10q10k10q10k.net

What changed in AGREE REALTY CORP's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of AGREE REALTY CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+232 added−222 removedSource: 10-K (2024-02-13) vs 10-K (2023-02-14)

Top changes in AGREE REALTY CORP's 2023 10-K

232 paragraphs added · 222 removed · 175 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

44 edited+6 added−13 removed35 unchanged
Biggest changeTo do so we have: ● When warranted, closed our offices for non-essential functions and offered remote work flexibility; ● Provided personal protective equipment and maintained cleaning protocols; ● Maintained regular communication regarding impacts of the COVID-19 pandemic, including health and safety protocols and procedures; ● Continued screening of any team members and vendors at our offices; ● Maintained protocols to address actual and suspected COVID-19 cases and potential exposure; and ● Continued employing protocols regarding required masks and social distancing ​ Environmental, Social and Governance (“ESG”) As part of the Company’s commitment to continuously improving our understanding of and performance across material ESG topics, the Company engaged a third-party consultant in 2022 to help identify opportunities for improvement across our programs, policies, and disclosures to meet the expectations of our stakeholders.
Biggest changeThe Company pays 100% of medical, short-term, long-term, and life insurance premiums for team members and their families. ​ Environmental, Social and Governance (“ESG”) As part of the Company’s commitment to continuously improving our understanding of and performance across material ESG topics, the Company engaged a third-party consultant since 2022 to help identify opportunities for improvement across our programs, policies, and disclosures to meet the expectations of our stakeholders.
Professional development plans based on critical competencies are created and monitored to ensure progress is made along established timelines. ​ Financial and Health Wellness ​ As part of our compensation philosophy, we offer and maintain market competitive total rewards programs for team members in order to attract and retain superior talent.
Professional development plans based on critical core competencies are created and monitored to ensure progress is made along established timelines. ​ Financial and Health Wellness ​ As part of our compensation philosophy, we offer and maintain market competitive total rewards programs for team members in order to attract and retain superior talent.
Factors that we consider when evaluating an investment include but are not limited to: ● Overall market-specific characteristics, such as demographics, market rents, competition and retail synergy; ● Asset-specific characteristics, such as the age, size, location, zoning, use and environmental history, accessibility, physical condition, signage and visibility of the property; ● Tenant-specific characteristics, including but not limited to the financial profile, operating history, business plan, size, market positioning, geographic footprint, management team, industry and/or sector-specific trends and other characteristics specific to the tenant and parent thereof; ● Unit-level operating characteristics, including store sales performance and profitability, if available; ● Lease-specific terms, including term of the lease, rent to be paid by the tenant and other tenancy considerations; and ● Transaction considerations, such as purchase price, seller profile and other non-financial terms.
Factors that we consider when evaluating an investment include but are not limited to: ● Overall market-specific characteristics, such as demographics, market rents, competition and retail synergy; ● Asset-specific characteristics, such as the age, size, location, zoning, use and environmental history, accessibility, physical condition, signage and visibility of the property; ● Tenant-specific characteristics, including but not limited to the financial profile, operating history, business plan, 4 Table of Contents size, market positioning, geographic footprint, management team, industry and/or sector-specific trends and other characteristics specific to the tenant and parent thereof; ● Unit-level operating characteristics, including store sales performance and profitability, if available; ● Lease-specific terms, including term of the lease, rent to be paid by the tenant and other tenancy considerations; and ● Transaction considerations, such as purchase price, seller profile and other non-financial terms.
Our talent management practices include the utilization of our core competency frameworks, professional development plans, career pathing and succession planning and carefully designed promotion and internal mobility opportunities. ​ Our team members goal setting and performance feedback processes include formal quarterly and annual reviews and self and team leader reviews, as well as ongoing one-on-one meetings with team leaders.
Our talent management practices include the utilization of our core competency frameworks, professional development plans, career pathing and succession planning and carefully designed promotion and internal mobility opportunities. ​ Our team members’ goal setting and performance feedback processes include formal quarterly and annual reviews and self and team leader reviews, as well as ongoing one-on-one meetings with team leaders.
There can be no assurance that we will be able to compete successfully with such entities in our acquisition, development and leasing activities in the future. Significant Tenants No tenant accounted for more than 10.0% of our annualized base rent as of December 31, 2022.
There can be no assurance that we will be able to compete successfully with such entities in our acquisition, development and leasing activities in the future. Significant Tenants No tenant accounted for more than 10.0% of our annualized base rent as of December 31, 2023.
As of December 31, 2022, we have not received notice from any governmental authority, nor are we otherwise aware, of any non-compliance with the ADA that we believe would have a material adverse effect on our business, financial position or results of operations.
As of December 31, 2023, we have not received notice from any governmental authority, nor are we otherwise aware, of any non-compliance with the ADA that we believe would have a material adverse effect on our business, financial position or results of operations.
Substantially all of our tenants are subject to net lease agreements. A net lease typically requires the tenant to be responsible for minimum monthly rent and property operating expenses including property taxes, insurance and maintenance. As of December 31, 2022, the Company had 76 full-time employees, covering acquisitions, development, legal, asset management, accounting, finance, administrative and executive functions.
Substantially all of our tenants are subject to net lease agreements. A net lease typically requires the tenant to be responsible for minimum monthly rent and property operating expenses including property taxes, insurance and maintenance. As of December 31, 2023, the Company had 72 full-time employees, covering acquisitions, development, legal, asset management, accounting, finance, administrative and executive functions.
Common cash dividends were paid quarterly for 107 consecutive quarters between 1994 and 2020 prior to moving to monthly common cash dividends in 2021. We have since paid 25 consecutive monthly dividends.
Common cash dividends were paid quarterly for 107 consecutive quarters between 1994 and 2020 prior to moving to monthly common cash dividends in 2021. We have since paid 37 consecutive monthly dividends.
A significant majority of the Company’s properties are leased to national tenants and approximately 67.8% of our annualized base rent was derived from tenants, or parent entities thereof, with an investment grade credit rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Association of Insurance Commissioners.
A significant majority of the Company’s properties are leased to national tenants and approximately 69.1% of our annualized base rent was derived from tenants, or parent entities thereof, with an investment grade credit rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Association of Insurance Commissioners.
The portfolio was approximately 99.7% leased and had a weighted average remaining lease term of approximately 8.8 years.
The portfolio was approximately 99.8% leased and had a weighted average remaining lease term of approximately 8.4 years.
The Company’s assets are held by, and all of its operations are conducted through, directly or indirectly, the Operating Partnership of which the Company is the sole general partner and in which it held a 99.6% common interest as of December 31, 2022.
The Company’s assets are held by, and all of its operations are conducted through, directly or indirectly, the Operating Partnership of which the Company is the sole general partner and in which it held a 99.7% common interest as of December 31, 2023.
We remain committed to using our time, talents, resources and relationships to grow in a manner that makes the world and the environment better for future generations. ​ The Company’s focus on industry leading, national and super-regional retailers provides for long-term relationships with some of the most environmentally conscientious retailers in the world.
We remain committed to using our time, talents, resources, and relationships to grow in a manner that makes the world and the environment better for future generations. ​ Our focus on industry-leading, national and super-regional retailers provides for long-term relationships with many environmentally conscientious retailers.
Time-vested stock grants to officers and team members vest over a five-year period to provide long-term alignment, while performance-based stock grants to named executive officers utilize total shareholder return, with the amount of the grants intended to increase as total returns to stockholders increase, further enhancing alignment.
Time-vested stock grants to officers and team members vest over a three-year period to provide long-term alignment, while performance-based stock grants to named executive officers utilize total shareholder return, with the amount of the grants intended to increase as total returns to 8 Table of Contents stockholders increase, further enhancing alignment.
Compensation is used to achieve business objectives by attracting, retaining and motivating top talent. 7 Table of Contents ● Reward superior individual and Company performance on both a short-term and long-term basis.
Compensation is used to achieve business objectives by attracting, retaining and motivating top talent. ● Reward superior individual and Company performance on both a short-term and long-term basis.
Leasing During 2022, excluding properties that were sold, the Company executed new leases, extensions or options on approximately 850,000 square feet of GLA throughout its portfolio. The annualized base contractual rent associated with these new leases, extensions or options is approximately $8.6 million.
Leasing During 2023, excluding properties that were sold, the Company executed new leases, extensions or options on approximately 1,873,000 square feet of GLA throughout its portfolio. The annualized base contractual rent associated with these new leases, extensions or options is approximately $15.8 million.
We all roll up our sleeves and dig in, no matter the task. ● We achieve results by making consistent, disciplined decisions. ● We have a resilient mindset to achieve and exceed our goals. ● We push ourselves to be the best we can at our position and embrace the opportunities that new challenges present. ​ We work to attract the best talent externally to meet the current and future demands of our business.
We all roll up our sleeves and dig in, no matter the task. ● Brick by Brick - We achieve results by making consistent, disciplined decisions. ● Greatness Requires Grit - We have a resilient mindset to achieve and exceed our goals. 6 Table of Contents ● Punch Your Ticket - We push ourselves to be the best we can at our position and embrace the opportunities that new challenges present. ​ We work to attract the best talent externally to meet the current and future demands of our business.
We believe that development and PCS projects have the potential to generate superior risk-adjusted returns on investment in properties that are substantially similar to those we acquire. 4 Table of Contents We focus on four core principles that underlie our investment criteria: ● Omni-channel critical (e-commerce resistance), focusing on leading operators that have matured in omni-channel structure or those in e-commerce resistant sectors; ● Recession resistance, emphasizing a balanced portfolio with exposure to counter-cyclical sectors and retailers with strong credit profiles; ● Avoidance of private equity sponsorship, emphasizing leading operators with strong balance sheets and minimizing exposure to the possibility of such sponsorship overleveraging their acquisitions and reducing retailers’ abilities to invest in their businesses; and ● Adherence to strong real estate fundamentals and fungible buildings, protecting against unforeseen changes to our investment philosophies. ​ Each platform leverages the Company’s real estate acumen to pursue investments in net lease retail real estate.
We focus on four core principles that underlie our investment criteria: ● Omni-channel critical (e-commerce resistance), focusing on leading operators that have matured in omni-channel structure or those in e-commerce resistant sectors; ● Recession resistance, emphasizing a balanced portfolio with exposure to counter-cyclical sectors and retailers with strong credit profiles; ● Avoidance of private equity sponsorship, emphasizing leading operators with strong balance sheets and minimizing exposure to the possibility of such sponsorship overleveraging their acquisitions and reducing retailers’ abilities to invest in their businesses; and ● Adherence to strong real estate fundamentals and fungible buildings, protecting against unforeseen changes to our investment philosophies. ​ Each platform leverages the Company’s real estate acumen to pursue investments in net lease retail real estate.
As of December 31, 2022, the Company’s ratio of total debt to enterprise value, assuming the conversion of common limited partnership interests in the Operating Partnership (“Operating Partnership Common Units”) into shares of common stock, was approximately 23.0%, and its ratio of total debt to total gross assets (before accumulated depreciation) was approximately 27.9%.
As of December 31, 2023, the Company’s ratio of total debt to enterprise value, assuming the conversion of common limited partnership interests in the Operating Partnership (“Operating Partnership Common Units”) into shares of common stock, was approximately 27.2%, and its ratio of total debt to total gross assets (before accumulated depreciation) was approximately 29.6%.
We have a management information system designed to provide our management with the operating data necessary to make informed business decisions on a timely basis. This system provides us rapid access to lease data, tenants’ sales history, cash flow budgets and forecasts. Such a system helps us to maximize cash flow from operations and closely monitor corporate expenses.
We have a management information system designed to provide our management with the operating data necessary to make informed business decisions on a timely basis. This system provides us rapid access to lease data, tenants’ sales history, cash flow budgets and forecasts.
Under the agreement of limited partnership of the Operating Partnership, the Company, as the sole general partner, has exclusive responsibility and discretion in the management and control of the Operating Partnership. As of December 31, 2022, the Company’s portfolio consisted of 1,839 properties located in 48 states and totaling approximately 38.1 million square feet of Gross Leasable Area (“GLA”).
Under the agreement of limited partnership of the Operating Partnership, the Company, as the sole general partner, has exclusive responsibility and discretion in the management and control of the Operating Partnership. As of December 31, 2023, the Company’s portfolio consisted of 2,135 properties located in 49 states and totaling approximately 44.2 million square feet of Gross Leasable Area (“GLA”).
Investigation of a property may reveal non-compliance with the ADA. Our tenants will typically have primary responsibility for complying with the ADA, but we may incur costs if the tenant does not comply.
Our tenants will typically have primary responsibility for complying with the ADA, but we may incur costs if the tenant does not comply.
Investors include traded and non-traded public REITs, private equity firms, institutional investment funds, insurance companies and private individuals, many of which have greater financial resources than we do and the ability to accept more risk than we believe we can prudently manage.
As such, we compete with other investors for a limited supply of properties and financing for these properties. Investors include traded and non-traded public REITs, private equity firms, institutional investment funds, insurance companies and private individuals, many of which have greater financial resources than we do and the ability to accept more risk than we believe we can prudently manage.
As a REIT, the Company is not subject to federal income tax with respect to that portion of its income that is distributed currently to its stockholders. The Company’s principal executive offices are located at 70 E. Long Lake Road, Bloomfield Hills, MI 48304 and its telephone number is (248) 737-4190. The Company’s website is www.agreerealty.com.
As a REIT, the Company is not subject to federal income tax with respect to that portion of its income that is distributed currently to its stockholders. The Company’s principal executive offices are located at 32301 Woodward Avenue, Royal Oak MI 48073 and its telephone number is (248) 737-4190. The Company’s website is www.agreerealty.com.
The December 2022 dividend per share of $0.240 represents an annualized dividend of $2.88 per share and an annualized dividend yield of approximately 4.1% based on the last reported sales price of our common stock listed on the NYSE of $70.93 on December 30, 2022. The Company has routinely paid cash dividends to our common shareholders.
The December 2023 dividend per share of $0.247 represents an annualized dividend of $2.964 per share and an annualized dividend yield of approximately 4.7% based on the last reported sales price of our common stock listed on the NYSE of $62.95 on December 29, 2023. The Company has routinely paid cash dividends to our common shareholders.
Dividends The Company increased its monthly dividend per common share from $0.227 to $0.234 in April 2022 and further increased the monthly dividend per common share to $0.240 in October 2022.
Dividends The Company increased its monthly dividend per common share from $0.24 to $0.243 in April 2023 and further increased the monthly dividend per common share to $0.247 in October 2023.
Business Strategies Our primary business objectives are to capitalize on distinct market positioning in the retail net lease space, focus on 21st century industry-leading retailers through our external growth platforms, leverage our real estate acumen and relationships to identify superior risk-adjusted opportunities, maintain a conservative and flexible capital structure that enables growth, and provide consistent, high-quality earnings growth and a well-covered growing dividend.
The Company used the existing $350 million of forward starting interest rate swaps to hedge the variable SOFR priced interest to a weighted average fixed rate of 3.57% until January 2029. 3 Table of Contents Business Strategies Our primary business objectives are to capitalize on distinct market positioning in the retail net lease space, focus on 21st century industry-leading retailers through our external growth platforms, leverage our real estate acumen and relationships to identify superior risk-adjusted opportunities, maintain a conservative and flexible capital structure that enables growth, and provide consistent, high-quality earnings growth and a well-covered growing dividend.
As of December 31, 2022, our total debt outstanding before deferred financing costs and original issue discount was $1.96 billion, including $50.4 million of secured mortgage debt that had a weighted average fixed interest rate of 3.94% and a weighted average maturity of 6.2 years, $1.81 billion of unsecured borrowings that had a weighted average fixed interest rate of 3.31% (including the effects of previously settled, forward interest rate swap agreements) and a weighted average 5 Table of Contents maturity of 7.8 years, and $100.0 million of floating rate borrowings under our revolving credit facility at a weighted average interest rate of approximately 5.14%.
As of December 31, 2023, our total debt outstanding before deferred financing costs and original issue discount was $2.43 billion, including $44.9 million of secured mortgage debt that had a weighted average fixed interest rate of 3.78% and a weighted average maturity of 5.8 years, $2.16 billion of unsecured borrowings, which includes $350.0 million of unsecured term loans and $1.81 billion of unsecured notes, that had a weighted average fixed interest rate of 3.50% (including the effects of interest rate swap agreements) and a weighted average maturity of 6.5 years, and $227.0 million of floating rate borrowings under our revolving credit facility at a weighted average interest rate of approximately 6.27%.
We seek to expand and enhance our portfolio by identifying the best risk-adjusted investment opportunities across our three external growth platforms: development, Partner Capital Solutions (“PCS”) and acquisitions.
We seek to expand and enhance our portfolio by identifying the best risk-adjusted investment opportunities across our three external avenues for growth: development, Developer Funding Platform (“DFP”) and acquisitions.
Human Capital Team Members and Values As of December 31, 2022, the Company had 76 full-time team members covering acquisitions, development, legal, asset management, accounting, finance, administrative, and executive functions as compared to 57 full-time team members as of December 31, 2021.
