AmREIT Reports Fourth Quarter And Year End Results, Announces 2014 Guidance, And Declares March 2014 Dividend

AmREIT, Inc. (NYSE:AMRE) (“AmREIT” or the “Company”), today announced financial results for the fourth quarter and year ended December 31, 2013, its 2014 guidance and declared dividends for the first quarter ended March 31, 2014.

Fourth Quarter and Year-End Highlights:

Financial Results
  • Core Funds from Operations ("Core FFO") available to common stockholders for the fourth quarter of 2013 was $5.1 million, or $0.26 per share, compared to $3.9 million, or $0.24 per share for the comparable period in 2012. For the year ended December 31, 2013, Core FFO was $18.0 million, or $1.02 per share, compared to $15.0 million, or $1.11 per share for the comparable period in 2012. Weighted average shares outstanding in 2013 were 17.7 million, compared to 13.5 million in 2012.
  • FFO available to common stockholders for the fourth quarter of 2013 was $7.4 million, or $0.38 per share, compared to $3.2 million, or $0.20 per share for the comparable period in 2012. For the year ended December 31, 2013, FFO was $20.4 million, or $1.15 per share, compared to $13.9 million, or $1.03 per share for the comparable twelve month period in 2012. Included in FFO for the three months ended December 31, 2013 was a $2.3 million gain from the sale of the build-to-suit CVS Pharmacy at Loop 610 & Ella in Houston. Included in FFO for the year ended December 31, 2013 is the aforementioned gain on the CVS project, a $799,000 gain from the sale of a non-core single tenant asset, $173,000 in acquisition costs related to the Woodlake Square acquisition in September 2013, a $279,000 one-time charge recorded in connection with our acquisition of the underlying land at Preston Royal Village in July 2013, $164,000 in acquisition costs (our 30% portion) recorded by the MacArthur Park joint venture with Goldman Sachs in March 2013 and $126,000 in acquisition costs related to the Fountain Oaks acquisition in June 2013.
  • Net income available to common stockholders for the fourth quarter of 2013 was $4.2 million, or $0.21 per share, compared to $734,000, or $0.04 per share, for the same period in 2012. For the year ended December 31, 2013, net income available to common stockholders was $14.8 million, or $0.83 per share, compared to $4.5 million, or $0.32 per share. Included in net income for the three months ended December 31, 2013 was a $2.3 million gain from the sale of the build-to-suit CVS at Loop 610 & Ella in Houston. Included in net income for the year ended December 31, 2013 is the aforementioned gain on the CVS project, a $799,000 gain from the sale of a non-core single tenant asset, $173,000 in acquisition costs related to the Woodlake Square acquisition in September 2013, a $279,000 one-time charge recorded in connection with our acquisition of the underlying land at Preston Royal Village in July 2013, $164,000 in acquisition costs (our 30% portion) recorded by the MacArthur Park joint venture with Goldman Sachs in March 2013 and $126,000 in acquisition costs related to the Fountain Oaks acquisition in June 2013.

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

Portfolio Results

  • During the third quarter of 2013, we began the process of terminating leases with or relocating tenants occupying a portion of our Uptown Park property which we refer to as the “Baker Site” and our Courtyard at Post Oak property at Post Oak and San Felipe in Houston, in order to prepare those sites for vertical re-development. In the fourth quarter of 2013, excluding our redevelopment properties (Uptown Park – Baker Site and The Courtyard on Post Oak), same-store net operating income (“NOI”) increased 3.0% over the same period in the prior year. Including those two redevelopment properties, same-store NOI increased 0.4% over the same period in the prior year. For the year ended December 31, 2013, same-store NOI, excluding redevelopment properties, increased 3.1% and, including the two redevelopment properties, increased 1.3% over the same period in the prior year. While the same-store NOI in the short term has been negatively impacted by our redevelopments, we believe that the mid-term and long term benefits of re-development of these sites will provide outsized same-store NOI growth. For example, the anticipated ground lease at the Uptown Park – Baker Site, if executed, would represent a 200% increase over the in-place NOI generated by the existing 12,200 square feet of inline retail space.
  • With the 2013 acquisitions of Fountain Oaks and Woodlake Square, which were 79% and 93% occupied respectively, portfolio occupancy as of December 31, 2013 was 94.2%, a decrease of approximately 250 basis points as compared to portfolio occupancy of 96.7% as of December 31, 2012. We have initiated vacancies at The Courtyard on Post Oak and at the Uptown Park – Baker Site in preparation for their anticipated redevelopments which has put pressure on our occupancy in the short term. Excluding these redevelopments, our portfolio occupancy was 95.1%. On a leased basis, which includes leases that have been executed but where rent has not yet commenced, the portfolio was 94.8% leased as of December 31, 2013. We anticipate rent commencement on these signed leases over the next 90 days.
  • During the fourth quarter of 2013, AmREIT signed 11 leases for 37,890 square feet of gross leasable area, including both new and renewal leases. Of these, 8 leases for 26,909 square feet were renewals or replacements of expiring leases which were deemed to be comparable leases. Cash leasing spreads, which is the new leasing rate per square foot compared to the expiring leasing rate per square foot on comparable leases, increased 10.4%. On a GAAP basis, which includes the effects of straight-line rent, leasing spreads increased 12.8%. For the year ended December 31, 2013, AmREIT signed 61 leases for 149,696 square feet of gross leasable area, including both new and renewal leases. Of these, 46 leases, or 113,991 square feet, were comparable leases. Cash leasing spreads increased 10.6%. On a GAAP basis, leasing spreads increased 16.1%.

NOI and same store NOI are non-GAAP supplemental earnings measures that AmREIT considers meaningful in measuring its operating performance. Further explanation and a reconciliation of NOI and same store NOI to net income are 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 31, 2014 to all common stockholders of record at the close of business on March 21, 2014.

Acquisitions and Dispositions
  • On November 12, 2013, AmREIT sold its recently completed build-to-suit CVS property at Loop 610 and Ella in Houston, Texas, and reported a gain on sale of approximately $2.3 million. AmREIT developed the property for approximately $5.2 million, financed through cash and its unsecured credit facility and sold the property at a 5.5% cap rate, or approximately $7.5 million net of expenses. Although not included in Core FFO, this activity is a key component of our business strategy and is a benefit of being a ‘local sharpshooter’ within our core markets.
  • On September 18, 2013, AmREIT completed the previously announced acquisition of Woodlake Square Shopping Center, a 156,888 square foot Randalls (Safeway parent company) and Walgreens-anchored shopping center in Houston Texas. Average household incomes within a one-mile radius of Woodlake Square are $69,595, and there are 82,692 households within a three-mile radius of the property. Daytime employment within a three-mile radius is 126,883. Woodlake Square was acquired from a joint venture, the partners of which were one of our Advised Funds and AEW Value Investors II, L.P., a value-added real estate fund managed by AEW Capital Management. The asset was 90% owned by AEW Capital Management, 6% by AmREIT Monthly Income & Growth Fund IV, LP., 3% by AmREIT Monthly Income & Growth Fund III, Ltd., and 1% by AmREIT. We managed the joint venture and the property. Woodlake Square was acquired for approximately $41.6 million, funded by a $23.0 million new first mortgage with a 4.3% fixed interest rate and a 10-year term, and the balance of $18.6 million was funded in cash.
  • On July 17, 2013, AmREIT completed the acquisition of the underlying land of Preston Royal Village NEC. This acquisition resulted in termination of our ground lease that we acquired in December 2012 and provided us with complete ownership of this property. Average household incomes within a one-mile radius of Preston Royal Village are $279,562 and there are 42,163 households within a three-mile radius. The Preston Royal Village NEC land was purchased for approximately $15.0 million in cash.
  • On June 25, 2013, AmREIT completed the acquisition of Fountain Oaks Shopping Center, a 160,600 square foot Kroger-anchored shopping center in the north Buckhead submarket of Atlanta, Georgia. Average household incomes within a one-mile radius of Fountain Oaks are $96,771, and there are 31,887 households within a three-mile radius of the property. Fountain Oaks was acquired for approximately $27.7 million, is unencumbered, and was funded with borrowings under AmREIT’s unsecured revolving credit facility.
  • On March 26, 2013, AmREIT entered into a joint venture agreement with Goldman Sachs pursuant to which AmREIT contributed equity in its MacArthur Park property to a single-purpose entity in exchange for a 30% interest in the joint venture, and Goldman Sachs contributed cash for a 70% interest in the joint venture. The joint venture entity concurrently purchased the contiguous property to the north known as MacArthur Park Phase I, excluding a Target store, for approximately $25.5 million and placed mortgage financing on the combined property of $43.9 million. Upon closing the transaction, AmREIT received net cash proceeds of approximately $35.6 million, which it used to repay borrowings under its unsecured revolving credit facility. AmREIT continues to manage and lease MacArthur Park on behalf of the joint venture and retains a right of first offer to acquire the project in the future, after expiration of a two-year lock-out period.

