##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 or
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File No. 0-28378
 AmREIT
 (Exact name of registrant as specified in its charter)
 Texas
(State or other jurisdiction of incorporation or organization)
    
    76-0410050
(I.R.S. Employer Identification No.)8 Greenway Plaza, Suite 1000
Houston, Texas
(Address of principal executive offices)
    
    77046
(Zip Code)
 (713) 850-1400
 Securities registered pursuant to Section 12 (b) of the Exchange Act:
 Title of Class
    
    Name of Exchange on Which RegisteredClass A Common Shares
    
    American Stock Exchange
 Securities registered under Section 12(g) of the Exchange Act: None
 o þ
 o þ
 þ o
 þ
 o þ
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ(Do not check if a smaller reporting company)
Smaller reporting company o   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TABLE OF CONTENTS
 Form10-KItem No.
    
    
    
    Report PagePART I1.
    
    Business
    
    41B.
    
    Unresolved Staff Comments
    
    62.
    
    Properties
    
    73.
    
    Legal Proceedings
    
    114.
    
    Submission of Matters to a Vote of Security Holders
    
    11PART II5.
    
    Market for the Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
    
    126.
    
    Selected Financial Data
    
    147.
    
    Management's Discussion and Analysis of Financial Condition and Results of Operations
    
    157A.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    248.
    
    Consolidated Financial Statements and Supplementary Data
    
    259.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    259A.
    
    Controls and Procedures
    
    259B.
    
    Other Information
    
    26PART III10.
    
    Trust Managers, Executive Officers and Corporate Governance
    
    2611.
    
    Executive Compensation
    
    2612.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
    
    2613.
    
    Certain Relationships, Related Transactions and Trust Manager Independence
    
    2614.
    
    Principal Accountant Fees and Services
    
    27PART IV15.
    
    Exhibits and Financial Statement Schedules
    
    27EX-10.5EX-21.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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FORWARD LOOKING STATEMENTS
    3




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##### Table of Contents



PART I
 
 Item 1. Business
 General
   Our Strategy
  
    
    Phase I consisted of business model changes which are designed to reduce the earnings
volatility created by some of our transactional operating subsidiaries. In connection with
phase I of our plan we have simplified our operating platform and reduced our transactional
volatility by exiting the general contracting business and the fund raising business.
Additionally, we suspended the REITPlus, Inc. best efforts equity offering. Together,
these restructuring initiatives have resulted in a one-time restructuring charge of
approximately $2.5 million during 2008 and have reduced our annual overhead and general and
administrative expenses by approximately $4.5 million.
    
    Phase II will consist of changes which are designed to simplify our equity capital
structure. As the first step in Phase II, in December 2008, we voluntarily de-listed our
class A common shares from trading on the NYX. Our class A common shares are therefore no
longer traded on a national exchange. Additionally, we have announced the potential merger
of AmREIT into REITPlus, resulting in a combined, conforming entity with a single class of
common stock.
    
    Phase III will consist of growing our portfolio of Irreplaceable Corners and identifying
additional sources of liquidity for shareholders once we have accomplished the first two
phases of Vision 2010 and the country begins to move into recovery.
  4




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##### Table of Contents



Our Structure
  Portfolio of Irreplaceable Corners
  
    
    Located on a corner in major metropolitan area
    
    High barriers to entry
    
    High daytime and evening population
    
    High count of cars per day
    
    High average household income within 3-5 mile radius
   Advisory Business
   Real Estate Development and Operating Group
  5




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##### Table of Contents



Competition
  Compliance with Governmental Regulations
   Employees
  Financial Information
  Materials Available on Our Website
  
 Item 1B. Unresolved Staff Comments
  6




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##### Table of Contents



Item 2. Properties
 General
  
    
    Located on a corner in major metropolitan area
    
    High barriers to entry
    
    High daytime and evening population
    
    High count of cars per day
    
    High average household income within 3-5 mile radius
  Land
 Buildings
 Leases
 Location of Properties
   7




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##### Table of Contents



Grocery Anchored Shopping Centers
    
    City
    
    State
    
    GLA
    
    ABR
    
    % Leased1
    
    
    AmREIT C-Ranch LP
    
    Houston
    
    TX
    
    
    97,297
    
    
    $
    1,263,969
    
    
    
    100
    %2
    
    
    MacArthur Park
    
    Irving
    
    TX
    
    
    237,381
    
    
    
    3,906,589
    
    
    
    96
    %3
    
    
    Plaza in the Park
    
    Houston
    
    TX
    
    
    144,062
    
    
    
    2,663,253
    
    
    
    98
    %3
    
    
    Grocery Anchored Shopping Centers Total
    
    
    
    
    
    
    
    
    
    
    478,740
    
    
    $
    7,833,811
 Neighborhood Lifestyle & Community Shopping Center
    
    City
    
    State
    
    GLA
    
    ABR
    
    % Leased1
    
    
    Bakery Square
    
    Houston
    
    TX
    
    
    34,614
    
    
    $
    856,786
    
    
    
    100
    %2
    
    
    Courtyard on Post Oak
    
    Houston
    
    TX
    
    
    13,597
    
    
    
    485,997
    
    
    
    100
    %3
    
    
    Sugarland Plaza
    
    Sugarland
    
    TX
    
    
    16,750
    
    
    
    349,612
    
    
    
    100
    %4
    
    
    Terrace Shops
    
    Houston
    
    TX
    
    
    16,395
    
    
    
    443,752
    
    
    
    100
    %5
    
    
    Uptown Plaza (including CVS)
    
    Houston
    
    TX
    
    
    28,000
    
    
    
    1,242,311
    
    
    
    100
    %6
    
    
    Uptown Park
    
    Houston
    
    TX
    
    
    169,112
    
    
    
    5,336,029
    
    
    
    98
    %7
    
    
    Woodlands Plaza
    
    The Woodlands
    
    TX
    
    
    20,018
    
    
    
    321,724
    
    
    
    85
    %8
    
    
    Southbank  Riverwalk
    
    San Antonio
    
    TX
    
    
    46,673
    
    
    
    1,536,786
    
    
    
    100
    %9
    
    
    Uptown Plaza  Dallas
    
    Dallas
    
    TX
    
    
    33,840
    
    
    
    1,583,020
    
    
    
    96
    %9
    
    
    Community Shopping Centers Total
    
    
    
    
    
    
    
    
    
    
    378,999
    
    
    $
    12,156,017
 Single Tenant (Ground Leases)  Land
    
    City
    
    State
    
    GLA
    
    ABR
    
    % Leased1
    
    
    410-Blanco (Citibank)
    
    San Antonio
    
    TX
    
    
    4,439
    
    
    $
    159,979
    
    
    
    100
    %2
    
    
    Carlson Restaurants
    
    Hanover
    
    MD
    
    
    6,802
    
    
    
    141,674
    
    
    
    100
    %3
    
    
    Darden
    
    Peachtree City
    
    GA
    
    
    6,867
    
    
    
    94,922
    
    
    
    100
    %4
    
    
    Commerce & Zarzamora
    
    San Antonio
    
    TX
    
    
    14,820
    
    
    Note (1)
    
    
    0
    %5
    
    
    CVS Corporation (Eckerds at Yorktown)
    
    Houston
    
    TX
    
    
    13,824
    
    
    
    327,167
    
    
    
    100
    %6
    
    
    Woodlands Ring Road  Ground Leases
    
    The Woodlands
    
    TX
    
    
    66,349
    
    
    
    664,538
    
    
    
    100
    %6
    
    
    Single Tenant (Ground Leases) Total
    
    
    
    
    
    
    
    
    
    
    113,101
    
    
    $
    1,388,280
 Single Tenant (Fee Simple)
    
    City
    
    State
    
    GLA
    
    ABR
    
    % Leased1
    
    
    AFC, Inc. (2)
    
    Atlanta
    
    GA
    
    
    2,583
    
    
    $
    119,279
    
    
    
    100
    %2
    
    
    Advance Auto
    
    Aurora
    
    IL
    
    
    7,000
    
    
    Note (1) (3)
    
    
    0
    %3
    
    
    McAlisters Deli
    
    Champaign
    
    IL
    
    
    7,000
    
    
    
    175,392
    
    
    
    100
    %4
    
    
    McAlisters Deli
    
    Peoria
    
    IL
    
    
    3,426
    
    
    
    153,000
    
    
    
    100
    %5
    
    
    Sunbelt Rental (2 acres of land)
    
    Champaign
    
    IL
    
    
    12,000
    
    
    
    176,970
    
    
    
    100
    %6
    
    
    Carlson Restaurants
    
    Houston
    
    TX
    
    
    8,500
    
    
    
    215,000
    
    
    
    100
    %7
    
    
    Golden Corral
    
    Houston
    
    TX
    
    
    12,000
    
    
    
    210,450
    
    
    
    100
    %8
    
    
    Golden Corral (2)
    
    Humble
    
    TX
    
    
    12,000
    
    
    
    208,941
    
    
    
    100
    %9
    
    
    IHOP Corporation #1483
    
    Sugarland
    
    TX
    
    
    4,020
    
    
    
    190,620
    
    
    
    100
    %10
    
    
    IHOP Corporation #1737
    
    Centerville
    
    UT
    
    
    4,020
    
    
    
    163,896
    
    
    
    100
    %11
    
    
    IHOP Corporation #4462
    
    Memphis
    
    TN
    
    
    4,020
    
    
    
    179,496
    
    
    
    100
    %12
    
    
    IHOP Corporation #5318
    
    Topeka
    
    KS
    
    
    4,020
    
    
    
    159,504
    
    
    
    100
    %12
    
    
    Single Tenant (Fee Simple) Total
    
    
    
    
    
    
    
    
    
    
    80,589
    
    
    $
    1,952,548
 Single Tenant (Leasehold)
    
    City
    
    State
    
    GLA
    
    ABR
    
    % Leased15
    
    
    Single Tenant (Leasehold) Total
    
    Various
    
    Various
    
    
    60,300
    
    
    $
    1,524,420
    
    
    
    100
    %Company Total Sq. Ft.
    
    
    
    
    
    
    
    
    
    
    1,111,729
    
    
    $
    24,855,076
 8




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##### Table of Contents



(1)
    
    Under Development (GLA represents proposed leasable square footage)(2)
    
    Held for Sale(3)
    
    Advance Auto property is located in IL. The property has a proposed GLA of 7,000 square
feet.  Held for Investment
    
    Held for SaleRental
    
    Rental
    
    Rental
    
    RentalState/City
    
    Income
    
    Concentration
    
    Income
    
    ConcentrationTexas  Houston
    
    $
    19,847,418
    
    
    
    58.7
    %
    
    $
    349,277
    
    
    
    56.4
    %Texas  Dallas
    
    $
    8,611,463
    
    
    
    25.5
    %
    
    
    
    
    
    
    0.0
    %Texas  San Antonio
    
    $
    2,750,389
    
    
    
    8.1
    %
    
    
    
    
    
    
    0.0
    %Texas  other
    
    $
    229,922
    
    
    
    0.7
    %
    
    
    
    
    
    
    0.0
    %Total Texas
    
    
    31,439,192
    
    
    
    93.0
    %
    
    
    349,277
    
    
    
    56.4
    %Tennessee
    
    $
    298,804
    
    
    
    0.9
    %
    
    $
    150,120
    
    
    
    24.3
    %Louisiana
    
    $
    209,082
    
    
    
    0.6
    %
    
    
    
    
    
    
    0.0
    %Kansas
    
    $
    96,323
    
    
    
    0.3
    %
    
    
    
    
    
    
    0.0
    %Illinois
    
    $
    501,809
    
    
    
    1.5
    %
    
    
    
    
    
    
    0.0
    %Missouri
    
    $
    110,395
    
    
    
    0.3
    %
    
    
    
    
    
    
    0.0
    %Colorado
    
    $
    105,138
    
    
    
    0.3
    %
    
    
    
    
    
    
    0.0
    %Georgia
    
    $
    82,930
    
    
    
