Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - AGREE REALTY CORP | v460680_8k.htm |
Exhibit 99.1
 | 70 E. Long Lake Rd. Bloomfield Hills, MI 48304 www.agreerealty.com |
FOR IMMEDIATE RELEASE
AGREE REALTY CORPORATION REPORTS
FOURTH QUARTER AND FULL YEAR 2016 RESULTS
Bloomfield Hills, MI, February 23, 2017 -- Agree Realty Corporation (NYSE: ADC) (the “Company”) today announced results for the quarter and full year ended December 31, 2016. All per share amounts included herein are on a diluted per common share basis unless otherwise stated.
2016 Full Year Financial and Operating Highlights:
| § | Invested $312.1 million in 92 retail net lease properties |
| § | Completed or commenced construction on 14 development or Partner Capital Solutions (“PCS”) projects |
| § | Increased rental revenue 30.7% to $84.2 million |
| § | Net Income per share attributable to the Company decreased 9.0% to $1.97 |
| § | Net Income attributable to the Company increased 15.6% to $45.1 million |
| § | Increased Funds from Operations (“FFO”) per share 6.1% to $2.54 |
| § | Increased FFO 34.3% to $59.2 million |
| § | Increased Adjusted Funds from Operations (“AFFO”) per share 5.2% to $2.51 |
| § | Increased AFFO 33.2% to $58.4 million |
| § | Raised approximately $228.2 million in net proceeds from the issuance of 5.5 million common shares |
| § | Declared dividends of $1.92 per share, an increase of 4.1% over dividends per share declared in 2015 |
| § | Net of cash on hand, full availability of recently expanded $250 million revolving credit facility |
| § | Sector leading balance sheet at 4.5 times net debt-to-recurring earnings before interest, taxes, depreciation and amortization (“EBITDA”) |
Fourth Quarter 2016 Financial and Operating Highlights:
| § | Increased rental revenue 37.3% to $23.3 million |
| § | Net Income per share attributable to the Company increased 22.7% to $0.50 |
| § | Net Income attributable to the Company increased 63.4% to $12.7 million |
| § | Increased Funds from Operations (“FFO”) per share 6.3% to $0.64 |
| § | Increased FFO 40.9% to $16.6 million |
| § | Increased Adjusted Funds from Operations (“AFFO”) per share 5.3% to $0.63 |
| § | Increased AFFO 39.6% to $16.2 million |
| § | Raised approximately $103.9 million in net proceeds from the issuance of 2.3 million common shares |
| § | Declared a dividend of $0.495 per share, an increase of 6.5% over the dividend per share declared in the fourth quarter of 2015 |
| 1 |
Financial Results
Total Rental Revenue
Total rental revenue, which includes minimum rents and percentage rents, for the three months ended December 31, 2016 increased 37.3% to $23.3 million, compared to total rental revenue of $17.0 million for the comparable period in 2015.
Total rental revenue for the year ended December 31, 2016 increased 30.7% to $84.2 million, compared to total rental revenue of $64.5 million for the comparable period in 2015.
Net Income
Net income attributable to the Company for the three months ended December 31, 2016 increased 63.4% to $12.7 million, compared to $7.8 million for the comparable period in 2015. Net income per share attributable to the Company for the three months ended December 31, 2016 increased 22.7% to $0.50, compared to $0.41 per share for the comparable period in 2015.
Net income attributable to the Company for the year ended December 31, 2016 increased 15.6% to $45.1 million, compared to $39.0 million for the comparable period in 2015. Net income per share attributable to the Company for the year ended December 31, 2016 decreased 9.0% to $1.97, compared to $2.16 per share for the comparable period in 2015.
Funds from Operations
FFO for the three months ended December 31, 2016 increased 40.9% to $16.6 million, compared to FFO of $11.8 million for the comparable period in 2015. FFO per share for the three months ended December 31, 2016 increased 6.3% to $0.64, compared to FFO per share of $0.60 for the comparable period in 2015.
FFO for the year ended December 31, 2016 increased 34.3% to $59.2 million, compared to FFO of $44.0 million for the comparable period in 2015. FFO per share for the year ended December 31, 2016 increased 6.1% to $2.54, compared to FFO per share of $2.39 for the comparable period in 2015.
Adjusted Funds from Operations
AFFO for the three months ended December 31, 2016 increased 39.6% to $16.2 million, compared to AFFO of $11.6 million for the comparable period in 2015. AFFO per share for the three months ended December 31, 2016 increased 5.3% to $0.63, compared to AFFO per share of $0.60 for the comparable period in 2015.