Human Capital Team Members and Values As of December 31, 2023, the Company had 72 full-time team members covering acquisitions, development, legal, asset management, accounting, finance, administrative, and executive functions as compared to 76 full-time team members as of December 31, 2022. ​ Our core values are the foundation of our Company culture and include: ● We All Do the Dishes - We are a team.
The Board has adopted an insider trading policy that applies to all directors, officers and team members. The Company does not have a stockholder rights plan (“poison pill”) and maintains stock ownership guidelines for directors and named executive officers requiring specified levels of stock ownership.
The Company does not have a stockholder rights plan (“poison pill”) and maintains stock ownership guidelines for directors and named executive officers requiring specified levels of stock ownership.
Recent Developments For a discussion of business developments that occurred in 2022, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” later in this report. Certain summarized highlights are contained below.
Recent Developments For a discussion of business developments that occurred in 2023, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” later in this report. Certain summarized highlights are contained below. Investments and Disposition Activity During 2023, the Company completed approximately $1.28 billion of investments in net leased retail real estate.
Additionally, the Company completed forward sale agreements under the 2022 ATM Program for 4,350,232 shares of common stock, for anticipated future net proceeds of $300.9 million. The Company has settled 245,591 shares of these forward sale agreements as of December 31, 2022 for net proceeds of approximately $18.1 million, after deducting fees and expenses.
As of December 31, 2023, the Company completed forward sale agreements under the 2022 ATM Program for 10,197,230 shares of common stock, for anticipated future net proceeds of $669.1 million, after deducting fees and expenses.
We are committed to managing the Company for the benefit of our stockholders and are focused on maintaining good corporate governance. Our Board has nine directors, seven of whom are independent. Five new independent directors have been added since 2018. Independent directors meet regularly, without the presence of officers or team members. A Lead Independent Director was appointed in 2019.
We are committed to managing the Company for the benefit of our stockholders and are focused on maintaining good corporate governance. Our board of directors has 10 directors, eight of whom are independent, including the Company’s new independent director added in 2024. Six new independent directors have been added since 2018.
We believe that we are in compliance, in all material respects, with all federal, state and local ordinances and regulations regarding hazardous or toxic substances.
We believe that we are in compliance, in all material respects, with all federal, state and local ordinances and regulations regarding hazardous or toxic substances. Furthermore, we have not received notice from any governmental authority of any noncompliance, liability or other claim in connection with any of our properties.
Competition The U.S. commercial real estate investment market is a highly competitive industry. We actively compete with many entities engaged in the acquisition, development and operation of commercial properties. As such, we compete with other investors for a limited supply of properties and financing for these properties.
Such a system helps us to maximize cash flow from operations and closely monitor corporate expenses. 5 Table of Contents Competition The U.S. commercial real estate investment market is a highly competitive industry. We actively compete with many entities engaged in the acquisition, development and operation of commercial properties.
In September 2022, the Company entered into a new $750 million at-the-market (“ATM”) program (the “2022 ATM Program”) through which the Company, from time to time, may sell shares of common stock and/or enter into forward sale agreements. During 2022, the Company settled 5,453,975 shares of common stock under predecessor ATM programs, generating net proceeds of $379.1 million.
In addition to its common dividends, the Company paid monthly cash dividends on its 4.25% Series A Cumulative Redeemable Preferred Stock. Financing Equity In September 2022, the Company entered into a $750 million at-the-market (“ATM”) program (the “2022 ATM Program”) through which the Company, from time to time, may sell shares of common stock and/or enter into forward sale agreements.
This is particularly meaningful because the Company’s portfolio is primarily comprised of properties that are leased to tenants under long-term net leases where the tenant is generally responsible for maintaining the property and implementing environmentally responsible practices. We are proud to know that our tenants have pioneered the use of environmentally-preferable solutions in their business practices in many ways.
This is particularly meaningful because the Company’s portfolio is primarily comprised of properties that are leased to tenants under long-term net leases where the tenant is generally responsible for maintaining the property and implementing environmentally responsible practices. ​ In 2023, we engaged with our retail partners on shared sustainability initiatives at our properties, and executing green leases with various tenants, as well as systematically monitoring ESG policies for current and prospective tenants.
Our developments are typically build-to-suit projects that result in fee simple ownership of the property upon completion. Partner Capital Solutions: We launched our PCS program in April 2012. Our PCS program allows us to acquire properties or development opportunities by partnering with private developers or retailers on their in-process developments.
Our developments are typically build-to-suit projects that result in fee simple ownership of the property upon completion. Developer Funding Platform: Our DFP, previously called Partner Capital Solutions, collaborates with developers or retailers on their in-process developments. We offer construction expertise and access to capital to facilitate the successful completion of their projects.
We offer construction expertise and access to capital to facilitate the successful completion of their projects. We typically take fee simple ownership of PCS projects upon completion. Acquisitions: Our acquisitions platform was launched in April 2010 in order to expand our investment capabilities by pursuing opportunities that meet both our real estate and return on investment criteria.
We typically take fee simple ownership of DFP projects upon completion. Acquisitions: Our acquisitions platform expands our investment capabilities by pursuing opportunities that meet both our real estate and return on investment criteria. We believe that development and DFP projects have the potential to generate superior risk-adjusted returns on investment in properties that are substantially similar to those we acquire.
Furthermore, we have not received notice from any governmental authority of any noncompliance, liability or other claim in connection with any of our properties. 6 Table of Contents Americans with Disabilities Act of 1990 Our properties, as commercial facilities, are required to comply with Title III of the Americans with Disabilities Act of 1990 and similar state and local laws and regulations (collectively, the “ADA”).
Americans with Disabilities Act of 1990 Our properties, as commercial facilities, are required to comply with Title III of the Americans with Disabilities Act of 1990 and similar state and local laws and regulations (collectively, the “ADA”). Investigation of a property may reveal non-compliance with the ADA.
These 441 properties are net leased to tenants operating in 27 sectors and are located in 43 states. These assets are 100% leased for a weighted average lease term of approximately 10.2 years. 2 Table of Contents During 2022, the Company sold seven assets for net proceeds of $44.9 million.
These assets are 100% leased for a weighted average lease term of approximately 11.4 years. 2 Table of Contents During 2023, the Company sold six assets, including one former corporate headquarters office building, for net proceeds of $13.8 million.
Environmental Sustainability The Company, through its team members, understands that corporate and environmental responsibility is an ongoing endeavor and embraces responsibility to being a steward of the environment, using natural resources carefully, and meeting the goals of its tenant partners.
Environmental Sustainability We understand that environmental sustainability is an ongoing endeavor and embrace the responsibility to be a steward of the environment, use natural resources carefully, and work with our retail partners on shared sustainability initiatives.
Investments and Disposition Activity During 2022, the Company completed approximately $1.62 billion of investments in net leased retail real estate, including acquisition and closing costs. Total investment volume includes the acquisition of 434 properties for an aggregate purchase price of approximately $1.6 billion and the completed development of seven properties for an aggregate cost of approximately $22.5 million.
Total investment volume includes the acquisition of 282 properties for an aggregate purchase price of approximately $1.19 billion, and the completed development of 21 properties for an aggregate cost of approximately $86.2 million. These 303 properties are net leased to tenants operating in 27 sectors and are located in 40 states.
Insurance coverages are provided for all team members and their dependents, including medical, dental, vision, disability, and life insurance. The Company pays 100% of medical, short-term, long-term, and life insurance premiums for team members and their families. ​ COVID-19 During 2022, we have continued to focus on the safety of our team members in response to the COVID-19 pandemic.
Insurance coverages are provided for all team members and their dependents, including medical, dental, vision, disability, and life insurance.
Removed
In addition to its common dividends, the Company paid monthly cash dividends on its 4.25% Series A Cumulative Redeemable Preferred Stock. Financing Equity During 2022, the Company completed two follow-on public offerings totaling 11,500,000 shares of common stock under its shelf registration statement, in connection with forward sale agreements.
Added
The Company has settled 6,363,359 shares of these forward sale agreements as of December 31, 2023 for net proceeds of approximately $433.4 million, after deducting fees and expenses. The Company is required to settle the remaining forward agreements by January 2025. The Company had approximately $75.8 million of availability remaining under the 2022 ATM Program as of December 31, 2023.
Removed
Upon settlement, these offerings are anticipated to raise total net proceeds of $767.4 million after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreements. During 2022, the Company settled 7,350,000 shares of common stock under these forward sale agreements, realizing net proceeds of $492.9 million.
Added
Debt In July 2023, the Company closed on an unsecured $350 million 5.5-year term loan (the “2029 Unsecured Term Loan”) which includes an accordion option that allows the Company to request additional lender commitments up to a total of $500 million and matures in January 2029.
Removed
In addition, the Company settled 5,750,000 shares of common stock under a forward settlement agreement related to a follow-on public offering from December 2021, realizing net proceeds of $368.7 million.
Added
Borrowings under the 2029 Unsecured Term Loan are priced at SOFR plus a spread of 80 to 160 basis points over SOFR, depending on the Company’s credit ratings, plus a SOFR adjustment of 10 basis points. Based on the Company’s credit ratings at the time of closing, pricing on the 2029 Unsecured Term Loan was 95 basis points over SOFR.
Removed
The Company is required to settle these forward agreements by various dates between November and December 2023.
Added
The Company executed an 7 Table of Contents ongoing sustainability and ESG strategy to enhance our oversight structure, risk management, policies, data collection, reporting, and stakeholder engagement. Additionally, the Company received Gold Level recognition from Green Lease Leaders.
Removed
After considering the 4,350,232 shares of common stock subject to forward sale agreements under the 2022 ATM Program, the Company had approximately $446.6 million of availability remaining under the 2022 ATM Program as of December 31, 2022. 3 Table of Contents Debt In April 2022, and in connection with a four-property acquisition, the Company assumed an interest only, mortgage note payable with a principal balance of $42.3 million, stated interest rate of 3.63%, and maturity in December 2029.
Added
We will continue working with our tenants and consultant to update our greenhouse gas emissions inventory. ​ Social Company Culture and Team Members The Agree Wellness Program focuses on physical and financial wellness to enhance team members’ well-being.
Removed
In August 2022, the Operating Partnership completed an underwritten public offering of $300 million aggregate principal amount of 4.80% Notes due 2032 (the “2032 Senior Unsecured Public Notes”). The 2032 Senior Unsecured Public Notes are fully and unconditionally guaranteed by the Company and certain wholly owned subsidiaries of the Operating Partnership.
Added
Independent directors meet regularly, without the presence of officers or team members. A Lead Independent Director was appointed in 2019. The board of directors has adopted an insider trading policy that applies to all directors, officers and team members.
Removed
Considering the effect of terminated swap agreements relating to these notes, the blended all-in rates for the $300 million principal amount is 3.96%.
Removed
In November 2022, the Company entered into a First Amendment to the Third Amended and Restated Revolving Credit Agreement which converted the interest rate on its $1.0 billion senior unsecured revolving credit facility (the "Revolving Credit Facility") from a spread over LIBOR to a spread over Secured Overnight Financing Rate (“SOFR”), plus a SOFR adjustment of 10 basis points.
Removed
No other changes were made to the Revolving Credit Facility as a result of the amendment.
Removed
The increased headcount is attributable to the Company’s need to support its current and future portfolio growth. ​ Our core values are the foundation of our Company culture and include: ● We are a team.
Removed
This process resulted in a three-year action plan and roadmap for the Company to enhance its ESG program through oversight structures, risk management, policies, data collection, reporting, and stakeholder engagement.
Removed
In 2022, the Company enhanced its engagement with its retail partners on shared sustainability initiatives, introduced green lease language into its standard lease forms, and executed leases that contained green clauses with several tenants.
Removed
Additionally, the Company’s award-winning headquarters utilize green technologies including programmable thermostats, Low-E window glass, LEED HVAC systems and LED occupancy-sensored lighting. ​ 8 Table of Contents Social Company Culture and Team Members The Agree Wellness Program focuses on physical and financial wellness to enhance team members’ well-being.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

46 edited+13 added−6 removed130 unchanged
Biggest changeThe COVID-19 pandemic, or a future pandemic, could also have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors: ● A complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant action; ● Reduced economic activity could severely impact our tenants’ businesses, financial condition and liquidity and may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations; ● Reduced economic activity could result in a prolonged recession, which could negatively impact consumer discretionary spending; ● Difficulty accessing debt and equity capital on attractive terms, or at all, potential impacts to our credit ratings, and a prolonged severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis and our tenants’ ability to fund their business operations and meet their obligations to us; ● Negative impacts to our future compliance with financial covenants of our Revolving Credit Facility and other debt agreements could result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings under our Revolving Credit Facility and pay dividends; ● Any impairment in value of our tangible or intangible assets which could be recorded as a result of weaker economic conditions; ● A decline in business activity and demand for real estate transactions could adversely affect our ability or desire to grow our portfolio of properties; ● A deteriorati on in our or our tenants’ ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed for our or our tenants’ efficient operations could adversely affect our operations and those of our tenants; and ● The potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during this disruption.
Biggest changeAn epidemic or pandemic (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, may precipitate or materially exacerbate one or more of the other risks, and may significantly disrupt our tenants’ ability to operate their businesses and/or pay rent to us or prevent us from operating our business in the ordinary course for an extended period. 21 Table of Contents An epidemic or pandemic could have a material and adverse effect on or cause disruption to our business or financial condition, results of operations, cash flows and the market value and trading price of our securities due to, among other factors: ● A complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant action; ● Reduced economic activity could severely impact our tenants’ businesses, financial condition and liquidity and may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations; ● Reduced economic activity could result in a prolonged recession, which could negatively impact consumer discretionary spending; ● Difficulty accessing debt and equity capital on attractive terms, or at all, potential impacts to our credit ratings, and a prolonged severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis and our tenants’ ability to fund their business operations and meet their obligations to us; ● Negative impacts to our future compliance with financial covenants of our Revolving Credit Facility and other debt agreements could result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings under our Revolving Credit Facility and pay dividends; ● Any impairment in value of our tangible or intangible assets which could be recorded as a result of weaker economic conditions; ● A decline in business activity and demand for real estate transactions could adversely affect our ability or desire to grow our portfolio of properties; ● A deteriorati on in our or our tenants’ ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed for our or our tenants’ efficient operations could adversely affect our operations and those of our tenants; and ● The potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during this disruption.
Potential consequences of changes in economic and financial conditions include: ● Changes in the performance of our tenants, which may result in lower rent and lower recoverable expenses that the tenant can afford to pay and tenant defaults under the leases; ● Current or potential tenants may delay or postpone entering into long-term net leases with us; ● The ability to borrow on terms and conditions that we find acceptable may be limited or unavailable, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from acquisition and development activities, reduce our ability to make cash distributions to our stockholders and increase our future interest expense; ● Our ability to access the capital markets may be restricted at a time when we would like, or need, to access those markets, which could have an impact on our flexibility to react to changing economic and business conditions; ● The recognition of impairment charges on or reduced values of our properties, which may adversely affect our results of operations or limit our ability to dispose of assets at attractive prices and may reduce the availability of buyer financing; and ● One or more lenders under our revolving credit facility could fail and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all. ​ We are also limited in our ability to reduce costs to offset the results of a prolonged or severe economic downturn given certain fixed costs and commitments associated with our operations, which could materially impact our results of operations and/or financial condition. ​ Our business is significantly dependent on single tenant properties.
Potential consequences of changes in economic and financial conditions include: ● Changes in the performance of our tenants, which may result in lower rent and lower recoverable expenses that the tenant can afford to pay and tenant defaults under the leases; ● Current or potential tenants may delay or postpone entering into long-term net leases with us; ● The ability to borrow on terms and conditions that we find acceptable may be limited or unavailable, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from acquisition and development activities, reduce our ability to make cash distributions to our stockholders and increase our future interest expense; ● Our ability to access the capital markets may be restricted at a time when we would like, or need, to access those markets, which could have an impact on our flexibility to react to changing economic and business conditions; ● The recognition of impairment charges on or reduced values of our properties, which may adversely affect our results of operations or limit our ability to dispose of assets at attractive prices and may reduce the availability of buyer financing; and ● One or more lenders under our revolving credit facility could fail and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all. ​ We are also limited in our ability to reduce costs to offset the results of a prolonged or severe economic downturn given certain fixed costs and commitments associated with our operations, which could materially impact our results of operations and/or financial condition. 9 Table of Contents Our business is significantly dependent on single tenant properties.
The market price and trading volume of our common stock may fluctuate widely due to various factors, including: ● Broad market fluctuations; ● Market reaction to any additional indebtedness we incur or debt or equity securities we or the Operating Partnership issue in the future; ● Additions or departures of key management personnel; 21 Table of Contents ● Changes in our credit ratings; ● The financial condition, performance and prospects of our tenants; ● Changes in market interest rates; and ● The realization of any of the other risk factors presented in this Annual Report on Form 10-K.
The market price and trading volume of our common stock may fluctuate widely due to various factors, including: ● Broad market fluctuations; ● Market reaction to any additional indebtedness we incur or debt or equity securities we or the Operating Partnership issue in the future; ● Additions or departures of key management personnel; ● Changes in our credit ratings; ● The financial condition, performance and prospects of our tenants; ● Changes in market interest rates; and ● The realization of any of the other risk factors presented in this Annual Report on Form 10-K.
