Equity Research Note
Andrew DiZio, CFA [email protected] Daniel P. Donlan [email protected]
215-665-6439
Agree Realty Corporation
215-665-6476
ADC - BUY July 19, 2011
Updating Estimates for Borders Liquidation; Reiterate BUY
REITs Agree Realty Corporation (ADC) - BUY Price:
$22.72
Fair Value Estimate: 52-Week Range: Equity Market Cap (M): 30-day Avg Daily Vol: Dividend: Yield: reNAV/Sh: Premium/(Disc) to reNav/Sh: Debt/Total Market Cap: Debt/Gross Assets: FYE: Dec FFO: P/FFO:
2010A $1.76A 12.9x
Quarterly FFO: Q1 $0.71A Q2 $0.61A Q3 $0.60A Q4 $(0.12)A
$27.00 $29.25-$20.61 231.9 64,594 $1.60 7.0% $27.75 (18.1)% 29.3% 28.7% 2011E $2.14E 10.6x
2012E $1.96E 11.6x
$0.63A $0.55E $0.52E $0.43E
$0.49E $0.49E $0.49E $0.49E
INVESTMENT CONCLUSION: Last night, Agree tenant Borders Group (BGPIQ-$0.06; Not Rated) officially announced plans to liquidate. Borders was previously Agree’s second-largest tenant (27% of 2010 rents), but a combination of new acquisitions, re-tenanting, and rent reductions have lowered overall exposure to 9% of annualized rental income. With the Borders question mark removed via liquidation, we believe that Agree is worth more without Borders’ leases and associated property debt (including assuming vacancy costs on non-mortgaged stores) than with the retailer as a tenant. We also estimate that Agree’s current $1.60/sh dividend remains covered by cash flow following Borders’ liquidation. We reiterate our BUY rating and $27 fair value. KEY POINTS: • Update on Borders situation—Last night, Borders announced it would submit to bankruptcy court a previously announced liquidation plan, ending hope that the book retailer could find a buyer. Liquidation sales will begin next week and conclude in September. Though we have maintained concurrent models including and excluding Borders rents and associated mortgages, our official estimates have assumed Borders remained a going concern; we now update our estimates to account for Borders' liquidation.
• Our estimates assume Borders pays through 3Q, ADC voluntarily defaults by year-end—We assume Borders pays rent through September while completing its inventory liquidation, and that ADC voluntarily defaults on all Borders-related mortgages at year-end; the mortgages are non-recourse to ADC. Agree may elect to discontinue paying its mortgage commensurate with the discontinuation of rent, but we believe the market is more focused on full-year 2012 earnings potential than quarterly 2011. We do not assume any re-leasing or sales of former Borders properties retained by Agree (those without debt). See p. 2 for a summary of Borders properties
• Updating NAV valuation to $27.75—Following the rent reductions, assignment,
1 Year Price History for ADC
Q2
Q3
Q1
Q2
Q3
30 27 24 21 18 15
2011 0.75 0.6 0.45 0.3 0.15 0 Created by BlueMatrix
Equity Research Note
and re-tenanting announced in June, we estimated Agree’s NAV to be higher without Borders, and associated property debt, than with the retailer due to the portfolio cap rate difference; we reiterate that claim. As shown on p. 4, our $27.75 NAV assumes all Borders rents are discontinued and related mortgage debt is voluntarily defaulted on. Our weighted-average cap rate is 7.9%.
• Updating FFO—FFO will be lumpy through 2011 with Borders cash flow ending and assigned leases increasing in rent. Updating our numbers to reflect Borders liquidation, we lower our 2011E and 2012E to $2.14 and $1.96, respectively, from $2.21 and $2.20. Our changes reflect the cessation of rents from Borders beginning in 4Q11, all previously announced interim rate roll downs and rent assignments, and a voluntary default on related Borders mortgages at year-end 2011.
• Valuation—Our $27 fair value is a slight discount to NAV, 13.8x our 2012E, and represents a yield of 6.2% using the current $1.60 annual dividend, a level we calculate to be sustainable. Relative to its peers, our FV would place ADC at an 8.5% discount on a 2012E multiple basis; peers trade at double-digit NAV premiums and an average yield of 5.7% (see Table #1, p. 2).
Research Analyst Certifications and Important Disclosures are on pages 7 - 8 of this report
Table #1: Comparable Company Analysis for ADC Ticker GTY GOOD LTC NNN O
Getty Realty Corp. Gladstone Commercial Corp * LTC Properties, Inc. National Retail Properties * Realty Income Corp. *
Share Price Current 18-Jul-11 Yield $25.73 7.5% $17.76 8.4% $27.47 6.1% $25.73 5.9% $33.81 5.1%
Comp. Set Wtd. Average^ All REITs Wtd. Average^ ADC Agree Realty Corp. * Prem./(Disc.) to Comp Set. average Prem./(Disc.) to REITs average
$22.72
2011E FFO Payout 88.7% 94.3% 80.6% 99.3% 86.5%
Equity Debt to FFO Growth Mkt Cap Total 2011E 2012E ($M) Mkt Cap 1.2% 0.2% $859 15.3% -3.0% -1.3% $171 52.7% 13.9% 9.6% $833 11.7% 9.3% 3.3% $2,176 33.8% 10.4% 6.0% $4,288 23.6%
Prem. Price / FFO (Disc.) to 2011E 2012E reNAV 11.9 x 11.9 x 16.6% 11.2 x 11.3 x -6.5% 13.2 x 12.0 x 8.4% 16.8 x 16.3 x 14.4% 16.8 x 15.9 x 18.6%
5.7% 3.4%
89.7% 58.7%
9.2% 14.3%
24.8% 34.5%
15.8 x 18.1 x
15.1 x 16.5 x
15.8% 10.7%
7.0% 130 365
74.8% (1,488) 1,612
21.6% 1,234 727
29.0% 420 (551)
10.6 x -32.9% -41.2%
11.6 x -23.2% -29.6%
(18.1% ) (3,389) (2,882)
4.9% 8.4% -8.4% (1,330) bps (1,681) bps
$232
Source: Publicly available documents, SNL Financial, and JMS' estimates (for covered companies). Note: FFO multiples for those companies not under JMS coverage are calculated using FactSet mean FFO estimates. *Indicates the company is part of JMS' coverage universe. ^Wtd. Average based on the companies' equity market capitalizations.
