AmREIT Reports Fourth Quarter Results and Announces 2013 Guidance

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AmREIT Reports Fourth Quarter Results and Announces 2013 Guidance

HOUSTON--(BUSINESS WIRE)-- AmREIT, Inc. (NYS: AMRE) ("AmREIT" or the "Company"), today announced financial results for the quarter and year ended December 31, 2012 and its 2013 guidance.

Fourth Quarter and Year-to-Date Highlights:


Financial Results

  • Core Funds from Operations ("Core FFO") available to common stockholders for the fourth quarter of 2012 was $3.9 million, or $0.24 per share, compared to $4.5 million, or $0.39 per share for the comparable period in 2011. For the twelve months ended December 31, 2012, Core FFO was $14.6 million, or $1.08 per share, compared to $13.8 million, or $1.19 per share, for the comparable period in 2011.
  • FFO available to common stockholders for the fourth quarter of 2012 was $3.2 million, or $0.20 per share, compared to $3.6 million, or $0.31 per share for the comparable period in 2011. For the twelve months ended December 31, 2012, FFO was $13.9 million, or $1.03 per share, compared to $13.1 million, or $1.13 per share, for the comparable period in 2011.
  • Net income available to common stockholders for the fourth quarter of 2012 was $734,000, or $0.04 per share, compared to $1.2 million, or $0.11 per share, for the same period in 2011. For the twelve months ended December 31, 2012, net income was $4.5 million, or $0.32 per share, compared to $4.2 million, or $0.36 per share, for the same period in 2011. Net income for the three and twelve months ended December 31, 2011 was positively impacted by a gain on sale of approximately $417,000.

FFO and Core FFO are non-GAAP supplemental earnings measures that AmREIT consider meaningful in measuring its operating performance. A reconciliation of FFO and Core FFO to net income is attached to this press release.

Portfolio Results

  • In the fourth quarter of 2012, same-store net operating income ("NOI") increased 3.2% over the prior year period. For the twelve months ended December 31, 2012, same-store NOI increased 3.0%, compared with the same period in 2011. From January 1, 2010 through December 31, 2012, AmREIT has experienced an average annual increase in same-store NOI of 3.2%.
  • Portfolio occupancy as of December 31, 2012 was 96.7%, an increase of approximately 80 basis points as compared to portfolio occupancy of 95.9% as of December 31, 2011.
  • During the fourth quarter of 2012, AmREIT signed eight leases for 30,373 square feet of gross leasable area, including both new and renewal leases, and cash leasing spreads (i.e. new leasing rate per square foot compared to the expiring leasing rate per square foot) increased 9.1% for renewals and increased 3.2% for new comparable leases. On a GAAP basis (which includes the effects of straight-line rent), leasing spreads increased 11.8% on renewals and 8.0% on new comparable leases.
  • For the twelve months ended December 31, 2012, AmREIT signed 39 leases for 145,828 square feet of gross leasable area, including both new and renewal leases, and cash leasing spreads increased 5.7% on renewals and 28.0% on new comparable leases. On a GAAP basis, leasing spreads increased 10.5% on renewals and 36.6% on new leases.

NOI is a non-GAAP supplemental earnings measure that AmREIT considers meaningful in measuring its operating performance. Further explanation and a reconciliation of NOI to net income is attached to this press release.

Dividends

  • AmREIT also announced today that the Company's Board of Directors has approved a regular quarterly cash dividend of $0.20 per share. The dividend will be paid on March 29, 2013 to all common stockholders of record on March 19, 2013.

Acquisitions and Dispositions

  • On December 12, 2012 AmREIT purchased Preston Royal Village Shopping Center, located at the northeast and northwest corners of Preston and Royal in the highly affluent Preston Hollow submarket of Dallas, Texas. Preston Royal Village Shopping Center is an approximately 230,000 square foot grocery-anchored shopping center that is 97% leased and occupied. The northwest corner of Preston and Royal is anchored by Tom Thumb (Safeway) and includes tenants such as Chico's, Barnes & Noble, Pinkberry and Dougherty's Pharmacy (an original tenant of the shopping center). The northeast corner of Preston and Royal is unanchored and includes tenants such as Bank of America, Starbucks, Omaha Steaks, Einstein Bagels, and Fed-Ex/Kinko's. The shopping center was acquired for a total of $66.9 million, including closing costs and prorations. The property was funded through a $31.2 million draw against our unsecured credit facility, $12.3 million in cash, and mortgage financing of $23.4 million secured mortgage with a 3.21% interest rate.
  • On January 24, 2013, we entered into an agreement with Goldman Sachs to form a joint venture through our contribution to a newly-organized single purpose entity of our MacArthur Park property as well as the acquisition by the joint venture of the contiguous property to the east ("MacArthur Park Phase I"), excluding Target. Goldman Sachs will contribute cash for a 70% interest in the joint venture. The joint venture would concurrently purchase MacArthur Park Phase I, currently owned by Farmers New World Life Insurance Company, for approximately $26.2 million and place mortgage financing on the entire combined property of approximately $43.9 million. The joint venture will fully repay the MacArthur Park debt of approximately $8.8 million, including a $2.2 million defeasance penalty. At the conclusion of this transaction, AmREIT will hold a 30% ownership in the joint venture and receive net cash proceeds of approximately $35.4 million which would be used to repay borrowings under our unsecured credit facility. We expect this transaction to close in March 2013; however, closing is subject to customary closing conditions and we can make no assurances of when or if this joint venture will actually be formed and capitalized. AmREIT will continue to manage and lease MacArthur Park on behalf of the joint venture and will retain a right of first offer to acquire the project in the future, after a lock out period.