In addition, our bylaws contain a provision exempting from the control share acquisition statute Richard Agree, Edward Rosenberg, any spouses or the foregoing, any brothers or sisters of the foregoing, any ancestors of the foregoing, any other lineal descendants of any of the foregoing, any estates of any of the foregoing, any trusts established for the benefit of any 17 Table of Contents of the foregoing and any other entity controlled by any of the foregoing, our other officers, our team members, any of the associates or affiliates of the foregoing and any other person acting in concert of as a group with any of the foregoing.
In addition, our bylaws contain a provision exempting from the control share acquisition statute Richard Agree, Edward Rosenberg, any spouses or the foregoing, any brothers or sisters of the foregoing, any ancestors of the foregoing, any other lineal descendants of any of the foregoing, any estates of any of the foregoing, any trusts established for the benefit of any of the foregoing and any other entity controlled by any of the foregoing, our other officers, our team members, any of the associates or affiliates of the foregoing and any other person acting in concert of as a group with any of the foregoing.
Our directors are divided into three classes serving three-year staggered terms. The staggering of our board of directors may discourage offers for the Company or make an acquisition more difficult, even when an acquisition may be viewed to be in the best interest of our stockholders. We could issue stock without stockholder approval.
Our directors are divided into three classes serving three-year staggered terms. The staggering of our board of directors may discourage offers for the Company or make an acquisition more difficult, even when an acquisition may be viewed to be in the best interest of our stockholders. 16 Table of Contents We could issue stock without stockholder approval.
Acquisitions entail risks that investments will fail to perform in accordance with expectations, as well as general investment risks associated with any new real estate investment. Loss of revenues from tenants would reduce the Company’s cash flow. Our tenants encounter significant macroeconomic, governmental and competitive forces.
Acquisitions entail risks that investments will fail to perform in accordance with expectations, as well as general investment risks associated with any new real estate investment. 10 Table of Contents Loss of revenues from tenants would reduce the Company’s cash flow. Our tenants encounter significant macroeconomic, governmental and competitive forces.
The more favorable rates applicable to regular corporate distributions could cause investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT 20 Table of Contents corporations that pay distributions. This could materially and adversely affect the value of the stock of REITs, including our common stock.
The more favorable rates applicable to regular corporate distributions could cause investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay distributions. This could materially and adversely affect the value of the stock of REITs, including our common stock.
Other legislative proposals could be enacted in the future that could affect REITs and their stockholders. Prospective investors are urged to consult their tax advisors regarding the effect of these tax law changes and any other potential tax law changes on an investment in our common stock.
Other legislative proposals could be enacted in the future that could affect REITs and their 18 Table of Contents stockholders. Prospective investors are urged to consult their tax advisors regarding the effect of these tax law changes and any other potential tax law changes on an investment in our common stock.
Any scrutiny of our sustainability disclosures or our failure to achieve related strategies, commitments and targets could negatively impact our reputation or performance. 12 Table of Contents General Real Estate Risk Our performance and value are subject to general economic conditions and risks associated with our real estate assets. There are risks associated with owning and leasing real estate.
Any scrutiny of our sustainability disclosures or our failure to achieve related strategies, commitments and targets could negatively impact our reputation or performance. General Real Estate Risk Our performance and value are subject to general economic conditions and risks associated with our real estate assets. There are risks associated with owning and leasing real estate.
There can be no assurance that we will be able to retain tenants in any of our properties upon the expiration of their leases. 13 Table of Contents Our leases contain certain limitations on tenants’ real estate tax, insurance and operating cost reimbursement obligations.
There can be no assurance that we will be able to retain tenants in any of our properties upon the expiration of their leases. Our leases contain certain limitations on tenants’ real estate tax, insurance and operating cost reimbursement obligations.
In addition, losses in our TRSs will generally not provide any tax benefit, except for being carried forward against future taxable income in the TRSs. General Risks Loss of our key personnel could materially impair our ability to operate successfully.
In addition, losses in our TRSs will generally not provide any tax benefit, except for being carried forward against future taxable income in the TRSs. 20 Table of Contents General Risks Loss of our key personnel could materially impair our ability to operate successfully.
Cybersecurity incidents could cause operational interruption, damage to our business relationships, private data exposure (including personally identifiable information, or proprietary and confidential information, of ours and our team members, as well as third parties) and affect the efficiency of our business operations.
Cybersecurity incidents could cause 11 Table of Contents operational interruption, damage to our business relationships, private data exposure (including personally identifiable information, or proprietary and confidential information, of ours and our team members, as well as third parties) and affect the efficiency of our business operations.
We believe these risks, assumptions, uncertainties and other factors, individually or in the 9 Table of Contents aggregate, could cause our actual results to differ materially from expected and historical results and could materially and adversely affect our business operations, results of operations, financial condition and liquidity.
We believe these risks, assumptions, uncertainties and other factors, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results and could materially and adversely affect our business operations, results of operations, financial condition and liquidity.
However, we bear all expenses incurred by our operations, and our funds generated by operations, after deducting these expenses, may not be sufficient to cover desired 11 Table of Contents levels of dividends to our stockholders. We cannot assure our stockholders that sufficient funds will be available to pay dividends.
However, we bear all expenses incurred by our operations, and our funds generated by operations, after deducting these expenses, may not be sufficient to cover desired levels of dividends to our stockholders. We cannot assure our stockholders that sufficient funds will be available to pay dividends.
We may be required to invest in the restoration or modification of a property before we can sell it, or we may need to obtain landlord consent to sell certain assets in which we have a leasehold interest in the land underlying the buildings.
We may be required to invest in the restoration or modification 12 Table of Contents of a property before we can sell it, or we may need to obtain landlord consent to sell certain assets in which we have a leasehold interest in the land underlying the buildings.
A majority of our leases require our tenants to comply with environmental laws and to indemnify us against environmental liability arising from the operation of the properties. However, we could be subject to strict liability under environmental laws because we own the properties.
A majority of our leases require our tenants to comply with environmental laws and to indemnify us against environmental liability arising from the operation of the properties. However, we could be subject to strict liability under environmental 13 Table of Contents laws because we own the properties.
In addition, any payment on a claim we have for unpaid past rent could be substantially less than the amount owed. 10 Table of Contents Our portfolio is concentrated in certain states, which makes us more susceptible to adverse events in these areas.
In addition, any payment on a claim we have for unpaid past rent could be substantially less than the amount owed. Our portfolio is concentrated in certain states, which makes us more susceptible to adverse events in these areas.
Our tenants are concentrated in certain retail sectors, which makes us susceptible to adverse conditions impacting these sectors. As of December 31, 2022, 9.1%, 8.9% and 8.9% of our annualized contractual base rent and interest were derived from tenants operating in the home improvement, grocery store, and tire and auto service sectors, respectively.
Our tenants are concentrated in certain retail sectors, which makes us susceptible to adverse conditions impacting these sectors. As of December 31, 2023, 9.6%, 8.7% and 8.6% of our annualized contractual base rent and interest were derived from tenants operating in the grocery store, home improvement, and tire and auto service sectors, respectively.
A REIT may own up to 100% of the stock of one or more TRSs. A TRS may earn income that would not be qualifying income if earned directly by the parent REIT. Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs.
A TRS may earn income that would not be qualifying income if earned directly by the parent REIT. Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs.
Any failure, inadequacy or interruption could materially harm our business. Furthermore, our business is subject to risks from and may be impacted by cybersecurity attacks, including attempts to gain unauthorized access to our confidential data and other electronic security breaches.
Any failure, inadequacy or interruption could materially harm our business and/or damage our business relationships and our reputation. Furthermore, our business is subject to risks from and may be impacted by cybersecurity attacks or cyber intrusion, including attempts to gain unauthorized access to our confidential data and other electronic security breaches.
If we are compelled to liquidate our investments to repay obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any gain if we sell assets in transactions that are considered to be “prohibited transactions,” which are explained in the risk factor below.
If we are compelled to liquidate our investments to repay obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any gain if we sell assets in transactions that are considered to be “prohibited transactions,” which are explained in the risk factor below. 19 Table of Contents We may be subject to other tax liabilities even if we qualify as a REIT.
The extent to which the COVID-19 pandemic, or a future pandemic, impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence. The rapid development and fluidity of the COVID-19 pandemic, or a future pandemic, precludes any prediction as to the full adverse impacts on our business.
The extent to a future pandemic impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence. A future pandemic precludes any prediction as to the full adverse impacts on our business.
At December 31, 2022, our ratio of total debt to enterprise value (assuming conversion of Operating Partnership Common Units into shares of common stock) was approximately 23.0%.
At December 31, 2023, our ratio of total debt to enterprise value (assuming conversion of Operating Partnership Common Units into shares of common stock) was approximately 27.2%.
Nevertheless, the COVID-19 pandemic, of a future pandemic, presents a material uncertainty and risk with respect to our financial condition, results of operations, cash flows and performance. 22 Table of Contents
Nevertheless, a future pandemic presents a material uncertainty and risk with respect to our financial condition, results of operations, cash flows and performance.
This expansion of e-commerce could have an adverse impact on our tenant’s ongoing viability. The default, financial distress, bankruptcy or liquidation of one or more of our tenants could cause substantial vacancies in our property portfolio or impact our tenants’ ability to pay rent. Vacancies reduce our revenues, increase property expenses and could decrease the value of each vacant property.
The default, financial distress, bankruptcy or liquidation of one or more of our tenants could cause substantial vacancies in our property portfolio or impact our tenants’ ability to pay rent. Vacancies reduce our revenues, increase property expenses and could decrease the value of each vacant property.
Additionally, our charter provides our board of directors with the power, under certain circumstances, to revoke or otherwise terminate our REIT election and cause us to be taxed as a regular corporation, without the approval of our stockholders.
The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. Additionally, our charter provides our board of directors with the power, under certain circumstances, to revoke or otherwise terminate our REIT election and cause us to be taxed as a regular corporation, without the approval of our stockholders.
This individual may have personal interests that conflict with the interests of our stockholders with respect to business decisions affecting us and the Operating Partnership, such as interests in the timing and pricing of property sales or refinancing in order to obtain favorable tax treatment.
This individual may have personal interests that conflict with the interests of our stockholders with respect to business decisions affecting us and the Operating Partnership, such as interests in the timing and pricing of property sales or refinancing in order to obtain favorable tax treatment. 17 Table of Contents Federal Income Tax Risks Complying with REIT requirements may cause us to forego otherwise attractive opportunities.
Changes in global or national economic conditions, such as a market downturn or a disruption in the capital markets, may cause, among other things, a significant tightening in the credit markets, lower levels of liquidity, increases in the rate of default and bankruptcy and lower consumer spending and business spending, which could adversely affect our business and operations.
Changes in global or national economic conditions, such as the global economic and financial market downturn, rising tensions between China and Taiwan and the conflicts in Ukraine and in the Middle East, may cause or continue to cause, among other things, tightening in the credit markets, lower levels of liquidity, increases in the rate of default and bankruptcy and lower consumer spending and business spending, which could adversely affect our business and operations.
Incurring substantial debt may adversely affect our business and operating results by: ● Requiring us to use a substantial portion of our cash flow to pay interest and principal, which reduces the amount available for distributions, acquisitions and capital expenditures; ● Making us more vulnerable to economic and industry downturns and reducing our flexibility to respond to changing business and economic conditions; ● Requiring us to agree to less favorable terms, including higher interest rates, in order to incur additional debt, and otherwise limiting our ability to borrow for operations, working capital or to finance acquisitions in the future; or ● Limiting our flexibility in conducting our business, including our ability to finance or refinance our assets, contribute assets to joint ventures or sell assets as needed, which may place us at a disadvantage compared to competitors with less debt or debt with less restrictive terms.
Incurring substantial debt may adversely affect our business and operating results by: ● Requiring us to use a substantial portion of our cash flow to pay interest and principal, which reduces the amount available for distributions, acquisitions and capital expenditures; ● Making us more vulnerable to economic and industry downturns and reducing our flexibility to respond to changing business and economic conditions; ● Requiring us to agree to less favorable terms, including higher interest rates, in order to incur additional debt, and otherwise limiting our ability to borrow for operations, working capital or to finance acquisitions in the future; or ● Limiting our flexibility in conducting our business, including our ability to finance or refinance our assets, contribute assets to joint ventures or sell assets as needed, which may place us at a disadvantage compared to competitors with less debt or debt with less restrictive terms. 14 Table of Contents In addition, the use of leverage presents an additional element of risk in the event that (1) the cash flow from lease payments on our properties is insufficient to meet debt obligations, (2) we are unable to refinance our debt obligations as necessary or on as favorable terms, (3) there is an increase in interest rates, (4) we default on our financial obligations or (5) debt service requirements increase.
In the event of a substantial unreimbursed loss, we would remain obligated to repay any mortgage indebtedness or other obligations related to the property. 14 Table of Contents Risks Related to Our Debt Financings Our level of indebtedness could materially and adversely affect our financial position, including reducing funds available for other business purposes and reducing our operational flexibility, and we may have future capital needs and may not be able to obtain additional financing on acceptable terms.
Risks Related to Our Debt Financings Our level of indebtedness could materially and adversely affect our financial position, including reducing funds available for other business purposes and reducing our operational flexibility, and we may have future capital needs and may not be able to obtain additional financing on acceptable terms.
Our properties are located in 48 states throughout the United States and in particular, the state of Texas (where 124 properties out of 1,839 properties are located, or 7.3% of our annualized base rent was derived as of December 31, 2022), Ohio (122 properties, or 5.7% of our annualized base rent) Florida (116 properties, or 5.6% of our annualized base rent), Michigan (101 properties, or 5.6% of our annualized base rent), and Illinois (106 properties, or 5.5% of our annualized rent).
Our properties are located in 49 states throughout the United States and in particular, the state of Texas (where 143 properties out of 2,135 properties are located, or 7.2% of our annualized base rent was derived as of December 31, 2023), Florida (137 properties, or 6.1% of our annualized base rent), Illinois (124 properties, or 5.5% of our annualized base rent), North Carolina (127 properties, or 5.5% of our annualized base rent), and Ohio (133 properties, or 5.3% of our annualized rent).
Federal Income Tax Risks Complying with REIT requirements may cause us to forego otherwise attractive opportunities. To qualify as a REIT for federal income tax purposes we must continually satisfy numerous income, asset and other tests, thus having to forego investments we might otherwise make and hindering our investment performance.
To qualify as a REIT for federal income tax purposes we must continually satisfy numerous income, asset and other tests, thus having to forego investments we might otherwise make and hindering our investment performance. Failure to qualify as a REIT could adversely affect our operations and our ability to make distributions.
In addition, if we fail to qualify as a REIT, we will no longer be required to pay dividends (other than any mandatory dividends on any preferred shares we may offer).
In addition, if we fail to qualify as a REIT, we will no longer be required to pay dividends (other than any mandatory dividends on any preferred shares we may offer). As a result of these factors, our failure to qualify as a REIT could adversely affect the market price for our common stock.
For example, we will be subject to federal income tax on any of our REIT taxable income (including capital gains) that we do not distribute annually to our stockholders.
Even if we remain qualified as a REIT for federal income tax purposes, we will be required to pay certain federal, state and local taxes on our income and property. For example, we will be subject to federal income tax on any of our REIT taxable income (including capital gains) that we do not distribute annually to our stockholders.
Changes to the federal income tax laws are proposed regularly. Additionally, the REIT rules are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury, which may result in revisions to regulations and interpretations in addition to statutory changes.
Additionally, the REIT rules are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury, which may result in revisions to regulations and interpretations in addition to statutory changes. If enacted, certain such changes could have an adverse impact on our business and financial results.
As a result of these factors, our failure to qualify as a REIT could adversely affect the market price for our common stock. 18 Table of Contents U.S. federal tax reform legislation could affect REITs generally, the geographic markets in which we operate, our stock and our results of operations, both positively and negatively in ways that are difficult to anticipate.
U.S. federal tax reform legislation could affect REITs generally, the geographic markets in which we operate, our stock and our results of operations, both positively and negatively in ways that are difficult to anticipate. Changes to the federal income tax laws are proposed regularly.
In addition, we may issue preferred stock or other securities convertible into equity securities with a distribution preference or a liquidation preference that may limit our ability to make distributions on our common stock.
In addition, we may issue preferred stock or other securities convertible into equity securities with a distribution preference or a liquidation preference that may limit our ability to make distributions on our common stock. Our ability to estimate the amount, timing or nature of additional offerings is limited as these factors will depend upon market conditions and other factors.
Furthermore, failure to meet certain of these financial covenants could cause an event of default under and/or accelerate some or all of such indebtedness which could have a material adverse effect on us. 15 Table of Contents An increase in market interest rates could raise our interest costs on existing and future debt or adversely affect our stock price, and a decrease in interest rates may lead to additional competition for the acquisition of real estate or adversely affect our results of operations.
An increase in market interest rates could raise our interest costs on existing and future debt or adversely affect our stock price, and a decrease in interest rates may lead to additional competition for the acquisition of real estate or adversely affect our results of operations.