    0.2
    %
    
    $
    119,279
    
    
    
    19.3
    %Oregon
    
    $
    176,763
    
    
    
    0.5
    %
    
    
    
    
    
    
    0.0
    %Virginia
    
    $
    171,869
    
    
    
    0.5
    %
    
    
    
    
    
    
    0.0
    %Utah
    
    $
    163,846
    
    
    
    0.5
    %
    
    
    
    
    
    
    0.0
    %Maryland
    
    $
    141,664
    
    
    
    0.4
    %
    
    
    
    
    
    
    0.0
    %New York
    
    $
    125,128
    
    
    
    0.4
    %
    
    
    
    
    
    
    0.0
    %California
    
    $
    112,105
    
    
    
    0.4
    %
    
    
    
    
    
    
    0.0
    %New Mexico
    
    $
    78,638
    
    
    
    0.2
    %
    
    
    
    
    
    
    0.0
    %Total
    
    
    33,813,686
    
    
    
    100.0
    %
    
    
    618,676
    
    
    
    100.0
    %
 9




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##### Table of Contents



Grocery-Anchored Shopping Centers
    Neighborhood, Lifestyle and Community Shopping Centers
    Single-tenant Properties
    Land to be Developed
  10




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##### Table of Contents



Property Acquisitions and Dispositions
   Property Held for Sale
  
 Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  11




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##### Table of Contents

]

PART II
 
 Item 5. Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases
of Equity Securities
   Calendar Period
    
    High
    
    Low
    
    Dividends2008Fourth Quarter (through
December 19)
    
    $
    7.00
    
    
    $
    1.95
    
    
    $
    .1242Third Quarter
    
    $
    7.23
    
    
    $
    5.45
    
    
    $
    .1242Second Quarter
    
    $
    8.04
    
    
    $
    6.65
    
    
    $
    .1242First Quarter
    
    $
    7.48
    
    
    $
    5.91
    
    
    $
    .12422007Fourth Quarter
    
    $
    8.40
    
    
    $
    6.56
    
    
    $
    .1242Third Quarter
    
    $
    8.91
    
    
    $
    6.66
    
    
    $
    .1242Second Quarter
    
    $
    9.00
    
    
    $
    7.90
    
    
    $
    .1242First Quarter
    
    $
    9.25
    
    
    $
    8.00
    
    
    $
    .1242
  Class C Common Shares
 Class D
Common Shares
 12




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##### Table of Contents



(a)
    
    (b)
    
    (c)
    
    (d)Total
    
    Average
    
    Total Number of
    
    Approximate DollarNumber
    
    Price
    
    Shares Purchased
    
    Value of Shares thatof Shares
    
    Paid per
    
    As Part of Publicly
    
    May Yet be PurchasedPeriod
    
    Purchased
    
    Share
    
    Announced Program
    
    Under the ProgramJanuary 1, 2008 to March 31, 2008
    
    
    156,490
    
    
    $
    6.99
    
    
    
    156,490
    
    
    $
    2,618,707April 1, 2008 to June 30, 2008
    
    
    695,800
    
    
    $
    7.28
    
    
    
    695,800
    
    
    $
    2,560,990July 1, 2008 to September 30, 2008
    
    
    84,310
    
    
    $
    7.09
    
    
    
    84,310
    
    
    $
    1,963,519October 2, 2008 to December 31,
2008
    
    
    49,900
    
    
    $
    6.42
    
    
    
    49,900
    
    
    $
    1,643,161
 13




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##### Table of Contents



Item 6. Selected Financial Data
  December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Balance sheet data (at end of period)Real estate investments before
accumulated depreciation and amortization
    
    $
    316,189
    
    
    $
    329,819
    
    
    $
    312,405
    
    
    $
    290,097
    
    
    $
    198,744Total assets
    
    
    327,027
    
    
    
    344,187
    
    
    
    328,430
    
    
    
    314,971
    
    
    
    203,151Notes payable
    
    
    184,352
    
    
    
    168,560
    
    
    
    144,453
    
    
    
    114,687
    
    
    
    105,964Notes payable held for sale
    
    
    
    
    
    
    12,811
    
    
    
    
    
    
    
    
    
    
    
    Shareholders equity
    
    
    128,624
    
    
    
    149,433
    
    
    
    169,050
    
    
    
    187,285
    
    
    
    88,370Other dataFunds from operations,
available to class A (1)
    
    
    (1,357
    )
    
    
    1,896
    
    
    
    4,750
    
    
    
    3,644
    
    
    
    (2,003
    )Operating DataRevenues
    
    
    40,081
    
    
    
    38,628
    
    
    
    38,397
    
    
    
    27,631
    
    
    
    11,856Expenses (2)
    
    
    28,302
    
    
    
    24,167
    
    
    
    24,993
    
    
    
    16,383
    
    
    
    7,207Other income and expenses.
    
    
    (9,841
    )
    
    
    (8,356
    )
    
    
    (6,022
    )
    
    
    (7,758
    )
    
    
    (2,770
    )Income (Loss) from discontinued operations (3)
    
    
    (2,355
    )
    
    
    (854
    )
    
    
    (201
    )
    
    
    3,414
    
    
    
    (3,118
    )Gain on sale of real estate acquired for resale
    
    
    229
    
    
    
    
    
    
    
    382
    
    
    
    3,222
    
    
    
    1,827Net income (loss)
    
    $
    (188
    )
    
    $
    5,251
    
    
    $
    7,563
    
    
    $
    10,126
    
    
    $
    588Net income (loss) available to class A shareholders
    
    $
    (10,201
    )
    
    $
    (6,458
    )
    
    $
    (3,879
    )
    
    $
    881
    
    
    $
    (3,866
    )Net (loss) income per common share  basic and dilutedLoss before discontinued operations
    
    $
    (1.42
    )
    
    $
    (0.88
    )
    
    $
    (0.64
    )
    
    $
    (1.11
    )
    
    $
    (0.79
    )Income (loss) from discontinued operations
    
    
    (0.38
    )
    
    
    (0.13
    )
    
    
    0.03
    
    
    
    1.28
    
    
    
    (0.40
    )Net income (loss)
    
    $
    (1.80
    )
    
    $
    (1.01
    )
    
    $
    (0.61
    )
    
    $
    0.17
    
    
    $
    (1.19
    )Distributions per share  class A
    
    $
    0.50
    
    
    $
    0.50
    
    
    $
    0.50
    
    
    $
    0.50
    
    
    $
    0.48
 
 (1)
    
    We have 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. We consider FFO to be an appropriate supplemental
measure of operating performance because, by excluding gains or losses on dispositions and
excluding depreciation, FFO is a helpful tool that can assist in the comparison of the operating
performance of a companys real estate between periods, or as compared to different companies. FFO
should not be considered an alternative to cash flows from operating, investing and financing
activities in accordance with general accepted accounting principles and is not necessarily
indicative of cash available to meet cash needs. Our computation of FFO may differ from the
methodology for calculating FFO utilized by other equity REITs and, therefore, may not be
comparable to such other REITS. FFO is not defined by generally accepted accounting principles and
should not be considered an alternative to net income as an indication of our performance, or of
cash flows as a measure of liquidity. Please see reconciliation of Net Income to FFO in Item 7 
Managements Discussion and Analysis of Financial Condition and Results of Operations. For the
year ended December 31, 2004, FFO includes an impairment charge of $2.4 million related to two
single tenant, non-core assets. For the year ended December 31, 2004, FFO includes deferred merger
costs of $1.7 million resulting from shares issued to our CEO from the sale of his advisory company
to us in June 1998. For the year ended December 31, 2008, FFO includes an impairment charge of $1.5
million related to four properties that represent non-core real estate assets, one of which was
sold in July 2008. FFO for the year ended December 31, 2008 also includes a restructuring charge of
$2.5 million related to the wind-down of our fund raising business and general contracting
operations, including severance costs related to the employees terminated as part of the
restructuring.(2)
    
    Operating expenses for the year ended December 31, 2004 include a charge of $1.7 million
resulting from shares issued to our CEO as deferred merger cost stemming from the sale of his
advisory company to us in June 1998. 14




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##### Table of Contents



(3)
    
    Income from discontinued operations in 2004 includes an impairment charge of $2.4 million,
resulting from two asset impairments and corresponding write-downs of value. Income from
discontinued operations in 2008 includes impairment charge of $632,000 related to two properties
that represent non-core real estate assets, both of which were disposed of during 2008. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Executive Overview
    
    
    Phase I consisted of business model changes which are designed to reduce the earnings
volatility created by some of our transactional operating subsidiaries. In connection with
phase I of our plan we have simplified our operating platform and reduced our transactional
volatility by exiting the general contracting business and the fund raising business.
Additionally, we suspended the REITPlus, Inc. best efforts equity offering. Together,
these restructuring initiatives have resulted in a one-time restructuring charge of
approximately $2.5 million during 2008 and have reduced our annual overhead and general and
administrative expenses by approximately $4.5 million.
    
    Phase II will consist of changes which are designed to simplify our equity capital
structure. As the first step in Phase II, in December 2008, we voluntarily de-listed our
class A common shares from trading on the NYX. Our class A common shares are therefore no
longer traded on a national exchange. Additionally, we have announced the potential merger
of AmREIT into REITPlus, resulting in a combined, conforming entity with a single class of
common stock.
    
    Phase III will consist of growing our portfolio of Irreplaceable Corners and identifying
additional sources of liquidity for shareholders once we have accomplished the first two
phases of Vision 2010 and the country begins to move into recovery.
    15




---



##### Table of Contents



Portfolio of Irreplaceable Corners
  
    
    Located on a corner in major metropolitan area
    
    High barriers to entry
    
    High daytime and evening population
    
    High count of cars per day
    
    High average household income within 3-5 mile radius
  Advisory Business
   Real Estate Development and Operating Group
  Summary of Critical Accounting Policies
  16




---



##### Table of Contents



Revenue Recognition
    Real Estate Valuation
  Valuation of Receivables
 17




---



##### Table of Contents



Real Estate Acquisitions Business Combinations
  Derivative Financial Instruments Accounting for Derivative Instruments and Hedging Activities Amendment of Statement 133 on Derivative Instruments and Hedging
Activities
  Recently Issued Accounting Pronouncements
 Fair Value
Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 18




---



##### Table of Contents



Business Combinations .
 Noncontrolling Interests in Consolidated Financial
Statementsan amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133.
 Liquidity and Capital Resources
  2008
    
    2007
    
    2006Operating activities
    
    $
    10,229
    
    
    $
    10,950
    
    
    $
    18,147Investing activities
    
    $
    8,980
    
    
    $
    (23,965
    )
    
    $
    (23,980
    )Financing activities
    
    $
    (18,095
    )
    
    $
    10,821
    
    
    $
    3,333
     19




---



##### Table of Contents



20




---



##### Table of Contents



Contractual Obligations
  2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    Thereafter
    
    
    TotalUnsecured debt:Revolving credit
facility*
    
    $
    27,411
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    27,411Secured Debt**
    
    
    5,444
    
    
    
    1,554
    
    
    
    21,682
    
    
    
    36,943
    
    
    
    425
    
    
    $
    90,494
    
    
    
    156,542Interest*
    
    
    8,857
    
    
    
    7,821
    
    
    
    7,525
    
    
    
    5,730
    
    
    
    5,222
    
    
    
    21,310
    
    
    
    56,465Non-cancelable operating
lease payments
    
    
    219
    
    
    
    23
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    265Total contractual
obligations
    
    $
    41,931
    
    
    $
    9,398
    
    
    $
    29,230
    
    
    $
    42,673
    
    
    $
    5,647
    
    
    $
    111,804
    
    
    $
    240,683
 
 *
    
    Interest expense includes our interest obligations on our revolving credit facility as well as on
our fixed-rate loans. Our revolving credit facility is a variable-rate debt instrument, and the
outstanding balance tends to fluctuate throughout the year based on our liquidity needs. This
table assumes that the balance outstanding ($27.4 million) and the interest rate as of December 31,
2008 (3.4%) remain constant through maturity.**
    
