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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)


þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2006


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-12110

CAMDEN PROPERTY TRUST

(Exact name of registrant as specified in its charter)


Texas		76-6088377
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

3 Greenway Plaza, Suite 1300		77046
Houston, Texas		(Zip Code)
(Address of principle executive offices)

Registrant’s telephone number, including area code: (713) 354-2500

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered
Common Shares of Beneficial Interest, $.01 par value		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicated by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in the Rule 12b-2 of the Exchange Act). Yes o No þ

The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was $4,091,663,801 based on a June 30, 2006 share price of $73.55.

On February 19, 2007, the number of outstanding common shares of the registrant’s was 56,794,195 (net of 8,554,483 treasury shares).

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement in connection with its Annual Meeting of Shareholders to be held May 1, 2007 are incorporated by reference in Part III.

PART I

Item 1. Business

General Development 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.

Our portfolio consists of middle- to upper-market multifamily communities. We target acquisitions and developments in selected markets in the United States. By combining acquisition, renovation and development capabilities, we believe we can better respond to changing conditions in each market, reduce market risk and take advantage of opportunities as they arise.

Our executive offices are located at 3 Greenway Plaza, Suite 1300, Houston, Texas 77046 and our telephone number is (713) 354-2500. Our website is located at www.camdenliving.com. On our website, we make available free of charge our current and periodic reports, and amendments to such reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we file such material electronically with, or furnish it to, the Securities and Exchange Commission (the “SEC”). We also make available, free of charge on our website, our Guidelines on Governance, Code of Business Conduct and Ethics, Code of Ethical Conduct for Senior Financial Officers and the charters of each of our Audit, Compensation, Nominating and Corporate Governance Committees. This information is also available in print free of charge to any person who requests it by contacting us at Camden Property Trust, 3 Greenway Plaza, Suite 1300, Houston, Texas 77046, attention: Investor Relations.

Our annual, quarterly and current reports, proxy statements and other information are electronically filed with the SEC. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE., Washington, D.C. 20549. Please contact the SEC at 1-800-SEC-0330 for further information about the operation of the SEC’s Public Reference Room. The SEC also maintains a website at www.sec.gov which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Financial Information about Segments

We are engaged in the ownership, development, construction and management of multifamily apartment communities. As each of our apartment communities has similar economic characteristics, residents, and products and services, our operations have been aggregated into one reportable segment. See the consolidated financial statements and notes thereto included in Item 15 of this Annual Report on Form 10-K for certain information required by Item 1.

Narrative Description of Business

As of December 31, 2006, we owned interests in, operated or were developing 197 multifamily properties comprising 67,631 apartment homes located in 13 states. We had 3,788 apartment homes under development at 11 of our multifamily properties, including 1,069 apartment homes at three multifamily properties owned through joint ventures, 26 apartment homes at one operating property, and several sites we intend to develop into multifamily apartment communities. Additionally, three properties comprised of 930 apartment homes were designated as held for sale.

Operating Strategy

We believe producing consistent earnings growth through property operations, development and acquisitions, achieving market balance and recycling capital are crucial factors to our success. We rely heavily on our sophisticated property management capabilities and innovative operating strategies to produce consistent earnings growth.

Real Estate Investments and Market Balance. We believe we are well positioned in our current markets and have the expertise to take advantage of both development and acquisition opportunities in new markets which have healthy long-term fundamentals and strong growth projections. These capabilities, combined with what we believe is a conservative financial structure, allow us to concentrate our growth efforts towards selective development and acquisition opportunities to achieve our strategy of having a geographically and physically diverse portfolio of assets that meet the requirements of our residents. We typically make physical improvements at our acquired properties, such as new or enhanced landscaping design, new or upgraded amenities and redesigned building structures, which, coupled with a strong focus on property management, branding and marketing, have resulted in attractive yields on acquired properties.

We continue to operate in our core markets in which we believe we have an advantage due to economies of scale. We feel where possible, it is best to operate with a strong base of properties in order to benefit from the personnel allocation and the market strength associated with managing several properties in the same market. However, in order to generate consistent earnings growth, we intend to selectively dispose of properties and redeploy capital if we determine a property cannot meet long term earnings growth expectations.

We have recently expanded our development pipeline significantly, and we expect selective development of new apartment properties will continue to be important to the growth of our portfolio for the next several years. We use experienced on-site construction superintendents, operating under the supervision of project managers and senior management, to control the construction process. Risks inherent to developing real estate include zoning changes, environmental matters and changes in economic conditions during the development process. See the further discussion of risks associated with development and construction in our “Risk Factors” section.

Sophisticated Property Management. We believe the depth of our organization enables us to deliver quality services, promote resident satisfaction and improve resident retention, thereby reducing operating expenses. We manage our properties utilizing a staff of professionals and support personnel, including certified property managers, experienced apartment managers and leasing agents, and trained apartment maintenance technicians. Our on-site personnel are trained to deliver high quality services to their residents. We attempt to motivate our on-site employees through incentive compensation arrangements based upon operational results produced at their property, rental rate increases and the level of lease renewals achieved.

Operations. We believe an intense focus on operations is necessary to realize consistent, sustained earnings growth. Ensuring resident satisfaction, increasing rents as market conditions allow, maximizing rent collections, maintaining property occupancy at optimal levels and controlling operating costs comprise our principal strategies to maximize property net operating income. During 2005, we completed the roll out of our web-based property management and revenue management systems. These two systems have improved on-site operations and were a contributing factor in allowing us to increase rental rates substantially during a period of strong recovery in the United States economy. Lease terms are generally staggered based on vacancy exposure by apartment type so lease expirations are matched to each property’s seasonal rental patterns. We generally offer leases ranging from six to thirteen months, with individual property marketing plans structured to respond to local market conditions. In addition, we conduct ongoing customer service surveys to ensure timely response to residents’ changing needs and a high level of satisfaction.

Competition

There are numerous housing alternatives which compete with our properties in attracting residents. Our properties compete directly with other multifamily properties as well as condominiums and single family homes which are available for rent or purchase in the markets in which our properties are located. This competitive environment could have a material adverse effect on our ability to lease apartment homes at our present properties or any newly developed or acquired property, as well as on the rents charged.

Employees

At December 31, 2006, we had approximately 1,920 employees, including executive, administrative and community personnel.

Qualification as a Real Estate Investment Trust

As of December 31, 2006, we met the qualification of a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, we, with the exception of our taxable REIT subsidiaries, will not be subject to federal income tax to the extent we meet certain requirements of the Code.

Item 1A. Risk Factors

In addition to the other information contained in this Form 10-K, the following risk factors should be considered carefully in evaluating our business. Our business, financial condition, or results of operations could be materially adversely affected by any of these risks. Please note additional risks not presently known to us or which we currently consider immaterial may also impair our business and operations.

Insufficient cash flows could limit our ability to make required payments for debt obligations or pay distributions to shareholders and create refinancing risk.

Substantially all of our income is derived from rental income from our multifamily communities. As a result, our performance depends on our ability to collect rent from residents which could be negatively affected by a number of factors, including the following:

	•		delay in resident lease commencements;

	•		decline in occupancy;

	•		failure of residents to make rental payments when due;

	•		the attractiveness of our properties to residents and potential residents;

	•		our ability to adequately manage and maintain our properties;

	•		competition from other available apartments and housing alternatives; and

	•		changes in market rents.

Cash flow could be insufficient to meet required payments of principal and interest with respect to debt financing. 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 gain, in order for us to continue to qualify as a REIT; this requirement limits the cash flow available to meet required principal and interest payments on our debt. We may need to refinance all or a portion of our outstanding debt as it matures. We may not be able to refinance existing debt or a refinancing may not occur on favorable terms, either of which may have a material adverse effect on our financial condition and results of operations.

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

Economic conditions may significantly affect apartment home occupancy or rental rates. Occupancy and rental rates in the markets in which we operate, in turn, may have a material adverse impact on our cash flows and operating results. The risks that may affect conditions in these markets include the following:

	•		changes in the national, regional and local economic climates;

	•		local conditions, such as an oversupply of apartments or a reduction in demand for apartments in the area;

	•		a future economic downturn which simultaneously effects more than one of our geographical markets; and

	•		increased operating costs, if these costs cannot be passed through to residents.

National, regional and local economic climates may be adversely affected should population or job growth slow. To the extent either of these conditions occurs in the markets in which we operate, market rents will likely be affected. We could also face challenges adequately managing and maintaining our properties should we experience increased operating costs. As a result, we may experience a loss of rental revenues, which may adversely affect our results of operations and our ability to satisfy our financial obligations and to pay distributions to shareholders.

Various changes could adversely impact the market price of our common shares.

The market price of our publicly traded common shares depends on various conditions. The risks that may affect this market price include the following:

	•		investor interest in our property portfolio;

	•		the reputation and performance of REITs;

	•		the attractiveness of REITs as compared to other investment vehicles;

	•		the results of our financial condition and operations;

	•		the perception of our growth and earnings potential;

	•		dividend payment rates; and

	•		increases in market rates, which may lead purchasers of our common shares to demand a higher yield.

Development and construction risks could impact our profitability.

We intend to continue to develop and construct multifamily apartment communities for our property portfolio. Our development and construction activities may be exposed to a number of risks that may increase our construction costs including the following:

	•		inability to obtain, or delays in obtaining, necessary zoning, land-use, building, occupancy and other required permits and authorizations, or problems with subcontractors could result in increased costs;

	•		incurring construction costs for a property exceeding our original estimates due to increased materials, labor or other costs, or due to errors and omissions that occur in the design or construction process;

	•		experiencing fluctuations in occupancy rates and rents at a newly completed property, which may not be adequate to make the property profitable;

	•		inability to obtain financing with favorable terms for the development of a community;

	•		inability to complete construction and lease-up of a community on schedule, resulting in increased costs;

	•		incurring costs related to the abandonment of development opportunities which we have pursued and deemed unfeasible; and

	•		our inability to successfully implement our development and construction strategy could adversely affect our results of operations and our ability to satisfy our financial obligations and pay distributions to shareholders.

