[AmREIT Logo]
FOR IMMEDIATE RELEASE
FOR INFORMATION CONTACT:
Chad C. Braun (cbraun@amreit.com)
AmREIT, (713) 850-1400
AmREIT REPORTS SECOND QUARTER RESULTS
HOUSTON, August 7, 2007 - 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 second quarter ended
June 30, 2007.
Second Quarter and Year-to-Date Highlights:
Corporate
o Funds from Operations available to class A common shareholders (FFO)
for the second quarter 2007 were $380,000, or $0.06 per share, which
exceeded the top end of our second quarter guidance and compared
with second quarter 2006 FFO of $516,000, or $0.08 per share;
o Net loss available to Class A common shareholders for the second
quarter 2007 was $1.6 million, or ($0.25) per share, compared with a
net loss of $1.7 million, or ($0.26) per share, for the same period
in 2006;
o Operating revenues for the second quarter 2007 were $11.5 million
compared with $13.3 million for the same period in 2006 due to the
timing of acquisition fees and other transactional revenue. Revenues
from the property portfolio and asset management fees increased by
4.6% to $8.6 million for the quarter as compared to $8.2 million for
the same period in 2006;
o FFO for the six months ended June 30, 2007 were $638,000, or $0.10
per share compared with FFO for the comparable six months in 2006 of
$913,000, or $0.14 per share;
o Net loss available to Class A common shareholders for the six months
ended June 30, 2007 was $3.3 million, or ($0.52) per share, compared
with a net loss of $3.5 million, or ($0.55) per share, for the same
period in 2006;
o Operating revenues for the six months ended June 30, 2007 were $22.7
million compared with $24.6 million for the same period in 2006.
Revenues from the property portfolio and asset management fees
increased by 10.8% to $16.4 million year to date as compared to
$14.8 million for the same period in 2006;
o Total distributions paid to all classes of common shareholders
exceeded total FFO available to all classes of common shareholders
by $388,000 for the second quarter 2007 compared with $246,000 for
the same period in 2006, and $890,000 for the six months ended June
30, 2007 compared with $608,000 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 2007 FFO to be earned in
the second half of the year;
o The Board of Trust Managers declared a quarterly dividend of $0.1242
per class A common share for the third quarter 2007, which will be
paid in three monthly installments;
o The Board of Trust Managers approved a $5 million class A common
share repurchase program on June 22, 2007;
o FFO estimates for the third quarter 2007 are $0.17 to $0.24 per
class A share, and management reiterates its annual FFO guidance of
$0.78 to $0.82 per class A share;
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AmREIT Reports Second Quarter Results
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August 7, 2007
Portfolio
o Portfolio occupancy as of June 30, 2007 is 98.1%, an increase of
1.60% compared to December 31, 2006 occupancy of 96.5%;
o New leases signed at average annual rentals of $33.33 per foot and
renewal leases signed at 12.4% increases over the expiring rental
rates; and
o Cap rates continue to tighten for high quality retail assets,
resulting in strengthened net asset valuations yet limited
acquisition opportunities near term.
Asset Advisory
o Equity under management increased from $121 million as of December
31, 2006 to $144 million as of June 30, 2007, compared to $85
million as of June 30, 2006; and
o Total real estate assets owned by the merchant development funds in
the Company's asset advisory business were $282 million at June 30,
2007, compared with $149 million a year ago.
Commenting on the financial results for the quarter, Chad C. Braun, AmREIT's
Chief Financial Officer, noted, "The better-than-expected FFO growth in the
second quarter was led by contributions from our two sources of recurring income
- - the portfolio of Irreplaceable Corners and a growing base of assets under
management. The portfolio experienced strong leasing activity as well as
continued improvement in occupancy and property operating margins, while the
advisory/sponsorship business benefited from additional capital raised over the
last six months. Our guidance for the year remains unchanged as we anticipate a
solid base of recurring income to match up with the usual ramp in transactional
activity during the second half of the year."