Summary of remaining Borders’ locations & associated debt—Table #2, below, summarizes Agree’s Borders properties and their change in status since January 1, 2011. Our estimates assume Agree voluntarily defaults on those with associated debt, with the exception of the Indianapolis, IN property assigned to Simply Amish. Table #2: ADC Borders Stores as-of January 1, 2011 and Current Status Year
SqFt
Tenant
City
ST
Built
(000s)
Borders Borders Borders Borders Borders Borders Borders Borders Borders Borders Borders Borders Borders Borders Borders Borders HQ
Boynton Beach Indianapolis Norman Ann Arbor Omaha Columbia Germantown Omaha Oklahoma City Wichita Lawrence Columbus Monroeville Tulsa Tulsa Ann Arbor
FL IN OK MI NE MD MD NE OK KS KS OH PA OK OK MI
1996 2002 1996 1996 1995 1999 2000 2002 2002 1995 1997 1996 1996 1998 1996 1996
25 16 25 110 30 28 25 25 25 25 20 21 37 0 0 459
Basis on
Debt on
31-Dec-10 31-Dec-10 $3,578 $1,298 $2,506 $10,159 $3,761 $3,926 $3,734 $3,768 $3,972 $2,755 $4,330 $3,163 $8,582 $0 $0 $7,737
$0 $725 $0 $0 $0 $2,254 $2,120 $2,503 $2,728 $0 $2,354 $0 $0 $0 $0 $5,782
Debt Expiration Status NA 1-Dec-17 NA NA NA 1-Nov-18 1-Nov-18 1-Nov-18 1-Nov-18 NA 1-May-22 NA NA NA NA 1-Feb-23
Assigned to Broadway Shoes Assigned to Simply Amish To Be Liquidated To Be Liquidated To Be Liquidated To Be Liquidated To Be Liquidated To Be Liquidated Previously Closed Previously Closed Previously Closed Previously Closed Previously Closed Sold in Jan 2011 Sold in Jan 2011 HQ Office, to be exited
Source: Janney, Agree 2010 10-K Note: Locations in box are cross-collateralized
Borders headquarters office a wildcard—Agree also owns the Borders headquarters office building in Ann Arbor, MI. Borders pays $200k in quarterly rent for 330k sq ft in the building, while ADC’s quarterly mortgage payments are $172k (self-amortizing, currently ~$5.6M principal balance). Given the relatively low mortgage payment, ADC may elect to attempt to lease the property rather than return it to the bank; our estimates assume the REIT voluntarily defaults. Holding the property and attempting to lease it would lower our 2012E and 2013E approximately $0.03/sh while cash flow would decline $0.07/sh each year (after principal amortization).
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Chart #1: Historical FFO Multiple Analysis for ADC 15.7x 13.0x
14.6x
13.6x
12.0x
11.2x 8.1x
11.2x
7.3x
12.0x
11.4x 9.1x
5.3x
13.8x
11.6x
11.0x
10.6x
8.7x 5.5x
12.6x
7.5x
6.6x 3.2x
3.1x
2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011E^ 2012E^ Source: Company documents and JMS estimates ^Multiple ranges are based on ADCE’s current price (low end) and our 12-month fair value of $27 (high end)
Risks. We believe the primary risk associated with owning ADC is tenant diversification risk. Agree now derives the majority of its rents from two national retailers: 37% from Walgreens and 13% from Kmart. Additional risks include, but are not limited to, uncertainty surrounding the timing and volume of acquisitions or dispositions and the potential rotation of funds out of REIT shares and into stocks perceived to offer higher returns. COMPANY DESCRIPTION: Public since December 1993 and based in Farmington Hills, MI, Agree Realty Corp. is an equity REIT that owns, manages, and develops single-tenant retail properties and community shopping centers primarily in the Midwestern U.S. Agree employs triple-net leases with national retail chains such as Walgreens, Kmart, and Chase Bank. As of March 31, 2011, and adjusting for Borders locations which closed in April 2011, Agree's portfolio was 96.0% leased and included an aggregate of 81 properties with 3.5M square feet located in 17 states. Occupancy will decline as Borders stores are liquidated.
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Agree Realty Corporation (ADC)
Net Asset Value Calculation: Ex-All Borders Leases Capitalization Rate Average
Low
(in thousands, except per share amounts) ASSUMPTIONS: Caprate (by tenant) Borders Walgreens Kmart Other
% NOI 0% 37% 13% 51%
High
Implied Cap
NA 6.75% 9.75% 7.75%
NA 7.00% 10.00% 8.00%
NA 7.25% 10.25% 8.25%
7.63%
7.88%
8.13%
9.18%
$8,569
$8,569
$8,569
$8,569
(790)
(790)
(790)
(790)
(800)
(800)
(800)
(800)
124 28
124 28
124 28
124 28
7,130
7,130
7,130
7,130
Annualized NOI, assuming 2.5% same-store growth - Other rent adjustments
28,734 NA
28,734 NA
28,734 NA
28,734 NA
Estimated cash flow
28,734
28,734
28,734
28,734
376,473
364,533
353,327
313,007
799 248 0 13,133
799 248 0 13,133
799 248 0 13,133
799 248 0 13,133
390,653
378,713
367,507
327,187
Real estate cap rate on cash NOI COMPONENTS OF NAV: Adjusted quarterly NOI from property - 1Q11
b
+ Qtrly NOI lost from Borders annc'd closures
c
+ Qtrly NOI lost when remaining Borders closed
c
d
+ Add'l Qtrly NOI from assignments + Add'l Qtrly NOI from post-1Q acquisitions Total GAAP NOI for the quarter
Implied value of properties on cash NOI a
Plus: Cash and cash equivalents Construction in process Real estate held for sale, net Other assets Estimated market value of assets a
Less: Consolidated indebtedness Voluntary default on non-recourse debt assoc. w/ BGP stores Cost of post-1Q acquisitions Other liabilities Net asset value Shares & units outstanding NAV per share NAV per share, rounded Closing price on June 18, 2011
95,905 (18,467) 1,350 16,543
95,905 (18,467) 1,350 16,543
95,905 (18,467) 1,350 16,543
95,905 (18,467) 1,350 16,543
$295,322
$283,382
$272,176
$231,856
10,205
10,205
10,205
10,205
$28.94
$27.77
$26.67
$29.00
$27.75
$26.50
$22.72
$22.72
$22.72
