Agree Realty Corporation Reports Operating Results for the Second Quarter 2011

FARMINGTON HILLS, Mich., July 28, 2011 /PRNewswire/ --

SECOND Quarter 2011 Highlights:

• 2nd Quarter diluted FFO per share of $0.54
• Acquired Advance Auto Parts store in Marietta, Georgia for $1.3 million
• Executed lease with Vitamin Cottage Natural Food Markets, Inc. in former Borders location in Wichita, Kansas
• $0.40 per share quarterly dividend paid July 12, 2011

Agree Realty Corporation (NYSE: ADC) today announced results for the quarter ended June 30, 2011. Second quarter funds from operations (FFO) was $5,431,000 compared with FFO in the second quarter of 2010 of $5,899,000.  FFO per diluted share for the second quarter of 2011 was $0.54 compared with $0.61 for the second quarter of 2010.  A reconciliation of net income to FFO is included in the financial tables accompanying this press release.  Net income for the second quarter of 2011 was $3,823,000, or $0.38 per diluted share, compared with net income for the second quarter of 2010 of $4,431,000, or $0.46 per share.  Total revenues increased 10.0% to $9,606,000, compared with total revenues of $8,759,000 in the second quarter of 2010.

For the six months ended June 30, 2011, FFO was $11,749,000 compared with FFO for the six months ended June 30, 2010 of $11,955,000.  FFO per diluted share was $1.17 compared with $1.32 for the six months ended June 30, 2010.  FFO per share decreased primarily due to an increase in the weighted average shares outstanding as the result of the common share offering in April 2010.  Net income was $8,523,000, or $0.85 per diluted share, compared with net income for the comparable period last year of $14,400,000, or $1.59 per diluted share.  Net income for the six months of 2010, included a gain of $5,328,000, or $0.59 per share from the sale of the Company's Santa Barbara, California Borders Books store.  Total revenues increased 11.9% to $19,851,000 compared with total revenues of $17,736,000 for the comparable period last year.  

"We are pleased with our operating results for the second quarter," said Joey Agree, President and Chief Operating Officer.  "We substantially completed our Berkeley, California project on behalf of Walgreens during the second quarter of this year. Our development and acquisition pipelines continue to grow and produce high-quality net lease opportunities."

Borders Bankruptcy Status

Borders Group, Inc. and certain of its subsidiaries, including Borders, Inc., has been operating in a Chapter 11 bankruptcy since February 16, 2011.  In July 2011, Borders, being unable to conclude a sale as a going concern, sought and received the bankruptcy court's approval for the liquidation of all of the assets of Borders, including its leases.  The Company has seven locations currently leased by Borders.  The Borders liquidation will negatively affect the Company's future operating results due to the closure of the additional Borders locations.  Until Borders determines its plan for each of the Company's locations, there will be uncertainty in determining the ultimate impact on the Company's operations.  The Company has been actively marketing all of the Borders locations for potential retenanting or disposition.

The former Borders location in Wichita, Kansas has been leased to Vitamin Cottage Natural Food Markets, Inc.  They plan to open a Natural Grocers by Vitamin Cottage store in the location.

Dividend

The Company paid a cash dividend of $0.40 per share on July 12, 2011 to shareholders of record on June 30, 2011.  The dividend is equivalent to an annualized dividend of $1.60 per share and represents a payout ratio of 74.0% of FFO for the quarter.

Portfolio

At June 30, 2011, the Company's total assets were $281,363,000 and its portfolio consisted of 81 properties located in 17 states and totaling 3,803,850 square feet of gross leasable space.  The portfolio was 96.6% leased at the end of the quarter.  

The Company's construction in progress balance totaled approximately $308,000 at June 30, 2011.

Major Tenants

The following is a breakdown of base rents in effect at June 30, 2011 for each of the Company's major tenants:

Lease Expirations

The following table, as of June 30, 2011, 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.

Annualized Base Rent of Properties

The following is a breakdown of base rents in effect at June 30, 2011 for each type of retail tenant:

Outstanding Shares and Operating Partnership Units

For the three and six months ended June 30, 2011, the Company's fully diluted weighted average shares outstanding were 9,655,921 and 9,656,599.  The basic weighted average shares outstanding for the three and six months ended June 30, 2011 were 9,628,874 and 9,625,072.

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, 2011, there were 347,619 operating partnership units outstanding and the Company held a 96.59% interest.

Development Activity

The Company developed a retail space on behalf of Walgreens located at the southeast corner of Shattuck Avenue and Cedar Street in Berkeley, California.  The retail space was formerly occupied by Elephant Pharmacy.  The Company managed and coordinated the development process and oversaw the construction for a fee.  The development process commenced during the first quarter of 2011 and the project was completed and delivered to the tenant during the second quarter of 2011.

Acquisition Activity

In June, the Company acquired a retail property net leased to Advance Auto Parts for a total of approximately $1,335,000.  The property is located in Marietta, Georgia.

About Agree Realty Corporation

Agree Realty Corporation is engaged in the ownership, management and development of properties, which are primarily single tenant properties leased to retail tenants and neighborhood community shopping centers.  The Company currently owns and operates a portfolio of 81 properties, located in 17 states and containing approximately 3.8 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."

Forward-Looking Statements

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, 2010.  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

SOURCE Agree Realty Corporation