Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 02, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-12928 | |
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 | |
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 | 75,174,452 | |
Entity Central Index Key | 0000917251 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Stock [Member] | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $0.0001 par value | |
Trading Symbol | ADC | |
Security Exchange Name | NYSE | |
Redeemable Preferred Stock [Member] | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Depositary Shares, each representing one-thousandth of a share of 4.25% Series A Cumulative Redeemable Preferred Stock, $0.0001 par value | |
Trading Symbol | ADCPrA | |
Security Exchange Name | NYSE |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Real Estate Investments | ||
Land | $ 1,658,905 | $ 1,559,434 |
Buildings | 3,286,755 | 3,034,391 |
Less accumulated depreciation | (253,180) | (233,862) |
Real estate investments excluding property under development | 4,692,480 | 4,359,963 |
Property under development | 39,218 | 7,148 |
Net Real Estate Investments | 4,731,698 | 4,367,111 |
Real Estate Held for Sale, net | 0 | 5,676 |
Cash and Cash Equivalents | 24,888 | 43,252 |
Cash Held in Escrows | 878 | 1,998 |
Accounts Receivable - Tenants, net | 59,411 | 53,442 |
Lease Intangibles, net of accumulated amortization of $198,936 and $180,532 at March 31, 2022 and December 31, 2021, respectively | 716,509 | 672,020 |
Other Assets, net | 105,206 | 83,407 |
Total Assets | 5,638,590 | 5,226,906 |
LIABILITIES | ||
Mortgage Notes Payable, net | 32,249 | 32,429 |
Senior Unsecured Notes, net | 1,495,650 | 1,495,200 |
Unsecured Revolving Credit Facility | 320,000 | 160,000 |
Dividends and Distributions Payable | 17,763 | 16,881 |
Accounts Payable, Accrued Expenses, and Other Liabilities | 63,476 | 70,005 |
Lease Intangibles, net of accumulated amortization of $31,184 and $29,726 at March 31, 2022 and December 31, 2021, respectively | 33,711 | 33,075 |
Total Liabilities | 1,962,849 | 1,807,590 |
EQUITY | ||
Preferred stock, $.0001 par value per share, 4,000,000 shares authorized, 7,000 shares Series A outstanding, at stated liquidation value of $25,000 per share, at March 31, 2022 and December 31, 2021 | 175,000 | 175,000 |
Common stock, $.0001 par value, 180,000,000 shares authorized, 75,174,580 and 71,285,311 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively | 8 | 7 |
Additional paid-in-capital | 3,646,770 | 3,395,549 |
Dividends in excess of net income | (162,765) | (147,366) |
Accumulated other comprehensive income (loss) | 15,060 | (5,503) |
Total Equity - Agree Realty Corporation | 3,674,073 | 3,417,687 |
Non-controlling interest | 1,668 | 1,629 |
Total Equity | 3,675,741 | 3,419,316 |
Total Liabilities and Equity | $ 5,638,590 | $ 5,226,906 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Finite-lived intangible assets, accumulated amortization (in dollars) | $ 198,936,000 | $ 180,532,000 |
Below market lease, accumulated amortization (in dollars) | $ 31,184,000 | $ 29,726,000 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 4,000,000 | 4,000,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 180,000,000 | 180,000,000 |
Common stock, shares issued | 75,174,580 | 71,285,311 |
Common stock, shares outstanding | 75,174,580 | 71,285,311 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares outstanding | 7,000 | 7,000 |
Preferred stock, liquidation preference, value per share | $ 25,000 | $ 25,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenues | ||
Rental income | $ 98,312 | $ 77,760 |
Other | 30 | 69 |
Total Revenues | 98,342 | 77,829 |
Operating Expenses | ||
Real estate taxes | 7,611 | 5,696 |
Property operating expenses | 4,477 | 3,541 |
Land lease expense | 402 | 346 |
General and administrative | 7,622 | 6,879 |
Depreciation and amortization | 28,561 | 21,489 |
Provision for impairment | 1,015 | 0 |
Total Operating Expenses | 49,688 | 37,951 |
Gain (loss) on sale of assets, net | 2,310 | 2,945 |
Gain (loss) on involuntary conversion, net | (25) | 117 |
Income from Operations | 50,939 | 42,940 |
Other (Expense) Income | ||
Interest expense, net | (13,931) | (11,653) |
Income tax (expense) benefit | (719) | (1,009) |
Net Income | 36,289 | 30,278 |
Less net income attributable to non-controlling interest | 176 | 166 |
Net income attributable to Agree Realty Corporation | 36,113 | 30,112 |
Less Series A preferred stock dividends | 1,859 | 0 |
Net Income Attributable to Common Stockholders | $ 34,254 | $ 30,112 |
Net Income Per Share Attributable to Common Stockholders | ||
Basic | $ 0.48 | $ 0.48 |
Diluted | $ 0.48 | $ 0.48 |
Other Comprehensive Income | ||
Net income | $ 36,289 | $ 30,278 |
Amortization of interest rate swaps | 82 | 500 |
Change in fair value and settlement of interest rate swaps | 20,581 | 25,146 |
Total comprehensive income (loss) | 56,952 | 55,924 |
Less comprehensive income (loss) attributable to non-controlling interest | 276 | 304 |
Comprehensive Income (Loss) Attributable to Agree Realty Corporation | $ 56,676 | $ 55,620 |
Weighted Average Number of Common Shares Outstanding - Basic | 71,228,930 | 62,828,897 |
Weighted Average Number of Common Shares Outstanding - Diluted | 71,336,103 | 62,940,360 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Thousands | Preferred Stock [Member] | 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, 2020 | $ 6 | $ 2,652,090 | $ (91,343) | $ (36,266) | $ 1,762 | $ 2,526,249 | |
Balance (in shares) at Dec. 31, 2020 | 60,021,483 | ||||||
Issuance of common stock, net of issuance costs | 258,105 | 258,105 | |||||
Issuance of common stock, net of issuance costs (in shares) | 4,028,410 | ||||||
Repurchase of common shares | (1,780) | (1,780) | |||||
Repurchase of common shares (in shares) | (27,594) | ||||||
Issuance of restricted stock under the Omnibus Incentive Plan | 298 | 298 | |||||
Issuance of restricted stock under the Omnibus Incentive Plan (in shares) | 128,066 | ||||||
Forfeiture of restricted stock | (92) | (92) | |||||
Forfeiture of restricted stock (in shares) | (4,587) | ||||||
Stock-based compensation | 1,293 | 1,293 | |||||
Dividends and distributions declared for the period | (39,906) | (215) | (40,121) | ||||
Amortization, changes in fair value and settlement of interest rate swaps | 25,506 | 140 | 25,646 | ||||
Net income | 30,112 | 166 | 30,278 | ||||
Balance at Mar. 31, 2021 | $ 6 | 2,909,914 | (101,137) | (10,760) | 1,853 | 2,799,876 | |
Balance (in shares) at Mar. 31, 2021 | 64,145,778 | ||||||
Balance at Dec. 31, 2021 | $ 175,000 | $ 7 | 3,395,549 | (147,366) | (5,503) | 1,629 | 3,419,316 |
Balance (in shares) at Dec. 31, 2021 | 7,000 | 71,285,311 | |||||
Issuance of common stock, net of issuance costs | $ 1 | 250,683 | 250,684 | ||||
Issuance of common stock, net of issuance costs (in shares) | 3,791,964 | ||||||
Repurchase of common shares | (1,745) | (1,745) | |||||
Repurchase of common shares (in shares) | (28,117) | ||||||
Issuance of stock under the Omnibus Incentive Plan | 648 | 648 | |||||
Issuance of stock under the Omnibus Incentive Plan (in shares) | 125,422 | ||||||
Stock-based compensation | 1,635 | 1,635 | |||||
Series A preferred dividends declared for the period | $ (1,859) | (1,859) | |||||
Dividends and distributions declared for the period | (49,653) | (237) | (49,890) | ||||
Amortization, changes in fair value and settlement of interest rate swaps | 20,563 | 100 | 20,663 | ||||
Net income | 1,859 | 34,254 | 176 | 36,289 | |||
Balance at Mar. 31, 2022 | $ 175,000 | $ 8 | $ 3,646,770 | $ (162,765) | $ 15,060 | $ 1,668 | $ 3,675,741 |
Balance (in shares) at Mar. 31, 2022 | 7,000 | 75,174,580 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Preferred Stock [Member] | ||
Cash dividends declared per depositary share of Series A preferred stock | $ 0.266 | |
Common Stock [Member] | ||
Cash dividends declared per common share (in dollars per share) | $ 0.681 | $ 0.621 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash Flows from Operating Activities | ||
Net income | $ 36,289 | $ 30,278 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 28,561 | 21,489 |
Amortization from above (below) market lease intangibles, net | 8,178 | 4,756 |
Amortization from financing and credit facility costs | 1,061 | 425 |
Stock-based compensation | 1,635 | 1,499 |
Provision for impairment | 1,015 | 0 |
Gain (loss) on settlement of interest rate swaps | 501 | |
(Gain) loss on sale of assets | (2,310) | (2,945) |
(Increase) decrease in accounts receivable | (5,980) | (2,932) |
(Increase) decrease in other assets | (4,708) | 6,803 |
Increase (decrease) in accounts payable, accrued expenses, and other liabilities | (2,274) | (14,079) |
Net Cash Provided by Operating Activities | 61,467 | 45,795 |
Cash Flows from Investing Activities | ||
Acquisition of real estate investments and other assets | (413,098) | (397,044) |
Development of real estate investments and other assets, net of reimbursements (including capitalized interest of $112 in 2022 and $75 in 2021) | (33,291) | 1,683 |
Payment of leasing costs | (45) | (240) |
Net proceeds from sale of assets | 7,643 | 8,422 |
Net Cash Used in Investing Activities | (438,791) | (387,179) |
Cash Flows from Financing Activities | ||
Proceeds from common stock offerings, net | 250,684 | 258,105 |
Repurchase of common shares | (1,745) | (1,780) |
Unsecured revolving credit facility borrowings (repayments), net | 160,000 | 146,000 |
Payments of mortgage notes payable | (209) | (195) |
Payment of Series A preferred dividends | (1,859) | |
Payment of common stock dividends | (48,771) | (60,957) |
Distributions to non-controlling interest | (237) | (359) |
Payments for financing costs | (23) | (16) |
Net Cash Provided by Financing Activities | 357,840 | 340,798 |
Net Increase (Decrease) in Cash and Cash Equivalents and Cash Held in Escrow | (19,484) | (586) |
Cash and cash equivalents and cash held in escrow, beginning of period | 45,250 | 7,955 |
Cash and cash equivalents and cash held in escrow, end of period | 25,766 | 7,369 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid for interest (net of amounts capitalized) | 13,367 | 15,836 |
Cash paid for income tax | 1,336 | 1,794 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||
Lease right of use assets added under new ground leases | 6,302 | |
Dividends declared and unpaid | 17,763 | |
Change in accrual of development, construction and other real estate investment costs | 411 | 7,179 |
Preferred Stock [Member] | ||
Cash Flows from Operating Activities | ||
Net income | 1,859 | |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||
Dividends declared and unpaid | 620 | |
Common Stock [Member] | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||
Dividends declared and unpaid | $ 17,143 | $ 13,350 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Statement Of Cash Flows [Abstract] | ||
Real estate inventory, capitalized interest costs | $ 112 | $ 75 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2022 | |
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”), of which Agree Realty Corporation is the sole general partner and in which it held a 99.5% common equity interest as of March 31, 2022. There is a one-for-one relationship between the limited partnership interests in the Operating Partnership (“Operating Partnership Common Units”) owned by the Company and shares of Company common stock outstanding. The Company also owns a Series A preferred equity interest in the Operating Partnership. This preferred equity interest corresponds on a one-for-one basis to the Company’s Series A Preferred Stock (see Note 6– Common and Preferred Stock The terms “Agree Realty,” the “Company,” “Management,” “we,” “our” or “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 | 3 Months Ended |
Mar. 31, 2022 | |
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 months ended March 31, 2022 may not be indicative of the results that may be expected for the year ending December 31, 2022. Amounts as of December 31, 2021 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, 2021. 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 99.5% of the Operating Partnership’s common equity as of March 31, 2022 and December 31, 2021, as well as the Series A preferred equity interest. All material intercompany accounts and transactions have been eliminated, including the Company’s Series A preferred equity interest in the Operating Partnership. At March 31, 2022 and December 31, 2021, the non-controlling interest in the Operating Partnership consisted of a 0.5% ownership interest in the Operating Partnership held by the Company’s founder and chairman. The Operating Partnership Common 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 Common Units held by others for cash based on the current trading price of its shares. Assuming the exchange of all non-controlling Operating Partnership Common Units, there would have been 75,522,199 shares of common stock outstanding at March 31, 2022. Significant Risks and Uncertainties One of the most significant risks and uncertainties continues to be the potential adverse effect of the ongoing pandemic of the novel coronavirus, or COVID-19, and its variants. The outbreak of COVID-19 has significantly, adversely impacted economic activity and has contributed to significant volatility and negative pressure in financial markets. Although the duration and severity of this pandemic are still uncertain, there is reason to believe that the success of vaccination efforts and therapeutics in the U.S. will have a positive impact on businesses, as federal, state and local restrictions are lifted. However, the virus’s variants, its surges and resurgences in the population, and challenges related to vaccine immunization are still having a very fluid and continuously evolving impact on businesses and consumers. The COVID-19 pandemic could still 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 impacting 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 which could impact our future compliance with financial covenants of our credit facility and other debt agreements; and ● weaker economic conditions which could cause us to recognize impairment in value of our tangible or intangible assets. During the quarter ended March 31, 2022, the Company collected substantially all rent payments originally contracted for in the period. However, the extent to which the COVID-19 pandemic impacts our operations and those of our tenants will still depend on future developments which are uncertain, including the scope, severity and remaining 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 not able to fully predict the impact that it ultimately will have on our 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 real estate held for sale based on specific criteria as outlined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Property, Plant & Equipment at March 31, 2022 and classified one operating property as real estate held for sale as of December 31, 2021, the assets for which are separately presented in the Condensed Consolidated Balance Sheets. Real estate held for sale consisted of the following as of March 31, 2022 and December 31, 2021 ( presented in thousands March 31, 2022 December 31, 2021 Land $ — $ 4,485 Lease intangibles - asset — 1,213 — 5,698 Accumulated depreciation and amortization, net — (22) Total Real Estate Held for Sale, net $ — $ 5,676 Subsequent to quarter-end, a property that did not qualify as held for sale as of March 31, 2022 was sold at a price of $14.0 million, which approximated its carrying value. 