Our ability to estimate the amount, timing or nature of additional offerings is limited as these factors will depend upon market conditions and other factors. 16 Table of Contents Risks Related to Our Corporate Structure Our charter, bylaws and Maryland law contain provisions that may delay, defer or prevent a change of control transaction. Our charter contains 9.8% ownership limits.
Risks Related to Our Corporate Structure Our charter, bylaws and Maryland law contain provisions that may delay, defer or prevent a change of control transaction. Our charter contains 9.8% ownership limits.
Although we believe that we are organized and operate in such a manner so as to qualify as a REIT under the Internal Revenue Code, no assurance can be given that we will remain so qualified. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations.
We will be subject to increased taxation if we fail to qualify as a REIT for federal income tax purposes. Although we believe that we are organized and operate in such a manner so as to qualify as a REIT under the Internal Revenue Code, no assurance can be given that we will remain so qualified.
If this occurs, we may have to borrow funds or liquidate some of our assets in order to meet the distribution requirement applicable to a REIT. 19 Table of Contents Our ownership of and relationship with our TRSs will be limited, and a failure to comply with the limits would jeopardize our REIT status and may result in the application of a 100% excise tax.
Our ownership of and relationship with our TRSs will be limited, and a failure to comply with the limits would jeopardize our REIT status and may result in the application of a 100% excise tax. A REIT may own up to 100% of the stock of one or more TRSs.
Our hedging strategies may not be successful in mitigating our risks associated with interest rates and could reduce the overall returns on your investment. We use various derivative financial instruments to provide a level of protection against interest rate risks, but no hedging strategy can protect us completely.
We use various derivative financial instruments to provide a level of protection against interest rate risks, but no hedging strategy can protect us completely.
Increased competition for the acquisition of real estate may lead to a decrease in the yields on real estate targeted for acquisition. In such circumstances, if we are not able to offset the decrease in yields by obtaining lower interest costs on our borrowings, our results of operations may be adversely affected.
In such circumstances, if we are not able to offset the decrease in yields by obtaining lower interest costs on our borrowings, our results of operations may be adversely affected. 15 Table of Contents Our hedging strategies may not be successful in mitigating our risks associated with interest rates and could reduce the overall returns on your investment.
Adverse changes in consumer spending or consumer preferences for particular goods, services or store-based retailing could severely impact their ability to pay rent. Shifts from in-store to online shopping could increase due to changing consumer shopping patterns as well as the increase in consumer adoption and use of mobile electronic devices.
Shifts from in-store to online shopping could increase due to changing consumer shopping patterns as well as the increase in consumer adoption and use of mobile electronic devices. This expansion of e-commerce could have an adverse impact on our tenant’s ongoing viability.
Rising interest rates could limit our ability to refinance existing debt when it matures or cause us to pay higher interest rates upon refinancing.
For example, the increase in interest rates has led to an increase in our cost of capital, resulting in requiring acquisition opportunities to have higher investment yields to achieve our investment goals and objectives. Rising interest rates could limit our ability to refinance existing debt when it matures or cause us to pay higher interest rates upon refinancing.
The complexity of these provisions and applicable treasury regulations is also increased in the context of a REIT that holds its assets in partnership form. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT.
Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations. The complexity of these provisions and applicable treasury regulations is also increased in the context of a REIT that holds its assets in partnership form.
Removed
In addition, the use of leverage presents an additional element of risk in the event that (1) the cash flow from lease payments on our properties is insufficient to meet debt obligations, (2) we are unable to refinance our debt obligations as necessary or on as favorable terms, (3) there is an increase in interest rates, (4) we default on our financial obligations or (5) debt service requirements increase.
Added
For example, the current and continued macro-economic conditions of high inflation and increased interest rates have increased the costs associated with acquiring new properties and decreased the availability of financing on terms that we find acceptable, which has reduced our ability to acquire properties at our historical rate with attractive terms.
Removed
Failure to qualify as a REIT could adversely affect our operations and our ability to make distributions. We will be subject to increased taxation if we fail to qualify as a REIT for federal income tax purposes.
Added
Beginning in 2022, in an effort to combat inflation and restore price stability, the Federal Reserve significantly raised its benchmark federal funds rate, which led to increases in interest rates in the credit markets.
Removed
If enacted, certain such changes could have an adverse impact on our business and financial results.
Added
The Federal Reserve may continue to raise the federal funds rate, which will likely lead to higher interest rates in the credit markets and the possibility of slowing economic growth and/or a recession.
Removed
We may be subject to other tax liabilities even if we qualify as a REIT. Even if we remain qualified as a REIT for federal income tax purposes, we will be required to pay certain federal, state and local taxes on our income and property.
Added
Additionally, U.S. government policies implemented to address inflation, including actions by the Federal Reserve to increase interest rates, could negatively impact consumer spending and adversely impact the broader economy. Adverse changes in consumer spending or consumer preferences for particular goods, services or store-based retailing could severely impact their ability to pay rent.
Removed
The COVID-19 pandemic, its variants, and the future outbreak of other highly infectious or contagious diseases, could materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance.
Added
Inflation, changes in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace or renovate an affected property after it has been damaged or destroyed. Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position on the damaged or destroyed property.
Removed
The COVID-19 pandemic, including continued spread of new variants, has had, and other pandemics in the future could have, repercussions across regional and global economies and financial markets.
Added
In the event of a substantial unreimbursed loss, we would remain obligated to repay any mortgage indebtedness or other obligations related to the property. It has generally become more difficult and expensive to obtain property insurance, including coverage for terrorism.
Added
When our current insurance policies expire, we may encounter difficulty in obtaining or renewing property insurance on our properties at the same levels of coverage and under similar terms. Such insurance may be more limited and for some catastrophic risks (for example, earthquake, flood and terrorism) may not be generally available at current levels.
Added
Even if we are able to renew our policies or to obtain new policies at levels and with limitations consistent with our current policies, we cannot be sure that we will be able to obtain such insurance at premium rates that are commercially reasonable.
Added
If we were unable to obtain adequate insurance on our properties for certain risks, it could cause us to be in default under specific covenants on certain of our indebtedness or other contractual commitments that require us to maintain adequate insurance to protect against the risk of loss.
Added
If this were to occur, or if we were unable to obtain adequate insurance and our properties experience damage which would otherwise have been covered by insurance, it could materially and adversely affect our financial condition and the operations of our properties.
Added
Furthermore, failure to meet certain of these financial covenants could cause an event of default under and/or accelerate some or all of such indebtedness which could have a material adverse effect on us.
Added
Increased competition for the acquisition of real estate may lead to a decrease in the yields on real estate targeted for acquisition.
Added
If this occurs, we may have to borrow funds or liquidate some of our assets in order to meet the distribution requirement applicable to a REIT.

Item 2. Properties

Properties — owned and leased real estate

8 edited+1 added−4 removed1 unchanged
Biggest changeTenant Sector Base Rent (1) Base Rent Texas ​ $ 34,202 7.3 % Ohio ​ 26,661 5.7 % Florida ​ 26,317 5.6 % Michigan ​ 26,139 5.6 % Illinois ​ 26,069 5.5 % North Carolina ​ 25,095 5.3 % New Jersey ​ 22,198 4.7 % Pennsylvania ​ 22,097 4.7 % California ​ 20,010 4.3 % New York ​ 18,992 4.0 % Georgia ​ 16,174 3.4 % Virginia ​ 14,415 3.1 % Connecticut ​ ​ 12,618 ​ 2.7 % Wisconsin ​ ​ 12,356 ​ 2.6 % Other(2) ​ ​ 167,072 ​ 35.5 % Total ​ $ 470,415 100.0 % (1) Represents annualized contractual base rent on a straight-line basis as of December 31, 2022.
Biggest changeTenant Sector Base Rent (1) Base Rent Texas ​ $ 40,096 7.2 % Florida ​ 33,844 6.1 % Illinois ​ 30,816 5.5 % North Carolina ​ 30,778 5.5 % Ohio ​ 29,341 5.3 % Michigan ​ 27,810 5.0 % Pennsylvania ​ 26,126 4.7 % New Jersey ​ ​ 23,122 ​ 4.2 % California ​ ​ 22,191 ​ 4.0 % New York ​ ​ 21,193 ​ 3.8 % Georgia ​ ​ 20,564 ​ 3.7 % Wisconsin ​ ​ 15,719 ​ 2.8 % Virginia ​ ​ 15,270 ​ 2.7 % Missouri ​ ​ 14,908 ​ 2.7 % Louisiana ​ ​ 14,033 ​ 2.5 % Kansas ​ ​ 13,661 2.5 % Connecticut ​ ​ 12,762 2.3 % South Carolina ​ ​ 12,443 2.2 % Mississippi ​ ​ 12,379 2.2 % Minnesota ​ ​ 11,596 2.1 % Massachusetts ​ ​ 11,274 2.0 % Tennessee ​ ​ 10,308 1.9 % Oklahoma ​ ​ 9,419 1.7 % Alabama ​ 9,308 1.7 % Kentucky ​ 8,448 1.5 % Indiana ​ 8,437 1.5 % Maryland ​ 8,367 1.5 % Other(2) ​ ​ 62,152 ​ 11.2 % Total ​ $ 556,365 100.0 % (1) Represents annualized contractual base rent on a straight-line basis as of December 31, 2023.
(2) Includes tenants generating less than 1.5% of annualized contractual base rent. 23 Table of Contents Tenant Sector Diversification The following table presents annualized base rents for all sectors as of December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ($ in thousands) ​ ​ ​ ​ Annualized ​ % of Ann.
(2) Includes tenants generating less than 1.5% of annualized contractual base rent. 25 Table of Contents Tenant Sector Diversification The following table presents annualized base rents for all sectors as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ($ in thousands) ​ ​ ​ ​ Annualized ​ % of Ann.
Item 2: Properties As of December 31, 2022, our portfolio consisted of 1,839 properties located in 48 states and totaling approximately 38.1 million square feet of GLA. As of December 31, 2022, our portfolio was approximately 99.7% leased and had a weighted average remaining lease term of approximately 8.8 years.
Item 2: Properties As of December 31, 2023, the Company’s portfolio consisted of 2,135 properties located in 49 states and totaling approximately 44.2 million square feet of GLA. As of December 31, 2023, the Company’s portfolio was approximately 99.8% leased and had a weighted average remaining lease term of approximately 8.4 years.
In addition, our tenants are typically subject to future rent increases based on fixed amounts or increases in the consumer price index and certain leases provide for additional rent calculated as a percentage of the tenants’ gross sales above a specified level.
In addition, our tenants are typically subject to future rent increases based on fixed amounts or increases in the consumer price index and certain leases provide for additional rent calculated as a percentage of the tenants’ gross sales above a specified level. 24 Table of Contents Tenant Diversification The following table presents annualized base rents for all tenants that generated 1.5% or greater of our total annualized base rent as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ($ in thousands) ​ ​ ​ ​ Annualized ​ % of Ann.
A significant majority of our properties are leased to national tenants and approximately 67.8% of our annualized base rent was derived from tenants, or parents thereof, with an investment grade credit rating. Substantially all of our tenants are subject to net lease agreements.
A significant majority of the Company’s properties are leased to national tenants and approximately 69.1% of our annualized base rent was derived from tenants, or parent entities thereof, with an investment grade credit rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or National Association of Insurance Commissioners. Substantially all of our tenants are subject to net lease agreements.
Tenant Sector Base Rent (1) Base Rent Home Improvement ​ $ 42,754 ​ 9.1 % Grocery Stores ​ 41,884 ​ 8.9 % Tire and Auto Service ​ 41,612 ​ 8.9 % Dollar Stores ​ 36,241 ​ 7.7 % Convenience Stores ​ 35,842 ​ 7.6 % General Merchandise ​ 30,476 ​ 6.5 % Off-Price Retail ​ 28,782 ​ 6.1 % Auto Parts ​ 27,301 ​ 5.8 % Farm and Rural Supply ​ 22,187 ​ 4.7 % Consumer Electronics ​ 21,723 ​ 4.6 % Pharmacy ​ 20,823 ​ 4.4 % Crafts and Novelties ​ 14,208 ​ 3.0 % Discount Stores ​ 11,212 ​ 2.4 % Equipment Rental ​ 10,398 ​ 2.2 % Warehouse Clubs ​ 10,100 ​ 2.2 % Health Services ​ ​ 9,496 ​ 2.0 % Health and Fitness ​ ​ 8,082 ​ 1.7 % Restaurants - Quick Service ​ ​ 7,931 ​ 1.7 % Dealerships ​ ​ 6,506 ​ 1.4 % Specialty Retail ​ ​ 6,306 ​ 1.3 % Restaurants - Casual Dining ​ ​ 5,243 ​ 1.1 % Home Furnishings ​ ​ 4,898 ​ 1.0 % Sporting Goods ​ ​ 4,835 ​ 1.0 % Financial Services ​ ​ 4,606 ​ 1.0 % Theaters ​ ​ 3,848 ​ 0.8 % Pet Supplies ​ ​ 3,146 ​ 0.7 % Entertainment Retail ​ ​ 2,323 ​ 0.5 % Beauty and Cosmetics ​ ​ 2,259 ​ 0.5 % Shoes ​ ​ 2,005 ​ 0.4 % Apparel ​ ​ 1,418 ​ 0.3 % Miscellaneous ​ ​ 1,175 ​ 0.3 % Office Supplies ​ 795 ​ 0.2 % Total ​ $ 470,415 100.0 % (1) Represents annualized contractual base rent on a straight-line basis as of December 31, 2022. 24 Table of Contents Geographic Diversification The following table presents annualized base rents, by state, for our portfolio as of December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ($ in thousands) ​ ​ ​ ​ ​ Annualized ​ % of Ann.
Tenant Sector Base Rent (1) Base Rent Grocery Stores ​ $ 53,240 ​ 9.6 % Home Improvement ​ 48,147 ​ 8.7 % Tire and Auto Service ​ 47,661 ​ 8.6 % Convenience Stores ​ 46,135 ​ 8.3 % Dollar Stores ​ 42,310 ​ 7.6 % Off-Price Retail ​ 34,920 ​ 6.3 % General Merchandise ​ 32,331 ​ 5.8 % Auto Parts ​ 31,636 ​ 5.7 % Farm and Rural Supply ​ 29,883 ​ 5.4 % Pharmacy ​ 23,701 ​ 4.3 % Consumer Electronics ​ 21,730 ​ 3.9 % Crafts and Novelties ​ 16,915 ​ 2.9 % Discount Stores ​ 14,399 ​ 2.6 % Warehouse Clubs ​ 13,699 ​ 2.5 % Equipment Rental ​ 12,700 ​ 2.3 % Health Services ​ ​ 11,085 ​ 2.0 % Dealerships ​ ​ 10,276 ​ 1.7 % Restaurants - Quick Service ​ ​ 9,215 ​ 1.7 % Health and Fitness ​ ​ 8,660 ​ 1.6 % Specialty Retail ​ ​ 6,620 ​ 1.2 % Sporting Goods ​ ​ 6,208 ​ 1.1 % Financial Services ​ ​ 6,030 ​ 1.1 % Restaurants - Casual Dining ​ ​ 5,594 ​ 1.0 % Home Furnishings ​ ​ 4,001 ​ 0.7 % Theaters ​ ​ 3,854 ​ 0.7 % Pet Supplies ​ ​ 3,430 ​ 0.6 % Beauty and Cosmetics ​ ​ 3,233 ​ 0.6 % Shoes ​ ​ 2,875 ​ 0.5 % Entertainment Retail ​ ​ 2,323 ​ 0.4 % Apparel ​ ​ 1,531 ​ 0.3 % Miscellaneous ​ ​ 1,239 ​ 0.2 % Office Supplies ​ 784 ​ 0.1 % Total ​ $ 556,365 100.0 % (1) Represents annualized contractual base rent on a straight-line basis as of December 31, 2023. 26 Table of Contents Geographic Diversification The following table presents annualized base rents, by state, for our portfolio as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ($ in thousands) ​ ​ ​ ​ ​ Annualized ​ % of Ann.
Tenant / Concept Base Rent (1) Base Rent Walmart ​ $ 31,924 6.8 % Dollar General ​ 23,465 5.0 % Tractor Supply ​ 20,649 4.4 % Best Buy ​ 19,515 4.1 % Dollar Tree ​ 14,240 3.0 % TJX Companies ​ 14,216 3.0 % O'Reilly Auto Parts ​ 14,137 3.0 % CVS ​ 14,117 3.0 % Kroger ​ 12,856 2.7 % Lowe's ​ 12,210 2.6 % Hobby Lobby ​ 11,904 2.5 % Burlington ​ 11,408 2.4 % Sherwin-Williams ​ 10,849 2.3 % Sunbelt Rentals ​ ​ 10,072 2.1 % Wawa ​ ​ 9,668 2.1 % Home Depot ​ ​ 8,880 1.9 % TBC Corporation ​ 8,437 1.8 % Gerber Collision ​ 7,538 1.6 % Goodyear ​ 7,522 1.6 % AutoZone ​ 7,466 1.6 % Other (2) ​ 199,342 42.5 % Total ​ $ 470,415 100.0 % (1) Represents annualized contractual base rent on a straight-line basis as of December 31, 2022.
