Item 1. Financial Statements

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Item 1. Financial Statements

CAMDEN PROPERTY TRUST

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(in thousands, except per share amounts)	March 31, 2022		December 31, 2021
Assets
Real estate assets, at cost
Land	$	1,343,209	$	1,349,594
Buildings and improvements	8,651,674		8,624,734
	$	9,994,883	$	9,974,328
Accumulated depreciation	(3,436,969)		(3,358,027)
Net operating real estate assets	$	6,557,914	$	6,616,301
Properties under development, including land	488,100		474,739
Investments in joint ventures	13,181		13,730



Total real estate assets	$	7,059,195	$	7,104,770
Accounts receivable – affiliates	13,258		18,664
Other assets, net	254,763		234,370

Cash and cash equivalents	1,129,716		613,391
Restricted cash	5,778		5,589
Total assets	$	8,462,710	$	7,976,784
Liabilities and equity
Liabilities
Unsecured notes payable	$	3,671,309	$	3,170,367

Accounts payable and accrued expenses	169,973		191,651
Accrued real estate taxes	36,988		66,673
Distributions payable	100,880		88,786
Other liabilities	197,021		193,052
Total liabilities	$	4,176,171	$	3,710,529
Commitments and contingencies (Note 11)

Equity
Common shares of beneficial interest; $0.01 par value per share; 175,000 shares authorized; 114,827 and 114,668 issued; 112,735 and 112,578 outstanding at March 31, 2022 and December 31, 2021, respectively	1,127		1,126
Additional paid-in capital	5,396,267		5,363,530
Distributions in excess of net income attributable to common shareholders	(848,074)		(829,453)
Treasury shares, at cost (9,113 and 9,236 common shares at March 31, 2022 and December 31, 2021, respectively)	(329,521)		(333,974)
Accumulated other comprehensive loss	(3,370)		(3,739)
Total common equity	$	4,216,429	$	4,197,490
Non-controlling interests	70,110		68,765
Total equity	$	4,286,539	$	4,266,255
Total liabilities and equity	$	8,462,710	$	7,976,784

See Notes to Condensed Consolidated Financial Statements (Unaudited).

CAMDEN PROPERTY TRUST

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(in thousands, except per share amounts)		2022		2021



Property revenues		$	311,359	$	267,568
Property expenses
Property operating and maintenance		$	70,437	$	63,479
Real estate taxes		39,873		37,453
Total property expenses		$	110,310	$	100,932
Non-property income
Fee and asset management		$	2,450	$	2,206
Interest and other income		2,131		332
Income/(loss) on deferred compensation plans		(7,497)		3,626
Total non-property income/(loss)		$	(2,916)	$	6,164
Other expenses
Property management		$	7,214	$	6,124
Fee and asset management		1,175		1,132
General and administrative		14,790		14,222
Interest		24,542		23,644
Depreciation and amortization		113,138		93,141

Expense/(benefit) on deferred compensation plans		(7,497)		3,626
Total other expenses		$	153,362	$	141,889

Gain on sale of operating property		36,372		—

Equity in income of joint ventures		3,048		1,914
Income from continuing operations before income taxes		$	84,191	$	32,825
Income tax expense		(590)		(352)



Net income		$	83,601	$	32,473
Less income allocated to non-controlling interests		(2,856)		(1,126)

Net income attributable to common shareholders		$	80,745	$	31,347




Earnings per share – basic	$	0.77	$	0.31



Earnings per share – diluted	$	0.76	$	0.31




Weighted average number of common shares outstanding – basic	105,336		99,547
Weighted average number of common shares outstanding – diluted	106,152		99,621
Condensed Consolidated Statements of Comprehensive Income
Net income	$	83,601	$	32,473
Other comprehensive income

Reclassification of net loss on cash flow hedging activities, prior service cost and net loss on post retirement obligation	369		373
Comprehensive income	$	83,970	$	32,846
Less income allocated to non-controlling interests	(2,856)		(1,126)

Comprehensive income attributable to common shareholders	$	81,114	$	31,720

See Notes to Condensed Consolidated Financial Statements (Unaudited).

CAMDEN PROPERTY TRUST

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

For the three months ended March 31, 2022


	Common Shareholders
(in thousands, except per share amounts)	Common shares of beneficial interest		Additional paid-in capital		Distributions in excess of net income		Treasury shares, at cost		Accumulated other comprehensive (loss)/income		Non-controlling interests		Total equity
Equity, December 31, 2021	$	1,126	$	5,363,530	$	(829,453)	$	(333,974)	$	(3,739)	$	68,765	$	4,266,255
Net income					80,745						2,856		83,601
Other comprehensive income									369				369
Common shares issued	1		26,164										26,165
Net share awards			6,477				4,453						10,930
Employee share purchase plan			134										134




Cash distributions declared to equity holders ($0.94 per common share)					(99,366)						(1,511)		(100,877)
Other			(38)										(38)
Equity, March 31, 2022	$	1,127	$	5,396,267	$	(848,074)	$	(329,521)	$	(3,370)	$	70,110	$	4,286,539

See Notes to Condensed Consolidated Financial Statements (Unaudited).

