We continue to focus on expense control. The increase in 2004 expenses was driven by increases in property insurance  expenses and normal increases in employee related expenses. We were able to capitalize on the lower interest rate  environment in 2004 by taking advantage of financing opportunities and replacing maturing debt with new lower cost  debt. Although we expect 2005 to remain a challenging economic environment, we believe we are well positioned, both  geographically and financially, for growth. Market balance is one of our core strategies. Through our merger with Summit, which is discussed below, and  development and disposition activities, we have increased our market exposure in key markets, such as Southern  California, Washington, D.C. and Southeast Florida, decreased our relative exposure in high concentration markets,  such as Houston, Dallas and Las Vegas, and expanded our development pipeline. We intend to continue to recycle  capital to improve the quality of our properties. As a result of the merger and other activities, our properties are  located in 16 of the top 20 U.S. job growth markets and are well positioned as the recovery continues. We expect the  combination of all these forces to add value for our shareholders moving forward into 2005. On February 28, 2005, Summit was merged with and into Camden Summit Inc., one of our wholly-owned subsidiaries  (“Camden Summit”), pursuant to an Agreement and Plan of Merger dated as of October 4, 2004 (the “Merger  Agreement”), as amended. Prior to the effective time of the merger, Summit was the sole general partner of Summit  Properties Partnership, L.P. (the “Camden Summit Partnership”), and at the effective time, Camden Summit became  the sole general partner of the Camden Summit Partnership. As of December 31, 2004, Summit owned or held an  ownership interest in 48 communities comprised of 15,002 apartment homes with an additional 1,834 apartment  homes under construction in fi ve new communities. Under the terms of the Merger Agreement, Summit stockholders had the right to elect, on a share-by-share basis,  to receive either $31.20 in cash or 0.6687 of a Camden common share at the closing of the merger. These elections  were subject to reallocation so that the aggregate amount of cash issued in the merger to Summit’s stockholders  equaled approximately $436.3 million. In the merger, we issued approximately 11.8 million common shares to  Summit stockholders. The limited partners in the Camden Summit Partnership were offered, on a unit-by-unit basis,  the opportunity to redeem their partnership units for $31.20 in cash per unit or to remain in the Camden Summit  Partnership following the merger at a unit valuation equal to 0.6687 of a Camden common share. The limited partner  elections resulted in our redeeming 0.7 million partnership units for cash, for an aggregate of $21.7 million, and  issuing 1.8 million partnership units.  During 2004, stabilization was achieved at two communities totaling 786 apartment homes as follows: Camden Oak  Crest, which completed construction of 364 apartment homes in the second quarter of 2003; and Camden Sierra  at Otay Ranch, which completed construction of 422 apartment homes in the third quarter of 2003. We consider a  property stabilized once it reaches 90% occupancy, or generally one year from opening the leasing office, with some  allowances for larger than average properties. During 2004, we also completed construction of Camden Harbor View, a 538 apartment home community located in  Long Beach, California, which stabilized operations during the first quarter of 2005. Additionally, we continued construction at Camden Westwind, a 464 apartment home community in Ashburn, Virginia. This property is owned by a joint venture in which we own a 20% interest. We also began construction on Camden Farmers Market II, a 284 apartment home community located in Dallas, Texas, and Camden Lago Vista, a 366 apartment home community  located in Orlando, Florida. Property Update transforming camden 51 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS