Form 8-K

Exhibit 99.1

Item 6. Selected Financial Data

The following table provides selected financial data relating to our historical financial condition and results of operations as of and for each of the years ending December 31, 2004 through 2008. This data should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes. Prior year amounts have been reclassified for discontinued operations.

COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA


	Year Ended December 31,
(in thousands, except per share amounts and property data)	2008			2007			2006			2005(e)			2004

Operating Data (a)
Total property revenues	$	624,016		$	588,319		$	561,029		$	485,696		$	347,174
Total property expenses		238,915			217,350			210,621			184,566			138,700
Total non-property income (loss)		(19,540	)		25,002			35,530			50,912			27,884
Total other expenses		331,278			339,548			345,908			338,520			206,022
Income (loss) from continuing operations attributable to common shareholders		(13,705	)		41,721			119,953			147,022			18,815
Net income attributable to common shareholders		70,973			148,457			232,846			199,086			41,341

Income (loss) from continuing operations attributable to common shareholders per share
Basic	$	(0.25	)	$	0.71		$	2.09		$	2.80		$	0.43
Diluted		(0.25	)		0.70			2.03			2.61			0.42
Net income attributable to common shareholders per share
Basic	$	1.28		$	2.54		$	4.08		$	3.80		$	0.98
Diluted		1.28			2.50			3.93			3.55			0.96

Distributions declared per common share	$	2.80		$	2.76		$	2.64		$	2.54		$	2.54

Balance Sheet Data (at end of year)
Total real estate assets, at cost	$	5,491,593		$	5,527,403		$	5,141,467		$	5,039,007		$	3,159,077
Total assets		4,730,342			4,890,760			4,586,050			4,487,799			2,629,364
Notes payable		2,832,396			2,828,095			2,330,976			2,633,091			1,576,405
Minority interests		97,925			97,925			97,925			97,925			115,060
Shareholders’ equity		1,501,356			1,653,340			1,859,942			1,494,001			738,022

Other Data
Cash flows provided by (used in):
Operating activities	$	216,958		$	223,106		$	231,569		$	200,845		$	156,997
Investing activities		(37,374	)		(346,798	)		(52,067	)		(207,561	)		(65,321	)
Financing activities		(173,074	)		123,555			(180,044	)		6,039			(92,780	)
Funds from operations — diluted (b)		169,585			227,153			237,790			195,290			143,669

Property Data
Number of operating properties (at the end of year) (c)		181			182			186			191			144
Number of operating apartment homes (at end of year) (c)		62,903			63,085			63,843			65,580			51,456
Number of operating apartment homes (weighted average) (c)(d)		51,277			53,132			55,850			55,056			47,118
Weighted average monthly total property revenue per apartment home	$	1,055		$	1,025		$	970		$	888		$	792
Properties under development (at end of period)		5			11			11			9			3


(a)		Excludes discontinued operations.

(b)		Management considers Funds from Operations (“FFO”) to be an appropriate measure of the financial performance of an equity REIT. The National Association of Real Estate Investment Trusts (“NAREIT”) currently defines FFO as net income (computed in accordance with accounting principles generally accepted in the United States of America (“GAAP”)), excluding gains (or losses) associated with the sale of previously depreciated operating properties, real estate depreciation and amortization, and adjustments for unconsolidated joint ventures. Our calculation of diluted FFO also assumes conversion of all potentially dilutive securities, including certain noncontrolling 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 excluding depreciation, FFO can assist in the comparison of the operating performance of a company’s real estate between periods or as compared to different companies.

(c)		Includes discontinued operations.

(d)		Excludes apartment homes owned in joint ventures.

(e)		The 2005 results include the operations of Summit Properties Inc. subsequent to February 28, 2005.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and notes appearing elsewhere in this report. Historical results and trends which might appear in the consolidated financial statements should not be interpreted as being indicative of future operations.

We consider portions of this report to be “forward-looking” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to our expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions, or other items relating to the future; forward-looking statements are not guarantees of future performances, results, or events. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance our expectations will be achieved. Any statements contained herein which are not statements of historical fact should be deemed forward-looking statements. Reliance should not be placed on these forward-looking statements as they are subject to known and unknown risks, uncertainties, and other factors beyond our control and could differ materially from our actual results and performance.

Factors that may cause our actual results or performance to differ materially from those contemplated by forward-looking statements include, but are not limited to, the following:

	•		Volatility in capital and credit markets could adversely impact us;

	•		We could be negatively impacted by the condition of Fannie Mae or Freddie Mac;

	•		Unfavorable changes in economic conditions could adversely impact occupancy or rental rates;

	•		We face risks associated with land holdings;

	•		Difficulties of selling real estate could limit our flexibility;

	•		Compliance or failure to comply with laws requiring access to our properties by disabled persons could result in substantial cost;

	•		Competition could limit our ability to lease apartments or increase or maintain rental income;

	•		Development and construction risks could impact our profitability;

	•		Our acquisition strategy may not produce the cash flows expected;

	•		Competition could adversely affect our ability to acquire properties;

	•		Losses from catastrophes may exceed our insurance coverage;

	•		Investments through joint ventures and partnerships involve risks not present in investments in which we are the sole investor;

	•		We face risks associated with investments in and management of discretionary funds;

	•		We depend on our key personnel;

	•		Changes in laws and litigation risks could affect our business;

	•		Tax matters, including failure to qualify as a REIT, could have adverse consequences;

	•		Insufficient cash flows could limit our ability to make required payments for debt obligations or pay distributions to shareholders;

	•		We have significant debt, which could have important adverse consequences;

	•		We may be unable to renew, repay, or refinance our outstanding debt;

	•		Variable rate debt is subject to interest rate risk;

	•		We may incur losses on interest rate hedging arrangements;

	•		Issuances of additional debt or equity may adversely impact our financial condition;

	•		Failure to maintain current credit ratings could adversely affect our cost of funds, related margins, liquidity, and access to capital markets;

	•		Share ownership limits and our ability to issue additional equity securities may prevent takeovers beneficial to shareholders;

	•		Our share price will fluctuate; and

	•		We may reduce dividends on our equity securities or elect to pay a portion of the dividend in common shares.

These forward-looking statements represent our estimates and assumptions as of the date of this report, and we assume no obligation to update or supplement forward-looking statements because of subsequent events.

Unless the context requires otherwise, “we,” “our,” “us,” and the “Company,” refer to Camden Property Trust and Camden’s consolidated subsidiaries and partnerships, collectively.

Executive Summary

Our fiscal year 2008 results reflect the challenges the multifamily industry faced during the year. During fiscal year 2008, the factors adversely affecting demand for and rents received in our multifamily communities became more intense and pervasive across the United States. As a result, the already difficult conditions within the industry became progressively more challenging. High inventory levels of single-family homes and condominiums in the markets in which we operate, overall weak consumer confidence, and fears of a prolonged recession, among other factors, have persisted throughout fiscal year 2008. The effects of these factors have been further magnified by credit tightening in the financial markets, increasing home foreclosures, and severe shortages of liquidity in the financial markets.

Based on our results for fiscal year 2008, the deteriorating market conditions discussed above, and our belief these conditions may not improve quickly, we expect negative growth in property revenues during fiscal year 2009. Current factors which may negatively affect our future performance include recent and expected future job losses, liquidity disruptions in the capital markets, recessionary concerns, uncertainty in the financial markets, and a continued oversupply of single-family homes and condominiums in many of the markets in which we operate. However, positive impacts on our performance may result from reductions in the U.S. home ownership rate, more stringent lending criteria for prospective home buyers, and long term growth prospects for population, employment, and household formations in our markets, although there can be no assurance any of these factors will continue or will positively impact our operating results.

Due to the instability experienced during the current economic downturn, we believe the timing of an economic recovery is unclear and these conditions may not improve quickly. Our near term primary focus is to strengthen our capital and liquidity position by selectively disposing of properties, controlling and reducing construction and overhead costs, generating positive cash flows from operations, and reducing outstanding debt and leverage ratios.

We intend to continue to look for opportunities to acquire existing communities through our investment in and management of discretionary investment funds. Until the earlier of (i) December 31, 2011 or (ii) such time as 90% of its committed capital is invested, subject to two one-year extensions, the Fund and the Co-Investment Vehicle will be our exclusive investment vehicles for acquiring fully developed multifamily properties, subject to certain exceptions. Our portfolio of apartment communities is geographically diverse, which we believe mitigates risks such as changes in demographics or job growth which may occur within individual markets, although may not mitigate such risks with respect to more wide spread economic declines. In the long term, we also intend to continue focusing on our development pipeline which currently contains twelve properties in various stages of construction, lease-up, and pre-development. The commencement of future developments has and may continue to be impacted by macroeconomic issues, increasing construction costs, and other factors. We expect decreasing levels of development activity in 2009 as compared to prior years.

We review our assets for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Our impairment evaluations reflected our expectation of continued and increased challenges in the development of future multifamily communities, our belief these challenges will persist for some time, and our decision to not continue with five future development projects. Based on our evaluations, we recorded significant impairment charges in the fourth quarter to our land valuations, which materially affected our operating results during fiscal year 2008. Land valuations may continue to have significant fluctuations due to, among other things, the current economic environment and, as a result, there can be no assurance we will not have further impairments in the future.

The continuation of the current economic environment and capital market disruptions have and could continue to have a negative impact on us and adversely affect our future results of operations.

Property Portfolio

Our multifamily property portfolio, excluding land and joint venture properties which we do not manage, is summarized as follows:


	December 31, 2008				December 31, 2007
	Apartment				Apartment
	Homes		Properties		Homes		Properties
Operating Properties
Las Vegas, Nevada		8,016		29		8,064		30
Houston, Texas		6,620		16		6,346		15
Dallas, Texas		6,119		15		7,225		18
Washington, D.C. Metro		5,702		16		4,525		13
Tampa, Florida		5,503		12		5,503		12
Charlotte, North Carolina		3,574		15		3,574		15
Orlando, Florida		3,557		9		3,296		8
Atlanta, Georgia		3,202		10		3,202		10
Raleigh, North Carolina		2,704		7		2,704		7
Southeast Florida		2,520		7		2,520		7
Los Angeles/Orange County, California		2,481		6		2,191		5
Phoenix, Arizona		2,433		8		2,433		8
Denver, Colorado		2,171		7		2,529		8
Austin, Texas		2,106		7		2,778		9
San Diego/Inland Empire, California		1,196		4		1,196		4
Other		4,999		13		4,999		13

Total Operating Properties		62,903		181		63,085		182

Properties Under Development
Houston, Texas		712		3		733		3
Washington, D.C. Metro		366		1		1,543		4
Austin, Texas		348		1		556		2
Los Angeles/Orange County, California		—		—		290		1
Orlando, Florida		—		—		261		1

Total Properties Under Development		1,426		5		3,383		11

Total Properties		64,329		186		66,468		193

Less: Joint Venture Properties (1)
Las Vegas, Nevada		4,047		17		4,047		17
Houston, Texas (2)		2,199		7		1,946		6
Phoenix, Arizona		992		4		992		4
Los Angeles/Orange County, California		711		2		711		2
Austin, Texas		601		2		—		—
Washington, D.C. Metro		508		1		508		1
Dallas, Texas		456		1		456		1
Denver, Colorado		320		1		320		1
Other		3,237		9		3,237		9

Total Joint Venture Properties		13,071		44		12,217		41

Total Properties Owned 100%		51,258		142		54,251		152


(1)		Refer to Note 7, “Investments in Joint Ventures,” in the Notes to Consolidated Financial Statements for further discussion of our joint venture investments.

(2)		Figures for 2008 include Camden Travis Street, a fully-consolidated joint venture, of which we retain a 25% ownership.

Stabilized Communities

We generally consider a property stabilized once it reaches 90% occupancy. During the year ended December 31, 2008, stabilization was achieved at five recently completed properties as follows:

Number of

Apartment

Date of

Property and Location

Homes

Completion

Stabilization

Camden Old Creek

San Marcos, CA

350

1Q07

1Q08

Camden Monument Place

Fairfax, VA

368

4Q07

2Q08

Camden Plaza — joint venture

Houston, TX

271

3Q07

2Q08

City Centre

Houston, TX

379

4Q07

3Q08

Camden Royal Oaks

Houston, TX

236

3Q06

4Q08

Partial Sales and Dispositions to Joint Ventures Included in Continuing Operations

In March 2008, we sold Camden Amber Oaks, a development community in Austin, Texas, to the Fund for approximately $8.9 million. No gain or loss was recognized on the sale. Concurrent with the transaction, we invested approximately $1.9 million in the Fund. In August 2008, we sold Camden South Congress to the Fund for approximately $44.2 million and recognized a gain of approximately $1.8 million on the sale. In conjunction with the transaction, we invested approximately $2.8 million in the Fund.

There were no partial sales or dispositions to joint ventures for the year ended December 31, 2007.

During the year ended December 31, 2006, we recognized gains of approximately $91.5 million from the partial sale of nine properties to an affiliated unconsolidated joint venture. This partial sale generated net proceeds of approximately $170.9 million. The gains recognized on the partial sales of these assets were included in continuing operations as we retained a partial interest in the ventures which own these assets. We also recognized gains of approximately $0.5 million and $4.7 million on the partial sales of land to two joint ventures located in Houston, Texas and College Park, Maryland, respectively. The gains recognized on the sales of these assets were included in continuing operations as we retained a partial interest in the ventures which own these assets. We recognized an additional gain of approximately $0.8 million on the sale of land located adjacent to one of our pre-development assets in College Park, Maryland. The gain on this sale was not included in discontinued operations as the operations and cash flows of these assets were not clearly distinguished, operationally or for reporting purposes, from the adjacent assets.

Discontinued Operations and Assets Held for Sale

We intend to maintain a long-term strategy of managing our invested capital through the selective sale of properties and to utilize the proceeds to reduce our outstanding debt and leverage ratios and fund investments with higher anticipated growth prospects in our markets. Income from discontinued operations includes the operations of properties, including land, sold during the period or classified as held for sale as of December 31, 2008. The components of earnings classified as discontinued operations include separately identifiable property-specific revenues, expenses, depreciation, and interest expense, if any. The gain on the disposal of the held for sale properties is also classified as discontinued operations.

A summary of our 2008 dispositions and properties held for sale as of December 31, 2008 is as follows:

Number of

Apartment

Date of

Property and Location

Homes

Disposition

Year Built

Dispositions

Camden Ridgeview

Austin, TX

167

1Q08

1984

Camden Town Village

Mesquite, TX

188

2Q08

1983

Oasis Sands

Las Vegas, NV

2Q08

1994

Camden Lakeview

Irving, TX

476

3Q08

1985

Camden Arbors

Westminster, CO

358

3Q08

1986

Camden Woodview

Austin, TX

283

3Q08

1984

Camden Brian Oaks

Austin, TX

430

3Q08

1980

Camden Place

Mesquite, TX

442

3Q08

1984

Held for Sale

Camden West Oaks

Houston, TX

671

n/a

1982

Total apartment homes sold and held for sale

3,063

During the year ended December 31, 2008, we received net proceeds of approximately $121.7 million and recognized gains of approximately $80.2 million from the sale of the eight operating properties listed above to unaffiliated third parties. During the year ended December 31, 2007, we received net proceeds of approximately $166.4 million and recognized gains of approximately $106.3 million from the sale of ten operating properties, containing 3,054 apartment homes, to unaffiliated third parties. During the year ended December 31, 2006, we received net proceeds of approximately $137.3 million and recognized a gain of approximately $78.8 million on the sale of eight operating properties, containing 3,041 apartment homes, to unaffiliated third parties.

During the year ended December 31, 2008, we recognized gains of approximately $1.1 million from the sale of land adjacent to our regional office in Las Vegas, Nevada. The gain on this sale was not included in discontinued operations as the operations and cash flows of this asset was not clearly distinguished, operationally or for reporting purposes, from the adjacent assets.

Upon our decision to abandon efforts to develop certain land parcels and to market these parcels for sale, we reclassify the operating expenses associated with these assets to discontinued operations. At December 31, 2008, we had undeveloped land parcels classified as held for sale as follows:


($ in millions)			Net Book
Location	Acres		Value

Southeast Florida		2.2	$	7.4
Dallas		2.4		1.8

Total land held for sale			$	9.2

There were no sales of undeveloped land during the year ended December 31, 2008. During the year ended December 31, 2007, we sold undeveloped land totaling approximately 0.9 acres to unrelated third parties. In connection with these sales, we received net proceeds of approximately $6.0 million and recognized gains totaling approximately $0.7 million. During the year ended December 31, 2006, we sold undeveloped land totaling approximately 8.7 acres to unrelated third parties. In connection with these sales, we received net proceeds of approximately $41.0 million and recognized gains totaling approximately $20.5 million.

Development and Lease-Up Properties

At December 31, 2008, we had five completed consolidated properties in lease-up as follows:


	Number of				% Leased					Estimated
($ in millions)	Apartment		Cost		at			Date of		Date of
Property and Location	Homes		Incurred		2/15/09			Completion		Stabilization

Camden Potomac Yard Arlington, VA		378	$	104.5		73	%		2Q08		4Q09
Camden Orange Court Orlando, FL		261		45.5		65	%		2Q08		3Q09
Camden Summerfield Landover, MD		291		62.6		78	%		2Q08		4Q09
Camden Cedar Hills Austin, TX		208		23.6		88	%		4Q08		2Q09
Camden Whispering Oaks Houston, TX		274		27.3		80	%		4Q08		3Q09

Total		1,412	$	263.5		76	%

At December 31, 2008, we had two consolidated properties under construction as follows:


							Included in
	Number of						Properties		Estimated		Estimated
($ in millions)	Apartment		Estimated		Cost		Under		Date of		Date of
Property and Location	Homes		Cost		Incurred		Development		Completion		Stabilization

Camden Dulles Station Oak Hill, VA		366	$	77.0	$	71.4	$	14.4		1Q09		3Q10
Camden Travis Street (a) Houston, TX		253		39.0		9.3		9.3		1Q10		3Q10

Total		619	$	116.0	$	80.7	$	23.7


(a)		Camden Travis Street is owned in a fully-consolidated joint venture, of which we retain a 25% ownership.

Our consolidated balance sheet at December 31, 2008 included approximately $264.2 million related to properties under development and land. Of this amount, approximately $23.7 million related to projects currently under construction. Additionally, at December 31, 2008, we had approximately $184.3 million invested in land for projects we may begin constructing in the future and approximately $56.2 million invested primarily in land tracts in which future development activities have been put on hold.

At December 31, 2008, we had investments in non-consolidated joint ventures which were developing the following multifamily communities:


				Number of
($ in millions)				Apartment		Estimated		Total
Property and Location	Ownership %			Homes		Cost		Cost Incurred

Completed Communities (1)
Camden Main & Jamboree Irving, CA		30	%		290		N/A	$	110.1
Camden College Park College Park, MD		30	%		508		N/A		125.3

Completed Communities Total					798			$	235.4


Under Construction
Braeswood Place (1) (2) Houston, TX		30	%		340	$	48.6	$	41.1
Belle Meade (2) Houston, TX		30	%		119		33.2		20.0
Camden Amber Oaks (1) Austin, TX		20	%		348		40.0		32.6

Under Construction Total					807	$	121.8	$	93.7


Pre-Development (3)				Total Acres

Lakes at 610 Houston, TX		30	%		6.1		N/A	$	6.4
Town Lake Austin, TX		72	%		25.9		N/A		37.9

Pre-Development Total					32.0			$	44.3


(1)		Properties in lease-up as of December 31, 2008.

(2)		Properties being developed by joint venture partner.

(3)		Properties in pre-development by joint venture partner.

Refer to Note 7, “Investments in Joint Ventures” in the Notes to Consolidated Financial Statements for further discussion of our joint venture investments.

Geographic Diversification

At December 31, 2008 and 2007, our investments in various geographic areas, excluding depreciation, investments in joint ventures, and properties held for sale, were as follows:


(in thousands)	2008				2007

Washington, D.C. Metro	$	1,219,866	22.4	%	$	1,196,451	21.8	%
Southeast Florida		446,629	8.2			444,645	8.1
Houston, Texas		377,041	6.9			374,177	6.8
Dallas, Texas		337,890	6.2			372,075	6.8
Tampa, Florida		386,816	7.1			370,379	6.7
Los Angeles/Orange County, California		330,849	6.1			346,452	6.3
Orlando, Florida		364,379	6.7			336,768	6.1
Atlanta, Georgia		319,047	5.8			316,733	5.8
Las Vegas, Nevada		321,782	5.9			314,609	5.7
Charlotte, North Carolina		316,387	5.8			312,760	5.7
Raleigh, North Carolina		237,023	4.3			235,263	4.3
San Diego/Inland Empire, California		226,556	4.1			225,769	4.1
Austin, Texas		159,897	2.9			221,807	4.1
Denver, Colorado		186,292	3.4			202,962	3.7
Phoenix, Arizona		118,003	2.2			117,092	2.1
Other		107,377	2.0			105,742	1.9

Total	$	5,455,834	100.0	%	$	5,493,684	100.0	%

Results of Operations

Changes in revenues and expenses related to our operating properties from period to period are due primarily to the performance of stabilized properties in the portfolio, the lease-up of newly constructed properties, acquisitions, and dispositions. Where appropriate, comparisons of income and expense on communities included in continuing operations are made on a dollars-per-weighted average apartment home basis in order to adjust for such changes in the number of apartment homes owned during each period. Selected weighted averages for the years ended December 31 are as follows:


	2008			2007			2006
Average monthly property revenue per apartment home	$	1,055		$	1,055		$	970
Annualized total property revenue per apartment home	$	4,845		$	4,544		$	4,370
Weighted average number of operating apartment homes owned 100%		49,312			47,832			48,200
Weighted average occupancy of operating apartment homes owned 100%		93.8	%		93.7	%		95.1	%

Property-level operating results

The following tables present the property-level revenues and property-level expenses, excluding discontinued operations, for the year ended December 31, 2008 as compared to 2007 and for the year ended December 31, 2007 as compared to 2006:


	Apartment		Year Ended
	Homes		December 31,				Change
($ in thousands)	at 12/31/08		2008		2007		$			%
Property revenues
Same store communities		40,340	$	498,875	$	491,736	$	7,139			1.5	%
Non-same store communities		8,469		108,184		88,925		19,259			21.7
Development and lease-up communities		2,031		9,444		81		9,363			*
Dispositions/other		—		7,513		7,577		(64	)		(0.8	)

Total property revenues		50,840	$	624,016	$	588,319	$	35,697			6.1	%


Property expenses
Same store communities		40,340	$	188,644	$	180,277	$	8,367			4.6	%
Non-same store communities		8,469		40,395		33,444		6,951			20.8
Development and lease-up communities		2,031		5,694		140		5,554			*
Dispositions/other		—		4,182		3,489		693			19.9

Total property expenses		50,840	$	238,915	$	217,350	$	21,565			9.9	%


*		Not a meaningful percentage

Same store communities are communities we owned and were stabilized as of January 1, 2007. Non-same store communities are stabilized communities we have acquired, developed, or re-developed after January 1, 2007. Development and lease-up communities are non-stabilized communities we have acquired or developed after January 1, 2007.