Tenant / Concept Base Rent (1) Base Rent Walmart ​ $ 33,864 6.1 % Tractor Supply ​ 28,155 5.1 % Dollar General ​ 26,831 4.8 % Best Buy ​ 19,515 3.5 % CVS ​ 17,310 3.1 % TJX Companies ​ 17,008 3.1 % Dollar Tree ​ 16,987 3.1 % Kroger ​ 16,315 2.9 % O'Reilly Auto Parts ​ 16,107 2.9 % Hobby Lobby ​ 14,637 2.6 % Lowe's ​ 14,025 2.5 % Burlington ​ 13,770 2.5 % 7-Eleven ​ 12,431 2.2 % Sunbelt Rentals ​ ​ 12,374 2.2 % Gerber Collision ​ ​ 11,880 2.1 % Sherwin-Williams ​ ​ 11,423 2.1 % Wawa ​ 10,185 1.8 % Home Depot ​ 8,880 1.6 % BJ's Wholesale Club ​ 8,713 1.6 % Other(2) ​ 245,955 44.2 % Total ​ $ 556,365 100.0 % (1) Represents annualized contractual base rent on a straight-line basis as of December 31, 2023.
(2) Includes states generating less than 2.5% of annualized contractual base rent. ​ Lease Expirations The following table presents contractual lease expirations within the Company’s portfolio as of December 31, 2022, assuming that no tenants exercise renewal options: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ and GLA in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Annualized Base Rent (1) ​ Gross Leasable Area ​ ​ Number of ​ ​ ​ ​ % of ​ ​ ​ % of Year Leases Dollars Total Square Feet Total 2023 33 ​ $ 6,083 1.3 % 714 1.9 % 2024 47 ​ 13,963 3.0 % 1,623 4.3 % 2025 71 ​ 17,582 3.7 % 1,688 4.4 % 2026 114 ​ 24,966 5.3 % 2,657 7.0 % 2027 131 ​ 30,453 6.5 % 2,881 7.6 % 2028 142 ​ 36,855 7.8 % 3,350 8.8 % 2029 158 ​ 43,537 9.3 % 4,285 11.2 % 2030 253 ​ 52,183 11.1 % 3,962 10.4 % 2031 164 ​ 38,612 8.2 % 2,821 7.4 % 2032 198 ​ 39,170 8.3 % 3,051 8.0 % Thereafter 678 ​ 167,011 35.5 % 11,001 29.0 % Total 1,989 ​ $ 470,415 100.0 % 38,033 100.0 % (1) Represents annualized contractual base rent on a straight-line basis as of December 31, 2022. 25 Table of Contents Developments During the fourth quarter, the Company commenced six development and PCS projects, with total anticipated costs of approximately $37.3 million.
(2) Includes states generating less than 1.5% of annualized contractual base rent. 27 Table of Contents ​ Lease Expirations The following table presents contractual lease expirations within the Company’s portfolio as of December 31, 2023, assuming that no tenants exercise renewal options: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ and GLA in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Annualized Base Rent (1) ​ Gross Leasable Area ​ ​ Number of ​ ​ ​ ​ % of ​ ​ ​ % of Year Leases Dollars Total Square Feet Total 2024 28 ​ $ 6,106 1.1 % 722 1.6 % 2025 73 ​ 17,153 3.1 % 1,684 3.8 % 2026 120 ​ 26,874 4.8 % 2,769 6.3 % 2027 155 ​ 34,038 6.1 % 3,119 7.1 % 2028 175 ​ 45,925 8.3 % 4,155 9.5 % 2029 182 ​ 55,189 9.9 % 5,379 12.2 % 2030 265 ​ 55,218 9.9 % 4,240 9.7 % 2031 180 ​ 42,434 7.6 % 3,119 7.1 % 2032 232 ​ 48,165 8.7 % 3,559 8.1 % 2033 193 ​ 45,005 8.1 % 3,485 7.9 % Thereafter 706 ​ 180,258 32.4 % 11,691 26.7 % Total 2,309 ​ $ 556,365 100.0 % 43,922 100.0 % (1) Represents annualized contractual base rent on a straight-line basis as of December 31, 2023.
Removed
Tenant Diversification The following table presents annualized base rents for all tenants that generated 1.5% or greater of our total annualized base rent as of December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ($ in thousands) ​ ​ ​ ​ Annualized ​ % of Ann.
Added
Developments During the year ended December 31, 2023, the Company had 37 development or Developer Funding Platform projects completed or under construction, for which 16 remained under construction as of December 31, 2023. Anticipated total costs for the 16 projects are approximately $63.7 million. ​ ​
Removed
Construction continued during the quarter on 18 projects with anticipated costs totaling approximately $58.6 million. The Company completed two projects during the quarter, which include a Gerber Collision in Kimberly, Wisconsin and a Sunbelt Rentals in Roxana, Illinois. ​ During the year ended December 31, 2022, the Company had 31 development or PCS projects completed or under construction.
Removed
Anticipated total costs for those projects are approximately $118.5 million and include the following completed or commenced projects: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Actual or ​ ​ ​ ​ ​ ​ ​ Lease ​ Anticipated Rent ​ Tenant ​ Location ​ Lease Structure ​ Term ​ Commencement ​ Status 7-Eleven ​ Saginaw, MI ​ Build-to-Suit ​ 15 years ​ Q1 2022 ​ Complete Gerber Collision ​ Pooler, GA ​ Build-to-Suit ​ 15 years ​ Q2 2022 ​ Complete Burlington ​ Turnersville, NJ ​ Build-to-Suit ​ 10 years ​ Q3 2022 ​ Complete Gerber Collision ​ Janesville, WI ​ Build-to-Suit ​ 15 years ​ Q3 2022 ​ Complete Gerber Collision ​ New Port Richey, FL ​ Build-to-Suit ​ 15 years ​ Q3 2022 ​ Complete Gerber Collision ​ Kimberly, WI ​ Build-to-Suit ​ 15 years ​ Q4 2022 ​ Complete Sunbelt Rentals ​ Roxana, IL ​ Build-to-Suit ​ 10 years ​ Q4 2022 ​ Complete Gerber Collision ​ Fort Wayne, IN ​ Build-to-Suit ​ 15 years ​ Q1 2023 ​ Under Construction Gerber Collision ​ Johnson City, NY ​ Build-to-Suit ​ 15 years ​ Q1 2023 ​ Under Construction Gerber Collision ​ Joplin, MO ​ Build-to-Suit ​ 15 years ​ Q1 2023 ​ Under Construction Gerber Collision ​ Lake Charles, LA ​ Build-to-Suit ​ 15 years ​ Q1 2023 ​ Under Construction Gerber Collision ​ Lake Park, FL ​ Build-to-Suit ​ 15 years ​ Q1 2023 ​ Under Construction Gerber Collision ​ McDonough, GA ​ Build-to-Suit ​ 15 years ​ Q1 2023 ​ Under Construction Gerber Collision ​ Murrieta, CA ​ Build-to-Suit ​ 15 years ​ Q1 2023 ​ Under Construction Gerber Collision ​ Ocala, FL ​ Build-to-Suit ​ 15 years ​ Q1 2023 ​ Under Construction Gerber Collision ​ Toledo, OH ​ Build-to-Suit ​ 15 years ​ Q1 2023 ​ Under Construction Gerber Collision ​ Venice, FL ​ Build-to-Suit ​ 15 years ​ Q1 2023 ​ Under Construction Gerber Collision ​ Winterville, NC ​ Build-to-Suit ​ 15 years ​ Q1 2023 ​ Under Construction Gerber Collision ​ Woodstock, IL ​ Build-to-Suit ​ 15 years ​ Q1 2023 ​ Under Construction Gerber Collision ​ Yorkville, IL ​ Build-to-Suit ​ 15 years ​ Q1 2023 ​ Under Construction Sunbelt Rentals ​ St.
Removed
Louis, MO ​ Build-to-Suit ​ 7 years ​ Q1 2023 ​ Under Construction Gerber Collision ​ Huntley, IL ​ Build-to-Suit ​ 15 years ​ Q2 2023 ​ Under Construction Gerber Collision ​ Lawrence, PA ​ Build-to-Suit ​ 15 years ​ Q2 2023 ​ Under Construction Gerber Collision ​ Springfield, MO ​ Build-to-Suit ​ 15 years ​ Q2 2023 ​ Under Construction HomeGoods ​ South Elgin, IL ​ Build-to-Suit ​ 10 years ​ Q2 2023 ​ Under Construction Old Navy ​ Searcy, AR ​ Build-to-Suit ​ 7 years ​ Q2 2023 ​ Under Construction Burlington ​ Brenham, TX ​ Build-to-Suit ​ 10 years ​ Q3 2023 ​ Under Construction Ulta Beauty ​ Brenham, TX ​ Build-to-Suit ​ 10 years ​ Q3 2023 ​ Under Construction Five Below ​ Onalaska, WI ​ Build-to-Suit ​ 10 years ​ Q3 2023 ​ Under Construction HomeGoods ​ Onalaska, WI ​ Build-to-Suit ​ 10 years ​ Q3 2023 ​ Under Construction Sierra Trading Post ​ Onalaska, WI ​ Build-to-Suit ​ 10 years ​ Q3 2023 ​ Under Construction TJ Maxx ​ Onalaska, WI ​ Build-to-Suit ​ 10 years ​ Q3 2023 ​ Under Construction Ulta Beauty ​ Onalaska, WI ​ Build-to-Suit ​ 11 years ​ Q3 2023 ​ Under Construction Gerber Collision ​ Blue Springs, MO ​ Build-to-Suit ​ 15 years ​ Q3 2023 ​ Under Construction Gerber Collision ​ Muskegon, MI ​ Build-to-Suit ​ 15 years ​ Q3 2023 ​ Under Construction Sunbelt Rentals ​ Wentzille, MO ​ Build-to-Suit ​ 12 years ​ Q3 2023 ​ Under Construction ​ ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeWe are not presently involved in any litigation nor, to our knowledge, is any other litigation threatened against us, other than routine litigation arising in 26 Table of Contents the ordinary course of business, which is expected to be covered by our liability insurance and all of which collectively is not expected to have a material adverse effect on our liquidity, results of operations or business or financial condition.
Biggest changeWe are not presently involved in any litigation nor, to our knowledge, is any other litigation threatened against us, other than routine litigation arising in the ordinary course of business, which is expected to be covered by our liability insurance and all of which collectively is not expected to have a material adverse effect on our liquidity, results of operations or business or financial condition.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−0 removed3 unchanged
Biggest changeSuch distributions are treated for REIT tax purposes as paid by us and received by our stockholders on December 31 of the year in which they are declared.
Biggest changeGenerally, such distributions are treated for REIT tax purposes as paid by us and received by our stockholders on December 31 of the year in which they are declared, however such distributions may be treated for REIT tax purposes as a distribution in the year in which they are paid if REIT distribution requirements have been met through earlier distributions.
We must pay these distributions in the taxable year the income is recognized; or in the following taxable year if they are declared during the last three months of the taxable year, payable to stockholders of record on a specified date during such period and paid during January of the following year.
The distributions must be paid in the taxable year the income is recognized; or in the following taxable year if they are declared during the last three months of the taxable year, payable to stockholders of record on a specified date during such period and paid during January of the following year.
The value of the common stock withheld was based on the closing price of our common stock on the applicable vesting date. Recent Sales of Unregistered Securities There were no unregistered sales of equity securities during the three months ended December 31, 2022.
The value of the common stock withheld was based on the closing price of our common stock on the applicable vesting date. Recent Sales of Unregistered Securities There were no unregistered sales of equity securities during the year ended December 31, 2023.
We have historically paid cash dividends, although we may choose to pay a portion in stock dividends in the future. To qualify as a REIT, we must distribute at least 90% of our REIT taxable income prior to net capital gains to our stockholders, as well as meet certain other requirements.
The Company has historically paid cash dividends, although we may choose to pay a portion in stock dividends in the future. To qualify as a REIT, distributions of at least 90% of our REIT taxable income prior to net capital gains must be made to our stockholders, as well as meet certain other requirements.
We intend to continue to declare regular dividends. However, our distributions are determined by our board of directors and will depend upon cash generated by operating activities, our financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Internal Revenue Code and such other factors as the board of directors deems relevant.
However, our distributions are determined by our board of directors and will depend upon cash generated by operating activities, our financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Internal Revenue Code and such other factors as the board of directors deems relevant.
The number of stockholders of record does not reflect persons or entities that held their shares in nominee or “street” name. In addition, at February 13, 2023 there were 347,619 outstanding Operating Partnership Common Units held by a limited partner other than our Company. The Operating Partnership Common Units are exchangeable into shares of common stock on a one-for-one basis.
The number of stockholders of record does not reflect persons or entities that held their shares in nominee or “street” name. In addition, at February 12, 2024 there were 347,619 outstanding Operating Partnership Common Units held by a limited partner other than our Company.
Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Dividend Policy Our common stock is traded on the NYSE under the symbol “ADC.” At February 13, 2023, there were 90,173,424 shares of our common stock issued and outstanding which were held by approximately 139 stockholders of record.
Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Dividend Policy The Company’s common stock is traded on the NYSE under the symbol “ADC.” At February 12, 2024, there were 100,519,355 shares of our common stock issued and outstanding which were held by approximately 159 stockholders of record.
Purchases of Equity Securities by the Issuer Common stock repurchases during the three months ended December 31, 2022 were: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Maximum Number ​ ​ ​ ​ Shares Purchased of Shares that May ​ ​ ​ ​ ​ ​ ​ as Part of Publicly ​ Yet Be Purchased ​ ​ Total Number of ​ ​ Average Price Paid ​ Announced Plans ​ Under the Plans Period ​ Shares Purchased ​ ​ Per Share ​ or Programs ​ or Programs October 1, 2022 - October 31, 2022 ​ — ​ $ — ​ — ​ — November 1, 2022 - November 30, 2022 ​ 82 ​ ​ 69.31 ​ — ​ — December 1, 2022 - December 31, 2022 ​ 172 ​ ​ 70.20 ​ — ​ — Total ​ 254 ​ $ 69.91 ​ — ​ — ​ 27 Table of Contents During the three months ended December 31, 2022, the Company withheld 254 shares from employees to satisfy estimated statutory income tax obligations related to vesting of restricted stock awards.
Purchases of Equity Securities by the Issuer Common stock repurchases during the three months ended December 31, 2023 were: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Maximum Number ​ ​ ​ ​ Shares Purchased of Shares that May ​ ​ ​ ​ ​ ​ ​ as Part of Publicly ​ Yet Be Purchased ​ ​ Total Number of ​ ​ Average Price Paid ​ Announced Plans ​ Under the Plans Period ​ Shares Purchased ​ ​ Per Share ​ or Programs ​ or Programs October 1, 2023 - October 31, 2023 ​ — ​ $ - ​ — ​ — November 1, 2023 - November 30, 2023 ​ 106 ​ ​ 56.96 ​ — ​ — December 1, 2023 - December 31, 2023 ​ 5 ​ ​ 60.98 ​ — ​ — Total ​ 111 ​ $ 57.15 ​ — ​ — ​ During the three months ended December 31, 2023, the Company withheld 111 shares from employees to satisfy estimated statutory income tax obligations related to vesting of restricted stock awards.
Added
The Operating Partnership Common Units are exchangeable into shares 28 Table of Contents of common stock on a one-for-one basis. The Company intends to continue to declare regular dividends.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

64 edited+31 added−23 removed34 unchanged
Biggest changeDebt The below table summarizes the Company’s outstanding debt as of December 31, 2022 and December 31, 2021 ( presented in thousands ): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ All-in ​ ​ ​ ​ ​ Principal Amount Outstanding Senior Unsecured Revolving Credit Facility Interest Rate ​ ​ Maturity December 31, 2022 December 31, 2021 Revolving Credit Facility (1) 5.18 % ​ ​ January 2026 ​ $ 100,000 ​ $ 160,000 Total Credit Facility ​ ​ ​ ​ ​ ​ ​ $ 100,000 ​ $ 160,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Senior Unsecured Notes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 Senior Unsecured Notes 4.16 % ​ ​ May 2025 ​ $ 50,000 ​ $ 50,000 2027 Senior Unsecured Notes 4.26 % ​ ​ May 2027 ​ 50,000 ​ 50,000 2028 Senior Unsecured Public Notes (2) ​ 2.11 % ​ ​ June 2028 ​ ​ 350,000 ​ ​ 350,000 2028 Senior Unsecured Notes 4.42 % ​ ​ July 2028 ​ 60,000 ​ 60,000 2029 Senior Unsecured Notes 4.19 % ​ ​ September 2029 ​ 100,000 ​ 100,000 2030 Senior Unsecured Notes 4.32 % ​ ​ September 2030 ​ 125,000 ​ 125,000 2030 Senior Unsecured Public Notes (2) 3.49 % ​ ​ October 2030 ​ 350,000 ​ 350,000 2031 Senior Unsecured Notes 4.42 % ​ ​ October 2031 ​ ​ 125,000 ​ ​ 125,000 2032 Senior Unsecured Public Notes (2) ​ 3.96 % ​ ​ October 2032 ​ ​ 300,000 ​ ​ — 2033 Senior Unsecured Public Notes (2) ​ 2.13 % ​ ​ June 2033 ​ ​ 300,000 ​ ​ 300,000 Total Senior Unsecured Notes ​ ​ ​ ​ ​ ​ ​ $ 1,810,000 ​ $ 1,510,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage Notes Payable ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CMBS Portfolio Loan 3.60 % ​ ​ January 2023 ​ $ — ​ $ 23,640 Single Asset Mortgage Loan 5.01 % ​ ​ September 2023 ​ 4,622 ​ 4,622 Portfolio Credit Tenant Lease ​ 6.27 % ​ ​ July 2026 ​ ​ 3,523 ​ ​ 4,373 Four Asset Mortgage Loan 3.63 % ​ ​ December 2029 ​ 42,250 ​ — Total Mortgage Notes Payable ​ ​ ​ ​ ​ ​ ​ $ 50,395 ​ $ 32,635 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Principal Amount Outstanding ​ ​ ​ ​ ​ ​ ​ $ 1,960,395 ​ $ 1,702,635 32 Table of Contents (1) The annual interest rate of the Revolving Credit Facility (defined below) assumes SOFR as of December 31, 2022 of 4.30%.
