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

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

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

•	Volatility in capital and credit markets, or other unfavorable changes in economic conditions, either nationally or regionally in one or more of the markets in which we operate, could adversely impact us;

•	Short-term leases expose us to the effects of declining market rents;

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

•	We face risks associated with land holdings and related activities;

•	Potential reforms to Fannie Mae and Freddie Mac could adversely affect us;

•	Development, redevelopment and construction risks could impact our profitability;

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

•	Competition could adversely affect our ability to acquire properties;

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

•	Failure to qualify as a REIT could have adverse consequences;

•	Tax laws have recently changed and may continue to change at any time, and any such legislative or other actions could have a negative effect on us;

•	Litigation risks could affect our business;

•	Damage from catastrophic weather and other natural events could result in losses;

•	We are in the process of implementing a new enterprise resource planning system and problems with the design or implementation of this system could interfere with our business and operations;

•	A cybersecurity incident and other technology disruptions could negatively impact our business;

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

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

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

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

•	We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is determined;

•	Rising interest rates could both increase our borrowing costs, thereby adversely affecting our cash flows and the amounts available for distribution to our shareholders, and decrease our share price, if investors seek higher yields through other investments;

•	Failure to hedge effectively against interest rates may adversely affect results of operations;

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

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

•	Our share price will fluctuate; and

•	The form, timing and amount of dividend distributions in future periods may vary and be impacted by economic and other considerations.

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

Executive Summary

We are primarily engaged in the ownership, management, development, redevelopment, acquisition, and construction of multifamily apartment communities. Overall, we focus on investing in markets characterized by high-growth economic conditions, strong employment, and attractive quality of life which we believe leads to higher demand and retention of our apartments. As of December 31, 2018, we owned interests in, operated, or were developing 167 multifamily properties comprised of 56,858 apartment homes across the United States as detailed in the following Property Portfolio table. In addition, we own other land holdings which we may develop into multifamily apartment communities in the future.

Property Operations

Our results for the year ended December 31, 2018 reflect an increase in same store revenues of 3.2% as compared to 2017. These increases were due to higher average rental rates, which we believe was primarily attributable to improving job growth, favorable demographics, a manageable supply of new multifamily housing, and in part to more individuals choosing to rent versus buy as evidenced by the continued low level of homeownership rates. We believe the continued low levels of homeownership rates are mainly attributable to difficulties in obtaining mortgage loans as well as changing demographic trends which demonstrate certain generations having a higher propensity to rent, both of which promote apartment rentals. We also believe U.S. economic and employment growth are likely to continue during 2019 and the supply of new multifamily homes will likely remain at manageable levels. If economic conditions were to worsen, our operating results could be adversely affected.

Construction Activity

At December 31, 2018, we had six projects under construction comprised of 1,698 apartment homes, with stabilization expected to be completed within the next 42 months. As of December 31, 2018, we estimate the additional cost to complete the construction of the six projects to be approximately $335.2 million.

Acquisitions

Operating properties: During the year ended December 31, 2018 we acquired the following operating properties:

•	In September 2018, we acquired one operating property comprised of 299 apartment homes located in Orlando, Florida, for approximately $89.8 million.

•	In February 2018, we acquired one operating property comprised of 333 apartment homes located in Orlando, Florida, for approximately $81.4 million.

•	In January 2018, we acquired one operating property comprised of 358 apartment homes located in St. Petersburg, Florida, for approximately $126.9 million.

Land: In April 2018, we acquired approximately 1.8 acres of land in Orlando, Florida for approximately $11.4 million for the future development of a community with 360 wholly-owned apartment homes which started construction during the quarter ended June 30, 2018.

Dispositions

Land. In September 2018, we sold approximately 14.1 acres of land adjacent to two development properties in Phoenix, Arizona for approximately $11.5 million.

Future Outlook

Subject to market conditions, we intend to continue to seek opportunities to develop new communities, and to redevelop, reposition and acquire existing communities. We also intend to evaluate our operating property and land development portfolio and plan to continue our practice of selective dispositions as market conditions warrant and opportunities arise. We expect to maintain a strong balance sheet and preserve our financial flexibility by continuing to focus on our core fundamentals which currently are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We intend to meet our near-term liquidity requirements through a combination of one or more of the following: cash flows generated from operations, draws on our unsecured credit facility or other short-term borrowing, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our 2017 ATM program, other unsecured borrowings, or secured mortgages.

As of December 31, 2018, we had approximately $34.4 million in cash and cash equivalents, and $634.9 million available under our $645.0 million unsecured credit facilities. As of the date of this filing, we had common shares having an aggregate offering price of up to $312.8 million remaining available for sale under our 2017 ATM program. We believe scheduled payments of debt in 2019 are manageable at $437.3 million, which represents approximately 18.8% of our total outstanding debt, and includes the amortization of debt discounts and debt issuance costs, net of scheduled principal payments of approximately $1.8 million. We believe we are well-positioned with a strong balance sheet and sufficient liquidity to cover near-term debt maturities and new development, redevelopment, and other capital funding requirements. We will, however, continue to assess and take further actions we believe are prudent to meet our objectives and capital requirements.

Property Portfolio

Our multifamily property portfolio is summarized as follows:

	December 31, 2018						December 31, 2017
	Apartment Homes			Properties			Apartment Homes			Properties
Operating Properties
Houston, Texas	8,749			25			8,434			24
Washington, D.C. Metro	6,862			19			6,040			17
Dallas, Texas	5,666			14			5,666			14
Atlanta, Georgia	4,496			14			4,496			14
Orlando, Florida	3,594			10			2,962			8
Austin, Texas	3,360			10			3,360			10
Charlotte, North Carolina	3,076			13			3,076			13
Raleigh, North Carolina	3,054			8			3,054			8
Phoenix, Arizona	2,929			10			2,929			10
Southeast Florida	2,781			8			2,781			8
Tampa, Florida	2,736			7			2,378			6
Los Angeles/Orange County, California	2,658			7			2,658			7
Denver, Colorado	2,632			8			2,632			8
San Diego/Inland Empire, California	1,665			5			1,665			5
Corpus Christi, Texas	902			3			902			3
Total Operating Properties	55,160			161			53,033			155

Properties Under Construction
Phoenix, Arizona	441			1			441			1
Atlanta, Georgia	365			1			—			—
Orlando, Florida	360			1			—			—
Houston, Texas	271			1			586			2
Denver, Colorado	233			1			233			1
Charlotte, North Carolina	28			1			28			1
Washington, D.C. Metro	—			—			822			2
Total Properties Under Construction	1,698			6			2,110			7
Total Properties	56,858			167			55,143			162

	December 31, 2018						December 31, 2017
	Apartment Homes			Properties			Apartment Homes			Properties
Less: Unconsolidated Joint Venture Properties (1)
Houston, Texas	2,522			8			2,522			8
Austin, Texas	1,360			4			1,360			4
Dallas, Texas	1,250			3			1,250			3
Tampa, Florida	450			1			450			1
Raleigh, North Carolina	350			1			350			1
Orlando, Florida	300			1			300			1
Washington, D.C. Metro	281			1			281			1
Corpus Christi, Texas	270			1			270			1
Charlotte, North Carolina	266			1			266			1
Atlanta, Georgia	234			1			234			1
Total Unconsolidated Joint Venture Properties	7,283			22			7,283			22
Total Properties Fully Consolidated	49,575			145			47,860			140

(1)	Refer to Note 9, "Investments in Joint Ventures," in the notes to Consolidated Financial Statements for further discussion of our joint venture investments.

