Achieves Record Investment Grade Exposure
Approaching 69% of Annualized Base Rents
ROYAL
OAK, Mich., Oct. 24,
2023 /PRNewswire/ -- Agree Realty Corporation (NYSE:
ADC) (the "Company") today announced results for the quarter ended
September 30, 2023. All per share
amounts included herein are on a diluted per common share basis
unless otherwise stated.
Third Quarter 2023 Financial and Operating
Highlights:
- Invested approximately $411
million in 98 retail net lease properties
- Completed eight development or Developer Funding Platform
("DFP") projects representing total committed capital of over
$41 million
- Net Income per share attributable to common stockholders
decreased 12.4% to $0.41
- Core Funds from Operations ("Core FFO") per share increased
2.1% to $0.99
- Adjusted Funds from Operations ("AFFO") per share increased
4.2% to $1.00
- Declared an October monthly dividend of $0.247 per common share, a 2.9% year-over-year
increase
- Closed on an unsecured $350
million 5.5-year term loan at a 4.52% fixed rate inclusive
of prior hedging activity
- Sold 1,327,130 shares of common stock via the forward component
of the Company's at-the-market equity ("ATM") program for net
proceeds of approximately $87
million
- Settled 4,251,771 shares of outstanding forward equity for net
proceeds of approximately $290
million
- Balance sheet well positioned at 4.5 times net debt to
recurring EBITDA
Financial Results
Net Income Attributable to Common Stockholders
Net Income for the three months ended September 30, 2023 increased 5.6% to $39.7 million, compared to $37.6 million for the comparable period in 2022.
Net Income per share for the three months ended September 30th decreased 12.4% to
$0.41, compared to $0.46 per share for the comparable period in
2022.
Net Income for the nine months ended September 30, 2023 increased 11.8% to
$118.4 million, compared to
$105.9 million for the comparable
period in 2022. Net Income per share for the nine months ended
September 30th decreased
9.4% to $1.26, compared to
$1.39 per share for the comparable
period in 2022.
Core FFO
Core FFO for the three months ended September 30, 2023 increased 23.3% to
$96.4 million, compared to Core FFO
of $78.2 million for the comparable
period in 2022. Core FFO per share for the three months ended
September 30th increased
2.1% to $0.99, compared to Core FFO
per share of $0.97 for the comparable
period in 2022.
Core FFO for the nine months ended September 30, 2023 increased 24.4% to
$276.8 million, compared to Core FFO
of $222.4 million for the comparable
period in 2022. Core FFO per share for the nine months ended
September 30th increased
0.8% to $2.94, compared to Core FFO
per share of $2.92 for the comparable
period in 2022.
AFFO
AFFO for the three months ended September
30, 2023 increased 25.8% to $97.6
million, compared to AFFO of $77.6
million for the comparable period in 2022. AFFO per share
for the three months ended September
30th increased 4.2% to $1.00, compared to AFFO per share of $0.96 for the comparable period in 2022.
AFFO for the nine months ended September
30, 2023 increased 26.3% to $278.4
million, compared to AFFO of $220.5
million for the comparable period in 2022. AFFO per share
for the nine months ended September
30th increased 2.3% to $2.96, compared to AFFO per share of $2.89 for the comparable period in 2022.
Dividend
In the third quarter, the Company declared monthly cash
dividends of $0.243 per common share
for each of July, August and September
2023. The monthly dividends during the third quarter
reflected an annualized dividend amount of $2.916 per common share, representing a 3.8%
increase over the annualized dividend amount of $2.808 per common share from the third quarter of
2022. The dividends represent payout ratios of approximately 74% of
Core FFO per share and 73% of AFFO per share, respectively.
For the nine months ended September 30,
2023, the Company declared monthly cash dividends totaling
$2.178 per common share, a 4.5%
increase over the dividends of $2.085
per common share declared for the comparable period in 2022. The
dividends represent payout ratios of approximately 74% of both Core
FFO per share and AFFO per share.
Subsequent to quarter end, the Company declared a monthly cash
dividend of $0.247 per common share
for October 2023. The monthly
dividend reflects an annualized dividend amount of $2.964 per common share, representing a 2.9%
increase over the annualized dividend amount of $2.880 per common share from the fourth quarter
of 2022. The dividend is payable November
14, 2023 to stockholders of record at the close of business
on October 31, 2023.
Additionally, subsequent to quarter end, the Company declared a
monthly cash dividend on its 4.25% Series A Cumulative Redeemable
Preferred Stock of $0.08854 per
depositary share, which is equivalent to $1.0625 per annum. The dividend is payable on
November 1, 2023 to stockholders of
record at the close of business on October
20, 2023.
CEO Comments
"We are very pleased with our year-to-date performance as we
continue to bolster the strength of our portfolio via investment
activity, with a record of nearly 69% of annualized base rents
coming from investment grade retailers," said Joey Agree, President
and Chief Executive Officer. "Looking forward, we are well
positioned to execute on unique opportunities across all three
external growth platforms, while being disciplined allocators of
capital during these turbulent times."
Portfolio Update
As of September 30, 2023, the
Company's portfolio consisted of 2,084 properties located in 49
states and contained approximately 43.2 million square feet of
gross leasable area.
At quarter end, the portfolio was 99.7% leased, had a
weighted-average remaining lease term of approximately 8.6 years,
and generated 68.9% of annualized base rents from investment grade
retail tenants.
Ground Lease Portfolio
During the third quarter, the Company acquired seven ground
leases for an aggregate purchase price of approximately
$34.7 million, representing 8.2% of
annualized base rents acquired.
As of September 30, 2023, the
Company's ground lease portfolio consisted of 217 leases located in
34 states and totaled approximately 5.9 million square feet of
gross leasable area. Properties ground leased to tenants
represented 11.6% of annualized base rents.
At quarter end, the ground lease portfolio was fully occupied,
had a weighted-average remaining lease term of approximately 10.8
years, and generated 87.6% of annualized base rents from investment
grade retail tenants.
Acquisitions
Total acquisition volume for the third quarter was approximately
$398.3 million and included 74
properties net leased to leading retailers operating in sectors
including farm and rural supply, auto parts, tire and auto service,
convenience stores, off-price retail, dollar stores, home
improvement, and warehouse clubs. The properties are located in 28
states and leased to tenants operating in 23 sectors.
The properties were acquired at a weighted-average
capitalization rate of 6.9% and had a weighted-average remaining
lease term of approximately 11.5 years. Approximately 72.5% of
annualized base rents acquired were generated from investment grade
retail tenants.
