-----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, LyCQkzpfjcbJLL9vyjESULJMmqxnP+jETI3dA+i2CqOk/typKM3q/vOb/WbIMQ0e OlCoU3rxrEKZdSKVTgHvtQ== 0000950124-06-004107.txt : 20060802 0000950124-06-004107.hdr.sgml : 20060802 20060802144631 ACCESSION NUMBER: 0000950124-06-004107 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060802 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060802 DATE AS OF CHANGE: 20060802 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: 06997556 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 k07385e8vk.txt CURRENT REPORT, DATED AUGUST 2, 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: August 2, 2006 AGREE REALTY CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MARYLAND (State or 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 August 1, 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 August 1, 2006, the Company issued a press release describing its results of operations for the second quarter ending June 30, 2006. 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, 2005. 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: August 2, 2006 EXHIBIT INDEX
Exhibit Number Description - -------------- ------------ 99.1 Press Release of Agree Realty Corporation dated August 1, 2006
EX-99.1 2 k07385exv99w1.txt PRESS RELEASE, DATED AUGUST 1, 2006 Exhibit 99.1 PRESS RELEASE - FOR IMMEDIATE RELEASE CONTACT: Kenneth R. Howe, Chief Financial Officer (248) 737-4190 AGREE REALTY CORPORATION REPORTS SECOND QUARTER 2006 OPERATING RESULTS SECOND QUARTER 2006 HIGHLIGHTS: FINANCIAL INFORMATION - Diluted FFO per share of $0.59 - $0.49 per share quarterly dividend paid July 13, 2006 FARMINGTON HILLS, MI (August 1, 2006) - Agree Realty Corporation (NYSE: ADC) today announced results for the quarter ended June 30, 2006. For the second quarter, funds from operations were $4,953,000 compared with funds from operations in the second quarter of 2005 of $5,015,000. Diluted funds from operations per share were $0.59 per share compared with $0.60 per share for the second quarter of 2005. Net income was $3,462,000, or $0.45 per share on a diluted basis, compared with net income for the second quarter of 2005 of $3,519,000, or $0.46 per share. Total revenues increased 5.6% to $8,167,000, compared with total revenues of $7,737,000 in the second quarter of 2005. A reconciliation of net income to funds from operations is included in the financial table accompanying this press release. For the six months ended June 30, 2006, funds from operations were $9,923,000 compared with funds from operations for the six months ended June 30, 2005 of $9,793,000. Diluted funds from operations per share were $1.18 per share compared with $1.20 per share for the six months ended June 30, 2005. Net income was $6,949,000, or $0.89 per share on a diluted basis, compared with net income for the comparable period last year of $6,820,000, or $0.91 per share. Total revenues increased 5.7% to $16,440,000, compared with total revenues of $15,561,000 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 13, 2006 to shareholders of record on June 30, 2006. The dividend is equivalent to an annualized dividend of $1.96 per share and represents a payout ratio of 83.1% of funds from operations for the quarter. PORTFOLIO RESULTS At June 30, 2006, Agree Realty Corporation's total assets were $216,260,000 and our portfolio consisted of 59 properties totaling 3,362,971 million square feet located in 15 states. The portfolio was 98.3% leased at the end of the quarter. For the six month and three month periods ended June 30, 2006 our fully diluted weighted average shares outstanding were 7,660,300 shares and 7,661,478 shares, respectively. At June 30, 2006 our construction in progress balance totaled approximately $2,735,000 and we capitalized $35,000 of construction period interest during the second quarter 2006. 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, 2006 -------------- Gross Leasable Area Annualized Base Rent ------------------- -------------------- Number Expiration of Leases Square Percent Percent Year Expiring Footage of Total Amount of Total - ------------------------------------------------------------------- 2006 3 7,600 .2% $ 63,800 .2% 2007 11 52,200 1.6% 470,670 1.6% 2008 27 313,005 9.5% 1,396,908 4.7% 2009 16 181,590 5.5% 899,114 3.0% 2010 20 331,635 10.0% 2,057,916 6.9% 2011 24 232,521 7.0% 1,608,836 5.4% 2012 4 20,760 .6% 162,793 .5% 2013 1 51,868 1.6% 492,746 1.7% 2014 3 172,958 5.2% 824,206 2.8% 2015 11 730,525 22.1% 5,075,265 17.1% Thereafter 45 1,212,536 36.7% 16,665,898 56.1% ------------------------------------------------- Total 165 3,307,198 100.0% $29,718,152 100.0% ----------------------------------------------------
ANNUALIZED BASE RENT OF OUR PROPERTIES The following is a breakdown of base rents in place at June 30, 2006 for each type of retail tenant: National $26,465,043 89% Regional 2,182,579 7% Local 1,070,530 4% --------- ---- Total $29,718,152 100% ----------- ----
MAJOR TENANTS The following is a breakdown of base rents in place at June 30, 2006 for each of our Major Tenants: Borders (18) $ 9,752,295 33% Walgreen (17) 6,320,599 21% Kmart (12) 3,847,911 13% --------- ---- Total $19,920,805 67% ----------- ----
OPERATING PARTNERSHIP UNITS As of June 30, 2006 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 Six months ended June 30, June 30, ---------------------------------------------- 2006 2005 2006 2005 ------- ------- ------- ------- REVENUE Minimum rents $ 7,430 $ 6,983 $14,963 $14,035 Percentage rent 13 6 27 25 Operating cost reimbursements 710 731 1,422 1,484 Other income 14 17 28 17 ------- ------- ------- ------- TOTAL REVENUE 8,167 7,737 16,440 15,561 ------- ------- ------- ------- EXPENSES Real estate taxes 462 431 902 872 Property operating expenses 381 472 928 1,093 Land lease payments 195 195 391 391 General and administration 1,022 834 2,073 1,754 Depreciation and amortization 1,203 1,155 2,406 2,294 Interest expense 1,139 974 2,292 2,028 ------- ------- ------- ------- TOTAL EXPENSES 4,402 4,061 8,892 8,432 ------- ------- ------- ------- INCOME BEFORE MINORITY INTEREST AND DISCONTINUED OPERATIONS 3,765 3,676 7,548 7,130 Minority interest expense 303 297 599 588 ------- ------- ------- ------- INCOME BEFORE DISCONTINUED OPERATIONS 3,462 3,379 6,949 6,543 ------- ------- ------- ------- Income from discontinued operations -- 140 -- 278 ------- ------- NET INCOME $ 3,462 $ 3,519 $ 6,949 $ 6,820 ------- ------- ------- ------- NET INCOME - PER SHARE $ .45 $ .46 $ .89 $ .91 ------- ------- ------- ------- RECONCILIATION OF FUNDS FROM OPERATIONS TO NET INCOME Net income $ 3,462 $ 3,519 $ 6,949 $ 6,820 Depreciation of real estate assets 1,178 1,175 2,355 2,336 Amortization of leasing costs 10 12 20 24 Gain on sale of assets -- -- -- -- Minority interest 303 309 599 613 ------- ------- ------- ------- FUNDS FROM OPERATIONS $ 4,953 $ 5,015 $ 9,923 $ 9,793 ------- ------- ------- ------- FUNDS FROM OPERATIONS - PER SHARE $ .59 $ .60 $ 1.18 $ 1.20 ------- ------- ------- ------- WEIGHTED AVERAGE NUMBER OF SHARES AND OP UNITS OUTSTANDING - DILUTIVE 8,335 8,349 8,334 8,178 ------- ------- ------- -------
AGREE REALTY CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
JUNE 30, DEC. 31 2006 2005 --------- --------- ASSETS Land $ 73,035 $ 73,035 Buildings 184,802 185,032 Accumulated depreciation (45,966) (43,772) Property under development 1,535 265 Cash and cash equivalents 216 5,715 Rents receivable 275 731 Deferred costs, net of amortization 1,191 1,241 Other Assets 1,172 1,213 --------- --------- TOTAL ASSETS $ 216,260 $ 223,460 --------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY Mortgages payable $ 49,527 $ 50,722 Notes payable 12,300 17,500 Deferred revenue 12,449 12,794 Dividends and distributions payable 4,097 4,089 Other liabilities 1,643 1,749 --------- --------- TOTAL LIABILITIES 80,016 86,854 --------- --------- TOTAL MINORITY INTEREST 5,917 5,979 --------- --------- Common stock 1 1 Additional paid-in capital 143,138 143,138 Accumulated deficit (10,421) (9,717) Unearned compensation (2,391) (2,795) --------- --------- TOTAL STOCKHOLDERS' EQUITY 130,327 130,627 --------- --------- $ 216,260 $ 223,460 --------- ---------
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