PR Newswire | Feb 18, 2021 04:06PM EST

Results

02/18 15:05 CST

Agree Realty Corporation Reports Fourth Quarter And Record Full Year 2020 Results BLOOMFIELD HILLS, Mich., Feb. 18, 2021

BLOOMFIELD HILLS, Mich., Feb. 18, 2021 /PRNewswire/ -- Agree Realty Corporation (NYSE: ADC) (the "Company") today announced results for the quarter and full year ended December 31, 2020. All per share amounts included herein are on a diluted per common share basis unless otherwise stated.

Fourth Quarter 2020 Financial and Operating Highlights:

* Invested $363.3 million in 106 retail net lease properties * 19.4% of annualized base rents acquired were derived from ground leased assets * Commenced two new development and Partner Capital Solutions ("PCS") projects * Net Income per share attributable to the Company decreased 19.6% to $0.42 * Net Income attributable to the Company increased 4.7% to $23.6 million * Increased Core Funds from Operations ("Core FFO") per share 3.8% to $0.84 * Increased Core FFO 35.1% to $47.3 million * Increased Adjusted Funds from Operations ("AFFO") per share 4.8% to $0.83 * Increased AFFO 36.4% to $47.1 million * Declared a quarterly dividend of $0.620 per share, a 6.0% year-over-year increase * Sold 1,501,210 shares of common stock via the forward component of the Company's at-the-market equity ("ATM") program for anticipated net proceeds of approximately $98.2 million * Settled the remaining 4,651,666 shares of the Company's outstanding April 2020 forward equity offering for net proceeds of approximately $266.7 million

Full Year 2020 Financial and Operating Highlights:

* Invested or committed a record $1.36 billion in 329 retail net lease properties * Completed nine development and PCS projects * Net Income per share attributable to the Company decreased 10.1% to $1.74 * Net Income attributable to the Company increased 14.1% to $91.4 million * Increased Core FFO per share 4.8% to $3.23 * Increased Core FFO 33.0% to $170.2 million * Increased AFFO per share 6.0% to $3.20 * Increased AFFO 34.4% to $168.8 million * Declared dividends of $2.405 per share, a 5.5% year-over-year increase * Received a BBB investment grade credit rating from S&P Global Ratings * Completed inaugural public bond offering of $350.0 million of 2.90% senior unsecured notes due 2030 * Balance sheet positioned for growth at 4.8 times net debt to recurring EBITDA

Financial Results

Net Income

Net Income attributable to the Company for the three months ended December 31, 2020 increased 4.7% to $23.6 million, compared to $22.6 million for the comparable period in 2019. Net Income per share attributable to the Company for the three months ended December 31, 2020 decreased 19.6% to $0.42, compared to $0.52 per share for the comparable period in 2019.

Net Income attributable to the Company for the twelve months ended December 31, 2020 increased 14.1% to $91.4 million, compared to $80.1 million for the comparable period in 2019. Net Income per share attributable to the Company for the twelve months ended December 31, 2020 decreased 10.1% to $1.74, compared to $1.93 per share for the comparable period in 2019.

Core Funds from Operations

Core FFO for the three months ended December 31, 2020 increased 35.1% to $47.3 million, compared to Core FFO of $35.0 million for the comparable period in 2019. Core FFO per share for the three months ended December 31, 2020 increased 3.8% to $0.84, compared to Core FFO per share of $0.81 for the comparable period in 2019.

Core FFO for the twelve months ended December 31, 2020 increased 33.0% to $170.2 million, compared to Core FFO of $128.0 million for the comparable period in 2019. Core FFO per share for the twelve months ended December 31, 2020 increased 4.8% to $3.23, compared to Core FFO per share of $3.08 for the comparable period in 2019.

Adjusted Funds from Operations

AFFO for the three months ended December 31, 2020 increased 36.4% to $47.1 million, compared to AFFO of $34.5 million for the comparable period in 2019. AFFO per share for the three months ended December 31, 2020 increased 4.8% to $0.83, compared to AFFO per share of $0.80 for the comparable period in 2019.

AFFO for the twelve months ended December 31, 2020 increased 34.4% to $168.8 million, compared to AFFO of $125.5 million for the comparable period in 2019. AFFO per share for the twelve months ended December 31, 2020 increased 6.0% to $3.20, compared to AFFO per share of $3.02 for the comparable period in 2019.

Dividend

The Company paid a cash dividend of $0.620 per share on January 6, 2021 to stockholders of record on December 23, 2020, a 6.0% increase over the $0.585 quarterly dividend declared in the fourth quarter of 2019. The quarterly dividend represents payout ratios of approximately 74% of both Core FFO per share and AFFO per share, respectively.

For the twelve months ended December 31, 2020, the Company declared dividends of $2.405 per share, a 5.5% increase over the dividends of $2.280 per share declared for the comparable period in 2019. The dividends represent payout ratios of approximately 75% of both Core FFO per share and AFFO per share, respectively.

In January 2021, the Company announced the transition to a monthly cash dividend and declared its inaugural monthly dividend of $0.207 per share. The dividend was paid on February 12, 2021 to stockholders of record at the close of business on January 29, 2021.