	Apartment		Year Ended
	Homes		December 31,				Change
	at 12/31/07		2007		2006		$			%
Property revenues
Same store communities		39,417	$	479,015	$	460,758	$	18,257			4.0	%
Non-same store communities		8,312		96,372		75,448		20,924			27.7
Development and lease-up communities		3,459		8,473		508		7,965			*
Dispositions/other		—		4,459		24,315		(19,856	)		(81.7	)

Total property revenues		51,188	$	588,319	$	561,029	$	27,290			4.9	%


Property expenses
Same store communities		39,417	$	175,189	$	171,320	$	3,869			2.3	%
Non-same store communities		8,312		35,488		27,392		8,096			29.6
Development and lease-up communities		3,459		4,726		532		4,194			*
Dispositions/other		—		1,947		11,377		(9,430	)		(82.9	)

Total property expenses		51,188	$	217,350	$	210,621	$	6,729			3.2	%


*		Not a meaningful percentage

Same store communities are communities we owned and were stabilized as of January 1, 2006. Non-same store communities are stabilized communities we have acquired, developed, or re-developed after January 1, 2006. Development and lease-up communities are non-stabilized communities we have developed or acquired after January 1, 2006.

Same store analysis

Our same store property revenues for the year ended December 31, 2008 increased approximately $7.1 million, or 1.5%, from 2007 resulting primarily from increases in other property income, partially offset by a decline in rental revenues due to slight declines in average occupancy and average rental rates for our same store portfolio. Same store property revenues for the year ended December 31, 2007 increased approximately $18.3 million, or 4.0%, from 2006 primarily from increases in other property income and higher average rental income per apartment home, partially offset by declines in occupancy.

Same store property revenues for 2008 as compared to 2007 were positively impacted by increases in other property income due to the continued implementation of the Perfect Connection (also known as CamdenTV) in 2008, which provides cable services to our residents, and other utility rebilling programs. The increase in other property income was partially offset by a decrease in average rental rates, as we experienced rental rate decreases primarily as a result of the challenges we and the multifamily industry faced throughout the year, which are discussed in detail in the “Executive Summary.” Average total occupancy at our same store properties declined in 2008 as we experienced decreases in occupancy in a majority of our markets. We believe our operating performance during the current market environment benefited from the continued operational and technological enhancements we are making at many of our communities, which have created opportunities to take advantage of additional revenue sources.

Same store property revenues for 2007 as compared to 2006 were positively impacted by increases in revenues in substantially all markets. These revenue increases were driven by other property income which increased due to the implementation of Perfect Connection, and other utility rebilling programs. Our same store communities recognized an overall increase in average rental rates, and we experienced rental rate increases in all markets. The increase in average rental rates in 2007 was a result of moderate improvements in fundamentals such as job growth, population growth, and household formations. Average occupancy at our same store properties declined less than 1% in 2007, as we had slight decreases in occupancy in a majority of our markets.

Total property expenses from our same store communities increased approximately $8.4 million, or 4.6%, and approximately $3.9 million, or 2.3%, for the year ended December 31, 2008 as compared to 2007 and for the year ended December 31, 2007 as compared to 2006, respectively. The increases in same store property expenses per apartment home of $207 for the year ended December 31, 2008 as compared to 2007 were primarily due to increases in utility expenses in connection with our utility rebilling programs and real estate taxes. Real estate taxes increased primarily due to increases in appraisals and taxation rates. The increase for the year ended December 31, 2007 as compared to 2006 was primarily due to increases in repair and maintenance costs as well as utility expenses in connection with our utility rebilling programs.

Non-same store analysis and other analysis

Property revenues from non-same store and development and lease-up communities increased approximately $28.6 million for the year ended December 31, 2008 as compared to 2007 and increased approximately $28.9 million for the year ended December 31, 2007 as compared to 2006. The increases in both periods were primarily due to the completion and lease-up of certain properties in our development pipeline as well as property acquisitions in 2007 and 2006. See “Development and Lease-Up Properties” for additional detail of occupancy at properties in our development pipeline.

Property expenses from non-same store and development and lease-up communities increased approximately $12.5 million for the year ended December 31, 2008 as compared to 2007 and approximately $12.3 million for 2007 as compared to 2006. The increases in both periods were due to the completion and lease-up of properties in our development pipeline as well as acquisitions completed in 2007 and 2006.

Property revenues from dispositions/other decreased approximately $0.1 million and approximately $19.9 million for the year ended December 31, 2008 as compared to 2007 and for the year ended December 31, 2007 as compared to 2006, respectively. The decrease for the year ended December 31, 2007 primarily related to properties partially sold to joint ventures.

Property expenses from dispositions/other increased approximately $0.7 million and decreased approximately $9.4 million for the year ended December 31, 2008 as compared to 2007 and for the year ended December 31, 2007 as compared to 2006, respectively. The increase for the year ended December 31, 2008 as compared to December 31, 2007 primarily related to insurance costs related to Hurricane Ike. Refer to Note 14, “Commitments and Contingencies”, in the Notes to Consolidated Financial Statements for further discussion. The decrease for the year ended December 31, 2007 as compared to December 31, 2006 primarily related to properties partially sold to joint ventures.

Non-property income


	Year Ended											Year Ended
	December 31,					Change						December 31,				Change
($ in thousands)	2008			2007		$			%			2007		2006		$			%
Fee and asset management	$	9,167		$	8,293	$	874			10.5	%	$	8,293	$	14,041	$	(5,748	)		(40.9	)%
Sale of technology investments		—			623		(623	)		(100.0	)		623		1,602		(979	)		(61.1	)
Interest and other income		4,736			8,804		(4,068	)		(46.2	)		8,804		9,771		(967	)		(9.9	)
Income (loss) on deferred compensation plans		(33,443	)		7,282		(40,725	)		*			7,282		10,116		(2,834	)		(28.0	)

Total non-property income (loss)	$	(19,540	)	$	25,002	$	(44,542	)		(178.2	)%	$	25,002	$	35,530	$	(10,528	)		(29.6	)%


*		Not a meaningful percentage

Fee and asset management income, which represents income related to third-party construction and development projects and property management, for the year ended December 31, 2008 increased approximately $0.9 million as compared to 2007 and decreased approximately $5.7 million for the year ended December 31, 2007 as compared to 2006. Growth was relatively flat for 2008 as compared to 2007 due to decreased third-party construction activities in 2008, partially offset by increases in management fees earned from the Fund. The decrease in 2007 as compared to 2006 was primarily due to increased fees earned from joint ventures and third-party construction and development projects in 2006 as compared to 2007 as these 2006 projects were winding down in 2007 and were not replaced with additional projects.

Interest and other income decreased approximately $4.1 million for 2008 as compared to 2007 and decreased approximately $1.0 million for 2007 as compared to 2006. Interest income, which primarily relates to interest earned on notes receivable outstanding under our mezzanine financing program, decreased approximately $0.8 million for 2008 as compared to 2007 and increased approximately $0.6 million for 2007 as compared to 2006. The decrease for 2008 as compared to 2007 was primarily due to contractual reductions in interest rates related to mezzanine loans for development communities which have reached stabilization, reductions in interest earned on variable rate notes due to reductions in the London Interbank Offered Rate (“LIBOR”), and principal payments received in 2008. The increase for 2007 as compared to 2006 was primarily due to new notes issued during the latter part of 2006 of approximately $9.1 million. Other income decreased approximately $3.3 million for 2008 as compared to 2007 and decreased approximately $1.6 million for 2007 as compared to 2006. Other income primarily represents income recognized upon the settlement of legal, insurance and warranty claims, and contract disputes. In 2007, other income included approximately $3.3 million related to settlement of a contract dispute.

Income on deferred compensation plans decreased approximately $40.7 million during the year ended December 31, 2008 as compared to 2007 and decreased approximately $2.8 million during the year ended December 31, 2007 as compared to 2006. The changes in income primarily related to the performance of the assets held in the deferred compensation plans for plan participants, which is subject to fluctuations in the financial markets.

Other expenses


	Year Ended											Year Ended
	December 31,					Change						December 31,				Change
($ in thousands)	2008			2007		$			%			2007		2006		$			%
Property management	$	19,910		$	18,413	$	1,497			8.1	%	$	18,413		18,490	$	(77	)		(0.4	)%
Fee and asset management		6,054			4,552		1,502			33.0			4,552		9,382		(4,830	)		(51.5	)
General and administrative		31,586			32,590		(1,004	)		(3.1	)		32,590		37,584		(4,994	)		(13.3	)
Interest		132,399			115,753		16,646			14.4			115,753		117,348		(1,595	)		(1.4	)
Depreciation and amortization		171,814			157,297		14,517			9.2			157,297		149,206		8,091			5.4
Amortization of deferred financing costs		2,958			3,661		(703	)		(19.2	)		3,661		3,782		(121	)		(3.2	)
Expense (benefit) on deferred compensation plans		(33,443	)		7,282		(40,725	)		*			7,282		10,116		(2,834	)		(28.0	)

Total non-property expenses	$	331,278		$	339,548	$	(8,270	)		(2.4	)%	$	339,548		345,908	$	(6,360	)		(1.8	)%


*		Not a meaningful percentage

Property management expense, which represents regional supervision and accounting costs related to property operations, increased approximately $1.5 million for the year ended December 31, 2008 as compared to 2007 and decreased approximately $0.1 million for 2007 as compared to 2006. Property management expenses were 3.2%, 3.1%, and 3.3% of total property revenues for the years ended December 31, 2008, 2007, and 2006, respectively.

Fee and asset management expense, which represents expenses related to third-party construction and development projects and property management, increased approximately $1.5 million for 2008 as compared to 2007 and decreased approximately $4.8 million for 2007 as compared to 2006. The increase for 2008 as compared to 2007 was primarily attributable to increased costs associated with the Fund partially offset by decreases in our third-party construction activities. The decrease for 2007 as compared to 2006 is primarily attributable to decreased third-party activities, offset by costs associated with the Fund which was formed in the latter part of 2007.

General and administrative expenses decreased approximately $1.0 million during the year ended December 31, 2008 as compared to 2007 and decreased approximately $5.0 million during the year ended December 31, 2007 as compared to 2006, and were 5.0%, 5.4%, and 6.4% of total revenues, excluding income or loss on deferred compensation plans, for the years ended December 31, 2008, 2007, and 2006, respectively. The decreases in general and administrative expenses for the year ended December 31, 2008 as compared to 2007 and for December 31, 2007 as compared to 2006 were primarily due to decreases in salaries, incentive compensation, and legal expenses. Additionally, during 2006, an aggregate of 76,542 share awards that otherwise would have vested from time to time over the next five years became immediately exercisable. By accelerating the vesting of these share awards, we recognized a one-time expense of approximately $4.2 million for the year ended December 31, 2006.

Interest expense for the year ended 2008 increased approximately $16.6 million as compared to 2007 primarily due to the repurchase of common shares using debt proceeds, the timing of refinancing portions of our long-term indebtedness at higher rates, and decreased capitalized interest, partially offset by decreased amounts outstanding on our line of credit, our repurchases and early retirement of outstanding debt, and a decline in interest rates on our floating rate debt, Refer to Note 9, “Notes Payable,” in the Notes to Consolidated Financial Statements for further discussion of our debt repurchases and retirements. Interest expense for the year ended 2007 decreased approximately $1.6 million as compared to 2006. Factors contributing to the decrease in interest expense in 2007 as compared to 2006 include repayment of debt from proceeds received from our July 2006 equity offering, property dispositions during both periods, and interest adjustments related to tax liabilities. Partially offsetting this decrease was interest incurred on debt used to repurchase our common shares during 2007. While our average debt level outstanding during 2007 increased slightly as compared to 2006, we continued to fund construction costs associated with our development pipeline, increasing interest capitalized by approximately $2.0 million in 2007 as compared to 2006.

Depreciation and amortization expense increased approximately $14.5 million during the year ended December 31, 2008 as compared to 2007 and increased approximately $8.1 million during the year ended December 31, 2007 as compared to 2006. The increases were primarily due to an increased level of new development and capital improvements placed in service each year as compared to the previous year, partially offset by dispositions.

Amortization of deferred financing costs decreased $0.7 million and $0.1 million during the years ended December 31, 2008, and 2007, respectively. The decrease for fiscal year 2008 was due to certain deferred financing costs becoming fully amortized.

Expense on deferred compensation plans decreased approximately $40.7 million during the year ended December 31, 2008 as compared to 2007 and decreased approximately $2.8 million during the year ended December 31, 2007 as compared to 2006. The changes in expense primarily related to the performance of the assets held in the deferred compensation plans for plan participants, which is subject to fluctuations in the financial markets.

Other


	Year Ended												Year Ended
	December 31,						Change						December 31,						Change
(in thousands)	2008			2007			$			%			2007			2006			$			%

Gain on sale of properties, including land	$	2,929		$	—		$	2,929			100.0	%	$	—		$	97,452		$	(97,452	)		(100.0	)%
Gain on early retirement of debt		13,566			—			13,566			100.0			—			—			—			—
Impairment loss on land		(51,323	)		(1,447	)		(49,876	)		*			(1,447	)		—			(1,447	)		(100.0	)
Equity in income (loss) of joint ventures		(1,265	)		1,526			(2,791	)		(182.9	)		1,526			5,156			(3,630	)		(70.4	)
Distributions on perpetual preferred units		(7,000	)		(7,000	)		—			—			(7,000	)		(7,000	)		—			—
Income tax expense — current		(843	)		(3,052	)		2,209			72.4			(3,052	)		—			(3,052	)		(100.0	)


*		Not a meaningful percentage

Gain on sale of properties, including land, totaled approximately $2.9 million for the year ended December 31, 2008 due to gains on the partial sale of properties to the Fund and a gain on the sale of a land parcel in Las Vegas, Nevada to an unaffiliated third-party. There was no gain on sale of properties, including land, for the year ended December 31, 2007. Gain on sale of properties, including land, for the year ended December 31, 2006 included gains of approximately $91.5 million from the partial sale of nine operating properties to an affiliated joint venture and approximately $5.2 million from the partial sales of land to affiliated joint ventures; also included in gain on sale of properties for the year ended December 31, 2006 was approximately $0.8 million from the sale of undeveloped land to an unaffiliated third party. See further discussion of gains associated with property dispositions in “Property Portfolio.”

Gain on early retirement of debt was approximately $13.6 million for the year ended December 31, 2008. These gains were the result of various repurchases and retirements of debt, and included a tender offer for certain series of outstanding debt which resulted in the repurchase and retirement of approximately $108.3 million of debt from unrelated third parties for approximately $100.6 million. In addition to the tender offer, we repurchased and retired approximately $82.7 million of various series of other outstanding debt from unrelated third parties for approximately $75.7 million during the year ended December 31, 2008. These gains were partially offset by the proportionate share of unamortized loan costs and other costs associated with the retirement of the debt.

The impairment loss on land for the year ended December 31, 2008 of approximately $51.3 million reflects impairments in the value of land holdings for several potential development projects we no longer plan to pursue, including approximately $48.6 million related to land holdings for five projects we no longer plan to develop, approximately $1.6 million in the value of a land parcel held for future development, and approximately $1.1 million for costs capitalized for a potential joint venture development we no longer plan to pursue. The impairment loss on land for the year ended December 31, 2007 of approximately $1.4 million reflects impairment in the value of one potential development project we no longer plan to pursue. These impairment charges are the difference between each parcel’s estimated fair value and the carrying value, which includes pursuit and other costs.

Equity in income (loss) of joint ventures decreased approximately $2.8 million for the year ended December 31, 2008 as compared to 2007, and decreased approximately $3.6 million for the year ended December 31, 2007 as compared to 2006. Changes from period to period were due to changes in the number of properties held through joint ventures, and the development dilution we are experiencing on the completion of units in our joint venture development pipeline, which resulted in depreciation and interest expense recorded exceeding income recognized as these properties have not reached stabilization. We recognized approximately $2.8 million of gains for our proportionate share of the sale of three properties held through a joint venture during the year ended December 31, 2006.

For the tax year ended December 31, 2008, we had current income tax expense of approximately $0.8 million. Income tax expense decreased $2.2 million for the year ended December 31, 2008 as compared to the same period in 2007, primarily attributable to less gains on property dispositions in states with high income tax rates and changes in state tax laws affecting one of our operating partnerships.


	Year Ended											Year Ended
	December 31,						Change					December 31,						Change
(in thousands)	2008			2007			$		%			2007			2006			$		%

Income allocated to noncontrolling interest	$	(4,052	)	$	(4,729	)	$	677		14.3	%	$	(4,729	)	$	(15,685	)	$	10,956		69.9	%

Income allocated to noncontrolling interest decreased approximately $0.7 million during the year ended December 31, 2008 as compared to 2007 and decreased approximately $11.0 million during the year ended December 31, 2007 as compared to 2006. Income allocated to noncontrolling interest in 2006 included the impact of gains recognized on the partial sale of eight properties to an affiliated joint venture during the year ended December 31, 2006. A portion of the gains recognized were allocated to noncontrolling interest holders in Camden Operating, L.P.

Funds from Operations (“FFO”)

Management considers FFO to be an appropriate measure of the financial performance of an equity REIT. The National Association of Real Estate Investment Trusts (“NAREIT”) currently defines FFO as net income (computed in accordance with accounting principles generally accepted in the United States of America (“GAAP”)), excluding gains (or losses) associated with the sale of previously depreciated operating properties, real estate depreciation and amortization, and adjustments for unconsolidated joint ventures. Our calculation of diluted FFO also assumes conversion of all potentially dilutive securities, including certain noncontrolling interest, 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 excluding depreciation, FFO can help one compare the operating performance of a company’s real estate between periods or as compared to different companies.

We believe in order to facilitate a clear understanding of our consolidated historical operating results, FFO should be examined in conjunction with net income as presented in the Consolidated Statements of Income and Comprehensive Income and data included elsewhere in this report. FFO is not defined by GAAP and should not be considered as an alternative to net income as an indication of our operating performance. Additionally, FFO as disclosed by other REITs may not be comparable to our calculation.

Reconciliations of net income attributable to common shareholders to diluted FFO for the years ended December 31, 2008, 2007, and 2006 are as follows:


(in thousands)	2008			2007			2006
Funds from operations
Net income attributable to common shareholders	$	70,973		$	148,457		$	232,846
Real estate depreciation and amortization, including discontinued operations		171,009			161,064			157,233
Adjustments for unconsolidated joint ventures (1)		7,103			4,934			478
Gain on sale of properties, including land and discontinued operations, net of taxes		(83,117	)		(105,098	)		(170,304	)
Income allocated to noncontrolling interest, including discontinued operations		3,617			17,796			17,537

Funds from operations — diluted	$	169,585		$	227,153		$	237,790


Weighted average shares — basic		55,272			58,135			56,660
Incremental shares issuable from assumed conversion of:
Common share options and awards granted		114			482			725
Common units		3,142			3,503			3,868

Weighted average shares — diluted		58,528			62,120			61,253


(1)		Adjustment for 2006 includes approximately $2.8 million in gains recognized on sales of properties held in joint ventures. 2006 adjustment is net of approximately $0.5 million in prepayment penalties incurred with the repayment of mortgage notes directly associated with the sold properties.

Liquidity and Capital Resources

Financial Condition and Sources of Liquidity

We intend to maintain a strong balance sheet and preserve our financial flexibility, which we believe should enhance our ability to identify and capitalize on investment opportunities as they become available. We intend to maintain what management believes is a conservative capital structure by:

	•		extending and sequencing the maturity dates of our debt where possible;

	•		managing interest rate exposure using what management believes to be prudent levels of fixed and floating rate debt;

	•		maintaining conservative coverage ratios; and

	•		using what management believes to be a prudent combination of debt and common and preferred equity.

Our interest expense coverage ratio, net of capitalized interest, was 2.6, 3.0, and 2.9 times for the years ended December 31, 2008, 2007, and 2006, respectively. Our interest expense coverage ratio is calculated by dividing interest expense for the period into the sum of property revenues and expenses, non-property income, other expenses, income from discontinued operations, depreciation, amortization, and interest expense. At December 31, 2008, 2007, and 2006, 78.3%, 81.6%, and 80.5%, respectively, of our properties (based on invested capital) were unencumbered. Our weighted average maturity of debt, excluding our line of credit, was 5.0 years at December 31, 2008.

Our primary source of liquidity is cash flow generated from operations. Other sources include the availability under our unsecured credit facility and other short-term borrowings, proceeds from dispositions of properties and other investments, and access to the capital markets. We believe our liquidity and financial condition are sufficient to meet all of our reasonably anticipated cash flow needs during 2009 including:

	•		normal recurring operating expenses;

	•		current debt service requirements;

	•		recurring capital expenditures;

	•		initial funding of property developments, acquisitions, and notes receivable; and

	•		the minimum dividend payments required to maintain our REIT qualification under the Internal Revenue Code of 1986.

Factors which could increase or decrease our future liquidity include but are not limited to current volatility in capital and credit markets, sources of financing, completion of planned asset sales, the effect our debt level and decreases in credit ratings could have on our costs of funds and our ability to access capital markets, and changes in operating costs resulting from a weakened economy, which could also impact occupancy and rental rates and ultimately impact our planned growth of capital.

Cash Flows

Certain sources and uses of cash, such as the level of discretionary capital expenditures, repurchases of debt and common shares, and distributions paid on our equity securities are within our control and are adjusted as necessary based upon market conditions. The following is a discussion of our cash flows for the years ended December 31, 2008 and 2007.