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 various 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 tangible and intangible assets and liabilities of an acquired property, land is valued based upon comparable market data or independent appraisals. Buildings are valued on an as-if vacant basis based on a cost approach utilizing estimates of cost and the economic age of the building or an income approach utilizing various market data. 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 adjustment to 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 to rental income. The following schedule summarizes the Company’s amortization of lease intangibles for the three months ended March 31, 2022 and 2021 ( presented in thousands Three Months Ended March 31, 2022 March 31, 2021 Lease intangibles (in-place) $ 8,795 $ 5,915 Lease intangibles (above-market) 9,636 6,401 Lease intangibles (below-market) (1,458) (1,645) Total $ 16,973 $ 10,671 The following schedule represents estimated future amortization of lease intangibles as of March 31, 2022 ( presented in thousands 2022 Year Ending December 31, (remaining) 2023 2024 2025 2026 Thereafter Total Lease intangibles (in-place) $ 29,842 $ 37,665 $ 35,021 $ 32,596 $ 30,157 $ 156,469 $ 321,750 Lease intangibles (above-market) 29,583 37,186 33,120 30,631 28,868 235,371 394,759 Lease intangibles (below-market) (4,359) (5,186) (4,516) (4,080) (3,726) (11,844) (33,711) Total $ 55,066 $ 69,665 $ 63,625 $ 59,147 $ 55,299 $ 379,996 $ 682,798 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 deposit and checking accounts. Cash held in escrows primarily relates to proposed like-kind exchange transactions pursued under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) and funds restricted through a mortgage agreement. The account balances 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 $24.0 million and $44.0 million in cash and cash equivalents and cash held in escrow as of March 31, 2022 and December 31, 2021, respectively, in excess of the FDIC insured limit. Per the requirements of ASU 2016-18 (Topic 230, Statement of Cash Flows presented in thousands March 31, 2022 December 31, 2021 Cash and cash equivalents $ 24,888 $ 43,252 Cash held in escrow 878 1,998 Total of cash and cash equivalents and cash held in escrow $ 25,766 $ 45,250 Revenue Recognition and Accounts Receivable The Company leases real estate to its tenants under long-term net leases which are accounted 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 March 31, 2022 and December 31, 2021 was $44.0 million and $40.9 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. 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 As of March 31, 2022, the Company has three tenants where collection is no longer considered probable. For these tenants, the Company is recording rental income on a cash basis and has written off any outstanding receivables, including straight-line rent receivables. Adjustments to rental revenue related to potentially uncollectible charges under these tenant leases had an immaterial impact to Rental Income and Net Income for the three months ended March 31, 2022. In addition to the tenant-specific collectability assessment performed, the Company also recognizes a general allowance, as a reduction to rental revenue, for its operating lease receivables which are not expected to be fully collectible based on the potential for settlement of arrears. As of March 31, 2022 and December 31, 2021, this allowance was $0.8 million. The Company’s leases provide for reimbursement from tenants for common area maintenance (“CAM”), insurance, real estate taxes and other operating expenses. A portion of the Company’s operating cost reimbursement revenue is estimated each period and is recognized as rental revenue in the period the recoverable costs are incurred and accrued, and the related revenue is earned. The balance of unbilled operating cost reimbursement receivable at March 31, 2022 and December 31, 2021 was $7.7 million and $9.1 million, respectively. The Company has adopted the practical expedient in FASB ASC 842, Leases “ASC 842”) pursuant to tenant leases are reflected as one line, “Rental Income,” in the Condensed Consolidated Statement of Operations and Comprehensive Income. Earnings per Share Earnings per share of common stock has been computed pursuant to the guidance in the FASB ASC Topic 260, Earnings Per Share The following is a reconciliation of the numerator and denominator used in the computation of basic and diluted net earnings per share of common stock for each of the periods presented ( presented in thousands, except for share data Three Months Ended March 31, 2022 March 31, 2021 Net income attributable to Agree Realty Corporation $ 36,113 $ 30,112 Less: Series A preferred stock dividends (1,859) — Net income attributable to common stockholders 34,254 30,112 Less: Income attributable to unvested restricted shares (110) (103) Net income used in basic and diluted earnings per share $ 34,144 $ 30,009 Weighted average number of common shares outstanding 71,471,247 63,048,905 Less: Unvested restricted stock (242,317) (220,008) Weighted average number of common shares outstanding used in basic earnings per share 71,228,930 62,828,897 Weighted average number of common shares outstanding used in basic earnings per share 71,228,930 62,828,897 Effect of dilutive securities: Share-based compensation 58,190 62,454 2020 ATM Forward Equity Offerings — 49,009 2021 ATM Forward Equity Offerings 980 — December 2021 Forward Offering 48,003 — Weighted average number of common shares outstanding used in diluted earnings per share 71,336,103 62,940,360 For the three months ended March 31, 2022, 76,623 shares of common stock related to the 2021 at-the-market (“ATM”) forward equity offerings, 4,733 shares of restricted common stock (“restricted shares”) granted in 2020 and 2021, and 1,078 performance units granted in 2022 were anti-dilutive and were not included in the computation of diluted earnings per share. For the three months ended March 31, 2021, 3,397 shares of common stock related to the 2020 ATM forward equity offerings, 664 shares of common stock related to the 2021 ATM forward equity offerings, and 6,920 shares of restricted shares 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, the Company has concluded that its forward sale agreements are not liabilities as they do not embody obligations to repurchase its 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 its shares. The Company then evaluates whether the agreements meet the derivatives and hedging guidance scope exception to be accounted for as equity instruments. The Company has 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 the Company’s own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to its 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. Equity Offering Costs Underwriting commissions and offering costs of equity offerings have been reflected as a reduction of additional paid-in-capital in our Condensed Consolidated Balance Sheets. Income Taxes The Company has 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 covered in the Condensed Consolidated Financial Statements, the Company believes it has qualified as a REIT. Accordingly, no provision has been made for federal income taxes. 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 stockholders 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. The Company regularly analyzes its various federal and state filing positions and only recognizes the income tax effect in its financial statements when certain criteria regarding uncertain income tax positions have been met. The Company believes that its 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. 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, among other things, 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. Reclassifications Certain reclassifications of prior period amounts have been made in the consolidated financial statements and footnotes in order to conform to the current presentation. 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. 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, ASC 820 Fair Value Measurement Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 2 – Valuation is based on inputs other than Level 1 inputs 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. 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 15, 2021. The adoption of this guidance on January 1, 2022 did not have a material impact the Company’s financial statements. 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. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022, the Company’s portfolio was approximately 99.6% leased and had a weighted average remaining lease term (excluding extension options) of approximately 9.1 years. A significant majority of its properties are leased to national tenants and approximately 67.8% 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 contractual lease payments for the Company’s operating leases for which it is the lessor, for the three months ended March 31, 2022 and 2021. (presented in thousands) Three Months Ended March 31, 2022 March 31, 2021 Total lease payments $ 103,362 $ 80,200 Less: Operating cost reimbursements and percentage rents 11,914 8,976 Total non-variable lease payments $ 91,448 $ 71,224 At March 31, 2022, future non-variable lease payments to be received from the Company’s operating leases for the remainder of 2022, the following four years, and thereafter are as follows ( presented in thousands 2022 Year Ending December 31, (remaining) 2023 2024 2025 2026 Thereafter Total Future non-variable lease payments $ 285,903 $ 376,785 $ 365,734 $ 353,794 $ 335,943 $ 1,859,443 $ 3,577,602 Deferred Revenue As of March 31, 2022 and December 31, 2021, there was $13.5 million 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. ASC 842 requires a lessee to recognize right of use assets and lease obligation liabilities that arise from leases, whether qualifying as operating or finance. As of March 31, 2022 and December 31, 2021, the Company had $59.5 million and $59.7 million, respectively, of right of use assets, net, recognized within Other Assets in the Condensed Consolidated Balance Sheets, while the corresponding lease obligations, net, of $24.0 million and $24.1 million, respectively, were recognized within Accounts Payable, Accrued Expenses, and Other Liabilities on the Condensed Consolidated Balance Sheets as of these dates. The Company’s land leases do not include any 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. Certain of the Company’s land leases qualify as finance leases as a result of purchase options that are reasonably certain of being exercised or automatic transfer of title to the Company at the end of the lease term. Amortization of right of use assets for operating land leases is classified as land lease expense and was $0.4 million and $0.3 million for the three months ended March 31, 2022 and 2021, respectively. There was no amortization of right of use assets for finance land leases, as the underlying leased asset (land) has an infinite life. Interest expense on finance land leases was less than $0.1 million during the three months ended March 31, 2022 and March 31, 2021. 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 months ended March 31, 2022 and 2021. (presented in thousands) Three Months Ended March 31, 2022 March 31, 2021 Operating leases: Operating cash outflows $ 298 $ 267 Weighted-average remaining lease term - operating leases (years) 33.7 36.3 Finance leases: Operating cash outflows $ 64 $ 22 Financing cash outflows $ 20 $ 34 Weighted-average remaining lease term - finance leases (years) 2.5 3.5 Supplemental Disclosure: Right-of-use assets obtained in exchange for new lease liabilities $ — $ 6,302 Right-of-use assets net change $ — $ 6,302 The weighted-average discount rate used in computing operating and finance lease obligations approximated 4%at March 31, 2022 and 2021. Maturity Analysis of Lease Liabilities for Operating Leases ( presented in thousands 2022 Year Ending December 31, (remaining) 2023 2024 2025 2026 Thereafter Total Lease payments $ 900 $ 1,197 $ 1,197 $ 1,197 $ 1,195 $ 29,851 $ 35,537 Imputed interest (546) (711) (690) (669) (647) (14,491) (17,754) Total lease liabilities $ 354 $ 486 $ 507 $ 528 $ 548 $ 15,360 $ 17,783 Maturity Analysis of Lease Liabilities for Finance Leases ( presented in thousands 2022 Year Ending December 31, (remaining) 2023 2024 2025 2026 Thereafter Total Lease payments $ 252 $ 336 $ 6,252 $ — $ — $ — $ 6,840 Imputed interest (191) (252) (207) — — — (650) Total lease liabilities $ 61 $ 84 $ 6,045 $ — $ — $ — $ 6,190 |
Real Estate Investments
Real Estate Investments | 3 Months Ended |
Mar. 31, 2022 | |
Real Estate Investments | |
Real Estate Investments | Note 4 – Real Estate Investments Real Estate Portfolio As of March 31, 2022, the Company owned 1,510 properties, with a total gross leasable area (“GLA”) of approximately 31.0 million square feet. Net Real Estate Investments totaled $4.7 billion as of March 31, 2022. As of December 31, 2021, the Company owned 1,404 properties, with a total GLA of approximately 29.1 million square feet. Net Real Estate Investments totaled $4.4 billion as of December 31, 2021. Acquisitions During the three months ended March 31, 2022, the Company purchased 106 retail net lease assets for approximately $409.8 million, which includes acquisition and closing costs. These properties are located in 32 states and are leased for a weighted average lease term of approximately 9.2 years. The aggregate acquisitions for the three months ended March 31, 2022 were allocated $99.8 million to land, $249.2 million to buildings and improvements, and $60.8 million to lease intangibles. 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 three months of 2022 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 March 31, 2022. Developments During the three months ended March 31, 2022, the Company commenced 15 development or Partner Capital Solutions projects. At March 31, 2022, the Company had 17 development or Partner Capital Solutions projects under construction. Dispositions During the three months ended March 31, 2022, the Company sold one property, which was classified as held for sale as of December 31, 2021, for net proceeds of $7.6 million and recorded a net gain of $2.3 million. Provisions for Impairment As a result of the Company’s review of real estate investments, it recognized a $1.0 million provision for impairment for the three months ended March 31, 2022. There was no impairment recognized during the three months ended March 31, 2021. The estimated fair value of the impaired real estate assets at their time of impairment during 2022 was $1.8 million. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2022 | |