For the nine months ended September 30,
2023, total acquisition volume was approximately
$1.01 billion. The 232 acquired
properties are located in 37 states and leased to tenants who
operate in 25 retail sectors. The properties were acquired at a
weighted-average capitalization rate of 6.8% and had a
weighted-average remaining lease term of approximately 11.5 years.
Approximately 73.3% of annualized base rents were generated from
investment grade retail tenants.
The Company now anticipates acquisition volume for the full-year
2023 to be approximately $1.3 billion
of high-quality retail net lease properties.
Dispositions
During the three months ended September
30, 2023, the Company sold one property for gross proceeds
of approximately $0.2 million. During
the nine months ended September 30,
2023, the Company sold two properties for total gross
proceeds of $3.3 million.
Development and DFP
During the third quarter, the Company commenced two development
and DFP projects, with total anticipated costs of approximately
$11.0 million. Construction continued
during the quarter on 14 projects with anticipated costs totaling
approximately $56.3 million. The
Company completed eight projects during the quarter with total
costs of approximately $41.4
million.
For the nine months ended September 30,
2023, the Company had 33 development or DFP projects
completed or under construction with anticipated total costs of
approximately $137.1 million. At
quarter end, the Company had 16 development or DFP projects under
construction with anticipated total costs of approximately
$67.3 million, including $32.8 million of costs incurred.
The following table presents the Company's 33 development or DFP
projects as of September 30,
2023:
|
Tenant
|
Location
|
Lease
Structure
|
Lease
Term
|
Actual or
Anticipated Rent
Commencement
|
Status
|
|
|
|
|
|
Gerber
Collision
|
Murrieta, CA
|
Build-to-Suit
|
15 years
|
Q1 2023
|
Complete
|
|
|
|
|
|
Gerber
Collision
|
Ocala, FL
|
Build-to-Suit
|
15 years
|
Q1 2023
|
Complete
|
|
|
|
|
|
Gerber
Collision
|
Venice, FL
|
Build-to-Suit
|
15 years
|
Q1 2023
|
Complete
|
|
|
|
|
|
Gerber
Collision
|
Johnson City,
NY
|
Build-to-Suit
|
15 years
|
Q2 2023
|
Complete
|
|
|
|
|
|
Gerber
Collision
|
Lake Charles,
LA
|
Build-to-Suit
|
15 years
|
Q2 2023
|
Complete
|
|
|
|
|
|
Gerber
Collision
|
Winterville,
NC
|
Build-to-Suit
|
15 years
|
Q2 2023
|
Complete
|
|
|
|
|
|
HomeGoods
|
South Elgin,
IL
|
Build-to-Suit
|
10 years
|
Q2 2023
|
Complete
|
|
|
|
|
|
Old Navy
|
Searcy, AR
|
Build-to-Suit
|
7 years
|
Q2 2023
|
Complete
|
|
|
|
|
|
Sunbelt
Rentals
|
St. Louis,
MO
|
Build-to-Suit
|
7 years
|
Q2 2023
|
Complete
|
|
|
|
|
|
Five Below
|
Onalaska, WI
|
Build-to-Suit
|
10 years
|
Q3 2023
|
Complete
|
|
|
|
|
|
HomeGoods
|
Onalaska, WI
|
Build-to-Suit
|
10 years
|
Q3 2023
|
Complete
|
|
|
|
|
|
Sierra Trading
Post
|
Onalaska, WI
|
Build-to-Suit
|
10 years
|
Q3 2023
|
Complete
|
|
|
|
|
|
TJ Maxx
|
Onalaska, WI
|
Build-to-Suit
|
10 years
|
Q3 2023
|
Complete
|
|
|
|
|
|
Ulta Beauty
|
Onalaska, WI
|
Build-to-Suit
|
11 years
|
Q3 2023
|
Complete
|
|
|
|
|
|
Gerber
Collision
|
Fort Wayne,
IN
|
Build-to-Suit
|
15 years
|
Q3 2023
|
Complete
|
|
|
|
|
|
Gerber
Collision
|
Huntley, IL
|
Build-to-Suit
|
15 years
|
Q3 2023
|
Complete
|
|
|
|
|
|
Gerber
Collision
|
Joplin, MO
|
Build-to-Suit
|
15 years
|
Q3 2023
|
Complete
|
|
|
|
|
|
Gerber
Collision
|
Lake Park,
FL
|
Build-to-Suit
|
15 years
|
Q3 2023
|
Complete
|
|
|
|
|
|
Gerber
Collision
|
Toledo, OH
|
Build-to-Suit
|
15 years
|
Q3 2023
|
Complete
|
|
|
|
|
|
Gerber
Collision
|
Woodstock,
IL
|
Build-to-Suit
|
15 years
|
Q3 2023
|
Complete
|
|
|
|
|
|
Sunbelt
Rentals
|
Wentzville,
MO
|
Build-to-Suit
|
12 years
|
Q3 2023
|
Complete
|
|
|
|
|
|
Burlington
|
Brenham, TX
|
Build-to-Suit
|
10 years
|
Q4 2023
|
Under
Construction
|
|
|
|
|
|
Ulta Beauty
|
Brenham, TX
|
Build-to-Suit
|
10 years
|
Q4 2023
|
Under
Construction
|
|
|
|
|
|
Gerber
Collision
|
McDonough,
GA
|
Build-to-Suit
|
15 years
|
Q4 2023
|
Under
Construction
|
|
|
|
|
|
Gerber
Collision
|
Muskegon, MI
|
Build-to-Suit
|
15 years
|
Q4 2023
|
Under
Construction
|
|
|
|
|
|
Gerber
Collision
|
Springfield,
MO
|
Build-to-Suit
|
15 years
|
Q4 2023
|
Under
Construction
|
|
|
|
|
|
Gerber
Collision
|
Blue Springs,
MO
|
Build-to-Suit
|
15 years
|
Q1 2024
|
Under
Construction
|
|
|
|
|
|
Gerber
Collision
|
Lawrence, PA
|
Build-to-Suit
|
15 years
|
Q1 2024
|
Under
Construction
|
|
|
|
|
|
Gerber
Collision
|
Warner Robins,
GA
|
Build-to-Suit
|
15 years
|
Q1 2024
|
Under
Construction
|
|
|
|
|
|
Sunbelt
Rentals
|
Ashwaubenon,
WI
|
Build-to-Suit
|
10 years
|
Q1 2024
|
Under
Construction
|
|
|
|
|
|
Sunbelt
Rentals
|
Broken Arrow,
OK
|
Build-to-Suit
|
12 years
|
Q1 2024
|
Under
Construction
|
|
|
|
|
|
Gerber
Collision
|
Eugene, OR
|
Build-to-Suit
|
15 years
|
Q2 2024
|
Under
Construction
|
|
|
|
|
|
Gerber
Collision
|
Odessa, FL
|
Build-to-Suit
|
15 years
|
Q2 2024
|
Under
Construction
|
|
|
|
|
|
Gerber
Collision
|
Peachtree,
GA
|
Build-to-Suit
|
15 years
|
Q2 2024
|
Under
Construction
|
|
|
|
|
|
Gerber
Collision
|
Yorkville,
IL
|
Build-to-Suit
|
15 years
|
Q2 2024
|
Under
Construction
|
|
|
|
|
|
Sunbelt
Rentals
|
Monroe, OH
|
Build-to-Suit
|
12 years
|
Q2 2024
|
Under
Construction
|
|
|
|
|
|
Sunbelt
Rentals
|
Traverse City,
MI
|
Build-to-Suit
|
12 years
|
Q2 2024
|
Under
Construction
|
|
|
|
|
|
Sunbelt
Rentals
|
Washington,
PA
|
Build-to-Suit
|
12 years
|
Q2 2024
|
Under
Construction
|
|
|
|
|
Leasing Activity and Expirations
During the third quarter, the Company executed new leases,
extensions or options on approximately 655,000 square feet of gross
leasable area throughout the existing portfolio. Notable new
leases, extensions or options included a 220,000-square foot
Walmart in Wichita, Kansas, a
130,000-square foot Lowe's in North
Providence, Rhode Island, and a 40,000-square foot Marshalls
& HomeGoods in Napa,
California.
