Capital Automotive Reports Record Third Quarter Results
24 October 2000
Capital Automotive Reports Record Third Quarter Results; Eleventh Consecutive Quarter of Revenue, FFO and Dividend Growth
Revenues and FFO Per Share for the Quarter Increased 24% and 15%,
Respectively, Compared to the Same Quarter Last Year
MCLEAN, Va., Oct. 24 Capital Automotive ,
the nation's leading specialty finance company for automotive retail real
estate, today announced financial results for the third quarter and nine
months ended September 30, 2000.
The Company reported funds from operations (FFO) of $13.5 million, or
$0.46 per basic and diluted share, up from $11.7 million or $0.40 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 now includes
straight-lined rents, resulting in an increase in rents of $588,000 or
$0.02 per diluted share in the third quarter of 2000 and $404,000 or $0.01 per
diluted share in the same period of 1999. Revenues were $25.8 million for the
quarter, a 24% increase compared to revenues of $20.8 million in the third
quarter of 1999. Net income was $6.5 million, or $0.31 per basic and diluted
share, compared to $6.2 million, or $0.29 per basic and diluted share, in the
same quarter last year. This is the Company's first quarter in which the
annualized rental revenue run rate exceeded $100 million.
For the nine-month period ended September 30, 2000, FFO was $39.6 million,
or $1.36 per basic share and $1.35 per diluted share, up from $31.5 million,
or $1.10 per basic and diluted share, in the same period last year.
Total revenues for the nine-month period were $76.2 million compared to
$51.4 million for the same period in 1999, an increase of 48%. Net income for
the period was $19.2 million, or $0.92 per basic share and $0.91 per diluted
share, compared to $15.5 million, or $0.72 per basic and diluted share, in the
same period last year.
The Company previously announced on October 18, 2000 that its Board of
Trustees declared a cash dividend of $0.3775 per share for the third quarter.
The dividend is payable on November 21, 2000 to shareholders of record as of
November 10, 2000. The third quarter dividend is the 11th consecutive increase
in the quarterly dividend and represents an annualized rate of $1.51 per share
and a 11% yield based upon Monday's closing stock price.
The Company also announced on October 11, 2000 that it completed
approximately $39.6 million of acquisitions since the end of the second
quarter 2000. Of that amount, approximately $32.5 million in acquisitions
were completed during the third quarter, which included eight properties and
several facility improvement projects. Consideration for the properties
consisted of approximately $1.9 million in operating partnership units
(at an average price of $14.41 per unit), $1.6 million in permanent financing
and the remainder from a combination of funds drawn down on the Company's
short-term credit facilities and cash on hand. It is anticipated that the
short-term debt will be replaced with permanent financing during the fourth
quarter of 2000. The average initial lease term for the third quarter
acquisitions was 16.2 years, with multiple renewal options. Investment
spreads on these transactions were consistent with the Company's overall
portfolio.
The Company's debt to assets (total assets plus accumulated depreciation)
ratio was approximately 54% as of September 30, 2000, which falls within the
Company's current policy of limiting debt to approximately 65% of assets.
Approximately 90% of the debt outstanding as of September 30, 2000 is
substantially match-funded, non-recourse debt. To minimize interest rate
risk, the Company intends to maintain at least 85% of its total outstanding
debt as long-term fixed rate debt or floating rate debt that is substantially
match-funded with its leases. Virtually all of the Company's debt is secured
financing with a weighted average remaining term of 11.6 years, which
approximates the remaining weighted average lease term of 11.7 years.
Commenting on today's news, Thomas D. Eckert, President and Chief
Executive Officer, stated, "We are very pleased with our third quarter
performance reflecting stronger acquisition activity and strict control over
our expenses. Accordingly, we believe the Company is well positioned to
deliver consistent operating results. Although we have seen recent automobile
manufacturers' profitability decline, our tenants, and franchise dealers in
general, continue to report very solid results. Because of the significant
profitability derived from franchise dealers' used car and parts and service
operations, we expect our portfolio to perform well, despite cyclical
downturns in the economy. We have built a very solid, geographically diverse
portfolio with strong tenants. Our balance sheet is structured to have
minimal interest rate risk. With our 2001 FFO growth projected at 7% and a
current dividend yield of 11%, we are producing terrific risk adjusted returns
for our shareholders."