CAMDEN PROPERTY TRUST

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Continued)

(Unaudited)

For the three months ended March 31, 2021


	Common Shareholders
(in thousands, except per share amounts)	Common shares of beneficial interest		Additional paid-in capital		Distributions in excess of net income		Treasury shares, at cost		Accumulated other comprehensive (loss)/income		Non-controlling interests		Total equity
Equity, December 31, 2020	$	1,069	$	4,581,710	$	(791,079)	$	(341,412)	$	(5,383)	$	71,682	$	3,516,587
Net income					31,347						1,126		32,473
Other comprehensive income									373				373

Net share awards			2,965				5,901						8,866
Employee share purchase plan			87										87



Conversion of operating partnership units	1		3,316								(3,317)		—
Cash distributions declared to equity holders ($0.83 per common share)					(82,896)						(1,392)		(84,288)
Other			(22)										(22)
Equity, March 31, 2021	$	1,070	$	4,588,056	$	(842,628)	$	(335,511)	$	(5,010)	$	68,099	$	3,474,076

See Notes to Condensed Consolidated Financial Statements (Unaudited).

CAMDEN PROPERTY TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(in thousands)	2022		2021
Cash flows from operating activities
Net income	$	83,601	$	32,473

Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	113,138		93,141


Gain on sale of operating property	(36,372)		—
Distributions of income from joint ventures	3,015		1,881
Equity in income of joint ventures	(3,048)		(1,914)

Share-based compensation	3,175		3,677

Net change in operating accounts and other	(41,222)		(40,802)


Net cash from operating activities	$	122,287	$	88,456
Cash flows from investing activities
Development and capital improvements, including land	$	(90,531)	$	(90,325)


Proceeds from sale of operating property	70,536		—







Increase in earnest money	(23,219)		(50)
Other	(5,696)		(1,691)



Net cash from investing activities	$	(48,910)	$	(92,066)
Cash flows from financing activities
Borrowings on unsecured credit facility	$	500,000	$	—
Proceeds from issuance of common shares	26,165		—
Distributions to common shareholders and non-controlling interests	(88,786)		(84,147)










Other	5,758		731
Net cash from financing activities	$	443,137	$	(83,416)
Net increase (decrease) in cash, cash equivalents, and restricted cash	516,514		(87,026)
Cash, cash equivalents, and restricted cash, beginning of period	618,980		424,533
Cash, cash equivalents, and restricted cash, end of period	$	1,135,494	$	337,507
Reconciliation of cash, cash equivalents, and restricted cash to the Condensed Consolidated Balance Sheets
Cash and cash equivalents	$	1,129,716	$	333,402
Restricted cash	5,778		4,105
Total cash, cash equivalents, and restricted cash, end of period	$	1,135,494	$	337,507
Supplemental information
Cash paid for interest, net of interest capitalized	$	16,581	$	15,724

Supplemental schedule of noncash investing and financing activities
Distributions declared but not paid	100,880		84,282
Value of shares issued under benefit plans, net of cancellations	20,245		16,937
Conversion of operating partnership units to common shares	—		3,317
Accrual associated with construction and capital expenditures	20,564		17,519

See Notes to Condensed Consolidated Financial Statements (Unaudited).

CAMDEN PROPERTY TRUST

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Description of Business

Business. Formed on May 25, 1993, Camden Property Trust ("CPT"), a Texas real estate investment trust ("REIT"), and all consolidated subsidiaries are primarily engaged in the ownership, management, development, reposition, redevelopment, acquisition, and construction of multifamily apartment communities. Our multifamily apartment communities are referred to as "communities," "multifamily communities," "properties," or "multifamily properties" in the following discussion. As of March 31, 2022, we owned interests in, operated, or were developing 175 multifamily properties comprised of 59,894 apartment homes across the United States. Of the 175 properties, five properties were under construction as of March 31, 2022, and will consist of a total of 1,839 apartment homes when completed. We also own land holdings which we may develop into multifamily communities in the future.

2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Principles of Consolidation. Our condensed consolidated financial statements include our accounts and the accounts of other subsidiaries and joint ventures (including partnerships and limited liability companies) over which we have control. All intercompany transactions, balances, and profits have been eliminated in consolidation. Investments acquired or created are evaluated based on the accounting guidance relating to variable interest entities ("VIEs"), which requires the consolidation of VIEs in which we are considered to be the primary beneficiary. If the investment is determined not to be a VIE, then the investment is evaluated for consolidation primarily using a voting interest model. In determining if we have a controlling financial interest, we consider factors such as ownership interests, decision making authority, kick-out rights and participating rights. As of March 31, 2022, two of our consolidated operating partnerships were VIEs. We are considered the primary beneficiary of both consolidated operating partnerships and therefore consolidate these operating partnerships. As of March 31, 2022, we held approximately 93% and 95% of the outstanding common limited partnership units and the sole 1% general partnership interest in each of these consolidated operating partnerships.

