Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 16, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-12928 | |
Entity Registrant Name | AGREE REALTY CORPORATION | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 38-3148187 | |
Entity Address, Address Line One | 70 E. Long Lake Road | |
Entity Address, City or Town | Bloomfield Hills | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48304 | |
City Area Code | 248 | |
Local Phone Number | 737-4190 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | ADC | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 55,370,525 | |
Entity Central Index Key | 0000917251 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Real Estate Investments | ||
Land | $ 981,476 | $ 735,991 |
Buildings | 2,184,620 | 1,600,293 |
Less accumulated depreciation | (158,719) | (127,748) |
Real estate investments excluding property under development | 3,007,377 | 2,208,536 |
Property under development | 8,229 | 10,056 |
Net Real Estate Investments | 3,015,606 | 2,218,592 |
Real Estate Held for Sale, net | 3,750 | |
Cash and Cash Equivalents | 14,715 | 15,603 |
Cash Held in Escrows | 1,515 | 26,554 |
Accounts Receivable - Tenants | 39,309 | 26,808 |
Lease Intangibles, net of accumulated amortization of $114,990 and $89,118 at September 30, 2020 and December 31, 2019, respectively | 422,373 | 343,514 |
Other Assets, net | 54,096 | 29,709 |
Total Assets | 3,547,614 | 2,664,530 |
LIABILITIES | ||
Mortgage Notes Payable, net | 33,304 | 36,698 |
Unsecured Term Loans, net | 237,765 | 237,403 |
Senior Unsecured Notes, net | 855,232 | 509,198 |
Unsecured Revolving Credit Facility | 20,000 | 89,000 |
Dividends and Distributions Payable | 32,522 | 25,014 |
Accounts Payable, Accrued Expenses, and Other Liabilities | 67,871 | 48,987 |
Lease Intangibles, net of accumulated amortization of $23,067 and $19,307 at September 30, 2020 and December 31, 2019, respectively | 35,533 | 26,668 |
Total Liabilities | 1,282,227 | 972,968 |
EQUITY | ||
Common stock, $.0001 par value, 90,000,000 shares authorized, 55,370,525 and 45,573,623 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 6 | 5 |
Preferred Stock, $.0001 par value per share, 4,000,000 shares authorized | ||
Additional paid-in-capital | 2,384,331 | 1,752,912 |
Dividends in excess of net income | (80,627) | (57,094) |
Accumulated other comprehensive income (loss) | (40,140) | (6,492) |
Total Equity - Agree Realty Corporation | 2,263,570 | 1,689,331 |
Non-controlling interest | 1,817 | 2,231 |
Total Equity | 2,265,387 | 1,691,562 |
Total Liabilities and Equity | $ 3,547,614 | $ 2,664,530 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Statement Of Financial Position [Abstract] | ||
Finite-lived intangible assets, accumulated amortization (in dollars) | $ 114,990 | $ 89,118 |
Below market lease, accumulated amortization (in dollars) | $ 23,067 | $ 19,307 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common stock, shares issued | 55,370,525 | 45,573,623 |
Common stock, shares outstanding | 55,370,525 | 45,573,623 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 4,000,000 | 4,000,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues | ||||
Rental income | $ 63,701,000 | $ 48,020,000 | $ 176,960,000 | $ 135,240,000 |
Other | 109,000 | 55,000 | 193,000 | 102,000 |
Total Revenues | 63,810,000 | 48,075,000 | 177,153,000 | 135,342,000 |
Operating Expenses | ||||
Real estate taxes | 5,516,000 | 3,674,000 | 15,058,000 | 11,016,000 |
Property operating expenses | 2,108,000 | 1,598,000 | 6,303,000 | 4,832,000 |
Land lease expense | 325,000 | 354,000 | 977,000 | 922,000 |
General and administrative | 4,756,000 | 3,832,000 | 13,999,000 | 11,746,000 |
Depreciation and amortization | 17,327,000 | 11,897,000 | 47,067,000 | 32,597,000 |
Provision for impairment | 2,868,000 | 0 | 3,996,000 | 1,609,000 |
Total Operating Expenses | 32,900,000 | 21,355,000 | 87,400,000 | 62,722,000 |
Income from Operations | 30,910,000 | 26,720,000 | 89,753,000 | 72,620,000 |
Other (Expense) Income | ||||
Interest expense, net | (10,158,000) | (8,352,000) | (28,307,000) | (23,363,000) |
Gain (loss) on sale of assets, net | 970,000 | 2,597,000 | 7,567,000 | 8,973,000 |
Income tax (expense) benefit | (306,000) | (184,000) | (826,000) | (210,000) |
Other (expense) income | 23,000 | |||
Net Income | 21,416,000 | 20,781,000 | 68,210,000 | 58,020,000 |
Less net income attributable to non-controlling interest | 136,000 | 170,000 | 444,000 | 498,000 |
Net Income Attributable to Agree Realty Corporation | $ 21,280,000 | $ 20,611,000 | $ 67,766,000 | $ 57,522,000 |
Net Income Per Share Attributable to Agree Realty Corporation | ||||
Basic | $ 0.39 | $ 0.49 | $ 1.33 | $ 1.43 |
Diluted | $ 0.39 | $ 0.48 | $ 1.32 | $ 1.41 |
Other Comprehensive Income | ||||
Net income | $ 21,416,000 | $ 20,781,000 | $ 68,210,000 | $ 58,020,000 |
Other comprehensive income (loss) - change in fair value and settlement of interest rate swaps | 1,420,000 | (7,418,000) | (33,883,000) | (13,815,000) |
Total comprehensive income (loss) | 22,836,000 | 13,363,000 | 34,327,000 | 44,205,000 |
Less comprehensive income (loss) attributable to non-controlling interest | 152,000 | 109,000 | 187,000 | 367,000 |
Comprehensive Income (Loss) Attributable to Agree Realty Corporation | $ 22,684,000 | $ 13,254,000 | $ 34,140,000 | $ 43,838,000 |
Weighted Average Number of Common Shares Outstanding - Basic | 53,721,956 | 41,832,457 | 50,637,569 | 39,992,703 |
Weighted Average Number of Common Shares Outstanding - Diluted | 54,555,672 | 42,318,042 | 51,151,462 | 40,625,441 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Dividends in excess of net income [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Noncontrolling Interest [Member] | Total |
Balance at Dec. 31, 2018 | $ 4 | $ 1,277,592 | $ (42,945) | $ 1,424 | $ 2,411 | $ 1,238,486 |
Balance (in shares) at Dec. 31, 2018 | 37,545,790 | |||||
Issuance of common stock, net of issuance costs | 57,845 | 57,845 | ||||
Issuance of common stock, net of issuance costs (in shares) | 874,268 | |||||
Repurchase of common shares | (1,398) | (1,398) | ||||
Repurchase of common shares (in shares) | (21,868) | |||||
Issuance of restricted stock under the Omnibus Incentive Plan (in shares) | 56,592 | |||||
Stock-based compensation | 913 | 913 | ||||
Dividends and distributions declared for the period | (21,342) | (193) | (21,535) | |||
Other comprehensive income (loss) - change in fair value and gain (loss) on settlement of interest rate swaps | (3,374) | (31) | (3,405) | |||
Net income | 18,347 | 169 | 18,516 | |||
Balance at Mar. 31, 2019 | $ 4 | 1,334,952 | (45,940) | (1,950) | 2,356 | 1,289,422 |
Balance (in shares) at Mar. 31, 2019 | 38,454,782 | |||||
Balance at Dec. 31, 2018 | $ 4 | 1,277,592 | (42,945) | 1,424 | 2,411 | 1,238,486 |
Balance (in shares) at Dec. 31, 2018 | 37,545,790 | |||||
Net income | 58,020 | |||||
Balance at Sep. 30, 2019 | $ 4 | 1,556,124 | (54,841) | (13,068) | 2,195 | 1,490,414 |
Balance (in shares) at Sep. 30, 2019 | 42,412,827 | |||||
Balance at Dec. 31, 2018 | $ 4 | 1,277,592 | (42,945) | 1,424 | 2,411 | 1,238,486 |
Balance (in shares) at Dec. 31, 2018 | 37,545,790 | |||||
Balance at Dec. 31, 2019 | $ 5 | 1,752,912 | (57,094) | (6,492) | 2,231 | 1,691,562 |
Balance (in shares) at Dec. 31, 2019 | 45,573,623 | |||||
Balance at Mar. 31, 2019 | $ 4 | 1,334,952 | (45,940) | (1,950) | 2,356 | 1,289,422 |
Balance (in shares) at Mar. 31, 2019 | 38,454,782 | |||||
Issuance of common stock, net of issuance costs | 186,667 | 186,667 | ||||
Issuance of common stock, net of issuance costs (in shares) | 3,512,500 | |||||
Stock-based compensation | 1,025 | 1,025 | ||||
Dividends and distributions declared for the period | (23,922) | (197) | (24,119) | |||
Other comprehensive income (loss) - change in fair value and gain (loss) on settlement of interest rate swaps | (3,761) | (33) | (3,794) | |||
Net income | 18,564 | 158 | 18,722 | |||
Balance at Jun. 30, 2019 | $ 4 | 1,522,644 | (51,298) | (5,711) | 2,284 | 1,467,923 |
Balance (in shares) at Jun. 30, 2019 | 41,967,282 | |||||
Issuance of common stock, net of issuance costs | 32,452 | 32,452 | ||||
Issuance of common stock, net of issuance costs (in shares) | 444,251 | |||||
Repurchase of common shares | (4) | (4) | ||||
Repurchase of common shares (in shares) | (82) | |||||
Issuance of restricted stock under the Omnibus Incentive Plan (in shares) | 1,399 | |||||
Forfeiture of restricted stock | (2) | (2) | ||||
Forfeiture of restricted stock (in shares) | (23) | |||||
Stock-based compensation | 1,034 | 1,034 | ||||
Dividends and distributions declared for the period | (24,154) | (198) | (24,352) | |||
Other comprehensive income (loss) - change in fair value and gain (loss) on settlement of interest rate swaps | (7,357) | (61) | (7,418) | |||
Net income | 20,611 | 170 | 20,781 | |||
Balance at Sep. 30, 2019 | $ 4 | 1,556,124 | (54,841) | (13,068) | 2,195 | 1,490,414 |
Balance (in shares) at Sep. 30, 2019 | 42,412,827 | |||||
Balance at Dec. 31, 2019 | $ 5 | 1,752,912 | (57,094) | (6,492) | 2,231 | 1,691,562 |
Balance (in shares) at Dec. 31, 2019 | 45,573,623 | |||||
Issuance of common stock, net of issuance costs | 104,615 | 104,615 | ||||
Issuance of common stock, net of issuance costs (in shares) | 1,400,251 | |||||
Repurchase of common shares | (1,627) | (1,627) | ||||
Repurchase of common shares (in shares) | (20,707) | |||||
Issuance of restricted stock under the Omnibus Incentive Plan (in shares) | 48,942 | |||||
Stock-based compensation | 1,014 | 1,014 | ||||
Dividends and distributions declared for the period | (26,677) | (203) | (26,880) | |||
Other comprehensive income (loss) - change in fair value and gain (loss) on settlement of interest rate swaps | (32,799) | (243) | (33,042) | |||
Net income | 21,229 | 141 | 21,370 | |||
Balance at Mar. 31, 2020 | $ 5 | 1,856,914 | (62,542) | (39,291) | 1,926 | 1,757,012 |
Balance (in shares) at Mar. 31, 2020 | 47,002,109 | |||||
Balance at Dec. 31, 2019 | $ 5 | 1,752,912 | (57,094) | (6,492) | 2,231 | 1,691,562 |
Balance (in shares) at Dec. 31, 2019 | 45,573,623 | |||||
Net income | 68,210 | |||||
Balance at Sep. 30, 2020 | $ 6 | 2,384,331 | (80,627) | (40,140) | 1,817 | 2,265,387 |
Balance (in shares) at Sep. 30, 2020 | 55,370,525 | |||||
Balance at Mar. 31, 2020 | $ 5 | 1,856,914 | (62,542) | (39,291) | 1,926 | 1,757,012 |
Balance (in shares) at Mar. 31, 2020 | 47,002,109 | |||||
Issuance of common stock, net of issuance costs | 437,100 | 437,100 | ||||
Issuance of common stock, net of issuance costs (in shares) | 6,851,695 | |||||
Repurchase of common shares | (3) | (3) | ||||
Repurchase of common shares (in shares) | (51) | |||||
Forfeiture of restricted stock (in shares) | (2,661) | |||||
Stock-based compensation | 1,224 | 1,224 | ||||
Dividends and distributions declared for the period | (32,311) | (209) | (32,520) | |||
Other comprehensive income (loss) - change in fair value and gain (loss) on settlement of interest rate swaps | (2,253) | (8) | (2,261) | |||
Net income | 25,258 | 166 | 25,424 | |||
Balance at Jun. 30, 2020 | $ 5 | 2,295,235 | (69,595) | (41,544) | 1,875 | 2,185,976 |
Balance (in shares) at Jun. 30, 2020 | 53,851,092 | |||||
Issuance of common stock, net of issuance costs | $ 1 | 87,870 | 87,871 | |||
Issuance of common stock, net of issuance costs (in shares) | 1,515,000 | |||||
Repurchase of common shares | (7) | (7) | ||||
Repurchase of common shares (in shares) | (108) | |||||
Issuance of restricted stock under the Omnibus Incentive Plan (in shares) | 4,541 | |||||
Stock-based compensation | 1,233 | 1,233 | ||||
Dividends and distributions declared for the period | (32,312) | (210) | (32,522) | |||
Other comprehensive income (loss) - change in fair value and gain (loss) on settlement of interest rate swaps | 1,404 | 16 | 1,420 | |||
Net income | 21,280 | 136 | 21,416 | |||
Balance at Sep. 30, 2020 | $ 6 | $ 2,384,331 | $ (80,627) | $ (40,140) | $ 1,817 | $ 2,265,387 |
Balance (in shares) at Sep. 30, 2020 | 55,370,525 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF EQUITY - (Parenthetical) - $ / shares | Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 |
Common Stock [Member] | |||||
Cash dividends declared per common share (in dollars per share) | $ 0.600 | $ 0.585 | $ 0.570 | $ 0.570 | $ 0.555 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash Flows from Operating Activities | ||
Net income | $ 68,210,000 | $ 58,020,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 47,067,000 | 32,597,000 |
Amortization from above (below) market lease intangibles, net | 11,552,000 | 9,882,000 |
Amortization from financing and credit facility costs | 1,029,000 | 966,000 |
Stock-based compensation | 3,471,000 | 2,972,000 |
Provision for impairment | 3,996,000 | 1,609,000 |
Settlement of interest rate swaps | (23,169,000) | 802,000 |
(Gain) loss on sale of assets | (7,567,000) | (8,973,000) |
(Increase) decrease in accounts receivable | (13,484,000) | (4,468,000) |
(Increase) decrease in other assets | (1,364,000) | 47,000 |
Increase (decrease) in accounts payable, accrued expenses, and other liabilities | 1,114,000 | (4,911,000) |
Net Cash Provided by Operating Activities | 90,855,000 | 88,543,000 |
Cash Flows from Investing Activities | ||
Acquisition of real estate investments and other assets | (964,974,000) | (568,523,000) |
Development of real estate investments and other assets (including capitalized interest of $109 in 2020, $321 in 2019) | (14,343,000) | (13,880,000) |
Payment of leasing costs | (388,000) | (292,000) |
Net proceeds from sale of assets | 45,983,000 | 34,513,000 |
Net Cash Used in Investing Activities | (933,722,000) | (548,182,000) |
Cash Flows from Financing Activities | ||
Proceeds from common stock offerings, net | 629,586,000 | 276,960,000 |
Repurchase of common shares | (1,637,000) | (1,400,000) |
Unsecured revolving credit facility borrowings (repayments), net | (69,000,000) | 229,000,000 |
Payments of mortgage notes payable | (3,474,000) | (2,650,000) |
Payments of unsecured term loans | (18,543,000) | |
Senior unsecured notes proceeds | 349,745,000 | |
Dividends paid | (83,798,000) | (66,102,000) |
Distributions to non-controlling interest | (615,000) | (582,000) |
Payments for financing costs | (3,867,000) | (217,000) |
Net Cash Provided by Financing Activities | 816,940,000 | 416,466,000 |
Net Increase (Decrease) in Cash and Cash Equivalents and Cash Held in Escrow | (25,927,000) | (43,173,000) |
Cash and cash equivalents and cash held in escrow, beginning of period | 42,157,000 | 53,975,000 |
Cash and cash equivalents and cash held in escrow, end of period | 16,230,000 | 10,802,000 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid for interest (net of amounts capitalized) | 25,351,000 | 25,496,000 |
Cash paid for income tax | 1,137,000 | 754,000 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||
Operating lease right of use assets added upon implementation of leases standard on January 1, 2019 | 7,505,000 | |
Additional operating lease right of use assets added under new ground leases after January 1, 2019 | 12,167,000 | |
Operating lease right of use assets disposed of upon acquisition of underlying ground leased land | (3,059,000) | |
Dividends and limited partners' distributions declared and unpaid | 32,522,000 | 24,353,000 |
Accrual of development, construction and other real estate investment costs | $ 7,665,000 | $ 7,331,000 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 |
Statement Of Cash Flows [Abstract] | ||
Real estate inventory, capitalized interest costs | $ 109 | $ 321 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2020 | |
Organization | |
Organization | Note 1 – Organization Agree Realty Corporation (the “Company”), a Maryland corporation, is a fully integrated real estate investment trust (“REIT”) primarily focused on the ownership, acquisition, development and management of retail properties net leased to industry leading tenants. The Company was founded in 1971 by its current Executive Chairman, Richard Agree, and its common stock was listed on the New York Stock Exchange in 1994. The Company’s assets are held by, and all of its operations are conducted through, directly or indirectly, Agree Limited Partnership (the “Operating Partnership”), a Delaware limited partnership, of which Agree Realty Corporation is the sole general partner and in which it held a 99.4% interest as of September 30, 2020. There is a one-for-one relationship between Operating Partnership units (“Operating Partnership Units”) owned by the Company and Company common shares outstanding. Under the partnership agreement of the Operating Partnership, the Company, as the sole general partner, has exclusive responsibility and discretion in the management and control of the Operating Partnership. The terms the “Company,” “Management,” “we,” “our” and “us” refer to Agree Realty Corporation and all of its consolidated subsidiaries, including the Operating Partnership. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Basis of Accounting and Principles of Consolidation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for audited financial statements. The unaudited Condensed Consolidated Financial Statements reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results for the interim period presented. Operating results for the three and nine months ended September 30, 2020 may not be indicative of the results that may be expected for the year ending December 31, 2020. Amounts as of December 31, 2019 included in the Condensed Consolidated Financial Statements have been derived from the audited Consolidated Financial Statements as of that date. The unaudited Condensed Consolidated Financial Statements, included herein, should be read in conjunction with the audited Consolidated Financial Statements and notes thereto, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Company’s Form 10-K for the year ended December 31, 2019. The unaudited Condensed Consolidated Financial Statements include the accounts of the Company, the Operating Partnership and its wholly owned subsidiaries. The Company, as the sole general partner, held 99.4% and 99.2% of the Operating Partnership as of September 30, 2020 and December 31, 2019, respectively. All material intercompany accounts and transactions have been eliminated. At September 30, 2020 and December 31, 2019, the non-controlling interest in the Operating Partnership consisted of a 0.6% and 0.8% ownership interest in the Operating Partnership held by the Company’s founder/chairman, respectively. The Operating Partnership Units may, under certain circumstances, be exchanged for shares of common stock. The Company as sole general partner of the Operating Partnership has the option to settle exchanged Operating Partnership Units held by others for cash based on the current trading price of our shares. Assuming the exchange of all non-controlling Operating Partnership Units, there would have been 55,718,144 shares of common stock outstanding at September 30, 2020. Significant Risks and Uncertainties Currently, one of the most significant risks and uncertainties is the potential adverse effect of the current pandemic of the novel coronavirus, or COVID-19. The COVID-19 pandemic has had repercussions across regional and global economies and financial markets. The outbreak of COVID-19 in many countries, including the United States, has significantly adversely impacted economic activity and has contributed to significant volatility and negative pressure in financial markets. The COVID-19 pandemic has resulted in a number of our tenants temporarily closing their stores and requesting rent deferral or rent abatement during this pandemic. The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations and cash flows in the near term due to, but not limited to, the following: ● reduced economic activity severely impacts our tenants’ businesses, financial condition and liquidity and may cause tenants to be unable to fully meet their obligations to us. Certain tenants have sought to modify such obligations and may seek additional relief and additional tenants may seek modifications of such obligations, resulting in increases in uncollectible receivables and reductions in rental income; ● the negative financial impact of the pandemic could impact our future compliance with financial covenants of our credit facility and other debt agreements; and ● weaker economic conditions could cause us to recognize impairment in value of our tangible or intangible assets. As a result of COVID-19, we have received numerous rent relief requests, most often in the form of rent deferrals. We have evaluated, and continue to evaluate, each tenant rent relief request on an individual basis, considering a number of factors. Not all tenant requests have resulted in modification agreements, nor is the Company forgoing its contractual rights under its lease agreements. Since the onset of COVID-19, we have entered into lease modifications that deferred 4% and 2% of rent originally contracted for the three months ended June 30, 2020 and September 30, 2020, respectively, and have collected approximately 92% and 97% of rent payments originally contracted for these periods, respectively. Rent deferral percentages disclosed above are net of any repayments that have since occurred. The extent to which the COVID-19 pandemic continues to impact our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business and geographies. However, as a result of the many uncertainties surrounding the COVID-19 pandemic, we are unable to predict the impact that it ultimately will have on its financial condition, results of operations and cash flows. Real Estate Investments The Company records the acquisition of real estate at cost, including acquisition and closing costs. For properties developed by the Company, all direct and indirect costs related to planning, development and construction, including interest, real estate taxes and other miscellaneous costs incurred during the construction period, are capitalized for financial reporting purposes and recorded as property under development until construction has been completed. Assets are classified as held for sale based on specific criteria as outlined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Property, Plant & Equipment one year. The Company did not classify any operating properties as held for sale at September 30, 2020, the assets for which would have been separately presented in the Condensed Consolidated Balance Sheets. Real estate held for sale consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Land $ — $ 2,269 Building — 2,315 Lease intangibles - asset — — — 4,584 Accumulated depreciation and amortization — (834) Total Real Estate Held for Sale, net $ — $ 3,750 Acquisitions of Real Estate The acquisition of property for investment purposes is typically accounted for as an asset acquisition. The Company allocates the purchase price to land, buildings and identified intangible assets and liabilities, based in each case on their relative estimated fair values and without giving rise to goodwill. Intangible assets and liabilities represent the value of in-place leases and above- or below-market leases. In making estimates of fair values, the Company may use a number of sources, including data provided by independent third parties, as well as information obtained by the Company as a result of its due diligence, including expected future cash flows of the property and various characteristics of the markets where the property is located. In allocating the fair value of the identified intangible assets and liabilities of an acquired property, in-place lease intangibles are valued based on the Company’s estimates of costs related to tenant acquisition and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. 