    Secured debt as shown above is $400,000 less than total secured debt as reported in the
accompanying balance sheet due to the premium recorded on above-market debt assumed in conjunction
with certain of our property acquisitions.  Class A
    
    Class B
    
    Class C
    
    Class D2008Fourth Quarter
    
    $
    655
    
    
    $
    
    
    
    $
    723
    
    
    $
    1,782Third Quarter
    
    $
    670
    
    
    $
    
    
    
    $
    723
    
    
    $
    1,783Second Quarter
    
    $
    719
    
    
    $
    
    
    
    $
    723
    
    
    $
    1,781First Quarter
    
    $
    773
    
    
    $
    
    
    
    $
    723
    
    
    $
    1,7752007Fourth Quarter
    
    $
    785
    
    
    $
    1,097
    (1)
    
    $
    721
    
    
    $
    1,783Third Quarter
    
    $
    793
    
    
    $
    191
    
    
    $
    720
    
    
    $
    1,783Second Quarter
    
    $
    796
    
    
    $
    192
    
    
    $
    726
    
    
    $
    1,791First Quarter
    
    $
    785
    
    
    $
    194
    
    
    $
    725
    
    
    $
    1,786
 
 (1)
    
    Includes a $933,000 redemption premium associated with the redemption of the remaining Class B
Shares in December 2007.   Results of Operations
 Comparison of the year ended December 31, 2008 to the year ended December 31, 2007
  21




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##### Table of Contents



Expenses
       Other
    22




---



##### Table of Contents



Results of Operations
 Comparison of the year ended December 31, 2007 to the year ended December 31, 2006
      Expenses
      Other
    Funds From Operations
  23




---



##### Table of Contents



2008
    
    
    2007
    
    
    2006Income  before discontinued operations
    
    $
    1,938
    
    
    $
    6,105
    
    
    $
    7,382Income (Loss)   from discontinued operations
    
    
    (2,126
    )
    
    
    (854
    )
    
    
    181Plus depreciation of real estate assets  from operations
    
    
    8,845
    
    
    
    7,742
    
    
    
    8,628Plus depreciation of real estate assets  from
discontinued operations
    
    
    74
    
    
    
    136
    
    
    
    153Adjustments for nonconsolidated affiliates
    
    
    849
    
    
    
    476
    
    
    
    133Less gain on sale of real estate assets acquired
for investment
    
    
    (924
    )
    
    
    
    
    
    
    (285
    )Less class B, C & D distributions
    
    
    (10,013
    )
    
    
    (11,709
    )
    
    
    (11,442
    )Total Funds From Operations available to class A
shareholders
    
    
    ($1,357
    )
    
    $
    1,896
    
    
    $
    4,750
  
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    24




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##### Table of Contents



Item 8. Consolidated Financial Statements and Supplementary Data
 (a)
    (1)
    Financial StatementsReport of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of December 31, 2008 and 2007Consolidated Statements of Operations for the Years Ended December 31, 2008, 2007 and 2006Consolidated Statements of Shareholders Equity for the Years Ended December 31, 2008,
2007 and 2006Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006Notes to Consolidated Financial Statements(2)
    Financial Statement Schedule (unaudited)Schedule III  Consolidated Real Estate Owned and Accumulated Depreciation
 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
  
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
   
    
    Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of AmREITs assets;
    
    Provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial
statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of AmREIT are being made only in accordance with authorizations of management and
trust managers of AmREIT; and
    
    Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of AmREITs assets that could have a material effect on the
financial statements.
    Changes in Internal Controls
 25




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##### Table of Contents



Item 9B. Other Information
  
 PART III
 
 Item 10. Trust Managers, Executive Officers and Corporate Governance
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  (c)Number ofsecuritiesremaining availablefor future(a)
    
    
    
    
    
    issuances underNumber of
    
    
    
    
    
    equity compensationsecurities to be
    
    (b)
    
    plans (excludingissued upon
    
    Weighted average
    
    securitiesPlan
    
    exercise of
    
    exercise price of
    
    reflected in columnCategory
    
    outstanding options
    
    outstanding options
    
    (a))Equity compensation
plans approved by
security holders.
    
    
    
    
    
    
    
    
    
    
    1,288,739Equity compensation
plans not approved
by security
holders.
    
    
    
    
    
    
    
    
    
    
    TOTAL
    
    
    
    
    
    
    
    
    
    
    1,288,739
  
 Item 13. Certain Relationships, Related Transactions and Trust Manager Independence
 26




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##### Table of Contents



Item 14. Principal Accountant Fees and Services
  
 PART IV
 
 Item 15. Exhibits, Financial Statements and Schedules
 (a)
    (1)
    Financial StatementsReport of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of December 31, 2008 and 2007Consolidated Statements of Operations for the Years Ended December 31, 2008, 2007 and 2006Consolidated Statements of Shareholders Equity for the Years Ended December 31, 2008, 2007
and 2006Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and
2006Notes to Consolidated Financial Statements(2)
    Financial Statement Schedule (unaudited)Schedule III  Consolidated Real Estate Owned and Accumulated Depreciation(b)
    
    Exhibits
 3.1
    
    Amended and Restated Declaration of Trust (included as Exhibit 3.1 of the Exhibits to the
Companys Annual Report on Form 10-KSB for the year ended December 31, 2002, and incorporated
herein by reference).3.2
    
    By-Laws, dated December 22, 2002 (included as Exhibit 3.1 of the Exhibits to the Companys
Annual Report on Form 10-KSB for the year ended December 31, 2002, and incorporated herein by
reference).10.2
    
    Amended and Restated Revolving Credit Agreement, effective December 8, 2003, by and among
AmREIT and Wells Fargo Bank, as the Agent, relating to a $30,000,000 loan (included as Exhibit
10.4 of the Exhibits to the Companys Annual Report on Form 10-KSB for the year ended
December 31, 2003 and incorporated herein by reference).10.3
    
    Eighth Modification Agreement, effective November 4, 2005 by and between AmREIT and Wells
Fargo Bank, relating to a $40,000,000 loan and modifying the September 4, 2003 Revolving
Credit Agreement (included as Exhibit 10.3 of the Exhibits to the Companys Annual
Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by
reference).10.4
    
    Revolving Credit Agreement, dated effective as of October 30, 2007 by and between AmREIT as
borrower and Wells Fargo Bank.10.5*
    
    Amended and Restated Revolving Credit Agreement, dated effective as of November 21, 2008 by
and between AmREIT as borrower and Wells Fargo Bank, National Association as Lender.21.1 *
    
    Subsidiaries of the Company31.1 *
    
    Certification pursuant to Rule 13a-14(a) of Chief Executive Officer dated December 31, 2008.
 27




---



##### Table of Contents



31.2 *
    
    Certification pursuant to Rule 13a-14(a) of Chief Financial Officer dated December 31, 2008.32.1 **
    
    Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2 **
    
    Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith**
    
    Furnished herewith    AmREIT/s/ H. Kerr TaylorH. Kerr Taylor, President and Chief Executive Officer  /s/ H. Kerr Taylor
 H.
KERR TAYLOR 
President, Chairman of the Board, Chief Executive 
Officer and Director (Principal Executive Officer)
    
    March 27, 2009/s/ Robert S. Cartwright, Jr.
 ROBERT
S. CARTWRIGHT, JR., Trust Manager
    
    March 27, 2009/s/ Philip W. Taggart
 PHILIP
W. TAGGART, Trust Manager
    
    March 27, 2009/s/ H.L. Rush, Jr.
 H.L.
RUSH, JR., Trust Manager
    
    March 27, 2009/s/ Brett P. Treadwell
 BRETT
P. TREADWELL, Managing Vice President  Finance
(Principal Accounting Officer)
    
    March 27, 2009
 28




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##### Table of Contents



AmREIT AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
 PageFINANCIAL STATEMENTS:Report of Independent Registered Public Accounting Firm
    
    F-2Consolidated
Balance Sheets as of December 31, 2008 and 2007
    
    F-3Consolidated Statements of Operations for the years ended
December 31, 2008, 2007, 2006
    
    F-4Consolidated Statements of Shareholders Equity
for the years ended December 31, 2008, 2007, 2006
    
    F-5Consolidated Statements of Cash Flows for the years ended
December 31, 2008, 2007, 2006
    
    F-6Notes to Consolidated Financial Statements
    
    F-7 to F-33FINANCIAL STATEMENT SCHEDULE:Schedule III  Consolidated Real Estate Owned and Accumulated
Depreciation for the year ended December 31, 2008
    
    S-1
  F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
   .
  
 F-2




---



##### Table of Contents



Item 1. Financial Statements
 
 AmREIT AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31 2008 and 2007
(in thousands, except share data)
 December 31,
    
    
    December 31,2008
    
    
    2007ASSETSReal estate investments at cost:Land
    
    $
    130,438
    
    
    $
    130,563Buildings
    
    
    140,711
    
    
    
    141,045Tenant improvements
    
    
    9,552
    
    
    
    10,105280,701
    
    
    
    281,713Less accumulated depreciation and amortization
    
    
    (19,721
    )
    
    
    (15,626
    )260,980
    
    
    
    266,087Real estate held for sale
and investment in direct financing leases held for sale, net
    
    
    2,662
    
    
    
    22,438Net investment in direct financing leases held for investment
    
    
    18,884
    
    
    
    2,058Acquired lease intangibles, net
    
    
    9,446
    
    
    
    13,096Investment in merchant development funds and other affiliates
    
    
    4,496
    
    
    
    10,514Net real estate investments
    
    
    296,468
    
    
    
    314,193Cash and cash equivalents
    
    
    2,335
    
    
    
    1,221Tenant receivables, net
    
    
    3,717
    
    
    
    4,398Accounts receivable, net
    
    
    1,979
    
    
    
    1,251Accounts receivable  related party
    
    
    1,441
    
    
    
    5,386Notes receivable
    
    
    5,533
    
    
    
    Notes receivable  related party
    
    
    5,307
    
    
    
    10,442Deferred costs, net
    
    
    2,556
    
    
    
    2,472Other assets
    
    
    7,691
    
    
    
    4,824TOTAL ASSETS
    
    $
    327,027
    
    
    $
    344,187LIABILITIES AND SHAREHOLDERS EQUITYLiabilities:Notes payable
    
    $
    184,352
    
    
    $
    168,560Notes payable, held for sale
    
    
    
    
    
    
    12,811Accounts payable and other liabilities
    
    
    7,071
    
    
    
    8,129Acquired below market lease intangibles, net
    
    
    2,112
    
    
    
    3,401Deferred gain on sale of property
    
    
    2,919
    
    
    
    Security deposits
    
    
    705
    
    
    
    674TOTAL LIABILITIES
    
    
    197,159
    
    
    
    193,575Minority interest
    
    
    1,244
    
    
    
    1,179Shareholders equity:Preferred shares, $.01 par value, 10,000,000 shares authorized, none issued
    
    
    
    
    
    
    Class A common shares, $.01 par value, 50,000,000 shares authorized,
6,634,489 and 6,626,559 shares issued and outstanding,
respectively
    
    
    66
    
    
    
    66Class C common shares, $.01 par value, 4,400,000 shares authorized,
4,139,802 and 4,143,971 shares issued and outstanding,
respectively
    
    
    41
    
    
    
    41Class D common shares, $.01 par value, 17,000,000 shares authorized,
10,993,010 and 11,045,763 shares issued and outstanding,
respectively
    
    
    110
    
    
    
    110Capital in excess of par value
    
    
    185,350
    
    
    
    185,165Accumulated distributions in excess of earnings
    
    
    (46,383
    )
    
    
    (33,365
    )Accumulated other comprehensive income
    
    
    (409
    )
    
    
    Cost of treasury shares, 1,355,405 and 337,308 Class A common shares, respectively
    
    
    (10,151
    )
    
