U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                                   (Mark One)
[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
    1934

                  For the fiscal year ended December 31, 2001
                                       or
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
    of 1934

                           Commission File No. 0-28378
                                  AMREIT, INC.
                 (Name of small business issuer in its charter)
         Maryland                                    76-0410050
(State or other jurisdiction of                      (I.R.S. Employer
Incorporation or organization)                        Identification No.)

8 Greenway Plaza, Suite 824
Houston, Texas                                       77046
(Address of principal executive offices)             (Zip Code)

Issuer's telephone number, including area code:  (713) 850-1400

   Securities registered under Section 12(b) of the Exchange Act: None
   Securities registered under Section 12(g) of the Exchange Act: Shares of
      Common Stock

Check  whether the issuer (1) has filed all reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months  (or for
such  shorter  period  that the  issuer was  required  to file such  reports),
and (2) has been  subject  to such  filing requirements for the past
90 days:  Yes      X        No
             -----------      --------------

Check if there is no disclosure of delinquent filers in response to Item 405 of
Registration S-B is not contained in this form, and no disclosure will be
contained, to the best of issuer's knowledge, in definitive proxy or informative
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

Issuer's revenues for its most recent fiscal year:    $5,946,442

Aggregate market value of the voting stock held by non-affiliates of the issuer:
                          No Established Trading Market

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 2,344,794 shares of Common Stock as
of March 15, 2002

<PAGE>


                       DOCUMENTS INCORPORATED BY REFERENCE

1. Portions of the Prospectus of Registrant dated June 18, 1996 (included in
Registration Statement No. 0-28378 of Registrant) and as supplemented February
28, 1997, October 16, 1997, December 1, 1997 and February 11, 1998 are
incorporated by reference into Part III.

2. Issuer incorporates by reference into Part III portions of its Proxy
Statement for the 2001 Annual Meeting of Shareholders.

Transitional Small Business Disclosure Format (check one): Yes    No     X
                                                             -----    --------




















                                       2
<PAGE>


                                     PART I

Item 1.    Description of Business

General

AmREIT, Inc., formerly American Asset Advisers Trust, Inc. ("Issuer" or the
"Company"), was incorporated in the state of Maryland on August 17, 1993, and is
structured as a Real Estate Investment Trust for federal income tax purposes.
AmREIT, like its predecessor, has been an entrepreneurial real estate company,
with a primary focus on growing its portfolio of credit tenant leased
freestanding commercial properties and frontage shopping centers, as well as
growing its sponsorship of high quality real estate investment products for the
NASD financial planning community within the United States. Through a wholly
owned subsidiary, the Company provides advisory and management services to
thirteen real estate limited partnerships.

The Company focuses on acquiring credit tenant leased commercial properties and
frontage shopping centers that are located primarily on corner or out-parcel
locations in strong commercial corridors near traffic generators, such as major
regional malls, power centers and discount retailers. These properties, which
attract a wide array of established commercial tenants, offer attractive
opportunities for stable current return and potential capital appreciation. In
addition, management believes that the location and design of properties in this
niche provide flexibility in use and tenant selection and an increased
likelihood of advantageous re-lease terms.

The Company has been successful in attracting tenants that operate in different
commercial segments, including Radio Shack, Wherehouse Entertainment, OfficeMax,
Inc., International House of Pancakes, Hollywood Video (leased to Hollywood
Entertainment Corp.), Texas Children's Hospital, Memorial Herman Hospital and
Washington Mutual, a Federal Savings Bank.

Properties that are acquired by the Company are generally newly constructed or
recently constructed as of the time of acquisition. Additionally, the Company
has the development expertise to self-develop properties for credit tenants and
to develop frontage shopping centers for regional and national commercial
tenants. To date, the Company has acquired only properties that are subject to a
lease in order to avoid the risks inherent in initial leasing. The Company's
credit tenant leases typically provide that the tenant bear responsibility for
substantially all property costs and expenses associated with ongoing
maintenance and operation such as utilities, property taxes and insurance. Some
of the credit tenant leases require that the Company be responsible for roof and
structural repairs. In these instances, the Company normally requires warranties
and/or guarantees from the related vendors, suppliers and/or contractors, to
mitigate the potential costs of repairs during the primary terms of the leases.

The Company's leases typically do not limit the Company's recourse against the
tenant and any guarantor in the event of a default, and for this reason are
considered "full-credit" leases.

A further description of the Company's business is included in Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in Item 6 of this Form 10-KSB.

The objectives of the Company are:


(1)  To strive, as stewards of our investors' resources, to enhance the
     long-term shareholder value of AmREIT and to embrace the need for short
     term results. The Company intends to continue

                                       3
<PAGE>

     to pay a stable, growing, moderate quarterly distribution with a special
     fifth distribution at the end of the year, which will be a result of the
     activity generated in AmREIT Realty Investment Corporation, a wholly-owned
     taxable REIT subsidiary;
(2)  to be the partner of choice to America's finest companies in solving their
     corporate real estate problems;
(3)  to be the highest quality real estate investment product sponsor within the
     U.S. serving the National Association of Securities Dealers ("NASD")
     financial planning community, creating balanced funds that maximize
     investor value by using a conservative, actively managed, entrepreneurial
     approach to real estate investing; and
(4)  to enhance our employees' lives by providing a job that calls them to a
     higher plane of using their gifts, a corporate environment that allows
     attainment of their individual needs of physical, mental and spiritual
     well-being and a clear system of measurement that allows to attract and
     retain quality employees.

There is no assurance that these objectives can be achieved.

AmREIT has an independent board of directors, which is comprised of Steve
Dawson, board member since 1999, is the Chief Financial Officer of Camden
Property Trust, A New York Stock Exchange REIT. Bryan Goolsby, board member
since 1999, is the sole managing partner of Locke Liddell & Sapp, a prestigious
law firm who specialize's in SEC and REIT law. Robert Cartwright, board member
since 1993, is a tenured professor of Rice University and a graduate of Harvard
and Stanford Universities. Philip Taggart, board member since 1999, is the
President of a firm that has been involved in over 100 initial public offerings
and secondary offerings. In addition to having a quality board of directors,
AmREIT's service providers include Deloitte & Touch, Wells Fargo, Locke Liddell
& Sapp and others.

Properties

At December 31, 2001, the Company owned nineteen properties, thirteen directly
and six through joint ventures, all in fee simple. Eight of these properties are
located in Texas, two each are located in Louisiana, Missouri and Kansas and one
each in Georgia, Arizona, Delaware, Tennessee, and Mississippi. Although the
specific terms of each lease vary, a summary of the terms of the leases is as
follows:

The primary term of the leases ranges from ten to twenty-five years. Seventeen
of the leases also provide for two to four five-year renewal options. The leases
are "triple-net" leases under which the tenants are responsible for the property
taxes, insurance and operating costs. Annual rental income ranges from $59,641
to $412,768. All of the leases provide for either percentage rents based on
sales in excess of certain amounts, periodic escalations in the annual rental
rates or both.

As of December 31, 2001, two of the Company's properties each accounted for more
than 10% of the Company's total assets. Summarized as follows are the
significant items pertaining to each of these properties:

Sugarland Plaza, a multi-tenant development was originally acquired on July 1,
1998 for a purchase price of $3,928,997, and is located at U.S. Highway 59 and
Sweetwater Boulevard in Sugar Land, Texas. This 1.59 acre property is currently
occupied by two tenants, Mattress Giant and River Oaks Imaging and Diagnostic
Clinic. On January 1, 2001 the Company entered into a ten-year lease with River
Oaks Imaging and Diagnostic Clinic for approximately 10,750 square feet. The
lease agreement also provides for an escalation in the rent after the fifth year
and two five-year renewal options. On March 31, 2001, the Company entered into a
ten-year lease with Mattress Giant for approximately 6,000 square feet. The
lease agreement also provides for an escalation in the rent after the fifth year
and two five-year renewal options. The Company recorded $322,817 and $63,618 of
revenue from this property in 2001 and 2000 respectively.

The Woodlands Plaza, a multi-tenant development was originally acquired on June
3, 1998 for a purchase price of $3,751,555. This 2.561-acre property is
currently under renovation and is being converted from a single-tenant property
into a multi-tenant storefront property, with estimated redevelopment costs of
$1,082,000. The Company has signed a ten-year lease with Skewers Inc. The
Company has engaged a national real estate broker, along with AmREIT's brokerage
team, to manage the initial leasing of this property. As of December 31, 2001
the

                                       4
<PAGE>

Company was negotiating multiple letters of intent with various tenants, which
would occupy 100% of the remaining vacant space. The Company recorded $0 and
$61,986 of revenue from this property in 2001 and 2000 respectively.

The Company's leases specify the amount, if any, of insurance coverage required
to be carried by each tenant. Management of the Company believes that the
insurance policies required to be carried by the tenants combined with the
insurance carried by the Company will adequately cover the replacement cost of
the properties and any personal liability losses, which the Company may
foreseeably sustain.

Financing - Borrowing Policies

The Company may incur unsecured and secured borrowings, as long as the total
amounts of such borrowings do not exceed 300% of the Company's net assets on a
consolidated basis. At December 31, 2001, the Company's total borrowings were
approximately 43.7% of the Company's net assets on a consolidated basis.

Competitive Conditions

The Company generally competes with other REIT's, real estate limited
partnerships and other investors, including, but not limited to, insurance
companies, pension funds and financial institutions involved in the acquisition,
leasing, financing and disposition of investments in net-leased commercial
properties.


Employees

At December 31, 2001, the Company had 13 full-time employees, two real estate
brokers and various part-time and seasonal personnel.

Item 2.     Description of Property

At December 31, 2001, the Company owned nineteen properties in fee simple,
thirteen directly and six through joint ventures with related parties.
Properties are located in Texas, Georgia, Arizona, Missouri, Louisiana,
Delaware, Mississippi, Tennessee and Kansas. Reference is made to the Schedule
III - Consolidated Real Estate Owned and Accumulated Depreciation filed with
this Form 10-KSB for a listing of the properties and their respective costs.

Land - The Company's property sites range from approximately 34,000 to 125,000
square feet, depending upon building size and local demographic factors. Sites
purchased by the Company are in high traffic corridors and have been reviewed
for traffic and demographic pattern and history.

Buildings - The buildings are single and multi-tenant properties and are located
at "main and main" locations throughout the United States. They are positioned
for good exposure to traffic flow and are constructed from various combinations
of stucco, steel, wood, brick and tile. Buildings range from approximately 2,350
to 24,000 square feet. Buildings are suitable for possible conversion to various
uses, although modifications may be required prior to use for other operations.