a. As of March 31, 2011 b. Adjusted to include full-quarter effect of mid-1Q11 acquisitions c. Includes 20% cost-of-carry (taxes and insurance) in addition to lost quarterly rent for locations not voluntarily defaulted on
-4-
$22.72
Agree Realty Corporation (ADC)
FFO Growth Model (in thousands, except per share amounts)
2010 A _________
1Q11 A ________
2Q11 E ________
3Q11 E ________
4Q11 E ________
2011 E _________
1Q12 E ________
2Q12 E ________
3Q12 E ________
4Q12 E ________
2012 E _________
Revenues Minimum rents % rents Operating cost remibursements
$32,787 35 2,604 _________
$9,057 16 739 _________
$8,155 16 608 _________
$8,304 16 610 _________
$7,711 16 399 _________
$33,227 64 2,356 _________
$7,943 16 443 _________
$7,948 16 444 _________
$7,956 16 444 _________
$7,967 16 445 _________
$31,814 65 1,776 _________
Total revenues - Real estate taxes - Property operating expenses - Land lease payments
35,426 1,913 1,458 477 _________
9,812 614 421 227 _________
8,778 614 421 225 _________
8,930 616 423 225 _________
8,126 628 434 225 _________
35,647 2,472 1,699 902 _________
8,402 599 440 225 _________
8,408 599 440 225 _________
8,417 599 441 225 _________
8,428 600 441 225 _________
33,655 2,397 1,763 900 _________
Net operating income (NOI) Management fees and other Development fee income Equity in income of unconsolidated entities
31,578 97 589 0 _________
8,550 23 411 0 _________
7,518 24 475 0 _________
7,666 24 25 0 _________
6,840 24 0 0 _________
30,574 95 911 0 _________
7,138 24 0 0 _________
7,144 24 0 0 _________
7,151 24 0 0 _________
7,162 24 0 0 _________
28,595 95 0 0 _________
32,264
8,984
8,017
7,715
6,864
31,580
7,162
7,167
7,175
7,185
28,690
5,003 14.1% 5,687 4,712 7,700 _________
1,442 14.7% 1,629 1,305 0 _________
1,440 16.4% 1,649 1,003 0 _________
1,445 16.2% 1,656 988 0 _________
1,441 17.7% 1,730 1,015 0 _________
5,768 16.2% 6,664 4,310 0 _________
1,456 17.3% 1,730 739 0 _________
1,454 17.3% 1,730 731 0 _________
1,459 17.3% 1,730 723 0 _________
1,455 17.3% 1,730 736 0 _________
5,826 17.3% 6,920 2,929 0 _________
Income from continuing operations - Minority interests
23,102 _________ 9,162 (561) _________
4,376 _________ 4,608 (160) _________
4,092 _________ 3,925 (134) _________
4,088 _________ 3,627 (124) _________
4,186 _________ 2,678 (91) _________
16,742 _________ 14,837 (508) _________
3,926 _________ 3,236 (110) _________
3,916 _________ 3,252 (111) _________
3,913 _________ 3,263 (111) _________
3,921 _________ 3,265 (111) _________
15,675 _________ 13,015 (443) _________
Income before discontinued operations + Income from discontinued operations + Gain on sale of investment properties
8,601 1,728 4,738 _________
4,448 92 0 _________
3,791 0 0 _________
3,503 0 0 _________
2,587 0 0 _________
14,329 92 0 _________
3,126 0 0 _________
3,141 0 0 _________
3,151 0 0 _________
3,153 0 0 _________
12,572 0 0 _________
Net income - Preferred stock dividends
15,067 NA _________ 15,067 0 _________
4,540 NA _________ 4,540 0 _________
3,791 NA _________ 3,791 0 _________
3,503 NA _________ 3,503 0 _________
2,587 NA _________ 2,587 0 _________
14,421 NA _________ 14,421 0 _________
3,126 NA _________ 3,126 0 _________
3,141 NA _________ 3,141 0 _________
3,151 NA _________ 3,151 0 _________
3,153 NA _________ 3,153 0 _________
12,572 NA _________ 12,572 0 _________
$15,067 $1.64 -23.4%
$4,540 $0.47 -60.0%
$3,791 $0.38 -15.9%
$3,503 $0.36 -22.1%
$2,587 $0.26 -179.0%
$14,421 $1.48 -9.9%
$3,126 $0.32 -32.6%
$3,141 $0.32 -17.1%
$3,151 $0.32 -10.0%
$3,153 $0.32 22.1%
$12,572 $1.28 -13.6%
$4,540 160 1,592 0 25 0 _________
$3,791 134 1,649 0 25 0 _________
$3,503 124 1,656 0 25 0 _________
$2,587 91 1,730 0 25 0 _________
$14,421 508 6,627 0 100 0 _________
$3,126 110 1,730 0 25 0 _________
$3,141 111 1,730 0 25 0 _________
$3,151 111 1,730 0 25 0 _________
$3,153 111 1,730 0 25 0 _________
$12,572 443 6,920 0 100 0 _________
$6,317 $0.63 -11.5%
$5,599 $0.55 -9.9%
$5,308 $0.52 -14.0%
$4,433 $0.43 -466.5%
$21,656 $2.14 21.6%
$4,991 $0.49 -22.6%
$5,007 $0.49 -10.5%
$5,018 $0.49 -5.4%
$5,019 $0.49 13.4%
$20,035 $1.96 -8.3%
Total operating income Corporate Expenses General and administrative expense G&A as % of rental revenues Real estate related depreciation Interest expense Other Subtotal Corporate Expenses
Net income available to common, basic + Minority interests, net Net income available to common, diluted EPS, diluted % increase
FUNDS FROM OPERATION (FFO) Net income available to common $15,067 + Minority interests, net 561 + Real estate related depreciation 5,810 + Real estate related depreciation of discontinued ops 0 + Amort'n of leasing costs 93 +/- (Gain) loss on sale of investment properties (4,738) _________ Funds From Operations (FFO) $16,793 FFO/Share, diluted $1.76 % increase -37.3%
-5-
Agree Realty Corporation (ADC)
FFO Growth Model (in thousands, except per share amounts) ADJUSTED FUNDS FROM OPERATION (AFFO) Funds From Operations (FFO) - Total CapEx - Effect of Straight Line Rents + Other amortization costs + Amort'n of stock compensation + Non-cash items and cash gains (losses) on sale Adjusted Funds from Operation (AFFO) AFFO/Share, diluted % increase CASH AVAILABLE FOR DISTRIBUTION (CAD) Adjusted Funds from Operation - Capitalized interest expense - Amortization of principal on secured debt Cash Available for Distribution (CAD) CAD/Share, diluted % increase Weighted average shares, diluted Weighted average shares & units, diluted Dividend FFO Payout Ratio AFFO Payout Ratio CAD Payout Ratio OTHER CALCULATIONS EBITDA Total operating income Less: Total G&A EBITDA EBITDA/Share, diluted
