Agree Realty Corporation Reports Operating Results for the Third Quarter 2010

Oct 28, 2010, 09:00 ET from Agree Realty Corporation

FARMINGTON HILLS, Mich., Oct. 28 /PRNewswire-FirstCall/ --

THIRD Quarter 2010 Highlights:

  • 3rd Quarter diluted FFO per share of $0.60
  • $0.51 per share quarterly dividend paid October 13, 2010

Agree Realty Corporation (NYSE: ADC) today announced results for the quarter ended September 30, 2010. Third quarter funds from operations (FFO) was $6,020,000 compared with FFO in the third quarter of 2009 of $6,017,000.  FFO per diluted share for the third quarter of 2010 was $0.60 compared with $0.72 for the third quarter of 2009.  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.  A reconciliation of net income to FFO is included in the financial tables accompanying this press release.  Net income for the third quarter of 2010 was $4,541,000, or $0.46 per diluted share, compared with net income for the third quarter of 2009 of $4,607,000, or $0.55 per share.  Total revenues increased 2.0% to $9,288,000, compared with total revenues of $9,109,000 in the third quarter of 2009.

For the nine months ended September 30, 2010, FFO increased 2.0% to $17,975,000 compared with FFO for the nine months ended September 30, 2009 of $17,621,000.  FFO per diluted share was $1.92 compared with $2.10 for the nine months ended September 30, 2009.  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 $18,941,000, or $2.02 per diluted share, compared with net income for the comparable period last year of $13,431,000, or $1.60 per diluted share.  Net income for the nine 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 Book store.  Total revenues increased 3.6% to $27,968,000 compared with total revenues of $26,979,000 for the comparable period last year.  

"We are extremely pleased with our operating results for the third quarter," said Joey Agree, President and Chief Operating Officer.  "We completed our Ann Arbor, Michigan project on behalf of Walgreens during the third quarter of this year. We also acquired a retail property in Lake in the Hills, Illinois net leased to CVS/Caremark during the quarter.  Our current developments in Atlantic Beach, Florida, and St. Augustine Shores, Florida, as well as our redevelopment of Boynton Festive Center, are on track and will be completed in the fourth quarter of 2010.  Our balance sheet is strong and we continue to be well-positioned to take advantage of development and acquisition opportunities as they arise."

Dividend

The Company paid a cash dividend of $0.51 per share on October 13, 2010 to shareholders of record on September 30, 2010.  The dividend is equivalent to an annualized dividend of $2.04 per share and represents a payout ratio of 85% of FFO for the quarter.

Portfolio

At September 30, 2010, the Company's total assets were $274,057,000 and its portfolio consisted of 76 properties located in 15 states and totaling 3,519,343 square feet of gross leasable space.  The portfolio was 99.2% leased at the end of the quarter.  

The Company's construction in progress balance totaled approximately $10,372,000 at September 30, 2010, and the Company capitalized $139,970 of construction period interest during the third quarter of 2010.

Lease Expirations

The following table, as of September 30, 2010, 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.

Gross Leasable Area

Annualized Base Rent

Expiration Year

Number of Leases Expiring

Square Footage

Percent of Total

Amount

Percent of Total

2010

0

-

-

-

-

2011

18

133,827

3.8%

962,298

2.7%

2012

30

282,956

8.1%

1,474,122

4.1%

2013

21

321,663

9.2%

1,805,397

5.0%

2014

11

194,458

5.6%

1,042,856

2.9%

2015

22

857,135

24.6%

5,370,887

14.9%

2016

11

142,041

4.1%

2,074,856

5.8%

2017

4

30,844

0.9%

351,995

1.0%

2018

12

225,235

6.5%

3,963,986

11.0%

2019

7

95,170

2.7%

2,174,649

6.0%

Thereafter

47

1,206,551

34.5%

16,756,696

46.6%

Total

183

3,489,880

$35,977,742

Annualized Base Rent of Properties

The following is a breakdown of base rents in effect at September 30, 2010 for each type of retail tenant:

Retail Tenant

Annualized Base Rent

Percent of Total Base Rent

National

$  32,162,918

89%

Regional

2,717,792

8

Local

1,097,032

3

Total

$  35,977,742

100%

Major Tenants

The following is a breakdown of base rents in effect at September 30, 2010 for each of the Company's major tenants:

Major Tenant

Annualized Base Rent

Percent of Total Base Rent

Walgreen (29)

$    10,861,099

30%

Borders (17)

9,268,723

26

Kmart (12)

3,847,911

11

Total

$  23,977,733

67%

Outstanding Shares and Operating Partnership Units

For the three and nine months ended September 30, 2010, the Company's fully diluted weighted average shares outstanding were 9,618,240 and 9,034,629.  The basic weighted average shares outstanding for the three and nine months ended September 30, 2010 were 9,580,928 and 9,000,649.

