CAMDEN PROPERTY TRUST UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Exhibit
99.4
UNAUDITED
PRO FORMA CONDENSED
COMBINED
FINANCIAL STATEMENTS
Camden
and Summit entered into an agreement and plan of merger on October 4, 2004,
which was subsequently amended on October 6, 2004 and January 24, 2005. The
merger agreement provides for the merger of Summit with and into Camden Summit,
a wholly owned subsidiary of Camden, with Camden Summit as the surviving
corporation. The merger agreement, as amended, has been incorporated by
reference in this Amendment No. 1 to Form 8-K. We encourage you to read the
merger agreement, as amended, because it is the legal document that governs the
merger.
The
following unaudited pro forma condensed combined financial information sets
forth: (i) the historical financial information as of December 31, 2004 and
for the twelve months then ended, as derived from the audited financial
statements of Camden and Summit, (ii) Summit's acquisitions of apartment
communities, as appropriate, and (iii) pro forma adjustments assuming the merger
was completed as of December 31, 2004 for purposes of the unaudited pro forma
condensed combined balance sheet and January 1, 2004 for purposes of the
unaudited pro forma condensed combined statements of operations.
The
unaudited pro forma combined financial information should be read in conjunction
with, and are qualified in their entirety by, the notes thereto and with the
historical consolidated financial statements of Camden and Summit, including the
respective notes thereto. The unaudited pro forma condensed combined financial
statements give effect to the merger under the purchase method of accounting in
accordance with the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 141, "Business Combinations." In the opinion
of management, all significant adjustments necessary to reflect the effects of
the merger have been made. The merger adjustments are based on certain estimates
and currently available information. Such adjustments could change as additional
information becomes available, as estimates are refined or as additional events
occur.
The
unaudited pro forma condensed combined financial statements are presented for
comparative purposes only and are not necessarily indicative of what the actual
combined financial position and results of operations of Camden and Summit would
have been as of and for the periods presented, nor does it purport to represent
the future combined financial position or results of operations of Camden and
Summit.
1
Unaudited
Pro Forma Condensed Combined Balance Sheet
As
of December 31, 2004
|
Pro
Forma |
|||||||||||||
(in
thousands) |
Camden |
Summit |
Adjustments |
Camden |
|||||||||
|
Historical |
Historical |
(A) |
Pro
Forma |
||||||||||
ASSETS |
|||||||||||||
|
Real
estate assets held for investment |
$ |
3,087,018 |
$ |
1,584,663 |
$ |
376,695 |
$ |
5,048,376 |
|||||
|
Accumulated
depreciation |
(688,333 |
) |
(156,913 |
) |
156,913
|
(688,333 |
) | ||||||
|
Net
real estate assets held for investment |
2,398,685
|
1,427,750
|
533,608
|
4,360,043
|
|||||||||
|
Investment
in joint ventures |
9,641
|
2,716
|
-
|
12,357
|
|||||||||
|
Assets
held for sale |
62,418
|
31,348
|
- |
93,766
|
|||||||||
|
Total
real estate assets |
2,470,744
|
1,461,814
|
533,608
|
4,466,166
|
|||||||||
|
Cash
and cash equivalents |
2,253
|
6,511
|
-
|
8,764
|
|||||||||
|
Other
assets, net |
156,367
|
23,090
|
18,174
|
197,631
|
|||||||||
|
Total
assets |
$ |
2,629,364 |
$ |
