PR Newswire | Jul 20, 2020 04:06PM EDT

07/20 15:05 CDT

Agree Realty Corporation Reports Record Second Quarter 2020 ResultsINCREASES 2020 ACQUISITION GUIDANCE TO $900 MILLION TO $1.1 BILLION BLOOMFIELD HILLS, Mich., July 20, 2020

BLOOMFIELD HILLS, Mich., July 20, 2020 /PRNewswire/ -- Agree Realty Corporation (NYSE: ADC) (the "Company") today announced results for the quarter ended June 30, 2020. All per share amounts included herein are on a diluted per common share basis unless otherwise stated.

Second Quarter 2020 Financial and Operating Highlights:

* Invested a record $275.6 million in 78 retail net lease properties * Net Income per share attributable to the Company increased 4.7% to $0.47 * Net Income attributable to the Company increased 36.1% to $25.3 million * Increased Core Funds from Operations ("Core FFO") per share 2.1% to $0.76 * Increased Core FFO 32.0% to $40.9 million * Increased Adjusted Funds from Operations ("AFFO") per share 3.0% to $0.76 * Increased AFFO 33.1% to $40.7 million * Declared a quarterly dividend of $0.60 per share, a 5.3% year-over-year increase * Completed forward equity offering in which 6,166,666 shares were sold to Cohen & Steers Capital Management, Inc. via an underwritten public offering at $60.00 per share, raising anticipated net proceeds of $362.7 million * Sold 742,860 shares of common stock via the forward component of the Company's at-the-market equity ("ATM") program for anticipated net proceeds of $48.4 million * Settled 3,976,695 shares of the Company's outstanding ATM forward equity offerings for net proceeds of approximately $267.4 million

First Half 2020 Financial and Operating Highlights:

* Invested a record $506.8 million in 132 retail net lease properties * Completed four development or Partner Capital Solutions ("PCS") projects * Net Income per share attributable to the Company increased 1.1% to $0.93 * Net Income attributable to the Company increased 25.9% to $46.5 million * Increased Core FFO per share 6.1% to $1.58 * Increased Core FFO 31.7% to $78.4 million * Increased AFFO per share 7.6% to $1.57 * Increased AFFO 33.6% to $77.9 million * Declared dividends of $1.185 per share, a 5.3% year-over-year increase * Received a BBB investment grade credit rating from S&P Global Ratings to accompany the Company's existing Baa2 investment grade credit rating from Moody's Investors Service

Financial Results

Net Income

Net Income attributable to the Company for the three months ended June 30, 2020 increased 36.1% to $25.3 million, compared to $18.6 million for the comparable period in 2019. Net Income per share attributable to the Company for the three months ended June 30, 2020 increased 4.7% to $0.47, compared to $0.45 per share for the comparable period in 2019.

Net Income attributable to the Company for the six months ended June 30, 2020 increased 25.9% to $46.5 million, compared to $36.9 million for the comparable period in 2019. Net income per share attributable to the Company for the six months ended June 30, 2020 increased 1.1% to $0.93, compared to $0.92 per share for the comparable period in 2019.

Core Funds from Operations

Core FFO for the three months ended June 30, 2020 increased 32.0% to $40.9 million, compared to Core FFO of $31.0 million for the comparable period in 2019. Core FFO per share for the three months ended June 30, 2020 increased 2.1% to $0.76, compared to Core FFO per share of $0.75 for the comparable period in 2019.

Core FFO for the six months ended June 30, 2020 increased 31.7% to $78.4 million, compared to Core FFO of $59.5 million for the comparable period in 2019. Core FFO per share for the six months ended June 30, 2020 increased 6.1% to $1.58, compared to Core FFO per share of $1.49 for the comparable period in 2019.

Adjusted Funds from Operations

AFFO for the three months ended June 30, 2020 increased 33.1% to $40.7 million, compared to AFFO of $30.6 million for the comparable period in 2019. AFFO per share for the three months ended June 30, 2020 increased 3.0% to $0.76, compared to AFFO per share of $0.74 for the comparable period in 2019.

