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Investors Real Estate TrustDear Fellow Shareholders, This past year marked our 25th anniversary as a publicly traded company and another record year for Agree Realty Corporation. In 2019, we further strengthened our best-in-class retail net lease portfolio while fortifying our fortress balance sheet to support our impressive growth trajectory. In the past three years, we have invested over $1.7 billion into more than 525 high-quality retail net lease properties. Over that period, the Company has constructed the leading retail net lease portfolio in the industry while returning over 71% to our shareholders. While I write this letter, the markets are gripped by coronavirus fears and the 10-year US treasury yield is at an all-time low. Our Company and its real estate portfolio have been constructed to not only withstand, but to flourish during these trying times. While we have experienced a protracted period of economic expansion, we have simultaneously witnessed the continued disruption of the retail industry. It is this disruption which has been at the core of our strategy. I anticipate that our multi-year plan to assemble a portfolio that is able withstand both cyclical and structural changes without interruption will prove prescient. With that, please allow me to review our Company’s many accomplishments during 2019 and further explain how those achievements uniquely position Agree Realty to continue to execute for the foreseeable future. Investing in the Best Our investment activities are focused on the strongest and most resilient retailers in today’s omni-channel world. We have avoided private equity sponsorship, leveraged balance sheets and lower-tier operators with purpose. The balance sheet capacity and management capabilities to invest in price, e-commerce distribution and in-store customer experience are critical for a contemporary retailer’s survival. We believe that we will continue to witness the bifurcation of winners and losers in this ever-changing environment as retailing undergoes additional transformation. Our 2019 investment activities, including capital committed to ongoing development and Partner Capital Solutions projects, totaled a record $734 million. While we have consistently achieved year-over-year record investment volumes, more critical to the sustained success of our Company is the quality of that investment activity. A company record 77% of annualized base rent acquired during 2019 was derived from leading investment grade retailers. The high-quality nature of our investment activity in this past year was once again demonstrated by the addition of several industry-leading retailers to our top tenant roster. During the past year, we added Home Depot, TBC Corporation (National Tire & Battery) and Sunbelt Rentals to our top tenant list. Each of these retailers are leaders in their respective sectors, have robust balance sheets, employ a cohesive omni-channel strategy and/or maintain significant barriers to e-commerce penetration. Our focus on quality is reinforced by the nearly 700 basis point year-over-year increase in our investment grade exposure to an impressive 58.2% of annualized base rents. On a two-year stacked basis, we have increased our investment grade exposure by more than 1,400 basis points. We have constructed a portfolio that is built to last. We have yet again enhanced our portfolio through the acquisition of a number of ground leased assets. During the year we acquired 12 such assets leased to best-in-class retailers including Costco, Walmart, Wawa, AutoZone, ALDI and Chick-Fil-A. Our ground lease portfolio is a prime example of the thoughtful portfolio construction and detailed real estate analysis that we consistently conduct to mitigate risk and maximize quality. It is extremely unique and provides a compelling risk-adjusted value proposition for our shareholders. Consistent & Reliable Results Our record investment activity and strong per share earnings growth led to another year of dividend growth for our shareholders. Our Board of Directors approved two dividend increases during the year that resulted in nearly 6% growth year-over-year. The $0.585 quarterly dividend declared in the fourth quarter of 2019 represents an annualized dividend of $2.34 per share and reflects the Company’s 103rd consecutive cash dividend since our initial public offering in 1994. Our dividends declared in 2019 represent payout ratios of approximately 74% of Core FFO per share and 76% of AFFO per share, respectively. Our focus remains on providing our fellow shareholders with a growing, reliable income stream through a secure and well-covered dividend. A Fortress Balance Sheet Our long-term performance has been enabled by our conservative and disciplined approach to our balance sheet. During 2019, we raised or settled more than $740 million of common equity and debt capital, including several strategic capital markets transactions that fortified our balance sheet, mitigated risk, and provided our Company with enhanced optionality and flexibility. As a result of prudent capital markets activities, we ended the year with net debt to recurring EBITDA of 4.5 times. Proforma for the settlement of approximately $145 million of forward equity offering proceeds, our net debt to recurring EBITDA was approximately 3.7 times. Our fixed charge coverage ratio increased to a record 4.3 times while total debt to enterprise value was approximately 21.6%. In short, our fortress balance sheet positions us to continue to execute. Positioned for Growth At year-end, our growing team was comprised of 43 members, more than three times the size of our Company just five years ago. We added seven team members during the past year, expanding our acquisitions, asset management, finance, accounting, human resources and due diligence teams. In 2020, with the completion of our second building and state-of-the-art campus, we will continue to emphasize attracting and retaining industry-leading talent. To facilitate our growing Team, we were very pleased this past year to welcome Nicole Witteveen, our first Vice President of People & Culture. Our most important asset is our people and we will continue to endeavor to create a first-class environment for them to thrive. Our focus on system enhancements has resulted in increased automation and improved efficiency throughout the organization. We have implemented state-of-the-art technology to better manage our industry-wide relationships, have real-time data and closely monitor origination activities. We continue to pursue a number of other exciting information technology initiatives that will come online in 2021. While investing in our people and systems, we have also realized meaningful efficiencies that will help us to continue reducing our operating leverage. General and administrative expense as a percentage of total revenue decreased by another 50 basis points this past year. We anticipate additional G&A efficiencies in the years to come. Environmental, Social & Governance (‘‘ESG’’) Practices and Disclosure During the past year, we formed an ESG Task Force that implemented comprehensive environmental, social and governance improvements. I am proud of their work as well as our Company’s ESG practices and disclosure, both of which were greatly enhanced in 2019. Included on our website is additional information related to our partnership with retailers using environmentally preferable solutions in their business practices, our continued investment in our team members and social causes, and our commitment to strong corporate governance and ethical business practices. I look forward to continuing to engage in dialogue related to these important areas of our business. In Conclusion After another year of record performance, I am pleased to say that our Company is once again positioned to continue to execute on its mission---to construct the highest quality retail portfolio in the country. While I’m proud of our many accomplishments, we remain focused on capitalizing on the innumerable opportunities that lie ahead. I would like to thank our loyal shareholders, our Board of Directors, and our committed team members for their continued support of Agree Realty Corporation. Sincerely, Joey Agree President & Chief Executive Officer This page is intentionally blank201920182017 Total revenues ($000's)187,478$ 137,122$ 111,517$ Core Funds from Operations ($000's)127,987$ 93,429$ 76,271$ Core Funds from Operations per share3.08$ 2.85$ 2.72$ Dividends per share2.280$ 2.155$ 2.025$ Property Portfolio 201920182017 Real estate assets, at cost ($000's)2,346,340$ 1,761,646$ 1,299,255$ Total assets ($000's)2,664,530$ 2,028,189$ 1,494,634$ Total debt and accrued interest ($000's)882,010$ 728,841$ 525,811$ Number of properties821 645 436 Gross leasable area (sq. ft)14,605,000 11,237,000 8,663,000 Period EndingIndex12.31.1412.31.1512.31.1612.31.1712.31.1812.31.19Agree Realty Corporation100.00115.98163.96190.85228.48280.28Russell 2000100.0095.59115.95132.94118.30148.49SNL REIT Retail Shopping Ctr100.00105.35109.0296.9481.36103.39Financial - For Year Ended December 31,NYSE: ADCAGREE REALTY CORPORATIONFinancial Highlights10014018022026030012.31.1412.31.1512.31.1612.31.1712.31.1812.31.19Index ValueTOTAL RETURN PERFORMANCEAgree Realty CorporationRussell 2000SNL REIT Retail Shopping Ctr UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2019 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from __________ to __________ Commission File Number 1-12928 AGREE REALTY CORPORATION (Exact name of Registrant as specified in its charter) Maryland 38-3148187(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 70 E. Long Lake Road, Bloomfield Hills, Michigan 48304 (Address of Principal Executive Offices) Registrant’s telephone number, including area code: (248) 737-4190 Securities Registered Pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol(s) Name of Each Exchange On Which Registered Common Stock, $.0001 par value ADC New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No ☐Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer ☐Non-accelerated filer ☐Smaller reporting company ☐Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No The aggregate market value of the Registrant’s shares of common stock held by non-affiliates was $2,688,004,412 as of June 30, 2019, based on the closing price of $64.05 on the New York Stock Exchange on that date. At February 19, 2020, there were 45,569,487 shares of common stock, $.0001 par value per share, outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive proxy statement for the annual shareholder meeting to be held in 2020 are incorporated by reference into Part III of this Annual Report on Form 10-K as noted herein. AGREE REALTY CORPORATION Index to Form 10-K Page PART I Item 1 Business 1 Item 1A Risk Factors 6 Item 1B Unresolved Staff Comments 18 Item 2 Properties18 Item 3 Legal Proceedings 22 Item 4 Mine Safety Disclosures 22 PART II Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities22 Item 6 Selected Financial Data 24 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 25 Item 7A Quantitative and Qualitative Disclosure about Market Risk 35 Item 8 Financial Statements and Supplementary Data37 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 37 Item 9A Controls and Procedures 37 Item 9B Other Information 38 PART III Item 10: Directors, Executive Officers and Corporate Governance 39 Item 11: Executive Compensation39 Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters39 Item 13: Certain Relationships and Related Transactions, and Director Independence 39 Item 14: Principal Accountant Fees and Services 39 PART IV Item 15: Exhibits and Financial Statement Schedules 40 Consolidated Financial Statements and Notes F-1SIGNATURES DTP SB Hcho 8.25 x 10.75 (35) .25 HT153938 TOPPAN agree realty_Text_Insert_Cover Sig 2 ]153938 TOPPAN agree realty_Text_Insert_Cover Signature 2 Side A RGS 6153938 TOPPAN agree realty_Text_Insert_Cover Signature 2 Side A RGS 5153938 TOPPAN agree realty_Text_Insert_Cover Signature 2 Side A RGS 4153938 TOPPAN agree realty_Text_Insert_Cover Signature 2 Side A RGS 3153938 TOPPAN agree realty_Text_Insert_Cover Signature 2 Side A RGS 2153938 TOPPAN agree realty_Text_Insert_Cover Signature 2 Side A RGS 1153938 TOPPAN agree realty_Text_Insert_Cover Signature 2 Side A Yellow153938 TOPPAN agree realty_Text_Insert_Cover Signature 2 Side A Magenta153938 TOPPAN agree realty_Text_Insert_Cover Signature 2 Side A Cyan153938 TOPPAN agree realty_Text_Insert_Cover Signature 2 Side A Black ] 32 Page2UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2017 Commission File Number 1-12928 AGREE REALTY CORPORATION (Exact name of Registrant as specified in its charter) Maryland 38-3148187 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 70 E. Long Lake Road, Bloomfield Hills, Michigan 48304 (Address of Principal Executive Offices) Registrant’s telephone number, including area code: (248) 737-4190 Securities Registered Pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange On Which Registered Common Stock, $.0001 par value New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No The aggregate market value of the Registrant’s shares of common stock held by non-affiliates was approximately $1,313,587,447 as of June 30, 2017, based on the closing price of $45.87 on the New York Stock Exchange on that date. At February 20, 2018, there were 30,992,597 shares of common stock, $.0001 par value per share, outstanding. [This page intentionally left blank.] 1 PART I Cautionary Note Regarding Forward-Looking Statements This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Agree Realty Corporation intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” “may,” “will,” “seek,” “could,” “project,” or similar expressions. Forward-looking statements in this report include information about possible or assumed future events, including, among other things, discussion and analysis of our future financial condition, results of operations, our strategic plans and objectives, occupancy and leasing rates and trends, liquidity and ability to refinance our indebtedness as it matures, anticipated expenditures of capital, and other matters. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect actual results, performances or achievements. Factors which may cause actual results to differ materially from current expectations, include, but are not limited to: the global and national economic conditions and changes in general economic, financial and real estate market conditions; changes in our business strategy; the potential need to fund improvements or other capital expenditures out of operating cash flow; financing risks, such as the inability to obtain debt or equity financing on favorable terms or at all; the level and volatility of interest rates; our ability to re-lease space as leases expire; loss or bankruptcy of one or more of our major tenants; our ability to maintain our qualification as a real estate investment trust (“REIT”) for federal income tax purposes and the limitations imposed on our business by our status as a REIT; and legislative or regulatory changes, including changes to laws governing REITs. The factors included in this report, including the documents incorporated by reference, and documents the Company subsequently files or furnishes with the SEC are not exhaustive and additional factors could cause actual results to differ materially from that described in the forward-looking statements. For a discussion of additional risk factors, see the factors included under the caption “Risk Factors” within this report. All forward-looking statements are based on information that was available, and speak only, as of the date on which they were made. Except as required by law, the Company disclaims any obligation to review or update these forward–looking statements to reflect events or circumstances as they occur. Unless the context otherwise requires, references in this Annual Report on Form 10-K to the terms “registrant,” the “Company,” “Agree Realty,” “we,” “our” or “us” refer to Agree Realty Corporation and all of its consolidated subsidiaries, including its majority owned operating partnership, Agree Limited Partnership (the “Operating Partnership”). Agree Realty has elected to treat certain subsidiaries as taxable real estate investment trust subsidiaries which are collectively referred to herein as the “TRS.” Item 1: Business General The Company is a fully integrated REIT primarily focused on the ownership, acquisition, development and management of retail properties net leased to industry leading tenants. The Company was founded in 1971 by its current Executive Chairman, Richard Agree, and its common stock was listed on the New York Stock Exchange (“NYSE”) in 1994. 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 99.2% interest as of December 31, 2019. Under the partnership agreement of the Operating Partnership, we, as the sole general partner, have exclusive responsibility and discretion in the management and control of the Operating Partnership. As of December 31, 2019, our portfolio consisted of 821 properties located in 46 states and totaling approximately 14.6 million square feet of gross leasable area (“GLA”). As of December 31, 2019, our portfolio was approximately 99.6% leased and had a weighted average remaining lease term of approximately 10.0 years. A significant majority of our properties are leased to national tenants and approximately 58.2% of our annualized base rent was derived from tenants, or parent entities thereof, with an investment grade credit 2 rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Association of Insurance Commissioners. 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, 2019, we had 41 full-time employees, including executive, investment, due diligence, construction, accounting, asset management and administrative personnel. Our principal executive offices are located at 70 E. Long Lake Road, Bloomfield Hills, MI 48304 and our telephone number is (248) 737-4190. We maintain a website at www.agreerealty.com. Our reports are electronically filed with or furnished to the SEC pursuant to Section 13 or 15(d) of the Exchange Act and can be accessed through this site, free of charge, as soon as reasonably practicable after we electronically file or furnish such reports. These filings are also available on the SEC’s website at www.sec.gov. Our website also contains copies of our corporate governance guidelines and code of business conduct and ethics, as well as the charters of our audit, compensation and nominating and governance committees. The information on our website is not part of this report. Recent Developments For a discussion of business developments that occurred in 2019, see 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 2019, we completed approximately $724.7 million of investments in net leased retail real estate, including acquisition and closing costs. Total investment volume includes the acquisition of 186 properties for an aggregate purchase price of approximately $702.9 million and the completed development of eight properties for an aggregate cost of approximately $21.8 million. These 194 properties are net leased to 57 different tenants operating in 22 sectors and are located in 40 states. These assets are 100% leased for a weighted average lease term of approximately 11.7 years. During 2019, we sold 16 properties for net proceeds of $65.5 million. Leasing During 2019, excluding properties that were sold, we executed new leases, extensions or options on more than 370,000 square feet of GLA throughout our portfolio. The annualized base contractual rent associated with these new leases, extensions or options is approximately $6.6 million. Notable new leases, extensions or options included a 40,000 square foot Dave & Buster’s in Austin, Texas and an approximately 30,800 square foot Best Buy in Sanford, Florida. Dividends We increased our quarterly dividend per share from $0.555 in March 2019 to $0.570 in June 2019 and further increased our quarterly dividend per share to $0.585 in December 2019. The fourth quarter 2019 dividend per share of $0.585 represents an annualized dividend of $2.34 per share and an annualized dividend yield of approximately 3.3% based on the last reported sales price of our common stock listed on the NYSE of $70.17 on December 31, 2019. We have paid a quarterly cash dividend for 103 consecutive quarters and, although we expect to continue our policy of paying quarterly dividends, we cannot guarantee that we will maintain our current level of dividends, that we will continue our recent pattern of increasing dividends per share or what our actual dividend yield will be in any future period. 3 Financing Equity During 2019, the Company completed follow-on public offerings of common stock under our existing shelf registration statement, issuing a total of 6,662,500 shares. These offerings generated total net proceeds of $381.8 million. Upon settlement of the September 2018 Forward (defined below) in May 2019, the Company issued 3,500,000 shares of common stock. In July 2019, we entered into a $400.0 million at-the-market equity program (the “2019 ATM Program”) through which we may, from time to time, sell shares of common stock. In addition to selling shares of common stock, we may enter into forward sale agreements through our 2019 ATM Program. During 2019, the Company issued 444,228 shares under the 2019 ATM Program, at an average price of $74.30, realizing gross proceeds of $33.0 million. During 2019, the Company issued 886,768 shares of common stock, under a previously authorized $250.0 million ATM program (the “2018 ATM Program), at an average price of $66.83, realizing gross proceeds of $59.3 million. No future issuances will occur under the 2018 ATM Program. During 2019, the Company entered into forward sale agreements in connection with our 2019 ATM Program to sell an aggregate of 2,003,118 shares of common stock (the “ATM Forward Offerings”). To date, no shares from the ATM Forward Offerings have been settled. The ATM Forward Offerings are required to be settled by various dates in December 2020. After considering shares already sold under the 2019 ATM Program including the outstanding ATM Forward Offerings, the Company had $220.1 million of availability remaining under the 2019 ATM Program as of December 31, 2019. Debt In June 2019, we completed a private placement of $125.0 million aggregate principal amount of 4.47% senior unsecured notes due October 2031 (the “2031 Senior Unsecured Notes”). Considering the effect of the hedging activities, the blended all-in rate for the 2031 Senior Unsecured Notes is 4.42%. In December 2019, we entered into a Second Amended and Restated Revolving Credit and Term Loan Agreement (the “Credit Agreement”), replacing the Company’s previous credit agreement from 2016. The Credit Agreement provides $600.0 million in unsecured borrowing capacity, composed of a $500.0 million revolving credit facility (the “Revolving Credit Facility”), and $100.0 million in term loan facilities, which mature in January 2024. Subject to certain terms and conditions, the Company may request additional lender commitments of up to an additional aggregate of $500.0 million and may elect to extend the maturity date of the Revolving Credit Facility up to a maximum maturity of January 2025. All borrowings under the $500.0 million unsecured Revolving Credit Facility bear interest at variable rates plus margins based on the Company’s credit rating. As of December 31, 2019, the all-in rate on the Revolving Credit Facility was 2.69%. Business Strategies Our primary business objective is to generate consistent shareholder returns by primarily investing in and actively managing a diversified portfolio of retail properties net leased to industry leading tenants. The following is a discussion of our investment, financing and asset management strategies. 4 Investment We are primarily focused on the long-term, fee simple ownership of properties net leased to national or large, regional retailers operating in sectors we believe to be more e-commerce and recession resistant. Our leases are typically long-term net leases that require the tenant to pay all property operating expenses, including real estate taxes, insurance and maintenance. We believe that a diversified portfolio of such properties provides for stable and predictable cash flow. We seek to expand and enhance our portfolio by identifying the best risk-adjusted investment opportunities across our development, Partner Capital Solutions (“PCS”) and acquisitions platforms. Development: We have been developing retail properties since the formation of our predecessor company in 1971 and our development platform seeks to employ our capabilities to direct all aspects of the development process, including site selection, land acquisition, lease negotiation, due diligence, design and construction. 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. We offer construction expertise, relationships, access to capital and forward commitments to purchase the properties to facilitate the successful completion of their projects. We typically take fee simple ownership of PCS projects upon their completion. Acquisitions: Our acquisitions platform was launched in April 2010 in order to expand our investment capabilities by pursuing opportunities that do not fall within our development platform, but that do meet both our real estate and return on investment criteria. 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. We focus on four core principles that underlie our investment criteria: e-commerce resistance, focusing on leading operators in e-commerce resistant sectors or those that have matured in omni-channel structure recession resistance, emphasizing a balanced portfolio with exposure to counter-cyclical sectors and retailers with strong credit profiles avoidance of private equity sponsorship, minimizing exposure to the possibility of such sponsorship overleveraging their acquisitions and reducing retailers’ abilities to invest in their businesses 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. 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. 5 Financing We seek to maintain a capital structure that provides us with the flexibility to manage our business and pursue our growth strategies, while allowing us to service our debt requirements and generate appropriate risk-adjusted returns for our shareholders. We believe these objectives are best achieved by a capital structure that consists primarily of common equity and prudent amounts of debt financing. However, we may raise capital in any form and under terms that we deem acceptable and in the best interest of our shareholders. We have previously utilized common stock equity offerings, secured mortgage borrowings, unsecured bank borrowings, private placements of senior unsecured notes and the sale of properties to meet our capital requirements. We continually evaluate our financing policies on an on-going basis in light of current economic conditions, access to various capital markets, relative costs of equity and debt securities, the market value of our properties and other factors. We occasionally sell common stock through forward sale agreements, enabling the Company to set the price of shares upon pricing the offering while delaying the issuance of shares and the receipt of the net proceeds by the Company. As of December 31, 2019, our ratio of total debt to enterprise value, assuming the conversion of limited partnership interests in the Operating Partnership (“OP Units”) into shares of common stock, was approximately 21.6%, and our ratio of total debt to total gross assets (before accumulated depreciation) was approximately 29.9%. As of December 31, 2019, our total debt outstanding before deferred financing costs was $876.1 million, including $37.1 million of secured mortgage debt that had a weighted average fixed interest rate of 4.40% (including the effects of interest rate swap agreements) and a weighted average maturity of 3.4 years, $750.0 million of unsecured borrowings that had a weighted average fixed interest rate of 4.04% (including the effects of interest rate swap agreements) and a weighted average maturity of 8.1 years, and $89.0 million of floating rate borrowings under our revolving credit facility at a weighted average interest rate of approximately 2.69%. Certain financial agreements to which we are a party contain covenants that limit our ability to incur debt under certain circumstances; however, our organizational documents do not limit the absolute amount or percentage of indebtedness that we may incur. As such, we may modify our borrowing policies at any time without shareholder approval. Asset Management We maintain a proactive leasing and capital improvement program that, combined with the quality and locations of our properties, has made our properties attractive to tenants. We intend to continue to hold our properties for long-term investment and, accordingly, place a strong emphasis on the quality of construction and an on-going program of regular and preventative maintenance. Our properties are designed and built to require minimal capital improvements other than renovations or alterations, typically paid for by tenants. Personnel from our corporate headquarters conduct regular inspections of each property and maintain regular contact with major tenants. 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. 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. 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. 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. 6 Significant Tenants No tenant accounted for more than 5.0% of our annualized base rent as of December 31, 2019. See “Item 2 – Properties” for additional information on our top tenants and the composition of our tenant base. Regulation Environmental Investments in real property create the potential for environmental liability on the part of the owner or operator of such real property. If hazardous substances are discovered on or emanating from a property, the owner or operator of the property may be held strictly liable for all costs and liabilities relating to such hazardous substances. We have obtained a Phase I environmental study (which involves inspection without soil sampling or ground water analysis) conducted by independent environmental consultants on each of our properties and, in certain instances, have conducted additional investigation, including a Phase II environmental assessment. We have no knowledge of any hazardous substances existing on our properties in violation of any applicable laws; however, no assurance can be given that such substances are not currently located on any of our properties. 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 been notified by any governmental authority of any noncompliance, liability or other claim in connection with any of our properties. 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. Our tenants will typically have primary responsibility for complying with the ADA, but we may incur costs if the tenant does not comply. As of December 31, 2019, we have not been notified by 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. Available Information We make available free of charge through our website at www.agreerealty.com all reports we electronically file with, or furnish to, the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and current reports on Form 8-K, as well as any amendments to those reports, as soon as reasonably practicable after those documents are filed with, or furnished to, the SEC. These filings are also accessible on the SEC’s website at www.sec.gov. Item 1A: Risk Factors The following factors and other factors discussed in this Annual Report on Form 10-K could cause our actual results to differ materially from those contained in forward-looking statements made in this report or presented elsewhere in future SEC reports. You should carefully consider each of the risks, assumptions, uncertainties and other factors described below and elsewhere in this report, as well as any reports, amendments or updates reflected in subsequent filings or furnishings with the SEC. 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. 7 Risks Related to Our Business and Operations Economic and financial conditions may have a negative effect on our business and operations. 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. 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 shareholders 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. We focus our development and investment activities on ownership of real properties that are primarily net leased to a single tenant. Therefore, the financial failure of, or other default in payment by, a single tenant under its lease and the potential resulting vacancy is likely to cause a significant reduction in our operating cash flows from that property and a significant reduction in the value of the property and could cause a significant impairment loss. In addition, we would be responsible for all of the operating costs of a property following a vacancy at a single tenant building. Because our properties have generally been built to suit a particular tenant’s specific needs and desires, we may also incur significant losses to make the leased premises ready for another tenant and experience difficulty or a significant delay in releasing such property. Bankruptcy laws will limit our remedies if a tenant becomes bankrupt and rejects its leases. If a tenant becomes bankrupt or insolvent, that could diminish the income we receive from that tenant’s leases. We may not be able to evict a tenant solely because of its bankruptcy. On the other hand, a bankruptcy court might authorize the tenant to terminate its leasehold with us. If that happens, our claim against the bankrupt tenant for unpaid future rent would be an unsecured pre-petition claim subject to statutory limitations, and therefore any amounts received in bankruptcy are likely to be substantially less valuable than the remaining rent we otherwise were owed under the leases. 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 properties are located in 46 states throughout the United States and in particular, the state of Michigan (where 61 properties out of 821 properties are located, or 8.5% of our annualized base rent was derived as of December 31, 2019), Texas (54 properties, or 7.0% of our annualized base rent) and Florida (58 properties, or 6.2% of our annualized base rent). 8 An economic downturn or other adverse events or conditions such as natural disasters in any of these areas, or any other area where we may have significant concentration in the future, could result in a material reduction of our cash flows or material losses to our company. Our tenants are concentrated in certain retail sectors, which makes us susceptible to adverse conditions impacting these sectors. As of December 31, 2019, 10.8%, 7.7%, and 6.9% of our annualized contractual base rent and interest was derived from tenants operating in, the home improvement, tire and auto service, and grocery store sectors, respectively. Similarly, we have concentrations in other sectors such as off-price retail and convenience stores. Any decrease in consumer demand for the products and services offered by our tenants operating in any industries for which we have concentrations could have an adverse effect on our tenants’ revenues, costs and results of operations, thereby adversely affecting their ability to meet their lease obligations to us. As we continue to invest in properties, our portfolio may become more or less concentrated by industry sector. There are risks associated with our development and acquisition activities. We intend to continue the development of new properties and to consider possible acquisitions of existing properties. We anticipate that our new developments will be financed under the revolving credit facility or other forms of financing that will result in a risk that permanent fixed rate financing on newly developed projects might not be available or would be available only on disadvantageous terms. In addition, new project development is subject to a number of risks, including risks of construction delays or cost overruns that may increase anticipated project costs. Furthermore, new project commencement risks also include receipt of zoning, occupancy, other required governmental permits and authorizations and the incurrence of development costs in connection with projects that are not pursued to completion. If permanent debt or equity financing is not available on acceptable terms to finance new development or acquisitions undertaken without permanent financing, further development activities or acquisitions might be curtailed, or cash available for distribution might be adversely affected. 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. We own certain of our properties subject to ground leases that expose us to the loss of such properties upon breach or termination of the ground leases and may limit our ability to sell these properties. We own a limited number of properties through leasehold interests in the land underlying the buildings and we may acquire additional buildings in the future that are subject to similar ground leases. As lessee under a ground lease, we are exposed to the possibility of losing our interest in the property upon termination, or an earlier breach by us, of the ground lease, which may have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common stock. Our ground leases contain certain provisions that may limit our ability to sell certain of our properties. In order to assign or transfer our rights and obligations under certain of our ground leases, we generally must obtain the consent of the landlord which, in turn, could adversely impact the price realized from any such sale. Loss of revenues from tenants would reduce the Company’s cash flow. Our tenants encounter significant macroeconomic, governmental and competitive forces. 