AmREIT Reports First Quarter Results
HOUSTON, May 8 /PRNewswire-FirstCall/ -- AmREIT (Amex: AMY), a Houston-
based real estate development and operating company that has elected to be taxed
as a real estate investment trust, today announced financial results for the
first quarter ended March 31, 2007.
First Quarter Highlights:
Corporate
-- Funds from Operations available to class A common shareholders (FFO)
for the first quarter 2007 were $258,000, or $0.04 per share which
was in the top half of first quarter guidance, compared with first
quarter 2006 FFO of $391,000, or $0.06 per share;
-- Net loss available to Class A common shareholders for the first
quarter 2007 was a loss of $1.7 million, or ($0.27) per share,
compared with a net loss of $1.8 million, or ($0.28) per share, for
the same period in 2006;
-- Operating revenues for the first quarter 2007 were $11.2 million
compared with $11.3 million for the same period in 2006. Revenues
from the property portfolio and asset management fees totaled $7.9
million, increasing by 18.6% over the same period in the prior year,
consistent with our commitment to increase dividend coverage from
stable sources of income;
-- Total distributions paid to all classes of common shareholders
exceeded total FFO available to all classes of common shareholders
by $527,000 for the first quarter 2007 compared with $398,000 for
the same period in 2006. On an annual basis, total FFO has
historically exceeded total dividends paid, and for 2005 and 2006,
FFO exceeded total dividends by $1.1 million and $1.6 million,
respectively. Consistent with guidance and prior years', management
expects the bulk of this year's FFO to be earned in the second half
of the year;
-- The Board of Trust Managers declared a quarterly dividend of $0.1242
per class A common share for the second quarter 2007, which will be
paid in three monthly installments;
-- FFO estimates for the second quarter 2007 are $0.02 to $0.05 per
class A share, and management reiterates its annual FFO guidance of
$0.78 to $0.82 per class A share;
Portfolio
-- Portfolio occupancy as of March 31, 2007 is 97.4%, an increase of
0.90% compared to December 31, 2006 occupancy of 96.5%;
-- On February 1, 2007, the Company purchased five single tenant ground
lease properties along the 'ring-road' to the Woodlands mall;
-- Uptown Plaza Dallas financing (10-year, full term interest only at
5.63%) generated $19.6 million in proceeds, which were used to fund
the Woodlands ground lease properties and the class B tender that
closed in December 2006;
-- Cap rates continue to tighten for high quality retail assets,
resulting in strengthened net asset valuations and limited portfolio
growth opportunities near term;
Asset Advisory
-- Equity under management increased from $121 million as of December
31, 2006 to $130 million as of March 31, 2007;
-- Total real estate assets owned by the merchant development funds in
the Company's asset advisory business were $282 million at March 31,
2007, compared with $140 million a year ago; and
-- On January 5, 2007, AmREIT Monthly Income & Growth Fund III, Ltd.
purchased an 8.5 acre tract of land in San Antonio, Texas in a joint
venture with a third party for a retail development, and is
anticipated to begin development later this year.
Commenting on the financial results for the quarter, Chad C. Braun,
AmREIT's Chief Financial Officer, noted, "The first quarter unfolded much as we
expected it would in our 2007 guidance with almost all of our FFO for the
quarter generated by our sources of stable income - the portfolio of
Irreplaceable Corners and recurring asset management fees. As we continue to
grow the platform and take another upward 'pivot' in our growth cycle, we will
experience greater volatility in the transactional component of our business. We
are focused both on the short and long term, however, our primary objective is
to build long term shareholder value and to continue to build and enhance our
Net Asset Value. To that regard, the fundamentals in this business are perhaps
the strongest they have been in years, which has served to increase the value of
the portfolio in today's marketplace."
H. Kerr Taylor, Chairman and Chief Executive Officer of AmREIT, added,
"There is a tremendous amount of capital in the marketplace, which continues to
drive cap rates for quality assets lower and lower. We remain committed to
acquiring assets at appropriate prices - not just for the sake of growth, but to
increase shareholder value in the long run. Our business model allows us to
benefit from a significant source of recurring income through a portfolio that
continues to increase in value as well as through a recurring income stream from
asset management fees that are anticipated to grow substantially over the next
year."