AFFO for the year ended December 31, 2016 increased 33.2% to $58.4 million, compared to AFFO of $43.9 million for the comparable period in 2015. AFFO per share for the year ended December 31, 2016 increased 5.2% to $2.51, compared to AFFO per share of $2.38 for the comparable period in 2015.
Dividend
The Company paid a cash dividend of $0.495 per share on January 3, 2017 to stockholders of record on December 23, 2016, a 6.5% increase over the $0.465 quarterly dividend declared in the fourth quarter of 2015. The quarterly dividend represents payout ratios of approximately 77.2% of FFO per share and 78.9% of AFFO per share, respectively.
For 2016, the Company declared annual dividends of $1.92, a 4.1% increase over the $1.845 of annual dividends declared in 2015. The annual dividend represents payout ratios of approximately 75.6% of FFO per share and 76.6% of AFFO per share, respectively.
 | 2 |
CEO Comments
“We are extremely pleased with our 2016 performance as we continued to execute on our operating strategy and deliver results in all phases of our business,” said Joey Agree, President and Chief Executive Officer of Agree Realty Corporation. “We maintained a disciplined approach across our three external growth platforms while remaining focused on leading retailers that offer a compelling customer experience or employ a comprehensive omni-channel strategy. In 2017, we remain intently focused on being a retail net lease value creator through our differentiated operating strategy.”
Portfolio Update
As of December 31, 2016, the Company’s portfolio consisted of 366 properties located in 43 states and totaling 7.0 million square feet of gross leasable space. Properties ground leased to tenants accounted for 7.5% of annualized base rent.
The portfolio was approximately 99.6% leased, had a weighted average remaining lease term of approximately 10.6 years, and generated approximately 45.6% of annualized base rents from investment grade tenants.
The following table provides a summary of the Company’s portfolio as of December 31, 2016:
| Property Type | Number
of | Annualized Base Rent(1) | Percent of Annualized Base Rent | Percent Investment Grade(2) | Weighted Average Lease Term | |||||||||||||||
| Retail Net Lease | 331 | $ | 85,422 | 90.6 | % | 42.6 | % | 10.3 yrs | ||||||||||||
| Retail Net Lease Ground Leases | 32 | 7,077 | 7.5 | % | 86.5 | % | 13.1 yrs | |||||||||||||
| Total Retail Net Lease | 363 | $ | 92,499 | 98.1 | % | 45.9 | % | 10.7 yrs | ||||||||||||
| Total Portfolio | 366 | $ | 94,250 | 100.0 | % | 45.6 | % | 10.6 yrs | ||||||||||||
Annualized base rent is in thousands; any differences are the result of rounding.
| (1) | Represents annualized straight-line rent as of December 31, 2016. |
| (2) | Reflects tenants, or parent entities thereof, with investment grade credit ratings from Standard & Poor’s, Moody's, Fitch and/or NAIC. |
Acquisitions
Total acquisition volume for the fourth quarter of 2016 was approximately $61.6 million and included 22 assets net leased to a number of notable retailers operating in the discount apparel, grocery, auto service, auto parts and specialty retail sectors. The properties are located in 12 states and leased to 17 distinct tenants operating across 11 retail sectors. These properties were acquired at a weighted average cap rate of 7.8% and with a weighted average remaining lease term of approximately 10.5 years.
For the year ended December 31, 2016, total acquisition volume was approximately $295.8 million and included 82 high-quality retail net lease assets. The properties are located in 27 states and leased to 49 diverse tenants who operate in 22 retail sectors. The properties were acquired at a weighted average cap rate of 7.8% and with a weighted average remaining lease term of approximately 10.7 years.
Dispositions
During the quarter, the Company sold one property net leased to Walgreens in Ocala, Florida, for gross proceeds of approximately $7.1 million. The disposition was completed at a cap rate of 5.7%.
| | 3 |
For the year ended December 31, 2016, the Company disposed of four Walgreens for gross proceeds of $29.7 million. The weighted average cap rate of the dispositions was 5.6%.
Development and Partner Capital Solutions
In the fourth quarter of 2016, the Company completed four previously announced development and Partner Capital Solutions projects, including the Company’s first Texas Roadhouse in Mount Pleasant, Michigan. This project is leased to Texas Roadhouse under a new 15-year ground lease and had a total project cost of approximately $0.5 million.
The Company also completed its previously announced Starbucks in North Lakeland, Florida during the quarter. This project, which represents the Company’s first ground-up development with Starbucks, had a total project cost of approximately $1.2 million and is under a new 10-year net lease.
