EX-99.1
2
e27179ex99-1.txt
PRESS RELEASE

                                                                    Exhibit 99.1

                                     [LOGO]
                               AMERICAN FINANCIAL
                                  REALTY TRUST

Muriel Lange                                            Anthony DeFazio
Investor Relations                                      Media Relations
(215) 887-2280 (X3023)                                  (215) 887-2280 (X2919)
Email: mlange@afrt.com                                  Email: adefazio@afrt.com

      American Financial Realty Trust Announces 2007 First Quarter Results

            "Solid Quarterly Results Reflect Progress on All Fronts"

JENKINTOWN,  Pa. May 3,  2007--American  Financial Realty Trust (NYSE:AFR) today
reported  financial  results for the quarter  ended March 31, 2007.  The Company
reported first quarter revenues from continuing  operations of $101.0 million, a
decrease of $5.2 million from the fourth quarter of 2006, excluding interest and
other income.  The decrease in first quarter revenues is primarily  attributable
to a beneficial  and permanent  transfer of property  expenses to a major tenant
totaling $6.3 million.

First quarter funds from  operations  ("FFO")(1)  were $6.3 million or $0.05 per
share,  which is $0.62 better than the fourth quarter of 2006. This  improvement
over the past quarter  primarily  reflects the prior  quarter's  recognition  of
$99.4 million in debt defeasance and impairment charges related to the Company's
portfolio repositioning program.

First quarter  adjusted funds from operations  ("AFFO")(2) were $22.2 million or
$0.17 on a per share equivalent basis, which is $0.01 better than the previously
reported quarter.

The Company's  weighted average diluted common shares and operating  partnership
units  outstanding were 132.8 million,  reflecting a negligible  impact from the
repurchase of 0.8 million shares during the period.

----------
(1) FFO is  defined  as net  income  (loss)  before  minority  interest,  in our
operating partnership (computed in accordance with generally accepted accounting
principles),  excluding gains (or losses) from debt  restructuring and gains (or
losses) from sales of  property,  less any  impairments  of asset values at cost
(unrealized  loss),  plus real  estate  related  depreciation  and  amortization
(excluding   amortization   of  deferred   costs)  and  after   adjustments  for
unconsolidated partnerships and joint ventures.

(2) Commencing  with the third quarter 2006,  AFFO no longer includes GAAP gains
(the difference  between sale price and net book value (original  purchase price
less  accumulated  depreciation))  as a component  of AFR's core  earnings.  The
Company includes economic gains (the difference  between sale price and original
purchase  price)   realized  during  the  reporting   period  solely  to  offset
transaction  costs incurred on assets sold and impairments taken within the same
period.  Quarter over quarter and year over year AFFO  comparisons  for 2006 and
2005 using the Company's  revised AFFO reporting  methodology  were presented in
its October 9, 2006 press release, which is available on the Company's website.




AFR declared its first quarter dividend for shareholders of beneficial  interest
of $0.19 per share totaling  approximately $25.2 million.  The dividend was paid
on April 20, 2007, to  shareholders  and Operating  Partnership  unit holders on
March 31, 2007.

First Quarter 2007 Highlights

Occupancy(3):  As of March 31, 2007, the portfolio  included  within  continuing
operations  had occupancy of 90.6%,  while  Held-for-Sale  assets had an average
occupancy of 66.0%.  Stable occupancy was 87.0%;  total occupancy was 86.5%; and
Same Store occupancy was 91.2%.

Dispositions:  $99.1  million of net proceeds  were received from the sale of 50
properties,  all but  one of  which  were  non-core  assets.  In  addition,  two
leasehold obligations were terminated at a cost of $1.0 million. Combined, these
dispositions  and  terminations  resulted  in a  reduction  to AFR's real estate
portfolio by 941,000 square feet, including approximately 234,900 square feet of
vacancy.

Acquisitions: The Company acquired seven bank branch properties for $6.5 million
and  assumed  three  leasehold  interests  under  outstanding  Formulated  Price
Contracts.  The  properties  were  all  vacant  at the time of  acquisition  and
comprise approximately 58,600 square feet.

Leasing:  58 leases added  approximately  230,000  square feet of newly occupied
space during the quarter.

