2024 Guidance

AFFO per share⁽¹⁾

$4.10 to $4.13

General and administrative expenses (% of adjusted revenue)⁽²⁾

5.7% to 6.0%

Non-reimbursable real estate expenses (% of adjusted revenue)⁽²⁾

1.0% to 1.5%

Income and other tax expense

$4 to $5 million

Acquisition volume

Approximately $600 million

Disposition volume

 $50 to $100 million

The Company's 2024 guidance is subject to risks and uncertainties more fully described in this press release and in the Company's filings with the Securities and Exchange Commission.

(1)

The Company does not provide guidance with respect to the most directly comparable GAAP financial measure or provide reconciliations to GAAP from its forward-looking non-GAAP financial measure of AFFO per share guidance due to the inherent difficulty of forecasting the effect, timing and significance of certain amounts in the reconciliation that would be required by Item 10(e)(1)(i)(B) of Regulation S-K. Examples of these amounts include impairments of assets, gains and losses from sales of assets, and depreciation and amortization from new acquisitions or developments. In addition, certain non-recurring items may also significantly affect net income but are generally adjusted for in AFFO. Based on our historical experience, the dollar amounts of these items could be significant, and could have a material impact on the Company's GAAP results for the guidance period.

(2)

Adjusted revenue excludes the impact of the amortization of above and below market lease intangibles.

Three Months Ended

March 31, 2024

Number of Projects

20

Costs Funded During Q1 2024

$16,539

Costs Funded Prior to Q1 2024

31,610

Remaining Funding Costs

33,732

Development and DFP project costs are in thousands. Any differences are the result of rounding. Costs Funded During Q1 2024 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 Q1 2024. Costs Funded Prior to Q1 2024 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

12

2,327

0.4 %

274

0.6 %

2025

70

15,818

2.8 %

1,598

3.6 %

2026

122

27,110

4.8 %

2,788

6.2 %

2027

156

34,329

6.1 %

3,134

7.0 %

2028

176

46,901

8.3 %

4,338

9.7 %

2029

192

58,384

10.3 %

5,613

12.6 %

2030

268

56,470

10.0 %

4,318

9.7 %

2031

185

44,152

7.8 %

3,252

7.3 %

2032

237

48,897

8.7 %

3,631

8.1 %

2033

198

46,102

8.2 %

3,557

8.0 %

Thereafter

721

184,462

32.6 %

12,169

27.2 %

Total Portfolio

2,337

$564,952

100.0 %

44,672

100.0 %

The contractual lease expirations presented above exclude the effect of replacement tenant leases that had been executed as of March 31, 2024, 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 March 31, 2024, 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

6.0 %

Tractor Supply

28,155

5.0 %

Dollar General

26,831

4.7 %

Best Buy

19,593

3.5 %

CVS

17,809

3.2 %

Dollar Tree

17,558

3.1 %

Kroger

16,802

3.0 %

TJX Companies

16,762

3.0 %

O'Reilly Auto Parts

16,411

2.9 %

Hobby Lobby

14,673

2.6 %

Lowe's

14,025

2.5 %

Burlington

13,080

2.3 %

Sunbelt Rentals

12,761

2.3 %

7-Eleven

12,431

2.2 %

Gerber Collision

11,710

2.1 %

Sherwin-Williams

11,423

2.0 %

Wawa

9,916

1.8 %

Home Depot

9,591

1.7 %

BJ's Wholesale Club

8,713

1.5 %

Other⁽²⁾

252,844

44.6 %

Total Portfolio

$564,952

100.0 %

      Annualized Base Rent is in thousands; any differences are the result of rounding.

      (1)   Refer to footnote 1 on page 4 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

