AQQ American Spectrum Realty, Inc.

American Spectrum Realty, Inc. (AMEX:AQQ) (“the Company”), a real investment, management and leasing company headquartered in Houston, Texas, announced today that it has filed its Annual Report on Form 10-K with the Securities and Exchange Commission.

In connection with the preparation of the Annual Report and its 2010 financial statements, the Company concluded that it was appropriate to revise its accounting treatment of its purchase of assets from Evergreen Realty Group and to account for certain acquired interests as variable interest entities (VIE’s) and to consolidate those VIE’s in its financial statements. The Company’s 2010 financial statements treat the Evergreen acquisition as a business combination rather than an asset acquisition and consolidate certain VIE’s from various dates in 2010.

Also in this correction, the Company determined that it would be appropriate to restate its financial statements for the first three quarters of 2010 to reflect the business combination and the consolidation of the VIE’s. This attached schedule indicated the items in the quarterly financial statements which are being restated.

American Spectrum Realty, Inc. is a real estate investment company that owns, through an operating partnership, 30 office, industrial and retail properties aggregating approximately 2.8 million square feet in California, Texas, Arizona and the Midwest, and has been publicly traded since 2001. American Spectrum Realty Management, LLC, a wholly-owned subsidiary of the Company’s operating partnership, manages and leases all properties owned by American Spectrum Realty, Inc.

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.

- Financial Tables Follow -

The following tables summarize the impact of the restatement discussed above on the previously issued Consolidated Financial Statements as of, and for the periods ended March 31, June 30 and Sept 30, 2010 (dollars in thousands except per share data):

       

As Previously Reported

(unaudited)

 

Adjustment

(unaudited)

 

Restated

(unaudited)

Statement of Operations for the Three Months Ended Mar 31, 2010   Rental revenue $ 8,183 - $ 8,183 Third party management and transaction revenue   1,104     -       1,104   Total revenues   9,211     -       9,211   Property operating expense 3,625 - 3,625 Depreciation and amortization 3,570 191 3,761 Interest expense   3,400     -       3,400   Total expenses   12,217     191       12,408   Deferred income tax benefit 1,134 70 1,204 Net income attributable to non-controlling interests (466 ) 32 (434 ) Net income attributable to American Spectrum Realty, Inc. 509 (89 ) 420 Net income attributable to American Spectrum Realty, Inc. common stockholders

449

(89

)

360

Basic and diluted earnings per share attributable to American Spectrum Realty, Inc. common stockholders

$

0.18

(0.03

)

$

0.15

  Statement of Operations for the Three Months Ended Jun 30, 2010   Rental revenue $ 7,603 489 $ 8,092 Third party management and transaction revenue   1,221     (19 )     1,202   Total revenues   8,837     470       9,307   Property operating expense 3,913 (3 ) 3,910 Depreciation and amortization 3,579 496 4,075 Interest expense   3,524     214       3,738   Total expenses   13,532     707       14,239   Deferred income tax benefit 1,762 105 1,867 Net loss attributable to non-controlling interests 878 11 889 Net loss attributable to American Spectrum Realty, Inc. (2,055 ) (121 ) (2,176 ) Net loss attributable to American Spectrum Realty, Inc. common

Stockholders

(2,115

)

(121

)

(2,236

)

Basic and diluted earnings per share attributable to American Spectrum

Realty, Inc. common stockholders

$

(0.70

)

(0.04

)

$

(0.74

)

  Statement of Operations for the Six Months Ended Jun 30, 2010   Rental revenue $ 15,786 489 $ 16,275 Third party management and transaction revenue   2,235     71       2,306   Total revenues   18,048     470       18,518   Property operating expense 7,538 (3 ) 7,535 Depreciation and amortization 7,149 687 7,836 Interest expense   6,924     214       7,138   Total expenses   25,749     898       26,647   Deferred income tax benefit 2,896 175 3,071 Net loss attributable to non-controlling interests 412 43 455 Net loss attributable to American Spectrum Realty, Inc. (1,546 ) (210 ) (1,756 ) Net loss attributable to American Spectrum Realty, Inc. common

Stockholders

(1,666

)

(210

)

(1,876

)

Basic and diluted earnings per share attributable to American Spectrum

Realty, Inc. common stockholders

$

(.52

)

(.07

)

$

(.59

)

  Statement of Operations for the Three Months Ended Sep 30, 2010   Rental revenue $ 8,307 8,424 $ 16,731 Third party management and transaction revenue   973     (289 )     684   Total revenues   9,420     8,135       17,555   Property operating expense 4,703 2,136 6,839 Depreciation and amortization 3,608 4,146 7,754 Interest expense   3,494     3,318       6,812   Total expenses   14,362     9,600       23,962   Deferred income tax benefit 1,697 105 1,802 Net loss attributable to non-controlling interests 1,092 1,241 2,333 Net loss attributable to American Spectrum Realty, Inc. (2,153 ) (119 ) (2,272 ) Net loss attributable to American Spectrum Realty, Inc. common