2010 A _________
1Q11 A ________
2Q11 E ________
3Q11 E ________
4Q11 E ________
2011 E _________
1Q12 E ________
2Q12 E ________
3Q12 E ________
4Q12 E ________
2012 E _________
$16,794 (286) 0 410 1,167 0 _________
$6,317 (192) 0 100 300 _________0
$5,599 (197) 0 100 300 _________0
$5,308 (197) 0 100 300 _________0
$4,433 (200) 0 100 300 _________0
$21,656 (786) 0 400 1,200 0 _________
$4,991 (312) 0 100 300 _________0
$5,007 (312) 0 100 300 _________0
$5,018 (312) 0 100 300 _________0
$5,019 (312) 0 100 300 _________0
$20,035 (1,246) 0 400 1,200 0 _________
$18,084 $1.90 -35.5%
$6,525 $0.65 -7.2%
$5,802 $0.57 -5.7%
$5,511 $0.54 -15.0%
$4,632 $0.45 -9951.0%
$22,470 $2.22 17.1%
$5,080 $0.50 -23.7%
$5,095 $0.50 -12.1%
$5,106 $0.50 -7.3%
$5,108 $0.50 10.4%
$20,389 $2.00 -10.0%
$18,084 (277) (3,034) _________
$6,525 (75) (1,074) _________
$5,802 (75) (1,074) _________
$5,511 (75) (1,074) _________
$4,632 (75) (1,074) _________
$22,470 (300) (4,295) _________
$5,080 (75) (810) _________
$5,095 (75) (810) _________
$5,106 (75) (810) _________
$5,108 (75) (810) _________
$20,389 (300) (3,238) _________
$14,774 $1.55 -39.6%
$5,376 $0.54 -11.1%
$4,653 $0.46 -11.3%
$4,362 $0.43 -21.7%
$3,484 $0.34 -541.1%
$17,875 $1.77 14.1%
$4,195 $0.41 -23.6%
$4,211 $0.41 -9.5%
$4,221 $0.41 -3.2%
$4,223 $0.41 21.4%
$16,851 $1.65 -6.5%
9,156 9,539
9,648 9,996
9,862 10,210
9,866 10,214
9,869 10,217
9,772 10,119
9,857 10,205
9,857 10,205
9,857 10,205
9,857 10,205
9,857 10,205
$2.04 115.9% 107.6% 131.7%
$0.40 63.3% 61.3% 74.4%
$0.40 72.9% 70.4% 87.8%
$0.40 77.0% 74.1% 93.7%
$0.40 92.2% 88.2% 117.3%
$1.60 74.8% 72.1% 90.6%
$0.40 81.8% 80.4% 97.3%
$0.40 81.5% 80.1% 96.9%
$0.40 81.4% 79.9% 96.7%
$0.40 81.3% 79.9% 96.7%
$1.60 81.5% 80.1% 96.9%
$33,369 (5,004) ________ $28,365 $2.97
$8,984 (1,442) ________ $7,542 $0.75
$8,017 (1,440) ________ $6,577 $0.64
$7,715 (1,445) ________ $6,270 $0.61
$6,864 (1,441) ________ $5,423 $0.53
$31,580 (5,768) ________ $25,812 $2.55
$7,162 (1,456) ________ $5,706 $0.56
$7,167 (1,454) ________ $5,713 $0.56
$7,175 (1,459) ________ $5,716 $0.56
$7,185 (1,455) ________ $5,730 $0.56
$28,690 (5,826) ________ $22,864 $2.24
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IMPORTANT DISCLOSURES Research Analyst Certification I, Andrew DiZio and Daniel P. Donlan, the Primarily Responsible Analyst for this research report, hereby certify that all of the views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers. No part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views I expressed in this research report.
Janney Montgomery Scott LLC ("Janney") Equity Research Disclosure Legend Janney Montgomery Scott is a market maker in the securities of ADC, and may at any time hold a long or short position in this security. Janney Montgomery Scott may seek compensation for investment banking services from the subject company (ies) ADC security in the next 3 months. The research analyst is compensated based on, in part, Janney Montgomery Scott's profitability, which includes its investment banking revenues.
Definition of Ratings BUY: Janney expects that the subject company will appreciate in value. Additionally, we expect that the subject company will outperform comparable companies within its sector. NEUTRAL: Janney believes that the subject company is fairly valued and will perform in line with comparable companies within its sector. Investors may add to current positions on short-term weakness and sell on strength as the valuations or fundamentals become more or less attractive. SELL: Janney expects that the subject company will likely decline in value and will underperform comparable companies within its sector.
Price Charts Rating and Price Target History for: Agree Realty Corporation (ADC) as of 07-18-2011 08/01/08 S
05/01/09 N
05/21/10 B
01/04/11 N
02/17/11 B
30 25 20 15 10 Q2
Q3
Q1 2009
Q2
Q3
Q1 2010
Q2
Q3
Q1
Q2
5 Q3
2011
Created by BlueMatrix
-7-
Janney Montgomery Scott Ratings Distribution as of 06/30/11 IB Serv./Past 12 Mos. Rating
Count
Percent
Count
Percent
BUY [B]
202
56
23
8
NEUTRAL [N]
151
42
8
6
8
2
0
0
SELL [S]
*Percentages of each rating category where Janney has performed Investment Banking services over the past 12 months. Other Disclosures Investment opinions are based on each stock's 6-12 month return potential. Our ratings are not based on formal price targets, however our analysts will discuss fair value and/or target price ranges in research reports. Decisions to buy or sell a stock should be based on the investor's investment objectives and risk tolerance and should not rely solely on the rating. Investors should read carefully the entire research report, which provides a more complete discussion of the analyst's views. This research report is provided for informational purposes only and shall in no event be construed as an offer to sell or a solicitation of an offer to buy any securities. The information described herein is taken from sources which we believe to be reliable, but the accuracy and completeness of such information is not guaranteed by us. The opinions expressed herein may be given only such weight as opinions warrant. This Firm, its officers, directors, employees, or members of their families may have positions in the securities mentioned and may make purchases or sales of such securities from time to time in the open market or otherwise and may sell to or buy from customers such securities on a principal basis.Supporting information related to the recommendation, if any, made in the research report is available upon request.
