EX-99.1 2 k46849exv99w1.htm EX-99.1 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 THIRD QUARTER 2008
 
Third Quarter 2008 Highlights:
  •   3rd quarter FFO increases 7.0% year-over-year
 
  •   $0.50 per share quarterly dividend paid October 14, 2008
     FARMINGTON HILLS, MI (October 29, 2008) — Agree Realty Corporation (NYSE: ADC) today announced results for the quarter ended September 30, 2008. For the third quarter, funds from operations (“FFO”) increased 7.0% to $5,532,000 compared with funds from operations in the third quarter of 2007 of $5,170,000. Diluted funds from operations per share were $0.66 per share compared with $0.62 per share for the third quarter of 2007. Net income was $3,849,000, or $0.50 per share on a diluted basis, compared with net income for the third quarter of 2007 of $3,613,000 or $0.47 per share. Total revenues increased 6.9% to $9,029,000, compared with total revenues of $8,450,000 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 nine months ended September 30, 2008, FFO was $16,118,000 compared with FFO for the nine months ended September 30, 2007 of $15,473,000. FFO per diluted share was $1.93 compared with $1.85 for the nine months ended September 30, 2007. Net income was $11,194,000, or $1.46 per diluted share, compared with net income for the comparable period last year of $10,821,000, or $1.41 per diluted share. Total revenues increased 5.1% to $26,586,000 compared with total revenues of $25,291,000 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, Port St. John, Florida and Brighton, Michigan are completed.” said Richard Agree, President and Chief Executive Officer. “Despite difficult market conditions, we achieved year-over-year growth of 7%. We continue to execute our long-term business plan of developing projects for high-quality national retailers and look forward to upcoming announcements highlighting additional development activity.”
Dividend
     The Company paid a cash dividend of $0.50 per share on October 14, 2008 to shareholders of record on September 30, 2008. The dividend is equivalent to an annualized dividend of $2.00 per share and represents a payout ratio of 75.6% of FFO for the quarter.

 

 

Portfolio
     At September 30, 2008, the Company’s total assets were $252,714,000 and its portfolio consisted of 68 properties located in 16 states and totaling 3,447,554 square feet. The portfolio was 99.2% leased at the end of the quarter.
     The Company’s construction in progress balance totaled approximately $9,045,000 at September 30, 2008, and we capitalized $106,000 of construction period interest during the third quarter of 2008.
Lease Expirations
     The following table, as of September 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  
Year   Expiring     Footage     Total     Base Rent     of Total  
2008
     5       12,300       0.4 %   $ 72,860       0.2 %
2009
     19       191,726       5.6 %     966,717       2.9 %
2010
     21       304,757       8.9 %     1,824,426       5.5 %
2011
     27       236,154       6.9 %     1,695,218       5.1 %
2012
     14       76,560       2.2 %     617,385       1.9 %
2013
     16       314,313       9.2 %     1,682,771       5.1 %
2014
     4       174,558       5.1 %     837,006       2.5 %
2015
     11       651,242       19.0 %     4,665,262       14.0 %
2016
     5       80,945       2.4 %     1,664,513       5.0 %
2017
     4       55,303       1.6 %     848,440       2.5 %
Thereafter
     51       1,325,043       38.7 %     18,419,060       55.3 %
 
                                  
Total
     177       3,422,901             $ 33,293,658          
 
                                  

 

 

Annualized Base Rent of Properties
     The following is a breakdown of base rents in effect at September 30, 2008 for each type of retail tenant:
                                 
Credit Analysis                        
Retail   Annualized     Percent of     Square     Percent of  
Tenant   Base Rent     Total     Feet     Total  
 
National
   $ 29,477,050       88.6 %     2,931,456       85.6 %
Regional
     2,640,792       7.9 %     375,206       11.0 %
Local
     1,175,816       3.5 %     116,439       3.4 %
 
