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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Mark One

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

For the quarterly period ended September 30, 2021, or

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

For the transition period fromto

Commission File Number 001-12928

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

 

70 E. Long Lake Road, Bloomfield Hills, Michigan

    

48304

(Address of principal executive offices)

(Zip Code)

(248) 737-4190

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:  

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $0.0001 par value

ADC

New York Stock Exchange

Depositary Shares, each representing one-thousandth of a share of 4.25% Series A Cumulative Redeemable Preferred Stock, $0.0001 par value

ADCPrA

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

No

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

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer 

Smaller reporting company

Emerging growth company 

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

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

Yes

No

As of October 29, 2021, the Registrant had 69,779,748 shares of common stock issued and outstanding.

AGREE REALTY CORPORATION

Index to Form 10-Q

Page

PART I

Financial Information

Item 1:

Interim Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020

1

Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2021 and 2020

3

Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2021 and 2020

4

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020

6

Notes to Condensed Consolidated Financial Statements

7

Item 2:

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

35

Item 3:

Quantitative and Qualitative Disclosures about Market Risk

50

Item 4:

Controls and Procedures

51

PART II

Item 1:

Legal Proceedings

51

Item 1A:

Risk Factors

51

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

51

Item 3:

Defaults Upon Senior Securities

51

Item 4:

Mine Safety Disclosures

51

Item 5:

Other Information

51

Item 6:

Exhibits

52

SIGNATURES

53

AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(Unaudited)

PART I.       FINANCIAL INFORMATION

Item 1.       Financial Statements

September 30, 

December 31, 

2021

2020

ASSETS

Real Estate Investments

  

Land

$

1,459,526

$

1,094,550

Buildings

 

2,863,568

 

2,371,553

Less accumulated depreciation

 

(216,775)

 

(172,577)

 

4,106,319

 

3,293,526

Property under development

 

7,728

 

10,653

Net Real Estate Investments

 

4,114,047

 

3,304,179

 

  

Real Estate Held for Sale, net

 

5,571

 

1,199

 

Cash and Cash Equivalents

 

91,881

 

6,137

 

  

Cash Held in Escrows

 

10,927

 

1,818

Accounts Receivable - Tenants

52,854

 

37,808

 

  

Lease Intangibles, net of accumulated amortization of

$164,517 and $125,995 at September 30, 2021 and December 31, 2020, respectively

 

645,594

 

473,592

 

Other Assets, net

 

76,626

 

61,450

 

  

Total Assets

$

4,997,500

$

3,886,183

See accompanying notes to Condensed Consolidated Financial Statements.

1

AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(Unaudited)

September 30, 

December 31, 

2021

2020

LIABILITIES

  

Mortgage Notes Payable, net

$

32,607

$

33,122

  

Unsecured Term Loans, net

 

237,849

  

Senior Unsecured Notes, net

1,494,747

 

855,328

  

Unsecured Revolving Credit Facility

 

92,000

  

Dividends and Distributions Payable

15,507

 

34,545

Accounts Payable, Accrued Expenses, and Other Liabilities

80,494

 

71,390

  

Lease Intangibles, net of accumulated amortization of

$28,303 and $24,651 at September 30, 2021 and December 31, 2020, respectively

32,544

 

35,700

  

Total Liabilities

1,655,899

 

1,359,934

  

EQUITY

  

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

7,000 shares Series A outstanding, at stated liquidation value of $25,000 per share, at September 30, 2021, no shares issued and outstanding at December 31, 2020

175,000

 

Common stock, $.0001 par value, 180,000,000 and 90,000,000 shares

 

authorized, 69,779,748 and 60,021,483 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

7

6

Additional paid-in-capital

3,300,227

 

2,652,090

Dividends in excess of net income

(130,455)

 

(91,343)

Accumulated other comprehensive income (loss)

(4,893)

 

(36,266)

  

Total Equity - Agree Realty Corporation

3,339,886

 

2,524,487

Non-controlling interest

1,715

 

1,762

Total Equity

3,341,601

 

2,526,249

  

Total Liabilities and Equity

$

4,997,500

$

3,886,183

See accompanying notes to Condensed Consolidated Financial Statements.

2

AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

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

(Unaudited)

Three Months Ended

Nine Months Ended

    

September 30, 2021

    

September 30, 2020

    

September 30, 2021

    

September 30, 2020

Revenues

 

  

 

  

 

  

 

  

Rental income

$

87,469

$

63,701

$

247,722

$

176,960

Other

 

68

 

109

 

189

 

193

Total Revenues

 

87,537

 

63,810

 

247,911

 

177,153

 

  

 

  

 

  

 

  

Operating Expenses

 

  

 

  

 

  

 

  

Real estate taxes

 

6,957

 

5,516

 

18,812

15,058

Property operating expenses

 

3,189

 

2,108

 

9,944

6,303

Land lease expense

 

400

 

325

 

1,135

977

General and administrative

 

5,687

 

4,756

 

18,806

13,999

Depreciation and amortization

 

24,488

 

17,327

 

69,164

47,067

Provision for impairment

 

 

2,868

 

3,996

Total Operating Expenses

 

40,721

 

32,900

 

117,861

 

87,400

Gain (loss) on sale of assets, net

 

3,470

 

970

 

13,182

7,567

Income from Operations

 

50,286

 

31,880

 

143,232

 

97,320

 

  

 

  

 

  

 

  

Other (Expense) Income

 

  

 

  

 

  

 

  

Interest expense, net

 

(13,066)

 

(10,158)

 

(37,267)

(28,307)

Income tax (expense) benefit

(390)

(306)

(1,884)

(826)

Gain (loss) on early extinguishment of term loans and settlement of related interest rate swaps