Leases - The primary term of the leases ranges from ten to twenty-five years.
All nineteen leases also provide for two to four five-year renewal options. The
freestanding, credit tenant leases are primarily "triple-net" leases whereby the
tenants are responsible for the property taxes, insurance and operating costs.
Annual rental income ranges from $59,641 to $412,768. All leases provide for
either percentage rents based on sales in excess of certain amounts, periodic
escalations in the annual rental rates or both.

                                       5

<PAGE>

Geographic Location - The properties are generally located within major
metropolitan areas (Standard Metropolitan Statistical Areas) with populations
that exceed 250,000. For additional information, see Note 6 to the financial
statements included in this Form 10-KSB.

As of December 31, 2001, the Company on a consolidated basis, has invested cash
of $37,456,349 in properties. This includes land, building and acquisition
costs. A further description of the Company properties, including acquisition
fees and certain acquisition expenses, is included in Item 1 "Properties" and in
Schedule III - Consolidated Real Estate Owned and Accumulated Depreciation of
this Form 10-KSB.

Item 3.     Legal Proceedings

The Company does not have any material legal proceedings pending.

Item 4.     Submission of Matters to a Vote of Security Holders

No matters were submitted to shareholders during the fourth quarter of the
fiscal year.

















                                       6
<PAGE>


                                     PART II

Item 5.    Market for Common Equity and Related Stockholder Matters

As of March 15, 2002, there were approximately 1,069 record holders of 2,344,794
shares of the Company's common stock, net of 29,768 shares held in treasury. No
established public trading market currently exists for the stock.

For the years ended December 31, 2001 and 2000, the Company paid distributions
of $604,742 and $227,090, respectively. A summary of the distributions by
quarter is as follows:

                  Quarter Ended           2001                  2000
                  -------------       -----------           -----------
                  March 31             $  100,000            $ 43,185
                  June 30                 117,717              54,000
                  September 30            137,025              60,000
                  December 31             250,000              69,905

The second quarter of 1994 marked the beginning of the Company's regular
operations and, consequently, the beginning of regular quarterly distribution
payments.  The distributions of $604,742 represent an increase over 2000
distributions of approximately 166%. The company's philosophy is to pay out a
conservative regular quarterly distribution based on the operations of AmREIT
Inc., and then to pay out a special distribution in the fourth quarter of each
year that represents a portion the activity that has been generated in AmREIT
Realty Investment Corporation, the Company's taxable REIT subsidiary. At
December 31, 2001, the Company paid a special distribution of $100,000 and a
regular distribution of $150,000. The Company intends to continue the payment of
quarterly distributions. Other than loan covenants, there are currently no
material legal restrictions that would limit the Company's ability to pay
distributions.

For the year, the Company repurchased a total of 24,723 shares of common stock
at a price of $6.50 per share. These shares were repurchased primarily due to
investor hardship situations. The repurchase price of $6.50 was based on a
discount of net asset value and a calculation of previously received
distributions.

Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

The Company is a fully integrated, self-administered real estate investment
trust. The Company was organized on August 17, 1993 as an entrepreneurial real
estate company, with a primary focus on growing its portfolio of credit tenant
leased freestanding commercial properties and frontage shopping centers, as well
as growing its sponsorship of high quality real estate investment products for
the NASD financial planning community within the United States. Through a wholly
owned subsidiary, the Company also provides advisory services to thirteen real
estate limited partnerships.

Liquidity and Capital Resources

Cash flow from operations has been the principal source of capital to fund the
Company's ongoing operations. The Company's issuance of common stock and the use
of the Company's credit facility have been the principal sources of capital to
fund its growth.

Net cash provided by operating activities increased from $676,430 in 2000 to
$1,625,417 in 2001. The increase in cash provided by operating activities was
due primarily to the following components: (1) an increase in net income of
$1,003,000, from a loss of $212,492 in 2000 to income of $790,508 in 2001, and
(2) the increase of accounts payable of $830,715, from $5,977 in 2000 to

                                       7
<PAGE>

$836,692 in 2001. The above increases are offset somewhat by an increase in
accounts receivable of $388,442 in 2001, compared to a decrease of $149,232 in
2000.

Net cash used in investing activities increased by $2,307,171 to $2,332,891 in
2001 when compared to 2000. The increase was primarily due to an increase in
property acquisitions of $3,445,279 in 2001. Investment in joint ventures also
increased by $728,958 from $1,000 in 2000 to $729,958 in 2001. In addition,
improvements to real estate increased by $398,846. That increase is primarily
attributed to costs incurred at Sugar Land Plaza and Lake Woodlands Plaza to
accommodate new tenants. The increases were partially offset by the proceeds
from the sale of property, which increased $2,516,760 from $3,499 in 2000 to
$2,520,259 in 2001.

Net cash used in financing activities decreased $832,313 in 2001 when compared
to 2000. The decrease was primarily due to proceeds from notes payable, which
totaled $8,038,500 in 2001 compared to $0 in 2000. The proceeds were used to pay
down existing debt and to acquire new properties. The increase in loan proceeds
were partially offset by an increase in payments of notes payable. Payments of
notes payable increased $6,530,939 from $8,195 in 2000 to $6,539,134 in 2001.

In order to continue to expand and develop its portfolio of properties and other
investments, the Company intends to finance future acquisitions and growth
through the most advantageous sources of capital available at the time. Such
capital sources may include proceeds from public or private offerings of the
Company's debt or equity securities, secured or unsecured borrowings from banks
or other lenders, a merger with certain affiliated partnerships or other
unrelated companies, or the disposition of assets, as well as undistributed
funds from operations.

At December 31, 2001, the Company had a joint proxy and consent solicitation
statement and prospectus on file with the SEC. This registration statement,
which was not effective at December 31, 2001, proposed, among other items, the
merger of certain affiliated partnerships into AmREIT.

The Company's leases typically provide that the tenant bear responsibility for
substantially all property costs and expenses associated with ongoing
maintenance and operation, including utilities, property taxes and insurance. In
addition, the Company's leases generally provide that the tenant be responsible
for roof and structural repairs. Some of the tenants' leases require the Company
to be responsible for roof and structural repairs. In these instances, the
Company normally requires warranties and/or guarantees from the related vendors,
suppliers and/or contractors, to mitigate the potential costs of repairs during
the primary terms of the leases. Because many of the properties which are
subject to leases that place these responsibilities on the Company are recently
constructed, management anticipates that capital demands to meet obligations
with respect to these properties will be minimal for the foreseeable future and
can be met with funds from operations and working capital. The Company may be
required to use bank borrowing or other sources of capital in the event of
unforeseen significant capital expenditures.

In November 1998, the Company entered into an unsecured credit facility (the
"Credit Facility"), which is being used to provide funds for the acquisition of
properties and working capital, and repaid all amounts outstanding under the
Company's prior credit facility. Under the Credit Facility, which had an
original term of one year, and has been extended through April 2002, the Company
may borrow up to $13 million subject to the value of unencumbered assets. The
Company intends to either seek an additional extension of time for the Credit
Facility, and is currently working with its lender to extend the existing Credit
Facility under comparable terms and conditions or seek additional permanent
financing to satisfy its obligation for the Credit Facility. The Credit Facility
contains covenants which, among other restrictions, require the Company to
maintain a minimum net worth, a maximum leverage ratio, and specified interest
coverage and fixed charge coverage ratios. At December 31, 2001, the Company was
in compliance with all of the covenants on the Credit Facility. The Credit
Facility bears interest at an annual rate of LIBOR plus a spread of 1.875%. As
of December 31, 2001, $9,230,048 was outstanding under the Credit Facility. The
Company has approximately $2,442,800 availability under its line of credit,
subject to use of proceeds approval by the lender.

                                       8
<PAGE>

As of December 31, 2001, the Company had acquired thirteen properties directly
and six properties through joint ventures with entities with common management
and had invested $37,456,349, exclusive of any minority interests, including
certain acquisition expenses related to the Company's investment in these
properties. These expenditures resulted in a corresponding decrease in the
Company's liquidity.

Until properties are acquired by the Company, proceeds are held in short-term,
highly liquid investments which the Company believes to have appropriate safety
of principal. This investment strategy has allowed, and continues to allow, high
liquidity to facilitate the Company's use of these funds to acquire properties
at such time as properties suitable for acquisition are located. At December 31,
2001, the Company's cash and cash equivalents totaled $227,117.

The Company made cash distributions to the Shareholders during 2001 and 2000,
distributing a total of $604,742 and $227,090, respectively, for each such
fiscal year.

Inflation has had very little effect on income from operations. Management
expects that increases in store sales volumes due to inflation as well as
increases in the Consumer Price Index (C.P.I.), may contribute to capital
appreciation of the Company properties. These factors, however, also may have an
adverse impact on the operating margins of the tenants of the properties.

Funds From Operations

Funds from operations ("FFO") increased $755,798 to $978,565 in 2001 from
$222,767 in 2000. The Company has adopted the National Association of Real
Estate Investment Trusts (NAREIT) definition of FFO. FFO is calculated as net
income (computed in accordance with generally accepted accounting principles)
excluding gains or losses from sales of depreciable operating property,
depreciation and amortization of real estate assets, and excluding results
defined as "extraordinary items" under generally accepted accounting principles.
FFO should not be considered an alternative to cash flows from operating,
investing and financing activities in accordance with generally accepted
accounting principles and is not necessarily indicative of cash available to
meet cash needs. The Company's computation of FFO may differ from the
methodology for calculating FFO utilized by other equity REIT's and, therefore,
may not be comparable to such other REIT's. FFO is not defined by generally
accepted accounting principles and should not be considered an alternative to
net income as an indication of the Company's performance.