We also develop and construct properties for unrelated third parties pursuant to guaranteed maximum price contracts. The terms of these contracts require us to estimate the time and costs to complete a project and we assume the risk the time and costs associated with our performance may be greater than was anticipated. As a result, our profitability on guaranteed maximum price contracts is dependent on our ability to predict these factors accurately. The time and costs may be affected by a variety of factors, including those listed above, many of which are beyond our control. In addition, the terms of these contracts generally require a warranty period, which may have a duration of up to ten years, during which we may be required to repair, replace or rebuild a project in the event of a material defect.

Our property acquisition strategy may not produce the cash flows expected.

In the normal course of our business, we continually evaluate a number of potential acquisitions and may acquire additional operating properties. The success of our acquisition activities is subject to a number of risks, including the following:

	•		we may not be able to successfully integrate acquired properties into our existing operations;

	•		our estimates of the costs of repositioning or redeveloping the acquired property may prove inaccurate; and

	•		the expected occupancy and rental rates may differ from the actual results.

Our inability to successfully implement our property acquisition strategy could adversely affect our results of operations and our ability to satisfy our financial obligations and pay distributions to shareholders. We expect other real estate investors, including insurance companies, pension and investment funds, private investors and other apartment REITs will compete with us to acquire existing properties and to develop new properties. This competition could increase prices for the type of properties we would likely pursue and adversely affect our ability to acquire these properties or the profitability of such properties upon acquisition.

Difficulties of selling real estate could limit our flexibility.

Real estate investments generally cannot be disposed of quickly, especially when market conditions are poor. This may limit our ability to vary our portfolio promptly in response to changes in economic or other conditions. In addition, in order to maintain our status as a REIT, the Code imposes restrictions on our ability to sell properties held fewer than four years, which may cause us to incur losses thereby reducing our cash flows and adversely impacting distributions to shareholders.

We have significant debt, which could have important consequences.

As of December 31, 2006, we had outstanding debt of approximately $2.3 billion. This indebtedness could have important consequences, including:

	•		if a property is mortgaged to secure payment of indebtedness, and if we are unable to meet our mortgage obligations, we could sustain a loss as a result of foreclosure on the mortgage;

	•		our vulnerability to general adverse economic and industry conditions is increased; and

	•		our flexibility in planning for, or reacting to, changes in business and industry is limited.

Variable rate debt is subject to interest rate risk.

We have mortgage debt with varying interest rates dependent upon the market index. In addition, we have a revolving credit facility bearing interest at a variable rate on all amounts drawn on the facility. We may incur additional variable rate debt in the future. Increases in interest rates on variable rate debt would increase our interest expense, which would adversely affect net income and cash available for payment of our debt obligations and distributions to shareholders.

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

Our capital requirements depend on numerous factors, including the occupancy rates of our apartment properties, dividend payment rates to our shareholders, development and capital expenditures, costs of operations and potential acquisitions. If our capital requirements vary materially from our plans, we may require additional financing sooner than anticipated. Accordingly, we could become more leveraged, resulting in increased risk of default on our obligations and an increase in our debt service requirements, both of which could adversely affect our financial condition and ability to access debt and equity capital markets in the future.

Losses from catastrophes may exceed our insurance coverage.

We carry comprehensive property and liability insurance on our properties, which we believe is of the type and amount customarily obtained on similar real property assets. We intend to obtain similar coverage for properties we acquire in the future. However, some losses, generally of a catastrophic nature, such as losses from floods, hurricanes or earthquakes, may be subject to coverage limitations. We exercise our discretion in determining amounts, coverage limits and deductibility provisions of insurance, to maintain appropriate insurance on our investments at a reasonable cost and on suitable terms. If we suffer a substantial loss, our insurance coverage may not be sufficient to pay the full current market value or current replacement value of our lost investment, as well as the anticipated future revenues from the property. Inflation, changes in building codes and ordinances, environmental considerations and other factors also may reduce the feasibility of using insurance proceeds to replace a property after it has been damaged or destroyed.

Potential liability for environmental contamination could result in substantial costs.

Under various federal, state and local laws, ordinances and regulations, we are liable for costs to investigate and remove or remediate hazardous or toxic substances on or in our properties, in some cases, regardless of whether we knew of or were responsible for the presence of these substances. These costs, and other costs of investigation, remediation or removal of hazardous substances, may be substantial. Also, the presence of hazardous or toxic substances on a property, or the failure to properly remediate such substances, may adversely affect our ability to sell or rent the property or use the property as collateral.

Additionally, we occasionally develop, manage, lease and/or operate various properties for third parties. Consequently, we may be considered to have been or to be an operator of these properties and, therefore, potentially liable for removal or remediation costs or other potential costs that could relate to hazardous or toxic substances.

Over the past several years, there have been an increasing number of lawsuits against owners and managers of multifamily properties alleging personal injury and property damage caused by the presence of mold in residential real estate. Some of these lawsuits have resulted in substantial monetary judgments or settlements. Insurance carriers have reacted to these liability awards by excluding mold related claims from standard policies and pricing mold endorsements at high rates. Therefore, should we be named in a lawsuit regarding mold infiltration, the amount of damages may not be fully covered under insurance.

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

We may not continue to qualify in the future as a REIT. The Internal Revenue Service may challenge our qualification as a REIT for prior years and new legislation, regulations, administrative interpretations or court decisions may change the tax laws or the application of the tax laws with respect to qualification as a REIT or the federal tax consequences of such qualification.

For any taxable year we fail to qualify as a REIT:

•

we would be subject to federal income tax on our taxable income at corporate rates, subject to any applicable alternative minimum tax;

	•		we would be disqualified from treatment as a REIT for the four taxable years following the year in which we failed to qualify, thereby reducing our net earning available for operations, including any distributions to shareholders, as we would be required to pay significant income taxes for the year or years involved; and

	•		our ability to expand our business and raise capital would be impaired, which may adversely affect the value of our common shares.

We may face other tax liabilities in the future which may impact our cash flow. These potential tax liabilities may be calculated on our income or property at either the corporate or individual property levels. Any additional tax expense incurred would decrease the cash available for distribution to our shareholders.

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

Instead of acquiring or developing apartment communities directly, we may invest in a joint venture or partnership as a partner. These investments involve risks, including the possibility our partner may become insolvent, our partner may have business goals which are inconsistent with ours, or our partner may be in a position to take action or withhold consent contrary to our requests. We and our partner may each have the right to trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partner’s interest, at a time when we otherwise would not have initiated such a transaction.

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

The Americans with Disabilities Act, or ADA, the Fair Housing Amendments Act of 1988, or FHAA, and other federal, state and local laws generally require public accommodations be made accessible to disabled persons. Noncompliance could result in the imposition of fines by the government or the award of damages to private litigants. These laws may require us to modify our existing properties. These laws may also restrict renovations by requiring improved access to such buildings by disabled persons or may require us to add other structural features that increase our construction costs. Legislation or regulations adopted in the future may impose further burdens or restrictions on us with respect to improved access by disabled persons. Although we believe our properties are substantially in compliance with present requirements, we may incur unanticipated expenses to comply with ADA, FHAA and other federal, state and local laws.

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

For us to maintain our qualification as a REIT, we must have 100 or more shareholders during the year and not more than 50% in value of our outstanding shares may be owned, directly or indirectly, by five or fewer individuals. As defined for federal income tax purposes, the term “individuals” includes a number of specified entities. To minimize the possibility we will fail to qualify as a REIT under this test, our declaration of trust includes restrictions on transfers of our shares and ownership limits. The ownership limits, as well as our ability to issue other classes of equity securities, may delay, defer or prevent a change in control. These provisions may also deter tender offers for our common shares that may be attractive to you, or limit your opportunity to receive a premium for your shares that might otherwise exist if a third party were attempting to effect a change in control transaction.

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

Our apartment communities compete with numerous housing alternatives in attracting residents, including other rental apartments, condominiums and single-family homes available for rent or sale. Competitive residential housing in a particular area could adversely affect our ability to lease apartments and increase or maintain rents.

We depend on our key personnel.

Our success depends in part on our ability to attract and retain the services of executive officers and other personnel. There is substantial competition for qualified personnel in the real estate industry and the loss of several of our key personnel could have an adverse effect on us.

Changes in laws and litigation risks could affect our business.

As a large publicly-traded owner of multifamily properties, we may become involved in legal proceedings, including consumer, employment, tort or commercial litigation, which if decided adversely to or settled by us, could result in liability that is material to our financial condition or results of operations.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Properties

Our properties typically consist of mid-rise buildings or two- and three-story buildings in a landscaped setting and provide residents with a variety of amenities. Most of the properties have one or more swimming pools and a clubhouse and many have whirlpool spas, tennis courts and controlled-access gates. Many of the apartment homes offer additional features such as fireplaces, vaulted ceilings, microwave ovens, covered parking, icemakers, washers and dryers and ceiling fans.

