Exhibit 99.1
AmREIT Reports Third Quarter Results
HOUSTON--(BUSINESS WIRE)--Nov. 6, 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 third quarter ended September 30, 2007.
Third Quarter and Year-to-Date Highlights:
Corporate
-- Funds from Operations (FFO) available to class A common
shareholders for the third quarter 2007 were $1.4 million, or
$0.22 per share, which was at the high end of our third
quarter guidance and compared with third quarter 2006 FFO of
$726,000, or $0.12 per share;
-- Net loss available to Class A common shareholders for the
third quarter 2007 was $688,000, or ($0.11) per share,
compared with a net loss of $1.4 million, or ($0.22) per
share, for the same period in 2006;
-- Operating revenues for the third quarter 2007 were $12.8
million compared with $13.6 million for the same period in
2006 due to a significant related party construction contract
that generated $2.2 million in revenues during the third
quarter 2006 and was subsequently completed in the fourth
quarter 2006. Revenues from the property portfolio and asset
management fees increased by 6.7% to $8.0 million for the
quarter as compared to $7.5 million for the same period in
2006;
-- FFO for the nine months ended September 30, 2007 were $2.0
million, or $0.32 per share compared with FFO for the
comparable nine months in 2006 of $1.6 million, or $0.26 per
share;
-- Net loss available to Class A common shareholders for the nine
months ended September 30, 2007 was $4.0 million, or ($0.63)
per share, compared with a net loss of $4.8 million, or
($0.76) per share, for the same period in 2006;
-- Operating revenues for the nine months ended September 30,
2007 were $34.5 million compared with $37.2 million for the
same period in 2006. Revenues from the property portfolio and
asset management fees increased by 9.8% to $23.5 million year
to date as compared to $21.4 million for the same period in
2006;
-- Total FFO for all classes of common shareholders exceeded
total distributions by $616,000 for the third quarter 2007
compared with total distributions in excess of total FFO of
$55,000 for the same period in 2006, and distributions in
excess of total FFO of $329,000 for the nine months ended
September 30, 2007 compared with distributions in excess of
total FFO of $719,000 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 fourth quarter of the
year;
-- The Board of Trust Managers declared a quarterly dividend of
$0.1242 per class A common share for the fourth quarter 2007,
which will be paid in three monthly installments;
-- FFO estimates for the fourth quarter 2007 are $0.46 to $0.50
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 September 30, 2007 is 97.9%, an
increase of 1.4% compared to December 31, 2006 occupancy of
96.5%; and
-- Cap rates continue to tighten for high quality retail assets,
resulting in strengthened net asset valuations yet limited
acquisition opportunities near term.
Asset Advisory
-- Equity under management increased from $121 million as of
December 31, 2006 to $155 million as of September 30, 2007,
compared to $99 million as of September 30, 2006; and
-- Real estate assets owned by the merchant development funds in
the Company's asset advisory business were $312 million at
September 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 performance of
our portfolio continues to be a bright spot for us as fundamentals in
the shopping center business remain very strong. Occupancy and leasing
remain solid, and we have been very successful in aggressively
managing the portfolio. The FFO generated from our centers has
compensated for the lower-than-anticipated asset growth in the
advisory/sponsorship business as we have maintained our discipline on
real estate underwriting and pricing. While we anticipate that the
asset goal we had targeted for this business for year end will now be
reached in the first half of 2008, our flexible business structure
allows us take advantage of other opportunities we see in the
marketplace. To this regard, we have several transactions slated to
close in the forth quarter that should allow us to achieve our overall
financial goals for the year."
H. Kerr Taylor, Chairman and Chief Executive Officer of AmREIT,
added, "Our mission is to become "The Irreplaceable Corner(TM)
Company". Since going public in 2002 we have grown our assets under
management--both portfolio and within our advisory business--from
approximately $100 million to approximately $750 million. Our goal is
to reach the $1 billion mark by the third quarter of next year. We are
gratified to be one of the few companies in America that has the
ability to raise capital from all three traditional channels of
capital: Wall Street, Institutions and the Independent Broker Dealers
("IBD"). A pivotal step in our growth is the launching of REITPlus.
