8-K

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, 2004

AGREE REALTY CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MARYLAND
(State of other jurisdiction of	(Commission File Number)
incorporation or organization)	1-12928

31850 Northwestern Highway
Farmington Hills, MI 48334
(Address of principal executive offices) 38-3148187
(I.R.S. Employer
identification No.)

(Registrant’s telephone number, including area code) (248) 737-4190

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02. Results of Operations and Financial Condition
	Item 9.01. Financial Statements, Pro Forma Financial Information and Exhibits.
SIGNATURE
EXHIBIT INDEX
Press Release Dated October 28, 2004

Item 2.02. 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 28, 2004, the Company issued a press release describing its results of operations for the third quarter ended September 30. 2004. 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, 2003.

Item 9.01. Financial Statements, Pro Forma Financial Information and Exhibits.

(c) Exhibits

Exhibit 99.1 –  Press Release issued by Agree Realty Corporation, dated October 28, 2004

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
DATED: October 29, 2004	Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release of Agree Realty Corporation dated October 28, 2004

EX-99.1

EXHIBIT 99.1

PRESS RELEASE — FOR IMMEDIATE RELEASE

CONTACT: Kenneth R. Howe, Chief Financial Officer

                                                                                       (248) 737-4190

AGREE REALTY CORPORATION REPORTS THIRD QUARTER 2004
OPERATING RESULTS

Third Quarter 2004 Highlights:

Financial Information

• Diluted FFO per share of $0.67

• $0.49 per share quarterly dividend paid October 12, 2004

     FARMINGTON HILLS, MI (October 28, 2004) — Agree Realty Corporation (NYSE: ADC) today announced results for the quarter ended September 30, 2004. For the third quarter, funds from operations increased 54.2% to $4,824,000 compared with funds from operations in the third quarter of 2003 of $3,127,000 ($4,088,000 before a charge for early extinguishment of debt). Diluted funds from operations per share were $0.67 per share compared with $0.49 per share ($0.64 per share before a charge for early extinguishment of debt) for the third quarter of 2003. Net income increased to $3,895,000, or $0.60 per share on a diluted basis, compared with net income for the third quarter of 2003 of $1,857,000, or $0.33 per share. Total revenues increased 12.4% to $7,629,000, compared with total rental revenues of $6,785,000 in the third quarter of 2003. A reconciliation of net income to FFO is included in the financial table accompanying this press release.

     For the nine months ended September 30, 2004, funds from operations increased 26.0% to $13,545,000 compared with funds from operations for the nine months ended September 30, 2003 of $10,548,000 ($11,509,000 before a charge for early extinguishment of debt). Diluted funds from operations per share were $1.90 per share compared with $1.90 per share ($2.07 per share before a charge for early extinguishment of debt) for the third quarter of 2003. Net income was $9,848,000, or $1.52 per share on a diluted basis, compared with net income for the comparable period last year of $6,475,000, or $1.33 per share. Total revenues increased 9.1% to $22,210,000, compared with total rental revenues of $20,364,000 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

     We paid a cash dividend of $0.49 per share on October 12, 2004 to shareholders of record on September 30, 2004. The dividend is equivalent to an annualized dividend of $1.96 per share and represents a payout ratio of 73.1% of funds from operations for the quarter.

Portfolio Results

     At September 30, 2004, Agree Realty Corporation’s total assets were $209,576,000. At quarter end our portfolio consisted of 52 properties totaling 3,435,388 million square feet located in 14 states. The portfolio was 99% leased at the end of the quarter. During the quarter we:

• Sold a Single Tenant Property located in Perrysburg, Ohio to a private investor for approximately $2.1 million.

• Entered into a land lease with a restaurant operator for a property we acquired in Lansing, Michigan.

• Terminated the interest of our joint venture partner in two joint venture properties located in Ann Arbor, Michigan and Boynton Beach, Florida. The tenant repaid

the joint venture partners’ capital contributions of approximately $13.8 million and the Company now owns 100% of the two (2) properties. We have treated the repayment of the capital contribution as deferred revenue and accordingly, will recognize rental income over the twenty (20) year term of the related leases.

• Received a lease termination payment of approximately $350,000 from a former tenant of the Lakeland, Florida community shopping center.

• Announced that we would develop a retail property in Midland, Michigan.