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. 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. Upon the expiration of a lease, the tenant may choose not to renew the lease, renegotiate the economics of any option period(s) as a condition of exercising one or more of them, and/or we may not be able to release the vacant property at a comparable lease rate or without incurring additional expenditures in connection with such renewal or re-leasing. These risks could be exacerbated by a deterioration in the financial condition of any major tenant with leases in multiple locations. 9 The availability and timing of cash dividends is uncertain. We expect to continue to pay quarterly dividends to our shareholders. 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 shareholders. We cannot assure our shareholders that sufficient funds will be available to pay dividends. The decision to declare and pay dividends on our common stock in the future, as well as the timing, amount, and composition of any such future dividends, will be at the sole discretion of our board of directors and will depend on our earnings, funds from operations, liquidity, financial condition, capital requirements, contractual prohibitions, or other limitations under our indebtedness, annual dividend requirements or the REIT provisions of the Internal Revenue Code of 1986, as amended (the “Code”), state law and such other factors as our board of directors deems relevant. Further, we may issue new shares of common stock as compensation to our employees or in connection with public offerings or acquisitions. Any future issuances may substantially increase the cash required to pay dividends at current or higher levels. Any preferred shares we may offer may have a fixed dividend rate that would not increase with any increases in the dividend rate of our common stock. Conversely, payment of dividends on our common stock may be subject to payment in full of the dividends on any preferred shares and payment of interest on any debt securities we may offer. If we do not maintain or increase the dividend on our common stock, it could have an adverse effect on the market price of our shares. We face risks relating to information technology and cybersecurity attacks, loss of confidential information and other business disruptions. We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information and to manage or support a variety of our business processes and we rely on commercially available systems, software, tools and monitoring to provide infrastructure and security for processing, transmitting and storing information. 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. Such cyber-attacks can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats. While we employ a number of measures to prevent, detect and mitigate these threats, there is no guarantee such efforts will be successful in preventing a cyber-attack. 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 employees, as well as third parties) and affect the efficiency of our business operations. Any such incidents could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information and reduce the benefits of our technologies. A loss of key management personnel could adversely affect our performance. As an internally managed company, we are dependent on the efforts and performance of our key management. We cannot guarantee we retain any of our senior leadership team and they could be difficult to replace. The loss of their services until suitable replacements are found could adversely affect our business, diminish our investment opportunities and weaken our relationships with lenders, business partners, existing and prospective tenants and industry personnel, all of which could materially and adversely affect us. 10 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. Although many of our leases contain terms that obligate the tenants to bear substantially all of the costs of operating our properties, investing in real estate involves a number of risks. Income from and the value of our properties may be adversely affected by: changes in general or local economic conditions; the attractiveness of our properties to potential tenants; changes in supply of or demand for similar or competing properties in an area; bankruptcies, financial difficulties or lease defaults by our tenants; changes in operating costs and expense and our ability to control rents; our ability to lease properties at favorable rental rates; our ability to sell a property when we desire to do so at a favorable price; unanticipated changes in costs associated with known adverse environmental conditions or retained liabilities for such conditions; and changes in or increased costs of compliance with governmental rules, regulations and fiscal policies, including changes in the ADA and similar regulations and tax, real estate, environmental and zoning laws, and our potential liability thereunder. Economic and financial market conditions have and may continue to exacerbate many of the foregoing risks. If a tenant fails to perform on its lease covenants, that would not excuse us from meeting any mortgage debt obligation secured by the property and could require us to fund reserves in favor of our mortgage lenders, thereby reducing funds available for payment of cash dividends on our shares of common stock. The fact that real estate investments are relatively illiquid may reduce economic returns to investors. We may desire to sell a property in the future because of changes in market conditions or poor tenant performance or to avail ourselves of other opportunities. We may also be required to sell a property in the future to meet secured debt obligations or to avoid a secured debt loan default. Real estate properties cannot generally be sold quickly, and we cannot assure you that we could always obtain a favorable price. We may be required to invest in the restoration or modification of a property before we can sell it. This lack of liquidity may limit our ability to vary our portfolio promptly in response to changes in economic or other conditions and, as a result, could adversely affect our financial condition, results of operations, cash flows and our ability to pay dividends on our common stock. Our ability to renew leases or re-lease space on favorable terms as leases expire significantly affects our business. We are subject to the risks that, upon expiration of leases for space located in our properties, the premises may not be re-let or the terms of re-letting (including the cost of concessions to tenants) may be less favorable than current lease terms. If a tenant does not renew its lease or if a tenant defaults on its lease obligations, there is no assurance we could obtain a substitute tenant on acceptable terms. If we cannot obtain another tenant with comparable building structural space and configuration needs, we may be required to modify the property for a different use, which may involve a significant capital expenditure and a delay in re-leasing the property. Further, if we are unable to re-let promptly all or a substantial portion of our retail space or if the rental rates upon such re-letting were significantly lower than expected rates, our net income and ability to make expected distributions to shareholders would be adversely affected. There can be no assurance that we will be able to retain tenants in any of our properties upon the expiration of their leases. 11 Our leases contain certain limitations on tenants’ real estate tax, insurance and operating cost reimbursement obligations. Our tenants under net leases generally are responsible for paying the real estate taxes, insurance costs and operating costs associated with the leased property. However, certain leases contain limitations on the tenant’s cost reimbursement obligations and, therefore, there are costs which may be incurred and which will not be reimbursed in full by tenants. This could reduce our operating cash flows from those properties and could reduce the value of those properties. Potential liability for environmental contamination could result in substantial costs. Under federal, state and local environmental laws, we may be required to investigate and clean up any release of hazardous or toxic substances or petroleum products at our properties, regardless of our knowledge or actual responsibility, simply because of our current or past ownership or operation of the real estate. If unidentified environmental problems arise, we may have to make substantial payments, which could adversely affect our cash flow and our ability to make distributions to our shareholders. This potential liability results from the following: as owner, we may have to pay for property damage and for investigation and clean-up costs incurred in connection with the contamination; the law may impose clean-up responsibility and liability regardless of whether the owner or operator knew of or caused the contamination; even if more than one person is responsible for the contamination, each person who shares legal liability under environmental laws may be held responsible for all of the clean-up costs; and governmental entities and third parties may sue the owner or operator of a contaminated site for damages and costs. These costs could be substantial and in extreme cases could exceed the value of the contaminated property. The presence of hazardous substances or petroleum products or the failure to properly remediate contamination may adversely affect our ability to borrow against, sell or lease an affected property. In addition, some environmental laws create liens on contaminated sites in favor of the government for damages and costs it incurs in connection with a contamination. We own and may in the future acquire properties that will be operated as convenience stores with gas station facilities. The operation of convenience stores with gas station facilities at our properties will create additional environmental concerns. Similarly, we may lease properties to users or producers of other hazardous materials. We require that the tenants who operate these facilities do so in material compliance with current laws and regulations. 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. There are certain losses, including losses from environmental liabilities, that are not generally insured against or that are not generally fully insured against because it is not deemed economically feasible or prudent to do so. There is also a risk that tenants may not satisfy their environmental compliance and indemnification obligations under the leases. Any of these events could substantially increase our cost of operations, require us to fund environmental indemnities in favor of our secured lenders and reduce our ability to service our secured debt and pay dividends to shareholders and any debt security interest payments. Environmental problems at any properties could also put us in default under loans secured by those properties, as well as loans secured by unaffected properties. Uninsured losses relating to real property may adversely affect our returns. Our leases generally require tenants to carry comprehensive liability and extended coverage insurance on our properties. However, there are certain losses, including losses from environmental liabilities, terrorist acts or catastrophic acts of nature, that are not generally insured against or that are not generally fully insured against because it is not deemed economically feasible or prudent to do so. If there is an uninsured loss or a loss in excess of insurance limits, we could lose both the revenues generated by the affected property and the capital we have invested in the property. In the event of a substantial unreimbursed loss, we would remain obligated to repay any mortgage indebtedness or other obligations related to the property. 12 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. At December 31, 2019, our ratio of total debt to enterprise value (assuming conversion of OP Units into shares of common stock) was approximately 21.6%. 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. 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 and (5) debt service requirements increase. If a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the property could be foreclosed upon with a consequential loss of income and asset value to us. We generally intend to maintain a ratio of total indebtedness (including construction or acquisition financing) to total market capitalization of 65% or less. Nevertheless, we may operate with debt levels which are in excess of 65% of total market capitalization for extended periods of time. If our debt capitalization policy were changed, we could become more highly leveraged, resulting in an increase in debt service that could adversely affect our operating cash flow and our ability to make expected distributions to shareholders, and could result in an increased risk of default on our obligations. Covenants in our credit agreements and note purchase agreements could limit our flexibility and adversely affect our financial condition. The terms of the financing agreements and other indebtedness require us to comply with a number of customary financial and other covenants. These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness even if we have satisfied our payment obligations. Our financing agreements contain certain cross-default provisions which could be triggered in the event that we default on our other indebtedness. These cross-default provisions may require us to repay or restructure the revolving credit facility in addition to any mortgage or other debt that is in default. If our properties were foreclosed upon, or if we are unable to refinance our indebtedness at maturity or meet our payment obligations, the amount of our distributable cash flows and our financial condition would be adversely affected. Our unsecured revolving credit facility, certain term loan agreements and certain note purchase agreements contain various restrictive corporate covenants, including a maximum total leverage ratio, a maximum secured leverage ratio and a minimum fixed charge coverage ratio. In addition, our unsecured revolving credit facility, certain term loan agreements and certain note purchase agreements have unencumbered pool covenants, which include a maximum unencumbered leverage ratio and a minimum unencumbered interest coverage ratio. These covenants may restrict our ability to pursue certain business initiatives or certain transactions that might otherwise be advantageous. 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. 13 Credit market developments may reduce availability under our revolving credit facility. There is risk that lenders, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations under our existing revolving credit facility, including but not limited to: extending credit up to the maximum amount permitted by such credit facility, allowing access to additional credit features and/or honoring loan commitments. If our lender(s) fail to honor their legal commitments under our revolving credit facility, it could be difficult to replace our revolving credit facility on similar terms. Any such failure by any of the lenders under the revolving credit facility may impact our ability to finance our operating or investing activities. 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 interest costs for any new debt and our current debt obligations may rise if interest rates increase. This increased cost could make the financing of any new acquisition more expensive as well as lower our current period earnings. Rising interest rates could limit our ability to refinance existing debt when it matures or cause us to pay higher interest rates upon refinancing. In addition, an increase in interest rates could decrease the access third parties have to credit, thereby decreasing the amount they are willing to pay to lease our assets and limit our ability to reposition our portfolio promptly in response to changes in economic or other conditions. An increase in market interest rates may lead prospective purchasers of our common stock to expect a higher dividend yield, which could adversely affect the market price of our common stock. Decreases in interest rates may lead to additional competition for the acquisition of real estate due to a reduction in desirable alternative income-producing investments. 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. 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. These instruments involve risks, such as the risk that the counterparties may fail to honor their obligations under these arrangements, that these arrangements may not be effective in reducing our exposure to interest rate changes, that a court could rule that such agreements are not legally enforceable, and that we may have to post collateral to enter into hedging transactions, which we may lose if we are unable to honor our obligations. These instruments may also generate income that may not be treated as qualifying REIT income for purposes of the REIT income tests. In addition, the nature and timing of hedging transactions may influence the effectiveness of our hedging strategies. Poorly designed strategies or improperly executed transactions could actually increase our risk and losses. Moreover, hedging strategies involve transaction and other costs. We cannot assure you that our hedging strategy and the derivatives that we use will adequately offset the risk of interest rate volatility or that our hedging transactions will not result in losses that may reduce the overall return on your investment. LIBOR is being phased-out as a reference rate for debt and hedging agreements and may require us to transition LIBOR-based contracts to an alternative reference rate. In July 2017, the Financial Conduct Authority (“FCA”), the authority that regulates LIBOR, announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board organized the Alternative Reference Rates Committee (“ARRC”), which recommended the Secured Overnight Financing Rate (“SOFR”), as its preferred alternative to USD-LIBOR in derivatives and other financial contracts. However, at this time, no consensus exists as to what rate or rates may become acceptable alternatives to LIBOR. The Company is not able to predict when LIBOR will cease to be available or supported, or whether additional reforms to LIBOR may be enacted. Any changes adopted by FCA or other governing bodies in the method used for determining LIBOR or the transition from LIBOR to a successor benchmark may result in a sudden or prolonged increase or decrease in reported LIBOR, a delay in the publication of LIBOR and changes in the rules or methodologies in LIBOR. If these events were to occur, our interest 14 payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available it its current form. As of December 31, 2019 and the date of this Annual Report on Form 10-K, the Company has contracts that are indexed to LIBOR, including its unsecured revolving credit facility and interest rate swap agreements, and continues to monitor this activity and evaluate the related risks, including the risks of interest on loans and amounts paid or received on swaps fluctuating. These risks may arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans or swaps tied to LIBOR could also be impacted if LIBOR is limited or discontinued. 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. Our charter, subject to certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT and contains provisions that limit any person to actual or constructive ownership of no more than 9.8% (in value or in number of shares, whichever is more restrictive) of the outstanding shares of our common stock and no more than 9.8% (in value) of the aggregate of the outstanding shares of all classes and series of our stock. Our board of directors, in its sole discretion, may exempt, subject to the satisfaction of certain conditions, any person from the ownership limits. These restrictions on transferability and ownership will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT. The ownership limits may delay or impede, and we may use the ownership limits deliberately to delay or impede, a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our shareholders. We have a staggered board. 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 shareholders. We could issue stock without shareholder approval. Our board of directors could, without shareholder approval, issue authorized but unissued shares of our common stock or preferred stock. In addition, our board of directors could, without shareholder approval, classify or reclassify any unissued shares of our common stock or preferred stock and set the preferences, rights and other terms of such classified or reclassified shares. Our board of directors could establish a series of stock that could, depending on the terms of such series, delay, defer or prevent a transaction or change of control that might involve a premium price for our common stock or otherwise be viewed to be in the best interest of our shareholders. Provisions of Maryland law may limit the ability of a third party to acquire control of our company. Certain provisions of Maryland law may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under certain circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then prevailing market price of such shares, including: “Business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested shareholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof) for five years after the most recent date on which the shareholder becomes an interested shareholder and thereafter would require the recommendation of our board of directors and impose special appraisal rights and special shareholder voting requirements on these combinations; and “Control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the shareholder, entitle the shareholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares. 15 The business combination statute permits various exemptions from its provisions, including business combinations that are approved or exempted by the board of directors before the time that the interested shareholder becomes an interested shareholder. Our board of directors has exempted from the business combination provisions of the Maryland General Corporation Law, or MGCL, any business combination with Mr. Richard Agree or any other person acting in concert or as a group with Mr. Richard Agree. 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 employees, 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. Additionally, Title 3, Subtitle 8 of the MGCL, permits our board of directors, without shareholder approval and regardless of what is currently provided in our charter or our bylaws, to implement certain takeover defenses. These provisions may have the effect of inhibiting a third party from making an acquisition proposal for our company or of delaying, deferring or preventing a change in control of our company under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-current market price. Our charter, our bylaws, the limited partnership agreement of the Operating Partnership and Maryland law also contain other provisions that may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be viewed to be in the best interest of our shareholders. Future offerings of debt and equity may not be available to us or may adversely affect the market price of our common stock. We expect to continue to increase our capital resources by making additional offerings of equity and debt securities in the future, which could include classes or series of preferred stock, common stock and senior or subordinated notes. Our ability to raise additional capital may be restricted at a time when we would like or need, including as a result of market conditions. Future market dislocations could cause us to seek sources of potentially less attractive capital and impact our flexibility to react to changing economic and business conditions. All debt securities and other borrowings, as well as all classes or series of preferred stock, will be senior to our common stock in a liquidation of our company. Additional equity offerings could dilute our shareholders’ equity and reduce the market price of shares of our common stock. In addition, depending on the terms and pricing of an additional offering of our common stock and the value of our properties, our shareholders may experience dilution in both the book value and fair value of their shares. The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market after an offering or the perception that such sales could occur, and this could materially and adversely affect our ability to raise capital through future offerings of equity or equity-related securities. 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. An officer and director may have interests that conflict with the interests of shareholders. An officer and member of our board of directors owns OP Units. This individual may have personal interests that conflict with the interests of our shareholders 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. 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. 16 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. Although we believe that we are organized and operate in such a manner so as to qualify as a REIT under the 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. 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. 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 shareholders. A REIT that annually distributes at least 90% of its taxable income to its shareholders generally is not taxed at the corporate level on such distributed income. We have not requested and do not plan to request a ruling from the Internal Revenue Service that we qualify as a REIT. If we fail to qualify as a REIT, we will face tax consequences that will substantially reduce the funds available for payment of cash dividends: We would not be allowed a deduction for dividends paid to shareholders in computing our taxable income and would be subject to federal income tax at regular corporate rates. We may be subject to increased state and local taxes. Unless we are entitled to relief under statutory provisions, we could not elect to be treated as a REIT for four taxable years following the year in which we failed to qualify. 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. 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. Additionally, the REIT rules are constantly under review by persons involved in the legislative process and by the Internal Revenue Service 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. In particular, H.R. 1, which took effect for taxable years that began on or after January 1, 2018 (subject to certain exceptions), made many significant changes to the federal income tax laws that profoundly impacted the taxation of individuals, corporations (both regular C corporations as well as corporations that have elected to be taxed as REITs), and the taxation of taxpayers with overseas assets and operations. A number of changes that affect non-corporate taxpayers will expire at the end of 2025 unless Congress acts to extend them. These changes will impact us and our shareholders in various ways, some of which are adverse or potentially adverse compared to prior law. While the IRS has issued some guidance with respect to certain of the new provisions, there are numerous interpretive issues that will require further guidance. It is highly likely that technical corrections legislation will be needed to clarify certain aspects of the new law and give proper effect to Congressional intent. There can be no assurance, however, that technical clarifications or further changes needed to prevent unintended or unforeseen tax consequences will be enacted by Congress in the near future. In addition, while certain elements of tax reform legislation do not impact us directly as a REIT, they could impact the geographic markets in which we operate, the tenants that populate our properties and the customers who frequent our properties in ways, both positive and negative, that are difficult to anticipate. Other legislative proposals could be enacted in the future that could affect REITs and their shareholders. Prospective investors are urged to consult their tax advisors regarding the effect of H.R. 1 and any other potential tax law changes on an investment in our common stock. Changes in tax laws may prevent us from maintaining our qualification as a REIT. As we have previously described, we intend to maintain our qualification as a REIT for federal income tax purposes. However, this intended qualification is based on the tax laws that are currently in effect. We are unable to predict any 17 future changes in the tax laws that would adversely affect our status as a REIT. If there is a change in the tax law that prevents us from qualifying as a REIT or that requires REITs generally to pay corporate level income taxes, we may not be able to make the same level of distributions to our shareholders. Complying with REIT requirements may force us to liquidate or restructure otherwise attractive investments. In order to qualify as a REIT, at least 75% of the value of our assets must consist of cash, cash items, government securities and qualified real estate assets. The remainder of our investments in securities (other than government securities, securities of TRSs and qualified real estate assets) cannot include more than 10% of the voting securities or 10% of the value of all securities, of any one issuer. In addition, in general, no more than 5% of the total value of our assets (other than government securities, securities of TRSs and qualified real estate assets) can consist of securities of any one issuer, and no more than 20% of the total value of our assets can be represented by one or more TRSs. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments. We may have to borrow funds or sell assets to meet our distribution requirements. Subject to some adjustments that are unique to REITs, a REIT generally must distribute 90% of its taxable income. For the purpose of determining taxable income, we may be required to accrue interest, rent and other items treated as earned for tax purposes but that we have not yet received. In addition, we may be required not to accrue as expenses for tax purposes some expenses that actually have been paid, including, for example, payments of principal on our debt, or some of our deductions might be disallowed by the Internal Revenue Service. As a result, we could have taxable income in excess of cash available for distribution. 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. 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. 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 will typically pay federal, state and local income tax at regular corporate rates on any income that it earns. In addition, the TRS rules impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. Our TRSs will pay federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but will not be required to be distributed to us. There can be no assurance that we will be able to comply with the 20% limitation discussed above or to avoid application of the 100% excise tax discussed above. Liquidation of our assets may jeopardize our REIT qualification. To qualify as a REIT, we must comply with requirements regarding our assets and our sources of income. 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. 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. 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 shareholders. Additionally, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which dividends paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. Moreover, if we have net income from “prohibited transactions,” that income will be subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property held primarily for sale to 18 customers in the ordinary course of business. The determination as to whether a particular sale is a prohibited transaction depends on the facts and circumstances related to that sale. While we will undertake sales of assets if those assets become inconsistent with our long-term strategic or return objectives, we do not believe that those sales should be considered prohibited transactions, but there can be no assurance that the Internal Revenue Service would not contend otherwise. The need to avoid prohibited transactions could cause us to forego or defer sales of properties that might otherwise be in our best interest to sell. In addition, any net taxable income earned directly by our TRSs, or through entities that are disregarded for federal income tax purposes as entities separate from our TRSs, will be subject to federal and possibly state corporate income tax. To the extent that we and our affiliates are required to pay federal, state and local taxes, we will have less cash available for distributions to our shareholders. Dividends payable by REITs do not qualify for the reduced tax rates on dividend income from regular corporations. The maximum federal income tax rate applicable to “qualified dividend income” payable by non-REIT corporations to certain non-corporate U.S. shareholders is generally 20% and a 3.8% Medicare tax may also apply. Dividends paid by REITs, however, generally are not eligible for the reduced rates applicable to qualified dividend income. Commencing with taxable years that began on or after January 1, 2018 and continuing through 2025, H.R. 1 temporarily reduced the effective tax rate on ordinary REIT dividends (i.e., dividends other than capital gain dividends and dividends attributable to certain qualified dividend income received by us) for U.S. holders of our common stock that are individuals, estates or trusts by permitting such holders to claim a deduction in determining their taxable income equal to 20% of any such dividends they receive. Taking into account H.R. 1’s reduction in the maximum individual federal income tax rate from 39.6% to 37%, this results in a maximum effective rate of regular income tax on ordinary REIT dividends of 29.6% through 2025 (as compared to the 20% maximum federal income tax rate applicable to qualified dividend income received from a non-REIT corporation). 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. Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities. The REIT provisions of the Code substantially limit our ability to hedge our liabilities. Any income from a hedging transaction we enter into to manage risk of interest rate changes, price changes or currency fluctuations with respect to borrowings made or to be made to acquire or carry real estate assets does not constitute qualifying income for purposes of income tests that apply to us as a REIT. To the extent that we enter into other types of hedging transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of the income tests. As a result of these rules, we may need to limit our use of advantageous hedging techniques or implement those hedges through a TRS. This could increase the cost of our hedging activities because our TRS would be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. 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. Item 1B: Unresolved Staff Comments There are no unresolved staff comments. Item 2: Properties As of December 31, 2019, our portfolio consisted of 821 properties located in 46 states and totaling approximately 14.6 million square feet of GLA. As of December 31, 2019, our portfolio was approximately 99.6% leased and had a weighted average remaining lease term of approximately 10.0 years. A significant majority of our properties are leased to national tenants and approximately 58.2% of our annualized base rent was derived from tenants, or parents thereof, with an investment grade credit rating. 19 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. 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. 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, 2019: ($ in thousands) Annualized % of Ann. Tenant / Concept Base Rent (1) Base Rent Sherwin-Williams $ 10,001 4.9 % Walmart 8,530 4.2 % TJX Companies 7,661 3.8 % Walgreens 6,957 3.4 % Best Buy 6,220 3.0 % Dollar General 6,130 3.0 % Tractor Supply 5,919 2.9 % O'Reilly Auto Parts 5,800 2.8 % CVS 5,530 2.7 % LA Fitness 5,091 2.5 % Home Depot 4,549 2.2 % Lowe's 4,215 2.1 % Dollar Tree 4,201 2.1 % Sunbelt Rentals 4,151 2.0 % AutoZone 3,853 1.9 % TBC Corporation 3,837 1.9 % Wawa 3,793 1.9 % Hobby Lobby 3,733 1.8 % Mister Car Wash 3,510 1.7 % Dave & Buster's 3,117 1.5 % Burlington 3,097 1.5 % Other(2) 94,251 46.2 % Total $ 204,146 100.0 % (1) Represents annualized contractual base rent on a straight-line basis as of December 31, 2019. (2) Includes tenants generating less than 1.5% of annualized contractual base rent. 20 Tenant Sector Diversification The following table presents annualized base rents for all sectors that generated 2.5% or greater of our total annualized base rents as of December 31, 2019: ($ in thousands) Annualized % of Ann. Tenant Sector Base Rent (1) Base Rent Home Improvement $ 21,991 10.8 % Tire and Auto Service 15,639 7.7 % Grocery 14,028 6.9 % Pharmacy 13,308 6.5 % Off-Price Retail 12,969 6.4 % Convenience Stores 12,817 6.3 % Auto Parts 11,242 5.5 % Dollar Stores 9,122 4.5 % General Merchandise 7,791 3.8 % Consumer Electronics 7,576 3.7 % Health and Fitness 7,499 3.7 % Farm and Rural Supply 6,996 3.4 % Restaurants - Quick Service 6,525 3.2 % Crafts and Novelties 6,186 3.0 % Home Furnishings 5,154 2.5 % Other(2) 45,303 22.1 % Total $ 204,146 100.0 % (1) Represents annualized contractual base rent on a straight-line basis as of December 31, 2019. (2) Includes sectors generating less than 2.5% of annualized contractual base rent. Geographic Diversification The following table presents annualized base rents, by state, for our portfolio as of December 31, 2019: ($ in thousands) Annualized % of Ann. Tenant Sector Base Rent (1) Base Rent Michigan $ 17,373 8.5 % Texas 14,243 7.0 % Florida 12,692 6.2 % Illinois 12,076 5.9 % Pennsylvania 10,654 5.2 % Ohio 10,057 4.9 % New Jersey 8,739 4.3 % Virginia 8,216 4.0 % Georgia 7,333 3.6 % Wisconsin 6,857 3.4 % Missouri 6,270 3.1 % North Carolina 5,795 2.8 % Louisiana 5,774 2.8 % Other(2) 78,067 38.3 % Total $ 204,146 100.0 % (1) Represents annualized contractual base rent on a straight-line basis as of December 31, 2019. (2) Includes states generating less than 2.5% of annualized contractual base rent. 21 Lease Expirations The following table presents contractual lease expirations within the Company’s portfolio as of December 31, 2019, 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 2020 8 $ 1,045 0.5 % 113 0.8 % 2021 27 5,262 2.6 % 318 2.2 % 2022 22 4,064 2.0 % 367 2.5 % 2023 40 7,283 3.6 % 726 5.0 % 2024 38 11,725 5.7 % 1,307 9.0 % 2025 49 11,925 5.8 % 1,015 7.0 % 2026 63 10,992 5.4 % 1,069 7.3 % 2027 63 15,534 7.6 % 1,171 8.1 % 2028 64 16,283 8.0 % 1,233 8.5 % 2029 81 24,098 11.8 % 1,839 12.6 % Thereafter 448 95,935 47.0 % 5,382 37.0 % Total 903 $ 204,146 100 % 14,541 100.0 % (1) Represents annualized contractual base rent on a straight-line basis as of December 31, 2019. Developments During the fourth quarter of 2019, construction continued on two development and Partner Capital Solutions (“PCS”) projects with anticipated total project costs of approximately $10.6 million. The projects consist of the Company’s (1) redevelopment of the former Kmart space in Frankfort, Kentucky for ALDI, Big Lots and Harbor Freight Tools and (2) development in Hart, Michigan for Tractor Supply. During the fourth quarter of 2019, the Company completed landlord’s work for the spaces leased to ALDI and Harbor Freight Tools and delivered those spaces to the tenants. Tenants’ work was ongoing as of December 31, 2019 for both spaces, and rent is anticipated to commence in full in the first quarter of 2020. Landlord’s work was ongoing for the space leased to Big Lots as of December 31, 2019. 