Good morning and welcome to the Agree Realty Corporation First Quarter 2015 Earnings Conference Call. All participants will be in a listen only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Joey Agree, Chief Executive Officer, please go ahead.

Thank you, Drew. Good morning and thank you for joining us for Agree Realty's First Quarter 2015 Conference Call. Joining me today is Michael Donahue, our Corporate Controller, Brian Dickman, our Chief Financial Officer is having his second child, we wish him and his wife nothing but the best. Overall I'm very pleased with our first quarter results. We generated strong year-over-year earnings of nearly 8% growth in FFO per share and over 5.5% in AFFO per share. This growth was led by an active quarter on the acquisition front as we closed 13 transactions for approximately $60 million. All three external growth platforms continue to produce a strong pipeline of high quality opportunities to invest our capital. We also made progress on important portfolio and balance sheet initiatives which we'll discuss later in this call. On the acquisition front during the first quarter we acquired 25 properties; net leased to 15 retail tenants operating in nine e-commerce resistant sectors. These properties are located in 15 states and are 100% occupied by leading tenants such as Bed, Bath and Beyond, Old Navy, Academy Sports, Sherwin Williams, and Jo-Ann Fabric and Craft as well as large franchisees operating in top brands such as Taco Bell and Wendy's. The weighted average cap rate on our first quarter investments was 8.1% and the weighted average lease term was approximately 13 years. We are currently conducting diligence on a number of additional opportunities including potential investments in the casual dining, health and fitness, warehouse club, auto parts, grocery, specialty retail and pet supply sectors among others. We believe we remain on track to achieve our targeted 2015 acquisition volume of $175 million to $200 million while maintaining our disciplined approach to investing capital. As of March 31, 2015 our portfolio consisted of 233 properties…

Thanks Joey, good morning everyone. As a reminder please note that during this call the company will make certain statements that may be considered forward-looking under federal securities law. Our actual results may differ significantly from the matters discussed in any forward-looking statements. In addition, we discuss non-GAAP financial measures including funds from operations or FFO and adjusted funds from operations or AFFO. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the company's earnings release. As announced yesterday for the first quarter of 2015, the company reported total rental revenue of $14.6 million, an increase of 26.4% over Q1, 2014. FFO for the quarter was $10 million, an increase of 26.2% over 2014 and AFFO was $10.1 million, an increase of 24.1% over 2014. On a per share basis, FFO was $0.56, was an increase of 7.7% over Q1 2014 and AFFO of $0.57 represented an increase of 5.6% over Q1 2014. Note that FFO in Q1 2015 included a one-time loss on debt extinguishment of approximately $180,000 or $0.01 per share. This was related to a mortgage loan we prepaid in January and discussed on our last earnings call. This was a fully amortizing loan secured by [4] Walgreen in Michigan and by un-encumbering the properties we've increased our asset level flexibility. G&A expenses were approximately 10.6% of total revenue for the quarter as compared to 12.7% in Q1 2014. As our growing platform continues to drive efficiencies with regards to overhead cost. We anticipate continuing to see G&A as a percentage of total revenues trending a downward trajectory as a portfolio of gross. Moving on to the balance sheet, the company continues to maintain a strong credit profile, total debt to total market capitalization at March 31, was approximately…

Thank you for the update Michael. To wrap it up, I'm very pleased with our first quarter results as well as the progress we've made on a number of initiatives during the past three months. Our three growth platform continue to produce unique, high quality net lease investment opportunity that provide significant value to our shareholders. At this time we'd like to open it up for questions.

We will now begin the question-and-answer session. [Operator Instructions]. The first question comes from R.J. Milligan of R.W. Baird. Please go ahead.

Joey a question for you, you did 60 million in the first quarter in acquisitions, guidance for 175 to 200. Is there anything that was in the first quarter that was more lumpy or front end loaded that you would think that that acquisition pace might slow or would you say that you're just being little conservative in terms of the rest of the year for guidance?

I think nothing lumpy in the first quarter, we had a couple of larger price point transactions and then we saw a couple of transactions that were anticipated closing in Q4 of 2014, kind of roll over into 2015. So I'd tell you -- nothing that would -- is out of the normal course in terms of our typical aggregation.

Okay and then just over an 8 cap for the acquisitions on the first quarter, curious how you think that might trend over the rest of the year?

Yes, we see that -- we see an ability to maintain and still work half rates. We think the first quarter of this year was [indiscernible] of 2014 in terms of our closed transactions and we see that carrying forward at least into Q2 and Q3, I couldn't tell you we have full visibility into Q4 yet.

Okay and then switching over to the three potential development announcements that could come, is that something that you're looking to increase your exposure to development or do you still anticipate a couple of projects a year and then the focus being on acquisitions.