Operating Properties

The 186 operating properties, including properties held through joint ventures, which we owned interests in and operated at December 31, 2006, averaged 905 square feet of living area per apartment home. For the year ended December 31, 2006, no single operating property accounted for greater than 2.1% of our total revenues. Our operating properties, including properties held through joint ventures, had a weighted average occupancy rate of 95.2% and 95.3% for 2006 and 2005, respectively. Resident lease terms generally range from six to thirteen months. One hundred and fifty-nine of our operating properties have over 200 apartment homes, with the largest having 894 apartment homes. Our operating properties have an average age of 9.5 years (calculated on the basis of investment dollars). Our operating properties were constructed and placed in service as follows:


Year Placed in Service		Number of Operating Properties
2001 -2006		33
1996 -2000		57
1991 -1995		20
1986 -1990		41
1980 -1985		27
Prior to 1980		8

Property Table

The following table sets forth information with respect to our operating properties at December 31, 2006.

OPERATING PROPERTIES


	Number of		Year Placed		Average Apartment		2006 Average
Property and Location	Apartments		In Service		Size (Sq. Ft.)		Occupancy (1)
ARIZONA
Phoenix
Camden Copper Square		332		2000		786		95.7	%
Camden Fountain Palms (2)		192		1986/1996		1,050		95.1
Camden Legacy		428		1996		1,067		96.5
Camden Pecos Ranch (2)		272		2001		924		96.6
Camden San Paloma		324		1993/1994		1,042		95.9
Camden Sierra (2)		288		1997		925		95.0
Camden Towne Center (2)		240		1998		871		95.8
Camden Vista Valley		357		1986		923		94.9
CALIFORNIA
Los Angeles/Orange County
Camden Crown Valley		380		2001		1,009		95.7
Camden Harbor View		538		2004		976		94.5
Camden Martinique		714		1986		795		93.9
Camden Parkside (2)		421		1972		836		95.3
Camden Sea Palms		138		1990		891		96.0
San Diego/Inland Empire
Camden Sierra at Otay Ranch		422		2003		962		94.2
Camden Tuscany		160		2003		891		97.4
Camden Vineyards		264		2002		1,053		93.2
COLORADO
Denver
Camden Arbors		358		1986		792		93.6
Camden Caley		218		2000		925		96.6
Camden Centennial		276		1985		744		94.6
Camden Denver West (3)		320		1997		1,015		95.3
Camden Highlands Ridge		342		1996		1,149		94.7
Camden Interlocken		340		1999		1,022		94.5
Camden Lakeway		451		1997		932		93.6
Camden Pinnacle		224		1985		748		91.8
WASHINGTON DC METRO
Camden Ashburn Farms		162		2000		1,061		97.6
Camden Fair Lakes		530		1999		996		95.5
Camden Fairfax Corner (4)		488		2006		934	Lease-up
Camden Fallsgrove		268		2004		996		96.6
Camden Grand Parc		105		2002		904		97.4
Camden Lansdowne		690		2002		1,006		95.7
Camden Largo Town Center		219		2000		1,042		97.1
Camden Roosevelt		198		2003		856		97.8
Camden Russett		426		2000		1,025		94.5
Camden Silo Creek		284		2004		971		95.6
Camden Westwind (4)		464		2006		1,036	Lease-up
FLORIDA
Southeast Florida
Camden Aventura		379		1995		1,106		95.6
Camden Doral		260		1999		1,172		97.3
Camden Doral Villas		232		2000		1,253		96.8
Camden Las Olas		420		2004		1,043		96.2
Camden Plantation		502		1997		1,152		95.3
Camden Portofino		322		1995		1,307		96.0
Summit Brickell		405		2003		937		97.3

OPERATING PROPERTIES (CONTINUED)


	Number of		Year Placed		Average Apartment		2006 Average
Property and Location	Apartments		In Service		Size (Sq. Ft.)		Occupancy (1)
Orlando
Camden Club		436		1986		1,077		96.1	%
Camden Hunter’s Creek		270		2000		1,082		95.0
Camden Lago Vista		366		2005		954		96.6
Camden Landings		220		1983		748		96.8
Camden Lee Vista		492		2000		937		94.5
Camden Renaissance		578		1996/1998		899		93.5
Camden Reserve		526		1990/1991		824		95.5
Camden World Gateway		408		2000		979		97.1
Tampa/St. Petersburg
Camden Bay		760		1997/2001		943		94.3
Camden Bay Pointe		368		1984		771		96.5
Camden Bayside		832		1987/1989		748		95.7
Camden Citrus Park		247		1985		704		97.3
Camden Isles		484		1983/1985		722		94.8
Camden Lakes		688		1982/1983		728		95.0
Camden Lakeside		228		1986		728		96.1
Camden Live Oaks		770		1990		1,093		94.4
Camden Preserve		276		1996		942		95.0
Camden Providence Lakes		260		1996		1,024		93.7
Camden Westshore		278		1986		728		95.7
Camden Woods		444		1986		1,223		94.0
GEORGIA
Atlanta
Camden Brookwood		359		2002		906		92.1
Camden Dunwoody		324		1997		1,007		94.2
Camden Deerfield		292		2000		1,187		94.4
Camden Midtown Atlanta		296		2001		953		95.6
Camden River		352		1997		1,103		95.6
Camden Peachtree City		399		2001		1,026		95.2
Camden Shiloh		232		1999/2002		1,151		96.1
Camden St. Clair		336		1997		969		94.9
Camden Stockbridge		304		2003		1,009		94.1
Camden Sweetwater		308		2000		1,151		95.2
KENTUCKY
Louisville
Camden Brookside (5)		224		1987		732		96.9
Camden Downs		254		1975		682		95.3
Camden Meadows (5)		400		1987/1990		746		94.9
Camden Oxmoor (5)		432		2000		903		96.2
Camden Prospect Park (5)		138		1990		916		95.6
MISSOURI
Kansas City
Camden Passage (5)		596		1989/1997		832		93.4
St. Louis
Camden Cedar Lakes (5)		420		1986		852		94.6
Camden Cove West (5)		276		1990		828		93.5
Camden Cross Creek (5)		591		1973/1980		947		95.6
Camden Taravue		304		1975		676		90.6
Camden Trace		372		1972		1,158		95.5
Camden Westchase (5)		160		1986		945		95.6

OPERATING PROPERTIES (CONTINUED)


	Number of		Year Placed		Average Apartment		2006 Average
Property and Location	Apartments		In Service		Size (Sq. Ft.)		Occupancy (1)
NEVADA
Las Vegas
Camden Bel Air		528		1988/1995		943		96.2	%
Camden Breeze		320		1989		846		96.8
Camden Canyon		200		1995		987		97.6
Camden Commons		376		1988		936		95.9
Camden Cove		124		1990		898		96.8
Camden Del Mar		560		1995		986		95.8
Camden Fairways		320		1989		896		96.7
Camden Hills		184		1991		579		95.8
Camden Legends		113		1994		792		96.6
Camden Palisades		624		1991		905		96.8
Camden Pines (2)		315		1997		1,005		96.9
Camden Pointe		252		1996		985		96.8
Camden Summit (2)		234		1995		1,187		97.2
Camden Tiara (2)		400		1996		1,043		96.6
Camden Vintage		368		1994		978		94.2
Oasis Bay (6)		128		1990		876		94.0
Oasis Crossings (6)		72		1996		983		97.1
Oasis Emerald (6)		132		1988		873		96.7
Oasis Gateway (6)		360		1997		1,146		94.4
Oasis Island (6)		118		1990		901		93.5
Oasis Landing (6)		144		1990		938		95.8
Oasis Meadows (6)		383		1996		1,031		96.3
Oasis Palms (6)		208		1989		880		94.7
Oasis Pearl (6)		90		1989		930		96.4
Oasis Place (6)		240		1992		440		95.6
Oasis Ridge (6)		477		1984		391		93.9
Oasis Sands		48		1994		1,125		95.2
Oasis Sierra (6)		208		1998		922		95.5
Oasis Springs (6)		304		1988		838		95.1
Oasis Vinings (6)		234		1994		1,152		94.5
NORTH CAROLINA
Charlotte
Camden Ballantyne		400		1998		1,053		95.8
Camden Cotton Mills		180		2002		906		96.7
Camden Dilworth (7)		145		2006		857		97.4
Camden Eastchase		220		1986		698		92.1
Camden Fairview		135		1983		1,036		96.9
Camden Forest		208		1989		703		93.7
Camden Foxcroft		156		1979		940		96.3
Camden Grandview		266		2000		1,145		94.6
Camden Habersham		240		1986		773		96.9
Camden Park Commons		232		1997		859		95.7
Camden Pinehurst		407		1967		1,147		95.5
Camden Sedgebrook		368		1999		1,017		96.6
Camden Simsbury		100		1985		874		96.4
Camden South End		299		2003		883		94.3
Camden Stonecrest		306		2001		1,169		96.2
Camden Timber Creek		352		1984		706		93.5
Camden Touchstone		132		1986		899		96.2

OPERATING PROPERTIES (CONTINUED)