Debt | |
Debt | Note 5 – Debt As of March 31, 2022, the Company had total gross indebtedness of $1.86 billion, including (i) $32.4 million of mortgage notes payable; (ii) $1.51 billion of senior unsecured notes; and (iii) $320.0 million of borrowings outstanding under the Revolving Credit Facility (defined below) as of March 31, 2022. Mortgage Notes Payable As of March 31, 2022, the Company had total gross mortgage indebtedness of $32.4 million, which was collateralized by related real estate and tenants’ leases with an aggregate net book value of $38.7 million. The weighted average interest rate on the Company’s mortgage notes payable was 4.04% as of March 31, 2022 and 4.16% as of December 31, 2021. Mortgage notes payable consisted of the following ( presented in thousands March 31, 2022 December 31, 2021 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 interest only at 5.01% per annum, with a balloon payment due September 2023 4,622 4,622 Note payable in monthly installments of $92 including interest at 6.27% per annum, with a final monthly payment due July 2026 4,166 4,373 Total principal 32,428 32,635 Unamortized debt issuance costs (179) (206) Total $ 32,249 $ 32,429 The mortgage loans encumbering the Company’s properties are generally non-recourse, subject to certain exceptions for which we 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 March 31, 2022, there were no mortgage loans with partial recourse to the Company. The Company has entered into mortgage loans that 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 we default 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 In May 2021, the Company used the net proceeds from the offering of the 2028 Senior Unsecured Public Notes and the 2033 Senior Unsecured Public Notes (see Senior Unsecured Notes Senior Unsecured Notes The following table presents the senior unsecured notes balance net of unamortized debt issuance costs and original issue discount as of March 31, 2022, and December 31, 2021 ( presented in thousands March 31, 2022 December 31, 2021 2025 Senior Unsecured Notes $ 50,000 $ 50,000 2027 Senior Unsecured Notes 50,000 50,000 2028 Senior Unsecured Public Notes 350,000 350,000 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 350,000 350,000 2031 Senior Unsecured Notes 125,000 125,000 2033 Senior Unsecured Public Notes 300,000 300,000 Total Principal 1,510,000 1,510,000 Unamortized debt issuance costs and original issue discount, net (14,350) (14,800) Total $ 1,495,650 $ 1,495,200 In May 2015, the Company and the Operating Partnership completed a private placement of $100 million principal amount of senior unsecured notes. The senior unsecured notes were sold in two series; $50 million of 4.16% notes due May 2025 (the “2025 Senior Unsecured Notes”) and $50 million of 4.26% notes due May 2027 (the “2027 Senior Unsecured Notes”). In July 2016, the Company and the Operating Partnership completed a private placement of $60 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 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 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 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 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 only to institutional investors and did not involve a public offering in reliance on the exemption from registration in Section 4(a)(2) of the Securities Act. In August 2020, the Operating Partnership completed an underwritten public offering of $350 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 million that hedged the 2030 Senior Unsecured Public Notes, paying $23.4 million upon termination. Considering the effect of the terminated swap agreements, the blended all-in rate to the Company for the $350 million aggregate principal amount of 2030 Senior Unsecured Public Notes is 3.49%. In May 2021, the Operating Partnership completed an underwritten public offering of $350 million aggregate principal amount of 2.000% Notes due 2028 (the “2028 Senior Unsecured Public Notes”) and $300 million in aggregate principal amount of 2.600% Notes due 2033 (the “2033 Senior Unsecured Public Notes”). The 2028 Senior Unsecured Public Notes and the 2033 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 2028 Senior Unsecured Public Notes and the 2033 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 May 14, 2021, the “Indenture”). The Indenture contains various restrictive covenants, including limitations on the ability of the guarantors and the Operating Partnership to incur additional indebtedness and requirements to maintain a pool of unencumbered assets. The Company terminated related swap agreements of $300 million notional amount that hedged the 2033 Senior Unsecured Public Notes, receiving $16.7 million upon termination. Considering the effect of the terminated swap agreements, the blended all-in rates to the Company for the $350 million aggregate principal amount of the 2028 Senior Unsecured Public Notes and the $300 million aggregate principal amount of the 2033 Senior Unsecured Public Notes are 2.11% and 2.13%, respectively. Senior Unsecured Revolving Credit Facility In December 2019, the Company entered into a Second Amended and Restated Revolving Credit and Term Loan Agreement. This agreement provided for a $500 million unsecured revolving credit facility. It also provided for a $65 million unsecured term loan facility and a $35 million unsecured term loan facility. All amounts outstanding under these unsecured term loan facilities were repaid in May 2021 (see Unsecured Term Loan Facilities In December 2021, the Company entered into a Third Amended and Restated Revolving Credit Agreement which increases its senior unsecured revolving credit facility (the “Revolving Credit Facility”) to $1.0 billion. The Revolving Credit Facility includes an accordion option that allows the Company to request additional lender commitments up to a total of $1.75 billion. The Revolving Credit Facility will mature in January 2026 with Company options to extend the maturity date to January 2027. The Revolving Credit Facility’s interest rate is based on a pricing grid with a range of 72.5 to 140 basis points over LIBOR, determined by the Company’s credit ratings. The margins for the Revolving Credit Facility are subject to improvement based on the Company's leverage ratio, provided its credit ratings meet a certain threshold. Based on the Company's credit ratings and leverage ratio at the time of closing, pricing on the Revolving Credit Facility was 77.5 basis points over LIBOR. In connection with the Company's ongoing environmental, social and governance (“ESG”) initiatives, pricing may be reduced if specific ESG ratings are achieved. 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 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 March 31, 2022 ( presented in thousands Scheduled Balloon Principal Payment Total Remainder of 2022 $ 643 $ — $ 643 2023 905 28,262 29,167 2024 963 — 963 2025 1,026 50,000 51,026 2026 (1) 629 320,000 320,629 Thereafter — 1,460,000 1,460,000 Total scheduled principal payments 4,166 1,858,262 1,862,428 Original issue discount, net — (8,651) (8,651) Total $ 4,166 $ 1,849,611 $ 1,853,777 (1) The Revolving Credit Facility matures in January 2026, with options to extend the maturity to January 2027. The Revolving Credit Facility had an outstanding balance of $320.0 million as of March 31, 2022. 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 March 31, 2022, 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 March 31, 2022. |
Common and Preferred Stock
Common and Preferred Stock | 3 Months Ended |
Mar. 31, 2022 | |
Common and Preferred Stock | |
Common and Preferred Stock | Note 6 – Common and Preferred Stock Shelf Registration On May 27, 2020, the Company filed an automatic shelf registration statement on Form S-3 with the Securities and Exchange Commission registering an unspecified amount of common stock, preferred stock, depositary shares, warrants and guarantees of debt securities of the Operating Partnership, as well as an unspecified amount of debt securities of the Operating Partnership, at an indeterminate aggregate initial offering price. The Company may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering. Follow-on Common Stock Offerings In January 2021, the Company completed a follow-on public offering of 3,450,000 shares of common stock, which included the full exercise of the underwriters’ option to purchase an additional 450,000 shares of common stock. The offering resulted in net proceeds to the Company of approximately $221.4 million, after deducting fees and offering expenses payable by the Company. In June 2021, the Company completed a follow-on public offering of 4,600,000 shares of common stock, which included the full exercise of the underwriters’ option to purchase an additional 600,000 shares of common stock. The offering resulted in net proceeds to the Company of approximately $327.0 million, after deducting fees and offering expenses payable by the Company. In December 2021, the Company completed a follow-on public offering of 5,750,000 shares of common stock, including the full exercise of the underwriters' option to purchase additional 750,000 shares, in connection with forward sale agreements. Upon settlement, the offering is anticipated to raise net proceeds of approximately $374.8 million after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreements. As of March 31, 2022, the Company settled 1,666,668 shares of these December 2021 forward sale agreements, realizing net proceeds of $107.7 million. Preferred Stock Offering In September 2021, the Company completed an underwritten public offering of depositary shares (the “Depositary Shares”), each representing 1/1,000 Dividends on the Series A Preferred Shares will be payable monthly in arrears on the first day of each month (or, if not on a business day, on the next succeeding business day). The dividend rate is 4.25% per annum of the $25,000 (equivalent to $25.00 per Depositary Share) liquidation preference. The first pro-rated dividend on the Series A Preferred Shares was paid on October 1, 2021, and was in an amount equivalent to $0.04132 per Depositary Share. Subsequent dividends on the Series A Preferred Shares have been and will be in the amount of $0.08854 per Depositary Share, equivalent to $1.0625 per annum. The Company may not redeem the Series A Preferred Shares before September 2026, except in limited circumstances to preserve its status as a real estate investment trust for federal income tax purposes and except in certain circumstances upon the occurrence of a change of control of the Company. Beginning in September 2026, the Company, at its option, may redeem the Series A Preferred Shares, in whole or from time to time in part, by paying $25.00 per Depositary Share, plus any accrued and unpaid dividends. Upon the occurrence of a change in control of the Company, if the Company does not otherwise redeem the Series A Preferred Shares, the holders have a right to convert their shares into common stock of the Company at the $25.00 per share liquidation value, plus any accrued and unpaid dividends. This conversion value is limited by a share cap if the Company’s stock price falls below a certain threshold. 2021 ATM Program In February 2021, the Company entered into a new $500.0 million ATM program (the “2021 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 2021 ATM Program, as described below. As of March 31, 2022, the Company had entered into forward sale agreements to sell an aggregate of 2,125,296 shares of common stock. The Company has settled the entirety of these forward sale agreements as of March 31, 2022 for net proceeds of approximately $143.1 million. |
Dividends and Distribution Paya
Dividends and Distribution Payable | 3 Months Ended |
Mar. 31, 2022 | |
Dividends and Distribution Payable | |
Dividends and Distribution Payable | Note 7 – Dividends and Distribution Payable During the three months ended March 31, 2022, the Company declared monthly dividends of $0.227 per common share for January, February and March 2022. Holders of Operating Partnership Common Units are entitled to an equal distribution per Operating Partnership Common Unit held. The dividends and distributions payable for January and February were paid during the quarter, while the March amounts were recorded as liabilities on the Condensed Consolidated Balance Sheets at March 31, 2022. The March dividends and distributions were paid on April 14, 2022. During the three months ended March 31, 2022, the Company declared monthly dividends on the Series A Preferred Shares in the amount of $.08854 per Depositary Share for January, February, and March 2022. The dividends payable for January and February were paid during the quarter, while the March dividend was recorded as a liability on the Condensed Consolidated Balance Sheet at March 31, 2022 and was paid on April 1, 2022. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Taxes | |
Income Taxes | Note 8 – Income Taxes 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, 2018. 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. The Company has no material interest or penalties relating to income taxes recognized for the three months ended March 31, 2022 and 2021. Income Tax Expense The Company recognized total federal and state tax expense of approximately $0.7 million and $1.0 million for the three months ended March 31, 2022 and 2021, respectively. The income tax expense recorded in 2021 includes additional tax expense of approximately $0.5 million relating to the true-up of 2020 expense upon filing of the annual tax returns. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activity | 3 Months Ended |
Mar. 31, 2022 | |
