Company Quick10K Filing
Agree Realty
Price72.72 EPS2
Shares42 P/E43
MCap3,084 P/FCF35
Net Debt921 EBIT96
TEV4,005 TEV/EBIT42
TTM 2019-09-30, in MM, except price, ratios
10-Q 2021-03-31 Filed 2021-05-03
10-K 2020-12-31 Filed 2021-02-18
10-Q 2020-09-30 Filed 2020-10-19
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10-K 2019-12-31 Filed 2020-02-20
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8-K 2021-02-22 Other Events, Exhibits
8-K 2021-02-19 Officers, Exhibits
8-K 2021-02-18 Earnings, Exhibits
8-K 2021-01-06 Other Events, Exhibits
8-K 2021-01-04 Regulation FD, Other Events, Exhibits
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8-K 2018-03-13
8-K 2018-02-22
8-K 2018-01-03

ADC 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Note 1 - Organization
Note 2 - Summary of Significant Accounting Policies
Note 3 - Leases
Note 4 - Real Estate Investments
Note 5 - Debt
Note 6 - Common and Preferred Stock
Note 7 - Dividends and Distribution Payable
Note 8 - Income Taxes
Note 9 - Derivative Instruments and Hedging Activity
Note 10 - Fair Value Measurements
Note 11 - Equity Incentive Plan
Note 12 - Commitments and Contingencies
Note 13 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.1 adc-20210331xex10d1.htm
EX-31.1 adc-20210331xex31d1.htm
EX-31.2 adc-20210331xex31d2.htm
EX-32.1 adc-20210331xex32d1.htm
EX-32.2 adc-20210331xex32d2.htm

Agree Realty Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
2.62.11.61.00.50.02012201420172020
Assets, Equity
0.10.10.10.00.00.02012201420172020
Rev, G Profit, Net Income
0.30.20.1-0.1-0.2-0.32012201420172020
Ops, Inv, Fin

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Mark One

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2021, or

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period fromto

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

(I.R.S. Employer Identification No.)

organization

 

70 E. Long Lake Road, Bloomfield Hills, Michigan

    

48304

(Address of principal executive offices)

(Zip Code)

(248) 737-4190

(Registrant's telephone number, including area code)

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, $0.0001 par value

ADC

New York Stock Exchange

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 (§ 232.405 of this chapter) 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.

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

As of April 30, 2021, the Registrant had 64,145,608 shares of common stock issued and outstanding.

Table of Contents

AGREE REALTY CORPORATION

Index to Form 10-Q

Page

PART I

Financial Information

Item 1:

Interim Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020

1

Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2021 and 2020

3

Condensed Consolidated Statements of Equity for the three months ended March 31, 2021 and 2020

4

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020

6

Notes to Condensed Consolidated Financial Statements

7

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

32

Item 3:

Quantitative and Qualitative Disclosures about Market Risk

44

Item 4:

Controls and Procedures

47

PART II

Item 1:

Legal Proceedings

47

Item 1A:

Risk Factors

47

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

47

Item 3:

Defaults Upon Senior Securities

47

Item 4:

Mine Safety Disclosures

47

Item 5:

Other Information

47

Item 6:

Exhibits

48

SIGNATURES

49

Table of Contents

AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per-share data)

(Unaudited)

PART I.       FINANCIAL INFORMATION

Item 1.       Financial Statements

March 31, 

December 31, 

2021

2020

ASSETS

Real Estate Investments

  

Land

$

1,215,065

$

1,094,550

Buildings

 

2,534,818

 

2,371,553

Less accumulated depreciation

 

(185,946)

 

(172,577)

 

3,563,937

 

3,293,526

Property under development

 

11,088

 

10,653

Net Real Estate Investments

 

3,575,025

 

3,304,179

 

  

Real Estate Held for Sale, net

 

13,549

 

1,199

 

Cash and Cash Equivalents

 

7,369

 

6,137

 

  

Cash Held in Escrows

 

 

1,818

Accounts Receivable - Tenants

40,700

 

37,808

 

  

Lease Intangibles, net of accumulated amortization of

$138,188 and $125,995 at March 31, 2021 and December 31, 2020, respectively

 

545,376

 

473,592

 

Other Assets, net

 

96,383

 

61,450

 

  

Total Assets

$

4,278,402

$

3,886,183

See accompanying notes to Condensed Consolidated Financial Statements.