Strategic Positioning Update

Harold W. Pote, Chief Executive  Officer for AFR, said, "This quarter  continues
to  reflect  the  results  from our  repositioning  plan.  During  the period we
continued  to  make  progress  toward  the  repositioning  of  our  real  estate
portfolio. As a recap, our principal goals are to:

      Step  1.  Sell  between  $1.5-2.0  billion  in  assets  which  are  either
      off-strategy  or non-core to our  customer  relationships,  or represent a
      drag on shareholder value.

      "Since the inception of this plan, we have  completed  sales totaling $1.1
      billion,  of which $183.5 million of this total were non-core asset sales,
      comprising  a little more than half of our target of between  $300 to $400
      million of non-core assets. Additionally, in March we announced a contract
      to sell the Fireman's Fund  headquarters for  approximately  $310 million,
      the closing of which is pending the final rating agency  approval  process
      related to the assumption of debt.

      Step 2. Rationalize the Company's liability structure by reducing leverage
      (the ratio of our net debt to total book value  assets) to between  60-65%
      and  improve net cash flow by repaying  debt with high  interest  rates or
      debt service constants.

----------
(3) Stable  occupancy is the total  occupancy less any space acquired during the
quarter and all  activity  in the  quarter  associated  with those  assets,  and
recapture space. Total occupancy encompasses the entire portfolio,  exclusive of
joint  venture  assets,  at any  specific  point in time.  Same Store  occupancy
includes  properties  that  were  owned  at the  beginning  and  the  end of the
reporting  period,  excluding assets held for sale. See AFR 1Q 2007 Supplemental
for additional details.


                                     - 2 -


      "With the additional debt reduction in the first quarter, we have achieved
      a leverage ratio of 66.6%.

      Step 3. Reduce general and administrative costs by $6-8 million.

      "The annualized MG&A run rate as of March 31, 2007 was  approximately  $28
      million  inclusive of non-cash equity  compensation  costs.  This compares
      favorably to the MG&A run rate of $35.4  million in the second  quarter of
      2006, and represents the high end of our $6-8 million  targeted  reduction
      in MG&A. After our recent restructuring of executive long term stock based
      compensation, as well as the addition of new directors, we anticipate some
      increases in operating costs,  however, we will remain within our targeted
      range.

      Step 4.  Strive  to cover our $0.19  per  share  quarterly  dividend  from
      operating cash flow by the second half of 2007.

      "AFFO  coverage of the  dividend  continues  to improve,  ending the first
      quarter at 88.4%, up from 84.5% in the fourth quarter 2006.

      Step 5. Restore AFR's credibility in the markets by clearer enunciation of
      our strategy, enhanced financial reporting and consistent execution.

      "We will  continue  to  communicate  our  progress  and actions we plan to
      execute in order to improve future performance. To that end, I'm extremely
      pleased  to  announce  that John R.  Biggar  and  Richard  J.  Berry,  two
      distinguished  executives with years of experience,  have joined our board
      as independent  trustees and will provide solid financial,  managerial and
      operational  acumen  that will add value to our  company for many years to
      come."

      Building Shareholder Value

      Pote concluded "Our focus now is on building  shareholder  value under the
      following initiatives:

      o     Driving  profitability in the properties  retained in our investment
            portfolio   through  continued   lease-up  and  expense   management
            initiatives;

      o     Continuing  to  build  a  pipeline  of new  business  opportunities,
            including   our  calling   program   through  our  joint   marketing
            partnership with Sandler O'Neill & Partners, and

      o     Efficient use of our capital by:

            -     Developing joint venture  opportunities  to monetize  existing
                  assets and improve our capital base,

            -     Developing    joint   ventures   for   future    co-investment
                  opportunities  to better match the investment  cost of capital
                  to acquisition returns."


                                     - 3 -


First Quarter Results

All financial  comparisons  to prior  periods are based on  previously  reported
amounts,  which  are  not  adjusted  for  changes  resulting  from  discontinued
operations.

The Company  reported  AFFO(4) of $22.2  million in the first quarter of 2007 or
$0.17 on a per share equivalent basis inclusive of Operating Partnership units.