22 During the year ended December 31, 2019, the Company had 10 development or PCS projects completed or under construction. Anticipated total costs for those projects are approximately $32.4 million and include the following completed or commenced projects: Actual or Lease Anticipated Rent Tenant Location Lease Structure Term Commencement Status Mister Car Wash Orlando, FL Build-to-Suit 20 years Q1 2019 Complete Mister Car Wash Tavares, FL Build-to-Suit 20 years Q1 2019 Complete Sunbelt Rentals Maumee, OH Build-to-Suit 10 years Q1 2019 Complete Sunbelt Rentals Batavia, OH Build-to-Suit 10 years Q2 2019 Complete Sunbelt Rentals Georgetown, KY Build-to-Suit 15 years Q3 2019 Complete Gerber Collision Round Lake, IL Build-to-Suit 15 years Q3 2019 Complete Sunbelt Rentals Carrizo Springs, TX Build-to-Suit 10 years Q3 2019 Complete Hobby Lobby Mt. Pleasant, MI Build-to-Suit 15 years Q3 2019 Complete ALDI Frankfort, KY Build-to-Suit 10 years Q4 2019 Complete Harbor Freight Tools Frankfort, KY Build-to-Suit 10 years Q4 2019 Complete Big Lots Frankfort, KY Build-to-Suit 10 years Q1 2020 Under Construction Tractor Supply Hart, MI Build-to-Suit 10 years Q1 2020 Under Construction Item 3: Legal Proceedings From time to time, we are involved in legal proceedings in the ordinary course of business. We 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 4: Mine Safety Disclosures Not applicable. PART II Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the NYSE under the symbol “ADC.” At February 19, 2020, there were 45,569,487 shares of our common stock issued and outstanding which were held by approximately 132 shareholders of record. The number of shareholders of record does not reflect persons or entities that held their shares in nominee or “street” name. In addition, at February 19, 2020 there were 347,619 outstanding OP Units held by a limited partner other than our Company. The OP Units are exchangeable into shares of common stock on a one-for-one basis. 23 Common stock repurchases during the three months ended December 31, 2019 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 Per Announced Plans Under the Plans Period Shares Purchased Per Share or Programs or Programs October 1, 2019 - October 31, 2019 — $ — — — November 1, 2019 - November 30, 2019 — — — — December 1, 2019 - December 31, 2019 61 72.67 — — 61 $ 72.67 — — During the three months ended December 31, 2019, the Company withheld 61 shares from employees to satisfy estimated statutory income tax obligations related to vesting of restricted stock awards. The value of the common stock withheld was based on the closing price of our common stock on the applicable vesting date. There were no unregistered sales of equity securities during the three months ended December 31, 2019. We intend to continue to declare quarterly 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 Code and such other factors as the board of directors deems relevant. 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 shareholders, as well as meet certain other requirements. 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 shareholders of record on a specified date during such period and paid during January of the following year. Such distributions are treated for REIT tax purposes as paid by us and received by our shareholders on December 31 of the year in which they are declared. In addition, at our election, a distribution for a taxable year may be declared in the following taxable year if it is declared before we timely file our tax return for such year and if paid on or before the first regular dividend payment after such declaration. These distributions qualify as dividends paid for the 90% REIT distribution test for the previous year and are taxable to holders of our capital stock in the year in which paid. For information about our equity compensation plan, please see “Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report on Form 10-K. 24 Item 6: Selected Financial Data The following table sets forth our selected financial information on a historical basis and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report on Form 10-K. The balance sheet for the periods ending December 31, 2015 through 2019 and operating data for each of the periods presented were derived from our audited financial statements. (in thousands, except per share information and number of properties) Year Ended December 31, 2019 2018 2017 2016 2015 Operating Data Total Revenues $ 187,478 $ 137,122 $ 111,517 $ 88,357 $ 68,454 Expenses Property costs (1) 23,511 17,011 12,467 8,596 6,379 General and administrative 15,566 11,756 9,428 7,862 6,836 Interest 33,094 24,872 18,137 15,343 12,305 Depreciation and amortization 45,703 33,030 26,661 20,237 14,974 Impairments 1,609 2,319 — — — Total Expenses 119,483 88,988 66,693 52,038 40,494 Income from Operations 67,995 48,134 44,824 36,319 27,960 Gain (loss) on extinguishment of debt — — — (333) (181) Gain (loss) on sale of assets 13,306 11,180 14,193 9,964 12,135 Income tax expense (538) (516) (227) (153) (152) Net Income 80,763 58,798 58,790 45,797 39,762 Less Net Income Attributable to Non-Controlling Interest 682 626 678 679 744 Net Income Attributable to Agree Realty Corporation $ 80,081 $ 58,172 $ 58,112 $ 45,118 $ 39,018 Share Data Weighted Average Number of Common Shares Outstanding- Diluted 41,224 32,401 27,700 22,960 18,065 Net Income Per Share Attributable to Agee Realty Corporation - Diluted $ 1.93 $ 1.78 $ 2.08 $ 1.97 $ 2.15 Cash Dividends Per Share $ 2.28 $ 2.16 $ 2.03 $ 1.92 $ 1.85 Balance Sheet Data Real Estate (before accumulated depreciation) $ 2,346,340 $ 1,761,646 $ 1,299,255 $ 1,019,956 $ 755,849 Total Assets $ 2,664,530 $ 2,028,189 $ 1,494,634 $ 1,141,972 $ 807,042 Total Debt (including accrued interest) $ 882,010 $ 728,841 $ 525,811 $ 406,261 $ 320,547 Other Data Number of Properties 821 645 436 366 278 Gross Leasable Area (Sq. Ft.) 14,605 11,237 8,663 7,033 5,207 Percentage Leased 99.6 % 99.8 % 99.7 % 99.6 % 99.5 % (1) Property costs include real estate taxes, insurance, maintenance and land lease expense. 25 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 “-Special Note Regarding Forward-Looking Statements” in “Item 1A – Risk Factors” above. Also refer to the 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, 2018 for additional discussion of our financial condition and results of operations. Overview We are a fully integrated REIT primarily focused on the ownership, acquisition, development and management of retail properties net leased to industry leading tenants. We were founded in 1971 by our current Executive Chairman, Richard Agree, and our common stock was listed on the NYSE in 1994. Our assets are held by, and all of our operations are conducted through, directly or indirectly, the Operating Partnership, of which we are the sole general partner and in which we held a 99.2% interest as of December 31, 2019. As of December 31, 2019, our portfolio consisted of 821 properties located in 46 states and totaling approximately 14.6 million square feet of GLA. As of December 31, 2019, our portfolio was approximately 99.6% leased and had a weighted average remaining lease term of approximately 10.0 years. 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. We elected to be taxed as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 1994. We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT for federal income tax purposes and we intend to continue operating in such a manner. 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. Critical Accounting Policies The preparation of our financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires us to make estimates and assumptions that are subjective in nature and, as a result, our actual results could differ materially from our estimates. Some of these estimates and assumptions require application of difficult, subjective, and/or complex judgment, often about the effect of matters that are inherently uncertain and that may change in subsequent periods, including those relating to the policies below. This summary should be read in conjunction with the more complete discussion of our accounting policies and procedures included in Note 2 to our Consolidated Financial Statements. Accounting for Acquisitions of Real Estate The acquisition of property for investment purposes is typically accounted for as an asset acquisition. We allocate the purchase price to land, building and identified intangible assets and liabilities, based in each case on their relative estimated fair values and without giving rise to goodwill. Intangible assets and liabilities represent the value of in-place leases and above- or below-market leases. Above- and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition and the Company’s estimate of current market lease rates for the property. In making estimates of fair values, we may use a number of sources, including data provided by independent third parties, as well as information obtained by the Company as a result of our due diligence, including expected future cash flows of the property and various characteristics of the markets where the property is located. The use of different assumptions in the allocation of the purchase price of the acquired properties could affect the timing of recognition of the related revenue and expenses. 26 Impairments We review our real estate investments for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable through operations plus estimated disposition proceeds. Events or circumstances that may occur include, but are not limited to, significant changes in real estate market conditions, estimated residual values, or our ability or expectation to re-lease or sell properties that are vacant or become vacant. 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, with the carrying cost of the individual asset. An asset is considered impaired if its carrying value exceeds its estimated undiscounted cash flows and an impairment charge is recorded in the amount by which the carrying value of the asset exceeds its estimated fair value. The valuation of impaired assets is determined using valuation techniques including discounted cash flow analysis, analysis of recent comparable sales transactions, and purchase offers received from third parties. The Company may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate. 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. These factors could cause our expected future cash flows from a property to change, and, as a result, an impairment could be considered to have occurred. Determination of the fair value of a property for purposes of measuring impairment involves significant judgment. Results of Operations Overall The Company’s real estate investment portfolio grew from approximately $1.7 billion in gross investment amount representing 645 properties with 11.2 million square feet of gross leasable space as of December 31, 2018 to approximately $2.2 billion in gross investment amount representing 821 properties with 14.6 million square feet of gross leasable space at December 31, 2019. 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 2019 on acquisitions that were made during 2018. Similarly, the full rental income impact of acquisitions made during 2019 will not be seen until 2020. Acquisitions During the year ended December 31, 2019, the Company acquired 186 retail net lease assets for approximately $702.9 million, which includes acquisition and closing costs. These properties are located in 40 states and are leased to 56 different tenants operating in 22 diverse retail sectors for a weighted average lease term of approximately 11.7 years. The underwritten weighted average capitalization rate on the Company’s 2019 acquisitions was approximately 6.9%.1 Dispositions During the year ended December 31, 2019, the Company sold 16 properties for net proceeds of $65.5 million and recorded a net gain of $13.3 million. During the year ended December 31, 2018, the Company sold 21 properties for net proceeds of $65.8 million and recorded a net gain of $11.2 million. The weighted average capitalization rate on the Company’s 2019 dispositions was approximately 7.2%.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. 27 Development and Partner Capital Solutions During the year ended December 31, 2019, the Company completed eight developments or Partner Capital Solutions projects. During the year ended December 31, 2018, the Company completed eight developments or Partner Capital Solutions projects. At December 31, 2019 the Company had two such projects under construction. Comparison of Year Ended December 31, 2019 to Year Ended December 31, 2018 Year Ended Variance December 31, 2019 December 31, 2018 (in dollars) (percentage) Rental Income $ 187,279 $ 136,883 $ 50,396 37 % Real Estate Tax Expense $ 15,520 $ 10,721 $ 4,799 45 % Property Operating Expense $ 6,749 $ 5,645 $ 1,104 20 % Land Lease Expense $ 1,242 $ 645 $ 597 93 % Depreciation and Amortization Expense $ 45,703 $ 33,030 $ 12,673 38 % The variances in rental income, real estate tax expense, property operating expense, land lease expense and depreciation and amortization expense shown above were due to the acquisition and the ownership of additional properties during the year ended December 31, 2019 compared to the year ended December 31, 2018, as further described under Results of Operations - Overall above. General and administrative expenses increased $3.8 million, or 32%, to $15.6 million for the year ended December 31, 2019, compared to $12.2 million for the year ended December 31, 2018. The increase was primarily the result of increased employee headcount, which resulted in increased compensation costs, and increased professional costs. General and administrative expenses as a percentage of total revenue decreased to 8.3% in 2019 from 8.6% in 2018. Provision for impairment decreased to $1.6 million for the year ended December 31, 2019, compared to $2.3 million for the year ended December 31, 2018. Provisions for impairment reflect the amount by which current book value exceeds estimated fair value and are not necessarily comparable period-to-period. Interest expense increased $8.2 million, or 33%, to $33.1 million for the year ended December 31, 2019, compared to $24.9 million for the year ended December 31, 2018. The increase in interest expense was primarily a result of higher levels of borrowings in 2019 in comparison to 2018. Borrowings increased in order to finance the acquisition and development of additional properties. Acquisition and development activity increased in 2019 in comparison to the prior period. Gain on sale of assets increased $2.1 million, or 19%, to $13.3 million for the year ended December 31, 2019, compared to $11.2 million for the year ended December 31, 2018. Gains on sales of assets are dependent on the levels of disposition activity and the assets’ bases relative to their sales prices. As a result, such gains are not necessarily comparable period-to-period. Income tax expense remained consistent at $0.5 million in 2019 and 2018. An increase in income tax expense due to the acquisition and the ownership of additional properties during the year ended December 31, 2019 compared to the year ended December 31, 2018 was offset by a one-time credit of $0.5 million in 2019 to reflect a reduction in the Company’s deferred tax liability of one of its taxable REIT subsidiaries. Net income increased $22.0 million, or 37%, to $80.8 million for the year ended December 31, 2019, compared to $58.8 million for the year ended December 31, 2018. The change was the result of the items discussed above. 28 Liquidity and Capital Resources Our principal demands for funds include payment of operating expenses, payment of principal and interest on our outstanding indebtedness, dividends and distributions to our shareholders and OP Unit holders, and future property acquisitions and development. We expect to meet our short-term liquidity requirements through cash provided from operations and borrowings under our revolving credit facility. As of December 31, 2019, available cash and cash equivalents was $42.2 million. As of December 31, 2019, we had $89.0 million outstanding on our revolving credit facility and $411.0 million was available for future borrowings, subject to our compliance with covenants. We anticipate funding our long-term capital needs through cash provided from operations, borrowings under our revolving credit facility, the issuance of debt and common or preferred equity or other instruments convertible into or exchangeable for common or preferred equity. In December 2019, we amended and restated our revolving credit agreement, increasing our current and potential future borrowing capacity – see Senior Unsecured Revolving Credit Facility below. We continually evaluate alternative financing and believe that we can obtain financing on reasonable terms. However, there can be no assurance that additional financing or capital will be available, or that the terms will be acceptable or advantageous to us. Capitalization As of December 31, 2019, our total market capitalization was approximately $4.1 billion. Total market capitalization consisted of $3.2 billion of common equity (based on the December 31, 2019 closing price of our common stock on the NYSE of $70.17 per share and assuming the conversion of OP Units) and $876.1 million of total debt including (i) $89.0 million of borrowings under our revolving credit facility; (ii) $240.0 million of unsecured term loans; (iii) $510.0 million of senior unsecured notes; (iv) $37.1 million of mortgage notes payable; less (v) cash, cash equivalents, and cash held in escrow of $42.2 million. Our ratio of total debt to total market capitalization was 21.6% at December 31, 2019. At December 31, 2019, the non-controlling interest in our Operating Partnership consisted of a 0.8% ownership interest in the Operating Partnership. The OP Units may, under certain circumstances, be exchanged for our shares of common stock on a one-for-one basis. The Company, as sole general partner of the Operating Partnership, has the option to settle exchanged OP Units held by others for cash based on the current trading price of our shares. Assuming the exchange of all OP Units, there would have been 45,921,242 shares of common stock outstanding at December 31, 2019. Equity Shelf Registration In June 2017, the Company filed an automatic shelf registration statement on Form S-3, registering an unspecified amount of common stock, preferred stock, depositary shares and warrants at an indeterminant aggregate initial offering price. We may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering. In June 2017, the Company completed a follow-on underwritten offering of 2,415,000 shares of common stock. The offering, which included the full exercise of the overallotment option by the underwriters, raised net proceeds of approximately $108.0 million, after deducting the underwriting discount. The proceeds from the offering were used to repay borrowings under our revolving credit facility to fund property acquisitions and for general corporate purposes. In March 2018, the Company completed a follow-on public offering of 3,450,000 shares of common stock, which included the underwriters’ option to purchase an additional 450,000 shares of common stock, in connection with a forward sale agreement. The offering, which included the full exercise of the underwriters’ option to purchase additional shares, was settled in its entirety in September 2018. Upon settlement we issued 3,450,000 shares and received net proceeds of $160.2 million after deducting fees and expenses. 29 In September 2018, the Company entered into a follow-on public offering of 3,500,000 shares of common stock in connection with a forward sale agreement (the “September 2018 Forward”). The September 2018 Forward was settled in its entirety in April 2019. Upon settlement we issued 3,500,000 shares and received net proceeds of $186.0 million, after deducting fees and expenses. In April 2019, the Company entered into a follow-on public offering to sell an aggregate of 3,162,500 shares of common stock (the “April 2019 Forward”). We settled the entirety of the April 2019 Forward on December 30, 2019 and received net proceeds of approximately $195.8 million, after deducting fees and expenses. ATM Programs In July 2019, the Company entered into the 2019 ATM Program. In addition to selling shares of common stock, we may enter into forward sale agreements through the 2019 ATM Program. During 2019, we issued 444,228 shares under this program, at an average price of $74.30 per share, realizing gross proceeds of $33.0 million. During 2018 and the six months ended June 30, 2019, the Company issued 3,057,263 and 886,768 shares of common stock, respectively, under the 2018 ATM Program, at average prices of $59.28 and $66.83, respectively, realizing gross proceeds of approximately $181.2 million and $59.3 million, respectively. No future issuances will occur under the 2018 ATM Program. During the fourth quarter of 2019, the Company entered into forward sale agreements in connection with our 2019 ATM Program to sell an aggregate of 2,003,118 shares of common stock. To date, no shares from the ATM Forward Offerings have been settled. The ATM Forward Offerings are required to be settled by certain dates in December 2020. After considering shares already sold under the 2019 ATM Program including the outstanding ATM Forward Offerings, the Company had $220.1 million of availability remaining under the 2019 ATM Program as of December 31, 2019. 30 Debt The below table summarizes the Company’s outstanding debt as of December 31, 2019 and December 31, 2018 (in thousands): Interest Principal Amount Outstanding Senior Unsecured Revolving Credit Facility Rate Maturity December 31, 2019 December 31, 2018Credit Facility (1) 2.69 % January 2021 $ 89,000 $ 19,000 Total Credit Facility $ 89,000 $ 19,000 Unsecured Term Loans (2) 2019 Term Loan 3.62 % May 2019 $ — $ 18,543 2023 Term Loan 2.40 % July 2023 40,000 40,000 2024 Term Loan Facility 3.09 % January 2024 65,000 65,000 2024 Term Loan Facility 3.20 % January 2024 35,000 35,000 2026 Term Loan 4.26 % January 2026 100,000 100,000 Total Unsecured Term Loans $ 240,000 $ 258,543 Senior Unsecured Notes (2) 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 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 2031 Senior Unsecured Notes 4.42 % October 2031 125,000 — Total Senior Unsecured Notes $ 510,000 $ 385,000 Mortgage Notes Payable (2) Single Asset Mortgage Loan 3.32 % October 2019 — 21,500 Portfolio Mortgage Loan (3) 6.90 % January 2020 — 1,922 Single Asset Mortgage Loan 6.24 % February 2020 2,775 2,872 CMBS Portfolio Loan 3.60 % January 2023 23,640 23,640 Single Asset Mortgage Loan 5.01 % September 2023 4,779 4,959 Portfolio Credit Tenant Lease 6.27 % July 2026 5,921 6,626 Total Mortgage Notes Payable $ 37,115 $ 61,519 Total Principal Amount Outstanding $ 876,115 $ 724,062 (1) The annual interest rate of the Credit Facility assumes one-month LIBOR as of December 31, 2019 of 1.86%. (2) Interest rate includes the effects of variable interest rates that have been swapped to fixed interest rates. (3) Mortgage paid off early in September 2019. Original maturity date of January 2020. Senior Unsecured Revolving Credit Facility In December 2019, the Company entered into the Credit Agreement. The Credit Agreement provides for a $500.0 million unsecured revolving credit facility, a $65.0 million unsecured term loan facility (the “$65 Million Term Loan”) and a $35.0 million unsecured term loan facility (the “$35 Million Term Loan”, and together with the $65 Million Term Loan, the “2024 Term Loan Facilities”). The Credit Agreement amended and restated in its entirety the Company’s previous amended and restated credit agreement dated December 15, 2016. The Credit Agreement provides $600.0 million unsecured borrowing capacity, composed of the Revolving Credit Facility, which matures on January 15, 2024, as well as the 2024 Term Loan Facilities, which mature on January 15, 2024. Subject to certain terms and conditions set forth in the Agreement, the Company (i) may request additional lender commitments 31 under any or all facilities of up to an additional aggregate of $500.0 million and (ii) may elect, for an additional fee, to extend the maturity date of the Revolving Credit Facility by six months up to two times, for a maximum maturity date of January 15, 2025. No amortization payments are required under the Credit Agreement, and interest is payable in arrears no less frequently than quarterly. All borrowings under the Revolving Credit Facility (except swing line loans) bear interest at a rate per annum equal to, at the option of the Company, (i) LIBOR plus a margin that is based upon the Company’s credit rating, or (ii) the Base Rate (which is defined as the greater of the rate of interest as publicly announced from time to time by PNC Bank, National Association, as its prime rate, the Federal Funds Open Rate plus 0.50%, or the Daily Eurodollar Rate plus 1.0%) plus a margin that is based upon the Company’s credit rating. The margins for the Revolving Credit Facility range in amount from 0.775% to 1.450% for LIBOR-based loans and 0.00% to 0.45% for Base Rate loans, depending on the Company’s credit rating. The margins for the Revolving Credit Facility are subject to improvement based on the Company’s leverage ratio, provided its credit rating meets a certain threshold. The Company and Richard Agree, the Executive Chairman of the Company, are parties to a Reimbursement Agreement dated November 18, 2014. Pursuant to the Reimbursement Agreement, Mr. 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. Unsecured Term Loan Facilities In July 2016, the Company completed a $40.0 million unsecured term loan facility that matures July 2023 (the “2023 Term Loan”). Borrowings under the 2023 Term Loan are priced at LIBOR plus 85 to 165 basis points, depending on the Company’s credit rating. The Company entered into an interest rate swap agreement to fix LIBOR at 140 basis points until maturity. Pursuant to the Credit Agreement, the Company has outstanding the 2024 Term Loan Facilities. Borrowings under the 2024 Term Loan Facilities bear interest at a rate per annum equal to, at the option of the Company, (i) LIBOR plus a margin that is based upon the Company's credit rating or (ii) the Base Rate (which is defined as the greater of the rate of interest as publicly announced from time to time by PNC Bank, National Association, as its prime rate, the Federal Funds Open Rate plus 0.50%, or the Daily Eurodollar Rate plus 1.0%) plus a margin that is based upon the Company’s credit rating. The margins for the 2024 Term Loan Facilities range in amount from 0.85% to 1.65% for LIBOR-based loans and 0.00% to 0.65% for Base Rate loans, depending on the Company’s credit rating. The Company has utilized existing interest rate swaps to fix LIBOR at 2.0904% for the $65.0 million term loan and at 2.1970% for the $35.0 million term loan. In October 2019, the Company entered into new interest rate swap agreements to fix LIBOR at 143 basis points for both the $65.0 million and $35.0 million term loans, through their 2024 maturity dates. In December 2018, the Company entered into a $100.0 million unsecured term loan facility that matures January 2026 (the “2026 Term Loan”). Borrowings under the 2026 Term Loan are priced at LIBOR plus 145 to 240 basis points, depending on the Company’s credit rating. The Company entered into interest rate swap agreements to fix LIBOR at 266 basis points until maturity. Senior Unsecured Notes In May 2015, the Company and the Operating Partnership completed a private placement of $100.0 million principal amount of senior unsecured notes. The senior unsecured notes were sold in two series; $50.0 million of 4.16% notes due May 2025 (the “2025 Senior Unsecured Notes”) and $50.0 million of 4.26% notes due May 2027 (the “2027 Senior Unsecured Notes”). In July 2016, the Company and the Operating Partnership entered into a note purchase agreement with institutional purchasers. Pursuant to the note purchase agreement, the Operating Partnership completed a private placement of $60.0 million aggregate principal amount of 4.42% senior unsecured notes due July 2028 (the “2028 Senior Unsecured Notes”). 32 In September 2017, the Company and the Operating Partnership completed a private placement of $100.0 million aggregate principal amount of 4.19% senior unsecured notes due September 2029 (the “2029 Senior Unsecured Notes”). In September 2018, the Company and the Operating Partnership entered into two supplements to uncommitted master note facilities with institutional purchasers. Pursuant to the supplements, the Operating Partnership completed a private placement of $125.0 million aggregate principal amount of 4.32% senior unsecured notes due September 2030 (the “2030 Senior Unsecured Notes”). In October 2019, the Company and the Operating Partnership closed on a private placement of $125.0 million of 4.47% senior unsecured notes due October 2031. In March 2019, the Company entered into forward-starting interest rate swap agreements to fix the interest for $100.0 million of long-term debt until maturity. The Company terminated the swap agreements at the time of pricing the 2031 Senior Unsecured Notes, which resulted in an effective annual fixed rate of 4.41% for $100.0 million aggregate principal amount of the 2031 Senior Unsecured Notes. Considering the effect of the terminated swap agreements, the blended all-in rate to the Company for the $125.0 million aggregate principal amount of 2031 Senior Unsecured Notes is 4.42%. Mortgage Notes Payable As of December 31, 2019, the Company had total gross mortgage indebtedness of $37.1 million which was collateralized by related real estate and tenants’ leases with an aggregate net book value of $48.4 million. Including mortgages that have been swapped to a fixed interest rate, the weighted average interest rate on the Company’s mortgage notes payable was 4.40% as of December 31, 2019 and 4.13% as of December 31, 2018. We have 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 we default 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. Loan Covenants Certain loan agreements contain various restrictive covenants, including the following financial covenants: maximum leverage ratio, maximum secured leverage ratios, consolidated net worth requirements, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, a minimum unsecured interest expense ratio, a minimum interest coverage ratio, a minimum unsecured debt yield and a minimum unencumbered interest expense ratio. As of December 31, 2019, the most restrictive covenant was the minimum unencumbered interest expense ratio. The Company was in compliance with all of its loan covenants and obligations as of December 31, 2019. Cash Flows Operating -- Substantially all of the Company’s cash from operations is generated by rental income from its investment portfolio. Net cash provided by operating activities for the year ended December 31, 2019 increased by $33.5 million over 2018, primarily due to the increase in the size of the Company’s real estate investment portfolio. Investing -- Net cash used in investing activities was $99.4 million higher during the year ended December 31, 2019, compared to 2018. Acquisitions of properties during 2019 were $97.0 million higher than 2018, due to overall increases in the level of acquisition activity. Development costs during the year ended December 31, 2019 were $2.9 million higher than 2018, due to the timing of costs incurred related to the Company’s development activity. Proceeds from asset sales remained consistent during year ended December 31, 2019 compared to 2018. Financing -- Net cash provided by financing activities was $58.9 million higher during the year ended December 31, 2019, compared to 2018. Net proceeds from the issuance of common stock and borrowings increased by $133.0 million during the year ended December 31, 2019 compared to 2018, primarily to fund the increased level of acquisitions occurring in 2019. In addition, borrowings on the revolving credit facility increased by $65.0 million during the year ended December 31, 2019 compared to 2018, to fund increased acquisition investment activity. Finally, net cash provided by the financing 33 related to unsecured term loans decreased by $100.0 million due to the Company’s use of alternate financing sources to fund investment activity, such as the revolving credit facility and equity. The Company increased its total dividends and distributions paid to its shareholders and non-controlling owners by $22.6 million during 2019 compared to 2018. The Company increased its quarterly dividend in the fourth quarter of 2019 to an annualized $2.34 per common share, a 5.4% increase over the annualized $2.22 per common share declared in the fourth quarter of 2018. Contractual Obligations In conducting our business, the Company enters into contractual obligations, including those for debt and operating leases for land. Detail of these obligations as of December 31, 2019, including expected settlement periods, is contained below in thousands): 2020 2021 2022 2023 2024 Thereafter Total Mortgage Notes Payable $ 3,714 $ 998 $ 1,060 $ 28,726 $ 963 $ 1,654 $ 37,115 Revolving Credit Facility — — — — 89,000 — 89,000 Unsecured Term Loans — — — 40,000 100,000 100,000 240,000 Senior Unsecured Notes — — — — — 510,000 510,000 Land Lease Obligations 1,069 1,015 789 789 789 30,584 35,035 Estimated Interest Payments on Outstanding Debt (1) 34,360 34,269 34,207 32,821 28,922 108,826 273,405 Total $ 39,143 $ 36,282 $ 36,056 $ 102,336 $ 219,674 $ 751,064 $ 1,184,555 (1) Estimated interest payments are based on (i) the stated rates for mortgage notes payable, including the effect of interest rate swap agreements and (ii) the stated rates for unsecured term loans, including the effect of interest rate swap agreements and assuming the interest rate in effect for the most recent quarter remains in effect through the respective maturity dates. Inflation Our leases typically contain provisions to mitigate the adverse impact of inflation on our results of operations. Tenant leases generally provide for limited increases in rent as a result of fixed increases or increases in the consumer price index. Certain of our leases contain clauses enabling us to receive percentage rents based on tenants’ gross sales, which generally increase as prices rise. During times when inflation is greater than increases in rent, rent increases will not keep up with the rate of inflation. Substantially all of our properties are leased to tenants under long-term, net leases which require the tenant to pay certain operating expenses for a property, thereby reducing our exposure to operating cost increases resulting from inflation. Inflation may have an adverse impact on our tenants. Non-GAAP Financial Measures Funds from Operations (“FFO” or “Nareit FFO”) FFO is defined by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”) to mean net income computed in accordance with GAAP, excluding gains (or losses) from sales of real estate assets and/or changes in control, plus real estate related depreciation and amortization and any impairment charges on depreciable real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. 