Agree Realty Leaves Investors in the Cold

Granted, any net-asset-value estimate of Agree may in fact be higher than the stock price, given the future development pipeline coming online in 2007 and beyond. But if the stock stays at its 14 times FFO multiple, getting shares up to around $39 is no easy task.

"The fact is the shareholders own this company, and I think Richard (Agree) and the board of directors has forgotten this," says Michael Comparato, Compson's president. "They owe us, the shareholders and owners of the company, some form of justification as to why he thinks this company is worth more than $38.75, especially when the stock price says something clearly thinks different."

Agree's management didn't return repeated calls for comment.

In a research note earlier in the week, BB&T Capital Markets analyst Robert Whittemore said the Compson offer was fair and reasonable. He said he suspects Agree "would be more likely to entertain a friendlier offer from a public REIT that could offer a form of generational succession."

Joey Agree, the 27-year-old son of Richard Agree, currently works as an executive vice president at the company and is likely being groomed to take over for his father as CEO in the future.

Of Agree's six directors, five have been with the company for 13 years, since around when REIT completed its IPO. Leon Schurgin, the board member elected in 2004, works for the law firm that served as counsel to Agree on various matters in 2005 for a firm fee of $239,000, as Agree's proxy statement shows.

In its press release Tuesday, Agree said it "was not for sale." Perhaps this is a strong-arm tactic, but Compson did note that is $38.75 per share offer was its final one after boosting its original $34.50 offer.