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

                                   FORM 10-KSB

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

                   For the fiscal year ended December 31, 1999
                                       or
             [ ] Transition Report Under Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

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

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

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

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

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the issuer was required to file such  reports),  and (2) has
been subject to such filing requirements for the past 90 days: Yes X No_____

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

Issuer's revenues for its most recent fiscal year:    $4,603,325

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:  2,372,744 shares of Common Stock as
of March 24, 2000


<PAGE>






                       DOCUMENTS INCORPORATED BY REFERENCE

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

2.  Issuer  incorporates  by  reference  into  Part III  portions  of its  Proxy
Statement for the 1999 Annual Meeting of Shareholders.

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


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<PAGE>
                                     PART I

Item 1.    Description of Business

General

AmREIT, Inc., which changed its name from American Asset Advisers Trust, Inc. in
conjunction  with the Merger (as  described  below) which was  completed in June
1999 ("Issuer" or the "Company"),  was  incorporated in the state of Maryland on
August 17, 1993. The Company is a real estate  investment  trust (a "REIT") that
acquires,  develops,  owns and  manages  high-quality,  freestanding  properties
leased to major retail businesses under long-term commercial net leases. Through
a wholly-owned subsidiary, the Company also provides advisory services to twelve
real estate limited partnerships.

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

The Company has been successful in attracting  tenants that operate in different
retail  segments,  including  Radio  Shack  (leased  to the Tandy  Corporation),
Blockbuster  Music (lease guaranteed by Viacom,  Inc.),  Popeye's Famous Chicken
(lease guaranteed by AFC, Inc.), OfficeMax, Inc.,International House of Pancakes
Hollywood  Video ( leased to Hollywood Entertainment Corp.) and  Bank  United, a
Federal Savings Bank.

The  Company owns  four Just  For Feet  properties in  fee simple. Two  of these
properties are wholly-owned by the Company  and two of these properties, located
in Baton Rouge, Louisiana  and Tucson, Arizona, are owned in joint venture  with
the Company owning a 51% and 51.9% majority. On November 4, 1999  Just For Feet,
Inc. filed a  petition  for relief under  Chapter 11 of  the Federal  bankruptcy
code. On January 27, 2000 Just For Feet,Inc. announced that its previous efforts
of reorganization were unsuccessful. As  such, the bankruptcy  court in Delaware
approved a liquidation auction of all of Just For Feet, Inc.'s retail stores and
inventory.  On February 16, 2000  Just For Feet, Inc.  entered into an agreement
whereby Footstar, Inc. would purchase the inventory of  Just For Feet, Inc., and
assume  certain retail operating leases. Included  in the leases  being  assumed
by  Footstar, Inc. were the two properties that are owned by the Company through
a joint venture. The two wholly-owned  properties were rejected by Just For Feet
on  March  5,  2000. ( the "Bankruptcy" ). The  company  has  both  wholly-owned
properties  currently  listed  for  re-lease  with  local  retail  brokers.  The
bankruptcy court in Delaware has ordered Just For Feet, Inc. to cure and pay any
deficiencies  under  the lease prior to  the  assumption  of  the  two leases by
Footstar, Inc. These  deficiencies include  rent, property  taxes  and  property
insurance.  Footstar,  the  second  largest  retailer  of athletic  footwear and
apparel, is a public company, whose common stock is traded on the New York Stock
Exchange.

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

<PAGE>

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

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

The objectives of the Company are:

         (1) to provide regular  distributions to shareholders.  The Company has
         paid  quarterly  distributions to  shareholders  since  July  1994 with
         the  exception  of December 31, 1999  distribution which was eliminated
         primarily due to the Just For Feet Bankruptcy.  The Company  reinstated
         its dividend as of March  31, 2000   and  intends  to  continue  paying
         quarterly  distributions  to  shareholders. Distribution  payments  may
         fluctuate during the life of the Company.

         (2) to  provide  shareholders  with  long-term  appreciation  on  their
         investment.  Management  believes  that the  Company  can  realize  its
         objective of long-term  appreciation of its property portfolio based on
         the fact that most of the leases on the properties which the Company

                                       3

<PAGE>

         currently owns contain, and the Company expects that most of the leases
         on the  additional  properties  that  it  will  acquire  will  contain,
         periodic rent escalation provisions over the original and renewal terms
         of such leases.  Because the Company's  properties are and are expected
         to  continue  to be  valued on the basis of their  ability  to  produce
         income,  the Company  believes that  successive  periodic rental income
         increases resulting from such escalation provisions should increase the
         value of the  Company's  properties  over the  long  term.  There is of
         course  no  assurance  the  Company  will  in  fact  realize  portfolio
         appreciation.

         (3) to conserve  capital.  The Company will attempt to conserve capital
         by  endeavoring  to continue to invest in a  diversified  portfolio  of
         quality real estate under long-term leases to creditworthy tenants. The
         amount of money  raised in future  offerings  will affect the number of
         properties  the Company will be able to purchase.  The more  properties
         the Company  acquires,  the more diversified it will be and the less it
         will be  affected  by any  single  property  that does not  perform  as
         expected.

There is no assurance these objectives can be achieved.

The Merger

From 1993 to June 5, 1998,  the  Company  and  American  Asset  Advisers  Realty
Corporation ("AAA") were party to an advisory  agreement,  pursuant to which AAA
provided certain management,  advisory and acquisition services. AAA received an
annual fee,  payable monthly,  equal to 5% of rental income.  Under the advisory
agreement,  AAA generally  was  responsible  for  administering  the  day-to-day
investment  operations  of  the  Company,   including  investment  analysis  and
development,  acquisitions,  due diligence,  and asset management and accounting
services.  These duties  included  collecting  rental  payments,  inspecting and
managing the properties, assisting the Company in responding to tenant inquiries
and notices, providing information to the Company about the status of the leases
and the properties,  maintaining the Company's accounting books and records, and
preparing  and filing  various  reports,  returns  or  statements  with  various
regulatory  agencies.  In addition,  AAA served as the  Company's  consultant in
connection with policy  decisions to be made by the Board of Directors,  managed
the Company's  properties  and rendered other services as the Board of Directors
deemed appropriate.

Historically,  the Company did not have a large enough asset base to provide the
economies  of scale  needed to  efficiently  support the  extensive  general and
administrative  expenses of an in-house  management  team. As a result,  AAA had
incurred the full expense of a management and  acquisition  team while receiving
advisory and acquisition fees that have offset this expense.  In 1997,  however,
due to the Company's historical and anticipated growth, management believed that
the efficiencies  derived from being externally  advised had diminished and that
it would be more cost effective to become  self-administered.  As a result, at a
special  meeting of the Company's  Board of Directors held on December 31, 1997,
the Board of Directors,  other than Mr. H. Kerr Taylor,  who abstained  from the
vote due to his interest in the  transaction,  approved an agreement and plan of
merger with AAA, which when approved by the  shareholders of the Company on June
5,  1998  at  a  special   meeting,   resulted   in  the   Company   becoming  a
self-administered  and self-managed  real estate investment trust. The Agreement
and Plan of Merger provided for the merger of AAA into a wholly owned subsidiary
of the Company pursuant to which all of the outstanding  common stock of AAA was
exchanged for up to 900,000 shares (the "Share  Consideration") of the Company's
common  stock (the  "Merger").  The common  stock of AAA was wholly owned by the
president and director of the Company.  Effective  June 5, 1998,  213,260 shares
were issued and the balance (the "Share Balance") of the Share  Consideration is
to be paid over a six year period to the extent certain goals are achieved after
the  Merger. The  213,260  shares  issued  on  June 5, 1999  were  appropriately
accounted  for as an  expense in the  Company's statement  of operations. During
1999, no additional shares have been earned, paid or expensed. Upon consummation
of the Merger on June 5, 1998,  certain employees of AAA became employees of the
Company,  and any  obligation  to pay fees  under the advisor  agreement between
the  Company  and  AAA  was terminated  and the Company  assumed/took over AAA's
existing management contracts.

                                       4

<PAGE>



Properties

At December 31, 1998, the Company owned  nineteen  properties, thirteen directly
and six through joint ventures, all in fee simple. Eight of these properties are
located in Texas,  two each are located in Louisiana, Kansas and Georgia and one
each in  Arizona,  Delaware,  Nevada,  Mississippi  and  Missouri.  Although the
specific terms  of each lease vary, a  summary of the terms  of the leases is as
follows:

The primary term of the leases ranges from  ten to twenty-five years. Sixteen of
the leases also provide for two to four five-year  renewal  options.  The leases
are  all "triple-net"  leases under  which the  tenants are  responsible for the
property taxes, insurance and operating costs.  Annual rental income ranges from
$59,641 to $403,409. Seventeen of the leases provide for either percentage rents
based on sales in excess of certain  amounts, periodic escalations in the annual
rental rates or both.