    
    (2,584
    )TOTAL SHAREHOLDERS EQUITY
    
    
    128,624
    
    
    
    149,433TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    327,027
    
    
    $
    344,187
  F-3




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##### Table of Contents



AmREIT AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 2008, 2007 and 2006
(in thousands, except per share data)
 Year to date ended December 31,2008
    
    
    2007
    
    
    2006Revenues:Rental income from operating leases
    
    $
    31,805
    
    
    $
    29,842
    
    
    $
    27,138Earned income from direct financing leases
    
    
    2,009
    
    
    
    2,026
    
    
    
    2,030Real estate fee income
    
    
    438
    
    
    
    1,196
    
    
    
    1,334Real estate fee income  related party
    
    
    3,877
    
    
    
    4,046
    
    
    
    6,983Construction management fee income
    
    
    46
    
    
    
    61
    
    
    
    63Construction management fee income  related party
    
    
    405
    
    
    
    168
    
    
    
    26Asset management fee income  related party
    
    
    1,501
    
    
    
    1,289
    
    
    
    823Total revenues
    
    
    40,081
    
    
    
    38,628
    
    
    
    38,397Expenses:General and administrative
    
    
    7,771
    
    
    
    6,785
    
    
    
    6,839Property expense
    
    
    8,905
    
    
    
    7,400
    
    
    
    6,840Legal and professional
    
    
    1,618
    
    
    
    1,621
    
    
    
    1,464Real estate commissions
    
    
    139
    
    
    
    459
    
    
    
    1,042Depreciation and amortization
    
    
    9,006
    
    
    
    7,902
    
    
    
    8,808Impairment Charge
    
    
    863
    
    
    
    
    
    
    
    Total expenses
    
    
    28,302
    
    
    
    24,167
    
    
    
    24,993Operating income
    
    
    11,779
    
    
    
    14,461
    
    
    
    13,404Other income (expense):Interest and other income  related party
    
    
    1,162
    
    
    
    1,103
    
    
    
    1,425Income (loss) from merchant development funds and other affiliates
    
    
    (894
    )
    
    
    153
    
    
    
    967Income tax benefit (expense) for taxable REIT subsidiary
    
    
    696
    
    
    
    321
    
    
    
    (542
    )Interest expense
    
    
    (10,474
    )
    
    
    (9,793
    )
    
    
    (7,814
    )Minority interest in loss of consolidated joint ventures
    
    
    (331
    )
    
    
    (140
    )
    
    
    (58
    )Income before discontinued operations
    
    
    1,938
    
    
    
    6,105
    
    
    
    7,382Loss from
discontinued operations, net of taxes
    
    
    (2,355
    )
    
    
    (854
    )
    
    
    (201
    )Gain on sales of real estate acquired for resale, net of taxes
    
    
    229
    
    
    
    
    
    
    
    382Income
(loss) from discontinued operations
    
    
    (2,126
    )
    
    
    (854
    )
    
    
    181Net income (loss)
    
    
    (188
    )
    
    
    5,251
    
    
    
    7,563Distributions paid to class B, C and D shareholders
    
    
    (10,013
    )
    
    
    (11,709
    )
    
    
    (11,442
    )Net loss available to class A shareholders
    
    $
    (10,201
    )
    
    $
    (6,458
    )
    
    $
    (3,879
    )Net loss per class A common share  basic and dilutedLoss before discontinued operations
    
    $
    (1.42
    )
    
    $
    (0.88
    )
    
    $
    (0.64
    )Income (loss)
from discontinued operations
    
    $
    (0.38
    )
    
    $
    (0.13
    )
    
    $
    0.03Net loss
    
    $
    (1.80
    )
    
    $
    (1.01
    )
    
    $
    (0.61
    )Weighted average class A common shares used to
compute net loss per share, basic and diluted
    
    
    5,667
    
    
    
    6,358
    
    
    
    6,300
  F-4




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##### Table of Contents



AmREIT AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
For the years ended December 31, 2008, 2007 and 2006
(in thousands)
 Accumulated
    
    
    AccumulatedCapital in
    
    
    distributions
    
    
    other
    
    
    Cost ofCommon Shares
    
    
    excess of
    
    
    in excess of
    
    
    comprehensive
    
    
    treasuryAmount
    
    
    par value
    
    
    earnings
    
    
    income
    
    
    shares
    
    
    TotalBalance at December 31, 2005
    
    $
    238
    
    
    $
    204,331
    
    
    $
    (16,736
    )
    
    $
    
    
    
    $
    (548
    )
    
    $
    187,285Net income
    
    
    
    
    
    
    
    
    
    
    7,563
    
    
    
    
    
    
    
    
    
    
    
    7,563Deferred compensation issuance of
restricted shares, Class A
    
    
    
    
    
    
    (987
    )
    
    
    
    
    
    
    
    
    
    
    1,264
    
    
    
    277Repurchase of common shares, Class A
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,840
    )
    
    
    (2,840
    )Repurchase of common shares, Class B
    
    
    (11
    )
    
    
    (9,220
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,231
    )Amortization of deferred compensation
    
    
    
    
    
    
    556
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    556Issuance of common shares, Class C
    
    
    2
    
    
    
    1,726
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,728Retirement of common shares, Class C
    
    
    (2
    )
    
    
    (1,506
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,508
    )Issuance of common shares, Class D
    
    
    5
    
    
    
    4,554
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,559Retirement of common shares, Class D
    
    
    (5
    )
    
    
    (4,758
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,763
    )Distributions
    
    
    
    
    
    
    
    
    
    
    (14,576
    )
    
    
    
    
    
    
    
    
    
    
    (14,576
    )Balance at December 31, 2006
    
    $
    227
    
    
    $
    194,696
    
    
    $
    (23,749
    )
    
    $
    
    
    
    $
    (2,124
    )
    
    $
    169,050Net income
    
    
    
    
    
    
    
    
    
    
    5,251
    
    
    
    
    
    
    
    
    
    
    
    5,251Deferred compensation issuance of
restricted shares, Class A
    
    
    
    
    
    
    (749
    )
    
    
    
    
    
    
    
    
    
    
    837
    
    
    
    88Issuance of common shares, Class A
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Repurchase of common shares, Class A
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,297
    )
    
    
    (1,297
    )Repurchase of common shares, Class B
    
    
    (11
    )
    
    
    (9,274
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,285
    )Amortization of deferred compensation
    
    
    
    
    
    
    739
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    739Issuance of common shares, Class C
    
    
    2
    
    
    
    1,721
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,723Retirement of common shares, Class C
    
    
    (2
    )
    
    
    (1,754
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,756
    )Issuance of common shares, Class D
    
    
    5
    
    
    
    4,412
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,417Retirement of common shares, Class D
    
    
    (5
    )
    
    
    (4,626
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,631
    )Distributions
    
    
    
    
    
    
    
    
    
    
    (14,867
    )
    
    
    
    
    
    
    
    
    
    
    (14,867
    )Balance at December 31, 2007
    
    $
    217
    
    
    $
    185,165
    
    
    $
    (33,365
    )
    
    $
    
    
    
    $
    (2,584
    )
    
    $
    149,433Net (loss)
    
    
    
    
    
    
    
    
    
    
    (188
    )
    
    
    
    
    
    
    
    
    
    
    (188
    )Fair value of hedge liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (409
    )
    
    
    
    
    
    
    (409
    )Deferred compensation issuance of
restricted shares, Class A
    
    
    
    
    
    
    492
    
    
    
    
    
    
    
    
    
    
    
    (559
    )
    
    
    (67
    )Issuance of common shares, Class A
    
    
    
    
    
    
    47
    
    
    
    
    
    
    
    
    
    
    
    67
    
    
    
    114Repurchase of common shares, Class A
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,075
    )
    
    
    (7,075
    )Amortization of deferred compensation
    
    
    
    
    
    
    437
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    437Issuance of common shares, Class C
    
    
    
    
    
    
    1,545
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,545Retirement of common shares, Class C
    
    
    
    
    
    
    (1,590
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,590
    )Issuance of common shares, Class D
    
    
    
    
    
    
    4,016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,016Retirement of common shares, Class D
    
    
    
    
    
    
    (4,762
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,762
    )Distributions
    
    
    
    
    
    
    
    
    
    
    (12,830
    )
    
    
    
    
    
    
    
    
    
    
    (12,830
    )Balance at December 31, 2008
    
    $
    217
    
    
    $
    185,350
    
    
    $
    (46,383
    )
    
    $
    (409
    )
    
    $
    (10,151
    )
    
    $
    128,624
  F-5




---



##### Table of Contents



AmREIT AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share data)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net income (loss)
    
    $
    (188
    )
    
    $
    5,251
    
    
    $
    7,563Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Investment in real estate acquired for resale
    
    
    (2,476
    )
    
    
    
    
    
    
    (3,331
    )Proceeds from sales of real estate acquired for resale
    
    
    466
    
    
    
    1,399
    
    
    
    2,190Gain on sales of real estate acquired for resale
    
    
    (229
    )
    
    
    
    
    
    
    Gain on sales of real estate acquired for investment
    
    
    (924
    )
    
    
    
    
    
    
    (382
    )Impairment charge
    
    
    1,494
    
    
    
    
    
    
    
    (285
    )Bad debt expense
    
    
    1,403
    
    
    
    
    
    
    
    Restructuring charges
    
    
    1,919
    
    
    
    
    
    
    
    Loss (Income) from merchant development funds and other affiliates
    
    
    894
    
    
    
    (153
    )
    
    
    (967
    )Cash receipts (payments) related to deferred related party fees
    
    
    (400
    )
    
    
    851
    
    
    
    Depreciation and amortization
    
    
    9,081
    
    
    
    8,071
    
    
    
    9,214Amortization of above/below market rent
    
    
    (944
    )
    
    
    (298
    )
    
    
    (158
    )Amortization of loan premium and financing cost
    
    
    113
    
    
    
    (27
    )
    
    
    (232
    )Amortization of deferred compensation
    
    
    437
    
    
    
    739
    
    
    
    556Minority interest in income of consolidated joint ventures
    
    
    331
    
    
    
    139
    
    
    
    56Distributions from merchant development funds and other affiliates
    
    
    539
    
    
    
    467
    
    
    
    1,857Decrease in tenant receivables
    
    
    (473
    )
    
    
    (68
    )
    
    
    (1,198
    )Decrease in accounts receivable
    
    
    453
    
    
    
    521
    
    
    
    35Decrease (Increase) in accounts receivable  related party
    
    
    2,026
    
    
    
    (3,721
    )
    
    
    2,493Cash receipts from direct financing leases
more than income recognized
    
    
    209
    
    
    
    112
    
    
    
    8Increase in other assets
    
    
    (2,370
    )
    
    
    (962
    )
    
    
    (296
    )Increase (decrease) in accounts payable and other liabilities
    
    
    (693
    )
    
    
    (1,377
    )
    
    
    1,002Decrease in accounts payable  related party
    
    
    (469
    )
    
    
    
    
    
    
    Increase in security deposits
    
    
    30
    
    
    
    6
    
    
    
    22Net cash provided by operating activities
    
    
    10,229
    
    
    
    10,950
    
    
    
    18,147Cash flows from investing activities:Improvements to real estate
    
    
    (3,107
    )
    
    
    (3,735
    )
    
    
    (4,026
    )Acquisition of investment properties
    
    
    
    
    
    
    (10,610
    )
    
    
    (24,518
    )Loans to affiliates
    
    
    (4,986
    )
    
    
    (6,423
    )
    
    
    (22,069
    )Payments from affiliates
    
    
    10,121
    
    
    
    6,085
    
    
    
    23,197Investment in receivable
    
    
    (1,621
    )
    
    
    
    
    
    
    Additions to furniture, fixtures and equipment
    
    
    (120
    )
    
    
    (75
    )
    
    
    (128
    )Proceeds from sale to related party of investment in other affiliates
    
    
    10,126
    
    
    
    
    
    
    
