ADC Agree Realty Corporation

Three Months Ended
December 31, 2023

Twelve Months Ended
December 31, 2023

Number of Projects

20

37

Costs Funded During Q4 2023

$11,619

$11,619

Costs Funded Prior to Q4 2023

32,772

102,694

Remaining Funding Costs

35,593

35,593

$79,984

$149,906

Development and DFP project costs are in thousands. Any differences are the result of rounding. Costs Funded
During Q4 2023 exclude any costs associated with projects that were completed in prior quarters. Remaining
Funding Costs exclude any costs associated with projects that were completed in Q4 2023. Costs Funded Prior
to Q4 2023 may include adjustments related to completed projects to arrive at the correct Anticipated Total
Project Costs.   

 Leases

Annualized
Base Rent ⁽¹⁾

 Percent of
Annualized
Base Rent

Gross

Leasable Area

 Percent of Gross
Leasable Area

2024

28

6,106

1.1 %

722

1.6 %

2025

73

17,153

3.1 %

1,684

3.8 %

2026

120

26,874

4.8 %

2,769

6.3 %

2027

155

34,038

6.1 %

3,119

7.1 %

2028

175

45,925

8.3 %

4,155

9.5 %

2029

182

55,189

9.9 %

5,379

12.2 %

2030

265

55,218

9.9 %

4,240

9.7 %

2031

180

42,434

7.6 %

3,119

7.1 %

2032

232

48,165

8.7 %

3,559

8.1 %

2033

193

45,005

8.1 %

3,485

7.9 %

Thereafter

706

180,258

32.4 %

11,691

26.7 %

     Total Portfolio

2,309

$556,365

100.0 %

43,922

100.0 %

The contractual lease expirations presented above exclude the effect of replacement tenant leases that had been executed as of December 31, 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 December 31, 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.

Tenant

Annualized
Base Rent⁽¹⁾

 Percent of

Annualized Base Rent

Walmart

$33,864

6.1 %

Tractor Supply

28,155

5.1 %

Dollar General

26,831

4.8 %

Best Buy

19,515

3.5 %

CVS

17,310

3.1 %

TJX Companies

17,008

3.1 %

Dollar Tree

16,987

3.1 %

Kroger

16,315

2.9 %

O'Reilly Auto Parts

16,107

2.9 %

Hobby Lobby

14,637

2.6 %

Lowe's

14,025

2.5 %

Burlington

13,770

2.5 %

7-Eleven

12,431

2.2 %

Sunbelt Rentals

12,374

2.2 %

Gerber Collision

11,880

2.1 %

Sherwin-Williams

11,423

2.1 %

Wawa

10,185

1.8 %

Home Depot

8,880

1.6 %

BJ's Wholesale Club

8,713

1.6 %

Other⁽²⁾

245,955

44.2 %

Total Portfolio

$556,365

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 tenants generating less than 1.5% of Annualized Base Rent. 