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215-665-6439
Agree Realty Corporation
215-665-6476
ADC - BUY July 19, 2011
Updating Estimates for Borders Liquidation; Reiterate BUY
REITs Agree Realty Corporation (ADC) - BUY Price:
$22.72
Fair Value Estimate: 52-Week Range: Equity Market Cap (M): 30-day Avg Daily Vol: Dividend: Yield: reNAV/Sh: Premium/(Disc) to reNav/Sh: Debt/Total Market Cap: Debt/Gross Assets: FYE: Dec FFO: P/FFO:
2010A $1.76A 12.9x
Quarterly FFO: Q1 $0.71A Q2 $0.61A Q3 $0.60A Q4 $(0.12)A
$27.00 $29.25-$20.61 231.9 64,594 $1.60 7.0% $27.75 (18.1)% 29.3% 28.7% 2011E $2.14E 10.6x
2012E $1.96E 11.6x
$0.63A $0.55E $0.52E $0.43E
$0.49E $0.49E $0.49E $0.49E
INVESTMENT CONCLUSION: Last night, Agree tenant Borders Group (BGPIQ-$0.06; Not Rated) officially announced plans to liquidate. Borders was previously Agree’s second-largest tenant (27% of 2010 rents), but a combination of new acquisitions, re-tenanting, and rent reductions have lowered overall exposure to 9% of annualized rental income. With the Borders question mark removed via liquidation, we believe that Agree is worth more without Borders’ leases and associated property debt (including assuming vacancy costs on non-mortgaged stores) than with the retailer as a tenant. We also estimate that Agree’s current $1.60/sh dividend remains covered by cash flow following Borders’ liquidation. We reiterate our BUY rating and $27 fair value. KEY POINTS: • Update on Borders situation—Last night, Borders announced it would submit to bankruptcy court a previously announced liquidation plan, ending hope that the book retailer could find a buyer. Liquidation sales will begin next week and conclude in September. Though we have maintained concurrent models including and excluding Borders rents and associated mortgages, our official estimates have assumed Borders remained a going concern; we now update our estimates to account for Borders' liquidation.
• Our estimates assume Borders pays through 3Q, ADC voluntarily defaults by year-end—We assume Borders pays rent through September while completing its inventory liquidation, and that ADC voluntarily defaults on all Borders-related mortgages at year-end; the mortgages are non-recourse to ADC. Agree may elect to discontinue paying its mortgage commensurate with the discontinuation of rent, but we believe the market is more focused on full-year 2012 earnings potential than quarterly 2011. We do not assume any re-leasing or sales of former Borders properties retained by Agree (those without debt). See p. 2 for a summary of Borders properties
• Updating NAV valuation to $27.75—Following the rent reductions, assignment,
1 Year Price History for ADC
Q2
Q3
Q1
Q2
Q3
30 27 24 21 18 15
2011 0.75 0.6 0.45 0.3 0.15 0 Created by BlueMatrix
Equity Research Note
and re-tenanting announced in June, we estimated Agree’s NAV to be higher without Borders, and associated property debt, than with the retailer due to the portfolio cap rate difference; we reiterate that claim. As shown on p. 4, our $27.75 NAV assumes all Borders rents are discontinued and related mortgage debt is voluntarily defaulted on. Our weighted-average cap rate is 7.9%.
• Updating FFO—FFO will be lumpy through 2011 with Borders cash flow ending and assigned leases increasing in rent. Updating our numbers to reflect Borders liquidation, we lower our 2011E and 2012E to $2.14 and $1.96, respectively, from $2.21 and $2.20. Our changes reflect the cessation of rents from Borders beginning in 4Q11, all previously announced interim rate roll downs and rent assignments, and a voluntary default on related Borders mortgages at year-end 2011.
• Valuation—Our $27 fair value is a slight discount to NAV, 13.8x our 2012E, and represents a yield of 6.2% using the current $1.60 annual dividend, a level we calculate to be sustainable. Relative to its peers, our FV would place ADC at an 8.5% discount on a 2012E multiple basis; peers trade at double-digit NAV premiums and an average yield of 5.7% (see Table #1, p. 2).
Research Analyst Certifications and Important Disclosures are on pages 7 - 8 of this report
Table #1: Comparable Company Analysis for ADC Ticker GTY GOOD LTC NNN O
Getty Realty Corp. Gladstone Commercial Corp * LTC Properties, Inc. National Retail Properties * Realty Income Corp. *
Share Price Current 18-Jul-11 Yield $25.73 7.5% $17.76 8.4% $27.47 6.1% $25.73 5.9% $33.81 5.1%
Comp. Set Wtd. Average^ All REITs Wtd. Average^ ADC Agree Realty Corp. * Prem./(Disc.) to Comp Set. average Prem./(Disc.) to REITs average
$22.72
2011E FFO Payout 88.7% 94.3% 80.6% 99.3% 86.5%
Equity Debt to FFO Growth Mkt Cap Total 2011E 2012E ($M) Mkt Cap 1.2% 0.2% $859 15.3% -3.0% -1.3% $171 52.7% 13.9% 9.6% $833 11.7% 9.3% 3.3% $2,176 33.8% 10.4% 6.0% $4,288 23.6%
Prem. Price / FFO (Disc.) to 2011E 2012E reNAV 11.9 x 11.9 x 16.6% 11.2 x 11.3 x -6.5% 13.2 x 12.0 x 8.4% 16.8 x 16.3 x 14.4% 16.8 x 15.9 x 18.6%
5.7% 3.4%
89.7% 58.7%
9.2% 14.3%
24.8% 34.5%
15.8 x 18.1 x
15.1 x 16.5 x
15.8% 10.7%
7.0% 130 365
74.8% (1,488) 1,612
21.6% 1,234 727
29.0% 420 (551)
10.6 x -32.9% -41.2%
11.6 x -23.2% -29.6%
(18.1% ) (3,389) (2,882)
4.9% 8.4% -8.4% (1,330) bps (1,681) bps
$232
Source: Publicly available documents, SNL Financial, and JMS' estimates (for covered companies). Note: FFO multiples for those companies not under JMS coverage are calculated using FactSet mean FFO estimates. *Indicates the company is part of JMS' coverage universe. ^Wtd. Average based on the companies' equity market capitalizations.