Stabilized Communities

We generally consider a property stabilized once it reaches 90% occupancy. During the year ended December 31, 2018, stabilization was achieved at one consolidated operating property as follows:

Stabilized Property and Location	Number of Apartment Homes			Date of Construction Completion		Date of Stabilization
Consolidated Operating Property
Camden NoMa II
Washington, D.C.	405			2Q17		4Q18

Completed Construction in Lease-Up

At December 31, 2018, we had three consolidated completed operating properties in lease-up as follows:

($ in millions) Property and Location	Number of Apartment Homes			Cost Incurred (1)				% Leased at 1/30/2019			Date of Construction Completion		Estimated Date of Stabilization
Consolidated Operating Properties
Camden Shady Grove
Rockville, MD	457			$	114.0			90	%		1Q18		2Q19
Camden Washingtonian
Gaithersburg, MD	365			86.8				72	%		4Q18		4Q19
Camden McGowen Station
Houston, TX	315			90.8				64	%		4Q18		4Q19
Consolidated total	1,137			$	291.6

(1) Excludes leasing costs, which are expensed as incurred.

Properties Under Development and Land

Our consolidated balance sheet at December 31, 2018 included approximately $294.0 million related to properties under development and land. Of this amount, approximately $186.3 million related to our projects currently under construction. In

addition, we had approximately $107.7 million primarily invested in land held for future development related to projects we currently expect to begin constructing during the next two years.

Communities Under Construction. At December 31, 2018, we had six consolidated properties in various stages of construction as follows:

($ in millions) Property and Location	Number of Apartment Homes			Estimated Cost				Cost Incurred				Included in Properties Under Development				Estimated Date of Construction Completion		Estimated Date of Stabilization
Camden North End I Phoenix, AZ (1)	441			$	105.0			$	95.9			$	14.6			1Q19		2Q20
Camden Grandview II Charlotte, NC (2)	28			21.0				21.3				11.1				1Q19		2Q19
Camden RiNo Denver, CO	233			75.0				41.6				41.6				2Q20		4Q20
Camden Downtown I Houston, TX	271			132.0				58.9				58.9				3Q20		1Q21
Camden Lake Eola Orlando, FL	360			120.0				34.0				34.0				3Q20		3Q21
Camden Buckhead Atlanta, GA	365			160.0				26.1				26.1				3Q21		2Q22
Consolidated total	1,698			$	613.0			$	277.8			$	186.3

(1)	Property in lease-up and was 54% leased at January 30, 2019.

(2)	Property in lease-up and was 11% leased at January 30, 2019.

Development Pipeline Communities. At December 31, 2018, we had the following consolidated communities undergoing development activities:

($ in millions) Property and Location		Projected Homes			Total Estimated Cost (1)				Cost to Date
Camden North End II		340			$	85.0			$	15.3
Phoenix, AZ
Camden Hillcrest		132			90.0				28.9
San Diego, CA
Camden Atlantic		269			90.0				16.7
Plantation, FL
Camden Arts District		354			150.0				21.5
Los Angeles, CA
Camden Paces III		350			100.0				14.6
Atlanta, GA
Camden Downtown II		271			145.0				10.7
Houston, TX
Total		1,716			$	660.0			$	107.7

(1)	Represents our estimate of total costs we expect to incur on these projects. However, forward-looking statements are not guarantees of future performance, results, or events. Although we believe these expectations are based upon reasonable assumptions, future events rarely develop exactly as forecasted, and estimates routinely require adjustment.

Geographic Diversification

At December 31, 2018 and 2017, our real estate assets by various markets, excluding depreciation and investments in joint ventures, were as follows:

($ in thousands)	2018							2017
Washington, D.C. Metro	$	1,551,925			18.6	%		$	1,500,568			19.6	%
Houston, Texas	899,458				10.8			811,507				10.6
Los Angeles/Orange County, California	738,856				8.9			724,745				9.5
Atlanta, Georgia	713,931				8.6			697,325				9.1
Southeast Florida	599,907				7.2			575,134				7.5
Phoenix, Arizona	563,797				6.8			524,126				6.8
Orlando, Florida	549,039				6.6			345,525				4.5
Dallas, Texas	508,134				6.1			500,492				6.5
Denver, Colorado	502,761				6.0			465,363				6.1
Charlotte, North Carolina	401,879				4.8			383,439				5.0
San Diego/Inland Empire, California	371,186				4.5			359,549				4.7
Tampa, Florida	350,517				4.2			223,841				2.9
Raleigh, North Carolina	293,961				3.5			280,540				3.7
Austin, Texas	234,743				2.8			232,405				3.0
Corpus Christi, Texas	48,381				0.6			43,184				0.5
Total	$	8,328,475			100.0	%		$	7,667,743			100.0	%

Results of Operations

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

	2018				2017				2016
Average monthly property revenue per apartment home	$	1,695			$	1,625			$	1,556
Annualized total property expenses per apartment home	$	7,322			$	7,114			$	6,634
Weighted average number of operating apartment homes owned 100%	46,925				46,210				46,934
Weighted average occupancy of operating apartment homes owned 100% (1)	95.6		%		95.4		%		95.3		%

(1)	Our one student housing community, which was sold in December 2017, is excluded from this calculation.

Management considers property net operating income ("NOI") to be an appropriate supplemental measure of operating performance to net income because it reflects the operating performance of our communities without an allocation of corporate level property management overhead or general and administrative costs. We define NOI as total property income less property operating and maintenance expenses less real estate taxes. NOI is further detailed in the Property-Level NOI table as seen below. NOI is not defined by accounting principles generally accepted in the United States of America ("GAAP") and should not be considered an alternative to net income as an indication of our operating performance, should not be considered an alternative to net cash from operating activities as a measure of liquidity, and should not be considered an indication of cash available to fund cash needs. Additionally, NOI as disclosed by other REITs may not be comparable to our calculation.