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. In the case of sale-leaseback transactions, it is typically assumed that the lease is not in-place prior to the close of the transaction. Depreciation and Amortization Land, buildings and improvements are recorded and stated at cost. The Company’s properties are depreciated using the straight-line method over the estimated remaining useful life of the assets, which are generally 40 years for buildings and 10 to 20 years for improvements. Properties classified as held for sale and properties under development or redevelopment are not depreciated. Major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. In-place lease intangible assets and above- and below-market lease intangibles are amortized as a net reduction of rental income. In the event of early lease termination, the remaining net book value of any above- or below-market lease intangible is recognized as an adjustment of rental income. The following schedule summarizes the Company’s amortization of lease intangibles for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Lease intangibles (in-place) $ 4,408 $ 2,854 $ 11,971 $ 7,298 Lease intangibles (above-market) 5,338 4,562 15,607 13,297 Lease intangibles (below-market) (1,374) (1,181) (4,055) (3,415) Total $ 8,372 $ 6,235 $ 23,523 $ 17,180 The following schedule represents estimated future amortization of lease intangibles as of September 30, 2020 (in thousands): 2020 Year Ending December 31, (remaining) 2021 2022 2023 2024 Thereafter Total Lease intangibles (in-place) $ 5,529 $ 19,342 $ 18,242 $ 17,246 $ 15,812 $ 88,250 $ 164,421 Lease intangibles (above-market) 5,876 23,317 22,370 21,460 19,791 165,138 257,952 Lease intangibles (below-market) (1,651) (6,032) (5,109) (4,277) (3,563) (14,901) (35,533) Total $ 9,754 $ 36,627 $ 35,503 $ 34,429 $ 32,040 $ 238,487 $ 386,840 Impairments The Company reviews real estate investments and related lease intangibles for possible impairment when certain events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable through operations plus estimated disposition proceeds. Events or changes in circumstances that may occur include, but are not limited to, significant changes in real estate market conditions, estimated residual values and an expectation to sell assets before the end of the previously estimated life. Impairments are measured to the extent the current book value exceeds the estimated fair value of the asset less disposition costs for any assets classified as held for sale. The valuation of impaired assets is determined using valuation techniques including discounted cash flow analysis, analysis of recent comparable sales transactions and purchase offers received from third parties, which are Level 3 inputs. The Company may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate. Estimating future cash flows is highly subjective and estimates can differ materially from actual results. Cash and Cash Equivalents and Cash Held in Escrows The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of cash and money market accounts. Cash held in escrows relates to delayed like-kind exchange transactions pursued under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The account balances of cash and cash held in escrow periodically exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage, and as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company had $15.5 million and $40.9 million in cash and cash held in escrow as of September 30, 2020 and December 31, 2019, respectively, in excess of the FDIC insured limit. Revenue Recognition and Accounts Receivable The Company leases real estate to its tenants under long-term net leases which we account for as operating leases. Under this method, leases that have fixed and determinable rent increases are recognized on a straight-line basis over the lease term. Rental increases based upon changes in the consumer price indexes, or other variable factors, are recognized only after changes in such factors have occurred and are then applied according to the lease agreements. Certain leases also provide for additional rent based on tenants’ sales volumes. These rents are recognized when determinable after the tenant exceeds a sales breakpoint. Recognizing rent escalations on a straight-line method results in rental revenue in the early years of a lease being higher than actual cash received, creating a straight-line rent receivable asset which is included in the Accounts Receivable - Tenants line item in the Condensed Consolidated Balance Sheets. The balance of straight-line rent receivables at September 30, 2020 and December 31, 2019 was $27.6 million and $23.0 million, respectively. To the extent any of the tenants under these leases become unable to pay their contractual cash rents, the Company may be required to write down the straight-line rent receivable from those tenants, which would reduce rental income. The Company reviews the collectability of charges under its tenant operating leases on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located. During 2020, the Company’s assessment has specifically included the impact of the COVID-19 pandemic, which represents a material risk to collectability (see Significant Risks and Uncertainties The Company’s leases provide for reimbursement from tenants for common area maintenance, insurance, real estate taxes and other operating expenses. A portion of the Company’s operating cost reimbursements is estimated each period and is recognized as revenue in the period the recoverable costs are incurred and accrued. Receivables from operating cost reimbursements are included in the Accounts Receivable - Tenants line item in the Condensed Consolidated Balance Sheets. The balance of unbilled operating cost reimbursement receivable at September 30, 2020 and December 31, 2019 was $3.1 million and $2.6 million, respectively. The Company adopted FASB ASC Topic-842, Leases Rent Concessions – COVID-19 During the second and third quarters of 2020, the Company has provided lease concessions to certain tenants in response to the impact of COVID-19, in the form of rent deferrals. The Company has made an election to account for such lease concessions consistent with how those concessions would be accounted for under ASC 842 if enforceable rights and obligations for those concessions had already existed in the leases. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in our rights as lessor, including concessions that result in the total payments required by the modified lease being substantially the same as or less than total payments required by the original lease. Substantially all of the Company’s concessions to date provide for a deferral of payments with no substantive changes to the consideration in the original lease. These deferrals affect the timing, but not the amount, of the lease payments. The Company is accounting for these deferrals as if no changes to the lease were made. Under this accounting, the Company increases its lease receivable as tenant payments accrue and continues to recognize rental income. To date, the Company has entered into lease concessions that deferred 4% and 2% of rent originally contracted for in the second and third quarters of 2020, respectively. Such rent deferral percentages are net of any repayments that have since occurred. Sales Tax The Company collects various taxes from tenants and remits these amounts, on a net basis, to the applicable taxing authorities. Earnings per Share Earnings per common share has been computed pursuant to the guidance in FASB ASC Topic 260, Earnings Per Share The following is a reconciliation of the numerator and denominator for the basic net earnings per common share and diluted net earnings per common share computation for each of the periods presented: (in thousands, except for share data) Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Net income attributable to Agree Realty Corporation $ 21,280 $ 20,611 $ 67,766 $ 57,522 Less: Income attributable to unvested restricted shares (69) (98) (233) (283) Net income used in basic and diluted earnings per share $ 21,211 $ 20,513 $ 67,533 $ 57,239 Weighted average number of common shares outstanding 53,902,541 42,034,685 50,818,154 40,194,931 Less: Unvested restricted stock (180,585) (202,228) (180,585) (202,228) Weighted average number of common shares outstanding used in basic earnings per share 53,721,956 41,832,457 50,637,569 39,992,703 Weighted average number of common shares outstanding used in basic earnings per share 53,721,956 41,832,457 50,637,569 39,992,703 Effect of dilutive securities: share-based compensation 85,380 109,027 87,111 102,845 Effect of dilutive securities: September 2018 forward equity offering — — — 359,713 Effect of dilutive securities: April 2019 forward equity offering — 376,558 — 170,180 Effect of dilutive securities: 2019 ATM forward equity offerings — — 19,053 — Effect of dilutive securities: 2020 ATM forward equity offerings 22,515 — 16,934 — Effect of dilutive securities: April 2020 forward equity offering 725,821 — 390,795 — Weighted average number of common shares outstanding used in diluted earnings per share 54,555,672 42,318,042 51,151,462 40,625,441 For the three months ended September 30, 2020, 4,510 shares of common stock related to the 2020 at-the-market (“ATM”) forward equity offerings, 3,139 shares of restricted common stock granted in 2020, and 6,390 performance units granted in 2020 were anti-dilutive and were not included in the computation of diluted earnings per share. For the nine months ended September 30, 2020, 22,820 shares of common stock related to the 2019 ATM forward equity offerings, 34,899 shares of common stock included in the 2020 ATM forward equity offerings, 2,355 shares of restricted common stock granted in 2020 and 5,887 performance units granted in 2020 were anti-dilutive and were not included in the computation of diluted earnings per share. Forward Equity Sales The Company occasionally sells shares of common stock through forward sale agreements to enable the Company to set the price of such shares upon pricing the offering (subject to certain adjustments) while delaying the issuance of such shares and the receipt of the net proceeds by the Company. To account for the forward sale agreements, the Company considers the accounting guidance governing financial instruments and derivatives. To date, we have concluded that our forward sale agreements are not liabilities as they do not embody obligations to repurchase our shares nor do they embody obligations to issue a variable number of shares for which the monetary value are predominantly fixed, varying with something other than the fair value of the shares, or varying inversely in relation to our shares. We then evaluate whether the agreements meet the derivatives and hedging guidance scope exception to be accounted for as equity instruments. We have concluded that the agreements are classifiable as equity contracts based on the following assessments: (i) none of the agreements’ exercise contingencies are based on observable markets or indices besides those related to the market for our own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to our own stock. The Company also considers the potential dilution resulting from the forward sale agreements on the earnings per share calculations. The Company uses the treasury stock method to determine the dilution resulting from the forward sale agreements during the period of time prior to settlement. Income Taxes The Company made an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code and related regulations. The Company generally will not be subject to federal income taxes on amounts distributed to stockholders, providing it distributes 100% of its REIT taxable income and meets certain other requirements for qualifying as a REIT. For the periods ending September 30, 2020 and December 31, 2019, the Company believes it has qualified as a REIT. Notwithstanding its qualification for taxation as a REIT, the Company is subject to certain state taxes on its income and real estate. Earnings and profits that determine the taxability of distributions to shareholders differ from net income reported for financial reporting purposes due to differences in the estimated useful lives and methods used to compute depreciation and the carrying value (basis) of the investments in properties for tax purposes, among other things. The Company and its taxable REIT subsidiaries (“TRS”) have made a timely TRS election pursuant to the provisions of the REIT Modernization Act. A TRS is able to engage in activities resulting in income that previously would have been disqualified from being eligible REIT income under the federal income tax regulations. As a result, certain activities of the Company which occur within its TRS entities are subject to federal and state income taxes. All provisions for federal income taxes in the accompanying Condensed Consolidated Financial Statements are attributable to the Company’s TRS. We regularly analyze our various federal and state filing positions and only recognize the income tax effect in our financial statements when certain criteria regarding uncertain income tax positions have been met. We believe that our income tax positions would more likely than not be sustained upon examination by all relevant taxing authorities. Therefore, no provisions for uncertain income tax positions have been recorded in the Condensed Consolidated Financial Statements. Fair Values of Financial Instruments The Company’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance. The framework specifies a hierarchy of valuation inputs, which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. The guidance describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels: Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities. Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques. Management’s Responsibility to Evaluate Our Ability to Continue as a Going Concern When preparing financial statements for each annual and interim reporting period, management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In making its evaluation, the Company considers, but is not limited to, any risks and/or uncertainties to its results of operations, contractual obligations in the form of near-term debt maturities, dividend requirements, or other factors impacting the Company’s liquidity and capital resources. No conditions or events that raised substantial doubt about the ability to continue as a going concern within one year were identified as of the issuance date of the Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. Segment Reporting The Company is primarily in the business of acquiring, developing and managing retail real estate which is considered to be one reportable segment. The Company has no other reportable segments. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from those estimates. Recent Accounting Pronouncements In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). The guidance in ASU 2020-06 simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separately present certain conversion features in equity. In addition, the amendments in the ASU 2020-06 also simplify the guidance in ASC Subtopic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity In April 2020, the FASB staff issued a question-and-answer document (the “Q&A document”) to address questions on the application of lease accounting guidance for lease concessions related to the effects of the COVID-19 pandemic. Prior to the issuance of this document, changes to lease payments not stipulated in an original lease were generally accounted for as lease modifications under ASC 842. The Q&A document now provides for a policy election to be made to account for COVID-19 pandemic-related concessions (1) as lease modifications or (2) as they would otherwise be accounted for under ASC 842 if enforceable rights and obligations for those concessions had already existed in the lease. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor, including concessions that result in the total payments required by the modified lease being substantially the same as or less than the total payments required by the original lease. Refer to Rent Concessions – COVID 19 In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)” (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). These amendments modify the disclosure requirements in ASC Topic 820, Fair Value Measurements and Disclosure In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which changes how entities measure credit losses for most financial assets. This guidance requires an entity to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses”, which clarified that receivables arising from operating leases are within the scope of the leasing standard ASU 2016-02, “Leases (Topic 842),” not ASU 2016-13. The Company adopted this new standard on January 1, 2020. In the event any of the Company’s leases ever were to be classified as sales-type or direct finance leases, it would become subject to the provisions of ASU 2016-13. However, the Company does not currently have any such leases, nor does it have a significant number of other financial instruments subject to the new standard. Therefore, adoption of ASU 2016-13 has not had, and is not currently expected to have, a material effect on the Company’s financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”). The new standard creates ASC 842 and supersedes ASC Topic 840, Leases • ASC 842 requires a lessee to recognize right of use assets and lease obligation liabilities that arise from leases (operating and finance). On January 1, 2019, the Company recognized $7.5 million of right of use assets and lease liabilities • ASC 842 requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases and operating leases. Based on its election of practical expedients, the Company’s existing retail leases, where it is the lessor, continue to be accounted for as operating leases under the new standard. However, ASC 842 changed certain requirements regarding the classification of leases that could result in the Company recognizing certain long-term leases entered into or modified after January 1, 2019 as sales-type leases, as opposed to operating leases. • The Company elected an optional transition method that allows entities to initially apply ASC 842 at the adoption date (January 1, 2019) and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. However, the Company ultimately did not have any cumulative-effect adjustment as of the adoption date. • The Company elected a practical expedient which allows lessors to not separate non-lease components from the lease component when the timing and pattern of transfer for the lease components and non-lease components are the same and if the lease component is classified as an operating lease. As a result, the Company now presents all rentals and reimbursements from tenants as a single line item Rental Income within the Condensed Consolidated Statement of Operations and Comprehensive Income. • Under ASC 842 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases | |
Leases | Note 3 – Leases Tenant Leases The Company is primarily focused on the ownership, acquisition, development and management of retail properties leased to industry leading tenants. As of September 30, 2020, the Company’s portfolio was approximately 99.8% leased and had a weighted average remaining lease term (excluding extension options) of approximately 9.8 years. A significant majority of its properties are leased to national tenants and approximately 62.2% of its annualized base rent was derived from tenants, or parent entities thereof, with an investment grade credit rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Association of Insurance Commissioners. Substantially all of the Company’s tenants are subject to net lease agreements. A net lease typically requires the tenant to be responsible for minimum monthly rent and actual property operating expenses incurred, including property taxes, insurance and maintenance. In addition, the Company’s tenants are typically subject to future rent increases based on fixed amounts or increases in the consumer price index and certain leases provide for additional rent calculated as a percentage of the tenants’ gross sales above a specified level. Certain of the Company’s properties are subject to leases under which it retains responsibility for specific costs and expenses of the property. The Company’s leases typically provide the tenant one or more multi-year renewal options to extend their leases, subject to generally the same terms and conditions, including rent increases, consistent with the initial lease term. The Company attempts to maximize the amount it expects to derive from the underlying real estate property following the end of the lease, to the extent it is not extended. The Company maintains a proactive leasing program that, combined with the quality and locations of its properties, has made its properties attractive to tenants. The Company intends to continue to hold its properties for long-term investment and, accordingly, places a strong emphasis on the quality of construction and an on-going program of regular and preventative maintenance. However, the residual value of a real estate property is still subject to various market-specific, asset-specific, and tenant-specific risks and characteristics. As the classification of a lease is dependent on the fair value of its cash flows at lease commencement, the residual value of a property represents a significant assumption in its accounting for tenant leases. The Company has elected the practical expedient in ASC 842 on not separating non-lease components from associated lease components. The lease and non-lease components combined as a result of this election largely include tenant rentals and maintenance charges, respectively. The Company applies the accounting requirements of ASC 842 to the combined component. The following table includes information regarding the Company’s operating leases for which it is the lessor, for the three and nine months ended September 30, 2020 and September 30, 2019. (presented in thousands) Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Total lease payments $ 65,762 $ 49,463 $ 184,144 $ 140,071 Less: Variable lease payments 6,897 4,868 19,981 15,168 Total Non-Variable Lease Payments $ 58,865 $ 44,595 $ 164,163 $ 124,903 2020 Year Ending December 31, (remaining) 2021 2022 2023 2024 Thereafter Total Future Lease Payments $ 63,293 $ 253,841 $ 253,056 $ 248,988 $ 239,171 $ 1,540,746 $ 2,599,095 Deferred Revenue As of September 30, 2020, and December 31, 2019, there was $3.3 million and $4.1 million, respectively, in deferred revenues resulting from rents paid in advance. Land Lease Obligations The Company is the lessee under land lease agreements for certain of its properties, substantially all of which qualified as operating leases as of September 30, 2020. The Company’s land leases are net lease agreements and do not include variable lease payments. These leases typically provide multi-year renewal options to extend their term as lessee at the Company’s option. Option periods are included in the calculation of the lease obligation liability only when options are reasonably certain to be exercised. Land lease expense was $0.3 million and $0.4 million for the three months ended September 30, 2020 and 2019, respectively and $1.0 million and $0.9 million of the nine months ended September 30, 2020 and 2019, respectively. The Company has a single land lease agreement that qualified as a finance lease as of September 30, 2020 due to the existence of a purchase option that is reasonably assured of being exercised. No lease or interest expense is being incurred relating to this property and all current and future rental payments have already been made. In calculating its lease obligations under ground leases, the Company uses discount rates estimated to be equal to what it would have to pay to borrow on a collateralized basis over a similar term, for an amount equal to the lease payments, in a similar economic environment. The following tables include information on the Company’s land leases for which it is the lessee, for the three and nine months ended September 30, 2020 and September 30, 2019. (presented in thousands) Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Operating lease costs $ 325 $ 354 $ 973 $ 925 Variable lease costs — — — — Total Non-Variable Lease Costs $ 325 $ 354 $ 973 $ 925 Supplemental Disclosure Right-of-use assets obtained in exchange for new operating lease liabilities $ — $ — $ — $ 19,672 Right-of-use assets removed in exchange for real property — (3,025) — (3,025) Right-of-use assets net change $ — $ (3,025) $ — $ 16,647 Operating cash outflows on operating leases $ 267 $ 297 $ 802 $ 805 Weighted-average remaining lease term - operating leases (years) 38.2 38.3 38.2 38.3 Weighted-average discount rate - operating leases 4.13 % 4.13 % 4.13 % 4.13 % Maturity Analysis of Lease Liabilities ( presented in thousands 2020 Year Ending December 31, (remaining) 2021 2022 2023 2024 Thereafter Total Lease payments $ 267 $ 1,015 $ 789 $ 789 $ 789 $ 30,584 $ 34,233 Imputed interest (164) (645) (634) (628) (621) (15,634) (18,326) Total Lease Liabilities $ 103 $ 370 $ 155 $ 161 $ 168 $ 14,950 $ 15,907 |
Real Estate Investments
Real Estate Investments | 9 Months Ended |
Sep. 30, 2020 | |
Real Estate Investments | |
Real Estate Investments | Note 4 – Real Estate Investments Real Estate Portfolio As of September 30, 2020, the Company owned 1,027 operating properties located in 45 states, with a total gross leasable area (“GLA”) of approximately 21.0 million square feet. Net Real Estate Investments totaled $3.0 billion as of September 30, 2020. As of December 31, 2019, the Company owned 821 operating properties located in 46 states, with a total GLA of approximately 14.6 million square feet. Net Real Estate Investments totaled $2.2 billion as of December 31, 2019. Acquisitions During the three months ended September 30, 2020, the Company purchased 91 retail net lease assets for approximately $458.8 million, which includes acquisition and closing costs. These properties are located in 26 states and are leased for a weighted average lease term of approximately 11.5 years. During the nine months ended September 30, 2020, the Company purchased 217 retail net lease assets for approximately $958.3 million, which includes acquisition and closing costs. These properties are located in 35 states and are leased for a weighted average lease term of approximately 11.2 years. The aggregate acquisitions for the nine months ended September 30, 2020 were allocated $248.2 million to land, $588.6 million to buildings and improvements, $97.0 million to lease intangibles and $24.5 million to right of use assets. The acquisitions were all cash purchases and there was no material contingent consideration associated with these acquisitions. None of the Company’s acquisitions during the first nine months of 2020 caused any new or existing tenant to comprise 10% or more of its total assets or generate 10% or more of its total annualized contractual base rent at September 30, 2020. Developments During the three months ended September 30, 2020, the Company completed two development or Partner Capital Solutions projects. During the nine months ended September 30, 2020, the Company completed six developments or Partner Capital Solutions projects. At September 30, 2020, the Company had four development or Partner Capital Solutions projects under construction. Dispositions During the three months ended September 30, 2020, the Company sold two properties for net proceeds of $3.4 million and the Company recorded a net gain of $1.0 million. During the nine months ended September 30, 2020, the Company sold 16 properties for net proceeds of $46.0 million and the Company recorded a net gain of $7.6 million. Provision for Impairment As a result of our review of Real Estate Investments, the Company recognized provisions for impairments of $2.9 million for the three months ended September 30, 2020 and no provisions for impairments for the three months ended September 30, 2019, and $4.0 million and $1.6 million for the nine months ended September 30, 2020 and 2019, respectively. The estimated fair value of the impaired real estate assets at their time of impairment during the nine months ended September 30, 2020 was $4.5 million. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt | |
Debt | Note 5 – Debt As of September 30, 2020, the Company had total gross indebtedness of $1.2 billion, including (i) $33.6 million of mortgage notes payable; (ii) $240.0 million of unsecured term loans; (iii) $860.0 million of senior unsecured notes; and (iv) $20.0 million of borrowings under the Revolving Credit Facility (defined below). Mortgage Notes Payable As of September 30, 2020, the Company had total gross mortgage indebtedness of $33.6 million, which was collateralized by related real estate and tenants’ leases with an aggregate net book value of $40.1 million. Including mortgages that have been swapped to a fixed interest rate, the weighted average interest rate on the Company’s mortgage notes payable was 4.22% as of September 30, 2020 and 4.40% as of December 31, 2019. September 30, 2020 December 31, 2019 (not presented in thousands) (in thousands) Note payable in monthly installments of $23,004, including interest at 6.24% per annum, extinguished in January 2020 $ — $ 2,775 Note payable in monthly installments of interest only at 3.60% per annum, with a balloon payment due January 2023 23,640 23,640 Note payable in monthly installments of $35,673, including interest at 5.01% per annum, with a balloon payment of $4,034,627 due September 2023 4,639 4,779 Note payable in monthly installments of $91,675 including interest at 6.27% per annum, with a final monthly payment due July 2026 5,363 5,921 Total principal 33,642 37,115 Unamortized debt issuance costs (338) (417) Total $ 33,304 $ 36,698 The mortgage loans encumbering the Company’s properties are generally non-recourse, subject to certain exceptions for which it would be liable for any resulting losses incurred by the lender. These exceptions vary from loan to loan, but generally include fraud or material misrepresentations, misstatements or omissions by the borrower, intentional or grossly negligent conduct by the borrower that harms the property or results in a loss to the lender, filing of a bankruptcy petition by the borrower, either directly or indirectly, and certain environmental liabilities. At September 30, 2020, there were no mortgage loans with partial recourse to us. The Company had entered into mortgage loans which are secured by multiple properties and contain cross-default and cross-collateralization provisions. Cross-collateralization provisions allow a lender to foreclose on multiple properties in the event that the Company defaults under the loan. Cross-default provisions allow a lender to foreclose on the related property in the event a default is declared under another loan. Unsecured Term Loan Facilities The following table presents the unsecured term loans balance net of unamortized debt issuance costs as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 2023 Term Loan $ 40,000 $ 40,000 2024 Term Loan Facilities 100,000 100,000 2026 Term Loan 100,000 100,000 Total Principal 240,000 240,000 Unamortized debt issuance costs (2,235) (2,597) Total $ 237,765 $ 237,403 In August 2016, the Company entered into a $20.3 million unsecured amortizing term loan that matured May 2019 and that was swapped to an all-in rate of 3.62% (the “2019 Term Loan”). The 2019 Term Loan was repaid upon maturity in May 2019. In July 2016, the Company completed a $40.0 million unsecured term loan facility that matures July 2023 (the “2023 Term Loan”). Borrowings under the 2023 Term Loan are priced at LIBOR plus 85 to 165 basis points, depending on the Company’s credit rating. The Company entered into an interest rate swap agreement to fix LIBOR at 140 basis points until maturity. As of September 30, 2020, $40.0 million was outstanding under the 2023 Term Loan, which was subject to an all-in interest rate of 2.40%, including the swap. The Credit Agreement, described below, extended the maturity dates of the $65.0 million unsecured term loan facility (the “$65 Million Term Loan”) and $35.0 million unsecured term loan facility (the “$35 Million Term Loan,” and together with the $65 Million Term Loan, the “2024 Term Loan Facilities”) to January 2024. In connection with entering into the Credit Agreement, the prior notes evidencing the existing $65 Million Term Loan and $35 Million Term Loan were canceled and new notes evidencing the 2024 Term Loan Facilities were executed. Borrowings under the unsecured 2024 Term Loan Facilities bear interest at a variable LIBOR plus 85 to 165 basis points, depending on the Company’s credit rating. The Company utilized existing interest rate swap agreements to effectively fix LIBOR at 213 basis points until September 2020 for the $35 Million Term Loan and July 2021 for the $65 Million Term Loan (refer to Note 9 – Derivative Instruments and Hedging Activity In December 2018, the Company entered into a $100.0 million unsecured term loan facility that matures January 2026 (the “2026 Term Loan”). Borrowings under the 2026 Term Loan are priced at LIBOR plus 145 to 240 basis points, depending on the Company’s credit rating. The Company entered into interest rate swap agreements to fix LIBOR at 266 basis points until maturity. As of September 30, 2020, $100.0 million was outstanding under the 2026 Term Loan, which was subject to an all-in interest rate of 4.26%, including the swap. Senior Unsecured Notes The following table presents the senior unsecured notes balance net of unamortized debt issuance costs and original issue discount as of September 30, 2020, and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 2025 Senior Unsecured Notes $ 50,000 $ 50,000 2027 Senior Unsecured Notes 50,000 50,000 2028 Senior Unsecured Notes 60,000 60,000 2029 Senior Unsecured Notes 100,000 100,000 2030 Senior Unsecured Notes 125,000 125,000 2030 Senior Unsecured Public Notes 350,000 — 2031 Senior Unsecured Notes 125,000 125,000 Total Principal 860,000 510,000 Unamortized debt issuance costs and original issue discount (4,768) (802) Total $ 855,232 $ 509,198 In May 2015, the Company and the Operating Partnership completed a private placement of $100.0 million principal amount of senior unsecured notes. The senior unsecured notes were sold in two series; $50.0 million of 4.16% notes due May 2025 (the “2025 Senior Unsecured Notes”) and $50.0 million of 4.26% notes due May 2027 (the “2027 Senior Unsecured Notes”). In July 2016, the Company and the Operating Partnership entered into a note purchase agreement with institutional purchasers. Pursuant to the note purchase agreement, the Operating Partnership completed a private placement of $60.0 million aggregate principal amount of 4.42% senior unsecured notes due July 2028 (the “2028 Senior Unsecured Notes”). In September 2017, the Company and the Operating Partnership completed a private placement of $100.0 million aggregate principal amount of 4.19% senior unsecured notes due September 2029 (the “2029 Senior Unsecured Notes”). In September 2018, the Company and the Operating Partnership entered into two supplements to uncommitted master note facilities with institutional purchasers. Pursuant to the supplements, the Operating Partnership completed a private placement of $125.0 million aggregate principal amount of 4.32% senior unsecured notes due September 2030 (the “2030 Senior Unsecured Notes”). In October 2019, the Company and the Operating Partnership closed on a private placement of $125.0 million of 4.47% senior unsecured notes due October 2031 (the “2031 Senior Unsecured Notes”). In March 2019, the Company entered into forward-starting interest rate swap agreements to fix the interest for $100.0 million of long-term debt until maturity. The Company terminated the swap agre ements at the time of pricing the 2031 Notes, which resulted in an effective annual fixed rate of for $ million aggregate principal amount of the 2031 Notes. Considering the effect of the terminated swap agreements, the blended all-in rate to the Company for the $ million aggregate principal amount of 2031 Senior Unsecured Notes is . All of the senior unsecured notes described in the preceding paragraphs were sold solely to institutional investors in private placements pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. In August 2020, the Operating Partnership completed an underwritten public offering of $350.0 million aggregate principal amount of 2.900% Notes due 2030 (the “2030 Senior Unsecured Public Notes”). The 2030 Senior Unsecured Public Notes are fully and unconditionally guaranteed by Agree Realty Corporation and certain wholly owned subsidiaries of the Operating Partnership. The terms of the 2030 Senior Unsecured Public Notes are governed by an indenture, dated August 17, 2020, among the Operating Partnership, the Company and U.S. Bank National Association, as trustee (as amended and supplemented by an officer’s certificate dated August 17, 2020, the “Indenture”). The Indenture contains various restrictive covenants, including limitations on the ability of the guarantors and the issuer to incur additional indebtedness and requirements to maintain a pool of unencumbered assets. The Company terminated related swap agreements of $200.0 million that hedged the 2030 Senior Unsecured Public Notes. Considering the effect of the terminated swap agreements, the blended all-in rate to the Company for the $350.0 million aggregate principal amount of 2030 Senior Unsecured Public Notes is 3.49%. Senior Unsecured Revolving Credit Facility In December 2019, the Company entered into a Second Amended and Restated Revolving Credit and Term Loan Agreement (the “Credit Agreement”). The Credit Agreement provides for a $500.0 million unsecured revolving credit facility (the “Revolving Credit Facility”), the $65 Million Term Loan and the $35 Million Term Loan. The Credit Agreement amended and restated in its entirety the Company’s previous amended and restated credit agreement dated December 15, 2016. The Credit Agreement provides $600.0 million unsecured borrowing capacity, composed of the Revolving Credit Facility, which matures on January 15, 2024, as well as the 2024 Term Loan Facilities, which mature on January 15, 2024. Subject to certain terms and conditions set forth in the Credit Agreement, the Company (i) may request additional lender commitments under any or all facilities of up to an additional aggregate of $500.0 million and (ii) may elect, for an additional fee, to extend the maturity date of the Revolving Credit Facility by six months up to two times, for a maximum maturity date of January 15, 2025. No amortization payments are required under the Credit Agreement, and interest is payable in arrears no less frequently than quarterly. All borrowings under the Revolving Credit Facility (except for swing line loans) bear interest at a rate per annum equal to, at the option of the Company, (i) LIBOR plus a margin that is based upon the Company’s credit rating, or (ii) the Base Rate (which is defined as the greater of the rate of interest as publicly announced from time to time by PNC Bank, National Association, as its prime rate, the Federal Funds Open Rate plus 0.50%, or the Daily Eurodollar Rate plus 1.0%) plus a margin that is based upon the Company’s credit rating. The margins for the Revolving Credit Facility range in amount from 0.775% to 1.450% for LIBOR-based loans and 0.00% to 0.45% for Base Rate loans, depending on the Company’s credit rating. The margins for the Revolving Credit Facility are subject to improvement based on the Company’s leverage ratio, provided its credit rating meets a certain threshold. Concurrent with entering into the Credit Agreement, certain conforming changes, including customary financial covenants, were made to the 2023 Term Loan and 2026 Term Loan. The Company and Richard Agree, the Executive Chairman of the Company, are parties to a Reimbursement Agreement dated November 18, 2014 (the “Reimbursement Agreement”). Pursuant to the Reimbursement Agreement, Mr. Agree has agreed to reimburse the Company for any loss incurred under the Revolving Credit Facility in an amount not to exceed $14.0 million to the extent that the value of the Operating Partnership’s assets available to satisfy the Operating Partnership’s obligations under the Revolving Credit Facility is less than $14.0 million. Debt Maturities The following table presents scheduled principal payments related to the Company’s debt as of September 30, 2020 (in thousands): Scheduled Balloon Principal Payment Total Remainder of 2020 $ 240 $ — $ 240 2021 998 — 998 2022 1,060 — 1,060 2023 1,069 67,656 68,725 2024 (1) 963 120,000 120,963 Thereafter 1,656 960,000 961,656 Total scheduled principal payments 5,986 1,147,656 1,153,642 Original issue discount — (252) (252) Total $ 5,986 $ 1,147,404 $ 1,153,390 (1) The Revolving Credit Facility matures in January 2024, with options to extend the maturity as described under Senior Unsecured Revolving Credit Facility Loan Covenants Certain loan agreements contain various restrictive covenants, including the following financial covenants: maximum total leverage ratio, maximum secured leverage ratios, consolidated net worth requirements, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, a minimum unsecured interest expense ratio, a minimum interest coverage ratio, a minimum unsecured debt yield and a minimum unencumbered interest expense ratio. As of September 30, 2020, the most restrictive covenant was the minimum unencumbered interest expense ratio. The Company was in compliance with all of its loan covenants and obligations as of September 30, 2020. |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2020 | |
Common Stock | |