For the nine months ended September 30,
2023, the Company executed new leases, extensions or options
on approximately 1,448,000 square feet of gross leasable area
throughout the existing portfolio.
As of September 30, 2023, the
Company's 2023 lease maturities represented 0.3% of annualized base
rents. The following table presents contractual lease expirations
within the Company's portfolio as of September 30, 2023, assuming no tenants exercise
renewal options:
|
Year
|
Leases
|
|
Annualized
Base Rent (1)
|
|
Percent of
Annualized
Base Rent
|
|
Gross
Leasable
Area
|
|
Percent of
Gross
Leasable Area
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
8
|
|
1,759
|
|
0.3 %
|
|
154
|
|
0.4 %
|
|
2024
|
37
|
|
9,213
|
|
1.7 %
|
|
1,032
|
|
2.4 %
|
|
2025
|
72
|
|
17,221
|
|
3.2 %
|
|
1,679
|
|
3.9 %
|
|
2026
|
119
|
|
26,711
|
|
4.9 %
|
|
2,759
|
|
6.4 %
|
|
2027
|
152
|
|
33,736
|
|
6.2 %
|
|
3,095
|
|
7.2 %
|
|
2028
|
171
|
|
45,249
|
|
8.3 %
|
|
4,133
|
|
9.6 %
|
|
2029
|
172
|
|
51,398
|
|
9.5 %
|
|
5,038
|
|
11.7 %
|
|
2030
|
262
|
|
54,553
|
|
10.0 %
|
|
4,198
|
|
9.8 %
|
|
2031
|
174
|
|
40,996
|
|
7.5 %
|
|
3,005
|
|
7.0 %
|
|
2032
|
225
|
|
46,099
|
|
8.5 %
|
|
3,458
|
|
8.0 %
|
|
Thereafter
|
861
|
|
216,301
|
|
39.9 %
|
|
14,491
|
|
33.6 %
|
|
Total
Portfolio
|
2,253
|
|
$543,236
|
|
100.0 %
|
|
43,042
|
|
100.0 %
|
|
|
|
The contractual lease
expirations presented above exclude the effect of replacement
tenant leases that had been executed as of September 30, 2023 but
that had not yet commenced. Annualized Base Rent and gross leasable
area (square feet) are in thousands; any differences are the result
of rounding.
|
|
(1)
|
Annualized Base Rent
represents the annualized amount of contractual minimum rent
required by tenant lease agreements as of September 30, 2023,
computed on a straight-line basis. Annualized Base Rent is not, and
is not intended to be, a presentation in accordance with generally
accepted accounting principles ("GAAP"). The Company believes
annualized contractual minimum rent is useful to management,
investors, and other interested parties in analyzing concentrations
and leasing activity.
|
Top Tenants
As of September 30, 2023, TBC
Corporation is no longer among the Company's top tenants. The
Company added BJ's Wholesale Club to its top tenants during the
third quarter of 2023. The following table presents annualized base
rents for all tenants that represent 1.5% or greater of the
Company's total annualized base rent as of September 30, 2023:
|
Tenant
|
|
Annualized
Base Rent(1)
|
|
Percent
of
Annualized Base
Rent
|
|
|
|
|
|
|
Walmart
|
|
$33,864
|
|
6.2 %
|
|
Tractor
Supply
|
|
26,634
|
|
4.9 %
|
|
Dollar
General
|
|
25,942
|
|
4.8 %
|
|
Best Buy
|
|
19,515
|
|
3.6 %
|
|
CVS
|
|
17,172
|
|
3.2 %
|
|
TJX
Companies
|
|
16,788
|
|
3.1 %
|
|
Dollar Tree
|
|
16,493
|
|
3.0 %
|
|
Kroger
|
|
16,315
|
|
3.0 %
|
|
O'Reilly Auto
Parts
|
|
15,877
|
|
2.9 %
|
|
Hobby Lobby
|
|
14,638
|
|
2.7 %
|
|
Lowe's
|
|
13,201
|
|
2.4 %
|
|
Burlington
|
|
13,079
|
|
2.4 %
|
|
7-Eleven
|
|
12,423
|
|
2.3 %
|
|
Sunbelt
Rentals
|
|
12,147
|
|
2.2 %
|
|
Gerber
Collision
|
|
11,218
|
|
2.1 %
|
|
Sherwin-Williams
|
|
11,214
|
|
2.1 %
|
|
Wawa
|
|
10,188
|
|
1.9 %
|
|
Home Depot
|
|
8,880
|
|
1.6 %
|
|
BJ's Wholesale
Club
|
|
8,701
|
|
1.6 %
|
|
Other(2)
|
|
238,947
|
|
44.0 %
|
|
Total
Portfolio
|
|
$543,236
|
|
100.0 %
|
|
|
|
Annualized Base Rent is
in thousands; any differences are the result of
rounding.
|
|
Bolded and italicized
tenants represent additions for the three months ended September
30, 2023.
|
|
(1)
|
Refer to footnote 1
on page 5 for the Company's definition of Annualized Base
Rent.
|
|
(2)
|
Includes tenants
generating less than 1.5% of Annualized Base Rent.
