American Spectrum Realty Reports Decreased Expenses And Occupancy Increase For Owned Properties In Second Quarter

American Spectrum Realty, Inc. (AMEX:AQQ) (“the Company”), a real estate investment, management and leasing company headquartered in Houston, Texas, announced today its results for the quarter ended June 30, 2012.

Second quarter rental revenue for ASR owned properties increased by approximately $0.2 million, primarily due to an increase in occupancy. The weighted average occupancy of our owned properties increased from 84% at June 30, 2011 to 88% at June 30, 2012. The weighted average occupancy of the Company's owned, managed and leased properties in Houston, Texas has steadily risen over the past nine months from 78% to 88% due to aggressive marketing and creative leasing strategies. Overall rental revenue for the second quarter decreased by approximately $1.7 million, or by 11%, compared to the second quarter of 2011. This decrease was primarily due to the deconsolidation of VIE’s during 2011 which accounted for approximately $1.6 million of the decrease. Rental revenue for properties consolidated for the full three months ended June 30, 2012 and 2011 was relatively unchanged, decreasing by approximately $0.1 million. However, Rental revenue for our VIE properties consolidated for the full three months ended June 30, 2012 and 2011 decreased by approximately $0.3 million, primarily due to a decrease in occupancy.

Total expenses decreased by approximately $4.1 million, or by 19.0%, for the second quarter of 2012 when compared to the second quarter of 2011 through cost-efficient management and streamlined operations. The decrease was also due to the deconsolidation of VIE’s during 2011 which accounted for a decrease in total expenses of approximately $2.7 million.

The Company reported a net loss attributable to common stockholders for the second quarter of 2012 of approximately $0.1 million, or $0.00 per diluted share, compared to net income of approximately $9.4 million, or $2.02 per diluted share for the second quarter of 2011. The net loss for the second quarter 2012 included income from discontinued operations of approximately $1.8 million, compared to net income from discontinued operations of approximately $15.1 million for the second quarter 2011. The net income for the second quarter of 2011 included a gain on litigation settlement of approximately $4.8 million related to the Company’s Hurricane Ike insurance claims.

On May 30th, 2012 the Company announced that it repurchased all of the operating partnership units (“OP Units”) issued to Evergreen Realty Group, LLC and certain of its affiliates (“Evergreen”). The Company had issued the OP Units to Evergreen in connection with its acquisition of assets from Evergreen on January 17, 2010. A total of 800,000 OP Units issued to Evergreen (adjusted from the original 1,600,000 OP Units issued to reflect the Company’s 2011 two-for-one reverse split), were repurchased by the Company for a total of ONE DOLLAR ($1). The repurchase transaction effectively increased the Company’s stockholders’ equity and decreased its non-controlling interest by $8 million, respectively. As a result of the repurchase, the number of OP Units outstanding (other than those held by the Company), was reduced to 252,463. Holders of OP Units have the option to redeem their OP Units and to receive, at the option of the Company, either (i) one share of common stock of the Company, or (ii) cash equal to the value of one share of common stock of the Company on the date of conversion.

The Company’s Funds From Operations (FFO), a widely accepted supplemental measure of REIT performance established by the National Association of Real Estate Investment Trusts, was approximately $(1.5) million for the six months ended June 30, 2012 compared to approximately $3.9 million for the six months ended June 30, 2012. The Company’s business is the ownership, operation and management of real estate. It believes that FFO is helpful to investors when measuring operating performance because it excludes various items that are considered in the determination of net income or loss that do not relate to or are not indicative of operating performance, such as gains or losses from sales of operating properties and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. The following table reflects the reconciliation of FFO to net income (loss) attributable to the Company, the most directly comparable Generally Accepted Accounting Principles measure, for the six months ended June 30, 2012 and 2011 (in thousands):
      Six Months Ended

June 30,
2012       2011
Net income (loss) attributable to the Company $ 419 $ 7,394
Depreciation and amortization from discontinued operations 706 2,811
Gain on disposition of discontinued operations (6,171 ) (15,444 )
Deferred income tax expense (benefit) 241 5,021
Depreciation and amortization attributable to the Company’s owned properties 3,311   4,058  
FFO $ (1,494 ) $ 3,840  
 

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 multi-family properties 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 office, industrial, retail, self-storage, and multi-family properties, totaling over 11 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.