Net cash provided by operating activities was approximately $217.0 million during the year ended December 31, 2008 as compared to approximately $223.1 million for the same period in 2007. The decrease was primarily due to increased interest payments on our levels of outstanding debt, timing of payments of trade payables and receivables, offset by growth in revenues from our same store, non-same store, and development communities.

Cash flows used in investing activities during the year ended December 31, 2008 totaled approximately $37.4 million, as compared to approximately $346.8 million during the year ended December 31, 2007. Cash outflows for property development, acquisition, and capital improvements were approximately $199.3 million during 2008 as compared to approximately $500.8 million during 2007. Proceeds received from sales of properties, sales of assets to joint ventures, joint venture distributions representing returns of investments, and sale of technology investments totaled approximately $177.1 million for the year ended December 31, 2008 as compared to approximately $178.9 million for the year ended December 31, 2007.

Net cash used in financing activities totaled approximately $173.1 million for the year ended December 31, 2008, primarily as a result of approximately $379.2 million in repayment of outstanding notes payable. The repayment consisted of approximately $100.6 million of outstanding notes payable related to our December 2008 tender offer, repurchase and retirement of approximately $75.7 million of various series of other outstanding debt, and repayment of approximately $201.9 million of maturing secured notes payable. See Note 9 of the Notes to Consolidated Financial Statements, “Notes Payable,” for further discussion. Net cash used in financing activities was also attributable to distributions paid to shareholders, minority interest and noncontrolling interest holders of approximately $172.3 million and approximately $33.1 million of common share repurchases, offset by proceeds from notes payable and increases in our unsecured line of credit of approximately $385.9 million and $30.0 million, respectively. Net cash provided by financing activities totaled approximately $123.6 million for the year ended December 31, 2007, primarily as a result of approximately $808.0 million in proceeds from notes payable, offset by repayment of balances outstanding on our line of credit of approximately $91.0 million, payments of approximately $213.4 million related to the payoff of two senior unsecured notes and one mortgage note, approximately $200.5 million of common share repurchases, and distributions paid to shareholders, minority interest and noncontrolling interest holders of approximately $178.1 million.

Financial Flexibility

We have a $600 million unsecured credit facility which matures in January 2010 and can be extended at our option through January 2011. The scheduled interest rate is based on spreads over the London Interbank Offered Rate (“LIBOR”) or the Prime Rate. The scheduled interest rate spreads are subject to change as our credit ratings change. Advances under the line of credit may be priced at the scheduled rates, or we may enter into bid rate loans with participating banks at rates below the scheduled rates. These bid rate loans have terms of six months or less and may not exceed the lesser of $300 million or the remaining amount available under the line of credit. The line of credit is subject to customary financial covenants and limitations, all of which we believe we are in compliance.

Our line of credit provides us with the ability to issue up to $100 million in letters of credit. While our issuance of letters of credit does not increase our borrowings outstanding under our line, it does reduce the amount available. At December 31, 2008, we had outstanding letters of credit totaling approximately $10.5 million, and had approximately $444.5 million available under our unsecured line of credit.

As an alternative to our unsecured line of credit, from time to time we borrow using competitively bid unsecured short-term notes with lenders who may or may not be a part of the unsecured line of credit bank group. Such borrowings vary in term and pricing and are typically priced at interest rates below those available under the unsecured line of credit.

We have an automatic shelf registration statement on file with the Securities and Exchange Commission which allows us to offer, from time to time, common shares, preferred shares, debt securities, or warrants. Our declaration of trust provides we may issue up to 110,000,000 shares of beneficial interest, consisting of 100,000,000 common shares and 10,000,000 preferred shares. As of December 31, 2008, we had 66,027,911 common shares and no preferred shares outstanding.

We believe our ability to access capital markets is enhanced by our senior unsecured debt ratings by Moody’s and Standard and Poor’s, which are currently Baa1 and BBB+, respectively, as well as the ability to borrow on a secured basis from Fannie Mae or Freddie Mac. However, we may not be able to maintain our current credit ratings and may not be able to borrow on a secured or unsecured basis in the future. The capital and credit markets have been experiencing extreme volatility and disruption, which has caused the spreads on prospective debt financings to widen considerably and have made it more difficult to borrow money. If current levels of market disruption and volatility continue or worsen, we may not be able to obtain new debt financing or refinance our existing debt on favorable terms or at all.

Future Cash Requirements and Contractual Obligations

One of our principal long-term liquidity requirements includes the repayment of maturing debt, including borrowings under our unsecured line of credit used to fund development and acquisition activities. During 2009 approximately $3.9 million of secured mortgage notes and approximately $130.5 million of unsecured debt, including scheduled principal amortizations, are scheduled to mature. See Note 9 of the Notes to Consolidated Financial Statements, “Notes Payable,” for further discussion of scheduled maturities. Additionally, as of December 31, 2008, we had several current development projects in various stages of construction, for which a total estimated cost of approximately $63.4 million remained to be funded; we anticipate funding approximately $6 million of these costs through our unsecured line of credit and the remaining approximate $57 million from existing joint venture construction loans. We intend to meet our long-term liquidity requirements through the use of cash flows from operations, draws on our unsecured credit facility, property dispositions, secured mortgage notes, and debt and equity offerings under our automatic shelf registration statement.

In order for us to continue to qualify as a REIT we are required to distribute annual dividends equal to a minimum of 90% of our REIT taxable income, computed without regards to the dividends paid deduction and our net capital gains. In November 2008, we announced our Board of Trust Managers had declared a dividend distribution of $0.70 per share to our common shareholders of record as of December 4, 2008. The dividend was subsequently paid on January 2, 2009. We paid equivalent amounts per unit to holders of the common operating partnership units. This distribution to common shareholders and holders of common operating partnership units equates to an annualized dividend rate of $2.80 per share or unit.

The following table summarizes our known contractual cash obligations as of December 31, 2008:


(in millions)	Total		2009		2010		2011		2012		2013		Thereafter
Debt maturities (1)	$	2,832.4	$	134.4	$	355.5	$	421.7	$	772.2	$	227.2	$	921.4
Interest payments (2)		658.6		136.6		121.9		101.5		89.2		54.6		154.8
Capital contributions to Fund (3)		32.8		32.8		—		—		—		—		—
Non-cancelable lease payments		14.9		2.5		2.5		2.4		2.0		1.9		3.6
Postretirement benefit obligations		3.0		0.2		0.2		0.2		0.2		0.2		2.0
Construction contracts		63.4		61.5		1.9		—		—		—		—

	$	3,605.1	$	368.0	$	482.0	$	525.8	$	863.6	$	283.9	$	1,081.8


(1)		Includes our line of credit and scheduled principal amortizations.

(2)		Includes contractual interest payments for our line of credit, senior unsecured notes, medium-term notes, and secured notes. Interest payments on hedged loans were calculated based on the interest rates effectively fixed by the interest rate swap agreements. The interest payments on certain secured notes with floating interest rates and our line of credit were calculated based on the interest rates in effect as of December 31, 2008 or the most recent practicable date.

(3)		Contingent on timing of capital calls by the Fund; subject to change.

Off-Balance Sheet Arrangements

The joint ventures in which we have an interest have been funded in part with secured, third-party debt. We are committed to additional funding under mezzanine loans provided to joint ventures. See further discussion of our investments in various joint ventures in Note 7, “Investments in Joint Ventures” and a discussion of our mezzanine construction financing in Note 8, “Notes Receivable” in the Notes to Consolidated Financial Statements.

Inflation

Substantially all of our apartment leases are for a term generally ranging from six to fifteen months. In an inflationary environment, we may realize increased rents at the commencement of new leases or upon the renewal of existing leases. The short-term nature of our leases generally minimizes our risk from the adverse effects of inflation.

Critical Accounting Policies

Critical accounting policies are those most important to the presentation of a company’s financial condition and results, and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We follow financial accounting and reporting policies in accordance with generally accepted accounting principles in the United States of America.

General. A comprehensive enumeration of our significant accounting policies is presented in Note 2 to the accompanying consolidated financial statements as of December 31, 2008 and 2007, and for the years ended December 31, 2008, 2007, and 2006. Each of our policies has been chosen based upon current authoritative literature that collectively comprises accounting principles generally accepted in the United States of America.

Principles of Consolidation. Our consolidated financial statements include our accounts, the accounts of variable interest entities (“VIEs”) in which we are the primary beneficiary, and the accounts of other subsidiaries and joint ventures over which we have control. All intercompany transactions, balances, and profits have been eliminated in consolidation. Investments acquired or created are evaluated based on Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) 46R, “Consolidation of Variable Interest Entities” (as revised), which requires the consolidation of VIEs in which we are considered to be the primary beneficiary. If the investment is determined not to be within the scope of FIN 46R, then the investments are evaluated for consolidation using American Institute of Certified Public Accountants’ Statement of Position 78-9, “Accounting for Investments in Real Estate Ventures,” and Accounting Research Bulletin 51, “Consolidated Financial Statements.” If we are the general partner in a limited partnership, we also consider the guidance of Emerging Issues Task Force Issue 04-5, “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights,” to assess whether any rights held by the limited partners overcome the presumption of control by us.

Use of Estimates. In the application of GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, results of operations during the reporting periods, and related disclosures. Our more significant estimates relate to estimates supporting our impairment analysis related to the carrying values of our real estate assets, estimates of the useful lives of our assets, reserves related to our general liability and employee benefit programs, estimates related to our investments in joint ventures and mezzanine construction financing, and estimates of expected losses of variable interest entities. These estimates are based on historical experience and various other assumptions believed to be reasonable under the circumstances. Future events rarely develop exactly as forecasted, and the best estimates routinely require adjustment.

Income Recognition. Our rental and other property revenue is recorded when due from residents and is recognized monthly as it is earned. Other property revenue consists primarily of utility rebillings and administrative, application, and other transactional fees charged to our residents. Our apartment homes are rented to residents on lease terms generally ranging from six to fifteen months, with monthly payments due in advance. Interest, fee and asset management, and all other sources of income are recognized as earned. Two of our properties are subject to rent control or rent stabilization. Operations of apartment properties acquired are recorded from the date of acquisition in accordance with the purchase method of accounting. In management’s opinion, due to the number of residents, the types and diversity of submarkets in which the properties operate, and the collection terms, there is no significant concentration of credit risk.

Cost Capitalization. Real estate assets are carried at cost plus capitalized carrying charges. Carrying charges are primarily interest and real estate taxes which are capitalized as part of properties under development. Expenditures directly related to the development, acquisition, and improvement of real estate assets, excluding internal costs relating to acquisitions of operating properties, are capitalized at cost as land and buildings and improvements. Indirect development costs, including salaries and benefits and other related costs directly attributable to the development of properties are also capitalized. All construction and carrying costs are capitalized and reported in the balance sheet as properties under development until the apartment homes are substantially completed. Upon substantial completion of the apartment homes, the total cost for the apartment homes and the associated land is transferred to buildings and improvements and land, respectively.

Where possible, we stage our construction to allow leasing and occupancy during the construction period, which we believe minimizes the duration of the lease-up period following completion of construction. Our accounting policy related to properties in the development and leasing phase is all operating expenses associated with completed apartment homes are expensed. We capitalize renovation and improvement costs we believe extend the economic lives of depreciable property. Capital expenditures subsequent to initial construction are capitalized and depreciated over their estimated useful lives, which range from three to twenty years.

Depreciation and amortization is computed over the expected useful lives of depreciable property on a straight-line basis with lives generally as follows:


		Estimated
		Useful Life
Buildings and improvements		5-35 years
Furniture, fixtures, equipment and other		3-20 years
Intangible assets (in-place leases and above and below market leases)		underlying lease term

Derivative Instruments. We utilize derivative financial instruments to manage interest rate risk, and we designate the derivative instruments as cash flow hedges. Derivative instruments are recorded in the balance sheet as either an asset or a liability measured at fair value. For cash flow hedge relationships, changes in the fair value of the derivative instrument deemed effective at offsetting the risk being hedged are reported in other comprehensive income or loss and are reclassified into earnings when the hedged item affects earnings. The ineffective portion is recognized in current period earnings. Derivatives not designated or not qualifying for hedge treatment must be recorded at fair value with gains or losses recognized in earnings in the period of change. We do not use derivative instruments for trading or speculative purposes. We use derivative instruments to reduce the potential impact of changes in interest rates on variable-rate debt.

We formally document all relationships between hedging instruments and hedged items, as well as our risk management objective and strategy for undertaking the hedge. This process includes specific identification of the hedging instrument and the hedged transaction, the nature of the risk being hedged, and how the hedging instrument’s effectiveness in hedging the exposure to the hedged transaction’s variability in cash flows attributable to the hedged risk will be assessed and measured. Both at the inception of the hedge and on an ongoing basis, we assess whether the derivatives used in hedging transactions are highly effective in offsetting changes in cash flows or fair values of hedged items. We discontinue hedge accounting if a derivative is not determined to be highly effective as a hedge or has ceased to be a highly effective hedge.

Accumulated other comprehensive income or loss on the Consolidated Balance Sheets reflects the effective portions of cumulative changes in the fair value of derivatives in qualifying cash flow hedge relationships.

Asset Impairment. Long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment exists if estimated future undiscounted cash flows associated with long-lived assets are not sufficient to recover the carrying value of such assets. When impairment exists the long-lived asset is adjusted to its respective fair value. We consider projected future undiscounted cash flows, trends, strategic decisions regarding future development plans, and other factors in our assessment of whether impairment conditions exist. While we believe our estimates of future cash flows are reasonable, different assumptions regarding such factors as market rents, economies, and occupancies could significantly affect these estimates. In estimating fair value, management uses appraisals, management estimates, or discounted cash flow calculations. In addition, we continually evaluate our investments in joint ventures and mezzanine construction financing and if we believe there is an other than temporary decline in market value, or if it is probable we will not collect all interest and principal in accordance with the terms of the mezzanine loan, we will record an impairment charge based on these evaluations. In general, we provide mezzanine loans to affiliated joint ventures constructing or operating multifamily assets. While we believe it is currently probable we will collect all scheduled principal and interest with respect to these development loans, current market conditions with respect to credit availability and with respect to real estate market fundamentals inject a significant amount of uncertainty into the environment. Given this, any future adverse development in market conditions would cause us to re-evaluate our conclusions, and could result in material impairment charges with respect to our mezzanine loans.

The value of our properties held for development depends on market conditions, including estimates of the project start date as well as estimates of future demand of multifamily communities. We have analyzed trends and other information related to each potential development and have incorporated this information as well as our current outlook into the assumptions we use in our impairment analyses. Due to the judgment and assumptions applied in the estimation process with respect to impairments, including the fact that limited market information regarding the value of comparable land exists at this time, it is possible actual results could differ substantially from those estimated.

We believe the carrying value of our operating real estate assets, properties under development, and land is currently recoverable. However, if market conditions worsen beyond our current expectations, or if changes in our development strategy significantly affect any key assumptions used in our fair value calculations, we may need to take additional charges in future periods for impairments related to existing assets. Any such non-cash charges would have an adverse effect on our consolidated financial position and results of operations.

We do not purchase land for resale. However, when we own land or communities which no longer fit into our plans and we determine the best use of the asset is the sale of the asset, the asset is accounted for as properties held for sale, including land, assuming the held for sale criteria defined in Statement of Financial Accounting Standards (“SFAS”) 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” are met. We record land held for sale at the lesser of its carrying value or fair value less estimated costs to sell.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS 157, “Fair Value Measurements.” SFAS 157 defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. The statement does not require new fair value measurements, but is applied to the extent other accounting pronouncements require or permit fair value measurements. The statement emphasizes fair value as a market-based measurement which should be determined based on assumptions market participants would use in pricing an asset or a liability. In February 2008, the FASB issued FSP 157-2, “Effective Date of FASB Statement 157,” which deferred the effective date of SFAS 157 for us to January 1, 2009 for all nonfinancial assets and nonfinancial liabilities, except for those which are recognized or disclosed at fair value in the financial statements on a recurring basis. We have adopted FAS 157 for nonfinancial assets and nonfinancial liabilities effective January 1, 2009, and this adoption has not and is not expected to materially affect how we determine fair value.

In December 2007, the FASB issued SFAS 141R, “Business Combinations,” which replaced SFAS 141, "Business Combinations.” SFAS 141R applies to all transactions or events in which an entity obtains control of one or more businesses. SFAS 141R requires the acquiring entity in a business combination to recognize the full fair value of assets acquired and liabilities assumed in the transaction (whether a full or partial acquisition); establishes the acquisition date fair value as the measurement objective for all assets acquired and liabilities assumed; requires expensing of most transaction and restructuring costs; and requires the acquirer to disclose to investors and other users all of the information needed to evaluate and understand the nature and financial impact of the business combination. SFAS 141R is effective for us for business combinations made on or after January 1, 2009. We expect the adoption of SFAS 141R to have a material effect on our accounting for future acquisitions of properties, which may fall under the definition of a business, as most transaction costs associated with such acquisitions will be expensed as opposed to the prior treatment of such charges as capitalized costs.

In December 2007, the FASB issued SFAS 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB 51.” SFAS 160 clarifies a noncontrolling interest in a subsidiary is an ownership interest in a consolidated entity which should be reported as equity in the parent’s consolidated financial statements. SFAS 160 requires a reconciliation of the beginning and ending balances of equity attributable to non-controlling interests and disclosure, on the face of the consolidated income statements, of those amounts of consolidated net income attributable to the non-controlling interest, eliminating the past practice of reporting these amounts as an adjustment in arriving at consolidated net income. SFAS 160 also requires a parent to recognize a gain or loss in net income when a subsidiary is deconsolidated and requires the parent to attribute to a noncontrolling interest its share of losses, even if such treatment results in a deficit non-controlling interests balance within the parent’s equity accounts. SFAS 160 was effective for us on January 1, 2009 and the presentation and disclosure provisions have been applied retrospectively within these financial statements.

Upon our adoption of SFAS 160, we reclassified balances related to minority interest relating to the common units in (i) Camden Operating, L.P., (ii) Oasis Martinique, LLC, (iii) Camden Summit Partnership, L.P., and (iv) other minority interest in consolidated real estate joint ventures into our consolidated equity accounts and these are now classified as noncontrolling interest. The noncontrolling interest reclassification amount at December 31, 2008 and 2007 was approximately $89.9 million and $122.0 million, respectively. The minority interest relating to cumulative redeemable perpetual preferred units in Camden Operating, L.P. of $97.9 million will remain classified between liability and equity pursuant to EITF D-98, “Classification and Measurement of Redeemable Securities.” See Note 17, “Retrospective Adoption of Recent Accounting Pronouncements,” for further disclosure requirements of noncontrolling interest.

In June 2008, the FASB issued FASB Staff Position (“FSP”) 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities.” FSP 03-6-1 affects entities which accrue non-returnable cash dividends on share-based payment awards during the awards’ service period. The FASB concluded unvested share-based payment awards which are entitled to non-forfeitable cash dividends, whether paid or unpaid, are participating securities and are participants of undistributed earnings. Because the awards are considered participating securities, the issuer is required to apply the two-class method of computing basic and diluted earnings per share which involves separate computations for common shares and participating securities. As we do accrue and pay non-forfeitable cash dividends on unvested share-based payment awards, these types of awards are considered participating securities and will be included in our earnings per share calculation in future periods. FSP 03-6-1 was effective for us on January 1, 2009 and retrospective application has been applied in these financial statements. The retrospective application of our adoption of this FSP resulted in an impact to basic and diluted earnings per share of $0.00, $0.01, and $0.03 for the years ended December 31, 2008, 2007, and 2006, respectively.

In October 2008, the FASB issued FSP 157-3, “Determining the Fair Value of a Financial Asset When the Market for that Asset is Not Active.” FSP 157-3 clarifies the application of SFAS 157, “Fair Value Measurements” in a non-active market. FSP 157-3 became effective upon issuance, including prior periods for which financial statements have not been issued. We adopted FSP 157-3 upon issuance, and it did not have a material impact on our consolidated financial position, results of operations, or cash flows.

Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trust Managers and Shareholders of
Camden Property Trust
Houston, Texas

We have audited the accompanying consolidated balance sheets of Camden Property Trust and subsidiaries (the “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of income and comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedules included in Item 8. These financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Camden Property Trust and subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2009 expressed an unqualified opinion on the Company’s internal control over financial reporting.

Houston, Texas
February 18, 2009
(May 4, 2009 as to Note 17)

CAMDEN PROPERTY TRUST
CONSOLIDATED BALANCE SHEETS


	December 31,
(in thousands, except per share amounts)	2008			2007
Assets
Real estate assets, at cost
Land	$	744,059		$	730,548
Buildings and improvements		4,447,587			4,316,472

		5,191,646			5,047,020
Accumulated depreciation		(981,049	)		(868,074	)

Net operating real estate assets		4,210,597			4,178,946
Properties under development and land		264,188			446,664
Investments in joint ventures		15,106			8,466
Properties held for sale, including land		20,653			25,253

Total real estate assets		4,510,544			4,659,329

Accounts receivable — affiliates		37,000			35,940
Notes receivable
Affiliates		58,109			50,358
Other		8,710			11,565
Other assets, net		103,013			126,996
Cash and cash equivalents		7,407			897
Restricted cash		5,559			5,675

Total assets	$	4,730,342		$	4,890,760


Liabilities and shareholders’ equity
Liabilities
Notes payable
Unsecured	$	2,103,187		$	2,265,319
Secured		729,209			562,776
Accounts payable and accrued expenses		82,575			107,403
Accrued real estate taxes		23,600			24,943
Distributions payable		42,936			42,689
Other liabilities		149,554			136,365

Total liabilities		3,131,061			3,139,495

Commitments and contingencies

Minority interests
Perpetual preferred units		97,925			97,925

Shareholders’ equity
Common shares of beneficial interest; $0.01 par value per share; 100,000 shares authorized; 68,770 and 68,030 issued; 66,028 and 65,434 outstanding at December 31, 2008 and 2007, respectively		660			654
Additional paid-in capital		2,237,703			2,209,631
Distributions in excess of net income attributable to common shareholders		(312,309	)		(227,025	)
Employee notes receivable		(295	)		(1,950	)
Treasury shares, at cost		(463,209	)		(433,874	)
Accumulated other comprehensive loss		(51,056	)		(16,123	)

Total common shareholders’ equity		1,411,494			1,531,313
Noncontrolling interest		89,862			122,027

Total shareholders’ equity		1,501,356			1,653,340

Total liabilities and shareholders’ equity	$	4,730,342		$	4,890,760

See Notes to Consolidated Financial Statements.

CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


	Year Ended December 31,
(in thousands, except per share amounts)	2008			2007			2006

Property revenues
Rental revenues	$	547,718		$	525,497		$	510,129
Other property revenues		76,298			62,822			50,900

Total property revenues		624,016			588,319			561,029
Property expenses
Property operating and maintenance		168,883			155,181			151,595
Real estate taxes		70,032			62,169			59,026

Total property expenses		238,915			217,350			210,621
Non-property income
Fee and asset management		9,167			8,293			14,041
Sale of technology investments		—			623			1,602
Interest and other income		4,736			8,804			9,771
Income (loss) on deferred compensation plans		(33,443	)		7,282			10,116

Total non-property income (loss)		(19,540	)		25,002			35,530
Other expenses
Property management		19,910			18,413			18,490
Fee and asset management		6,054			4,552			9,382
General and administrative		31,586			32,590			37,584
Interest		132,399			115,753			117,348
Depreciation and amortization		171,814			157,297			149,206
Amortization of deferred financing costs		2,958			3,661			3,782
Expense (benefit) on deferred compensation plans		(33,443	)		7,282			10,116

Total other expenses		331,278			339,548			345,908
Income from continuing operations before gain on sale of properties, gain on early retirement of debt, impairment loss on land, equity in income (loss) of joint ventures, distributions on perpetual preferred units, and income taxes		34,283			56,423			40,030
Gain on sale of properties, including land		2,929			—			97,452
Gain on early retirement of debt		13,566			—			—
Impairment loss on land		(51,323	)		(1,447	)		—
Equity in income (loss) of joint ventures		(1,265	)		1,526			5,156
Distributions on perpetual preferred units		(7,000	)		(7,000	)		(7,000	)

Income (loss) from continuing operations before income taxes		(8,810	)		49,502			135,638
Income tax expense — current		(843	)		(3,052	)		—

Income (loss) from continuing operations		(9,653	)		46,450			135,638
Income from discontinued operations		4,480			13,214			15,927
Gain on sale of discontinued operations, including land, net of tax		80,198			107,039			99,273

Net income		75,025			166,703			250,838
Less income allocated to noncontrolling interest from continuing operations		(4,052	)		(4,729	)		(15,685	)
Less income allocated to noncontrolling interest from discontinued operations		—			(13,517	)		(2,307	)

Net income attributable to common shareholders	$	70,973		$	148,457		$	232,846

See Notes to Consolidated Financial Statements.

CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


	Year Ended December 31,
(In thousands, except per share amounts)	2008			2007			2006
Earnings per share — basic
Income (loss) from continuing operations attributable to common shareholders	$	(0.25	)	$	0.71		$	2.09
Income from discontinued operations attributable to common shareholders, including gain on sale and income allocated to common units		1.53			1.83			1.99

Net income attributable to common shareholders	$	1.28		$	2.54		$	4.08

Earnings per share — diluted
Income (loss) from continuing operations attributable to common shareholders	$	(0.25	)	$	0.70		$	2.03
Income from discontinued operations attributable to common shareholders, including gain on sale and income allocated to common units		1.53			1.80			1.90

Net income attributable to common shareholders	$	1.28		$	2.50		$	3.93

Distributions declared per common share	$	2.80		$	2.76		$	2.64

Weighted average number of common shares outstanding		55,272			58,135			56,660
Weighted average number of common and common dilutive equivalent shares outstanding		55,272			59,125			59,524

Net income attributable to common shareholders
Income (loss) from continuing operations		(9,653	)		46,450			135,638
Less income allocated to noncontrolling interest from continuing operations		(4,052	)		(4,729	)		(15,685	)

Income (loss) from continuing operations attributable to common shareholders		(13,705	)		41,721			119,953
Income from discontinued operations, including gain on sale		84,678			120,253			115,200
Less income allocated to noncontrolling interest from discontinued operations		—			(13,517	)		(2,307	)

Income (loss) from discontinued operations attributable to common shareholders		84,678			106,736			112,893

Net income attributable to common shareholders	$	70,973		$	148,457		$	232,846

Consolidated Statements of Comprehensive Income
Net income	$	75,025		$	166,703		$	250,838
Other comprehensive income (loss)
Unrealized loss on cash flow hedging activities		(35,069	)		(16,123	)		—
Gain on postretirement obligations		136			—			—

Comprehensive income		40,092			150,580			250,838
Less income allocated to noncontrolling interest from continuing operations		(4,052	)		(4,729	)		(15,685	)
Less income allocated to noncontrolling interest from discontinued operations		—			(13,517	)		(2,307	)

Comprehensive income (loss) attributable to common shareholders	$	36,040		$	132,334		$	232,846

See Notes to Consolidated Financial Statements.

CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS AND SHAREHOLDERS’ EQUITY


	Common Shareholders
																Accumulated
	Common shares						Distributions in									Other						Total
	of beneficial			Additional paid-			excess of net			Employee notes			Treasury shares			comprehensive			Non-controlling			shareholders’
(in thousands, except per share amounts)	interest			in capital			income			receivable			at cost			loss			interest			equity
Shareholders’ Equity, January 1, 2006	$	608		$	1,902,595		$	(295,074	)	$	(2,078	)	$	(235,148	)	$	—		$	123,099		$	1,494,002
Net income								232,846												17,992			250,838
Other comprehensive income																	—						—
Common shares issued (3,600) shares		36			254,895																		254,931
Common shares issued under dividend reinvestment plan					30																		30
Share awards issued under benefit plan (317 shares)		3			(1	)								(2	)								—
Share awards canceled under benefit plan (31 shares)					—																		—
Amortization of previously granted share awards					12,964																		12,964
Employee share purchase plan					1,359									935									2,294
Repayment of employee notes receivable, net											42												42
Share awards placed into deferred plans (97 shares)		(1	)		1																		—
Common share options exercised (119 shares)		1			5,293																		5,294
Issuance of operating partnership units																				1,900			1,900
Conversions and redemptions of operating partnership units (334 shares)		3			6,486															(6,659	)		(170	)
Cash distributions ($2.64 per share)								(151,437	)											(10,745	)		(162,182	)

Shareholders’ equity, December 31, 2006	$	650		$	2,183,622		$	(213,665	)	$	(2,036	)	$	(234,215	)	$	—		$	125,587		$	1,859,943

Net income								148,457												18,246			166,703
Other comprehensive income																	(16,123	)					(16,123	)
Common shares issued under dividend reinvestment plan					38																		38
Share awards issued under benefit plan (282 shares)		3			18									(64	)								(43	)
Share awards canceled under benefit plan (65 shares)		(1	)		1																		—
Amortization of previously granted share awards					9,327																		9,327
Employee share purchase plan					817									562									1,379
Repayment of employee notes receivable, net											86												86
Share awards placed into deferred plans (151 shares)		(2	)		2																		—
Common share options exercised (96 shares)		1			4,333																		4,334
Conversions and redemptions of operating partnership units (266 shares)		3			11,473															(11,786	)		(310	)
Common shares repurchased (3,604 shares)														(200,157	)								(200,157	)
Cumulative effect of a change in accounting principle								(2,496	)														(2,496	)
Noncontrolling interest issued in connection with real estate contribution																				532			532
Cash distributions ($2.76 per share)								(159,321	)											(10,552	)		(169,873	)

Shareholders’ equity, December 31, 2007	$	654		$	2,209,631		$	(227,025	)	$	(1,950	)	$	(433,874	)	$	(16,123	)	$	122,027		$	1,653,340

Net income								70,973												4,052			75,025
Other comprehensive income (loss)																	(34,933	)					(34,933	)
Common shares issued under dividend reinvestment plan					7																		7
Share awards issued under benefit plan (268 shares)		3			(3	)																	—
Share awards canceled under benefit plan (36 shares)		—			—																		—
Amortization of previously granted share awards					10,221																		10,221
Employee share purchase plan					142									740									882
Repayment of employee notes receivable, net											1,655												1,655
Share awards placed into deferred plans (147 shares)		(2	)		2																		—
Common share options exercised (45 shares)		—			2,155																		2,155
Conversions and redemptions of operating partnership units (464 shares)		5			15,548															(18,610	)		(3,057	)
Common shares repurchased (695 shares)														(30,075	)								(30,075	)
Purchase of noncontrolling interest																				(8,573	)		(8,573	)
Cash distributions ($2.80 per share)								(156,257	)											(9,034	)		(165,291	)

Shareholders’ equity, December 31, 2008	$	660		$	2,237,703		$	(312,309	)	$	(295	)	$	(463,209	)	$	(51,056	)	$	89,862		$	1,501,356

See Notes to Consolidated Financial Statements.

CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended December 31,
(in thousands)	2008			2007			2006
Cash flows from operating activities
Net income	$	75,025		$	166,703		$	250,838
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization, including discontinued operations		169,151			157,137			159,860
Gain on sale of discontinued operations		(80,198	)		(107,039	)		(99,273	)
Impairment loss on land		51,323			1,447			—
Gain on early retirement of debt		(13,566	)		—			—
Distributions on perpetual preferred units		7,000			7,000			7,000
Share-based compensation		7,663			7,547			11,619
Distributions of income from joint ventures		5,392			5,406			—
Amortization of deferred financing costs		2,975			3,689			3,813
Equity in loss (income) of joint ventures		1,265			(1,526	)		(5,156	)
Accretion of discount on unsecured notes payable		571			590			694
Gain on sale of technology investments		—			(623	)		(1,602	)
Gain on sale of properties, including land		(2,929	)		—			(97,452	)
Interest on notes receivable — affiliates		(3,688	)		(4,112	)		(108	)
Net change in operating accounts		(3,026	)		(13,113	)		1,336

Net cash from operating activities	$	216,958		$	223,106		$	231,569


Cash flows from investing activities
Development and capital improvements		(199,269	)		(417,789	)		(334,339	)
Proceeds from sales of properties, including land and discontinued operations		123,513			171,757			181,963
Proceeds from partial sales of assets to joint ventures		52,509			—			213,720
Investments in joint ventures		(10,444	)		(6,015	)		(3,147	)
Distributions of investments from joint ventures		1,058			6,525			47,922
Acquisition of operating properties		—			(83,031	)		(109,961	)
Payment of merger related liabilities		—			—			(8,233	)
Earnest money deposits on potential transactions		—			(340	)		(4,803	)
Increase in notes receivable — affiliates		(3,487	)		(3,154	)		(41,615	)
Payments received on notes receivable — other		2,855			1,000			9,406
Change in restricted cash		116			(954	)		368
Proceeds from the sale of technology investments		—			623			1,602
Issuance of notes receivable — other		—			(8,710	)		—
Other		(4,225	)		(6,710	)		(4,950	)

Net cash from investing activities	$	(37,374	)	$	(346,798	)	$	(52,067	)

See Notes to Consolidated Financial Statements.

CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended December 31,
(in thousands)	2008			2007			2006
Cash flows from financing activities
Proceeds from notes payable	$	385,927		$	807,990		$	—
Repayment of notes payable		(379,213	)		(213,376	)		(227,284	)
Net increase (decrease) in unsecured line of credit and short-term borrowings		30,000			(91,000	)		(45,000	)
Payment of deferred financing costs		(4,321	)		(5,113	)		(2,945	)
Distributions to shareholders, minority interests and noncontrolling interest		(172,332	)		(178,142	)		(166,234	)
Repurchase of common shares and units		(33,133	)		(200,467	)		(170	)
Common share options exercised		1,729			3,795			4,155
Repayment of employee notes receivable		1,679			190			150
Proceeds from issuance of common shares		—			—			254,931
Net increase (decrease) in accounts receivable — affiliates		(929	)		(1,452	)		382
Other		(2,481	)		1,130			1,971

Net cash from financing activities	$	(173,074	)	$	123,555		$	(180,044	)

Net increase (decrease) in cash and cash equivalents		6,510			(137	)		(542	)
Cash and cash equivalents, beginning of year		897			1,034			1,576

Cash and cash equivalents, end of year	$	7,407		$	897		$	1,034

Supplemental information
Cash paid for interest, net of interest capitalized	$	136,172		$	114,531		$	121,396
Cash paid for income taxes		1,651			2,555			—
Supplemental schedule of non-cash investing and financing activities
Distributions declared but not paid	$	42,937		$	42,693		$	43,068
Decrease (increase) in liabilities associated with construction and capital expenditures		24,167			40			(5,261	)
Conversion of operating partnership units to common shares		15,793			11,638			6,569
Debt disposed of through disposition		14,010			—			—
Value of shares issued under benefit plans, net of cancellations		10,766			15,381			16,144
Contribution of real estate assets to joint ventures		10,523			—			33,493
Assumption of debt by joint venture		—			—			30,525
Cancellation of notes receivable — affiliate in connection with property acquisition		—			—			12,053
Acquisition of Summit, net of cash acquired, at fair value		—			—			1,900
Assets acquired		—			—			1,881
Liabilities assumed		—			—			1,881
Noncontrolling interest issued in connection with real estate contribution		—			532			—

See Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business

Formed on May 25, 1993, Camden Property Trust, a Texas real estate investment trust (“REIT”), is engaged in the ownership, development, construction, and management of multifamily apartment communities. Our multifamily apartment communities are referred to as “communities,” “multifamily communities,” “properties,” or “multifamily properties” in the following discussion. As of December 31, 2008, we owned interests in, operated, or were developing 186 multifamily properties comprising 64,329 apartment homes across the United States. We had 1,426 apartment homes under development at five of our multifamily properties, including 1,060 apartment homes at four multifamily properties owned through joint ventures, in which we own an interest, in addition to other sites we may develop into multifamily apartment communities. Additionally, one property comprised of 671 apartment homes was designated as held for sale.

2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Principles of Consolidation. Our consolidated financial statements include our accounts, the accounts of variable interest entities (“VIEs”) in which we are the primary beneficiary, and the accounts of other subsidiaries and joint ventures over which we have control. All intercompany transactions, balances, and profits have been eliminated in consolidation. Investments acquired or created are evaluated based on Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) 46R, “Consolidation of Variable Interest Entities” (as revised), which requires the consolidation of VIEs in which we are considered to be the primary beneficiary. If the investment is determined not to be within the scope of FIN 46R, then the investments are evaluated for consolidation using American Institute of Certified Public Accountants’ Statement of Position 78-9, “Accounting for Investments in Real Estate Ventures,” and Accounting Research Bulletin 51, “Consolidated Financial Statements.” If we are the general partner in a limited partnership, we also consider the guidance of Emerging Issues Task Force Issue 04-5, “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights,” to assess whether any rights held by the limited partners overcome the presumption of control by us.

Allocations of Purchase Price. Upon the acquisition of real estate, we allocate the purchase price between tangible and intangible assets, which includes land, buildings, furniture and fixtures, the value of in-place leases, including above and below market leases, and acquired liabilities. When allocating the purchase price to acquired properties, we allocate costs to the estimated intangible value of in-place leases and above or below market leases and to the estimated fair value of furniture and fixtures, land and buildings on a value determined by assuming the property was vacant by applying methods similar to those used by independent appraisers of income-producing property. Depreciation and amortization is computed on a straight-line basis over the remaining useful lives of the related assets. The value of in-place leases and above or below market leases is amortized over the estimated average remaining life of leases in place at the time of acquisition. Estimates of fair value of acquired debt are based upon interest rates available for the issuance of debt with similar terms and remaining maturities.

Asset Impairment. Long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment exists if estimated future undiscounted cash flows associated with long-lived assets are not sufficient to recover the carrying value of such assets. When impairment exists the long-lived asset is adjusted to its respective fair value. We consider projected future undiscounted cash flows, trends, strategic decisions regarding future development plans, and other factors in our assessment of whether impairment conditions exist. While we believe our estimates of future cash flows are reasonable, different assumptions regarding such factors as market rents, economies, and occupancies could significantly affect these estimates. In estimating fair value, management uses appraisals, management estimates, or discounted cash flow calculations. In addition, we continually evaluate our investments in joint ventures and mezzanine construction financing and if we believe there is an other than temporary decline in market value, or if it is probable we will not collect all interest and principal in accordance with the terms of the mezzanine loan, we will record an impairment charge based on these evaluations. In general, we provide mezzanine loans to affiliated joint ventures constructing or operating multifamily assets. While we believe it is currently probable we will collect all scheduled principal and interest with respect to these development loans, current market conditions with respect to credit availability and with respect to real estate market fundamentals inject a significant amount of uncertainty into the environment. Given this, any future adverse development in market conditions would cause us to re-evaluate our conclusions, and could result in material impairment charges with respect to our mezzanine loans.

The value of our properties held for development depends on market conditions, including estimates of the project start date as well as estimates of demand of multifamily communities. We have analyzed trends and other information related to each potential development and have incorporated this information as well as our current outlook into the assumptions we use in our impairment analyses. Due to the judgment and assumptions applied in the estimation process with respect to impairments, including the fact that limited market information regarding the value of comparable land exists at this time, it is possible actual results could differ substantially from those estimated.

Cash and Cash Equivalents. All cash and investments in money market accounts and other highly liquid securities with a maturity of three months or less at the date of purchase are considered to be cash and cash equivalents.

Cost Capitalization. Real estate assets are carried at cost plus capitalized carrying charges. Carrying charges are primarily interest and real estate taxes which are capitalized as part of properties under development. Expenditures directly related to the development, acquisition, and improvement of real estate assets, excluding internal costs relating to acquisitions of operating properties, are capitalized at cost as land and buildings and improvements. Indirect development costs, including salaries and benefits and other related costs directly attributable to the development of properties are also capitalized. All construction and carrying costs are capitalized and reported in the balance sheet as properties under development until the apartment homes are substantially completed. Upon substantial completion of the apartment homes, the total cost for the apartment homes and the associated land is transferred to buildings and improvements and land, respectively.

As discussed above, carrying charges are principally interest and real estate taxes capitalized as part of properties under development and buildings and improvements. Capitalized interest was approximately $17.7 million, $22.6 million, and $20.6 million in 2008, 2007, and 2006, respectively. Capitalized real estate taxes were approximately $3.4 million, $3.5 million, and $2.6 million in 2008, 2007, and 2006, respectively.

Depreciation and amortization is computed over the expected useful lives of depreciable property on a straight-line basis with lives generally as follows:


		Estimated
		Useful Life
Buildings and improvements		5-35 years
Furniture, fixtures, equipment and other		3-20 years
Intangible assets (in-place leases and above and below market leases)		underlying lease term

Derivative Instruments. We utilize derivative financial instruments to manage interest rate risk, and we designate the derivative instruments as cash flow hedges. Derivative instruments are recorded in the balance sheet as either an asset or a liability measured at fair value. For cash flow hedge relationships, changes in the fair value of the derivative instrument deemed effective at offsetting the risk being hedged are reported in other comprehensive income or loss and are reclassified into earnings when the hedged item affects earnings. The ineffective portion is recognized in current period earnings. Derivatives not designated or not qualifying for hedge treatment must be recorded at fair value with gains or losses recognized in earnings in the period of change. We do not use derivative instruments for trading or speculative purposes. We use derivative instruments to reduce the potential impact of changes in interest rates on variable-rate debt.

See Note 10, “Derivative Instruments and Hedging Activities,” for further discussion of derivative financial instruments.

Accumulated other comprehensive income or loss in the Consolidated Balance Sheets includes the effective portions of cumulative changes in the fair value of derivatives in qualifying cash flow hedge relationships.

Discontinued Operations. The results of operations for properties sold during the period or classified as held for sale at the end of the current period are required to be classified as discontinued operations in the current and prior periods. The property-specific components of earnings that are classified as discontinued operations include separately identifiable property-specific revenues, expenses, depreciation and interest expense, if any. The gain or loss resulting from the eventual disposal of the held for sale properties is also classified as discontinued operations. Real estate assets held for sale are measured at the lower of carrying amount or fair value less costs to sell, and are presented separately in the accompanying consolidated balance sheets. Subsequent to classification of a property as held for sale, no further depreciation is recorded. Properties sold by our unconsolidated entities are not included in discontinued operations and related gains or losses are reported as a component of equity in income of joint ventures.

Gains on sale of real estate are recognized using the full accrual or partial sale methods, as applicable, in accordance with SFAS No. 66 “Accounting for Real Estate Sales,” provided various criteria relating to the terms of sale and any subsequent involvement with the real estate sold are met.

Income Recognition. Our rental and other property revenue is recorded when due from residents and is recognized monthly as it is earned. Other property revenue consists primarily of utility rebillings and administrative, application, and other transactional fees charged to our residents. Our apartment homes are rented to residents on lease terms generally ranging from six to fifteen months, with monthly payments due in advance. Interest, fee and asset management, and all other sources of income are recognized as earned. Two of our properties are subject to rent control or rent stabilization. Operations of apartment properties acquired are recorded from the date of acquisition in accordance with the purchase method of accounting. In management’s opinion, due to the number of residents, the types and diversity of submarkets in which the properties operate, and the collection terms, there is no significant concentration of credit risk.

Insurance. Our primary lines of insurance coverage are property, general liability, and health and workers’ compensation. We believe our insurance coverage adequately insures our properties against the risk of loss attributable to fire, earthquake, hurricane, tornado, flood and other perils and adequately insures us against other risks. Losses are accrued based upon our estimates of the aggregate liability for claims incurred using certain actuarial assumptions followed in the insurance industry and based on our experience.

Other Assets, Net. Other assets in our consolidated financial statements include investments under deferred compensation plans, deferred financing costs, non-real estate leasehold improvements and equipment, prepaid expenses, the value of in-place leases net of related accumulated amortization, and other miscellaneous receivables. Investments under deferred compensation plans are classified as trading securities and are adjusted to fair market value at period end. See further discussion of our investments under deferred compensation plans in Note 11, “Share Based Compensation and Benefit Plans.” Deferred financing costs are amortized over the terms of the related debt on the straight-line method, which approximates the effective interest method. Corporate leasehold improvements and equipment are depreciated using the straight-line method over the shorter of the expected useful lives or the lease terms which range from three to ten years.