In February 2021, the Company declared a monthly cash dividend of $0.207 per share. The dividend is payable March 12, 2021 to stockholders of record at the close of business on February 26, 2021. The January and February monthly dividends reflect an annualized dividend amount of $2.484 per common share, representing a 6.2% increase over the annualized dividend amount of $2.340 per common share from the first quarter of 2020.

CEO Comments

"We are extremely pleased with our record performance in 2020 amidst the most difficult of circumstances," said Joey Agree, President and Chief Executive Officer. "We are poised to become an omni-channel retail thought leader with our RETHINK RETAIL initiative and have strategically positioned our portfolio to thrive in any environment. Our Team and our balance sheet remain positioned for 2021."

Portfolio Update

As of December 31, 2020, the Company's growing portfolio consisted of 1,129 properties located in 46 states and totaled approximately 22.7 million square feet of gross leasable area.

The portfolio was approximately 99.5% leased, had a weighted-average remaining lease term of approximately 9.7 years, and generated 67.5% of annualized base rents from investment grade retail tenants.

COVID-19 Rental Payment Update

The Company has received second, third, and fourth quarter rent payments originally contracted for those quarters from 95%, 98% and 99% of its portfolio, respectively. The Company has also entered into deferral agreements representing 2%, 2% and less than 1% of second, third and fourth quarter rents, respectively, net of repayments received.

Ground Lease Portfolio

During the quarter, the Company acquired 16 ground leased assets for an aggregate purchase price of approximately $78.7 million, representing 19.4% of annualized base rents acquired.

As of December 31, 2020, the Company's ground lease portfolio consisted of 89 leases located in 27 states and totaled approximately 3.1 million square feet of gross leasable area. Properties ground leased to tenants increased to 9.6% of annualized base rents.

At year end, the ground lease portfolio was fully occupied, had a weighted-average remaining lease term of approximately 11.9 years, and generated 92.3% of annualized base rents from investment grade retail tenants.

Acquisitions

Total acquisition volume for the fourth quarter of 2020 was approximately $355.6 million and included 100 properties net leased to leading retailers operating in sectors including off-price retail, home improvement, auto parts, general merchandise, dollar stores, convenience stores, farm and rural supply, grocery stores and tire and auto service. The properties are located in 33 states and leased to tenants operating in 18 sectors.

The properties were acquired at a weighted-average capitalization rate of 6.4% and had a weighted-average remaining lease term of approximately 11.6 years. Approximately 83.5% of annualized base rents acquired were generated from investment grade retail tenants.

For the twelve months ended December 31, 2020, total acquisition volume was approximately $1.31 billion. The 317 acquired properties are located in 39 states and leased to 45 tenants who operate in 20 retail sectors. The properties were acquired at a weighted-average capitalization rate of 6.4% and had a weighted-average remaining lease term of approximately 11.3 years. Approximately 83.6% of annualized base rents were generated from investment grade retail tenants. Approximately 12.2% of annualized base rents acquired were derived from ground leased assets.

The Company's outlook for acquisition volume in 2021, which includes several significant assumptions, remains between $800 million and $1.0 billion of high-quality retail net lease properties.

Dispositions

During the fourth quarter, the Company sold one property for gross proceeds of approximately $1.8 million. The disposition was completed at a capitalization rate of 7.2%. During the twelve months ended December 31, 2020, the Company divested 17 properties for total gross proceeds of $49.4 million. The weighted-average capitalization rate of the dispositions was 7.1%.

The Company's disposition guidance for 2021 remains between $25 million and $75 million.

Development and Partner Capital Solutions

In the fourth quarter, the Company completed three previously announced development and PCS projects, including the Company's second development with Harbor Freight Tools in Weslaco, Texas, and the Company's first development projects with O'Reilly Auto Parts and Tire Discounters.

During the quarter, the Company commenced two new development and PCS projects, with total anticipated costs of approximately $6.2 million. The projects consist of a Burlington in Texarkana, Texas, and a Gerber Collision in Buford, Georgia.

Construction continued during the fourth quarter on the Company's first development with Grocery Outlet in Port Angeles, Washington, which is expected to be completed in the second quarter of 2021.

For the twelve months ended December 31, 2020, the Company had 12 development or PCS projects completed or under construction. Anticipated total costs are approximately $43.2 million and include the following projects:

Actual or Lease LeaseTenant Location Anticipated Rent Status Structure Term Commencement

ALDI Frankfort, KY Build-to-Suit 10 years Q4 2019 Complete

Harbor Freight Tools Frankfort, KY Build-to-Suit 10 years Q4 2019 Complete

Big Lots Frankfort, KY Build-to-Suit 10 years Q1 2020 Complete

Tractor Supply Hart, MI Build-to-Suit 10 years Q1 2020 Complete

Sunbelt Rentals Converse, TX Build-to-Suit 10 years Q1 2020 Complete

Family Dollar Grayling, MI Build-to-Suit 7 Years Q2 2020 Complete

TJ Maxx Harlingen, TX Build-to-Suit 10 years Q3 2020 Complete

Burlington Columbus, OH Build-to-Suit 10 years Q3 2020 Complete

Tractor Supply Columbus, OH Build-to-Suit 10 years Q3 2020 Complete

Harbor Freight Tools Weslaco, TX Build-to-Suit 15 Years Q4 2020 Complete

O'Reilly Auto Parts Mayflower, AR Build-to-Suit 10 years Q4 2020 Complete

Tire Discounters Westerville, OH Build-to-Suit 15 Years Q4 2020 Complete

Grocery Outlet Port Angeles, WA Build-to-Suit 15 years Q2 2021 Under Construction

Burlington Texarkana, TX Build-to-Suit 11 years Q2 2021 Under Construction

Gerber Collision Buford, GA Build-to-Suit 15 years Q2 2021 Under Construction

Leasing Activity and Expirations

During the fourth quarter, the Company executed new leases, extensions or options on approximately 83,000 square feet of gross leasable area.

For the twelve months ended December 31, 2020, the Company executed new leases, extensions or options on approximately 518,000 square feet of gross leasable area. Notable new leases, extensions or options included new twenty-year leases on three Wawa convenience stores located in the Mid-Atlantic, an approximately 44,000-square foot Dick's Sporting Goods in Boynton Beach, Florida, and an approximately 38,000-square foot Giant Eagle in Ligonier, Pennsylvania.

As of December 31, 2020, the Company's 2021 lease maturities represented 0.9% of annualized base rents. The following table presents contractual lease expirations within the Company's portfolio as of December 31, 2020, assuming no tenants exercise renewal options:

Percent of Annualized Gross Percent of GrossYear Leases Annualized Leasable Area Leasable Area Base Rent^(1) Base Rent

2021 16 2,594 0.9% 163 0.7%

2022 19 3,726 1.3% 344 1.5%

2023 42 8,236 2.9% 942 4.2%

2024 41 14,195 4.9% 1,623 7.2%

2025 64 15,410 5.4% 1,509 6.7%

2026 82 16,280 5.7% 1,589 7.0%

2027 81 17,989 6.3% 1,375 6.1%

2028 84 20,566 7.2% 1,797 8.0%

2029 110 32,814 11.4% 2,913 12.9%

2030 185 33,624 11.7% 2,661 11.8%

Thereafter 492 122,000 42.3% 7,647 33.9%

Total 1,216 $287,434 100.0% 22,563 100.0%Portfolio

The contractual lease expirations presented above exclude the effect of replacement tenant leases that had been executed as of December 31, 2020 but that had not yet commenced. Annualized Base Rent and gross leasable area (square feet) are in thousands; any differences are the result of rounding.

Annualized Base Rent represents the annualized amount of contractual minimum rent required by tenant lease agreements as of December 31, 2020, computed on a straight-line basis. Annualized Base Rent is not, and is not(1) intended to be, a presentation in accordance with generally accepted accounting principles ("GAAP"). The Company believes annualized contractual minimum rent is useful to management, investors, and other interested parties in analyzing concentrations and leasing activity.

Top Tenants

The Company added Wawa to its top tenants during the fourth quarter of 2020. The following table presents annualized base rents for all tenants that represent 1.5% or greater of the Company's total annualized base rent as of December 31, 2020:

Tenant Annualized Percent of Base Rent^(1) Annualized Base Rent

Walmart $21,089 7.3%

Dollar General 12,545 4.4%

Tractor Supply 12,457 4.3%

Best Buy 10,493 3.7%

TJX Companies 10,450 3.6%

Sherwin-Williams 10,077 3.5%

O'Reilly Auto Parts 9,411 3.3%

Hobby Lobby 7,631 2.7%

TBC Corporation 6,948 2.4%

Lowe's 6,901 2.4%

Home Depot 6,841 2.4%

Walgreens 6,594 2.3%

Burlington 6,526 2.3%

CVS 6,421 2.2%

Dollar Tree 6,216 2.2%

Kroger 5,919 2.1%

Wawa 5,536 1.9%

AutoZone 5,268 1.8%

LA Fitness 5,091 1.8%

Sunbelt Rentals 4,992 1.7%

Other^(2) 120,028 41.7%

Total Portfolio $287,434 100.0%

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

Bolded and italicized tenants represent additions for the three months ended December 31, 2020.

(1) Refer to footnote 1 on page 5 for the Company's definition of Annualized Base Rent.

(2) Includes tenants generating less than 1.5% of Annualized Base Rent.

Retail Sectors

The following table presents annualized base rents for all of the Company's retail sectors as of December 31, 2020:

Annualized Percent of Q4 2020 RentSector Base Rent^(1) Annualized Payments Base Rent Received^(2)

