PRESS RELEASE – FOR IMMEDIATE RELEASE
CONTACT: Kenneth R. Howe, Chief Financial Officer
(248) 737-4190
AGREE REALTY REPORTS OPERATING RESULTS FOR THE SECOND
QUARTER 2009
SECOND Quarter 2009 Highlights:
| · | 2nd quarter FFO increases 9% year-over-year |
| · | Year-to-date FFO increases 9.6% year-over-year |
| · | $0.50 per share quarterly dividend paid July 14, 2009 |
FARMINGTON HILLS, MI (July 30, 2009) - Agree Realty Corporation (NYSE: ADC) today announced results for the quarter ended June 30, 2009. Second quarter funds from operations (“FFO”) increased 9.0% to $5,910,000 compared with FFO in the second quarter of 2008 of $5,420,000. FFO per diluted share was $0.70 compared with $0.65 for the second quarter of 2008. A reconciliation of net income to FFO is included in the financial tables accompanying this press release. Net income was $4,240,000, or $0.54 per diluted share, compared with net income for the second quarter of 2008 of $3,766,000 or $0.49 per share. Total revenues increased 3.8% to $9,123,000, compared with total revenues of $8,789,000 in the second quarter of 2008.
For the six months ended June 30, 2009, FFO increased 9.6% to $11,605,000 compared with FFO for the six months ended June 30, 2008 of $10,586,000. FFO per diluted share was $1.38 compared with $1.27 for the six months ended June 30, 2008. Net income was $8,250,000, or $1.05 per diluted share, compared with net income for the comparable period last year of $7,345,000, or $0.96 per diluted share. Total revenues increased 4.6% to $18,363,000 compared with total revenues of $17,557,000 for the comparable period last year.
“Despite challenging economic conditions, we are extremely pleased to deliver strong operating results for the quarter.” said Richard Agree, Chief Executive Officer. “We will continue to employ proven development strategies while taking a conservative approach to the deployment of our capital.”
Dividend
The Company paid a cash dividend of $0.50 per share on July 14, 2009 to shareholders of record on June 30, 2009. The dividend is equivalent to an annualized dividend of $2.00 per share and represents a payout ratio of 72.2% of FFO for the quarter
Portfolio
At June 30, 2009, the Company’s total assets were $259,925,000 and its portfolio consisted of 71 properties located in 16 states and totaling 3,491,204 square feet. The portfolio was 98.2% leased at the end of the quarter.
The Company’s construction in progress balance totaled approximately $6,327,000 at June 30, 2009, and we capitalized $45,339 of construction period interest during the second quarter of 2009.
Lease Expirations
The following table, as of June 30, 2009, 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 | ||||||||||||||||||||
Expiration Year | Number of Leases Expiring | Square Footage | Percent of Total | Annualized Base Rent | Percent of Total | |||||||||||||||
| 2009 | 3 | 10,300 | 0.3 | % | $ | 70,806 | 0.2 | % | ||||||||||||
| 2010 | 18 | 269,557 | 7.9 | % | 1,535,626 | 4.5 | % | |||||||||||||
| 2011 | 27 | 230,834 | 6.7 | % | 1,683,433 | 5.0 | % | |||||||||||||
| 2012 | 25 | 256,686 | 7.5 | % | 1,346,191 | 4.0 | % | |||||||||||||
| 2013 | 19 | 325,013 | 9.5 | % | 1,726,197 | 5.1 | % | |||||||||||||
| 2014 | 9 | 190,458 | 5.6 | % | 985,856 | 2.9 | % | |||||||||||||
| 2015 | 13 | 673,042 | 19.6 | % | 4,841,062 | 14.2 | % | |||||||||||||
| 2016 | 5 | 80,945 | 2.4 | % | 1,664,513 | 4.9 | % | |||||||||||||
| 2017 | 3 | 22,844 | 0.7 | % | 293,995 | .9 | % | |||||||||||||
| 2018 | 12 | 237,582 | 6.9 | % | 4,317,781 | 12.7 | % | |||||||||||||
| Thereafter | 42 | 1,131,661 | 32.9 | % | 15,523,360 | 45.6 | % | |||||||||||||
| Total | 176 | 3,428,922 | $ | 33,988,820 | ||||||||||||||||
Annualized Base Rent of Properties
The following is a breakdown of base rents in effect at June 30, 2009 for each type of retail tenant:
| Credit Analysis | ||||||||||||||||
Retail Tenant | Annualized Base Rent | Percent of Total | Square Feet | Percent of Total | ||||||||||||
| National | $ | 30,257,926 | 89.0 | % | 2,945,247 | 85.9 | % | |||||||||
| Regional | 2,659,992 | 7.8 | % | 376,806 | 11.0 | % | ||||||||||
| Local | 1,070,902 | 3.2 | % | 106,869 | 3.1 | % | ||||||||||
| Total | $ | 33,988,820 | 3,428,922 | |||||||||||||
Major Tenants
The following is a breakdown of base rents in effect at June 30, 2009 for each of the Company’s major tenants:
| Tenant Analysis | ||||||||||||||||
Retail Tenant | Annualized Base Rent | Percent of Total | Square Feet | Percent of Total | ||||||||||||
| Walgreen | $ | 9,946,099 | 29.3 | % | 388,780 | 11.3 | % | |||||||||
| Borders | 9,938,796 | 29.2 | % | 979,474 | 28.6 | % | ||||||||||
| Kmart | 3,847,911 | 11.3 | % | 999,766 | 29.2 | % | ||||||||||
| Subtotal | $ | 23,732,806 | 69.8 | % | 2,368,020 | 69.1 | % | |||||||||
Outstanding Shares and Operating Partnership Units
For the three months and six months ended June 30, 2009, the Company’s fully diluted weighted average shares outstanding were 7,894,349 and 7,834,404, respectively. The basic weighted average shares outstanding for the three months and six months ended June 30, 2009 were 7,879,183 and 7,825,957, 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, 2009, there were 347,619 operating partnership units outstanding and the Company held a 95.93% interest. For the three months and six months ended June 30, 2009, the weighted average number of operating partnership units outstanding, were 506,261 and 555,563, respectively.
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 71 properties, which are located in 16 states and contain 3.5 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 June 30, | Six Months Ended June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
| Revenues: | ||||||||||||||||
| Minimum rents | $ | 8,431 | $ | 8,133 | $ | 16,942 | $ | 16,112 | ||||||||
| Percentage rent | 1 | - | 8 | 5 | ||||||||||||
| Operating cost reimbursements | 682 | 654 | 1,401 | 1,437 | ||||||||||||
| Other income | 9 | 2 | 12 | 3 | ||||||||||||
| Total Revenues | 9,123 | 8,789 | 18,363 | 17,557 | ||||||||||||
| Expenses: | ||||||||||||||||
| Real estate taxes | 489 | 451 | 967 | 916 | ||||||||||||
| Property operating expenses | 332 | 359 | 791 | 954 | ||||||||||||
| Land lease payments | 215 | 171 | 430 | 339 | ||||||||||||
| General and administration | 998 | 1,130 | 2,250 | 2,226 | ||||||||||||
| Depreciation and amortization | 1,420 | 1,348 | 2,814 | 2,643 | ||||||||||||
| Interest expense | 1,161 | 1,239 | 2,286 | 2,499 | ||||||||||||
| Total Expenses | 4,615 | 4,698 | 9,538 | 9,577 | ||||||||||||
| Income before minority interest | 4,508 | 4,091 | 8,825 | 7,980 | ||||||||||||
| Minority interest | 268 | 325 | 575 | 635 | ||||||||||||
| Net Income | $ | 4,240 | $ | 3,766 | $ | 8,250 | $ | 7,345 | ||||||||
| Net Income Per Share – Dilutive | $ | 0.54 | $ | 0.49 | $ | 1.05 | $ | 0.96 | ||||||||
Reconciliation of Funds from Operations to Net Income: (1) | ||||||||||||||||
| Net income | $ | 4,240 | $ | 3,766 | $ | 8,250 | $ | 7,345 | ||||||||
| Depreciation of real estate assets | 1,386 | 1,314 | 2,747 | 2,577 | ||||||||||||
| Amortization of leasing costs | 16 | 15 | 33 | 30 | ||||||||||||
| Minority interest | 268 | 325 | 575 | 634 | ||||||||||||
| Funds from Operations | $ | 5,910 | $ | 5,420 | $ | 11,605 | $ | 10,586 | ||||||||
| Funds from Operations Per Share – Dilutive | $ | 0.70 | $ | 0.65 | $ | 1.38 | $ | 1.27 | ||||||||
| Weighted average number of shares and OP units outstanding – dilutive | 8,401 | 8,357 | 8,390 | 8,356 | ||||||||||||
(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, 2009 | December 31 2008 | |||||||
| Assets | ||||||||
| Land | $ | 92,895 | $ | 87,309 | ||||
| Buildings | 218,454 | 210,650 | ||||||
| Accumulated depreciation | (61,250 | ) | (58,502 | ) | ||||
| Property under development | 6,327 | 13,383 | ||||||
| Cash and cash equivalents | 265 | 669 | ||||||
| Rents receivable | 924 | 965 | ||||||
| Deferred costs, net of amortization | 1,538 | 1,437 | ||||||
| Other assets | 772 | 986 | ||||||
| Total Assets | $ | 259,925 | $ | 256,897 | ||||
| Liabilities | ||||||||
| Mortgages payable | $ | 65,955 | 67,624 | |||||
| Notes payable | 38,336 | 32,945 | ||||||
| Deferred revenue | 10,380 | 10,725 | ||||||
| Dividends and distributions payable | 4,262 | 4,233 | ||||||
| Other liabilities | 2,364 | 3,388 | ||||||
| Total Liabilities | 121,297 | 118,915 | ||||||
| Stockholders’ Equity | ||||||||
| Common stock (8,191,574 and 7,863,930 shares) | 1 | 1 | ||||||
| Additional paid-in capital | 146,876 | 143,892 | ||||||
| Deficit | (11,069 | ) | (11,258 | ) | ||||
| Accumulated other comprehensive income (loss) | (212 | ) | - | |||||
| Non-controlling interest | 3,032 | 5,347 | ||||||
| Total Stockholders’ Equity | 138,628 | 137,982 | ||||||
| $ | 259,925 | $ | 256,897 | |||||