Agree Realty Corporation
), a real estate investment trust (REIT), announced the pricing
of a public offering of 1.5 million common shares. Priced at
$27.25 a share, the offering would help the company raise
proceeds of over $40.8 million. Moreover, the underwriters have
been granted a 30-day option to purchase up to 225,000 additional
shares for covering over-allotments, if any.
This larger-sized public offering (it previously disclosed a plan
to offer 1.3 million shares) comes as part of Agree Realty's
effort to generate cash to repay its debt, finance development
activity and property acquisitions as well as for general
Particularly, the company plans to use the proceeds from this
public offering to pay down the outstanding debt under its $85
million credit facility. The sole book running managers for this
offering was Raymond James. The offering is scheduled to close on
or about Jan 18, 2013.
For Agree Realty, though the public offering would result in
share dilution, the paying back of debt is encouraging as it
would reduce its interest expenses. Moreover, the opportunistic
acquisitions would help Agree Realty enhance its portfolio
quality, which in turn could be accretive to its earnings going
forward. In addition, it aims to retain high-end tenants through
long-term lease deals, thereby guaranteeing a consistent source
As a matter of fact, Agree Realty has been on an acquisition
spree. Recently, the company announced the acquisition of 4
Applebee's International Inc. restaurants along with one store of
Advance Auto Parts Inc.
) in late December 2012. The average purchase price of the
properties came in at approximately $10.1 million.
With the above-mentioned transaction, Agree Realty's total
acquisitions in 2012 reached roughly $81.5 million - more than
doubling from the total value of the 2011 acquisitions. The
company acquired properties spanning approximately 400,000 square
feet located in 15 states.
The properties are spread along 13 retail sectors and have an
average lease term of 14.5 years. Roughly 68% of the annualized
base rents, generated from these acquisitions in 2012, are from
Agree Realty is mainly engaged in the acquisition and development
of single tenant properties net leased to industry leading retail
tenants. Currently, it owns and operates a portfolio of 109
properties, situated in 27 states and includes around 3.3 million
square feet of gross leasable space.
We presently have a long-term Neutral recommendation on Agree
Realty. Also, it holds a Zacks Rank #3 (Hold).
ADVANCE AUTO PT (AAP): Free Stock Analysis
AGREE RLTY CORP (ADC): Free Stock Analysis
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