Capital Automotive Reports Record First Quarter Results
26 April 2000
Ninth Consecutive Quarter of Revenue, FFO and Dividend Growth
Revenues and FFO per Share for the Quarter Increased 70% and 29%, respectively,
compared to the same Quarter Last Year
McLEAN, Va. - Capital Automotive, a leading specialty finance company for
automotive retail real estate, today announced financial results for the first
quarter ended March 31, 2000.
For the first quarter, the Company reported funds from operations (FFO) of
$12.9 million, or $0.44 per basic and diluted share, up from $9.6 million or
$0.34 per basic and diluted share in the same quarter last year. FFO is
calculated using the revised definition from NAREIT's October 1999 White
Paper, which includes straight-lined rents, which resulted in an increase in
rents totaling $510,000 or $0.02 per share for the first quarter of 2000(A).
Revenues were $25.2 million for the quarter, or a 70% increase compared to
revenues of $14.8 million in the first quarter of 1999. Net income was
$6.4 million, or $0.30 per basic and diluted share, compared to $4.4 million
or $0.20 per basic and diluted share in the same quarter last year.
The Company also announced today that its Board of Trustees has declared a
cash dividend of $0.365 per share for the first quarter. The dividend is
payable on May 19, 2000 to shareholders of record as of May 10, 2000. The
first quarter dividend is the ninth consecutive increase in the quarterly
dividend and represents an annualized rate of $1.46 per share.
Capital Automotive closed on approximately $13.0 million in property
acquisitions in the first quarter, including two properties that are leased to
an existing tenant utilizing a floating cap rate. Under this lease program,
rental payments are adjusted monthly based upon a spread over the 30 day
LIBOR. The tenant has the ability to fix the lease rate during the initial
lease term. Consistent with the Company's financing strategy, the floating
rent lease is match funded with long-term floating rate debt.
The Company repurchased 900,000 common shares during the first quarter, at
an average share price of $10.96. This repurchase was partially funded by the
sale of two properties for $5.0 million, which resulted in a gain on sale of
the assets of approximately $294,000, or 6%. Of the 6.0 million common shares
that are authorized for repurchase under the Company's common share repurchase
program, the Company has repurchased 4.1 million through March 31, 2000.
During the quarter, the Company executed an agreement for a $100 million
revolving credit facility from General Motors Acceptance Corporation ("GMAC").
As of March 31, 2000, there were no amounts outstanding. Proceeds will be
used to fund future acquisitions on a short-term basis and will be repaid with
the issuance of long-term debt. The credit facility will bear interest at 225
basis points over LIBOR. The term of the agreement is one year and is
renewable annually.
The Company's debt to assets (total assets plus accumulated depreciation)
ratio was 53% as of March 31, 2000, with approximately 95% of the debt being
long-term, fixed rate, non-recourse debt. The Company's policy is to limit
debt to approximately 65% of assets. In addition, it is the Company's policy
generally to match the average duration of its leases with long-term debt to
minimize interest rate risk. Virtually all of the Company's debt is secured
financing with an average remaining debt term of 12.1 years versus an average
remaining lease term of 12.0 years.
Thomas D. Eckert, president and chief executive officer, stated, "We are
very pleased with the operating results of our first quarter, which continue
to reflect the success of our long-term strategy. Our timely share repurchase
combined with growing investment spreads continue to maximize our return on
invested capital and enhance shareholder value. The completion of the GMAC
revolving credit agreement adds acquisition capacity as well as credibility to
our Company. We remain confident in the growth and future prospects of the
Company."
As of March 31, 2000, the Company's portfolio included 230 properties with
an asset value of $944.2 million consisting of 351 automotive franchises in
27 states. These properties total 8.1 million square feet of buildings and
improvements on 1,302 acres of land. Approximately 71% of the Company's
properties are located in the top 50 automobile markets in the country. The
properties are leased under long-term, triple-net leases with an average
initial lease term of 13.3 years. The Company has entered into transactions
with 15 of the top 100 dealer groups in the country, 14 of which are tenants.
Approximately 66% of the Company's annualized rental revenues are derived from
this group of tenants. As of March 31, 2000, the Company's 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.
CAPITAL AUTOMOTIVE
UNAUDITED SUPPLEMENTAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended
March 31,
Statements of Operations: 2000 1999
Revenue:
Rental $24,718 $14,572
Interest and other 457 216
Total revenue 25,175 14,788
Expenses:
Depreciation and amortization 4,311 3,845
General and administrative 1,665 1,894
Interest 10,247 3,275
Total expenses 16,223 9,014
Net income before minority interest 8,952 5,774
Minority interest (2,559) (1,385)
Net income $6,393 $4,389
Basic earnings per share $0.30 $0.20
Diluted earnings per share $0.30 $0.20
Weighted average number of common shares
- basic 21,070 21,607
Weighted average number of common shares
- diluted 21,148 21,607
Funds From Operations:
Net income before minority interest $8,952 $5,774
Adjustments:
Add: Real estate depreciation and amortization 4,287 3,820
Less: Gain on sale of assets (294) -
Funds from operations (FFO) (A) $12,945 $9,594
Basic FFO per share $0.44 $0.34
Diluted FFO per share $0.44 $0.34
Adjusted funds from operations (AFFO) (B) $12,435 $9,594
Basic AFFO per share $0.42 $0.34
Diluted AFFO per share $0.42 $0.34
Weighted average number of common shares
and units - basic 29,392 28,274
Weighted average number of common shares
and units - diluted 29,469 28,274
(A) FFO is calculated using the revised definition from NAREIT's October
1999 White Paper, which includes straight-lined rents, totaling
$510,000, or $0.02 per share for the three months ended March 31, 2000.
Prior to the first quarter of 2000, the Company excluded straight-lined
rents from the FFO calculation. The Company began straight-lining
rents on a prospective basis in the third quarter of 1999, therefore
the revised definition has no impact on FFO for the three months ended
March 31, 1999.
(B) AFFO is calculated as FFO less straight-lined rents of $510,000, or
$0.02 per share for the three months ended March 31, 2000 and $0 for
the three months ended March 31, 1999.
March 31, Dec. 31,
2000 1999
Selected Balance Sheet Data (in thousands) (unaudited)
Real estate before accumulated depreciation $944,245 $935,525
Cash and cash equivalents 4,619 11,886
Total assets 939,130 942,559
Mortgage loans 515,818 501,510
Total other liabilities 9,180 26,066
Minority interest 118,718 115,384
Total shareholders' equity 295,414 299,599
March 31, Dec. 31,
Selected Portfolio Data (unaudited) 2000 1999
Properties 230 230
States 27 27
Land acres 1,302 1,292
Square footage of buildings (in millions) 8.1 8.0
Average lease term (in years) 13.3 13.3
Franchises 351 349