As of December 31, 1999,  three of the Company's  properties  each accounted for
more than 10% of the  Company's  total  assets.  Summarized  as follows  are the
significant items pertaining to each of these leases:

On July 1, 1998, the Company acquired a newly  constructed  property on lease to
Just For Feet, Inc. for a purchase price of $3,928,997.  This 1.59 acre property
is being  operated  as a Just For Feet retail  store on U.S. 59 at First  Colony
Boulevard in Sugar Land,  Texas.  The  improvements  are a single-tenant  retail
building that contains  approximately  16,900 square feet.  The lease  agreement
extends for fifteen years,  however the tenant has the option to renew the lease
for two  additional  terms of five years each.  The lease has  provisions for an
escalation in the rent after the fifth and tenth years of the lease. The Company
recorded $381,705 of revenue from this property in 1999. This lease was rejected
by Just For Feet on March 5, 2000 in connection with the bankruptcy.

On June 3, 1998, the Company acquired a newly  constructed  property on lease to
Just For Feet, Inc. for a purchase price of $3,751,555. This 2.561 acre property
is being operated as a Just For Feet retail store on Lake Woodlands Drive in The
Woodlands,  Texas.  The  improvements  are a single-tenant  retail building that
contains  approximately  16,900  square feet.  The lease  agreement  extends for
fifteen  years,  however  the  tenant  has the option to renew the lease for two
additional  terms of five years each. The lease has provisions for an escalation
in the rent after the fifth and tenth years of the lease.  The Company  recorded
$371,914  of revenue from this property in 1999. This lease was rejected by Just
For Feet on March 5, 2000 in connection with the bankruptcy.

On  September  11,  1996,  the  Company  acquired  a 51.9%  interest  in a newly
constructed  property on lease to Just For Feet,  Inc.  through a joint  venture
with two entities  with common  management  for the combined  purchase  price of
$3,680,383. This 2.938 acre property is being operated as a Just For Feet retail
store on the  northwest  corner of North  Oracle  Road and Old  Tucson  Florence
Highway in Tucson, Arizona. The improvements are a single-tenant retail building
that contains  approximately 15,200 square feet. The lease agreement extends for
twenty  years,  however  the  tenant  has the  option to renew the lease for two
additional  terms of five years each. The lease has provisions for an escalation
in the rent after the  fifth,  tenth,  and  fifteenth  years of the  lease.  The
Company recorded $403,409 of revenue from this property in 1999.  This lease was
assumed by Just For Feet on February 16, 2000 in connection with the bankruptcy.

For information  regarding the results of operations and financial  condition of
Just For Feet, Inc. or Footstar, Inc., refer to their Annual Report on Form 10-K
as filed with the  Securities and Exchange Commission for the year ended January
31, 1999 and December 31, 1999, respectively.

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

                                       5

<PAGE>

Financing - Borrowing Policies

The Company may incur  unsecured  and secured  borrowings,  so long as the total
amounts of such  borrowings  do not exceed 300% of the Company's net assets on a
consolidated basis.

Competitive Conditions

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

Employees

At December 31, 1999, the Company had 13 employees,  of which all were full-time
employees.

Item 2.     Description of Property

At  December 31, 1999,  the Company  owned  nineteen  properties  in fee simple,
thirteen  directly  and  six  through   joint  ventures  with  related  parties.
Properties  are  located  in  Texas,  Georgia,  Arizona,  Missouri,   Louisiana,
Delaware, Mississippi, Nevada  and Kansas. Reference is made to the Schedule III
-  Consolidated Real Estate Owned and  Accumulated  Depreciation filed with this
Form 10-KSB for a listing of the properties and their respective costs.

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

Buildings - The buildings  are all single tenant and are generally  rectangular.
They are positioned for good exposure to traffic flow and are  constructed  from
various  combinations of stucco,  steel,  wood, brick and tile.  Buildings range
from  approximately  2,350 to 24,000  square  feet.  Buildings  are suitable for
possible  conversion to various  uses,  although  modifications  may be required
prior to use for other operations.  The Company anticipates improvements costing
between  $200,000 and  $500,000  being required at each of the two Just For Feet
stores  located  in  Sugarland, Texas  and  The Woodlands, Texas,  in  order  to
accomodate a new tenant(s).

Leases - The primary term of the leases ranges from  ten to  twenty-five  years.
Sixteen of the leases  also provide for two to four five-year  renewal  options.
The leases are all  "triple-net"  leases whereby the tenants are responsible for
the property taxes,  insurance and operating costs.  Annual rental income ranges
from $59,641 to $406,648. Seventeen of the leases provide for either  percentage
rents based on sales in excess of certain amounts,  periodic  escalations in the
annual rental rates or both.

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

As of December 31, 1999, a total of $35,816,828  has been invested in properties
by the  Company on a  consolidated  basis.  This  includes  land,  building  and
acquisition costs. A further  description of the Company  properties,  including
acquisition  fees  and  certain  acquisition  expenses,  is  included  in Item 1
"Properties"  and  in  Schedule  III  -  Consolidated   Real  Estate  Owned  and
Accumulated Depreciation of this Form 10-KSB.

                                       6

<PAGE>

Item 3.     Legal Proceedings

The Company does not have any material legal proceedings pending.

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

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

                                       7

<PAGE>



                                     PART II

Item 5.    Market for Common Equity and Related Stockholder Matters

As of March 24, 2000, there were approximately 1,065 record holders of 2,372,744
shares of the Company's common stock, net of 11,373 shares held in treasury.  No
established public trading market currently exists for the stock.

For the years ended December 31, 1999 and 1998,  the Company paid  distributions
of $1,294,972 and $1,591,545  respectively.  A summary of the  distributions by
quarter is as follows:

      Quarter Ended                                1999                1998
      -------------                                ----                ----
      March 31                                  $ 430,822           $ 341,965
      June 30                                     431,839             387,634
      September 30                                432,311             428,990
      December 31                                       -             432,956

The  second  quarter of 1994  marked  the  beginning  of the  Company's  regular
operations and,  consequently,  the beginning of regular quarterly  distribution
payments. The Company  eliminated its  quarterly dividend for the quarter  ended
December 31, 1999 primarily due to  the bankruptcy of Just For Feet. The Company
has reinstated its dividend for the first quarter 2000. The  Company  intends to
continue  the  payment  of  regular  quarterly  distributions. Other  than  loan
covenants, which have been waived by the Company's lender, there  are  currently
no  material  legal restrictions that  would  limit the Company's ability to pay
distributions.

For every two shares of stock acquired  pursuant to the Company's initial public
offering, an investor also received one warrant. These warrants were exercisable
at $9 per share  between  March 17, 1997 and March 15,  1998.  A total of 57,316
shares  were issued  from the exercise of the Warrants. At December 31, 1999 and
1998, the Company had no obligation for the warrants which are expired.

On June 5, 1998,  the Company issued  213,260  shares of  common stock to Mr. H.
Kerr Taylor in connection with the Company's merger with AAA. The 213,260 shares
were  appropriately  accounted for as an expense in the statement of  operations
for the year ended December 31, 1998. This represents approximately 8.99% of the
Company's outstanding common stock at December 31, 1999.


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

The Company is a fully  integrated,  self-administered  real  estate  investment
trust. The Company was organized on August 17, 1993 to acquire,  either directly
or through  joint  venture  arrangements,  undeveloped,  newly  constructed  and
existing net-lease real estate that is located primarily on corner or out-parcel
locations in strong commercial corridors, to lease on a net-lease basis to major
retail  businesses  and to hold the  properties  with the  expectation of equity
appreciation  producing a steadily  rising income  stream for its  shareholders.
Through a wholly-owned  subsidiary,  the Company also provides advisory services
to twelve real estate limited partnerships.

Liquidity and Capital Resources

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

Net  cash  provided  by  operating  activities  decreased  by ($1,041,369)  when
compared to 1998. This decrease in cash provided by operating activities was due
to  the  following  components: (1) The  decrease  in merger costs of $2,283,322
related to the acquisition of American Asset Advisers Realty Corporation on June
5, 1998; (2) The gain on sale of assets of $278,000  in 1999 related to the sale
of certain  real estate  properties  and (3) an increase in  accounts receivable
of $530,506 primarily due to amounts due  on the  Just For Feet properties. This
overall decrease  was partially  offset by  the increase  in accounts payable of
$244,698  and the decrease in the net loss from $1,805,786 in 1998 to $37,862 in
1999.

Net cash used in investing activities decreased by $5,248,192  to $2,439,262  in
1999  when compared  to 1998. This decrease  was primarily  due to proceeds from
sales of real estate properties of $3,646,821, the return on investment in joint
venture of  $362,149  and the  overall decrease  in real estate  acquisitions of
$859,842. Additionally, pre-acquisition costs increased by $321,596.

Net cash provided by financing activities decreased by  $1,784,377 when compared
to 1998. The decrease was primarily  due to the proceeds from the sale of common
stock in 1998 of  $2,480,782. This  decrease was partially offset by an increase
in proceeds from notes payable of  $303,586  and a decrease in the distributions
paid to shareholders of $296,573.

In order to continue to expand and develop its portfolio of properties and other
investments,  The  Company  intends to  finance future  acquisitions and  growth
through  the most advantageous  sources of capital  available to  the Company at
the time. Such  capital  sources may  include  proceeds  from  public or private
offerings  of the  Company's  debt or equity  securities, secured  or  unsecured
borrowings from banks or other lenders, or the disposition of assets, as well as
undistributed funds from operations.  At December 31, 1999,  the Company did not
have any public or private equity or debt offerings on registration with the SEC
or  any  other  regulatory  agency. The  Company  has  approximately  $5,316,000
availability  under its  Line Of Credit, subject to  use of proceeds approval by
the lender.


