-----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, KfxrE+CAEpfAtPRDOjlctvwhudR1iDqGzHoTFdNAEdZ0OQG6C/uOmxYUj5CCCaJL yTprlph5gw/WfzSvzBCcvg== 0000950124-03-003363.txt : 20031029 0000950124-03-003363.hdr.sgml : 20031029 20031029133800 ACCESSION NUMBER: 0000950124-03-003363 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031029 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031029 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12928 FILM NUMBER: 03963039 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 8-K 1 k80430e8vk.txt CURRENT REPORT DATED OCTOBER 29, 2003 - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT: October 29, 2003 AGREE REALTY CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MARYLAND 1-12928 (State of other jurisdiction of (Commission File Number) incorporation or organization) 31850 Northwestern Highway 38-3148187 Farmington Hills, MI 48334 (I.R.S. Employer (Address of principal executive offices) identification No.) (Registrant's telephone number, including area code) (248) 737-4190 ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits Exhibit 99.1 - Press Release issued by Agree Realty Corporation, dated October 29, 2003. ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION The information under this caption is furnished by Agree Realty Corporation (the "Company") in accordance with Securities Exchange Commission Release No. 33-8216. This information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. On October 29, 2003, the Company issued a press release describing its results of operations for the third quarter ended September 30. 2003. A copy of the press release is attached as Exhibit 99.1 to this report. In the earnings release, the Company used the non-GAAP financial measure of Funds from Operations ("FFO"). A reconciliation of FFO to the comparable GAAP financial measure (Net Income) is contained in the attached earnings release. Disclosure regarding the definition of FFO used by the Company and why the Company's management believes the presentation of FFO provides useful information to investors is included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2002. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized. AGREE REALTY CORPORATION /s/ Kenneth R. Howe -------------------------------------------- Vice President, Finance, Chief Financial Officer DATED: October 29, 2003 EXHIBIT INDEX ------------- Exhibit Number Description - -------------- ----------- 99.1 Press Release of Agree Realty Corporation dated October 29, 2003 EX-99.1 3 k80430exv99w1.txt PRESS RELEASE EXHIBIT 99.1 PRESS RELEASE - FOR IMMEDIATE RELEASE CONTACT: Kenneth R. Howe, Chief Financial Officer (248) 737-4190 AGREE REALTY CORPORATION REPORTS THIRD QUARTER 2003 OPERATING RESULTS THIRD QUARTER 2003 HIGHLIGHTS: FINANCIAL INFORMATION o Diluted FFO per share of $0.49 o Diluted FFO per share before charge for early extinguishment of debt $0.64 o $0.485 per share quarterly dividend paid October 16, 2003 o Completed $43.2 million offering of Common Stock FARMINGTON HILLS, MI (October 29, 2003) - Agree Realty Corporation (NYSE: ADC) today announced results for the quarter ended September 30, 2003. For the third quarter, funds from operations were $3,127,000 ($4,088,000 before a charge for early extinguishment of debt) compared with funds from operations in the third quarter of 2002 of $3,432,000. Diluted funds from operations per share were $0.49 per share ($0.64 per share before a charge for early extinguishment of debt) compared with $0.67 per share for the third quarter of 2002. Net income decreased to $1,857,000 as a result of a charge for early extinguishment of debt as explained below, or $0.33 per share on a diluted basis, compared with net income for the third quarter of 2002 of $2,137,000, or $0.48 per share. Total revenues increased 11.5% to $6,843,000, compared with total revenues of $6,140,000 in the third quarter of 2002. A reconciliation of net income to FFO is included in the financial table accompanying this press release. For the nine months ended September 30, 2003, funds from operations were $10,548,000 ($11,509,000 before a charge for early extinguishment of debt) compared with funds from operations for the nine months ended September 30, 2002 of $10,056,000. Diluted funds from operations per share were $1.90 per share ($2.07 per share before a charge for early extinguishment of debt) compared with $1.96 per share for the third quarter of 2002. Net income was $6,475,000, or $1.33 per share on a diluted basis, compared with net income for the comparable period last year of $6,200,000, or $1.39 per share. Total revenues increased 12.8% to $20,549,000, compared with total revenues of $18,211,000 for the comparable period last year. FUNDS FROM OPERATIONS Management considers Funds from Operations ("FFO") to be a useful supplemental measure to evaluate operating performance. The Company considers FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions and excluding depreciation, FFO can help one compare the operating performance of a company's real estate between periods or as compared to different companies. FFO is defined by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT") to mean net income computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization. 