Capital Automotive Completes $83 Million in Property Acquisitions, Bringing Year-to-Date Acquisitions to $100 Million
MCLEAN, Va., June 3 -- Capital Automotive REIT , the nation's leading specialty finance company for automotive retail real estate, today announced that the Company has completed approximately $83 million of acquisitions since the end of the first quarter of 2003, bringing total acquisitions for the five-month period ended May 31, 2003 to approximately $100 million. The $83 million of acquisitions completed since the end of the first quarter of 2003 included two auto malls consisting of seven properties, four other properties and construction fundings. These acquisitions contain 15 automotive franchises located in six states and have a weighted average initial lease term of 14.3 years, with multiple renewal options exercisable at the option of the tenant. The Company funded these acquisitions with net proceeds from its underwritten public equity offering that closed during the second quarter of 2003 as previously announced, cash on hand, and borrowings on the Company's short-term credit facilities. As of May 3, 20031, 2003, the Company had approximately $19 million outstanding on its short- term credit facilities. A summary of the acquisitions is as follows:
* Eight properties totaling approximately $54.3 million leased to
subsidiaries of UnitedAuto Group, Inc.
, (UnitedAuto) located
in Florida and Rhode Island. An auto mall consisting of six properties
and located in Rhode Island has nine franchises (Acura, Audi, Bentley,
BMW, Infiniti, Lexus, Mercedes-Benz, Porsche, and Volvo). Capital
Automotive will also provide improvement funding to the existing
dealerships located in the auto mall. The remaining properties are
located in Florida and include a single property auto mall with four
franchises (Chrysler, Jeep, Mazda and Nissan), and an adjacent property
with a Toyota franchise. UnitedAuto is one of the largest automobile
retailers in the U.S. operating 138 franchises in the United States and
72 franchises internationally, primarily in the United Kingdom. As of
May 31, 2003, we leased 16 properties to subsidiaries of UnitedAuto,
representing approximately 11% of our total annualized rental revenues.
* Three properties totaling approximately $26.2 million leased to
subsidiaries of Asbury Automotive Group, Inc.
, (Asbury).
These properties are located in California, Georgia and North Carolina.
A Mercedes-Benz franchise is operated on one of the properties and a
Honda and Lexus franchise will be constructed on the remaining
properties. The construction of these new facilities will be funded by
Capital Automotive. Asbury is one of the largest automobile retailers
in the U.S. operating 92 automobile retail stores, encompassing 132
franchises for the sale and servicing of 35 different brands of
American, European and Asian automobiles. As of May 31, 2003, we leased
seven properties to subsidiaries of Asbury, representing approximately
3% of our total annualized rental revenues.
* Construction fundings, totaling approximately $2.8 million, all of which
were transacted with existing tenants.
Commenting on today's news, Thomas D. Eckert, President and Chief Executive Officer, stated, "We have had an outstanding first five months of 2003. We remain focused on our core strategy, which is to partner with the nation's top automotive retailers. These acquisitions reinforce our strategy of doing repeat business with our existing tenants. Our high quality properties tenanted by industry leading retailers should provide stable cash flows for our shareholders over the long-term."
In light of the Company's acquisition pace and the current interest rate environment, the Company is reaffirming its funds from operations and net income per diluted share guidance of $2.34 and $1.57, respectively for 2003.
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 May 31, 2003, the Company had invested nearly $1.7 billion in 306 properties, consisting of 425 automotive franchises in 29 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 72% 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.
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.
Contact Information: David S. Kay Senior Vice President and Chief Financial Officer Capital Automotive REIT 703-394-1302