	Number of		Year Placed		Average Apartment		2006 Average
Property and Location	Apartments		In Service		Size (Sq. Ft.)		Occupancy (1)
Greensboro
Camden Glen		304		1980		662		93.5	%
Camden Wendover		216		1985		795		94.8
Raleigh
Camden Crest		438		2001		1,129		95.3
Camden Governor’s Village		242		1999		1,134		94.4
Camden Lake Pine		446		1999		1,075		95.5
Camden Manor Park (4)		484		2006		966	Lease-up
Camden Overlook		320		2001		1,056		95.0
Camden Reunion Park		420		2000/2004		972		93.8
Camden Westwood		354		1999		1,112		95.5
PENNSYLVANIA
Camden Valleybrook		352		2002		992		93.6
TEXAS
Austin
Camden Briar Oaks		430		1980		711		94.7
Camden Gaines Ranch		390		1997		955		93.3
Camden Huntingdon		398		1995		903		95.6
Camden Laurel Ridge		183		1986		702		96.6
Camden Ridge View		167		1984		859		95.8
Camden Ridgecrest		284		1995		851		95.3
Camden Stoneleigh (8)		390		2001		908		95.8
Camden Woodview		283		1984		644		95.2
Corpus Christi
Camden Breakers		288		1996		868		92.8
Camden Copper Ridge		344		1986		775		94.9
Camden Miramar (9)		778		1994/2004		468		85.0
Dallas/Fort Worth
Camden Addison (2)		456		1996		942		95.6
Camden Buckingham		464		1997		919		96.5
Camden Centreport		268		1997		910		94.7
Camden Cimarron		286		1992		772		95.9
Camden Farmers Market		620		2001		916		95.5
Camden Farmers Market II (7)		284		2005		970		93.2
Camden Gardens		256		1983		652		95.0
Camden Glen Lakes		424		1979		877		94.5
Camden Lakeview		476		1985		853		94.0
Camden Legacy Creek		240		1995		831		97.3
Camden Legacy Park		276		1996		871		98.0
Camden Oasis		602		1986		548		92.6
Camden Place		442		1984		772		94.3
Camden Ridge		208		1985		829		94.2
Camden Springs		304		1987		713		94.5
Camden Terrace		340		1984		848		94.6
Camden Towne Village		188		1983		735		95.3
Camden Valley Creek		380		1984		855		95.6
Camden Valley Park		516		1986		743		96.1
Camden Valley Ridge		408		1987		773		93.6
Camden Westview		335		1983		697		94.8

OPERATING PROPERTIES (CONTINUED)


	Number of		Year Placed		Average Apartment		2006 Average
Property and Location	Apartments		In Service		Size (Sq. Ft.)		Occupancy (1)
Houston
Camden Baytown		272		1999		844		95.7	%
Camden Creek		456		1984		639		92.3
Camden Greenway		756		1999		861		95.7
Camden Holly Springs (2)		548		1999		934		94.7
Camden Midtown		337		1999		843		96.6
Camden Oak Crest		364		2003		870		94.4
Camden Park (2)		288		1995		866		95.6
Camden Royal Oaks (4)		236		2006		923	Lease-up
Camden Steeplechase		290		1982		748		93.9
Camden Stonebridge		204		1993		845		96.9
Camden Sugar Grove (2)		380		1997		917		95.4
Camden Vanderbilt		894		1996/1997		863		97.4
Camden West Oaks		671		1982		726		93.2

Total		63,843				905		95.2	%


(1)		Represents average physical occupancy for the year except as noted below.

(2)		Properties owned through a joint venture in which we own a 20% interest. The remaining interest is owned by an unaffiliated private investor.

(3)		Property owned through a joint venture in which we own a 50% interest. The remaining interest is owned by an unaffiliated private investor.

(4)		Properties under lease-up at December 31, 2006.

(5)		Properties owned through a joint venture in which we own a 15% interest. The remaining interest is owned by an unaffiliated private investor.

(6)		Properties owned through a joint venture in which we own a 20% interest. The remaining interest is owned by an unaffiliated private pension fund.

(7)		Development property completed during 2006 — average occupancy calculated from date at which occupancy exceeded 90% through year-end.

(8)		Properties acquired during 2006 — average occupancy calculated from date of acquisition date through year-end.

(9)		Miramar is a student housing project for Texas A&M at Corpus Christi. Average occupancy includes summer which is normally subject to high vacancies.

Item 3. Legal Proceedings

For discussion regarding legal proceedings, see Note 18 to the Consolidated Financial Statements on page F-30.

Item 4. Submission of Matters to a Vote of Security Holders

None.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The high and low closing prices per share of our common shares, as reported on the New York Stock Exchange composite tape, and distributions per share declared for the quarters indicated are as follows:


	High		Low		Distributions
2006 Quarters:
First	$	72.70	$	58.40	$	0.66
Second		73.55		65.50		0.66
Third		77.99		72.80		0.66
Fourth		80.97		71.40		0.66

2005 Quarters:
First	$	50.70	$	45.31	$	0.635
Second		55.60		46.76		0.635
Third		56.25		49.91		0.635
Fourth		60.18		52.70		0.635

As of February 19, 2007, there were 765 shareholders of record and approximately 29,200 beneficial owners of our common shares.

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, 2002 through 2006. 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 restated for amounts classified as discontinued operations.

COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA


	Year Ended December 31,
(in thousands, except per share amounts)	2006			2005 (c)			2004			2003			2002

Property Revenues
Rental revenues	$	544,236		$	479,221		$	351,513		$	335,892		$	332,290
Other property revenues		55,194			42,860			31,503			29,999			27,636

Total property revenues		599,430			522,081			383,016			365,891			359,926
Property Expenses
Property operating and maintenance		165,810			145,044			113,762			106,148			96,918
Real estate taxes		63,388			57,316			42,131			40,191			37,678

Total property expenses		229,198			202,360			155,893			146,339			134,596
Non-property income
Fee and asset management		14,041			12,912			9,187			7,276			6,264
Sale of technology investments		1,602			24,206			863			—			—
Interest and other income		9,771			7,373			11,074			5,685			8,214
Income (loss) on deferred compensation plans		10,116			6,421			6,760			(895	)		(1,353	)

Total non-property income		35,530			50,912			27,884			12,066			13,125
Other expenses
Property management		18,490			16,145			11,924			10,154			10,027
Fee and asset management		9,382			6,897			3,856			3,908			2,499
General and administrative		37,584			24,845			18,536			16,231			14,439
Transaction compensation and merger expenses		—			14,085			—			—			—
Impairment provision for technology investments		—			130			—			—			—
Other expenses		—			—			—			1,389			2,790
Losses related to early retirement of debt		—			—			—			—			234
Interest		118,344			111,548			78,260			74,036			70,093
Depreciation and amortization		158,510			164,705			94,730			92,948			88,442
Amortization of deferred financing costs		3,813			3,739			2,697			2,633			2,165
Expense (gain) on deferred compensation plans		10,116			6,421			6,760			(895	)		(1,353	)

Total other expenses		356,239			348,515			216,763			200,404			189,336

Income 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		49,523			22,118			38,244			31,214			49,119
Gain on sale of properties, including land		97,452			132,914			1,642			2,590			359
Impairment loss on land held for sale		—			(339	)		—			—			—
Equity in income of joint ventures		5,156			10,049			356			3,200			366
Income allocated to minority interests
Distributions on perpetual preferred units		(7,000	)		(7,028	)		(10,461	)		(12,747	)		(12,872	)
Original issuance costs of redeemed perpetual preferred units		—			(365	)		(745	)		—			—
Income allocated to common units and other minority interests		(16,163	)		(2,223	)		(2,733	)		(2,196	)		(1,762	)

Income from continuing operations		128,968			155,126			26,303			22,061			35,210
Income from discontinued operations		6,434			8,249			8,357			7,410			10,248
Gain on sale of discontinued operations		99,273			36,175			9,351			—			29,199
Impairment loss on land held for sale		—			—			(1,143	)		—			—
Income from discontinued operations, allocated to common units		(1,829	)		(464	)		(1,527	)		(41	)		(45	)

Net income	$	232,846		$	199,086		$	41,341		$	29,430		$	74,612


Earnings per share — basic
Income from continuing operations	$	2.28		$	2.98		$	0.64		$	0.56		$	0.87
Income from discontinued operations, including gain on sale		1.83			0.85			0.36			0.19			0.97

Net income	$	4.11		$	3.83		$	1.00		$	0.75		$	1.84


Earnings per share — diluted
Income from continuing operations	$	2.21		$	2.79		$	0.62		$	0.53		$	0.84
Income from discontinued operations, including gain on sale		1.75			0.79			0.36			0.18			0.89

Net income	$	3.96		$	3.58		$	0.98		$	0.71		$	1.73

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

Weighted average number of common shares outstanding		56,660			52,000			41,430			39,355			40,441

Weighted average number of common and common dilutive equivalent shares outstanding		59,524			56,313			42,426			41,354			44,216

COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA
(CONTINUED)


	Year Ended December 31,
(in thousands, except property data)	2006			2005 (c)			2004			2003			2002

Balance Sheet Data (at end of year)
Real estate assets	$	5,141,467		$	5,039,007		$	3,159,077		$	3,099,856		$	3,035,970
Accumulated depreciation		(762,011	)		(716,650	)		(688,333	)		(601,688	)		(498,776	)
Total assets		4,586,050			4,487,799			2,629,364			2,625,561			2,608,899
Notes payable		2,330,976			2,633,091			1,576,405			1,509,677			1,427,016
Minority interests		223,511			221,023			159,567			196,385			200,729
Shareholders’ equity	$	1,734,356		$	1,370,903		$	738,515		$	784,885		$	839,453

Common shares outstanding		65,006			60,763			48,601			48,299			47,881

Other Data
Cash flows provided by (used in):
Operating activities	$	231,569		$	200,845		$	156,997		$	144,703		$	184,808
Investing activities		(52,067	)		(207,561	)		(65,321	)		(94,386	)		(220,766	)
Financing activities		(180,044	)		6,039			(92,780	)		(47,365	)		33,184
Funds from operations — diluted (a)		237,790			195,290			143,669			135,699			150,443

Property Data
Number of operating properties (at end of year)
Included in continuing operations		183			180			131			130			129
Included in discontinued operations		3			11			13			14			14

Number of operating apartment homes (at end of year)
Included in continuing operations		62,913			61,609			46,599			45,935			45,381
Included in discontinued operations		930			3,971			4,857			5,409			5,409

Number of operating apartment homes (weighted average) (b)
Included in continuing operations		53,387			50,765			41,712			41,014			40,316
Included in discontinued operations		2,463			4,291			5,406			5,368			6,435

Weighted average monthly total property revenue per apartment home, excluding discontinued operations	$	936		$	857		$	765		$	743		$	744

Properties under development (at end of period)		11			9			3			2			4


(a)		Management considers Funds From Operations (“FFO”) to be an appropriate measure of performance of an equity REIT. The National Association of Real Estate Investment Trusts currently defines FFO as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from depreciable operating property sales, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Diluted FFO also assumes conversion of all dilutive convertible securities, including minority 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 help one compare the operating performance of a company’s real estate between periods or as compared to different companies.

