PR Newswire | Nov 1, 2021 04:06PM EDT

11/01 15:05 CDT

Agree Realty Corporation Reports Third Quarter 2021 ResultsGROUND LEASE PORTFOLIO APPROACHES 14% OF ANNUALIZED BASE RENTS BLOOMFIELD HILLS, Mich., Nov. 1, 2021

BLOOMFIELD HILLS, Mich., Nov. 1, 2021 /PRNewswire/ -- Agree Realty Corporation (NYSE: ADC) (the "Company") today announced results for the quarter ended September 30, 2021. All per share amounts included herein are on a diluted per common share basis unless otherwise stated.

Third Quarter 2021 Financial and Operating Highlights:

* Invested approximately $342.7 million in 83 retail net lease properties * 30.3% of annualized base rents acquired were derived from ground leased assets * Net Income per share attributable to common stockholders increased 34.4% to $0.52 * Core Funds from Operations ("Core FFO") per share increased 13.0% to $0.92 * Adjusted Funds from Operations ("AFFO") per share increased 11.5% to $0.89 * Declared an October monthly dividend of $0.227 per share, a 9.8% year-over-year increase * Completed inaugural public offering of 4.250% Series A Cumulative Redeemable Preferred Stock for net proceeds of approximately $170.3 million * Sold 367,464 shares of common stock via the forward component of the Company's at-the-market equity ("ATM") program for anticipated net proceeds of approximately $27.0 million * Balance sheet positioned for growth at 3.7 times proforma net debt to recurring EBITDA; 4.4 times excluding unsettled forward equity * Appointed Michael Judlowe to the Company's Board of Directors

Financial Results

Net Income Attributable to Common Stockholders

Net Income for the three months ended September 30, 2021 increased 70.9% to $36.4 million, compared to $21.3 million for the comparable period in 2020. Net Income per share for the three months ended September 30, 2021 increased 34.4% to $0.52, compared to $0.39 per share for the comparable period in 2020.

Net Income for the nine months ended September 30, 2021 increased 31.1% to $88.8 million, compared to $67.8 million for the comparable period in 2020. Net Income per share for the nine months ended September 30, 2021 increased 1.3% to $1.34, compared to $1.32 per share for the comparable period in 2020.

Core FFO

Core FFO for the three months ended September 30, 2021 increased 44.0% to $64.0 million, compared to Core FFO of $44.5 million for the comparable period in 2020. Core FFO per share for the three months ended September 30, 2021 increased 13.0% to $0.92, compared to Core FFO per share of $0.81 for the comparable period in 2020.

Core FFO for the nine months ended September 30, 2021 increased 43.2% to $175.9 million, compared to Core FFO of $122.9 million for the comparable period in 2020. Core FFO per share for the nine months ended September 30, 2021 increased 11.2% to $2.65, compared to Core FFO per share of $2.39 for the comparable period in 2020.

AFFO

AFFO for the three months ended September 30, 2021 increased 42.0% to $62.1 million, compared to AFFO of $43.8 million for the comparable period in 2020. AFFO per share for the three months ended September 30, 2021 increased 11.5% to $0.89, compared to AFFO per share of $0.80 for the comparable period in 2020.

AFFO for the nine months ended September 30, 2021 increased 41.6% to $172.3 million, compared to AFFO of $121.7 million for the comparable period in 2020. AFFO per share for the nine months ended September 30, 2021 increased 10.0% to $2.60, compared to AFFO per share of $2.36 for the comparable period in 2020.

Dividend

In the third quarter, the Company declared monthly cash dividends of $0.217 per common share for each of July, August and September 2021. The monthly dividends reflected an annualized dividend amount of $2.604 per common share, representing an 8.5% increase over the annualized dividend amount of $2.400 per common share from the third quarter of 2020. The dividends represent payout ratios of approximately 71% of Core FFO per share and 73% of AFFO per share, respectively.