Common Stock | Note 6 – Common Stock Follow-on Public Offerings In September 2018, the Company entered into a follow-on public offering of 3,500,000 shares of common stock in connection with a forward sale agreement (the “September 2018 Forward”). The September 2018 Forward was settled in its entirety in April 2019. Upon settlement, the Company issued 3,500,000 shares of common stock and received net proceeds of $186.0 million, after deducting fees and expenses. In April 2019, the Company entered into a follow-on public offering (the “April 2019 Forward”) to sell an aggregate of 3,162,500 shares of common stock, which included the full exercise of the underwriters’ option to purchase an additional 412,500 shares of common stock. The April 2019 Forward was settled in its entirety in December 2019. Upon settlement, the Company issued 3,162,500 shares of common stock and received net proceeds of approximately $195.8 million, after deducting fees and expenses. In April 2020, the Company completed a follow-on public offering of 2,875,000 shares of common stock, which included the full exercise of the underwriters’ option to purchase an additional 375,000 shares of common stock. Upon closing, the Company issued 2,875,000 shares of common stock and received net proceeds of $170.4 million, after deducting fees and expenses. Also in April 2020, the Company entered into a follow-on public offering to sell an aggregate of 6,166,666 shares of common stock in connection with a forward sale agreement (the “April 2020 Forward”). During the three months ended September 30, 2020, the Company settled 1,515,000 shares of common stock under the April 2020 Forward, realizing net proceeds of approximately $88.0 million. The remaining shares of common stock under the April 2020 Forward are required to be settled no later than April 20, 2021. ATM Programs 2019 ATM Program In July 2019, the Company entered into a $400.0 million ATM program (the “2019 ATM Program”) through which the Company, from time to time, sold shares of common stock. During the third quarter of 2019, the Company issued 444,228 shares of common stock under the 2019 ATM Program, at an average price of $74.30, realizing gross proceeds of $32.6 million. In addition to selling shares of common stock, the Company also entered into forward sale agreements through the 2019 ATM Program, as described below. During the fourth quarter of 2019, the Company entered into forward sale agreements in connection with the 2019 ATM Program to sell an aggregate of 2,003,118 shares of common stock. Additionally, during the first quarter of 2020, the Company entered into forward sale agreements in connection with the 2019 ATM Program to sell an aggregate of 3,169,754 shares of common stock. During 2020, the Company settled all forward sale agreements under the 2019 ATM Program, realizing net proceeds of $359.5 million. The 2019 ATM Program was terminated simultaneously with the establishment of the 2020 ATM Program, which is discussed below. As a result, no future issuances will occur under the 2019 ATM Program. 2020 ATM Program In March 2020, the Company entered into a new $400.0 million ATM program (the “2020 ATM Program”) through which the Company, from time to time, may sell shares of common stock. In addition to selling shares of common stock, the Company has entered into forward sale agreements through the 2020 ATM Program, as described below. During the first three quarters of 2020, the Company entered into forward sale agreements to sell an aggregate of 1,832,846 shares of common stock. The Company has since settled 204,074 shares of common stock under these forward sale agreements, realizing net proceeds of $12.5 million. The Company is required to settle outstanding shares under the 2020 ATM Program by various dates between April and September 2021. After considering the 1,628,772 shares of common stock subject to forward sale agreements and including shares issued under the 2020 ATM Program, the Company had approximately $278.0 million of availability remaining under the 2020 ATM Program as of September 30, 2020. 2018 ATM Program In May 2018, the Company entered into a $250.0 million ATM program (“2018 ATM Program”) through which the Company, from time to time, sold shares of common stock. During the nine months ended September 30, 2019, the Company issued 886,768 shares of common stock under the 2018 ATM Program, realizing net proceeds of approximately $58.5 million. The 2018 ATM Program was subsequently terminated, and no future issuances will occur under the 2018 ATM Program. |
Dividends and Distribution Paya
Dividends and Distribution Payable | 9 Months Ended |
Sep. 30, 2020 | |
Dividends and Distribution Payable | |
Dividends and Distribution Payable | Note 7 – Dividends and Distribution Payable On September 9, 2020, the Company declared a dividend of $0.60 per share (and distributions per Operating Partnership Unit) for the quarter ended September 30, 2020. The holder of the Operating Partnership Units is entitled to an equal distribution per Operating Partnership Unit held as of September 25, 2020. The dividends and distributions payable were recorded as liabilities on the Condensed Consolidated Balance Sheets at September 30, 2020. The dividend has been reflected as a reduction of stockholders’ equity and the distribution has been reflected as a reduction of the limited partners’ non-controlling interest. These amounts were paid on October 9, 2020. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Taxes | |
Income Taxes | Note 8 – Income Taxes (not presented in thousands) Uncertain Tax Positions The Company is subject to the provisions of FASB ASC Topic 740-10 (“ASC 740-10”) and has analyzed its various federal and state filing positions. The Company believes that its income tax filing positions and deductions are documented and supported. Additionally, the Company believes that its accruals for tax liabilities are adequate. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740-10. The Company’s federal income tax returns are open for examination by taxing authorities for all tax years after December 31, 2015. The Company has elected to record related interest and penalties, if any, as income tax expense on the Consolidated Statements of Operations and Comprehensive Income. We have no material interest or penalties relating to income taxes recognized for the three and nine months ended September 30, 2020 and 2019. Deferred Taxes As of December 31, 2018, the Company had accrued a deferred income tax liability in the amount of $475,000. This deferred income tax balance represented the federal and state tax effect of deferring income tax in 2007 on the sale of an asset under section 1031 of the Internal Revenue Code. This transaction was accrued within the Company’s TRS entities. During the nine months ended September 30, 2019, the Company restructured its ownership of the TRS to which the deferred tax liability was related, resulting in a reversal of the previously accrued amount. Income Tax Expense The Company recognized total federal and state tax expense of approximately $306,000 and $184,000 for the three months ended September 30, 2020 and 2019, respectively and approximately $826,000 and $210,000 for the nine months ended September 30, 2020 and 2019, respectively. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activity | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activity | |
Derivative Instruments and Hedging Activity | Note 9 – Derivative Instruments and Hedging Activity Background The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risk, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and, to a limited extent, the use of derivative instruments. For additional information regarding the leveling of the Company’s derivatives (refer to Note 10 – Fair Value Measurements The Company’s objective in using interest rate derivatives is to manage its exposure to interest rate movements and add stability to interest expense. To accomplish this objective, the Company uses interest rate swap agreements as part of its interest rate risk management strategy. Interest rate swap agreements designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed rate payments over the life of the agreement without exchange of the underlying notional amount. Recent Activity In March 2019, the Company entered into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $100.0 million of long-term debt. The Company hedged its exposure to the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period of one year. In May, the Company terminated the swap agreements at the time of pricing the future debt issuance, receiving $0.8 million upon termination. See discussion of the 2031 Senior Unsecured Notes in Note 5 – Debt In June 2019, the Company entered into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $100.0 million of long-term debt. The Company hedged its exposure to the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period ending March 2021. In August 2020, the Company terminated the swap agreements upon the debt issuance, paying $16.1 million upon termination. See discussion of the 2030 Senior Unsecured Public Notes in Note 5 – Debt In October 2019, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $65.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreements, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.4275%. This swap effectively converts $65.0 million of variable-rate borrowings to fixed-rate borrowings from July 12, 2021 to January 12, 2024. As of September 30, 2020, this interest rate swap was valued as a liability of approximately $2.0 million. Also in October 2019, the Company entered into an interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $35.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.4265%. This swap effectively converts $35.0 million of variable-rate borrowings to fixed-rate borrowings from September 29, 2020 to January 12, 2024. As of September 30, 2020, this interest rate swap was valued as a liability of approximately $1.5 million. In February 2020, the Company entered into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $100.0 million of long-term debt. The Company hedged its exposure to the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period ending March 2021. In August 2020, the Company terminated the swap agreements upon the debt issuance, paying $7.3 million upon termination. See discussion of the 2030 Senior Unsecured Public Notes in Note 5 – Debt In August 2020, the Company entered into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $100.0 million of long-term debt. The Company is hedging its exposure to the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period ending February 2022. As of September 30, 2020, these interest rate swaps were valued as an asset of approximately $0.3 million. Prior Derivative Transactions In July 2014, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $65.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreements, the Company receives from the counterparty interest on the notional amount based on one month LIBOR and pays to the counterparty a fixed rate of 2.09%. These swaps effectively converted $65.0 million of variable-rate borrowings to fixed-rate borrowings from July 21, 2014 to July 21, 2021. As of September 30, 2020, these interest rate swaps were valued as a liability of approximately $1.0 million. In September 2017, the Company entered into an interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $40.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on one month LIBOR and pays to the counterparty a fixed rate of 1.40%. This swap effectively converted $40.0 million of variable-rate borrowings to fixed-rate borrowings from August 1, 2016 to July 1, 2023. As of September 30, 2020, this interest rate swap was valued as a liability of approximately $1.4 million. In December 2018, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $100.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreements, the Company receives from the counterparty interest on the notional amount based on one month LIBOR and pays to the counterparty a fixed rate of 2.66%. These swaps effectively converts $100.0 million of variable-rate borrowings to fixed-rate borrowings from December 27, 2018 to January 15, 2026. As of September 30, 2020, these interest rate swaps were valued as a liability of approximately $12.5 million. Recognition On January 1, 2019, the Company adopted ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities,” which provided changes in hedge accounting recognition and presentation requirements. The Company now recognizes all changes in fair value for hedging instruments designated and qualifying for cash flow hedge accounting treatment as a component of Other Comprehensive Income (OCI), as opposed to previously recognizing the ineffective portion, if any, directly in earnings. Upon adoption, there were no adjustments relating to previously recorded derivatives transactions or amounts. Net realized gains or losses resulting from derivatives that were settled in conjunction with planned fixed rate financings or refinancings continue to be included in accumulated OCI during the term of the hedged debt transaction. Amounts reported in accumulated OCI related to currently outstanding interest rate derivatives are recognized as an adjustment to income as interest payments are made on the Company’s variable-rate debt. Realized gains or losses on settled derivative instruments included in accumulated OCI are recognized as an adjustment over the term of the hedged debt transaction. During the next twelve months, the Company estimates that an additional $6.7 million will be reclassified as an increase to interest expense. The Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (in thousands, except number of instruments): Number of Instruments Notional 1 September 30, December 31, September 30, December 31, Interest Rate Derivatives 2020 2019 2020 2019 Interest rate swap 14 15 $ 405,000 $ 440,000 1 The table below presents the estimated fair value of the Company’s interest rate swaps, as well as their classification in the Condensed Consolidated Balance Sheets (in thousands). Asset Derivatives September 30, 2020 December 31, 2019 Fair Value Fair Value Derivatives designated as cash flow hedges: Other Assets, net $ 283 $ 572 Liability Derivatives September 30, 2020 December 31, 2019 Fair Value Fair Value Derivatives designated as cash flow hedges: Accounts Payable, Accrued Expenses, and Other Liabilities $ 18,369 $ 7,943 The table below displays the effect of the Company’s derivative financial instruments in the Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2020 and 2019 (in thousands). Location of Derivatives in Income/(Loss) Cash Flow Reclassified from Amount of Income/(Loss) Hedging Amount of Income/(Loss) Recognized Accumulated OCI Reclassified from Relationships in OCI on Derivative into Income Accumulated OCI into Expense Three Months Ended September 30, 2020 2019 2020 2019 Interest rate swaps $ (70) $ (7,418) Interest Expense $ 1,490 $ 22 Nine Months Ended September 30, 2020 2019 2020 2019 Interest rate swaps $ (36,739) $ (14,617) Interest Expense $ 2,856 $ 366 The Company does not use derivative instruments for trading or other speculative purposes and did not have any other derivative instruments or hedging activities as of September 30, 2020. Credit-risk-related Contingent Features The Company has agreements with its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to default on the indebtedness. As of September 30, 2020, the fair value of derivatives in a net liability position related to these agreements, which includes accrued interest but excludes any adjustment for nonperformance risk, was $18.8 million. Although the derivative contracts are subject to master netting arrangements, which serve as credit mitigants to both the Company and its counterparties under certain situations, the Company does not net its derivative fair values or any existing rights or obligations to cash collateral on the Condensed Consolidated Balance Sheets. The table below presents a gross presentation of the effects of offsetting and a net presentation of the Company’s derivatives as of September 30, 2020 and December 31, 2019. The gross amounts of derivative assets or liabilities can be reconciled to the Tabular Disclosure of Fair Values of Derivative Instruments above, which also provides the location that derivative assets and liabilities are presented on the Condensed Consolidated Balance Sheets (in thousands): Offsetting of Derivative Assets as of September 30, 2020 Gross Amounts Net Amounts of Offset in the Assets presented Gross Amounts Not Offset in the Gross Amounts Statement of in the Statement Statement of Financial Position of Recognized Financial of Financial Financial Cash Collateral Assets Position Position Instruments Received Net Amount Derivatives $ 283 $ — $ 283 $ (155) $ — $ 128 Offsetting of Derivative Liabilities as of September 30, 2020 Net Amounts of Gross Amounts Liabilities Offset in the presented in the Gross Amounts Not Offset in the Gross Amounts Statement of Statement of Statement of Financial Position of Recognized Financial Financial Financial Cash Collateral Liabilities Position Position Instruments Posted Net Amount Derivatives $ 18,369 $ — $ 18,369 $ (155) $ — $ 18,214 Offsetting of Derivative Assets as of December 31, 2019 Gross Amounts Net Amounts of Offset in the Assets presented Gross Amounts Not Offset in the Gross Amounts Statement of in the Statement Statement of Financial Position of Recognized Financial of Financial Financial Cash Collateral Assets Position Position Instruments Received Net Amount Derivatives $ 572 $ — $ 572 $ (572) $ — $ — Offsetting of Derivative Liabilities as of December 31, 2019 Net Amounts of Gross Amounts Liabilities Offset in the presented in the Gross Amounts Not Offset in the Gross Amounts Statement of Statement of Statement of Financial Position of Recognized Financial Financial Financial Cash Collateral Liabilities Position Position Instruments Posted Net Amount Derivatives $ 7,943 $ — $ 7,943 $ (572) $ — $ 7,371 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | Note 10 – Fair Value Measurements Assets and Liabilities Measured at Fair Value The Company accounts for fair values in accordance with ASC 820. ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances. ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls, is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Derivative Financial Instruments Currently, the Company uses interest rate swap agreements to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. To comply with the provisions of ASC 820, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2020, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019 (in thousands): Total Fair Value Level 2 September 30, 2020 Derivative assets - interest rate swaps $ 283 $ 283 Derivative liabilities - interest rate swaps $ 18,369 $ 18,369 December 31, 2019 Derivative assets - interest rate swaps $ 572 $ 572 Derivative liabilities - interest rate swaps $ 7,943 $ 7,943 Other Financial Instruments The carrying values of cash and cash equivalents, receivables and accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short maturity of these financial instruments. The Company estimated the fair value of its debt based on its incremental borrowing rates for similar types of borrowing arrangements with the same remaining maturity and on the discounted estimated future cash payments to be made for other debt. The discount rate used to calculate the fair value of debt approximates current lending rates for loans and assumes the debt is outstanding through maturity. Since such amounts are estimates that are based on limited available market information for similar transactions, which is a Level 2 non-recurring measurement, there can be no assurance that the disclosed value of any financial instrument could be realized by immediate settlement of the instrument. Fixed rate debt (including variable rate debt swapped to fixed, excluding the value of the derivatives) with carrying values of $1.1 billion and $783.3 million as of September 30, 2020 and December 31, 2019, respectively, had fair values of $1.3 billion and $817.7 million, respectively. Variable rate debt’s fair value is estimated to be equal to the carrying values of $20.0 million and $89.0 million, as of September 30, 2020 and December 31, 2019, respectively. |
Equity Incentive Plan
Equity Incentive Plan | 9 Months Ended |
Sep. 30, 2020 | |
Equity Incentive Plan | |