Also within the quarter, the Company completed two Burger Kings in Hamilton, Montana and West Fargo, North Dakota. These projects are the third and fourth Burger Kings in the Company’s partnership with Meridian Restaurants, and are subject to new 20-year net leases. The total costs of these two projects were approximately $1.5 million and $1.6 million, respectively.
During the fourth quarter, construction continued on the Company’s four development and PCS projects with anticipated total project costs of approximately $21.7 million. These projects include one Burger King development in Heber, Utah; two Camping World projects in Tyler, Texas and Georgetown, Kentucky; and the redevelopment and expansion of an existing property in Boynton Beach, Florida for Orchard Supply Hardware.
For the year ended December 31, 2016, the Company completed or commenced construction on 14 development or PCS projects net leased to a number of industry-leading retail tenants. Total project costs for those developments are approximately $38.0 million and include the following completed or commenced projects:
| Tenant | Location | Lease Structure |
Lease Term |
Actual or Anticipated Rent Commencement |
Status | |||||
| Hobby Lobby | Springfield, OH | Build-to-Suit | 15 Years | Q1 2016 | Completed | |||||
| Family Fare Quick Stop | Marshall, MI | Ground Lease | 10 Years | Q2 2016 | Completed | |||||
| Burger King(1) | Farr West, UT | Build-to-Suit | 20 Years | Q2 2016 | Completed | |||||
| Chick-fil-A | Frankfort, KY | Ground Lease | 20 Years | Q3 2016 | Completed | |||||
| Burger King(1) | Devil's Lake, ND | Build-to-Suit | 20 Years | Q3 2016 | Completed | |||||
| Wawa | Orlando, FL | Ground Lease | 20 Years | Q3 2016 | Completed | |||||
| Starbucks | North Lakeland, FL | Build-to-Suit | 10 Years | Q4 2016 | Completed | |||||
| Burger King(1) | Hamilton, MT | Build-to-Suit | 20 Years | Q4 2016 | Completed | |||||
| Texas Roadhouse | Mount Pleasant, MI | Ground Lease | 15 Years | Q4 2016 | Completed | |||||
| Burger King(1) | West Fargo, ND | Build-to-Suit | 20 Years | Q4 2016 | Completed | |||||
| Camping World | Tyler, TX | Build-to-Suit | 20 Years | Q1 2017 | Under Construction | |||||
| Burger King(1) | Heber, UT | Build-to-Suit | 20 Years | Q1 2017 | Under Construction | |||||
| Camping World | Georgetown, KY | Build-to-Suit | 20 Years | Q3 2017 | Under Construction | |||||
| Orchard Supply | Boynton Beach, FL | Build-to-Suit | 15 Years | Q3 2017 | Under Construction |
| (1) | Franchise restaurants operated by Meridian Restaurants Unlimited, LC. |
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Leasing
During 2016, the Company executed new leases, extensions or options on more than 56,000 square feet of gross leasable area throughout the existing portfolio. Material new leases, extensions or options included a 24,153 square foot Staples in Davenport, Iowa.
Top Tenants
The following table presents annualized base rents for all tenants that represent 1.5% or greater of the Company’s total annualized base rent as of December 31, 2016:
| Tenant | Annualized Base Rent(1) | Percent of Annualized Base Rent | ||||||
| Walgreens | $ | 10,903 | 11.6 | % | ||||
| Walmart | 4,224 | 4.5 | % | |||||
| Lowe's | 3,099 | 3.3 | % | |||||
| Wawa | 2,664 | 2.8 | % | |||||
| Mister Car Wash | 2,580 | 2.7 | % | |||||
| Smart & Final | 2,518 | 2.7 | % | |||||
| CVS | 2,463 | 2.6 | % | |||||
| Dollar General | 2,415 | 2.6 | % | |||||
| Hobby Lobby | 2,177 | 2.3 | % | |||||
| Tractor Supply | 2,172 | 2.3 | % | |||||
| Academy Sports | 1,982 | 2.1 | % | |||||
| Rite Aid | 1,886 | 2.0 | % | |||||
| Dollar Tree | 1,832 | 1.9 | % | |||||
| Burger King(2) | 1,763 | 1.9 | % | |||||
| BJ's Wholesale | 1,759 | 1.9 | % | |||||
| LA Fitness | 1,709 | 1.8 | % | |||||
| 24 Hour Fitness | 1,694 | 1.8 | % | |||||
| AMC | 1,585 | 1.7 | % | |||||
| Taco Bell(3) | 1,537 | 1.6 | % | |||||
| Other(4) | 43,288 | 45.9 | % | |||||
| Total Portfolio | $ | 94,250 | 100.0 | % | ||||
Annualized base rent is in thousands; any differences are the result of rounding.
| (1) | Represents annualized straight-line rent as of December 31, 2016. |
| (2) | Franchise restaurants operated by Meridian Restaurants Unlimited, L.C. |
| (3) | Franchise restaurants operated by Charter Foods North, LLC. |
| (4) | Includes tenants generating less than 1.5% of annualized base rent. |
| | 5 |
Retail Sectors
The following table presents annualized base rents for the Company’s top retail sectors that represent 2.5% or greater of the Company’s total annualized base rent as of December 31, 2016:
| Sector | Annualized Base Rent(1) | Percent of Annualized Base Rent | ||||||
| Pharmacy | $ | 15,252 | 16.2 | % | ||||
| Grocery Stores | 6,632 | 7.0 | % | |||||
| Restaurants - Quick Service | 6,492 | 6.9 | % | |||||
| Auto Service | 5,452 | 5.8 | % | |||||
| Specialty Retail | 4,672 | 5.0 | % | |||||
| Discount Apparel | 4,533 | 4.8 | % | |||||
| General Merchandise | 3,956 | 4.2 | % | |||||
| Health & Fitness | 3,822 | 4.1 | % | |||||
| Home Improvement | 3,790 | 4.0 | % | |||||
| Warehouse Clubs | 3,749 | 4.0 | % | |||||
| Crafts and Novelties | 3,528 | 3.7 | % | |||||
| Sporting Goods | 3,149 | 3.3 | % | |||||
| Dollar Stores | 3,038 | 3.2 | % | |||||
| Farm and Rural Supply | 2,906 | 3.1 | % | |||||
| Convenience Stores | 2,830 | 3.0 | % | |||||
| Auto Parts | 2,822 | 3.0 | % | |||||
| Restaurants - Casual Dining | 2,481 | 2.6 | % | |||||
| Other(2) | 15,146 | 16.1 | % | |||||
| Total Portfolio | $ | 94,250 | 100.0 | % | ||||
Annualized base rent is in thousands; any differences are the result of rounding.
| (1) | Represents annualized straight-line rent as of December 31,2016. |
| (2) | Includes sectors generating less than 2.5% of annualized base rent. |
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Geographic Diversification
The following table presents annualized base rents for all states that represent 2.5% or greater of the Company’s total annualized base rent as of December 31, 2016:
| State | Annualized Base Rent(1) | Percent of Annualized Base Rent | ||||||
| Michigan | $ | 14,555 | 15.4 | % | ||||
| Texas | 8,107 | 8.6 | % | |||||
| Florida | 7,491 | 7.9 | % | |||||
| Ohio | 5,779 | 6.1 | % | |||||
| Illinois | 5,677 | 6.0 | % | |||||
| Pennsylvania | 4,095 | 4.3 | % | |||||
| California | 3,700 | 3.9 | % | |||||
| Mississippi | 2,855 | 3.0 | % | |||||
| Wisconsin | 2,841 | 3.0 | % | |||||
| Kentucky | 2,723 | 2.9 | % | |||||
| Colorado | 2,571 | 2.7 | % | |||||
| Kansas | 2,540 | 2.7 | % | |||||
| North Carolina | 2,396 | 2.5 | % | |||||
| Other(2) | 28,920 | 31.0 | % | |||||
| Total Portfolio | $ | 94,250 | 100.0 | % | ||||
Annualized base rent is in thousands; any differences are the result of rounding.
| (1) | Represents annualized straight-line rent as of December 31, 2016. |
| (2) | Includes states generating less than 2.5% of annualized base rent. |
| | 7 |
Lease Expiration
The following table presents contractual lease expirations within the Company’s portfolio as of December 31, 2016, assuming that no tenants exercise renewal options:
| Year | Leases | Annualized Base Rent(1) | Percent of Annualized Base Rent | Gross Leasable Area | Percent of Gross Leasable Area | |||||||||||||||
| 2017 | 8 | $ | 817 | 0.9 | % | 89 | 1.3 | % | ||||||||||||
| 2018 | 15 | 2,258 | 2.4 | % | 356 | 5.1 | % | |||||||||||||
| 2019 | 13 | 4,403 | 4.7 | % | 377 | 5.4 | % | |||||||||||||
| 2020 | 18 | 2,639 | 2.8 | % | 244 | 3.5 | % | |||||||||||||
| 2021 | 29 | 6,042 | 6.4 | % | 386 | 5.5 | % | |||||||||||||
| 2022 | 22 | 4,690 | 5.0 | % | 406 | 5.8 | % | |||||||||||||
| 2023 | 27 | 4,865 | 5.2 | % | 443 | 6.3 | % | |||||||||||||
| 2024 | 36 | 9,081 | 9.6 | % | 880 | 12.5 | % | |||||||||||||
| 2025 | 34 | 6,883 | 7.3 | % | 538 | 7.7 | % | |||||||||||||
| 2026 | 34 | 4,352 | 4.6 | % | 390 | 5.6 | % | |||||||||||||
| Thereafter | 179 | 48,220 | 51.1 | % | 2,924 | 41.3 | % | |||||||||||||
| Total Portfolio | 415 | $ | 94,250 | 100.0 | % | 7,033 | 100.0 | % | ||||||||||||
Annualized base rent and gross leasable area are in thousands; any differences are the result of rounding.
| (1) | Represents annualized straight-line rent as of December 31, 2016. |
Capital Markets and Balance Sheet
Capital Markets
During 2016, the Company executed on several capital markets transactions to fund strategic growth and preserve its strong balance sheet:
| § | In December 2016, the Company finalized an agreement to amend and restate its senior unsecured credit facility. The amended and restated credit facility was increased to $350 million and is comprised of a $250 million unsecured revolving credit facility (the “Revolving Facility”) and extensions of the Company’s existing $65 million and $35 million unsecured term loans (together, the “Unsecured Term Loans”). The Revolving Facility will mature in January 2021 with options to extend the maturity date to January 2022, and the Unsecured Term Loans will mature in January 2024. |
| § | In October 2016, the Company completed a follow-on public offering of 2,087,250 shares of common stock, which included the underwriters’ full exercise of their option to purchase additional shares. Total net proceeds, after deducting the underwriting discount and offering expenses, were approximately $95.0 million. |
| § | During the three months ended December 31, 2016, the Company issued 183,602 shares of common stock under its ATM program, realizing net proceeds of approximately $8.8 million. During the year ended December 31, 2016, the Company issued 499,209 shares of common stock under its ATM Program at an average gross price of $47.74, for total net proceeds of approximately $23.5 million. |
| | 8 |
| § | In August 2016, the Company refinanced an existing $20.3 million secured amortizing mortgage note. The refinanced $20.3 million term loan, which is now unsecured, matures in May 2019 and has a fixed interest rate of 3.62% through the use of an existing interest rate swap. |
| § | In July 2016, the Company completed the issuance of $100 million of long-term, unsecured, fixed rate debt. The combined $100 million of unsecured financings have a weighted average term of 10 years and a blended interest rate of 3.87%. |
| § | In May 2016, the Company completed a follow-on public offering of 2,875,000 shares of common stock, which included the underwriters’ full exercise of their option to purchase additional shares. Total net proceeds, after deducting the discount and offering expenses, were approximately $109.6 million. |
| § | In March 2016, the Company repaid an $8.6 million mortgage secured by three Wawa properties. |
Balance Sheet
As of December 31, 2016, net of cash on hand, the Company had full availability of recently expanded $250 million revolving credit facility. The Company’s net debt-to-recurring EBITDA was 4.5 times and its fixed charge coverage ratio was 3.9 times. As of December 31, 2016, the Company’s total debt to total enterprise value was 24.9%. Total enterprise value 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 into common stock.
For the three and twelve months ended December 31, 2016, the Company’s fully diluted weighted average shares outstanding were 25.5 million and 23.0 million, respectively. The basic weighted average shares outstanding for the three and twelve months ended December 31, 2016 were 25.4 million and 22.9 million, respectively.
The Company’s assets are held by, and its operations are conducted through, Agree Limited Partnership, of which the Company is the sole general partner. As of December 31, 2016, there were 347,619 operating partnership units outstanding and the Company held a 98.7% interest in the operating partnership.
2017 Outlook
The Company’s outlook for acquisition volume in 2017, which assumes continued growth in economic activity, moderate interest rate growth, positive business trends and other significant assumptions, is between $200 and $225 million of high-quality retail net lease properties. The Company’s disposition guidance for 2017 is between $20 million and $50 million.
Conference Call/Webcast
The Company will host its quarterly analyst and investor conference call on Friday, February 24, 2017 at 9:00 AM ET. To participate in the conference call, please dial (866) 363-3979 approximately ten minutes before the call begins.