Sector

Annualized
Base Rent⁽¹⁾

 Percent of Annualized

Base Rent

Grocery Stores

$53,240

9.6 %

Home Improvement

48,147

8.7 %

Tire and Auto Service

47,661

8.6 %

Convenience Stores

46,135

8.3 %

Dollar Stores

42,310

7.6 %

Off-Price Retail

34,920

6.3 %

General Merchandise

32,331

5.8 %

Auto Parts

31,636

5.7 %

Farm and Rural Supply

29,883

5.4 %

Pharmacy

23,701

4.3 %

Consumer Electronics

21,730

3.9 %

Crafts and Novelties

16,915

2.9 %

Discount Stores

14,399

2.6 %

Warehouse Clubs

13,699

2.5 %

Equipment Rental

12,700

2.3 %

Health Services

11,085

2.0 %

Dealerships

10,276

1.7 %

Restaurants - Quick Service

9,215

1.7 %

Health and Fitness

8,660

1.6 %

Specialty Retail

6,620

1.2 %

Sporting Goods

6,208

1.1 %

Financial Services

6,030

1.1 %

Restaurants - Casual Dining

5,594

1.0 %

Home Furnishings

4,001

0.7 %

Theaters

3,854

0.7 %

Pet Supplies

3,430

0.6 %

Beauty and Cosmetics

3,233

0.6 %

Shoes

2,875

0.5 %

Entertainment Retail

2,323

0.4 %

Apparel

1,531

0.3 %

Miscellaneous

1,239

0.2 %

Office Supplies

784

0.1 %

Total Portfolio

$556,365

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. 

State

Annualized
Base Rent⁽¹⁾

 Percent of

Annualized Base Rent

Texas

$40,096

7.2 %

Florida

33,844

6.1 %

Illinois

30,816

5.5 %

North Carolina

30,778

5.5 %

Ohio

29,341

5.3 %

Michigan

27,810

5.0 %

Pennsylvania

26,126

4.7 %

New Jersey

23,122

4.2 %

California

22,191

4.0 %

New York

21,193

3.8 %

Georgia

20,564

3.7 %

Wisconsin

15,719

2.8 %

Virginia

15,270

2.7 %

Missouri

14,908

2.7 %

Louisiana

14,033

2.5 %

Kansas

13,661

2.5 %

Connecticut

12,762

2.3 %

South Carolina

12,443

2.2 %

Mississippi

12,379

2.2 %

Minnesota

11,596

2.1 %

Massachusetts

11,274

2.0 %

Tennessee

10,308

1.9 %

Oklahoma

9,419

1.7 %

Alabama

9,308

1.7 %

Kentucky

8,448

1.5 %

Indiana

8,437

1.5 %

Maryland

8,367

1.5 %

Other⁽²⁾

62,152

11.2 %

Total Portfolio

$556,365

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 1.5% of Annualized Base Rent. 

Forward Equity
Offerings

Shares
Sold

Shares
Settled

Shares
Remaining

Net
Proceeds
Received

Anticipated
Net
Proceeds
Remaining

Q4 2023 ATM Forward Offerings

3,833,871

-

3,833,871

-

$235,618,977

Total Forward Equity Offerings

3,833,871

-

3,833,871

-

$235,618,977

Agree Realty Corporation

Consolidated Balance Sheet

($ in thousands, except share and per-share data)

(Unaudited)

December 31, 2023

December 31, 2022

Assets:

Real Estate Investments:

Land 

$                2,282,354

$                1,941,599

Buildings

4,861,692

4,054,679

Accumulated depreciation

(433,958)

(321,142)

Property under development

33,232

65,932

Net real estate investments

6,743,320

5,741,068

Real estate held for sale, net

3,642

-

Cash and cash equivalents

10,907

27,763

Cash held in escrows

3,617

1,146

Accounts receivable - tenants, net

82,954

65,841

Lease Intangibles, net of accumulated amortization of $360,061 and
$263,011 at December 31, 2023 and December 31, 2022, respectively

854,088

799,448

Other assets, net

76,308

77,923

Total Assets

$                7,774,836

$                6,713,189

Liabilities:

Mortgage notes payable, net

42,811

47,971

Unsecured term loans, net

346,798

-

Senior unsecured notes, net

1,794,312

1,792,047

Unsecured revolving credit facility

227,000

100,000

Dividends and distributions payable

25,534

22,345

Accounts payable, accrued expenses and other liabilities

101,401

83,722

Lease intangibles, net of accumulated amortization of $42,813 and
$35,992 at December 31, 2023 and December 31, 2022, respectively

36,827

36,714

Total Liabilities

$                2,574,683

$                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 December 31, 2023 and December 31, 2022

175,000

175,000

Common stock, $.0001 par value, 180,000,000 shares authorized,
100,519,355 and 90,173,424 shares issued and outstanding at December 31,
2023 and December 31, 2022, respectively

