10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Mark One

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2013, or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

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

31850 Northwestern Highway, Farmington Hills, Michigan 48334

(Address of Principal Executive Offices)

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

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       x No         ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes      x  No          o

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

Large Accelerated Filer   ¨	Accelerated Filer   x	Non-accelerated Filer   ¨	Smaller reporting company     ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes     ¨ No     x

As of April 29, 2013, the Registrant had 13,241,844 shares of common stock, $0.0001 par value, outstanding.

AGREE REALTY CORPORATION

Index to Form 10-Q

		Page
PART I	Financial Information
Item 1:	Interim Consolidated Financial Statements
	Consolidated Balance Sheets as of March 31, 2013 (Unaudited) and December 31, 2012	1-2
	Consolidated Statements of Income (Unaudited) for the three months ended March 31, 2013 and 2012	3
	Consolidated Statement of Stockholders’ Equity (Unaudited) for the three months ended March 31, 2013	4
	Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2013 and 2012	5
	Notes to Consolidated Financial Statements (Unaudited)	6-12
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13-19
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4:	Controls and Procedures	20
PART II
Item 1:	Legal Proceedings	21
Item 1A:	Risk Factors	21
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3:	Defaults Upon Senior Securities	21
Item 4:	Mine Safety Disclosures	21
Item 5:	Other Information	21
Item 6:	Exhibits	21-22
SIGNATURES		23

AGREE REALTY CORPORATION

CONSOLIDATED BALANCE SHEETS

	March 31, 2013  (Unaudited)			December 31, 2012
ASSETS
Real Estate Investments
Land	$	135,504,709		$	134,740,784
Buildings		252,164,842			240,204,708
Less accumulated depreciation		(60,101,756	)		(58,508,881	)
		327,567,795			316,436,611
Property under development		21,183,557			18,980,779
Property held for sale		-			4,537,752
Net Real Estate Investments		348,751,352			339,955,142
Cash and Cash Equivalents		1,199,030			1,270,027
Accounts Receivable - Tenants, net of allowance of $35,000 for possible losses at March 31, 2013 and December 31, 2012		1,718,266			2,160,055
Unamortized Deferred Expenses
Financing costs, net of accumulated amortization of $6,451,619 and $6,273,113 at March 31, 2013 and December 31, 2012, respectively		2,713,119			2,864,314
Leasing costs, net of accumulated amortization of $1,339,715 and $1,312,085 at March 31, 2013 and December 31, 2012, respectively		660,198			687,828
Lease intangibles, net of accumulated amortization of $1,909,384 and $1,594,815 at March 31, 2013 and December 31, 2012, respectively		23,174,203			21,342,122
Other Assets		1,991,462			1,813,344
Total Assets	$	380,207,630		$	370,092,832

See accompanying notes to consolidated financial statements.

1

AGREE REALTY CORPORATION

CONSOLIDATED BALANCE SHEETS

	March 31, 2013  (Unaudited)			December 31, 2012
LIABILITIES
Mortgages Payable	$	116,526,115		$	117,376,142
Note Payable		9,000,000			43,530,005
Dividends and Distributions Payable		5,570,743			4,710,446
Deferred Revenue		1,814,938			1,930,783
Accrued Interest Payable		436,717			335,416
Accounts Payable and Accrued Expense
Capital expenditures		85,874			122,080
Operating		1,601,842			2,015,367
Interest Rate Swap		1,087,329			1,337,998
Deferred Income Taxes		705,000			705,000
Tenant Deposits		61,961			64,461
Total Liabilities		136,890,519			172,127,698
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value, 15,850,000  shares authorized, 13,241,844 and 11,436,044 shares issued and outstanding, respectively		1,324			1,144
Excess stock, $.0001 par value, 4,000,000 shares authorized, 0 shares issued and outstanding		-			-
Series A junior participating preferred stock, $.0001 par  value, 150,000 shares authorized, 0 shares issued and outstanding		-			-
Additional paid-in-capital		263,049,468			217,768,918
Deficit		(21,344,886	)		(21,166,509	)
Accumulated other comprehensive income (loss)		(1,050,166	)		(1,294,267	)
Total Stockholders' Equity - Agree Realty Corporation		240,655,740			195,309,286
Non-controlling interest		2,661,371			2,655,848
Total Stockholders' Equity	$	243,317,111		$	197,965,134
Total Liabilities and Stockholders' Equity	$	380,207,630		$	370,092,832

See accompanying notes to consolidated financial statements.

2

AGREE REALTY CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended
	March 31, 2013			March 31, 2012
Revenues
Minimum rents	$	9,635,863		$	7,817,059
Percentage rents		20,061			15,107
Operating cost reimbursement		591,773			536,763
Other income		-			17,227
Total Revenues		10,247,697			8,386,156
Operating Expenses
Real estate taxes		466,510			476,075
Property operating expenses		357,391			334,801
Land lease payments		106,975			181,075
General and administrative		1,486,367			1,407,595
Depreciation and amortization		1,951,364			1,475,848
Total Operating Expenses		4,368,607			3,875,394
Income from Operations		5,879,090			4,510,762
Other Income (Expense)
Interest expense, net		(1,440,193	)		(1,136,046	)
Income From Continuing Operations		4,438,897			3,374,716
Discontinued Operations
Gain on sale of assets from discontinued operations		946,347			908,160
Income from discontinued operations		7,014			458,959
Net Income		5,392,258			4,741,835
Less Net Income Attributable to Non-Controlling Interest		141,479			145,556
Net Income Attributable to Agree Realty Corporation	$	5,250,779		$	4,596,279
Basic Earnings (Loss)  Per Share
Continuing operations	$	0.35		$	0.31
Discontinued operations		0.07			0.12
	$	0.42		$	0.43
Diluted Earnings (Loss) Per Share
Continuing operations	$	0.34		$	0.31
Discontinued operations		0.07			0.12
	$	0.41		$	0.43
Other Comprehensive Income
Net income	$	5,392,258		$	4,741,835
Other Comprehensive Income (Loss)		250,669			52,791
Total Comprehensive Income		5,642,927			4,794,626
Comprehensive Income Attributable to Non-Controlling Interest		(148,047	)		(147,177	)
Comprehensive Income Attributable to Agree Realty Corporation	$	5,494,880		$	4,647,449
Weighted Average Number of Common Shares Outstanding - Basic		12,641,730			10,722,457
Weighted Average Number of Common Shares Outstanding - Dilutive		12,693,361			10,754,822

See accompanying notes to consolidated financial statements.

3

AGREE REALTY CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Unaudited)

	Common Stock													Accumulated Other
	Shares			Amount		Additional  Paid-In Capital		Non-Controlling Interest			Deficit			Comprehensive Income (Loss)
Balance, December 31, 2012		11,436,044		$	1,144	$	217,768,918	$	2,655,848		$	(21,166,509	)	$	(1,294,267	)
Issuance of common stock, net of issuance costs		1,725,000			172		44,810,440		-			-			-
Issuance of restricted stock under the Equity Incentive Plan		82,050			8		-		-			-			-
Forfeiture of restricted stock		(1,250	)		-		-		-			-			-
Vesting of restricted stock		-			-		470,110		-			-			-
Dividends and distributions declared for the period January 1, 2013 to March 31, 2013		-			-		-		(142,524	)		(5,429,156	)		-
Other comprehensive income - change in fair value of interest rate swap		-			-		-		6,568			-			244,101
Net income for the period January 1, 2013 to March 31, 2013		-			-		-		141,479			5,250,779			-
Balance, March 31, 2013		13,241,844		$	1,324	$	263,049,468	$	2,661,371		$	(21,344,886	)	$	(1,050,166	)

See accompanying notes to consolidated financial statements.

4

AGREE REALTY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months  Ended March 31, 2013			Three Months  Ended March 31, 2012
Cash Flows from Operating Activities
Net income	$	5,392,258		$	4,741,835
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		1,611,451			1,449,778
Amortization		520,706			353,718
Stock-based compensation		470,110			412,000
Gain on sale of assets		(946,347	)		(908,160	)
(Increase) decrease in accounts receivable		441,789			197,360
(Increase) decrease in other assets		(194,408	)		(288,822	)
(Decrease) increase in accounts payable		(411,442	)		(1,756,591	)
Decrease in deferred revenue		(115,845	)		(115,845	)
Increase (decrease) in accrued interest		101,301			(260,676	)
Increase (decrease) in tenant deposits		(2,500	)		(1,400	)
Net Cash Provided by Operating Activities		6,867,073			3,823,197
Cash Flows from Investing Activities
Acquisition of real estate investments (including capitalized interest of $203,558 in 2013, $0 in 2012)		(16,968,082	)		(9,726,161	)
Payment of leasing costs		-			(625	)
Net proceeds from sale of assets		5,462,280			627,118
Net Cash Used In Investing Activities		(11,505,802	)		(9,099,668	)
Cash Flows from Financing Activities
Proceeds from common stock offering		44,810,620			35,042,235
Note payable borrowings		17,242,796			13,943,606
Note payable repayments		(51,772,801	)		(40,002,806	)
Payments of mortgages payable		(850,027	)		(739,776	)
Dividends paid		(4,574,418	)		(3,940,766	)
Limited partners' distributions paid		(139,047	)		(139,047	)
Repayments of payables for capital expenditures		(122,080	)		(424,321	)
Payments for financing costs		(27,311	)		-
Net Cash Provided by Financing Activities		4,567,732			3,739,125
Net Increase (Decrease) in Cash and Cash Equivalents		(70,997	)		(1,537,346	)
Cash and Cash Equivalents, beginning of period		1,270,027			2,002,663
Cash and Cash Equivalents, end of period	$	1,199,030		$	465,317
Supplemental Disclosure of Cash Flow Information
Cash paid for interest (net of amounts capitalized)	$	1,146,919		$	1,282,681
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Shares issued under Stock Incentive Plan	$	2,257,195		$	2,166,270
Dividends and limited partners' distributions declared and unpaid	$	5,571,680		$	4,697,001
Real estate investments financed with accounts payable	$	85,874		$	54,321
Forgiveness of mortgage debt	$	-		$	9,173,789

See accompanying notes to consolidated financial statements.

5

AGREE REALTY CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements of Agree Realty Corporation (the “Company”) for the three months ended March 31, 2013 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for audited financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The consolidated balance sheet at December 31, 2012 has been derived from the audited consolidated financial statements at that date. Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 or for any other interim period. The results of operations of properties that have either been disposed of or are classified as held for sale are reported as discontinued operations. As a result of these discontinued operations, certain of the 2012 balances have been reclassified to conform to the 2013 presentation. For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

2. Stock Based Compensation

The Company estimates the fair value of restricted stock and stock option 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. 

As of March 31, 2013, there was $5,813,000 of unrecognized compensation costs related to the outstanding shares of restricted stock, which is expected to be recognized over a weighted average period of 3.62 years. The Company used a 0% discount factor and forfeiture rate for determining the fair value of restricted stock. The forfeiture rate was based on historical results and trends.

The holder of a restricted stock award is generally entitled at all times on and after the date of issuance of the restricted stock to exercise the rights of a stockholder of the Company, including the right to vote the shares and the right to receive dividends on the shares.

Restricted share activity is summarized as follows:

	Shares Outstanding			Weighted Average Grant Date  Fair Value
Unvested restricted stock at January 1, 2013		250,180		$	22.66
Restricted stock granted		82,050			27.51
Restricted stock vested		(69,680	)		22.50
Restricted stock forfeited		(1,250	)		20.33
Unvested restricted stock at March 31, 2013		261,300		$	24.24

6

AGREE REALTY CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

3. Earnings Per Share

Earnings per share has been computed by dividing the net income attributable to Agree Realty Corporation by the weighted average number of common shares outstanding.

The following is a reconciliation of the denominator of the 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:

	Three Months Ended March 31,
	2013		2012
Weighted average number of common shares outstanding		12,903,030		10,975,857
Unvested restricted stock		261,300		253,400
Weighted average number of common shares outstanding used in basic earnings per share		12,641,730		10,722,457
Weighted average number of common shares outstanding used in basic earnings per share		12,641,730		10,722,457
Effect of dilutive securities:
Restricted stock		51,631		32,365
Weighted average number of common shares outstanding used in diluted earnings per share		12,693,361		10,754,822

4. Recent Accounting Pronouncements

As of March 31, 2013, the impact of recent accounting pronouncements is not considered to be material.

5. Derivative Instruments and Hedging Activity

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.

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.