Summary of remaining Borders’ locations & associated debt—Table #2, below, summarizes Agree’s Borders properties and their change in status since January 1, 2011. Our estimates assume Agree voluntarily defaults on those with associated debt, with the exception of the Indianapolis, IN property assigned to Simply Amish. Table #2: ADC Borders Stores as-of January 1, 2011 and Current Status Year
SqFt
Tenant
City
ST
Built
(000s)
Borders Borders Borders Borders Borders Borders Borders Borders Borders Borders Borders Borders Borders Borders Borders Borders HQ
Boynton Beach Indianapolis Norman Ann Arbor Omaha Columbia Germantown Omaha Oklahoma City Wichita Lawrence Columbus Monroeville Tulsa Tulsa Ann Arbor
FL IN OK MI NE MD MD NE OK KS KS OH PA OK OK MI
1996 2002 1996 1996 1995 1999 2000 2002 2002 1995 1997 1996 1996 1998 1996 1996
25 16 25 110 30 28 25 25 25 25 20 21 37 0 0 459
Basis on
Debt on
31-Dec-10 31-Dec-10 $3,578 $1,298 $2,506 $10,159 $3,761 $3,926 $3,734 $3,768 $3,972 $2,755 $4,330 $3,163 $8,582 $0 $0 $7,737
$0 $725 $0 $0 $0 $2,254 $2,120 $2,503 $2,728 $0 $2,354 $0 $0 $0 $0 $5,782
Debt Expiration Status NA 1-Dec-17 NA NA NA 1-Nov-18 1-Nov-18 1-Nov-18 1-Nov-18 NA 1-May-22 NA NA NA NA 1-Feb-23
Assigned to Broadway Shoes Assigned to Simply Amish To Be Liquidated To Be Liquidated To Be Liquidated To Be Liquidated To Be Liquidated To Be Liquidated Previously Closed Previously Closed Previously Closed Previously Closed Previously Closed Sold in Jan 2011 Sold in Jan 2011 HQ Office, to be exited
Source: Janney, Agree 2010 10-K Note: Locations in box are cross-collateralized
Borders headquarters office a wildcard—Agree also owns the Borders headquarters office building in Ann Arbor, MI. Borders pays $200k in quarterly rent for 330k sq ft in the building, while ADC’s quarterly mortgage payments are $172k (self-amortizing, currently ~$5.6M principal balance). Given the relatively low mortgage payment, ADC may elect to attempt to lease the property rather than return it to the bank; our estimates assume the REIT voluntarily defaults. Holding the property and attempting to lease it would lower our 2012E and 2013E approximately $0.03/sh while cash flow would decline $0.07/sh each year (after principal amortization).
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Chart #1: Historical FFO Multiple Analysis for ADC 15.7x 13.0x
14.6x
13.6x
12.0x
11.2x 8.1x
11.2x
7.3x
12.0x
11.4x 9.1x
5.3x
13.8x
11.6x
11.0x
10.6x
8.7x 5.5x
12.6x
7.5x
6.6x 3.2x
3.1x
2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011E^ 2012E^ Source: Company documents and JMS estimates ^Multiple ranges are based on ADCE’s current price (low end) and our 12-month fair value of $27 (high end)
Risks. We believe the primary risk associated with owning ADC is tenant diversification risk. Agree now derives the majority of its rents from two national retailers: 37% from Walgreens and 13% from Kmart. Additional risks include, but are not limited to, uncertainty surrounding the timing and volume of acquisitions or dispositions and the potential rotation of funds out of REIT shares and into stocks perceived to offer higher returns. COMPANY DESCRIPTION: Public since December 1993 and based in Farmington Hills, MI, Agree Realty Corp. is an equity REIT that owns, manages, and develops single-tenant retail properties and community shopping centers primarily in the Midwestern U.S. Agree employs triple-net leases with national retail chains such as Walgreens, Kmart, and Chase Bank. As of March 31, 2011, and adjusting for Borders locations which closed in April 2011, Agree's portfolio was 96.0% leased and included an aggregate of 81 properties with 3.5M square feet located in 17 states. Occupancy will decline as Borders stores are liquidated.
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Agree Realty Corporation (ADC)
Net Asset Value Calculation: Ex-All Borders Leases Capitalization Rate Average
Low
(in thousands, except per share amounts) ASSUMPTIONS: Caprate (by tenant) Borders Walgreens Kmart Other
% NOI 0% 37% 13% 51%
High
Implied Cap
NA 6.75% 9.75% 7.75%
NA 7.00% 10.00% 8.00%
NA 7.25% 10.25% 8.25%
7.63%
7.88%
8.13%
9.18%
$8,569
$8,569
$8,569
$8,569
(790)
(790)
(790)
(790)
(800)
(800)
(800)
(800)
124 28
124 28
124 28
124 28
7,130
7,130
7,130
7,130
Annualized NOI, assuming 2.5% same-store growth - Other rent adjustments
28,734 NA
28,734 NA
28,734 NA
28,734 NA
Estimated cash flow
28,734
28,734
28,734
28,734
376,473
364,533
353,327
313,007
799 248 0 13,133
799 248 0 13,133
799 248 0 13,133
799 248 0 13,133
390,653
378,713
367,507
327,187
Real estate cap rate on cash NOI COMPONENTS OF NAV: Adjusted quarterly NOI from property - 1Q11
b
+ Qtrly NOI lost from Borders annc'd closures
c
+ Qtrly NOI lost when remaining Borders closed
c
d
+ Add'l Qtrly NOI from assignments + Add'l Qtrly NOI from post-1Q acquisitions Total GAAP NOI for the quarter
Implied value of properties on cash NOI a
Plus: Cash and cash equivalents Construction in process Real estate held for sale, net Other assets Estimated market value of assets a
Less: Consolidated indebtedness Voluntary default on non-recourse debt assoc. w/ BGP stores Cost of post-1Q acquisitions Other liabilities Net asset value Shares & units outstanding NAV per share NAV per share, rounded Closing price on June 18, 2011
95,905 (18,467) 1,350 16,543
95,905 (18,467) 1,350 16,543
95,905 (18,467) 1,350 16,543
95,905 (18,467) 1,350 16,543
$295,322
$283,382
$272,176
$231,856
10,205
10,205
10,205
10,205
$28.94
$27.77
$26.67
$29.00
$27.75
$26.50
$22.72
$22.72
$22.72
a. As of March 31, 2011 b. Adjusted to include full-quarter effect of mid-1Q11 acquisitions c. Includes 20% cost-of-carry (taxes and insurance) in addition to lost quarterly rent for locations not voluntarily defaulted on
-4-
$22.72
Agree Realty Corporation (ADC)
FFO Growth Model (in thousands, except per share amounts)
2010 A _________
1Q11 A ________
2Q11 E ________
3Q11 E ________
4Q11 E ________
2011 E _________
1Q12 E ________
2Q12 E ________
3Q12 E ________
4Q12 E ________
2012 E _________
Revenues Minimum rents % rents Operating cost remibursements
$32,787 35 2,604 _________
$9,057 16 739 _________
$8,155 16 608 _________
$8,304 16 610 _________
$7,711 16 399 _________
$33,227 64 2,356 _________
$7,943 16 443 _________
$7,948 16 444 _________
$7,956 16 444 _________
$7,967 16 445 _________
$31,814 65 1,776 _________
Total revenues - Real estate taxes - Property operating expenses - Land lease payments
35,426 1,913 1,458 477 _________
9,812 614 421 227 _________
8,778 614 421 225 _________
8,930 616 423 225 _________
8,126 628 434 225 _________
35,647 2,472 1,699 902 _________
8,402 599 440 225 _________
8,408 599 440 225 _________
8,417 599 441 225 _________
8,428 600 441 225 _________
33,655 2,397 1,763 900 _________
Net operating income (NOI) Management fees and other Development fee income Equity in income of unconsolidated entities
31,578 97 589 0 _________
8,550 23 411 0 _________
7,518 24 475 0 _________
7,666 24 25 0 _________
6,840 24 0 0 _________
30,574 95 911 0 _________
7,138 24 0 0 _________
7,144 24 0 0 _________
7,151 24 0 0 _________
7,162 24 0 0 _________
28,595 95 0 0 _________
32,264
8,984
8,017
7,715
6,864
31,580
7,162
7,167
7,175
7,185
28,690
5,003 14.1% 5,687 4,712 7,700 _________
1,442 14.7% 1,629 1,305 0 _________
1,440 16.4% 1,649 1,003 0 _________
1,445 16.2% 1,656 988 0 _________
1,441 17.7% 1,730 1,015 0 _________
5,768 16.2% 6,664 4,310 0 _________
1,456 17.3% 1,730 739 0 _________
1,454 17.3% 1,730 731 0 _________
1,459 17.3% 1,730 723 0 _________
1,455 17.3% 1,730 736 0 _________
5,826 17.3% 6,920 2,929 0 _________
Income from continuing operations - Minority interests
23,102 _________ 9,162 (561) _________
4,376 _________ 4,608 (160) _________
4,092 _________ 3,925 (134) _________
4,088 _________ 3,627 (124) _________
4,186 _________ 2,678 (91) _________
16,742 _________ 14,837 (508) _________
3,926 _________ 3,236 (110) _________
3,916 _________ 3,252 (111) _________
3,913 _________ 3,263 (111) _________
3,921 _________ 3,265 (111) _________
15,675 _________ 13,015 (443) _________
Income before discontinued operations + Income from discontinued operations + Gain on sale of investment properties
8,601 1,728 4,738 _________
4,448 92 0 _________
3,791 0 0 _________
3,503 0 0 _________
2,587 0 0 _________
14,329 92 0 _________
3,126 0 0 _________
3,141 0 0 _________
3,151 0 0 _________
3,153 0 0 _________
12,572 0 0 _________
Net income - Preferred stock dividends
15,067 NA _________ 15,067 0 _________
4,540 NA _________ 4,540 0 _________
3,791 NA _________ 3,791 0 _________
3,503 NA _________ 3,503 0 _________
2,587 NA _________ 2,587 0 _________
14,421 NA _________ 14,421 0 _________
3,126 NA _________ 3,126 0 _________
3,141 NA _________ 3,141 0 _________
3,151 NA _________ 3,151 0 _________
3,153 NA _________ 3,153 0 _________
12,572 NA _________ 12,572 0 _________
$15,067 $1.64 -23.4%
$4,540 $0.47 -60.0%
$3,791 $0.38 -15.9%
$3,503 $0.36 -22.1%
$2,587 $0.26 -179.0%
$14,421 $1.48 -9.9%
$3,126 $0.32 -32.6%
$3,141 $0.32 -17.1%
$3,151 $0.32 -10.0%
$3,153 $0.32 22.1%
$12,572 $1.28 -13.6%
$4,540 160 1,592 0 25 0 _________
$3,791 134 1,649 0 25 0 _________
$3,503 124 1,656 0 25 0 _________
$2,587 91 1,730 0 25 0 _________
$14,421 508 6,627 0 100 0 _________
$3,126 110 1,730 0 25 0 _________
$3,141 111 1,730 0 25 0 _________
$3,151 111 1,730 0 25 0 _________
$3,153 111 1,730 0 25 0 _________
$12,572 443 6,920 0 100 0 _________
$6,317 $0.63 -11.5%
$5,599 $0.55 -9.9%
$5,308 $0.52 -14.0%
$4,433 $0.43 -466.5%
$21,656 $2.14 21.6%
$4,991 $0.49 -22.6%
$5,007 $0.49 -10.5%
$5,018 $0.49 -5.4%
$5,019 $0.49 13.4%
$20,035 $1.96 -8.3%
Total operating income Corporate Expenses General and administrative expense G&A as % of rental revenues Real estate related depreciation Interest expense Other Subtotal Corporate Expenses
Net income available to common, basic + Minority interests, net Net income available to common, diluted EPS, diluted % increase
FUNDS FROM OPERATION (FFO) Net income available to common $15,067 + Minority interests, net 561 + Real estate related depreciation 5,810 + Real estate related depreciation of discontinued ops 0 + Amort'n of leasing costs 93 +/- (Gain) loss on sale of investment properties (4,738) _________ Funds From Operations (FFO) $16,793 FFO/Share, diluted $1.76 % increase -37.3%
-5-
Agree Realty Corporation (ADC)
FFO Growth Model (in thousands, except per share amounts) ADJUSTED FUNDS FROM OPERATION (AFFO) Funds From Operations (FFO) - Total CapEx - Effect of Straight Line Rents + Other amortization costs + Amort'n of stock compensation + Non-cash items and cash gains (losses) on sale Adjusted Funds from Operation (AFFO) AFFO/Share, diluted % increase CASH AVAILABLE FOR DISTRIBUTION (CAD) Adjusted Funds from Operation - Capitalized interest expense - Amortization of principal on secured debt Cash Available for Distribution (CAD) CAD/Share, diluted % increase Weighted average shares, diluted Weighted average shares & units, diluted Dividend FFO Payout Ratio AFFO Payout Ratio CAD Payout Ratio OTHER CALCULATIONS EBITDA Total operating income Less: Total G&A EBITDA EBITDA/Share, diluted
2010 A _________
