Agree Realty Corp 10-Q for FY2022 Q2

About this 10-Q

Headline figures

Agree Realty Corp (ADC)

10-Q 2022-08-02 For: 2022-06-30

Added on April 04, 2026

Agree Realty Corp filed this 10-Q on August 2, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Asset Derivatives

June 30, 2022

December 31, 2021

Fair Value

Fair Value

Derivatives designated as cash flow hedges:

Other Assets, net

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $104.88M; up 27.1% from $82.55M a year earlier
Net income: $35.97M; up 61.0% from net income of $22.35M a year earlier
Diluted EPS: $0.45; up 32.4% from $0.34 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


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)


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


Yes	☒	No	◻


Yes	☒	No	◻


Large Accelerated Filer	☒	Accelerated Filer	◻	Non-accelerated Filer	◻	Smaller reporting company	☐	Emerging growth company	☐


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


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


		Page

PART I	Financial Information

Item 1:	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	1

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2022 and 2021	3

	Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2022 and 2021	4

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3:	Quantitative and Qualitative Disclosures about Market Risk	48

Item 4:	Controls and Procedures	49

PART II	Other Information

Item 1:	Legal Proceedings	49

Item 1A:	Risk Factors	49

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	49

Item 3:	Defaults Upon Senior Securities	49

Item 4:	Mine Safety Disclosures	49

Item 5:	Other Information	49

Item 6:	Exhibits	50

SIGNATURES		51


	June 30,		December 31,
	2022		2021
ASSETS
Real Estate Investments
Land	$	1,762,244	$	1,559,434
Buildings		3,560,694		3,034,391
Less accumulated depreciation		(274,323)		(233,862)
		5,048,615		4,359,963
Property under development		43,051		7,148
Net Real Estate Investments		5,091,666		4,367,111

Real Estate Held for Sale, net		—		5,676

Cash and Cash Equivalents		26,267		43,252

Cash Held in Escrows		840		1,998

Accounts Receivable - Tenants, net		61,406		53,442

Lease Intangibles, net of accumulated amortization of
$218,540 and $180,532 at June 30, 2022 and December 31, 2021, respectively		739,319		672,020

Other Assets, net		118,734		83,407

Total Assets	$	6,038,232	$	5,226,906


	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Revenues
Rental income	$	104,793	$	82,494	$	203,105	$	160,253
Other		83		52		113		121
Total Revenues		104,876		82,546		203,218		160,374

Operating Expenses
Real estate taxes		7,979		6,158		15,591		11,855
Property operating expenses		4,541		3,214		9,018		6,755
Land lease expense		407		389		809		736
General and administrative		7,651		6,241		15,272		13,118
Depreciation and amortization		31,950		23,188		60,510		44,676
Provision for impairment		—		—		1,015		—
Total Operating Expenses		52,528		39,190		102,215		77,140

Gain (loss) on sale of assets, net		17		6,767		2,326		9,712
Gain (loss) on involuntary conversion, net		(25)		(14)		(50)		103
Income from Operations		52,340		50,109		103,279		93,049

Other (Expense) Income
Interest expense, net		(15,512)		(12,549)		(29,442)		(24,202)
Income tax (expense) benefit		(698)		(485)		(1,418)		(1,494)
Loss on early extinguishment of term loans and settlement of related interest rate swaps		—		(14,614)		—		(14,614)
Net Income		36,130		22,461		72,419		52,739

Less net income attributable to non-controlling interest		157		114		333		280
Net income attributable to Agree Realty Corporation		35,973		22,347		72,086		52,459
Less Series A preferred stock dividends		1,859		—		3,718		—
Net Income Attributable to Common Stockholders	$	34,114	$	22,347	$	68,368	$	52,459

Net Income Per Share Attributable to Common Stockholders
Basic	$	0.45	$	0.34	$	0.93	$	0.82
Diluted	$	0.45	$	0.34	$	0.93	$	0.82

