Press Releases

Agree Realty Corporation Reports Fourth Quarter And Full Year 2016 Results

BLOOMFIELD HILLS, Mich., Feb. 23, 2017 /PRNewswire/ -- 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

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. 

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

Properties


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%.

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.

 

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.

 

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.

 

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.

 

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.
  • 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.

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.

 

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





 

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









 

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.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/agree-realty-corporation-reports-fourth-quarter-and-full-year-2016-results-300412775.html

SOURCE Agree Realty Corporation

For further information: Matthew M. Partridge, Chief Financial Officer, Agree Realty Corporation, (248) 737-4190