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 swaps as part of its interest rate risk management strategy. Interest rate swaps 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. Hedges of 2022 Planned Debt Issuance In May and July 2021, 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 $300 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 December 2022. As of March 31, 2022, these interest rate swaps were valued as an asset of approximately $19.1 million. 2021 Settlements Hedging 2021 Debt Issuances 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 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 February 2022. In May 2021, the Company terminated the swap agreements upon the debt issuance, receiving $8.0 million upon termination. This settlement was included as a component of accumulated OCI, to be recognized as an adjustment to income over the term of the debt. In December 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 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 February 2022. In May 2021, the Company terminated the swap agreements upon the debt issuance, receiving $5.6 million upon termination. This settlement was included as a component of accumulated OCI, to be recognized as an adjustment to income over the term of the debt. In February 2021, 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 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 February 2022. In May 2021, the Company terminated the swap agreements upon the debt issuance, receiving $3.1 million upon termination. This settlement was included as a component of accumulated OCI, to be recognized as an adjustment to income over the term of the debt. 2021 Settlements – Extinguishment of Term Loans 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 million in variable-rate borrowings. Under the terms of the interest rate swap agreements, the Company received 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 million of variable-rate borrowings to fixed-rate borrowings from July 21, 2014 to July 21, 2021. In May 2021, the Company terminated the swap agreements upon the payoff of the related term loan, paying $0.3 million upon termination. This settlement was recognized as an expense during the three months ended June 30, 2021. In June 2016, 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 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company received 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 million of variable-rate borrowings to fixed-rate borrowings from August 1, 2016 to July 1, 2023. In May 2021, the Company terminated the swap agreements upon the payoff of the related term loan, paying $1.0 million upon termination. This settlement was recognized as an expense during the three months ended June 30, 2021. 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 million in variable-rate borrowings. Under the terms of the interest rate swap agreements, the Company received 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 converted $100 million of variable-rate borrowings to fixed-rate borrowings from December 27, 2018 to January 15, 2026. In May 2021, the Company terminated the swap agreements upon the payoff of the related term loan, paying $9.2 million upon termination. This settlement was recognized as an expense during the three months ended June 30, 2021. 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 million in variable-rate borrowings. Under the terms of the interest rate swap agreements, the Company received from the counterparty interest on the notional amount based on one month LIBOR and pays to the counterparty a fixed rate of 1.4275%. This swap effectively converted $65 million of variable-rate borrowings to fixed-rate borrowings from July 12, 2021 to January 12, 2024. In May 2021, the Company terminated the swap agreements upon the payoff of the related term loan, paying $1.8 million upon termination. This settlement was recognized as an expense during the three months ended June 30, 2021. 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 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 1.4265%. This swap effectively converted $35 million of variable-rate borrowings to fixed-rate borrowings from September 29, 2020 to January 12, 2024. In May 2021, the Company terminated the swap agreements upon the payoff of the related term loan, paying $1.1 million upon termination. This settlement was recognized as an expense during the three months ended June 30, 2021. Recognition Companies are required to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet. The Company recognizes its derivatives within Other Assets, net and Accounts Payable, Accrued Expenses and Other Liabilities on the Condensed Consolidated Balance Sheets. The Company 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). 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 $0.3 million will be reclassified as an increase to interest expense. During the three months ended June 30, 2021, the Company accelerated the reclassification of amounts in accumulated OCI into expense given that the hedged forecasted transactions were no longer likely to occur. During 2021, the Company accelerated a loss of $13.4 million out of OCI into earnings due to missed forecasted transactions associated with terminated swap agreements in connection with the early payoff of the hedged term loans (see 2021 Settlements - Extinguishment of Term Loans The Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk ( presented in thousands, except number of instruments Number of Instruments 1 Notional 1 March 31, December 31, March 31, December 31, Interest Rate Derivatives 2022 2021 2022 2021 Interest rate swap 3 3 $ 300,000 $ 300,000 1 The table below presents the estimated fair value of the Company’s derivative financial instruments, as well as their classification in the Condensed Consolidated Balance Sheets ( presented in thousands Asset Derivatives March 31, 2022 December 31, 2021 Fair Value Fair Value Derivatives designated as cash flow hedges: Other Assets, net $ 19,114 $ 1,868 Liability Derivatives March 31, 2022 December 31, 2021 Fair Value Fair Value Derivatives designated as cash flow hedges: Accounts Payable, Accrued Expenses, and Other Liabilities $ — $ 3,335 The table below presents the effect of the Company’s derivative financial instruments in the Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2022 and 2021 ( presented 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 March 31, 2022 2021 2022 2021 Interest rate swaps $ 20,581 $ 23,954 Interest Expense $ 82 $ 1,693 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 March 31, 2022. 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 the Company’s default on the indebtedness. As of March 31, 2022, the fair value of derivatives in a net asset position related to these agreements, which includes accrued interest but excludes any adjustment for nonperformance risk, was $19.2 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 March 31, 2022 and December 31, 2021. 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 ( presented in thousands Offsetting of Derivative Assets as of March 31, 2022 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 $ 19,114 $ — $ 19,114 $ — $ — $ 19,114 Offsetting of Derivative Liabilities as of March 31, 2022 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 $ — $ — $ — $ — $ — $ — Offsetting of Derivative Assets as of December 31, 2021 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 $ 1,868 $ — $ 1,868 $ (1,679) $ — $ 189 Offsetting of Derivative Liabilities as of December 31, 2021 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 $ 3,335 $ — $ 3,335 $ (1,679) $ — $ 1,656 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022, 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 March 31, 2022 and December 31, 2021 (in thousands): Total Fair Value Level 2 March 31, 2022 Derivative assets - interest rate swaps $ 19,114 $ 19,114 Derivative liabilities - interest rate swaps $ — $ — December 31, 2021 Derivative assets - interest rate swaps $ 1,868 $ 1,868 Derivative liabilities - interest rate swaps $ 3,335 $ 3,335 Other Financial Instruments The carrying values of cash and cash equivalents, cash held in escrow, 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, there can be no assurance that the disclosed value of any financial instrument could be realized by immediate settlement of the instrument. The Company determined that the valuation of its Senior Unsecured Notes and Revolving Credit Facility are classified as Level 2 of the fair value hierarchy and its fixed rate mortgages are classified as Level 3 of the fair value hierarchy. The Senior Unsecured Notes had carrying values of $1.50 billion as of March 31, 2022 and December 31, 2021 and had fair values of $1.45 billion and $1.57 billion, respectively. The Revolving Credit Facility’s fair value is estimated to be equal to the carrying values of $320.0 million and $160.0 million as of March 31, 2022 and December 31, 2021, respectively. The Mortgage Notes Payable had carrying values of $32.2 million and $32.6 million as of March 31, 2022 and December 31, 2021, respectively, and had fair values of $33.1 million and $33.9 million as of those dates. |
Equity Incentive Plan
Equity Incentive Plan | 3 Months Ended |
Mar. 31, 2022 | |
Equity Incentive Plan | |
Equity Incentive Plan | Note 11 – Equity Incentive Plan In May 2020, the Company’s stockholders approved the Agree Realty Corporation 2020 Omnibus Incentive Plan (the “2020 Plan”), which replaced the Agree Realty Corporation 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 March 31, 2022; 328,713 shares of common stock were available for issuance under the 2020 Plan. Restricted Stock - Employees Shares of restricted common stock (“restricted shares”) have been granted to certain employees. 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 share grants at the date of grant and amortizes those amounts into expense on a straight-line basis or amount vested, if greater, over the appropriate vesting period. The Company recognized expense relating to restricted share grants of $1.0 million and $0.9 million for the three months ended March 31, 2022 and 2021. As of March 31, 2022, there was $12.4 million of total unrecognized compensation costs related to the outstanding restricted shares, which is expected to be recognized over a weighted average period of 3.8 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 $1.7 million and $1.8 million for the three months ended March 31, 2022 and March 31, 2021, respectively. Restricted share activity is summarized as follows: Shares Weighted Average Outstanding Grant Date ( in thousands ) Fair Value Unvested restricted stock at December 31, 2021 175 $ 64.90 Restricted stock granted 77 $ 62.64 Restricted stock vested (52) $ 60.51 Unvested restricted stock at March 31, 2022 200 $ 65.16 Performance Units and Shares Performance units were granted to certain executive officers during 2021, 2020 and 2019, while performance shares were granted prior to those years. Performance units or shares 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 constituents in 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 and shares 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 units and shares vest within five years of the original award date. 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. Compensation expense related to performance units or shares is determined at the grant date and is not adjusted throughout the measurement or vesting periods. The Monte Carlo simulation pricing model for issued grants utilizes the following assumptions: (i) expected term (equal to the remaining performance measurement period at the grant date), (ii) volatility (based on historical volatility), and (iii) risk-free rate (interpolated based on 2- and 3-year rates). The Company used 0% for the forfeiture rate for determining the fair value of performance units and shares. During the years ended December 31, 2022, 2021 and 2020 the following assumptions were used: Three Months Ended March 31, 2022 2021 2020 Expected term (years) 2.9 2.9 2.9 Volatility 33.5 % 33.9 % 18.4 % Risk-free rate 1.8 % 0.2 % 1.3 % The Company recognized expense related to performance units and shares for which the three-year performance period has not yet been completed of $0.3 million and $0.2 million for the three months ended March 31, 2022 and 2021. As of March 31, 2022, there was $4.6 million of total unrecognized compensation costs related to performance units and shares for which the three-year performance period has not yet been completed, which is expected to be recognized over a weighted average period of 4.0 years. The Company recognized expense related to performance units and shares for which the three-year performance period was completed of $0.1 million for each of the three months ended March 31, 2022 and 2021. As of March 31, 2022, there was $0.4 million of total unrecognized compensation costs related to performance units and shares for which the three-year performance period has been completed, which is expected to be recognized over a weighted average period of 1.2 years. Performance unit and shares activity is summarized as follows: Target Number Weighted Average of Awards Grant Date (in thousands ) Fair Value Performance units and shares at December 31, 2021 - three-year performance period to be completed 78 $ 63.35 Performance units granted 34 $ 68.59 Performance units and shares at March 31, 2022- three-year performance period completed (27) $ 65.66 Performance units and shares at March 31, 2022 - three-year performance period to be completed 85 $ 67.64 Shares Weighted Average Outstanding Grant Date (in thousands) Fair Value Performance shares - three-year performance period completed but not yet vested at December 31, 2021 27 $ 55.29 Shares earned at completion of three-year performance period (1) 28 $ 65.66 Shares vested (23) $ 54.83 Performance shares - three-year performance period completed but not yet vested March 31, 2022 32 $ 57.90 (1)Performance shares granted in 2019 for which the three-year performance period was completed in 2022 paid out at the 106% performance level Restricted Stock - Directors During the three months ended March 31, 2022, 10,636 shares of restricted common stock (“restricted shares”) were granted to independent members of the Company’s board of directors at a weighted average grant date fair value of $62.62 per share. 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 the 2022 calendar year commensurate with the board members’ annual services to the Company. The Company estimates the fair value of board members’ restricted share grants at the date of grant and amortizes those amounts into expense on a straight-line basis over the one-year vesting period. The Company recognized expense relating to restricted share grants to the board members of $0.2 million for the three months ended March 31, 2022. As of March 31, 2022, there was $0.5 million of total unrecognized compensation costs related to the board members’ outstanding restricted shares, which is expected to be recognized over the remainder of 2022. The Company used 0% for the forfeiture rate for determining the fair value of this restricted stock. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
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 | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022 through the date on which these financial statements were issued to determine whether any of these events required disclosure in the financial statements. There were no reportable subsequent events or transactions. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Summary of Significant Accounting Policies | |
Basis of Accounting and Principles of Consolidation | 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 months ended March 31, 2022 may not be indicative of the results that may be expected for the year ending December 31, 2022. Amounts as of December 31, 2021 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, 2021. 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 99.5% of the Operating Partnership’s common equity as of March 31, 2022 and December 31, 2021, as well as the Series A preferred equity interest. All material intercompany accounts and transactions have been eliminated, including the Company’s Series A preferred equity interest in the Operating Partnership. At March 31, 2022 and December 31, 2021, the non-controlling interest in the Operating Partnership consisted of a 0.5% ownership interest in the Operating Partnership held by the Company’s founder and chairman. The Operating Partnership Common 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 Common Units held by others for cash based on the current trading price of its shares. Assuming the exchange of all non-controlling Operating Partnership Common Units, there would have been 75,522,199 shares of common stock outstanding at March 31, 2022. |
