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 /PRNewswire/ -- Capital Automotive (Nasdaq: CARS), 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, 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 .
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 frbinc.com .
The Company will host a conference call at 11:00 a.m. Eastern Daylight Time today to discuss these quarterly results, market trends and future outlook. The conference call will be broadcast live over the Internet and can be accessed by all interested parties from the Company's web site at www.capitalautomotive.com . Please allow extra time prior to the call to visit the site and download the streaming media software required to listen to the Internet broadcast. A replay of the webcast will be available for 15 days following the call. |