For the nine months ended September 30, 2021, the Company declared monthly dividends totaling $1.923 per common share, a 7.7% increase over the dividends of $1.785 per common share declared for the comparable period in 2020. The dividends represent payout ratios of approximately 72% of Core FFO per share and 74% of AFFO per share, respectively.

Subsequent to quarter end, the Company declared a monthly cash dividend of $0.227 per common share for October 2021. The monthly dividend reflects an annualized dividend amount of $2.724 per common share, representing a 9.8% increase over the annualized dividend amount of $2.480 per common share from the fourth quarter of 2020. The dividend is payable November 12, 2021 to stockholders of record at the close of business on October 29, 2021.

Additionally, subsequent to quarter end, the Company declared a monthly cash dividend on its 4.25% Series A Cumulative Redeemable Preferred Stock of $0.08854 per depositary share, which is equivalent to $1.0625 per annum. The dividend is payable November 1, 2021 to stockholders of record at the close of business on October 25, 2021.

CEO Comments

"We are extremely pleased with our year-to-date performance as we achieved record investment volume of more than $1 billion through the first nine months while maintaining a disciplined underwriting approach aligned with our RETHINKRETAIL initiative," said Joey Agree, President and Chief Executive Officer. "Our focus on best-in-class retail net lease opportunities has served to construct a leading portfolio with nearly 14% of annualized base rents derived from ground leases and 67% via investment grade tenants. Additionally, the completion of our inaugural preferred equity issuance during the quarter further positions our Company for dynamic growth and provides enhanced balance sheet flexibility."

Portfolio Update

As of September 30, 2021, the Company's portfolio consisted of 1,338 properties located in 47 states and contained approximately 27.7 million square feet of gross leasable area.

The portfolio was approximately 99.6% leased, had a weighted-average remaining lease term of approximately 9.5 years, and generated 66.9% of annualized base rents from investment grade retail tenants.

Ground Lease Portfolio

During the quarter, the Company acquired 28 ground leases for an aggregate purchase price of approximately $108.9 million, representing 30.3% of annualized base rents acquired.

As of September 30, 2021, the Company's ground lease portfolio consisted of 162 leases located in 30 states and totaled approximately 4.7 million square feet of gross leasable area. Properties ground leased to tenants increased to 13.8% of annualized base rents.

At quarter end, the ground lease portfolio was fully occupied, had a weighted-average remaining lease term of approximately 12.1 years, and generated 87.0% of annualized base rents from investment grade retail tenants.

Acquisitions

Total acquisition volume for the third quarter was approximately $340.1 million and included 80 properties net leased to leading retailers operating in sectors including off-price retail, convenience stores, tire and auto service, home improvement, auto parts, grocery and general merchandise. The properties are located in 28 states and leased to tenants operating in 20 sectors.

The properties were acquired at a weighted-average capitalization rate of 6.2% and had a weighted-average remaining lease term of approximately 10.7 years. Approximately 59.2% of annualized base rents acquired were generated from investment grade retail tenants.

For the nine months ended September 30, 2021, total acquisition volume was approximately $1.07 billion. The 219 acquired properties are located in 40 states and leased to tenants who operate in 26 retail sectors. The properties were acquired at a weighted-average capitalization rate of 6.2% and had a weighted-average remaining lease term of approximately 11.9 years. Approximately 69.8% of annualized base rents were generated from investment grade retail tenants or parent entities thereof.

The Company is increasing the lower end of its outlook for acquisition volume for the full-year 2021 to $1.3 billion and is maintaining the upper end of the range at $1.4 billion of high-quality retail net lease properties. This compares with a previous range of $1.2 billion to $1.4 billion.

Dispositions

During the three months ended September 30, 2021, the Company sold three properties for gross proceeds of approximately $11.8 million. The weighted-average capitalization rate of the dispositions was 6.3%. During the nine months ended September 30, 2021, the Company divested 13 properties for total gross proceeds of $48.3 million. The weighted-average capitalization rate of the dispositions was 6.6%.