Significant Risks and Uncertainties | Significant Risks and Uncertainties One of the most significant risks and uncertainties continues to be the potential adverse effect of the ongoing pandemic of the novel coronavirus, or COVID-19, and its variants. The outbreak of COVID-19 has significantly, adversely impacted economic activity and has contributed to significant volatility and negative pressure in financial markets. Although the duration and severity of this pandemic are still uncertain, there is reason to believe that the success of vaccination efforts and therapeutics in the U.S. will have a positive impact on businesses, as federal, state and local restrictions are lifted. However, the virus’s variants, its surges and resurgences in the population, and challenges related to vaccine immunization are still having a very fluid and continuously evolving impact on businesses and consumers. The COVID-19 pandemic could still 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 impacting 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 which could impact our future compliance with financial covenants of our credit facility and other debt agreements; and ● weaker economic conditions which could cause us to recognize impairment in value of our tangible or intangible assets. During the quarter ended March 31, 2022, the Company collected substantially all rent payments originally contracted for in the period. However, the extent to which the COVID-19 pandemic impacts our operations and those of our tenants will still depend on future developments which are uncertain, including the scope, severity and remaining 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 not able to fully predict the impact that it ultimately will have on our financial condition, results of operations and cash flows. |
Real Estate Investments | 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 real estate held for sale based on specific criteria as outlined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Property, Plant & Equipment at March 31, 2022 and classified one operating property as real estate held for sale as of December 31, 2021, the assets for which are separately presented in the Condensed Consolidated Balance Sheets. Real estate held for sale consisted of the following as of March 31, 2022 and December 31, 2021 ( presented in thousands March 31, 2022 December 31, 2021 Land $ — $ 4,485 Lease intangibles - asset — 1,213 — 5,698 Accumulated depreciation and amortization, net — (22) Total Real Estate Held for Sale, net $ — $ 5,676 Subsequent to quarter-end, a property that did not qualify as held for sale as of March 31, 2022 was sold at a price of $14.0 million, which approximated its carrying value. |
Acquisitions of Real Estate | 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 various 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 tangible and intangible assets and liabilities of an acquired property, land is valued based upon comparable market data or independent appraisals. Buildings are valued on an as-if vacant basis based on a cost approach utilizing estimates of cost and the economic age of the building or an income approach utilizing various market data. 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 | 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 adjustment to 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 to rental income. The following schedule summarizes the Company’s amortization of lease intangibles for the three months ended March 31, 2022 and 2021 ( presented in thousands Three Months Ended March 31, 2022 March 31, 2021 Lease intangibles (in-place) $ 8,795 $ 5,915 Lease intangibles (above-market) 9,636 6,401 Lease intangibles (below-market) (1,458) (1,645) Total $ 16,973 $ 10,671 The following schedule represents estimated future amortization of lease intangibles as of March 31, 2022 ( presented in thousands 2022 Year Ending December 31, (remaining) 2023 2024 2025 2026 Thereafter Total Lease intangibles (in-place) $ 29,842 $ 37,665 $ 35,021 $ 32,596 $ 30,157 $ 156,469 $ 321,750 Lease intangibles (above-market) 29,583 37,186 33,120 30,631 28,868 235,371 394,759 Lease intangibles (below-market) (4,359) (5,186) (4,516) (4,080) (3,726) (11,844) (33,711) Total $ 55,066 $ 69,665 $ 63,625 $ 59,147 $ 55,299 $ 379,996 $ 682,798 |
Impairments | 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 | 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 deposit and checking accounts. Cash held in escrows primarily relates to proposed like-kind exchange transactions pursued under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) and funds restricted through a mortgage agreement. The account balances 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 $24.0 million and $44.0 million in cash and cash equivalents and cash held in escrow as of March 31, 2022 and December 31, 2021, respectively, in excess of the FDIC insured limit. Per the requirements of ASU 2016-18 (Topic 230, Statement of Cash Flows presented in thousands March 31, 2022 December 31, 2021 Cash and cash equivalents $ 24,888 $ 43,252 Cash held in escrow 878 1,998 Total of cash and cash equivalents and cash held in escrow $ 25,766 $ 45,250 |
Revenue Recognition and Accounts Receivable | Revenue Recognition and Accounts Receivable The Company leases real estate to its tenants under long-term net leases which are accounted 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 March 31, 2022 and December 31, 2021 was $44.0 million and $40.9 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. 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 As of March 31, 2022, the Company has three tenants where collection is no longer considered probable. For these tenants, the Company is recording rental income on a cash basis and has written off any outstanding receivables, including straight-line rent receivables. Adjustments to rental revenue related to potentially uncollectible charges under these tenant leases had an immaterial impact to Rental Income and Net Income for the three months ended March 31, 2022. In addition to the tenant-specific collectability assessment performed, the Company also recognizes a general allowance, as a reduction to rental revenue, for its operating lease receivables which are not expected to be fully collectible based on the potential for settlement of arrears. As of March 31, 2022 and December 31, 2021, this allowance was $0.8 million. The Company’s leases provide for reimbursement from tenants for common area maintenance (“CAM”), insurance, real estate taxes and other operating expenses. A portion of the Company’s operating cost reimbursement revenue is estimated each period and is recognized as rental revenue in the period the recoverable costs are incurred and accrued, and the related revenue is earned. The balance of unbilled operating cost reimbursement receivable at March 31, 2022 and December 31, 2021 was $7.7 million and $9.1 million, respectively. The Company has adopted the practical expedient in FASB ASC 842, Leases “ASC 842”) pursuant to tenant leases are reflected as one line, “Rental Income,” in the Condensed Consolidated Statement of Operations and Comprehensive Income. |
Earnings per Share | Earnings per Share Earnings per share of common stock has been computed pursuant to the guidance in the FASB ASC Topic 260, Earnings Per Share The following is a reconciliation of the numerator and denominator used in the computation of basic and diluted net earnings per share of common stock for each of the periods presented ( presented in thousands, except for share data Three Months Ended March 31, 2022 March 31, 2021 Net income attributable to Agree Realty Corporation $ 36,113 $ 30,112 Less: Series A preferred stock dividends (1,859) — Net income attributable to common stockholders 34,254 30,112 Less: Income attributable to unvested restricted shares (110) (103) Net income used in basic and diluted earnings per share $ 34,144 $ 30,009 Weighted average number of common shares outstanding 71,471,247 63,048,905 Less: Unvested restricted stock (242,317) (220,008) Weighted average number of common shares outstanding used in basic earnings per share 71,228,930 62,828,897 Weighted average number of common shares outstanding used in basic earnings per share 71,228,930 62,828,897 Effect of dilutive securities: Share-based compensation 58,190 62,454 2020 ATM Forward Equity Offerings — 49,009 2021 ATM Forward Equity Offerings 980 — December 2021 Forward Offering 48,003 — Weighted average number of common shares outstanding used in diluted earnings per share 71,336,103 62,940,360 For the three months ended March 31, 2022, 76,623 shares of common stock related to the 2021 at-the-market (“ATM”) forward equity offerings, 4,733 shares of restricted common stock (“restricted shares”) granted in 2020 and 2021, and 1,078 performance units granted in 2022 were anti-dilutive and were not included in the computation of diluted earnings per share. For the three months ended March 31, 2021, 3,397 shares of common stock related to the 2020 ATM forward equity offerings, 664 shares of common stock related to the 2021 ATM forward equity offerings, and 6,920 shares of restricted shares granted in 2020 were anti-dilutive and were not included in the computation of diluted earnings per share. |
Forward Equity Sales | 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, the Company has concluded that its forward sale agreements are not liabilities as they do not embody obligations to repurchase its 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 its shares. The Company then evaluates whether the agreements meet the derivatives and hedging guidance scope exception to be accounted for as equity instruments. The Company has 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 the Company’s own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to its 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. |
Equity Offering Costs | Equity Offering Costs Underwriting commissions and offering costs of equity offerings have been reflected as a reduction of additional paid-in-capital in our Condensed Consolidated Balance Sheets. |
Income Taxes | Income Taxes The Company has 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 covered in the Condensed Consolidated Financial Statements, the Company believes it has qualified as a REIT. Accordingly, no provision has been made for federal income taxes. 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 stockholders 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. The Company regularly analyzes its various federal and state filing positions and only recognizes the income tax effect in its financial statements when certain criteria regarding uncertain income tax positions have been met. The Company believes that its 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. |
Management's Responsibility to Evaluate Our Ability to Continue as a Going Concern | 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, among other things, 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. |
Reclassifications | Reclassifications Certain reclassifications of prior period amounts have been made in the consolidated financial statements and footnotes in order to conform to the current presentation. |
Segment Reporting | 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 | 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. |
Fair Values of Financial Instruments | 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, ASC 820 Fair Value Measurement Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 2 – Valuation is based on inputs other than Level 1 inputs 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. |
Recent Accounting Pronouncements | 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 15, 2021. The adoption of this guidance on January 1, 2022 did not have a material impact the Company’s financial statements. 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Summary of Significant Accounting Policies | |
Schedule of real estate properties held-for-sale | Real estate held for sale consisted of the following as of March 31, 2022 and December 31, 2021 ( presented in thousands March 31, 2022 December 31, 2021 Land $ — $ 4,485 Lease intangibles - asset — 1,213 — 5,698 Accumulated depreciation and amortization, net — (22) Total Real Estate Held for Sale, net $ — $ 5,676 Subsequent to quarter-end, a property that did not qualify as held for sale as of March 31, 2022 was sold at a price of $14.0 million, which approximated its carrying value. |
Schedule of amortization of lease intangibles | The following schedule summarizes the Company’s amortization of lease intangibles for the three months ended March 31, 2022 and 2021 ( presented in thousands Three Months Ended March 31, 2022 March 31, 2021 Lease intangibles (in-place) $ 8,795 $ 5,915 Lease intangibles (above-market) 9,636 6,401 Lease intangibles (below-market) (1,458) (1,645) Total $ 16,973 $ 10,671 |
Schedule of estimated future amortization of lease intangibles | The following schedule represents estimated future amortization of lease intangibles as of March 31, 2022 ( presented in thousands 2022 Year Ending December 31, (remaining) 2023 2024 2025 2026 Thereafter Total Lease intangibles (in-place) $ 29,842 $ 37,665 $ 35,021 $ 32,596 $ 30,157 $ 156,469 $ 321,750 Lease intangibles (above-market) 29,583 37,186 33,120 30,631 28,868 235,371 394,759 Lease intangibles (below-market) (4,359) (5,186) (4,516) (4,080) (3,726) (11,844) (33,711) Total $ 55,066 $ 69,665 $ 63,625 $ 59,147 $ 55,299 $ 379,996 $ 682,798 |
Schedule of cash, cash equivalents and cash held in escrow | Per the requirements of ASU 2016-18 (Topic 230, Statement of Cash Flows presented in thousands March 31, 2022 December 31, 2021 Cash and cash equivalents $ 24,888 $ 43,252 Cash held in escrow 878 1,998 Total of cash and cash equivalents and cash held in escrow $ 25,766 $ 45,250 |
Schedule of reconciliation of basic and diluted net earnings per common share | The following is a reconciliation of the numerator and denominator used in the computation of basic and diluted net earnings per share of common stock for each of the periods presented ( presented in thousands, except for share data Three Months Ended March 31, 2022 March 31, 2021 Net income attributable to Agree Realty Corporation $ 36,113 $ 30,112 Less: Series A preferred stock dividends (1,859) — Net income attributable to common stockholders 34,254 30,112 Less: Income attributable to unvested restricted shares (110) (103) Net income used in basic and diluted earnings per share $ 34,144 $ 30,009 Weighted average number of common shares outstanding 71,471,247 63,048,905 Less: Unvested restricted stock (242,317) (220,008) Weighted average number of common shares outstanding used in basic earnings per share 71,228,930 62,828,897 Weighted average number of common shares outstanding used in basic earnings per share 71,228,930 62,828,897 Effect of dilutive securities: Share-based compensation 58,190 62,454 2020 ATM Forward Equity Offerings — 49,009 2021 ATM Forward Equity Offerings 980 — December 2021 Forward Offering 48,003 — Weighted average number of common shares outstanding used in diluted earnings per share 71,336,103 62,940,360 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Leases | |
