Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 23, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-12928 | |
Entity Registrant Name | AGREE REALTY CORPORATION | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 38-3148187 | |
Entity Address, Address Line One | 32301 Woodward Avenue | |
Entity Address, City or Town | Royal Oak | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48073 | |
City Area Code | 248 | |
Local Phone Number | 737-4190 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 100,519,717 | |
Entity Central Index Key | 0000917251 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Stock [Member] | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $0.0001 par value | |
Trading Symbol | ADC | |
Security Exchange Name | NYSE | |
Redeemable Preferred Stock [Member] | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Depositary Shares, each representing one-thousandth of a share of 4.25% Series A Cumulative Redeemable Preferred Stock, $0.0001 par value | |
Trading Symbol | ADCPrA | |
Security Exchange Name | NYSE |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Real Estate Investments | ||
Land | $ 2,231,535 | $ 1,941,599 |
Buildings | 4,750,160 | 4,054,679 |
Less accumulated depreciation | (403,501) | (321,142) |
Real estate investments excluding property under development | 6,578,194 | 5,675,136 |
Property under development | 36,114 | 65,932 |
Net Real Estate Investments | 6,614,308 | 5,741,068 |
Real Estate Held for Sale, net | 3,202 | |
Cash and Cash Equivalents | 6,384 | 27,763 |
Cash Held in Escrows | 3 | 1,146 |
Accounts Receivable - Tenants, net | 77,749 | 65,841 |
Lease Intangibles, net of accumulated amortization of $335,073 and $263,011 at September 30, 2023 and December 31, 2022, respectively | 849,191 | 799,448 |
Other Assets, net | 96,269 | 77,923 |
Total Assets | 7,647,106 | 6,713,189 |
LIABILITIES | ||
Mortgage Notes Payable, net | 42,952 | 47,971 |
Unsecured Term Loan, net | 346,639 | |
Senior Unsecured Notes, net | 1,793,777 | 1,792,047 |
Unsecured Revolving Credit Facility | 49,000 | 100,000 |
Dividends and Distributions Payable | 25,131 | 22,345 |
Accounts Payable, Accrued Expenses, and Other Liabilities | 106,755 | 83,722 |
Lease Intangibles, net of accumulated amortization of $40,667 and $35,992 at September 30, 2023 and December 31, 2022, respectively | 37,458 | 36,714 |
Total Liabilities | 2,401,712 | 2,082,799 |
EQUITY | ||
Preferred stock, $.0001 par value per share, 4,000,000 shares authorized, 7,000 shares Series A outstanding, at stated liquidation value of $25,000 per share, at September 30, 2023 and December 31, 2022 | 175,000 | 175,000 |
Common stock, $.0001 par value, 180,000,000 shares authorized, 100,519,717 and 90,173,424 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | 10 | 9 |
Additional paid-in-capital | 5,352,063 | 4,658,570 |
Dividends in excess of net income | (316,083) | (228,132) |
Accumulated other comprehensive income (loss) | 33,291 | 23,551 |
Total Equity - Agree Realty Corporation | 5,244,281 | 4,628,998 |
Non-controlling interest | 1,113 | 1,392 |
Total Equity | 5,245,394 | 4,630,390 |
Total Liabilities and Equity | $ 7,647,106 | $ 6,713,189 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Finite-lived intangible assets, accumulated amortization (in dollars) | $ 335,073,000 | $ 263,011,000 |
Below market lease, accumulated amortization (in dollars) | $ 40,667,000 | $ 35,992,000 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 4,000,000 | 4,000,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 180,000,000 | 180,000,000 |
Common stock, shares issued | 100,519,717 | 90,173,424 |
Common stock, shares outstanding | 100,519,717 | 90,173,424 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares outstanding | 7,000 | 7,000 |
Preferred stock, liquidation preference, value per share | $ 25,000 | $ 25,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues | ||||
Rental income | $ 136,774 | $ 110,031 | $ 393,259 | $ 313,136 |
Other | 38 | 34 | 71 | 147 |
Total Revenues | 136,812 | 110,065 | 393,330 | 313,283 |
Operating Expenses | ||||
Real estate taxes | 10,124 | 8,526 | 29,429 | 24,117 |
Property operating expenses | 5,518 | 4,557 | 18,120 | 13,575 |
Land lease expense | 411 | 404 | 1,252 | 1,213 |
General and administrative | 8,844 | 6,992 | 26,087 | 22,265 |
Depreciation and amortization | 45,625 | 35,157 | 129,020 | 95,666 |
Provision for impairment | 3,195 | 0 | 4,510 | 1,015 |
Total Operating Expenses | 73,717 | 55,636 | 208,418 | 157,851 |
Gain (loss) on sale of assets, net | (20) | 3,000 | 299 | 5,326 |
Gain (loss) on involuntary conversion, net | 0 | (115) | (165) | |
Income from Operations | 63,075 | 57,314 | 185,211 | 160,593 |
Other (Expense) Income | ||||
Interest expense, net | (20,803) | (17,149) | (58,748) | (46,592) |
Income tax (expense) benefit | (709) | (720) | (2,201) | (2,137) |
Other (expense) income | 94 | 132 | 184 | 132 |
Net Income | 41,657 | 39,577 | 124,446 | 111,996 |
Less net income attributable to non-controlling interest | 135 | 152 | 442 | 485 |
Net income attributable to Agree Realty Corporation | 41,522 | 39,425 | 124,004 | 111,511 |
Less Series A preferred stock dividends | 1,859 | 1,859 | 5,578 | 5,578 |
Net Income Attributable to Common Stockholders | $ 39,663 | $ 37,566 | $ 118,426 | $ 105,933 |
Net Income Per Share Attributable to Common Stockholders | ||||
Basic | $ 0.41 | $ 0.47 | $ 1.26 | $ 1.40 |
Diluted | $ 0.41 | $ 0.46 | $ 1.26 | $ 1.39 |
Other Comprehensive Income | ||||
Net income | $ 41,657 | $ 39,577 | $ 124,446 | $ 111,996 |
Amortization of interest rate swaps | (631) | (273) | (1,889) | (109) |
Change in fair value and settlement of interest rate swaps | 8,324 | (7,181) | 11,664 | 29,881 |
Total comprehensive income (loss) | 49,350 | 32,123 | 134,221 | 141,768 |
Less comprehensive income (loss) attributable to non-controlling interest | 162 | 121 | 477 | 630 |
Comprehensive Income (Loss) Attributable to Agree Realty Corporation | $ 49,188 | $ 32,002 | $ 133,744 | $ 141,138 |
Weighted Average Number of Common Shares Outstanding - Basic | 97,255,143 | 79,701,136 | 93,474,182 | 75,361,583 |
Weighted Average Number of Common Shares Outstanding - Diluted | 97,349,473 | 80,589,446 | 93,732,359 | 75,890,692 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Dividends in excess of net income [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Noncontrolling Interest [Member] | Total |
Balance at Dec. 31, 2021 | $ 175,000 | $ 7 | $ 3,395,549 | $ (147,366) | $ (5,503) | $ 1,629 | $ 3,419,316 |
Balance (in shares) at Dec. 31, 2021 | 7,000 | 71,285,311 | |||||
Issuance of common stock, net of issuance costs | $ 1 | 250,683 | 250,684 | ||||
Issuance of common stock, net of issuance costs (in shares) | 3,791,964 | ||||||
Repurchase of common shares | (1,745) | (1,745) | |||||
Repurchase of common shares (in shares) | (28,117) | ||||||
Issuance of restricted stock under the Omnibus Incentive Plan | 648 | 648 | |||||
Issuance of restricted stock under the Omnibus Incentive Plan (in shares) | 125,422 | ||||||
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 at Mar. 31, 2022 | $ 175,000 | $ 8 | 3,646,770 | (162,765) | 15,060 | 1,668 | 3,675,741 |
Balance (in shares) at Mar. 31, 2022 | 7,000 | 75,174,580 | |||||
Balance at Dec. 31, 2021 | $ 175,000 | $ 7 | 3,395,549 | (147,366) | (5,503) | 1,629 | 3,419,316 |
Balance (in shares) at Dec. 31, 2021 | 7,000 | 71,285,311 | |||||
Net income | 111,996 | ||||||
Balance at Sep. 30, 2022 | $ 175,000 | $ 9 | 4,551,081 | (203,040) | 24,124 | 1,533 | 4,548,707 |
Balance (in shares) at Sep. 30, 2022 | 7,000 | 88,573,248 | |||||
Balance at Dec. 31, 2021 | $ 175,000 | $ 7 | 3,395,549 | (147,366) | (5,503) | 1,629 | 3,419,316 |
Balance (in shares) at Dec. 31, 2021 | 7,000 | 71,285,311 | |||||
Balance at Dec. 31, 2022 | $ 175,000 | $ 9 | 4,658,570 | (228,132) | 23,551 | 1,392 | 4,630,390 |
Balance (in shares) at Dec. 31, 2022 | 7,000 | 90,173,424 | |||||
Balance at Mar. 31, 2022 | $ 175,000 | $ 8 | 3,646,770 | (162,765) | 15,060 | 1,668 | 3,675,741 |
Balance (in shares) at Mar. 31, 2022 | 7,000 | 75,174,580 | |||||
Issuance of common stock, net of issuance costs | 300,110 | 300,110 | |||||
Issuance of common stock, net of issuance costs (in shares) | 4,667,850 | ||||||
Repurchase of common shares | (76) | (76) | |||||
Repurchase of common shares (in shares) | (1,052) | ||||||
Issuance of stock under the Omnibus Incentive Plan (in shares) | 1,493 | ||||||
Forfeiture of restricted stock (in shares) | (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 at Jun. 30, 2022 | $ 175,000 | $ 8 | 3,948,547 | (182,518) | 31,547 | 1,656 | 3,974,240 |
Balance (in shares) at Jun. 30, 2022 | 7,000 | 79,842,743 | |||||
Issuance of common stock, net of issuance costs | $ 1 | 601,086 | 601,087 | ||||
Issuance of common stock, net of issuance costs (in shares) | 8,739,752 | ||||||
Repurchase of common shares | (66) | (66) | |||||
Repurchase of common shares (in shares) | (943) | ||||||
Issuance of restricted stock under the Omnibus Incentive Plan (in shares) | 1,754 | ||||||
Forfeiture of restricted stock | (61) | (61) | |||||
Forfeiture of restricted stock (in shares) | (10,058) | ||||||
Stock-based compensation | 1,575 | 1,575 | |||||
Series A preferred dividends declared for the period | $ (1,859) | (1,859) | |||||
Dividends and distributions declared for the period | (58,088) | (244) | (58,332) | ||||
Amortization, changes in fair value and settlement of interest rate swaps | (7,423) | (31) | (7,454) | ||||
Net income | 1,859 | 37,566 | 152 | 39,577 | |||
Balance at Sep. 30, 2022 | $ 175,000 | $ 9 | 4,551,081 | (203,040) | 24,124 | 1,533 | 4,548,707 |
Balance (in shares) at Sep. 30, 2022 | 7,000 | 88,573,248 | |||||
Balance at Dec. 31, 2022 | $ 175,000 | $ 9 | 4,658,570 | (228,132) | 23,551 | 1,392 | 4,630,390 |
Balance (in shares) at Dec. 31, 2022 | 7,000 | 90,173,424 | |||||
Issuance of common stock, net of issuance costs | 195,133 | 195,133 | |||||
Issuance of common stock, net of issuance costs (in shares) | 2,945,000 | ||||||
Repurchase of common shares | (2,607) | (2,607) | |||||
Repurchase of common shares (in shares) | (35,578) | ||||||
Issuance of stock under the Omnibus Incentive Plan (in shares) | 128,993 | ||||||
Forfeiture of restricted stock (in shares) | (13,760) | ||||||
Stock-based compensation | 1,831 | 1,831 | |||||
Series A preferred dividends declared for the period | $ (1,859) | (1,859) | |||||
Dividends and distributions declared for the period | (65,939) | (250) | (66,189) | ||||
Amortization, changes in fair value and settlement of interest rate swaps | (627) | (2) | (629) | ||||
Net income | 1,859 | 39,755 | 160 | 41,774 | |||
Balance at Mar. 31, 2023 | $ 175,000 | $ 9 | 4,852,927 | (254,316) | 22,924 | 1,300 | 4,797,844 |
Balance (in shares) at Mar. 31, 2023 | 7,000 | 93,198,079 | |||||
Balance at Dec. 31, 2022 | $ 175,000 | $ 9 | 4,658,570 | (228,132) | 23,551 | 1,392 | 4,630,390 |
Balance (in shares) at Dec. 31, 2022 | 7,000 | 90,173,424 | |||||
Net income | 124,446 | ||||||
Balance at Sep. 30, 2023 | $ 175,000 | $ 10 | 5,352,063 | (316,083) | 33,291 | 1,113 | 5,245,394 |
Balance (in shares) at Sep. 30, 2023 | 7,000 | 100,519,717 | |||||
Balance at Mar. 31, 2023 | $ 175,000 | $ 9 | 4,852,927 | (254,316) | 22,924 | 1,300 | 4,797,844 |
Balance (in shares) at Mar. 31, 2023 | 7,000 | 93,198,079 | |||||
Issuance of common stock, net of issuance costs | $ 1 | 205,104 | 205,105 | ||||
Issuance of common stock, net of issuance costs (in shares) | 3,070,997 | ||||||
Repurchase of common shares | (8) | (8) | |||||
Repurchase of common shares (in shares) | (101) | ||||||
Issuance of stock under the Omnibus Incentive Plan (in shares) | 373 | ||||||
Forfeiture of restricted stock (in shares) | (12) | ||||||
Stock-based compensation | 2,177 | 2,177 | |||||
Series A preferred dividends declared for the period | $ (1,859) | (1,859) | |||||
Dividends and distributions declared for the period | (68,688) | (252) | (68,940) | ||||
Amortization, changes in fair value and settlement of interest rate swaps | 2,701 | 10 | 2,711 | ||||
Net income | 1,859 | 39,009 | 147 | 41,015 | |||
Balance at Jun. 30, 2023 | $ 175,000 | $ 10 | 5,060,200 | (283,995) | 25,625 | 1,205 | 4,978,045 |
Balance (in shares) at Jun. 30, 2023 | 7,000 | 96,269,336 | |||||
Issuance of common stock, net of issuance costs | 289,748 | 289,748 | |||||
Issuance of common stock, net of issuance costs (in shares) | 4,251,771 | ||||||
Repurchase of common shares | (57) | (57) | |||||
Repurchase of common shares (in shares) | (990) | ||||||
Forfeiture of restricted stock | (3) | (3) | |||||
Forfeiture of restricted stock (in shares) | (400) | ||||||
Stock-based compensation | 2,175 | 2,175 | |||||
Series A preferred dividends declared for the period | $ (1,859) | (1,859) | |||||
Dividends and distributions declared for the period | (71,751) | (254) | (72,005) | ||||
Amortization, changes in fair value and settlement of interest rate swaps | 7,666 | 27 | 7,693 | ||||
Net income | 1,859 | 39,663 | 135 | 41,657 | |||
Balance at Sep. 30, 2023 | $ 175,000 | $ 10 | $ 5,352,063 | $ (316,083) | $ 33,291 | $ 1,113 | $ 5,245,394 |
Balance (in shares) at Sep. 30, 2023 | 7,000 | 100,519,717 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |
Preferred Stock [Member] | ||||||
Cash dividends declared per depositary share of Series A preferred stock | $ 0.266 | $ 0.266 | $ 0.266 | $ 0.266 | $ 0.266 | $ 0.266 |
Common Stock [Member] | ||||||
Cash dividends declared per common share (in dollars per share) | $ 0.729 | $ 0.729 | $ 0.720 | $ 0.702 | $ 0.702 | $ 0.681 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | |
Cash Flows from Operating Activities | ||||||||||
Net income | $ 41,657 | $ 41,015 | $ 41,774 | $ 39,577 | $ 36,130 | $ 36,289 | $ 124,446 | $ 111,996 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 45,625 | 35,157 | 129,020 | 95,666 | ||||||
Amortization from above (below) market lease intangibles, net | 25,615 | 24,863 | ||||||||
Amortization from financing costs, credit facility costs and debt discount | 3,468 | 2,938 | ||||||||
Stock-based compensation | 6,180 | 4,892 | ||||||||
Straight-line accrued rent | (8,942) | (9,419) | ||||||||
Provision for impairment | 3,195 | 0 | 4,510 | 1,015 | ||||||
Gain (loss) on settlement of interest rate swaps | 0 | 28,414 | ||||||||
(Gain) loss on sale of assets | (299) | (5,326) | ||||||||
(Increase) decrease in accounts receivable | (3,080) | (15,233) | ||||||||
(Increase) decrease in other assets | (7,929) | 11,317 | ||||||||
Increase (decrease) in accounts payable, accrued expenses, and other liabilities | 20,599 | 17,822 | ||||||||
Net Cash Provided by Operating Activities | 293,588 | 268,945 | ||||||||
Cash Flows from Investing Activities | ||||||||||
Acquisition of real estate investments and other assets | (1,010,182) | (1,166,124) | ||||||||
Development of real estate investments and other assets, net of reimbursements (including capitalized interest of $1,669 in 2023 and $816 in 2022) | (76,618) | (60,968) | ||||||||
Payment of leasing costs | (167) | (372) | ||||||||
Net proceeds from sale of assets | 3,267 | 43,923 | ||||||||
Net Cash Used in Investing Activities | (1,083,700) | (1,183,541) | ||||||||
Cash Flows from Financing Activities | ||||||||||
Proceeds from common stock offerings, net | 689,986 | 1,151,881 | ||||||||
Repurchase of common shares | (2,672) | (1,887) | ||||||||
Unsecured revolving credit facility borrowings | 1,005,000 | 925,000 | ||||||||
Unsecured revolving credit facility repayments | (1,056,000) | (1,085,000) | ||||||||
Payments of mortgage notes payable | (5,296) | (633) | ||||||||
Proceeds from unsecured term loan | 350,000 | |||||||||
Proceeds from senior unsecured notes | 0 | 297,513 | ||||||||
Payment of Series A preferred dividends | (5,578) | (5,578) | ||||||||
Payment of common stock dividends | (203,593) | (157,063) | ||||||||
Distributions to non-controlling interest | (756) | (722) | ||||||||
Payments for financing costs | (3,501) | (2,651) | ||||||||
Net Cash Provided by Financing Activities | 767,590 | 1,120,860 | ||||||||
Net Increase (Decrease) in Cash and Cash Equivalents and Cash Held in Escrow | (22,522) | 206,264 | ||||||||
Cash and cash equivalents and cash held in escrow, beginning of period | 28,909 | 45,250 | 28,909 | 45,250 | $ 251,514 | $ 45,250 | ||||
Cash and cash equivalents and cash held in escrow, end of period | 6,387 | 251,514 | 6,387 | 251,514 | 6,387 | 28,909 | ||||
Supplemental Disclosure of Cash Flow Information | ||||||||||
Cash paid for interest (net of amounts capitalized) | 47,829 | 45,703 | ||||||||
Cash paid for income tax | 3,044 | 2,379 | ||||||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||||||||||
Lease right of use assets added under new ground leases | 0 | 1,816 | ||||||||
Mortgage note payable assumed, net of $2,548 mortgage debt discount | 0 | 39,702 | ||||||||
Dividends declared and unpaid | 25,131 | 25,131 | 25,131 | $ 22,345 | ||||||
Change in accrual of development, construction and other real estate investment costs | 2,435 | 2,342 | ||||||||
Preferred Stock [Member] | ||||||||||
Cash Flows from Operating Activities | ||||||||||
Net income | 1,859 | $ 1,859 | $ 1,859 | 1,859 | $ 1,859 | $ 1,859 | ||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||||||||||
Dividends declared and unpaid | 620 | 620 | 620 | 620 | 620 | |||||
Common Stock [Member] | ||||||||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||||||||||
Dividends declared and unpaid | $ 24,511 | $ 20,807 | $ 24,511 | $ 20,807 | $ 24,511 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2023 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
Real estate inventory, capitalized interest costs | $ 816 | $ 1,669 |
Mortgage debt discount | $ 2,548 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2023 | |
Organization | |
