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 1, 2016
AGREE REALTY CORPORATION
(Exact name of registrant as specified in its charter)
Maryland
(State of other jurisdiction of incorporation)
|
1-12928 (Commission file number) |
38-3148187 (I.R.S. Employer Identification No.) |
|
70 E. Long Lake Road Bloomfield Hills, MI (Address of principal executive offices) |
48304 (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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 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 1.01. Entry into a Material Definitive Agreement.
On July 1, 2016, Agree Limited Partnership (the “Operating Partnership”), the majority-owned operating partnership of Agree Realty Corporation (the “Company”), entered into a $40 million term loan agreement (the “Agreement”). The $40 million, seven-year unsecured term loan facility (the “New Term Loan”) is due July 1, 2023. Borrowings under the New Term Loan will be priced at LIBOR plus 165 to 225 basis points, depending on the Company’s leverage ratio, with an initial applicable margin of 165 basis points. The Company has entered into an interest rate swap agreement starting on August 1, 2016 to fix LIBOR at 1.3985% until maturity, implying an all-in interest rate of 3.05% at closing. Proceeds from the New Term Loan will be used to repay borrowings under the Company’s existing revolving credit facility and for general corporate purposes. The New Term Loan may be increased to an aggregate of $75 million at the Company’s election, subject to certain terms and conditions.
The Agreement contains customary covenants, including financial covenants regarding debt levels, total liabilities, tangible net worth, fixed charge coverage, unencumbered properties, permitted investments, etc. The Company was in compliance with all covenant terms at closing.
The above summary of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement. The Company will file a copy of the Agreement with the Securities and Exchange Commission as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending June 30, 2016.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure
On July 6, 2016, the Company issued a press release announcing the Agreement. A copy of the press release is furnished as Exhibit 99.1 to this report.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit | Description |
| 99.1 | Press release, dated July 6, 2016, announcing the financing transactions. |
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 | ||
| By: | /s/ Matthew M. Partridge | |
| Name: | Matthew M. Partridge | |
| Title: | Executive Vice President, Chief Financial Officer and Secretary | |
Date: July 6, 2016
EXHIBIT INDEX
| Exhibit | Description |
| 99.1 | Press release, dated July 6, 2016, announcing the financing transactions. |
Agree Realty Announces $100 Million Long-Term Unsecured Debt Financings
BLOOMFIELD HILLS, Mich., July 6, 2016 /PRNewswire/ -- Agree Realty Corporation (NYSE: ADC) (the "Company") today announced it has entered into agreements for $100 million of long-term, unsecured, fixed rate debt. The combined $100 million unsecured financings have a weighted average term of 10 years and a blended interest rate of 3.87%.
"We are very pleased and appreciative of the continued support of our bank group and our private placement investors," said Joey Agree, President and Chief Executive Officer of Agree Realty Corporation. "These financings demonstrate our diversified access to long-term, fixed rate, unsecured debt capital and enables us to maintain excellent long-term flexibility, while further solidifying our industry-leading balance sheet."
The combined $100 million unsecured financings are comprised of a $40 million unsecured term loan (the "Term Loan") and $60 million of privately placed senior unsecured notes (the "Senior Notes"). Net proceeds from the Term Loan and Senior Notes will be used to reduce amounts outstanding under the Company's unsecured credit facility and for general corporate purposes.
The unsecured Term Loan has a 7-year term, maturing on July 1, 2023, with an interest rate based on a pricing grid over LIBOR, determined by the Company's leverage ratio. In conjunction with the new Term Loan, the Company has fixed LIBOR over the seven-year period. The Company anticipates the interest rate on the unsecured Term Loan will be fixed at 3.05%, based upon current leverage levels. The Term Loan also includes an accordion option that allows the Company to request additional lender commitments up to a total of $75 million.
The Company's Term Loan is led by Capital One, N.A., who serves as the Administrative Agent. Raymond James Bank, N.A. also participated in the Term Loan.
The Senior Notes have a 12-year term, maturing in July 2028, priced at a fixed interest rate of 4.42%. Closing and funding of the new private placement of Senior Notes is expected to occur July 28, 2016, subject to the satisfaction of standard closing conditions.
The Senior Notes are being sold to qualified institutional buyers in the United States in accordance with Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") and to persons outside the United States in accordance with Regulation S under the Securities Act. The Senior Notes have not been and will not be registered under the Securities Act or any state or other jurisdiction's securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state or other jurisdictions' securities laws.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy the Senior Notes or any other securities, nor shall there be any offer, solicitation or sale of the Senior Notes or any other securities in any state or other jurisdiction in which such an offer, solicitation or sale would be unlawful.
About Agree Realty Corporation
Agree Realty Corporation is a publicly traded real estate investment trust primarily engaged in the acquisition and development of properties net leased to industry-leading retail tenants. The Company currently owns and operates a portfolio of 327 properties, located in 42 states and containing approximately 6.3 million square feet of gross leasable space. The common stock of Agree Realty Corporation is listed on the New York Stock Exchange under the symbol "ADC". For additional information, please visit www.agreerealty.com.
This press release contains certain "forward-looking" statements relating to, among other things, potential incurrence of indebtedness. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "seek," "anticipate," "estimate," "approximately," "believe," "could," "project," "predict," "forecast," "continue," "plan" or other similar words or expressions. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. These forward-looking statements are subject to various risks and uncertainties, many of which are beyond the Company's control, which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to factors described in greater detail in the Company's filings with the Securities and Exchange Commission ("SEC"), including, without limitation, the Company's Annual Report on Form 10-K for the year ended December 31, 2015. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
For further information about the Company's business and financial results, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of the Company's SEC filings, including, but not limited to, its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which may be obtained at the Investor Relations section of the Company's website at www.agreerealty.com.
CONTACT: Matthew M. Partridge, Chief Financial Officer, Agree Realty Corporation, (248) 737-4190