AFFO for the six months ended June 30, 2020 increased 33.6% to $77.9 million, compared to AFFO of $58.3 million for the comparable period in 2019. AFFO per share for the six months ended June 30, 2020 increased 7.6% to $1.57, compared to AFFO per share of $1.45 for the comparable period in 2019.

Dividend

The Company paid a cash dividend of $0.60 per share on July 10, 2020 to stockholders of record on June 26, 2020, a 5.3% increase over the $0.570 quarterly dividend declared in the second quarter of 2019. The quarterly dividend represents payout ratios of approximately 79% of Core FFO per share and AFFO per share, respectively.

For the six months ended June 30, 2020, the Company declared dividends of $1.185 per share, a 5.3% increase over the dividends of $1.125 per share declared for the comparable period in 2019. The dividends represent payout ratios of approximately 75% of Core FFO per share and 76% of AFFO per share, respectively.

CEO Comments

"We are extremely pleased with our performance during the first half of the year as we executed on our strategy in an efficient and disciplined manner amidst the ongoing disruption caused by COVID-19," said Joey Agree, President and Chief Executive Officer. "Our rent collections of approximately 90% during the second quarter, as well as 94% to date in July, demonstrate the resiliency of our best-in-class portfolio. Given our record year-to-date investment activity and robust pipeline, we are increasing our full-year acquisition guidance to a range of $900 million to $1.1 billion. While increasing our acquisition guidance, we will continue to adhere to our rigorous underwriting standards and will maintain our fortress-like balance sheet during these uncertain times."

Portfolio Update

As of June 30, 2020, the Company's growing portfolio consisted of 936 properties located in 46 states and totaled approximately 18.4 million square feet of gross leasable area.

The portfolio was approximately 99.8% leased, had a weighted-average remaining lease term of approximately 9.7 years, and generated 61.0% of annualized base rents from investment grade retail tenants or parent entities thereof.

COVID-19 Rental Payment Update

As of July 17, 2020, the Company received April, May and June rent payments from 92%, 89% and 89% of its portfolio, respectively. In the aggregate, the Company received second quarter rent payments from 90% of its portfolio. The Company has entered into deferral agreements representing 1% of April rents, 4% of May rents and 5% of June rents. In the aggregate, the Company entered into deferral agreements representing 3% of second quarter rents.

The Company has received July rent payments from 94% of its portfolio and entered into deferral agreements with tenants representing 3% of July rents. The weighted-average deferral period for all deferral agreements entered into as of July 17, 2020 is approximately three months, with a weighted-average payback period of approximately nine months.

Ground Lease Portfolio

As of June 30, 2020, the Company's ground lease portfolio consisted of 69 properties located in 25 states and totaled approximately 2.2 million square feet of gross leasable area. Properties ground leased to tenants accounted for 8.0% of annualized base rents.

The ground lease portfolio was fully occupied, had a weighted-average remaining lease term of approximately 10.4 years, and generated 89.3% of annualized base rents from investment grade retail tenants or parent entities thereof.

Acquisitions

Total acquisition volume for the second quarter of 2020 was approximately $271.8 million and included 75 assets net leased to leading retailers operating in sectors including off-price retail, auto parts, general merchandise, dollar stores, convenience stores, grocery stores and tire and auto service. The properties are located in 26 states and leased to tenants operating in 11 sectors. The properties were acquired at a weighted-average capitalization rate of 6.5% and had a weighted-average remaining lease term of approximately 10.9 years. Approximately 79.4% of annualized base rents acquired were generated from investment grade retail tenants or parent entities thereof. Approximately 27% of the Company's second quarter acquisition volume was invested into seven assets leased to Walmart.

For the six months ended June 30, 2020, total acquisition volume was approximately $499.5 million. The 126 acquired properties are located in 33 states and leased to 24 diverse tenants who operate in 17 retail sectors. The properties were acquired at a weighted-average capitalization rate of 6.5% and had a weighted-average remaining lease term of approximately 11.0 years. Approximately 83.6% of annualized base rents were generated from investment grade retail tenants or parent entities thereof. Approximately 31% of the Company's year-to-date acquisition volume was invested into 13 assets leased to Walmart.

