BLOOMFIELD HILLS, Mich.,
April 27, 2015 /PRNewswire/
-- Agree Realty Corporation (NYSE: ADC) today announced
results for the quarter ended March
31, 2015. All per share amounts included herein are on
a diluted per common share basis unless otherwise stated.
First Quarter Financial and Operating Highlights:
- Increased rental revenue 26.4% to $14.6
million
- Increased Funds from Operations (FFO) 26.2% to $10.0 million
- Increased FFO per share 7.7% to $0.56 from $0.52
- Increased Adjusted Funds from Operations (AFFO) 24.1% to
$10.1 million
- Increased AFFO per share 5.6% to $0.57 from $0.54
- Acquired 25 retail net lease properties for approximately
$59.7 million
- Paid quarterly dividend of $0.45
per share on April 14, 2015
Financial Results
Total Rental Revenue
Total
rental revenue, which includes minimum rents and percentage rents,
for the three months ended March 31,
2015 increased 26.4% to $14,564,000 compared with total rental revenue of
$11,523,000 for the comparable period
in 2014.
Funds from Operations
FFO for the three months ended
March 31, 2015 increased 26.2% to
$9,953,000 compared with FFO of
$7,886,000 for the comparable period
in 2014. FFO per share for the three months ended
March 31, 2015 increased 7.7% to
$0.56 compared with FFO per share of
$0.52 for the comparable period in
2014.
FFO for the three months ended March 31,
2015 included a non-recurring loss on debt extinguishment of
$180,000, or $0.01 per share.
Adjusted Funds from Operations
AFFO for the three
months ended March 31, 2015 increased
24.1% to $10,068,000 compared with
AFFO of $8,116,000 for the comparable
period in 2014. AFFO per share for the three months ended
March 31, 2015 increased 5.6% to
$0.57 compared with AFFO per share of
$0.54 for the comparable period in
2014.
Net Income
Net income for the three months ended
March 31, 2015 was $6,368,000, or $0.37 per share, compared with $5,384,000, or $0.37 per share, for the comparable period in
2014.
Dividend
The Company paid a cash dividend of
$0.45 per share on April 14, 2015 to stockholders of record on
March 31, 2015. The quarterly
dividend represented payout ratios of 80.4% of FFO and 78.9% of
AFFO, respectively.
CEO Comments
"I am very pleased with our Q1 2015
operating results and, more generally, the Company's positioning
after the first quarter of the year," said Joey Agree, President
and Chief Executive Officer. "We have a strong pipeline of
high-quality real estate investment opportunities and are making
progress on a number of key strategic initiatives. We remain
focused on executing our plan to scale the Company while
maintaining a disciplined approach to real estate underwriting and
balance sheet management."
Portfolio Update
As of March
31, 2015, the Company's portfolio consisted of 233
properties located in 39 states and totaling 4.7 million square
feet of gross leasable space. Retail net lease properties
contributed approximately 92.3% of annualized base rent, including
9.9% of which was generated from properties ground leased to
tenants. The remaining rent was derived from community
shopping centers.
The portfolio was approximately 98.6% leased, had a weighted
average remaining lease term of approximately 11.8 years, and
generated approximately 54.1% of annualized base rents from
investment grade tenants.
The table below provides a summary of the Company's portfolio as
of March 31, 2015:
($ in
thousands)
|
|
Number
of
|
|
Annualized
|
|
% of
Ann.
|
|
%
IG
|
|
Wtd.
Avg.
|
|
|
Property
Type
|
|
Properties
|
|
Base Rent
(1)
|
|
Base
Rent
|
|
Rated
(2)
|
|
Lease
Term
|
|
|
Retail Net
Lease
|
|
203
|
|
$50,554
|
|
82.4%
|
|
53.8%
|
|
12.1 yrs
|
|
|
Retail Net Lease
(ground leases)
|
|
24
|
|
6,103
|
|
9.9%
|
|
89.4%
|
|
14.5 yrs
|
|
|
Total Retail Net
Lease
|
|
227
|
|
$56,657
|
|
92.3%
|
|
57.6%
|
|
12.4
yrs
|
|
|
Community Shopping
Centers
|
|
6
|
|
4,693
|
|
7.7%
|
|
11.4%
|
|
4.6 yrs
|
|
|
Total
Portfolio
|
|
233
|
|
$61,350
|
|
100.0%
|
|
54.1%
|
|
11.8
yrs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents
annualized straight-line rents as of March 31, 2015.