Equity Incentive Plan | Note 11 – Equity Incentive Plan In May 2020, the Company’s stockholders approved the 2020 Omnibus Incentive Plan (the “2020 Plan”), which replaced the 2014 Omnibus Equity Incentive Plan (the “2014 Plan”). The 2020 Plan provides for the award to employees, directors and consultants of the Company of options, restricted stock, restricted stock units, stock appreciation rights, performance awards (which may take the form of performance units or performance shares) and other awards to acquire up to an aggregate of 700,000 shares of the Company’s common stock. All subsequent awards of equity or equity rights will be granted under the 2020 Plan, and no further awards will be made under the 2014 Plan. As of September 30, 2020, 695,459 shares of common stock were available for issuance under the 2020 Plan. Restricted Stock Restricted common stock has been granted to certain employees and directors. The holder of a restricted share award is generally entitled at all times on and after the date of issuance of the restricted shares to exercise the rights of a stockholder of the Company, including the right to vote the shares and the right to receive dividends on the shares. The restricted shares vest over a five-year period based on continued service to the Company. The Company estimates the fair value of restricted stock grants at the date of grant and amortizes those amounts into expense on a straightline basis or amount vested, if greater, over the appropriate vesting period. The Company recognized expense relating to restricted stock grants of $0.8 million and $0.8 million for the three months ended September 30, 2020 and 2019, respectively, and $2.4 million and $2.2 million for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, there was $8.8 million of total unrecognized compensation costs related to the outstanding restricted stock, which is expected to be recognized over a weighted average period of 3.4 years. The Company used 0% for the forfeiture rate for determining the fair value of restricted stock. The intrinsic value of restricted shares redeemed was $1.6 million and $1.4 million for the nine months ended September 30, 2020 and 2019, respectively. Restricted stock activity is summarized as follows: Shares Weighted Average Outstanding Grant Date (in thousands) Fair Value Unvested restricted stock at December 31, 2019 194 $ 50.71 Restricted stock granted 52 $ 78.43 Restricted stock vested (62) $ 45.45 Restricted stock forfeited (3) $ 62.73 Unvested restricted stock at September 30, 2020 181 $ 60.26 Performance Units On February 23, 2020, certain executive officers received performance units. Performance units are subject to a three-year performance period, at the conclusion of which, shares awarded are to be determined by the Company’s total shareholder return compared to the constituents of the MSCI US REIT Index and a defined peer group. 50% of the award is based upon the total shareholder return percentile rank versus the MSCI US REIT index for the three-year performance period; and 50% of the award is based upon TSR percentile rank versus a specified net lease peer group for the three-year performance period. Vesting of the performance units following their issuance will occur ratably over a three-year period, with the initial vesting occurring immediately following the conclusion of the performance period such that all shares vest within five years of the original award date of February 23, 2020. The grant date fair value of these awards is determined using a Monte Carlo simulation pricing model and compensation expense is amortized on an attribution method over a five-year period. The Monte Carlo simulation pricing model for the 2020 grants utilized the following assumptions: (i) expected term of 2.9 years (equal to the remaining performance measurement period at the grant date), (ii) volatility of 18.4% (based on historical volatility), (iii) dividend yield of 2.9% (based on the most recently paid dividend at grant date), (iv) risk-free rate of 1.3% (interpolated based on 2- and 3-year rates). Compensation expense related to performance units is determined at the grant date and is not adjusted throughout the measurement or vesting periods. The Company recognized expense related to performance units of $0.4 million and $0.2 million, for the three months ended September 30, 2020 and 2019, respectively, and $1.1 million and $0.6 million, for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, there was $3.7 million of total unrecognized compensation costs related to the outstanding performance units, which is expected to be recognized over a weighted average period of 3.6 years. The Company used 0% for the forfeiture rate for determining the fair value of performance units. Prior to 2019, the Company’s equity incentive plan utilized performance shares instead of units. These performance shares had substantially identical terms to the performance units described above. Performance share and unit activity is summarized as follows: Target Number of Awards Weighted Average (in thousands) Grant Date Performance units and shares at December 31, 2019 61 $ 56.57 Performance units granted 26 $ 79.62 Performance units and shares at September 30, 2020 87 $ 63.35 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 12 – Commitments and Contingencies In the ordinary course of business, we are party to various legal actions which we believe are routine in nature and incidental to the operation of our business. We believe that the outcome of the proceedings will not have a material adverse effect upon our consolidated financial position or results of operations. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events | |
Subsequent Events | Note 13 – Subsequent Events In connection with the preparation of its financial statements, the Company has evaluated events that occurred subsequent to September 30, 2020 through the date on which these financial statements were issued to determine whether any of these events required disclosure in the financial statements. In October, 2020, the Company entered into a new employment agreement with Joel Agree to extend Mr. Agree’s term as President and Chief Executive Officer of the Company through September 30, 2023 (the “Agreement”). The Agreement supersedes Mr. Agree’s prior employment agreement with the Company, which had a term that was scheduled to expire on June 30, 2021. The term of Mr. Agree’s employment under the Agreement extends through September 30, 2023, and will automatically renew for successive two-year periods unless either party provides notice of non-renewal at least 60 days prior to the expiration of any term. The Agreement revises and updates, as applicable, Mr. Agree’s salary, incentive compensation, termination, death and disability, and change in control provisions, as well as provides for a one-time extension bonus. There were no other reportable subsequent events or transactions. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Consolidation, Policy [Policy Text Block] | Basis of Accounting and Principles of Consolidation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for audited financial statements. The unaudited Condensed Consolidated Financial Statements reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results for the interim period presented. Operating results for the three and nine months ended September 30, 2020 may not be indicative of the results that may be expected for the year ending December 31, 2020. Amounts as of December 31, 2019 included in the Condensed Consolidated Financial Statements have been derived from the audited Consolidated Financial Statements as of that date. The unaudited Condensed Consolidated Financial Statements, included herein, should be read in conjunction with the audited Consolidated Financial Statements and notes thereto, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Company’s Form 10-K for the year ended December 31, 2019. The unaudited Condensed Consolidated Financial Statements include the accounts of the Company, the Operating Partnership and its wholly owned subsidiaries. The Company, as the sole general partner, held 99.4% and 99.2% of the Operating Partnership as of September 30, 2020 and December 31, 2019, respectively. All material intercompany accounts and transactions have been eliminated. At September 30, 2020 and December 31, 2019, the non-controlling interest in the Operating Partnership consisted of a 0.6% and 0.8% ownership interest in the Operating Partnership held by the Company’s founder/chairman, respectively. The Operating Partnership Units may, under certain circumstances, be exchanged for shares of common stock. The Company as sole general partner of the Operating Partnership has the option to settle exchanged Operating Partnership Units held by others for cash based on the current trading price of our shares. Assuming the exchange of all non-controlling Operating Partnership Units, there would have been 55,718,144 shares of common stock outstanding at September 30, 2020. |
Significant Risks and Uncertainties [Policy Text Block] | Significant Risks and Uncertainties Currently, one of the most significant risks and uncertainties is the potential adverse effect of the current pandemic of the novel coronavirus, or COVID-19. The COVID-19 pandemic has had repercussions across regional and global economies and financial markets. The outbreak of COVID-19 in many countries, including the United States, has significantly adversely impacted economic activity and has contributed to significant volatility and negative pressure in financial markets. The COVID-19 pandemic has resulted in a number of our tenants temporarily closing their stores and requesting rent deferral or rent abatement during this pandemic. The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations and cash flows in the near term due to, but not limited to, the following: ● reduced economic activity severely impacts our tenants’ businesses, financial condition and liquidity and may cause tenants to be unable to fully meet their obligations to us. Certain tenants have sought to modify such obligations and may seek additional relief and additional tenants may seek modifications of such obligations, resulting in increases in uncollectible receivables and reductions in rental income; ● the negative financial impact of the pandemic could impact our future compliance with financial covenants of our credit facility and other debt agreements; and ● weaker economic conditions could cause us to recognize impairment in value of our tangible or intangible assets. As a result of COVID-19, we have received numerous rent relief requests, most often in the form of rent deferrals. We have evaluated, and continue to evaluate, each tenant rent relief request on an individual basis, considering a number of factors. Not all tenant requests have resulted in modification agreements, nor is the Company forgoing its contractual rights under its lease agreements. Since the onset of COVID-19, we have entered into lease modifications that deferred 4% and 2% of rent originally contracted for the three months ended June 30, 2020 and September 30, 2020, respectively, and have collected approximately 92% and 97% of rent payments originally contracted for these periods, respectively. Rent deferral percentages disclosed above are net of any repayments that have since occurred. The extent to which the COVID-19 pandemic continues to impact our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business and geographies. However, as a result of the many uncertainties surrounding the COVID-19 pandemic, we are unable to predict the impact that it ultimately will have on its financial condition, results of operations and cash flows. |
Real Estate, Policy [Policy Text Block] | Real Estate Investments The Company records the acquisition of real estate at cost, including acquisition and closing costs. For properties developed by the Company, all direct and indirect costs related to planning, development and construction, including interest, real estate taxes and other miscellaneous costs incurred during the construction period, are capitalized for financial reporting purposes and recorded as property under development until construction has been completed. Assets are classified as held for sale based on specific criteria as outlined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Property, Plant & Equipment one year. The Company did not classify any operating properties as held for sale at September 30, 2020, the assets for which would have been separately presented in the Condensed Consolidated Balance Sheets. Real estate held for sale consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Land $ — $ 2,269 Building — 2,315 Lease intangibles - asset — — — 4,584 Accumulated depreciation and amortization — (834) Total Real Estate Held for Sale, net $ — $ 3,750 |
Purchase Accounting For Acquisitions Of Real Estate [Policy Text Block] | Acquisitions of Real Estate The acquisition of property for investment purposes is typically accounted for as an asset acquisition. The Company allocates the purchase price to land, buildings and identified intangible assets and liabilities, based in each case on their relative estimated fair values and without giving rise to goodwill. Intangible assets and liabilities represent the value of in-place leases and above- or below-market leases. In making estimates of fair values, the Company may use a number of sources, including data provided by independent third parties, as well as information obtained by the Company as a result of its due diligence, including expected future cash flows of the property and various characteristics of the markets where the property is located. In allocating the fair value of the identified intangible assets and liabilities of an acquired property, in-place lease intangibles are valued based on the Company’s estimates of costs related to tenant acquisition and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. 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. In the case of sale-leaseback transactions, it is typically assumed that the lease is not in-place prior to the close of the transaction. |
Depreciation, Depletion, and Amortization [Policy Text Block] | Depreciation and Amortization Land, buildings and improvements are recorded and stated at cost. The Company’s properties are depreciated using the straight-line method over the estimated remaining useful life of the assets, which are generally 40 years for buildings and 10 to 20 years for improvements. Properties classified as held for sale and properties under development or redevelopment are not depreciated. Major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. In-place lease intangible assets and above- and below-market lease intangibles are amortized as a net reduction of rental income. In the event of early lease termination, the remaining net book value of any above- or below-market lease intangible is recognized as an adjustment of rental income. The following schedule summarizes the Company’s amortization of lease intangibles for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Lease intangibles (in-place) $ 4,408 $ 2,854 $ 11,971 $ 7,298 Lease intangibles (above-market) 5,338 4,562 15,607 13,297 Lease intangibles (below-market) (1,374) (1,181) (4,055) (3,415) Total $ 8,372 $ 6,235 $ 23,523 $ 17,180 The following schedule represents estimated future amortization of lease intangibles as of September 30, 2020 (in thousands): 2020 Year Ending December 31, (remaining) 2021 2022 2023 2024 Thereafter Total Lease intangibles (in-place) $ 5,529 $ 19,342 $ 18,242 $ 17,246 $ 15,812 $ 88,250 $ 164,421 Lease intangibles (above-market) 5,876 23,317 22,370 21,460 19,791 165,138 257,952 Lease intangibles (below-market) (1,651) (6,032) (5,109) (4,277) (3,563) (14,901) (35,533) Total $ 9,754 $ 36,627 $ 35,503 $ 34,429 $ 32,040 $ 238,487 $ 386,840 |
Impairment of Real Estate Investments, Policy [Policy Text Block] | Impairments The Company reviews real estate investments and related lease intangibles for possible impairment when certain events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable through operations plus estimated disposition proceeds. Events or changes in circumstances that may occur include, but are not limited to, significant changes in real estate market conditions, estimated residual values and an expectation to sell assets before the end of the previously estimated life. Impairments are measured to the extent the current book value exceeds the estimated fair value of the asset less disposition costs for any assets classified as held for sale. The valuation of impaired assets is determined using valuation techniques including discounted cash flow analysis, analysis of recent comparable sales transactions and purchase offers received from third parties, which are Level 3 inputs. The Company may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate. Estimating future cash flows is highly subjective and estimates can differ materially from actual results. |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents and Cash Held in Escrows The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of cash and money market accounts. Cash held in escrows relates to delayed like-kind exchange transactions pursued under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The account balances of cash and cash held in escrow periodically exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage, and as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company had $15.5 million and $40.9 million in cash and cash held in escrow as of September 30, 2020 and December 31, 2019, respectively, in excess of the FDIC insured limit. |
Revenue from Contract with Customer [Policy Text Block] | Revenue Recognition and Accounts Receivable The Company leases real estate to its tenants under long-term net leases which we account for as operating leases. Under this method, leases that have fixed and determinable rent increases are recognized on a straight-line basis over the lease term. Rental increases based upon changes in the consumer price indexes, or other variable factors, are recognized only after changes in such factors have occurred and are then applied according to the lease agreements. Certain leases also provide for additional rent based on tenants’ sales volumes. These rents are recognized when determinable after the tenant exceeds a sales breakpoint. Recognizing rent escalations on a straight-line method results in rental revenue in the early years of a lease being higher than actual cash received, creating a straight-line rent receivable asset which is included in the Accounts Receivable - Tenants line item in the Condensed Consolidated Balance Sheets. The balance of straight-line rent receivables at September 30, 2020 and December 31, 2019 was $27.6 million and $23.0 million, respectively. To the extent any of the tenants under these leases become unable to pay their contractual cash rents, the Company may be required to write down the straight-line rent receivable from those tenants, which would reduce rental income. The Company reviews the collectability of charges under its tenant operating leases on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located. During 2020, the Company’s assessment has specifically included the impact of the COVID-19 pandemic, which represents a material risk to collectability (see Significant Risks and Uncertainties The Company’s leases provide for reimbursement from tenants for common area maintenance, insurance, real estate taxes and other operating expenses. A portion of the Company’s operating cost reimbursements is estimated each period and is recognized as revenue in the period the recoverable costs are incurred and accrued. Receivables from operating cost reimbursements are included in the Accounts Receivable - Tenants line item in the Condensed Consolidated Balance Sheets. The balance of unbilled operating cost reimbursement receivable at September 30, 2020 and December 31, 2019 was $3.1 million and $2.6 million, respectively. The Company adopted FASB ASC Topic-842, Leases |
Lessor, Operating Lease, Lease Concessions Policy [Policy Text Block] | Rent Concessions – COVID-19 During the second and third quarters of 2020, the Company has provided lease concessions to certain tenants in response to the impact of COVID-19, in the form of rent deferrals. The Company has made an election to account for such lease concessions consistent with how those concessions would be accounted for under ASC 842 if enforceable rights and obligations for those concessions had already existed in the leases. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in our rights as lessor, including concessions that result in the total payments required by the modified lease being substantially the same as or less than total payments required by the original lease. Substantially all of the Company’s concessions to date provide for a deferral of payments with no substantive changes to the consideration in the original lease. These deferrals affect the timing, but not the amount, of the lease payments. The Company is accounting for these deferrals as if no changes to the lease were made. Under this accounting, the Company increases its lease receivable as tenant payments accrue and continues to recognize rental income. To date, the Company has entered into lease concessions that deferred 4% and 2% of rent originally contracted for in the second and third quarters of 2020, respectively. Such rent deferral percentages are net of any repayments that have since occurred. |
Sales Tax [Policy Text Block] | Sales Tax The Company collects various taxes from tenants and remits these amounts, on a net basis, to the applicable taxing authorities. |
Earnings Per Share, Policy [Policy Text Block] | Earnings per Share Earnings per common share has been computed pursuant to the guidance in FASB ASC Topic 260, Earnings Per Share The following is a reconciliation of the numerator and denominator for the basic net earnings per common share and diluted net earnings per common share computation for each of the periods presented: (in thousands, except for share data) Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Net income attributable to Agree Realty Corporation $ 21,280 $ 20,611 $ 67,766 $ 57,522 Less: Income attributable to unvested restricted shares (69) (98) (233) (283) Net income used in basic and diluted earnings per share $ 21,211 $ 20,513 $ 67,533 $ 57,239 Weighted average number of common shares outstanding 53,902,541 42,034,685 50,818,154 40,194,931 Less: Unvested restricted stock (180,585) (202,228) (180,585) (202,228) Weighted average number of common shares outstanding used in basic earnings per share 53,721,956 41,832,457 50,637,569 39,992,703 Weighted average number of common shares outstanding used in basic earnings per share 53,721,956 41,832,457 50,637,569 39,992,703 Effect of dilutive securities: share-based compensation 85,380 109,027 87,111 102,845 Effect of dilutive securities: September 2018 forward equity offering — — — 359,713 Effect of dilutive securities: April 2019 forward equity offering — 376,558 — 170,180 Effect of dilutive securities: 2019 ATM forward equity offerings — — 19,053 — Effect of dilutive securities: 2020 ATM forward equity offerings 22,515 — 16,934 — Effect of dilutive securities: April 2020 forward equity offering 725,821 — 390,795 — Weighted average number of common shares outstanding used in diluted earnings per share 54,555,672 42,318,042 51,151,462 40,625,441 For the three months ended September 30, 2020, 4,510 shares of common stock related to the 2020 at-the-market (“ATM”) forward equity offerings, 3,139 shares of restricted common stock granted in 2020, and 6,390 performance units granted in 2020 were anti-dilutive and were not included in the computation of diluted earnings per share. For the nine months ended September 30, 2020, 22,820 shares of common stock related to the 2019 ATM forward equity offerings, 34,899 shares of common stock included in the 2020 ATM forward equity offerings, 2,355 shares of restricted common stock granted in 2020 and 5,887 performance units granted in 2020 were anti-dilutive and were not included in the computation of diluted earnings per share. |
Forward Equity Sales, Policy [Policy Text Block] | Forward Equity Sales The Company occasionally sells shares of common stock through forward sale agreements to enable the Company to set the price of such shares upon pricing the offering (subject to certain adjustments) while delaying the issuance of such shares and the receipt of the net proceeds by the Company. To account for the forward sale agreements, the Company considers the accounting guidance governing financial instruments and derivatives. To date, we have concluded that our forward sale agreements are not liabilities as they do not embody obligations to repurchase our shares nor do they embody obligations to issue a variable number of shares for which the monetary value are predominantly fixed, varying with something other than the fair value of the shares, or varying inversely in relation to our shares. We then evaluate whether the agreements meet the derivatives and hedging guidance scope exception to be accounted for as equity instruments. We have concluded that the agreements are classifiable as equity contracts based on the following assessments: (i) none of the agreements’ exercise contingencies are based on observable markets or indices besides those related to the market for our own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to our own stock. The Company also considers the potential dilution resulting from the forward sale agreements on the earnings per share calculations. The Company uses the treasury stock method to determine the dilution resulting from the forward sale agreements during the period of time prior to settlement. |
Income Tax, Policy [Policy Text Block] | Income Taxes The Company made an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code and related regulations. The Company generally will not be subject to federal income taxes on amounts distributed to stockholders, providing it distributes 100% of its REIT taxable income and meets certain other requirements for qualifying as a REIT. For the periods ending September 30, 2020 and December 31, 2019, the Company believes it has qualified as a REIT. Notwithstanding its qualification for taxation as a REIT, the Company is subject to certain state taxes on its income and real estate. Earnings and profits that determine the taxability of distributions to shareholders differ from net income reported for financial reporting purposes due to differences in the estimated useful lives and methods used to compute depreciation and the carrying value (basis) of the investments in properties for tax purposes, among other things. The Company and its taxable REIT subsidiaries (“TRS”) have made a timely TRS election pursuant to the provisions of the REIT Modernization Act. A TRS is able to engage in activities resulting in income that previously would have been disqualified from being eligible REIT income under the federal income tax regulations. As a result, certain activities of the Company which occur within its TRS entities are subject to federal and state income taxes. All provisions for federal income taxes in the accompanying Condensed Consolidated Financial Statements are attributable to the Company’s TRS. We regularly analyze our various federal and state filing positions and only recognize the income tax effect in our financial statements when certain criteria regarding uncertain income tax positions have been met. We believe that our income tax positions would more likely than not be sustained upon examination by all relevant taxing authorities. Therefore, no provisions for uncertain income tax positions have been recorded in the Condensed Consolidated Financial Statements. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Values of Financial Instruments The Company’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance. The framework specifies a hierarchy of valuation inputs, which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. The guidance describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels: Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities. Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques. |
Going Concern, Policy [Policy Text Block] | Management’s Responsibility to Evaluate Our Ability to Continue as a Going Concern When preparing financial statements for each annual and interim reporting period, management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In making its evaluation, the Company considers, but is not limited to, any risks and/or uncertainties to its results of operations, contractual obligations in the form of near-term debt maturities, dividend requirements, or other factors impacting the Company’s liquidity and capital resources. No conditions or events that raised substantial doubt about the ability to continue as a going concern within one year were identified as of the issuance date of the Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. |
Segment Reporting, Policy [Policy Text Block] | Segment Reporting The Company is primarily in the business of acquiring, developing and managing retail real estate which is considered to be one reportable segment. The Company has no other reportable segments. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from those estimates. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). The guidance in ASU 2020-06 simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separately present certain conversion features in equity. In addition, the amendments in the ASU 2020-06 also simplify the guidance in ASC Subtopic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity In April 2020, the FASB staff issued a question-and-answer document (the “Q&A document”) to address questions on the application of lease accounting guidance for lease concessions related to the effects of the COVID-19 pandemic. Prior to the issuance of this document, changes to lease payments not stipulated in an original lease were generally accounted for as lease modifications under ASC 842. The Q&A document now provides for a policy election to be made to account for COVID-19 pandemic-related concessions (1) as lease modifications or (2) as they would otherwise be accounted for under ASC 842 if enforceable rights and obligations for those concessions had already existed in the lease. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor, including concessions that result in the total payments required by the modified lease being substantially the same as or less than the total payments required by the original lease. Refer to Rent Concessions – COVID 19 In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)” (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). These amendments modify the disclosure requirements in ASC Topic 820, Fair Value Measurements and Disclosure In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which changes how entities measure credit losses for most financial assets. This guidance requires an entity to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses”, which clarified that receivables arising from operating leases are within the scope of the leasing standard ASU 2016-02, “Leases (Topic 842),” not ASU 2016-13. The Company adopted this new standard on January 1, 2020. In the event any of the Company’s leases ever were to be classified as sales-type or direct finance leases, it would become subject to the provisions of ASU 2016-13. However, the Company does not currently have any such leases, nor does it have a significant number of other financial instruments subject to the new standard. Therefore, adoption of ASU 2016-13 has not had, and is not currently expected to have, a material effect on the Company’s financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”). The new standard creates ASC 842 and supersedes ASC Topic 840, Leases • ASC 842 requires a lessee to recognize right of use assets and lease obligation liabilities that arise from leases (operating and finance). On January 1, 2019, the Company recognized $7.5 million of right of use assets and lease liabilities • ASC 842 requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases and operating leases. Based on its election of practical expedients, the Company’s existing retail leases, where it is the lessor, continue to be accounted for as operating leases under the new standard. However, ASC 842 changed certain requirements regarding the classification of leases that could result in the Company recognizing certain long-term leases entered into or modified after January 1, 2019 as sales-type leases, as opposed to operating leases. • The Company elected an optional transition method that allows entities to initially apply ASC 842 at the adoption date (January 1, 2019) and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. However, the Company ultimately did not have any cumulative-effect adjustment as of the adoption date. • The Company elected a practical expedient which allows lessors to not separate non-lease components from the lease component when the timing and pattern of transfer for the lease components and non-lease components are the same and if the lease component is classified as an operating lease. As a result, the Company now presents all rentals and reimbursements from tenants as a single line item Rental Income within the Condensed Consolidated Statement of Operations and Comprehensive Income. • Under ASC 842, beginning on January 1, 2019, changes in the probability of collecting tenant rental income results in direct adjustments of rental income and tenant receivables. The Company no longer recognizes any separate specific bad debt provision or allowance for doubtful accounts. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Schedule of Real Estate Properties Held-For-Sale [Table Text Block] | Real estate held for sale consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Land $ — $ 2,269 Building — 2,315 Lease intangibles - asset — — — 4,584 Accumulated depreciation and amortization — (834) Total Real Estate Held for Sale, net $ — $ 3,750 |
Schedule of Amortization of Deferred Expenses [Table Text Block] | The following schedule summarizes the Company’s amortization of lease intangibles for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Lease intangibles (in-place) $ 4,408 $ 2,854 $ 11,971 $ 7,298 Lease intangibles (above-market) 5,338 4,562 15,607 13,297 Lease intangibles (below-market) (1,374) (1,181) (4,055) (3,415) Total $ 8,372 $ 6,235 $ 23,523 $ 17,180 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | The following schedule represents estimated future amortization of lease intangibles as of September 30, 2020 (in thousands): 2020 Year Ending December 31, (remaining) 2021 2022 2023 2024 Thereafter Total Lease intangibles (in-place) $ 5,529 $ 19,342 $ 18,242 $ 17,246 $ 15,812 $ 88,250 $ 164,421 Lease intangibles (above-market) 5,876 23,317 22,370 21,460 19,791 165,138 257,952 Lease intangibles (below-market) (1,651) (6,032) (5,109) (4,277) (3,563) (14,901) (35,533) Total $ 9,754 $ 36,627 $ 35,503 $ 34,429 $ 32,040 $ 238,487 $ 386,840 |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following is a reconciliation of the numerator and denominator for the basic net earnings per common share and diluted net earnings per common share computation for each of the periods presented: (in thousands, except for share data) Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Net income attributable to Agree Realty Corporation $ 21,280 $ 20,611 $ 67,766 $ 57,522 Less: Income attributable to unvested restricted shares (69) (98) (233) (283) Net income used in basic and diluted earnings per share $ 21,211 $ 20,513 $ 67,533 $ 57,239 Weighted average number of common shares outstanding 53,902,541 42,034,685 50,818,154 40,194,931 Less: Unvested restricted stock (180,585) (202,228) (180,585) (202,228) Weighted average number of common shares outstanding used in basic earnings per share 53,721,956 41,832,457 50,637,569 39,992,703 Weighted average number of common shares outstanding used in basic earnings per share 53,721,956 41,832,457 50,637,569 39,992,703 Effect of dilutive securities: share-based compensation 85,380 109,027 87,111 102,845 Effect of dilutive securities: September 2018 forward equity offering — — — 359,713 Effect of dilutive securities: April 2019 forward equity offering — 376,558 — 170,180 Effect of dilutive securities: 2019 ATM forward equity offerings — — 19,053 — Effect of dilutive securities: 2020 ATM forward equity offerings 22,515 — 16,934 — Effect of dilutive securities: April 2020 forward equity offering 725,821 — 390,795 — Weighted average number of common shares outstanding used in diluted earnings per share 54,555,672 42,318,042 51,151,462 40,625,441 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases | |
Summary of lease income | The following table includes information regarding the Company’s operating leases for which it is the lessor, for the three and nine months ended September 30, 2020 and September 30, 2019. (presented in thousands) Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Total lease payments $ 65,762 $ 49,463 $ 184,144 $ 140,071 Less: Variable lease payments 6,897 4,868 19,981 15,168 Total Non-Variable Lease Payments $ 58,865 $ 44,595 $ 164,163 $ 124,903 |
Summary of lease income to be received | 2020 Year Ending December 31, (remaining) 2021 2022 2023 2024 Thereafter Total Future Lease Payments $ 63,293 $ 253,841 $ 253,056 $ 248,988 $ 239,171 $ 1,540,746 $ 2,599,095 |
Summary of lease costs | The following tables include information on the Company’s land leases for which it is the lessee, for the three and nine months ended September 30, 2020 and September 30, 2019. (presented in thousands) Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Operating lease costs $ 325 $ 354 $ 973 $ 925 Variable lease costs — — — — Total Non-Variable Lease Costs $ 325 $ 354 $ 973 $ 925 Supplemental Disclosure Right-of-use assets obtained in exchange for new operating lease liabilities $ — $ — $ — $ 19,672 Right-of-use assets removed in exchange for real property — (3,025) — (3,025) Right-of-use assets net change $ — $ (3,025) $ — $ 16,647 Operating cash outflows on operating leases $ 267 $ 297 $ 802 $ 805 Weighted-average remaining lease term - operating leases (years) 38.2 38.3 38.2 38.3 Weighted-average discount rate - operating leases 4.13 % 4.13 % 4.13 % 4.13 % |
Summary of maturity analysis of lease liabilities | Maturity Analysis of Lease Liabilities ( presented in thousands 2020 Year Ending December 31, (remaining) 2021 2022 2023 2024 Thereafter Total Lease payments $ 267 $ 1,015 $ 789 $ 789 $ 789 $ 30,584 $ 34,233 Imputed interest (164) (645) (634) (628) (621) (15,634) (18,326) Total Lease Liabilities $ 103 $ 370 $ 155 $ 161 $ 168 $ 14,950 $ 15,907 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Schedule of Maturities of Long-term Debt [Table Text Block] | The following table presents scheduled principal payments related to the Company’s debt as of September 30, 2020 (in thousands): Scheduled Balloon Principal Payment Total Remainder of 2020 $ 240 $ — $ 240 2021 998 — 998 2022 1,060 — 1,060 2023 1,069 67,656 68,725 2024 (1) 963 120,000 120,963 Thereafter 1,656 960,000 961,656 Total scheduled principal payments 5,986 1,147,656 1,153,642 Original issue discount — (252) (252) Total $ 5,986 $ 1,147,404 $ 1,153,390 (1) The Revolving Credit Facility matures in January 2024, with options to extend the maturity as described under Senior Unsecured Revolving Credit Facility |
Mortgages [Member] | |
Schedule of Long-term Debt Instruments [Table Text Block] | September 30, 2020 December 31, 2019 (not presented in thousands) (in thousands) Note payable in monthly installments of $23,004, including interest at 6.24% per annum, extinguished in January 2020 $ — $ 2,775 Note payable in monthly installments of interest only at 3.60% per annum, with a balloon payment due January 2023 23,640 23,640 Note payable in monthly installments of $35,673, including interest at 5.01% per annum, with a balloon payment of $4,034,627 due September 2023 4,639 4,779 Note payable in monthly installments of $91,675 including interest at 6.27% per annum, with a final monthly payment due July 2026 5,363 5,921 Total principal 33,642 37,115 Unamortized debt issuance costs (338) (417) Total $ 33,304 $ 36,698 |
Unsecured Debt [Member] | |
Schedule of Long-term Debt Instruments [Table Text Block] | The following table presents the unsecured term loans balance net of unamortized debt issuance costs as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 2023 Term Loan $ 40,000 $ 40,000 2024 Term Loan Facilities 100,000 100,000 2026 Term Loan 100,000 100,000 Total Principal 240,000 240,000 Unamortized debt issuance costs (2,235) (2,597) Total $ 237,765 $ 237,403 |
Senior Unsecured Notes [Member] | |
Schedule of Long-term Debt Instruments [Table Text Block] | The following table presents the senior unsecured notes balance net of unamortized debt issuance costs and original issue discount as of September 30, 2020, and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 2025 Senior Unsecured Notes $ 50,000 $ 50,000 2027 Senior Unsecured Notes 50,000 50,000 2028 Senior Unsecured Notes 60,000 60,000 2029 Senior Unsecured Notes 100,000 100,000 2030 Senior Unsecured Notes 125,000 125,000 2030 Senior Unsecured Public Notes 350,000 — 2031 Senior Unsecured Notes 125,000 125,000 Total Principal 860,000 510,000 Unamortized debt issuance costs and original issue discount (4,768) (802) Total $ 855,232 $ 509,198 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activity | |
Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block] | The Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (in thousands, except number of instruments): Number of Instruments Notional 1 September 30, December 31, September 30, December 31, Interest Rate Derivatives 2020 2019 2020 2019 Interest rate swap 14 15 $ 405,000 $ 440,000 1 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | The table below presents the estimated fair value of the Company’s interest rate swaps, as well as their classification in the Condensed Consolidated Balance Sheets (in thousands). Asset Derivatives September 30, 2020 December 31, 2019 Fair Value Fair Value Derivatives designated as cash flow hedges: Other Assets, net $ 283 $ 572 Liability Derivatives September 30, 2020 December 31, 2019 Fair Value Fair Value Derivatives designated as cash flow hedges: Accounts Payable, Accrued Expenses, and Other Liabilities $ 18,369 $ 7,943 |
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The table below displays the effect of the Company’s derivative financial instruments in the Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2020 and 2019 (in thousands). Location of Derivatives in Income/(Loss) Cash Flow Reclassified from Amount of Income/(Loss) Hedging Amount of Income/(Loss) Recognized Accumulated OCI Reclassified from Relationships in OCI on Derivative into Income Accumulated OCI into Expense Three Months Ended September 30, 2020 2019 2020 2019 Interest rate swaps $ (70) $ (7,418) Interest Expense $ 1,490 $ 22 Nine Months Ended September 30, 2020 2019 2020 2019 Interest rate swaps $ (36,739) $ (14,617) Interest Expense $ 2,856 $ 366 |
Offsetting Assets And Liabilities [Table Text Block] | The table below presents a gross presentation of the effects of offsetting and a net presentation of the Company’s derivatives as of September 30, 2020 and December 31, 2019. The gross amounts of derivative assets or liabilities can be reconciled to the Tabular Disclosure of Fair Values of Derivative Instruments above, which also provides the location that derivative assets and liabilities are presented on the Condensed Consolidated Balance Sheets (in thousands): Offsetting of Derivative Assets as of September 30, 2020 Gross Amounts Net Amounts of Offset in the Assets presented Gross Amounts Not Offset in the Gross Amounts Statement of in the Statement Statement of Financial Position of Recognized Financial of Financial Financial Cash Collateral Assets Position Position Instruments Received Net Amount Derivatives $ 283 $ — $ 283 $ (155) $ — $ 128 Offsetting of Derivative Liabilities as of September 30, 2020 Net Amounts of Gross Amounts Liabilities Offset in the presented in the Gross Amounts Not Offset in the Gross Amounts Statement of Statement of Statement of Financial Position of Recognized Financial Financial Financial Cash Collateral Liabilities Position Position Instruments Posted Net Amount Derivatives $ 18,369 $ — $ 18,369 $ (155) $ — $ 18,214 Offsetting of Derivative Assets as of December 31, 2019 Gross Amounts Net Amounts of Offset in the Assets presented Gross Amounts Not Offset in the Gross Amounts Statement of in the Statement Statement of Financial Position of Recognized Financial of Financial Financial Cash Collateral Assets Position Position Instruments Received Net Amount Derivatives $ 572 $ — $ 572 $ (572) $ — $ — Offsetting of Derivative Liabilities as of December 31, 2019 Net Amounts of Gross Amounts Liabilities Offset in the presented in the Gross Amounts Not Offset in the Gross Amounts Statement of Statement of Statement of Financial Position of Recognized Financial Financial Financial Cash Collateral Liabilities Position Position Instruments Posted Net Amount Derivatives $ 7,943 $ — $ 7,943 $ (572) $ — $ 7,371 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Measurements | |
Schedule of Derivative Liabilities at Fair Value [Table Text Block] | The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019 (in thousands): Total Fair Value Level 2 September 30, 2020 Derivative assets - interest rate swaps $ 283 $ 283 Derivative liabilities - interest rate swaps $ 18,369 $ 18,369 December 31, 2019 Derivative assets - interest rate swaps $ 572 $ 572 Derivative liabilities - interest rate swaps $ 7,943 $ 7,943 |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity Incentive Plan | |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | Restricted stock activity is summarized as follows: Shares Weighted Average Outstanding Grant Date (in thousands) Fair Value Unvested restricted stock at December 31, 2019 194 $ 50.71 Restricted stock granted 52 $ 78.43 Restricted stock vested (62) $ 45.45 Restricted stock forfeited (3) $ 62.73 Unvested restricted stock at September 30, 2020 181 $ 60.26 |
Schedule of Nonvested Performance-based Units Activity [Table Text Block] | Target Number of Awards Weighted Average (in thousands) Grant Date Performance units and shares at December 31, 2019 61 $ 56.57 Performance units granted 26 $ 79.62 Performance units and shares at September 30, 2020 87 $ 63.35 |
Organization (Details)
Organization (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Agree Realty Corporation [Member] | General Partner [Member] | ||
Nature of Operations [Line Items] | ||
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Ownership Interest | 99.40% | 99.20% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Real Estate Properties (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Summary of Significant Accounting Policies | |
Land | $ 2,269 |
Buildings | 2,315 |
Real Estate Held-for-sale, gross | 4,584 |
Accumulated depreciation and amortization | (834) |
Total Real Estate Held for Sale, net | $ 3,750 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Amortization of Deferred Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
Amortization of Deferred Charges | $ 8,372 | $ 6,235 | $ 23,523 | $ 17,180 |
Lease intangibles (in-place) | ||||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
Amortization of Deferred Charges | 4,408 | 2,854 | 11,971 | 7,298 |
Lease intangibles (above-market) | ||||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
Amortization of Deferred Charges | 5,338 | 4,562 | 15,607 | 13,297 |
Lease intangibles (below-market) | ||||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
Amortization of Below Market Lease | $ (1,374) | $ (1,181) | $ (4,055) | $ (3,415) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Future Amortization of Deferred Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Year Ending December 31, | ||
2020 (Remaining) | $ 9,754 | |
2021 | 36,627 | |
2022 | 35,503 | |
2023 | 34,429 | |
2024 | 32,040 | |
Thereafter | 238,487 | |
Total | 386,840 | |
Total | (35,533) | $ (26,668) |
Lease intangibles (in-place) | ||
Year Ending December 31, | ||
2020 (Remaining) | 5,529 | |
2021 | 19,342 | |
2022 | 18,242 | |
2023 | 17,246 | |
2024 | 15,812 | |
Thereafter | 88,250 | |
Total | 164,421 | |
Lease intangibles (above-market) | ||
Year Ending December 31, | ||
2020 (Remaining) | 5,876 | |
2021 | 23,317 | |
2022 | 22,370 | |
2023 | 21,460 | |
2024 | 19,791 | |
Thereafter | 165,138 | |
Total | 257,952 | |
Lease intangibles (below-market) | ||
Year Ending December 31, | ||
2020 (Remaining) | (1,651) | |
2021 | (6,032) | |
2022 | (5,109) | |
2023 | (4,277) | |
2024 | (3,563) | |
Thereafter | (14,901) | |
Total | $ (35,533) |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Earnings per Share (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share Basic And Diluted [Line Items] | ||||
Net income attributable to Agree Realty Corporation | $ 21,280 | $ 20,611 | $ 67,766 | $ 57,522 |
Less: Income attributable to unvested restricted shares | (69) | (98) | (233) | (283) |
Net income used in basic and diluted earnings per share | $ 21,211 | $ 20,513 | $ 67,533 | $ 57,239 |
Weighted average number of common shares outstanding | 53,902,541 | 42,034,685 | 50,818,154 | 40,194,931 |
Less: Unvested restricted stock | (180,585) | (202,228) | (180,585) | (202,228) |
Weighted average number of common shares outstanding used in basic earnings per share | 53,721,956 | 41,832,457 | 50,637,569 | 39,992,703 |
Weighted average number of common shares outstanding used in basic earnings per share | 53,721,956 | 41,832,457 | 50,637,569 | 39,992,703 |
Effect of dilutive securities: share-based compensation | 85,380 | 109,027 | 87,111 | 102,845 |
Weighted average number of common shares outstanding used in diluted earnings per share | 54,555,672 | 42,318,042 | 51,151,462 | 40,625,441 |
Restricted Stock [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,139 | 2,355 | ||
Performance Units [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 6,390 | 5,887 | ||
September 2018 Forward Sales | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Effect of dilutive securities: forward equity offering | 359,713 | |||
April 2019 Forward Equity | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Effect of dilutive securities: forward equity offering | 376,558 | 170,180 | ||
April 2020 Forward Equity | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Effect of dilutive securities: forward equity offering | 725,821 | 0 | 390,795 | 0 |
2019 ATM Forward Equity | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Effect of dilutive securities: forward equity offering | 19,053 | |||
2019 ATM Forward Equity | Forward Sale Agreement [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 22,820 | |||
2020 ATM Forward Equity | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Effect of dilutive securities: forward equity offering | 22,515 | 16,934 | ||
2020 ATM Forward Equity | Forward Sale Agreement [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 4,510 | 34,899 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020USD ($)tenantshares | Jun. 30, 2020 | Sep. 30, 2020USD ($)segmenttenantshares | Dec. 31, 2019USD ($) | Jan. 01, 2019USD ($) | |
Accounting Policies [Line Items] | |||||
Limited Partners' Capital Account, Units Outstanding | shares | 55,718,144 | 55,718,144 | |||
Deferral Of Actual Rent, Percentage | 2 | 4 | |||
Percentage Of Rent Collection | 97 | 92 | |||
Cash in Excess of FDIC Insured Amounts | $ 15,500 | $ 15,500 | $ 40,900 | ||
Straight-line rent receivables | $ 27,600 | $ 27,600 | 23,000 | ||
Lessor, Operating Lease, Assumptions and Judgments, Number Of Tenants, Collections No Longer Probable | tenant | 5 | 5 | |||
Number of Reportable Segments | segment | 1 | ||||
Right of use assets | $ 40,000 | $ 40,000 | |||
Lease liabilities | 15,907 | 15,907 | |||
ASU 2016-02 [Member] | Revision of Prior Period, Change in Accounting Principle, Adjustment [Member] | |||||
Accounting Policies [Line Items] | |||||
Right of use assets | $ 7,500 | ||||
Lease liabilities | $ 7,500 | ||||
Unbilled Revenues [Member] | |||||
Accounting Policies [Line Items] | |||||
Accounts Receivable, Gross | $ 3,100 | $ 3,100 | $ 2,600 | ||
Building [Member] | |||||
Accounting Policies [Line Items] | |||||
Property, Plant and Equipment, Useful Life | 40 years | ||||
Building Improvements [Member] | Minimum [Member] | |||||
Accounting Policies [Line Items] | |||||
Property, Plant and Equipment, Useful Life | 10 years | ||||
Building Improvements [Member] | Maximum [Member] | |||||
Accounting Policies [Line Items] | |||||
Property, Plant and Equipment, Useful Life | 20 years | ||||
Agree Realty Corporation [Member] | General Partner [Member] | |||||
Accounting Policies [Line Items] | |||||
Percentage of Operating Partnership Owned | 99.40% | 99.20% | |||
Agree Realty Corporation [Member] | Third party [Member] | |||||
Accounting Policies [Line Items] | |||||
Non controlling interest | 0.60% | 0.80% |
Leases - Tenant Leases (Details
Leases - Tenant Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases | ||||
Percentage of portfolio leased | 99.80% | |||
Weighted average remaining lease term | 9 years 9 months 18 days | 9 years 9 months 18 days | ||
Annualized base rent derived from tenants (as a percent) | 62.20% | |||
Option to extend lease | true | |||
Lease, practical expedients | true | |||
Lease Income | ||||
Total lease payments | $ 65,762 | $ 49,463 | $ 184,144 | $ 140,071 |
Less: Variable lease payments | 6,897 | 4,868 | 19,981 | 15,168 |
Total Non-Variable Lease Payments | 58,865 | $ 44,595 | 164,163 | $ 124,903 |
Lessor, Operating Lease, Payments, Fiscal Year Maturity [Abstract] | ||||
2020 (remaining) | 63,293 | 63,293 | ||
2021 | 253,841 | 253,841 | ||
2022 | 253,056 | 253,056 | ||
2023 | 248,988 | 248,988 | ||
2024 | 239,171 | 239,171 | ||
Thereafter | 1,540,746 | 1,540,746 | ||
Lease payments receivable | $ 2,599,095 | $ 2,599,095 |
Leases - Deferred Revenue (Deta
Leases - Deferred Revenue (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Leases | ||
Deferred revenue | $ 3.3 | $ 4.1 |
Leases - Land Lease Obligations
Leases - Land Lease Obligations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Lease costs | ||||
Land lease expense | $ 325 | $ 354 | $ 977 | $ 922 |
Finance lease right-of-use asset amortization and interest expense | 0 | |||
Operating lease costs | 325 | 354 | 973 | 925 |
Total Non-Variable Lease Costs | 325 | 354 | 973 | 925 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 19,672 | |||
Right-of-use assets removed in exchange for real property | (3,025) | (3,025) | ||
Right-of-use assets net change | (3,025) | 16,647 | ||
Operating cash outflows from operating leases | $ 267 | $ 297 | $ 802 | $ 805 |
Weighted-average remaining lease term - operating leases (years) | 38 years 2 months 12 days | 38 years 3 months 18 days | 38 years 2 months 12 days | 38 years 3 months 18 days |
Weighted-average discount rate - operating leases | 4.13% | 4.13% | 4.13% | 4.13% |
Maturity Analysis of Lease Liabilities | ||||
Lease payments 2020 (remaining) | $ 267 | $ 267 | ||
Lease payments 2021 | 1,015 | 1,015 | ||
Lease payments 2022 | 789 | 789 | ||
Lease payments 2023 | 789 | 789 | ||
Lease payments 2024 | 789 | 789 | ||
Lease payment Thereafter | 30,584 | 30,584 | ||
Lease payments Total | 34,233 | 34,233 | ||
Imputed interest 2020 (remaining) | (164) | (164) | ||
Imputed interest 2021 | (645) | (645) | ||
Imputed interest 2022 | (634) | (634) | ||
Imputed interest 2023 | (628) | (628) | ||
Imputed interest 2024 | (621) | (621) | ||
Imputed interest Thereafter | (15,634) | (15,634) | ||
Imputed interest Total | (18,326) | (18,326) | ||
Total Lease Liabilities 2020 (remaining) | 103 | 103 | ||
Total Lease Liabilities 2021 | 370 | 370 | ||
Total Lease Liabilities 2022 | 155 | 155 | ||
Total Lease Liabilities 2023 | 161 | 161 | ||
Total Lease Liabilities 2024 | 168 | 168 | ||
Total Lease Liabilities Thereafter | 14,950 | 14,950 | ||
Total Lease Liabilities | $ 15,907 | $ 15,907 |
Real Estate Investments (Detail
Real Estate Investments (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($)ft²propertyitemstate | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)ft²itempropertystate | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($)ft²state | |
Real Estate Investments | |||||
Number of Real Estate Properties | 1,027 | 1,027 | 821 | ||
Number of states | state | 45 | 45 | 46 | ||
Land Subject to Ground Leases | ft² | 21,000,000 | 21,000,000 | 14,600,000 | ||
Net Real Estate Investments | $ 3,015,606,000 | $ 3,015,606,000 | $ 2,218,592,000 | ||
Retail Net Lease Assets Purchased | 91 | 217 | |||
Payments to Acquire Property, Plant, and Equipment | $ 458,800,000 | $ 958,300,000 | |||
Number Of States Properties Located | 26 | 35 | |||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life (in year) | 11 years 6 months | 11 years 2 months 12 days | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Land | $ 248,200,000 | $ 248,200,000 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Buildings | 588,600,000 | 588,600,000 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | 97,000,000 | 97,000,000 | |||
Aggregate acquisitions of right use of asset | $ 24,500,000 | $ 24,500,000 | |||
Number of Contracts or Customers Comprising Ten Percent or More Of Company's Total Assets or Total Rent | 0 | ||||
Number Of Development And Partner Capital Solutions Projects Completed | item | 2 | 6 | |||
Number of Development and Partner Capital Solutions Projects Construction | item | 4 | ||||
Number of properties sold | property | 2 | 16 | |||
Proceeds from Sale of Real Estate | $ 3,400,000 | $ 46,000,000 | |||
Gains (Losses) on Sales of Investment Real Estate | 1,000,000 | 7,600,000 | |||
Provision for impairment | 2,868,000 | $ 0 | 3,996,000 | $ 1,609,000 | |
Impaired Real Estate Estate Fair Value | $ 4,500,000 | $ 4,500,000 |
Debt - Narrative (Details)
Debt - Narrative (Details) $ in Thousands | 9 Months Ended | ||||||||||||
Sep. 30, 2020USD ($)item | Aug. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Oct. 31, 2019USD ($) | May 31, 2019 | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Aug. 31, 2016USD ($) | Jul. 31, 2016USD ($) | May 31, 2015USD ($) | Nov. 18, 2014USD ($) | |
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Total | $ 1,153,390 | ||||||||||||
Long-term Debt, Gross | 1,153,642 | ||||||||||||
Long-term Line of Credit | 20,000 | $ 89,000 | |||||||||||
Maximum [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Reimbursement Agreement, Amount | $ 14,000 | ||||||||||||
Revolving Credit Facility [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | 20,000 | ||||||||||||
Mortgages [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Total | 33,304 | 36,698 | |||||||||||
Long-term Debt, Gross | 33,642 | $ 37,115 | |||||||||||
Debt Instrument, Collateral Amount | $ 40,100 | ||||||||||||
Long-term Debt, Weighted Average Interest Rate | 4.22% | 4.40% | |||||||||||
Unsecured Debt [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Total | $ 237,765 | $ 237,403 | |||||||||||
Long-term Debt, Gross | $ 240,000 | 240,000 | |||||||||||
Unsecured Debt [Member] | 2025 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.16% | ||||||||||||
Unsecured Debt [Member] | 2027 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.26% | ||||||||||||
Debt Instrument, Face Amount | $ 50,000 | ||||||||||||
Unsecured Debt [Member] | 2028 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.42% | ||||||||||||
Unsecured Debt [Member] | 2030 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Face Amount | $ 125,000 | ||||||||||||
Unsecured Debt [Member] | 2031 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.47% | ||||||||||||
Debt Instrument, Face Amount | $ 125,000 | ||||||||||||
Unsecured Debt [Member] | Revolving Credit and Term Loan Facility [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 600,000 | ||||||||||||
Unsecured Debt [Member] | Revolving Credit and Term Loan Facility [Member] | Revolving Credit Facility [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of Credit Facility, Maximum Borrowing Capacity, Additional Commitments Available | $ 500,000 | ||||||||||||
Credit facility extension times | item | 2 | ||||||||||||
Unsecured Debt [Member] | 2019 Term Loan [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 3.62% | ||||||||||||
Debt Instrument, Face Amount | $ 20,300 | ||||||||||||
Unsecured Debt [Member] | 2023 Term Loan [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | $ 40,000 | 40,000 | |||||||||||
Debt Instrument, Description of Variable Rate Basis | Borrowings under the 2023 Term Loan are priced at LIBOR plus 85 to 165 basis points, depending on the Company’s credit rating. The Company entered into an interest rate swap agreement to fix LIBOR at 140 basis points until maturity | ||||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 2.40% | ||||||||||||
Debt Instrument, Face Amount | $ 40,000 | ||||||||||||
Unsecured Debt [Member] | 2023 Term Loan [Member] | LIBOR [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Derivative Instrument Basis Fixed Rate | 1.40% | ||||||||||||
Unsecured Debt [Member] | 2023 Term Loan [Member] | Minimum [Member] | LIBOR [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 0.85% | ||||||||||||
Unsecured Debt [Member] | 2023 Term Loan [Member] | Maximum [Member] | LIBOR [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 1.65% | ||||||||||||
Unsecured Debt [Member] | 2024 Term Loan Facilities[Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | $ 100,000 | 100,000 | |||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 3.13% | ||||||||||||
Unsecured Debt [Member] | 2024 Term Loan Facilities[Member] | LIBOR [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Derivative Instrument Basis Fixed Rate | 2.13% | ||||||||||||
Unsecured Debt [Member] | 2024 Term Loan Facilities[Member] | Minimum [Member] | LIBOR [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 0.85% | ||||||||||||
Unsecured Debt [Member] | 2024 Term Loan Facilities[Member] | Maximum [Member] | LIBOR [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 1.65% | ||||||||||||
Unsecured Debt [Member] | 2024 Term Loan Facility One [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Description of Variable Rate Basis | Borrowings under the unsecured 2024 Term Loan Facilities bear interest at a variable LIBOR plus 85 to 165 basis points, depending on the Company’s credit rating. The Company utilized existing interest rate swap agreements to effectively fix LIBOR at 213 basis points until September 2020 for the $35 Million Term Loan and July 2021 for the $65 Million Term Loan (refer to Note 9 – Derivative Instruments and Hedging Activity). | ||||||||||||
Debt Instrument, Face Amount | 65,000 | ||||||||||||
Unsecured Debt [Member] | 2024 Term Loan Facility Two [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Face Amount | 35,000 | ||||||||||||
Unsecured Debt [Member] | 2026 Term Loan [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | $ 100,000 | 100,000 | |||||||||||
Debt Instrument, Description of Variable Rate Basis | Borrowings under the 2026 Term Loan are priced at LIBOR plus 145 to 240 basis points, depending on the Company’s credit rating. The Company entered into interest rate swap agreements to fix LIBOR at 266 basis points until maturity. | ||||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 4.26% | ||||||||||||
Debt Instrument, Face Amount | $ 100,000 | ||||||||||||
Unsecured Debt [Member] | 2026 Term Loan [Member] | LIBOR [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Derivative Instrument Basis Fixed Rate | 2.66% | ||||||||||||
Unsecured Debt [Member] | 2026 Term Loan [Member] | Minimum [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 1.45% | ||||||||||||
Unsecured Debt [Member] | 2026 Term Loan [Member] | Maximum [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 2.40% | ||||||||||||
Senior Unsecured Debt [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Total | $ 855,232 | 509,198 | |||||||||||
Long-term Debt, Gross | 860,000 | 510,000 | |||||||||||
Debt Instrument, Face Amount | 100,000 | ||||||||||||
Senior Unsecured Debt [Member] | Revolving Credit Facility [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Face Amount | 500,000 | ||||||||||||
Senior Unsecured Debt [Member] | 2025 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | 50,000 | 50,000 | |||||||||||
Debt Instrument, Face Amount | $ 50,000 | ||||||||||||
Senior Unsecured Debt [Member] | 2027 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | 50,000 | 50,000 | |||||||||||
Senior Unsecured Debt [Member] | 2028 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | 60,000 | 60,000 | |||||||||||
Debt Instrument, Face Amount | $ 60,000 | ||||||||||||
Senior Unsecured Debt [Member] | 2029 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | $ 100,000 | 100,000 | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.19% | ||||||||||||
Debt Instrument, Face Amount | $ 100,000 | ||||||||||||
Senior Unsecured Debt [Member] | 2030 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | $ 125,000 | 125,000 | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.32% | ||||||||||||
Senior Unsecured Debt [Member] | 2030 Senior Unsecured Public Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | $ 350,000 | ||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.90% | ||||||||||||
Debt Instrument, Face Amount | $ 350,000 | ||||||||||||
Senior Unsecured Debt [Member] | 2030 Senior Unsecured Public Notes [Member] | Interest rate swap | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Derivative Notional Amount, Terminated | $ 200,000 | ||||||||||||
Senior Unsecured Debt [Member] | 2030 Senior Unsecured Public Notes [Member] | Blended All-In Including Interest Rate Swap [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 3.49% | ||||||||||||
Debt Instrument, Face Amount | $ 350,000 | ||||||||||||
Senior Unsecured Debt [Member] | 2031 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | $ 125,000 | 125,000 | |||||||||||
Senior Unsecured Debt [Member] | 2031 Senior Unsecured Notes [Member] | Interest rate swap | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.41% | ||||||||||||
Debt Instrument, Face Amount | $ 100,000 | $ 100,000 | |||||||||||
Senior Unsecured Debt [Member] | 2031 Senior Unsecured Notes [Member] | Blended All-In Including Interest Rate Swap [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.42% | ||||||||||||
Debt Instrument, Face Amount | $ 125,000 | ||||||||||||
Senior Unsecured Debt [Member] | Revolving Credit and Term Loan Facility [Member] | Revolving Credit Facility [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Description of Variable Rate Basis | (i) LIBOR plus a margin that is based upon the Company’s credit rating, or (ii) the Base Rate (which is defined as the greater of the rate of interest as publicly announced from time to time by PNC Bank, National Association, as its prime rate, the Federal Funds Open Rate plus 0.50%, or the Daily Eurodollar Rate plus 1.0%) plus a margin that is based upon the Company’s credit rating. The margins for the Revolving Credit Facility range in amount from 0.775% to 1.450% for LIBOR-based loans and 0.00% to 0.45% for Base Rate loans, depending on the Company’s credit rating. The margins for the Revolving Credit Facility are subject to improvement based on the Company’s leverage ratio, provided its credit rating meets a certain threshold. | ||||||||||||
Senior Unsecured Debt [Member] | Revolving Credit and Term Loan Facility [Member] | Revolving Credit Facility [Member] | Fed Funds Effective Rate Overnight Index Swap Rate [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 0.50% | ||||||||||||
Senior Unsecured Debt [Member] | Revolving Credit and Term Loan Facility [Member] | Revolving Credit Facility [Member] | Eurodollar [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 1.00% | ||||||||||||
Senior Unsecured Debt [Member] | Revolving Credit and Term Loan Facility [Member] | Revolving Credit Facility [Member] | Minimum [Member] | LIBOR [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 0.775% | ||||||||||||
Senior Unsecured Debt [Member] | Revolving Credit and Term Loan Facility [Member] | Revolving Credit Facility [Member] | Minimum [Member] | Base Rate [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 0.00% | ||||||||||||
Senior Unsecured Debt [Member] | Revolving Credit and Term Loan Facility [Member] | Revolving Credit Facility [Member] | Maximum [Member] | LIBOR [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 1.45% | ||||||||||||
Senior Unsecured Debt [Member] | Revolving Credit and Term Loan Facility [Member] | Revolving Credit Facility [Member] | Maximum [Member] | Base Rate [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 0.45% | ||||||||||||
Senior Unsecured Debt [Member] | 2024 Term Loan Facility One [Member] | Revolving Credit Facility [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Face Amount | 65,000 | ||||||||||||
Long-term Line of Credit | $ 20 | ||||||||||||
Senior Unsecured Debt [Member] | 2024 Term Loan Facility Two [Member] | Revolving Credit Facility [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Face Amount | $ 35,000 |
Debt - Mortgages Payable (Detai
Debt - Mortgages Payable (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||
Total | $ 1,153,642,000 | |
Long-term Debt, Total | 1,153,390,000 | |
Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Total | 33,642,000 | $ 37,115,000 |
Unamortized debt issuance costs | (338,000) | (417,000) |
Long-term Debt, Total | 33,304,000 | 36,698,000 |
Notes Payable Due January 2020 6.24 Percent [Member] | Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Total | 2,775,000 | |
Debt Instrument, Periodic Payment, Principal | $ 23,004 | |
Debt Instrument, Interest Rate, Stated Percentage | 6.24% | |
Notes Payable Due January 2023 3.60 Percent [Member] | Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Total | $ 23,640,000 | 23,640,000 |
Debt Instrument, Interest Rate, Stated Percentage | 3.60% | |
Notes Payable Due September 2023 5.01 Percent [Member] | Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Total | $ 4,639,000 | 4,779,000 |
Debt Instrument, Periodic Payment, Principal | 35,673 | |
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid | $ 4,034,627 | |
Debt Instrument, Interest Rate, Stated Percentage | 5.01% | |
Notes Payable Due July 2026 6.27 Percent [Member] | Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Total | $ 5,363,000 | $ 5,921,000 |
Debt Instrument, Periodic Payment, Principal | $ 91,675 | |
Debt Instrument, Interest Rate, Stated Percentage | 6.27% |
Debt - Unsecured Term Loan Faci
Debt - Unsecured Term Loan Facilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Total Principal | $ 1,153,642 | |
Long-term Debt, Total | 1,153,390 | |
Unsecured Debt [Member] | ||
Total Principal | 240,000 | $ 240,000 |
Unamortized debt issuance costs | (2,235) | (2,597) |
Long-term Debt, Total | 237,765 | 237,403 |
Unsecured Debt [Member] | 2023 Term Loan [Member] | ||
Total Principal | 40,000 | 40,000 |
Unsecured Debt [Member] | 2024 Term Loan Facilities[Member] | ||
Total Principal | 100,000 | 100,000 |
Unsecured Debt [Member] | 2026 Term Loan [Member] | ||
Total Principal | $ 100,000 | $ 100,000 |
Debt - Senior Unsecured Notes (
Debt - Senior Unsecured Notes (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Total Principal | $ 1,153,642 | |
Long-term Debt, Total | 1,153,390 | |
Senior Unsecured Debt [Member] | ||
Total Principal | 860,000 | $ 510,000 |
Unamortized debt issuance costs and original issue discount | (4,768) | (802) |
Long-term Debt, Total | 855,232 | 509,198 |
Senior Unsecured Debt [Member] | 2025 Senior Unsecured Notes [Member] | ||
Total Principal | 50,000 | 50,000 |
Senior Unsecured Debt [Member] | 2027 Senior Unsecured Notes [Member] | ||
Total Principal | 50,000 | 50,000 |
Senior Unsecured Debt [Member] | 2028 Senior Unsecured Notes [Member] | ||
Total Principal | 60,000 | 60,000 |
Senior Unsecured Debt [Member] | 2029 Senior Unsecured Notes [Member] | ||
Total Principal | 100,000 | 100,000 |
Senior Unsecured Debt [Member] | 2030 Senior Unsecured Notes [Member] | ||
Total Principal | 125,000 | 125,000 |
Senior Unsecured Debt [Member] | 2030 Senior Unsecured Public Notes [Member] | ||
Total Principal | 350,000 | |
Senior Unsecured Debt [Member] | 2031 Senior Unsecured Notes [Member] | ||
Total Principal | $ 125,000 | $ 125,000 |
Debt - Debt Maturities (Details
Debt - Debt Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Long Term Debt Maturities Repayments Of Principal Line Items | ||
Remainder of 2020 | $ 240 | |
2021 | 998 | |
2022 | 1,060 | |
2023 | 68,725 | |
2024 | 120,963 | |
Thereafter | 961,656 | |
Total scheduled principal payments | 1,153,642 | |
Original issue discount | (252) | |
Total | 1,153,390 | |
Long-term Line of Credit | 20,000 | $ 89,000 |
Senior Unsecured Debt [Member] | ||
Long Term Debt Maturities Repayments Of Principal Line Items | ||
Total scheduled principal payments | 860,000 | 510,000 |
Total | 855,232 | $ 509,198 |
Revolving Credit Facility [Member] | ||
Long Term Debt Maturities Repayments Of Principal Line Items | ||
Total scheduled principal payments | 20,000 | |
Revolving Credit Facility [Member] | 2024 Term Loan Facility One [Member] | Senior Unsecured Debt [Member] | ||
Long Term Debt Maturities Repayments Of Principal Line Items | ||
Long-term Line of Credit | 20 | |
Scheduled Principal [Member] | ||
Long Term Debt Maturities Repayments Of Principal Line Items | ||
Remainder of 2020 | 240 | |
2021 | 998 | |
2022 | 1,060 | |
2023 | 1,069 | |
2024 | 963 | |
Thereafter | 1,656 | |
Total scheduled principal payments | 5,986 | |
Total | 5,986 | |
Debt Instrument Balloon Payment [Member] | ||
Long Term Debt Maturities Repayments Of Principal Line Items | ||
Remainder of 2020 | 0 | |
2021 | 0 | |
2022 | 0 | |
2023 | 67,656 | |
2024 | 120,000 | |
Thereafter | 960,000 | |
Total scheduled principal payments | 1,147,656 | |
Original issue discount | (252) | |
Total | $ 1,147,404 |
Common Stock (Details)
Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 30, 2019 | Apr. 30, 2020 | Sep. 30, 2018 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Jul. 31, 2019 | Apr. 30, 2019 | May 31, 2018 |
Class of Stock [Line Items] | ||||||||||||||||
Common Stock, Shares Authorized | 90,000,000 | 90,000,000 | 90,000,000 | 90,000,000 | ||||||||||||
Proceeds From Issuance Of Common Stock | $ 629,586 | $ 276,960 | ||||||||||||||
Common Stock [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Common Stock, Shares Authorized | 2,875,000 | |||||||||||||||
Stock Issued During Period, Shares, New Issues | 2,875,000 | 1,515,000 | 6,851,695 | 1,400,251 | 444,251 | 3,512,500 | 874,268 | |||||||||
Proceeds From Issuance Of Common Stock | $ 170,400 | |||||||||||||||
Common Stock [Member] | Forward Sale Agreement [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Common Stock, Shares Authorized | 6,166,666 | 3,500,000 | 3,162,500 | |||||||||||||
Stock Issued During Period, Shares, New Issues | 3,500,000 | 1,515,000 | 3,162,500 | |||||||||||||
Proceeds From Issuance Of Common Stock | $ 195,800 | $ 186,000 | $ 88,000 | |||||||||||||
At-Market Equity Program [Member] | Common Stock [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Forward Contract Indexed to Issuer's Equity, Shares | 3,169,754 | |||||||||||||||
Stock Issued During Period, Shares, New Issues | 886,768 | |||||||||||||||
Proceeds From Issuance Of Common Stock | $ 58,500 | |||||||||||||||
Value Of Equity Instruments To Be Issued | 0 | 0 | $ 250,000 | |||||||||||||
At-Market Equity Program Two [Member] | Common Stock [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Forward Contract Indexed to Issuer's Equity, Shares | 2,003,118 | |||||||||||||||
Stock Issued During Period, Shares, New Issues | 444,228 | |||||||||||||||
Proceeds From Issuance Of Common Stock | $ 32,600 | 359,500 | ||||||||||||||
Value Of Equity Instruments To Be Issued | $ 400,000 | |||||||||||||||
Common stock Average Price | $ 74.30 | |||||||||||||||
At-Market Equity Program Three [Member] | Common Stock [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Value Of Equity Instruments To Be Issued | $ 0 | $ 0 | ||||||||||||||
At-Market Equity Program Four [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Value Of Equity Instruments To Be Issued | $ 400,000 | |||||||||||||||
At-Market Equity Program Four [Member] | Common Stock [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Forward Contract Indexed to Issuer's Equity, Shares | 1,832,846 | |||||||||||||||
Forward Contract Indexed to Issuer's Equity, Settlement Alternatives, Shares, at Fair Value | 1,628,772 | 1,628,772 | ||||||||||||||
Forward Contract Indexed to Issuer's Equity, Settlement Alternatives, Cash, at Fair Value | $ 278,000 | $ 278,000 | ||||||||||||||
Stock Issued During Period, Shares, New Issues | 204,074 | |||||||||||||||
Proceeds From Issuance Of Common Stock | $ 12,500 | |||||||||||||||
Over-Allotment Option [Member] | Common Stock [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Common Stock, Shares Authorized | 375,000 | |||||||||||||||
Over-Allotment Option [Member] | Common Stock [Member] | Forward Sale Agreement [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Common Stock, Shares Authorized | 412,500 |
Dividends and Distribution Pa_2
Dividends and Distribution Payable (Details) | Sep. 09, 2020$ / shares |
Dividends and Distribution Payable | |
Cash dividends declared per common share (in dollars per share) | $ 0.60 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2018 | |
Income Taxes | |||||
Deferred Tax Liabilities, Gross | $ 475,000 | ||||
Income tax (expense) benefit | $ (306,000) | $ (184,000) | $ (826,000) | $ (210,000) |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activity (Details) - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Aug. 31, 2020 | Oct. 31, 2019 | May 31, 2019 | Dec. 31, 2018 | Sep. 30, 2017 | Jul. 31, 2014 | Sep. 30, 2020 | Dec. 31, 2019 | Feb. 29, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimated Net Amount to be Transferred | $ (6.7) | ||||||||||
Derivative, Net Liability Position, Aggregate Fair Value | $ 18.8 | ||||||||||
Interest Rate Swap Agreement, in March 2019 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 100 | ||||||||||
Realized gain (loss) on settlement of interest rate swaps | $ 0.8 | ||||||||||
Interest Rate Swap Agreement, in June 2019 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 100 | ||||||||||
Realized gain (loss) on settlement of interest rate swaps | $ (16.1) | ||||||||||
Interest Rate Swap Agreement, Sixty-Five Million in October 2019 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 65 | ||||||||||
Description of Interest Rate Cash Flow Hedge Activities | the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.4275% | ||||||||||
Fixed interest rate | 1.4275% | ||||||||||
Derivative, Amount of Hedged Item | $ 65 | ||||||||||
Derivative, Inception Date | Jul. 12, 2021 | ||||||||||
Derivative, Maturity Date | Jan. 12, 2024 | ||||||||||
Fair Value, Net Asset (Liability) | $ (2) | ||||||||||
Interest Rate Swap Agreement, Thirty-Five Million in October 2019 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 35 | ||||||||||
Description of Interest Rate Cash Flow Hedge Activities | the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.4265% | ||||||||||
Fixed interest rate | 1.4265% | ||||||||||
Derivative, Amount of Hedged Item | $ 35 | ||||||||||
Derivative, Inception Date | Sep. 29, 2020 | ||||||||||
Derivative, Maturity Date | Jan. 12, 2024 | ||||||||||
Fair Value, Net Asset (Liability) | $ (1.5) | ||||||||||
Interest Rate Swap Agreement, in February 2020 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 100 | ||||||||||
Realized gain (loss) on settlement of interest rate swaps | (7.3) | ||||||||||
Interest Rate Swap Agreement, in July 2014 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 65 | ||||||||||
Description of Interest Rate Cash Flow Hedge Activities | the Company receives from the counterparty interest on the notional amount based on one month LIBOR and pays to the counterparty a fixed rate of 2.09% | ||||||||||
Fixed interest rate | 2.09% | ||||||||||
Derivative, Amount of Hedged Item | $ 65 | ||||||||||
Derivative, Inception Date | Jul. 21, 2014 | ||||||||||
Derivative, Maturity Date | Jul. 21, 2021 | ||||||||||
Fair Value, Net Asset (Liability) | (1) | ||||||||||
Interest Rate Swap Agreement, in September 2017 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 40 | ||||||||||
Description of Interest Rate Cash Flow Hedge Activities | the Company receives from the counterparty interest on the notional amount based on one month LIBOR and pays to the counterparty a fixed rate of 1.40% | ||||||||||
Fixed interest rate | 1.40% | ||||||||||
Derivative, Amount of Hedged Item | $ 40 | ||||||||||
Derivative, Inception Date | Aug. 1, 2016 | ||||||||||
Derivative, Maturity Date | Jul. 1, 2023 | ||||||||||
Fair Value, Net Asset (Liability) | (1.4) | ||||||||||
Interest Rate Swap Agreement, in December 2018 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 100 | ||||||||||
Description of Interest Rate Cash Flow Hedge Activities | the Company receives from the counterparty interest on the notional amount based on one month LIBOR and pays to the counterparty a fixed rate of 2.66% | ||||||||||
Fixed interest rate | 2.66% | ||||||||||
Derivative, Amount of Hedged Item | $ 100 | ||||||||||
Derivative, Inception Date | Dec. 27, 2018 | ||||||||||
Derivative, Maturity Date | Jan. 15, 2026 | ||||||||||
Fair Value, Net Asset (Liability) | (12.5) | ||||||||||
Agreement in August 2020 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 100 | ||||||||||
Fair Value, Net Asset (Liability) | $ 0.3 |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activity - Interest Rate Derivatives (Details) - Interest rate swap $ in Thousands | Sep. 30, 2020USD ($)DerivativeInstrument | Dec. 31, 2019USD ($)DerivativeInstrument |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Interest Rate Derivatives, Number of Instruments | DerivativeInstrument | 14 | 15 |
Interest Rate Derivatives, Notional Amount | $ | $ 405,000 | $ 440,000 |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activity - Fair Value (Details) - Interest rate swap - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Other Assets [Member] | ||
Derivatives designated as cash flow hedges | ||
Interest Rate Cash Flow Hedge Asset at Fair Value | $ 283 | $ 572 |
Accounts Payable and Accrued Liabilities And Other Liabilities [Member] | ||
Derivatives designated as cash flow hedges | ||
Interest Rate Cash Flow Hedge Liability at Fair Value | $ 18,369 | $ 7,943 |
Derivative Instruments and He_6
Derivative Instruments and Hedging Activity - Consolidated statements of operations and other comprehensive loss (Details) - Interest rate swap - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Other comprehensive income (loss) - change in fair value and settlement of interest rate swaps | $ (70) | $ (7,418) | $ (36,739) | $ (14,617) |
Interest Expense [Member] | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivative Instruments, Amount of Income/(Loss) Reclassified from Accumulated OCI into Expense (Effective Portion) | $ 1,490 | $ 22 | $ 2,856 | $ 366 |
Derivative Instruments and He_7
Derivative Instruments and Hedging Activity - Offsetting of Derivative Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Derivative Instruments and Hedging Activity | ||
Gross Amounts of Recognized Assets | $ 283 | $ 572 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Assets presented in the statement of Financial Position | 283 | 572 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | (155) | (572) |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Net Amount | 128 | |
Gross Amounts of Recognized Liabilities | 18,369 | 7,943 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Liabilities presented in the statement of Financial Position | 18,369 | 7,943 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | (155) | (572) |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Net Amount | $ 18,214 | $ 7,371 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Derivative [Line Items] | ||
Long-term Debt, Gross | $ 1,153,642 | |
Fixed rate debt | ||
Derivative [Line Items] | ||
Long-term Debt, Gross | 1,100,000 | $ 783,300 |
Value of debt | 1,300,000 | 817,700 |
Variable rate debt | ||
Derivative [Line Items] | ||
Value of debt | $ 20,000 | $ 89,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Assets and Liabilities (Details) - Interest rate swap - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 283 | $ 572 |
Derivative liabilities | 18,369 | 7,943 |
Fair Value, Inputs, Level 2 [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 283 | 572 |
Derivative liabilities | $ 18,369 | $ 7,943 |
Equity Incentive Plan (Details)
Equity Incentive Plan (Details) - USD ($) $ in Millions | Feb. 23, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | May 31, 2020 |
2020 Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Issuance of Common stock | 700,000 | |||||
Common Stock, Capital Shares Reserved for Future Issuance | 695,459 | 695,459 | ||||
Restricted Stock [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Options Granted | 52,000 | |||||
Vesting period | 5 years | |||||
Recognized share based compensation | $ 0.8 | $ 0.8 | $ 2.4 | $ 2.2 | ||
Unrecognized compensation, other than options | 8.8 | $ 8.8 | ||||
Unrecognized compensation recognition period | 3 years 4 months 24 days | |||||
Fair value inputs forfeiture rate | 0.00% | |||||
Intrinsic value of restricted shares | $ 1.6 | 1.4 | ||||
Performance Shares [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Options Granted | 26,000 | |||||
Vesting period | 3 years | |||||
Recognized share based compensation | 0.4 | $ 0.2 | $ 1.1 | $ 0.6 | ||
Unrecognized compensation, other than options | $ 3.7 | $ 3.7 | ||||
Unrecognized compensation recognition period | 3 years 7 months 6 days | |||||
Amortization period of compensation expense | 5 years | |||||
Expected term | 2 years 10 months 24 days | |||||
Expected volatility rate | 18.40% | |||||
Expected dividend yield | 2.90% | |||||
Expected risk free rate | 1.30% | 0.00% | ||||
Performance Shares [Member] | Share-based Payment Arrangement, Tranche One [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 50.00% | |||||
Performance Shares [Member] | Share-based Payment Arrangement, Tranche Two [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 50.00% | |||||
Performance Shares [Member] | Maximum [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period | 5 years |
Equity Incentive Plan - Share a
Equity Incentive Plan - Share and unit activity (Details) - $ / shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares Outstanding, Unvested restricted stock at beginning of the period | 194 | |
Shares Outstanding, Restricted stock granted | 52 | |
Shares Outstanding, Restricted stock vested | (62) | |
Shares Outstanding, Restricted stock forfeited | (3) | |
Shares Outstanding, Unvested restricted stock at end of the period | 181 | |
Weighted Average Grant Date Fair Value, Unvested restricted stock at beginning of the period (in dollars per share) | $ 50.71 | |
Weighted Average Grant Date Fair Value, Restricted stock granted (in dollars per share) | 78.43 | |
Weighted Average Grant Date Fair Value, Restricted stock vested (in dollars per share) | 45.45 | |
Weighted Average Grant Date Fair Value, Restricted stock forfeited (in dollars per share) | 62.73 | |
Weighted Average Grant Date Fair Value, Unvested restricted stock at end of the period (in dollars per share) | $ 50.71 | $ 60.26 |
Performance Shares [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares Outstanding, Unvested restricted stock at beginning of the period | 61 | |
Shares Outstanding, Restricted stock granted | 26 | |
Shares Outstanding, Unvested restricted stock at end of the period | 87 | |
Weighted Average Grant Date Fair Value, Unvested restricted stock at beginning of the period (in dollars per share) | $ 56.57 | |
Weighted Average Grant Date Fair Value, Restricted stock granted (in dollars per share) | 79.62 | |
Weighted Average Grant Date Fair Value, Unvested restricted stock at end of the period (in dollars per share) | $ 56.57 | $ 63.35 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - President And Chief Executive Officer [Member] | 1 Months Ended |
Oct. 31, 2020 | |
Subsequent Event [Line Items] | |
Agreement auto renewal period | 2 years |
Agreement non renewal period | 60 days |