$54,894

9.7 %

Home Improvement

49,349

8.7 %

Tire and Auto Service

47,363

8.4 %

Convenience Stores

46,072

8.2 %

Dollar Stores

42,881

7.6 %

Off-Price Retail

33,992

6.0 %

General Merchandise

32,331

5.7 %

Auto Parts

32,256

5.7 %

Farm and Rural Supply

29,883

5.3 %

Pharmacy

24,200

4.3 %

Consumer Electronics

21,723

3.9 %

Crafts and Novelties

16,952

3.0 %

Discount Stores

14,155

2.5 %

Warehouse Clubs

13,699

2.4 %

Equipment Rental

13,087

2.3 %

Dealerships

12,411

2.2 %

Health Services

11,500

2.0 %

Restaurants - Quick Service

9,109

1.6 %

Health and Fitness

9,034

1.6 %

Sporting Goods

7,450

1.3 %

Specialty Retail

6,620

1.2 %

Financial Services

6,612

1.2 %

Restaurants - Casual Dining

5,594

1.0 %

Theaters

3,854

0.7 %

Home Furnishings

3,702

0.7 %

Beauty and Cosmetics

3,465

0.6 %

Pet Supplies

3,430

0.6 %

Shoes

3,166

0.6 %

Entertainment Retail

2,323

0.4 %

Apparel

1,810

0.3 %

Miscellaneous

1,251

0.2 %

Office Supplies

784

0.1 %

Total Portfolio

$564,952

100.0 %

Annualized Base Rent is in thousands; any differences are the result of rounding.

(1)

 Refer to footnote 1 on page 4 for the Company's definition of Annualized Base Rent.

State

Annualized
Base Rent⁽¹⁾

 Percent of

Annualized Base Rent

Texas

$40,683

7.2 %

Florida

32,880

5.8 %

Illinois

31,676

5.6 %

North Carolina

30,782

5.4 %

Michigan

29,566

5.2 %

Ohio

29,434

5.2 %

Pennsylvania

27,204

4.8 %

New Jersey

23,525

4.2 %

California

22,746

4.0 %

New York

21,585

3.8 %

Georgia

20,813

3.7 %

Missouri

16,488

2.9 %

Wisconsin

16,039

2.8 %

Virginia

15,754

2.8 %

Louisiana

14,031

2.5 %

Kansas

13,668

2.4 %

Connecticut

12,653

2.2 %

South Carolina

12,402

2.2 %

Mississippi

12,218

2.2 %

Minnesota

11,796

2.1 %

Massachusetts

11,351

2.0 %

Tennessee

10,387

1.8 %

Alabama

9,404

1.7 %

Oklahoma

9,194

1.6 %

Indiana

8,905

1.6 %

Kentucky

8,633

1.5 %

Other⁽²⁾

71,135

12.8 %

Total Portfolio

$564,952

100.0 %

Annualized Base Rent is in thousands; any differences are the result of rounding.

(1)

Refer to footnote 1 on page 4 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

-

$235,493,226

Q1 2024 ATM
Forward Offerings

20,743

-

20,743

-

$1,275,278

Total Forward
Equity Offerings

3,854,614

-

3,854,614

-

$236,768,504

Agree Realty Corporation

Consolidated Balance Sheet

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

(Unaudited)

March 31, 2024

December 31, 2023

Assets:

Real Estate Investments:

Land 

$                2,305,313

$                2,282,354

Buildings

4,937,878

4,861,692

Accumulated depreciation

(463,827)

(433,958)

Property under development

42,109

33,232

Net real estate investments

6,821,473

6,743,320

Real estate held for sale, net

5,416

3,642

Cash and cash equivalents

6,314

10,907

Cash held in escrows

9,120

3,617

Accounts receivable - tenants, net

91,301

82,954

Lease Intangibles, net of accumulated amortization of $383,456 and
$360,061 at March 31, 2024 and December 31, 2023, respectively

840,984

854,088

Other assets, net

94,057

76,308

Total Assets

$                7,868,665

$                7,774,836

Liabilities:

Mortgage notes payable, net

42,666

42,811

Unsecured term loans, net

346,947

346,798

Senior unsecured notes, net

1,794,874

1,794,312

Unsecured revolving credit facility

330,000

227,000

Dividends and distributions payable

25,561

25,534

Accounts payable, accrued expenses and other liabilities

112,385

101,401

Lease intangibles, net of accumulated amortization of $42,684 and
$42,813 at March 31, 2024 and December 31, 2023, respectively

36,757

36,827

Total Liabilities

$                2,689,190

$                2,574,683

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 March 31, 2024 and December 31, 2023

175,000

175,000

Common stock, $.0001 par value, 180,000,000 shares authorized,
100,628,975 and 100,519,355 shares issued and outstanding at March
31, 2024 and December 31, 2023, respectively

10

10

Additional paid-in-capital

5,354,362

5,354,120

Dividends in excess of net income

(378,205)

(346,473)

Accumulated other comprehensive income (loss)

