AQQ American Spectrum Realty, Inc.

American Spectrum Realty, Inc. (NYSE MKT: AQQ) (“the Company”), a real estate investment, management and leasing company headquartered in Houston, Texas, announced today its results for the year ended December 31, 2013.

On Friday, October 31, 2014 the Company filed its 2013 Annual Report on Form 10-K with the Securities and Exchange Commission and reported a net loss of $13.8 million for the fiscal year ending December 31, 2013. During the same period in 2012, the Company reported net income of $1.4 million. The Company’s net loss attributable to its common shares for the year ended December 31, 2013, was $3.88 per share and consisted of a net loss of $3.68 per share from continuing operations, and a net loss of $0.20 per share from discontinued operations. During the same period in 2012, the Company had net income attributable to its common shares of $0.33 per share, including a net loss of $1.60 per share from continuing operations which was more than offset by net income of $1.93 per share from discontinued operations.

The change in net income for the year ended December 31, 2013, as compared to the same period in 2012, largely resulted from:

• Revenues – The $0.4 million increase from 2012 to 2013 is mainly the result of an increase in the average occupancy rates, average rent rates and the number of active third party management contracts.
• Expenses – For 2013, expenses increased $7.4 million as a result of increases in property operating expenses, attorney fees and settlement costs.
• Other income – The $5.7 million increase is primarily due to a one-time settlement in the Evergreen matter during 2013.
• Income Taxes - An adjustment to the Company’s deferred future tax benefits resulted in an increase in the current year provision for income taxes in the amount of $5.0 million.
• Discontinued Operations – Gains recognized in 2012 from multiple asset sales were not repeated in 2013 which contributed to a $7.1 million decline in discontinued operations.
• Losses attributable to noncontrolling interests – The gain attributable to the sale of a property held in a partnership with another investor contributed to a $1.8 million decline in the net losses attributable to noncontrolling interests in 2013.

Condensed Consolidated Statements of Operations (unaudited) are as follows:

  Year Ended December 31, 2013   2012 (in thousands) Revenues $ 42,673   $ 42,235 Expenses 61,827 54,464 Other income 6,399 682 Income tax (expense) benefit   (1,774 )   3,268   Loss from continuing operations (14,529 ) (8,279 ) Income (loss) from discontinued operations   (654 )   6,494   Net loss, including noncontrolling interests (15,183 ) (1,785 ) Net loss attributable to noncontrolling interests   1,414     3,199   Net income (loss) attributable to American Spectrum Realty, Inc. $ (13,769 ) $ 1,414     Basic and diluted per share data: Loss from continuing operations attributable to American Spectrum Realty, Inc. common stockholders ($3.68 ) ($1.60 ) Income (loss) from discontinued operations attributable to American Spectrum Realty, Inc. common stockholders   (0.20 )   1.93   Net income (loss) attributable to American Spectrum Realty, Inc. common stockholders   ($3.88 ) $ 0.33     Basic and diluted weighted average shares used 3,610,243 3,569,032  

As of December 31, 2013, the Company had an equity deficit of $11.5 million and cash and cash equivalents of $2.6 million. Debt obligations that mature and come due in 2014 totaled $53.7 million. In addition, the Company had $22.2 million in vendor obligations and other accrued liabilities. These liquidity concerns create uncertainty about the Company's ability to meet its ongoing obligations in the normal course of business without the sale of real estate assets. To generate additional liquidity for maturing obligations, management has increased the pace of asset sales in 2014, and expects to continue the process into 2015. The current plan is to dispose of properties that will generate aggregate net sales revenue of approximately $57 million, reduce consolidated secured obligations by approximately $34 million, and provide liquidity to the company of approximately $10 million.

American Spectrum Realty, Inc. is a real estate investment company that owns, through an operating partnership, interest in office, industrial self-storage, retail and multi-family properties throughout the United States. The Company has been publicly traded since 2001. American Spectrum Management Group, Inc., a wholly-owned subsidiary of the Company, manages and leases all properties owned by American Spectrum Realty, Inc. as well as for third-party clients.

American Spectrum Management Group, Inc. provides first-class management and leasing services for office, industrial, retail, self-storage, student housing and multi-family properties totaling over 10 million square feet in multiple states. For more information, visit www.asrmanagement.com or call 713-706-6200.

Certain matters discussed in this release are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including the risks and uncertainties of acquiring, owning, operating and disposing of real estate. Such risks and uncertainties are disclosed in the Company’s past and current filings with the U.S. Securities and Exchange Commission.

 

AMERICAN SPECTRUM REALTY, INC.

Consolidated Balance Sheets

  December 31, 2013   2012 ASSETS (in thousands)   Real estate held for investment (includes $253,928 and $327,676 from consolidated Variable Interest Entities ("VIE's"), respectively) $ 416,982 $ 438,675 Accumulated depreciation (includes $39,828 and $37,127 from consolidated VIE's, respectively)   (70,208 )   (71,775 ) Real estate held for investment, net (includes $214,100 and $290,549 from consolidated VIE's, respectively)   346,774     366,900   Cash and cash equivalents (includes $2,475 and $3,724 from consolidated VIE's, respectively) 2,587 4,216 Restricted cash 2,805

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Tenant and other receivables (includes $970 and $784 from consolidated VIE's, respectively), net of allowance for doubtful accounts of $417 and $673 (includes $236 and $473 from consolidated VIE's, respectively) 1,687 1,281 Assets held for sale, net of accumulated depreciation of $1,485 2,870

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Deferred rents receivable (includes $2,811 and $2,204 from consolidated VIE's, respectively)

3,546 3,269 Purchased intangibles subject to amortization, net of accumulated amortization of $5,417 and $3,114, respectively 2,920 5,946 Deferred tax assets 9,340 11,308 Goodwill 12,756 6,687 Investment in unconsolidated real estate assets from related parties 389 332 Receivables from Evergreen

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1,686 Prepaid and other assets, net (includes $7,668 and $8,600 from consolidated VIE's, respectively) 12,981 15,753     Total Assets $ 398,655   $ 417,378     LIABILITIES AND STOCKHOLDERS' EQUITY   Liabilities:   Notes payable (includes $168,433 and $221,899 from consolidated VIE's, respectively) $ 259,600 $ 312,662 Notes payable on assets held for sale 3,794

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Accounts payable (includes $284 and $398 from consolidated VIE's, respectively) 8,868 7,458 Accrued and other liabilities (includes $5,773 and $6,759 from consolidated VIE's, respectively) 13,357 15,241 Long-term liabilities - Series B Preferred and Series C Preferred   69,022    

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  Total liabilities   354,641     335,361     Commitments and Contingencies   Stockholders' Equity:   American Spectrum Realty, Inc, stockholders' equity (deficit): Preferred Stock, par value $.01 per share, 25,000,000 shares authorized:   Series A Preferred, 15% cumulative, par value $.01 per share, 68,965 authorized shares, 18,390 and 55,170 shares issued and outstanding at December 31, 2013 and December 31, 2012, respectively

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1 Series B Preferred, 8% cumulative, par value $.01 per share, 17,000,000 authorized shares, 16,870,609 shares issued and outstanding at December 31, 2013

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Series C Preferred, 8% cumulative, par value $.01 per share, 55,170 authorized shares, 36,780 shares issued and outstanding at December 31, 2013

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  Common Stock, par value $.01 per share, 100,000,000 authorized shares, 4,174,492 and 4,039,191 shares issued at December 31, 2013 and December 31, 2012, respectively; 3,703,142 and 3,567,779 shares outstanding at December 31, 2013 and December 31, 2012, respectively 42 34 Additional paid-in capital 60,412 61,158 Accumulated deficit (68,865 ) (55,096 ) Treasury stock, at cost, 471,350 shares at December 31, 2013 and December 31, 2012   (3,095 )   (3,095 ) Total American Spectrum Realty, Inc. stockholders' equity (deficit) (11,506 ) 3,002   Noncontrolling interest   55,520     79,015     Total Equity   44,014     82,017   Total Liabilities and Equity $ 398,655   $ 417,378    

AMERICAN SPECTRUM REALTY, INC.

Consolidated Statements of Operations

  Year Ended December 31, 2013   2012 REVENUES: (in thousands) Rental revenue $ 39,226   $ 39,050 Third party management and leasing revenue 3,441 3,060 Interest income   6     125   Total revenues   42,673     42,235     EXPENSES: Property operating expense 13,944 10,505

Corporate general and administrative

15,192 10,204 Depreciation and amortization 15,909 16,265 Interest expense 14,938 16,508 Impairment expense   1,844     982   Total expenses   61,827     54,464     OTHER INCOME: Gain on extinguishment of debt 10,327 682 Loss on litigation settlement   (3,928 )  

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  Total other income   6,399     682     Loss from continuing operations before income taxes (12,755 ) (11,547 )   Income tax (expense) benefit (1,774 ) 3,268     Loss from continuing operations   (14,529 )   (8,279 )   Discontinued operations: Loss from discontinued operations (899 ) (4,505 ) Gain on disposition of discontinued operations 439 15,082 Income tax expense   (194 )   (4,083 ) Income (loss) from discontinued operations (654 ) 6,494     Net loss, including noncontrolling interests (15,183 ) (1,785 )   Net loss attributable to noncontrolling interests 1,414 3,199     Net income (loss) attributable to American Spectrum Realty, Inc.   (13,769 )   1,414     Less: Preferred stock dividend (240 ) (240 )     Net income (loss) attributable to American Spectrum Realty, Inc. common stockholders $ (14,009 ) $ 1,174     Basic and diluted per share data: Loss from continuing operations attributable to American Spectrum Realty, Inc. common stockholders ($3.68 ) ($1.60 ) Income (loss) from discontinued operations attributable to American Spectrum Realty, Inc. common stockholders   (0.20 )   1.93   Net income (loss) attributable to American Spectrum Realty, Inc. common stockholders   ($3.88 ) $ 0.33     Basic and diluted weighted average shares used 3,610,243 3,569,032   Amounts attributable to American Spectrum Realty, Inc. common stockholders: Loss from continuing operations $ (13,286 ) $ (5,715 ) Income (loss) from discontinued operations   (723 )   6,889   Net income (loss) $ (14,009 ) $ 1,174  

American Spectrum Realty, Inc.James Hurn, (713) 706-6200General Counseljhurn@americanspectrum.com