Exhibit 99.1
FOR IMMEDIATE RELEASE
FOR INFORMATION CONTACT:
Debbie Lucas (dlucas@amreit.com)
AmREIT, (713) 850-1400
AmREIT REPORTS STRONG 2005 YEAR END AND FOURTH QUARTER RESULTS;
FFO PER SHARE GREW 9% FOR THE YEAR
HOUSTON, March 15, 2006 - AmREIT (AMEX: AMY), a Houston-based real estate
investment trust, announced today financial results for the fourth quarter and
year end 2005. Following are the financial highlights:
o Funds from Operations (FFO) available to our Class A shareholders for
the year ended December 31, 2005 were $3.6 million or $0.70 per share.
This is a 9% increase over year end 2004 reported FFO of $2.1 million
or $0.64 per share (as adjusted for non-cash charges to earnings);
o Funds from Operations (FFO) available to our Class A shareholders for
the fourth quarter 2005 were $1.7 million, or $0.27 per share. This
compares to fourth quarter 2004 reported FFO loss of $965 thousand or
a loss of $0.28 per share;
o Total FFO available to all common shareholders for the year ended
December 31, 2005 was $12.9 million and we paid dividends to all
classes of common shareholders of $11.8 million. This compares to 2004
where we reported FFO available to all common shareholders of $6.6
million (as adjusted for non-cash charges to earnings) and dividends
to all classes of common shareholders of $6.0 million;
o Revenues for the fourth quarter 2005 increased to $12.6 million as
compared to $4.9 million for the same period in 2004. For the year,
revenues were $34.7 million as compared with revenues of $15.3 million
for 2004, a 127% year over year increase;
o Net income available to our class A common shareholders for the year
ended December 31, 2005 was $881,000, or $0.17 per share. This
compares to a loss of $3.9 million for 2004 or a loss of $1.19 per
share;
o Net income available to our class A common shareholders for the fourth
quarter 2005 was $2.1 million, or $0.33 per share. This compares to
fourth quarter 2004 reported net loss of $1.6 million or ($0.48) per
share;
o During 2005, we sold 10 non-core assets from our portfolio, generating
a gain on sale of $3.4 million. Additionally, we sold six properties
merchant development properties that were held for re-sale, generating
$3.2 million in gains on sale;
o The Board of Trust Managers declared dividends of $0.50 per class A
common share during 2005, which were paid out on a monthly basis, as
compared to dividends declared of $0.48 during 2004. This represents
an annual increase in dividends of 4.2%.
o Total assets increased from a book value of $203 million to a book
value of $315 million for the year, a 55% increase.
AmREIT's business model and therefore its financial results are broken down into
three distinct businesses. First, as a real estate development and operating
company we create value by providing construction, development, acquisition,
disposition, brokerage, leasing and property management services to our own
portfolio, to third parties, and to our affiliated asset advisory group. Second,
we have a portfolio of Irreplaceable CornersTM, which provides a solid
foundation for our revenue growth through its steady stream of rental income.
Finally, we have an asset advisory group that has historically raised private
capital for our merchant development partnership funds. These three segments
collectively contribute to our overall financial growth and earnings.
"We have and will continue to focus on creating value for our shareholders by
growing our Net Asset Value (NAV) on a per share basis, while at the same time
growing our FFO on a per share basis," said Chad C. Braun, AmREIT's chief
financial officer. "Our business model allows us to be active in up and down cap
rate markets. In a market where cap rates continue to be compressed and interest
rates are on the rise, we will shift focus and grow our asset advisory group and
real estate development group. These businesses allow us to develop and sell
properties and generate transactional income for services provided to grow
earnings and value."
Real Estate Development and Operations
Our real estate development group generated $7.8 million (including discontinued
operations and net of construction expense) in revenue during 2005, up 152% as
compared to the $3.1 million generated in 2004. We anticipate this business to
generate total 2006 revenues of $10.6 million (net of construction expense), a
36% expected annual increase.
Expenses associated with this line of business were approximately $5.0 million.
Revenues are further reduced by the allocation of dividends on our non-traded
shares on a pro-rata basis based on net income contribution of the segment ($2.3
million allocated to this group), resulting in net income to our class A shares
of $450,000.
FFO contributions from this segment totaled approximately $450,000, or $0.08 per
share for the year, representing approximately 27% of total FFO per share for
2005. Anticipated FFO per share for 2006 from this segment is budgeted at $0.13
to $0.15 a share, or approximately 17% of total 2006 budgeted FFO. This business
is transactional and the timing of these contributions from quarter to quarter
is hard to predict.
Fee income generated during 2005 by this group related to services provided to
third parties and our affiliated asset advisory group totaled $5.8 million (net
of construction expense). For 2006 we have budgeted fee income from this segment
to be $8.5 million, a 47% increase.
Our pipeline of development opportunities for third parties and for our asset
advisory group includes approximately 700,000 square feet under various stages
of development and an additional 600,000 square feet in various stages of
pre-development. Together, this represents over $111 million in active
development projects. Of this, 690,000 square feet is scheduled for completion
in 2006.
Our merchant development program, which buys and builds properties with the
intent to sell, generated profits of $3.2 million during 2005. In 2006 we
anticipate merchant development profits to be $2.1 million for the year.
Asset Advisory Group
For 20 years we have been raising private capital for our real estate merchant
development partnership funds and building relationships in the financial
planning community, earning fees and sharing in profits from those activities.
To date, we have sponsored six actively managed income and growth funds, with
the first two having substantially liquidated and generating back end profit
participation to the general partners.
These remaining funds are anticipated to enter their liquidation phases in 2008,
2010, 2011 and 2012, respectively. As these funds enter into liquidation, we
expect to receive economic benefit from our profit participation, after certain
preferred returns have been paid to the partnerships' limited partners.
As of December 31, 2005, we had $61 million in equity capital under management
in four funds. For the year, this group generated total revenues of $1.7
million, with $1.2 million related to securities commissions earned on sales of
units in our merchant development funds and $495,000 related to recurring asset
management fees. We anticipate asset management fees to increase 88% in 2006 to
$930,000.
Expenses associated with this line of business were approximately $2.1 million,
comprised of $864,000 in securities commission expense and $1.2 million of
general and administrative expense. This results in a net loss to our class A
shares of $427,000.
The asset advisory group reduced FFO by approximately $327,000, or $0.06 per
share for the year. Anticipated FFO per share for 2006 from this segment is
budgeted at $0.02 to $0.03 a share, or approximately 2% of total 2006 FFO. The
asset advisory group is anticipated to increase its contribution to FFO as we
grow equity under management from the current $61 million to an anticipated
critical mass of $250 million within the next twenty-four months. As our
existing funds enter into liquidation, they can produce general partner back end
interest, which can provide additional contributions to FFO.
Portfolio of Irreplaceable Corners
Our portfolio acts as the primary source of recurring income to our business
model, contributing approximately 66% in total revenues, and consists of premier
retail properties typically located on "Main and Main" intersections in
high-traffic, highly populated affluent areas. As of December 31, 2005, we owned
49 properties, located in 15 states. Approximately 81% of our rental income is
derived from multi-tenant, grocery anchored and lifestyle shopping centers. The
remaining 22% comes primarily from single tenant, parent company guaranteed
leased properties.
The portfolio generated $23.0 million in operating revenue during 2005, up 123%
as compared to the $10.3 million generated in 2004. Additionally, based on
selling non-core assets, the portfolio generated income from discontinued
operations of $4.6 million during 2005. We anticipate this business to generate
total 2006 operating revenues of $33.1 million, a 44% annual increase.
Expenses associated with our portfolio were approximately $20.3 million,
comprised of $4.8 million in property expenses, $6.0 million in depreciation and
amortization, $5.8 million in interest expense and $3.1 million in general and
administrative expense. Revenues are further reduced by the allocation of
dividends on our non-traded shares on a pro-rata basis based on net income
contribution of the segment ($6.9 million allocated to this group), resulting in
net income to our class A shares of $930,000.
FFO contributions from the portfolio totaled approximately $3.6 million or $0.68
per share for the year, representing approximately 81% of total FFO per share
for 2005. Anticipated FFO per share for 2006 from this segment is budgeted at
$0.56 to $0.59 a share, or approximately 81% of total 2006 FFO. This is a
recurring and dependable income stream that supports the monthly dividends.
Our overall occupancy as of December 31, 2005 was approximately 96.4%.
During the year we acquired three shopping center properties, representing
approximately 255,000 square feet, for an investment of over $110 million. One
property was acquired in Houston, Texas during the second quarter, one in San
Antonio, Texas during the third quarter and one in Dallas, Texas during the
fourth quarter.
Consistent with our continued strategy of selling non-core assets, we sold eight
single tenant properties during the fourth quarter of 2005, representing
approximately 91,000 square feet. Three of the properties were located in Texas,
one in Minnesota, one in Missouri, one in Louisiana, one in Mississippi and one
in Colorado. The sale generated a gain of approximately $2.8 million.
"Our balance sheet is conservatively leveraged, with a debt to asset ratio of
40% based on book value of our assets," said Chad C. Braun, AmREIT's chief
financial officer. "The combination of great real estate assets and conservative
leverage gives us great opportunity and flexibility during 2006."
AmREIT updates earnings guidance on a quarterly basis.
CONFERENCE CALL
AmREIT will hold its quarterly conference call to discuss fourth quarter and
year end results Thursday, March 16, at 10:00 am Central Time (11:00 am 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 1-877-407-8031. The call will also be available for
replay for 60 days by dialing 1-877-660-6853, account number 286, ID number
191232.
The company has published additional forward-looking statements in its fourth
quarter and year end 2005 supplemental information package that may help
investors estimate earnings for 2006. A copy of the company's fourth quarter and
year end 2005 supplemental information will be available on the company's web
site at www.amreit.com or by written request to Debbie Lucas, Investor
Relations, AmREIT, 8 Greenway Plaza, Suite 1000, Houston, Texas 77046. The
information provided in the supplemental package is unaudited and there can be
no assurance that the information will not vary from the final information for
the quarter ended December 31, 2005. AmREIT may, but assumes no obligation to,
update information in the supplemental package from time to time.
ABOUT AmREIT
AmREIT (AMEX: AMY) is a growing real estate company that has delivered results
to our investors for 21 years. Our mission is to establish a real estate
business that can realize growth in income in any market cycle - a company with
strong earnings power from multiple sources. This mission has led us into three
distinct businesses. First, as a real estate development and operating company,
we construct, develop, acquire, dispose of, broker, lease and manage properties
for our shareholders as well as for our asset advisory group and third parties.
Second, we have an asset advisory group which raises private capital for and
generates fees from our merchant development partnership funds. And third, we
own 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 December 31, 2005, AmREIT has
over 1.3 million square feet of retail centers in various stages of development
or in the pipeline for both our advisory group and for third parties. Since
listing on the AMEX in July 2002, our total assets have grown from a book value
of $32 million to $315 million, and equity within our asset advisory group has
grown from $15 million to $61 million.
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.
For more information, call Debbie Lucas, Vice President Investor Relations &
Corporate Communications of AmREIT, at (713) 850-1400, or Chad Braun, Chief
Financial Officer of AmREIT, 713-850-1400. AmREIT is online at
TUwww.amreit.comUT.