|
Retail Sectors
The following table presents annualized base rents for all the
Company's retail sectors as of September 30,
2023:
|
Sector
|
|
Annualized
Base Rent(1)
|
|
Percent of
Annualized
Base
Rent
|
|
|
|
|
|
|
Grocery
Stores
|
|
$52,787
|
|
9.7 %
|
|
Home
Improvement
|
|
46,471
|
|
8.6 %
|
|
Tire and Auto
Service
|
|
46,242
|
|
8.5 %
|
|
Convenience
Stores
|
|
45,659
|
|
8.4 %
|
|
Dollar
Stores
|
|
41,221
|
|
7.6 %
|
|
Off-Price
Retail
|
|
33,193
|
|
6.1 %
|
|
General
Merchandise
|
|
32,331
|
|
6.0 %
|
|
Auto Parts
|
|
31,406
|
|
5.8 %
|
|
Farm and Rural
Supply
|
|
28,362
|
|
5.2 %
|
|
Pharmacy
|
|
23,723
|
|
4.4 %
|
|
Consumer
Electronics
|
|
21,724
|
|
4.0 %
|
|
Crafts and
Novelties
|
|
16,916
|
|
3.1 %
|
|
Warehouse
Clubs
|
|
13,687
|
|
2.5 %
|
|
Discount
Stores
|
|
13,370
|
|
2.5 %
|
|
Equipment
Rental
|
|
12,473
|
|
2.3 %
|
|
Health
Services
|
|
10,337
|
|
1.9 %
|
|
Dealerships
|
|
9,331
|
|
1.7 %
|
|
Restaurants - Quick
Service
|
|
9,261
|
|
1.7 %
|
|
Health and
Fitness
|
|
8,456
|
|
1.6 %
|
|
Specialty
Retail
|
|
6,790
|
|
1.3 %
|
|
Sporting
Goods
|
|
6,325
|
|
1.2 %
|
|
Restaurants - Casual
Dining
|
|
5,586
|
|
1.0 %
|
|
Financial
Services
|
|
4,925
|
|
0.9 %
|
|
Home
Furnishings
|
|
3,971
|
|
0.7 %
|
|
Theaters
|
|
3,848
|
|
0.7 %
|
|
Pet
Supplies
|
|
3,430
|
|
0.6 %
|
|
Beauty and
Cosmetics
|
|
2,874
|
|
0.5 %
|
|
Shoes
|
|
2,715
|
|
0.5 %
|
|
Entertainment
Retail
|
|
2,323
|
|
0.4 %
|
|
Apparel
|
|
1,529
|
|
0.3 %
|
|
Miscellaneous
|
|
1,186
|
|
0.2 %
|
|
Office
Supplies
|
|
784
|
|
0.1 %
|
|
Total
Portfolio
|
|
$543,236
|
|
100.0 %
|
|
|
|
Annualized Base Rent
is in thousands; any differences are the result of
rounding.
|
|
(1)
|
Refer to footnote 1
on page 5 for the Company's definition of Annualized Base
Rent.
|
Geographic Diversification
The following table presents annualized base rents for all
states that represent 1.5% or greater of the Company's total
annualized base rent as of September 30,
2023:
|
State
|
|
Annualized
Base Rent(1)
|
|
Percent
of
Annualized Base
Rent
|
|
|
|
|
|
|
|
|
Texas
|
|
$37,764
|
|
7.0 %
|
|
|
Florida
|
|
33,026
|
|
6.1 %
|
|
|
Illinois
|
|
29,695
|
|
5.5 %
|
|
|
North
Carolina
|
|
29,355
|
|
5.4 %
|
|
|
Ohio
|
|
28,663
|
|
5.3 %
|
|
|
Michigan
|
|
28,270
|
|
5.2 %
|
|
|
Pennsylvania
|
|
25,585
|
|
4.7 %
|
|
|
New Jersey
|
|
23,117
|
|
4.3 %
|
|
|
California
|
|
22,190
|
|
4.1 %
|
|
|
New York
|
|
21,085
|
|
3.9 %
|
|
|
Georgia
|
|
19,322
|
|
3.6 %
|
|
|
Wisconsin
|
|
15,867
|
|
2.9 %
|
|
|
Virginia
|
|
15,276
|
|
2.8 %
|
|
|
Missouri
|
|
14,657
|
|
2.7 %
|
|
|
Louisiana
|
|
13,702
|
|
2.5 %
|
|
|
Kansas
|
|
13,023
|
|
2.4 %
|
|
|
Connecticut
|
|
12,760
|
|
2.3 %
|
|
|
Mississippi
|
|
12,379
|
|
2.3 %
|
|
|
South
Carolina
|
|
12,317
|
|
2.3 %
|
|
|
Minnesota
|
|
11,425
|
|
2.1 %
|
|
|
Massachusetts
|
|
11,274
|
|
2.1 %
|
|
|
Tennessee
|
|
9,561
|
|
1.8 %
|
|
|
Oklahoma
|
|
9,211
|
|
1.7 %
|
|
|
Alabama
|
|
9,171
|
|
1.7 %
|
|
|
Indiana
|
|
8,302
|
|
1.5 %
|
|
|
Other(2)
|
|
76,239
|
|
13.8 %
|
|
|
Total
Portfolio
|
|
$543,236
|
|
100.0 %
|
|
|
|
Annualized Base Rent
is in thousands; any differences are the result of
rounding.
|
|
(1)
|
Refer to footnote 1 on
page 5 for the Company's definition of Annualized Base
Rent.
|
|
(2)
|
Includes states
generating less than 1.5% of Annualized Base Rent.
|
Capital Markets, Liquidity and Balance Sheet
Capital Markets
In July, the Company entered into an agreement for an unsecured
$350 million 5.5-year term loan. The
Company had previously entered into $350
million of forward starting swaps to fix SOFR until maturity
in January 2029. Including the impact
of the swaps, the interest rate on the term loan is fixed at 4.52%
based on the Company's current credit rating. The term loan
includes an accordion option that allows the Company to request
additional lender commitments of up to $150
million, or an aggregate of $500
million.
During the third quarter, the Company entered into forward sale
agreements in connection with its ATM program to sell an aggregate
of 1,327,130 shares of common stock for net proceeds of
$87.3 million. Additionally, the
Company settled 4,251,771 shares under existing forward sale
agreements, including agreements entered into during the quarter,
for net proceeds of $289.9
million.
Liquidity
As of September 30, 2023, the
Company had total liquidity of $957.4
million, which includes $951.0
million of availability under its revolving credit facility
and $6.4 million of cash on hand. The
Company's $1.0 billion revolving
credit facility includes an accordion option that allows the
Company to request additional lender commitments of up to
$750 million, or an aggregate of
$1.75 billion.