Interim Financial Reporting. We have prepared these unaudited financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial statements and the applicable rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, these statements do not include all information and footnote disclosures required for annual statements. While we believe the disclosures presented are adequate for interim reporting, these interim unaudited financial statements should be read in conjunction with the audited financial statements and notes included in our 2021 Annual Report on Form 10-K.

Acquisitions of Real Estate. Upon an acquisition of real estate, we determine the fair value of tangible and intangible assets, which includes land, buildings (as-if-vacant), furniture and fixtures, the value of in-place leases, including above and below market leases, and acquired liabilities. In estimating these values, we apply methods similar to those used by independent appraisers of income-producing property. Estimates of fair value of acquired debt are based upon interest rates available for the issuance of debt with similar terms and remaining maturities. Depreciation is computed on a straight-line basis over the remaining useful lives of the related tangible assets. The value of in-place leases and above or below market leases is amortized over the estimated average remaining life of leases in place at the time of acquisition; the net carrying value of in-place leases are included in other assets, net and the net carrying value of above or below market leases are included in other liabilities, net in our condensed consolidated balance sheets.

We recognized amortization expense related to in-place leases of approximately $6.2 million during the three months ended March 31, 2022 and did not recognize significant amortization expense related to in-place leases during the three months ended March 31, 2021. We recognized revenue related to net below-market leases of $0.9 million for the three months ended March 31, 2022 and did not recognize revenue related to above or below-market leases for the three months ended March 31, 2021. During the three months ended March 31, 2022, the weighted average amortization period for in-place leases was approximately twelve months, and the weighted average amortization period for net below-market leases was approximately ten months.

Asset Impairment. Long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment 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 record an impairment charge if we believe there is an other than temporary decline in market value below the carrying value of our investment. We did not record any impairment charges for the three months ended March 31, 2022 or 2021.

The value of our properties under development depends on market conditions, including estimates of the project start date, projected construction costs, and demand for multifamily communities. We have reviewed market trends and other marketplace information and 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 in our consolidated financial position and results of operations.

Cost Capitalization. Real estate assets are carried at cost plus capitalized carrying charges. Carrying charges are primarily interest and real estate taxes which are capitalized as part of properties under development. Capitalized interest is generally based on the weighted average interest rate of our unsecured debt and was approximately $4.0 million and $4.8 million for the three months ended March 31, 2022 and 2021, respectively. Capitalized real estate taxes were approximately $1.2 million and $1.4 million for the three months ended March 31, 2022 and 2021, respectively.

Expenditures directly related to the development and improvement of real estate assets are capitalized at cost as land and buildings and improvements. Indirect development costs, including salaries and benefits and other related costs directly attributable to the development of properties, are also capitalized. We begin capitalizing development, construction, and carrying costs when the development of the future real estate asset is probable and certain activities necessary to prepare the underlying real estate for its intended use have been initiated. All construction and carrying costs are capitalized and reported in the balance sheet as properties under development until the apartment homes are substantially completed. As apartment homes within development properties are substantially completed the total capitalized development cost of each apartment home is transferred from properties under development including land to buildings and improvements.

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


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

Fair Value. For financial assets and liabilities recorded at fair value on a recurring or non-recurring basis, fair value is the price we would expect to receive to sell an asset, or pay to transfer a liability, in an orderly transaction with a market participant at the measurement date under current market conditions. In the absence of such data, fair value is estimated using internal information consistent with what market participants would use in a hypothetical transaction.

In determining fair value, observable inputs reflect market data obtained from independent sources while unobservable inputs reflect our market assumptions; preference is given to observable inputs. These two types of inputs create the following fair value hierarchy:

Level 1: Quoted prices for identical instruments in active markets.
Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3: Significant inputs to the valuation model are unobservable.

Recurring Fair Value Measurements. The following describes the valuation methodologies we use to measure different financial instruments at fair value on a recurring basis:

Deferred Compensation Plan Investments. The estimated fair values of investment securities classified as deferred compensation plan investments are based on quoted market prices utilizing public information for the same transactions. Our deferred compensation plan investments, excluding the value of Company shares, are recorded in other assets in our condensed consolidated balance sheets. The inputs associated with the valuation of our recurring deferred compensation plan investments are included in Level 1 of the fair value hierarchy.