Organization | Note 1 – Organization Agree Realty Corporation (the “Company”), a Maryland corporation, is a fully integrated real estate investment trust (“REIT”) primarily focused on the ownership, acquisition, development and management of retail properties net leased to industry leading tenants. The Company was founded in 1971 by its current Executive Chairman, Richard Agree, and its common stock was listed on the New York Stock Exchange in 1994. The Company’s assets are held by, and all of its operations are conducted through, directly or indirectly, Agree Limited Partnership (the “Operating Partnership”), of which Agree Realty Corporation is the sole general partner and in which it held a 99.7% and 99.6% common equity interest as of September 30, 2023 and December 31, 2022, respectively. There is a one-for-one relationship between the limited partnership interests in the Operating Partnership (“Operating Partnership Common Units”) owned by the Company and shares of Company common stock outstanding. The Company also owns 100% of the Series A preferred equity interest in the Operating Partnership. This preferred equity interest corresponds on a one-for-one basis to the Company’s Series A Preferred Stock (Refer to Note 6 – Common and Preferred Stock At September 30, 2023 and December 31, 2022, respectively the non-controlling interest in the Operating Partnership consisted of a 0.3% and 0.4% common ownership interest in the Operating Partnership held by the Company’s founder and Executive Chairman. The Operating Partnership Common Units may, under certain circumstances, be exchanged for shares of common stock on a one-for-one basis. The Company, as sole general partner of the Operating Partnership, has the option to settle exchanged Operating Partnership Common Units held by others for cash based on the current trading price of its shares. Assuming the exchange of all non-controlling Operating Partnership Common Units, there would have been 100,867,336 shares of common stock outstanding at September 30, 2023. As of September 30, 2023, the Company owned 2,084 properties, with a total gross leasable area (“GLA”) of approximately 43.2 million square feet. As of September 30, 2023, the Company’s portfolio was approximately 99.7% leased and had a weighted average remaining lease term (excluding extension options) of approximately 8.6 years. A significant majority of its properties are leased to national tenants and approximately 68.9% of its annualized base rent was derived from tenants, or parent entities thereof, with an investment grade credit rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Association of Insurance Commissioners. The terms “Agree Realty,” the “Company,” “Management,” “we,” “our” or “us” refer to Agree Realty Corporation and all of its consolidated subsidiaries, including the Operating Partnership. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Basis of Accounting The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for audited financial statements. The unaudited Condensed Consolidated Financial Statements reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results for the interim period presented. Operating results for the three and nine months ended September 30, 2023 may not be indicative of the results that may be expected for the year ending December 31, 2023. Amounts as of December 31, 2022 included in the Condensed Consolidated Financial Statements have been derived from the audited Consolidated Financial Statements as of that date. The unaudited Condensed Consolidated Financial Statements, included herein, should be read in conjunction with the audited Consolidated Financial Statements and notes thereto, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Company’s Form 10-K for the year ended December 31, 2022. Consolidation Under the agreement of limited partnership of the Operating Partnership, the Company, as the sole general partner, has exclusive responsibility and discretion in the management and control of the Operating Partnership. The Company consolidates the Operating Partnership under the guidance set forth in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation, and as a result, the unaudited Condensed Consolidated Financial Statements include the accounts of the Company, the Operating Partnership and its wholly owned subsidiaries. All material intercompany accounts and transactions are eliminated, including the Company’s Series A preferred equity interest in the Operating Partnership. Real Estate Investments The Company records the acquisition of real estate at cost, including acquisition and closing costs. For properties developed by the Company, all direct and indirect costs related to planning, development and construction, including interest, real estate taxes and other miscellaneous costs incurred during the construction period, are capitalized for financial reporting purposes and recorded as property under development until construction has been completed. Assets Held for Sale Assets are classified as real estate held for sale based on specific criteria as outlined in FASB ASC Topic 360, Property, Plant & Equipment Acquisitions of Real Estate The acquisition of property for investment purposes is typically accounted for as an asset acquisition. The Company allocates the purchase price to land, building, assumed debt, if any, and identified intangible assets and liabilities, based in each case on their relative estimated fair values and without giving rise to goodwill. Intangible assets and liabilities represent the value of in-place leases and above- or below-market leases. In making estimates of fair values, the Company may use various sources, including data provided by independent third parties, as well as information obtained by the Company as a result of its due diligence, including expected future cash flows of the property and various characteristics of the markets where the property is located. In allocating the fair value of the identified tangible and intangible assets and liabilities of an acquired property, land is valued based upon comparable market data or independent appraisals. Buildings are valued on an as-if vacant basis based on a cost approach utilizing estimates of cost and the economic age of the building or an income approach utilizing various market data. In-place lease intangibles are valued based on the Company’s estimates of costs related to tenant acquisition and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. 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. In the case of sale-leaseback transactions, it is typically assumed that the lease is not in-place prior to the close of the transaction. Depreciation and Amortization Land, buildings and improvements are recorded and stated at cost. The Company’s properties are depreciated using the straight-line method over the estimated remaining useful life of the assets, which are generally 40 years for buildings and 10 to 20 years for improvements. Properties classified as held for sale and properties under development or redevelopment are not depreciated. Major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. In-place lease intangible assets and above- and below-market lease intangibles are amortized as a net adjustment to rental income. In the event of early lease termination, the remaining net book value of any above- or below-market lease intangible is recognized as an adjustment to rental income. The following schedule summarizes the Company’s amortization of lease intangibles for the three and nine months ended September 30, 2023 and 2022 ( presented in thousands Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Lease intangibles (in-place) $ 15,117 $ 11,693 $ 42,924 $ 30,895 Lease intangibles (above-market) 10,015 10,010 30,290 29,493 Lease intangibles (below-market) (1,722) (1,636) (4,675) (4,630) Total $ 23,410 $ 20,067 $ 68,539 $ 55,758 The following schedule represents estimated future amortization of lease intangibles as of September 30, 2023 ( presented in thousands 2023 Year Ending December 31, (remaining) 2024 2025 2026 2027 Thereafter Total Lease intangibles (in-place) $ 15,338 $ 59,585 $ 56,542 $ 53,207 $ 47,630 $ 221,890 $ 454,192 Lease intangibles (above-market) 9,596 36,956 34,622 32,893 30,298 250,634 394,999 Lease intangibles (below-market) (1,405) (5,203) (4,767) (4,413) (4,064) (17,606) (37,458) Total $ 23,529 $ 91,338 $ 86,397 $ 81,687 $ 73,864 $ 454,918 $ 811,733 Impairments The Company reviews real estate investments and related lease intangibles for possible impairment when certain events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable through operations plus estimated disposition proceeds. Events or changes in circumstances that may occur include, but are not limited to, significant changes in real estate market conditions, estimated residual values, the Company’s ability or expectation to re-lease properties that are vacant or become vacant or a change in the anticipated holding period for a property. Management determines whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the residual value of the real estate, to the carrying cost of the individual asset. Impairments are measured to the extent the current book value exceeds the estimated fair value of the asset less disposition costs for any assets classified as held for sale. The valuation of impaired assets is determined using valuation techniques including discounted cash flow analysis, analysis of recent comparable sales transactions and purchase offers received from third parties, which are Level 3 inputs. The Company may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate. Estimating future cash flows is highly subjective and estimates can differ materially from actual results. Cash and Cash Equivalents and Cash Held in Escrows The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of deposit, checking, and money market accounts. The account balances periodically exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage, and as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. Cash held in escrows primarily relates to proposed like-kind exchange transactions pursued under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) and funds restricted through a mortgage agreement. The Company had $5.3 million and $27.1 million in cash and cash equivalents and cash held in escrow as of September 30, 2023 and December 31, 2022, respectively, in excess of the FDIC insured limit. Per the requirements of Accounting Standards Update (“ASU”) 2016-18 Topic 230, Statement of Cash Flows presented in thousands September 30, 2023 December 31, 2022 Cash and cash equivalents $ 6,384 $ 27,763 Cash held in escrow 3 1,146 Total of cash and cash equivalents and cash held in escrow $ 6,387 $ 28,909 Revenue Recognition and Accounts Receivable The Company leases real estate to its tenants under long-term net leases which are accounted for as operating leases. Under this method, leases that have fixed and determinable rent increases are recognized on a straight-line basis over the lease term. Rental increases based upon changes in the consumer price indexes, or other variable factors, are recognized only after changes in such factors have occurred and are then applied according to the lease agreements. Certain leases also provide for additional rent based on tenants’ sales volumes. These rents are recognized when determinable after the tenant exceeds a sales breakpoint. Recognizing rent escalations on a straight-line method results in rental revenue in the early years of a lease being higher than actual cash received, creating a straight-line rent receivable asset which is included in the accounts receivable - tenants line item in the Condensed Consolidated Balance Sheets. The balance of straight-line rent receivables at September 30, 2023 and December 31, 2022 was $62.7 million and $53.9 million, respectively. To the extent any of the tenants under these leases become unable to pay their contractual cash rents, the Company may be required to write down the straight-line rent receivable from those tenants, which would reduce rental income. The Company reviews the collectability of charges under its tenant operating leases on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located. In the event that collectability with respect to any tenant changes, the Company recognizes an adjustment to rental revenue. The Company’s review of collectability of charges under its operating leases also includes any accrued rental revenue related to the straight-line method of reporting rental revenue. As of September 30, 2023, the Company has four leases across four tenants where collection is not considered probable. For these tenants, the Company is recording rental income on a cash basis and has written off any outstanding receivables, including straight-line rent receivables. Adjustments to rental revenue related to tenants accounted for on the cash basis resulted in an increase to rental income of $0.3 million and $0.2 million for the three and nine months ended September 30, 2023, respectively due to the receipt of amounts previously considered uncollectible. In addition to the tenant-specific collectability assessment performed, the Company may also recognize a general allowance, as a reduction to rental revenue, for its operating lease receivables which are not expected to be fully collectible based on the potential for settlement of arrears. The Company had no general allowance at September 30, 2023 and December 31, 2022. The Company’s leases provide for reimbursement from tenants for common area maintenance, insurance, real estate taxes and other operating expenses. A portion of the Company’s operating cost reimbursement revenue is estimated each period and is recognized as rental revenue in the period the recoverable costs are incurred and accrued, and the related revenue is earned. The balance of unbilled operating cost reimbursement receivable at September 30, 2023 and December 31, 2022 was $14.7 million and $11.1 million, respectively. Unbilled operating cost reimbursement receivable is reflected in accounts receivable – tenants, net in the Condensed Consolidated Balance Sheets. The Company has adopted the practical expedient in FASB ASC Topic 842, Leases “ASC 842”) Earnings per Share Earnings per share of common stock has been computed pursuant to the guidance in the FASB ASC Topic 260, Earnings Per Share The following is a reconciliation of the numerator and denominator used in the computation of basic and diluted net earnings per share of common stock for each of the periods presented ( presented in thousands, except for share data Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Net income attributable to Agree Realty Corporation $ 41,522 $ 39,425 $ 124,004 $ 111,511 Less: Series A preferred stock dividends (1,859) (1,859) (5,578) (5,578) Net income attributable to common stockholders 39,663 37,566 118,426 105,933 Less: Income attributable to unvested restricted shares (96) (97) (300) (283) Net income used in basic and diluted earnings per share $ 39,567 $ 37,469 $ 118,126 $ 105,650 Weighted average number of common shares outstanding 97,497,836 79,930,394 93,716,875 75,590,841 Less: Unvested restricted shares (242,693) (229,258) (242,693) (229,258) Weighted average number of common shares outstanding used in basic earnings per share 97,255,143 79,701,136 93,474,182 75,361,583 Weighted average number of common shares outstanding used in basic earnings per share 97,255,143 79,701,136 93,474,182 75,361,583 Effect of dilutive securities: Share-based compensation 94,330 125,925 108,646 111,989 ATM Forward Equity Offerings — 156,062 49,235 65,932 December 2021 Forward Equity Offering — — — 119,950 May 2022 Forward Equity Offering — 606,323 — 231,238 September 2022 Forward Equity Offering — — 100,296 — Weighted average number of common shares outstanding used in diluted earnings per share 97,349,473 80,589,446 93,732,359 75,890,692 Operating Partnership Units ("OP Units") 347,619 347,619 347,619 347,619 Weighted average number of common shares and OP Units outstanding used in diluted earnings per share 97,697,092 80,937,065 94,079,978 76,238,311 For the three months ended September 30, 2023, 732 restricted shares granted in 2020, 2021 and 2022, and 1,660 performance units granted in 2023 were anti-dilutive and were not included in the computation of diluted earnings per share. For the nine months ended September 30, 2023, 356 performance units granted in 2021 and 2022 were anti-dilutive and were not included in the computation of diluted earnings per share. For the three months ended September 30, 2022, 19,010 shares of common stock related to at-the-market (“ATM”) forward equity offerings and 19 shares of restricted common stock (“restricted shares”) granted in 2022 were anti-dilutive and were not included in the computation of diluted earnings per share. For the nine months ended September 30, 2022, 31,879 shares of common stock related to ATM forward equity offerings and 271 shares of restricted shares granted in 2022 were anti-dilutive and were not included in the computation of diluted earnings per share. Forward Equity Sales The Company occasionally sells shares of common stock through forward sale agreements to enable the Company to set the price of such shares upon pricing the offering (subject to certain adjustments) while delaying the issuance of such shares and the receipt of the net proceeds by the Company. To account for the forward sale agreements, the Company considers the accounting guidance governing financial instruments and derivatives. To date, the Company has concluded that its forward sale agreements are not liabilities as they do not embody obligations to repurchase its shares nor do they embody obligations to issue a variable number of shares for which the monetary value are predominantly fixed, varying with something other than the fair value of the shares, or varying inversely in relation to its shares. The Company then evaluates whether the agreements meet the derivatives and hedging guidance scope exception to be accounted for as equity instruments. The Company has concluded that the agreements are classifiable as equity contracts based on the following assessments: (i) none of the agreements’ exercise contingencies are based on observable markets or indices besides those related to the market for the Company’s own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to its own stock. The Company also considers the potential dilution resulting from the forward sale agreements on the earnings per share calculations. The Company uses the treasury stock method to determine the dilution resulting from forward sale agreements during the period of time prior to settlement. Equity Offering Costs Underwriting commissions and offering costs of equity offerings have been reflected as a reduction of additional paid-in-capital in the Company’s Condensed Consolidated Balance Sheets. Income Taxes The Company has made an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code and related regulations. The Company generally will not be subject to federal income taxes on amounts distributed to stockholders, providing it distributes 100% of its REIT taxable income and meets certain other requirements for qualifying as a REIT. For the periods covered in the Condensed Consolidated Financial Statements, the Company believes it has qualified as a REIT. Accordingly, no provision has been made for federal income taxes. Notwithstanding its qualification for taxation as a REIT, the Company is subject to certain state taxes on its income and real estate. Earnings and profits that determine the taxability of distributions to stockholders differ from net income reported for financial reporting purposes due to differences in the estimated useful lives and methods used to compute depreciation and the carrying value (basis) of the investments in properties for tax purposes, among other things. The Company and its taxable REIT subsidiaries (“TRS”) have made a timely TRS election pursuant to the provisions of the REIT Modernization Act. A TRS is able to engage in activities resulting in income that previously would have been disqualified from being eligible REIT income under the federal income tax regulations. As a result, certain activities of the Company which occur within its TRS entities are subject to federal and state income taxes. All provisions for federal income taxes in the accompanying Condensed Consolidated Financial Statements are attributable to the Company’s TRS. The Company regularly analyzes its various federal and state filing positions and only recognizes the income tax effect in its financial statements when certain criteria regarding uncertain income tax positions have been met. The Company believes that its income tax positions would more likely than not be sustained upon examination by all relevant taxing authorities. Therefore, no provisions for uncertain income tax positions have been recorded in the Condensed Consolidated Financial Statements. Management’s Responsibility to Evaluate Its Ability to Continue as a Going Concern When preparing financial statements for each annual and interim reporting period, management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In making its evaluation, the Company considers, among other things, any risks and/or uncertainties to its results of operations, contractual obligations in the form of near-term debt maturities, dividend requirements, or other factors impacting the Company’s liquidity and capital resources. No conditions or events that raised substantial doubt about the ability to continue as a going concern within one year were identified as of the issuance date of the Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. Reclassifications Certain reclassifications of prior period amounts have been made in the consolidated financial statements and footnotes in order to conform to the current presentation. Segment Reporting The Company is primarily in the business of acquiring, developing and managing retail real estate. The Company’s chief operating decision maker, which is its Chief Executive Officer, does not distinguish or group operations on a geographic or other basis when assessing the financial performance of the Company’s portfolio of properties. Accordingly, the Company has a single Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from those estimates. Fair Values of Financial Instruments The Company’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance, ASC Topic 820 Fair Value Measurement Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities. Level 2 – Valuation is based upon inputs other than Level 1 inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques. Recent Accounting Pronouncements In March 2022, the FASB issued ASU 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820)” (“ASU 2022-03”). ASU 2022-03 clarifies that contractual sale restrictions on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, are not considered in measuring the fair value of equity securities. In addition, the amendment requires the disclosure of: (1) the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet, (2) the nature and remaining duration of the restrictions, and (3) any circumstances that could cause a lapse in the restrictions. The amendments in ASU 2022-03 are effective for the Company for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years. The amendment is applied prospectively and early adoption is permitted. The Company continues to evaluate the potential impact of the guidance. In August 2023, the FASB issued ASU 2023-05, Business Combinations – Joint Venture Formations (Subtopic 805-60) (“ASU 2023-05”). ASU 2023-05 addresses the accounting for contributions made to a joint venture, upon formation, in a joint venture’s separate financial statements. Currently, GAAP does not provide specific authoritative guidance on how a joint venture, upon formation, should recognize and initially measure assets contributed and liabilities assumed. ASU 2023-05 will require that a joint venture apply a new basis of accounting upon formation. By applying a new basis of accounting, a joint venture, upon formation, will recognize and initially measure its assets and liabilities at fair value (with exceptions to fair value measurement that are consistent with the business combinations guidance). The amendments in ASC 2023-05 are effective prospectively for all joint ventures formed on or after January 1, 2025. Joint ventures formed prior |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Leases | Note 3 – Leases Tenant Leases The Company is primarily focused on the ownership, acquisition, development and management of retail properties leased to industry leading tenants. Substantially all of the Company’s tenants are subject to net lease agreements. A net lease typically requires the tenant to be responsible for minimum monthly rent and actual property operating expenses incurred, including property taxes, insurance and maintenance. In addition, the Company’s tenants are typically subject to future rent increases based on fixed amounts or increases in the consumer price index and certain leases provide for additional rent calculated as a percentage of the tenants’ gross sales above a specified level. Certain of the Company’s properties are subject to leases under which it retains responsibility for specific costs and expenses of the property. The Company’s leases typically provide the tenant with one or more multi-year renewal options to extend their leases, subject to generally the same terms and conditions, including rent increases, consistent with the initial lease term. The Company attempts to maximize the amount it expects to derive from the underlying real estate property following the end of the lease, to the extent it is not extended. The Company maintains a proactive leasing program that, combined with the quality and locations of its properties, has made its properties attractive to tenants. The Company intends to continue to hold its properties for long-term investment and, accordingly, places a strong emphasis on the quality of construction and an on-going program of regular and preventative maintenance. The Company has elected the practical expedient in ASC 842 on not separating non-lease components from associated lease components. The lease and non-lease components combined as a result of this election largely include tenant rentals and maintenance charges, respectively. The Company applies the accounting requirements of ASC 842 to the combined component. The following table includes information regarding contractual lease payments for the Company’s operating leases for which it is the lessor, for the three and nine months ended September 30, 2023 and 2022 (presented in thousands) Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Total lease payments $ 141,960 $ 115,567 $ 409,802 $ 328,991 Less: Operating cost reimbursements and percentage rents 14,388 12,012 45,509 35,696 Total non-variable lease payments $ 127,572 $ 103,555 $ 364,293 $ 293,295 At September 30, 2023, future non-variable lease payments to be received from the Company’s operating leases for the remainder of 2023, the following four years, and thereafter are as follows ( presented in thousands 2023 Year Ending December 31, (remaining) 2024 2025 2026 2027 Thereafter Total Future non-variable lease payments $ 135,968 $ 545,296 $ 538,038 $ 518,637 $ 492,646 $ 2,746,339 $ 4,976,924 Deferred Revenue As of September 30, 2023 and December 31, 2022, there was $19.0 million and $18.1 million, respectively, in deferred revenues resulting from rents paid in advance. Deferred revenues are recognized within accounts payable, accrued expenses, and other liabilities on the Condensed Consolidated Balance Sheets as of these dates. Land Lease Obligations The Company is the lessee under land lease agreements for certain of its properties. ASC 842 requires a lessee to recognize right of use assets and lease obligation liabilities that arise from leases, whether qualifying as operating or finance. As of September 30, 2023 and December 31, 2022, the Company had $60.4 million and $60.9 million, respectively, of right of use assets, net, recognized within other assets in the Condensed Consolidated Balance Sheets, while the corresponding lease obligations, net, of $23.1 million and $23.6 million, respectively, were recognized within accounts payable, accrued expenses, and other liabilities The Company’s land leases do not include any variable lease payments. These leases typically provide multi-year renewal options to extend their term as lessee at the Company’s option. Option periods are included in the calculation of the lease obligation liability only when options are reasonably certain to be exercised. Certain of the Company’s land leases qualify as finance leases as a result of purchase options that are reasonably certain of being exercised or automatic transfer of title to the Company at the end of the lease term. Amortization of right of use assets for operating land leases is classified as land lease expense and was $0.4 million for the three months ended September 30, 2023 and 2022 and $1.3 million and $1.2 million for the nine months ended September 30, 2023 and 2022, respectively. There was no amortization of right of use assets for finance land leases, as the underlying leased asset (land) has an infinite life. Interest expense on finance land leases was less than $0.1 million during the three months ended September 30, 2023 and 2022, and $0.2 million for the nine months ended September 30, 2023 and 2022. In calculating its lease obligations under ground leases, the Company uses discount rates estimated to be equal to what it would have to pay to borrow on a collateralized basis over a similar term, for an amount equal to the lease payments, in a similar economic environment. The following tables include information on the Company’s land leases for which it is the lessee, for the three and nine months ended September 30, 2023 and 2022. (presented in thousands) Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Operating leases: Operating cash outflows $ 299 $ 299 $ 898 $ 898 Weighted-average remaining lease term - operating leases (years) 33.3 33.6 33.3 33.6 Finance leases: Operating cash outflows $ 63 $ 64 $ 189 $ 192 Financing cash outflows $ 21 $ 20 $ 63 $ 60 Weighted-average remaining lease term - finance leases (years) 1.0 2.0 1.0 2.0 The weighted-average discount rate used in computing operating and finance lease obligations approximated 4% at September 30, 2023 and 2022. The following is a maturity analysis of lease liabilities for operating land leases as of September 30, 2023 for the remainder of 2023 and the following four years. ( presented in thousands 2023 Year Ending December 31, (remaining) 2024 2025 2026 2027 Thereafter Total Lease payments $ 299 $ 1,197 $ 1,197 $ 1,195 $ 1,042 $ 28,809 $ 33,739 Imputed interest (176) (690) (669) (647) (627) (13,864) (16,673) Total lease liabilities $ 123 $ 507 $ 528 $ 548 $ 415 $ 14,945 $ 17,066 The following is a maturity analysis of lease liabilities for finance land leases as of September 30, 2023 for the remainder of 2023 and the following four years. ( presented in thousands 2023 Year Ending December 31, (remaining) 2024 2025 2026 2027 Thereafter Total Lease payments $ 84 $ 6,252 $ — $ — $ — $ — $ 6,336 Imputed interest (63) (207) — — — — (270) Total lease liabilities $ 21 $ 6,045 $ — $ — $ — $ — $ 6,066 |
Real Estate Investments
Real Estate Investments | 9 Months Ended |
Sep. 30, 2023 | |
Real Estate Investments | |
Real Estate Investments | Note 4 – Real Estate Investments Real Estate Portfolio As of September 30, 2023, the Company owned 2,084 properties, with a total gross leasable area (“GLA”) of approximately 43.2 million square feet. Net Real Estate Investments totaled $6.61 billion as of September 30, 2023. As of December 31, 2022, the Company owned 1,839 properties, with a total GLA of approximately 38.1 million square feet. Net Real Estate Investments totaled $5.74 billion as of December 31, 2022. Acquisitions During the three months ended September 30, 2023, the Company purchased 74 retail net lease assets for approximately $399.7 million, which includes acquisition and closing costs. These properties are located in 28 states and had a weighted average lease term of approximately 11.5 years. During the nine months ended September 30, 2023, the Company purchased 232 retail net lease assets for approximately $1.01 billion, which includes acquisition and closing costs. These properties are located in 37 states and had a weighted average lease term of approximately 11.5 years. The aggregate acquisitions for the nine months ended September 30, 2023 were allocated $273.9 million to land, $617.8 million to buildings and improvements and $118.7 million to lease intangibles, net. During the three months ended September 30, 2022, the Company purchased 98 retail net lease assets for approximately $361.5 million. These properties are located in 29 states and are leased for a weighted average lease term of approximately 11.1 years. During the nine months ended September 30, 2022, the Company purchased 303 retail net lease assets for approximately $1.20 billion, which includes acquisition costs, closing costs and the assumption of a $42.3 million mortgage note. These properties are located in 42 states and are leased for a weighted average lease term of approximately 10.1 years. The aggregate acquisitions for the nine months ended September 30, 2022 were allocated $289.4 million to land, $755.8 million to buildings and improvements, $147.4 million to lease intangibles, net and $2.5 million to assumed mortgage debt discount. The acquisitions during the nine months ended September 30, 2023 and 2022 were primarily funded as cash purchases and the assumption of a mortgage note payable with a principal balance of $42.3 million in 2022. There was no material contingent consideration associated with these acquisitions. None of the Company’s acquisitions during the first nine months of 2023 or 2022 caused any new or existing tenant to comprise 10% or more of its total assets or generate 10% or more of its total annualized contractual base rent. Developments During the third quarter of 2023, the Company changed the name of its Partner Capital Solutions program to Developer Funding Platform. During the three months ended September 30, 2023, the Company commenced two and completed eight development or Developer Funding Platform projects. During the nine months ended September 30, 2023, the Company commenced nine and completed 17 development or Developer Funding Platform projects. At September 30, 2023, the Company had 16 development or Developer Funding Platform projects under construction. During the three months ended September 30, 2022, the Company commenced two development or Partner Capital Solutions projects. During the nine months ended September 30, 2022, the Company commenced 22 development or Partner Capital Solutions projects. At September 30, 2022, the Company had 20 development or Partner Capital Solutions projects under construction. Dispositions During the three months ended September 30, 2023, the Company sold one property for net proceeds of $0.2 million and recorded a net loss of less than $0.1 million. During the nine months ended September 30, 2023, the Company sold two properties for net proceeds of $3.3 million and recorded a net gain of $0.3 million. During the three months ended September 30, 2022, the Company sold one property for net proceeds of $20.0 million and recorded a net gain of $3.0 million. During the nine months ended September 30, 2022, the Company sold six properties for net proceeds of $43.9 million and recorded a net gain of $5.3 million. Assets Held for Sale Real estate held for sale consisted of the following as of September 30, 2023 and December 31, 2022 ( presented in thousands September 30, 2023 December 31, 2022 Land $ 1,342 $ — Building 2,393 — 3,735 — Accumulated depreciation and amortization, net (533) — Total Real Estate Held for Sale, net $ 3,202 $ — Provisions for Impairment As a result of the Company’s review of real estate investments, it recognized $3.2 million and no provisions for impairment for the three months ended September 30, 2023 and 2022, respectively. During the nine months ended September 30, 2023 and 2022, the Company recognized a $4.5 million and $1.0 million provision for impairment, respectively. The estimated fair value of the impaired real estate assets at their time of impairment was $2.6 million in 2023 and $1.8 million in 2022. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt | |
Debt | Note 5 – Debt As of September 30, 2023, the Company had total gross indebtedness of $2.25 billion, including (i) $45.1 million of mortgage notes payable; (ii) $350.0 million unsecured term loan; (iii) $1.81 billion of senior unsecured notes; and (iv) $49.0 million outstanding under the Revolving Credit Facility (defined below). Mortgage Notes Payable As of September 30, 2023, the Company had total gross mortgage indebtedness of $45.1 million, which was collateralized by related real estate and tenants’ leases with an aggregate net book value of $80.0 million. The weighted average interest rate on the Company’s mortgage notes payable was 3.80% as of September 30, 2023 and 3.94% as of December 31, 2022. Mortgage notes payable consisted of the following ( presented in thousands September 30, 2023 December 31, 2022 Note payable in monthly installments of interest only at 5.01% per annum, extinguished in September 2023 $ — $ 4,622 Note payable in monthly installments of $92 including interest at 6.27% per annum, with a final monthly payment due July 2026 2,849 3,523 Note payable in monthly installments of interest only at 3.63% per annum, with a balloon payment due December 2029 42,250 42,250 Total principal 45,099 50,395 Unamortized debt issuance costs and assumed debt discount, net (2,147) (2,424) Total $ 42,952 $ 47,971 During the three months ended September 30, 2023, the Company repaid the $4.6 million, 5.01% per annum, interest only mortgage note maturing in September 2023. In connection with a four-property acquisition during the nine months ended September 30, 2022, the Company assumed an interest only, mortgage note payable with a principal balance of $42.3 million and stated interest rate of 3.63% maturing December 2029. In connection with the purchase price allocation, the mortgage debt was recorded at fair value as of the date of acquisition resulting in a $2.5 million debt discount that will be amortized over the term of the mortgage note payable into interest expense in the Condensed Consolidated Statements of Operations and Comprehensive Income. The mortgage loans encumbering the Company’s properties are generally non-recourse, subject to certain exceptions for which the Company would be liable for any resulting losses incurred by the lender. These exceptions vary from loan to loan, but generally include fraud or material misrepresentations, misstatements or omissions by the borrower, intentional or grossly negligent conduct by the borrower that harms the property or results in a loss to the lender, filing of a bankruptcy petition by the borrower, either directly or indirectly, and certain environmental liabilities. At September 30, 2023, there were no mortgage loans with partial recourse to the Company. The Company has entered into mortgage loans that are secured by multiple properties and contain cross-default and cross-collateralization provisions. Cross-collateralization provisions allow a lender to foreclose on multiple properties in the event that the Company defaults under the loan. Cross-default provisions allow a lender to foreclose on the related property in the event a default is declared under another loan. Unsecured Term Loan The following table presents the unsecured term loan principal balances net of unamortized debt issuance costs as of September 30, 2023 and December 31, 2022 (presented in thousands): All-in Interest Rate (1) Maturity September 30, 2023 December 31, 2022 2029 Unsecured Term Loan 4.52 % January 2029 $ 350,000 $ — Total Principal 350,000 — Unamortized debt issuance costs, net (3,361) — Total $ 346,639 $ — (1) Interest rate at September 30, 2023 reflects the credit spread of 95 basis points plus the impact of interest rate swaps which converted $350 million of SOFR-based interest to a fixed interest rate of 3.57% . On July 31, 2023, the Company closed on an unsecured $350 million 5.5-year term loan (the “2029 Unsecured Term Loan”) which includes an accordion option that allows the Company to request additional lender commitments up to a total of $500 million and matures in January 2029. Borrowings under the 2029 Unsecured Term Loan are priced at SOFR plus a spread of 80 to 160 basis points over SOFR, depending on the Company’s credit ratings. Based on the Company’s credit ratings at the time of closing, pricing on the 2029 Unsecured Term Loan was 95 basis points over SOFR. The Company used the existing $350 million of forward starting interest rate swaps to hedge the variable SOFR priced interest to a weighted average fixed rate of 3.57% until January 2029. Senior Unsecured Notes The following table presents the senior unsecured notes principal balances net of unamortized debt issuance costs and original issue discounts for the Company’s private placement and public offerings as of September 30, 2023 and December 31, 2022 ( presented in thousands All-in Coupon Interest Rate (1) Rate Maturity September 30, 2023 December 31, 2022 2025 Senior Unsecured Notes 4.16 % 4.16 % May 2025 $ 50,000 $ 50,000 2027 Senior Unsecured Notes 4.26 % 4.26 % May 2027 50,000 50,000 2028 Senior Unsecured Public Notes 2.11 % 2.00 % June 2028 350,000 350,000 2028 Senior Unsecured Notes 4.42 % 4.42 % July 2028 60,000 60,000 2029 Senior Unsecured Notes 4.19 % 4.19 % September 2029 100,000 100,000 2030 Senior Unsecured Notes 4.32 % 4.32 % September 2030 125,000 125,000 2030 Senior Unsecured Public Notes 3.49 % 2.90 % October 2030 350,000 350,000 2031 Senior Unsecured Notes 4.42 % 4.47 % October 2031 125,000 125,000 2032 Senior Unsecured Public Notes 3.96 % 4.80 % October 2032 300,000 300,000 2033 Senior Unsecured Public Notes 2.13 % 2.60 % June 2033 300,000 300,000 Total Principal 1,810,000 1,810,000 Unamortized debt issuance costs and original issue discounts, net (16,223) (17,953) Total $ 1,793,777 $ 1,792,047 (1) The all-in interest rate reflects the straight-line amortization of the terminated swap agreements, as applicable. The Company has entered into forward-starting interest rate swap agreements to hedge against changes in future cash flows on forecasted issuances of debt. Refer to Note 9 – Derivative Instruments and Hedging Activity Senior Unsecured Notes – Private Placements The Senior Unsecured Notes (collectively the “Private Placements”) were issued in private placements to individual investors. The Private Placements did not involve a public offering in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act. Senior Unsecured Notes – Public Offerings The Senior Unsecured Public Notes (collectively the “Public Notes”) are fully and unconditionally guaranteed by Agree Realty Corporation and certain wholly owned subsidiaries of the Operating Partnership. The Public Notes are governed by an indenture, dated August 17, 2020, among the Operating Partnership, the Company and trustee (as supplemented by an officer’s certificate dated at the issuance of each of the Public Notes, the “Indenture”). The Indenture contains various restrictive covenants, including limitations on the ability of the guarantors and the issuer to incur additional indebtedness and requirements to maintain a pool of unencumbered assets. Senior Unsecured Revolving Credit Facility In December 2021, the Company entered into a Third Amended and Restated Revolving Credit Agreement which provided for a $1.0 billion senior unsecured revolving credit facility (the "Revolving Credit Facility") that bore interest based on a pricing grid with a range of 72.5 to 140 basis points over LIBOR, determined by the Company’s credit ratings and leverage ratio. Based on the Company’s credit ratings and leverage ratio at the time of closing, pricing on the Revolving Credit Facility was 77.5 basis points over LIBOR. In November 2022, the Company entered into a First Amendment to the Third Amended and Restated Revolving Credit Agreement which converted the interest rate on its $1.0 billion Revolving Credit Facility from a spread over LIBOR to a spread over SOFR plus a SOFR adjustment of 10 basis points. The margins for the Revolving Credit Facility are subject to improvement based on the Company's leverage ratio, provided its credit ratings meet a certain threshold. Based on the Company's credit ratings and leverage ratio at the time of closing plus the SOFR adjustment of 10 basis points, pricing on the Revolving Credit Facility was 87.5 basis points over SOFR. In connection with the Company's ongoing environmental, social and governance ("ESG") initiatives, pricing may be reduced if specific ESG ratings are achieved. The Revolving Credit Facility includes an accordion option that allows the Company to request additional lender commitments up to a total of $1.75 billion. The Revolving Credit Facility will mature in January 2026 with Company options to extend the maturity date to January 2027. The Company Debt Maturities The following table presents scheduled principal payments related to the Company’s debt as of September 30, 2023 ( presented in thousands Scheduled Balloon Principal Payment Total Remainder of 2023 $ 231 $ — $ 231 2024 963 — 963 2025 1,026 50,000 51,026 2026 (1) 629 49,000 49,629 2027 — 50,000 50,000 Thereafter — 2,102,250 2,102,250 Total scheduled principal payments $ 2,849 $ 2,251,250 $ 2,254,099 (1) The Revolving Credit Facility matures in January 2026, with options to extend the maturity to January 2027. The Revolving Credit Facility had a $49.0 million outstanding balance as of September 30, 2023. Loan Covenants Certain ratio, a minimum unsecured debt yield and a minimum unencumbered interest expense ratio. As of September 30, 2023, the most restrictive covenant was the minimum unencumbered interest expense ratio. The Company was in compliance with all of its loan covenants and obligations as of September 30, 2023. |