Reclassifications. Certain reclassifications have been made to amounts in prior period financial statements to conform to the current period presentations. We reclassified one property previously included in discontinued operations to continuing operations during the three months ended June 30, 2008 as management made the decision not to sell this asset. As a result, we adjusted the current and prior period consolidated financial statements to reflect this reclassification. Additionally, we recorded a depreciation charge of approximately $0.6 million during the year ended December 31, 2008 on this asset in accordance with the provisions of SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”

Reportable Segments. Our multifamily communities are geographically diversified throughout the United States, and management evaluates operating performance on an individual property level. As each of our apartment communities has similar economic characteristics, residents, and products and services, our apartment communities have been aggregated into one reportable segment. Our multifamily communities generate rental revenue and other income through the leasing of apartment homes, which comprised 98%, 97%, and 96% of our total consolidated revenues, excluding income or loss on deferred compensation plans, for the years ended December 31, 2008, 2007, and 2006, respectively.

Restricted Cash. Restricted cash consists of escrow deposits held by lenders for property taxes, insurance and replacement reserves, cash required to be segregated for the repayment of residents’ security deposits, and escrowed amounts related to our development activities. Substantially all restricted cash is invested in demand and short-term instruments.

Share Based Compensation. Compensation expense associated with share-based awards under SFAS 123R is recognized in our consolidated statements of income and comprehensive income using the grant-date fair values. Compensation cost for all share based awards, including options, requires measurement at estimated fair value on the grant date and recognition of compensation expense over the requisite service period for awards expected to vest. Share awards can have vesting periods of up to ten years. The fair value of stock option grants was estimated using the Black-Scholes valuation model. The compensation cost for share awards is based on the market value of the shares on the date of grant.

Use of Estimates. In the application of accounting principles generally accepted in the United States of America (“GAAP”), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, results of operations during the reporting periods, and related disclosures. Our more significant estimates relate to estimates supporting our impairment analysis related to the carrying values of our real estate assets, estimates of the useful lives of our assets, reserves related to our general liability and employee benefit programs, estimates related to our investments in joint ventures and mezzanine construction financing, and estimates of expected losses of variable interest entities. These estimates are based on historical experience and various other assumptions believed to be reasonable under the circumstances. Future events rarely develop exactly as forecasted, and the best estimates routinely require adjustment.

Recent Accounting Pronouncements. In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) 157, “Fair Value Measurements.” SFAS 157 defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. The statement does not require new fair value measurements, but is applied to the extent other accounting pronouncements require or permit fair value measurements. The statement emphasizes fair value as a market-based measurement which should be determined based on assumptions market participants would use in pricing an asset or a liability. In February 2008, the FASB issued FSP 157-2, “Effective Date of FASB Statement 157,” which deferred the effective date of SFAS 157 for us to January 1, 2009 for all nonfinancial assets and nonfinancial liabilities, except for those which are recognized or disclosed at fair value in the financial statements on a recurring basis. We have adopted FAS 157 for nonfinancial assets and nonfinancial liabilities effective January 1, 2009, and this adoption has not and is not expected to materially affect how we estimate fair value, although future disclosures regarding how we develop fair value estimates for nonfinancial assets and liabilities is expected to be enhanced. In October 2008, the FASB issued FSP 157-3, “Determining the Fair Value of a Financial Asset When the Market for that Asset is Not Active.” FSP 157-3 clarifies the application of SFAS 157 in a non-active market. FSP 157-3 became effective upon issuance, including prior periods for which financial statements have not been issued. We adopted FSP 157-3 upon issuance, and it did not have a material impact on our estimated fair value measurements.

In December 2007, the FASB issued SFAS 141R, “Business Combinations,” which replaced SFAS 141, “Business Combinations.” SFAS 141R applies to all transactions or events in which an entity obtains control of one or more businesses. SFAS 141R requires the acquiring entity in a business combination to recognize the full fair value of assets acquired and liabilities assumed in the transaction (whether a full or partial acquisition); establishes the acquisition date fair value as the measurement objective for all assets acquired and liabilities assumed; requires expensing of most transaction and restructuring costs; and requires the acquirer to disclose to investors and other users all of the information needed to evaluate and understand the nature and financial impact of the business combination. SFAS 141R is effective for us for business combinations made on or after January 1, 2009. We expect the adoption of SFAS 141R to have a material effect on our accounting for acquisitions of properties, which may fall under the definition of a business, as most transaction costs associated with such acquisitions will be expensed as opposed to the prior capitalization of such costs.

In December 2007, the FASB issued SFAS 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB 51.” SFAS 160 clarifies a non-controlling interest in a subsidiary is an ownership interest in a consolidated entity which should be reported as equity in the parent’s consolidated financial statements. SFAS 160 requires a reconciliation of the beginning and ending balances of equity attributable to non-controlling interests and disclosure, on the face of the consolidated income statements, of those amounts of consolidated net income attributable to the non-controlling interest, eliminating the past practice of reporting these amounts as an adjustment in arriving at consolidated net income. SFAS 160 also requires a parent to recognize a gain or loss in net income when a subsidiary is deconsolidated and requires the parent to attribute to a non-controlling interest its share of losses, even if such treatment results in a deficit non-controlling interests balance within the parent’s equity accounts. SFAS 160 was effective for us on January 1, 2009 and the presentation and disclosure provisions have been applied retrospectively within these financial statements.

Upon our adoption of SFAS 160, we reclassified balances related to minority interest relating to the common units in (i) Camden Operating, L.P., (ii) Oasis Martinique, LLC, (iii) Camden Summit Partnership, L.P., and (iv) other minority interest in consolidated real estate joint ventures into our consolidated equity accounts and these are now classified as noncontrolling interest. The noncontrolling interest reclassification amount at December 31, 2008 and 2007 was approximately $89.9 million and $122.0 million, respectively. The minority interest relating to cumulative redeemable perpetual preferred units in Camden Operating, L.P. of $97.9 million will remain classified between liability and equity pursuant to EITF D-98, “Classification and Measurement of Redeemable Securities.” See Note 17, “Retrospective Adoption of Recent Accounting Pronouncements,” for further disclosure requirements of noncontrolling interest.

3. Share Data

Basic earnings per share are computed using income (loss) from continuing operations and the weighted average number of common shares outstanding. Diluted earnings per share reflect common shares issuable from the assumed conversion of common share options and awards granted and units convertible into common shares. Only those items that have a dilutive impact on our basic earnings per share are included in diluted earnings per share. We have reflected the adoption of FSP 03-6-1 within these financial statements. For the years ended December 31, 2008, 2007, and 2006, 5.2 million, 4.3 million, and 2.8 million common share options and awards granted and units convertible into common shares, respectively, were excluded from the diluted earnings per share calculation as they were not determined to be dilutive.

The following table presents information necessary to calculate basic and diluted earnings per share for the periods indicated:


	Year Ended December 31,
(in thousands, except per share amounts)	2008			2007			2006
Basic earnings per share calculation
Income (loss) from continuing operations attributable to common shareholders	$	(13,705	)	$	41,721		$	119,953
Amount allocated to participating securities		(329	)		(934	)		(1,929	)

Income from continuing operations attributable to common shareholders, net of amount allocated to participating securities, as adjusted	$	(14,034	)	$	40,787		$	118,024

Income from discontinued operations attributable to common shareholders, including gain on sale		84,678			106,736			112,893

Net income attributable to common shareholders, as adjusted — basic	$	70,644		$	147,523		$	230,917


Income from continuing operations attributable to common shareholders, as adjusted — per share	$	(0.25	)	$	0.71		$	2.09
Income from discontinued operations attributable to common shareholders, including gain on sale — per share		1.53			1.83			1.99

Net income attributable to common shareholders, as adjusted — per share	$	1.28		$	2.54		$	4.08


Weighted average number of common shares outstanding		55,272			58,135			56,660

Diluted earnings per share calculation
Income from continuing operations attributable to common shareholders, net of amount allocated to participating securities	$	(14,034	)	$	40,787		$	118,024
Income from continuing operations allocated to common units		—			27			2,432

Income from continuing operations attributable to common shareholders, as adjusted		(14,034	)		40,814			120,456
Income from discontinued operations attributable to common shareholders		84,678			106,736			112,893
Income from discontinued operations allocated to common units		—			—			652

Net income attributable to common shareholders, as adjusted	$	70,644		$	147,550		$	234,001


Income from continuing operations attributable to common shareholders, as adjusted — per share	$	(0.25	)	$	0.70		$	2.03
Income from discontinued operations attributable to common shareholders, including gain on sale — per share		1.53			1.80			1.90

Net income attributable to common shareholders, as adjusted — per share	$	1.28		$	2.50		$	3.93


Weighted average common shares outstanding		55,272			58,135			56,660
Incremental shares issuable from assumed conversion of:
Common share options and awards granted		—			482			725
Common units		—			508			2,139

Weighted average common shares outstanding, as adjusted		55,272			59,125			59,524

In April 2007, our Board of Directors approved a program to repurchase up to $250 million of our common equity securities through open market purchases, block purchases, and privately negotiated transactions. In January 2008, our Board of Trust Managers voted to increase the April 2007 repurchase plan to allow for the repurchase of up to $500 million of our common equity securities through open market purchases, block purchases, and privately negotiated transactions. We intend to use proceeds from asset sales and borrowings under our line of credit to fund share repurchases. Under this program, we repurchased 4.3 million shares for a total of approximately $230.2 million from April 2007 through December 31, 2008. The remaining dollar value of our common equity securities authorized to be repurchased under the program was approximately $269.8 million as of December 31, 2008.

At December 31, 2008 and 2007, 12.9 million and 12.2 million shares, respectively, were held in treasury.

In June 2006, we issued 3.6 million common shares at $71.25 per share in a public equity offering. We used the net proceeds of approximately $254.9 million to reduce indebtedness on our unsecured line of credit and for general corporate purposes.

We filed an automatic shelf registration statement with the Securities and Exchange Commission during 2006 which became effective upon filing. We may use the shelf registration statement to offer, from time to time, common shares, preferred shares, debt securities, or warrants. Our declaration of trust provides that we may issue up to 110,000,000 shares of beneficial interest, consisting of 100,000,000 common shares and 10,000,000 preferred shares. As of December 31, 2008, we had 66,027,911 common shares and no preferred shares outstanding under our declaration of trust.

4. Operating Partnerships

At December 31, 2008, approximately 11% of our multifamily apartment homes were held in Camden Operating, L.P (“Camden Operating” or the “operating partnership”). Camden Operating has issued both common and preferred limited partnership units. As of December 31, 2008, we held 89.1% of the common limited partnership units and the sole 1% general partnership interest of the operating partnership. The remaining common limited partnership units, comprising 1,177,115 units, are primarily held by former officers, directors, and investors of Paragon Group, Inc., which we acquired in 1997. Each common limited partnership unit is redeemable for one common share of Camden or cash at our election. Holders of common limited partnership units are not entitled to rights as shareholders prior to redemption of their common limited partnership units. No member of our management owns Camden Operating common limited partnership units, and two of our ten trust managers own Camden Operating common limited partnership units.

Camden Operating has $100 million of 7.0% Series B Cumulative Redeemable Perpetual Preferred Units outstanding. Distributions on the preferred units are payable quarterly in arrears. The Series B preferred units are redeemable beginning in December 2008 by the operating partnership for cash at par plus the amount of any accumulated and unpaid distributions. There were no redemptions as of December 31, 2008. The preferred units are convertible beginning in 2013 by the holder into a fixed number of corresponding Series B Cumulative Redeemable Perpetual Preferred Shares. The Series B preferred units are subordinate to present and future debt. Income earned by and distributions to the Series B preferred units totaled approximately $7.0 million for each of the years ended December 31, 2008, 2007, and 2006.

We are the controlling managing member interest in Oasis Martinique, LLC, which owns one property in Orange County, California and is included in our consolidated financial statements. The remaining interests, comprising 669,348 units, are exchangeable into 508,035 common shares.

At December 31, 2008, approximately 24% of our multifamily apartment homes were held in Camden Summit Partnership, L.P. (“the Camden Summit Partnership”). This operating partnership has issued common limited partnership units. As of December 31, 2008, we held 93.5% of the common limited partnership units and the sole 1% general partnership interest of the Camden Summit Partnership. The remaining common limited partnership units, comprising 1,260,085 units, are primarily held by former officers, directors and investors of Summit Properties, Inc. (“Summit”), a company we acquired in 2005. Each common limited partnership unit is redeemable for one common share of Camden or cash at our election. Holders of common limited partnership units are not entitled to rights as shareholders prior to redemption of their common limited partnership units. No member of our management owns Camden Summit Partnership common limited partnership units, and two of our ten trust managers own Camden Summit Partnership common limited partnership units.

In conjunction with our merger with Summit, we acquired employee notes receivable from former employees of Summit. At December 31, 2008 and 2007, the notes receivable had an outstanding balance of approximately $0.3 million and $2.0 million, respectively. During 2008, one employee repaid all his notes outstanding totaling approximately $1.6 million. As of December 31, 2008, the one remaining employee note receivable was 100% secured by Camden common shares.

5. Income Taxes

We have maintained and intend to maintain our election as a REIT under the Internal Revenue Code of 1986, as amended. In order for us to continue to qualify as a REIT we must meet a number of organizational and operational requirements, including a requirement to distribute annual dividends to our shareholders equal to a minimum of 90% of our REIT taxable income, computed without regards to the dividends paid deduction and our net capital gains. As a REIT, we generally will not be subject to federal income tax on our taxable income at the corporate level to the extent such income is distributed to our shareholders annually. If our taxable income exceeds our dividends in a tax year, REIT tax rules allow us to designate dividends from the subsequent tax year in order to avoid current taxation on undistributed income. For the year ended December 31, 2006, we designated dividends from 2007 to meet our dividend distribution requirements. If we fail to qualify as a REIT in any taxable year, we will be subject to federal and state income taxes at regular corporate rates, including any applicable alternative minimum tax. In addition, we may not be able to requalify as a REIT for the four subsequent taxable years. Historically, we have incurred only state and local income, franchise, excise and margin taxes. Taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to applicable federal, state, and local income taxes.

The following table reconciles net income to REIT taxable income for the years ended December 31, 2008, 2007, and 2006:


	Year Ended December 31,
(in thousands)	2008			2007			2006
Net income	$	75,025		$	166,703		$	250,838
Less income attributable to noncontrolling interest		(4,052	)		(18,246	)		(17,992	)

Net income attributable to common shareholders		70,973			148,457			232,846
Net (income) loss of taxable REIT subsidiaries included above		9,239			(3,449	)		(6,540	)

Net income from REIT operations		80,212			145,008			226,306
Book depreciation and amortization, including discontinued operations		175,162			164,978			163,673
Tax depreciation and amortization		(164,327	)		(155,173	)		(177,153	)
Book/tax difference on gains/losses from capital transactions		826			(25,985	)		(90,694	)
Book/tax difference on impairment of loss on land		51,323			1,447			—
Book/tax difference on merger costs		(68	)		(234	)		(331	)
Other book/tax differences, net		(15,342	)		7,843			(767	)

REIT taxable income		127,786			137,884			121,034
Dividends paid deduction		(151,346	)		(144,604	)		(121,034	)

Dividends paid in excess of taxable income	$	(23,560	)	$	(6,720	)	$	—

A schedule of per share distributions we paid and reported to our shareholders is set forth in the following table:


	Year Ended December 31,
Common Share Distributions		2008			2007			2006
Ordinary income	$	1.34		$	1.20		$	0.26
Long-term capital gain		0.91			1.18			1.85
Unrecaptured Sec. 1250 gain		0.55			0.38			0.53

Total	$	2.80		$	2.76		$	2.64


Percentage of distributions representing tax preference items		5.59	%		7.15	%		5.99	%

We have taxable REIT subsidiaries which are subject to federal and state income taxes. At December 31, 2008, our taxable REIT subsidiaries had net operating loss carryforwards (“NOL’s”) of approximately $15.8 million which expire in years 2020 to 2028. Because NOL’s are subject to certain change of ownership, continuity of business, and separate return year limitations, and because it is unlikely the available NOL’s will be utilized, no benefits of these NOL’s have been recognized in our consolidated financial statements.

SFAS No. 109, “Accounting for Income Taxes,” requires a public enterprise to disclose the aggregate difference in the basis of its net assets for financial and tax reporting purposes. The carrying value reported in our consolidated financial statements exceeded the tax basis by approximately $1,073.3 million.

Income Tax Expense — Current. For the tax year ended December 31, 2008, we had current income tax expense of approximately $0.8 million, comprised mainly of state income taxes. Income tax expense decreased $2.2 million for the year ended December 31, 2008 as compared to the same period in 2007, primarily attributable to a $1.6 million decrease in state taxes for our operating partnerships. This decrease was primarily attributable to less gains on property dispositions in states with high income tax rates and changes in state tax laws affecting one of our operating partnerships.

Income Tax Expense — Deferred. For the years ended December 31, 2008, 2007, and 2006, our deferred tax accounts were not material.

6. Property Acquisitions, Dispositions, Assets Held for Sale, and Impairments

Acquisitions. In April 2007, we acquired Camden South Congress, a 253-apartment home community located in Austin, Texas for approximately $42.8 million and in June 2007, we acquired Camden Royal Palms, a 352-apartment home community located in Tampa, Florida for $41.1 million. Both properties were purchased using proceeds from our unsecured line of credit. The purchase prices of these properties were allocated to the tangible and intangible assets and liabilities acquired based on their estimated fair values at the date of acquisition. We did not acquire any operating properties in 2008.

Discontinued Operations and Assets Held for Sale. For the years ended December 31, 2008, 2007, and 2006, income from discontinued operations included the results of operations of one operating property, containing 671 apartment homes, classified as held for sale at December 31, 2008 and the results of operations of eight operating properties sold in 2008 through their sale dates. For the years ended December 31, 2007 and 2006, income from discontinued operations also included the results of operations of ten operating properties sold during 2007 and eight operating properties sold during 2006 through their sale dates. As of December 31, 2008, the one operating property held for sale had a net book value of approximately $11.1 million.

The following is a summary of income from discontinued operations for the years presented below:


	Year Ended December 31,
(in thousands)	2008		2007		2006

Property revenues	$	15,857	$	41,693	$	56,233
Property expenses		8,149		20,526		28,625

		7,708		21,167		27,608
Interest		466		998		996
Depreciation and amortization		2,762		6,955		10,685

Income from discontinued operations	$	4,480	$	13,214	$	15,927


Gain on sale of discontinued operations	$	80,198	$	107,039	$	99,273

Dispositions. During the year ended December 31, 2008, we received net proceeds of approximately $121.7 million and recognized gains of approximately $80.2 million from the sale of eight operating properties, containing 2,392 apartment homes, to unaffiliated third parties. During the year ended December 31, 2007, we received net proceeds of approximately $166.4 million and recognized gains of approximately $106.3 million from the sale of ten operating properties, containing 3,054 apartment homes, to unaffiliated third parties. In addition, we sold 0.9 acres of undeveloped land to an unrelated third party, receiving net proceeds of approximately $6.0 million and recognizing gains totaling approximately $0.7 million. During the year ended December 31, 2006, we received net proceeds of approximately $137.3 million and recognized a gain of approximately $78.8 million on the sale of eight operating properties, containing 3,041 apartment homes, to unaffiliated third parties. In addition, we sold 8.7 acres of undeveloped land to an unrelated third party, receiving net proceeds of approximately $41.0 million and recognizing gains totaling approximately $20.5 million.

Partial Sales and Dispositions to Joint Ventures included in Continuing Operations. In March 2008, we sold Camden Amber Oaks, a development community in Austin, Texas, to the Camden Multifamily Value Add Fund, L.P., (the “Fund”) for approximately $8.9 million. No gain or loss was recognized on the sale. Concurrent with the transaction, we invested approximately $1.9 million in the Fund. In August 2008, we sold Camden South Congress to the Fund for approximately $44.2 million and recognized a gain of approximately $1.8 million on the sale. In conjunction with the transaction, we invested approximately $2.8 million in the Fund.

There were no partial sales or dispositions to joint ventures for the year ended December 31, 2007.

The gains recognized from the partial sales of these assets are included in continuing operations as we retained a partial interest in the ventures which own these assets.

Upon our decision to abandon efforts to develop certain land parcels and to market these parcels for sale, we reclassify the operating expenses associated with these assets to discontinued operations. At December 31, 2008, we had 4.6 acres of undeveloped land parcels classified as held for sale with a net book value of approximately $9.2 million.

Impairment. The impairment loss on land for the year ended December 31, 2008 of approximately $51.3 million reflects impairments in the value of land holdings for several potential development projects we no longer plan to pursue, including approximately $48.6 million related to land holdings for five projects we no longer plan to develop, approximately $1.6 million in the value of a land parcel held for future development, and approximately $1.1 million for costs capitalized for a potential joint venture development we no longer plan to pursue. The impairment loss on land for the year ended December 31, 2007 of approximately $1.4 million reflects impairment in the value of one potential development project we no longer plan to pursue. These impairment charges are the difference between each parcel’s estimated fair value and the carrying value, which includes pursuit and other costs.

7. Investments in Joint Ventures

The joint ventures described below are accounted for using the equity method. The joint ventures in which we have an interest have been funded in part with secured, third-party debt. We have guaranteed no more than our proportionate interest on six loans totaling approximately $75.3 million utilized for construction and development activities for our joint ventures. Additionally, we eliminate fee income from property management services provided to these joint ventures to the extent of our ownership.

Our contributions of real estate assets to joint ventures at formation in which we receive cash are treated as partial sales provided certain criteria are met. As a result, the amounts recorded as gain on sale of assets to joint ventures represent the change in ownership of the underlying assets. Our initial recorded investment is comprised of our historical carrying value of the assets on the date of the respective transaction multiplied by our ownership percentage in the joint venture. We have provided mezzanine loans to certain joint ventures, which are recorded as “Notes receivable — affiliates” as discussed in Note 8, “Notes Receivable.”

We earn fees for property management, construction, development, and other services related to joint ventures in which we own an interest. Fees earned for these services amounted to approximately $9.2 million, $8.3 million, and $14.0 million for the years ended December 31, 2008, 2007, and 2006, respectively.