10

9

Additional paid-in-capital

5,354,120

4,658,570

Dividends in excess of net income

(346,473)

(228,132)

Accumulated other comprehensive income (loss)

16,554

23,551

Total Equity - Agree Realty Corporation

$                5,199,211

$                4,628,998

Non-controlling interest

942

1,392

Total Equity

$                5,200,153

$                4,630,390

Total Liabilities and Equity

$                7,774,836

$                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

December 31,

Twelve months ended

December 31,

2023

2022

2023

2022

Revenues

Rental Income

$      144,144

$    116,496

$    537,403

$    429,632

Other

21

35

92

182

Total Revenues

$      144,165

$    116,531

$    537,495

$    429,814

Operating Expenses

Real estate taxes

$        10,663

$        7,962

$      40,092

$      32,079

Property operating expenses

6,841

5,010

24,961

18,585

Land lease expense

412

404

1,664

1,617

General and administrative

8,701

7,856

34,788

30,121

Depreciation and amortization

47,257

37,904

176,277

133,570

Provision for impairment

2,665

-

7,175

1,015

Total Operating Expenses

$        76,539

$      59,136

$    284,957

$    216,987

Gain (loss) on sale of assets, net

1,550

15

1,849

5,341

Gain (loss) on involuntary conversion, net

-

82

-

(83)

Income from Operations

$        69,176

$      57,492

$    254,387

$    218,085

Other (Expense) Income

Interest expense, net

$       (22,371)

$    (16,843)

$    (81,119)

$    (63,435)

Income tax (expense) benefit

(709)

(723)

(2,910)

(2,860)

Other (expense) income

5

1,113

189

1,245

Net Income

$        46,101

$      41,039

$    170,547

$    153,035

Less net income attributable to non-controlling interest

146

113

588

598

Net Income Attributable to Agree Realty Corporation

$        45,955

$      40,926

$    169,959

$    152,437

Less Series A Preferred Stock Dividends

1,859

1,859

7,437

7,437

Net Income Attributable to Common Stockholders

$        44,096

$      39,067

$    162,522

$    145,000

Net Income Per Share Attributable to Common Stockholders

Basic

$            0.44

$          0.44

$          1.70

$          1.84

Diluted

$            0.44

$          0.44

$          1.70

$          1.83

Other Comprehensive Income

Net Income

$        46,101

$      41,039

$    170,547

$    153,035

Amortization of interest rate swaps

(630)

(575)

(2,519)

(684)

Change in fair value and settlement of interest rate swaps

(16,165)

-

(4,501)

29,881

Total Comprehensive Income (Loss)

29,306

40,464

163,527

182,232

Less comprehensive income attributable to non-controlling interest

88

111

565

741

Comprehensive Income Attributable to Agree Realty Corporation

$        29,218

$      40,353

$    162,962

$    181,491

Weighted Average Number of Common Shares Outstanding - Basic

100,279,279

88,434,580

95,191,409

78,659,333

Weighted Average Number of Common Shares Outstanding - Diluted

100,397,096

88,812,510

95,437,412

79,164,386

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

December 31,

Twelve months ended

December 31,

2023

2022

2023

2022

Net Income

$      46,101

$      41,039

$    170,547

$    153,035

Less Series A Preferred Stock Dividends

1,859

1,859

7,437

7,437

Net Income attributable to OP Common Unitholders

44,242

39,180

163,110

145,598

Depreciation of rental real estate assets

31,119

24,843

115,617

88,685

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

15,611

12,800

58,967

44,107

Provision for impairment

2,665

-

7,175

1,015

(Gain) loss on sale or involuntary conversion of assets, net

(1,550)

(97)

(1,849)

(5,258)

Funds from Operations - OP Common Unitholders

$      92,087

$      76,726

$    343,020

$    274,147

8,556

33,430

33,563

Core Funds from Operations - OP Common Unitholders

$      99,651

$      85,282

$    376,450

$    307,710

Straight-line accrued rent

(3,200)