1,491,415 |
$ |
551,782 |
$ |
4,672,561 |
|||||
|
LIBAILITIES
AND SHARHOLDERS' EQUITY |
|||||||||||||
|
Liabilities |
|||||||||||||
|
Notes
payable |
$ |
1,576,405 |
$ |
758,748 |
$ |
544,672 |
$ |
2,879,825 |
|||||
|
Accounts
payable and other liabilities |
154,877
|
108,622
|
3,633
|
267,132
|
|||||||||
|
Total
liabilities |
1,731,282
|
867,370
|
548,305
|
3,146,957
|
|||||||||
|
Minority
interests |
|||||||||||||
|
Perpetual
preferred units |
115,060
|
-
|
-
|
115,060
|
|||||||||
|
Common
units |
44,507
|
59,105
|
22,459
|
126,071
|
|||||||||
|
Other
minority interests |
-
|
7,020
|
2,860
|
9,880
|
|||||||||
|
Total
minority interests |
159,567
|
66,125
|
25,319
|
251,011
|
|||||||||
|
Shareholders'
equity |
|||||||||||||
|
Common
shares of beneficial interest |
486
|
315
|
(197 |
) |
604
|
||||||||
|
Additional
paid-in capital |
1,348,848
|
504,370
|
39,577
|
1,892,795
|
|||||||||
|
(Distributions
in excess of net income) / |
|||||||||||||
|
retained
earnings |
(361,973 |
) |
61,326
|
(61,326 |
) |
(361,973 |
) | ||||||
|
Unearned
restricted share awards |
(13,023 |
) |
(104 |
) |
104
|
(13,023 |
) | ||||||
|
Employee
notes receivable |
-
|
(7,987 |
) |
-
|
(7,987 |
) | |||||||
|
Treasury
shares, at cost |
(235,823 |
) |
-
|
-
|
(235,823 |
) | |||||||
|
Total
shareholders' equity |
738,515
|
557,920
|
(21,842 |
) |
1,274,593
|
||||||||
|
Total
liabilities and shareholders' equity |
$ |
2,629,364 |
$ |
1,491,415 |
$ |
551,782 |
$ |
4,672,561 |
|||||
2
Unaudited
Pro Forma Condensed Combined Statement of Operations
For
the Year Ended December 31, 2004
|
Completed |
||||||||||||||||||||||
| (in thousands, except per share amounts) |
Camden |
Summit |
Transactions |
Summit, |
Pro
Forma |
Camden |
||||||||||||||||
|
Historical |
Historical |
(B) |
As
adjusted |
Adjustments |
Pro
Forma |
|||||||||||||||||
REVENUES |
||||||||||||||||||||||
|
Rental
revenues |
$ |
376,148 |
$ |
131,882 |
$ |
9,716 |
$ |
141,598 |
$ |
2,791 |
(C-1 |
) |
$ |
520,537 |
||||||||
|
Other
property revenues |
33,959
|
11,004
|
587
|
11,591
|
-
|
45,550
|
||||||||||||||||
|
Total
property revenues |
410,107
|
142,886
|
10,303
|
153,189
|
2,791
|
566,087
|
||||||||||||||||
|
Fee
and asset management |
9,187
|
586
|
-
|
586
|
-
|
9,773
|
||||||||||||||||
|
Other
revenues |
11,937
|
1,984
|
-
|
1,984
|
-
|
13,921
|
||||||||||||||||
|
Total
revenues |
431,231
|
145,456
|
10,303
|
155,759
|
2,791
|
589,781
|
||||||||||||||||
|
EXPENSES |
||||||||||||||||||||||
|
Total
property expenses |
168,787
|
47,293
|
4,081
|
51,374
|
-
|
220,161
|
||||||||||||||||
|
Property
management |
11,924
|
6,203
|
-
|
6,203
|
-
|
18,127
|
||||||||||||||||
|
Fee
and asset management |
3,856
|
751
|
751
|
-
|
4,607
|
|||||||||||||||||
|
General
and administrative |
18,536
|
12,967
|
-
|
12,967
|
-
|
31,503
|
||||||||||||||||
|
Merger
related costs |
-
|
11,484
|
-
|
11,484
|
-
|
11,484
|
||||||||||||||||
|
Interest |
79,214
|
31,422
|
1,714
|
33,136
|
8,821
|
(C-2 |
) |
121,171
|
||||||||||||||
|
Depreciation
and amortization |
103,528
|
42,705
|
7,891
|
50,596
|
29,543
|
(C-1 |
) |
183,667
|
||||||||||||||
|
Amortization
of deferred financing costs |
2,697
|
1,510
|
-
|
1,510
|
(1,510 |
) |
(C-3 |
) |
2,697
|
|||||||||||||
|
Total
expenses |
388,542
|
154,335
|
13,686
|
168,021
|
36,854
|
(C-4 |
) |
593,417
|
||||||||||||||
|
Income
(loss from continuing operations |
||||||||||||||||||||||
|
before
gain on sale of properties, |
||||||||||||||||||||||
|
impairment
loss on land held for sale, |