Biggest changeDebt The below table summarizes the Company’s outstanding debt as of December 31, 2023 and December 31, 2022 ( presented in thousands ): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ All-in ​ ​ Coupon ​ ​ ​ ​ Principal Amount Outstanding ​ Interest Rate ​ Rate ​ ​ Maturity December 31, 2023 December 31, 2022 Senior Unsecured Revolving Credit Facility ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving Credit Facility (1) 6.27 % ​ ​ ​ ​ January 2026 ​ $ 227,000 ​ $ 100,000 Total Credit Facility ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 227,000 ​ $ 100,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unsecured Term Loan ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2029 Unsecured Term Loan (2) 4.52 % ​ ​ ​ ​ January 2029 ​ $ 350,000 ​ $ — Total Unsecured Term Loan ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 350,000 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Senior Unsecured Notes (3) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 Senior Unsecured Notes 4.16 % ​ 4.16 % ​ May 2025 ​ $ 50,000 ​ $ 50,000 2027 Senior Unsecured Notes 4.26 % ​ 4.26 % ​ May 2027 ​ 50,000 ​ 50,000 2028 Senior Unsecured Public Notes (4) ​ 2.11 % ​ 2.00 % ​ June 2028 ​ ​ 350,000 ​ ​ 350,000 2028 Senior Unsecured Notes 4.42 % ​ 4.42 % ​ July 2028 ​ 60,000 ​ 60,000 2029 Senior Unsecured Notes 4.19 % ​ 4.19 % ​ September 2029 ​ 100,000 ​ 100,000 2030 Senior Unsecured Notes 4.32 % ​ 4.32 % ​ September 2030 ​ 125,000 ​ 125,000 2030 Senior Unsecured Public Notes (4) 3.49 % ​ 2.90 % ​ October 2030 ​ 350,000 ​ 350,000 2031 Senior Unsecured Notes 4.42 % ​ 4.47 % ​ October 2031 ​ ​ 125,000 ​ ​ 125,000 2032 Senior Unsecured Public Notes (4) ​ 3.96 % ​ 4.80 % ​ October 2032 ​ ​ 300,000 ​ ​ 300,000 2033 Senior Unsecured Public Notes (4) ​ 2.13 % ​ 2.60 % ​ June 2033 ​ ​ 300,000 ​ ​ 300,000 Total Senior Unsecured Notes ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 1,810,000 ​ $ 1,810,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage Notes Payable ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Single Asset Mortgage Loan 5.01 % ​ ​ ​ ​ September 2023 ​ — ​ 4,622 Portfolio Credit Tenant Lease ​ 6.27 % ​ ​ ​ ​ July 2026 ​ ​ 2,618 ​ ​ 3,523 Four Asset Mortgage Loan 3.63 % ​ ​ ​ ​ December 2029 ​ 42,250 ​ 42,250 Total Mortgage Notes Payable ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 44,868 ​ $ 50,395 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Principal Amount Outstanding ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 2,431,868 ​ $ 1,960,395 34 Table of Contents (1) The interest rate of the Revolving Credit Facility assumes SOFR as of December 31, 2023 of 5.39%.
The Company anticipates funding its long-term capital needs through cash provided from operations, borrowings under its revolving credit facility, the issuance of debt and common or preferred equity or other instruments convertible into or exchangeable for common or preferred equity. We continually evaluate alternative financing and believe that we can obtain financing on reasonable terms.
The Company anticipates funding its long-term capital needs through cash provided from operations, borrowings under its revolving credit facility, and the issuance of debt and common or preferred equity or other instruments convertible into or exchangeable for common or preferred equity. We continually evaluate alternative financing and believe that we can obtain financing on reasonable terms.
Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operation.
Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations.
Also refer to “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s previously filed Annual Report on Form 10-K for the year ended December 31, 2021 for additional discussion of our financial condition and results of operations, including a comparison of our results of operations for the years ended December 31, 2021 and December 31, 2020.
Also refer to “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s previously filed Annual Report on Form 10-K for the year ended December 31, 2022 for additional discussion of our financial condition and results of operations, including a comparison of our results of operations for the years ended December 31, 2022 and December 31, 2021.
This conversion value is limited by a share cap if the Company’s stock price falls below a certain threshold. 31 Table of Contents ATM Programs The Company enters into ATM programs through which the Company, from time to time, sells shares of common stock and enters into forward sale agreements.
This conversion value is limited by a share cap if the Company’s stock price falls below a certain threshold. 33 Table of Contents ATM Programs The Company enters into ATM programs through which the Company, from time to time, sells shares of common stock and enters into forward sale agreements.
As of December 31, 2022, the most restrictive covenant was the minimum unencumbered interest expense ratio. The Company was in compliance with all of its material loan covenants and obligations as of December 31, 2022. Cash Flows Operating -- Most of the Company’s cash from operations is generated by rental income from its investment portfolio.
As of December 31, 2023, the most restrictive covenant was the minimum unencumbered interest expense ratio. The Company was in compliance with all of its material loan covenants and obligations as of December 31, 2023. Cash Flows Operating - Most of the Company’s cash from operations is generated by rental income from its investment portfolio.
The Company’s real estate investments were made throughout the periods presented and were not all outstanding for the entire period; accordingly, a portion of the increase in rental income between periods is related to recognizing revenue in 2022 on acquisitions that were made during 2021.
The Company’s real estate investments were made throughout and between the periods presented and were not all outstanding for the entire period; accordingly, a portion of the increase in rental income between periods is related to recognizing revenue in 2023 on acquisitions that were made during 2022.
Agree has agreed to reimburse the Company for any loss incurred under the Revolving Credit Facility in an amount not to exceed $14.0 million to the extent that the value of the Operating Partnership’s assets available to satisfy the Operating Partnership’s obligations under the Revolving Credit Facility is less than $14.0 million.
Agree had agreed to reimburse the Company for any loss incurred under the Revolving Credit Facility in an amount not to exceed $14.0 million to the extent that the value of the Operating Partnership’s assets available to satisfy the Operating Partnership’s obligations under the Revolving Credit Facility is less than $14.0 million.
Certain estimates, including those around market land values and market rental rates, are inherently subjective. While estimates of market land values and market rental rates are based on available market data, the application of market data to the unique nature of properties acquired may require significant judgment.
Certain assumptions, including those around market land values and market rental rates, are inherently subjective. While assumptions of market land values and market rental rates are based on available market data, the application of market data to the unique nature of properties acquired may require significant judgment.
Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the consolidated financial statements, and related notes thereto, included elsewhere in this Annual Report on Form 10-K and the “Cautionary Note Regarding Forward-Looking Statements” in “Item 1A – Risk Factors” above.
Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the consolidated financial statements, and related notes thereto, included elsewhere in this Annual Report on Form 10-K and the “Cautionary Note Regarding Forward-Looking 29 Table of Contents Statements” in “Item 1A – Risk Factors” above.
The expected cash flows of a property are dependent on estimates and other factors subject to change, including (1) changes in the national, regional, and/or local economic climates and/or market conditions, (2) competition from other retail, (3) 36 Table of Contents increases in operating costs, (4) bankruptcy and/or other changes in a tenant’s condition and (5) expected holding period.
The expected cash flows of a property are dependent on estimates and other factors subject to change, including (1) changes in the national, regional, and/or local economic climates and/or market conditions, (2) competition from other retail, (3) increases in operating costs, (4) bankruptcy and/or other changes in a tenant’s condition and (5) expected holding period.
Our ability to access capital on favorable terms as well as to use cash from operations to continue to meet our liquidity needs, is uncertain and cannot be predicted and could be affected by various risks and uncertainties, including, but not limited to, risks detailed in Part I, Item 1A, “Risk Factors.” Capitalization As of December 31, 2022, the Company’s total enterprise value was approximately $8.53 billion.
Our ability to access capital on favorable terms as well as to use cash from operations to continue to meet our liquidity needs, is uncertain and cannot be predicted and could be affected by various risks and uncertainties, including, but not limited to the risks detailed in Part I, Item 1A, “Risk Factors.” Capitalization As of December 31, 2023, the Company’s total enterprise value was approximately $8.94 billion.
If management’s judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting principles would have been applied, resulting in different presentations of the consolidated financial statements. From time-to-time, the Company may re-evaluate its estimates and assumptions.
If management’s judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting principles would have been applied, resulting in a different presentation of the consolidated financial statements. From time-to-time, the Company may re-evaluate its estimates and assumptions.
A significant majority of the Company’s properties are leased to national tenants and approximately 67.8% of our annualized base rent was derived from tenants, or parent entities thereof, with an investment grade credit rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Association of Insurance Commissioners.
A significant majority of the Company’s properties are leased to national tenants and approximately 69.1% of our annualized base rent was derived from tenants, or parent entities thereof, with an investment grade credit rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Association of Insurance Commissioners.
Management considers AFFO a useful supplemental measure of the Company’s performance, however, AFFO should not be considered an alternative to net income as an indication of its performance, or to cash flow as a measure of liquidity or ability to make distributions.
Management considers AFFO a useful supplemental measure of the Company’s performance, however, 39 Table of Contents AFFO should not be considered an alternative to net income as an indication of its performance, or to cash flow as a measure of liquidity or ability to make distributions.
The Private Placements did not involve a public offering in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act. ​ The 2030 Senior Unsecured Public Notes, 2028 Senior Unsecured Public Notes, 2033 Senior Unsecured Public Notes and 2032 Senior Unsecured Public Notes, (collectively the “Public Notes”) are fully and unconditionally guaranteed by Agree Realty Corporation and certain wholly owned subsidiaries of the Operating Partnership.
The Private Placements did not involve a public offering in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act. ​ Senior Unsecured Notes – Public Offerings The Senior Unsecured Public Notes (collectively the “Public Notes”) are fully and unconditionally guaranteed by Agree Realty Corporation and certain wholly owned subsidiaries of the Operating Partnership.
The Company’s assets are held by, and all of its operations are conducted through, directly or indirectly, the Operating Partnership, of which the Company is the sole general partner and in which the Company held a 99.6% common interest as of December 31, 2022.
The Company’s assets are held by, and all of its operations are conducted through, directly or indirectly, the Operating Partnership, of which the Company is the sole general partner and in which the Company held a 99.7% common interest as of December 31, 2023.
These construction commitments will be funded using cash provided from operations, current capital resources on hand, and/or other sources of funding available to the Company. ​ The Company’s recurring obligations under its tenant leases for maintenance, taxes, and/or insurance will also be funded through the sources available to the Company described earlier. ​ Dividends During the fourth quarter of 2022 the Company declared monthly dividends of $0.24 per common share for October, November, and December 2022.
These construction commitments will be funded using cash provided from operations, current capital resources on hand, and/or other sources of funding available to the Company. ​ The Company’s recurring obligations under its tenant leases for maintenance, taxes, and/or insurance will also be funded through the sources available to the Company described earlier. ​ 37 Table of Contents Dividends During the fourth quarter of 2023 the Company declared monthly dividends of $0.247 per common share for October, November, and December 2023.
Similarly, the full rental income impact of acquisitions made during 2022 will not be seen until 2023. Acquisitions During the year ended December 31, 2022, the Company acquired 434 retail net lease assets for approximately $1.6 billion, which includes acquisition and closing costs.
Similarly, the full rental income impact of acquisitions made during 2023 will not be seen until 2024. Acquisitions During the year ended December 31, 2023, the Company acquired 282 retail net lease assets for approximately $1.20 billion, which includes acquisition and closing costs.
The Company expects to meet its short-term liquidity requirements through cash provided from operations and borrowings under its revolving credit facility. As of December 31, 2022, available cash and cash equivalents, including cash held in escrow, was $28.9 million.
The Company expects to meet its short-term liquidity requirements through cash and cash equivalents held as of December 31, 2023, cash provided from operations, and borrowings under its revolving credit facility. As of December 31, 2023, available cash and cash equivalents, including cash held in escrow, was $14.5 million.
The Company’s ratio of total debt to total enterprise value was 23.0% at December 31, 2022. At December 31, 2022, the non-controlling interest in the Operating Partnership consisted of a 0.4% common ownership interest in the Operating Partnership. The Operating Partnership Common Units may, under certain circumstances, be exchanged for shares of Company common stock on a one-for-one basis.
The Company’s total debt to total enterprise value was 27.2% at December 31, 2023. At December 31, 2023, the non-controlling interest in the Operating Partnership consisted of a 0.3% common ownership interest in the Operating Partnership. The Operating Partnership Common Units may, under certain circumstances, be exchanged for shares of Company common stock on a one-for-one basis.
Events or circumstances that may occur include, but are not limited to, significant changes in real estate market conditions, estimated residual values, our ability or expectation to re-lease properties that are vacant or become vacant or a change in the anticipated holding period for a property. Identification of such events may involve certain assumptions, estimates, and significant judgment.
Events or circumstances that may occur include, but are not limited to, significant changes in real estate market conditions, estimated residual values, our ability or expectation to re-lease properties that are vacant or become vacant or a change in the anticipated holding period for a property.
Common Stock Offerings In May 2022, the Company completed a follow-on public offering of 5,750,000 shares of common stock, including the full exercise of the underwriters’ option to purchase 750,000 shares in connection with forward sale agreements.
Common Stock Offerings In December 2021, the Company completed a follow-on public offering of 5,750,000 shares of common stock, including the full exercise of the underwriters' option to purchase an additional 750,000 shares, in connection with forward sale agreements. During 2022, the Company settled all of the December 2021 forward sale agreements.
As of December 31, 2022, the Company had $100.0 million outstanding on its revolving credit facility and $900.0 million was available for future borrowings, subject to its compliance with covenants.
As of December 31, 2023, the Company had $227.0 million outstanding on its revolving credit facility and $773.0 million available for future borrowings, subject to its compliance with covenants.
Results of Operations Overall The Company’s real estate investment portfolio grew from approximately $4.37 billion in net investment amount representing 1,404 properties with 29.1 million square feet of gross leasable space as of December 31, 2021 to 28 Table of Contents approximately $5.74 billion in net investment amount representing 1,839 properties with 38.1 million square feet of gross leasable space at December 31, 2022.
Results of Operations Overall The Company’s real estate investment portfolio grew from approximately $5.74 billion in net investment amount representing 1,839 properties with 38.1 million square feet of gross leasable space as of December 31, 2022 to approximately $6.74 billion in net investment amount representing 2,135 properties with 44.2 million square feet of gross leasable space at December 31, 2023.
The Revolving Credit Facility will mature in January 2026 with Company options to extend the maturity date to January 2027. The Revolving Credit Facility's interest rate is based on a pricing grid with a range of 72.5 to 140 basis points over SOFR, determined by the Company's credit ratings and leverage ratio, plus a SOFR adjustment of 10 basis points.
The Revolving Credit Facility's interest rate is based on a pricing grid with a range of 72.5 to 140 basis points over SOFR, determined by the Company's credit ratings and leverage ratio, plus a SOFR adjustment of 10 basis points.
In October 2022, the Company completed a follow-on public offering of 5,750,000 shares of common stock, including the full exercise of the underwriters' option to purchase 750,000 shares, in connection with forward sale agreements.
In October 2022, the Company completed a follow-on public offering of 5,750,000 shares of common stock, including the full exercise of the underwriters' option to purchase 750,000 shares, in connection with forward sale agreements. During 2022, the Company settled 1,600,000 shares of common stock under the forward sale agreements, realizing net proceeds of $106.2 million.
As of December 31, 2022, the Company’s portfolio consisted of 1,839 properties located in 48 states and totaling approximately 38.1 million square feet of GLA. The Company’s portfolio was approximately 99.7% leased and had a weighted average remaining lease term of approximately 8.8 years.
As of December 31, 2023, the Company’s portfolio consisted of 2,135 properties located in 49 states and totaling approximately 44.2 million square feet of GLA. The portfolio was approximately 99.8% leased and had a weighted average remaining lease term of approximately 8.4 years.
