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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 1-12928

AGREE REALTY CORPORATION

(Exact name of Registrant as specified in its charter)

Maryland

    

38-3148187

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

70 E. Long Lake Road, Bloomfield Hills, Michigan 48304

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (248) 737-4190

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange
On Which Registered

Common Stock, $.0001 par value

ADC

New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
No 

The aggregate market value of the Registrant’s shares of common stock held by non-affiliates was $2,688,004,412 as of June 30, 2019, based on the closing price of $64.05 on the New York Stock Exchange on that date.

At February 19, 2020, there were 45,569,487 shares of common stock, $.0001 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for the annual shareholder meeting to be held in 2020 are incorporated by reference into Part III of this Annual Report on Form 10-K as noted herein.

Table of Contents

AGREE REALTY CORPORATION

Index to Form 10-K

Page

PART I

 

Item 1:

Business

1

 

Item 1A:

Risk Factors

6

 

Item 1B:

Unresolved Staff Comments

18

 

Item 2:

Properties

18

 

Item 3:

Legal Proceedings

22

 

Item 4:

Mine Safety Disclosures

22

 

PART II

 

Item 5:

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

22

 

Item 6:

Selected Financial Data

24

 

Item 7:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

 

Item 7A:

Quantitative and Qualitative Disclosure about Market Risk

35

 

Item 8:

Financial Statements and Supplementary Data

37

 

Item 9:

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

37

 

Item 9A:

Controls and Procedures

37

 

Item 9B:

Other Information

38

 

PART III

 

 

Item 10:

Directors, Executive Officers and Corporate Governance

39

 

Item 11:

Executive Compensation

39

 

Item 12:

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

39

 

Item 13:

Certain Relationships and Related Transactions, and Director Independence

39

 

Item 14:

Principal Accountant Fees and Services

39

 

PART IV

 

Item 15:

Exhibits and Financial Statement Schedules

40

 

Consolidated Financial Statements and Notes

F-1

SIGNATURES

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PART I

Cautionary Note Regarding Forward-Looking Statements

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Agree Realty Corporation intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” “may,” “will,” “seek,” “could,” “project,” or similar expressions. Forward-looking statements in this report include information about possible or assumed future events, including, among other things, discussion and analysis of our future financial condition, results of operations, our strategic plans and objectives, occupancy and leasing rates and trends, liquidity and ability to refinance our indebtedness as it matures, anticipated expenditures of capital, and other matters. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect actual results, performances or achievements. Factors which may cause actual results to differ materially from current expectations, include, but are not limited to: the global and national economic conditions and changes in general economic, financial and real estate market conditions; changes in our business strategy; the potential need to fund improvements or other capital expenditures out of operating cash flow; financing risks, such as the inability to obtain debt or equity financing on favorable terms or at all; the level and volatility of interest rates; our ability to re-lease space as leases expire; loss or bankruptcy of one or more of our major tenants; our ability to maintain our qualification as a real estate investment trust (“REIT”) for federal income tax purposes and the limitations imposed on our business by our status as a REIT; and legislative or regulatory changes, including changes to laws governing REITs. The factors included in this report, including the documents incorporated by reference, and documents the Company subsequently files or furnishes with the SEC are not exhaustive and additional factors could cause actual results to differ materially from that described in the forward-looking statements. For a discussion of additional risk factors, see the factors included under the caption “Risk Factors” within this report. All forward-looking statements are based on information that was available, and speak only, as of the date on which they were made. Except as required by law, the Company disclaims any obligation to review or update these forward–looking statements to reflect events or circumstances as they occur.

Unless the context otherwise requires, references in this Annual Report on Form 10-K to the terms “registrant,” the “Company,” “Agree Realty,” “we,” “our” or “us” refer to Agree Realty Corporation and all of its consolidated subsidiaries, including its majority owned operating partnership, Agree Limited Partnership (the “Operating Partnership”). Agree Realty has elected to treat certain subsidiaries as taxable real estate investment trust subsidiaries which are collectively referred to herein as the “TRS.”

Item 1:       Business

General

The Company is a fully integrated 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 (“NYSE”) in 1994. The Company’s assets are held by, and all of its operations are conducted through, directly or indirectly, the Operating Partnership of which the Company is the sole general partner and in which it held a 99.2% interest as of December 31, 2019. Under the partnership agreement of the Operating Partnership, we, as the sole general partner, have exclusive responsibility and discretion in the management and control of the Operating Partnership.  As of December 31, 2019, our portfolio consisted of 821 properties located in 46 states and totaling approximately 14.6 million square feet of gross leasable area (“GLA”).

As of December 31, 2019, our portfolio was approximately 99.6% leased and had a weighted average remaining lease term of approximately 10.0 years. A significant majority of our properties are leased to national tenants and approximately 58.2% of our annualized base rent was derived from tenants, or parent entities thereof, with an investment grade credit

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rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Association of Insurance Commissioners. Substantially all of our tenants are subject to net lease agreements. A net lease typically requires the tenant to be responsible for minimum monthly rent and property operating expenses including property taxes, insurance and maintenance.

As of December 31, 2019, we had 41 full-time employees, including executive, investment, due diligence, construction, accounting, asset management and administrative personnel.

Our principal executive offices are located at 70 E. Long Lake Road, Bloomfield Hills, MI 48304 and our telephone number is (248) 737-4190. We maintain a website at www.agreerealty.com. Our reports are electronically filed with or furnished to the SEC pursuant to Section 13 or 15(d) of the Exchange Act and can be accessed through this site, free of charge, as soon as reasonably practicable after we electronically file or furnish such reports. These filings are also available on the SEC’s website at www.sec.gov. Our website also contains copies of our corporate governance guidelines and code of business conduct and ethics, as well as the charters of our audit, compensation and nominating and governance committees. The information on our website is not part of this report.

Recent Developments

For a discussion of business developments that occurred in 2019, see Management's Discussion and Analysis of Financial Condition and Results of Operations later in this report.  Certain summarized highlights are contained below.

Investments and Disposition Activity

During 2019, we completed approximately $724.7 million of investments in net leased retail real estate, including acquisition and closing costs. Total investment volume includes the acquisition of 186 properties for an aggregate purchase price of approximately $702.9 million and the completed development of eight properties for an aggregate cost of approximately $21.8 million. These 194 properties are net leased to 57 different tenants operating in 22 sectors and are located in 40 states. These assets are 100% leased for a weighted average lease term of approximately 11.7 years.

During 2019, we sold 16 properties for net proceeds of $65.5 million.

Leasing

During 2019, excluding properties that were sold, we executed new leases, extensions or options on more than 370,000 square feet of GLA throughout our portfolio. The annualized base contractual rent associated with these new leases, extensions or options is approximately $6.6 million.  Notable new leases, extensions or options included a 40,000 square foot Dave & Buster’s in Austin, Texas and an approximately 30,800 square foot Best Buy in Sanford, Florida.

Dividends

We increased our quarterly dividend per share from $0.555 in March 2019 to $0.570 in June 2019 and further increased our quarterly dividend per share to $0.585 in December 2019.

The fourth quarter 2019 dividend per share of $0.585 represents an annualized dividend of $2.34 per share and an annualized dividend yield of approximately 3.3% based on the last reported sales price of our common stock listed on the NYSE of $70.17 on December 31, 2019.  

We have paid a quarterly cash dividend for 103 consecutive quarters and, although we expect to continue our policy of paying quarterly dividends, we cannot guarantee that we will maintain our current level of dividends, that we will continue our recent pattern of increasing dividends per share or what our actual dividend yield will be in any future period.

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Financing

Equity

During 2019, the Company completed follow-on public offerings of common stock under our existing shelf registration statement, issuing a total of 6,662,500 shares.  These offerings generated total net proceeds of $381.8 million.  Upon settlement of the September 2018 Forward (defined below) in May 2019, the Company issued 3,500,000 shares of common stock.

In July 2019, we entered into a $400.0 million at-the-market equity program (the “2019 ATM Program”) through which we may, from time to time, sell shares of common stock. In addition to selling shares of common stock, we may enter into forward sale agreements through our 2019 ATM Program. During 2019, the Company issued 444,228 shares under the 2019 ATM Program, at an average price of $74.30, realizing gross proceeds of $33.0 million.

During 2019, the Company issued 886,768 shares of common stock, under a previously authorized $250.0 million ATM program (the “2018 ATM Program), at an average price of $66.83, realizing gross proceeds of $59.3 million.  No future issuances will occur under the 2018 ATM Program.

During 2019, the Company entered into forward sale agreements in connection with our 2019 ATM Program to sell an aggregate of 2,003,118 shares of common stock (the “ATM Forward Offerings”). To date, no shares from the ATM Forward Offerings have been settled.  The ATM Forward Offerings are required to be settled by various dates in December 2020.

After considering shares already sold under the 2019 ATM Program including the outstanding ATM Forward Offerings, the Company had $220.1 million of availability remaining under the 2019 ATM Program as of December 31, 2019.  

Debt

In June 2019, we completed a private placement of $125.0 million aggregate principal amount of 4.47% senior unsecured notes due October 2031 (the “2031 Senior Unsecured Notes”). Considering the effect of the hedging activities, the blended all-in rate for the 2031 Senior Unsecured Notes is 4.42%.

In December 2019, we entered into a Second Amended and Restated Revolving Credit and Term Loan Agreement (the “Credit Agreement”), replacing the Company’s previous credit agreement from 2016.   The Credit Agreement provides $600.0 million in unsecured borrowing capacity, composed of a $500.0 million revolving credit facility (the “Revolving Credit Facility”), and $100.0 million in term loan facilities, which mature in January 2024. Subject to certain terms and conditions, the Company may request additional lender commitments of up to an additional aggregate of $500.0 million and may elect to extend the maturity date of the Revolving Credit Facility up to a maximum maturity of January 2025.

All borrowings under the $500.0 million unsecured Revolving Credit Facility bear interest at variable rates plus margins based on the Company’s credit rating.  As of December 31, 2019, the all-in rate on the Revolving Credit Facility was 2.69%.

Business Strategies

Our primary business objective is to generate consistent shareholder returns by primarily investing in and actively managing a diversified portfolio of retail properties net leased to industry leading tenants. The following is a discussion of our investment, financing and asset management strategies.

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Investment

We are primarily focused on the long-term, fee simple ownership of properties net leased to national or large, regional retailers operating in sectors we believe to be more e-commerce and recession resistant. Our leases are typically long-term net leases that require the tenant to pay all property operating expenses, including real estate taxes, insurance and maintenance. We believe that a diversified portfolio of such properties provides for stable and predictable cash flow.

We seek to expand and enhance our portfolio by identifying the best risk-adjusted investment opportunities across our development, Partner Capital Solutions (“PCS”) and acquisitions platforms.

Development: We have been developing retail properties since the formation of our predecessor company in 1971 and our development platform seeks to employ our capabilities to direct all aspects of the development process, including site selection, land acquisition, lease negotiation, due diligence, design and construction. Our developments are typically build-to-suit projects that result in fee simple ownership of the property upon completion.

Partner Capital Solutions: We launched our PCS program in April 2012. Our PCS program allows us to acquire properties or development opportunities by partnering with private developers or retailers on their in-process developments. We offer construction expertise, relationships, access to capital and forward commitments to purchase the properties to facilitate the successful completion of their projects. We typically take fee simple ownership of PCS projects upon their completion.

Acquisitions: Our acquisitions platform was launched in April 2010 in order to expand our investment capabilities by pursuing opportunities that do not fall within our development platform, but that do meet both our real estate and return on investment criteria.

We believe that development and PCS projects have the potential to generate superior risk-adjusted returns on investment in properties that are substantially similar to those we acquire.

We focus on four core principles that underlie our investment criteria:

e-commerce resistance, focusing on leading operators in e-commerce resistant sectors or those that have matured in omni-channel structure
recession resistance, emphasizing a balanced portfolio with exposure to counter-cyclical sectors and retailers with strong credit profiles
avoidance of private equity sponsorship, minimizing exposure to the possibility of such sponsorship overleveraging their acquisitions and reducing retailers’ abilities to invest in their businesses
adherence to strong real estate fundamentals and fungible buildings, protecting against unforeseen changes to our investment philosophies

Each platform leverages the Company’s real estate acumen to pursue investments in net lease retail real estate. Factors that we consider when evaluating an investment include but are not limited to:

overall market-specific characteristics, such as demographics, market rents, competition and retail synergy;
asset-specific characteristics, such as the age, size, location, zoning, use and environmental history, accessibility, physical condition, signage and visibility of the property;
tenant-specific characteristics, including but not limited to the financial profile, operating history, business plan, size, market positioning, geographic footprint, management team, industry and/or sector-specific trends and other characteristics specific to the tenant and parent thereof;
unit-level operating characteristics, including store sales performance and profitability, if available;
lease-specific terms, including term of the lease, rent to be paid by the tenant and other tenancy considerations; and
transaction considerations, such as purchase price, seller profile and other non-financial terms.

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Financing

We seek to maintain a capital structure that provides us with the flexibility to manage our business and pursue our growth strategies, while allowing us to service our debt requirements and generate appropriate risk-adjusted returns for our shareholders. We believe these objectives are best achieved by a capital structure that consists primarily of common equity and prudent amounts of debt financing. However, we may raise capital in any form and under terms that we deem acceptable and in the best interest of our shareholders.

We have previously utilized common stock equity offerings, secured mortgage borrowings, unsecured bank borrowings, private placements of senior unsecured notes and the sale of properties to meet our capital requirements. We continually evaluate our financing policies on an on-going basis in light of current economic conditions, access to various capital markets, relative costs of equity and debt securities, the market value of our properties and other factors.

We occasionally sell common stock through forward sale agreements, enabling the Company to set the price of shares upon pricing the offering while delaying the issuance of shares and the receipt of the net proceeds by the Company.

As of December 31, 2019, our ratio of total debt to enterprise value, assuming the conversion of limited partnership interests in the Operating Partnership (“OP Units”) into shares of common stock, was approximately 21.6%, and our ratio of total debt to total gross assets (before accumulated depreciation) was approximately 29.9%.

As of December 31, 2019, our total debt outstanding before deferred financing costs was $876.1 million, including $37.1 million of secured mortgage debt that had a weighted average fixed interest rate of 4.40% (including the effects of interest rate swap agreements) and a weighted average maturity of 3.4 years, $750.0 million of unsecured borrowings that had a weighted average fixed interest rate of 4.04% (including the effects of interest rate swap agreements) and a weighted average maturity of 8.1 years, and $89.0 million of floating rate borrowings under our revolving credit facility at a weighted average interest rate of approximately 2.69%.

Certain financial agreements to which we are a party contain covenants that limit our ability to incur debt under certain circumstances; however, our organizational documents do not limit the absolute amount or percentage of indebtedness that we may incur. As such, we may modify our borrowing policies at any time without shareholder approval.

Asset Management

We maintain a proactive leasing and capital improvement program that, combined with the quality and locations of our properties, has made our properties attractive to tenants. We intend to continue to hold our properties for long-term investment and, accordingly, place a strong emphasis on the quality of construction and an on-going program of regular and preventative maintenance. Our properties are designed and built to require minimal capital improvements other than renovations or alterations, typically paid for by tenants. Personnel from our corporate headquarters conduct regular inspections of each property and maintain regular contact with major tenants.

We have a management information system designed to provide our management with the operating data necessary to make informed business decisions on a timely basis. This system provides us rapid access to lease data, tenants’ sales history, cash flow budgets and forecasts. Such a system helps us to maximize cash flow from operations and closely monitor corporate expenses.

Competition

The U.S. commercial real estate investment market is a highly competitive industry. We actively compete with many entities engaged in the acquisition, development and operation of commercial properties. As such, we compete with other investors for a limited supply of properties and financing for these properties. Investors include traded and non-traded public REITs, private equity firms, institutional investment funds, insurance companies and private individuals, many of which have greater financial resources than we do and the ability to accept more risk than we believe we can prudently manage. There can be no assurance that we will be able to compete successfully with such entities in our acquisition, development and leasing activities in the future.

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Significant Tenants

No tenant accounted for more than 5.0% of our annualized base rent as of December 31, 2019. See “Item 2 – Properties” for additional information on our top tenants and the composition of our tenant base.

Regulation

Environmental

Investments in real property create the potential for environmental liability on the part of the owner or operator of such real property. If hazardous substances are discovered on or emanating from a property, the owner or operator of the property may be held strictly liable for all costs and liabilities relating to such hazardous substances. We have obtained a Phase I environmental study (which involves inspection without soil sampling or ground water analysis) conducted by independent environmental consultants on each of our properties and, in certain instances, have conducted additional investigation, including a Phase II environmental assessment.

We have no knowledge of any hazardous substances existing on our properties in violation of any applicable laws; however, no assurance can be given that such substances are not currently located on any of our properties.

We believe that we are in compliance, in all material respects, with all federal, state and local ordinances and regulations regarding hazardous or toxic substances. Furthermore, we have not been notified by any governmental authority of any noncompliance, liability or other claim in connection with any of our properties.

Americans with Disabilities Act of 1990

Our properties, as commercial facilities, are required to comply with Title III of the Americans with Disabilities Act of 1990 and similar state and local laws and regulations (collectively, the “ADA”). Investigation of a property may reveal non-compliance with the ADA. Our tenants will typically have primary responsibility for complying with the ADA, but we may incur costs if the tenant does not comply. As of December 31, 2019, we have not been notified by any governmental authority, nor are we otherwise aware, of any non-compliance with the ADA that we believe would have a material adverse effect on our business, financial position or results of operations.

Available Information

We make available free of charge through our website at www.agreerealty.com all reports we electronically file with, or furnish to, the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and current reports on Form 8-K, as well as any amendments to those reports, as soon as reasonably practicable after those documents are filed with, or furnished to, the SEC. These filings are also accessible on the SEC’s website at www.sec.gov.

Item 1A:        Risk Factors

The following factors and other factors discussed in this Annual Report on Form 10-K could cause our actual results to differ materially from those contained in forward-looking statements made in this report or presented elsewhere in future SEC reports. You should carefully consider each of the risks, assumptions, uncertainties and other factors described below and elsewhere in this report, as well as any reports, amendments or updates reflected in subsequent filings or furnishings with the SEC. We believe these risks, assumptions, uncertainties and other factors, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results and could materially and adversely affect our business operations, results of operations, financial condition and liquidity.

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Risks Related to Our Business and Operations

Economic and financial conditions may have a negative effect on our business and operations.

Changes in global or national economic conditions, such as a market downturn or a disruption in the capital markets, may cause, among other things, a significant tightening in the credit markets, lower levels of liquidity, increases in the rate of default and bankruptcy and lower consumer spending and business spending, which could adversely affect our business and operations. Potential consequences of changes in economic and financial conditions include:

changes in the performance of our tenants, which may result in lower rent and lower recoverable expenses that the tenant can afford to pay and tenant defaults under the leases;
current or potential tenants may delay or postpone entering into long-term net leases with us;
the ability to borrow on terms and conditions that we find acceptable may be limited or unavailable, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from acquisition and development activities, reduce our ability to make cash distributions to our shareholders and increase our future interest expense;
our ability to access the capital markets may be restricted at a time when we would like, or need, to access those markets, which could have an impact on our flexibility to react to changing economic and business conditions;
the recognition of impairment charges on or reduced values of our properties, which may adversely affect our results of operations or limit our ability to dispose of assets at attractive prices and may reduce the availability of buyer financing; and
one or more lenders under our revolving credit facility could fail and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all.

We are also limited in our ability to reduce costs to offset the results of a prolonged or severe economic downturn given certain fixed costs and commitments associated with our operations, which could materially impact our results of operations and/or financial condition.

Our business is significantly dependent on single tenant properties.

We focus our development and investment activities on ownership of real properties that are primarily net leased to a single tenant. Therefore, the financial failure of, or other default in payment by, a single tenant under its lease and the potential resulting vacancy is likely to cause a significant reduction in our operating cash flows from that property and a significant reduction in the value of the property and could cause a significant impairment loss. In addition, we would be responsible for all of the operating costs of a property following a vacancy at a single tenant building. Because our properties have generally been built to suit a particular tenant’s specific needs and desires, we may also incur significant losses to make the leased premises ready for another tenant and experience difficulty or a significant delay in releasing such property.

Bankruptcy laws will limit our remedies if a tenant becomes bankrupt and rejects its leases.

If a tenant becomes bankrupt or insolvent, that could diminish the income we receive from that tenant’s leases. We may not be able to evict a tenant solely because of its bankruptcy. On the other hand, a bankruptcy court might authorize the tenant to terminate its leasehold with us. If that happens, our claim against the bankrupt tenant for unpaid future rent would be an unsecured pre-petition claim subject to statutory limitations, and therefore any amounts received in bankruptcy are likely to be substantially less valuable than the remaining rent we otherwise were owed under the leases. In addition, any payment on a claim we have for unpaid past rent could be substantially less than the amount owed.

Our portfolio is concentrated in certain states, which makes us more susceptible to adverse events in these areas.

Our properties are located in 46 states throughout the United States and in particular, the state of Michigan (where 61 properties out of 821 properties are located, or 8.5% of our annualized base rent was derived as of December 31, 2019), Texas (54 properties, or 7.0% of our annualized base rent) and Florida (58 properties, or 6.2% of our annualized base rent).

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An economic downturn or other adverse events or conditions such as natural disasters in any of these areas, or any other area where we may have significant concentration in the future, could result in a material reduction of our cash flows or material losses to our company.

Our tenants are concentrated in certain retail sectors, which makes us susceptible to adverse conditions impacting these sectors.

As of December 31, 2019, 10.8%, 7.7%, and 6.9% of our annualized contractual base rent and interest was derived from tenants operating in, the home improvement, tire and auto service, and grocery store sectors, respectively.  Similarly, we have concentrations in other sectors such as off-price retail and convenience stores.  Any decrease in consumer demand for the products and services offered by our tenants operating in any industries for which we have concentrations could have an adverse effect on our tenants’ revenues, costs and results of operations, thereby adversely affecting their ability to meet their lease obligations to us.  As we continue to invest in properties, our portfolio may become more or less concentrated by industry sector.  

There are risks associated with our development and acquisition activities.

We intend to continue the development of new properties and to consider possible acquisitions of existing properties. We anticipate that our new developments will be financed under the revolving credit facility or other forms of financing that will result in a risk that permanent fixed rate financing on newly developed projects might not be available or would be available only on disadvantageous terms. In addition, new project development is subject to a number of risks, including risks of construction delays or cost overruns that may increase anticipated project costs. Furthermore, new project commencement risks also include receipt of zoning, occupancy, other required governmental permits and authorizations and the incurrence of development costs in connection with projects that are not pursued to completion. If permanent debt or equity financing is not available on acceptable terms to finance new development or acquisitions undertaken without permanent financing, further development activities or acquisitions might be curtailed, or cash available for distribution might be adversely affected. Acquisitions entail risks that investments will fail to perform in accordance with expectations, as well as general investment risks associated with any new real estate investment.

We own certain of our properties subject to ground leases that expose us to the loss of such properties upon breach or termination of the ground leases and may limit our ability to sell these properties.

We own a limited number of properties through leasehold interests in the land underlying the buildings and we may acquire additional buildings in the future that are subject to similar ground leases. As lessee under a ground lease, we are exposed to the possibility of losing our interest in the property upon termination, or an earlier breach by us, of the ground lease, which may have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common stock. Our ground leases contain certain provisions that may limit our ability to sell certain of our properties. In order to assign or transfer our rights and obligations under certain of our ground leases, we generally must obtain the consent of the landlord which, in turn, could adversely impact the price realized from any such sale.

Loss of revenues from tenants would reduce the Company’s cash flow.

Our tenants encounter significant macroeconomic, governmental and competitive forces. Adverse changes in consumer spending or consumer preferences for particular goods, services or store-based retailing could severely impact their ability to pay rent. Shifts from in-store to online shopping could increase due to changing consumer shopping patterns as well as the increase in consumer adoption and use of mobile electronic devices. This expansion of e-commerce could have an adverse impact on our tenant’s ongoing viability. The default, financial distress, bankruptcy or liquidation of one or more of our tenants could cause substantial vacancies in our property portfolio or impact our tenants’ ability to pay rent. Vacancies reduce our revenues, increase property expenses and could decrease the value of each vacant property. Upon the expiration of a lease, the tenant may choose not to renew the lease, renegotiate the economics of any option period(s) as a condition of exercising one or more of them, and/or we may not be able to release the vacant property at a comparable lease rate or without incurring additional expenditures in connection with such renewal or re-leasing.  These risks could be exacerbated by a deterioration in the financial condition of any major tenant with leases in multiple locations.

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The availability and timing of cash dividends is uncertain.

We expect to continue to pay quarterly dividends to our shareholders. However, we bear all expenses incurred by our operations, and our funds generated by operations, after deducting these expenses, may not be sufficient to cover desired levels of dividends to our shareholders. We cannot assure our shareholders that sufficient funds will be available to pay dividends.

The decision to declare and pay dividends on our common stock in the future, as well as the timing, amount, and composition of any such future dividends, will be at the sole discretion of our board of directors and will depend on our earnings, funds from operations, liquidity, financial condition, capital requirements, contractual prohibitions, or other limitations under our indebtedness, annual dividend requirements or the REIT provisions of the Internal Revenue Code of 1986, as amended (the “Code”), state law and such other factors as our board of directors deems relevant. Further, we may issue new shares of common stock as compensation to our employees or in connection with public offerings or acquisitions. Any future issuances may substantially increase the cash required to pay dividends at current or higher levels.

Any preferred shares we may offer may have a fixed dividend rate that would not increase with any increases in the dividend rate of our common stock. Conversely, payment of dividends on our common stock may be subject to payment in full of the dividends on any preferred shares and payment of interest on any debt securities we may offer.

If we do not maintain or increase the dividend on our common stock, it could have an adverse effect on the market price of our shares.

We face risks relating to information technology and cybersecurity attacks, loss of confidential information and other business disruptions.

We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information and to manage or support a variety of our business processes and we rely on commercially available systems, software, tools and monitoring to provide infrastructure and security for processing, transmitting and storing information. Any failure, inadequacy or interruption could materially harm our business. Furthermore, our business is subject to risks from and may be impacted by cybersecurity attacks, including attempts to gain unauthorized access to our confidential data and other electronic security breaches. Such cyber-attacks can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats. While we employ a number of measures to prevent, detect and mitigate these threats, there is no guarantee such efforts will be successful in preventing a cyber-attack. Cybersecurity incidents could cause operational interruption, damage to our business relationships, private data exposure (including personally identifiable information, or proprietary and confidential information, of ours and our employees, as well as third parties) and affect the efficiency of our business operations. Any such incidents could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information and reduce the benefits of our technologies.

A loss of key management personnel could adversely affect our performance.

As an internally managed company, we are dependent on the efforts and performance of our key management. We cannot guarantee we retain any of our senior leadership team and they could be difficult to replace. The loss of their services until suitable replacements are found could adversely affect our business, diminish our investment opportunities and weaken our relationships with lenders, business partners, existing and prospective tenants and industry personnel, all of which could materially and adversely affect us.

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General Real Estate Risk

Our performance and value are subject to general economic conditions and risks associated with our real estate assets.

There are risks associated with owning and leasing real estate. Although many of our leases contain terms that obligate the tenants to bear substantially all of the costs of operating our properties, investing in real estate involves a number of risks. Income from and the value of our properties may be adversely affected by:

changes in general or local economic conditions;
the attractiveness of our properties to potential tenants;
changes in supply of or demand for similar or competing properties in an area;
bankruptcies, financial difficulties or lease defaults by our tenants;
changes in operating costs and expense and our ability to control rents;
our ability to lease properties at favorable rental rates;
our ability to sell a property when we desire to do so at a favorable price;
unanticipated changes in costs associated with known adverse environmental conditions or retained liabilities for such conditions; and
changes in or increased costs of compliance with governmental rules, regulations and fiscal policies, including changes in the ADA and similar regulations and tax, real estate, environmental and zoning laws, and our potential liability thereunder.

Economic and financial market conditions have and may continue to exacerbate many of the foregoing risks. If a tenant fails to perform on its lease covenants, that would not excuse us from meeting any mortgage debt obligation secured by the property and could require us to fund reserves in favor of our mortgage lenders, thereby reducing funds available for payment of cash dividends on our shares of common stock.

The fact that real estate investments are relatively illiquid may reduce economic returns to investors.

We may desire to sell a property in the future because of changes in market conditions or poor tenant performance or to avail ourselves of other opportunities. We may also be required to sell a property in the future to meet secured debt obligations or to avoid a secured debt loan default. Real estate properties cannot generally be sold quickly, and we cannot assure you that we could always obtain a favorable price. We may be required to invest in the restoration or modification of a property before we can sell it. This lack of liquidity may limit our ability to vary our portfolio promptly in response to changes in economic or other conditions and, as a result, could adversely affect our financial condition, results of operations, cash flows and our ability to pay dividends on our common stock.

Our ability to renew leases or re-lease space on favorable terms as leases expire significantly affects our business.

We are subject to the risks that, upon expiration of leases for space located in our properties, the premises may not be re-let or the terms of re-letting (including the cost of concessions to tenants) may be less favorable than current lease terms. If a tenant does not renew its lease or if a tenant defaults on its lease obligations, there is no assurance we could obtain a substitute tenant on acceptable terms. If we cannot obtain another tenant with comparable building structural space and configuration needs, we may be required to modify the property for a different use, which may involve a significant capital expenditure and a delay in re-leasing the property. Further, if we are unable to re-let promptly all or a substantial portion of our retail space or if the rental rates upon such re-letting were significantly lower than expected rates, our net income and ability to make expected distributions to shareholders would be adversely affected. There can be no assurance that we will be able to retain tenants in any of our properties upon the expiration of their leases.

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Our leases contain certain limitations on tenants’ real estate tax, insurance and operating cost reimbursement obligations.

Our tenants under net leases generally are responsible for paying the real estate taxes, insurance costs and operating costs associated with the leased property. However, certain leases contain limitations on the tenant’s cost reimbursement obligations and, therefore, there are costs which may be incurred and which will not be reimbursed in full by tenants. This could reduce our operating cash flows from those properties and could reduce the value of those properties.

Potential liability for environmental contamination could result in substantial costs.

Under federal, state and local environmental laws, we may be required to investigate and clean up any release of hazardous or toxic substances or petroleum products at our properties, regardless of our knowledge or actual responsibility, simply because of our current or past ownership or operation of the real estate. If unidentified environmental problems arise, we may have to make substantial payments, which could adversely affect our cash flow and our ability to make distributions to our shareholders. This potential liability results from the following:

as owner, we may have to pay for property damage and for investigation and clean-up costs incurred in connection with the contamination;
the law may impose clean-up responsibility and liability regardless of whether the owner or operator knew of or caused the contamination;
even if more than one person is responsible for the contamination, each person who shares legal liability under environmental laws may be held responsible for all of the clean-up costs; and
governmental entities and third parties may sue the owner or operator of a contaminated site for damages and costs.

These costs could be substantial and in extreme cases could exceed the value of the contaminated property. The presence of hazardous substances or petroleum products or the failure to properly remediate contamination may adversely affect our ability to borrow against, sell or lease an affected property. In addition, some environmental laws create liens on contaminated sites in favor of the government for damages and costs it incurs in connection with a contamination.

We own and may in the future acquire properties that will be operated as convenience stores with gas station facilities. The operation of convenience stores with gas station facilities at our properties will create additional environmental concerns. Similarly, we may lease properties to users or producers of other hazardous materials.  We require that the tenants who operate these facilities do so in material compliance with current laws and regulations.

A majority of our leases require our tenants to comply with environmental laws and to indemnify us against environmental liability arising from the operation of the properties. However, we could be subject to strict liability under environmental laws because we own the properties. There are certain losses, including losses from environmental liabilities, that are not generally insured against or that are not generally fully insured against because it is not deemed economically feasible or prudent to do so.  There is also a risk that tenants may not satisfy their environmental compliance and indemnification obligations under the leases. Any of these events could substantially increase our cost of operations, require us to fund environmental indemnities in favor of our secured lenders and reduce our ability to service our secured debt and pay dividends to shareholders and any debt security interest payments. Environmental problems at any properties could also put us in default under loans secured by those properties, as well as loans secured by unaffected properties.

Uninsured losses relating to real property may adversely affect our returns.

Our leases generally require tenants to carry comprehensive liability and extended coverage insurance on our properties. However, there are certain losses, including losses from environmental liabilities, terrorist acts or catastrophic acts of nature, that are not generally insured against or that are not generally fully insured against because it is not deemed economically feasible or prudent to do so. If there is an uninsured loss or a loss in excess of insurance limits, we could lose both the revenues generated by the affected property and the capital we have invested in the property. In the event of a substantial unreimbursed loss, we would remain obligated to repay any mortgage indebtedness or other obligations related to the property.

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Risks Related to Our Debt Financings

Our level of indebtedness could materially and adversely affect our financial position, including reducing funds available for other business purposes and reducing our operational flexibility, and we may have future capital needs and may not be able to obtain additional financing on acceptable terms.

At December 31, 2019, our ratio of total debt to enterprise value (assuming conversion of OP Units into shares of common stock) was approximately 21.6%. Incurring substantial debt may adversely affect our business and operating results by:

requiring us to use a substantial portion of our cash flow to pay interest and principal, which reduces the amount available for distributions, acquisitions and capital expenditures;
making us more vulnerable to economic and industry downturns and reducing our flexibility to respond to changing business and economic conditions;
requiring us to agree to less favorable terms, including higher interest rates, in order to incur additional debt, and otherwise limiting our ability to borrow for operations, working capital or to finance acquisitions in the future; or
limiting our flexibility in conducting our business, including our ability to finance or refinance our assets, contribute assets to joint ventures or sell assets as needed, which may place us at a disadvantage compared to competitors with less debt or debt with less restrictive terms.

In addition, the use of leverage presents an additional element of risk in the event that (1) the cash flow from lease payments on our properties is insufficient to meet debt obligations, (2) we are unable to refinance our debt obligations as necessary or on as favorable terms, (3) there is an increase in interest rates, (4) we default on our financial obligations and (5) debt service requirements increase. If a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the property could be foreclosed upon with a consequential loss of income and asset value to us.

We generally intend to maintain a ratio of total indebtedness (including construction or acquisition financing) to total market capitalization of 65% or less. Nevertheless, we may operate with debt levels which are in excess of 65% of total market capitalization for extended periods of time. If our debt capitalization policy were changed, we could become more highly leveraged, resulting in an increase in debt service that could adversely affect our operating cash flow and our ability to make expected distributions to shareholders, and could result in an increased risk of default on our obligations.

Covenants in our credit agreements and note purchase agreements could limit our flexibility and adversely affect our financial condition.

The terms of the financing agreements and other indebtedness require us to comply with a number of customary financial and other covenants. These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness even if we have satisfied our payment obligations. Our financing agreements contain certain cross-default provisions which could be triggered in the event that we default on our other indebtedness. These cross-default provisions may require us to repay or restructure the revolving credit facility in addition to any mortgage or other debt that is in default. If our properties were foreclosed upon, or if we are unable to refinance our indebtedness at maturity or meet our payment obligations, the amount of our distributable cash flows and our financial condition would be adversely affected.

Our unsecured revolving credit facility, certain term loan agreements and certain note purchase agreements contain various restrictive corporate covenants, including a maximum total leverage ratio, a maximum secured leverage ratio and a minimum fixed charge coverage ratio. In addition, our unsecured revolving credit facility, certain term loan agreements and certain note purchase agreements have unencumbered pool covenants, which include a maximum unencumbered leverage ratio and a minimum unencumbered interest coverage ratio. These covenants may restrict our ability to pursue certain business initiatives or certain transactions that might otherwise be advantageous. Furthermore, failure to meet certain of these financial covenants could cause an event of default under and/or accelerate some or all of such indebtedness which could have a material adverse effect on us.

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Credit market developments may reduce availability under our revolving credit facility.

There is risk that lenders, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations under our existing revolving credit facility, including but not limited to: extending credit up to the maximum amount permitted by such credit facility, allowing access to additional credit features and/or honoring loan commitments. If our lender(s) fail to honor their legal commitments under our revolving credit facility, it could be difficult to replace our revolving credit facility on similar terms. Any such failure by any of the lenders under the revolving credit facility may impact our ability to finance our operating or investing activities.

An increase in market interest rates could raise our interest costs on existing and future debt or adversely affect our stock price, and a decrease in interest rates may lead to additional competition for the acquisition of real estate or adversely affect our results of operations.

Our interest costs for any new debt and our current debt obligations may rise if interest rates increase. This increased cost could make the financing of any new acquisition more expensive as well as lower our current period earnings. Rising interest rates could limit our ability to refinance existing debt when it matures or cause us to pay higher interest rates upon refinancing. In addition, an increase in interest rates could decrease the access third parties have to credit, thereby decreasing the amount they are willing to pay to lease our assets and limit our ability to reposition our portfolio promptly in response to changes in economic or other conditions. An increase in market interest rates may lead prospective purchasers of our common stock to expect a higher dividend yield, which could adversely affect the market price of our common stock. Decreases in interest rates may lead to additional competition for the acquisition of real estate due to a reduction in desirable alternative income-producing investments. Increased competition for the acquisition of real estate may lead to a decrease in the yields on real estate targeted for acquisition. In such circumstances, if we are not able to offset the decrease in yields by obtaining lower interest costs on our borrowings, our results of operations may be adversely affected.

Our hedging strategies may not be successful in mitigating our risks associated with interest rates and could reduce the overall returns on your investment.

We use various derivative financial instruments to provide a level of protection against interest rate risks, but no hedging strategy can protect us completely. These instruments involve risks, such as the risk that the counterparties may fail to honor their obligations under these arrangements, that these arrangements may not be effective in reducing our exposure to interest rate changes, that a court could rule that such agreements are not legally enforceable, and that we may have to post collateral to enter into hedging transactions, which we may lose if we are unable to honor our obligations. These instruments may also generate income that may not be treated as qualifying REIT income for purposes of the REIT income tests. In addition, the nature and timing of hedging transactions may influence the effectiveness of our hedging strategies. Poorly designed strategies or improperly executed transactions could actually increase our risk and losses. Moreover, hedging strategies involve transaction and other costs. We cannot assure you that our hedging strategy and the derivatives that we use will adequately offset the risk of interest rate volatility or that our hedging transactions will not result in losses that may reduce the overall return on your investment.

LIBOR is being phased-out as a reference rate for debt and hedging agreements and may require us to transition LIBOR-based contracts to an alternative reference rate.

In July 2017, the Financial Conduct Authority (“FCA”), the authority that regulates LIBOR, announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board organized the Alternative Reference Rates Committee (“ARRC”), which recommended the Secured Overnight Financing Rate (“SOFR”), as its preferred alternative to USD-LIBOR in derivatives and other financial contracts.  However, at this time, no consensus exists as to what rate or rates may become acceptable alternatives to LIBOR.  The Company is not able to predict when LIBOR will cease to be available or supported, or whether additional reforms to LIBOR may be enacted.  Any changes adopted by FCA or other governing bodies in the method used for determining LIBOR or the transition from LIBOR to a successor benchmark may result in a sudden or prolonged increase or decrease in reported LIBOR, a delay in the publication of LIBOR and changes in the rules or methodologies in LIBOR.  If these events were to occur, our interest

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payments could change.  In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available it its current form.

As of  December 31, 2019 and the date of this Annual Report on Form 10-K, the Company has contracts that are indexed to LIBOR, including its unsecured revolving credit facility and interest rate swap agreements, and continues to monitor this activity and evaluate the related risks, including the risks of interest on loans and amounts paid or received on swaps fluctuating. These risks may arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans or swaps tied to LIBOR could also be impacted if LIBOR is limited or discontinued.