Balance Sheet
As of September 30, 2023, the
Company's net debt to recurring EBITDA was 4.5 times. The Company's
fixed charge coverage ratio was 5.1 times as of the end of the
third quarter.
The Company's total debt to enterprise value was 28.2% as of
September 30, 2023. Enterprise value
is calculated as the sum of net debt, the liquidation value of the
Company's preferred stock, and the market value of the Company's
outstanding shares of common stock, assuming conversion of Agree
Limited Partnership (the "Operating Partnership" or "OP") common
units into common stock of the Company.
For the three and nine months ended September 30, 2023, the Company's fully diluted
weighted-average shares outstanding were 97.3 million and 93.7
million, respectively. The basic weighted-average shares
outstanding for the three and nine months ended September 30, 2023 were 97.3 million and 93.5
million, respectively.
For the three and nine months ended September 30, 2023, the Company's fully diluted
weighted-average shares and units outstanding were 97.7 million and
94.1 million, respectively. The basic weighted-average shares and
units outstanding for the three and nine months ended September 30, 2023 were 97.6 million and 93.8
million, respectively.
The Company's assets are held by, and its operations are
conducted through, the Operating Partnership, of which the Company
is the sole general partner. As of September
30, 2023, there were 347,619 Operating Partnership common
units outstanding, and the Company held a 99.7% common interest in
the Operating Partnership.
Conference Call/Webcast
The Company will host its quarterly analyst and investor
conference call on Wednesday, October 25,
2023 at 9:00 AM ET. To
participate in the conference call, please dial (866) 363-3979
approximately ten minutes before the call begins.
Additionally, a webcast of the conference call will be available
through the Company's website. To access the webcast, visit
www.agreerealty.com ten minutes prior to the start time of the
conference call and go to the Investors section of the
website. A replay of the conference call webcast will be
archived and available online through the Investors section of
www.agreerealty.com.
About Agree Realty Corporation
Agree Realty Corporation is a publicly traded real estate
investment trust that is
RETHINKING RETAIL through the acquisition
and development of properties net leased to industry-leading,
omni-channel retail tenants. As of September
30, 2023, the Company owned and operated a portfolio of
2,084 properties, located in 49 states and containing approximately
43.2 million square feet of gross leasable area. The
Company's common stock is listed on the New York Stock Exchange
under the symbol "ADC". For additional information on the
Company and RETHINKING RETAIL, please
visit www.agreerealty.com.
Forward-Looking Statements
This press release contains forward-looking
statements, including statements about projected financial
and operating results, within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities
Act") and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Company intends such
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and includes this
statement for purposes of complying with these safe harbor
provisions. Forward-looking statements are generally
identifiable by use of forward-looking terminology such as "may,"
"will," "should," "potential," "intend," "expect," "seek,"
"anticipate," "estimate," "approximately," "believe," "could,"
"project," "predict," "forecast," "continue," "assume," "plan,"
"outlook" or other similar words or expressions. Forward-looking
statements are based on certain assumptions and can include future
expectations, future plans and strategies, financial and operating
projections or other forward-looking information. Although
these forward-looking statements are based on good faith beliefs,
reasonable assumptions and the Company's best judgment reflecting
current information, you should not rely on forward-looking
statements since they involve known and unknown risks,
uncertainties and other factors which are, in some cases, beyond
the Company's control and which could materially affect the
Company's results of operations, financial condition, cash flows,
performance or future achievements or events. Currently, some of
the most significant factors, include the potential adverse effect
of ongoing worldwide economic uncertainties and increased inflation
and interest rates on the financial condition, results of
operations, cash flows and performance of the Company and its
tenants, the real estate market and the global economy and
financial markets. The extent to which these conditions will impact
the Company and its tenants will depend on future developments,
which are highly uncertain and cannot be predicted with confidence.
Moreover, investors are cautioned to interpret many of the risks
identified in the risk factors discussed in the Company's Annual
Report on Form 10-K and subsequent quarterly reports filed with the
Securities and Exchange Commission (the "SEC"), as well as the
risks set forth below, as being heightened as a result of the
ongoing and numerous adverse impacts of the macroeconomic
environment. Additional important factors, among others, that may
cause the Company's actual results to vary include the general
deterioration in national economic conditions, weakening of real
estate markets, decreases in the availability of credit, increases
in interest rates, adverse changes in the retail industry, the
Company's continuing ability to qualify as a REIT and other factors
discussed in the Company's reports filed with the SEC. The
forward-looking statements included in this press release are made
as of the date hereof. Unless legally required, the
Company disclaims any obligation to update any forward-looking
statements, whether as a result of new information, future events,
changes in the Company's expectations or assumptions or
otherwise.
For further information about the Company's business and
financial results, please refer to the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
"Risk Factors" sections of the Company's SEC filings, including,
but not limited to, its Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q, copies of which may be obtained at the
Investor Relations section of the Company's website at
www.agreerealty.com.
The Company defines the "weighted-average capitalization
rate" for acquisitions and dispositions as the sum of contractual
fixed annual rents computed on a straight-line basis over the
primary lease terms and anticipated annual net tenant recoveries,
divided by the purchase and sale prices for occupied
properties.
References to "Core FFO" and "AFFO" in this press release are
representative of Core FFO attributable to OP common unitholders
and AFFO attributable to OP common unitholders. Detailed
calculations for these measures are shown in the Reconciliation of
Net Income to FFO, Core FFO and Adjusted FFO table as "Core Funds
From Operations – OP Common Unitholders" and "Adjusted Funds from
Operations – OP Common Unitholders".