On January 2, 2009, the Company entered into an interest rate swap agreement for a notional amount of $24,501,280, effective on January 2, 2009 and ending on July 1, 2013. The notional amount decreases over the term to match the outstanding balance of the hedged borrowing. The Company entered into this derivative instrument to hedge against the risk of changes in future cash flows related to changes in interest rates on $24,501,280 of the total variable-rate borrowings outstanding. Under the terms of the interest rate swap agreement, the Company will receive from the counterparty interest on the notional amount based on 1.5% plus one-month LIBOR and will pay to the counterparty a fixed rate of 3.744%. This swap effectively converted $24,501,280 of variable-rate borrowings to fixed-rate borrowings beginning on January 2, 2009 and through July 1, 2013.

On April 24, 2012, the Company entered into a forward starting interest rate swap agreement, for the same variable rate loan, as extended, for a notional amount of $22,268,358, effective on July 1, 2013 and ending on May 1, 2019. The notional amount decreases over the term to match the outstanding balance of the hedged borrowing. The Company entered into this derivative instrument to hedge against the risk of changes in future cash flows related to changes in interest rates on $22,268,358 of the total variable rate borrowings outstanding. Under the terms of the interest rate swap agreement, the Company will receive from the counterparty interest on the notional amount based on one-month LIBOR and will pay to the counterparty a fixed rate of 1.92%. This swap effectively converted $22,268,358 of variable-rate borrowings to fixed-rate borrowings beginning on July 1, 2013 and through May 1, 2019.

7

AGREE REALTY CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

On December 4, 2012, the Company entered into interest rate swap agreements for a notional amount of $25,000,000, effective December 6, 2012 and ending on April 4, 2018. The Company entered into these derivative instruments to hedge against changes in future cash flows related to changes in interest rates on $25,000,000 of variable rate borrowings outstanding. Under the terms of the interest rate swap agreements, the Company will receive from the counterparty interest on the notional amount based on one month LIBOR and will pay to the counterparty a fixed rate of .885%. This swap effectively converted $25,000,000 of variable-rate borrowings to fixed-rate borrowings beginning on December 6, 2012 and through April 4, 2018.

Companies are required to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet. The Company has designated these derivative instruments as cash flow hedges. As such, changes in the fair value of the derivative instrument are recorded as a component of other comprehensive income (loss) (“OCI”) for the three months ended March 31, 2013 to the extent of effectiveness. The ineffective portion of the change in fair value of the derivative instrument is recognized in interest expense. For the three months ended March 31, 2013, the Company has determined these derivative instruments to be effective hedges.

The Company does not use derivative instruments for trading or other speculative purposes and did not have any other derivative instruments or hedging activities as of March 31, 2013.

6. Fair Value Measurements

Certain of the Company’s assets and liabilities are disclosed at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  In determining fair value, the Company uses various valuation methods including market, income and cost approaches.  The assumptions used in the application of these valuation methods are developed from the perspective of market participants pricing the asset or liability.  Inputs used in the valuation methods can be either readily observable, market corroborated, or generally unobservable inputs.  Whenever possible the Company attempts to utilize valuation methods that maximize the use of observable inputs and minimizes the use of unobservable inputs.  Based on the operability of the inputs used in the valuation methods, the Company is required to provide the following information according to the fair value hierarchy.  The fair value hierarchy ranks the quality and reliability of the information used to determine fair values.  Assets and liabilities measured, reported and/or disclosed at fair value will be classified and disclosed in one of the following three categories:

Level 1 – Quoted market prices in active markets for identical assets or liabilities.

Level 2 – Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3 – Unobservable inputs that are not corroborated by market data.

The table below sets forth the Company’s fair value hierarchy for liabilities measured or disclosed at fair value as of March 31, 2013.

Liability:	Level 1		Level 2		Level 3		Carrying  Value
Interest rate swaps	$	-	$	1,087,329	$	-	$	1,087,329
Mortgages payable	$	-	$	-	$	117,942,643	$	116,526,115
Note payable	$	-	$	9,000,000	$	-	$	9,000,000

The carrying amounts of the Company’s short-term financial instruments, which consist of cash, cash equivalents, receivables, and accounts payable, approximate their fair values. The fair value of the interest rate swaps were derived using estimates to settle the interest rate swap agreements, which is based on the net present value of expected future cash flows on each leg of the swaps utilizing market-based inputs and discount rates reflecting the risks involved. The fair value of fixed and variable rate mortgages was derived using the present value of future mortgage payments based on estimated current market interest rates.  The fair value of variable rate debt is estimated to be equal to the face value of the debt because the interest rates are floating and is considered to approximate fair value.

8

AGREE REALTY CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

7. Note Payable

Agree Limited Partnership (the “Operating Partnership”) has in place an $85,000,000 unsecured revolving credit facility (“Credit Facility”), which is guaranteed by the Company. Subject to customary conditions, at the Company’s option, total commitments under the Credit Facility may be increased up to an aggregate of $135,000,000. The Company intends to use borrowings under the Credit Facility for general corporate purposes, including working capital, development and acquisition activities, capital expenditures, repayment of indebtedness or other corporate activities. The Credit Facility matures on October 26, 2015, and may be extended, at the Company’s election, for two one-year terms to October 2017, subject to certain conditions. Borrowings under the Credit Facility bear interest at LIBOR plus a spread of 150 to 215 basis points depending on the Company’s leverage ratio. As of March 31, 2013, $9,000,000 was outstanding under the Credit Facility bearing a weighted average interest rate of 1.73%, and $76,000,000 was available for borrowing (subject to customary conditions to borrowing).

The Credit Facility contains customary covenants, including, among others, financial covenants regarding debt levels, total liabilities, tangible net worth, fixed charge coverage, unencumbered borrowing base properties, and permitted investments. The Company was in compliance with the covenant terms at March 31, 2013.

9

AGREE REALTY CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

8. Mortgages Payable

Mortgages payable consisted of the following:

	March 31, 2013		December 31, 2012
Note payable in monthly installments of interest only at LIBOR plus 160 basis points, swapped to a fixed rate of 2.49% with balloon payment due April 4, 2018; collateralized by related real estate and tenants' leases	$	25,000,000	$	25,000,000
Note payable in monthly installments of interest only at 3.60% per annum, with balloon payment due January 1, 2023; collateralized by related real estate and tenants' leases		23,640,000		23,640,000
Note payable in monthly principal installments of $47,250 plus interest at 170 basis points over LIBOR, currently swapped to a fixed rate of 3.74%.  A final balloon payment in the amount of $19,744,758 is due on May 14, 2017 unless extended for a two year period at the option of the Company, collateralized by related real estate and tenants’ leases		22,460,228		22,601,978
Note payable in monthly installments of $153,838 including interest at 6.90% per annum, with the final monthly payment due January 2020; collateralized by related real estate and tenants’ leases		10,035,323		10,320,440
Note payable in monthly installments of $91,675 including interest at 6.27% per annum, with a final monthly payment due July 2026; collateralized by related real estate and tenants’ leases		9,923,924		10,042,152
Note payable in monthly installments of $60,097 including interest at 5.08% per annum, with a final balloon payment in the amount of $9,167,573 due June 2014; collateralized by related real estate and tenants’ leases		9,449,137		9,509,011
Note payable in monthly installments of $99,598 including interest at 6.63% per annum, with the final monthly payment due February 2017; collateralized by related real estate and tenants’ leases		4,112,749		4,340,850
Note payable in monthy interest-only installments of $48,467 at 6.56% annum, with a balloon payment in the amount of $8,580,000 due June 11, 2016;  collateralized by related real estate and tenants’ leases		8,580,000		8,580,000
Note payable in monthly installments of $23,004 including interest at 6.24% per annum, with the final balloon payment of $2,766,628 due February 2020; collateralized by related real estate and tenant lease		3,324,754		3,341,711
Total	$	116,526,115	$	117,376,142

The above mortgages payable are collateralized by related real estate with an aggregate net book value of $147,660,543.

10

AGREE REALTY CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

Future scheduled annual maturities of mortgages payable for years ending March 31 are as follows: 2014 - $3,534,255; 2015 - $12,724,355; 2016 - $3,752,012; 2017 - $12,485,823; 2018 - $22,150,568 and $61,879,102 thereafter. The weighted average interest rate at March 31, 2013 was 4.41%.

9. Dividends and Distributions Payable

On March 5, 2013, the Company declared a dividend of $.41 per common share for the quarter ended March 31, 2013. The holders of limited partnership interest in the Operating Partnership (“OP Units”) were entitled to an equal distribution per OP Unit held as of March 31, 2013. The dividend and distributions payable are recorded as liabilities in the Company’s consolidated balance sheet as of March 31, 2013. The dividend has been reflected as a reduction of stockholders’ equity and the distribution has been reflected as a reduction of the limited partners’ non-controlling interest. The amounts were paid April 9, 2013.

10. Deferred Revenue

In July 2004, the Company’s tenant in a joint venture property located in Boynton Beach, FL repaid $4.0 million that had been contributed by the Company’s joint venture partner. As a result of this repayment the Company became the sole member of the limited liability company holding the property. Total assets of the property were approximately $4.0 million. The Company has treated the $4.0 million as deferred revenue and accordingly, will recognize rental income over the term of the related leases.

The remaining deferred revenue of approximately $1.8 million will be recognized as minimum rents over approximately 4.1 years.

11. Discontinued Operations

During 2013, the Company sold one single tenant property for approximately $5,600,000 in Ypsilanti, Michigan.

During 2012, the Company sold six non-core properties: a vacant office property for approximately $650,000; two vacant single tenant properties for $4,460,000; a Kmart anchored shopping center in Charlevoix, Michigan for $3,500,000; and two Kmart anchored shopping centers, one in Plymouth, Wisconsin and one in Shawano, Wisconsin for $7,475,000. In addition, during 2012, the Company conveyed four mortgaged properties to the lender pursuant to a consensual deed-in-lieu-of-foreclosure process that satisfied the loans, which had an aggregate principal amount outstanding of approximately $9.2 million as of December 31, 2011.

The results of operations for these properties are presented as discontinued operations in the Company’s Consolidated Statements of Income. The revenues for the properties were $9,301 for the three months ended March 31, 2013, and $996,050 for the three months ended March 31, 2012. The expenses for the properties were $2,287 for the three months ended March 31, 2013, and $537,091 for the three months ended March 31, 2012.

The Company elected to not allocate consolidated interest expense to the discontinued operations where the debt is not directly attributed to or related to the discontinued operations. Interest expense that was directly attributable to the discontinued operations was $0 for both the three months ended March 31, 2013, and March 31, 2012.

The results of income from discontinued operations allocable to non-controlling interest was $25,014 for the three months ended March 31, 2013, and $41,965 for the three months ended March 31, 2012.

12. Purchase Accounting for Acquisitions of Real Estate

Acquired real estate assets have been accounted for using the purchase method of accounting and accordingly, the results of operations are included in the consolidated statements of income from the respective dates of acquisition. The Company allocates the purchase price to (i) land and buildings based on management’s internally prepared estimates and (ii) identifiable intangible assets or liabilities generally consisting of above-market and below-market in-place leases and in-place leases. The Company uses estimates of fair value based on estimated cash flows, using appropriate discount rates, and other valuation techniques, including management’s analysis of comparable properties in the existing portfolio, to allocate the purchase price to acquired tangible and intangible assets.

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AGREE REALTY CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

The estimated fair value of above-market and below-market in-place leases for acquired properties is recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease.

The aggregate fair value of other intangible assets consisting of in-place, at market leases, is estimated based on internally developed methods to determine the respective property values and are included in lease intangible costs in the consolidated balance sheets. Factors considered by management in their analysis include an estimate of costs to execute similar leases and operating costs saved.

During 2013, the Company has purchased five retail assets for approximately $15 million with a weighted average capitalization rate of 8.03% to obtain 100% control of the assets. The weighted average capitalization rate for these single tenant net leased properties was calculated by dividing the property net operating income by the purchase price. Property net operating income is defined as the straight-line rent for the base term of the lease less property level expense (if any) that is not recoverable from the tenant. The cost of the aggregate acquisitions was allocated as follows: $1 million to land, $13 million to buildings and improvements and $1 million to lease intangible costs. The acquisitions were cash purchases and there were no contingent considerations associated with these acquisitions.

Total revenues of $235,000 and income before discontinued operations of $198,000 are included in the consolidated income statement, for the three months ended March 31, 2013, for the aggregate 2013 acquisitions.

The following pro forma total revenue and income before discontinued operations for the 2013 acquisitions in aggregate, assumes the acquisitions had taken place on January 1, 2013 for the 2013 pro forma information, and on January 1, 2012 for the 2012 pro forma information (in thousands):

Supplemental pro forma for the three months ended March 31, 2013 (1)

Total revenue	$	10,362
Income before discontinued operations	$	4,452

Supplemental pro forma for the three months ended March 31, 2012 (1)

Total revenue	$	8,407
Income before discontinued operations	$	3,382

(1) This unaudited pro forma supplemental information does not purport to be indicative of what the Company operating results would have been had the acquisitions occurred on January 1, 2013 or January 1, 2012 and may not be indicative of future operating results. Various acquisitions were of newly leased or constructed assets and may not have been in service for the full periods shown.