The Company's disposition guidance for 2021 remains between $50 million and $75 million.

Development and Partner Capital Solutions

During the quarter, the Company commenced its third project with Gerber Collision in New Port Richey, Florida, which is expected to be completed in the second quarter of 2022. Construction continued during the third quarter on the Company's first development with 7-Eleven in Saginaw, Michigan and the Company's second Gerber Collision project in Pooler, Georgia, both of which are expected to be completed during the first quarter of 2022.

For the nine months ended September 30, 2021, the Company had seven development or PCS projects completed or under construction. Anticipated total costs are approximately $40.0 million and include the following projects:

Lease Lease Actual orTenant Location Structure Term Anticipated Rent Status Commencement

Burlington Texarkana, TX Build-to-Suit 11 years Q1 2021 Complete

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

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

Floor & D?cor Naples, FL Build-to-Suit 15 years Q2 2021 Complete

7-Eleven Saginaw, MI Build-to-Suit 15 years Q1 2022 Under Construction

Gerber Collision Pooler, GA Build-to-Suit 15 years Q1 2022 Under Construction

Gerber Collision New Port Richey, FL Build-to-Suit 15 years Q2 2022 Under Construction

Leasing Activity and Expirations

During the third quarter, the Company executed new leases, extensions or options on approximately 72,000 square feet of gross leasable area throughout the existing portfolio.

For the nine months ended September 30, 2021, the Company executed new leases, extensions or options on approximately 347,000 square feet of gross leasable area throughout the existing portfolio.

As of September 30, 2021, the Company's four remaining 2021 lease maturities represented 0.1% of annualized base rents. The following table presents contractual lease expirations within the Company's portfolio as of September 30, 2021, assuming no tenants exercise renewal options:

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

2021 4 526 0.1% 44 0.2%

2022 19 3,313 0.9% 326 1.2%

2023 45 9,857 2.8% 1,276 4.6%

2024 43 13,529 3.8% 1,613 5.8%

2025 67 15,972 4.5% 1,543 5.6%

2026 100 19,804 5.6% 2,039 7.4%

2027 90 21,013 5.9% 1,768 6.4%

2028 96 23,906 6.8% 2,125 7.7%

2029 129 37,261 10.5% 3,319 12.0%

2030 210 41,773 11.8% 3,059 11.1%

Thereafter 645 166,304 47.3% 10,482 38.0%

Total Portfolio 1,448 $353,258 100.0% 27,594 100.0%

The contractual lease expirations presented above exclude the effect of replacement tenant leases that had been executed as of September 30, 2021 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 September 30, 2021, 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

As of September 30, 2021, Walgreens, CarMax and LA Fitness are 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 September 30, 2021:

Annualized Percent ofTenant Base Rent^(1) Annualized Base Rent

Walmart $23,760 6.7%

Tractor Supply 13,875 3.9%

Dollar General 13,335 3.8%

Best Buy 11,771 3.3%

O'Reilly Auto Parts 11,537 3.3%

TJX Companies 11,259 3.2%

Kroger 10,798 3.1%

Hobby Lobby 10,595 3.0%

Sherwin-Williams 10,290 2.9%

Lowe's 9,811 2.8%

CVS 9,520 2.7%

Wawa 9,127 2.6%

TBC Corporation 7,893 2.2%

Burlington 7,615 2.2%

Dollar Tree 7,272 2.1%

Home Depot 6,841 1.9%

Sunbelt Rentals 6,730 1.9%

AutoZone 6,288 1.8%

Other^(2) 164,941 46.6%

Total Portfolio $353,258 100.0%

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 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 September 30, 2021:

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

Grocery Stores $37,356 10.6%

Home Improvement 33,376 9.4%

Convenience Stores 27,670 7.8%

Tire and Auto Service 27,579 7.8%

General Merchandise 23,451 6.6%

Auto Parts 22,064 6.2%

Off-Price Retail 21,087 6.0%

Dollar Stores 19,612 5.6%

Pharmacy 15,576 4.4%

Farm and Rural Supply 15,388 4.4%

Consumer Electronics 13,552 3.8%

Crafts and Novelties 12,811 3.6%

Warehouse Clubs 8,288 2.3%

Restaurants - Quick Service 7,383 2.1%

Equipment Rental 7,056 2.0%

Health and Fitness 6,984 2.0%

Dealerships 6,475 1.8%

Health Services 6,448 1.8%

Discount Stores 6,448 1.8%

Home Furnishings 5,696 1.6%

Specialty Retail 4,710 1.3%

Restaurants - Casual Dining 4,490 1.3%

Theaters 3,854 1.1%

Financial Services 3,293 0.9%

Sporting Goods 3,243 0.9%

Pet Supplies 2,597 0.7%

Entertainment Retail 2,333 0.7%

Apparel 1,253 0.4%

Beauty and Cosmetics 1,159 0.3%

Shoes 1,058 0.3%

Office Supplies 860 0.3%

Miscellaneous 108 0.2%

Total Portfolio $353,258 100.0%

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.

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 September 30, 2021:

Annualized Percent ofState Base Rent^(1) Annualized Base Rent

Texas $25,716 7.3%

Michigan 20,982 5.9%

Florida 20,207 5.7%

Ohio 19,969 5.7%

Illinois 19,521 5.5%

New Jersey 19,201 5.4%

North Carolina 19,092 5.4%

New York 13,918 3.9%

California 13,553 3.8%

Pennsylvania 12,905 3.7%

Georgia 11,814 3.3%

Virginia 10,564 3.0%

Wisconsin 9,966 2.8%

Connecticut 9,765 2.8%

Missouri 8,921 2.5%

Other^(2) 117,164 33.3%

Total Portfolio $353,258 100.0%

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

In September 2021, the Company completed its inaugural public offering of 7,000,000 depositary shares at $25.00 per depositary share, with each depositary share representing 1/1,000th of a share of 4.250% Series A Cumulative Redeemable Preferred Stock. Upon closing, the Company received total net proceeds of approximately $170.3 million, after deducting fees and estimated offering expenses.

During the third quarter of 2021, the Company entered into forward sale agreements in connection with its ATM program to sell an aggregate of 367,464 shares of common stock for anticipated net proceeds of approximately $27.0 million. Additionally, the Company settled 885,912 shares under forward sale agreements entered into through its ATM program and received net proceeds of approximately $56.1 million.

At quarter end, the Company had 3,419,340 shares remaining to be settled under existing forward sale agreements, which are anticipated to raise net proceeds of approximately $226.5 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 September 30, 2021:

Forward Equity Net Anticipated Shares Shares Shares Proceeds NetOfferings Sold Settled Remaining Received Proceeds Remaining

Q4 2020 ATM Forward Offerings 1,501,210 - 1,501,210 - $94,660,759

Q1 2021 ATM Forward Offerings 372,469 - 372,469 - $24,669,939

Q2 2021 ATM Forward Offerings 1,178,197 - 1,178,197 - $80,117,774

Q3 2021 ATM Forward Offerings 367,464 367,464 $27,006,743

Total Forward Equity Offerings 3,419,340 - 3,419,340 - $226,455,215

Balance Sheet

As of September 30, 2021, the Company's net debt to recurring EBITDA was 4.4 times. The Company's proforma net debt to recurring EBITDA was 3.7 times when deducting the $226.5 million of anticipated net proceeds from the outstanding forward equity offerings from the Company's net debt of $1.4 billion as of September 30, 2021. The Company's fixed charge coverage ratio was 5.1 times as of the end of the third quarter.

The Company's total debt to enterprise value was 24.6% as of September 30, 2021. Enterprise value is calculated as the sum of net debt and the market value of the Company's outstanding shares of common and preferred stock, assuming conversion of Agree Limited Partnership (the "Operating Partnership" or "OP") units into common stock.