Other Comprehensive Income
Net income	$	36,130	$	22,461	$	72,419	$	52,739
Amortization of interest rate swaps		82		287		164		787
Change in fair value and settlement of interest rate swaps		16,481		2,230		37,062		27,376
Total comprehensive income (loss)		52,693		24,978		109,645		80,902
Less comprehensive income (loss) attributable to non-controlling interest		233		128		509		294

Comprehensive Income (Loss) Attributable to Agree Realty Corporation	$	52,460	$	24,850	$	109,136	$	80,608

Weighted Average Number of Common Shares Outstanding - Basic		75,037,920		64,835,984		73,145,097		63,838,070

Weighted Average Number of Common Shares Outstanding - Diluted		75,570,089		65,185,604		73,474,930		64,079,697


											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, 2021	7,000	$	175,000	71,285,311	$	7	$	3,395,549	$	(147,366)	$	(5,503)	$	1,629	$	3,419,316
Issuance of common stock, net of issuance costs	—		—	3,791,964		1		250,683		—		—		—		250,684
Repurchase of common shares	—		—	(28,117)		—		(1,745)		—		—		—		(1,745)
Issuance of stock under the 2020 Omnibus Incentive Plan	—		—	125,422		—		648		—		—		—		648
Stock-based compensation	—		—	—		—		1,635		—		—		—		1,635
Series A preferred dividends declared for the period	—		(1,859)	—		—		—		—		—		—		(1,859)
Dividends and distributions declared for the period	—		—	—		—		—		(49,653)		—		(237)		(49,890)
Amortization, changes in fair value, and settlement of interest rate swaps	—		—	—		—		—		—		20,563		100		20,663
Net income	—		1,859	—		—		—		34,254		—		176		36,289
Balance, March 31, 2022	7,000	$	175,000	75,174,580	$	8	$	3,646,770	$	(162,765)	$	15,060	$	1,668	$	3,675,741
Issuance of common stock, net of issuance costs	—		—	4,667,850		—		300,110		—		—		—		300,110
Repurchase of common shares	—		—	(1,052)		—		(76)		—		—		—		(76)
Issuance of stock under the 2020 Omnibus Incentive Plan	—		—	1,493		—		—		—		—		—		—
Forfeiture of restricted stock	—		—	(128)		—		—		—		—		—		—
Stock-based compensation	—		—	—		—		1,743		—		—		—		1,743
Series A preferred dividends declared for the period	—		(1,859)	—		—		—		—		—		—		(1,859)
Dividends and distributions declared for the period	—		—	—		—		—		(53,867)		—		(245)		(54,112)
Amortization, changes in fair value, and settlement of interest rate swaps	—		—	—		—		—		—		16,487		76		16,563
Net income	—		1,859	—		—		—		34,114		—		157		36,130
Balance, June 30, 2022	7,000	$	175,000	79,842,743	$	8	$	3,948,547	$	(182,518)	$	31,547	$	1,656	$	3,974,240

Cash dividends declared per depositary share of Series A preferred stock:
For the three months ended March 31, 2022		$	0.266
For the three months ended June 30, 2022		$	0.266

Cash dividends declared per common share:
For the three months ended March 31, 2022					$	0.681
For the three months ended June 30, 2022					$	0.702


	2022
Year Ending December 31,	(remaining)		2023		2024		2025		2026		Thereafter		Total
Lease intangibles (in-place)	$	22,324	$	42,613	$	39,950	$	37,562	$	34,871	$	169,852	$	347,172
Lease intangibles (above-market)		19,901		37,609		33,557		31,223		29,524		240,333		392,147
Lease intangibles (below-market)		(3,228)		(5,839)		(5,168)		(4,732)		(4,353)		(13,024)		(36,344)
Total	$	38,997	$	74,383	$	68,339	$	64,053	$	60,042	$	397,161	$	702,975


	June 30, 2022		December 31, 2021
Cash and cash equivalents	$	26,267	$	43,252
Cash held in escrow		840		1,998
Total of cash and cash equivalents and cash held in escrow	$	27,107	$	45,250


	June 30, 2022		December 31, 2021
Note payable in monthly installments of interest only at 3.60% per annum, with a balloon payment due January 2023	$	23,640	$	23,640

