Exhibit 99.1
AmREIT Reports Second Quarter Results
- Earnings per Share was a loss of $0.31;
- Adjusted FFO of $0.23 per share, on track with 2004 guidance; and
- Increase in total assets to $108.7 million, up 35 percent compared to
June 30, 2003.
HOUSTON, Aug. 11 /PRNewswire-FirstCall/ -- AmREIT (Amex: AMY), a Houston-
based real estate investment trust, announced its second quarter of 2004
results.
Revenues for the second quarter increased 124 percent to $4.7 million
compared to $2.1 million for the second quarter of 2003. This increase is due
to additional portfolio revenue of $619,000 (attributed to property
acquisitions made in the second half of December 2003 and acquisitions made
during the second quarter), additional real estate operating and development
revenue of $445,000 and additional securities and retail partnership revenue
of $1.2 million, primarily due to an increase in securities commissions earned
from the sale of class C common shares and the sale of limited partnership
units, which was offset by an increase in securities commission expense of
$1.0 million. The net loss attributable to class A shareholders was
$1.0 million for the quarter compared to net income of $210,000 for the second
quarter of last year. Included in second quarter 2004 expenses is a non-cash
deferred merger charge of $362,000 related to the purchase of the company's
advisor, which represents the final payment of the deferred merger costs.
Also included in second quarter 2004 expenses is a non-cash impairment charge
of $1.1 million taken related to the Wherehouse Entertainment property located
in Wichita, Kansas. This impairment was due to the bankruptcy of the tenant,
the deterioration of the local retail market, and management's strategy to
quickly sell this asset and redeploy the capital into more productive assets.
This decision is in line with management's previously announced objective of
selling non-core assets and replacing them with irreplaceable corners --
premier retail frontage properties in high-traffic, highly populated areas.
Management is in the process of identifying approximately $10 to $15 million
of non-core properties in its portfolio and intends to dispose of these assets
later this year. While certain asset sales may result in an impairment of
value, management believes that in total, the non-core assets sold will result
in a net gain to the company.
For the second quarter, AmREIT's loss before discontinued operations per
class A common share was $0.25 compared to a loss of $0.15 per share for the
second quarter of 2003. The loss generated from discontinued operations for
the quarter was $0.06 per class A common share (which includes the impairment
charge of $0.34 per share) compared with a gain of $0.23 per share for the
second quarter of 2003. The company's net loss per share for the second
quarter was $0.31 compared to net earnings per share of $0.08 for the same
period last year. Diluted earnings per share information is not applicable
due to the anti-dilutive nature of the common class B and class C shares.
For the second quarter, per share operating income and net income,
adjusted for the non-cash deferred merger charge and asset impairment charge,
available to class A shareholders was $0.03 and $0.14, respectively.
Funds From Operations (FFO) for the second quarter was a loss of $0.22 per
class A common share and include a non-cash deferred merger charge of
$362,000, or $0.11 per share, and a non-cash impairment charge of
$1.1 million, or $0.34 per share, related to the Wherehouse Entertainment
property located in Wichita Kansas, which was sold in the second quarter.
This compares to FFO of $418,000, or $0.15 per share for the same period last
year, which did not include deferred merger charges or impairment charges.
Excluding those charges, adjusted FFO for the second quarter was $739,000, or
$0.23 per share and $1.13 million, or $0.36 per share for the six months ended
June 30, 2004, which is in line with management's guidance range for annual
adjusted FFO of $0.61 to $0.65 per share. A reconciliation of net income to
FFO is included in the financial tables accompanying this press release.
Total assets increased 35 percent to $108.7 million, from $80.4 million at
the second quarter of 2003 and are up 7 percent from $101.3 million at 2003
year-end. Total liabilities decreased to $36.0 million during the second
quarter, down from $51.7 million at year-end and $42.2 million at the second
quarter of 2003.