For the three and nine months ended September 30, 2021, the Company's fully diluted weighted-average shares outstanding were 69.6 million and 66.0 million, respectively. The basic weighted-average shares outstanding for the

three and nine months ended September 30, 2021 were 69.1 million and 65.6 million, respectively.

For the three and nine months ended September 30, 2021, the Company's fully diluted weighted-average shares and units outstanding were 69.9 million and 66.3 million, respectively. The basic weighted-average shares and units outstanding for the three and nine months ended September 30, 2021 were 69.5 million and 66.0 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 September 30, 2021, there were 347,619 Operating Partnership units outstanding and the Company held a 99.5% interest in the Operating Partnership.

Conference Call/Webcast

The Company will host its quarterly analyst and investor conference call on Tuesday, November 2, 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 that is RETHINKINGRETAILthrough the acquisition and development of properties net leased to industry-leading, omni-channel retail tenants. As of September 30, 2021, the Company owned and operated a portfolio of 1,338 properties, located in 47 states and containing approximately 27.7 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 on the Company and RETHINKINGRETAIL, 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 atwww.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.

References to "Core FFO" and "AFFO" in this press release are representative of Core FFO attributable to OP common unitholders and AFFO attributable to OP common unitholders. Detailed calculations for these measures are shown in the Reconciliation of Net Income to FFO, Core FFO and Adjusted FFO table as "Core Funds From Operations - OP Common Unitholders" and "Adjusted Funds from Operations - OP Common Unitholders."

Agree Realty Corporation

Consolidated Balance Sheet

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

(Unaudited)

September 30, 2021 December 31, 2020

Assets:

Real EstateInvestments:

Land $ 1,459,526 $ 1,094,550

Buildings 2,863,568 2,371,553

Accumulated (216,775) (172,577)depreciation

Property under 7,728 10,653development

Net real estate 4,114,047 3,304,179investments

Real estate held for 5,571 1,199sale, net

Cash and cash 91,881 6,137equivalents

Cash held in escrows 10,927 1,818

Accounts receivable 52,854 37,808- tenants

Lease intangibles,net of accumulatedamortization of$164,517 and 645,594 473,592$125,995 atSeptember 30, 2021and December 31,2020, respectively

Other assets, net 76,626 61,450

Total Assets $ 4,997,500 $ 3,886,183

Liabilities:

Mortgage notes $ 32,607 $ 33,122payable, net

Unsecured term - 237,849loans, net

Senior unsecured 1,494,747 855,328notes, net

Unsecured revolving - 92,000credit facility

Dividends anddistributions 15,507 34,545payable

Accounts payable,accrued expenses and 80,494 71,390other liabilities

Lease intangibles,net of accumulatedamortization of$28,303 and $24,651 32,544 35,700at September 30,2021 and December31, 2020,respectively

Total Liabilities $ 1,655,899 $ 1,359,934

Equity:

Preferred Stock,$.0001 par value pershare, 4,000,000shares authorized,7,000 shares SeriesA outstanding, atstated liquidation 175,000 -value of $25,000 pershare, at September30, 2021, no sharesissued andoutstanding atDecember 31, 2020

Common stock, $.0001par value per share,180,000,000 and90,000,000 sharesauthorized,69,779,748 and 7 660,021,483 sharesissued andoutstanding atSeptember 30, 2021and December 31,2020, respectively

Additional paid-in 3,300,227 2,652,090capital

Dividends in excess (130,455) (91,343)of net income

Accumulated othercomprehensive income (4,893) (36,266)(loss)

Total Equity - Agree $ 3,339,886 $ 2,524,487Realty Corporation

Non-controlling 1,715 1,762interest

Total Equity $ 3,341,601 $ 2,526,249

Total Liabilities $ 4,997,500 $ 3,886,183and Equity

Agree Realty Corporation

Consolidated Statements of Operations and Comprehensive Income

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

(Unaudited)

