Property Type

 Number of
Properties

Annualized
Base Rent ⁽¹⁾

 Percent of
Annualized
Base Rent

Percent
Investment
Grade ⁽²⁾

 Weighted
Average
Lease Term

Retail Net Lease

307

$80,625

90.2%

43.1%

10.7 yrs

Retail Net Lease Ground Leases

31

6,984

7.8%

87.6%

13.2 yrs

Total Retail Net Lease

338

$87,609

98.0%

46.7%

10.9 yrs

Total Portfolio

341

$89,359

100.0%

46.3%

10.8 yrs

Annualized base rent is in thousands; any differences are the result of rounding.

(1)

Represents annualized straight-line rent as of September 30, 2016.

Reflects tenants, or parent entities thereof, with investment grade credit ratings from Standard & Poor's, Moody's, Fitch and/or NAIC.

Tenant

Location

Lease Structure

Lease Term

Actual or Anticipated Rent Commencement

Status

Hobby Lobby

Springfield, OH

Build-to-Suit

15 Years

Q1 2016

Completed

Burger King ⁽¹⁾

Farr West, UT

Build-to-Suit

20 Years

Q2 2016

Completed

Family Fare Quick Stop

Marshall, MI

Ground Lease

10 Years

Q2 2016

Completed

Burger King ⁽¹⁾

Devils Lake, ND

Build-to-Suit

20 Years

Q3 2016

Completed

Wawa

Orlando, FL

Ground Lease

20 Years

Q3 2016

Completed

Chick-fil-A

Frankfort, KY

Ground Lease

20 Years

Q3 2016

Completed

Starbucks

North Lakeland, FL

Build-to-Suit

10 Years

Q4 2016

Under Construction

Burger King ⁽¹⁾

Hamilton, MT

Build-to-Suit

20 Years

Q4 2016

Under Construction

Burger King ⁽¹⁾

West Fargo, ND

Build-to-Suit

20 Years

Q1 2017

Under Construction

Burger King ⁽¹⁾

Heber, UT

Build-to-Suit

20 Years

Q1 2017

Under Construction

Texas Roadhouse

Mount Pleasant, MI

Ground Lease

15 Years

Q2 2017

Under Construction

Camping World

Tyler, TX

Build-to-Suit

20 Years

Q2 2017

Under Construction

Camping World

Georgetown, KY

Build-to-Suit

20 Years

Q3 2017

Under Construction

Orchard Supply Hardware

Boynton Beach, FL

Build-to-Suit

15 Years

Q3 2017

Under Construction

Tenant

Annualized
Base Rent ⁽¹⁾

 Percent of Annualized
Base Rent

Walgreens

$11,305

12.7%

Walmart

4,224

4.7%

Lowe's

3,099

3.5%

Wawa

2,664

3.0%

Mister Car Wash

2,580

2.9%

Smart & Final

2,518

2.8%

CVS

2,463

2.8%

Hobby Lobby

2,177

2.4%

Tractor Supply

2,175

2.4%

Dollar General

2,148

2.4%

Academy Sports

1,982

2.2%

Rite Aid

1,886

2.1%

24 Hour Fitness

1,759

2.0%

BJ's Wholesale

1,709

1.9%

LA Fitness

1,694

1.9%

Carmike

1,585

1.8%

Taco Bell ⁽²⁾

1,537

1.7%

Burger King ⁽³⁾

1,500

1.7%

Dollar Tree

1,427

1.6%

Other ⁽⁴⁾

38,927

43.5%

Total Portfolio

$89,359

100.0%

Annualized base rent is in thousands; any differences are the result of rounding.

(1)

Represents annualized straight-line rent as of September 30, 2016.

(2)

Franchise restaurants operated by Charter Foods North, LLC. 

(3)

Franchise restaurants operated by Meridian Restaurants Unlimited, LC.

(4)

Includes tenants generating less than 1.5% of annualized base rent.