1

Table of Contents

AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per-share data)

(Unaudited)

March 31, 

December 31, 

2021

2020

LIABILITIES

  

Mortgage Notes Payable, net

$

32,953

$

33,122

  

Unsecured Term Loans, net

237,955

 

237,849

  

Senior Unsecured Notes, net

855,454

 

855,328

  

Unsecured Revolving Credit Facility

238,000

 

92,000

  

Dividends and Distributions Payable

13,324

 

34,545

Accounts Payable, Accrued Expenses, and Other Liabilities

66,186

 

71,390

  

Lease Intangibles, net of accumulated amortization of

$26,030 and $24,651 at March 31, 2021 and December 31, 2020, respectively

34,654

 

35,700

  

Total Liabilities

1,478,526

 

1,359,934

  

EQUITY

  

Common stock, $.0001 par value, 90,000,000 shares

 

authorized, 64,145,778 and 60,021,483 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

6

6

Preferred Stock, $.0001 par value per share, 4,000,000 shares authorized

 

Additional paid-in-capital

2,909,914

 

2,652,090

Dividends in excess of net income

(101,137)

 

(91,343)

Accumulated other comprehensive income (loss)

(10,760)

 

(36,266)

  

Total Equity - Agree Realty Corporation

2,798,023

 

2,524,487

Non-controlling interest

1,853

 

1,762

Total Equity

2,799,876

 

2,526,249

  

Total Liabilities and Equity

$

4,278,402

$

3,886,183

See accompanying notes to Condensed Consolidated Financial Statements.

2

Table of Contents

AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except share and per-share data)

(Unaudited)

Three Months Ended

    

March 31, 2021

    

March 31, 2020

    

Revenues

 

  

 

  

 

Rental income

$

77,760

$

55,783

Other

 

69

 

26

Total Revenues

 

77,829

 

55,809

 

  

 

  

Operating Expenses

 

  

 

  

Real estate taxes

 

5,696

 

4,702

Property operating expenses

 

3,541

 

2,335

Land lease expense

 

346

 

328

General and administrative

 

6,879

 

4,658

Depreciation and amortization

 

21,489

 

14,132

Total Operating Expenses

 

37,951

 

26,155

 

  

 

  

Income from Operations

 

39,878

 

29,654

 

  

 

  

Other (Expense) Income

 

  

 

  

Interest expense, net

 

(11,653)

 

(9,669)

Gain (loss) on sale of assets, net

 

2,945

 

1,645

Gain (loss) on involuntary conversion of assets, net

117

Income tax (expense) benefit

(1,009)

(260)

Net Income

 

30,278

 

21,370

 

  

 

  

Less net income attributable to non-controlling interest

 

166

 

141

 

  

 

  

Net Income Attributable to Agree Realty Corporation

$

30,112

$

21,229

 

  

 

  

Net Income Per Share Attributable to Agree Realty Corporation

 

  

 

  

Basic

$

0.48

$

0.47

Diluted

$

0.48

$

0.46

 

  

 

  

Other Comprehensive Income

 

  

 

  

Net income

$

30,278

$

21,370

Realized gain (loss) on settlement of interest rate swaps

500

(17)

Other comprehensive income (loss) - change in fair value and settlement of interest rate swaps

 

25,146

 

(33,025)

Total comprehensive income (loss)

 

55,924

 

(11,672)

Less comprehensive income (loss) attributable to non-controlling interest

 

304

 

(109)

 

  

 

  

Comprehensive Income (Loss) Attributable to Agree Realty Corporation

$

55,620

$

(11,563)

 

  

 

  

Weighted Average Number of Common Shares Outstanding - Basic

 

62,828,897

 

45,436,191

 

  

 

  

Weighted Average Number of Common Shares Outstanding - Diluted

 

62,940,360

 

45,565,054

See accompanying notes to Condensed Consolidated Financial Statements.

3

Table of Contents

AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(In thousands, except share and per-share data)

(Unaudited)

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, 2020

60,021,483

$

6

$

2,652,090

$

(91,343)

$

(36,266)

$

1,762

$

2,526,249

Issuance of common stock, net of issuance costs

4,028,410

258,105

258,105

Repurchase of common shares

(27,594)

(1,780)

(1,780)

Issuance of restricted stock under the 2020 Omnibus Incentive Plan

128,066

298

298

Forfeiture of restricted stock

(4,587)

(92)

(92)

Stock-based compensation

1,293

1,293

Dividends and distributions declared for the period

(39,906)

(215)

(40,121)

Other comprehensive income (loss) - change in fair value of interest rate swaps

25,506

140

25,646

Net income

30,112

166

30,278

Balance, March 31, 2021

64,145,778

$

6

$

2,909,914

$

(101,137)

$

(10,760)

$

1,853

$

2,799,876

Cash dividends declared per common share:

For the three months ended March 31, 2021

$

0.621

See accompanying notes to Condensed Consolidated Financial Statements.

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Table of Contents

AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(In thousands, except share and per-share data)

(Unaudited)

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, 2019

45,573,623

$

5

$

1,752,912

$

(57,094)

$

(6,492)

$

2,231

$

1,691,562

Issuance of common stock, net of issuance costs

1,400,251

104,615

104,615

Repurchase of common shares

(20,707)

(1,627)

(1,627)

Issuance of restricted stock under the 2014 Omnibus Incentive Plan

48,942

Forfeiture of restricted stock

Stock-based compensation

1,014

1,014

Dividends and distributions declared for the period

(26,677)

(203)

(26,880)

Other comprehensive income (loss) - change in fair value and settlement of interest rate swaps

(32,799)

(243)

(33,042)

Net income

21,229

141

21,370

Balance, March 31, 2020

47,002,109

$

5

$

1,856,914

$

(62,542)

$

(39,291)

$

1,926

$

1,757,012

Cash dividends declared per common share:

For the three months ended March 31, 2020

$

0.585

See accompanying notes to Condensed Consolidated Financial Statements.

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AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Months Ended

    

March 31, 2021

    

March 31, 2020

Cash Flows from Operating Activities

 

  

 

  

Net income

$

30,278

$

21,370

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Depreciation and amortization

 

21,489

 

14,132

Amortization from above (below) market lease intangibles, net

4,756

3,809

Amortization from financing and credit facility costs

 

425

 

323

Stock-based compensation

 

1,499

 

1,014

Settlement of interest rate swaps

501

(17)

(Gain) loss on sale of assets

 

(2,945)

 

(1,645)

(Increase) decrease in accounts receivable

 

(2,932)

 

(1,284)

(Increase) decrease in other assets

 

6,803

 

50

Increase (decrease) in accounts payable, accrued expenses, and other liabilities

(14,079)

(9,056)

Net Cash Provided by Operating Activities

 

45,795

 

28,696

 

  

 

  

Cash Flows from Investing Activities

 

  

 

  

Acquisition of real estate investments and other assets

 

(397,044)

 

(229,586)

Development of real estate investments, net of reimbursements

 

(including capitalized interest of $75 in 2021, $25 in 2020)

 

1,683

 

(1,217)

Payment of leasing costs

 

(240)

 

(189)

Net proceeds from sale of assets

 

8,422

 

24,383

Net Cash Used in Investing Activities

 

(387,179)

 

(206,609)

 

  

 

  

Cash Flows from Financing Activities

 

 

  

Proceeds from common stock offerings, net

 

258,105

 

104,615

Repurchase of common shares

 

(1,780)

 

(1,627)

Unsecured revolving credit facility borrowings (repayments), net

 

146,000

 

153,000

Payments of mortgage notes payable

 

(195)