                                       8

<PAGE>

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

The initial issuance of 20,001 shares of stock for $200,010 was to AAA. On March
17, 1994, the Company commenced an offering of 2,000,000 Shares of Common Stock,
together  with  1,000,000  Warrants  (collectively   "Securities").   Until  the
completion  of the offering in March 1996,  the  Securities  were offered on the
basis of two (2) Shares of Common Stock and one (1) Warrant for a total purchase
price of $20.00.  The Shares and  Warrants  are  separately  transferable  by an
investor. Each Warrant entitled the holder to purchase one Share for $9.00 until
March 15, 1998. The offering period for the initial public  offering  terminated
on March 15, 1996 with gross proceeds totaling  $10,082,520  (1,008,252 shares).
In addition,  $515,844  (57,316  shares) was  received  from the exercise of the
Warrants.  On June 18, 1996, the Company commenced a follow-on offering of up to
$29,250,000  (2,853,659  shares) of additional  shares of its common stock.  The
offering  terminated on May 22, 1998 with gross  proceeds  totaling  $10,827,300
(1,056,946 shares). At December 31, 1999 and 1998  all Warrants that were issued
in connection with the above Securities issuance were expired.

In November 1998,  the Company  entered into an unsecured  credit  facility (the
"Credit Facility"),  which is being used to provide funds for the acquisition of
properties and working  capital,  and repaid all amounts  outstanding  under the
Company's  prior  credit  facility.  Under  the  Credit  Facility,  which had an
original term of one year, and has been  extended through June 2000, the Company
may borrow up to $20 million subject  to the value of unencumbered  assets.  The
Credit Facility contains covenants which, among other restrictions,  require the
Company to maintain a minimum net worth, a maximum leverage ratio, and specified
interest coverage and fixed charge coverage ratios.  At December 31, 1999, these
covenants  on the  Credit Facility  have been waived. The Credit Facility  bears
interest at an annual rate of LIBOR plus a  spread of 1.875%. As of December 31,
1999, $14,485,474 was outstanding  under the Credit Facility.

As of  December 31, 1999, the Company  had acquired Thirteen properties directly
and six properties  through joint ventures with entities with common  management
and had  invested $30,358,269, exclusive  of any  minority  interests, including
certain  acquisition  expenses  related  to  the  Company's  investment in these
properties. These  expenditures resulted  in a  corresponding  decrease  in  the
Company's liquidity.

Until  properties are acquired by the Company,  proceeds are held in short-term,
highly liquid  investments which the Company believes to have appropriate safety
of principal. This investment strategy has allowed, and continues to allow, high
liquidity to facilitate  the Company's use of these funds to acquire  properties
at such time as properties suitable for acquisition are located. At December 31,
1999, the Company's cash and cash equivalents totaled $1,118,746.

The Company made cash  distributions to the Shareholders  during each quarter of
1999 and 1998, distributing a total of $1,294,972 and $1,591,545,  respectively,
for each such fiscal year.

                                       9

<PAGE>

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

Funds From Operations

Funds from operations  (FFO) increased  $169,028  or 11.8% to $1,605,091 in 1999
from $1,436,063 in 1998. The Company has adopted  the  National  Association  of
Real Estate Investment  Trusts (NAREIT)  definition of FFO. FFO is calculated as
net  income  (  computed  in   accordance  with  generally  accepted  accounting
principles)  excluding gains or losses from sales of property,  depreciation and
amortization of real estate assets, and nonrecurring items of income or expense.
For purposes of the table below, FFO  excludes  nonrecurring  merger  costs, bad
debt  expense  related   to  the  Just  For  Feet  bankruptcy,  pre-paid  merger
acquisition costs and potential acquisition costs.  FFO should not be considered
an alternative to cash  flows from operating, investing and financing activities
in  accordance  with  generally  accepted  accounting   principles  and  is  not
necessarily  indicative  of  cash  available  to  meet cash needs. The Company's
computation  of  FFO  may  differ  from   the  methodology  for  calculating FFO
utilized by other equity  REIT's and, therefore,  may not be comparable  to such
other  REIT's. FFO is not defined by  generally accepted  accounting  principles
and  should  not be  considered  an  alternative  to net income as an indication
of the Company's performance.

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

                                                  1999                    1998
                                                  ----                    ----
Net income (loss)                             $   (37,862)          $(1,805,786)
Plus depreciation of real estate assets           447,967               349,888
Plus bad debt related to Just For Feet            189,490                     -
Plus pre-paid merger acquisition costs            262,495                     -
Plus merger costs                                       -             2,427,658
Plus potential acquisition costs                  743,001               464,303
                                              -----------           -----------
Total funds from operations                   $ 1,605,091           $ 1,431,063
                                              ===========           ===========

Cash distributions paid                       $ 1,294,972           $ 1,591,545
Distributions in excess of FFO                $  (310,119)          $   155,482

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

                                                  1999                   1998
                                                  ----                   ----
Operating activities                        $    468,700           $  1,510,069
Investing activities                        $ (2,439,262)          $ (7,687,454)
Financing activities                        $  3,040,788           $  4,824,165

Results of Operations

Years Ended December 31, 1999 and 1998:

During the years ended  December 31, 1999 and 1998, the Company owned and leased
nineteen and seventeen properties, respectively. During the years ended December
31, 1999 and 1998, the Company earned $3,649,818 and  $2,741,757,  respectively,
in rental income from  operating leases  and earned income from direct financing
leases. The 33 percent  increase in rental income and earned income during 1999,
as compared to 1998, is primarily  attributable to  rental income  earned on the
three  IHOP  properties  acquired  during  1999.  In addition, rental and earned
                                       10

<PAGE>

income increased during 1999  as a result of the  fact that the five  properties
acquired  during 1998 were operational for a full fiscal year in 1999.

The Company  bought and sold three properties  during 1999;  an IHOP in Wichita,
Kansas, an IHOP in Visalia,  California,  and a Krispy Kreme in Houston,  Texas.
The Company  purchased  these  properties in ARIC, its  consolidated  affiliate,
with  the  intention  to sell.  The Company  realized a  gain  on  sale of these
properties of approximately $278,000.

No Merger costs for 1999 were incurred compared to Merger costs of $2,427,658 in
1998. These Merger costs  were  related to the  merger of AAA.  This merger  was
finalized on June 5, 1998 and accordingly, no additional expense was recorded in
1999.

General and administrative costs were $1,290,433 in 1999 compared to $562,110 in
1998. Pursuant  to the Merger with AAA, the  Company  acquired  AAA  and  became
internally managed. Effective June 5, 1998,  the reimbursements and fees paid to
AAA were replaced with the actual personnel and other operating costs associated
with being internally managed.

Potential acquisition  costs for 1999 were $743,001  compared to  only  $464,303
in  1998.  These  potential  acquisition  costs  are  related  to  the  proposed
acquisition  of   the  ten  affiliated  limited  partnerships.  These  potential
acquisition  costs  are  primarily   due  to  transaction  related  legal  fees,
appraisals,   accounting   fees  and   underwriting/fairness  fees.

Bad  debt expense  was $189,490 in 1999 compared to no amounts in 1998. This bad
debt expense is related  to  the  Bankruptcy of Just For Feet.  This  represents
back rent,  property  taxes and property  insurance for the  properties  located
in  The Woodlands,  Texas and Sugar Land, Texas. The Company has both properties
listed with local retail brokers and is working with brokers  and tenants to re-
lease these properties.

Pre-paid merger related acquisition costs were  $262,495 in 1999  compared to no
amounts in 1998. These costs are related to  acquisition  costs  paid  to AAA in
connection with locating, evaluating and selecting  properties  and  structuring
and  negotiating  the  acquisition of properties. As additional  properties were
acquired,   these  costs  were  capitalized  into  the  basis  of the  property.
At  December 31, 1999 all  properties  and  relationships  with  which  AAA  was
involved  have   been  accounted  for  and  the  appropriate  acquisition  costs
capitalized  into  the  basis  of  the  property  As  such, AmREIT  expensed the
remaining balance as of December 31, 1999.

Interest expense was $1,134,919 in 1999 compared to $402,707  in  1998. This  is
due  to an  increase in  the interest  rates  and the  advancement of additional
funds on the Company's  line of credit.  The interest rate at  December 31, 1999
was 8.375%  compared to  December 31, 1998 of  6.938%. Additionally,  the amount
outstanding at December 31, 1999 was  $14,485,474  compared  to  $10,580,110  at
December 31, 1998. The advancement of funds was primarily due to the purchase of
the three IHOP's located in Topeka, Kansas, Sugar Land, Texas and Reno, Nevada.