- Financial Tables Follow –
 
AMERICAN SPECTRUM REALTY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except share amounts)(Unaudited)
           
Three Months Ended June 30, Six Months Ended June 30,
2012   2011 2012   2011
 
REVENUES:      
Rental revenue $ 13,818 $ 15,551 $ 28,176 $ 31,296
Third party management and leasing revenue 728 1,478 1,622 2,514
Interest income   40     60     86     199  
Total revenues   14,586     17,089     29,884     34,009  
 
EXPENSES:
Property operating expense 3,497 6,070 8,493 11,379
Corporate general and administrative 2,439 2,424 5,674 4,941
Depreciation and amortization 5,413 6,641 11,045 13,139
Interest expense 5,794 6,116 11,509 13,398
Impairment of real estate assets   -     -     481     150  
Total expenses   17,143     21,251     37,202     43,007  
 
OTHER INCOME/(EXPENSE):
Gain on litigation settlement - 4,174 - 4,174
Other income/(expense)   -     623     (151 )   623  
Total other income/(expense)   -     4,797     (151 )   4,797  
 
(Loss)/income from continuing operation before deferred income tax (2,557 ) 635 (7,469 ) (4,201 )
 
Deferred income tax benefit   1,058     571     2,048     1,262  
 
(Loss)/income from continuing operations   (1,499 )   1,206     (5,421 )   (2,939 )
 

Discontinued operations:
Loss from operations (182 ) (1,791 ) (955 ) (3,613 )
Gain on disposition of discontinued operations 2,934 23,631 7,542 23,631
Income tax expense   (938 )     (6,719 )   (2,289 )   (6,283 )
Income from discontinued operations 1,814 15,121 4,298 13,735
       
Net income/(loss), including non-controlling interests 315 16,327 (1,123 ) 10,796
 
Plus: Net (income)/loss attributable to non-controlling interests   (308 )   (6,894 )   1,542     (3,402 )
 
Net income attributable to American Spectrum Realty, Inc.   7     9,433     419     7,394  
 
Less: Preferred stock dividend (60 ) (60 ) (120 ) (120 )
       
Net (loss)/income attributable to American Spectrum Realty, Inc.
common stockholders $ (53 ) $ 9,373   $ 299   $ 7,274  
 
 
Basic per share data:
 
(Loss) income from continuing operations attributable to American Spectrum Realty, Inc.
common stockholders (0.46 ) 1.13 (1.00 ) $ 0.70
Income from discontinued operations attributable to American Spectrum Realty, Inc.   0.46     2.05     1.12     1.80  
Net income attributable to American Spectrum Realty, Inc. common stockholders   -   $ 3.18   $ 0.12   $ 2.50  
 
Basic weighted average shares used 3,564,783 2,964,001 3,571,283 2,962,647
 
Diluted per share data:
 
(Loss) income from continuing operations attributable to American Spectrum Realty, Inc.
common stockholders (0.46 ) 0.72 (1.00 ) $ 0.70
Income from discontinued operations attributable to American Spectrum Realty, Inc.   0.46     1.30     1.12     1.80  
Net income attributable to American Spectrum Realty, Inc. common stockholders   -   $ 2.02   $ 0.12   $ 2.50  
 
Diluted weighted average shares used 3,564,783 4,663,775 3,571,283 2,962,647
 
Amounts attributable to American Spectrum Realty, Inc. common stockholders:
(Loss) income from continuing operations $ (1,688 ) $ 3,298 $ (3,692 ) $ 1,956
Income from discontinuing operations $ 1,635   $ 6,075   $ 3,991   $ 5,318  
Net (loss)/income $ (53 ) $ 9,373   $ 299   $ 7,274  

Copyright Business Wire 2010

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