Reconciliations of net income to NOI for the year ended December 31, 2018, 2017, and 2016 are as follows:

(in thousands)		2018				2017				2016
Net income		$160,694				$200,860				$	838,226
Less: Fee and asset management income		(7,231		)		(8,176		)		(6,864		)
Less: Interest and other income		(2,101		)		(3,011		)		(2,202		)
Less: (Income)/loss on deferred compensation plans		6,535				(16,608		)		(5,511		)
Plus: Property management expense		25,581				25,773				25,125
Plus: Fee and asset management expense		4,451				3,903				3,848
Plus: General and administrative expense		50,735				50,587				47,415
Plus: Interest expense		84,263				86,750				93,145
Plus: Depreciation and amortization expense		300,946				263,974				250,146
Plus: Expense/(benefit) on deferred compensation plans		(6,535		)		16,608				5,511
Plus: Loss on early retirement of debt		—				323				—
Less: Gain on sale of operating properties, including land		—				(43,231		)		(295,397		)
Less: Equity in income of joint ventures		(7,836		)		(6,822		)		(7,125		)
Plus: Income tax expense		1,424				1,224				1,617
Less: Income from discontinued operations		—				—				(7,605		)
Less: Gain on sale of discontinued operations, net of tax		—				—				(375,237		)
Net operating income		$	610,926			$	572,154			$	565,092

Property-Level NOI (1)(2)

Property NOI, as reconciled above, is detailed further into the following categories for the year ended December 31, 2018 as compared to 2017 and for the year ended December 31, 2017 as compared to 2016:

	Apartment Homes at			Year Ended December 31,								Change
($ in thousands)	12/31/2018			2018				2017				$				%
Property revenues:
Same store communities	41,968			$	820,732			$	795,642			$	25,090			3.2	%
Non-same store communities	4,772			112,685				82,722				29,963				36.2
Development and lease-up communities	2,835			12,667				2,157				10,510				*
Dispositions/other	—			8,421				20,375				(11,954		)		(58.7	)
Total property revenues	49,575			$	954,505			$	900,896			$	53,609			6.0	%
Property expenses:
Same store communities	41,968			$	294,503			$	286,571			$	7,932			2.8	%
Non-same store communities	4,772			41,116				30,563				10,553				34.5
Development and lease-up communities	2,835			5,115				676				4,439				*
Hurricane expenses	—			—				3,944				(3,944		)		*
Dispositions/other	—			2,845				6,988				(4,143		)		(59.3	)
Total property expenses	49,575			$	343,579			$	328,742			$	14,837			4.5	%
Property NOI:
Same store communities	41,968			$	526,229			$	509,071			$	17,158			3.4	%
Non-same store communities	4,772			71,569				52,159				19,410				37.2
Development and lease-up communities	2,835			7,552				1,481				6,071				*
Hurricane expenses	—			—				(3,944		)		3,944				*
Dispositions/other	—			5,576				13,387				(7,811		)		(58.3	)
Total property NOI	49,575			$	610,926			$	572,154			$	38,772			6.8	%

• Not a meaningful percentage.

(1)

For 2018, same store communities are communities we owned and were stabilized since January 1, 2017, excluding communities under redevelopment and properties held for sale. Non-same store communities are stabilized communities not owned or stabilized since January 1, 2017, including communities under redevelopment and excluding properties held for sale. We define communities under redevelopment as communities with capital expenditures that improve a community's cash flow and competitive position through extensive unit, exterior building, common area, and amenity upgrades. Management believes same store information is useful as it allows both management and investors to determine financial results over a particular period for the same set of communities. Development and lease-up communities are non-stabilized communities we have developed since January 1, 2017, excluding properties held for sale. Hurricane expenses include storm-related damages related to Hurricanes Harvey and Irma in the third quarter of 2017. Dispositions/other includes those communities disposed of or held for sale which are not classified as discontinued operations and non-multifamily rental properties and expenses related to land holdings not under active development.

	Apartment Homes at			Year Ended December 31,								Change
($ in thousands)	12/31/2017			2017				2016				$				%
Property revenues:
Same store communities	41,988			$	799,951			$	777,498			$	22,453			2.9	%
Non-same store communities	3,357			77,360				49,849				27,511				55.2
Development and lease-up communities	2,515			6,034				—				6,034				*
Dispositions/other	—			17,551				49,100				(31,549		)		(64.3	)
Total property revenues	47,860			$	900,896			$	876,447			$	24,449			2.8	%
Property expenses:
Same store communities	41,988			$	287,828			$	276,444			$	11,384			4.1	%
Non-same store communities	3,357			28,561				18,473				10,088				54.6
Development and lease-up communities	2,515			2,399				—				2,399				*
Hurricane expenses	—			3,944				—				3,944				*
Dispositions/other	—			6,010				16,438				(10,428		)		(63.4	)
Total property expenses	47,860			$	328,742			$	311,355			$	17,387			5.6	%
Property NOI:
Same store communities	41,988			$	512,123			$	501,054			$	11,069			2.2	%
Non-same store communities	3,357			48,799				31,376				17,423				55.5
Development and lease-up communities	2,515			3,635				—				3,635				*
Hurricane expenses	—			(3,944		)		—				(3,944		)		*
Dispositions/other	—			11,541				32,662				(21,121		)		(64.7	)
Total property NOI	47,860			$	572,154			$	565,092			$	7,062			1.2	%

• Not a meaningful percentage.

(2)

For 2017, same store communities are communities we owned and were stabilized since January 1, 2016, excluding communities under redevelopment and properties held for sale. Non-same store communities are stabilized communities not owned or stabilized since January 1, 2016, including communities under redevelopment and excluding properties held for sale. We define communities under redevelopment as communities with capital expenditures that improve a community's cash flow and competitive position through extensive unit, exterior building, common area, and amenity upgrades. Management believes same store information is useful as it allows both management and investors to determine financial results over a particular period for the same set of communities. Development and lease-up communities are non-stabilized communities we have developed since January 1, 2016, excluding properties held for sale. Dispositions/other includes those communities disposed of or held for sale which are not classified as discontinued operations and non-multifamily rental properties and expenses related to land holdings not under active development.

Same Store Analysis

Year ended December 2018 compared to year ended December 2017

Same store property NOI increased approximately $17.2 million for the year ended December 31, 2018 as compared to the same period in 2017. This increase was due to an increase of approximately $25.1 million in same store property revenues for the year ended December 31, 2018, partially offset by an increase of approximately $7.9 million in same store property expenses for the year ended December 31, 2018, as compared to the same period in 2017.

The $25.1 million increase in same store property revenues for the year ended December 31, 2018, as compared to the same period in 2017, was primarily due to an increase in same store rental revenues of approximately $22.2 million from our same store portfolio for the year ended December 31, 2018, which was primarily due to a 2.8% increase in average rental rates for our same

store portfolio for the year ended December 31, 2018, as compared to the same period in 2017. The increase in same store property revenue was also due to a $2.9 million increase in other property revenues primarily due to increases in income from our bulk internet rebilling program for the year ended December 31, 2018 as compared to the same period in 2017.

The $7.9 million increase in same store property expense for the year ended December 31, 2018, as compared to the same period in 2017, was primarily due to an increase of approximately $5.9 million in real estate taxes as a result of higher property valuations and tax rates at a number of our communities, approximately $2.0 million of higher salary expenses, and $1.0 million of higher utility and bulk internet program expenses. These increases were partially offset by an approximate $1.6 million decrease related to lower repair and maintenance costs as compared to the same period in 2017.