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. FFO should not be considered an alternative to net income as the primary indicator of the Company’s operating performance, or as an alternative to cash flow as a measure of liquidity. Further, while the Company adheres to the Nareit 34 definition of FFO, its presentation of FFO is not necessarily comparable to similarly titled measures of other REITs due to the fact that all REITs may not use the same definition. Core Funds from Operations (“Core FFO”) The Company defines Core FFO as Nareit FFO with the addback of noncash amortization of above- and below- market lease intangibles. Under Nareit’s definition of FFO, lease intangibles created upon acquisition of a net lease must be amortized over the remaining term of the lease. The Company believes that by recognizing amortization charges for above- and below-market lease intangibles, the utility of FFO as a financial performance measure can be diminished. Management believes that its measure of Core FFO facilitates useful comparison of performance to its peers who predominantly transact in sale-leaseback transactions and are thereby not required by GAAP to allocate purchase price to lease intangibles. Unlike many of its peers, the Company has acquired the substantial majority of its net leased properties through acquisitions of properties from third parties or in connection with the acquisitions of ground leases from third parties. Core FFO should not be considered an alternative to net income as the primary indicator of the Company’s operating performance, or as an alternative to cash flow as a measure of liquidity. Further, the Company’s presentation of Core FFO is not necessarily comparable to similarly titled measures of other REITs due to the fact that all REITs may not use the same definition. Adjusted Funds from Operations (“AFFO”) AFFO is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. AFFO further adjusts FFO and Core FFO for certain non-cash and/or infrequently recurring items that reduce or increase net income computed in accordance with GAAP. 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. 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. 35 The following table provides a reconciliation of net income to FFO, Core FFO, and AFFO for the years ended December 31, 2019, 2018, and 2017: Year Ended December 31, 2019 December 31, 2018 December 31, 2017Reconciliation from Net Income to Funds from Operations Net income $ 80,763 $ 58,798 $ 58,790 Depreciation of rental real estate assets 34,349 24,553 19,507 Amortization of lease intangibles - in-place leases and leasing costs 11,071 8,271 7,076 Provision for impairment 1,609 2,319 - (Gain) loss on sale of assets (13,306) (11,180) (14,193)Funds from Operations $ 114,486 $ 82,761 $ 71,180 Amortization of above (below) market lease intangibles, net 13,501 10,668 5,091 Core Funds from Operations $ 127,987 $ 93,429 $ 76,271 Straight-line accrued rent (7,093) (4,648) (3,548)Deferred tax expense (benefit) (475) — (230)Stock based compensation expense 4,106 3,227 2,589 Amortization of financing costs 706 578 574 Non-real estate depreciation 283 146 78 Adjusted Funds from Operations $ 125,514 $ 92,732 $ 75,734 Funds from Operations Per Share - Diluted $ 2.75 $ 2.53 $ 2.54 Core Funds from Operations Per Share - Diluted $ 3.08 $ 2.85 $ 2.72 Adjusted Funds from Operations Per Share - Diluted $ 3.02 $ 2.83 $ 2.70 Weighted average shares and OP units outstanding Basic 40,924,965 32,417,874 27,972,721 Diluted 41,571,233 32,748,741 28,047,966 Additional supplemental disclosure Scheduled principal repayments $ 2,401 $ 3,337 $ 3,151 Capitalized interest $ 410 $ 448 $ 570 Capitalized building improvements $ 2,451 $ 1,635 $ 1,230 Item 7A: Quantitative and Qualitative Disclosures about Market Risk The Company is exposed to interest rate risk primarily through borrowing activities. There is inherent roll-over risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and our future financing requirements. 36 Our interest rate risk is monitored using a variety of techniques. The table below presents the principal payments (in thousands) and the weighted average interest rates on outstanding debt, by year of expected maturity, to evaluate the expected cash flows and sensitivity to interest rate changes. Average interest rates shown reflect the impact of the swap agreements described later in this section. 2020 2021 2022 2023 2024 Thereafter Total Mortgage Notes Payable $ 3,714 $ 998 $ 1,060 $ 28,726 $ 963 $ 1,654 $ 37,115 Average Interest Rate 6.18 % 6.02 % 6.02 % 3.89 % 6.27 % 6.27 % Unsecured Revolving Credit Facility (1) $ — $ — $ — $ — $ 89,000 $ — $ 89,000 Average Interest Rate 2.69 % Unsecured Term Loans $ — $ — $ — $ 40,000 $ 100,000 $ 100,000 $ 240,000 Average Interest Rate 2.40 % 3.13 % 4.21 % Senior Unsecured Notes $ — $ — $ — $ — $ — $ 510,000 $ 510,000 Average Interest Rate 4.31 % (1) The balloon payment balance includes the balance outstanding under the Credit Facility as of December 31, 2019. The Revolving Credit Facility matures in January 2024, with options to extend the maturity to extend its maturity date by six months up to two times, for a maximum maturity of January 2025. The fair value is estimated at $37.8 million and $779.9 million for mortgage notes payable and unsecured term loans and notes, respectively, as of December 31, 2019. The table above incorporates those exposures that exist as of December 31, 2019; it does not consider those exposures or positions which could arise after that date. As a result, our ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the period and interest rates. We seek to limit the impact of interest rate changes on earnings and cash flows and to lower the overall borrowing costs by closely monitoring our variable rate debt and converting such debt to fixed rates when we deem such conversion advantageous. From time to time, we may enter into interest rate swap agreements or other interest rate hedging contracts. While these agreements are intended to lessen the impact of rising interest rates, they also expose us to the risks that the other parties to the agreements will not perform. The Company could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly effective cash flow hedges under GAAP guidance. In September 2013, the Company entered into an interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $35.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 2.20%. This swap effectively converted $35.0 million of variable-rate borrowings to fixed-rate borrowings from October 3, 2013 to September 29, 2020. As of December 31, 2019, this interest rate swap was valued as a liability of approximately $0.1 million. In July 2014, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $65.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 2.09%. This swap effectively converted $65.0 million of variable-rate borrowings to fixed-rate borrowings from July 21, 2014 to July 21, 2021. As of December 31, 2019, this interest rate swap was valued as a liability of approximately $0.5 million. In September 2016, the Company entered into an interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $40.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month 37 LIBOR and pays to the counterparty a fixed rate of 1.40%. This swap effectively converted $40.0 million of variable-rate borrowings to fixed-rate borrowings from August 1, 2016 to July 1, 2023. As of December 31, 2019, this interest rate swap was valued as an asset of approximately $0.2 million. In December 2018, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $100.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreements, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 2.66%. This swap effectively converted $100.0 million of variable-rate borrowings to fixed-rate borrowings from December 27, 2018 to January 15, 2026. As of December 31, 2019, this interest rate swap was valued as a liability of approximately $5.9 million. In June 2019, the Company entered into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $100.0 million of long-term debt. The Company is hedging its exposure to the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period ending March 2021. As of December 31, 2019, these interest rate swaps were valued as a liability of $1.4 million. In October 2019, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $65.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreements, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.4275%. This swap effectively converts $65.0 million of variable-rate borrowings to fixed-rate borrowings from July 12, 2021 to January 12, 2024. As of December 31, 2019, this interest rate swap was valued as an asset of approximately $0.2 million. Also in October 2019, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $35.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.4265%. This swap effectively converts $35.0 million of variable-rate borrowings to fixed-rate borrowings from September 29, 2020 to January 12, 2024. As of December 31, 2019, this interest rate swap was valued as an asset of approximately $0.1 million. We do not use derivative instruments for trading or other speculative purposes, and we did not have any other derivative instruments or hedging activities as of December 31, 2019. Refer to the section “Risks Related to Our Debt Financings” under Item 1A “Risk Factors” in this Annual Report for discussion of the future transition from LIBOR and the possible impact it may have on the Company’s debt, swap agreements, and interest payments. Item 8: Financial Statements and Supplementary Data The financial statements and supplementary data are listed in the Index to the Financial Statements and Financial Statement Schedules appearing on Page F-1 of this Annual Report on Form 10-K and are included in this Annual Report on Form 10-K following page F-1. Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A: Controls and Procedures Disclosure Controls and Procedures As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of our disclosure controls and procedures 38 (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a15-(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that: 1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our Company; 2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and 3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision of our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment and those criteria, our management believes that we maintained effective internal control over financial reporting as of December 31, 2019. Changes in Internal Control over Financial Reporting There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Attestation Report of Independent Registered Public Accounting Firm The attestation report issued by our independent registered public accounting firm, Grant Thornton LLP, required under this item is contained on page F-2 of this Annual Report on Form 10-K. Item 9B: Other Information None. 39 PART III Item 10: Directors, Executive Officers and Corporate Governance The information required by this item is set forth under the following captions in our proxy statement to be filed with respect to our 2020 Annual Meeting of Shareholders (the “Proxy Statement”), all of which is incorporated by reference: “Proposal I – Election of Directors”; “Board Matters –The Board of Directors”; “Board Matters –Committees of the Board”; “Board Matters –Corporate Governance”; “Executive Officers”; “Additional Information – Section 16(a) Beneficial Ownership Reporting Compliance” and “Additional Information – Proposals for 2020 Annual Meeting.” Item 11: Executive Compensation The information required by this item is set forth under the following captions in our Proxy Statement, all of which is incorporated herein by reference: “Compensation Discussion and Analysis”, “Executive Officer Compensation Tables”, “Board Matters – Director Compensation”, “Board Matters –Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report.” Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table summarizes the equity compensation plan under which our common stock may be issued as of December 31, 2019. Number of Securities Remaining Available for Number of Securities to Future Issuance Under be Issued Upon Weighted Average Equity Compensation Exercise of Outstanding Exercise Price of Plans (Excluding Options, Warrants and Outstanding Options, Securities Reflected in Rights Warrant and Rights Column (a)) Plan Category (a) (b) (c) Equity Compensation Plans Approved by Security Holders — — 248,925 (1) Equity Compensation Plans Not Approved by Security Holders — — — Total — — 248,925 (1) Relates to various stock-based awards available for issuance under our 2014 Omnibus Incentive Plan, including incentive stock options, non-qualified stock options, stock appreciation rights, deferred stock awards, restricted stock awards, performance shares and units, unrestricted stock awards and dividend equivalent rights. Additional information required by this item is set forth under the following caption in our Proxy Statement, all of which is incorporated herein by reference: “Security Ownership of Certain Beneficial Owners and Management.” Item 13: Certain Relationships, Related Transactions and Director Independence The information required by this item is set forth under the following captions in our Proxy Statement, all of which is incorporated herein by reference: “Related Person Transactions” and “Board Matters –The Board of Directors.” Item 14: Principal Accounting Fees and Services The information required by this item is set forth under the following caption in our Proxy Statement, all of which is incorporated herein by reference: “Audit Committee Matters.” 40 PART IV ITEM 15: Exhibits and Financial Statement Schedules 15(a)(1). The following documents are filed as a part of this Annual Report on Form 10-K: Reports of Independent Registered Public Accounting Firms Consolidated Balance Sheets as of December 31, 2019 and 2018 Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2019, 2018 and 2017 Consolidated Statement of Equity for the Years Ended December 31, 2019, 2018 and 2017 Consolidated Statements of Cash Flow for the Years Ended December 31, 2019, 2018 and 2017 Notes to the Consolidated Financial Statements 15(a)(2). The following is a list of the financial statement schedules required by Item 8: Schedule III – Real Estate and Accumulated Depreciation 15(a)(3). Exhibits Exhibit No. Description 3.1 Articles of Incorporation of the Company, including all amendments and articles supplementary thereto(incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013). 3.2 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 9, 2013). 3.3 Amendment to the Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 6, 2015). 3.4 Amendment to Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 3, 2016). 3.5 Articles Supplementary of the Company, dated February 26, 2019 (incorporated by reference to Exhibit 3.1to the Company’s Current Report on Form 8-K filed on February 28, 2019). 3.6 First Amendment to Amended and Restated Bylaws of Agree Realty Corporation, effective February 26,2019 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on February 28, 2019). 3.7 Articles of Amendment of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 25, 2019). 4.1 Amended and Restated Registration Rights Agreement, dated July 8, 1994 by and among the Company,Richard Agree, Edward Rosenberg and Joel Weiner (incorporated by reference to Exhibit 10.2 to theCompany’s Annual Report on Form 10-K for the year ended December 31, 1994). 4.2 Form of certificate representing shares of common stock (incorporated by reference to Exhibit 4.2 to theCompany’s Registration Statement on Form S-3 filed on August 24, 2009). 4.3 Form of 4.32% Senior Guaranteed Note, Series 2018-A, due September 26, 2030 (incorporated by referenceto Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018). 41 4.4 Form of 4.32% Senior Guaranteed Note, Series 2018-B, due September 26, 2030 (incorporated by referenceto Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018). 4.5* Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Act of 1934. 10.1 Term Loan Agreement, dated July 1, 2016, among Agree Limited Partnership, Capital One, NationalAssociation, and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016). 10.2 Amended and Restated Revolving Credit and Term Loan Agreement, dated as of December 15, 2016, among Agree Limited Partnership, as the Borrower, the Company, as the parent, certain subsidiaries of the Borrower, as guarantors, PNC Bank, National Association and the other lenders party thereto (incorporated by referenceto Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016). 10.3 First Amendment and Joinder to Term Loan Agreement, dated December 15, 2016, by and among AgreeLimited Partnership, the Company, the other guarantors party thereto, the lenders party thereto and CapitalOne, National Association (incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016). 10.4 Note Purchase Agreement, dated as of August 3, 2017, among Agree Limited Partnership, the Company andthe purchasers named therein (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017). 10.5 Uncommitted Master Note Facility, dated as of August 3, 2017, among Agree Limited Partnership, theCompany and Teachers Insurance and Annuity Associate of America (“TIAA”) and each TIAA Affiliate (as defined therein) (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017). 10.6 Uncommitted Master Note Facility, dated as of August 3, 2017, among Agree Limited Partnership, theCompany and Teachers Insurance and AIG Asset Management (U.S.), LLC (“AIG”) and each AIG Affiliate (as defined therein) (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017). 10.7 First Amended and Restated Agreement of Limited Partnership of Agree Limited Partnership, dated as ofApril 22, 1994, by and among the Company, Richard Agree, Edward Rosenberg and Joel Weiner(incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012). 10.8 Second Amendment to First Amended and Restated Agreement of Limited Partnership of Agree LimitedPartnership, dated as of March 20, 2013, by and among the Company, Agree Limited Partnership and RichardAgree (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013). 10.9+ Agree Realty Corporation Profit Sharing Plan (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1996). 10.10+ Amended Employment Agreement, dated July 1, 2014, by and between the Company and Richard Agree(incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014). 10.11+ Amended Employment Agreement, dated July 1, 2014, by and between the Company and Joey Agree(incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014). 42 10.12+ Letter Agreement of Employment dated April 5, 2010 between Agree Limited Partnership and Laith Hermiz(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 6,2010). 10.13+ Employment Agreement, dated October 20, 2017, between Agree Realty Corporation and Clayton R. Thelen(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 1, 2017). 10.14* Summary of Director Compensation. 10.15+ Agree Realty Corporation 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.10 to theCompany’s Annual Report on Form 10-K for the year ended December 31, 2014). 10.16+ Form of Restricted Stock Agreement under the Agree Realty Corporation 2014 Omnibus Incentive Plan(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014). 10.17+ Form of Performance Share Award Agreement pursuant to the Agree Realty Corporation 2014 OmnibusIncentive Plan (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017). 10.18+ Agree Realty Corporation 2017 Executive Incentive Plan, dated February 16, 2017 (incorporated byreference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31,2016). 10.19 Note Purchase Agreement dated as of May 28, 2015 by and among Agree Limited Partnership, the Companyand the purchasers thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 1, 2015). 10.20 Note Purchase Agreement, dated as of July 28, 2016, by and among Agree Limited Partnership, the Companyand the purchasers thereto (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016). 10.21 Increase Agreement, dated July 18, 2018 among Agree Limited Partnership, as the Borrower, the Company,as the parent, PNC Bank, National Association and the other lender parties thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 23, 2018). 10.22 Form of Revolving Note (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 23, 2018). 10.23 First Supplement to Uncommitted Master Note Facility, dated as of September 26, 2018, among AgreeLimited Partnership, Agree Realty Corporation and Teachers Insurance and Annuity Association of America(“TIAA”) (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018). 10.24 First Supplement to Uncommitted Master Note Facility, dated as of September 26, 2018, among AgreeLimited Partnership, Agree Realty Corporation, AIG Asset Management (U.S.), LLC and the institutionalinvestors named therein (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018). 10.25 Second Amendment to Term Loan Agreement dated November 2, 2018, among Agree Limited Partnership,Capital One, National Association, and Raymond James Bank, N.A. (incorporated by reference to Exhibit10.25 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018). 43 10.26 First Amendment to Amended and Restated Revolving Credit and Term Loan Agreement, dated as ofDecember 17, 2018, among the Company, PNC Bank, National Association and the other lenders party thereto (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018). 10.27 Term Loan Agreement, dated December 27, 2018, by and among Agree Limited Partnership, the Company,PNC Bank, National Association and the other lenders party thereto (incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018). 10.28 Guaranty, dated as of December 27, 2018, by and among the Company and each of the subsidiaries of AgreeLimited Partnership party thereto (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018). 10.29 Reimbursement Agreement, dated as of November 18, 2014, by and between the Company and RichardAgree (incorporated by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018). 10.30+ Form of Performance Unit Award Notice (incorporated by reference to Exhibit 10.1 to the Company’sQuarterly Report on Form 10-Q for the quarter ended March 31, 2019). 10.31 Note Purchase Agreement, dated as of June 14, 2019, among Agree Limited Partnership, the Company andthe purchasers named therein (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Reporton Form 10-Q for the quarter ended June 30, 2019). 10.32 First Amendment to Term Loan Agreement, dated May 6, 2019, by and among Agree Limited Partnership, the Company, PNC Bank, National Association and the other lenders party thereto (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019). 10.33 Second Amendment to Amended and Restated Revolving Credit and Term Loan Agreement, dated as of May6, 2019, by and among Agree Limited Partnership, the Company, PNC Bank, National Association and theother lenders party thereto (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019). 10.34 Third Amendment to Term Loan Agreement, dated May 6, 2019, by and among Agree Limited Partnership,the Company, Capital One, National Association and Raymond James Bank, N.A. (incorporated by referenceto Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019). 10.35 Second Amended and Restated Revolving Credit and Term Loan Agreement, dated December 5, 2019,among the Company, the Borrower, PNC Bank and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 9, 2019). 10.36 Fourth Amendment to Term Loan Agreement, dated December 5, 2019, among the Company, the Borrower,Capital One, the guarantors party thereto and the lenders party thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 9, 2019). 10.37 Second Amendment to Term Loan Agreement, dated December 5, 2019, among the Company, the Borrower, and PNC Bank (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on December 9, 2019). 10.38*+ Summary of Material Terms of Compensation Arrangement with Danielle M. Spehar (effective December7, 2019). 21* Subsidiaries of Agree Realty Corporation. 44 23.1* Consent of Grant Thornton LLP. 24* Power of Attorney (included on the signature page of this Annual Report on Form 10-K). 31.1* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Joel N. Agree, Chief ExecutiveOfficer. 31.2* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Clayton Thelen, Chief FinancialOfficer. 32.1* Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Joel N. Agree, Chief ExecutiveOfficer. 32.2* Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Clayton Thelen, Chief Financial Officer. 99.1* Material Federal Income Tax Considerations. 101* The following materials from Agree Realty Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Income, (iii) the Consolidated Statement of Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and(v) related notes to these consolidated financial statements, tagged as blocks of text. 104* Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). * Filed herewith. + Management contract or compensatory plan or arrangement. 15(b) The Exhibits listed in Item 15(a)(3) are hereby filed with this Annual Report on Form 10-K. 15(c) The financial statement schedule listed at Item 15(a)(2) is hereby filed with this Annual Report on Form 10-K. F-1 Page Reports of Independent Registered Public Accounting Firm F-2 Financial Statements Consolidated Balance Sheets F-5Consolidated Statements of Operations and Comprehensive Income F-7Consolidated Statements of Equity F-8Consolidated Statements of Cash Flows F-9 Notes to Consolidated Financial Statements F-10 Schedule III - Real Estate and Accumulated Depreciation F-36 F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Shareholders Agree Realty Corporation Opinion on internal control over financial reporting We have audited the internal control over financial reporting of Agree Realty Corporation (a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2019, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2019, and our report dated February 20, 2020 expressed an unqualified opinion on those financial statements. Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Grant Thornton LLP Philadelphia, Pennsylvania February 20, 2020 F-3 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Shareholders Agree Realty Corporation Opinion on the financial statements We have audited the accompanying consolidated balance sheets of Agree Realty Corporation (a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedules included under Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 20, 2020 expressed an unqualified opinion. Change in accounting principle As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Codification (ASC) Topic 842, Leases. Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Accounting for Acquisitions of Real Estate As described in Notes 2 and 4 to the consolidated financial statements, the acquisition of property for investment purposes is typically accounted for as an asset acquisition in which the Company allocates the purchase price to land, buildings and identified intangible assets and liabilities, based in each case on their relative estimated fair values and without giving rise to goodwill. The Company acquired approximately $702.9 million of real estate during the year ended December 31, 2019. We identified the accounting for acquisitions of real estate as a critical audit matter. The principal consideration for our determination that the accounting for acquisitions of real estate was a critical audit matter was the higher risk of estimation uncertainty due to the sensitivity of management’s judgments in determining estimates of fair value, particularly with respect to the market rent assumption, a significant component in the fair value estimation of above- and below-market lease intangible assets and liabilities recognized in connection with the F-4 acquisitions. As described in Note 2 to the consolidated financial statements, these amounts are amortized over the remaining terms of the related leases as adjustments to the “Rental income” line item in the consolidated statement of operations. Our audit procedures related to the accounting for acquisitions of real estate included the following, among others. We tested the design and operating effectiveness of relevant controls relating to the accounting for acquisitions of real estate, such as controls over the measurement and recognition of assets acquired, liabilities assumed, and consideration paid. For each of the acquisitions during the audit period, we inspected the purchase agreements to assess whether amounts reported and disclosed in the consolidated financial statements were consistent with the underlying transaction agreements. In testing the estimates of fair value of assets acquired and liabilities assumed recognized in connection with the acquisitions, we evaluated the appropriateness of the valuation methodology used by management, and compared management’s significant assumptions, particularly the market rent assumption, with comparable observable market data. These procedures involved the use of our valuation specialists. Our overall assessment of these assumptions and the amounts reported and disclosed in the consolidated financial statements in connection with the acquisitions included consideration of whether such information was consistent with evidence obtained in other areas of the audit. Impairments As described in Notes 2 and 4 to the consolidated financial statements, the Company reviews its real estate investments for potential impairment when certain events or changes in circumstances indicate that the carrying amount may not be recoverable. Those events and circumstances include, but are not limited to, significant changes in real estate market conditions, estimated residual values, and an expectation to sell assets before the end of the previously estimated life. For real estate investments that show an indication of impairment, management determines whether an impairment has occurred by comparing the estimated undiscounted future cash flows, including the residual value of the real estate, with the carrying amount of the individual asset. Forecasting the estimated future cash flows requires management to make estimates and assumptions about significant variables, such as the probabilities of outcomes, estimated holding periods, capitalization rates, and potential disposal proceeds to be received upon a sale. We identified the evaluation of impairment of real estate investments as a critical audit matter. The principal consideration for our determination that the evaluation of impairment was a critical audit matter was a higher risk of estimation uncertainty due to sensitivity of management judgments not only regarding indicators of impairment but also regarding estimates and assumptions utilized in forecasting cash flows for cost recoverability and making fair value measurements. Our audit procedures related to the evaluation of impairment included the following, among others. We tested the design and operating effectiveness of relevant controls over the evaluation of potential real estate investment impairments, such as controls over the Company’s monitoring of the real estate investment portfolio, controls over the Company’s analysis of undiscounted future cash flows, and controls over the Company’s estimates of fair value. In consideration of impairment indicator criteria established in management’s accounting policies over impairment, we evaluated the completeness of the population of properties requiring further analysis. We examined and evaluated the Company’s undiscounted cash flow analyses and estimates of fair value over properties identified for potential impairment. We evaluated the reasonableness of the methods and significant assumptions used, including probabilities of outcomes, holding periods, capitalization rates, and disposal proceeds. We evaluated these items in comparison with historical performance of the impacted properties and with comparable observable market data, which involved the use of our valuation specialists. Our assessment included sensitivity analyses over these assumptions, and we considered whether such assumptions were consistent with evidence obtained in other areas of the audit. /s/ Grant Thornton LLP We have served as the Company’s auditor since 2013. Philadelphia, Pennsylvania February 20, 2020 F-5 AGREE REALTY CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share and per-share data) December 31, December 31, 2019 2018 ASSETS Real Estate Investments Land $ 735,991 $ 553,704 Buildings 1,600,293 1,194,985 Less accumulated depreciation (127,748) (100,312) 2,208,536 1,648,377 Property under development 10,056 12,957 Net Real Estate Investments 2,218,592 1,661,334 Real Estate Held for Sale, net 3,750 — Cash and Cash Equivalents 15,603 53,955 Cash Held in Escrows 26,554 20 Accounts Receivable - Tenants 26,808 21,547 Lease intangibles, net of accumulated amortization of $89,118 and $62,543 at December 31, 2019 and December 31, 2018, respectively 343,514 280,153 Other Assets, net 29,709 11,180 Total Assets $ 2,664,530 $ 2,028,189 See accompanying notes to consolidated financial statements. F-6 AGREE REALTY CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share and per-share data) December 31, December 31, 2019 2018 LIABILITIES Mortgage Notes Payable, net $ 36,698 $ 60,926 Unsecured Term Loans, net 237,403 256,419 Senior Unsecured Notes, net 509,198 384,064 Unsecured Revolving Credit Facility 89,000 19,000 Dividends and Distributions Payable 25,014 21,031 Accounts Payable, Accrued Expenses, and Other Liabilities 48,987 21,045 Lease intangibles, net of accumulated amortization of $19,307 and $15,177 at December 31, 2019 and December 31, 2018, respectively 26,668 27,218 Total Liabilities 972,968 789,703 EQUITY Common stock, $.0001 par value, 90,000,000 shares authorized, 45,573,623 and 37,545,790 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively 5 4 Preferred Stock, $.0001 par value per share, 4,000,000 shares authorized — — Additional paid-in-capital 1,752,912 1,277,592 Dividends in excess of net income (57,094) (42,945)Accumulated other comprehensive income (loss) (6,492) 1,424 Total Equity - Agree Realty Corporation 1,689,331 1,236,075 Non-controlling interest 2,231 2,411 Total Equity 1,691,562 1,238,486 Total Liabilities and Equity $ 2,664,530 $ 2,028,189 See accompanying notes to consolidated financial statements. F-7 AGREE REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (In thousands, except share and per-share data) Year Ended 2019 2018 2017 Revenues Rental Income $ 187,279 $ 136,884 $ 110,685 Other 199 238 832 Total Revenues 187,478 137,122 111,517 Operating Expenses Real estate taxes 15,520 10,721 8,204 Property operating expenses 6,749 5,645 3,610 Land lease expense 1,242 645 653 General and administrative 15,566 11,756 9,428 Depreciation and amortization 45,703 33,030 26,661 Provision for impairment 1,609 2,319 — Total Operating Expenses 86,389 64,116 48,556 Income from Operations 101,089 73,006 62,961 Other (Expense) Income Interest expense, net (33,094) (24,872) (18,137)Gain (loss) on sale of assets, net 13,306 11,180 14,193 Income tax expense (538) (516) (227)Net Income 80,763 58,798 58,790 Less Net Income Attributable to Non-Controlling Interest 682 626 678 Net Income Attributable to Agree Realty Corporation $ 80,081 $ 58,172 $ 58,112 Net Income Per Share Attributable to Agree Realty Corporation Basic $ 1.96 $ 1.80 $ 2.09 Diluted $ 1.93 $ 1.78 $ 2.08 Other Comprehensive Income Net income $ 80,763 $ 58,798 $ 58,790 Changes in fair value of interest rate swaps (8,775) 54 1,935 Realized gain (loss) on settlement of interest rate swaps 788 — — Total Comprehensive Income 72,776 58,852 60,725 Less Comprehensive Income Attributable to Non-Controlling Interest 611 631 702 Comprehensive Income Attributable to Agree Realty Corporation $ 72,165 $ 58,221 $ 60,023 Weighted Average Number of Common Shares Outstanding - Basic 40,577,346 32,070,255 27,625,102 Weighted Average Number of Common Shares Outstanding - Diluted 41,223,614 32,401,122 27,700,347 See accompanying notes to consolidated financial statements. F-8 AGREE REALTY CORPORATION CONSOLIDATED STATEMENT OF EQUITY (In thousands, except share and per-share data) Accumulated Dividends in Other Common Stock Additional excess of net Comprehensive Non-Controlling Total Shares Amount Paid-In Capital income Income (Loss) Interest Equity Balance, December 31, 2016 26,164,977 $ 3 $ 712,069 $ (28,558) $ (536) $ 2,532 $ 685,510 Issuance of common stock, net of issuance costs 4,786,604 — 222,695 — — — 222,695 Repurchase of common shares (23,925) — (1,111) — — — (1,111)Issuance of restricted stock under the Omnibus Incentive Plan 88,466 — — — — — — Forfeiture of restricted stock (11,222) — — — — — — Stock-based compensation — — 2,393 — — — 2,393 Dividends and distributions declared for the period — — — (58,317) — (705) (59,022)Other comprehensive income (loss) - change in fair value of interest rate swaps — — — — 1,911 24 1,935 Net income — — — 58,112 — 678 58,790 Balance, December 31, 2017 31,004,900 $ 3 $ 936,046 $ (28,763) $ 1,375 $ 2,529 $ 911,190 Issuance of common stock, net of issuance costs 6,507,263 1 339,743 — — — 339,744 Repurchase of common shares (23,407) — (1,145) — — — (1,145)Issuance of restricted stock under the Omnibus Incentive Plan 57,882 — — — — — — Forfeiture of restricted stock (848) — — — — — — Stock-based compensation — — 2,948 — — — 2,948 Dividends and distributions declared for the period — — — (72,354) — (749) (73,103)Other comprehensive income (loss) - change in fair value of interest rate swaps — — — — 49 5 54 Net income — — — 58,172 — 626 58,798 Balance, December 31, 2018 37,545,790 $ 4 $ 1,277,592 $ (42,945) $ 1,424 $ 2,411 $ 1,238,486 Issuance of common stock, net of issuance costs 7,993,519 — 472,746 — — — 472,746 Repurchase of common shares (22,011) — (1,406) — — — (1,406)Issuance of restricted stock under the Omnibus Incentive Plan 58,735 1 — — — — 1 Forfeiture of restricted stock (2,410) — (29) — — — (29)Stock-based compensation — — 4,009 — — — 4,009 Dividends and distributions declared for the period — — — (94,230) — (791) (95,021)Other comprehensive income (loss) - change in fair value and settlement of interest rate swaps — — — — (7,916) (71) (7,987)Net income — — — 80,081 — 682 80,763 Balance, December 31, 2019 45,573,623 $ 5 $ 1,752,912 $ (57,094) $ (6,492) $ 2,231 $ 1,691,562 Cash dividends declared per common share: For the three months ended March 31, 2019 $ 0.555 For the three months ended June 30, 2019 $ 0.570 For the three months ended September 30, 2019 $ 0.570 For the three months ended December 31, 2019 $ 0.585 See accompanying notes to consolidated financial statements. F-9 AGREE REALTY CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended 2019 2018 2017 Cash Flows from Operating Activities Net income $ 80,763 $ 58,798 $ 58,790 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 45,703 33,030 26,661 Amortization from above (below) lease intangibles, net 13,501 10,668 5,091 Amortization from financing and credit facility costs 1,284 1,055 979 Stock-based compensation 3,980 2,948 2,393 Provision for impairment 1,609 2,319 — Settlement of interest rate swap 788 — — (Gain) loss on sale of assets (13,306) (11,180) (14,193)(Increase) decrease in accounts receivable (6,071) (6,855) (4,216)(Increase) decrease in other assets (2,150) (463) 444 Increase (decrease) in accounts payable, accrued expenses, and other liabilities 606 2,927 6,254 Net Cash Provided by Operating Activities 126,707 93,247 82,203 Cash Flows from Investing Activities Acquisition of real estate investments and other assets (708,144) (611,129) (319,572)Development of real estate investments and other assets (including capitalized interest of $410 in 2019, $448 in 2018, and $570 in 2017) (24,428) (21,481) (43,302)Payment of leasing costs (411) (1,337) (568)Net proceeds from sale of assets 65,464 65,830 44,343 Net Cash Used in Investing Activities (667,519) (568,117) (319,099) Cash Flows from Financing Activities Proceeds (costs) from common stock offerings, net 472,746 339,744 222,695 Repurchase of common shares (1,406) (1,145) (1,111)Unsecured revolving credit facility borrowings (repayments), net 70,000 5,000 — Payments of mortgage notes payable (24,404) (27,576) (2,412)Unsecured term loan proceeds — 100,000 — Payments of unsecured term loans (18,543) (761) (739)Senior unsecured notes proceeds 125,000 125,000 100,000 Dividends paid (90,257) (67,638) (55,146)Distributions to Non-Controlling Interest (782) (737) (695)Payments for financing costs (3,360) (1,824) (309)Net Cash Provided by Financing Activities 528,994 470,063 262,283 Net Increase (Decrease) in Cash and Cash Equivalents (11,818) (4,807) 25,387 Cash and cash equivalents and cash held in escrow, beginning of period 53,975 58,782 33,395 Cash and cash equivalents and cash held in escrow, end of period $ 42,157 $ 53,975 $ 58,782 Supplemental Disclosure of Cash Flow Information Cash paid for interest (net of amounts capitalized) $ 29,925 $ 23,015 $ 17,331 Cash paid for income tax $ 666 $ 452 $ 257 Supplemental Disclosure of Non-Cash Investing and Financing Activities Operating lease right of use assets added upon implementation of leases standard on January 1, 2019 $ 7,505 $ — $ — Additional operating lease right of use assets added under new ground leases after January 1, 2019 $ 12,167 $ — — Operating lease right of use assets disposed of upon acquisition of underlying ground leased land $ (3,059) $ — — Dividends and limited partners’ distributions declared and unpaid $ 25,014 $ 21,031 $ 16,303 Accrual of development, construction and other real estate investment costs $ 4,330 $ 1,768 $ 6,742 See accompanying notes to consolidated financial statements. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-10 Note 1 – Organization Agree Realty Corporation (the “Company”), a Maryland corporation, is a fully integrated real estate investment trust (“REIT”) primarily focused on the ownership, acquisition, development and management of retail properties net leased to industry leading tenants. The Company was founded in 1971 by its current Executive Chairman, Richard Agree, and our common stock was listed on the New York Stock Exchange (“NYSE”) in 1994. Our assets are held by, and all of our operations are conducted through, directly or indirectly, Agree Limited Partnership (the “Operating Partnership”), of which Agree Realty Corporation is the sole general partner and in which it held a 99.2% interest as of December 31, 2019. There is a one-for-one relationship between Operating Partnership units the (“Operating Partnership Units”) owned by the Company and Company common shares outstanding. Under the partnership agreement of the Operating Partnership, the Company, as the sole general partner, has exclusive responsibility and discretion in the management and control of the Operating Partnership. The terms “Agree Realty,” the “Company,” “Management,” “we,” “our” or “us” refer to Agree Realty Corporation and all of its consolidated subsidiaries, including the Operating Partnership. Note 2 – Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements of Agree Realty Corporation include the accounts of the Company, the Operating Partnership and its wholly-owned subsidiaries. The Company, as the sole general partner, held 99.2% and 99.1% of the Operating Partnership as of December 31, 2019 and 2018, respectively. All material intercompany accounts and transactions are eliminated. Non-controlling Interest At December 31, 2019, the non-controlling interest in the Operating Partnership consisted of a 0.8% ownership interest in the Operating Partnership held by third parties. The Operating Partnership Units may, under certain circumstances, be exchanged for shares of common stock. The Company as sole general partner of the Operating Partnership has the option to settle exchanged Operating Partnership Units held by others for cash based on the current trading price of our shares. Assuming the exchange of all non-controlling Operating Partnership Units, there would have been 45,921,242 shares of common stock outstanding at December 31, 2019. Reclassifications The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 842 “Leases” (“ASC 842”) using the modified retrospective approach as of January 1, 2019 and elected to apply the transition provisions of the standard at the beginning of the period of adoption. The Company adopted the practical expedient in ASC 842 that alleviates the requirement to separate lease and non-lease components. As a result, all income earned pursuant to tenant leases is reflected as one line, “Rental Income,” in the 2019 consolidated statement of operations and comprehensive income. To facilitate comparability, the Company has reclassified prior periods’ lease and non-lease income consistently with the classification employed in 2019. The Company often recognizes above- and below-market lease intangibles in connection with acquisitions of real estate (see Acquisitions of Real Estate below). The capitalized above- and below-market lease intangibles are amortized over the remaining term of the related leases. The Company historically presented this amortization as a component of Depreciation and Amortization expense within the Consolidated Statement of Income and Comprehensive Income. During 2019, the Company changed this classification to recognize this amortization as an adjustment of Rental Income. The prior period results have been reclassified to conform to the current year classification. The Company 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-11 incurred amortization of capitalized above- and below-market lease intangibles of $13.5 million, $10.7 million, and $5.1 million for the years ended December 31, 2019, 2018, and 2017, respectively. Certain other reclassifications have been made to prior year financial statements to conform to classifications used in the current year. These reclassifications had no impact on net income or shareholders’ equity as previously reported. Real Estate Investments The Company records the acquisition of real estate at cost, including acquisition and closing costs. For properties developed by the Company, all direct and indirect costs related to planning, development and construction, including interest, real estate taxes and other miscellaneous costs incurred during the construction period, are capitalized for financial reporting purposes and recorded as property under development until construction has been completed. Assets are classified as Held for Sale based on specific criteria as outlined in Accounting Standards Codification 360, Property, Plant & Equipment. Properties classified as Held for Sale are recorded at the lower of their carrying value or their fair value, less anticipated selling costs. Assets are generally classified as Held for Sale once management has actively engaged in marketing the asset and has received a firm purchase commitment that is expected to close within one year. The Company classified one operating property as held for sale at December 31, 2019, the assets for which are separately presented in the Consolidated Balance Sheet. There were no assets held for sale at December 31, 2018. Real estate held for sale consisted of the following as of December 31, 2019 and December 31, 2018 (in thousands): December 31, 2019 December 31, 2018Land $ 2,269 $ — Building 2,315 — 4,584 — Accumulated depreciation and amortization (834) — Total Real Estate Held for Sale, net $ 3,750 $ — Acquisitions of Real Estate The acquisition of property for investment purposes is typically accounted for as an asset acquisition. The Company allocates the purchase price to land, buildings and identified intangible assets and liabilities, based in each case on their relative estimated fair values and without giving rise to goodwill. Intangible assets and liabilities represent the value of in-place leases and above- or below-market leases. In making estimates of fair values, the Company may use a number of sources, including data provided by independent third parties, as well as information obtained by the Company as a result of its due diligence, including expected future cash flows of the property and various characteristics of the markets where the property is located. In allocating the fair value of the identified intangible assets and liabilities of an acquired property, in-place lease intangibles are valued based on the Company’s estimates of costs related to tenant acquisition and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. Above- and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition and the Company’s estimate of current market lease rates for the property. In the case of sale-leaseback transactions, it is typically assumed that the lease is not in-place prior to the close of the transaction. Depreciation and Amortization Land, buildings, and improvements are recorded and stated at cost. The Company’s properties are depreciated using the straight-line method over the estimated remaining useful life of the assets, which are generally 40 years for buildings and 10 to 20 years for improvements. Properties classified as held for sale and properties under development or redevelopment 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-12 are not depreciated. Major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. In-place lease intangible assets and the capitalized above- and below-market lease intangibles are amortized over the non-cancelable term of the lease unless the Company believes it is reasonably certain that the tenant will renew the lease for an option term whereby the Company amortizes the value attributable to the renewal over the renewal period. In-place lease intangible assets are amortized to amortization expense and above- and below-market lease intangibles are amortized as a net reduction of rental income (see Reclassifications above). In the event of early lease termination, the remaining net book value of any above- or below-market lease intangible is recognized as an adjustment of rental income. The following schedule summarizes the Company’s amortization of lease intangibles for the years ended December 31, 2019, 2018, and 2017 (in thousands): For the Year Ended December 31, 2019 2018 2017 Lease Intangibles (In-place) $ 10,619 $ 7,877 $ 6,353 Lease Intangibles (Above-Market) 18,107 14,871 9,707 Lease Intangibles (Below-Market) (4,607) (4,203) (4,275)Total $ 24,119 $ 18,545 $ 11,785 Year Ending December 31, 2020 2021 2022 2023 2024 Thereafter Total Lease Intangibles (In-place) $ 13,351 $ 12,258 $ 11,392 $ 10,614 $ 9,502 $ 52,814 $ 109,931 Lease Intangibles (Above-Market) 19,462 19,273 18,980 18,126 16,473 141,268 233,582 Lease Intangibles (Below-Market) (4,868) (4,435) (3,525) (2,954) (2,265) (8,621) (26,668)Total $ 27,945 $ 27,096 $ 26,847 $ 25,786 $ 23,710 $ 185,461 $ 316,845 Impairments The Company reviews real estate investments and related lease intangibles, for possible impairment when certain events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable though operations plus estimated disposition proceeds. Events or changes in circumstances that may occur include, but are not limited to, significant changes in real estate market conditions, estimated residual values, and an expectation to sell assets before the end of the previously estimated life. Impairments are measured to the extent the current book value exceeds the estimated fair value of the asset less disposition costs for any assets classified as held for sale. The valuation of impaired assets is determined using valuation techniques including discounted cash flow analysis, analysis of recent comparable sales transactions, and purchase offers received from third parties, which are Level 3 inputs. The Company may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate. Estimating future cash flows is highly subjective and estimates can differ materially from actual results. Cash and Cash Equivalents and Cash Held in Escrow The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of cash and money market accounts. Cash held in escrows relates to delayed like-kind exchange transactions pursued under Section 1031 of the Internal Revenue Code. Additionally, as of December 31, 2019, escrowed cash included $24.8 million held by the Company’s stock transfer agent in connection with the payment of the January 3, 2020 dividend. The account balances periodically exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage, and as a result, there is a concentration of credit risk related to amounts on deposit in excess 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-13 of FDIC insurance coverage. We had $40.9 million and $52.7 million in cash and cash held in escrow as of December 31, 2019 and December 31, 2018, respectively, in excess of the FDIC insured limit. Revenue Recognition and Accounts Receivable The Company leases real estate to its tenants under long-term net leases which we account for as operating leases. Under this method, leases that have fixed and determinable rent increases are recognized on a straight-line basis over the lease term. Rental increases based upon changes in the consumer price indexes, or other variable factors, are recognized only after changes in such factors have occurred and are then applied according to the lease agreements. Certain leases also provide for additional rent based on tenants’ sales volumes. These rents are recognized when determinable after the tenant exceeds a sales breakpoint. Recognizing rent escalations on a straight-line method results in rental revenue in the early years of a lease being higher than actual cash received, creating a straight-line rent receivable asset which is included in the Accounts Receivable - Tenants line item in our Consolidated Balance Sheets. The balance of straight-line rent receivables at December 31, 2019 and December 31, 2018 was $23.0 million and $16.7 million, respectively. To the extent any of the tenants under these leases become unable to pay their contractual cash rents, the Company may be required to write down the straight-line rent receivable from those tenants, which would reduce rental income. The Company reviews the collectability of charges under its tenant operating leases on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located. In the event that collectability with respect to any tenant changes, beginning with the adoption of ASC 842 as of January 1, 2019, the Company recognizes an adjustment to rental income. Prior to the adoption of ASC 842, the Company recognized a provision for uncollectible amounts or a direct write-off of the specific rent receivable. The Company’s review of collectability of charges under its operating leases includes any accrued rental revenues related to the straight-line method of reporting rental revenue. The Company’s leases provide for reimbursement from tenants for common area maintenance (“CAM”), insurance, real estate taxes and other operating expenses. A portion of our operating cost reimbursement revenue is estimated each period and is recognized as rental income in the period the recoverable costs are incurred and accrued. The balance of unbilled operating cost reimbursement receivable at December 31, 2019 and December 31, 2018 was $2.6 million and $3.3 million, respectively. Sales Tax The Company collects various taxes from tenants and remits these amounts, on a net basis, to the applicable taxing authorities. Earnings per Share Earnings per common share has been computed pursuant to the guidance in the FASB ASC Topic 260, “Earnings Per Share.” The guidance requires the classification of the Company’s unvested restricted stock, which contain rights to receive non forfeitable dividends, as participating securities requiring the two-class method of computing net income per common share. In accordance with the two-class method, earnings per share has been computed by dividing the net income less net income attributable to unvested restricted shares by the weighted average number of common shares outstanding less unvested restricted shares. Diluted earnings per share is computed by dividing net income by the weighted average common shares and potentially dilutive common shares outstanding in accordance with the treasury stock method. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-14 The following is a reconciliation of basic net earnings per common share computation to the denominator of the diluted net earnings per common share computation for each of the periods presented: Year Ended December 31, 2019 2018 2017 Net income attributable to Agree Realty Corporation $ 80,081 $ 58,172 $ 58,112 Less: Income attributable to unvested restricted shares (379) (370) (454)Net income used in basic and diluted earnings per share $ 79,702 $ 57,802 $ 57,658 Weighted average number of common shares outstanding 40,771,300 32,281,273 27,852,231 Less: Unvested restricted stock (193,954) (211,018) (227,129)Weighted average number of common shares outstanding used in basic earnings per share 40,577,346 32,070,255 27,625,102 Weighted average number of common shares outstanding used in basic earnings per share 40,577,346 32,070,255 27,625,102 Effect of dilutive securities: Share-based compensation 98,740 69,136 75,245 Effect of dilutive securities: March 2018 forward equity offering — 198,786 — Effect of dilutive securities: September 2018 forward equity offering 269,785 62,945 — Effect of dilutive securities: April 2019 forward equity offering 277,225 — — Effect of dilutive securities: 2019 ATM forward equity offerings 518 — — Weighted average number of common shares outstanding used in diluted earnings per share 41,223,614 32,401,122 27,700,347 Forward Equity Sales The Company occasionally sells shares of common stock through forward sale agreements to enable the Company to set the price of such shares upon pricing the offering (subject to certain adjustments) while delaying the issuance of such shares and the receipt of the net proceeds by the Company. To account for the forward sale agreements, the Company considers the accounting guidance governing financial instruments and derivatives. To date, we have concluded that our forward sale agreements are not liabilities as they do not embody obligations to repurchase our shares nor do they embody obligations to issue a variable number of shares for which the monetary value are predominantly fixed, varying with something other than the fair value of the shares, or varying inversely in relation to our shares. We then evaluate whether the agreements meet the derivatives and hedging guidance scope exception to be accounted for as equity instruments. We have concluded that the agreements are classifiable as equity contracts based on the following assessments: (i) none of the agreements’ exercise contingencies are based on observable markets or indices besides those related to the market for our own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to our own stock. The Company considers the potential dilution resulting from the forward sale agreements on the earnings per share calculations. The Company uses the treasury stock method to determine the dilution resulting from the forward sale agreement during the period of time prior to settlement. Equity Offering Costs Underwriting commissions and offering costs of equity offerings have been reflected as a reduction of additional paid-in-capital in our Consolidated Balance Sheets. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-15 Income Taxes The Company has made an election to be taxed as a REIT under Sections 856 through 860 of the Code and related regulations. The Company generally will not be subject to federal income taxes on amounts distributed to shareholders, providing it distributes 100% of its REIT taxable income and meets certain other requirements for qualifying as a REIT. For each of the years in the three-year period ended December 31, 2019, the Company believes it has qualified as a REIT. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements. Notwithstanding the Company’s qualification for taxation as a REIT, the Company is subject to certain state taxes on its income and real estate. Earnings and profits that determine the taxability of distributions to shareholders differ from net income reported for financial reporting purposes due to differences in the estimated useful lives and methods used to compute depreciation and the carrying value (basis) of the investments in properties for tax purposes, among other things. The Company and its taxable REIT subsidiaries (“TRS”) have made a timely TRS election pursuant to the provisions of the REIT Modernization Act. A TRS is able to engage in activities resulting in income that previously would have been disqualified from being eligible REIT income under the federal income tax regulations. As a result, certain activities of the Company which occur within its TRS entity are subject to federal and state income taxes (See Note 8). All provisions for federal income taxes in the accompanying consolidated financial statements are attributable to the Company’s TRS. We regularly analyze our various federal and state filing positions and only recognize the income tax effect in our financial statements when certain criteria regarding uncertain income tax positions have been met. We believe that our income tax positions would more likely than not be sustained upon examination by all relevant taxing authorities. Therefore, no provisions for uncertain income tax positions have been recorded in our financial statements. Management’s Responsibility to Evaluate Our Ability to Continue as a Going Concern When preparing financial statements for each annual and interim reporting period, management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. No such conditions or events were identified as of the issuance date of the financial statements contained in this Annual Report on Form 10-K. Segment Reporting The Company is primarily in the business of acquiring, developing and managing retail real estate which is considered to be one reporting segment. The Company has no other reportable segments. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from those estimates. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-16 Fair Values of Financial Instruments The Company’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. The guidance describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels: Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities. Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly,such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active orother inputs that are observable or can be corroborated by observable market data for substantiallythe full term of the assets or liabilities. Level 3 – Valuation is generated from model-based techniques that use at least one significant assumptionnot observable in the market. These unobservable assumptions reflect estimates of assumptionsthat market participants would use in pricing the asset or liability. Valuation techniques includeoption pricing models, discounted cash flow models and similar techniques. Recent Accounting Pronouncements In August 2018, the FASB issued ASU No. ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). These amendments modify the disclosure requirements in Topic 820 on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty. ASU 2018-13 will be effective for all entities for fiscal years beginning after December 15, 2019, including interim periods in the year of adoption. The Company is in the process of determining the impact of the implementation of ASU 2018-13, but does not believe it will have a material effect on its financial statements. In June 2018, the FASB issued ASU No. 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). These amendments expand the scope of Topic 718, Compensation—Stock Compensation, which currently only includes share-based payments to employees, to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned, and the ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees. The Company adopted ASU 2018-07 on January 1, 2019. The adoption did not have a material effect on its financial statements. In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). The objective of ASU 2017-12 is to expand hedge accounting for both financial (interest rate) and commodity risks and create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes. The Company adopted ASU 2017-12 on January 1, 2019. The adoption did not have a material effect on the financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which changes how entities measure credit losses for most financial assets. This guidance requires an entity to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses”, which clarified that receivables arising from operating leases are within the scope of the leasing standard (Topic 842), not Topic 326. This new standard is effective for the Company on January 1, 2020. The Company is evaluating the impact this new standard would have on its consolidated financial statements, in the event 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-17 any of its leases ever were to be classified as sales-type or direct finance leases and become subject to the provisions of ASU 2016-13. However, the Company does not currently have any such leases, nor does it have a significant number of other financial instruments subject to the new standard. Therefore, the Company does not currently expect the adoption of ASU 2016-13 to have a material effect on its financial statements. In February 2016, the FASB issued ASU No. 2016-02 “Leases” (“ASU 2016-02”). The new standard creates ASC 842 and supersedes FASB ASC 840, Leases (“ASC 840”), which the Company adopted on January 1, 2019 along with related interpretations. The adoption of the new Leases standard ASU 2016-02 generally had, and will have, the following impacts on the Company: Topic 842 requires a lessee to recognize right of use assets and lease obligation liabilities that arise from leases (operating and finance). On January 1, 2019, the Company recognized $7.5 million of right of use assets and lease liabilities, within Other Assets and Accounts Payable, Accrued Expenses, and Other Liabilities on the Consolidated Balance Sheet. The Company was not required to reassess the classification of existing land leases and therefore these leases continue to be accounted for as operating leases. In the event the Company modifies existing land leases or enters into new land leases after adoption of the new standard, such leases may be classified as finance leases. Business activity occurring subsequent to January 1, 2019, including the Company entering into an additional operating lease as lessee, has increased the balances of the right of use assets and lease liabilities to $16.0 million and $16.2 million respectively, as of December 31, 2019. Topic 842 requires lessors to account for leases using an approach that is substantially equivalent to ASC 840 guidance for sales-type leases and operating leases. Based on its election of practical expedients, the Company’s existing retail leases, where it is the lessor, continue to be accounted for as operating leases under the new standard. However, Topic 842 changed certain requirements regarding the classification of leases that could result in the Company recognizing certain long-term leases entered into or modified after January 1, 2019 as sales-type leases, as opposed to operating leases. The Company elected an optional transition method that allows entities to initially apply Topic 842 at the adoption date (January 1, 2019) and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. However, the Company ultimately did not have any cumulative-effect adjustment as of the adoption date. The Company elected a practical expedient which allows lessors to not separate non-lease components from the lease component when the timing and pattern of transfer for the lease components and non-lease components are the same and if the lease component is classified as an operating lease. As a result, the Company now presents all rentals and reimbursements from tenants as a single line item Rental Income within the Consolidated Statement of Operations and Comprehensive Income, and made certain reclassifications to prior periods for comparability. See Reclassifications above. Under Topic 842, beginning on January 1, 2019, changes in the probability of collecting tenant rental income will result in direct adjustments to rental income and tenant receivables. See Revenue Recognition and Accounts Receivable above. The Company elected an optional transition method allowing entities to not evaluate under ASC 842 land easements that existed or expired before the adoption of ASC 842 and that were not previously accounted for as leases under ASC 840. In connection with its adoption of Topic 842 the Company also began recognizing amortization of above- and below- market lease intangibles as a net reduction of Rental Income. See Reclassifications above. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-18 Note 3 – Leases Tenant Leases The Company is primarily focused on the ownership, acquisition, development and management of retail properties leased to industry leading tenants. As of December 31, 2019, the Company’s portfolio was approximately 99.6% leased and had a weighted average remaining lease term (excluding extension options) of approximately 10.0 years. A significant majority of its properties are leased to national tenants and approximately 58.2% of its annualized base rent was derived from tenants, or parent entities thereof, with an investment grade credit rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Association of Insurance Commissioners. Substantially all of the Company’s tenants are subject to net lease agreements. A net lease typically requires the tenant to be responsible for minimum monthly rent and actual property operating expenses incurred, including property taxes, insurance and maintenance. In addition, the Company’s tenants are typically subject to future rent increases based on fixed amounts or increases in the consumer price index and certain leases provide for additional rent calculated as a percentage of the tenants’ gross sales above a specified level. Certain of the Company’s properties are subject to leases under which it retains responsibility for specific costs and expenses of the property. The Company’s leases typically provide the tenant one or more multi-year renewal options to extend their leases, subject to generally the same terms and conditions, including rent increases, consistent with the initial lease term. The Company attempts to maximize the amount it expects to derive from the underlying real estate property following the end of the lease, to the extent it is not extended. The Company maintains a proactive leasing program that, combined with the quality and locations of its properties, has made its properties attractive to tenants. The Company intends to continue to hold its properties for long-term investment and, accordingly, places a strong emphasis on the quality of construction and an on-going program of regular and preventative maintenance. However, the residual value of a real estate property is still subject to various market-specific, asset-specific, and tenant-specific risks and characteristics. As the classification of a lease is dependent on the fair value of its cash flows at lease commencement, the residual value of a property represents a significant assumption in its accounting for tenant leases. The Company has elected the practical expedient in ASC Topic 842 on not separating non-lease components from associated lease components. The lease and non-lease components combined as a result of this election largely include tenant rentals and maintenance charges, respectively. The Company applies the accounting requirements of ASC 842 to the combined component. The following table includes information regarding the Company’s operating leases for which it is the lessor, for the year ended December 31, 2019. (presented in thousands) For the Year Ended December 31, 2019 Total Lease Payments $ 193,843 Less: Variable Lease Payments (21,137) Total Non-Variable Lease Payments $ 172,706 Year Ending December 31, 2020 2021 2022 2023 2024 Thereafter Total Future Lease Payments $ 198,089 $ 196,430 $ 193,140 $ 189,080 $ 180,195 $ 1,109,013 $ 2,065,947 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-19 Deferred Revenue As of December 31, 2019, and December 31, 2018, there was $4.1 million and $3.7 million, respectively, in deferred revenues resulting from rents paid in advance. Land Lease Obligations The Company is the lessee under land lease agreements for certain of its properties, all of which qualified as operating leases as of December 31, 2019. The Company’s land leases are net lease agreements and do not include variable lease payments. These leases provide multi-year renewal options to extend their term as lessee at the Company’s option. Option periods are included in the calculation of the lease obligation liability only when options are reasonably certain to be exercised. Land lease expense was $1.2 million, $0.6 million, and $0.7 million for the years ending December 31, 2018, 2017 and 2016, respectively. In calculating its lease obligations under the ground leases, the Company uses discount rates estimated to be equal to what it would have to pay to borrow on a collateralized basis over a similar term, for an amount equal to the lease payments, in a similar economic environment. The following tables include information on the Company’s land leases for which it is the lessee, for the year ended December 31, 2019 and as of period end (presented in thousands). Year Ended December 31, 2019 Operating Lease Costs $ (1,131)Variable Lease Costs — Total Non-Variable Lease Costs $ (1,131) Supplemental Disclosure Right-of-use assets obtained in exchange for new operating lease liabilities $ 19,672 Right-of-use assets removed in exchange for real property (3,025) Right-of-use assets net change $ 16,647 Operating cash outflows on operating leases $ 1,073 Weighted-average remaining lease term - operating leases (years) 38.2 Weighted-average discount rate - operating leases 4.13 % Maturity Analysis of Lease Liabilities (presented in thousands) Year Ending December 31, 2020 2021 2022 2023 2024 Thereafter Total Lease Payments $ 1,069 $ 1,015 $ 789 $ 789 $ 789 $ 30,584 $ 35,035 Imputed Interest (662) (645) (634) (628) (621) (15,634) (18,824)Total Lease Liabilities $ 407 $ 370 $ 155 $ 161 $ 168 $ 14,950 $ 16,211 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-20 Note 4 – Real Estate Portfolio Real Estate Portfolio As of December 31, 2019, the Company owned 821 properties, with a total gross leasable area (“GLA”) of approximately 14.6 million square feet. Net Real Estate Investments totaled $2.2 billion as of December 31, 2019. As of December 31, 2018, the Company owned 645 properties, with a total gross leasable area of approximately 11.2 million square feet. Net Real Estate Investments totaled $1.7 billion as of December 31, 2018. Acquisitions During 2019, the Company purchased 186 retail net lease assets for approximately $702.9 million, which includes acquisition and closing costs. These properties are located in 40 states and had a weighted average lease term of approximately 11.7 years. The aggregate 2019 acquisitions were allocated approximately $195.8 million to land, $415.1 million to buildings and improvements, and $92.0 million to lease intangibles. During 2018, the Company purchased 225 retail net lease assets for approximately $608.3 million, including acquisition and closing costs. These properties are located in 37 states and are leased for a weighted average lease term of approximately 12.4 years. The aggregate 2018 acquisitions were allocated approximately $164.7 million to land, $325.0 million to buildings and improvements, and $118.6 million to lease intangibles and other assets. The 2019 and 2018 acquisitions were substantially all cash purchases and there was no contingent consideration associated with these acquisitions. None of the Company’s investments during 2019 or 2018 caused any new or existing tenant to comprise 10% or more of the Company’s total assets or generate 10% or more of the Company’s total annualized contractual base rent at December 31, 2019 or 2018. Developments During 2019, the Company completed eight development or Partner Capital Solutions projects. During 2018, eight such projects were completed. Dispositions During 2019, the Company sold real estate properties