Non-Recurring Fair Value Measurements. Certain assets are measured at fair value on a non-recurring basis. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. These assets primarily include long-lived assets which are recorded at fair value if they are impaired using the fair value methodologies used to measure long-lived assets described above at "Asset Impairment." The inputs associated with the valuation of long-lived assets are generally included in Level 3 of the fair value hierarchy, unless a quoted price for a similar long-lived asset in an active market exists, at which time they are included in Level 2 of the fair value hierarchy.

Financial Instrument Fair Value Disclosures. As of March 31, 2022 and December 31, 2021, the carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and distributions payable represented fair value because of the short-term nature of these instruments. The carrying value of restricted cash approximates its fair value based on the nature of our assessment of the ability to recover these amounts. In calculating the fair value of our notes payable, interest rate and spread assumptions reflect current credit worthiness and market conditions available for the issuance of notes payable with similar terms and remaining maturities. These financial instruments utilize Level 2 inputs.

Income Recognition. The majority of our revenues are derived from real estate lease contracts and presented as property revenues, and include rental revenue as well as revenue from amounts received under contractual terms for other services provided to our customers. As a lessor, we have also elected practical expedients to: i) not separate the lease and non-lease components by class of underlying assets and account for the combined components as a single component under certain conditions, and ii) exclude from lease revenues the sales taxes collected from lessees and certain lessor costs paid directly by the lessee. Our other revenue streams include fee and asset management income in accordance with other revenue guidance, ASC 606, Revenues from Contracts with Customers. Details of our material revenue streams are discussed below:

Property Revenues: We earn rental revenue from operating lease contracts for the use of dedicated spaces within owned assets, which is our only underlying asset class. We recognize rental revenues from these lease contracts on a straight-line basis over the applicable lease term, net of amounts related to lease contracts identified as uncollectible. We also earn revenues from amounts received under contractual terms for other services considered non-lease components within a lease contract, primarily consisting of utility rebillings and other transactional fees. These amounts received under contractual terms for other services are charged to our residents and recognized monthly as earned. Any identified uncollectible amounts related to individual lease contracts are presented as an adjustment to property revenue. Any renewal options of real estate lease contracts are considered a new and separate contract which will be recognized at the time the option is exercised on a straight-line basis over the renewal period.

As of March 31, 2022, our average residential lease term was approximately fourteen months with all non-residential commercial leases averaging longer lease terms. We currently anticipate property revenue from existing leases as follows:


(in millions)
Year ended December 31,	Operating Leases
Remainder of 2022	$	651.0
2023	115.6
2024	3.8
2025	3.2
2026	2.9
Thereafter	8.4
Total	$	784.9

Credit Risk. In management’s opinion, due to the number of residents, the types and diversity of submarkets in which our properties operate, and the collection terms, there is no significant concentration of credit risk.

3. Per Share Data

Basic earnings per share is computed using net income attributable to common shareholders and the weighted average number of common shares outstanding. Diluted earnings per share reflects common shares issuable from the assumed conversion of common share options and unvested share awards, and units convertible into common shares. Only those items having a dilutive impact on our basic earnings per share are included in diluted earnings per share. Our unvested share-based awards are considered participating securities and are reflected in the calculation of basic and diluted earnings per share using the two-class method. Common shares under a forward sale agreement will be considered in our calculation for diluted earnings-per-share until settlement, using the if-converted method. The number of common share equivalent securities excluded from the diluted earnings per share calculation were approximately 1.0 million for the three months ended March 31, 2022 and approximately 1.9 million for the three months ended March 31, 2021. These securities, which include share awards granted and units convertible into common shares, were excluded from the diluted earnings per share calculations as they are anti-dilutive. The following table presents information necessary to calculate basic and diluted earnings per share for the periods indicated:


	Three Months Ended March 31,
(in thousands, except per share amounts)		2022		2021
Earnings per common share calculation – basic
Income from continuing operations attributable to common shareholders		$	80,745	$	31,347
Amount allocated to participating securities		(121)		(43)


Net income attributable to common shareholders – basic		$	80,624	$	31,304



Total earnings per common share – basic		$	0.77	$	0.31

Weighted average number of common shares outstanding – basic		105,336		99,547

Earnings per common share calculation – diluted
Income from continuing operations attributable to common shareholders, net of amount allocated to participating securities		$	80,624	$	31,304
Income allocated to common units from continuing operations		291		—


Net income attributable to common shareholders – diluted		$	80,915	$	31,304



Total earnings per common share – diluted		$	0.76	$	0.31

Weighted average number of common shares outstanding – basic		105,336		99,547
Incremental shares issuable from assumed conversion of:
Share awards granted		83		74
Common units		733		—
Weighted average number of common shares outstanding – diluted		106,152		99,621

4. Common Shares

In August 2021, we created an at-the-market ("ATM") share offering program through which we can, but have no obligation to, sell common shares for an aggregate offering price of up to $500.0 million (the "2021 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 2021 ATM program are intended to be used for general corporate purposes, which may include reducing future borrowings under our $900 million unsecured line of credit, the repayment of other indebtedness, the redemption or other repurchase of outstanding debt or equity securities, funding for development activities, and financing for acquisitions.