Stockholders

(2,213

)

(119

)

(2,332

)

Basic and diluted earnings per share attributable to American Spectrum

Realty, Inc. common stockholders

$

(0.73

)

(.04

)

$

(0.77

)

  Statement of Operations for the Nine Months Ended Sep 30, 2010   Rental revenue $ 24,093 8,913 $ 33,006 Third party management and transaction revenue   3,208     218       3,426   Total revenues   27,468     8,605       36,073   Property operating expense 12,241 2,133 14,374 Depreciation and amortization 10,757 4,833 15,590 Interest expense   10,418     3,532       13,950   Total expenses   40,111     10,498       50,609   Deferred income tax benefit 4,593 280 4,873 Net loss attributable to non-controlling interests 1,504 1,284 2,788 Net loss attributable to American Spectrum Realty, Inc. (3,699 ) (329 ) (4,028 ) Net loss attributable to American Spectrum Realty, Inc. common

Stockholders

(3,879

)

(329

)

(4,208

)

Basic and diluted earnings per share attributable to American Spectrum

Realty, Inc. common stockholders

$

(1.27

)

(.09

)

$

(1.36

)

  Balance Sheet as of March 31, 2010   Real estate held for investment $ 252,375 21,925 $ 274,300 Accumulated depreciation (75,673 ) (4 ) (75,677 ) Restricted cash 992 925 1,917 Deferred tax asset 8,348 70 8,418 Investments in unconsolidated real estate assets from related parties - 375 375 Purchased intangibles subject to amortization 18,000 (4,713 ) 13,287 Goodwill - 4,003 4,003 Prepaid and other assets, net   10,956     940      

118,966

  Total Assets   227,944     23,521       251,465   Notes payable 203,863 15,234 219,097 Accounts payable 6,377 75 6,452 Accrued and other liabilities   8,431     848       9,279   Total Liabilities   220,114     16,157       236,271   Accumulated deficit (51,963 ) (89 ) (52,052 ) Non-controlling interests 11,976 7,453 19,429 American Spectrum Realty, Inc. stockholders’ equity (deficit) (5,931 ) (89 ) (6,020 ) Total Equity (Deficit)   6,045     7,364       13,409   Total Liabilities and Equity (Deficit) $ 227,944     23,521     $ 251,465     Balance Sheet as of June 30, 2010   Real estate held for investment $ 263,359 322,197 $ 585,556 Accumulated depreciation (79,238 ) (218 ) (79,456 ) Restricted cash 992 3,371 4,363 Tenant and other receivables, net of allowance for doubtful accounts 1,314 262 1,576 Deferred tax asset 10,146 175 10,321 Investments in unconsolidated real estate assets from related parties 1,386 141 1,527 Purchased intangibles subject to amortization 18,000 (4,994 ) 13,006 Goodwill - 4,003 4,003 Prepaid and other assets, net   11,803     4,673       16,476   Total Assets   239,867     329,610       569,477   Notes payable 214,663 226,725 441,388 Accounts payable 6,125 3,227 9,352 Accrued and other liabilities   9,132     1,565       10,697   Total Liabilities   231,287     231,517       462,804   Accumulated deficit (54,018 ) (210 ) (54,228 ) Non-controlling interests 16,600 98,303 114,903 American Spectrum Realty, Inc. stockholders’ equity (deficit) (8,020 ) (210 ) (8,230 ) Total Equity (Deficit)   8,580     98,093       106,673   Total Liabilities and Equity (Deficit) $ 239,867     329,610     $ 569,477     Balance Sheet as of September 30, 2010   Real estate held for investment $ 280,033 338,471 $ 618,504 Accumulated depreciation (82,344 ) (4,084 ) (86,428 ) Restricted cash 992 2,908 3,900 Tenant and other receivables, net of allowance for doubtful accounts 1,223 515 1,738 Deferred tax asset 11,883 280 12,163 Investments in unconsolidated real estate assets from related parties 142 129 271 Purchased intangibles subject to amortization 18,000 (5,275 ) 12,725 Goodwill - 4,003 4,003 Prepaid and other assets, net   12,821     5,860       18,681   Total Assets   253,736     342,807       596,543   Notes payable 221,187 240,509 461,696 Accounts payable 8,408 4,315 12,723 Accrued and other liabilities   11,008     1,168       12,176   Total Liabilities   242,298     245,992       488,290   Accumulated deficit (56,171 ) (329 ) (56,500 ) Non-controlling interests 21,641 97,144 118,785 American Spectrum Realty, Inc. stockholders’ equity (deficit) (10,203 ) (329 ) (10,532 ) Total Equity (Deficit)   11,438     96,815       108,253   Total Liabilities and Equity (Deficit) $ 253,736     342,807     $ 596,543