Risks Related to Our Corporate Structure

Our charter, bylaws and Maryland law contain provisions that may delay, defer or prevent a change of control transaction.

Our charter contains 9.8% ownership limits. Our charter, subject to certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT and contains provisions that limit any person to actual or constructive ownership of no more than 9.8% (in value or in number of shares, whichever is more restrictive) of the outstanding shares of our common stock and no more than 9.8% (in value) of the aggregate of the outstanding shares of all classes and series of our stock. Our board of directors, in its sole discretion, may exempt, subject to the satisfaction of certain conditions, any person from the ownership limits. These restrictions on transferability and ownership will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT. The ownership limits may delay or impede, and we may use the ownership limits deliberately to delay or impede, a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our shareholders.

We have a staggered board. Our directors are divided into three classes serving three-year staggered terms. The staggering of our board of directors may discourage offers for the Company or make an acquisition more difficult, even when an acquisition may be viewed to be in the best interest of our shareholders.

We could issue stock without shareholder approval. Our board of directors could, without shareholder approval, issue authorized but unissued shares of our common stock or preferred stock. In addition, our board of directors could, without shareholder approval, classify or reclassify any unissued shares of our common stock or preferred stock and set the preferences, rights and other terms of such classified or reclassified shares. Our board of directors could establish a series of stock that could, depending on the terms of such series, delay, defer or prevent a transaction or change of control that might involve a premium price for our common stock or otherwise be viewed to be in the best interest of our shareholders.

Provisions of Maryland law may limit the ability of a third party to acquire control of our company. Certain provisions of Maryland law may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under certain circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then prevailing market price of such shares, including:

“Business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested shareholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof) for five years after the most recent date on which the shareholder becomes an interested shareholder and thereafter would require the recommendation of our board of directors and impose special appraisal rights and special shareholder voting requirements on these combinations; and
“Control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the shareholder, entitle the shareholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

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The business combination statute permits various exemptions from its provisions, including business combinations that are approved or exempted by the board of directors before the time that the interested shareholder becomes an interested shareholder. Our board of directors has exempted from the business combination provisions of the Maryland General Corporation Law, or MGCL, any business combination with Mr. Richard Agree or any other person acting in concert or as a group with Mr. Richard Agree.

In addition, our bylaws contain a provision exempting from the control share acquisition statute Richard Agree, Edward Rosenberg, any spouses or the foregoing, any brothers or sisters of the foregoing, any ancestors of the foregoing, any other lineal descendants of any of the foregoing, any estates of any of the foregoing, any trusts established for the benefit of any of the foregoing and any other entity controlled by any of the foregoing, our other officers, our employees, any of the associates or affiliates of the foregoing and any other person acting in concert of as a group with any of the foregoing.

Additionally, Title 3, Subtitle 8 of the MGCL, permits our board of directors, without shareholder approval and regardless of what is currently provided in our charter or our bylaws, to implement certain takeover defenses. These provisions may have the effect of inhibiting a third party from making an acquisition proposal for our company or of delaying, deferring or preventing a change in control of our company under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-current market price.

Our charter, our bylaws, the limited partnership agreement of the Operating Partnership and Maryland law also contain other provisions that may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be viewed to be in the best interest of our shareholders.

Future offerings of debt and equity may not be available to us or may adversely affect the market price of our common stock.

We expect to continue to increase our capital resources by making additional offerings of equity and debt securities in the future, which could include classes or series of preferred stock, common stock and senior or subordinated notes. Our ability to raise additional capital may be restricted at a time when we would like or need, including as a result of market conditions. Future market dislocations could cause us to seek sources of potentially less attractive capital and impact our flexibility to react to changing economic and business conditions. All debt securities and other borrowings, as well as all classes or series of preferred stock, will be senior to our common stock in a liquidation of our company. Additional equity offerings could dilute our shareholders’ equity and reduce the market price of shares of our common stock. In addition, depending on the terms and pricing of an additional offering of our common stock and the value of our properties, our shareholders may experience dilution in both the book value and fair value of their shares. The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market after an offering or the perception that such sales could occur, and this could materially and adversely affect our ability to raise capital through future offerings of equity or equity-related securities. In addition, we may issue preferred stock or other securities convertible into equity securities with a distribution preference or a liquidation preference that may limit our ability to make distributions on our common stock. Our ability to estimate the amount, timing or nature of additional offerings is limited as these factors will depend upon market conditions and other factors.

An officer and director may have interests that conflict with the interests of shareholders.

An officer and member of our board of directors owns OP Units. This individual may have personal interests that conflict with the interests of our shareholders with respect to business decisions affecting us and the Operating Partnership, such as interests in the timing and pricing of property sales or refinancing in order to obtain favorable tax treatment.

Federal Income Tax Risks

Complying with REIT requirements may cause us to forego otherwise attractive opportunities.

To qualify as a REIT for federal income tax purposes we must continually satisfy numerous income, asset and other tests, thus having to forego investments we might otherwise make and hindering our investment performance.

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Failure to qualify as a REIT could adversely affect our operations and our ability to make distributions.

We will be subject to increased taxation if we fail to qualify as a REIT for federal income tax purposes. Although we believe that we are organized and operate in such a manner so as to qualify as a REIT under the Code, no assurance can be given that we will remain so qualified. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations. The complexity of these provisions and applicable treasury regulations is also increased in the context of a REIT that holds its assets in partnership form. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. Additionally, our charter provides our board of directors with the power, under certain circumstances, to revoke or otherwise terminate our REIT election and cause us to be taxed as a regular corporation, without the approval of our shareholders. A REIT that annually distributes at least 90% of its taxable income to its shareholders generally is not taxed at the corporate level on such distributed income. We have not requested and do not plan to request a ruling from the Internal Revenue Service that we qualify as a REIT.

If we fail to qualify as a REIT, we will face tax consequences that will substantially reduce the funds available for payment of cash dividends:

We would not be allowed a deduction for dividends paid to shareholders in computing our taxable income and would be subject to federal income tax at regular corporate rates.
We may be subject to increased state and local taxes.
Unless we are entitled to relief under statutory provisions, we could not elect to be treated as a REIT for four taxable years following the year in which we failed to qualify.

In addition, if we fail to qualify as a REIT, we will no longer be required to pay dividends (other than any mandatory dividends on any preferred shares we may offer). As a result of these factors, our failure to qualify as a REIT could adversely affect the market price for our common stock.

U.S. federal tax reform legislation could affect REITs generally, the geographic markets in which we operate, our stock and our results of operations, both positively and negatively in ways that are difficult to anticipate.

Changes to the federal income tax laws are proposed regularly. Additionally, the REIT rules are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Department of the Treasury, which may result in revisions to regulations and interpretations in addition to statutory changes. If enacted, certain such changes could have an adverse impact on our business and financial results. In particular, H.R. 1, which took effect for taxable years that began on or after January 1, 2018 (subject to certain exceptions), made many significant changes to the federal income tax laws that profoundly impacted the taxation of individuals, corporations (both regular C corporations as well as corporations that have elected to be taxed as REITs), and the taxation of taxpayers with overseas assets and operations. A number of changes that affect non-corporate taxpayers will expire at the end of 2025 unless Congress acts to extend them. These changes will impact us and our shareholders in various ways, some of which are adverse or potentially adverse compared to prior law. While the IRS has issued some guidance with respect to certain of the new provisions, there are numerous interpretive issues that will require further guidance. It is highly likely that technical corrections legislation will be needed to clarify certain aspects of the new law and give proper effect to Congressional intent. There can be no assurance, however, that technical clarifications or further changes needed to prevent unintended or unforeseen tax consequences will be enacted by Congress in the near future. In addition, while certain elements of tax reform legislation do not impact us directly as a REIT, they could impact the geographic markets in which we operate, the tenants that populate our properties and the customers who frequent our properties in ways, both positive and negative, that are difficult to anticipate. Other legislative proposals could be enacted in the future that could affect REITs and their shareholders. Prospective investors are urged to consult their tax advisors regarding the effect of H.R. 1 and any other potential tax law changes on an investment in our common stock.

Changes in tax laws may prevent us from maintaining our qualification as a REIT.

As we have previously described, we intend to maintain our qualification as a REIT for federal income tax purposes. However, this intended qualification is based on the tax laws that are currently in effect. We are unable to predict any

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future changes in the tax laws that would adversely affect our status as a REIT. If there is a change in the tax law that prevents us from qualifying as a REIT or that requires REITs generally to pay corporate level income taxes, we may not be able to make the same level of distributions to our shareholders.

Complying with REIT requirements may force us to liquidate or restructure otherwise attractive investments.

In order to qualify as a REIT, at least 75% of the value of our assets must consist of cash, cash items, government securities and qualified real estate assets. The remainder of our investments in securities (other than government securities, securities of TRSs and qualified real estate assets) cannot include more than 10% of the voting securities or 10% of the value of all securities, of any one issuer. In addition, in general, no more than 5% of the total value of our assets (other than government securities, securities of TRSs and qualified real estate assets) can consist of securities of any one issuer, and no more than 20% of the total value of our assets can be represented by one or more TRSs. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments.

We may have to borrow funds or sell assets to meet our distribution requirements.

Subject to some adjustments that are unique to REITs, a REIT generally must distribute 90% of its taxable income. For the purpose of determining taxable income, we may be required to accrue interest, rent and other items treated as earned for tax purposes but that we have not yet received. In addition, we may be required not to accrue as expenses for tax purposes some expenses that actually have been paid, including, for example, payments of principal on our debt, or some of our deductions might be disallowed by the Internal Revenue Service. As a result, we could have taxable income in excess of cash available for distribution. If this occurs, we may have to borrow funds or liquidate some of our assets in order to meet the distribution requirement applicable to a REIT.

Our ownership of and relationship with our TRSs will be limited, and a failure to comply with the limits would jeopardize our REIT status and may result in the application of a 100% excise tax.

A REIT may own up to 100% of the stock of one or more TRSs. A TRS may earn income that would not be qualifying income if earned directly by the parent REIT. Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs. A TRS will typically pay federal, state and local income tax at regular corporate rates on any income that it earns. In addition, the TRS rules impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. Our TRSs will pay federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but will not be required to be distributed to us. There can be no assurance that we will be able to comply with the 20% limitation discussed above or to avoid application of the 100% excise tax discussed above.

Liquidation of our assets may jeopardize our REIT qualification.

To qualify as a REIT, we must comply with requirements regarding our assets and our sources of income. If we are compelled to liquidate our investments to repay obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any gain if we sell assets in transactions that are considered to be “prohibited transactions,” which are explained in the risk factor below.

We may be subject to other tax liabilities even if we qualify as a REIT.

Even if we remain qualified as a REIT for federal income tax purposes, we will be required to pay certain federal, state and local taxes on our income and property. For example, we will be subject to federal income tax on any of our REIT taxable income (including capital gains) that we do not distribute annually to our shareholders. Additionally, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which dividends paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. Moreover, if we have net income from “prohibited transactions,” that income will be subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property held primarily for sale to

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customers in the ordinary course of business. The determination as to whether a particular sale is a prohibited transaction depends on the facts and circumstances related to that sale. While we will undertake sales of assets if those assets become inconsistent with our long-term strategic or return objectives, we do not believe that those sales should be considered prohibited transactions, but there can be no assurance that the Internal Revenue Service would not contend otherwise. The need to avoid prohibited transactions could cause us to forego or defer sales of properties that might otherwise be in our best interest to sell.

In addition, any net taxable income earned directly by our TRSs, or through entities that are disregarded for federal income tax purposes as entities separate from our TRSs, will be subject to federal and possibly state corporate income tax. To the extent that we and our affiliates are required to pay federal, state and local taxes, we will have less cash available for distributions to our shareholders.

Dividends payable by REITs do not qualify for the reduced tax rates on dividend income from regular corporations.

The maximum federal income tax rate applicable to “qualified dividend income” payable by non-REIT corporations to certain non-corporate U.S. shareholders is generally 20% and a 3.8% Medicare tax may also apply. Dividends paid by REITs, however, generally are not eligible for the reduced rates applicable to qualified dividend income. Commencing with taxable years that began on or after January 1, 2018 and continuing through 2025, H.R. 1 temporarily reduced the effective tax rate on ordinary REIT dividends (i.e., dividends other than capital gain dividends and dividends attributable to certain qualified dividend income received by us) for U.S. holders of our common stock that are individuals, estates or trusts by permitting such holders to claim a deduction in determining their taxable income equal to 20% of any such dividends they receive. Taking into account H.R. 1’s reduction in the maximum individual federal income tax rate from 39.6% to 37%, this results in a maximum effective rate of regular income tax on ordinary REIT dividends of 29.6% through 2025 (as compared to the 20% maximum federal income tax rate applicable to qualified dividend income received from a non-REIT corporation). The more favorable rates applicable to regular corporate distributions could cause investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay distributions. This could materially and adversely affect the value of the stock of REITs, including our common stock.

Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.

The REIT provisions of the Code substantially limit our ability to hedge our liabilities. Any income from a hedging transaction we enter into to manage risk of interest rate changes, price changes or currency fluctuations with respect to borrowings made or to be made to acquire or carry real estate assets does not constitute qualifying income for purposes of income tests that apply to us as a REIT. To the extent that we enter into other types of hedging transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of the income tests. As a result of these rules, we may need to limit our use of advantageous hedging techniques or implement those hedges through a TRS. This could increase the cost of our hedging activities because our TRS would be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in our TRSs will generally not provide any tax benefit, except for being carried forward against future taxable income in the TRSs.

Item 1B:       Unresolved Staff Comments

There are no unresolved staff comments.

Item 2:          Properties

As of December 31, 2019, our portfolio consisted of 821 properties located in 46 states and totaling approximately 14.6 million square feet of GLA.

As of December 31, 2019, our portfolio was approximately 99.6% leased and had a weighted average remaining lease term of approximately 10.0 years. A significant majority of our properties are leased to national tenants and approximately 58.2% of our annualized base rent was derived from tenants, or parents thereof, with an investment grade credit rating.

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Substantially all of our tenants are subject to net lease agreements. A net lease typically requires the tenant to be responsible for minimum monthly rent and property operating expenses including property taxes, insurance and maintenance. In addition, our 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.

Tenant Diversification

The following table presents annualized base rents for all tenants that generated 1.5% or greater of our total annualized base rent as of December 31, 2019:

($ in thousands)

    

    

    

 

Annualized

% of Ann.

 

Tenant / Concept

    

Base Rent (1)

    

Base Rent

 

Sherwin-Williams

$

10,001

 

4.9

%

Walmart

 

8,530

 

4.2

%

TJX Companies

 

7,661

 

3.8

%

Walgreens

 

6,957

 

3.4

%

Best Buy

 

6,220

 

3.0

%

Dollar General

 

6,130

 

3.0

%

Tractor Supply

 

5,919

 

2.9

%

O'Reilly Auto Parts

 

5,800

 

2.8

%

CVS

 

5,530

 

2.7

%

LA Fitness

 

5,091

 

2.5

%

Home Depot

 

4,549

 

2.2

%

Lowe's

 

4,215

 

2.1

%

Dollar Tree

 

4,201

 

2.1

%

Sunbelt Rentals

 

4,151

 

2.0

%

AutoZone

 

3,853

 

1.9

%

TBC Corporation

 

3,837

 

1.9

%

Wawa

 

3,793

 

1.9

%

Hobby Lobby

 

3,733

 

1.8

%

Mister Car Wash

 

3,510

 

1.7

%

Dave & Buster's

3,117

1.5

%

Burlington

3,097

1.5

%

Other(2)

 

94,251

 

46.2

%

Total

$

204,146

 

100.0

%

(1)Represents annualized contractual base rent on a straight-line basis as of December 31, 2019.
(2)Includes tenants generating less than 1.5% of annualized contractual base rent.

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Table of Contents

Tenant Sector Diversification

The following table presents annualized base rents for all sectors that generated 2.5% or greater of our total annualized base rents as of December 31, 2019:

($ in thousands)

    

    

    

 

Annualized

% of Ann.

 

Tenant Sector

    

Base Rent (1)

    

Base Rent

 

Home Improvement

$

21,991

10.8

%

Tire and Auto Service

 

15,639

7.7

%

Grocery

 

14,028

6.9

%

Pharmacy

 

13,308

6.5

%

Off-Price Retail

 

12,969

6.4

%

Convenience Stores

 

12,817

6.3

%

Auto Parts

 

11,242

5.5

%

Dollar Stores

 

9,122

4.5

%

General Merchandise

 

7,791

3.8

%

Consumer Electronics

 

7,576

3.7

%

Health and Fitness

 

7,499

3.7

%

Farm and Rural Supply

 

6,996

3.4

%

Restaurants - Quick Service

 

6,525

3.2

%

Crafts and Novelties

 

6,186

3.0

%

Home Furnishings

 

5,154

2.5

%

Other(2)

 

45,303

22.1

%

Total

$

204,146

 

100.0

%

(1)Represents annualized contractual base rent on a straight-line basis as of December 31, 2019.
(2)Includes sectors generating less than 2.5% of annualized contractual base rent.

Geographic Diversification

The following table presents annualized base rents, by state, for our portfolio as of December 31, 2019:

($ in thousands)

    

    

 

Annualized

% of Ann.

 

Tenant Sector

    

Base Rent (1)

    

Base Rent

 

Michigan

$

17,373

 

8.5

%

Texas

 

14,243

 

7.0

%

Florida

 

12,692

 

6.2

%

Illinois

 

12,076

 

5.9

%

Pennsylvania

 

10,654

 

5.2

%

Ohio

 

10,057

 

4.9

%

New Jersey

 

8,739

 

4.3

%

Virginia

 

8,216

 

4.0

%

Georgia

 

7,333

 

3.6

%

Wisconsin

 

6,857

 

3.4

%

Missouri

 

6,270

 

3.1

%

North Carolina

 

5,795

 

2.8

%

Louisiana

 

5,774

 

2.8

%

Other(2)

 

78,067

 

38.3

%

Total

$

204,146

 

100.0

%

(1)Represents annualized contractual base rent on a straight-line basis as of December 31, 2019.
(2)Includes states generating less than 2.5% of annualized contractual base rent.

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Table of Contents

Lease Expirations

The following table presents contractual lease expirations within the Company’s portfolio as of December 31, 2019, assuming that no tenants exercise renewal options:

($ and GLA in thousands)

 

Annualized Base Rent (1)

Gross Leasable Area

 

Number of

% of

% of

 

Year

    

Leases

    

Dollars

    

Total

    

Square Feet

    

Total

 

2020

 

8

$

1,045

 

0.5

%  

113

 

0.8

%

2021

 

27

 

5,262

 

2.6

%  

318

 

2.2

%

2022

 

22

 

4,064

 

2.0

%  

367

 

2.5

%

2023

 

40

 

7,283

 

3.6

%  

726

 

5.0

%

2024

 

38

 

11,725

 

5.7

%  

1,307

 

9.0

%

2025

 

49

 

11,925

 

5.8

%  

1,015

 

7.0

%

2026

 

63

 

10,992

 

5.4

%  

1,069

 

7.3

%

2027

 

63

 

15,534

 

7.6

%  

1,171

 

8.1

%

2028

 

64

 

16,283

 

8.0

%  

1,233

 

8.5

%

2029

 

81

 

24,098

 

11.8

%  

1,839

 

12.6

%

Thereafter

 

448

 

95,935

 

47.0

%  

5,382

 

37.0

%

Total

 

903

$

204,146

 

100

%  

14,541

 

100.0

%

(1)Represents annualized contractual base rent on a straight-line basis as of December 31, 2019.

Developments

During the fourth quarter of 2019, construction continued on two development and Partner Capital Solutions (“PCS”) projects with anticipated total project costs of approximately $10.6 million. The projects consist of the Company’s (1) redevelopment of the former Kmart space in Frankfort, Kentucky for ALDI, Big Lots and Harbor Freight Tools and (2) development in Hart, Michigan for Tractor Supply.  

During the fourth quarter of 2019, the Company completed landlord’s work for the spaces leased to ALDI and Harbor Freight Tools and delivered those spaces to the tenants. Tenants’ work was ongoing as of December 31, 2019 for both spaces, and rent is anticipated to commence in full in the first quarter of 2020. Landlord’s work was ongoing for the space leased to Big Lots as of December 31, 2019.

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During the year ended December 31, 2019, the Company had 10 development or PCS projects completed or under construction. Anticipated total costs for those projects are approximately $32.4 million and include the following completed or commenced projects:

    

    

    

    

Actual or

    

Lease

Anticipated Rent

 

Tenant

Location

Lease Structure

Term

Commencement

Status

Mister Car Wash

Orlando, FL

Build-to-Suit

20 years

Q1 2019

Complete

Mister Car Wash

Tavares, FL

Build-to-Suit

20 years

Q1 2019

Complete

Sunbelt Rentals

Maumee, OH

Build-to-Suit

10 years

Q1 2019

Complete

Sunbelt Rentals

Batavia, OH

Build-to-Suit

10 years

Q2 2019

Complete

Sunbelt Rentals

Georgetown, KY

Build-to-Suit

15 years

Q3 2019

Complete

Gerber Collision

Round Lake, IL

Build-to-Suit

15 years

Q3 2019

Complete

Sunbelt Rentals

Carrizo Springs, TX

Build-to-Suit

10 years

Q3 2019

Complete

Hobby Lobby

Mt. Pleasant, MI

Build-to-Suit

15 years

Q3 2019

Complete

ALDI

Frankfort, KY

Build-to-Suit

10 years

Q4 2019

Complete

Harbor Freight Tools

Frankfort, KY

Build-to-Suit

10 years

Q4 2019

Complete

Big Lots

Frankfort, KY

Build-to-Suit

10 years

Q1 2020

Under Construction

Tractor Supply

Hart, MI

Build-to-Suit

10 years

Q1 2020

Under Construction

Item 3:        Legal Proceedings

From time to time, we are involved in legal proceedings in the ordinary course of business. We are not presently involved in any litigation nor, to our knowledge, is any other litigation threatened against us, other than routine litigation arising in the ordinary course of business, which is expected to be covered by our liability insurance and all of which collectively is not expected to have a material adverse effect on our liquidity, results of operations or business or financial condition.

Item 4:        Mine Safety Disclosures

Not applicable.

PART II

Item 5:        Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is traded on the NYSE under the symbol “ADC.” At February 19, 2020, there were 45,569,487 shares of our common stock issued and outstanding which were held by approximately 132 shareholders of record. The number of shareholders of record does not reflect persons or entities that held their shares in nominee or “street” name. In addition, at February 19, 2020 there were 347,619 outstanding OP Units held by a limited partner other than our Company. The OP Units are exchangeable into shares of common stock on a one-for-one basis.

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Table of Contents

Common stock repurchases during the three months ended December 31, 2019 were:

    

    

    

Total Number of

Maximum Number

    

    

    

Shares Purchased

    

of Shares that May

as Part of Publicly

Yet Be Purchased

Total Number of

Average Price Paid Per

Announced Plans

Under the Plans

Period

Shares Purchased

Per Share

or Programs

or Programs

October 1, 2019 - October 31, 2019

$

November 1, 2019 - November 30, 2019

December 1, 2019 - December 31, 2019

61

72.67

61

$

72.67

During the three months ended December 31, 2019, the Company withheld 61 shares from employees to satisfy estimated statutory income tax obligations related to vesting of restricted stock awards. The value of the common stock withheld was based on the closing price of our common stock on the applicable vesting date.

There were no unregistered sales of equity securities during the three months ended December 31, 2019.

We intend to continue to declare quarterly dividends. However, our distributions are determined by our board of directors and will depend upon cash generated by operating activities, our financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Code and such other factors as the board of directors deems relevant. We have historically paid cash dividends, although we may choose to pay a portion in stock dividends in the future. To qualify as a REIT, we must distribute at least 90% of our REIT taxable income prior to net capital gains to our shareholders, as well as meet certain other requirements. We must pay these distributions in the taxable year the income is recognized; or in the following taxable year if they are declared during the last three months of the taxable year, payable to shareholders of record on a specified date during such period and paid during January of the following year. Such distributions are treated for REIT tax purposes as paid by us and received by our shareholders on December 31 of the year in which they are declared. In addition, at our election, a distribution for a taxable year may be declared in the following taxable year if it is declared before we timely file our tax return for such year and if paid on or before the first regular dividend payment after such declaration. These distributions qualify as dividends paid for the 90% REIT distribution test for the previous year and are taxable to holders of our capital stock in the year in which paid.

For information about our equity compensation plan, please see “Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report on Form 10-K.

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Table of Contents

Item 6:        Selected Financial Data

The following table sets forth our selected financial information on a historical basis and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report on Form 10-K. The balance sheet for the periods ending December 31, 2015 through 2019 and operating data for each of the periods presented were derived from our audited financial statements.

(in thousands, except per share information and number of properties)

Year Ended December 31, 

 

    

2019

    

2018

    

2017

    

2016

    

2015

 

Operating Data

 

  

 

  

 

  

 

  

 

  

Total Revenues

$

187,478

$

137,122

$

111,517

$

88,357

$

68,454

Expenses

 

  

 

  

 

  

 

  

 

  

Property costs (1)

 

23,511

 

17,011

 

12,467

 

8,596

 

6,379

General and administrative

 

15,566

 

11,756

 

9,428

 

7,862

 

6,836

Interest

 

33,094

 

24,872

 

18,137

 

15,343

 

12,305

Depreciation and amortization

 

45,703

 

33,030

 

26,661

 

20,237

 

14,974

Impairments

 

1,609

 

2,319

 

 

 

Total Expenses

 

119,483

 

88,988

 

66,693

 

52,038

 

40,494

Income from Operations

 

67,995

 

48,134

 

44,824

 

36,319

 

27,960

Gain (loss) on extinguishment of debt

 

 

 

 

(333)

 

(181)

Gain (loss) on sale of assets

 

13,306

 

11,180

 

14,193

 

9,964

 

12,135

Income tax expense

(538)

(516)

(227)

(153)

(152)

Net Income

 

80,763

 

58,798

 

58,790

 

45,797

 

39,762

Less Net Income Attributable to Non-Controlling Interest

 

682

 

626

 

678

 

679

 

744

Net Income Attributable to Agree Realty Corporation

$

80,081

$

58,172

$

58,112

$

45,118

$

39,018

Share Data

 

  

 

  

 

  

 

  

 

  

Weighted Average Number of Common Shares Outstanding- Diluted

 

41,224

 

32,401

 

27,700

 

22,960

 

18,065

Net Income Per Share Attributable to Agee Realty Corporation - Diluted

$

1.93

$

1.78

$

2.08

$

1.97

$

2.15

Cash Dividends Per Share

$

2.28

$

2.16

$

2.03

$

1.92

$

1.85

Balance Sheet Data

 

  

 

  

 

  

 

  

 

  

Real Estate (before accumulated depreciation)

$

2,346,340

$

1,761,646

$

1,299,255

$

1,019,956

$

755,849

Total Assets

$

2,664,530

$

2,028,189

$

1,494,634

$

1,141,972

$

807,042

Total Debt (including accrued interest)

$

882,010

$

728,841

$

525,811

$

406,261

$

320,547

Other Data

 

  

 

  

 

  

 

  

 

  

Number of Properties

 

821

 

645

 

436

 

366

 

278

Gross Leasable Area (Sq. Ft.)

 

14,605

 

11,237

 

8,663

 

7,033

 

5,207

Percentage Leased

 

99.6

%  

 

99.8

%  

 

99.7

%  

 

99.6

%  

 

99.5

%

(1)Property costs include real estate taxes, insurance, maintenance and land lease expense.

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Table of Contents

Item 7:        Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements, and related notes thereto, included elsewhere in this Annual Report on Form 10-K and the “-Special Note Regarding Forward-Looking Statements” in “Item 1A – Risk Factors” above. Also refer to the Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s previously filed Annual Report on Form 10-K for the year ended December 31, 2018 for additional discussion of our financial condition and results of operations.

Overview

We are a fully integrated REIT primarily focused on the ownership, acquisition, development and management of retail properties net leased to industry leading tenants. We were founded in 1971 by our current Executive Chairman, Richard Agree, and our common stock was listed on the NYSE in 1994. Our assets are held by, and all of our operations are conducted through, directly or indirectly, the Operating Partnership, of which we are the sole general partner and in which we held a 99.2% interest as of December 31, 2019.

As of December 31, 2019, our portfolio consisted of 821 properties located in 46 states and totaling approximately 14.6 million square feet of GLA. As of December 31, 2019, our portfolio was approximately 99.6% leased and had a weighted average remaining lease term of approximately 10.0 years. Substantially all of our tenants are subject to net lease agreements. A net lease typically requires the tenant to be responsible for minimum monthly rent and property operating expenses including property taxes, insurance and maintenance.

We elected to be taxed as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 1994. We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT for federal income tax purposes and we intend to continue operating in such a manner.

Recent Accounting Pronouncements

Refer to “Note 2 – Summary of Significant Accounting Policies” in the Consolidated Financial Statements for a summary and anticipated impact of each accounting pronouncement on the Company’s financial statements.

Critical Accounting Policies

The preparation of our financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires us to make estimates and assumptions that are subjective in nature and, as a result, our actual results could differ materially from our estimates. Some of these estimates and assumptions require application of difficult, subjective, and/or complex judgment, often about the effect of matters that are inherently uncertain and that may change in subsequent periods, including those relating to the policies below.  This summary should be read in conjunction with the more complete discussion of our accounting policies and procedures included in Note 2 to our Consolidated Financial Statements.

Accounting for Acquisitions of Real Estate

The acquisition of property for investment purposes is typically accounted for as an asset acquisition. We allocate the purchase price to land, building 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. 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 making estimates of fair values, we may use a number of sources, including data provided by independent third parties, as well as information obtained by the Company as a result of our due diligence, including expected future cash flows of the property and various characteristics of the markets where the property is located. The use of different assumptions in the allocation of the purchase price of the acquired properties could affect the timing of recognition of the related revenue and expenses.

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Table of Contents

Impairments

We review our real estate investments for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable through operations plus estimated disposition proceeds. Events or circumstances that may occur include, but are not limited to, significant changes in real estate market conditions, estimated residual values, or our ability or expectation to re-lease or sell properties that are vacant or become vacant. Management determines whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the residual value of the real estate, with the carrying cost of the individual asset. An asset is considered impaired if its carrying value exceeds its estimated undiscounted cash flows and an impairment charge is recorded in the amount by which the carrying value of the asset exceeds its estimated fair value.  

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. The Company may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate.

The expected cash flows of a property are dependent on estimates and other factors subject to change, including (1) changes in the national, regional, and/or local economic climates and/or market conditions, (2) competition from other retail, (3) increases in operating costs, (4) bankruptcy and/or other changes in a tenant’s condition, and (5) expected holding period. These factors could cause our expected future cash flows from a property to change, and, as a result, an impairment could be considered to have occurred. Determination of the fair value of a property for purposes of measuring impairment involves significant judgment.

Results of Operations

Overall

The Company’s real estate investment portfolio grew from approximately $1.7 billion in gross investment amount representing 645 properties with 11.2 million square feet of gross leasable space as of December 31, 2018 to approximately $2.2 billion in gross investment amount representing 821 properties with 14.6 million square feet of gross leasable space at December 31, 2019. The Company’s real estate investments were made throughout the periods presented and were not all outstanding for the entire period; accordingly, a portion of the increase in rental income between periods is related to recognizing revenue in 2019 on acquisitions that were made during 2018. Similarly, the full rental income impact of acquisitions made during 2019 will not be seen until 2020.

Acquisitions

During the year ended December 31, 2019, the Company acquired 186 retail net lease assets for approximately $702.9 million, which includes acquisition and closing costs. These properties are located in 40 states and are leased to 56 different tenants operating in 22 diverse retail sectors for a weighted average lease term of approximately 11.7 years. The underwritten weighted average capitalization rate on the Company’s 2019 acquisitions was approximately 6.9%.1

Dispositions

During the year ended December 31, 2019, the Company sold 16 properties for net proceeds of $65.5 million and recorded a net gain of $13.3 million.  During the year ended December 31, 2018, the Company sold 21 properties for net proceeds of $65.8 million and recorded a net gain of $11.2 million.  The weighted average capitalization rate on the Company’s 2019 dispositions was approximately 7.2%.1

1 When used within this discussion, “weighted-average capitalization rate” for acquisitions and dispositions is defined by the Company as the sum of contractual fixed annual rents computed on a straight-line basis over the primary lease terms and anticipated annual net tenant recoveries, divided by the purchase and sale prices.

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Table of Contents

Development and Partner Capital Solutions

During the year ended December 31, 2019, the Company completed eight developments or Partner Capital Solutions projects.  During the year ended December 31, 2018, the Company completed eight developments or Partner Capital Solutions projects.  At December 31, 2019 the Company had two such projects under construction.

Comparison of Year Ended December 31, 2019 to Year Ended December 31, 2018

Year Ended

Variance

    

December 31, 2019

    

December 31, 2018

    

(in dollars)

    

(percentage)

Rental Income

$

187,279

$

136,884

$

50,395

37

%

Real Estate Tax Expense

$

15,520

$

10,721

$

4,799

45

%

Property Operating Expense

$

6,749

$

5,645

$

1,104

20

%

Land Lease Expense

$

1,242

$

645

$

597

93

%

Depreciation and Amortization Expense

$

45,703

$

33,030

$

12,673

38

%

The variances in rental income, real estate tax expense, property operating expense, land lease expense and depreciation and amortization expense shown above were due to the acquisition and the ownership of additional properties during the year ended December 31, 2019 compared to the year ended December 31, 2018, as further described under Results of Operations - Overall above.

General and administrative expenses increased $3.8 million, or 32%, to $15.6 million for the year ended December 31, 2019, compared to $12.2 million for the year ended December 31, 2018.  The increase was primarily the result of increased employee headcount, which resulted in increased compensation costs, and increased professional costs.  General and administrative expenses as a percentage of total revenue decreased to 8.3% in 2019 from 8.6% in 2018.

Provision for impairment decreased to $1.6 million for the year ended December 31, 2019, compared to $2.3 million for the year ended December 31, 2018. Provisions for impairment reflect the amount by which current book value exceeds estimated fair value and are not necessarily comparable period-to-period.

Interest expense increased $8.2 million, or 33%, to $33.1 million for the year ended December 31, 2019, compared to $24.9 million for the year ended December 31, 2018.  The increase in interest expense was primarily a result of higher levels of borrowings in 2019 in comparison to 2018. Borrowings increased in order to finance the acquisition and development of additional properties.  Acquisition and development activity increased in 2019 in comparison to the prior period.

Gain on sale of assets increased $2.1 million, or 19%, to $13.3 million for the year ended December 31, 2019, compared to $11.2 million for the year ended December 31, 2018.  Gains on sales of assets are dependent on the levels of disposition activity and the assets’ bases relative to their sales prices.  As a result, such gains are not necessarily comparable period-to-period.

Income tax expense remained consistent at $0.5 million in 2019 and 2018. An increase in income tax expense due to the acquisition and the ownership of additional properties during the year ended December 31, 2019 compared to the year ended December 31, 2018 was offset by a one-time credit of $0.5 million in 2019 to reflect a reduction in the Company’s deferred tax liability of one of its taxable REIT subsidiaries.

Net income increased $22.0 million, or 37%, to $80.8 million for the year ended December 31, 2019, compared to $58.8 million for the year ended December 31, 2018.  The change was the result of the items discussed above.

Liquidity and Capital Resources

Our principal demands for funds include payment of operating expenses, payment of principal and interest on our outstanding indebtedness, dividends and distributions to our shareholders and OP Unit holders, and future property acquisitions and development.

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We expect to meet our short-term liquidity requirements through cash provided from operations and borrowings under our revolving credit facility. As of December 31, 2019, available cash and cash equivalents was $42.2 million. As of December 31, 2019, we had $89.0 million outstanding on our revolving credit facility and $411.0 million was available for future borrowings, subject to our compliance with covenants.  We anticipate funding our long-term capital needs through cash provided from operations, borrowings under our revolving credit facility, the issuance of debt and common or preferred equity or other instruments convertible into or exchangeable for common or preferred equity.  In December 2019, we amended and restated our revolving credit agreement, increasing our current and potential future borrowing capacity – see Senior Unsecured Revolving Credit Facility below.

We continually evaluate alternative financing and believe that we can obtain financing on reasonable terms. However, there can be no assurance that additional financing or capital will be available, or that the terms will be acceptable or advantageous to us.

Capitalization

As of December 31, 2019, our total market capitalization was approximately $4.1 billion.  Total market capitalization consisted of $3.2 billion of common equity (based on the December 31, 2019 closing price of our common stock on the NYSE of $70.17 per share and assuming the conversion of OP Units) and $876.1 million of total debt including (i) $89.0 million of borrowings under our revolving credit facility; (ii) $240.0 million of unsecured term loans; (iii) $510.0 million of senior unsecured notes; (iv) $37.1 million of mortgage notes payable; less (v) cash, cash equivalents, and cash held in escrow of $42.2 million. Our ratio of total debt to total market capitalization was 21.6% at December 31, 2019.

At December 31, 2019, the non-controlling interest in our Operating Partnership consisted of a 0.8% ownership interest in the Operating Partnership. The OP Units may, under certain circumstances, be exchanged for our shares of common stock on a one-for-one basis. The Company, as sole general partner of the Operating Partnership, has the option to settle exchanged OP Units held by others for cash based on the current trading price of our shares. Assuming the exchange of all OP Units, there would have been 45,921,242 shares of common stock outstanding at December 31, 2019.

Equity

Shelf Registration

In June 2017, the Company filed an automatic shelf registration statement on Form S-3, registering an unspecified amount of common stock, preferred stock, depositary shares and warrants at an indeterminant aggregate initial offering price. We 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.

In June 2017, the Company completed a follow-on underwritten offering of 2,415,000 shares of common stock. The offering, which included the full exercise of the overallotment option by the underwriters, raised net proceeds of approximately $108.0 million, after deducting the underwriting discount. The proceeds from the offering were used to repay borrowings under our revolving credit facility to fund property acquisitions and for general corporate purposes.

In March 2018, the Company completed a follow-on public offering of 3,450,000 shares of common stock, which included the underwriters’ option to purchase an additional 450,000 shares of common stock, in connection with a forward sale agreement.  The offering, which included the full exercise of the underwriters’ option to purchase additional shares, was settled in its entirety in September 2018.  Upon settlement we issued 3,450,000 shares and received net proceeds of $160.2 million after deducting fees and expenses.

In September 2018, the Company entered into a follow-on public offering of 3,500,000 shares of common stock in connection with a forward sale agreement (the “September 2018 Forward”).  The September 2018 Forward was settled in its entirety in April 2019.   Upon settlement we issued 3,500,000 shares and received net proceeds of $186.0 million, after deducting fees and expenses.  

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In April 2019, the Company entered into a follow-on public offering to sell an aggregate of 3,162,500 shares of common stock (the “April 2019 Forward”). We settled the entirety of the April 2019 Forward on December 30, 2019 and received net proceeds of approximately $195.8 million, after deducting fees and expenses.

ATM Programs

In July 2019, the Company entered into the 2019 ATM Program.  In addition to selling shares of common stock, we may enter into forward sale agreements through the 2019 ATM Program. During 2019, we issued 444,228 shares under this program, at an average price of $74.30 per share, realizing gross proceeds of $33.0 million.

During 2018 and the six months ended June 30, 2019, the Company issued 3,057,263 and 886,768 shares of common stock, respectively, under the 2018 ATM Program, at average prices of $59.28 and $66.83, respectively, realizing gross proceeds of approximately $181.2 million and $59.3 million, respectively.  No future issuances will occur under the 2018 ATM Program.