|
(2) Reflects
tenants, or parent entities thereof, with investment grade credit
ratings from S&P, Moody's, Fitch and/or NAIC.
|
Acquisitions
Total acquisition volume for the first
quarter was approximately $59,658,000
and included 25 assets net leased to a diverse group of retailers,
including those operating in the quick service restaurant, auto
service, discount store, apparel, home furnishings, crafts and
novelties, sporting goods and specialty retail sectors. These
properties are located in 15 states and were acquired at a
weighted-average cap rate of 8.1% and with a weighted-average
remaining lease term of 13.0 years.
Dispositions
In the first quarter, the Company
completed the sale of one asset, a Sonic restaurant in Waynesboro, Virginia, for approximately
$1,038,000. The property, which
had approximately 10.6 years of lease term remaining, was initially
acquired in 2014 as part of a portfolio of seven Sonic
restaurants. The other six properties are subject to a master
lease with 19.6 years of remaining lease term.
Top Tenants
The following table presents annualized
base rents for all tenants that generated 1.5% or greater of the
Company's total annualized base rent as of March 31, 2015:
($ in
thousands)
|
|
Annualized
|
|
% of
Ann.
|
Tenant /
Concept
|
|
Base Rent
(1)
|
|
Base
Rent
|
Walgreens
|
|
$12,362
|
|
20.1%
|
Wawa
|
|
2,465
|
|
4.0%
|
CVS
|
|
2,463
|
|
4.0%
|
Wal-Mart
|
|
2,039
|
|
3.3%
|
Academy
Sports
|
|
1,982
|
|
3.2%
|
Rite Aid
|
|
1,962
|
|
3.2%
|
Lowe's
|
|
1,846
|
|
3.0%
|
LA Fitness
|
|
1,694
|
|
2.8%
|
Kmart
|
|
1,618
|
|
2.6%
|
Taco Bell
(2)
|
|
1,537
|
|
2.5%
|
Burger King
(3)
|
|
1,241
|
|
2.0%
|
Kohl's
|
|
1,180
|
|
1.9%
|
AutoZone
|
|
1,163
|
|
1.9%
|
Dollar
General
|
|
1,155
|
|
1.9%
|
Dick's Sporting
Goods
|
|
1,089
|
|
1.8%
|
BJ's
Wholesale
|
|
918
|
|
1.5%
|
Total
|
|
$36,714
|
|
59.7%
|
|
|
|
|
|
(1)
Represents annualized straight-line rents as of March 31,
2015.
|
(2)
Franchise restaurants operated by Charter Foods
North.
|
(3)
Franchise restaurants operated by Meridian
Restaurants.
|
Tenant Sector
The following table presents annualized
base rents for the Company's top retail sectors as of March 31, 2015:
($ in
thousands)
|
|
Annualized
|
|
% of
Ann.
|
|
Tenant
Sector
|
|
Base Rent
(1)
|
|
Base
Rent
|
|
Pharmacy
|
|
$16,788
|
|
27.4%
|
|
Restaurants - Quick
Service
|
|
5,637
|
|
9.2%
|
|
Apparel
|
|
3,829
|
|
6.2%
|
|
Sporting
Goods
|
|
3,378
|
|
5.5%
|
|
Warehouse
Clubs
|
|
2,957
|
|
4.8%
|
|
Convenience
Stores
|
|
2,599
|
|
4.2%
|
|
Health &
Fitness
|
|
2,546
|
|
4.1%
|
|
Grocery
Stores
|
|
2,426
|
|
4.0%
|
|
Specialty
Retail
|
|
2,114
|
|
3.4%
|
|
General
Merchandise
|
|
2,006
|
|
3.3%
|
|
Restaurants - Casual
Dining
|
|
1,848
|
|
3.0%
|
|
Home
Improvement
|
|
1,846
|
|
3.0%
|
|
Financial
Services
|
|
1,706
|
|
2.8%
|
|
Auto Parts
|
|
1,578
|
|
2.6%
|
|
Auto
Service
|
|
1,546
|
|
2.5%
|
|
Crafts and
Novelties
|
|
1,522
|
|
2.5%
|
|
Other (2)
|
|
7,024
|
|
11.5%
|
|
Total
|
|
$61,350
|
|
100.0%
|
|
|
|
|
|
|
|
(1)
Represents annualized straight-line rents as of March 31,
2015.
