Good morning, and welcome to the Agree Realty Corporation's Second Quarter 2014 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note this event is being recorded. I'd now like to turn the conference over to Joey Agree. Mr. Agree, please go ahead.

Thank you, Keith. Good morning, everyone. Thank you for joining us for Agree Realty's second quarter 2014 conference call. With me today is Brian Dickman, our Chief Financial Officer. Overall, the second quarter of 2014 was another strong quarter for the company. In addition to producing another quarter of year-over-year earnings growth, we saw significant activity across all three of our external growth platforms, and expect to capitalize on a number of investment opportunities throughout the second half of the year. As Brian will touch on shortly on the year-over-year basis, both FFO and AFFO per share were up approximately 6%, and approximately 28% debt to total market capitalization and 4.5 times debt to EBITDA, these results were achieved while preserving our strong balance sheet. The recent announcement of our new, more robust credit facility will only further enhance our balance sheet capacity and flexibility. At the end of the quarter, our portfolio consisted of 142 properties spread across 34 states and encompassed approximately 3.9 million square feet of gross leasable area. The portfolio was 99% occupancy at quarter end and consisted of 134 net lease assets, which generated over 86% of our annualized rent, and eight community shopping centers, which generated the remainder. As of June 30th, the company's portfolio had a weighted average lease term remaining of approximately 11.3 years, which increases to 12.4 years specifically for the net lease portfolio. Investment grade retailers generated approximately 59.4% of annualized rent across the portfolio, and approximately 67.3% when looking only at the net lease portfolio. On the acquisition front, we closed down two properties with $12.5 million in the second quarter, including the portfolio's first Academy Sports as well as the Michaels craft store in Wausau, Wisconsin. Subsequent to quarter end, we announced two additional acquisitions for an aggregate…

Thanks, Joey. Good morning everyone. As a remainder, please note that during this call the company will make certain statements that maybe considered forward-looking under Federal Securities Laws. Our actual results may differ significantly from the matters discussed in any forward-looking statements. In addition, we'll be discussing 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 second quarter of 2014, the company reported FFO per share of $0.54, which represents an increase of 5.9% over Q2 2013 and AFFO per share of $0.55, which represents an increase of 5.8% over Q2 2013. These per share results were driven by 19% year-over-year increase in total rental revenue as we continue to grow the company through accretive investment. The company paid a dividend of $0.43 per share for the second quarter or $1.72 on an annualized basis. This represents the company's 81st consecutive cash dividend. Our payout ratios, currently at 80% of FFO and 78% of AFFO remain well within the company's target ranges. As Joey mentioned, Kmart declined to exercise lease extensions at three of our properties, which resulted in the company taking a non-cash impairment of $2.8 million on our Chippewa Common shopping center. Impairment analyzes were run on the other affected properties and did not result an additional write-down. The company has worked diligently over the past few years to reduce our Kmart and shopping center exposure, and we're confident in our plans to realize the remaining value in these assets. The company's balance sheet continues to provide a strong foundation for our growth efforts. Total debt to total market capitalization at June 30th was approximately…

Thank you for the update, Brian. In conclusion, it was another strong quarter with significant progress on our operating strategy. We delivered material year-over-year earnings growth, continue to expand and diversify the portfolio, and not only maintained our strong balance sheet, but significantly improved our credit profile through our new unsecured bank facilities. We look forward to continuing to execute in a disciplined and strategic manner as the year progresses. At this time, we'll open it up for questions.

Yes, thank you. (Operator Instructions) The first question comes from Paul Adornato with BMO Capital Markets.

Hi, good morning.

Good morning, Paul.

On the shopping center portfolio, I was wondering if you could just talk about that for a little bit. You said you had some leasing activity, both on the anchor side, and then some of the small shop space. What were some of the leasing metrics there? That is, what was the rent growth or maybe you could provide a little color on what the leasing environment is like.

Yes, I'll talk generally about the shopping center portfolio of the leasing activity. It was predominantly small shop space within the shopping center for an aggregate during the quarter of approximately 9000 feet. That was really scattered throughout the remainder of the shopping center portfolio. In terms of rent growth, we're looking at nominal rent growth, nothing overly significantly material that will impact the bottom line. But most importantly, we're continuing to see small tenant space, the demand for small tenant space, continue to increase.