The fair values of intangible assets acquired are amortized to depreciation and amortization on the consolidated statements of income over the remaining term of the respective leases. The weighted average amortization period for the lease intangible costs is 19.1 years.

13. Common Stock

On January 18, 2013, the Company completed an underwritten public offering of 1,725,000 shares of common stock at a public offering price of $27.25 per share, including 225,000 common shares pursuant to the full exercise of the underwriters’ overallotment option. The offering raised approximately $45 million in net proceeds, after deducting the underwriting discount and other expenses. The Company used the net proceeds of the offering to pay down amounts outstanding under the Credit Facility and for general corporate purposes.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements 

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend 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 include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and described 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; risks that our acquisition and development projects will fail to perform as expected; 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 retail tenants; a failure of our properties to generate additional income to offset increases in operating expenses; 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 other factors discussed in Item 1A. “Risk Factors” and elsewhere in this report and in subsequent filings with the Securities and Exchange Commission (“SEC”) including our Annual Report on Form 10-K for the fiscal year ended December 31, 2012. We caution you that any such statements are based on currently available operational, financial and competitive information, and that you should not place undue reliance on these forward-looking statements, which reflect our management’s opinion only as of the date on which they were made. Except as required by law, we disclaim any obligation to review or update these forward–looking statements to reflect events or circumstances as they occur.

Overview 

Agree Realty Corporation is a fully-integrated, self-administered and self-managed REIT. In this report, the terms “Company,” “we,” “our” and “us” and similar terms refer to Agree Realty Corporation and/or its majority owned operating partnership, Agree Limited Partnership (“Operating Partnership”) and/or its majority owned and controlled subsidiaries, including its qualified taxable REIT subsidiaries (“TRS”), as the context may require. 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 97.44% and 97.05% interest as of March 31, 2013 and December 31, 2012, respectively. 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. We are operating so as to qualify as a REIT for federal income tax purposes.

We are primarily engaged in the acquisition and development of single tenant properties net leased to industry leading retail tenants. We were incorporated in December 1993 to continue and expand the business founded in 1971 by our current Executive Chairman of the Board of Directors, Richard Agree. We specialize in acquiring and developing single tenant net leased retail properties for industry leading retail tenants. As of March 31, 2013, approximately 97% of our annualized base rent was derived from national and regional tenants and approximately 42% of our annualized base rent was derived from our top three tenants: Walgreens Co. (“Walgreens”) – 29%; Kmart Corporation (“Kmart”) – 7% and CVS Caremark Corporation (“CVS”) – 6%.

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As of March 31, 2013, our portfolio consisted of 113 properties, located in 30 states containing an aggregate of approximately 3.3 million square feet of gross leasable area (“GLA”). As of March 31, 2013, our portfolio included 104 freestanding single tenant net leased properties and nine community shopping centers that were 97% leased in aggregate with a weighted average lease term of approximately 12 years remaining. All of our freestanding property tenants and the majority of our community shopping center tenants have triple-net leases, which require the tenant to be responsible for property operating expenses, including property taxes, insurance and maintenance. We believe this strategy provides a generally consistent source of income and cash for distributions.

During the period from April 1, 2013 to December 31, 2013, we have seven leases that are scheduled to expire assuming that the tenants do not exercise the renewal option or terminate the leases prior to the contractual expiration date. These leases represent 89,795 square feet of GLA and $476,812 of annualized base rent. During the first quarter of 2013, Kmart exercised five-year extension options at Central Michigan Commons in Mt. Pleasant, Michigan and Capital Plaza in Frankfort, Kentucky. The Central Michigan Commons store is 80,399 square feet and the Capital Plaza store is 80,192 square feet. The extended lease for the Central Michigan Commons store will expire on August 31, 2018 and for the Capital Plaza store will expire on September 30, 2018. In addition, during the first quarter of 2013, Fashion Bug vacated approximately 40,000 square feet of space at four separate shopping centers. We are working with replacement tenants for the vacated spaces.

We expect to continue to grow our asset base through the development and acquisition of single tenant net leased retail properties that are leased on a long-term basis to industry leading retail tenants. Historically we have focused on development because we believed, based on the historical returns we have been able to achieve, it generally has provided us a higher return on investment than the acquisition of similarly located properties. However, beginning in 2010, we commenced a strategic acquisition program to acquire retail properties net leased to industry leading retail tenants. Since our initial public offering in 1994, we have developed 55 of our 113 properties, including 46 of our 104 freestanding single tenant properties and all nine of our community shopping centers. As of March 31, 2013, the properties that we developed accounted for 57% of our annualized base rent. We expect to continue to expand our existing tenant relationships and diversify our tenant base to include other quality industry leading retail tenants through the development and acquisition of net leased properties.

In April 2013, we completed development of a Wawa in Kissimmee, Florida, which opened April 3, 2013, and a Walgreens in Rancho Cordova, California. Total development cost for the two projects was approximately $8 million. Additionally, development continues for three projects. In August 2012, we purchased a parcel of land in Pinellas Park, Florida to be developed for Wawa under a ground lease with us. Rent is anticipated to commence in the second quarter of 2013. In September 2012, we announced that we had closed on the acquisition of a parcel of land in Casselberry, Florida for a development expected to be completed by the fourth quarter of 2013. In December 2012, we acquired a building in Ann Arbor, Michigan for redevelopment. The redevelopment, which is pre-leased to the industry leader in the retail pharmacy sector, is expected to be completed by the second quarter of 2014. The purchase price was $5.8 million.

Our construction in progress balance totaled approximately $21.2 million at March 31, 2013.

The following should be read in conjunction with the Interim Consolidated Financial Statements of Agree Realty Corporation, including the respective notes thereto, which are included in this Quarterly Report on Form 10-Q.

Recent Accounting Pronouncements 

As of March 31, 2013, the impact of recent accounting pronouncements on our business is not considered to be material.

Critical Accounting Policies 

Critical accounting policies are those that are both significant to the overall presentation of our financial condition and results of operations and require management to make difficult, complex or subjective judgments. For example, significant estimates and assumptions have been made with respect to revenue recognition, capitalization of costs related to real estate investments, potential impairment of real estate investments, operating cost reimbursements, and taxable income.

Minimum rental income attributable to leases is recorded on a straight-line basis over the lease term. Certain leases provide for additional percentage rents based on tenants’ sales volumes. These percentage rents are recognized when determinable by us.

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Real estate assets are stated at cost less accumulated depreciation. All costs related to planning, development and construction of buildings prior to the date they become operational, including interest and real estate taxes during the construction period, are capitalized for financial reporting purposes and recorded as property under development until construction has been completed. The viability of all projects under construction or development is regularly evaluated under applicable accounting requirements, including requirements relating to abandonment of assets or changes in use. To the extent a project, or individual components of the project, are no longer considered to have value, the related capitalized costs are charged against operations. Subsequent to the completion of construction, expenditures for property maintenance are charged to operations as incurred, while significant renovations are capitalized. Depreciation of the buildings is recorded in accordance with the straight-line method using an estimated useful life of 40 years.

We evaluate real estate for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through estimated undiscounted future cash flows from the use of these assets. When any such impairment exists, the related assets will be written down to fair value and such excess carrying value is charged to income.  The expected cash flows of a project are dependent on estimates and other factors subject to change, including (1) changes in the national, regional, and/or local economic climates, (2) competition from other shopping centers, stores, clubs, mailings, and the internet, (3) increases in operating costs, (4) bankruptcy and/or other changes in the condition of third parties, including tenants, (5) expected holding period, and (6) availability of credit. These factors could cause our expected future cash flows from a project to change, and, as a result, an impairment could be considered to have occurred.

Substantially all of our leases contain provisions requiring tenants to pay as additional rent a proportionate share of operating expenses (“operating cost reimbursements”) including real estate taxes, repairs and maintenance and insurance. The related revenue from tenant billings is recognized in the same period the expense is recorded.

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) since our 1994 tax year. As a result, we are not subject to federal income taxes to the extent that we distribute annually 100% of our REIT taxable income to our stockholders and satisfy certain other requirements for qualifying as a REIT.

We have established TRS entities pursuant to the provisions of the Internal Revenue Code. Our TRS entities are able to engage in activities resulting in income that would be nonqualifying income for a REIT. As a result, certain activities of our Company which occur within our TRS entities are subject to federal and state income taxes. As of March 31, 2013 and December 31, 2012, we had accrued a deferred income tax amount of $705,000. In addition, we have recognized income tax expense of $0 and $4,200 for the three months ended March 31, 2013 and 2012, respectively.

Results of Operations

Comparison of Three Months Ended March 31, 2013 to Three Months Ended March 31, 2012 

Minimum rental revenue increased $1,819,000, or 23%, to $9,636,000 in 2013, compared to $7,817,000 in 2012. Rental revenue increased $1,695,000 due to the acquisition of 28 single tenant net leased properties subsequent to December 31, 2011, $73,000 due to the completed development of two properties in 2012, and $51,000 as a result of other rent adjustments.

Operating cost reimbursements increased $55,000, or 10%, to $592,000 in 2013, compared to $537,000 in 2012.

Other income was $0 in 2013, compared to $17,000 in 2012.

Real estate taxes decreased $10,000, or 2%, to $466,000 in 2013, compared to $476,000 in 2012. The change was related to single tenant properties.

Property operating expenses (shopping center maintenance, snow removal, insurance and utilities) increased $22,000, or 7%, to $357,000 in 2013, compared to $335,000 in 2012.

Land lease payments decreased $74,000, or 41%, to $107,000 in 2013, compared to $181,000 in 2012 due to the acquisition of property previously leased.

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General and administrative expenses increased by $79,000, or 6%, to $1,486,000 in 2013, compared to $1,407,000 in 2012. The increase in general and administrative expenses was the result of increased employee costs of $66,000, and other increased costs of $13,000. General and administrative expenses as a percentage of total rental income (minimum and percentage rents) decreased from 17.98% for 2012 to 15.39% for 2013.

Depreciation and amortization increased $475,000, or 32%, to $1,951,000 in 2013, compared to $1,476,000 in 2012. The increase was the result of the acquisition of 30 properties in 2012 and 2013.

We recognized a gain of $946,000 on the disposition of one property in January 2013 and a gain of $908,000 on the sale of assets in 2012. 

Interest expense increased $304,000, or 27%, to $1,440,000 in 2013, compared to $1,136,000, in 2012. The increase in interest expense was a result of the higher level of borrowings due to the acquisition of properties.

Income from discontinued operations was $7,000 in 2013 compared to $459,000 in 2012, as a result of the sale of one property in January of 2013 and the sale of six properties during 2012; one in May, one in June, two in August, and another in September.

Our net income increased $650,000 or 14%, to $5,392,000 in 2013 from $4,742,000 in 2012 as a result of the foregoing factors.

Liquidity and Capital Resources 

Our principal demands for liquidity are operations, distributions to our stockholders, debt repayment, development of new properties, redevelopment of existing properties and future property acquisitions. We intend to meet our short-term liquidity requirements, including capital expenditures related to the leasing and improvement of our properties, through cash flow provided by operations, our $85 million credit facility (the “Credit Facility”) and additional financings. We believe that adequate cash flow will be available to fund our operations and pay dividends in accordance with REIT requirements for at least the next 12 months. We may obtain additional funds for future developments or acquisitions through other borrowings or the issuance of additional shares of common stock. Although market conditions have limited the availability of new sources of financing and capital, which may have an impact on our ability to obtain financing, we believe that these financing sources will enable us to generate funds sufficient to meet both our short-term and long-term capital needs.

We completed an underwritten public offering of 1,725,000 shares of common stock at a public offering price of $27.25 per share in January of 2013. The offering, which included the full exercise of the overallotment option by the underwriters, raised net proceeds of approximately $45 million after deducting the underwriting discount and other expenses. We used the net proceeds of the offering to pay down amounts outstanding under the Credit Facility and for general corporate purposes.

We sold one single tenant property during 2013 for net proceeds of approximately $5,600,000. We will continue to evaluate our portfolio to identify opportunities to further diversify our holdings and improve asset quality while executing on our operating strategy.

Our cash flows from operations increased $3,044,000 to $6,867,000 for the three months ended March 31, 2013, compared to $3,823,000 for the three months ended March 31, 2012. Cash used in investing activities increased by $2,406,000 to ($11,506,000) in 2013, compared to ($9,100,000) in 2012. Cash provided by financing activities increased $829,000 to $4,568,000 in 2013, compared to $3,739,000 in 2012.

