Capital Automotive, a specialty finance company for automotive retail real estate, today announced record financial results for the third quarter and nine months ended Sept. 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 percent 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 Sept. 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 percent. 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.

"We are very pleased with our third quarter performance reflecting stronger acquisition activity and strict control over our expenses," said Thomas D. Eckert, president and CEO of Capital Automotive. "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 percent and a current dividend yield of 11 percent, 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."

Capital previously announced on Oct. 18 that its Board of Trustees declared a cash dividend of $0.3775 per share for the third quarter. The dividend is payable on Nov. 21 to shareholders of record as of Nov. 10. 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 percent yield based upon Monday's closing stock price.

Capital also announced on Oct. 11 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.

Capital Automotive officials anticipate 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.

Capital's debt to assets (total assets plus accumulated depreciation) ratio was approximately 54 percent as of Sept. 30, 2000, which falls within the company's current policy of limiting debt to approximately 65 percent of assets. Approximately 90 percent of the debt outstanding as of Sept. 30, 2000 is substantially match-funded, non-recourse debt.

To minimize interest rate risk, Capital intends to maintain at least 85 percent 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.

As of Oct. 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 percent 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.

Capital has entered into transactions with 15 of the top 100 dealer groups in the country, 14 of which are tenants. Approximately two-thirds of the Company's annualized rental revenues are derived from this group of tenants.

Capital Automotive, headquartered in McLean, Virginia, 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 www.capitalautomotive.com.

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