(b)		Excludes apartment homes owned in joint ventures.

(c)		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. 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 that 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:

	•		Insufficient cash flows could affect our ability to make required payments of debt obligations or pay distributions to shareholders and create refinancing risk;

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

	•		Various changes could adversely impact the market price of our common shares;

	•		Development and construction risks could impact our profitability;

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

	•		Difficulties of selling real estate could limit our flexibility;

	•		Our variable rate debt is subject to interest rate risk;

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

	•		Losses from catastrophes may exceed our insurance coverage;

	•		Potential liability for environmental contamination could result in substantial loss;

	•		Tax matters, including failure to qualify as a real estate investment trust (“REIT”) could have adverse consequences;

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

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

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

These forward-looking statements represent our estimates and assumptions as of the date of this report.

Executive Summary

Based on our results for the year ended December 31, 2006 and the projected economic conditions, we expect moderate growth during 2007 from the revenue generated by our stabilized communities. The economic projections include meaningful job growth and population growth in a number of markets in which we operate and decreased housing demand due to rising interest rates resulting in multifamily apartment communities being an economically attractive alternative to purchasing a single-family home and positively affecting apartment housing demand.

We intend to continue to focus on our market balance investment strategy and to improve our portfolio mix through the acquisition and disposition of real estate assets. We expect market concentration risk to be mitigated as our property operations are not centralized in any one market.

In positioning for future growth, we intend to continue focusing on our development pipeline and maintain approximately $1.0 billion to $1.5 billion in our current and future development pipelines. Total projected capital costs and the commencement of future developments may be impacted by increasing construction costs and other factors.

Property Portfolio

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


	December 31, 2006				December 31, 2005
	Apartment				Apartment
	Homes		Properties		Homes		Properties
Operating Properties
Las Vegas, Nevada		8,064		30		8,064		30
Dallas, Texas		7,773		21		8,643		24
Houston, Texas		5,696		13		6,810		15
Tampa, Florida		5,635		12		5,635		12
Charlotte, North Carolina		4,146		17		4,493		18
Washington, D.C. Metro		3,834		11		2,882		9
Orlando, Florida		3,296		8		3,296		8
Atlanta, Georgia		3,202		10		3,202		10
Raleigh, North Carolina		2,704		7		2,631		7
Denver, Colorado		2,529		8		2,529		8
Austin, Texas		2,525		8		2,135		7
Southeast Florida		2,520		7		2,520		7
Phoenix, Arizona		2,433		8		2,433		8
Los Angeles/Orange County, California		2,191		5		2,191		5
St. Louis, Missouri		2,123		6		2,123		6
Louisville, Kentucky		1,448		5		1,448		5
Corpus Christi, Texas		1,410		3		1,410		3
San Diego/Inland Empire, California		846		3		846		3
Other		1,468		4		2,289		6

Total Operating Properties		63,843		186		65,580		191

Properties Under Development
Washington, D.C. Metro		2,237		6		1,996		5
Houston, Texas		650		2		236		1
San Diego/Inland Empire, California		350		1		350		1
Los Angeles/Orange County, California		290		1		—		—
Orlando, Florida		261		1		—		—
Raleigh, North Carolina		—		—		484		1
Charlotte, North Carolina		—		—		145		1

Total Properties Under Development		3,788		11		3,211		9

Total Properties		67,631		197		68,791		200

Less: Joint Venture Properties (1)
Las Vegas, Nevada		4,047		17		4,047		17
Dallas, Texas		456		1		456		1
Houston, Texas		1,487		4		1,216		3
Charlotte, North Carolina		—		—		492		2
Washington, D.C. Metro		508		1		464		1
Raleigh, North Carolina		—		—		411		1
Denver, Colorado		320		1		320		1
Phoenix, Arizona		992		4		992		4
Los Angeles/Orange County, California		711		2		421		1
St. Louis, Missouri		1,447		4		—		—
Louisville, Kentucky		1,194		4		—		—
Other		596		1		—		—

Total Joint Venture Properties		11,758		39		8,819		31

Total Properties Owned 100%		55,873		158		59,972		169


(1)		Refer to Note 8, “Investments in Joint Ventures” in the Notes to Consolidated Financial Statements for further discussion of our joint venture investments.

Stabilized Communities

We consider a property stabilized once it reaches 90% occupancy, or generally one year from opening the leasing office, with some allowances for larger than average properties. During the year ended December 31, 2006, stabilization was achieved at two recently completed properties as follows:

Number of

Apartment

Date of

Property and Location

Homes

Completion

Stabilization

Camden Farmers Market II

Dallas, TX

284

3Q05

2Q06

Camden Dilworth

Charlotte, NC

145

2Q06

3Q06

Acquisition Communities

On January 31, 2006, we acquired the remaining 80% interest in Camden-Delta Westwind, LLC, a joint venture in which we had a 20% interest, in accordance with the Agreement and Assignment of Limited Liability Company Interest. The 80% interest was previously owned by Westwind Equity, LLC (“Westwind”), an unrelated third-party. As a result of the acquisition, we paid Westwind $31.0 million, which included a $2.0 million non-refundable earnest money deposit paid in October 2005. Concurrent with this transaction, the mezzanine loan we had provided to the joint venture, which totaled $12.1 million, was canceled. Additionally, we repaid the outstanding balance of a third party construction loan, totaling $46.8 million. We used proceeds from our unsecured line of credit facility to fund this purchase. The purchase price was allocated to the tangible and intangible assets and liabilities acquired based on their estimated fair value at the date of acquisition. The intangible assets acquired at acquisition include in-place leases of $0.5 million.

In July 2006, we acquired Camden Stoneleigh, a 390-apartment home community located in Austin, Texas, for $35.3 million using proceeds from our unsecured line of credit. The purchase price of this property was allocated to the tangible and intangible assets and liabilities acquired based on their estimated fair values at the date of acquisition. The intangible assets acquired at acquisition include in-place leases of $0.6 million and above or below market leases of $0.1 million.

Dispositions and Partial Sales to Joint Ventures Included in Continuing Operations

During the year ended December 31, 2006, we recognized gains of $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. During the year ended December 31, 2005, we recognized gains of $132.1 million from the partial sales of twelve properties to twelve affiliated unconsolidated joint ventures. These partial sales generated net proceeds of approximately $316.8 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.

During the year ended December 31, 2006, we recognized gains of $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.

During the year ended December 31, 2006, we recognized a gain of $0.8 million on the sale of land located adjacent to one of our pre-development assets in College Park, Maryland. During the year ended December 31, 2005, we recognized a gain of $0.8 million on the sale of land located adjacent to one of our pre-development assets in Houston, Texas. Also during 2005, we sold undeveloped land located in Dallas, Texas to an unrelated third party. In connection with our decision to sell this undeveloped land, we recognized an impairment loss of $0.3 million. During the year ended December 31, 2004, we recognized gains totaling $1.6 million on the sales of land located adjacent to two of our pre-development assets in Houston, Texas. These gains were included in continuing operations as the cash flows from these land parcels were not separately identifiable from the cash flows generated by the adjacent pre-development assets.

Discontinued Operations

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, 2006. The components of earnings classified as discontinued operations include separately identifiable property-specific revenues, expenses, depreciation and interest expense, if any. The gain or loss on the disposal of the held for sale properties is also classified as discontinued operations. We intend to maintain a strategy of managing our invested capital through the selective sale of properties and to utilize the proceeds to fund investments with higher anticipated growth prospects in our markets.

A summary of our 2006 dispositions and properties held for sale as of December 31, 2006 is as follows:

Number of

($ in millions)

Apartment

Date of

Net Book

Property and Location

Homes

Disposition

Year Built

Value (1)

Dispositions

Camden Highlands

Plano, TX

160

1Q06

1985

n/a

Camden View

Tucson, AZ

365

1Q06

1974

n/a

Camden Trails

Dallas, TX

264

2Q06

1984

n/a

Camden Wilshire

Houston, TX

536

2Q06

1982

n/a

Camden Pass

Tucson, AZ

456

2Q06

1984

n/a

Camden Oaks

Dallas, TX

446

3Q06

1985

n/a

Camden Wyndham

Houston, TX

448

4Q06

1978/1981

n/a

Camden Crossing

Houston, TX

366

4Q06

1982

n/a

Held for Sale

Camden Trace

Maryland Heights, MO

372

n/a

1972

6.9

Camden Taravue

St. Louis, MO

304

n/a

1975

5.9

Camden Downs

Louisville, KY

254

n/a

1975

5.2

Total apartment homes sold and held for sale

3,971


(1)		Net Book Value is land and buildings and improvements less the related accumulated depreciation as of December 31, 2006.

During the year ended December 31, 2006, we recognized gains of $78.8 million from the sale of eight operating properties to unaffiliated third parties. These sales generated net proceeds of approximately $137.3 million. During the year ended December 31, 2005, we recognized gains of $36.1 million from the sale of three operating properties, containing 1,317 apartment homes, to unaffiliated third parties. During the year ended December 31, 2004, we recognized a gain of $8.4 million on the sale of one operating property, containing 552 apartment homes, to an unaffiliated third party.

