Capital Automotive Reports Strong Second Quarter Results
26 July 2000
Tenth Consecutive Quarter of Revenue, FFO and Dividend Growth
MCLEAN, Va. - Capital Automotive , the nation's leading specialty finance
company for automotive retail real estate, today announced financial results for
the second quarter and six months ended June 30, 2000.
For the second quarter 2000, the Company reported funds from operations
(FFO) of $13.2 million, or $0.45 per basic and diluted share, up from
$10.3 million or $0.36 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, that resulted in an
increase in rents totaling $519,000 or $0.02 per diluted share for the second
quarter of 2000. Revenues were $25.3 million for the quarter, or a 59%
increase compared to revenues of $15.9 million in the second quarter of 1999.
Net income was $6.3 million, or $0.31 per basic and $0.30 per diluted share,
compared to $5.0 million or $0.23 per basic and diluted share in the same
quarter last year.
For the six-month period ended June 30, 2000, FFO was $26.1 million, or
$0.89 per basic and diluted share, up from $19.8 million, or $0.70 per basic
and diluted share in the same period last year. Total revenues for the six-
month period were $50.4 million compared to $30.7 million for the same period
in 1999. Net income for the six-month period was $12.7 million, or $0.61 per
basic and diluted share compared to $9.4 million or $0.43 per basic and
diluted share in the same period last year.
The Company previously announced on July 24, 2000 that its Board of
Trustees declared a cash dividend of $0.3725 per share for the second quarter.
The dividend is payable on August 18, 2000 to shareholders of record as of
August 10, 2000. The second quarter dividend is the tenth consecutive
increase in the quarterly dividend and represents an annualized rate of
$1.49 per share.
During the second quarter 2000, the Company acquired approximately
$7.5 million of automotive properties, all of which were leased to existing
tenants. The Company's debt to assets (total assets plus accumulated
depreciation) ratio was 53% as of June 30, 2000, with approximately 94% of the
debt being long-term, fixed rate, non-recourse debt. The Company's current
policy is to limit debt to approximately 65% of assets. In addition, it is
the Company's policy generally to match the average term of its leases with
long-term debt to minimize interest rate risk. Virtually all of the Company's
debt is secured financing with a weighted average remaining debt term of 11.8
years, which equals the weighted average remaining lease term of 11.8 years.
Commenting on today's news, Thomas D. Eckert, President and Chief
Executive Officer, stated, " We are extremely pleased with our operating
results for the second quarter and six months, which we believe reflect the
effectiveness of our business plan. We have continued our strategy of
prudently investing our capital in high quality automotive properties situated
in prime locations across the country. Our focused acquisition strategy
includes maximizing our investment spreads while servicing our existing
clients. As a result, our portfolio continues to perform at a high level,
and, with the flexible capital structure we have maintained, we are poised to
deliver shareholder value over the long-term." Mr. Eckert continued, "In the
quarters ahead, the Company expects to build upon this momentum by focusing on
prudently growing the business through strategic acquisitions. We are
confident Capital Automotive is well positioned to take advantage of the
numerous opportunities in our target markets while offering the potential for
the generation of solid returns and FFO growth."
As of June 30, 2000, the Company's portfolio included 231 properties with
an asset value of $951.7 million consisting of 353 automotive franchises in 27
states. These properties total 8.1 million square feet of buildings and
improvements on 1,304 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 June 30, 2000, the Company's weighted average
initial cap rate was 10.5%.
The Company will host a conference call at 11:00 am Eastern Daylight Time
today to discuss these quarterly results.
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 Six Months Ended
June 30, June 30,
Statements of Operations: 2000 1999 2000 1999
Revenue:
Rental $ 25,048 $ 15,677 $ 49,766 $ 30,249
Interest and other 217 221 674 437
Total revenue 25,265 15,898 50,440 30,686
Expenses:
Depreciation and amortization 4,343 3,834 8,654 7,679
General and administrative 1,659 1,733 3,324 3,627
Interest 10,385 3,725 20,632 7,000
Total expenses 16,387 9,292 32,610 18,306
Net income before minority
interest 8,878 6,606 17,830 12,380
Minority interest (2,533) (1,641) (5,092) (3,026)
Net income $ 6,345 $ 4,965 $ 12,738 $ 9,354
Basic earnings per share $ 0.31 $ 0.23 $ 0.61 $ 0.43
Diluted earnings per share $ 0.30 $ 0.23 $ 0.61 $ 0.43
Weighted average number of
common shares - basic 20,721 21,607 20,896 21,607
Weighted average number
of common shares - diluted 20,931 21,630 21,040 21,619
Funds From Operations (FFO):
Net income before minority
interest $ 8,878 $ 6,606 $ 17,830 $ 12,380
Adjustments:
Add: Real estate depreciation
and amortization 4,318 3,808 8,605 7,628
Less: Gain on sale of assets (17) (164) (311) (164)
FFO (A) $ 13,179 $ 10,250 $ 26,124 $ 19,844
Basic FFO per share $ 0.45 $ 0.36 $ 0.89 $ 0.70
Diluted FFO per share $ 0.45 $ 0.36 $ 0.89 $ 0.70
Adjusted Funds From
Operations (AFFO):
FFO $ 13,179 $ 10,250 $ 26,124 $ 19,844
Less: straight-lined rents (519) - (1,029) -
AFFO (B) $ 12,660 $ 10,250 $ 25,095 $ 19,844
Basic AFFO per share $ 0.44 $ 0.36 $ 0.86 $ 0.70
Diluted AFFO per share $ 0.43 $ 0.36 $ 0.85 $ 0.70
Weighted average number of
common shares and units
- basic 29,043 28,466 29,217 28,371
Weighted average number of
common shares and units
- diluted 29,253 28,488 29,361 28,382
(A) FFO is calculated using the revised definition from NAREIT's October
1999 White Paper, which includes straight-lined rents, totaling
$519,000, or $0.02 per diluted share for the three months ended June
30, 2000 and $1,029,000, or $.04 per diluted share for the six months
ended June 30, 2000. Prior to 2000, the Company excluded straight-
lined rents from the FFO calculation. For comparison purposes, the
Company has included straight-lined rents in the FFO calculation for
all periods presented. 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 and six months
ended June 30, 1999.
(B) AFFO is calculated as FFO less straight-lined rents.
June 30, Dec. 31,
2000 1999
Selected Balance Sheet Data (in thousands) (unaudited)
Real estate before accumulated depreciation $ 951,745 $ 935,525
Cash and cash equivalents 5,468 11,886
Total assets 943,221 942,559
Mortgage loans 508,631 501,510
Borrowings under credit facilities 9,500 -
Total other liabilities 12,037 26,066
Minority Interest 118,249 115,384
Total shareholders' equity 294,804 299,599
June 30, Dec. 31,
Selected Portfolio Data (unaudited) 2000 1999
Properties 231 230
States 27 27
Land acres 1,304 1,292
Square footage of buildings (in millions) 8.1 8.0
Average lease term (in years) 13.3 13.3
Franchises 353 349