-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WnHW1fU+4O9Rr3FwZOJn/76dvYP9CHM70y4VmJF+Ie7YoGTOUU1dsSdq9xmMFAH3 duNiTMNrQvu1rhlayGJdbA== 0000889697-99-000087.txt : 19990505 0000889697-99-000087.hdr.sgml : 19990505 ACCESSION NUMBER: 0000889697-99-000087 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990504 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AGREE REALTY CORP CENTRAL INDEX KEY: 0000917251 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 383148187 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12928 FILM NUMBER: 99609678 BUSINESS ADDRESS: STREET 1: 31850 NORTHWESTERN HGWY CITY: FARMINGTON HILLS STATE: MI ZIP: 48334 BUSINESS PHONE: 8107374190 MAIL ADDRESS: STREET 1: 31850 NORTHWESTERN HIGHWAY CITY: FARMINGTON HILLS STATE: MI ZIP: 48334 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q /x/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1999 OR / / Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________ Commission File Number 1-12928 Agree Realty Corporation - ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Maryland 38-3148187 - ----------------------------------------------------------------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 31850 Northwestern Highway, Farmington Hills, Michigan 48334 - ---------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, included area code: (248) 737-4190 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No |X| |_| 4,364,867 Shares of Common Stock, $.0001 par value, were outstanding as of May 4, 1999 Agree Realty Corporation Form 10-Q Index - ----------------------------------------------------------------------------- Part I: Financial Information Page Item 1. Interim Consolidated Financial Statements 3 Consolidated Balance Sheets as of March 31, 1999 and December 31, 1998 4-5 Consolidated Statements of Income for the three months ended March 31, 1999 and 1998 6 Consolidated Statement of Stockholders' Equity for the three months ended March 31, 1999 7 Consolidated Statements of Cash Flows for the three months ended March 31, 1999 and 1998 8 Notes to Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-15 Part II: Other Information Item 1. Legal Proceedings 16 Item 2. Changes in Securities 16 Item 3. Defaults Upon Senior Securities 16 Item 4. Submission of Matters to a Vote of Security Holders 16 Item 5 Other Information 16 Item 6. Exhibits and Reports on Form 8-K 16 Signatures 17 2 Agree Realty Corporation Part I: Financial Information - ----------------------------------------------------------------------------- ITEM 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS 3
Agree Realty Corporation Consolidated Balance Sheets (Unaudited) - ----------------------------------------------------------------------------- March 31, December 31, 1999 1998 - --------------------------------------------------------------------------------------- Assets Real Estate Investments Land .............................................. $ 37,005,162 $ 37,005,162 Buildings ......................................... 128,831,914 128,861,505 Property under development ........................ 1,944,874 1,054,335 ------------- ------------- 167,781,950 166,921,002 Less accumulated depreciation ..................... (23,842,383) (23,022,291) ------------- ------------- Net Real Estate Investments .......................... 143,939,567 143,898,711 Cash and Cash Equivalents ............................ 253,806 994,159 Accounts Receivable - Tenants ........................ 321,894 645,052 Investments In and Advances To Unconsolidated Entities 1,015,382 1,135,409 Unamortized Deferred Expenses Financing ......................................... 1,741,390 1,533,440 Leasing costs ..................................... 304,008 302,694 Other Assets ......................................... 853,514 761,066 ------------- ------------- $ 148,429,561 $ 149,270,531 ============= ============= See accompanying notes to consolidated financial statements.