The Company's outlook for total acquisition volume in 2020, which includes several significant assumptions, is being increased to a range of $900 million to $1.1 billion from a previous range of $700 million to $800 million.

Dispositions

During the second quarter, the Company sold eight properties for gross proceeds of approximately $19.0 million. The dispositions were completed at a weighted-average capitalization rate of 6.3%. During the six months ended June 30, 2020, the Company divested 14 properties for total gross proceeds of $44.1 million. The weighted-average capitalization rate of the dispositions was 7.2%.

The Company is increasing the lower end of its total disposition guidance range for 2020 from $35 million to $50 million and is maintaining the upper end of the range at $75 million.

Development and Partner Capital Solutions

In the second quarter of 2020, the Company completed its first development with Family Dollar in Grayling, Michigan. The Company commenced one new development project during the second quarter. The project is the Company's second development with Harbor Freight Tools in Weslaco, Texas, and is expected to be completed in the fourth quarter of 2020.

Construction continued during the second quarter on the Company's first development with TJ Maxx in Harlingen, Texas, which is expected to be completed in the third quarter of 2020.

For the six months ended June 30, 2020, the Company had six development or PCS projects completed or under construction. Anticipated total costs are approximately $19.1 million and include the following projects:

Lease Lease Actual orTenant Location Structure Term Anticipated Rent Status Commencement

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

HarborFreight Frankfort, KY Build-to-Suit 10 years Q4 2019 CompleteTools

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

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

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

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

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

HarborFreight Weslaco, TX Build-to-Suit 15 Years Q4 2020 Under ConstructionTools

Leasing Activity and Expirations

During the second quarter, the Company executed new leases, extensions or options on approximately 92,000 square feet of gross leasable area throughout the existing portfolio. Notable new leases, extensions or options included the 20-year net lease with Loves Furniture at the former Art Van Furniture store in Canton, Michigan. The approximately 70,000 square foot space was delivered to Loves Furniture in June. Rent is anticipated to commence during the third quarter of 2020.

For the six months ended June 30, 2020, the Company executed new leases, extensions or options on approximately 272,000 square feet of gross leasable area throughout the existing portfolio.

As of June 30, 2020, the Company's 2020 lease maturities represented 0.1% of annualized base rents. The following table presents contractual lease expirations within the Company's portfolio as of June 30, 2020, assuming no tenants exercise renewal options:

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

2020 3 300 0.1% 59 0.3%

2021 24 4,448 1.9% 262 1.4%

2022 18 3,713 1.6% 340 1.9%

2023 41 8,046 3.4% 936 5.1%

2024 37 12,463 5.3% 1,408 7.7%

2025 57 14,085 6.0% 1,328 7.2%

2026 70 12,361 5.3% 1,187 6.5%

2027 73 16,936 7.2% 1,296 7.1%

2028 69 17,168 7.3% 1,481 8.1%

2029 96 29,851 12.7% 2,672 14.6%

Thereafter 531 115,224 49.2% 7,388 40.1%

Total 1,019 $234,595 100.0% 18,357 100.0%Portfolio



The contractual lease expirations presented above exclude the effect of replacement tenant leases that had been executed as of June 30, 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 June 30, 2020, computed on a straight-line basis. Annualized Base Rent is not, and is (1)not intended to be, a presentation in accordance with 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 Burlington to its top tenants during the second quarter of 2020. As of June 30, 2020, Mister Car Wash is no longer among the Company's top tenants. 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 June 30, 2020:

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

Walmart $17,894 7.6%

Sherwin-Williams 10,001 4.3%

Dollar General 9,280 4.0%

Best Buy 8,973 3.8%

TJX Companies 8,231 3.5%

Tractor Supply 7,950 3.4%

O'Reilly Auto Parts 7,565 3.2%

Walgreens 6,594 2.8%

TBC Corporation 6,088 2.6%

CVS 5,530 2.4%

Hobby Lobby 5,147 2.2%

LA Fitness 5,091 2.2%

Dollar Tree 5,036 2.1%

Lowe's 4,890 2.1%

Sunbelt Rentals 4,735 2.0%

Home Depot 4,549 1.9%

AutoZone 4,438 1.9%

Wawa 3,793 1.6%

Burlington 3,671 1.6%

Other^(2) 105,139 44.8%

Total Portfolio $234,595 100.0%



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

Bolded and italicized tenants represent additions for the three months ended June 30, 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 June 30, 2020:

Annualized Percent of Q2 2020 RentSector Base Rent^(1) Annualized Payments Base Rent Received^(2)

Home Improvement $22,665 9.7% 98%

Tire and Auto Service 17,898 7.6% 96%

General Merchandise 16,895 7.2% 99%

Grocery Stores 16,459 7.0% 100%

Convenience Stores 15,189 6.5% 100%

Off-Price Retail 14,114 6.0% 75%

Auto Parts 13,528 5.8% 100%

Dollar Stores 13,107 5.6% 100%

Pharmacy 12,944 5.5% 100%

Consumer Electronics 10,335 4.4% 100%

Farm and Rural Supply 8,901 3.8% 100%

Health and Fitness 7,499 3.2% 20%

Crafts and Novelties 7,309 3.1% 89%

Home Furnishings 5,611 2.4% 61%

Restaurants - Quick Service 5,267 2.2% 99%

Equipment Rental 5,061 2.2% 100%

Warehouse Clubs 4,988 2.1% 100%

Health Services 4,923 2.1% 100%

Specialty Retail 4,862 2.1% 72%

Discount Stores 4,182 1.8% 90%

Theaters 3,854 1.6% 71%

Entertainment Retail 3,117 1.3% 0%

Dealerships 3,112 1.3% 100%

Pet Supplies 2,597 1.1% 100%

Restaurants - Casual Dining 2,187 0.9% 85%

Financial Services 2,075 0.9% 100%

Sporting Goods 2,020 0.9% 100%

Apparel 1,271 0.5% 45%

Shoes 1,019 0.4% 55%

Beauty and Cosmetics 878 0.4% 100%

Office Supplies 659 0.3% 100%

Miscellaneous 69 0.1% 94%

Total Portfolio $234,595 100.0% 90%



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 June 30, 2020 for each respective sector. Beginning in 2020, the Company began providing (2)supplemental disclosures due to the COVID-19 pandemic. "Contractual rent" for any period 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.

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 June 30, 2020:

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

Michigan $18,362 7.8%

Texas 16,397 7.0%

Florida 14,356 6.1%

Illinois 12,859 5.5%

Pennsylvania 11,675 5.0%

Ohio 11,509 4.9%

North Carolina 9,641 4.1%

Georgia 8,889 3.8%

New Jersey 8,739 3.7%

Virginia 8,001 3.4%

New York 7,359 3.1%

Missouri 7,036 3.0%

Wisconsin 6,879 2.9%

Louisiana 6,357 2.7%

California 6,088 2.6%

Mississippi 5,915 2.5%

Other^(2) 74,533 31.9%

Total Portfolio $234,595 100.0%



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 the first quarter of 2020, the Company entered into forward sale agreements in connection with its ATM program to sell an aggregate of 3,373,828 shares of common stock at an average gross price of $69.00 per share.

On March 30, 2020, the Company settled 1,400,251 shares under forward sale agreements entered in 2019 and 2020 and received net proceeds of approximately $104.6 million. On April 22, 2020, the Company settled the remaining 3,976,695 shares under forward sale agreements entered in 2019 and 2020 and received net proceeds of approximately $267.4 million.

On March 30, 2020, the Company commenced 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. The follow-on public offering closed on April 2, 2020, and the Company received net proceeds of approximately $170.4 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. Upon settlement, the April 2020 Forward Offering is anticipated to raise net proceeds of approximately $362.7 million after deducting fees and expenses and making certain other adjustments as provided in the forward sale agreement.

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 an average gross price of $66.61 per share (the "ATM Forward Offerings"). Upon settlement, the ATM Forward Offerings are anticipated to raise net proceeds of approximately $48.4 million after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreements.

To date, the Company has not received any proceeds from the sale of shares under the April 2020 Forward Offering and the ATM Forward Offerings, which total 6,909,526 shares of common stock and are anticipated to raise net proceeds of approximately $411.1 million.

Balance Sheet

As of June 30, 2020, the Company's net debt to recurring EBITDA was 3.5 times and its fixed charge coverage ratio was 4.6 times. The Company's pro forma net debt to recurring EBITDA was 1.6 times when deducting the $362.7 million of anticipated net proceeds from the April 2020 Forward Offering and the $48.4 million of anticipated net proceeds from the ATM Forward Offerings from the Company's net debt of $747.5 million as of June 30, 2020.

The Company's total debt to enterprise value was 18.2% as of June 30, 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 six months ended June 30, 2020, the Company's fully diluted weighted-average shares outstanding were 53.3 million and 49.4 million, respectively. The basic weighted-average shares outstanding for the three and six months ended June 30, 2020 were 52.7 million and 49.1 million, respectively.

For the three and six months ended June 30, 2020, the Company's fully diluted weighted-average shares and units outstanding were 53.6 million and 49.8 million, respectively. The basic weighted-average shares and units outstanding for the three and six months ended June 30, 2020 were 53.1 million and 49.4 million, respectively.

The Company's assets are held by, and its operations are conducted through, Agree Limited Partnership, of which the Company is the sole general partner. As of June 30, 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 Tuesday, July 21, 2020 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 Invest section of the website. A replay of the conference call webcast will be archived and available online through the Invest 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 June 30, 2020, the Company owned and operated a portfolio of 936 properties, located in 46 states and containing approximately 18.4 million square feet of gross leasable area. The common stock of Agree Realty Corporation 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 for the year ended December 31, 2019 and other filings 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)

June 30, 2020 December 31, 2019

Assets:

Real Estate Investments:

Land $ 856,113 $ 735,991

Buildings 1,927,114 1,600,293

Accumulated depreciation (146,267) (127,748)

Property under 6,171 10,056development

Net real estate 2,643,131 2,218,592investments

Real estate held for sale, - 3,750net

Cash and cash equivalents 29,341 15,603

Cash held in escrows 7,043 26,554

Accounts receivable - 33,996 26,808tenants

Lease intangibles, net ofaccumulated amortizationof $105,296 and $89,118 at 368,812 343,514June 30, 2020 and December31, 2019, respectively

Other assets, net 29,319 29,709

Total Assets $ 3,111,642 $ 2,664,530

Liabilities:

Mortgage notes payable, $ 33,513 $ 36,698net

Unsecured term loans, net 237,274 237,403

Senior unsecured notes, 509,253 509,198net

Unsecured revolving credit - 89,000facility

Dividends and 32,519 25,014distributions payable

Accounts payable, accruedexpenses and other 80,088 48,987liabilities

Lease intangibles, net ofaccumulated amortizationof $21,758 and $19,307 at 33,019 26,668June 30, 2020 and December31, 2019, respectively

Total Liabilities $ 925,666 $ 972,968

Equity:

Common stock, $.0001 parvalue, 90,000,000 sharesauthorized, 53,851,092 and45,573,623 shares issued $ 5 $ 5and outstanding at June30, 2020 and December 31,2019, respectively

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

Additional paid-in capital 2,295,235 1,752,912

Dividends in excess of net (69,595) (57,094)income

Accumulated othercomprehensive income (41,544) (6,492)(loss)

Total Equity - Agree $ 2,184,101 $ 1,689,331Realty Corporation

Non-controlling interest 1,875 2,231

Total Equity $ 2,185,976 $ 1,691,562

Total Liabilities and $ 3,111,642 $ 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 Six months ended June 30, June 30,

2020 2019 2020 2019

Revenues

Rental Income $ 57,476 $ 44,875 $ 113,259 $ 87,219

Other 59 45 85 49

Total Revenues $ 57,535 $ 44,920 $ 113,344 $ 87,268

OperatingExpenses

Real estate $ 4,840 $ 3,720 $ 9,542 $ 7,342taxes

Propertyoperating 1,860 1,496 4,195 3,235expenses

Land lease 325 372 652 568expense

General and 4,587 3,880 9,244 7,914administrative

Depreciationand 15,607 10,836 29,740 20,700amortization

Provision for 1,128 1,193 1,128 1,609impairment

Total Operating $ 28,347 $ 21,497 $ 54,501 $ 41,368Expenses

Income from $ 29,188 $ 23,423 $ 58,843 $ 45,900Operations

Other (Expense)Income

Interest $ (8,479) $ (7,455) $ (18,149) $ (15,012)expense, net

Gain (loss) onsale of assets, 4,952 2,949 6,597 6,376net

Income tax(expense) (260) (195) (520) (26)benefit

Other (expense) 23 - 23 -income

Net Income $ 25,424 $ 18,722 $ 46,794 $ 37,238

Less Net IncomeAttributable to 166 158 308 327Non-ControllingInterest

Net IncomeAttributable to $ 25,258 $ 18,564 $ 46,486 $ 36,911Agree RealtyCorporation

Net Income PerShareAttributable toAgree RealtyCorporation

Basic $ 0.47 $ 0.45 $ 0.94 $ 0.94

Diluted $ 0.47 $ 0.45 $ 0.93 $ 0.92

OtherComprehensiveIncome

Net Income $ 25,424 $ 18,722 $ 46,794 $ 37,238

Changes in fairvalue of (2,244) (3,794) (35,269) (7,199)interest rateswaps

Realized gain(loss) onsettlement of (17) - (33) -interest rateswaps

TotalComprehensive 23,163 14,928 11,492 30,039Income (Loss)

ComprehensiveIncomeAttributable to (151) (125) (42) (264)Non-ControllingInterest

ComprehensiveIncomeAttributable to $ 23,012 $ 14,803 $ 11,450 $ 29,775Agree RealtyCorporation

WeightedAverage Numberof Common 52,726,230 40,612,372 49,082,616 39,058,743SharesOutstanding -Basic

WeightedAverage Numberof Common 53,266,740 41,141,659 49,423,546 39,745,337SharesOutstanding -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 Six months ended June 30, June 30,

2020 2019 2020 2019

Net Income $ 25,424 $ 18,722 $ 46,794 $ 37,238

Depreciationof rental 11,316 8,276 21,719 15,920real estateassets

Amortizationof leaseintangibles - 4,170 2,496 7,791 4,653in-placeleases andleasing costs

Provision for 1,128 1,193 1,128 1,609impairment

(Gain) losson sale of (4,952) (2,949) (6,597) (6,376)assets, net

Funds from $ 37,086 $ 27,738 $ 70,835 $ 53,044Operations

Amortizationof above(below) 3,779 3,225 7,588 6,501market leaseintangibles,net

Core Fundsfrom $ 40,865 $ 30,963 $ 78,423 $ 59,545Operations

Straight-line (1,681) (1,692) (3,319) (3,190)accrued rent

Deferred taxexpense - - - (475)(benefit)

Stock basedcompensation 1,224 1,026 2,238 1,939expense

Amortizationof financing 168 209 336 365costs

Non-realestate 121 64 230 127depreciation

AdjustedFunds from $ 40,697 $ 30,570 $ 77,908 $ 58,311Operations

Funds fromOperations $ 0.70 $ 0.68 $ 1.43 $ 1.35Per Share -Basic

Funds fromOperations $ 0.69 $ 0.67 $ 1.42 $ 1.32Per Share -Diluted

Core FundsfromOperations $ 0.77 $ 0.76 $ 1.59 $ 1.51Per Share -Basic

Core FundsfromOperations $ 0.76 $ 0.75 $ 1.58 $ 1.49Per Share -Diluted

AdjustedFunds fromOperations $ 0.77 $ 0.75 $ 1.58 $ 1.48Per Share -Basic

AdjustedFunds fromOperations $ 0.76 $ 0.74 $ 1.57 $ 1.45Per Share -Diluted

WeightedAverageNumber ofCommon Shares 53,073,849 40,959,991 49,430,235 39,406,362and UnitsOutstanding -Basic

WeightedAverageNumber ofCommon Shares 53,614,359 41,489,278 49,771,165 40,092,956and UnitsOutstanding -Diluted

Additionalsupplementaldisclosure

Scheduledprincipal $ 233 $ 745 $ 463 $ 1,607repayments

Capitalized 30 113 55 203interest

Capitalizedbuilding 1,361 926 2,276 960improvements

Contractualrents subject 1,941 - 1,941 -to deferral^(1)

Uncollectedcontractualrents not 3,527 - 3,527 -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. The Company is accounting for leaseconcessions related to COVID-19 as increases in its lease receivables as tenantpayments accrue and is continuing to recognize rental income.

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 June 30,

2020

Net Income $ 25,424

Interest expense, net 8,479

Income tax expense 260

Depreciation of rental real estate assets 11,316

Amortization of lease intangibles - in-place leases and leasing costs 4,170

Non-real estate depreciation 121

Provision for impairment 1,128

(Gain) loss on sale of assets, net (4,952)

EBITDAre $ 45,946

Run-Rate Impact of Investment, Disposition and Leasing Activity $ 3,015

Amortization of above (below) market lease intangibles, net 3,779

Other expense (income) (23)

Recurring EBITDA $ 52,717

Annualized Recurring EBITDA $ 210,868

Total Debt $ 783,878

Cash, cash equivalents and cash held in escrows (36,384)

Net Debt $ 747,494

Net Debt to Recurring EBITDA 3.5x

Net Debt $ 747,494

Anticipated Net Proceeds from ATM Forward Offerings (48,384)

Anticipated Net Proceeds from April 2020 Forward Offering (362,679)

Proforma Net Debt $ 336,431

Proforma Net Debt to Recurring EBITDA 1.6x

Non-GAAP Financial Measures

EBITDAreEBITDAreis 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 EBITDAreto 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 EBITDArea 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 ofEBITDAremay not be comparable to EBITDArereported by other REITs that interpretthe Nareit definition differently than the Company.

Recurring EBITDAThe Company defines Recurring EBITDA as EBITDArewith 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 DebtThe 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 and April 2020 Forward OfferingThe Company has 742,860 shares remaining to be settled under the ATM ForwardOfferings. Upon settlement, the offerings are anticipated to raise net proceedsof approximately $48.4 million based on the applicable forward sale prices asof June 30, 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 June 2021. On April 20, 2020,the Company commenced an underwritten public offering of 6,166,666 shares ofcommon stock in connection with a forward sale agreement at a public offeringprice of $60.00 per share. Upon settlement, the April 2020 Forward Offering isanticipated to raise net proceeds of approximately $362.7 million based on theapplicable forward sale price as of June 30, 2020. The Company is contractuallyobligated to settle the offering by April 2021.

Agree Realty Corporation

Rental Income

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

(Unaudited)

Three months ended Six months ended June 30, June 30,

2020 2019 2020 2019

Rental Income Source^(1)

Minimum rents^(2) $ 53,229 $ 41,508 $ 103,972 $ 80,230

Percentage rents^(2) 16 - 249 287

Operating cost reimbursement^(2) 6,176 4,900 12,836 10,013

Straight-line rental adjustments^(3) 1,834 1,692 3,790 3,190

Amortization of (above) below market (3,779) (3,225) (7,588) (6,501)lease intangibles^(4)

Total Rental Income $ 57,476 $ 44,875 $ 113,259 $ 87,219

(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-line basis,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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