Year 2000 Compliance

The Year  2000  problem  ("Y2K")  concerns  the  inability  of  information  and
non-information   technology   systems  to   properly   recognize   and  process
date-sensitive  information  beyond January 1, 2000.  The Company's  information
technology system consists of a network of personal  computers and servers built
using  hardware  and  software  from  mainstream  suppliers.  The Company has no
internally  generated  programmed  software  coding  to  correct,  as all of the
software  utilized  by the  Company  is  purchased  or  licensed  from  external
providers.

In 1998,  the  Company  formed a Year 2000  committee  (the "Y2K  Team") for the
purpose  of  identifying,   understanding  and  addressing  the  various  issues
associated  with the Year 2000  problems.  The Y2K Team consists of members from
the Company,  including  representatives from senior management,  accounting and
computer consultants. The Y2K Team's initial step in assessing the Company's Y2K
readiness  consists of  identifying  any systems  that are  date-sensitive  and,
accordingly,  could have potential Y2K problems.

The  Company's   information  system  is  comprised  of  hardware  and  software
applications  from  mainstream  suppliers;  accordingly,  the Y2K Team contacted
the respective vendors  and manufacturers to verify the Y2K  compliance of their
products. In addition, the  Y2K Team  also requested and evaluated documentation
from  other  companies  with  which  the  Company  has  a  material  third party
relationship,  including   the  Company's   tenants,  major  vendors,  financial
institutions  and  the  Company's  transfer  agent. The  Company  depends on its
tenants for rents and cash flows, its financial  institutions  for  availability
of cash and financing  and  its transfer agent to maintain  and  track  investor
information.  The Company  did not  encounter any material Y2K  impact  of third
parties  nor  did  they  have  a  materially  adverse  effect  on its results of
operation or financial position.

The Company has identified  and has  implemented  upgrades for certain  hardware
equipment and software applications. The Company did not incur more than  $2,500
in Year 2000 remedial measures.


                                       11

<PAGE>

Through March 30, 2000, the Company has  not experienced  any significant issues
related to the Year 2000. Based on this, the Company does not forsee significant
risks associated with the Year 2000.

Forward-Looking Statements

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

Item 7.   Financial Statements.

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

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

None.

                                       12

<PAGE>


                                    PART III

Item 9. Directors and Executive Officers

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

Item 10.   Executive Compensation

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

Item 11. Security Ownership of Certain Beneficial Owners and Management

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

Item 12. Certain Relationships and Related Transactions

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

                                       13

<PAGE>


                                     PART IV

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

(a)    (1)    Financial Statements

              Independent Auditors' Report
              Consolidated Balance Sheet, December 31, 1999
              Consolidated Statements of Operations for the Years Ended
                December 31, 1999 and 1998
              Consolidated  Statements of Shareholders' Equity
                for the  Years  Ended  December  31, 1999 and 1998
              Consolidated Statements of Cash Flows for the Years Ended
                December 31, 1999 and 1998
              Notes to Consolidated Financial Statements for the Years
                Ended December 31, 1999 and 1998

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

       (3)    Exhibits   See (c) below

(b)           Reports on Form 8-K filed after September 30, 1999:

              None

(c)           Exhibits

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

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

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

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

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

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

                                       14

<PAGE>



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

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

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

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

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

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

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

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

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

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

                                       15


<PAGE>



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

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

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

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

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

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

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

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

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

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

                                       16


<PAGE>



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

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

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

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

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

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

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

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

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

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


                                       17

<PAGE>



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

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

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

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

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

              11      Computation of earnings per common share.

              21      Subsidiaries of the Company.

              27      Financial Data Schedule.

Items 5, 6 and 7 of Part II and Item 13 of Part IV of this Form  10-KSB  contain
the  financial  statements,  financial  statement  schedule and other  financial
information.  No  Annual  Report  or proxy  material  has yet been  provided  to
security holders with respect to 1999.

(d)           Financial Statements Schedules

              Schedule III - Consolidated Real Estate Owned and Accumulated
              Depreciation

                                       18

<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Issuer has duly  caused this report to be signed on its behalf
on the 30th of March 2000 by the undersigned, thereunto duly authorized.

                                          AmREIT, Inc.

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




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



/s/ H. Kerr Taylor                                      March 30, 2000
------------------
H. KERR TAYLOR
President, Chairman of the Board, Chief Executive
Officer and Director (Principal Executive Officer)


/s/ Robert S. Cartwright, Jr.                           March 30, 2000
-----------------------------
ROBERT S. CARTWRIGHT, JR., Director


/s/ George A. McCanse, Jr.                              March 30, 2000
--------------------------
GEORGE A. McCANSE, JR., Director


/s/ Chad C. Braun                                       March 30, 2000
-------------------
CHAD C. BRAUN, Vice President - Financial and
Secretary (Principal Accounting Officer)



                                       19


<PAGE>








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


                        CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


                        AND FINANCIAL STATEMENT SCHEDULE
                      FOR THE YEAR ENDED DECEMBER 31, 1999


                          AMREIT, INC. AND SUBSIDARIES

                                      F-1

<PAGE>



                          AMREIT, INC. AND SUBSIDIARIES
                          INDEX TO FINANCIAL STATEMENTS




                                                                            Page

FINANCIAL STATEMENTS:

Independent Auditors' Report                                                 F-3
Consolidated Balance Sheet, December 31, 1999                                F-4
Consolidated Statements of Operations for the Years Ended
    December 31, 1999 and 1998                                               F-5
Consolidated Statements of Shareholders' Equity
    for the Years Ended December 31, 1999 and 1998                           F-6
Consolidated Statements of Cash Flows for the Years Ended
    December 31, 1999 and 1998                                               F-7
Notes to Consolidated Financial Statements for the Years Ended
    December 31, 1999 and 1998                                       F-8 to F-16



FINANCIAL STATEMENT SCHEDULE:
Schedule III Consolidated Real Estate Owned and Accumulated
    Depreciation for the Year Ended December 31, 1999                       F-17


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

                                      F-2

<PAGE>



INDEPENDENT AUDITORS' REPORT

To the Board of Directors
AmREIT, Inc.

We have audited the accompanying  consolidated balance sheet of AmREIT, Inc. and
subsidiaries   (the  "Company")  as  of  December  31,  1999,  and  the  related
consolidated  statements of operations,  shareholders' equity and cash flows for
each of the two years in the period ended  December  31,  1999.  Our audits also
included the financial  statement  schedule listed in the Index. These financial
statements and the financial  statement  schedule are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an  opinion  on the
financial statements and financial statement schedule based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the  financial  position of the Company as of December  31,
1999,  and the results of its  operations and its cash flows for each of the two
years in the  period  ended  December  31,  1999 in  conformity  with  generally
accepted accounting  principles.  Also, in our opinion, such financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole,  presents  fairly in all material  respects the  information  set forth
therein.





DELOITTE & TOUCHE LLP

Houston, Texas
March 23, 2000


                                      F-3

<PAGE>


                          AMREIT, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1999

 ASSETS
 Cash and cash equivalents                                      $     1,118,746
 Accounts receivable, net of $189,490
   in allowance for doubtful accounts                                   432,182
 Prepaid expenses                                                        20,825
 Property:
   Land                                                              12,897,732
   Buildings                                                         16,963,946
   Furniture, fixtures and equipment                                    126,087
                                                                ---------------
                                                                     29,987,765
   Accumulated depreciation                                          (1,148,503)
                                                                ---------------
     Total property, net                                             28,839,262
                                                                ---------------
 Net investment in direct financing leases                            5,955,150
 Other assets:
   Preacquisition costs                                                   9,964
   Accrued rental income                                                333,168
   Investment in non-consolidating subsidiary                           249,981
   Other                                                                 58,908
                                                                ---------------
     Total other assets                                                 652,021
                                                                ---------------
 TOTAL ASSETS                                                   $    37,018,186
                                                                ===============

 LIABILITIES AND SHAREHOLDERS' EQUITY
 Liabilities:
   Note payable                                                 $    15,480,378
   Accounts payable                                                     552,938
   Security deposit                                                      15,050
                                                                ---------------
     TOTAL LIABILITIES                                               16,048,366
                                                                ---------------

 Commitments and contingencies                                                -
 Minority interest                                                    5,180,546
 Shareholders' equity:
   Preferred stock, $.01 par value,
     10,001,000 shares authorized, none issued
   Common stock, $.01 par value,
     100,010,000 shares authorized,
     2,384,117 shares issued                                             23,841
   Capital in excess of par value                                    21,655,867
   Accumulated distributions in excess of earnings                   (5,783,941)
   Cost of treasury stock, 11,373 shares                               (106,493)
                                                                ---------------
     TOTAL SHAREHOLDERS' EQUITY                                      15,789,274
                                                                ---------------
 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                     $    37,018,186
                                                                ===============

 See Notes to Consolidated Financial Statements.