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 September 30, 2010, there were 347,619 operating partnership units outstanding and the Company held a 96.56% interest.

Development Activity

During 2010 the Company commenced three developments for a national retailer in the U.S. chain drugstore industry.  The developments are located in Atlantic Beach, Florida, St. Augustine Shores, Florida and Ann Arbor, Michigan.  The Company delivered the Ann Arbor, Michigan store to the tenant in late September 2010.  The Company also commenced the redevelopment of its vacant Circuit City store in Boynton Beach, Florida for Dick's Sporting Goods, Inc.  The developments and redevelopment are expected to be completed during the fourth quarter of 2010 at an aggregate cost of approximately $11 million.

Acquisition Activity

In August, the Company acquired a retail property net leased to CVS/Caremark Corporation for a total of approximately $5,779,000.  The property is located in Lake in the Hills, Illinois.

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 75 properties, located in 15 states and containing approximately 3.5 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, 2009.  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 September 30,

Nine Months  Ended September 30,

2010

2009

2010

2009

Revenues:

  Minimum rents

$8,615

$8,345

$25,401

$24,795

  Percentage rent

8

-

21

8

  Operating cost reimbursements

590

598

1,900

1,998

  Development fee income

47

158

583

158

  Other income

28

8

63

20

       Total Revenues

9,288

9,109

27,968

26,979

Expenses:

  Real estate taxes

455

472

1,452

1,440

  Property operating expenses

397

410

1,122

1,200

  Land lease payments

227

215

680

644

  General and administration

1,151

1,083

3,604

3,333

  Depreciation and amortization

1,477

1,393

4,336

4,137

  Interest expense

1,098

1,145

3,492

3,432

       Total Expenses

4,805

4,718

14,686

14,186

Income before discontinued operations

4,483

4,391

13,282

12,793

Sale of asset from discontinued   operations

-

-

5,328

-

Income from discontinued operations

58

216

331

638

Net Income

4,541

4,607

18,941

13,431

Net income attributable to non-controlling interest

149

190

692

764

Net Income Attributable to Agree Realty Corporation

$4,392

$4,417

$18,249

$12,667

Net Income Per Share – Dilutive

$0.46

$0.55

$2.02

$1.60

Reconciliation of Funds from    

  Operations to Net Income: (1)

  Net income

$4,541

$4,607

$18,941

$13,431

  Depreciation of real estate assets

1,459

1,393

4,304

4,141

  Amortization of leasing costs

20

17

58

49

  Sale of fixed asset

-

-

(5,328)

-

Funds from Operations

$6,020

$6,017

$17,975

$17,621

Funds from Operations  Per Share –  

  Dilutive

$0.60

$0.72

$1.92

$2.10

Weighted average number of shares and

OP units outstanding – dilutive

9,965

8,411

9,382

8,395

(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)

September 30,

2010

December 31,

2009

Assets

  Land

$95,441

$95,047

  Buildings

227,913

220,605

  Accumulated depreciation

(67,076)

(64,076)

  Property under development

10,372

4,792

  Property held for sale

3,016

-

  Cash and cash equivalents

337

689

  Accounts receivable

795

1,987

  Deferred costs, net of amortization

1,727

1,897

  Other assets

1,532

848

         Total Assets

$274,057

$261,789

Liabilities

  Mortgages payable

$72,559

$75,553

  Notes payable

7,898

29,000

  Deferred revenue

9,518

10,035

  Dividends and distributions payable

5,144

4,354

  Other liabilities

3,867

3,020

         Total Liabilities

98,986

121,962

Stockholders' Equity

  Common stock (9,756,764 and 8,196,074 shares)

1

1

  Additional paid-in capital

179,403

147,466

  Deficit

(6,543)

(10,633)

  Accumulated other comprehensive income (loss)

(979)

(71)

  Non-controlling interest

3,189

3,064

         Total Stockholders' Equity

175,071

139,827

$274,057

$261,789

SOURCE Agree Realty Corporation



RELATED LINKS

http://www.agreerealty.com