(3,757)

(12,142)

(13,176)

Stock based compensation expense

2,158

1,572

8,338

6,464

Amortization of financing costs and original issue discounts

1,186

1,071

4,403

3,141

Non-real estate depreciation

527

261

1,693

778

Adjusted Funds from Operations - OP Common Unitholders

$    100,322

$      84,429

$    378,742

$    304,917

Funds from Operations Per Common Share and OP Unit - Basic

$          0.92

$          0.86

$          3.59

$          3.47

Funds from Operations Per Common Share and OP Unit - Diluted

$          0.91

$          0.86

$          3.58

$          3.45

Core Funds from Operations Per Common Share and OP Unit - Basic

$          0.99

$          0.96

$          3.94

$          3.89

Core Funds from Operations Per Common Share and OP Unit - Diluted

$          0.99

$          0.96

$          3.93

$          3.87

Adjusted Funds from Operations Per Common Share and OP Unit - Basic

$          1.00

$          0.95

$          3.96

$          3.86

Adjusted Funds from Operations Per Common Share and OP Unit - Diluted

$          1.00

$          0.95

$          3.95

$          3.83

Weighted Average Number of Common Shares and OP Units Outstanding - Basic

100,626,898

88,782,199

95,539,028

79,006,952

Weighted Average Number of Common Shares and OP Units Outstanding - Diluted

100,744,715

89,160,129

95,785,031

79,512,005

Additional supplemental disclosure

Scheduled principal repayments

$           232

$           217

$           905

$           850

Capitalized interest

288

445

1,957

1,261

Capitalized building improvements

3,122

968

9,819

7,945

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
December 31,

2023

Net Income

$                       46,101

Interest expense, net

22,371

Income tax expense

709

Depreciation of rental real estate assets

31,119

Non-real estate depreciation

527

Provision for impairment

2,665

(Gain) loss on sale or involuntary conversion of assets, net

(1,550)

EBITDAre

$                     117,553

Run-Rate Impact of Investment, Disposition and Leasing Activity

$                         2,344

Amortization of above (below) market lease intangibles, net

7,481

Recurring EBITDA

$                     127,378

Annualized Recurring EBITDA

$                     509,512

Total Debt

$                  2,431,868

Cash, cash equivalents and cash held in escrows

(14,524)

Net Debt

$                  2,417,344

Net Debt to Recurring EBITDA

4.7x

Net Debt

$                  2,417,344

Anticipated Net Proceeds from ATM Forward Offerings

(235,619)

Proforma Net Debt

$                  2,181,725

Proforma Net Debt to Recurring EBITDA

4.3x

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 principal outstanding 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

The Company has 3,833,871 shares remaining to be settled under the ATM Forward Offerings. Upon settlement, the offerings are anticipated to raise net proceeds of approximately $235.6 million based on the applicable
forward sale price as of December 31, 2023. The applicable forward sale price varies depending on the offering. The Company is contractually obligated to settle the offerings by January 2025.

Agree Realty Corporation

Rental Income

($ in thousands, except share and per share-data)

(Unaudited)

Three months ended

December 31,

Twelve months ended

December 31,

2023

2022

2023

2022

Rental Income Source⁽¹⁾

Minimum rents⁽²⁾

$    133,274

$    109,227

$    497,736

$    402,117

Percentage rents⁽²⁾

-

-

1,314

723

Operating cost reimbursement⁽²⁾

15,151

11,986

59,307

46,953

Straight-line rental adjustments⁽³⁾

3,200

3,757

12,142

13,176

Amortization of (above) below market lease intangibles⁽⁴⁾                                                                               

(7,481)

(8,474)

(33,096)

(33,337)

Total Rental Income

$    144,144

$    116,496

$    537,403

$    429,632

(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.