The 2021 ATM program also permits the use of forward sale agreements which allows us to lock in a share price on the sale of common shares at the time the agreement is executed, but defer receiving the proceeds from the sale of the applicable shares until a later date. If we enter into a forward sale agreement, we expect the applicable forward purchasers will borrow

from third parties and, through the applicable sales agent acting in its role as forward seller, sell a number of common shares equal to the number of shares underlying the applicable agreement. Under this scenario, we would not initially receive any proceeds from any sale of borrowed shares by the forward seller. We expect to physically settle each forward sale agreement with the relevant forward purchaser on or prior to the maturity date of a particular forward sale agreement by issuing our common shares in return for the receipt of aggregate net cash proceeds at settlement equal to the number of common shares underlying the particular forward sale agreement multiplied by the relevant forward sale price. However, at our sole discretion, we may also elect to cash settle or net share settle a particular forward sale agreement, in which case we may not receive any proceeds from the issuance of common shares, and we will instead receive or pay cash (in the case of cash settlement) or receive or deliver common shares (in the case of net share settlement). During the three months ended March 31, 2022 and through the date of this filing, we have not entered into any forward sale agreements under the 2021 ATM program.

During the three months ended March 31, 2022, we sold an aggregate of approximately 0.2 million common shares at an average price per share of $165.01, for aggregate net consideration of approximately $26.2 million under the 2021 ATM program. The proceeds from the sale of our common shares under the 2021 ATM program were used for general corporate purposes, which included funding for development activities and financing for acquisitions, including the acquisition of ownership interests in two discretionary investment Funds described below. We did not sell any additional shares under the 2021 ATM program subsequent to March 31, 2022, and as of the date of this filing, we had common shares having an aggregate offering price of up to $71.3 million remaining available for sale under the 2021 ATM program.

We have a share repurchase plan approved by our Board of Trust Managers which allows for the repurchase of up to $500.0 million of our common equity securities through open-market purchases, block purchases, and privately negotiated transactions. There were no repurchases during the three months ended March 31, 2022. As of the date of this filing, the remaining dollar value of our common equity securities authorized to be repurchased under this program was approximately $269.5 million.

We currently have an automatic shelf registration statement which allows us to offer common shares, preferred shares, debt securities, or warrants, and 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 March 31, 2022, we had approximately 103.6 million common shares outstanding, net of treasury shares and shares held in our deferred compensation arrangements, and no preferred shares outstanding.

In April 2022, we issued 2.9 million common shares in a public equity offering and received approximately $490.3 million in net proceeds; we used these net proceeds to reduce borrowings under our $900 million unsecured line of credit.

5. Acquisitions and Dispositions

Acquisition of Land. During the three months ended March 31, 2022, we acquired approximately 15.9 acres of land in Richmond, Texas for approximately $7.8 million for future development purposes. We did not acquire any land during the three months ended March 31, 2021.

In April 2022, we acquired two parcels of land of approximately 42.6 acres in Charlotte, North Carolina for an aggregate of $32.7 million for future development purposes.

Asset Acquisition of Operating Properties. On April 1, 2022, we acquired the remaining limited partnership interests in two discretionary investment Funds which own 22 multifamily communities with 7,247 apartment homes for cash consideration of approximately $1.1 billion. See Note 6, "Investments in Joint Ventures" for a further discussion on this transaction.

Sale of Operating Property. During the three months ended March 31, 2022, we sold one operating property comprised of 245 apartment homes located in Largo, Maryland for approximately $71.9 million and recognized a gain of approximately $36.4 million.

6. Investments in Joint Ventures

As of March 31, 2022, our equity investments in unconsolidated joint ventures, which we account for utilizing the equity method of accounting, consisted of two discretionary investment funds (collectively, the "Funds"), in which we held an ownership interest of 31.3% in each. These Funds own 22 multifamily communities comprised of 7,247 units located in Houston, Austin, Dallas, Tampa, Raleigh, Orlando, Washington D.C., Charlotte, and Atlanta. We provided property and asset management and other services to the Funds which own operating properties and we also provided construction and development services to the Funds which own properties under development. The following table summarizes the combined balance sheets and statements of income data for the Funds as of and for the periods presented:


(in millions)	March 31, 2022		December 31, 2021
Total assets	$	659.9	$	679.1
Total third-party debt	513.9		513.8
Total equity	130.0		131.9


	Three Months Ended March 31,
(in millions)	2022		2021
Total revenues	$	37.2	$	33.0

Net income	7.1		3.8
Equity in income (1)	3.0		1.9

*(1)*Equity in income excludes our ownership interest of fee income from various services provided by us to the Funds.