As of December 31, 2008, our equity investments in unconsolidated joint ventures accounted for utilizing the equity method of accounting consisted of 24 joint ventures, with our ownership percentages ranging from 15% to 72%. As discussed above, we provide property management services to the operating joint ventures and may provide construction and development services to the joint ventures currently under development. The following table summarizes balance sheet and income statement data for the unconsolidated joint ventures as of December 31, (in millions):


	2008			2007
Total Assets	$	1,210.7		$	1,099.2
Total Third-Party Debt		984.2			883.9
Total Equity		145.0			149.7

	2008			2007			2006
Total Revenues	$	127.1		$	113.7		$	88.8
Net Income (Loss)		(18.7	)		(3.7	)		13.4
Equity in Income (Loss) (1)		(1.3	)		1.5			5.2


(1)		Equity in Income excludes our ownership interest in transactions with our joint ventures.

Variable Interest Entities. As discussed in Note 2, “Summary of Significant Accounting Policies and Recent Accounting Pronouncements, Principles of Consolidation,” investments acquired or created are evaluated based on FIN 46R to determine whether or not the investment qualifies as a VIE. If the investment is determined to fall under the scope of FIN 46R, we then determine whether we are the primary beneficiary by performing a combination of qualitative and quantitative measures, including analyzing expected investment portfolios for the entities using various investment assumptions including product mix, return rates, and revenue and expense growth. The projected cash flow allocations are reviewed to determine whether or not we are in a primary beneficiary position based on expected returns or losses each variable interest holder would absorb. In addition, we consider factors such as voting rights and decision-making abilities of each variable interest holder.

The Fund is a VIE, but we do not consolidate the Fund as we are not considered to be the primary beneficiary. The Fund is in the form of a joint venture and was created to make investments in multifamily and mixed-use projects and own, develop, redevelop, manage, supervise, and dispose of such investments. The Fund currently contains one development project and one 253-unit operating property, and continues to evaluate potential acquisitions. The Fund is financed with third-party secured debt.

The following table compares the carrying amount of our investment in the Fund to the maximum loss exposure as of December 31, 2008 (in thousands):


VIE	Investment (1)		Maximum Loss (2)
Fund	$	3,504	$	37,500


(1)		Included in investments in joint ventures in the consolidated balance sheets.

(2)		Based on maximum capital commitment to the Fund; however, given we are the general partner, maximum loss exposure could be unlimited.

8. Notes Receivable

Affiliates. We provided mezzanine construction financing with rates ranging from LIBOR plus 3% to 14% per year, in connection with certain of our joint venture transactions. As of December 31, 2008 and 2007, the balance of “Notes receivable — affiliates” totaled $58.1 million and $50.4 million, respectively, on notes maturing through 2010. We eliminate the interest and other income to the extent of our percentage ownership in the joint ventures. We have reviewed the terms and conditions underlying these notes receivable and believe these notes are collectible, and no impairment existed at December 31, 2008.

At December 31, 2008, we were committed to funding additional amounts under the mezzanine loans in the amount of approximately $31.7 million.

Other. We have a mezzanine financing program under which we provide secured financing to owners of real estate properties. As of December 31, 2008 and 2007, the balance of secured note receivables due from unrelated third parties was approximately $8.7 million and $11.6 million, respectively. During the first quarter of 2008, one of our notes receivable, totaling approximately $2.9 million with an interest rate of Prime Rate plus 1%, was paid in full. The remaining note, which matures in January 2010, accrues interest at LIBOR plus 2%, which is recognized as earned. We have reviewed the terms and conditions underlying the outstanding notes receivable and believe this note is collectible, and no impairment existed at December 31, 2008.

9. Notes Payable

The following is a summary of our indebtedness:


	December 31,
(in millions)	2008		2007
Commercial Banks
Unsecured line of credit and short-term borrowings	$	145.0	$	115.0
$500 million term loan, due 2012		500.0		500.0

		645.0		615.0

Senior unsecured notes
$100.0 million 4.74% Notes, due 2009		81.9		99.9
$250.0 million 4.39% Notes, due 2010		150.4		249.9
$100.0 million 6.77% Notes, due 2010		79.9		100.0
$150.0 million 7.69% Notes, due 2011		149.8		149.7
$200.0 million 5.93% Notes, due 2012		199.6		199.5
$200.0 million 5.45% Notes, due 2013		199.3		199.2
$250.0 million 5.08% Notes, due 2015		248.9		248.8
$300.0 million 5.75% Notes, due 2017		246.0		299.0

		1,355.8		1,546.0

Medium-term notes
$15.0 million 7.63% Notes, due 2009		15.0		15.0
$25.0 million 4.64% Notes, due 2009		25.2		25.9
$10.0 million 4.90% Notes, due 2010		10.5		10.9
$14.5 million 6.79% Notes, due 2010		14.5		14.5
$35.0 million 4.99% Notes, due 2011		37.2		38.0

		102.4		104.3

Total unsecured notes payable		2,103.2		2,265.3

Secured notes
3.18% - 8.50% Conventional Mortgage Notes, due 2009 - 2018		686.6		498.8
2.12% Tax-exempt Mortgage Note, due 2028 (1)		42.6		57.6
7.29% Tax-exempt Mortgage Note due 2025		—		6.4

		729.2		562.8

Total notes payable	$	2,832.4	$	2,828.1


Floating rate debt included in commercial bank indebtedness (1.53%)	$	145.0	$	115.0
Floating rate tax-exempt debt included in secured notes (2.12%)		42.6		57.6
Floating rate debt included in secured notes (3.18% - 4.20%)		180.9		—
Value of real estate assets subject to secured notes		1,193.5		1,018.1


(1)		Approximately $14.0 million of which was paid off in connection with the sale of the related property in the third quarter of 2008.

We have a $600 million unsecured credit facility which matures in January 2010 and can be extended at our option to January 2011. The scheduled interest rate is based on spreads over LIBOR or the Prime Rate. The scheduled interest rate spreads are subject to change as our credit ratings change. Advances under the line of credit may be priced at the scheduled rates, or we may enter into bid rate loans with participating banks at rates below the scheduled rates. These bid rate loans have terms of six months or less and may not exceed the lesser of $300 million or the remaining amount available under the line of credit. The line of credit is subject to customary financial covenants and limitations, all of which we believe are in compliance.

Our line of credit provides us with the ability to issue up to $100 million in letters of credit. While our issuance of letters of credit does not increase our borrowings outstanding under our line of credit, it does reduce the amount available. At December 31, 2008, we had outstanding letters of credit totaling approximately $10.5 million, and had approximately $444.5 million available under our unsecured line of credit.

On August 18, 2008, we entered into a construction loan agreement for approximately $33.1 million to finance the development of a multifamily apartment community in Houston, Texas. The loan has an annual interest rate of LIBOR plus 1.45% and matures in August 2011. We entered into an interest rate swap, with a notional amount fluctuating up to a maximum of 50% of the projected outstanding balance on the construction loan. The swap will fix the interest rate at approximately 3.82% per annum for three years. The swap became effective November 2008. This swap has been formally designated as a hedge and is expected to be a highly effective cash flow hedge of the interest rate risk.

On September 24, 2008, we and one of our subsidiaries, the Camden Summit Partnership, as guarantors, and CPT Community Owner, LLC and CSP Community Owner, LLC, each a Delaware limited liability company and our subsidiary, as borrowers (collectively, the “Borrowers”), entered into a secured master credit facility agreement for a $380 million credit facility. The facility is comprised of a $175 million variable rate loan funded with a Fannie Mae Discount Mortgage Backed Security (“DMBS”) and a $205 million fixed rate loan. The variable rate loan is currently priced at approximately 4.2% per annum and is for a ten-year term. The DMBS rate has typically approximated three-month LIBOR. The fixed rate loan has a fixed annual interest rate of 5.625% for a ten-year term and provides for an additional one-year term with a variable rate. We have entered into standard nonrecourse carveout guarantees. The obligations of the Borrowers under the credit agreement are secured by cross-collateralized first priority mortgages on 17 of our multifamily properties. We used the proceeds from this credit facility for the repayment of maturing debt, including approximately $173 million of secured notes payable, as well as pay down of amounts outstanding under our revolving line of credit, with the remainder being used for general corporate purposes. Concurrent with this transaction, we entered into an interest rate cap, with a notional amount of $175 million, to cap the variable interest at approximately 7.17% for three-month LIBOR, before the applicable spread, per annum for three years. Although the hedge is expected to offset our exposure to interest rate movements it did not meet the strict hedge accounting requirements of SFAS 133 for cash flow hedges. As such, gains and losses will be recognized in earnings for the period of change.

On December 12, 2008, we commenced a cash tender offer for certain series of notes maturing in 2009 and 2010. We repurchased and retired approximately $108.3 million of our outstanding debt for approximately $100.6 million. We recorded a gain of approximately $7.2 million in relation to the tender offer, which is included in gain on early retirement of debt in our Consolidated Statements of Income and Comprehensive Income. These gains were partially offset by the proportionate share of unamortized loan costs and other costs associated with the retirement of the debt.

We also repurchased and retired approximately $82.7 million of various other outstanding debt from unrelated third parties for approximately $75.7 million during fiscal year 2008. We recorded a gain of approximately $6.4 million related to these transactions, which is included in gain on early retirement of debt in our Consolidated Statements of Income and Comprehensive Income. These gains were partially offset by the proportionate share of unamortized loan costs and other costs associated with the retirement of the debt.

As part of the 2005 Summit merger, we assumed certain debt and recorded approximately $33.9 million as a fair value adjustment which is being amortized over the respective debt terms. As of December 31, 2008, approximately $6.0 million of the fair value adjustment remained unamortized. We recorded amortization of the fair value adjustment, which resulted in a decrease of interest expense, of approximately $5.4 million, $7.1 million, and $7.6 million during the years ended December 31, 2008, 2007, and 2006, respectively.

During 2008 we repaid approximately $191 million of unsecured notes either as they matured or as an early repurchase and retirement, excluding repayments on our line of credit, with an effective interest rate of 5.1%.

At December 31, 2008 and 2007, the weighted average interest rate on our floating rate debt, which includes our unsecured line of credit, was 2.7% and 5.0%, respectively.

Our indebtedness, excluding our unsecured line of credit, had a weighted average maturity of 5.0 years. Scheduled repayments on outstanding debt, including our line of credit and scheduled principal amortizations, and the weighted average interest rate on maturing debt at December 31, 2008 are as follows:


(in millions)			Weighted Average
Year	Amount		Interest Rate
2009	$	134.4		5.2	%
2010		355.5		5.1
2011		421.7		4.5
2012		772.2		5.4
2013		227.2		5.4
2014 and thereafter		921.4		5.1

Total	$	2,832.4		5.1	%

10. Derivative Instruments & Hedging Activities

We have entered into interest rate hedge agreements to reduce the impact of interest rate fluctuations on our variable rate debt. We have not entered into any interest rate hedge agreements for our fixed-rate debt and do not enter into derivative transactions for trading or other speculative purposes. The following tables summarize our interest rate hedge agreements at December 31, 2008 (dollars in millions):


Notional balance	$	500
Hedging instrument	Interest rate swap
Effective interest rate		5.24	%(1)
Maturity date		10/4/2012
Estimated liability fair value	$	50.3


(1)		Includes our interest rate spread of 0.5%.


Notional balance	$	175
Hedging instrument	Interest rate cap
Interest rate cap LIBOR strike		7.17	%
Maturity date		10/1/2011
Estimated asset fair value	$	0.1

Notional balance	$	3.4
Hedging instrument	Interest rate swap
Effective interest rate		3.82	%
Maturity date		8/18/2011
Estimated liability fair value	$	0.8

We have determined our interest rate hedge agreements qualify as effective cash flow hedges under SFAS 133, “Accounting for Derivative Instruments and Hedging Activities,” resulting in our recording the effective portion of cumulative changes in the fair value of the interest rate hedge agreements in other comprehensive income (loss). Amounts recorded in other comprehensive income (loss) will be reclassified into earnings as adjustments to interest expense in the periods in which earnings are affected by the hedged cash flows. To adjust the interest rate hedge agreements to their fair value, we recorded unrealized losses in other comprehensive loss of approximately $35.1 million and $16.1 million during the years ended December 31, 2008 and 2007, respectively. These amounts will be reclassified into interest expense in conjunction with the periodic payment of the cash flows being hedged. The change in net unrealized losses for the years ended December 31, 2008 and 2007 reflect a reclassification of unrealized losses from accumulated other comprehensive loss to interest expense of approximately $9.3 million and $0.3 million, respectively. We anticipate approximately $18.4 million of accumulated other comprehensive loss at December 31, 2008 will be reclassified as a charge to interest expense over the next twelve months to offset the variability of cash flows of the hedge transaction during this period.

We assess, both at inception and on an on-going basis, the effectiveness of the cash flow hedging relationships and any hedge ineffectiveness is recognized directly in earnings. During the years ended December 31, 2008 and 2007, no hedge ineffectiveness was recognized in earnings and we expect the hedging relationships to continue to be highly effective. The fair value of the interest rate hedge agreements is included in other liabilities.

Derivative financial instruments expose us to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. We believe we minimize our credit risk on these transactions by dealing with major, creditworthy financial institutions. As part of our on-going control procedures, we monitor the credit ratings of counterparties and our exposure to any single entity, thus minimizing credit risk concentration. We believe the likelihood of realized losses from counterparty non-performance is remote.

11. Share Based Compensation and Benefit Plans

Incentive Plan. During 2002, our Board of Trust Managers adopted, and our shareholders approved, the 2002 Share Incentive Plan of Camden Property Trust (the “2002 Share Plan”). Under the 2002 Share Plan, we may issue up to 10% of the total of (i) the number of our common shares outstanding as of the plan date, February 5, 2002, plus (ii) the number of our common shares reserved for issuance upon conversion of securities convertible into or exchangeable for our common shares, plus (iii) the number of our common shares held as treasury shares. Compensation awards that can be granted under the 2002 Share Plan include various forms of incentive awards, including incentive share options, non-qualified share options and share awards. The class of eligible persons that can receive grants of incentive awards under the 2002 Share Plan consists of key employees, consultants and non-employee trust managers as determined by the Compensation Committee of our Board of Trust Managers. The 2002 Share Plan does not have a termination date; however, no incentive share options will be granted under this plan after February 5, 2012.

Valuation Assumptions. The weighted average fair value of options granted was $5.06, $11.04, and $7.88 in 2008, 2007, and 2006, respectively. We estimated the fair value of each option award on the date of grant using the Black-Scholes option pricing model. The following assumptions were used for options granted during each respective period:


	Year Ended December 31,
	2008			2007			2006

Expected volatility		20.5	%		17.1	%		16.6	%
Risk-free interest rate		3.6	%		4.6	%		4.4	%
Expected dividend yield		5.8	%		3.7	%		4.1	%
Expected life (in years)		7			6			5

Our computation of expected volatility for 2008 was based on the historical volatility of our common shares over a time period equal to the expected term of the option and ending on the grant date. The interest rate for periods within the contractual life of the award is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield on our common shares is calculated using the annual dividends paid in the prior year. Our computation of expected life for 2008 was determined based on historical experience of similar awards, giving consideration to the contractual terms of the share-based awards.

Options. Options are exercisable, subject to the terms and conditions of the plan, in increments ranging from 20% to 33.33% per year on each of the anniversaries of the date of grant. The plan provides that the exercise price of an option will be determined by the Compensation Committee of the Board of Trust Managers on the day of grant, and to date all options have been granted at an exercise price that equals the fair market value on the date of grant. Options exercised during 2008 were exercised at prices ranging from $24.88 to $43.90 per share. At December 31, 2008, options outstanding were exercisable at prices ranging from $24.88 to $73.32 per share and had a weighted average remaining contractual life of 5.8 years.

The total intrinsic value of options exercised was approximately $0.5 million during the year ended December 31, 2008. As of December 31, 2008, there was approximately $1.8 million of total unrecognized compensation cost related to unvested options, which is expected to be amortized over the next five years.

The following table summarizes share options outstanding and exercisable at December 31, 2008:


	Outstanding Options				Exercisable Options
Range of			Weighted				Weighted		Remaining
Exercise			Average				Average		Contractual
Prices	Number		Price		Number		Price		Life
$24.88-$41.91		285,371	$	35.37		285,371	$	35.37		3.4
$42.90-$43.90		353,486		42.98		353,486		42.98		4.9
$44.00-$73.32		897,670		48.78		466,360		49.49		6.9


Total options		1,536,527	$	44.96		1,105,217	$	43.76		5.8

The following table summarizes activity under our Share Incentive Plans for the three years ended December 31:


	Options and Share Awards
				Weighted					Weighted					Weighted
				Average					Average					Average
1993 Share Plan	2008			2008 Price		2007			2007 Price		2006			2006 Price
Balance at January 1		1,885,989		$	30.34		1,953,800		$	31.99		2,045,730		$	32.12

Options
Exercised		(39,013	)		38.26		(60,695	)		33.37		(89,879	)		32.24
Forfeited		—			—		(6,986	)		33.98		(1,086	)		29.44

Net options		(39,013	)				(67,681	)				(90,965	)


Share awards
Forfeited		—					(130	)		34.72		(965	)		34.71

Net share awards		—					(130	)				(965	)


Balance at December 31		1,846,976		$	29.68		1,885,989		$	30.34		1,953,800		$	31.99


Exercisable options at December 31		165,811		$	32.78		174,576		$	32.68		262,779		$	32.78
Vested share awards at December 31		1,337,273		$	28.95		1,337,273		$	28.95		1,317,733		$	28.85


	Shares				Options and Share Awards
	Available						Weighted					Weighted					Weighted
	for Issuance						Average					Average					Average
2002 Share Plan	2008			2008			2008 Price		2007			2007 Price		2006			2006 Price
Balance at January 1		3,032,625			1,621,958		$	51.21		1,498,911		$	46.40		1,334,332		$	42.72

Options
Granted		(444,264	)		444,264			48.02		—			—		—			—
Exercised		—			(5,937	)		37.89		(63,013	)		41.71		(75,366	)		35.50
Forfeited		12,954			(12,954	)		48.02		(2,836	)		39.99		(1,534	)		36.87

Net options		(431,310	)		425,373					(65,849	)				(76,900	)


Share awards
Granted		(267,450	)		267,450			48.23		253,836			77.22		270,658			65.24
Forfeited		36,445			(36,445	)		58.10		(64,940	)		64.55		(29,179	)		52.63

Net share awards		(231,005	)		231,005					188,896					241,479


Business at December 31		2,370,310			2,278,336		$	50.85		1,621,958		$	51.21		1,498,911		$	46.40


Exercisable options at December 31					939,406		$	45.70		908,925		$	45.48		754,586		$	44.84
Vested share awards at December 31					654,664		$	50.90		498,772		$	48.57		354,850		$	46.44

Employee Share Purchase Plan (“ESPP”). We have established an ESPP for all active employees and officers who have completed one year of continuous service. Participants may elect to purchase Camden common shares through payroll deductions and/or through semi-annual contributions. At the end of each six-month offering period, each participant’s account balance is applied to acquire common shares at 85% of the market value, as defined, on the first or last day of the offering period, whichever price is lower. We currently use treasury shares to satisfy ESPP share requirements. Each participant must hold the shares purchased for nine months in order to receive the discount, and a participant may not purchase more than $25,000 in value of shares during any plan year, as defined. The following table presents certain information related to our ESPP.


	2008		2007		2006
Shares purchased		25,939		20,534		30,352
Weighted average fair value of shares purchased	$	37.81	$	59.98	$	73.61
Expense recorded (in millions)	$	0.1	$	0.2	$	0.5

In January 2009, 12,940 shares were purchased under the ESPP related to the 2008 plan year.

Share Awards and Vesting. Share awards generally have a vesting period of five years. The compensation cost for share awards is based on the market value of the shares on the date of grant and is amortized over the vesting period. To determine our estimated forfeitures, we use actual forfeiture history. At December 31, 2008, the unamortized value of previously issued unvested share awards was approximately $22.8 million. This amount will be amortized into earnings over the next five years. The total fair value of shares vested during the years ended December 31, 2008, 2007, and 2006 was $8.8 million, $8.1 million, and $10.9 million, respectively. On October 30, 2006, the Compensation Committee of the Board of Trust Managers of Camden Property Trust authorized the acceleration of vesting of all unvested share awards held by two members of senior management issued under the 2002 share incentive plan. As a result of vesting acceleration, an aggregate of 76,542 share awards that otherwise would have vested from time to time over the subsequent five years became immediately exercisable. All other terms and conditions applicable to such share awards remain in effect. By accelerating the vesting of these share awards, we recognized a one-time expense in 2006 of approximately $4.2 million. This action will reduce compensation expense by an equivalent amount over the five-year period these share awards would have originally vested.

Total compensation cost for options and share awards charged against income was $6.5 million, $5.8 million, and $9.4 million for 2008, 2007, and 2006, respectively.

Rabbi Trust. We have established a rabbi trust for a select group of participants in which share awards granted under the share incentive plan and salary and other cash amounts earned may be deposited. The rabbi trust is an irrevocable trust and no portion of the trust fund may be used for any purpose other than the delivery of those assets to the participants. The assets held in the rabbi trust are subject to the claims of the Company’s general creditors in the event of bankruptcy or insolvency. As of December 31, 2008, the rabbi trust is in use only for deferrals made prior to 2005, including bonuses related to service in 2004 but paid in 2005.

We follow the provisions of EITF 97-14 “Accounting for Deferred Compensation Arrangements Where the Amounts Are Held in a Rabbi Trust and Invested” regarding the accounting for the rabbi trust. As a result, the assets of the rabbi trust are consolidated into our financial statements. Granted share awards held by the rabbi trust are classified in equity in a manner similar to the manner in which treasury stock is accounted. Subsequent changes in the fair value of the shares are not recognized. The deferred compensation obligation is classified as an equity instrument and changes in the fair value of the amount owed to the participant are not recognized. At December 31, 2008, 2007, and 2006, approximately 2.1 million, 2.1 million, and 2.2 million share awards, respectively, were held in the rabbi trust. Additionally, as of December 31, 2008, 2007, and 2006, the rabbi trust was holding trading securities totaling approximately $50.2 million, $76.4 million, and $65.8 million, respectively, which represents cash deferrals made by plan participants. Market value fluctuations on these trading securities are recognized in income in accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and the fair value of the liability due to participants is adjusted accordingly.