Below is the reconciliation of net income to funds from operations:

                                                 2001                 2000
                                              ---------             ---------
Net income (loss)                             $ 790,508             $(212,492)
Plus depreciation of real estate assets         442,070               435,259
Less gain of sale of real estate assets        (254,013)                    -
                                              ---------             ---------
Total funds from operations                   $ 978,565             $ 222,767

Cash distributions paid                       $ 604,742             $ 227,090
Distributions (less than) in excess of FFO    $(373,823)            $   4,323

                                       9
<PAGE>

Cash flows from operating activities, investing activities, and financing
activities are presented below:

                                   2001                    2000
                                -----------              ---------
Operating activities            $ 1,625,417              $ 676,430
Investing activities            $(2,332,891)             $ (25,720)
Financing activities            $    (1,276)             $ 833,589)


Results of Operations

Years Ended December 31, 2001 and 2000:

During the years ended December 31, 2001 and 2000, the Company owned and leased
nineteen properties. During the years ended December 31, 2001 and 2000, the
Company had revenues of $3,285,774 and $3,125,294, respectively, in rental
income from operating leases and earned income from direct financing leases.
Revenue of $2,699,732 and $2,539,702 in 2001 and 2000 respectively, are from
properties owned directly by the Company. Revenue of $586,042 and $585,592 in
2001 and 2000 respectively, are from properties owned in joint ventures. The
increase in revenue is primarily attributed to the leasing of Sugar Land Plaza,
formerly known as the Just For Feet Building in Sugar Land, which was vacant for
much of 2000.

The Company sold two properties during 2001, a Church's Chicken in Smyrna,
Georgia and an IHOP in Reno, Nevada. The Company realized a gain on sale of
these properties of $254,013.

Service fees and other income increased from $794,102 in 2000 to $2,396,100 in
2001. The primary reason for the $1,601,998 increase is attributed to an
increase in fees related to the Company's Capital Development Partners program
which generated gross revenues of $1,208,236 and $127,290 in 2001 and 2000
respectively. Additionally commission income from real estate sales and leasing
commissions increased from $91,385 in 2000 to $627,241 in 2001.

General and administrative costs were $1,953,285 in 2001 compared to $1,446,638
in 2000. The increased general and administrative costs are primarily related to
property costs incurred due to the vacant Lake Woodlands Plaza, formerly known
as the Just For Feet Building in The Woodlands. Additionally, compensation costs
increased related to positions added to build our professional teams.

Legal and professional fees increased from $242,161 in 2000 to $1,002,776 in
2001. The primary increase is due to costs associated with the Capital
Development Partners program.

Potential acquisition costs for 2001 was zero compared to $153,236 in 2000.
These potential acquisition costs are related to the proposed acquisition of
certain affiliated limited partnerships. These potential acquisition costs are
primarily due to transaction related legal fees, appraisals, accounting fees and
underwriting/fairness.

Interest expense was $1,063,574 in 2001 compared to $1,339,622 in 2000. Included
with interest expense is the amortization of loan costs. Loan cost amortization
was $39,707 for 2001 and $70,265 for 2000. The decrease in interest is primarily
due to a decrease in the average interest rates, which is partially offset by an
increase in the average debt balance. For 2001 the Company's total notes payable
increased $1,499,366 due to property acquisitions. The weighted average interest
rate at December 31, 2001 was 6.0% compared to December 31, 2000 of 8.2%. The
outstanding notes payable at December 31, 2001 was $16,971,549.

Forward-Looking Statements

Certain information presented in this Form 10-KSB constitutes forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Although the Company
believes that the expectations reflected in such forward-looking statements are
based upon reasonable assumptions, the Company's actual results could differ
materially from those set forth in the forward-looking statements. Certain
factors that might cause such a difference include the following: changes in
general economic conditions, changes in real estate market conditions, continued
availability of proceeds from the Company's debt or equity capital, the ability
of the Company to locate suitable tenants for its properties and the ability of
tenants to make payments under their respective leases.

                                       10
<PAGE>

Item 7.   Financial Statements.

The response to this item is submitted in Item 13(a) of this report and is
incorporated herein by reference.

Item 8.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosures.

None.

























                                       11
<PAGE>


                                    PART III
Item 9. Directors and Executive Officers

Reference is made to the Company's definitive proxy statement to be filed with
the Commission pursuant to Regulation 14(a).

Item 10.   Executive Compensation

Reference is made to the Company's definitive proxy statement to be filed with
the Commission pursuant to Regulation 14(a).

Item 11. Security Ownership of Certain Beneficial Owners and Management

Reference is made to the Company's definitive proxy statement to be filed with
the Commission pursuant to Regulation 14(a).

Item 12. Certain Relationships and Related Transactions

Reference is made to the Company's definitive proxy statement to be filed with
the Commission pursuant to Regulation 14(a).
















                                       12
<PAGE>


                                     PART IV

Item 13. Exhibits, Financial Statements, Schedules and Reports on Form 8-K.

(a)    (1)    Financial Statements
              Independent Auditors' Report
              Consolidated Balance Sheet, December 31, 2001
              Consolidated Statements of Operations for the Years Ended December
              31, 2001 and 2000 Consolidated Statements of Shareholders' Equity
              for the Years Ended December 31, 2001 and 2000 Consolidated
              Statements of Cash Flows for the Years Ended December 31, 2001 and
              2000 Notes to Consolidated Financial Statements for the Years
              Ended December 31, 2001 and 2000

       (2)     Financial Statement Schedules: See (d) below

       (3)     Exhibits   See (c) below

(b)            Reports on Form 8-K filed after September 30, 2001:

               None

(c)            Exhibits

3.1           Articles of  Incorporation  (included  as Exhibit 3.1 of the
                  Exhibits to  Registration  Statement  No.  33-70654 of the
                  Company and incorporated herein by reference).

3.2           Articles of Amendment to the Articles of  Incorporation  (included
                  as Exhibit 3 (ii) of the  Company's  Annual Report on
                  Form 10-K for the year ended December 31, 1994 and
                  incorporated herein by reference).

3.3           Articles of  Amendment  to the  Articles of  Incorporation  dated
                  December  16, 1997  (included as Exhibit 3 (v) of the
                  Exhibits  to the  Company's  Annual  Report on Form  10-KSB
                  for the year  ended  December  31,  1997 and
                  incorporated herein by reference).

3.4           Amended and  Restated  By-Laws,  dated  November 12, 1997
                  (included as Exhibit 3 (vi) of the Exhibits to the  Company's
                  Annual Report on Form 10-KSB for the year ended December 31,
                  1997 and incorporated herein by reference).

4             Form of Sales  Warrant  (included as Exhibit 4.3 to  Registration
                  Statement  No.  33-70654 of Company and  incorporated
                  herein by reference).

10.1           Lease between Ironwood Development Corporation, as landlord and
                  Tandy Corporation, a Delaware corporation, dated August 1991
                  (included as Exhibit 10 (b) (2) of the Exhibits to the
                  Company's Annual Report on Form 10-K for the year ended
                  December 31, 1995 and incorporated herein by reference).

10.2          Assignment and Assumption of the Lease between Ironwood
                  Development Corporation and American Asset Advisers Trust,
                  Inc., dated June 14, 1994 (included as Exhibit 10 (b) (1) of
                  the Exhibits to the Company's Annual Report on Form 10-K for
                  the year ended December 31, 1994, and incorporated herein by
                  reference).

                                       13
<PAGE>


 10.3          Assignment of Guaranties and Warranties from Ironwood Development
                  Corporation to American Asset Advisers Trust,  Inc., dated
                  June 14, 1994  (included as Exhibit 10 (b) (4) of the Exhibits
                  to the  Company's  Annual  Report on Form 10-K for the year
                  ended December 31, 1995 and incorporated herein by reference).

 10.4          Real Estate Sales Agreement between  America's  Favorite Chicken
                  Company and AAA Net Realty Fund X, Ltd., dated June 13, 1994
                  (included as Exhibit 10 (b) (5) of the  Exhibits to the
                  Company's  Annual  Report on Form 10-K for the year ended
                  December 31, 1995 and incorporated herein by reference).

 10.5          Lease (the "AFCC Lease") between AAA Net Realty Fund X, Ltd., as
                  landlord and America's  Favorite  Chicken  Company, as
                  tenant,  dated June 13, 1994  (included  as Exhibit 10 (b)(6)
                  of the  Exhibits to the  Company's  Annual Report on Form 10-K
                  for the year ended December 31, 1995 and incorporated herein
                  by reference).

 10.6          Assignment of the Agreement and the Lease form AAA Net Realty
                  Fund X, Ltd.  to American  Asset  Advisers  Trust,  Inc
                  (included  as Exhibit 10 (b) (7) of the  Exhibits  to the
                  Company's  Annual  Report on Form 10-K for the year ended
                  December 31, 1995 and incorporated herein by reference).

 10.7          First  Amendment to AFCC Lease,  dated July 22, 1994  (included
                  as Exhibit 10 (b) (8) of the Exhibits to the  Company's
                  Annual Report on Form 10-K for the year ended December 31,
                  1995 and incorporated herein by reference).

 10.8          Agreement  for  Purchase and Sale of Real Estate (the "KCBB
                  Contract")  between  KCBB,  Inc. and AAA Net Realty Fund X,
                  Ltd.,  dated  October 12, 1994  (included as Exhibit 10 (b)(9)
                  of the Exhibits to the  Company's  Annual Report on Form 10-K
                  for the year ended December 31, 1995 and incorporated herein
                  by reference).

 10.9          Lease (the "KCBB Lease") between KCBB, Inc., as landlord and
                  Sound Warehouse,  Inc., as tenant,  dated November 19, 1993
                  (included  as Exhibit 10 (b) (10) of the  Exhibits to the
                  Company's  Annual  Report on Form 10-K for the year ended
                  December 31, 1995 and incorporated herein by reference).

 10.10         Guaranty of KCBB Lease by Blockbuster Entertainment Corporation
                  (included as Exhibit 10 (b) (11) of the Exhibits to the
                  Company's Annual Report on Form 10-K for the year ended
                  December 31, 1995 and incorporated herein by reference).

 10.11         Amendment to the KCBB Contract (included as Exhibit 10 (b)(12)
                  of the Exhibits to the Company's Annual Report on Form 10-K
                  for the year ended December 31, 1995 and incorporated herein
                  by reference).

 10.12         Joint Venture Agreement between the Company and AAA Net Realty
                  Fund X, Ltd., dated October 27, 1994 (included as Exhibit
                  10(b) (3) of the Exhibits to the Company's Annual Report on
                  Form 10-K for the year ended December 31, 1994, and
                  incorporated herein by reference).


                                       14
<PAGE>


 10.13         Assignment and Assumption of the Lease between KCBB, Inc. and AAA
                  Joint Venture 94-1, dated November 11, 1994 (included as
                  Exhibit 10 (b) (4) of the Exhibits to the Company's Annual
                  Report on Form 10-K for the year ended December 31, 1994,
                  and incorporated herein by reference).