||||||||||||||||||||||
|
equity
in income of joint ventures and |
||||||||||||||||||||||
|
minority
interests |
42,689
|
(8,879 |
) |
(3,383 |
) |
(12,262 |
) |
(34,063 |
) |
(3,636 |
) | |||||||||||
|
Gain
on sale of properties, including land |
2,625
|
-
|
-
|
-
|
-
|
2,625
|
||||||||||||||||
|
Impairment
loss on land held for sale |
(1,143 |
) |
-
|
-
|
-
|
-
|
(1,143 |
) | ||||||||||||||
|
Equity
in income (loss) of joint ventures |
356
|
(380 |
) |
-
|
(380 |
) |
-
|
(24 |
) | |||||||||||||
|
Distributions
on perpetual preferred units |
(10,461 |
) |
(4,812 |
) |
-
|
(4,812 |
) |
-
|
(15,273 |
) | ||||||||||||
|
Original
issuance costs on redeemed |
||||||||||||||||||||||
|
perpetual
preferred units |
(745 |
) |
(1,453 |
) |
-
|
(1,453 |
) |
-
|
(2,198 |
) | ||||||||||||
|
(Income)
loss allocated to common units |
(2,765 |
) |
1,492
|
(325 |
) |
1,167
|
2,554
|
(C-5 |
) |
956
|
||||||||||||
|
Income
(loss) from continuing operations |
$ |
30,556 |
$ |
(14,032 |
) |
$ |
(3,708 |
) |
$ |
(17,740 |
) |
$ |
(31,509 |
) |
$ |
(18,693 |
) | |||||
|
Per
share data |
||||||||||||||||||||||
|
Basic
income (loss) from continuing |
||||||||||||||||||||||
|
operations
per share |
$ |
0.74 |
$ |
(0.35 |
) | |||||||||||||||||
|
Diluted
income (loss) from continuing |
||||||||||||||||||||||
|
operations
per share |
$ |
0.72 |
$ |
(0.35 |
) | |||||||||||||||||
|
Weighted
average number of common |
||||||||||||||||||||||
|
shares
outstanding |
41,430
|
11,802
|
(C-6 |
) |
53,232
|
|||||||||||||||||
|
Weighted
average number of common |
||||||||||||||||||||||
|
and
dilutive common equivalent shares |
||||||||||||||||||||||
|
outstanding |
42,426
|
11,802
|
53,232
|
|||||||||||||||||||
3
|
A. |
Under
the terms of the Merger Agreement, Summit stockholders had the opportunity
to elect to receive cash or stock for their Summit shares. Each
stockholder's election was subject to proration, depending on the
elections of all Summit stockholders so that the aggregate amount of cash
issued in the merger to Summit's stockholders equaled approximately $436.3
million. As a result of this proration, Summit stockholders electing
Camden stock received approximately .6383 shares of Camden stock and
$1.4177 in cash for each of their Summit common shares. The final
conversion ratio for the common shares was determined based on the average
market price of our common shares over a five day trading period preceding
the effective time of the merger. Fractional shares were paid in cash.
Summit stockholders electing cash or who had no consideration preference,
as well as those stockholders who made no effective election, received
$31.20 in cash for each of their Summit shares. In the merger, we issued
approximately 11.8 million common shares to Summit stockholders.
|
In
conjunction with the merger, the limited partners in the Operating Partnership
were offered, on a unit-by-unit basis, the opportunity to redeem their
partnership units for $31.20 in cash, without interest, or to remain in the
Operating Partnership following the merger at a unit valuation equal to .6687 of
a Camden common share. The limited partner elections result in our redeeming 0.7
million partnership units for cash, for an aggregate of $21.7 million, and
issuing 1.8 million partnership units. The value of the common shares and
partnership units issued was determined based on the average market price of our
common shares for the five day period commencing two days prior to the
announcement of the merger on October 4, 2004.