During the fourth quarter of 2019, the Company entered into forward sale agreements in connection with our 2019 ATM Program to sell an aggregate of 2,003,118 shares of common stock. To date, no shares from the ATM Forward Offerings have been settled.  The ATM Forward Offerings are required to be settled by certain dates in December 2020.  

After considering shares already sold under the 2019 ATM Program including the outstanding ATM Forward Offerings, the Company had $220.1 million of availability remaining under the 2019 ATM Program as of December 31, 2019.  

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Debt

The below table summarizes the Company’s outstanding debt as of December 31, 2019 and December 31, 2018 (in thousands):

Interest

Principal Amount Outstanding

Senior Unsecured Revolving Credit Facility

    

Rate

    

Maturity

    

December 31, 2019

    

December 31, 2018

Credit Facility (1)

 

2.69

%

January 2021

$

89,000

$

19,000

Total Credit Facility

$

89,000

$

19,000

Unsecured Term Loans (2)

2019 Term Loan

 

3.62

%

May 2019

$

$

18,543

2023 Term Loan

 

2.40

%

July 2023

 

40,000

 

40,000

2024 Term Loan Facility

 

3.09

%

January 2024

 

65,000

 

65,000

2024 Term Loan Facility

 

3.20

%

January 2024

 

35,000

 

35,000

2026 Term Loan

 

4.26

%

January 2026

 

100,000

 

100,000

Total Unsecured Term Loans

$

240,000

$

258,543

Senior Unsecured Notes (2)

2025 Senior Unsecured Notes

 

4.16

%

May 2025

$

50,000

$

50,000

2027 Senior Unsecured Notes

 

4.26

%

May 2027

 

50,000

 

50,000

2028 Senior Unsecured Notes

 

4.42

%

July 2028

 

60,000

 

60,000

2029 Senior Unsecured Notes

 

4.19

%

September 2029

 

100,000

 

100,000

2030 Senior Unsecured Notes

 

4.32

%

September 2030

 

125,000

 

125,000

2031 Senior Unsecured Notes

 

4.42

%

October 2031

 

125,000

 

Total Senior Unsecured Notes

$

510,000

$

385,000

Mortgage Notes Payable (2)

Single Asset Mortgage Loan

 

3.32

%

October 2019

 

 

21,500

Portfolio Mortgage Loan (3)

 

6.90

%

January 2020

 

 

1,922

Single Asset Mortgage Loan

 

6.24

%

February 2020

 

2,775

 

2,872

CMBS Portfolio Loan

 

3.60

%

January 2023

 

23,640

 

23,640

Single Asset Mortgage Loan

 

5.01

%

September 2023

 

4,779

 

4,959

Portfolio Credit Tenant Lease

 

6.27

%

July 2026

 

5,921

 

6,626

Total Mortgage Notes Payable

$

37,115

$

61,519

Total Principal Amount Outstanding

$

876,115

$

724,062

(1)The annual interest rate of the Credit Facility assumes one-month LIBOR as of December 31, 2019 of 1.86%.
(2)Interest rate includes the effects of variable interest rates that have been swapped to fixed interest rates.
(3)Mortgage paid off early in September 2019. Original maturity date of January 2020.

Senior Unsecured Revolving Credit Facility

In December 2019, the Company entered into the Credit Agreement. The Credit Agreement provides for a $500.0 million unsecured revolving credit facility, a $65.0 million unsecured term loan facility (the “$65 Million Term Loan”) and a $35.0 million unsecured term loan facility (the “$35 Million Term Loan”, and together with the $65 Million Term Loan, the “2024 Term Loan Facilities”). The Credit Agreement amended and restated in its entirety the Company’s previous amended and restated credit agreement dated December 15, 2016.  

The Credit Agreement provides $600.0 million unsecured borrowing capacity, composed of the Revolving Credit Facility, which matures on January 15, 2024, as well as the 2024 Term Loan Facilities, which mature on January 15, 2024. Subject to certain terms and conditions set forth in the Agreement, the Company (i) may request additional lender commitments

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under any or all facilities of up to an additional aggregate of $500.0 million and (ii) may elect, for an additional fee, to extend the maturity date of the Revolving Credit Facility by six months up to two times, for a maximum maturity date of January 15, 2025. No amortization payments are required under the Credit Agreement, and interest is payable in arrears no less frequently than quarterly.

All borrowings under the Revolving Credit Facility (except swing line loans) bear interest at a rate per annum equal to, at the option of the Company, (i) LIBOR plus a margin that is based upon the Company’s credit rating, or (ii) the Base Rate (which is defined as the greater of the rate of interest as publicly announced from time to time by PNC Bank, National Association, as its prime rate, the Federal Funds Open Rate plus 0.50%, or the Daily Eurodollar Rate plus 1.0%) plus a margin that is based upon the Company’s credit rating. The margins for the Revolving Credit Facility range in amount from 0.775% to 1.450% for LIBOR-based loans and 0.00% to 0.45% for Base Rate loans, depending on the Company’s credit rating. The margins for the Revolving Credit Facility are subject to improvement based on the Company’s leverage ratio, provided its credit rating meets a certain threshold.

The Company and Richard Agree, the Executive Chairman of the Company, are parties to a Reimbursement Agreement dated November 18, 2014.   Pursuant to the Reimbursement Agreement, Mr. Agree has agreed to reimburse the Company for any loss incurred under the Revolving Credit Facility in an amount not to exceed $14.0 million to the extent that the value of the Operating Partnership’s assets available to satisfy the Operating Partnership’s obligations under the revolving credit facility is less than $14.0 million.

Unsecured Term Loan Facilities

In July 2016, the Company completed a $40.0 million unsecured term loan facility that matures July 2023 (the “2023 Term Loan”). Borrowings under the 2023 Term Loan are priced at LIBOR plus 85 to 165 basis points, depending on the Company’s credit rating. The Company entered into an interest rate swap agreement to fix LIBOR at 140 basis points until maturity.

Pursuant to the Credit Agreement, the Company has outstanding the 2024 Term Loan Facilities.   Borrowings under the 2024 Term Loan Facilities bear interest at a rate per annum equal to, at the option of the Company, (i) LIBOR plus a margin that is based upon the Company's credit rating or (ii) the Base Rate (which is defined as the greater of the rate of interest as publicly announced from time to time by PNC Bank, National Association, as its prime rate, the Federal Funds Open Rate plus 0.50%, or the Daily Eurodollar Rate plus 1.0%) plus a margin that is based upon the Company’s credit rating. The margins for the 2024 Term Loan Facilities range in amount from 0.85% to 1.65% for LIBOR-based loans and 0.00% to 0.65% for Base Rate loans, depending on the Company’s credit rating. The Company has utilized existing interest rate swaps to fix LIBOR at 2.0904% for the $65.0 million term loan and at 2.1970% for the $35.0 million term loan.  In October 2019, the Company entered into new interest rate swap agreements to fix LIBOR at 143 basis points for both the $65.0 million and $35.0 million term loans, through their 2024 maturity dates.

In December 2018, the Company entered into a $100.0 million unsecured term loan facility that matures January 2026 (the “2026 Term Loan”). Borrowings under the 2026 Term Loan are priced at LIBOR plus 145 to 240 basis points, depending on the Company’s credit rating. The Company entered into interest rate swap agreements to fix LIBOR at 266 basis points until maturity.

Senior Unsecured Notes

In May 2015, the Company and the Operating Partnership completed a private placement of $100.0 million principal amount of senior unsecured notes. The senior unsecured notes were sold in two series; $50.0 million of 4.16% notes due May 2025 (the “2025 Senior Unsecured Notes”) and $50.0 million of 4.26% notes due May 2027 (the “2027 Senior Unsecured Notes”).

In July 2016, the Company and the Operating Partnership entered into a note purchase agreement with institutional purchasers. Pursuant to the note purchase agreement, the Operating Partnership completed a private placement of $60.0 million aggregate principal amount of 4.42% senior unsecured notes due July 2028 (the “2028 Senior Unsecured Notes”).

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In September 2017, the Company and the Operating Partnership completed a private placement of $100.0 million aggregate principal amount of 4.19% senior unsecured notes due September 2029 (the “2029 Senior Unsecured Notes”).

In September 2018, the Company and the Operating Partnership entered into two supplements to uncommitted master note facilities with institutional purchasers. Pursuant to the supplements, the Operating Partnership completed a private placement of $125.0 million aggregate principal amount of 4.32% senior unsecured notes due September 2030 (the “2030 Senior Unsecured Notes”).

In October 2019, the Company and the Operating Partnership closed on a private placement of $125.0 million of 4.47% senior unsecured notes due October 2031.  In March 2019, the Company entered into forward-starting interest rate swap agreements to fix the interest for $100.0 million of long-term debt until maturity. The Company terminated the swap agreements at the time of pricing the 2031 Senior Unsecured Notes, which resulted in an effective annual fixed rate of 4.41% for $100.0 million aggregate principal amount of the 2031 Senior Unsecured Notes. Considering the effect of the terminated swap agreements, the blended all-in rate to the Company for the $125.0 million aggregate principal amount of 2031 Senior Unsecured Notes is 4.42%.

Mortgage Notes Payable

As of December 31, 2019, the Company had total gross mortgage indebtedness of $37.1 million which was collateralized by related real estate and tenants’ leases with an aggregate net book value of $48.4 million. Including mortgages that have been swapped to a fixed interest rate, the weighted average interest rate on the Company’s mortgage notes payable was 4.40% as of December 31, 2019 and 4.13% as of December 31, 2018.

We have entered into mortgage loans which are secured by multiple properties and contain cross-default and cross-collateralization provisions. Cross-collateralization provisions allow a lender to foreclose on multiple properties in the event that 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.

Loan Covenants

Certain loan agreements contain various restrictive covenants, including the following financial covenants: maximum 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 December 31, 2019, 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 December 31, 2019.

Cash Flows

Operating -- Substantially all of the Company’s cash from operations is generated by rental income from its investment portfolio.  Net cash provided by operating activities for the year ended December 31, 2019 increased by $33.5 million over 2018, primarily due to the increase in the size of the Company’s real estate investment portfolio.  

Investing -- Net cash used in investing activities was $99.4 million higher during the year ended December 31, 2019, compared to 2018.  Acquisitions of properties during 2019 were $97.0 million higher than 2018, due to overall increases in the level of acquisition activity.  Development costs during the year ended December 31, 2019 were $2.9 million higher than 2018, due to the timing of costs incurred related to the Company’s development activity.   Proceeds from asset sales remained consistent during year ended December 31, 2019 compared to 2018.

Financing -- Net cash provided by financing activities was $58.9 million higher during the year ended December 31, 2019, compared to 2018.  Net proceeds from the issuance of common stock and borrowings increased by $133.0 million during the year ended December 31, 2019 compared to 2018, primarily to fund the increased level of acquisitions occurring in 2019.  In addition, borrowings on the revolving credit facility increased by $65.0 million during the year ended December 31, 2019 compared to 2018, to fund increased acquisition investment activity.  Finally, net cash provided by the financing

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related to unsecured term loans decreased by $100.0 million due to the Company’s use of alternate financing sources to fund investment activity, such as the revolving credit facility and equity.  The Company increased its total dividends and distributions paid to its shareholders and non-controlling owners by $22.6 million during 2019 compared to 2018.  The Company increased its quarterly dividend in the fourth quarter of 2019 to an annualized $2.34 per common share, a 5.4% increase over the annualized $2.22 per common share declared in the fourth quarter of 2018.  

Contractual Obligations

In conducting our business, the Company enters into contractual obligations, including those for debt and operating leases for land. Detail of these obligations as of December 31, 2019, including expected settlement periods, is contained below in thousands):

2020

    

2021

    

2022

    

2023

    

2024

    

Thereafter

    

Total

Mortgage Notes Payable

$

3,714

$

998

$

1,060

$

28,726

$

963

$

1,654

$

37,115

Revolving Credit Facility

 

 

 

 

 

89,000

 

 

89,000

Unsecured Term Loans

 

 

 

 

40,000

 

100,000

 

100,000

 

240,000

Senior Unsecured Notes

 

 

 

 

 

 

510,000

 

510,000

Land Lease Obligations

 

1,069

 

1,015

 

789

 

789

 

789

 

30,584

 

35,035

Estimated Interest Payments on Outstanding Debt (1)

 

34,360

 

34,269

 

34,207

 

32,821

 

28,922

 

108,826

 

273,405

Total

$

39,143

$

36,282

$

36,056

$

102,336

$

219,674

$

751,064

$

1,184,555

(1)Estimated interest payments are based on (i) the stated rates for mortgage notes payable, including the effect of interest rate swap agreements and (ii) the stated rates for unsecured term loans, including the effect of interest rate swap agreements and assuming the interest rate in effect for the most recent quarter remains in effect through the respective maturity dates.

Inflation

Our leases typically contain provisions to mitigate the adverse impact of inflation on our results of operations. Tenant leases generally provide for limited increases in rent as a result of fixed increases or increases in the consumer price index. Certain of our leases contain clauses enabling us to receive percentage rents based on tenants’ gross sales, which generally increase as prices rise. During times when inflation is greater than increases in rent, rent increases will not keep up with the rate of inflation.

Substantially all of our properties are leased to tenants under long-term, net leases which require the tenant to pay certain operating expenses for a property, thereby reducing our exposure to operating cost increases resulting from inflation. Inflation may have an adverse impact on our tenants.

Non-GAAP Financial Measures

Funds from Operations (“FFO” or “Nareit FFO”)

FFO is defined by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”) to mean net income computed in accordance with GAAP, excluding gains (or losses) from sales of real estate assets and/or changes in control, plus real estate related depreciation and amortization and any impairment charges on depreciable real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations.

FFO should not be considered an alternative to net income as the primary indicator of the Company’s operating performance, or as an alternative to cash flow as a measure of liquidity. Further, while the Company adheres to the Nareit

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definition of FFO, its presentation of FFO is not necessarily comparable to similarly titled measures of other REITs due to the fact that all REITs may not use the same definition.

Core Funds from Operations (“Core FFO”)

The Company defines Core FFO as Nareit FFO with the addback of noncash amortization of above- and below- market lease intangibles. Under Nareit’s definition of FFO, lease intangibles created upon acquisition of a net lease must be amortized over the remaining term of the lease. The Company believes that by recognizing amortization charges for above- and below-market lease intangibles, the utility of FFO as a financial performance measure can be diminished.  Management believes that its measure of Core FFO facilitates useful comparison of performance to its peers who predominantly transact in sale-leaseback transactions and are thereby not required by GAAP to allocate purchase price to lease intangibles.  Unlike many of its peers, the Company has acquired the substantial majority of its net leased properties through acquisitions of properties from third parties or in connection with the acquisitions of ground leases from third parties.

Core FFO should not be considered an alternative to net income as the primary indicator of the Company’s operating performance, or as an alternative to cash flow as a measure of liquidity. Further, the Company’s presentation of Core FFO is not necessarily comparable to similarly titled measures of other REITs due to the fact that all REITs may not use the same definition.

Adjusted Funds from Operations (“AFFO”)

AFFO is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. AFFO further adjusts FFO and Core FFO for certain non-cash and/or infrequently recurring items that reduce or increase net income computed in accordance with GAAP. Management considers AFFO a useful supplemental measure of the Company’s performance, however, AFFO should not be considered an alternative to net income as an indication of its performance, or to cash flow as a measure of liquidity or ability to make distributions. The Company’s computation of AFFO may differ from the methodology for calculating AFFO used by other equity REITs, and therefore may not be comparable to such other REITs.

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The following table provides a reconciliation of net income to FFO, Core FFO, and AFFO for the years ended December 31, 2019, 2018, and 2017:

Year Ended

December 31, 2019

    

December 31, 2018

    

December 31, 2017

Reconciliation from Net Income to Funds from Operations

Net income

$

80,763

$

58,798

$

58,790

Depreciation of rental real estate assets

 

34,349

 

24,553

 

19,507

Amortization of lease intangibles - in-place leases and leasing costs

 

11,071

 

8,271

 

7,076

Provision for impairment

 

1,609

 

2,319

 

-

(Gain) loss on sale of assets

 

(13,306)

 

(11,180)

 

(14,193)

Funds from Operations

$

114,486

$

82,761

$

71,180

Amortization of above (below) market lease intangibles, net

13,501

10,668

5,091

Core Funds from Operations

$

127,987

$

93,429

$

76,271

Straight-line accrued rent

 

(7,093)

 

(4,648)

 

(3,548)

Deferred tax expense (benefit)

(475)

(230)

Stock based compensation expense

 

4,106

 

3,227

 

2,589

Amortization of financing costs

 

706

 

578

 

574

Non-real estate depreciation

 

283

 

146

 

78

Adjusted Funds from Operations

$

125,514

$

92,732

$

75,734

Funds from Operations Per Share - Diluted

$

2.75

$

2.53

$

2.54

Core Funds from Operations Per Share - Diluted

$

3.08

$

2.85

$

2.72

Adjusted Funds from Operations Per Share - Diluted

$

3.02

$

2.83

$

2.70

Weighted average shares and OP units outstanding

Basic

 

40,924,965

 

32,417,874

 

27,972,721

Diluted

 

41,571,233

 

32,748,741

 

28,047,966

Additional supplemental disclosure

Scheduled principal repayments

$

2,401

$

3,337

$

3,151

Capitalized interest

$

410

$

448

$

570

Capitalized building improvements

$

2,451

$

1,635

$

1,230

Item 7A:        Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to interest rate risk primarily through borrowing activities. There is inherent roll-over risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and our future financing requirements.

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Our interest rate risk is monitored using a variety of techniques. The table below presents the principal payments (in thousands) and the weighted average interest rates on outstanding debt, by year of expected maturity, to evaluate the expected cash flows and sensitivity to interest rate changes.  Average interest rates shown reflect the impact of the swap agreements described later in this section.

    

2020

    

2021

    

2022

    

2023

    

2024

    

Thereafter

    

Total

Mortgage Notes Payable

 

$

3,714

 

$

998

 

$

1,060

 

$

28,726

 

$

963

 

$

1,654

$

37,115

Average Interest Rate

 

6.18

%

6.02

%

6.02

%

3.89

%

6.27

%

6.27

%

Unsecured Revolving Credit Facility (1)

$

$

$

 

$

$

89,000

$

$

89,000

Average Interest Rate

2.69

%

Unsecured Term Loans

$

$

$

$

40,000

$

100,000

$

100,000

$

240,000

Average Interest Rate

 

 

2.40

%

3.13

%

 

4.21

%

Senior Unsecured Notes

$

$

$

$

$

$

510,000

$

510,000

Average Interest Rate

 

4.31

%

(1)The balloon payment balance includes the balance outstanding under the Credit Facility as of December 31, 2019. The Revolving Credit Facility matures in January 2024, with options to extend the maturity to extend its maturity date by six months up to two times, for a maximum maturity of January 2025.

The fair value is estimated at $37.8 million and $779.9 million for mortgage notes payable and unsecured term loans and notes, respectively, as of December 31, 2019.

The table above incorporates those exposures that exist as of December 31, 2019; it does not consider those exposures or positions which could arise after that date. As a result, our ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the period and interest rates.

We seek to limit the impact of interest rate changes on earnings and cash flows and to lower the overall borrowing costs by closely monitoring our variable rate debt and converting such debt to fixed rates when we deem such conversion advantageous. From time to time, we may enter into interest rate swap agreements or other interest rate hedging contracts. While these agreements are intended to lessen the impact of rising interest rates, they also expose us to the risks that the other parties to the agreements will not perform. The Company could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly effective cash flow hedges under GAAP guidance.

In September 2013, the Company entered into an interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $35.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 2.20%. This swap effectively converted $35.0 million of variable-rate borrowings to fixed-rate borrowings from October 3, 2013 to September 29, 2020. As of December 31, 2019, this interest rate swap was valued as a liability of approximately $0.1 million.

In July 2014, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $65.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 2.09%. This swap effectively converted $65.0 million of variable-rate borrowings to fixed-rate borrowings from July 21, 2014 to July 21, 2021. As of December 31, 2019, this interest rate swap was valued as a liability of approximately $0.5 million.

In September 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 $40.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month

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LIBOR and pays to the counterparty a fixed rate of 1.40%. This swap effectively converted $40.0 million of variable-rate borrowings to fixed-rate borrowings from August 1, 2016 to July 1, 2023. As of December 31, 2019, this interest rate swap was valued as an asset of approximately $0.2 million.

In December 2018, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $100.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreements, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 2.66%. This swap effectively converted $100.0 million of variable-rate borrowings to fixed-rate borrowings from December 27, 2018 to January 15, 2026. As of December 31, 2019, this interest rate swap was valued as a liability of approximately $5.9 million.

In June 2019, the Company entered into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $100.0 million of long-term debt. The Company is hedging its exposure to the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period ending March 2021. As of December 31, 2019, these interest rate swaps were valued as a liability of $1.4 million.

In October 2019, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $65.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreements, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.4275%. This swap effectively converts $65.0 million of variable-rate borrowings to fixed-rate borrowings from July 12, 2021 to January 12, 2024. As of December 31, 2019, this interest rate swap was valued as an asset of approximately $0.2 million.

Also 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 $35.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.4265%. This swap effectively converts $35.0 million of variable-rate borrowings to fixed-rate borrowings from September 29, 2020 to January 12, 2024. As of December 31, 2019, this interest rate swap was valued as an asset of approximately $0.1 million.

We do not use derivative instruments for trading or other speculative purposes, and we did not have any other derivative instruments or hedging activities as of December 31, 2019.

Refer to the section “Risks Related to Our Debt Financings” under Item 1A “Risk Factors” in this Annual Report for discussion of the future transition from LIBOR and the possible impact it may have on the Company’s debt, swap agreements, and interest payments.

Item 8:       Financial Statements and Supplementary Data

The financial statements and supplementary data are listed in the Index to the Financial Statements and Financial Statement Schedules appearing on Page F-1 of this Annual Report on Form 10-K and are included in this Annual Report on Form 10-K following page F-1.

Item 9:       Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A:    Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of our disclosure controls and procedures

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(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a15-(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:

1)Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our Company;
2)Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
3)Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision of our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment and those criteria, our management believes that we maintained effective internal control over financial reporting as of December 31, 2019.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of Independent Registered Public Accounting Firm

The attestation report issued by our independent registered public accounting firm, Grant Thornton LLP, required under this item is contained on page F-2 of this Annual Report on Form 10-K.

Item 9B:       Other Information

None.

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PART III

Item 10:       Directors, Executive Officers and Corporate Governance

The information required by this item is set forth under the following captions in our proxy statement to be filed with respect to our 2020 Annual Meeting of Shareholders (the “Proxy Statement”), all of which is incorporated by reference: “Proposal I – Election of Directors”; “Board Matters –The Board of Directors”; “Board Matters –Committees of the Board”; “Board Matters –Corporate Governance”; “Executive Officers”; “Additional Information – Section 16(a) Beneficial Ownership Reporting Compliance” and “Additional Information – Proposals for 2020 Annual Meeting.”

Item 11:       Executive Compensation

The information required by this item is set forth under the following captions in our Proxy Statement, all of which is incorporated herein by reference: “Compensation Discussion and Analysis”, “Executive Officer Compensation Tables”, “Board Matters – Director Compensation”, “Board Matters –Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report.”

Item 12:       Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table summarizes the equity compensation plan under which our common stock may be issued as of December 31, 2019.

    

    

    

Number of Securities

    

Remaining Available for

Number of Securities to 

Future Issuance Under

be Issued Upon

Weighted Average

Equity Compensation

Exercise of Outstanding

Exercise Price of

Plans (Excluding

Options, Warrants and

Outstanding Options,

Securities Reflected in

Rights

Warrant and Rights

Column (a))

Plan Category

(a)

(b)

(c)

Equity Compensation Plans Approved by Security Holders

 

 

 

248,925

(1)

Equity Compensation Plans Not Approved by Security Holders

 

 

 

  

Total

 

 

 

248,925

  

(1)Relates to various stock-based awards available for issuance under our 2014 Omnibus Incentive Plan, including incentive stock options, non-qualified stock options, stock appreciation rights, deferred stock awards, restricted stock awards, performance shares and units, unrestricted stock awards and dividend equivalent rights.

Additional information required by this item is set forth under the following caption in our Proxy Statement, all of which is incorporated herein by reference: “Security Ownership of Certain Beneficial Owners and Management.”

Item 13:       Certain Relationships, Related Transactions and Director Independence

The information required by this item is set forth under the following captions in our Proxy Statement, all of which is incorporated herein by reference: “Related Person Transactions” and “Board Matters –The Board of Directors.”

Item 14:       Principal Accounting Fees and Services

The information required by this item is set forth under the following caption in our Proxy Statement, all of which is incorporated herein by reference: “Audit Committee Matters.”

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PART IV

ITEM 15:        Exhibits and Financial Statement Schedules

15(a)(1).

The following documents are filed as a part of this Annual Report on Form 10-K:

     Reports of Independent Registered Public Accounting Firms

     Consolidated Balance Sheets as of December 31, 2019 and 2018

     Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2019, 2018 and 2017

     Consolidated Statement of Equity for the Years Ended December 31, 2019, 2018 and 2017

     Consolidated Statements of Cash Flow for the Years Ended December 31, 2019, 2018 and 2017

     Notes to the Consolidated Financial Statements

15(a)(2).

The following is a list of the financial statement schedules required by Item 8:

Schedule III – Real Estate and Accumulated Depreciation

15(a)(3).

Exhibits

Exhibit
No.

    

Description 

 

 

 

3.1

 

Articles of Incorporation of the Company, including all amendments and articles supplementary thereto (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013).

 

 

 

3.2

 

Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 9, 2013).

 

 

 

3.3

 

Amendment to the Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 6, 2015).

 

 

 

3.4

 

Amendment to Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 3, 2016).

3.5

Articles Supplementary of the Company, dated February 26, 2019 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 28, 2019).

3.6

First Amendment to Amended and Restated Bylaws of Agree Realty Corporation, effective February 26, 2019 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on February 28, 2019).

3.7

Articles of Amendment of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 25, 2019).

4.1

Amended and Restated Registration Rights Agreement, dated July 8, 1994 by and among the Company, Richard Agree, Edward Rosenberg and Joel Weiner (incorporated by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1994).

 

 

 

4.2

 

Form of certificate representing shares of common stock (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-3 filed on August 24, 2009).

 

 

 

4.3

 

Form of 4.32% Senior Guaranteed Note, Series 2018-A, due September 26, 2030 (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018).

 

 

 

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4.4

 

Form of 4.32% Senior Guaranteed Note, Series 2018-B, due September 26, 2030 (incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018).

4.5*

Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Act of 1934.

 

 

 

10.1

 

Term Loan Agreement, dated July 1, 2016, among Agree Limited Partnership, Capital One, National Association, and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016).

 

 

 

10.2

 

Amended and Restated Revolving Credit and Term Loan Agreement, dated as of December 15, 2016, among Agree Limited Partnership, as the Borrower, the Company, as the parent, certain subsidiaries of the Borrower, as guarantors, PNC Bank, National Association and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016).

10.3

 

First Amendment and Joinder to Term Loan Agreement, dated December 15, 2016, by and among Agree Limited Partnership, the Company, the other guarantors party thereto, the lenders party thereto and Capital One, National Association (incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016).

 

 

 

10.4

 

Note Purchase Agreement, dated as of August 3, 2017, among Agree Limited Partnership, the Company and the purchasers named therein (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017).

 

 

 

10.5

 

Uncommitted Master Note Facility, dated as of August 3, 2017, among Agree Limited Partnership, the Company and Teachers Insurance and Annuity Associate of America (“TIAA”) and each TIAA Affiliate (as defined therein) (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017).

 

 

 

10.6

 

Uncommitted Master Note Facility, dated as of August 3, 2017, among Agree Limited Partnership, the Company and Teachers Insurance and AIG Asset Management (U.S.), LLC (“AIG”) and each AIG Affiliate (as defined therein) (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017).

 

 

 

10.7

 

First Amended and Restated Agreement of Limited Partnership of Agree Limited Partnership, dated as of April 22, 1994, by and among the Company, Richard Agree, Edward Rosenberg and Joel Weiner (incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012).

 

 

 

10.8

 

Second Amendment to First Amended and Restated Agreement of Limited Partnership of Agree Limited Partnership, dated as of March 20, 2013, by and among the Company, Agree Limited Partnership and Richard Agree (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013).

 

 

 

10.9+

 

Agree Realty Corporation Profit Sharing Plan (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1996).

 

 

 

10.10+

 

Amended Employment Agreement, dated July 1, 2014, by and between the Company and Richard Agree (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014).

 

 

 

10.11+

 

Amended Employment Agreement, dated July 1, 2014, by and between the Company and Joey Agree (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014).

 

 

 

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10.12+

 

Letter Agreement of Employment dated April 5, 2010 between Agree Limited Partnership and Laith Hermiz (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 6, 2010).

 

 

 

10.13+

 

Employment Agreement, dated October 20, 2017, between Agree Realty Corporation and Clayton R. Thelen (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 1, 2017).

 

 

 

10.14*

 

Summary of Director Compensation.

 

 

 

10.15+

 

Agree Realty Corporation 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014).

 

 

 

10.16+

 

Form of Restricted Stock Agreement under the Agree Realty Corporation 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014).

 

 

 

10.17+

 

Form of Performance Share Award Agreement pursuant to the Agree Realty Corporation 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017).

 

 

 

10.18+

 

Agree Realty Corporation 2017 Executive Incentive Plan, dated February 16, 2017 (incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016).

 

 

 

10.19

 

Note Purchase Agreement dated as of May 28, 2015 by and among Agree Limited Partnership, the Company and the purchasers thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 1, 2015).

 

 

 

10.20

 

Note Purchase Agreement, dated as of July 28, 2016, by and among Agree Limited Partnership, the Company and the purchasers thereto (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016).

10.21

Increase Agreement, dated July 18, 2018 among Agree Limited Partnership, as the Borrower, the Company, as the parent, PNC Bank, National Association and the other lender parties thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 23, 2018).

10.22

Form of Revolving Note (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 23, 2018).

10.23

First Supplement to Uncommitted Master Note Facility, dated as of September 26, 2018, among Agree Limited Partnership, Agree Realty Corporation and Teachers Insurance and Annuity Association of America (“TIAA”) (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018).

10.24

First Supplement to Uncommitted Master Note Facility, dated as of September 26, 2018, among Agree Limited Partnership, Agree Realty Corporation, AIG Asset Management (U.S.), LLC and the institutional investors named therein (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on  Form 10-Q for the quarter ended September 30, 2018).

10.25 

 

Second Amendment to Term Loan Agreement dated November 2, 2018, among Agree Limited Partnership, Capital One, National Association, and Raymond James Bank, N.A. (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018).

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Table of Contents

10.26

First Amendment to Amended and Restated Revolving Credit and Term Loan Agreement, dated as of December 17, 2018, among the Company, PNC Bank, National Association and the other lenders party thereto (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018).

10.27

Term Loan Agreement, dated December 27, 2018, by and among Agree Limited Partnership, the Company, PNC Bank, National Association and the other lenders party thereto (incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018).

10.28

Guaranty, dated as of December 27, 2018, by and among the Company and each of the subsidiaries of Agree Limited Partnership party thereto (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018).

10.29

Reimbursement Agreement, dated as of November 18, 2014, by and between the Company and Richard Agree (incorporated by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018).

10.30+

Form of Performance Unit Award Notice (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019).

10.31

Note Purchase Agreement, dated as of June 14, 2019, among Agree Limited Partnership, the Company and the purchasers named therein (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019).

10.32

First Amendment to Term Loan Agreement, dated May 6, 2019, by and among Agree Limited Partnership, the Company, PNC Bank, National Association and the other lenders party thereto (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019).

10.33

Second Amendment to Amended and Restated Revolving Credit and Term Loan Agreement, dated as of May 6, 2019, by and among Agree Limited Partnership, the Company, PNC Bank, National Association and the other lenders party thereto (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019).

10.34

Third Amendment to Term Loan Agreement, dated May 6, 2019, by and among Agree Limited Partnership, the Company, Capital One, National Association and Raymond James Bank, N.A. (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019).

10.35

Second Amended and Restated Revolving Credit and Term Loan Agreement, dated December 5, 2019, among the Company, the Borrower, PNC Bank and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 9, 2019).

10.36

Fourth Amendment to Term Loan Agreement, dated December 5, 2019, among the Company, the Borrower, Capital One, the guarantors party thereto and the lenders party thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 9, 2019).

10.37

Second Amendment to Term Loan Agreement, dated December 5, 2019, among the Company, the Borrower, and PNC Bank (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on December 9, 2019).

10.38*+

Summary of Material Terms of Compensation Arrangement with Danielle M. Spehar (effective December 7, 2019).

21*

 

Subsidiaries of Agree Realty Corporation.

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23.1*

 

Consent of Grant Thornton LLP.

 

 

 

24*

 

Power of Attorney (included on the signature page of this Annual Report on Form 10-K).

 

 

 

31.1*

 

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Joel N. Agree, Chief Executive Officer.

 

 

 

31.2*

 

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Clayton Thelen, Chief Financial Officer.

 

 

 

32.1*

 

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Joel N. Agree, Chief Executive Officer.

 

 

 

32.2*

 

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Clayton Thelen, Chief Financial Officer.

 

 

 

99.1*

 

Material Federal Income Tax Considerations.

 

 

 

101*

 

The following materials from Agree Realty Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Income, (iii) the Consolidated Statement of Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these consolidated financial statements, tagged as blocks of text.

104*

Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

*      Filed herewith.

+      Management contract or compensatory plan or arrangement.

15(b)    The Exhibits listed in Item 15(a)(3) are hereby filed with this Annual Report on Form 10-K.

15(c)     The financial statement schedule listed at Item 15(a)(2) is hereby filed with this Annual Report on Form 10-K.

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Page

Reports of Independent Registered Public Accounting Firm

F-2

Financial Statements

Consolidated Balance Sheets

F-5

Consolidated Statements of Operations and Comprehensive Income

F-7

Consolidated Statements of Equity

F-8

Consolidated Statements of Cash Flows

F-9

Notes to Consolidated Financial Statements

F-10

Schedule III - Real Estate and Accumulated Depreciation

F-36

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Agree Realty Corporation

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Agree Realty Corporation (a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2019, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2019, and our report dated February 20, 2020 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Grant Thornton LLP

 

 

 

Philadelphia, Pennsylvania

February 20, 2020

 

F-2

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Agree Realty Corporation

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Agree Realty Corporation (a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedules included under Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 20, 2020 expressed an unqualified opinion.

Change in accounting principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Codification (ASC) Topic 842, Leases.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Accounting for Acquisitions of Real Estate

As described in Notes 2 and 4 to the consolidated financial statements, the acquisition of property for investment purposes is typically accounted for as an asset acquisition in which 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. The Company acquired approximately $702.9 million of real estate during the year ended December 31, 2019.  We identified the accounting for acquisitions of real estate as a critical audit matter.

The principal consideration for our determination that the accounting for acquisitions of real estate was a critical audit matter was the higher risk of estimation uncertainty due to the sensitivity of management’s judgments in determining estimates of fair value, particularly with respect to the market rent assumption, a significant component in the fair value estimation of above- and below-market lease intangible assets and liabilities recognized in connection with the

F-3

Table of Contents

acquisitions. As described in Note 2 to the consolidated financial statements, these amounts are amortized over the remaining terms of the related leases as adjustments to the “Rental income” line item in the consolidated statement of operations.

Our audit procedures related to the accounting for acquisitions of real estate included the following, among others. We tested the design and operating effectiveness of relevant controls relating to the accounting for acquisitions of real estate, such as controls over the measurement and recognition of assets acquired, liabilities assumed, and consideration paid. For each of the acquisitions during the audit period, we inspected the purchase agreements to assess whether amounts reported and disclosed in the consolidated financial statements were consistent with the underlying transaction agreements.  

In testing the estimates of fair value of assets acquired and liabilities assumed recognized in connection with the acquisitions, we evaluated the appropriateness of the valuation methodology used by management, and compared management’s significant assumptions, particularly the market rent assumption, with comparable observable market data. These procedures involved the use of our valuation specialists. Our overall assessment of these assumptions and the amounts reported and disclosed in the consolidated financial statements in connection with the acquisitions included consideration of whether such information was consistent with evidence obtained in other areas of the audit.  

Impairments

As described in Notes 2 and 4 to the consolidated financial statements, the Company reviews its real estate investments for potential impairment when certain events or changes in circumstances indicate that the carrying amount may not be recoverable. Those events and circumstances 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.  For real estate investments that show an indication of impairment, management determines whether an impairment has occurred by comparing the estimated undiscounted future cash flows, including the residual value of the real estate, with the carrying amount of the individual asset. Forecasting the estimated future cash flows requires management to make estimates and assumptions about significant variables, such as the probabilities of outcomes, estimated holding periods, capitalization rates, and potential disposal proceeds to be received upon a sale. We identified the evaluation of impairment of real estate investments as a critical audit matter.

The principal consideration for our determination that the evaluation of impairment was a critical audit matter was a higher risk of estimation uncertainty due to sensitivity of management judgments not only regarding indicators of impairment but also regarding estimates and assumptions utilized in forecasting cash flows for cost recoverability and making fair value measurements.

Our audit procedures related to the evaluation of impairment included the following, among others. We tested the design and operating effectiveness of relevant controls over the evaluation of potential real estate investment impairments, such as controls over the Company’s monitoring of the real estate investment portfolio, controls over the Company’s analysis of undiscounted future cash flows, and controls over the Company’s estimates of fair value. In consideration of impairment indicator criteria established in management’s accounting policies over impairment, we evaluated the completeness of the population of properties requiring further analysis. We examined and evaluated the Company’s undiscounted cash flow analyses and estimates of fair value over properties identified for potential impairment. We evaluated the reasonableness of the methods and significant assumptions used, including probabilities of outcomes, holding periods, capitalization rates, and disposal proceeds. We evaluated these items in comparison with historical performance of the impacted properties and with comparable observable market data, which involved the use of our valuation specialists. Our assessment included sensitivity analyses over these assumptions, and we considered whether such assumptions were consistent with evidence obtained in other areas of the audit.

/s/ Grant Thornton LLP

 

 We have served as the Company’s auditor since 2013.

 

Philadelphia, Pennsylvania

 

February 20, 2020

 

F-4

Table of Contents

AGREE REALTY CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per-share data)

December 31, 

December 31, 

2019

2018

ASSETS

Real Estate Investments

  

Land

$

735,991

$

553,704

Buildings

 

1,600,293

 

1,194,985

Less accumulated depreciation

 

(127,748)

 

(100,312)

 

2,208,536

 

1,648,377

Property under development

 

10,056

 

12,957

Net Real Estate Investments

 

2,218,592

 

1,661,334

 

  

Real Estate Held for Sale, net

 

3,750

 

 

Cash and Cash Equivalents

 

15,603

 

53,955

 

  

Cash Held in Escrows

 

26,554

 

20

Accounts Receivable - Tenants

26,808

 

21,547

 

  

Lease intangibles, net of accumulated amortization of

$89,118 and $62,543 at December 31, 2019 and December 31, 2018, respectively

 

343,514

 

280,153

 

Other Assets, net

 

29,709

 

11,180

 

  

Total Assets

$

2,664,530

$

2,028,189

See accompanying notes to consolidated financial statements.

