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HOUSTON-AmREIT’s first-quarter figures are bucking the trend of many retail owners. As a result, the REIT’s senior executives are confident they can reach at least $2 billion in acquisitions and development within two to three years.

“2008 will continue to be an interesting year as capital markets continue to clamp down,” H. Kerr Taylor, AmREIT’s chairman, CEO and president, told shareholders and analysts during yesterday’s earnings call. He added “this year will be a launching pad for us” although many competitors are boxed in with current capital market conditions.

Taylor says one reason for the optimism is sellers are starting to loosen up on putting their assets on the market. “At this time last year, we couldn’t see much quality. People were selling B and C projects, but not letting go of A,” Taylor said. “They’re starting to let go.”

The company’s team is in negotiation for several class A projects, Taylor continued, adding AmREIT is seeing little competition in the field. “There is not a robust pipeline,” he acknowledged. “But I think we’ll be successful with at least one or two of the transactions. As we continue, we’ll see more and more coming into the pipeline.”

What is likely to continue slowing up, however, is ground-up development. Not much, if any, spec product will come on line either. “I think it’s healthy,” Taylor commented. “I’d said last year we were in the red zone and we’d need to see a pull back somehow.”

AmREIT executives also were confident about their leasing activities. Total lease expirations for 2008 represent 1.88% of the portfolio. “It gets a little stronger in 2009 at a 7.5% roll, but we’re also taking some proactive steps to get those renewals done early,” said Chad C. Braun, vice president and CFO of AmREIT.

One thing saving AmREIT on the leasing side is the weighted local and regional tenant mix. Braun said AmREIT’s assets have limited exposure in the retail areas that are being hit economically, which include popularly priced apparel, home improvement and full-service casual dining.

There are a couple of properties in which AmREIT is losing tenants mid-term. “But in both cases, we have better replacements for those tenants stepping in immediately,” Braun said. Although specifics could not be mentioned because deals are still under negotiation, one tenant, a national Italian restaurant chain, is closing its doors, but will be replaced by a national steakhouse. In another situation, a local restaurant that is going out of business will be replaced buy a successful regional French restaurant concept.

“I hate to lose a tenant,” Braun commented. “But if I’m going to lose one, that’s the best way to go.”

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