(14,614)

Other (expense) income

 

 

 

103

 

23

Net Income

 

36,830

 

21,416

 

89,570

 

68,210

 

  

 

  

 

  

 

  

Less net income attributable to non-controlling interest

 

167

 

136

 

447

 

444

Net income attributable to Agree Realty Corporation

36,663

21,280

89,123

67,766

Less Series A preferred stock dividends

 

289

 

 

289

 

Net Income Attributable to Common Stockholders

$

36,374

$

21,280

$

88,834

$

67,766

 

  

 

  

 

  

 

  

Net Income Per Share Attributable to Common Stockholders

 

  

 

  

 

  

 

  

Basic

$

0.52

$

0.39

$

1.35

$

1.33

Diluted

$

0.52

$

0.39

$

1.34

$

1.32

 

  

 

  

 

  

 

  

Other Comprehensive Income

 

  

 

  

 

  

 

  

Net income

$

36,830

$

21,416

$

89,570

$

68,210

Realized gain (loss) on settlement of interest rate swaps

82

869

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

 

3,300

 

1,420

 

30,676

 

(33,883)

Total comprehensive income (loss)

 

40,212

 

22,836

 

121,115

 

34,327

Less comprehensive income (loss) attributable to non-controlling interest

 

185

 

152

 

465

 

187

 

  

 

  

 

  

 

  

Comprehensive Income (Loss) Attributable to Agree Realty Corporation

$

40,027

$

22,684

$

120,650

$

34,140

 

  

 

  

 

  

 

  

Weighted Average Number of Common Shares Outstanding - Basic

 

69,102,500

 

53,721,956

 

65,623,720

 

50,637,569

 

  

 

  

 

  

 

Weighted Average Number of Common Shares Outstanding - Diluted

 

69,591,848

 

54,555,672

 

65,952,113

 

51,151,462

See accompanying notes to Condensed Consolidated Financial Statements.

3

AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

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

(Unaudited)

Accumulated

Dividends in

Other

Preferred Stock

Common Stock

Additional

excess of net

Comprehensive

Non-Controlling

Total

  

Shares

  

Amount

  

Shares

  

Amount

  

Paid-In Capital

  

income

  

Income (Loss)

  

Interest

  

Equity

Balance, December 31, 2020

$

60,021,483

$

6

$

2,652,090

$

(91,343)

$

(36,266)

$

1,762

$

2,526,249

Issuance of common stock, net of issuance costs

4,028,410

258,105

258,105

Repurchase of common shares

(27,594)

(1,780)

(1,780)

Issuance of restricted stock under the 2020 Omnibus Incentive Plan

128,066

298

298

Forfeiture of restricted stock

(4,587)

(92)

(92)

Stock-based compensation

1,293

1,293

Dividends and distributions declared for the period

(39,906)

(215)

(40,121)

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

25,506

140

25,646

Net income

30,112

166

30,278

Balance, March 31, 2021

$

64,145,778

$

6

$

2,909,914

$

(101,137)

$

(10,760)

$

1,853

$

2,799,876

Issuance of common stock, net of issuance costs

336,875

336,876

Repurchase of common shares

Issuance of stock under the 2020 Omnibus Incentive Plan

22

22

Forfeiture of restricted stock

Stock-based compensation

1,453

-

1,453

Dividends and distributions declared for the period

(42,829)

(225)

(43,054)

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

2,503

14

2,517

Net income

22,347

114

22,461

Balance, June 30, 2021

$

64,145,778

$

6

$

3,248,264

$

(121,619)

$

(8,257)

$

1,756

$

3,120,151

Issuance of Series A preferred stock, net of issuance costs

7,000

175,000

(4,715)

170,285

Issuance of common stock, net of issuance costs

885,912

55,878

55,878

Repurchase of common shares

(369)

(27)

(27)

Issuance of stock under the 2020 Omnibus Incentive Plan

5,891

Forfeiture of restricted stock

(22,059)

(468)

(468)

Stock-based compensation

1,295

1,295

Series A preferred dividends declared for the period

(289)

(289)

Common dividends and distributions declared for the period

(45,210)

(226)

(45,436)

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

3,364

18

3,382

Net income

289

36,374

167

36,830

Balance, September 30, 2021

7,000

$

175,000

65,015,153

$

6

$

3,300,227

$

(130,455)

$

(4,893)

$

1,715

$

3,341,601

Cash dividends declared per depositary share of Series A preferred stock:

For the three months ended March 31, 2021

$

For the three months ended June 30, 2021

$

For the three months ended September 30, 2021

$

0.041

Cash dividends declared per common share:

For the three months ended March 31, 2021

$

0.621

For the three months ended June 30, 2021

$

0.651

For the three months ended September 30, 2021

$

0.651

See accompanying notes to Condensed Consolidated Financial Statements.

4

AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

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

(Unaudited)

Accumulated

Dividends in

Other

Common Stock

Additional

excess of net

Comprehensive

Non-Controlling

Total

  

Shares

  

Amount

  

Paid-In Capital

  

income

  

Income (Loss)

  

Interest

  

Equity

Balance, December 31, 2019

45,573,623

$

5

$

1,752,912

$

(57,094)

$

(6,492)

$

2,231

$

1,691,562

Issuance of common stock, net of issuance costs

1,400,251

104,615

104,615

Repurchase of common shares

(20,707)

(1,627)

(1,627)

Issuance of restricted stock under the 2014 Omnibus Incentive Plan

48,942

Stock-based compensation

1,014

1,014

Dividends and distributions declared for the period

(26,677)

(203)

(26,880)

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

(32,799)

(243)

(33,042)

Net income

21,229

141

21,370

Balance, March 31, 2020