Yes. Paul, just to put a little bit more detail around it for you, we had roughly six primary units. We had these two extensions from Kmart, so those are contractual extensions as well as the Rite Aid extension in March. So, those were the big ones. As Joey mentioned, the others were small shop space, there was one contractual extension at our Lakeland property. And then we had two new leases, one at Chippewa and one at Petoskey, on previously vacant spaces, so no real comparison in terms of previous rent on those boxes.

Okay. And what milestone should we look for with respect to potential sale of those portfolios?

In terms of the shopping center assets what we've always talked about, we'll continue to both monetize existing assets potentially in the portfolio. The LOIs for the outlot at our Frankfort, Kentucky, Capital Plaza Shopping Center is emblematic of those opportunities which we think we can harvest from the existing portfolio. Our goal over the long-term is to continue to focus on that lease, dispose the non-core assets. And again over the long-term shopping centers will all be deemed non-core.

Okay, thank you.

Thanks, Paul.

Thank you. And the next question comes from Wilkes Graham with Compass Point.

Good morning, Wilkes.

Hey, guys. Good morning. Just one question on the balance sheet in light of what was a pretty attractive debt financings and refinancings that you alluded to, and that you just did recently. Does it increase your appetite for leverage maybe to the higher end of that 30% to 40% range? As you continue to build the portfolio out, as you get larger, are you more comfortable with having a little bit higher leverage, given the attractive financing you just got?

Yes, Wilkes, this is Brian. I don't think it changes our view on leverage broadly. Within those bands 30% to 40% on a debt to asset level and four and half to five and half times, I don't think that gives us plenty of room to operate. Obviously we have to look at various factors at any given time with regards to the balance sheet, what does the pipeline look like, where the equity markets with debt capital is available to us? So I think we are comfortable operating for the most part anywhere within that band. That's why those are the ranges we've said. And I'd say broadly, no, I don't think it changes our view on leverage nor do we anticipate operating any differently than we've articulated.

Wilkes, this is Joey. I think when you look at the recent balance sheet activity and the increased capacity of the revolver plus the increased size of the accordion it gives us the opportunity to execute on larger price point transactions. It gives us really the ability to execute from a perspective where we can execute on multiple transactions on a simultaneous basis, which frankly the $85 million previous revolver really didn't enable us in that regard.

Can I read into that that maybe there's -- you're seeing some attractive pricing in either smaller portfolios or larger assets?

I'd say we're finding opportunities to execute on that we find attractively priced. I wouldn't want to speak to the broader market thinking that there is a cap rate, the cap rate compression or the cap rate environment that we've seen has led up. But I'll tell you similar to the Taco Bell sale leaseback for the $19 million there, we're seeing larger price point opportunities across multiple different sectors that we are both looking at and frankly have in our pipeline. So I think the $85 million revolver just didn't comport with our ability long-term to execute, to continue to scale and diversify the portfolio there.

Yes, Wilkes, we always talk about the balance sheet and being a facilitator of growth as opposed to an inhibitor and that is everything from your leverage and coverage metrics, your debt maturities but also certainly liquidity, and making sure that we have the capital and the capacity to act on opportunities as we see. And so I think that's really -- as the companies grow and as we increase our appetite to some degree for growth through the right opportunities, we certainly now have the capacity to act on those as they come around.

Great. All right, thanks guys.

Thanks, Wilkes.

Thank you. And the next question comes from Daniel Donlan with Ladenburg Thalmann. Daniel Donlan – Ladenburg Thalmann: Thank you, and good morning. Joey, sorry, I had a little snafu on the conference call. So, I'm sorry if this was asked.

That's okay. Daniel Donlan – Ladenburg Thalmann: With the Buffalo Wild Wings project in St. Augustine, what's the expected cost of that redevelopment?

About $1.75 million total cost. Daniel Donlan – Ladenburg Thalmann: Okay.

And that is predominantly via acquisition of the existing buildings. Daniel Donlan – Ladenburg Thalmann: Okay. So I'm not going to ask you for a cap rate per se, but what type of value should we base an estimated cap rate off of, that $1.7 million number?

That's an interesting project and it's almost a hybrid between a development and acquisition we've actually called it redevelopments. We're acquiring a former restaurant there and Buffalo Wild Wings is actually doing all the work, but it's fair to assume that that is falling within our typical band, call it 8% to 9% on a straight line as well as the cash basis. Daniel Donlan – Ladenburg Thalmann: Okay. And just use the 1.7 on that?