F-5

Table of Contents

AGREE REALTY CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per-share data)

December 31, 

December 31, 

2019

2018

LIABILITIES

  

Mortgage Notes Payable, net

$

36,698

$

60,926

  

Unsecured Term Loans, net

237,403

 

256,419

  

Senior Unsecured Notes, net

509,198

 

384,064

  

Unsecured Revolving Credit Facility

89,000

 

19,000

  

Dividends and Distributions Payable

25,014

 

21,031

Accounts Payable, Accrued Expenses, and Other Liabilities

48,987

 

21,045

  

Lease intangibles, net of accumulated amortization of

$19,307 and $15,177 at December 31, 2019 and December 31, 2018, respectively

26,668

 

27,218

  

Total Liabilities

972,968

 

789,703

  

EQUITY

  

Common stock, $.0001 par value, 90,000,000 shares

 

authorized, 45,573,623 and 37,545,790 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively

5

4

Preferred Stock, $.0001 par value per share, 4,000,000 shares authorized

 

Additional paid-in-capital

1,752,912

 

1,277,592

Dividends in excess of net income

(57,094)

 

(42,945)

Accumulated other comprehensive income (loss)

(6,492)

 

1,424

  

Total Equity - Agree Realty Corporation

1,689,331

 

1,236,075

Non-controlling interest

2,231

 

2,411

Total Equity

1,691,562

 

1,238,486

  

Total Liabilities and Equity

$

2,664,530

$

2,028,189

See accompanying notes to consolidated financial statements.

F-6

Table of Contents

AGREE REALTY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except share and per-share data)

Year Ended

2019

    

2018

    

2017

Revenues

  

 

  

 

  

Rental Income

$

187,279

$

136,884

$

110,685

Other

 

199

 

238

 

832

Total Revenues

 

187,478

 

137,122

 

111,517

 

  

 

  

 

  

Operating Expenses

 

  

 

  

 

  

Real estate taxes

 

15,520

 

10,721

 

8,204

Property operating expenses

 

6,749

 

5,645

 

3,610

Land lease expense

 

1,242

 

645

 

653

General and administrative

 

15,566

 

11,756

 

9,428

Depreciation and amortization

 

45,703

 

33,030

 

26,661

Provision for impairment

 

1,609

2,319

Total Operating Expenses

 

86,389

 

64,116

 

48,556

 

  

 

  

 

  

Income from Operations

 

101,089

 

73,006

 

62,961

 

  

 

  

 

  

Other (Expense) Income

 

  

 

  

 

  

Interest expense, net

 

(33,094)

 

(24,872)

 

(18,137)

Gain (loss) on sale of assets, net

 

13,306

 

11,180

 

14,193

Income tax expense

(538)

(516)

(227)

Net Income

 

80,763

 

58,798

 

58,790

 

  

 

  

 

  

Less Net Income Attributable to Non-Controlling Interest

 

682

 

626

 

678

 

  

 

  

 

  

Net Income Attributable to Agree Realty Corporation

$

80,081

$

58,172

$

58,112

 

  

 

  

 

  

Net Income Per Share Attributable to Agree Realty Corporation

 

  

 

  

 

  

Basic

$

1.96

$

1.80

$

2.09

Diluted

$

1.93

$

1.78

$

2.08

 

  

 

  

 

  

Other Comprehensive Income

 

  

 

  

 

  

Net income

$

80,763

$

58,798

$

58,790

Changes in fair value of interest rate swaps

(8,775)

54

1,935

Realized gain (loss) on settlement of interest rate swaps

 

788

 

 

Total Comprehensive Income

 

72,776

 

58,852

 

60,725

Less Comprehensive Income Attributable to Non-Controlling Interest

 

611

 

631

 

702

 

  

 

  

 

  

Comprehensive Income Attributable to Agree Realty Corporation

$

72,165

$

58,221

$

60,023

 

  

 

  

 

  

Weighted Average Number of Common Shares Outstanding - Basic

 

40,577,346

 

32,070,255

 

27,625,102

 

  

 

  

 

  

Weighted Average Number of Common Shares Outstanding - Diluted

 

41,223,614

 

32,401,122

 

27,700,347

See accompanying notes to consolidated financial statements.

F-7

Table of Contents

AGREE REALTY CORPORATION

CONSOLIDATED STATEMENT OF EQUITY

(In thousands, except share and per-share data)

Accumulated

Dividends in

Other

Common Stock

Additional

excess of net

Comprehensive

Non-Controlling

Total

  

Shares

  

Amount

  

Paid-In Capital

  

income

  

Income (Loss)

  

Interest

  

Equity

Balance, December 31, 2016

26,164,977

$

3

$

712,069

$

(28,558)

$

(536)

$

2,532

$

685,510

Issuance of common stock, net of issuance costs

4,786,604

222,695

222,695

Repurchase of common shares

(23,925)

(1,111)

(1,111)

Issuance of restricted stock under the Omnibus Incentive Plan

88,466

Forfeiture of restricted stock

(11,222)

Stock-based compensation

2,393

2,393

Dividends and distributions declared for the period

(58,317)

(705)

(59,022)

Other comprehensive income (loss) - change in fair value of interest rate swaps

1,911

24

1,935

Net income

58,112

678

58,790

Balance, December 31, 2017

31,004,900

$

3

$

936,046

$

(28,763)

$

1,375

$

2,529

$

911,190

Issuance of common stock, net of issuance costs

6,507,263

1

339,743

339,744

Repurchase of common shares

(23,407)

(1,145)

(1,145)

Issuance of restricted stock under the Omnibus Incentive Plan

57,882

Forfeiture of restricted stock

(848)

Stock-based compensation

2,948

2,948

Dividends and distributions declared for the period

(72,354)

(749)

(73,103)

Other comprehensive income (loss) - change in fair value of interest rate swaps

49

5

54

Net income

58,172

626

58,798

Balance, December 31, 2018

37,545,790

$

4

$

1,277,592

$

(42,945)

$

1,424

$

2,411

$

1,238,486

Issuance of common stock, net of issuance costs

7,993,519

472,746

472,746

Repurchase of common shares

(22,011)

(1,406)

(1,406)

Issuance of restricted stock under the Omnibus Incentive Plan

58,735

1

1

Forfeiture of restricted stock

(2,410)

(29)

(29)

Stock-based compensation

4,009

4,009

Dividends and distributions declared for the period

(94,230)

(791)

(95,021)

Other comprehensive income (loss) - change in fair value and settlement of interest rate swaps

(7,916)

(71)

(7,987)

Net income

80,081

682

80,763

Balance, December 31, 2019

45,573,623

$

5

$

1,752,912

$

(57,094)

$

(6,492)

$

2,231

$

1,691,562

Cash dividends declared per common share:

For the three months ended March 31, 2019

$

0.555

For the three months ended June 30, 2019

$

0.570

For the three months ended September 30, 2019

$

0.570

For the three months ended December 31, 2019

$

0.585

See accompanying notes to consolidated financial statements.

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Table of Contents

AGREE REALTY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended

    

2019

    

2018

    

2017

Cash Flows from Operating Activities

 

  

 

  

  

Net income

$

80,763

$

58,798

$

58,790

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

  

Depreciation and amortization

 

45,703

 

33,030

 

26,661

Amortization from above (below) lease intangibles, net

13,501

10,668

5,091

Amortization from financing and credit facility costs

 

1,284

 

1,055

 

979

Stock-based compensation

 

3,980

 

2,948

 

2,393

Provision for impairment

1,609

2,319

Settlement of interest rate swap

788

(Gain) loss on sale of assets

 

(13,306)

 

(11,180)

 

(14,193)

(Increase) decrease in accounts receivable

 

(6,071)

 

(6,855)

 

(4,216)

(Increase) decrease in other assets

 

(2,150)

 

(463)

 

444

Increase (decrease) in accounts payable, accrued expenses, and other liabilities

606

2,927

6,254

Net Cash Provided by Operating Activities

 

126,707

 

93,247

 

82,203

 

  

 

  

 

  

Cash Flows from Investing Activities

 

  

 

  

 

  

Acquisition of real estate investments and other assets

 

(708,144)

 

(611,129)

 

(319,572)

Development of real estate investments and other assets

 

(including capitalized interest of $410 in 2019, $448 in 2018, and $570 in 2017)

 

(24,428)

 

(21,481)

 

(43,302)

Payment of leasing costs

 

(411)

 

(1,337)

 

(568)

Net proceeds from sale of assets

 

65,464

 

65,830

 

44,343

Net Cash Used in Investing Activities

 

(667,519)

 

(568,117)

 

(319,099)

 

  

 

  

 

  

Cash Flows from Financing Activities

 

 

  

 

  

Proceeds (costs) from common stock offerings, net

 

472,746

 

339,744

 

222,695

Repurchase of common shares

 

(1,406)

 

(1,145)

 

(1,111)

Unsecured revolving credit facility borrowings (repayments), net

 

70,000

 

5,000

 

Payments of mortgage notes payable

 

(24,404)

 

(27,576)

 

(2,412)

Unsecured term loan proceeds

100,000

Payments of unsecured term loans

 

(18,543)

 

(761)

 

(739)

Senior unsecured notes proceeds

 

125,000

 

125,000

 

100,000

Dividends paid

 

(90,257)

 

(67,638)

 

(55,146)

Distributions to Non-Controlling Interest

 

(782)

 

(737)

 

(695)

Payments for financing costs

 

(3,360)

 

(1,824)

 

(309)

Net Cash Provided by Financing Activities

 

528,994

 

470,063

 

262,283

 

  

 

  

 

  

Net Increase (Decrease) in Cash and Cash Equivalents

 

(11,818)

 

(4,807)

 

25,387

Cash and cash equivalents and cash held in escrow, beginning of period

 

53,975

 

58,782

 

33,395

Cash and cash equivalents and cash held in escrow, end of period

$

42,157

$

53,975

$

58,782

 

  

 

  

 

  

Supplemental Disclosure of Cash Flow Information

 

  

 

  

 

  

Cash paid for interest (net of amounts capitalized)

$

29,925

$

23,015

$

17,331

Cash paid for income tax

$

666

$

452

$

257

 

 

  

 

  

Supplemental Disclosure of Non-Cash Investing and Financing Activities

 

  

 

  

 

  

Operating lease right of use assets added upon implementation of leases standard on January 1, 2019

$

7,505

$

$

Additional operating lease right of use assets added under new ground leases after January 1, 2019

$

12,167

$

Operating lease right of use assets disposed of upon acquisition of underlying ground leased land

$

(3,059)

$

Dividends and limited partners’ distributions declared and unpaid

$

25,014

$

21,031

$

16,303

Accrual of development, construction and other real estate investment costs

$

4,330

$

1,768

$

6,742

See accompanying notes to consolidated financial statements.

F-9

Table of Contents

8

Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

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 our common stock was listed on the New York Stock Exchange (“NYSE”) in 1994.

Our assets are held by, and all of our 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 99.2% interest as of December 31, 2019.  There is a one-for-one relationship between Operating Partnership units the (“Operating Partnership Units”) owned by the Company and Company common shares outstanding.  Under the partnership agreement of the Operating Partnership, the Company, as the sole general partner, has exclusive responsibility and discretion in the management and control of the Operating Partnership.

The terms “Agree Realty,” the “Company,” “Management,” “we,” “our” or “us” refer to Agree Realty Corporation and all of its consolidated subsidiaries, including the Operating Partnership.

Note 2 – Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements of Agree Realty Corporation include the accounts of the Company, the Operating Partnership and its wholly-owned subsidiaries. The Company, as the sole general partner, held 99.2% and 99.1% of the Operating Partnership as of December 31, 2019 and 2018, respectively. All material intercompany accounts and transactions are eliminated.

Non-controlling Interest

At December 31, 2019, the non-controlling interest in the Operating Partnership consisted of a 0.8% ownership interest in the Operating Partnership held by third parties. The Operating Partnership Units may, under certain circumstances, be exchanged for shares of common stock. The Company as sole general partner of the Operating Partnership has the option to settle exchanged Operating Partnership Units held by others for cash based on the current trading price of our shares. Assuming the exchange of all non-controlling Operating Partnership Units, there would have been 45,921,242 shares of common stock outstanding at December 31, 2019.

Reclassifications

The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 842 “Leases” (“ASC 842”) using the modified retrospective approach as of January 1, 2019 and elected to apply the transition provisions of the standard at the beginning of the period of adoption.  The Company adopted the practical expedient in ASC 842 that alleviates the requirement to separate lease and non-lease components. As a result, all income earned pursuant to tenant leases is reflected as one line, “Rental Income,” in the 2019 consolidated statement of operations and comprehensive income.  To facilitate comparability, the Company has reclassified prior periods’ lease and non-lease income consistently with the classification employed in 2019.

The Company often recognizes above- and below-market lease intangibles in connection with acquisitions of real estate (see Acquisitions of Real Estate below).  The capitalized above- and below-market lease intangibles are amortized over the remaining term of the related leases.  The Company historically presented this amortization as a component of Depreciation and Amortization expense within the Consolidated Statement of Income and Comprehensive Income.  During 2019, the Company changed this classification to recognize this amortization as an adjustment of Rental Income.  The prior period results have been reclassified to conform to the current year classification.  The Company

F-10

Table of Contents

8

Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

incurred amortization of capitalized above- and below-market lease intangibles of $13.5 million, $10.7 million, and $5.1 million for the years ended December 31, 2019, 2018, and 2017, respectively.

Certain other reclassifications have been made to prior year financial statements to conform to classifications used in the current year. These reclassifications had no impact on net income or shareholders’ equity as previously reported.

Real Estate Investments

The Company records the acquisition of real estate at cost, including acquisition and closing costs. For properties developed by the Company, all direct and indirect costs related to planning, development and construction, including interest, real estate taxes and other miscellaneous costs incurred during the construction period, are capitalized for financial reporting purposes and recorded as property under development until construction has been completed.  

Assets are classified as Held for Sale based on specific criteria as outlined in Accounting Standards Codification 360, Property, Plant & Equipment.  Properties classified as Held for Sale are recorded at the lower of their carrying value or their fair value, less anticipated selling costs. Assets are generally classified as Held for Sale once management has actively engaged in marketing the asset and has received a firm purchase commitment that is expected to close within one year. The Company classified one operating property as held for sale at December 31, 2019, the assets for which are separately presented in the Consolidated Balance Sheet. There were no assets held for sale at December 31, 2018.

Real estate held for sale consisted of the following as of December 31, 2019 and December 31, 2018 (in thousands):

    

December 31, 2019

    

December 31, 2018

Land

$

2,269

$

Building

 

2,315

 

 

4,584

 

Accumulated depreciation and amortization

 

(834)

 

Total Real Estate Held for Sale, net

$

3,750

$

Acquisitions of Real Estate

The acquisition of property for investment purposes is typically accounted for as an asset acquisition. The Company allocates the purchase price to land, buildings and identified intangible assets and liabilities, based in each case on their relative estimated fair values and without giving rise to goodwill. Intangible assets and liabilities represent the value of in-place leases and above- or below-market leases. In making estimates of fair values, the Company may use a number of sources, including data provided by independent third parties, as well as information obtained by the Company as a result of its due diligence, including expected future cash flows of the property and various characteristics of the markets where the property is located.

In allocating the fair value of the identified intangible assets and liabilities of an acquired property, in-place lease intangibles are valued based on the Company’s estimates of costs related to tenant acquisition and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. Above- and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition and the Company’s estimate of current market lease rates for the property.  In the case of sale-leaseback transactions, it is typically assumed that the lease is not in-place prior to the close of the transaction.

Depreciation and Amortization

Land, buildings, and improvements are recorded and stated at cost.  The Company’s properties are depreciated using the straight-line method over the estimated remaining useful life of the assets, which are generally 40 years for buildings and 10 to 20 years for improvements. Properties classified as held for sale and properties under development or redevelopment

F-11

Table of Contents

8

Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

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 the capitalized above- and below-market lease intangibles are amortized over the non-cancelable term of the lease unless the Company believes it is reasonably certain that the tenant will renew the lease for an option term whereby the Company amortizes the value attributable to the renewal over the renewal period.  In-place lease intangible assets are amortized to amortization expense and above- and below-market lease intangibles are amortized as a net reduction of rental income (see Reclassifications above).  In the event of early lease termination, the remaining net book value of any above- or below-market lease intangible is recognized as an adjustment of rental income.

The following schedule summarizes the Company’s amortization of lease intangibles for the years ended December 31, 2019, 2018, and 2017 (in thousands):

For the Year Ended December 31, 

    

2019

    

2018

    

2017

Lease Intangibles (In-place)

$

10,619

$

7,877

$

6,353

Lease Intangibles (Above-Market)

 

18,107

 

14,871

 

9,707

Lease Intangibles (Below-Market)

 

(4,607)

 

(4,203)

 

(4,275)

Total

$

24,119

$

18,545

$

11,785

 

Year Ending December 31, 

    

2020

    

2021

    

2022

    

2023

    

2024

    

Thereafter

    

Total

Lease Intangibles (In-place)

$

13,351

  

$

12,258

  

$

11,392

  

$

10,614

  

$

9,502

$

52,814

  

$

109,931

Lease Intangibles (Above-Market)

 

19,462

  

 

19,273

  

 

18,980

  

 

18,126

  

 

16,473

 

141,268

  

 

233,582

Lease Intangibles (Below-Market)

 

(4,868)

 

(4,435)

 

(3,525)

 

(2,954)

 

(2,265)

 

(8,621)

 

(26,668)

Total

$

27,945

  

$

27,096

  

$

26,847

  

$

25,786

  

$

23,710

$

185,461

  

$

316,845

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 though 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 Escrow

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of cash and money market accounts.  Cash held in escrows relates to delayed like-kind exchange transactions pursued under Section 1031 of the Internal Revenue Code.  Additionally, as of December 31, 2019, escrowed cash included $24.8 million held by the Company’s stock transfer agent in connection with the payment of the January 3, 2020 dividend.  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

F-12

Table of Contents

8

Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

of FDIC insurance coverage. We had $40.9 million and $52.7 million in cash and cash held in escrow as of December 31, 2019 and December 31, 2018, respectively, in excess of the FDIC insured limit.

Revenue Recognition and Accounts Receivable

The Company leases real estate to its tenants under long-term net leases which we account for as operating leases. Under this method, leases that have fixed and determinable rent increases are recognized on a straight-line basis over the lease term. Rental increases based upon changes in the consumer price indexes, or other variable factors, are recognized only after changes in such factors have occurred and are then applied according to the lease agreements. Certain leases also provide for additional rent based on tenants’ sales volumes. These rents are recognized when determinable after the tenant exceeds a sales breakpoint.

Recognizing rent escalations on a straight-line method results in rental revenue in the early years of a lease being higher than actual cash received, creating a straight-line rent receivable asset which is included in the Accounts Receivable - Tenants line item in our Consolidated Balance Sheets. The balance of straight-line rent receivables at December 31, 2019 and December 31, 2018 was $23.0 million and $16.7 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. In the event that collectability with respect to any tenant changes, beginning with the adoption of ASC 842 as of January 1, 2019, the Company recognizes an adjustment to rental income. Prior to the adoption of ASC 842, the Company recognized a provision for uncollectible amounts or a direct write-off of the specific rent receivable. The Company’s review of collectability of charges under its operating leases includes any accrued rental revenues related to the straight-line method of reporting rental revenue.

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 our operating cost reimbursement revenue is estimated each period and is recognized as rental income in the period the recoverable costs are incurred and accrued.  The balance of unbilled operating cost reimbursement receivable at December 31, 2019 and December 31, 2018 was $2.6 million and $3.3 million, respectively.

Sales Tax

The Company collects various taxes from tenants and remits these amounts, on a net basis, to the applicable taxing authorities.

Earnings per Share

Earnings per common share has been computed pursuant to the guidance in the FASB ASC Topic 260, “Earnings Per Share.”  The guidance requires the classification of the Company’s unvested restricted stock, which contain rights to receive non forfeitable dividends, as participating securities requiring the two-class method of computing net income per common share.  In accordance with the two-class method, earnings per share has been computed by dividing the net income less net income attributable to unvested restricted shares by the weighted average number of common shares outstanding less unvested restricted shares. Diluted earnings per share is computed by dividing net income by the weighted average common shares and potentially dilutive common shares outstanding in accordance with the treasury stock method.

F-13

Table of Contents

8

Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

The following is a reconciliation of basic net earnings per common share computation to the denominator of the diluted net earnings per common share computation for each of the periods presented:

Year Ended December 31, 

    

2019

    

2018

    

2017

Net income attributable to Agree Realty Corporation

$

80,081

$

58,172

$

58,112

Less: Income attributable to unvested restricted shares

(379)

(370)

(454)

Net income used in basic and diluted earnings per share

$

79,702

$

57,802

$

57,658

Weighted average number of common shares outstanding

40,771,300

  

32,281,273

  

27,852,231

Less: Unvested restricted stock

(193,954)

  

(211,018)

  

(227,129)

Weighted average number of common shares outstanding used in basic earnings per share

40,577,346

  

32,070,255

  

27,625,102

  

  

Weighted average number of common shares outstanding used in basic earnings per share

40,577,346

  

32,070,255

  

27,625,102

Effect of dilutive securities: Share-based compensation

98,740

  

69,136

  

75,245

Effect of dilutive securities: March 2018 forward equity offering

198,786

Effect of dilutive securities: September 2018 forward equity offering

269,785

62,945

Effect of dilutive securities: April 2019 forward equity offering

277,225

  

  

Effect of dilutive securities: 2019 ATM forward equity offerings

518

  

  

Weighted average number of common shares outstanding used in diluted earnings per share

41,223,614

  

32,401,122

  

27,700,347

Forward Equity Sales

The Company occasionally sells shares of common stock through forward sale agreements to enable the Company to set the price of such shares upon pricing the offering (subject to certain adjustments) while delaying the issuance of such shares and the receipt of the net proceeds by the Company.

To account for the forward sale agreements, the Company considers the accounting guidance governing financial instruments and derivatives.  To date, we have concluded that our forward sale agreements are not liabilities as they do not embody obligations to repurchase our shares nor do they embody obligations to issue a variable number of shares for which the monetary value are predominantly fixed, varying with something other than the fair value of the shares, or varying inversely in relation to our shares. We then evaluate whether the agreements meet the derivatives and hedging guidance scope exception to be accounted for as equity instruments.  We have concluded that the agreements are classifiable as equity contracts based on the following assessments: (i) none of the agreements’ exercise contingencies are based on observable markets or indices besides those related to the market for our own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to our own stock.

The Company 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 agreement 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 Consolidated Balance Sheets.

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

Income Taxes

The Company has made an election to be taxed as a REIT under Sections 856 through 860 of the Code and related regulations. The Company generally will not be subject to federal income taxes on amounts distributed to shareholders, providing it distributes 100% of its REIT taxable income and meets certain other requirements for qualifying as a REIT. For each of the years in the three-year period ended December 31, 2019, the Company believes it has qualified as a REIT. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements.    Notwithstanding the Company’s qualification for taxation as a REIT, the Company is subject to certain state taxes on its income and real estate.

Earnings and profits that determine the taxability of distributions to shareholders differ from net income reported for financial reporting purposes due to differences in the estimated useful lives and methods used to compute depreciation and the carrying value (basis) of the investments in properties for tax purposes, among other things.

The Company and its taxable REIT subsidiaries (“TRS”) have made a timely TRS election pursuant to the provisions of the REIT Modernization Act. A TRS is able to engage in activities resulting in income that previously would have been disqualified from being eligible REIT income under the federal income tax regulations. As a result, certain activities of the Company which occur within its TRS entity are subject to federal and state income taxes (See Note 8). All provisions for federal income taxes in the accompanying consolidated financial statements are attributable to the Company’s TRS.

We regularly analyze our various federal and state filing positions and only recognize the income tax effect in our financial statements when certain criteria regarding uncertain income tax positions have been met. We believe that our income tax positions would more likely than not be sustained upon examination by all relevant taxing authorities. Therefore, no provisions for uncertain income tax positions have been recorded in our 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. No such conditions or events were identified as of the issuance date of the financial statements contained in this Annual Report on Form 10-K.

Segment Reporting

The Company is primarily in the business of acquiring, developing and managing retail real estate which is considered to be one reporting segment.  The Company has no other reportable segments.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“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.

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

Fair Values of Financial Instruments

The Company’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. The guidance describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels:

Level 1 –

Valuation is based upon quoted prices in active markets for identical assets or liabilities.

 

 

Level 2 –

Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

 

Level 3 –

Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques.

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU No. ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). These amendments modify the disclosure requirements in Topic 820 on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty. ASU 2018-13 will be effective for all entities for fiscal years beginning after December 15, 2019, including interim periods in the year of adoption. The Company is in the process of determining the impact of the implementation of ASU 2018-13, but does not believe it will have a material effect on its financial statements.

In June 2018, the FASB issued ASU No. 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). These amendments expand the scope of Topic 718, Compensation—Stock Compensation, which currently only includes share-based payments to employees, to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned, and the ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees. The Company adopted ASU 2018-07 on January 1, 2019. The adoption did not have a material effect on its financial statements.

In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). The objective of ASU 2017-12 is to expand hedge accounting for both financial (interest rate) and commodity risks and create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes. The Company adopted ASU 2017-12 on January 1, 2019. The adoption did not have a material effect on the financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which changes how entities measure credit losses for most financial assets. This guidance requires an entity to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses”, which clarified that receivables arising from operating leases are within the scope of the leasing standard (Topic 842), not Topic 326. This new standard is effective for the Company on January 1, 2020. The Company is evaluating the impact this new standard would have on its consolidated financial statements, in the event

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

any of its leases ever were to be classified as sales-type or direct finance leases and become subject to the provisions of ASU 2016-13. However, the Company does not currently have any such leases, nor does it have a significant number of other financial instruments subject to the new standard. Therefore, the Company does not currently expect the adoption of ASU 2016-13 to have a material effect on its financial statements.

In February 2016, the FASB issued ASU No. 2016-02 “Leases” (“ASU 2016-02”). The new standard creates ASC 842 and supersedes FASB ASC 840, Leases (“ASC 840”), which the Company adopted on January 1, 2019 along with related interpretations.

The adoption of the new Leases standard ASU 2016-02 generally had, and will have, the following impacts on the Company:

Topic 842 requires a lessee to recognize right of use assets and lease obligation liabilities that arise from leases (operating and finance).  On January 1, 2019, the Company recognized $7.5 million of right of use assets and lease liabilities, within Other Assets and Accounts Payable, Accrued Expenses, and Other Liabilities on the Consolidated Balance Sheet.  The Company was not required to reassess the classification of existing land leases and therefore these leases continue to be accounted for as operating leases.  In the event the Company modifies existing land leases or enters into new land leases after adoption of the new standard, such leases may be classified as finance leases.  Business activity occurring subsequent to January 1, 2019, including the Company entering into an additional operating lease as lessee, has increased the balances of the right of use assets and lease liabilities to $16.0 million and $16.2 million respectively, as of December 31, 2019.
Topic 842 requires lessors to account for leases using an approach that is substantially equivalent to ASC 840 guidance for sales-type leases and operating leases. Based on its election of practical expedients, the Company’s existing retail leases, where it is the lessor, continue to be accounted for as operating leases under the new standard.  However, Topic 842 changed certain requirements regarding the classification of leases that could result in the Company recognizing certain long-term leases entered into or modified after January 1, 2019 as sales-type leases, as opposed to operating leases.
The Company elected an optional transition method that allows entities to initially apply Topic 842 at the adoption date (January 1, 2019) and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.  However, the Company ultimately did not have any cumulative-effect adjustment as of the adoption date.
The Company elected a practical expedient which allows lessors to not separate non-lease components from the lease component when the timing and pattern of transfer for the lease components and non-lease components are the same and if the lease component is classified as an operating lease.  As a result, the Company now presents all rentals and reimbursements from tenants as a single line item Rental Income within the Consolidated Statement of Operations and Comprehensive Income, and made certain reclassifications to prior periods for comparability. See Reclassifications above.
Under Topic 842, beginning on January 1, 2019, changes in the probability of collecting tenant rental income will result in direct adjustments to rental income and tenant receivables. See Revenue Recognition and Accounts Receivable above.
The Company elected an optional transition method allowing entities to not evaluate under ASC 842 land easements that existed or expired before the adoption of ASC 842 and that were not previously accounted for as leases under ASC 840.
In connection with its adoption of Topic 842 the Company also began recognizing amortization of above- and below- market lease intangibles as a net reduction of Rental Income.  See Reclassifications above.

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

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 December 31, 2019, the Company’s portfolio was approximately 99.6% leased and had a weighted average remaining lease term (excluding extension options) of approximately 10.0 years. A significant majority of its properties are leased to national tenants and approximately 58.2% of its annualized base rent was derived from tenants, or parent entities thereof, with an investment grade credit rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Association of Insurance Commissioners.

Substantially all of the Company’s tenants are subject to net lease agreements. A net lease typically requires the tenant to be responsible for minimum monthly rent and actual property operating expenses incurred, including property taxes, insurance and maintenance. In addition, the Company’s tenants are typically subject to future rent increases based on fixed amounts or increases in the consumer price index and certain leases provide for additional rent calculated as a percentage of the tenants’ gross sales above a specified level.  Certain of the Company’s properties are subject to leases under which it retains responsibility for specific costs and expenses of the property.

The Company’s leases typically provide the tenant one or more multi-year renewal options to extend their leases, subject to generally the same terms and conditions, including rent increases, consistent with the initial lease term.  

The Company attempts to maximize the amount it expects to derive from the underlying real estate property following the end of the lease, to the extent it is not extended.  The Company maintains a proactive leasing program that, combined with the quality and locations of its properties, has made its properties attractive to tenants. The Company intends to continue to hold its properties for long-term investment and, accordingly, places a strong emphasis on the quality of construction and an on-going program of regular and preventative maintenance.  However, the residual value of a real estate property is still subject to various market-specific, asset-specific, and tenant-specific risks and characteristics.  As the classification of a lease is dependent on the fair value of its cash flows at lease commencement, the residual value of a property represents a significant assumption in its accounting for tenant leases.  

The Company has elected the practical expedient in ASC Topic 842 on not separating non-lease components from associated lease components.  The lease and non-lease components combined as a result of this election largely include tenant rentals and maintenance charges, respectively. The Company applies the accounting requirements of ASC 842 to the combined component.

The following table includes information regarding the Company’s operating leases for which it is the lessor, for the year ended December 31, 2019. (presented in thousands)

For the Year Ended December 31, 

2019

Total Lease Payments

$

193,843

Less: Variable Lease Payments

 

(21,137)

Total Non-Variable Lease Payments

$

172,706

 

Year Ending December 31, 

    

2020

    

2021

    

2022

    

2023

    

2024

    

Thereafter

    

Total

Future Lease Payments

$

198,089

  

$

196,430

  

$

193,140

  

$

189,080

  

$

180,195

$

1,109,013

  

$

2,065,947

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

Deferred Revenue

As of December 31, 2019, and December 31, 2018, there was $4.1 million and $3.7 million, respectively, in deferred revenues resulting from rents paid in advance.

Land Lease Obligations

The Company is the lessee under land lease agreements for certain of its properties, all of which qualified as operating leases as of December 31, 2019. The Company’s land leases are net lease agreements and do not include variable lease payments. These leases provide multi-year renewal options to extend their term as lessee at the Company’s option. Option periods are included in the calculation of the lease obligation liability only when options are reasonably certain to be exercised. Land lease expense was $1.2 million, $0.6 million, and $0.7 million for the years ending December 31, 2018, 2017 and 2016, respectively.

In calculating its lease obligations under the 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 year ended December 31, 2019 and as of period end (presented in thousands).

Year Ended

    

    

December 31, 2019

Operating Lease Costs

$

(1,131)

Variable Lease Costs

 

Total Non-Variable Lease Costs

$

(1,131)

Supplemental Disclosure

Right-of-use assets obtained in exchange for new operating lease liabilities

$

19,672

Right-of-use assets removed in exchange for real property

(3,025)

Right-of-use assets net change

$

16,647

Operating cash outflows on operating leases

$

1,073

Weighted-average remaining lease term - operating leases (years)

38.2

Weighted-average discount rate - operating leases

4.13

%

Maturity Analysis of Lease Liabilities (presented in thousands)

 

Year Ending December 31, 

    

2020

    

2021

    

2022

    

2023

    

2024

    

Thereafter

    

Total

Lease Payments

$

1,069

  

$

1,015

  

$

789

  

$

789

  

$

789

$

30,584

  

$

35,035

Imputed Interest

 

(662)

 

(645)

 

(634)

 

(628)

 

(621)

 

(15,634)

 

(18,824)

Total Lease Liabilities

$

407

  

$

370

  

$

155

  

$

161

  

$

168

$

14,950

  

$

16,211

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

Note 4 – Real Estate Portfolio

Real Estate Portfolio

As of December 31, 2019, the Company owned 821 properties, with a total gross leasable area (“GLA”) of approximately 14.6 million square feet. Net Real Estate Investments totaled $2.2 billion as of December 31, 2019. As of December 31, 2018, the Company owned 645 properties, with a total gross leasable area of approximately 11.2 million square feet. Net Real Estate Investments totaled $1.7 billion as of December 31, 2018.

Acquisitions

During 2019, the Company purchased 186 retail net lease assets for approximately $702.9 million, which includes acquisition and closing costs. These properties are located in 40 states and had a weighted average lease term of approximately 11.7 years.

The aggregate 2019 acquisitions were allocated approximately $195.8 million to land, $415.1 million to buildings and improvements, and $92.0 million to lease intangibles.

During 2018, the Company purchased 225 retail net lease assets for approximately $608.3 million, including acquisition and closing costs. These properties are located in 37 states and are leased for a weighted average lease term of approximately 12.4 years. The aggregate 2018 acquisitions were allocated approximately $164.7 million to land, $325.0 million to buildings and improvements, and $118.6 million to lease intangibles and other assets.

The 2019 and 2018 acquisitions were substantially all cash purchases and there was no contingent consideration associated with these acquisitions.

None of the Company’s investments during 2019 or 2018 caused any new or existing tenant to comprise 10% or more of the Company’s total assets or generate 10% or more of the Company’s total annualized contractual base rent at December 31, 2019 or 2018.

Developments

During 2019, the Company completed eight development or Partner Capital Solutions projects.  During 2018, eight such projects were completed.

Dispositions

During 2019, the Company sold real estate properties for net proceeds of $65.5 million and a recorded net gain of $13.3 million.

During 2018, the Company sold real estate properties for net proceeds of $65.8 million and a recorded net gain of $11.2 million.

During 2017, the Company sold real estate properties for net proceeds of $44.3 million and a recorded net gain of $14.2 million.

Provisions for Impairment

As a result of our review of Real Estate Investments we recognized real estate impairment charges of $1.6 million, $2.3 million and $0.0 million for the years ended December 31, 2019, 2018 and 2017, respectively.  The estimated fair value of the impaired real estate assets at their time of impairment during 2019 and 2018 was $3.0 million and $17.3 million, respectively.  During 2020, events and circumstances related to a property suggest its carrying value might be

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

impaired.  However, the Company’s estimates of undiscounted cash flows based on conditions existing as of the December 31, 2019 balance sheet date indicated that the carrying amount was expected to be recovered.  Nonetheless, it is reasonably possible the recoverability may change in the near term.

Note 5 – Debt

As of December 31, 2019, we had total gross indebtedness of $876.1 million, including (i) $37.1 million of mortgage notes payable; (ii) $240.0 million of unsecured term loans; (iii) $510.0 million of senior unsecured notes; and (iv) $89.0 million of borrowings under our Revolving Credit Facility.

Mortgage Notes Payable

As of December 31, 2019, the Company had total gross mortgage indebtedness of $37.1 million which was collateralized by related real estate and tenants’ leases with an aggregate net book value of $48.4 million. Including mortgages that have been swapped to a fixed interest rate, the weighted average interest rate on the Company’s mortgage notes payable was 4.40% as of December 31, 2019 and 4.13% as of December 31, 2018.

Mortgages payable consisted of the following:

    

December 31, 2019

    

December 31, 2018

(not presented in thousands)

(in thousands)

Note payable in monthly installments of interest only at 3.32% per annum, with a balloon payment made in October 2019

$

$

21,500

 

  

 

  

Note payable in monthly installments of $153,838, including interest at 6.90% per annum, early extinguished in September 2019

 

 

1,922

 

 

  

Note payable in monthly installments of $23,004, including interest at 6.24% per annum, with a balloon payment of $2,781,819 due February 2020

 

2,775

 

2,872

 

  

 

  

Note payable in monthly installments of interest only at 3.60% per annum, with a balloon payment due January 2023

 

23,640

 

23,640

 

  

 

  

Note payable in monthly installments of $35,673, including interest at 5.01% per annum, with a balloon payment of $4,034,627 due September 2023

 

4,779

 

4,959

 

  

 

  

Note payable in monthly installments of $91,675 including interest at 6.27% per annum, with a final monthly payment due July 2026

 

5,921

 

6,626

 

  

 

  

Total principal

 

37,115

 

61,519

Unamortized debt issuance costs

 

(417)

 

(593)

Total

$

36,698

$

60,926

The mortgage loans encumbering our 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 December 31, 2019, there were no mortgage loans with partial recourse to us.

We have entered into mortgage loans which are secured by multiple properties and contain cross-default and cross-collateralization provisions. Cross-collateralization provisions allow a lender to foreclose on multiple properties in the

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

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

The following table presents the Unsecured Term Loans balance net of unamortized debt issuance costs as of December 31, 2019 and 2018 (in thousands):

    

December 31, 2019

    

December 31, 2018

2019 Term Loan

$

$

18,543

2023 Term Loan

 

40,000

 

40,000

2024 Term Loan Facilities

100,000

100,000

2026 Term Loan

 

100,000

 

100,000

Total Principal

 

240,000

 

258,543

Unamortized debt issuance costs

 

(2,597)

 

(2,124)

Total

$

237,403

$

256,419

In August 2016, the Company entered into a $20.3 million unsecured amortizing term loan that matured May 2019 (the “2019 Term Loan”). Borrowings under the 2019 Term Loan were priced at LIBOR plus 170 basis points. In order to fix LIBOR on the 2019 Term Loan at 1.92% until maturity, the Company had an interest rate swap agreement in place, which was assigned by the lender under the Mortgage Note to the 2019 Term Loan lender. The 2019 Term Loan was repaid in May 2019 at maturity.

In July 2016, the Company completed a $40.0 million unsecured term loan facility that matures July 2023 (the “2023 Term Loan”). Borrowings under the 2023 Term Loan are priced at LIBOR plus 85 to 165 basis points, depending on the Company’s credit rating. The Company entered into an interest rate swap agreement to fix LIBOR at 140 basis points until maturity. As of December 31, 2019, $40.0 million was outstanding under the 2023 Term Loan, which was subject to an all-in interest rate of 2.40%, including the swap.

Pursuant to the amended and restated credit agreement, described below, and its predecessor credit facility, the Company has outstanding $65.0 million and $35.0 million unsecured term loans maturing in January 2024 (together, the “2024 Term Loan Facilities”). Effective with the amended and restated credit agreement, borrowings under the 2024 Term Loan Facilities bear interest at a rate per annum equal to, at the option of the Company, (i) LIBOR plus a margin that is based upon the Company's credit rating or (ii) the Base Rate (which is defined as the greater of the rate of interest as publicly announced from time to time by PNC Bank, National Association, as its prime rate, the Federal Funds Open Rate plus 0.50%, or the Daily Eurodollar Rate plus 1.0%) plus a margin that is based upon the Company’s credit rating. The margins for the 2024 Term Loan Facilities range in amount from 0.85% to 1.65% for LIBOR-based loans and 0.00% to 0.65% for Base Rate loans, depending on the Company’s credit rating. The Company has utilized existing interest rate swaps to fix LIBOR at 2.0904% through July 2021 for the $65.0 million term loan and at 2.1970% through September 2020 for the $35.0 million term loan. In October 2019, the Company entered into new interest swap agreements to fix LIBOR at 143 basis points for both the $65.0 million and $35.0 million term loans, through their 2024 maturity dates.