At December 31, 2008, 2007, and 2006, approximately $35.0 million, $34.9 million, and $33.7 million, respectively, was required to be paid to us by plan participants upon the withdrawal of any assets from the trust, and is included in “Accounts receivable-affiliates” in our consolidated financial statements.

Non-Qualified Deferred Compensation Plan. The Non-Qualified Deferred Compensation Plan (the “Plan”), effective December 1, 2004, is an unfunded arrangement established and maintained primarily for the benefit of a select group of participants. Eligible participants shall commence participation in the Plan on the date the deferral election first becomes effective. We will credit to the participant’s account an amount equal to the amount designated as the participant’s deferral for the plan year as indicated in the participant’s deferral election(s). Any modification to or termination of the Plan will not reduce a participant’s right to any vested amounts already credited to his or her account. At December 31, 2008, 2007, and 2006, approximately 0.7 million, 0.5 million, and 0.4 million share awards, respectively, were held in the Plan. Additionally, as of December 31, 2008, 2007, and 2006, the Plan was holding trading securities totaling approximately $18.1 million, $20.7 million, and $15.6 million, respectively, which represents cash deferrals made by plan participants. Market value fluctuations on these trading securities are recognized in income in accordance with SFAS No. 115 and the fair value of the liability due to participants is adjusted accordingly.

401(k) Savings Plan. We have a 401(k) savings plan, which is a voluntary defined contribution plan. Under the savings plan, every employee is eligible to participate beginning on the date the employee has completed six months of continuous service with us. Each participant may make contributions to the savings plan by means of a pre-tax salary deferral, which may not be less than 1% or more than 60% of the participant’s compensation. The federal tax code limits the annual amount of salary deferrals that may be made by any participant. We may make matching contributions on the participant’s behalf up to a predetermined limit. The matching contributions made for the years ended December 31, 2008, 2007, and 2006 were approximately $1.4 million, $1.2 million, and $1.0 million, respectively. A participant’s salary deferral contribution is 100% vested and nonforfeitable. A participant will become vested in our matching contributions 33.33% after one year of service, 66.67% after two years of service and 100% after three years of service. Administrative expenses under the savings plan were paid by us and were not significant.

12. Fair Value of Financial Instruments

As of January 1, 2008 we adopted SFAS 157, “Fair Value Measurements,” (“SFAS 157”). The standard defines fair value, establishes a framework for measuring fair value, and also expands disclosures about fair value measurements. The following table presents information about our assets and liabilities measured at fair value on a recurring basis as of December 31, 2008, and indicates the fair value hierarchy of the valuation techniques utilized by us to determine such fair value.

In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets we have the ability to access for identical assets or liabilities. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable for the asset or liability, such as interest rates and yield curves observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In instances in which the inputs used to measure fair value may fall into different levels of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement in its entirety has been determined is based on the lowest level input significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. Disclosures concerning assets and liabilities measured at fair value on a recurring basis are as follows:

Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2008

(in millions)


	Quoted Prices in		Significant
	Active Markets		Other		Significant		Balance at
	for Identical		Observable		Unobservable		December 31,
	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2008
Assets
Deferred compensation plan investments	$	43.9	$	—	$	—	$	43.9
Derivative financial instruments		—		0.1		—		0.1
Liabilities
Derivative financial instruments	$	—	$	51.1	$	—	$	51.1

To estimate fair values, observable market prices are used if available. In some instances, observable market prices are not readily available for certain financial instruments and fair value is estimated using present value or other techniques appropriate for a particular financial instrument. These techniques involve some degree of judgment and as a result are not necessarily indicative of the amounts we would realize in a current market exchange. The use of different assumptions or estimation techniques may have a material effect on the estimated fair value amounts.

Deferred compensation plan investments. The estimated fair values of investment securities classified as deferred compensation plan investments are based on quoted market prices utilizing public information for the same transactions or information provided through third-party advisors. Our deferred compensation plan investments are recorded in other assets.

Derivative financial instruments. We enter into derivative financial instruments, specifically interest rate swaps and caps, for non-trading purposes. We use interest rate swaps and caps to manage interest rate risk arising from interest payments associated with floating rate debt. Through December 31, 2008, derivative financial instruments were designated and qualified as cash flow hedges. Derivative contracts with positive net fair values are recorded in accrued expenses and other assets. Derivative contracts with negative net fair values are recorded in accrued expenses and other liabilities. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and volatility. The fair values of interest rate swaps and caps are estimated using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, to comply with the provisions of SFAS 157, credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, are incorporated in the fair values to account for potential nonperformance risk. The fair value of interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts which would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observed market interest rate curves and volatilities.

To comply with the provisions of SFAS 157, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, and guarantees.

Although we have determined the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of December 31, 2008, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Other Fair Value Disclosures. As of December 31, 2008 and 2007, management estimated the carrying value of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, investments and liabilities under deferred compensation plans, accounts payable, accrued expenses and other liabilities, and distributions payable were at amounts that reasonably approximated their fair value.

In calculating the fair value of our notes payable, interest rates and spreads reflect our current creditworthiness and market conditions available for the issuance of notes payable with similar terms and remaining maturities. In instances where market conditions are not available, we follow the guidance of FSP 157-3 to estimate fair value in a non-active market.


	December 31, 2008				December 31, 2007
	Carrying		Estimated		Carrying		Estimated
(in thousands)	Value		Fair Value		Value		Fair Value

Fixed rate notes payable (1)	$	2,467.3	$	2,163.8	$	2,655.5	$	2,609.6
Floating rate notes payable (2)		365.1		359.0		172.6		172.6	(3)


(1)		Includes a $500 million term loan entered into in 2007 and $3.4 million of a construction loan entered into in 2008 which has become effectively fixed by the use of an interest rate swap.

(2)		Includes balances outstanding under our unsecured line of credit.

(3)		Carrying value approximated fair value.

13. Net Change in Operating Accounts

The effect of changes in the operating accounts on cash flows from operating activities is as follows:


	Year Ended December 31,
(in thousands)	2008			2007			2006
Decrease (increase) in assets:
Other assets, net	$	(4,350	)	$	9,956		$	(2,667	)

Increase (decrease) in liabilities:
Accounts payable and accrued liabilities		(568	)		(19,657	)		17,339
Accrued real estate taxes		486			1,855			(110	)
Other liabilities		1,406			(5,267	)		(13,226	)

Change in operating accounts	$	(3,026	)	$	(13,113	)	$	1,336

14. Commitments and Contingencies

Construction Contracts. As of December 31, 2008, we were obligated for approximately $63.4 million of additional expenditures on our recently completed projects and those currently under development. We expect to fund approximately $57 million of this amount from existing joint venture construction loans.

Litigation. In September 2007, The Equal Rights Center filed a lawsuit against us and one of our wholly-owned subsidiaries in the United States District Court for the District of Maryland. This suit alleges various violations of the Fair Housing Act and the Americans with Disabilities Act by us in the design, construction, control, management, and/or ownership of various multifamily properties. The plaintiff seeks compensatory and punitive damages in unspecified amounts, an award of attorneys’ fees and costs of suit, as well as preliminary and permanent injunctive relief that includes modification of existing assets and prohibiting construction or sale of noncompliant units or complexes. At this stage in the proceeding, it is not possible to predict or determine the outcome of the lawsuit, nor is it possible to estimate the amount of loss, if any, that would be associated with an adverse decision.

We are subject to various other legal proceedings and claims which arise in the ordinary course of business. Matters which arise out of allegations of bodily injury, property damage, and employment practices are generally covered by insurance. While the resolution of these other legal proceedings and claims cannot be predicted with certainty, management believes the final outcome of such matters will not have a material adverse effect on our consolidated financial statements.

Other Contingencies. In the ordinary course of our business, we issue letters of intent indicating a willingness to negotiate for acquisitions, dispositions, or joint ventures and also enter into arrangements contemplating various transactions. Such letters of intent and other arrangements are non-binding as to either party unless and until a definitive contract is entered into by the parties. Even if definitive contracts relating to the purchase or sale of real property are entered into, these contracts generally provide the purchaser with time to evaluate the property and conduct due diligence, during which periods the purchaser will have the ability to terminate the contracts without penalty or forfeiture of any deposit or earnest money. There can be no assurance definitive contracts will be entered into with respect to any matter covered by letters of intent or we will consummate any transaction contemplated by any definitive contract. Furthermore, due diligence periods for real property are frequently extended as needed. An acquisition or sale of real property becomes probable at the time the due diligence period expires and the definitive contract has not been terminated. We are then at risk under a real property acquisition contract, but generally only to the extent of any earnest money deposits associated with the contract, and are obligated to sell under a real property sales contract.

Lease Commitments. At December 31, 2008, we had long-term leases covering certain land, office facilities, and equipment. Rental expense totaled approximately $3.0 million for both of the years ended December 31, 2008 and 2007 and $2.9 million for the year ended December 31, 2006. Minimum annual rental commitments for the years ending December 31, 2009 through 2013 are approximately $2.5 million, $2.5 million, $2.4 million, $2.0 million, and $1.9 million, respectively, and $3.6 million in the aggregate thereafter.

Investments in Joint Ventures. We have entered into, and may continue in the future to enter into, joint ventures or partnerships (including limited liability companies) through which we own an indirect economic interest in less than 100% of the community or communities owned directly by the joint venture or partnership. Our decision whether to hold the entire interest in an apartment community ourselves, or to have an indirect interest in the community through a joint venture or partnership, is based on a variety of factors and considerations, including: (i) our projection, in some circumstances, we will achieve higher returns on our invested capital or reduce our risk if a joint venture or partnership vehicle is used; (ii) our desire to diversify our portfolio of communities by market; (iii) our desire at times to preserve our capital resources to maintain liquidity or balance sheet strength; and (iv) the economic and tax terms required by a seller of land or of a community, who may prefer or who may require less payment if the land or community is contributed to a joint venture or partnership. Investments in joint ventures or partnerships are not limited to a specified percentage of our assets. Each joint venture or partnership agreement is individually negotiated, and our ability to operate and/or dispose of a community in our sole discretion may be limited to varying degrees depending on the terms of the joint venture or partnership agreement.

In December 2007, we formed the Fund, a discretionary investment vehicle to make direct and indirect investments in multifamily real estate throughout the United States, primarily through acquisitions of operating properties and certain land parcels which will be acquired by or contributed to the Fund for development. In April 2008, we formed a co-investment limited partnership (the “Co-Investment Vehicle”) to invest for its own account or alongside the Fund in one or more investments of the Fund. The Fund and the Co-Investment Vehicle (collectively, the “Funds”) will serve, until the earlier of (i) December 31, 2011 or (ii) such time as 90% of the Funds’ committed capital is invested, as the exclusive vehicles through which we will acquire fully-developed multifamily properties, subject to certain exceptions. These exceptions include properties acquired in tax-deferred transactions, follow-on investments made with respect to prior investments, significant transactions which include the issuance of our securities, significant individual asset and portfolio acquisitions, significant merger and acquisition activities, acquisitions which are inadvisable or inappropriate for the Funds, transactions with our existing ventures, contributions or sales of properties to or entities in which we remain an investor, and transactions approved by the Funds’ advisory board. The Funds will not restrict our development activities and will terminate on December 31, 2015, subject to two one-year extensions. We are currently targeting acquisitions for the Funds where value creation opportunities are present through one or more of the following: redevelopment activities, market cycle opportunities, or improved property operations. One of our wholly-owned subsidiaries is the general partner of each of the Funds, and we have committed 20% of the total equity of each of the Funds, up to $75 million in the aggregate. We have received commitments to each of the Funds from an unaffiliated investor of $150 million and on September 30, 2008 the Funds were closed to additional investors.

Employment Agreements. At December 31, 2008, we had employment agreements with eight of our senior officers, the terms of which expire at various times through August 20, 2009. Such agreements provide for minimum salary levels, as well as various incentive compensation arrangements, which are payable based on the attainment of specific goals. The agreements also provide for severance payments plus a gross-up payment if certain situations occur, such as termination without cause or a change of control. In the case of five of the agreements, the severance payment equals one times the respective current annual base salary in the case of termination without cause and 2.99 times the respective average annual base salary over the previous three fiscal years in the case of a change of control and a termination of employment or a material adverse change in the scope of their duties. In the case of one agreement, the severance payment equals one times the respective current annual base salary for termination without cause and 2.99 times the greater of current gross income or average gross income over the previous three fiscal years in the case of a change of control. In the case of the other two agreements, the severance payment generally equals 2.99 times the respective average annual compensation over the previous three fiscal years in connection with, among other things, a termination without cause or a change of control, and the officer would be entitled to receive continuation and vesting of certain benefits in the case of such termination.

Hurricane Ike. On September 13, 2008, Hurricane Ike came ashore on the Texas Gulf Coast and impacted our multifamily communities in the Houston, Texas area. As of February 2009, our current assessment of the total damage incurred is approximately $11.3 million; approximately $1.4 million was not covered by insurance. Accordingly, our operating results for the year ended December 31, 2008 include a corresponding charge in property and operating expenses to reflect the estimated amounts not reimbursable by insurance.

15. Postretirement Benefits

We maintain a postretirement benefit for two former officers of Summit, who also serve on our Board of Trust Managers. Benefits received by these former employees include office space and medical benefits. Participants in the postretirement plan contribute to the cost of the medical benefits. Our contribution for medical benefits is limited to amounts between $562 and $868 per month per participant and dependents. For measurement purposes, a 12.1% and 11.0% rate of increase in the per capita cost of covered health care claims was assumed for the years ending December 31, 2008 and 2007, respectively; the rate was assumed to decrease until 2015 at which point the annual rate would be 5.0% and remain at that level thereafter. Our contribution for office space was approximately $187,000 for the year ended December 31, 2008.

As of December 31, the status of our defined postretirement benefit plan was as follows:


(in thousands)	2008			2007
Postretirement benefit obligation, beginning of year	$	3,162		$	3,202
Interest cost		182			176
Actuarial gain (1)		(160	)		—
Benefits paid		(206	)		(216	)

Net periodic postretirement benefit obligation, end of year	$	2,978		$	3,162


(1)		Included in other comprehensive income in our Consolidated Statements of Income and Comprehensive Income.

The weighted average discount rate used to determine the value of accumulated postretirement benefit cost for the years ended December 31, 2008 and 2007 was 6.29% and 5.62%, respectively. As of December 31, 2008, we had accrued for the approximate $3.0 million associated with these postretirement liabilities in other liabilities in our consolidated balance sheet. We paid approximately $0.2 million to the plan during the year ended December 31, 2008. During 2009, we expect to pay approximately $0.2 million to the plan.

The benefits expected to be paid in each of the next five fiscal years, and in the aggregate for the five fiscal years thereafter are as follows:


(in thousands)	Estimated Benefit
Year Beginning January 1	Payment
2009	$	210
2010		216
2011		215
2012		220
2013		224
2014-2018		1,165

Total	$	2,250

A 1% increase or decrease in assumed health care cost trend rates has no significant effect on the interest cost component of net periodic postretirement health care costs. A 1% increase or decrease in assumed health care cost trend rates would increase or decrease the accumulated postretirement benefit obligation by approximately $0.3 million.

16. Quarterly Financial Data (unaudited)

Summarized quarterly financial data, which has been adjusted for discontinued operations as discussed in Note 6, “Property Acquisitions, Dispositions, Assets Held for Sale, and Impairments,” for the years ended December 31, 2008 and 2007, is as follows:


(in thousands, except per share amounts)	First		Second			Third			Fourth			Total(e)
2008:
Revenues	$	151,464	$	155,527		$	159,383		$	157,642		$	624,016
Net income attributable to common shareholders		14,915		17,294			73,673			(34,909	)		70,973
Net income attributable to common shareholders per share — basic		0.27		0.31			1.32	(a)		(0.63)	(b)		1.28
Net income attributable to common shareholders per share — diluted		0.27		0.31			1.30	(a)		(0.63)	(b)		1.28

2007:
Revenues	$	142,728	$	146,383		$	149,743		$	149,465		$	588,319
Net income attributable to common shareholders		13,037		42,592			11,852			80,976			148,457
Net income attributable to common shareholders per share — basic		0.22		0.72	(c)		0.20			1.41	(d)		2.54
Net income attributable to common shareholders per share — diluted		0.22		0.71	(c)		0.20			1.41	(d)		2.50


(a)		Includes a $65,599, or $1.18 basic and $1.17 diluted per share, impact related to the gain on sale of discontinued operations.

(b)		Includes a $51,323, or $0.93 for both basic and diluted per share, impact related to the impairment loss on land.

(c)		Includes a $30,976, or $0.53 basic and $0.52 diluted per share, impact related to the gain on sale of discontinued operations.

(d)		Includes a $75,306, or $1.33 basic and $1.31 diluted per share, impact related to the gain on sale of discontinued operations, as well as a $1,447, or $0.03 for both basic and diluted per share, impact related to the impairment loss on land.

(e)		Net income per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly net income per share may not equal the total computed for the year.

17. Retrospective Adoption of Recent Accounting Pronouncements

Retrospective Adoption of SFAS 160. We adopted SFAS 160 effective January 1, 2009 and have applied the presentation and disclosure provisions retrospectively in these financial statements. SFAS 160 requires a reconciliation of equity attributable to noncontrolling interest and disclosure of those amounts of consolidated net income attributable to the noncontrolling interest.

Upon our adoption of SFAS 160, we reclassified balances related to minority interest relating to the common units in (i) Camden Operating, L.P., (ii) Oasis Martinique, LLC, (iii) Camden Summit Partnership, L.P., and (iv) other minority interest in consolidated real estate joint ventures into our consolidated equity accounts and these are now classified as noncontrolling interest. The noncontrolling interest reclassification amount at December 31, 2008 and 2007 was approximately $89.9 million and $122.0 million, respectively. The minority interest relating to cumulative redeemable perpetual preferred units in Camden Operating, L.P. of $97.9 million will remain classified between liability and equity pursuant to EITF D-98, “Classification and Measurement of Redeemable Securities.” Our consolidated statements of income and comprehensive income and shareholders’ equity have been reclassified to conform to the presentation requirements of SFAS 160.

Schedule III

Camden Property Trust
Real Estate and Accumulated Depreciation
As of December 31, 2008
(in thousands)


	Initial Cost						Total Cost
			Building/						Building/						Total Cost,
			Construction in		Cost Subsequent				Construction						Net of				Year of
			Progress &		to Acquisition/				In Progress &				Accumulated		Accumulated				Completion/
	Land		Improvements		Construction		Land		Improvements		Total		Depreciation		Depreciation		Encumbrances		Acquisition

Current Communities

Camden Ashburn Farm		4,835		22,604		441		4,835		23,045		27,880		2,847		25,033		15,364	2005
Camden Aventura		12,185		47,616		1,431		12,185		49,047		61,232		5,862		55,370		36,660	2005
Camden Ballantyne		4,503		30,250		709		4,503		30,959		35,462		3,797		31,665		26,025	2005
Camden Bay		7,450		63,283		3,010		7,450		66,293		73,743		15,326		58,417			1998/2002
Camden Bay Pointe		1,296		10,394		4,455		1,296		14,849		16,145		7,970		8,175			1997
Camden Bayside		3,726		28,689		8,387		3,726		37,076		40,802		17,650		23,152			1997
Camden Baytown		520		13,071		1,091		520		14,162		14,682		4,794		9,888			1999
Camden Bel Air		3,594		31,221		3,277		3,594		34,498		38,092		13,853		24,239			1998
Camden Breakers		1,055		13,024		2,866		1,055		15,890		16,945		6,278		10,667			1996
Camden Breeze		2,894		15,828		2,531		2,894		18,359		21,253		7,173		14,080			1998
Camden Brickell		14,621		57,031		1,504		14,621		58,535		73,156		7,463		65,693			2005
Camden Brookwood		7,174		31,984		657		7,174		32,641		39,815		4,346		35,469		22,624	2005
Camden Buckingham		2,704		21,251		1,621		2,704		22,872		25,576		7,884		17,692			1997
Camden Caley		2,047		17,445		948		2,047		18,393		20,440		5,550		14,890			2000
Camden Canyon		1,802		11,666		4,383		1,802		16,049		17,851		5,377		12,474			1998
Camden Centennial		3,123		13,051		2,237		3,123		15,288		18,411		5,804		12,607			1995
Camden Centre		172		1,166		185		172		1,351		1,523		547		976			1998
Camden Centreport		1,613		12,644		1,306		1,613		13,950		15,563		4,863		10,700			1997
Camden Cimarron		2,231		14,092		1,821		2,231		15,913		18,144		6,639		11,505			1997
Camden Citrus Park		1,144		6,045		2,688		1,144		8,733		9,877		4,755		5,122			1997
Camden City Centre		4,976		46,787		—		4,976		46,787		51,763		2,770		48,993			2007
Camden Clearbrook		2,384		43,942		2		2,384		43,944		46,328		3,573		42,755			2007
Camden Club		4,453		29,811		4,766		4,453		34,577		39,030		15,831		23,199			1998
Camden Commons		2,476		20,073		3,564		2,476		23,637		26,113		10,898		15,215			1998
Camden Copper Ridge		1,204		9,180		3,734		1,204		12,914		14,118		7,366		6,752		3,922	1993
Camden Copper Square		4,825		23,672		1,189		4,825		24,861		29,686		7,589		22,097			2000
Camden Cotton Mills		4,246		19,147		1,081		4,246		20,228		24,474		2,587		21,887			2005
Camden Cove		1,382		6,266		1,080		1,382		7,346		8,728		3,234		5,494			1998
Camden Creek		1,494		12,483		4,677		1,494		17,160		18,654		10,673		7,981			1993
Camden Crest		4,412		33,366		823		4,412		34,189		38,601		4,231		34,370		25,760	2005
Camden Crown Valley		9,381		54,210		1,030		9,381		55,240		64,621		13,531		51,090			2001
Camden Deerfield		4,895		21,922		682		4,895		22,604		27,499		2,980		24,519		19,220	2005
Camden Del Mar		4,404		35,264		12,761		4,404		48,025		52,429		16,105		36,324			1998
Camden Dilworth		516		16,633		—		516		16,633		17,149		1,735		15,414		13,073	2006
Camden Doral		10,260		40,416		675		10,260		41,091		51,351		4,990		46,361		28,838	2005

Schedule III


	Initial Cost						Total Cost
			Building/						Building/						Total Cost,
			Construction in		Cost Subsequent				Construction						Net of				Year of
			Progress &		to Acquisition/				In Progress &				Accumulated		Accumulated				Completion/
	Land		Improvements		Construction		Land		Improvements		Total		Depreciation		Depreciation		Encumbrances		Acquisition

Camden Doral Villas		6,476		25,543		729		6,476		26,272		32,748		3,338		29,410		21,651	2005
Camden Dunwoody		5,290		23,642		888		5,290		24,530		29,820		3,087		26,733		21,168	2005
Camden Fair Lakes		15,626		104,223		1,491		15,626		105,714		121,340		12,109		109,231		50,637	2005
Camden Fairfax Corner		8,484		72,874		17		8,484		72,891		81,375		7,270		74,105			2006
Camden Fairview		1,283		7,223		850		1,283		8,073		9,356		1,181		8,175			2005
Camden Fairways		3,969		15,543		8,262		3,969		23,805		27,774		8,700		19,074			1998
Camden Fallsgrove		9,408		43,647		344		9,408		43,991		53,399		5,406		47,993			2005
Camden Farmers Market		17,341		74,193		1,711		17,341		75,904		93,245		17,448		75,797			2001/2005
Camden Forest		970		7,209		1,862		970		9,071		10,041		4,428		5,613			1997
Camden Foxcroft		1,408		7,919		1,800		1,408		9,719		11,127		1,275		9,852		9,040	2005
Camden Gaines Ranch		5,094		37,100		1,173		5,094		38,273		43,367		4,034		39,333			2005
Camden Gardens		1,500		6,137		2,309		1,500		8,446		9,946		4,882		5,064			1994
Camden Glen Lakes		2,157		16,339		12,561		2,157		28,900		31,057		17,408		13,649			1993
Camden Governor’s Village		3,669		20,508		786		3,669		21,294		24,963		2,781		22,182		13,004	2005
Camden Grand Parc		7,688		35,900		489		7,688		36,389		44,077		4,363		39,714			2005
Camden Grandview		7,570		33,859		1,135		7,570		34,994		42,564		4,608		37,956			2005
Camden Greenway		16,916		43,933		2,876		16,916		46,809		63,725		15,265		48,460		52,359	1999
Camden Habersham		1,004		10,283		2,313		1,004		12,596		13,600		6,439		7,161			1997
Camden Harbor View		16,079		127,459		830		16,079		128,289		144,368		21,819		122,549			2003
Camden Highlands Ridge		2,612		34,726		2,476		2,612		37,202		39,814		11,752		28,062			1996
Camden Hills		853		7,834		1,117		853		8,951		9,804		3,750		6,054			1998
Camden Hunter’s Creek		4,156		20,925		729		4,156		21,654		25,810		2,748		23,062			2005
Camden Huntingdon		2,289		17,393		2,407		2,289		19,800		22,089		8,596		13,493			1995
Camden Interlocken		5,293		31,612		2,439		5,293		34,051		39,344		10,696		28,648			1999
Camden Lago Vista		3,497		29,623		31		3,497		29,654		33,151		4,489		28,662			2005
Camden Lake Pine		5,746		31,714		1,032		5,746		32,746		38,492		4,336		34,156		26,212	2005
Camden Lakes		3,106		22,746		7,302		3,106		30,048		33,154		16,593		16,561			1997
Camden Lakeside		1,171		7,395		2,710		1,171		10,105		11,276		5,287		5,989			1997
Camden Lakeway		3,915		34,129		2,766		3,915		36,895		40,810		12,879		27,931			1997
Camden Landings		1,045		6,434		2,881		1,045		9,315		10,360		5,019		5,341			1997
Camden Landsdowne		15,502		102,267		1,020		15,502		103,287		118,789		12,802		105,987			2005
Camden Largo Town Center		8,411		44,163		706		8,411		44,869		53,280		5,077		48,203			2005
Camden Las Olas		12,395		79,518		694		12,395		80,212		92,607		10,138		82,469			2005
Camden Laurel Ridge		915		4,338		1,834		915		6,172		7,087		3,527		3,560			1994
Camden Lee Vista		4,350		34,645		2,117		4,350		36,762		41,112		9,965		31,147			2000
Camden Legacy		4,068		26,612		2,836		4,068		29,448		33,516		11,468		22,048			1998
Camden Legacy Creek		2,052		12,896		1,428		2,052		14,324		16,376		5,395		10,981			1997
Camden Legacy Park		2,560		15,449		1,721		2,560		17,170		19,730		6,239		13,491			1997
Camden Legends		1,370		6,382		701		1,370		7,083		8,453		2,697		5,756			1998
Camden Live Oaks		6,428		39,127		9,562		6,428		48,689		55,117		19,705		35,412			1998
Camden Manor Park		2,535		47,134		1		2,535		47,135		49,670		5,236		44,434		29,675	2006
Camden Martinique		28,401		51,861		8,590		28,401		60,451		88,852		20,331		68,521		42,588	1998
Camden Midtown		4,583		18,026		1,535		4,583		19,561		24,144		6,494		17,650			1999
Camden Midtown Atlanta		6,196		33,828		1,337		6,196		35,165		41,361		4,601		36,760		20,565	2005
Camden Miramar		—		25,526		3,763		—		29,289		29,289		10,127		19,162			1994-2004
Camden Monument Place		9,030		54,053		3		9,030		54,056		63,086		3,112		59,974			2007
Camden Oak Crest		2,078		20,941		381		2,078		21,322		23,400		5,097		18,303		17,309	2003
Camden Oasis		2,409		13,745		3,863		2,409		17,608		20,017		9,852		10,165			1993
Camden Old Creek		20,360		71,777		7		20,360		71,784		92,144		5,410		86,734			2007
Camden Overlook		4,591		25,563		1,934		4,591		27,497		32,088		3,604		28,484		20,770	2005

Schedule III


	Initial Cost						Total Cost
			Building/						Building/						Total Cost,
			Construction in		Cost Subsequent				Construction						Net of				Year of
			Progress &		to Acquisition/				In Progress &				Accumulated		Accumulated				Completion/
	Land		Improvements		Construction		Land		Improvements		Total		Depreciation		Depreciation		Encumbrances		Acquisition

Camden Palisades		8,406		31,497		4,928		8,406		36,425		44,831		13,662		31,169			1998
Camden Park Commons		1,146		11,311		1,522		1,146		12,833		13,979		4,964		9,015			1997
Camden Peachtree City		6,536		29,063		950		6,536		30,013		36,549		4,016		32,533			2005
Camden Pinehurst		3,380		14,807		4,994		3,380		19,801		23,181		18,666		4,515			1997
Camden Pinnacle		1,640		12,287		1,973		1,640		14,260		15,900		5,463		10,437			1994
Camden Plantation		6,299		77,964		1,708		6,299		79,672		85,971		9,390		76,581			2005
Camden Pointe		2,058		14,879		1,652		2,058		16,531		18,589		6,025		12,564			1998
Camden Portofino		9,867		38,702		995		9,867		39,697		49,564		4,746		44,818			2005
Camden Preserve		1,206		16,258		1,746		1,206		18,004		19,210		6,872		12,338			1997
Camden Providence Lakes		2,020		14,855		3,931		2,020		18,786		20,806		4,002		16,804			2002
Camden Renaissance		4,144		37,424		2,648		4,144		40,072		44,216		12,325		31,891			1997
Camden Reserve		3,910		20,027		5,467		3,910		25,494		29,404		11,565		17,839			1997
Camden Reunion Park		3,302		18,457		750		3,302		19,207		22,509		2,541		19,968		19,961	2005
Camden Ridgecrest		1,008		12,720		1,926		1,008		14,646		15,654		6,303		9,351			1995
Camden River		5,386		24,025		1,615		5,386		25,640		31,026		3,343		27,683		14,332	2005
Camden Roosevelt		11,470		45,785		202		11,470		45,987		57,457		6,002		51,455			2005
Camden Royal Oaks		1,055		19,919		78		1,055		19,997		21,052		2,343		18,709			2006
Camden Royal Palms		2,147		38,339		426		2,147		38,765		40,912		2,066		38,846			2007
Camden Russett		13,460		61,837		906		13,460		62,743		76,203		7,570		68,633		46,545	2005
Camden San Paloma		6,480		23,045		1,974		6,480		25,019		31,499		5,413		26,086			2002
Camden Sea Palms		4,336		9,930		1,788		4,336		11,718		16,054		4,298		11,756			1998
Camden Sedgebrook		5,266		29,211		684		5,266		29,895		35,161		3,887		31,274		21,614	2005
Camden Shiloh		4,181		18,798		664		4,181		19,462		23,643		2,722		20,921			2005
Camden Sierra at Otay		10,585		49,781		490		10,585		50,271		60,856		9,117		51,739			2003
Camden Silo Creek		9,707		45,144		250		9,707		45,394		55,101		5,540		49,561			2005
Camden Simsbury		1,152		6,499		261		1,152		6,760		7,912		865		7,047			2005
Camden South End Square		6,625		29,175		549		6,625		29,724		36,349		3,869		32,480		23,693	2005
Camden Springs		1,520		8,300		3,046		1,520		11,346		12,866		7,511		5,355			1994
Camden St. Clair		7,526		27,486		953		7,526		28,439		35,965		3,530		32,435		21,306	2005
Camden Steeplechase		1,089		5,190		3,713		1,089		8,903		9,992		5,869		4,123			1994
Camden Stockbridge		5,071		22,693		699		5,071		23,392		28,463		3,234		25,229		21,646	2005
Camden Stonebridge		1,016		7,137		1,983		1,016		9,120		10,136		4,450		5,686			1993
Camden Stonecrest		3,954		22,021		463		3,954		22,484		26,438		2,932		23,506		17,814	2005
Camden Stoneleigh		3,498		31,285		776		3,498		32,061		35,559		2,763		32,796			2006
Camden Sweetwater		4,395		19,664		847		4,395		20,511		24,906		2,789		22,117			2005
Camden Touchstone		1,203		6,772		1,619		1,203		8,391		9,594		1,200		8,394			2005
Camden Tuscany		3,330		36,466		325		3,330		36,791		40,121		6,501		33,620			2003
Camden Valley Creek		1,529		9,543		4,717		1,529		14,260		15,789		8,048		7,741			1994
Camden Valley Park		3,096		14,667		7,907		3,096		22,574		25,670		13,862		11,808			1994
Camden Valley Ridge		1,609		9,814		4,044		1,609		13,858		15,467		7,380		8,087			1994
Camden Valleybrook		7,340		39,139		546		7,340		39,685		47,025		5,116		41,909			2005
Camden Vanderbilt		16,076		44,918		11,588		16,076		56,506		72,582		20,636		51,946			1994/1997
Camden Vineyards		4,367		28,494		574		4,367		29,068		33,435		6,225		27,210			2002
Camden Vintage		3,641		19,255		3,450		3,641		22,705		26,346		9,534		16,812			1998
Camden Vista Valley		2,318		17,014		3,970		2,318		20,984		23,302		10,153		13,149			1998
Camden Westshore		1,734		10,819		4,774		1,734		15,593		17,327		6,904		10,423			1997
Camden Westview		1,066		7,932		2,935		1,066		10,867		11,933		6,515		5,418			1993
Camden Westwind		26,824		68,257		21		26,824		68,278		95,102		7,464		87,638			2006
Camden Westwood		4,567		25,354		779		4,567		26,133		30,700		3,460		27,240		19,907	2005
Camden Woods		2,693		19,930		6,131		2,693		26,061		28,754		12,159		16,595			1999
Camden World Gateway		5,785		51,821		1,014		5,785		52,835		58,620		5,646		52,974			2005

		695,865		3,867,153		305,912		695,865		4,173,065		4,868,930		971,190		3,897,740		723,282

Schedule III

Camden Property Trust
Real Estate and Accumulated Depreciation
As of December 31, 2008
(in thousands)


	Initial Cost						Total Cost
			Building/						Building/						Total Cost,
			Construction in		Cost Subsequent				Construction						Net of				Year of
			Progress &		to Acquisition/				In Progress &				Accumulated		Accumulated				Completion/
	Land		Improvements		Construction		Land		Improvements		Total		Depreciation		Depreciation		Encumbrances		Acquisition
Lease-Up & Development Communities

Camden Cedar Hills		2,684		20,880		—		2,684		20,880		23,564		609		22,955			2008
Camden Dulles Station		10,807		60,611		—		10,807		60,611		71,418		1,131		70,287			N/A
Camden Orange Court		5,319		40,148		—		5,319		40,148		45,467		1,374		44,093			2008
Camden Potomac Yards		16,498		88,013		—		16,498		88,013		104,511		3,642		100,869			2008
Camden Summerfield		14,659		47,926		—		14,659		47,926		62,585		2,028		60,557			2008
Camden Travis Street		1,780		7,515		—		1,780		7,515		9,295		—		9,295		5,927	N/A
Camden Whispering Oaks		1,188		26,064		—		1,188		26,064		27,252		630		26,622			2008

		52,935		291,157		—		52,935		291,157		344,092		9,414		334,678		5,927

Development Communities
5400 Lamar Acreage				8,465		—				8,465		8,465		403		8,062			N/A
Camden Amber Oaks Phase II				4,112		—				4,112		4,112		—		4,112			N/A
Camden Celebration				15,239		—				15,239		15,239		—		15,239			N/A
Camden City Centre II				7,903		—				7,903		7,903		2		7,901			N/A
Camden Countryway				16,116		—				16,116		16,116		—		16,116			N/A
Camden Deer Springs				19,996		—				19,996		19,996		—		19,996			N/A
Camden Farmer’s Market Phase III/IV				6,511		—				6,511		6,511		1		6,510			N/A
Camden Highlands				6,926		—				6,926		6,926		36		6,890			N/A
Camden Lake Nona				21,970		—				21,970		21,970		—		21,970			N/A
Camden Lincoln Station				4,647		—				4,647		4,647		—		4,647			N/A
Camden McGowen Station				10,850		—				10,850		10,850		—		10,850			N/A
Camden Montague				3,577		—				3,577		3,577		1		3,576			N/A
Camden NOMA				24,976		—				24,976		24,976		1		24,975			N/A
Camden NOMA II				17,331		—				17,331		17,331		—		17,331			N/A
Camden Royal Oaks II				3,756		—				3,756		3,756		—		3,756			N/A
Camden Selma & Vine		`		16,954		—				16,954		16,954		—		16,954			N/A
Camden South Capital				26,960		—				26,960		26,960		1		26,959			N/A
Camden Summerfield				18,668		—				18,668		18,668		—		18,668			N/A
Camden Whispering Oaks II				5,228		—				5,228		5,228		—		5,228			N/A
		—		240,185		—		—		240,185		240,185		445		239,740		—	N/A

Corporate				2,627		—		—		2,627		2,627		—		2,627		—

	$	748,800	$	4,401,122	$	305,912	$	748,800	$	4,707,034	$	5,455,834	$	981,049	$	4,474,785	$	729,209

Schedule III

Camden Property Trust
Real Estate and Accumulated Depreciation
As of December 31, 2008
(in thousands)

The changes in total real estate assets, excluding depreciation, investments in joint ventures, and properties held for sale for the years ended December 31:


	*2008(a)***			2007			2006
Balance, beginning of the period	$	5,493,684		$	5,099,459		$	4,860,799

Additions during the period:
Acquisition — Other					83,290			149,386
Acquisition — Summit								1,994
Development		122,088			333,412			254,128
Improvements		46,465			89,698			57,544
Classification from held for sale		15,783						122,750
Deductions during period:
Cost of real estate sold — Other		(52,183	)		(5,313	)		(248,587	)
Impairment loss on land (b)		(50,190	)		(1,447	)
Classification to held for sale		(119,813	)		(105,415	)		(98,555	)

Balance, end of period	$	5,455,834		$	5,493,684		$	5,099,459

The changes in accumulated depreciation for the years ended December 31:


	*2008(a)***			2007			2006
Balance, Beginning of the period	$	868,074		$	762,011		$	716,650
Depreciation		168,006			154,051			153,570
Real Estate sold		(1,845	)					(75,755	)
Real Estate disposed		(3,053	)		(1,502	)
Transferred to held for sale		(54,684	)		(46,486	)		(46,302	)
Transferred from held for sale		4,551						13,848

Balance, end of period	$	981,049		$	868,074		$	762,011


(a)		Excludes two parcels classified as held for sale with gross book values of $1.8 million and $7.4 million, one townhome classified as held for sale with a gross book value of $0.3 million, and one operating property with a gross book value of $24.8 million, and accumulated depreciation of $13.7 million.

(b)		Excludes a $1.1 million impairment loss related to a potential joint venture development we no longer plan to pursue as there were no real estate assets associated with the potential joint venture.

		The aggregate cost for federal income tax purposes at December 31, 2008 was $4.6 billion.

Schedule IV

CAMDEN PROPERTY TRUST
MORTGAGE LOANS ON REAL ESTATE
December 31, 2008

($ in thousands)

Face amount of

Carry amount of

Description

Interest rate

Final maturity date

Periodic payment terms

mortgages

mortgages (a)

Apartments

Second Mortgages

Los Angeles/Orange County, California

12.00

March 2009

Interest Only

22,616

Houston, Texas

12.00

January 2009

Interest Only

9,226

Washington DC Metro

14.00

August 2010

Interest Only

9,412

First Mortgages

Houston, Texas

Libor + 2.00%

December 2009

Interest Only

8,710

Undeveloped Land

First Mortgage

Houston, Texas

Libor + 3.00%

December 2009

Interest Only

5,637

Houston, Texas

Libor + 3.00%

December 2009

Interest Only

8,405

Houston, Texas

Libor + 3.00%

July 2011

Interest Only

2,813

Total

66,819


(a)		The aggregate cost at December 31, 2008 for federal income tax purposes is approximately $66,819.

Changes in mortgage loans for the years ended December 31, 2008, 2007 and 2006 are summarized below.


	2008		2007		2006
Balance at beginning of year	$	61,923	$	45,333	$	25,177
Additions:
Advances under real estate loans		8,693		17,590		41,615
Deductions:
Collections of principal		3,797		1,000		21,459

Balance at end of year	$	66,819	$	61,923	$	45,333

EXHIBIT 12.1

CAMDEN PROPERTY TRUST
STATEMENT REGARDING COMPUTATION OF RATIOS
FOR THE FIVE YEARS ENDED DECEMBER 31


(in thousands, except for ratio amounts)	*2008(1)***			*2007(2)***			*2006(3)***			*2005(4)***			*2004(5)***

EARNINGS BEFORE FIXED CHARGES:
Income (loss) from continuing operations before income taxes	$	(8,810	)	$	49,502		$	135,638		$	148,753		$	21,128
Less: Distributions on perpetual preferred units		(7,000	)		(7,000	)		(7,000	)		(7,393	)		(11,206	)
Less: Equity in income (loss) of joint ventures		(1,265	)		1,526			5,156			10,049			356

		(545	)		54,976			137,482			146,097			31,978
Add: Distributed income of joint ventures		5,392			5,406			—			—			1,390
Less: Interest capitalized		17,718			22,622			20,627			17,513			9,332
Less: Preferred distribution of subsidiaries		7,000			7,000			7,000			7,028			10,461

Total earnings before fixed charges		(19,871	)		30,760			109,855			121,556			13,575


FIXED CHARGES:
Interest expense		132,399			115,753			117,348			110,672			76,801
Interest capitalized		17,718			22,622			20,627			17,513			9,332
Accretion of discount		571			590			694			687			609
Loan amortization		2,958			3,661			3,782			3,712			2,681
Interest portion of rental expense		928			912			864			823			668
Preferred distribution of subsidiaries		7,000			7,000			7,000			7,028			10,461

Total fixed charges		161,574			150,538			150,315			140,435			100,552


Total earnings and fixed charges	$	141,703		$	181,298		$	260,170		$	261,991		$	114,127


RATIO OF EARNINGS TO FIXED CHARGES		0.88			1.20			1.73			1.87			1.14


(1)		Earnings include a $51,323 impact related to impairment loss on land, a $13,566 impact related to gain on early retirement of debt, and a $2,929 impact related to gain on sale of properties, including land. Excluding this impact, the ratio would be 1.09.

(2)		Earnings include a $1,447 impact related to impairment loss on land. Excluding this impact, the ratio would be 1.21.

(3)		Earnings include a $97,452 impact related to gain on sale of properties, including land. Excluding this impact, the ratio would be 1.08.

(4)		Earnings include a $132,914 impact related to gain on sale of properties, including land. Excluding this impact, the ratio would be 0.92.

(5)		Earnings include a $1,642 impact related to gain on sale of properties, including land. Excluding this impact, the ratio would be 1.12.


INTEREST COVERAGE RATIO
Total revenues	$	604,476		$	613,321		$	596,559		$	536,608		$	375,058
Total expenses		(570,193	)		(556,898	)		(556,529	)		(523,086	)		(344,722	)
Income from discontinued operations		4,480			13,214			15,927			16,845			16,265
Add: Depreciation and amortization		174,772			160,958			152,988			159,325			88,145
Add: Depreciation of discontinued operations		2,762			6,953			10,685			15,668			20,735
Add: Interest expense		132,399			115,753			117,348			110,672			76,801
Add: Interest expense of discontinued operations		466			1,000			996			876			2,413

Total	$	349,162		$	354,301		$	337,974		$	316,908		$	234,695


Total interest expense	$	132,865		$	116,753		$	118,344		$	111,548		$	79,214

INTEREST COVERAGE RATIO		2.6			3.0			2.9			2.8			3.0


Texas	1-12110	76-6088377

(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)


Three Greenway Plaza, Suite 1300, Houston, Texas		77046

(Address of principal executive offices)		(Zip Code)

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


	CAMDEN PROPERTY TRUST
	By:	/s/ Michael P. Gallagher
		Michael P. Gallagher
		Vice President - Chief Accounting Officer


Exhibit
Number		Title

23.1		Consent of Independent Registered Public Accounting Firm

99.1		Item 6. Selected Financial Data, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 8. Financial Statements and Supplementary Data and Procedures, Schedule III and IV and Exhibit 12.1