MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS At December 31, 2004, we had one completed property in lease-up as follows: At December 31, 2004, we had three properties in various stages of construction as follows: Real estate assets are carried at cost plus capitalized carrying charges. Carrying charges are primarily interest and  real estate taxes which are capitalized as part of properties under development. Expenditures directly related to the  development, acquisition and improvement of real estate assets, excluding internal costs relating to acquisitions of operating properties, are capitalized at cost as land, buildings and improvements. Indirect development costs, including  salaries and benefits and other related costs which are clearly attributable to the development of properties, are also  capitalized. All construction and carrying costs are capitalized and reported on the balance sheet in properties under  development until the apartment homes are substantially completed. Upon substantial completion of the apartment  homes, the total cost for the apartment homes and the associated land is transferred to buildings and improvements  and land, respectively, and the assets are depreciated over their estimated useful lives using the straight-line method  of depreciation. Where possible, we stage our construction to allow leasing and occupancy during the construction period, which we believe minimizes the duration of the lease-up period following completion of construction. Our accounting policy  related to properties in the development and leasing phase is that all operating expenses associated with completed  apartment homes are expensed. If an event or change in circumstance indicates that a potential impairment in the value of a property has occurred, our  policy is to assess any potential impairment by making a comparison of the current and projected cash flows for such  property over its remaining holding period, on an undiscounted basis, to the carrying amount of the property. If such carrying amounts were in excess of the estimated projected cash flows of the property, we would recognize an  impairment loss equivalent to an amount required to adjust the carrying amount to its estimated fair value, less costs  to sell. During 2004, 2.4 acres of undeveloped land held in Dallas, Texas was classified as held for sale, upon the commencement  of a plan to dispose of the asset. In connection with our decision to dispose of the asset, we incurred an impairment  charge of $1.1 million to write-down the carrying value of the land to its fair value, less costs to sell. The net fair value  expected to be received upon sale is estimated to be $1.8 million. 54 camden transforming Total  650  $  66.5  $  39.3  APARTMENT $ in millions PROPERTY AND LOCATION NUMBER OF  HOMES ESTIMATED COST COST INCURRED AT 12/31/04 ESTIMATED DATE OF COMPLETION ESTIMATED DATE OF STABILIZATION UNDER CONSTRUCTION Camden Farmers Market II Dallas, TX  284 $ 31.7 $ 18.4 3Q05 1Q06 Camden Lago Vista Orlando, FL  366 $ 34.8 $ 20.9 3Q05 1Q06 UNDER CONSTRUCTION – JV’S Camden Westwind Ashburn, VA  464 $ 69.1 $ 44.2 1Q06 4Q06 APARTMENT $ in millions PROPERTY AND LOCATION NUMBER OF   HOMES COST TO DATE % LEASED AT 3/1/05 DATE OF  COMPLETION DATE OF STABILIZATION  Camden Harbor View Long Beach, CA  538 $ 144.2 90 % 2Q04 1Q05