                                       F-4

<PAGE>


 AMREIT, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS

                                                For the Years Ended December 31,
                                                      1999            1998
                                                      ----            ----
 Revenues:
   Rental income from operating leases          $   3,119,594  $   2,401,048
   Earned income from direct financing leases         530,224        340,709
   Interest income                                    199,448         98,692
   Gain on sale of assets                             278,000              -
   Service fees and other income                      476,059        187,577
                                                      -------        -------

     Total revenues                                 4,603,325      3,028,026
                                                    ---------      ---------

 Expenses:
   General operating and administrative             1,290,433        562,110
   Reimbursements and fees to related party                 -         40,607
   Interest                                         1,134,919        402,707
   Depreciation                                       467,455        355,114
   Amortization                                        27,342         62,754
   Merger related acquisition costs                   262,495              -
   Bad debt                                           189,490              -
   Merger costs (note 8)                                    -      2,247,658
   Potential acquisition costs                        743,001        464,303
                                                      -------        -------

     Total expenses                                 4,115,135      4,315,253
                                                    ---------        -------

 Income (loss) before minority interest
   in net income of consolidated joint ventures       488,190     (1,287,227)

 Minority interest in net income of
   consolidated joint ventures                       (526,052)      (518,559)
                                                     --------       --------

 Net (loss)                                     $     (37,862) $  (1,805,786)
                                                =============  =============


 Basic (loss) per share                         $       (0.02) $       (0.81)
                                                =============  =============
 Diluted (loss) per share                       $       (0.02) $       (0.81)
                                                =============  =============

 Weighted average number of common
   shares outstanding                               2,372,744      2,226,403
                                                    =========      =========
 Weighted average number of common
   shares outstanding
   plus dilutive potential common shares            2,372,744      2,226,403
                                                    =========      =========

  See Notes to Consolidated Financial Statements.

                                       F-5



<PAGE>


                          AMREIT, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>



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


 Balance at December 31, 1997          1,868,213  $ 18,682   $ 16,665,300   $  (1,053,776)   $       -    $ 15,630,206

   Net loss                                    -         -              -      (1,805,786)           -      (1,805,786)

   Distributions ($.73 per share)              -         -              -      (1,591,545)           -      (1,591,545)

   Issuance of common stock              515,904     5,159      5,252,768               -            -       5,257,927

   Stock issuance costs                        -         -       (262,201)              -            -        (262,201)

   Cost of treasury stock, 11,373 share        -         -              -               -     (106,493)       (106,493)

                                        --------  --------       --------        --------     --------        --------

 Balance at December 31, 1998          2,384,117    23,841     21,665,867      (4,451,107)    (106,493)     17,122,108

   Net loss                                    -         -              -         (37,862)           -         (37,862)

   Distributions ($.55 per share)              -         -              -      (1,294,972)           -      (1,294,972)

                                        --------  --------       --------        --------     --------        --------
Balance at December 31,1999           $2,384,117   $23,841    $21,665,867     $(5,783,941)   $(106,493)    $15,789,274


</TABLE>


 See Notes to Consolidated Financial Statements.

                                       F-6


<PAGE>


                          AMREIT, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                For the Years Ended December 31,
                                                        1999            1998
                                                        ----            ----
 Cash flows from operating activities:
   Net (loss)                                   $      (37,862) $    (1,805,786)
   Adjustments to reconcile net (loss)
     to net cash provided by
     operating activities:
       Amortization                                     27,342           62,754
       Depreciation                                    467,455          355,114
       Gain on sale of property                       (278,000)               -
       Merger costs                                          -        2,283,322
      (Increase) decrease in accounts
         receivable                                   (419,044)         111,462
       Increase in prepaid expenses                     (7,291)         (13,534)
       Increase in accounts payable                    351,659          106,961
       Cash receipts from direct
         financing leases less than
         income recognized                             (35,093)         (10,474)
       Decrease in escrow deposits,
         net of minority interest
         partners                                       10,000            1,100
       Increase in accrued rental income               (94,952)         (77,409)
       Increase in other assets                        (41,566)         (22,000)
       Earnings of minority interest                   527,052          518,559
                                                       -------          -------
         Net cash provided by operating
           activities                                  469,700        1,510,069
                                                     ---------        ---------
 Cash flows from investing activities:
   Acquisition of real estate                       (3,729,122)      (7,337,349)
   Acquisition of property under direct
     financing lease                                (2,748,385)               -
   Proceeds from property sales                      3,646,821                -
   Additions of furniture, fixtures
     and equipment                                     (57,108)          (5,019)
   Investment in non consolidating
     subsidiary                                       (249,981)               -
   Investment in joint venture                         362,149         (362,149)
       -
   Preacquisition costs                                338,659           17,063
   Short term investments                               (2,295)               -
                                                        ------         --------
     Net cash used in investing activities          (2,439,262)      (7,687,454)
                                                    ----------      -----------
 Cash flows from financing activities:
   Proceeds from issuance of stock, net                      -        2,480,782
   Common stock repurchases                                  -         (106,493)
   Proceeds from note payable                        4,905,364        4,601,778
   Payments of notes payable                            (5,096)               -
   Distributions paid to shareholders               (1,294,972)      (1,591,545)
   Distributions to minority interest
     partners                                         (564,508)        (560,357)
                                                      --------         --------
     Net cash provided by financing
       activities                                    3,039,788        4,824,165
                                                     ---------       ----------
 Net Increase (decrease) in cash and
   cash equivalents                                  1,070,226       (1,353,220)
 Cash and cash equivalents at beginning
   of year                                              48,520        1,401,740
                                                     ---------        ---------
 Cash and cash equivalents at end of year       $    1,118,746  $        48,520
                                                ==============  ===============

 Supplemental disclosure of non-cash
   financing activities:

   Issuance of stock in lieu of note payment    $            -  $       270,564
                                                ==============  ===============
   Issuance of stock in connection with Merger  $            -  $     2,244,380
                                                ==============  ===============

 See Notes to Consolidated Financial Statements.

                                        F-7


<PAGE>



                          AMREIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

AmREIT,  Inc.,  formerly  American Asset Advisers Trust,  Inc.  ("Issuer" or the
"Company"),  was  incorporated  in the state of Maryland on August 17, 1993. The
Company is a real estate  investment  trust (a "REIT") that acquires,  develops,
owns and manages  high-quality,  freestanding  properties leased to major retail
businesses  under  long-term  commercial  net  leases.  Through  a  wholly-owned
subsidiary,  the Company also provides  advisory  services to twelve real estate
limited partnerships.

BASIS OF CONSOLIDATION

The consolidated  financial statements include the accounts of AmREIT, Inc., its
subsidiaries, AmREIT Realty Investment Corporation ("ARIC"),  AmREIT  Securities
Company  ("ASC"),  AmREIT  Operating  Corporation ("AOC"),  AmREIT  SPE  1  Inc.
("SPE 1") and AmREIT Opportunity Corporation ("AOP"), and its six joint ventures
with related parties. ARIC, AOC, and AOP were formed in  June,  July  and  April
1998, respectively. ASC and SPE 1 were both formed in February  1999.  ASC is  a
wholly owned  subsidiary of ARIC and was  established exclusively to  distribute
security commissions generated through direct participation programs and private
placement activities. SPE 1 is a special purpose  entity, created solely  at the
lenders  request.  SPE  1  owns  a  building  and  land  located  in  Ridgeland,
Mississippi that is leased to Hollywood Video.  ARIC  was organized to  acquire,
develop, hold and sell real estate in the  short-term for capital  gains  and/or
receive fee  income.  The  Company owns 100% of the outstanding preferred shares
of ARIC and AOP.  The preferred shares are entitled  to receive dividends  equal
to 95% of net income and are expected to be paid from cash flows, if any. H Kerr
Taylor ownes 100% of the outstanding common shares of  ARIC  and AOP. The common
shares are entitled to  receive dividends equal to 5% of the net income and  are
expected to be paid from cash flows, if any, and are  accounted for as  minority
interest on the balance sheet at December 31, 1999. AOC and AOP were formed with
the  intention to qualify and to operate as a real estate investment trust under
federal  tax laws. All  significant intercompany accounts and  transactions have
been  eliminated  in  consolidation. The Company owns  greater  than  50% of the
aforementioned joint ventures and exercises control over operations.

BASIS OF ACCOUNTING

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

CASH AND CASH EQUIVALENTS

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

PROPERTY

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

                                      F-8

<PAGE>

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

Expenditures  related to the development of real estate are carried at cost plus
capitalized carrying charges,  acquisition costs and development costs. Carrying
charges,  primarily interest and loan acquisition costs, and direct and indirect
development  costs related to buildings  under  construction  are capitalized as
part of construction in progress. The Company capitalizes acquisition costs once
the  acquisition  of the  property  becomes  probable.  Prior  to  that time the
Company  expenses these  costs as  acquisition expense. Interest of $316,492 was
capitalized on properties  under construction  during 1998 and no interest costs
were capitalized for 1999.

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

DEPRECIATION

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

INVESTMENT IN NON CONSOLIDATED SUBSIDIARY

AOP invested  $250,000 as a limited  partner and  $1,000 as a general partner in
AmREIT  Opportunity  Fund,  Ltd.  that is  accounted for  using the cost method.
The limited  partners have the right  to remove and replace  the general partner
(AOP) by a  vote of the  limited partners  owning a majority  of the outstanding
units.  AOP  currently  owns  a  15 percent limited  partner  interest in AmREIT
Opportunity Fund, Ltd. AmREIT  Opportunity  Fund  was  formed to  develop,  own,
manage, and hold for investment and or resell property  and  to  make  or invest
in  loans for the development or construction of property.

