-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FgKl7YW48lRec5APuQoMBhoUFeGySKqvxW0zmsDbdG3HSe5XuP4uU+WAl9iosW6t CW84GETo/6jqA+mbMgOUcg== 0001144204-07-023515.txt : 20070509 0001144204-07-023515.hdr.sgml : 20070509 20070509092716 ACCESSION NUMBER: 0001144204-07-023515 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070508 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070509 DATE AS OF CHANGE: 20070509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMREIT CENTRAL INDEX KEY: 0000913957 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 760410050 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31397 FILM NUMBER: 07830521 BUSINESS ADDRESS: STREET 1: 8 GREENWAY PLAZA STREET 2: STE 824 CITY: HOUSTON STATE: TX ZIP: 77046 BUSINESS PHONE: 7138501400 MAIL ADDRESS: STREET 1: 8 GREENWAY PLAZA STREET 2: STE 824 CITY: HOUSTON STATE: TX ZIP: 77046 FORMER COMPANY: FORMER CONFORMED NAME: AMREIT INC DATE OF NAME CHANGE: 19981123 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN ASSET ADVISERS TRUST INC DATE OF NAME CHANGE: 19931022 8-K 1 v074157_8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ------------------------------------ Date of Report (Date of earliest event reported) May 8, 2007 Commission File Number 0-28378 AmREIT ---------------------------------------------------------------- (Exact name of registrant as specified in its charter) TEXAS 76-0410050 - --------------------------------- ------------------------ (State or other jurisdiction of (IRS Employer Incorporation or organization) Identification No.) 8 Greenway Plaza, Suite 1000, Houston, Texas 77046 713-850-1400 - ----------------------------------------- -------------------------------- (Address of principal executive offices) (Registrant's telephone number) [N/A] ---------------------------------------------------------------- (Former name or former address, if changed since last report) TABLE OF CONTENTS Item 2.02. Results of Operations and Financial Condition On May 8, 2007, the Company issued a press release announcing its financial results for the first quarter ended March 31, 2007. A copy of the press release issued by the Company is attached hereto as Exhibit 99.1. Attached as Exhibit 99.2 is the Supplemental Financial Information which accompanies this press release. The Company's press release announcing its financial results for its first quarter ended March 31, 2007, contains non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with United States generally accepted accounting principles, or GAAP. Pursuant to the requirements of Regulation G, the Company has provided quantitative reconciliations within the press release of the non-GAAP financial measures to the most directly comparable GAAP financial measures. The press release attached to this Form 8-K as Exhibit 99.1 shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities of that section. Item 9.01. Financial Statement and Exhibits Exhibits. The following exhibits are furnished as part of this current report on Form 8-K: 99.1 Press release dated May 8, 2007 99.2 Supplemental Financial Information SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AmREIT By: /s/ Chad C. Braun ---------------------------------------- Chad C. Braun, Chief Financial Officer Dated: May 8, 2007 2 EX-99.1 2 v074157_ex99-1.txt 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) EX-99.2 3 v074157_ex99-2.txt [AMREIT LOGO] - -------------------------------------------------------------------------------- Supplemental Financial Information March 31, 2007 (Unaudited) Table of Contents Page # ----------------- ------ Corporate Profile 1 Consolidated Balance Sheets 2 Consolidated Statements of Operations 3 Consolidated Statements of Operations - Segments 4 - 5 Summary of Operating Results Funds From Operations 6 Dividends - All Classes of Common Shares 6 Rental Income 7 Real Estate Revenue Allocation 7 Discontinued Operations 8 Interest Expense 8 Summary Balance Sheet Information Common Share Data 9 Capitalization 9 Portfolio Net Asset Value 9 Debt Information Outstanding Balances and Terms 10 - 11 Fixed vs. Variable Rate Debt 11 Property & Tenant Information Property Table 12- 13 Tenant Diversification 14 Leasing Activity Report 14 Lease Expiration Schedule 15 This Supplemental Financial Information package contains historical information of the Company and is intended to supplement the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 2007. All financial information in this Supplemental Financial Information package is shown in thousands, except for per share data and share information. Certain information contained in this Supplemental Financial Information package includes certain forward-looking statements reflecting AmREIT's expectations in the near term that involve a number of risks and uncertainties; however, many factors may materially affect the actual results, including demand for our properties, changes in rental and occupancy rates, changes in property operating costs, interest rate fluctuations, and changes in local and general economic conditions. Accordingly, there is no assurance that AmREIT's expectations will be realized. Corporate Profile: AmREIT (AMEX: AMY) is a growing real estate company focused on the development, acquisition, construction, disposition, brokerage, leasing and management of shopping centers in major metropolitan markets throughout the Southwest and Southeast. The company deploys its broad range of real estate development and operating expertise to grow two distinct businesses within AmREIT. The first is a 1.1 million square foot portfolio of "Irreplaceable Corners TM" - Premier retail properties in high traffic, densely populated areas. The second is an advisory and sponsorship business that had a total of $280 million in assets under management as of March 31, 2007. Founded in 1985, AmREIT is a fully integrated equity real estate investment trust that has been public since 2002. Corporate Office: 8 Greenway Plaza, Suite 1000 Houston, Texas 77046 (800) 888-4400 (713) 850-0498 (fax) www.amreit.com Stock Exchange: American Stock Exchange - AMY 1 Consolidated Balance Sheets:
March 31, December 31, 2007 2006 ------------ ------------ (unaudited) ASSETS Real estate investments at cost: Land $ 133,345 $ 124,751 Buildings 140,360 140,487 Tenant improvements 9,409 9,296 ------------ ------------ 283,114 274,534 Less accumulated depreciation and amortization (11,871) (10,628) ------------ ------------ 271,243 263,906 Net investment in direct financing leases held for investment 19,200 19,204 Intangible lease cost, net 15,278 16,016 Investment in merchant development funds and other affiliates 2,564 2,651 ------------ ------------ Nettreal estate investments 308,285 301,777 Cash and cash equivalents 7,274 3,415 Tenant receivables, net 4,480 4,330 Accounts receivable, net 703 1,772 Accounts receivable - related party 2,482 1,665 Notes receivable - related party 11,269 10,104 Deferred costs 2,247 2,045 Other assets 2,841 3,322 ------------ ------------ TOTAL ASSETS $ 339,581 $ 328,430 ============ ============ LIABILITIES AND SHAREH0LDERS' EQUITY Liabilities: Notes payable $ 161,914 $ 144,453 Accounts payable and other liabilities 4,850 9,162 Below market leases, net 3,822 3,960 Security deposits 678 668 ------------ ------------ TOTAL LIABILITIES 171,264 158,243 ------------ ------------ Minority interest 1,153 1,137 Shareholders' equity: Preferred shares, $.01 par value, 10,000,000 shares authorized, none issue- -- Class A Common shares, $.01 par value, 50,000,000 shares authorized, 6,580,305 and 6,549,950 shares issued, respectively 66 65 Class B Common shares, $.01 par value, 3,000,000 shares authorized, 1,049,825 and 1,080,180 shares issued, respectively 10 11 Class C Common shares, $.01 par value, 4,400,000 shares authorized, 4,167,338 and 4,145,531 shares issued, respectively 42 41 Class D Common shares, $.01 par value, 17,000,000 shares authorized, 11,058,788 and 11,039,803 shares issued, respectively 111 110 Capital in excess of par value 194,462 194,696 Accumulated distributions in excess of earnings (26,236) (23,749) Cost of treasury shares, 177,984 and 292,238 Class A shares, respectively (1,291) (2,124) ------------ ------------ TOTAL SHAREHOLDERS' EQUITY 167,164 169,050 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $ 339,581 $ 328,430 ============ ============
2 Consolidated Statements of Operations:
2007 2006 ---------- ---------- Revenues: 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 costs 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 Income from merchant development funds and other affiliates (12) 98 Federal income tax expense for taxable REIT subsidiary 20 83 Interest expense (2,357) (1,743) Minority interest in income of consolidated joint ventures (36) (36) ---------- ---------- Income (loss) before discontinued operations 999 1,118 Income (loss) from discontinued operations, net of taxes 5 (30) Gain on sales of real estate acquired for resale, net of taxes (1) 5 ---------- ---------- Income from discontinued operations 4 (25) ---------- ---------- Net income 1,003 1,093 Distributions paid to class B, C and D shareholders (2,705) (2,906) ---------- ---------- Net (loss) income available to class A shareholders $ (1,702) $ (1,813) ========== ========== Net (loss) income per class A common share - basic and diluted Loss before discontinued operations $ (0.27) $ (0.28) Income from discontinued operations 0.00 (0.00) ---------- ---------- Net (loss) income $ (0.27) $ (0.28) ========== ========== Weighted average class A common shares used to compute net (loss) income per share, basic and diluted 6,320 6,425 ========== ==========
3 Segmented Statements of Operations:
Asset Advisory Business ------------------------------ For the three months Real Estate Merchant ended Development & Securities Development March 31, 2007 Portfolio Operations Operations Funds Total - ----------------------------- ------------- ------------- ------------- ------------- ------------- Rental income $ 7,589 $ -- $ -- $ -- $ 7,589 Securities commission income -- -- 993 -- 993 Real estate fee income -- 1,407 -- -- 1,407 Construction revenues -- 973 -- -- 973 Asset management fee income -- -- -- 284 284 ------------- ------------- ------------- ------------- ------------- Total revenues 7,589 2,380 993 284 11,246 General and administrative 435 1,223 486 66 2,210 Property expense 1,694 36 -- -- 1,730 Construction costs -- 861 -- -- 861 Legal and professional 198 87 10 -- 295 Real estate commissions -- 421 -- -- 421 Securities commissions -- -- 829 -- 829 Depreciation and amortization 1,941 -- -- -- 1,941 ------------- ------------- ------------- ------------- ------------- Total expenses 4,268 2,628 1,325 66 8,287 Interest expense (2,229) (125) (3) -- (2,357) Other income/(expense) 217 163 114 (97) 397 Income (loss) from discontinued operations -- 4 -- -- 4 ------------- ------------- ------------- ------------- ------------- Net income (loss) $ 1,309 $ (206) $ (221) $ 121 $ 1,003 ------------- ------------- ------------- ------------- -------------
4
Asset Advisory Business ------------------------------ For the three months Real Estate Merchant ended Development Securities Development March 31, 2006 Portfolio & Operations Operations Funds Total - ----------------------------- ------------- ------------- ------------- ------------- ------------- Rental income $ 6,480 $ -- $ -- $ -- $ 6,480 Securities commission income -- -- 1,391 -- 1,391 Real estate fee income -- 1,518 -- -- 1,518 Construction revenues -- 1,794 -- -- 1,794 Asset management fee income -- -- -- 158 158 ------------- ------------- ------------- ------------- ------------- Total revenues 6,480 3,312 1,391 158 11,341 General and administrative 372 1,001 489 17 1,879 Property expense 1,004 11 -- -- 1,015 Construction costs -- 1,675 -- -- 1,675 Legal and professional 242 60 10 -- 312 Real estate commissions -- 540 -- -- 540 Securities commissions -- -- 1,257 -- 1,257 Depreciation and amortization 2,182 -- -- -- 2,182 ------------- ------------- ------------- ------------- ------------- Total expenses 3,800 3,287 1,756 17 8,860 Interest expense (1,579) (161) (3) -- (1,743) Other income/ (expense) 309 58 (10) 23 380 Income from discontinued operations (27) 2 -- -- (25) ------------- ------------- ------------- ------------- ------------- Net income (loss) $ 1,383 $ (76) $ (378) $ 164 $ 1,093 ============= ============= ============= ============= =============
5 AmREIT Summary of Operating Results
Three Months Ended March 31, ------------------------ Funds From Operations: 2007 2006 ---------- ---------- Income - before discontinued operations $ 999 $ 1,118 (Loss) Income - from discontinued operations 4 (25) Plus depreciation of real estate assets - from operations 1,940 2,164 Plus depreciation of real estate assets - from discontinued operations 3 10 Adjustments for nonconsolidated affiliates 17 30 Less class B, C & D distributions (2,705) (2,906) ---------- ---------- Total Funds From Operations available to class A shareholders $ 258 $ 391 ========== ========== Weighted Average Class A Shares Outstanding 6,320 6,425 ========== ========== Funds from Operations per Class A Share $ 0.04 $ 0.06 Dividends: Class A Common share dividends per share $ 0.12 $ 0.12 Class B Common share dividends per share (1) $ 0.19 $ 0.19 Class C Common share dividends per share (2) $ 0.17 $ 0.17 Class D Common share dividends per share (3) $ 0.16 $ 0.16
(1) The class B common shares receive a cumulative preferred dividend, fixed at 8%, payable quarterly. The shares are currently convertible on a one for one basis into our class A common shares, and became callable by the Company beginning in July 2005 on a one for one basis, or $10.18 in cash at the holders option. (2) The class C common shares receive a preferred dividend, fixed at 7%, payable monthly. The shares are convertible into our class A common shares based on 110% of invested capital (i.e. $1,000 in class C common shares will convert into $1,100 in class A common shares) after the seventh anniversary of issuance (beginning in 2010). The class C common shares became callable by the Company beginning in August 2006, based on the same conversion formula (110% of invested capital). (3) The class D common shares receive a fixed 6.5% annual dividend, payable monthly. The shares are convertible into our class A common shares based on 107.7% of invested capital (i.e. $1,000 in class C common shares will convert into $1,077 in class A common shares) after the seventh anniversary of issuance (beginning in 2011). The class D common shares became callable by the Company beginning in July 2005, based on the same conversion formula, prorated for the time the shares were outstanding (107.7% of invested capital). 6 Three Months Ended March 31, ------------------- Rental and Earned Income: 2007 2006 -------- -------- Base minimum rent $ 5,222 $ 4,697 Earned income from direct financing leases 507 507 Straight line rent 146 68 Over/Under market rent 31 1 Percentage rent -- 136 Tenant reimbursements 1,683 920 Lease termination fees -- 151 -------- -------- Total Rental and Earned Income $ 7,589 $ 6,480 ======== ========
Three Months Ended March 31, -------------------- Real Estate Operating Revenue: 2007 2006 -------- -------- Development and construction management fees Merchant development funds and affiliates $ 408 $ 164 Unrelated third parties 66 -- Leasing and brokerage commissions Merchant development funds and affiliates 98 501 Unrelated third parties 628 751 Property management fees Merchant development funds and affiliates 207 102 Unrelated third parties -- -- -------- -------- Total Real Estate Operating Revenue $ 1,407 $ 1,518 ======== ======== Percent attributable to merchant development funds and affiliates 51% 51% Percent attributable to unrelated third parties 49% 49%
7 Three Months Ended Discontinued operations: March 31, -------------------- 2007 2006 -------- -------- Rental revenue and earned income from DFL $ 24 $ 28 Gain on sale of real estate held for investment -- (7) Interest and other income -- -- Gain on sale of real estate held for resale -- 5 -------- -------- Total revenues 24 26 -------- -------- Property expense -- (12) General and administrative (1) (15) Federal income tax expense (4) -- Legal and professional (1) (8) Depreciation and amortization (3) (10) Minority interest (6) -- Interest expense (5) (6) -------- -------- Total expenses (20) (51) -------- -------- Income (loss) from discontinued operations 4 (25) ======== ======== Basic and diluted income (loss) from discontinued operations per class A common share $ 0.00 $ 0.00 ======== ======== Three Months Ended March 31, -------------------- Interest Expense: 2007 2006 -------- -------- Interest paid - floating rate $ 357 $ 120 Interest paid - fixed rate 1,992 1,622 Loan cost amortization 67 58 Out-of-market debt amortization (59) (57) -------- -------- Total Interest Expense $ 2,357 $ 1,743 ======== ======== 8 AmREIT Summary Balance Sheet Information
March 31, 2007 December 31, 2006 ------------------ ------------------ Class A Common Share Data: Closing market price $ 8.79 $ 8.33 Dividend yield 5.69% 6.00% 90-day average trading volume 23,211 16,474 Total Capitalization: Debt $ 161,914 $ 144,453 Class A common shares at market 56,276 52,127 Class B common shares as converted 9,228 8,998 Class C common shares as converted 45,841 45,601 Class D common shares as converted 119,103 118,899 ------------------ ------------------ Total Capitalization $ 392,362 $ 370,078 ================== ================== Debt to Total Capitalization 41.3% 39.0%
Portfolio Net Asset Value Calculation: Annual Property NOI $ 23,327,750 Average Property Cap Rate 6.25% 6.50% Property Gross Value 373,244,000 358,888,000 Notes Receivable 11,269,000 11,269,000 Cash, Receivables, Other 17,483,000 17,483,000 ------------- ------------- Total Asset Value 401,996,000 387,640,000 Notes Payable (157,761,000) (157,761,000) Security Deposits & A/P (5,528,000) (5,528,000) ------------- ------------- Total Liabilities (163,289,000) (163,289,000) Minority Interest (1) (2,083,000) (2,083,000) Total Net Asset Value (NAV) 236,624,000 222,268,000 NAV - Non Traded Shares (2) 165,908,000 165,908,000 NAV - class A common shares (2) 70,716,000 56,360,000 NAV - Per Class A common (2) $ 11.05 $ 8.80 (1) Includes the portion of the net asset value that is owned by third parties or management, such as management's ownership interest in AAA CTL. (2) NAV and NAV per share represent only the portfolio value and other liquid assets. We have not valued the asset advisory business or any of our general partner back end interests in the above analysis. - -------------------------------------------------------------------------------- 9 AmREIT Debt Information
Amount Amount Outstanding Outstanding Interest Annual Debt Maturity Description 03-31-2007 12-31-2006 Rate Service Date - -------------------- ------------- ------------- ------------- ------------- ------------- Credit Facility (1) $ 9,855 $ 11,929 7.82% $ 771 11/4/2007 ------------- ------------- 2007 Maturities $ 9,855 $ 11,929 MacArthur Park $ 13,410 $ 13,410 6.17% $ 827 12/1/2008 ------------- ------------- 2008 Maturities $ 13,410 $ 13,410 Sugarland IHOP $ 1,144 $ 1,155 8.25% $ 138 3/1/2011 Sugar Land Plaza 2,279 2,286 7.60% 203 11/1/2011 ------------- ------------- 2011 Maturities $ 3,423 $ 3,441 Albuquerque IHOP $ 664 $ 670 7.82% $ 75 4/24/2012 Baton Rouge IHOP 1,098 1,107 7.82% 124 4/24/2012 Beaverton IHOP 779 785 7.82% 88 4/16/2012 Charlottesville IHOP 553 558 7.82% 62 4/24/2012 El Paso #1934 IHOP 668 673 7.82% 75 4/16/2012 Rochester IHOP 835 842 7.82% 94 4/16/2012 Shawnee IHOP 659 665 7.82% 74 4/18/2012 5115 Buffalo Spdwy 2,723 2,731 7.58% 241 5/11/2012 Salem IHOP 547 551 7.82% 61 5/17/2012 Springfield IHOP 907 915 7.82% 102 6/21/2012 Roanoke IHOP 629 635 7.89% 71 7/26/2012 Centerville IHOP 1,101 1,110 7.89% 124 7/26/2012 Memphis #4462 IHOP 1,190 1,199 7.89% 134 7/19/2012 Alexandria IHOP 635 640 7.89% 71 7/19/2012 El Paso #1938 IHOP 795 802 7.89% 89 8/23/2012 La Verne IHOP 662 668 7.89% 74 8/23/2012 Memphis #4482 IHOP 690 696 7.89% 77 8/23/2012 Parker IHOP 743 749 7.89% 83 8/23/2012 ------------- ------------- 2012 Maturities $ 15,878 $ 15,996 Cinco Ranch $ 8,264 $ 8,298 5.60% $ 601 7/10/2013 Plaza in the Park 17,466 17,538 5.60% 1,270 7/10/2013 ------------- ------------- 2013 Maturities $ 25,730 $ 25,836
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Amount Amount Annual Outstanding Outstanding Interest Debt Maturity Description 09-30-2006 12-31-2005 Rate Service Date - ---------------------- ------------- ------------- ------------- ------------- ------------- Uptown Park $ 49,000 $ 49,000 5.37% $ 2,631 6/1/2015 ------------- ------------- 2015 Maturities $ 49,000 $ 49,000 Southbank - Riverwalk $ 20,000 $ -- 5.91% $ 1,182 6/1/2016 ------------- ------------- 2016 Maturities $ 20,000 $ -- Bakery Square $ 3,903 $ 3,967 8.00% $ 571 2/10/2017 Uptown Plaza Dallas $ 19,900 $ -- 5.64% $ 1,122 4/1/2017 ------------- ------------- 2017 Maturities $ 23,803 $ 3,967 ------------- ------------- Total Maturities (2) $ 161,099 $ 143,579 ============= =============
(1) Our revolving credit facility is a variable-rate debt instrument, and its outstanding balance fluctuates throughout the year based on our liquidity needs. Annual Debt Service on this debt instrument assumes that the amount outstanding and the interest rate as of March 31, 2007 remain constant through maturity. (2) Total maturities above are $815 thousand and $874 thousand less than total debt as reported in our consolidated financial statements as of March 31, 2007 and December 31, 2006, respectively, due to the premium recorded on above-market debt assumed in conjunction with certain of our property acquisitions. Fixed vs. Variable Rate Debt: March 31, % of December 31, % of 2007 Total 2006 Total ------------ ------------ ------------ ------------ Variable rate $ 9,855 6.1% $ 11,929 8.3% Fixed rate 152,059 93.9% 132,524 91.7% ------------ ------------ ------------ ------------ $ 161,914 100.0% $ 144,453 100.0% 11 AmREIT Property & Tenant Information
Date Multi-Tenant Shopping Centers Major Tenants City State Acquired GLA - ----------------------------------- --------------------- ------------- ----- ------------ ---------- Uptown Park - Phase I and II Ann Taylor, McCormick & Schmick's Houston TX 6/1/2005 169,110 Southbank - Riverwalk Hard Rock Cafe San Antonio TX 9/30/2005 46,673 MacArthur Park and Pad Sites Kroger Irving TX 12/04 &12/05 237,381 Plaza in the Park Kroger Houston TX 7/1/2004 144,062 Cinco Ranch Kroger Houston TX 7/1/2004 97,297 Bakery Square Walgreens & Bank of America Houston TX 7/21/2004 34,614 Uptown Plaza CVS/pharmacy Houston TX 12/10/2003 28,000 Woodlands Plaza FedEx/Kinkos & Rug Gallery The Woodlands TX 6/3/1998 20,018 Sugarland Plaza Mattress Giant Sugarland TX 7/1/1998 16,750 Terrace Shops Starbucks Houston TX 12/15/2003 16,395 584 N. Germantown Pkwy Auto Zone & (Baptist Memorial Medical Plaza) Baptist Memorial Memphis TN 7/23/2002 15,000 Courtyard on Post Oak Verizon Wireless Houston TX 6/15/2004 13,597 Grotto, Century Bank, Uptown Plaza - Dallas Pei Wei Dallas TX 3/30/2006 33,840 ---------- Multi-Tenant Shopping Centers Total 872,737 Annualized Base Rent as of March 31, Multi-Tenant Shopping Centers 2007 % Leased - ----------------------------------- ---------- ---------- Uptown Park - Phase I and II $4,520,617 94% Southbank - Riverwalk 1,513,352 100% MacArthur Park and Pad Sites 3,886,451 96% Plaza in the Park 2,642,150 98% Cinco Ranch 1,228,515 99% Bakery Square 823,484 97% Uptown Plaza 1,236,646 100% Woodlands Plaza 373,317 100% Sugarland Plaza 349,612 100% Terrace Shops 440,628 93% 584 N. Germantown Pkwy (Baptist Memorial Medical Plaza) 194,026 75% Courtyard on Post Oak 477,361 100% Uptown Plaza - Dallas 1,619,902 100% ---------- Multi-Tenant Shopping Centers Total 19,306,061
Annualized Base Rent Single Tenant Date as of (Ground Leases) City State Acquired GLA March 31, 2007 % Leased - ----------------------------------- -------------- ----- ---------- ---------- --------------- ---------- CVS Corporation Houston TX 1/10/2003 13,824 $ 327,167 100% Darden Restaurants Peachtree City GA 12/18/1998 6,867 79,366 100% Carlson Restaurants Hanover MD 9/16/2003 6,802 141,674 100% Citibank San Antonio TX 12/17/2004 4,439 155,000 100% Washington Mutual Houston TX 12/11/1996 3,685 98,155 100% Washington Mutual The Woodlands TX 9/23/1996 3,685 63,996 100% Woodlands Ring Road - Ground Leases The Woodlands TX 2/1/2007 66,349 596,093 100% ---------- --------------- Single Tenant (Ground Leases) Total 105,651 1,461,451
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Annualized Base Date Rent as of Single Tenant (Fee Simple) City State Acquired GLA March 31, 2007 % Leased - -------------------------------- ----------- -------- ---------- ---------- --------------- ---------- Golden Corral Houston TX 7/23/2002 12,000 182,994 100% Golden Corral Humble TX 7/23/2002 12,000 181,688 100% Carlson Restaurants Houston TX 7/23/2005 8,500 200,000 100% #1483 IHOP Corporation Sugarland TX 9/22/1999 4,020 189,516 100% #1737 IHOP Corporation (5) Centerville UT 7/25/2002 4,020 163,380 100% #4462 IHOP Corporation (5) Memphis TN 8/23/2002 4,020 179,376 100% #5318 IHOP Corporation Topeka KS 9/30/1999 4,020 158,748 100% AFC, Inc. Atlanta GA 7/23/2002 2,583 119,279 100% Advance Auto (1)(2)(3)(4) Various Various Various 14,000 Note (1) Note (1) ---------- --------------- Single Tenant (Fee Simple) Total 65,163 1,374,981
Annualized Base Date Rent as of Single Tenant (Leasehold) City State Acquired GLA March 31, 2007 % Leased - -------------------------------- ----------- -------- ---------- ---------- --------------- ---------- IHOP Corporation (5) Various Various Various 60,300 $ 1,558,056 100% ---------- --------------- ---------- Company Total GLA % Leased 1,103,851 $ 23,700,549 97%
--------------------------------------------------------------------------- (1) Under Development (GLA represents proposed leaseable square footage). (2) Held for Sale (3) Held in joint venture of which we are the managing 50% owner. (4) Advance Auto properties are located in MO and IL. Each of the properties has a proposed GLA of 7,000 square feet. (5) IHOP properties are located in NM, LA, OR, VA, TX, CA, TN, CO, VA, NY, OR, KS, UT and MO. Each of the properties has a GLA of 4,020 square feet. These properties are held by a consolidated subsidiary, 79.0% of which is owned by AmREIT,19.6% of which is owned by AmREIT Income & Growth Fund, one of our affiliated merchant development funds, and 1.4% of which is owned by unaffiliated third parties. We have assigned to management approximately 50% of our back-end participation interest in this entity as part of our long-term incentive compensation program. Accordingly, approximately half of the future net cash flows from such participation interest are owned by management. 13 Top Tenants by revenue concentration for the three months ended March 31, 2007: % of Total Operating Tenant Rental Income Revenue - ---------------------------- ------------- ------------- Kroger $ 585 5.20% IHOP Corporation 562 5.00% Landry's 261 2.32% CVS/Pharmacy 242 2.15% Hard Rock Cafe International 178 1.58% Cosniac Restaurant Group 154 1.37% Champps Entertainment, Inc. 138 1.23% Starbucks 135 1.20% Linens `N Things 120 1.07% McCormick & Schmicks 117 1.04% ------------- ------------- Total $ 2,492 22.16% ============= ============= Leasing Activity for the quarter ended March 31, 2007:
Rent per sq. ft. --------------------------- # of leases Total sq. ft. New Rent Old Rent % Change ------------ ------------ ------------ ------------ ------------ New leases 6 9,519 32.16 N/A N/A Activity on Existing Leases: Lease renewals 2 3,773 24.14 20.32 18.77% Non-renewals 1 1,200 N/A 26.00 N/A Expired/Cancelled leases 2 2,827 N/A 26.51 N/A
14 Lease Expirations by Year: Number of Leases Square Percent Expiration Year Expiring Footage of Total - --------------- ---------- ---------- ---------- 2007 10 24,874 2.37% 2008 23 69,186 6.60% 2009 33 93,252 8.90% 2010 32 129,476 12.36% 2011 51 191,675 18.29% 2012 9 29,942 2.86% 2013 8 34,308 3.27% 2014 6 26,237 2.50% 2015 2 7,251 0.69% 2016 11 53,168 5.07% 2017 3 40,661 3.88% 2019 1 4,020 0.38% 2020 4 75,991 7.25% 2021 3 89,676 8.56% 2022 1 4,020 0.38% 2023 1 63,373 6.05% 2024 3 21,864 2.09% 2025 7 45,597 4.35% 2026 4 16,080 1.53% 2027 3 12,060 1.15% 2056 1 15,120 1.47% - --------------- ---------- ---------- ---------- Totals 216 1,047,831 100.00% 15 -----END PRIVACY-ENHANCED MESSAGE-----