-----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, QsTnUpxiXqUmhktcWnapq6ZnPAMNhpqHK8ub5zZgaDAU/StMNwKYbKyllLkgNLef 4fpNpIwUcsTo5AwLklk7LQ== 0000950124-06-000841.txt : 20060224 0000950124-06-000841.hdr.sgml : 20060224 20060224115912 ACCESSION NUMBER: 0000950124-06-000841 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060224 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060224 DATE AS OF CHANGE: 20060224 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: 06641668 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 k02836e8vk.txt CURRENT REPORT, DATED FEBRUARY 24, 2006 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: February 24, 2006 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 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 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2 (b)) [ ] Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4 (c)) ITEM 9.01. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits Exhibit 99.1 - Press Release issued by Agree Realty Corporation, dated February 24, 2006 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 February 24, 2006, the Company issued a press release describing its results of operations for the fourth quarter ended December 31, 2005. 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, 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 Financial Officer DATED: February 24, 2006 EXHIBIT INDEX
Exhibit Number Description - -------------- -------------- 99.1 Press Release of Agree Realty Corporation dated February 24, 2006
EX-99.1 2 k02836exv99w1.txt PRESS RELEASE ISSUED BY AGREE REALTY CORPORATION, DATED FEBRUARY 24, 2006 Exhibit 99.1 PRESS RELEASE - FOR IMMEDIATE RELEASE CONTACT: Kenneth R. Howe, Chief Financial Officer (248) 737-4190 AGREE REALTY CORPORATION REPORTS FOURTH QUARTER 2005 OPERATING RESULTS FOURTH QUARTER 2005 HIGHLIGHTS: FINANCIAL INFORMATION - Diluted FFO per share of $0.55 - $0.49 per share quarterly dividend paid January 5, 2006 FARMINGTON HILLS, MI (February 24, 2006) - Agree Realty Corporation (NYSE: ADC) today announced results for the quarter ended December 31, 2005. For the fourth quarter, funds from operations were $4,567,000 compared with funds from operations in the fourth quarter of 2004 of $4,792,000. Diluted funds from operations per share were $0.55 per share compared with $0.67 per share for the fourth quarter of 2004. Net income was $5,773,000, or $0.75 per share on a diluted basis, compared with net income for the fourth quarter of 2004 of $3,275,000, or $0.51 per share. Total revenues increased 8.4% to $8,328,000, compared with total revenues of $7,686,000 in the fourth quarter of 2004. A reconciliation of net income to FFO is included in the financial table accompanying this press release. For the year ended December 31, 2005, funds from operations increased 5.3% to $19,308,000 compared with funds from operations for the year ended December 31, 2004 of $18,337,000. Diluted funds from operations per share were $2.34 per share compared with $2.57 per share for the year ended December 31, 2004. Net income was $16,048,000, or $2.11 per share on a diluted basis, compared with net income for the comparable period last year of $13,123,000, or $2.03 per share. Total revenues increased 8.3% to $31,585,000, compared with total rental revenues of $29,157,000 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 January 5, 2006 to shareholders of record on December 23, 2005. The dividend is equivalent to an annualized dividend of $1.96 per share and represents a payout ratio of 89.1% of funds from operations for the quarter. PORTFOLIO RESULTS At December 31, 2005, Agree Realty Corporation's total assets were $224,299,000. At year end our portfolio consisted of 59 properties totaling 3,362,971 million square feet located in 15 states. The portfolio was 98.6% leased at the end of the year. For the year ended December 31, 2005 our fully diluted weighted shares outstanding were 7,588,164 shares. For the quarter ended December 31, 2005, our fully diluted weighted average shares outstanding were 7,673,279 shares On October 31, 2005, we completed the sale of a community shopping center for approximately $8.8 million. The property was anchored by Kmart Corporation and Roundy's Foods and was located in Iron Mountain, Michigan. On November 5, 2005 we completed the development of a retail property in Delta Township, Michigan. The property is leased to Walgreen Co. During November 2005 we acquired three (3) freestanding net leased properties that added 32,273 square feet of gross leasable area to our operating portfolio and cost approximately $9.1 million. The properties are located in Roseville, Michigan, Mt Pleasant, Michigan and N Cape May, New Jersey and are leased to Rite Aid. During the fourth quarter 2005 we recognized expenses totaling $476,480 due to the write-off of development costs for sites that development was no longer considered probable. These expenses were for contracted services to investigate development opportunities in Florida and surrounding states. For the year ended December 31, 2005 we expensed a total of $742,564 of these costs for sites that development is no longer considered probable. At December 31, 2005 our construction in progress balance totaled approximately $1,465,000 and we capitalized $47,000 of construction period interest during the fourth quarter 2005. In January 2006 we repaid $5.0 million on our secured line of credit. 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.
December 31, 2005 Gross Leasable Area Annualized Base Rent Number Expiration of Leases Square Percent Percent Year Expiring Footage of Total Amount of Total - ---------- ---------- ------- -------- -------- -------- 2006 20 75,837 2.3% $ 532,879 1.8% 2007 11 66,200 2.0% 577,662 1.9% 2008 26 311,205 9.4% 1,381,209 4.6% 2009 14 176,590 5.3% 857,714 2.9% 2010 17 303,885 9.2% 1,816,095 6.1% 2011 16 214,237 6.5% 1,442,873 4.9% 2012 2 2,760 .1% 25,360 .1% 2013 1 51,868 1.6% 492,746 1.7% 2014 3 172,958 5.2% 824,206 2.8% 2015 11 730,525 22.0% 5,072,330 17.1% Thereafter 43 1,210,513 36.4% 16,686,425 56.1% ------------------------------------------------------------- Total 164 3,316,578 100.0% $29,709,499 100.0% -------------------------------------------------------------
ANNUALIZED BASE RENT OF OUR PROPERTIES The following is a breakdown of base rents in place at December 31, 2005 for each type of retail tenant: National $26,853,180 90% Regional 1,714,322 6% Local 1,141,997 4% ----------- ---- Total $29,709,499 100% ----------- ----
MAJOR TENANTS The following is a breakdown of base rents in place at December 31, 2005 for each of our Major Tenants: Borders (18) $ 9,714,132 33% Walgreen (17) 6,320,599 21% Kmart (12) 3,847,911 13% ----------- ---- Total $19,882,642 67% ----------- ----
OPERATING PARTNERSHIP UNITS As of December 31, 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 fifteen (15) 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 Year ended December 31, December 31, -------------------------------------------- 2005 2004 2005 2004 -------------------------------------------- REVENUE Minimum rents $ 7,290 $ 6,813 $ 28,387 $ 25,966 Percentage rent 29 34 68 56 Operating cost reimbursements 985 838 3,083 2,885 Unconsolidated entities - - - 217 Other income 24 1 47 33 - ------------------------------------------------------------------------------------------------------------ TOTAL REVENUE 8,328 7,686 31,585 29,157 - ------------------------------------------------------------------------------------------------------------ EXPENSES Real estate taxes 433 397 1,749 1,693 Property operating expenses 577 451 2,012 1,791 Land lease payments 198 185 784 737 General and administration 1,526 865 4,191 2,848 Depreciation and amortization 1,176 1,142 4,637 4,249 Interest expense 1,102 1,168 4,159 4,507 - ------------------------------------------------------------------------------------------------------------ TOTAL EXPENSES 5,012 4,208 17,532 15,825 - ------------------------------------------------------------------------------------------------------------ INCOME BEFORE MINORITY INTEREST AND DISCONTINUED OPERATIONS 3,316 3,478 14,053 13,332 Minority interest expense 266 328 1,145 1,257 - ------------------------------------------------------------------------------------------------------------ INCOME BEFORE DISCONTINUED OPERATIONS 3,050 3,150 12,908 12,075 Gain on sale of asset from discontinued operations 2,653 - 2,654 523 Income from discontinued operations 70 125 486 525 - ------------------------------------------------------------------------------------------------------------ NET INCOME $ 5,773 $ 3,275 $ 16,048 $ 13,123 - ------------------------------------------------------------------------------------------------------------ NET INCOME - PER SHARE $ .75 $ .51 $ 2.11 $ 2.03 - ------------------------------------------------------------------------------------------------------------ RECONCILIATION OF FUNDS FROM OPERATIONS TO NET INCOME Net income $ 5,773 $ 3,275 $ 16,048 $ 13,123 Depreciation of real estate assets 1,163 1,165 4,684 4,380 Amortization of leasing costs 12 11 48 45 Gain on sale of assets (2,889) - (2,896) (577) Minority interest 508 341 1,424 1,366 - ------------------------------------------------------------------------------------------------------------ FUNDS FROM OPERATIONS $ 4,567 $ 4,792 $ 19,308 $ 18,337 - ------------------------------------------------------------------------------------------------------------ FUNDS FROM OPERATIONS - PER SHARE $ .55 $ .67 $ 2.34 $ 2.57 - ------------------------------------------------------------------------------------------------------------ WEIGHTED AVERAGE NUMBER OF SHARES AND "OP" UNITS OUTSTANDING 8,347 7,152 8,262 7,149 - ------------------------------------------------------------------------------------------------------------
AGREE REALTY CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
DEC 31, DEC 31 2005 2004 ---------------------------- ASSETS Land $ 73,035 $ 70,592 Buildings 185,872 180,596 Accumulated depreciation (43,772) (41,728) Property under development 265 2,105 Cash and cash equivalents 5,715 587 Rents receivable 731 627 Deferred costs, net of amortization 1,241 1,261 Other Assets 1,212 1,662 - ------------------------------------------------------------------------------------ TOTAL ASSETS $ 224,299 $ 215,702 - ------------------------------------------------------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Mortgages payable $ 51,561 $ 53,809 Notes payable 17,500 39,200 Deferred revenue 12,794 13,483 Dividends and distributions payable 4,089 3,509 Other liabilities 1,749 2,194 - ------------------------------------------------------------------------------------ TOTAL LIABILITIES 87,693 112,195 - ------------------------------------------------------------------------------------ TOTAL MINORITY INTEREST 5,979 5,875 - ------------------------------------------------------------------------------------ Common stock 1 1 Additional paid-in capital 142,127 109,600 Accumulated deficit (9,718) (10,727) Unearned compensation (1,783) (1,242) - ------------------------------------------------------------------------------------ TOTAL STOCKHOLDERS' EQUITY 130,627 97,632 - ------------------------------------------------------------------------------------ $ 224,299 $ 215,702 - ------------------------------------------------------------------------------------
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