The Company's  first quarter  revenues from  continuing  operations  were $101.0
million,  a decrease of $5.2 million from the fourth quarter of 2006,  excluding
interest  and  other  income.   The  decrease  in  first  quarter   revenues  is
attributable,   in  part,   to  an  overall   decrease  in   operating   expense
reimbursements,  totaling $6.3 million. These variances are primarily related to
a change in operating  lease  language in 23 properties  where the tenant is now
directly  responsible  for the  payment of  operating  expenses,  instead of AFR
collecting these expenses on a reimbursement basis from the tenant.

MG&A expenses,  inclusive of deferred equity compensation costs,  decreased $0.5
million compared with the fourth quarter of 2006.

Assets sold during the quarter  resulted in a GAAP gain of $7.5 million,  before
minority  interest.  Impairment charges of $4.2 million were recognized for both
properties  sold during the period and those that were placed under  contract to
close in  subsequent  quarters.  Additionally,  yield  maintenance  fees of $1.9
million were incurred in connection with defeasing related debt.

Economic gains related to assets sold during the quarter totaled $5.0 million or
$1.1 million less than the corresponding costs associated with such dispositions
(impairment  costs and yield  maintenance  fees).  This $1.1  million  shortfall
reduces AFFO on a per share equivalent basis by $0.01.

EBITDA  remained  relatively  flat,  increasing  by $0.3 million over the fourth
quarter of 2006 to $43.8 million.

Interest expense related to continuing operations, excluding the amortization of
deferred financing costs, totaled $30.9 million, a decrease of $3.6 million from
the $34.5  million  reported  in the fourth  quarter of 2006.  The  decrease  in
interest  expense  primarily  reflects the partial  repayment of the acquisition
credit facility and the pre-payment of 23 individual mortgage loans.

----------
(4) The Company  calculates AFFO by subtracting from or adding to FFO as defined
by NAREIT (i)  non-real  estate  related  depreciation  and  amortization,  (ii)
non-reimbursable  recurring  capital  expenditures  associated  with the ongoing
operation  of real  property  after the second year of  operation,  (iii) tenant
improvement allowances and leasing commissions associated with the re-leasing of
previously occupied non-bank tenanted spaces,  which was paid during the period,
(iv)  the  effects  of   straight-lining  of  rents  and  fee  income,  and  (v)
amortization of various deferred costs, (vi) deferred financing costs, (vii) non
cash stock compensation,  and (viii) economic gains to the extent they are equal
to or less than current  period  transaction  costs and  impairments  related to
non-core asset sales. The SEC classifies AFFO as a non-GAAP measure.


                                     - 4 -


First Quarter 2007 Portfolio and Tenant Overview

Disposition activity:

During  the  quarter,  36  properties  and 14 land  parcels  were  sold  and two
leaseholds  were  terminated  comprising  approximately  941,000 square feet, of
which approximately 234,900 square feet were vacant, resulting in gross proceeds
of $102.1  million,  excluding  $1.0  million  in  leasehold  termination  fees.
Included in the first quarter sales were:

      o     HSBC operations center, 158,000 square feet, sold for $27.5 million.
            This asset was acquired  from  another  landlord and was unlikely to
            result in repeat business with the bank.

      o     Bank of America Financial Center-Spokane,  328,000 square feet, sold
            for $36.0  million.  This asset had relatively low occupancy by Bank
            of America and did not meet AFR criteria to be Held-for-Investment.

Acquisition activity:

The Company  purchased  seven vacant bank branch  properties  and assumed  three
leasehold  interests through Formulated Price Contracts with Bank of America and
Wachovia for approximately  $6.5 million.  Combined,  the acquisitions  comprise
approximately 58,600 rentable square feet.

Leasing activity:

New and expanded  leasing  activity for the first  quarter  added  approximately
230,000  square  feet of  occupied  space with  average  rent per square foot of
$13.77.(5) Associated tenant improvement costs, calculated on a weighted average
lease term of 5.9 years, were $1.17 per square foot per year. Net absorption for
the quarter was  negative  (83,500)  square feet which  included the exercise of
early  termination  rights comprising  approximately  203,000 square feet in the
Bank of  America  II  portfolio.  However,  new leases  were  executed  for this
terminated  space. When these leases are taken into account,  occupancy,  net of
assets   Held-for-Sale  in  the  portfolio,   remained  at   approximately   91%
quarter-over-quarter.

