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 (Date of earliest event reported): July 31, 2008

AGREE REALTY CORPORATION

(Exact name of registrant as specified in its charter)

Maryland
(State of other jurisdiction of incorporation)

1-12928	38-3148187
(Commission file number)	(I.R.S. Employer Identification No.)
31850 Northwestern Highway
Farmington Hills, MI	48334
(Address of principal executive offices)	(Zip code)

(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:

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

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

     On July 31, 2008, Agree Realty Corporation issued a press release describing its results of operations for the second quarter ended June 30, 2008. The press release is furnished as Exhibit 99.1 to this report and is hereby incorporated by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit	Description
99.1	Press release, dated July 31, 2008, reporting the Company’s results of operations for the second quarter ended June 30, 2008.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

AGREE REALTY CORPORATION
 

/s/ Kenneth R. Howe  

Vice President, Finance, Chief Financial Officer 

Date: August 1, 2008

EXHIBIT INDEX

Exhibit	Description
99.1	Press release, dated July 31, 2008, reporting the Company’s results of operations for the second quarter ended June 30, 2008.

EX-99.1

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 SECOND QUARTER 2008

SECOND Quarter 2008 Highlights:

• 2^nd quarter FFO increases 4.9% year-over-year

• $0.50 per share quarterly dividend paid July 15, 2008

     FARMINGTON HILLS, MI (July 31, 2008) — Agree Realty Corporation (NYSE: ADC) today announced results for the quarter ended June 30, 2008. For the second quarter, funds from operations (“FFO”) increased 4.9% to $5,420,000 compared with funds from operations in the second quarter of 2007 of $5,165,000. Diluted funds from operations per share were $0.65 per share compared with $0.62 per share for the second quarter of 2007. Net income was $3,766,000, or $0.49 per share on a diluted basis, compared with net income for the second quarter of 2007 of $3,603,000 or $0.47 per share. Total revenues increased 4.9% to $8,789,000, compared with total revenues of $8,378,000 in the second quarter of 2007. A reconciliation of net income to FFO is included in the financial tables accompanying this press release.

          For the six months ended June 30, 2008, FFO was $10,586,000 compared with FFO for the six months ended June 30, 2007 of $10,304,000. FFO per diluted share was $1.27 compared with $1.23 for the six months ended June 30, 2007. Net income was $7,345,000, or $0.96 per diluted share, compared with net income for the comparable period last year of $7,208,000, or $0.94 per diluted share. Total revenues increased 4.3% to $17,557,000 compared with total revenues of $16,841,000 for the comparable period last year.

     “We are extremely pleased with the operating results for the quarter, and expect continued growth as our projects in Silver Springs Shores, Florida, Shelby Township, Michigan, Brighton, Michigan and Big Rapids, Michigan are completed.” said Richard Agree, President and Chief Executive Officer. “Despite difficult market conditions, we achieved year-over-year growth of nearly 5%. We continue to build a pipeline of development projects for high-quality national tenants and look forward to upcoming announcements highlighting additional development activity.”

Dividend

     The Company paid a cash dividend of $0.50 per share on July 15, 2008 to shareholders of record on June 30, 2008. The dividend is equivalent to an annualized dividend of $2.00 per share and represents a payout ratio of 76.9% of FFO for the quarter

Portfolio

     At June 30, 2008, the Company’s total assets were $247,900,000 and its portfolio consisted of 67 properties located in 16 states and totaling 3,432,734 square feet. The portfolio was 99.3% leased at the end of the quarter.

     The Company’s construction in progress balance totaled approximately $6,576,000 at June 30, 2008, and we capitalized $148,000 of construction period interest during the second quarter of 2008.

Lease Expirations

     The following table, as of June 30, 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.

