Agree Realty Reports Operating Results for the Second Quarter 2009

FARMINGTON HILLS, Mich., July 30 /PRNewswire-FirstCall/ -- 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 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 --------------- Number of Square Percent of Annualized Percent of Expiration Leases Footage Total Base Rent Total Year Expiring ----------------------------------------------------------------- 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 Annualized Percent of Square Percent of Tenant Base Rent Total Feet 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 Annualized Percent of Square Percent of Tenant Base Rent Total Feet 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 Six Months Ended June 30, 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, December 31 2009 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 DATASOURCE: Agree Realty Corporation CONTACT: Kenneth R. Howe, Chief Financial Officer, Agree Realty Corporation, +1-248-737-4190 Web Site: http://www.agreerealty.com/