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Agree Realty Corporation Consolidated Balance Sheets (Unaudited) - ----------------------------------------------------------------------------- March 31, December 31, 1999 1998 - ------------------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity Mortgage Payable ............................................... $ 41,272,896 $ 41,299,294 Construction Loans ............................................. 8,915,033 8,874,326 Notes Payable .................................................. 36,058,232 35,158,232 Dividends and Distributions Payable ............................ 2,317,670 2,309,136 Accrued Interest Payable ....................................... 356,315 318,362 Accounts Payable Operating ................................................... 447,350 721,485 Capital expenditures ........................................ 340,695 1,444,517 Tenant Deposits ................................................ 46,273 48,606 ------------- ------------- Total Liabilities .............................................. 89,754,464 90,173,958 ------------- ------------- Minority Interest .............................................. 5,982,908 6,047,843 ------------- ------------- Stockholders' Equity Common stock, $.0001 par value; 20,000,000 shares authorized, 4,364,867 and 4,346,313 shares issued and outstanding ..... 436 435 Additional paid-in capital .................................. 63,217,235 62,873,987 Deficit ..................................................... (9,869,191) (9,448,351) ------------- ------------- 53,348,480 53,426,071 Less: unearned compensation - restricted stock ................ (656,291) (377,341) ------------- ------------- Total Stockholders' Equity ..................................... 52,692,189 53,048,730 ------------- ------------- $ 148,429,561 $ 149,270,531 ============= ============= See accompanying notes to consolidated financial statements.
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Agree Realty Corporation Consolidated Statements of Income (Unaudited) - ----------------------------------------------------------------------------- Three Months Ended Three Months Ended March 31, 1999 March 31, 1998 - ---------------------------------------------------------------------------------------------------- Revenues Rental income ................................................ $ 4,716,423 $ 4,170,541 Operating cost reimbursement ................................. 656,532 524,922 Management fees and other .................................... 9,263 24,257 ----------- ----------- Total Revenues .................................................. 5,382,218 4,719,720 ----------- ----------- Operating Expenses Real estate taxes ............................................ 422,412 360,625 Property operating expenses .................................. 446,303 274,969 Land lease payments .......................................... 136,915 141,921 General and administrative ................................... 316,045 277,996 Depreciation and amortization ................................ 848,896 726,706 ----------- ----------- Total Operating Expenses ........................................ 2,170,571 1,782,217 ----------- ----------- Income From Operations .......................................... 3,211,647 2,937,503 ----------- ----------- Other Income (Expense) Interest expense, net ........................................ (1,386,685) (1,240,673) Equity in net income (loss) of unconsolidated entities ....... 6,934 (2,999) Development fee income ....................................... -- 59,647 ----------- ----------- Total Other Expense ............................................. (1,379,751) (1,184,025) ----------- ----------- Income Before Minority Interest ................................. 1,831,896 1,753,478 Minority Interest ............................................... 244,897 226,384 ----------- ----------- Net Income ...................................................... $ 1,586,999 $ 1,527,094 =========== =========== Earnings Per Share .............................................. $ .36 $ .35 =========== =========== Weighted Average Number of Common Shares Outstanding .................................... 4,364,867 4,346,313 =========== =========== See accompanying notes to consolidated financial statements.
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Agree Realty Corporation Consolidated Statement of Stockholders' Equity (Unaudited) - ----------------------------------------------------------------------------- Unearned Common Stock Additional Compensation - ------------------------ Paid-In Restricted Shares Amount Capital Deficit Stock - ------------------------------------------------------------------------------------------------------------------------- Balance, January 1, 1999 .................... 4,346,313 $ 435 $62,873,987 $(9,448,351) $ (377,341) Issuance of shares under Stock Incentive Plan ..................... 18,554 1 343,248 -- (327,450) Vesting of restricted stock ................. -- -- -- -- 48,500 Dividends declared for the period January 1, 1999 to March 31, 1999 ........ -- -- -- (2,007,839) -- Net income for the period January 1, 1999 to March 31, 1999 ........ -- -- -- 1,586,999 -- --------- ----------- ----------- ----------- ----------- Balance, March 31, 1999 ..................... 4,364,867 $ 436 $63,217,235 $(9,869,191) $ (656,291) ========= =========== =========== =========== =========== See accompanying notes to consolidated financial statements.
