Exhibit 99.1
AmREIT Reports Third Quarter Results
- Loss Per Share of $0.01;
- FFO and Adjusted FFO of $0.18 Per Share, on Track with 2004 Guidance; and
- Increase in Total Assets to $167 Million, up 64 Percent
Compared to December 31, 2003.
HOUSTON, Nov. 10 /PRNewswire-FirstCall/ -- AmREIT (Amex: AMY), a Houston-
based real estate investment trust, announced its third quarter of 2004
results.
Revenues for the third quarter increased 127 percent to $5.8 million
compared to $2.5 million for the third quarter of 2003. This increase is due
to additional portfolio revenue of $2.0 million (attributed to property
acquisitions made in the second and third quarter of 2004), additional real
estate operating and development revenue of $250,000 and additional securities
and retail partnership revenue of $1.0 million, primarily due to an increase
in securities commissions earned from the sale of class D common shares and
the sale of limited partnership units, which was offset by an increase in
securities commission expense of $766,000. Net income attributable to class A
shareholders was a loss of $48,000 for the quarter compared to net income of
$202,000 for the third quarter of last year.
For the third quarter, AmREIT's income before discontinued operations per
class A common share was a loss of $0.14 compared to a loss of $0.15 per share
for the third quarter of 2003. The income from discontinued operations for the
quarter was $0.13 per class A common share compared with income of $0.22 per
share for the third quarter of 2003. The company's net earnings per share for
the third quarter was a loss of $0.01 compared to net earnings per share of
$0.07 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, C and
D shares.
Funds From Operations (FFO) for the third quarter was $603,000, or $0.18
per class A common share. This compares to FFO of $417,000, or $0.15 per
share, for the same period last year. Because there were no non-operational,
non-cash charges to earnings during the third quarter (such as the deferred
merger costs), Adjusted FFO and FFO are the same. For the nine-months ended
September 30, 2004, FFO was a loss of $1.1 million. The Company added back
the $1.7 million non-cash deferred merger charge to earnings and the $1.1
million non-cash charge to earnings resulting from an asset impairment and the
corresponding write-down of value, resulting in Adjusted FFO of $1.7 million
or $0.54 per class A common share, 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 64 percent to $167 million from $101 million at
December 31, 2003. Total liabilities increased to $88.8 million during the
third quarter, up from $51.7 million at year-end.
"We set forth specific, growth oriented goals as we entered 2004. With
the results of this quarter, we are well on our way to achieving those goals.
Our team of high-quality individuals contributed significantly to this
success," said Chad Braun, AmREIT's executive vice president and chief
financial officer. "As we execute our business plan, we will continue to focus
on three key objectives: remaining focused on our investment discipline of
acquiring what we believe to be irreplaceable corners, building and expanding
our flexible business model, and building and growing a great team of talented
individuals."
Operational Highlights
- On July 1, 2004, AmREIT acquired Plaza in the Park, a 129,955 square-
foot Kroger anchored shopping center located on approximately 14.3
acres. The property is located at the southwest corner of Buffalo
Speedway and Westpark in Houston, Texas. Plaza in the Park's Kroger is
undergoing a 13,120 square-foot expansion, and when completed, Kroger
has indicated that they expect it to be the number one Kroger grocery
store in both sales volume and size within the state. The property was
acquired for cash and the assumption of long term fixed rate debt. The
shopping center is 96.7 percent occupied.
- On July 1, 2004, AmREIT acquired Cinco Ranch -- Kroger, a 97,297 square-
foot Kroger anchored shopping center located on approximately 12.8 acres
of land. The property is located at the northeast corner of Mason Road
and Westheimer Parkway in Katy, Texas, a suburb of Houston. The shopping
center is positioned in the heart of the Cinco Ranch master planned
community, and was named one of the top ten Kroger grocery stores in
Texas. The property was acquired for cash and the assumption of long
term fixed-rate debt. The shopping center is 100 percent occupied.