Three months ended Nine months ended September 30, September 30,

2021 2020 2021 2020

Revenues

Rental Income $ 87,469 $ 63,701 $ 247,722 $ 176,960

Other 68 109 189 193

Total Revenues $ 87,537 $ 63,810 $ 247,911 $ 177,153

OperatingExpenses

Real estate $ 6,957 $ 5,516 $ 18,812 $ 15,058taxes

Propertyoperating 3,189 2,108 9,944 6,303expenses

Land lease 400 325 1,135 977expense

General and 5,687 4,756 18,806 13,999administrative

Depreciationand 24,488 17,327 69,164 47,067amortization

Provision for - 2,868 - 3,996impairment

Total Operating $ 40,721 $ 32,900 $ 117,861 $ 87,400Expenses

Gain (loss) onsale of assets, 3,470 970 13,182 7,567net

Income from $ 50,286 $ 31,880 $ 143,232 $ 97,320Operations

Other (Expense)Income

Interest $ (13,066) $ (10,158) $ (37,267) $ (28,307)expense, net

Income tax(expense) (390) (306) (1,884) (826)benefit

Gain (loss) onearlyextinguishmentof term loans - - (14,614) -and settlementof relatedinterest rateswaps

Other (expense) - - 103 23income

Net Income $ 36,830 $ 21,416 $ 89,570 $ 68,210

Less Net IncomeAttributable to 167 136 447 444Non-ControllingInterest

Net IncomeAttributable to $ 36,663 $ 21,280 $ 89,123 $ 67,766Agree RealtyCorporation

Less Series APreferred Stock 289 - 289 -Dividends

Net IncomeAttributable to $ 36,374 $ 21,280 $ 88,834 $ 67,766CommonStockholders

Net Income PerShareAttributable toCommonStockholders

Basic $ 0.52 $ 0.39 $ 1.35 $ 1.33

Diluted $ 0.52 $ 0.39 $ 1.33 $ 1.32

OtherComprehensiveIncome

Net Income $ 36,830 $ 21,416 $ 89,570 $ 68,210

Realized gain(loss) onsettlement of 82 - 869 -interest rateswaps

Othercomprehensiveincome (loss) -change in fair 3,300 1,420 30,676 (33,883)value andsettlement ofinterest rateswaps

TotalComprehensive 40,212 22,836 121,115 34,327Income (Loss)

ComprehensiveIncomeAttributable to (185) (152) (465) (187)Non-ControllingInterest

ComprehensiveIncomeAttributable to $ 40,027 $ 22,684 $ 120,650 $ 34,140Agree RealtyCorporation

WeightedAverage Numberof Common 69,102,500 53,721,956 65,623,720 50,637,569SharesOutstanding -Basic

WeightedAverage Numberof Common 69,591,848 54,555,672 65,952,113 51,151,462SharesOutstanding -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 Nine months ended September 30, September 30,

2021 2020 2021 2020

Net Income $ 36,830 $ 21,416 $ 89,570 $ 68,210

Less Series APreferred 289 - 289 -StockDividends

Net Incomeattributable 36,541 21,416 89,281 68,210to OP CommonUnitholders

Depreciationof rental real 17,019 12,669 48,439 34,387estate assets

Amortizationof leaseintangibles - 7,310 4,523 20,263 12,315in-placeleases andleasing costs

Provision for - 2,868 - 3,996impairment

(Gain) loss onsale orinvoluntary (3,470) (970) (13,285) (7,567)conversion ofassets, net

Funds fromOperations - $ 57,400 $ 40,506 $ 144,698 $ 111,341OP CommonUnitholders

Loss onextinguishmentof debt and - - 14,614 -settlement ofrelated hedges

Amortizationof above(below) market 6,615 3,964 16,630 11,552leaseintangibles,net

Core FundsfromOperations - $ 64,015 $ 44,470 $ 175,942 $ 122,893OP CommonUnitholders