Home Improvement $28,208 9.8% 100%

Grocery Stores 23,794 8.3% 100%

Tire and Auto Service 23,257 8.1% 100%

General Merchandise 20,958 7.3% 100%

Convenience Stores 19,904 6.9% 100%

Off-Price Retail 19,188 6.7% 100%

Auto Parts 17,882 6.2% 100%

Dollar Stores 17,552 6.1% 100%

Pharmacy 13,835 4.8% 100%

Farm and Rural Supply 13,408 4.7% 100%

Consumer Electronics 12,051 4.2% 100%

Crafts and Novelties 9,835 3.4% 100%

Health and Fitness 7,077 2.5% 97%

Home Furnishings 5,485 1.9% 100%

Restaurants - Quick Service 5,363 1.9% 99%

Equipment Rental 5,318 1.9% 100%

Health Services 5,271 1.8% 100%

Warehouse Clubs 4,988 1.7% 100%

Specialty Retail 4,862 1.7% 94%

Dealerships 4,820 1.7% 100%

Discount Stores 4,565 1.6% 99%

Theaters 3,854 1.3% 76%

Entertainment Retail 3,117 1.1% 100%

Pet Supplies 2,597 0.9% 100%

Restaurants - Casual Dining 2,314 0.8% 89%

Sporting Goods 2,020 0.7% 100%

Financial Services 2,001 0.7% 100%

Apparel 1,260 0.4% 99%

Shoes 1,019 0.4% 83%

Beauty and Cosmetics 878 0.3% 100%

Office Supplies 659 0.2% 100%

Miscellaneous 94 0.0% 99%

Total Portfolio $287,434 100.0% 99%

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

(1) Refer to footnote 1 on page 5 for the Company's definition of Annualized Base Rent.

Reflects the contractual rent paid as a percentage of the total contractual rent due for the three months ended December 31, 2020 for each respective sector. Beginning in 2020, the Company began providing supplemental disclosures due to the COVID-19 pandemic. "Contractual rent" for any period(2) means the recurring cash amount charged to tenants, inclusive of monthly base rent and recurring operating cost reimbursements due pursuant to lease agreements, for such period. "Contractual rent" has not been adjusted for any temporary rent relief granted and includes amounts charged to tenants in bankruptcy.

Geographic Diversification

The following table presents annualized base rents for all states that represent 2.5% or greater of the Company's total annualized base rent as of December 31, 2020:

State Annualized Percent of Base Rent^(1) Annualized Base Rent

Texas $22,207 7.7%

Michigan 19,447 6.8%

North Carolina 16,296 5.7%

Ohio 16,231 5.6%

Florida 15,457 5.4%

Illinois 14,521 5.1%

Pennsylvania 12,053 4.2%

New Jersey 11,145 3.9%

Georgia 10,717 3.7%

California 10,577 3.7%

New York 9,437 3.3%

Wisconsin 9,283 3.2%

Virginia 8,397 2.9%

Missouri 8,177 2.8%

Mississippi 7,404 2.6%

Louisiana 7,304 2.5%

Other^(2) 88,781 30.9%

Total Portfolio $287,434 100.0%

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

(1) Refer to footnote 1 on page 5 for the Company's definition of Annualized Base Rent.

(2) Includes states generating less than 2.5% of Annualized Base Rent.

Capital Markets and Balance Sheet

Capital Markets

During 2020, the Company executed numerous capital markets transactions to fund strategic growth and maintain a fortified balance sheet:

* On March 30, 2020, the Company settled 1,400,251 shares under forward sale agreements entered into through its ATM program and received net proceeds of approximately $104.6 million. * On April 2, 2020, the Company completed a follow-on public offering of 2,875,000 shares of common stock, including the underwriters' overallotment option, at a public offering price of $61.00 per share. Upon closing, the Company received net proceeds of approximately $170.4 million. * On April 22, 2020, the Company settled 3,976,695 shares under forward sale agreements entered into through its ATM program and received net proceeds of approximately $267.4 million. * On April 22, 2020, the Company closed an underwritten public offering of 6,166,666 shares of its common stock (the "April 2020 Forward Offering") in connection with a forward sale agreement in which the shares were sold to Cohen & Steers Capital Management, Inc. at a price of $60.00 per share. * During the second quarter of 2020, the Company entered into forward sale agreements in connection with its ATM program to sell an aggregate of 742,860 shares of common stock at a weighted-average gross price of $66.61 per share. * On August 17, 2020, the Company completed its inaugural public bond offering of $350.0 million of 2.90% senior unsecured notes due 2030 (the "Notes"). The public offering price for the Notes was 99.93% of the principal amount for an effective yield to maturity of 2.91%. The Notes are senior unsecured obligations of Agree Limited Partnership (the "Operating Partnership"), guaranteed by the Company and certain of their subsidiary guarantors. * During the third quarter of 2020, the Company entered into forward sale agreements in connection with its ATM program to sell an aggregate of 885,912 shares of common stock at a weighted-average gross price of $67.47 per share. * On September 28, 2020, the Company settled 1,515,000 shares under the April 2020 Forward Offering and received net proceeds of approximately $88.0 million. * During the fourth quarter of 2020, the Company entered into forward sale agreements in connection with its ATM program to sell an aggregate of 1,501,210 shares of common stock at a weighted-average gross price of $66.85 per share. * On December 28, 2020, the Company settled the remaining 4,651,666 shares under the April 2020 Forward Offering and received net proceeds of approximately $266.7 million.

In January 2021, Company completed a follow-on public offering of 3,450,000 shares of common stock, including the underwriters' option to purchase additional shares. Upon closing, the Company received total net proceeds of approximately $221.6 million.

At year end, the Company had 3,129,982 shares remaining to be settled under existing forward sale agreements, which are anticipated to raise net proceeds of approximately $203.2 million after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreements.