 10.14          Assignment from KCBB, Inc. to AAA Joint Venture
                   94-1, dated November 11, 1994 (included as Exhibit
                   10 (b) (15) of the Exhibits to the Company's
                   Annual Report on Form 10-K for the year ended
                   December 31, 1995 and incorporated herein by
                   reference).

 10.15          Assignment from KCBB, Inc., to AAA Joint Venture
                   94-1 of warranties, dated November 11, 1994
                   (included as Exhibit 10 (b) (16) of the Exhibits
                   to the Company's Annual Report on Form 10-K for
                   the year ended December 31, 1995 and incorporated
                   herein by reference).

 10.16          Agreement for Purchase and Sale of Real Estate
                   (the KCBB Contract II") between KCBB, Inc. and the
                   Company, dated August 9, 1995 (included as Exhibit
                   10 (b) (17) of the Exhibits to the Company's
                   Annual Report on Form 10-K for the year ended
                   December 31, 1995 and incorporated herein by
                   reference).

 10.17          Lease (the "KCBB Lease II") between KCBB, Inc., as landlord and
                   Blockbuster Music Retail,  Inc., as tenant, dated August
                   9, 1995  (included as Exhibit 10 (b) (18) of the  Exhibits to
                   the  Company's  Annual  Report on Form 10-K for the year
                   ended December 31, 1995 and incorporated herein by
                   reference).

 10.18           Amendment to Agreement for Purchase and Sale of
                    Real Estate Assigning Agreement to AAA Joint
                    Venture 95-2 (included as Exhibit 10 (b) (19) of
                    the Exhibits to the Company's Annual Report on
                    Form 10-K for the year ended December 31, 1995 and
                    incorporated herein by reference).

 10.19           Joint Venture Agreement between the Company and
                    AAA Net Realty Fund XI, Ltd., dated August 24,
                    1995 (included as Exhibit 10 (b) (20) of the
                    Exhibits to the Company's Annual Report on Form
                    10-K for the year ended December 31, 1995 and
                    incorporated herein by reference).

 10.20           Assignment and Assumption of the KCBB Lease II
                    between KCBB, Inc. and AAA Joint Venture 95-2,
                    dated September 12, 1995 (included as Exhibit 10
                    (b) (21) of the Exhibits to the Company's Annual
                    Report on Form 10-K for the year ended December
                    31, 1995 and incorporated herein by reference).

 10.21           Assignment from KCBB, Inc. to AAA Joint Venture
                    95-2 of Contracts and Warranties, dated September
                    12, 1995 (included as Exhibit 10 (b) (22) of the
                    Exhibits to the Company's Annual Report on Form
                    10-K for the year ended December 31, 1995 and
                    incorporated herein by reference).

 10.22           Agreement for the Purchase and Sale of Real Estate
                    between Turner Adreac, L.C. and the Company, dated
                    March 31, 1995 (included as Exhibit 10 (b) (23) of
                    the Exhibits to the Company's Annual Report on
                    Form 10-K for the year ended December 31, 1995 and
                    incorporated herein by reference).


                                       15
<PAGE>


10.23            Assignment of Rents,  Leases and Profits from Turner Adreac,
                    L.C. to American Asset Advisers Trust,  Inc.,  dated March
                    31, 1995  (included as Exhibit 10 (b) (24) of the Exhibits
                    to the  Company's  Annual  Report on Form 10-K for the year
                    ended December 31, 1995 and incorporated herein by
                    reference).

10.24            Lease (the "OneCare  Lease")  between  Turner  Adreac, L.C. and
                    OneCare  Health  Industries,  Inc., a Texas  non-profit
                    corporation,  dated  February 17, 1995  (included as Exhibit
                    10 (b) (25) of the Exhibits to the Company's Annual Report
                    on Form 10-K for the year ended December 31, 1995 and
                    incorporated herein by reference).

10.25            Assignment  and Assumption of the OneCare Lease between Turner
                    Adreac,  L.C. and American Asset Advisers  Trust,  Inc.,
                    dated  September 26, 1995 (included  as Exhibit 10 (b)(26)
                    of the  Exhibits to the  Company's  Annual Report on Form
                    10-K for the year ended December 31, 1995 and incorporated
                    herein by reference).

10.26            Assignment of Warranties from Turner Adreac, L.C.
                    to the Company, dated September 26, 1995 (included
                    as Exhibit 10 (b) (27) of the Exhibits to the
                    Company's Annual Report on Form 10-K for the year
                    ended December 31, 1995 and incorporated herein by
                    reference).

10.27            Agreement for Purchase and Sale of Real Estate
                    between Company and Tucson Oracle Limited
                    Partnership (AZ LP), dated January 19, 1996
                    (included as Exhibit 10 (b) (28) of the Exhibits
                    to the Company's Annual Report on Form 10-K for
                    the year ended December 31, 1995 and incorporated
                    herein by reference).

10.28            First Amendment to Agreement for the Purchase and
                    Sale of Real Estate between Company and Tucson
                    Oracle Limited Partnership (AZ LP), dated June 10,
                    1996 (included as Exhibit 10 (b) (29) of the
                    Exhibits to the Company's Annual Report on Form
                    10-K for the year ended December 31, 1996 and
                    incorporated herein by reference).

10.29            Lease (the "Just For Feet Lease") between Cumberland America
                    Development  Company,  Inc. and Just for Feet, Inc., dated
                    August 10, 1995  (included as Exhibit 10 (b) (30) of the
                    Exhibits to the Company's  Annual Report on Form 10-K for
                    the year ended December 31, 1996 and incorporated herein by
                    reference).

10.30            First Amendment to Just For Feet Lease, dated
                    February 29, 1996 (included as Exhibit 10 (b) (31)
                    of the Exhibits to the Company's Annual Report on
                    Form 10-K for the year ended December 31, 1996 and
                    incorporated herein by reference).

10.31            Second Amendment to Just For Feet Lease, dated May
                    29, 1996 (included as Exhibit 10 (b) (32) of the
                    Exhibits to the Company's Annual Report on Form
                    10-K for the year ended December 31, 1996 and
                    incorporated herein by reference).

10.32            Third Amendment to Just For Feet Lease,
                    dated January 1997 (included as Exhibit
                    10 (b) (33) of the Exhibits to the
                    Company's Annual Report on Form 10-K
                    for the year ended December 31, 1996
                    and incorporated herein by reference).


                                       16
<PAGE>


10.33            Joint  Venture  Agreement  between the Company and AAA Net
                    Realty Fund X, Ltd. and AAA Net Realty Fund XI,  Ltd., dated
                    April 5, 1996  (included as Exhibit 10 (b) (34) of the
                    Exhibits to the  Company's  Annual  Report on Form 10-K for
                    the year ended December 31, 1996 and incorporated herein by
                    reference).

10.34            Bill of Sale and Assignment between Tucson Oracle
                    Limited Partnership and AAA Joint Venture 96-1,
                    dated September 6, 1996 (included as Exhibit 10
                    (b) (35) of the Exhibits to the Company's Annual
                    Report on Form 10-K for the year ended December
                    31, 1996 and incorporated herein by reference).

10.35            Joint Venture Agreement between the Company and
                    AAA Net Realty Fund XI, Ltd., dated August 8, 1996
                    (included as Exhibit 10 (b) (36) of the Exhibits
                    to the Company's Annual Report on Form 10-K for
                    the year ended December 31, 1996 and incorporated
                    herein by reference).

10.36            Revolving Credit Agreement, dated November 6,
                    1998, by and among AmREIT, Inc., certain lenders
                    and Wells Fargo Bank, as the Agent, relating to a
                    $30,000,000 loan (included as Exhibit 10.1 of the
                    Exhibits to the Company's Quarterly Report on Form
                    10-QSB for the quarter ended September 30, 1998
                    and incorporated herein by reference).

10.37            Lease (the "Sugar Land Imaging lease") between AmREIT, Inc. and
                    Sugar Land Imaging Affiliates,  LTD., dated September 8,
                    2000  (included as Exhibit 10 (b) (37) of the Exhibits to
                    the  Company's  Annual  Report on Form 10-K for the year
                    ended December 31, 2000 and incorporated herein by
                    reference).

10.38            Lease (the "Mattress Giant lease") between AmREIT,
                    Inc. and Mattress Giant I Limited Partnership
                    dated September 27, 2000 (included as Exhibit 10
                    (b) (38) of the Exhibits to the Company's Annual
                    Report on Form 10-K for the year ended December 31, 2000
                    and incorporated herein by reference).

10.39            Amended and Restated Revolving Credit Agreement,
                    effective August 1, 2000, by and among AmREIT,
                    Inc., certain lenders and Wells Fargo Bank, as the
                    Agent, relating to a $13,000,000 loan (included as
                    Exhibit 10.1 of the Exhibits to the Company's
                    Quarterly Report on Form 10-QSB for the quarter
                    ended September 30, 1998 and incorporated herein
                    by reference).

11               Computation of earnings per common share.

21               Subsidiaries of the Company.


Items 5, 6 and 7 of Part II and Item 13 of Part IV of this Form 10-KSB contain
the financial statements, financial statement schedule and other financial
information. No Annual Report or proxy material has yet been provided to
security holders with respect to 2001.

(d)            Financial Statements Schedules

     Schedule III - Consolidated Real Estate Owned and Accumulated Depreciation


                                       17
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Issuer has duly caused this report to be signed on its behalf
on the 20th of March 2002 by the undersigned, thereunto duly authorized.

                         AmREIT, Inc.

                         /s/ H. Kerr Taylor
                         -------------------------------------------------
                         H. Kerr Taylor, President and Chief Executive Officer




Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Issuer and in
the capacities and on the dates indicated.