                            
Total
   $ 33,293,658               3,423,101          
 
                            
Major Tenants
     The following is a breakdown of base rents in effect at September 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       29.6 %     979,474       28.4 %
Walgreen
     8,599,599       25.8 %     345,130       10.0 %
Kmart
     3,847,911       11.6 %     999,766       29.0 %
 
                        
Subtotal
   $ 22,309,237       67.0 %     2,324,370       67.4 %
 
                        
Outstanding Shares and Operating Partnership Units
     For the three months and nine months ended September 30, 2008, the Company’s fully diluted weighted average shares outstanding were 7,690,538 and 7,690,096, respectively. The basic weighted average shares outstanding for the three months and nine months ended September 30, 2008 were 7,677,790 and 7,676,787, 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 September 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 68 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     Nine Months Ended  
    September 30,     September 30,  
    2008     2007     2008     2007  
Revenues:
                                
Minimum rents
   $ 8,339     $ 7,755     $ 24,451     $ 23,084  
Percentage rent
     —       14       5       30  
Operating cost reimbursements
     690       681       2,127       2,164  
Other income
     —       —       3       13  
 
                        
Total Revenues
     9,029       8,450       26,586       25,291  
 
                        
Expenses:
                                
Real estate taxes
     466       468       1,383       1,393  
Property operating expenses
     394       381       1,347       1,327  
Land lease payments
     205       169       545       507  
General and administration
     1,039       966       3,264       2,938  
Depreciation and amortization
     1,366       1,259       4,009       3,756  
Interest expense
     1,377       1,280       3,877       3,608  
 
                        
Total Expenses
     4,847       4,523       14,425       13,529  
 
                        
Income before minority interest
     4,182       3,927       12,161       11,762  
Minority interest
     333       314       967       941  
 
                        
Net Income
   $ 3,849     $ 3,613     $ 11,194     $ 10,821  
 
                        
Net Income Per Share — Dilutive
   $ 0.50     $ 0.47     $ 1.46     $ 1.41  
 
                        
Reconciliation of Funds from Operations to Net Income: (1)
                                
Net income
   $ 3,849     $ 3,613     $ 11,194     $ 10,821  
Depreciation of real estate assets
     1,335       1,230       3,912       3,674  
Amortization of leasing costs
     15       13       45       37  
Minority interest
     333       314       967       941  
 
                        
Funds from Operations
   $ 5,532     $ 5,170     $ 16,118     $ 15,473  
 
                        
Funds from Operations Per Share — Dilutive
   $ 0.66     $ 0.62     $ 1.93     $ 1.85  
 
                        
Weighted average number of shares and OP units outstanding — dilutive
     8,364       8,366       8,364       8,371  
 
                        
 
(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)
                 
    September 30,     December 31  
    2008     2007  
Assets
                
Land
   $ 87,234     $ 87,234  
Buildings
     210,434       197,034  
Accumulated depreciation
     (57,159 )     (53,251 )
Property under development
     9,045       4,806  
Cash and cash equivalents
     159       545  
Rents receivable
     753       770  
Deferred costs, net of amortization
     1,493       1,261  
Other assets
     755       949  
 
            
Total Assets
   $ 252,714     $ 239,348  
 
            
 
                
Liabilities
                
Mortgages payable
   $ 68,519     $ 45,760  
Notes payable
     29,200       36,800  
Deferred revenue
     10,897       11,414  
Dividends and distributions payable
     4,231       4,212  
Other liabilities
     2,046       3,652  
 
            
Total Liabilities
     114,893       101,838  
 
            
Total minority interest
     5,853       5,896  
 
            
Stockholders’ Equity
                
Common stock
     1       1  
Additional paid-in capital
     143,116       141,261  
Accumulated deficit
     (11,149 )     (10,648 )
 
            
Total Stockholders’ Equity
     131,968       131,614  
 
            
 
   $ 252,714     $ 239,348