27,430

16,554

Total Equity - Agree Realty Corporation

$                5,178,597

$                5,199,211

Non-controlling interest

878

942

Total Equity

$                5,179,475

$                5,200,153

Total Liabilities and Equity

$                7,868,665

$                7,774,836

Agree Realty Corporation

Consolidated Statements of Operations and Comprehensive Income

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

(Unaudited)

Three months ended

March 31,

2024

2023

Revenues

Rental Income

$        149,422

$      126,609

Other

31

9

Total Revenues

$        149,453

$      126,618

Operating Expenses

Real estate taxes

$          10,701

$          9,432

Property operating expenses

7,373

6,782

Land lease expense

415

430

General and administrative

9,515

8,821

Depreciation and amortization

48,463

40,646

Provision for impairment

4,530

-

Total Operating Expenses

$          80,997

$        66,111

Gain (loss) on sale of assets, net

2,096

-

Gain (loss) on involuntary conversion, net

(55)

-

Income from Operations

$          70,497

$        60,507

Other (Expense) Income

Interest expense, net

$        (24,451)

$      (17,998)

Income and other tax (expense) benefit

(1,149)

(783)

Other (expense) income

117

48

Net Income

$          45,014

$        41,774

Less net income attributable to non-controlling interest

155

160

Net Income Attributable to Agree Realty Corporation

$          44,859

$        41,614

Less Series A Preferred Stock Dividends

1,859

1,859

Net Income Attributable to Common Stockholders

$          43,000

$        39,755

Net Income Per Share Attributable to Common Stockholders

Basic

$              0.43

$            0.44

Diluted

$              0.43

$            0.44

Other Comprehensive Income

Net Income

$          45,014

$        41,774

Amortization of interest rate swaps

(629)

(629)

Change in fair value and settlement of interest rate swaps

11,543

-

Total Comprehensive Income (Loss)

55,928

41,145

Less comprehensive income attributable to non-controlling interest

193

158

Comprehensive Income Attributable to Agree Realty Corporation

$          55,735

$        40,987

Weighted Average Number of Common Shares Outstanding - Basic

100,284,588

90,028,255

Weighted Average Number of Common Shares Outstanding - Diluted

100,336,600

90,548,172

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

March 31,

2024

2023

Net Income

$          45,014

$        41,774

Less Series A Preferred Stock Dividends

1,859

1,859

Net Income attributable to OP Common Unitholders

43,155

39,915

Depreciation of rental real estate assets

31,966

26,584

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

15,996

13,770

Provision for impairment

4,530

-

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

(2,041)

-

Funds from Operations - OP Common Unitholders

$          93,606

$        80,269

Amortization of above (below) market lease intangibles, net and assumed mortgage debt discount, net

8,379

8,695

Core Funds from Operations - OP Common Unitholders

$        101,985

$        88,964

Straight-line accrued rent

(2,847)

(3,039)

Stock based compensation expense

2,425

1,831

Amortization of financing costs and original issue discounts

1,186

1,029

Non-real estate depreciation

501

292

Adjusted Funds from Operations - OP Common Unitholders

$        103,250

$        89,077

Funds from Operations Per Common Share and OP Unit - Basic

$              0.93

$            0.89

Funds from Operations Per Common Share and OP Unit - Diluted

$              0.93

$            0.88

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

$              1.01

$            0.98

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

$              1.01

$            0.98

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

$              1.03

$            0.99

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

$              1.03

$            0.98

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

100,632,207

90,375,874

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

100,684,219

90,895,791

Additional supplemental disclosure

Scheduled principal repayments

$               235

$             221

Capitalized interest

304

539

Capitalized building improvements

493

702

Non-GAAP Financial Measures

Funds from Operations ("FFO" or "Nareit FFO")
FFO is defined by the National Association of Real Estate Investment Trusts, Inc. ("Nareit") to mean net income computed in accordance with GAAP, excluding gains (or losses) from sales of real estate assets and/or changes in control, plus real estate related depreciation and amortization and any impairment charges on depreciable real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company's operations. FFO should not be considered an alternative to net income as the primary indicator of the Company's operating performance, or as an alternative to cash flow as a measure of liquidity. Further, while the Company adheres to the Nareit definition of FFO, its presentation of FFO is not necessarily comparable to similarly titled measures of other REITs due to the fact that all REITs may not use the same definition.