Note payable in monthly installments of interest only at 5.01% per annum, with a balloon payment due September 2023		4,622		4,622

Note payable in monthly installments of $92 including interest at 6.27% per annum, with a final monthly payment due July 2026		3,955		4,373

Note payable in monthly installments of interest only at 3.63% per annum, with a balloon payment due December 2029		42,250		—

Total principal		74,467		32,635
Unamortized debt issuance costs and assumed debt discount		(2,643)		(206)
Total	$	71,824	$	32,429


	June 30, 2022		December 31, 2021
2025 Senior Unsecured Notes	$	50,000	$	50,000
2027 Senior Unsecured Notes		50,000		50,000
2028 Senior Unsecured Public Notes		350,000		350,000
2028 Senior Unsecured Notes		60,000		60,000
2029 Senior Unsecured Notes		100,000		100,000
2030 Senior Unsecured Notes		125,000		125,000
2030 Senior Unsecured Public Notes		350,000		350,000
2031 Senior Unsecured Notes		125,000		125,000
2033 Senior Unsecured Public Notes		300,000		300,000
Total Principal		1,510,000		1,510,000
Unamortized debt issuance costs and original issue discount, net		(13,899)		(14,800)
Total	$	1,496,101	$	1,495,200


	Six Months Ended
	June 30, 2022		June 30, 2021
Cash Flows from Operating Activities
Net income	$	72,419	$	52,739
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		60,510		44,676
Amortization from above (below) market lease intangibles, net		16,489		10,015
Amortization from financing costs, credit facility costs and debt discount		1,884		948
Stock-based compensation		3,378		2,974
Provision for impairment		1,015		—
Gain (loss) on settlement of interest rate swaps		—		16,748
(Gain) loss on sale of assets		(2,326)		(9,712)
Write-off of unamortized financing costs upon debt extinguishment		—		1,250
(Increase) decrease in accounts receivable		(7,794)		(9,381)
(Increase) decrease in other assets		(951)		2,113
Increase (decrease) in accounts payable, accrued expenses, and other liabilities		5,465		5,576
Net Cash Provided by Operating Activities		150,089		117,946

Cash Flows from Investing Activities
Acquisition of real estate investments and other assets		(799,166)		(741,353)
Development of real estate investments and other assets, net of reimbursements
(including capitalized interest of $262 in 2022 and $163 in 2021)		(46,105)		(28,748)
Payment of leasing costs		(203)		(296)
Net proceeds from sale of assets		23,924		35,377
Net Cash Used in Investing Activities		(821,550)		(735,020)

Cash Flows from Financing Activities
Proceeds from common stock offerings, net		550,794		594,980
Repurchase of common shares		(1,821)		(1,780)
Unsecured revolving credit facility borrowings		680,000		434,000
Unsecured revolving credit facility repayments		(470,000)		(526,000)
Payments of mortgage notes payable		(418)		(393)
Payments of unsecured term loans		—		(240,000)
Proceeds from senior unsecured notes		—		640,623
Payment of Series A preferred dividends		(3,718)		—
Payment of common stock dividends		(101,018)		(102,110)
Distributions to non-controlling interest		(478)		(582)
Payments for financing costs		(23)		(1,238)
Net Cash Provided by Financing Activities		653,318		797,500


	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Operating leases:
Operating cash outflows	$	301	$	267	$	598	$	534
Weighted-average remaining lease term - operating leases (years)		33.7		36.3		33.7		36.3

Finance leases:
Operating cash outflows	$	64	$	65	$	128	$	86
Financing cash outflows	$	20	$	19	$	40	$	54
Weighted-average remaining lease term - finance leases (years)		2.3		3.3		2.3		3.3

Supplemental Disclosure:
Right-of-use assets obtained in exchange for new lease liabilities	$	—	$	6,302	$	—	$	6,302
Right-of-use assets net change	$	—	$	6,302	$	—	$	6,302


	2022
Year Ending December 31,	(remaining)		2023		2024		2025		2026		Thereafter		Total
Lease payments	$	598	$	1,197	$	1,197	$	1,197	$	1,195	$	29,851	$	35,235
Imputed interest		(363)		(711)		(690)		(669)		(647)		(14,491)		(17,571)
Total lease liabilities	$	235	$	486	$	507	$	528	$	548	$	15,360	$	17,664


	Scheduled		Balloon
	Principal		Payment		Total
Remainder of 2022	$	432	$	—	$	432
2023		905		28,262		29,167
2024		963		—		963
2025		1,026		50,000		51,026
2026 ⁽¹⁾		629		370,000		370,629
Thereafter		—		1,502,250		1,502,250
Total scheduled principal payments	$	3,955	$	1,950,512	$	1,954,467


	Number of Instruments ¹		Notional ¹
	June 30,	December 31,	June 30,		December 31,
Interest Rate Derivatives	2022	2021	2022		2021
Interest rate swap	3	3	$	300,000	$	300,000



					Location of Income/(Loss)	Amount of Income/(Loss)
	Amount of Income/(Loss) Recognized				Reclassified from Accumulated	Reclassified from
	in OCI on Derivative				OCI into Income	Accumulated OCI into Expense
Three Months Ended June 30,	2022		2021			2022		2021

Interest rate swaps	$	16,481	$	(11,600)	Interest expense	$	82	$	754

					Loss on extinguishment of debt and settlement of related hedges	$	—	$	13,363


	Total Fair Value		Level 2
June 30, 2022
Derivative assets - interest rate swaps	$	35,595	$	35,595
Derivative liabilities - interest rate swaps	$	—	$	—

December 31, 2021
Derivative assets - interest rate swaps	$	1,868	$	1,868
Derivative liabilities - interest rate swaps	$	3,335	$	3,335


	Shares	Weighted Average
	Outstanding	Grant Date
	(in thousands)	Fair Value
Unvested restricted stock at December 31, 2021	175	$	64.90

Restricted stock granted	78	$	62.72
Restricted stock vested	(56)	$	60.92

Unvested restricted stock at June 30, 2022	197	$	65.15


	2022		2021		2020
Expected term (years)	2.9		2.9		2.9
Volatility	33.5	%	33.9	%	18.4	%
Risk-free rate	1.8	%	0.2	%	1.3	%


	Target Number	Weighted Average
	of Awards	Grant Date
	(in thousands)	Fair Value
Performance units and shares at December 31, 2021 - three-year performance period to be completed	78	$	63.35

Performance units granted	34	$	68.59
Performance units and shares at June 30, 2022- three-year performance period completed	(27)	$	65.66

Performance units and shares at June 30, 2022 - three-year performance period to be completed	85	$	67.64


	Three Months Ended				Variance
	June 30, 2022		June 30, 2021		(in dollars)		(percentage)
Rental Income	$	104,793	$	82,494	$	22,299	27	%
Real Estate Tax Expense	$	7,979	$	6,158	$	1,821	30	%
Property Operating Expense	$	4,541	$	3,214	$	1,327	41	%
Depreciation and Amortization Expense	$	31,950	$	23,188	$	8,762	38	%


	All-in			Principal Amount Outstanding
Senior Unsecured Revolving Credit Facility	Interest Rate		Maturity	June 30, 2022		December 31, 2021
Revolving Credit Facility ⁽¹⁾	2.56	%	January 2026	$	370,000	$	160,000
Total Credit Facility				$	370,000	$	160,000

Senior Unsecured Notes
2025 Senior Unsecured Notes	4.16	%	May 2025	$	50,000	$	50,000
2027 Senior Unsecured Notes	4.26	%	May 2027		50,000		50,000
2028 Senior Unsecured Public Notes ⁽²⁾	2.11	%	June 2028		350,000		350,000
2028 Senior Unsecured Notes	4.42	%	July 2028		60,000		60,000
2029 Senior Unsecured Notes	4.19	%	September 2029		100,000		100,000
2030 Senior Unsecured Notes	4.32	%	September 2030		125,000		125,000
2030 Senior Unsecured Public Notes ⁽²⁾	3.49	%	October 2030		350,000		350,000
2031 Senior Unsecured Notes	4.42	%	October 2031		125,000		125,000
2033 Senior Unsecured Public Notes ⁽²⁾	2.13	%	June 2033		300,000		300,000
Total Senior Unsecured Notes				$	1,510,000	$	1,510,000