During the year ended December 31, 2006, the operations of two properties previously included in discontinued operations were reclassified to continuing operations as management made the decision not to sell these assets. As a result, we adjusted the current and prior period consolidated financial statements to reflect the

necessary reclassifications. Additionally, we recorded a depreciation charge of $2.6 million during the year ended December 31, 2006 on these assets.

Upon our decision to abandon efforts to develop certain land parcels and to market these parcels as held for sale, we reclassified the operating expenses associated with these assets to discontinued operations. At December 31, 2006, we had several undeveloped land parcels classified as held for sale as follows:


($ in millions)			Net Book
Location	Acres		Value
Southeast Florida		3.1	$	12.3
Dallas		2.6		2.5

Total land held for sale			$	14.8

During the year ended December 31, 2006, we sold undeveloped land totaling an aggregate of 8.7 acres to unrelated third parties. In connection with these sales, we received net proceeds of $41.0 million and recognized gains totaling $20.5 million. During the year ended December 31, 2004, we sold undeveloped land totaling 2.1 acres to an unrelated third party. In connection with this sale, we recognized a gain of $1.0 million. Land sales during the year ended December 31, 2005 were immaterial.

During 2004, in connection with our decision to dispose of a 2.4 acre parcel of undeveloped land located in Dallas, we incurred an impairment charge of $1.1 million to write-down the carrying value of the land to its fair value, less costs to sell.

Development and Lease-Up Properties

At December 31, 2006, we had four completed properties in lease-up as follows:

Number of

% Leased

Estimated

($ in millions)

Apartment

Cost to

Date of

Property and Location

Homes

Date

2 /19/07

Completion

Stabilization

In Lease-Up: Wholly-Owned

Camden Fairfax Corner

Fairfax, VA

488

80.6

3Q06

1Q07

Camden Westwind

Ashburn, VA

464

95.0

2Q06

3Q07

Camden Manor Park

Raleigh, NC

484

49.3

3Q06

3Q07

Camden Royal Oaks

Houston, TX

236

20.8

3Q06

1Q08

Total — wholly-owned

1,672

245.7

At December 31, 2006, we had eleven properties in various stages of 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
In Lease-Up: Wholly-Owned
Camden Clearbrook
Frederick, MD		297	$	46.0	$	45.3	$	13.6		1Q07		3Q07
Camden Old Creek
San Marcos, CA		350		98.0		90.0		44.5		2Q07		4Q07

Under Construction: Wholly-Owned
Camden Largo, Phase II
Largo, MD		26		5.5		3.9		3.9		1Q07		2Q07
Camden Monument Place
Fairfax, VA		368		64.0		46.8		46.8		3Q07		1Q08
Camden Potomac Yards
Arlington County, VA		379		110.0		75.3		75.3		3Q07		3Q08
Camden City Centre
Houston, TX		379		54.0		31.0		31.0		4Q07		3Q08
Camden Summerfield
Largo, MD		291		68.0		28.3		28.3		3Q08		1Q09
Camden Orange Court
Orlando, FL		261		49.0		16.2		16.2		3Q08		1Q09
Camden Dulles Station
Herndon, VA		368		77.0		26.1		26.1		4Q08		2Q09

Total — wholly-owned		2,719	$	571.5	$	362.9	$	285.7


Under Construction — Joint Ventures
Camden Main & Jamboree
Irvine, CA		290	$	107.1	$	94.0	$	94.0		2Q07		4Q07
Camden Plaza
Houston, TX		271		42.9		28.9		28.9		3Q07		2Q08
Camden College Park
College Park, MD		508		139.9		68.3		68.3		1Q09		4Q09

Total — joint ventures		1,069	$	289.9	$	191.2	$	191.2

Our consolidated balance sheet at December 31, 2006 included $369.9 million related to wholly-owned properties under development. Of this amount, $285.7 million related to our wholly-owned projects currently under development. Additionally, at December 31, 2006, we had $84.2 million invested in land held for future development. Included in this amount was $41.9 million related to projects we expect to begin constructing during 2007. We also had $36.1 million invested in land tracts adjacent to development projects, which are being utilized in conjunction with those projects. Upon completion of these development projects, we may utilize this land to further develop apartment homes in these areas. We may also sell certain parcels of these undeveloped land tracts to third parties for commercial and retail development.

Geographic Diversification

At December 31, 2006 and 2005, our investments in various geographic areas, excluding investments in joint ventures, were as follows:


(in thousands)	2006				2005

Washington, D.C. Metro	$	1,038,981	20.2	%	$	810,717	16.7	%
Southeast Florida		454,837	8.9			371,579	7.6
Dallas, Texas		381,521	7.4			387,159	8.0
Los Angeles/Orange County, California		343,853	6.7			342,279	7.0
Charlotte, North Carolina		336,337	6.6			334,063	6.9
Houston, Texas		334,019	6.5			326,535	6.7
Tampa, Florida		322,684	6.3			257,963	5.3
Atlanta, Georgia		314,595	6.1			309,639	6.4
Orlando, Florida		288,088	5.6			274,569	5.7
Las Vegas, Nevada		281,069	5.5			277,503	5.7
Raleigh, North Carolina		232,973	4.5			222,019	4.6
Denver, Colorado		198,185	3.9			196,110	4.0
San Diego/Inland Empire, California		190,341	3.7			158,095	3.3
Austin, Texas		158,673	3.1			117,855	2.4
Phoenix, Arizona		115,418	2.2			113,370	2.3
Corpus Christi, Texas		56,823	1.1			56,067	1.2
St. Louis, Missouri		12,772	0.3			123,022	2.5
Louisville, Kentucky		5,168	0.1			79,659	1.6
Other		65,885	1.3			102,596	2.1

Total real estate assets, at cost		5,132,222	100.0	%		4,860,799	100.0	%

Properties held for sale		32,763				172,112

Total properties held for investment, at cost	$	5,099,459			$	4,688,687

Results of Operations

Changes in revenues and expenses related to our operating properties from period to period are due primarily to acquisitions, dispositions, the performance of stabilized properties in the portfolio, and the lease-up of newly constructed properties. 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:


	2006			2005			2004
Average monthly property revenue per apartment home	$	936		$	857		$	765
Annualized total property expenses per apartment home	$	4,293		$	3,986		$	3,737
Weighted average number of operating apartment homes owned 100%		53,387			50,765			41,712
Weighted average occupancy of operating apartment homes owned 100%		95.1	%		95.0	%		94.1	%

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, 2006 as compared to 2005 and for the year ended December 31, 2005 as compared to 2004:


	Apartment		Year Ended
	Homes		December 31,				Change
($ in thousands)	at 12/31/06		2006		2005		$			%

Property revenues
Same store communities		33,465	$	336,076	$	314,308	$	21,768			6.9	%
Summit same store communities		13,100		171,943		133,584		38,359			28.7
Non-same store communities		3,154		38,765		22,593		16,172			71.6
Summit non-same store communities		833		14,741		9,975		4,766			47.8
Development and lease-up communities		4,391		13,585		405		13,180			100.0
Dispositions/other		—		24,320		41,216		(16,896	)		(41.0	)

Total property revenues		54,943	$	599,430	$	522,081	$	77,349			14.8	%


Property expenses
Same store communities		33,465	$	137,290	$	130,190	$	7,100			5.5	%
Summit same store communities		13,100		57,450		45,865		11,585			25.3
Non-same store communities		3,154		13,934		7,789		6,145			78.9
Summit non-same store communities		833		5,088		3,863		1,225			31.7
Development and lease-up communities		4,391		4,308		87		4,221			100.0
Dispositions/other		—		11,128		14,566		(3,438	)		(23.6	)

Total property expenses		54,943	$	229,198	$	202,360	$	26,838			13.3	%

Same store communities are communities we (or Summit) owned and were stabilized as of January 1, 2005. Non-same store communities are stabilized communities we (or Summit) have acquired or developed after January 1, 2005. Development and lease-up communities are non-stabilized communities we (or Summit) have acquired or developed after January 1, 2005. Dispositions primarily represent communities we have partially sold to joint ventures in which we retained an ownership interest.


	Apartment		Year Ended
	Homes		December 31,				Change
	at 12/31/05		2005		2004		$			%
Property revenues
Same store communities		35,916	$	330,628	$	318,976	$	11,652			3.7	%
Summit same store communities		11,083		114,229		—		114,229			100.0
Non-same store communities		3,266		32,120		22,698		9,422			41.5
Summit non-same store communities		2,705		29,820		—		29,820			100.0
Development and lease-up communities		3,031		806		—		806			100.0
Dispositions/other		—		14,478		41,342		(26,864	)		(65.0	)

Total property revenues		56,001	$	522,081	$	383,016	$	139,065			36.3	%


Property expenses
Same store communities		35,916	$	135,579	$	131,191	$	4,388			3.3	%
Summit same store communities		11,083		39,185		—		39,185			100.0
Non-same store communities		3,266		11,562		9,282		2,280			24.6
Summit non-same store communities		2,705		10,811		—		10,811			100.0
Development and lease-up communities		3,031		539		—		539			100.0
Dispositions/other		—		4,684		15,420		(10,736	)		(69.6	)

Total property expenses		56,001	$	202,360	$	155,893	$	46,467			29.8	%

Same store communities are communities we (or Summit) owned and were stabilized as of January 1, 2004. Non-same store communities are stabilized communities we (or Summit) have acquired or developed after January 1, 2004. Development and lease-up communities are non-stabilized communities we (or Summit) have developed or acquired after January 1, 2004. Dispositions primarily represent communities we have partially sold to joint ventures in which we retained an ownership interest.