As of March 31, 2022, the Funds had been funded in part with secured third-party debt and we have no outstanding guarantees related to debt of the Funds.

We earned fees for property and asset management, construction, development, and other services related to the Funds, and we eliminated fee income for services provided to the Funds to the extent of our ownership. Fees earned for these services, net of eliminations, were approximately $1.7 million and $1.5 million for the three months ended March 31, 2022 and 2021.

On April 1, 2022, we purchased the remaining 68.7% ownership interests in the Funds for cash consideration of approximately $1.1 billion, after adjusting for our assumption of approximately $514 million of existing secured mortgage debt of the Funds which remained outstanding. We funded this transaction with cash on-hand. As mentioned above, we previously accounted for our ownership interests in these Funds properties in accordance with the equity method of accounting as of March 31, 2022, and following the completion of this purchase in April 2022, we will consolidate these Funds for financial reporting purposes.

7. Notes Payable

The following is a summary of our indebtedness:


(in millions)	March 31, 2022		December 31, 2021
Commercial banks
1.99% Term Loan, due 2022	$	39.9	$	39.9

1.23% Unsecured credit facility	500.0		—

	$	539.9	$	39.9

Senior unsecured notes

3.15% Notes, due 2022	$	349.5	$	349.3
5.07% Notes, due 2023	249.5		249.3
4.36% Notes, due 2024	249.5		249.5
3.68% Notes, due 2024	248.9		248.8
3.74% Notes, due 2028	397.9		397.8
3.67% Notes, due 2029 (1)	595.0		594.9
2.91% Notes, due 2030	744.3		744.1
3.41% Notes, due 2049	296.8		296.8
	$	3,131.4	$	3,130.5









Total unsecured notes payable (2)	$	3,671.3	$	3,170.4

(1) The 2029 Notes have an effective annual interest rate of approximately 3.84% through June 2026, which includes the effect of a settled forward interest rate swap, and approximately 3.28% thereafter, for an all-in average effective rate of approximately 3.67%.

(2) Unamortized debt discounts and debt issuance costs of $18.7 million and $19.6 million are included in senior unsecured notes payable as of March 31, 2022 and December 31, 2021, respectively.

We have a $900 million unsecured credit facility which matures in March 2023, with two options to further extend the facility at our election for two additional six-month periods and may be expanded three times by up to an additional $500 million upon satisfaction of certain conditions. The interest rate on our unsecured credit facility is based upon the London Interbank Offered Rate ("LIBOR") plus a margin which is subject to change as our credit ratings change. Advances under our 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 $450 million or the remaining amount available under our 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 as of March 31, 2022 and through the date of this filing.

Our credit facility provides us with the ability to issue up to $50 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 March 31, 2022, we had $500.0 million outstanding on our $900 million credit facility and we had outstanding letters of credit totaling approximately $14.6 million, leaving approximately $385.4 million available under our credit facility. In April 2022, we issued approximately 2.9 million common shares in a public equity offering and received approximately $490.3 million in net proceeds; we used these net proceeds to reduce borrowings under our $900 million unsecured line of credit.

We had outstanding floating rate debt of approximately $539.9 million and $39.8 million at March 31, 2022 and 2021, respectively. The weighted average interest rate on such debt was approximately 1.3% and 1.9% for the three months ended March 31, 2022 and 2021, respectively.

Our indebtedness had a weighted average maturity of approximately 6.5 years at March 31, 2022. The table below is a summary of the maturity dates of our outstanding debt and principal amortizations, and the weighted average interest rates on such debt, at March 31, 2022:


(in millions)	Amount (1)		Weighted Average Interest Rate (2)
Remainder of 2022	$	387.2	3.0	%
2023	247.3		5.1
2024 (3)	997.9		2.6
2025	(1.8)		—
2026	(1.8)		—
Thereafter	2,042.5		3.4
Total	$	3,671.3	3.3	%

*(1)*Includes amortization of debt discounts and debt issuance costs.

*(2)*Includes the effects of the applicable settled forward interest rate swaps.

*(3)*Includes $500.0 million of borrowings outstanding under our unsecured credit facility and includes all available extension options.

8. Derivative Financial Instruments and Hedging Activities

Risk Management Objective of Using Derivatives. We are exposed to certain risks arising from both our business operations and economic conditions. We manage economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. Specifically, we may enter into derivative financial instruments to manage exposures arising from business activities resulting in differences in the amount, timing, and duration of our known or expected cash payments principally related to our borrowings.

Cash Flow Hedges of Interest Rate Risk. Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps involve the receipt of variable rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

Designated Hedges. The gain or loss on derivatives designated and qualifying as cash flow hedges is reported as a component of other comprehensive income or loss, and subsequently reclassified into earnings in the period the hedged forecasted transaction affects earnings and is presented in the same line item as the earnings effect of the hedged item. At March 31, 2022 and 2021, we had no designated hedges outstanding.