    Investment in merchant development funds and other affiliates
    
    
    (5,490
    )
    
    
    (9,263
    )
    
    
    (1,055
    )Distributions from merchant development funds and other affiliates
    
    
    333
    
    
    
    235
    
    
    
    137Proceeds from sale of investment property
    
    
    3,530
    
    
    
    
    
    
    
    4,466Decrease (increase) in preacquisition costs
    
    
    194
    
    
    
    (179
    )
    
    
    16Net cash provided by (used in) investing activities
    
    
    8,980
    
    
    
    (23,965
    )
    
    
    (23,980
    )Cash flows from financing activities:Proceeds from notes payable
    
    
    66,037
    
    
    
    104,811
    
    
    
    82,650Payments of notes payable
    
    
    (62,817
    )
    
    
    (67,658
    )
    
    
    (52,652
    )Increase in deferred costs
    
    
    (508
    )
    
    
    (542
    )
    
    
    (130
    )Purchase of treasury shares
    
    
    (7,075
    )
    
    
    (1,297
    )
    
    
    (2,610
    )Issuance of common shares
    
    
    81
    
    
    
    
    
    
    
    Retirement of common shares
    
    
    (6,352
    )
    
    
    (15,669
    )
    
    
    (15,502
    )Issuance costs
    
    
    (42
    )
    
    
    (12
    )
    
    
    (82
    )Common dividends paid
    
    
    (7,261
    )
    
    
    (8,715
    )
    
    
    (8,246
    )Distributions to minority interests
    
    
    (158
    )
    
    
    (97
    )
    
    
    (95
    )Net cash provided by (used in) financing activities
    
    
    (18,095
    )
    
    
    10,821
    
    
    
    3,333Net increase (decrease) in cash and cash equivalents
    
    
    1,114
    
    
    
    (2,194
    )
    
    
    (2,500
    )Cash and cash equivalents, beginning of period
    
    
    1,221
    
    
    
    3,415
    
    
    
    5,915Cash and cash equivalents, end of period
    
    $
    2,335
    
    
    $
    1,221
    
    
    $
    3,415Supplemental schedule of cash flow information:Cash paid during the year for:Interest
    
    $
    10,683
    
    
    $
    9,708
    
    
    $
    7,861Income taxes
    
    
    210
    
    
    
    867
    
    
    
    945
 Supplemental schedule of noncash investing and financing activities
      F-6




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##### Table of Contents



AmREIT AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
 1. DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS
    
    
    Phase I consisted of business model changes which are designed to reduce the earnings
volatility created by some of our transactional operating subsidiaries. In connection with
phase I of our plan we have simplified our operating platform and reduced our transactional
volatility by exiting the general contracting business and the fund raising business.
Additionally, we suspended the REITPlus, Inc. best efforts equity offering. Together,
these restructuring initiatives have resulted in a one-time restructuring charge of
approximately $2.5 million during 2008 and have reduced our annual overhead and general and
administrative expenses by approximately $4.5 million.
    
    Phase II will consist of changes which are designed to simplify our equity capital
structure. As the first step in Phase II, in December 2008, we voluntarily de-listed our
class A common shares from trading on the NYX. Our class A common shares are therefore no
longer traded on a national exchange. Additionally, we have announced the potential merger
of AmREIT into REITPlus, resulting in a combined, conforming entity with a single class of
common stock.
    
    Phase III will consist of growing our portfolio of Irreplaceable Corners and identifying
additional sources of liquidity for shareholders once we have accomplished the first two
phases of Vision 2010 and the country begins to move into recovery.
   F-7




---



##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
       F-8




---



##### Table of Contents



Development Properties
 Acquired Properties and Acquired Lease Intangibles Business Combinations
 Depreciation
 Properties Held for Sale
 F-9




---



##### Table of Contents



Impairment 
  Tenant receivables ,
 Accounts receivable
 F-10




---



##### Table of Contents



Note receivable
 Notes receivable  related party
  Accounting for
Derivative Instruments and Hedging Activities Amendment of Statement 133 on Derivative Instruments and Hedging Activities
      Restricted Share Issuances
 F-11




---



##### Table of Contents



2008
    
    2007Weighted Average
    
    
    
    
    
    Weighted AverageNon-vested
    
    grant
    
    Non-vested
    
    grantShares
    
    date fair value
    
    Shares
    
    date fair valueBeginning of period
    
    
    410,830
    
    
    $
    7.67
    
    
    
    355,599
    
    
    $
    7.31Granted
    
    
    10,000
    
    
    
    6.70
    
    
    
    131,334
    
    
    
    8.51Vested
    
    
    (55,974
    )
    
    
    7.68
    
    
    
    (50,758
    )
    
    
    7.36Forfeited
    
    
    (72,551
    )
    
    
    7.57
    
    
    
    (25,345
    )
    
    
    7.53End of period
    
    
    292,305
    
    
    
    7.67
    
    
    
    410,830
    
    
    
    7.67
  General Partner Profit Participation Interests
 Tax-Deferred Retirement Plan (401k)
 Stock Options
   Federal
 F-12




---



##### Table of Contents



State Accounting for Income Taxes,
    For the Years Ended December 31,2008
    
    2007
    
    2006Loss to class A common shareholders
    
    $
    (10,201
    )
    
    $
    (6,458
    )
    
    $
    (3,879
    )Weighted average class A common shares outstanding
    
    
    5,667
    
    
    
    6,358
    
    
    
    6,300Basic and diluted loss per share
    
    $
    (1.80
    )
    
    $
    (1.01
    )
    
    $
    (0.61
    )
     F-13




---



##### Table of Contents




    
    Level 1 Inputs  Quoted market prices (unadjusted) for identical assets and liabilities in
an active market that the Company has the ability to access at the measurement date.
    
    Level 2 Inputs  Inputs, other than the quoted prices in active markets, that are
observable either directly or indirectly.
    
    Level 3 Inputs  Inputs based on prices or valuation techniques that are both unobservable
and significant to the overall fair value measurements.
     Level 1
    
    Level 2
    
    Level 3Notes Payable
    
    
    
    
    
    
    
    
    
    $
    140,313Derivative Liability
    
    
    
    
    
    $
    409
   F-14




---



##### Table of Contents



The Fair Value Option for Financial Assets and
Financial Liabilities
 Business Combinations .
 Noncontrolling Interests in Consolidated Financial
Statementsan amendment of ARB No. 51
    F-15




---



##### Table of Contents



For the Years Ended December 31,2008
    
    
    2007
    
    
    2006Rental revenue
    
    $
    619
    
    
    $
    805
    
    
    $
    1,072Real estate fee income
    
    
    115
    
    
    
    
    
    
    
    Construction revenues
    
    
    8,661
    
    
    
    7,416
    
    
    
    13,371Securities commission income
    
    
    1,365
    
    
    
    4,805
    
    
    
    6,554Interest and other income
    
    
    15
    
    
    
    38
    
    
    
    Gain on sale of real estate held for investment
    
    
    924
    
    
    
    
    
    
    
    285Gain on sale of real estate held for resale
    
    
    229
    
    
    
    
    
    
    
    382Total revenues
    
    
    11,928
    
    
    
    13,064
    
    
    
    21,664Other general and administrative
    
    
    2,321
    
    
    
    2,282
    
    
    
    2,272Property expense
    
    
    249
    
    
    
    196
    
    
    
    115Construction costs
    
    
    8,050
    
    
    
    6,906
    
    
    
    12,290Legal and professional
    
    
    195
    
    
    
    171
    
    
    
    133Securities commissions
    
    
    963
    
    
    
    3,989
    
    
    
    5,732Depreciation and amortization
    
    
    74
    
    
    
    136
    
    
    
    153Restructuring charges
    
    
    2,457
    
    
    
    
    
    
    
    Impairment charge
    
    
    632
    
    
    
    
    
    
    
    Interest expense
    
    
    315
    
    
    
    166
    
    
    
    276Federal income tax expense (benefit)
    
    
    (1,202
    )
    
    
    72
    
    
    
    512Total expenses
    
    
    14,054
    
    
    
    13,918
    
    
    
    21,483Income (Loss) from discontinued operations
    
    
    (2,126
    )
    
    
    (854
    )
    
    
    181Basic and diluted income (loss) from discontinued operations
per class A common share
    
    $
    (0.38
    )
    
    $
    (0.13
    )
    
    $
    0.03
 Restructuring charges
  General Contracting
 F-16




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##### Table of Contents



2008
    
    2007Billed receivables Third party
    
    $
    189
    
    
    $
    498 Related party
    
    $
    511
    
    
    $
    1,927Unbilled receivables Third party
    
    $
    1
    
    
    $
    4 Related party
    
    $
    
    
    
    $
    (85
    )Retention receivables Third party
    
    $
    
    
    
    $
    61 Related party
    
    $
    521
    
    
    $
    527Accounts payable/accrued liabilities
    
    $
    1,180
    
    
    $
    1,235Advances billings
    
    $
    
    
    
    $
    6
 Fund-raising business
  2008
    
    2007Cash
    
    $
    141
    
    
    $
    1,104Accounts payable/accrued liabilities
    
    $
    19
    
    
    $
    776
       F-17




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##### Table of Contents



3. OPERATING LEASES
  2009
    
    $
    24,2112010
    
    
    20,5172011
    
    
    17,4792012
    
    
    15,4262013
    
    
    12,902Thereafter
    
    
    89,199$
    179,734
 4. NET INVESTMENT IN DIRECT FINANCING LEASES
  Associated with AssetsHeld for Investment
    
    
    Associated with Assets2008
    
    
    2007
    
    
    Held for SaleMinimum lease payments receivable
    
    $
    40,442
    
    
    $
    4,517
    
    
    $
    
    
    
    $
    38,142Unguaranteed Residual Value
    
    
    1,493
    
    
    
    701
    
    
    
    
    
    
    
    802Less: Unearned Income
    
    
    (23,051
    )
    
    
    (3,160
    )
    
    
    
    
    
    
    (21,909
    )$
    18,884
    
    
    $
    2,058
    
    
    $
    
    
    
    $
    17,035
   Associated with AssetsHeld for Investment2009
    
    
    2,2292010
    
    
    2,2402011
    
    
    2,2412012
    
    
    2,3512013
    
    
    2,4392014-thereafter
    
    
    28,941Total
    
    
    40,441
 5 INVESTMENTS IN MERCHANT DEVELOPMENT FUNDS AND OTHER AFFILIATES
 AAA CTL Notes, Ltd.
 F-18




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##### Table of Contents



Merchant Development Funds
  AmREIT Opportunity Fund (AOF)
 AmREIT Income & Growth Fund, Ltd. (AIG)
 AmREIT Monthly Income & Growth Fund (MIG)
 AmREIT Monthly Income & Growth Fund II (MIG II)
 AmREIT Monthly Income & Growth Fund III (MIG III) 
 AmREIT Monthly Income & Growth Fund IV (MIG IV)
 F-19




---



##### Table of Contents



REITPlus, Inc.
  F-20




---



##### Table of Contents



Merchant
    
    CapitalDevelopment
    
    under
    
    LP
    
    GP
    
    Scheduled
    
    Sharing Ratios(1)
    
    LPFund
    
    Mgmt.
    
    Interest
    
    Interest
    
    Liquidation
    
    LP
    
    GP
    
    PreferenceAIG
    
    $3 million
    
    
    2.0
    %
    
    
    1.0
    %
    
    
    2008
    
    
    
    99
    %
    
    
    1
    %
    
    
    8
    %90
    %
    
    
    10
    %
    
    
    10
    %80
    %
    
    
    20
    %
    
    
    12
    %70
    %
    
    
    30
    %
    
    
    15
    %0
    %
    
    
    100
    %
    
    40% Catch Up60
    %
    
    
    40
    %
    
    ThereafterMIG
    
    $15       million
    
    
    1.3
    %
    
    
    1.0
    %
    
    
    2010
    
    
    
    99
    %
    
    
    1
    %
    
    
    8
    %90
    %
    
    
    10
    %
    
    
    10
    %80
    %
    
    
    20
    %
    
    
    12
    %0
    %
    
    
    100
    %
    
    40% Catch Up60
    %
    
    
    40
    %
    
    ThereafterMIG II
    
    $25       million
    
    
    1.6
    %
    
    
    1.0
    %
    
    
    2011
    
    
    
    99
    %
    
    
    1
    %
    
    
    8
    %85
    %
    
    
    15
    %
    
    
    12
    %0
    %
    
    
    100
    %
    
    40% Catch Up60
    %
    
    
    40
    %
    
    ThereafterMIG III
    
    $71       million
    
    
    1.1
    %
    
    
    1.0
    %
    
    
    2012
    
    
    
    99
    %
    
    
    1
    %
    
    
    10
    %0
    %
    
    
    100
    %
    
    40% Catch Up60
    %
    
    
    40
    %
    
    ThereafterMIG IV
    
    $50       million
    
    
    1.6
    %
    
    
    1.0
    %
    
    
    2013
    
    
    
    99
    %
    
    
    1
    %
    
    
    8.5
    %0
    %
    
    
    100
    %
    
    40% Catch Up60
    %
    
    
    40
    %
    
    ThereafterREITPlus (2)
    
    $7.5      million
    
    NA
    
    NA
    
    
    2014
    
    
    
    99
    %
    
    
    1
    %
    
    (Note 3)85
    %
    
    
    15
    %
 
 (1)
    
    Using AIG as an example of how the sharing ratios and LP preference provisions are applied, the
LPs share in 99% of the cash distributions until they receive an 8% preferred return. The LPs
share in 90% of the cash distributions until they receive a 10% preferred return and so on.(2)
    
    REITPlus suspended its offering during October 2008.(3)
    
    We will be entitled to distributions from REITPlus with respect to our $1 million investment to
the same extent as stockholders who purchased shares in the public offering. For a description of
our subsidiarys promoted interest in REITPlus, please see the second paragraph under REITPlus,
Inc. above in the Section 3. Other AffiliatesOther than the merchant development funds, we have investments in entities that are accounted for
under the equity method because we exercise significant influence over such entities. We record our
prorate share of income or loss from the underlying entity based on our ownership interest.AmREIT Woodlake, L.P.  In 2007, we invested $3.4 million in AmREIT Woodlake, LP,
(Woodlake) for a 30% limited partner interest in the partnership. Woodlake was formed in 2007 to
acquire, lease and manage Woodlake Square, a shopping center located on the west side of Houston,
Texas at the intersection of Westheimer and Gessner. In June 2008, we sold two-thirds (20%) of our
interest in Woodlake to MIG IV. Pursuant to the purchase agreement, our interest in the property
was sold at its carrying value, resulting in no gain or loss to us. At December 31, 2008, we hold a
remaining 10% interest in Woodlake Square.AmREIT Westheimer Gessner, L.P.  In 2007, we invested $3.8 million in AmREIT Westheimer
Gessner, LP, for a 30% limited partner interest in the partnership. AmREIT Westheimer Gessner, LP
was formed in 2007 to acquire, lease and manage Borders Shopping Center, a shopping center located
on the west side of Houston, Texas at the intersection of Westheimer and Gessner.
 F-21




---



##### Table of Contents



AmREIT SPF Shadow Creek, L.P.
  As of December 31,Combined Balance Sheets (in thousands)
    
    2008
    
    
    2007AssetsProperty, net
    
    $
    204,481
    
    
    $
    155,699Cash
    
    
    4,652
    
    
    
    28,208Notes receivable
    
    
    2,388
    
    
    
    8,823Other assets
    
    
    47,676
    
    
    
    38,483Total Assets
    
    
    259,197
    
    
    
    231,213Liabilities and partners capital:Notes payable (1)
    
    
    140,794
    
    
    
    106,291Other liabilities
    
    
    19,779
    
    
    
    10,575Partners capital
    
    
    98,624
    
    
    
    114,348Total Liabilities and Partners Capital
    
    $
    259,197
    
    
    $
    231,214AmREIT share of Partners Capital
    
    $
    4,496
    
    
    $
    10,514
 Years ended December 31,Combined Statement of Operations (in thousands)
    
    2008
    
    
    2007
    
    
    2006RevenueTotal Revenue
    
    
    21,963
    
    
    
    15,220
    
    
    
    14,248ExpenseInterest
    
    
    8,269
    
    
    
    5,135
    
    
    
    3,196Depreciation and amortization
    
    
    9,483
    
    
    
    4,570
    
    
    
    2,757Other
    
    
    11,042
    
    
    
    8,508
    
    
    
    3,722Total Expense
    
    
    28,794
    
    
    
    18,213
    
    
    
    9,675Net (loss) income
    
    $
    (6,831
    )
    
    $
    (2,993
    )
    
    $
    4,573AmREIT share of Net (loss) income
    
    $
    (894
    )
    
    $
    153
    
    
    $
    967
 
 (1)
    
    Includes $5.3 million and $10.4 million payable to us as of December 31, 2008 and 2007, respectively. 6. ACQUIRED LEASE INTANGIBLES
  F-22




---



##### Table of Contents



December 31, 2008
    
    December 31, 2007Accumulated
    
    
    
    AccumulatedCost
    
    
    Amortization
    
    Cost
    
    AmortizationIn-place leases
    
    $
    17,347
    
    
    $
    (8,508
    )
    
    $
    19,052
    
    
    $
    (6,910
    )Above-market leases
    
    
    2,023
    
    
    
    (1,416
    )
    
    
    2,025
    
    
    
    (1,071
    )Below-market leases
    
    
    (3,865
    )
    
    
    1,753
    
    
    
    (5,016
    )
    
    
    1,616Intangible lease cost
    
    $
    15,505
    
    
    $
    (8,171
    )
    
    $
    16,061
    
    
    $
    (6,365
    )
  Amortization Expense
    
    Rental Income (above(in-place
    
    and below marketYear Ending December 31,
    
    lease value)
    
    leases)2009
    
    $
    1,938
    
    
    $
    812010
    
    
    1,462
    
    
    
    2182011
    
    
    1,128
    
    
    
    1922012
    
    
    874
    
    
    
    1862013
    
    
    694
    
    
    
    177$
    6,096
    
    
    $
    854
 7. NOTES PAYABLE
  F-23




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##### Table of Contents



2008
    
    
    2007Notes Payable, Held for InvestmentFixed rate mortgage loans
    
    
    135,935
    
    
    
    138,121Variable-rate unsecured line of credit
    
    
    27,411
    
    
    
    30,439Variable-rate secured loans
    
    
    21,006
    
    
    
    Total
    
    
    184,352
    
    
    
    168,560Notes Payable, Held for SaleFixed rate mortgage loans
    
    
    
    
    
    
    12,811
    
    
    
    12,811
     F-24




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##### Table of Contents



Associated with AssetsHeld for InvestmentScheduled Principal
    
    
    Term-LoanScheduled Payments by Year
    
    Payments
    
    
    Maturities
    
    
    Total Payments2009
    
    $
    28,849
    
    
    
    4,006
    
    
    
    32,8552010
    
    
    1,554
    
    
    
    
    
    
    
    1,5542011
    
    
    1,816
    
    
    
    19,866
    
    
    
    21,6822012
    
    
    1,308
    
    
    
    35,635
    
    
    
    36,9432013
    
    
    425
    
    
    
    
    
    
    
    425Beyond five years
    
    
    1,594
    
    
    
    88,900
    
    
    
    90,494Unamortized debt premiums
    
    
    
    
    
    
    399
    
    
    
    399Total
    
    $
    35,546
    
    
    $
    148,806
    
    
    $
    184,352
  8. DERIVATIVE FINANCIAL INSTRUMENTS
    9. CONCENTRATIONS
   2008
    
    2007
    
    2006IHOP Corporation
    
    
    2,228
    
    
    
    2,246
    
    
    
    2,249Kroger
    
    
    2,116
    
    
    
    2,116
    
    
    
    2,116CVS
    
    
    922
    
    
    
    922
    
    
    
    922Hard Rock Café
    
    
    442
    
    
    
    439
    
    
    
    426TGI Fridays
    
    
    435
    
    
    
    415
    
    
    
    333Champps Americana
    
    
    422
    
    
    
    422
    
    
    
    422Landrys Restaurant
    
    
    418
    
    
    
    701
    
    
    
    615Golden Corral
    
    
    413
    
    
    
    367
    
    
    
    365Linens N Things
    
    
    403
    
    
    
    403
    
    
    
    403Paesanos
    
    
    355
    
    
    
    357
    
    
    
    3678,154
    
    
    
    8,388
    
    
    
    8,218
 F-25




---



##### Table of Contents



10. FEDERAL INCOME TAXES
 Non-taxable Operations
 Taxable Operations
 2008
    
    
    2007
    
    
    2006Current- Federal
    
    $
    (861
    )
    
    $
    (267
    )
    
    $
    692Current- State
    
    $
    258
    
    
    $
    328
    
    
    $
    191Deferred-Federal
    
    
    (1,292
    )
    
    
    (305
    )
    
    
    171Total income tax expense (benefit)
    
    $
    (1,895
    )
    
    $
    (244
    )
    
    $
    1,054
  Accounting for Income Taxes,
 F-26




---



##### Table of Contents



11. SHAREHOLDERS EQUITY AND MINORITY INTEREST
 Class A Common Shares
 Class C Common Shares
 Class D Common Shares
 Minority Interest
 12. RELATED PARTY TRANSACTIONS
    F-27




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##### Table of Contents



13. REAL ESTATE ACQUISITIONS AND DISPOSITIONS
 2008
  2007
  2006
    14. COMMITMENTS
  F-28




---



##### Table of Contents



2009
    
    $
    2192010
    
    
    232011
    
    
    232012
    
    
    2013
    
    
    2014 & thereafter
    
    
    Total
    
    $
    265
  15. SEGMENT REPORTING
    F-29




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##### Table of Contents



Real Estate
    
    Asset Advisory GroupDevelopment &
    
    Securities
    
    Merchant2008 (in thousands)
    
    Portfolio
    
    Operating Company
    
    Operations
    
    Development Funds
    
    TotalRental income
    
    
    33,312
    
    
    
    502
    
    
    
    
    
    
    
    
    
    
    
    33,814Securities commission income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Real estate fee income
    
    
    
    
    
    
    4,315
    
    
    
    
    
    
    
    
    
    
    
    4,315Construction management fee income
    
    
    
    
    
    
    451
    
    
    
    
    
    
    
    
    
    
    
    451Asset management fee income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,501
    
    
    
    1,501Total revenue
    
    
    33,312
    
    
    
    5,268
    
    
    
    
    
    
    
    1,501
    
    
    
    40,081General and administrative
    
    
    1,892
    
    
    
    5,759
    
    
    
    
    
    
    
    120
    
    
    
    7,771Property expense
    
    
    8,891
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    8,905Legal and Professional
    
    
    1,468
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    1,618Real estate commissions
    
    
    
    
    
    
    139
    
    
    
    
    
    
    
    
    
    
    
    139Depreciation and amortization
    
    
    8,923
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    9,006Impairment Charge
    
    
    
    
    
    
    863
    
    
    
    
    
    
    
    
    
    
    
    863Total expenses
    
    
    21,174
    
    
    
    7,008
    
    
    
    
    
    
    
    120
    
    
    
    28,302Interest expense
    
    
    (9,685
    )
    
    
    (26
    )
    
    
    
    
    
    
    (763
    )
    
    
    (10,474
    )Other income/(expense)
    
    
    325
    
    
    
    885
    
    
    
    
    
    
    
    (577
    )
    
    
    633Income (loss) from discontinued operations
    
    
    1,338
    
    
    
    (848
    )
    
    
    (2,616
    )
    
    
    
    
    
    
    (2,126
    )Net income (loss)
    
    
    4,116
    
    
    
    (1,729
    )
    
    
    (2,616
    )
    