Portfolio of Irreplaceable Corners
As of March 31, 2007, AmREIT owned 53 properties, with approximately 92%
of its rental income coming from properties located in major Texas metropolitan
areas. The Woodlands ground leases purchased in the first quarter are leased to
Landry's Seafood, Circuit City, TGI Friday's, Bank of America, and Macaroni
Grill. The leases are structured as triple net ground leases whereby all
operating expense and maintenance is the responsibility of the tenant.
Consistent with our other Corner properties, population in the immediate trade
area of The Woodlands is approximately 172,000 and the average household income
is approximately $93,000.
The portfolio generated $7.8 million in total revenue during the first
quarter of 2007, up 15% compared with $6.8 million generated for the same period
in 2006. The increase in revenue is a result of increased leasing spreads on
lease renewals, a full quarter of revenue from Uptown Dallas, which was
purchased on March 29, 2006 and the acquisition of the Woodlands ground leases
during the quarter. After expenses and allocation of dividends paid on the
Company's non-traded shares, the segment reported a GAAP net loss of $1.4
million, or ($0.22) per class A common share and FFO totaling approximately
$549,000, or $0.09 per Class A common share, for the quarter.
Real Estate Development and Operations
AmREIT's real estate development and operating business generated $1.7
million (including discontinued operations and net of construction expense) in
adjusted revenue during the first quarter, consistent with the $1.7 million
generated in the first quarter of 2006. Consistent with prior years', we
anticipate the bulk of this year's real estate transactional revenue to fall in
the second half of the year.
Adjusted expenses associated with this line of business for the first
quarter were approximately $1.9 million (excluding construction costs),
resulting in a net loss of $206,000 or ($0.03) per class A common share. This
business is transactional in nature, and the timing of these transactional
revenue sources from quarter to quarter is difficult to predict.
AmREIT's pipeline of development and re-development opportunities for
third parties and for its asset advisory group includes approximately 1.2
million square feet under various stages of development. Together, this
represents over $207 million in active development and re-development projects.
Of this pipeline, 224,000 square feet is scheduled for completion in 2007.
Asset Advisory Business
As of March 31, 2007, AmREIT had a combined $130 million in equity capital
under management in its five actively managed income and growth funds. For the
quarter, this group generated total revenues of $1.4 million, with $993,000
related to securities commissions earned on sales of units in the merchant
development funds.
For the quarter, expenses associated with this line of business were
approximately $1.5 million, including $829,000 in securities commission expense.
The asset advisory group generated a loss and reduction to FFO of $101,000 or
($0.02) per Class A common share.
AmREIT updates earnings guidance on a quarterly basis and will update its
annual guidance as well as give guidance for the upcoming quarter.
Conference Call
AmREIT will hold its quarterly conference call to discuss first quarter
2007 results Wednesday, May 9, at 10:00 a.m. Central Time (11:00 a.m. Eastern
Time). Interested parties are encouraged to access the live webcast by visiting
the investor relations page of AmREIT's website at http://www.amreit.com. The
dial-in number for the call is 1-877-407-8031. The call will also be available
for replay for 60 days by dialing 1-877-660-6853, account number 286, ID number
232013.
Supplemental Financial Information
Further details regarding AmREIT's results of operations, properties, and
tenants can be accessed at the Company's web site at http://www.amreit.com.
About AmREIT
AmREIT (Amex: AMY) is a growing real estate company that has delivered
results to its investors for 22 years. Our mission is to build a real estate
business with complementary operations that reduce our overall sensitivity to
changing market cycles - a company with strong earnings potential from multiple
sources. This mission has led AmREIT into three distinct businesses. First, as a
real estate development and operating company, it constructs, develops,
acquires, disposes of, brokers, leases and manages properties for shareholders
as well as for its asset advisory group and third parties. Second, AmREIT has an
asset advisory group which raises private capital for and generates fees from
merchant development partnership funds. Third, AmREIT owns a portfolio of
"Irreplaceable Corners(TM)" - premier retail properties in high-traffic, highly
populated areas - which are held for long-term value and provide a steady stream
of rental income. As of March 31, 2007, AmREIT has over 1.2 million square feet
of retail centers in various stages of re- development, development or in the
pipeline for both our advisory group and for third parties. As of March 31,
2007, total assets were $340 million and the asset advisory group managed an
additional $282 million in total assets.
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.
For more information, call Chad Braun, Chief Financial Officer of AmREIT,
at (713) 850-1400. AmREIT is online at http://www.amreit.com.
Operating Results
(in thousands, except share and per share data)
Three Months Ended
March 31,
Revenues: 2007 2006
Rental income from operating leases $7,082 $5,973
Earned income from direct financing leases 507 507
Real estate fee income 694 751
Real estate fee income - related party 713 767
Construction revenues 97 621
Construction revenues - related party 876 1,173
Securities commission income - related party 993 1,391
Asset management fee income - related party 284 158
Total revenues 11,246 11,341
Expenses:
General and administrative 2,210 1,879
Property expense 1,730 1,015
Construction expense 861 1,675
Legal and professional 295 312
Real estate commissions 421 540
Securities commissions 829 1,257
Depreciation and amortization 1,941 2,182
Total expenses 8,287 8,860
Operating income 2,959 2,481
Other income (expense):
Interest and other income - related party 244 235
(Loss) income from merchant development funds
and other affiliates (12) 98
Federal income tax benefit for taxable REIT
subsidiary 201 83
Interest expense (2,357) (1,743)
Minority interest in income of consolidated
joint ventures (36) (36)
Income before discontinued operations 999 1,118
Income from discontinued operations 5 (30)
Gain on sale of real estate acquired for resale (1) 5
Net income 1,003 1,093
Distributions paid to Class B, C and D shareholders (2,705) (2,906)
Net (loss) available to class A shareholders $(1,702) $(1,813)
(in thousands, except share and per share data)
Three Months Ended
March 31,
2007 2006
Reconciliation of Net Income before discontinued
operations to Funds From Operations ("FFO"):
Income before discontinued operations $999 $1,118
Income (loss) from discontinued operations 4 (25)
Depreciation - from operations 1,940 2,164
Depreciation - from discontinued operations 3 10
Adjustments for non-consolidated affiliates 17 30
Gain on sale of real estate held for investment - -
Class B, C and D distributions (2,705) (2,906)
FFO available to Class A shares $258 $391
Basic and Diluted Per Class A Share Data:
Loss before discontinued operations $(0.27) $(0.28)
Income from discontinued operations $0.00 $0.00
Net (loss) $(0.27) $(0.28)
FFO $0.04 $0.06
Distributions per Class A share $0.12 $0.12
Distributions per Class B, C and D share $0.52 $0.52
Share Data:
Weighted average Class A common shares used to
compute net income per share, basic and diluted 6,320,264 6,424,570
Market Capitalization Table
Number of Price Market
Common Shares Outstanding (03/31/07) Shares Equity
Class A, net of treasury shares 6,402,321 $8.79 56,276,402
Class B 1,049,825 $8.79 9,227,962
Class C (priced at par value) 4,167,338 $10.00 41,673,380
Class D (priced at par value) 11,058,788 $10.00 110,587,880
Total 22,678,272 217,765,624
Balance Sheet Highlights
(in thousands)
March 31, December 31,
2007 2006
Real estate investments before accumulated
depreciation $283,114 $274,534
Real estate held for investment, net 271,243 263,906
Net investment in direct financing leases 19,200 19,204
Total assets 339,581 328,430
Notes payable 161,914 144,453
Total liabilities 171,264 158,243
Minority interest 1,153 1,137
Total shareholders' equity 167,164 169,050
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 FFO in accordance with this definition. Management 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 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 2007
Range Historical
High Low 12/31/06
Net (loss) available to Class A shareholders ($0.57) ($0.61) $(0.62)
Depreciation and amortization 1.39 1.39 1.40
Adjustment for non-consolidated affiliates - - 0.02
Less gain on sale of real estate (0.00) (0.00) (0.05)
FFO available to Class A shareholders $0.82 $0.78 $0.75
SOURCE AmREIT
-0- 05/08/2007
/CONTACT: Chad C. Braun of AmREIT, +1-713-850-1400, cbraun@amreit.com/
/Web site: http://www.amreit.com/
(AMY)