for net proceeds of $65.5 million and a recorded net gain of $13.3 million. During 2018, the Company sold real estate properties for net proceeds of $65.8 million and a recorded net gain of $11.2 million. During 2017, the Company sold real estate properties for net proceeds of $44.3 million and a recorded net gain of $14.2 million. Provisions for Impairment As a result of our review of Real Estate Investments we recognized real estate impairment charges of $1.6 million, $2.3 million and $0.0 million for the years ended December 31, 2019, 2018 and 2017, respectively. The estimated fair value of the impaired real estate assets at their time of impairment during 2019 and 2018 was $3.0 million and $17.3 million, respectively. During 2020, events and circumstances related to a property suggest its carrying value might be 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-21 impaired. However, the Company’s estimates of undiscounted cash flows based on conditions existing as of the December 31, 2019 balance sheet date indicated that the carrying amount was expected to be recovered. Nonetheless, it is reasonably possible the recoverability may change in the near term. Note 5 – Debt As of December 31, 2019, we had total gross indebtedness of $876.1 million, including (i) $37.1 million of mortgage notes payable; (ii) $240.0 million of unsecured term loans; (iii) $510.0 million of senior unsecured notes; and (iv) $89.0 million of borrowings under our Revolving Credit Facility. Mortgage Notes Payable As of December 31, 2019, the Company had total gross mortgage indebtedness of $37.1 million which was collateralized by related real estate and tenants’ leases with an aggregate net book value of $48.4 million. Including mortgages that have been swapped to a fixed interest rate, the weighted average interest rate on the Company’s mortgage notes payable was 4.40% as of December 31, 2019 and 4.13% as of December 31, 2018. Mortgages payable consisted of the following: December 31, 2019 December 31, 2018(not presented in thousands) (in thousands) Note payable in monthly installments of interest only at 3.32% per annum, with a balloon payment made in October 2019 $ — $ 21,500 Note payable in monthly installments of $153,838, including interest at 6.90% per annum, early extinguished in September 2019 — 1,922 Note payable in monthly installments of $23,004, including interest at 6.24% per annum, with a balloon payment of $2,781,819 due February 2020 2,775 2,872 Note payable in monthly installments of interest only at 3.60% per annum, with a balloon payment due January 2023 23,640 23,640 Note payable in monthly installments of $35,673, including interest at 5.01% per annum, with a balloon payment of $4,034,627 due September 2023 4,779 4,959 Note payable in monthly installments of $91,675 including interest at 6.27% per annum, with a final monthly payment due July 2026 5,921 6,626 Total principal 37,115 61,519 Unamortized debt issuance costs (417) (593)Total $ 36,698 $ 60,926 The mortgage loans encumbering our properties are generally non-recourse, subject to certain exceptions for which we would be liable for any resulting losses incurred by the lender. These exceptions vary from loan to loan, but generally include fraud or material misrepresentations, misstatements or omissions by the borrower, intentional or grossly negligent conduct by the borrower that harms the property or results in a loss to the lender, filing of a bankruptcy petition by the borrower, either directly or indirectly, and certain environmental liabilities. At December 31, 2019, there were no mortgage loans with partial recourse to us. We have 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 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-22 event that we default under the loan. Cross-default provisions allow a lender to foreclose on the related property in the event a default is declared under another loan. Unsecured Term Loan Facilities The following table presents the Unsecured Term Loans balance net of unamortized debt issuance costs as of December 31, 2019 and 2018 (in thousands): December 31, 2019 December 31, 20182019 Term Loan $ — $ 18,543 2023 Term Loan 40,000 40,000 2024 Term Loan Facilities 100,000 100,000 2026 Term Loan 100,000 100,000 Total Principal 240,000 258,543 Unamortized debt issuance costs (2,597) (2,124)Total $ 237,403 $ 256,419 In August 2016, the Company entered into a $20.3 million unsecured amortizing term loan that matured May 2019 (the “2019 Term Loan”). Borrowings under the 2019 Term Loan were priced at LIBOR plus 170 basis points. In order to fix LIBOR on the 2019 Term Loan at 1.92% until maturity, the Company had an interest rate swap agreement in place, which was assigned by the lender under the Mortgage Note to the 2019 Term Loan lender. The 2019 Term Loan was repaid in May 2019 at maturity. In July 2016, the Company completed a $40.0 million unsecured term loan facility that matures July 2023 (the “2023 Term Loan”). Borrowings under the 2023 Term Loan are priced at LIBOR plus 85 to 165 basis points, depending on the Company’s credit rating. The Company entered into an interest rate swap agreement to fix LIBOR at 140 basis points until maturity. As of December 31, 2019, $40.0 million was outstanding under the 2023 Term Loan, which was subject to an all-in interest rate of 2.40%, including the swap. Pursuant to the amended and restated credit agreement, described below, and its predecessor credit facility, the Company has outstanding $65.0 million and $35.0 million unsecured term loans maturing in January 2024 (together, the “2024 Term Loan Facilities”). Effective with the amended and restated credit agreement, borrowings under the 2024 Term Loan Facilities bear interest at a rate per annum equal to, at the option of the Company, (i) LIBOR plus a margin that is based upon the Company's credit rating or (ii) the Base Rate (which is defined as the greater of the rate of interest as publicly announced from time to time by PNC Bank, National Association, as its prime rate, the Federal Funds Open Rate plus 0.50%, or the Daily Eurodollar Rate plus 1.0%) plus a margin that is based upon the Company’s credit rating. The margins for the 2024 Term Loan Facilities range in amount from 0.85% to 1.65% for LIBOR-based loans and 0.00% to 0.65% for Base Rate loans, depending on the Company’s credit rating. The Company has utilized existing interest rate swaps to fix LIBOR at 2.0904% through July 2021 for the $65.0 million term loan and at 2.1970% through September 2020 for the $35.0 million term loan. In October 2019, the Company entered into new interest swap agreements to fix LIBOR at 143 basis points for both the $65.0 million and $35.0 million term loans, through their 2024 maturity dates. In December 2018, the Company entered into a $100.0 million unsecured term loan facility that matures January 2026 (the “2026 Term Loan”). Borrowings under the 2026 Term Loan are priced at LIBOR plus 145 to 240 basis points, depending on the Company’s credit rating. The Company entered into interest rate swap agreements to fix LIBOR at 266 basis points until maturity. As of December 31, 2019, $100.0 million was outstanding under the 2026 Term Loan, which was subject to an all-in interest rate of 4.26%, including the swaps. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-23 Senior Unsecured Notes The following table presents the Senior Unsecured Notes balance net of unamortized debt issuance costs as of December 31, 2019, and 2018 (in thousands): December 31, 2019 December 31, 20182025 Senior Unsecured Notes $ 50,000 $ 50,000 2027 Senior Unsecured Notes 50,000 50,000 2028 Senior Unsecured Notes 60,000 60,000 2029 Senior Unsecured Notes 100,000 100,000 2030 Senior Unsecured Notes 125,000 125,000 2031 Senior Unsecured Notes 125,000 — Total Principal 510,000 385,000 Unamortized debt issuance costs (802) (936)Total $ 509,198 $ 384,064 All of the Senior Unsecured Notes were sold only to institutional investors and did not involve a public offering in reliance on the exemption from registration in Section 4(a)(2) of the Securities Act. In May 2015, the Company and the Operating Partnership completed a private placement of $100.0 million principal amount of senior unsecured notes. The senior unsecured notes were sold in two series; $50.0 million of 4.16% notes due May 2025 (the “2025 Senior Unsecured Notes”) and $50.0 million of 4.26% notes due May 2027 (the “2027 Senior Unsecured Notes”). In July 2016, the Company and the Operating Partnership entered into a note purchase agreement with institutional purchasers. Pursuant to the note purchase agreement, the Operating Partnership completed a private placement of $60.0 million aggregate principal amount of 4.42% senior unsecured notes due July 2028 (the “2028 Senior Unsecured Notes”). In September 2017, the Company and the Operating Partnership completed a private placement of $100.0 million aggregate principal amount of 4.19% senior unsecured notes due September 2029 (the “2029 Senior Unsecured Notes”). In September 2018, the Company and the Operating Partnership entered into two supplements to uncommitted master note facilities with institutional purchasers. Pursuant to the supplements, the Operating Partnership completed a private placement of $125.0 million aggregate principal amount of 4.32% senior unsecured notes due September 2030 (the “2030 Senior Unsecured Notes”). In October 2019, the Company and the Operating Partnership closed on a private placement of $125.0 million of 4.47% senior unsecured notes due October 2031 (the “2031 Senior Unsecured Notes”). In March 2019, the Company entered into forward-starting interest rate swap agreements to fix the interest for $100.0 million of long-term debt until maturity. The Company terminated the swap agreements at the time of pricing the 2031 Senior Unsecured Notes, which resulted in an effective annual fixed rate of 4.41% for $100.0 million aggregate principal amount of the 2031 Senior Unsecured Notes. Considering the effect of the terminated swap agreements, the blended all-in rate to the Company for the $125.0 million aggregate principal amount of 2031 Senior Unsecured Notes is 4.42%. Senior Unsecured Revolving Credit Facility In December 2019, the Company entered into a Second Amended and Restated Revolving Credit and Term Loan Agreement (the “Credit Agreement”). The Credit Agreement provides for a $500.0 million unsecured revolving credit facility (the “Revolving Credit Facility”), a $65.0 million unsecured term loan facility and a $35.0 million unsecured term loan facility. The Credit Agreement amended and restated in its entirety the Company’s previous credit agreement dated December 15, 2016. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-24 The Credit Agreement provides $600.0 million unsecured borrowing capacity, composed of the Revolving Credit Facility, which matures on January 15, 2024, as well as the 2024 Term Loan Facilities, which mature on January 15, 2024. Subject to certain terms and conditions set forth in the Agreement, the Company (i) may request additional lender commitments under any or all facilities of up to an additional aggregate of $500.0 million and (ii) may elect, for an additional fee, to extend the maturity date of the Revolving Credit Facility by six months up to two times, for a maximum maturity date of January 15, 2025. No amortization payments are required under the Credit Agreement, and interest is payable in arrears no less frequently than quarterly. All borrowings under the Revolving Credit Facility(except for swing line loans) bear interest at a rate per annum equal to, at the option of the Company, (i) LIBOR plus a margin that is based upon the Company’s credit rating, or (ii) the Base Rate (which is defined as the greater of the rate of interest as publicly announced from time to time by PNC Bank, National Association, as its prime rate, the Federal Funds Open Rate plus 0.50%, or the Daily Eurodollar Rate plus 1.0%) plus a margin that is based upon the Company’s credit rating. The margins for the Revolving Credit Facility range in amount from 0.775% to 1.450% for LIBOR-based loans and 0.00% to 0.45% for Base Rate loans, depending on the Company’s credit rating. The margins for the Revolving Credit Facility are subject to improvement based on the Company’s leverage ratio, provided its credit rating meets a certain threshold. Concurrent with the amendment and restatement of the Company’s Credit Agreement, certain conforming changes, including customary financial covenants, were made to the 2023 Term Loan and 2026 Term Loan. The Company and Richard Agree, the Executive Chairman of the Company, are parties to a Reimbursement Agreement dated November 18, 2014. Pursuant to the Reimbursement Agreement, Mr. 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. Debt Maturities The following table presents scheduled principal payments related to our debt as of December 31, 2019 (in thousands): Scheduled Balloon Principal Payment Total 2020 $ 948 $ 2,767 $ 3,715 2021 998 — 998 2022 1,060 — 1,060 2023 1,069 67,656 68,725 2024 (1) 963 189,000 189,963 Thereafter 1,654 610,000 611,654 Total $ 6,692 $ 869,423 $ 876,115 (1) The balloon payment balance includes the balance outstanding under the Revolving Credit Facility as of December 31, 2019. The Credit Facility matures in January 2024, with options to extend the maturity as described under Senior Unsecured Revolving Credit Facility above. Loan Covenants Certain loan agreements contain various restrictive covenants, including the following financial covenants: maximum total leverage ratio, maximum secured leverage ratios, consolidated net worth requirements, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, a minimum unsecured interest expense ratio, a minimum interest coverage ratio, a minimum unsecured debt yield and a minimum unencumbered interest expense ratio. As of December 31, 2019, the most restrictive covenant was the minimum unencumbered interest expense ratio. The Company was in compliance with all of its loan covenants and obligations as of December 31, 2019. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-25 Note 6 – Common and Preferred Stock Common Share Authorization In April 2019, the Company’s shareholders approved an amendment to its charter to increase the total number of shares of common stock that the Company has the authority to issue from 45,000,000 shares to 90,000,000 shares. Shelf Registration In June 2017, the Company filed an automatic shelf registration statement on Form S-3, registering an unspecified amount of common stock, preferred stock, depositary shares and warrants at an indeterminant aggregate initial offering price. The Company may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering. In June 2017, the Company completed a follow-on underwritten offering of 2,415,000 shares of common stock. The offering, which included the full exercise of the overallotment option by the underwriters, raised net proceeds of approximately $108.0 million, after deducting the underwriting discount. The proceeds from the offering were used to repay borrowings under our revolving credit facility to fund property acquisitions and for general corporate purposes. In March 2018, the Company completed a follow-on public offering of 3,450,000 shares of common stock, which included the underwriters’ option to purchase an additional 450,000 shares of common stock, in connection with a forward sale agreement. The offering, which included the full exercise of the underwriters’ option to purchase additional shares, was settled in its entirety in September 2018. Upon settlement the Company issued 3,450,000 shares and received net proceeds of $160.2 million after deducting fees and expenses. In September 2018, the Company entered into a follow-on public offering of 3,500,000 shares of common stock in connection with a forward sale agreement (the “September 2018 Forward”). The September 2018 Forward was settled in its entirety in April 2019. Upon settlement the Company issued 3,450,000 shares and received net proceeds of $186.0 million, after deducting fees and expenses. In April 2019, the Company entered into a follow-on public offering to sell an aggregate of 3,162,500 shares of common stock (the “April 2019 Forward”). The Company settled the entirety of the April 2019 Forward on December 30, 2019 and received net proceeds of approximately $195.8 million, after deducting fees and expenses. ATM Program In July 2019, the Company entered into a $400.0 million at-the-market equity program (the “2019 ATM Program”) through which the Company may, from time to time, sell shares of common stock. In addition to selling shares of common stock, the Company may enter into forward sale agreements through the 2019 ATM Program. During 2019, the Company issued 444,228 shares under the 2019 ATM Program, at an average price of $74.30, realizing gross proceeds of $33.0 million. During the year ended December 31, 2018, and the six months ended June 30, 2019, the Company issued 3,057,263 and 886,768 shares of common stock, respectively, under a previously authorized $250.0 million ATM program (the “2018 ATM Program”), at average prices of $59.28 and $66.83, respectively, realizing gross proceeds of approximately $181.2 million and $59.3 million, respectively. No future issuances will occur under the 2018 ATM Program. During the fourth quarter of 2019, the Company entered into forward sale agreements in connection with the 2019 ATM Program to sell an aggregate of 2,003,118 shares of common stock (the “ATM Forward Offerings”). To date, no shares from the ATM Forward Offerings have been settled. The ATM Forward Offerings are required to be settled by certain dates in December 2020. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-26 After considering shares already sold under the 2019 ATM Program including the outstanding ATM Forward Offerings, the Company had $220.1 million of availability remaining under the 2019 ATM Program as of December 31, 2019. Preferred Stock During 2019, the Company redesignated and reclassified all 200,000 authorized but unissued shares of its Series A Junior Participating Preferred Stock as authorized but unissued and unclassified shares of preferred stock, par value $.0001 per share, of the Company without further designation. The number of preferred shares the Company has the authority to issue remains at 4,000,000, all of which are unclassified and undesignated. Note 7 – Dividends and Distribution Payable The Company declared dividends of $2.280, $2.155 and $2.025 per share during the years ended December 31, 2019, 2018 and 2017; the dividends have been reflected for federal income tax purposes as follows: For the Year Ended December 31, 2019 2018 2017 Ordinary Income $ 1.933 $ 1.638 $ 1.695 Return of Capital 0.347 0.517 0.330 Total $ 2.280 $ 2.155 $ 2.025 On December 3, 2019, the Company declared a dividend of $0.585 per share for the quarter ended December 31, 2019. The holders of Operating Partnership Units were entitled to an equal distribution per Operating Partnership Unit held as of December 20, 2019. The dividend has been reflected as a reduction of shareholders’ equity and the distribution has been reflected as a reduction of the limited partners’ non-controlling interest. These amounts were paid on January 3, 2020. Note 8 – Income Taxes (not presented in thousands) Uncertain Tax Positions The Company is subject to the provisions of Financial Accounting Standards Board Accounting Standard Codification 740-10 (“FASB ASC 740-10”) and has analyzed its various federal and state filing positions. The Company believes that its income tax filing positions and deductions are documented and supported. Additionally, the Company believes that its accruals for tax liabilities are adequate. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to FASB ASC 740-10. The Company’s Federal income tax returns are open for examination by taxing authorities for all tax years after December 31, 2015. The Company has elected to record related interest and penalties, if any, as income tax expense on the Consolidated Statements of Operations and Comprehensive Income. We have no material interest or penalties relating to income taxes recognized for years ended 2019, 2018, and 2017. Deferred Taxes As of December 31, 2018, the Company had accrued a deferred income tax liability in the amount of $475,000. This deferred income tax balance represents the federal and state tax effect of deferring income tax in 2007 on the sale of an asset under section 1031 of the Code. This transaction was accrued within the Company’s TRS entities. During 2019, the Company restructured its ownership of the TRS to which the deferred tax liability was related, resulting in a reversal of the previously accrued amount. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code, including but not limited to reducing the U.S. federal corporate rate from 35 percent to 21 percent. In connection with our initial analysis of the impact of the Tax Act, we recorded a discrete net tax benefit related to one of the Company’s TRS entities reducing the deferred income tax liability by $230,000 in the period ending December 31, 2017. This is included in other expense and income on the Consolidated Statements of Operations and Comprehensive Income. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-27 Income Tax Expense During the years ended December 31, 2019, 2018 and 2017, the Company recognized net federal and state income tax expense of approximately $538,000, $516,000 and $227,000, respectively. Note 9 – Derivative Instruments and Hedging Activity Background The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risk, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and, to a limited extent, the use of derivative instruments. For additional information regarding the leveling of our derivatives. Refer to “Note 10 – Fair Value Measurements.” The Company’s objective in using interest rate derivatives is to manage its exposure to interest rate movements and add stability to interest expense. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed rate payments over the life of the agreement without exchange of the underlying notional amount. 2019 Activity In March 2019, the Company entered into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $100.0 million of long-term debt. The Company hedged its exposure to the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period of one year. In May, the Company terminated the swap agreements at the time of pricing the future debt issuance, receiving $0.8 million upon termination. See discussion of the 2031 Notes in “Note 5 – Debt” above. In June 2019, the Company entered into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $100.0 million of long-term debt. The Company is hedging its exposure to the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period ending March 2021. As of December 31, 2019, these interest rate swaps were valued as a liability of $1.4 million. In October 2019, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $65.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreements, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.4275%. This swap effectively converts $65.0 million of variable-rate borrowings to fixed-rate borrowings from July 12, 2021 to January 12, 2024. As of December 31, 2019, this interest rate swap was valued as an asset of approximately $0.2 million. Also in October 2019, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $35.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.4265%. This swap effectively converts $35.0 million of variable-rate borrowings to fixed-rate borrowings from September 29, 2020 to January 12, 2024. As of December 31, 2019, this interest rate swap was valued as an asset of approximately $0.1 million. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-28 Prior Derivative Transactions In September 2013, the Company entered into an interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $35.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 2.20%. This swap effectively converts $35.0 million of variable-rate borrowings to fixed-rate borrowings from October 3, 2013 to September 29, 2020. As of December 31, 2019, this interest rate swap was valued as a liability of approximately $0.1 million. In July 2014, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $65.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 2.09%. This swap effectively converts $65.0 million of variable-rate borrowings to fixed-rate borrowings from July 21, 2014 to July 21, 2021. As of December 31, 2019, this interest rate swap was valued as a liability of approximately $0.5 million. In September 2016, the Company entered into an interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $40.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.40%. This swap effectively converts $40.0 million of variable-rate borrowings to fixed-rate borrowings from August 1, 2016 to July 1, 2023. As of December 31, 2019, this interest rate swap was valued as an asset of approximately $0.2 million. In December 2018, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $100.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreements, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 2.66%. This swap effectively converts $100.0 million of variable-rate borrowings to fixed-rate borrowings from December 27, 2018 to January 15, 2026. As of December 31, 2019, this interest rate swap was valued as a liability of approximately $5.9 million. Recognition Companies are required to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet. We recognize our derivatives within Other Assets, net and Accounts Payable, Accrued Expenses, and Other Liabilities on our Balance Sheet. On January 1, 2019, the Company adopted ASU No. 2017-12, "Targeted Improvements to Accounting for Hedging Activities", which provided changes in hedge accounting recognition and presentation requirements. The Company now recognizes all changes in fair value for hedging instruments designated and qualifying for cash flow hedge accounting treatment as a component of Other Comprehensive Income (OCI), as opposed to previously recognizing the ineffective portion, if any, directly in earnings. Upon adoption, there were no adjustments to recognize relating to previously recorded derivatives transactions or amounts. Net realized gains or losses resulting from derivatives that were settled in conjunction with planned fixed rate financings or refinancings continue to be included in accumulated OCI during the term of the hedged debt transaction. Amounts reported in accumulated OCI related to currently outstanding interest rate derivatives are recognized as an adjustment to income as interest payments are made on the Company’s variable-rate debt. Realized gains or losses on settled derivative instruments included in accumulated OCI are recognized as an adjustment over the term of the hedged debt transaction. During the next twelve months, the Company estimates that an additional $1.5 million will be reclassified as an increase to interest expense. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-29 The Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (in thousands, except number of instruments): Number of Instruments Notional December 31, December 31, December 31, December 31, Interest Rate Derivatives 2019 2018 2019 2018 Interest Rate Swap 15 10 $ 240,000 $ 258,543 The table below presents the estimated fair value of the Company’s derivative financial instruments as well as their classification in the consolidated balance sheets (in thousands). Asset Derivatives December 31, 2019 December 31, 2018 Fair Value Fair Value Derivatives designated as cash flow hedges: Interest Rate Swaps $ 572 $ 2,539 Liability Derivatives December 31, 2019 December 31, 2018 Fair Value Fair Value Derivatives designated as cash flow hedges: Interest Rate Swaps $ 7,943 $ 1,135 The table below presents the effect of the Company’s derivative financial instruments in the consolidated statements of operations and other comprehensive loss for the years ended December 31, 2019 and 2018 (in thousands). Year Ended December 31, 2019 2018 2019 2018 Interest rate swaps $ (8,657) $ 193 Interest Expense $ (118) $ (139) The Company does not use derivative instruments for trading or other speculative purposes and did not have any other derivative instruments or hedging activities as of December 31, 2019. Credit-risk-related Contingent Features The Company has agreements with its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. As of December 31, 2019, the fair value of derivatives in a net liability position related to these agreements, which includes accrued interest but excludes any adjustment for nonperformance risk, was $7.6 million. Although the derivative contracts are subject to master netting arrangements, which serve as credit mitigants to both us and our counterparties under certain situations, we do not net our derivative fair values or any existing rights or obligations to cash collateral on the Consolidated Balance Sheets. The table below presents a gross presentation of the effects of offsetting and a net presentation of the Company’s derivatives as of December 31, 2019 and December 31, 2018. The gross amounts of derivative assets or liabilities can be 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-30 reconciled to the Tabular Disclosure of Fair Values of Derivative Instruments above, which also provides the location that derivative assets and liabilities are presented on the Consolidated Balance Sheets (in thousands): Offsetting of Derivative Assets As of December 31, 2019 Gross Amounts Net Amounts of Offset in the Assets presented Gross Amounts Not Offset in the Gross Amounts Statement of in the Statement Statement of Financial Position of Recognized Financial of Financial Financial Cash Collateral Assets Position Position Instruments Received Net Amount Derivatives $ 572 $ — $ 572 $ (572) $ — $ — Offsetting of Derivative Liabilities As of December 31, 2019 Net Amounts of Gross Amounts Liabilities Offset in the presented in the Gross Amounts Not Offset in the Gross Amounts Statement of Statement of Statement of Financial Position of Recognized Financial Financial Financial Cash Collateral Liabilities Position Position Instruments Posted Net AmountDerivatives $ 7,943 $ — $ 7,943 $ (572) $ — $ 7,372 Offsetting of Derivative Assets As of December 31, 2018 Gross Amounts Net Amounts of Offset in the Assets presented Gross Amounts Not Offset in the Gross Amounts Statement of in the Statement Statement of Financial Position of Recognized Financial of Financial Financial Cash Collateral Assets Position Position Instruments Received Net Amount Derivatives $ 2,539 $ — $ 2,539 $ (575) $ — $ 1,964 Offsetting of Derivative Liabilities As of December 31, 2018 Net Amounts of Gross Amounts Liabilities Offset in the presented in the Gross Amounts Not Offset in the Gross Amounts Statement of Statement of Statement of Financial Position of Recognized Financial Financial Financial Cash Collateral Liabilities Position Position Instruments Posted Net AmountDerivatives $ 1,135 $ — $ 1,135 $ (575) $ — $ 560 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-31 Note 10 – Fair Value Measurements Assets and Liabilities Measured at Fair Value The Company accounts for fair values in accordance with FASB Accounting Standards Codification Topic 820 Fair Value Measurements and Disclosure (ASC 820). ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances. ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls, is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Derivative Financial Instruments Currently, the Company uses interest rate swap agreements to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. To comply with the provisions of ASC 820, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of December 31, 2019, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-32 The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and December 31, 2018 (in thousands): Total Fair Value Level 2 December 31, 2019 Derivative assets - interest rate swaps $ 572 $ 572 Derivative liabilities - interest rate swaps $ 7,943 $ 7,943 December 31, 2018 Derivative assets - interest rate swaps $ 2,539 $ 2,539 Derivative liabilities - interest rate swaps $ 1,135 $ 1,135 Other Financial Instruments The carrying values of cash and cash equivalents, receivables and accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short maturity of these financial instruments. The Company estimated the fair value of its debt based on our incremental borrowing rates for similar types of borrowing arrangements with the same remaining maturity and on the discounted estimated future cash payments to be made for other debt. The discount rate used to calculate the fair value of debt approximates current lending rates for loans and assumes the debt is outstanding through maturity. Since such amounts are estimates that are based on limited available market information for similar transactions, which is a Level 2 non-recurring measurement, there can be no assurance that the disclosed value of any financial instrument could be realized by immediate settlement of the instrument. Fixed rate debt (including variable rate debt swapped to fixed, excluding the value of the derivatives) with carrying values of $783.3 million and $701.4 million as of December 31, 2019 and December 31, 2018, respectively, had fair values of approximately $817.7 million and $702.0 million, respectively. Variable rate debt’s fair value is estimated to be equal to the carrying values of $89.0 million and $19.0 million as of December 31, 2019 and December 31, 2018, respectively. Note 11 – Equity Incentive Plan In 2014, the Company’s shareholders approved the 2014 Omnibus Incentive Plan (the “2014 Plan”), which replaced the 2005 Equity Incentive Plan. The 2014 Plan authorizes the issuance of a maximum of 700,000 shares of common stock. Restricted Stock Restricted common stock has been granted to certain employees and directors under the 2014 Plan. The holder of a restricted share award is generally entitled at all times on and after the date of issuance of the restricted shares to exercise the rights of a shareholder of the Company, including the right to vote the shares and the right to receive dividends on the shares. The Company granted 54,488, 57,247, and 88,466 shares of restricted stock in 2019, 2018 and 2017, respectively, to employees and directors. The restricted shares vest over a five-year period based on continued service to the Company. The Company estimates the fair value of restricted stock grants at the date of grant and amortizes those amounts into expense on a straight line basis or amount vested, if greater, over the appropriate vesting period. During 2019, 2018 and 2017 the Company recognized $3.0 million, $2.7 million and $2.4 million, respectively, of expense relating to restricted stock grants. As of December 31, 2019, there was $7.3 million of unrecognized compensation costs related to the outstanding restricted stock, which is expected to be recognized over a weighted average period of 3.2 years. The Company used 0% for the forfeiture rate for determining the fair value of restricted stock. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-33 Restricted share activity is summarized as follows (in thousands, except per share data): Shares Weighted Average Outstanding Grant Date (in thousands) Fair Value Unvested restricted stock at December 31, 2016 228 $ 33.02 Restricted stock granted 88 $ 48.59 Restricted stock vested (78) $ 30.95 Restricted stock forfeited (11) $ 39.68 Unvested restricted stock at December 31, 2017 227 $ 39.47 Restricted stock granted 57 $ 48.85 Restricted stock vested (71) $ 36.06 Restricted stock forfeited (1) $ 48.28 Unvested restricted stock at December 31, 2018 212 $ 42.74 Restricted stock granted 54 $ 65.85 Restricted stock vested (70) $ 39.55 Restricted stock forfeited (2) $ 54.08 Unvested restricted stock at December 31, 2019 194 $ 50.71 The intrinsic value of restricted shares redeemed was $1.4 million, $1.1 million and $1.1 million for the years ended December 31, 2019, 2018 and 2017, respectively. Performance Units and Shares On February 23, 2019 certain executive officers received performance units. Performance units are subject to a three-year performance period, at the conclusion of which, shares awarded are to be determined by the Company’s total shareholder return compared to the constituents of the MSCI US REIT Index and a defined peer group. 