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: May 4, 2007

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):

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

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

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 May 3, 2007, the Company issued a press release describing its results of operations for the first quarter ending March 31, 2007. 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, 2006.

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

(c) Exhibits

Exhibit 99.1 — Press Release issued by Agree Realty Corporation, dated May 3, 2007

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: May 4, 2007

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release of Agree Realty Corporation dated May 3, 2007

EX-99.1

PRESS RELEASE — FOR IMMEDIATE RELEASE

CONTACT: Kenneth R. Howe, Chief Financial Officer (248) 737-4190

AGREE REALTY CORPORATION REPORTS FIRST QUARTER 2007 OPERATING RESULTS

First Quarter 2007 Highlights:

Financial Information

• Diluted FFO per share of $0.61

• $0.49 per share quarterly dividend paid April 12, 2007

     FARMINGTON HILLS, MI (May 3, 2007) — Agree Realty Corporation (NYSE: ADC) today announced results for the quarter ended March 31, 2007. For the first quarter, funds from operations were $5,139,000 compared with funds from operations in the first quarter of 2006 of $4,870,000. Diluted funds from operations per share were $0.61 per share compared with $0.58 per share for the first quarter of 2006. Net income was $3,605,000, or $0.47 per share on a diluted basis, compared with net income for the first quarter of 2006 of $3,387,000, or $0.45 per share. Total revenues increased 2.3% to $8,463,000, compared with total revenues of $8,272,000 in the first quarter of 2006. A reconciliation of net income to funds from operations is included in the financial table accompanying this press release.

     “We are pleased with the operating results for the quarter ended March 31, 2007 and expect continued growth of our funds from operations as our development projects in Livonia, Michigan, Barnesville, Georgia and Macomb, Michigan are completed,” said Richard Agree, President and Chairman of Agree Realty Corporation.

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 April 12, 2007 to shareholders of record on March 30, 2007. The dividend is equivalent to an annualized dividend of $1.96 per share and represents a payout ratio of 80.3% of funds from operations for the quarter.

Portfolio Results

     At March 31, 2007, Agree Realty Corporation’s total assets were $224,595,000 and our portfolio consisted of 60 properties totaling 3,355,234 million square feet located in 15 states. The portfolio was 99.7% leased at the end of the quarter. For the quarter ended March 31, 2007 our basic and fully diluted weighted average shares outstanding were 7,643,026 and 7,685,616 shares, respectively.

     At March 31, 2007 our construction in progress balance totaled approximately $7,800,000 and we capitalized $105,000 of construction period interest during the first quarter 2007.

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.

			March 31, 2007
	Number		Gross Leasable Area					Annualized Base Rent
Expiration	of Leases		Square		Percent					Percent
Year	Expiring		Footage		of Total			Amount		of Total
2007		3		14,300		.4	%	$	127,700		.4	%
2008		26		311,925		9.3	%		1,375,758		4.5	%
2009		20		193,326		5.8	%		974,511		3.2	%
2010		20		328,035		9.8	%		2,031,495		6.7	%
2011		26		233,524		7.0	%		1,665,429		5.5	%
2012		12		68,260		2.0	%		526,177		1.7	%
2013		1		51,868		1.5	%		497,068		1.6	%
2014		3		172,958		5.2	%		824,206		2.7	%
2015		10		646,442		19.3	%		4,612,462		15.2	%
2016		5		80,945		2.4	%		1,664,513		5.5	%
Thereafter		42		1,253,651		37.3	%		16,091,624		53.0	%
Total		168		3,355,234		100.0	%	$	30,390,943		100.0	%

Annualized Base Rent of our Properties

The following is a breakdown of base rents in place at March 31, 2007 for each type of retail tenant:

National	$	27,136,470	89	%
Regional		2,146,579	7	%
Local		1,107,894	4	%
Total	$	30,390,943	100	%

Major Tenants

The following is a breakdown of base rents in place at March 31, 2007 for each of our Major Tenants:

Borders (18)	$	9,861,727	32	%
Walgreen (18)		6,648,599	22	%
Kmart (12)		3,847,911	13	%
Total	$	20,358,237	67	%

Operating Partnership Units

     As of March 31, 2007 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
	March 31,
	2007		2006
Revenue
Minimum rents	$	7,687	$	7,532
Percentage rent		14		14
Operating cost reimbursements		756		712
Other income		6		14
Total Revenue		8,463		8,272
Expenses
Real estate taxes		457		440
Property operating expenses		510		547
Land lease payments		170		195
General and administration		996		1,051
Depreciation and amortization		1,234		1,202
Interest expense		1,177		1,154
Total Expenses		4,544		4,589
Income before minority interest		3,919		3,683
Minority interest expense		314		296
Net income	$	3,605	$	3,387
Net Income — per share	$	.47	$	.45
Reconciliation of Funds from Operations to Net Income
Net income	$	3,605	$	3,387
Depreciation of real estate assets		1,208		1,177
Amortization of leasing costs		12		10
Minority interest		314		296
Funds from Operations	$	5,139	$	4,870
Funds from Operations — per share	$	.61	$	.58
Weighted average number of shares and “OP” units outstanding		8,359		8,326

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

	March 31,			Dec 31
	2007			2006
ASSETS
Land	$	78,611		$	77,536
Buildings		189,193			189,117
Accumulated depreciation		(49,559	)		(48,353	)
Property under development		3,160			1,594
Cash and cash equivalents		168			464
Rents receivable		378			732
Deferred costs, net of amortization		1,392			1,441
Other Assets		1,252			984
Total Assets	$	224,595		$	223,515
LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgages payable	$	47,720		$	48,291
Notes payable		23,073			20,500
Deferred revenue		11,932			12,104
Dividends and distributions payable		4,108			4,112
Other liabilities		1,429			2,210
Total Liabilities		88,262			87,217
Total Minority Interest		5,862			5,879
Common stock		1			1
Additional paid-in capital		141,521			141,277
Accumulated deficit		(11,051	)		(10,859	)
Total Stockholders’ Equity		130,471			130,419
	$	224,595		$	223,515