FOR INFORMATION CONTACT:
JenniferTweeton (jennifert@vollmerpr.com)
VOLLMER, (713) 970-2100
AmREIT ANNOUNCES RECORD YEAREND RESULTS
o Earnings per share of $0.02 for 2003
o Adjusted FFO up 29 percent to $0.54 per share for 2003
o Total assets up 38 percent to $101 million
HOUSTON, March 17, 2004 - AmREIT (AMEX: AMY), a Houston-based real estate
investment trust, announced record results on strong growth for 2003.
For the year, AmREIT's net income (loss) per class A common share ("EPS") was
$0.02 compared to a loss of ($0.62) for 2002. The adjusted EPS for 2003 and
2002, before the adjustment for non-cash deferred merger expenses was $0.35
and $0.15, respectively.
Funds from operations (FFO) for the fourth quarter were $(0.16) per class A
share, compared with a $0.02 per share for the fourth quarter of 2002. AmREIT's
FFO for the year was $0.22 per class A share compared with FFO of ($0.34) in
2002. A reconciliation of net income to FFO is included in the financial tables
accompanying this press release. Diluted earnings per share information is not
applicable due to the anti-dilutive nature of the common class B and class C
shares.
AmREIT's EPS for the fourth quarter of 2003 was a net loss of ($0.13) compared
to a net loss of ($0.06) per share for the fourth quarter of last year. The
loss posted during the fourth quarter of 2003 was due to a $0.91 million charge
to earnings for a non-cash deferred merger expense. The adjusted EPS for the
quarter before this non-cash charge was $0.19.
The company incurred non-cash deferred merger costs of $0.91 million and $1.9
million in 2003 and 2002, respectively, related to the purchase of the
company's advisor. FFO adjusted for this non-cash deferred merger cost was
$0.54 per share in 2003, in line with management's expected range of $0.54 to
$0.56 and 29 percent higher than the adjusted FFO of $0.42 per share announced
for 2002. Properties owned increased 38 percent to $101 million, and assets
managed under the company's retail limited partnerships increased 100 percent
to $30 million for the year.
"Eighteen months ago we merged three of our affiliated investment funds into
AmREIT and listed our self-managed REIT on the American Stock Exchange,
embarking on our journey from good to great," said Kerr Taylor, AmREIT's
president and chief executive officer. "That provided us with a unique
business structure and created a platform for growth by bringing in-house
three synergistic businesses to support our REIT: a real estate operating
and development business, a securities business, and a retail partnership
business. Since going public in July 2002, we have doubled our asset
portfolio, and we expect to repeat that growth pattern over the next 12 to 18
months."
Operational Highlights
o During 2003 AmREIT purchased or developed $27 million in "irreplaceable
corners": premium retail frontage properties in high-traffic, highly
populated areas.
o During 2003, AmREIT, through its wholly owned subsidiary AmREIT Securities
Company, raised $15 million for its affiliated retail limited partnerships
and $14 million from the issuance of its class C common shares.
o In 2003 the company continued its efforts of divesting of non-core
properties and replacing them with "irreplaceable corners". The properties
sold during 2003 resulted in a net profit of $.31 million.
o On March 2, 2004, Footstar declared bankruptcy and subsequently announced
that it intends to close all of its Just For Feet locations. AmREIT owns
two Just For Feet locations: Baton Rouge, Louisiana and Tucson, Arizona.
Rental income and occupancy costs lost from these two properties represent
approximately 5.6% of 2003 total revenue. We do not anticipate that this
vacancy will have any negative impact on projected AFFO or dividends in
2004.
o In line with the liquidation strategy of AmREIT's retail limited
partnerships, AmREIT Opportunity Fund commenced selling its properties in
September of 2002 and anticipates completing liquidation during 2004. The
profit participation realized by AmREIT (through its general and limited
partner interests) from the liquidation of the AmREIT Opportunity Fund and
operating profits from other retail limited partnerships contributed to
revenue and earnings during 2003.
Outlook for 2004
In 2004, management expects to raise $50 to $60 million through the capital
markets to support an anticipated 100 percent increase in asset growth over the
next twelve to eighteen months. This growth is expected to result in adjusted
EPS (adjusted for non-cash deferred merger costs expected to be $1.9 million
in 2004) in the range of $0.20 to $0.22 cents per class A share. Management
expects FFO adjusted for certain non-cash deferred merger costs (adjusted FFO),
for the calendar year of 2004 of between $0.62 and $0.64 per class A share.
This represents an increase in adjusted FFO of between 15 and 19 percent when
compared to adjusted FFO of $0.54 per class A share for 2003. AmREIT updates
earnings guidance on a quarterly basis.