We intend to maintain a ratio of total indebtedness (including construction or acquisition financing) to total enterprise value (common equity, on a fully diluted basis, plus total indebtedness) of 65% or less. Nevertheless, we may operate with debt levels which are in excess of 65% of total enterprise value for extended periods of time. At March 31, 2013, our ratio of indebtedness to total enterprise value was approximately 23%.

Dividends 

During the quarter ended March 31, 2013, we declared a quarterly dividend of $0.41 per share. We paid the dividend on April 9, 2013 to holders of record on March 28, 2013.

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Debt 

The Operating Partnership has in place an $85 million unsecured revolving Credit Facility, which is guaranteed by our Company. Subject to customary conditions, at our option, total commitments under the Credit Facility may be increased up to an aggregate of $135 million. We intend to use borrowings under the Credit Facility for general corporate purposes, including working capital, development and acquisition activities, capital expenditures, repayment of indebtedness or other corporate activities. The Credit Facility matures on October 26, 2015, and may be extended, at our election, for two one-year terms to October 2017, subject to certain conditions. Borrowings under the Credit Facility bear interest at LIBOR plus a spread of 150 to 215 basis points depending on our leverage ratio. As of March 31, 2013, we had $9,000,000 in principal amount outstanding under the Credit Facility bearing a weighted average interest rate of 1.73%, and $76,000,000 was available for borrowing (subject to customary conditions to borrowing).

The Credit Facility contains customary covenants, including, among others, financial covenants regarding debt levels, total liabilities, tangible net worth, fixed charge coverage, unencumbered borrowing base properties and permitted investments. We were in compliance with the covenant terms at March 31, 2013.

As of March 31, 2013, we had total mortgage indebtedness of $116,526,115. Including our mortgages that have been swapped to a fixed interest rate, our weighted average interest rate on mortgage debt is 4.41%.

The mortgage loans encumbering the Company’s properties are generally non-recourse, subject to certain exceptions for which the Company would be liable for any resulting losses incurred by the lender. These exceptions vary from loan to loan but generally include fraud or a material misrepresentation, misstatement or omission by the borrower, intentional or grossly negligent conduct by the borrower that harms the property or results in a loss to the lender, filing of a bankruptcy petition by the borrower, either directly or indirectly, and certain environmental liabilities. At March 31, 2013, the mortgage debt of $22,460,228 is recourse debt and is secured by a limited guaranty of payment and performance by us for approximately 50% of the loan amount. 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.

Capitalization 

As of March 31, 2013, our total enterprise value was approximately $535 million. Enterprise value consisted of $126 million of total indebtedness (including construction or acquisition financing, property related mortgages and the Credit Facility), and $409 million of shares of common equity, including common stock and operating partnership units in the Operating Partnership (“OP units”) (based on the closing price on the New York Stock Exchange of $30.10 per share on March 28, 2013). Our ratio of indebtedness to total enterprise value was approximately 23% at March 31, 2013.

At March 31, 2013, the non-controlling interest in the Operating Partnership represented a 2.56% ownership 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. We, as sole general partner of the Operating Partnership, have 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 13,589,463 shares of common stock outstanding at March 31, 2013, with a market value of approximately $409 million.

We completed an underwritten public offering of 1,725,000 shares of common stock in January of 2013 at a public offering price of $27.25 per share.  The offering, which included the full exercise of the overallotment option by the underwriters, raised net proceeds of approximately $45 million after deducting the underwriting discount and other expenses.  We used the net proceeds from the offering to pay down amounts outstanding under the Credit Facility and for general corporate purposes.

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Contractual Obligations 

The following table outlines our contractual obligations, as of March 31, 2013 for the periods presented below (in thousands).

	Total		April 1, 2013 - March 31, 2014		April 1, 2014 - March 31, 2016		April 1, 2016 - March 31, 2018		Thereafter
Mortgages payable	$	116,526	$	3,534	$	16,476	$	34,637	$	61,879
Note payable		9,000		-		9,000		-		-
Land lease obligation		10,671		416		832		850		8,573
Estimated interest payments on mortgages and note payable		27,112		5,282		8,972		6,042		6,816
Total	$	163,309	$	9,232	$	35,280	$	41,529	$	77,268

Estimated interest payments for mortgages payable are based on stated rates. Estimated interest payments for note payable are based on the interest rate in effect for the most recent quarter, which is assumed to be in effect through the respective maturity date.

We are constructing and plan to begin construction of additional pre-leased developments and may acquire additional properties, which will initially be financed by the Credit Facility. Additional funding required to complete current ongoing projects is estimated to be $3,097,000. We will periodically refinance short-term construction and acquisition financing with long-term debt and/or equity to the extent available.

Off-Balance Sheet Arrangements 

We do not engage in any off-balance sheet arrangements with unconsolidated entities or financial partnerships, such as structured finance or special purpose entities.

Inflation 

Our leases generally contain provisions designed to mitigate the adverse impact of inflation on net income. These provisions include clauses enabling us to pass through to tenants certain operating costs, including real estate taxes, common area maintenance, utilities and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. Certain of our leases contain clauses enabling us to receive percentage rents based on tenants' gross sales, which generally increase as prices rise, and, in certain cases, escalation clauses, which generally increase rental rates during the terms of the leases. In addition, expiring tenant leases permit us to seek increased rents upon re-lease at market rates if rents are below the then existing market rates.

Funds from Operations 

Funds from Operations (“FFO”) is defined by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) to mean net income computed in accordance with U.S. generally accepted accounting principles (“GAAP”), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. In addition, NAREIT has recently clarified the computation of FFO to exclude impairment charges on depreciable property. Management has restated FFO for prior periods presented accordingly. Management uses FFO as a supplemental measure to conduct and evaluate our business because there are certain limitations associated with using GAAP net income by itself as the primary measure of our operating performance. 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, management believes that the presentation of operating results for real estate companies that use historical cost accounting is insufficient by itself.

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

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Adjusted Funds from Operations (“AFFO”) is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. AFFO further adjusts FFO for certain non-cash items that reduce or increase net income in accordance with GAAP. AFFO should not be considered an alternative to net earnings, as an indication of our performance or to cash flow as a measure of liquidity or ability to make distributions. Management considers AFFO a useful supplemental measure of our performance. Our 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.

The following tables provide a reconciliation of FFO and AFFO to net income for the three months ended March 31, 2013 and 2012:

	Three Months Ended
Reconciliation of Funds from Operations to Net Income	March 31, 2013			March 31, 2012
Net income	$	5,392,258		$	4,741,835
Depreciation of real estate assets		1,595,162			1,433,750
Amortization of leasing costs		27,630			25,400
Amortization of leasing intangibles		314,570			214,277
Gain on sale of assets		(946,347	)		(908,160	)
Funds from Operations	$	6,383,273		$	5,507,102
Funds from Operations Per Share - Dilutive	$	0.49		$	0.50
Weighted average shares and OP units outstanding
Basic		12,989,349			11,070,076
Diluted		13,040,980			11,102,441

	Three Months Ended
Reconciliation of Adjusted Funds from Operations to Net Income	March 31, 2013			March 31, 2012
Net income	$	5,392,258		$	4,741,835
Cumulative adjustments to calculate FFO		991,015			765,267
Funds from Operations	$	6,383,273		$	5,507,102
Straight-line accrued rent		(403,297	)		(135,490	)
Deferred revenue recognition		(115,845	)		(115,845	)
Stock based compensation expense		470,110			412,000
Amortization of financing costs		78,042			42,056
Capitalized building improvements		-			-
Adjusted Funds from Operations	$	6,412,283		$	5,709,823
Additional supplemental disclosure
Scheduled principal repayments		850,026			739,776

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are 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.

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.

	Year ended March 31,
	2014			2015			2016			2017			2018			Thereafter			Total
Fixed Rate Mortgages Payable	$	3,534		$	12,724		$	3,752		$	12,486		$	22,151		$	61,879		$	116,526
Average interest rate		6.06	%		5.36	%		6.13	%		6.42	%		3.92	%		3.75	%		-
Variable Rate Note Payable		-		$	9,000			-			-			-			-		$	9,000
Average interest rate		-			2.22	%		-			-			-			-			-

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The fair value (in thousands) is estimated at $117,943 and $9,000 for fixed rate mortgages and other variable rate debt, respectively, as of March 31, 2013.

The table above incorporates those exposures that exist as of March 31, 2013; 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, we 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.

We entered into an interest rate swap agreement in 2009 to hedge interest rates on $24.5 million in variable-rate borrowings outstanding. Under the terms of the interest rate swap agreement, we will receive from the counterparty interest on the notional amount based on 1.5% plus one-month LIBOR and will pay to the counterparty a fixed rate of 3.744%. This swap effectively converted $24.5 million of variable-rate borrowings to fixed-rate borrowings to June 30, 2013. As of March 31, 2013, this interest rate swap was valued at a liability of $151,635. In addition, in April 2012, we entered into a forward starting interest rate swap agreement, for the same variable rate loan, to hedge interest rates on $22.3 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, we will receive from the counterparty interest on the notional amount based on one-month LIBOR and will pay to the counterparty a fixed rate of 1.92%. This swap effectively converted $22.3 million of variable-rate borrowings to fixed-rate borrowings from July 1, 2013 to May 1, 2019. As of March 31, 2013, this interest rate swap was valued at a liability of $913,027.

On December 4, 2012, we entered into interest rate swap agreements for a notional amount of $25,000,000, effective December 6, 2012 and ending on April 4, 2018. We entered into these derivative instruments to hedge against changes in future cash flows related to changes in interest rates on $25,000,000 of variable rate borrowings outstanding. Under the terms of the interest rate swap agreements we will receive from the counterparty interest on the notional amount based on one-month LIBOR and will pay to the counterparty a fixed rate of .885%. This swap effectively converted $25,000,000 of variable-rate borrowings to fixed-rate borrowings beginning on December 6, 2012 and through April 4, 2018. As of March 31, 2013, this interest rate swap was valued at a liability of $22,667.

We do not use derivative instruments for trading or other speculative purposes.

As of March 31, 2013, a 100 basis point increase in interest rates on the portion of our debt bearing interest at variable rates (excluding the amounts outstanding under the loans that have been hedged to fixed rates) would result in an annual increase in interest expense of approximately $90,000.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures 

At 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 (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.

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.

20

PART II—Other Information

Item 1.    Legal Proceedings

We are not presently involved in any litigation nor, to our knowledge, is any other litigation threatened against us, except for routine litigation arising in the ordinary course of business which is expected to be covered by our liability insurance.

Item 1A. Risk Factors

There have been no material changes from our risk factors set forth under Item 1A of Part 1 of our most recently filed Form 10-K.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.    Defaults Upon Senior Securities

None.

Item 4.    Mine safety disclosures

Not applicable.

Item 5.    Other Information

None.

Item 6.    Exhibits

*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, Alan D. Maximiuk, Vice President, 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, Alan D. Maximiuk, Vice President, Chief Financial Officer

*10.1 Second Amendment to First Amended and Restated Agreement of Limited Partnership of Agree Limited Partnership

10.2 Amended Employment Agreement, dated January 1, 2013, by and between the Company and Richard Agree (incorporated by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K (No. 001-12928) filed on March 11, 2013)

10.3 Amended Employment Agreement, dated January 1, 2013, by and between the Company and Joey Agree (incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K (No. 001-12928) filed on March 11, 2013)

21

*101 The following materials from Agree Realty Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statement of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these consolidated financial statements.

As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

* Filed herewith.

22

SIGNATURES

Pursuant to the requirements 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

/s/ JOEL N. AGREE

Joel N. Agree

President and Chief Executive Officer

/s/ ALAN D. MAXIMIUK

Alan D. Maximiuk

Vice President, Chief Financial Officer and

Secretary

(Principal Financial and Accounting Officer)

Date:   May 3, 2013

23

EX-10.1

Exhibit 10.1

SECOND AMENDMENT TO FIRST AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP OF

AGREE LIMITED PARTNERSHIP

March 20, 2013

WHEREAS, it is deemed in the best interests of Agree Realty Corporation, a Maryland corporation (“General Partner”), and each of the limited partners of Agree Limited Partnership, a Delaware limited partnership (“Partnership”), to amend as set forth herein the First Amended and Restated Agreement of Limited Partnership of Agreement Limited Partnership, dated as of April 22, 1994 (the “Initial Partnership Agreement”), as previously amended by the Amendment to the First Amended and Restated Agreement of Limited Partnership of Agree Limited Partnership, dated as of July 8, 1994 (the “First Amendment” and together with the Initial Partnership Agreement, the “Partnership Agreement”);

WHEREAS, the Partnership Agreement may be amended as provided in Section 13.1 thereof.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the General Partner and each of the Limited Partners hereby agree as follows:

1.          Capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Partnership Agreement. The following defined terms used herein shall have the meanings specified below:

“Agree Partnership Units” means the Partnership Units owned by Richard Agree as of December 31, 2012, regardless of whether such Partnership Units are subsequently owned by Richard Agree. An Agree Partnership Unit shall cease to be treated as such if it is acquired by the General Partner pursuant to the exercise of the Conversion Right by the owner of such Agree Partnership Unit.