Sector

Annualized
Base Rent ⁽¹⁾

 Percent of Annualized
Base Rent

Pharmacy

$15,654

17.5%

Grocery Stores

6,119

6.8%

Restaurants - Quick Service

6,104

6.8%

Auto Service

4,711

5.3%

Specialty Retail

4,391

4.9%

Discount Apparel

3,983

4.5%

General Merchandise

3,956

4.4%

Warehouse Clubs

3,749

4.2%

Home Improvement

3,720

4.2%

Health & Fitness

3,562

4.0%

Crafts and Novelties

3,256

3.6%

Sporting Goods

3,149

3.5%

Farm and Rural Supply

2,909

3.3%

Convenience Stores

2,830

3.2%

Restaurants - Casual Dining

2,388

2.7%

Dollar Stores

2,366

2.6%

Auto Parts

2,346

2.6%

Other ⁽²⁾

14,166

15.9%

Total Portfolio

$89,359

100.0%

Annualized base rent is in thousands; any differences are the result of rounding.

(1)

 Represents annualized straight-line rent as of September 30, 2016.

(2)

Includes sectors generating less than 2.5% of annualized base rent.

Sector

Annualized
Base Rent ⁽¹⁾

 Percent of Annualized
Base Rent

Michigan

$14,201

15.9%

Texas

8,110

9.1%

Florida

7,594

8.5%

Ohio

5,779

6.5%

Illinois

4,317

4.8%

Pennsylvania

4,095

4.6%

California

3,700

4.1%

Wisconsin

2,841

3.2%

Kentucky

2,723

3.0%

Mississippi

2,543

2.8%

Kansas

2,540

2.8%

Other ⁽²⁾

30,916

34.7%

Total Portfolio

$89,359

100.0%

Annualized base rent is in thousands; any differences are the result of rounding.

(1)

 Represents annualized straight-line rent as of September 30, 2016.

(2)

Includes states generating less than 2.5% of annualized base rent.

Year

 Leases

Annualized
Base Rent ⁽¹⁾

 Percent of Annualized Base Rent

Gross
Leasable Area

 Percent of Gross
Leasable Area

2016

0

$0

0.0%

0

0.0%

2017

9

894

1.0%

93

1.4%

2018

15

2,257

2.5%

356

5.3%

2019

12

4,326

4.8%

372

5.6%

2020

18

2,639

3.0%

244

3.7%

2021

28

5,674

6.3%

354

5.3%

2022

20

4,238

4.7%

378

5.7%

2023

27

4,865

5.4%

443

6.6%

2024

35

8,835

9.9%

847

12.7%

2025

34

6,883

7.7%

538

8.1%

Thereafter

189

48,748

54.7%

3,060

45.6%

Total Portfolio

387

$89,359

100.0%

6,685

100.0%

Annualized base rent and gross leasable area are in thousands; any differences are the result of rounding.

(1)

Represents annualized straight-line rent as of September 30, 2016.

Agree Realty Corporation

Consolidated Balance Sheet

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

September 30, 2016

December 31, 2015

Assets:

(Unaudited)

Real Estate Investments:

Land  

$                  295,311

$                 225,274

Buildings

662,612

526,912

Accumulated depreciation

(65,884)

(56,401)

Property under development 

5,795

3,663

Net real estate investments

897,834

699,448

Cash and cash equivalents

11,491

2,712

Cash Held in Escrowa

12,292

-

Accounts receivable - Tenants, net of allowance of $50 and $35 for possible losses at September 30, 2016 and December 31, 2015, respectively

10,623

7,418

Unamortized Deferred Expenses:

Credit facility financing Costs, net of accumulated amortization of $1,693 and $1,532 at September 30, 2016 and December 31, 2015, respectively

406

543

Leasing costs, net of accumulated amortization of $637 and $554 at September 30, 2016 and December 31, 2015, respectively

1,229

665

Lease intangibles, net of accumulated amortization of $16,438 and $10,578 at September 30, 2016 and December 31, 2015, respectively

