MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the financial statements and notes appearing elsewhere  in this report. Historical results and trends which might appear should not be interpreted as being indicative of future  operations. We have made statements in this report which are “forward-looking” in that they do not discuss historical fact, but  instead note expectations, projections, intentions or other items relating to the future. You should not rely on these forward-looking statements as they are subject to known and unknown risks, uncertainties and other factors which  may cause our actual results or performance to differ materially from those included in the forward-looking statements. Many of these factors are noted in conjunction with the forward-looking statements in the text. Other  important factors that could cause actual results to differ include: • the results of our efforts to implement our property development, construction and acquisition strategies; • our ability to effectively integrate the operations of Summit Properties Inc. (“Summit”);  • the timing of property dispositions and other financing arrangements related to the merger with Summit;  • the effects of economic conditions, including rising interest rates;  • our ability to generate sufficient cash flows; •  the failure to qualify as a real estate investment trust; • the costs of our capital and debt;  • changes in our capital requirements; • the actions of our competitors and our ability to respond to those actions; • the performance of our mezzanine financing program; • changes in governmental regulations, tax rates and similar matters; and • environmental uncertainties and disasters. Do not rely on these forward-looking statements, which only represent our estimates and assumptions as of the date  of this report. We assume no obligation to update or revise any forward-looking statement.  BUSINESS  Camden Property Trust is a real estate investment trust (“REIT”) and, with our subsidiaries, reports as a single business segment with activities related to the ownership, development, construction and management of multifamily  apartment communities. Our use of the term “communities”, “multifamily communities”, “properties”, or “multifamily  properties” in the following discussion refers to our multifamily apartment communities. As of December 31, 2004,  we owned interests in, operated or were developing 147 multifamily properties containing 52,570 apartment homes  located in ten states. At December 31, 2004, we had one recently completed multifamily property containing 538 apartment homes in lease-up. We had 1,114 apartment homes under development at three of our multifamily properties, including 464 apartment homes at one multifamily property owned through a joint venture. We had two  properties containing 886 apartment homes which were designated as held for sale. Additionally, we had several sites  that we intend to develop into multifamily apartment communities. Our 2004 results reflected a return of earnings growth that had been on the decline since 2001. Factors contributing  to our growth in 2004 included our ability to (i) take advantage of development and acquisition opportunities as  they became available, and (ii) leverage our access to low cost capital to provide earnings opportunities. These  fundamentals have been key contributors to our ability to increase shareholder value. Our recent and current  development pipeline has increased our asset base by nearly $400 million and these properties have signifi cantly  contributed to our success in 2004. Additionally, we have been able to take advantage of our strong fi nancial position  by providing mezzanine financing that has positively augmented our revenue stream. Our operating fundamentals continued to be affected by an oversupply of multifamily housing and low interest rates  on mortgage debt, which continued to make home purchases attractive. High concessions continued to be our biggest  challenge to increasing rental rates during 2004. Concession trends during the last half of 2004 showed promising results, as concessions declined in our stabilized properties during the fourth quarter. However, we expect that managing concessions will continue to be a significant challenge in 2005. 50 camden transforming