Increases 2023 Acquisition Guidance to At
Least $1.3 Billion; Portfolio
Surpasses 2,000 Properties
ROYAL
OAK, Mich., Aug. 1, 2023
/PRNewswire/ -- Agree Realty Corporation (NYSE: ADC) (the
"Company") today announced results for the quarter ended
June 30, 2023. All per share amounts
included herein are on a diluted per common share basis unless
otherwise stated.
Second Quarter 2023 Financial and Operating
Highlights:
- Invested approximately $324
million in 120 retail net lease properties
- Completed six development or Partner Capital Solutions ("PCS")
projects representing total committed capital of over $18 million
- Net Income per share attributable to common stockholders
decreased 7.2% to $0.42
- Core Funds from Operations ("Core FFO") per share of
$0.98 was unchanged
year-over-year
- Adjusted Funds from Operations ("AFFO") per share increased
1.1% to $0.98
- Declared a July monthly dividend of $0.243 per common share, a 3.8% year-over-year
increase
- Announced an unsecured $350
million 5.5-year term loan at a 4.52% fixed rate inclusive
of prior hedging activity
- Settled 3,070,997 shares of outstanding forward equity for net
proceeds of approximately $205
million
- Balance sheet well positioned at 4.1 times proforma net debt to
recurring EBITDA; 4.5 times excluding unsettled forward equity
First Half 2023 Financial and Operating Highlights:
- Invested approximately $638
million in 189 retail net lease properties
- Committed a record of nearly $126
million to 31 development or PCS projects completed or under
construction
- Net Income per share attributable to common stockholders
decreased 7.9% to $0.86
- Core FFO per share increased 0.1% to $1.96
- AFFO per share increased 1.3% to $1.96
- Declared dividends of $1.449 per
share, a 4.8% year-over-year increase
Financial Results
Net Income Attributable to Common Stockholders
Net Income for the three months ended June 30, 2023 increased 14.3% to $39.0 million, compared to $34.1 million for the comparable period in 2022.
Net Income per share for the three months ended June 30, 2023 decreased 7.2% to $0.42, compared to $0.45 per share for the comparable period in
2022.
Net Income for the six months ended June
30, 2023 increased 15.2% to $78.8
million, compared to $68.4
million for the comparable period in 2022. Net Income per
share for the six months ended June 30,
2023 decreased 7.9% to $0.86,
compared to $0.93 per share for the
comparable period in 2022.
Core FFO
Core FFO for the three months ended June
30, 2023 increased 22.7% to $91.4
million, compared to Core FFO of $74.5 million for the comparable period in 2022.
Core FFO per share for the three months ended June 30, 2023 of $0.98 was unchanged compared to the same period
in 2022.
Core FFO for the six months ended June
30, 2023 increased 25.1% to $180.4
million, compared to Core FFO of $144.2 million for the comparable period in 2022.
Core FFO per share for the six months ended June 30, 2023 increased 0.1% to $1.96, compared to Core FFO per share of
$1.95 for the comparable period in
2022.
AFFO
AFFO for the three months ended June 30,
2023 increased 24.5% to $91.8
million, compared to AFFO of $73.7
million for the comparable period in 2022. AFFO per share
for the three months ended June 30,
2023 increased 1.1% to $0.98,
compared to AFFO per share of $0.97
for the comparable period in 2022.
AFFO for the six months ended June 30,
2023 increased 26.5% to $180.9
million, compared to AFFO of $142.9
million for the comparable period in 2022. AFFO per share
for the six months ended June 30,
2023 increased 1.3% to $1.96,
compared to AFFO per share of $1.94
for the comparable period in 2022.
Dividend
In the second quarter, the Company declared monthly cash
dividends of $0.243 per common share
for each of April, May and June 2023.
The monthly dividends during the second quarter reflected an
annualized dividend amount of $2.916
per common share, representing a 3.8% increase over the annualized
dividend amount of $2.808 per common
share from the second quarter of 2022. The dividends represent
payout ratios of approximately 75% of Core FFO per share and 74% of
AFFO per share, respectively.
For the six months ended June 30,
2023, the Company declared monthly cash dividends totaling
$1.449 per common share, a 4.8%
increase over the dividends of $1.383
per common share declared for the comparable period in 2022. The
dividends represent payout ratios of approximately 74% of both Core
FFO per share and AFFO per share.
Subsequent to quarter end, the Company declared a monthly cash
dividend of $0.243 per common share
for July 2023. The monthly dividend
reflects an annualized dividend amount of $2.916 per common share, representing a 3.8%
increase over the annualized dividend amount of $2.808 per common share from the third quarter of
2022. The dividend is payable August 14,
2023 to stockholders of record at the close of business on
July 31, 2023.
Additionally, subsequent to quarter end, the Company declared a
monthly cash dividend on its 4.25% Series A Cumulative Redeemable
Preferred Stock of $0.08854 per
depositary share, which is equivalent to $1.0625 per annum. The dividend was paid on
August 1, 2023 to stockholders of
record at the close of business on July 21,
2023.
CEO Comments
"We are extremely pleased with our performance during the first
half of the year as we continued to execute on high-quality net
lease opportunities and surpassed 2,000 properties in 49 states
including Alaska," said Joey
Agree, President and Chief Executive Officer. "Given our
year-to-date acquisition activity and visibility into our pipeline,
we are increasing our full-year acquisition guidance to at least
$1.3 billion of high-quality retail
net lease assets. Our balance sheet remains in excellent position
with $1.3 billion of liquidity
inclusive of the recent closing of our $350
million 5.5-year term loan."
Portfolio Update
As of June 30, 2023, the Company's
portfolio consisted of 2,004 properties located in 49 states and
contained approximately 41.7 million square feet of gross leasable
area.
At quarter end, the portfolio was 99.7% leased, had a
weighted-average remaining lease term of approximately 8.6 years,
and generated 67.9% of annualized base rents from investment grade
retail tenants.
Ground Lease Portfolio
During the second quarter, the Company acquired three ground
leases for an aggregate purchase price of approximately
$25.8 million, representing 8.1% of
annualized base rents acquired.
As of June 30, 2023, the Company's
ground lease portfolio consisted of 210 leases located in 34 states
and totaled approximately 5.7 million square feet of gross leasable
area. Properties ground leased to tenants represented 11.9% of
annualized base rents.
At quarter end, the ground lease portfolio was fully occupied,
had a weighted-average remaining lease term of approximately 10.9
years, and generated 87.1% of annualized base rents from investment
grade retail tenants.
Acquisitions
Total acquisition volume for the second quarter was
approximately $305.0 million and
included 92 properties net leased to leading retailers operating in
sectors including off-price retail, farm and rural supply, dollar
stores, general merchandise, auto parts and tire and auto service.
The properties are located in 31 states and leased to tenants
operating in 18 sectors.
The properties were acquired at a weighted-average
capitalization rate of 6.8% and had a weighted-average remaining
lease term of approximately 9.9 years. Approximately 72.8% of
annualized base rents acquired were generated from investment grade
retail tenants.
For the six months ended June 30,
2023, total acquisition volume was approximately
$607.4 million. The 158 acquired
properties are located in 35 states and leased to tenants who
operate in 21 retail sectors. The properties were acquired at a
weighted-average capitalization rate of 6.7% and had a
weighted-average remaining lease term of approximately 11.5 years.
Approximately 73.8% of annualized base rents were generated from
investment grade retail tenants.
The Company's outlook for acquisition volume for the full-year
2023 is being increased to at least $1.3
billion of high-quality retail net lease properties, from at
least $1.2 billion previously.
Dispositions
During the three and six months ended June 30, 2023, the Company sold one property for
gross proceeds of approximately $3.1
million. The disposition was completed at a capitalization
rate of 6.4%.
Development and PCS
During the second quarter, the Company commenced two development
and PCS projects, with total anticipated costs of approximately
$10.3 million. Construction continued
during the quarter on 20 projects with anticipated costs totaling
approximately $87.0 million. The
Company completed six projects during the quarter, which included a
HomeGoods, a Sunbelt Rentals, and three Gerber Collision
developments.
For the six months ended June 30,
2023, the Company had 31 development or PCS projects
completed or under construction. Anticipated total costs are
approximately $125.7 million,
including $77.7 million of costs
incurred as of quarter end.
The following table presents the Company's 31 development or PCS
projects as of June 30, 2023:
Tenant
|
Location
|
Lease
Structure
|
Lease
Term
|
Actual or
Anticipated Rent
Commencement
|
Status
|
Gerber
Collision
|
Murrieta, CA
|
Build-to-Suit
|
15 years
|
Q1 2023
|
Complete
|
Gerber
Collision
|
Ocala, FL
|
Build-to-Suit
|
15 years
|
Q1 2023
|
Complete
|
Gerber
Collision
|
Venice, FL
|
Build-to-Suit
|
15 years
|
Q1 2023
|
Complete
|
Gerber
Collision
|
Johnson City,
NY
|
Build-to-Suit
|
15 years
|
Q2 2023
|
Complete
|
Gerber
Collision
|
Lake Charles,
LA
|
Build-to-Suit
|
15 years
|
Q2 2023
|
Complete
|
Gerber
Collision
|
Winterville,
NC
|
Build-to-Suit
|
15 years
|
Q2 2023
|
Complete
|
HomeGoods
|
South Elgin,
IL
|
Build-to-Suit
|
10 years
|
Q2 2023
|
Complete
|
Old Navy
|
Searcy, AR
|
Build-to-Suit
|
7 years
|
Q2 2023
|
Complete
|
Sunbelt
Rentals
|
St. Louis,
MO
|
Build-to-Suit
|
7 years
|
Q2 2023
|
Complete
|
Five Below
|
Onalaska, WI
|
Build-to-Suit
|
10 years
|
Q3 2023
|
Under
Construction
|
HomeGoods
|
Onalaska, WI
|
Build-to-Suit
|
10 years
|
Q3 2023
|
Under
Construction
|
Sierra Trading
Post
|
Onalaska, WI
|
Build-to-Suit
|
10 years
|
Q3 2023
|
Under
Construction
|
TJ Maxx
|
Onalaska, WI
|
Build-to-Suit
|
10 years
|
Q3 2023
|
Under
Construction
|
Ulta Beauty
|
Onalaska, WI
|
Build-to-Suit
|
11 years
|
Q3 2023
|
Under
Construction
|
Gerber
Collision
|
Fort Wayne,
IN
|
Build-to-Suit
|
15 years
|
Q3 2023
|
Under
Construction
|
Gerber
Collision
|
Huntley, IL
|
Build-to-Suit
|
15 years
|
Q3 2023
|
Under
Construction
|
Gerber
Collision
|
Joplin, MO
|
Build-to-Suit
|
15 years
|
Q3 2023
|
Under
Construction
|
Gerber
Collision
|
Lake Park,
FL
|
Build-to-Suit
|
15 years
|
Q3 2023
|
Under
Construction
|
Gerber
Collision
|
Springfield,
MO
|
Build-to-Suit
|
15 years
|
Q3 2023
|
Under
Construction
|
Gerber
Collision
|
Toledo, OH
|
Build-to-Suit
|
15 years
|
Q3 2023
|
Under
Construction
|
Gerber
Collision
|
Woodstock,
IL
|
Build-to-Suit
|
15 years
|
Q3 2023
|
Under
Construction
|
Sunbelt
Rentals
|
Wentzville,
MO
|
Build-to-Suit
|
12 years
|
Q3 2023
|
Under
Construction
|
Burlington
|
Brenham, TX
|
Build-to-Suit
|
10 years
|
Q4 2023
|
Under
Construction
|
Ulta Beauty
|
Brenham, TX
|
Build-to-Suit
|
10 years
|
Q4 2023
|
Under
Construction
|
Gerber
Collision
|
McDonough,
GA
|
Build-to-Suit
|
15 years
|
Q4 2023
|
Under
Construction
|
Gerber
Collision
|
Muskegon, MI
|
Build-to-Suit
|
15 years
|
Q4 2023
|
Under
Construction
|
Gerber
Collision
|
Blue Springs,
MO
|
Build-to-Suit
|
15 years
|
Q1 2024
|
Under
Construction
|
Gerber
Collision
|
Lawrence, PA
|
Build-to-Suit
|
15 years
|
Q1 2024
|
Under
Construction
|
Gerber
Collision
|
Warner Robins,
GA
|
Build-to-Suit
|
15 years
|
Q1 2024
|
Under
Construction
|
Sunbelt
Rentals
|
Ashwaubenon,
WI
|
Build-to-Suit
|
10 years
|
Q1 2024
|
Under
Construction
|
Sunbelt
Rentals
|
Broken Arrow,
OK
|
Build-to-Suit
|
12 years
|
Q1 2024
|
Under
Construction
|
Gerber
Collision
|
Eugene, OR
|
Build-to-Suit
|
15 years
|
Q2 2024
|
Under
Construction
|
Gerber
Collision
|
Odessa, FL
|
Build-to-Suit
|
15 years
|
Q2 2024
|
Under
Construction
|
Gerber
Collision
|
Peachtree,
GA
|
Build-to-Suit
|
15 years
|
Q2 2024
|
Under
Construction
|
Gerber
Collision
|
Yorkville,
IL
|
Build-to-Suit
|
15 years
|
Q2 2024
|
Under
Construction
|
Sunbelt
Rentals
|
Monroe, OH
|
Build-to-Suit
|
12 years
|
Q2 2024
|
Under
Construction
|
|
|
|
|
|
|
|
|
|
|
Leasing Activity and Expirations
During the second quarter, the Company executed new leases,
extensions or options on approximately 282,000 square feet of gross
leasable area throughout the existing portfolio.
For the six months ended June 30,
2023, the Company executed new leases, extensions or options
on approximately 793,000 square feet of gross leasable area
throughout the existing portfolio.
As of June 30, 2023, the Company's
2023 lease maturities represented 0.3% of annualized base rents.
The following table presents contractual lease expirations within
the Company's portfolio as of June 30,
2023, assuming no tenants exercise renewal options:
Year
|
Leases
|
|
Annualized
Base Rent (1)
|
|
Percent of
Annualized
Base Rent
|
|
Gross
Leasable
Area
|
|
Percent of
Gross
Leasable Area
|
|
|
|
|
|
|
|
|
|
|
2023
|
10
|
|
1,754
|
|
0.3 %
|
|
143
|
|
0.3 %
|
2024
|
44
|
|
12,247
|
|
2.4 %
|
|
1,456
|
|
3.5 %
|
2025
|
71
|
|
17,416
|
|
3.4 %
|
|
1,678
|
|
4.0 %
|
2026
|
117
|
|
25,509
|
|
5.0 %
|
|
2,685
|
|
6.5 %
|
2027
|
150
|
|
33,566
|
|
6.5 %
|
|
3,135
|
|
7.5 %
|
2028
|
165
|
|
42,300
|
|
8.2 %
|
|
3,978
|
|
9.6 %
|
2029
|
166
|
|
47,469
|
|
9.2 %
|
|
4,546
|
|
10.9 %
|
2030
|
260
|
|
54,383
|
|
10.6 %
|
|
4,165
|
|
10.0 %
|
2031
|
173
|
|
40,489
|
|
7.9 %
|
|
2,961
|
|
7.1 %
|
2032
|
221
|
|
44,192
|
|
8.6 %
|
|
3,374
|
|
8.1 %
|
Thereafter
|
784
|
|
193,862
|
|
37.9 %
|
|
13,442
|
|
32.5 %
|
Total
Portfolio
|
2,161
|
|
$513,187
|
|
100.0 %
|
|
41,563
|
|
100.0 %
|
The contractual lease expirations presented above exclude the
effect of replacement tenant leases that had been executed as of
June 30, 2023 but that had not yet
commenced. Annualized Base Rent and gross leasable area (square
feet) are in thousands; any differences are the result of
rounding.
(1) Annualized Base Rent
represents the annualized amount of contractual minimum rent
required by tenant lease agreements as of June 30, 2023, computed on a straight-line basis.
Annualized Base Rent is not, and is not intended to be, a
presentation in accordance with generally accepted accounting
principles ("GAAP"). The Company believes annualized contractual
minimum rent is useful to management, investors, and other
interested parties in analyzing concentrations and leasing
activity.
Top Tenants
As of June 30, 2023, Goodyear is
no longer among the Company's top tenants. The Company added
7-Eleven to its top tenants during the second quarter of 2023.The
following table presents annualized base rents for all tenants that
represent 1.5% or greater of the Company's total annualized base
rent as of June 30, 2023:
Tenant
|
|
Annualized
Base Rent(1)
|
|
Percent
of
Annualized Base
Rent
|
|
|
|
|
|
Walmart
|
|
$33,102
|
|
6.5 %
|
Dollar
General
|
|
25,068
|
|
4.9 %
|
Tractor
Supply
|
|
22,604
|
|
4.4 %
|
Best Buy
|
|
19,515
|
|
3.8 %
|
Dollar Tree
|
|
16,493
|
|
3.2 %
|
Kroger
|
|
16,315
|
|
3.2 %
|
CVS
|
|
15,920
|
|
3.1 %
|
TJX
Companies
|
|
15,555
|
|
3.0 %
|
O'Reilly Auto
Parts
|
|
15,413
|
|
3.0 %
|
Hobby Lobby
|
|
14,177
|
|
2.8 %
|
Lowe's
|
|
13,210
|
|
2.6 %
|
Burlington
|
|
11,408
|
|
2.2 %
|
Sunbelt
Rentals
|
|
11,199
|
|
2.2 %
|
Sherwin-Williams
|
|
10,949
|
|
2.1 %
|
Wawa
|
|
10,188
|
|
2.0 %
|
Gerber
Collision
|
|
10,015
|
|
2.0 %
|
Home Depot
|
|
8,880
|
|
1.7 %
|
7-Eleven
|
|
8,294
|
|
1.6 %
|
TBC
Corporation
|
|
7,917
|
|
1.5 %
|
AutoZone
|
|
7,747
|
|
1.5 %
|
Other(2)
|
|
219,218
|
|
42.7 %
|
Total
Portfolio
|
|
$513,187
|
|
100.0 %
|
Annualized Base Rent is in thousands; any differences are the
result of rounding.
Bolded and italicized tenants
represent additions for the three months ended June 30, 2023.
(1)
Refer to footnote 1 on page 5 for the Company's definition of
Annualized Base Rent.
(2) Includes tenants generating
less than 1.5% of Annualized Base Rent.
Retail Sectors
The following table presents annualized base rents for all the
Company's retail sectors as of June 30,
2023:
Sector
|
|
Annualized
Base Rent(1)
|
|
Percent of
Annualized
Base
Rent
|
|
|
|
|
|
Grocery
Stores
|
|
$51,742
|
|
10.1 %
|
Home
Improvement
|
|
$45,765
|
|
8.9 %
|
Tire and Auto
Service
|
|
$44,847
|
|
8.7 %
|
Dollar
Stores
|
|
$40,347
|
|
7.9 %
|
Convenience
Stores
|
|
$38,721
|
|
7.5 %
|
General
Merchandise
|
|
$31,556
|
|
6.2 %
|
Auto Parts
|
|
$30,839
|
|
6.0 %
|
Off-Price
Retail
|
|
$30,289
|
|
5.9 %
|
Farm and Rural
Supply
|
|
$24,332
|
|
4.7 %
|
Pharmacy
|
|
$22,655
|
|
4.4 %
|
Consumer
Electronics
|
|
$21,724
|
|
4.2 %
|
Crafts and
Novelties
|
|
$16,456
|
|
3.2 %
|
Discount
Stores
|
|
$12,548
|
|
2.4 %
|
Warehouse
Clubs
|
|
$11,711
|
|
2.3 %
|
Equipment
Rental
|
|
$11,525
|
|
2.2 %
|
Health
Services
|
|
$9,659
|
|
1.9 %
|
Restaurants - Quick
Service
|
|
$8,588
|
|
1.7 %
|
Health and
Fitness
|
|
$8,456
|
|
1.6 %
|
Dealerships
|
|
$7,141
|
|
1.4 %
|
Specialty
Retail
|
|
$6,517
|
|
1.3 %
|
Sporting
Goods
|
|
$5,449
|
|
1.1 %
|
Restaurants - Casual
Dining
|
|
$5,243
|
|
1.0 %
|
Home
Furnishings
|
|
$4,571
|
|
0.9 %
|
Financial
Services
|
|
$4,251
|
|
0.8 %
|
Theaters
|
|
$3,848
|
|
0.8 %
|
Pet
Supplies
|
|
$3,402
|
|
0.7 %
|
Shoes
|
|
$2,552
|
|
0.5 %
|
Beauty and
Cosmetics
|
|
$2,386
|
|
0.5 %
|
Entertainment
Retail
|
|
$2,323
|
|
0.5 %
|
Apparel
|
|
$1,780
|
|
0.3 %
|
Miscellaneous
|
|
$1,180
|
|
0.2 %
|
Office
Supplies
|
|
$784
|
|
0.2 %
|
Total
Portfolio
|
|
$513,187
|
|
100.0 %
|
Annualized Base Rent is in thousands; any differences
are the result of rounding.
(1) Refer
to footnote 1 on page 5 for the Company's definition of Annualized
Base Rent.
Geographic Diversification
The following table presents annualized base rents for all
states that represent 2.5% or greater of the Company's total
annualized base rent as of June 30,
2023:
State
|
|
Annualized
Base Rent(1)
|
|
Percent
of
Annualized Base
Rent
|
|
|
|
|
|
|
|
Texas
|
|
$37,167
|
|
7.2 %
|
|
Florida
|
|
30,558
|
|
6.0 %
|
|
Ohio
|
|
28,205
|
|
5.5 %
|
|
North
Carolina
|
|
27,907
|
|
5.4 %
|
|
Michigan
|
|
27,196
|
|
5.3 %
|
|
Illinois
|
|
27,010
|
|
5.3 %
|
|
Pennsylvania
|
|
24,543
|
|
4.8 %
|
|
New Jersey
|
|
22,424
|
|
4.4 %
|
|
California
|
|
22,008
|
|
4.3 %
|
|
New York
|
|
19,990
|
|
3.9 %
|
|
Georgia
|
|
18,883
|
|
3.7 %
|
|
Virginia
|
|
14,788
|
|
2.9 %
|
|
Wisconsin
|
|
14,443
|
|
2.8 %
|
|
Missouri
|
|
13,004
|
|
2.5 %
|
|
Other(2)
|
|
185,061
|
|
36.0 %
|
|
Total
Portfolio
|
|
$513,187
|
|
100.0 %
|
Annualized Base Rent is in thousands; any differences
are the result of rounding.
(1) Refer to footnote 1
on page 5 for the Company's definition of Annualized Base
Rent.
(2) Includes states generating less than
2.5% of Annualized Base Rent.
Capital Markets, Liquidity and Balance Sheet
Capital Markets
In June, the Company received commitments for an unsecured
$350 million 5.5-year term loan with
a 12-month delayed draw feature (the "Term Loan"). On July 31st, the Company closed the Term
Loan and received $350 million of
proceeds, which were used to pay down all amounts outstanding on
its revolving credit facility. The Company had previously entered
into $350 million of forward starting
swaps to fix SOFR until maturity in January
2029. Including the impact of the swaps, the interest rate
on the Term Loan is fixed at 4.52% based on the Company's current
credit rating. The Term Loan includes an accordion option that
allows the Company to request additional lender commitments up to a
total of $500 million.
During the second quarter, the Company entered into forward sale
agreements in connection with its ATM program to sell an aggregate
of 685,997 shares of common stock for gross proceeds of
$45.1 million. Additionally, the
Company settled 3,070,997 shares under existing forward sale
agreements, including agreements entered into during the quarter,
for net proceeds of $205.4
million.
At quarter end, the Company had over 2.9 million shares
remaining to be settled under existing forward sale agreements,
which are anticipated to raise net proceeds of $202.0 million after deducting fees and expenses
and making certain other adjustments as provided in the equity
distribution agreements.
The following table presents the Company's outstanding forward
equity offerings as of June 30,
2023:
Forward
Equity
Offerings
|
Shares
Sold
|
|
Shares
Settled
|
|
Shares
Remaining
|
|
Net
Proceeds
Received
|
|
Anticipated
Net
Proceeds
Remaining
|
|
|
|
|
|
|
|
|
|
|
Q4 2022 ATM
Forward Offerings
|
4,104,641
|
|
1,180,000
|
|
2,924,641
|
|
$80,773,006
|
|
$202,026,219
|
Total Forward
Equity Offerings
|
4,104,641
|
|
1,180,000
|
|
2,924,641
|
|
$80,773,006
|
|
$202,026,219
|
Liquidity
As of June 30, 2023, the Company
had total liquidity of $911.2
million, which includes $697.0
million of availability under its revolving credit facility,
$202.0 million of outstanding forward
equity, and $12.2 million of cash on
hand. Proforma for the closing of the Company's $350 million 5.5-year term loan on July 31st, total liquidity is
approximately $1.3 billion.
Balance Sheet
As of June 30, 2023, the Company's
net debt to recurring EBITDA was 4.5 times. The Company's proforma
net debt to recurring EBITDA was 4.1 times when deducting the
$202.0 million of anticipated net
proceeds from the outstanding forward equity offerings from the
Company's net debt of $2.2 billion as
of June 30, 2023. The Company's fixed
charge coverage ratio was 5.1 times as of the end of the second
quarter.
The Company's total debt to enterprise value was 25.0% as of
June 30, 2023. Enterprise value is
calculated as the sum of net debt, the liquidation value of the
Company's preferred stock, and the market value of the Company's
outstanding shares of common stock, assuming conversion of Agree
Limited Partnership (the "Operating Partnership" or "OP") common
units into common stock of the Company.
For the three and six months ended June
30, 2023, the Company's fully diluted weighted-average
shares outstanding were 93.1 million and 91.9 million,
respectively. The basic weighted-average shares outstanding for the
three and six months ended June 30,
2023 were 93.1 million and 91.5 million, respectively.
For the three and six months ended June
30, 2023, the Company's fully diluted weighted-average
shares and units outstanding were 93.5 million and 92.2 million,
respectively. The basic weighted-average shares and units
outstanding for the three and six months ended June 30, 2023 were 93.4 million and 91.9 million,
respectively.
The Company's assets are held by, and its operations are
conducted through, the Operating Partnership, of which the Company
is the sole general partner. As of June 30,
2023, there were 347,619 Operating Partnership common units
outstanding, and the Company held a 99.6% common interest in the
Operating Partnership.
Conference Call/Webcast
The Company will host its quarterly analyst and investor
conference call on Wednesday, August 2,
2023 at 9:00 AM ET. To
participate in the conference call, please dial (866) 363-3979
approximately ten minutes before the call begins.
Additionally, a webcast of the conference call will be available
through the Company's website. To access the webcast, visit
www.agreerealty.com ten minutes prior to the start time of the
conference call and go to the Investors section of the
website. A replay of the conference call webcast will be
archived and available online through the Investors section of
www.agreerealty.com.
About Agree Realty Corporation
Agree Realty Corporation is a publicly traded real estate
investment trust that is
RETHINKING RETAIL through the acquisition
and development of properties net leased to industry-leading,
omni-channel retail tenants. As of June 30, 2023, the Company owned and operated a
portfolio of 2,004 properties, located in 49 states and containing
approximately 41.7 million square feet of gross leasable
area. The Company's common stock is listed on the New York
Stock Exchange under the symbol "ADC". For additional
information on the Company and
RETHINKING RETAIL, please visit
www.agreerealty.com.
Forward-Looking Statements
This press release contains forward-looking
statements, including statements about projected financial
and operating results, within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities
Act") and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Company intends such
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and includes this
statement for purposes of complying with these safe harbor
provisions. Forward-looking statements are generally
identifiable by use of forward-looking terminology such as "may,"
"will," "should," "potential," "intend," "expect," "seek,"
"anticipate," "estimate," "approximately," "believe," "could,"
"project," "predict," "forecast," "continue," "assume," "plan,"
"outlook" or other similar words or expressions. Forward-looking
statements are based on certain assumptions and can include future
expectations, future plans and strategies, financial and operating
projections or other forward-looking information. Although
these forward-looking statements are based on good faith beliefs,
reasonable assumptions and the Company's best judgment reflecting
current information, 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
the Company's control and which could materially affect the
Company's results of operations, financial condition, cash flows,
performance or future achievements or events. Currently, some of
the most significant factors, include the potential adverse effect
of ongoing worldwide economic uncertainties and increased inflation
and interest rates on the financial condition, results of
operations, cash flows and performance of the Company and its
tenants, the real estate market and the global economy and
financial markets. The extent to which these conditions will impact
the Company and its tenants will depend on future developments,
which are highly uncertain and cannot be predicted with confidence.
Moreover, investors are cautioned to interpret many of the risks
identified in the risk factors discussed in the Company's Annual
Report on Form 10-K and subsequent quarterly reports filed with the
Securities and Exchange Commission (the "SEC"), as well as the
risks set forth below, as being heightened as a result of the
ongoing and numerous adverse impacts of the macroeconomic
environment. Additional important factors, among others, that may
cause the Company's actual results to vary include the general
deterioration in national economic conditions, weakening of real
estate markets, decreases in the availability of credit, increases
in interest rates, adverse changes in the retail industry, the
Company's continuing ability to qualify as a REIT and other factors
discussed in the Company's reports filed with the SEC. The
forward-looking statements included in this press release are made
as of the date hereof. Unless legally required, the
Company disclaims any obligation to update any forward-looking
statements, whether as a result of new information, future events,
changes in the Company's expectations or assumptions or
otherwise.
For further information about the Company's business and
financial results, please refer to the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
"Risk Factors" sections of the Company's SEC filings, including,
but not limited to, its Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q, copies of which may be obtained at the
Investor Relations section of the Company's website at
www.agreerealty.com.
The Company defines the "weighted-average capitalization
rate" for acquisitions and dispositions as the sum of contractual
fixed annual rents computed on a straight-line basis over the
primary lease terms and anticipated annual net tenant recoveries,
divided by the purchase and sale prices for occupied
properties.
References to "Core FFO" and "AFFO" in this press release are
representative of Core FFO attributable to OP common unitholders
and AFFO attributable to OP common unitholders. Detailed
calculations for these measures are shown in the Reconciliation of
Net Income to FFO, Core FFO and Adjusted FFO table as "Core Funds
From Operations – OP Common Unitholders" and "Adjusted Funds from
Operations – OP Common Unitholders".
