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, 2006

Commission File Number
0-28378

AmREIT

(Exact name of registrant as specified in its charter)

TEXAS	76-0410050
(State or other jurisdiction of Incorporation or organization)	(IRS Employer 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)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction  A.2.):

o Written communications pursuant to Rule 425 under the Securities Act  (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act  (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (7 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition

          On November 6, 2006, the Company issued a press release announcing its financial results for the third quarter ended September 30, 2006.  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 ended September 30, 2006, 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, 2006
99.2	Supplemental Financial Information

2

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 7, 2006

3

EX-99.1

Exhibit 99.1

AmREIT Reports Third Quarter Results

HOUSTON, Nov. 6 /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 third quarter and nine months ended September 30, 2006.

Third Quarter and Year-to-Date Financial Highlights:
*	Funds from Operations (FFO) available to Class A common shareholders for the third quarter 2006 were $726,000, or $0.12 per share, at the high end of the revised third quarter 2006 guidance of $0.10 to $0.12 per share.  This compares with third quarter 2005 reported FFO available to Class A common shareholders of $854,000, or $0.13 per share;
*	Net loss available to Class A common shareholders for the third quarter 2006 was $1.4 million, or ($0.22) per share compared with a net loss of $635,000, or ($0.10) per share for the same period in 2005;
*	Operating revenues for the third quarter 2006 increased 56.7% to $14.1 million compared with $9.0 million for the same period in 2005;
*	FFO available to Class A common shareholders for the nine months 2006, were $1.6 million, or $0.26 per share. This compares with nine months 2005 reported FFO available to Class A common shareholders of $1.9 million, or $0.40 per share;
*	Net loss available to Class A common shareholders for the nine months 2006 was $4.8 million, or ($0.76) per share compared with a net loss of $1.2 million, or (0.26) per share for the same period in 2005;
*	Operating revenues for the nine months 2006 increased 80.8% to $38.7 million compared with $21.4 million for the same period in 2005;
*	The Board of Trust Managers declared a quarterly dividend of $0.1242 per Class A common share for the fourth quarter 2006, which will be paid on a monthly basis;
*	Total assets owned by the merchant development funds in the Company’s asset advisory business increased to $173 million at September 30, 2006, compared with $113 million a year ago;
*	Total FFO available to all common shareholders for the third quarter 2006 was $3.6 million compared with $3.5 million for the same period in 2005. Dividends paid to all classes of common shareholders (Class A, B, C and D) were $3.7 million compared with $3.5 million for the same period of 2005;
*	Total FFO available to all common shareholders for the nine months 2006 was $10.4 million, and dividends paid to all classes of common shareholders equaled $11.1 million. This compares with the same quarter in 2005 where FFO available to all common shareholders was $8.3 million and dividends paid to all classes of common shareholders amounted to $8.1 million.

Commenting on the financial results for the quarter, Chad C. Braun, AmREIT’s Chief Financial Officer, noted, “Consistent with our announcement in mid-October, FFO for the third quarter reflected strong improvements in our portfolio of Irreplaceable Corners, offset by delays in the timing of some transactions in our real estate development and operating business until the fourth quarter. Having already closed the second largest of these expected transactions at the end of October - the sale of West Road Plaza in Houston, Texas on behalf of one of our affiliated funds - we remain confident that the balance of these transactions scheduled for completion in 2006 will close by year end.”

Portfolio of Irreplaceable Corners

As of September 30, 2006, AmREIT owned 49 properties, with approximately 89.8% of its rental income coming from properties located in major Texas metropolitan areas. Of the total portfolio, 86.5% consists of multi-tenant, grocery-anchored and lifestyle shopping centers. The remaining 13.5% comes primarily from single-tenant, parent-company-guaranteed leased properties. The portfolio generated $8.3 million in total revenue during the third quarter of 2006, up 34% compared with $6.2 million generated for the same period in 2005.

Expenses associated with AmREIT’s portfolio during the third quarter were approximately $6.5 million, comprising $2.0 million in property expenses, $2.0 million in depreciation and amortization, $2.0 million in interest expense and $469,000 in general and administrative expense. Earnings were further reduced by $2.9 million due to the allocation of dividends from the Company’s non- traded shares on a pro-rata basis based on net income contribution of the segment, resulting in a net loss to Class A common shares of $1.0 million. FFO contributions from the portfolio totaled approximately $1.0 million, or $0.16 per Class A common share, for the quarter. Overall occupancy as of September 30, 2006, was approximately 96%.

H. Kerr Taylor, Chairman and Chief Executive Officer of AmREIT, added, “The performance of our portfolio was better than we projected for the quarter with occupancy improving on both a sequential and year-over-year basis. New and renewal leasing spreads remained strong as the leasing team continues to capitalize on the excellent location, demographics and growing markets of our Irreplaceable Corners to secure exciting and productive tenants. The higher occupancy also enabled us to improve operating margins within the portfolio due to higher tenant reimbursements and leveraging of general and administrative expenses.”

Real Estate Development and Operations

AmREIT’s real estate development and operating business generated $1.3 million (including discontinued operations and net of construction expense) in total revenue during the third quarter, down 24% compared with the $1.7 million generated in the third quarter of 2005. The decrease in the real estate development and operating business is due to timing of transactional activities.

Expenses associated with this line of business for the third quarter were approximately $1.5 million, resulting in net loss to Class A common shares of $242,000. The real estate development and operating business reduced FFO available to Class A common shares by approximately $242,000, or ($0.04) per share for the quarter. This business is transactional in nature, and the timing of these contributions 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 1.1 million square feet under various stages of development. Together, this represents over $91.2 million in active development and re-development projects. Of this, 606,000 square feet is scheduled for completion in 2006.

“Despite the pushback in the timing of a few deals into the fourth quarter from the third quarter, our real estate development and operating business had a successful quarter,” Taylor added. “We closed $20 million of acquisitions for our affiliated funds, bringing the total acquisition volume to $70 million for the first nine months. We have also added to our bench strength in this business during 2006 with additional experienced staff and a new office in Dallas in order to better support our growth. This team has generated a number of new opportunities for AmREIT and our affiliated funds that, beginning with the fourth quarter and into 2007, should provide excellent returns on the investment we have made this year in enhancing that business.”

Asset Advisory Business

As of September 30, 2006, AmREIT had a combined $99 million in equity capital under management in its four actively managed income and growth funds. It is anticipated that the equity under management will increase to $120 million by year-end. For the quarter, this group generated total revenues of $1.9 million, with $1.6 million related to securities operations and securities commissions earned on sales of units in the merchant development funds and $212,000 related to recurring asset management fees and general partner interests.

For the quarter, expenses associated with this line of business were approximately $2.0 million, comprising $1.4 million in securities commission expense and $636,000 of general and administrative expense. The result was a net loss to Class A common shares of $72,000. The asset advisory group reduced FFO available to Class A common shares by approximately $29,000, or ($0.00) per share for the quarter.

Taylor concluded, “As much as we have seen strong growth in equity capital under management in the asset advisory group to date in 2006, we expect the fourth quarter and 2007 to be just as active if not more so. Over the past 21 years as both a public and private company, we have built this business into a Best of Class Sponsor with a successful track record. At current levels of assets under management, we have not yet been able to leverage the costs associated with our build-up in staffing to support the future growth of our advisory and sponsorship business, which has resulted in operating losses. However, with our more aggressive growth expectations for this group in 2007, we expect to achieve economies of scale as we begin to grow this business significantly in the very near future.”

Class B Tender Offer

On October 11, 2006, AmREIT commenced a tender offer to purchase all of its outstanding Class B common shares, which totals approximately 2.1 million shares, at a cash price of $9.25 per share. The Offer is voluntary and ends at 5:00pm Eastern Time on December 10, 2006.

The Company intends to fund the tender offer through debt, initially with its credit facility, in order to reduce its cost of capital and provide additional liquidity for the Class B shareholders. The transaction will be accretive for the Company.

Outlook for Year Ending December 31, 2006

Based on the year-to-date results, the Company is affirming its previously issued guidance for 2006. The Company anticipates that total FFO available to all common shareholders for 2006 will be $16.1 million to $16.6 million. FFO available to Class A common shareholders is expected to be in a range of $0.71 to $0.77 per Class A common share. AmREIT updates annual earnings guidance on a quarterly basis. Its expected 2006 guidance is based on the following assumptions:

The Company anticipates that its portfolio of Irreplaceable Corners will generate total revenues of approximately $31 million in 2006, a 35% annual increase over 2005. Anticipated FFO available to all common shares for 2006 from this segment is budgeted at $14.9 million to $15.1 million, or approximately 91% of total 2006 FFO.

AmREIT strives to have the portfolio cover 100% of the dividends paid to all classes of common shares. The Company’s long-term goal is to grow the portfolio activities such that the FFO generated from the portfolio will cover dividends paid to all classes of stock. For 2006, the portfolio is estimated to cover 100% of the dividends paid.

For the Company’s real estate development and operating business, AmREIT anticipates that this business will generate total 2006 revenues of approximately $8.1 million (net of construction expense), a 40% expected annual increase over 2005. Anticipated FFO available to all common shares for 2006 from this segment is budgeted at $1.9 million to $2.1 million, or approximately 12% of total 2006 budgeted FFO.

AmREIT anticipates asset management fees in 2006 will increase 66% over 2005 to approximately $820,000 as a result of increased assets under management during 2006. When combined with securities, our asset advisory segment is anticipated to reduce FFO available to all common shares for 2006 from this segment by $600,000 to $800,000 or a reduction of approximately (3%) of total 2006 FFO.

Conference Call

AmREIT will hold its quarterly conference call to discuss third quarter 2006 results Tuesday, 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 1-877-407-8031. The call will also be available for replay for 60 days by dialing 1-877-660-6853, account number 286, ID number 217513.

Supplemental Financial Information

Further details regarding AmREIT’s results of operations, properties, and tenants can be accessed at the Company’s web site at www.amreit.com.

About AmREIT

AmREIT (AMEX: AMY) is a growing real estate company that has delivered results to its investors for 21 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 September 30, 2006, AmREIT has over 1.0 million square feet of retail centers in various stages of development or in the pipeline for both our advisory group and for third parties. As of September 30, 2006, total assets were $329.7 million and the asset advisory group managed an additional $173 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 Debbie Lucas, Vice President Investor Relations & Corporate Communications or Chad Braun, Chief Financial Officer of AmREIT, at (713) 850-1400. AmREIT is online at www.amreit.com.

(Tables to Follow)

Operating Results
(in thousands, except share and per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Revenues:
Rental income from operating leases	$	7,285		$	5,132		$	20,745		$	13,525
Earned income from direct financing leases		507			507			1,522			1,522
Real estate fee income		27			58			778			352
Real estate fee income -related party		897			1,654			2,574			3,369
Construction revenues		705			388			1,645			666
Construction revenues -related party		2,890			886			6,686			1,073
Securities commission income -related party		1,554			248			4,172			519
Asset management fee income -related party		212			130			556			367
Total revenues		14,077			9,003			38,678			21,393
Expenses:
General and administrative		2,110			1,170			6,238			3,678
Property expense		2,012			1,141			5,203			2,771
Construction expense		3,224			1,197			7,508			1,499
Legal and professional		338			324			917			1,220
Real estate commissions		—			32			540			198
Securities commissions		1,355			214			3,694			449
Depreciation and amortization		2,048			1,606			6,621			3,985
Total expenses		11,087			5,684			30,721			13,800
Operating income		2,990			3,319			7,957			7,593
Other income (expense):
Interest and other income		403			358			870			514
Income from merchant development funds and other affiliates		213			75			519			188
Federal income tax expense (benefit) for taxable REIT subsidiary		88			(309	)		353			(478	)
Interest expense		(2,100	)		(1,746	)		(5,933	)		(4,722	)
Minority interest in income of consolidated joint ventures		(36	)		(42	)		(110	)		(88	)
Income before discontinued operations		1,558			1,655			3,656			3,007
Income (loss) from discontinued operations		(1	)		379			234			1,249
Gain on sale of real estate acquired for resale		—			—			12			872
Net income		1,557			2,034			3,902			5,128
Distributions paid to Class B, C and D shareholders		(2,909	)		(2,669	)		(8,729	)		(6,348	)
Net loss available to class A shareholders	$	(1,352	)	$	(635	)	$	(4,827	)	$	(1,220	)

(in thousands, except share and per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Reconciliation of Net Income before discontinued operations to Funds From Operations (“FFO”):
Income before discontinued operations	$	1,558		$	1,655		$	3,656		$	3,007
Income from discontinued operations		(1	)		379			246			2,121
Depreciation - from operations		2,036			1,468			6,625			3,560
Depreciation - from discontinued operations		—			—			16			116
Adjustments for non-consolidated affiliates		42			21			111			65
Gain on sale of real estate held for investment		—			—			(286	)		(595	)
Class B, C and D distributions		(2,909	)		(2,669	)		(8,729	)		(6,348	)
FFO available to Class A shares	$	726		$	854		$	1,639		$	1,926
Basic and Diluted Per Class A Share Data:
Loss before discontinued operations	$	(0.22	)	$	(0.16	)	$	(0.80	)	$	(0.70	)
Income from discontinued operations	$	0.00		$	0.06		$	0.04		$	0.44
Net loss	$	(0.22	)	$	(0.10	)	$	(0.76	)	$	(0.26	)
FFO	$	0.12		$	0.13		$	0.26		$	0.40
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		6,284,527			6,431,005			6,320,901			4,789,745

Market Capitalization Table

Common Shares Outstanding (9/30/06)	Number of Shares		Price		Market Equity
Class A, net of treasury shares		6,245,635	$	7.33		45,780,505
Class B		2,080,752	$	7.33		15,251,912
Class C (priced at par value)		4,148,869	$	10.00		41,488,690
Class D (priced at par value)		11,111,278	$	10.00		111,112,780
Total		23,586,534				213,633,887

Balance Sheet Highlights
(in thousands)

	September 30, 2006		December 31, 2005
		(Unaudited)
Real estate investments before accumulated depreciation	$	310,457	$	290,097
Real estate held for investment, net		262,145		241,301
Net investment in direct financing leases		19,207		19,212
Real estate held for resale, net		668		3,569
Total assets		329,734		314,971
Notes payable		136,914		114,687
Total liabilities		149,520		126,510
Minority interest		1,145		1,176
Total shareholders’ equity		179,069		187,285

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 2006 Range						Historical 12/31/05
	High			Low
Net (loss)/income available to
Class A shareholders	$	(0.53	)	$	(0.59	)	$	0.17
Depreciation and amortization		1.35			1.35			1.18
Less gain on sale of real estate		(0.05	)		(0.05	)		(0.65	)
FFO available to Class A shareholders	$	0.77		$	0.71		$	0.70

SOURCE  AmREIT
          -0-                    11/06/2006
          /CONTACT:  Debbie Lucas of AmREIT, +1-713-850-1400, or dlucas@amreit.com/
          /Web site:  http://www.amreit.com /
          (AMY)

EX-99.2

Exhibit 99.2

Supplemental Financial Information
September 30, 2006
(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 Income	9
	Real Estate Revenue Allocation	9
	Discontinued Operations	10
	Interest Expense	10
Summary Balance Sheet Information
	Common Share Data	11
	Capitalization	11
Debt Information
	Outstanding Balances and Terms	12 - 13
	Fixed vs. Variable Rate Debt	13
Property & Tenant Information
	Property Table	13 - 14
	Tenant Diversification	15
	Leasing Activity Report	15
	Lease Expiration Schedule	16

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, 2006.  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 an established real estate company that, at its core, is a value creator which has delivered results to our investors for 21 years. Our mission is to build a real estate business with complementary operations that reduce our overall sensitivity to changing market cycles.  We have developed three distinct businesses that provide earnings potential from multiple sources: a real estate development and operating business, an asset advisory business and our premium portfolio of Irreplaceable Corners™.

As a real estate development and operating company, we provide value through offering an array of services to our tenants and properties, to our asset advisory group’s portfolios and to third parties. As of September 30, 2006, the Company has over 1.1 million square feet of retail centers in various stages of development or in the pipeline for both our advisory business and for third parties.

Our asset advisory business broadens the Company’s avenues to capital and raises private equity for a series of merchant development funds.  Through these funds, we combine the skills of our asset advisory team with those of our real estate development team to actively manage a blend of value-added acquisition, redevelopment and development projects, which generate both transactional fees and recurring management fees.

AmREIT’s institutional-grade portfolio of Irreplaceable Corners, our most recognized business, provides a foundation to our FFO growth through a steady stream of rental income. We focus on the acquisition and development of premier retail properties in high-traffic, densely populated high-income areas to hold for long-term value. These properties are primarily high-end grocery anchored and lifestyle shopping centers leased to well-known national and regional tenants.

Since AmREIT listed its class A shares on the AMEX in July 2002, our total assets have grown from $48 million to $330 million and equity within our asset advisory group has grown from $15 million to $99 million.

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

Consolidated Balance Sheets:

	September 30, 2006			December 31, 2005
	(unaudited)
ASSETS
Real estate investments at cost:
Land	$	122,088		$	112,784
Buildings		140,362			127,094
Tenant improvements		9,130			7,366
		271,580			247,244
Less accumulated depreciation and amortization		(9,435	)		(5,943	)
		262,145			241,301
Real estate held for sale, net		668			3,569
Net investment in direct financing leases held for investment		19,207			19,212
Intangible lease cost, net		16,822			17,761
Investment in merchant development funds and other affiliates		2,180			2,311
Net real estate investments		301,022			284,154
Cash and cash equivalents		2,577			5,915
Tenant receivables		3,957			3,132
Accounts receivable, net		1,313			1,807
Accounts receivable - related party		2,405			4,158
Notes receivable - related party		12,988			11,232
Deferred costs		1,919			1,487
Other assets		3,553			3,086
TOTAL ASSETS	$	329,734		$	314,971
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Notes payable	$	136,914		$	114,687
Accounts payable and other liabilities		7,862			8,232
Below market leases, net		4,103			2,940
Security deposits		641			651
TOTAL LIABILITIES		149,520			126,510
Minority interest		1,145			1,176
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, 6,547,175 and 6,479,278 shares issued, respectively		65			65
Class B Common shares, $.01 par value, 3,000,000 shares authorized, 2,080,752 and 2,148,649 shares issued, respectively		21			22
Class C Common shares, $.01 par value, 4,400,000 shares authorized, 4,148,869 and 4,119,923 shares issued, respectively		41			41
Class D Common shares, $.01 par value, 17,000,000 shares authorized, 11,111,278 and 11,035,482 shares issued, respectively		111			110
Capital in excess of par value		204,924			204,331
Accumulated distributions in excess of earnings		(23,921	)		(16,736	)
Cost of treasury shares, 301,540 and 77,741 Class A shares, respectively		(2,172	)		(548	)
TOTAL SHAREHOLDERS’ EQUITY		179,069			187,285
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	329,734		$	314,971

2

Consolidated Statements of Operations:

	Quarter ended September 30,						Year to date September 30,
	2006			2005			2006			2005
Revenues:
Rental income from operating leases	$	7,285		$	5,132		$	20,745		$	13,525
Earned income from direct financing leases		507			507			1,522			1,522
Real estate fee income		27			58			778			352
Real estate fee income - related party		897			1,654			2,574			3,369
Construction revenues		705			388			1,645			666
Construction revenues - related party		2,890			886			6,686			1,073
Securities commission income - related party		1,554			248			4,172			519
Asset management fee income - related party		212			130			556			367
Total revenues		14,077			9,003			38,678			21,393
Expenses:
General and administrative		2,110			1,170			6,238			3,678
Property expense		2,012			1,141			5,203			2,771
Construction costs		3,224			1,197			7,508			1,499
Legal and professional		338			324			917			1,220
Real estate commissions		—			32			540			198
Securities commissions		1,355			214			3,694			449
Depreciation and amortization		2,048			1,606			6,621			3,985
Total expenses		11,087			5,684			30,721			13,800
Operating income		2,990			3,319			7,957			7,593
Other income (expense):
Interest and other income		403			358			870			514
Income from merchant development funds and other affiliates		213			75			519			188
Federal income tax (expense) benefit for taxable REIT subsidiary		88			(309	)		353			(478	)
Interest expense		(2,100	)		(1,746	)		(5,933	)		(4,722	)
Minority interest in income of consolidated joint ventures		(36	)		(42	)		(110	)		(88	)
Income before discontinued operations		1,558			1,655			3,656			3,007
Income from discontinued operations		(1	)		379			234			1,249
Gain on sales of real estate acquired for resale		—			—			12			872
Income from discontinued operations		(1	)		379			246			2,121
Net income		1,557			2,034			3,902			5,128
Distributions paid to class B, C and D shareholders		(2,909	)		(2,669	)		(8,729	)		(6,348	)
Net loss available to class A shareholders	$	(1,352	)	$	(635	)	$	(4,827	)	$	(1,220	)
Net (loss) income per class A common share - basic and diluted
Loss before discontinued operations	$	(0.22	)	$	(0.16	)	$	(0.80	)	$	(0.70	)
Income from discontinued operations		(0.00	)		0.06			0.04			0.44
Net loss	$	(0.22	)	$	(0.10	)	$	(0.76	)	$	(0.26	)
Weighted average class A common shares used to compute net (loss) income per share, basic and diluted		6,285			6,431			6,321			4,790

3

Segmented Statements of Operations:

For the nine months ended September 30, 2006	Portfolio			Real Estate Development & Operations			Asset Advisory Business					Eliminations		Total
							Securities Operations			Merchant Development Funds
Rental income	$	22,251		$	16		$	—		$	—	$	—	$	22,267
Securities commission income		—			—			4,172			—		—		4,172
Real estate fee income		—			3,352			—			—		—		3,352
Construction revenues		—			8,331			—			—		—		8,331
Other income		—			—			—			556		—		556
Total revenue		22,251			11,699			4,172			556		—		38,678
General and administrative		822			3,649			1,634			133		—		6,238
Property expense		5,089			94			20			—		—		5,203
Construction costs		—			7,508			—			—		—		7,508
Legal and professional		713			147			57			—		—		917
Real estate commissions		—			540			—			—		—		540
Securities commissions		—			—			3,694			—		—		3,694
Depreciation and amortization		6,620			1			—			—		—		6,621
Total expenses		13,244			11,939			5,405			133		—		30,721
Interest expense		(5,542	)		(355	)		(36	)		—		—		(5,933	)
Other income/ (expense)		1,057			110			125			340		—		1,632
Income (loss) from discontinued operations		290			(44	)		—			—		—		246
Net income (loss)	$	4,812		$	(529	)	$	(1,144	)	$	763	$	—	$	3,902

4

For the nine months ended September 30, 2005	Portfolio			Real Estate Development & Operations			Asset Advisory Business						Eliminations			Total
							Securities Operations			Merchant Development Funds
Rental income	$	15,047		$	—		$	—		$	—		$	—		$	15,047
Securities commission income		—			—			9,705			—			(9,186	)		519
Real estate fee income		—			3,721			—			—			—			3,721
Construction revenues		—			1,739			—			—			—			1,739
Other income		—			—			—			367			—			367
Total revenue		15,047			5,460			9,705			367			(9,186	)		21,393
General and administrative		994			2,454			2,185			168			(2,123	)		3,678
Property expense		2,720			51			—			—			—			2,771
Construction costs		—			1,499			—			—			—			1,499
Legal and professional		909			225			85			1			—			1,220
Real estate commissions		—			198			—			—						198
Securities commissions		—			—			7,513			—			(7,064	)		449
Depreciation and amortization		3,985			—			—			—			—			3,985
Total expenses		8,608			4,427			9,783			169			(9,187	)		13,800
Interest expense		(4,531	)		(95	)		(67	)		(29	)		—			(4,722	)
Other income/ (expense)		164			(21	)		(43	)		36			—			136
Income from discontinued operations		1,595			526			—			—			—			2,121
Net income (loss)	$	3,667		$	1,443		$	(188	)	$	205		$	1		$	5,128

5

Expiration Year	Number of Leases Expiring		Square Footage		Percent of Total
2006		1		1,400		0.11	%
2007		15		35,369		2.84	%
2008		22		67,791		5.45	%
2009		32		77,939		6.27	%
2010		32		130,919		24.57	%
2011		52		193,102		15.53	%
2012		7		26,274		3.77	%
2013		6		25,373		2.04	%
2014		7		27,287		2.19	%
2015		1		3,000		0.24	%
2016		10		49,583		3.99	%
2019		1		4,020		3.06	%
2020		4		75,991		6.11	%
2021		4		86,806		6.98	%
2022		1		4,020		0.32	%
2023		1		63,373		5.10	%
2024		3		21,864		5.38	%
2025		6		32,100		2.58	%
2026		4		16,080		1.29	%
2027		3		12,060		0.97	%
2056		1		15,120		1.21	%
Totals		213		969,471		100.00	%

6

							Asset Advisory Business
For the three months ended September 30, 2005	Portfolio			Real Estate Development & Operations			Securities Operations			Merchant Development Funds			Eliminations			Total
Rental income	$	5,638		$	—		$	—		$	—		$	—		$	5,638
Securities commission income		—			—			3,909			—			(3,660	)		249
Real estate fee income		—			1,712			—			—			—			1,712
Construction revenues		—			1,274			—			—			—			1,274
Other income		—			—			—			130			—			130
Total revenue		5,638			2,986			3,909			130			(3,660	)		9,003
General and administrative		274			901			763			84			(852	)		1,170
Property expense		1,125			16			—			—			—			1,141
Construction costs		—			1,197			—			—			—			1,197
Legal and professional		289			28			7			—			—			324
Real estate commissions		—			32			—			—			—			32
Securities commissions		—			—			3,022			—			(2,808	)		214
Depreciation and amortization		1,606			—			—			—			—			1,606
Total expenses		3,294			2,174			3,792			84			(3,660	)		5,684
Interest expense		(1,554	)		(96	)		(67	)		(29	)		—			(1,746	)
Other income/ (expense)		257			(163	)		(27	)		15			—			82
Income (loss) from discontinued operations		298			81			—			—			—			379
Net income (loss)	$	1,345		$	634		$	23		$	32		$	—		$	2,034

7

AmREIT
Summary of Operating Results

	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Funds From Operations:
Income – before discontinued operations	$	1,558		$	1,655		$	3,656		$	3,007
(Loss) Income – from discontinued operations		(1	)		379			246			2,121
Plus depreciation of real estate assets – from operations		2,036			1,468			6,625			3,560
Plus depreciation of real estate assets – from discontinued operations		—			—			16			116
Adjustments for nonconsolidated affiliates		42			21			111			65
Less gain on sale of real estate assets acquired for investment		—			—			(286	)		(595	)
Less class B, C & D distributions		(2,909	)		(2,669	)		(8,729	)		(6,348	)
Total Funds From Operations available to class A shareholders	$	726		$	854		$	1,639		$	1,926
Weighted Average Class A Shares Outstanding		6,285			6,431			6,321			4,790
Funds from Operations per Class A Share	$	0.12		$	0.13		$	0.26		$	0.40
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 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).

8

	Three Months Ended September 30,				Nine Months Ended September 30,
	2006		2005		2006		2005
Rental and Earned Income:
Base minimum rent	$	4,947	$	3,895	$	14,680	$	10,127
Earned income from direct financing leases		507		507		1,522		1,522
Straight line rent		218		98		350		246
Over/Under market rent		16		57		50		187
Percentage rent		118		—		291		84
Tenant reimbursements		1,986		1,082		5,374		2,881
Total Rental and Earned Income	$	7,792	$	5,639	$	22,267	$	15,047

	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Real Estate Operating Revenue:
Development and construction management fees
Merchant development funds and affiliates	$	94		$	767		$	367		$	1,060
Unrelated third parties		27			10			30			30
Leasing and brokerage commissions
Merchant development funds and affiliates		709			854			1,932			2,226
Unrelated third parties		—			48			748			322
Property management fees
Merchant development funds and affiliates		94			33			275			83
Unrelated third parties		—			—			—			—
Total Real Estate Operating Revenue	$	924		$	1,712		$	3,352		$	3,721
Percent attributable to merchant development funds and affiliates		97	%		97	%		77	%		91	%
Percent attributable to unrelated third parties		3	%		3	%		23	%		9	%

9

	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Discontinued operations:
Rental revenue and earned income from DFL	$	—		$	481		$	52		$	1,548
Gain on sale of real estate held for investment		—			—			286			595
Interest and other income		—			—			—			146
Gain on sale of real estate held for resale		—			—			12			872
Total revenues		—			481			350			3,161
Property expense		7			(24	)		(101	)		(177	)
General and administrative		(2	)		(1	)		(14	)		(9	)
Federal income tax expense		5			(11	)		22			(174	)
Legal and professional		(24	)		(1	)		(56	)		(8	)
Depreciation and amortization		—			—			(16	)		(116	)
Minority interest		13			(10	)		68			(402	)
Interest expense		—			(55	)		(7	)		(154	)
Total expenses		(1	)		(102	)		(104	)		(1,040	)
Income (loss) from discontinued operations		(1	)		379		$	246		$	2,121
Basic and diluted income (loss) from discontinued operations per class A common share	$	—		$	0.06		$	0.04		$	0.44

	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Interest Expense:
Interest paid – floating rate	$	66		$	1		$	353		$	618
Interest paid – fixed rate		2,025			1,739			5,567			4,102
Loan cost amortization		67			62			186			171
Out-of-market debt amortization		(58	)		(56	)		(173	)		(169	)
Total Interest Expense	$	2,100		$	1,746		$	5,933		$	4,722

10

AmREIT
Summary Balance Sheet Information

	September 30, 2006			December 31, 2005
Class A Common Share Data:
Closing market price	$	7.33		$	6.90
Dividend yield		6.82	%		7.24	%
90-day average trading volume		10,824			25,095
Total Capitalization:
Debt	$	136,914		$	114,687
Class A common shares at market		45,781			44,171
Class B common shares as converted		15,252			14,826
Class C common shares as converted		45,638			45,319
Class D common shares as converted		119,668			118,852
Total Capitalization	$	363,252		$	337,855
Debt to Total Capitalization		37.7	%		33.9	%

11

AmREIT
Debt Information

Description	Amount Outstanding 09-30-2006		Amount Outstanding 12-31-2005		Interest Rate			Annual Debt Service		Maturity Date
Credit Facility (1)	$	4,031	$	—		6.93	%	$	279		11/4/2007
2007 Maturities	$	4,031	$	—
MacArthur Park	$	13,410	$	13,410		6.17	%	$	827		12/1/2008
2008 Maturities	$	13,410	$	13,410
Merger Notes (2)	$	—	$	760		5.47	%	$	43		7/23/2010
2010 Maturities	$	—	$	760
Sugarland IHOP	$	1,165	$	1,196		8.25	%	$	138		3/1/2011
Sugar Land Plaza		2,293		2,313		7.60	%		203		11/1/2011
2011 Maturities	$	3,458	$	3,509
Albuquerque IHOP	$	676	$	692		7.82	%	$	75		4/24/2012
Baton Rouge IHOP		1,116		1,143		7.82	%		124		4/24/2012
Beaverton IHOP		792		811		7.82	%		88		4/16/2012
Charlottesville IHOP		563		576		7.82	%		62		4/24/2012
El Paso #1934 IHOP		679		695		7.82	%		75		4/16/2012
Rochester IHOP		849		870		7.82	%		94		4/16/2012
Shawnee IHOP		670		686		7.82	%		74		4/18/2012
5115 Buffalo Spdwy.		2,739		2,761		7.58	%		241		5/11/2012
Salem IHOP		556		567		7.82	%		61		5/17/2012
Springfield IHOP		922		944		7.82	%		102		6/21/2012
Roanoke IHOP		639		654		7.89	%		71		7/26/2012
Centerville IHOP		1,119		1,145		7.89	%		124		7/26/2012
Memphis #4462 IHOP		1,209		1,237		7.89	%		134		7/19/2012
Alexandria IHOP		645		660		7.89	%		71		7/19/2012
El Paso #1938 IHOP		808		826		7.89	%		89		8/23/2012
La Verne IHOP		673		688		7.89	%		74		8/23/2012
Memphis #4482 IHOP		701		717		7.89	%		77		8/23/2012
Parker IHOP		755		772		7.89	%		83		8/23/2012
2012 Maturities	$	16,111	$	16,444
Cinco Ranch	$	8,332	$	8,430		5.60	%	$	601		7/10/2013
Plaza in the Park		17,609		17,817		5.60	%		1,270		7/10/2013
2013 Maturities	$	25,941	$	26,247
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	%	$	591		6/1/2016
2016 Maturities	$	20,000	$	—
Bakery Square	$	4,030	$	4,211		8.00	%	$	571		2/10/2017
2017 Maturities	$	4,030	$	4,211
Total Maturities (3)	$	135,981	$	113,581

(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, 2006 remain constant through maturity.

(2) The Merger Notes were paid off during the quarter ended March 31, 2006.

(3) Total maturities above are $933 thousand and $1.1 million less than total debt as reported in our consolidated financial statements as of September 30, 2006 and December 31, 2005, respectively, due to the premium recorded on above-market debt assumed in conjunction with certain of our property acquisitions.

12

Fixed vs. Variable Rate Debt:

	September 30, 2006		% of Total			December 31, 2005		% of Total
Variable rate	$	4,031		2.9	%	$	—		0.0	%
Fixed rate		132,883		97.1	%		114,687		100.0	%
	$	136,914		100.0	%	$	114,687		100.0	%

AmREIT
Property & Tenant Information

Multi-Tenant Shopping Centers	Major Tenants	City	State	Date Acquired	GLA		Annualized Base Rent as of September 30, 2006		% Leased
Uptown Park - Phase I and II	Ann Taylor, McCormick & Schmick’s	Houston	TX	6/1/2005		169,110	$	4,526,540		92	%
Southbank - Riverwalk	Hard Rock Café	San Antonio	TX	9/30/2005		46,673		1,434,915		100	%
MacArthur Park and Pad Sites	Kroger	Irving	TX	12/04 &12/05		237,381		3,832,969		96	%
Plaza in the Park	Kroger	Houston	TX	7/1/2004		139,971		2,504,631		97	%
Cinco Ranch	Kroger	Houston	TX	7/1/2004		97,302		1,270,297		100	%
Bakery Square	Walgreens & Bank of America	Houston	TX	7/21/2004		34,614		849,460		100	%
Uptown Plaza	CVS/pharmacy	Houston	TX	12/10/2003		28,000		1,236,646		90	%
Woodlands Plaza	FedEx/Kinkos & Rug Gallery	The Woodlands	TX	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		436,844		93	%
584 N. Germantown Pkwy. (Baptist Memorial Medical Plaza)	Auto Zone & Baptist Memorial	Memphis	TN	7/23/2002		15,000		194,026		75	%
Courtyard on Post Oak	Verizon Wireless	Houston	TX	6/15/2004		13,597		477,361		100	%
Uptown Plaza - Dallas	Grotto, Century Bank, Pei Wei	Dallas	TX	3/30/2006		38,872		1,436,881		86	%
Multi-Tenant Shopping Centers Total						873,683		18,923,499

Single Tenant (Ground Leases)	City	State	Date Acquired	GLA		Annualized Base Rent as of September 30, 2006			% 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	%
Comerica Bank	Houston	TX	4/30/2004		4,277		Note	(6)		100	%
Washington Mutual	Houston	TX	12/11/1996		3,685		98,160			100	%
Washington Mutual	The Woodlands	TX	9/23/1996		3,685		61,060			100	%
Single Tenant (Ground Leases) Total					43,579		862,427

13

Single Tenant (Fee Simple)	City	State	Date Acquired	GLA		Annualized Base Rent as of September 30, 2006			% 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		189,252			100	%
#1737 IHOP Corporation (5)	Centerville	UT	7/25/2002		4,020		162,864			100	%
#4462 IHOP Corporation (5)	Memphis	TN	8/23/2002		4,020		179,148			100	%
#5318 IHOP Corporation	Topeka	KS	9/30/1999		4,020		158,472			100	%
AFC, Inc.	Atlanta	GA	7/23/2002		2,583		119,279			100	%
Advance Auto (1)(2)(3)(4)	Various	Various	Various		21,000		Note	(1)		Note	(1)
Single Tenant (Fee Simple) Total					72,163		1,373,697

Single Tenant (Leasehold)	City	State	Date Acquired		GLA		Annualized Base Rent as of September 30, 2006		% Leased
IHOP Corporation (5)	Various	Various		Various		60,300	$	1,554,444		100	%
Company Total GLA % Leased						1,049,725	$	22,714,070		96	%

(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.
(6)	This property is 100% leased; however, rent does not commence until after September 30, 2006.

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Top Tenants by revenue concentration for the nine months ended September 30, 2006:

Tenant	Rental Income		% of Total Operating Revenue
Kroger	$	2,165		5.60	%
IHOP Corporation		1,687		4.36	%
CVS/pharmacy		709		1.83	%
Linens ’N Things		487		1.26	%
Landry’s		484		1.25	%
Champps Entertainment, Inc.		429		1.11	%
Hard Rock Café International		411		1.06	%
Cosniac Restaurant Group		376		0.97	%
Golden Corral Corporation		350		0.90	%
McCormick & Schmicks		349		0.90	%
Total	$	7,447		19.25	%

Leasing Activity for the quarter ended September 30, 2006:

					Rent per sq. ft.
	# of leases		Total sq. ft.		New Rent		Old Rent		% Change
New leases		3		8,075		35.02		N/A		N/A
Activity on Existing Leases:
Lease renewals		4		8,526		28.43		26.85		5.86	%
Non-renewals		2		2,795		N/A		26.01		N/A
Expired/Cancelled leases		1		1,937		N/A		35.00		N/A

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Lease Expirations by Year:

Expiration Year	Number of Leases Expiring		Square Footage		Percent of Total
2006		1		1,400		0.11	%
2007		15		35,369		2.84	%
2008		22		67,791		5.45	%
2009		32		77,939		6.27	%
2010		32		130,919		24.57	%
2011		52		193,102		15.53	%
2012		7		26,274		3.77	%
2013		6		25,373		2.04	%
2014		7		27,287		2.19	%
2015		1		3,000		0.24	%
2016		10		49,583		3.99	%
2019		1		4,020		3.06	%
2020		4		75,991		6.11	%
2021		4		86,806		6.98	%
2022		1		4,020		0.32	%
2023		1		63,373		5.10	%
2024		3		21,864		5.38	%
2025		6		32,100		2.58	%
2026		4		16,080		1.29	%
2027		3		12,060		0.97	%
2056		1		15,120		1.21	%
Totals		213		969,471		100.00	%

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