The following table presents the Company's outstanding forward equity offerings as of December 31, 2020:

Anticipated Net Shares Shares Shares NetForward Equity Offerings Proceeds Sold Settled Remaining Proceeds Received Remaining

Q2 2020 ATM Forward 742,860 - 742,860 - $47,255,448Offerings

Q3 2020 ATM Forward 885,912 - 885,912 - $57,737,161Offerings

Q4 2020 ATM Forward 1,501,210 - 1,501,210 - $98,218,182Offerings

Total Forward Equity 3,129,982 - 3,129,982 - $203,210,791Offerings

Balance Sheet

As of December 31, 2020, the Company's net debt to recurring EBITDA was 4.8 times and its fixed charge coverage ratio was 4.8 times. The Company's proforma net debt to recurring EBITDA was 4.0 times when deducting the $203.2 million of anticipated net proceeds from the outstanding forward equity offerings from the Company's net debt of $1.2 billion as of December 31, 2020.

The Company's total debt to enterprise value was 23.4% as of December 31, 2020. Enterprise value is calculated as the sum of net debt and the market value of the Company's outstanding shares of common stock, assuming conversion of Operating Partnership units into common stock.

For the three and twelve months ended December 31, 2020, the Company's fully diluted weighted-average shares outstanding were 56.1 million and 52.4 million, respectively. The basic weighted-average shares outstanding for the three and twelve months ended December 31, 2020 were 55.4 million and 51.8 million, respectively.

For the three and twelve months ended December 31, 2020, the Company's fully diluted weighted-average shares and units outstanding were 56.4 million and 52.7 million, respectively. The basic weighted-average shares and units outstanding for the three and twelve months ended December 31, 2020 were 55.7 million and 52.2 million, respectively.

The Company's assets are held by, and its operations are conducted through, the Operating Partnership, of which the Company is the sole general partner. As of December 31, 2020, there were 347,619 Operating Partnership units outstanding and the Company held a 99.4% interest in the Operating Partnership.

Conference Call/Webcast

The Company will host its quarterly analyst and investor conference call on Friday, February 19, 2021 at 9:00 AM ET. To participate in the conference call, please dial (866) 363-3979 approximately ten minutes before the call begins.

Additionally, a webcast of the conference call will be available through the Company's website. To access the webcast, visit www.agreerealty.com ten minutes prior to the start time of the conference call and go to the Investors section of the website. A replay of the conference call webcast will be archived and available online through the Investors section of www.agreerealty.com.

About Agree Realty Corporation

Agree Realty Corporation is a publicly traded real estate investment trust primarily engaged in the acquisition and development of properties net leased to industry-leading retail tenants. As of December 31, 2020, the Company owned and operated a portfolio of 1,129 properties, located in 46 states and containing approximately 22.7 million square feet of gross leasable area. The Company's common stock is listed on the New York Stock Exchange under the symbol "ADC". For additional information, please visit www.agreerealty.com.

Forward-Looking Statements

This press release contains forward-looking statements, including statements about projected financial and operating results,within the meaning ofSection 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions.Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "seek," "anticipate," "estimate," "approximately," "believe," "could," "project," "predict," "forecast," "continue," "assume," "plan," "outlook" or other similar words or expressions. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. Although these forward-looking statements are based on good faith beliefs, reasonable assumptions and the Company's best judgment reflecting current information, you should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company's control and which could materially affect the Company's results of operations, financial condition, cash flows, performance or future achievements or events. Currently, one of the most significant factors, however, is the potential adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on the financial condition, results of operations, cash flows and performance of the Company and its tenants, the real estate market and the global economy and financial markets. The extent to which COVID-19 impacts the Company and its tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, investors are cautioned to interpret many of the risks identified in the risk factors discussed in the Company's Annual Report on Form 10-K and subsequent quarterly reports filed with the Securities and Exchange Commission (the "SEC"), as well as the risks set forth below, as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19. Additional important factors, among others, that may cause the Company's actual results to vary include the general deterioration in national economic conditions, weakening of real estate markets, decreases in the availability of credit, increases in interest rates, adverse changes in the retail industry, the Company's continuing ability to qualify as a REIT and other factors discussed in the Company's reports filed with the SEC. The forward-looking statements included in this press release are made as of the date hereof. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events, changes in the Company's expectations or assumptions or otherwise.

For further information about the Company's business and financial results, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of the Company's SEC filings, including, but not limited to, its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which may be obtained at the Investor Relations section of the Company's website at www.agreerealty.com.

The Company defines the "weighted-average capitalization rate" for acquisitions and dispositions as the sum of contractual fixed annual rents computed on a straight-line basis over the primary lease terms and anticipated annual net tenant recoveries, divided by the purchase and sale prices.

