SOURCE: Compson Holding Corp.

May 11, 2006 09:07 ET

Compson Holding Corp. Offers $38.75 per Share for Agree Realty Corporation or Its Assets

BOCA RATON, FL -- (MARKET WIRE) -- May 11, 2006 --


The following letter was sent yesterday to the Board of Directors of Agree Realty Corporation (NYSE: ADC) by Michael Comparato, President of Compson Holding Corporation.

Dear Members of the Board of Directors of Agree Realty Corporation:

As you are aware, the principals of Compson Holding Corporation ("Compson") own approximately 3.1% of the outstanding shares of Agree Realty Corporation ("ADC") and are very familiar with the properties and operations of ADC.

We have spent in excess of three months, and a significant amount of money, performing both legal and business due diligence from publicly available information regarding ADC and led a group that offered $34.50 per share, thereafter increased to $36.00 per share, to acquire ADC or its assets. You rejected each of these offers without articulating your reasons for claiming that they were "not in the best interests of the shareholders."

We were disappointed to learn at ADC's annual meeting that you had no suggestions for maximizing shareholder value in response to our May 2, 2006 letter to ADC's Board. That said, please allow this letter to serve as Compson's best and final offer.

Compson proposes to enter into an all cash transaction with ADC and/or Agree Limited Partnership (the "Operating Partnership") pursuant to which Compson would directly or indirectly acquire either (i) all of the outstanding common stock of ADC and the outstanding limited partnership interests in the Operating Partnership, (ii) all of the general and limited partnership interests in the Operating Partnership or (iii) all of the real property directly or indirectly owned by the Operating Partnership and/or ADC.

The Acquisition Price would be $395,640,000 ("Acquisition Price"), representing a price of approximately $38.75 per share. Our all cash proposal is not subject to any financing contingency. The Acquisition Price, regardless of the transaction structure agreed upon by the parties, would be predicated upon the Operating Partnership delivering clear and marketable title to all the properties free and clear of debt and liens. In addition, it assumes that there are no more than 8,380,500 outstanding common shares and other securities convertible into common shares (including Operating Partnership units) and that our due diligence will not result in any unforeseen acquisition costs.

A basic breakdown of the Acquisition Price is below:

          Outstanding Shares                      $298,640,000
          Minority Interest Conversion            $ 26,100,000
          1st Mortgage Balance (approximate)      $ 50,700,000
          Estimated Prepayment Penalty            $  7,000,000
          Lines of Credit                         $ 13,200,000
          ---------------                         ------------
          TOTAL                                   $395,640,000
This proposal represents an excellent opportunity for all ADC shareholders, representing a 19.4% premium to yesterday's closing price, a 24% premium to the average trading price for the last 30 trading days, a 24.5% premium to the average trading price for the last 60 trading days and a 15.6% premium to the all-time high. Due to the relatively low trading volume of the stock, our offer presents an extraordinary opportunity for large shareholders of ADC to monetize their shares without materially impacting the stock price, as would happen if they attempted to sell their shares on the open market.

Our proposed transaction, depending on the agreed structure, can be completed either by (i) a merger between Compson and the Operating Partnership which will cash out the general partner and all of the limited partners in the Operating Partnership, (ii) a merger among Compson, ADC and the Operating Partnership which will cash out all of the current shareholders of ADC and the limited partners in the Operating Partnership or (iii) the direct acquisition of the Operating Partnership's assets.

This proposal is subject to the execution of a mutually satisfactory acquisition or merger agreement containing customary terms and conditions, and is not binding on any party until the execution of such a definitive agreement. Any transaction would be subject to closing conditions customary for similar transactions and to the satisfactory completion of our due diligence, which we expect can be completed while we are negotiating the terms of the definitive agreement. As we have already conducted an extensive analysis of ADC based on publicly available information, we are confident that we can complete our due diligence in a timely manner.

Again, I reiterate that Compson and its team of advisors would welcome the opportunity to sit down with you and/or your representatives to work out the terms of a mutually acceptable transaction. We respectfully request a written response from the board of directors no later than 6:00 pm, Thursday, May 18, 2006.

Sincerely,

COMPSON HOLDING CORP.

Michael A. Comparato President

About Compson Holding Corporation

Compson is a family owned real estate company that was founded in Rochester, NY in 1946. Compson, headquartered in Boca Raton, FL, currently maintains additional offices in Rochester, NY, and McLean, VA. During the 1st quarter of 2006, the principals of Compson completed approximately $200 million in transactions involving single tenant properties. Compson has completed millions of square feet of transactions over its existence and is receiving most acknowledgment for its current development of the seven-million square foot, mixed use property known as Renaissance Commons located in Boynton Beach, FL. In addition to their strong real estate history, principals of Compson were also founding directors of 1st United Bank, a bank with over $1 billion in assets that was traded on the Nasdaq under the symbol FUBC prior to its acquisition by Wachovia Bank in 1997.

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