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Agree Realty Corporation Consolidated Statements of Cash Flows (Unaudited) - ----------------------------------------------------------------------------- Three Months Ended Three Months Ended March 31, 1999 March 31, 1998 - ----------------------------------------------------------------------------------------------------------- Cash Flows From Operating Activities Net income ...................................................... $ 1,586,999 $ 1,527,094 Adjustments to reconcile net income to net cash provided by operating activities Depreciation ................................................ 827,588 708,909 Amortization ................................................ 111,308 126,285 Equity in net loss (income) of unconsolidated entities ...... (6,934) 2,999 Minority interests .......................................... 244,897 226,384 Decrease in accounts receivable ............................. 323,158 114,461 Increase in other assets .................................... (53,255) (22,804) Decrease in accounts payable ................................ (274,135) (193,368) Increase in accrued interest ................................ 37,953 33,233 Increase (decrease) in tenant deposits ...................... (2,333) 1,667 ----------- ----------- Net Cash Provided By Operating Activities .......................... 2,795,246 2,524,860 ----------- ----------- Cash Flows From Investing Activities Acquisition of real estate investments (including capitalized interest of $147,000 in 1999 and $64,671 in 1998) ......................... (860,948) (4,361,754) Investments in and advances to unconsolidated entities .......... 124,150 142,162 ----------- ----------- Net Cash Used In Investing Activities .............................. (736,798) (4,219,592) ----------- ----------- Cash Flows From Financing Activities Dividends and limited partners' distributions paid .............. (2,309,136) (2,284,792) Net repayment of capital expenditures payables .................. (1,088,024) (454,411) Line-of-credit proceeds ......................................... 900,000 3,032,928 Payment of financing costs ...................................... (297,950) (8,000) Construction loan proceeds ...................................... 40,707 911,967 Payments of mortgages payable ................................... (26,398) (88,497) Payment of leasing costs ........................................ (18,000) -- Redemption of restricted stock .................................. -- (35,328) ----------- ----------- Net Cash Provided By (Used In) Financing Activities ................ (2,798,801) 1,073,867 ----------- ----------- Net Decrease In Cash and Cash Equivalents .......................... (740,353) (620,865) Cash and Cash Equivalents, beginning of period ..................... 994,159 1,785,968 ----------- ----------- Cash and Cash Equivalents, end of period ........................... $ 253,806 $ 1,165,103 =========== =========== Supplemental Disclosure of Cash flow Information Cash paid for interest (net of amounts capitalized) ............. $ 1,263,185 $ 1,126,719 =========== =========== Supplemental Disclosure of Non-Cash Transactions Dividends and limited partners' distributions declared and unpaid $ 2,317,670 $ 2,292,765 Shares issued under Stock Incentive Plan ........................ $ 343,249 $ 405,830 =========== =========== See accompanying notes to consolidated financial statements.
8 Agree Realty Corporation Notes to Financial Statements - ----------------------------------------------------------------------------- 1. Basis of Presentation The accompanying unaudited 1999 consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The consolidated balance sheet at December 31, 1998 has been derived from the audited consolidated financial statements at that date. Operating results for the three months ended March 31, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999, or for any other interim period. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report for the year ended December 31, 1998. 2. Earnings Per Share Earnings per share has been computed by dividing the income by the weighted average number of common shares outstanding. The per share amounts reflected in the consolidated statements of income are presented in accordance with Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings per Share"; the amounts of the Company's "basic" and "diluted" earnings per share (as defined in SFAS No. 128) are the same. 3. Comprehensive Income The amounts of the Company's net and comprehensive income (as defined in SFAS No. 130, "Reporting Comprehensive Income") are the same. 4. Reclassification Certain reclassifications were made to the December 31, 1998 balance sheet in order to conform with the presentation used as of March 31, 1999. 9 Agree Realty Corporation Part I - ----------------------------------------------------------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ----------------------------------------------------------------------------- Overview The Company was established to continue to operate and expand the retail property business of its Predecessors. The Company commenced its operations on April 22, 1994 with the sale of 2,500,000 shares of common stock in an initial public offering. The net cash proceeds to the Company from the completion of this offering were approximately $45.4 million, which were used primarily to reduce outstanding indebtedness, pay stock issuance costs and establish a working capital reserve. On May 21, 1997, the Company completed an offering of 1,625,000 shares of common stock at $20.625 per share; on June 18, 1997 the underwriters exercised their overallotment option for an additional 28,850 shares at the same per share price (collectively, "the 1997 Offering"). The net proceeds from the 1997 Offering of approximately $31.9 million were used to repay amounts outstanding under the Company's Credit Facility. The assets of the Company are held by, and all operations are conducted through, Agree Limited Partnership (the "Operating Partnership"), of which the Company is the sole general partner and held an 86.63% interest as of March 31, 1999. The Company is operating so as to qualify as a real estate investment trust ("REIT") for federal income tax purposes. The following should be read in conjunction with the Consolidated Financial Statements of Agree Realty Corporation, including the respective notes thereto, which are included in this Form 10-Q. Comparison of Three Months Ended March 31, 1999 to Three Months Ended March 31, 1998 Rental income increased $546,000, or 13%, to $4,716,000 in 1999, compared to $4,170,000 in 1998. The increase was the result of the development and acquisition of five Properties in 1998. Operating cost reimbursement, which represents additional rent required by substantially all of the Company's leases to cover the tenants' proportionate share of real estate taxes and property operating expenses, increased $131,000, or 25%, to $656,000 in 1999, compared to $525,000 in 1998. Operating cost reimbursement increased due to the increase in real estate taxes and property operating expenses from 1998 to 1999, as explained below. Management fees and other income decreased $15,000, or 62%, to $9,000 in 1999, compared to $24,000 in 1998. The decrease was the result of a reduction in management fees due to the Company's acquisition of a property it previously managed. Real estate taxes increased $61,000, or 17%, to $422,000 in 1999 compared to $361,000 in 1998. The increase is the result of the addition of new properties. 10 Property operating expenses (shopping center maintenance, insurance and utilities) increased $171,000, or 62%, to $446,000 in 1999 compared $275,000 in 1998. The increase was the result of increased snow removal costs of $128,000 and an increase in shopping center maintenance costs of $43,000 in 1999 versus 1998. Land lease payments remained relatively constant at $137,000 in 1999 compared to $142,000 in 1998. General and administrative expenses increased $38,000, or 14%, to $316,000 in 1999 compared to $278,000 in 1998. The increase was primarily the result of an increase in compensation-related expenses. General and administrative expenses as a percentage of rental income remained constant at 6.7% for 1999 and 1998. Depreciation and amortization increased $122,000, or 17%, to $849,000 in 1999 compared to $727,000 in 1998. The increase was the result of the development and acquisition of five properties in 1998. Interest expense increased $146,000, or 12%, to $1,387,000 in 1999, from $1,241,000 in 1998. The increase in interest expense was the result of the Company's additional borrowing to finance its acquisition and development projects. The Company received development fee income of $60,000 in 1998. There was no development fee income in 1999. The above amount was not included in the Company's calculation of Funds from Operations, due to the non-recurring nature of this type of income. Equity in net income (loss) of unconsolidated entities increased $10,000 to $7,000 in 1999 compared to ($3,000) in 1998 as a result of decreased depreciation expense in 1999 related to certain of the Joint Venture Properties in which the Company holds interests ranging from 8% to 20%. The Company's income before minority interest increased $78,000 as a result of the foregoing factors. 11 Funds from Operations Management considers Funds from Operations ("FFO") to be a supplemental measure of the Company's operating performance. FFO is defined by the National Association of Real Estate Investments Trusts, Inc. ("NAREIT") to mean net income computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains (or losses) from debt restructuring and sales of property, plus real estate related depreciation and amortization, and after adjustments for unconsolidated entities in which the REIT holds an interest. FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs. FFO should not be considered as an alternative to net income as the primary indicator of the Company's operating performance or as an alternative to cash flow as a measure of liquidity. The following tables illustrate the calculation of FFO for the three months ended March 31, 1999 and 1998:
Three Months Ended March 31, 1999 1998 - ------------------------------------------------------------------------------------------------------- Net income before minority interest $1,831,896 $ 1,753,478 Depreciation of real estate assets 827,525 703,534 Amortization of leasing costs 16,686 17,796 Amortization of stock awards 48,500 39,000 Depreciation of real estate assets held in unconsolidated entities 166,645 175,219 Development fee income -- (59,647) ---------- ----------- Funds from Operations $2,891,252 $ 2,629,380 ========== =========== Weighted Average Shares and OP Units Outstanding 5,038,414 4,984,272 ========== =========== FFO increased $262,000, or 10%, for the three months ended March 31, 1999, to $2,891,000. The increase in FFO is primarily the result of the acquisition and development of five properties in 1998. 12 Forward-Looking Statements Management has included herein certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. When used, statements which are not historical in nature including the words "anticipate," "estimate," "should," "expect," "believe," "intend" and similar expressions are intended to identify forward-looking statements. Such statements are, by their nature, subject to certain risks and uncertainties. Risks and other factors that might cause such a difference include, but are not limited to, the effect of economic and market conditions; risks that the Company's acquisition and development projects will fail to perform as expected; financing risks, such as the inability to obtain debt or equity financing on favorable terms; the level and volatility of interest rates; loss or bankruptcy of one or more of the Company's major retail tenants; and failure of the Company's properties to generate additional income to offset increases in operating expenses. Liquidity and Capital Resources The Company's principal demands for liquidity are distributions to its stockholders, debt repayment, development of new properties and future property acquisitions. During the quarter ended March 31, 1999, the Company declared a quarterly dividend of $.46 per share. The dividend was paid on April 15, 1999 to holders of record on March 31, 1999. As of March 31, 1999, the Company had total mortgage indebtedness of $41,272,896 with a weighted average interest rate of 6.90%. Future scheduled annual maturities of mortgages payable for the years ending March 31 are as follows: 2000 - $802,000; 2001 - $936,000; 2002 - $1,003,000; 2003 - $1,076,000; 2004 - $1,154,000. This mortgage debt is all fixed rate debt. On April 1, 1999 the Company obtained replacement financing for a mortgage on its Lakeland, Florida property. The mortgage is in the amount of $7,700,000, bears interest at 7.00%, and has a term of fourteen years, with a rate review at the end of the seventh year. The note requires principle and interest payments based on an amortization period of 18.5 years. In addition, the Operating Partnership has in place a $50 million line of Credit Facility (the "Credit Facility") which is guaranteed by the Company. The loan matures in August 2000 and can be extended by the Company for an additional three years. Advances under the Credit Facility bear interest within a range of one-month to six-month LIBOR plus 150 basis points to 213 basis points or the bank's prime rate less 50 basis points to plus 13 basis points, at the option of the Company, based on certain factors such as debt to property value and debt service coverage. The Credit Facility is used to fund property acquisitions and development activities and is secured by most of the Company's Properties which are not otherwise encumbered and properties to be acquired or developed. As of March 31, 1999, $35,158,232 was outstanding under the Credit Facility. 13 The Company also has in place a $5 million line of credit (the "Line of Credit"), which matures October 19, 1999, and which the Company expects to renew for an additional 12-month period. The Line of Credit bears interest at the bank's prime rate less 50 basis points or 175 basis points in excess of the one-month LIBOR rate, at the option of the Company. The purpose of the Line of Credit is to provide working capital to the Company and fund land options and start-up costs associated with new projects. As of March 31, 1999, $900,000 was outstanding under the Line of Credit. The Company's two wholly-owned subsidiaries have obtained construction financing of approximately $7,300,000 to fund the development of two retail properties. The notes require quarterly interest payments, based on a weighted average interest rate based on LIBOR, computed by the lender. The notes mature on October 16, 2002 and are secured by the underlying land and buildings. As of March 31, 1999, $7,184,543 was outstanding under these notes. The Company has received funding from an unaffiliated third party for the construction of certain of its Properties. Advances under this agreement bear no interest and are required to be repaid within sixty (60) days after the date construction has been completed. The advances are secured by the specific land and buildings being developed. As of March 31, 1999, $1,730,490 was outstanding under this arrangement. The Company has one development project under