AmREIT Announces Record Yearend Results.Business Editors HOUSTON--(BUSINESS WIRE)--March 17, 2004 -- Earnings per share of $0.02 for 2003 -- Adjusted FFO FFO See: Funds from operations up 29 percent to $0.54 per share for 2003 -- Total assets up 38 percent to $101 million AmREIT (AMEX AMEX See: American Stock Exchange :AMY A`my´ n. 1. A friend. ), a Houston-based real estate investment trust, announced record results on strong growth for 2003. For the year, AmREIT's net income (loss) per class A common share ("EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ") was $0.02 compared to a loss of ($0.62) for 2002. The adjusted EPS for 2003 and 2002, before the adjustment for non-cash deferred merger expenses, was $0.35 and $0.15, respectively. Funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. (FFO) for the fourth quarter were $(0.16) per class A share, compared with a $0.02 per share for the fourth quarter of 2002. AmREIT's FFO for the year was $0.22 per class A share compared with FFO of ($0.34) in 2002. A reconciliation of net income to FFO is included in the financial tables accompanying this press release. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of information is not applicable due to the anit-dilutive nature of the common class B and class C shares. AmREIT's EPS for the fourth quarter of 2003 was a net loss of ($0.13) compared to a net loss of ($0.06) per share for the fourth quarter of last year. The loss posted during the fourth quarter of 2003 was due to a $0.9 million charge to earnings for a non-cash deferred merger expense. The adjusted EPS for the quarter before this non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. was $0.19. The company incurred non-cash deferred merger costs of $0.9 million and $1.9 million in 2003 and 2002, respectively, related to the purchase of the company's advisor. FFO adjusted for this non-cash deferred merger cost was $0.54 per share in 2003, in line with management's expected range of $0.54 to $0.56 and 29 percent higher than the adjusted FFO of $0.42 per share announced for 2002. Properties owned increased 38 percent to $101 million, and assets managed under the company's retail limited partnerships increased 100 percent to $30 million for the year. "Eighteen months ago we merged three of our affiliated investment funds Noun 1. investment funds - money that is invested with an expectation of profit investment assets - anything of material value or usefulness that is owned by a person or company into AmREIT and listed our self-managed REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). on the American Stock Exchange American Stock Exchange (AMEX) Stock exchange in the U.S. Originally known as “the Curb,” it began as an outdoor marketplace in New York City c. 1850. It moved indoors to its present location in the Wall Street area in 1921. , embarking on our journey from good to great," said Kerr Taylor, AmREIT's president and chief executive officer. "That provided us with a unique business structure and created a platform for growth by bringing in-house three synergistic synergistic /syn·er·gis·tic/ (sin?er-jis´tik) 1. acting together. 2. enhancing the effect of another force or agent. syn·er·gis·tic adj. 1. businesses to support our REIT: a real estate operating and development business, a securities business, and a retail partnership business. Since going public in July 2002, we have doubled our asset portfolio, and we expect to repeat that growth pattern over the next 12 to 18 months." Operational Highlights -- During 2003 AmREIT purchased or developed $27 million in "irreplaceable corners": premium retail frontage properties in high-traffic, highly populated pop·u·late tr.v. pop·u·lat·ed, pop·u·lat·ing, pop·u·lates 1. To supply with inhabitants, as by colonization; people. 2. areas. -- During 2003, AmREIT, through its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. AmREIT Securities Company, raised $15 million for its affiliated retail limited partnerships and $14 million from the issuance of its class C common shares. -- In 2003 the company continued its efforts of divesting of non-core properties and replacing them with "irreplaceable corners." The properties sold during 2003 resulted in a net profit of $0.3 million. -- On March 2, 2004, Footstar declared bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most and subsequently announced that it intends to close all of its Just For Feet locations. AmREIT owns two Just For Feet locations: Baton Rouge, Louisiana For the Canadian restaurant, see . Baton Rouge (from the French bâton rouge), pronounced /ˈbætn ˈɹuːʒ/ in English, and and Tucson, Arizona Tucson (pronounced /ˈtusɑn/, Spanish: Tucsón [tuk'son] . Rental income and occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal lost from these two properties represent approximately 5.6% of 2003 total revenue. The company does not anticipate that this vacancy VACANCY. A place which is empty. The term is principally applied to cases where an office is not filled. 