As of March 31,  2007,  the total  potential  recapture  space  remaining in two
portfolios was  approximately  161,000 square feet, half of which is expected to
be returned in the second quarter.

The  following  table  provides  statistics on the AFR portfolio as of March 31,
2007, with comparisons to the portfolio as of December 31, 2006.

----------
(5) See AFR 1Q 2007 Supplemental page 29 for additional details.


                                     - 5 -


-------------------------------------------------------------------------------------------------------------- As of As of As of As of March 31, March 31, December 31, December 31, 2007 2007, 2006 2006, Net of Net of Held-for-Sale Held-for-Sale -------------------------------------------------------------------------------------------------------------- Number of Properties 1,106 901 1,148 911 -------------------------------------------------------------------------------------------------------------- -- Branches 684 570 700 566 -------------------------------------------------------------------------------------------------------------- -- Branches owned in joint venture 239 239 239 239 -------------------------------------------------------------------------------------------------------------- -- Office Buildings 412 321 424 321 -------------------------------------------------------------------------------------------------------------- -- Land 10 10 24 24 -------------------------------------------------------------------------------------------------------------- Total Square Feet 32,366,761 27,011,091 33,249,218 26,985,774 -------------------------------------------------------------------------------------------------------------- -- Branches 4,761,813 3,675,304 4,806,357 3,649,605 -------------------------------------------------------------------------------------------------------------- -- Branches owned in joint venture 982,634 982,634 982,634 982,634 -------------------------------------------------------------------------------------------------------------- -- Office Buildings 27,604,948 23,335,787 28,442,861 23,336,169 -------------------------------------------------------------------------------------------------------------- Occupancy -------------------------------------------------------------------------------------------------------------- --Total Occupancy 86.5% 90.6% 86.9% 91.5% -------------------------------------------------------------------------------------------------------------- --Stable Occupancy 87.0% 90.9% 87.5% 92.2% -------------------------------------------------------------------------------------------------------------- --Same Store Occupancy (805 properties) 91.2% 91.2% 92.1% N/A -------------------------------------------------------------------------------------------------------------- % Rent from Financial Institutions 81.0% 81.1% 81.2% 81.9% -------------------------------------------------------------------------------------------------------------- % Rent from "A-" Rated Tenants 76.3% 75.8% 76.5% 76.6% -------------------------------------------------------------------------------------------------------------- % Rent from Net Leases 77.8% 77.9% 77.8% 78.7% -------------------------------------------------------------------------------------------------------------- Lease Expirations (within 1 year) 1.8% 1.7% 1.5% 1.2% -------------------------------------------------------------------------------------------------------------- Average Remaining Lease Term (years) 11.5 11.6 11.6 11.8 -------------------------------------------------------------------------------------------------------------- Average Remaining Debt Term (years) 9.3 N/A 9.5 N/A -------------------------------------------------------------------------------------------------------------- % Fixed Rate Debt to Total Debt 90.7% N/A 90.4% N/A --------------------------------------------------------------------------------------------------------------
Chief Financial Officer Dave Nettina commented, "This quarter's results reflect the positive effects from our repositioning plan and the changing character of our investment portfolio. Core operating results, meaning AFFO derived from our ongoing real estate portfolio, were in line with our expectations, while four key items, which will benefit future periods, had generally neutral effects on AFFO this quarter. During the quarter, we negotiated the early termination of two leasehold obligations costing about $1 million, saving between $150,000 and $200,000 every year through 2014. We were able to absorb this cost through higher than expected investment income and lower interest costs associated with our cash management program. Additionally, we recognized about $1.1 million in additional net impairments offset by savings in our second cycle