Exhibit 99.1
PRESS RELEASE —FOR IMMEDIATE RELEASE
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| CONTACT: | | Kenneth R. Howe, Chief Financial Officer |
| | | (248) 737-4190 |
AGREE REALTY CORPORATION
REPORTS OPERATING RESULTS FOR THE FOURTH QUARTER AND YEAR-END 2007
Fourth Quarter & Year-End 2007 Highlights:
| | • | | 4th Quarter diluted FFO per share of $0.63 |
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| | • | | Year-end diluted FFO per share of $2.47 |
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| | • | | $0.50 per share quarterly dividend paid January 4, 2008 |
FARMINGTON HILLS, MI (February 28, 2008) — Agree Realty Corporation (NYSE: ADC) today announced results for the quarter and the twelve months ended December 31, 2007. Fourth quarter net income was $4,661,000, or $0.60 per diluted share, compared with net income for the fourth quarter of 2006 of $3,719,000, or $0.49 per diluted share. Total revenues increased 9.8% to $9,177,000, compared with total revenues of $8,354,000 in the fourth quarter of 2006. Funds from Operations (FFO) was $5,266,000 compared with FFO in the fourth quarter of 2006 of $5,260,000. FFO per diluted share was $0.63 compared with $0.63 for the fourth quarter of 2006. A reconciliation of net income to FFO is included in the financial tables accompanying this press release.
For the year ended December 31, 2007, net income was $15,482,000, or $2.01 per diluted share, compared with net income for the comparable period last year of $13,974,000, or $1.83 per diluted share. Total revenues increased 4.7% to $34,468,000, compared with total revenues of $32,907,000 for the comparable period last year. FFO was $20,739,000 compared with FFO for the year ended December 31, 2006 of $19,984,000. FFO per diluted share was $2.47 compared with $2.40 for the year ended December 31, 2006.
“We are pleased with the operating results for the quarter, as well as the year and expect continued growth as our projects in Macomb Township, Michigan, Ypsilanti, Michigan, Shelby Township, Michigan and Marion County, Florida, as well as the redevelopment of our shopping center in Big Rapids, Michigan are complete,” said Richard Agree, President and Chief Executive Officer. “Within the past year we have commenced or completed nine projects in four states. 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 January 4, 2008 to shareholders of record on December 21, 2007. The dividend is equivalent to an annualized dividend of $2.00 per share and represents a payout ratio of 79.4% of FFO for the quarter
Portfolio
At December 31, 2007, the Company’s total assets were $239,348,000 and its portfolio consisted of 64 properties located in 16 states and totaling 3,384,544 square feet. The portfolio was 99.6% leased at the end of the quarter.
The Company’s construction in progress balance totaled approximately $10,093,000 at December 31, 2007, and it capitalized $155,000 of construction period interest during the fourth quarter of 2007.
Lease Expirations
The following table, as of December 31, 2007, 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.
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| | | | | | | Gross Leasable Area | | | Annualized Base Rent | |
| | | Number of | | | | | | | | | | | | | | |
| Expiration | | Leases | | | Square | | | Percent of | | | | | | | Percent of | |
| Year | | Expiring | | | Footage | | | Total | | | Amount | | | Total | |
| 2008 | | | 13 | | | | 226,445 | | | | 6.7 | % | | $ | 747,618 | | | | 2.4 | % |
| 2009 | | | 20 | | | | 193,326 | | | | 5.7 | | | | 976,244 | | | | 3.1 | |
| 2010 | | | 21 | | | | 304,757 | | | | 9.0 | | | | 1,859,626 | | | | 5.9 | |
| 2011 | | | 28 | | | | 242,154 | | | | 7.2 | | | | 1,726,069 | | | | 5.5 | |
| 2012 | | | 14 | | | | 76,560 | | | | 2.3 | | | | 614,235 | | | | 1.9 | |
| 2013 | | | 9 | | | | 103,718 | | | | 3.1 | | | | 954,773 | | | | 3.0 | |
| 2014 | | | 3 | | | | 172,958 | | | | 5.1 | | | | 824,206 | | | | 2.6 | |
| 2015 | | | 11 | | | | 651,242 | | | | 19.3 | | | | 4,665,262 | | | | 14.7 | |
| 2016 | | | 5 | | | | 80,945 | | | | 2.4 | | | | 1,664,513 | | | | 5.3 | |
| 2017 | | | 4 | | | | 55,303 | | | | 1.6 | | | | 848,440 | | | | 2.7 | |
| Thereafter | | | 45 | | | | 1,264,483 | | | | 37.6 | | | | 16,780,199 | | | | 52.9 | |
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| Total | | | 173 | | | | 3,371,891 | | | | 100.0 | % | | $ | 31,661,185 | | | | 100.0 | % |
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Annualized Base Rent of Properties
The following is a breakdown of base rents in effect at December 31, 2007 for each type of retail tenant:
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| Retail Tenant | | Annualized Base Rent | | | Percent of Total Base Rent | |
| National | | $ | 28,047,948 | | | | 88 | % |
| Regional | | | 2,444,206 | | | | 8 | |
| Local | | | 1,169,031 | | | | 4 | |
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| Total | | $ | 31,661,185 | | | | 100 | % |
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Major Tenants
The following is a breakdown of base rents in effect at December 31, 2007 for each of the Company’s major tenants:
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| Major Tenant | | Annualized Base Rent | | | Percent of Total Base Rent | |
| Borders (18 properties) | | $ | 9,861,727 | | | | 31 | % |
| Walgreen (20 properties) | | | 7,343,599 | | | | 23 | |
| Kmart (12 properties) | | | 3,847,911 | | | | 12 | |
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| Total | | $ | 21,053,237 | | | | 66 | % |
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Outstanding Shares and Operating Partnership Units
