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| ADC > SEC Filings for ADC > Form 8-K on 25-Sep-2012 | All Recent SEC Filings |
25-Sep-2012
Other Events, Financial Statements and Exhibits
Discontinued Operations
Agree Realty Corporation (the "Company") is re-issuing the historical financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011 (the "2011 Form 10-K") to reflect as discontinued operations additional entities that were presented as discontinued operations during the six months ended June 30, 2012 in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification (ASC) 205-20, Discontinued Operations. During the six months ended June 30, 2012, the Company sold three non-core properties and conveyed four properties to the lender pursuant to a consensual deed-in-lieu-of-foreclosure process that satisfied the loans, each of which qualifies as discontinued operations. In compliance with ASC 205-20, the Company has reported revenue, expenses and net gains from the sale of these properties as discontinued operations for each period presented in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 filed with the Securities and Exchange Commission ("SEC") on August 3, 2012. Under SEC requirements, the same reclassification as discontinued operations required by ASC 205-20 following the sale of a property is required for previously issued annual financial statements for each of the three years shown in the Company's last annual report on Form 10-K, if those financials are incorporated by reference in subsequent filings with the SEC made under the Securities Act of 1933, as amended, even though those financial statements relate to periods prior to the date of the sale.
This reclassification has no effect on the Company's previously reported net income (loss) attributable to Company stockholders or funds from operations. As a result of the changes discussed above, this Current Report on Form 8-K updates the following information in Items 6, 7, 8 and 15 (Exhibit 12 only) of the 2011 Form 10-K:
o Selected Financial Data included in Item 6 of the 2011 Form 10-K
o Management's Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of the 2011 Form 10-K
o Financial Statements and Supplementary Data included in Item 8 of the 2011 Form 10-K
o Exhibit 12 included in Item 15 of the 2011 Form 10-K
No attempt has been made to update matters in the 2011 Form 10-K for any other activities or events occurring after the original filing date except to the extent expressly provided herein. The information in this Current Report on Form 8-K should be read in conjunction with the portions of the 2011 Form 10-K not subject to the updates described herein and the Company's filings made with the SEC subsequent to the filing of the 2011 Form 10-K, including the Company's Quarterly Report on Form 10-Q for the quarters ended March 31, 2012 and June 30, 2012, and the Company's Current Reports on Form 8-K.
Recent Acquisitions
In connection with its filing on or about the date hereof of a Registration Statement on Form S-3, the Company is also filing this Current Report on Form 8-K to present certain additional disclosures to be incorporated by reference therein, including disclosures relating to:
· historical financial statements related to certain of the Company's completed acquisitions in 2011 and 2012; and
· unaudited pro forma financial information regarding the Company's completed acquisitions for purposes of Regulation S-X.
(a) Financial Statements Under Rule 3-14 of Regulation S-X
2012 ACQUISITIONS Portland, Oregon Property Report of Independent Registered Public Accounting Firm 5 Statements of Revenues and Certain Expenses for the period from January 1, 2012 to May 17, 2012 (unaudited) and the year ended December 31, 2011 6 Notes to Statements of Revenue and Certain Expenses 7 Tri-State Properties Report of Independent Registered Public Accounting Firm 10 Statements of Revenues and Certain Expenses for the period from January 1, 2012 to July 18, 2012 (unaudited) and the year ended December 31, 2011 11 Notes to Statements of Revenue and Certain Expenses 12 2011 ACQUISITIONS Roseville, California Property Report of Independent Registered Public Accounting Firm 15 Statements of Revenues and Certain Expenses for the period from January 1, 2011 to August 29, 2011 (unaudited) and the year ended December 31, 2010 16 Notes to Statements of Revenue and Certain Expenses 17 Salt Lake Property Report of Independent Registered Public Accounting Firm 19 Statements of Revenues and Certain Expenses for the period from January 1, 2011 to October 13, 2011 (unaudited) and the year ended December 31, 2010 20 Notes to Statements of Revenue and Certain Expenses 21 Leawood Property Report of Independent Registered Public Accounting Firm 23 Statements of Revenues and Certain Expenses for the period January 1, 2011 to December 29, 2011 (unaudited) and the year ended December 31, 2010 24 Notes to Statements of Revenue and Certain Expenses 25 |
(b) Unaudited Pro Forma Condensed Consolidated Financial Information
Agree Realty Corporation and Subsidiaries Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2012 31 Unaudited Pro Forma Condensed Consolidated Statement of Operations for the six months ended June 30, 2012 32 Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2011 33 Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements 34
(c) Exhibits
Exhibit No. Description
12.1 Statement of computation of ratios of earnings to combined fixed
charges and preferred stock dividends
23.1 Consent of Baker Tilly Virchow Krause, LLP
99.1 Form 10-K, Item 6. Selected Financial Data
Form 10-K, Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Form 10-K, Item 8. Financial Statements and Supplementary Data
100 The following materials from Agree Realty Corporation's Current
Report on Form 8-K updating its Annual Report on Form 10-K for the
year ended December 31, 2011 formatted in XBRL (eXtensible
Business Reporting Language): (i) the Consolidated Balance
Sheets, (ii) the Consolidated Statements of Income, (iii) the
Consolidated Statement of Stockholders' Equity, (iv) the
Consolidated Statements of Cash Flows, and (v) related notes to
these consolidated financial statements, tagged as blocks of text
As provided in Rule 406T of Regulation S-T, this information is
furnished and not filed for purposes of Sections 11 and 12 of the
Securities Act of 1933 and Section 18 of the Securities Exchange
Act of 1934
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To the Shareholders, Audit Committee and Board of Directors
Agree Realty Corporation
Farmington Hills, MI
We have audited the accompanying statement of revenue and certain expenses (the "Statement") of the Portland, Oregon Property (the "Property") for the year ended December 31, 2011. This Statement is the responsibility of management. Our responsibility is to express an opinion on this Statement based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Statement. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion on Form 8-K of Agree Realty Corporation), as described in note 2 and is not intended to be a complete presentation of the Property's revenue and expenses.
In our opinion, the Statement referred to above presents fairly, in all material respects, the revenue and certain expenses, as described in note 2, of the Property for the year ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.
/s/ Baker Tilly Virchow Krause, LLP
Chicago, Illinois
September 25, 2012
Portland, Oregon Property
Statements of Revenue and Certain Expenses
(Dollars in thousands)
Period from January 1, Year ended
2012 to May 17, 2012 December 31,
(Unaudited) 2011
Revenue
Rental revenue $ 403 $ 1,062
Total revenue 403 1,062
Certain expenses
Interest expense 188 506
Certain expenses 188 506
Revenue in excess of certain expenses $ 215 $ 556
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The accompanying notes are an integral part to the statements of revenue and certain expenses.
(1) Organization
The Portland, Oregon Property (the "Property") is a single tenant retail property located in Portland, Oregon. The accompanying statements of revenue and certain expenses ("Statements") relate to the operations of the Property.
On May 18, 2012, the Property was acquired by Agree Portland OR LLC, a single member limited liability company wholly owned by Agree Limited Partnership, an entity consolidated by Agree Realty Corporation. Prior to May 18, 2012, the Property was owned by an unaffiliated third party.
(2) Significant Accounting Policies
(a) Basis of Presentation
The accompanying Statements have been prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended, and accordingly, are not representative of the actual results of operations of the Property, due to the exclusion of the following revenue and expenses which may not be comparable to the proposed future operations of the Property:
· Depreciation and amortization
· Interest income
· Amortization of above and below market leases
· Other miscellaneous revenue and expenses not directly related to the proposed future operations of the Property.
(b) Revenue Recognition
Rental revenue is recognized on a straight-line basis over the term of the non-cancelable portion of the related leases. Differences between rental revenue earned and amounts due under the lease is charged or credited, as applicable, to accrued rental revenue. The impact of the straight-line rent adjustment increased revenue by approximately $40 for the period from January 1, 2012 to May 17, 2012 (unaudited) and increased revenue by approximately $105 for the year ended December 31, 2011. The tenant makes payments for certain expenses and costs, which have been assumed by the tenant under the terms of their respective lease, and are not reflected in the Statements.
(c) Use of Estimates
Management has made a number of estimates and assumptions relating to the reporting and disclosure of revenue and certain expenses during the reporting period to prepare the Statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.
(d) Unaudited Interim Statement
The statement of revenue and certain expenses for the period from January 1, 2012 to May 17, 2012 is unaudited. In the opinion of management, the statement reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of normal recurring nature.
(3) Mortgage Payable
The Property is subject to a non-recourse mortgage loan in the original amount of $11,100. The loan carries a 5.075% interest rate and is payable in monthly installments of $60 with a balloon payment of $9,168 due on the maturity date on June 1, 2014, and is collateralized by related real estate and tenant lease.
The following table presents scheduled principal payments on mortgages as of December 31, 2011:
Year ending December 31, (In thousands) 2012 $ 224 2013 237 2014 9,271 Total $ 9,732 |
(4) Description of Leasing Arrangements
The Property is leased to one tenant under a non-cancelable operating lease which has an expiration date of September 30, 2029.
Future minimum base rentals over the next five years and in the aggregate on the non-cancelable operating lease at December 31, 2011 are as follows:
2012 $ 957 2013 957 2014 981 2015 1,053 2016 1,053 Thereafter 15,054 Total $ 20,055 |
The above future minimum lease payments exclude tenant recoveries, amortization of accrued rental revenue and above/below-market lease intangibles.
(5) Commitments and Contingencies
The Property is subject to legal claims and disputes in the ordinary course of business. Management believes that the ultimate settlement of any existing potential claims and disputes would not have a material impact on the Property's revenue and certain operating expenses.
(6) Subsequent Events
Management has evaluated the events and transactions that have occurred through September 25, 2012, the date which the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.
To the Shareholders, Audit Committee and Board of Directors
Agree Realty Corporation
Farmington Hills, MI
We have audited the accompanying statement of revenue and certain expenses (the "Statement") of the Tri-State Properties (the "Properties") for the year ended December 31, 2011. This Statement is the responsibility of management. Our responsibility is to express an opinion on this Statement based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Statement. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion on Form 8-K of Agree Realty Corporation), as described in note 2 and is not intended to be a complete presentation of the Properties' revenue and expenses.
In our opinion, the Statement referred to above presents fairly, in all material respects, the revenue and certain expenses, as described in note 2, of the Properties for the year ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.
/s/ Baker Tilly Virchow Krause, LLP
Chicago, Illinois
September 25, 2012
Tri-State Properties
Statements of Revenue and Certain Expenses
(Dollars in thousands)
Period from January 1, Year ended
2012 to July 18, 2012 December 31,
(Unaudited) 2011
Revenue
Rental revenue $ 617 $ 1,122
Total revenue 617 1122
Certain expenses
Interest expense 310 563
Certain expenses 310 563
Revenue in excess of certain expenses $ 307 $ 559
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The accompanying notes are an integral part to the statements of revenue and certain expenses.
(1) Organization
The Tri-State Properties (the "Properties"), are three single tenant retail properties located in Clifton Heights, Pennsylvania, Newark, Delaware and Vineland, New Jersey. The accompanying statements of revenue and certain expenses ("Statements") relate to the operations of the Properties.
On July 19, 2012, the Properties were acquired by Agree Tri-State Lease, LLC, a single member limited liability company wholly owned by Agree Limited Partnership, an entity consolidated by Agree Realty Corporation. Prior to July 19, 2012, the Properties were owned by an unaffiliated third party.
(2) Significant Accounting Policies
(a) Basis of Presentation
The accompanying Statements have been prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended, and accordingly, are not representative of the actual results of operations of the Properties, due to the exclusion of the following revenue and expenses which may not be comparable to the proposed future operations of the Properties:
· Depreciation and amortization
· Interest income and expense
· Amortization of above and below market leases
· Other miscellaneous revenue and expenses not directly related to the proposed future operations of the Properties.
(b) Revenue Recognition
Rental revenue is recognized on a straight-line basis over the term of the non-cancelable portion of the related leases. Differences between rental revenue earned and amounts due under the lease is charged or credited, as applicable, to accrued rental revenue. The tenant makes payments for certain expenses and costs, which have been assumed by the tenant under the terms of their respective lease, and are not reflected in the Statements.
(c) Use of Estimates
Management has made a number of estimates and assumptions relating to the reporting and disclosure of revenue and certain expenses during the reporting period to prepare the Statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.
(d) Unaudited Interim Statement
The statement of revenue and certain expenses for the period from January 1, 2012 to July 18, 2012 is unaudited. In the opinion of management, the statement reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of normal recurring nature.
(3) Mortgage Payable
The Properties are subject to a non-recourse mortgage loan in the original amount of $8,580. The loan carries a 6.56% interest rate payable monthly with a balloon payment of $8,580 due on the maturity date on June 11, 2016 and is collateralized by related real estate and related tenant lease.
(4) Description of Leasing Arrangements
The Properties are leased to one tenant under a non-cancelable operating lease which has an expiration date of December 31, 2021.
Future minimum base rentals over the next five years and in the aggregate on the non-cancelable operating lease at December 31, 2011 are as follows:
2012 $ 1,122 2013 1,122 2014 1,122 2015 1,122 2016 1,122 Thereafter 5,610 Total $ 11,220 |
The above future minimum lease payments exclude tenant recoveries, amortization of accrued rental revenue and above/below-market lease intangibles.
(5) Commitments and Contingencies
The Properties are subject to legal claims and disputes in the ordinary course of business. Management believes that the ultimate settlement of any existing potential claims and disputes would not have a material impact on the Property's revenue and certain operating expenses.
(6) Subsequent Events
Management has evaluated the events and transactions that have occurred through September 25, 2012, the date which the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.
To the Shareholders, Audit Committee and Board of Directors
Agree Realty Corporation
Farmington Hills, MI
We have audited the accompanying statement of revenue and certain expenses (the "Statement") of the Roseville, California Property (the "Property") for the year ended December 31, 2010. This Statement is the responsibility of management. Our responsibility is to express an opinion on this Statement based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Statement. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion on Form 8-K of Agree Realty Corporation), as described in note 2 and is not intended to be a complete presentation of the Property's revenue and expenses.
In our opinion, the Statement referred to above presents fairly, in all material respects, the revenue and certain expenses, as described in note 2, of the Property for the year ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.
/s/ Baker Tilly Virchow Krause, LLP
Chicago, Illinois
September 25, 2012
Roseville, California Property
Statements of Revenue and Certain Expenses
(Dollars in thousands)
Period from
January 1, 2011 to Year ended
August 29, 2011 December 31,
(Unaudited) 2010
Revenue
Rental revenue $ 481 $ 722
Total revenue 481 722
Certain expenses
Revenue in excess of certain expenses $ 481 $ 722
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The accompanying notes are an integral part to the statements of revenue and certain expenses.
(1) Organization
The Roseville, California Property (the "Property") is a single tenant retail property located in Roseville, California. The accompanying statements of revenue and certain expenses ("Statements") relate to the operations of the Property.
On August 30, 2011, the Property was acquired by Agree Roseville CA, LLC, a single member limited liability company wholly owned by Agree Limited Partnership, an entity consolidated by Agree Realty Corporation. Prior to August 30, 2011, the Property was owned by an unaffiliated third party.
(2) Significant Accounting Policies
(a) Basis of Presentation
The accompanying Statements have been prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended, and accordingly, are not representative of the actual results of operations of the Property, due to the exclusion of the following revenue and expenses which may not be comparable to the proposed future operations of the Property:
· Depreciation and amortization
· Interest income and expense
· Amortization of above and below market leases
· Other miscellaneous revenue and expenses not directly related to the proposed future operations of the Property.
(b) Revenue Recognition
Rental revenue is recognized on a straight-line basis over the term of the non-cancelable portion of the related leases. Differences between rental revenue earned and amounts due under the lease is charged or credited, as applicable, to accrued rental revenue. The impact of the straight-line rent adjustment increased revenue by approximately $40 and $59 for the period January 1, 2011 to . . .
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