Same store analysis

Camden same store property revenues for the year ended December 31, 2006 increased $21.8 million, or 6.9%, from 2005 resulting primarily from higher rental income per apartment home. Same store property revenues for the year ended December 31, 2005 increased $11.7 million, or 3.7% from 2004 primarily from higher rental income per apartment home and decreased vacancy loss per apartment home. Our revenue growth is the result of improving market fundamentals resulting from growth in employment and population in the majority of our markets, the increasing cost of ownership versus rental, and rising interest rates and construction costs limiting new supply. In addition, we continue to believe our strong operating performance is not only the result of improving operating fundamentals, but also the continued enhancements we are making to many of our operational components, such as our web-based property management and revenue management systems. We believe these enhancements have created efficiencies within our business and have allowed us to take advantage of improvements in the rental market.

Total property expenses from our same store communities increased 5.5% and 3.3% for the year ended December 31, 2006 as compared to 2005 and for the year ended December 31, 2005 as compared to 2004, respectively. The increases in same store property expenses per apartment home for the year ended December 31, 2006 as compared to 2005 were primarily due to increases in repair and maintenance, salaries and utilities expenses. These three expense categories represent approximately 60% of total operating costs for the year ended December 31, 2006 and increased approximately 8% as compared to the year ended December 31, 2005. The increases for the year ended December 31, 2005 as compared to 2004 were primarily due to increases in salary and benefit expenses, real estate tax expenses and utilities expenses. These three expense categories represent approximately 68% of total operating costs for the period, and increased approximately 5% as compared to 2004.

The revenues and expenses related to Summit same store communities represent the operations of those assets since February 28, 2005, the effective time of the Summit merger. Increases in revenues and expenses on Summit same store communities for 2006 compared to 2005 and for 2005 compared to 2004 are due to our ownership of those assets for only a partial year, beginning in 2005.

Non-same store analysis and other analysis

Property revenues from non-same store, development and lease-up communities increased $34.1 million for the year ended December 31, 2006 as compared to 2005 and increased $40.0 million for the year ended December 31, 2005 as compared to 2004. The increase during both periods was primarily due to the completion and lease-up of properties in our development pipeline. Property revenues from non-same store, development and lease-up communities acquired in the Summit merger are only for periods subsequent to February 28, 2005, the effective date of the merger.

Property revenues from dispositions/other decreased $16.9 million and $26.9 million for the year ended December 31, 2006 as compared to 2005 and for the year ended December 31, 2005 as compared to 2004, respectively. Dispositions/other property revenues earned during the year ended December 31, 2006 primarily related to properties partially sold to joint ventures of $20.0 million and retail lease income of $3.1 million. For the year ended December 31, 2005, dispositions/other property revenues earned primarily related to properties partially sold into joint ventures of $35.1 million, retail lease income of $2.3 million and income associated with the amortization of above and below market leases on acquired communities of $2.8 million. For the year ended December 31, 2004, dispositions/other property revenue earned primarily related to properties partially sold into joint ventures of $40.8 million.

Property expenses from non-same store, development and lease-up communities increased $11.6 million for the year ended December 31, 2006 as compared to 2005 and $13.6 million for 2005 as compared to 2004. The increase in expenses during both periods was primarily due to the completion and lease-up of properties in our development pipeline. Property expenses from non-same store, development and lease-up communities acquired in the Summit merger are only for periods subsequent to February 28, 2005, the effective date of the merger.

Property expenses from dispositions/other decreased $3.4 million and $10.7 million for the year ended December 31, 2006 as compared to 2005 and for the year ended December 31, 2005 as compared to 2004, respectively. The decrease for the year ended December 31, 2006 as compared to December 31, 2005 was due to the partial sale of nine properties to a joint venture in 2006. The decrease for the year ended December 31, 2005 as

compared to the year ended December 31, 2004 was due to the twelve communities partially sold to twelve individual affiliated joint ventures during 2005.

Non-property income


	Year Ended										Year Ended
	December 31,				Change						December 31,				Change
($ in thousands)	2006		2005		$			%			2005		2004		$			%

Fee and asset management	$	14,041	$	12,912	$	1,129			8.7	%	$	12,912	$	9,187	$	3,725			40.5	%
Sale of technology investments		1,602		24,206		(22,604	)		(39.3	)		24,206		863		23,343				*
Interest and other income		9,771		7,373		2,398			(71.5	)		7,373		11,074		(3,701	)		(33.4	)
Income on deferred compensation plans		10,116		6,421		3,695			57.5			6,421		6,760		(339	)		(5.0	)

Total non-property income	$	35,530	$	50,912	$	(15,382	)		(30.2	)%	$	50,912	$	27,884	$	23,028			82.6	%


*		Not a meaningful percentage

Fee and asset management income for the year ended December 31, 2006 increased $1.1 million as compared to 2005 and increased $3.7 million for the year ended December 31, 2005 as compared to 2004. The increase in fee and asset management income during 2006 as compared to 2005 was primarily due to fees earned on our third-party construction projects. The fees earned from the three joint ventures formed during the year ended December 31, 2006 were consistent with the structuring fees we earned from the partial sale of 12 properties to joint ventures in 2005. The increase in fee and asset management income during 2005 as compared to 2004 was primarily due to the structuring fees we earned from the partial sale of 12 properties to joint ventures in 2005.

Income from the sale of technology investments totaled $1.6 million, $24.2 million and $0.9 million for the years ended December 31, 2006, 2005 and 2004, respectively. During the year ended December 31, 2005, we recognized a $24.2 million gain on the sale of our investment in Rent.com, which was acquired by eBay Inc. during the first quarter of 2005. During the year ended December 31, 2006, we received additional distributions totaling $1.6 million from the sale of our investment in Rent.com.

Interest and other income increased $2.4 million for 2006 as compared to 2005 and decreased $3.7 million for 2005 as compared to 2004. Interest income, which primarily relates to interest earned on notes receivable outstanding under our mezzanine financing program, decreased $2.9 million for 2006 as compared to 2005 and decreased $2.0 million for 2005 as compared to 2004. These decreases were due to repayments of notes receivable during all years. Other income was $5.3 million in 2006 and $1.7 million in 2004. Other income represents income recognized upon the settlement of legal, insurance and warranty claims and contract disputes.

Income on deferred compensation plans increased $3.7 million during the year ended December 31, 2006 as compared to 2005 and decreased $0.3 million during the year ended December 31, 2005 as compared to 2004. The changes in income primarily related to the performance of the assets held in the deferred compensation plan for plan participants.

Other expenses


	Year Ended										Year Ended
	December 31,				Change						December 31,				Change
($ in thousands)	2006		2005		$			%			2005		2004		$			%

Property management	$	18,490	$	16,145	$	2,345			14.5	%	$	16,145	$	11,924	$	4,221			35.4	%
Fee and asset management		9,382		6,897		2,485			36.0			6,897		3,856		3,041			78.9
General and administrative		37,584		24,845		12,739			51.3			24,845		18,536		6,309			34.0
Transaction compensation and merger expenses		—		14,085		(14,085	)		(100.0	)		14,085		—		14,085			100.0
Impairment provisions on technology investments		—		130		(130	)		(100.0	)		130		—		130			100.0
Interest		118,344		111,548		6,796			6.1			111,548		78,260		33,288			42.5
Depreciation and amortization		158,510		164,705		(6,195	)		(3.8	)		164,705		94,730		69,975			73.9
Amortization of deferred financing costs		3,813		3,739		74			2.0			3,739		2,697		1,042			38.6
Expense on deferred compensation plans		10,116		6,421		3,695			57.5			6,421		6,760		(339	)		(5.0	)

Total non-property income	$	356,239	$	348,515	$	7,724			2.2	%	$	348,515	$	216,763	$	131,752			60.8	%

Property management expense, which represents regional supervision and accounting costs related to property operations, increased $2.3 million for the year ended December 31, 2006 as compared to 2005 and increased $4.2 million for 2005 as compared to 2004. The increases were primarily due to salary and benefit expenses, including long-term incentive compensation and amortization expense recorded for share awards. Additionally, increases in 2005 as compared to 2004 included the costs of additional regional supervision personnel and regional offices from the Summit merger. Property management expenses were 3.1% of total property revenues for the years ended December 31, 2006, 2005 and 2004.

Fee and asset management expense, which represents expenses related to third-party construction projects and property management, increased $2.5 million for 2006 as compared to 2005 and increased $3.0 million for 2005 as compared to 2004. These increases were primarily due to increases in costs and cost over-runs on third-party construction projects which totaled $7.0 million, $5.4 million and $2.7 million for the years ended December 31, 2006, 2005 and 2004, respectively.

General and administrative expenses increased $12.7 million during the year ended December 31, 2006 as compared to 2005 and increased $6.3 million during the year ended December 31, 2005 as compared to 2004, and were 5.8%, 4.1% and 4.1% of total revenues for the years ended December 31, 2006, 2005 and 2004, respectively. The increase in general and administrative expenses for the year ended December 31, 2006 as compared to 2005 was primarily due to increases in salary and benefit expenses, including long-term incentive compensation and amortization expense recorded for share awards, acceleration of vesting of previously granted share awards and legal costs. 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. The increase in general and administrative expenses for the year ended December 31, 2005 as compared to 2004 was primarily due to costs associated with pursuing potential transactions not consummated, increases in salary and benefit expenses, including the addition of internal audit, information technology and personnel associated with the Summit merger, and professional fees associated with Sarbanes-Oxley Act of 2002 compliance requirements and information technology projects.

