[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; -MORE- AmREIT Reports Second Quarter Results Page 2 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. -MORE- AmREIT Reports Second Quarter Results Page 3 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). -MORE- AmREIT Reports Second Quarter Results Page 4 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) -MORE- AmREIT Reports Second Quarter Results Page 5 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) -MORE- AmREIT Reports Second Quarter Results Page 6 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 -MORE- 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 ###