As of
February 28, 2005, there were 31,567,372 shares of Summit common stock
outstanding and 3,342,504 limited partnership units in Summit Properties
Partnership, L.P. owned by minority interest holders. At closing, approximately
35,229 previously granted shares of restricted stock vested and were entitled to
receive the merger consideration.
Holders
of outstanding Summit incentive stock options were able to elect to receive
Camden common shares at the effective time of the merger, in exchange for the
cancellation of such incentive stock options, in an amount equal to the value of
the cash option payment. The issuance of Camden common shares in lieu of the
cash option payment did not effect the allocation of the amounts of cash and
Camden common shares issued in the merger. In connection with the merger, we
issued 20,829 Camden common shares to holders of Summit incentive stock options.
4
The total
purchase price, based on an estimated Camden share price of $46.10, which
represents Camden's trading average for the five day period commencing two days
prior to the announcement of the merger on October 4, 2004, and financing of the
merger are summarized as follows (in thousands):
Calculation
of purchase price |
||||
|
Issuance
of 11,781,005 Camden common shares based on a .6383 exchange ratio in
exchange for 18,457,441 shares of Summit common stock |
$ |
543,105 |
||
|
Issuance
of 20,829 Camden common shares based on the cash value of Summit incentive
stock options outstanding |
960 |
|||
|
Payment
of $410.1 million in exchange for 13,145,160 shares of Summit common stock
at $31.20 per share |
410,129 |
|||
|
Payment
of $26.2 million in exchange for 18,457,441 shares of Summit common stock,
at $1.4177 per share, and fractional shares |
26,185 |
|||
|
Payment
of $21.7 million in exchange for 696,652 Camden Summit Operating
Partnership units |
21,736 |
|||
|
Issuance
of 1,769,281 Camden Summit Operating Partnership units based on a .6687
exchange ratio in exchange for 2,645,852 units in Summit Properties
Partnership, L.P. |
81,564 |
|||
|
Total
merger consideration |
1,083,679 |
|||
|
Assumption
of Summit's mortgages and unsecured notes payable at book
value |
758,748 |
|||
|
Adjustment
to record Summit mortgages and unsecured notes payable at fair
value |
34,166 |
|||
|
Reversal
of Summit's historical fair value adjustments to notes
payable |
(1,453 |
) | ||
|
Assumption
of Summit's accounts payable and other liabilities at book
value |
108,622 |
|||
|
Assumption
of Summit's employee notes receivable |
(7,987 |
) | ||
|
Adjustment
to record Summit's accounts payable and other liabilities at fair
value |
3,633 |
|||
|
Fair
value of Summit's other minority interests |
9,880 |
|||
|
Estimated
remaining fees and other expenses related to the merger |
53,909 |
|||
|
Total
purchase price |
$ |
2,043,197 |
||
The
following is a calculation of the estimated fees and other expenses related to
the merger (in thousands):
|
Advisory
fees |
$ |
10,209 |
||
|
Legal,
accounting and other fees |
5,000 |
|||
|
Termination,
severance and settlement of share-based compensation |
69,000 |
|||
|
Total
estimated fees and other expenses related to the merger |
84,209 |
|||
|
Costs
paid by Summit prior to December 31, 2004 |
(29,512 |
) | ||
|
Costs
paid by Camden prior to December 31, 2004 |
(788 |
) | ||
|
Estimated
remaining fees and other expenses related to the merger |
$ |
53,909 |
Included
in the $29.5 million of costs paid by Summit prior to December 31, 2005 are
payments totaling $24.6 million paid to certain Summit executives in December
2004 as follows: $14.2 million related to the cash value of vested and unvested
options, $7.1 million in performance bonus payments and $3.3 million related to
unvested restricted share awards. All payments were made using funds available
under Summit's line of credit, which Camden Summit assumed by operation of
merger.