OTHER ASSETS

Other assets include  loan acquisition costs.  Loan acquisition costs of $61,757
incurred in obtaining property financing are  amortized to interest expense on a
straight - line  basis  over  the  term  of  the  debt  agreements.  Accumulated
amortization  related to loan acquisition  costs as of December 31, 1999 totaled
$5,146.

STOCK ISSUANCE COSTS

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

STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION

There has been no cash paid for income  taxes  during 1999 or 1998.  During 1999
and 1998, the Company paid  interest of $1,143,310  and $635,177,  respectively,
of  which  none  was  capitalized  for  1999  and  $316,492  was  capitalized on
properties under construction for 1998.

REVENUE RECOGNITION

Properties are leased on a triple-net basis. Revenue is recognized on a straight
-line  basis  over  the  terms  of  the individual leases.  Percentage rents are
recognized when received.


                                      F-9

<PAGE>



FEDERAL INCOME TAXES

The Company is qualified as a real estate  investment  trust  ("REIT") under the
Internal Revenue Code of 1986, and is, therefore,  not subject to Federal income
taxes  provided it meets all conditions  specified by the Internal  Revenue Code
for retaining its REIT status,  including the  requirement  that at least 95% of
its real estate  investment  trust taxable  income is distributed by March 15 of
the following year.

EARNINGS (LOSS) PER SHARE

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

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

                                                For the Years Ended December 31,
                                                 1999                      1998
                                                 ----                      ----
BASIC EARNINGS (LOSS) PER SHARE
     Weighted average common shares
       outstanding                            2,372,744               2,226,403
                                           =============           =============
         Basic earnings (loss) per share   $       (.02)           $       (.81)
                                           =============           =============

DILUTED EARNINGS (LOSS) PER SHARE
     Weighted average common shares
       outstanding                            2,372,744               2,226,403
                                           =============           =============
       Diluted earnings (loss)per share    $       (.02)           $       (.81)
                                           =============           =============

EARNINGS (LOSS) FOR BASIC AND DILUTED
  COMPUTATION
    Net income  (loss) to common
      shareholders (basic and diluted
      earnings per share computation)      $    (37,862)           $ (1,805,786)
                                           =============           =============


USE OF ESTIMATES

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

NEW ACCOUNTING PRONOUNCEMENTS

In  June  1999, the  Financial Accounting  Standards Board  issued  Statement of
Financial Accounting Standards  No. 137,  "Accounting for Derivative Instruments
and Hedging Activities"  which deferred the effective date of FASB Statement No.
133 ("SFAS 137").  SFAS 137 is effective for all fiscal quarters of fiscal years
beginning after June  15, 2000.  FASB 133, as ammended by SFAS 137,  establishes
a new accounting and reporting standards  for derivative  instruments, including
certain  derivative  instruments  embedded in  other contracts  and  for hedging
activities.  The Company  is evaluating  what impact,  if any,  adoption of this
statement will have on the Comapny's consolidated financial statements.

                                      F-10

<PAGE>

2. OPERATING LEASES

A summary of minimum future rentals to be received,  exclusive of any  renewals,
under  noncancellable operating  leases in  existence at December 31, 1999 is as
follows:

                           2000                $   2,388,120
                           2001                    2,271,553
                           2002                    2,306,537
                           2003                    2,327,109
                           2004                    2,217,489
                           2005-2024              14,512,504
                                               -------------
                                               $  26,023,312
                                               =============

3. NET INVESTMENT IN DIRECT FINANCING LEASES

The Company's net investment in its direct financing leases at December 31, 1999
included:


 Minimum lease payments receivable             $   15,484,758
 Unguaranteed residual value                        2,811,998
 Less: Unearned income                             12,341,606
                                               --------------
                                               $    5,955,150
                                               ==============

A summary  of minimum  future  rentals,  exclusive  of any  renewals,  under the
noncancellable direct financing leases follows:

                           2000                $      641,861
                           2001                       648,523
                           2002                       668,508
                           2003                       668,508
                           2004                       684,222
                           2005-2016               12,173,137
                                               --------------
                                               $   15,484,759
                                               ==============


                                      F-11

<PAGE>



4. JOINT VENTURES

CONSOLIDATED JOINT VENTURES

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

On June 29, 1998, the  Company  entered  into  a joint venture, GDC  Vista Ridge
Partners Ltd.,  with GDC Ltd.  The joint venture was formed to acquire, finance,
develop,  operate  and dispose of a retail project located in Lewisville, Texas.
The Company's interest in the joint venture is 15%.

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

On February 11,  1997,  the Company  entered  into a joint  venture with AAA Net
Realty XI, Ltd.  The joint  venture  was formed for the  purchase of a property,
which  is  being  operated  as a Just For  Feet  retail  store  in Baton  Rouge,
Louisiana. The property was purchased on June 9, 1997 after the construction was
completed. The Company's interest in  the joint venture is 51%. On  November  4,
1999 Just For Feet, Inc. filed  for a petition  for  relief under  Chapter 11 of
the Federal bankruptcy  code. On January 27, 2000 Just For Feet, Inc.  announced
that  its  previous  efforts of  reorganization  were unsuccessful. As such, the
bankruptcy  court in  Delaware approved a liquidation auction of all of Just For
Feet, Inc.'s retail  stores and inventory.  On February 16, 2000  Just For Feet,
Inc.  entered  into  an  agreement  whereby  Footstar, Inc. would  purchase  the
inventory of Just For Feet, Inc., and  assume certain retail  operating  leases.
Included  in  the leases  being  assumed by  Footstar, Inc. is the Just For Feet
property located in Baton Rouge, Louisiana. The bankruptcy court in Delaware has
ordered Just For Feet, Inc.to cure  and  pay any  deficiencies  under the  lease
prior  to  the  assumption  of the  lease by  Footstar, Inc. These  deficiencies
include rent, property taxes and property insurance. Footstar, Inc.is the second
largest retailer of athletic footwear  and apparel.  Footstar Inc. is a publicly
owned company whose common stock is traded on the New York Stock Exchange.

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

On April 5, 1996, the Company  formed a joint  venture,  AAA Joint Venture 96-1,
with AAA Net Realty Fund XI, Ltd. and AAA Net Realty Fund X, Ltd., entities with
common  management,  for the  purpose of  acquiring  a  property  which is being
operated as a Just For Feet retail  store in Tucson,  Arizona.  The property was
purchased on September 11, 1996 after construction was completed.  The Company's
interest  in  the  joint  venture  is 51.9%. As  part of the Just For Feet, Inc.
bankruptcy Footstar, Inc. has agreed to purchase the inventory of Just For Feet,
Inc., and  assume  certain  retail  operating  leases.  Included  in  the leases
being assumed by Footstar, Inc. is the Just For Feet located in Tucson, Arizona,
which is owned by AAA Joint Venture 96-1. The  bankruptcy court has ordered Just
For Feet, Inc. to cure and pay any  deficiencies  under the  lease prior  to the
assumption  of the  lease by  Footstar, Inc. These  deficiencies  include  rent,
property  taxes and  property  insurance. Footstar, Inc. is  the second  largest
retailer of athletic footwear  and apparel.  Footstar Inc. is a  publicly  owned
company whose common stock is traded on the New York Stock Exchange.

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

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

                                      F-12

<PAGE>



5. NOTES PAYABLE

In November 1998,  the Company  entered into an unsecured  credit  facility (the
"Credit Facility"),  which is being used to provide funds for the acquisition of
properties and working  capital,  and repaid all amounts  outstanding  under the
Company's  prior  credit  facility. Under  the  Credit  Facility, which  had  an
original term of one year and has been extended through June 2000,  the  Company
may  borrow  up to $20  million  subject  to the  value of unencumbered  assets.
The Credit Facility contains covenants which, among other restrictions,  require
the  Company  to  maintain  a  minimum  net worth,  a  maximum  leverage  ratio,
specified  interest coverage and  fixed  charge  coverage  ratios and  allow the
lender to approve all distributions.  At Decenber 31, 1999, these  covenants  on
the Credit Facility  have been waived.The Credit Facility  bears  interest at an
annual rate of LIBOR plus a spread of 1.875% (8.375% as of December  31,  1999),
set  quarterly  depending  on the Company's  leverage  ratio. As of December 31,
1999,  $14,485,474 was outstanding under the Credit Facility.

In March 1999,  the Company entered into a ten year mortgage,  amortized over 30
years,  note  payable  with  NW  L. L. C. for  $1,000,000  with  $994,904  being
outstanding  at  December 31, 1999.  The interest  rate is  fixed at 8.375% with
payments of  principal and interest due monthly. The note matures  April 1, 2009
and as of December  31, 1999  the Company is in compliance with all terms of the
agreement.The note is collateralized by a first lein mortgage on propert with an
aggregate  carrying  value  of  approximately  $1,242,990.