Once effective, this offering gives us the opportunity to raise up to
$500 million in additional equity through the IBD channel within our
advisory business. We are seeing quality assets coming back into our
pipeline and are pleased that we had the discipline to be restrained
in our acquisitions over the past 12 months in what we believed was an
overheated market."
Portfolio of Irreplaceable Corners
As of September 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 $7.7 million in total revenue during the
third quarter of 2007, up 5.5% compared with $7.3 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 loss of $843,000 or ($0.13) per class A common
share and FFO totaling approximately $1.2 million, or $0.19 per Class
A common share, for the quarter.
Real Estate Development and Operations
AmREIT's real estate development and operating business generated
$3.9 million in revenue during the third quarter, a decrease compared
with the $4.5 million generated in the third quarter of 2006. The
decrease in revenue generated from the real estate group is a result
of the timing of transactional activity from year to year, and is
primarily related to an affiliated construction contract completed in
the fourth 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, which is consistent with institutional
deadline expectations and the desire for retailers to be open during
the holidays.
Expenses associated with this line of business for the third
quarter were approximately $3.3 million (including direct construction
costs of $1.8 million). After allocating dividends paid on the
Company's non-traded shares, the segment reported net income and FFO
of $95,000 or $0.01 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 1.3 million square feet in various stages of
development. Together, this represents over $218 million in active
development and re-development projects. Of this pipeline, 520,000
square feet is scheduled for completion in 2008.
Asset Advisory Business
As of September 30, 2007, AmREIT had a combined $155 million in
equity capital under management in its five actively managed income
and growth funds. For the quarter, this group generated total revenues
of $1.3 million, with $933,000 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 $1.3 million, including $788,000 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 $61,000 and FFO totaling approximately $127,000 or
$0.02 per class A common share.
Financing Activity
Effective October 30, 2007, AmREIT renewed its senior credit
facility for two years to expire in November 2009 and increased the
maximum availability under the facility, subject to the value of
unencumbered assets, from $40 million to $70 million. The facility now
provides for an interest rate in the range of 100 to 185 basis points
over LIBOR compared with 135 to 235 basis points previously.
AmREIT also announced on November 1, 2007 that it intends to
redeem its remaining 1,026,732 Class B common shares on December 20th.
Holders of the Class B common shares will have the right to receive,
at their election, $10.18 per share in cash or one Class A common
share per one Class B common share redeemed. AmREIT expects to fund
the cash redemptions through borrowings on its credit facility.
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 third
quarter 2007 results Wednesday, November 7, 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
1-888-684-1282. A replay of the call will be available through
November 15, 2007, by dialing 1-888-203-1112 and entering the passcode
6443565.
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), headquartered in Houston, is a growing, full
service real estate company that has delivered results to its
investors for 23 years. AmREIT's 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 two
distinct companies: our institutional grade portfolio of Irreplaceable
Corners(TM) - premier retail properties in high-traffic, highly
populated areas which are held for long-term value and provide a
foundation to our growth through a steady stream of rental income; and
our advisory/sponsorship business that broadens our access to capital
and raises equity for a series of merchant development funds,
resulting in recurring income from assets under management. As of
September 30, 2007, AmREIT has over 1.3 million square feet in various
stages of re-development, development or in the pipeline for both our
advisory group and for third parties. AmREIT has offices in Dallas and
San Antonio, Texas. Please visit our website at www.amreit.com.
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 www.amreit.com.