|
Agree Realty
Corporation
|
|
Consolidated Balance
Sheet
|
|
($ in thousands,
except share and per-share data)
|
|
(Unaudited)
|
|
September 30,
2023
|
|
December 31,
2022
|
|
Assets:
|
|
|
|
|
Real Estate
Investments:
|
|
|
|
|
Land
|
$
2,231,535
|
|
$
1,941,599
|
|
Buildings
|
4,750,160
|
|
4,054,679
|
|
Accumulated
depreciation
|
(403,501)
|
|
(321,142)
|
|
Property under
development
|
36,114
|
|
65,932
|
|
Net real estate
investments
|
6,614,308
|
|
5,741,068
|
|
Real estate held for
sale, net
|
3,202
|
|
-
|
|
Cash and cash
equivalents
|
6,384
|
|
27,763
|
|
Cash held in
escrows
|
3
|
|
1,146
|
|
Accounts receivable -
tenants, net
|
77,749
|
|
65,841
|
|
Lease Intangibles, net
of accumulated amortization of $335,073 and
$263,011 at September 30, 2023 and December 31,
2022,
respectively
|
849,191
|
|
799,448
|
|
Other assets,
net
|
96,269
|
|
77,923
|
|
Total
Assets
|
$
7,647,106
|
|
$
6,713,189
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
Mortgage notes
payable, net
|
42,952
|
|
47,971
|
|
Unsecured term loans,
net
|
346,639
|
|
-
|
|
Senior unsecured
notes, net
|
1,793,777
|
|
1,792,047
|
|
Unsecured revolving
credit facility
|
49,000
|
|
100,000
|
|
Dividends and
distributions payable
|
25,131
|
|
22,345
|
|
Accounts payable,
accrued expenses and other liabilities
|
106,755
|
|
83,722
|
|
Lease intangibles, net
of accumulated amortization of $40,667 and
$35,992 at September 30, 2023 and December 31,
2022,
respectively
|
37,458
|
|
36,714
|
|
Total
Liabilities
|
$
2,401,712
|
|
$
2,082,799
|
|
|
|
|
|
Equity:
|
|
|
|
|
Preferred Stock, $.0001
par value per share, 4,000,000 shares
authorized, 7,000 shares Series A outstanding, at stated
liquidation
value of $25,000 per share, at September 30, 2023 and December
31,
2022
|
175,000
|
|
175,000
|
|
Common stock, $.0001
par value, 180,000,000 shares authorized,
100,519,717 and 90,173,424 shares issued and outstanding at
September 30, 2023 and December 31, 2022, respectively
|
10
|
|
9
|
|
Additional
paid-in-capital
|
5,352,063
|
|
4,658,570
|
|
Dividends in excess of
net income
|
(316,083)
|
|
(228,132)
|
|
Accumulated other
comprehensive income (loss)
|
33,291
|
|
23,551
|
|
Total Equity - Agree
Realty Corporation
|
$
5,244,281
|
|
$
4,628,998
|
|
Non-controlling
interest
|
1,113
|
|
1,392
|
|
Total
Equity
|
$
5,245,394
|
|
$
4,630,390
|
|
Total Liabilities
and Equity
|
$
7,647,106
|
|
$
6,713,189
|
|
|
|
|
|
Agree Realty
Corporation
|
|
|
Consolidated
Statements of Operations and Comprehensive Income
|
|
|
($ in thousands,
except share and per share-data)
|
|
|
(Unaudited)
|
|
|
Three months
ended
September
30,
|
|
Nine months
ended
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Revenues
|
|
|
|
|
|
|
|
|
Rental
Income
|
$
136,774
|
|
$
110,031
|
|
$
393,259
|
|
$
313,136
|
|
|
Other
|
38
|
|
34
|
|
71
|
|
147
|
|
Total
Revenues
|
$
136,812
|
|
$
110,065
|
|
$
393,330
|
|
$
313,283
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
Real estate
taxes
|
$ 10,124
|
|
$
8,526
|
|
$ 29,429
|
|
$ 24,117
|
|
Property operating
expenses
|
5,518
|
|
4,557
|
|
18,120
|
|
13,575
|
|
Land lease
expense
|
411
|
|
404
|
|
1,252
|
|
1,213
|
|
General and
administrative
|
8,844
|
|
6,992
|
|
26,087
|
|
22,265
|
|
Depreciation and
amortization
|
45,625
|
|
35,157
|
|
129,020
|
|
95,666
|
|
Provision for
impairment
|
3,195
|
|
-
|
|
4,510
|
|
1,015
|
|
Total Operating
Expenses
|
$
73,717
|
|
$
55,636
|
|
$
208,418
|
|
$
157,851
|
|
|
|
|
|
|
|
|
|
Gain (loss) on sale of
assets, net
|
(20)
|
|
3,000
|
|
299
|
|
5,326
|
|
Gain (loss) on
involuntary conversion, net
|
-
|
|
(115)
|
|
-
|
|
(165)
|
|
|
|
|
|
|
|
|
|
Income from
Operations
|
$
63,075
|
|
$
57,314
|
|
$
185,211
|
|
$
160,593
|
|
|
|
|
|
|
|
|
|
Other (Expense)
Income
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
$
(20,803)
|
|
$
(17,149)
|
|
$
(58,748)
|
|
$
(46,592)
|
|
Income tax (expense)
benefit
|
(709)
|
|
(720)
|
|
(2,201)
|
|
(2,137)
|
|
Other (expense)
income
|
94
|
|
132
|
|
184
|
|
132
|
|
|
|
|
|
|
|
|
|
Net
Income
|
$
41,657
|
|
$
39,577
|
|
$
124,446
|
|
$
111,996
|
|
|
|
|
|
|
|
|
|
Less net income
attributable to non-controlling interest
|
135
|
|
152
|
|
442
|
|
485
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to Agree Realty Corporation
|
$
41,522
|
|
$
39,425
|
|
$
124,004
|
|
$
111,511
|
|
|
|
|
|
|
|
|
|
Less Series A
Preferred Stock Dividends
|
1,859
|
|
1,859
|
|
5,578
|
|
5,578
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to Common Stockholders
|
$
39,663
|
|
$
37,566
|
|
$
118,426
|
|
$
105,933
|
|
|
|
|
|
|
|
|
|
Net Income Per
Share Attributable to Common Stockholders
|
|
|
|
|
|
|
|
|
Basic
|
$
0.41
|
|
$
0.47
|
|
$
1.26
|
|
$
1.40
|
|
Diluted
|
$
0.41
|
|
$
0.46
|
|
$
1.26
|
|
$
1.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive
Income
|
|
|
|
|
|
|
|
|
Net Income
|
$ 41,657
|
|
$ 39,577
|
|
$
124,446
|
|
$
111,996
|
|
Amortization of
interest rate swaps
|
(631)
|
|
(273)
|
|
(1,889)
|
|
(109)
|
|
Change in fair value
and settlement of interest rate swaps
|
8,324
|
|
(7,181)
|
|
11,664
|
|
29,881
|
|
Total Comprehensive
Income (Loss)
|
49,350
|
|
32,123
|
|
134,221
|
|
141,768
|
|
Less comprehensive
income attributable to non-controlling interest
|
162
|
|
121
|
|
477
|
|
630
|
|
Comprehensive Income
Attributable to Agree Realty Corporation
|
$ 49,188
|
|
$ 32,002
|
|
$
133,744
|
|
$
141,138
|
|
|
|
|
|
|
|
|
|
Weighted Average Number
of Common Shares Outstanding - Basic
|
97,255,143
|
|
79,701,136
|
|
93,474,182
|
|
75,361,583
|
|
Weighted Average Number
of Common Shares Outstanding - Diluted
|
97,349,473
|
|
80,589,446
|
|
93,732,359
|
|
75,890,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Agree Realty Corporation
|
|
|
Reconciliation of Net Income to FFO, Core FFO and
Adjusted FFO
|
|
|
($ in thousands, except share and per-share
data)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
$
41,657
|
|
$
39,577
|
|
$
124,446
|
|
$
111,996
|
|
|
Less Series A Preferred
Stock Dividends
|
1,859
|
|
1,859
|
|
5,578
|
|
5,578
|
|
|
Net Income attributable
to OP Common Unitholders
|
39,798
|
|
37,718
|
|
118,868
|
|
106,418
|
|
|
Depreciation of rental
real estate assets
|
29,769
|
|
23,073
|
|
84,498
|
|
63,842
|
|
|
Amortization of lease
intangibles - in-place leases and leasing costs
|
15,258
|
|
11,836
|
|
43,356
|
|
31,307
|
|
|
Provision for
impairment
|
3,195
|
|
-
|
|
4,510
|
|
1,015
|
|
|
(Gain) loss on sale or
involuntary conversion of assets, net
|
20
|
|
(2,885)
|
|
(299)
|
|
(5,161)
|
|
|
Funds from Operations -
OP Common Unitholders
|
$
88,040
|
|
$
69,742
|
|
$
250,933
|
|
$
197,421
|
|
|
Amortization of above
(below) market lease intangibles, net and assumed mortgage debt
discount, net
|
8,377
|
|
8,458
|
|
25,866
|
|
25,007
|
|
|
Core Funds from
Operations - OP Common Unitholders
|
$
96,417
|
|
$
78,200
|
|
$
276,799
|
|
$
222,428
|
|
|
Straight-line accrued
rent
|
(2,795)
|
|
(3,189)
|
|
(8,942)
|
|
(9,419)
|
|
|
Stock based
compensation expense
|
2,172
|
|
1,514
|
|
6,180
|
|
4,892
|
|
|
Amortization of
financing costs and original issue discounts
|
1,160
|
|
791
|
|
3,217
|
|
2,070
|
|
|
Non-real estate
depreciation
|
598
|
|
248
|
|
1,166
|
|
517
|
|
|
Adjusted Funds from
Operations - OP Common Unitholders
|
$
97,552
|
|
$
77,564
|
|
$
278,420
|
|
$
220,488
|
|
|
|
|
|
|
|
|
|
|
|
Funds from Operations
Per Common Share and OP Unit - Basic
|
$
0.90
|
|
$
0.87
|
|
$
2.67
|
|
$
2.61
|
|
|
Funds from Operations
Per Common Share and OP Unit - Diluted
|
$
0.90
|
|
$
0.86
|
|
$
2.67
|
|
$
2.59
|
|
|
|
|
|
|
|
|
|
|
|
Core Funds from
Operations Per Common Share and OP Unit - Basic
|
$
0.99
|
|
$
0.98
|
|
$
2.95
|
|
$
2.94
|
|
|
Core Funds from
Operations Per Common Share and OP Unit - Diluted
|
$
0.99
|
|
$
0.97
|
|
$
2.94
|
|
$
2.92
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Funds from
Operations Per Common Share and OP Unit - Basic
|
$
1.00
|
|
$
0.97
|
|
$
2.97
|
|
$
2.91
|
|
|
Adjusted Funds from
Operations Per Common Share and OP Unit - Diluted
|
$
1.00
|
|
$
0.96
|
|
$
2.96
|
|
$
2.89
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number
of Common Shares and OP Units Outstanding - Basic
|
97,602,762
|
|
80,048,755
|
|
93,821,801
|
|
75,709,202
|
|
|
Weighted Average Number
of Common Shares and OP Units Outstanding - Diluted
|
97,697,092
|
|
80,937,065
|
|
94,079,978
|
|
76,238,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional supplemental
disclosure
|
|
|
|
|
|
|
|
|
|
Scheduled principal
repayments
|
$
228
|
|
$
214
|
|
$
673
|
|
$
633
|
|
|
Capitalized
interest
|
466
|
|
554
|
|
1,669
|
|
816
|
|
|
Capitalized building
improvements
|
3,602
|
|
3,135
|
|
6,697
|
|
6,977
|
|
|
|
Non-GAAP Financial
Measures
Funds from
Operations ("FFO" or "Nareit FFO")
FFO is defined by the National Association of Real Estate
Investment Trusts, Inc. ("Nareit") to mean net income computed in
accordance with GAAP, excluding gains (or losses) from sales of
real estate assets and/or changes in control, plus real estate
related depreciation and amortization and any impairment charges on
depreciable real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures. Historical cost
accounting for real estate assets in accordance with GAAP
implicitly assumes that the value of real estate assets diminishes
predictably over time. Since real estate values instead have
historically risen or fallen with market conditions, most real
estate industry investors consider FFO to be helpful in evaluating
a real estate company's operations. FFO should not be considered an
alternative to net income as the primary indicator of the Company's
operating performance, or as an alternative to cash flow as a
measure of liquidity. Further, while the Company adheres to the
Nareit definition of FFO, its presentation of FFO is not
necessarily comparable to similarly titled measures of other REITs
due to the fact that all REITs may not use the same definition.
Core Funds from
Operations ("Core FFO")
The Company defines Core FFO as Nareit FFO with the addback of (i)
noncash amortization of acquisition purchase price related to
above- and below- market lease intangibles and discount on assumed
debt and (ii) certain infrequently occurring items that reduce or
increase net income in accordance with GAAP. Management believes
that its measure of Core FFO facilitates useful comparison of
performance to its peers who predominantly transact in
sale-leaseback transactions and are thereby not required by GAAP to
allocate purchase price to lease intangibles. Unlike many of its
peers, the Company has acquired the substantial majority of its
net-leased properties through acquisitions of properties from third
parties or in connection with the acquisitions of ground leases
from third parties. Core FFO should not be considered an
alternative to net income as the primary indicator of the Company's
operating performance, or as an alternative to cash flow as a
measure of liquidity. Further, the Company's presentation of Core
FFO is not necessarily comparable to similarly titled measures of
other REITs due to the fact that all REITs may not use the same
definition.
Adjusted Funds from
Operations ("AFFO") AFFO is a non-GAAP financial measure of
operating performance used by many companies in the REIT industry.