"We have built a team of high quality individuals that are executing our
business plan and generating solid results. Each of our teams and each
component of our business model: our portfolio, our real estate operating and
development business, our securities business and our retail partnership
business, are contributing to our growth and our success," said Kerr Taylor,
AmREIT's president and chief executive officer. "As we continue on our
journey from good to great, our business model, our people and the knowledge
capital that we have created will allow us to overcome our challenges and
drive our growth year over year."
Operational Highlights
-- During the second quarter, AmREIT fully subscribed its $40 million
class C common share offering through its securities subsidiary,
AmREIT Securities Company.
-- Subsequent to quarter end, AmREIT fully deployed the equity raised in
the class C common share offering with the acquisition of
$57.0 million of grocery anchored and multi-tenant shopping centers.
-- During the second quarter, AmREIT commenced a $170 million class D
common share offering. The security has a stated yield of
6.5 percent per annum, and after a seven-year holding period,
converts into the company's publicly traded class A common shares at
a 7.7 percent premium on invested capital.
-- AmREIT negotiated a lease buy out/assignment of bankruptcy claims
related to its two Just For Feet properties located in Tucson,
Arizona and Baton Rouge, Louisiana, resulting in a payment to the
company of $934,000, and the company has a sales contract in due
diligence for the sale of the Just For Feet located in Tucson,
Arizona, which is expected to close in the third quarter.
Outlook for 2004
In our annual report, we set forth four key goals and expectations for
this year:
-- The first goal was to have continued portfolio growth: Asset growth
of 100 percent over the next 12-18 months. With the acquisitions
made during and subsequent to the quarter end, we are well on our way
to achieve our goal, and have grown assets by approximately
65 percent. Our real estate pipeline remains robust, we are excited
about the projects that are currently in our pipeline, and we are on
track to achieve this 100 percent growth between December 2004 and
June 2005. Additionally, for almost 20 years we have invested in
real estate on good corners. Since listing on the AMEX two years
ago, we have implemented our strategy to expand our holdings of
multi-tenant properties. As we execute this strategy, we will
constantly be evaluating and disposing of those assets that are no
longer core, replacing them with multi-tenant shopping centers,
grocery anchored centers and single tenant leases on great corners.
The company's Net Asset Value is approximately $8.60 - $9.25. When
compared to our trading price, this translates to a 13-21 percent
discount to Net Asset Value.
-- The second goal was continued growth in capital resources and
conservative leverage structure. As of June 30, 2004, through the
class C common share offering, the company had raised approximately
$40.4 million since the offering opened in August 2003. On
June 25, 2004, the company launched its $170 million class D common
share offering and began raising capital through this offering in
late July. Through its by-laws, the company's debt to asset ratio is
limited to 55 percent. As of June 30, 2004, the company's debt to
asset ratio was approximately 33 percent.
-- The third goal was continued diversity and increased portfolio
quality. We continue to work to reduce concentration among our
tenants. For the year ended December 31, 2003, IHOP represented
approximately 23 percent of total revenue. Based on 2004 projected
revenue, IHOP is expected to represent approximately 12-15 percent of
total annual revenue. This decrease in concentration will be fueled
by the multi-tenant properties acquired to date as well as the
pending acquisitions and the fees and profits generated by our real
estate operating and development segment.
-- And the fourth goal was continued growth in Adjusted FFO and
dividends. Supported by the increase in rental revenue generated by
the pipeline of properties previously mentioned, as well as the
increase in fees and profits generated from our supporting business
segments, our target AFFO guidance remains $0.61 to $0.65 per class A
share. Dividends have increased every quarter since listing on
AMEX. The growth in portfolio assets as well as the growth of AFFO
continues to support an annual increase in dividends in the range of
7-10 percent.
AmREIT updates earnings guidance on a quarterly basis.
Conference Call
AmREIT will hold its quarterly conference call to discuss second quarter
results Wednesday, August 11, at 2:00 pm Central Time (3:00 pm Eastern Time).