5
Notes
to Unaudited Pro Forma Condensed Combined
Financial
Statements
Camden
has allocated the purchase price to the estimated fair value of the net assets
acquired and liabilities assumed as follows:
|
Summit
Historical |
Summit
Fair Value |
Pro
Forma Adjustments |
|||||||||||
(in
thousands) |
|||||||||||||
ASSETS |
|||||||||||||
Real
estate assets |
|||||||||||||
|
Real
estate assets held for investment |
$ |
1,584,663 |
$ |
1,961,358 |
$ |
376,695 |
(A-1 |
) | |||||
|
Accumulated
depreciation |
(156,913 |
) |
- |
156,913 |
(A-2 |
) | |||||||
|
Net
real estate assets held for investment |
1,427,750 |
1,961,358 |
533,608 |
||||||||||
|
Investment
in joint ventures |
2,716 |
2,716 |
- |
||||||||||
|
Assets
held for sale |
31,348 |
31,348 |
- |
||||||||||
|
Total
real estate assets |
1,461,814 |
1,995,422 |
533,608 |
||||||||||
|
Cash
and cash equivalents |
6,511 |
6,511 |
- |
||||||||||
|
Other
assets, net |
23,090 |
41,264 |
18,174 |
(A-3 |
) | ||||||||
|
Total
assets |
$ |
1,491,415 |
$ |
2,043,197 |
$ |
551,782 |
|||||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY |
|||||||||||||
|
Liabilities |
|||||||||||||
|
Notes
payable |
$ |
758,748 |
$ |
1,303,420 |
$ |
544,672 |
(A-4 |
) | |||||
|
Accounts
payable and other liabilities |
108,622 |
112,225 |
3,633 |
(A-5 |
) | ||||||||
|
Total
liabilities |
867,370 |
1,415,675 |
548,305 |
||||||||||
|
Minority
interests |
|||||||||||||
|
Perpetual
preferred units |
- |
- |
- |
||||||||||
|
Common
units |
59,105 |
81,564 |
22,459 |
(A-6 |
) | ||||||||
|
Other
minority interests |
7,020 |
9,880 |
2,860 |
(A-7 |
) | ||||||||
|
Total
minority interests |
66,125 |
91,444 |
25,319 |
||||||||||
|
Shareholders'
equity |
|||||||||||||
|
Common
shares of beneficial interest |
315 |
118 |
(197 |
) |
(A-8 |
) | |||||||
|
Additional
paid-in capital |
504,370 |
543,947 |
39,577 |
(A-8 |
) | ||||||||
|
Retained
earnings |
61,326 |
- |
(61,326 |
) |
(A-8 |
) | |||||||
|
Unearned
restricted share awards |
(104 |
) |
- |
104 |
(A-8 |
) | |||||||
|
Employee
notes receivable |
(7,987 |
) |
(7,987 |
) |
- |
(A-9 |
) | ||||||
|
Total
shareholders' equity |
557,920 |
536,078 |
(21,842 |
) |
|||||||||
|
Total
liabilities and shareholders' equity |
$ |
1,491,415 |
$ |
2,043,197 |
$ |
551,782 |
|||||||
6
|
A-1 |
Fair
market value adjustment to Summit's real estate assets held for investment
based on Camden's purchase price allocation. See Note C-1 for further
discussion of purchase price allocation. |
|
A-2 |
Adjustment
to eliminate Summit's historical accumulated
depreciation. |
|
A-3 |
Adjustments
to Summit's historical balances for other assets as
follows: |
|
a. |
Elimination
of Summit's historical book value for: $8.4 million in deferred financing
costs, $3.1 million in acquired in place lease values and $2.7 million in
receivables related to straight line rent adjustments and other
assets. |
|
b. |
Increase
in other assets for $32.4 million, which represents the portion of the
purchase price allocated to intangible lease costs related to in place
leases. The value of in place leases was determined as the difference in
the discounted cash flows calculated as if the property was vacant and at
its acquired occupancy level. |
|
A-4 |
Adjustment
to Summit's historical balances for notes payable as
follows: |
|
a. |
Additional
borrowings of $512.0 million to fund the cash portion of the merger
consideration and payment of estimated fees and other expenses related to
the merger. These borrowings were financed under a new $500 million senior
unsecured bridge facility and by borrowing the remainder under ▇▇▇▇▇▇'s
$600 million unsecured line of credit. |
|
b. |
Adjustment
to reflect the reversal of Summit's historical fair value adjustments to
notes payable of $1.5 million and the addition of our estimated fair value
of Summit's notes payable of $34.2 million. The fixed interest rates on
notes payable that Camden will assume upon completion of the merger with
Summit are above market rates. Camden will record a fair value adjustment
of $34.2 million to account for the difference between the fixed rates and
market rates for those borrowings. Estimates of fair value are based upon
interest rates available for the issuance of debt with similar terms and
remaining maturities. |
|
A-5 |
Adjustments
to record at fair value Summit's accounts payable and other liabilities,
including below market leases. |
|
A-6 |
Represents
the issuance of 1,769,281 common units based on a .6687 exchange ratio in
exchange for 2,645,852 common units in Summit Properties Partnership, L.P.