Additionally, a webcast of the conference call will be available through the Company’s website. To access the webcast, visit www.agreerealty.com ten minutes prior to the start time of the conference call and go to the Invest section of the website. A replay of the conference call webcast will be archived and available online through the Invest section of www.agreerealty.com.
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About Agree Realty Corporation
Agree Realty Corporation is a publicly traded real estate investment trust primarily engaged in the acquisition and development of properties net leased to industry-leading retail tenants. The Company currently owns and operates a portfolio of 368 properties, located in 43 states and containing approximately 7.1 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, please visit www.agreerealty.com.
Forward-Looking Statements
This press release may contain certain “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” “forecast,” “continue,” “assume,” “plan,” references to “outlook” or other similar words or expressions. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections and forecasts and other forward-looking information and estimates. These forward-looking statements are subject to various risks and uncertainties, many of which are beyond the Company’s control, which could cause actual results to differ materially from such statements. These risks and uncertainties are described in greater detail in the Company’s filings with the Securities and Exchange Commission, including, without limitation, the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and in subsequent quarterly reports. Except as required by law, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
For further information about the Company’s business and financial results, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of the Company’s SEC filings, including, but not limited to, its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which may be obtained at the Invest section of the Company’s website at www.agreerealty.com.
All information in this press release is as of February 23, 2017. The Company undertakes no duty to update the statements in this press release to conform the statements to actual results or changes in the Company’s expectations.
Contact:
Matthew M. Partridge, Chief Financial Officer, Agree Realty Corporation, (248) 737-4190
###
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Agree Realty Corporation
Consolidated Balance Sheet
($ in thousands, except share and per share data)
| December 31, 2016 | December 31, 2015 | |||||||
| Assets: | ||||||||
| Real Estate Investments: | ||||||||
| Land | $ | 309,687 | $ | 225,274 | ||||
| Buildings | 703,506 | 526,912 | ||||||
| Accumulated depreciation | (69,696 | ) | (56,401 | ) | ||||
| Property under development | 6,764 | 3,663 | ||||||
| Net real estate investments | 950,261 | 699,448 | ||||||
| Cash and cash equivalents | 33,395 | 2,712 | ||||||
| Accounts receivable - Tenants, net of allowance of $50 and $35 for possible losses at December 31, 2016 and December 31, 2015, respectively | 11,535 | 7,418 | ||||||
| Unamortized Deferred Expenses: | ||||||||
| Credit facility financing Costs, net of accumulated amortization of $1,262 and $1,532 at December 31, 2016 and December 31, 2015, respectively | 1,552 | 543 | ||||||
| Leasing costs, net of accumulated amortization of $677 and $554 at December 31, 2016 and December 31, 2015, respectively | 1,227 | 665 | ||||||
| Lease intangibles, net of accumulated amortization of $18,588 and $10,578 at December 31, 2016 and December 31, 2015, respectively | 109,824 | 76,552 | ||||||
| Interest Rate Swaps | 1,409 | 98 | ||||||
| Other assets | 2,722 | 2,471 | ||||||
| Total Assets | $ | 1,111,925 | $ | 789,907 | ||||
| Liabilities: | ||||||||
| Mortgage notes payable, net | $ | 69,067 | $ | 100,391 | ||||
| Unsecured Term Loans, net | 158,679 | 99,390 | ||||||
| Senior Unsecured Notes, net | 159,176 | 99,161 | ||||||
| Unsecured Revolving Credit Facility | 14,000 | 18,000 | ||||||
| Dividends and Distributions Payable | 13,124 | 9,758 | ||||||
| Deferred Revenue | 1,823 | 1,708 | ||||||
| Accrued Interest Payable | 2,210 | 963 | ||||||
| Accounts Payable and Accrued Expense: | ||||||||
| Capital Expenditures | 677 | 122 | ||||||
| Operating | 4,866 | 2,759 | ||||||
| Interest Rate Swaps | 1,994 | 3,301 | ||||||
| Deferred Income Taxes | 705 | 705 | ||||||