construction that will add an additional 14,000 square feet of retail space to the Company's portfolio. The project is expected to be completed during the second quarter of 1999. Additional Company funding required for this project is estimated to be $540,000 and will come from the Credit Facility. Management expects the development of this project to have a positive effect on cash generated by operating activities and Funds from Operations. The Company intends to meet its short-term liquidity requirements, including capital expenditures related to the leasing and improvement of the Properties, through its cash flow provided by operations and the Line of Credit. Management believes that adequate cash flow will be available to fund the Company's operations and pay dividends in accordance with REIT requirements. The Company may obtain additional funds for future development or acquisitions through other borrowings or the issuance of additional shares of capital stock. The Company intends to incur additional debt in a manner consistent with its policy of maintaining a ratio of total debt (including construction and acquisition financing) to total market capitalization of 65% or less. 14 The Company plans to begin construction of additional pre-leased developments and may acquire additional properties, which will initially be financed by the Credit Facility and Line of Credit. Management intends to periodically refinance short-term construction and acquisition financing with long-term debt and/or equity. Upon completion of refinancing, the Company intends to lower the ratio of total debt to market capitalization to 50% or less. Nevertheless, the Company may operate with debt levels or ratios which are in excess of 50% for extended periods of time prior to such refinancing. Year 2000 Compliance The Company's information system consists of a three station Windows NT network system. All accounting and property management functions are processed via Timberline Software, a nationally recognized provider of software to the real estate industry. The Company is currently assessing its significant business relationships with external parties, including its major tenants, to determine if their failure to be Year 2000 compliant would have a material adverse effect upon the Company. In the event that any of the Company's significant tenants, vendors, banks or others with whom it does business do not successfully and timely achieve Year 2000 compliance, the Company's operations may be affected. To date, nothing has come to the attention of management that leads it to conclude that the likelihood of such adverse effect reasonably exists. However, because the complexities involved, management cannot provide assurance that the Year 2000 issue will not have an impact on the Company's operations. The Company has completed a review of its information systems and believes its business technologies are fully compliant with any issues that may arise as a result of Year 2000 issues Inflation The Company's leases generally contain provisions designed to mitigate the adverse impact of inflation on net income. These provisions include clauses enabling the Company to pass through to tenants certain operating costs, including real estate taxes, common area maintenance, utilities and insurance, thereby reducing the Company's exposure to increases in costs and operating expenses resulting from inflation. Certain of the Company's leases contain clauses enabling the Company to receive percentage rents based on tenants' gross sales, which generally increase as prices rise, and, in certain cases, escalation clauses, which generally increase rental rates during the terms of the leases. In addition, expiring tenant leases permit the Company to seek increased rents upon re-lease at market rates if rents are below the then existing market rates. 15 Agree Realty Corporation Part II - ----------------------------------------------------------------------------- Other Information Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 3.1 Articles of Incorporation and Articles of Amendment of the Company (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-11 (Registration Statement No. 33-73858, as amended ("Agree S-11")) 3.2 Bylaws of the Company (incorporated by reference to Exhibit 3.3 to Agree S-11) 27.1 Financial Data Schedule (b) Reports on Form 8-K None 16 Agree Realty Corporation Signatures - ----------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has fully caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Agree Realty Corporation /s/ RICHARD AGREE - ----------------------------------------------- Richard Agree President and Chief Executive Officer /s/ KENNETH R. HOWE - ------------------------------------------------ Kenneth R. Howe Vice-President - Finance and Secretary (Principal Financial Officer) Date: May 4, 1999 - ------------------------------------------------ 17
EX-27 2
5 3-MOS DEC-31-1999 MAR-31-1999 253,806 0 321,894 0 0 0 167,781,950 23,842,383 148,429,561 0 86,246,161 436 0 0 52,692,189 148,429,561 5,382,218 0 0 2,170,571 0 0 1,386,685 0 0 0 0 0 0 1,586,999 0.36 0.36
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