AFFO further adjusts FFO and Core FFO for certain non-cash items
that reduce or increase net income computed in accordance with
GAAP. Management considers AFFO a useful supplemental measure of
the Company's performance, however, AFFO should not be considered
an alternative to net income as an indication of its performance,
or to cash flow as a measure of liquidity or ability to make
distributions. The Company's computation of AFFO may differ from
the methodology for calculating AFFO used by other equity REITs,
and therefore may not be comparable to such other REITs.
|
|
Agree Realty Corporation
|
|
|
Reconciliation of Net Debt to Recurring
EBITDA
|
|
|
($ in thousands, except share and per-share
data)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
|
|
|
|
|
|
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
|
|
$41,657
|
|
|
Interest expense,
net
|
|
|
|
|
|
|
20,803
|
|
|
Income tax
expense
|
|
|
|
|
|
|
709
|
|
|
Depreciation of rental
real estate assets
|
|
|
|
29,769
|
|
|
Amortization of lease
intangibles - in-place leases and leasing costs
|
15,258
|
|
|
Non-real estate
depreciation
|
598
|
|
|
Provision for
impairment
|
|
|
|
|
|
|
3,195
|
|
|
(Gain) loss on sale or
involuntary conversion of assets, net
|
20
|
|
|
EBITDAre
|
|
|
|
|
|
|
$112,009
|
|
|
|
|
|
|
|
|
|
|
|
|
Run-Rate Impact of
Investment, Disposition and Leasing Activity
|
$
5,207
|
|
|
Amortization of above
(below) market lease intangibles, net
|
|
8,293
|
|
|
Recurring
EBITDA
|
|
|
|
|
|
|
$125,509
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Recurring
EBITDA
|
|
|
|
$
502,036
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Debt
|
|
|
|
|
|
|
$2,254,099
|
|
|
Cash, cash equivalents
and cash held in escrows
|
(6,387)
|
|
|
Net Debt
|
|
|
|
|
|
|
$2,247,712
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt to Recurring EBITDA
|
|
|
|
4.5x
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
EBITDAre
EBITDAre is defined by
Nareit to mean net income computed in accordance with GAAP, plus
interest expense, income tax expense, depreciation and
amortization, any gains (or losses) from sales of real estate
assets and/or changes in control, any impairment charges on
depreciable real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures. The Company
considers the non-GAAP measure of EBITDAre to be a key supplemental
measure of the Company's performance and should be considered along
with, but not as an alternative to, net income or loss as a measure
of the Company's operating performance. The Company considers
EBITDAre a key supplemental measure of the Company's operating
performance because it provides an additional supplemental measure
of the Company's performance and operating cash flow that is widely
known by industry analysts, lenders and investors. The Company's
calculation of EBITDAre may not be comparable to EBITDAre reported
by other REITs that interpret the Nareit definition differently
than the Company.
Recurring
EBITDA
The Company defines
Recurring EBITDA as EBITDAre with the addback of noncash
amortization of above- and below- market lease intangibles, and
after adjustments for the run-rate impact of the Company's
investment and disposition activity for the period presented, as
well as adjustments for non-recurring benefits or expenses. The
Company considers the non-GAAP measure of Recurring EBITDA to be a
key supplemental measure of the Company's performance and should be
considered along with, but not as an alternative to, net income or
loss as a measure of the Company's operating performance. The
Company considers Recurring EBITDA a key supplemental measure of
the Company's operating performance because it represents the
Company's earnings run rate for the period presented and because it
is widely followed by industry analysts, lenders and
investors. Our Recurring EBITDA may not be comparable to
Recurring EBITDA reported by other companies that have a different
interpretation of the definition of Recurring EBITDA. Our ratio of
net debt to Recurring EBITDA is used by management as a measure of
leverage and may be useful to investors in understanding the
Company's ability to service its debt, as well as assess the
borrowing capacity of the Company. Our ratio of net debt to
Recurring EBITDA is calculated by taking annualized Recurring
EBITDA and dividing it by our net debt per the consolidated balance
sheet.
Net Debt
The Company defines Net
Debt as total debt less cash, cash equivalents and cash held in
escrows. The Company considers the non-GAAP measure of Net Debt to
be a key supplemental measure of the Company's overall liquidity,
capital structure and leverage. The Company considers Net Debt a
key supplemental measure because it provides industry analysts,
lenders and investors useful information in understanding our
financial condition. The Company's calculation of Net Debt may not
be comparable to Net Debt reported by other REITs that interpret
the definition differently than the Company. The Company
presents Net Debt on both an actual and proforma basis, assuming
the net proceeds of the Forward Offerings (see below) are used to
pay down debt. The Company believes the proforma measure may be
useful to investors in understanding the potential effect of the
Forward Offerings on the Company's capital structure, its future
borrowing capacity, and its ability to service its debt.
|
|
Agree Realty Corporation
|
|
Rental Income
|
|
($ in thousands, except share and per
share-data)
|
|
(Unaudited)
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
Rental Income
Source(1)
|
|
|
|
|
|
|
|
|
|
Minimum
rents(2)
|
$
127,756
|
|
$
103,208
|
|
$
364,462
|
|
$
292,890
|
|
|
Percentage
rents(2)
|
-
|
|
-
|
|
1,314
|
|
723
|
|
|
Operating cost
reimbursement(2)
|
14,516
|
|
12,008
|
|
44,156
|
|
34,967
|
|
|
Straight-line rental
adjustments(3)
|
2,795
|
|
3,189
|
|
8,942
|
|
9,419
|
|
|
Amortization of
(above) below market lease intangibles(4)
|
(8,293)
|
|
(8,374)
|
|
(25,615)
|
|
(24,863)
|
|
|
Total Rental Income
|
$
136,774
|
|
$
110,031
|
|
$
393,259
|
|
$
313,136
|
|
|
|
(1) The Company adopted
Financial Accounting Standards Board Accounting Standards
Codification ("FASB ASC") 842 "Leases" using the modified
retrospective approach as of January 1, 2019. The Company
adopted the practical expedient in FASB ASC 842 that alleviates the
requirement to separately present lease and non-lease components of
lease contracts. As a result, all income earned pursuant to tenant
leases is reflected as one line, "Rental Income," in the
consolidated statement of operations. The purpose of this
table is to provide additional supplementary detail of Rental
Income.
(2) Represents
contractual rentals and/or reimbursements as required by tenant
lease agreements, recognized on an accrual basis of
accounting. The Company believes that the presentation of
contractual lease income is not, and is not intended to be, a
presentation in accordance with GAAP. The Company believes this
information is frequently used by management, investors, analysts
and other interested parties to evaluate the Company's
performance.
(3) Represents
adjustments to recognize minimum rents on a straight-line basis,
consistent with the requirements of FASB ASC 842.
(4) In allocating the
fair value of an acquired property, above- and below-market lease
intangibles are recorded based on the present value of the
difference between the contractual amounts to be paid pursuant to
the leases at the time of acquisition and the Company's estimate of
current market lease rates for the property.
|
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SOURCE Agree Realty Corporation