Lease Expirations

     The following table shows lease expirations for the next 10 years for our freestanding properties and community shopping centers, assuming that none of the tenants exercise renewal options.

					September 30, 2004
			Gross Leasable Area					Annualized Base Rent
	Number
Expiration	of Leases		Square		Percent					Percent
Year	Expiring		Footage		of Total			Amount		of Total
2004		2		8,136		.24	%	$	73,224		.27	%
2005		19		142,890		4.16			824,341		2.99
2006		38		180,024		5.24			1,456,049		5.28
2007		13		68,330		1.99			459,346		1.67
2008		24		310,595		9.04			1,288,143		4.68
2009		10		162,490		4.73			731,614		2.66
2010		7		213,135		6.20			1,245,529		4.52
2011		6		178,903		5.21			1,163,938		4.22
2012		—		—		—			—		—
2013		1		51,868		1.51			492,746		1.79
Total		120		1,316,371		38.32	%	$	7,734,930		28.08	%

Annualized Base Rent of our Properties

The following is a breakdown of base rents in place at September 30, 2004 for each type of retail tenant:

National	$	24,317,677	88.26	%
Regional		1,999,713	7.26
Local		1,234,670	4.48
Total	$	27,552,060	100.00	%

Operating Partnership Units

     As of September 30, 2004 there were 673,547 operating partnership units outstanding.

     Agree Realty Corporation owns, manages and develops properties which are primarily single tenant properties and neighborhood community shopping centers, located in fourteen (14) 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,
	2004			2003		2004			2003
Revenue
Minimum rents	$	6,939		$	6,035	$	19,753		$	17,899
Percentage rent		(12	)		48		29			99
Operating cost reimbursements		649			592		2,179			2,023
Unconsolidated entities		30			110		217			341
Other income		23			—		32			2
Total Revenue		7,629			6,785		22,210			20,364
Expenses
Real estate taxes		453			458		1,381			1,365
Property operating expenses		415			463		1,505			1,484
Land lease payments		180			180		541			541
General and administration		687			553		1,983			1,676
Depreciation and amortization		1,107			1,012		3,248			2,997
Interest expense		1,076			1,302		3,339			4,561
Early extinguishment of debt		—			961		—			961
Total Expenses		3,918			4,929		11,997			13,585
Income before minority interest and Discontinued operations		3,711			1,856		10,213			6,779
Minority interest expense		350			179		963			822
Income before discontinued operations		3,361			1,677		9,250			5,957
Gain on sale — discontinued property		523			—		523			—
Income from discontinued operations		11			180		75			518
Net income	$	3,895		$	1,857	$	9,848		$	6,475
Net Income — per share	$	.60		$	.33	$	1.52		$	1.33
Reconciliation of Funds from Operations to Net Income
Net income	$	3,895		$	1,857	$	9,848		$	6,475
Depreciation of real estate assets		1,089			1,056		3,215			3,136
Amortization of leasing costs		12			15		34			43
Gain on sale of assets		(577	)		—		(577	)		—
Minority interest		405			199		1,025			894
Funds from Operations	$	4,824		$	3,127	$	13,545		$	10,548
Funds from Operations — per share	$	.67		$	.49	$	1.90		$	1.90
Weighted average number of shares and “OP” units
outstanding		7,148			6,349		7,147			5,557

Agree Realty Corporation
Consolidated Balance Sheets (in thousands)
(Unaudited)

	Sep 30,			Dec 31
	2004			2003
ASSETS
Real estate investments, at cost	$	246,940		$	221,225
Accumulated depreciation		(40,565	)		(38,476	)
Cash and cash equivalents		216			1,004
Cash — restricted		—			4,310
Rents receivable		115			622
Investments in and advances to unconsolidated entities		—			330
Deferred costs, net of amortization		1,260			1,387
Other Assets		1,610			1,284
Total Assets	$	209,576		$	191,686
LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgages payable	$	54,362		$	55,967
Construction loans		—			1,569
Notes payable		33,900			26,500
Deferred revenue		13,657			—
Other liabilities		4,735			5,640
Total Liabilities		106,654			89,676
Total Minority Interest		5,864			5,822
Common stock		1			1
Additional paid-in capital		109,241			108,252
Accumulated deficit		(10,823	)		(11,228	)
Unearned compensation		(1,361	)		(837	)
Total Stockholders’ Equity		97,058			96,188
	$	209,576		$	191,686