PRESS RELEASE - FOR IMMEDIATE RELEASE
CONTACT: Kenneth R. Howe, Chief Financial Officer
(248) 737-4190
AGREE REALTY CORPORATION REPORTS THIRD QUARTER 2005
OPERATING RESULTS
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THIRD QUARTER 2005 HIGHLIGHTS:
FINANCIAL INFORMATION
o Diluted FFO per share of $0.59
o $0.49 per share quarterly dividend paid
October 13, 2005
FARMINGTON HILLS, MI (October 28, 2005) - Agree Realty Corporation (NYSE:
ADC) today announced results for the quarter ended September 30, 2005. For the
third quarter, funds from operations increased 2.6% to $4,948,000 compared with
funds from operations in the third quarter of 2004 of $4,824,000. Diluted funds
from operations per share were $0.59 per share compared with $0.67 per share for
the third quarter of 2004. Net income was $3,454,000, or $0.45 per share on a
diluted basis, compared with net income for the third quarter of 2004 of
$3,895,000, or $0.60 per share. Total revenues increased 4.3% to $7,696,000,
compared with total revenues of $7,380,000 in the third quarter of 2004. A
reconciliation of net income to FFO is included in the financial table
accompanying this press release.
For the nine months ended September 30, 2005, funds from operations
increased 8.8% to $14,741,000 compared with funds from operations for the nine
months ended September 30, 2004 of $13,545,000. Diluted funds from operations
per share were $1.79 per share compared with $1.90 per share for the nine months
ended September 30, 2004. Net income was $10,274,000, or $1.36 per share on a
diluted basis, compared with net income for the comparable period last year of
$9,848,000, or $1.52 per share. Total revenues increased 8.3% to $23,256,000,
compared with total rental revenues of $21,471,000 for the comparable period
last year.
FUNDS FROM OPERATIONS
Management considers Funds from Operations (FFO) to be a useful
supplemental measure to evaluate operating performance. The Company considers
FFO to be an appropriate supplemental measure of operating performance because,
by excluding gains or losses on dispositions and excluding depreciation, FFO can
help one compare the operating performance of a company's real estate between
periods or as compared to different companies. 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. 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. In addition, our method
of calculating FFO may not be comparable to the methods used by other REITs and,
accordingly may be different from similarly titled measures reported by other
companies.
DIVIDEND
We paid a cash dividend of $0.49 per share on October 13, 2005 to
shareholders of record on September 30, 2005. The dividend is equivalent to an
annualized dividend of $1.96 per share and represents a payout ratio of 83.1% of
funds from operations for the quarter.
PORTFOLIO RESULTS
At September 30, 2005, Agree Realty Corporation's total assets were
$215,730,000. At quarter end our portfolio consisted of 56 properties totaling
3,492,491 million square feet located in 14 states. The portfolio was 98.7%
leased at the end of the quarter.
On August 22, 2005 we completed the development of a retail property in
Grand Rapids, Michigan. The property is leased to Walgreen Co.
At September 30, 2005 our construction in progress balance totaled
approximately $5.7 million and we capitalized $118,000 of construction period
interest during the third quarter 2005.
LEASE EXPIRATIONS
The following table shows lease expirations for the next 10 years for our
freestanding properties and community shopping centers, assuming that none of
the tenants exercise renewal options.
September 30, 2005
------------------
Gross Leasable Area Annualized Base Rent
------------------- --------------------
Number
Expiration of Leases Square Percent Percent
Year Expiring Footage of Total Amount of Total
- ---------- -------- ------- -------- ------ --------
2006 30 107,247 3.07 $ 690,023 2.36
2007 15 80,630 2.31 597,559 2.04
2008 29 325,995 9.33 1,449,333 4.96
2009 12 172,990 4.95 818,531 2.80
2010 17 301,885 8.64 1,801,840 6.16
2011 16 248,322 7.11 1,625,235 5.56
2012 - - - - -
2013 1 51,868 1.49 492,746 1.69
2014 3 172,958 4.95 824,206 2.82
2015 12 821,632 23.53 5,267,493 18.03
--- --------- ----- ----------- -----
Total 135 2,283,527 65.38% $13,566,966 46.42%
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ANNUALIZED BASE RENT OF OUR PROPERTIES
The following is a breakdown of base rents in place at September 30, 2005 for
each type of retail tenant:
National $26,094,131 89.28%
Regional 1,988,446 6.80
Local 1,144,709 3.92
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Total $29,227,286 100.00%
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MAJOR TENANTS
The following is a breakdown of base rents in place at September 30, 2005 for
each of our Major Tenants:
Borders $ 9,543,489 32.65%
Walgreen 5,936,999 20.31
Kmart 4,213,717 14.42
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Total $19,694,205 67.38%
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OPERATING PARTNERSHIP UNITS
As of September 30, 2005 there were 673,547 operating partnership units
outstanding.