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

                           2000           $      8,138
                           2001                  8,847
                           2002                  9,617
                           2003                 10,454
                           2004                 11,364
                     Thereafter                946,484
                                          ------------
                                          $    994,904
                                          ============

The Company  assumed a 5-year lease  agreement for its office telephone  system.
The lease, which is treated as a capital lease, terminates in September 2000, at
which  time  the Company  has the option to  purchase the equipment. The assumed
lease and  a  telephone  equipment lease entered  into in  May 1999  combine for
monthly lease payments totaling $313.  Monthly lease payments total $313. Future
minimum lease payments required under these leases are summarized as follows:

                           2000           $      5,068
                           2001                  1,308
                           2002                    545
                                          ------------
                                          $      6,921
                                          ============

6. MAJOR TENANTS

The  Company's  operations  are  related  to  the  acquisition  and  leasing  of
commercial real estate  properties.  The following  schedule  summarizes  rental
income by lessee  for 1999 and 1998 under both  operating  and direct  financing
methods of accounting:
                                                          1999            1998
                                                          ----            ----
Tandy Corporation
  (Mesquite, Texas)                                 $    108,900    $    108,900
America's Favorite
  Chicken Company (Smyrna, Georgia)                       98,896          98,265
Blockbuster Music Retail, Inc.
  (Independence, Missouri and
   Wichita, Kansas)                                      376,682         377,901
OneCare Health Industries, Inc.
  (Houston, Texas)                                       201,637         202,800
Just For Feet, Inc.
  (Tucson, Arizona; Baton Rouge, Louisiana;
   The Woodlands, Texas and Sugar Land, Texas)(1)      1,461,584       1,096,233
Bank United (The Woodlands, Texas and
  Houston, Texas)                                        157,801         157,801
Hollywood Entertainment Corp. (Lafayette,
  Louisiana and Ridgeland, Mississippi)                  273,163         273,931
OfficeMax, Inc. (Lake Jackson, Texas
  and Dover, Delaware)                                   518,493         406,622
D F & R Operating Company, Inc.
  (Peachtree City, Georgia)                               78,447           3,288
Krispy Kreme Doughnuts of the Gulf
  Coast, Ltd. (Houston, Texas)                            97,408          16,016
International House of Pancakes ( Reno, Nevada;
  Topeka and Wichita, Kansas; Visalia, California
  and Houston, Texas)                                    276,807               -
                                                    ------------    ------------
  Total                                             $  3,649,818    $  2,741,757
                                                    ============    ============

(1) The Woodlands,  Texas and Sugar Land,  Texas Just For Feet stores are vacant
due to the Just For Feet bankruptcy. The Company is in the process of re-leasing
these properties.



                                      F-13

<PAGE>



7. FEDERAL INCOME TAXES

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

For income tax purposes,  distributions paid to shareholders consist of ordinary
income, capital gains and return of capital as follows:
                                             1999                     1998
                                             ----                     ----
Ordinary Income                        $       689,996        $        780,588
Return of capital                              604,976                 810,957
                                       ---------------        ----------------
                                       $     1,294,972        $      1,591,545
                                       ===============        ================

8. MERGER TRANSACTION

On June 5, 1998,  the Company's  shareholders  voted to approve an agreement and
plan of merger with American Asset Advisers Realty Corporation ("AAA"),  whereby
the stockholder of  AAA  agreed to exchange  100% of the  outstanding  shares of
common stock of AAA for up to 900,000  shares (the "Share Consideration") of the
Company's common stock (the "Merger").  The common stock of AAA was wholly owned
by the  president and  director of the  Company. As a result of the Merger,  the
Company  became a  fully integrated,  self-administered  real estate  investment
trust ("REIT") effective June 5, 1998.  Effective June 5, 1998,  213,260  shares
were issued and the balance (the "Share Balance") of the Share Consideration  is
to be  paid over a  six  year period to  the extent  certain  goals are achieved
after the Merger.  None of the Share Balance has been earned subsequent  to June
5,  1998.  The  market  value of  the  common  shares  issued effective  June 5,
1998  was  $2,185,915  which was accounted for as expenses incurred in acquiring
AAA from a related party. In addition, the Company assumed an obligation to  the
stockholder of AAA in the  amount  of  $97,407.  This obligation and the related
accrued  interest of $3,157 were  subsequently  paid with  the issuance of 9,811
shares. In connection with the Merger, the Company incurred no costs during 1999
and costs of $144,336 during 1998, consisting primarily of legal and  accounting
fees,  valuation  opinions  and fairness opinions.  For accounting purposes, AAA
was not considered a "business" for  purposes of  applying  APB Opinion  No. 16,
"Business  Combinations,"  and therefore, the market value of the common  shares
issued in  excess of  the fair  value of the net tangible  assets  acquired  was
charged to expense  rather than capitalized as goodwill. To the extent the Share
Balance is paid  over time, the  market value of  the common shares  issued will
also be charged to expense.  Upon consummation  of the  Merger on June 5,  1998,
certain  employees  of AAA became employees  of the  Company,  and  the  Company
was no longer  obligated to pay  fees  under the advisor  agreement  between the
Company and AAA. The  Company  assumed / took  over  AAA's  existing  management
contracts. This transaction was not accounted  for  as  a  contract  termination
because the contracts AAA  had with  the various  entities were  not terminated,
but rather assumed by the Company.

9.   RELATED PARTY TRANSACTIONS

See Note 8 regarding the Merger and Note 4 regarding  joint  venture  agreements
with related parties.

                                      F-14

<PAGE>



RELATED PARTY TRANSACTIONS SUBSEQUENT TO THE MERGER:

Beginning  June 5, 1998, the Company  provides  property  acquisition,  leasing,
administrative and management services for eleven affiliated real estate limited
partnerships  (the  "Partnerships").  The  president and director of the Company
owns  between  45% and 100% of the  stock  of the  companies  that  serve as the
general partner of the Partnerships.  Service fees of $259,871 and $138,340 were
paid by the Partnerships to the Company for 1999 and 1998 respectively.

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

RELATED PARTY TRANSACTIONS PRIOR TO THE MERGER:

Prior to June 5, 1998, the Company was a party to an Omnibus Services  Agreement
with AAA whereby AAA provided property acquisition,  leasing, administrative and
management  services for the Company.  Service fees of $40,607 were incurred and
charged to expense  for the period  beginning  January 1, 1998  through  June 5,
1998.

AAA  had  incurred  certain  costs  in  connection  with  the  organization  and
syndication of the Company.  Reimbursement of these costs become  obligations of
the Company in accordance with the terms of the offering.  AAA incurred Costs of
$56,164 for the  period  ended  June 5,  1998 in  connection  with  the issuance
and  marketing  of  the Company's  stock. These costs are reflected as  issuance
costs and are recorded as a reduction to capital in excess of par value.

Acquisition fees,  including real estate commissions,  finders fees,  consulting
fees and any other  non-recurring  fees  incurred in connection  with  locating,
evaluating  and  selecting   properties  and  structuring  and  negotiating  the
acquisition  of  properties  are  included  in  the  basis  of  the  properties.
Acquisition  fees of $123,389 were incurred and paid to AAA for the period ended
June 5, 1998.


                                     F-15
<PAGE>


10. PROPERTY ACQUISITIONS AND DISPOSITIONS IN 1999

On  September 30, 1999,  the Company  acquired  a newly  constructed property on
lease to IHOP Properties, Inc. for a purchase price of $1,409,959. This property
is being operated as an IHOP restaurant on Wanamaker Road in Topeka, Kansas. The
lease agreement extends for twenty five years, however the tenant has the option
to renew the lease for three additional terms of five years each.  The lease has
provisions for an escalation in the rent every the fifth year of the lease.  The
Company recorded $62,076 of revenue from this property in 1999.

On  September 30, 1999,  the Company  acquired  a newly  constructed property on
lease to IHOP Properties, Inc. for a purchase price of $1,703,634. This property
is being operated as an  IHOP restaurant on U.S. 59 frontage road in Sugar Land,
Texas. The lease agreement extends for twenty five years, however the tenant has
the option to renew the lease for three additional terms of five years each. The
lease has provisions for an escalation in the rent every fifth year of the lease
The Company recorded $75,427 of revenue from this property in 1999.

On  September 22, 1999,  the Company  acquired  a newly  constructed property on
lease to IHOP Properties, Inc. for a purchase price of $1,372,825. This property
is being  operated as an  IHOP restaurant on North McCarren in Reno, Nevada. The
lease agreement extends for twenty five years, however the tenant has the option
to renew the lease for three additional terms of five years each.  The lease has
provisions for  an  escalation  in the  rent every  fifth year of the lease. The
Company recorded $61,552 of revenue from this property in 1999.

In  November of 1998,  the Company  acquired a  newly  constructed  property  in
Houston, Texas leased to KK Shadowlake, Ltd. for a purchase price of $1,371,459.
This  property is being  operated as a Krispy Kreme  doughnut  shop.  In July of
1999, the Company disposed of this property for  $1,577,287  resulting in a gain
on sale of $136,576 after  selling  expenses.  The Company  recorded  $97,408 of
rental income from this property in 1999.

In October of 1999, the Company acquired newly constructed property located on a
ground lease in  Visalia,  California  leased  to IHOP  Properties,  Inc. for  a
purchase  price  of  $825,603.  This  property  is  being  operated  as  an IHOP
restaurant.  In  December  of 1999, the  Company  disposed  of this property for
$973,575  resulting in a gain on sale of  $16,953  after selling  expenses.  The
Company recorded $75,453 of rental income from this property in 1999.