Mortgage Notes Payable
CMBS Portfolio Loan	3.60	%	January 2023	$	23,640	$	23,640
Single Asset Mortgage Loan	5.01	%	September 2023		4,622		4,622
Portfolio Credit Tenant Lease	6.27	%	July 2026		3,955		4,373
Four Asset Mortgage Loan	3.63	%	December 2029		42,250		—
Total Mortgage Notes Payable				$	74,467	$	32,635

Total Principal Amount Outstanding				$	1,954,467	$	1,702,635

2022
	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Reconciliation from Net Income to Funds from Operations
Net income	$	36,130	$	22,461	$	72,419	$	52,739
Less Series A preferred stock dividends		1,859		—		3,718		—
Net income attributable to Operating Partnership common unitholders		34,271		22,461		68,701		52,739
Depreciation of rental real estate assets		21,299		16,127		40,768		31,419
Amortization of lease intangibles - in-place leases and leasing costs		10,550		6,905		19,472		12,955
Provision for impairment		—		—		1,015		—
(Gain) loss on sale or involuntary conversion of assets, net		8		(6,753)		(2,276)		(9,815)
Funds from Operations - Operating Partnership common unitholders	$	66,128	$	38,740	$	127,680	$	87,298

Loss on extinguishment of debt and settlement of related hedges		—		14,614		—		14,614
Amortization of above (below) market lease intangibles, net and assumed mortgage debt discount		8,369		5,260		16,547		10,015
Core Funds from Operations - Operating Partnership common unitholders	$	74,497	$	58,614	$	144,227	$	111,927

Straight-line accrued rent		(3,095)		(2,967)		(6,230)		(5,564)
Stock based compensation expense		1,743		1,617		3,378		2,981
Amortization of financing costs		492		221		1,281		489
Non-real estate depreciation		101		156		268		302
Adjusted Funds from Operations - Operating Partnership common unitholders	$	73,738	$	57,641	$	142,924	$	110,135

Funds from Operations per common share and partnership unit - diluted	$	0.87	$	0.59	$	1.73	$	1.35
Core Funds from Operations per common share and partnership unit - diluted	$	0.98	$	0.89	$	1.95	$	1.74
Adjusted Funds from Operations per common share and partnership unit - diluted	$	0.97	$	0.88	$	1.94	$	1.71

Weighted average shares and Operating Partnership common units outstanding
Basic		75,385,539		65,183,603		73,492,716		64,185,689
Diluted		75,917,708		65,533,223		73,822,549		64,427,316

Additional supplemental disclosure
Scheduled principal repayments	$	211	$	198	$	418	$	393
Capitalized interest	$	150	$	88	$	262	$	163
Capitalized building improvements	$	2,743	$	2,280	$	3,843	$	2,454





3.1	Articles of Incorporation of the Company, including all amendments and articles supplementary thereto (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013).
3.2	Amendment to the Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 6, 2015).

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

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

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

3.6	Amendment to Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 10, 2021).

3.7	Articles Supplementary of the Company, dated September 13, 2021 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 13, 2021).

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

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

22	Subsidiary Guarantors of Agree Realty Corporation (incorporated by reference to Exhibit 22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021).

*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, Peter Coughenour, 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, Peter Coughenour, Chief Financial Officer

*101	The following materials from Agree Realty Corporation’s Quarterly Report on Form 10-Q for the three months ended June 30, 2022 formatted in Inline iXBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income and Comprehensive Income, (iii) the Condensed Consolidated Statement of Stockholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) related notes to these consolidated financial statements.

*104	Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101)

Agree Realty Corporation

/s/ Joel N. Agree
Joel N. Agree
President and Chief Executive Officer

/s/ Peter Coughenour
Peter Coughenour
Chief Financial Officer and Secretary
(Principal Financial Officer)

Date: August 2, 2022


Date: August 2, 2022	/s/ Joel N. Agree

	Name:	Joel N. Agree
	Title:	President and Chief Executive Officer