Agree Realty Corporation owns, manages and develops properties which
are primarily single tenant properties and neighborhood community shopping
centers, located in fourteen (14) states and leased to major retail tenants.
Agree Realty Corporation 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 27E of the Securities
Exchange Act of 1934, both as amended, with respect to the Company's expectation
for future periods. Such statements are, by their nature, subject to certain
risks and uncertainties. The Company cautions that, as a result of a number of
factors, actual results could differ materially from those set forth in this
presentation. Other risks, uncertainties and factors that could cause actual
results to differ materially than those projected are detailed from time to time
in reports filed by the Company with the Securities and Exchange Commission,
including Forms 8-K, 10-Q and 10-K.
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,
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2005 2004 2005 2004
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REVENUE
Minimum rents $ 7,062 $ 6,740 $ 21,097 $ 19,153
Percentage rent 14 (12) 39 22
Operating cost reimbursements 613 599 2,097 2,047
Unconsolidated entities - 23 - 217
Other income 7 30 23 32
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TOTAL REVENUE 7,696 7,380 23,256 21,471
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EXPENSES
Real estate taxes 444 425 1,316 1,295
Property operating expenses 342 349 1,434 1,352
Land lease payments 195 180 586 541
General and administration 911 687 2,665 1,983
Depreciation and amortization 1,168 1,060 3,461 3,107
Interest expense 1,029 1,076 3,057 3,339
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TOTAL EXPENSES 4,089 3,777 12,519 11,617
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INCOME BEFORE MINORITY INTEREST AND
DISCONTINUED OPERATIONS 3,607 3,603 10,737 9,854
Minority interest expense 291 340 879 929
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INCOME BEFORE DISCONTINUED OPERATIONS 3,316 3,263 9,858 8,925
Gain on sale of asset from discontinued operations - 523 - 523
Income from discontinued operations 138 109 416 400
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NET INCOME $ 3,454 $ 3,895 $ 10,274 $ 9,848
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NET INCOME - PER SHARE $ .45 $ .60 $ 1.36 $ 1.52
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RECONCILIATION OF FUNDS FROM OPERATIONS TO NET INCOME
Net income $ 3,454 $ 3,895 $ 10,274 $ 9,848
Depreciation of real estate assets 1,185 1,089 3,521 3,215
Amortization of leasing costs 12 12 36 34
Gain on sale of assets (6) (577) (6) (577)
Minority interest 303 405 916 1,025
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FUNDS FROM OPERATIONS $ 4,948 $ 4,824 $ 14,741 $ 13,545
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FUNDS FROM OPERATIONS - PER SHARE $ .59 $ .67 $ 1.79 $ 1.90
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WEIGHTED AVERAGE NUMBER OF SHARES AND "OP" UNITS OUTSTANDING 8,346 7,148 8,234 7,147
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AGREE REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
(UNAUDITED)
SEPT 30, DEC 31
2005 2004
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ASSETS
Land $ 69,114 $ 69,914
Buildings 178,136 173,089
Accumulated depreciation (42,579) (39,252)
Operating property held for sale 5,578 5,709
Property under development 2,447 2,105
Cash and cash equivalents 190 587
Rents receivable 152 627
Deferred costs, net of amortization 1,291 1,261
Other Assets 1,401 1,662
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TOTAL ASSETS $ 215,730 $ 215,702
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LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgages payable $ 52,151 $ 53,809
Notes payable 11,200 39,200
Deferred revenue 12,966 13,483
Dividends and distributions payable 4,088 3.509
Other liabilities 1,077 2,194
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TOTAL LIABILITIES 81,482 112,195
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TOTAL MINORITY INTEREST 5,800 5,875
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Common stock 1 1
Additional paid-in capital 142,091 109,600
Accumulated deficit (11,731) (10,727)
Unearned compensation (1,913) (1,242)
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TOTAL STOCKHOLDERS' EQUITY 128,448 97,632
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$ 215,730 $ 215,702
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