Capital Automotive Reports Record Third Quarter 1999 Results
26 October 1999
Capital Automotive Reports Record Third Quarter 1999 Results
Seventh Consecutive Quarter of Revenue, FFO and Dividend Growth Revenues Up
100%, FFO per Share Increases 39%
McLEAN, Va., Oct. 25 -- Capital Automotive ,
the nation's leading specialty finance company for automotive retail real
estate, today announced financial results for the third quarter ended
September 30, 1999.
The Company reported funds from operations (FFO) of $11.2 million, or
$0.39 per basic and diluted share, up from $8.5 million or $0.28 per basic and
diluted share in the same quarter last year. Revenues were $20.8 million for
the quarter or a 100% increase compared to revenues of $10.4 million in the
third quarter of 1998. Net income was $6.2 million, or $0.29 per basic and
diluted share, compared to $5.2 million or $0.21 per basic and diluted share
in the same quarter last year. FFO results for the quarter are based on basic
and diluted weighted average number of shares and operating partnership units
of 28.8 million. Net income results are based on basic and diluted weighted
average number of shares of 21.6 million.
For the nine-month period ended September 30, 1999, FFO was $31.1 million,
or $1.09 per basic and diluted share, up from $17.8 million, or $0.71 per
basic share and $0.70 per diluted share in the same period last year. Total
revenues for the nine-month period were $51.4 million compared to
$22.2 million for the same period in 1998. Net income for the period was
$15.5 million, or $0.72 per basic and diluted share compared to the same
period last year of $11.7 million or $0.57 per basic share and $0.56 per
diluted share. FFO results for the nine-month period are based on basic and
diluted weighted average number of shares and operating partnership units of
28.5 million. Net income results are based on basic and diluted weighted
average number of shares of 21.6 million.
Thomas D. Eckert, president and chief executive officer, stated, "The
third quarter was a great quarter for the Company. The closing of the MMR
transaction, our largest transaction to date, is a significant event. We have
also duration-matched substantially all of our leases with long-term,
fixed-rate, non-recourse debt. The securitization of our Deutsche Banc Alex.
Brown debt in October lends significant credibility to the strength of our
collateral given the triple-A rating received from Moody's."
The Company also announced today that its Board of Trustees has declared a
cash dividend of $0.35 per share for the third quarter. The dividend is
payable on November 19, 1999 to shareholders of record as of November 10,
1999. This is an annualized rate of $1.40 per share.
Capital Automotive closed on approximately $221 million in property
acquisitions in the third quarter. Consideration for the properties consisted
of approximately $1.4 million in operating partnership units and the remainder
in cash. The majority of the acquisitions were financed through long-term,
fixed-rate, non-recourse loans from Ford Motor Credit Company and an affiliate
of Deutsche Banc Alex. Brown. Acquisitions in the third quarter included 63
dealership properties in 13 states, representing 81 franchises. The average
initial lease term for the third quarter acquisitions was 13.2 years. Cap
rates on these transactions were consistent with the Company's business plan.
During the third quarter, the Company acquired MMR Holdings, LLC ("MMR"),
an affiliate of Sonic Automotive, Inc. . As a result of the
acquisition of MMR, the Company acquired 57 properties valued at $200 million
and following the acquisition of MMR, the Company also acquired two additional
properties through MMR for $7.0 million. The properties are located in 10
states: Alabama, Florida, Georgia, Maryland, North Carolina, Ohio, South
Carolina, Tennessee, Texas and Virginia. The properties are tenanted by 76
franchises including Ford, BMW, Chrysler and Toyota.
Other acquisitions in the third quarter valued at $14 million included
four dealership properties in four states, representing five franchises.
Properties were purchased from affiliates of Group 1 Automotive, Inc.
, Auffenberg Enterprises, and Kelley Automotive Group.
As a result of the MMR transaction, the Company began, on a prospective
basis, straight-lining its rents for leases with fixed, minimum escalators
during the third quarter. The total impact of this change on the third
quarter 1999 net income is an increase of $400,000, or $0.01 per share. The
impact of this change has not been included in FFO.
During the third quarter, the Company reviewed each property in its real
estate portfolio. Based on the average age of the portfolio, the Company
changed the depreciation life on the majority of its assets that were
currently being depreciated over a 20-year life to 30 years in order to
properly reflect the remaining useful lives. The change in the depreciation
life is considered a change in an accounting estimate and will be recorded on
a prospective basis beginning in the third quarter of 1999. The total impact
of this change added approximately $1.1 million to third quarter 1999 net
income, or $0.04 per share. Depreciation expense is not included in FFO and
therefore has no impact on FFO per share.
As of September 30, 1999, the Company's portfolio included 216 properties
including 332 automotive franchises in 26 states. These properties total
7.5 million square feet of buildings and improvements on 1,197 acres of land.
The properties are leased under long-term, triple net leases with an average
initial lease term of 13.2 years. The Company has entered into transactions
with 16 of the top 100 dealer groups in the country -- 15 of which are
tenants. Approximately 65% of the Company's annualized rental revenues are
derived from this group of tenants. As of September 30, 1999, the Company's
portfolio weighted average initial cap rate is 10.5%.
Capital Automotive, headquartered in McLean, Va., is a self-administered,
self-managed real estate investment trust formed to acquire the 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.
To receive Capital Automotive's latest news and corporate developments via
fax at no cost, please call 1-800-PRO-INFO; use Company code CARS. Or visit
The Financial Relations Board's web site at http://www.frbinc.com.
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 the Company's tenants will not
pay rent or that the Company's operating costs may be higher than expected,
risks of interest rate fluctuations impacting future acquisitions, risks that
additional acquisitions may not be consummated, environmental and other risks
associated with the acquisition and leasing of automotive properties and those
risks detailed from time to time in the Company's SEC reports, including its
annual report on Form 10-K and its quarterly reports on Form 10-Q.
CAPITAL AUTOMOTIVE
UNAUDITED SUPPLEMENTAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Nine Months Ended
September 30, September 30,
Statements of
Operations: 1999 1998 1999 1998
Revenue:
Rental $20,183 $8,425 $50,380 $15,254
Interest and other 574 1,938 1,063 6,975
Total revenue 20,757 10,363 51,443 22,229
Expenses:
Depreciation and
amortization 3,497 1,972 11,177 3,311
General and
administrative 1,603 1,630 5,230 3,992
Interest 7,401 159 14,400 328
Total expenses 12,501 3,761 30,807 7,631
Net income before
minority interest 8,256 6,602 20,636 14,598
Minority interest (2,074) (1,381) (5,100) (2,928)
Net income $6,182 $5,221 $15,536 $11,670
Basic earnings
per share $0.29 $0.21 $0.72 $0.57
Diluted earnings
per share $0.29 $0.21 $0.72 $0.56
Weighted average number
of common shares
-- basic 21,607 24,713 21,607 20,597
Weighted average number
of common shares
- diluted 21,640 24,713 21,626 20,665
Funds From Operations:
Net income before
minority interest $8,256 $6,602 $20,636 $14,598
Adjustments:
Add: Real estate
depreciation
and amortization 3,477 1,947 11,105 3,241
Less: Straight-line
rental income (404) -- (404) --
Less: Gain on sale
of assets (81) -- (245) --
Funds from operations $11,248 $8,549 $31,092 $17,839
Basic funds from
operations
per share $0.39 $0.28 $1.09 $0.71
Diluted funds from
operations
per share $0.39 $0.28 $1.09 $0.70
Weighted average number
of common shares
and units - basic 28,808 31,018 28,518 25,293
Weighted average number
of common shares
and units - diluted 28,840 31,018 28,536 25,534
Sept. 30, Dec. 31,
1999 1998
Selected Balance
Sheet Data (in thousands) (unaudited)
Real estate before accumulated
depreciation $863,710 $511,132
Cash and cash equivalents 49,335 72,106
Total assets 918,499 583,211
Mortgage loans 493,150 161,997
Total other liabilities 11,608 18,659
Minority Interest 104,345 93,898
Total shareholders' equity 309,396 308,657
Sept. 30, Dec. 31,
Selected Portfolio Data 1999 1998
Properties 216 120
States 26 18
Land acres 1,197 709
Square footage of buildings (in millions) 7.5 4.3
Average lease term (in years) 13.2 12.9
Franchises 332 196