(Tables to Follow)
Operating Results
(in thousands, except share and per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ ------------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Revenues:
Rental income from operating
leases $ 6,816 $ 3,104 $ 20,484 $ 8,200
Earned income from direct financing
leases 508 507 2,030 2,029
Real estate fee income 133 353 485 409
Real estate fee income - related
party 1,219 135 4,588 1,443
Construction revenue 1,636 - 2,302 -
Construction revenue - related party 1,361 - 2,434 -
Securities commission income 644 688 1,163 2,742
Asset management fee income 128 116 495 361
Interest and other income 191 35 705 82
---------- ---------- ---------- ----------
Total revenues 12,636 4,938 34,686 15,266
Expenses:
General and administrative 2,553 1,193 6,356 4,600
Property expense 2,101 630 4,860 1,418
Construction expense 2,784 - 4,283 -
Legal and professional 431 686 1,859 1,646
Securities commissions 476 530 864 2,081
Depreciation and amortization 1,879 763 6,046 1,817
Deferred merger costs - - - 1,682
---------- ---------- ---------- ----------
Total expenses 10,224 3,802 24,268 13,244
Operating income 2,412 1,136 10,418 2,022
Income from merchant development funds
and other affiliates (27) 881 161 1,121
Federal income tax (expense)/benefit 111 (225) (379) (77)
Interest expense (1,691) (1,164) (6,412) (3,290)
Minority interest in income of
consolidated joint ventures (20) (54) (241) (186)
---------- ---------- ---------- ----------
Income (loss) before discontinued
operations 785 574 3,547 (410)
Income (loss) from discontinued
operations 1,863 (906) 3,356 (829)
Gain on sale of real estate acquired for
resale 2,351 68 3,223 1,827
---------- ---------- ---------- ----------
Net income (loss) 4,999 (264) 10,126 588
Distributions paid to class B, C and D
shareholders (2,897) (1,366) (9,245) (4,454)
---------- ---------- ---------- ----------
Net income (loss) available to class A
shareholders $ 2,102 $ (1,630) $ 881 $ (3,866)
========== ========== ========== ==========
(in thousands, except share and per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------------- --------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
RECONCILIATION OF INCOME (LOSS) BEFORE
DISCONTINUED OPERATIONS TO FUNDS FROM
OPERATIONS ("FFO"):
Income (loss) before discontinued
operations $ 785 $ 574 $ 3,547 $ (410)
Income (loss) from discontinued
operations 4,214 (838) 6,579 998
Depreciation - from operations 2,210 648 5,952 1,674
Depreciation - from discontinued
operations 177 60 111 297
Adjustments for non-consolidated
affiliates 35 9 100 29
Gain on sale of real estate held
for investment (2,805) (52) (3,400) (137)
Class B, C and D distributions (2,897) (1,366) (9,245) (4,454)
----------- ----------- ----------- -----------
FFO available to class A shares $ 1,719 $ (965) $ 3,644 $ (2,003)
BASIC AND DILUTED PER CLASS A SHARE
DATA:
Loss before discontinued
operations $ (0.33) $ (0.23) $ (1.09) $ (1.50)
Income (loss) from discontinued
operations 0.65 (0.24) 1.26 0.31
----------- ----------- ----------- -----------
Net income (loss) $ 0.32 $ (0.47) $ 0.17 $ (1.19)
FFO $ 0.27 $ (0.28) $ 0.70 $ (0.62)
SHARE DATA:
Weighted average class A common shares
used to compute net income
per share, basic and diluted 6,446,377 3,431,394 5,204,914 3,251,285
MARKET CAPITALIZATION TABLE:
Common Shares Outstanding (12/31/05) Number of Shares Price Market Equity
- ------------------------------------ ---------------- ------- -------------
Class A, net of treasury shares 6,401,537 $ 6.90 $ 44.17M
Class B 2,148,649 $ 6.90 $ 14.83M
Class C (priced at par value) 4,119,923 $ 10.00 $ 41.19M
Class D (priced at par value) 11,035,482 $ 10.00 $ 110.35M
---------------- -------------
Total 23,705,591 $ 210.54M
Balance Sheet Highlights
(in thousands)
(Unaudited)
December 31, December 31,
2005 2004
------------ ------------
Real estate held for investment, net $ 241,301 $ 157,031
Net investment in direct financing leases 19,212 19,219
Intangible lease cost, net 17,761 10,628
Real estate held for resale, net 3,569 6,326
Investment in merchant development funds
and other affiliates 2,311 1,979
Total assets 314,971 203,151
Notes payable 114,687 105,964
Total liabilities 126,510 113,666
Minority interest 1,176 1,115
Total shareholders' equity 187,285 88,370
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. 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 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 2006
Range
------------------------ Historical
High Low 12/31/05
---------- ---------- ----------
Net (loss)/income available to class A shareholders $ (0.41) $ (0.45) $ 0.17
Depreciation and amortization 1.18 1.16 1.18
Less gain on sale of real estate - - (0.65)
---------- ---------- ----------
FFO available to class A shareholders $ 0.77 $ 0.71 $ 0.70
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