capital costs. "In addition to continuing to pay down debt, we also began execution of our share repurchase program. In mid-March, we announced the implementation of a 10b5-1 program, to repurchase up to 2.5 million common shares. During the first quarter, we completed purchases of - 6 - approximately 0.8 million shares and at this time have nearly fully executed this initial level of share repurchases," concluded Mr. Nettina. Balance Sheet As of March 31, 2007, the Company's total net debt (net of cash and certain escrow balances) to enterprise value (net debt and equity market capitalization) was 62.8%, and the ratio of net debt to total assets at net book value was 66.6%. The Company has stated that it is targeting a general reduction of its overall leverage to a range of 60-65% of debt to total assets at net book value. The ratio of net secured debt to total real estate investments and real estate intangibles (at cost and before joint venture investments) was 51.3%, an improvement of 80 basis points over the prior quarter. Total mortgage debt principal repayments and defeasance related to asset dispositions, in addition to monthly principal amortization, totaled $56.3 million during the quarter, including $17.2 million relating to debt and defeasance costs on the sale of the HSBC operations center. During the first quarter, other property related debt of $31.0 million was repaid. This included 23 small mortgage loans with relative high constants of $14.6 million and the repayment of a short-term acquisition note of $16.4 million. As of March 31, 2007, the Company had total indebtedness of approximately $2.4 billion, with a weighted average remaining term of 9.4 years and a weighted average interest rate (including amortized hedging costs) of 5.68%, which is comparable to the previous quarter's average of 5.66%. Debt decreased nominally by approximately $43.0 million, compared to December 31, 2006. Subsequent Events: Second quarter asset sales: On March 9, 2007, the Company announced that it had entered into a definitive contract for the sale of the Fireman's Fund headquarters, a three-building, Class "A" office campus in Novato, California, at a sale price in excess of $310 million, before settlement costs. The Company expects the transaction to close in the second quarter. Conference Call Management will conduct a conference call and audio webcast at 10:30 a.m. ET on May 3, 2007 to review the Company's quarterly results. The conference call dial-in number is 303-205-0066. The audio webcast will be available to the public, on a listen-only basis, via the Investor Relations section of the Company's website at www.afrt.com. Please allow extra time, prior to the call, to visit the site and download the necessary software to listen to the Internet broadcast. - 7 - Supplemental Quarterly Financial and Operating Data American Financial publishes supplemental quarterly financial and operating data, which can be found under the Investor Relations section of the Company's website at www.afrt.com. These materials are also available via e-mail by calling 312-640-6770. Non-GAAP Financial Measures The Company believes that FFO and AFFO are helpful to investors as measures of the Company's performance as an equity REIT because they provide investors with an understanding of the Company's operating performance and profitability. FFO and AFFO are non-GAAP financial measures commonly used in the REIT industry, and therefore these measures may be useful in comparing the Company's performance with that of other REITs. However, the Company's definitions of FFO and AFFO may differ from those used by other companies, and investors should take definitional differences into account when comparing FFO and AFFO reported by other REITs. Additionally, FFO and AFFO (and their per share equivalents) should be evaluated along with GAAP net income and net income per share (the most directly comparable GAAP measures) in evaluating the performance of equity REITs. The Company believes that EBITDA, which represents earnings before interest, taxes, depreciation and amortization, is also helpful to investors as a measure of the Company's performance. About American Financial Realty Trust American Financial Realty Trust is a self-administered, self-managed real estate investment trust that acquires properties from, and leases properties to, regulated financial institutions. The Company through its operating partnership and various affiliates owns and manages its assets primarily under long-term triple net and bond net leases with banks. The Company is traded on the New York Stock Exchange under the ticker symbol AFR. For more information on American Financial Realty Trust, visit the Company's website at www.afrt.com. Forward-Looking Statements Certain statements in this press release constitute forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of the words "expects," "anticipates," "estimates," "intends," "believes" and similar expressions that do not relate to historical information. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks and uncertainties which are, in some cases, beyond the Company's control and could materially affect actual results, performance or achievements. These risks and uncertainties include the risks detailed from time to time in the Company's filings with the Securities and Exchange Commission, and include, without limitation, changes in general economic conditions and the extent of any tenant bankruptcies and insolvencies; the Company's ability to maintain and increase occupancy; the Company's ability to timely lease or re-lease space at anticipated net effective rents; the cost and availability of debt and equity financing; and the Company's ability to acquire and dispose of - 8 - certain of its assets from time to time on acceptable terms. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. Financial Statements The attached financial statements and data are presented to supplement the Company's audited and unaudited regulatory filings and should be read in conjunction with those filings. The unaudited financial data presented herein is provided from the perspective of timeliness to assist readers of quarterly and annual financial filings. This financial data was prepared prior to the Company's auditors completing their audit. As such, data otherwise contained in future regulatory filings covering this same time period may differ from the data presented herein. The Company does not accept responsibility for highlighting these changes in its subsequent filings. - 9 - AMERICAN FINANCIAL REALTY TRUST CONSOLIDATED BALANCE SHEETS March 31, 2007 and December 31, 2006 (Unaudited in thousands, except share and per share data)
March 31, December 31, 2007 2006 ----------- ------------ Assets: Real estate investments, at cost: Land $ 334,066 $ 333,716 Land held for development 6,901 14,632 Buildings and improvements 1,959,564 1,947,977 Equipment and fixtures 284,301 283,704 Leasehold interests 16,395 16,039 Investment in joint venture 18,355 21,903 ----------- ----------- Total real estate investments, at cost 2,619,582 2,617,971 Less accumulated depreciation (322,590) (297,371) ----------- ----------- Total real estate investments, net 2,296,992 2,320,600 Cash and cash equivalents 97,491 106,006 Restricted cash 69,156 76,448 Marketable investments and accrued interest 3,640 3,457 Pledged government securities, net 69,245 32,391 Tenant and other receivables, net 67,433 62,946 Prepaid expenses and other assets 42,209 32,191 Assets held for sale 511,547 594,781 Intangible assets, net of accumulated amortization of $76,579 and $70,044 308,218 314,753 Deferred costs, net of accumulated amortization of $22,668 and $20,070 62,530 62,591 ----------- ----------- Total assets $ 3,528,461 $ 3,606,164 =========== =========== Liabilities and Shareholders' Equity: Mortgage notes payable $ 1,538,398 $ 1,557,313 Credit facilities 223,398 212,609 Convertible notes, net 446,395 446,343 Accounts payable 1,592 7,246 Accrued interest expense 11,546 15,601 Accrued expenses and other liabilities 55,495 58,940 Dividends and distributions payable 25,159 25,328 Below-market lease liabilities, net of accumulated amortization of $11,707 and $10,874 56,341 57,173 Deferred revenue 217,055 179,456 Liabilities related to assets held for sale 206,291 247,798 ----------- ----------- Total liabilities 2,781,670 2,807,807 ----------- ----------- Minority interest 9,878 12,393 Shareholders' equity: Preferred shares, 100,000,000 shares authorized at $0.001 per share, no shares issued and outstanding at March 31, 2007 and December 31, 2006 -- -- Common shares, 500,000,000 shares authorized at $0.001 per share, 131,755,738 issued and 130,934,338 outstanding at March 31, 2007; 130,966,141 issued and outstanding at December 31, 2006 132 131 Capital contributed in excess of par 1,392,089 1,389,827 Accumulated deficit (642,387) (599,596) Common shares held in treasury, 821,400 shares at March 31, 2007 (8,724) -- Accumulated other comprehensive loss (4,197) (4,398) ----------- ----------- Total shareholders' equity 736,913 785,964 ----------- ----------- Total liabilities and shareholders' equity $ 3,528,461 $ 3,606,164 =========== ===========
- 10 - AMERICAN FINANCIAL REALTY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended March 31, 2007, March 31, 2006, and December 31, 2006 (Unaudited and in thousands, except per share data)