| Tenant Deposits | 94 | 29 | ||||||
| Total Liabilities | 426,415 | 336,287 | ||||||
| Stockholders' Equity: | ||||||||
| Common stock, $.0001 par value, 45,000,000 shares authorized, 21,164,977 and 20,637,301 shares issued and outstanding, respectively | 3 | 2 | ||||||
| Preferred stock, $.0001 par value per share, 4,000,000 shares authorized | ||||||||
| Series A junior participating preferred stock, $.0001 par value, 200,000 authorized, no shares issued and outstanding | - | - | ||||||
| Additional paid-in capital | 712,069 | 482,514 | ||||||
| Dividends in excess of net income | (28,558 | ) | (28,262 | ) | ||||
| Accumulated other comprehensive loss | (536 | ) | (3,130 | ) | ||||
| Total Stockholders' Equity - Agree Realty Corporation | 682,978 | 451,124 | ||||||
| Non-controlling interest | 2,532 | 2,496 | ||||||
| Total Stockholders' Equity | 685,510 | 453,620 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 1,111,925 | $ | 789,907 | ||||
| | 11 |
Agree Realty Corporation
Consolidated Statements of Operations and Comprehensive Income
($ in thousands, except share and per share data)
| Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| Revenues | ||||||||||||||||
| Minimum rents | $ | 23,349 | $ | 17,016 | $ | 84,031 | $ | 64,278 | ||||||||
| Percentage rents | - | (9 | ) | 197 | 180 | |||||||||||
| Operating cost reimbursement | 1,900 | 2,031 | 7,267 | 5,277 | ||||||||||||
| Other income | 50 | 116 | 32 | 231 | ||||||||||||
| Total Revenues | 25,299 | 19,154 | 91,527 | 69,966 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Real estate taxes | 1,425 | 1,663 | 5,459 | 4,005 | ||||||||||||
| Property operating expenses | 815 | 357 | 2,484 | 1,768 | ||||||||||||
| Land lease payments | 163 | 163 | 653 | 606 | ||||||||||||
| General and administrative | 1,908 | 1,808 | 8,015 | 6,988 | ||||||||||||
| Depreciation and amortization | 6,506 | 3,289 | 23,407 | 16,486 | ||||||||||||
| Total Operating Expenses | 10,817 | 7,280 | 40,018 | 29,853 | ||||||||||||
| Income from Operations | 14,482 | 11,874 | 51,509 | 40,113 | ||||||||||||
| Other (Expense) Income | ||||||||||||||||
| Interest expense, net | (4,107 | ) | (3,947 | ) | (15,343 | ) | (12,305 | ) | ||||||||
| Gain on sale of assets | 2,832 | - | 9,964 | 12,135 | ||||||||||||
| Loss on debt extinguishment | (301 | ) | - | (333 | ) | (181 | ) | |||||||||
| Net Income | 12,906 | 7,927 | 45,797 | 39,762 | ||||||||||||
| Less Net Income Attributable to Non-Controlling Interest | 173 | 137 | 679 | 744 | ||||||||||||
| Net Income Attributable to Agree Realty Corporation | $ | 12,733 | $ | 7,790 | $ | 45,118 | $ | 39,018 | ||||||||
| Net Income Per Share Attributable to Agree Realty Corporation | ||||||||||||||||
| Basic | $ | 0.50 | $ | 0.41 | $ | 1.97 | $ | 2.17 | ||||||||
| Diluted | $ | 0.50 | $ | 0.41 | $ | 1.97 | $ | 2.16 | ||||||||
| Other Comprehensive Income | ||||||||||||||||
| Net income | $ | 12,906 | $ | 7,927 | $ | 45,797 | $ | 39,762 | ||||||||
| Other Comprehensive Income (Loss) | 5,853 | 1,836 | 2,618 | (1,093 | ) | |||||||||||
| Total Comprehensive Income | 18,759 | 9,763 | 48,415 | 38,669 | ||||||||||||
| Comprehensive Income Attributable to Non-Controlling Interest | (251 | ) | (173 | ) | (703 | ) | (724 | ) | ||||||||
| Comprehensive Income Attributable to Agree Realty Corporation | $ | 18,508 | $ | 9,590 | $ | 47,712 | $ | 37,945 | ||||||||
| Weighted Average Number of Common Shares Outstanding - Basic | 25,375,922 | 19,063,379 | 22,868,736 | 18,003,122 | ||||||||||||
| Weighted Average Number of Common Shares Outstanding - Diluted | 25,473,270 | 19,129,475 | 22,959,799 | 18,065,415 | ||||||||||||
| | 12 |
Agree Realty Corporation
Reconciliation of Net Income to FFO and Adjusted FFO
($ in thousands, except share and per share data)
(Unaudited)
| Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net income | $ | 12,906 | $ | 7,927 | $ | 45,797 | $ | 39,762 | ||||||||
| Depreciation of real estate assets | 4,296 | 2,768 | 15,200 | 11,466 | ||||||||||||
| Amortization of leasing costs | 41 | 14 | 125 | 98 | ||||||||||||
| Amortization of lease intangibles | 2,150 | 1,046 | 8,010 | 4,859 | ||||||||||||
| (Gain) loss on sale of assets | (2,832 | ) | - | (9,964 | ) | (12,135 | ) | |||||||||
| Funds from Operations | $ | 16,561 | $ | 11,755 | $ | 59,168 | $ | 44,050 | ||||||||
| Straight-line accrued rent | (1,420 | ) | (634 | ) | (3,582 | ) | (2,450 | ) | ||||||||
| Deferred revenue recognition | - | (116 | ) | (541 | ) | (463 | ) | |||||||||