During the year ended December 31, 2005, we incurred transaction compensation and merger expenses totaling $14.1 million related to the Summit merger. Merger expenses primarily related to training and transitional employee costs.

Gross interest cost before interest capitalized to development properties increased $9.9 million for the year ended December 31, 2006 as compared to 2005 and increased $41.5 million for the year ended December 31, 2004 as compared to 2005. The overall increase in interest expense was due primarily to an increase in debt outstanding as a result of continued funding of the development pipeline, increases in the effective interest rate associated with variable rate debt and interest on notes acquired in the Summit merger. These increases were partially offset by the repayment of debt associated with our equity offering in 2006. Interest capitalized increased $3.1 million for 2006 as compared to 2005 and increased $8.2 million for 2005 as compared to 2004. The increase in interest capitalized was due to higher average balances in our development pipeline, including the increase in development assets acquired in the Summit merger in 2005.

Depreciation and amortization and amortization of deferred financing costs decreased 3.6% during the year ended December 31, 2006 as compared to 2005 and increased 72.9% during the year ended December 31, 2005 as compared to 2004. These variances were due primarily to amortization of the value of in-place leases acquired in connection with the merger with Summit of $32.3 million during the year ended December 31, 2005, offset by additional depreciation on assets acquired, depreciation charges on assets reclassified from discontinued operations to continuing operations, and new development and capital improvements placed in service during the preceding year.

Expense on deferred compensation plans increased $3.7 million during the year ended December 31, 2006 as compared to 2005 and decreased $0.3 million during the year ended December 31, 2005 as compared to 2004. The changes in expense primarily related to the performance of the assets held in the deferred compensation plan for plan participants.

Other


	Year Ended												Year Ended
	December 31,						Change						December 31,						Change
($ in thousands)	2006			2005			$			%			2005			2004			$		%

Gain on sale of properties, including land	$	97,452		$	132,914		$	(35,462	)		(26.7	)%	$	132,914		$	1,642		$	131,272		*	%
Equity in income of joint ventures		5,156			10,049			(4,893	)		(48.7	)		10,049			356			9,693		*
Distributions on perpetual preferred units		(7,000	)		(7,028	)		(28	)		(0.4	)		(7,028	)		(10,461	)		3,433		32.8
Original issuance costs on redeemed perpetual preferred units		—			(365	)		365			100.0			(365	)		(745	)		380		51.0
Income allocated to common units and other minority interests		(16,163	)		(2,223	)		(13,940	)		(627.1	)		(2,223	)		(2,733	)		510		18.7


*		Not a meaningful percentage.

Gain on sale of properties for the year ended December 31, 2006 included gains of $91.5 million from the partial sale of nine operating properties to an affiliated joint venture and $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 $0.8 million from the sale of undeveloped land to an unaffiliated third party. Gain on sale of properties for the year ended December 31, 2005 included a gain of $132.1 million from the partial sale of 12 operating communities to affiliated joint ventures and $0.8 million from the sale of undeveloped land to an unaffiliated third party. Gain on sale of properties for the year ended December 31, 2004 included gains of $1.6 million from the sales of undeveloped land to unaffiliated third parties.

Equity in income of joint ventures decreased $4.9 million for the year ended December 31, 2006 as compared to 2005, and increased $9.7 million for the year December 31, 2005 as compared to 2004. Changes from period to period are due to an increase in the number of properties and gains recognized on the sale of assets held through joint ventures. We recognized $2.8 million of gains on the sale of three properties held through a joint venture during the year ended December 31, 2006. During the year ended December 31, 2005, we recognized $11.2 million in gains on the sale of three properties held in joint ventures. The gains recognized during the year ended December 31, 2005 were partially offset by losses recognized in one joint venture due to debt retirement costs associated with the refinancing of debt totaling $2.0 million.

Distributions on perpetual preferred units decreased $3.4 million for the year ended December 31, 2005 as compared to 2004 as a result of the redemption of $53 million Series C preferred units in September 2004 and January 2005. Original issuance costs of $0.4 million and $0.7 million were expensed in connection with these redemptions in 2005 and 2004, respectively.

Income allocated to common units and other minority interests increased $13.9 million during the year ended December 31, 2006 as compared to 2005 and decreased $0.5 million during the year ended December 31, 2005 as compared to 2004. The increase in 2006 was due primarily to gains recognized on the partial sale of eight properties held in Camden Operating, L.P. to a joint venture during the year ended December 31, 2006. A portion of the gains recognized were allocated to minority 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 generally accepted accounting principles), excluding gains (or losses) from depreciable operating property sales, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Diluted FFO also assumes conversion of all dilutive convertible securities, including convertible minority 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 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 operations and data included elsewhere in this report. FFO is not defined by generally accepted accounting principles 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 to diluted FFO for the years ended December 31, 2006, 2005 and 2004 are as follows:

(in thousands)


	2006			2005			2004
Funds from operations
Net income	$	232,846		$	199,086		$	41,341
Real estate depreciation, including discontinued operations		157,233			168,777			104,339
Adjustments for unconsolidated joint ventures		478			(6,867	)		2,097
Gain on sale of properties, including discontinued operations		(170,304	)		(168,221	)		(8,368	)
Income allocated to common units, including discontinued operations		17,537			2,515			4,260

Funds from operations — diluted	$	237,790		$	195,290		$	143,669


Weighted average shares — basic		56,660			52,000			41,430
Incremental shares issuable from assumed conversion of:
Common share options and awards granted		725			483			434
Common units		3,868			3,830			2,438

Weighted average shares — diluted		61,253			56,313			44,302

Adjustments for unconsolidated joint ventures included in FFO for the years ended December 31, 2006 and 2005 includes net gains totaling $2.8 million and $11.2 million, respectively, from the sale of properties held in joint ventures. Included in the net gains recognized during the years ended December 31, 2006 and 2005 are $0.5 million and $0.3 million, respectively, in prepayment penalties associated with the repayment of mortgages associated with the sold properties.

Liquidity and Capital Resources

We are committed to maintaining a strong balance sheet and preserving our financial flexibility, which we believe enhances 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:

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

	•		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;

	•		borrowing on an unsecured basis in order to maintain a substantial number of unencumbered assets; and

	•		maintaining conservative coverage ratios.

Our interest expense coverage ratio, net of capitalized interest, was 2.9, 2.8 and 3.0 times for the years ended December 31, 2006, 2005 and 2004, respectively. Interest expense coverage ratio is derived by dividing interest expense for the period into the sum of income from continuing operations before gain on sale of properties, equity in income (loss) of joint ventures and minority interests, depreciation, amortization, interest expense and income from discontinued operations. At December 31, 2006, 2005 and 2004, 80.5%, 78.8% and 88.6%, respectively, of our properties (based on invested capital) were unencumbered. Our weighted average maturity of debt, excluding our line of credit, was 4.7 years at December 31, 2006.

As a result of the significant cash flow generated by our operations, 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 by issuing securities under our automatic shelf registration statement, we believe our liquidity and financial condition are sufficient to meet all of our reasonably anticipated cash flow needs during 2007 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.

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. For unsecured notes, we anticipate that no significant portion of the principal of those notes will be repaid prior to maturity. Additionally, as of December 31, 2006, we had several development projects in various stages of construction, for which a total estimated cost of $208.6 million remained to be funded. We intend to meet our long-term liquidity requirements through the use of debt and equity offerings under our automatic shelf registration statement, draws on our unsecured credit facility and property dispositions.

In December 2006, we announced our Board of Trust Managers had declared a dividend distribution of $0.66 per share to holders of record as of December 22, 2006 of our common shares. The dividend was subsequently paid on January 17, 2007. 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 $2.64 per share or unit.

Net cash provided by operating activities increased to $231.6 million during the year ended December 31, 2006 from $200.8 million for the same period in 2005. The increases were primarily due to additional property revenues from recently acquired properties and growth in property revenues from our stabilized communities. This increase was partially offset by the loss of property revenues due to sales of properties and other transactional expenses.

Cash flows used in investing activities during the year ended December 31, 2006 totaled $52.1 million, as compared to $207.6 million during the year ended December 31, 2005. We incurred $463.1 million in property development, acquisition and capital improvement costs during 2006 as compared to $301.6 million during 2005. During the year ended December 31, 2006, we paid $8.2 million of severance benefits associated with the Summit merger. Notes receivable — affiliates increased $41.6 million as five mezzanine loans were provided to joint ventures formed during the year ended December 31, 2006. Proceeds received from sales of properties and technology investments, sales of assets to joint ventures and joint venture distributions repr

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		Page
PART I

Item 1.	Business		1

Item 1A.	Risk Factors		3

Item 1B.	Unresolved Staff Comments		8

Item 2.	Properties		8

Item 3.	Legal Proceedings		14

Item 4.	Submission of Matters to a Vote of Security Holders		14

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		14

Item 6.	Selected Financial Data		14

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		35

Item 8.	Financial Statements and Supplementary Data		35

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		35

Item 9A.	Controls and Procedures		35

Item 9B.	Other Information		38

PART III

Item 10.	Directors, Executive Officers and Corporate Governance		38

Item 11.	Executive Compensation		38

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		38

Item 13.	Certain Relationships and Related Transactions, and Director Independence		38

Item 14.	Principal Accounting Fees and Services		38

PART IV

Item 15.	Exhibits and Financial Statement Schedules		39

SIGNATURES			45
Statement Re: Computation of Ratios
List of Subsidiaries
Consent of Deloitte & Touche LLP
Powers of Attorney
Certification Pursuant to Rule 13a-14(a)
Certification Pursuant to Rule 13a-14(a)
Certification Pursuant to 18 U.S.C. Section 1350