Equity Offering
  • On June 21, 2013, AmREIT filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission ("SEC") registering the offer and sale, from time to time, of up to $350 million of securities, which was declared effective by the SEC on July 1, 2013.
  • On July 19, 2013 AmREIT completed the public underwritten offering of 3,450,000 shares of common stock, including 450,000 shares sold pursuant to the exercise of the underwriter's over-allotment option, at a public offering price of $18.25 per share. The offering generated net proceeds of approximately $60 million, after deducting the underwriting discount and offering expenses. AmREIT used a portion of the net proceeds to repay borrowings under its unsecured revolving credit facility and to acquire the underlying land on our Preston Royal East property. AmREIT used a portion of the remaining proceeds to fund the cash portion of the acquisition of Woodlake Square.

2014 Full Year Guidance
  • Full year and quarterly 2014 Core FFO and FFO guidance per share is as follows:
    Projected 2014 Range
  High   Low
1Q2014 $0 .22 $0 .21
2Q2014 0 .24 0 .23
3Q2014 0 .26 0 .25
4Q2014

0

.34

0

.33
Full Year Core FFO $1 .06 $1 .02
     
1Q2014 $0 .22 $0 .21
2Q2014 0 .23 0 .22
3Q2014 0 .24 0 .23
4Q2014

0

.33

0

.32
Full Year FFO $1 .02 $0 .98
  • Our 2014 Core FFO and FFO guidance is based on the following assumptions:
    • Same-Store NOI growth target of 2.5% - 3.0%;
    • Average portfolio occupancy of 94.5% - 95.5%;
    • Portfolio growth through acquisitions totaling $50 million;
    • Off balance sheet growth through joint ventures totaling $70 million;
    • Uptown Park Phase I redevelopment:
      • Termination of Baker Furniture lease in September 2014, annual NOI of $200,000
      • Multi-family ground lease of $850,000 annually, commencing in October 2014
    • Disposition of 3-4 single tenant properties, targeted for the second half of the year totaling $14 million to $15 million in proceeds;
    • Recurring Advised Fund real estate fee income of $2.3 million (asset management and property management fees);
    • Transactional Advised Fund real estate fee income of $600,000 (leasing commissions, development and brokerage commissions);
    • Interest income on notes receivable of $125,000;
    • Annual G&A run rate of $8.8 million

Preliminary 2015 Full Year Guidance

Our 2015 preliminary Core FFO and FFO guidance per share is as follows:
    Preliminary 2015 Range
  High   Low
Full Year Core FFO $1 .13 $1 .10
     
Full Year FFO $1 .10 $1 .07

“As we close out 2013, our Irreplaceable Corner TM portfolio and our experienced management team delivered another solid quarter, and we are well positioned for success in 2014,” said Kerr Taylor, Chairman & Chief Executive Officer of AmREIT. “We are pleased to announce our continued progress towards the groundbreaking of our first redevelopment phase at Uptown Park. Further, we have released on our website the master plan and a brief redevelopment video, which showcase the estimated $1.2 Billion of future redevelopment opportunities at Uptown Park.”

Conference Call

AmREIT will hold its quarterly conference call to discuss the results of its year end and fourth quarter of 2013 on Wednesday, February 19, 2014, 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 10039598.

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.

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 REITs, 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.

Funds From Operations (FFO)

AmREIT considers FFO to be an appropriate measure of the operating performance of an equity REIT. FFO is computed as net income (loss) determined in accordance with GAAP, excluding gains or losses from sales of property and impairment charges on properties held for investment, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. NAREIT recommends that extraordinary items not be considered in arriving at FFO. AmREIT calculates FFO in accordance with this definition.

Most industry analysts and equity REITs, including AmREIT, consider FFO to be an appropriate supplemental non-GAAP financial measure of operating performance because, by excluding gains or losses from sales of property and impairment charges on properties held for investment and by excluding real estate related depreciation and amortization, 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. Management uses FFO as a supplemental measure to conduct and evaluate our business because there are certain limitations associated with using GAAP net income by itself as the primary measure of our operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, management believes that the presentation of operating results for real estate companies that uses historical cost accounting is insufficient by itself.

Additionally, AmREIT considers Core FFO, which adjusts FFO for items that do not reflect ongoing operations, such as acquisition expenses, non-recurring intangible asset write-offs and recoveries, expensed issuance costs and gains on the sale of real estate held for resale, to be a meaningful performance measurement. The computation of FFO in accordance with NAREIT’s definition includes certain items such as acquisition costs, issuance costs, non-recurring asset write-offs and recoveries and gains on sale of real estate held for resale that management believes are not indicative of AmREIT’s ongoing results and therefore affect the comparability of our period-over-period performance with the performances of similar REITs. Accordingly, management believes that it is helpful to investors to adjust FFO for such items. There can be no assurance that FFO or Core FFO presented by AmREIT is comparable to similarly titled measures of other REITs. FFO and Core FFO should not be considered as an alternative to net income or other measurements under GAAP as an indicator of our operating performance or to cash flows from operating, investing or financing activities as a measure of liquidity.

Projected FFO and Core FFO are calculated in a method consistent with historical FFO and Core FFO, and AmREIT considers projected FFO and Core FFO to be an appropriate supplemental measure when compared with projected earnings per share. A reconciliation of the projected FFO and Core FFO to projected earnings per share is provided below:
 

Projected 2014 Range

High
 

Low

Net income

$ 0.58

$ 0.54
Gain on sale – investment (0.20) (0.20)
Depreciation and amortization 0.56 0.56
Depreciation and amortization for non-consolidated affiliates 0.08 0.08
FFO available to stockholders $ 1.02 $ 0.98
Acquisition costs 0.04 0.04
Core FFO available to stockholders $1.06 $1.02

Net Operating Income (NOI)

AmREIT believes that NOI is a useful measure of its operating performance. AmREIT defines NOI as operating revenues (rental income, tenant recovery income, percentage rent, excluding straight-line rental income and amortization of acquired above- and below-market rents) less property operating expenses (real estate tax expense and property operating expense, excluding straight-line rent bad debt expense). Other REITs may use different methodologies for calculating NOI, and accordingly, AmREIT’s NOI may not be comparable to other REITs.

AmREIT believes that reporting NOI provides an operating perspective not immediately apparent from GAAP operating income, GAAP net income, FFO or Core FFO. AmREIT uses NOI to evaluate its performance on a property-by-property basis because NOI allows it to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on its operating results. However, NOI should only be used as a supplemental measure of AmREIT’s financial performance.

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 90.5% of AmREIT's rental income for the year ended December 31, 2013, 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 portfolio was 94.2% occupied as of December 31, 2013, 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 Advised Funds, which include value add joint ventures with leading institutional investors who partner with the company as local experts. AmREIT's common stock is traded on the New York Stock Exchange under the symbol “AMRE.” For more information, please visit www.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 2014 Core FFO and FFO financial 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 supplement dated July 16, 2013 filed with the Securities and Exchange Commission on July 16, 2013, and other risks described in documents subsequently filed by AmREIT from time to time with the Securities and Exchange Commission.

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.
 
AmREIT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS(in thousands except share data)
   
December 31, 2013 December 31, 2012
 
ASSETS
Real estate investments at cost:
Land $ 181,749 $ 147,460
Buildings 224,472 222,679
Tenant improvements   14,992     17,386  
421,213 387,525
Less accumulated depreciation and amortization   (37,356 )   (39,820 )
383,857 347,705
 
Acquired lease intangibles, net 15,849 15,976
Investments in Advised Funds   15,689     7,953  
Net real estate investments 415,395 371,634
 
Cash and cash equivalents 14,297 2,992
Tenant and accounts receivable, net 6,467 5,566
Accounts receivable - related party, net 693 821
Notes receivable, net 4,333 2,731
Notes receivable - related party, net 689 6,748
Deferred costs, net 3,214 3,696
Other assets   1,493     3,206  
TOTAL ASSETS $ 446,581   $ 397,394  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable $ 199,851 $ 218,579
Accounts payable and other liabilities 11,582 9,593
Acquired below-market lease intangibles, net   7,881     3,507  
TOTAL LIABILITIES 219,314 231,679
 
Stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued - -

Class A common stock, $0.01 par value, 0 and 100,000,000 shares authorized as of December 31, 2013 and 2012, 0 and 11,657,563 shares issued and outstanding as of December 31, 2013, and 2012.
- 117

Common stock, $0.01 par value, 1,000,000,000 and 900,000,000 shares authorized as of December 31, 2013 and 2012, 19,628,037 and 4,465,725 shares issued and outstanding as of December 31, 2013 and 2012.
196 45
Capital in excess of par value 306,423 245,403
Accumulated distributions in excess of earnings   (79,352 )   (79,850 )
TOTAL STOCKHOLDERS' EQUITY   227,267     165,715  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 446,581   $ 397,394  
 
AmREIT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands except per share data)
       
Three months ended December 31, Year ended December 31,
2013 2012 2013 2012
 
Revenues:
Rental income from operating leases $ 12,085 $ 10,425 $ 43,536 $ 37,251
Advisory services income - related party   877     897     3,661     3,870  
Total revenues 12,962 11,322 47,197 41,121
 
Expenses:
General and administrative 2,111 1,937 8,302 6,773
Property expense 3,427 3,154 12,564 10,067
Legal and professional 308 242 1,104 911
Real estate commissions 38 119 292 387
Acquisition costs 2 687 299 687
Depreciation and amortization 3,023 2,316 11,945 8,861
Impairment recovery - notes receivable   -     -     -     (443 )
Total expenses   8,909     8,455     34,506     27,243  
 
Operating income 4,053 2,867 12,691 13,878
 
Other income (expense):
Gain on sale of real estate acquired for investment - - 7,696 -
Interest and other income 158 123 609 485
Interest and other income - related party 7 69 187 462
Income (loss) from Advised Funds 166 (110 ) 99 (238 )
State income taxes (1 ) 19 (30 ) (2 )
Interest expense   (2,508 )   (2,258 )   (9,603 )   (10,250 )
 
Income from continuing operations 1,875 710 11,649 4,335
 
Income from discontinued operations, net of taxes 12 24 81 125
Gain on sale of real estate acquired for resale, net of taxes   2,290     -     3,089     -  
Income from discontinued operations   2,302     24     3,170     125  
 
Net income $ 4,177   $ 734   $ 14,819   $ 4,460  
 
Net income per share of common stock - basic and diluted
Income before discontinued operations $ 0.09 $ 0.04 $ 0.65 $ 0.31
Income from discontinued operations   0.12     0.00     0.18     0.01  
Net income $ 0.21   $ 0.04   $ 0.83   $ 0.32  
 

Weighted average shares of common stock used to compute net income per share, basic and diluted
  19,068     15,580     17,169     13,120  
 
Distributions per share of common stock $ 0.20   $ 0.20   $ 0.80   $ 0.80  
   

Summary of Operating Results (in thousands except per share data) :
 
Three months ended December 31, Year ended December 31,
Funds from operations ("FFO") 2013   2012 2013   2012
Net income $ 4,177 $ 734 $ 14,819 $ 4,460
Add:

Depreciation of real estate assets - from operations
3,015 2,304 11,897 8,809

Depreciation of real estate assets - from discontinued operations
- 5 14 23

Depreciation of real estate assets for nonconsolidated affiliates
198 156 1,316 622
Less:

Gain on sale of real estate acquired for investment
- - (7,696 ) -
       
Total FFO available to stockholders $ 7,390   $ 3,199   $ 20,350   $ 13,914  
 
Total FFO per share $ 0.38   $ 0.20   $ 1.15   $ 1.03  
 
Core funds from operations ("Core FFO")
Total FFO available to stockholders $ 7,390 $ 3,199 $ 20,350 $ 13,914
Add:
Acquisition costs 2 687 299 687
Acquisition costs of nonconsolidated affiliates - - 164 -
Write off of below market ground lease - - 279 -
Write off of deferred financing costs - - - 362
Less:
Gain on sale of real estate acquired for resale (2,290 ) - (3,089 ) -
       
Total Core FFO available to stockholders $ 5,102   $ 3,886   $ 18,003   $ 14,963  
 
Total Core FFO per share $ 0.26   $ 0.24   $ 1.02   $ 1.11  
 
Adjusted funds from operations ("AFFO")
Total Core FFO available to stockholders $ 5,102 $ 3,886 $ 18,003 $ 14,963
Add:
Depreciation of non-real estate assets 8 12 48 52
Amortization of deferred financing costs 104 96 403 384
Stock-based compensation 293 258 1,211 813
Bad debt expense related to straight-line rent - 7 - -
Less:
Straight-line rent and above/below market rent (288 ) (153 ) (933 ) (424 )
Bad debt recoveries related to straight-line rent - - (164 ) (90 )
Amortization of above-market debt (27 ) (30 ) (112 ) (122 )
Impairment recoveries - notes receivable - - - (443 )
Maintenance capital expenditures (61 ) (14 ) (139 ) (121 )

Straight-line rent and above/below market rent - discontinued operations
- (4 ) (7 ) (6 )
       
Total AFFO available to stockholders $ 5,131   $ 4,058   $ 18,310   $ 15,006  
 
Total AFFO per share $ 0.26   $ 0.25   $ 1.03   $ 1.11  
 
Weighted average shares outstanding (1)   19,628     16,123     17,725     13,479  
 
Dividends
Regular common dividends per share $ 0.20 $ 0.20 $ 0.80 $ 0.80
Payout ratio - Core FFO 76.9 % 83.3 % 78.4 % 72.1 %

_____________
(1) Weighted average shares outstanding reflects the weighted average of all shares of common stock outstanding during the period including our non-vested shares. Weighted average shares of common stock outstanding used to compute net income per share under GAAP pursuant to the “two class method” includes only vested shares of common stock. Our reconciliation of weighted average shares used to compute net income per share, basic and diluted, on our consolidated statements of operations to weighted average shares used to compute our FFO per share metrics above is as follows:
  Three months ended December 31,   Year ended December 31,
2013   2012 2013   2012

Weighted average shares used to compute net income per share, basic and diluted
19,068 15,580 17,169 13,120

Weighted average shares of restricted common stock outstanding
560 543 556 359

Weighted average shares outstanding
19,628 16,123 17,725 13,479
     

Same Store Property Analysis (in thousands except for number of properties, percentages and per share data) :
 
Three months ended December 31,
2013   2012 Change $ Change%
Same store properties (26 properties)
Rental income (1) $ 4,351 $ 4,216 $ 135 3.2 %
Recovery income (1) 1,306 1,498 (192 ) (12.8 ) %
Percentage rent (1) 203 193 10 5.2 %
Less:
Property expenses   1,392     1,569     177   11.3 %

Same store NOI, excluding redevelopment properties
  4,468     4,338     130   3.0 %

 

Same store occupancy, excluding redevelopment properties, at end of period (2)
98.4 % 98.6 % n/a (0.2 ) %
 
Redevelopment properties (2 properties)
Rental income (1) $ 1,480 $ 1,532 $ (52 ) (3.4 ) %
Recovery income (1) 350 1,166 (816 ) (70.0 )
Percentage rent (1) 173 183 (10 ) (5.5 ) %
Less:
Property expenses   398     1,168     770   65.9 %

Redevelopment properties NOI
  1,605     1,713     (108 ) (6.3 ) %
 
Redevelopment properties occupancy at end of period (2) 87.6 % 92.0 % n/a (4.4 ) %
 

Same Store NOI, including redevelopment properties
  6,073     6,051     22   0.4 %
 
Non-same store properties (4 properties)
Rental income (1) 2,346 1,099 1,247 113.5 %
Recovery income (1) 1,445 264 1,181 *
Percentage rent (1) 144 120 24 20.0 %
Less:
Property expenses   1,637     410     (1,227 ) *
Non-same store net operating income   2,298     1,073     1,225   114.2 %
 
Non-same store occupancy at end of period (2) 90.1 % 95.1 % n/a (5.0 ) %
 
Total net operating income 8,371 7,124 1,247 17.5 %
 
Other revenues 1,329 1,243 86 6.9 %
 
Less other expenses   7,825     7,657     (168 ) (2.2 ) %
 
Income (loss) from continuing operations 1,875 710 1,165 164.1 %
Income from discontinued operations   2,302     24     2,278   *
Net income $ 4,177   $ 734   $ 242   33.0 %

_____________
(1) Rental income from operating leases on the consolidated statements of operations is comprised of rental income, recovery income and percentage rent from same store properties, rental income and recovery income from non-same store properties and amortization of straight-line rents and above/below market rents. For the three months ended December 31, 2013 and 2012, rental income from operating leases was $12,085 and $10,425, respectively.
(2) Percent occupied is calculated as (i) GLA under commenced leases as of December 31, 2013 or 2012, divided by (ii) total GLA as of such dates, expressed as a percentage.

*

Percentage change not shown as there is no prior year amount, or such amount is immaterial, and the percentage change is not meaningful.
     

Same Store Property Analysis, continued (in thousands except for number of properties, percentages and per share data) :
 
Year ended December 31,
2013   2012 Change $ Change%
Same store properties (26 properties)
Rental income (1) $ 17,220 $ 16,884 $ 336 2.0 %
Recovery income (1) 5,404 5,104 300 5.9 %
Percentage rent (1) 296 293 3 1.0 %
Less:
Property expenses   5,421     5,315     (106 ) (2.0 ) %

Same store NOI, excluding redevelopment properties
  17,499     16,966     533   3.1 %
 
Same store occupancy, excluding redevelopment
properties, at end of period (2) 98.4 % 98.6 % n/a (0.2 ) %
 
Redevelopment properties (2 properties)
Rental income (1) $ 5,853 $ 6,044 $ (191 ) (3.2 ) %
Recovery income (1) 2,472 3,176 (704 ) (22.2 )
Percentage rent (1) 220 218 2 0.9 %
Less:
Property expenses   2,683     3,338     655   19.6 %
Redevelopment properties NOI   5,862     6,100     (238 ) (3.9 ) %
 
Redevelopment properties occupancy at end of period (2) 87.6 % 92.0 % n/a (4.4 ) %
 
 

Same Store NOI, including redevelopment properties
  23,361     23,066     295   1.3 %
 
Non-same store properties (5 properties) (3)
Rental income (1) 7,562 3,817 3,745 98.1 %
Recovery income (1) 3,371 1,170 2,201 188.1 %
Percentage rent (1) 205 120 85 70.8 %
Less:
Property expenses   4,345     1,504     (2,841 ) (188.9 ) %
Non-same store net operating income   6,793     3,603     3,190   88.5 %
 
Non-same store occupancy at end of period (2) 90.1 % 95.1 % n/a (5.0 ) %
 
Total net operating income 30,154 26,669 3,485 13.1 %
 
Other revenues 13,086 5,242 7,844 149.6 %
 
Less other expenses   31,591     27,576     (4,015 ) (14.6 ) %
 
Income (loss) from continuing operations 11,649 4,335 7,314 168.7 %
Income from discontinued operations   3,170     125     3,045   *
Net income $ 14,819   $ 4,460   $ 242   5.4 %

_____________
(1) Rental income from operating leases on the consolidated statements of operations is comprised of rental income, recovery income and percentage rent from same store properties, rental income and recovery income from non-same store properties and amortization of straight-line rents and above/below market rents. For the year ended December 31, 2013 and 2012, rental income from operating leases was $43,536 and $37,251, respectively.
(2) Percent occupied is calculated as (i) GLA under commenced leases as of December 31, 2013 or 2012, divided by (ii) total GLA as of such dates, expressed as a percentage.
(3) Included in non-same store properties are the results of operations from the MacArthur Park property prior to its contribution into the MacArthur Park Joint Venture. Our continuing involvement in the operations of the property precludes it from being reported as a discontinued operation.
* Percentage change not shown as there is no prior year amount, or such amount is immaterial, and the percentage change is not meaningful.
   

Summary of Capital Expenditures (in thousands) :
 
Three months ended December 31, Year ended December 31,
2013   2012 2013   2012
Non-maintenance capital expenditures:
Tenant improvements and leasing commissions $ 370 $ 540 $ 1,822 $ 3,115
Development, redevelopment and expansion   909   112   2,531   591
Total non-maintenance capital expenditures 1,279 652 4,353 3,706
 
Maintenance capital expenditures   61   14   139   121
Total capital expenditures $ 1,340 $ 666 $ 4,492 $ 3,827
   

Rental Income from Operating Leases (in thousands) :
 
Three months ended December 31, Year ended December 31,
2013   2012 2013   2012
Base minimum rent $ 8,177 $ 6,847 $ 30,635 $ 26,745
Straight-line rent adjustments 145 110 479 228
Amortization of above/below market rent 142 47 454 197
Percentage rent 520 496 721 631
Recovery income   3,101   2,925   11,247   9,450
Rental income from operating leases $ 12,085 $ 10,425 $ 43,536 $ 37,251
   

Advisory Services Income – Related Party (in thousands) :
 
Three months ended December 31, Year ended December 31,
2013   2012 2013   2012
Leasing commission income $ 98 $ 284 $ 689 $ 918
Brokerage commission income 127 31 160 322
Property management fee income 406 344 1,628 1,261
Development fee income 49 16 330 504
Asset management fee income 156 156 622 622
Construction management fee income   41   66   232   243
Advisory services income - related party $ 877 $ 897 $ 3,661 $ 3,870
 
Interest and other income - related party $ 7 $ 69 $ 187 $ 462
 
Reimbursements of administrative costs $ 255 $ 214 $ 881 $ 855
 

Capitalization Data (in thousands, except per share and percent data) :
 
December 31, 2013 December 31, 2012
Equity capitalization -
Common shares outstanding 19,628 16,123
NYSE closing price (1) $ 16.80   $ 17.15  
Total equity capitalization $ 329,750   $ 276,509  
 
Debt capitalization -
Variable rate line of credit $ - $ 33,500
Fixed rate mortgage loans   199,851     185,079  
Total debt capitalization $ 199,851   $ 218,579  
 
Total capitalization $ 529,601   $ 495,088  
 
Debt statistics -
Total debt to total capitalization 37.7 % 44.1 %
Ratio of EBITDA to combined fixed charges (2) 3.56

(3)
2.25

_____________
(1) Represents the last reported price per share of our common stock on the New York Stock Exchange on the applicable date.
(2) Fixed charges consist of interest expense and scheduled principal payments on borrowed funds (including capitalized interest, but excluding amortization of debt premium). Both EBITDA and fixed charges are calculated for the year ended December 31, 2013 and 2012.
(3) EBITDA includes gains of $10.8 million on the sale of real estate. Excluding these gains, the ratio of EBITDA to combined fixed charges is 2.56.
           

Outstanding Debt and Terms:
 
AmREIT Debt Information(in thousands)
Description  

Amount Outstanding 12/31/13
 

Interest Rate
 

Annual Debt Service
 

Maturity Date
  % of total  

Weighted average rate maturing
Property Mortgages:
 
500 Lamar $ 1,536 6.00 % $ 92 2/1/2015
Uptown Park   49,000 5.37 % 2,631 6/1/2015
2015 Maturities 50,536 25.31 % 5.39 %
 
Plaza in the Park 23,250 3.45 % 802 1/1/2016
Market at Lake Houston 15,675 5.75 % 901 1/1/2016
Cinco Ranch 9,750 3.45 % 336 1/1/2016
Southbank - Riverwalk   20,000 5.91 % 1,182 6/1/2016
2016 Maturities 68,675 34.40 % 4.69 %
 
Bakery Square   1,594 8.00 % 128 2/10/2017
2017 Maturities 1,594 0.80 % 8.00 %
 
Alpharetta Commons   12,019 4.54 % 546 8/1/2018
2018 Maturities 12,019 6.02 % 4.54 %
 
Preston Royal Northwest   22,968 3.21 % 737 1/1/2020
2020 Maturities 22,968 11.50 % 3.21 %
 
Brookwood Village 7,171 5.40 % 387 2/10/2022
Uptown Plaza - Dallas   13,683 4.25 % 582 8/10/2022
2022 Maturities 20,854 10.45 % 4.65 %
 
Woodlake Square   23,000 4.30 % 989 10/1/2023
2023 Maturities 23,000 11.52 % 4.30 %
 
Corporate debt:
 
$75.0 million Facility (1) -

(1)
$ 263 8/1/2015 0.00 %

(1)
 
Total Maturities (2) $ 199,646
 
Fixed-rate debt:
Weighted average fixed rate 4.67 %
Weighted average years to maturity 4.1

___________
(1) The $75.0 million Facility bears interest at LIBOR plus a margin of 205 basis points to 275 basis points, depending on our leverage, and carries a fee equal to 0.35% of the unused portion of the total amount available under the facility. Annual debt service assumes the amount outstanding and interest rates as of December 31, 2013, remain constant.
(2) Total maturities above are $205 less than total debt as reported in our consolidated balance sheets as of December 31, 2013, due to the premium recorded on above-market debt assumed in conjunction with certain of our property acquisitions.
   

Interest Expense Detail (in thousands) :
 
Three months ended December 31, Year ended December 31,
2013   2012 2013   2012
Fixed-rate debt interest expense $ 2,364 $ 2,080 $ 8,787 $ 8,949
Variable-rate debt interest expense - 42 304 574
$75 million Facility unused fee 67 60 221 103
Amortization of deferred loan costs 104 106 403 362
Write off of deferred financing costs - - - 384
Amortization of above market debt   (27 )   (30 )   (112 )   (122 )
Total interest expense $ 2,508   $ 2,258   $ 9,603   $ 10,250  
                 

Wholly-Owned Property and Tenant Information:
 
Property  

Property Location
 

Year Built / Renovated
  GLA  

Percent Occupied (1)
   

Percent Leased (2)
  ABR (3)  

ABR per Occupied Square Foot (4)
 

Average Net Effective ABR per Occupied Square Foot (5)
 

Key Tenants
Neighborhood and Community Shopping Centers
Uptown Park Houston, TX 1999/2005 169,112 92.2 %

(9)
92.2 % $ 5,645,574 $ 36.19 $ 35.64 The Tasting Room, McCormick & Schmicks (owned by Landry's)
Plaza in the Park Houston, TX 1999/2009 144,054 98.6 % 100.0 % 2,825,066 19.89 19.81 Kroger
Preston Royal East Dallas, TX 1956 107,914 93.4 % 93.4 % 2,615,087 25.95 26.85 Bank of America, Starbucks, FedEx Office
Preston Royal West Dallas, TX 1959 122,564 99.0 % 99.0 % 2,492,303 20.54 22.57 Tom Thumb, Barnes & Noble, Spec's
Woodlake Square Houston, TX 1970/2011 156,888 92.9 % 97.3 % 2,479,969 17.02 17.31 Randalls, Walgreens, Jos. A. Bank, Five Guys
Fountain Oaks Atlanta, GA 1988 160,598 78.6 % 78.6 % 1,669,090 13.23 15.45 Kroger
Southbank San Antonio, TX 1995 46,673 100.0 % 100.0 % 1,780,793 38.15 38.35 Hard Rock Café
The Market at Lake Houston Houston, TX 2000 101,799 100.0 % 100.0 % 1,623,821 15.95 16.00 H-E-B, Five Guys
Uptown Plaza - Dallas Dallas, TX 2006 33,840 93.4 % 93.4 % 1,317,683 41.69 44.06 Morton's (owned by Landry's), Wells Fargo
Alpharetta Commons Atlanta, GA 1997 94,544 98.7 % 98.7 % 1,341,315 14.37 14.49 Publix
Cinco Ranch Houston, TX 2001 97,297 100.0 % 100.0 % 1,326,296 13.63 13.68 Kroger
Uptown Plaza - Houston Houston, TX 2002 28,000 100.0 % 100.0 % 1,315,746 46.99 46.10 CVS/pharmacy, The Grotto (owned by Landry's)
Bakery Square Houston, TX 1996 34,614 97.0 % 97.0 % 952,886 28.39 29.62 Walgreens, Boston Market
Brookwood Village Atlanta, GA 1941/2000 28,774 90.0 % 90.0 % 655,649 25.30 26.27 CVS/pharmacy, Subway
The Courtyard on Post Oak Houston, TX 1994 13,597 29.5 %

(9)
29.5 % 260,845 65.00 61.41 Verizon
Woodlands Plaza Houston, TX 1997/2003 19,517 100.0 % 100.0 % 464,431 23.80 28.98 FedEx Office, Freebirds World Burrito
Terrace Shops Houston, TX 2000 16,395 89.5 % 89.5 % 441,182 30.08 30.95 Starbucks
Sugarland Plaza Houston, TX 1998/2001 16,750 100.0 % 100.0 % 408,188 24.37 23.45 Memorial Hermann
500 Lamar Austin, TX 1998 12,795   87.0 %     87.0 %     363,033     32.61     37.68 Title Nine Sports
Neighborhood and Community Shopping Centers Subtotal/Weighted Average

1,405,725
93.6 % 94.3 % $ 29,978,956 $ 22.78 $ 23.42
 
Single Tenant (Ground Leases) (6)
CVS/Pharmacy Houston, TX 2003 13,824 100.0 % 100.0 % $ 327,167 $ 23.67 $ 23.67 CVS/pharmacy

Jared The Galleria of Jewelry
Houston, TX 2012 6,057 100.0 % 100.0 % 180,000 29.72 34.48 Jared The Galleria of Jewelery
Citibank San Antonio, TX 2005 4,439 100.0 % 100.0 % 160,000 36.04 36.04 Citibank
Landry's Seafood Houston, TX 1995 13,497 100.0 % 100.0 % 155,677 11.53 12.18 Landry's Seafood
T.G.I. Friday's (7) Hanover, MD 2003 6,802 100.0 % 100.0 % 163,304 24.01 23.44 T.G.I. Friday's
Bank of America Houston, TX 1994 4,251 100.0 % 100.0 % 129,275 30.41 28.78 Bank of America
Macaroni Grill Houston, TX 1994 7,825 100.0 % 100.0 % 96,000 12.27 12.05 Macaroni Grill
T.G.I. Friday's Houston, TX 1994 6,543 100.0 % 100.0 % 96,000 14.67 14.41 T.G.I. Friday's
Smokey Bones Atlanta, GA 1998 6,867   100.0 %     100.0 %     94,922     13.82     13.82 Smokey Bones
Single Tenant (Ground Leases) Subtotal/Weighted Average 70,105 100.0 % 100.0 % $ 1,402,345 $ 20.00 $ 20.34
 
Single Tenant (Fee Simple) (8)
The Container Store Houston, TX 2011 25,083 100.0 % 100.0 % $ 425,323 $ 16.96 $ 17.86 The Container Store
T.G.I. Friday's Houston, TX 1982 8,500 100.0 % 100.0 % 215,000 25.29 25.90 T.G.I. Friday's
Golden Corral (7) Houston, TX 1992 12,000 100.0 % 100.0 % 210,450 17.54 17.54 Golden Corral
Golden Corral (7) Houston, TX 1993 12,000   100.0 %     100.0 %     208,941     17.41     17.41 Golden Corral
Single Tenant (Fee Simple) Subtotal/Weighted Average 57,583 100.0 % 100.0 % $ 1,059,714 $ 18.40 $ 18.89
 
Portfolio Total/Weighted Average

1,533,413
  94.2 %

(9)
  94.8 %   $ 32,441,015   $ 22.47   $ 23.09

_____________
(1) Percent occupied is calculated as (i) GLA under commenced leases as of December 31, 2013, divided by (ii) total GLA, expressed as a percentage.
(2) Percent leased is calculated as (i) GLA under signed leases as of December 31, 2013, divided by (ii) total GLA, expressed as a percentage.
(3) ABR is calculated by multiplying (i) monthly base rent as of December 31, 2013, for leases that had commenced as of such date, by (ii) 12.
(4) ABR per leased square foot is calculated by dividing (i) ABR, by (ii) GLA under commenced leases as of December 31, 2013.
(5) Average net effective ABR per leased square foot represents (i) the contractual base rent for commenced leases as of December 31, 2013, calculated on a straight line basis to amortize free rent periods, abatements and contractual rent increases, but without subtracting tenant improvement allowances and leasing commissions, divided by (ii) GLA under commenced leases as of December 31, 2013.
(6) For single-tenant ground leases, we own and lease the land to the tenant. The tenant owns the building during the term of the lease and is responsible for all expenses relating to the property. Upon expiration or termination of the lease, ownership of the building will revert to us as owner of the land. The weighted average remaining term of our ground leases is 7.0 years.
(7) The tenants at these properties have rights of first refusal to purchase the property.
(8) For single-tenant fee simple properties, we own the land and the building, and the tenant is responsible for all expenses relating to the property. The weighted average remaining term of our fee simple leases is 6.0 years.
(9) Percent occupied, excluding our redevelopment properties of Uptown Park and The Courtyard on Post Oak, was 95.1% as of December 31, 2013.

Redevelopment Table:

There is no guaranty that we will ultimately complete any or all of these opportunities, that the expected return on investment or projected costs will be the amounts shown or that stabilization will occur as anticipated. Such amounts and dates represent management's best estimate, which is based on current information and may change over time.
      Revised    

 
 

 
 

 
 

 
 

 
Property   Location  

Current GLA
 

Owned GLA
 

Non-Owned GLA
  Opportunity  

Redevelopment / Development [1]
 

Expected ROI [2]
 

AmREIT Projected Costs [3]
 

Costs to Date
 

Anticipated Construction Completion
 

Anticipated Stabilization Date [4]
 
Uptown Park - Baker Site Houston, TX 12,200 30,000 360,000 We anticipate executing a ground lease with an experienced luxury multi-family developer who will co-develop and own the multi-family improvements. We will own the retail improvements in a condominium interest. R 8 - 12% $10-15 million $0.4 million 2016 2017
 
The Courtyard Houston, TX 13,597 15,000 480,000 Similar to the Uptown Park opportunity, we anticipate executing a ground lease with a co-developer who will own the improvements above our retail which we would own in a condominium interest. R 8 - 12% $5-10 million $0.1 million 2016 2017
 
Fountain Oaks - Kroger Box Atlanta, GA 160,598

190,598
N/A

Kroger lease option allows expansion of space from 58,000 square feet of GLA to 88,000 square feet of GLA along with a fresh 20-year lease term.
R 8.25%

$7.5 million
$ - 2015 2015
 
Woodlake Square Pad Sites Houston, TX 7,000 11,500 N/A Development of a retail pad and redevelopment of an existing outparcel building D/R 6 - 10%

$1-1.5 million
$ - 2014 2014
 
610 & Ella [5] Houston, TX -

12,900
N/A Build-to-suit with CVS/pharmacy D

8%
$5.2 million $5.2 million 2013 2013
               
Total

193,395
 

249,998
  840,000 10%

[6]

$28.7-39.2 million
  $5.7 million

___________
[1] Redevelopment represents significant construction and refurbishment at operating properties. Development represents initial construction, primarily from unimproved land.
[2] Expected ROI (return on investment) for redevelopment projects generally reflects only the deal specific cash, unleveraged incremental property net operating income (NOI) generated by the redevelopment and is calculated as incremental NOI divided by incremental cost. Incremental property NOI is the NOI generated by the redevelopment after deducting rent being paid or management's estimate of rent to be paid for the redevelopment space and any other space taken out of service to accommodate the redevelopment.
For development projects, expected return on investment reflects the deal specific cash, unleveraged property NOI generated by the development and is calculated as NOI divided by cost.
Expected return on investment for development and redevelopment projects does not include peripheral impacts, such as the impact on future lease rollovers at the property or the impact on the long-term value of the property.
[3] Amounts include construction costs, anticipated tenant improvements and lease-up costs, including anticipated commissions that will be borne by the Company.
[4] Stabilization is reached when the property achieves targeted occupancy, typically 95%.
[5] Property was sold during 2013 for $7.5 million.
[6]

Represents the weighted average expected return on investment for all properties.
         

Summary of Top 25 Tenants:
 
Rank   Tenant Name  

Year to Date Base Rent
 

Year to Date Base Rent as a Percentage of Portfolio Base Rent
  Tenant GLA  

Percentage of Total GLA
1 Kroger $ 1,999,610 6.43 % 267,097 17.42 %
2 Landry's 1,251,787 4.02 % 38,819 2.53 %
3 CVS/pharmacy 1,240,401 3.99 % 37,485 2.44 %
4 H-E-B 1,109,736 3.57 % 80,641 5.26 %
5 Publix 780,936 2.51 % 65,146 4.25 %
6 Safeway 589,371 1.89 % 89,809 5.86 %
7 Bank of America 514,349 1.65 % 14,129 0.92 %
8 Barnes & Noble 502,682 1.62 % 22,453 1.46 %
9 Hard Rock Cafe 496,825 1.60 % 15,752 1.03 %
10 TGI Fridays 473,881 1.52 % 21,845 1.42 %
11 The Container Store 447,988 1.44 % 25,019 1.63 %
12 Champps Americana 422,336 1.36 % 11,384 0.74 %
13 Golden Corral 412,268 1.33 % 24,000 1.57 %
14 Paesanos 406,583 1.31 % 8,017 0.52 %
15 Walgreens 393,609 1.27 % 15,120 0.99 %
16 The County Line 360,584 1.16 % 10,614 0.69 %
17 Tasting Room 345,209 1.11 % 2,000 0.13 %
18 Dougherty's Pharmacy 336,689 1.08 % 12,093 0.79 %
19 Verizon Wireless 303,449 0.98 % 5,513 0.36 %
20 Spec's Family Partners, Ltd. 289,473 0.93 % 9,918 0.65 %
21 River Oaks Imaging & Diagnostic, L.P. 268,500 0.86 % 10,750 0.70 %
22 Howl At The Moon Saloon 257,508 0.83 % 7,055 0.46 %
23 Potbelly 251,320 0.81 % 5,458 0.36 %
24 Buca Di Beppo 249,792 0.80 % 7,573 0.49 %
25 M. Penner 234,798 0.75 % 6,500 0.42 %
   

Retail Leasing Summary for Comparable Leases (1) :
 

For the three months ended December 31,
For the year ended December 31,
Expirations

2013
 

2012

2013
 

2012
 

2011
 

2010
 

2009
 

2008
Number of leases 11 13 50 44 53 50 34 22
GLA 43,351 63,722 133,796 180,245 187,605 224,578 110,693 75,601
New Leases (1)
Number of leases 1 1 10 5 7 11 8 4
GLA 2,600 1,419 19,419 12,997 14,231 17,737 15,471 7,328
Expiring annualized base rent per square foot $ 23.00 $ 31.00 $ 25.67 $ 27.22 $ 28.36 $ 31.07 $ 28.31 $ 23.52
New annualized base rent per square foot $ 26.00 $ 32.00 $ 31.65 $ 34.84 $ 30.85 $ 31.44 $ 29.64 $ 21.70
% Change (Cash) 13.0 % 3.2 % 23.3 % 28.0 % 8.8 % 1.2 % 4.7 % -7.7 %
Renewals (2)
Number of leases 7 7 36 30 38 39 24 13
GLA 24,309 28,914 94,572 115,501 143,324 140,236 86,462 22,464
Expiring annualized base rent per square foot $ 30.83 $ 23.69 $ 26.27 $ 23.91 $ 24.92 $ 26.12 $ 25.62 $ 27.05
New annualized base rent per square foot $ 33.98 $ 25.85 $ 28.40 $ 25.27 $ 25.74 $ 27.32 $ 26.85 $ 31.53
% Change (Cash) 10.2 % 9.1 % 8.1 % 5.7 % 3.3 % 4.6 % 4.8 % 16.6 %
Combined
Number of leases 8 8 46 35 45 50 32 17
GLA 26,909 30,333 113,991 128,498 157,555 157,973 101,933 29,792
Expiring annualized base rent per square foot $ 30.07 $ 24.03 $ 26.17 $ 24.24 $ 25.23 $ 26.68 $ 26.03 $ 26.18
New annualized base rent per square foot $ 33.21 $ 26.14 $ 28.94 $ 26.24 $ 26.20 $ 27.78 $ 27.27 $ 29.11
% Change (Cash) 10.4 % 8.8 % 10.6 % 8.2 % 3.8 % 4.1 % 4.8 % 11.2 %

___________
(1) Comparable leases are defined as renewals or new leases for a space that was not vacant for more than 12 consecutive months prior to lease signing.
(2) Represents existing tenants that, upon expiration of their leases, enter into new leases for the same space.
     

Lease Expiration Table:
 
Anchor Tenants (>20,000 square feet) Shop Space Tenants (≤20,000 square feet) Total
Year Expiring GLA   Tenant   % of GLA Expiring   ABR Per Square Foot (1) Expiring GLA   % of GLA Expiring   ABR Per Square Foot (1) Expiring GLA   % of GLA Expiring   ABR Per Square Foot (1)
Vacant

-  

   -
- $ - 89,468 8 .6% $ - 89,468 5 .8% $ -
2014

-  

   -
- - 144,466 13 .8% 26 .73 144,466 9 .4% 26 .73
2015 26,147 Barnes & Noble 5 .3% 18 .64 152,761 14 .6% 29 .72 178,908 11 .7% 28 .10
2016

-  

   -
- - 145,898 14 .0% 27 .49 145,898 9 .5% 27 .49
2017 145,787 H-E-B, Publix 29 .8% 12 .97 93,596 9 .0% 28 .38 239,383 15 .6% 18 .99
2018

-  

   -
- - 129,038 12 .4% 25 .94 129,038 8 .4% 25 .94
2019

-  

   -
- - 46,655 4 .5% 29 .43 46,655 3 .0% 29 .43
2020

-  

   -
- - 39,851 3 .8% 28 .72 39,851 2 .6% 28 .72
2021 81,217 Kroger 16 .6% 12 .83 28,945 2 .8% 24 .99 110,162 7 .2% 16 .02
2022 25,083 The Container Store 5 .1% 16 .96 45,795 4 .4% 31 .59 70,878 4 .6% 26 .41
2023 122,507 Kroger 25 .0% 8 .83 31,527 3 .0% 35 .88 154,034 10 .0% 14 .37
2024 + 89,009 Safeway 18 .2% 7 .95 95,663 9 .2% 26 .89 184,672 12 .0% 17 .76
Total / Weighted Avg 489,750 11 .50 1,043,663 28 .09 1,533,413 22 .47

_____________
(1) ABR per square foot is calculated by multiplying (i) the monthly base rent as of December 31, 2013, for leases expiring during the applicable period by (ii) 12 and then dividing the result by GLA for such leases.
                 

Lease Distribution Table:
 
GLA Range

Number of

Expiring

Leases

Percentage

of Leases
Total GLA

Total

Occupied

GLA

Percent

Occupied

Percentage

of Occupied

GLA
ABR (1)

Percentage

of ABR

ABR Per

Occupied

Square Foot (2)
 
2,500 or less 199 60.5% 325,358 288,501 88.7% 20.0% $ 8,340,106 25.7% 28.91
2,501 - 5,000 73 22.2% 271,066 255,392 94.2% 17.7% 7,449,706 23.0% 29.17
5,001 - 10,000 35 10.6% 265,706 245,080 92.2% 17.0% 6,901,906 21.3% 28.16
10,000 - 20,000 13 4.0% 181,533 165,222 91.0% 11.4% 4,114,760 12.7% 24.90
greater than 20,000 9 2.7% 489,750 489,750 100.0% 33.9% 5,634,537 17.4% 11.50
Total portfolio 329 100.0% 1,533,413 1,443,945 94.2% 100.0% $ 32,441,015 100.0% 22.47

_____________
(1) ABR is calculated by multiplying (i) the monthly base rent as of December 31, 2013, for leases in the applicable GLA range that had commenced as of such date by (ii) 12.
(2) ABR per leased square foot is calculated by dividing (i) ABR for leases in the applicable GLA range by (ii) total leased GLA for leases in the applicable GLA range.
 

Significant Investments Table (in thousands, except percent and GLA data) :

Of our Investments in Advised Funds, only our investments in MacArthur Park and Shadow Creek Ranch (which represent 54.3% and 35.5%, respectively of our Investments in Advised Funds balance as of December 31, 2013) comprise greater than 10% of the balance. The table below presents the NOI, debt and property data for these two investments.
  MacArthur Park  

Shadow Creek Ranch
Year acquired 2013 2009
Percent owned 30.0% 10.0%
 
For the three months ended December 31, 2013:
 
Revenues $ 2,105 $ 2,606
Expenses   782     792  
NOI $ 1,323 $ 1,814
 
For the year ended December 31, 2013:
 
Revenues $ 5,954

(1)
$ 10,210
Expenses   2,051  

(1)
  3,093  
NOI $ 3,903

(1)
$ 7,117
 
As of December 31, 2013:
 
Real estate at cost $ 81,844 $ 113,262
Mortgage obligation $ 43,900 $ 62,463
Debt maturity 04/01/2023 03/01/2015
 
GLA 406,102 613,109
Percent occupied 86.3 % 97.7 %
Grocery anchor Kroger H.E.B.
Other principal tenants Michael's Academy
TJ Maxx Burlington Coat Factory
Ulta Hobby Lobby
Office Depot Ashley Furniture

_____________
(1) MacArthur Park, which was a wholly-owned AmREIT property, was contributed to a joint venture with Goldman Sachs on March 26, 2013. The table above excludes revenues, expenses and NOI of $1.1 million, $308,000, and $770,000, respectively, related to MacArthur Park for the 2013 period prior to contribution to the joint venture. Such amounts are included in our Statement of Operations and NOI reconciliation included in the Definitions section below.
 

Reconciliation of income from Advised Funds to NOI from Advised Funds (in thousands) :
 

Year ended December 31,
Income from Advised Funds $ 99
Depreciation of real estate assets   1,316  
FFO from Advised Funds 1,415
Acquisition costs   164  
Core FFO from Advised Funds 1,579
Interest expense 887
Other GAAP and non-recurring adjustments   (338 )
NOI from Advised Funds $ 2,128   *

_____________
* As of December 31, 2013, only nine months of operations are included for the MacArthur Park joint venture as it began operations on March 26, 2013.
 

Definitions
 

ABR

Annualized base rent.
 

Adjusted FFO

Core FFO (as defined below) adjusted to exclude non-cash income and expenses that are included in the NAREIT definition of FFO (defined below).  There can be no assurance that AFFO presented by AmREIT is comparable to similarly titled measures of other REITs. AFFO should not be considered as an alternative to net income or other measurements under GAAP as an indicator of our operating performance or to cash flows from operating, investing or financing activities as a measure of liquidity.
 

Advised Funds

Collectively, our varying minority ownership interests in four high net worth investment funds, one institutional joint venture with Goldman Sachs, one institutional joint venture with J.P. Morgan Investment Management and one joint venture with two of our high net worth investment funds, MIG III and MIG IV.
 

Core FFO

FFO in accordance with NAREIT’s definition, adjusted to exclude items that management believes do not reflect our ongoing operations, such as acquisition expenses, non-recurring asset write-offs and recoveries, expensed issuance costs and gains on the sale of real estate held for resale. Management believes that such items therefore affect the comparability of our period-over-period performance with similar REITs.
 

EBITDA

Earnings before interest, income taxes, depreciation and amortization.  Management believes that EBITDA is an appropriate supplemental measure of operating performance to net income. We define EBITDA as GAAP net income, plus interest expense, state or federal income taxes and depreciation and amortization. Management believes that EBITDA provides useful information to the investment community about our operating performance when compared to other REITs since EBITDA is generally recognized as a standard measure. However, EBITDA should not be viewed as a measure of our overall financial performance since it does not reflect depreciation and amortization, interest expense, provision for income taxes, and the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties. Other REITs may use different methodologies for calculating EBITDA and, accordingly, our EBITDA may not be comparable to other REITs.  Below is a reconciliation of net income to EBITDA:
 
  Year ended December 31,
2013   2012
Net income $ 14,819 $ 4,460
Interest expense 9,603 10,250
State income taxes 30 2
Depreciation and amortization 11,945 8,861
Depreciation and amortization - discontinued operations 14 23
Adjustments for Advised Funds   2,203   1,148
EBITDA $ 38,614 $ 24,744
 

FFO

Funds from operations, as defined by NAREIT, which includes net income (loss) computed in accordance with GAAP, excluding gains, losses or impairments on properties held for investment, plus real estate related depreciation and amortization, and after adjustments for similar items  recorded by our Advised Funds.
 

GLA

Gross leasable area.
 

NAREIT

National Association of Real Estate Investment Trusts.
 

NOI

Net operating income, defined as operating revenues (rental income, tenant recovery income, percentage rent, excluding straight-line rental income and amortization of acquired above- and below-market rents) less property operating expenses (real estate tax expense and property operating expense, excluding straight-line rent bad debt expense).  Below for a reconciliation of net income to NOI:
  Three months ended December 31, Year ended December 31,
2013   2012 2013   2012
 
Net income $ 4,177 $ 734 $ 14,819 $ 4,460
Adjustments to add/(deduct):

Amortization of straight-line rents and above/below-market rents (1)
(287 ) (154 ) (933 ) (425 )
Advisory services income - related party (877 ) (897 ) (3,661 ) (3,870 )

Gain on sale of real estate acquired for investment
- - (7,696 ) -
Interest and other income (158 ) (123 ) (609 ) (485 )
Interest and other income - related party (7 ) (69 ) (187 ) (462 )

Straight-line rent bad debt expense (recoveries) (2)
- 7 (164 ) (90 )
Write off of below market ground lease (2) - - 279 -
General and administrative 2,111 1,937 8,302 6,773
Legal and professional 308 242 1,104 911
Real estate commissions 38 119 292 387
Acquisition costs 2 687 299 687
Depreciation and amortization 3,023 2,316 11,945 8,861
Impairment recovery - notes receivable - - - (443 )
Loss (income) from Advised Funds (166 ) 110 (99 ) 238
State income tax expense (benefit) 1 (19 ) 30 2
Interest expense 2,508 2,258 9,603 10,250
Income from discontinued operations   (2,302 )   (24 )   (3,170 )   (125 )
Net operating income $ 8,371   $ 7,124   $ 30,154   $ 26,669  

_____________
(1) Included in rental income from operating leases as presented on our consolidated statements of operations.
(2) Included in property expense on our consolidated statements of operations.

Copyright Business Wire 2010

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