Expiring Leases

	Number of
Expiration	Leases		Square		Percent of			Annualized		Percent of
Year	Expiring		Footage		Total			Base Rent		Total
2008		5		12,300		0.4	%	$	72,860		0.2	%
2009		19		191,726		5.6	%		963,717		2.9	%
2010		21		304,757		8.9	%		1,859,626		5.6	%
2011		27		236,154		6.9	%		1,695,819		5.1	%
2012		14		76,560		2.2	%		617,385		1.9	%
2013		16		314,313		9.2	%		1,669,637		5.1	%
2014		4		174,558		5.1	%		837,006		2.5	%
2015		11		651,242		19.1	%		4,665,262		14.1	%
2016		5		80,945		2.4	%		1,664,513		5.0	%
2017		4		55,303		1.6	%		848,440		2.6	%
Thereafter		50		1,310,223		38.4	%		18,129,532		54.9	%
Total		176		3,408,081				$	33,023,797

Annualized Base Rent of Properties

     The following is a breakdown of base rents in effect at June 30, 2008 for each type of retail tenant:

Credit Analysis

Retail	Annualized		Percent of			Square		Percent of
Tenant	Base Rent		Total			Feet		Total
National	$	29,251,716		88.6	%		2,916,636		85.6	%
Regional		2,596,264		7.9	%		375,206		11.0	%
Local		1,175,817		3.5	%		116,439		3.4	%
Total	$	33,023,797					3,408,281

Major Tenants

     The following is a breakdown of base rents in effect at June 30, 2008 for each of the Company’s major tenants:

Tenant Analysis

Retail	Annualized		Percent of			Square		Percent of
Tenant	Base Rent		Total			Feet		Total
Borders	$	9,861,727		29.9	%		979,474		28.5	%
Walgreen		8,354,599		25.3	%		330,310		9.6	%
Kmart		3,847,911		11.7	%		999,766		29.1	%
Subtotal	$	22,064,237		66.9	%		2,309,550		67.2	%

Outstanding Shares and Operating Partnership Units

     For the three months and six months ended June 30, 2008, the Company’s fully diluted weighted average shares outstanding were 7,683,039 and 7,682,947, respectively. The basic weighted average shares outstanding for the three months and six months ended June 30, 2008 were 7,676,258 and 7,672,500, respectively.

     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 June 30, 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 67 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				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007
Revenues:
Minimum rents	$	8,133	$	7,643	$	16,112	$	15,330
Percentage rent		—		2		5		16
Operating cost reimbursements		654		726		1,437		1,482
Other income		2		7		3		13
Total Revenues		8,789		8,378		17,557		16,841
Expenses:
Real estate taxes		451		467		916		925
Property operating expenses		359		436		954		947
Land lease payments		171		169		339		339
General and administration		1,130		975		2,226		1,971
Depreciation and amortization		1,348		1,263		2,643		2,496
Interest expense		1,239		1,152		2,499		2,328
Total Expenses		4,698		4,462		9,577		9,006
Income before minority interest		4,091		3,916		7,980		7,835
Minority interest		325		313		635		627
Net Income	$	3,766	$	3,603	$	7,345	$	7,208
Net Income Per Share — Dilutive	$	0.49	$	0.47	$	0.96	$	0.94
Reconciliation of Funds from Operations to Net Income: (1)
Net income	$	3,766	$	3,603	$	7,345	$	7,208
Depreciation of real estate assets		1,314		1,236		2,577		2,444
Amortization of leasing costs		15		13		30		25
Minority interest		325		313		634		627
Funds from Operations	$	5,420	$	5,165	$	10,586	$	10,304
Funds from Operations Per Share — Dilutive	$	0.65	$	0.62	$	1.27	$	1.23
Weighted average number of shares and OP units outstanding — dilutive		8,357		8,365		8,356		8,366

(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)

	June 30,			December 31
	2008			2007
Assets
Land	$	87,234		$	87,234
Buildings		206,895			197,034
Accumulated depreciation		(55,824	)		(53,251	)
Property under development		6,576			4,806
Cash and cash equivalents		181			545
Rents receivable		657			770
Deferred costs, net of amortization		1,293			1,261
Other assets		888			949
Total Assets	$	247,900		$	239,348
Liabilities
Mortgages payable	$	44,408		$	45,760
Notes payable		47,750			36,800
Deferred revenue		11,070			11,414
Dividends and distributions payable		4,235			4,212
Other liabilities		2,837			3,652
Total Liabilities		110,300			101,838
Total minority interest		5,857			5,896
Stockholders’ Equity
Common stock		1			1
Additional paid-in capital		142,842			141,261
Accumulated deficit		(11,100	)		(10,648	)
Total Stockholders’ Equity		131,743			131,614
	$	247,900		$	239,348