As of the three months ended March 31, 2022 and 2021, there were no unrealized gains or losses recognized in other comprehensive income related to derivative financial instruments. During each of the three months ended March 31, 2022 and 2021, approximately $0.3 million was reclassified from accumulated other comprehensive income (loss) as an increase to interest expense for derivative financial instruments settled in prior periods.

9. Share-Based Compensation and Non-Qualified Deferred Compensation Plan

Incentive Compensation. We currently maintain the 2018 Share Incentive Plan (the “2018 Share Plan”) and the 2011 Share Incentive Plan (the “2011 Share Plan”), although no new awards may be granted under the 2011 Plan. Each of these plans were approved by our shareholders. The shares available for awards under the 2018 Share Plan are, subject to certain other limits under the plan, generally available for any type of award authorized under the 2018 Share Plan including stock options, stock appreciation rights, restricted stock awards, stock bonuses and other stock-based awards. Persons eligible to receive awards under the 2018 Share Plan include our and our subsidiaries' officers and employees, Trust Managers, and certain of our and our subsidiaries' consultants and advisors. A total of 9.7 million shares (“Share Limit”) was authorized under the 2018 Share Plan. Shares issued or to be issued are counted against the Share Limit as (1) 3.45 to 1.0 for every share award, excluding stock options and share appreciation rights, granted, and (2) 1.0 to 1.0 for every share of stock option or share appreciation right granted. As of March 31, 2022, there were approximately 5.9 million common shares available under the 2018 Share Plan, which would result in approximately 1.7 million shares which could be granted pursuant to full value awards conversion ratios as defined under the plan.

Total compensation cost for share awards charged against income was approximately $3.4 million and $4.0 million for the three months ended March 31, 2022 and 2021, respectively. Total capitalized compensation costs for share awards were approximately $1.0 million and $0.9 million for the three months ended March 31, 2022 and 2021, respectively.

A summary of activity under our share incentive plans for the three months ended March 31, 2022 is shown below:


	Nonvested Share Awards Outstanding	Weighted Average Exercise / Grant Price
Nonvested share awards outstanding at December 31, 2021	184,128	$	107.57
Granted	124,703	163.64
Vested	(139,705)	127.56
Forfeited	(1,407)	128.82
Total nonvested share awards outstanding at March 31, 2022	167,719	$	132.55

Share Awards and Vesting. Share awards for employees generally vest over three years and are valued at the market value of the shares on the grant date. In the event the holder of the share awards attains at least age 65, and with respect to employees, also attain at least ten or more years of service ("Retirement Eligibility") before the term in which the awards are scheduled to vest, the value of the share awards is amortized from the date of grant to the individual's Retirement Eligibility date. All new share awards granted after reaching retirement eligibility vest on the date of grant.

The weighted average fair value of share awards granted during the three months ended March 31, 2022 and 2021 was $163.64 per share and $103.77 per share, respectively. The total fair value of shares vested during the three months ended March 31, 2022 and 2021 was approximately $17.8 million and $17.7 million, respectively. At March 31, 2022, the unamortized value of previously issued unvested share awards was approximately $20.7 million which is expected to be amortized over the next three years.

10. Net Change in Operating Accounts

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


	Three Months Ended March 31,
(in thousands)	2022		2021
Change in assets:
Other assets, net	$	(9,613)	$	(1,838)
Change in liabilities:
Accounts payable and accrued expenses	(13,109)		(7,127)
Accrued real estate taxes	(29,708)		(33,001)
Other liabilities	10,266		232
Other	942		932
Change in operating accounts and other	$	(41,222)	$	(40,802)

11. Commitments and Contingencies

Construction Contracts. As of March 31, 2022, we estimate the total additional cost to complete the five properties currently under construction to be approximately $182.3 million. We expect to fund this amount through a combination of one or more of the following: cash and cash equivalents, cash flows generated from operations, draws on our unsecured credit facility, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our ATM programs, and other unsecured borrowings or secured mortgages.

Other Commitments and Contingencies. In the ordinary course of our business we issue letters of intent indicating a willingness to negotiate for acquisitions, dispositions, or joint ventures and also enter into arrangements contemplating various transactions. Such letters of intent and other arrangements are non-binding as to either party unless and until a definitive contract is entered into by the parties. Even if definitive contracts relating to the purchase or sale of real property are entered into, these contracts generally provide the purchaser with time to evaluate the property and conduct due diligence, during which periods the purchaser will have the ability to terminate the contracts without penalty or forfeiture of any deposit or earnest money. There can be no assurance definitive contracts will be entered into with respect to any matter covered by letters of intent or we will consummate any transaction contemplated by any definitive contract. Furthermore, due diligence periods for real property are frequently extended as needed. An acquisition or sale of real property becomes probable at the time the due diligence period expires and the definitive contract has not been terminated. We are then at risk under a real property acquisition contract, but generally only to the extent of any earnest money deposits associated with the contract, and are obligated to sell under a real property sales contract. At March 31, 2022, we had approximately $24.0 million of refundable earnest money deposits for potential acquisitions of land which are included in other assets, net in our condensed consolidated balance sheet. Of this $24.0 million in refundable earnest money deposits, approximately $22.7 million was related to the acquisition of land in Charlotte, North Carolina which was completed in April 2022.