Straight-line (3,215) (2,294) (8,779) (5,614)accrued rent

Stock basedcompensation 986 1,233 3,967 3,471expense

Amortizationof financing 203 223 692 560costs

Non-realestate 159 135 462 365depreciation

Adjusted FundsfromOperations - $ 62,148 $ 43,767 $ 172,284 $ 121,675OP CommonUnitholders

Funds fromOperations PerCommon Share $ 0.83 $ 0.75 $ 2.19 $ 2.18and OP Unit -Basic

Funds fromOperations PerCommon Share $ 0.82 $ 0.74 $ 2.18 $ 2.16and OP Unit -Diluted

Core FundsfromOperations Per $ 0.92 $ 0.82 $ 2.67 $ 2.41Common Shareand OP Unit -Basic

Core FundsfromOperations Per $ 0.92 $ 0.81 $ 2.65 $ 2.39Common Shareand OP Unit -Diluted

Adjusted FundsfromOperations Per $ 0.89 $ 0.81 $ 2.61 $ 2.39Common Shareand OP Unit -Basic

Adjusted FundsfromOperations Per $ 0.89 $ 0.80 $ 2.60 $ 2.36Common Shareand OP Unit -Diluted

WeightedAverage Numberof CommonShares and OP 69,450,119 54,069,575 65,971,339 50,985,188UnitsOutstanding -Basic

WeightedAverage Numberof CommonShares and OP 69,939,467 54,903,291 66,299,732 51,499,081UnitsOutstanding -Diluted

Additionalsupplementaldisclosure

Scheduledprincipal $ 201 $ 236 $ 594 $ 699repayments

Capitalized 36 54 200 109interest

Capitalizedbuilding 1,921 973 4,376 3,248improvements

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 and certaininfrequently recurring items that reduce or increase net income in accordancewith GAAP. Under Nareit's definition of FFO, lease intangibles created uponacquisition of a net lease must be amortized over the remaining term of thelease. The Company believes that by recognizing amortization charges for above-and below-market lease intangibles, the utility of FFO as a financialperformance measure can be diminished. Management believes that its measure ofCore FFO facilitates useful comparison of performance to its peers whopredominantly transact in sale-leaseback transactions and are thereby notrequired by GAAP to allocate purchase price to lease intangibles. Unlike manyof its peers, the Company has acquired the substantial majority of its netleased properties through acquisitions of properties from third parties or inconnection with the acquisitions of ground leases from third parties. Core FFOshould not be considered an alternative to net income as the primary indicatorof the Company's operating performance, or as an alternative to cash flow as ameasure of 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 items that reduce or increase net income computed inaccordance with GAAP. Management considers AFFO a useful supplemental measureof the Company's performance, however, AFFO should not be considered analternative to net income as an indication of its performance, or to cash flowas a measure of liquidity or ability to make distributions. The Company'scomputation of AFFO may differ from the methodology for calculating AFFO usedby other equity REITs, and therefore may not be comparable to such other REITs.

Agree Realty Corporation

Reconciliation of Net Debt to Recurring EBITDA

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

(Unaudited)

Three months ended September 30,

2021

Net Income $ 36,830

Interest expense, net 13,066

Income tax expense 390

Depreciation of rental real estate 17,019assets

Amortization of lease intangibles - 7,310in-place leases and leasing costs

Non-real estate depreciation 159

(Gain) loss on sale or involuntary (3,470)conversion of assets, net

EBITDAre $ 71,304

Run-Rate Impact of Investment, $ 3,491Disposition and Leasing Activity

Amortization of above (below) market 6,615lease intangibles, net

Recurring EBITDA $ 81,410

Annualized Recurring EBITDA $ 325,640

Total Debt $ 1,542,839

Cash, cash equivalents and cash held in (102,808)escrows

Net Debt $ 1,440,031

Net Debt to Recurring EBITDA 4.4x

Net Debt $ 1,440,031

Anticipated Net Proceeds from ATM (226,455)Forward Offerings

Proforma Net Debt $ 1,213,576

Proforma Net Debt to Recurring EBITDA 3.7x

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 andamortization, any gains (or losses) from sales of real estate assets and/orchanges in control, any impairment charges on depreciable real estate assets,and after adjustments for unconsolidated partnerships and joint ventures. TheCompany considers the non-GAAP measure of EBITDAre to be a key supplementalmeasure of the Company's performance and should be considered along with, butnot as an alternative to, net income or loss as a measure of the Company'soperating performance. The Company considers EBITDAre a key supplementalmeasure of the Company's operating performance because it provides anadditional supplemental measure of the Company's performance and operatingcash flow that is widely known by industry analysts, lenders and investors.The Company's calculation of EBITDAre may not be comparable to EBITDArereported by other REITs that interpret the Nareit definition differently thanthe 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 anddisposition activity for the period presented, as well as adjustments fornon-recurring benefits or expenses. The Company considers the non-GAAP measureof Recurring EBITDA to be a key supplemental measure of the Company'sperformance and should be considered along with, but not as an alternative to,net income or loss as a measure of the Company's operating performance. TheCompany considers Recurring EBITDA a key supplemental measure of the Company'soperating performance because it represents the Company's earnings run ratefor the period presented and because it is widely followed by industryanalysts, lenders and investors. Our Recurring EBITDA may not be comparableto Recurring EBITDA reported by other companies that have a differentinterpretation of the definition of Recurring EBITDA. Our ratio of net debt toRecurring EBITDA is used by management as a measure of leverage and may beuseful to investors in understanding the Company's ability to service itsdebt, as well as assess the borrowing capacity of the Company. Our ratio ofnet debt to Recurring EBITDA is calculated by taking annualized RecurringEBITDA and dividing it by our net debt per the consolidated balance sheet.

Net Debt

The Company defines Net Debt as total debt less cash, cash equivalents andcash held in escrows. The Company considers the non-GAAP measure of Net Debtto be a key supplemental measure of the Company's overall liquidity, capitalstructure and leverage. The Company considers Net Debt a key supplementalmeasure because it provides industry analysts, lenders and investors usefulinformation in understanding our financial condition. The Company'scalculation of Net Debt may not be comparable to Net Debt reported by otherREITs that interpret the definition differently than the Company. The Companypresents Net Debt on both an actual and proforma basis, assuming the netproceeds of the ATM Forward Offerings (see below) are used to pay down debt.The Company believes the proforma measure may be useful to investors inunderstanding the potential effect of the ATM Forward Offerings on theCompany's capital structure, its future borrowing capacity, and its ability toservice its debt.

ATM Forward Offerings

The Company has 3,419,340 shares remaining to be settled under the ATM ForwardOfferings. Upon settlement, the offerings are anticipated to raise netproceeds of approximately $226.5 million based on the applicable forward saleprices as of September 30, 2021. The applicable forward sale price variesdepending on the offering. The Company is contractually obligated to settlethe ATM Forward Offerings by certain dates between December 2021 and September2022.

Agree Realty Corporation

Rental Income

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

(Unaudited)

Three months ended Nine months ended September 30, September 30,

2021 2020 2021 2020

Rental Income Source^(1)

Minimum rents^(2) $ 81,334 $ 58,578 $ 228,494 $ 163,045

Percentage rents^(2) 102 - 593 249

Operating cost reimbursement^(2) 9,433 6,793 26,486 19,604

Straight-line rental adjustments^(3) 3,215 2,294 8,779 5,614

Amortization of (above) below market (6,615) (3,964) (16,630) (11,552)lease intangibles^(4)

Total Rental Income $ 87,469 $ 63,701 $ 247,722 $ 176,960

(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 bytenant lease agreements, recognized on an accrual basis of accounting. TheCompany believes that the presentation of contractual lease income is not, andis not intended to be, a presentation in accordance with GAAP. The Companybelieves this information is frequently used by management, investors, analystsand other 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