/s/ H. Kerr Taylor                                             March 20, 2002
---------------------------------------------
H. KERR TAYLOR
President, Chairman of the Board, Chief Executive
Officer and Director (Principal Executive Officer)


/s/ Robert S. Cartwright, Jr.                                  March 20, 2002
---------------------------------------------
ROBERT S. CARTWRIGHT, JR., Director


/s/ G. Steven Dawson                                           March 20, 2002
----------------------------------------------
G. STEVEN DAWSON, Director


/s/ Bryan L. Goolsby                                           March 20, 2002
----------------------------------------------
BRYAN L. GOOLSBY, Director


/s/ Philip W. Taggart                                          March 20, 2002
----------------------------------------------
PHILIP W. TAGGART, Director


/s/ Chad C. Braun                                              March 20, 2002
-----------------------------
CHAD C. BRAUN, Executive Vice President
Finance and Secretary (Principal Accounting Officer)



                                       18

<PAGE>
                          ANNUAL REPORT ON FORM 10-KSB
                       ITEMS 7, 13(a)(1) AND (2) AND 13(d)


                        CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000


                        AND FINANCIAL STATEMENT SCHEDULE
                      FOR THE YEAR ENDED DECEMBER 31, 2001


                          AMREIT, INC. AND SUBSIDARIES



<PAGE>



                          AMREIT, INC. AND SUBSIDIARIES
                          INDEX TO FINANCIAL STATEMENTS




                                                                       Page

FINANCIAL STATEMENTS:

Independent Auditors' Report                                            F-3
Consolidated Balance Sheet, December 31, 2001                           F-4
Consolidated Statements of Operations for the Years Ended
    December 31, 2001 and 2000                                          F-5
Consolidated Statements of Shareholders' Equity
    for the Years Ended December 31, 2001 and 2000                      F-6
Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2001 and 2000                                          F-7
Notes to Consolidated Financial Statements for the Years Ended
    December 31, 2001 and 2000                                  F-8 to F-20



FINANCIAL STATEMENT SCHEDULE:
Schedule III Consolidated Real Estate Owned and Accumulated
    Depreciation for the Year Ended December 31, 2001                  F-21


All other financial statement schedules are omitted as the required information
is either inapplicable or is included in the financial statements or related
notes.







                                      F-2
<PAGE>



INDEPENDENT AUDITORS' REPORT

To the Board of Directors
AmREIT, Inc.

We have audited the accompanying consolidated balance sheet of AmREIT, Inc. and
subsidiaries (the "Company") as of December 31, 2001, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the two years in the period ended December 31, 2001. Our audits also
included the financial statement schedule listed in the Index. These financial
statements and the financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31,
2001, and the results of its operations and its cash flows for each of the two
years in the period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, such financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.





DELOITTE & TOUCHE LLP

Houston, Texas
March 15, 2002









                                      F-3
<PAGE>
                         PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
                          AMREIT, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                December 31, 2001

<TABLE>
<CAPTION>
<S>                                                                                 <C>

ASSETS
 Cash and cash equivalents                                                          $  227,117
 Accounts receivable                                                                   671,392
 Escrow deposits                                                                        81,545
 Prepaid expenses, net                                                                 252,868

 Property:
      Land                                                                          13,136,693
      Buildings                                                                     17,312,379
      Furniture, fixtures and equipment                                                276,953
                                                                                   -----------
                                                                                    30,726,025
      Accumulated depreciation                                                      (2,066,067)
                                                                                   -----------
          Total property, net                                                       28,659,958
                                                                                   -----------

  Net investment in direct financing leases                                          7,007,277

 Other assets:
      Preacquisition costs                                                             209,200
      Loan acquisition cost, net of $28,279 in accumulated amortization                268,837
      Accrued rental income                                                            469,260
      Investment in non-consolidated subsidiary                                        980,939
                                                                                   -----------
         Total other assets                                                          1,928,236
                                                                                   -----------
 TOTAL ASSETS                                                                      $38,828,393
                                                                                   ===========

 LIABILITIES AND SHAREHOLDERS' EQUITY
 Liabilities:
      Notes payable                                                                $16,971,549
      Accounts payable                                                               1,395,607
      Security deposit                                                                  32,123
                                                                                   -----------
          TOTAL LIABILITIES                                                         18,399,279
                                                                                   -----------

 Minority interest                                                                   5,075,333

 Shareholders' equity:
      Preferred stock, $.01 par value, 10,001,000 shares authorized, none issued
      - Common stock, $.01 par value, 100,010,000 shares authorized,
         2,384,117 shares issued                                                        23,841
      Capital in excess of par value                                                21,655,867
      Accumulated distributions in excess of earnings                               (6,037,757)
      Cost of treasury stock, 39,323 shares                                           (288,170)
                                                                                   -----------
          TOTAL SHAREHOLDERS' EQUITY                                                15,353,781
                                                                                   -----------
 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                        $38,828,393
                                                                                   ===========

</TABLE>
 See Notes to Consolidated Financial Statements.

                                       F-4
<PAGE>
                          AMREIT, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS
                        FOR THE YEARS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
<S>                                                                <C>              <C>
                                                                         Year to date
                                                                     2001               2000
                                                                ---------------     ------------
 Revenues:
      Rental income from operating leases                          $ 2,648,237      $ 2,455,328
      Earned income from direct financing leases                       637,537          669,966
      Service fees and other income                                  2,396,100          794,102
      Gain (loss) on sale of property                                  254,013             (834)
      Interest income                                                   10,555           31,630
                                                                   -----------      -----------
         Total revenues                                              5,946,442        3,950,192
                                                                   -----------      -----------

 Expenses:
      General operating and administrative                           1,953,285        1,446,638
      Legal and professional                                         1,002,776          242,161
      Interest                                                       1,063,574        1,339,622
      Depreciation                                                     464,308          453,906
      Potential acquisition costs                                            -          153,236
                                                                   -----------      -----------
         Total expenses                                              4,483,943        3,635,563
                                                                   -----------      -----------

 Income before federal income taxes and minority
      interest in net income of consolidated joint ventures          1,462,499          314,629

 Federal income taxes expenses for taxable REIT subsidiary            (144,420)               -

 Minority Interest in Net Income of Consolidated Joint                (527,571)        (527,121)
   Venture                                                         -----------      -----------

 Net income (loss)                                                 $   790,508      $  (212,492)
                                                                   ===========      ===========


 Basic and diluted earnings (loss) per share                            $ 0.34          $ (0.09)
                                                                   ===========      ===========

 Weighted average number of common shares outstanding                2,354,572        2,372,060
                                                                   ===========      ===========
 Weighted average number of common shares outstanding
      plus dilutive potential common shares                          2,354,572        2,372,060
                                                                   ===========      ===========

  See Notes to Consolidated Financial Statements.

</TABLE>


                                       F-5
<PAGE>
                         AMREIT, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                        For the years ended December 31,
<TABLE>
<CAPTION>
<S>                                    <C>            <C>          <C>           <C>              <C>         <C>


                                                                                  Accumulated
                                                                   Capital in     distributions   Cost of
                                            Common Stock           excess of      in excess of    treasury
                                          Number       Amount       par value      earnings         stock          Total
                                         ---------     -------     -----------   -----------   ----------     -----------

 Balance at January 1, 2000             2,384,117      $23,841     $21,655,867   $(5,783,941)  $ (106,493)    $15,789,274

     Net loss                                   -            -               -      (212,492)           -        (212,492)

     Cost of treasury stock, 3,227 shares                                                         (20,974)        (20,974)

     Distributions ($.095 per share)            -            -               -      (227,090)           -        (227,090)
                                        ---------      -------     -----------   -----------   ----------     -----------

 Balance at December 31, 2000           2,384,117      $23,841     $21,655,867   $(6,223,523)  $ (127,467)    $15,328,718
                                        ---------      -------     -----------   -----------   ----------     -----------

     Net income                                 -            -               -       790,508            -         790,508

     Cost of treasury stock, 24,723 shares                                                       (160,703)       (160,703)

     Distributions ($.257 per share)            -            -               -      (604,742)           -        (604,742)
                                        ---------      -------     -----------   -----------   ----------     -----------

 Balance at December 31, 2001           2,384,117      $23,841     $21,655,867   $(6,037,757)  $ (288,170)    $15,353,781
                                        ---------      -------     -----------   -----------   ----------     -----------

</TABLE>

  See Notes to Consolidated Financial Statements.

                                       F-6

<PAGE>
                         AMREIT, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
<S>                                                                <C>                 <C>


                                                                     2001               2000
                                                                ---------------     --------------
 Cash flows from operating activities:
      Net income (loss)                                            $   790,508         $ (212,492)
      Adjustments to reconcile net income to net cash
            provided by operating activities:
             (Gain) loss on sale of property                          (254,013)               834
             Depreciation                                              464,308            453,906
             (Increase) decrease in accounts receivable               (388,442)           149,232
             Increase in prepaid expense                              (128,324)          (103,719)
             Increase in accounts payable                              836,692              5,977
             Increase in security deposits                                   -             17,073
             Cash receipts from direct financing leases
                 less than income recognized                           (38,581)           (28,095)
             Increase in accrued rental income                        (102,757)           (76,100)
             Increase in other assets                                  (81,545)           (57,307)
             Increase in minority interest                             527,571            527,121
                                                                   -----------        -----------
                 Net cash provided by operating activities           1,625,417            676,430
                                                                   -----------        -----------

 Cash flows from investing activities:
      Improvements to real estate                                     (432,276)           (33,430)
      Acquisitions of real estate                                   (3,445,279)                 -
      Additions to furniture, fixtures and equipment                   (37,061)            (4,129)
      Investment in joint ventures                                    (729,958)            (1,000)
      Proceeds from sale of property                                 2,520,259              3,499
      (Increase) decrease in prepaid acquisition costs                (208,576)             9,340
                                                                   -----------        -----------
          Net cash used in investing activities                     (2,332,891)           (25,720)
                                                                   -----------        -----------

 Cash flows from financing activities:
      Proceeds from notes payable                                    8,038,500                  -
      Payments of notes payable                                     (6,539,134)            (8,195)
      Loan acquisition costs, net                                     (152,622)                 -
      Purchase of treasury stock                                      (160,703)           (20,974)
      Distributions paid to shareholders                              (604,742)          (227,090)
      Distributions to minority interest partners                     (582,575)          (577,330)
                                                                ---------------       -----------
          Net cash used in financing activities                         (1,276)          (833,589)
                                                                ---------------       -----------

 Net decrease in cash and cash equivalents                            (708,750)          (182,879)
 Cash and cash equivalents, beginning of period                        935,867          1,118,746
                                                                ---------------       -----------
 Cash and cash equivalents, end of period                            $ 227,117          $ 935,867
                                                                ===============       ===========

 See Notes to Consolidated Financial Statements.
</TABLE>


                                       F-7

<PAGE>

                          AMREIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

AmREIT, Inc., formerly American Asset Advisers Trust, Inc. ("Issuer" or the
"Company"), was incorporated in the state of Maryland on August 17, 1993. AmREIT
and its predecessor has been an entrepreneurial real estate company, with a
primary focus on growing its portfolio of credit tenant leased freestanding
commercial properties and frontage shopping centers, as well as growing its
sponsorship of high quality real estate investment products for the NASD
financial planning community within the United States. Through a wholly owned
subsidiary, the Company provides advisory and management services to thirteen
real estate limited partnerships.