Based on an estimated value of Camden common shares of $46.10 per share,
the fair value of these units total $81.6 million. Summit's book value of
these units as of December 31, 2004 was $59.1
million. |
|
A-7 |
Reflects
the adjustment to Summit's other minority interests based on estimates of
fair value of the underlying assets and liabilities of the joint
venture. |
|
A-8 |
Represents
adjustments to historical shareholders' equity to reflect the issuance of
11,781,005 Camden common shares, at an estimated value of $46.10 per
share, in exchange for 18,457,441 shares of Summit common stock, the
issuance of 20,829 Camden common shares in exchange for Summit incentive
stock options and the purchase of 13,145,160 shares of Summit common stock
for cash. At the time of the merger, all previously granted shares of
restricted stock vested and were entitled to receive the merger
consideration. |
|
A-9 |
Represents
employee notes receivable that are secured by Summit common stock. No pro
forma adjustment has been made because the stockholders elected, on a
share-by-share basis, to receive either Summit common stock or cash at the
closing of the merger. Subsequent to year end, $4.9 million in Summit
employee notes receivables were repaid. No pro forma adjustments have been
made for these repayments, as they do not meet the requirements of a
pro forma adjustment. |
7
|
B |
Summit
acquired six apartment communities during the year ended December 31,
2004. |
On May
27, 2004, Summit acquired Summit Stonecrest, a 306 apartment home community
located in Charlotte, North Carolina, for $28.0 million. Consideration paid for
this community was cash of $9.6 million and the assumption of a $19.7 million
mortgage, which had a fair market value of $18.4 million on the date of
acquisition. The assumed mortgage has a stated interest rate of 4.18% and
matures on September 1, 2012. The property was 89.9% occupied as of May 26,
2004.
On June
14, 2004, Summit acquired Summit South End Square, a 299 apartment home
community located in Charlotte, North Carolina, for $33.5 million in cash. The
property was 92.6% occupied as of June 13, 2004.
On
September 2, 2004, Summit acquired Summit Doral Villas, a 232 apartment home
community located in Miami, Florida for $43.3 million. Consideration paid for
this community included cash of $18.4 million and the assumption of a $21.1
million mortgage, which had a fair market value of $24.9 million on the date of
acquisition. The assumed mortgage has a stated interest rate of 6.82% and
matures on January 1, 2011. The property was 94.4% occupied as of September 1,
2004.
On
September 30, 2004, Summit acquired Summit Midtown, a 296 apartment home
community located in Atlanta, Georgia, for $44.8 million in cash. The
residential units were 92.6% occupied and the retail space was 100.0% occupied
as of September 29, 2004.
On
October 14, 2004, Summit acquired Summit Fallsgrove, a 268 apartment home
community located in Rockville, Maryland, for $54.5 million in cash. The
property was 65.3% occupied as of October 13, 2004.
On
November 28, 2004, Summit acquired ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, a 180 apartment home
community located in Charlotte, North Carolina, for $23.8 million in cash. The
property was 97% occupied as of November 27, 2004.
