EX-99.1 2 k97103exv99w1.txt PRESS RELEASE, DATED JULY 28, 2005 EXHIBIT 99.1 PRESS RELEASE - FOR IMMEDIATE RELEASE CONTACT: Kenneth R. Howe, Chief Financial Officer (248) 737-4190 AGREE REALTY CORPORATION REPORTS SECOND QUARTER 2005 OPERATING RESULTS -------------------------------------------------------------------------------- SECOND QUARTER 2005 HIGHLIGHTS: FINANCIAL INFORMATION o Diluted FFO per share of $0.60 o $0.49 per share quarterly dividend paid July 14, 2005 FARMINGTON HILLS, MI (July 28, 2005) - Agree Realty Corporation (NYSE: ADC) today announced results for the quarter ended June 30, 2005. For the second quarter, funds from operations increased 12.7% to $5,015,000 compared with funds from operations in the second quarter of 2005 of $4,451,000. Diluted funds from operations per share were $0.60 per share compared with $0.62 per share for the second quarter of 2004. Net income increased to $3,519,000, or $0.46 per share on a diluted basis, compared with net income for the second quarter of 2004 of $3,057,000, or $0.47 per share. Total revenues increased 9.6% to $7,994,000, compared with total rental revenues of $7,295,000 in the second quarter of 2004. A reconciliation of net income to FFO is included in the financial table accompanying this press release. For the six months ended June 30, 2005, funds from operations increased 14.6% to $9,793,000 compared with funds from operations for the six months ended June 30, 2004 of $8,721,000. Diluted funds from operations per share were $1.20 per share compared with $1.22 per share for the six months ended June 30, 2004. Net income was $6,820,000, or $.91 per share on a diluted basis, compared with net income for the comparable period last year of $5,953,000, or $.92 per share. Total revenues increased 10.3% to $16,089,000, compared with total rental revenues of $14,581,000 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 July 14, 2005 to shareholders of record on June 30, 2005. The dividend is equivalent to an annualized dividend of $1.96 per share and represents a payout ratio of 81.7% of funds from operations for the quarter. PORTFOLIO RESULTS At June 30, 2005, Agree Realty Corporation's total assets were $217,199,000. At quarter end our portfolio consisted of 55 properties totaling 3,477,671 million square feet located in 14 states. The portfolio was 99% leased at the end of the quarter. On June 30, 2005 we completed the development of a retail property in Midland, Michigan. The property is leased to Walgreen Co. At June 30, 2005 our construction in progress balance totaled approximately $8.6 million and we capitalized $150,000 of construction period interest during the second quarter 2005. 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. JUNE 30, 2005 -------------
GROSS LEASABLE AREA ANNUALIZED BASE RENT ------------------- -------------------- NUMBER EXPIRATION OF LEASES SQUARE PERCENT PERCENT YEAR EXPIRING FOOTAGE OF TOTAL AMOUNT OF TOTAL --------------------------------------------------------------------------------------------- 2005 2 $ 1,400 0.04% $ 27,498 0.09% 2006 39 179,247 5.15 1,434,424 4.94 2007 15 80,630 2.32 597,176 2.05 2008 27 316,195 9.09 1,359,624 4.68 2009 11 164,990 4.74 164,990 0.57 2010 16 299,885 8.62 1,778,885 6.12 2011 9 192,322 5.53 1,231,871 4.24 2012 -- -- -- -- -- 2013 1 51,868 1.49 492,746 1.70 2014 3 172,958 4.97 824,206 2.84 ------------------------------------------------------------------------------- Total 123 $1,459,495 41.95% $7,911,420 27.23% -------------------------------------------------------------------------------
ANNUALIZED BASE RENT OF OUR PROPERTIES The following is a breakdown of base rents in place at June 30, 2005 for each type of retail tenant:
National $25,823,698 88.86% Regional 2,008,113 6.91 Local 1,228,163 4.23 --------- ------ Total $29,059,974 100.00% ----------- -------
MAJOR TENANTS The following is a breakdown of base rents in place at June 30, 2005 for each of our Major Tenants:
Borders $ 9,543,489 32.84% Walgreen 5,569,606 19.17 Kmart 4,213,717 14.50 --------- ------ Total $19,326,812 66.51% ----------- -------