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of AmREIT, Inc., its
subsidiaries, AmREIT Realty Investment Corporation ("ARIC"), AmREIT Securities
Company ("ASC"), AmREIT Operating Corporation ("AOC"), AmREIT SPE1 Inc. ("SPE
1"), AmREIT Opportunity Corporation ("AOP"), AmREIT Income and Growth
Corporation ("AIGC"), Reno IHOP L.P. ("Reno IHOP"), Sugar Land IHOP L.P. ("Sugar
Land IHOP"), AmREIT Fidelity Corporation (Fidelity), Sugar Land Plaza, LP
(Plaza), ARIC SPE 1, LLC (ARIC SPE), and its six joint ventures with related
parties. ARIC, AOC and AOP were formed in June, July and April 1998
respectively. ASC and SPE 1 were both formed in February 1999. AIGC was formed
in January 2001, and Reno IHOP and Sugarland IHOP were both formed in February
2001. Fidelity, Plaza, and ARIC SPE were formed in October 2001. ASC is a wholly
owned subsidiary of ARIC and was established exclusively to distribute security
commissions generated through direct participation programs and private
placement activities. SPE 1 is a special purpose entity, created solely at the
lender request. SPE 1 owns a building and land located in Ridgeland, Mississippi
that is leased to Hollywood Video. ARIC was organized to acquire, develop, hold


                                      F-8
<PAGE>

and sell real estate in the short-term for capital gains and/or receive fee
income. ARIC and AOP were structured as non-qualified REIT subsidiaries, whereby
AmREIT owned 100% of the preferred stock outstanding. In January 2001, ARIC and
AOP elected to restructure their respective capital stock in conjunction with
the 2000 tax act. As a result, the preferred stock held by AmREIT was retired
and common stock was issued in its place. ARIC and AOP have elected to be
treated as taxable REIT subsidiaries, with AmREIT, Inc. owning 100% of the
outstanding common stock. AIGC was organized as a taxable REIT subsidiary with
AmREIT, Inc. owning 100% of the outstanding common stock. Reno IHOP is a special
purpose entity, created solely at the lender request. Reno IHOP owned land
located in Reno, Nevada that was leased to IHOP Properties. During 2001, the
IHOP in Reno was sold and this entity was liquidated. Sugar Land IHOP, Fidelity,
Plaza, and ARIC SPE were created solely at the lenders request. Sugar Land IHOP
owns an IHOP located in Sugar Land, Texas that is leased to IHOP Properties.
Fidelity owns two IHOP's which are located in Memphis, Tennessee and St. Peters,
Missouri. Plaza owns a multi- tenant property located in Sugar Land that is
leased to Mattress Giant and River Oaks Imaging. ARIC SPE was created at the
lenders request to act as the General Partner on loans for the property that is
owned by Fidelity. All significant intercompany accounts and transactions have
been eliminated in consolidation. The Company owns greater than 50% of the
aforementioned joint ventures and exercises control over operations.

BASIS OF ACCOUNTING

The financial records of the Company are maintained on the accrual basis of
accounting whereby revenues are recognized when earned and expenses are recorded
when incurred.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with an original maturity of three months or
less to be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks and money market funds.







                                      F-9
<PAGE>



PROPERTY

Property is leased to others on a net lease basis whereby all operating expenses
related to the properties, including property taxes, insurance and common area
maintenance are the responsibility of the tenant. The leases are accounted for
under the operating method or the direct financing method.

Under the operating method, the properties are recorded at cost. Rental income
is recognized ratably over the life of the lease and depreciation is charged
based upon the estimated useful life of the property. Under the direct financing
method, properties are recorded at their net investment (see Note 3). Unearned
income is deferred and amortized to income over the life of the lease so as to
produce a constant periodic rate of return.

Expenditures related to the development of real estate are carried at cost plus
capitalized carrying charges, acquisition costs and development costs. Carrying
charges, primarily interest and loan acquisition costs, and direct and indirect
development costs related to buildings under construction are capitalized as
part of construction in progress. The Company capitalizes acquisition costs once
the acquisition of the property becomes probable. Prior to that time, the
Company expenses these costs as acquisition expense. No interest costs were
capitalized for 2001 or 2000.

Management reviews its properties for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets, including accrued
rental income, may not be recoverable through operations. Management determines
whether an impairment in value occurred by comparing the estimated future cash
flows (undiscounted and without interest charges), including the residual value
of the property, with the carrying cost of the individual property. If
impairment is indicated, a loss will be recorded for the amount by which the
carrying value of the asset exceeds its fair value.

DEPRECIATION

Buildings are depreciated using the straight-line method over an estimated
useful life of 39 years.

INVESTMENT IN NON CONSOLIDATED SUBSIDIARY

AOP invested $250,000 as a limited partner and $1,000 as a general partner in
AmREIT Opportunity Fund, Ltd. that is accounted for using the equity method. The
limited partners have the right to remove and replace the general partner (AOP)
by a vote of the limited partners owning a majority of the outstanding units.
AOP currently owns a 10.6 percent limited partner interest in AmREIT Opportunity
Fund, Ltd. AmREIT Opportunity Fund was formed to develop, own, manage, and hold
for investment and, or resell property and to make or invest in loans for the
development or construction of property.

AIGC invested $200,000 as a limited partner and $1,000 as a general partner in
AmREIT Income & Growth Fund, Ltd. that is accounted for using the equity method.
The limited partners have the right to remove and replace the general partner
(AIGC) by a vote of the limited partners owning a majority of the outstanding
units. AIGC currently owns a 13.1 percent limited partner interest in AmREIT
Income & Growth Fund, Ltd. AmREIT Income & Growth Fund was formed to develop,
own, manage, and hold for investment and, or resell property and to make or
invest in loans for the development or construction of property.

ARIC invested $69,810 as a limited partner in AmREIT CDP #27, LP that is
accounted for using the equity method. ARIC currently owns a 14.8 percent
limited partner interest in AmREIT CDP #27, LP, which was formed to acquire
commercial real property and to develop, operate, lease, manage, and or sell the
real property.


                                      F-10
<PAGE>


ARIC invested $329,714 as a member in AmREIT CDP #31, LLC that is accounted for
using the equity method. ARIC currently owns a 48.9 percent member interest in
AmREIT CDP #31, LLC, which was formed to acquire commercial real property and to
develop, operate, lease, manage, and or sell the real property.

ARIC invested $121,870 as a limited partner in AmREIT CDP SPE #33, Ltd. that is
accounted for using the equity method. ARIC currently owns a 33 percent limited
partner interest in AmREIT CDP SPE #33, Ltd, which was formed to acquire
commercial real property and to develop, operate, lease, manage, and or sell the
real property.


OTHER ASSETS

Other assets include preacqusition costs of $209,200. Preacqusitions costs
include $22,537 in costs related to a multi-tenant pad site that is being
considered for acquisition. Additionally preacqusitions costs include $186,663
in costs related to the joint proxy and consent solicitation statement and
prospectus on registration with the SEC, which proposes, among other items, the
merger of certain affiliated partnerships into AmREIT. Other assets additionally
include loan acquisition costs of $297,116. Loan acquisitions costs are incurred
in obtaining property financing and are amortized to interest expense on a
straight-line basis over the term of the debt agreements. Accumulated
amortization related to loan acquisition costs as of December 31, 2001 totaled
$28,279.












                                      F-11
<PAGE>



STOCK ISSUANCE COSTS

Issuance costs incurred in the raising of capital through the sale of common
stock are treated as a reduction of shareholders' equity.

STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION

There has been no cash paid for income taxes during 2001 or 2000. During 2001
and 2000, the Company paid interest of $1,063,574 and $1,339,622, respectively,
of which none was capitalized for 2001 or 2000.

REVENUE RECOGNITION

Properties are leased on a net lease basis. Revenue is recognized on a
straight-line basis over the terms of the individual leases. Service fees are
recognized when earned.

FEDERAL INCOME TAXES

AmREIT, Inc. is qualified as a real estate investment trust ("REIT") under the
Internal Revenue Code of 1986, and is, therefore, not subject to Federal income
taxes provided it meets all conditions specified by the Internal Revenue Code
for retaining its REIT status, including the requirement that at least 90% of
its real estate investment trust taxable income is distributed by March 15 of
the following year.

ARIC, a wholly owned subsidiary of AmREIT, Inc. is treated as a taxable REIT
subsidiary for federal income tax purposes. In addition, ARC, AOPP and AIGC are
treated as taxable REIT subsidiaries and are consolidated with ARIC to file a
federal income tax return. As such, ARIC has recorded a federal income tax
liability for 2001 of $144,420, which represents the federal income tax
obligations on the consolidated taxable REIT subsidiaries taxable net income.

INCOME PER SHARE

Basic earnings per share have been computed by dividing net income to common
shareholders by the weighted average number of common shares outstanding.
Diluted earnings per share has been computed by dividing net income to common
shareholders (as adjusted) by the weighted average number of common shares
outstanding plus dilutive potential common shares.

The following table presents information necessary to calculate basic and
diluted earnings per share for the periods indicated:

                                                For the Years Ended December 31,
                                                        2001          2000
                                                     ---------      ---------
BASIC INCOME (LOSS) PER SHARE
   Weighted average common shares outstanding        2,354,572      2,372,060
                                                     =========      =========
       Basic income (loss) per share                 $     .34      $    (.09)
                                                     =========      =========

DILUTED INCOME (LOSS) PER SHARE
   Weighted average common shares outstanding        2,354,572      2,372,060
                                                     =========      =========
       Diluted income (loss) per share               $     .34      $    (.09)
                                                     =========      =========

INCOME (LOSS) FOR BASIC AND DILUTED COMPUTATION Net income (loss) to common
   shareholders (basic and diluted
       income (loss) per share computation)          $ 790,508      $(212,492)
                                                     =========      =========



                                      F-12
<PAGE>
USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist primarily of cash, cash equivalents,
accounts receivable and accounts and notes payable. The carrying value of cash,
cash equivalents, accounts receivable and accounts payable are representative of
their respective fair values due to the short-term maturity of these
instruments. The fair value of the Company's debt obligations is representative
of its carrying value based upon the variable rate terms of the credit facility.


NEW ACCOUNTING STANDARDS

In June 1999, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"). SFAS 133 establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. In June
1999, the FASB issued SFAS 137 that deferred the effective date of adoption of
SFAS 133 for one year. This was followed in June 2000 by the issuance of SFAS
138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities", which amended SFAS 133.