Conference Call
AmREIT will hold its first quarterly conference call to discuss fourth quarter
and yearend results Thursday, March 18, at 10:00 am Central Time (11:00 am
Eastern Time). The dial-in number for the call is 800-884-5695, passcode
AmREIT. A live Web cast of the call can be accessed on the investor relations
page of AmREIT's Web site at www.amreit.com. The call will also be available
for replay for 30 days by dialing 888-286-8010, passcode 58349604, 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. AmREIT also creates retail limited partnerships,
offered to accredited investors through the financial planning community. These
retail partnerships create value through actively acquiring and developing high
quality free standing and shopping center properties, leased to trusted names
such as Starbucks, Walgreens, and Washington Mutual, 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
www.amreit.com.
(Tables to Follow)
Operating Results
(in thousands, except share and per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
Revenues: 2003 2002 2003 2002
---- ---- ---- ----
(Unaudited)
Rental income from
operating leases $ 1,390 $ 1,126 $ 4,966 $ 3,386
Earned income from direct
financing leases 668 584 2,619 1,807
Real estate fee income 320 239 1,031 1,223
Gain on sale of real estate
acquired for resale 550 37 787 -
Securities commission income 1,646 348 2,958 847
Asset management fee income 71 33 240 252
Interest and other income 3 2 8 4
---------- ---------- ---------- ----------
Total Revenues 4,648 2,369 12,609 7,519
Expenses:
General operating and
administrative 1,529 907 3,937 2,802
Legal and professional 302 369 881 679
Securities commissions 1,270 268 2,288 653
Depreciation and amortization 218 157 836 611
Deferred merger costs 915 - 915 1,904
---------- ---------- ---------- ----------
Total Expenses 4,234 1,701 8,857 6,649
Operating Income 414 668 3,752 870
Income from non-consolidated affiliates 220 134 312 417
Federal income tax expense (237) 29 (237) (61)
Interest expense (611) (592) (2,354) (1,775)
Minority interest in income of
consolidated joint ventures (50) (1) (178) (308)
---------- ---------- ---------- ----------
Income (loss) before discontinued
operations (264) 238 1,295 (857)
Income from from discontinued
operations 185 77 391 246
Gain (loss) on sales of real estate
acquired for investment 312 (48) 312 (48)
---------- ---------- ---------- ----------
Income from discontinued operations 497 29 703 198
Net income (loss) 233 267 1,998 (659)
Distributions paid to class B and C
shareholders (593) (441) ( 1,943) (865)
----------- ---------- ---------- ----------
Net income (loss) available to class A
shareholders $ (360) $ (174) $ 55 $ (1,524)
Operating Results - Continued
(in thousands, except share and per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
Revenues: 2003 2002 2003 2002
---- ---- ---- ----
(Unaudited)
RECONCILIATION OF NET INCOME (LOSS) TO
FUNDS FROM OPERATIONS ("FFO"):
Income (loss) - before
discontinued operations (264) 238 1,295 (857)
Income from discontinued
operations 497 29 703 198
Plus depreciation of real estate
assets - from operations 217 153 829 575
Plus depreciation of real estate
assets - from discontinued operations - 14 30 55
Less (gain) loss on sale of real
estate assets acquired for investment (312) 48 (312) 48
Less class B and C distributions (593) (441) (1,943) (865)
---------- ---------- ---------- ----------
FFO available to class A Shares (455) 41 602 (846)
BASIC PER SHARE DATA:
Net income per class A common share -
basic and diluted:
Loss before discontinued operations (0.31) (0.07) (0.23) (0.70)
Income from discontinued
operations 0.18 0.01 0.25 0.08
---------- ---------- ---------- ----------
Net income (loss) (0.13) (0.06) 0.02 (0.62)
Weighted average class A common shares
used to compute net income per class
A share, basic and diluted 2,823,850 2,745,667 2,797,263 2,469,725
Balance Sheet Highlights
(in Thousands)
As of December 31,
2003 2002
---- ----
Real estate held for investment, net $ 68,447 $ 45,843
Net investment in direct financing leases 22,046 23,405
Real estate held for resale, net 4,384 -
Total assets 101,277 73,976
Notes payable 48,485 33,586
Total liabilities 51,684 34,959
Minority interest 847 811
Total shareholders' equity 48,746 38,206
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 related to the
issuance of stock in conjunction with the payment of deferred merger costs,
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:
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Projected 2004 Range Historical
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High Low 12/31/03
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Net (loss) income available to class A shareholders ($0.38) ($0.40) $ 0.02
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Depreciation and amortization 0.42 0.42 0.30
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Less gain on sale of real estate - - (0.11)
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FFO available to class A shareholders 0.08 0.02 0.21
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Deferred merger costs 0.60 0.60 0.33
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Adjusted FFO $0.64 $0.62 $0.54
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