2.          The defined terms “Net Income” and “Net Loss” in Article I are deleted in their entirety and the following new defined terms are inserted in their place:

“Net Income” means, for any taxable period, the excess, if any, of the Partnership’s items of income and gain for such taxable period over the Partnership’s items of loss and deduction for such taxable period. The items included in the calculation of Net Income shall be determined in accordance with Section 4.4 hereof. Once an item of income, gain, loss or deduction that has been included in the initial computation of Net Income is subjected to the special allocation rules in Sections 6.4, 6.5 and 6.6, Net Loss or the resulting Net Income, whichever the case may be, shall be recomputed without regard to such item.

“Net Loss” means, for any taxable period, the excess, if any, of the Partnership’s items of loss and deduction for such taxable period over the Partnership’s items of income and gain for such taxable period. The items included in the calculation of Net Income shall be determined in accordance with Section 4.4 hereof. Once an item of income, gain, loss or deduction that has been included in the initial computation of Net Loss is subjected to the special allocation rules in Sections 6.4, 6.5 and 6.6, Net Income or the resulting Net Loss, whichever the case may be, shall be recomputed without regard to such item.

3.          Article VI, Section 6.1 of the Partnership Agreement is hereby deleted in its entirety and the following new Section 6.1 is inserted in its place:

For purposes of maintaining the Capital Accounts and in determining the rights of the Partners among themselves, the Partnership’s items of income, gain, loss and deduction (computed in accordance with Section 4.4 hereof) shall be allocated among the Partners in each taxable year (or portion thereof) as provided herein below.

A.           Net Income.   After giving effect to the special allocations set forth in Sections 6.4 and 6.6 hereof, Net Income shall be allocated (i) first, to the General Partner to the extent that Net Losses previously allocated to the General Partner pursuant to the last sentence of Section 6.1.B exceed Net Income previously allocated to the General Partner pursuant to this clause (i) of Section 6.1.A, and (ii) thereafter, Net Income shall be allocated to the Partners in accordance with their respective Partnership Interests.

B.           Net Losses. After giving effect to the special allocations set forth in Sections 6.4 and 6.6 hereof, Net Losses shall be allocated to the Partners in accordance with their respective Partnership Interests, provided that Net Losses shall not be allocated to any Limited Partner pursuant to this Section 6.1.B to the extent that such allocation would cause such Limited Partner to have an Adjusted Capital Account Deficit at the end of such taxable year (or increase any existing Adjusted Capital Account Deficit). All Net Losses in excess of the limitations set forth in this Section 6.1.B shall be allocated to the General Partner.

4.          Article VI, Section 6.5.A of the Partnership Agreement is hereby deleted in its entirety and the following new Section 6.5.A is inserted in its place:

A.           Except as otherwise provided in this Section 6.5, for federal income tax purposes, each item of income, gain, loss and deduction shall be allocated among the Partners in the same manner as its correlative item of “book” income, gain, loss or deduction is allocated pursuant to Sections 6.1, 6.4 and 6.6 of this Agreement.

5.          Article VI of the Partnership Agreement is hereby amended by adding the following new Section 6.6 thereto:

Section 6.6           Special Allocation to Agree Partnership Units.

Notwithstanding any other provision of this Agreement (including Section 6.1 above), the following special allocations shall be made with respect to the Agree Partnership Units:

A.           $1,200,000 of loss subject to the recapture rules in section 1231 of the Code recognized by the Partnership during its taxable year ended December 31, 2012 shall be specially allocated pro rata to the Agree Partnership Units.

2

B.           Up to $200,000 of items of gain recognized by the Partnership from the sale or other disposition of the Partnership’s properties in each taxable year beginning with the Partnership’s taxable year ending December 31, 2013 shall be specially allocated pro rata to the Agree Partnership Units until the Agree Partnership Units have received special allocations of items of gain and income of the Partnership pursuant to this Section 6.6.B and Section 6.6.C in an aggregate amount equal to $1,200,000.

C.           If any Limited Partner owning Agree Partnership Units exercises the Conversion Right with respect to its Agree Partnership Units and prior to that time the Agree Partnership Units have not been specially allocated in the aggregate items of gain and income of the Partnership in an amount equal to $1,200,000 pursuant to Section 6.6.B above or this Section 6.6.C, then each Agree Partnership Unit with respect to which the Conversion Right has been exercised shall be specially allocated items of gain and, if the Partnership does not have sufficient items of gain, items of income of the Partnership for the year in which the Conversion Right is exercised in an amount such that, if all Agree Partnership Units received a special allocation pursuant to this Section 6.6.C on a pro rata basis, then the aggregate amount of items of gain and income allocated to the Agree Partnership Units pursuant to this Section 6.6 would equal $1,200,000.

6.          Except as modified herein, all terms and conditions of the Partnership Agreement shall remain in full force and effect, which terms and conditions the General Partner and the Limited Partners hereby ratify and confirm.

3

IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the date first set forth above.

AGREE LIMITED PARTNERSHIP
By:	Agree Realty Corporation,
	as General Partner
	By:	/s/ Alan D. Maximiuk
	Name:	Alan D. Maximiuk
	Title:	Vice President, Chief Financial
		Officer and Secretary
AGREE REALTY CORPORATION,
as General Partner and a Limited Partner
By:	/s/ Alan D. Maximiuk
	Name:	Alan D. Maximiuk
	Title:	Vice President, Chief Financial
		Officer and Secretary
Richard Agree, Limited Partner
/s/ Richard Agree

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joel N. Agree, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Agree Realty Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 3, 2013	/s/ Joel N. Agree
	Name:  Joel N. Agree
	Title:  President and Chief Executive Officer

1

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Alan D. Maximiuk, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Agree Realty Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  May 3, 2013	/s/ Alan D. Maximiuk
	Name:  Alan D. Maximiuk
	Title:  Vice President, Chief Financial Officer
	and Secretary

1

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Based on a review of the Quarterly Report on Form 10-Q for the period ending March 31, 2013 of Agree Realty Corporation (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joel N. Agree, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report, containing the financial statements, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Joel N. Agree

Joel N. Agree

President and Chief Executive Officer

May 3, 2013

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Based on a review of the Quarterly Report on Form 10-Q for the period ending March 31, 2013 of Agree Realty Corporation (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan D. Maximiuk, Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report, containing the financial statements, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Alan D. Maximiuk

Alan D. Maximiuk

Vice President, Chief Financial

Officer and Secretary

May 3, 2013

XML

Dividends and Distributions Payable (Details Textual) (USD $)	Mar. 05, 2013
Dividends Payable, Amount Per Share	$ 0.41

XML

Stock Based Compensation (Details) (Restricted Stock [Member], USD $)	3 Months Ended
	Mar. 31, 2013
Restricted Stock [Member]
Shares Outstanding, Unvested restricted stock	250,180
Shares Outstanding,Restricted stock granted	82,050
Shares Outstanding,Restricted stock vested	(69,680)
Shares Outstanding,Restricted stock forfeited	(1,250)
Shares Outstanding, Unvested restricted stock	261,300
Weighted Average Grant Date Fair Value, Unvested restricted stock	$ 22.66
Weighted Average Grant Date Fair Value,Restricted stock granted	$ 27.51
Weighted Average Grant Date Fair Value,Restricted stock vested	$ 22.50
Weighted Average Grant Date Fair Value,Restricted stock forfeited	$ 20.33
Weighted Average Grant Date Fair Value, Unvested restricted stock	$ 24.24

XML

Purchase Accounting for Acquisitions of Real Estate (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2013 Properties
Payments To Acquire Retail Assets	$ 15,000,000
Weighted Average Capitalization Rate For Acquired Assets	8.03%
Percentage Of Control Of Assets	100.00%
Real Estate Revenue, Net	235,000
Income (Loss) From Continuing Operations Attributable To Parent	198,000
Acquired Finite-Lived Intangible Assets, Weighted Average Useful Life	19 years 1 month 6 days
Number Of Real Estate Properties	4
Land [Member]
Business Acquisition, Purchase Price Allocation, Assets Acquired	1,000,000
Building and Building Improvements [Member]
Business Acquisition, Purchase Price Allocation, Assets Acquired	13,000,000
Lease Intangible Costs [Member]
Business Acquisition, Purchase Price Allocation, Assets Acquired	$ 1,000,000

XML

Earnings Per Share

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

3. Earnings Per Share

Earnings per share has been computed by dividing the net income attributable to Agree Realty Corporation by the weighted average number of common shares outstanding.

The following is a reconciliation of the denominator of the 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:

	Three Months Ended March 31,
	2013		2012
Weighted average number of common shares outstanding		12,903,030		10,975,857
Unvested restricted stock		261,300		253,400
Weighted average number of common shares outstanding used in basic earnings per share		12,641,730		10,722,457
Weighted average number of common shares outstanding used in basic earnings per share		12,641,730		10,722,457
Effect of dilutive securities:
Restricted stock		51,631		32,365
Weighted average number of common shares outstanding used in diluted earnings per share		12,693,361		10,754,822

XML

Fair Value Measurements (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Interest Rate Derivative Liabilities, at Fair Value	$ 1,087,329	$ 1,337,998
Interest Rate Swap [Member]
Interest Rate Derivative Liabilities, at Fair Value	1,087,329
Interest Rate Swap [Member] | Fair Value, Inputs, Level 1 [Member]
Interest Rate Derivative Liabilities, at Fair Value	0
Interest Rate Swap [Member] | Fair Value, Inputs, Level 2 [Member]
Interest Rate Derivative Liabilities, at Fair Value	1,087,329
Interest Rate Swap [Member] | Fair Value, Inputs, Level 3 [Member]
Interest Rate Derivative Liabilities, at Fair Value	0
Mortgages Payable [Member]
Interest Rate Derivative Liabilities, at Fair Value	116,526,115
Mortgages Payable [Member] | Fair Value, Inputs, Level 1 [Member]
Interest Rate Derivative Liabilities, at Fair Value	0
Mortgages Payable [Member] | Fair Value, Inputs, Level 2 [Member]
Interest Rate Derivative Liabilities, at Fair Value	0
Mortgages Payable [Member] | Fair Value, Inputs, Level 3 [Member]
Interest Rate Derivative Liabilities, at Fair Value	117,942,643
Note Payable [Member]
Interest Rate Derivative Liabilities, at Fair Value	9,000,000
Note Payable [Member] | Fair Value, Inputs, Level 1 [Member]
Interest Rate Derivative Liabilities, at Fair Value	0
Note Payable [Member] | Fair Value, Inputs, Level 2 [Member]
Interest Rate Derivative Liabilities, at Fair Value	9,000,000
Note Payable [Member] | Fair Value, Inputs, Level 3 [Member]
Interest Rate Derivative Liabilities, at Fair Value	$ 0

XML

Derivative Instruments and Hedging Activity (Details Textual) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2009 Interest Rate Swap Agreement One [Member]	Dec. 31, 2012 Interest Rate Swap Agreement Two [Member]	Dec. 31, 2012 Interest Rate Swap Agreement Three [Member]
Derivative, Notional Amount	$ 24,501,280	$ 22,268,358	$ 25,000,000
Derivative, Inception Date	Jan. 02, 2009	Jul. 01, 2013	Dec. 06, 2012
Derivative, Maturity Date	Jul. 01, 2013	May 01, 2019	Apr. 04, 2018
Description Of Interest Rate Cash Flow Hedge Activities	1.5% plus one-month LIBOR and will pay to the counterparty a fixed rate of 3.744%.	one-month LIBOR and will pay to the counterparty a fixed rate of 1.92%.	one month LIBOR and will pay to the counterparty a fixed rate of .885%.
Short-Term Debt, Percentage Bearing Fixed Interest Rate	3.744%	1.92%	0.885%
Conversion Of Variable Rate Borrowing Amount To Fixed Rate Bearing Amount	$ 24,501,280	$ 22,268,358	$ 25,000,000

XML

Notes Payable (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2013
Line Of Credit Facility, Current Borrowing Capacity	$ 85,000,000
Line Of Credit Facility, Maximum Borrowing Capacity	135,000,000
Line Of Credit Facility, Expiration Date	Oct. 26, 2015
Extension Options	two-one year
Line Of Credit Facility Extension Option Expiration Date	October 2017
Line Of Credit Facility, Interest Rate Description	interest at LIBOR plus a spread of 150 to 215 basis points depending on the Company's leverage ratio
Line Of Credit Facility, Amount Outstanding	9,000,000
Line Of Credit Facility Weighted Average Interest Rate	1.73%
Line Of Credit Facility Available For Borrowing Subject To Customary Condition	$ 76,000,000

XML

Mortgages Payable (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Secured Debt	$ 116,526,115	$ 117,376,142
May 14 2017 [Member]
Secured Debt	22,460,228	22,601,978
January 2020 [Member]
Secured Debt	10,035,323	10,320,440
July 2026 [Member]
Secured Debt	9,923,924	10,042,152
June 2014 [Member]
Secured Debt	9,449,137	9,509,011
February 2017 [Member]
Secured Debt	4,112,749	4,340,850
June 11 2016 [Member]
Secured Debt	8,580,000	8,580,000
February 2020 [Member]
Secured Debt	3,324,754	3,341,711
April 4 2018 [Member]
Secured Debt	25,000,000	25,000,000
January 1 2023 [Member]
Secured Debt	$ 23,640,000	$ 23,640,000

XML

Stock Based Compensation

3 Months Ended

Mar. 31, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

2. Stock Based Compensation

The Company estimates the fair value of restricted stock and stock option 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. 