The Company adopted these standards effective January 1, 2001. The Company
currently has no contracts that would be affected by these accounting standards
and as a result there was no effect on the Company's financial position, results
of operation or cash flows from the adoption of SFAS 133, as amended.

On June 29, 2001, SFAS No. 141, "Business Combinations" was approved by the
Financial Accounting Standards Board ("FASB"). SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Goodwill and certain intangible assets will remain on the
balance sheet and not be amortized. On an annual basis, and when there is reason
to suspect that their values have been diminished or impaired, these assets must
be tested for impairment, and write-downs may be necessary. The Company was
required to implement SFAS No. 141 on July 1, 2001. The adoption of this
Statement had no effect on the Company's consolidated financial position,
results of operations or cash flows.

On June 29, 2001, SFAS No. 142, "Goodwill and Other Intangible Assets " was
approved by the FASB. SFAS No. 142 changes the accounting for goodwill from an
amortization method to an impairment-only approach. Amortization of goodwill,
including goodwill recorded in past business combinations, will cease upon
adoption of this statement. The Company is required to implement SFAS No. 142 on
January 1, 2002. The adoption of this Statement had no effect on the Company's
consolidated financial position, results of operations or cash flows.

In June 2001, FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations", which is effective for fiscal years beginning after June 15, 2002.
SFAS No. 143 addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. The adoption of this Statement had no effect on the
Company's consolidated financial position, results of operations or cash flows.

                                      F-13
<PAGE>

In August 2001, FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", which is effective for fiscal years beginning
after December 15, 2001. SFAS No. 144 addresses financial accounting and
reporting for the impairment or disposal of a segment of a business. The
adoption of SFAS No. 144 will not have a material impact on our financial
position, results of operations, or cash flows.

2. OPERATING LEASES

A summary of minimum future rentals to be received, exclusive of any renewals,
under noncancellable operating leases in existence at December 31, 2001 is as
follows:


               2002                                    2,671,340
               2003                                    2,691,912
               2004                                    2,579,302
               2005                                    2,275,040
               2006                                    2,127,427
               2007-2026                              15,256,895
                                                     -----------
                                                     $27,601,916










                                      F-14
<PAGE>



3. NET INVESTMENT IN DIRECT FINANCING LEASES

The Company's net investment in its direct financing leases at December 31, 2001
included:


 Minimum lease payments receivable                   $18,015,425
 Unguaranteed residual value                           3,106,258
 Less: Unearned income                               (14,114,406)
                                                     -----------
                                                     $ 7,007,277
                                                     ===========
A summary of minimum future rentals, exclusive of any renewals, under the
noncancellable direct financing leases follows:

            2002                           747,673
            2003                           747.673
            2004                           756,411
            2005                           765,150
            2006                           774,505
            2007 - 2026                 14,224,013
                                       -----------
                                       $18,015,425
                                       ===========

4. JOINT VENTURES

CONSOLIDATED JOINT VENTURES

The Company consolidates its joint ventures listed below due to its ability to
control operations. Pursuant to the Joint Venture Agreements that incorporate
the provisions to the Texas Revised Partnership Act, the Company as majority
owner may make management decisions, such as the sale of the property, without
the consent of the minority joint venture interests.

On October 16, 1997, the Company entered into a joint venture with AAA Net
Realty XI, Ltd., an entity with common management. The joint venture was formed
for the purchase of a property, which is being operated as a Hollywood Video
store in Lafayette, Louisiana. The property was purchased on October 31, 1997
after the construction was completed. The Company's interest in the joint
venture is 74.58%.

On February 11, 1997, the Company entered into a joint venture with AAA Net
Realty Fund XI, Ltd. The joint venture was formed for the purpose of acquiring a
property, which is being operated as a Just For Feet retail store in Baton
Rouge, Louisiana. The property was purchased on June 9, 1997 after the
construction was completed. The Partnership's interest in the joint venture is
51%.

On September 23, 1996, the Company formed a joint venture, AAA Joint Venture
96-2, with AAA Net Realty Fund XI, Ltd. The joint venture was formed for the
purpose of acquiring a parcel of land in The Woodlands, Texas upon which the
tenant, Bank United, constructed a branch bank building at its cost. At the
termination of the lease the improvements will be owned by the joint venture.
The Company's interest in the joint venture is 51%.

On April 5, 1996, the Company formed a joint venture, AAA Joint Venture 96-1,
with AAA Net Realty Fund XI, Ltd. and AAA Net Realty Fund X, Ltd., entities with
common management, for the purpose of acquiring a property, which is being
operated as a Just For Feet retail store in Tucson, Arizona. The property was
purchased on September 11, 1996 after construction was completed. The
Partnership's interest in the joint venture is 51.9%.

                                      F-15
<PAGE>

On September 12, 1995, the Company formed a joint venture, AAA Joint Venture
95-2, with AAA Net Realty Fund XI, Ltd. for the purpose of acquiring a property
in Wichita, Kansas on lease to Blockbuster Music Retail, Inc. The Company's
interest in the joint venture is 51%.

On October 27, 1994, the Company formed a joint venture, AAA Joint Venture 94-1,
with AAA Net Realty Fund X, Ltd. for the purpose of acquiring a property in
Independence, Missouri on lease to Blockbuster Music Retail, Inc. The Company's
interest in the joint venture is 54.84%.

5. NOTES PAYABLE

In November 1998, the Company entered into an unsecured credit facility (the
"Credit Facility"), which is being used to provide funds for the acquisition of
properties and working capital, and repaid all amounts outstanding under the
Company's prior credit facility. Under the Credit Facility, which had an
original term of one year, and has been extended through April 1 2002, the
Company may borrow up to $13 million subject to the value of unencumbered
assets. The Credit Facility contains covenants which, among other restrictions,
require the Company to maintain a minimum net worth, a maximum leverage ratio,
specified interest coverage and fixed charge coverage ratios and allow the
lender to approve all distributions. At December 31, 2001, the Company was in
compliance with all the covenants. The Credit Facility bears interest at an
annual rate of LIBOR plus a spread of 1.875% (4.0% as of December 31, 2001), set
quarterly depending on the Company's leverage ratio. As of December 31, 2001,
$9,230,048 was outstanding under the Credit Facility.

In March 1999, the Company entered into a ten-year mortgage, amortized over 30
years, note payable with NW L.L.C. for $1,000,000 with $977,801 being
outstanding at December 31, 2001. The interest rate is fixed at 8.375% with
payments of principal and interest due monthly. The note matures April 1, 2009
and as of December 31, 2001 the Company is in compliance with all terms of the
agreement. The note is collateralized by a first lien mortgage on property with
an aggregate carrying value of $1,200,126, net of $85,728 of accumulated
depreciation.

In February 2001, the Company entered into a ten-year mortgage, amortized over
20 years, note payable with GE Capital Business Asset Funding Corporation for
$1,350,000 with $1,329,446 being outstanding at December 31, 2001. The interest
rate is fixed at 8.250% with payments of principal and interest due monthly. The
note matures February 28, 2011 and as of December 31, 2001 the Company is in
compliance with all terms of the agreement. The note is collateralized by a
first lien mortgage on property with an aggregate carrying value of
approximately $1,648,091, net of $55,543 of accumulated depreciation.

In October 2001, the Company entered into a ten-year mortgage, amortized over 30
years, note payable with Greenwich Capital Financial Products, Inc. for
$2,400,000 with $2,398,254 being outstanding at December 31, 2001. The interest
rate is fixed at 7.6% with payments of principal and interest due monthly. The
note matures November 1, 2011 and as of December 31, 2001 the Company is in
compliance with all terms of the agreement. The note is collateralized by a
first lien mortgage on property with an aggregate carrying value of
approximately $4,058,656, net of $237,673 of accumulated depreciation.

In October 2001, the Company entered into a note payable with Washington Mutual
for $1,378,000 with $1,378,000 being outstanding at December 31, 2001. The
interest rate is equal to the thirty day LIBOR rate plus 280 basis points, but
in event lower than 6.75%, which equated to 6.75% at December 31, 2001. The note
which requires interest only payments, matures November 1, 2004 and as of
December 31, 2001 the Company is in compliance with all terms of the agreement.
The note is collateralized by a first lien mortgage on property with an
aggregate carrying value of approximately $1,560,325 net of $4,682 of
accumulated depreciation.

                                      F-16
<PAGE>

In October 2001, the Company entered into a note payable with Washington Mutual
for $1,658,000 with $1,658,000 being outstanding at December 31, 2001. The
interest rate is equal to the thirty day LIBOR rate plus 280 basis points, but
in event lower than 6.75%, which equated to 6.75% at December 31, 2001. The note
matures November 1, 2004 and as of December 31, 2001 the Company is in
compliance with all terms of the agreement. The note is collateralized by a
first lien mortgage on property with an aggregate carrying value of
approximately $1,874,648 net of $5,624 of accumulated depreciation.



Aggregate annual maturity of the mortgage note payable for each of the following
five years ending December 31 are as follows:


                  2002                           $   60,969
                  2003                               66,054
                  2004                            3,107,564
                  2005                               77,534
                  2006                               84,003
                  Thereafter                      4,345,377
                                                 ----------
                                                 $7,741,501
                                                 ==========
                                     F-17
<PAGE>
6. MAJOR TENANTS

The Company's operations are related to the acquisition and leasing of
commercial real estate properties. The following schedule summarizes rental
income by lessee for 2001 and 2000 under both operating and direct financing
leases:

<TABLE>
<CAPTION>
<S>                                                               <C>                <C>
                                                                     2001               2000
                                                                  ----------         ----------
Just For Feet, Inc. (Tucson, Arizona; Baton Rouge, Louisiana)     $  713,308         $  834,549
OfficeMax, Inc. (Lake Jackson, Texas and Dover, Delaware)            518,494            518,493
International House of Pancakes (Memphis, Tennessee; St Peters,
         Missouri; Topeka, Kansas; and Sugar Land, Texas)            509,596            476,123
Wherehouse Entertainment, Inc. (Independence, Missouri
         and Wichita, Kansas)                                        377,902            377,903
Hollywood Entertainment Corp. (Lafayette, Louisiana and
         Ridgeland, Mississippi)                                     273,162            273,163
Sugar Land Imaging Affiliates, Ltd. (Sugar Land, Texas)              216,792                  -
OneCare Health Industries, Inc. (Houston, Texas)                     203,809            201,637
Washington Mutual (The Woodlands, Texas and Houston, Texas)          157,797            157,801
Radio Shack (Mesquite, Texas)                                        108,900            108,900
Mattress Giant. (Sugar Land, Texas)                                  106,025                  -
D F & R Operating Company, Inc. (Peachtree City, Georgia)             79,195             78,447
America's Favorite Chicken Company (Smyrna, Georgia)                  20,794             98,278
                                                                  ----------         ----------

 Total                                                            $3,285,774          $3,125,294
                                                                  ==========          ==========
</TABLE>


7. FEDERAL INCOME TAXES

The differences between net income for financial reporting purposes and taxable
income before distribution deductions relate primarily to temporary differences,
merger costs and potential acquisition costs which are expensed for financial
reporting purposes.