    
    41
    
    
    
    (188
    )
 F-30




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##### Table of Contents



Real Estate
    
    Asset Advisory GroupDevelopment &
    
    
    
    
    
    MerchantOperating
    
    Securities
    
    Development2007 (in thousands)
    
    Portfolio
    
    Company
    
    Operations
    
    Funds
    
    TotalRental income
    
    
    31,737
    
    
    
    131
    
    
    
    
    
    
    
    
    
    
    
    31,868Securities commission income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Real estate fee income
    
    
    
    
    
    
    5,242
    
    
    
    
    
    
    
    
    
    
    
    5,242Construction management fee income
    
    
    
    
    
    
    229
    
    
    
    
    
    
    
    
    
    
    
    229Asset management fee income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,289
    
    
    
    1,289Total revenue
    
    
    31,737
    
    
    
    5,602
    
    
    
    
    
    
    
    1,289
    
    
    
    38,628General and administrative
    
    
    1,608
    
    
    
    5,068
    
    
    
    
    
    
    
    109
    
    
    
    6,785Property expense
    
    
    7,395
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    7,400Legal and Professional
    
    
    1,411
    
    
    
    179
    
    
    
    
    
    
    
    31
    
    
    
    1,621Real estate commissions
    
    
    
    
    
    
    459
    
    
    
    
    
    
    
    
    
    
    
    459Depreciation and amortization
    
    
    7,891
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    7,902Total expenses
    
    
    18,305
    
    
    
    5,722
    
    
    
    
    
    
    
    140
    
    
    
    24,167Interest expense
    
    
    (9,021
    )
    
    
    (772
    )
    
    
    
    
    
    
    
    
    
    
    (9,793
    )Other income/(expense)
    
    
    528
    
    
    
    735
    
    
    
    
    
    
    
    174
    
    
    
    1,437Income (loss) from discontinued operations
    
    
    428
    
    
    
    (274
    )
    
    
    (1,008
    )
    
    
    
    
    
    
    (854
    )Net income (loss)
    
    
    5,367
    
    
    
    (431
    )
    
    
    (1,008
    )
    
    
    1,323
    
    
    
    5,251
 F-31




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##### Table of Contents



Real Estate
    
    Asset Advisory GroupDevelopment &
    
    
    
    
    
    MerchantOperating
    
    Securities
    
    Development2006 (in thousands)
    
    Portfolio
    
    Company
    
    Operations
    
    Funds
    
    TotalRental income
    
    
    29,168
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,168Real estate fee income
    
    
    
    
    
    
    8,317
    
    
    
    
    
    
    
    
    
    
    
    8,317Construction management fee income
    
    
    
    
    
    
    89
    
    
    
    
    
    
    
    
    
    
    
    89Asset management fee income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    823
    
    
    
    823Total revenue
    
    
    29,168
    
    
    
    8,406
    
    
    
    
    
    
    
    823
    
    
    
    38,397General and administrative
    
    
    1,862
    
    
    
    4,818
    
    
    
    
    
    
    
    159
    
    
    
    6,839Property expense
    
    
    6,909
    
    
    
    (69
    )
    
    
    
    
    
    
    
    
    
    
    6,840Legal and Professional
    
    
    1,243
    
    
    
    221
    
    
    
    
    
    
    
    
    
    
    
    1,464Real estate commissions
    
    
    
    
    
    
    1,042
    
    
    
    
    
    
    
    
    
    
    
    1,042Depreciation and amortization
    
    
    8,808
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,808Total expenses
    
    
    18,822
    
    
    
    6,012
    
    
    
    
    
    
    
    159
    
    
    
    24,993Interest expense
    
    
    (7,519
    )
    
    
    (295
    )
    
    
    
    
    
    
    
    
    
    
    (7,814
    )Other income/(expense)
    
    
    418
    
    
    
    1,014
    
    
    
    
    
    
    
    360
    
    
    
    1,792Income (loss) from discontinued operations
    
    
    1,563
    
    
    
    (19
    )
    
    
    (1,363
    )
    
    
    
    
    
    
    181Net income (loss)
    
    
    4,808
    
    
    
    3,094
    
    
    
    (1,363
    )
    
    
    1,024
    
    
    
    7,563
 F-32




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##### Table of Contents



15. SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED)
  2008:
    
    1st Quarter
    
    2nd Quarter
    
    3rd Quarter
    
    4th QuarterRevenues as reported
    
    $
    11,572
    
    
    $
    12,777
    
    
    $
    8,590
    
    
    $
    9,962Reclassified to/from discontinued operations
    
    
    (1,473
    )
    
    
    (1,942
    )
    
    
    595
    
    
    
    Adjusted Revenues
    
    
    10,099
    
    
    
    10,835
    
    
    
    9,185
    
    
    
    9,962Net (loss) income available to class A shareholders
    
    
    (1,501
    )
    
    
    (3,169
    )
    
    
    (2,858
    )
    
    
    (2,673
    )Net (loss) income per class A share: basic and diluted
    
    
    (0.24
    )
    
    
    (0.54
    )
    
    
    (0.53
    )
    
    
    (0.49
    )
 2007:
    
    1st Quarter
    
    2nd Quarter
    
    3rd Quarter
    
    4th QuarterRevenues as reported
    
    $
    11,246
    
    
    $
    11,460
    
    
    $
    12,794
    
    
    $
    15,048Reclassified to discontinued operations
    
    
    (2,054
    )
    
    
    (2,536
    )
    
    
    (2,542
    )
    
    
    (4,788
    )Adjusted Revenues
    
    
    9,192
    
    
    
    8,924
    
    
    
    10,252
    
    
    
    10,260Net (loss) income available to class A shareholders
    
    
    (1,702
    )
    
    
    (1,610
    )
    
    
    (688
    )
    
    
    (2,458
    )Net (loss) income per class A share: basic and diluted
    
    
    (0.27
    )
    
    
    (0.25
    )
    
    
    (0.11
    )
    
    
    (0.38
    )
 F-3




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##### Table of Contents



AmREIT and subsidiaries
SCHEDULE III  Consolidated Real Estate Owned and Accumulated Depreciation
For the year ended December 31, 2008
 Initial Cost
    
    
    
    
    
    Total CostCostInvestment
    
    Capitalized
    
    
    
    
    
    
    
    
    
    Real
    
    Investmentin Direct
    
    Subsequent to
    
    
    
    
    
    
    
    Estate
    
    in DirectBuilding and
    
    
    
    
    

Financing
    
    Acquisition
    
    Building and
    
    
    

Held
    

Financing
    
    
    
    Accumulated
    
    DateProperty Description
    
    Improvements
    
    
    Land
    
    

Lease
    
    (Note A)
    
    Improvements
    
    Land
    
    for Sale
    

Lease
    
    Total
    
    Depreciation
    
    Acquired
    
    EncumbrancesSHOPPING CENTERSBakery Square, Texas
    
    
    4,806,518
    
    
    
    4,325,612
    
    
    
    
    
    
    
    6,520
    
    
    
    4,803,164
    
    
    
    4,335,486
    
    
    
    
    
    
    
    
    
    
    
    9,138,650
    
    
    
    666,519
    
    
    
    07-21-04
    
    
    
    3,418,138Cinco Ranch, Texas
    
    
    11,558,491
    
    
    
    2,666,534
    
    
    
    
    
    
    
    61,970
    
    
    
    11,618,769
    
    
    
    2,668,226
    
    
    
    
    
    
    
    
    
    
    
    14,286,995
    
    
    
    1,602,200
    
    
    
    07-01-04
    
    
    
    8,010,678Courtyard Square, Texas
    
    
    1,777,161
    
    
    
    4,133,641
    
    
    
    
    
    
    
    24,400
    
    
    
    1,784,450
    
    
    
    4,150,752
    
    
    
    
    
    
    
    
    
    
    
    5,935,202
    
    
    
    283,494
    
    
    
    06-15-04
    
    
    
    Lake Woodlands Plaza, Texas
    
    
    2,385,103
    
    
    
    1,366,452
    
    
    
    
    
    
    
    985,669
    
    
    
    3,368,160
    
    
    
    1,369,064
    
    
    
    
    
    
    
    
    
    
    
    4,737,224
    
    
    
    1,008,620
    
    
    
    06-03-98
    
    
    
    McArthur Park Pads, Texas
    
    
    5,853,816
    
    
    
    6,946,048
    
    
    
    
    
    
    
    40,997
    
    
    
    5,894,812
    
    
    
    6,946,049
    
    
    
    
    
    
    
    
    
    
    
    12,840,861
    
    
    
    843,540
    
    
    
    12-15-05
    
    
    
    McArthur Park, Texas
    
    
    26,445,219
    
    
    
    8,637,580
    
    
    
    
    
    
    
    (144,067
    )
    
    
    26,301,152
    
    
    
    8,637,580
    
    
    
    
    
    
    
    
    
    
    
    34,938,732
    
    
    
    3,365,765
    
    
    
    12-27-04
    
    
    
    17,000,000Plaza in the Park, Texas
    
    
    17,375,782
    
    
    
    13,257,976
    
    
    
    
    
    
    
    333,366
    
    
    
    17,705,332
    
    
    
    13,261,792
    
    
    
    
    
    
    
    
    
    
    
    30,967,124
    
    
    
    2,474,792
    
    
    
    07-01-04
    
    
    
    16,930,825Riverwalk, Texas
    
    
    17,148,688
    
    
    
    7,979,779
    
    
    
    
    
    
    
    206,398
    
    
    
    17,345,897
    
    
    
    7,988,968
    
    
    
    
    
    
    
    
    
    
    
    25,334,865
    
    
    
    1,673,154
    
    
    
    09-30-05
    
    
    
    20,000,000Sugar Land Plaza, Texas
    
    
    3,016,816
    
    
    
    1,280,043
    
    
    
    
    
    
    
    
    
    
    
    3,016,816
    
    
    
    1,280,043
    
    
    
    
    
    
    
    
    
    
    
    4,296,859
    
    
    
    845,481
    
    
    
    07-01-98
    
    
    
    2,227,977Terrace Shops, Texas
    
    
    2,544,592
    
    
    
    2,212,278
    
    
    
    
    
    
    
    98,873
    
    
    
    2,643,465
    
    
    
    2,212,278
    
    
    
    
    
    
    
    
    
    
    
    4,855,743
    
    
    
    353,029
    
    
    
    12-15-03
    
    
    
    2,664,870Uptown Park, Texas
    
    
    27,060,070
    
    
    
    36,976,809
    
    
    
    
    
    
    
    1,822,933
    
    
    
    28,994,711
    
    
    
    36,865,101
    
    
    
    
    
    
    
    
    
    
    
    65,859,812
    
    
    
    4,118,902
    
    
    
    06-01-05
    
    
    
    49,000,000Uptown Plaza Dallas, Texas
    
    
    14,129,798
    
    
    
    9,295,665
    
    
    
    
    
    
    
    (392,646
    )
    
    
    13,736,590
    
    
    
    9,296,227
    
    
    
    
    
    
    
    
    
    
    
    23,032,817
    
    
    
    1,264,679
    
    
    
    03-30-06
    
    
    
    19,900,000Uptown Plaza, Texas
    
    
    4,887,774
    
    
    
    7,796,383
    
    
    
    
    
    
    
    218,204
    
    
    
    5,105,978
    
    
    
    7,796,383
    
    
    
    
    
    
    
    
    
    
    
    12,902,361
    
    
    
    694,645
    
    
    
    12-10-03
    
    
    
    Total Shopping Centers
    
    
    138,989,828
    
    
    
    106,874,800
    
    
    
    
    
    
    
    3,262,617
    
    
    
    142,319,296
    
    
    
    106,807,949
    
    
    
    
    
    
    
    
    
    
    
    249,127,245
    
    
    
    19,194,820
    
    
    
    
    
    
    
    139,152,488SINGLE TENANT410 and Blanco, Texas
    
    
    
    
    
    
    1,318,418
    
    
    
