EX-99.1 2 k26313exv99w1.htm PRESS RELEASE, DATED MAY 1, 2008 exv99w1
 

EXHIBIT 99.1
PRESS RELEASE — FOR IMMEDIATE RELEASE
CONTACT:   Kenneth R. Howe, Chief Financial Officer
(248) 737-4190
AGREE REALTY CORPORATION
REPORTS OPERATING RESULTS FOR THE FIRST QUARTER 2008
 
FIRST Quarter 2008 Highlights:
  •   1st Quarter diluted FFO per share of $0.62
 
  •   $0.50 per share quarterly dividend paid April 15, 2008
     FARMINGTON HILLS, MI (May 1, 2008) — Agree Realty Corporation (NYSE: ADC) today announced results for the quarter ended March 31, 2008. For the first quarter, funds from operations were $5,166,000 compared with funds from operations in the first quarter of 2007 of $5,139,000. Diluted funds from operations per share were $0.62 per share compared with $0.61 per share for the first quarter of 2007. Net income was $3,579,000, or $0.47 per share on a diluted basis, compared with net income for the first quarter of 2007 of $3,605,000, or $0.47 per share. Total revenues increased 3.6% to $8,768,000, compared with total revenues of $8,463,000 in the first quarter of 2007. A reconciliation of net income to FFO is included in the financial tables accompanying this press release.
     As anticipated, the ongoing redevelopment of Rapids Plaza negatively impacted first quarter operating results. The Company expects both new junior box tenants, Peebles and MC Sporting Goods, to come online during the second and third quarters of 2008.
     “We are pleased with the operating results for the quarter, and expect continued growth as our projects in Ypsilanti, Michigan, Shelby Township, Michigan and Marion County, Florida, as well as the redevelopment of Rapids Plaza are complete,” said Richard Agree, President and Chief Executive Officer. “Within the past year we have commenced or completed ten projects in four states. We look forward to upcoming announcements highlighting additional development activity. Despite adverse market conditions, we continue to build a pipeline of development projects for high-quality national tenants.”
Dividend
     The Company paid a cash dividend of $0.50 per share on April 15, 2008 to shareholders of record on March 31, 2008. The dividend is equivalent to an annualized dividend of $2.00 per share and represents a payout ratio of 80.6% of FFO for the quarter
Portfolio
     At March 31, 2008, the Company’s total assets were $241,882,000 and its portfolio consisted of 65 properties located in 16 states and totaling 3,404,264 square feet. The portfolio was 99.6% leased at the end of the quarter.

 

 

     The Company’s construction in progress balance totaled approximately $8,055,000 at March 31, 2008, and we capitalized $138,000 of construction period interest during the first quarter of 2008.
Lease Expirations
     The following table, as of March 31, 2008, sets forth lease expirations for the next 10 years for the Company’s freestanding properties and community shopping centers, assuming that none of the tenants exercise renewal options or terminate their leases prior to the contractual expiration date.
                                         
            Gross Leasable Area     Annualized Base Rent  
    Number of                            
Expiration   Leases     Square     Percent of             Percent of  
Year   Expiring     Footage     Total     Amount     Total  
2008
     5       14,500       .4 %   $ 87,735       .3 %
2009
     20       193,526       5.7       977,211       3.0  
2010
     21       304,757       9.0       1,859,626       5.7  
2011
     29       244,154       7.2       1,746,219       5.4  
2012
     14       76,560       2.3       615,810       1.9  
2013
     16       314,313       9.3       1,657,737       5.1  
2014
     4       174,558       5.1       837,006       2.6  
2015
     11       651,242       19.3       4,665,262       14.4  
2016
     5       80,945       2.4       1,664,513       5.1  
2017
     4       55,303       1.6       848,440       2.6  
Thereafter
     48       1,281,753       37.7       17,431,612       53.9  
 
                              
Total
     177       3,391,611       100.0 %   $ 32,391,171       100.0 %
 
                              
Annualized Base Rent of Properties
     The following is a breakdown of base rents in effect at March 31, 2008 for each type of retail tenant:
                 
Retail Tenant   Annualized Base Rent     Percent of Total Base Rent  
 
                
National
   $ 28,566,147       88 %
Regional
     2,551,344       8  
Local
     1,273,680       4  
 
            
Total
   $ 32,391,171       100 %
 
            

 

 

Major Tenants
     The following is a breakdown of base rents in effect at March 31, 2008 for each of the Company’s major tenants:
                 
Major Tenant   Annualized Base Rent     Percent of Total Base Rent  
 
                
Borders (18 properties)
   $ 9,861,727       30 %
Walgreen (21 properties)
     7,701,599       24  
Kmart (12 properties)
     3,847,911       12  
 
            
Total
   $ 21,411,237       66 %
 
            
Outstanding Shares and Operating Partnership Units
     For the three months ended March 31, 2008, the Company’s fully diluted weighted average shares outstanding were 7,673,858. The basic weighted average shares outstanding for the three months a ended March 31, 2008 were 7,669,992.
     The Company’s assets are held by, and all of its operations are conducted through, Agree Limited Partnership, of which the Company is the sole general partner. As of March 31, 2008, there were 673,547 operating partnership units outstanding and the Company held a 92.05% interest.
     Agree Realty Corporation owns, manages and develops properties which are primarily single tenant properties leased to major retail tenants and neighborhood community shopping centers. The Company currently owns and operates a portfolio of 65 properties, which are located in 16 states and contain 3.4 million square feet of gross leasable space.
     The Company 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 21E of the Securities Exchange Act of 1934, each as amended. These forward-looking statements represent the Company’s expectations, plans and beliefs concerning future events. Although these forward-looking statements are based on good faith beliefs, reasonable assumptions and the Company’s best judgment reflecting current information, certain factors could cause actual results to differ materially from such forward-looking statements. Such factors are detailed from time to time in reports filed or furnished by the Company with the Securities and Exchange Commission, including the Company’s Form 10-K for the year ended December 31, 2006. Except as required by law, the Company assumes no obligation to update these forward-looking statements, even if new information becomes available in the future.
     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,  
    2008     2007  
Revenues:
                
Minimum rents
   $ 7,979     $ 7,687  
Percentage rent
     5       14  
Operating cost reimbursements
     783       756  
Other income
     1       6  
 
            
Total Revenues
     8,768       8,463  
 
            
Expenses:
                
Real estate taxes
     465       457  
Property operating expenses
     594       510  
Land lease payments
     169       170  
General and administration
     1,096       996  
Depreciation and amortization
     1,295       1,234  
Interest expense
     1,260       1,177  
 
            
Total Expenses
     4,879       4,544  
     
Income before minority interest
     3,889       3,919  
Minority interest
     310       314  
     
Net Income
   $ 3,579     $ 3,605  
 
            
Net Income Per Share — Dilutive
   $ 0.47     $ 0.47  
 
            
Reconciliation of Funds from Operations to Net Income: (1)
                
Net income
   $ 3,579     $ 3,605  
Depreciation of real estate assets
     1,262       1,208  
Amortization of leasing costs
     15       12  
Minority interest
     310       314  
 
     —       —  
 
            
Funds from Operations
   $ 5,166     $ 5,139  
 
            
Funds from Operations Per Share — Dilutive
   $ 0.62     $ 0.61  
 
            
 
                
Weighted average number of shares and OP units outstanding — dilutive
     8,347       8,359  
     
 
(1)   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 and after adjustments for unconsolidated partnerships and joint ventures. Management uses FFO as a supplemental measure to conduct and evaluate the Company’s business because there are certain limitations associated with using GAAP net income by itself as the primary measure of the Company’s operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, management believes that the presentation of operating results for real estate companies that use historical cost accounting is insufficient by itself.

 

 

     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. Further, while the Company adheres to the NAREIT definition of FFO, its presentation of FFO is not necessarily comparable to similarly titled measures of other REITs due to the fact that not all REITs use the same definition.

 

 

Agree Realty Corporation
Consolidated Balance Sheets (in thousands)
(Unaudited)
                 
    March 31,     December 31  
    2008     2007  
Assets
                
Land
   $ 87,234     $ 87,234  
Buildings
     200,490       197,034  
Accumulated depreciation
     (54,511 )     (53,251 )
Property under development
     5,426       4,806  
Cash and cash equivalents
     179       545  
Rents receivable
     644       770  
Deferred costs, net of amortization
     1,314       1,261  
Other assets
     1,106       949  
     
Total Assets
   $ 241,882     $ 239,348  
 
            
 
                
Liabilities
                
Mortgages payable
   $ 45,090     $ 45,760  
Notes payable
     40,750       36,800  
Deferred revenue
     11,242       11,414  
Dividends and distributions payable
     4,213       4,212  
Other liabilities
     3,133       3,652  
     
Total Liabilities
     104,428       101,838  
     
Total minority interest
     5,869       5,896  
     
Stockholders’ Equity
                
Common stock
     1       1  
Additional paid-in capital
     142,551       141,261  
Accumulated deficit
     (10,967 )     (10,648 )
     
Total Stockholders’ Equity
     131,585       131,614  
 
            
 
   $ 241,882     $ 239,348