Focused on the acquisition and development of single tenant properties leased to industry leading retail tenants

Transcription

1 BMO Capital Markets Non-Deal Roadshow January 28-29, 2013

2 Market Statistics Ticker: Focused on the acquisition and development of single tenant properties leased to industry leading retail tenants NYSE: ADC Recent Price: $28.51 (1) Shares and OP Units Outstanding: 13,591,000 (1) Current Annualized Dividend: $1.60 Dividend Yield: 5.6% (1) Current Market Cap: $387 million (1) Total Enterprise Value: $504 million (1) Total Revenues: $37 million (2) Number of Properties: 108 (1) Based on January 24, 2013 closing stock price of $28.51 per share. Shares and OP Units include common shares issued in January 2013 follow-on offering. Market cap and Enterprise value include additional borrowings of $37.6 million for fourth quarter acquisitions and use of offering proceeds. (2) Based on trailing 12 month results through September 30,

3 2012 Commenced or Completed Development Recently Announced Located in the heart of University of Michigan s Central Campus Redevelopment, pre-leased under a 20 year agreement WALGREENS RANCHO CORDOVA, CA McDONALD S - SOUTHFIELD, MI $5.8 million 18,000 sf ANN ARBOR, MI Ann Arbor historic district Built in 1937 CHASE - VENICE, FL WAWA - CASSELBERRY, FL SUPER ONE FOODS IRONWOOD, MI WAWA - KISSIMMEE, FL WAWA - PINELLAS PARK, FL 3

4 Investment Highlights Disciplined investment approach Industry leading team Strategic retailer relationships High quality property portfolio Proven external growth strategy and platform Strong, growth-oriented balance sheet Attractive, sustainable dividend yield 4

5 Strategic Growth Through Disciplined Investments Single Tenant Net Lease Development Preferred developer status with national tenants Long-term net leases with first in class tenants Pre-leasing minimizes development risk Superior return on development cost Wawa St. Petersburg, FL Single Tenant Net Lease Acquisitions Industry leading investment grade retailers Recession resistant and web resistant industries Average year one capitalization rate of roughly 8% Superior underlying real estate Average lease duration approaching 17 years Kohl s Salt Lake City, UT 5

6 Executive Management Experienced and Driven Richard Agree Executive Chairman Joey Agree President & CEO Alan Maximiuk Chief Financial Officer Laith Hermiz Executive Vice President 6 Founded Agree Development in 1971 CEO and Chairman from the Company s IPO in 1994 through January Developed over 8,000,000 square feet of retail space Appointed President & CEO in January 2013 Oversees the direction and supervision of all operations of the Company Named 30 in their Thirties by DBusiness magazine and 40 under 40 by Real Estate Forum magazine and Crain s Detroit Business Oversees the Company s accounting, corporate governance and SEC compliance Former Vice President Financial Services for Ramco-Gershenson Properties Trust Responsible for new business development, redevelopment activity & asset management Served as Vice President Development / Redevelopment at Ramco-Gershenson Properties Trust Former Managing Director of Joseph Freed & Associates Managed the construction of commercial, institutional and industrial projects totaling Michael Fitzgerald 4.8 million square feet in 18 states Vice President of Construction Responsibilities include sourcing, analyzing, and underwriting acquisition opportunities Former Senior Acquisition Analyst for Fortress Investment Group Responsible for the acquisition of over $2.1 billion of senior living assets for Brookdale Geoff Linden Senior Living Vice President of Acquisitions Kurt Beleck Vice President Oversees all development and redevelopment construction activities Served as Project Manager for both Grand/Sakwa and Clark Construction Responsible for the Company s due diligence and entitlement activities Registered Architect and Certified Development, Design and Construction Professional (CDP) Over 21 years of project management and real estate land development experience

7 National Portfolio Anchored by Strategic Retailer Relationships 108 properties in 27 states 3.2 million square feet of GLA 7

8 Strong Tenant Base Select Investment Grade Tenants 62.6% Investment Grade* (% of annualized base rents) 8 As of September 30, 2012 *Includes investment grade ratings as determined by S&P, Moody s and Fitch, or NAIC

9 Disposition of Non-Core Assets All Borders exposure addressed in addition to continued culling of non-core assets March Former Borders Office Building Ann Arbor, MI June Charlevoix Commons - Charlevoix, MI Kmart and Family Farm & Home Anchored Center September Former Borders - Columbus, OH January Walgreens Ypsilanti, MI 2012 MARCH MAY JUNE AUGUST SEPTEMBER 2013 May Former Borders Omaha, NE August Plymouth Commons - Plymouth, WI Kmart and Roundy s Anchored Center Shawano Plaza - Shawano, WI Kmart, JCPenney and Roundy s Anchored Center Divested of: 29% of Kmart Revenue 19% of Shopping Center Revenues 9

10 % of Total Company Annualized Base Rent Evolution of Major Tenant Exposure Evolution of Major Tenant Exposure All Other Tenants Walgreens Kmart Borders 10

11 Portfolio Stability and Historical Occupancy 2012 occupancy: 98% 5-year average occupancy: 98% 11

12 Well Staggered Expirations Mitigate Rollover Risk $35.0 Lease Expirations (Annualized base rent in millions) $30.0 $29.3 $25.0 $20.0 $15.0 $10.0 $5.0 $0.0 $2.5 $1.0 $1.5 $1.0 $ Thereafter As of September 30,

13 Stable Financial Growth $40 $35 $30 $25 $20 $27.0 $19.3 $20.0 $28.6 $20.7 $30.1 $21.6 $31.2 $32.9 $23.6 $24.2 $34.7 $22.0 $33.0 $15 $10 $5 $ Funds From Operations* *Funds from operations, as adjusted. **Defined as adjusted revenues less property level operating expenses, including land leases. Net Operating Income** 13

14 Since April 2010 Launch of Acquisition Platform ACQUISITIONS 44 STATES 22 RETAIL SECTORS 15 AGGREGATE PURCHASE PRICE $157 million ACQUISITION SUMMARY Average Purchase Price: $3.6 million Average Base Term: Retail Sectors: 17 Years Auto Parts, Auto Service, Pharmacy, Grocery, Apparel, Banks, Gas & C-Store, Dollar Stores, Specialty Retail, Health & Fitness, Casual Dining, Big Box Discount, Technology, Home Improvement, and Home Furnishings geographic diversification recession resistant web resistant investment grade sector diversification strong residuals 14

15 A Balance Sheet to Support Growth December 2012: Closed on new $25 million term loan with swapped interest rate of 2.49%, Closed on new $23.6 million 10-year CMBS loan at 3.60% Extended maturity on $85 million credit facility to 2015 Reduced interest spread to over Libor $50 million accordion feature increasing capacity to $135 million January 2013 completed follow-on offering of 1,725,000 common shares at $27.25/share raising net proceeds of $44,953,500 (in thousands) Shares & OP Units Outstanding 1 13,591 Total Assets $333,678 Total Debt 1 $117,059 Debt/Enterprise Value % Fixed Rate Debt/Total Debt 56% Fixed Charge Coverage 3.8x Interest Expense Coverage 4.0x Debt/EBITDA 4.6x Average Years to Maturity Fixed Rate Debt 6.6 years Credit Facility Maturity Oct As of September 30, 2012, with enterprise value based on January 24, 2013 closing stock price of $28.51 per share. Shares and OP Units include common shares issued in January 2013 follow-on offering. Debt and enterprise value include additional borrowings of $37.6 million for fourth quarter acquisitions and use of $45 million of net offering proceeds. 2 With extension options at Company s election until 2017.

16 Attractive and Well Covered Dividend Current annualized dividend of $1.60; current dividend yield of 5.6% (based on $28.51 share price) 75 consecutive quarterly cash dividends since its IPO FFO Payout Ratio: 79%* Targeted FFO Payout Ratio: 75 85% *Based on dividend and FFO for the quarter ended September 30,

17 2013 Strategic Priorities Strategic growth via STNL acquisition & development Continued diversification of portfolio Divestment of non-core assets Efficient recycling of capital 17

18 Forward Looking Statement This presentation may include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These forwardlooking statements include, but are not limited to, our plans, objectives, expectations and intentions and other statements contained in this document that are not historical facts and statements identified by words such as expects, anticipates, intends, plans, believes, seeks, estimates or words of similar meaning. These statements are based on our current beliefs or expectations and are inherently subject to significant uncertainties and changes in circumstances, many of which are beyond our control. Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory risk factors. Information concerning risk factors that could affect Agree Realty Corporation s actual results is contained in the Company s reports filed from time to time with the Securities and Exchange Commission. Agree Realty Corporation does not undertake any obligation to update any forward-looking statements contained in this document, as a result of new information, future events or otherwise. 18

19 Appendix: Case Studies

20 Case Studies: Capitalizing on Value Add Opportunities Structural Flexibility Construction Management CHALLENGES: Former Mervyns leasehold interest acquired by institutional investor as part of larger portfolio transaction Minimal due diligence provided or conducted by Seller Unrecorded cross-access & parking dated back to 1980 Identified environmental condition dating back to former use AGREE SOLUTIONS: Kohl s Salt Lake City, UT Conducted extensive due diligence review to recreate transactional history dating back to 1969 Eliminated potential environmental exposure via updated investigations without disturbing Tenant s business operation CHALLENGES: AT&T Wilmington, NC Seller failed to install landscaping and irrigation required by municipality preventing AT&T from obtaining Certificate of Occupancy NN lease failed to include reimbursement mechanism for common area maintenance and capital expenditures AGREE SOLUTIONS: Coordinated installation of landscape improvements on an expedited basis to accommodate Tenant s scheduled opening in time for holidays Negotiated lease revisions with AT&T to install pass-through mechanisms Closed all cash transaction for $8,100,000 Closed all cash transaction for $3,300,000 20

21 Case Studies: Capitalizing on Value Add Opportunities Leveraging Tenant Relationships Geotechnical & Environmental Expertise CHALLENGES: Lowe s Concord, NC Walgreens exclusive use restrictions encumbered entire 14.4 acre site Lowe s ground lease required Landlord to reimburse unamortized costs to Tenant CHALLENGES: CVS Atchison, KS Store constructed on geopiers due to unsuitable soil conditions Previously unknown underground storage tanks located on site AGREE SOLUTIONS: Renegotiated Reciprocal Easement Agreement with Walgreens Revised Lowe s Ground Lease to remove Landlord reimbursement mechanism AGREE SOLUTIONS: Conducted extensive soil testing to confirm structural suitability of foundation system Coordinated environmental closure and obtained No Further Action from State Closed all cash transaction for $9,900,000 Closed all cash transaction for $4,200,000 21