102,602

76,552

Other assets

2,336

2,569

Total Assets

$               1,038,813

$                 789,907

Liabilities:

Mortgage notes payable, net

$                    69,594

$                 100,391

Unsecured Term Loans, net

159,211

99,390

Senior Unsecured Notes, net

159,156

99,161

Unsecured Revolving Credit Facility

47,000

18,000

Dividends and Distributions Payable

11,631

9,758

Deferred Revenue

-

541

Accrued Interest Payable

2,571

963

Accounts Payable and Accrued Expense:

Capital Expenditures

136

122

Operating

6,847

3,926

Interest Rate Swaps

6,437

3,301

Deferred Income Taxes

705

705

Tenant Deposits

94

29

Total Liabilities

463,382

336,287

Stockholders' Equity:

Common stock, $.0001 par value, 45,000,000 shares authorized, 23,884,220 and 20,637,301 shares issued and outstanding, respectively

2

2

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

Series A junior participating preferred stock, $.0001 par value, 200,000 authorized, no shares issued and outstanding

-

-

Additional paid-in capital

607,627

482,514

Dividends in excess of net income

(28,339)

(28,262)

Accumulated other comprehensive loss

(6,311)

(3,130)

Total Stockholders' Equity - Agree Realty Corporation

572,979

451,124

Non-controlling interest

2,452

2,496

Total Stockholders' Equity

575,431

453,620

Total Liabilities and Stockholders' Equity

$               1,038,813

$                 789,907

Agree Realty Corporation

Consolidated Statements of Operations and Comprehensive Income

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

Three months ended
September 30,

Nine months ended
September 30,

2016

2015

2016

2015

(Unaudited)

(Unaudited)

Revenues

Minimum rents

$       22,279

$       16,736

$       60,682

$       47,262

Percentage rents

7

38

197

189

Operating cost reimbursement

1,845

970

5,368

3,246

Other income

30

106

(18)

115

Total Revenues

24,161

17,850

66,229

50,812

Operating Expenses

Real estate taxes

1,473

716

4,035

2,342

Property operating expenses

169

424

1,669

1,411

Land lease payments

163

174

490

443

General and administrative

2,020

1,769

6,107

5,180

Depreciation and amortization

6,151

4,985

16,901

12,656

Total Operating Expenses

9,976

8,068

29,202

22,032

Income from Operations

14,185

9,782

37,027

28,780

Other (Expense) Income

Interest expense, net

(4,091)

(3,505)

(11,236)

(8,899)

Gain on sale of assets

4,415

8,599

7,133

12,134

Loss on debt extinguishment

(33)

-

(33)

(180)

Net Income

14,476

14,876

32,891

31,835

Less Net Income Attributable to Non-Controlling Interest

213

281

506

608

Net Income Attributable to Agree Realty Corporation

$       14,263

$       14,595

$       32,385

$       31,227

Net Income Per Share Attributable to Agree Realty Corporation

Basic

$           0.61

$           0.81

$           1.47

$           1.77

Diluted

$           0.61

$           0.81

$           1.46

$           1.76

Other Comprehensive Income

Net income

$       14,476

$       14,876

$       32,891

$       31,835

Other Comprehensive Income (Loss)

1,378

(2,538)

(3,236)

(2,929)

Total Comprehensive Income

15,854

12,338

29,655

28,906

Comprehensive Income Attributable to Non-Controlling Interest

(229)

(231)

(456)

(552)

Comprehensive Income Attributable to Agree Realty Corporation

$       15,625

$       12,107

$       29,199

$       28,354

Weighted Average Number of Common Shares Outstanding - Basic

23,454,083

18,008,592

22,034,388

17,653,482

Weighted Average Number of Common Shares Outstanding - Diluted

23,563,331

18,064,318

22,127,329

17,716,362

Agree Realty Corporation

Reconciliation of Net Income to FFO and Adjusted FFO

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

(Unaudited)