Provisions for impairment are recorded when events or changes in circumstances indicate that the carrying amount may not be recoverable through operations plus estimated disposition proceeds and are not necessarily comparable period-to-period. Interest expense increased $13.0 million, or 26%, to $63.4 million for the year ended December 31, 2022, compared to $50.4 million for the year ended December 31, 2021.
Provisions for impairment are recorded when events or changes in circumstances indicate that the carrying amount may not be recoverable through operations plus estimated disposition proceeds and are not necessarily comparable period-to-period. Net income increased $17.5 million, or 11%, to $170.5 million for the year ended December 31, 2023, compared to $153.0 million for the year ended December 31, 2022.
The Company has settled 245,591 shares of these forward sale agreements as of December 31, 2022 for net proceeds of approximately $18.1 million after deducting fees and expenses. The Company is required to settle the remaining outstanding shares of common stock under the 2022 ATM Program by various dates between November and December 2023.
The Company has settled 6,363,359 shares of these forward sale agreements as of December 31, 2023 for net proceeds of approximately $433.4 million after deducting fees and expenses. The Company is required to settle the remaining outstanding shares of common stock under the 2022 ATM Program by January 2025.
After allocation of income to non-controlling interest and preferred stockholders, net income attributable to common stockholders increased $24.9 million, or 21% to $145.0 million for the year ended December 31, 2022, compared to $120.1 million for the year ended December 31, 2021.
After allocation of income to non-controlling interest and preferred stockholders, net income attributable to common stockholders increased $17.5 million, or 12% to $162.5 million for the year ended December 31, 2023, compared to $145.0 million for the year ended December 31, 2022.
As of December 31, 2022, the Company entered into forward sale agreements to sell an aggregate of 4,350,232 shares of common stock under the 2022 ATM Program, for anticipated net proceeds of $300.9 million.
As of December 31, 2023, the Company entered into forward sale agreements to sell an aggregate of 10,197,230 shares of common stock under the 2022 ATM Program, for anticipated net proceeds of $669.1 million.
Management determines whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the residual value of the real estate, to the carrying cost of the individual asset.
Identification of such events may involve certain assumptions, estimates, and significant judgment. 38 Table of Contents Management determines whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the residual value of the real estate, to the carrying cost of the individual asset.
The dividend rate is 4.25% per annum of the $25,000 (equivalent to $25.00 per Depositary Share) liquidation preference. Dividends on the Series A Preferred Shares are in the amount of $0.08854 per Depositary Share, equivalent to $1.0625 per annum.
Dividends on the Series A Preferred Shares are in the amount of $0.08854 per Depositary Share, equivalent to $1.0625 per annum.
Total enterprise value consisted of $6.42 billion of common equity (based on the December 31, 2022 closing price of Company common stock on the NYSE of $70.93 per share and assuming the conversion of Operating Partnership Common Units), $175 million of preferred equity (stated at liquidation value), and $1.96 billion of total debt including (i) $100.0 million of borrowings under its revolving credit facility; (ii) $1.81 billion of senior unsecured notes; (iii) $50.4 million of mortgage notes payable; 30 Table of Contents less $28.9 million cash, cash equivalents, and cash held in escrow.
Total enterprise value consisted of $6.35 billion of common equity (based on the December 31, 2023 closing price of Company common stock on the NYSE of $62.95 per common share and assuming the conversion of Operating Partnership Common Units), $175.0 million of preferred equity (stated at liquidation value), and $2.43 billion of total debt including (i) $227.0 million of borrowings under its revolving credit facility; (ii) $1.81 billion of senior unsecured notes; (iii) $350.0 million of unsecured term loans (iv) $44.9 million of mortgage notes payable; less $14.5 million cash, cash equivalents and cash held in escrow.
The December dividends and distributions were paid on January 13, 2023. ​ During the fourth quarter of 2022, the Company declared a monthly dividend on the Series A Preferred Shares for October, November, and December 2022 in the amount of $0.08854 per Depositary Share. The dividends payable for October and November were paid during the quarter.
The December dividends and distributions were recorded as a liability on the Consolidated Balance Sheet at December 31, 2023 and were paid on January 16, 2024. ​ During the fourth quarter of 2023, the Company declared monthly dividends on the Series A Preferred Shares for October, November, and December 2023 in the amount of $0.08854 per Depositary Share.
The weighted average interest rate on the Company’s mortgage notes payable was 3.94% as of December 31, 2022. The Company has entered into mortgage loans which are secured by multiple properties and contain cross-default and cross-collateralization provisions.
The weighted average interest rate on the Company’s mortgage notes payable was 3.78% as of December 31, 2023. The Company has entered into mortgage loans which are secured by multiple properties and contain cross-default and cross-collateralization provisions. Cross-collateralization provisions allow a lender to foreclose on multiple properties in the event that the Company defaults under the loan.
The Company’s computation of AFFO may differ from the methodology for calculating AFFO used by other equity REITs, and therefore may not be comparable to such other REITs. 37 Table of Contents The following table provides a reconciliation of net income to FFO, Core FFO, and AFFO for the years ended December 31, 2022, 2021, and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, 2022 December 31, 2021 December 31, 2020 Reconciliation from Net Income to Funds from Operations ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ ​ ​ $ 153,035 ​ $ 122,876 ​ $ 91,972 Less Series A preferred stock dividends ​ ​ ​ ​ 7,437 ​ ​ 2,148 ​ ​ — Net income attributable to Operating Partnership common unitholders ​ ​ ​ ​ 145,598 ​ ​ 120,728 ​ ​ 91,972 Depreciation of rental real estate assets ​ ​ ​ 88,685 ​ 66,732 ​ 48,367 Amortization of lease intangibles - in-place leases and leasing costs ​ ​ ​ 44,107 ​ 28,379 ​ 17,882 Provision for impairment ​ ​ ​ 1,015 ​ 1,919 ​ 4,137 (Gain) loss on sale or involuntary conversion of assets, net ​ ​ ​ (5,258) ​ (15,111) ​ (8,004) Funds from Operations - Operating Partnership common unitholders ​ ​ ​ $ 274,147 ​ $ 202,647 ​ $ 154,354 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss on extinguishment of debt and settlement of related hedges ​ ​ ​ ​ — ​ ​ 14,614 ​ ​ — Amortization of above (below) market lease intangibles, net and assumed mortgage debt discount, net ​ ​ ​ ​ 33,563 ​ ​ 24,284 ​ ​ 15,885 Core Funds from Operations - Operating Partnership common unitholders ​ ​ ​ $ 307,710 ​ $ 241,545 ​ $ 170,239 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Straight-line accrued rent ​ ​ ​ (13,176) ​ (11,857) ​ (7,818) Stock based compensation expense ​ ​ ​ 6,464 ​ 5,467 ​ 4,995 Amortization of financing costs ​ ​ ​ 3,141 ​ 1,197 ​ 826 Non-real estate depreciation ​ ​ ​ 778 ​ 618 ​ 509 Adjusted Funds from Operations - Operating Partnership common unitholders ​ ​ ​ $ 304,917 ​ $ 236,970 ​ $ 168,751 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Funds from Operations per common share and partnership unit - diluted ​ ​ ​ $ 3.45 ​ $ 3.00 ​ $ 2.93 Core Funds from Operations per common share and partnership unit - diluted ​ ​ ​ $ 3.87 ​ $ 3.58 ​ $ 3.23 Adjusted Funds from Operations per common share and partnership unit - diluted ​ ​ ​ $ 3.83 ​ $ 3.51 ​ $ 3.20 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares and Operating Partnership common units outstanding ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ ​ 79,006,952 ​ 67,149,861 ​ 52,185,838 Diluted ​ ​ ​ 79,512,005 ​ 67,486,698 ​ 52,744,353 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional supplemental disclosure ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Scheduled principal repayments ​ ​ ​ $ 850 ​ $ 799 ​ $ 907 Capitalized interest ​ ​ ​ $ 1,261 ​ $ 249 ​ $ 172 Capitalized building improvements ​ ​ ​ $ 7,945 ​ $ 5,821 ​ $ 5,581 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 38 Table of Contents
The following table provides a reconciliation of net income to FFO, Core FFO, and AFFO for the years ended December 31, 2023, 2022 and 2021 ( presented in thousands ): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, 2023 December 31, 2022 December 31, 2021 Reconciliation from Net Income to Funds from Operations ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ ​ ​ $ 170,547 ​ $ 153,035 ​ $ 122,876 Less Series A preferred stock dividends ​ ​ ​ ​ 7,437 ​ ​ 7,437 ​ ​ 2,148 Net income attributable to Operating Partnership common unitholders ​ ​ ​ ​ 163,110 ​ ​ 145,598 ​ ​ 120,728 Depreciation of rental real estate assets ​ ​ ​ 115,617 ​ 88,685 ​ 66,732 Amortization of lease intangibles - in-place leases and leasing costs ​ ​ ​ 58,967 ​ 44,107 ​ 28,379 Provision for impairment ​ ​ ​ 7,175 ​ 1,015 ​ 1,919 (Gain) loss on sale or involuntary conversion of assets, net ​ ​ ​ (1,849) ​ (5,258) ​ (15,111) Funds from Operations - Operating Partnership common unitholders ​ ​ ​ $ 343,020 ​ $ 274,147 ​ $ 202,647 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss on extinguishment of debt and settlement of related hedges ​ ​ ​ ​ — ​ ​ — ​ ​ 14,614 Amortization of above (below) market lease intangibles, net and assumed mortgage debt discount, net ​ ​ ​ ​ 33,430 ​ ​ 33,563 ​ ​ 24,284 Core Funds from Operations - Operating Partnership common unitholders ​ ​ ​ $ 376,450 ​ $ 307,710 ​ $ 241,545 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Straight-line accrued rent ​ ​ ​ (12,142) ​ (13,176) ​ (11,857) Stock-based compensation expense ​ ​ ​ 8,338 ​ 6,464 ​ 5,467 Amortization of financing costs and original issue discounts ​ ​ ​ 4,403 ​ 3,141 ​ 1,197 Non-real estate depreciation ​ ​ ​ 1,693 ​ 778 ​ 618 Adjusted Funds from Operations - Operating Partnership common unitholders ​ ​ ​ $ 378,742 ​ $ 304,917 ​ $ 236,970 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Funds from Operations per common share and partnership unit - diluted ​ ​ ​ $ 3.58 ​ $ 3.45 ​ $ 3.00 Core Funds from Operations per common share and partnership unit - diluted ​ ​ ​ $ 3.93 ​ $ 3.87 ​ $ 3.58 Adjusted Funds from Operations per common share and partnership unit - diluted ​ ​ ​ $ 3.95 ​ $ 3.83 ​ $ 3.51 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares and Operating Partnership common units outstanding ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ ​ 95,539,028 ​ 79,006,952 ​ 67,149,861 Diluted ​ ​ ​ 95,785,031 ​ 79,512,005 ​ 67,486,698 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional supplemental disclosure ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Scheduled principal repayments ​ ​ ​ $ 905 ​ $ 850 ​ $ 799 Capitalized interest ​ ​ ​ $ 1,957 ​ $ 1,261 ​ $ 249 Capitalized building improvements ​ ​ ​ $ 9,819 ​ $ 7,945 ​ $ 5,821 ​ ​ 40 Table of Contents ​
Gain on sale of assets decreased to $5.3 million for the year ended December 31, 2022, compared to $14.9 million for the year ended December 31, 2021. Gains on sales of assets are dependent on the levels of disposition activity and the assets’ basis relative to their sales prices. As a result, such gains are not necessarily comparable period-to-period.
Gains on sales of assets are dependent on the levels of disposition activity and the assets’ basis relative to their sales prices. As a result, such gains are not necessarily comparable period-to-period. Provision for impairment increased $6.2 million to $7.2 million for the year ended December 31, 2023, compared to $1.0 million for the year ended December 31, 2022.
Equity Shelf Registration The Company has filed with the SEC an automatic shelf registration statement on Form S-3, registering an unspecified amount of common stock, preferred stock, depositary shares, warrants and guarantees of debt securities of the Operating Partnership, as well as an unspecified amount of debt securities of the Operating Partnership, at an indeterminate aggregate initial offering price.
Assuming the exchange of all Operating Partnership Common Units, there would have been 100,866,974 shares of common stock outstanding at December 31, 2023. 32 Table of Contents Equity Shelf Registration The Company has filed with the SEC an automatic shelf registration statement on Form S-3ASR, registering an unspecified amount of common stock, preferred stock, depositary shares, warrants of the Company and guarantees of debt securities of the Operating Partnership, as well as an unspecified amount of debt securities of the Operating Partnership, at an indeterminate aggregate initial offering price.
Cross-collateralization provisions allow a lender to foreclose on multiple properties in 33 Table of Contents the event that the Company defaults under the loan. Cross-default provisions allow a lender to foreclose on the related property in the event a default is declared under another loan.
Cross-default provisions allow a lender to foreclose on the related property in the event a default is declared under another loan.
The December dividend was paid on January 3, 2023. ​ 35 Table of Contents Recent Accounting Pronouncements Refer to “ Note 2 – Summary of Significant Accounting Policies” in the consolidated financial statements for a summary and anticipated impact of each accounting pronouncement on the Company’s financial statements.
The December dividend was recorded as a liability on the Consolidated Balance Sheet at December 31, 2023 and were paid on January 2, 2024. ​ Recent Accounting Pronouncements Refer to Note 2 – Summary of Significant Accounting Policies in the consolidated financial statements for a summary and anticipated impact of each accounting pronouncement on the Company’s financial statements.
The offering resulted in net proceeds to the Company of approximately $386.7 million, after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreements.
The Company settled all of the May 2022 forward sales agreements in 2022 which resulted in net proceeds to the Company of approximately $386.7 million, after deducting fees and expenses and making certain other adjustments.
The Company, as sole general partner of the Operating Partnership, has the option to settle exchanged Operating Partnership Common Units held by others for cash based on the current trading price of our shares. Assuming the exchange of all Operating Partnership Common Units, there would have been 90,521,043 shares of common stock outstanding at December 31, 2022.
The Company, as sole general partner of the Operating Partnership, has the option to settle exchanged Operating Partnership Common Units held by others for cash based on the current trading price of our shares.
During the year ended December 31, 2022 the Company had 31 development or Partner Capital Solutions projects completed or under construction, for which 24 remain under construction as of December 31, 2022. Anticipated total costs for the 31 projects are approximately $118.5 million.
During the year ended December 31, 2023 the Company had 37 development or Developer Funding Platform projects completed or under construction, for which 16 remain under construction as of December 31, 2023. Anticipated total costs for the 16 projects are approximately $63.7 million.
Comparison of Year Ended December 31, 2022 to Year Ended December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Variance ​ December 31, 2022 December 31, 2021 (in dollars) (percentage) Rental Income ​ $ 429,632 ​ $ 339,067 ​ $ 90,565 ​ 27 % Real Estate Tax Expense ​ $ 32,079 ​ $ 25,513 ​ $ 6,566 ​ 26 % Property Operating Expense ​ $ 18,585 ​ $ 13,996 ​ $ 4,589 ​ 33 % Depreciation and Amortization Expense ​ $ 133,570 ​ $ 95,729 ​ $ 37,841 ​ 40 % ​ The variances in rental income, real estate tax expense, property operating expense and depreciation and amortization expense shown above were due to the acquisition and the ownership of an increased number of properties during the year ended December 31, 2022 compared to the year ended December 31, 2021 , as further described under Results of Operations - Overall above .
Comparison of Year Ended December 31, 2023 to Year Ended December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Variance ​ December 31, 2023 December 31, 2022 (in dollars) (percentage) Rental Income ​ $ 537,403 ​ $ 429,632 ​ $ 107,771 ​ 25 % Real Estate Tax Expense ​ $ 40,092 ​ $ 32,079 ​ $ 8,013 ​ 25 % Property Operating Expense ​ $ 24,961 ​ $ 18,585 ​ $ 6,376 ​ 34 % Depreciation and Amortization Expense ​ $ 176,277 ​ $ 133,570 ​ $ 42,707 ​ 32 % ​ The variances in rental income, real estate tax expense, property operating expense and depreciation and amortization expense shown above were due to the acquisition and the ownership of an increased number of properties during the year ended December 31, 2023 compared to the year ended December 31, 2022 , as further described under Results of Operations - Overall above .
General and administrative expenses as a percentage of total revenue decreased to 7.0% for the year ended December 31, 2022 compared to 7.5% for the year ended December 31, 2021. Provision for impairment decreased to $1.0 million for the year ended December 31, 2022, compared to $1.9 million for the year ended December 31, 2021.
General and administrative expenses as a percentage of total revenue decreased to 6.5% for the year ended December 31, 2023 from 7.0% for the year ended December 31, 2022. Interest expense increased $17.7 million, or 28%, to $81.1 million for the year ended December 31, 2023, compared to $63.4 million for the year ended December 31, 2022.
Net cash provided by operating activities for the year ended December 31, 2022 increased by $115.8 million over 2021, primarily due to the increase in the size of the Company’s real estate investment portfolio, as well as an increase in cash received upon settlement of outstanding interest rate swap agreements.
Net cash provided by operating activities for the year ended December 31, 2023 increased by $29.5 million over 2022, primarily due to the increase in the size of the Company’s real estate investment portfolio, partially offset by normal course changes in working capital as well as the proceeds received in connection with the settlement of interest rate swaps during 2022.