|
|
(2) Includes
sectors generating less than 2.5% of annualized base
rent.
|
Lease Expiration
The following table presents
contractual lease expirations within the Company's portfolio as of
March 31, 2015, assuming that no
tenants exercise renewal options:
(in
thousands)
|
|
|
|
Annualized
Base Rent
|
|
Gross
Leasable Area
|
Year
|
|
Leases
|
|
$
Amount
|
|
% of
Total
|
|
Sq.
Ft.
|
|
% of
Total
|
2015
|
|
7
|
|
$726
|
|
1.2%
|
|
152
|
|
3.3%
|
2016
|
|
9
|
|
318
|
|
0.5%
|
|
35
|
|
0.8%
|
2017
|
|
12
|
|
1,870
|
|
3.0%
|
|
134
|
|
2.9%
|
2018
|
|
17
|
|
2,171
|
|
3.5%
|
|
310
|
|
6.7%
|
2019
|
|
14
|
|
4,019
|
|
6.6%
|
|
360
|
|
7.7%
|
2020
|
|
15
|
|
2,740
|
|
4.5%
|
|
321
|
|
6.9%
|
2021
|
|
15
|
|
4,256
|
|
6.9%
|
|
256
|
|
5.5%
|
2022
|
|
12
|
|
2,605
|
|
4.2%
|
|
257
|
|
5.5%
|
2023
|
|
15
|
|
2,419
|
|
3.9%
|
|
221
|
|
4.7%
|
2024
|
|
21
|
|
3,917
|
|
6.4%
|
|
296
|
|
6.4%
|
Thereafter
|
|
153
|
|
36,309
|
|
59.3%
|
|
2,253
|
|
48.2%
|
Vacant
|
|
|
|
|
|
|
|
63
|
|
1.4%
|
Total
|
|
290
|
|
$61,350
|
|
100.0%
|
|
4,658
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Markets and Balance Sheet
Balance Sheet
Summary
As of March 31, 2015,
the Company's total debt to total market capitalization was
32.4%. Total market capitalization is calculated as the sum
of total debt and the market value of the Company's outstanding
shares of common stock, assuming conversion of operating
partnership units.
For the quarter ended March 31,
2015, the Company's fully diluted weighted average shares
outstanding was 17,416,360. The basic weighted average shares
outstanding for the quarter ended March 31,
2015 was 17,369,833.
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 March 31, 2015, there were 347,619 operating
partnership units outstanding and the Company held a 98.06%
interest in the operating partnership.
Conference Call/Webcast
Agree Realty Corporation will
host a live broadcast of its first quarter 2015 conference call on
Tuesday, April 28, 2015 at
9:00 am EDT to discuss its financial
and operating results. The live broadcast will be available online
at: http://www.webcaster4.com/Webcast/Page/408/8241 and also
by telephone at 1-866-363-3979 (USA Toll Free) and 1-412-902-4206
(International). A replay will be available shortly after the
call until July 28, 2015 at
1-877-344-7529 (USA Toll Free,
conference #10063223) or 1-412-317-0088 (International, conference
#10063223).
About Agree Realty Corporation
Agree Realty
Corporation is primarily engaged in the acquisition and development
of properties net leased to industry leading retail tenants.
As of March 31, 2015, the Company
owned and operated a portfolio of 233 properties located in 39
states and containing 4.7 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."
For additional information, visit the Company's home page at
http://www.agreerealty.com.
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, 2014. 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.