In July of 1999, the Company finalized  an  acquisition  of a newly  constructed
property  in  Wichita,  Kansas  leased  to IHOP  Properties,  Inc. for  a  total
purchase  price  of  $1,124,749.  This  property  is  being  operated as an IHOP
restaurant.  In  August  of  1999,  the  Company  disposed of this  property for
$1,334,000 resulting in a gain on sale of $125,200 after selling  expenses.  The
Company recorded $2,299 of rental income from this property in 1999.


11. COMMITMENT

As part of the Merger,  the Company  assumed a 3-year  lease  agreement  for its
office  facilities.  The lease terminates in September 2000, however the Company
has the option to renew the lease for an additional three years.  Rental expense
for  the  years  ended  December 31, 1999  and  1998  was  $63,520  and  $36,256
respectively. Future minimum lease payments required under this operating lease,
excluding renewal options, are summarized as follows:

                           2000          $      43,976


                                      F-16

<PAGE>


                          AmREIT, INC. AND SUBSIDIARIES
   SCHEDULE III - CONSOLIDATED REAL ESTATE OWNED AND ACCUMULATED DEPRECIATION
                      FOR THE YEAR ENDED DECEMBER 31, 1999


<TABLE>
<CAPTION>

                                                                                                                            LIFE ON
                                                                                                                            WHICH
                                                                                                                            DEPR. IN
                                                                                                                            LATEST
                                                                             COST AT                                        INCOME
    PROPERTY                   ENCUM-                          IMPROVE-    CLOSE OF YEAR      ACCUM.    DATE OF   DATE      STMT. IS
  DESCRIPTION                 BRANCES    BUILDING      LAND     MENTS    BUILDING     LAND     DEPR.    CONSTR.  ACQUIRED   COMPUTED
  -----------                 -------    --------      ----     -----    --------     ----     -----    -------  --------   --------

PROPERTIES INVESTED IN
UNDER OPERATING LEASES

<S>                               <C>    <C>         <C>         <C>    <C>         <C>        <C>       <C>     <C>        <C>


Radio Shack Retail Store, Tx.     $0    $788,330    $337,856     $0    $788,330    $337,856   $111,965    N/A    06-15-94   39 Years
Church's Chicken Restaurant, Ga.  $0          $0    $251,071     $0          $0    $251,071        N/A    N/A    07-22-94        N/A
Blockbuster Music Store, Mo.      $0  $1,145,410    $490,747     $0  $1,145,410    $490,747   $150,497    N/A    11-14-94   39 Years
OneCare Health Ind.,Inc.,Tx.      $0  $1,246,200    $534,086     $0  $1,246,200    $534,086   $135,843    N/A    09-26-95   39 Years
Blockbuster Music Store, Ks.      $0  $1,255,774    $538,189     $0  $1,255,774    $538,189   $138,189    N/A    09-12-95   39 Years
Just For Feet Store, Az.          $0          $0  $1,101,425     $0          $0  $1,101,425        N/A    N/A    09-11-96        N/A
Bank United, Woodlands, Tx.       $0          $0    $531,693     $0          $0    $531,693        N/A    N/A    09-23-96        N/A
Bank United, Houston, Tx.         $0          $0    $851,973     $0          $0    $851,973        N/A    N/A    12-11-96        N/A
JustForFeet Store, La.            $0  $2,036,150    $872,635     $0  $2,036,150    $872,635   $133,569    N/A    06-09-97   39 Years
Hollywood Video Store, La.        $0    $729,286    $418,156     $0    $729,286    $418,156    $40,517    N/A    10-31-97   39 Years
Hollywood Video Store, Ms.        $0    $835,854    $450,000     $0    $835,854    $450,000    $42,864    N/A    12-30-97   39 Years
OfficeMax, Tx.                    $0  $1,914,572    $491,094     $0  $1,914,572    $491,094    $91,316    N/A    02-20-98   39 Years
OfficeMax, De.                    $0  $1,978,313    $870,480     $0  $1,978,313    $870,480    $80,316    N/A    04-14-98   39 Years
JustForFeet Store, Woodlands,Tx.  $0  $2,385,103  $1,366,452     $0  $2,385,103  $1,366,452    $96,831    N/A    06-03-98   39 Years
JustForFeet Store, Sugar Land,Tx. $0  $2,648,954  $1,280,043     $0  $2,648,954  $1,280,043   $101,883    N/A    07-01-98   39 Years
Don Pablo's, Ga.                  $0          $0    $773,800     $0          $0    $773,800        N/A    N/A    12-18-98        N/A
IHOP, Reno, Nv.                   $0          $0    $546,166     $0          $0    $546,166        N/A    N/A    09-30-99        N/A
IHOP, Topeka, Ks.                 $0          $0    $450,984     $0          $0    $450,984        N/A    N/A    09-30-99        N/A
IHOP, Sugar Land, Tx.             $0          $0    $740,882     $0          $0    $740,882        N/A    N/A    09-22-99        N/A
                                  --    --------    --------     --    --------    --------     ------

      Total                       $0 $16,963,946 $12,897,732     $0 $16,963,946 $12,897,732 $1,123,790
                                  == =========== ===========     == =========== =========== ==========


PROPERTY INVESTED IN UNDER
DIRECT FINANCING LEASE

Church's Chicken Restaurant, Ga.  $0    $585,798          $0     $0    $585,798          $0       (1)     N/A    07-22-94        N/A
JustForFeet Store, Az.            $0  $2,594,532          $0     $0  $2,594,532          $0       (1)     N/A    09-11-96        N/A
IHOP, Reno, Nv.                   $0    $834,685          $0     $0    $834,685          $0       (1)     N/A    09-30-99        N/A
IHOP, Topeka, Ks.                 $0    $967,185          $0     $0    $967,185          $0       (1)     N/A    09-30-99        N/A
IHOP, Sugar Land, Tx.             $0    $972,950          $0     $0    $972,950          $0       (1)     N/A    09-22-99        N/A
                                  --  ----------          --     --  ----------          --

      Total                       $0  $5,955,150          $0     $0  $5,955,150          $0       (1)
                                  ==  ==========          ==     ==  ==========          ==

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

(2)  Transactions in real estate and accumulated depreciation during 1999, 1998
     and 1997 for operating lease properties are summarized as follows:
                                               Accumulated
                                     Cost      Depreciation
                                     ----      ------------
Balance at December 31, 1996      $9,070,654      $195,256
Acquisitions                      $5,346,024            $0
Depreciation expense                      $0      $146,016
                                 -----------    ----------
Balance at December 31, 1997     $14,416,678      $341,272
Acquisitions                     $15,078,709            $0
Depreciation expense                      $0      $349,888
                                 -----------    ----------
Balance at December 31, 1998     $29,495,387      $691,160
Acquisitions                      $3,729,122            $0
Disposals                        ($3,362,831)     ($15,337)
Depreciation expense                      $0      $447,967
                                 -----------    ----------
Balance at December 31, 1999     $29,861,678    $1,123,790
                                 ===========    ==========

(3)  The aggregate cost of all properties for Federal Income Tax purposes is
     $35,816,828 at December 31, 1999.

</TABLE>


                                      F-17


                                                                      EXHIBIT 11

                         AMREIT, INC. AND SUBSIDIARIES
                COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE




                                                 For the Year Ended December 31,
                                                     1999               1998
                                                     ----               ----
BASIC EARNINGS (LOSS) PER SHARE:

WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING                      $2,372,744         $2,226,403
                                                  ===========       ============

NET INCOME (LOSS)                                   ($37,862)       ($1,805,786)
                                                  ===========       ============


BASIC EARNINGS (LOSS) PER SHARE                       ($0.02)            ($0.81)
                                                  ===========       ============


DILUTED EARNINGS (LOSS) PER SHARE:

WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING                      $2,372,744         $2,226,403

SHARES ISSUABLE FROM ASSUMED
   CONVERSION OF STOCK WARRANTS                            -                  -
                                                  -----------       ------------

TOTAL WEIGHTED AVERAGE NUMBER OF COMMON
   SHARES OUTSTANDING, AS ADJUSTED                $2,372,744         $2,226,403
                                                  ===========       ============


NET INCOME (LOSS)                                   ($37,862)       ($1,805,786)
                                                  ===========       ============

DILUTED EARNINGS (LOSS) PER SHARE                     ($0.02)            ($0.81)
                                                  ===========       ============

<PAGE>


                                                                     Exhibit 21

                                  AMREIT, INC.
                           SUBSIDIARIES OF THE COMPANY


Set forth below is certain  information  with  respect to each of the  Company's
subsidiaries:


                                                                 STATE OF
SUBSIDIARY                                                       DOMICILE

AmREIT Realty Investment Corporation                               Texas
AmREIT Operating Corporation                                       Texas
AmREIT Opportunity Corporation                                     Texas
AmREIT Securities Corporation                                      Texas
AmREIT SPE 1                                                       Texas


<PAGE>