Common and Preferred Stock
Common and Preferred Stock | 9 Months Ended |
Sep. 30, 2023 | |
Common and Preferred Stock | |
Common and Preferred Stock | Note 6 – Common and Preferred Stock Shelf Registration On May 5, 2023, the Company filed an automatic shelf registration statement on Form S-3 with the Securities and Exchange Commission registering an unspecified amount of common stock, preferred stock, depositary shares, warrants and guarantees of debt securities of the Operating Partnership, as well as an unspecified amount of debt securities of the Operating Partnership, at an indeterminate aggregate initial offering price. The Company may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering. Common Stock Offerings In December 2021, the Company completed a follow-on public offering of 5,750,000 shares of common stock, including the full exercise of the underwriters' option to purchase an additional 750,000 shares, in connection with forward sale agreements. During the nine months ended September 30, 2022, the Company settled all of the December 2021 forward sale agreements. The offering resulted in net proceeds to the Company of approximately $368.7 million after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreements. In May 2022, the Company completed a follow-on public offering of 5,750,000 shares of common stock, including the full exercise of the underwriters' option to purchase an additional 750,000 shares, in connection with forward sale agreements. As of December 31, 2022, the Company settled all of these forward sale agreements. The offering resulted in net proceeds to the Company of approximately $386.7 million after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreements. In October 2022, the Company completed a follow-on public offering of 5,750,000 shares of common stock, including the full exercise of the underwriters' option to purchase an additional 750,000 shares, in connection with forward sale agreements. As of December 31, 2022, the Company settled 1,600,000 shares of these October 2022 forward sale agreements, realizing net proceeds of $106.2 million. During the nine months ended September 30, 2023, the Company settled the remaining 4,150,000 shares of these October 2022 forward sale agreements, realizing net proceeds of $275.0 million. The offering resulted in total net proceeds to the Company of $381.2 million after deducting fees and expenses and making certain adjustments as provided in the equity distribution agreement. Preferred Stock Offering As of September 30, 2023, the Company had 7,000,000 depositary shares (the “Depositary Shares”) outstanding, each representing 1/1,000 Dividends on the Series A Preferred Shares are payable monthly in arrears on the first day of each month (or, if not on a business day, on the next succeeding business day). The dividend rate is 4.25% per annum of the $25,000 (equivalent to $25.00 per Depositary Share) liquidation preference. Monthly dividends on the Series A Preferred Shares have been and will be in the amount of $0.08854 per Depositary Share, equivalent to $1.0625 per annum. The Company may not redeem the Series A Preferred Shares before September 2026, except in limited circumstances to preserve its status as a real estate investment trust for federal income tax purposes and except in certain circumstances upon the occurrence of a change of control of the Company. Beginning in September 2026, the Company, at its option, may redeem the Series A Preferred Shares, in whole or from time to time in part, by paying $25.00 per Depositary Share, plus any accrued and unpaid dividends. Upon the occurrence of a change in control of the Company, if the Company does not otherwise redeem the Series A Preferred Shares, the holders have a right to convert their shares into common stock of the Company at the $25.00 per share liquidation value, plus any accrued and unpaid dividends. This conversion value is limited by a share cap if the Company’s stock price falls below a certain threshold. ATM Programs The Company enters into ATM programs through which the Company, from time to time, sells shares of common stock and/or enters into forward sale agreements. Under the current $750.0 million ATM Program, the Company has entered into forward sale agreements through September 30, 2023 to sell an aggregate of 6,363,359 shares of common stock, for net proceeds of $433.4 million. Through December 31, 2022, the Company settled 245,591 shares of these forward sale agreements for net proceeds of approximately $18.1 million, after deducting fees and expenses. During the nine months ended September 30, 2023, the Company settled the remaining 6,117,768 shares of these forward sales agreements for net proceeds of approximately $415.4 million, after deducting fees and expenses. After considering the shares of common stock issued or sold subject to forward sale agreements under the current ATM Program, the Company had approximately $313.4 million of availability remaining under the current ATM program as of September 30, 2023. During 2022, the Company settled 5,453,975 shares of common stock under predecessor ATM programs, generating net proceeds of $379.1 million. |
Dividends and Distribution Paya
Dividends and Distribution Payable | 9 Months Ended |
Sep. 30, 2023 | |
Dividends and Distribution Payable | |
Dividends and Distribution Payable | Note 7 – Dividends and Distribution Payable During the three months ended September 30, 2023 and 2022 the Company declared monthly dividends of $0.243 and $0.234, respectively, per common share. Holders of Operating Partnership Common Units are entitled to an equal distribution per Operating Partnership Common Unit held. The dividends and distributions payable for July and August were paid during the three months ended September 30, 2023 and 2022, while the September dividends and distributions were recorded as liabilities on the Condensed Consolidated Balance Sheets at September 30, 2023 and 2022. The September 2023 and 2022 dividends per common share and distributions per Operating Partnership Common Units were paid on October 13, 2023 and October 14, 2022, respectively. During the three months ended September 30, 2023 and 2022 the Company declared monthly dividends on the Series A Preferred Shares in the amount of $0.08854, per Depositary Share. The dividends payable for July and August were paid during the three months ended September 30, 2023 and 2022, while the September dividends and distributions were recorded as a liability on the Condensed Consolidated Balance Sheet at September 30, 2023 and 2022. The September 2023 and 2022 dividends per Depository Share were paid on October 2, 2023 and October 3, 2022, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Income Taxes | Note 8 – Income Taxes Uncertain Tax Positions The Company is subject to the provisions of FASB ASC Topic 740-10 (“ASC 740-10”) and has analyzed its various federal and state filing positions. The Company believes that its income tax filing positions and deductions are documented and supported. Additionally, the Company believes that its accruals for tax liabilities are adequate. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740-10. The Company’s federal income tax returns are open for examination by taxing authorities for all tax years after December 31, 2019. The Company has elected to record related interest and penalties, if any, as income tax expense on the Consolidated Statements of Operations and Comprehensive Income. The Company has no material interest or penalties relating to income taxes recognized for the three and nine months ended September 30, 2023 and 2022. Income Tax Expense The Company recognized total federal and state tax expense of approximately $0.7 million for each of the three months ended September 30, 2023 and 2022, and approximately $2.2 million and $2.1 million for the nine months ended September 30, 2023 and 2022, respectively. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activity | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activity | |
Derivative Instruments and Hedging Activity | Note 9 – Derivative Instruments and Hedging Activity Background The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risk, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and, to a limited extent, the use of derivative instruments. For additional information regarding the leveling of the Company’s derivatives, refer to Note 10 – Fair Value Measurements The Company’s objective in using interest rate derivatives is to manage its exposure to interest rate movements and add stability to interest expense. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed rate payments over the life of the agreement without exchange of the underlying notional amount. 2023 Hedge Activity In June 2023, the Company entered into $350 million of forward starting interest rate swap agreements to hedge against variability in future cash flows resulting from changes in SOFR. The swaps exchange variable rate SOFR interest on $350 million of SOFR indexed debt to a weighted average fixed interest rate of 3.57% and are effective August 1, 2023 through the maturity date of January 1, 2029. The swaps are designated to hedge the variable rate interest payments of the 2029 Unsecured Term Loan indexed to SOFR. As of September 30, 2023, these interest rate swaps were valued as an asset of approximately $11.7 million. 2022 Settlements - Hedging 2022 Debt Issuances In May and July 2021, the Company entered into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $300 million of long-term debt. The Company hedged its exposure to the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period ending December 2022. In August 2022, the Company terminated the swap agreements upon the debt issuance, receiving $28.4 million upon termination. This settlement was included as a component of accumulated OCI, to be recognized as an adjustment to income over the term of the debt. Recognition The Company recognizes all derivative instruments as either assets or liabilities at fair value on the balance sheet. The Company recognizes its derivatives within other assets, net and accounts payable, accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets. The Company recognizes all changes in fair value for hedging instruments designated and qualifying for cash flow hedge accounting treatment as a component of other comprehensive income (OCI). Accumulated OCI relates to (i) the change in fair value of interest rate derivatives and (ii) realized gains or losses on settled derivative instruments. Amounts are reclassified out of accumulated OCI as an adjustment to interest expense for (i) realized gains or losses related to effective interest rate swaps and (ii) realized gains or losses on settled derivative instruments, amortized over the term of the hedged debt transaction. During the next twelve months, the Company estimates that an additional $8.5 million will be reclassified as a decrease to interest expense. The Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk ( presented in thousands, except number of instruments Number of Instruments 1 Notional Amount 1 September 30, December 31, September 30, December 31, Interest Rate Derivatives 2023 2022 2023 2022 Interest rate swap 3 — $ 350,000 $ — (1) Number of Instruments and total Notional Amount disclosed includes all interest rate swap agreements outstanding at the balance sheet date, including forward-starting swaps prior to their effective date. The table below presents the estimated fair value of the Company’s derivative financial instruments, as well as their classification in the Condensed Consolidated Balance Sheets ( presented in thousands Asset Derivatives September 30, 2023 December 31, 2022 Derivatives designated as cash flow hedges: Other Assets, net $ 11,664 $ — Liability Derivatives September 30, 2023 December 31, 2022 Derivatives designated as cash flow hedges: Accounts Payable, Accrued Expenses, and Other Liabilities $ — $ — The table below presents the effect of the Company’s derivative financial instruments in the Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2023 and 2022 ( presented in thousands Amount of Income/(Loss) Location of Accumulated OCI Amount Reclassified from Recognized in Reclassified from Accumulated Accumulated OCI as a OCI on Derivative OCI into Income (Reduction)/Increase in Interest Expense Three Months Ended September 30, 2023 2022 2023 2022 Interest rate swaps $ 9,348 $ (7,181) Interest expense $ (1,653) $ (273) Amount of Income/(Loss) Location of Accumulated OCI Amount Reclassified from Recognized in Reclassified from Accumulated Accumulated OCI as a OCI on Derivative OCI into Income (Reduction)/Increase in Interest Expense Nine Months Ended September 30, 2023 2022 2023 2022 Interest rate swaps $ 12,688 $ 29,881 Interest expense $ (2,913) $ (109) The Company does not use derivative instruments for trading or other speculative purposes and did not have any other derivative instruments or hedging activities as of September 30, 2023. Credit-Risk-Related Contingent Features The Company has agreements with its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. Although the derivative contracts are subject to master netting arrangements, which serve as credit mitigants to both the Company and its counterparties under certain situations, the Company does not net its derivative fair values or any existing rights or obligations to cash collateral on the Condensed Consolidated Balance Sheets. As of September 30, 2023, the fair value of derivatives in a net asset position related to these agreements, which includes interest but excludes any adjustment for nonperformance risk was $12.3 million. The Company had no derivatives outstanding as of December 31, 2022. There was no offsetting of derivative assets or liabilities as of September 30, 2023 and December 31, 2022. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | Note 10 – Fair Value Measurements Assets and Liabilities Measured at Fair Value The Company accounts for fair values in accordance with ASC 820. ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances. ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls, is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Derivative Financial Instruments The Company uses interest rate swap agreements to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. To comply with the provisions of ASC 820, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2023, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 ( presented in thousands Total Fair Value Level 2 September 30, 2023 Derivative assets - interest rate swaps $ 11,664 $ 11,664 Derivative liabilities - interest rate swaps $ — $ — December 31, 2022 Derivative assets - interest rate swaps $ — $ — Derivative liabilities - interest rate swaps $ — $ — Other Financial Instruments The carrying values of cash and cash equivalents, cash held in escrow, accounts receivable and accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short maturity of these financial instruments. The Company estimated the fair value of its debt based on its incremental borrowing rates for similar types of borrowing arrangements with the same remaining maturity and on the discounted estimated future cash payments to be made for other debt. The discount rate used to calculate the fair value of debt approximates current lending rates for loans and assumes the debt is outstanding through maturity. Since such amounts are estimates that are based on limited available market information for similar transactions, there can be no assurance that the disclosed value of any financial instrument could be realized by immediate settlement of the instrument. The Company determined that the valuation of its Unsecured Term Loan, Senior Unsecured Notes and Revolving Credit Facility are classified as Level 2 of the fair value hierarchy and its fixed rate mortgages are classified as Level 3 of the fair value hierarchy. The Senior Unsecured Notes had carrying values of $1.79 billion as of September 30, 2023 and December 31, 2022 and had fair values of $1.52 billion and $1.54 billion, respectively. The Mortgage Notes Payable had carrying values of $43.0 million and $48.0 million as of September 30, 2023 and December 31, 2022, respectively, and had fair values of $39.3 million and $45.4 million as of those dates. The fair value of the Revolving Credit Facility and Unsecured Term Loan are estimated to be equal to the carrying value as they are variable rate debt. |
Equity Incentive Plan
Equity Incentive Plan | 9 Months Ended |
Sep. 30, 2023 | |
Equity Incentive Plan | |