In December 2018, the Company entered into a $100.0 million unsecured term loan facility that matures January 2026 (the “2026 Term Loan”). Borrowings under the 2026 Term Loan are priced at LIBOR plus 145 to 240 basis points, depending on the Company’s credit rating. The Company entered into interest rate swap agreements to fix LIBOR at 266 basis points until maturity. As of December 31, 2019, $100.0 million was outstanding under the 2026 Term Loan, which was subject to an all-in interest rate of 4.26%, including the swaps.

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

Senior Unsecured Notes

The following table presents the Senior Unsecured Notes balance net of unamortized debt issuance costs as of December 31, 2019, and 2018 (in thousands):

    

December 31, 2019

    

December 31, 2018

2025 Senior Unsecured Notes

$

50,000

$

50,000

2027 Senior Unsecured Notes

 

50,000

 

50,000

2028 Senior Unsecured Notes

 

60,000

 

60,000

2029 Senior Unsecured Notes

 

100,000

 

100,000

2030 Senior Unsecured Notes

 

125,000

 

125,000

2031 Senior Unsecured Notes

 

125,000

Total Principal

 

510,000

 

385,000

Unamortized debt issuance costs

 

(802)

 

(936)

Total

$

509,198

$

384,064

All of the Senior Unsecured Notes 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 May 2015, the Company and the Operating Partnership completed a private placement of $100.0 million principal amount of senior unsecured notes. The senior unsecured notes were sold in two series; $50.0 million of 4.16% notes due May 2025 (the “2025 Senior Unsecured Notes”) and $50.0 million of 4.26% notes due May 2027 (the “2027 Senior Unsecured Notes”).

In July 2016, the Company and the Operating Partnership entered into a note purchase agreement with institutional purchasers. Pursuant to the note purchase agreement, the Operating Partnership completed a private placement of $60.0 million aggregate principal amount of 4.42% senior unsecured notes due July 2028 (the “2028 Senior Unsecured Notes”).

In September 2017, the Company and the Operating Partnership completed a private placement of $100.0 million aggregate principal amount of 4.19% senior unsecured notes due September 2029 (the “2029 Senior Unsecured Notes”).

In September 2018, the Company and the Operating Partnership entered into two supplements to uncommitted master note facilities with institutional purchasers. Pursuant to the supplements, the Operating Partnership completed a private placement of $125.0 million aggregate principal amount of 4.32% senior unsecured notes due September 2030 (the “2030 Senior Unsecured Notes”).

In October 2019, the Company and the Operating Partnership closed on a private placement of $125.0 million of 4.47% senior unsecured notes due October 2031 (the “2031 Senior Unsecured Notes”).  In March 2019, the Company entered into forward-starting interest rate swap agreements to fix the interest for $100.0 million of long-term debt until maturity. The Company terminated the swap agreements at the time of pricing the 2031 Senior Unsecured Notes, which resulted in an effective annual fixed rate of 4.41% for $100.0 million aggregate principal amount of the 2031 Senior Unsecured Notes. Considering the effect of the terminated swap agreements, the blended all-in rate to the Company for the $125.0 million aggregate principal amount of 2031 Senior Unsecured Notes is 4.42%.

Senior Unsecured Revolving Credit Facility

In December 2019, the Company entered into a Second Amended and Restated Revolving Credit and Term Loan Agreement (the “Credit Agreement”). The Credit Agreement provides for a $500.0 million unsecured revolving credit facility (the “Revolving Credit Facility”), a $65.0 million unsecured term loan facility and a $35.0 million unsecured term loan facility.  The Credit Agreement amended and restated in its entirety the Company’s previous credit agreement dated December 15, 2016.  

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

The Credit Agreement provides $600.0 million unsecured borrowing capacity, composed of the Revolving Credit Facility, which matures on January 15, 2024, as well as the 2024 Term Loan Facilities, which mature on January 15, 2024. Subject to certain terms and conditions set forth in the Agreement, the Company (i) may request additional lender commitments under any or all facilities of up to an additional aggregate of $500.0 million and (ii) may elect, for an additional fee, to extend the maturity date of the Revolving Credit Facility by six months up to two times, for a maximum maturity date of January 15, 2025. No amortization payments are required under the Credit Agreement, and interest is payable in arrears no less frequently than quarterly.

All borrowings under the Revolving Credit Facility(except for swing line loans) bear interest at a rate per annum equal to, at the option of the Company, (i) LIBOR plus a margin that is based upon the Company’s credit rating, or (ii) the Base Rate (which is defined as the greater of the rate of interest as publicly announced from time to time by PNC Bank, National Association, as its prime rate, the Federal Funds Open Rate plus 0.50%, or the Daily Eurodollar Rate plus 1.0%) plus a margin that is based upon the Company’s credit rating. The margins for the Revolving Credit Facility range in amount from 0.775% to 1.450% for LIBOR-based loans and 0.00% to 0.45% for Base Rate loans, depending on the Company’s credit rating. The margins for the Revolving Credit Facility are subject to improvement based on the Company’s leverage ratio, provided its credit rating meets a certain threshold.

Concurrent with the amendment and restatement of the Company’s Credit Agreement, certain conforming changes, including customary financial covenants, were made to the 2023 Term Loan and 2026 Term Loan.

The Company and Richard Agree, the Executive Chairman of the Company, are parties to a Reimbursement Agreement dated November 18, 2014.   Pursuant to the Reimbursement Agreement, Mr. Agree has agreed to reimburse the Company for any loss incurred under the Revolving Credit Facility in an amount not to exceed $14.0 million to the extent that the value of the Operating Partnership’s assets available to satisfy the Operating Partnership’s obligations under the revolving credit facility is less than $14.0 million.

Debt Maturities

The following table presents scheduled principal payments related to our debt as of December 31, 2019 (in thousands):

Scheduled

    

Balloon

    

Principal

Payment

Total

2020

$

948

$

2,767

$

3,715

2021

 

998

 

 

998

2022

 

1,060

 

 

1,060

2023

 

1,069

 

67,656

 

68,725

2024 (1)

963

189,000

189,963

Thereafter

 

1,654

 

610,000

 

611,654

Total

$

6,692

$

869,423

$

876,115

(1)The balloon payment balance includes the balance outstanding under the Revolving Credit Facility as of December 31, 2019. The Credit Facility matures in January 2024, with options to extend the maturity as described under Senior Unsecured Revolving Credit Facility above.

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 December 31, 2019, 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 December 31, 2019.

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

Note 6 – Common and Preferred Stock

Common Share Authorization

In April 2019, the Company’s shareholders approved an amendment to its charter to increase the total number of shares of common stock that the Company has the authority to issue from 45,000,000 shares to 90,000,000 shares.

Shelf Registration

In June 2017, the Company filed an automatic shelf registration statement on Form S-3, registering an unspecified amount of common stock, preferred stock, depositary shares and warrants at an indeterminant 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.

In June 2017, the Company completed a follow-on underwritten offering of 2,415,000 shares of common stock. The offering, which included the full exercise of the overallotment option by the underwriters, raised net proceeds of approximately $108.0 million, after deducting the underwriting discount. The proceeds from the offering were used to repay borrowings under our revolving credit facility to fund property acquisitions and for general corporate purposes.

In March 2018, the Company completed a follow-on public offering of 3,450,000 shares of common stock, which included the underwriters’ option to purchase an additional 450,000 shares of common stock, in connection with a forward sale agreement.  The offering, which included the full exercise of the underwriters’ option to purchase additional shares, was settled in its entirety in September 2018.  Upon settlement the Company issued 3,450,000 shares and received net proceeds of $160.2 million after deducting fees and expenses.

In September 2018, the Company entered into a follow-on public offering of 3,500,000 shares of common stock in connection with a forward sale agreement (the “September 2018 Forward”).  The September 2018 Forward was settled in its entirety in April 2019.   Upon settlement the Company issued 3,450,000 shares and received net proceeds of $186.0 million, after deducting fees and expenses.  

In April 2019, the Company entered into a follow-on public offering to sell an aggregate of 3,162,500 shares of common stock (the “April 2019 Forward”). The Company settled the entirety of the April 2019 Forward on December 30, 2019 and received net proceeds of approximately $195.8 million, after deducting fees and expenses.

ATM Program

In July 2019, the Company entered into a $400.0 million at-the-market equity program (the “2019 ATM Program”) through which the Company may, from time to time, sell shares of common stock. In addition to selling shares of common stock, the Company may enter into forward sale agreements through the 2019 ATM Program. During 2019, the Company issued 444,228 shares under the 2019 ATM Program, at an average price of $74.30, realizing gross proceeds of $33.0 million.

During the year ended December 31, 2018, and the six months ended June 30, 2019, the Company issued 3,057,263 and 886,768 shares of common stock, respectively, under a previously authorized $250.0 million ATM program (the “2018 ATM Program”), at average prices of $59.28 and $66.83, respectively, realizing gross proceeds of approximately $181.2 million and $59.3 million, respectively.  No future issuances will occur under the 2018 ATM Program.

During the fourth quarter of 2019, the Company entered into forward sale agreements in connection with the 2019 ATM Program to sell an aggregate of 2,003,118 shares of common stock (the “ATM Forward Offerings”). To date, no shares from the ATM Forward Offerings have been settled.  The ATM Forward Offerings are required to be settled by certain dates in December 2020.  

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

After considering shares already sold under the 2019 ATM Program including the outstanding ATM Forward Offerings, the Company had $220.1 million of availability remaining under the 2019 ATM Program as of December 31, 2019.

Preferred Stock

During 2019, the Company redesignated and reclassified all 200,000 authorized but unissued shares of its Series A Junior Participating Preferred Stock as authorized but unissued and unclassified shares of preferred stock, par value $.0001 per share, of the Company without further designation. The number of preferred shares the Company has the authority to issue remains at 4,000,000, all of which are unclassified and undesignated.

Note 7 – Dividends and Distribution Payable

The Company declared dividends of $2.280, $2.155 and $2.025 per share during the years ended December 31, 2019, 2018 and 2017; the dividends have been reflected for federal income tax purposes as follows:

For the Year Ended December 31, 

    

2019

    

2018

    

2017

Ordinary Income

$

1.933

$

1.638

$

1.695

Return of Capital

 

0.347

 

0.517

 

0.330

Total

$

2.280

$

2.155

$

2.025

On December 3, 2019, the Company declared a dividend of $0.585 per share for the quarter ended December 31, 2019. The holders of Operating Partnership Units were entitled to an equal distribution per Operating Partnership Unit held as of December 20, 2019. The dividend has been reflected as a reduction of shareholders’ equity and the distribution has been reflected as a reduction of the limited partners’ non-controlling interest. These amounts were paid on January 3, 2020.

Note 8 – Income Taxes (not presented in thousands)

Uncertain Tax Positions

The Company is subject to the provisions of Financial Accounting Standards Board Accounting Standard Codification 740-10 (“FASB 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 FASB ASC 740-10. The Company’s Federal income tax returns are open for examination by taxing authorities for all tax years after December 31, 2015. The Company has elected to record related interest and penalties, if any, as income tax expense on the Consolidated Statements of Operations and Comprehensive Income. We have no material interest or penalties relating to income taxes recognized for years ended 2019, 2018, and 2017.

Deferred Taxes

As of December 31, 2018, the Company had accrued a deferred income tax liability in the amount of $475,000. This deferred income tax balance represents the federal and state tax effect of deferring income tax in 2007 on the sale of an asset under section 1031 of the Code. This transaction was accrued within the Company’s TRS entities.  During 2019, the Company restructured its ownership of the TRS to which the deferred tax liability was related, resulting in a reversal of the previously accrued amount.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code, including but not limited to reducing the U.S. federal corporate rate from 35 percent to 21 percent. In connection with our initial analysis of the impact of the Tax Act, we recorded a discrete net tax benefit related to one of the Company’s TRS entities reducing the deferred income tax liability by $230,000 in the period ending December 31, 2017. This is included in other expense and income on the Consolidated Statements of Operations and Comprehensive Income.

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

Income Tax Expense

During the years ended December 31, 2019, 2018 and 2017, the Company recognized net federal and state income tax expense of approximately $538,000, $516,000 and $227,000, respectively.

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 our 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.

2019 Activity

In March 2019, the Company entered into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $100.0 million of long-term debt. The Company hedged its exposure to the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period of one year. In May, the Company terminated the swap agreements at the time of pricing the future debt issuance, receiving $0.8 million upon termination. See discussion of the 2031 Notes in “Note 5 – Debt” above.

In June 2019, the Company entered into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $100.0 million of long-term debt. The Company is hedging its exposure to the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period ending March 2021. As of December 31, 2019, these interest rate swaps were valued as a liability of $1.4 million.

In October 2019, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $65.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreements, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.4275%. This swap effectively converts $65.0 million of variable-rate borrowings to fixed-rate borrowings from July 12, 2021 to January 12, 2024. As of December 31, 2019, this interest rate swap was valued as an asset of approximately $0.2 million.

Also 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 $35.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.4265%. This swap effectively converts $35.0 million of variable-rate borrowings to fixed-rate borrowings from September 29, 2020 to January 12, 2024. As of December 31, 2019, this interest rate swap was valued as an asset of approximately $0.1 million.

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

Prior Derivative Transactions

In September 2013, the Company entered into an interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $35.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 2.20%. This swap effectively converts $35.0 million of variable-rate borrowings to fixed-rate borrowings from October 3, 2013 to September 29, 2020. As of December 31, 2019, this interest rate swap was valued as a liability of approximately $0.1 million.

In July 2014, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $65.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 2.09%. This swap effectively converts $65.0 million of variable-rate borrowings to fixed-rate borrowings from July 21, 2014 to July 21, 2021. As of December 31, 2019, this interest rate swap was valued as a liability of approximately $0.5 million.

In September 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 $40.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.40%. This swap effectively converts $40.0 million of variable-rate borrowings to fixed-rate borrowings from August 1, 2016 to July 1, 2023. As of December 31, 2019, this interest rate swap was valued as an asset of approximately $0.2 million.

In December 2018, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $100.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreements, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 2.66%. This swap effectively converts $100.0 million of variable-rate borrowings to fixed-rate borrowings from December 27, 2018 to January 15, 2026. As of December 31, 2019, this interest rate swap was valued as a liability of approximately $5.9 million.

Recognition

Companies are required to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet.  We recognize our derivatives within Other Assets, net and Accounts Payable, Accrued Expenses, and Other Liabilities on our Balance Sheet.

On January 1, 2019, the Company adopted ASU No. 2017-12, "Targeted Improvements to Accounting for Hedging Activities", which provided changes in hedge accounting recognition and presentation requirements. The Company now recognizes all changes in fair value for hedging instruments designated and qualifying for cash flow hedge accounting treatment as a component of Other Comprehensive Income (OCI), as opposed to previously recognizing the ineffective portion, if any, directly in earnings. Upon adoption, there were no adjustments to recognize relating to previously recorded derivatives transactions or amounts.  Net realized gains or losses resulting from derivatives that were settled in conjunction with planned fixed rate financings or refinancings continue to be included in accumulated OCI during the term of the hedged debt transaction.

Amounts reported in accumulated OCI related to currently outstanding interest rate derivatives are recognized as an adjustment to income as interest payments are made on the Company’s variable-rate debt. Realized gains or losses on settled derivative instruments included in accumulated OCI are recognized as an adjustment over the term of the hedged debt transaction. During the next twelve months, the Company estimates that an additional $1.5 million will be reclassified as an increase to interest expense.

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

The Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (in thousands, except number of instruments):

Number of Instruments

Notional

December 31, 

December 31, 

December 31, 

December 31, 

Interest Rate Derivatives

    

2019

    

2018

    

2019

    

2018

Interest Rate Swap

 

15

 

10

$

240,000

$

258,543

The table below presents the estimated fair value of the Company’s derivative financial instruments as well as their classification in the consolidated balance sheets (in thousands).

Asset Derivatives

December 31, 2019

December 31, 2018

    

Fair Value

    

Fair Value

Derivatives designated as cash flow hedges:

 

  

 

  

Interest Rate Swaps

$

572

$

2,539

Liability Derivatives

December 31, 2019

December 31, 2018

    

Fair Value

    

Fair Value

Derivatives designated as cash flow hedges:

 

  

 

  

Interest Rate Swaps

$

7,943

$

1,135

The table below presents the effect of the Company’s derivative financial instruments in the consolidated statements of operations and other comprehensive loss for the years ended December 31, 2019 and 2018 (in thousands).

Year Ended December 31, 

    

    

2019

    

2018

    

    

2019

    

2018

Interest rate swaps

$

(8,657)

$

193

Interest Expense

$

(118)

$

(139)

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 December 31, 2019.

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 December 31, 2019, the fair value of derivatives in a net liability position related to these agreements, which includes accrued interest but excludes any adjustment for nonperformance risk, was $7.6 million.

Although the derivative contracts are subject to master netting arrangements, which serve as credit mitigants to both us and our counterparties under certain situations, we do not net our derivative fair values or any existing rights or obligations to cash collateral on the 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 December 31, 2019 and December 31, 2018. The gross amounts of derivative assets or liabilities can be

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

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 Consolidated Balance Sheets (in thousands):

Offsetting of Derivative Assets

 

As of December 31, 2019

Gross Amounts

    

Net Amounts of

Offset in the

Assets presented

Gross Amounts Not Offset in the

Gross Amounts

    

Statement of

in the Statement

Statement of Financial Position

of Recognized

Financial

of Financial

    

Financial

    

Cash Collateral

    

Assets

    

Position

    

Position

    

Instruments

    

Received

    

Net Amount

Derivatives

$

572

$

$

572

$

(572)

$

$

Offsetting of Derivative Liabilities

 

As of December 31, 2019

Net Amounts of

 

Gross Amounts

 

Liabilities

 

Offset in the

 

presented in the

 

Gross Amounts Not Offset in the

 

Gross Amounts

 

Statement of

 

Statement of

 

Statement of Financial Position

 

of Recognized

 

Financial

 

Financial

 

Financial

 

Cash Collateral

    

Liabilities

    

Position

    

Position

    

Instruments

    

Posted

    

Net Amount

Derivatives

$

7,943

$

$

7,943

$

(572)

$

$

7,372

Offsetting of Derivative Assets

 

As of December 31, 2018

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

$

2,539

$

$

2,539

$

(575)

$

$

1,964

Offsetting of Derivative Liabilities

 

As of December 31, 2018

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

$

1,135

$

$

1,135

$

(575)

$

$

560

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

Note 10 – Fair Value Measurements

Assets and Liabilities Measured at Fair Value

The Company accounts for fair values in accordance with FASB Accounting Standards Codification Topic 820 Fair Value Measurements and Disclosure (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 December 31, 2019, 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.

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Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and December 31, 2018 (in thousands):

    

Total Fair Value

    

Level 2

December 31, 2019

Derivative assets - interest rate swaps

$

572

$

572

Derivative liabilities - interest rate swaps

$

7,943

$

7,943

December 31, 2018

Derivative assets - interest rate swaps

$

2,539

$

2,539

Derivative liabilities - interest rate swaps

$

1,135

$

1,135

Other Financial Instruments

The carrying values of cash and cash equivalents, receivables and accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short maturity of these financial instruments.

The Company estimated the fair value of its debt based on our incremental borrowing rates for similar types of borrowing arrangements with the same remaining maturity and on the discounted estimated future cash payments to be made for other debt. The discount rate used to calculate the fair value of debt approximates current lending rates for loans and assumes the debt is outstanding through maturity. Since such amounts are estimates that are based on limited available market information for similar transactions, which is a Level 2 non-recurring measurement, there can be no assurance that the disclosed value of any financial instrument could be realized by immediate settlement of the instrument.

Fixed rate debt (including variable rate debt swapped to fixed, excluding the value of the derivatives) with carrying values of $783.3 million and $701.4 million as of December 31, 2019 and December 31, 2018, respectively, had fair values of approximately $817.7 million and $702.0 million, respectively. Variable rate debt’s fair value is estimated to be equal to the carrying values of $89.0 million and $19.0 million as of December 31, 2019 and December 31, 2018, respectively.

Note 11 – Equity Incentive Plan

In 2014, the Company’s shareholders approved the 2014 Omnibus Incentive Plan (the “2014 Plan”), which replaced the 2005 Equity Incentive Plan. The 2014 Plan authorizes the issuance of a maximum of 700,000 shares of common stock.

Restricted Stock

Restricted common stock has been granted to certain employees and directors under the 2014 Plan.

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 shareholder of the Company, including the right to vote the shares and the right to receive dividends on the shares. The Company granted 54,488, 57,247, and 88,466 shares of restricted stock in 2019, 2018 and 2017, respectively, to employees and directors. The restricted shares vest over a five-year period based on continued service to the Company.

The Company estimates the fair value of restricted stock grants at the date of grant and amortizes those amounts into expense on a straight line basis or amount vested, if greater, over the appropriate vesting period. During 2019, 2018 and 2017 the Company recognized $3.0 million, $2.7 million and $2.4 million, respectively, of expense relating to restricted stock grants.  As of December 31, 2019, there was $7.3 million of unrecognized compensation costs related to the outstanding restricted stock, which is expected to be recognized over a weighted average period of 3.2 years. The Company used 0% for the forfeiture rate for determining the fair value of restricted stock.

F-32

Table of Contents

8

Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

Restricted share activity is summarized as follows (in thousands, except per share data):

    

Shares

    

Weighted Average

Outstanding

Grant Date

(in thousands)

Fair Value

Unvested restricted stock at December 31, 2016

 

228

$

33.02

Restricted stock granted

 

88

$

48.59

Restricted stock vested

 

(78)

$

30.95

Restricted stock forfeited

 

(11)

$

39.68

Unvested restricted stock at December 31, 2017

 

227

$

39.47

Restricted stock granted

 

57

$

48.85

Restricted stock vested

 

(71)

$

36.06

Restricted stock forfeited

 

(1)

$

48.28

Unvested restricted stock at December 31, 2018

 

212

$

42.74

Restricted stock granted

 

54

$

65.85

Restricted stock vested

 

(70)

$

39.55

Restricted stock forfeited

 

(2)

$

54.08

Unvested restricted stock at December 31, 2019

 

194

$

50.71

The intrinsic value of restricted shares redeemed was $1.4 million, $1.1 million and $1.1 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Performance Units and Shares

On February 23, 2019 certain executive officers received performance units. Performance units are subject to a three-year performance period, at the conclusion of which, shares awarded are to be determined by the Company’s total shareholder return compared to the constituents of the MSCI US REIT Index and a defined peer group. 50% of the award is based upon the total shareholder return percentile rank versus the MSCI US REIT index for the three-year performance period; and 50% of the award is based upon TSR percentile rank versus a specified net lease peer group for the three-year performance period. Vesting of the performance units following their issuance will occur ratably over a three-year period, with the initial vesting occurring immediately following the conclusion of the performance period such that all shares vest within five years of the original award date of February 23, 2019.  

The grant date fair value of these awards is determined using a Monte Carlo simulation pricing model and compensation expense is amortized on an attribution method over a five-year period. The Monte Carlo simulation pricing model for the 2019 grants utilized the following assumptions: (i) expected term of 2.9 years (equal to the remaining performance measurement period at the grant date), (ii) volatility of 19.7% (based on historical volatility), (iii) dividend yield of 3.4% (based on most recently paid dividend at grant date), and (iv) risk-free rate of 2.5% (interpolated based on 2-and 3- year rates). Compensation expense related to performance units is determined at the grant date and is not adjusted throughout the measurement or vesting periods.

Equity compensation awarded February 23, 2018 for certain executive officers included performance shares.  The terms of the performance shares are substantially identical to the performance units described above.  The grant date fair value of these awards is determined using a Monte Carlo simulation pricing model using the following assumptions: (i) expected term of 2.9 years (equal to the remaining performance measurement period at the grant date), (ii) volatility of 19.1% (based on historical volatility), (iii) dividend yield of 4.36% (based on most recently paid dividend at grant date), and (iv) risk-free rate of 2.37% (interpolated based on 2-and 3- year rates). Compensation expense is amortized on an attribution method

F-33

Table of Contents

8

Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

over a five-year period. Compensation expense related to performance shares is determined at the grant date and is not adjusted throughout the measurement or vesting periods.

During 2019 and 2018, the Company recognized $0.9 million and $0.3 million, respectively, of expense related to performance units and shares.  There was no expense in 2017.  As of December 31, 2019, there was $2.5 million of total unrecognized compensation costs related to the outstanding performance units and shares, which is expected to be recognized over a weighted average period of 3.4 years.  The Company used 0% for the forfeiture rate for determining the fair value of performance shares.

Performance share and unit activity is summarized as follows:

    

Target Number

    

Weighted Average

of Awards

Grant Date

Performance shares at December 31, 2017

 

$

Performance shares granted

 

31

$

47.73

Performance shares at December 31, 2018

 

31

$

47.73

Performance units granted

 

30

$

65.66

Performance units and shares at December 31, 2019

 

61

$

56.57

Note 12 – Profit-Sharing Plan

The Company has a discretionary profit-sharing plan whereby it contributes to the plan such amounts as the Board of Directors of the Company determines. The participants in the plan cannot make any contributions to the plan. Contributions to the plan are allocated to the employees based on their percentage of compensation to the total compensation of all employees for the plan year. Participants in the plan become fully vested after six years of service. No contributions were made to the plan in 2019, 2018, or 2017.

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Table of Contents

8

Agree Realty Corporation

Notes to Consolidated Financial Statements

 

December 31, 2019

Note 13 – Quarterly Financial Data (Unaudited)

The following summary represents the unaudited results of operations of the Company, expressed in thousands except per share amounts, for the periods from January 1, 2018 through December 31, 2019:

2019

Three Months Ended

    

March 31, 

    

June 30, 

    

September 30, 

    

December 31, 

Revenue

$

42,348

$

44,920

$

48,075

$

52,135

Net income

18,516

18,722

20,781

22,744

Net income attributable to Agree Realty Corporation

18,347

18,564

20,611

22,559

Net earnings per share (1)

Basic

$

0.49

$

0.45

$

0.49

$

0.53

Diluted

0.48

0.45

0.48

0.52

2018

Three Months Ended

    

March 31, 

    

June 30, 

    

September 30, 

    

December 31, 

Revenue (2)

$

32,452

$

33,168

$

34,054

$

37,448

Net income

16,636

13,068

15,756

13,338

Net income attributable to Agree Realty Corporation

16,451

12,923

15,586

13,212

Net earnings per share (1)

Basic

$

0.53

$

0.42

$

0.49

$

0.37

Diluted

0.53

0.41

0.48

0.36

(1)Calculated independently for each period and consequently, the sum of the quarters may differ from the annual amount.
(2)Refer to “Note 2 – Summary of Significant Accounting Policies” regarding certain reclassifications impacting reported 2018 revenues.

Note 14 – 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.

Note 15 – Subsequent Events

In connection with the preparation of its financial statements, the Company has evaluated events that occurred subsequent to December 31, 2019 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.

F-35

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Real Estate Held for Investment

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Borman Center, MI

 

 

550,000

 

562,404

 

1,087,596

 

550,000

 

1,650,000

 

2,200,000

 

1,650,000

 

1977

 

40

Capital Plaza, KY

 

 

7,379

 

2,240,607

 

3,061,594

 

7,379

 

5,302,201

 

5,309,580

 

1,112,613

 

1978

 

40

Grayling Plaza, MI

 

 

200,000

 

1,778,657

 

(37,082)

 

200,000

 

1,741,575

 

1,941,575

 

1,534,124

 

1984

 

40

Omaha Store, NE

 

 

150,000

 

 

 

150,000

 

 

150,000

 

 

1995

 

Wichita Store, KS

 

 

1,039,195

 

1,690,644

 

(48,910)

 

1,139,677

 

1,541,252

 

2,680,929

 

941,791

 

1995

 

40

Monroeville, PA

 

 

6,332,158

 

2,249,724

 

(2,278,873)

 

3,153,890

 

3,149,119

 

6,303,009

 

1,282,076

 

1996

 

40

Boynton Beach, FL

 

 

1,534,942

 

2,043,122

 

3,717,733

 

1,534,942

 

5,760,855

 

7,295,797

 

1,746,509

 

1996

 

40

Chesterfield Township, MI

 

 

1,350,590

 

1,757,830

 

(46,164)

 

1,350,590

 

1,711,666

 

3,062,256

 

920,602

 

1998

 

40

Pontiac, MI

 

 

1,144,190

 

1,808,955

 

(89,989)

 

1,144,190

 

1,718,966

 

2,863,156

 

902,808

 

1998

 

40

Mt Pleasant Shopping Ctr, MI

 

 

907,600

 

8,081,968

 

3,837,722

 

1,872,803

 

10,954,487

 

12,827,290

 

4,402,125

 

1998

 

40

Rochester, MI

 

 

2,438,740

 

2,188,050

 

1,950

 

2,438,740

 

2,190,000

 

4,628,740

 

1,122,353

 

1999

 

40

Ypsilanti, MI

 

 

2,050,000

 

2,222,097

 

(3,494,709)

 

777,388

 

 

777,388

 

 

1999

 

Petoskey, MI

 

 

 

2,332,473

 

2,006,589

 

2,005,410

 

2,333,652

 

4,339,062

 

1,147,289

 

2000

 

40

Flint, MI

 

 

2,026,625

 

1,879,700

 

(1,200)

 

2,026,625

 

1,878,500

 

3,905,125

 

892,296

 

2000

 

40

Flint, MI

 

 

1,477,680

 

2,241,293

 

 

1,477,680

 

2,241,293

 

3,718,973

 

1,057,606

 

2001

 

40

New Baltimore, MI

 

 

1,250,000

 

2,285,781

 

(16,503)

 

1,250,000

 

2,269,278

 

3,519,278

 

1,042,625

 

2001

 

40

Flint, MI

 

1,944,528

 

1,729,851

 

1,798,091

 

660

 

1,729,851

 

1,798,751

 

3,528,602

 

796,284

 

2002

 

40

Indianapolis, IN

 

 

180,000

 

1,117,617

 

108,551

 

180,000

 

1,226,168

 

1,406,168

 

516,868

 

2002

 

40

Big Rapids, MI

 

 

1,201,675

 

2,014,107

 

(2,000)

 

1,201,675

 

2,012,107

 

3,213,782

 

842,613

 

2003

 

40

Flint, MI

 

 

 

471,272

 

(201,809)

 

 

269,463

 

269,463

 

166,120

 

2003

 

40

Canton Twp, MI

 

 

1,550,000

 

2,132,096

 

23,021

 

1,550,000

 

2,155,117

 

3,705,117

 

866,484

 

2003

 

40

Flint, MI

 

2,253,670

 

1,537,400

 

1,961,674

 

 

1,537,400

 

1,961,674

 

3,499,074

 

776,577

 

2004

 

40

Albion, NY

 

 

1,900,000

 

3,037,864

 

 

1,900,000

 

3,037,864

 

4,937,864

 

1,148,697

 

2004

 

40

Flint, MI

 

1,722,966

 

1,029,000

 

2,165,463

 

(6,666)

 

1,029,000

 

2,158,797

 

3,187,797

 

816,251

 

2004

 

40

Lansing, MI

 

 

785,000

 

348,501

 

3,045

 

785,000

 

351,546

 

1,136,546

 

136,187

 

2004

 

40

Boynton Beach, FL

 

 

1,569,000

 

2,363,524

 

3,943,404

 

1,569,000

 

6,306,928

 

7,875,928

 

1,460,733

 

2004

 

40

Midland, MI

 

 

2,350,000

 

2,313,413

 

(79,235)

 

2,268,695

 

2,315,483

 

4,584,178

 

836,877

 

2005

 

40

Roseville, MI

 

 

1,771,000

 

2,327,052

 

395

 

1,771,000

 

2,327,447

 

4,098,447

 

821,780

 

2005

 

40

Mt Pleasant, MI

 

 

1,075,000

 

1,432,390

 

4,787

 

1,075,000

 

1,437,177

 

2,512,177

 

505,991

 

2005

 

40

N Cape May, NJ

 

 

1,075,000

 

1,430,092

 

495

 

1,075,000

 

1,430,587

 

2,505,587

 

503,681

 

2005

 

40

Summit Twp, MI

 

 

998,460

 

1,336,357

 

12,686

 

998,460

 

1,349,043

 

2,347,503

 

447,419

 

2006

 

40

Livonia, MI

 

 

1,200,000

 

3,441,694

 

817,589

 

1,200,000

 

4,259,283

 

5,459,283

 

1,310,476

 

2007

 

40

Barnesville, GA

 

 

932,500

 

2,091,514

 

5,490

 

932,500

 

2,097,004

 

3,029,504

 

639,992

 

2007

 

40

East Lansing, MI

 

 

240,000

 

54,531

 

(52,752)

 

240,000

 

1,779

 

241,779

 

12,439

 

2007

 

40

Macomb Township, MI

 

 

424,222

 

 

 

424,222

 

 

424,222

 

 

2008

 

Brighton, MI

 

 

1,365,000

 

2,802,036

 

5,615

 

1,365,000

 

2,807,651

 

4,172,651

 

760,328

 

2009

 

40

Southfield, MI

 

1,483,000

 

1,200,000

 

125,616

 

2,063

 

1,200,000

 

127,679

 

1,327,679

 

32,577

 

2009

 

40

F-36

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Atchison, KS

 

 

943,750

 

3,021,672

 

 

823,170

 

3,142,252

 

3,965,422

 

744,776

 

2010

 

40

Johnstown, OH

 

 

485,000

 

2,799,502

 

 

485,000

 

2,799,502

 

3,284,502

 

664,883

 

2010

 

40

Lake in the Hills, IL

 

 

2,135,000

 

3,328,560

 

 

1,690,000

 

3,773,560

 

5,463,560

 

890,660

 

2010

 

40

Concord, NC

 

 

7,676,305

 

 

 

7,676,305

 

 

7,676,305

 

 

2010

 

Antioch, IL

 

 

1,087,884

 

 

 

1,087,884

 

 

1,087,884

 

 

2010

 

Mansfield, CT

 

 

700,000

 

1,902,191

 

508

 

700,000

 

1,902,699

 

2,602,699

 

434,052

 

2010

 

40

Spring Grove, IL

 

2,313,000

 

1,191,199

 

 

968

 

1,192,167

 

 

1,192,167

 

 

2010

 

Tallahassee, FL

 

1,628,000

 

 

1,482,462

 

 

 

1,482,462

 

1,482,462

 

335,095

 

2010

 

40

Wilmington, NC

 

2,186,000

 

1,500,000

 

1,348,591

 

 

1,500,000

 

1,348,591

 

2,848,591

 

297,815

 

2011

 

40

Marietta, GA

 

900,000

 

575,000

 

696,297

 

6,359

 

575,000

 

702,656

 

1,277,656

 

149,237

 

2011

 

40

Baltimore, MD

 

2,534,000

 

2,610,430

 

 

(3,447)

 

2,606,983

 

 

2,606,983

 

 

2011

 

Dallas, TX

 

1,844,000

 

701,320

 

778,905

 

1,042,730

 

701,320

 

1,821,635

 

2,522,955

 

372,439

 

2011

 

40

Chandler, AZ

 

 

332,868

 

793,898

 

360

 

332,868

 

794,258

 

1,127,126

 

163,853

 

2011

 

40

New Lenox, IL

 

 

1,422,488

 

 

 

1,422,488

 

 

1,422,488

 

 

2011

 

Roseville, CA

 

4,752,000

 

2,800,000

 

3,695,455

 

(96,364)

 

2,695,636

 

3,703,455

 

6,399,091

 

771,489

 

2011

 

40

Fort Walton Beach, FL

 

1,768,000

 

542,200

 

1,958,790

 

88,778

 

542,200

 

2,047,568

 

2,589,768

 

406,728

 

2011

 

40

Leawood, KS

 

2,775,043

 

989,622

 

3,003,541

 

16,197

 

989,622

 

3,019,738

 

4,009,360

 

603,945

 

2011

 

40

Salt Lake City, UT

 

 

 

6,810,104

 

(44,416)

 

 

6,765,688

 

6,765,688

 

1,388,609

 

2011

 

40

Burton, MI

 

 

80,000

 

 

 

80,000

 

 

80,000

 

 

2011

 

Macomb Township, MI

 

1,793,000

 

1,605,134

 

 

 

1,605,134

 

 

1,605,134

 

 

2012

 

Madison, AL

 

1,552,000

 

675,000

 

1,317,927

 

 

675,000

 

1,317,927

 

1,992,927

 

263,585

 

2012

 

40

Walker, MI

 

887,000

 

219,200

 

1,024,738

 

 

219,200

 

1,024,738

 

1,243,938

 

198,543

 

2012

 

40

Portland, OR

 

 

7,969,403

 

 

161

 

7,969,564

 

 

7,969,564

 

 

2012

 

Cochran, GA

 

 

365,714

 

2,053,726

 

 

365,714

 

2,053,726

 

2,419,440

 

385,075

 

2012

 

40

Baton Rouge, LA

 

 

 

1,188,322

 

 

 

1,188,322

 

1,188,322

 

225,286

 

2012

 

40

Southfield, MI

 

 

1,178,215

 

 

 

1,178,215

 

 

1,178,215

 

 

2012

 

Clifton Heights, PA

 

 

2,543,941

 

3,038,561

 

(3,105)

 

2,543,941

 

3,035,456

 

5,579,397

 

565,989

 

2012

 

40

Newark, DE

 

 

2,117,547

 

4,777,516

 

(4,881)

 

2,117,547

 

4,772,635

 

6,890,182

 

889,961

 

2012

 

40

Vineland, NJ

 

 

4,102,710

 

1,501,854

 

7,986

 

4,102,710

 

1,509,840

 

5,612,550

 

281,526

 

2012

 

40

Fort Mill, SC

 

 

750,000

 

1,187,380

 

 

750,000

 

1,187,380

 

1,937,380

 

220,159

 

2012

 

40

Spartanburg, SC

 

 

250,000

 

765,714

 

4,387

 

250,000

 

770,101

 

1,020,101

 

142,277

 

2012

 

40

Springfield, IL

 

 

302,520

 

653,654

 

10,255

 

302,520

 

663,909

 

966,429

 

122,467

 

2012

 

40

Jacksonville, NC

 

 

676,930

 

1,482,748

 

(150,000)

 

676,930

 

1,332,748

 

2,009,678

 

271,836

 

2012

 

40

Morrow, GA

 

 

525,000

 

1,383,489

 

(99,849)

 

525,000

 

1,283,640

 

1,808,640

 

233,285

 

2012

 

40

Charlotte, NC

 

 

1,822,900

 

3,531,275

 

(570,844)

 

1,822,900

 

2,960,431

 

4,783,331

 

532,624

 

2012

 

40

Lyons, GA

 

 

121,627

 

2,155,635

 

(103,392)

 

121,627

 

2,052,243

 

2,173,870

 

363,824

 

2012

 

40

Fuquay-Varina, NC

 

 

2,042,225

 

1,763,768

 

(255,778)

 

2,042,225

 

1,507,990

 

3,550,215

 

267,573

 

2012

 

40

F-37

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Minneapolis, MN

 

 

1,088,015

 

345,958

 

(54,430)

 

826,635

 

552,908

 

1,379,543

 

97,482

 

2012

 

40

Lake Zurich, IL

 

 

780,974

 

7,909,277

 

46,509

 

780,974

 

7,955,786

 

8,736,760

 

1,397,598

 

2012

 

40

Lebanon, VA

 

 

300,000

 

612,582

 

20,380

 

300,000

 

632,962

 

932,962

 

116,845

 

2012

 

40

Harlingen, TX

 

 

430,000

 

1,614,378

 

12,854

 