Year ended December 2017 compared to year ended December 2016

Same store property NOI increased approximately $11.1 million for the year ended December 31, 2017 as compared to the same period in 2016. This increase was due to an increase of approximately $22.5 million in same store property revenues for the year ended December 31, 2017, partially offset by an increase of approximately $11.4 million in same store property expenses for the year ended December 31, 2017, as compared to the same period in 2016.

The $22.5 million increase in same store property revenues for the year ended December 31, 2017 as compared to the same period in 2016, was due in part to an increase in same store rental revenues of approximately $16.4 million for the year ended December 31, 2017, which was primarily due to a 2.9% increase in average rental rates for our same store portfolio for the year ended December 31, 2017, as compared to the same period in 2016. The increase in same store property revenue was also due to an increase of approximately $6.1 million in other property revenue for the year ended December 31, 2017, as compared to the same period in 2016, primarily due to increases in income from our bulk internet rebilling program and miscellaneous fee income.

The $11.4 million increase in same store property expense for the year ended December 31, 2017, as compared to the same period in 2016, was primarily due to increased costs of approximately $4.4 million associated with our bulk internet and other utility rebilling programs and a $3.9 million increase in real estate taxes as a result of higher property valuations at a number of our communities. These increases were partially offset by decreased property insurance expenses of approximately $1.8 million during the year ended December 31, 2017 as compared to the same period in 2016.

Non-same Store and Development and Lease-up Analysis

Property NOI from non-same store and development and lease-up communities increased approximately $25.5 million for the year ended December 31, 2018 as compared to the same period in 2017. The increase was due to an increase of approximately $40.5 million in revenues for the year ended December 31, 2018, partially offset by an increase of approximately $15.0 million in expenses for the year ended December 31, 2018, as compared to the same period in 2017. The increases in property revenues and expenses from our non-same store communities were primarily due to the stabilization of four operating properties in 2017 and one operating property in 2018 and the acquisition of one operating property in 2017 and three operating properties in 2018. The increases in property revenues and expenses from our development and lease-up communities were primarily due to the timing of completion and partial lease up of a total of three properties during 2017 and 2018, and the partial lease-up of two properties which were under construction at December 31, 2018.

Property NOI from non-same store and development and lease-up communities increased approximately $21.0 million for the year ended December 31, 2017 as compared to the same period in 2016. The increase was due to an increase of approximately $33.5 million in revenues for the year ended December 31, 2017, partially offset by an increase of approximately $12.5 million in expenses for the year ended December 31, 2017, as compared to the same period in 2016. The increases in property revenues and expenses from our non-same store communities were primarily due to the stabilization of four operating properties in each of 2016 and 2017 and the acquisition of one operating property in 2017. The increases in property revenues and expenses from our development and lease-up communities were primarily due to the completion and partial lease up of a total of one property during 2016 and 2017, and the partial lease-up of one property which was under construction at December 31, 2017.

The following table details the changes, described above, relating to non-same store and development and lease up NOI:

		For the year ended December 31,
(in millions)		2018 compared to 2017				2017 compared to 2016
Property Revenues
Revenues from non-same store stabilized properties		$	10.7			$	24.7
Revenues from acquisitions		19.3				2.8
Revenues from development and lease-up properties		10.5				6.0
		$	40.5			$	33.5
Property Expenses
Expenses from non-same store stabilized properties		$	2.8			$	8.8
Expenses from acquisitions		7.9				1.3
Expenses from development and lease-up properties		4.4				2.4
Other		(0.1		)		—
		$	15.0			$	12.5
Property NOI
NOI from non-same store stabilized properties		$	7.9			$	15.9
NOI from acquisitions		11.4				1.5
NOI from development and lease-up properties		6.1				3.6
Other		0.1				—
		$	25.5			$	21.0

Hurricane Expenses

In 2017, certain of our wholly-owned multifamily communities were impacted by Hurricanes Harvey and Irma and we incurred approximately $3.9 million of expenses.

Dispositions/Other Property Analysis

Dispositions/other property NOI decreased approximately $7.8 million for the year ended December 31, 2018 as compared to the same period in 2017. The decrease was primarily due to the disposition of one operating property in 2017. We had no operating property dispositions in 2018.

Dispositions/other property NOI decreased approximately $21.1 million for the year ended December 31, 2017 as compared to the same period in 2016. The decrease was primarily due to the disposition of one dual-phased operating property and six other operating properties in 2016 and the disposition of one operating property in 2017.

Non-Property Income

	Year Ended December 31,								Change							Year Ended December 31,								Change
($ in thousands)	2018				2017				$				%			2017				2016				$				%
Fee and asset management	$	7,231			$	8,176			$	(945	)		(11.6	)%		$	8,176			$	6,864			$	1,312			19.1	%
Interest and other income	2,101				3,011				(910		)		(30.2	)		3,011				2,202				809				36.7	%
Income (loss) on deferred compensation plans	(6,535		)		16,608				(23,143		)		*			16,608				5,511				11,097				*
Total non-property income	$	2,797			$	27,795			$	(24,998	)		(89.9	)%		$	27,795			$	14,577			$	13,218			90.7	%

• Not a meaningful percentage

Fee and asset management income, which represents income related to property management of our joint ventures and fees from third-party construction projects, decreased approximately $0.9 million for the year ended December 31, 2018 as compared to 2017 and increased approximately $1.3 million for the year ended December 31, 2017 as compared to 2016. The decrease for 2018 as compared to 2017 was primarily due to a decrease in third-party construction activity of approximately $1.2 million, partially offset by an increase in property revenues by the operating properties of the Funds, which resulted in higher property management fees. The increase for 2017 as compared to 2016 was primarily due to an increase in third-party construction activity and higher fees earned on capital projects at Fund communities.

Interest and other income decreased approximately $0.9 million for the year ended December 31, 2018, as compared to 2017, and increased approximately $0.8 million for the year ended December 31, 2017 as compared to 2016. The decrease for the year ended December 31, 2018 was primarily due to lower interest income earned on investments in cash and cash equivalents due to maintaining lower average cash balances in 2018, as compared to 2017 due to the $442.5 million net proceeds from the completion of a public equity offering in September 2017. The increase for 2017 was due to higher interest income earned on investments in cash and cash equivalents due to maintaining higher average cash balances throughout the year ended December 31, 2017, as compared to the same period in 2016.

Our deferred compensation plans recognized a loss of approximately $6.5 million in 2018, and income of approximately $16.6 million and $5.5 million in 2017 and in 2016, respectively. These changes were related to the performance of the investments held in deferred compensation plans for participants and were directly offset by the expense (benefit) related to these plans, as discussed below.