H. Kerr Taylor, Chairman and Chief Executive Officer of AmREIT, added, "Within
the investment climate in the shopping center industry, we still see a wealth of
institutional activity creating competition for quality assets like those we
own. This trend continues to cut two ways. First it increases the value of our
Irreplaceable Corner portfolio. Second, it inhibits our ability to grow the
portfolio and our transactional business through acquisitions at the pace we
would prefer. We continue to make strides in gaining critical mass in our
advisory/sponsorship business and anticipate increased revenues from this group
beginning in 2008."
Portfolio of Irreplaceable Corners
As of June 30, 2007, AmREIT owned 50 properties, with approximately 91% of its
rental income coming from properties located in major Texas metropolitan areas.
The portfolio generated $8.2 million in total revenue during the second quarter
of 2007, up 2.5% compared with $8.0 million generated for the same period in
2006. The increase in revenue is a result of increased rents resulting from
increases in leasing activity, increased renewal leasing rates and the Woodlands
ground lease properties acquired during the first quarter. After expenses and
allocation of dividends paid on the Company's non-traded shares, the segment
reported a GAAP net loss of $1.1 million, or ($0.18) per class A common share
and FFO totaling approximately $847,000, or $0.13 per Class A common share, for
the quarter.
Real Estate Development and Operations
AmREIT's real estate development and operating business generated $1.4 million
in revenue during the second quarter, a decrease compared with the $3.9 million
generated in the second quarter of 2006. The decrease in revenue generated from
the real estate group is a result of the timing of transactional activity.
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.
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AmREIT Reports Second Quarter Results
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August 7, 2007
Expenses associated with this line of business for the second quarter were
approximately $1.9 million (including direct construction costs of $868,000),
resulting in a net loss of $488,000 or ($0.08) 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, however, a
majority of the expenses and personnel costs associated with this business are
recurring throughout the year.
AmREIT's pipeline of development and re-development opportunities for third
parties and for its asset advisory group includes approximately 500,000 square
feet under various stages of development. Together, this represents over $125
million in active development and re-development projects. Of this pipeline,
125,000 square feet is scheduled for completion in 2007.
Asset Advisory Business
As of June 30, 2007, AmREIT had a combined $144 million in equity capital under
management in its five actively managed income and growth funds. For the
quarter, this group generated total revenues of $1.8 million, with $1.5 million
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 $1.7 million, including $1.2 million in securities commission
expense. After expenses and allocation of dividends paid on the Company's
non-traded shares, the asset advisory group reported GAAP net income of $6,000
and FFO totaling approximately $25,000.
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 second
quarter 2007 results Wednesday, August 8, 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 www.amreit.com. The
dial-in number for the call is 1-800-817-2743. A replay of the call will be
available through August 15, 2007, by dialing 1-888-203-1112 (conference ID
number 2430791).
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AmREIT Reports Second Quarter Results
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August 7, 2007
Supplemental Financial Information
Further details regarding AmREIT's results of operations, properties, and
tenants can be accessed at the Company's web site at www.amreit.com.
About AmREIT
AmREIT (AMEX:AMY) is a growing real estate company that has delivered results to
its investors for 22 years. Its mission is to build a real estate business with
complementary operations that reduce AmREIT's 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 June 30, 2007, AmREIT has over 500,000 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 June 30, 2007, total assets
were $333 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 Tuwww.amreit.comUT.
(Tables to Follow)
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AmREIT Reports Second Quarter Results
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August 7, 2007
Operating Results - (Unaudited)
(in thousands, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
Revenues: 2007 2006 2007 2006
-------- -------- -------- --------
Rental income from operating leases $ 7,733 $ 7,487 $ 14,815 $ 13,460
Earned income from direct financing leases 508 508 1,015 1,015
Real estate fee income 160 -- 854 751
Real estate fee income - related party 349 910 1,062 1,677
Construction revenues 695 319 792 940
Construction revenues - related party 219 2,623 1,095 3,796
Securities commission income - related party 1,484 1,227 2,477 2,618
Asset management fee income - related party 312 186 596 344
-------- -------- -------- --------
Total revenues 11,460 13,260 22,706 24,601
Expenses:
General and administrative 1,911 2,254 4,120 4,136
Property expense 2,037 2,162 3,767 3,184
Construction expense 868 2,609 1,729 4,284
Legal and professional 479 288 774 597
Real estate commissions 26 -- 447 540
Securities commissions 1,245 1,089 2,074 2,346
Depreciation and amortization 1,958 2,391 3,898 4,573
-------- -------- -------- --------
Total expenses 8,524 10,793 16,809 19,660
Operating income 2,936 2,467 5,897 4,941
Other income (expense):
Interest and other income - related party 256 232 500 467
Income from merchant development funds and other affiliates (15) 208 (27) 306
Federal income tax benefit for taxable REIT subsidiary 302 184 501 269
Interest expense (2,351) (2,090) (4,708) (3,833)
Minority interest in income of consolidated joint ventures (27) (27) (63) (58)
-------- -------- -------- --------
Income before discontinued operations 1,101 974 2,100 2,092
Income from discontinued operations -- 272 4 241
Gain on sale of real estate acquired for resale -- 7 -- 12
-------- -------- -------- --------
Net income 1,101 1,253 2,104 2,345
Distributions paid to Class B, C and D shareholders (2,711) (2,914) (5,416) (5,820)
-------- -------- -------- --------
Net loss available to class A shareholders $ (1,610) $ (1,661) $ (3,312) $ (3,475)
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AmREIT Reports Second Quarter Results
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August 7, 2007
(in thousands, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
------------ ------------ ------------ ------------
Reconciliation of Net Income before discontinued operations to
Funds From Operations ("FFO"):
Income before discontinued operations $ 1,101 $ 974 $ 2,100 $ 2,092
Income from discontinued operations -- 279 4 253
Depreciation - from operations 1,961 2,425 3,900 4,589
Depreciation - from discontinued operations 10 6 14 16
Adjustments for non-consolidated affiliates 19 39 36 69
Gain on sale of real estate held for investment -- (293) -- (286)
Class B, C and D distributions (2,711) (2,914) (5,416) (5,820)
------------ ------------ ------------ ------------
FFO available to Class A shares $ 380 $ 516 $ 638 $ 913
Basic and Diluted Per Class A Share Data:
Loss before discontinued operations $ (0.25) $ (0.30) $ (0.52) $ (0.59)
Income from discontinued operations $ 0.00 $ 0.04 $ 0.00 $ 0.04
------------ ------------ ------------ ------------
Net loss $ (0.25) $ (0.26) $ (0.52) $ (0.55)
FFO $ 0.06 $ 0.08 $ 0.10 $ 0.14
Distributions per Class A share $ 0.12 $ 0.12 $ 0.24 $ 0.24
Distributions per Class B, C and D share $ 0.52 $ 0.52 $ 1.04 $ 1.04
Share Data:
Weighted average Class A common shares used to compute net
income per share, basic and diluted 6,411,026 6,347,818 6,365,896 6,339,390
Market Capitalization Table
Common Shares Outstanding (06/30/07) Number of Shares Price Market Equity
- ------------------------------------ ---------------- --------- -------------
Class A, net of treasury shares 6,424,565 $ 8.75 56,214,944
Class B 1,038,871 $ 8.75 9,090,121
Class C (priced at par value) 4,150,471 $ 10.00 41,504,710
Class D (priced at par value) 11,060,390 $ 10.00 110,603,900
---------------- -------------
Total 22,674,297 217,413,675
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AmREIT Reports Second Quarter Results
Page 7
August 7, 2007
Balance Sheet Highlights
(in thousands)
(Unaudited)
June 30, December 31,
2007 2006
-------- ------------
Real estate investments before accumulated depreciation $282,356 $274,534
Real estate held for investment, net 269,232 263,906
Net investment in direct financing leases 19,181 19,204
Real estate held for resale, net 1,763 --
Total assets 332,992 328,430
Notes payable 157,545 144,453
Total liabilities 167,120 158,243
Minority interest 1,162 1,137
Total shareholders' equity 164,710 169,050
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 REITs, 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)/income 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
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