As of March 31, 2013, there was $5,813,000 of unrecognized compensation costs related to the outstanding shares of restricted stock, which is expected to be recognized over a weighted average period of 3.62 years. The Company used a 0% discount factor and forfeiture rate for determining the fair value of restricted stock. The forfeiture rate was based on historical results and trends.

The holder of a restricted stock award is generally entitled at all times on and after the date of issuance of the restricted stock to exercise the rights of a stockholder of the Company, including the right to vote the shares and the right to receive dividends on the shares.

Restricted share activity is summarized as follows:

	Shares Outstanding			Weighted Average Grant Date  Fair Value
Unvested restricted stock at January 1, 2013		250,180		$	22.66
Restricted stock granted		82,050			27.51
Restricted stock vested		(69,680	)		22.50
Restricted stock forfeited		(1,250	)		20.33
Unvested restricted stock at March 31, 2013		261,300		$	24.24

XML

Mortgages Payable (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2013
Long-Term Debt, Maturities, Repayments Of Principal In Next Twelve Months	$ 3,534,255
Long-Term Debt, Maturities, Repayments Of Principal In Year Two	12,724,355
Long-Term Debt, Maturities, Repayments Of Principal In Year Three	3,752,012
Long-Term Debt, Maturities, Repayments Of Principal In Year Four	12,485,823
Long-Term Debt, Maturities, Repayments Of Principal In Year Five	22,150,568
Long-Term Debt, Maturities, Repayments Of Principal After Year Five	61,879,102
Short-Term Debt, Weighted Average Interest Rate	4.41%
Real Estate Investments, Net	147,660,543
January 2020 [Member]
Debt Instrument, Periodic Payment	153,838
Debt Instrument, Interest Rate, Stated Percentage	6.90%
July 2026 [Member]
Debt Instrument, Periodic Payment	91,675
Debt Instrument, Interest Rate, Stated Percentage	6.27%
June 2014 [Member]
Debt Instrument, Periodic Payment	60,097
Debt Instrument, Interest Rate, Stated Percentage	5.08%
Repayments Of Debt	9,167,573
February 2017 [Member]
Debt Instrument, Periodic Payment	99,598
Debt Instrument, Interest Rate, Stated Percentage	6.63%
June 11 2016 [Member]
Debt Instrument, Periodic Payment	48,467
Debt Instrument, Interest Rate, Stated Percentage	6.56%
Repayments Of Debt	8,580,000
February 2020 [Member]
Debt Instrument, Periodic Payment	23,004
Debt Instrument, Interest Rate, Stated Percentage	6.24%
Repayments Of Debt	2,766,628
May 14 2017 [Member]
Debt Instrument, Periodic Payment	47,250
Short Term Debt Percentage Bearing Variable Interest Rate Description	interest at 170 basis points over LIBOR
Repayments Of Debt	$ 19,744,758
Short Term Debt Percentage Bearing Fixed Interest Rate One	3.74%
April 4 2018 [Member]
Short Term Debt Percentage Bearing Fixed Interest Rate One	2.49%
January 1 2023 [Member]
Debt Instrument, Interest Rate, Stated Percentage	3.60%

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CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2013	Dec. 31, 2012
ASSETS
Land	$ 135,504,709	$ 134,740,784
Buildings	252,164,842	240,204,708
Less accumulated depreciation	(60,101,756)	(58,508,881)
Property, Plant and Equipment, Net	327,567,795	316,436,611
Property under development	21,183,557	18,980,779
Property held for sale		4,537,752
Net Real Estate Investments	348,751,352	339,955,142
Cash and Cash Equivalents	1,199,030	1,270,027
Accounts Receivable - Tenants, net of allowance of $35,000 for possible losses at March 31, 2013 and December 31, 2012	1,718,266	2,160,055
Unamortized Deferred Expenses
Financing costs, net of accumulated amortization of $6,451,619 and $6,273,113 at March 31, 2013 and December 31, 2012, respectively	2,713,119	2,864,314
Leasing costs, net of accumulated amortization of $1,339,715 and $1,312,085 at March 31, 2013 and December 31, 2012, respectively	660,198	687,828
Lease intangibles, net of accumulated amortization of $1,909,384 and $1,594,815 at March 31, 2013 and December 31, 2012, respectively	23,174,203	21,342,122
Other Assets	1,991,462	1,813,344
Total Assets	380,207,630	370,092,832
LIABILITIES
Mortgages Payable	116,526,115	117,376,142
Note Payable	9,000,000	43,530,005
Dividends and Distributions Payable	5,570,743	4,710,446
Deferred Revenue	1,814,938	1,930,783
Accrued Interest Payable	436,717	335,416
Accounts Payable and Accrued Expense
Capital expenditures	85,874	122,080
Operating	1,601,842	2,015,367
Interest Rate Swap	1,087,329	1,337,998
Deferred Income Taxes	705,000	705,000
Tenant Deposits	61,961	64,461
Total Liabilities	136,890,519	172,127,698
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value, 15,850,000 shares authorized, 13,241,844 and 11,436,044 shares issued and outstanding, respectively	1,324	1,144
Excess stock, $.0001 par value, 4,000,000 shares authorized, 0 shares issued and outstanding	0	0
Series A junior participating preferred stock, $.0001 par value, 150,000 shares authorized, 0 shares issued and outstanding	0	0
Additional paid-in-capital	263,049,468	217,768,918
Deficit	(21,344,886)	(21,166,509)
Accumulated other comprehensive income (loss)	(1,050,166)	(1,294,267)
Total Stockholders' Equity - Agree Realty Corporation	240,655,740	195,309,286
Non-controlling interest	2,661,371	2,655,848
Total Stockholders' Equity	243,317,111	197,965,134
Total Liabilities and Stockholders' Equity	$ 380,207,630	$ 370,092,832

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash Flows from Operating Activities
Net income	$ 5,392,258	$ 4,741,835
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	1,611,451	1,449,778
Amortization	520,706	353,718
Stock-based compensation	470,110	412,000
Gain on sale of assets	(946,347)	(908,160)
(Increase) decrease in accounts receivable	441,789	197,360
(Increase) decrease in other assets	(194,408)	(288,822)
(Decrease) increase in accounts payable	(411,442)	(1,756,591)
Decrease in deferred revenue	(115,845)	(115,845)
Increase (decrease) in accrued interest	101,301	(260,676)
Increase (decrease) in tenant deposits	(2,500)	(1,400)
Net Cash Provided by Operating Activities	6,867,073	3,823,197
Cash Flows from Investing Activities
Acquisition of real estate investments (including capitalized interest of $203,558 in 2013, $0 in 2012)	(16,968,082)	(9,726,161)
Payment of leasing costs	0	(625)
Net proceeds from sale of assets	5,462,280	627,118
Net Cash Used In Investing Activities	(11,505,802)	(9,099,668)
Cash Flows from Financing Activities
Proceeds from common stock offering	44,810,620	35,042,235
Note payable borrowings	17,242,796	13,943,606
Note payable repayments	(51,772,801)	(40,002,806)
Payments of mortgages payable	(850,027)	(739,776)
Dividends paid	(4,574,418)	(3,940,766)
Limited partners' distributions paid	(139,047)	(139,047)
Repayments of payables for capital expenditures	(122,080)	(424,321)
Payments for financing costs	(27,311)
Net Cash Provided by Financing Activities	4,567,732	3,739,125
Net Increase (Decrease) in Cash and Cash Equivalents	(70,997)	(1,537,346)
Cash and Cash Equivalents, beginning of period	1,270,027	2,002,663
Cash and Cash Equivalents, end of period	1,199,030	465,317
Supplemental Disclosure of Cash Flow Information
Cash paid for interest (net of amounts capitalized)	1,146,919	1,282,681
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Shares issued under Stock Incentive Plan	2,257,195	2,166,270
Dividends and limited partners' distributions declared and unpaid	5,571,680	4,697,001
Real estate investments financed with accounts payable	85,874	54,321
Forgiveness of mortgage debt	$ 0	$ 9,173,789

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Discontinued Operations (Details Textual) (USD $)	3 Months Ended			12 Months Ended	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Shopping Center Property One [Member]	Mar. 31, 2013 Ypsilanti Property [Member]	Dec. 31, 2012 Segment, Discontinued Operations [Member] Office Building [Member]	Dec. 31, 2012 Segment, Discontinued Operations [Member] Single Tenant Property [Member]	Dec. 31, 2012 Segment, Discontinued Operations [Member] Shopping Center Property [Member]
Proceeds from Sale of Property, Plant, and Equipment				$ 7,475,000	$ 5,600,000	$ 650,000	$ 4,460,000	$ 3,500,000
Long-Term Debt, Gross			9,200,000
Disposal Group, Including Discontinued Operation, Revenue	9,301	996,050
Disposal Group, Including Discontinued Operation, Operating Expense	2,287	537,091
Disposal Group, Including Discontinued Operation, Interest Expense	0	0
Income (Loss) from Discontinued Operations, Net of Tax, Attributable to Noncontrolling Interest	$ 25,014	$ 41,965

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Schedule of Derivative Liabilities at Fair Value [Table Text Block]

The table below sets forth the Company’s fair value hierarchy for liabilities measured or disclosed at fair value as of March 31, 2013.

Liability:	Level 1		Level 2		Level 3		Carrying Value
Interest rate swaps	$	-	$	1,087,329	$	-	$	1,087,329
Mortgages payable	$	-	$	-	$	117,942,643	$	116,526,115
Note payable	$	-	$	9,000,000	$	-	$	9,000,000

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Purchase Accounting for Acquisitions of Real Estate (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Total revenue	$ 10,362	[1]	$ 8,407	[1]
Income before discontinued operations	$ 4,452	[1]	$ 3,382	[1]

[1] This unaudited pro forma supplemental information does not purport to be indicative of what the Company operating results would have been had the acquisitions occurred on January 1, 2013 or January 1, 2012 and may not be indicative of future operating results. Various acquisitions were of newly leased or constructed assets and may not have been in service for the full periods shown.

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Purchase Accounting for Acquisitions of Real Estate (Tables)

3 Months Ended

Mar. 31, 2013

Real Estate [Abstract]

Business Acquisition, Pro Forma Information [Table Text Block]

The following pro forma total revenue and income before discontinued operations for the 2013 acquisitions in aggregate, assumes the acquisitions had taken place on January 1, 2013 for the 2013 pro forma information, and on January 1, 2012 for the 2012 pro forma information (in thousands):

Supplemental pro forma for the three months ended March 31, 2013 (1)

Total revenue	$	10,362
Income before discontinued operations	$	4,452

Supplemental pro forma for the three months ended March 31, 2012 (1)

Total revenue	$	8,407
Income before discontinued operations	$	3,382

(1) This unaudited pro forma supplemental information does not purport to be indicative of what the Company operating results would have been had the acquisitions occurred on January 1, 2013 or January 1, 2012 and may not be indicative of future operating results. Various acquisitions were of newly leased or constructed assets and may not have been in service for the full periods shown.