Yes. Daniel Donlan – Ladenburg Thalmann: Okay. And then what's the -- Buffalo Wild Wings, obviously, a pretty well known tenant, growing fairly quickly. Is this a sign of some other things to come? Or is this just a one-off thing that you hope to duplicate, but not necessarily possible per se?

We think Buffalo Wild Wings is a fantastic flag and a great operator, and their same-store sales continue to be at the top of the industry. So we're continuing to work with Buffalo Wild Wings both at the corporate as well as the franchise level on new stores, both the acquisitions and development frankly, and hopefully we can get some other opportunities across the goal line with them. Daniel Donlan – Ladenburg Thalmann: Okay. And then with regards to Kmart again, I'm not sure if you talked about this -- what is the expected loss in NOI from the non-renewals? And when does that hit exactly?

Dan, this is Brian. So a few things there, a little bit of detail, those leases, there is three of them. They expired, the earliest one as November of this year, another one is July of next 2015, and then November of 2015 we end up. And as Joey mentioned in earlier remarks, all those rents will be in full through the end of those leases. So as we look out over the next toward 18 months, a year and a half on an all-in basis, NOI, we're estimating depending on some co-tenancy, how they're triggered, how they're not? Call is 600,000 upwards maybe 900,000, very worst case scenario of NOI reduction over the next 18 months. And of course that doesn't assume any sales redevelopment, re-tenancy kind of a base analysis that we've looked at. Daniel Donlan – Ladenburg Thalmann: Okay. And then Joey, I think you had talked about you were hoping that this might happen at some of your centers, just given that you'd be able to bring [so many] in potentially at a significantly higher rent. Is that the case in any of these locations?

On an asset specific basis we think there is an opportunity to redevelop Ferris Commons, and we've been working on those redevelopment plans for upwards of 12 to 18 months. So we anticipate potentially being able to create some upside or additional outlots that could be created there as well as redevelopment of the Kmart box. Specific to Petoskey Town Center, that asset after we executed the lease with Hobby Lobby, that asset has been previously marketed for sale. And we anticipate disposing of that asset by the end of this year in 2014. And frankly, we are close to entering to an agreement for that disposition. Chippewa Commons, we're still evaluating. We'll look at the opportunities there in the market. We've been evaluating it for some time. If we don't see the opportunity to re-tenant or redevelop that parcel we could potentially look to disposal of that by the end of 2015 or end of 2014 -- sorry, or early 2015 as well.

Okay. All right. Then as far as leverage is concerned, you have always maintained, I would say, a highly conservative balance sheet. But given now that you've got 60% or plus exposure to investment grade rated tenants, much less dependence on the shopping centers. Do you feel like you might be able to run the company with slightly higher leverage than you have in years passed? Or should we continue to expect you to really maintain a sector low leverage versus your peers?

Yes. This is Brian. It's a good question, and just building off my previous answer, I think that if you look at those bands at any given point in time you could be on the low-end, you could be on the high-end. There is obviously a lot of factors that impact where your leverage is. Again, at a point in time I think we're comfortable anywhere within that band. Obviously it depends on the environment out there. We've stated throughout the year that we've been on the low-end. And I think that you've obviously seen us financed this year's investment activity with debt, which makes sense given that profile. So, again, I just don't see a material change in terms of how we think about the balance sheet, keeping in mind that long-term here and comfortably more like medium-term, but on the foreseeable future we do aim to be an investment grade rated company ourselves to give us assets to additional capital, additional attractively priced capital, and having seen a number of companies make that transition and have to do some not necessarily punitive, but whether it's prepayment penalties or material equity rates to put themselves in a position to get that rating, add some cost to them, we think that keeping our mindset today in preparation for that will make that transition as easy and (indiscernible) when we get there.

Okay, makes sense. Thanks, guys.

Thanks, Dan.

Thank you. (Operator Instructions) All right. Well, there is nothing more at the present time. So I'd like to turn the call back over to management for any closing comments.

Great, thank you. Well, that about wraps it up. Again, I'd like to thank everyone for joining us this morning, and we look forward to speaking with you again next quarter. Thank you.

Thank you. The conference call is now concluded. Thank you for attending today's presentation. You may now disconnect. Have a nice day.