Agree Realty Corporation Reports Fourth Quarter and Full Year 2023 Results
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Insights
The financial results of Agree Realty Corporation indicate a robust performance in the retail net lease sector. The company's strategy of investing in a diversified portfolio of retail properties has yielded a year-over-year increase in Core Funds from Operations (Core FFO) and Adjusted Funds from Operations (AFFO) per share. These metrics are crucial as they provide clearer insights into the actual operating performance of a real estate investment trust (REIT) by excluding the effects of non-recurring items and certain GAAP measures that may not accurately reflect the cash generated by the business.
The increase in dividends, both quarterly and annually, signals confidence in the company's earnings stability and growth prospects. This is further supported by the company's low net debt to recurring EBITDA ratio, which at 4.3 times proforma, is indicative of a healthy balance sheet. The leverage ratio is particularly important for investors as it provides a measure of the company's financial risk and its ability to meet its debt obligations.
The use of an at-the-market (ATM) equity program to raise capital is a flexible and cost-effective strategy, allowing the company to finance its investments without significantly diluting shareholder value. The $500 million of leverage-neutral investment capacity created through the fourth quarter ATM activity presents an opportunity for the company to further grow its asset base without increasing its debt load, which is a positive sign for investors looking for sustainable growth.
Agree Realty's focus on retail net lease properties is noteworthy in the context of the broader retail real estate market. The company's portfolio, which is 99.8% leased with a weighted-average remaining lease term of approximately 8.4 years, provides a stable income stream. The high percentage of investment-grade retail tenants (69.1% of annualized base rents) is a testament to the quality of the tenants and the resilience of the income.
The ground lease portfolio, being fully occupied with a weighted-average remaining lease term of approximately 10.5 years, further reinforces the stability of the company's rental income. Ground leases are typically long-term and provide a steady income with minimal landlord responsibilities, which is attractive from an investor's standpoint.
Geographic and tenant diversification reduces the risk of income concentration and exposure to regional economic fluctuations. The spread across 49 states and investment in a variety of retail sectors, including essential services like grocery stores and home improvement, positions the company well to withstand sector-specific downturns.
The strategic capital allocation of Agree Realty Corporation, as demonstrated by its acquisition and disposition activities, reflects a disciplined investment approach. The acquisition of properties at a weighted-average capitalization rate of 7.2% for the fourth quarter and 6.9% for the full year is competitive within the industry, suggesting the company is able to invest capital at returns that should be accretive to shareholder value.
Development and Developer Funding Platform (DFP) projects represent a forward-thinking approach to value creation, as they often offer higher yields upon completion compared to immediate acquisitions. The completion of development projects and the commencement of new ones showcase the company's ability to manage and execute its growth strategy effectively.
From an investment perspective, the company's disciplined approach to capital management, including the use of forward equity offerings, positions it well to take advantage of market opportunities without over-leveraging. The anticipated net proceeds from outstanding forward equity offerings provide a cushion for future investments or debt reduction, which could further enhance the company's financial flexibility and shareholder value.