- On July 23, 2004, AmREIT acquired Bakery Square, a 34,704 square foot
retail shopping center shopping center anchored by Bank of America and a
free standing Walgreen's pharmacy. The property is located at the
southwest corner of Dunlavy and West Gray in Houston, Texas. This is an
infill (established areas with significant barriers to entry) property
located just west of downtown Houston and includes other national
tenants such as T-Mobile, Blockbuster Video and Boston Market. The
property was acquired for cash and the assumption of long-term debt. The
shopping center is 100 percent occupied.
- During the quarter, AmREIT commenced its $170 million class D common
share offering and raised approximately $5.5 million in gross sales
proceeds. The security has a stated yield of 6.5 percent per annum, and
after a seven-year holding period, has a conversion option into the
company's publicly traded class A common shares at a 7.7 percent premium
on invested capital.
Outlook for 2004
In their annual report, AmREIT set forth four key goals and expectations
for this year:
- The first goal was to have asset growth of 100 percent over the next 12
to 18 months. With the acquisitions made during the third quarter
assets increased by approximately 64 percent. The real estate pipeline
remains robust, and AmREIT remains on track to achieve 100 percent
growth between December 2004 and June 2005. Additionally, for almost 20
years AmREIT has invested in both single and multi-tenant real estate
located in high-traffic, highly populated areas. Since listing on the
AMEX two years ago, a strategy was implemented to expand holdings of
multi-tenant properties and today, a majority of rental revenue is
generated from multi-tenant shopping centers. As this strategy is
executed, the company will continue to evaluate and dispose of those
assets that are no longer core assets, replacing them with multi-tenant
shopping centers, grocery anchored centers and single tenant leases on
what are believed to be irreplaceable corners. As of September 30,
2004, the company's Net Asset Value per share was approximately $8.60 to
$9.25. When compared to the September 30, 2004 trading price, this
translates into a 13 to 21 percent discount to Net Asset Value.
- The second goal was continued growth in capital resources and
maintaining a conservative leverage structure. Through September 30,
2004, the company raised approximately $32.2 million through its class C
and D common share offerings. Through its by-laws, the company's debt-
to-total asset ratio is limited to 55 percent, and as of September 30,
2004, the company's debt to-total asset ratio was approximately 53
percent.
- The third goal was continued diversity and increased portfolio quality.
With the multi-tenant acquisitions made during the third quarter, the
company has continued to reduce tenant concentration and increase the
dependability of rental income. As of September 30, 2004, no single
tenant represented more than 10 percent of total revenue.
- And the fourth goal was continued growth in Adjusted FFO (AFFO) and
dividends. Supported by the increase in rental revenue generated by the
acquisitions made during the quarter, as well as the increase in fees
and profits generated from supporting business segments, the annual
target AFFO guidance remains $0.61 to $0.65 per class A share.
Dividends have increased every quarter since listing on the AMEX. With
the dividends declared for the fourth quarter of 2004, annual dividends
for the year have increased approximately 9.1 percent over 2003, which
is in line with management's estimate of 7 to 10 percent.
AmREIT updates earnings guidance on a quarterly basis.
Conference Call
AmREIT will hold its quarterly conference call to discuss third quarter
results Wednesday, November 10, at 2:00 pm Central Time (3:00 pm Eastern
Time). The dial-in number for the call is 800.510.0146, 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 84509133, 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 steadily 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 large grocery
anchored centers, high-end multi-tenant shopping centers and, high profile
single tenant properties, 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. A copy of any available prospectus and the related subscription
documents are available to qualified potential investors on request.
For more information, call Debbie Lucas, Vice President Investor Relations
and Corporate Communications of AmREIT, at (713) 850-1400, or Chad Braun,
Chief Financial Officer of AmREIT, 713-850-1400. AmREIT is online at
http://www.amreit.com.
Operating Results
(in thousands, except share and per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
Revenues: 2004 2003 2004 2003
Rental income from
operatingleases $2,980 $1,024 $6,176 $2,964
Earned income from
direct financing leases 507 507 1,522 1,508
Real estate fee income 415 165 1,364 432
Securities commission
income 1,780 785 5,333 1,312
Asset management fee
income 97 72 245 170
Interest and other
income 18 2 343 5
Total Revenues 5,797 2,555 14,983 6,391
Expenses:
General operating
and administrative 2,062 864 5,070 2,400
Legal and professional 312 239 961 575
Securities commissions 1,388 622 4,149 1,018
Depreciation and
amortization 749 194 1,253 550
Deferred merger costs -- -- 1,682 --
Total Expenses 4,511 1,919 13,115 4,543
Operating Income 1,286 636 1,868 1,848
Income from
non-consolidated
affiliates 54 7 240 92
Federal income tax
benefit (expense) 427 (15) 152 --
Interest expense (1,026) (532) (2,189) (1,588)
Minority interest
in income of
consolidated joint
venture (46) (46) (139) (129)
Income (loss) before
discontinued operations 695 50 (68) 223
Income from discontinued
operations 425 609 921 1,543
Net income 1,120 659 853 1,766
Distributions paid to
class B, C and D
shareholders (1,168) (457) (3,087) (1,349)
Net income (loss)
available to class A
shareholders $(48) $202 $(2,234) $417
(in thousands, except share and per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
Reconciliation of
Net Income (loss) to
Funds From
Operations ("FFO"):
Income before
discontinued
operations $695 $50 $(68) $223
Income from
discontinued
operations 425 609 921 1,543
Depreciation -
from operations 736 192 1,224 544
Depreciation -
from discontinued
operations -- 23 38 99
Gain on sale of
real estate held
for investment (85) -- (85) --
Class B, C and
D distributions (1,168) (457) (3,087) (1,349)
FFO available to
class A shares 603 $417 $(1,057) $1,060
Basic and Diluted
Per Class A Share
Data:
(Loss) before
discontinued
operations $(0.14) $(0.15) $(0.99) $(0.40)
Income (loss)
from discontinued
operations $0.13 $0.22 $0.29 $0.55
Net income (loss) $(0.01) $0.07 $(0.70) $0.15
FFO $0.18 $0.15 $(0.33) $0.38
Distributions per
class A share $0.12 $0.11 $0.36 $0.33
Distributions per
class B, C and D
share $0.52 $0.18 $1.24 $0.58
Weighted average
class A common
shares used to
compute net income
per share, basic and
diluted 3,381,899 2,805,753 3,190,810 2,788,303
Weighted average
number of class B
common shares
outstanding 1,558,293 2,399,128 2,076,246 2,316,067
Weighted average
number of class C
common shares
outstanding 4,050,916 64,580 3,326,696 21,763
Weighted average
number of class D
common shares
outstanding 174,180 -- 58,484 --
Balance Sheet Highlights
(in thousands)
(Unaudited)
September 30, December 31,
2004 2003
Real estate held for
investment, net $121,426 $68,018
Net investment in direct
financing leases 19,221 22,046
Real estate held for resale, net 9,684 4,384
Total assets 166,657 101,327
Notes payable 84,905 48,485
Total liabilities 88,818 51,684
Minority interest 1,070 847
Total shareholders' equity 76,769 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 income (loss) available to
class A shareholders ($0.92) ($0.96) $0.02
Depreciation and amortization 0.60 0.60 0.30
Less gain (loss) on sale of
real estate 0.03 0.03 (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
FOR INFORMATION CONTACT:
Debbie Lucas (dlucas@amreit.com)
AmREIT, 713-860-4943
SOURCE AmREIT
-0- 11/10/2004
/CONTACT: Debbie Lucas, +1-713-860-4943, dlucas@amreit.com, of AmREIT/
/Web site: http://www.amreit.com /
(AMY)
CO: AmREIT
ST: Texas
IN: RLT
SU: CCA ERN