Lease Commitments. Substantially all of our lessee operating leases, which are recorded within other liabilities in our condensed consolidated balance sheets, are related to office facility leases. We had no significant changes to our lessee lease commitments for the three months ended March 31, 2022. The lease and non-lease components, excluding short-term lease contracts with a duration of 12 months or less, are accounted for as a combined single component based upon the standalone price at the time the applicable lease is commenced and is recognized as a lease expense on a straight-line basis over the lease term. Most of our office facility leases include options to renew and generally are not included in the operating lease liabilities or right-of-use assets as they are not reasonably certain of being exercised. If an option to renew is exercised, it would be considered a separate contract and recognized based upon the standalone price at the time the option to renew is exercised. Variable lease payments which values are not known at lease commencement, such as executory costs of real estate taxes, property insurance, and common area maintenance, are expensed as incurred. Rental expense totaled approximately $1.0 million and $1.2 million for the three months ended March 31, 2022 and 2021, respectively. The following is a summary of our maturities of our lease liabilities as of March 31, 2022:


(in millions)
Year ended December 31,	Operating Leases
Remainder of 2022	$	2.4
2023	3.1
2024	3.0
2025	2.2
2026	0.3
Thereafter	0.1
Less: discount for time value	(1.0)
Lease liability as of March 31, 2022	$	10.1

12. Income Taxes

We have maintained and intend to maintain our election as a REIT under the Internal Revenue Code of 1986, as amended. In order for us to continue to qualify as a REIT we must meet a number of organizational and operational requirements, including a requirement to distribute annual dividends to our shareholders equal to a minimum of 90% of our adjusted taxable income. As a REIT, we generally will not be subject to federal income tax on our taxable income at the corporate level to the extent such income is distributed to our shareholders annually. If our taxable income exceeds our dividends in a tax year, REIT tax rules allow us to designate dividends from the subsequent tax year in order to avoid current taxation on undistributed income. If we fail to qualify as a REIT in any taxable year, we may be subject to federal and state income taxes for such year. In addition, we may not be able to requalify as a REIT for the four subsequent taxable years and may be subject to federal and state income taxes in those years as well. Historically, we have incurred only state and local income, franchise, and excise taxes. Taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to applicable federal, state, and local income taxes. Our consolidated operating partnerships are flow-through entities and are not subject to federal income taxes at the entity level.

We have recorded income, franchise, sales, and excise taxes in the condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2022 and 2021 as income tax expense. Income taxes for the three months ended March 31, 2022 primarily related to state income tax and federal taxes on the taxable income of certain of our taxable REIT subsidiaries. We have no significant temporary or permanent differences or tax credits associated with our taxable REIT subsidiaries.

We believe we have no uncertain tax positions or unrecognized tax benefits requiring disclosure as of and for the three months ended March 31, 2022.

13. Fair Value Measurements

Recurring Fair Value Measurements. The following table presents information about our financial instruments measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 using the inputs and fair value hierarchy discussed in Note 2, "Summary of Significant Accounting Policies and Recent Accounting Pronouncements."

Financial Instruments Measured at Fair Value on a Recurring Basis


	March 31, 2022								December 31, 2021
(in millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Other Assets
Deferred compensation plan investments (1)	$	131.4	$	—	$	—	$	131.4	$	137.3	$	—	$	—	$	137.3

*(1)*Approximately $2.6 million and $10.6 million of participant cash was withdrawn from our deferred compensation plan investments during the three months ended March 31, 2022 and the year ended December 31, 2021, respectively.

Non-Recurring Fair Value Disclosures. The nonrecurring fair value disclosure inputs under the fair value hierarchy are discussed in Note 2, "Summary of Significant Accounting Policies and Recent Accounting Pronouncements." We did not have any asset acquisitions of operating properties or impairments during the three months ended March 31, 2022.

Financial Instrument Fair Value Disclosures. The following table presents the carrying and estimated fair values of our notes payable at March 31, 2022 and December 31, 2021, in accordance with the policies discussed in Note 2, "Summary of Significant Accounting Policies and Recent Accounting Pronouncements."


	March 31, 2022				December 31, 2021
(in millions)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Fixed rate notes payable	$	3,131.4	$	3,122.8	$	3,130.5	$	3,363.7
Floating rate notes payable (1)	539.9		540.4		39.9		40.1

*(1)*Includes balance outstanding under our unsecured credit facility at March 31, 2022.

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