Three months ended
September 30,

Nine months ended
September 30,

2016

2015

2016

2015

Net income

$      14,476

$      14,876

$      32,891

$      31,835

Depreciation of real estate assets

3,947

3,221

10,904

8,698

Amortization of leasing costs

38

29

85

88

Amortization of lease intangibles

2,148

1,710

5,860

3,813

(Gain) loss on sale of assets

(4,415)

(8,599)

(7,133)

(12,134)

Funds from Operations

$      16,194

$      11,237

$      42,607

$      32,300

Straight-line accrued rent

(857)

(609)

(2,162)

(1,816)

Deferred revenue recognition

(309)

(116)

(541)

(348)

Stock based compensation expense

555

477

1,864

1,522

Amortization of financing costs

122

130

361

355

Non-real estate depreciation

19

15

53

47

Debt extinguishment costs

33

-

33

180

Adjusted Funds from Operations

$      15,757

$      11,134

$      42,215

$      32,240

FFO per common share - Basic

$          0.68

$          0.61

$          1.90

$          1.79

FFO per common share - Diluted

$          0.68

$          0.61

$          1.90

$          1.79

Adjusted FFO per common share - Basic

$          0.66

$          0.61

$          1.89

$          1.79

Adjusted FFO per common share - Diluted

$          0.66

$          0.60

$          1.88

$          1.78

Weighted Average Number of Common Shares and Units Outstanding - Basic

23,801,702

18,356,211

22,382,007

18,001,079

Weighted Average Number of Common Shares and Units Outstanding - Diluted

23,910,950

18,411,938

22,474,948

18,063,958

Supplemental Information:

Scheduled principal repayments

$           748

$           701

$        2,196

$        2,061

Capitalized interest

14

14

27

17

Capitalized building improvements

376

73

405

73

Non-GAAP Financial Measures

FFO
The Company considers the non-GAAP measures of FFO and FFO per share/unit)to be key supplemental measures of the Company's performance and should be considered along with, but not as alternatives to, net income or loss as a measure of the Company's operating performance. Historical cost accounting for real estate assets 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.

The White Paper on FFO approved by NAREIT in April 2002, as revised in 2011, defines FFO as net income or loss (computed in accordance with GAAP), excluding gains or losses from sales of properties and items classified by GAAP as extraordinary, plus real estate-related depreciation and amortization and impairment writedowns, and after comparable adjustments for the Company's portion of these items related to unconsolidated entities and joint ventures. The Company computes FFO consistent with standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company.

The Company believes that excluding the effect of extraordinary items, real estate-related depreciation and amortization and impairments, which are based on historical cost accounting and which may be of limited significance in evaluating current performance, can facilitate comparisons of operating performance between periods and between REITs, even though FFO does not represent an amount that accrues directly to common shareholders. However, FFO may not be helpful when comparing the Company to non-REITs.

FFO does not represent cash generated from operating activities as determined by GAAP and should not be considered as alternatives to net income or loss, cash flows from operations or any other operating performance measure prescribed by GAAP. FFO is not a measurement of the Company's liquidity, nor is FFO indicative of funds available to fund the Company's cash needs, including its ability to make cash distributions. These measurement does not reflect cash expenditures for long-term assets and other items that have been and will be incurred. FFO may include funds that may not be available for management's discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, and other commitments and uncertainties. To compensate for this, management considers the impact of these excluded items to the extent they are material to operating decisions or the evaluation of the Company's operating performance.

Adjusted FFO
The Company presents adjusted FFO (including adjusted FFO per share/unit), which adjusts for certain additional items including straight-line accrued rent, deferred revenue recognition, stock based compensation expense, non-real estate depreciation and debt extinguishment costs and certain other items. The Company excludes these items as it believes it allows for meaningful comparisons with other REITs and between periods and is more indicative of the ongoing performance of its assets. As with FFO, the Company's calculation of adjusted FFO may be different from similar adjusted measures calculated by other REITs.

Any differences a result of rounding.