Summary of lease income | The following table includes information regarding contractual lease payments for the Company’s operating leases for which it is the lessor, for the three months ended March 31, 2022 and 2021. (presented in thousands) Three Months Ended March 31, 2022 March 31, 2021 Total lease payments $ 103,362 $ 80,200 Less: Operating cost reimbursements and percentage rents 11,914 8,976 Total non-variable lease payments $ 91,448 $ 71,224 |
Summary of lease income to be received | At March 31, 2022, future non-variable lease payments to be received from the Company’s operating leases for the remainder of 2022, the following four years, and thereafter are as follows ( presented in thousands 2022 Year Ending December 31, (remaining) 2023 2024 2025 2026 Thereafter Total Future non-variable lease payments $ 285,903 $ 376,785 $ 365,734 $ 353,794 $ 335,943 $ 1,859,443 $ 3,577,602 |
Summary of lease costs | The following tables include information on the Company’s land leases for which it is the lessee, for the three months ended March 31, 2022 and 2021. (presented in thousands) Three Months Ended March 31, 2022 March 31, 2021 Operating leases: Operating cash outflows $ 298 $ 267 Weighted-average remaining lease term - operating leases (years) 33.7 36.3 Finance leases: Operating cash outflows $ 64 $ 22 Financing cash outflows $ 20 $ 34 Weighted-average remaining lease term - finance leases (years) 2.5 3.5 Supplemental Disclosure: Right-of-use assets obtained in exchange for new lease liabilities $ — $ 6,302 Right-of-use assets net change $ — $ 6,302 |
Summary of maturity analysis of operating lease liabilities | Maturity Analysis of Lease Liabilities for Operating Leases ( presented in thousands 2022 Year Ending December 31, (remaining) 2023 2024 2025 2026 Thereafter Total Lease payments $ 900 $ 1,197 $ 1,197 $ 1,197 $ 1,195 $ 29,851 $ 35,537 Imputed interest (546) (711) (690) (669) (647) (14,491) (17,754) Total lease liabilities $ 354 $ 486 $ 507 $ 528 $ 548 $ 15,360 $ 17,783 |
Summary of maturity analysis of finance lease liabilities | Maturity Analysis of Lease Liabilities for Finance Leases ( presented in thousands 2022 Year Ending December 31, (remaining) 2023 2024 2025 2026 Thereafter Total Lease payments $ 252 $ 336 $ 6,252 $ — $ — $ — $ 6,840 Imputed interest (191) (252) (207) — — — (650) Total lease liabilities $ 61 $ 84 $ 6,045 $ — $ — $ — $ 6,190 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Schedule of maturities of long-term debt | The following table presents scheduled principal payments related to the Company’s debt as of March 31, 2022 ( presented in thousands Scheduled Balloon Principal Payment Total Remainder of 2022 $ 643 $ — $ 643 2023 905 28,262 29,167 2024 963 — 963 2025 1,026 50,000 51,026 2026 (1) 629 320,000 320,629 Thereafter — 1,460,000 1,460,000 Total scheduled principal payments 4,166 1,858,262 1,862,428 Original issue discount, net — (8,651) (8,651) Total $ 4,166 $ 1,849,611 $ 1,853,777 (1) The Revolving Credit Facility matures in January 2026, with options to extend the maturity to January 2027. The Revolving Credit Facility had an outstanding balance of $320.0 million as of March 31, 2022. |
Mortgages [Member] | |
Schedule of long-term debt instruments | Mortgage notes payable consisted of the following ( presented in thousands March 31, 2022 December 31, 2021 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 interest only at 5.01% per annum, with a balloon payment due September 2023 4,622 4,622 Note payable in monthly installments of $92 including interest at 6.27% per annum, with a final monthly payment due July 2026 4,166 4,373 Total principal 32,428 32,635 Unamortized debt issuance costs (179) (206) Total $ 32,249 $ 32,429 |
Senior Unsecured Notes [Member] | |
Schedule of long-term debt instruments | The following table presents the senior unsecured notes balance net of unamortized debt issuance costs and original issue discount as of March 31, 2022, and December 31, 2021 ( presented in thousands March 31, 2022 December 31, 2021 2025 Senior Unsecured Notes $ 50,000 $ 50,000 2027 Senior Unsecured Notes 50,000 50,000 2028 Senior Unsecured Public Notes 350,000 350,000 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 350,000 350,000 2031 Senior Unsecured Notes 125,000 125,000 2033 Senior Unsecured Public Notes 300,000 300,000 Total Principal 1,510,000 1,510,000 Unamortized debt issuance costs and original issue discount, net (14,350) (14,800) Total $ 1,495,650 $ 1,495,200 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activity (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Derivative Instruments and Hedging Activity | |
Schedule of notional amounts of outstanding derivative positions | The Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk ( presented in thousands, except number of instruments Number of Instruments 1 Notional 1 March 31, December 31, March 31, December 31, Interest Rate Derivatives 2022 2021 2022 2021 Interest rate swap 3 3 $ 300,000 $ 300,000 1 |
Schedule of derivative instruments in statement of financial position, fair value | The table below presents the estimated fair value of the Company’s derivative financial instruments, as well as their classification in the Condensed Consolidated Balance Sheets ( presented in thousands Asset Derivatives March 31, 2022 December 31, 2021 Fair Value Fair Value Derivatives designated as cash flow hedges: Other Assets, net $ 19,114 $ 1,868 Liability Derivatives March 31, 2022 December 31, 2021 Fair Value Fair Value Derivatives designated as cash flow hedges: Accounts Payable, Accrued Expenses, and Other Liabilities $ — $ 3,335 |
Schedule of cash flow hedges included in accumulated other comprehensive income (loss) | The table below presents the effect of the Company’s derivative financial instruments in the Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2022 and 2021 ( presented 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 March 31, 2022 2021 2022 2021 Interest rate swaps $ 20,581 $ 23,954 Interest Expense $ 82 $ 1,693 |
Schedule of offsetting assets and liabilities | The table below presents a gross presentation of the effects of offsetting and a net presentation of the Company’s derivatives as of March 31, 2022 and December 31, 2021. 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 ( presented in thousands Offsetting of Derivative Assets as of March 31, 2022 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 $ 19,114 $ — $ 19,114 $ — $ — $ 19,114 Offsetting of Derivative Liabilities as of March 31, 2022 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 $ — $ — $ — $ — $ — $ — Offsetting of Derivative Assets as of December 31, 2021 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 $ 1,868 $ — $ 1,868 $ (1,679) $ — $ 189 Offsetting of Derivative Liabilities as of December 31, 2021 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 $ 3,335 $ — $ 3,335 $ (1,679) $ — $ 1,656 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Measurements | |
Schedule of assets and liabilities measured at fair value | The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 (in thousands): Total Fair Value Level 2 March 31, 2022 Derivative assets - interest rate swaps $ 19,114 $ 19,114 Derivative liabilities - interest rate swaps $ — $ — December 31, 2021 Derivative assets - interest rate swaps $ 1,868 $ 1,868 Derivative liabilities - interest rate swaps $ 3,335 $ 3,335 |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Equity Incentive Plan | |
Schedule of restricted share activity | Restricted share activity is summarized as follows: Shares Weighted Average Outstanding Grant Date ( in thousands ) Fair Value Unvested restricted stock at December 31, 2021 175 $ 64.90 Restricted stock granted 77 $ 62.64 Restricted stock vested (52) $ 60.51 Unvested restricted stock at March 31, 2022 200 $ 65.16 |
Schedule of valuation assumptions used | During the years ended December 31, 2022, 2021 and 2020 the following assumptions were used: Three Months Ended March 31, 2022 2021 2020 Expected term (years) 2.9 2.9 2.9 Volatility 33.5 % 33.9 % 18.4 % Risk-free rate 1.8 % 0.2 % 1.3 % |
Schedule of performance share and unit activity | Performance unit and shares activity is summarized as follows: Target Number Weighted Average of Awards Grant Date (in thousands ) Fair Value Performance units and shares at December 31, 2021 - three-year performance period to be completed 78 $ 63.35 Performance units granted 34 $ 68.59 Performance units and shares at March 31, 2022- three-year performance period completed (27) $ 65.66 Performance units and shares at March 31, 2022 - three-year performance period to be completed 85 $ 67.64 Shares Weighted Average Outstanding Grant Date (in thousands) Fair Value Performance shares - three-year performance period completed but not yet vested at December 31, 2021 27 $ 55.29 Shares earned at completion of three-year performance period (1) 28 $ 65.66 Shares vested (23) $ 54.83 Performance shares - three-year performance period completed but not yet vested March 31, 2022 32 $ 57.90 (1)Performance shares granted in 2019 for which the three-year performance period was completed in 2022 paid out at the 106% performance level |
Organization (Details)
Organization (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
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 | 99.50% | 99.50% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Real Estate Properties (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Summary of Significant Accounting Policies | ||
Land | $ 0 | $ 4,485 |
Lease intangibles - asset | 0 | 1,213 |
Real Estate Held-for-sale, gross | 0 | 5,698 |
Accumulated depreciation and amortization, net | 0 | (22) |
Total Real Estate Held for Sale, net | $ 0 | $ 5,676 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Amortization of Deferred Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
Amortization of deferred charges | $ 16,973 | $ 10,671 |
Lease intangibles (in-place) | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
Amortization of deferred charges | 8,795 | 5,915 |
Lease intangibles (above-market) | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
Amortization of deferred charges | 9,636 | 6,401 |
Lease intangibles (below-market) | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
Amortization of below market lease | $ (1,458) | $ (1,645) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Future Amortization of Deferred Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Year Ending December 31, | ||
2022 (Remaining) | $ 55,066 | |
2023 | 69,665 | |
2024 | 63,625 | |
2025 | 59,147 | |
2026 | 55,299 | |
Thereafter | 379,996 | |
Total | 682,798 | |
Total | (33,711) | $ (33,075) |
Lease intangibles (in-place) | ||
Year Ending December 31, | ||
2022 (Remaining) | 29,842 | |
2023 | 37,665 | |
2024 | 35,021 | |
2025 | 32,596 | |
2026 | 30,157 | |
Thereafter | 156,469 | |
Total | 321,750 | |
Lease intangibles (above-market) | ||
Year Ending December 31, | ||
2022 (Remaining) | 29,583 | |
2023 | 37,186 | |
2024 | 33,120 | |
2025 | 30,631 | |
2026 | 28,868 | |
Thereafter | 235,371 | |
Total | 394,759 | |
Lease intangibles (below-market) | ||
Year Ending December 31, | ||
2022 (Remaining) | (4,359) | |
2023 | (5,186) | |
2024 | (4,516) | |
2025 | (4,080) | |
2026 | (3,726) | |
Thereafter | (11,844) | |
Total | $ (33,711) |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Reconciliation of cash and cash equivalents and cash held in escrow - (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Cash and Cash Equivalents, at Carrying Value [Abstract] | ||||
Cash and cash equivalents | $ 24,888 | $ 43,252 | ||
Cash held in escrow | 878 | 1,998 | ||
Total of cash and cash equivalents and cash held in escrow | $ 25,766 | $ 45,250 | $ 7,369 | $ 7,955 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Earnings per Share (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share Basic And Diluted [Line Items] | ||
Net income attributable to Agree Realty Corporation | $ 36,113 | $ 30,112 |
Less: Series A preferred stock dividends | (1,859) | 0 |
Net Income Attributable to Common Stockholders | 34,254 | 30,112 |
Less: Income attributable to unvested restricted shares | (110) | (103) |
Net income used in basic and diluted earnings per share | $ 34,144 | $ 30,009 |
Weighted average number of common shares outstanding | 71,471,247 | 63,048,905 |
Less: Unvested restricted stock | (242,317) | (220,008) |
Weighted average number of common shares outstanding used in basic earnings per share | 71,228,930 | 62,828,897 |
Weighted average number of common shares outstanding used in basic earnings per share | 71,228,930 | 62,828,897 |
Effect of dilutive securities: | ||
Share-based compensation | 58,190 | 62,454 |
Weighted average number of common shares outstanding used in diluted earnings per share | 71,336,103 | 62,940,360 |
Restricted Stock [Member] | ||
Effect of dilutive securities: | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 4,733 | 6,920 |
Performance Units [Member] | ||
Effect of dilutive securities: | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,078 | |
2020 ATM Forward Equity | ||
Effect of dilutive securities: | ||
Forward equity offering | 0 | 49,009 |
2020 ATM Forward Equity | Forward Sale Agreement [Member] | ||
Effect of dilutive securities: | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,397 | |
2021 ATM Forward Equity | ||
Effect of dilutive securities: | ||
Forward equity offering | 980 | 0 |
2021 ATM Forward Equity | Forward Sale Agreement [Member] | ||
Effect of dilutive securities: | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 76,623 | 664 |
December 2021 Forward Offering | ||
Effect of dilutive securities: | ||
Forward equity offering | 48,003 | 0 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Narrative (Details) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended |
May 03, 2022USD ($) | Mar. 31, 2022USD ($)propertysegmenttenantshares | Dec. 31, 2021USD ($)property | |
Accounting Policies [Line Items] | |||
Outstanding units | shares | 75,522,199 | ||
Number of real estate properties held-for-sale | property | 0 | 1 | |
Cash in excess of FDIC insured amounts | $ 24 | $ 44 | |
Straight-line rent receivables | $ 44 | 40.9 | |
Number of tenants for whom, collections no longer probable | tenant | 3 | ||
Allowance for doubtful accounts receivable (in dollars) | $ 0.8 | 0.8 | |
Number of Reportable Segments | segment | 1 | ||
Proceeds from Sale of Real Estate | $ 7.6 | ||
Subsequent Event [Member] | |||
Accounting Policies [Line Items] | |||
Proceeds from Sale of Real Estate | $ 14 | ||
Unbilled Revenues [Member] | |||
Accounting Policies [Line Items] | |||
Accounts Receivable, Gross | $ 7.7 | $ 9.1 | |
Building [Member] | |||