As a
result of the transactions discussed above, we have adjusted the historical
financial information for the year ended December 31, 2004 to reflect the
operations of these properties as if the acquisitions occurred as of January 1,
2004. The historical financial information has been adjusted for the period from
January 1, 2004 up to the day the property was acquired.
|
C-1 |
Represents
the net increase in rental income and depreciation and amortization of
real estate held for investment as a result of recording Summit's assets
at fair value. We allocate the purchase price between net tangible and
intangible assets. 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 is vacant by applying methods similar to those
used by independent appraisers of income-producing property. Depreciation
and amortization are computed on a straight-line basis over the remaining
useful lives of the related assets. Buildings and furniture and fixtures
have an estimated useful life of 35 years and 5 years, respectively. The
value of in place leases and above or below market leases is being
amortized over the estimated average remaining life of leases in place at
the time of the merger. Below market leases are amortized as an adjustment
to rental income. Apartment lease terms generally range from 6 to 13
months, with an estimated remaining average lease term of 10
months. |
8
The
calculation of the fair value of depreciable real estate assets is as follows
(in thousands):
|
Buildings |
$ |
1,487,620 |
||
|
Furniture
and fixtures |
26,416 |
|||
|
In
place lease value |
32,352 |
|||
|
Land |
295,280 |
|||
|
Properties
under development, including land |
152,042 |
|||
|
Assets
held for sale |
31,348 |
|||
|
Other
assets, including cash (excluding in place lease values) |
15,423 |
|||
|
Investment
in joint ventures |
2,716 |
|||
|
Total
purchase price |
$ |
2,043,197 |
The
calculation of the pro forma adjustment for depreciation expense is as follows
(in thousands):
|
Year
Ended |
||||
|
December
31, 2004 |
||||
|
Pro
forma depreciation and amortization expense |
$ |
80,139 |
||
|
Historical
Summit depreciation and amortization expense, as adjusted |
(50,596 |
) | ||
|
Camden
pro forma adjustment for depreciation and amortization
expense |
$ |
29,543 |
||
|
C-2 |
Represents
the net adjustment to interest expense to reflect the additional
borrowings of $512.0 million to fund the purchase of Summit shares for
cash and merger costs. These borrowings will be available under the $500
million bridge facility and from available borrowings under ▇▇▇▇▇▇'s $600
million unsecured credit facility. Interest expense has been calculated
based on current market rates available to Camden under ▇▇▇▇▇▇'s unsecured
line of credit. The increase in interest cost from additional borrowings
is partially offset by $7.4 million for the twelve months ended December
31, 2004 in pro forma adjustments for the amortization of the fair value
adjustment to Summit's historical debt balances. The fair value
adjustments, which totaled $34.2 million, are being amortized over the
weighted average remaining life of the underlying debt, which is 5.2
years. Each ⅛th of 1% increase in the annual interest rate on the bridge
facility will increase Camden's annual consolidated interest expense by
approximately $625,000. |
|
C-3 |
Represents
the elimination of Summit's historical amortization of deferred financing
costs. |
|
C-4 |
Although
not included as pro forma adjustments, as they do not meet the criteria
for such presentation, management has estimated that the merger will
create operational and general and administrative cost savings of
approximately 60% of Summit's historical amounts in the first year of
operations primarily from savings in executive compensation, corporate
administrative functions and regulatory costs. There can be no assurance
that ▇▇▇▇▇▇ will be successful in achieving such anticipated cost
savings. |
|
C-5 |
Reflects
the allocation of earnings to the minority interests in the Operating
Partnership as a result of the pro forma adjustments based on the
estimated weighted average minority interest ownership percentage
subsequent to the merger. |
|
C-6 |
The
pro forma weighted average shares outstanding are the historical weighted
average number of Camden common shares outstanding for the periods
presented, adjusted for the issuance of 11,801,834 Camden common shares in
connection with the merger. As the pro forma combined income from
continuing operations is a loss for the periods presented, certain items
that were historically included in the weighted average shares for diluted
earnings per share calculation have been eliminated for pro forma
purposes. |
9