Agree Realty
Corporation
|
Operating Results
(in thousands, except per share amounts)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2015
|
|
2014
|
Revenues:
|
|
|
|
|
Minimum
rents
|
|
$ 14,554
|
|
$ 11,523
|
Percentage
rent
|
|
10
|
|
-
|
Operating cost
reimbursements
|
|
1,178
|
|
1,023
|
Other
income
|
|
1
|
|
29
|
Total
Revenues
|
|
15,743
|
|
12,575
|
Expenses:
|
|
|
|
|
Real estate
taxes
|
|
763
|
|
697
|
Property operating
expenses
|
|
571
|
|
499
|
Land lease
payments
|
|
132
|
|
107
|
General and
administration
|
|
1,668
|
|
1,592
|
Depreciation and
amortization
|
|
3,554
|
|
2,514
|
Total Operating
Expenses
|
|
6,688
|
|
5,409
|
Income from
Operations
|
|
9,055
|
|
7,166
|
Interest
expense
|
|
(2,460)
|
|
(1,794)
|
Gain on sale of
assets
|
|
79
|
|
-
|
Loss on debt
extinguishment
|
|
(180)
|
|
-
|
Income Before
Discontinued Operations
|
|
6,494
|
|
5,372
|
Gain on sale of asset
from discontinued operations
|
|
-
|
|
123
|
Income from
discontinued operations
|
|
-
|
|
14
|
Total Discontinued
Operations
|
|
-
|
|
137
|
Net
Income
|
|
6,494
|
|
5,509
|
Net income
attributable to non-controlling interest
|
|
126
|
|
125
|
Net Income
Attributable to Agree Realty Corporation
|
|
6,368
|
|
5,384
|
Other
Comprehensive Income (loss) , Net of ($39) and ($10)
|
|
|
|
|
Attributable to
Non-Controlling Interest
|
|
(1,973)
|
|
(449)
|
Total
Comprehensive Income Attributable to Agree Realty
Corporation
|
$ 4,395
|
|
$ 4,935
|
Basic Earnings Per
Share
|
|
|
|
|
Continuing
operations
|
|
$ 0.37
|
|
$ 0.36
|
Discontinued
operations
|
|
-
|
|
0.01
|
|
|
$ 0.37
|
|
$ 0.37
|
Dilutive Earnings
Per Share
|
|
|
|
|
Continuing
operations
|
|
$ 0.37
|
|
$ 0.36
|
Discontinued
operations
|
|
-
|
|
0.01
|
|
|
$ 0.37
|
|
$ 0.37
|
Weighted Average
Number of Common Shares Outstanding - Basic
|
|
17,370
|
|
14,698
|
Weighted Average
Number of Common Shares Outstanding - Diluted
|
|
17,416
|
|
14,745
|
Agree Realty
Corporation
|
Funds from
Operations (in thousands, except per share amounts)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2015
|
|
2014
|
Reconciliation of
Funds from Operations to Net Income: (1)
|
|
|
|
|
Net income
|
|
$ 6,494
|
|
$ 5,509
|
Depreciation of real
estate assets
|
|
2,555
|
|
1,953
|
Amortization of
leasing costs
|
|
953
|
|
30
|
Amortization of lease
intangibles
|
|
30
|
|
517
|
Gain on sale of
assets
|
|
(79)
|
|
(123)
|
Funds from
Operations
|
|
$ 9,953
|
|
7,886
|
Funds from
Operations Per Share - Diluted
|
|
$ 0.56
|
|
$ 0.52
|
Weighted Average
Number of Common Shares Outstanding - Diluted
|
|
17,764
|
|
15,093
|
Adjusted Funds
from Operations (in thousands, except per share
amounts)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2015
|
|
2014
|
Reconciliation of
Adjusted Funds from Operations to Net Income: (1)
|
|
|
|
|
Net income
|
|
$ 6,494
|
|
$ 5,509
|
Cumulative
adjustments to calculate FFO
|
|
3,459
|
|
2,377
|
Funds from
Operations
|
|
9,953
|
|
7,886
|
Straight-line accrued
rent
|
|
(598)
|
|
(288)
|
Deferred revenue
recognition
|
|
(116)
|
|
(116)
|
Stock based
compensation expense
|
|
524
|
|
528
|
Amortization of
financing costs
|
|
109
|
|
91
|
Non-Real Estate
Depreciation / Amortization
|
|
16
|
|
15
|
Loss on Debt
Extinguishment
|
|
180
|
|
-
|
Adjusted Funds
from Operations
|
|
$ 10,068
|
|
$ 8,116
|
Adjusted Funds
from Operations Per Share - Diluted
|
|
$ 0.57
|
|
$ 0.54
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
Scheduled principal
repayments
|
|
$ 677
|
|
$ 906
|
Capitalized
interest
|
|
$
1
|
|
$
55
|
Capitalized building
improvements
|
|
$
-
|
|
$
-
|
(1) Funds from Operations ("FFO") is defined by the
National Association of Real Estate Investment Trusts, Inc.