Accounting Policies [Line Items] | |||
Useful life | 40 years | ||
Building Improvements [Member] | Minimum [Member] | |||
Accounting Policies [Line Items] | |||
Useful life | 10 years | ||
Building Improvements [Member] | Maximum [Member] | |||
Accounting Policies [Line Items] | |||
Useful life | 20 years | ||
Agree Realty Corporation [Member] | General Partner [Member] | |||
Accounting Policies [Line Items] | |||
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Ownership Interest | 99.50% | 99.50% | |
Agree Realty Corporation [Member] | Third party [Member] | |||
Accounting Policies [Line Items] | |||
Non controlling interest | 0.50% | 0.50% |
Leases - Tenant Leases (Details
Leases - Tenant Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Leases | ||
Percentage of portfolio leased | 99.60% | |
Weighted average remaining lease term | 9 years 1 month 6 days | |
Annualized base rent derived from tenants (as a percent) | 67.80% | |
Option to extend lease | true | |
Lease, practical expedients | true | |
Lease Income | ||
Total lease payments | $ 103,362 | $ 80,200 |
Less: Operating cost reimbursements and percentage rents | 11,914 | 8,976 |
Total non-variable lease payments | 91,448 | $ 71,224 |
Future non-variable lease payments | ||
2022 (remaining) | 285,903 | |
2023 | 376,785 | |
2024 | 365,734 | |
2025 | 353,794 | |
2026 | 335,943 | |
Thereafter | 1,859,443 | |
Lease payments receivable | $ 3,577,602 |
Leases - Deferred Revenue (Deta
Leases - Deferred Revenue (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Leases | ||
Deferred revenue | $ 13.5 | $ 13.5 |
Leases - Land Lease Obligations
Leases - Land Lease Obligations (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Lease costs | |||
Right of use assets | $ 59,500 | $ 59,700 | |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets | Other Assets | |
Operating Lease Liability, Before Depreciation | $ 24,000 | $ 24,100 | |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities | |
Land lease expense | $ 402 | $ 346 | |
Lease liabilities | 17,783 | ||
Amortization of right of use assets for finance lease | 0 | 0 | |
Operating cash outflows | $ 298 | $ 267 | |
Weighted-average remaining lease term - operating leases (years) | 33 years 8 months 12 days | 36 years 3 months 18 days | |
Operating cash outflows | $ 64 | $ 22 | |
Financing cash outflows | $ 20 | $ 34 | |
Weighted-average remaining lease term - finance leases (years) | 2 years 6 months | 3 years 6 months | |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 0 | $ 6,302 | |
Right-of-use assets net change | $ 0 | $ 6,302 | |
Weighted-average discount rate - operating leases | 4.00% | 4.00% | |
Weighted-average discount rate - finance leases | 4.00% | 4.00% | |
Maturity Analysis of Lease Liabilities for Operating Leases | |||
Lease payments 2022 (remaining) | $ 900 | ||
Lease payments 2023 | 1,197 | ||
Lease payments 2024 | 1,197 | ||
Lease payments 2025 | 1,197 | ||
Lease payments 2026 | 1,195 | ||
Lease payment Thereafter | 29,851 | ||
Total lease payments | 35,537 | ||
Imputed interest 2022 (remaining) | (546) | ||
Imputed interest 2023 | (711) | ||
Imputed interest 2024 | (690) | ||
Imputed interest 2025 | (669) | ||
Imputed interest 2026 | (647) | ||
Imputed interest Thereafter | (14,491) | ||
Total imputed interest | (17,754) | ||
Total Lease Liabilities 2022 (remaining) | 354 | ||
Total Lease Liabilities 2023 | 486 | ||
Total Lease Liabilities 2024 | 507 | ||
Total Lease Liabilities 2025 | 528 | ||
Total Lease Liabilities 2026 | 548 | ||
Total Lease Liabilities Thereafter | 15,360 | ||
Total lease liabilities | 17,783 | ||
Maturity Analysis of Lease Liabilities for Finance Leases | |||
Lease payments 2022 (remaining) | 252 | ||
Lease payments 2023 | 336 | ||
Lease payments 2024 | 6,252 | ||
Lease payments 2025 | 0 | ||
Lease Payment 2026 | 0 | ||
Thereafter | 0 | ||
Total lease payments | 6,840 | ||
Imputed interest 2022 (remaining) | (191) | ||
Imputed interest 2023 | (252) | ||
Imputed interest 2024 | (207) | ||
Imputed interest 2025 | 0 | ||
Imputed interest 2026 | 0 | ||
Imputed interest Thereafter | 0 | ||
Imputed interest Total | (650) | ||
Total lease Liabilities 2022 (remaining) | 61 | ||
Total Lease Liabilities 2023 | 84 | ||
Total Lease Liabilities 2024 | 6,045 | ||
Total Lease Liabilities 2024 | 0 | ||
Total Lease Liabilities 2026 | 0 | ||
Total Lease Liabilities Thereafter | 0 | ||
Total lease liabilities | 6,190 | ||
Maximum [Member] | |||
Lease costs | |||
Finance lease right-of-use asset amortization and interest expense | $ 100 |
Real Estate Investments (Detail
Real Estate Investments (Details) $ in Thousands, ft² in Millions | 3 Months Ended | |||
Mar. 31, 2022USD ($)ft²propertysitestateitem | Mar. 31, 2021USD ($) | Dec. 31, 2021USD ($)ft²property | Nov. 18, 2014USD ($) | |
Real Estate Investments | ||||
Number of Real Estate Properties | property | 1,510 | 1,404 | ||
Land Subject to Ground Leases | ft² | 31 | 29.1 | ||
Net Real Estate Investments | $ 4,731,698 | $ 4,367,111 | ||
Retail Net Lease Assets Purchased | item | 106 | |||
Payments to Acquire Property, Plant, and Equipment | $ 409,800 | |||
Number Of States Properties Located | state | 32 | |||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life (in year) | 9 years 2 months 12 days | |||
Payments to Acquire Land Held-for-use | $ 99,800 | |||
Payments for Capital Improvements | 249,200 | |||
Reimbursement Agreement, Debt Covenant, Assets Value | $ 14,000 | |||
Payments to Acquire Intangible Assets | $ 60,800 | |||
Number Of Development And Partner Capital Solutions Projects Commenced | site | 15 | |||
Number of Development and Partner Capital Solutions Projects Construction | site | 17 | |||
Number of properties sold | property | 1 | |||
Proceeds from Sale of Real Estate | $ 7,600 | |||
Gains on Sales of Investment Real Estate | 2,300 | |||
Provision for impairment | 1,015 | $ 0 | ||
Impaired Real Estate Estate Fair Value | $ 1,800 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||
May 31, 2021 | Aug. 31, 2020 | Jun. 30, 2021 | Dec. 31, 2021 | Mar. 31, 2022 | Dec. 31, 2019 | Oct. 31, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | Jul. 31, 2016 | May 31, 2015 | Nov. 18, 2014 | |
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | $ 1,862,428 | ||||||||||||
Maximum [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Reimbursement Agreement, Amount | $ 14,000 | ||||||||||||
Revolving Credit Facility [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | 320,000 | ||||||||||||
Mortgages [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | $ 32,635 | 32,428 | |||||||||||
Debt Instrument, Collateral Amount | $ 38,700 | ||||||||||||
Long-term Debt, Weighted Average Interest Rate | 4.16% | 4.04% | |||||||||||
Senior Unsecured Debt [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | $ 1,510,000 | $ 1,510,000 | |||||||||||
Amount of gain (loss) on early extinguishment of debt | $ 14,600 | ||||||||||||
Swap Termination Costs | 13,400 | ||||||||||||
Write off of Deferred Debt Issuance Cost | $ 1,200 | ||||||||||||
Senior Unsecured Debt [Member] | Revolving Credit Facility [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Face Amount | 1,000,000 | $ 500,000 | |||||||||||
Debt Instrument, Accordion Option Additional Lender Commitments, Maximum | $ 1,750,000 | ||||||||||||
Senior Unsecured Debt [Member] | Revolving Credit Facility [Member] | LIBOR [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 0.775% | ||||||||||||
Senior Unsecured Debt [Member] | Revolving Credit Facility [Member] | Minimum [Member] | LIBOR [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 0.725% | ||||||||||||
Senior Unsecured Debt [Member] | Revolving Credit Facility [Member] | Maximum [Member] | LIBOR [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on variable rate | 1.40% | ||||||||||||
Senior Unsecured Debt [Member] | Senior Unsecured Note 2025 and 2027 [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Face Amount | $ 100,000 | ||||||||||||
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 | ||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.16% | ||||||||||||
Senior Unsecured Debt [Member] | 2027 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | 50,000 | 50,000 | |||||||||||
Debt Instrument, Face Amount | $ 50,000 | ||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.26% | ||||||||||||
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 | $ 350,000 | $ 60,000 | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.00% | 4.42% | |||||||||||
Senior Unsecured Debt [Member] | 2028 Senior Unsecured Notes [Member] | Blended All-In Including Interest Rate Swap [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Face Amount | $ 350,000 | ||||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 2.11% | ||||||||||||
Senior Unsecured Debt [Member] | 2029 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | 100,000 | 100,000 | |||||||||||
Debt Instrument, Face Amount | $ 100,000 | ||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.19% | ||||||||||||
Senior Unsecured Debt [Member] | 2030 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | 125,000 | 125,000 | |||||||||||
Debt Instrument, Face Amount | $ 125,000 | ||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.32% | ||||||||||||
Senior Unsecured Debt [Member] | 2030 Senior Unsecured Notes [Member] | Interest rate swap | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Payment on Termination on Agreement | $ 23,400 | ||||||||||||
Senior Unsecured Debt [Member] | 2030 Senior Unsecured Public Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | 350,000 | 350,000 | |||||||||||
Debt Instrument, Face Amount | $ 350,000 | ||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.90% | ||||||||||||
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, Face Amount | $ 350,000 | ||||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 3.49% | ||||||||||||
Senior Unsecured Debt [Member] | 2031 Senior Unsecured Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | 125,000 | 125,000 | |||||||||||
Debt Instrument, Face Amount | $ 125,000 | $ 100,000 | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.47% | 4.41% | |||||||||||
Senior Unsecured Debt [Member] | 2031 Senior Unsecured Notes [Member] | Blended All-In Including Interest Rate Swap [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Face Amount | $ 125,000 | ||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.42% | ||||||||||||
Senior Unsecured Debt [Member] | 2033 Senior Unsecured Public Notes [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Long-term Debt, Gross | $ 300,000 | $ 300,000 | |||||||||||
Debt Instrument, Face Amount | $ 300,000 | ||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.60% | ||||||||||||
Senior Unsecured Debt [Member] | 2033 Senior Unsecured Public Notes [Member] | Interest rate swap | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Derivative Notional Amount, Terminated | $ 300,000 | ||||||||||||
Proceeds From Termination | 16,700 | ||||||||||||
Senior Unsecured Debt [Member] | 2033 Senior Unsecured Public Notes [Member] | Blended All-In Including Interest Rate Swap [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Face Amount | $ 300,000 | ||||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 2.13% | ||||||||||||
Senior Unsecured Debt [Member] | 2024 Term Loan Facility One [Member] | Revolving Credit Facility [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt Instrument, Face Amount | 65,000 | ||||||||||||
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 ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | ||
Total Principal | $ 1,862,428 | |
Total | 1,853,777 | |
Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Total Principal | 32,428 | $ 32,635 |
Unamortized debt issuance costs | (179) | (206) |
Total | 32,249 | 32,429 |
Notes Payable Due January 2023 3.60 Percent [Member] | Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Total Principal | $ 23,640 | $ 23,640 |
Debt Instrument, Interest Rate, Stated Percentage | 3.60% | 3.60% |
Notes Payable Due September 2023 5.01 Percent [Member] | Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Total Principal | $ 4,622 | $ 4,622 |
Debt Instrument, Interest Rate, Stated Percentage | 5.01% | 5.01% |
Notes Payable Due July 2026 6.27 Percent [Member] | Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Total Principal | $ 4,166 | $ 4,373 |
Debt Instrument, Periodic Payment, Principal | $ 92 | $ 92 |
Debt Instrument, Interest Rate, Stated Percentage | 6.27% | 6.27% |
Debt - Senior Unsecured Notes (
Debt - Senior Unsecured Notes (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Total Principal | $ 1,862,428 | |
Long-term Debt, Total | 1,853,777 | |
Senior Unsecured Debt [Member] | ||
Total Principal | 1,510,000 | $ 1,510,000 |
Unamortized debt issuance costs and original issue discount | (14,350) | (14,800) |
Long-term Debt, Total | 1,495,650 | 1,495,200 |
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 Public Notes [Member] | ||
Total Principal | 350,000 | 350,000 |
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 | 350,000 |
Senior Unsecured Debt [Member] | 2031 Senior Unsecured Notes [Member] | ||
Total Principal | 125,000 | 125,000 |
Senior Unsecured Debt [Member] | 2033 Senior Unsecured Public Notes [Member] | ||
Total Principal | $ 300,000 | $ 300,000 |
Debt - Debt Maturities (Details
Debt - Debt Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Long Term Debt Maturities Repayments Of Principal Line Items | ||
Remainder of 2022 | $ 643 | |
2023 | 29,167 | |
2024 | 963 | |
2025 | 51,026 | |
2026 | 320,629 | |
Thereafter | 1,460,000 | |
Total scheduled principal payments | 1,862,428 | |
Original issue discount | (8,651) | |
Total | 1,853,777 | |
Unsecured Revolving Credit Facility | 320,000 | $ 160,000 |
Revolving Credit Facility [Member] | ||
Long Term Debt Maturities Repayments Of Principal Line Items | ||
Total scheduled principal payments | 320,000 | |
Unsecured Revolving Credit Facility | 320,000 | |
Scheduled Principal [Member] | ||
Long Term Debt Maturities Repayments Of Principal Line Items | ||
Remainder of 2022 | 643 | |
2023 | 905 | |
2024 | 963 | |
2025 | 1,026 | |
2026 | 629 | |
Thereafter | 0 | |
Total scheduled principal payments | 4,166 | |
Original issue discount | 0 | |
Total | 4,166 | |
Debt Instrument Balloon Payment [Member] | ||
Long Term Debt Maturities Repayments Of Principal Line Items | ||
Remainder of 2022 | 0 | |
2023 | 28,262 | |
2024 | 0 | |
2025 | 50,000 | |
2026 | 320,000 | |
Thereafter | 1,460,000 | |
Total scheduled principal payments | 1,858,262 | |
Original issue discount | (8,651) | |
Total | $ 1,849,611 |
Common and Preferred Stock (Det
Common and Preferred Stock (Details) | 1 Months Ended | 3 Months Ended | |||||
Dec. 31, 2021USD ($)shares | Sep. 30, 2021USD ($)$ / sharesshares | Jun. 30, 2021USD ($)shares | Jan. 31, 2021USD ($)shares | Mar. 31, 2022USD ($)shares | Mar. 31, 2021USD ($)shares | Feb. 28, 2021USD ($) | |
Class of Stock [Line Items] | |||||||
Common stock, shares authorized | 180,000,000 | 180,000,000 | |||||
Net proceeds received | $ | $ 250,684,000 | $ 258,105,000 | |||||
Series A Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock, dividend rate, percentage | 4.25% | ||||||