430,000

 

1,627,232

 

2,057,232

 

284,764

 

2012

 

40

Pensacola, FL

 

 

650,000

 

1,165,415

 

23,957

 

650,000

 

1,189,372

 

1,839,372

 

206,265

 

2012

 

40

Pensacola, FL

 

 

400,000

 

1,507,583

 

12,854

 

400,000

 

1,520,437

 

1,920,437

 

266,078

 

2012

 

40

Venice, FL

 

 

1,300,196

 

 

4,892

 

1,305,088

 

 

1,305,088

 

 

2012

 

St. Joseph, MO

 

 

377,620

 

7,639,521

 

 

377,620

 

7,639,521

 

8,017,141

 

1,321,000

 

2013

 

40

Statham, GA

 

 

191,919

 

3,851,073

 

 

191,919

 

3,851,073

 

4,042,992

 

665,913

 

2013

 

40

North Las Vegas, NV

 

 

214,552

 

717,435

 

28,999

 

214,552

 

746,434

 

960,986

 

123,792

 

2013

 

40

Memphis, TN

 

 

322,520

 

748,890

 

 

322,520

 

748,890

 

1,071,410

 

127,939

 

2013

 

40

Rancho Cordova, CA

 

 

1,339,612

 

 

 

1,339,612

 

 

1,339,612

 

 

2013

 

Kissimmee, FL

 

 

1,453,500

 

971,683

 

 

1,453,500

 

971,683

 

2,425,183

 

163,972

 

2013

 

40

Pinellas Park, FL

 

 

2,625,000

 

874,542

 

4,163

 

2,625,000

 

878,705

 

3,503,705

 

144,547

 

2013

 

40

Manchester, CT

 

 

397,800

 

325,705

 

 

397,800

 

325,705

 

723,505

 

54,285

 

2013

 

40

Rapid City, SD

 

 

1,017,800

 

2,348,032

 

1,379

 

1,017,800

 

2,349,411

 

3,367,211

 

388,915

 

2013

 

40

Chicago, IL

 

 

272,222

 

649,063

 

2,451

 

272,222

 

651,514

 

923,736

 

107,133

 

2013

 

40

Brooklyn, OH

 

 

3,643,700

 

15,079,714

 

14,207

 

3,643,700

 

15,093,921

 

18,737,621

 

2,451,401

 

2013

 

40

Madisonville, TX

 

 

96,680

 

1,087,642

 

18,200

 

96,680

 

1,105,842

 

1,202,522

 

178,330

 

2013

 

40

Forest, MS

 

 

 

1,298,176

 

21,925

 

 

1,320,101

 

1,320,101

 

213,366

 

2013

 

40

Sun Valley, NV

 

 

308,495

 

1,373,336

 

(51,008)

 

253,495

 

1,377,328

 

1,630,823

 

218,007

 

2013

 

40

Rochester, NY

 

 

2,500,000

 

7,398,639

 

2,017

 

2,500,000

 

7,400,656

 

9,900,656

 

1,163,949

 

2013

 

40

Allentown, PA

 

 

2,525,051

 

7,896,613

 

623,995

 

2,525,051

 

8,520,608

 

11,045,659

 

1,242,703

 

2013

 

40

Casselberry, FL

 

 

1,804,000

 

793,101

 

(2,906)

 

1,804,000

 

790,195

 

2,594,195

 

127,190

 

2013

 

40

Berwyn, IL

 

 

186,791

 

933,959

 

3,925

 

186,791

 

937,884

 

1,124,675

 

142,791

 

2013

 

40

Grand Forks, ND

 

 

1,502,609

 

2,301,337

 

1,801,028

 

1,502,609

 

4,102,365

 

5,604,974

 

624,944

 

2013

 

40

Ann Arbor, MI

 

 

3,000,000

 

4,595,757

 

277,040

 

3,000,000

 

4,872,797

 

7,872,797

 

740,447

 

2013

 

40

Joplin, MO

 

 

1,208,225

 

1,160,843

 

 

1,208,225

 

1,160,843

 

2,369,068

 

178,962

 

2013

 

40

Red Bay, AL

 

 

38,981

 

2,528,437

 

3,856

 

38,981

 

2,532,293

 

2,571,274

 

327,074

 

2014

 

40

Birmingham, AL

 

 

230,106

 

231,313

 

(297)

 

230,106

 

231,016

 

461,122

 

29,359

 

2014

 

40

Birmingham, AL

 

 

245,234

 

251,339

 

(324)

 

245,234

 

251,015

 

496,249

 

31,901

 

2014

 

40

Birmingham, AL

 

 

98,271

 

179,824

 

 

98,271

 

179,824

 

278,095

 

22,853

 

2014

 

40

Birmingham, AL

 

 

235,641

 

127,477

 

(313)

 

235,641

 

127,164

 

362,805

 

16,162

 

2014

 

40

Montgomery, AL

 

 

325,389

 

217,850

 

 

325,389

 

217,850

 

543,239

 

27,686

 

2014

 

40

Littleton, CO

 

4,779,235

 

819,000

 

8,756,266

 

399

 

819,000

 

8,756,665

 

9,575,665

 

1,149,308

 

2014

 

40

St Petersburg, FL

 

 

1,225,000

 

1,025,247

 

6,592

 

1,225,000

 

1,031,839

 

2,256,839

 

148,049

 

2014

 

40

St Augustine, FL

 

 

200,000

 

1,523,230

 

 

200,000

 

1,523,230

 

1,723,230

 

199,924

 

2014

 

40

F-38

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

East Palatka, FL

 

 

730,000

 

575,236

 

6,911

 

730,000

 

582,147

 

1,312,147

 

76,365

 

2014

 

40

Pensacola, FL

 

 

136,365

 

398,773

 

 

136,365

 

398,773

 

535,138

 

50,677

 

2014

 

40

Jacksonville, FL

 

 

299,312

 

348,862

 

12,497

 

299,312

 

361,359

 

660,671

 

45,141

 

2014

 

40

Fort Oglethorpe, GA

 

 

1,842,240

 

2,844,126

 

20,442

 

1,842,240

 

2,864,568

 

4,706,808

 

422,870

 

2014

 

40

New Lenox, IL

 

 

2,010,000

 

6,206,252

 

107,873

 

2,010,000

 

6,314,125

 

8,324,125

 

818,384

 

2014

 

40

Rockford, IL

 

 

303,395

 

2,436,873

 

(15,000)

 

303,395

 

2,421,873

 

2,725,268

 

319,371

 

2014

 

40

Indianapolis, IN

 

 

575,000

 

1,871,110

 

 

575,000

 

1,871,110

 

2,446,110

 

268,971

 

2014

 

40

Terre Haute, IN

 

 

103,147

 

2,477,263

 

32,376

 

103,147

 

2,509,639

 

2,612,786

 

312,326

 

2014

 

40

Junction City, KS

 

 

78,271

 

2,504,294

 

(30,565)

 

78,271

 

2,473,729

 

2,552,000

 

313,132

 

2014

 

40

Baton Rouge, LA

 

 

226,919

 

347,691

 

 

226,919

 

347,691

 

574,610

 

44,185

 

2014

 

40

Lincoln Park, MI

 

 

543,303

 

1,408,544

 

78,362

 

543,303

 

1,486,906

 

2,030,209

 

207,753

 

2014

 

40

Novi, MI

 

 

1,803,857

 

1,488,505

 

22,490

 

1,803,857

 

1,510,995

 

3,314,852

 

188,840

 

2014

 

40

Bloomfield Hills, MI

 

 

1,340,000

 

2,003,406

 

380,288

 

1,341,900

 

2,381,794

 

3,723,694

 

330,567

 

2014

 

40

Jackson, MS

 

 

256,789

 

172,184

 

 

256,789

 

172,184

 

428,973

 

21,882

 

2014

 

40

Irvington, NJ

 

 

315,000

 

1,313,025

 

 

315,000

 

1,313,025

 

1,628,025

 

188,746

 

2014

 

40

Fargo, ND

 

 

629,484

 

707,799

 

505,065

 

629,484

 

1,212,864

 

1,842,348

 

156,596

 

2014

 

40

Jamestown, ND

 

 

234,545

 

1,158,486

 

8,499

 

234,545

 

1,166,985

 

1,401,530

 

150,687

 

2014

 

40

Toledo, OH

 

 

500,000

 

1,372,363

 

(12)

 

500,000

 

1,372,351

 

1,872,351

 

197,275

 

2014

 

40

Toledo, OH

 

 

213,750

 

754,675

 

 

213,750

 

754,675

 

968,425

 

102,196

 

2014

 

40

Toledo, OH

 

 

168,750

 

785,000

 

16,477

 

168,750

 

801,477

 

970,227

 

108,362

 

2014

 

40

Port Clinton, OH

 

 

75,000

 

721,100

 

 

75,000

 

721,100

 

796,100

 

97,650

 

2014

 

40

Mansfield, OH

 

 

306,000

 

725,600

 

 

306,000

 

725,600

 

1,031,600

 

98,258

 

2014

 

40

Orville, OH

 

 

344,250

 

716,600

 

 

344,250

 

716,600

 

1,060,850

 

97,039

 

2014

 

40

Akron, OH

 

 

696,000

 

845,000

 

 

696,000

 

845,000

 

1,541,000

 

114,427

 

2014

 

40

Hubbard, OH

 

 

204,000

 

726,500

 

 

204,000

 

726,500

 

930,500

 

98,381

 

2014

 

40

Calcutta, OH

 

 

208,050

 

758,750

 

1,462

 

208,050

 

760,212

 

968,262

 

102,868

 

2014

 

40

Columbus, OH

 

 

 

1,136,250

 

1,593,792

 

1,590,997

 

1,139,045

 

2,730,042

 

151,640

 

2014

 

40

Tulsa, OK

 

 

459,148

 

640,550

 

(13,336)

 

459,148

 

627,214

 

1,086,362

 

91,598

 

2014

 

40

Ligonier, PA

 

 

330,000

 

5,021,849

 

(9,500)

 

330,000

 

5,012,349

 

5,342,349

 

679,285

 

2014

 

40

Limerick, PA

 

 

369,000

 

 

 

369,000

 

 

369,000

 

 

2014

 

Harrisburg, PA

 

 

124,757

 

1,446,773

 

11,175

 

124,757

 

1,457,948

 

1,582,705

 

182,161

 

2014

 

40

Anderson, SC

 

 

781,200

 

4,441,535

 

254,244

 

775,732

 

4,701,247

 

5,476,979

 

675,734

 

2014

 

40

Easley, SC

 

 

332,275

 

268,612

 

 

332,275

 

268,612

 

600,887

 

34,137

 

2014

 

40

Spartanburg, SC

 

 

141,307

 

446,706

 

 

141,307

 

446,706

 

588,013

 

56,769

 

2014

 

40

Spartanburg, SC

 

 

94,770

 

261,640

 

 

94,770

 

261,640

 

356,410

 

33,250

 

2014

 

40

Columbia, SC

 

 

303,932

 

1,221,964

 

(13,830)

 

303,932

 

1,208,134

 

1,512,066

 

154,132

 

2014

 

40

Alcoa, TN

 

 

329,074

 

270,719

 

 

329,074

 

270,719

 

599,793

 

34,404

 

2014

 

40

F-39

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Knoxville, TN

 

 

214,077

 

286,037

 

 

214,077

 

286,037

 

500,114

 

36,351

 

2014

 

40

Red Bank, TN

 

 

229,100

 

302,146

 

 

229,100

 

302,146

 

531,246

 

38,397

 

2014

 

40

New Tazewell, TN

 

 

91,006

 

328,561

 

5,074

 

91,006

 

333,635

 

424,641

 

41,697

 

2014

 

40

Maryville, TN

 

 

94,682

 

1,529,621

 

27,243

 

94,682

 

1,556,864

 

1,651,546

 

194,242

 

2014

 

40

Morristown, TN

 

 

46,404

 

801,506

 

4,990

 

46,404

 

806,496

 

852,900

 

100,803

 

2014

 

40

Clinton, TN

 

 

69,625

 

1,177,927

 

11,564

 

69,625

 

1,189,491

 

1,259,116

 

148,675

 

2014

 

40

Knoxville, TN

 

 

160,057

 

2,265,025

 

226,291

 

160,057

 

2,491,316

 

2,651,373

 

284,721

 

2014

 

40

Sweetwater, TN

 

 

79,100

 

1,009,290

 

6,740

 

79,100

 

1,016,030

 

1,095,130

 

126,992

 

2014

 

40

McKinney, TX

 

 

2,671,020

 

6,785,815

 

100,331

 

2,671,020

 

6,886,146

 

9,557,166

 

943,066

 

2014

 

40

Forest, VA

 

 

282,600

 

956,027

 

 

282,600

 

956,027

 

1,238,627

 

131,452

 

2014

 

40

Colonial Heights, VA

 

 

547,692

 

1,059,557

 

(5,963)

 

547,692

 

1,053,594

 

1,601,286

 

133,897

 

2014

 

40

Glen Allen, VA

 

 

590,101

 

1,129,495

 

(6,867)

 

590,101

 

1,122,628

 

1,712,729

 

142,671

 

2014

 

40

Burlington, WA

 

 

610,000

 

3,647,279

 

(4,602)

 

610,000

 

3,642,677

 

4,252,677

 

464,312

 

2014

 

40

Wausau, WI

 

 

909,092

 

1,405,899

 

44,222

 

909,092

 

1,450,121

 

2,359,213

 

196,750

 

2014

 

40

Foley AL

 

 

305,332

 

506,203

 

 

305,332

 

506,203

 

811,535

 

64,203

 

2015

 

40

Sulligent, AL

 

 

58,803

 

1,085,906

 

(442,000)

 

58,803

 

643,906

 

702,709

 

125,623

 

2015

 

40

Eutaw, AL

 

 

103,746

 

1,212,006

 

(392,065)

 

103,746

 

819,941

 

923,687

 

141,791

 

2015

 

40

Tallassee, AL

 

 

154,437

 

850,448

 

11,125

 

154,437

 

861,573

 

1,016,010

 

100,764

 

2015

 

40

Orange Park, AL

 

 

649,652

 

1,775,000

 

 

649,652

 

1,775,000

 

2,424,652

 

192,292

 

2015

 

40

Aurora, CO

 

 

976,865

 

1,999,651

 

1,743

 

976,865

 

2,001,394

 

2,978,259

 

204,305

 

2015

 

40

Pace, FL

 

 

37,860

 

524,400

 

6,970

 

37,860

 

531,370

 

569,230

 

64,357

 

2015

 

40

Pensacola, FL

 

 

309,607

 

775,084

 

(25)

 

309,607

 

775,059

 

1,084,666

 

95,079

 

2015

 

40

Jacksonville Beach, FL

 

 

623,031

 

370,612

 

 

623,031

 

370,612

 

993,643

 

43,967

 

2015

 

40

Freeport, FL

 

 

312,615

 

1,277,386

 

 

312,615

 

1,277,386

 

1,590,001

 

143,706

 

2015

 

40

Glenwood, GA

 

 

29,489

 

1,027,370

 

(416,000)

 

29,489

 

611,370

 

640,859

 

114,155

 

2015

 

40

Albany, GA

 

 

47,955

 

641,123

 

 

47,955

 

641,123

 

689,078

 

76,053

 

2015

 

40

Belvidere, IL

 

 

184,136

 

644,492

 

 

184,136

 

644,492

 

828,628

 

76,420

 

2015

 

40

Peru, IL

 

 

380,254

 

2,125,498

 

 

380,254

 

2,125,498

 

2,505,752

 

225,834

 

2015

 

40

Davenport, IA

 

 

776,366

 

6,623,542

 

(150,000)

 

776,366

 

6,473,542

 

7,249,908

 

745,148

 

2015

 

40

Buffalo Center, IA

 

 

159,353

 

700,460

 

 

159,353

 

700,460

 

859,813

 

77,343

 

2015

 

40

Sheffield, IA

 

 

131,794

 

729,543

 

 

131,794

 

729,543

 

861,337

 

80,554

 

2015

 

40

Topeka, KS

 

 

1,853,601

 

12,427,839

 

(174,083)

 

1,853,601

 

12,253,756

 

14,107,357

 

1,496,063

 

2015

 

40

Lenexa, KS

 

 

303,175

 

2,186,864

 

 

303,175

 

2,186,864

 

2,490,039

 

218,686

 

2015

 

40

Tompkinsville, KY

 

 

70,252

 

1,132,033

 

(356,000)

 

70,252

 

776,033

 

846,285

 

132,267

 

2015

 

40

Hazard, KY

 

 

8,392,841

 

13,731,648

 

(16,857)

 

8,375,591

 

13,732,041

 

22,107,632

 

1,373,200

 

2015

 

40

Portland, MA

 

 

 

3,831,860

 

3,172

 

 

3,835,032

 

3,835,032

 

431,401

 

2015

 

40

Flint, MI

 

 

120,078

 

2,561,015

 

20,490

 

120,078

 

2,581,505

 

2,701,583

 

258,150

 

2015

 

40

F-40

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

Which

 

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Hutchinson, MN

 

 

67,914

 

720,799

 

 

67,914

 

720,799

 

788,713

 

79,588

 

2015

 

40

Lowry City, MO

 

 

103,202

 

614,065

 

 

103,202

 

614,065

 

717,267

 

69,082

 

2015

 

40

Branson, MO

 

 

564,066

 

940,585

 

175

 

564,066

 

940,760

 

1,504,826

 

97,995

 

2015

 

40

Branson, MO

 

 

721,135

 

717,081

 

940

 

721,135

 

718,021

 

1,439,156

 

74,786

 

2015

 

40

Enfield, NH

 

 

93,628

 

1,295,320

 

52,741

 

93,628

 

1,348,061

 

1,441,689

 

161,756

 

2015

 

40

Marietta, OH

 

 

319,157

 

1,225,026

 

 

319,157

 

1,225,026

 

1,544,183

 

145,414

 

2015

 

40

Lorain, OH

 

 

293,831

 

1,044,956

 

 

293,831

 

1,044,956

 

1,338,787

 

121,912

 

2015

 

40

Franklin, OH

 

 

264,153

 

1,191,777

 

 

264,153

 

1,191,777

 

1,455,930

 

136,558

 

2015

 

40

Elyria, OH

 

 

82,023

 

910,404

 

 

82,023

 

910,404

 

992,427

 

102,420

 

2015

 

40

Elyria, OH

 

 

126,641

 

695,072

 

 

126,641

 

695,072

 

821,713

 

78,196

 

2015

 

40

Bedford Heights, OH

 

 

226,920

 

959,528

 

21,900

 

226,920

 

981,428

 

1,208,348

 

106,678

 

2015

 

40

Newburgh Heights, OH

 

 

224,040

 

959,099

 

 

224,040

 

959,099

 

1,183,139

 

105,901

 

2015

 

40

Warrensville Heights, OH

 

 

186,209

 

920,496

 

4,900

 

186,209

 

925,396

 

1,111,605

 

103,149

 

2015

 

40

Heath, OH

 

 

325,381

 

757,994

 

135

 

325,381

 

758,129

 

1,083,510

 

78,971

 

2015

 

40

Lima, OH

 

 

335,386

 

592,154

 

2,833

 

335,386

 

594,987

 

930,373

 

59,263

 

2015

 

40

Elk City, OK

 

 

45,212

 

1,242,220

 

 

45,212

 

1,242,220

 

1,287,432

 

142,337

 

2015

 

40

Salem, OR

 

 

1,450,000

 

2,951,167

 

1,346,640

 

1,450,000

 

4,297,807

 

5,747,807

 

429,782

 

2015

 

40

Westfield, PA

 

 

47,346

 

1,117,723

 

 

47,346

 

1,117,723

 

1,165,069

 

137,286

 

2015

 

40

Altoona, PA

 

 

555,903

 

9,489,791

 

1,017

 

555,903

 

9,490,808

 

10,046,711

 

1,008,383

 

2015

 

40

Grindstone, PA

 

 

288,246

 

500,379

 

10,151

 

288,246

 

510,530

 

798,776

 

50,158

 

2015

 

40

Blythewood, SC

 

 

475,393

 

878,586

 

 

475,393

 

878,586

 

1,353,979

 

105,175

 

2015

 

40

Columbia, SC

 

 

249,900

 

809,935

 

 

249,900

 

809,935

 

1,059,835

 

96,080

 

2015

 

40

Liberty, SC

 

 

27,929

 

1,222,856

 

90

 

27,929

 

1,222,946

 

1,250,875

 

145,137

 

2015

 

40

Blacksburg, SC

 

 

27,547

 

1,468,101

 

 

27,547

 

1,468,101

 

1,495,648

 

171,279

 

2015

 

40

Easley, SC

 

 

51,325

 

1,187,506

 

 

51,325

 

1,187,506

 

1,238,831

 

136,069

 

2015

 

40

Fountain Inn, SC

 

 

107,633

 

1,076,633

 

 

107,633

 

1,076,633

 

1,184,266

 

123,364

 

2015

 

40

Walterboro, SC

 

 

21,414

 

1,156,820

 

 

21,414

 

1,156,820

 

1,178,234

 

132,552

 

2015

 

40

Jackson, TN

 

 

277,000

 

495,103

 

2,263

 

277,000

 

497,366

 

774,366

 

49,548

 

2015

 

40

Arlington, TX

 

 

494,755

 

710,416

 

 

494,755

 

710,416

 

1,205,171

 

87,029

 

2015

 

40

Sweetwater, TX

 

 

626,578

 

652,127

 

 

626,578

 

652,127

 

1,278,705

 

80,157

 

2015

 

40

Brenham, TX

 

 

355,486

 

17,280,895

 

581

 

355,486

 

17,281,476

 

17,636,962

 

2,016,133

 

2015

 

40

Corpus Christi, TX

 

 

316,916

 

2,140,056

 

 

316,916

 

2,140,056

 

2,456,972

 

231,839

 

2015

 

40

Harlingen, TX

 

 

126,102

 

869,779

 

 

126,102

 

869,779

 

995,881

 

94,226

 

2015

 

40

Midland, TX

 

 

194,174

 

5,005,720

 

2,000

 

194,174

 

5,007,720

 

5,201,894

 

532,045

 

2015

 

40

Rockwall, TX

 

 

578,225

 

1,768,930

 

210

 

578,225

 

1,769,140

 

2,347,365

 

176,910

 

2015

 

40

Bluefield, VA

 

 

88,431

 

1,161,840

 

 

88,431

 

1,161,840

 

1,250,271

 

137,924

 

2015

 

40

Princeton, WV

 

 

111,653

 

1,029,090

 

 

111,653

 

1,029,090

 

1,140,743

 

122,142

 

2015

 

40

F-41

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Beckley, WV

 

 

162,024

 

991,653

 

 

162,024

 

991,653

 

1,153,677

 

117,708

 

2015

 

40

Martinsburg, WV

 

 

620,892

 

943,163

 

 

620,892

 

943,163

 

1,564,055

 

94,316

 

2015

 

40

Grand Chute, WI

 

 

2,766,417

 

7,084,942

 

4,700

 

2,766,417

 

7,089,642

 

9,856,059

 

841,446

 

2015

 

40

New Richmond, WI

 

 

71,969

 

648,850

 

 

71,969

 

648,850

 

720,819

 

72,996

 

2015

 

40

Ashland, WI

 

 

142,287

 

684,545

 

(153,000)

 

142,287

 

531,545

 

673,832

 

69,848

 

2015

 

40

Baraboo, WI

 

 

142,563

 

653,176

 

 

142,563

 

653,176

 

795,739

 

72,122

 

2015

 

40

Decatur, AL

 

 

337,738

 

510,706

 

 

337,738

 

510,706

 

848,444

 

40,431

 

2016

 

40

Greenville, AL

 

 

203,722

 

905,780

 

9,911

 

203,722

 

915,691

 

1,119,413

 

68,633

 

2016

 

40

Bullhead City, AZ

 

 

177,500

 

1,364,406

 

 

177,500

 

1,364,406

 

1,541,906

 

127,900

 

2016

 

40

Page, AZ

 

 

256,982

 

1,299,283

 

 

256,982

 

1,299,283

 

1,556,265

 

121,808

 

2016

 

40

Safford, AZ

 

 

349,269

 

1,196,307

 

 

349,269

 

1,196,307

 

1,545,576

 

102,061

 

2016

 

40

Tucson, AZ

 

 

3,208,580

 

4,410,679

 

 

3,208,580

 

4,410,679

 

7,619,259

 

385,934

 

2016

 

40

Bentonville, AR

 

 

610,926

 

897,562

 

170

 

610,926

 

897,732

 

1,508,658

 

84,190

 

2016

 

40

Sunnyvale, CA

 

 

7,351,903

 

4,638,432

 

194

 

7,351,903

 

4,638,626

 

11,990,529

 

415,384

 

2016

 

40

Whittier, CA

 

 

4,237,918

 

7,343,869

 

 

4,237,918

 

7,343,869

 

11,581,787

 

657,888

 

2016

 

40

Aurora, CO

 

 

847,349

 

834,301

 

 

847,349

 

834,301

 

1,681,650

 

62,573

 

2016

 

40

Aurora, CO

 

 

1,132,676

 

5,716,367

 

70,600

 

1,132,676

 

5,786,967

 

6,919,643

 

432,541

 

2016

 

40

Evergreen, CO

 

 

1,998,860

 

3,827,245

 

 

1,998,860

 

3,827,245

 

5,826,105

 

342,857

 

2016

 

40

Lakeland, FL

 

 

61,000

 

1,227,037

 

 

61,000

 

1,227,037

 

1,288,037

 

97,140

 

2016

 

40

Mt Dora, FL

 

 

1,678,671

 

3,691,615

 

 

1,678,671

 

3,691,615

 

5,370,286

 

330,707

 

2016

 

40

North Miami Beach, FL

 

 

1,622,742

 

512,717

 

11,240

 

1,622,742

 

523,957

 

2,146,699

 

39,216

 

2016

 

40

Orlando, FL

 

 

903,411

 

1,627,159

 

(24,843)

 

903,411

 

1,602,316

 

2,505,727

 

133,440

 

2016

 

40

Port Orange, FL

 

 

1,493,863

 

3,114,697

 

 

1,493,863

 

3,114,697

 

4,608,560

 

279,025

 

2016

 

40

Royal Palm Beach, FL

 

 

2,052,463

 

956,768

 

11,151

 

2,052,463

 

967,919

 

3,020,382

 

82,467

 

2016

 

40

Sarasota, FL

 

 

1,769,175

 

3,587,992

 

139,891

 

1,769,175

 

3,727,883

 

5,497,058

 

326,087

 

2016

 

40

Venice, FL

 

 

281,936

 

1,291,748

 

 

281,936

 

1,291,748

 

1,573,684

 

107,560

 

2016

 

40

Vero Beach, FL

 

 

4,469,033

 

 

 

4,469,033

 

 

4,469,033

 

 

2016

 

Dalton, GA

 

 

211,362

 

220,927

 

 

211,362

 

220,927

 

432,289

 

19,311

 

2016

 

40

Crystal Lake, IL

 

 

2,446,521

 

7,012,819

 

12,944

 

2,446,521

 

7,025,763

 

9,472,284

 

541,007

 

2016

 

40

Glenwood, IL

 

 

815,483

 

970,108

 

 

815,483

 

970,108

 

1,785,591

 

76,800

 

2016

 

40

Morris, IL

 

 

1,206,749

 

2,062,495

 

 

1,206,749

 

2,062,495

 

3,269,244

 

184,765

 

2016

 

40

Wheaton, IL

 

 

447,291

 

751,458

 

 

447,291

 

751,458

 

1,198,749

 

68,884

 

2016

 

40

Bicknell, IN

 

 

215,037

 

2,381,471

 

 

215,037

 

2,381,471

 

2,596,508

 

198,359

 

2016

 

40

Fort Wayne, IN

 

 

711,430

 

1,258,357

 

 

711,430

 

1,258,357

 

1,969,787

 

123,214

 

2016

 

40

Indianapolis, IN

 

 

734,434

 

970,175

 

(2,700)

 

734,434

 

967,475

 

1,701,909

 

90,864

 

2016

 

40

Des Moines, IA

 

 

322,797

 

1,374,153

 

 

322,797

 

1,374,153

 

1,696,950

 

123,101

 

2016

 

40

Frankfort, KY

 

 

 

514,277

 

 

 

514,277

 

514,277

 

43,439

 

2016

 

40

F-42

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

DeRidder, LA

 

 

814,891

 

2,156,542

 

480

 

814,891

 

2,157,022

 

2,971,913

 

188,756

 

2016

 

40

Lake Charles, LA

 

 

1,308,418

 

4,235,719

 

5,761

 

1,308,418

 

4,241,480

 

5,549,898

 

326,828

 

2016

 

40

Shreveport, LA

 

 

891,872

 

2,058,257

 

 

891,872

 

2,058,257

 

2,950,129

 

180,107

 

2016

 

40

Marshall, MI

 

 

339,813

 

 

 

339,813

 

 

339,813

 

 

2016

 

Mt Pleasant, MI

 

 

 

511,282

 

(254)

 

 

511,028

 

511,028

 

38,328

 

2016

 

40

Norton Shores, MI

 

 

495,605

 

667,982

 

33,474

 

495,605

 

701,456

 

1,197,061

 

52,879

 

2016

 

40

Portage, MI

 

 

262,181

 

1,102,990

 

 

262,181

 

1,102,990

 

1,365,171

 

94,214

 

2016

 

40

Stephenson, MI

 

 

223,152

 

1,044,947

 

270

 

223,152

 

1,045,217

 

1,268,369

 

78,389

 

2016

 

40

Sterling, MI

 

 

127,844

 

905,607

 

25,464

 

127,844

 

931,071

 

1,058,915

 

73,513

 

2016

 

40

Cambridge, MN

 

 

536,812

 

1,334,601

 

 

536,812

 

1,334,601

 

1,871,413

 

119,558

 

2016

 

40

Eagle Bend, MN

 

 

96,558

 

1,165,437

 

 

96,558

 

1,165,437

 

1,261,995

 

94,637

 

2016

 

40

Brandon, MS

 

 

428,464

 

969,346

 

 

428,464

 

969,346

 

1,397,810

 

88,857

 

2016

 

40

Clinton, MS

 

 

370,264

 

1,057,143

 

 

370,264

 

1,057,143

 

1,427,407

 

96,905

 

2016

 

40

Columbus, MS

 

 

1,103,458

 

2,128,089

 

8,216

 

1,103,458

 

2,136,305

 

3,239,763

 

203,942

 

2016

 

40

Holly Springs, MS

 

 

413,316

 

952,574

 

 

413,316

 

952,574

 

1,365,890

 

83,235

 

2016

 

40

Jackson, MS

 

 

242,796

 

963,188

 

 

242,796

 

963,188

 

1,205,984

 

88,292

 

2016

 

40

Jackson, MS

 

 

732,944

 

2,862,813

 

13,767

 

732,944

 

2,876,580

 

3,609,524

 

233,904

 

2016

 

40

Meridian, MS

 

 

396,329

 

1,152,729

 

 

396,329

 

1,152,729

 

1,549,058

 

105,646

 

2016

 

40

Pearl, MS

 

 

299,839

 

616,351

 

7,355

 

299,839

 

623,706

 

923,545

 

46,726

 

2016

 

40

Ridgeland, MS

 

 

407,041

 

864,498

 

 

407,041

 

864,498

 

1,271,539

 

79,246

 

2016

 

40

Bowling Green, MO

 

 

360,201

 

2,809,170

 

 

360,201

 

2,809,170

 

3,169,371

 

228,204

 

2016

 

40

St Robert, MO

 

 

394,859

 

1,305,366

 

24,333

 

394,859

 

1,329,699

 

1,724,558

 

99,565

 

2016

 

40

Hamilton, MT

 

 

558,047

 

1,083,570

 

442

 

558,047

 

1,084,012

 

1,642,059

 

83,557

 

2016

 

40

Beatty, NV

 

 

198,928

 

1,265,084

 

8,051

 

198,928

 

1,273,135

 

1,472,063

 

103,330

 

2016

 

40

Alamogordo, NM

 

 

654,965

 

2,716,166

 

4,436

 

654,965

 

2,720,602

 

3,375,567

 

221,019

 

2016

 

40

Alamogordo, NM

 

 

524,763

 

941,615

 

7,522

 

524,763

 

949,137

 

1,473,900

 

73,120

 

2016

 

40

Alcalde, NM

 

 

435,486

 

836,499

 

 

435,486

 

836,499

 

1,271,985

 

62,737

 

2016

 

40

Cimarron, NM

 

 

345,693

 

1,236,437

 

7,613

 

345,693

 

1,244,050

 

1,589,743

 

95,853

 

2016

 

40

La Luz, NM

 

 

487,401

 

835,455

 

 

487,401

 

835,455

 

1,322,856

 

64,400

 

2016

 

40

Fayetteville, NC

 

 

1,267,529

 

2,527,462

 

16,292

 

1,267,529

 

2,543,754

 

3,811,283

 

195,986

 

2016

 

40

Gastonia, NC

 

 

401,119

 

979,803

 

1,631

 

401,119

 

981,434

 

1,382,553

 

75,652

 

2016

 

40

Devils Lake, ND

 

 

323,508

 

1,133,773

 

955

 

323,508

 

1,134,728

 

1,458,236

 

94,126

 

2016

 

40

Cambridge, OH

 

 

168,717

 

1,113,232

 

 

168,717

 

1,113,232

 

1,281,949

 

106,685

 

2016

 

40

Columbus, OH

 

 

1,109,044

 

1,291,313

 

 

1,109,044

 

1,291,313

 

2,400,357

 

112,916

 

2016

 

40

Grove City, OH

 

 

334,032

 

176,274

 

 

334,032

 

176,274

 

510,306

 

15,407

 

2016

 

40

Lorain, OH

 

 

808,162

 

1,390,481

 

10,000

 

808,162

 

1,400,481

 

2,208,643

 

131,691

 

2016

 

40

Reynoldsburg, OH

 

 

843,336

 

1,197,966

 

 

843,336

 

1,197,966

 

2,041,302

 

104,764

 

2016

 

40

F-43

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Springfield, OH

 

 

982,451

 

3,957,512

 

(3,500)

 

982,451

 

3,954,012

4,936,463

 

378,863

 

2016

 

40

Ardmore, OK

 

 

571,993

 

1,590,151

 

 

571,993

 

1,590,151

2,162,144

 

142,452

 

2016

 

40

Dillon, SC

 

 

85,896

 

1,697,160

 

 

85,896

 

1,697,160

1,783,056

 

166,180

 

2016

 

40

Jasper, TN

 

 

190,582

 

966,125

 

6,888

 

190,582

 

973,013

1,163,595

 

72,950

 

2016

 

40

Austin, TX

 

 

4,986,082

 

5,179,446

 

9,988

 

4,986,082

 

5,189,434

10,175,516

 

508,486

 

2016

 

40

Carthage, TX

 

 

597,995

 

1,965,290

 

 

597,995

 

1,965,290

2,563,285

 

171,970

 

2016

 

40

Cedar Park, TX

 

 

1,386,802

 

4,656,229

 

341,226

 

1,386,802

 

4,997,455

6,384,257

 

445,496

 

2016

 

40

Granbury, TX

 

 

944,223

 

2,362,540

 

 

944,223

 

2,362,540

3,306,763

 

206,730

 

2016

 

40

Hemphill, TX

 

 

250,503

 

1,955,918

 

11,886

 

250,503

 

1,967,804

2,218,307

 

159,502

 

2016

 

40

Lampasas, TX

 

 

245,312

 

1,063,701

 

16,808

 

245,312

 

1,080,509

1,325,821

 

93,909

 

2016

 

40

Lubbock, TX

 

 

1,501,556

 

2,341,031

 

 

1,501,556

 

2,341,031

3,842,587

 

204,850

 

2016

 

40

Odessa, TX

 

 

921,043

 

2,434,384

 

5,615

 

921,043

 

2,439,999

3,361,042

 

213,310

 

2016

 

40

Port Arthur, TX

 

 

1,889,732

 

8,121,417

 

26,655

 

1,889,732

 

8,148,072

10,037,804

 

677,341

 

2016

 

40

Farr West, UT

 

 

679,206

 

1,040,737

 

3,062

 

679,206

 

1,043,799

1,723,005

 

90,128

 

2016

 

40

Provo, UT

 

 

1,692,785

 

5,874,584

 

43,650

 

1,692,785

 

5,918,234

7,611,019

 

507,537

 

2016

 

40

St George, UT

 

 

313,107

 

1,009,161

 

10,080

 

313,107

 

1,019,241

1,332,348

 

96,541

 

2016

 

40

Tappahannock, VA

 

 

1,076,745

 

14,904

 

 

1,076,745

 

14,904

1,091,649

 

1,274

 

2016

 

40

Kirkland, WA

 

 

816,072

 

 

12,398

 

816,072

 

12,398

828,470

 

207

 

2016

 

40

Manitowoc, WI

 

 

879,237

 

4,467,960

 

 

879,237

 

4,467,960

5,347,197

 

372,171

 

2016

 

40

Oak Creek, WI

 

 

487,277

 

3,082,180

 

89,675

 

487,277

 

3,171,855

3,659,132

 

302,368

 

2016

 

40

Oxford, AL

 

 

148,407

 

641,820

 

 

148,407

 

641,820

790,227

 

42,759

 

2017

 

40

Oxford, AL

 

 

255,786

 

7,273,871

 

35,875

 

255,786

 

7,309,746

7,565,532

 

485,523

 

2017

 

40

Oxford, AL

 

 

24,875

 

600,936

 

 

24,875

 

600,936

625,811

 

40,062

 

2017

 

40

Jonesboro, AR

 

 

3,656,554

 

3,219,456

 

11,058

 

3,656,554

 

3,230,514

6,887,068

 

179,330

 

2017

 

40

Lowell, AR

 

 

949,519

 

1,435,056

 

10,229

 

949,519

 

1,445,285

2,394,804

 

72,200

 

2017

 

40

Southington, CT

 

 

1,088,181

 

1,287,837

 

14,134

 

1,088,181

 

1,301,971

2,390,152

 

64,977

 

2017

 

40

Millsboro, DE

 

 

3,501,109

 

 

1,969

 

3,503,078

 

3,503,078

 

 

2017

 

Jacksonville, FL

 

 

2,298,885

 

2,894,565

 

12,286

 

2,298,885

 

2,906,851

5,205,736

 

151,714

 

2017

 

40

Orange Park, FL

 

 

214,858

 

2,304,095

 

 

214,858

 

2,304,095

2,518,953

 

143,977

 

2017

 

40

Port Richey, FL

 

 

1,140,182

 

1,649,773

 

 

1,140,182

 

1,649,773

2,789,955

 

103,098

 

2017

 

40

Americus, GA

 

 

1,318,463

 

 

 

1,318,463

 

1,318,463

 

 

2017

 

Brunswick, GA

 

 

1,279,688

 

2,158,863

 

205

 

1,279,688

 

2,159,068

3,438,756

 

148,263

 

2017

 

40

Brunswick, GA

 

 

126,335

 

1,626,530

 

 

126,335

 

1,626,530

1,752,865

 

84,715

 

2017

 

40

Buford, GA

 

 

341,860

 

1,023,813

 

 

341,860

 

1,023,813

1,365,673

 

63,954

 

2017

 

40

Carrollton, GA

 

 

597,465

 

886,644

 

 

597,465

 

886,644

1,484,109

 

53,484

 

2017

 

40

Decatur, GA

 

 

558,859

 

1,429,106

 

 

558,859

 

1,429,106

1,987,965

 

74,433

 

2017

 

40

Metter, GA

 

 

256,743

 

766,818

 

 

256,743

 

766,818

1,023,561

 

46,284

 

2017

 