Agree Realty Corporation
|
Consolidated Balance Sheet
|
($ in thousands, except share and per-share
data)
|
(Unaudited)
|
|
June 30, 2023
|
|
December 31, 2022
|
Assets:
|
|
|
|
Real Estate Investments:
|
|
|
|
Land
|
$
2,090,557
|
|
$
1,941,599
|
Buildings
|
4,476,493
|
|
4,054,679
|
Accumulated
depreciation
|
(374,917)
|
|
(321,142)
|
Property under
development
|
81,526
|
|
65,932
|
Net real estate
investments
|
6,273,659
|
|
5,741,068
|
Cash and cash
equivalents
|
8,068
|
|
27,763
|
Cash held in
escrows
|
4,179
|
|
1,146
|
Accounts receivable -
tenants, net
|
70,929
|
|
65,841
|
Lease Intangibles, net
of accumulated amortization of $310,845 and $263,011 at
June 30, 2023 and December 31, 2022, respectively
|
825,998
|
|
799,448
|
Other assets,
net
|
89,173
|
|
77,923
|
Total Assets
|
$
7,272,006
|
|
$
6,713,189
|
|
|
|
|
Liabilities:
|
|
|
|
Mortgage notes
payable, net
|
$
47,701
|
|
$
47,971
|
Senior unsecured
notes, net
|
1,793,198
|
|
1,792,047
|
Unsecured revolving
credit facility
|
303,000
|
|
100,000
|
Dividends and
distributions payable
|
24,098
|
|
22,345
|
Accounts payable,
accrued expenses and other liabilities
|
87,692
|
|
83,722
|
Lease intangibles, net
of accumulated amortization of $38,945 and $35,992 at
June 30, 2023 and December 31, 2022, respectively
|
38,272
|
|
36,714
|
Total Liabilities
|
$
2,293,961
|
|
$
2,082,799
|
|
|
|
|
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
June 30, 2023 and December 31, 2022
|
175,000
|
|
175,000
|
Common stock, $.0001
par value, 180,000,000 shares authorized, 96,269,336
and 90,173,424 shares issued and outstanding at June 30, 2023 and
December
31, 2022, respectively
|
10
|
|
9
|
Additional
paid-in-capital
|
5,060,200
|
|
4,658,570
|
Dividends in excess of
net income
|
(283,995)
|
|
(228,132)
|
Accumulated other
comprehensive income (loss)
|
25,625
|
|
23,551
|
Total Equity - Agree
Realty Corporation
|
$
4,976,840
|
|
$
4,628,998
|
Non-controlling
interest
|
1,205
|
|
1,392
|
Total Equity
|
$
4,978,045
|
|
$
4,630,390
|
Total Liabilities and Equity
|
$
7,272,006
|
|
$
6,713,189
|
Agree Realty Corporation
|
Consolidated Statements of Operations and
Comprehensive Income
|
($ in thousands, except share and per
share-data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues
|
|
|
|
|
|
|
Rental
Income
|
$ 129,876
|
|
$ 104,793
|
|
$ 256,485
|
|
$ 203,105
|
Other
|
24
|
|
83
|
|
33
|
|
113
|
Total Revenues
|
$ 129,900
|
|
$ 104,876
|
|
$ 256,518
|
|
$ 203,218
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
Real estate
taxes
|
$
9,874
|
|
$
7,979
|
|
$
19,305
|
|
$
15,591
|
Property operating
expenses
|
5,821
|
|
4,541
|
|
12,602
|
|
9,018
|
Land lease
expense
|
410
|
|
407
|
|
840
|
|
809
|
General and
administrative
|
8,420
|
|
7,651
|
|
17,244
|
|
15,272
|
Depreciation and
amortization
|
42,750
|
|
31,950
|
|
83,396
|
|
60,510
|
Provision for
impairment
|
1,315
|
|
-
|
|
1,315
|
|
1,015
|
Total Operating Expenses
|
$
68,590
|
|
$
52,528
|
|
$ 134,702
|
|
$ 102,215
|
|
|
|
|
|
|
|
|
Gain (loss) on sale of
assets, net
|
319
|
|
17
|
|
319
|
|
2,326
|
Gain (loss) on
involuntary conversion, net
|
-
|
|
(25)
|
|
-
|
|
(50)
|
|
|
|
|
|
|
|
|
Income from Operations
|
$
61,629
|
|
$
52,340
|
|
$ 122,135
|
|
$ 103,279
|
|
|
|
|
|
|
|
|
Other (Expense) Income
|
|
|
|
|
|
|
|
Interest expense,
net
|
$ (19,948)
|
|
$ (15,512)
|
|
$ (37,945)
|
|
$ (29,442)
|
Income tax (expense)
benefit
|
(709)
|
|
(698)
|
|
(1,492)
|
|
(1,418)
|
Other (expense)
income
|
43
|
|
-
|
|
91
|
|
-
|
|
|
|
|
|
|
|
|
Net Income
|
$
41,015
|
|
$
36,130
|
|
$
82,789
|
|
$
72,419
|
|
|
|
|
|
|
|
|
Less net income
attributable to non-controlling interest
|
147
|
|
157
|
|
307
|
|
333
|
|
|
|
|
|
|
|
|
Net Income Attributable to Agree Realty
Corporation
|
$
40,868
|
|
$
35,973
|
|
$
82,482
|
|
$
72,086
|
|
|
|
|
|
|
|
|
Less Series A
Preferred Stock Dividends
|
1,859
|
|
1,859
|
|
3,718
|
|
3,718
|
|
|
|
|
|
|
|
|
Net Income Attributable to Common
Stockholders
|
$
39,009
|
|
$
34,114
|
|
$
78,764
|
|
$
68,368
|
|
|
|
|
|
|
|
|
Net Income Per Share Attributable to Common
Stockholders
|
|
|
|
|
|
|
|
Basic
|
$
0.42
|
|
$
0.45
|
|
$
0.86
|
|
$
0.93
|
Diluted
|
$
0.42
|
|
$
0.45
|
|
$
0.86
|
|
$
0.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Income
|
|
|
|
|
|
|
|
Net Income
|
$
41,015
|
|
$
36,130
|
|
$
82,789
|
|
$
72,419
|
Amortization of
interest rate swaps
|
(630)
|
|
82
|
|
(1,259)
|
|
164
|
Change in fair value
and settlement of interest rate swaps
|
3,341
|
|
16,481
|
|
3,341
|
|
37,062
|
Total Comprehensive
Income (Loss)
|
43,726
|
|
52,693
|
|
84,871
|
|
109,645
|
Less comprehensive
income attributable to non-controlling interest
|
157
|
|
233
|
|
315
|
|
509
|
Comprehensive Income
Attributable to Agree Realty Corporation
|
$
43,569
|
|
$
52,460
|
|
$
84,556
|
|
$ 109,136
|
|
|
|
|
|
|
|
|
Weighted Average Number
of Common Shares Outstanding - Basic
|
93,053,870
|
|
75,037,920
|
|
91,549,390
|
|
73,145,097
|
Weighted Average Number
of Common Shares Outstanding - Diluted
|
93,134,385
|
|
75,570,089
|
|
91,862,290
|
|
73,474,930
|
Agree Realty Corporation
|
|
|
Reconciliation of Net Income to FFO, Core FFO and
Adjusted FFO
|
|
|
($ in thousands, except share and per-share
data)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
41,015
|
|
$
36,130
|
|
$
82,789
|
|
$
72,419
|
|
|
Less Series A
Preferred Stock Dividends
|
|
1,859
|
|
1,859
|
|
3,718
|
|
3,718
|
|
|
Net Income
attributable to OP Common Unitholders
|
|
39,156
|
|
34,271
|
|
79,071
|
|
68,701
|
|
|
Depreciation of rental
real estate assets
|
|
28,145
|
|
21,299
|
|
54,729
|
|
40,768
|
|
|
Amortization of lease
intangibles - in-place leases and leasing costs
|
|
14,328
|
|
10,550
|
|
28,098
|
|
19,472
|
|
|
Provision for
impairment
|
|
1,315
|
|
-
|
|
1,315
|
|
1,015
|
|
|
(Gain) loss on sale or
involuntary conversion of assets, net
|
|
(319)
|
|
8
|
|
(319)
|
|
(2,276)
|
|
|
Funds from Operations
- OP Common Unitholders
|
|
$
82,625
|
|
$
66,128
|
|
$ 162,894
|
|
$ 127,680
|
|
|
Amortization of above
(below) market lease
intangibles, net and assumed mortgage debt discount, net
|
|
8,794
|
|
8,369
|
|
17,489
|
|
16,547
|
|
|
Core Funds from
Operations - OP Common Unitholders
|
|
$
91,419
|
|
$
74,497
|
|
$ 180,383
|
|
$ 144,227
|
|
|
Straight-line accrued
rent
|
|
(3,108)
|
|
(3,095)
|
|
(6,147)
|
|
(6,230)
|
|
|
Stock based
compensation expense
|
|
2,177
|
|
1,743
|
|
4,008
|
|
3,378
|
|
|
Amortization of
financing costs and original issue discounts
|
|
1,029
|
|
492
|
|
2,057
|
|
1,281
|
|
|
Non-real estate
depreciation
|
|
277
|
|
101
|
|
569
|
|
268
|
|
|
Adjusted Funds from
Operations - OP Common Unitholders
|
|
$
91,794
|
|
$
73,738
|
|
$ 180,870
|
|
$ 142,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from Operations
Per Common Share and OP Unit - Basic
|
|
$
0.88
|
|
$
0.88
|
|
$
1.77
|
|
$
1.74
|
|
|
Funds from Operations
Per Common Share and OP Unit - Diluted
|
|
$
0.88
|
|
$
0.87
|
|
$
1.77
|
|
$
1.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Funds from
Operations Per Common Share and OP Unit - Basic
|
|
$
0.98
|
|
$
0.99
|
|
$
1.96
|
|
$
1.96
|
|
|
Core Funds from
Operations Per Common Share and OP Unit - Diluted
|
|
$
0.98
|
|
$
0.98
|
|
$
1.96
|
|
$
1.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Funds from
Operations Per Common Share and OP Unit - Basic
|
|
$
0.98
|
|
$
0.98
|
|
$
1.97
|
|
$
1.94
|
|
|
Adjusted Funds from
Operations Per Common Share and OP Unit - Diluted
|
|
$
0.98
|
|
$
0.97
|
|
$
1.96
|
|
$
1.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number
of Common Shares and OP Units Outstanding - Basic
|
|
93,401,489
|
|
75,385,539
|
|
91,897,009
|
|
73,492,716
|
|
|
Weighted Average Number
of Common Shares and OP Units Outstanding - Diluted
|
|
93,482,004
|
|
75,917,708
|
|
92,209,909
|
|
73,822,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional supplemental
disclosure
|
|
|
|
|
|
|
|
|
|
|
Scheduled principal
repayments
|
|
$
224
|
|
$
211
|
|
$
445
|
|
$
418
|
|
|
Capitalized
interest
|
|
664
|
|
150
|
|
1,203
|
|
262
|
|
|
Capitalized building
improvements
|
|
2,389
|
|
2,743
|
|
3,092
|
|
3,843
|
|
|
|
|
|
Non-GAAP Financial Measures
Funds from Operations ("FFO" or "Nareit FFO")
FFO is defined by the National Association of Real Estate
Investment Trusts, Inc. ("Nareit") to mean net income computed in
accordance with GAAP, excluding gains (or losses) from sales of
real estate assets and/or changes in control, plus real estate
related depreciation and amortization and any impairment charges on
depreciable real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures. Historical cost
accounting for real estate assets in accordance with GAAP
implicitly assumes that the value of real estate assets diminishes
predictably over time. Since real estate values instead have
historically risen or fallen with market conditions, most real
estate industry investors consider FFO to be helpful in evaluating
a real estate company's operations. FFO should not be considered an
alternative to net income as the primary indicator of the Company's
operating performance, or as an alternative to cash flow as a
measure of liquidity. Further, while the Company adheres to the
Nareit definition of FFO, its presentation of FFO is not
necessarily comparable to similarly titled measures of other REITs
due to the fact that all REITs may not use the same definition.
Core Funds from Operations ("Core FFO")
The Company defines Core FFO as Nareit FFO with the addback of (i)
noncash amortization of acquisition purchase price related to
above- and below- market lease intangibles and discount on assumed
debt and (ii) certain infrequently occurring items that reduce or
increase net income in accordance with GAAP. Management believes
that its measure of Core FFO facilitates useful comparison of
performance to its peers who predominantly transact in
sale-leaseback transactions and are thereby not required by GAAP to
allocate purchase price to lease intangibles. Unlike many of
its peers, the Company has acquired the substantial majority of its
net-leased properties through acquisitions of properties from third
parties or in connection with the acquisitions of ground leases
from third parties. Core FFO should not be considered an
alternative to net income as the primary indicator of the Company's
operating performance, or as an alternative to cash flow as a
measure of liquidity. Further, the Company's presentation of Core
FFO is not necessarily comparable to similarly titled measures of
other REITs due to the fact that all REITs may not use the same
definition.