50% of the award is based upon the total shareholder return percentile rank versus the MSCI US REIT index for the three-year performance period; and 50% of the award is based upon TSR percentile rank versus a specified net lease peer group for the three-year performance period. Vesting of the performance units following their issuance will occur ratably over a three-year period, with the initial vesting occurring immediately following the conclusion of the performance period such that all shares vest within five years of the original award date of February 23, 2019. The grant date fair value of these awards is determined using a Monte Carlo simulation pricing model and compensation expense is amortized on an attribution method over a five-year period. The Monte Carlo simulation pricing model for the 2019 grants utilized the following assumptions: (i) expected term of 2.9 years (equal to the remaining performance measurement period at the grant date), (ii) volatility of 19.7% (based on historical volatility), (iii) dividend yield of 3.4% (based on most recently paid dividend at grant date), and (iv) risk-free rate of 2.5% (interpolated based on 2-and 3- year rates). Compensation expense related to performance units is determined at the grant date and is not adjusted throughout the measurement or vesting periods. Equity compensation awarded February 23, 2018 for certain executive officers included performance shares. The terms of the performance shares are substantially identical to the performance units described above. The grant date fair value of these awards is determined using a Monte Carlo simulation pricing model using the following assumptions: (i) expected term of 2.9 years (equal to the remaining performance measurement period at the grant date), (ii) volatility of 19.1% (based on historical volatility), (iii) dividend yield of 4.36% (based on most recently paid dividend at grant date), and (iv) risk-free rate of 2.37% (interpolated based on 2-and 3- year rates). Compensation expense is amortized on an attribution method 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-34 over a five-year period. Compensation expense related to performance shares is determined at the grant date and is not adjusted throughout the measurement or vesting periods. During 2019 and 2018, the Company recognized $0.9 million and $0.3 million, respectively, of expense related to performance units and shares. There was no expense in 2017. As of December 31, 2019, there was $2.5 million of total unrecognized compensation costs related to the outstanding performance units and shares, which is expected to be recognized over a weighted average period of 3.4 years. The Company used 0% for the forfeiture rate for determining the fair value of performance shares. Performance share and unit activity is summarized as follows: Target Number Weighted Average of Awards Grant Date Performance shares at December 31, 2017 — $ — Performance shares granted 31 $ 47.73 Performance shares at December 31, 2018 31 $ 47.73 Performance units granted 30 $ 65.66 Performance units and shares at December 31, 2019 61 $ 56.57 Note 12 – Profit-Sharing Plan The Company has a discretionary profit-sharing plan whereby it contributes to the plan such amounts as the Board of Directors of the Company determines. The participants in the plan cannot make any contributions to the plan. Contributions to the plan are allocated to the employees based on their percentage of compensation to the total compensation of all employees for the plan year. Participants in the plan become fully vested after six years of service. No contributions were made to the plan in 2019, 2018, or 2017. 8 Agree Realty Corporation Notes to Consolidated Financial Statements December 31, 2019 F-35 Note 13 – Quarterly Financial Data (Unaudited) The following summary represents the unaudited results of operations of the Company, expressed in thousands except per share amounts, for the periods from January 1, 2018 through December 31, 2019: 2019 Three Months Ended March 31, June 30, September 30, December 31, Revenue $ 42,348 $ 44,920 $ 48,075 $ 52,135 Net income 18,516 18,722 20,781 22,744 Net income attributable to Agree Realty Corporation 18,347 18,564 20,611 22,559 Net earnings per share (1) Basic $ 0.49 $ 0.45 $ 0.49 $ 0.53 Diluted 0.48 0.45 0.48 0.52 2018 Three Months Ended March 31, June 30, September 30, December 31, Revenue (2) $ 32,452 $ 33,168 $ 34,054 $ 37,448 Net income 16,636 13,068 15,756 13,338 Net income attributable to Agree Realty Corporation 16,451 12,923 15,586 13,212 Net earnings per share (1) Basic $ 0.53 $ 0.42 $ 0.49 $ 0.37 Diluted 0.53 0.41 0.48 0.36 (1) Calculated independently for each period and consequently, the sum of the quarters may differ from the annual amount. (2) Refer to “Note 2 – Summary of Significant Accounting Policies” regarding certain reclassifications impacting reported 2018 revenues. Note 14 – Commitments and Contingencies In the ordinary course of business, we are party to various legal actions which we believe are routine in nature and incidental to the operation of our business. We believe that the outcome of the proceedings will not have a material adverse effect upon our consolidated financial position or results of operations. Note 15 – Subsequent Events In connection with the preparation of its financial statements, the Company has evaluated events that occurred subsequent to December 31, 2019 through the date on which these financial statements were issued to determine whether any of these events required disclosure in the financial statements. There were no reportable subsequent events or transactions. Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-36 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Real Estate Held for Investment Borman Center, MI — 550,000 562,404 1,087,596 550,000 1,650,000 2,200,000 1,650,000 1977 40 Capital Plaza, KY — 7,379 2,240,607 3,061,594 7,379 5,302,201 5,309,580 1,112,613 1978 40 Grayling Plaza, MI — 200,000 1,778,657 (37,082) 200,000 1,741,575 1,941,575 1,534,124 1984 40 Omaha Store, NE — 150,000 — — 150,000 — 150,000 — 1995 — Wichita Store, KS — 1,039,195 1,690,644 (48,910) 1,139,677 1,541,252 2,680,929 941,791 1995 40 Monroeville, PA — 6,332,158 2,249,724 (2,278,873) 3,153,890 3,149,119 6,303,009 1,282,076 1996 40 Boynton Beach, FL — 1,534,942 2,043,122 3,717,733 1,534,942 5,760,855 7,295,797 1,746,509 1996 40 Chesterfield Township, MI — 1,350,590 1,757,830 (46,164) 1,350,590 1,711,666 3,062,256 920,602 1998 40 Pontiac, MI — 1,144,190 1,808,955 (89,989) 1,144,190 1,718,966 2,863,156 902,808 1998 40 Mt Pleasant Shopping Ctr, MI — 907,600 8,081,968 3,837,722 1,872,803 10,954,487 12,827,290 4,402,125 1998 40 Rochester, MI — 2,438,740 2,188,050 1,950 2,438,740 2,190,000 4,628,740 1,122,353 1999 40 Ypsilanti, MI — 2,050,000 2,222,097 (3,494,709) 777,388 — 777,388 — 1999 — Petoskey, MI — — 2,332,473 2,006,589 2,005,410 2,333,652 4,339,062 1,147,289 2000 40 Flint, MI — 2,026,625 1,879,700 (1,200) 2,026,625 1,878,500 3,905,125 892,296 2000 40 Flint, MI — 1,477,680 2,241,293 — 1,477,680 2,241,293 3,718,973 1,057,606 2001 40 New Baltimore, MI — 1,250,000 2,285,781 (16,503) 1,250,000 2,269,278 3,519,278 1,042,625 2001 40 Flint, MI 1,944,528 1,729,851 1,798,091 660 1,729,851 1,798,751 3,528,602 796,284 2002 40 Indianapolis, IN — 180,000 1,117,617 108,551 180,000 1,226,168 1,406,168 516,868 2002 40 Big Rapids, MI — 1,201,675 2,014,107 (2,000) 1,201,675 2,012,107 3,213,782 842,613 2003 40 Flint, MI — — 471,272 (201,809) — 269,463 269,463 166,120 2003 40 Canton Twp, MI — 1,550,000 2,132,096 23,021 1,550,000 2,155,117 3,705,117 866,484 2003 40 Flint, MI 2,253,670 1,537,400 1,961,674 — 1,537,400 1,961,674 3,499,074 776,577 2004 40 Albion, NY — 1,900,000 3,037,864 — 1,900,000 3,037,864 4,937,864 1,148,697 2004 40 Flint, MI 1,722,966 1,029,000 2,165,463 (6,666) 1,029,000 2,158,797 3,187,797 816,251 2004 40 Lansing, MI — 785,000 348,501 3,045 785,000 351,546 1,136,546 136,187 2004 40 Boynton Beach, FL — 1,569,000 2,363,524 3,943,404 1,569,000 6,306,928 7,875,928 1,460,733 2004 40 Midland, MI — 2,350,000 2,313,413 (79,235) 2,268,695 2,315,483 4,584,178 836,877 2005 40 Roseville, MI — 1,771,000 2,327,052 395 1,771,000 2,327,447 4,098,447 821,780 2005 40 Mt Pleasant, MI — 1,075,000 1,432,390 4,787 1,075,000 1,437,177 2,512,177 505,991 2005 40 N Cape May, NJ — 1,075,000 1,430,092 495 1,075,000 1,430,587 2,505,587 503,681 2005 40 Summit Twp, MI — 998,460 1,336,357 12,686 998,460 1,349,043 2,347,503 447,419 2006 40 Livonia, MI — 1,200,000 3,441,694 817,589 1,200,000 4,259,283 5,459,283 1,310,476 2007 40 Barnesville, GA — 932,500 2,091,514 5,490 932,500 2,097,004 3,029,504 639,992 2007 40 East Lansing, MI — 240,000 54,531 (52,752) 240,000 1,779 241,779 12,439 2007 40 Macomb Township, MI — 424,222 — — 424,222 — 424,222 — 2008 — Brighton, MI — 1,365,000 2,802,036 5,615 1,365,000 2,807,651 4,172,651 760,328 2009 40 Southfield, MI 1,483,000 1,200,000 125,616 2,063 1,200,000 127,679 1,327,679 32,577 2009 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-37 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Atchison, KS — 943,750 3,021,672 — 823,170 3,142,252 3,965,422 744,776 2010 40 Johnstown, OH — 485,000 2,799,502 — 485,000 2,799,502 3,284,502 664,883 2010 40 Lake in the Hills, IL — 2,135,000 3,328,560 — 1,690,000 3,773,560 5,463,560 890,660 2010 40 Concord, NC — 7,676,305 — — 7,676,305 — 7,676,305 — 2010 — Antioch, IL — 1,087,884 — — 1,087,884 — 1,087,884 — 2010 — Mansfield, CT — 700,000 1,902,191 508 700,000 1,902,699 2,602,699 434,052 2010 40 Spring Grove, IL 2,313,000 1,191,199 — 968 1,192,167 — 1,192,167 — 2010 — Tallahassee, FL 1,628,000 — 1,482,462 — — 1,482,462 1,482,462 335,095 2010 40 Wilmington, NC 2,186,000 1,500,000 1,348,591 — 1,500,000 1,348,591 2,848,591 297,815 2011 40 Marietta, GA 900,000 575,000 696,297 6,359 575,000 702,656 1,277,656 149,237 2011 40 Baltimore, MD 2,534,000 2,610,430 — (3,447) 2,606,983 — 2,606,983 — 2011 — Dallas, TX 1,844,000 701,320 778,905 1,042,730 701,320 1,821,635 2,522,955 372,439 2011 40 Chandler, AZ — 332,868 793,898 360 332,868 794,258 1,127,126 163,853 2011 40 New Lenox, IL — 1,422,488 — — 1,422,488 — 1,422,488 — 2011 — Roseville, CA 4,752,000 2,800,000 3,695,455 (96,364) 2,695,636 3,703,455 6,399,091 771,489 2011 40 Fort Walton Beach, FL 1,768,000 542,200 1,958,790 88,778 542,200 2,047,568 2,589,768 406,728 2011 40 Leawood, KS 2,775,043 989,622 3,003,541 16,197 989,622 3,019,738 4,009,360 603,945 2011 40 Salt Lake City, UT — — 6,810,104 (44,416) — 6,765,688 6,765,688 1,388,609 2011 40 Burton, MI — 80,000 — — 80,000 — 80,000 — 2011 — Macomb Township, MI 1,793,000 1,605,134 — — 1,605,134 — 1,605,134 — 2012 — Madison, AL 1,552,000 675,000 1,317,927 — 675,000 1,317,927 1,992,927 263,585 2012 40 Walker, MI 887,000 219,200 1,024,738 — 219,200 1,024,738 1,243,938 198,543 2012 40 Portland, OR — 7,969,403 — 161 7,969,564 — 7,969,564 — 2012 — Cochran, GA — 365,714 2,053,726 — 365,714 2,053,726 2,419,440 385,075 2012 40 Baton Rouge, LA — — 1,188,322 — — 1,188,322 1,188,322 225,286 2012 40 Southfield, MI — 1,178,215 — — 1,178,215 — 1,178,215 — 2012 — Clifton Heights, PA — 2,543,941 3,038,561 (3,105) 2,543,941 3,035,456 5,579,397 565,989 2012 40 Newark, DE — 2,117,547 4,777,516 (4,881) 2,117,547 4,772,635 6,890,182 889,961 2012 40 Vineland, NJ — 4,102,710 1,501,854 7,986 4,102,710 1,509,840 5,612,550 281,526 2012 40 Fort Mill, SC — 750,000 1,187,380 — 750,000 1,187,380 1,937,380 220,159 2012 40 Spartanburg, SC — 250,000 765,714 4,387 250,000 770,101 1,020,101 142,277 2012 40 Springfield, IL — 302,520 653,654 10,255 302,520 663,909 966,429 122,467 2012 40 Jacksonville, NC — 676,930 1,482,748 (150,000) 676,930 1,332,748 2,009,678 271,836 2012 40 Morrow, GA — 525,000 1,383,489 (99,849) 525,000 1,283,640 1,808,640 233,285 2012 40 Charlotte, NC — 1,822,900 3,531,275 (570,844) 1,822,900 2,960,431 4,783,331 532,624 2012 40 Lyons, GA — 121,627 2,155,635 (103,392) 121,627 2,052,243 2,173,870 363,824 2012 40 Fuquay-Varina, NC — 2,042,225 1,763,768 (255,778) 2,042,225 1,507,990 3,550,215 267,573 2012 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-38 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Minneapolis, MN — 1,088,015 345,958 (54,430) 826,635 552,908 1,379,543 97,482 2012 40 Lake Zurich, IL — 780,974 7,909,277 46,509 780,974 7,955,786 8,736,760 1,397,598 2012 40 Lebanon, VA — 300,000 612,582 20,380 300,000 632,962 932,962 116,845 2012 40 Harlingen, TX — 430,000 1,614,378 12,854 430,000 1,627,232 2,057,232 284,764 2012 40 Pensacola, FL — 650,000 1,165,415 23,957 650,000 1,189,372 1,839,372 206,265 2012 40 Pensacola, FL — 400,000 1,507,583 12,854 400,000 1,520,437 1,920,437 266,078 2012 40 Venice, FL — 1,300,196 — 4,892 1,305,088 — 1,305,088 — 2012 — St. Joseph, MO — 377,620 7,639,521 — 377,620 7,639,521 8,017,141 1,321,000 2013 40 Statham, GA — 191,919 3,851,073 — 191,919 3,851,073 4,042,992 665,913 2013 40 North Las Vegas, NV — 214,552 717,435 28,999 214,552 746,434 960,986 123,792 2013 40 Memphis, TN — 322,520 748,890 — 322,520 748,890 1,071,410 127,939 2013 40 Rancho Cordova, CA — 1,339,612 — — 1,339,612 — 1,339,612 — 2013 — Kissimmee, FL — 1,453,500 971,683 — 1,453,500 971,683 2,425,183 163,972 2013 40 Pinellas Park, FL — 2,625,000 874,542 4,163 2,625,000 878,705 3,503,705 144,547 2013 40 Manchester, CT — 397,800 325,705 — 397,800 325,705 723,505 54,285 2013 40 Rapid City, SD — 1,017,800 2,348,032 1,379 1,017,800 2,349,411 3,367,211 388,915 2013 40 Chicago, IL — 272,222 649,063 2,451 272,222 651,514 923,736 107,133 2013 40 Brooklyn, OH — 3,643,700 15,079,714 14,207 3,643,700 15,093,921 18,737,621 2,451,401 2013 40 Madisonville, TX — 96,680 1,087,642 18,200 96,680 1,105,842 1,202,522 178,330 2013 40 Forest, MS — — 1,298,176 21,925 — 1,320,101 1,320,101 213,366 2013 40 Sun Valley, NV — 308,495 1,373,336 (51,008) 253,495 1,377,328 1,630,823 218,007 2013 40 Rochester, NY — 2,500,000 7,398,639 2,017 2,500,000 7,400,656 9,900,656 1,163,949 2013 40 Allentown, PA — 2,525,051 7,896,613 623,995 2,525,051 8,520,608 11,045,659 1,242,703 2013 40 Casselberry, FL — 1,804,000 793,101 (2,906) 1,804,000 790,195 2,594,195 127,190 2013 40 Berwyn, IL — 186,791 933,959 3,925 186,791 937,884 1,124,675 142,791 2013 40 Grand Forks, ND — 1,502,609 2,301,337 1,801,028 1,502,609 4,102,365 5,604,974 624,944 2013 40 Ann Arbor, MI — 3,000,000 4,595,757 277,040 3,000,000 4,872,797 7,872,797 740,447 2013 40 Joplin, MO — 1,208,225 1,160,843 — 1,208,225 1,160,843 2,369,068 178,962 2013 40 Red Bay, AL — 38,981 2,528,437 3,856 38,981 2,532,293 2,571,274 327,074 2014 40 Birmingham, AL — 230,106 231,313 (297) 230,106 231,016 461,122 29,359 2014 40 Birmingham, AL — 245,234 251,339 (324) 245,234 251,015 496,249 31,901 2014 40 Birmingham, AL — 98,271 179,824 — 98,271 179,824 278,095 22,853 2014 40 Birmingham, AL — 235,641 127,477 (313) 235,641 127,164 362,805 16,162 2014 40 Montgomery, AL — 325,389 217,850 — 325,389 217,850 543,239 27,686 2014 40 Littleton, CO 4,779,235 819,000 8,756,266 399 819,000 8,756,665 9,575,665 1,149,308 2014 40 St Petersburg, FL — 1,225,000 1,025,247 6,592 1,225,000 1,031,839 2,256,839 148,049 2014 40 St Augustine, FL — 200,000 1,523,230 — 200,000 1,523,230 1,723,230 199,924 2014 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-39 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) East Palatka, FL — 730,000 575,236 6,911 730,000 582,147 1,312,147 76,365 2014 40 Pensacola, FL — 136,365 398,773 — 136,365 398,773 535,138 50,677 2014 40 Jacksonville, FL — 299,312 348,862 12,497 299,312 361,359 660,671 45,141 2014 40 Fort Oglethorpe, GA — 1,842,240 2,844,126 20,442 1,842,240 2,864,568 4,706,808 422,870 2014 40 New Lenox, IL — 2,010,000 6,206,252 107,873 2,010,000 6,314,125 8,324,125 818,384 2014 40 Rockford, IL — 303,395 2,436,873 (15,000) 303,395 2,421,873 2,725,268 319,371 2014 40 Indianapolis, IN — 575,000 1,871,110 — 575,000 1,871,110 2,446,110 268,971 2014 40 Terre Haute, IN — 103,147 2,477,263 32,376 103,147 2,509,639 2,612,786 312,326 2014 40 Junction City, KS — 78,271 2,504,294 (30,565) 78,271 2,473,729 2,552,000 313,132 2014 40 Baton Rouge, LA — 226,919 347,691 — 226,919 347,691 574,610 44,185 2014 40 Lincoln Park, MI — 543,303 1,408,544 78,362 543,303 1,486,906 2,030,209 207,753 2014 40 Novi, MI — 1,803,857 1,488,505 22,490 1,803,857 1,510,995 3,314,852 188,840 2014 40 Bloomfield Hills, MI — 1,340,000 2,003,406 380,288 1,341,900 2,381,794 3,723,694 330,567 2014 40 Jackson, MS — 256,789 172,184 — 256,789 172,184 428,973 21,882 2014 40 Irvington, NJ — 315,000 1,313,025 — 315,000 1,313,025 1,628,025 188,746 2014 40 Fargo, ND — 629,484 707,799 505,065 629,484 1,212,864 1,842,348 156,596 2014 40 Jamestown, ND — 234,545 1,158,486 8,499 234,545 1,166,985 1,401,530 150,687 2014 40 Toledo, OH — 500,000 1,372,363 (12) 500,000 1,372,351 1,872,351 197,275 2014 40 Toledo, OH — 213,750 754,675 — 213,750 754,675 968,425 102,196 2014 40 Toledo, OH — 168,750 785,000 16,477 168,750 801,477 970,227 108,362 2014 40 Port Clinton, OH — 75,000 721,100 — 75,000 721,100 796,100 97,650 2014 40 Mansfield, OH — 306,000 725,600 — 306,000 725,600 1,031,600 98,258 2014 40 Orville, OH — 344,250 716,600 — 344,250 716,600 1,060,850 97,039 2014 40 Akron, OH — 696,000 845,000 — 696,000 845,000 1,541,000 114,427 2014 40 Hubbard, OH — 204,000 726,500 — 204,000 726,500 930,500 98,381 2014 40 Calcutta, OH — 208,050 758,750 1,462 208,050 760,212 968,262 102,868 2014 40 Columbus, OH — — 1,136,250 1,593,792 1,590,997 1,139,045 2,730,042 151,640 2014 40 Tulsa, OK — 459,148 640,550 (13,336) 459,148 627,214 1,086,362 91,598 2014 40 Ligonier, PA — 330,000 5,021,849 (9,500) 330,000 5,012,349 5,342,349 679,285 2014 40 Limerick, PA — 369,000 — — 369,000 — 369,000 — 2014 — Harrisburg, PA — 124,757 1,446,773 11,175 124,757 1,457,948 1,582,705 182,161 2014 40 Anderson, SC — 781,200 4,441,535 254,244 775,732 4,701,247 5,476,979 675,734 2014 40 Easley, SC — 332,275 268,612 — 332,275 268,612 600,887 34,137 2014 40 Spartanburg, SC — 141,307 446,706 — 141,307 446,706 588,013 56,769 2014 40 Spartanburg, SC — 94,770 261,640 — 94,770 261,640 356,410 33,250 2014 40 Columbia, SC — 303,932 1,221,964 (13,830) 303,932 1,208,134 1,512,066 154,132 2014 40 Alcoa, TN — 329,074 270,719 — 329,074 270,719 599,793 34,404 2014 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-40 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Knoxville, TN — 214,077 286,037 — 214,077 286,037 500,114 36,351 2014 40 Red Bank, TN — 229,100 302,146 — 229,100 302,146 531,246 38,397 2014 40 New Tazewell, TN — 91,006 328,561 5,074 91,006 333,635 424,641 41,697 2014 40 Maryville, TN — 94,682 1,529,621 27,243 94,682 1,556,864 1,651,546 194,242 2014 40 Morristown, TN — 46,404 801,506 4,990 46,404 806,496 852,900 100,803 2014 40 Clinton, TN — 69,625 1,177,927 11,564 69,625 1,189,491 1,259,116 148,675 2014 40 Knoxville, TN — 160,057 2,265,025 226,291 160,057 2,491,316 2,651,373 284,721 2014 40 Sweetwater, TN — 79,100 1,009,290 6,740 79,100 1,016,030 1,095,130 126,992 2014 40 McKinney, TX — 2,671,020 6,785,815 100,331 2,671,020 6,886,146 9,557,166 943,066 2014 40 Forest, VA — 282,600 956,027 — 282,600 956,027 1,238,627 131,452 2014 40 Colonial Heights, VA — 547,692 1,059,557 (5,963) 547,692 1,053,594 1,601,286 133,897 2014 40 Glen Allen, VA — 590,101 1,129,495 (6,867) 590,101 1,122,628 1,712,729 142,671 2014 40 Burlington, WA — 610,000 3,647,279 (4,602) 610,000 3,642,677 4,252,677 464,312 2014 40 Wausau, WI — 909,092 1,405,899 44,222 909,092 1,450,121 2,359,213 196,750 2014 40 Foley AL — 305,332 506,203 — 305,332 506,203 811,535 64,203 2015 40 Sulligent, AL — 58,803 1,085,906 (442,000) 58,803 643,906 702,709 125,623 2015 40 Eutaw, AL — 103,746 1,212,006 (392,065) 103,746 819,941 923,687 141,791 2015 40 Tallassee, AL — 154,437 850,448 11,125 154,437 861,573 1,016,010 100,764 2015 40 Orange Park, AL — 649,652 1,775,000 — 649,652 1,775,000 2,424,652 192,292 2015 40 Aurora, CO — 976,865 1,999,651 1,743 976,865 2,001,394 2,978,259 204,305 2015 40 Pace, FL — 37,860 524,400 6,970 37,860 531,370 569,230 64,357 2015 40 Pensacola, FL — 309,607 775,084 (25) 309,607 775,059 1,084,666 95,079 2015 40 Jacksonville Beach, FL — 623,031 370,612 — 623,031 370,612 993,643 43,967 2015 40 Freeport, FL — 312,615 1,277,386 — 312,615 1,277,386 1,590,001 143,706 2015 40 Glenwood, GA — 29,489 1,027,370 (416,000) 29,489 611,370 640,859 114,155 2015 40 Albany, GA — 47,955 641,123 — 47,955 641,123 689,078 76,053 2015 40 Belvidere, IL — 184,136 644,492 — 184,136 644,492 828,628 76,420 2015 40 Peru, IL — 380,254 2,125,498 — 380,254 2,125,498 2,505,752 225,834 2015 40 Davenport, IA — 776,366 6,623,542 (150,000) 776,366 6,473,542 7,249,908 745,148 2015 40 Buffalo Center, IA — 159,353 700,460 — 159,353 700,460 859,813 77,343 2015 40 Sheffield, IA — 131,794 729,543 — 131,794 729,543 861,337 80,554 2015 40 Topeka, KS — 1,853,601 12,427,839 (174,083) 1,853,601 12,253,756 14,107,357 1,496,063 2015 40 Lenexa, KS — 303,175 2,186,864 — 303,175 2,186,864 2,490,039 218,686 2015 40 Tompkinsville, KY — 70,252 1,132,033 (356,000) 70,252 776,033 846,285 132,267 2015 40 Hazard, KY — 8,392,841 13,731,648 (16,857) 8,375,591 13,732,041 22,107,632 1,373,200 2015 40 Portland, MA — — 3,831,860 3,172 — 3,835,032 3,835,032 431,401 2015 40 Flint, MI — 120,078 2,561,015 20,490 120,078 2,581,505 2,701,583 258,150 2015 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-41 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Hutchinson, MN — 67,914 720,799 — 67,914 720,799 788,713 79,588 2015 40 Lowry City, MO — 103,202 614,065 — 103,202 614,065 717,267 69,082 2015 40 Branson, MO — 564,066 940,585 175 564,066 940,760 1,504,826 97,995 2015 40 Branson, MO — 721,135 717,081 940 721,135 718,021 1,439,156 74,786 2015 40 Enfield, NH — 93,628 1,295,320 52,741 93,628 1,348,061 1,441,689 161,756 2015 40 Marietta, OH — 319,157 1,225,026 — 319,157 1,225,026 1,544,183 145,414 2015 40 Lorain, OH — 293,831 1,044,956 — 293,831 1,044,956 1,338,787 121,912 2015 40 Franklin, OH — 264,153 1,191,777 — 264,153 1,191,777 1,455,930 136,558 2015 40 Elyria, OH — 82,023 910,404 — 82,023 910,404 992,427 102,420 2015 40 Elyria, OH — 126,641 695,072 — 126,641 695,072 821,713 78,196 2015 40 Bedford Heights, OH — 226,920 959,528 21,900 226,920 981,428 1,208,348 106,678 2015 40 Newburgh Heights, OH — 224,040 959,099 — 224,040 959,099 1,183,139 105,901 2015 40 Warrensville Heights, OH — 186,209 920,496 4,900 186,209 925,396 1,111,605 103,149 2015 40 Heath, OH — 325,381 757,994 135 325,381 758,129 1,083,510 78,971 2015 40 Lima, OH — 335,386 592,154 2,833 335,386 594,987 930,373 59,263 2015 40 Elk City, OK — 45,212 1,242,220 — 45,212 1,242,220 1,287,432 142,337 2015 40 Salem, OR — 1,450,000 2,951,167 1,346,640 1,450,000 4,297,807 5,747,807 429,782 2015 40 Westfield, PA — 47,346 1,117,723 — 47,346 1,117,723 1,165,069 137,286 2015 40 Altoona, PA — 555,903 9,489,791 1,017 555,903 9,490,808 10,046,711 1,008,383 2015 40 Grindstone, PA — 288,246 500,379 10,151 288,246 510,530 798,776 50,158 2015 40 Blythewood, SC — 475,393 878,586 — 475,393 878,586 1,353,979 105,175 2015 40 Columbia, SC — 249,900 809,935 — 249,900 809,935 1,059,835 96,080 2015 40 Liberty, SC — 27,929 1,222,856 90 27,929 1,222,946 1,250,875 145,137 2015 40 Blacksburg, SC — 27,547 1,468,101 — 27,547 1,468,101 1,495,648 171,279 2015 40 Easley, SC — 51,325 1,187,506 — 51,325 1,187,506 1,238,831 136,069 2015 40 Fountain Inn, SC — 107,633 1,076,633 — 107,633 1,076,633 1,184,266 123,364 2015 40 Walterboro, SC — 21,414 1,156,820 — 21,414 1,156,820 1,178,234 132,552 2015 40 Jackson, TN — 277,000 495,103 2,263 277,000 497,366 774,366 49,548 2015 40 Arlington, TX — 494,755 710,416 — 494,755 710,416 1,205,171 87,029 2015 40 Sweetwater, TX — 626,578 652,127 — 626,578 652,127 1,278,705 80,157 2015 40 Brenham, TX — 355,486 17,280,895 581 355,486 17,281,476 17,636,962 2,016,133 2015 40 Corpus Christi, TX — 316,916 2,140,056 — 316,916 2,140,056 2,456,972 231,839 2015 40 Harlingen, TX — 126,102 869,779 — 126,102 869,779 995,881 94,226 2015 40 Midland, TX — 194,174 5,005,720 2,000 194,174 5,007,720 5,201,894 532,045 2015 40 Rockwall, TX — 578,225 1,768,930 210 578,225 1,769,140 2,347,365 176,910 2015 40 Bluefield, VA — 88,431 1,161,840 — 88,431 1,161,840 1,250,271 137,924 2015 40 Princeton, WV — 111,653 1,029,090 — 111,653 1,029,090 1,140,743 122,142 2015 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-42 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Beckley, WV — 162,024 991,653 — 162,024 991,653 1,153,677 117,708 2015 40 Martinsburg, WV — 620,892 943,163 — 620,892 943,163 1,564,055 94,316 2015 40 Grand Chute, WI — 2,766,417 7,084,942 4,700 2,766,417 7,089,642 9,856,059 841,446 2015 40 New Richmond, WI — 71,969 648,850 — 71,969 648,850 720,819 72,996 2015 40 Ashland, WI — 142,287 684,545 (153,000) 142,287 531,545 673,832 69,848 2015 40 Baraboo, WI — 142,563 653,176 — 142,563 653,176 795,739 72,122 2015 40 Decatur, AL — 337,738 510,706 — 337,738 510,706 848,444 40,431 2016 40 Greenville, AL — 203,722 905,780 9,911 203,722 915,691 1,119,413 68,633 2016 40 Bullhead City, AZ — 177,500 1,364,406 — 177,500 1,364,406 1,541,906 127,900 2016 40 Page, AZ — 256,982 1,299,283 — 256,982 1,299,283 1,556,265 121,808 2016 40 Safford, AZ — 349,269 1,196,307 — 349,269 1,196,307 1,545,576 102,061 2016 40 Tucson, AZ — 3,208,580 4,410,679 — 3,208,580 4,410,679 7,619,259 385,934 2016 40 Bentonville, AR — 610,926 897,562 170 610,926 897,732 1,508,658 84,190 2016 40 Sunnyvale, CA — 7,351,903 4,638,432 194 7,351,903 4,638,626 11,990,529 415,384 2016 40 Whittier, CA — 4,237,918 7,343,869 — 4,237,918 7,343,869 11,581,787 657,888 2016 40 Aurora, CO — 847,349 834,301 — 847,349 834,301 1,681,650 62,573 2016 40 Aurora, CO — 1,132,676 5,716,367 70,600 1,132,676 5,786,967 6,919,643 432,541 2016 40 Evergreen, CO — 1,998,860 3,827,245 — 1,998,860 3,827,245 5,826,105 342,857 2016 40 Lakeland, FL — 61,000 1,227,037 — 61,000 1,227,037 1,288,037 97,140 2016 40 Mt Dora, FL — 1,678,671 3,691,615 — 1,678,671 3,691,615 5,370,286 330,707 2016 40 North Miami Beach, FL — 1,622,742 512,717 11,240 1,622,742 523,957 2,146,699 39,216 2016 40 Orlando, FL — 903,411 1,627,159 (24,843) 903,411 1,602,316 2,505,727 133,440 2016 40 Port Orange, FL — 1,493,863 3,114,697 — 1,493,863 3,114,697 4,608,560 279,025 2016 40 Royal Palm Beach, FL — 2,052,463 956,768 11,151 2,052,463 967,919 3,020,382 82,467 2016 40 Sarasota, FL — 1,769,175 3,587,992 139,891 1,769,175 3,727,883 5,497,058 326,087 2016 40 Venice, FL — 281,936 1,291,748 — 281,936 1,291,748 1,573,684 107,560 2016 40 Vero Beach, FL — 4,469,033 — — 4,469,033 — 4,469,033 — 2016 — Dalton, GA — 211,362 220,927 — 211,362 220,927 432,289 19,311 2016 40 Crystal Lake, IL — 2,446,521 7,012,819 12,944 2,446,521 7,025,763 9,472,284 541,007 2016 40 Glenwood, IL — 815,483 970,108 — 815,483 970,108 1,785,591 76,800 2016 40 Morris, IL — 1,206,749 2,062,495 — 1,206,749 2,062,495 3,269,244 184,765 2016 40 Wheaton, IL — 447,291 751,458 — 447,291 751,458 1,198,749 68,884 2016 40 Bicknell, IN — 215,037 2,381,471 — 215,037 2,381,471 2,596,508 198,359 2016 40 Fort Wayne, IN — 711,430 1,258,357 — 711,430 1,258,357 1,969,787 123,214 2016 40 Indianapolis, IN — 734,434 970,175 (2,700) 734,434 967,475 1,701,909 90,864 2016 40 Des Moines, IA — 322,797 1,374,153 — 322,797 1,374,153 1,696,950 123,101 2016 40 Frankfort, KY — — 514,277 — — 514,277 514,277 43,439 2016 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-43 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) DeRidder, LA — 814,891 2,156,542 480 814,891 2,157,022 2,971,913 188,756 2016 40 Lake Charles, LA — 1,308,418 4,235,719 5,761 1,308,418 4,241,480 5,549,898 326,828 2016 40 Shreveport, LA — 891,872 2,058,257 — 891,872 2,058,257 2,950,129 180,107 2016 40 Marshall, MI — 339,813 — — 339,813 — 339,813 — 2016 — Mt Pleasant, MI — — 511,282 (254) — 511,028 511,028 38,328 2016 40 Norton Shores, MI — 495,605 667,982 33,474 495,605 701,456 1,197,061 52,879 2016 40 Portage, MI — 262,181 1,102,990 — 262,181 1,102,990 1,365,171 94,214 2016 40 Stephenson, MI — 223,152 1,044,947 270 223,152 1,045,217 1,268,369 78,389 2016 40 Sterling, MI — 127,844 905,607 25,464 127,844 931,071 1,058,915 73,513 2016 40 Cambridge, MN — 536,812 1,334,601 — 536,812 1,334,601 1,871,413 119,558 2016 40 Eagle Bend, MN — 96,558 1,165,437 — 96,558 1,165,437 1,261,995 94,637 2016 40 Brandon, MS — 428,464 969,346 — 428,464 969,346 1,397,810 88,857 2016 40 Clinton, MS — 370,264 1,057,143 — 370,264 1,057,143 1,427,407 96,905 2016 40 Columbus, MS — 1,103,458 2,128,089 8,216 1,103,458 2,136,305 3,239,763 203,942 2016 40 Holly Springs, MS — 413,316 952,574 — 413,316 952,574 1,365,890 83,235 2016 40 Jackson, MS — 242,796 963,188 — 242,796 963,188 1,205,984 88,292 2016 40 Jackson, MS — 732,944 2,862,813 13,767 732,944 2,876,580 3,609,524 233,904 2016 40 Meridian, MS — 396,329 1,152,729 — 396,329 1,152,729 1,549,058 105,646 2016 40 Pearl, MS — 299,839 616,351 7,355 299,839 623,706 923,545 46,726 2016 40 Ridgeland, MS — 407,041 864,498 — 407,041 864,498 1,271,539 79,246 2016 40 Bowling Green, MO — 360,201 2,809,170 — 360,201 2,809,170 3,169,371 228,204 2016 40 St Robert, MO — 394,859 1,305,366 24,333 394,859 1,329,699 1,724,558 99,565 2016 40 Hamilton, MT — 558,047 1,083,570 442 558,047 1,084,012 1,642,059 83,557 2016 40 Beatty, NV — 198,928 1,265,084 8,051 198,928 1,273,135 1,472,063 103,330 2016 40 Alamogordo, NM — 654,965 2,716,166 4,436 654,965 2,720,602 3,375,567 221,019 2016 40 Alamogordo, NM — 524,763 941,615 7,522 524,763 949,137 1,473,900 73,120 2016 40 Alcalde, NM — 435,486 836,499 — 435,486 836,499 1,271,985 62,737 2016 40 Cimarron, NM — 345,693 1,236,437 7,613 345,693 1,244,050 1,589,743 95,853 2016 40 La Luz, NM — 487,401 835,455 — 487,401 835,455 1,322,856 64,400 2016 40 Fayetteville, NC — 1,267,529 2,527,462 16,292 1,267,529 2,543,754 3,811,283 195,986 2016 40 Gastonia, NC — 401,119 979,803 1,631 401,119 981,434 1,382,553 75,652 2016 40 Devils Lake, ND — 323,508 1,133,773 955 323,508 1,134,728 1,458,236 94,126 2016 40 Cambridge, OH — 168,717 1,113,232 — 168,717 1,113,232 1,281,949 106,685 2016 40 Columbus, OH — 1,109,044 1,291,313 — 1,109,044 1,291,313 2,400,357 112,916 2016 40 Grove City, OH — 334,032 176,274 — 334,032 176,274 510,306 15,407 2016 40 Lorain, OH — 808,162 1,390,481 10,000 808,162 1,400,481 2,208,643 131,691 2016 40 Reynoldsburg, OH — 843,336 1,197,966 — 843,336 1,197,966 2,041,302 104,764 2016 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-44 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Springfield, OH — 982,451 3,957,512 (3,500) 982,451 3,954,012 4,936,463 378,863 2016 40 Ardmore, OK — 571,993 1,590,151 — 571,993 1,590,151 2,162,144 142,452 2016 40 Dillon, SC — 85,896 1,697,160 — 85,896 1,697,160 1,783,056 166,180 2016 40 Jasper, TN — 190,582 966,125 6,888 190,582 973,013 1,163,595 72,950 2016 40 Austin, TX — 4,986,082 5,179,446 9,988 4,986,082 5,189,434 10,175,516 508,486 2016 40 Carthage, TX — 597,995 1,965,290 — 597,995 1,965,290 2,563,285 171,970 2016 40 Cedar Park, TX — 1,386,802 4,656,229 341,226 1,386,802 4,997,455 6,384,257 445,496 2016 40 Granbury, TX — 944,223 2,362,540 — 944,223 2,362,540 3,306,763 206,730 2016 40 Hemphill, TX — 250,503 1,955,918 11,886 250,503 1,967,804 2,218,307 159,502 2016 40 Lampasas, TX — 245,312 1,063,701 16,808 245,312 1,080,509 1,325,821 93,909 2016 40 Lubbock, TX — 1,501,556 2,341,031 — 1,501,556 2,341,031 3,842,587 204,850 2016 40 Odessa, TX — 921,043 2,434,384 5,615 921,043 2,439,999 3,361,042 213,310 2016 40 Port Arthur, TX — 1,889,732 8,121,417 26,655 1,889,732 8,148,072 10,037,804 677,341 2016 40 Farr West, UT — 679,206 1,040,737 3,062 679,206 1,043,799 1,723,005 90,128 2016 40 Provo, UT — 1,692,785 5,874,584 43,650 1,692,785 5,918,234 7,611,019 507,537 2016 40 St George, UT — 313,107 1,009,161 10,080 313,107 1,019,241 1,332,348 96,541 2016 40 Tappahannock, VA — 1,076,745 14,904 — 1,076,745 14,904 1,091,649 1,274 2016 40 Kirkland, WA — 816,072 — 12,398 816,072 12,398 828,470 207 2016 40 Manitowoc, WI — 879,237 4,467,960 — 879,237 4,467,960 5,347,197 372,171 2016 40 Oak Creek, WI — 487,277 3,082,180 89,675 487,277 3,171,855 3,659,132 302,368 2016 40 Oxford, AL — 148,407 641,820 — 148,407 641,820 790,227 42,759 2017 40 Oxford, AL — 255,786 7,273,871 35,875 255,786 7,309,746 7,565,532 485,523 2017 40 Oxford, AL — 24,875 600,936 — 24,875 600,936 625,811 40,062 2017 40 Jonesboro, AR — 3,656,554 3,219,456 11,058 3,656,554 3,230,514 6,887,068 179,330 2017 40 Lowell, AR — 949,519 1,435,056 10,229 949,519 1,445,285 2,394,804 72,200 2017 40 Southington, CT — 1,088,181 1,287,837 14,134 1,088,181 1,301,971 2,390,152 64,977 2017 40 Millsboro, DE — 3,501,109 — 1,969 3,503,078 — 3,503,078 — 2017 — Jacksonville, FL — 2,298,885 2,894,565 12,286 2,298,885 2,906,851 5,205,736 151,714 2017 40 Orange Park, FL — 214,858 2,304,095 — 214,858 2,304,095 2,518,953 143,977 2017 40 Port Richey, FL — 1,140,182 1,649,773 — 1,140,182 1,649,773 2,789,955 103,098 2017 40 Americus, GA — 1,318,463 — — 1,318,463 — 1,318,463 — 2017 — Brunswick, GA — 1,279,688 2,158,863 205 1,279,688 2,159,068 3,438,756 148,263 2017 40 Brunswick, GA — 126,335 1,626,530 — 126,335 1,626,530 1,752,865 84,715 2017 40 Buford, GA — 341,860 1,023,813 — 341,860 1,023,813 1,365,673 63,954 2017 40 Carrollton, GA — 597,465 886,644 — 597,465 886,644 1,484,109 53,484 2017 40 Decatur, GA — 558,859 1,429,106 — 558,859 1,429,106 1,987,965 74,433 2017 40 Metter, GA — 256,743 766,818 — 256,743 766,818 1,023,561 46,284 2017 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-45 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Villa Rica, GA — 410,936 1,311,444 — 410,936 1,311,444 1,722,380 84,669 2017 40 Chicago, IL — 2,899,155 9,822,986 — 2,899,155 9,822,986 12,722,141 675,245 2017 40 Chicago, IL — 2,081,151 5,197,315 — 2,081,151 5,197,315 7,278,466 356,950 2017 40 Galesburg, IL — 214,280 979,108 — 214,280 979,108 1,193,388 61,173 2017 40 Mundelein, IL — 1,238,743 — — 1,238,743 — 1,238,743 — 2017 — Mundelein, IL — 1,743,222 — — 1,743,222 — 1,743,222 — 2017 — Mundelein, IL — 1,803,068 — — 1,803,068 — 1,803,068 — 2017 — Springfield, IL — 574,805 1,554,786 2,030 574,805 1,556,816 2,131,621 77,797 2017 40 Woodstock, IL — 683,419 1,002,207 284 683,419 1,002,491 1,685,910 52,211 2017 40 Frankfort, IN — 50,458 2,008,275 — 50,458 2,008,275 2,058,733 133,885 2017 40 Kokomo, IN — 95,196 1,484,778 — 95,196 1,484,778 1,579,974 77,332 2017 40 Nashville, IN — 484,117 2,458,215 — 484,117 2,458,215 2,942,332 153,400 2017 40 Roeland Park, KS — 7,829,806 — (1,247,898) 6,581,908 — 6,581,908 — 2017 — Georgetown, KY — 1,996,456 6,315,768 928 1,996,456 6,316,696 8,313,152 401,760 2017 40 Hopkinsville, KY — 413,269 996,619 — 413,269 996,619 1,409,888 62,261 2017 40 Salyersville, KY — 289,663 906,455 — 289,663 906,455 1,196,118 58,507 2017 40 Amite, LA — 601,238 1,695,242 — 601,238 1,695,242 2,296,480 109,434 2017 40 Bossier City, LA — 797,899 2,925,864 146 797,899 2,926,010 3,723,909 152,393 2017 40 Kenner, LA — 323,188 859,298 — 323,188 859,298 1,182,486 48,245 2017 40 Mandeville, LA — 834,891 1,294,812 (795) 834,891 1,294,017 2,128,908 72,763 2017 40 New Orleans, LA — — 6,846,313 — — 6,846,313 6,846,313 427,850 2017 40 Baltimore, MD — 782,819 745,092 — 782,819 745,092 1,527,911 40,259 2017 40 Canton, MI — 3,655,296 — 13,912,109 7,345,761 10,221,644 17,567,405 475,714 2017 40 Grand Rapids, MI — 7,015,035 — 2,635,983 1,750,000 7,901,018 9,651,018 296,288 2017 40 Bloomington, MN — 1,491,302 — 619 1,491,921 — 1,491,921 — 2017 — Monticello, MN — 449,025 979,816 9,368 449,025 989,184 1,438,209 71,704 2017 40 Mountain Iron, MN — 177,918 1,139,849 — 177,918 1,139,849 1,317,767 71,222 2017 40 Gulfport, MS — 671,824 1,176,505 — 671,824 1,176,505 1,848,329 75,964 2017 40 Jackson, MS — 802,230 1,434,997 — 802,230 1,434,997 2,237,227 92,653 2017 40 McComb, MS — 67,026 685,426 — 67,026 685,426 752,452 42,792 2017 40 Kansas City, MO — 1,390,880 1,588,573 — 1,390,880 1,588,573 2,979,453 111,968 2017 40 Springfield, MO — 616,344 2,448,360 13,285 616,344 2,461,645 3,077,989 122,999 2017 40 St. Charles, MO — 736,242 2,122,426 176,600 736,242 2,299,026 3,035,268 153,531 2017 40 St. Peters, MO — 1,364,670 — — 1,364,670 — 1,364,670 — 2017 40 Boulder City, NV — 566,639 993,399 — 566,639 993,399 1,560,038 62,011 2017 40 Egg Harbor, NJ — 520,510 1,087,374 — 520,510 1,087,374 1,607,884 74,732 2017 40 Secaucus, NJ — 19,915,781 17,306,541 55,649 19,915,781 17,362,190 37,277,971 867,746 2017 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-46 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Sewell, NJ — 1,809,771 6,892,134 — 1,809,771 6,892,134 8,701,905 430,751 2017 40 Santa Fe, NM — 1,072,340 4,013,237 — 1,072,340 4,013,237 5,085,577 300,983 2017 40 Statesville, NC — 287,467 867,849 — 287,467 867,849 1,155,316 61,468 2017 40 Jacksonville, NC — 308,321 875,652 31,340 308,321 906,992 1,215,313 56,562 2017 40 Minot, ND — 928,796 1,619,726 — 928,796 1,619,726 2,548,522 104,543 2017 40 Grandview Heights, OH — 1,276,870 8,557,690 650 1,276,870 8,558,340 9,835,210 552,557 2017 40 Hillard, OH — 1,001,228 — — 1,001,228 — 1,001,228 — 2017 — Edmond, OK — 1,063,243 3,816,155 — 1,063,243 3,816,155 4,879,398 206,708 2017 40 Oklahoma City, OK — 868,648 1,820,174 7,835 868,648 1,828,009 2,696,657 106,480 2017 40 Erie, PA — 425,267 1,284,883 — 425,267 1,284,883 1,710,150 74,818 2017 40 Pittsburgh, PA — 692,454 2,509,358 — 692,454 2,509,358 3,201,812 156,658 2017 40 Gaffney, SC — 200,845 878,455 — 200,845 878,455 1,079,300 54,877 2017 40 Sumter, SC — 132,204 1,095,478 — 132,204 1,095,478 1,227,682 70,721 2017 40 Chattanooga, TN — 2,089,237 3,595,808 195 2,089,237 3,596,003 5,685,240 187,289 2017 40 Etowah, TN — 74,057 862,436 16,053 74,057 878,489 952,546 60,052 2017 40 Memphis, TN — 1,661,764 3,874,356 (250) 1,661,764 3,874,106 5,535,870 274,367 2017 40 Alamo, TX — 104,878 821,355 13,274 104,878 834,629 939,507 41,649 2017 40 Andrews, TX — 172,373 817,252 (292) 172,373 816,960 989,333 56,171 2017 40 Arlington, TX — 497,852 1,601,007 1,783 497,852 1,602,790 2,100,642 103,436 2017 40 Canyon Lake, TX — 382,522 1,026,179 (281) 382,522 1,025,898 1,408,420 51,297 2017 40 Corpus Christi, TX — 185,375 1,413,298 — 185,375 1,413,298 1,598,673 91,125 2017 40 Fort Stockton, TX — 185,474 1,186,339 — 185,474 1,186,339 1,371,813 76,586 2017 — Fort Worth, TX — 1,016,587 4,622,507 — 1,016,587 4,622,507 5,639,094 259,945 2017 40 Lufkin, TX — 1,497,171 4,948,906 3,078 1,497,171 4,951,984 6,449,155 340,486 2017 40 Heber, UT — 367,013 1,204,635 — 367,013 1,204,635 1,571,648 84,465 2017 40 Newport News, VA — 2,458,053 5,390,475 697,667 2,458,053 6,088,142 8,546,195 391,916 2017 40 Appleton, WI — 417,249 1,525,582 275 417,249 1,525,857 1,943,106 95,226 2017 40 Onalaska, WI — 821,084 2,651,772 — 821,084 2,651,772 3,472,856 171,201 2017 40 Athens, AL — 253,858 1,204,570 — 253,858 1,204,570 1,458,428 30,114 2018 40 Birmingham, AL — 1,635,912 2,739,834 — 1,635,912 2,739,834 4,375,746 119,841 2018 40 Boaz, AL — 379,197 898,689 — 379,197 898,689 1,277,886 39,234 2018 40 Roanoke, AL — 110,924 938,451 — 110,924 938,451 1,049,375 29,327 2018 40 Selma, AL — 206,831 1,790,939 (24,494) 206,831 1,766,445 1,973,276 44,774 2018 40 Maricopa, AZ — 2,166,955 9,505,724 5,700 2,166,955 9,511,424 11,678,379 257,539 2018 40 Parker, AZ — 322,510 1,159,624 — 322,510 1,159,624 1,482,134 45,902 2018 40 St. Michaels, AZ — 127,874 1,043,962 (1,440) 127,874 1,042,522 1,170,396 32,576 2018 40 Little Rock, AR — 390,921 856,987 — 390,921 856,987 1,247,908 21,425 2018 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-47 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Grand Junction, CO — 835,792 1,915,976 — 835,792 1,915,976 2,751,768 47,899 2018 40 Brookfield, CT — 343,489 835,106 — 343,489 835,106 