David S. Kay, Vice President and Chief Financial Officer added, "We expect
to finish 2000 with adjusted FFO (FFO excluding straight-line rents) at
$1.73, $0.01 above the current analyst consensus estimate. As for 2001, we
remain comfortable with the current analyst consensus adjusted FFO estimate of
$1.84 per share. In addition, we expect to pay our shareholders an annual
dividend of $1.50 and $1.54 per share for 2000 and 2001, respectively. The
2001 consensus estimate is based on acquisition volume of approximately $75 to
$125 million and investment spreads consistent with our overall portfolio.
Although the timing of acquisitions may vary from quarter to quarter, we
remain comfortable with this guidance."
As of October 20, 2000, the Company's portfolio included 240 properties
with an asset value of $991 million consisting of 356 automotive franchises in
27 states. 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 13.4 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.
CAPITAL AUTOMOTIVE
UNAUDITED SUPPLEMENTAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Nine Months Ended
September 30, September 30,
Statements of: 2000 1999 2000 1999
Operations
Revenue:
Rental $25,612 $20,183 $75,378 $50,380
Interest and other 156 574 830 1,063
Total revenue 25,768 20,757 76,208 51,443
Expenses:
Depreciation and
amortization 4,421 3,497 13,075 11,177
General and
administrative 1,646 1,603 4,970 5,230
Interest 10,595 7,401 31,227 14,400
Total expenses 16,662 12,501 49,272 30,807
Net income before
minority interest 9,106 8,256 26,936 20,636
Minority interest (2,619) (2,074) (7,711) (5,100)
Net income $6,487 $6,182 $19,225 $15,536
Basic earnings per
share $0.31 $0.29 $0.92 $0.72
Diluted earnings per
share $0.31 $0.29 $0.91 $0.72
Weighted average number
of common shares -
basic 20,811 21,607 20,867 21,607
Weighted average number
of common shares -
diluted 21,096 21,640 21,061 21,626
Funds From Operations (FFO):
Net income before
minority interest $9,106 $8,256 $26,936 $20,636
Adjustments:
Add: Real estate
depreciation and
amortization 4,395 3,477 13,000 11,105
Less: Gain on sale
of assets - (81) (311) (245)
FFO (A) $13,501 $11,652 $39,625 $31,496
Basic FFO per share $0.46 $0.40 $1.36 $1.10
Diluted FFO per share $0.46 $0.40 $1.35 $1.10
Adjusted Funds From
Operations (AFFO):
FFO $13,501 $11,652 $39,625 $31,496
Less: straight-lined
rents (588) (404) (1,617) (404)
AFFO (B) $12,913 $11,248 $38,008 $31,092
Basic AFFO per share $0.44 $0.39 $1.30 $1.09
Diluted AFFO per share $0.44 $0.39 $1.29 $1.09
Weighted average
number of common
shares and units -
basic 29,166 28,808 29,200 28,518
Weighted average
number of common
shares and units -
diluted 29,452 28,840 29,394 28,536
(A) FFO is calculated using the revised definition from NAREIT's
October 1999 White Paper, which includes straight-lined rents,
totaling $588,000, or $0.02 per diluted share for the three months
ended September 30, 2000 and $1,617,000, or $0.06 per diluted share
for the nine months ended September 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.
(B) AFFO is calculated as FFO less straight-lined rents.
September 30, Dec. 31,
2000 1999
Selected Balance Sheet Data (in thousands) (unaudited)
Real estate before accumulated depreciation $984,162 $935,525
Cash and cash equivalents 4,149 11,886
Total assets 970,414 942,559
Mortgage loans 507,540 501,510
Borrowings under credit facilities 32,800 -
Total other liabilities 15,267 26,066
Minority Interest 119,647 115,384
Total shareholders' equity 295,160 299,599
September 30, Dec. 31,
Selected Portfolio Data (unaudited) 2000 1999
Properties 239 230
States 27 27
Land acres 1,401 1,292
Square footage of buildings (in millions) 8.4 8.0
Average lease term (in years) 13.4 13.3
Franchises 355 349