OPERATING PARTNERSHIP UNITS As of June 30, 2005 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 Six months ended June 30, June 30, ------------------------------------- 2005 2004 2005 2004 ------------------------------------- REVENUE Minimum rents $ 7,202 $ 6,498 $14,469 $12,814 Percentage rent 6 16 30 41 Operating cost reimbursements 769 684 1,573 1,530 Unconsolidated entities -- 97 -- 194 Other income 17 -- 17 2 ----------------------------------------------------------------------------------------------------- TOTAL REVENUE 7,994 7,295 16,089 14,581 ----------------------------------------------------------------------------------------------------- EXPENSES Real estate taxes 462 475 931 928 Property operating expenses 499 406 1,165 1,091 Land lease payments 195 180 390 360 General and administration 834 663 1,754 1,296 Depreciation and amortization 1,202 1,072 2,388 2,141 Interest expense 974 1,159 2,028 2,263 ----------------------------------------------------------------------------------------------------- TOTAL EXPENSES 4,166 3,955 8,656 8,079 ----------------------------------------------------------------------------------------------------- INCOME BEFORE MINORITY INTEREST AND DISCONTINUED OPERATIONS 3,828 3,340 7,433 6,502 Minority interest expense 309 315 613 613 ----------------------------------------------------------------------------------------------------- INCOME BEFORE DISCONTINUED OPERATIONS 3,519 3,025 6,820 5,889 Income from discontinued operations -- 32 -- 64 ----------------------------------------------------------------------------------------------------- NET INCOME $ 3,519 $ 3,057 $ 6,820 $ 5,953 ----------------------------------------------------------------------------------------------------- NET INCOME - PER SHARE $ .46 $ .47 $ .91 $ .92 ----------------------------------------------------------------------------------------------------- RECONCILIATION OF FUNDS FROM OPERATIONS TO NET INCOME Net income $ 3,519 $ 3,057 $ 6,820 $ 5,953 Depreciation of real estate assets 1,175 1,065 2,336 2,127 Amortization of leasing costs 12 11 24 22 Gain on sale of assets -- -- -- -- Minority interest 309 318 613 619 ----------------------------------------------------------------------------------------------------- FUNDS FROM OPERATIONS $ 5,015 $ 4,451 $ 9,793 $ 8,721 ----------------------------------------------------------------------------------------------------- FUNDS FROM OPERATIONS - PER SHARE $ .60 $ .62 $ 1.20 $ 1.22 ----------------------------------------------------------------------------------------------------- WEIGHTED AVERAGE NUMBER OF SHARES AND "OP" UNITS OUTSTANDING 8,349 7,146 8,178 7,147 -----------------------------------------------------------------------------------------------------
AGREE REALTY CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
JUNE 30, DEC 31 2005 2004 ---------------------- ASSETS Real estate investments, at cost $ 257,880 $ 253,293 Accumulated depreciation (44,060) (41,728) Cash and cash equivalents 231 587 Cash - restricted -- -- Rents receivable 281 627 Investments in and advances to unconsolidated entities -- -- Deferred costs, net of amortization 1,341 1,261 Other Assets 1,526 1,662 ----------------------------------------------------------------------------------- TOTAL ASSETS $ 217,199 $ 215,702 ----------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Mortgages payable $ 52,675 $ 53,809 Construction loans -- -- Notes payable 10,800 39,200 Deferred revenue 13,138 13,483 Other liabilities 6,017 5,703 ----------------------------------------------------------------------------------- TOTAL LIABILITIES 82,630 112,195 ----------------------------------------------------------------------------------- TOTAL MINORITY INTEREST 5,827 5,875 ----------------------------------------------------------------------------------- Common stock 1 1 Additional paid-in capital 142,209 109,600 Accumulated deficit (11,427) (10,727) Unearned compensation (2,041) (1,242) ----------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 128,742 97,632 ----------------------------------------------------------------------------------- $ 217,199 $ 215,702 -----------------------------------------------------------------------------------