1,178,595 20,878 2018 40 Manchester, CT — 316,847 558,659 — 316,847 558,659 875,506 13,966 2018 40 Waterbury, CT — 663,667 607,457 — 663,667 607,457 1,271,124 15,186 2018 40 Apopka, FL — 587,585 2,363,721 72,787 587,585 2,436,508 3,024,093 60,458 2018 40 Cape Coral, FL — 554,721 1,009,404 — 554,721 1,009,404 1,564,125 25,235 2018 40 Crystal River, FL — 369,723 1,015,324 — 369,723 1,015,324 1,385,047 48,640 2018 40 DeFuniak Springs, FL — 226,898 835,016 7,130 226,898 842,146 1,069,044 24,488 2018 40 Eustis, FL — 649,394 1,580,694 — 649,394 1,580,694 2,230,088 39,517 2018 40 Hollywood, FL — 895,783 947,204 — 895,783 947,204 1,842,987 23,680 2018 40 Homestead, FL — 650,821 948,265 — 650,821 948,265 1,599,086 23,707 2018 40 Jacksonville, FL — 827,799 1,554,516 — 827,799 1,554,516 2,382,315 38,863 2018 40 Marianna, FL — 257,760 886,801 — 257,760 886,801 1,144,561 22,170 2018 40 Melbourne, FL — 497,607 1,549,974 — 497,607 1,549,974 2,047,581 38,749 2018 40 Merritt Island, FL — 598,790 988,114 — 598,790 988,114 1,586,904 30,879 2018 40 St. Petersburg, FL — 958,547 902,502 — 958,547 902,502 1,861,049 31,907 2018 40 Tampa, FL — 488,002 1,209,902 — 488,002 1,209,902 1,697,904 42,851 2018 40 Tampa, FL — 703,273 1,283,951 — 703,273 1,283,951 1,987,224 32,099 2018 40 Titusville, FL — 137,421 1,017,394 12,059 137,421 1,029,453 1,166,874 25,661 2018 40 Winter Haven, FL — 832,247 1,433,449 — 832,247 1,433,449 2,265,696 35,836 2018 40 Albany, GA — 448,253 1,462,641 6,023 448,253 1,468,664 1,916,917 36,675 2018 40 Austell, GA — 1,162,782 7,462,351 — 1,162,782 7,462,351 8,625,133 310,931 2018 40 Conyers, GA — 330,549 941,133 — 330,549 941,133 1,271,682 23,528 2018 40 Covington, GA — 744,321 1,235,171 (43,000) 744,321 1,192,171 1,936,492 33,453 2018 40 Doraville, GA — 1,991,031 291,663 — 1,991,031 291,663 2,282,694 12,699 2018 40 Douglasville, GA — 519,420 1,492,529 — 519,420 1,492,529 2,011,949 37,313 2018 40 Lilburn, GA — 304,597 1,206,785 — 304,597 1,206,785 1,511,382 30,170 2018 40 Marietta, GA — 1,257,433 1,563,755 — 1,257,433 1,563,755 2,821,188 71,607 2018 40 Marietta, GA — 447,582 832,782 — 447,582 832,782 1,280,364 20,820 2018 40 Pooler, GA — 989,819 1,220,271 734 989,819 1,221,005 2,210,824 45,769 2018 40 Riverdale, GA — 474,072 879,835 — 474,072 879,835 1,353,907 21,996 2018 40 Savannah, GA — 944,815 2,997,426 13,721 944,815 3,011,147 3,955,962 75,193 2018 40 Statesboro, GA — 681,381 1,592,291 1,786 681,381 1,594,077 2,275,458 49,793 2018 40 Union City, GA — 97,528 1,036,165 — 97,528 1,036,165 1,133,693 25,904 2018 40 Nampa, ID — 496,676 5,163,257 37,265 496,676 5,200,522 5,697,198 183,473 2018 40 Aurora, IL — 174,456 862,599 — 174,456 862,599 1,037,055 21,565 2018 40 Aurora, IL — 623,568 1,437,665 (58,618) 623,568 1,379,047 2,002,615 51,114 2018 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-48 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Bloomington, IL — 1,408,067 986,931 678 1,408,067 987,609 2,395,676 41,131 2018 40 Carlinville, IL — 208,519 1,113,537 — 208,519 1,113,537 1,322,056 44,078 2018 40 Centralia, IL — 277,527 351,547 — 277,527 351,547 629,074 8,789 2018 40 Chicago, IL — 1,569,578 632,848 — 1,569,578 632,848 2,202,426 30,296 2018 40 Flora, IL — 232,155 1,121,688 4,087 232,155 1,125,775 1,357,930 30,456 2018 40 Gurnee, IL — 1,341,679 951,320 — 1,341,679 951,320 2,292,999 41,604 2018 40 Lake Zurich, IL — 290,272 857,467 — 290,272 857,467 1,147,739 23,223 2018 40 Macomb, IL — 85,753 661,375 — 85,753 661,375 747,128 16,534 2018 40 Morris, IL — 331,622 1,842,994 3,880 331,622 1,846,874 2,178,496 57,666 2018 40 Newton, IL — 510,192 1,069,075 2,500 510,192 1,071,575 1,581,767 35,683 2018 40 Northlake, IL — 353,337 564,677 — 353,337 564,677 918,014 14,117 2018 40 Rockford, IL — 270,180 708,041 — 270,180 708,041 978,221 33,919 2018 40 Greenwood, IN — 1,586,786 1,232,818 — 1,586,786 1,232,818 2,819,604 48,799 2018 40 Hammond, IN — 230,142 — — 230,142 — 230,142 — 2018 — Indianapolis, IN — 132,291 311,647 — 132,291 311,647 443,938 7,791 2018 40 Mishawaka, IN — 1,263,680 4,106,900 — 1,263,680 4,106,900 5,370,580 128,341 2018 40 South Bend, IN — 420,571 2,772,376 — 420,571 2,772,376 3,192,947 132,796 2018 40 Warsaw, IN — 583,174 1,118,270 — 583,174 1,118,270 1,701,444 53,565 2018 40 Ackley, IA — 202,968 896,444 — 202,968 896,444 1,099,412 41,004 2018 40 Ottumwa, IA — 227,562 5,794,123 — 227,562 5,794,123 6,021,685 277,613 2018 40 Riceville, IA — 154,294 742,421 — 154,294 742,421 896,715 33,922 2018 40 Riverside, IA — 579,935 1,594,085 — 579,935 1,594,085 2,174,020 59,778 2018 40 Urbandale, IA — 68,172 2,938,611 — 68,172 2,938,611 3,006,783 141,778 2018 40 Overland Park, KS — 1,053,287 6,141,649 219 1,053,287 6,141,868 7,195,155 191,929 2018 40 Ekron, KY — 95,655 802,880 — 95,655 802,880 898,535 30,108 2018 40 Florence, KY — 601,820 1,054,572 — 601,820 1,054,572 1,656,392 26,364 2018 40 Chalmette, LA — 290,396 1,297,684 — 290,396 1,297,684 1,588,080 32,442 2018 40 Donaldsonville, LA — 542,118 2,418,183 5,647 542,118 2,423,830 2,965,948 85,738 2018 40 Franklinton, LA — 193,192 925,598 — 193,192 925,598 1,118,790 28,925 2018 40 Franklinton, LA — 242,651 2,462,533 — 242,651 2,462,533 2,705,184 87,215 2018 40 Franklinton, LA — 396,560 1,122,737 — 396,560 1,122,737 1,519,297 35,086 2018 40 Franklinton, LA — 163,258 747,944 — 163,258 747,944 911,202 23,373 2018 40 Harvey, LA — 728,822 1,468,688 — 728,822 1,468,688 2,197,510 64,184 2018 40 Jena, LA — 772,878 2,392,129 — 772,878 2,392,129 3,165,007 84,721 2018 40 Jennings, LA — 128,158 2,329,137 22,350 128,158 2,351,487 2,479,645 82,490 2018 40 New Orleans, LA — 293,726 — — 293,726 — 293,726 — 2018 — Pine Grove, LA — 238,223 758,573 — 238,223 758,573 996,796 23,705 2018 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-49 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Rayville, LA — 310,034 2,365,203 — 310,034 2,365,203 2,675,237 83,768 2018 40 Roseland, LA — 307,331 872,252 — 307,331 872,252 1,179,583 27,258 2018 40 Talisheek, LA — 150,802 1,031,214 41,717 150,802 1,072,931 1,223,733 33,008 2018 40 Baltimore, MD — 699,157 651,927 — 699,157 651,927 1,351,084 16,298 2018 40 Salisbury, MD — 305,215 1,193,870 — 305,215 1,193,870 1,499,085 29,847 2018 40 Springfield, MA — 153,428 826,741 — 153,428 826,741 980,169 20,669 2018 40 Ann Arbor, MI — 735,859 2,489,707 — 735,859 2,489,707 3,225,566 119,252 2018 40 Belleville, MI — 598,203 3,970,176 — 598,203 3,970,176 4,568,379 190,145 2018 40 Grand Blanc, MI — 1,589,886 3,738,477 — 1,589,886 3,738,477 5,328,363 179,057 2018 40 Jackson, MI — 1,451,971 2,548,436 — 1,451,971 2,548,436 4,000,407 122,054 2018 40 Kentwood, MI — 939,481 3,438,259 — 939,481 3,438,259 4,377,740 164,686 2018 40 Lake Orion, MI — 1,172,982 2,349,762 — 1,172,982 2,349,762 3,522,744 112,541 2018 40 Onaway, MI — 17,557 935,308 — 17,557 935,308 952,865 37,023 2018 40 Champlin, MN — 307,271 1,602,196 18,429 307,271 1,620,625 1,927,896 40,400 2018 40 North Branch, MN — 533,175 — 205 533,380 — 533,380 — 2018 — Richfield, MN — 2,141,431 613,552 — 2,141,431 613,552 2,754,983 15,339 2018 40 Bay St. Louis, MS — 547,498 2,080,989 — 547,498 2,080,989 2,628,487 73,702 2018 40 Corinth, MS — 504,885 4,540,022 — 504,885 4,540,022 5,044,907 217,538 2018 40 Forest, MS — 189,817 1,340,848 — 189,817 1,340,848 1,530,665 47,488 2018 40 Southaven, MS — 150,931 826,123 — 150,931 826,123 977,054 20,653 2018 40 Waynesboro, MS — 243,835 1,205,383 — 243,835 1,205,383 1,449,218 42,691 2018 40 Blue Springs, MO — 431,698 1,704,870 — 431,698 1,704,870 2,136,568 63,930 2018 40 Florissant, MO — 733,592 1,961,094 (14,149) 733,592 1,946,945 2,680,537 48,762 2018 40 Joplin, MO — 789,880 384,638 — 789,880 384,638 1,174,518 18,420 2018 40 Liberty, MO — 308,470 2,750,231 — 308,470 2,750,231 3,058,701 120,214 2018 40 Neosho, MO — 687,812 1,115,054 — 687,812 1,115,054 1,802,866 41,815 2018 40 Springfield, MO — 1,311,497 5,462,972 — 1,311,497 5,462,972 6,774,469 273,123 2018 40 St. Peters, MO — 1,205,257 1,760,658 — 1,205,257 1,760,658 2,965,915 44,016 2018 40 Webb City, MO — 1,324,146 1,501,744 — 1,324,146 1,501,744 2,825,890 71,948 2018 40 Nashua, NH — 3,635,953 2,720,644 4,240 3,635,953 2,724,884 6,360,837 130,372 2018 40 Forked River, NJ — 4,227,966 3,991,690 — 4,227,966 3,991,690 8,219,656 36,612 2018 40 Forked River, NJ — 3,505,805 (2,766,838) 1,494 3,505,805 (2,765,344) 740,461 12,427 2018 40 Forked River, NJ — 1,128,858 1,396,960 — 1,128,858 1,396,960 2,525,818 40,745 2018 40 Forked River, NJ — 1,682,284 3,527,964 (255,364) 1,682,284 3,272,600 4,954,884 86,372 2018 40 Forked River, NJ — 682,822 — — 682,822 — 682,822 — 2018 — Woodland Park, NJ — 7,761,801 3,958,902 — 7,761,801 3,958,902 11,720,703 140,199 2018 40 Bernalillo, NM — 899,770 2,037,465 (78,875) 820,895 2,037,465 2,858,360 98,910 2018 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-50 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Farmington, NM — 4,428,998 — — 4,428,998 — 4,428,998 — 2018 — Canandaigue, NY — 154,996 1,352,174 — 154,996 1,352,174 1,507,170 45,053 2018 40 Catskill, NY — 80,524 1,097,609 — 80,524 1,097,609 1,178,133 36,567 2018 40 Clifton Park, NY — 925,613 1,858,613 7,421 925,613 1,866,034 2,791,647 46,604 2018 40 Elmira, NY — 43,388 947,627 — 43,388 947,627 991,015 23,691 2018 40 Geneseo, NY — 264,795 1,328,115 — 264,795 1,328,115 1,592,910 44,270 2018 40 Greece, NY — 182,916 1,254,678 — 182,916 1,254,678 1,437,594 41,803 2018 40 Hamburg, NY — 520,599 2,039,602 — 520,599 2,039,602 2,560,201 50,990 2018 40 Latham, NY — 373,318 764,382 — 373,318 764,382 1,137,700 19,110 2018 40 N. Syracuse, NY — 165,417 452,510 — 165,417 452,510 617,927 11,313 2018 40 Niagara Falls, NY — 392,301 1,022,745 — 392,301 1,022,745 1,415,046 25,569 2018 40 Rochester, NY — 100,136 895,792 — 100,136 895,792 995,928 29,860 2018 40 Rochester, NY — 575,463 772,555 — 575,463 772,555 1,348,018 19,314 2018 40 Rochester, NY — 375,721 881,257 — 375,721 881,257 1,256,978 22,031 2018 40 Schenectady, NY — 74,387 1,279,967 8,383 74,387 1,288,350 1,362,737 42,803 2018 40 Schenectady, NY — 453,006 726,404 — 453,006 726,404 1,179,410 18,160 2018 40 Syracuse, NY — 339,207 918,302 — 339,207 918,302 1,257,509 22,958 2018 40 Syracuse, NY — 607,053 259,331 — 607,053 259,331 866,384 6,483 2018 40 Tonawanda, NY — 94,443 727,373 — 94,443 727,373 821,816 24,226 2018 40 Tonawanda, NY — 131,021 576,915 — 131,021 576,915 707,936 14,423 2018 40 W. Seneca, NY — 98,194 737,592 — 98,194 737,592 835,786 18,440 2018 40 Williamsville, NY — 705,842 488,800 — 705,842 488,800 1,194,642 12,220 2018 40 Charlotte, NC — 287,732 518,005 — 287,732 518,005 805,737 12,950 2018 40 Concord, NC — 526,102 1,955,989 8,699 526,102 1,964,688 2,490,790 53,138 2018 40 Durham, NC — 1,787,380 848,986 — 1,787,380 848,986 2,636,366 21,225 2018 40 Fayetteville, NC — 108,898 1,769,274 — 108,898 1,769,274 1,878,172 44,232 2018 40 Greensboro, NC — 402,957 1,351,015 — 402,957 1,351,015 1,753,972 33,775 2018 40 Greenville, NC — 541,233 1,403,441 — 541,233 1,403,441 1,944,674 35,086 2018 40 High Point, NC — 252,336 1,024,696 — 252,336 1,024,696 1,277,032 25,617 2018 40 Kernersville, NC — 270,581 966,807 — 270,581 966,807 1,237,388 24,170 2018 40 Pineville, NC — 1,390,592 6,390,201 — 1,390,592 6,390,201 7,780,793 212,984 2018 40 Rockingham, NC — 245,976 955,579 — 245,976 955,579 1,201,555 35,834 2018 40 Salisbury, NC — 572,085 700,288 — 572,085 700,288 1,272,373 17,507 2018 40 Zebulon, NC — 160,107 1,077 36 160,107 1,113 161,220 38 2018 40 Akron, OH — 445,299 — — 445,299 — 445,299 — 2018 — Bellevue, OH — 272,308 1,127,365 — 272,308 1,127,365 1,399,673 44,625 2018 40 Canton, OH — 981,941 1,076,113 — 981,941 1,076,113 2,058,054 26,903 2018 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-51 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Columbus, OH — 542,161 1,088,316 — 542,161 1,088,316 1,630,477 27,208 2018 40 Fairview Park, OH — 338,732 400,013 — 338,732 400,013 738,745 10,000 2018 40 Franklin, OH — 5,405,718 — — 5,405,718 — 5,405,718 — 2018 — Middletown, OH — 311,389 1,451,469 — 311,389 1,451,469 1,762,858 57,437 2018 40 Niles, OH — 334,783 798,136 — 334,783 798,136 1,132,919 19,953 2018 40 North Olmsted, OH — 544,903 810,840 — 544,903 810,840 1,355,743 35,436 2018 40 North Ridgeville, OH — 521,909 1,475,305 (37,428) 521,909 1,437,877 1,959,786 63,735 2018 40 Warren, OH — 208,710 601,092 — 208,710 601,092 809,802 15,027 2018 40 Warrensville Heights, OH — 735,534 — 627 736,161 — 736,161 — 2018 — Youngstown, OH — 323,983 989,430 — 323,983 989,430 1,313,413 24,736 2018 40 Broken Arrow, OK — 919,176 1,276,754 1,778 919,176 1,278,532 2,197,708 47,900 2018 40 Chickasha, OK — 230,000 2,881,525 — 230,000 2,881,525 3,111,525 96,051 2018 40 Coweta, OK — 282,468 803,762 — 282,468 803,762 1,086,230 30,141 2018 40 Midwest City, OK — 755,192 5,687,280 (21,199) 755,192 5,666,081 6,421,273 177,728 2018 40 Oklahoma City, OK — 1,104,085 1,874,359 507 1,104,085 1,874,866 2,978,951 50,773 2018 40 Shawnee, OK — 409,190 957,557 — 409,190 957,557 1,366,747 23,939 2018 40 Wright City, OK — 38,302 1,010,645 (1,300) 38,302 1,009,345 1,047,647 31,539 2018 40 Hillsboro, OR — 4,632,369 7,656,179 — 4,632,369 7,656,179 12,288,548 319,007 2018 40 Carlisle, PA — 340,349 643,498 — 340,349 643,498 983,847 16,087 2018 40 Erie, PA — 58,279 833,933 — 58,279 833,933 892,212 20,848 2018 40 Johnstown, PA — 1,030,667 — 8,829 1,030,667 8,829 1,039,496 166 2018 40 King of Prussia, PA — 5,097,320 — 1,202 5,098,522 — 5,098,522 — 2018 — Philadelphia, PA — 155,212 218,083 — 155,212 218,083 373,295 5,452 2018 40 Philadelphia, PA — 127,690 122,516 — 127,690 122,516 250,206 3,063 2018 40 Pittsburgh, PA — 927,083 5,126,243 — 927,083 5,126,243 6,053,326 149,515 2018 40 Pittsburgh, PA — 1,397,965 — 3,850 1,401,815 — 1,401,815 — 2018 — Upper Darby, PA — 861,339 85,966 — 861,339 85,966 947,305 2,149 2018 40 Wysox, PA — 1,668,272 1,699,343 — 1,668,272 1,699,343 3,367,615 53,104 2018 40 Richmond, RI — 1,293,932 7,477,281 254,992 1,293,932 7,732,273 9,026,205 322,553 2018 40 Warwick, RI — 687,454 2,108,256 — 687,454 2,108,256 2,795,710 52,706 2018 40 Greenville, SC — 628,081 1,451,481 — 628,081 1,451,481 2,079,562 36,287 2018 40 Lake City, SC — 57,911 932,874 869 57,911 933,743 991,654 25,282 2018 40 Manning, SC — 245,546 989,236 146 245,546 989,382 1,234,928 32,961 2018 40 Mt. Pleasant, SC — 555,387 1,042,804 — 555,387 1,042,804 1,598,191 26,070 2018 40 Myrtle Beach, SC — 254,334 149,107 — 254,334 149,107 403,441 3,728 2018 40 Spartanburg, SC — 709,338 1,618,382 — 709,338 1,618,382 2,327,720 40,460 2018 40 Sumter, SC — 521,299 809,466 — 521,299 809,466 1,330,765 20,237 2018 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-52 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Walterboro, SC — 207,130 827,775 — 207,130 827,775 1,034,905 31,039 2018 40 Chattanooga, TN — 1,179,566 1,236,591 — 1,179,566 1,236,591 2,416,157 30,915 2018 40 Johnson City, TN — 181,117 1,232,151 — 181,117 1,232,151 1,413,268 30,804 2018 40 Beaumont, TX — 936,389 2,725,502 21,662 936,389 2,747,164 3,683,553 68,544 2018 40 Donna, TX — 962,302 1,620,925 — 962,302 1,620,925 2,583,227 53,997 2018 40 Fairfield, TX — 125,098 970,816 — 125,098 970,816 1,095,914 28,315 2018 40 Groves, TX — 596,586 2,250,794 — 596,586 2,250,794 2,847,380 56,270 2018 40 Humble, TX — 173,885 867,347 — 173,885 867,347 1,041,232 21,684 2018 40 Jacksboro, TX — 119,147 1,036,482 — 119,147 1,036,482 1,155,629 30,231 2018 40 Kemah, TX — 2,324,774 2,835,597 (45,000) 2,324,774 2,790,597 5,115,371 88,612 2018 40 Lamesa, TX — 66,019 1,493,146 — 66,019 1,493,146 1,559,165 62,209 2018 40 Live Oak, TX — 371,174 1,880,746 — 371,174 1,880,746 2,251,920 70,526 2018 40 Lufkin, TX — 382,643 1,054,911 — 382,643 1,054,911 1,437,554 26,373 2018 40 Plano, TX — 452,721 822,683 — 452,721 822,683 1,275,404 20,567 2018 40 Port Arthur, TX — 512,094 721,936 — 512,094 721,936 1,234,030 18,048 2018 40 Porter, TX — 524,532 1,683,767 566 524,532 1,684,333 2,208,865 52,627 2018 40 Tomball, TX — 1,336,029 1,849,554 — 1,336,029 1,849,554 3,185,583 69,354 2018 40 Universal City, TX — 380,788 1,496,318 — 380,788 1,496,318 1,877,106 37,408 2018 40 Waxahachie, TX — 388,138 792,125 — 388,138 792,125 1,180,263 19,803 2018 40 Willis, TX — 406,466 925,047 7,287 406,466 932,334 1,338,800 29,040 2018 40 Logan, UT — 914,515 2,774,985 — 914,515 2,774,985 3,689,500 92,499 2018 40 Christiansburg, VA — 520,538 661,780 — 520,538 661,780 1,182,318 16,545 2018 40 Fredericksburg, VA — 452,911 1,076,589 — 452,911 1,076,589 1,529,500 26,915 2018 40 Glen Allen, VA — 1,112,948 837,542 — 1,112,948 837,542 1,950,490 36,546 2018 40 Hampton, VA — 353,242 514,898 — 353,242 514,898 868,140 12,872 2018 40 Louisa, VA — 538,246 2,179,541 — 538,246 2,179,541 2,717,787 68,574 2018 40 Manassas, VA — 1,454,278 — — 1,454,278 — 1,454,278 — 2018 — Virginia Beach, VA — 2,142,002 1,154,585 — 2,142,002 1,154,585 3,296,587 28,865 2018 40 Virginia Beach, VA — 271,176 3,308,434 — 271,176 3,308,434 3,579,610 82,711 2018 40 Everett, WA — 414,899 811,710 — 414,899 811,710 1,226,609 20,293 2018 40 Bluefield, WV — 287,740 947,287 — 287,740 947,287 1,235,027 45,390 2018 40 Green Bay, WI — 817,143 1,383,440 — 817,143 1,383,440 2,200,583 34,586 2018 40 La Crosse, WI — 175,551 1,145,438 — 175,551 1,145,438 1,320,989 28,636 2018 40 Madison, WI — 2,475,815 4,249,537 (30,000) 2,475,815 4,219,537 6,695,352 131,797 2018 40 Mt. Pleasant, WI — 208,806 1,173,275 — 208,806 1,173,275 1,382,081 29,332 2018 40 Schofield, WI — 533,503 1,071,930 — 533,503 1,071,930 1,605,433 26,798 2018 40 Sheboygan, WI — 331,692 929,092 — 331,692 929,092 1,260,784 23,227 2018 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-53 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Athens, AL — 338,789 1,119,459 — 338,789 1,119,459 1,458,248 11,661 2019 40 Attala, AL — 289,473 928,717 — 289,473 928,717 1,218,190 9,674 2019 40 Birmingham, AL — 1,400,530 859,880 — 1,400,530 859,880 2,260,410 3,583 2019 40 Blountsville, AL — 262,412 816,070 — 262,412 816,070 1,078,482 8,501 2019 40 Coffeeville, AL — 129,263 864,122 — 129,263 864,122 993,385 9,001 2019 40 Phenix, AL — 292,234 1,280,705 — 292,234 1,280,705 1,572,939 26,681 2019 40 Silas, AL — 383,742 1,351,195 — 383,742 1,351,195 1,734,937 14,065 2019 40 Tuba City, AZ — 138,006 1,253,376 — 138,006 1,253,376 1,391,382 7,749 2019 40 Searcy, AR — 851,561 5,582,069 — 851,561 5,582,069 6,433,630 115,813 2019 40 Sheridan, AR — 124,667 1,070,754 — 124,667 1,070,754 1,195,421 11,020 2019 40 Trumann, AR — 170,957 1,064,039 — 170,957 1,064,039 1,234,996 10,950 2019 40 Visalia, CA — 2,552,353 6,994,518 — 2,552,353 6,994,518 9,546,871 102,003 2019 40 Lakewood, CO — 3,021,260 6,125,185 — 3,021,260 6,125,185 9,146,445 — 2019 40 Rifle, CO — 4,427,019 1,599,591 — 4,427,019 1,599,591 6,026,610 23,219 2019 40 Danbury, CT — 1,095,933 — — 1,095,933 — 1,095,933 — 2019 — Greenwich, CT — 16,350,193 3,076,568 — 16,350,193 3,076,568 19,426,761 30,593 2019 40 Orange, CT — 6,881,022 10,519,218 — 6,881,022 10,519,218 17,400,240 65,223 2019 40 Torrington, CT — 195,171 1,541,214 — 195,171 1,541,214 1,736,385 3,211 2019 40 Bear, DE — 743,604 — — 743,604 — 743,604 — 2019 — Wilmington, DE — 2,501,623 2,784,576 — 2,501,623 2,784,576 5,286,199 52,046 2019 40 Apopka, FL — 646,629 1,215,458 — 646,629 1,215,458 1,862,087 30,386 2019 40 Clearwater, FL — 497,216 1,027,192 — 497,216 1,027,192 1,524,408 19,093 2019 40 Cocoa, FL — 2,174,730 — — 2,174,730 — 2,174,730 — 2019 — Lake Placid, FL — 255,339 1,059,913 — 255,339 1,059,913 1,315,252 4,416 2019 40 Merritt Island, FL — 746,846 1,805,756 — 746,846 1,805,756 2,552,602 15,048 2019 40 Orlando, FL — 751,265 2,089,523 — 751,265 2,089,523 2,840,788 37,764 2019 40 Poinciana, FL — 608,450 1,073,714 — 608,450 1,073,714 1,682,164 4,474 2019 40 Sanford, FL — 2,791,684 4,763,063 — 2,791,684 4,763,063 7,554,747 39,685 2019 40 Tavares, FL — 736,113 1,849,694 — 736,113 1,849,694 2,585,807 34,687 2019 40 Wauchula, FL — 333,236 1,156,806 — 333,236 1,156,806 1,490,042 28,920 2019 40 West Palm Beach, FL — 2,484,935 2,344,077 — 2,484,935 2,344,077 4,829,012 19,462 2019 40 Brunswick, GA — 186,767 1,615,510 — 186,767 1,615,510 1,802,277 30,106 2019 40 Columbus, GA — 336,125 2,497,365 — 336,125 2,497,365 2,833,490 10,406 2019 40 Conyers, GA — 714,666 2,137,506 — 714,666 2,137,506 2,852,172 26,604 2019 40 Dacula, GA — 1,280,484 1,716,312 — 1,280,484 1,716,312 2,996,796 35,697 2019 40 Marietta, GA — 390,416 1,441,936 — 390,416 1,441,936 1,832,352 26,859 2019 40 Tucker, GA — 374,268 1,652,522 — 374,268 1,652,522 2,026,790 34,368 2019 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-54 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Chubbuck, ID — 1,067,983 5,880,828 — 1,067,983 5,880,828 6,948,811 134,767 2019 40 Chubbuck, ID — 185,310 — — 185,310 — 185,310 — 2019 — Chubbuck, ID — 873,334 1,653,886 — 873,334 1,653,886 2,527,220 37,902 2019 40 Edwardsville, IL — 449,741 1,202,041 — 449,741 1,202,041 1,651,782 22,410 2019 40 Elk Grove Village, IL — 394,567 1,395,659 — 394,567 1,395,659 1,790,226 11,625 2019 40 Evergreen Park, IL — 5,687,045 18,880,969 — 5,687,045 18,880,969 24,568,014 157,070 2019 40 Freeport, IL — 92,295 1,537,120 — 92,295 1,537,120 1,629,415 9,540 2019 40 Geneva, IL — 644,434 1,213,859 — 644,434 1,213,859 1,858,293 20,231 2019 40 Greenville, IL — 135,642 1,026,006 — 135,642 1,026,006 1,161,648 2,138 2019 40 Murphysboro, IL — 176,281 988,808 — 176,281 988,808 1,165,089 12,217 2019 40 Rockford, IL — 814,666 1,719,410 — 814,666 1,719,410 2,534,076 10,679 2019 40 Round Lake, IL — 325,722 2,669,132 — 325,722 2,669,132 2,994,854 1,743 2019 40 Fishers, IN — 429,857 621,742 — 429,857 621,742 1,051,599 12,932 2019 40 Gas City, IN — 504,378 1,341,890 — 504,378 1,341,890 1,846,268 30,752 2019 40 Hammond, IN — 149,230 1,002,706 — 149,230 1,002,706 1,151,936 10,445 2019 40 Kokomo, IN — 716,631 1,143,537 — 716,631 1,143,537 1,860,168 21,333 2019 40 Marion, IN — 140,507 898,097 — 140,507 898,097 1,038,604 — 2019 40 Westfield, IN — 594,597 1,260,563 — 594,597 1,260,563 1,855,160 26,262 2019 40 Waterloo, IA — 369,497 1,265,450 — 369,497 1,265,450 1,634,947 10,473 2019 40 Concordia, KS — 150,440 1,144,639 — 150,440 1,144,639 1,295,079 — 2019 40 Parsons, KS — 203,953 1,073,554 — 203,953 1,073,554 1,277,507 22,245 2019 40 Pratt, KS — 245,375 1,293,871 — 245,375 1,293,871 1,539,246 10,782 2019 40 Wellington, KS — 95,197 1,090,333 — 95,197 1,090,333 1,185,530 6,748 2019 40 Wichita, KS — 1,257,608 5,700,299 — 1,257,608 5,700,299 6,957,907 94,888 2019 40 Crestwood, KY — 670,021 1,096,031 — 670,021 1,096,031 1,766,052 — 2019 40 Georgetown, KY — 257,839 3,025,734 — 257,839 3,025,734 3,283,573 18,089 2019 40 Grayson, KY — 241,857 1,155,603 — 241,857 1,155,603 1,397,460 9,630 2019 40 Henderson, KY — 146,676 958,794 — 146,676 958,794 1,105,470 1,998 2019 40 Leitchfield, KY — 303,830 1,062,711 — 303,830 1,062,711 1,366,541 — 2019 40 Kentwood, LA — 327,392 638,214 — 327,392 638,214 965,606 14,626 2019 40 Lake Charles, LA — 565,778 890,034 — 565,778 890,034 1,455,812 16,598 2019 40 Bowie, MD — 2,840,009 4,474,364 — 2,840,009 4,474,364 7,314,373 55,819 2019 40 Eldersburg, MD — 563,227 1,855,987 — 563,227 1,855,987 2,419,214 11,503 2019 40 Brockton, MA — 3,254,807 8,504,236 — 3,254,807 8,504,236 11,759,043 — 2019 40 Ipswich, MA — 467,109 967,282 — 467,109 967,282 1,434,391 11,996 2019 40 Ipswich, MA — 2,606,990 3,414,474 — 2,606,990 3,414,474 6,021,464 42,669 2019 40 Adrian, MI — 459,814 1,562,895 — 459,814 1,562,895 2,022,709 26,048 2019 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-55 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Allegan, MI — 184,466 1,239,762 — 184,466 1,239,762 1,424,228 15,497 2019 40 Bloomfield Hills, MI — 1,160,912 4,181,635 — 1,160,912 4,181,635 5,342,547 26,135 2019 40 Caro, MI — 183,318 1,328,630 — 183,318 1,328,630 1,511,948 8,257 2019 40 Clare, MI — 153,379 1,412,383 — 153,379 1,412,383 1,565,762 2,942 2019 40 Cooks, MI — 304,340 1,109,838 — 304,340 1,109,838 1,414,178 — 2019 40 Crystal Falls, MI — 62,462 757,276 — 62,462 757,276 819,738 7,888 2019 40 Harrison, MI — 59,984 900,901 — 59,984 900,901 960,885 — 2019 40 Jackson, MI — 524,446 1,265,119 — 524,446 1,265,119 1,789,565 5,271 2019 40 Monroe, MI — 501,688 2,651,440 — 501,688 2,651,440 3,153,128 49,516 2019 40 Plymouth, MI — 580,459 1,043,474 — 580,459 1,043,474 1,623,933 19,565 2019 40 Spalding, MI — 86,973 842,434 — 86,973 842,434 929,407 8,775 2019 40 Walker, MI — 4,821,073 15,814,475 — 4,821,073 15,814,475 20,635,548 65,894 2019 40 Lakeville, MN — 1,774,051 6,386,118 — 1,774,051 6,386,118 8,160,169 79,707 2019 40 Longville, MN — 30,748 836,277 — 30,748 836,277 867,025 8,711 2019 40 Waite Park, MN — 142,863 1,064,736 — 142,863 1,064,736 1,207,599 19,677 2019 40 Bolton, MS — 172,890 831,005 — 172,890 831,005 1,003,895 8,656 2019 40 Bruce, MS — 189,929 896,080 — 189,929 896,080 1,086,009 16,741 2019 40 Columbus, MS — 123,385 898,226 — 123,385 898,226 1,021,611 16,782 2019 40 Flowood, MS — 638,891 1,308,566 — 638,891 1,308,566 1,947,457 8,122 2019 40 Houston, MS — 170,449 913,763 — 170,449 913,763 1,084,212 17,073 2019 40 Jackson, MS — 393,954 1,169,374 — 393,954 1,169,374 1,563,328 7,255 2019 40 Michigan City (Lamar), MS — 336,323 963,447 — 336,323 963,447 1,299,770 18,005 2019 40 Pontotoc, MS — 174,112 924,043 — 174,112 924,043 1,098,155 13,476 2019 40 Tutwiler, MS — 152,108 844,300 — 152,108 844,300 996,408 8,795 2019 40 Fair Play, MO — 56,563 642,856 — 56,563 642,856 699,419 6,696 2019 40 Florissant, MO — 1,394,072 2,210,514 — 1,394,072 2,210,514 3,604,586 41,384 2019 40 Florissant, MO — 1,647,163 2,256,716 — 1,647,163 2,256,716 3,903,879 37,612 2019 40 Grovespring, MO — 207,974 823,419 — 207,974 823,419 1,031,393 8,577 2019 40 Hermitage, MO — 98,531 833,177 — 98,531 833,177 931,708 8,679 2019 40 Madison, MO — 199,972 844,901 — 199,972 844,901 1,044,873 8,801 2019 40 Oak Grove, MO — 275,293 1,000,150 — 275,293 1,000,150 1,275,443 12,502 2019 40 Salem, MO — 153,713 1,085,494 — 153,713 1,085,494 1,239,207 6,718 2019 40 South Fork, MO — 345,053 1,087,384 — 345,053 1,087,384 1,432,437 11,327 2019 40 St. Louis, MO — 743,673 3,387,981 — 743,673 3,387,981 4,131,654 7,058 2019 40 Manchester, HN — 1,486,550 2,419,269 — 1,486,550 2,419,269 3,905,819 10,080 2019 40 Nashua, NH — 808,886 2,020,221 — 808,886 2,020,221 2,829,107 8,418 2019 40 Lanoka Harbor, NJ — 1,355,335 1,052,415 — 1,355,335 1,052,415 2,407,750 6,451 2019 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-56 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Paramus, NJ — — 6,224,221 — — 6,224,221 6,224,221 116,353 2019 40 San Ysidro, NM — 316,770 956,983 — 316,770 956,983 1,273,753 9,969 2019 40 Hinsdale, NY — 353,602 905,350 — 353,602 905,350 1,258,952 9,431 2019 40 Liverpool, NY — 1,697,114 3,355,641 — 1,697,114 3,355,641 5,052,755 — 2019 40 Malone, NY — 413,667 1,035,771 — 413,667 1,035,771 1,449,438 19,244 2019 40 Vestal, NY — 3,540,906 5,610,529 — 3,540,906 5,610,529 9,151,435 34,748 2019 40 Columbus, NC — 423,026 1,070,992 — 423,026 1,070,992 1,494,018 6,620 2019 40 Fayetteville, NC — 505,574 1,544,177 — 505,574 1,544,177 2,049,751 6,434 2019 40 Hope Mills, NC — 1,522,142 7,906,676 — 1,522,142 7,906,676 9,428,818 65,764 2019 40 Stallings (Matthews), NC — 1,481,940 — — 1,481,940 — 1,481,940 — 2019 — Sylva, NC — 450,055 1,351,631 — 450,055 1,351,631 1,801,686 — 2019 40 Edgeley, ND — 193,509 944,881 — 193,509 944,881 1,138,390 11,811 2019 40 Grand Forks, ND — 1,187,389 2,052,184 — 1,187,389 2,052,184 3,239,573 21,358 2019 40 Williston, ND — 515,210 1,584,865 — 515,210 1,584,865 2,100,075 16,509 2019 40 Batavia (Union Township), OH — 601,071 1,125,756 — 601,071 1,125,756 1,726,827 16,656 2019 40 Bellevue, OH — 186,215 1,343,783 — 186,215 1,343,783 1,529,998 — 2019 40 Columbus, OH — 357,767 1,423,046 — 357,767 1,423,046 1,780,813 26,505 2019 40 Conneaut, OH — 200,915 1,363,715 — 200,915 1,363,715 1,564,630 5,682 2019 40 Hamilton, OH — 335,677 1,066,581 — 335,677 1,066,581 1,402,258 17,633 2019 40 Heath, OH — 657,358 3,259,449 — 657,358 3,259,449 3,916,807 — 2019 40 Kenton, OH — 191,968 1,290,534 — 191,968 1,290,534 1,482,502 2,689 2019 40 Maumee, OH — 1,498,739 815,222 — 1,498,739 815,222 2,313,961 18,750 2019 40 Oxford, OH — 912,241 2,566,991 — 912,241 2,566,991 3,479,232 53,319 2019 40 West Chester, OH — 796,035 814,730 — 796,035 814,730 1,610,765 18,671 2019 40 West Chester, OH — 395,924 1,173,848 — 395,924 1,173,848 1,569,772 24,338 2019 40 Ada, OK — 336,304 1,234,870 — 336,304 1,234,870 1,571,174 5,145 2019 40 Bartlesville, OK — 451,582 1,249,112 — 451,582 1,249,112 1,700,694 15,442 2019 40 Bokoshe, OK — 47,725 797,175 — 47,725 797,175 844,900 9,674 2019 40 Lawton, OK — 230,834 612,256 — 230,834 612,256 843,090 7,481 2019 40 Whitefield, OK — 144,932 863,327 — 144,932 863,327 1,008,259 10,792 2019 40 Cranberry Township, PA — 2,066,679 2,049,310 — 2,066,679 2,049,310 4,115,989 42,634 2019 40 Ebensburg, PA — 551,162 2,023,064 — 551,162 2,023,064 2,574,226 37,766 2019 40 Flourtown, PA — 1,342,409 2,229,147 — 1,342,409 2,229,147 3,571,556 51,069 2019 40 Monaca, PA — 449,116 842,901 — 449,116 842,901 1,292,017 17,501 2019 40 Natrona Heights, PA — 1,412,247 1,719,447 — 1,412,247 1,719,447 3,131,694 39,404 2019 40 North Huntingdon, PA — 428,166 1,508,044 — 428,166 1,508,044 1,936,210 31,358 2019 40 Oakdale, PA — 708,623 987,577 — 708,623 987,577 1,696,200 2,057 2019 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-57 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Philadelphia, PA — 1,891,985 20,799,223 — 1,891,985 20,799,223 22,691,208 345,425 2019 40 Pittsburgh, PA — 1,251,674 3,842,592 — 1,251,674 3,842,592 5,094,266 23,916 2019 40 Robinson Township, PA — 1,630,648 2,703,381 — 1,630,648 2,703,381 4,334,029 33,708 2019 40 Titusville, PA — 877,651 2,568,060 — 877,651 2,568,060 3,445,711 37,394 2019 40 West View, PA — 120,349 1,347,706 — 120,349 1,347,706 1,468,055 11,146 2019 40 York, PA — 3,331,496 6,690,968 — 3,331,496 6,690,968 10,022,464 97,334 2019 40 Columbia, SC — 2,783,934 13,228,453 — 2,783,934 13,228,453 16,012,387 275,466 2019 40 Hampton, SC — 215,462 1,050,367 — 215,462 1,050,367 1,265,829 26,259 2019 40 Myrtle Beach, SC — 1,371,226 2,752,440 — 1,371,226 2,752,440 4,123,666 28,666 2019 40 Orangeburg, SC — 316,428 1,116,664 — 316,428 1,116,664 1,433,092 16,207 2019 40 Kadoka, SD — 134,528 926,523 — 134,528 926,523 1,061,051 11,582 2019 40 Thorn Hill, TN — 115,367 974,925 — 115,367 974,925 1,090,292 18,185 2019 40 Woodbury, TN — 154,043 1,092,958 — 154,043 1,092,958 1,247,001 20,493 2019 40 Burleson, TX — 1,396,753 3,312,794 — 1,396,753 3,312,794 4,709,547 — 2019 40 Carrizo Springs, TX — 337,070 812,963 — 337,070 812,963 1,150,033 10,159 2019 40 Garland, TX — 773,385 2,587,011 — 773,385 2,587,011 3,360,396 43,117 2019 40 Kenedy, TX — 325,159 954,774 — 325,159 954,774 1,279,933 — 2019 40 Laredo, TX — 1,117,403 2,152,573 — 1,117,403 2,152,573 3,269,976 31,296 2019 40 Lewisville, TX — 2,347,993 5,271,935 — 2,347,993 5,271,935 7,619,928 120,815 2019 40 Lubbock, TX — 1,420,820 1,858,395 — 1,420,820 1,858,395 3,279,215 42,588 2019 40 Wichita Falls, TX — 585,664 1,952,988 — 585,664 1,952,988 2,538,652 24,412 2019 40 Wylie, TX — 686,154 1,623,684 — 686,154 1,623,684 2,309,838 33,767 2019 40 Draper, UT — 1,344,025 3,321,208 — 1,344,025 3,321,208 4,665,233 — 2019 40 Bristol, VA — 996,915 1,374,467 — 996,915 1,374,467 2,371,382 11,454 2019 40 Gloucester, VA — 458,785 1,994,093 — 458,785 1,994,093 2,452,878 16,573 2019 40 Hampton, VA — 3,549,928 6,096,218 — 3,549,928 6,096,218 9,646,146 37,853 2019 40 Hampton, VA — 429,613 1,081,015 — 429,613 1,081,015 1,510,628 9,008 2019 40 Hampton, VA — 744,520 1,249,355 — 744,520 1,249,355 1,993,875 10,411 2019 40 Hampton, VA — 561,596 1,545,002 — 561,596 1,545,002 2,106,598 12,875 2019 40 Newport News, VA — 12,618,320 — — 12,618,320 — 12,618,320 — 2019 — Newport News, VA — 855,793 1,754,228 — 855,793 1,754,228 2,610,021 14,619 2019 40 Poquoson, VA — 330,867 848,105 — 330,867 848,105 1,178,972 7,068 2019 40 South Boston, VA — 490,590 2,637,385 — 490,590 2,637,385 3,127,975 10,989 2019 40 Surry, VA — 685,233 994,788 — 685,233 994,788 1,680,021 8,290 2019 40 Williamsburg, VA — 1,574,769 2,001,920 — 1,574,769 2,001,920 3,576,689 16,683 2019 40 Williamsburg, VA — 675,861 1,098,464 — 675,861 1,098,464 1,774,325 9,154 2019 40 Wytheville, VA — 206,660 1,248,178 — 206,660 1,248,178 1,454,838 — 2019 40 Agree Realty Corporation Schedule III – Real Estate and Accumulated Depreciation December 31, 2019F-58 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H Life on Which Depreciation in Latest Costs Gross Amount at Which Carried at Income Initial Cost Capitalized Close of Period Statement is Building and Subsequent to Building and Accumulated Date of Computed Description Encumbrance Land Improvements Acquisition Land Improvements Total Depreciation Acquisition (in years) Ephrata, WA — 368,492 4,821,470 — 368,492 4,821,470 5,189,962 10,045 2019 40 Charleston, WV — 561,767 — — 561,767 — 561,767 — 2019 — Ripley, WV — 1,042,204 — — 1,042,204 — 1,042,204 — 2019 — Black River Falls, WI — 278,472 1,141,572 — 278,472 1,141,572 1,420,044 2,378 2019 40 Lake Geneva, WI — 7,078,726 — — 7,078,726 — 7,078,726 — 2019 — Menomonee Falls, WI — 3,518,493 12,020,248 — 3,518,493 12,020,248 15,538,741 174,856 2019 40 Sun Prairie, WI — 2,864,563 7,215,614 — 2,864,563 7,215,614 10,080,177 44,899 2019 40 West Milwaukee, WI — 783,260 3,055,907 — 783,260 3,055,907 3,839,167 6,365 2019 40 Subtotal 37,115,442 742,028,515 1,563,739,356 35,100,355 738,260,983 1,602,607,243 2,340,868,226 128,581,697 Property Under Development Various — — 10,055,838 — — 10,055,838 10,055,838 — Sub Total — — 10,055,838 — — 10,055,838 10,055,838 — Total $ 37,115,442 $ 742,028,515 $ 1,573,795,194 $ 35,100,355 $ 738,260,983 $ 1,612,663,081 $ 2,350,924,064 $ 128,581,697 1. Reconciliation of Real Estate Properties The following table reconciles the Real Estate Properties from January 1, 2017 to December 31, 2019. 2019 2018 2017 Balance at January 1 $ 1,761,646,695 $ 1,299,254,832 $ 1,019,956,329 Construction and acquisition cost 644,483,047 519,369,366 312,695,116 Impairment charge (1,609,000) (1,163,000) — Disposition of real estate (53,596,678) (55,814,503) (31,146,055)Reclassified as assets held for sale (4,584,178) — (2,250,558)Balance at December 31 $ 2,346,339,886 $ 1,761,646,695 $ 1,299,254,832 2. Reconciliation of Accumulated Depreciation The following table reconciles the Real Estate Properties from January 1, 2017 to December 31, 2019. 2019 2018 2017 Balance at January 1 $ 100,311,974 $ 85,238,614 $ 69,696,727 Current year depreciation expense 34,398,782 20,441,780 19,507,398 Disposition of real estate (6,129,059) (5,368,420) (3,737,114)Reclassified as assets held for sale (833,887) — (228,397)Balance at December 31 $ 127,747,810 $ 100,311,974 $ 85,238,614 3. Tax Basis of Building and Improvements The aggregate cost of Building and Improvements for federal income tax purposes is approximately $31,374,000 less than the cost basis used for financial statement purposes. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AGREE REALTY CORPORATION By: /s/ Joel N. Agree Date: February 20, 2020 Joel N. Agree President and Chief Executive Officer KNOW ALL PERSONS BY THESE PRESENTS, that we, the undersigned officers and directors of Agree Realty Corporation, hereby severally constitute Richard Agree, Joel N. Agree and Clayton Thelen, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Annual Report on Form 10-K filed herewith and any and all amendments to said Annual Report on Form 10-K, and generally to do all such things in our names and in our capacities as officers and directors to enable Agree Realty Corporation to comply with the provisions of the Securities Exchange Act of 1934, as amended and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Annual Report on Form 10-K and any and all amendments thereto. PURSUANT to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 20th day of February 2020. By: /s/ Richard Agree Date: February 20, 2020 Richard Agree Executive Chairman of the Board of Directors By: /s/ Joel N. Agree Date: February 20, 2020 Joel N. Agree President, Chief Executive Officer and Director (Principal Executive Officer) By: /s/ Clayton Thelen Date: February 20, 2020 Clayton Thelen Chief Financial Officer and Secretary (Principal Financial Officer) By: /s/ David Wolff Date: February 20, 2020 David Wolff Chief Accounting Officer (Principal Accounting Officer) By: /s/ Craig Erlich Date: February 20, 2020 Craig Erlich Director By: /s/ Merrie S. Frankel Date: February 20, 2020 Merrie S. Frankel Director By: /s/ Farris G. Kalil Date: February 20, 2020 Farris G. Kalil Director By: /s/ Greg Lehmkuhl Date: February 20, 2020 Greg Lehmkuhl Director By: /s/ Simon Leopold Date: February 20, 2020 Simon Leopold Director By: /s/ Jerome Rossi Date: February 20, 2020 Jerome Rossi Director By: /s/ William S. Rubenfaer Date: February 20, 2020 William S. Rubenfaer Director CORPORATE INFORMATION LEADERSHIP TEAM Joey Agree President Chief Executive Officer Director Ryan Cockerill Vice President | Acquisitions Laith Hermiz Chief Operating Officer Danielle Spehar General Counsel Clay Thelen Chief Financial Officer Secretary Nicole Witteveen Vice President | People & Culture DIRECTORSRichard Agree Executive Chairman Craig Erlich Executive Vice President George P. Johnson Company Merrie S. Frankel President Minerva Realty Consultants, LLC Adjunct Professor Columbia University New York University Farris Kalil Former, Director of Business Development of Commercial Lending Michigan National Bank Greg Lehmkuhl President Chief Executive Officer Lineage Logistics Simon Leopold Executive Vice President Chief Financial Officer Taubman Jerry Rossi Chief Executive Officer R&R Consulting Chairman Gabe’s Stores William S. Rubenfaer President Rubenfaer Associates, PCAnnual Meeting of Stockholders Tuesday, May 5, 2020 - 10:00 am Agree Realty Corporation 44 E. Long Lake Road Bloomfield Hills, MI 48304 Auditors Grant Thornton LLP 27777 Franklin Road Southfield, MI 48034 Counsel Honigman 39400 Woodward Ave., Ste. 101 Bloomfield Hills, MI 48304 Registrar & Transfer Agent Computershare P.O. Box 505005 Louisville, KY 40233
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