Agree Realty Corporation

Consolidated Balance Sheet

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

(Unaudited)

December 31, 2020 December 31, 2019

Assets:

Real EstateInvestments:

Land $ 1,094,550 $ 735,991

Buildings 2,371,553 1,600,293

Accumulated (172,577) (127,748)depreciation

Property under 10,653 10,056development

Net real estate 3,304,179 2,218,592investments

Real estate held 1,199 3,750for sale, net

Cash and cash 6,137 15,603equivalents

Cash held in 1,818 26,554escrows

Accountsreceivable - 37,808 26,808tenants

Leaseintangibles, netof accumulatedamortization of$125,995 and$89,118 at 473,592 343,514December 31,2020 andDecember 31,2019,respectively

Other assets, 61,450 29,709net

Total Assets $ 3,886,183 $ 2,664,530

Liabilities:

Mortgage notes $ 33,122 $ 36,698payable, net

Unsecured term 237,849 237,403loans, net

Senior unsecured 855,328 509,198notes, net

Unsecuredrevolving credit 92,000 89,000facility

Dividends anddistributions 34,545 25,014payable

Accountspayable, accruedexpenses and 71,390 48,987otherliabilities

Leaseintangibles, netof accumulatedamortization of$24,651 and$19,307 at 35,700 26,668December 31,2020 andDecember 31,2019,respectively

Total $ 1,359,934 $ 972,968Liabilities

Equity:

Common stock,$.0001 parvalue,90,000,000sharesauthorized,60,021,483 and45,573,623 $ 6 $ 5shares issuedand outstandingat December 31,2020 andDecember 31,2019,respectively

Preferred stock,$.0001 par valueper share, - -4,000,000 sharesauthorized

Additional 2,652,090 1,752,912paid-in capital

Dividends inexcess of net (91,343) (57,094)income

Accumulatedother (36,266) (6,492)comprehensiveincome (loss)

Total Equity -Agree Realty $ 2,524,487 $ 1,689,331Corporation

Non-controlling 1,762 2,231interest

Total Equity $ 2,526,249 $ 1,691,562

TotalLiabilities and $ 3,886,183 $ 2,664,530Equity

Agree Realty Corporation

Consolidated Statements of Operations and Comprehensive Income

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

(Unaudited)

Three months ended Twelve months ended December 31, December 31,

2020 2019 2020 2019

Revenues

Rental Income $ 71,349 $ 52,039 $ 248,309 $ 187,279

Other 65 96 259 199

Total Revenues $ 71,414 $ 52,135 $ 248,568 $ 187,478

OperatingExpenses

Real estate $ 6,370 $ 4,504 $ 21,428 $ 15,520taxes

Propertyoperating 2,720 1,916 9,023 6,749expenses

Land lease 325 320 1,301 1,242expense

General and 6,793 3,820 20,793 15,566administrative

Depreciationand 19,691 13,106 66,758 45,703amortization

Provision for 141 - 4,137 1,609impairment

Total Operating $ 36,040 $ 23,666 $ 123,440 $ 86,389Expenses

Income from $ 35,374 $ 28,469 $ 125,128 $ 101,089Operations

Other (Expense)Income

Interest $ (11,791) $ (9,730) $ (40,097) $ (33,094)expense, net

Gain (loss) onsale of assets, 437 4,333 8,004 13,306net

Income tax(expense) (260) (328) (1,086) (538)benefit

Other (expense) - - 23 -income

Net Income $ 23,760 $ 22,744 $ 91,972 $ 80,763

Less Net IncomeAttributable to 147 185 591 682Non-ControllingInterest

Net IncomeAttributable to $ 23,613 $ 22,559 $ 91,381 $ 80,081Agree RealtyCorporation

Net Income PerShareAttributable toAgree RealtyCorporation

Basic $ 0.43 $ 0.53 $ 1.76 $ 1.96

Diluted $ 0.42 $ 0.52 $ 1.74 $ 1.93

OtherComprehensiveIncome

Net Income $ 23,760 $ 22,744 $ 91,972 $ 80,763

Othercomprehensiveincome (loss) -change in fair 3,888 5,828 (29,996) (7,987)value andsettlement ofinterest rateswaps

TotalComprehensive 27,648 28,572 61,976 72,776Income (Loss)

ComprehensiveIncomeAttributable to (182) (502) (369) (611)Non-ControllingInterest

ComprehensiveIncomeAttributable to $ 27,466 $ 28,070 $ 61,607 $ 72,165Agree RealtyCorporation

WeightedAverage Numberof Common 55,397,190 42,287,660 51,838,219 40,577,346SharesOutstanding -Basic

WeightedAverage Numberof Common 56,063,758 42,996,318 52,396,734 41,223,614SharesOutstanding -Diluted

Agree Realty Corporation

Reconciliation of Net Income to FFO, Core FFO and Adjusted FFO

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

(Unaudited)

Three months ended Twelve months ended December 31, December 31,

2020 2019 2020 2019

Net Income $ 23,760 $ 22,744 $ 91,972 $ 80,763

Depreciationof rental 13,980 9,563 48,367 34,349real estateassets

Amortizationof leaseintangibles - 5,567 3,453 17,882 11,071in-placeleases andleasing costs

Provision for 141 - 4,137 1,609impairment

(Gain) losson sale of (437) (4,333) (8,004) (13,306)assets, net

Funds from $ 43,011 $ 31,427 $ 154,354 $ 114,486Operations

Amortizationof above(below) 4,333 3,618 15,885 13,501market leaseintangibles,net

Core Fundsfrom $ 47,344 $ 35,045 $ 170,239 $ 127,987Operations

Straight-line (2,204) (1,928) (7,818) (7,093)accrued rent

Deferred taxexpense - - - (475)(benefit)

Stock basedcompensation 1,524 1,134 4,995 4,106expense

Amortizationof financing 266 165 826 706costs

Non-realestate 144 89 509 283depreciation

AdjustedFunds from $ 47,074 $ 34,505 $ 168,751 $ 125,514Operations

Funds fromOperations $ 0.77 $ 0.74 $ 2.96 $ 2.80Per Share -Basic

Funds fromOperations $ 0.76 $ 0.73 $ 2.93 $ 2.75Per Share -Diluted

Core FundsfromOperations $ 0.85 $ 0.82 $ 3.26 $ 3.13Per Share -Basic

Core FundsfromOperations $ 0.84 $ 0.81 $ 3.23 $ 3.08Per Share -Diluted

AdjustedFunds fromOperations $ 0.84 $ 0.81 $ 3.23 $ 3.07Per Share -Basic

AdjustedFunds fromOperations $ 0.83 $ 0.80 $ 3.20 $ 3.02Per Share -Diluted

WeightedAverageNumber ofCommon Shares 55,744,809 42,635,279 52,185,838 40,924,965and UnitsOutstanding -Basic

WeightedAverageNumber ofCommon Shares 56,411,377 43,343,937 52,744,353 41,571,233and UnitsOutstanding -Diluted

Additionalsupplementaldisclosure

Scheduledprincipal $ 208 $ 251 $ 907 $ 2,401repayments

Capitalized 63 89 172 410interest

Capitalizedbuilding 2,333 1,251 5,581 2,451improvements

Contractualrents subject 263 - 2,133 -to deferral^(1)

Uncollectedcontractualrents not 89 - 2,069 -subject todeferral^(1)

(1) Beginning in the second quarter of 2020, the Company began providingsupplemental disclosures due to the COVID-19 pandemic. "Contractual rent" forany period means the recurring cash amount charged to tenants, inclusive ofmonthly base rent and recurring operating cost reimbursements due pursuant tolease agreements, for such period. "Contractual rents subject to deferral" arepresented net of amounts repaid under deferral agreements. "Uncollectedcontractual rents not subject to deferral" as used within this table excluderents that have been deemed uncollectible for purposes of ASC 842. Rents deemeduncollectible are excluded from the reported net income and funds fromoperations measures in the reconciliation above.

Non-GAAP Financial Measures

Funds from Operations ("FFO" or "Nareit FFO")

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

Core Funds from Operations ("Core FFO")

The Company defines Core FFO as Nareit FFO with the addback of noncashamortization of above- and below- market lease intangibles. Under Nareit'sdefinition of FFO, lease intangibles created upon acquisition of a net leasemust be amortized over the remaining term of the lease. The Company believesthat by recognizing amortization charges for above- and below-market leaseintangibles, the utility of FFO as a financial performance measure can bediminished. Management believes that its measure of Core FFO facilitatesuseful comparison of performance to its peers who predominantly transact insale-leaseback transactions and are thereby not required by GAAP to allocatepurchase price to lease intangibles. Unlike many of its peers, the Company hasacquired the substantial majority of its net leased properties throughacquisitions of properties from third parties or in connection with theacquisitions of ground leases from third parties. Core FFO should not beconsidered an alternative to net income as the primary indicator of theCompany's operating performance, or as an alternative to cash flow as a measureof liquidity. Further, the Company's presentation of Core FFO is notnecessarily comparable to similarly titled measures of other REITs due to thefact that all REITs may not use the same definition.

Adjusted Funds from Operations ("AFFO")

AFFO is a non-GAAP financial measure of operating performance used by manycompanies in the REIT industry. AFFO further adjusts FFO and Core FFO forcertain non-cash and/or infrequently recurring items that reduce or increasenet income computed in accordance with GAAP. Management considers AFFO a usefulsupplemental measure of the Company's performance, however, AFFO should not beconsidered an alternative to net income as an indication of its performance, orto cash flow as a measure of liquidity or ability to make distributions. TheCompany's computation of AFFO may differ from the methodology for calculatingAFFO used by other equity REITs, and therefore may not be comparable to suchother REITs.

Agree Realty Corporation

Reconciliation of Net Debt to Recurring EBITDA

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

(Unaudited)

Three months ended December 31,

2020

Net Income $ 23,760

Interest expense, net 11,791

Income tax expense 260

Depreciation of rental real estate assets 13,980

Amortization of lease intangibles - in-place leases and leasing costs 5,567

Non-real estate depreciation 144

Provision for impairment 141

(Gain) loss on sale of assets, net (437)

EBITDAre $ 55,206

Run-Rate Impact of Investment, Disposition and Leasing Activity $ 3,973

Amortization of above (below) market lease intangibles, net 4,333

Recurring EBITDA $ 63,512

Annualized Recurring EBITDA $ 254,048

Total Debt $ 1,225,433

Cash, cash equivalents and cash held in escrows (7,955)

Net Debt $ 1,217,478

Net Debt to Recurring EBITDA 4.8x

Net Debt $ 1,217,478

Anticipated Net Proceeds from ATM Forward Offerings (203,211)

Proforma Net Debt $ 1,014,267

Proforma Net Debt to Recurring EBITDA 4.0x

Non-GAAP Financial Measures

EBITDAre

EBITDAre is defined by Nareit to mean net income computed in accordance withGAAP, plus interest expense, income tax expense, depreciation and amortization,any gains (or losses) from sales of real estate assets and/or changes incontrol, any impairment charges on depreciable real estate assets, and afteradjustments for unconsolidated partnerships and joint ventures. The Companyconsiders the non-GAAP measure of EBITDAre to be a key supplemental measure ofthe Company's performance and should be considered along with, but not as analternative to, net income or loss as a measure of the Company's operatingperformance. The Company considers EBITDAre a key supplemental measure of theCompany's operating performance because it provides an additional supplementalmeasure of the Company's performance and operating cash flow that is widelyknown by industry analysts, lenders and investors. The Company's calculation ofEBITDAre may not be comparable to EBITDAre reported by other REITs thatinterpret the Nareit definition differently than the Company.

Recurring EBITDA

The Company defines Recurring EBITDA as EBITDAre with the addback of noncashamortization of above- and below- market lease intangibles, and afteradjustments for the run-rate impact of the Company's investment and dispositionactivity for the period presented, as well as adjustments for non-recurringbenefits or expenses. The Company considers the non-GAAP measure of RecurringEBITDA to be a key supplemental measure of the Company's performance and shouldbe considered along with, but not as an alternative to, net income or loss as ameasure of the Company's operating performance. The Company considers RecurringEBITDA a key supplemental measure of the Company's operating performancebecause it represents the Company's earnings run rate for the period presentedand because it is widely followed by industry analysts, lenders and investors. Our Recurring EBITDA may not be comparable to Recurring EBITDA reported byother companies that have a different interpretation of the definition ofRecurring EBITDA. Our ratio of net debt to Recurring EBITDA is used bymanagement as a measure of leverage and may be useful to investors inunderstanding the Company's ability to service its debt, as well as assess theborrowing capacity of the Company. Our ratio of net debt to Recurring EBITDAis calculated by taking annualized Recurring EBITDA and dividing it by our netdebt per the consolidated balance sheet.

Net Debt

The Company defines Net Debt as total debt less cash, cash equivalents and cashheld in escrows. The Company considers the non-GAAP measure of Net Debt to be akey supplemental measure of the Company's overall liquidity, capital structureand leverage. The Company considers Net Debt a key supplemental measure becauseit provides industry analysts, lenders and investors useful information inunderstanding our financial condition. The Company's calculation of Net Debtmay not be comparable to Net Debt reported by other REITs that interpret thedefinition differently than the Company. The Company presents Net Debt on bothan actual and proforma basis, assuming the net proceeds of the ATM ForwardOfferings (see below) are used to pay down debt. The Company believes theproforma measure may be useful to investors in understanding the potentialeffect of the ATM Forward Offerings on the Company's capital structure, itsfuture borrowing capacity, and its ability to service its debt.

ATM Forward Offerings

The Company has 3,129,982 shares remaining to be settled under the ATM ForwardOfferings. Upon settlement, the offerings are anticipated to raise net proceedsof approximately $203.2 million based on the applicable forward sale prices asof December 31, 2020. The applicable forward sale price varies depending on theoffering. The Company is contractually obligated to settle the ATM ForwardOfferings by certain dates between May 2021 and December 2021.

Agree Realty Corporation

Rental Income

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

(Unaudited)

Three months ended Twelve months ended December 31, December 31,

2020 2019 2020 2019

Rental Income Source^(1)

Minimum rents^(2) $ 65,333 $ 47,759 $ 228,122 $ 172,548

Percentage rents^(2) - 50 249 336

Operating cost reimbursement^(2) 8,145 5,920 28,005 20,803

Straight-line rental adjustments^(3) 2,204 1,928 7,818 7,093

Amortization of (above) below market (4,333) (3,618) (15,885) (13,501)lease intangibles^(4)

Total Rental Income $ 71,349 $ 52,039 $ 248,309 $ 187,279

(1) The Company adopted Financial Accounting Standards Board AccountingStandards Codification ("FASB ASC") 842 "Leases" using the modifiedretrospective approach as of January 1, 2019. The Company adopted thepractical expedient in FASB ASC 842 that alleviates the requirement toseparately present lease and non-lease components of lease contracts. As aresult, all income earned pursuant to tenant leases is reflected as one line,"Rental Income," in the consolidated statement of operations. The purpose ofthis table is to provide additional supplementary detail of Rental Income.

(2) Represents contractual rentals and/or reimbursements as required by tenantlease agreements, recognized on an accrual basis of accounting. The Companybelieves that the presentation of contractual lease income is not, and is notintended to be, a presentation in accordance with GAAP. The Company believesthis information is frequently used by management, investors, analysts andother interested parties to evaluate the Company's performance.

(3) Represents adjustments to recognize minimum rents on a straight-linebasis, consistent with the requirements of FASB ASC 842.

(4) In allocating the fair value of an acquired property, above- andbelow-market lease intangibles are recorded based on the present value of thedifference between the contractual amounts to be paid pursuant to the leases atthe time of acquisition and the Company's estimate of current market leaserates for the property. Effective in 2019, the Company began classifyingamortization of above- and below-market lease intangibles as a net reduction ofrental income.

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SOURCE Agree Realty Corporation