Other Expenses

	Year Ended December 31,								Change							Year Ended December 31,								Change
($ in thousands)	2018				2017				$				%			2017				2016				$				%
Property management	$	25,581			$	25,773			$	(192	)		(0.7	)%		$	25,773			$	25,125			$	648			2.6	%
Fee and asset management	4,451				3,903				548				14.0			3,903				3,848				55				1.4
General and administrative	50,735				50,587				148				0.3			50,587				47,415				3,172				6.7
Interest	84,263				86,750				(2,487		)		(2.9	)		86,750				93,145				(6,395		)		(6.9	)
Depreciation and amortization	300,946				263,974				36,972				14.0			263,974				250,146				13,828				5.5
Expense (benefit) on deferred compensation plans	(6,535		)		16,608				(23,143		)		*			16,608				5,511				11,097				*
Total other expenses	$	459,441			$	447,595			$	11,846			2.6	%		$	447,595			$	425,190			$	22,405			5.3	%

• Not a meaningful percentage

Property management expenses, which primarily represent regional supervision and accounting costs related to property operations, decreased approximately $0.2 million for the year ended December 31, 2018 as compared to 2017 and increased approximately $0.6 million for the year ended December 31, 2017 as compared to 2016. The slight decrease for 2018 as compared to 2017 was primarily related to lower professional expenses in 2018 as compared to 2017. The increase for 2017 as compared to 2016 was primarily related to higher salary and benefit costs, higher professional expenses and higher education programs provided to our regional employees. Property management expenses were 2.7% of total property revenues for the year ended December 31, 2018 and were 2.9% of total property revenues for each of the years ended December 31, 2017 and 2016.

Fee and asset management expense, which represents expenses related to property management of our joint ventures and fees from third-party construction projects, increased approximately $0.5 million for the year ended December 31, 2018 as compared to 2017 and increased approximately $0.1 million for the year ended December 31, 2017 as compared to 2016. The increase for 2018 as compared to 2017 was primarily due to higher expenses incurred as a result of pre-development activity relating to one land holding held by one of the Funds, and higher salaries incurred in managing our joint ventures. The slight increase for 2017 as compared to 2016 was primarily due to higher expenses relating to an increase in third-party construction activity in 2017 as compared to 2016.

General and administrative expenses increased approximately $0.1 million during the year ended December 31, 2018 as compared to 2017 and increased approximately $3.2 million during the year ended December 31, 2017 as compared to 2016. General and administrative expenses were 5.3%, 5.5% and 5.4% of total revenues, excluding income (loss) on deferred compensation plans, for the years ended December 31, 2018, 2017 and 2016, respectively. The slight increase for the year ended December 31, 2018 as compared to 2017 was primarily due to higher development pursuit costs, higher acquisition expenses, and other discretionary costs, partially offset by higher expenses incurred in 2017 relating to storm-related expenses of approximately $0.7 million due to Hurricanes Harvey and Irma in the third quarter 2017. The increase for the year ended December 31, 2017 as compared to 2016 was primarily due to higher salary and benefit costs, $0.7 million of storm-related expenses related to Hurricanes Harvey and Irma, and higher professional expenses.

Interest expense decreased approximately $2.5 million for the year ended December 31, 2018 as compared to 2017 and decreased approximately $6.4 million for the year ended December 31, 2017 as compared to 2016. The decrease in interest expense

in 2018 as compared to 2017 was primarily due to the repayment in May 2017 of a $246.8 million, 5.83% senior unsecured note payable and the repayment in October 2018 of $380 million of secured conventional mortgage notes. The decrease was partially offset by the issuance in October 2018 of $400 million, 3.74% senior unsecured notes and the incurrence in September 2018 of a $100 million unsecured floating rate term loan. The decrease was also partially offset by lower capitalized interest during the year ended December 31, 2018, resulting from lower average balances in our development pipeline.

The decrease in interest expense in 2017 as compared to 2016 was primarily due to the repayment in May 2017 of a $246.8 million, 5.83% senior unsecured note payable. The decrease was partially offset by lower capitalized interest during the year ended December 31, 2017, resulting from lower average balances in our development pipeline.

Depreciation and amortization expense increased approximately $37.0 million for the year ended December 31, 2018 as compared to 2017 and increased approximately $13.8 million for the year ended December 31, 2017 as compared to 2016. The increase in 2018 as compared to 2017 was primarily due to the acquisition of one operating property in 2017 and three operating properties in 2018, the completion of units in our development pipeline, and the completion of repositions during 2018 and 2017 and partial completion of redevelopments during 2018. The increase was partially offset by a decrease in depreciation expense related to the disposition of one operating property during the fourth quarter of 2017.

The increase in depreciation and amortization expense in 2017 as compared to 2016 was primarily due to the completion of units in our development pipeline, the acquisition of one operating property in 2017, the completion of repositions, and increases in capital improvements placed in service during 2017 and 2016. The increase was partially offset by a decrease in depreciation expense related to the disposition of one dual-phased operating property and six other operating properties in 2016, and one operating property in 2017.

Our deferred compensation plans incurred a benefit of approximately $6.5 million in 2018, and an expense of approximately $16.6 million and $5.5 million in 2017 and in 2016, respectively. These changes were related to the performance of the investments held in deferred compensation plans for participants and were directly offset by the income (loss) related to these plans, as discussed in the non-property income section above.

Other

	Year Ended December 31,								Change				Year Ended December 31,								Change
(in thousands)	2018				2017				$				2017				2016				$
Loss on early retirement of debt	$	—			$	(323	)		$	323			$	(323	)		$	—			$	(323	)
Gain on sale of operating properties, including land	$	—			$	43,231			$	(43,231	)		$	43,231			$	295,397			$	(252,166	)
Equity in income of joint ventures	7,836				6,822				1,014				6,822				7,125				(303		)
Income tax expense	(1,424		)		(1,224		)		(200		)		(1,224		)		(1,617		)		393

The $0.3 million loss on early retirement of debt during the year ended December 31, 2017 related to the early retirement of our $30.7 million tax-exempt secured note payable which was scheduled to mature in 2028. The loss is primarily related to the applicable unamortized loan costs.

For the year ended 2018, we sold approximately 14.1 acres of land adjacent to two development properties in Phoenix, Arizona for $11.5 million which approximated its book value. In 2017, we recognized a gain of approximately $43.2 million related to the sale of one operating property, which compares to an approximate $294.9 million gain recognized in 2016 related to the sale of one dual-phased property and six other operating properties. For the year ended 2016, we also sold 6.3 acres of land adjacent to an operating property in Tampa, Florida for a gain of approximately $0.4 million.

Equity in income of joint ventures increased approximately $1.0 million for the year ended December 31, 2018 as compared to 2017, and decreased approximately $0.3 million for the year ended December 31, 2017 as compared to 2016. The increase in 2018 was primarily due to an increase in earnings in 2018 as compared to 2017 resulting from the operating properties owned by the Funds and our share of hurricane-related expenses in 2017 which did not reoccur in 2018. The decrease in 2017 as compared to 2016 was primarily due to the recognition of approximately $0.4 million of expenses, representing our share of hurricane-related expenses in 2017. The decrease in 2017 was also due to higher interest expense recognized by three operating properties owned by the Funds which refinanced existing variable construction loans into permanent financing arrangements at higher rates. These decreases were partially offset by an increase in earnings resulting from higher rental and other property revenues from the operating properties owned by the Funds.

Income tax expense increased approximately $0.2 million for the year ended December 31, 2018, as compared to 2017, and decreased approximately $0.4 million for the year ended December 31, 2017, as compared to 2016. The increase in 2018 was primarily due to an approximate $0.5 million state income tax refund received in 2017. Excluding the income tax refund in 2017,

income tax decreased approximately $0.3 million in 2018 as compared to 2017. The decrease was primarily due to a decrease in our third-party construction activities conducted in a taxable REIT subsidiary and a reduction in the effective tax rate following the enactment of the 2017 Tax Act. The decrease in 2017 as compared to 2016 was primarily due to an approximate $0.5 million state income tax refund received in 2017, partially offset by an increase in taxable income related to our third party construction activities conducted in a taxable REIT subsidiary.

Funds from Operations (“FFO”) and Adjusted FFO ("AFFO")

Management considers FFO and AFFO to be appropriate measures 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 GAAP), excluding gains (or losses) associated with the sale of previously depreciated operating properties, real estate depreciation and amortization, impairments of depreciable assets, and adjustments for unconsolidated joint ventures to reflect FFO on the same basis. Our calculation of diluted FFO also assumes conversion of all potentially dilutive securities, including certain non-controlling interests, which are convertible into common shares. We consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions of operating properties and depreciation, FFO can assist in the comparison of the operating performance of a company’s real estate investments between periods or to different companies.

AFFO is calculated utilizing FFO less recurring capitalized expenditures which are necessary to help preserve the value of and maintain the functionality at our communities. We also consider AFFO to be a useful supplemental measure because it is frequently used by analysts and investors to evaluate a REIT's operating performance between periods or different companies. Our definition of recurring capital expenditures may differ from other REITs, and there can be no assurance our basis for computing this measure is comparable to other REITs.

To facilitate a clear understanding of our consolidated historical operating results, we believe FFO and AFFO should be examined in conjunction with net income attributable to common shareholders as presented in the consolidated statements of income and comprehensive income and data included elsewhere in this report. FFO and AFFO are not defined by GAAP and should not be considered alternatives to net income attributable to common shareholders as an indication of our operating performance. Additionally, FFO and AFFO as disclosed by other REITs may not be comparable to our calculation.

Reconciliations of net income attributable to common shareholders to FFO and AFFO for the years ended December 31 are as follows:

($ in thousands)	2018				2017				2016
Funds from operations
Net income attributable to common shareholders (1)	$	156,128			$	196,422			$	819,823
Real estate depreciation and amortization, including discontinued operations	294,283				257,540				248,235
Adjustments for unconsolidated joint ventures	8,976				8,903				9,194
Gain on sale of operating properties, net of tax	—				(43,231		)		(294,954		)
Gain on sale of discontinued operations, net of tax	—				—				(375,237		)
Income allocated to non-controlling interests	4,595				4,438				18,403
Funds from operations	$	463,982			$	424,072			$	425,464
Less: recurring capitalized expenditures	(72,296		)		(64,758		)		(59,084		)
Adjusted funds from operations	$	391,686			$	359,314			$	366,380
Weighted average shares – basic	95,208				91,499				89,580
Incremental shares issuable from assumed conversion of:
Common share options and awards granted	158				211				323
Common units	1,835				1,884				1,891
Weighted average shares – diluted	97,201				93,594				91,794

(1)	Net income attributable to common shareholders for the year ended December 31, 2017 included approximately $5.0 million of storm-related expenses related to Hurricanes Harvey and Irma.

Liquidity and Capital Resources

Financial Condition and Sources of Liquidity

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

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

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

•	maintaining what management believes to be conservative coverage ratios; and

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

Our interest expense coverage ratio, net of capitalized interest, was approximately 6.4, 5.8, and 5.5 times for the years ended December 31, 2018, 2017, and 2016, respectively. This ratio is a method for calculating the amount of operating cash flows available to cover interest expense and is calculated by dividing interest expense for the period into the sum of property revenues and expenses, non-property income, other expenses and income from discontinued operations after adding back depreciation, amortization, and interest expense from both continuing and discontinued operations. Approximately 89.6%, 80.0%, and 78.3% of our properties were unencumbered at December 31, 2018, 2017, and 2016, respectively. Our weighted average maturity of debt was approximately 4.9 years at December 31, 2018.

We also intend to strengthen our capital and liquidity positions by continuing to focus on our core fundamentals, which currently are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs.

Our primary sources of liquidity are cash and cash equivalents on hand and cash flow generated from operations. Other sources may include one or more of the following: availability under our unsecured credit facility and other short-term borrowing, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our 2017 ATM program, and other unsecured borrowings or secured mortgages. We believe our liquidity and financial condition are sufficient to meet all of our reasonably anticipated cash needs during 2019 including:

•	normal recurring operating expenses;

•	current debt service requirements, including debt maturities;

•	recurring capital expenditures;

•	reposition expenditures;

•	funding of property developments, redevelopments, acquisitions, and joint venture investments; and

•	the minimum dividend payments required to maintain our REIT qualification under the Code.

Factors which could increase or decrease our future liquidity include but are not limited to volatility in capital and credit markets, sources of financing, the minimum REIT dividend requirements, our ability to complete asset purchases, sales, or developments, the effect our debt level and changes in credit ratings could have on our cost of funds, and our ability to access capital markets.

Cash Flows

The following is a discussion of our cash flows for the years ended December 31, 2018 and 2017.

Net cash from operating activities was approximately $503.7 million during the year ended December 31, 2018 as compared to approximately $434.7 million during the year ended December 31, 2017. The increase was primarily due to growth attributable to our same store, non-same store communities, including four acquisitions during 2017 and 2018, and development and lease-up communities, as well as $15.9 million received for the settlement of an aggregate notional amount of $400.0 million forward interest rate swap designated hedges in 2018. These increases were partially offset by a decrease relating to the disposition of one operating property during the fourth quarter of 2017. See further discussions of our 2018 operations as compared to 2017 in "Results of Operations."

Net cash used in investing activities during the year ended December 31, 2018 totaled approximately $640.9 million as compared to $189.8 million during the year ended December 31, 2017. During 2018, we had cash outflows for property development and capital improvements of approximately $359.2 million. During 2018, we also acquired three operating properties

located in St. Petersburg and Orlando, Florida for approximately $290.0 million, and had increases in non-real estate assets of $14.5 million. These outflows were partially offset by net proceeds from the sale of land of approximately $11.3 million and a net decrease in notes receivable of $9.5 million. During 2017, we had cash outflows for property development and capital improvements of approximately $299.1 million. During 2017, we also acquired one operating property located in Atlanta, Georgia for approximately $58.3 million, had increases in non-real estate assets of $5.1 million, and had increases of $2.0 million in a note receivable balance outstanding on a real estate secured loan to an unaffiliated third party. These outflows were partially offset by cash receipts of $100.0 million from the maturity of a short-term investment, and proceeds from the disposition of one operating property of $76.9 million. The increase in property development and capital improvements for 2018, as compared to the same period in 2017, was primarily due to the timing and completion of a total of six consolidated operating properties in 2017 and 2018, and the completion of repositions and partial completion of redevelopments at several of our operating properties. The property development and capital improvements during 2018 and 2017, included the following:

		December 31,
(in millions)		2018				2017
Expenditures for new development, including land		$	177.9			$	163.1
Capital expenditures		83.6				70.3
Reposition expenditures		49.8				38.1
Capitalized interest, real estate taxes, and other capitalized indirect costs		24.3				25.3
Redevelopment expenditures		23.6				2.3
Total		$	359.2			$	299.1

Net cash used in financing activities totaled approximately $197.0 million during the year ended December 31, 2018 as compared to approximately $112.9 million during the year ended December 31, 2017. During 2018, we repaid our $175.0 million variable rate secured conventional mortgage notes and $205.0 million fixed rate secured conventional mortgage notes. We also used approximately $298.0 million to pay distributions to common shareholders and non-controlling interest holders, and $14.7 million for the repurchase of our common shares and redemption of units. These cash outflows were partially offset by net proceeds of approximately $495.5 million from the issuance of $400.0 million senior unsecured notes and the incurrence of a $100.0 million unsecured floating-rate term loan. During 2017, we used approximately $280.8 million to pay distributions to common shareholders and non-controlling interest holders. We also repaid our 5.83% senior unsecured note payable of approximately $246.8 million, as well as our tax-exempt secured notes payable of approximately $30.7 million. These cash outflows during 2017 were partially offset by net proceeds of approximately $445.0 million from the issuances of approximately 4.8 million common shares through an equity offering completed in September 2017 and issuances under our 2017 ATM program.

The following is a discussion of our cash flows for the years ended December 31, 2017 and 2016.

Net cash from operating activities was approximately $434.7 million during the year ended December 31, 2017 as compared to approximately $443.1 million during the year ended December 31, 2016. The decrease was primarily due to the disposition of 15 operating properties, a retail center, and approximately 19.6 acres of land classified as discontinued operations, and the disposition of one dual-phased operating property and six other operating properties during 2016 and one operating property during 2017. The decrease was also due to higher cash bonuses paid to employees in 2017 as compared to 2016. The decrease was partially offset by a growth attributable to our same store, non-same store, including one acquisition during 2017, and development and lease-up communities. See further discussions of our 2017 operations as compared to 2016 in "Results of Operations."

Net cash used in investing activities during the year ended December 31, 2017 totaled approximately $189.8 million as compared to net cash from investing activities of approximately $690.4 million during the year ended December 31, 2016. During 2017, we had cash outflows for property development and capital improvements of approximately $299.1 million. During 2017, we also acquired one operating property located in Atlanta, Georgia for approximately $58.3 million, had increases in non-real estate assets of $5.1 million, and had increases of $2.0 million in a note receivable balance outstanding on a real estate secured loan to an unaffiliated third party. These outflows were partially offset by cash receipts of $100.0 million from the maturity of a short-term investment, and proceeds from the disposition of one operating property of $76.9 million. During 2016, we received approximately $623.0 million from the sale of 15 operating properties, a retail center, and approximately 19.6 acres of land classified as discontinued operations, as well as $515.8 million from the sale of one dual-phase operating property and six other operating properties and one land holding. These cash inflows in 2016 were partially offset by cash outflows for property development and capital improvements of approximately $343.0 million, the purchase of a short-term investment for $100.0 million, net increases of $4.1 million in note receivable balances outstanding on real estate secured loans to unaffiliated third parties, and increases in non-real estate assets of $2.6 million. The decrease in property development and capital improvements for 2017, as compared to the same period in 2016, was primarily due to the timing and completion of six consolidated operating properties in 2016 and 2017, partially offset by an increase in redevelopment expenditures relating to our reposition program at

several of our operating properties. The expenditures related to property development and capital improvements during the years ended December 31, 2017 and 2016 included the following:

		December 31,
(in millions)		2017				2016
Expenditures for new development, including land		$	163.1			$	220.4
Capital expenditures		70.3				69.7
Reposition expenditures		38.1				23.1
Capitalized interest, real estate taxes, and other capitalized indirect costs		25.3				29.8
Redevelopment expenditures		2.3				—
Total		$	299.1			$	343.0

Net cash used in financing activities totaled approximately $112.9 million during the year ended December 31, 2017 as compared to approximately $904.2 million during the year ended December 31, 2016. During 2017, we used approximately $280.8 million to pay distributions to common shareholders and non-controlling interest holders. We also repaid our 5.83% senior unsecured note payable of approximately $246.8 million, as well as our tax-exempt secured notes payable of approximately $30.7 million. These cash outflows during 2017 were partially offset by net proceeds of approximately $445.0 million from the issuances of approximately 4.8 million common shares through an equity offering completed in September 2017 and issuances under our 2017 ATM program. During 2016, we had payments, net of proceeds, of $244.0 million on our unsecured credit facility and other short-term borrowings. We also used approximately $663.4 million to pay distributions to common shareholders and non-controlling interest holders which included the payment of a $4.25 per common share special dividend on September 30, 2016.

Financial Flexibility

We have a $600.0 million unsecured credit facility which matures in August 2019, with two six-month options to extend the maturity date at our election to August 2020. Additionally, we have the option to further increase our credit facility to $900.0 million by either adding additional banks to the facility or obtaining the agreement of the existing banks to increase their commitments. The interest rate on this credit facility is based upon LIBOR plus a margin which is subject to change as our credit ratings change. Advances under this credit facility may be priced at the scheduled rates, or we may enter into bid rate loans with participating banks at rates below the scheduled rates. These bid rate loans have terms of 180 days or less and may not exceed the lesser of $300.0 million or the remaining amount available under the credit facility. Our credit facility is subject to customary financial covenants and limitations. We believe we are in compliance with all such financial covenants and limitations on the date of this filing.

Our credit facility provides us with the ability to issue up to $50.0 million in letters of credit. While our issuance of letters of credit does not increase our borrowings outstanding under our credit facility, it does reduce the amount available. At December 31, 2018, we had no balances outstanding on our $600.0 million credit facility and we had outstanding letters of credit totaling approximately $10.1 million, leaving approximately $589.9 million available under our credit facility.

We also have a $45.0 million unsecured short-term borrowing facility which matures in May 2019. The interest rate is based on LIBOR plus 0.95%. At December 31, 2018, we had no balances outstanding on this unsecured short-term borrowing facility, leaving $45.0 million available under this facility.

We currently have an automatic shelf registration statement which allows us to offer, from time to time, common shares, preferred shares, debt securities, or warrants. Our Amended and Restated Declaration of Trust provides we may issue up to 185 million shares of beneficial interest, consisting of 175 million common shares and 10 million preferred shares. At December 31, 2018 we had approximately 93.2 million common shares outstanding, net of treasury shares and shares held in our deferred compensation arrangements, and no preferred shares outstanding.

In May 2017, we created an at-the market ("ATM") share offering program through which we can, but have no obligation to, sell common shares having an aggregate offering price of up to $315.3 million (the "2017 ATM program"), in amounts and at times as we determine, into the existing trading market at current market prices as well as through negotiated transactions. Actual sales from time to time may depend on a variety of factors including, among others, market conditions, the trading price of our common shares, and determinations by management of the appropriate sources of funding for us. The proceeds from the sale of our common shares under the 2017 ATM program are intended to be used for general corporate purposes, which may include reducing future borrowings under our unsecured line of credit or short-term borrowing facilities, the repayment of other indebtedness, the redemption or other repurchase of outstanding debt or equity securities, funding for development activities, and financing for acquisitions. As of the date of this filing, we had common shares having an aggregate offering price of up to $312.8 million remaining available for sale under the 2017 ATM program. No additional shares under the 2017 ATM program were sold subsequent to December 31, 2018 through the date of this filing.

We believe our ability to access capital markets is enhanced by our senior unsecured debt ratings by Moody’s, Fitch, and Standard and Poor's, which were A3 with stable outlook, A- with stable outlook, and BBB+ with positive outlook, respectively, as of December 31, 2018. In February 2019, Standard and Poor's upgraded our senior unsecured debt rating to A- with stable outlook. We believe our ability to access capital markets is also enhanced by our ability to borrow on a secured basis from various institutions including banks, Fannie Mae, Freddie Mac, or life insurance companies. However, we may not be able to maintain our current credit ratings and may not be able to borrow on a secured or unsecured basis in the future.

Future Cash Requirements and Contractual Obligations

One of our principal long-term liquidity requirements includes the repayment of maturing debt, including any future borrowings under our unsecured credit facility. We believe scheduled payments of debt in 2019 are manageable at $437.3 million, which represents approximately 18.8% of our total outstanding debt, and includes amortization of debt discounts and debt issuance costs, net of scheduled principle payments of approximately $1.8 million. See Note 10, “Notes Payable,” in the notes to Consolidated Financial Statements for further discussion of scheduled maturities.

We estimate the additional cost to complete the construction of the six consolidated projects to be approximately $335.2 million. Of this amount, we expect to incur costs between approximately $205 million and $225 million during 2019 and to incur the remaining costs during 2020 and 2021. Additionally, we expect to incur costs between approximately $95 million and $105 million related to the start of new development activities, between approximately $46 million and $50 million of repositions and revenue enhancing expenditures, between approximately $25 million and $33 million in redevelopment expenditures and between approximately $68 million and $72 million of additional recurring capital expenditures during 2019.

We anticipate meeting our near-term liquidity requirements through a combination of one or more of the following: cash flows generated from operations, draws on our unsecured credit facility or other short-term borrowings, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our 2017 ATM program, other unsecured borrowings, or secured mortgages. We continue to evaluate our operating properties and land development portfolio and plan to continue our practice of selective dispositions as market conditions warrant and opportunities arise.

As a REIT, we are subject to a number of organizational and operational requirements, including a requirement to distribute current dividends to our shareholders equal to a minimum of 90% of our annual taxable income. In order to minimize paying income taxes, our general policy is to distribute at least 100% of our taxable income. In December 2018, we announced our Board of Trust Managers had declared a quarterly dividend of $0.77 per common share to our common shareholders of record as of December 17, 2018. This dividend was subsequently paid on January 17, 2019 and we paid equivalent amounts per unit to holders of common operating partnership units. When aggregated with previous 2018 dividends, this distribution to common shareholders and holders of the common operating partnership units equates to an annual dividend rate of $3.08 per share or unit for the year ended December 31, 2018.

In the first quarter of 2019, the Company's Board of Trust Managers declared a first quarter dividend of $0.80 per common share to our common shareholders of record as of March 29, 2019. Future dividend payments are paid at the discretion of the Board of Trust Managers and depend on cash flows generated from operations, the Company's financial condition and capital requirements, distribution requirements under the REIT provisions of the Code and other factors which may be deemed relevant by our Board of Trust Managers. Assuming similar dividend distributions for the remainder of 2019, our annualized dividend rate for 2019 would be $3.20 as compared to a dividend rate of $3.08 in 2018.

The following table summarizes our known contractual cash obligations as of December 31, 2018:

(in millions)	Total				2019				2020				2021				2022				2023				Thereafter
Debt maturities (1)	$	2,321.6			$	437.3			$	(1.9	)		$	248.5			$	448.8			$	249.8			$	939.1
Interest payments (2)	435.7				84.6				75.0				68.7				59.5				43.0				104.9
Non-cancelable lease payments	18.8				2.9				3.0				3.1				2.7				2.6				4.5
	$	2,776.1			$	524.8			$	76.1			$	320.3			$	511.0			$	295.4			$	1,048.5

(1)	Includes amortization of debt discounts and debt issuance costs, net of scheduled principal payments.

(2)	Includes contractual interest payments for our senior unsecured notes and secured notes. The interest payments on our unsecured term loan with floating interest rates were calculated based on the interest rates in effect as of December 31, 2018.

Off-Balance Sheet Arrangements

The joint ventures in which we have an interest have been funded in part with secured, third-party debt. At December 31, 2018, our unconsolidated joint ventures had outstanding debt of approximately $510.7 million, of which our proportionate share was approximately $159.8 million. As of December 31, 2018, we had no outstanding guarantees related to the loans of our unconsolidated joint ventures.

Inflation

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

Critical Accounting Policies

The preparation of our financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the balance sheet date, and the amounts of revenues and expenses recognized during the reporting period. These estimates are based on historical experience and other assumptions believed to be reasonable under the circumstances. The following is a discussion of our critical accounting policies. For a discussion of all of our significant accounting policies, see Note 2, "Summary of Significant Accounting Policies and Recent Accounting Pronouncements," to the accompanying consolidated financial statements.

Valuation of Assets. Long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment may exist if estimated future undiscounted cash flows associated with long-lived assets are not sufficient to recover the carrying value of such assets. We consider projected future undiscounted cash flows, trends, strategic decisions regarding future development plans, and other factors in our assessment of whether impairment conditions exist. While we believe our estimates of future cash flows are reasonable, different assumptions regarding a number of factors, including market rents, economic conditions, and occupancies, could significantly affect these estimates. When impairment exists, the long-lived asset is adjusted to its fair value. In estimating fair value, management uses appraisals, management estimates, and discounted cash flow calculations which utilize inputs from a marketplace participant’s perspective. In addition, we evaluate our equity investments in joint ventures and if we believe there is an other than temporary decline in market value of our investment below our carrying value, we will record an impairment charge.

The value of our properties under development depends on market conditions, including estimates of the project start date as well as estimates of demand for multifamily communities. We have reviewed market trends and other marketplace information and have incorporated this information as well as our current outlook into the assumptions we use in our impairment analyses. Due to the judgment and assumptions applied in the impairment analyses, it is possible actual results could differ substantially from those estimated.

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

Recent Accounting Pronouncements

See Note 2, "Summary of Significant Accounting Policies and Recent Accounting Pronouncements" in the notes to Consolidated Financial Statements for further discussion of recent accounting pronouncements issued during the year ended December 31, 2018.