These ATM programs have been terminated and no future issuances will occur under them. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Proceeds Received Program Year ​ Size ($ million) ​ Shares Issued ​ ($ million) 2020 ​ $400.0 ​ 3,334,056 ​ $209.5 2021 ​ $500.0 ​ 5,453,975 ​ $379.1 ​ In September 2022, the Company entered into a new $750 million ATM program (the “2022 ATM Program”) through which the Company, from time to time, may sell shares of common stock and/or enter into forward sale agreements.
The results of ATM programs are shown in the following table. ​ ​ ​ ​ ​ ​ ​ ​ ​ Program Size ​ ​ ​ Net Proceeds Received Program Year ​ ($ million) ​ Shares Issued ​ ($ million) 2020 * $400.0 ​ 3,334,056 ​ $209.5 2021 * $500.0 ​ 5,453,975 ​ $379.1 2022 ​ $750.0 ​ 10,197,230 ​ $669.1 * ATM Programs have been terminated and no future issuance will occur under them.
Preferred Stock Offering As of December 31, 2022, we had 7,000,000 depositary shares (the “Depositary Shares”) outstanding, each representing 1/1,000th of a share of Series A Preferred Stock. Dividends on the Series A Preferred Shares are payable monthly in arrears on the first day of each month (or, if not on a business day, on the next succeeding business day).
Preferred Stock Offering As of December 31, 2023, the Company had 7,000,000 depositary shares (the “Depositary Shares”) outstanding, each representing 1/1,000th of a share of Series A Preferred Stock.
Proceeds from asset sales are dependent on levels of disposition activity and the specific assets sold. Proceeds from asset sales are not necessarily comparable period-to-period. Financing -- Net cash provided by financing activities was $59.9 million higher during the year ended December 31, 2022, compared to 2021.
Proceeds from asset sales are dependent on levels of disposition activity and the specific assets sold and are not necessarily comparable period-to-period.
The increase in interest expense was primarily a result of higher levels of borrowings in 2022 in comparison to 2021, as well as higher interest rates under the Revolving Credit Facility. 1 When used within this discussion, “weighted average capitalization rate” for acquisitions and dispositions is defined by the Company 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 for occupied properties. 29 Table of Contents Borrowings increased in order to finance the acquisition and development of additional properties (see Liquidity and Capital Resources – Debt below).
The weighted-average capitalization rate on the dispositions was 6.1%. 1 1 When used within this discussion, “weighted average capitalization rate” for acquisitions and dispositions is defined by the Company 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 for occupied properties. 30 Table of Contents Development and Developer Funding Platform During the year ended December 31, 2023, the Company commenced 13 development and Developer Funding Platform projects.
In connection with the Company's ongoing environmental, social and governance ("ESG") initiatives, pricing may be reduced if specific ESG ratings are achieved. The Company and Richard Agree, the Executive Chairman of the Company, are parties to a Reimbursement Agreement dated November 18, 2014 (the “Reimbursement Agreement”). Pursuant to the Reimbursement Agreement, Mr.
The Company and Richard Agree, the Executive Chairman of the Company, were parties to a Reimbursement Agreement dated November 18, 2014 (the “Reimbursement Agreement”). Pursuant to the Reimbursement Agreement, Mr.
General and administrative expenses increased $4.6 million, or 18%, to $30.1 million for the year ended December 31, 2022, compared to $25.5 million for the year ended December 31, 2021. The increase was primarily the result of increased employee headcount and increased compensation costs.
General and administrative expenses increased $4.7 million, or 15%, to $34.8 million for the year ended December 31, 2023, compared to $30.1 million for the year ended December 31, 2022.
Upon settlement, the offering is anticipated to raise net proceeds of approximately $380.7 million after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreements. During 2022, the Company settled 1,600,000 shares of common stock under the forward sale agreements, realizing net proceeds of $106.2 million.
During 2023, the Company settled the remaining 4,150,000 shares of these October 2022 forward sale agreements, realizing net proceeds of $275.0 million. The offering resulted in total net proceeds to the Company of $381.2 million after deducting fees and expenses and making certain adjustments.
Investing -- Net cash used in investing activities was $229.4 million higher during the year ended December 31, 2022, compared to 2021. Acquisitions of properties during 2022 were $177.8 million higher than 2021, due to overall increases in the level of acquisition activity.
Investing - Net cash used in investing activities was $341.0 million lower during the year ended December 31, 2023, compared to 2022 primarily due to: ● Cash used for property acquisitions decreased $372.5 million due to the overall decrease in the level of acquisition activity; and ● Proceeds from asset sales decreased by $31.1 million.
(2) The principal amount outstanding are presented excluding their original issue discounts. ​ Senior Unsecured Revolving Credit Facility The Company’s Third Amended and Restated Revolving Credit Agreement provides for a $1.0 billion Revolving Credit Facility. The Revolving Credit Facility includes an accordion option that allows the Company to request additional lender commitments up to a total of $1.75 billion.
(4) The principal amounts outstanding are presented excluding their original issue discounts. ​ Senior Unsecured Revolving Credit Facility The Company’s First Amendment to the Third Amended and Restated Revolving Credit Agreement provides for a $1.0 billion Revolving Credit Facility and converted the interest rate on the existing $1.0 billion Revolving Credit Facility from a spread over LIBOR to a spread over SOFR plus a SOFR adjustment of 10 basis points.
The Public Notes are governed by an Indenture, dated August 17, 2020, among the Operating Partnership, the Company and trustee (as supplemented by an officer’s certificate dated at the issuance of each of the Public Notes).
These guarantees are senior 35 Table of Contents unsecured obligations of the guarantors, rank equally in right of payment with all other existing and future senior unsecured indebtedness and are effectively subordinated to all secured indebtedness of the Operating Partnership and each guarantor (to the extent of the value of the collateral securing such indebtedness) of the guarantors. ​ The Public Notes are governed by an Indenture, dated August 17, 2020, among the Operating Partnership, the Company and respective trustee (as amended and supplemented by an officer’s certificate dated at the issuance of each of the Public Notes, the “Indenture”).
Net cash used related to the Revolving Credit Facility increased $128.0 million due to net repayments under the Revolving Credit Facility of $60 million during the year ended December 31, 2022 compared to net borrowings of $68.0 million during 2021.
Financing - Net cash provided by financing activities decreased by $368.5 million during the year ended December 31, 2023, compared to 2022 primarily due to: ● Net proceeds from the issuance of common stock decreased by $567.9 million; 36 Table of Contents ● Net borrowings under the Revolving Credit Facility increased by $187.0 million.
Considering the effect of the terminated swap agreements, the blended all-in rate to the Company for the 2032 Senior Unsecured Public Notes is 3.96%. ​ Mortgage Notes Payable As of December 31, 2022, the Company had total gross mortgage indebtedness of $50.4 million which was collateralized by related real estate and tenants’ leases with an aggregate net book value of $86.5 million.
The Indenture contains various restrictive covenants, including limitations on the ability of the guarantors and the issuer to incur additional indebtedness and requirements to maintain a pool of unencumbered assets. ​ Mortgage Notes Payable As of December 31, 2023, the Company had total gross mortgage indebtedness of $44.9 million which was collateralized by related real estate and tenants’ leases with an aggregate net book value of $79.3 million.
These properties are located in 43 states and are leased to tenants operating in 27 diverse retail sectors for a weighted average lease term of approximately 10.2 years. The underwritten weighted-average capitalization rate on the acquisitions was 6.2%. 1 Dispositions During the year ended December 31, 2022, the Company sold seven assets for net proceeds of $44.9 million.
The underwritten weighted-average capitalization rate on the acquisitions was 6.9%. 1 Dispositions During the year ended December 31, 2023, the Company sold six assets, including one former corporate headquarters office building, for net proceeds of $13.8 million.
After considering the 4,350,232 shares of common stock subject to forward sale agreements issued under the 2022 ATM Program, the Company had approximately $446.6 million of availability remaining under this program as of December 31, 2022.
The Company had approximately $75.8 million of availability remaining under this program as of December 31, 2023.
The Revolving Credit Facility matures in January 2026, with options to extend the maturity to extend its maturity date by six months up to two times, for a maximum maturity of January 2027. In addition to items reflected in the table above, the Company has preferred stock with cumulative cash dividends, as described under Equity – Preferred Stock Offering above.
(2) Estimated interest payments calculated for (i) variable rate debt based on the rate in effect at period-end and (ii) fixed rate debt based on the coupon interest rate. In addition to items reflected in the table above, the Company has preferred stock with cumulative cash dividends, as described under Equity – Preferred Stock Offering above.
Net proceeds from the issuance of senior unsecured notes and unsecured term loans decreased by $103.1 million during the year ended December 31, 2022, compared to the same period in 2021.
During the year ended December 31, 2023 , $350 million of proceeds were received as a result of the issuance of the 2029 Unsecured Term Loan while $297.5 million of proceeds were received during the year ended December 31, 2022 from the issuance of the 2032 Senior Unsecured Public Notes; and ● Payments of mortgage notes payable decreased $19.0 million driven by the principal repayment on interest only mortgage notes payable.
Removed
The weighted-average capitalization rate on the dispositions was 6.5%. 1 Development and Partner Capital Solutions During the year ended December 31, 2022, the Company commenced 28 development or PCS projects. At December 31, 2022 the Company had 24 development or Partner Capital Solutions projects under construction.
Added
These properties are located in 40 states and are leased to tenants operating in 26 diverse retail sectors for a weighted average lease term of approximately 11.3 years.
Removed
Income tax expense increased $0.5 million, or 19%, to $2.9 million for the year ended December 31, 2022, compared to $2.4 million for the year ended December 31, 2021.
Added
At December 31, 2023 the Company had 16 development or Developer Funding Platform projects under construction.
Removed
The increase in income tax expense was due to the acquisitions and the ownership of an increased number of properties during the year ended December 31, 2022 compared to 2021, partially offset by additional tax expense of approximately $0.5 million recognized during 2021 relating to the true-up of expense upon filing of the 2020 annual tax returns.
Added
The increase was primarily the result of increased compensation costs due to inflationary increases and higher stock based compensation expense as a result of changing the vesting period for awards granted in 2023.
Removed
In May 2021, the Company used the net proceeds from the offering of the 2028 Senior Unsecured Public Notes and the 2033 Senior Unsecured Public Notes to repay all amounts outstanding under its unsecured term loans and settle the related swap agreements.
Added
The increase in interest expense was primarily a result of higher levels of borrowings in 2023 in comparison to 2022 in order to finance the acquisition and development of additional properties, as well as higher interest rates under the Revolving Credit Facility.
Removed
The Company incurred a charge of $14.6 million upon this repayment and settlement, including swap termination costs of $13.4 million and the write-off of previously unamortized debt issuance costs of $1.2 million. ​ Net income increased $30.1 million, or 25%, to $153.0 million for the year ended December 31, 2022, compared to $122.9 million for the year ended December 31, 2021.
Added
Borrowings increased due to the $350 million 2029 Unsecured Term Loan that closed in July 2023 and the issuance of the $300 million 2032 Senior Unsecured Public Notes in August 2022.
Removed
The increase was primarily driven by the growth of our portfolio during the year ended December 31, 2022, and the repayment and settlement charge in 2021 discussed above.
Added
These borrowings resulted in increases in interest expense during the year ended December 31, 2023 of $6.7 million related to the 2029 Unsecured Term Loan, $7.1 million related to the 2032 Senior Unsecured Public Notes, and $0.5 million related to the amortization of deferred financing fees.
Removed
The allocation of income to the preferred stockholders began upon the September 2021 issuance of the Series A Preferred Stock.
Added
In addition, borrowing levels and interest rates on the Revolving Credit Facility during the year ended December 31, 2023 were higher than the comparative period in 2022 resulting in an increase in interest expense of $4.4 million.
Removed
The results of ATM programs entered into during 2020 and 2021 are shown in the following table.
Added
These increases in interest expense during 2023 were partially offset by an increase of $0.7 million of capitalized interest during the year ended December 31, 2023 as compared to the same period in 2022 due to the increased level of activity in development and Development Funding Platform projects during 2023 as well as a decrease of $0.5 million of interest expense related to mortgages driven by the repayment of mortgage principal during 2023 and 2022.

… 38 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+5 added−1 removed6 unchanged
Biggest changeAverage interest rates shown reflect the impact of the swap agreements described later in this section. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2024 2025 2026 2027 Thereafter Total Mortgage Notes Payable $ 5,527 $ 963 $ 1,026 $ 629 $ — $ 42,250 ​ $ 50,395 Average Interest Rate ​ 5.22 % ​ 6.27 % ​ 6.27 % ​ 6.27 % ​ ​ ​ ​ 3.63 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving Credit Facility (1) ​ $ — ​ $ — ​ $ — $ 100,000 ​ $ — ​ $ — ​ $ 100,000 Average Interest Rate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 5.14 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Senior Unsecured Notes ​ $ — ​ $ — ​ $ 50,000 ​ $ — ​ $ 50,000 ​ $ 1,710,000 ​ $ 1,810,000 Average Interest Rate ​ ​ ​ ​ ​ ​ ​ ​ 4.16 % ​ ​ ​ ​ 4.26 % 3.25 % ​ ​ (1) The balloon payment balance includes the balance outstanding under the Revolving Credit Facility as of December 31, 2022.
Biggest changeAverage interest rates shown reflect the impact of the swap agreements employed to fix interest rates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2025 2026 2027 2028 Thereafter Total Mortgage Notes Payable ​ $ 963 $ 1,026 $ 629 $ — $ — $ 42,250 ​ $ 44,868 Average Interest Rate ​ ​ 6.27 % ​ 6.27 % ​ 6.27 % ​ ​ ​ ​ ​ ​ ​ 3.63 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving Credit Facility (1) ​ ​ $ — ​ $ — ​ $ 227,000 $ ​ ​ $ — ​ $ — ​ $ 227,000 Average Interest Rate ​ ​ ​ ​ ​ ​ ​ ​ ​ 6.20 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unsecured Term Loan ​ ​ $ — ​ $ — ​ $ — $ — ​ $ — ​ $ 350,000 ​ $ 350,000 Average Interest Rate (2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 4.52 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Senior Unsecured Notes ​ ​ $ — ​ $ 50,000 ​ $ — ​ $ 50,000 ​ $ 410,000 ​ $ 1,300,000 ​ $ 1,810,000 Average Interest Rate ​ ​ ​ ​ ​ ​ 4.16 % ​ ​ ​ ​ 4.26 ​ ​ 2.45 % 3.51 % ​ ​ (1) The Revolving Credit Facility matures in January 2026, with options to extend the maturity date by six months up to two times, for a maximum maturity of January 2027.
The Company does not use derivative instruments for trading or other speculative purposes, and the Company did not have any derivative instruments as of December 31, 2022.
As of December 31, 2023, these interest rate swaps were valued as a liability of approximately $3.2 million. The Company does not use derivative instruments for trading or other speculative purposes, and the Company did not have any other derivative instruments as of December 31, 2023.
As a result, the Company’s ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the period and interest rates.
The table above incorporates those exposures that exist as of December 31, 2023; it does not consider those exposures or positions which could arise after that date. As a result, the Company’s ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the period and interest rates.
The Revolving Credit Facility matures in January 2026, with options to extend the maturity date by six months up to two times, for a maximum maturity of January 2027. The fair value is estimated to be $45.4 million and $1.54 billion for mortgage notes payable and senior unsecured notes, respectively, as of December 31, 2022.
The fair value of the mortgage notes payable and senior unsecured notes is estimated to be $41.2 million and $1.60 billion, respectively, as of December 31, 2023. The fair value of the Revolving Credit Facility and Unsecured Term Loan approximate their carrying values as they are variable rate debt.
Removed
The fair value of the Revolving Credit Facility approximates its book value as its variable rate debt. The table above incorporates those exposures that exist as of December 31, 2022; it does not consider those exposures or positions which could arise after that date.
Added
(2) The interest rate of the Unsecured Term Loan reflects the credit spread of 95 basis points plus the impact of the interest rate swaps which convert $350 million of SOFR based interest to a fixed interest rate of 3.57%.
Added
In June 2023, the Company entered into $350 million of forward starting interest rate swap agreements to hedge against variability in future cash flows resulting from changes in SOFR. The swaps exchange variable rate interest on $350 million of SOFR indexed debt to a weighted average fixed interest rate of 3.57% beginning August 1, 2023 through January 1, 2029.
Added
The swaps are designated to hedge the variable rate interest payments indexed to SOFR in the Senior Unsecured Term Loan which matures January 2029. As of December 31, 2023, these interest rate swaps were valued as a liability of approximately $1.3 million.
Added
In December 2023, the Company entered into $150 million forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in SOFR.
Added
The swaps exchange variable rate SOFR interest on $150 million of SOFR indexed debt to a weighted average fixed interest rate of 3.60% beginning December 31, 2024 through 41 Table of Contents the maturity date of December 31, 2034. The swaps are designated to hedge previously unhedged variable rate interest payments indexed to SOFR.

Other ADC 10-K year-over-year comparisons