The dial-in number for the call is 866-761-0749, passcode AmREIT. A live Web
cast of the call can be accessed on the investor relations page of AmREIT's
Web site at http://www.amreit.com . The call will also be available for
replay for 30 days by dialing 888-286-8010, passcode 56528045, or by going to
the investor relations events page of the company's Web site.
About AmREIT
AmREIT, a self-managed real estate investment firm, has been acquiring,
developing, and managing high quality commercial retail real estate to
generate monthly income and growth opportunities for investors for more than
19 years. A rapidly growing publicly traded company, AmREIT is known for its
ownership of "irreplaceable corners" -- premier retail frontage properties in
high-traffic, highly populated areas. These corners attract high profile
single tenant properties, high-end multi-tenant shopping centers and large
grocery anchored centers, leased to trusted names such as Kroger, Starbucks,
Walgreen's, and Washington Mutual. AmREIT also creates retail limited
partnerships, offered to accredited investors through the financial planning
community. These retail partnerships add value through actively acquiring and
developing high quality free standing and shopping center properties to create
the potential for increasing income and capital appreciation by selling the
properties within a defined time horizon.
In addition to historical information, this press release contains
forward-looking statements under the federal securities law. These statements
are based on current expectations, estimates and projections about the
industry and markets in which AmREIT operates, management's beliefs and
assumptions made by management. Past performance is not indicative of future
returns. Forward-looking statements are not guarantees of future performance
and involve certain risks and uncertainties, which are difficult to predict.
This press release does not constitute an offer to sell, or the
solicitation of an offer to buy any public or private securities from the
Company. The purchase of any securities may only be made pursuant to a
prospectus or Private Offering Memorandum. A copy of any available prospectus
or Private Offering Memorandum and the related subscription documents are
available to qualified potential investors on request.
For more information, call Jennifer Tweeton, Vollmer Public Relations, at
(713) 970-2100, or Chad Braun, AmREIT, 713-850-1400. AmREIT is online at
http://www.amreit.com .
(Tables to Follow)
Operating Results
(in thousands, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
Revenues: 2004 2003 2004 2003
Rental income from
operating leases $1,589 $970 $3,196 $1,940
Earned income from
direct financing
leases 507 507 1,014 1,001
Real estate fee income 581 136 949 267
Securities commission
income 1,648 441 3,553 526
Asset management fee
income 74 47 149 98
Interest and other
income 314 --- 325 3
Total Revenues 4,713 2,101 9,186 3,835
Expenses:
General operating and
administrative 1,587 783 3,008 1,536
Legal and professional 322 215 650 336
Securities commissions 1,338 331 2,761 396
Depreciation and
amortization 270 171 503 356
Deferred merger costs 362 --- 1,682 ---
Total Expenses 3,879 1,500 8,604 2,624
Operating Income 834 601 582 1,211
Income from non-
consolidated affiliates 172 45 187 86
Federal income tax
(expense) benefit (105) (58) (275) 15
Interest expense (544) (532) (1,163) (1,056)
Minority interest in
income of consolidated
joint ventures (49) (43) (94) (83)
Income (loss) before
discontinued operations 308 13 (763) 173
(Loss) income from
discontinued operations (211) 636 495 934
Net income (loss) 97 649 (268) 1,107
Distributions paid to
class B and C
shareholders (1,106) (439) (1,919) (892)
Net (loss) income
available to class A
shareholders $(1,009) $210 $(2,187) $215
(in thousands, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Reconciliation of
Net Income (loss)
to Funds From
Operations ("FFO"):
Income (loss) before
discontinued
operations $308 $13 $(763) $173
(Loss) income from
discontinued