40

F-44

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Villa Rica, GA

 

 

410,936

 

1,311,444

 

 

410,936

 

1,311,444

 

1,722,380

 

84,669

 

2017

 

40

Chicago, IL

 

 

2,899,155

 

9,822,986

 

 

2,899,155

 

9,822,986

 

12,722,141

 

675,245

 

2017

 

40

Chicago, IL

 

 

2,081,151

 

5,197,315

 

 

2,081,151

 

5,197,315

 

7,278,466

 

356,950

 

2017

 

40

Galesburg, IL

 

 

214,280

 

979,108

 

 

214,280

 

979,108

 

1,193,388

 

61,173

 

2017

 

40

Mundelein, IL

 

 

1,238,743

 

 

 

1,238,743

 

 

1,238,743

 

 

2017

 

Mundelein, IL

 

 

1,743,222

 

 

 

1,743,222

 

 

1,743,222

 

 

2017

 

Mundelein, IL

 

 

1,803,068

 

 

 

1,803,068

 

 

1,803,068

 

 

2017

 

Springfield, IL

 

 

574,805

 

1,554,786

 

2,030

 

574,805

 

1,556,816

 

2,131,621

 

77,797

 

2017

 

40

Woodstock, IL

 

 

683,419

 

1,002,207

 

284

 

683,419

 

1,002,491

 

1,685,910

 

52,211

 

2017

 

40

Frankfort, IN

 

 

50,458

 

2,008,275

 

 

50,458

 

2,008,275

 

2,058,733

 

133,885

 

2017

 

40

Kokomo, IN

 

 

95,196

 

1,484,778

 

 

95,196

 

1,484,778

 

1,579,974

 

77,332

 

2017

 

40

Nashville, IN

 

 

484,117

 

2,458,215

 

 

484,117

 

2,458,215

 

2,942,332

 

153,400

 

2017

 

40

Roeland Park, KS

 

 

7,829,806

 

 

(1,247,898)

 

6,581,908

 

 

6,581,908

 

 

2017

 

Georgetown, KY

 

 

1,996,456

 

6,315,768

 

928

 

1,996,456

 

6,316,696

 

8,313,152

 

401,760

 

2017

 

40

Hopkinsville, KY

 

 

413,269

 

996,619

 

 

413,269

 

996,619

 

1,409,888

 

62,261

 

2017

 

40

Salyersville, KY

 

 

289,663

 

906,455

 

 

289,663

 

906,455

 

1,196,118

 

58,507

 

2017

 

40

Amite, LA

 

 

601,238

 

1,695,242

 

 

601,238

 

1,695,242

 

2,296,480

 

109,434

 

2017

 

40

Bossier City, LA

 

 

797,899

 

2,925,864

 

146

 

797,899

 

2,926,010

 

3,723,909

 

152,393

 

2017

 

40

Kenner, LA

 

 

323,188

 

859,298

 

 

323,188

 

859,298

 

1,182,486

 

48,245

 

2017

 

40

Mandeville, LA

 

 

834,891

 

1,294,812

 

(795)

 

834,891

 

1,294,017

 

2,128,908

 

72,763

 

2017

 

40

New Orleans, LA

 

 

 

6,846,313

 

 

 

6,846,313

 

6,846,313

 

427,850

 

2017

 

40

Baltimore, MD

 

 

782,819

 

745,092

 

 

782,819

 

745,092

 

1,527,911

 

40,259

 

2017

 

40

Canton, MI

 

 

3,655,296

 

 

13,912,109

 

7,345,761

 

10,221,644

 

17,567,405

 

475,714

 

2017

 

40

Grand Rapids, MI

 

 

7,015,035

 

 

2,635,983

 

1,750,000

 

7,901,018

 

9,651,018

 

296,288

 

2017

 

40

Bloomington, MN

 

 

1,491,302

 

 

619

 

1,491,921

 

 

1,491,921

 

 

2017

 

Monticello, MN

 

 

449,025

 

979,816

 

9,368

 

449,025

 

989,184

 

1,438,209

 

71,704

 

2017

 

40

Mountain Iron, MN

 

 

177,918

 

1,139,849

 

 

177,918

 

1,139,849

 

1,317,767

 

71,222

 

2017

 

40

Gulfport, MS

 

 

671,824

 

1,176,505

 

 

671,824

 

1,176,505

 

1,848,329

 

75,964

 

2017

 

40

Jackson, MS

 

 

802,230

 

1,434,997

 

 

802,230

 

1,434,997

 

2,237,227

 

92,653

 

2017

 

40

McComb, MS

 

 

67,026

 

685,426

 

 

67,026

 

685,426

 

752,452

 

42,792

 

2017

 

40

Kansas City, MO

 

 

1,390,880

 

1,588,573

 

 

1,390,880

 

1,588,573

 

2,979,453

 

111,968

 

2017

 

40

Springfield, MO

 

 

616,344

 

2,448,360

 

13,285

 

616,344

 

2,461,645

 

3,077,989

 

122,999

 

2017

 

40

St. Charles, MO

 

 

736,242

 

2,122,426

 

176,600

 

736,242

 

2,299,026

 

3,035,268

 

153,531

 

2017

 

40

St. Peters, MO

 

 

1,364,670

 

 

 

1,364,670

 

 

1,364,670

 

 

2017

 

40

Boulder City, NV

 

 

566,639

 

993,399

 

 

566,639

 

993,399

 

1,560,038

 

62,011

 

2017

 

40

Egg Harbor, NJ

 

 

520,510

 

1,087,374

 

 

520,510

 

1,087,374

 

1,607,884

 

74,732

 

2017

 

40

Secaucus, NJ

 

 

19,915,781

 

17,306,541

 

55,649

 

19,915,781

 

17,362,190

 

37,277,971

 

867,746

 

2017

 

40

F-45

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Sewell, NJ

 

 

1,809,771

 

6,892,134

 

 

1,809,771

 

6,892,134

 

8,701,905

 

430,751

 

2017

 

40

Santa Fe, NM

 

 

1,072,340

 

4,013,237

 

 

1,072,340

 

4,013,237

 

5,085,577

 

300,983

 

2017

 

40

Statesville, NC

 

 

287,467

 

867,849

 

 

287,467

 

867,849

 

1,155,316

 

61,468

 

2017

 

40

Jacksonville, NC

 

 

308,321

 

875,652

 

31,340

 

308,321

 

906,992

 

1,215,313

 

56,562

 

2017

 

40

Minot, ND

 

 

928,796

 

1,619,726

 

 

928,796

 

1,619,726

 

2,548,522

 

104,543

 

2017

 

40

Grandview Heights, OH

 

 

1,276,870

 

8,557,690

 

650

 

1,276,870

 

8,558,340

 

9,835,210

 

552,557

 

2017

 

40

Hillard, OH

 

 

1,001,228

 

 

 

1,001,228

 

 

1,001,228

 

 

2017

 

Edmond, OK

 

 

1,063,243

 

3,816,155

 

 

1,063,243

 

3,816,155

 

4,879,398

 

206,708

 

2017

 

40

Oklahoma City, OK

 

 

868,648

 

1,820,174

 

7,835

 

868,648

 

1,828,009

 

2,696,657

 

106,480

 

2017

 

40

Erie, PA

 

 

425,267

 

1,284,883

 

 

425,267

 

1,284,883

 

1,710,150

 

74,818

 

2017

 

40

Pittsburgh, PA

 

 

692,454

 

2,509,358

 

 

692,454

 

2,509,358

 

3,201,812

 

156,658

 

2017

 

40

Gaffney, SC

 

 

200,845

 

878,455

 

 

200,845

 

878,455

 

1,079,300

 

54,877

 

2017

 

40

Sumter, SC

 

 

132,204

 

1,095,478

 

 

132,204

 

1,095,478

 

1,227,682

 

70,721

 

2017

 

40

Chattanooga, TN

 

 

2,089,237

 

3,595,808

 

195

 

2,089,237

 

3,596,003

 

5,685,240

 

187,289

 

2017

 

40

Etowah, TN

 

 

74,057

 

862,436

 

16,053

 

74,057

 

878,489

 

952,546

 

60,052

 

2017

 

40

Memphis, TN

 

 

1,661,764

 

3,874,356

 

(250)

 

1,661,764

 

3,874,106

 

5,535,870

 

274,367

 

2017

 

40

Alamo, TX

 

 

104,878

 

821,355

 

13,274

 

104,878

 

834,629

 

939,507

 

41,649

 

2017

 

40

Andrews, TX

 

 

172,373

 

817,252

 

(292)

 

172,373

 

816,960

 

989,333

 

56,171

 

2017

 

40

Arlington, TX

 

 

497,852

 

1,601,007

 

1,783

 

497,852

 

1,602,790

 

2,100,642

 

103,436

 

2017

 

40

Canyon Lake, TX

 

 

382,522

 

1,026,179

 

(281)

 

382,522

 

1,025,898

 

1,408,420

 

51,297

 

2017

 

40

Corpus Christi, TX

 

 

185,375

 

1,413,298

 

 

185,375

 

1,413,298

 

1,598,673

 

91,125

 

2017

 

40

Fort Stockton, TX

 

 

185,474

 

1,186,339

 

 

185,474

 

1,186,339

 

1,371,813

 

76,586

 

2017

 

Fort Worth, TX

 

 

1,016,587

 

4,622,507

 

 

1,016,587

 

4,622,507

 

5,639,094

 

259,945

 

2017

 

40

Lufkin, TX

 

 

1,497,171

 

4,948,906

 

3,078

 

1,497,171

 

4,951,984

 

6,449,155

 

340,486

 

2017

 

40

Heber, UT

 

 

367,013

 

1,204,635

 

 

367,013

 

1,204,635

 

1,571,648

 

84,465

 

2017

 

40

Newport News, VA

 

 

2,458,053

 

5,390,475

 

697,667

 

2,458,053

 

6,088,142

 

8,546,195

 

391,916

 

2017

 

40

Appleton, WI

 

 

417,249

 

1,525,582

 

275

 

417,249

 

1,525,857

 

1,943,106

 

95,226

 

2017

 

40

Onalaska, WI

 

 

821,084

 

2,651,772

 

 

821,084

 

2,651,772

 

3,472,856

 

171,201

 

2017

 

40

Athens, AL

 

 

253,858

 

1,204,570

 

 

253,858

 

1,204,570

 

1,458,428

 

30,114

 

2018

 

40

Birmingham, AL

 

 

1,635,912

 

2,739,834

 

 

1,635,912

 

2,739,834

 

4,375,746

 

119,841

 

2018

 

40

Boaz, AL

 

 

379,197

 

898,689

 

 

379,197

 

898,689

 

1,277,886

 

39,234

 

2018

 

40

Roanoke, AL

 

 

110,924

 

938,451

 

 

110,924

 

938,451

 

1,049,375

 

29,327

 

2018

 

40

Selma, AL

 

 

206,831

 

1,790,939

 

(24,494)

 

206,831

 

1,766,445

 

1,973,276

 

44,774

 

2018

 

40

Maricopa, AZ

 

 

2,166,955

 

9,505,724

 

5,700

 

2,166,955

 

9,511,424

 

11,678,379

 

257,539

 

2018

 

40

Parker, AZ

 

 

322,510

 

1,159,624

 

 

322,510

 

1,159,624

 

1,482,134

 

45,902

 

2018

 

40

St. Michaels, AZ

 

 

127,874

 

1,043,962

 

(1,440)

 

127,874

 

1,042,522

 

1,170,396

 

32,576

 

2018

 

40

Little Rock, AR

 

 

390,921

 

856,987

 

 

390,921

 

856,987

 

1,247,908

 

21,425

 

2018

 

40

F-46

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Grand Junction, CO

 

 

835,792

 

1,915,976

 

 

835,792

 

1,915,976

 

2,751,768

 

47,899

 

2018

 

40

Brookfield, CT

 

 

343,489

 

835,106

 

 

343,489

 

835,106

 

1,178,595

 

20,878

 

2018

 

40

Manchester, CT

 

 

316,847

 

558,659

 

 

316,847

 

558,659

 

875,506

 

13,966

 

2018

 

40

Waterbury, CT

 

 

663,667

 

607,457

 

 

663,667

 

607,457

 

1,271,124

 

15,186

 

2018

 

40

Apopka, FL

 

 

587,585

 

2,363,721

 

72,787

 

587,585

 

2,436,508

 

3,024,093

 

60,458

 

2018

 

40

Cape Coral, FL

 

 

554,721

 

1,009,404

 

 

554,721

 

1,009,404

 

1,564,125

 

25,235

 

2018

 

40

Crystal River, FL

 

 

369,723

 

1,015,324

 

 

369,723

 

1,015,324

 

1,385,047

 

48,640

 

2018

 

40

DeFuniak Springs, FL

 

 

226,898

 

835,016

 

7,130

 

226,898

 

842,146

 

1,069,044

 

24,488

 

2018

 

40

Eustis, FL

 

 

649,394

 

1,580,694

 

 

649,394

 

1,580,694

 

2,230,088

 

39,517

 

2018

 

40

Hollywood, FL

 

 

895,783

 

947,204

 

 

895,783

 

947,204

 

1,842,987

 

23,680

 

2018

 

40

Homestead, FL

 

 

650,821

 

948,265

 

 

650,821

 

948,265

 

1,599,086

 

23,707

 

2018

 

40

Jacksonville, FL

 

 

827,799

 

1,554,516

 

 

827,799

 

1,554,516

 

2,382,315

 

38,863

 

2018

 

40

Marianna, FL

 

 

257,760

 

886,801

 

 

257,760

 

886,801

 

1,144,561

 

22,170

 

2018

 

40

Melbourne, FL

 

 

497,607

 

1,549,974

 

 

497,607

 

1,549,974

 

2,047,581

 

38,749

 

2018

 

40

Merritt Island, FL

 

 

598,790

 

988,114

 

 

598,790

 

988,114

 

1,586,904

 

30,879

 

2018

 

40

St. Petersburg, FL

 

 

958,547

 

902,502

 

 

958,547

 

902,502

 

1,861,049

 

31,907

 

2018

 

40

Tampa, FL

 

 

488,002

 

1,209,902

 

 

488,002

 

1,209,902

 

1,697,904

 

42,851

 

2018

 

40

Tampa, FL

 

 

703,273

 

1,283,951

 

 

703,273

 

1,283,951

 

1,987,224

 

32,099

 

2018

 

40

Titusville, FL

 

 

137,421

 

1,017,394

 

12,059

 

137,421

 

1,029,453

 

1,166,874

 

25,661

 

2018

 

40

Winter Haven, FL

 

 

832,247

 

1,433,449

 

 

832,247

 

1,433,449

 

2,265,696

 

35,836

 

2018

 

40

Albany, GA

 

 

448,253

 

1,462,641

 

6,023

 

448,253

 

1,468,664

 

1,916,917

 

36,675

 

2018

 

40

Austell, GA

 

 

1,162,782

 

7,462,351

 

 

1,162,782

 

7,462,351

 

8,625,133

 

310,931

 

2018

 

40

Conyers, GA

 

 

330,549

 

941,133

 

 

330,549

 

941,133

 

1,271,682

 

23,528

 

2018

 

40

Covington, GA

 

 

744,321

 

1,235,171

 

(43,000)

 

744,321

 

1,192,171

 

1,936,492

 

33,453

 

2018

 

40

Doraville, GA

 

 

1,991,031

 

291,663

 

 

1,991,031

 

291,663

 

2,282,694

 

12,699

 

2018

 

40

Douglasville, GA

 

 

519,420

 

1,492,529

 

 

519,420

 

1,492,529

 

2,011,949

 

37,313

 

2018

 

40

Lilburn, GA

 

 

304,597

 

1,206,785

 

 

304,597

 

1,206,785

 

1,511,382

 

30,170

 

2018

 

40

Marietta, GA

 

 

1,257,433

 

1,563,755

 

 

1,257,433

 

1,563,755

 

2,821,188

 

71,607

 

2018

 

40

Marietta, GA

 

 

447,582

 

832,782

 

 

447,582

 

832,782

 

1,280,364

 

20,820

 

2018

 

40

Pooler, GA

 

 

989,819

 

1,220,271

 

734

 

989,819

 

1,221,005

 

2,210,824

 

45,769

 

2018

 

40

Riverdale, GA

 

 

474,072

 

879,835

 

 

474,072

 

879,835

 

1,353,907

 

21,996

 

2018

 

40

Savannah, GA

 

 

944,815

 

2,997,426

 

13,721

 

944,815

 

3,011,147

 

3,955,962

 

75,193

 

2018

 

40

Statesboro, GA

 

 

681,381

 

1,592,291

 

1,786

 

681,381

 

1,594,077

 

2,275,458

 

49,793

 

2018

 

40

Union City, GA

 

 

97,528

 

1,036,165

 

 

97,528

 

1,036,165

 

1,133,693

 

25,904

 

2018

 

40

Nampa, ID

 

 

496,676

 

5,163,257

 

37,265

 

496,676

 

5,200,522

 

5,697,198

 

183,473

 

2018

 

40

Aurora, IL

 

 

174,456

 

862,599

 

 

174,456

 

862,599

 

1,037,055

 

21,565

 

2018

 

40

Aurora, IL

 

 

623,568

 

1,437,665

 

(58,618)

 

623,568

 

1,379,047

 

2,002,615

 

51,114

 

2018

 

40

F-47

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Bloomington, IL

 

 

1,408,067

 

986,931

 

678

 

1,408,067

 

987,609

 

2,395,676

 

41,131

 

2018

 

40

Carlinville, IL

 

 

208,519

 

1,113,537

 

 

208,519

 

1,113,537

 

1,322,056

 

44,078

 

2018

 

40

Centralia, IL

 

 

277,527

 

351,547

 

 

277,527

 

351,547

 

629,074

 

8,789

 

2018

 

40

Chicago, IL

 

 

1,569,578

 

632,848

 

 

1,569,578

 

632,848

 

2,202,426

 

30,296

 

2018

 

40

Flora, IL

 

 

232,155

 

1,121,688

 

4,087

 

232,155

 

1,125,775

 

1,357,930

 

30,456

 

2018

 

40

Gurnee, IL

 

 

1,341,679

 

951,320

 

 

1,341,679

 

951,320

 

2,292,999

 

41,604

 

2018

 

40

Lake Zurich, IL

 

 

290,272

 

857,467

 

 

290,272

 

857,467

 

1,147,739

 

23,223

 

2018

 

40

Macomb, IL

 

 

85,753

 

661,375

 

 

85,753

 

661,375

 

747,128

 

16,534

 

2018

 

40

Morris, IL

 

 

331,622

 

1,842,994

 

3,880

 

331,622

 

1,846,874

 

2,178,496

 

57,666

 

2018

 

40

Newton, IL

 

 

510,192

 

1,069,075

 

2,500

 

510,192

 

1,071,575

 

1,581,767

 

35,683

 

2018

 

40

Northlake, IL

 

 

353,337

 

564,677

 

 

353,337

 

564,677

 

918,014

 

14,117

 

2018

 

40

Rockford, IL

 

 

270,180

 

708,041

 

 

270,180

 

708,041

 

978,221

 

33,919

 

2018

 

40

Greenwood, IN

 

 

1,586,786

 

1,232,818

 

 

1,586,786

 

1,232,818

 

2,819,604

 

48,799

 

2018

 

40

Hammond, IN

 

 

230,142

 

 

 

230,142

 

 

230,142

 

 

2018

 

Indianapolis, IN

 

 

132,291

 

311,647

 

 

132,291

 

311,647

 

443,938

 

7,791

 

2018

 

40

Mishawaka, IN

 

 

1,263,680

 

4,106,900

 

 

1,263,680

 

4,106,900

 

5,370,580

 

128,341

 

2018

 

40

South Bend, IN

 

 

420,571

 

2,772,376

 

 

420,571

 

2,772,376

 

3,192,947

 

132,796

 

2018

 

40

Warsaw, IN

 

 

583,174

 

1,118,270

 

 

583,174

 

1,118,270

 

1,701,444

 

53,565

 

2018

 

40

Ackley, IA

 

 

202,968

 

896,444

 

 

202,968

 

896,444

 

1,099,412

 

41,004

 

2018

 

40

Ottumwa, IA

 

 

227,562

 

5,794,123

 

 

227,562

 

5,794,123

 

6,021,685

 

277,613

 

2018

 

40

Riceville, IA

 

 

154,294

 

742,421

 

 

154,294

 

742,421

 

896,715

 

33,922

 

2018

 

40

Riverside, IA

 

 

579,935

 

1,594,085

 

 

579,935

 

1,594,085

 

2,174,020

 

59,778

 

2018

 

40

Urbandale, IA

 

 

68,172

 

2,938,611

 

 

68,172

 

2,938,611

 

3,006,783

 

141,778

 

2018

 

40

Overland Park, KS

 

 

1,053,287

 

6,141,649

 

219

 

1,053,287

 

6,141,868

 

7,195,155

 

191,929

 

2018

 

40

Ekron, KY

 

 

95,655

 

802,880

 

 

95,655

 

802,880

 

898,535

 

30,108

 

2018

 

40

Florence, KY

 

 

601,820

 

1,054,572

 

 

601,820

 

1,054,572

 

1,656,392

 

26,364

 

2018

 

40

Chalmette, LA

 

 

290,396

 

1,297,684

 

 

290,396

 

1,297,684

 

1,588,080

 

32,442

 

2018

 

40

Donaldsonville, LA

 

 

542,118

 

2,418,183

 

5,647

 

542,118

 

2,423,830

 

2,965,948

 

85,738

 

2018

 

40

Franklinton, LA

 

 

193,192

 

925,598

 

 

193,192

 

925,598

 

1,118,790

 

28,925

 

2018

 

40

Franklinton, LA

 

 

242,651

 

2,462,533

 

 

242,651

 

2,462,533

 

2,705,184

 

87,215

 

2018

 

40

Franklinton, LA

 

 

396,560

 

1,122,737

 

 

396,560

 

1,122,737

 

1,519,297

 

35,086

 

2018

 

40

Franklinton, LA

 

 

163,258

 

747,944

 

 

163,258

 

747,944

 

911,202

 

23,373

 

2018

 

40

Harvey, LA

 

 

728,822

 

1,468,688

 

 

728,822

 

1,468,688

 

2,197,510

 

64,184

 

2018

 

40

Jena, LA

 

 

772,878

 

2,392,129

 

 

772,878

 

2,392,129

 

3,165,007

 

84,721

 

2018

 

40

Jennings, LA

 

 

128,158

 

2,329,137

 

22,350

 

128,158

 

2,351,487

 

2,479,645

 

82,490

 

2018

 

40

New Orleans, LA

 

 

293,726

 

 

 

293,726

 

 

293,726

 

 

2018

 

Pine Grove, LA

 

 

238,223

 

758,573

 

 

238,223

 

758,573

 

996,796

 

23,705

 

2018

 

40

F-48

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Rayville, LA

 

 

310,034

 

2,365,203

 

 

310,034

 

2,365,203

 

2,675,237

 

83,768

 

2018

 

40

Roseland, LA

 

 

307,331

 

872,252

 

 

307,331

 

872,252

 

1,179,583

 

27,258

 

2018

 

40

Talisheek, LA

 

 

150,802

 

1,031,214

 

41,717

 

150,802

 

1,072,931

 

1,223,733

 

33,008

 

2018

 

40

Baltimore, MD

 

 

699,157

 

651,927

 

 

699,157

 

651,927

 

1,351,084

 

16,298

 

2018

 

40

Salisbury, MD

 

 

305,215

 

1,193,870

 

 

305,215

 

1,193,870

 

1,499,085

 

29,847

 

2018

 

40

Springfield, MA

 

 

153,428

 

826,741

 

 

153,428

 

826,741

 

980,169

 

20,669

 

2018

 

40

Ann Arbor, MI

 

 

735,859

 

2,489,707

 

 

735,859

 

2,489,707

 

3,225,566

 

119,252

 

2018

 

40

Belleville, MI

 

 

598,203

 

3,970,176

 

 

598,203

 

3,970,176

 

4,568,379

 

190,145

 

2018

 

40

Grand Blanc, MI

 

 

1,589,886

 

3,738,477

 

 

1,589,886

 

3,738,477

 

5,328,363

 

179,057

 

2018

 

40

Jackson, MI

 

 

1,451,971

 

2,548,436

 

 

1,451,971

 

2,548,436

 

4,000,407

 

122,054

 

2018

 

40

Kentwood, MI

 

 

939,481

 

3,438,259

 

 

939,481

 

3,438,259

 

4,377,740

 

164,686

 

2018

 

40

Lake Orion, MI

 

 

1,172,982

 

2,349,762

 

 

1,172,982

 

2,349,762

 

3,522,744

 

112,541

 

2018

 

40

Onaway, MI

 

 

17,557

 

935,308

 

 

17,557

 

935,308

 

952,865

 

37,023

 

2018

 

40

Champlin, MN

 

 

307,271

 

1,602,196

 

18,429

 

307,271

 

1,620,625

 

1,927,896

 

40,400

 

2018

 

40

North Branch, MN

 

 

533,175

 

 

205

 

533,380

 

 

533,380

 

 

2018

 

Richfield, MN

 

 

2,141,431

 

613,552

 

 

2,141,431

 

613,552

 

2,754,983

 

15,339

 

2018

 

40

Bay St. Louis, MS

 

 

547,498

 

2,080,989

 

 

547,498

 

2,080,989

 

2,628,487

 

73,702

 

2018

 

40

Corinth, MS

 

 

504,885

 

4,540,022

 

 

504,885

 

4,540,022

 

5,044,907

 

217,538

 

2018

 

40

Forest, MS

 

 

189,817

 

1,340,848

 

 

189,817

 

1,340,848

 

1,530,665

 

47,488

 

2018

 

40

Southaven, MS

 

 

150,931

 

826,123

 

 

150,931

 

826,123

 

977,054

 

20,653

 

2018

 

40

Waynesboro, MS

 

 

243,835

 

1,205,383

 

 

243,835

 

1,205,383

 

1,449,218

 

42,691

 

2018

 

40

Blue Springs, MO

 

 

431,698

 

1,704,870

 

 

431,698

 

1,704,870

 

2,136,568

 

63,930

 

2018

 

40

Florissant, MO

 

 

733,592

 

1,961,094

 

(14,149)

 

733,592

 

1,946,945

 

2,680,537

 

48,762

 

2018

 

40

Joplin, MO

 

 

789,880

 

384,638

 

 

789,880

 

384,638

 

1,174,518

 

18,420

 

2018

 

40

Liberty, MO

 

 

308,470

 

2,750,231

 

 

308,470

 

2,750,231

 

3,058,701

 

120,214

 

2018

 

40

Neosho, MO

 

 

687,812

 

1,115,054

 

 

687,812

 

1,115,054

 

1,802,866

 

41,815

 

2018

 

40

Springfield, MO

 

 

1,311,497

 

5,462,972

 

 

1,311,497

 

5,462,972

 

6,774,469

 

273,123

 

2018

 

40

St. Peters, MO

 

 

1,205,257

 

1,760,658

 

 

1,205,257

 

1,760,658

 

2,965,915

 

44,016

 

2018

 

40

Webb City, MO

 

 

1,324,146

 

1,501,744

 

 

1,324,146

 

1,501,744

 

2,825,890

 

71,948

 

2018

 

40

Nashua, NH

 

 

3,635,953

 

2,720,644

 

4,240

 

3,635,953

 

2,724,884

 

6,360,837

 

130,372

 

2018

 

40

Forked River, NJ

 

 

4,227,966

 

3,991,690

 

 

4,227,966

 

3,991,690

 

8,219,656

 

36,612

 

2018

 

40

Forked River, NJ

 

 

3,505,805

 

(2,766,838)

 

1,494

 

3,505,805

 

(2,765,344)

 

740,461

 

12,427

 

2018

 

40

Forked River, NJ

 

 

1,128,858

 

1,396,960

 

 

1,128,858

 

1,396,960

 

2,525,818

 

40,745

 

2018

 

40

Forked River, NJ

 

 

1,682,284

 

3,527,964

 

(255,364)

 

1,682,284

 

3,272,600

 

4,954,884

 

86,372

 

2018

 

40

Forked River, NJ

 

 

682,822

 

 

 

682,822

 

 

682,822

 

 

2018

 

Woodland Park, NJ

 

 

7,761,801

 

3,958,902

 

 

7,761,801

 

3,958,902

 

11,720,703

 

140,199

 

2018

 

40

Bernalillo, NM

 

 

899,770

 

2,037,465

 

(78,875)

 

820,895

 

2,037,465

 

2,858,360

 

98,910

 

2018

 

40

F-49

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Farmington, NM

 

 

4,428,998

 

 

 

4,428,998

 

 

4,428,998

 

 

2018

 

Canandaigue, NY

 

 

154,996

 

1,352,174

 

 

154,996

 

1,352,174

 

1,507,170

 

45,053

 

2018

 

40

Catskill, NY

 

 

80,524

 

1,097,609

 

 

80,524

 

1,097,609

 

1,178,133

 

36,567

 

2018

 

40

Clifton Park, NY

 

 

925,613

 

1,858,613

 

7,421

 

925,613

 

1,866,034

 

2,791,647

 

46,604

 

2018

 

40

Elmira, NY

 

 

43,388

 

947,627

 

 

43,388

 

947,627

 

991,015

 

23,691

 

2018

 

40

Geneseo, NY

 

 

264,795

 

1,328,115

 

 

264,795

 

1,328,115

 

1,592,910

 

44,270

 

2018

 

40

Greece, NY

 

 

182,916

 

1,254,678

 

 

182,916

 

1,254,678

 

1,437,594

 

41,803

 

2018

 

40

Hamburg, NY

 

 

520,599

 

2,039,602

 

 

520,599

 

2,039,602

 

2,560,201

 

50,990

 

2018

 

40

Latham, NY

 

 

373,318

 

764,382

 

 

373,318

 

764,382

 

1,137,700

 

19,110

 

2018

 

40

N. Syracuse, NY

 

 

165,417

 

452,510

 

 

165,417

 

452,510

 

617,927

 

11,313

 

2018

 

40

Niagara Falls, NY

 

 

392,301

 

1,022,745

 

 

392,301

 

1,022,745

 

1,415,046

 

25,569

 

2018

 

40

Rochester, NY

 

 

100,136

 

895,792

 

 

100,136

 

895,792

 

995,928

 

29,860

 

2018

 

40

Rochester, NY

 

 

575,463

 

772,555

 

 

575,463

 

772,555

 

1,348,018

 

19,314

 

2018

 

40

Rochester, NY

 

 

375,721

 

881,257

 

 

375,721

 

881,257

 

1,256,978

 

22,031

 

2018

 

40

Schenectady, NY

 

 

74,387

 

1,279,967

 

8,383

 

74,387

 

1,288,350

 

1,362,737

 

42,803

 

2018

 

40

Schenectady, NY

 

 

453,006

 

726,404

 

 

453,006

 

726,404

 

1,179,410

 

18,160

 

2018

 

40

Syracuse, NY

 

 

339,207

 

918,302

 

 

339,207

 

918,302

 

1,257,509

 

22,958

 

2018

 

40

Syracuse, NY

 

 

607,053

 

259,331

 

 

607,053

 

259,331

 

866,384

 

6,483

 

2018

 

40

Tonawanda, NY

 

 

94,443

 

727,373

 

 

94,443

 

727,373

 

821,816

 

24,226

 

2018

 

40

Tonawanda, NY

 

 

131,021

 

576,915

 

 

131,021

 

576,915

 

707,936

 

14,423

 

2018

 

40

W. Seneca, NY

 

 

98,194

 

737,592

 

 

98,194

 

737,592

 

835,786

 

18,440

 

2018

 

40

Williamsville, NY

 

 

705,842

 

488,800

 

 

705,842

 

488,800

 

1,194,642

 

12,220

 

2018

 

40

Charlotte, NC

 

 

287,732

 

518,005

 

 

287,732

 

518,005

 

805,737

 

12,950

 

2018

 

40

Concord, NC

 

 

526,102

 

1,955,989

 

8,699

 

526,102

 

1,964,688

 

2,490,790

 

53,138

 

2018

 

40

Durham, NC

 

 

1,787,380

 

848,986

 

 

1,787,380

 

848,986

 

2,636,366

 

21,225

 

2018

 

40

Fayetteville, NC

 

 

108,898

 

1,769,274

 

 

108,898

 

1,769,274

 

1,878,172

 

44,232

 

2018

 

40

Greensboro, NC

 

 

402,957

 

1,351,015

 

 

402,957

 

1,351,015

 

1,753,972

 

33,775

 

2018

 

40

Greenville, NC

 

 

541,233

 

1,403,441

 

 

541,233

 

1,403,441

 

1,944,674

 

35,086

 

2018

 

40

High Point, NC

 

 

252,336

 

1,024,696

 

 

252,336

 

1,024,696

 

1,277,032

 

25,617

 

2018

 

40

Kernersville, NC

 

 

270,581

 

966,807

 

 

270,581

 

966,807

 

1,237,388

 

24,170

 

2018

 

40

Pineville, NC

 

 

1,390,592

 

6,390,201

 

 

1,390,592

 

6,390,201

 

7,780,793

 

212,984

 

2018

 

40

Rockingham, NC

 

 

245,976

 

955,579

 

 

245,976

 

955,579

 

1,201,555

 

35,834

 

2018

 

40

Salisbury, NC

 

 

572,085

 

700,288

 

 

572,085

 

700,288

 

1,272,373

 

17,507

 

2018

 

40

Zebulon, NC

 

 

160,107

 

1,077

 

36

 

160,107

 

1,113

 

161,220

 

38

 

2018

 

40

Akron, OH

 

 

445,299

 

 

 

445,299

 

 

445,299

 

 

2018

 

Bellevue, OH

 

 

272,308

 

1,127,365

 

 

272,308

 

1,127,365

 

1,399,673

 

44,625

 

2018

 

40

Canton, OH

 

 

981,941

 

1,076,113

 

 

981,941

 

1,076,113

 

2,058,054

 

26,903

 

2018

 

40

F-50

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Columbus, OH

 

 

542,161

 

1,088,316

 

 

542,161

 

1,088,316

 

1,630,477

 

27,208

 

2018

 

40

Fairview Park, OH

 

 

338,732

 

400,013

 

 

338,732

 

400,013

 

738,745

 

10,000

 

2018

 

40

Franklin, OH

 

 

5,405,718

 

 

 

5,405,718

 

 

5,405,718

 

 

2018

 

Middletown, OH

 

 

311,389

 

1,451,469

 

 

311,389

 

1,451,469

 

1,762,858

 

57,437

 

2018

 

40

Niles, OH

 

 

334,783

 

798,136

 

 

334,783

 

798,136

 

1,132,919

 

19,953

 

2018

 

40

North Olmsted, OH

 

 

544,903

 

810,840

 

 

544,903

 

810,840

 

1,355,743

 

35,436

 

2018

 

40

North Ridgeville, OH

 

 

521,909

 

1,475,305

 

(37,428)

 

521,909

 

1,437,877

 

1,959,786

 

63,735

 

2018

 

40

Warren, OH

 

 

208,710

 

601,092

 

 

208,710

 

601,092

 

809,802

 

15,027

 

2018

 

40

Warrensville Heights, OH

 

 

735,534

 

 

627

 

736,161

 

 

736,161

 

 

2018

 

Youngstown, OH

 

 

323,983

 

989,430

 

 

323,983

 

989,430

 

1,313,413

 

24,736

 

2018

 

40

Broken Arrow, OK

 

 

919,176

 

1,276,754

 

1,778

 

919,176

 

1,278,532

 

2,197,708

 

47,900

 

2018

 

40

Chickasha, OK

 

 

230,000

 

2,881,525

 

 

230,000

 

2,881,525

 

3,111,525

 

96,051

 

2018

 

40

Coweta, OK

 

 

282,468

 

803,762

 

 

282,468

 

803,762

 

1,086,230

 

30,141

 

2018

 

40

Midwest City, OK

 

 

755,192

 

5,687,280

 

(21,199)

 

755,192

 

5,666,081

 

6,421,273

 

177,728

 

2018

 

40

Oklahoma City, OK

 

 

1,104,085

 

1,874,359

 

507

 

1,104,085

 

1,874,866

 

2,978,951

 

50,773

 

2018

 

40

Shawnee, OK

 

 

409,190

 

957,557

 

 

409,190

 

957,557

 

1,366,747

 

23,939

 

2018

 

40

Wright City, OK

 

 

38,302

 

1,010,645

 

(1,300)

 

38,302

 

1,009,345

 

1,047,647

 

31,539

 

2018

 

40

Hillsboro, OR

 

 

4,632,369

 

7,656,179

 

 

4,632,369

 

7,656,179

 

12,288,548

 

319,007

 

2018

 

40

Carlisle, PA

 

 

340,349

 

643,498

 

 

340,349

 

643,498

 

983,847

 

16,087

 

2018

 

40

Erie, PA

 

 

58,279

 

833,933

 

 

58,279

 

833,933

 

892,212

 

20,848

 

2018

 

40

Johnstown, PA

 

 

1,030,667

 

 

8,829

 

1,030,667

 

8,829

 

1,039,496

 

166

 

2018

 

40

King of Prussia, PA

 

 

5,097,320

 

 

1,202

 

5,098,522

 

 

5,098,522

 

 

2018

 

Philadelphia, PA

 

 

155,212

 

218,083

 

 

155,212

 

218,083

 

373,295

 

5,452

 

2018

 

40

Philadelphia, PA

 

 

127,690

 

122,516

 

 

127,690

 

122,516

 

250,206

 

3,063

 

2018

 

40

Pittsburgh, PA

 

 

927,083

 

5,126,243

 

 

927,083

 

5,126,243

 

6,053,326

 

149,515

 

2018

 

40

Pittsburgh, PA

 

 

1,397,965

 

 

3,850

 

1,401,815

 

 

1,401,815

 

 

2018

 

Upper Darby, PA

 

 

861,339

 

85,966

 

 

861,339

 

85,966

 

947,305

 

2,149

 

2018

 

40

Wysox, PA

 

 

1,668,272

 

1,699,343

 

 

1,668,272

 

1,699,343

 

3,367,615

 

53,104

 

2018

 

40

Richmond, RI

 

 

1,293,932

 

7,477,281

 

254,992

 

1,293,932

 

7,732,273

 

9,026,205

 

322,553

 

2018

 

40

Warwick, RI

 

 

687,454

 

2,108,256

 

 

687,454

 

2,108,256

 

2,795,710

 

52,706

 

2018

 

40

Greenville, SC

 

 

628,081

 

1,451,481

 

 

628,081

 

1,451,481

 

2,079,562

 

36,287

 

2018

 

40

Lake City, SC

 

 

57,911

 

932,874

 

869

 

57,911

 

933,743

 

991,654

 

25,282

 

2018

 

40

Manning, SC

 

 

245,546

 

989,236

 

146

 

245,546

 

989,382

 

1,234,928

 

32,961

 

2018

 

40

Mt. Pleasant, SC

 

 

555,387

 

1,042,804

 

 

555,387

 

1,042,804

 

1,598,191

 

26,070

 

2018

 

40

Myrtle Beach, SC

 

 

254,334

 

149,107

 

 

254,334

 

149,107

 

403,441

 

3,728

 

2018

 

40

Spartanburg, SC

 

 

709,338

 

1,618,382

 

 

709,338

 

1,618,382

 

2,327,720

 

40,460

 

2018

 

40

Sumter, SC

 

 

521,299

 

809,466

 

 

521,299

 

809,466

 

1,330,765

 

20,237

 

2018

 

40

F-51

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Walterboro, SC

 

 

207,130

 

827,775

 

 

207,130

 

827,775

 

1,034,905

 

31,039

 

2018

 

