Capital Automotive Increases 2003 Earnings Guidance And Announces Completion of Common Share Offering
MCLEAN, Va., April 29 -- Capital Automotive REIT , the nation's leading specialty finance company for automotive retail real estate, today announced that an underwritten public offering of 2,350,000 of its common shares priced at $26.00 per share closed on April 25, 2003. All of the common shares were sold by the Company. The Company has also granted the underwriters an over-allotment option to purchase up to 352,500 additional shares.
Credit Suisse First Boston was the sole bookrunner and joint lead manager. Citigroup and Friedman Billings Ramsey were also joint lead managers. Other co-managers were A.G. Edwards & Sons, Inc., JPMorgan, BB&T Capital Markets, and Ferris, Baker Watts Incorporated.
David S. Kay, Senior Vice President and Chief Financial Officer commented, "We are very pleased to announce that we are raising our 2003 earnings guidance. Our new 2003 Funds From Operations per share guidance is $2.34, which on a comparable basis to our prior earnings guidance is an increase of $0.03 per share. Our net income per diluted share guidance is $1.57. Our increased earnings guidance is the result of the lower than anticipated interest rate on our $228 million long-term, fixed rate, debt securitization, which we closed in the first quarter of 2003, LIBOR remaining lower than our previous forecast and the completion of the common share offering."
The Company's revised 2003 guidance assumes LIBOR rising ratably throughout the year to approximately 3% by the fourth quarter and additional property acquisitions of approximately $75 to $125 million for the remainder of the year, depending on the timing of closings. As previously announced, the debt securitization had a higher fixed interest rate (approximately 5.9%) as compared to the floating rate on the Company's short-term borrowings which were paid down at the end of the first quarter of 2003. Management believes locking in long-term, fixed rate debt during this very favorable interest rate environment is prudent. Although, the higher fixed rate will have a negative impact on our earnings during the last three quarters of 2003, as compared to first quarter results, it should have a positive effect on our earnings over the long-term. This impact has been fully assumed in our new earnings guidance.
The Company continues to experience a strong pipeline of acquisitions and its balance sheet has capacity that could enable portfolio growth of at least $250 million without returning to the equity capital markets.
About Capital Automotive
Capital Automotive, headquartered in McLean, Virginia, is a self- administered, self-managed real estate investment trust that acquires real property and improvements used by operators of multi-site, multi-franchised automotive dealerships and related businesses. Additional information on Capital Automotive is available on the Company's Web site at http://www.capitalautomotive.com/ .
As of March 31, 2003, the Company had invested nearly $1.6 billion in 295 properties, consisting of 410 automotive franchises in 28 states. Approximately 78% of the Company's total real estate investments are located in the top 50 metropolitan areas in the U.S. in terms of population. Approximately 69% of the Company's portfolio is invested in properties leased to the "Top 100" dealer groups as published by Automotive News. The properties are leased under long-term, triple-net leases with a weighted average initial lease term of 14.4 years.
Certain matters discussed within this press release are forward-looking statements within the meaning of the federal securities laws. Although the Company believes that the expectations reflected in the forward-looking statements are based upon reasonable assumptions, the Company's future operations will depend on a number of factors that may differ, some materially, from the Company's assumptions. These factors, which could cause the Company's actual results to differ materially from those set forth in the forward-looking statements, include risks that our tenants will not pay rent; risks related to our reliance on a small number of tenants for a significant portion of our revenue; risks of financing, such as our ability to meet existing financial covenants and to consummate planned and additional financings on terms that are acceptable to us; risks that our growth will be limited if we cannot obtain additional capital; risks that planned and additional acquisitions may not be consummated; risks related to the automotive industry, such as the ability of our tenants to compete effectively in the automotive retail industry and the ability of our tenants to perform their lease obligations as a result of changes in any manufacturer's production, supply, vehicle financing, marketing or other practices or changes in the economy generally; risks generally incident to the ownership of real property, including adverse changes in economic conditions, changes in the investment climate for real estate, changes in real estate taxes and other operating expenses, adverse changes in governmental rules and fiscal policies and the relative illiquidity of real estate; environmental and other risks associated with the acquisition and leasing of automotive properties; risks related to our status as a REIT for federal income tax purposes, such as the existence of complex regulations relating to our status as a REIT, the effect of future changes in REIT requirements as a result of new legislation and the adverse consequences of the failure to qualify as a REIT; and those risks detailed from time to time in the Company's SEC reports, including its Form 8- K/A filed on February 12, 2003, its annual report on Form 10-K and its quarterly reports on Form 10-Q. The Company makes no promise to update any of the forward-looking statements or to publicly release the results if the Company revises any of them.
Capital Automotive REIT
For the period presented, the following chart reconciles Funds from Operations (FFO) and FFO per diluted share to their most directly comparable GAAP measures, net income and net income per diluted share:
Year Ended
December 31, 2003
(in thousands, except per share data)
Net income $ 49,000
Adjustments:
Add: Real estate depreciation and amortization 30,600
Add: Minority interest related to income from
continuing operations and income from discontinued
operations 13,600
Less: Gain on sale of real estate (35)
FFO (A) $ 93,165
Weighted average number of common shares used to
compute fully diluted net income per share 31,200
Weighted average number of common shares and units
used to compute fully diluted FFO per share 39,750
Net income per diluted share $ 1.57
FFO per diluted share $ 2.34
(A) The National Association of Real Estate Investment Trusts (NAREIT)
developed FFO as a relative non-GAAP financial measure of performance and
liquidity of an equity REIT in order to recognize that income-producing
real estate historically has not depreciated on the basis determined under
generally accepted accounting principles, or GAAP. FFO, as defined under
the revised definition adopted in April 2002 by NAREIT and as presented by
the Company, is net income, computed in accordance with GAAP, plus
depreciation and amortization of assets unique to the real estate
industry, plus minority interest related to income from continuing
operations and income from discontinued operations and extraordinary
items, and excluding gains from the sales of property, and after
adjustments for unconsolidated partnerships and joint ventures. FFO does
not represent cash flows from operating activities in accordance with GAAP
(which, unlike FFO, generally reflects all cash effects of transactions
and other events in the determination of net income) and should not be
considered an alternative to net income as an indication of our
performance or to cash flow as a measure of liquidity or ability to make
distributions. We consider FFO a meaningful, additional measure of
operating performance because it primarily excludes the assumption that
the value of the real estate assets diminishes predictably over time, and
because industry analysts have accepted it as a performance measure.