Equity Incentive Plan | Note 11 – Equity Incentive Plan In May 2020, the Company’s stockholders approved the Agree Realty Corporation 2020 Omnibus Incentive Plan (the “2020 Plan”). The 2020 Plan provides for the award to employees, directors and consultants of the Company of options, restricted stock, restricted stock units, stock appreciation rights, performance awards (which may take the form of performance units or performance shares) and other awards to acquire up to an aggregate of 700,000 shares of the Company’s common stock. As of September 30, 2023, 317,970 shares of common stock were available for issuance under the 2020 Plan. Restricted Stock - Employees Restricted shares have been granted to certain employees which vest based on continued service to the Company. The holder of a restricted share award is generally entitled at all times on and after the date of issuance of the restricted shares to exercise the rights of a stockholder of the Company, including the right to vote the shares and the right to receive dividends on the shares. Restricted share awards granted prior to 2023 vest over a five-year period while awards granted in 2023 vest over a three-year period. The Company estimates the fair value of restricted share grants at the date of grant and amortizes those amounts into expense on a straight-line basis over the appropriate vesting period. The Company used 0% for the forfeiture rate for determining the fair value of restricted stock. The Company recognized expense relating to restricted share grants of $1.2 million and $0.9 million during the three months ended September 30, 2023 and 2022, respectively and $3.4 million and $3.0 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, there was $10.8 million of total unrecognized compensation costs related to the outstanding restricted shares, which is expected to be recognized over a weighted average period of 2.6 years. The intrinsic value of restricted shares redeemed during the nine months ended September 30, 2023 and 2022, was $2.7 million and $1.9 million, respectively. Restricted share activity is summarized as follows: Shares Weighted Average Outstanding Grant Date ( in thousands ) Fair Value Unvested restricted stock at December 31, 2022 183 $ 65.46 Restricted stock granted 82 $ 73.21 Restricted stock vested (54) $ 64.07 Restricted stock forfeited (14) $ 69.13 Unvested restricted stock at September 30, 2023 197 $ 68.78 Performance Units and Shares Performance shares were granted to certain executive officers prior to 2019, while performance units were granted beginning in 2019. Performance units or shares are subject to a three-year performance period, following the conclusion of which shares awarded are to be determined by the Company’s total shareholder return (“TSR”) compared to the constituents of the MSCI US REIT Index and a defined peer group. Fifty percent of the award is based upon the TSR percentile rank versus the constituents in the MSCI US REIT Index for the three-year performance period; and fifty percent of the award is based upon TSR percentile rank versus a specified net lease peer group for the three-year performance period. For performance units and shares granted prior to 2023, vesting of the performance units and shares following their issuance will occur ratably over a three-year period, with the initial vesting occurring immediately following the conclusion of the performance period such that all units and shares vest within five years of the original award date. Performance units granted in 2023 vest following the conclusion of the performance period such that all units will vest three years from the original award date. The grant date fair value of these awards is determined using a Monte Carlo simulation pricing model. For the performance units and shares granted prior to 2023, compensation expense is amortized on an attribution method over a five-year period. For performance units granted in 2023, compensation expense is amortized on a straight-line basis over a three-year period. Compensation expense related to performance units or shares is determined at the grant date and is not adjusted throughout the measurement or vesting periods. The Monte Carlo simulation pricing model for issued grants utilizes the following assumptions: (i) expected term (equal to the remaining performance measurement period at the grant date); (ii) volatility (based on historical volatility); and (iii) risk-free rate (interpolated based on 2- and 3-year rates). The Company used 0% for the forfeiture rate for determining the fair value of performance units and shares. The following assumptions were used when determining the grant date fair value: 2023 2022 2021 Expected term (years) 2.9 2.9 2.9 Volatility 23.6 % 33.5 % 33.9 % Risk-free rate 4.4 % 1.8 % 0.2 % The Company recognized expense related to performance units and shares for which the three-year performance period has not yet been completed of $0.6 million and $0.4 million for the three months ended September 30, 2023 and 2022, respectively, and $1.6 million and $1.1 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, there was $5.0 million of total unrecognized compensation costs related to performance units and shares for which the three-year performance period has not yet been completed, which is expected to be recognized over a weighted average period of 2.5 years. The Company recognized expense related to performance units and shares for which the three-year performance period was completed, however the shares have not yet vested, of $0.1 million for each of the three months ended September 30, 2023 and 2022, and $0.4 million and $0.3 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, there was $0.3 million of total unrecognized compensation costs related to performance units and shares for which the three-year performance period has been completed, however the shares have not yet vested, which is expected to be recognized over a weighted average period of 1.0 years. Performance units and shares activity is summarized as follows: Target Number Weighted Average of Awards Grant Date (in thousands ) Fair Value Performance units at December 31, 2022 - three-year performance period to be completed 85 $ 72.27 Performance units granted 47 $ 80.34 Performance units at September 30, 2023 - three-year performance period completed (21) $ 90.17 Performance units at September 30, 2023 - three-year performance period to be completed 111 $ 72.14 Shares Weighted Average Outstanding Grant Date (in thousands) Fair Value Performance units and shares - three-year performance period completed but not yet vested at December 31, 2022 32 $ 61.91 Shares earned at completion of three-year performance period (1) 33 $ 90.17 Shares vested (34) $ 69.73 Performance units and shares - three-year performance period completed but not yet vested at September 30, 2023 31 $ 83.40 (1) Performance units granted in 2020 for which the three-year performance period was completed December 31, 2022 paid out at the 150% performance level Restricted Stock - Directors During the nine months ended September 30, 2023, 14,535 restricted shares were granted to independent members of the Company’s board of directors at a weighted average grant date fair value of $73.27 per share. The holder of a restricted share award is generally entitled at all times on and after the date of issuance of the restricted shares to exercise the rights of a stockholder of the Company, including the right to vote the shares and the right to receive dividends on the shares. The restricted shares granted to non-employee directors vest over the 2023 calendar year commensurate with the board members’ annual services to the Company. The Company estimates the fair value of board members’ restricted share grants at the date of grant and amortizes those amounts into expense on a straight-line basis over the one-year vesting period. The Company recognized expense relating to restricted share grants to the board members of $0.3 million and $0.2 million for the three months ended September 30, 2023 and 2022, respectively, and $0.8 million and $0.5 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, there was $0.3 million of total unrecognized compensation costs related to the board members’ outstanding restricted shares, which is expected to be recognized over the remainder of 2023. The Company used 0% for the forfeiture rate for determining the fair value of this restricted stock. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 12 – Commitments and Contingencies In the ordinary course of business, the Company is party to various legal actions which the Company considers to be routine in nature and incidental to the operation of its business. The Company believes that the outcome of the proceedings will not have a material adverse effect upon the Company’s consolidated financial position or results of operations. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events | |
Subsequent Events | Note 13 – Subsequent Events In connection with the preparation of its financial statements, the Company has evaluated events that occurred subsequent to September 30, 2023 through the date on which these financial statements were issued to determine whether any of these events required disclosure in the financial statements. There were no reportable subsequent events or transactions. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Basis of Accounting | Basis of Accounting The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for audited financial statements. The unaudited Condensed Consolidated Financial Statements reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results for the interim period presented. Operating results for the three and nine months ended September 30, 2023 may not be indicative of the results that may be expected for the year ending December 31, 2023. Amounts as of December 31, 2022 included in the Condensed Consolidated Financial Statements have been derived from the audited Consolidated Financial Statements as of that date. The unaudited Condensed Consolidated Financial Statements, included herein, should be read in conjunction with the audited Consolidated Financial Statements and notes thereto, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Company’s Form 10-K for the year ended December 31, 2022. |
Consolidation | Consolidation Under the agreement of limited partnership of the Operating Partnership, the Company, as the sole general partner, has exclusive responsibility and discretion in the management and control of the Operating Partnership. The Company consolidates the Operating Partnership under the guidance set forth in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation, and as a result, the unaudited Condensed Consolidated Financial Statements include the accounts of the Company, the Operating Partnership and its wholly owned subsidiaries. All material intercompany accounts and transactions are eliminated, including the Company’s Series A preferred equity interest in the Operating Partnership. |
Real Estate Investments | Real Estate Investments The Company records the acquisition of real estate at cost, including acquisition and closing costs. For properties developed by the Company, all direct and indirect costs related to planning, development and construction, including interest, real estate taxes and other miscellaneous costs incurred during the construction period, are capitalized for financial reporting purposes and recorded as property under development until construction has been completed. |
Assets Held for Sale | Assets Held for Sale Assets are classified as real estate held for sale based on specific criteria as outlined in FASB ASC Topic 360, Property, Plant & Equipment |
Acquisitions of Real Estate | Acquisitions of Real Estate The acquisition of property for investment purposes is typically accounted for as an asset acquisition. The Company allocates the purchase price to land, building, assumed debt, if any, and identified intangible assets and liabilities, based in each case on their relative estimated fair values and without giving rise to goodwill. Intangible assets and liabilities represent the value of in-place leases and above- or below-market leases. In making estimates of fair values, the Company may use various sources, including data provided by independent third parties, as well as information obtained by the Company as a result of its due diligence, including expected future cash flows of the property and various characteristics of the markets where the property is located. In allocating the fair value of the identified tangible and intangible assets and liabilities of an acquired property, land is valued based upon comparable market data or independent appraisals. Buildings are valued on an as-if vacant basis based on a cost approach utilizing estimates of cost and the economic age of the building or an income approach utilizing various market data. In-place lease intangibles are valued based on the Company’s estimates of costs related to tenant acquisition and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. 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. In the case of sale-leaseback transactions, it is typically assumed that the lease is not in-place prior to the close of the transaction. |
Depreciation and Amortization | Depreciation and Amortization Land, buildings and improvements are recorded and stated at cost. The Company’s properties are depreciated using the straight-line method over the estimated remaining useful life of the assets, which are generally 40 years for buildings and 10 to 20 years for improvements. Properties classified as held for sale and properties under development or redevelopment are not depreciated. Major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. In-place lease intangible assets and above- and below-market lease intangibles are amortized as a net adjustment to rental income. In the event of early lease termination, the remaining net book value of any above- or below-market lease intangible is recognized as an adjustment to rental income. The following schedule summarizes the Company’s amortization of lease intangibles for the three and nine months ended September 30, 2023 and 2022 ( presented in thousands Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Lease intangibles (in-place) $ 15,117 $ 11,693 $ 42,924 $ 30,895 Lease intangibles (above-market) 10,015 10,010 30,290 29,493 Lease intangibles (below-market) (1,722) (1,636) (4,675) (4,630) Total $ 23,410 $ 20,067 $ 68,539 $ 55,758 The following schedule represents estimated future amortization of lease intangibles as of September 30, 2023 ( presented in thousands 2023 Year Ending December 31, (remaining) 2024 2025 2026 2027 Thereafter Total Lease intangibles (in-place) $ 15,338 $ 59,585 $ 56,542 $ 53,207 $ 47,630 $ 221,890 $ 454,192 Lease intangibles (above-market) 9,596 36,956 34,622 32,893 30,298 250,634 394,999 Lease intangibles (below-market) (1,405) (5,203) (4,767) (4,413) (4,064) (17,606) (37,458) Total $ 23,529 $ 91,338 $ 86,397 $ 81,687 $ 73,864 $ 454,918 $ 811,733 |
Impairments | Impairments The Company reviews real estate investments and related lease intangibles for possible impairment when certain events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable through operations plus estimated disposition proceeds. Events or changes in circumstances that may occur include, but are not limited to, significant changes in real estate market conditions, estimated residual values, the Company’s ability or expectation to re-lease properties that are vacant or become vacant or a change in the anticipated holding period for a property. Management determines whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the residual value of the real estate, to the carrying cost of the individual asset. Impairments are measured to the extent the current book value exceeds the estimated fair value of the asset less disposition costs for any assets classified as held for sale. The valuation of impaired assets is determined using valuation techniques including discounted cash flow analysis, analysis of recent comparable sales transactions and purchase offers received from third parties, which are Level 3 inputs. The Company may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate. Estimating future cash flows is highly subjective and estimates can differ materially from actual results. |
Cash and Cash Equivalents and Cash Held in Escrows | Cash and Cash Equivalents and Cash Held in Escrows The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of deposit, checking, and money market accounts. The account balances periodically exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage, and as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. Cash held in escrows primarily relates to proposed like-kind exchange transactions pursued under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) and funds restricted through a mortgage agreement. The Company had $5.3 million and $27.1 million in cash and cash equivalents and cash held in escrow as of September 30, 2023 and December 31, 2022, respectively, in excess of the FDIC insured limit. Per the requirements of Accounting Standards Update (“ASU”) 2016-18 Topic 230, Statement of Cash Flows presented in thousands September 30, 2023 December 31, 2022 Cash and cash equivalents $ 6,384 $ 27,763 Cash held in escrow 3 1,146 Total of cash and cash equivalents and cash held in escrow $ 6,387 $ 28,909 |
Revenue Recognition and Accounts Receivable | Revenue Recognition and Accounts Receivable The Company leases real estate to its tenants under long-term net leases which are accounted for as operating leases. Under this method, leases that have fixed and determinable rent increases are recognized on a straight-line basis over the lease term. Rental increases based upon changes in the consumer price indexes, or other variable factors, are recognized only after changes in such factors have occurred and are then applied according to the lease agreements. Certain leases also provide for additional rent based on tenants’ sales volumes. These rents are recognized when determinable after the tenant exceeds a sales breakpoint. Recognizing rent escalations on a straight-line method results in rental revenue in the early years of a lease being higher than actual cash received, creating a straight-line rent receivable asset which is included in the accounts receivable - tenants line item in the Condensed Consolidated Balance Sheets. The balance of straight-line rent receivables at September 30, 2023 and December 31, 2022 was $62.7 million and $53.9 million, respectively. To the extent any of the tenants under these leases become unable to pay their contractual cash rents, the Company may be required to write down the straight-line rent receivable from those tenants, which would reduce rental income. The Company reviews the collectability of charges under its tenant operating leases on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located. In the event that collectability with respect to any tenant changes, the Company recognizes an adjustment to rental revenue. The Company’s review of collectability of charges under its operating leases also includes any accrued rental revenue related to the straight-line method of reporting rental revenue. As of September 30, 2023, the Company has four leases across four tenants where collection is not considered probable. For these tenants, the Company is recording rental income on a cash basis and has written off any outstanding receivables, including straight-line rent receivables. Adjustments to rental revenue related to tenants accounted for on the cash basis resulted in an increase to rental income of $0.3 million and $0.2 million for the three and nine months ended September 30, 2023, respectively due to the receipt of amounts previously considered uncollectible. In addition to the tenant-specific collectability assessment performed, the Company may also recognize a general allowance, as a reduction to rental revenue, for its operating lease receivables which are not expected to be fully collectible based on the potential for settlement of arrears. The Company had no general allowance at September 30, 2023 and December 31, 2022. The Company’s leases provide for reimbursement from tenants for common area maintenance, insurance, real estate taxes and other operating expenses. A portion of the Company’s operating cost reimbursement revenue is estimated each period and is recognized as rental revenue in the period the recoverable costs are incurred and accrued, and the related revenue is earned. The balance of unbilled operating cost reimbursement receivable at September 30, 2023 and December 31, 2022 was $14.7 million and $11.1 million, respectively. Unbilled operating cost reimbursement receivable is reflected in accounts receivable – tenants, net in the Condensed Consolidated Balance Sheets. The Company has adopted the practical expedient in FASB ASC Topic 842, Leases “ASC 842”) |
Earnings per Share | Earnings per Share Earnings per share of common stock has been computed pursuant to the guidance in the FASB ASC Topic 260, Earnings Per Share The following is a reconciliation of the numerator and denominator used in the computation of basic and diluted net earnings per share of common stock for each of the periods presented ( presented in thousands, except for share data Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Net income attributable to Agree Realty Corporation $ 41,522 $ 39,425 $ 124,004 $ 111,511 Less: Series A preferred stock dividends (1,859) (1,859) (5,578) (5,578) Net income attributable to common stockholders 39,663 37,566 118,426 105,933 Less: Income attributable to unvested restricted shares (96) (97) (300) (283) Net income used in basic and diluted earnings per share $ 39,567 $ 37,469 $ 118,126 $ 105,650 Weighted average number of common shares outstanding 97,497,836 79,930,394 93,716,875 75,590,841 Less: Unvested restricted shares (242,693) (229,258) (242,693) (229,258) Weighted average number of common shares outstanding used in basic earnings per share 97,255,143 79,701,136 93,474,182 75,361,583 Weighted average number of common shares outstanding used in basic earnings per share 97,255,143 79,701,136 93,474,182 75,361,583 Effect of dilutive securities: Share-based compensation 94,330 125,925 108,646 111,989 ATM Forward Equity Offerings — 156,062 49,235 65,932 December 2021 Forward Equity Offering — — — 119,950 May 2022 Forward Equity Offering — 606,323 — 231,238 September 2022 Forward Equity Offering — — 100,296 — Weighted average number of common shares outstanding used in diluted earnings per share 97,349,473 80,589,446 93,732,359 75,890,692 Operating Partnership Units ("OP Units") 347,619 347,619 347,619 347,619 Weighted average number of common shares and OP Units outstanding used in diluted earnings per share 97,697,092 80,937,065 94,079,978 76,238,311 For the three months ended September 30, 2023, 732 restricted shares granted in 2020, 2021 and 2022, and 1,660 performance units granted in 2023 were anti-dilutive and were not included in the computation of diluted earnings per share. For the nine months ended September 30, 2023, 356 performance units granted in 2021 and 2022 were anti-dilutive and were not included in the computation of diluted earnings per share. For the three months ended September 30, 2022, 19,010 shares of common stock related to at-the-market (“ATM”) forward equity offerings and 19 shares of restricted common stock (“restricted shares”) granted in 2022 were anti-dilutive and were not included in the computation of diluted earnings per share. For the nine months ended September 30, 2022, 31,879 shares of common stock related to ATM forward equity offerings and 271 shares of restricted shares granted in 2022 were anti-dilutive and were not included in the computation of diluted earnings per share. |