(Tables to Follow)
Operating Results - (Unaudited)
(in thousands, except share and per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
Revenues: 2007 2006 2007 2006
---------- -------- --------- --------
Rental income from
operating leases $ 7,600 $ 7,241 $22,359 $20,646
Earned income from direct
financing leases 59 59 179 178
Real estate fee income 118 27 972 778
Real estate fee income -
related party 1,775 897 2,837 2,574
Construction revenues 300 705 1,092 1,645
Construction revenues -
related party 1,675 2,890 2,770 6,686
Securities commission
income - related party 933 1,554 3,410 4,172
Asset management fee
income - related party 334 212 930 556
---------- -------- --------- --------
Total revenues 12,794 13,585 34,549 37,235
Expenses:
General and administrative 2,249 2,115 6,363 6,234
Property expense 1,937 2,008 5,703 5,189
Construction expense 1,792 3,224 3,521 7,508
Legal and professional 425 356 1,188 942
Real estate commissions 1 - 448 540
Securities commissions 788 1,348 2,862 3,694
Depreciation and
amortization 2,016 2,046 5,914 6,620
---------- -------- --------- --------
Total expenses 9,208 11,097 25,999 30,727
Operating income 3,586 2,488 8,550 6,508
Other income (expense):
Interest and other income
- related party 361 403 861 870
Income from merchant
development funds and
other affiliates 462 213 435 519
Federal income tax
(expense) benefit for
taxable REIT subsidiary (259) 91 242 360
Interest expense (2,309) (1,814) (6,485) (5,095)
Minority interest in
income of consolidated
joint ventures 14 20 51 58
---------- -------- --------- --------
Income before discontinued
operations 1,855 1,401 3,654 3,220
Income from discontinued
operations 150 156 454 670
Gain on sale of real estate
acquired for resale - - - 12
---------- -------- --------- --------
Net income 2,005 1,557 4,108 3,902
Distributions paid to Class B,
C and D shareholders (2,693) (2,909) (8,109) (8,729)
---------- -------- --------- --------
Net loss available to class A
shareholders $ (688) $(1,352) $(4,001) $(4,827)
(in thousands, except share and per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
----------- ----------- ----------- -----------
Reconciliation of Net
Income before
discontinued
operations to Funds
From Operations
("FFO"):
Income before
discontinued
operations $ 1,855 $ 1,401 $ 3,654 $ 3,220
Income from
discontinued
operations 150 156 454 682
Depreciation -
from operations 2,022 2,034 5,922 6,624
Depreciation -
from
discontinued
operations 8 2 22 17
Adjustments for
non-consolidated
affiliates 66 42 102 111
Gain on sale of
real estate held
for investment - - - (286)
Class B, C and D
distributions (2,693) (2,909) (8,109) (8,729)
----------- ----------- ----------- -----------
FFO available to
Class A shares $ 1,408 $ 726 $ 2,045 $ 1,639
Basic and Diluted Per
Class A Share Data:
Loss before
discontinued
operations $ (0.13) $ (0.24) $ (0.70) $ (0.87)
Income from
discontinued
operations $ 0.02 $ 0.02 $ 0.07 $ 0.11
----------- ----------- ----------- -----------
Net loss $ (0.11) $ (0.22) $ (0.63) $ (0.76)
FFO $ 0.22 $ 0.12 $ 0.32 $ 0.26
Distributions per
Class A share $ 0.12 $ 0.12 $ 0.36 $ 0.36
Distributions per
Class B, C and D
share $ 0.52 $ 0.52 $ 1.56 $ 1.56
Share Data:
Weighted average Class
A common shares used
to compute net income
per share, basic and
diluted 6,385,000 6,285,000 6,373,000 6,321,000
Market Capitalization Table:
Common Shares Outstanding
(09/30/07) Number of Shares Price Market Equity
- -------------------------------- ---------------- ------ -------------
Class A, net of treasury shares 6,354,680 $7.91 50,265,519
Class B (priced at redemption
value) 1,031,097 $10.18 10,496,567
Class C (priced at par value) 4,141,140 $10.00 41,411,400
Class D (priced at par value) 11,044,413 $10.00 110,444,130
---------------- -------------
Total 22,571,330 212,617,616
Balance Sheet Highlights
(in thousands)
(Unaudited)
September 30, December 31,
2007 2006
------------- ------------
Real estate investments before accumulated
depreciation $ 279,745 $ 274,534
Real estate held for investment, net 265,384 263,906
Net investment in direct financing leases 2,055 19,204
Real estate held for resale, net 22,505 -
Total assets 341,532 328,430
Notes payable 154,386 144,453
Notes payable - held for sale 12,928 -
Total liabilities 177,888 158,243
Minority interest 1,166 1,137
Total shareholders' equity 162,478 169,050
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
CONTACT: AmREIT
Chad C. Braun, 713-850-1400
cbraun@amreit.com