Core Funds from Operations ("Core FFO")
The Company defines Core FFO as Nareit FFO with the addback of (i) noncash amortization of acquisition purchase price related to above- and below- market lease intangibles and discount on assumed debt and (ii) certain infrequently occurring items that reduce or increase net income in accordance with GAAP. Management believes that its measure of Core FFO facilitates useful comparison of performance to its peers who predominantly transact in sale-leaseback transactions and are thereby not required by GAAP to allocate purchase price to lease intangibles.  Unlike many of its peers, the Company has acquired the substantial majority of its net-leased properties through acquisitions of properties from third parties or in connection with the acquisitions of ground leases from third parties. Core FFO should not be considered an alternative to net income as the primary indicator of the Company's operating performance, or as an alternative to cash flow as a measure of liquidity. Further, the Company's presentation of Core FFO is not necessarily comparable to similarly titled measures of other REITs due to the fact that all REITs may not use the same definition.

Adjusted Funds from Operations ("AFFO") 
AFFO is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. AFFO further adjusts FFO and Core FFO for certain non-cash items that reduce or increase net income computed in accordance with GAAP. Management considers AFFO a useful supplemental measure of the Company's performance, however, AFFO should not be considered an alternative to net income as an indication of its performance, or to cash flow as a measure of liquidity or ability to make distributions. The Company's computation of AFFO may differ from the methodology for calculating AFFO used by other equity REITs, and therefore may not be comparable to such other REITs.

Agree Realty Corporation

Reconciliation of Non-GAAP Financial Measures

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

(Unaudited)

Three months ended
March 31,

2024

Mortgage notes payable, net

$                          42,666

Unsecured term loans, net

346,947

Senior unsecured notes, net

1,794,874

Unsecured revolving credit facility

330,000

Total Debt per the Consolidated Balance Sheet

$                     2,514,487

Unamortized debt issuance costs and discounts, net

20,145

Total Debt

$                     2,534,632

Cash and cash equivalents

$                          (6,314)

Cash held in escrows

(9,120)

Net Debt

$                     2,519,198

Anticipated Net Proceeds from ATM Forward Offerings

(236,769)

Proforma Net Debt

$                     2,282,429

Net Income

$                          45,014

Interest expense, net

24,451

Income and other tax expense

1,149

Depreciation of rental real estate assets

31,966

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

15,996

Non-real estate depreciation

501

Provision for impairment

4,530

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

(2,041)

EBITDAre

$                        121,566

Run-Rate Impact of Investment, Disposition and Leasing Activity

$                            1,376

Amortization of above (below) market lease intangibles, net

8,295

Recurring EBITDA

$                        131,237

Annualized Recurring EBITDA

$                        524,948

Total Debt per the Consolidated Balance Sheet to Annualized Net Income

14.0x

Net Debt to Recurring EBITDA

4.8x

Proforma Net Debt to Recurring EBITDA

4.3x

Non-GAAP Financial Measures

Total Debt and Net Debt
The Company defines Total Debt as debt per the consolidated balance sheet excluding unamortized debt issuance costs, original issue discounts and debt discounts. Net Debt is defined as Total Debt less cash, cash equivalents and cash held in escrows. The Company considers the non-GAAP measures of Total Debt and Net Debt to be key supplemental measures of the Company's overall liquidity, capital structure and leverage because they provide industry analysts, lenders and investors useful information in understanding our financial condition. The Company's calculation of Total Debt and Net Debt may not be comparable to Total Debt and Net Debt reported by other REITs that interpret the definitions 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 3,854,614 shares remaining to be settled under the ATM Forward Offerings. Upon settlement, the offerings are anticipated to raise net proceeds of approximately $236.8 million based on the applicable forward sale prices as of March 31, 2024. The applicable forward sale price varies depending on the offering. The Company is contractually obligated to settle the offerings by January 2025.

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.

Annualized Net Income
Represents net income for the three months ended March 31, 2024, on an annualized basis.

Agree Realty Corporation

Rental Income

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

(Unaudited)

Three months ended

March 31,

2024

2023

Rental Income Source⁽¹⁾

Minimum rents⁽²⁾

$    137,033

$    115,790

Percentage rents⁽²⁾

1,368

1,246

Operating cost reimbursement⁽²⁾

16,469

15,145

Straight-line rental adjustments⁽³⁾

2,847

3,039

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

(8,295)

(8,611)

Total Rental Income

$    149,422

$    126,609

(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.