| Stock based compensation expense | 576 | 470 | 2,441 | 1,992 | ||||||||||||
| Amortization of financing costs | 155 | 110 | 516 | 494 | ||||||||||||
| Non-real estate depreciation | 19 | 16 | 72 | 62 | ||||||||||||
| Debt extinguishment costs | 301 | - | 333 | 180 | ||||||||||||
| Adjusted Funds from Operations | $ | 16,192 | $ | 11,601 | $ | 58,407 | $ | 43,865 | ||||||||
| FFO per common share - Basic | $ | 0.64 | $ | 0.61 | $ | 2.55 | $ | 2.40 | ||||||||
| FFO per common share - Diluted | $ | 0.64 | $ | 0.60 | $ | 2.54 | $ | 2.39 | ||||||||
| Adjusted FFO per common share - Basic | $ | 0.63 | $ | 0.60 | $ | 2.52 | $ | 2.39 | ||||||||
| Adjusted FFO per common share - Diluted | $ | 0.63 | $ | 0.60 | $ | 2.51 | $ | 2.38 | ||||||||
| Weighted Average Number of Common Shares and Units Outstanding - Basic | 25,723,541 | 19,410,998 | 23,216,355 | 18,350,741 | ||||||||||||
| Weighted Average Number of Common Shares and Units Outstanding - Diluted | 25,820,889 | 19,477,094 | 23,307,418 | 18,413,034 | ||||||||||||
| Supplemental Information: | ||||||||||||||||
| Scheduled principal repayments | $ | 758 | $ | 711 | $ | 2,954 | $ | 2,772 | ||||||||
| Capitalized interest | 183 | 23 | 210 | 39 | ||||||||||||
| Capitalized building improvements | 136 | 382 | 541 | 310 | ||||||||||||
Non-GAAP Financial Measures
FFO
The Company considers the non-GAAP measures of FFO and FFO per share/unit)to be key supplemental measures of the Company's performance and should be considered along with, but not as alternatives to, net income or loss as a measure of the Company's operating performance. Historical cost accounting for real estate assets 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, most real estate industry investors consider FFO to be helpful in evaluating a real estate company's operations.
The White Paper on FFO approved by NAREIT in April 2002, as revised in 2011, defines FFO as net income or loss (computed in accordance with GAAP), excluding gains or losses from sales of properties and items classified by GAAP as extraordinary, plus real estate-related depreciation and amortization and impairment writedowns, and after comparable adjustments for the Company's portion of these items related to unconsolidated entities and joint ventures. The Company computes FFO consistent with standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company.
The Company believes that excluding the effect of extraordinary items, real estate-related depreciation and amortization and impairments, which are based on historical cost accounting and which may be of limited significance in evaluating current performance, can facilitate comparisons of operating performance between periods and between REITs, even though FFO does not represent an amount that accrues directly to common shareholders. However, FFO may not be helpful when comparing the Company to non-REITs.
FFO does not represent cash generated from operating activities as determined by GAAP and should not be considered as alternatives to net income or loss, cash flows from operations or any other operating performance measure prescribed by GAAP. FFO is not a measurement of the Company's liquidity, nor is FFO indicative of funds available to fund the Company's cash needs, including its ability to make cash distributions. These measurement does not reflect cash expenditures for long-term assets and other items that have been and will be incurred. FFO may include funds that may not be available for management's discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, and other commitments and uncertainties. To compensate for this, management considers the impact of these excluded items to the extent they are material to operating decisions or the evaluation of the Company's operating performance.
Adjusted FFO
The Company presents adjusted FFO (including adjusted FFO per share/unit), which adjusts for certain additional items including straight-line accrued rent, deferred revenue recognition, stock based compensation expense, non-real estate depreciation and debt extinguishment costs and certain other items. The Company excludes these items as it believes it allows for meaningful comparisons with other REITs and between periods and is more indicative of the ongoing performance of its assets. As with FFO, the Company’s calculation of adjusted FFO may be different from similar adjusted measures calculated by other REITs.
Any differences a result of rounding.
| | 13 |