Forward Equity Sales | Forward Equity Sales The Company occasionally sells shares of common stock through forward sale agreements to enable the Company to set the price of such shares upon pricing the offering (subject to certain adjustments) while delaying the issuance of such shares and the receipt of the net proceeds by the Company. To account for the forward sale agreements, the Company considers the accounting guidance governing financial instruments and derivatives. To date, the Company has concluded that its forward sale agreements are not liabilities as they do not embody obligations to repurchase its shares nor do they embody obligations to issue a variable number of shares for which the monetary value are predominantly fixed, varying with something other than the fair value of the shares, or varying inversely in relation to its shares. The Company then evaluates whether the agreements meet the derivatives and hedging guidance scope exception to be accounted for as equity instruments. The Company has concluded that the agreements are classifiable as equity contracts based on the following assessments: (i) none of the agreements’ exercise contingencies are based on observable markets or indices besides those related to the market for the Company’s own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to its own stock. The Company also considers the potential dilution resulting from the forward sale agreements on the earnings per share calculations. The Company uses the treasury stock method to determine the dilution resulting from forward sale agreements during the period of time prior to settlement. |
Equity Offering Costs | Equity Offering Costs Underwriting commissions and offering costs of equity offerings have been reflected as a reduction of additional paid-in-capital in the Company’s Condensed Consolidated Balance Sheets. |
Income Taxes | Income Taxes The Company has made an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code and related regulations. The Company generally will not be subject to federal income taxes on amounts distributed to stockholders, providing it distributes 100% of its REIT taxable income and meets certain other requirements for qualifying as a REIT. For the periods covered in the Condensed Consolidated Financial Statements, the Company believes it has qualified as a REIT. Accordingly, no provision has been made for federal income taxes. Notwithstanding its qualification for taxation as a REIT, the Company is subject to certain state taxes on its income and real estate. Earnings and profits that determine the taxability of distributions to stockholders differ from net income reported for financial reporting purposes due to differences in the estimated useful lives and methods used to compute depreciation and the carrying value (basis) of the investments in properties for tax purposes, among other things. The Company and its taxable REIT subsidiaries (“TRS”) have made a timely TRS election pursuant to the provisions of the REIT Modernization Act. A TRS is able to engage in activities resulting in income that previously would have been disqualified from being eligible REIT income under the federal income tax regulations. As a result, certain activities of the Company which occur within its TRS entities are subject to federal and state income taxes. All provisions for federal income taxes in the accompanying Condensed Consolidated Financial Statements are attributable to the Company’s TRS. The Company regularly analyzes its various federal and state filing positions and only recognizes the income tax effect in its financial statements when certain criteria regarding uncertain income tax positions have been met. The Company believes that its income tax positions would more likely than not be sustained upon examination by all relevant taxing authorities. Therefore, no provisions for uncertain income tax positions have been recorded in the Condensed Consolidated Financial Statements. |
Management's Responsibility to Evaluate Its Ability to Continue as a Going Concern | Management’s Responsibility to Evaluate Its Ability to Continue as a Going Concern When preparing financial statements for each annual and interim reporting period, management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In making its evaluation, the Company considers, among other things, any risks and/or uncertainties to its results of operations, contractual obligations in the form of near-term debt maturities, dividend requirements, or other factors impacting the Company’s liquidity and capital resources. No conditions or events that raised substantial doubt about the ability to continue as a going concern within one year were identified as of the issuance date of the Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. |
Reclassifications | Reclassifications Certain reclassifications of prior period amounts have been made in the consolidated financial statements and footnotes in order to conform to the current presentation. |
Segment Reporting | Segment Reporting The Company is primarily in the business of acquiring, developing and managing retail real estate. The Company’s chief operating decision maker, which is its Chief Executive Officer, does not distinguish or group operations on a geographic or other basis when assessing the financial performance of the Company’s portfolio of properties. Accordingly, the Company has a single |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Fair Values of Financial Instruments | Fair Values of Financial Instruments The Company’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance, ASC Topic 820 Fair Value Measurement Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities. Level 2 – Valuation is based upon inputs other than Level 1 inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2022, the FASB issued ASU 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820)” (“ASU 2022-03”). ASU 2022-03 clarifies that contractual sale restrictions on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, are not considered in measuring the fair value of equity securities. In addition, the amendment requires the disclosure of: (1) the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet, (2) the nature and remaining duration of the restrictions, and (3) any circumstances that could cause a lapse in the restrictions. The amendments in ASU 2022-03 are effective for the Company for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years. The amendment is applied prospectively and early adoption is permitted. The Company continues to evaluate the potential impact of the guidance. In August 2023, the FASB issued ASU 2023-05, Business Combinations – Joint Venture Formations (Subtopic 805-60) (“ASU 2023-05”). ASU 2023-05 addresses the accounting for contributions made to a joint venture, upon formation, in a joint venture’s separate financial statements. Currently, GAAP does not provide specific authoritative guidance on how a joint venture, upon formation, should recognize and initially measure assets contributed and liabilities assumed. ASU 2023-05 will require that a joint venture apply a new basis of accounting upon formation. By applying a new basis of accounting, a joint venture, upon formation, will recognize and initially measure its assets and liabilities at fair value (with exceptions to fair value measurement that are consistent with the business combinations guidance). The amendments in ASC 2023-05 are effective prospectively for all joint ventures formed on or after January 1, 2025. Joint ventures formed prior |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Schedule of amortization of lease intangibles | The following schedule summarizes the Company’s amortization of lease intangibles for the three and nine months ended September 30, 2023 and 2022 ( presented in thousands Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Lease intangibles (in-place) $ 15,117 $ 11,693 $ 42,924 $ 30,895 Lease intangibles (above-market) 10,015 10,010 30,290 29,493 Lease intangibles (below-market) (1,722) (1,636) (4,675) (4,630) Total $ 23,410 $ 20,067 $ 68,539 $ 55,758 |
Schedule of estimated future amortization of lease intangibles | The following schedule represents estimated future amortization of lease intangibles as of September 30, 2023 ( presented in thousands 2023 Year Ending December 31, (remaining) 2024 2025 2026 2027 Thereafter Total Lease intangibles (in-place) $ 15,338 $ 59,585 $ 56,542 $ 53,207 $ 47,630 $ 221,890 $ 454,192 Lease intangibles (above-market) 9,596 36,956 34,622 32,893 30,298 250,634 394,999 Lease intangibles (below-market) (1,405) (5,203) (4,767) (4,413) (4,064) (17,606) (37,458) Total $ 23,529 $ 91,338 $ 86,397 $ 81,687 $ 73,864 $ 454,918 $ 811,733 |
Schedule of cash, cash equivalents and cash held in escrow | Per the requirements of Accounting Standards Update (“ASU”) 2016-18 Topic 230, Statement of Cash Flows presented in thousands September 30, 2023 December 31, 2022 Cash and cash equivalents $ 6,384 $ 27,763 Cash held in escrow 3 1,146 Total of cash and cash equivalents and cash held in escrow $ 6,387 $ 28,909 |
Schedule of reconciliation of basic and diluted net earnings per common share | The following is a reconciliation of the numerator and denominator used in the computation of basic and diluted net earnings per share of common stock for each of the periods presented ( presented in thousands, except for share data Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Net income attributable to Agree Realty Corporation $ 41,522 $ 39,425 $ 124,004 $ 111,511 Less: Series A preferred stock dividends (1,859) (1,859) (5,578) (5,578) Net income attributable to common stockholders 39,663 37,566 118,426 105,933 Less: Income attributable to unvested restricted shares (96) (97) (300) (283) Net income used in basic and diluted earnings per share $ 39,567 $ 37,469 $ 118,126 $ 105,650 Weighted average number of common shares outstanding 97,497,836 79,930,394 93,716,875 75,590,841 Less: Unvested restricted shares (242,693) (229,258) (242,693) (229,258) Weighted average number of common shares outstanding used in basic earnings per share 97,255,143 79,701,136 93,474,182 75,361,583 Weighted average number of common shares outstanding used in basic earnings per share 97,255,143 79,701,136 93,474,182 75,361,583 Effect of dilutive securities: Share-based compensation 94,330 125,925 108,646 111,989 ATM Forward Equity Offerings — 156,062 49,235 65,932 December 2021 Forward Equity Offering — — — 119,950 May 2022 Forward Equity Offering — 606,323 — 231,238 September 2022 Forward Equity Offering — — 100,296 — Weighted average number of common shares outstanding used in diluted earnings per share 97,349,473 80,589,446 93,732,359 75,890,692 Operating Partnership Units ("OP Units") 347,619 347,619 347,619 347,619 Weighted average number of common shares and OP Units outstanding used in diluted earnings per share 97,697,092 80,937,065 94,079,978 76,238,311 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Summary of lease income | The following table includes information regarding contractual lease payments for the Company’s operating leases for which it is the lessor, for the three and nine months ended September 30, 2023 and 2022 (presented in thousands) Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Total lease payments $ 141,960 $ 115,567 $ 409,802 $ 328,991 Less: Operating cost reimbursements and percentage rents 14,388 12,012 45,509 35,696 Total non-variable lease payments $ 127,572 $ 103,555 $ 364,293 $ 293,295 |
Summary of lease income to be received | At September 30, 2023, future non-variable lease payments to be received from the Company’s operating leases for the remainder of 2023, the following four years, and thereafter are as follows ( presented in thousands 2023 Year Ending December 31, (remaining) 2024 2025 2026 2027 Thereafter Total Future non-variable lease payments $ 135,968 $ 545,296 $ 538,038 $ 518,637 $ 492,646 $ 2,746,339 $ 4,976,924 |
Summary of lease costs and maturity analysis | The following tables include information on the Company’s land leases for which it is the lessee, for the three and nine months ended September 30, 2023 and 2022. (presented in thousands) Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Operating leases: Operating cash outflows $ 299 $ 299 $ 898 $ 898 Weighted-average remaining lease term - operating leases (years) 33.3 33.6 33.3 33.6 Finance leases: Operating cash outflows $ 63 $ 64 $ 189 $ 192 Financing cash outflows $ 21 $ 20 $ 63 $ 60 Weighted-average remaining lease term - finance leases (years) 1.0 2.0 1.0 2.0 |
Summary of maturity analysis of lease liabilities for operating land leases | The following is a maturity analysis of lease liabilities for operating land leases as of September 30, 2023 for the remainder of 2023 and the following four years. ( presented in thousands 2023 Year Ending December 31, (remaining) 2024 2025 2026 2027 Thereafter Total Lease payments $ 299 $ 1,197 $ 1,197 $ 1,195 $ 1,042 $ 28,809 $ 33,739 Imputed interest (176) (690) (669) (647) (627) (13,864) (16,673) Total lease liabilities $ 123 $ 507 $ 528 $ 548 $ 415 $ 14,945 $ 17,066 |
Summary of maturity analysis of lease liabilities for finance land leases | The following is a maturity analysis of lease liabilities for finance land leases as of September 30, 2023 for the remainder of 2023 and the following four years. ( presented in thousands 2023 Year Ending December 31, (remaining) 2024 2025 2026 2027 Thereafter Total Lease payments $ 84 $ 6,252 $ — $ — $ — $ — $ 6,336 Imputed interest (63) (207) — — — — (270) Total lease liabilities $ 21 $ 6,045 $ — $ — $ — $ — $ 6,066 |
Real Estate Investments (Tables
Real Estate Investments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Real Estate Investments | |
Schedule of real estate properties held-for-sale | Real estate held for sale consisted of the following as of September 30, 2023 and December 31, 2022 ( presented in thousands September 30, 2023 December 31, 2022 Land $ 1,342 $ — Building 2,393 — 3,735 — Accumulated depreciation and amortization, net (533) — Total Real Estate Held for Sale, net $ 3,202 $ — |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Schedule of maturities of long-term debt | The following table presents scheduled principal payments related to the Company’s debt as of September 30, 2023 ( presented in thousands Scheduled Balloon Principal Payment Total Remainder of 2023 $ 231 $ — $ 231 2024 963 — 963 2025 1,026 50,000 51,026 2026 (1) 629 49,000 49,629 2027 — 50,000 50,000 Thereafter — 2,102,250 2,102,250 Total scheduled principal payments $ 2,849 $ 2,251,250 $ 2,254,099 (1) The Revolving Credit Facility matures in January 2026, with options to extend the maturity to January 2027. The Revolving Credit Facility had a $49.0 million outstanding balance as of September 30, 2023. |
Mortgages [Member] | |
Schedule of long-term debt instruments | Mortgage notes payable consisted of the following ( presented in thousands September 30, 2023 December 31, 2022 Note payable in monthly installments of interest only at 5.01% per annum, extinguished in September 2023 $ — $ 4,622 Note payable in monthly installments of $92 including interest at 6.27% per annum, with a final monthly payment due July 2026 2,849 3,523 Note payable in monthly installments of interest only at 3.63% per annum, with a balloon payment due December 2029 42,250 42,250 Total principal 45,099 50,395 Unamortized debt issuance costs and assumed debt discount, net (2,147) (2,424) Total $ 42,952 $ 47,971 |
Unsecured term loan | |
Schedule of debt | The following table presents the unsecured term loan principal balances net of unamortized debt issuance costs as of September 30, 2023 and December 31, 2022 (presented in thousands): All-in Interest Rate (1) Maturity September 30, 2023 December 31, 2022 2029 Unsecured Term Loan 4.52 % January 2029 $ 350,000 $ — Total Principal 350,000 — Unamortized debt issuance costs, net (3,361) — Total $ 346,639 $ — (1) Interest rate at September 30, 2023 reflects the credit spread of 95 basis points plus the impact of interest rate swaps which converted $350 million of SOFR-based interest to a fixed interest rate of 3.57% . |
Senior Unsecured Notes [Member] | |
Schedule of long-term debt instruments | The following table presents the senior unsecured notes principal balances net of unamortized debt issuance costs and original issue discounts for the Company’s private placement and public offerings as of September 30, 2023 and December 31, 2022 ( presented in thousands All-in Coupon Interest Rate (1) Rate Maturity September 30, 2023 December 31, 2022 2025 Senior Unsecured Notes 4.16 % 4.16 % May 2025 $ 50,000 $ 50,000 2027 Senior Unsecured Notes 4.26 % 4.26 % May 2027 50,000 50,000 2028 Senior Unsecured Public Notes 2.11 % 2.00 % June 2028 350,000 350,000 2028 Senior Unsecured Notes 4.42 % 4.42 % July 2028 60,000 60,000 2029 Senior Unsecured Notes 4.19 % 4.19 % September 2029 100,000 100,000 2030 Senior Unsecured Notes 4.32 % 4.32 % September 2030 125,000 125,000 2030 Senior Unsecured Public Notes 3.49 % 2.90 % October 2030 350,000 350,000 2031 Senior Unsecured Notes 4.42 % 4.47 % October 2031 125,000 125,000 2032 Senior Unsecured Public Notes 3.96 % 4.80 % October 2032 300,000 300,000 2033 Senior Unsecured Public Notes 2.13 % 2.60 % June 2033 300,000 300,000 Total Principal 1,810,000 1,810,000 Unamortized debt issuance costs and original issue discounts, net (16,223) (17,953) Total $ 1,793,777 $ 1,792,047 (1) The all-in interest rate reflects the straight-line amortization of the terminated swap agreements, as applicable. |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activity | |
Schedule of notional amounts of outstanding derivative positions | The Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk ( presented in thousands, except number of instruments Number of Instruments 1 Notional Amount 1 September 30, December 31, September 30, December 31, Interest Rate Derivatives 2023 2022 2023 2022 Interest rate swap 3 — $ 350,000 $ — (1) Number of Instruments and total Notional Amount disclosed includes all interest rate swap agreements outstanding at the balance sheet date, including forward-starting swaps prior to their effective date. |
Schedule of cash flow hedging instruments, as well as their classification in the Condensed Consolidated Balance Sheets | The table below presents the estimated fair value of the Company’s derivative financial instruments, as well as their classification in the Condensed Consolidated Balance Sheets ( presented in thousands Asset Derivatives September 30, 2023 December 31, 2022 Derivatives designated as cash flow hedges: Other Assets, net $ 11,664 $ — Liability Derivatives September 30, 2023 December 31, 2022 Derivatives designated as cash flow hedges: Accounts Payable, Accrued Expenses, and Other Liabilities $ — $ — |
Schedule of cash flow hedges included in accumulated other comprehensive income (loss) | The table below presents the effect of the Company’s derivative financial instruments in the Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2023 and 2022 ( presented in thousands Amount of Income/(Loss) Location of Accumulated OCI Amount Reclassified from Recognized in Reclassified from Accumulated Accumulated OCI as a OCI on Derivative OCI into Income (Reduction)/Increase in Interest Expense Three Months Ended September 30, 2023 2022 2023 2022 Interest rate swaps $ 9,348 $ (7,181) Interest expense $ (1,653) $ (273) Amount of Income/(Loss) Location of Accumulated OCI Amount Reclassified from Recognized in Reclassified from Accumulated Accumulated OCI as a OCI on Derivative OCI into Income (Reduction)/Increase in Interest Expense Nine Months Ended September 30, 2023 2022 2023 2022 Interest rate swaps $ 12,688 $ 29,881 Interest expense $ (2,913) $ (109) |
Schedule of derivative instruments in statement of financial position, fair value | |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Measurements | |
Schedule of assets and liabilities measured at fair value | The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 ( presented in thousands Total Fair Value Level 2 September 30, 2023 Derivative assets - interest rate swaps $ 11,664 $ 11,664 Derivative liabilities - interest rate swaps $ — $ — December 31, 2022 Derivative assets - interest rate swaps $ — $ — Derivative liabilities - interest rate swaps $ — $ — |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity Incentive Plan | |
Schedule of restricted share activity | Restricted share activity is summarized as follows: Shares Weighted Average Outstanding Grant Date ( in thousands ) Fair Value Unvested restricted stock at December 31, 2022 183 $ 65.46 Restricted stock granted 82 $ 73.21 Restricted stock vested (54) $ 64.07 Restricted stock forfeited (14) $ 69.13 Unvested restricted stock at September 30, 2023 197 $ 68.78 |
Schedule of valuation assumptions used | The following assumptions were used when determining the grant date fair value: 2023 2022 2021 Expected term (years) 2.9 2.9 2.9 Volatility 23.6 % 33.5 % 33.9 % Risk-free rate 4.4 % 1.8 % 0.2 % |
Schedule of performance share and unit activity | Performance units and shares activity is summarized as follows: Target Number Weighted Average of Awards Grant Date (in thousands ) Fair Value Performance units at December 31, 2022 - three-year performance period to be completed 85 $ 72.27 Performance units granted 47 $ 80.34 Performance units at September 30, 2023 - three-year performance period completed (21) $ 90.17 Performance units at September 30, 2023 - three-year performance period to be completed 111 $ 72.14 Shares Weighted Average Outstanding Grant Date (in thousands) Fair Value Performance units and shares - three-year performance period completed but not yet vested at December 31, 2022 32 $ 61.91 Shares earned at completion of three-year performance period (1) 33 $ 90.17 Shares vested (34) $ 69.73 Performance units and shares - three-year performance period completed but not yet vested at September 30, 2023 31 $ 83.40 (1) Performance units granted in 2020 for which the three-year performance period was completed December 31, 2022 paid out at the 150% performance level |
Organization (Details)
Organization (Details) ft² in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 ft² property shares | Dec. 31, 2022 ft² property | |
Nature of Operations [Line Items] | ||
Number of Real Estate Properties | property | 2,084 | 1,839 |
Total gross leasable area (GLA) | ft² | 43.2 | 38.1 |
Percentage of portfolio leased | 99.70% | |
Annualized base rent derived from tenants (as a percent) | 68.90% | |
Weighted Average [Member] | ||
Nature of Operations [Line Items] | ||
Remaining lease term | 8 years 7 months 6 days | |
Agree Realty Corporation [Member] | General Partner [Member] | ||
Nature of Operations [Line Items] | ||
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Ownership Interest | 99.70% | 99.60% |
Agree Realty Corporation [Member] | Third party [Member] | ||
Nature of Operations [Line Items] | ||
Non controlling interest in partnership | 0.30% | 0.40% |
Common stock conversion ratio | 1 | |
Number of units outstanding in exchange of non-controlling interest | shares | 100,867,336 | |
Series A Preferred Stock | Agree Realty Corporation [Member] | General Partner [Member] | ||
Nature of Operations [Line Items] | ||
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Ownership Interest | 100% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Amortization of Deferred Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
Amortization of deferred charges | $ 23,410 | $ 20,067 | $ 68,539 | $ 55,758 |
Lease intangibles (in-place) | ||||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
Amortization of deferred charges | 15,117 | 11,693 | 42,924 | 30,895 |
Lease intangibles (above-market) | ||||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
Amortization of deferred charges | 10,015 | 10,010 | 30,290 | 29,493 |
Lease intangibles (below-market) | ||||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
Amortization of below market lease | $ (1,722) | $ (1,636) | $ (4,675) | $ (4,630) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Future Amortization of Deferred Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Year Ending December 31, | ||
2023 (Remaining) | $ 23,529 | |
2024 | 91,338 | |
2025 | 86,397 | |
2026 | 81,687 | |
2027 | 73,864 | |
Thereafter | 454,918 | |
Total | 811,733 | |
Total | (37,458) | $ (36,714) |
Lease intangibles (in-place) | ||
Year Ending December 31, | ||
2023 (Remaining) | 15,338 | |
2024 | 59,585 | |
2025 | 56,542 | |
2026 | 53,207 | |
2027 | 47,630 | |
Thereafter | 221,890 | |
Total | 454,192 | |
Lease intangibles (above-market) | ||
Year Ending December 31, | ||
2023 (Remaining) | 9,596 | |
2024 | 36,956 | |
2025 | 34,622 | |
2026 | 32,893 | |
2027 | 30,298 | |
Thereafter | 250,634 | |
Total | 394,999 | |
Lease intangibles (below-market) | ||
Year Ending December 31, | ||
2023 (Remaining) | (1,405) | |
2024 | (5,203) | |
2025 | (4,767) | |
2026 | (4,413) | |
2027 | (4,064) | |
Thereafter | (17,606) | |
Total | $ (37,458) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Reconciliation of cash and cash equivalents and cash held in escrow - (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Cash and Cash Equivalents, at Carrying Value [Abstract] | ||||
Cash and cash equivalents | $ 6,384 | $ 27,763 | ||
Cash held in escrow | 3 | 1,146 | ||
Total of cash and cash equivalents and cash held in escrow | $ 6,387 | $ 28,909 | $ 251,514 | $ 45,250 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Earnings per Share (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Share Basic And Diluted [Line Items] | ||||
Net Income (Loss) | $ 41,522 | $ 39,425 | $ 124,004 | $ 111,511 |
Less: Series A preferred stock dividends | (1,859) | (1,859) | (5,578) | (5,578) |
Net Income Attributable to Common Stockholders | 39,663 | 37,566 | 118,426 | 105,933 |
Less: Income attributable to unvested restricted shares | (96) | (97) | (300) | (283) |
Net income used in basic and diluted earnings per share | $ 39,567 | $ 37,469 | $ 118,126 | $ 105,650 |
Weighted average number of common shares outstanding | 97,497,836 | 79,930,394 | 93,716,875 | 75,590,841 |
Less: Unvested restricted shares | (242,693) | (229,258) | (242,693) | (229,258) |
Weighted average number of common shares outstanding used in basic earnings per share | 97,255,143 | 79,701,136 | 93,474,182 | 75,361,583 |
Weighted average number of common shares outstanding used in basic earnings per share | 97,255,143 | 79,701,136 | 93,474,182 | 75,361,583 |
Effect of dilutive securities: | ||||
Share-based compensation | 94,330 | 125,925 | 108,646 | 111,989 |
Weighted average number of common shares outstanding used in diluted earnings per share | 97,349,473 | 80,589,446 | 93,732,359 | 75,890,692 |
Operating Partnership Units ("OP Units") | 347,619 | 347,619 | 347,619 | 347,619 |
Weighted average number of common shares and OP Units outstanding used in diluted earnings per share | 97,697,092 | 80,937,065 | 94,079,978 | 76,238,311 |
Restricted Shares [Member] | ||||
Effect of dilutive securities: | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 732 | 19 | 271 | |
Performance units [Member] | ||||
Effect of dilutive securities: | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,660 | 356 | ||
At-Market Equity Program [Member] | ||||
Effect of dilutive securities: | ||||
Forward equity offering | 156,062 | 49,235 | 65,932 | |
At-Market Equity Program [Member] | Forward Sale Agreement [Member] | ||||
Effect of dilutive securities: | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 19,010 | 31,879 | ||
December 2021 Forward Offering | ||||
Effect of dilutive securities: | ||||
Forward equity offering | 119,950 | |||
May 2022 Forward Equity Offering | ||||
Effect of dilutive securities: | ||||
Forward equity offering | 606,323 | 231,238 | ||
September 2022 Forward Offering | ||||
Effect of dilutive securities: | ||||
Forward equity offering | 100,296 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 USD ($) tenant lease | Sep. 30, 2023 USD ($) tenant segment lease | Dec. 31, 2022 USD ($) | |
Accounting Policies [Line Items] | |||
Cash in excess of FDIC insured amounts | $ 5.3 | $ 5.3 | $ 27.1 |
Straight-line rent receivables | $ 62.7 | $ 62.7 | 53.9 |
Accounts Receivable, Allowance for Credit Loss, Number Of Leases | lease | 4 | 4 | |
Accounts Receivable, Allowance for Credit Loss, Number Of Customers | tenant | 4 | 4 | |
Increase to rental income | $ 0.3 | $ 0.2 | |
Allowance for doubtful accounts receivable (in dollars) | 0 | $ 0 | 0 |
Number of Reportable Segments | segment | 1 | ||
Unbilled Revenues [Member] | |||
Accounting Policies [Line Items] | |||
Accounts Receivable, Gross | $ 14.7 | $ 14.7 | $ 11.1 |
Building [Member] | |||
Accounting Policies [Line Items] | |||
Useful life | 40 years | 40 years | |
Building Improvements [Member] | Minimum | |||
Accounting Policies [Line Items] | |||
Useful life | 10 years | 10 years | |
Building Improvements [Member] | Maximum | |||
Accounting Policies [Line Items] | |||
Useful life | 20 years | 20 years |
Leases - Tenant Leases (Details
Leases - Tenant Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases | ||||
Option to extend lease | true | |||
Lease, practical expedients | true | |||
Lease Income | ||||
Total lease payments | $ 141,960 | $ 115,567 | $ 409,802 | $ 328,991 |
Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration] | Operating Leases, Income Statement, Lease Revenue | Operating Leases, Income Statement, Lease Revenue | Operating Leases, Income Statement, Lease Revenue | Operating Leases, Income Statement, Lease Revenue |
Less: Operating cost reimbursements and percentage rents | $ 14,388 | $ 12,012 | $ 45,509 | $ 35,696 |
Total non-variable lease payments | 127,572 | $ 103,555 | 364,293 | $ 293,295 |
Future non-variable lease payments | ||||
2023 (remaining) | 135,968 | 135,968 | ||
2024 | 545,296 | 545,296 | ||
2025 | 538,038 | 538,038 | ||
2026 | 518,637 | 518,637 | ||
2027 | 492,646 | 492,646 | ||
Thereafter | 2,746,339 | 2,746,339 | ||
Lease payments receivable | $ 4,976,924 | $ 4,976,924 |
Leases - Deferred Revenue (Deta
Leases - Deferred Revenue (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Leases | ||
Deferred revenue | $ 19 | $ 18.1 |
Leases - Land Lease Obligations
Leases - Land Lease Obligations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Lease costs | |||||
Right of use assets | $ 60,400 | $ 60,400 | $ 60,900 | ||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other Assets | Other Assets | Other Assets | ||
Lease obligations, net | $ 23,100 | $ 23,100 | $ 23,600 | ||
Land lease expense | 411 | $ 404 | 1,252 | $ 1,213 | |
Amortization of right of use assets for finance lease | 0 | ||||
Finance lease right-of-use asset amortization and interest expense | 200 | 200 | |||
Operating cash outflows | $ 299 | $ 299 | $ 898 | $ 898 | |
Weighted-average remaining lease term - operating leases (years) | 33 years 3 months 18 days | 33 years 7 months 6 days | 33 years 3 months 18 days | 33 years 7 months 6 days | |
Operating cash outflows | $ 63 | $ 64 | $ 189 | $ 192 | |
Financing cash outflows | $ 21 | $ 20 | $ 63 | $ 60 | |
Weighted-average remaining lease term - finance leases (years) | 1 year | 2 years | 1 year | 2 years | |
Weighted-average discount rate - operating leases | 4% | 4% | 4% | 4% | |
Weighted-average discount rate - finance leases | 4% | 4% | 4% | 4% | |
Maturity Analysis of Lease Liabilities for Operating Leases | |||||
Lease payments 2023 (remaining) | $ 299 | $ 299 | |||
Lease payments 2024 | 1,197 | 1,197 | |||
Lease payments 2025 | 1,197 | 1,197 | |||
Lease payments 2026 | 1,195 | 1,195 | |||
Lease payments 2027 | 1,042 | 1,042 | |||
Lease payment Thereafter | 28,809 | 28,809 | |||
Total lease payments | 33,739 | 33,739 | |||
Imputed interest 2023 (remaining) | (176) | (176) | |||
Imputed interest 2024 | (690) | (690) | |||
Imputed interest 2025 | (669) | (669) | |||
Imputed interest 2026 | (647) | (647) | |||
Imputed interest 2027 | (627) | (627) | |||
Imputed interest Thereafter | (13,864) | (13,864) | |||
Total imputed interest | (16,673) | (16,673) | |||
Total Lease Liabilities 2023 (remaining) | 123 | 123 | |||
Total Lease Liabilities 2024 | 507 | 507 | |||
Total Lease Liabilities 2025 | 528 | 528 | |||
Total Lease Liabilities 2026 | 548 | 548 | |||
Total Lease Liabilities 2027 | 415 | 415 | |||
Total Lease Liabilities Thereafter | 14,945 | 14,945 | |||
Total lease liabilities | $ 17,066 | $ 17,066 | |||
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities | |||
Maturity Analysis of Lease Liabilities for Finance Leases | |||||
Lease payments 2023 (remaining) | $ 84 | $ 84 | |||
Lease payments 2024 | 6,252 | 6,252 | |||
Lease payments 2025 | 0 | 0 | |||
Lease payments 2026 | 0 | 0 | |||
Lease Payment 2027 | 0 | 0 | |||
Thereafter | 0 | 0 | |||
Total lease payments | 6,336 | 6,336 | |||
Imputed interest 2023 (remaining) | (63) | (63) | |||
Imputed interest 2024 | (207) | (207) | |||
Imputed interest 2025 | 0 | 0 | |||
Imputed interest 2026 | 0 | 0 | |||
Imputed interest 2027 | 0 | 0 | |||
Imputed interest Thereafter | 0 | 0 | |||
Imputed interest Total | (270) | (270) | |||
Total lease Liabilities 2023 (remaining) | 21 | 21 | |||
Total Lease Liabilities 2024 | 6,045 | 6,045 | |||
Total Lease Liabilities 2025 | 0 | 0 | |||
Total Lease Liabilities 2026 | 0 | 0 | |||
Total Lease Liabilities 2027 | 0 | 0 | |||
Total Lease Liabilities Thereafter | 0 | 0 | |||
Total lease liabilities | $ 6,066 | $ 6,066 | |||
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities | |||
Maximum | |||||
Lease costs | |||||
Finance lease right-of-use asset amortization and interest expense | $ 100 | $ 100 |
Real Estate Investments (Detail
Real Estate Investments (Details) $ in Thousands, ft² in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 USD ($) ft² state item property site | Sep. 30, 2022 USD ($) state site item property | Sep. 30, 2023 USD ($) ft² site state property item | Sep. 30, 2022 USD ($) site item property state | Dec. 31, 2022 USD ($) ft² property | |
Real Estate Properties [Line Items] | |||||
Number of Real Estate Properties | property | 2,084 | 2,084 | 1,839 | ||
Total gross leasable area (GLA) | ft² | 43.2 | 43.2 | 38.1 | ||
Net Real Estate Investments | $ 6,614,308 | $ 6,614,308 | $ 5,741,068 | ||
Retail Net Lease Assets Purchased | item | 74 | 98 | 232 | 303 | |
Payments to Acquire Property, Plant, and Equipment | $ 399,700 | $ 361,500 | $ 1,010,000 | $ 1,200,000 | |
Mortgage notes assumed | $ 42,300 | ||||
Number Of States Properties Located | state | 28 | 29 | 37 | 42 | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life (in year) | 11 years 6 months | 11 years 1 month 6 days | 11 years 6 months | 10 years 1 month 6 days | |
Payments to Acquire Land Held-for-use | $ 273,900 | $ 289,400 | |||
Payments for Capital Improvements | 617,800 | 755,800 | |||
Payments to Acquire Intangible Assets | $ 118,700 | 147,400 | |||
Assumed mortgage debt discount | 2,500 | ||||
Mortgage debt discount | $ 2,548 | ||||
Number Of Development And Developer Funding Platform Projects Commenced | site | 2 | 2 | 9 | 22 | |
Number Of Development And Developer Funding Platform Projects Completed | site | 8 | 17 | |||
Number of Development and Developer Funding Platform Projects Construction | site | 16 | 20 | |||
Number of properties sold | property | 1 | 1 | 2 | 6 | |
Proceeds from Sale of Real Estate | $ 200 | $ 20,000 | $ 3,300 | $ 43,900 | |
Gains/ (Losses) on Sales of Investment Real Estate | 3,000 | 300 | 5,300 | ||
Provision for impairment | 3,195 | $ 0 | 4,510 | $ 1,015 | |
Impaired Real Estate Estate Fair Value | 2,600 | $ 2,600 | $ 1,800 | ||
Maximum | |||||
Real Estate Properties [Line Items] | |||||
Gains/ (Losses) on Sales of Investment Real Estate | $ (100) |
Real Estate Investments - Asset
Real Estate Investments - Assets Held for Sale (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Real Estate Investments | |
Land | $ 1,342 |
Building | 2,393 |
Real Estate Held-for-sale, gross | 3,735 |
Accumulated depreciation and amortization, net | (533) |
Total Real Estate Held for Sale, net | $ 3,202 |
Debt - Narrative (Details)
Debt - Narrative (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Jul. 31, 2023 USD ($) | Sep. 30, 2023 USD ($) | Nov. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) property | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Nov. 18, 2014 USD ($) | |
Debt Instrument [Line Items] | ||||||||||
Unsecured term loan | $ 346,639 | $ 346,639 | $ 346,639 | |||||||
Long-term Debt, Gross | 2,254,099 | 2,254,099 | 2,254,099 | |||||||
Mortgage notes assumed | $ 42,300 | |||||||||
Derivative Notional Amount | $ 0 | |||||||||
Interest rate swap | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Derivative Notional Amount | 350,000 | 350,000 | 350,000 | |||||||
Maximum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Reimbursement Agreement, Amount | $ 14,000 | |||||||||
Reimbursement Agreement, Debt Covenant, Assets Value | $ 14,000 | |||||||||
Revolving Credit Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term Debt, Gross | 49,000 | 49,000 | 49,000 | |||||||
Mortgages [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term Debt, Gross | 45,099 | 45,099 | 45,099 | $ 50,395 | ||||||
Debt Instrument, Collateral Amount | $ 80,000 | $ 80,000 | $ 80,000 | |||||||
Long-term Debt, Weighted Average Interest Rate | 3.80% | 3.80% | 3.80% | 3.94% | ||||||
Unamortized debt issuance costs, net | $ 2,147 | $ 2,147 | $ 2,147 | $ 2,424 | ||||||
Mortgages [Member] | Property Acquisition [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Number of properties acquired | property | 4 | |||||||||
Mortgage notes assumed | $ 42,300 | |||||||||
Coupon Rate | 3.63% | 3.63% | ||||||||
Unamortized debt issuance costs, net | $ 2,500 | $ 2,500 | ||||||||
Mortgages [Member] | Notes payable, Due September 2023, 5.01 percent | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term Debt, Gross | $ 4,622 | |||||||||
Repayment of debt | $ 4,600 | |||||||||
Coupon Rate | 5.01% | 5.01% | 5.01% | 5.01% | ||||||
Unsecured Debt [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term Debt, Gross | $ 350,000 | $ 350,000 | $ 350,000 | |||||||
Unamortized debt issuance costs, net | 3,361 | 3,361 | 3,361 | |||||||
Unsecured Debt [Member] | 2029 Unsecured term loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term Debt, Gross | 350,000 | 350,000 | 350,000 | |||||||
Debt Instrument, Face Amount | $ 350,000 | $ 350,000 | $ 350,000 | $ 350,000 | ||||||
Debt Instrument, Interest Rate, Effective Percentage | 4.52% | 4.52% | 4.52% | |||||||
Debt Instrument, Term | 5 years 6 months | |||||||||
Hedge, fixed interest rate | 3.57% | 3.57% | 3.57% | |||||||
Additional lender commitments | $ 500,000 | |||||||||
Unsecured Debt [Member] | 2029 Unsecured term loan | Term SOFR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 0.95% | 0.95% | ||||||||
Unsecured Debt [Member] | 2029 Unsecured term loan | Interest rate swap | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Hedge, fixed interest rate | 3.57% | |||||||||
Derivative Notional Amount | $ 350,000 | |||||||||
Unsecured Debt [Member] | 2029 Unsecured term loan | Minimum | Term SOFR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 0.80% | |||||||||
Unsecured Debt [Member] | 2029 Unsecured term loan | Maximum | Term SOFR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 1.60% | |||||||||
Senior Unsecured Debt [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term Debt, Gross | $ 1,810,000 | $ 1,810,000 | $ 1,810,000 | $ 1,810,000 | ||||||
Unamortized debt issuance costs, net | 16,223 | 16,223 | $ 16,223 | 17,953 | ||||||
Senior Unsecured Debt [Member] | Revolving Credit Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Face Amount | $ 1,000,000 | |||||||||
Debt Instrument, Accordion Option Additional Lender Commitments, Maximum | $ 1,750,000 | |||||||||
Senior Unsecured Debt [Member] | Revolving Credit Facility [Member] | LIBOR [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 0.775% | |||||||||
Senior Unsecured Debt [Member] | Revolving Credit Facility [Member] | Term SOFR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Face Amount | $ 1,000,000 | |||||||||
Spread on variable rate | 0.875% | |||||||||
Variable rate | 0.10% | 0.10% | ||||||||
Senior Unsecured Debt [Member] | Revolving Credit Facility [Member] | Minimum | LIBOR [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 0.725% | |||||||||
Senior Unsecured Debt [Member] | Revolving Credit Facility [Member] | Maximum | LIBOR [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 1.40% | |||||||||
Senior Unsecured Debt [Member] | 2025 Senior Unsecured Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term Debt, Gross | $ 50,000 | $ 50,000 | $ 50,000 | 50,000 | ||||||
Coupon Rate | 4.16% | 4.16% | 4.16% | |||||||
Debt Instrument, Interest Rate, Effective Percentage | 4.16% | 4.16% | 4.16% | |||||||
Senior Unsecured Debt [Member] | 2027 Senior Unsecured Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term Debt, Gross | $ 50,000 | $ 50,000 | $ 50,000 | 50,000 | ||||||