That's a great question, I think that the three additional projects that we're getting close to announce a similar development and joint venture activity as we've been undertaking for the past few years. We'd love to continue to ramp our development as well as the joint venture platform up, it's going to be opportunistic, most importantly we're going to transact and engage on projects that have the right risk adjusted returns and maintain our discipline as we see Cap rates continue to remain low, development yields are being chased by a lot of developers out there. We're going to maintain our traditional 250 basis points spread over market cap rates and we're working with existing retailers within our portfolio, new retailers and we're focused on continuing to find projects that make sense for this company.

[Operator Instructions] The next question comes from Collin Mings from Raymond James, please go ahead.

First question, flipping through your recent investor presentation there're really a number of multi- tenanted properties that you have hired as far as some recent acquisition. Given some of your peers are just focused on single tenanted properties can you talk a little bit more of maybe opportunity to pursue some of these multi- tenanted properties?

That's a great question Collin. We made a couple of acquisitions as well as our joint venture capital solutions project the win [indiscernible] which we called Multitenant Net Leased Properties. These are traditionally two -- really four junior boxes, no small tenant space, no lease maturities, no roll over risk there. We will get it in the following way, if we'll acquire any of those individual boxes or tenants on its own in isolation, we see the opportunity if there's two to four of them lined up typically anchored by a super Walmart or a Target or Cold. We think that's a great opportunity for us to deploy capital and frankly we get exposure to tenants which aren't traditional net lease retailers from a free standing perspective. Most recently we've been able to add Old Navy, obviously Gap Credit, Bed, Bath and Beyond to the portfolio as well as Dressbarn, last year with our new Lennox acquisition -- our new Lennox joint venture, sorry, we were able to add TJ Max which was our first in the portfolio as well as Ross which was the first in the portfolio. So again, we see these opportunities as a meaningful way for us to deploy capital in accretive manner and take on really a similar risk profile to a single tenant net lease asset.

Okay, I mean is it safe to say that there is less competition maybe for those assets?

Yes, I think traditional net lease acquires -- most traditional net lease acquirer’s aren’t transacting -- certainly aren't developing those types of assets, obviously, we're the only net lease development REIT. SO they aren’t developing those types of assets and then on the acquisition front we don't see significant interest from the shopping center REITs who are typically looking for the ability to generate either same store NOI growth, outlot or expansion of the existing shopping center, so it’s a unique opportunity for us in many cases again, to deploy capital into credits and retailers that we like, that are recession resistant and e-commerce resistant and to do so with either minimal competition or less competition, I think you're right there.

Okay, and then going -- you touched upon this briefly in the prepared remarks Joey, but just on the decision to exit Lasonic in Virginia, are there any other property from that same portfolio you'd be looking to exit? Is there anything we sort of read through from that sale as it relates to some of your disposition plans for the rest of the year?

Good question Collin, I tell you that asset was specifically carved out of the 20 year master lease due to store level performance. That lease -- that asset was subject to a traditional 10 year lease in isolation. It was an opportunity for us frankly to divest of the asset, gain about a 100 basis points, and really it was one of the weaker performing stores in that portfolio, so the remainder of the portfolio is subject to 20 year master lease, that was an opportunity again for us to divest some of the exposure divest of really the weakest store in the portfolio. I think as we go forward we touched on in the prepared remarks our disposition target of $25 million for the year. We're going to see additional shopping center divestments in that $25 million as well as opportunistic dispositions of net lease assets, either due to store sale, portfolio comp or we don't like the residuals on the real-estate. So we're going to take advantage of some of the cap rates that we see in this market if they continue to work to build the best portfolio -- retail net lease portfolio in the space.

And then I guess on, does it come out of the ground lease funds, you have about 10% of the portfolio currently is the ground lease portfolio. How do you think about that changing as you contour to ramp up the acquisition activity in some of your plans for growing?

Our ground lease portfolio which is about 10% of the portfolio is really an investment grade ground lease portfolio. So 90% of the rental income is investment grade retailers. JP Morgan Chase, [indiscernible], McDonalds, P&C, Mayer, Wal-Mart, Wawa. As we go forward when we really been able to aggregate that portfolio because it's historically been a piece of our development platform. So all of the Wawa development that we undertake is a preferred developer for Wawa, Chase development and McDonald work that we've done is all been on ground leases bearing extensive landlords work. As we go forward I wouldn’t expect that portfolio to grow. I think as the overall portfolio grows from acquisitions development and joint venture capital solution, I think it would be probably presumptuous to say we'll be able to grow that the ground lease sub portfolio at the same rate. It's a fantastic portfolio, almost 15 years of term remaining again really 90% investment grade; a significant portion of that is [AE] credit, and it's above north of $6 million on a GAAP AVR perspective. So it’s a unique portfolio, I don't think we see any of our peers have a portfolio like that and it really comes back to our ability to execute on all three of our external growth platforms, development, joint ventures, capital solutions as well as acquisitions.