"AmREIT's strategy of creating value on 'Irreplaceable CornersTM' within our affluent, dense sub-markets was again advanced through our activities this past quarter," said H. Kerr Taylor, Chairman and Chief Executive Officer of AmREIT. "The off market acquisition of our Preston Royal Shopping Centers brought into our portfolio what we believe are two of the highest quality projects in the Dallas marketplace. The anticipated acquisition of the remainder of the MacArthur Park Project and our joint venture with Goldman Sachs are solid steps forward as they are expected to grow our platform, increase fee income and allow us to recycle capital."

Guidance

  • Full year 2013 Core FFO and FFO guidance per share is as follows:
             Projected 2013 Range
    High   Low
Core FFO   $1.07   $1.02
FFO   $0.98   $0.93
  • Our full year 2013 Core FFO and FFO guidance is supported by the following assumptions:
    • Same-Store NOI growth target of 3.0% to 4.0%;
    • Average occupancy of 96.8% to 97.1%;
    • Portfolio growth through acquisitions of $100 million;
    • Platform growth of $40 million (off balance sheet through advised funds), excluding the MacArthur Park joint venture;
    • Redeployment of cash received from the MacArthur Park joint venture;
    • Redeployment of cash received from the sale of 3-5 single tenant properties, targeted for the second half of the year;
    • Recurring Advised Fund real estate fee income of $2.2 million (asset management and property management fees);
    • Transactional Advised Fund real estate fee income of $1.1 million (leasing, development, construction and brokerage fees); and
    • Annual G&A run rate of $7.8 million.

Other Activities

  • AmREIT will hold its Annual Meeting of Stockholders at 10:00 AM CST on April 18, 2013.
  • At the Annual Meeting of Stockholders, stockholders will be asked to vote, among other items, on two charter amendments that, when taken together, will have the effect of converting all of our issued and unissued Class A common stock into Class B common stock, on a one-for-one basis, after which all of AmREIT's common stock would be listed on the New York Stock Exchange and freely tradable.

"Our 2012 financial results combined with our 2013 financial guidance reflect the sector-leading quality of our portfolio and are tracking the growth and operational goals that we have previously established," said Chad C. Braun, Chief Operating and Financial Officer of AmREIT. "The combination of additional capital resources created through the joint venture with Goldman Sachs and additional public float generated by the exchange of our Class A common stock into our NYSE-listed Class B common stock during 2013 should provide for a balance sheet that is poised for growth and allow us to execute upon our growth strategy during 2013."

Conference Call

AmREIT will hold its quarterly conference call to discuss the results of its fourth quarter of 2012 Wednesday, February 20, 2013, at 10:00 a.m. Central Standard Time (11:00 a.m. Eastern Standard Time). To participate in the quarterly conference call, please call 1-888-317-6016 approximately 10 minutes before the scheduled start time. The conference call will be recorded and a replay of the call will be available via webcast shortly after the call concludes.

The conference call will also be webcast live at www.amreit.com and can be accessed under the Investors tab of the Company's website. A telephonic replay of the conference call will be available for 14 days following the conference call. To access the telephonic replay of the conference call, dial 1-877-344-7529 and enter passcode 10023750.

Supplemental Financial Information

Further details regarding AmREIT's results of operations, properties, and tenants are attached to this press release and can be accessed at the Company's web site at www.amreit.com.