40

Chattanooga, TN

 

 

1,179,566

 

1,236,591

 

 

1,179,566

 

1,236,591

 

2,416,157

 

30,915

 

2018

 

40

Johnson City, TN

 

 

181,117

 

1,232,151

 

 

181,117

 

1,232,151

 

1,413,268

 

30,804

 

2018

 

40

Beaumont, TX

 

 

936,389

 

2,725,502

 

21,662

 

936,389

 

2,747,164

 

3,683,553

 

68,544

 

2018

 

40

Donna, TX

 

 

962,302

 

1,620,925

 

 

962,302

 

1,620,925

 

2,583,227

 

53,997

 

2018

 

40

Fairfield, TX

 

 

125,098

 

970,816

 

 

125,098

 

970,816

 

1,095,914

 

28,315

 

2018

 

40

Groves, TX

 

 

596,586

 

2,250,794

 

 

596,586

 

2,250,794

 

2,847,380

 

56,270

 

2018

 

40

Humble, TX

 

 

173,885

 

867,347

 

 

173,885

 

867,347

 

1,041,232

 

21,684

 

2018

 

40

Jacksboro, TX

 

 

119,147

 

1,036,482

 

 

119,147

 

1,036,482

 

1,155,629

 

30,231

 

2018

 

40

Kemah, TX

 

 

2,324,774

 

2,835,597

 

(45,000)

 

2,324,774

 

2,790,597

 

5,115,371

 

88,612

 

2018

 

40

Lamesa, TX

 

 

66,019

 

1,493,146

 

 

66,019

 

1,493,146

 

1,559,165

 

62,209

 

2018

 

40

Live Oak, TX

 

 

371,174

 

1,880,746

 

 

371,174

 

1,880,746

 

2,251,920

 

70,526

 

2018

 

40

Lufkin, TX

 

 

382,643

 

1,054,911

 

 

382,643

 

1,054,911

 

1,437,554

 

26,373

 

2018

 

40

Plano, TX

 

 

452,721

 

822,683

 

 

452,721

 

822,683

 

1,275,404

 

20,567

 

2018

 

40

Port Arthur, TX

 

 

512,094

 

721,936

 

 

512,094

 

721,936

 

1,234,030

 

18,048

 

2018

 

40

Porter, TX

 

 

524,532

 

1,683,767

 

566

 

524,532

 

1,684,333

 

2,208,865

 

52,627

 

2018

 

40

Tomball, TX

 

 

1,336,029

 

1,849,554

 

 

1,336,029

 

1,849,554

 

3,185,583

 

69,354

 

2018

 

40

Universal City, TX

 

 

380,788

 

1,496,318

 

 

380,788

 

1,496,318

 

1,877,106

 

37,408

 

2018

 

40

Waxahachie, TX

 

 

388,138

 

792,125

 

 

388,138

 

792,125

 

1,180,263

 

19,803

 

2018

 

40

Willis, TX

 

 

406,466

 

925,047

 

7,287

 

406,466

 

932,334

 

1,338,800

 

29,040

 

2018

 

40

Logan, UT

 

 

914,515

 

2,774,985

 

 

914,515

 

2,774,985

 

3,689,500

 

92,499

 

2018

 

40

Christiansburg, VA

 

 

520,538

 

661,780

 

 

520,538

 

661,780

 

1,182,318

 

16,545

 

2018

 

40

Fredericksburg, VA

 

 

452,911

 

1,076,589

 

 

452,911

 

1,076,589

 

1,529,500

 

26,915

 

2018

 

40

Glen Allen, VA

 

 

1,112,948

 

837,542

 

 

1,112,948

 

837,542

 

1,950,490

 

36,546

 

2018

 

40

Hampton, VA

 

 

353,242

 

514,898

 

 

353,242

 

514,898

 

868,140

 

12,872

 

2018

 

40

Louisa, VA

 

 

538,246

 

2,179,541

 

 

538,246

 

2,179,541

 

2,717,787

 

68,574

 

2018

 

40

Manassas, VA

 

 

1,454,278

 

 

 

1,454,278

 

 

1,454,278

 

 

2018

 

Virginia Beach, VA

 

 

2,142,002

 

1,154,585

 

 

2,142,002

 

1,154,585

 

3,296,587

 

28,865

 

2018

 

40

Virginia Beach, VA

 

 

271,176

 

3,308,434

 

 

271,176

 

3,308,434

 

3,579,610

 

82,711

 

2018

 

40

Everett, WA

 

 

414,899

 

811,710

 

 

414,899

 

811,710

 

1,226,609

 

20,293

 

2018

 

40

Bluefield, WV

 

 

287,740

 

947,287

 

 

287,740

 

947,287

 

1,235,027

 

45,390

 

2018

 

40

Green Bay, WI

 

 

817,143

 

1,383,440

 

 

817,143

 

1,383,440

 

2,200,583

 

34,586

 

2018

 

40

La Crosse, WI

 

 

175,551

 

1,145,438

 

 

175,551

 

1,145,438

 

1,320,989

 

28,636

 

2018

 

40

Madison, WI

 

 

2,475,815

 

4,249,537

 

(30,000)

 

2,475,815

 

4,219,537

 

6,695,352

 

131,797

 

2018

 

40

Mt. Pleasant, WI

 

 

208,806

 

1,173,275

 

 

208,806

 

1,173,275

 

1,382,081

 

29,332

 

2018

 

40

Schofield, WI

 

 

533,503

 

1,071,930

 

 

533,503

 

1,071,930

 

1,605,433

 

26,798

 

2018

 

40

Sheboygan, WI

 

 

331,692

 

929,092

 

 

331,692

 

929,092

 

1,260,784

 

23,227

 

2018

 

40

F-52

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Athens, AL

 

 

338,789

 

1,119,459

 

 

338,789

 

1,119,459

 

1,458,248

 

11,661

 

2019

 

40

Attala, AL

 

 

289,473

 

928,717

 

 

289,473

 

928,717

 

1,218,190

 

9,674

 

2019

 

40

Birmingham, AL

 

 

1,400,530

 

859,880

 

 

1,400,530

 

859,880

 

2,260,410

 

3,583

 

2019

 

40

Blountsville, AL

 

 

262,412

 

816,070

 

 

262,412

 

816,070

 

1,078,482

 

8,501

 

2019

 

40

Coffeeville, AL

 

 

129,263

 

864,122

 

 

129,263

 

864,122

 

993,385

 

9,001

 

2019

 

40

Phenix, AL

 

 

292,234

 

1,280,705

 

 

292,234

 

1,280,705

 

1,572,939

 

26,681

 

2019

 

40

Silas, AL

 

 

383,742

 

1,351,195

 

 

383,742

 

1,351,195

 

1,734,937

 

14,065

 

2019

 

40

Tuba City, AZ

 

 

138,006

 

1,253,376

 

 

138,006

 

1,253,376

 

1,391,382

 

7,749

 

2019

 

40

Searcy, AR

 

 

851,561

 

5,582,069

 

 

851,561

 

5,582,069

 

6,433,630

 

115,813

 

2019

 

40

Sheridan, AR

 

 

124,667

 

1,070,754

 

 

124,667

 

1,070,754

 

1,195,421

 

11,020

 

2019

 

40

Trumann, AR

 

 

170,957

 

1,064,039

 

 

170,957

 

1,064,039

 

1,234,996

 

10,950

 

2019

 

40

Visalia, CA

 

 

2,552,353

 

6,994,518

 

 

2,552,353

 

6,994,518

 

9,546,871

 

102,003

 

2019

 

40

Lakewood, CO

 

 

3,021,260

 

6,125,185

 

 

3,021,260

 

6,125,185

 

9,146,445

 

 

2019

 

40

Rifle, CO

 

 

4,427,019

 

1,599,591

 

 

4,427,019

 

1,599,591

 

6,026,610

 

23,219

 

2019

 

40

Danbury, CT

 

 

1,095,933

 

 

 

1,095,933

 

 

1,095,933

 

 

2019

 

Greenwich, CT

 

 

16,350,193

 

3,076,568

 

 

16,350,193

 

3,076,568

 

19,426,761

 

30,593

 

2019

 

40

Orange, CT

 

 

6,881,022

 

10,519,218

 

 

6,881,022

 

10,519,218

 

17,400,240

 

65,223

 

2019

 

40

Torrington, CT

 

 

195,171

 

1,541,214

 

 

195,171

 

1,541,214

 

1,736,385

 

3,211

 

2019

 

40

Bear, DE

 

 

743,604

 

 

 

743,604

 

 

743,604

 

 

2019

 

Wilmington, DE

 

 

2,501,623

 

2,784,576

 

 

2,501,623

 

2,784,576

 

5,286,199

 

52,046

 

2019

 

40

Apopka, FL

 

 

646,629

 

1,215,458

 

 

646,629

 

1,215,458

 

1,862,087

 

30,386

 

2019

 

40

Clearwater, FL

 

 

497,216

 

1,027,192

 

 

497,216

 

1,027,192

 

1,524,408

 

19,093

 

2019

 

40

Cocoa, FL

 

 

2,174,730

 

 

 

2,174,730

 

 

2,174,730

 

 

2019

 

Lake Placid, FL

 

 

255,339

 

1,059,913

 

 

255,339

 

1,059,913

 

1,315,252

 

4,416

 

2019

 

40

Merritt Island, FL

 

 

746,846

 

1,805,756

 

 

746,846

 

1,805,756

 

2,552,602

 

15,048

 

2019

 

40

Orlando, FL

 

 

751,265

 

2,089,523

 

 

751,265

 

2,089,523

 

2,840,788

 

37,764

 

2019

 

40

Poinciana, FL

 

 

608,450

 

1,073,714

 

 

608,450

 

1,073,714

 

1,682,164

 

4,474

 

2019

 

40

Sanford, FL

 

 

2,791,684

 

4,763,063

 

 

2,791,684

 

4,763,063

 

7,554,747

 

39,685

 

2019

 

40

Tavares, FL

 

 

736,113

 

1,849,694

 

 

736,113

 

1,849,694

 

2,585,807

 

34,687

 

2019

 

40

Wauchula, FL

 

 

333,236

 

1,156,806

 

 

333,236

 

1,156,806

 

1,490,042

 

28,920

 

2019

 

40

West Palm Beach, FL

 

 

2,484,935

 

2,344,077

 

 

2,484,935

 

2,344,077

 

4,829,012

 

19,462

 

2019

 

40

Brunswick, GA

 

 

186,767

 

1,615,510

 

 

186,767

 

1,615,510

 

1,802,277

 

30,106

 

2019

 

40

Columbus, GA

 

 

336,125

 

2,497,365

 

 

336,125

 

2,497,365

 

2,833,490

 

10,406

 

2019

 

40

Conyers, GA

 

 

714,666

 

2,137,506

 

 

714,666

 

2,137,506

 

2,852,172

 

26,604

 

2019

 

40

Dacula, GA

 

 

1,280,484

 

1,716,312

 

 

1,280,484

 

1,716,312

 

2,996,796

 

35,697

 

2019

 

40

Marietta, GA

 

 

390,416

 

1,441,936

 

 

390,416

 

1,441,936

 

1,832,352

 

26,859

 

2019

 

40

Tucker, GA

 

 

374,268

 

1,652,522

 

 

374,268

 

1,652,522

 

2,026,790

 

34,368

 

2019

 

40

F-53

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Chubbuck, ID

 

 

1,067,983

 

5,880,828

 

 

1,067,983

 

5,880,828

 

6,948,811

 

134,767

 

2019

 

40

Chubbuck, ID

 

 

185,310

 

 

 

185,310

 

 

185,310

 

 

2019

 

Chubbuck, ID

 

 

873,334

 

1,653,886

 

 

873,334

 

1,653,886

 

2,527,220

 

37,902

 

2019

 

40

Edwardsville, IL

 

 

449,741

 

1,202,041

 

 

449,741

 

1,202,041

 

1,651,782

 

22,410

 

2019

 

40

Elk Grove Village, IL

 

 

394,567

 

1,395,659

 

 

394,567

 

1,395,659

 

1,790,226

 

11,625

 

2019

 

40

Evergreen Park, IL

 

 

5,687,045

 

18,880,969

 

 

5,687,045

 

18,880,969

 

24,568,014

 

157,070

 

2019

 

40

Freeport, IL

 

 

92,295

 

1,537,120

 

 

92,295

 

1,537,120

 

1,629,415

 

9,540

 

2019

 

40

Geneva, IL

 

 

644,434

 

1,213,859

 

 

644,434

 

1,213,859

 

1,858,293

 

20,231

 

2019

 

40

Greenville, IL

 

 

135,642

 

1,026,006

 

 

135,642

 

1,026,006

 

1,161,648

 

2,138

 

2019

 

40

Murphysboro, IL

 

 

176,281

 

988,808

 

 

176,281

 

988,808

 

1,165,089

 

12,217

 

2019

 

40

Rockford, IL

 

 

814,666

 

1,719,410

 

 

814,666

 

1,719,410

 

2,534,076

 

10,679

 

2019

 

40

Round Lake, IL

 

 

325,722

 

2,669,132

 

 

325,722

 

2,669,132

 

2,994,854

 

1,743

 

2019

 

40

Fishers, IN

 

 

429,857

 

621,742

 

 

429,857

 

621,742

 

1,051,599

 

12,932

 

2019

 

40

Gas City, IN

 

 

504,378

 

1,341,890

 

 

504,378

 

1,341,890

 

1,846,268

 

30,752

 

2019

 

40

Hammond, IN

 

 

149,230

 

1,002,706

 

 

149,230

 

1,002,706

 

1,151,936

 

10,445

 

2019

 

40

Kokomo, IN

 

 

716,631

 

1,143,537

 

 

716,631

 

1,143,537

 

1,860,168

 

21,333

 

2019

 

40

Marion, IN

 

 

140,507

 

898,097

 

 

140,507

 

898,097

 

1,038,604

 

 

2019

 

40

Westfield, IN

 

 

594,597

 

1,260,563

 

 

594,597

 

1,260,563

 

1,855,160

 

26,262

 

2019

 

40

Waterloo, IA

 

 

369,497

 

1,265,450

 

 

369,497

 

1,265,450

 

1,634,947

 

10,473

 

2019

 

40

Concordia, KS

 

 

150,440

 

1,144,639

 

 

150,440

 

1,144,639

 

1,295,079

 

 

2019

 

40

Parsons, KS

 

 

203,953

 

1,073,554

 

 

203,953

 

1,073,554

 

1,277,507

 

22,245

 

2019

 

40

Pratt, KS

 

 

245,375

 

1,293,871

 

 

245,375

 

1,293,871

 

1,539,246

 

10,782

 

2019

 

40

Wellington, KS

 

 

95,197

 

1,090,333

 

 

95,197

 

1,090,333

 

1,185,530

 

6,748

 

2019

 

40

Wichita, KS

 

 

1,257,608

 

5,700,299

 

 

1,257,608

 

5,700,299

 

6,957,907

 

94,888

 

2019

 

40

Crestwood, KY

 

 

670,021

 

1,096,031

 

 

670,021

 

1,096,031

 

1,766,052

 

 

2019

 

40

Georgetown, KY

 

 

257,839

 

3,025,734

 

 

257,839

 

3,025,734

 

3,283,573

 

18,089

 

2019

 

40

Grayson, KY

 

 

241,857

 

1,155,603

 

 

241,857

 

1,155,603

 

1,397,460

 

9,630

 

2019

 

40

Henderson, KY

 

 

146,676

 

958,794

 

 

146,676

 

958,794

 

1,105,470

 

1,998

 

2019

 

40

Leitchfield, KY

 

 

303,830

 

1,062,711

 

 

303,830

 

1,062,711

 

1,366,541

 

 

2019

 

40

Kentwood, LA

 

 

327,392

 

638,214

 

 

327,392

 

638,214

 

965,606

 

14,626

 

2019

 

40

Lake Charles, LA

 

 

565,778

 

890,034

 

 

565,778

 

890,034

 

1,455,812

 

16,598

 

2019

 

40

Bowie, MD

 

 

2,840,009

 

4,474,364

 

 

2,840,009

 

4,474,364

 

7,314,373

 

55,819

 

2019

 

40

Eldersburg, MD

 

 

563,227

 

1,855,987

 

 

563,227

 

1,855,987

 

2,419,214

 

11,503

 

2019

 

40

Brockton, MA

 

 

3,254,807

 

8,504,236

 

 

3,254,807

 

8,504,236

 

11,759,043

 

 

2019

 

40

Ipswich, MA

 

 

467,109

 

967,282

 

 

467,109

 

967,282

 

1,434,391

 

11,996

 

2019

 

40

Ipswich, MA

 

 

2,606,990

 

3,414,474

 

 

2,606,990

 

3,414,474

 

6,021,464

 

42,669

 

2019

 

40

Adrian, MI

 

 

459,814

 

1,562,895

 

 

459,814

 

1,562,895

 

2,022,709

 

26,048

 

2019

 

40

F-54

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Allegan, MI

 

 

184,466

 

1,239,762

 

 

184,466

 

1,239,762

 

1,424,228

 

15,497

 

2019

 

40

Bloomfield Hills, MI

 

 

1,160,912

 

4,181,635

 

 

1,160,912

 

4,181,635

 

5,342,547

 

26,135

 

2019

 

40

Caro, MI

 

 

183,318

 

1,328,630

 

 

183,318

 

1,328,630

 

1,511,948

 

8,257

 

2019

 

40

Clare, MI

 

 

153,379

 

1,412,383

 

 

153,379

 

1,412,383

 

1,565,762

 

2,942

 

2019

 

40

Cooks, MI

 

 

304,340

 

1,109,838

 

 

304,340

 

1,109,838

 

1,414,178

 

 

2019

 

40

Crystal Falls, MI

 

 

62,462

 

757,276

 

 

62,462

 

757,276

 

819,738

 

7,888

 

2019

 

40

Harrison, MI

 

 

59,984

 

900,901

 

 

59,984

 

900,901

 

960,885

 

 

2019

 

40

Jackson, MI

 

 

524,446

 

1,265,119

 

 

524,446

 

1,265,119

 

1,789,565

 

5,271

 

2019

 

40

Monroe, MI

 

 

501,688

 

2,651,440

 

 

501,688

 

2,651,440

 

3,153,128

 

49,516

 

2019

 

40

Plymouth, MI

 

 

580,459

 

1,043,474

 

 

580,459

 

1,043,474

 

1,623,933

 

19,565

 

2019

 

40

Spalding, MI

 

 

86,973

 

842,434

 

 

86,973

 

842,434

 

929,407

 

8,775

 

2019

 

40

Walker, MI

 

 

4,821,073

 

15,814,475

 

 

4,821,073

 

15,814,475

 

20,635,548

 

65,894

 

2019

 

40

Lakeville, MN

 

 

1,774,051

 

6,386,118

 

 

1,774,051

 

6,386,118

 

8,160,169

 

79,707

 

2019

 

40

Longville, MN

 

 

30,748

 

836,277

 

 

30,748

 

836,277

 

867,025

 

8,711

 

2019

 

40

Waite Park, MN

 

 

142,863

 

1,064,736

 

 

142,863

 

1,064,736

 

1,207,599

 

19,677

 

2019

 

40

Bolton, MS

 

 

172,890

 

831,005

 

 

172,890

 

831,005

 

1,003,895

 

8,656

 

2019

 

40

Bruce, MS

 

 

189,929

 

896,080

 

 

189,929

 

896,080

 

1,086,009

 

16,741

 

2019

 

40

Columbus, MS

 

 

123,385

 

898,226

 

 

123,385

 

898,226

 

1,021,611

 

16,782

 

2019

 

40

Flowood, MS

 

 

638,891

 

1,308,566

 

 

638,891

 

1,308,566

 

1,947,457

 

8,122

 

2019

 

40

Houston, MS

 

 

170,449

 

913,763

 

 

170,449

 

913,763

 

1,084,212

 

17,073

 

2019

 

40

Jackson, MS

 

 

393,954

 

1,169,374

 

 

393,954

 

1,169,374

 

1,563,328

 

7,255

 

2019

 

40

Michigan City (Lamar), MS

 

 

336,323

 

963,447

 

 

336,323

 

963,447

 

1,299,770

 

18,005

 

2019

 

40

Pontotoc, MS

 

 

174,112

 

924,043

 

 

174,112

 

924,043

 

1,098,155

 

13,476

 

2019

 

40

Tutwiler, MS

 

 

152,108

 

844,300

 

 

152,108

 

844,300

 

996,408

 

8,795

 

2019

 

40

Fair Play, MO

 

 

56,563

 

642,856

 

 

56,563

 

642,856

 

699,419

 

6,696

 

2019

 

40

Florissant, MO

 

 

1,394,072

 

2,210,514

 

 

1,394,072

 

2,210,514

 

3,604,586

 

41,384

 

2019

 

40

Florissant, MO

 

 

1,647,163

 

2,256,716

 

 

1,647,163

 

2,256,716

 

3,903,879

 

37,612

 

2019

 

40

Grovespring, MO

 

 

207,974

 

823,419

 

 

207,974

 

823,419

 

1,031,393

 

8,577

 

2019

 

40

Hermitage, MO

 

 

98,531

 

833,177

 

 

98,531

 

833,177

 

931,708

 

8,679

 

2019

 

40

Madison, MO

 

 

199,972

 

844,901

 

 

199,972

 

844,901

 

1,044,873

 

8,801

 

2019

 

40

Oak Grove, MO

 

 

275,293

 

1,000,150

 

 

275,293

 

1,000,150

 

1,275,443

 

12,502

 

2019

 

40

Salem, MO

 

 

153,713

 

1,085,494

 

 

153,713

 

1,085,494

 

1,239,207

 

6,718

 

2019

 

40

South Fork, MO

 

 

345,053

 

1,087,384

 

 

345,053

 

1,087,384

 

1,432,437

 

11,327

 

2019

 

40

St. Louis, MO

 

 

743,673

 

3,387,981

 

 

743,673

 

3,387,981

 

4,131,654

 

7,058

 

2019

 

40

Manchester, HN

 

 

1,486,550

 

2,419,269

 

 

1,486,550

 

2,419,269

 

3,905,819

 

10,080

 

2019

 

40

Nashua, NH

 

 

808,886

 

2,020,221

 

 

808,886

 

2,020,221

 

2,829,107

 

8,418

 

2019

 

40

Lanoka Harbor, NJ

 

 

1,355,335

 

1,052,415

 

 

1,355,335

 

1,052,415

 

2,407,750

 

6,451

 

2019

 

40

F-55

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Paramus, NJ

 

 

 

6,224,221

 

 

 

6,224,221

 

6,224,221

 

116,353

 

2019

 

40

San Ysidro, NM

 

 

316,770

 

956,983

 

 

316,770

 

956,983

 

1,273,753

 

9,969

 

2019

 

40

Hinsdale, NY

 

 

353,602

 

905,350

 

 

353,602

 

905,350

 

1,258,952

 

9,431

 

2019

 

40

Liverpool, NY

 

 

1,697,114

 

3,355,641

 

 

1,697,114

 

3,355,641

 

5,052,755

 

 

2019

 

40

Malone, NY

 

 

413,667

 

1,035,771

 

 

413,667

 

1,035,771

 

1,449,438

 

19,244

 

2019

 

40

Vestal, NY

 

 

3,540,906

 

5,610,529

 

 

3,540,906

 

5,610,529

 

9,151,435

 

34,748

 

2019

 

40

Columbus, NC

 

 

423,026

 

1,070,992

 

 

423,026

 

1,070,992

 

1,494,018

 

6,620

 

2019

 

40

Fayetteville, NC

 

 

505,574

 

1,544,177

 

 

505,574

 

1,544,177

 

2,049,751

 

6,434

 

2019

 

40

Hope Mills, NC

 

 

1,522,142

 

7,906,676

 

 

1,522,142

 

7,906,676

 

9,428,818

 

65,764

 

2019

 

40

Stallings (Matthews), NC

 

 

1,481,940

 

 

 

1,481,940

 

 

1,481,940

 

 

2019

 

Sylva, NC

 

 

450,055

 

1,351,631

 

 

450,055

 

1,351,631

 

1,801,686

 

 

2019

 

40

Edgeley, ND

 

 

193,509

 

944,881

 

 

193,509

 

944,881

 

1,138,390

 

11,811

 

2019

 

40

Grand Forks, ND

 

 

1,187,389

 

2,052,184

 

 

1,187,389

 

2,052,184

 

3,239,573

 

21,358

 

2019

 

40

Williston, ND

 

 

515,210

 

1,584,865

 

 

515,210

 

1,584,865

 

2,100,075

 

16,509

 

2019

 

40

Batavia (Union Township), OH

 

 

601,071

 

1,125,756

 

 

601,071

 

1,125,756

 

1,726,827

 

16,656

 

2019

 

40

Bellevue, OH

 

 

186,215

 

1,343,783

 

 

186,215

 

1,343,783

 

1,529,998

 

 

2019

 

40

Columbus, OH

 

 

357,767

 

1,423,046

 

 

357,767

 

1,423,046

 

1,780,813

 

26,505

 

2019

 

40

Conneaut, OH

 

 

200,915

 

1,363,715

 

 

200,915

 

1,363,715

 

1,564,630

 

5,682

 

2019

 

40

Hamilton, OH

 

 

335,677

 

1,066,581

 

 

335,677

 

1,066,581

 

1,402,258

 

17,633

 

2019

 

40

Heath, OH

 

 

657,358

 

3,259,449

 

 

657,358

 

3,259,449

 

3,916,807

 

 

2019

 

40

Kenton, OH

 

 

191,968

 

1,290,534

 

 

191,968

 

1,290,534

 

1,482,502

 

2,689

 

2019

 

40

Maumee, OH

 

 

1,498,739

 

815,222

 

 

1,498,739

 

815,222

 

2,313,961

 

18,750

 

2019

 

40

Oxford, OH

 

 

912,241

 

2,566,991

 

 

912,241

 

2,566,991

 

3,479,232

 

53,319

 

2019

 

40

West Chester, OH

 

 

796,035

 

814,730

 

 

796,035

 

814,730

 

1,610,765

 

18,671

 

2019

 

40

West Chester, OH

 

 

395,924

 

1,173,848

 

 

395,924

 

1,173,848

 

1,569,772

 

24,338

 

2019

 

40

Ada, OK

 

 

336,304

 

1,234,870

 

 

336,304

 

1,234,870

 

1,571,174

 

5,145

 

2019

 

40

Bartlesville, OK

 

 

451,582

 

1,249,112

 

 

451,582

 

1,249,112

 

1,700,694

 

15,442

 

2019

 

40

Bokoshe, OK

 

 

47,725

 

797,175

 

 

47,725

 

797,175

 

844,900

 

9,674

 

2019

 

40

Lawton, OK

 

 

230,834

 

612,256

 

 

230,834

 

612,256

 

843,090

 

7,481

 

2019

 

40

Whitefield, OK

 

 

144,932

 

863,327

 

 

144,932

 

863,327

 

1,008,259

 

10,792

 

2019

 

40

Cranberry Township, PA

 

 

2,066,679

 

2,049,310

 

 

2,066,679

 

2,049,310

 

4,115,989

 

42,634

 

2019

 

40

Ebensburg, PA

 

 

551,162

 

2,023,064

 

 

551,162

 

2,023,064

 

2,574,226

 

37,766

 

2019

 

40

Flourtown, PA

 

 

1,342,409

 

2,229,147

 

 

1,342,409

 

2,229,147

 

3,571,556

 

51,069

 

2019

 

40

Monaca, PA

 

 

449,116

 

842,901

 

 

449,116

 

842,901

 

1,292,017

 

17,501

 

2019

 

40

Natrona Heights, PA

 

 

1,412,247

 

1,719,447

 

 

1,412,247

 

1,719,447

 

3,131,694

 

39,404

 

2019

 

40

North Huntingdon, PA

 

 

428,166

 

1,508,044

 

 

428,166

 

1,508,044

 

1,936,210

 

31,358

 

2019

 

40

Oakdale, PA

 

 

708,623

 

987,577

 

 

708,623

 

987,577

 

1,696,200

 

2,057

 

2019

 

40

F-56

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

    

COLUMN G

    

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Philadelphia, PA

 

 

1,891,985

 

20,799,223

 

 

1,891,985

 

20,799,223

 

22,691,208

 

345,425

 

2019

 

40

Pittsburgh, PA

 

 

1,251,674

 

3,842,592

 

 

1,251,674

 

3,842,592

 

5,094,266

 

23,916

 

2019

 

40

Robinson Township, PA

 

 

1,630,648

 

2,703,381

 

 

1,630,648

 

2,703,381

 

4,334,029

 

33,708

 

2019

 

40

Titusville, PA

 

 

877,651

 

2,568,060

 

 

877,651

 

2,568,060

 

3,445,711

 

37,394

 

2019

 

40

West View, PA

 

 

120,349

 

1,347,706

 

 

120,349

 

1,347,706

 

1,468,055

 

11,146

 

2019

 

40

York, PA

 

 

3,331,496

 

6,690,968

 

 

3,331,496

 

6,690,968

 

10,022,464

 

97,334

 

2019

 

40

Columbia, SC

 

 

2,783,934

 

13,228,453

 

 

2,783,934

 

13,228,453

 

16,012,387

 

275,466

 

2019

 

40

Hampton, SC

 

 

215,462

 

1,050,367

 

 

215,462

 

1,050,367

 

1,265,829

 

26,259

 

2019

 

40

Myrtle Beach, SC

 

 

1,371,226

 

2,752,440

 

 

1,371,226

 

2,752,440

 

4,123,666

 

28,666

 

2019

 

40

Orangeburg, SC

 

 

316,428

 

1,116,664

 

 

316,428

 

1,116,664

 

1,433,092

 

16,207

 

2019

 

40

Kadoka, SD

 

 

134,528

 

926,523

 

 

134,528

 

926,523

 

1,061,051

 

11,582

 

2019

 

40

Thorn Hill, TN

 

 

115,367

 

974,925

 

 

115,367

 

974,925

 

1,090,292

 

18,185

 

2019

 

40

Woodbury, TN

 

 

154,043

 

1,092,958

 

 

154,043

 

1,092,958

 

1,247,001

 

20,493

 

2019

 

40

Burleson, TX

 

 

1,396,753

 

3,312,794

 

 

1,396,753

 

3,312,794

 

4,709,547

 

 

2019

 

40

Carrizo Springs, TX

 

 

337,070

 

812,963

 

 

337,070

 

812,963

 

1,150,033

 

10,159

 

2019

 

40

Garland, TX

 

 

773,385

 

2,587,011

 

 

773,385

 

2,587,011

 

3,360,396

 

43,117

 

2019

 

40

Kenedy, TX

 

 

325,159

 

954,774

 

 

325,159

 

954,774

 

1,279,933

 

 

2019

 

40

Laredo, TX

 

 

1,117,403

 

2,152,573

 

 

1,117,403

 

2,152,573

 

3,269,976

 

31,296

 

2019

 

40

Lewisville, TX

 

 

2,347,993

 

5,271,935

 

 

2,347,993

 

5,271,935

 

7,619,928

 

120,815

 

2019

 

40

Lubbock, TX

 

 

1,420,820

 

1,858,395

 

 

1,420,820

 

1,858,395

 

3,279,215

 

42,588

 

2019

 

40

Wichita Falls, TX

 

 

585,664

 

1,952,988

 

 

585,664

 

1,952,988

 

2,538,652

 

24,412

 

2019

 

40

Wylie, TX

 

 

686,154

 

1,623,684

 

 

686,154

 

1,623,684

 

2,309,838

 

33,767

 

2019

 

40

Draper, UT

 

 

1,344,025

 

3,321,208

 

 

1,344,025

 

3,321,208

 

4,665,233

 

 

2019

 

40

Bristol, VA

 

 

996,915

 

1,374,467

 

 

996,915

 

1,374,467

 

2,371,382

 

11,454

 

2019

 

40

Gloucester, VA

 

 

458,785

 

1,994,093

 

 

458,785

 

1,994,093

 

2,452,878

 

16,573

 

2019

 

40

Hampton, VA

 

 

3,549,928

 

6,096,218

 

 

3,549,928

 

6,096,218

 

9,646,146

 

37,853

 

2019

 

40

Hampton, VA

 

 

429,613

 

1,081,015

 

 

429,613

 

1,081,015

 

1,510,628

 

9,008

 

2019

 

40

Hampton, VA

 

 

744,520

 

1,249,355

 

 

744,520

 

1,249,355

 

1,993,875

 

10,411

 

2019

 

40

Hampton, VA

 

 

561,596

 

1,545,002

 

 

561,596

 

1,545,002

 

2,106,598

 

12,875

 

2019

 

40

Newport News, VA

 

 

12,618,320

 

 

 

12,618,320

 

 

12,618,320

 

 

2019

 

Newport News, VA

 

 

855,793

 

1,754,228

 

 

855,793

 

1,754,228

 

2,610,021

 

14,619

 

2019

 

40

Poquoson, VA

 

 

330,867

 

848,105

 

 

330,867

 

848,105

 

1,178,972

 

7,068

 

2019

 

40

South Boston, VA

 

 

490,590

 

2,637,385

 

 

490,590

 

2,637,385

 

3,127,975

 

10,989

 

2019

 

40

Surry, VA

 

 

685,233

 

994,788

 

 

685,233

 

994,788

 

1,680,021

 

8,290

 

2019

 

40

Williamsburg, VA

 

 

1,574,769

 

2,001,920

 

 

1,574,769

 

2,001,920

 

3,576,689

 

16,683

 

2019

 

40

Williamsburg, VA

 

 

675,861

 

1,098,464

 

 

675,861

 

1,098,464

 

1,774,325

 

9,154

 

2019

 

40

Wytheville, VA

 

 

206,660

 

1,248,178

 

 

206,660

 

1,248,178

 

1,454,838

 

 

2019

 

40

F-57

Table of Contents

Agree Realty Corporation

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2019

COLUMN A

    

COLUMN B

COLUMN C

COLUMN D

COLUMN E

COLUMN F

COLUMN G

COLUMN H

 

Life on

 

Which

Depreciation in

 

Latest

Costs

Gross Amount at Which Carried at

Income

Initial Cost

Capitalized

Close of Period

 

Statement is

Building and

Subsequent to

Building and

 

Accumulated

Date of

Computed

Description

    

Encumbrance

    

Land

    

Improvements

    

Acquisition

    

Land

    

Improvements

    

Total

    

Depreciation

    

Acquisition

    

(in years)

Ephrata, WA

 

 

368,492

 

4,821,470

 

 

368,492

 

4,821,470

 

5,189,962

 

10,045

 

2019

 

40

Charleston, WV

 

 

561,767

 

 

 

561,767

 

 

561,767

 

 

2019

 

Ripley, WV

 

 

1,042,204

 

 

 

1,042,204

 

 

1,042,204

 

 

2019

 

Black River Falls, WI

 

 

278,472

 

1,141,572

 

 

278,472

 

1,141,572

 

1,420,044

 

2,378

 

2019

 

40

Lake Geneva, WI

 

 

7,078,726

 

 

 

7,078,726

 

 

7,078,726

 

 

2019

 

Menomonee Falls, WI

 

 

3,518,493

 

12,020,248

 

 

3,518,493

 

12,020,248

 

15,538,741

 

174,856

 

2019

 

40

Sun Prairie, WI

 

 

2,864,563

 

7,215,614

 

 

2,864,563

 

7,215,614

 

10,080,177

 

44,899

 

2019

 

40

West Milwaukee, WI

 

 

783,260

 

3,055,907

 

 

783,260

 

3,055,907

 

3,839,167

 

6,365

 

2019

 

40

 

 

 

 

 

 

 

 

 

 

Subtotal

 

37,115,442

 

742,028,515

 

1,563,739,356

 

35,100,355

 

738,260,983

 

1,602,607,243

 

2,340,868,226

 

128,581,697

 

  

 

  

Property Under Development

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Various

 

 

 

10,055,838

 

 

 

10,055,838

 

10,055,838

 

 

 

Sub Total

 

 

 

10,055,838

 

 

 

10,055,838

 

10,055,838

 

 

  

 

  

Total

$

37,115,442

$

742,028,515

$

1,573,795,194

$

35,100,355

$

738,260,983

$

1,612,663,081

$

2,350,924,064

$

128,581,697

 

  

 

  

1. Reconciliation of Real Estate Properties

The following table reconciles the Real Estate Properties from January 1, 2017 to December 31, 2019.

    

2019

    

2018

    

2017

Balance at January 1

$

1,761,646,695

$

1,299,254,832

$

1,019,956,329

Construction and acquisition cost

 

644,483,047

 

519,369,366

 

312,695,116

Impairment charge

 

(1,609,000)

 

(1,163,000)

 

Disposition of real estate

 

(53,596,678)

 

(55,814,503)

 

(31,146,055)

Reclassified as assets held for sale

 

(4,584,178)

 

 

(2,250,558)

Balance at December 31

$

2,346,339,886

$

1,761,646,695

$

1,299,254,832

2. Reconciliation of Accumulated Depreciation

The following table reconciles the Real Estate Properties from January 1, 2017 to December 31, 2019.

    

2019

    

2018

    

2017

Balance at January 1

$

100,311,974

$

85,238,614

$

69,696,727

Current year depreciation expense

 

34,398,782

 

20,441,780

 

19,507,398

Disposition of real estate

 

(6,129,059)

 

(5,368,420)

 

(3,737,114)

Reclassified as assets held for sale

 

(833,887)

 

 

(228,397)

Balance at December 31

$

127,747,810

$

100,311,974

$

85,238,614

3. Tax Basis of Building and Improvements

The aggregate cost of Building and Improvements for federal income tax purposes is approximately $31,374,000 less than the cost basis used for financial statement purposes.

F-58

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AGREE REALTY CORPORATION

1

By:

/s/ Joel N. Agree

    

Date: February 20, 2020

Joel N. Agree

President and Chief Executive Officer

KNOW ALL PERSONS BY THESE PRESENTS, that we, the undersigned officers and directors of Agree Realty Corporation, hereby severally constitute Richard Agree, Joel N. Agree and Clayton Thelen, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Annual Report on Form 10-K filed herewith and any and all amendments to said Annual Report on Form 10-K, and generally to do all such things in our names and in our capacities as officers and directors to enable Agree Realty Corporation to comply with the provisions of the Securities Exchange Act of 1934, as amended and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Annual Report on Form 10-K and any and all amendments thereto.

PURSUANT to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 20th day of February 2020.

By:

/s/ Richard Agree

    

Date: February 20, 2020

Richard Agree

Executive Chairman of the Board of Directors

By:

/s/ Joel N. Agree

Date: February 20, 2020

Joel N. Agree

President, Chief Executive Officer and Director

(Principal Executive Officer)

 

By:

/s/ Clayton Thelen

Date: February 20, 2020

Clayton Thelen

Chief Financial Officer and Secretary

(Principal Financial Officer)

By:

/s/ David Wolff

Date: February 20, 2020

David Wolff

Chief Accounting Officer

(Principal Accounting Officer)

 

By:

/s/ Craig Erlich

Date: February 20, 2020

Craig Erlich

Director

By:

/s/ Merrie S. Frankel

Date: February 20, 2020

Merrie S. Frankel

Director

 

By:

/s/ Farris G. Kalil

Date: February 20, 2020

Farris G. Kalil

Director

 

Table of Contents

By:

/s/ Greg Lehmkuhl

Date: February 20, 2020

Greg Lehmkuhl

Director

By:

/s/ Simon Leopold

Date: February 20, 2020

Simon Leopold

Director

 

By:

/s/ Jerome Rossi

Date: February 20, 2020

Jerome Rossi

Director

 

By:

/s/ William S. Rubenfaer

Date: February 20, 2020

William S. Rubenfaer

Director