Adjusted Funds from Operations ("AFFO")
AFFO is a non-GAAP financial measure of operating performance used
by many companies in the REIT industry. AFFO further adjusts FFO
and Core FFO for certain non-cash items that reduce or increase net
income computed in accordance with GAAP. Management considers AFFO
a useful supplemental measure of the Company's performance,
however, AFFO should not be considered an alternative to net income
as an indication of its performance, or to cash flow as a measure
of liquidity or ability to make distributions. The Company's
computation of AFFO may differ from the methodology for calculating
AFFO used by other equity REITs, and therefore may not be
comparable to such other REITs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agree Realty Corporation
|
|
|
Reconciliation of Net Debt to Recurring
EBITDA
|
|
|
($ in thousands, except share and per-share
data)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
|
|
|
|
|
|
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
|
|
$
41,015
|
|
|
Interest expense,
net
|
|
|
|
|
|
|
19,948
|
|
|
Income tax
expense
|
|
|
|
|
|
|
709
|
|
|
Depreciation of rental
real estate assets
|
|
|
|
|
|
|
28,145
|
|
|
Amortization of lease
intangibles - in-place leases and leasing costs
|
|
|
|
|
|
|
14,328
|
|
|
Non-real estate
depreciation
|
|
|
|
|
|
|
277
|
|
|
Provision for
impairment
|
|
|
|
|
|
|
1,315
|
|
|
(Gain) loss on sale or
involuntary conversion of assets, net
|
|
|
|
|
|
|
(319)
|
|
|
EBITDAre
|
|
|
|
|
|
|
$
105,418
|
|
|
|
|
|
|
|
|
|
|
|
|
Run-Rate Impact of
Investment, Disposition and Leasing Activity
|
|
|
|
|
|
|
$
4,276
|
|
|
Amortization of above
(below) market lease intangibles, net
|
|
|
|
|
|
|
8,711
|
|
|
Recurring
EBITDA
|
|
|
|
|
|
|
$
118,405
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Recurring
EBITDA
|
|
|
|
|
|
|
$
473,620
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Debt
|
|
|
|
|
|
|
$
2,162,949
|
|
|
Cash, cash equivalents
and cash held in escrows
|
|
|
|
|
|
|
(12,247)
|
|
|
Net Debt
|
|
|
|
|
|
|
$
2,150,702
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt to Recurring EBITDA
|
|
|
|
|
|
|
4.5x
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt
|
|
|
|
|
|
|
$
2,150,702
|
|
|
Anticipated Net
Proceeds from ATM Forward Offerings
|
|
|
|
|
|
|
(202,026)
|
|
|
Proforma Net
Debt
|
|
|
|
|
|
|
$
1,948,676
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma Net Debt to Recurring
EBITDA
|
|
|
|
|
|
|
4.1x
|
|
|
|
|
|
Non-GAAP Financial Measures
EBITDAre
EBITDAre is defined by Nareit to mean net income computed in
accordance with GAAP, plus interest expense, income tax expense,
depreciation and amortization, any gains (or losses) from sales of
real estate assets and/or changes in control, any impairment
charges on depreciable real estate assets, and after adjustments
for unconsolidated partnerships and joint ventures. The Company
considers the non-GAAP measure of EBITDAre to be a key supplemental
measure of the Company's performance and should be considered along
with, but not as an alternative to, net income or loss as a measure
of the Company's operating performance. The Company considers
EBITDAre a key supplemental measure of the Company's operating
performance because it provides an additional supplemental measure
of the Company's performance and operating cash flow that is widely
known by industry analysts, lenders and investors. The Company's
calculation of EBITDAre may not be comparable to EBITDAre reported
by other REITs that interpret the Nareit definition differently
than the Company.
Recurring EBITDA
The Company defines Recurring EBITDA as EBITDAre with the addback
of noncash amortization of above- and below- market lease
intangibles, and after adjustments for the run-rate impact of the
Company's investment and disposition activity for the period
presented, as well as adjustments for non-recurring benefits or
expenses. The Company considers the non-GAAP measure of Recurring
EBITDA to be a key supplemental measure of the Company's
performance and should be considered along with, but not as an
alternative to, net income or loss as a measure of the Company's
operating performance. The Company considers Recurring EBITDA a key
supplemental measure of the Company's operating performance because
it represents the Company's earnings run rate for the period
presented and because it is widely followed by industry analysts,
lenders and investors. Our Recurring EBITDA may not be
comparable to Recurring EBITDA reported by other companies that
have a different interpretation of the definition of Recurring
EBITDA. Our ratio of net debt to Recurring EBITDA is used by
management as a measure of leverage and may be useful to investors
in understanding the Company's ability to service its debt, as well
as assess the borrowing capacity of the Company. Our ratio of
net debt to Recurring EBITDA is calculated by taking annualized
Recurring EBITDA and dividing it by our net debt per the
consolidated balance sheet.
Net Debt
The Company defines Net Debt as total debt less cash, cash
equivalents and cash held in escrows. The Company considers the
non-GAAP measure of Net Debt to be a key supplemental measure of
the Company's overall liquidity, capital structure and leverage.
The Company considers Net Debt a key supplemental measure because
it provides industry analysts, lenders and investors useful
information in understanding our financial condition. The Company's
calculation of Net Debt may not be comparable to Net Debt reported
by other REITs that interpret the definition differently than the
Company. The Company presents Net Debt on both an actual and
proforma basis, assuming the net proceeds of the Forward Offerings
(see below) are used to pay down debt. The Company believes the
proforma measure may be useful to investors in understanding the
potential effect of the Forward Offerings on the Company's capital
structure, its future borrowing capacity, and its ability to
service its debt.
Forward Offerings
Tthe Company has 2,924,641 shares remaining to be settled under the
ATM Forward Offerings. Upon settlement, the offerings are
anticipated to raise net proceeds of approximately $202.0 million
based on the applicable forward sale prices as of June 30, 2023.
The applicable forward sale price varies depending on the offering.
The Company is contractually obligated to settle the ATM Forward
Offerings by certain dates between November 2023 and December
2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agree Realty Corporation
Rental Income
($ in thousands, except share and per
share-data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
Rental Income
Source(1)
|
|
|
|
|
|
|
|
|
|
Minimum
rents(2)
|
$ 120,916
|
|
$
98,239
|
|
$ 236,706
|
|
$ 189,680
|
|
|
Percentage
rents(2)
|
68
|
|
88
|
|
1,314
|
|
723
|
|
|
Operating cost
reimbursement(2)
|
14,495
|
|
11,682
|
|
29,640
|
|
22,961
|
|
|
Straight-line rental
adjustments(3)
|
3,108
|
|
3,095
|
|
6,147
|
|
6,230
|
|
|
Amortization of
(above) below market lease intangibles(4)
|
(8,711)
|
|
(8,311)
|
|
(17,322)
|
|
(16,489)
|
|
|
Total Rental Income
|
$ 129,876
|
|
$ 104,793
|
|
$ 256,485
|
|
$ 203,105
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The
Company adopted Financial Accounting Standards Board Accounting
Standards Codification ("FASB ASC") 842 "Leases" using the modified
retrospective approach as of January 1, 2019. The Company
adopted the practical expedient in FASB ASC 842 that alleviates the
requirement to separately present lease and non-lease components of
lease contracts. As a result, all income earned pursuant to tenant
leases is reflected as one line, "Rental Income," in the
consolidated statement of operations. The purpose of this
table is to provide additional supplementary detail of Rental
Income.
(2) Represents contractual rentals and/or
reimbursements as required by tenant lease agreements, recognized
on an accrual basis of accounting. The Company believes that
the presentation of contractual lease income is not, and is not
intended to be, a presentation in accordance with GAAP. The Company
believes this information is frequently used by management,
investors, analysts and other interested parties to evaluate the
Company's performance.
(3) Represents adjustments to recognize minimum rents
on a straight-line basis, consistent with the requirements of FASB
ASC 842.
(4) In allocating the fair value of an acquired
property, above- and below-market lease intangibles are recorded
based on the present value of the difference between the
contractual amounts to be paid pursuant to the leases at the time
of acquisition and the Company's estimate of current market lease
rates for the property.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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SOURCE Agree Realty Corporation