Agree Realty Corporation (ADC), a real estate investment trust (REIT), recently announced the acquisition of a Harris Teeter Supermarket located in downtown Charlotte, North Carolina. The company acquired the 18,000 square feet store from Harris Teeter Inc, for approximately $3,000,000.
Harris Teeter, Inc. is a wholly-owned subsidiary of Harris Teeter Supermarkets, Inc. (HTSI). Currently, Harris Teeter operates a regional chain of supermarkets in eight states mainly in southeastern and mid-Atlantic U.S. and the District of Columbia. With the acquisition of the Harris Teeter unit, Agree Realty expects to enhance its portfolio quality, which in turn could be accretive to earnings going forward.
Agree Realty is dynamically fulfilling its strategic goal of repositioning its portfolio. It has divested assets that have limited opportunities and is acquiring properties which have the potential to generate higher returns. Also, the company focuses on potential ground lease and built-to-suit opportunities for retailers under long-term net leases, thereby providing them with a consistent source of income.
In the recently completed third-quarter 2012, the company acquired seven single tenant retail properties for roughly $22 million. The acquired properties are net leased to some world-class tenants such as - AutoZone Inc. (AZO), Goodyear Tire & Rubber Co. (GT) and Family Dollar Stores Inc. (FDO). Currently, the company owns a portfolio of 98 properties, situated in 25 states containing around 3.1 million square feet of gross leasable space.
Agree Realty recently reported third-quarter 2012 adjusted FFO (fund from operations) of 50 cents per share, beating the Zacks Consensus Estimate by 2 cents.
We have a long-term Neutral recommendation on the stock. However, it holds a short-term Zacks #2 Rank (Buy).
Note: FFO, a widely accepted and reported measure of the performance of REITs, is derived by adding depreciation, amortization and other non-cash expenses to net income.