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Basis of Presentation

3 Months Ended

Mar. 31, 2013

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. Basis of Presentation

The accompanying unaudited consolidated financial statements of Agree Realty Corporation (the “Company”) for the three months ended March 31, 2013 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for audited financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The consolidated balance sheet at December 31, 2012 has been derived from the audited consolidated financial statements at that date. Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 or for any other interim period. The results of operations of properties that have either been disposed of or are classified as held for sale are reported as discontinued operations. As a result of these discontinued operations, certain of the 2012 balances have been reclassified to conform to the 2013 presentation. For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

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CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $)	Mar. 31, 2013	Dec. 31, 2012
Allowance for doubtful accounts receivable (in dollars)	$ 35,000	$ 35,000
Accumulated amortization, deferred finance costs (in dollars)	6,451,619	6,273,113
Deferred costs, leasing, accumulated amortization (in dollars)	1,339,715	1,312,085
Finite-lived intangible assets, accumulated amortization (in dollars)	$ 1,909,384	$ 1,594,815
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	15,850,000	15,850,000
Common stock, shares, issued	13,241,844	11,436,044
Common stock, shares, outstanding	13,241,844	11,436,044
Excess stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Excess stock, shares authorized	4,000,000	4,000,000
Excess stock, shares issued	0	0
Excess stock, shares outstanding	0	0
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	150,000	150,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

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Discontinued Operations

3 Months Ended

Mar. 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

11. Discontinued Operations

During 2013, the Company sold one Single tenant property for approximately $5,600,000 in Ypsilanti, Michigan.

During 2012, the Company sold six non-core properties: a vacant office property for approximately $650,000; two vacant single tenant properties for $4,460,000; a Kmart anchored shopping center in Charlevoix, Michigan for $3,500,000; and two Kmart anchored shopping centers, one in Plymouth, Wisconsin and one in Shawano, Wisconsin for $7,475,000. In addition, during 2012, the Company conveyed four mortgaged properties to the lender pursuant to a consensual deed-in-lieu-of-foreclosure process that satisfied the loans, which had an aggregate principal amount outstanding of approximately $9.2 million as of December 31, 2011.

The results of operations for these properties are presented as discontinued operations in the Company’s Consolidated Statements of Income. The revenues for the properties were $9,301 for the three months ended March 31, 2013, and $996,050 for the three months ended March 31, 2012. The expenses for the properties were $2,287 for the three months ended March 31, 2013, and $537,091 for the three months ended March 31, 2012.

The Company elected to not allocate consolidated interest expense to the discontinued operations where the debt is not directly attributed to or related to the discontinued operations. Interest expense that was directly attributable to the discontinued operations was $0 for both the three months ended March 31, 2013, and March 31, 2012.

The results of income from discontinued operations allocable to non-controlling interest was $25,014 for the three months ended March 31, 2013, and $41,965 for the three months ended March 31, 2012.

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DOCUMENT AND ENTITY INFORMATION	3 Months Ended
	Mar. 31, 2013	Apr. 29, 2013
Entity Registrant Name	AGREE REALTY CORP
Entity Central Index Key	0000917251
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Trading Symbol	adc
Entity Common Stock, Shares Outstanding		13,241,844
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2013

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Purchase Accounting for Acquisitions of Real Estate

3 Months Ended

Mar. 31, 2013

Real Estate [Abstract]

Real Estate Disclosure [Text Block]

12. Purchase Accounting for Acquisitions of Real Estate

Acquired real estate assets have been accounted for using the purchase method of accounting and accordingly, the results of operations are included in the consolidated statements of income from the respective dates of acquisition. The Company allocates the purchase price to (i) land and buildings based on management’s internally prepared estimates and (ii) identifiable intangible assets or liabilities generally consisting of above-market and below-market in-place leases and in-place leases. The Company uses estimates of fair value based on estimated cash flows, using appropriate discount rates, and other valuation techniques, including management’s analysis of comparable properties in the existing portfolio, to allocate the purchase price to acquired tangible and intangible assets.

The estimated fair value of above-market and below-market in-place leases for acquired properties is recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease.

The aggregate fair value of other intangible assets consisting of in-place, at market leases, is estimated based on internally developed methods to determine the respective property values and are included in lease intangible costs in the consolidated balance sheets. Factors considered by management in their analysis include an estimate of costs to execute similar leases and operating costs saved.

During 2013, the Company has purchased five retail assets for approximately $15 million with a weighted average capitalization rate of 8.03% to obtain 100% control of the assets. The weighted average capitalization rate for these single tenant net leased properties was calculated by dividing the property net operating income by the purchase price. Property net operating income is defined as the straight-line rent for the base term of the lease less property level expense (if any) that is not recoverable from the tenant. The cost of the aggregate acquisitions was allocated as follows: $1 million to land, $13 million to buildings and improvements and $1 million to lease intangible costs. The acquisitions were cash purchases and there were no contingent considerations associated with these acquisitions.

Total revenues of $235,000 and income before discontinued operations of $198,000 are included in the consolidated income statement, for the three months ended March 31, 2013, for the aggregate 2013 acquisitions.

The following pro forma total revenue and income before discontinued operations for the 2013 acquisitions in aggregate, assumes the acquisitions had taken place on January 1, 2013 for the 2013 pro forma information, and on January 1, 2012 for the 2012 pro forma information (in thousands):

Supplemental pro forma for the three months ended March 31, 2013 (1)

Total revenue	$	10,362
Income before discontinued operations	$	4,452

Supplemental pro forma for the three months ended March 31, 2012 (1)

Total revenue	$	8,407
Income before discontinued operations	$	3,382

(1) This unaudited pro forma supplemental information does not purport to be indicative of what the Company operating results would have been had the acquisitions occurred on January 1, 2013 or January 1, 2012 and may not be indicative of future operating results. Various acquisitions were of newly leased or constructed assets and may not have been in service for the full periods shown.

The fair values of intangible assets acquired are amortized to depreciation and amortization on the consolidated statements of income over the remaining term of the respective leases. The weighted average amortization period for the lease intangible costs is 19.1 years.

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CONSOLIDATED STATEMENTS OF INCOME (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Revenues
Minimum rents	$ 9,635,863	$ 7,817,059
Percentage rents	20,061	15,107
Operating cost reimbursement	591,773	536,763
Other income	0	17,227
Total Revenues	10,247,697	8,386,156
Operating Expenses
Real estate taxes	466,510	476,075
Property operating expenses	357,391	334,801
Land lease payments	106,975	181,075
General and administrative	1,486,367	1,407,595
Depreciation and amortization	1,951,364	1,475,848
Total Operating Expenses	4,368,607	3,875,394
Income from Operations	5,879,090	4,510,762
Other Income (Expense)
Interest expense, net	(1,440,193)	(1,136,046)
Income From Continuing Operations	4,438,897	3,374,716
Discontinued Operations
Gain on sale of assets from discontinued operations	946,347	908,160
Income from discontinued operations	7,014	458,959
Net Income	5,392,258	4,741,835
Less Net Income Attributable to Non-Controlling Interest	141,479	145,556
Net Income Attributable to Agree Realty Corporation	5,250,779	4,596,279
Basic Earnings (Loss) Per Share
Continuing operations (in dollars per share)	$ 0.35	$ 0.31
Discontinued operations (in dollars per share)	$ 0.07	$ 0.12
Earnings Per Share, Basic (in dollars per share)	$ 0.42	$ 0.43
Diluted Earnings (Loss) Per Share
Continuing operations (in dollars per share)	$ 0.34	$ 0.31
Discontinued operations (in dollars per share)	$ 0.07	$ 0.12
Earnings Per Share, Diluted (in dollars per share)	$ 0.41	$ 0.43
Other Comprehensive Income
Net income	5,392,258	4,741,835
Other Comprehensive Income (Loss)	250,669	52,791
Total Comprehensive Income	5,642,927	4,794,626
Comprehensive Income Attributable to Non-Controlling Interest	(148,047)	(147,177)
Comprehensive Income Attributable to Agree Realty Corporation	$ 5,494,880	$ 4,647,449
Weighted Average Number of Common Shares: Outstanding -Basic (in shares)	12,641,730	10,722,457
Weighted Average Number of Common Shares: Outstanding - Dilutive (in shares)	12,693,361	10,754,822

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Fair Value Measurements

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

6. Fair Value Measurements

Certain of the Company’s assets and liabilities are disclosed at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  In determining fair value, the Company uses various valuation methods including market, income and cost approaches.  The assumptions used in the application of these valuation methods are developed from the perspective of market participants pricing the asset or liability.  Inputs used in the valuation methods can be either readily observable, market corroborated, or generally unobservable inputs.  Whenever possible the Company attempts to utilize valuation methods that maximize the use of observable inputs and minimizes the use of unobservable inputs.  Based on the operability of the inputs used in the valuation methods, the Company is required to provide the following information according to the fair value hierarchy.  The fair value hierarchy ranks the quality and reliability of the information used to determine fair values.  Assets and liabilities measured, reported and/or disclosed at fair value will be classified and disclosed in one of the following three categories:

Level 1 – Quoted market prices in active markets for identical assets or liabilities.

Level 2 – Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3 – Unobservable inputs that are not corroborated by market data.

The table below sets forth the Company’s fair value hierarchy for liabilities measured or disclosed at fair value as of March 31, 2013.

Liability:	Level 1		Level 2		Level 3		Carrying  Value
Interest rate swaps	$	-	$	1,087,329	$	-	$	1,087,329
Mortgages payable	$	-	$	-	$	117,942,643	$	116,526,115
Note payable	$	-	$	9,000,000	$	-	$	9,000,000

The carrying amounts of the Company’s short-term financial instruments, which consist of cash, cash equivalents, receivables, and accounts payable, approximate their fair values. The fair value of the interest rate swaps were derived using estimates to settle the interest rate swap agreements, which is based on the net present value of expected future cash flows on each leg of the swaps utilizing market-based inputs and discount rates reflecting the risks involved. The fair value of fixed and variable rate mortgages was derived using the present value of future mortgage payments based on estimated current market interest rates.  The fair value of variable rate debt is estimated to be equal to the face value of the debt because the interest rates are floating and is considered to approximate fair value.

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Derivative Instruments and Hedging Activity

3 Months Ended

Mar. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

5. Derivative Instruments and Hedging Activity

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.

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.

On January 2, 2009, the Company entered into an interest rate swap agreement for a notional amount of $24,501,280, effective on January 2, 2009 and ending on July 1, 2013. The notional amount decreases over the term to match the outstanding balance of the hedged borrowing. The Company entered into this derivative instrument to hedge against the risk of changes in future cash flows related to changes in interest rates on $24,501,280 of the total variable-rate borrowings outstanding. Under the terms of the interest rate swap agreement, the Company will receive from the counterparty interest on the notional amount based on 1.5% plus one-month LIBOR and will pay to the counterparty a fixed rate of 3.744%. This swap effectively converted $24,501,280 of variable-rate borrowings to fixed-rate borrowings beginning on January 2, 2009 and through July 1, 2013.

On April 24, 2012, the Company entered into a forward starting interest rate swap agreement, for the same variable rate loan, as extended, for a notional amount of $22,268,358, effective on July 1, 2013 and ending on May 1, 2019. The notional amount decreases over the term to match the outstanding balance of the hedged borrowing. The Company entered into this derivative instrument to hedge against the risk of changes in future cash flows related to changes in interest rates on $22,268,358 of the total variable rate borrowings outstanding. Under the terms of the interest rate swap agreement, the Company will receive from the counterparty interest on the notional amount based on one-month LIBOR and will pay to the counterparty a fixed rate of 1.92%. This swap effectively converted $22,268,358 of variable-rate borrowings to fixed-rate borrowings beginning on July 1, 2013 and through May 1, 2019.

On December 4, 2012, the Company entered into interest rate swap agreements for a notional amount of $25,000,000, effective December 6, 2012 and ending on April 4, 2018. The Company entered into these derivative instruments to hedge against changes in future cash flows related to changes in interest rates on $25,000,000 of variable rate borrowings outstanding. Under the terms of the interest rate swap agreements, the Company will receive from the counterparty interest on the notional amount based on one month LIBOR and will pay to the counterparty a fixed rate of .885%. This swap effectively converted $25,000,000 of variable-rate borrowings to fixed-rate borrowings beginning on December 6, 2012 and through April 4, 2018.

Companies are required to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet. The Company has designated these derivative instruments as cash flow hedges. As such, changes in the fair value of the derivative instrument are recorded as a component of other comprehensive income (loss) (“OCI”) for the three months ended March 31, 2013 to the extent of effectiveness. The ineffective portion of the change in fair value of the derivative instrument is recognized in interest expense. For the three months ended March 31, 2013, the Company has determined these derivative instruments to be effective hedges.

The Company does not use derivative instruments for trading or other speculative purposes and did not have any other derivative instruments or hedging activities as of March 31, 2013.