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. In addition, our method of calculating FFO may not be comparable to the methods used by other REITs and, accordingly may be different from similarly titled measures reported by other companies. DIVIDEND The Company paid a cash dividend of $0.485 per share on October 16, 2003 to shareholders of record on September 30, 2003. The dividend is equivalent to an annualized dividend of $1.94 per share and represents a payout ratio of 75.3% of funds from operations before a charge for early extinguishment of debt for the quarter. FINANCING On August 4, 2003 the Company completed an offering of 1,700,000 shares of common stock at a price of $23.50 per share; on August 12, 2003 the underwriters exercised their over allotment option for an additional 255,000 shares at the same per share price. The net proceeds form the offerings of approximately $43.2 million were used to repay amounts outstanding under the Company's credit facility. During the third quarter 2003 the Company negotiated an early payment of three mortgage notes totaling approximately $37 million and bearing an interest rate of 7.00%. Two of the mortgages totaling approximately $30.3 million, were scheduled to mature in November 2005 and required a final payment in the amount of approximately $28.2 million on the maturity date. The third mortgage in the amount of approximately $6.7 million had a scheduled maturity date of April 2013 and required a final payment in the amount of approximately $2.9 million on the maturity date. This mortgage contained a provision that would reset the interest rate to the then current rate in December 2005. The Company incurred a pre-payment penalty of 1.50% of the outstanding mortgage balance and wrote off unamortized mortgage costs on the three mortgages of $406,000. PORTFOLIO RESULTS At September 30, 2003, Agree Realty Corporation's total assets were $188,146,000. At quarter end the Company's portfolio consisted of 50 properties totaling 3.7 million square feet located in 13 states. The portfolio is 97% leased. Agree Realty Corporation owns, manages and develops properties which are primarily single tenant properties and neighborhood community shopping centers, located in thirteen (13) states and leased to major retail tenants. Agree Realty Corporation considers portions of the information contained in this release to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 27E of the Securities Exchange Act of 1934, both as amended, with respect to the Company's expectation for future periods. Such statements are, by their nature, subject to certain risks and uncertainties. The Company cautions that, as a result of a number of factors, actual results could differ materially from those set forth in this presentation. Other risks, uncertainties and factors that could cause actual results to differ materially than those projected are detailed from time to time in reports filed by the Company with the Securities and Exchange Commission, including Forms 8-K, 10-Q and 10-K. For additional information, visit the Company's home page on the Internet at http://www.agreerealty.com AGREE REALTY CORPORATION OPERATING RESULTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Three months ended Nine months ended September 30, September 30, ------------------------------------------------- 2003 2002 2003 2002 ------------------------------------------------- REVENUE Minimum rents $ 6,088 $ 5,401 $18,072 $15,884 Percentage rent 48 35 99 78 Operating cost reimbursements 597 530 2,034 1,723 Unconsolidated entities 110 174 342 521 Management fees and other - - 2 5 ------------------------------------------------- TOTAL REVENUE 6,843 6,140 20,549 18,211 ------------------------------------------------- EXPENSES Real estate taxes 457 420 1,370 1,259 Property operating expenses 467 333 1,500 1,097 Land lease payments 185 185 554 554 General and administrative 553 503 1,676 1,466 Depreciation and amortization 1,026 926 3,040 2,778 Interest expense 1,302 1,557 4,561 4,580 Early extinguishment of debt 961 - 961 - ------------------------------------------------- TOTAL EXPENSES 4,951 3,924 13,662 11,734 ------------------------------------------------- INCOME BEFORE MINORITY INTEREST AND DISCONTINUED OPERATIONS 1,892 2,216 6,887 6,477 Minority interest expense 182 291 835 852 ------------------------------------------------- INCOME BEFORE DISCONTINUED OPERATIONS 1,710 1,925 6,052 5,625 Income from discontinued operations 147 212 423 575 ------------------------------------------------- NET INCOME $ 1,857 $ 2,137 $ 6,475 $ 6,200 ================================================= NET INCOME - PER SHARE $ 0.33 $ 0.48 $ 1.33 $ 1.39 ================================================= RECONCILIATION OF FUNDS FROM OPERATIONS TO NET INCOME Net income $ 1,857 $ 2,137 $ 6,475 $ 6,200 Depreciation of real estate assets 1,056 955 3,136 2,866 Amortization of leasing costs 15 17 43 51 Minority interest 199 323 894 939 ------------------------------------------------- FUNDS FROM OPERATIONS $ 3,127 $ 3,432 $10,548 $10,056 ================================================= FUNDS FROM OPERATIONS - PER SHARE $ 0.49 $ 0.67 $ 1.90 $ 1.96 ================================================= Weighted average number of shares and "OP" units outstanding 6,349 5,120 5,557 5,120 =================================================
Agree Realty Corporation Consolidated Balance Sheets (in thousands) (Unaudited)
Sep 30, Dec 31, 2003 2002 ------------------------------- ASSETS Real estate investments, at cost $ 216,047 $ 200,752 Accumulated depreciation (37,667) (34,706) Operating property held for sale 7,322 7,483 Cash and cash equivalents 234 1,096 Rents receivable 156 785 Investments in and advances to unconsolidated entities 333 315 Deferred costs, net of amortization 1,043 1,425 Other assets 678 1,012 ------------------------------- TOTAL ASSETS $ 188,146 $ 178,162 =============================== LIABILITIES AND STOCKHOLDERS' EQUITY Mortgages payable $ 41,435 $ 71,589 Construction loans 1,569 5,612 Notes payable 39,500 38,083 Other liabilities 4,702 4,468 ------------------------------- TOTAL LIABILITIES 87,206 119,752 ------------------------------- TOTAL MINORITY INTEREST 5,704 5,787 ------------------------------- Common stock 1 1 Additional paid-in capital 108,268 64,506 Accumulated deficit (12,104) (11,135) Unearned compensation (929) (749) ------------------------------- TOTAL STOCKHOLDERS' EQUITY 95,236 52,623 ------------------------------- $ 188,146 $ 178,162 ===============================
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