operations (211) 636 495 934
Depreciation - from
operations 257 170 488 352
Depreciation - from
discontinued
operations 26 38 39 76
Class B & C
distributions (1,106) (439) (1,919) (892)
FFO available to
class A shares (726) $418 $(1,660) $643
Basic Per Share Data:
(Loss) before
discontinued
operations $(0.25) $(0.15) $(0.87) $(0.26)
(Loss) income from
discontinued
operations $(0.06) $0.23 $0.16 $0.34
Net (loss) income $(0.31) $0.08 $(0.71) $0.08
FFO - Basic $(0.22) $0.15 $(0.54) $0.23
Distributions per
class A share $0.12 $0.11 $0.24 $0.22
Distributions per
class B & C share $0.36 $0.19 $0.72 $0.37
Weighted average
number of class A
common shares
outstanding 3,235,449 2,790,492 3,094,216 2,779,434
Weighted average
number of class B
common shares
outstanding 2,324,454 2,100,638 2,338,068 2,273,849
Weighted average
number of class C
common shares
outstanding 3,812,494 --- 2,960,606 ---
Balance Sheet Highlights
(in thousands)
(Unaudited)
June 30, December 31,
2004 2003
Real estate held for investment, net $68,119 $68,018
Net investment in direct financing leases 19,222 22,046
Real estate held for resale, net 11,032 4,384
Total assets 108,712 101,327
Notes payable 32,534 48,485
Total liabilities 35,999 51,684
Minority interest 1,010 847
Total shareholders' equity 71,703 48,796
Non-GAAP Financial Disclosure
This press release contains certain non-GAAP financial measures that
management believes are useful in evaluating an equity REIT's performance.
AmREIT's definitions and calculations of non-GAAP financial measures may
differ from those used by other equity REIT's, and therefore may not be
comparable. The non-GAAP financial measures should not be considered as an
alternative to net income as an indication of our operating results, or to net
cash provided by operating activities as a measure of our liquidity.
AmREIT considers FFO to be an appropriate measure of the operating
performance of an equity REIT. The National Association of Real Estate
Investment Trusts ("NAREIT") defines FFO as net income computed in accordance
with generally accepted accounting principles ("GAAP"), excluding gains or
losses from sales of property, plus real estate depreciation and amortization,
and after adjustments for unconsolidated partnerships and joint ventures.
AmREIT calculates its base FFO in accordance with this definition. AmREIT
adjusts its FFO calculation by adding back non-cash charges to earnings, such
as the issuance of stock in conjunction with the payment of deferred merger
costs and impairment charges on real assets, resulting in its adjusted FFO.
The Company considers FFO to be an appropriate supplemental measure of
operating performance because, by excluding gains or losses on dispositions
and excluding depreciation, FFO is a helpful tool that can assist in the
comparison of the operating performance of a company's real estate between
periods, or as compared to different companies. FFO is not defined by GAAP
and should not be considered as an alternative to net income as an indication
of our operating performance or to net cash provided by operating activities
as a measure of our liquidity. FFO and adjusted FFO as disclosed by other
REITs may not be comparable to AmREIT's calculation.
Projected FFO is calculated in a method consistent with historical FFO,
and AmREIT considers projected FFO to be an appropriate supplemental measure
when compared with projected EPS. A reconciliation of the projected FFO to
projected EPS per share is provided below:
Projected 2004
Range Historical
High Low 12/31/03
Net (loss) income available to
class A shareholders ($0.71) ($0.75) $0.02
Depreciation and amortization 0.42 0.42 0.30
Less gain on sale of real estate --- --- (0.11)
FFO available to class A
shareholders (0.29) (0.33) 0.21
Impairment charges 0.34 0.34 ---
Deferred merger costs 0.60 0.60 0.33
Adjusted FFO $0.65 $0.61 $0.54
SOURCE AmREIT
-0- 08/11/2004
/CONTACT: Jennifer Tweeton of VOLLMER, +1-713-970-2100, or
jennifert@vollmerpr.com , for AmREIT/
/Web site: http://www.amreit.com /
(AMY)
CO: AmREIT
ST: Texas
IN: FIN RLT
SU: ERN CCA MAV