American Spectrum Realty, Inc. (the "Company") (NYSE Amex: AQQ), a real estate investment and management company located in Houston, Texas, (NYSE Amex: AQQ) sold 7700 Irvine Center (aka “The Yardhouse Building”) on June 28, 2011, for $56.5 million, producing a $24.1 million profit to be recognized in the second quarter and largely sheltered from taxes as the company utilizes most of its federal net operating loss carry-forward. This sale was announced in a previous press release dated July 7, 2011. Proceeds will be used to reduce debt, lower payables and explore new investment opportunities. Motivation to dispose of the asset also stemmed from the fact that the Yardhouse Building was nearly three times larger than any other Company owned asset. 7700 Irvine Center Drive is 209,121 square feet, whereas The Company’s other assets average 82,000 square feet. The sale of this one building was a strategic decision to significantly reduce the Company’s risk exposure in a single location. William J Carden, AQQ’s President, congratulates the team, “We have achieved two goals simultaneously. Our goal has been to align our real estate holdings with our public shares. We have accomplished our objective of trading our capital gains in our real estate portfolio for our federal tax loss carry-forward, thereby sheltering our gain and paving the way towards REIT status.” The tax loss carry-forward needed to be eliminated prior to qualifying as a REIT or the tax benefit would be greatly reduced. Under full-disclosure the Company does not meet certain tests to qualify as a Real Estate Investment Trust (“REIT”). Requirements for REIT status: The company has not elected to be treated as a REIT for federal income tax purposes, but intends to consider making such an election and may decide to do so in the future if it is believed to be advantageous. If treated as a REIT, ASR would not be subject to federal corporate income tax. In order to be able to make this election, The Company would need to qualify under various tests relating to the nature of our assets and level of distribution of our income. ASR would also not be able to qualify as a REIT if fewer than five individuals are deemed to own more than 50% of Company shares. Based on share ownership structure at December 31, 2010, ASR would need to issue additional shares or some principal stockholders would need to reduce their ownership to meet the 50% qualification parameter.
Every REIT must pass these four tests annually in order to retain its special tax status:1. “The REIT must distribute at least 90 percent of its annual taxable income, excluding capital gains, as dividends to its shareholders. 2. The REIT must have at least 75 percent of its assets invested in real estate, mortgage loans, shares in other REITs, cash, or government securities. 3. The REIT must derive at least 75 percent of its gross income from rents, mortgage interest, or gains from the sale of real property. And at least 95 percent must come from these sources, together with dividends, interest and gains from securities sales. 4. The REIT must have at least 100 shareholders and must have less than 50 percent of the outstanding shares concentrated in the hands of five or fewer shareholders.” About American Spectrum Realty, Inc. American Spectrum Realty, Inc. is a real estate investment company that owns, through its operating partnership, interest in office, industrial, self storage, retail properties, and apartments throughout the United States. The company has been publicly traded since 2001. American Spectrum Realty Management, LLC is a wholly-owned subsidiary of the Company’s operating partnership that manages and leases all properties owned by American Spectrum Realty, Inc. as well as third-party clients. ASRM provides first-class management and leasing services for over 115 office, industrial, retail, self-storage, and multi-family properties, totaling over 15 million square feet in 18 states. Certain matters discussed in this release are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those projected including the risks and uncertainties of acquiring, owning, operating and disposing of real estate. Such risks and uncertainties are disclosed in the Company’s past and current filings with the U. S. Securities and Exchange Commission.