And then one last one from me Joey and then I'll turn it over. But in Walgreens announced about potential for 200 store closures, I want to say obviously that's your largest tenant. Is there any update there as it relates to your exposure to Walgreens? What you think that the store closing announcement may mean for you guys if anything?

Yes, [Tom] that's a good question. Obviously 200 stores in the context of the Walgreens overall real estate exposure is a tiny fraction. All retailers are looking at existing stores, closing stores, relocating stores, adding stores to varying degrees. We have no notice from Walgreens that they'll be closing any stores in our portfolio if they happen to close a store in the portfolio they would still be contractually obligated to continue to pay rent. Obviously, we don’t work favorably upon having any dark stores. But our Walgreens portfolio we feel is very stable, again we don't have any notice from Walgreens that they'll be closing any of our stores or any of stores are in that basket of 200. And there is no co-tenancy or really other considerations tied to those.

The next question comes from Dan Donlan from Ladenburg Thalmann. Please go ahead.

Joey just going back to the ground lease portfolio, just kind of curious we've seen cap rates or some of these corporate and/or corporate lease -- Texas [warehouse] or some of the [outback] trading in kind of the mid fives. What do you think that ground lease portfolio for you guys would trade?

That's a good question Dan. I think probably about a five cap would be an appropriate number to put on that portfolio. You look at the investment grade profile 90%; you'll keep a term of almost 15 years. And you look some of lease structures with these scheduled rate increases and I would tell you that that portfolio would probably create around a [indiscernible].

And I was reaching for Olive Garden that was a name I remember [indiscernible] as far as the disposition plan that you guys talked about. Kind of curious cap rates on that, you're buying in the [H] right now on a GAAP basis. If you were to layer in maybe some of the single tenant stuff that you guys have. What do you think you're disposition cap rates would be? Anywhere from 50% basis points above or below just kind of looking for some modeling detail there.

That's a good question Dan. We don't have visibility yet into really a blended cap rate on that 25 million. We're really looking at it on effectively a neutral basis as we redeploy that capital, if there is upside to that obviously we'll take it, but there is going to be some shopping center dispositions in there, net lease for dispositions. So it's really going to be a blended basis, we're going to see where some of those assets transacted we move through the year here. We have visibility into a couple of them. But there will be some opportunistic dispositions at lower cap rates, there will be some dispositions potentially in the shopping center space which will be well in double-digit cap rates and then some mid-single digit cap rates potentially in the shopping center as well as net lease.

And then as far as kind of sticking with an 8% cap rate kind of range to the rest of the year. How are able to achieve cap rates that we're seeing being kind of high quality retail in the high fives or sixes. Is it really just that you're going direct from your retailers? What is -- how are you able to get a better pricing that you're getting?

We won't give away all of our secrets on the call, but I'll tell you we have a very unique set of circumstances that really set the source of the opportunities set here. So we have three external platforms, all three which work symbiotically and together to really source opportunities that are not marketed. We aren’t a market buyer, we aren't entering into an asset level auction, we're leveraging our relationships, our skill sets, our unique development expertise, really to transact on assets that are unique. We are doing a lot of work with retailers; we're doing a lot of work with existing relationships. We're doing a lot of work where we can bring something to the table that's a value added proposition even though it's an acquisition, which really is enabled by our development expertise, our environmental expertise. And the things that really emanate from our development root of this company they've been here for 40 years. So again I tell you, we aren’t a market buyer. We will never be a market buyer; frankly I don’t think that is an accretive opportunity for us today. But more importantly it's not in our DNA. I mean this is a real estate company at its roots and we leverage those real estate capabilities, resources as well as those relationships to deploy our capital across all three platforms. So I would tell you the transactions and the opportunities that we see come from all directions, they come -- they do come at time directly from retailers but that by no means is a majority of the opportunities we see. They come from shopping center REITs; they come from developers, general contractors, leasing brokers, investment sale brokers, direct from developers and landlords. And we really seek to aggregate those opportunities and to deploy -- like we say $175 million or $200 million into acquisitions this year. Again if you look back at 2014, we underwrote really $2.5 billion of acquisition opportunities that came into real estate committee and we only transacted on $148 million of opportunities. So we have a very wide net, I’ll tell you it a unique net, and we continue to see those opportunities that don’t necessarily correlate to market Cap rates.

[Operator Instructions] Seeing that there are no other questions, this concludes our question and answer session. I would like to turn the conference back over to Joey Agree for any closing remarks.

Thanks Drew, that concludes our call. Again I'd like to thank everybody for joining us and we look forward to speaking with you when we report our second quarter results. Have a great day. Thank you.

The conference has now concluded. Thank you attending today's presentation. You may now disconnect.