About AmREIT

AmREIT believes it has one of the highest quality grocery and drugstore anchored retail portfolios in the REIT sector.AmREIT's 29-year-old established platform has localized acquisition, operation and redevelopment expertise in the most densely populated and affluent submarkets of five of the top markets in the U.S.:Houston, Dallas, San Antonio, Austin and Atlanta.Texas is one of the best performing economies in the country and 92% of AmREIT's income for the year ended December 31, 2012 was generated by its properties located in this market. AmREIT's management team has in-depth knowledge and extensive relationship advantages within its markets.AmREIT's core portfolio was 96.7% occupied as of December 31, 2012, and its top five tenants include Kroger, Landry's, CVS/Pharmacy, H-E-B and Publix.AmREIT also has access to an acquisition pipeline through its value add joint ventures, including two leading institutional investors who partner with the company as local experts.AmREIT's Class B common stock is traded on the New York Stock Exchange under the symbol "AMRE."For more information, please visitwww.amreit.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, including statements related to full year 2013 Core FFO and FFO financial projections and the underlying assumptions of such projections stated herein.These forward-looking statements are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," or "potential" or the negative of these words and phrases or similar words or phrases, which are predictions of or indicate future events or trends and which do not relate solely to historical matters. While forward-looking statements reflect AmREIT's good faith beliefs, assumptions and expectations, they are not guarantees of future performance. Furthermore, AmREIT disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could impact AmREIT's future results, performance or transactions, see the section entitled "Risk Factors" in AmREIT's final prospectus dated July 26, 2012, filed with the Securities and Exchange Commission on July 27, 2012 and other risks described in documents subsequently filed by AmREIT from time to time with the Securities and Exchange Commission.

Additional Information related to the 2013 Annual Meeting of Stockholders

In connection with its 2013 Annual Meeting of Stockholders, the Company will file a proxy statement and other documents regarding the 2013 Annual Meeting (the "2013 Proxy Statement") with the Securities and Exchange Commission (the "SEC") and will mail the 2013 Proxy Statement and a proxy card to each stockholder of record entitled to vote at the 2013 Annual Meeting. STOCKHOLDERS ARE ENCOURAGED TO READ THE 2013 PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders will be able to obtain the documents free of charge at the SEC's website, www.sec.gov, and from AmREITat its website, www.amreit.com, or 8 Greenway Plaza, Suite 1000, Houston, Texas 77046, Attention: Corporate Secretary.

Participants in Solicitation

The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies in connection with the 2013 Annual Meeting. Information concerning the Company's participants is set forth in AmREIT's final prospectus dated July 26, 2012, filed with the SEC on July 27, 2012. Additional information regarding the interests of participants of the Company in the solicitation of proxies in respect of the 2013 Annual Meeting of Stockholders and other relevant materials will be included in the 2013 Proxy Statement to be filed with the SEC in connection with the 2013 Annual Meeting.

Investor Contact

For more information, call Chad Braun, Chief Operating Officer and Chief Financial Officer of AmREIT, at (713) 850-1400. AmREIT is online at www.amreit.com.

(Financial and Operating Tables to Follow)

     

Operating Results

(Unaudited)

(in thousands, except share and per share data)

 
Three Months EndedTwelve Months Ended
December 31,December 31,
Revenues:2012 2011  2012 2011
Rental income from operating leases

$

10,463

$

8,885

$

37,438

$

32,995

Advisory services income - related party

897

858

3,870

3,789

Lease termination fee income -  22  -  131 
Total revenues11,3609,76541,30836,915
 
Expenses:
General and administrative1,9271,8546,7336,049
Property expense3,0991,8579,8917,770
Legal and professional242157919945
Real estate commissions11950387342
Acquisition costs6877687229
Depreciation and amortization2,3212,1868,8848,257
Impairment recovery - notes receivable -  (1,071) (443) (1,071)
Total expenses 8,395  5,040  27,058  22,521 
 
Operating income2,9654,72514,25014,394
 
Other income (expense):
Interest and other income123110485493
Interest and other income - related party

69

135

462

319

Loss from Advised Funds(110)(60)(238)(384)
Income tax expense(54)(74)(248)(262)
Interest expense(2,259)(2,705)(10,251)(9,971)
Issuance costs -  (914) -  (914)
 
Income from continuing operations7341,2174,4603,675
 
Income from discontinued operations, net of tax

-

3

-

148

Gain on sale of real estate acquired for resale 

-

  

-

  

-

  

417

 
Income from discontinued operations -  3  -  565 
 
Net income$734 $1,220 $4,460 $4,240 
     

(in thousands, except share and per share data)

 
Three Months EndedTwelve Months Ended
December 31,December 31,

2012

2011

2012

2011

Reconciliation of Net Income to Funds From Operations (FFO):
Net income$734$1,220$4,460$4,240
Depreciation - from operations2,3092,1698,8328,181
Depreciation - from discontinued operations

-

-

-

13

 

Depreciation of real estate assets for non-consolidated affiliates

 

156

 

170

 

622

 

628

 
FFO$3,199$3,559$13,914$13,062 
 
Acquisition costs6877687229
Issuance costs-914-914
Gain on sale of real estate acquired for resale 

-

 

-

 

-

 

(417

)

Core FFO$3,886$4,480$14,601$13,788 
     
Three Months EndedTwelve Months Ended
December 31,December 31,

2012

2011

2012

2011

Reconciliation of Net Income to Net Operating Income (NOI):

Net income$734$1,220$4,460$4,240
Adjustments to add/(deduct):

Amortization of straight-line rents and above/below-market rents (1)

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