For the three months and year ended December 31, 2007, the Company’s fully diluted weighted average shares outstanding were 7,705,087 and 7,715,879, respectively. The basic weighted average shares outstanding for the three months and year ended December 31, 2007 were 7,652,371 and 7,654,871, 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 December 31, 2007, there were 673,547 operating partnership units outstanding and the Company held a 92.01% 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 64 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 athttp://www.agreerealty.com
Agree Realty Corporation
Operating Results (in thousands, except per share amounts)
(Unaudited)
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| | | Three Months Ended | | | Year Ended | |
| | | December 31, | | | December 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Revenues: | | | | | | | | | | | | | | | | |
| Minimum rents | | $ | 8,552 | | | $ | 7,548 | | | $ | 31,637 | | | $ | 29,963 | |
| Percentage rent | | | 7 | | | | 13 | | | | 37 | | | | 53 | |
| Operating cost reimbursements | | | 596 | | | | 786 | | | | 2,759 | | | | 2,847 | |
| Other income | | | 22 | | | | 7 | | | | 35 | | | | 44 | |
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Total Revenues | | | 9,177 | | | | 8,354 | | | | 34,468 | | | | 32,907 | |
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Expenses: | | | | | | | | | | | | | | | | |
| Real estate taxes | | | 457 | | | | 469 | | | | 1,849 | | | | 1,821 | |
| Property operating expenses | | | 458 | | | | 320 | | | | 1,785 | | | | 1,637 | |
| Land lease payments | | | 168 | | | | 173 | | | | 676 | | | | 760 | |
| General and administration | | | 1,525 | | | | 940 | | | | 4,462 | | | | 4,019 | |
| Depreciation and amortization | | | 1,260 | | | | 1,233 | | | | 5,017 | | | | 4,851 | |
| Interest expense | | | 1,288 | | | | 1,176 | | | | 4,896 | | | | 4,625 | |
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Total Expenses | | | 5,156 | | | | 4,311 | | | | 18,685 | | | | 17,713 | |
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| Gain on sale of asset | | | 1,043 | | | | — | | | | 1,044 | | | | — | |
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| Income before minority interest | | | 5,064 | | | | 4,043 | | | | 16,827 | | | | 15,194 | |
| Minority interest | | | 403 | | | | 324 | | | | 1,345 | | | | 1,220 | |
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Net Income | | $ | 4,661 | | | $ | 3,719 | | | $ | 15,482 | | | $ | 13,974 | |
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Net Income Per Share — Dilutive | | $ | 0.60 | | | $ | 0.49 | | | $ | 2.01 | | | $ | 1.83 | |
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Reconciliation of Funds from Operations to Net Income: (1) | | | | | | | | | | | | | | | | |
| Net income | | $ | 4,661 | | | $ | 3,719 | | | $ | 15,482 | | | $ | 13,974 | |
| Depreciation of real estate assets | | | 1,232 | | | | 1,205 | | | | 4,905 | | | | 4,745 | |
| Amortization of leasing costs | | | 13 | | | | 12 | | | | 51 | | | | 45 | |
| Minority interest | | | 403 | | | | 324 | | | | 1,344 | | | | 1,220 | |
| Gain on sale of assets | | | (1,043 | ) | | | — | | | | (1,043 | ) | | | — | |
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Funds from Operations | | $ | 5,266 | | | $ | 5,260 | | | $ | 20,739 | | | $ | 19,984 | |
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Funds from Operations Per Share — Dilutive | | $ | 0.63 | | | $ | 0.63 | | | $ | 2.47 | | | $ | 2.40 | |
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| Weighted average number of shares and OP units outstanding — dilutive | | | 8,379 | | | | 8,341 | | | | 8,389 | | | | 8,325 | |
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| (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. |
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| | | 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)
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| | | December 31, | | | December 31, | |
| | | 2007 | | | 2006 | |
Assets | | | | | | | | |
| Land | | $ | 87,234 | | | $ | 77,537 | |
| Buildings | | | 197,034 | | | | 189,117 | |
| Accumulated depreciation | | | (53,251 | ) | | | (48,353 | ) |
| Property under development | | | 4,806 | | | | 1,594 | |
| Cash and cash equivalents | | | 545 | | | | 464 | |
| Rents receivable | | | 770 | | | | 732 | |
| Deferred costs, net of amortization | | | 1,261 | | | | 1,441 | |
| Other assets | | | 949 | | | | 983 | |
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Total Assets | | $ | 239,348 | | | $ | 223,515 | |
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Liabilities | | | | | | | | |
| Mortgages payable | | $ | 45,760 | | | $ | 48,291 | |
| Notes payable | | | 36,800 | | | | 20,500 | |
| Deferred revenue | | | 11,414 | | | | 12,104 | |
| Dividends and distributions payable | | | 4,212 | | | | 4,112 | |
| Other liabilities | | | 3,652 | | | | 2,210 | |
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Total Liabilities | | | 101,838 | | | | 87,217 | |
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| Total minority interest | | | 5,896 | | | | 5,879 | |
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Stockholders’ Equity | | | | | | | | |
| Common stock | | | 1 | | | | 1 | |
| Additional paid-in capital | | | 142,261 | | | | 141,277 | |
| Accumulated deficit | | | (10,648 | ) | | | (10,859 | ) |
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Total Stockholders’ Equity | | | 131,614 | | | | 130,419 | |
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| | | $ | 239,348 | | | $ | 223,515 | |
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