    
    
    
    
    165,742
    
    
    
    50,943
    
    
    
    1,433,217
    
    
    
    
    
    
    
    
    
    
    
    1,484,160
    
    
    
    9,714
    
    
    
    12-17-04
    
    
    
    Advance Auto, Illinois
    
    
    
    
    
    
    552,258
    
    
    
    
    
    
    
    (76,192
    )
    
    
    332,772
    
    
    
    143,293
    
    
    
    
    
    
    
    
    
    
    
    476,066
    
    
    
    n/a
    
    
    
    06-03-04
    
    
    
    CVS Pharmacy, Texas
    
    
    
    
    
    
    2,665,332
    
    
    
    
    
    
    
    23,664
    
    
    
    
    
    
    
    2,688,996
    
    
    
    
    
    
    
    
    
    
    
    2,688,996
    
    
    
    n/a
    
    
    
    01-10-03
    
    
    
    Commerce & Zarzamora, Texas
    
    
    
    
    
    
    2,588,615
    
    
    
    
    
    
    
    1,740,130
    
    
    
    1,736,554
    
    
    
    2,507,198
    
    
    
    
    
    
    
    
    
    
    
    4,243,752
    
    
    
    n/a
    
    
    
    06-17-08
    
    
    
    4,006,298Golden Corral, Texas
    
    
    1,093,139
    
    
    
    718,702
    
    
    
    
    
    
    
    10,926
    
    
    
    1,099,818
    
    
    
    722,949
    
    
    
    
    
    
    
    
    
    
    
    1,822,767
    
    
    
    182,128
    
    
    
    07-23-02
    
    
    
    Golden Corral, Texas
    
    
    1,290,347
    
    
    
    553,006
    
    
    
    
    
    
    
    (187,520
    )
    
    
    
    
    
    
    
    
    
    
    1,655,833
    
    
    
    
    
    
    
    1,655,833
    
    
    
    
    
    
    
    07-23-02
    
    
    
    IHOP, Kansas
    
    
    
    
    
    
    450,984
    
    
    
    958,975
    
    
    
    73,980
    
    
    
    
    
    
    
    450,984
    
    
    
    
    
    
    
    1,032,955
    
    
    
    1,483,939
    
    
    
    n/a
    
    
    
    09-30-99
    
    
    
    IHOP, Texas
    
    
    
    
    
    
    740,882
    
    
    
    962,752
    
    
    
    73,303
    
    
    
    
    
    
    
    740,882
    
    
    
    
    
    
    
    1,036,055
    
    
    
    1,776,937
    
    
    
    n/a
    
    
    
    09-22-99
    
    
    
    1,062,026IHOP, Utah
    
    
    
    
    
    
    457,493
    
    
    
    1,067,483
    
    
    
    53,325
    
    
    
    
    
    
    
    457,493
    
    
    
    
    
    
    
    1,120,808
    
    
    
    1,578,301
    
    
    
    n/a
    
    
    
    07-25-02
    
    
    
    1,031,928IHOP, Tennessee
    
    
    
    
    
    
    469,502
    
    
    
    1,074,438
    
    
    
    74,127
    
    
    
    
    
    
    
    469,502
    
    
    
    
    
    
    
    1,148,565
    
    
    
    1,618,067
    
    
    
    n/a
    
    
    
    07-26-02
    
    
    
    1,115,238IHOP, New Mexico
    
    
    
    
    
    
    
    
    
    
    884,965
    
    
    
    (86,639
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    798,326
    
    
    
    798,326
    
    
    Note B
    
    
    
    04-23-02
    
    
    
    621,461IHOP, Louisiana
    
    
    
    
    
    
    
    
    
    
    850,110
    
    
    
    1,670
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    851,780
    
    
    
    851,780
    
    
    Note B
    
    
    
    07-18-02
    
    
    
    595,317IHOP, Louisiana
    
    
    
    
    
    
    
    
    
    
    1,464,105
    
    
    
    (210,785
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,253,320
    
    
    
    1,253,320
    
    
    Note B
    
    
    
    04-23-02
    
    
    
    1,026,969IHOP, Oregon
    
    
    
    
    
    
    
    
    
    
    1,036,506
    
    
    
    11,248
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,047,754
    
    
    
    1,047,754
    
    
    Note B
    
    
    
    04-16-02
    
    
    
    728,291IHOP, Virginia
    
    
    
    
    
    
    
    
    
    
    741,991
    
    
    
    5,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    747,741
    
    
    
    747,741
    
    
    Note B
    
    
    
    04-23-02
    
    
    
    517,465IHOP, Texas
    
    
    
    
    
    
    
    
    
    
    886,212
    
    
    
    22,107
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    908,319
    
    
    
    908,319
    
    
    Note B
    
    
    
    04-16-02
    
    
    
    624,622IHOP, Texas
    
    
    
    
    
    
    
    
    
    
    1,144,152
    
    
    
    33,839
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,177,991
    
    
    
    1,177,991
    
    
    Note B
    
    
    
    08-23-02
    
    
    
    745,834IHOP, California
    
    
    
    
    
    
    
    
    
    
    987,204
    
    
    
    29,191
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,016,395
    
    
    
    1,016,395
    
    
    Note B
    
    
    
    08-23-02
    
    
    
    621,392IHOP, Tennessee
    
    
    
    
    
    
    
    
    
    
    1,050,313
    
    
    
    30,245
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,080,558
    
    
    
    1,080,558
    
    
    Note B
    
    
    
    08-23-02
    
    
    
    647,557IHOP, Colorado
    
    
    
    
    
    
    
    
    
    
    1,104,574
    
    
    
    (70,007
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,034,567
    
    
    
    1,034,567
    
    
    Note B
    
    
    
    08-23-02
    
    
    
    696,946IHOP, Virginia
    
    
    
    
    
    
    
    
    
    
    839,240
    
    
    
    3,917
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    843,157
    
    
    
    843,157
    
    
    Note B
    
    
    
    06-21-02
    
    
    
    589,450IHOP, New York
    
    
    
    
    
    
    
    
    
    
    1,125,356
    
    
    
    23,888
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,149,244
    
    
    
    1,149,244
    
    
    Note B
    
    
    
    04-16-02
    
    
    
    780,777IHOP, Oregon
    
    
    
    
    
    
    
    
    
    
    730,472
    
    
    
    (82,472
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    648,000
    
    
    
    648,000
    
    
    Note B
    
    
    
    05-17-02
    
    
    
    511,535IHOP, Kansas
    
    
    
    
    
    
    
    
    
    
    876,324
    
    
    
    11,028
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    887,352
    
    
    
    887,352
    
    
    Note B
    
    
    
    04-16-02
    
    
    
    616,470IHOP, Missouri
    
    
    
    
    
    
    
    
    
    
    1,203,723
    
    
    
    (102,689
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,101,034
    
    
    
    1,101,034
    
    
    Note B
    
    
    
    05-17-02
    
    
    
    849,162McAlister Deli, Illinois
    
    
    
    
    
    
    550,425
    
    
    
    
    
    
    
    1,179,246
    
    
    
    1,179,246
    
    
    
    550,425
    
    
    
    
    
    
    
    
    
    
    
    1,729,671
    
    
    
    57,220
    
    
    
    07-19-06
    
    
    
    McAlister Deli, Illinois
    
    
    
    
    
    
    1,051,862
    
    
    
    
    
    
    
    
    
    
    
    442,106
    
    
    
    1,095,861
    
    
    
    
    
    
    
    
    
    
    
    1,537,967
    
    
    
    7,456
    
    
    
    11-30-07
    
    
    
    Popeyes, Georgia
    
    
    778,772
    
    
    
    333,758
    
    
    
    
    
    
    
    (106,785
    )
    
    
    
    
    
    
    
    
    
    
    1,005,745
    
    
    
    
    
    
    
    1,005,745
    
    
    
    
    
    
    
    07-23-02
    
    
    
    Smokey Bones, Georgia
    
    
    
    
    
    
    773,800
    
    
    
    
    
    
    
    (60,414
    )
    
    
    
    
    
    
    713,386
    
    
    
    
    
    
    
    
    
    
    
    713,386
    
    
    
    n/a
    
    
    
    12-18-98
    
    
    
    Sunbelt Rental, Illinois
    
    
    
    
    
    
    402,080
    
    
    
    
    
    
    
    1,648,699
    
    
    
    1,648,699
    
    
    
    402,080
    
    
    
    
    
    
    
    
    
    
    
    2,050,779
    
    
    
    29,228
    
    
    
    05-23-07TGI Fridays, Maryland
    
    
    
    
    
    
    1,473,613
    
    
    
    
    
    
    
    860
    
    
    
    
    
    
    
    1,474,473
    
    
    
    
    
    
    
    
    
    
    
    1,474,473
    
    
    
    n/a
    
    
    
    09-16-03
    
    
    
    TGI Fridays, Texas
    
    
    1,425,843
    
    
    
    611,075
    
    
    
    
    
    
    
    39,894
    
    
    
    1,453,769
    
    
    
    623,043
    
    
    
    
    
    
    
    
    
    
    
    2,076,812
    
    
    
    240,739
    
    
    
    07-23-02
    
    
    
    Woodlands Ring Road, Texas
    
    
    
    
    
    
    8,957,570
    
    
    
    
    
    
    
    198,839
    
    
    
    
    
    
    
    9,156,409
    
    
    
    
    
    
    
    
    
    
    
    9,156,409
    
    
    
    n/a
    
    
    
    02-01-07Total Single Tenant
    
    
    4,588,101
    
    
    

24,669,375
    
    
    
    18,988,895
    
    
    
    4,472,115
    
    
    
    7,943,907
    
    
    
    23,630,192
    
    
    
    2,661,578
    
    
    
    18,883,921
    
    
    
    53,119,598
    
    
    
    526,485
    
    
    
    
    
    
    
    17,388,737Total
    
    $
    143,577,929
    
    
    $

131,544,175
    
    
    $
    18,988,895
    
    
    $
    7,734,732
    
    
    $
    150,263,203
    
    
    $
    130,438,141
    
    
    $
    2,661,578
    
    
    $
    18,883,921
    
    
    $
    302,246,843
    
    
    $
    19,721,306
    
    
    
    
    
    
    $
    156,541,226
 
 Note A
    
    The negative balance for costs capitalized subsequent to acquisition could be the result of out-parcels sold, tenant activity or reductions in our investments in properties accounted for as direct financing leases.Note B
    
    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.Note C
    
    As of December 31, 2008, the aggregate book basis of our properties approximated the aggregate tax basis.  AccumulatedCost
    
    DepreciationBalance at December 31, 2005
    
    
    250,812,570
    
    
    $
    5,943,499Acquisitions / additions
    
    
    31,929,242
    
    
    
    Disposals
    
    
    (8,207,968
    )
    
    
    (331,253
    )Impairment
    
    
    
    
    
    
    Transfer to held for sale
    
    
    
    
    
    
    Depreciation expense
    
    
    
    
    
    
    5,016,230Balance at December 31, 2006
    
    $
    274,533,844
    
    
    $
    10,628,476Acquisitions / additions
    
    
    14,214,097
    
    
    
    Disposals
    
    
    (1,550,237
    )
    
    
    (80,346
    )Impairment
    
    
    
    
    
    
    Transfer to held for sale
    
    
    (5,484,748)
    
    
    
    Depreciation expense
    
    
    
    
    
    
    5,077,541Balance at December 31, 2007
    
    $
    281,712,956
    
    
    $
    15,625,671Acquisitions / additions
    
    
    8,890,260
    
    
    
    28,975Disposals
    
    
    (5,745,486
    )
    
    
    (702,750
    )Impairment
    
    
    (1,494,808
    )Transfer to held for sale
    
    
    (2,661,578
    )
    
    
    (215,462
    )Depreciation expense
    
    
    
    
    
    
    4,984,872Balance at December 31, 2008
    
    $
    280,701,344
    
    
    $
    19,721,306
 S-1