Fourth Quarter ATM Activity Creates
Fourth Quarter 2023 Financial and Operating Highlights:
- Invested approximately
$199 million - Completed four development or Developer Funding Platform ("DFP") projects representing total committed capital of over
$16 million - Net Income per share attributable to common stockholders of
$0.44 - Core Funds from Operations ("Core FFO") per share increased
3.4% to$0.99 - Adjusted Funds from Operations ("AFFO") per share increased
5.2% to$1.00 - Declared a December monthly dividend of
$0.24 72.9% year-over-year increase - Sold 3.8 million shares of common stock via the forward component of the Company's at-the-market equity ("ATM") program for net proceeds of approximately
$236 million - Balance sheet well positioned at 4.3 times proforma net debt to recurring EBITDA; 4.7 times excluding unsettled forward equity
Full Year 2023 Financial and Operating Highlights:
- Invested or committed
$1.34 billion - Commenced 13 development or DFP projects for total committed capital of approximately
$54 million - Net Income per share attributable to common stockholders declined
7.0% to$1.70 - Core FFO per share increased
1.6% to$3.93 - AFFO per share increased
3.1% to$3.95 - Declared dividends of
$2.91 94.1% year-over-year increase - Raised over
$370 million - Closed on an unsecured
$350 million 4.52% fixed rate inclusive of prior hedging activity - Ended the year with over
$1.0 billion
Financial Results
Net Income Attributable to Common Stockholders
Net Income for the three months ended December 31, 2023 increased
Net Income for the twelve months ended December 31, 2023 increased
Core FFO
Core FFO for the three months ended December 31, 2023 increased
Core FFO for the twelve months ended December 31, 2023 increased
AFFO
AFFO for the three months ended December 31, 2023 increased
AFFO for the twelve months ended December 31, 2023 increased
Dividend
In the fourth quarter, the Company declared monthly cash dividends of
For the twelve months ended December 31, 2023, the Company declared monthly cash dividends totaling
Subsequent to year end, the Company declared a monthly cash dividend of
Additionally, subsequent to year end, the Company declared a monthly cash dividend for each of January and February 2024 on its
CEO Comments
"We are pleased with our performance in 2023 as we invested over
Portfolio Update
As of December 31, 2023, the Company's portfolio consisted of 2,135 properties located in 49 states and contained approximately 44.2 million square feet of gross leasable area.
At year end, the portfolio was
Ground Lease Portfolio
During the fourth quarter, the Company acquired seven ground leases for an aggregate purchase price of approximately
As of December 31, 2023, the Company's ground lease portfolio consisted of 224 leases located in 35 states and totaled approximately 6.1 million square feet of gross leasable area. Properties ground leased to tenants represented
At year end, the ground lease portfolio was fully occupied, had a weighted-average remaining lease term of approximately 10.5 years, and generated
Acquisitions
Total acquisition volume for the fourth quarter was approximately
The properties were acquired at a weighted-average capitalization rate of
For the twelve months ended December 31, 2023, total acquisition volume was approximately
Dispositions
During the fourth quarter, the Company sold three properties for gross proceeds of approximately
Development and DFP
During the fourth quarter, the Company commenced four development or DFP projects, with total anticipated costs of approximately
For the twelve months ended December 31, 2023, the Company had a record 37 development or DFP projects completed or under construction with anticipated total costs of approximately
The following table presents estimated costs for the Company's active or completed development or DFP projects for the quarter and year ended December 31, 2023:
Three Months Ended | Twelve Months Ended | |||||
Number of Projects | 20 | 37 | ||||
Costs Funded During Q4 2023 | ||||||
Costs Funded Prior to Q4 2023 | 32,772 | 102,694 | ||||
Remaining Funding Costs | 35,593 | 35,593 | ||||
Anticipated Total Project Costs | ||||||
Development and DFP project costs are in thousands. Any differences are the result of rounding. Costs Funded | ||||||
Leasing Activity and Expirations
During the fourth quarter, the Company executed new leases, extensions or options on approximately 425,000 square feet of gross leasable area throughout the existing portfolio. Notable new leases, extensions or options included a 25,000-square foot TJ Maxx in
For the twelve months ended December 31, 2023, the Company executed new leases, extensions or options on approximately 1,873,000 square feet of gross leasable area throughout the existing portfolio.