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Mortgages Payable (Tables)

3 Months Ended

Mar. 31, 2013

Debt Disclosure [Abstract]

Mortgages Payable [Table Text Block]

Mortgages payable consisted of the following:

	March 31, 2013		December 31, 2012
Note payable in monthly installments of interest only at LIBOR plus 160 basis points, swapped to a fixed rate of 2.49% with balloon payment due April 4, 2018; collateralized by related real estate and tenants' leases	$	25,000,000	$	25,000,000
Note payable in monthly installments of interest only at 3.60% per annum, with balloon payment due January 1, 2023; collateralized by related real estate and tenants' leases		23,640,000		23,640,000
Note payable in monthly principal installments of $47,250 plus interest at 170 basis points over LIBOR, currently swapped to a fixed rate of 3.74%.  A final balloon payment in the amount of $19,744,758 is due on May 14, 2017 unless extended for a two year period at the option of the Company, collateralized by related real estate and tenants’ leases		22,460,228		22,601,978
Note payable in monthly installments of $153,838 including interest at 6.90% per annum, with the final monthly payment due January 2020; collateralized by related real estate and tenants’ leases		10,035,323		10,320,440
Note payable in monthly installments of $91,675 including interest at 6.27% per annum, with a final monthly payment due July 2026; collateralized by related real estate and tenants’ leases		9,923,924		10,042,152
Note payable in monthly installments of $60,097 including interest at 5.08% per annum, with a final balloon payment in the amount of $9,167,573 due June 2014; collateralized by related real estate and tenants’ leases		9,449,137		9,509,011
Note payable in monthly installments of $99,598 including interest at 6.63% per annum, with the final monthly payment due February 2017; collateralized by related real estate and tenants’ leases		4,112,749		4,340,850
Note payable in monthy interest-only installments of $48,467 at 6.56% annum, with a balloon payment in the amount of $8,580,000 due June 11, 2016;  collateralized by related real estate and tenants’ leases		8,580,000		8,580,000
Note payable in monthly installments of $23,004 including interest at 6.24% per annum, with the final balloon payment of $2,766,628 due February 2020; collateralized by related real estate and tenant lease		3,324,754		3,341,711
Total	$	116,526,115	$	117,376,142

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Common Stock

3 Months Ended

Mar. 31, 2013

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

13. Common Stock

On January 18, 2013, the Company completed an underwritten public offering of 1,725,000 shares of common stock at a public offering price of $27.25 per share, including 225,000 common shares pursuant to the full exercise of the underwriters’ overallotment option. The offering raised approximately $45 million in net proceeds, after deducting the underwriting discount and other expenses. The Company used the net proceeds of the offering to pay down amounts outstanding under the Credit Facility and for general corporate purposes.

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Dividends and Distributions Payable

3 Months Ended

Mar. 31, 2013

Dividends and Distributions Payable [Abstract]

Dividends and Distributions Payable [Text Block]

9. Dividends and Distributions Payable

On March 5, 2013, the Company declared a dividend of $.41 per common share for the quarter ended March 31, 2013. The holders of limited partnership interest in the Operating Partnership (“OP Units”) were entitled to an equal distribution per OP Unit held as of March 31, 2013. The dividend and distributions payable are recorded as liabilities in the Company’s consolidated balance sheet as of March 31, 2013. The dividend has been reflected as a reduction of stockholders’ equity and the distribution has been reflected as a reduction of the limited partners’ non-controlling interest. The amounts were paid April 9, 2013.

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Notes Payable

3 Months Ended

Mar. 31, 2013

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

7. Note Payable

Agree Limited Partnership (the “Operating Partnership”) has in place an $85,000,000 unsecured revolving credit facility (“Credit Facility”), which is guaranteed by the Company. Subject to customary conditions, at the Company’s option, total commitments under the Credit Facility may be increased up to an aggregate of $135,000,000. The Company intends to use borrowings under the Credit Facility for general corporate purposes, including working capital, development and acquisition activities, capital expenditures, repayment of indebtedness or other corporate activities. The Credit Facility matures on October 26, 2015, and may be extended, at the Company’s election, for two one-year terms to October 2017, subject to certain conditions. Borrowings under the Credit Facility bear interest at LIBOR plus a spread of 150 to 215 basis points depending on the Company’s leverage ratio. As of March 31, 2013, $9,000,000 was outstanding under the Credit Facility bearing a weighted average interest rate of 1.73%, and $76,000,000 was available for borrowing (subject to customary conditions to borrowing).

The Credit Facility contains customary covenants, including, among others, financial covenants regarding debt levels, total liabilities, tangible net worth, fixed charge coverage, unencumbered borrowing base properties, and permitted investments. The Company was in compliance with the covenant terms at March 31, 2013.

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Mortgages Payable

3 Months Ended

Mar. 31, 2013

Debt Disclosure [Abstract]

Mortgage Notes Payable Disclosure [Text Block]

8. Mortgages Payable

Mortgages payable consisted of the following:

	March 31, 2013		December 31, 2012
Note payable in monthly installments of interest only at LIBOR plus 160 basis points, swapped to a fixed rate of 2.49% with balloon payment due April 4, 2018; collateralized by related real estate and tenants' leases	$	25,000,000	$	25,000,000
Note payable in monthly installments of interest only at 3.60% per annum, with balloon payment due January 1, 2023; collateralized by related real estate and tenants' leases		23,640,000		23,640,000
Note payable in monthly principal installments of $47,250 plus interest at 170 basis points over LIBOR, currently swapped to a fixed rate of 3.74%.  A final balloon payment in the amount of $19,744,758 is due on May 14, 2017 unless extended for a two year period at the option of the Company, collateralized by related real estate and tenants’ leases		22,460,228		22,601,978
Note payable in monthly installments of $153,838 including interest at 6.90% per annum, with the final monthly payment due January 2020; collateralized by related real estate and tenants’ leases		10,035,323		10,320,440
Note payable in monthly installments of $91,675 including interest at 6.27% per annum, with a final monthly payment due July 2026; collateralized by related real estate and tenants’ leases		9,923,924		10,042,152
Note payable in monthly installments of $60,097 including interest at 5.08% per annum, with a final balloon payment in the amount of $9,167,573 due June 2014; collateralized by related real estate and tenants’ leases		9,449,137		9,509,011
Note payable in monthly installments of $99,598 including interest at 6.63% per annum, with the final monthly payment due February 2017; collateralized by related real estate and tenants’ leases		4,112,749		4,340,850
Note payable in monthy interest-only installments of $48,467 at 6.56% annum, with a balloon payment in the amount of $8,580,000 due June 11, 2016;  collateralized by related real estate and tenants’ leases		8,580,000		8,580,000
Note payable in monthly installments of $23,004 including interest at 6.24% per annum, with the final balloon payment of $2,766,628 due February 2020; collateralized by related real estate and tenant lease		3,324,754		3,341,711
Total	$	116,526,115	$	117,376,142

The above mortgages payable are collateralized by related real estate with an aggregate net book value of $147,660,543.

Future scheduled annual maturities of mortgages payable for years ending March 31 are as follows: 2014 - $3,534,255; 2015 - $12,724,355; 2016 - $3,752,012; 2017 - $12,485,823; 2018 - $22,150,568 and $61,879,102 thereafter. The weighted average interest rate at March 31, 2013 was 4.41%.

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Deferred Revenue

3 Months Ended

Mar. 31, 2013

Deferred Revenue Disclosure [Abstract]

Deferred Revenue Disclosure [Text Block]

10. Deferred Revenue

In July 2004, the Company’s tenant in a joint venture property located in Boynton Beach, FL repaid $4.0 million that had been contributed by the Company’s joint venture partner. As a result of this repayment the Company became the sole member of the limited liability company holding the property. Total assets of the property were approximately $4.0 million. The Company has treated the $4.0 million as deferred revenue and accordingly, will recognize rental income over the term of the related leases.

The remaining deferred revenue of approximately $1.8 million will be recognized as minimum rents over approximately 4.1 years.

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Deferred Revenue (Details Textual) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2004	Dec. 31, 2012	Jul. 31, 2004
Proceeds From Related Party Debt			$ 4,000,000
Business Acquisition, Purchase Price Allocation, Property					4,000,000
Deferred Revenue	1,814,938			1,930,783	4,000,000
Minimum Lease Rental Years			4.1 years
Operating Leases, Income Statement, Minimum Lease Revenue	$ 9,635,863	$ 7,817,059	$ 1,800,000

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

Schedule of Earnings Per Share Reconciliation [Table Text Block]

The following is a reconciliation of the denominator of the 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:

	Three Months Ended March 31,
	2013		2012
Weighted average number of common shares outstanding		12,903,030		10,975,857
Unvested restricted stock		261,300		253,400
Weighted average number of common shares outstanding used in basic earnings per share		12,641,730		10,722,457
Weighted average number of common shares outstanding used in basic earnings per share		12,641,730		10,722,457
Effect of dilutive securities:
Restricted stock		51,631		32,365
Weighted average number of common shares outstanding used in diluted earnings per share		12,693,361		10,754,822

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Stock Based Compensation (Details Textual) (Restricted Stock [Member], USD $)	3 Months Ended
	Mar. 31, 2013
Restricted Stock [Member]
Employee Service Share-Based Compensation, Nonvested Awards, Total Compensation Cost Not Yet Recognized	$ 5,813,000
Employee Service Share-Based Compensation, Nonvested Awards, Total Compensation Cost Not Yet Recognized, Period For Recognition	3 years 7 months 13 days
Fair Value Inputs, Discount Rate	0.00%

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $)	Common Stock [Member]	Additional Paid-In Capital [Member]	Noncontrolling Interest [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at Dec. 31, 2012	$ 1,144	$ 217,768,918	$ 2,655,848	$ (21,166,509)	$ (1,294,267)	$ 197,965,134
Balance (in shares) at Dec. 31, 2012	11,436,044
Issuance of common stock, net of issuance costs	172	44,810,440	0	0	0
Issuance of common stock, net of issuance costs (in shares)	1,725,000
Issuance of restricted stock under the Equity Incentive Plan	8	0	0	0	0
Issuance of restricted stock under the Equity Incentive Plan (in shares)	82,050
Forfeiture of restricted stock (in shares)	(1,250)
Vesting of restricted stock	0	470,110	0	0	0
Dividends and distributions declared for the period January 1, 2013 to March 31, 2013	0	0	(142,524)	(5,429,156)	0
Other comprehensive income - change in fair value of interest rate swap	0	0	6,568	0	244,101
Net income for the period January 1, 2013 to March 31, 2013	0	0	141,479	5,250,779	0	5,392,258
Balance at Mar. 31, 2013	$ 1,324	$ 263,049,468	$ 2,661,371	$ (21,344,886)	$ (1,050,166)	$ 243,317,111
Balance (in shares) at Mar. 31, 2013	13,241,844

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Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2013

New Accounting Pronouncements and Changes In Accounting Principles [Abstract]

Description of New Accounting Pronouncements Not yet Adopted [Text Block]

4. Recent Accounting Pronouncements

As of March 31, 2013, the impact of recent accounting pronouncements is not considered to be material.

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Earnings Per Share (Details)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Weighted average number of common shares outstanding	12,903,030	10,975,857
Unvested restricted stock	261,300	253,400
Weighted average number of common shares outstanding used in basic earnings per share	12,641,730	10,722,457
Weighted average number of common shares outstanding used in basic earnings per share	12,641,730	10,722,457
Effect of dilutive securities:
Restricted stock	51,631	32,365
Weighted average number of common shares outstanding used in diluted earnings per share	12,693,361	10,754,822

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Common Stock (Details Textual) (USD $)	1 Months Ended		3 Months Ended
	Mar. 31, 2013	Jan. 31, 2013	Mar. 31, 2013	Mar. 31, 2012	Jan. 18, 2013
Stock Issued During Period, Shares, New Issues		1,725,000
Sale Of Stock, Price Per Share (in dollars per share)					$ 27.25
Proceeds From Issuance Of Common Stock (in dollars)	$ 45,000,000		$ 44,810,620	$ 35,042,235
Over Allotment Option [Member]
Sale Of Stock, Number Of Shares Issued In Transaction			225,000

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Stock Based Compensation (Tables)

3 Months Ended

Mar. 31, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

Restricted share activity is summarized as follows:

	Shares Outstanding			Weighted Average Grant Date  Fair Value
Unvested restricted stock at January 1, 2013		250,180		$	22.66
Restricted stock granted		82,050			27.51
Restricted stock vested		(69,680	)		22.50
Restricted stock forfeited		(1,250	)		20.33
Unvested restricted stock at March 31, 2013		261,300		$	24.24