Coupon Rate | 4.26% | 4.26% | 4.26% | |||||||
Debt Instrument, Interest Rate, Effective Percentage | 4.26% | 4.26% | 4.26% | |||||||
Senior Unsecured Debt [Member] | 2031 Senior Unsecured Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term Debt, Gross | $ 125,000 | $ 125,000 | $ 125,000 | 125,000 | ||||||
Coupon Rate | 4.47% | 4.47% | 4.47% | |||||||
Debt Instrument, Interest Rate, Effective Percentage | 4.42% | 4.42% | 4.42% | |||||||
Senior Unsecured Debt [Member] | 2030 Senior Unsecured Public Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term Debt, Gross | $ 350,000 | $ 350,000 | $ 350,000 | 350,000 | ||||||
Coupon Rate | 2.90% | 2.90% | 2.90% | |||||||
Debt Instrument, Interest Rate, Effective Percentage | 3.49% | 3.49% | 3.49% | |||||||
Senior Unsecured Debt [Member] | 2028 Senior Unsecured Public Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term Debt, Gross | $ 350,000 | $ 350,000 | $ 350,000 | 350,000 | ||||||
Coupon Rate | 2% | 2% | 2% | |||||||
Debt Instrument, Interest Rate, Effective Percentage | 2.11% | 2.11% | 2.11% | |||||||
Senior Unsecured Debt [Member] | 2033 Senior Unsecured Public Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term Debt, Gross | $ 300,000 | $ 300,000 | $ 300,000 | 300,000 | ||||||
Coupon Rate | 2.60% | 2.60% | 2.60% | |||||||
Debt Instrument, Interest Rate, Effective Percentage | 2.13% | 2.13% | 2.13% | |||||||
Senior Unsecured Debt [Member] | 2032 Senior Unsecured Public Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term Debt, Gross | $ 300,000 | $ 300,000 | $ 300,000 | $ 300,000 | ||||||
Coupon Rate | 4.80% | 4.80% | 4.80% | |||||||
Debt Instrument, Interest Rate, Effective Percentage | 3.96% | 3.96% | 3.96% |
Debt - Mortgages Payable (Detai
Debt - Mortgages Payable (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Total Principal | $ 2,254,099 | |
Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Total Principal | 45,099 | $ 50,395 |
Unamortized debt issuance costs, net | (2,147) | (2,424) |
Total | $ 42,952 | 47,971 |
Notes Payable Due September 2023 5.01 Percent [Member] | Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Total Principal | $ 4,622 | |
Debt Instrument, Interest Rate, Stated Percentage | 5.01% | 5.01% |
Notes Payable Due July 2026 6.27 Percent [Member] | Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Total Principal | $ 2,849 | $ 3,523 |
Debt Instrument, Periodic Payment, Principal | $ 92 | $ 92 |
Debt Instrument, Interest Rate, Stated Percentage | 6.27% | 6.27% |
Notes Payable Due December 2029 3.63 Percent [Member] | Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Total Principal | $ 42,250 | $ 42,250 |
Debt Instrument, Interest Rate, Stated Percentage | 3.63% | 3.63% |
Debt - Unsecured Term Loan (Det
Debt - Unsecured Term Loan (Details) - USD ($) $ in Thousands | 1 Months Ended | |
Jul. 31, 2023 | Sep. 30, 2023 | |
Total Principal | $ 2,254,099 | |
Unsecured Debt [Member] | ||
Total Principal | 350,000 | |
Unamortized debt issuance costs, net | (3,361) | |
Total | $ 346,639 | |
Unsecured Debt [Member] | 2029 Unsecured term loan | ||
All-in Interest Rate | 4.52% | |
Total Principal | $ 350,000 | |
Debt instrument, face amount | $ 350,000 | $ 350,000 |
Unsecured Debt [Member] | 2029 Unsecured term loan | SOFR | ||
Spread on variable rate | 0.95% | 0.95% |
Debt - Senior Unsecured Notes (
Debt - Senior Unsecured Notes (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Total Principal | $ 2,254,099 | |
Senior Unsecured Debt [Member] | ||
Total Principal | 1,810,000 | $ 1,810,000 |
Unamortized debt issuance costs, net | (16,223) | (17,953) |
Long-term Debt, Total | $ 1,793,777 | 1,792,047 |
Senior Unsecured Debt [Member] | 2025 Senior Unsecured Notes [Member] | ||
All-in Interest Rate | 4.16% | |
Coupon Rate | 4.16% | |
Total Principal | $ 50,000 | 50,000 |
Senior Unsecured Debt [Member] | 2027 Senior Unsecured Notes [Member] | ||
All-in Interest Rate | 4.26% | |
Coupon Rate | 4.26% | |
Total Principal | $ 50,000 | 50,000 |
Senior Unsecured Debt [Member] | 2028 Senior Unsecured Public Notes [Member] | ||
All-in Interest Rate | 2.11% | |
Coupon Rate | 2% | |
Total Principal | $ 350,000 | 350,000 |
Senior Unsecured Debt [Member] | 2028 Senior Unsecured Notes [Member] | ||
All-in Interest Rate | 4.42% | |
Coupon Rate | 4.42% | |
Total Principal | $ 60,000 | 60,000 |
Senior Unsecured Debt [Member] | 2029 Senior Unsecured Notes [Member] | ||
All-in Interest Rate | 4.19% | |
Coupon Rate | 4.19% | |
Total Principal | $ 100,000 | 100,000 |
Senior Unsecured Debt [Member] | 2030 Senior Unsecured Notes [Member] | ||
All-in Interest Rate | 4.32% | |
Coupon Rate | 4.32% | |
Total Principal | $ 125,000 | 125,000 |
Senior Unsecured Debt [Member] | 2030 Senior Unsecured Public Notes [Member] | ||
All-in Interest Rate | 3.49% | |
Coupon Rate | 2.90% | |
Total Principal | $ 350,000 | 350,000 |
Senior Unsecured Debt [Member] | 2031 Senior Unsecured Notes [Member] | ||
All-in Interest Rate | 4.42% | |
Coupon Rate | 4.47% | |
Total Principal | $ 125,000 | 125,000 |
Senior Unsecured Debt [Member] | 2032 Senior Unsecured Public Notes | ||
All-in Interest Rate | 3.96% | |
Coupon Rate | 4.80% | |
Total Principal | $ 300,000 | 300,000 |
Senior Unsecured Debt [Member] | 2033 Senior Unsecured Public Notes [Member] | ||
All-in Interest Rate | 2.13% | |
Coupon Rate | 2.60% | |
Total Principal | $ 300,000 | $ 300,000 |
Debt - Debt Maturities (Details
Debt - Debt Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Long Term Debt Maturities Repayments Of Principal Line Items | ||
Remainder of 2023 | $ 231 | |
2024 | 963 | |
2025 | 51,026 | |
2026 | 49,629 | |
2027 | 50,000 | |
Thereafter | 2,102,250 | |
Total scheduled principal payments | 2,254,099 | |
Unsecured Revolving Credit Facility | 49,000 | $ 100,000 |
Revolving Credit Facility [Member] | ||
Long Term Debt Maturities Repayments Of Principal Line Items | ||
Total scheduled principal payments | 49,000 | |
Unsecured Revolving Credit Facility | 49,000 | |
Scheduled Principal [Member] | ||
Long Term Debt Maturities Repayments Of Principal Line Items | ||
Remainder of 2023 | 231 | |
2024 | 963 | |
2025 | 1,026 | |
2026 | 629 | |
2027 | 0 | |
Thereafter | 0 | |
Total scheduled principal payments | 2,849 | |
Debt Instrument Balloon Payment [Member] | ||
Long Term Debt Maturities Repayments Of Principal Line Items | ||
Remainder of 2023 | 0 | |
2024 | 0 | |
2025 | 50,000 | |
2026 | 49,000 | |
2027 | 50,000 | |
Thereafter | 2,102,250 | |
Total scheduled principal payments | $ 2,251,250 |
Common and Preferred Stock - Fo
Common and Preferred Stock - Follow-on Common Stock Offerings (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
May 31, 2022 | Dec. 31, 2021 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | Oct. 31, 2022 | |
Class of Stock [Line Items] | |||||||||||||
Common stock, shares authorized | 180,000,000 | 180,000,000 | 180,000,000 | 180,000,000 | |||||||||
Net proceeds received | $ 689,986 | $ 1,151,881 | |||||||||||
Common Stock [Member] | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Shares issued | 4,251,771 | 3,070,997 | 2,945,000 | 8,739,752 | 4,667,850 | 3,791,964 | |||||||
Common Stock [Member] | Forward Sale Agreement [Member] | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Common stock, shares authorized | 5,750,000 | 5,750,000 | 5,750,000 | ||||||||||
Net proceeds received | $ 386,700 | $ 368,700 | $ 275,000 | $ 381,200 | $ 106,200 | ||||||||
Shares issued | 4,150,000 | 1,600,000 | |||||||||||
Over-Allotment Option [Member] | Common Stock [Member] | Forward Sale Agreement [Member] | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Common stock, shares authorized | 750,000 | 750,000 | 750,000 |
Common and Preferred Stock - Pr
Common and Preferred Stock - Preferred Stock Offering (Details) | 1 Months Ended | |||||||
Sep. 30, 2023 USD ($) $ / shares shares | Aug. 31, 2023 $ / shares | Jul. 31, 2023 $ / shares | Sep. 30, 2022 $ / shares | Aug. 31, 2022 $ / shares | Jul. 31, 2022 $ / shares | Sep. 30, 2021 USD ($) $ / shares | Dec. 31, 2022 USD ($) shares | |
Series A Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, shares outstanding | shares | 7,000 | 7,000 | ||||||
Preferred stock, dividend rate, percentage | 4.25% | |||||||
Preferred Stock, Liquidation Preference, Value | $ | $ 25,000 | $ 25,000 | $ 25,000 | |||||
Redeemable Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, shares outstanding | shares | 7,000,000 | |||||||
Preferred Stock, Liquidation Preference Per Share | $ 25 | |||||||
Preferred stock, dividend paid (in dollars per share) | $ 0.08854 | $ 0.08854 | $ 0.08854 | $ 0.08854 | $ 0.08854 | $ 0.08854 | ||
Preferred stock, dividends to be declared monthly (in dollars per share) | 0.08854 | |||||||
Preferred stock, dividends declared per annum (in dollars per share) | 1.0625 | |||||||
Preferred Stock, Redemption Price Per Share | $ 25 | |||||||
Over-Allotment Option [Member] | Series A Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Stockholders' Equity Note, Stock Split, Conversion Ratio | 0.001 |
Common and Preferred Stock - AT
Common and Preferred Stock - ATM Programs (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
May 31, 2022 | Dec. 31, 2021 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | |
Class of Stock [Line Items] | ||||||||||||
Net proceeds received | $ 689,986 | $ 1,151,881 | ||||||||||
Common Stock [Member] | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Shares issued | 4,251,771 | 3,070,997 | 2,945,000 | 8,739,752 | 4,667,850 | 3,791,964 | ||||||
Common Stock [Member] | Forward Sale Agreement [Member] | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Net proceeds received | $ 386,700 | $ 368,700 | $ 275,000 | $ 381,200 | $ 106,200 | |||||||
Shares issued | 4,150,000 | 1,600,000 | ||||||||||
2022 ATM Program | Common Stock [Member] | Forward Sale Agreement [Member] | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Size | $ 750,000 | $ 750,000 | $ 750,000 | |||||||||
Net proceeds received | 415,400 | $ 18,100 | ||||||||||
Amount available under ATM program | $ 313,400 | |||||||||||
Shares issued | 6,117,768 | 245,591 | ||||||||||
2022 ATM Program | Common Stock [Member] | Forward Sale Agreement [Member] | Scenario, Plan [Member] | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Net proceeds received | $ 433,400 | |||||||||||
Forward Contract Indexed to Issuer's Equity, Shares | 6,363,359 | |||||||||||
Predecessor ATM Programs [Member] | Common Stock [Member] | Forward Sale Agreement [Member] | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Net proceeds received | $ 379,100 | |||||||||||
Forward Contract Indexed to Issuer's Equity, Shares | 5,453,975 |
Dividends and Distribution Pa_2
Dividends and Distribution Payable (Details) - $ / shares | 1 Months Ended | |||||
Sep. 30, 2023 | Aug. 31, 2023 | Jul. 31, 2023 | Sep. 30, 2022 | Aug. 31, 2022 | Jul. 31, 2022 | |
Agree Limited Partnership [Member] | ||||||
Dividends Payable [Line Items] | ||||||
Cash dividends declared per common share (in dollars per share) | $ 0.243 | $ 0.243 | $ 0.243 | $ 0.234 | $ 0.234 | $ 0.234 |
Redeemable Preferred Stock [Member] | ||||||
Dividends Payable [Line Items] | ||||||
Cash dividends declared per depositary share of Series A preferred stock | $ 0.08854 | $ 0.08854 | $ 0.08854 | $ 0.08854 | $ 0.08854 | $ 0.08854 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Taxes | ||||
Income Tax Expense | $ 709 | $ 720 | $ 2,201 | $ 2,137 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activity (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Aug. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2023 | Dec. 31, 2022 | Jul. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Derivative Notional Amount | $ 0 | |||||||
Realized gain (loss) on settlement of interest rate swaps | $ (631) | $ (273) | $ (1,889) | $ (109) | ||||
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimated Net Amount to be Transferred | 8,500 | |||||||
Derivative, Net Liability Position, Aggregate Fair Value | 12,300 | 12,300 | ||||||
Cash Flow Hedging | Term SOFR | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Derivative Notional Amount | $ 350,000 | |||||||
Interest Rate Swap Agreement in May and July 2021 | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Derivative Notional Amount | $ 300,000 | |||||||
Realized gain (loss) on settlement of interest rate swaps | $ 28,400 | |||||||
Interest rate swap | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Derivative Notional Amount | 350,000 | 350,000 | ||||||
Interest rate swap | Cash Flow Hedging | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Derivative Notional Amount | $ 350,000 | |||||||
Hedge, fixed interest rate | 3.57% | |||||||
Derivative asset, notional amount | $ 11,700 | $ 11,700 |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activity - Interest Rate Derivatives (Details) $ in Thousands | Sep. 30, 2023 USD ($) DerivativeInstrument | Dec. 31, 2022 USD ($) |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, Notional Amount | $ 0 | |
Interest rate swap | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Interest Rate Derivatives, Number of Instruments | DerivativeInstrument | 3 | |
Derivative, Notional Amount | $ 350,000 |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activity - Fair Value (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Other assets, net | Interest rate swap | |
Derivatives designated as cash flow hedges | |
Interest Rate Cash Flow Hedge Asset at Fair Value | $ 11,664 |
Derivative Instruments and He_6
Derivative Instruments and Hedging Activity - Consolidated statements of operations and other comprehensive loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Interest Expense [Member] | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivative Instruments, Amount of Income/(Loss) Reclassified from Accumulated OCI as a (Reduction)/Increase in Interest Expense | $ (1,653) | $ (273) | $ (2,913) | $ (109) |
Interest rate swap | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Other comprehensive income (loss) - change in fair value and settlement of interest rate swaps | $ 9,348 | $ (7,181) | $ 12,688 | $ 29,881 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Derivative [Line Items] | ||
Long-term Debt, Gross | $ 2,254,099 | |
Mortgages [Member] | ||
Derivative [Line Items] | ||
Long-term Debt, Gross | 45,099 | $ 50,395 |
Senior Unsecured Debt [Member] | ||
Derivative [Line Items] | ||
Long-term Debt, Gross | 1,810,000 | 1,810,000 |
Long-term Debt [Member] | Fair Value, Inputs, Level 2 [Member] | Senior Unsecured Debt [Member] | ||
Derivative [Line Items] | ||
Long-term Debt, Gross | 1,790,000 | 1,790,000 |
Value of debt | 1,520,000 | 1,540,000 |
Long-term Debt [Member] | Fair Value, Inputs, Level 3 [Member] | Mortgages [Member] | ||
Derivative [Line Items] | ||
Long-term Debt, Gross | 43,000 | 48,000 |
Value of debt | $ 39,300 | $ 45,400 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Assets and Liabilities (Details) - Interest rate swap $ in Thousands | Sep. 30, 2023 USD ($) |
Derivatives, Fair Value [Line Items] | |
Derivative assets | $ 11,664 |
Fair Value, Inputs, Level 2 [Member] | |
Derivatives, Fair Value [Line Items] | |
Derivative assets | $ 11,664 |
Equity Incentive Plan (Details)
Equity Incentive Plan (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2020 | May 31, 2020 | |
2020 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Issuance of Common stock | 700,000 | ||||||
Future issuances | 317,970 | 317,970 | |||||
Restricted Shares [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 3 years | 5 years | |||||
Recognized share based compensation | $ 1.2 | $ 0.9 | $ 3.4 | $ 3 | |||
Unrecognized compensation, other than options | 10.8 | $ 10.8 | |||||
Unrecognized compensation recognition period | 2 years 7 months 6 days | ||||||
Fair value inputs forfeiture rate | 0% | ||||||
Intrinsic value of restricted shares | $ 2.7 | 1.9 | |||||
Shares Outstanding, granted | 82,000 | ||||||
Fair value of shares granted to directors | $ 73.21 | ||||||
Restricted Shares [Member] | Director | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 1 year | ||||||
Recognized share based compensation | 0.3 | 0.2 | $ 0.8 | 0.5 | |||
Unrecognized compensation, other than options | 0.3 | $ 0.3 | |||||
Fair value inputs forfeiture rate | 0% | ||||||
Shares Outstanding, granted | 14,535 | ||||||
Fair value of shares granted to directors | $ 73.27 | ||||||
Performance units [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 3 years | 3 years | 3 years | ||||
Shares Outstanding, granted | 47,000 | ||||||
Fair value of shares granted to directors | $ 80.34 | ||||||
Performance units and shares [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 3 years | 3 years | |||||
Fair value inputs forfeiture rate | 0% | ||||||
Amortization period of compensation expense | 5 years | ||||||
Shares Outstanding, granted | 33,000 | ||||||
Fair value of shares granted to directors | $ 90.17 | ||||||
Performance units and shares [Member] | 3 Year Performance period to be completed | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 3 years | ||||||
Recognized share based compensation | 0.6 | 0.4 | $ 1.6 | 1.1 | |||
Unrecognized compensation, other than options | 5 | $ 5 | |||||
Unrecognized compensation recognition period | 2 years 6 months | ||||||
Vesting percentage | 50% | ||||||
Performance units and shares [Member] | 3 Year Performance period completed | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 3 years | ||||||
Recognized share based compensation | 0.1 | $ 0.1 | $ 0.4 | $ 0.3 | |||
Unrecognized compensation, other than options | $ 0.3 | $ 0.3 | |||||
Unrecognized compensation recognition period | 1 year | ||||||
Vesting percentage | 50% | ||||||
Performance units and shares [Member] | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 5 years |
Equity Incentive Plan - Restric
Equity Incentive Plan - Restricted share activity (Details) - Restricted Shares [Member] shares in Thousands | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Outstanding, at beginning of the period | shares | 183 |
Shares Outstanding, granted | shares | 82 |
Shares Outstanding, vested | shares | (54) |
Shares Outstanding, forfeited | shares | (14) |
Shares Outstanding, at end of the period | shares | 197 |
Weighted Average Grant Date Fair Value, at beginning of the period (in dollars per share) | $ / shares | $ 65.46 |
Weighted Average Grant Date Fair Value, granted (in dollars per share) | $ / shares | 73.21 |
Weighted Average Grant Date Fair Value, vested (in dollars per share) | $ / shares | 64.07 |
Weighted Average Grant Date Fair Value, forfeited (in dollars per share) | $ / shares | 69.13 |
Weighted Average Grant Date Fair Value, at end of the period (in dollars per share) | $ / shares | $ 68.78 |
Equity Incentive Plan - Valuati
Equity Incentive Plan - Valuation assumption (Details) - Performance units and shares [Member] | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (years) | 2 years 10 months 24 days | 2 years 10 months 24 days | 2 years 10 months 24 days |
Volatility | 23.60% | 33.50% | 33.90% |
Risk-free rate | 4.40% | 1.80% | 0.20% |
Equity Incentive Plan - Perform
Equity Incentive Plan - Performance share activity (Details) - $ / shares shares in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2020 | |
Performance units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares Outstanding, at beginning of the period | 85 | ||
Shares Outstanding, granted | 47 | ||
Shares Outstanding, vested | (21) | ||
Shares Outstanding, at end of the period | 111 | 85 | |
Weighted Average Grant Date Fair Value, at beginning of the period (in dollars per share) | $ 72.27 | ||
Weighted Average Grant Date Fair Value, granted (in dollars per share) | 80.34 | ||
Weighted Average Grant Date Fair Value, vested (in dollars per share) | 90.17 | ||
Weighted Average Grant Date Fair Value, at end of the period (in dollars per share) | $ 72.14 | $ 72.27 | |
Percentage of performance shares paid out | 150% | ||
Vesting period | 3 years | 3 years | 3 years |
Performance units and shares [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares Outstanding, at beginning of the period | 32 | ||
Shares Outstanding, granted | 33 | ||
Shares Outstanding, vested | (34) | ||
Shares Outstanding, at end of the period | 31 | 32 | |
Weighted Average Grant Date Fair Value, at beginning of the period (in dollars per share) | $ 61.91 | ||
Weighted Average Grant Date Fair Value, granted (in dollars per share) | 90.17 | ||
Weighted Average Grant Date Fair Value, vested (in dollars per share) | 69.73 | ||
Weighted Average Grant Date Fair Value, at end of the period (in dollars per share) | $ 83.40 | $ 61.91 | |
Vesting period | 3 years | 3 years |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 41,522 | $ 39,425 | $ 124,004 | $ 111,511 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |