-----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, GmXt9D+mdOg36N1NAKQdviqccRwR6Kf5gQ7VgtgyV4Su2boBcYb2AWxFOKbtHaNG Scni061L9QFZkWarEIXCnQ== 0001157523-07-010872.txt : 20071107 0001157523-07-010872.hdr.sgml : 20071107 20071107090652 ACCESSION NUMBER: 0001157523-07-010872 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20071106 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20071107 DATE AS OF CHANGE: 20071107 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: 071219814 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 a5539427.txt AMREIT 8-K 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) November 6, 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 November 6, 2007, the Company issued a press release announcing its financial results for the third quarter and nine months ended September 30, 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 third quarter and nine months ended June 30, 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 November 6, 2007 99.2 Supplemental Financial Information 1 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: November 6, 2007 2 EX-99.1 2 a5539427ex99_1.txt EXHIBIT 99.1 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 EX-99.2 3 a5539427ex99_2.txt EXHIBIT 99.2 Exhibit 99.2 AmREIT - -------------------------------------------------------------------------------- Supplemental Financial Information September 30, 2007 (Unaudited) Table of Contents Page # ----------------- ------ Corporate Profile 1 Consolidated Balance Sheets 2 Consolidated Statements of Operations 3 Consolidated Statements of Operations - Segments 4 - 7 Summary of Operating Results Funds From Operations 8 Dividends - All Classes of Common Shares 8 Rental and Earned Income 9 Real Estate Operating Revenue 9 Discontinued Operations 10 Interest Expense 10 Summary Balance Sheet Information Common Share Data 11 Capitalization 11 Portfolio Net Asset Value 11 Debt Information Outstanding Balances and Terms 12 Fixed vs. Variable Rate Debt 13 Property & Tenant Information Property Table 14 - 15 Tenant Concentration 16 Leasing Activity Report 16 Lease Expiration Schedule 17 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 and nine months ended September 30, 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 1.2 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 $336 million in assets under management as of September 30, 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: CONSOLIDATED BALANCE SHEETS September 30, 2007 and December 31, 2006 (in thousands, except share data)
September 30, December 31, 2007 2006 ------------------ ------------------- ASSETS (unaudited) Real estate investments at cost: Land $ 129,497 $ 124,751 Buildings 140,277 140,487 Tenant improvements 9,971 9,296 -------------------------------------- 279,745 274,534 Less accumulated depreciation and amortization (14,361) (10,628) ------------------ ------------------- 265,384 263,906 Real estate held for sale, net 22,505 - Net investment in direct financing leases held for investment 2,055 19,204 Intangible lease cost, net 13,764 16,016 Investment in merchant development funds and other affiliates 6,912 2,651 ------------------ ------------------- Net real estate investments 310,620 301,777 Cash and cash equivalents 6,785 3,415 Tenant receivables, net 4,034 4,330 Accounts receivable, net 1,259 1,772 Accounts receivable - related party 5,593 1,665 Notes receivable - related party 7,216 10,104 Deferred costs 2,285 2,045 Other assets 3,740 3,322 ------------------ ------------------- TOTAL ASSETS $ 341,532 $ 328,430 ================== =================== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Notes payable $ 154,386 $ 144,453 Notes payable, held for sale 12,928 - Accounts payable and other liabilities 6,361 9,162 Below market leases, net 3,537 3,960 Security deposits 676 668 ------------------ ------------------- TOTAL LIABILITIES 177,888 158,243 ------------------ ------------------- Minority interest 1,166 1,137 Shareholders' equity: Preferred shares, $.01 par value, 10,000,000 shares authorized, none issued - - Class A Common shares, $.01 par value, 50,000,000 shares authorized, 6,599,033 and 6,549,950 shares issued, respectively 66 65 Class B Common shares, $.01 par value, 3,000,000 shares authorized, 1,031,097 and 1,080,180 shares issued and outstanding, respectively 10 11 Class C Common shares, $.01 par value, 4,400,000 shares authorized, 4,141,140 and 4,145,531 shares issued and outstanding, respectively 41 41 Class D Common shares, $.01 par value, 17,000,000 shares authorized, 11,044,413 and 11,039,803 shares issued and outstanding, respectively 110 110 Capital in excess of par value 194,230 194,696 Accumulated distributions in excess of earnings (30,124) (23,749) Cost of treasury shares, 244,353 and 292,238 Class A shares, respectively (1,855) (2,124) ------------------ ------------------- TOTAL SHAREHOLDERS' EQUITY 162,478 169,050 ------------------ ------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 341,532 $ 328,430 ================== ===================
2 Consolidated Statements of Operations:
Quarter ended September 30, Year to date ended September 30, 2007 2006 2007 2006 ---------------- ---------------- ------------------ --------------------- Revenues: 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 costs 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, net of taxes 150 156 454 670 Gain on sales of real estate acquired for resale, net of taxes - - - 12 ---------------- ---------------- ------------------ --------------------- Income from discontinued operations 150 156 454 682 ---------------- ---------------- ------------------ --------------------- 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) ================ ================ ================== ===================== Net loss per class A common share - basic and diluted 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) ================ ================ ================== ===================== Weighted average class A common shares used to compute net loss per share, basic and diluted 6,385 6,285 6,373 6,321 ================ ================ ================== =====================
3 Segmented Statements of Operations:
Asset Advisory ---------------------------- For the three months ended September 30, Portfolio Real Estate Securities Merchant Total 2007 ($ in 000's) Operations Development Funds ------------- -------------------------- ------------------------------- Rental income $ 7,659 $ - $ - $ - $ 7,659 Real estate fee income - 1,893 - - 1,893 Construction revenues - 1,975 - - 1,975 Securities commission income - - 933 - 933 Asset management fee income - - - 334 334 ------------- ------------- ------------ --------------- --------------- Total revenue 7,659 3,868 933 334 12,794 General and administrative 413 1,407 479 (50) 2,249 Property expense 1,912 25 - - 1,937 Construction costs - 1,792 - - 1,792 Legal and professional 338 32 50 5 425 Real estate commissions - 1 - - 1 Securities commissions - - 788 - 788 Depreciation and amortization 2,016 - - - 2,016 ------------- ------------- ------------ --------------- --------------- Total expenses 4,679 3,257 1,317 (45) 9,208 Interest expense (2,140) (151) (18) - (2,309) Other income/ (expense) 431 (181) 157 171 578 Income (loss) from discontinued operations 151 (1) - - 150 ------------- ------------- ------------ --------------- --------------- Net income (loss) $ 1,422 $ 278 $ (245) $ 550 $ 2,005 ------------- ------------- ------------ --------------- ---------------
4
Asset Advisory -------------------------- For the three months ended September 30, 2006 Portfolio Real Estate Securities Merchant Total ($ in 000's) Operations Development Funds ------------- -------------------------- ----------------------------- Rental income $ 7,300 $ - $ - $ - $ 7,300 Real estate fee income - 924 - - 924 Construction revenues - 3,595 - - 3,595 Securities commission income - - 1,554 - 1,554 Asset management fee income - - - 212 212 ------------- ------------- ------------ ------------- --------------- Total revenue 7,300 4,519 1,554 212 13,585 General and administrative 229 1,302 532 52 2,115 Property expense 1,961 47 - - 2,008 Construction costs - 3,224 - - 3,224 Legal and professional 236 87 33 - 356 Real estate commissions - - - - - Securities commissions - - 1,348 - 1,348 Depreciation and amortization 2,046 - - - 2,046 ------------- ------------- ------------ ------------- --------------- Total expenses 4,472 4,660 1,913 52 11,097 Interest expense (1,712) (92) (10) - (1,814) Other income/ (expense) 592 (7) (10) 152 727 Income (loss) from discontinued operations 159 (3) - - 156 ------------- ------------- ------------ ------------- --------------- Net income (loss) $ 1,867 $ (243) $ (379) $ 312 $ 1,557 ------------- ------------- ------------ ------------- ---------------
5
Asset Advisory --------------------------- For the nine months ended September 30, Portfolio Real Estate Securities Merchant Total 2007 ($ in 000's) Operations Development Funds --------------- -------------------------- ---------------------------- Rental income $ 22,538 $ - $ - $ - $ 22,538 Real estate fee income - 3,809 - - 3,809 Construction revenues - 3,862 - - 3,862 Securities commission income - - 3,410 - 3,410 Asset management fee income - - - 930 930 --------------- ------------- ------------ -------------- ------------- Total revenue 22,538 7,671 3,410 930 34,549 General and administrative 1,118 3,874 1,330 41 6,363 Property expense 5,606 93 4 - 5,703 Construction costs - 3,521 - - 3,521 Legal and professional 909 162 112 5 1,188 Real estate commissions - 448 - - 448 Securities commissions - - 2,862 - 2,862 Depreciation and amortization 5,914 - - - 5,914 --------------- ------------- ------------ -------------- ------------- Total expenses 13,547 8,098 4,308 46 25,999 Interest expense (6,041) (415) (29) - (6,485) Other income (expense) 890 392 336 (29) 1,589 Income from discontinued operations 451 3 - - 454 --------------- ------------- ------------ -------------- ------------- Net income (loss) $ 4,291 $ (447) $ (591) $ 855 $ 4,108 --------------- ------------- ------------ -------------- -------------
6
Asset Advisory ----------------------------- For the nine months ended September 30, Portfolio Real Estate Securities Merchant Total 2006 ($ in 000's) Operations Development Funds --------------- ---------------------------- ----------------------------- Rental income $ 20,824 $ - $ - $ - $ 20,824 Real estate fee income - 3,352 - - 3,352 Construction revenues - 8,331 - - 8,331 Securities commission income - - 4,172 - 4,172 Asset management fee income - - - 556 556 --------------- -------------- ------------- --------------- ------------- Total revenue 20,824 11,683 4,172 556 37,235 General and administrative 802 3,664 1,635 133 6,234 Property expense 5,083 86 20 - 5,189 Construction costs - 7,508 - - 7,508 Legal and professional 699 186 57 - 942 Real estate commissions - 540 - - 540 Securities commissions - - 3,694 - 3,694 Depreciation and amortization 6,620 - - - 6,620 --------------- -------------- ------------- --------------- ------------- Total expenses 13,204 11,984 5,406 133 30,727 Interest expense (4,718) (341) (36) - (5,095) Other income/ (expense) 1,200 141 126 340 1,807 Income (loss) from discontinued operations 701 (19) - - 682 --------------- -------------- ------------- --------------- ------------- Net income (loss) $ 4,803 $ (520) $ (1,144) $ 763 $ 3,902 --------------- -------------- ------------- --------------- -------------
7 AmREIT Summary of Operating Results
Three Months Ended Nine Months Ended September 30, September 30, ------------------------------------------------------------- Funds From Operations: 2007 2006 2007 2006 -------------- ------------- --------------- ---------------- Income - before discontinued operations $ 1,855 $ 1,402 $ 3,654 $ 3,219 Income - from discontinued operations 150 156 454 670 Plus depreciation of real estate assets - from operations 2,022 2,034 5,922 6,624 Plus depreciation of real estate assets - from discontinued operations 8 2 22 17 Adjustments for nonconsolidated affiliates 66 42 102 111 Less gain on sale of real estate acquired for investment - - - (286) Less class B, C & D distributions (2,693) (2,909) (8,109) (8,729) -------------- ------------- --------------- ---------------- Total Funds From Operations available to class A shareholders $ 1,408 $ 727 $ 2,045 $ 1,626 ============== ============= =============== ================ Weighted Average Class A Shares Outstanding 6,385 6,285 6,373 6,321 ============== ============= =============== ================ Funds from Operations per Class A Share $ 0.22 $ 0.12 $ 0.32 $ 0.26 Dividends: Class A Common share dividends per share $ 0.12 $ 0.12 $ 0.36 $ 0.36 Class B Common share dividends per share (1) $ 0.19 $ 0.19 $ 0.57 $ 0.57 Class C Common share dividends per share (2) $ 0.17 $ 0.17 $ 0.51 $ 0.51 Class D Common share dividends per share (3) $ 0.16 $ 0.16 $ 0.48 $ 0.48
(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 are callable by the Company on a one for one basis, or $10.18 in cash at the holders option. As announced on November 1, 2007, we have elected to redeem our remaining class C common shares and will do so on December 20, 2007. (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). We have the right to force conversion of the class C common shares into Class A common shares on a one-for-one basis or to redeem the shares at a cash redemption price of $11.00 per share at the holder's option. (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 D 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). 8
Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------------- Rental and Earned Income: 2007 2006 2007 2006 --------- --------- ------------ ------------ Base minimum rent $ 5,497 $ 4,903 $ 16,072 $ 14,581 Earned income from direct financing leases 59 59 179 178 Straight line rent 106 218 416 350 Over/Under market rent 49 16 130 50 Percentage rent 140 118 165 291 Tenant reimbursements 1,782 1,986 5,397 5,374 Lease termination fees 26 - 179 - --------- --------- ------------ ------------ Total Rental and Earned Income $ 7,659 $ 7,300 $ 22,538 $ 20,824 ========= ========= ============ ============
Three Months Ended Nine Months Ended September 30, September 30, --------------------- ---------------------- Real Estate Operating Revenue: 2007 2006 2007 2006 --------- ----------- ----------- ---------- Development and construction management fees Merchant development funds and affiliates $ 125 $ 94 $ 578 $ 367 Unrelated third parties 118 27 276 30 Leasing and brokerage commissions Merchant development funds and affiliates 1,406 709 1,599 1,932 Unrelated third parties - - 696 748 Property management fees Merchant development funds and affiliates 244 94 660 275 Unrelated third parties - - - - --------- ----------- ----------- ---------- Total Real Estate Operating Revenue $ 1,893 $ 924 $ 3,809 $ 3,352 ========= =========== =========== ========== Percent attributable to merchant development funds and affiliates 94% 97% 74% 77% Percent attributable to unrelated third parties 6% 3% 26% 23%
9
Three Months Ended Nine Months Ended ----------------------------- ---------------------------- Discontinued Operations September 30, September 30, ----------------------------- ---------------------------- 2007 2006 2007 2006 ------------- --------------- -------------- ------------- Rental revenue $ 76 $ 44 $ 188 $ 151 Earned income from DFL 447 448 1,342 1,344 Gain on sale of real estate held for investment - - 5 286 Gain on sale of real estate held for resale - - - 12 ------------- --------------- -------------- ------------- Total revenues 523 492 1,535 1,793 ------------- --------------- -------------- ------------- Property expense (1) 3 4 (116) Other general and administrative (4) (3) (16) (19) Federal income tax expense 3 2 (1) 15 Legal and professional (4) (7) (20) (31) Depreciation and amortization (8) (2) (22) (17) Minority interest (42) (43) (154) (98) Interest expense (317) (286) (873) (845) ------------- --------------- -------------- ------------- Total expenses (373) (336) (1,082) (1,111) ------------- --------------- -------------- ------------- Income from discontinued operations 150 156 454 682 Basic and diluted income from discontinued operations per class A common share $ 0.02 $ 0.02 $ 0.07 $ 0.11
Three Months Ended Nine Months Ended September 30, September 30, --------------------------- ------------------------- Interest Expense: 2007 2006 2007 2006 ------------- ------------- ------------- ----------- Interest paid - floating rate $ 181 $ 66 $ 610 $ 353 Interest paid - fixed rate 2,114 1,739 5,841 4,729 Loan cost amortization 73 67 210 186 Out-of-market debt amortization (59) (58) (176) (173) ------------- ------------- ------------- ----------- Total Interest Expense $ 2,309 $ 1,814 $ 6,485 $ 5,095 ------------- ------------- ------------- -----------
10 AmREIT Summary Balance Sheet Information September 30, December 31, 2007 2006 ----------------------------- Class A Common Share Data: Closing market price $ 7.91 $ 8.33 Dividend yield 6.32% 6.00% 90-day average trading volume 8,016 16,474 Total Capitalization: Debt $ 154,386 $ 144,453 Class A common shares at market 50,266 52,127 Class B common shares as redeemed 10,497 8,998 Class C common shares as converted 45,553 45,601 Class D common shares as converted 118,948 118,899 -------------- -------------- Total Capitalization $ 379,650 $ 370,078 ============== ============== Debt to Total Capitalization 40.7% 39.0% Annual Property NOI $ 24,686 Average Property Cap Rate (1) 6.35% 6.75% Property Gross Value 388,750 365,713 Notes Receivable 7,216 7,216 Cash, Receivables, Other 28,457 28,457 ---------------------------------- Total Asset Value 424,423 401,386 Notes Payable (163,335) (163,335) Security Deposits & A/P (7,037) (7,037) ---------------------------------- Total Liabilities (170,372) (170,372) Minority Interest (2) (3,271) (3,271) Total Net Asset Value (NAV) 250,780 227,743 NAV - Non Traded Shares (3) 170,138 170,138 NAV - class A common shares (3) 80,642 57,605 NAV - Per Class A common (3) $ 12.69 $ 9.07 (1) We have raised our Average Property Cap Rates as a result of continued volatile market conditions. (2) 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. We have elected to hold these assets for sale. (3) 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. - -------------------------------------------------------------------------------- 11
Description Amount Amount Interest Rate Annual Maturity Date Outstanding Outstanding Debt 09-30-2007 12-31-2006 Service - --------------------------------------------------------------------------------------------------- Credit Facility (1) $ 16,000 $ 11,929 7.53% $ 1,204 11/4/2007 ---------------------------------- 2007 Maturities $ 16,000 $ 11,929 MacArthur Park $ 13,410 $ 13,410 6.17% $ 827 12/1/2008 ---------------------------------- 2008 Maturities $ 13,410 $ 13,410 Sugarland IHOP $ 1,122 $ 1,155 8.25% $ 138 3/1/2011 Sugar Land Plaza 2,265 2,286 7.60% 203 11/1/2011 ---------------------------------- 2011 Maturities $ 3,387 $ 3,441 AAA CTL Notes (3) $ 12,928 $ 13,265 7.72% - 7.89% $ 1,47804/2012-08/2012 5115 Buffalo Spdwy. 2,707 2,731 7.58% 241 5/11/2012 ---------------------------------- 2012 Maturities $ 15,635 $ 15,996 Cinco Ranch $ 8,194 $ 8,298 5.60% $ 601 7/10/2013 Plaza in the Park 17,318 17,538 5.60% 1,270 7/10/2013 ---------------------------------- 2013 Maturities $ 25,512 $ 25,836 Uptown Park $ 49,000 $ 49,000 5.37% $ 2,631 6/1/2015 ---------------------------------- 2015 Maturities $ 49,000 $ 49,000 Southbank - Riverwalk $ 20,000 $ 20,000 5.91% $ 1,182 6/1/2016 ---------------------------------- 2016 Maturities $ 20,000 $ 20,000 Bakery Square $ 3,772 $ 3,967 8.00% $ 571 2/10/2017 Uptown Plaza Dallas $ 19,900 $ - 5.64% $ 783 4/1/2017 ---------------------------------- 2017 Maturities $ 23,672 $ 3,967 ---------------------------------- Total Maturities (2) $ 166,616 $ 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 September 30, 2007 remain constant through maturity. (2) Total maturities above are $698 thousand and $874 thousand less than total debt as reported in our consolidated financial statements as of September 30, 2007 and December 31, 2006, respectively, due to the premium recorded on above-market debt assumed in conjunction with certain of our property acquisitions. (3) The associated assets are held for sale as of September 30, 2007. 12 Fixed vs. Variable Rate Debt: September 30, % of December 31, % of 2007 Total 2006 Total --------------------------------------------------- Variable rate $ 16,000 10.4% $ 11,929 8.3% Fixed rate 138,386 89.6% 132,524 91.7% ------------------------ -------------------------- $ 154,386 100.0% $ 144,453 100.0% 13 AmREIT Property & Tenant Information
Annualized Base Rent as of Multi-Tenant Shopping September Centers Major Tenants City State Date Acquired GLA 30, 2007 % Leased - ------------------------------------------------------------------------------------------------------- Uptown Park - Phase I Ann Taylor, Houston TX and II McCormick & Schmick's 6/1/2005 169,110 $5,215,960 99% Southbank - Riverwalk Hard Rock Cafe San Antonio TX 9/30/2005 46,673 1,511,552 100% MacArthur Park and Pad Kroger Irving TX 12/04 &12/05 Sites 237,381 3,827,651 97% Plaza in the Park Kroger Houston TX 7/1/2004 144,062 2,649,984 98% Cinco Ranch Kroger Houston TX 7/1/2004 97,297 1,228,515 99% Bakery Square Walgreens & Bank Houston TX of America 7/21/2004 34,614 851,914 100% Uptown Plaza CVS/pharmacy Houston TX 12/10/2003 28,000 1,237,769 100% Woodlands Plaza FedEx/Kinkos & The TX Rug Gallery Woodlands 6/3/1998 20,018 373,317 100% Sugarland Plaza Mattress Giant Sugarland TX 7/1/1998 16,750 349,612 100% Terrace Shops Starbucks Houston TX 12/15/2003 16,395 483,067 100% 584 N. Germantown Pkwy. Auto Zone & Memphis TN (Baptist Memorial Baptist Medical Plaza) Memorial 7/23/2002 15,000 193,903 75% Courtyard on Post Oak Verizon Wireless Houston TX 6/15/2004 13,597 477,361 100% Uptown Plaza - Dallas Grotto, Century Dallas TX Bank, Pei Wei 3/30/2006 33,840 1,619,906 100% ---------------------- Multi-Tenant Shopping Centers Total 872,737 20,020,511
Annualized Base Rent as of Single Tenant September (Ground Leases) City State Date Acquired GLA 30, 2007 % Leased - ------------------------------------------------------------------------------------------------------- CVS Corporation Houston TX 1/10/2003 13,824 $327,167 100% Darden Restaurants Peachtree GA City 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 4,439 159,979 100% Washington Mutual Houston TX 12/11/1996 3,685 98,155 100% Washington Mutual The TX Woodlands 9/23/1996 3,685 63,996 100% Woodlands Ring Road - Ground Leases The TX Woodlands 2/1/2007 66,349 667,641 100% ---------------------- Single Tenant (Ground Leases) Total 105,651 1,537,978
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Annualized Base Rent as of September 30, Single Tenant (Fee Simple) City State Date Acquired GLA 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 4,020 189,660 100% #1737 IHOP Corporation Centerville UT (5)(2) 7/25/2002 4,020 163,380 100% #4462 IHOP Corporation Memphis TN (5)(2) 8/23/2002 4,020 179,376 100% #5318 IHOP Corporation Topeka KS 9/30/1999 4,020 158,892 100% AFC, Inc. Atlanta GA 7/23/2002 2,583 119,279 100% Sunbelt Rental (1) Champaign IL 5/23/2007 - Note (1) Note (1) Advance Auto (1)(2)(3)(4) Various Various Various 21,000 Note (1) Note (1) ---------------------------- Single Tenant (Fee Simple) Total 72,163 1,375,269
Annualized Base Rent as of September 30, Single Tenant (Leasehold) City State Date Acquired GLA 2007 % Leased ----------------------------------------------------------------------------------------------------------- IHOP Corporation (5)(2) Various Various Various 60,300 $1,554,147 100% -------------------------------------- Company Total GLA % Leased 1,110,851 $24,487,905 98% ----------------------------------------------------------------------------------------------------------- Under Development (GLA represents proposed leaseable
(1) square footage). (2) Held for Sale Held in joint venture of which we are the (3) managing 50% owner. Advance Auto properties are located in MO and IL. Each of the properties has a proposed GLA of (4) 7,000 square feet. 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. We have elected to hold these properties for sale as (5) of September 30, 2007. 15 Top Tenants by revenue concentration for the nine months ended September 30, 2007: % of Total -------------------- Operating -------------------- Tenant Rental Income Revenue - ---------------------------- --------------- -------------------- Kroger $ 2,556 7.56% IHOP Corporation * 1,686 4.98% CVS/Pharmacy 845 2.50% Landry's 790 2.34% Linens 'N Things 661 1.95% Hard Rock Cafe International 513 1.52% Cosniac Restaurant Group 445 1.32% Champps Entertainment, Inc 417 1.23% Starbucks 376 1.11% McCormick & Schmicks 342 1.01% --------------- -------------------- $ 8,631 25.52% =============== ==================== * $1,342 of the IHOP Corporation revenues are related to assets which we have elected to hold for sale as of September 30, 2007. Leasing Activity for the quarter ended September 30, 2007:
Rent per sq. ft. --------------------- # of Total sq. New Rent Old Rent leases ft. % Change --------------------- --------------------- ---------- New leases 5 13,335 $ 27.32 N/A N/A Activity on Existing Leases: Lease renewals 5 18,309 $ 20.16 $17.24 16.95% Non-renewals - - N/A - N/A Expired/Cancelled leases 1 1,941 N/A 26.00 N/A
16 Lease Expirations by Year: Number of Expiration Leases Square Percent Year Expiring Footage of Total ------------------------------------------------------------ 2007 6 19,796 1.86% 2008 20 61,174 5.75% 2009 31 86,750 8.15% 2010 34 133,702 12.56% 2011 52 192,483 18.08% 2012 18 51,656 4.85% 2013 7 32,941 3.09% 2014 7 27,220 2.56% 2015 2 7,251 0.68% 2016 12 56,768 5.33% 2017 6 47,090 4.42% 2019 1 4,020 0.38% 2020 4 75,991 7.14% 2021 3 89,676 8.42% 2022 1 4,020 0.38% 2023 1 63,373 5.95% 2024 3 21,864 2.05% 2025 7 45,597 4.28% 2026 4 16,080 1.51% 2027 3 12,060 1.13% 2056 1 15,120 1.42% ------------------------------------------------------------ 223 1,064,632 17 -----END PRIVACY-ENHANCED MESSAGE-----