2. By the constitution of the United States, the president has the power to fill up vacancies that may happen during the recess of the senate. will have any negative impact on projected AFFO AFFO Adjusted Funds From Operation or dividends in 2004. -- In line with the liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy strategy of AmREIT's retail limited partnerships, AmREIT Opportunity Fund commenced selling its properties in September of 2002 and anticipates completing liquidation during 2004. The profit participation realized by AmREIT (through its general and limited partner interests) from the liquidation of the AmREIT Opportunity Fund and operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. from other retail limited partnerships contributed to revenue and earnings during 2003. Outlook for 2004 In 2004, management expects to raise $50 to $60 million through the capital markets to support an anticipated 100 percent increase in asset growth over the next 12 to 18 months. This growth is expected to result in adjusted EPS (adjusted for non-cash deferred merger costs expected to be $1.9 million in 2004) in the range of $0.20 to $0.22 cents per class A share. Management expects FFO adjusted for certain non-cash deferred merger costs (adjusted FFO), for the calendar year of 2004 of between $0.62 and $0.64 per class A share. This represents an increase in adjusted FFO of between 15 and 19 percent when compared to adjusted FFO of $0.54 per class A share for 2003. AmREIT updates earnings guidance on a quarterly basis. Conference Call AmREIT will hold its first quarterly conference call to discuss fourth quarter and yearend results Thursday, March 18, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). The dial-in number for the call is 800-884-5695, passcode AmREIT. A live Web cast of the call can be accessed on the investor relations Investor relations The process by which the corporation communicates with its investors. page of AmREIT's Web site at www.amreit.com. The call will also be available for replay for 30 days by dialing 888-286-8010, passcode 58349604, or by going to the investor relations events page of the company's Web site. About AmREIT AmREIT, a self-managed real estate investment firm, has been acquiring, developing, and managing high quality commercial retail real estate to generate monthly income and growth opportunities for investors for more than 19 years. A rapidly growing publicly traded company publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. , AmREIT is known for its ownership of "irreplaceable corners" -- premier retail frontage properties in high-traffic, highly populated areas. AmREIT also creates retail limited partnerships, offered to accredited to attribute something to him; as, Mr. Clay was accredited with these views; they accredit him with a wise saying s>. See also: Accredit investors through the financial planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against community. These retail partnerships create value through actively acquiring and developing high quality free standing and shopping center shopping center, a concentration of retail, service, and entertainment enterprises designed to serve the surrounding region. The modern shopping center differs from its antecedents—bazaars and marketplaces—in that the shops are usually amalgamated into properties, leased to trusted names such as Starbucks, Walgreens, and Washington Mutual “WaMu” redirects here. For the Washington, DC radio station, see WAMU. Washington Mutual (or WaMu; NYSE: WM) is the United States' largest savings and loan association. , to create the potential for increasing income and capital appreciation by selling the properties within a defined time horizon. In addition to historical information, this press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. under the federal securities law. These statements are based on current expectations, estimates and projections about the industry and markets in which AmREIT operates, management's beliefs and assumptions made by management. Past performance is not indicative of future returns. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. This press release does not constitute an offer to sell, or the solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual of an offer to buy any public or private securities from the Company. The purchase of any securities may only be made pursuant to a prospectus or Private Offering Memorandum Offering Memorandum A legal document stating the objectives, risks, and terms of investment involved with a private placement. Notes: The private placement of hedge funds necessitates the issue of memorandums. . A copy of any available prospectus or Private Offering Memorandum and the related subscription documents are available to qualified potential investors on request. For more information, call Jennifer Tweeton, Vollmer Public Relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most , at (713) 970-2100, or Chad Chad (chăd, chäd), Fr. Tchad, officially Republic of Chad, republic (2005 est. pop. 9,826,000), 495,752 sq mi (1,284,000 sq km), N central Africa. Braun, AmREIT, 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 Twelve Months Ended
December 31, December 31,
Revenues: 2003 2002 2003 2002
--------- --------- ---------- ----------
(Unaudited)
Rental income from
operating leases $1,390 $1,126 $4,966 $3,386
Earned income from direct
financing leases 668 584 2,619 1,807
Real estate fee income 320 239 1,031 1,223
Gain on sale of real
estate acquired for
resale 550 37 787 -
Securities commission
income 1,646 348 2,958 847
Asset management fee
income 71 33 240 252
Interest and other income 3 2 8 4
--------- --------- ---------- ----------
Total Revenues 4,648 2,369 12,609 7,519
Expenses:
General operating and
administrative 1,529 907 3,937 2,802
Legal and professional 302 369 881 679
Securities commissions 1,270 268 2,288 653
Depreciation and
amortization 218 157 836 611
Deferred merger costs 915 - 915 1,904
--------- --------- ---------- ----------
Total Expenses 4,234 1,701 8,857 6,649
Operating Income 414 668 3,752 870
Income from non-consolidated
affiliates 220 134 312 417
Federal income tax expense (237) 29 (237) (61)
Interest expense (611) (592) (2,354) (1,775)
Minority interest in income
of consolidated joint
ventures (50) (1) (178) (308)
--------- --------- ---------- ----------
Income (loss) before
discontinued operations (264) 238 1,295 (857)
Income from discontinued
operations 185 77 391 246
Gain (loss) on sales of real
estate acquired for
investment 312 (48) 312 (48)
--------- --------- ---------- ----------
Income from discontinued
operations 497 29 703 198
Net income (loss) 233 267 1,998 (659)
Distributions paid to class B
and C shareholders (593) (441) (1,943) (865)
--------- --------- ---------- ----------
Net income (loss) available
to class A shareholders $(360) $(174) $55 $(1,524)
Operating Results - Continued
(in thousands, except share and per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
---------- ---------- ---------- ----------
(Unaudited)
Reconciliation of Net
Income (Loss) to Funds
From Operations ("FFO"):
Net income (loss) - before
discontinued operations (264) 238 1,295 (857)
Net income from
discontinued operations 497 29 703 198
Plus depreciation of real
estate assets - from
operations 217 153 829 575
Plus depreciation of real
estate assets - from
discontinued operations - 14 30 55
Less (gain) loss on sale of
real estate assets
acquired for investment (312) 48 (312) 48
Less class B and C
distributions (593) (441) (1,943) (865)
---------- ---------- ---------- ----------
FFO available to class A
Shares (455) 41 602 (846)
Basic and Diluted Per Share
Data:
Net income per class A
common share - basic and
diluted:
Loss before discontinued
operations (0.31) (0.07) (0.23) (0.70)
Income from discontinued
operations 0.18 0.01 0.25 0.08
---------- ---------- ---------- ----------
Net income (loss) (0.13) (0.06) 0.02 (0.62)
Weighted average common
shares used to compute
net income per share,
basic and diluted 2,823,850 2,745,667 2,797,263 2,469,725
Balance Sheet Highlights
(in Thousands)
As of December 31,
2003 2002
---------------------
Real estate held for investment, net $68,447 $45,843
Net investment in direct financing leases 22,046 23,405
Real estate held for re-sale, net 4,384 -
Total assets 101,277 73,976
Notes payable 48,485 33,586
Total liabilities 51,684 34,959
Minority interest 847 811
Total shareholders' equity 48,746 38,206
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 Equity REIT A Real Estate Investment Trust that assumes ownership status in the property it invests in enabling investors of the REIT to earn dividends on rental income from the property and appreciation in property resale. Antithesis of a Mortgage REIT. . The National Association of Real Estate Investment Trusts ("NAREIT NAREIT National Association of Real Estate Investment Trusts ") defines FFO as net income computed in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See 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 base FFO in accordance with this definition. AmREIT adjusts its FFO calculation by adding back non-cash charges to earnings related to the issuance of stock in conjunction with the payment of deferred merger costs, resulting in its adjusted FFO. The Company considers FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions and excluding depreciation, FFO is a helpful tool that can assist in the comparison of the operating performance of a company's real estate between periods, or as compared to different companies. FFO is not defined by GAAP and should not be considered as an alternative to net income as an indication of our operating performance or to net cash provided by operating activities as a measure of our liquidity. FFO and adjusted 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 2004
Range Historical
High Low 12/31/03
Net (loss) income available to class A
shareholders ($0.38) ($0.40) $ 0.02
Depreciation and amortization 0.42 0.42 0.30
Less gain on sale of real estate - - (0.11)
======== ======== ==========
FFO available to class A shareholders 0.04 0.02 0.21
Deferred merger costs 0.60 0.60 0.33
======== ======== ==========
Adjusted FFO $0.64 $0.62 $0.54
======== ======== ==========
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