As of December 31, 2023, the Company's 2024 lease maturities represented
Year | Leases | Annualized | Percent of | Gross Leasable Area | Percent of Gross | ||||
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 | 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 | |||||||||
(1) Annualized Base Rent represents the annualized amount of contractual minimum rent required by tenant lease agreements as of December 31, 2023, | |||||||||
Top Tenants
The following table presents annualized base rents for all tenants that represent
Tenant | Annualized | Percent of Annualized Base Rent | ||
Walmart | 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 % | ||
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 | 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 | ||||
Retail Sectors
The following table presents annualized base rents for all the Company's retail sectors as of December 31, 2023:
Sector | Annualized | Percent of Annualized Base Rent | ||
Grocery Stores | 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 | 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
State | Annualized | Percent of Annualized Base Rent | |||
7.2 % | |||||
33,844 | 6.1 % | ||||
30,816 | 5.5 % | ||||
30,778 | 5.5 % | ||||
29,341 | 5.3 % | ||||
27,810 | 5.0 % | ||||
26,126 | 4.7 % | ||||
23,122 | 4.2 % | ||||
22,191 | 4.0 % | ||||
21,193 | 3.8 % | ||||
20,564 | 3.7 % | ||||
15,719 | 2.8 % | ||||
15,270 | 2.7 % | ||||
14,908 | 2.7 % | ||||
14,033 | 2.5 % | ||||
13,661 | 2.5 % | ||||
12,762 | 2.3 % | ||||
12,443 | 2.2 % | ||||
12,379 | 2.2 % | ||||
11,596 | 2.1 % | ||||
11,274 | 2.0 % | ||||
10,308 | 1.9 % | ||||
9,419 | 1.7 % | ||||
9,308 | 1.7 % | ||||
8,448 | 1.5 % | ||||
8,437 | 1.5 % | ||||
8,367 | 1.5 % | ||||
Other(2) | 62,152 | 11.2 % | |||
Total Portfolio | 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 | |||||
Capital Markets, Liquidity and Balance Sheet
Capital Markets
During the fourth quarter, the Company entered into forward sale agreements in connection with its ATM program to sell an aggregate of 3,833,871 shares of common stock for net proceeds of approximately
The following table presents the Company's outstanding forward equity offerings as of December 31, 2023:
Forward Equity | Shares | Shares | Shares | Net | Anticipated | |||||
Q4 2023 ATM Forward Offerings | 3,833,871 | - | 3,833,871 | - | ||||||
Total Forward Equity Offerings | 3,833,871 | - | 3,833,871 | - |
Liquidity
As of December 31, 2023, the Company had total liquidity of over
Balance Sheet
As of December 31, 2023, the Company's net debt to recurring EBITDA was 4.7 times. The Company's proforma net debt to recurring EBITDA was 4.3 times when deducting the
The Company's total debt to enterprise value was
For the three and twelve months ended December 31, 2023, the Company's fully diluted weighted-average shares outstanding were 100.4 million and 95.4 million, respectively. The basic weighted-average shares outstanding for the three and twelve months ended December 31, 2023 were 100.3 million and 95.2 million, respectively.
For the three and twelve months ended December 31, 2023, the Company's fully diluted weighted-average shares and units outstanding were 100.7 million and 95.8 million, respectively. The basic weighted-average shares and units outstanding for the three and twelve months ended December 31, 2023 were 100.6 million and 95.5 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 December 31, 2023, there were 347,619 Operating Partnership common units outstanding, and the Company held a
Conference Call/Webcast
The Company will host its quarterly analyst and investor conference call on Wednesday, February 14, 2024 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 December 31, 2023, the Company owned and operated a portfolio of 2,135 properties, located in 49 states and containing approximately 44.2 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) | |||
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 | 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 | 36,827 | 36,714 | |
Total Liabilities | $ 2,574,683 | $ 2,082,799 | |
Equity: | |||
Preferred Stock, | 175,000 | 175,000 | |
Common stock, | 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 | ||||||||||||||||
Non-GAAP Financial Measures | ||||||||||||||||||||
Funds from Operations ("FFO" or "Nareit FFO") | ||||||||||||||||||||
Core Funds from Operations ("Core FFO") | ||||||||||||||||||||
Adjusted Funds from Operations ("AFFO") |
Agree Realty Corporation | ||||||||||||||||||||
Reconciliation of Net Debt to Recurring EBITDA | ||||||||||||||||||||
($ in thousands, except share and per-share data) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three months ended | ||||||||||||||||||||
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 | ||||||||||||||||||||
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 | ||||||||||||||||||||
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 | ||||||||||||||||||||
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 | ||||||||||||||||||||
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. |
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SOURCE Agree Realty Corporation
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