1Q11 A ________
2Q11 E ________
3Q11 E ________
4Q11 E ________
2011 E _________
1Q12 E ________
2Q12 E ________
3Q12 E ________
4Q12 E ________
2012 E _________
$16,794 (286) 0 410 1,167 0 _________
$6,317 (192) 0 100 300 _________0
$5,599 (197) 0 100 300 _________0
$5,308 (197) 0 100 300 _________0
$4,433 (200) 0 100 300 _________0
$21,656 (786) 0 400 1,200 0 _________
$4,991 (312) 0 100 300 _________0
$5,007 (312) 0 100 300 _________0
$5,018 (312) 0 100 300 _________0
$5,019 (312) 0 100 300 _________0
$20,035 (1,246) 0 400 1,200 0 _________
$18,084 $1.90 -35.5%
$6,525 $0.65 -7.2%
$5,802 $0.57 -5.7%
$5,511 $0.54 -15.0%
$4,632 $0.45 -9951.0%
$22,470 $2.22 17.1%
$5,080 $0.50 -23.7%
$5,095 $0.50 -12.1%
$5,106 $0.50 -7.3%
$5,108 $0.50 10.4%
$20,389 $2.00 -10.0%
$18,084 (277) (3,034) _________
$6,525 (75) (1,074) _________
$5,802 (75) (1,074) _________
$5,511 (75) (1,074) _________
$4,632 (75) (1,074) _________
$22,470 (300) (4,295) _________
$5,080 (75) (810) _________
$5,095 (75) (810) _________
$5,106 (75) (810) _________
$5,108 (75) (810) _________
$20,389 (300) (3,238) _________
$14,774 $1.55 -39.6%
$5,376 $0.54 -11.1%
$4,653 $0.46 -11.3%
$4,362 $0.43 -21.7%
$3,484 $0.34 -541.1%
$17,875 $1.77 14.1%
$4,195 $0.41 -23.6%
$4,211 $0.41 -9.5%
$4,221 $0.41 -3.2%
$4,223 $0.41 21.4%
$16,851 $1.65 -6.5%
9,156 9,539
9,648 9,996
9,862 10,210
9,866 10,214
9,869 10,217
9,772 10,119
9,857 10,205
9,857 10,205
9,857 10,205
9,857 10,205
9,857 10,205
$2.04 115.9% 107.6% 131.7%
$0.40 63.3% 61.3% 74.4%
$0.40 72.9% 70.4% 87.8%
$0.40 77.0% 74.1% 93.7%
$0.40 92.2% 88.2% 117.3%
$1.60 74.8% 72.1% 90.6%
$0.40 81.8% 80.4% 97.3%
$0.40 81.5% 80.1% 96.9%
$0.40 81.4% 79.9% 96.7%
$0.40 81.3% 79.9% 96.7%
$1.60 81.5% 80.1% 96.9%
$33,369 (5,004) ________ $28,365 $2.97
$8,984 (1,442) ________ $7,542 $0.75
$8,017 (1,440) ________ $6,577 $0.64
$7,715 (1,445) ________ $6,270 $0.61
$6,864 (1,441) ________ $5,423 $0.53
$31,580 (5,768) ________ $25,812 $2.55
$7,162 (1,456) ________ $5,706 $0.56
$7,167 (1,454) ________ $5,713 $0.56
$7,175 (1,459) ________ $5,716 $0.56
$7,185 (1,455) ________ $5,730 $0.56
$28,690 (5,826) ________ $22,864 $2.24
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IMPORTANT DISCLOSURES Research Analyst Certification I, Andrew DiZio and Daniel P. Donlan, the Primarily Responsible Analyst for this research report, hereby certify that all of the views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers. No part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views I expressed in this research report.
Janney Montgomery Scott LLC ("Janney") Equity Research Disclosure Legend Janney Montgomery Scott is a market maker in the securities of ADC, and may at any time hold a long or short position in this security. Janney Montgomery Scott may seek compensation for investment banking services from the subject company (ies) ADC security in the next 3 months. The research analyst is compensated based on, in part, Janney Montgomery Scott's profitability, which includes its investment banking revenues.
Definition of Ratings BUY: Janney expects that the subject company will appreciate in value. Additionally, we expect that the subject company will outperform comparable companies within its sector. NEUTRAL: Janney believes that the subject company is fairly valued and will perform in line with comparable companies within its sector. Investors may add to current positions on short-term weakness and sell on strength as the valuations or fundamentals become more or less attractive. SELL: Janney expects that the subject company will likely decline in value and will underperform comparable companies within its sector.
Price Charts Rating and Price Target History for: Agree Realty Corporation (ADC) as of 07-18-2011 08/01/08 S
05/01/09 N
05/21/10 B
01/04/11 N
02/17/11 B
30 25 20 15 10 Q2
Q3
Q1 2009
Q2
Q3
Q1 2010
Q2
Q3
Q1
Q2
5 Q3
2011
Created by BlueMatrix
-7-
Janney Montgomery Scott Ratings Distribution as of 06/30/11 IB Serv./Past 12 Mos. Rating
Count
Percent
Count
Percent
BUY [B]
202
56
23
8
NEUTRAL [N]
151
42
8
6
8
2
0
0
SELL [S]
*Percentages of each rating category where Janney has performed Investment Banking services over the past 12 months. Other Disclosures Investment opinions are based on each stock's 6-12 month return potential. Our ratings are not based on formal price targets, however our analysts will discuss fair value and/or target price ranges in research reports. Decisions to buy or sell a stock should be based on the investor's investment objectives and risk tolerance and should not rely solely on the rating. Investors should read carefully the entire research report, which provides a more complete discussion of the analyst's views. This research report is provided for informational purposes only and shall in no event be construed as an offer to sell or a solicitation of an offer to buy any securities. The information described herein is taken from sources which we believe to be reliable, but the accuracy and completeness of such information is not guaranteed by us. The opinions expressed herein may be given only such weight as opinions warrant. This Firm, its officers, directors, employees, or members of their families may have positions in the securities mentioned and may make purchases or sales of such securities from time to time in the open market or otherwise and may sell to or buy from customers such securities on a principal basis.Supporting information related to the recommendation, if any, made in the research report is available upon request.
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