Preferred Stock, Liquidation Preference, Value | $ | $ 25,000 | $ 25,000 | $ 25,000 | ||||
Redeemable Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred Stock, Liquidation Preference Per Share | $ / shares | $ 25 | ||||||
Preferred Stock, Redemption Price Per Share | $ / shares | 25 | ||||||
Preferred stock, dividends to be declared monthly (in dollars per share) | $ / shares | 0.08854 | ||||||
Preferred stock, dividends declared per annum (in dollars per share) | $ / shares | $ 1.0625 | ||||||
Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares authorized | 4,600,000 | 3,450,000 | |||||
Shares issued | 3,791,964 | 4,028,410 | |||||
Common Stock [Member] | Forward Sale Agreement [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares authorized | 5,750,000 | ||||||
Shares issued | 1,666,668 | ||||||
Net proceeds received | $ | $ 107,700,000 | ||||||
At-Market Equity Program [Member] | Common Stock [Member] | Forward Sale Agreement [Member] | |||||||
Class of Stock [Line Items] | |||||||
Forward Contract Indexed to Issuer's Equity, Shares | 2,125,296 | ||||||
Size | $ | $ 500,000,000 | ||||||
Net proceeds received | $ | $ 143,100,000 | ||||||
Over-Allotment Option [Member] | Series A Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Shares issued | 7,000 | ||||||
Stockholders' Equity Note, Stock Split, Conversion Ratio | 0.001 | ||||||
Proceeds from Series A preferred stock offering, net | $ | $ 170,300,000 | ||||||
Over-Allotment Option [Member] | Redeemable Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Shares issued | 7,000,000 | ||||||
Over-Allotment Option [Member] | Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares authorized | 600,000 | 450,000 | |||||
Net proceeds received | $ | $ 327,000,000 | $ 221,400,000 | |||||
Over-Allotment Option [Member] | Common Stock [Member] | Forward Sale Agreement [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares authorized | 750,000 | ||||||
Net proceeds received | $ | $ 374,800,000 |
Dividends and Distribution Pa_2
Dividends and Distribution Payable (Details) - $ / shares | 1 Months Ended | 3 Months Ended |
Sep. 30, 2021 | Mar. 31, 2022 | |
Agree Limited Partnership [Member] | ||
Dividends Payable [Line Items] | ||
Cash dividends declared per common share (in dollars per share) | $ 0.227 | |
Redeemable Preferred Stock [Member] | ||
Dividends Payable [Line Items] | ||
Cash dividends declared per depositary share of Series A preferred stock | $ 0.04132 | $ 0.08854 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Taxes | ||
Income Tax Expense | $ 719 | $ 1,009 |
Effective Income Tax Rate Reconciliation, Prior Year Income Taxes, Amount | $ 500 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activity (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |||||||||
May 31, 2021 | Oct. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2016 | Jul. 31, 2014 | Mar. 31, 2022 | Mar. 31, 2021 | Jul. 31, 2021 | Feb. 28, 2021 | Dec. 31, 2020 | Aug. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Realized gain (loss) on settlement of interest rate swaps | $ 82 | $ 500 | |||||||||
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimated Net Amount to be Transferred | 300 | ||||||||||
Accelerated loss out of OCI | 13,400 | ||||||||||
Derivative, Net Liability Position, Aggregate Fair Value | 19,200 | ||||||||||
Interest Rate Swap Agreement In August 2020 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 100,000 | ||||||||||
Realized gain (loss) on settlement of interest rate swaps | $ 8,000 | ||||||||||
Interest Rate Swap Agreement In December 2020 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 100,000 | ||||||||||
Realized gain (loss) on settlement of interest rate swaps | 5,600 | ||||||||||
Interest Rate Swap Agreement, in July 2014 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 65,000 | ||||||||||
Realized gain (loss) on settlement of interest rate swaps | (300) | ||||||||||
Description of Interest Rate Cash Flow Hedge Activities | the Company received 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 | $ 65,000 | ||||||||||
Derivative, Inception Date | Jul. 21, 2014 | ||||||||||
Derivative, Maturity Date | Jul. 21, 2021 | ||||||||||
Interest Rate Swap Agreement, in June 2016 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 40,000 | ||||||||||
Realized gain (loss) on settlement of interest rate swaps | (1,000) | ||||||||||
Description of Interest Rate Cash Flow Hedge Activities | the Company received 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 | $ 40,000 | ||||||||||
Derivative, Inception Date | Aug. 1, 2016 | ||||||||||
Derivative, Maturity Date | Jul. 1, 2023 | ||||||||||
Interest Rate Swap Agreement, in December 2018 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 100,000 | ||||||||||
Realized gain (loss) on settlement of interest rate swaps | (9,200) | ||||||||||
Description of Interest Rate Cash Flow Hedge Activities | the Company received 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 | $ 100,000 | ||||||||||
Derivative, Inception Date | Dec. 27, 2018 | ||||||||||
Derivative, Maturity Date | Jan. 15, 2026 | ||||||||||
Interest Rate Swap Agreement, Sixty-Five Million in October 2019 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 65,000 | ||||||||||
Realized gain (loss) on settlement of interest rate swaps | (1,800) | ||||||||||
Description of Interest Rate Cash Flow Hedge Activities | the Company received from the counterparty interest on the notional amount based on one month LIBOR and pays to the counterparty a fixed rate of 1.4275% | ||||||||||
Fixed interest rate | 1.4275% | ||||||||||
Derivative, Amount of Hedged Item | $ 65,000 | ||||||||||
Derivative, Inception Date | Jul. 12, 2021 | ||||||||||
Derivative, Maturity Date | Jan. 12, 2024 | ||||||||||
Interest Rate Swap Agreement, Thirty-Five Million in October 2019 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 35,000 | ||||||||||
Realized gain (loss) on settlement of interest rate swaps | (1,100) | ||||||||||
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 1.4265% | ||||||||||
Fixed interest rate | 1.4265% | ||||||||||
Derivative, Amount of Hedged Item | $ 35,000 | ||||||||||
Derivative, Inception Date | Sep. 29, 2020 | ||||||||||
Derivative, Maturity Date | Jan. 12, 2024 | ||||||||||
Interest Rate Swap Agreement, in February 2021 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 100,000 | ||||||||||
Realized gain (loss) on settlement of interest rate swaps | $ 3,100 | ||||||||||
Interest Rate Swap Agreement in May and July 2021 [Member] | |||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||
Derivative, Notional Amount | $ 300,000 | ||||||||||
Fair Value, Net Asset (Liability) | $ 19,100 |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activity - Interest Rate Derivatives (Details) - Interest rate swap $ in Thousands | Mar. 31, 2022USD ($)DerivativeInstrument | Dec. 31, 2021USD ($)DerivativeInstrument |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Interest Rate Derivatives, Number of Instruments | DerivativeInstrument | 3 | 3 |
Interest Rate Derivatives, Notional Amount | $ | $ 300,000 | $ 300,000 |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activity - Fair Value (Details) - Interest rate swap - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Other Assets, net | ||
Derivatives designated as cash flow hedges | ||
Interest Rate Cash Flow Hedge Asset at Fair Value | $ 19,114 | $ 1,868 |
Accounts Payable, Accrued Expenses, and Other Liabilities | ||
Derivatives designated as cash flow hedges | ||
Interest Rate Cash Flow Hedge Liability at Fair Value | $ 0 | $ 3,335 |
Derivative Instruments and He_6
Derivative Instruments and Hedging Activity - Consolidated statements of operations and other comprehensive loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Interest Expense [Member] | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Instruments, Amount of Income/(Loss) Reclassified from Accumulated OCI into Expense | $ 82 | $ 1,693 |
Interest rate swap | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Other comprehensive income (loss) - change in fair value and settlement of interest rate swaps | $ 20,581 | $ 23,954 |
Derivative Instruments and He_7
Derivative Instruments and Hedging Activity - Offsetting of Derivative Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Derivative Instruments and Hedging Activity | ||
Gross Amounts of Recognized Assets | $ 19,114 | $ 1,868 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Assets presented in the statement of Financial Position | 19,114 | 1,868 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 0 | (1,679) |
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 | 19,114 | 189 |
Gross Amounts of Recognized Liabilities | 0 | 3,335 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Liabilities presented in the statement of Financial Position | 0 | 3,335 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 0 | (1,679) |
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 | $ 0 | $ 1,656 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Derivative [Line Items] | ||
Long-term Debt, Gross | $ 1,862,428 | |
Revolving Credit Facility [Member] | ||
Derivative [Line Items] | ||
Long-term Debt, Gross | 320,000 | |
Mortgages [Member] | ||
Derivative [Line Items] | ||
Long-term Debt, Gross | 32,428 | $ 32,635 |
Senior Unsecured Debt [Member] | ||
Derivative [Line Items] | ||
Long-term Debt, Gross | 1,510,000 | 1,510,000 |
Long-term Debt [Member] | Revolving Credit Facility [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Derivative [Line Items] | ||
Value of debt | 320,000 | 160,000 |
Long-term Debt [Member] | Mortgages [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Derivative [Line Items] | ||
Long-term Debt, Gross | 32,200 | 32,600 |
Value of debt | 33,100 | 33,900 |
Long-term Debt [Member] | Senior Unsecured Debt [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Derivative [Line Items] | ||
Long-term Debt, Gross | 1,500,000 | 1,500,000 |
Value of debt | $ 1,450,000 | $ 1,570,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Assets and Liabilities (Details) - Interest rate swap - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 19,114 | $ 1,868 |
Derivative liabilities | 0 | 3,335 |
Fair Value, Inputs, Level 2 [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 19,114 | 1,868 |
Derivative liabilities | $ 0 | $ 3,335 |
Equity Incentive Plan (Details)
Equity Incentive Plan (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | 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 | 328,713 | |||
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 5 years | |||
Recognized share based compensation | $ 1 | $ 0.9 | ||
Unrecognized compensation, other than options | $ 12.4 | |||
Unrecognized compensation recognition period | 3 years 9 months 18 days | |||
Fair value inputs forfeiture rate | 0.00% | |||
Intrinsic value of restricted shares | $ 1.7 | 1.8 | ||
Shares Outstanding, granted | 77,000 | |||
Fair value of shares granted to directors | $ 62.64 | |||
Restricted Stock [Member] | Director | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
Recognized share based compensation | $ 0.2 | |||
Unrecognized compensation, other than options | $ 0.5 | |||
Fair value inputs forfeiture rate | 0.00% | |||
Shares Outstanding, granted | 10,636 | |||
Fair value of shares granted to directors | $ 62.62 | |||
Performance Units And Shares [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | 3 years | ||
Fair value inputs forfeiture rate | 0.00% | |||
Amortization period of compensation expense | 5 years | |||
Shares Outstanding, granted | 34,000 | |||
Fair value of shares granted to directors | $ 68.59 | |||
Performance Units And Shares [Member] | 3 Year Performance period to be completed | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Recognized share based compensation | $ 0.3 | 0.2 | ||
Unrecognized compensation, other than options | $ 4.6 | |||
Unrecognized compensation recognition period | 4 years | |||
Vesting percentage | 50.00% | |||
Performance Units And Shares [Member] | 3 Year Performance period completed | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Recognized share based compensation | $ 0.1 | $ 0.1 | ||
Unrecognized compensation, other than options | $ 0.4 | |||
Unrecognized compensation recognition period | 1 year 2 months 12 days | |||
Vesting percentage | 50.00% | |||
Performance Units And Shares [Member] | Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 5 years |
Equity Incentive Plan - Restric
Equity Incentive Plan - Restricted share activity (Details) - Restricted Stock [Member] shares in Thousands | 3 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Outstanding, at beginning of the period | shares | 175 |
Shares Outstanding, granted | shares | 77 |
Shares Outstanding, vested | shares | (52) |
Shares Outstanding, at end of the period | shares | 200 |
Weighted Average Grant Date Fair Value, at beginning of the period (in dollars per share) | $ / shares | $ 64.90 |
Weighted Average Grant Date Fair Value, granted (in dollars per share) | $ / shares | 62.64 |
Weighted Average Grant Date Fair Value, vested (in dollars per share) | $ / shares | 60.51 |
Weighted Average Grant Date Fair Value, at end of the period (in dollars per share) | $ / shares | $ 65.16 |
Equity Incentive Plan - Valuati
Equity Incentive Plan - Valuation assumption (Details) - Performance Units And Shares [Member] | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (years) | 2 years 10 months 24 days | 2 years 10 months 24 days | 2 years 10 months 24 days |
Volatility | 33.50% | 33.90% | 18.40% |
Risk-free rate | 1.80% | 0.20% | 1.30% |
Equity Incentive Plan - Perform
Equity Incentive Plan - Performance share activity (Details) - $ / shares shares in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Performance Shares [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares Outstanding, at beginning of the period | 27 | |
Shares Outstanding, granted | 28 | |
Shares Outstanding, vested | (23) | |
Shares Outstanding, at end of the period | 32 | 27 |
Weighted Average Grant Date Fair Value, at beginning of the period (in dollars per share) | $ 55.29 | |
Weighted Average Grant Date Fair Value, granted (in dollars per share) | 65.66 | |
Weighted Average Grant Date Fair Value, vested (in dollars per share) | 54.83 | |
Weighted Average Grant Date Fair Value, at end of the period (in dollars per share) | $ 57.90 | $ 55.29 |
Percentage of performance shares paid out | 106.00% | |
Vesting period | 3 years | 3 years |
Performance Units And Shares [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares Outstanding, at beginning of the period | 78 | |
Shares Outstanding, granted | 34 | |
Shares Outstanding, vested | (27) | |
Shares Outstanding, at end of the period | 85 | 78 |
Weighted Average Grant Date Fair Value, at beginning of the period (in dollars per share) | $ 63.35 | |
Weighted Average Grant Date Fair Value, granted (in dollars per share) | 68.59 | |
Weighted Average Grant Date Fair Value, vested (in dollars per share) | 65.66 | |
Weighted Average Grant Date Fair Value, at end of the period (in dollars per share) | $ 67.64 | $ 63.35 |
Vesting period | 3 years | 3 years |