MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Notes Receivable  IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS 66 camden transforming We evaluate the collectibility of both interest and principal of each of our notes receivable. If we identify that the  borrower is unable to perform their duties under the notes receivable or that the operations of the property do not  support the continued recognition of interest income or the carrying value of the loan, we would then cease income  recognition and record an impairment charge against the loan. The preparation of our financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the  date of the financial statements, results of operations during the reporting periods and related disclosures. Our  more significant estimates relate to determining the allocation of the purchase price of our acquisitions; estimates  supporting our impairment analysis related to the carrying value of our real estate assets; estimates of the useful  lives of our assets; reserves related to co-insurance requirements under our property, general liability and employee  benefit insurance programs and estimates of expected losses of variable interest entities. Actual results could differ  from those estimates. In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46, “Consolidation  of Variable Interest Entities, an Interpretation of ARB No. 51, Consolidated Financial Statements” (“FIN 46”), which  was revised in December 2003. This interpretation requires certain variable interest entities to be consolidated by the  primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling  fi nancial interest or do not have sufficient equity at risk for the entity to finance its activities without additional  subordinated fi nancial support from other parties. This interpretation was effective for periods ending after March 15,  2004. Our adoption of FIN 46, as revised, did not require the consolidation of any additional entities.  In June 2004, the Emerging Issues Task Force (“EITF”) issued EITF 03-01, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments”, which provides guidance to determine when an investment is considered impaired, whether the impairment is other than temporary, and the measurement of an impairment loss.  EITF 03-01 was effective for the first interim period beginning after June 15, 2004. The adoption of EITF 03-01 did not  have a material impact on our financial position, results of operations or cash fl ows. In December 2004, FASB issued SFAS No.123(R) “Share-Based Payment”, which replaces SFAS No.123, “Accounting  for Stock-Based Compensation”, and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”.  SFAS No. 123(R) requires an entity to measure the cost of employee services received in exchange for an award of  equity instruments based on the grant date fair value of the award. SFAS No. 123(R) is effective beginning July 1,  2005, and is required to be adopted using a “modified prospective” method. Under the modified prospective method,  SFAS No. 123(R) applies to new awards and to awards modified, repurchased or cancelled after the effective date.  Additionally, compensation cost for the unvested portion of awards as of the effective date is required to be recognized  as the awards vest after the effective date. The adoption of SFAS No. 123(R) will not have a material impact on our  financial position, results of operations or cash fl ows.  In December 2004, FASB issued SFAS No. 153, “Exchange of Nonmonetary Assets, an amendment of APB Opinion No.  29”, which addresses the measurement of exchanges of nonmonetary assets. SFAS No. 153 eliminates the exception  for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchange of  nonmonetary assets that do not have commercial substance. It also specifies that a nonmonetary exchange has  commercial substance if the future cash flows of the entity are expected to change significantly as a result of the  exchange. SFAS No. 153 is effective beginning July 1, 2005. The adoption of SFAS No. 153 will not have a material  impact on our financial position, results of operations or cash fl ows. We submitted an unqualified Section 12(a) CEO certification to the NYSE during 2004. We filed with the SEC the CEO  and CFO certifications required under Section 302 of the Sarbanes-Oxley Act as an exhibit to our Annual Report on  Form 10-K for the years ended December 31, 2003 and 2004.  NEW YORK STOCK EXCHANGE (“NYSE”) MATTERS