                                      F-18
<PAGE>



For income tax purposes, distributions paid to shareholders consist of ordinary
income, capital gains and return of capital as follows:

                                          2001            2000
                                        --------        --------
Ordinary income                         $  5,731        $      -
Return of capital                        143,359         227,090
Capital gain                             455,652                -
                                        --------        --------
                                        $604,742        $227,090
                                        ========        ========

8.   RELATED PARTY TRANSACTIONS

See Note 4 regarding joint venture agreements with related parties.

The Company provides property acquisition, leasing, administrative and
management services for thirteen affiliated real estate limited partnerships
(the "Partnerships"). The president and director of the Company owns between 45%
and 100% of the stock of the companies that serve as the general partner of the
Partnerships. Service fees of $334,879 and $340,068 were paid by the
Partnerships to the Company for 2001 and 2000 respectively.

On May 20, 1999, the Company entered into a partnership agreement with various
individual investors to form AmREIT Opportunity Fund, Ltd. The partnership was
formed to develop, own, manage, hold for investment and or resell property and
to make and or invest in loans for the development or construction of property.
The Company invested $250,000 as a Limited Partner and $1,000 as the General
Partner.

On January 26, 2001, the Company entered into a partnership agreement with
various individual investors to form AmREIT Income & Growth Fund, Ltd. The
partnership was formed to develop, own, manage, hold for investment and or
resell property and to make and or invest in loans for the development or
construction of property. The Company invested $200,000 as a Limited Partner and
$1,000 as the General Partner.


9. PROPERTY ACQUISITIONS AND DISPOSITIONS
On November 30, 2001, the Company acquired a newly constructed property on lease
to IHOP Properties, Inc. for a purchase price of $1,565,007. This property is
being operated as an IHOP restaurant on Riverdale Road in Memphis, Tennessee.
The lease agreement extends for twenty-five years, however, the tenant has the
option to renew the lease for three additional terms of five years each. The
lease has provisions for escalation in the rent after every fifth year of the
lease. The Company recorded $26,528 of rental income from this property in 2001.

On November 30, 2001, the Company acquired a newly constructed property on lease
to IHOP Properties, Inc. for a purchase price of $1,880,272. This property is
being operated as an IHOP restaurant on Veteran's Memorial Parkway in St Peters,
Missouri. The lease agreement extends for twenty-five years; however, the tenant
has the option to renew the lease for three additional terms of five years each.
The lease has provisions for escalation in the rent after every fifth year of
the lease. The Company recorded $31,906 of rental income from this property in
2001.


                                      F-19
<PAGE>



In July of 1994, the Company acquired a newly constructed property located on a
ground lease in Smyrna, Georgia leased to AFC Enterprises for a purchase price
of $833,631. This property is being operated as a Church's Chicken Restaurant.
In March of 2001, the Company disposed of this property for $1,024,935 resulting
in a gain on sale of $168,916. The Company recorded $20,794 of rental income
from this property in 2001.

In September of 1999, the Company acquired a newly constructed property in Reno,
Nevada leased to IHOP Properties, Inc. for a total purchase price of $1,372,825.
This property is being operated as an IHOP restaurant. In October of 2001, due
to tenant concentration and capital needs, the Company disposed of this property
for $1,630,000 resulting in a gain on sale of $85,097 after selling expenses.
The Company recorded $112,750 of rental income from this property in 2001.


10. COMMITMENT

The Company has a one-year lease agreement for its office facilities through
December 31, 2002. Rental expense for the years ended December 31, 2001 and 2000
was $70,527 and $60,829 respectively.

















                                      F-20

<PAGE>
                          AMREIT, INC. AND SUBSIDIARIES.
         SCHEDULE III - REAL ESTATE OWNED AND ACCUMULATED DEPRECIATION
                      FOR THE YEAR ENDED DECEMBER 31, 2001
<TABLE>
<CAPTION>
<S>                   <C>     <C>          <C>        <C>      <C>         <C>          <C>       <C>      <C>       <C>

                                                                                                                      Life on Which
                                                                                                                     Depreciation in
                                                                   Cost at                        Date of             Latest Income
  Property            Encum-                           Impro-    Close of Year          Accum.    Constr-    Date       Statement
 Description          brances    Building     Land     vements  Building     Land       Deprec.   uction    Acquired   is Computed
----------------      -------  -----------  --------   -------  ---------   --------    --------  -------  ---------- --------------
PROPERTIES INVESTED IN UNDER OPERATING LEASES

Radio Shack, TX       $ -     $   788,330  $   337,856  $ -    $   788,330 $   337,856  $  152,392  N/A    06-15-94      39 Years
Blockbuster Music, MO $ -     $ 1,145,410  $   490,747  $ -    $ 1,145,410 $   490,747  $  209,236  N/A    11-14-94      39 Years
OneCare Health, TX    $ -     $ 1,247,932  $   534,086  $ -    $ 1,247,932 $   534,086  $  199,751  N/A    09-26-95      39 Years
Blockbuster Music, KS $ -     $ 1,255,774  $   538,189  $ -    $ 1,255,774 $   538,189  $  202,587  N/A    09-12-95      39 Years
Just For Feet, AZ     $ -     $         -  $ 1,101,425  $ -    $         - $ 1,101,425        N/A   N/A    09-11-96        N/A
Bank United, TX       $ -     $         -  $   531,693  $ -    $         - $   531,693        N/A   N/A    09-23-96        N/A
Bank United, TX       $ -     $         -  $   851,973  $ -    $         - $   851,973        N/A   N/A    12-11-96        N/A
Just For Feet, LA     $ -     $ 2,036,150  $   872,635  $ -    $ 2,036,150 $   872,635  $  237,986  N/A    06-09-97      39 Years
Hollywood Video, LA   $ -     $   729,286  $   418,156  $ -    $   729,286 $   418,156  $   77,915  N/A    10-31-97      39 Years
Hollywood Video, MS   $ -     $   835,854  $   450,000  $ -    $   835,854 $   450,000  $   85,729  N/A    12-30-97      39 Years
OfficeMax, TX         $ -     $ 1,914,572  $   491,094  $ -    $ 1,914,572 $   491,094  $  189,500  N/A    02-20-98      39 Years
OfficeMax, DE         $ -     $ 1,978,313  $   870,480  $ -    $ 1,978,313 $   870,480  $  181,768  N/A    04-14-98      39 Years
Lake Woodlands Plaza  $ -     $ 2,479,131  $ 1,369,066  $ -    $ 2,479,131 $ 1,369,066  $  220,900  N/A    07-01-98      39 Years
Sugar Land PLaza      $ -     $ 2,901,627  $ 1,280,043  $ -    $ 2,901,627 $ 1,280,043  $  240,937  N/A    07-01-98      39 Years
Don Pablo's, GA       $ -     $         -  $   773,800  $ -    $ -         $   773,800        N/A   N/A    12-18-98        N/A
IHOP, KS              $ -     $         -  $   450,984  $ -    $ -         $   450,984        N/A   N/A    09-30-99        N/A
IHOP, TX              $ -     $         -  $   740,882  $ -    $ -         $   740,882        N/A   N/A    09-22-99        N/A
IHOP, TN              $ -     $         -  $   469,502  $ -    $ -         $   469,502        N/A   N/A    11-30-01        N/A
IHOP, St. Peters      $ -     $         -  $   564,082  $ -    $ -         $   564,082        N/A   N/A    11-30-01        N/A

      Total           $ -     $16,997,376  $12,897,732  $ -    $16,997,376 $12,897,732  $1,998,701

PROPERTY INVESTED IN UNDER DIRECT FINANCING LEASE:

Just For Feet, AZ     $ -     $ 2,610,489  $ -          $ -    $ 2,610,489 $ -              (1)     N/A    09-11-96        N/A
IHOP, KS              $ -     $   984,303  $ -          $ -    $ 984,303   $ -              (1)     N/A    09-30-99        N/A
IHOP, TX              $ -     $   989,515  $ -          $ -    $ 989,515   $ -              (1)     N/A    09-22-99        N/A
IHOP, TN              $ -     $ 1,100,623  $ -          $ -    $ 1,100,623 $ -              (1)     N/A    11-30-01        N/A
IHOP, St. Peters      $ -     $ 1,322,347  $ -          $ -    $ 1,322,347 $ -              (1)     N/A    11-30-01        N/A


      Total           $ -     $ 7,007,277  $ -          $ -    $ 7,007,277 $ -              (1)

(1) The portion of the lease  relating to the building of this property has been
recorded  as  a  direct  financing  lease  for  financial   reporting  purposes.
Consequently, depreciation is not applicable.

(2) Transactions in real estate and accumulated  depreciation  during 2001, 2000
and 1999 for operating lease properties are summarized as follows:

                                                        Accumulated
                                              Cost      Depreciation

Balance at December 31, 1998             $ 29,495,387     $  691,160
Acquisitions / additions                 $  3,729,122     $        -
Disposals                                $ (3,362,831)    $  (15,337)
Depreciation expense                     $          -     $  447,967
                                         -------------    -----------
Balance at December 31, 1999             $ 29,861,678     $1,123,790
Acquisitions / additions                 $     33,430     $        -
Depreciation expense                     $          -     $  435,259
                                         -------------    -----------
Balance at December 31, 2000             $ 29,895,108     $1,559,049
Acquisitions / additions                 $  1,351,201     $        -
Disposals                                $   (797,237)    $        -
Depreciation expense                     $          -     $  439,652
                                         -------------    -----------
Balance at December 31, 2001             $ 30,449,072     $1,998,701
                                         ============     ==========

(3) The  aggregate  cost of all  properties  for Federal  Income Tax purposes is
$37,456,349 at December 31, 2001.
</TABLE>

                                      F-21