(NAREIT) to mean net income computed in accordance with U.S.
generally accepted accounting principles (GAAP), excluding gains
(or losses) from sales of property, plus real estate related
depreciation and amortization and any impairment charges on a
depreciable real estate asset, 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 all REITs may
not use the same definition.
Adjusted Funds from Operations ("AFFO") is a non-GAAP financial
measure of operating performance used by many companies in the REIT
industry. AFFO further adjusts FFO for certain non-cash items
that reduce or increase net income in accordance with GAAP and for
non-recurring items that are not reflective of ongoing
operations. Management considers AFFO a useful supplemental
measure of the Company's performance, however, AFFO should not be
considered an alternative to net income as an indication of the
Company's performance, or to cash flow as a measure of liquidity or
ability to make distributions. The Company's computation of
AFFO may differ from the methodology for calculating AFFO used by
other equity REITs, and therefore may not be comparable to such
other REITs. Note that, during the year ended December 31, 2014, the Company adjusted its
calculation of AFFO to exclude non-recurring capitalized building
improvements and to include non-real estate related depreciation
and amortization. Management believes that these changes
provide a more useful measure of operating performance in the
context of AFFO.
Agree Realty
Corporation
|
Consolidated
Balance Sheets (in thousands)
|
(Unaudited)
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2015
|
|
2014
|
Assets:
|
|
|
|
|
Land
|
|
$
203,983
|
|
$
195,091
|
Buildings
|
|
434,289
|
|
393,827
|
Accumulated
depreciation
|
|
(61,641)
|
|
(59,090)
|
Property under
development
|
|
294
|
|
229
|
Net real estate
investments
|
|
576,925
|
|
530,057
|
|
|
|
|
|
Cash and cash
equivalents
|
|
7,919
|
|
5,399
|
Accounts
receivable
|
|
4,923
|
|
4,508
|
Deferred costs, net
of amortization
|
|
60,084
|
|
51,271
|
Other
assets
|
|
3,195
|
|
2,345
|
Total
Assets
|
|
$
653,046
|
|
$
593,580
|
Liabilities
|
|
|
|
|
Notes
Payable:
|
|
|
|
|
Mortgage notes
payable
|
|
$
103,679
|
|
$
106,762
|
Unsecured revolving
credit facility
|
|
79,500
|
|
15,000
|
Unsecured term
loan
|
|
100,000
|
|
100,000
|
Total Notes
Payable
|
|
283,179
|
|
221,762
|
|
|
|
|
|
Deferred
revenue
|
|
888
|
|
1,004
|
Dividends and
distributions payable
|
|
8,066
|
|
8,048
|
Other
liabilities
|
|
8,044
|
|
6,731
|
Total
Liabilities
|
|
300,177
|
|
237,545
|
Stockholder's
Equity
|
|
|
|
|
Common stock
(17,602,615 and 17,539,946 shares)
|
|
2
|
|
2
|
Additional paid-in
capital
|
|
388,692
|
|
388,263
|
Deficit
|
|
(34,138)
|
|
(32,585)
|
Accumulated other
comprehensive income (loss)
|
|
(4,033)
|
|
(2,060)
|
Non-controlling
interest
|
|
2,346
|
|
2,415
|
Total
Stockholder's Equity
|
|
352,869
|
|
356,035
|
|
|
$
653,046
|
|
$
593,580
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/agree-realty-corporation-reports-operating-results-for-the-first-quarter-2015-300072682.html
SOURCE Agree Realty Corporation