Three Months Ended ------------------------------------------- March 31, March 31, December 31, 2007 2006 2006 --------- --------- ------------ (Previously Revenues: reported) Rental income $ 66,387 $ 61,488 $ 65,313 Operating expense reimbursements 34,587 40,357 40,871 Interest and other income, net 976 1,012 3,014 --------- --------- --------- Total revenues 101,950 102,857 109,198 --------- --------- --------- Property operating expenses: Ground rents and leasehold obligations 3,206 3,580 3,351 Real estate taxes 10,753 10,161 9,626 Utilities 11,133 13,793 12,893 Property and leasehold impairments 1,176 872 1,871 Direct billable expenses 1,465 1,197 2,463 Other property operating expenses 23,983 24,085 28,213 --------- --------- --------- Total property operating expenses 51,716 53,688 58,417 --------- --------- --------- Property net operating income 50,234 49,169 50,781 --------- --------- --------- Expenses: Marketing, general and administrative 5,013 6,361 5,575 Repositioning -- -- 418 Severance and related accruals -- -- 13 Amortization of deferred equity compensation 1,386 2,556 1,285 --------- --------- --------- EBITDA 43,835 40,252 43,490 --------- --------- --------- Interest expense on mortgages and other debt 32,889 34,291 37,993 Depreciation and amortization 32,424 31,773 31,742 Loss before net loss on investments, equity in net loss from unconsolidated joint venture, gain on sale of properties in continuing operations, minority interest and discontinued operations (21,478) (25,812) (26,245) Equity in net loss from unconsolidated joint venture (759) -- (697) Net gain on disposal of properties in continuing operations 76 457 13 --------- --------- --------- Loss from continuing operations before minority interest (22,161) (25,355) (26,929) Minority interest 233 523 223 --------- --------- --------- Loss from continuing operations (21,928) (24,832) (26,706) --------- --------- --------- Discontinued operations: Loss from operations, net of minority interest of $63, $633, and $147 for the three months ended March 31, 2007, March 31, 2006, and December 31, 2006, respectively (1,430) (4,644) (51,121) Yield maintenance fees, net of minority interest of $28, $58, and $15,319 for the three months ended March 31, 2007, March 31, 2006 and December 31, 2006, respectively (1,827) (2,139) (32,718) Net gains on disposals, net of minority interest of $112, $233 and $72,587 for the three months ended March 31, 2007, March 31, 2006 and December 31, 2006, respectively 7,272 8,207 156,081 --------- --------- --------- Income from discontinued operations 4,015 1,424 72,242 --------- --------- --------- Net income (loss) $ (17,913) $ (23,408) $ 45,536 ========= ========= ========= Basic and diluted income (loss) per share: From continuing operations $ (0.17) $ (0.20) $ (0.21) From discontinued operations 0.03 0.01 0.56 --------- --------- --------- Total basic and diluted loss per share $ (0.14) $ (0.19) $ 0.35 ========= ========= =========
- 11 - Set forth below is a reconciliation of our calculations of FFO and AFFO to net loss (unaudited, in thousands except per share data):
Three Months Ended ----------------------------------------- March 31, March 31, December 31, 2007 2006 2006 --------- --------- ------------ Funds from operations per NAREIT: Net (loss) income $(17,913) $(23,408) $ 45,536 Add: Minority interest - Operating Partnership (277) (622) 782 Depreciation and amortization 33,158 43,522 38,270 Less: Non-real estate depreciation and amortization (1,121) (784) (1,103) Amortization of fair market rental adjustment, net (56) (41) (42) Net gains from disposals, net of income taxes (7,460) (8,888) (158,890) -------- -------- --------- Funds from operations $ 6,331 $ 9,779 $ (75,447) ======== ======== ========= Funds from operations - diluted per share $ 0.048 $ 0.074 $ (0.570) ======== ======== ========= ------------------------------------------------------------------------------------------------------- Adjusted funds from operations: Funds from operations $ 6,331 $ 9,779 $ (75,447) Add: Economic gains 4,999 2,402 84,660 Non-real estate depreciation and amortization 1,121 784 1,103 Reverse straightline rental income 10,654 9,769 11,060 Amortization of deferred compensation 1,386 2,556 1,285 Amortization of deferred costs 2,685 2,565 4,847 Straightline fee income (217) 469 (217) Less: Straightline rental income (2,415) (2,320) (3,340) Recurring capex and tenant improvements (2,049) (1,038) (1,762) Capital expenditure reimbursement revenue (260) (117) (776) -------- -------- --------- Adjusted funds from operations $ 22,235 $ 24,849 $ 21,413 ======== ======== ========= ------------------------------------------------------------------------------------------------------- AFFO coverage ratio: Quarterly dividend $ 25,159 $ 35,882 $ 25,328 AFFO / quarterly dividend 0.88x 0.69x 0.85x
- 12 -

The following information was filed by American Financial Realty Trust on Thursday, May 3, 2007 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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