 

(3,005)

Dividends paid

 

(60,957)

 

(24,811)

Distributions to non-controlling interest

 

(359)

 

(203)

Payments for financing costs

 

(16)

 

(73)

Net Cash Provided by Financing Activities

 

340,798

 

227,896

 

  

 

  

Net Increase (Decrease) in Cash and Cash Equivalents and Cash Held in Escrow

 

(586)

 

49,983

Cash and cash equivalents and cash held in escrow, beginning of period

 

7,955

 

42,157

Cash and cash equivalents and cash held in escrow, end of period

$

7,369

$

92,140

 

  

 

  

Supplemental Disclosure of Cash Flow Information

 

  

 

  

Cash paid for interest (net of amounts capitalized)

$

15,836

$

9,669

Cash paid for income tax

$

1,794

$

760

 

 

  

Supplemental Disclosure of Non-Cash Investing and Financing Activities

 

  

 

  

Additional operating lease right of use assets added under new ground leases after January 1, 2019

$

6,302

$

Dividends and limited partners’ distributions declared and unpaid

$

13,350

$

26,880

Accrual of development, construction and other real estate investment costs

$

7,179

$

3,034

See accompanying notes to Condensed Consolidated Financial Statements.

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AGREE REALTY CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

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 its common stock was listed on the New York Stock Exchange in 1994.

The Company’s assets are held by, and all of its 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 99.5% interest as of March 31, 2021. There is a one-for-one relationship between the limited partnership interests in the Operating Partnership (“Operating Partnership Units”) owned by the Company and shares of Company common stock outstanding.  Under the agreement of limited partnership of the Operating Partnership, the Company, as the sole general partner, has exclusive responsibility and discretion in the management and control of the Operating Partnership.

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

Basis of Accounting and Principles of Consolidation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for audited financial statements. The unaudited Condensed Consolidated Financial Statements reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results for the interim period presented. Operating results for the three months ended March 31, 2021 may not be indicative of the results that may be expected for the year ending December 31, 2021.  Amounts as of December 31, 2020 included in the Condensed Consolidated Financial Statements have been derived from the audited Consolidated Financial Statements as of that date. The unaudited Condensed Consolidated Financial Statements, included herein, should be read in conjunction with the audited Consolidated Financial Statements and notes thereto, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Company’s Form 10-K for the year ended December 31, 2020.

The unaudited Condensed Consolidated Financial Statements include the accounts of the Company, the Operating Partnership and its wholly owned subsidiaries. The Company, as the sole general partner, held 99.5% and 99.4% of the Operating Partnership as of March 31, 2021 and December 31, 2020, respectively.  All material intercompany accounts and transactions have been eliminated.

At March 31, 2021 and December 31, 2020, the non-controlling interest in the Operating Partnership consisted of a 0.5% and 0.6% ownership interest in the Operating Partnership held by the Company’s founder and chairman, respectively. 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 its shares. Assuming the exchange of all non-controlling Operating Partnership Units, there would have been 64,493,397 shares of common stock outstanding at March 31, 2021.

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Table of Contents

Significant Risks and Uncertainties

Currently, one of the most significant risks and uncertainties continues to be the potential adverse effect of the current pandemic of the novel coronavirus, or COVID-19.  The COVID-19 pandemic has had repercussions across regional and global economies and financial markets. The outbreak of COVID-19 in many countries, including the United States, has significantly adversely impacted economic activity and has contributed to significant volatility and negative pressure in financial markets.  The COVID-19 pandemic has resulted in a number of our tenants temporarily closing their stores and requesting rent deferrals or rent abatements during this pandemic.

The ongoing COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations and cash flows in the near term due to, but not limited to, the following:

reduced economic activity severely impacting our tenants’ businesses, financial condition and liquidity and which may cause tenants to be unable to fully meet their obligations to us.  Certain tenants have sought to modify such obligations and may seek additional relief and additional tenants may seek modifications of such obligations, resulting in increases in uncollectible receivables and reductions in rental income;
the negative financial impact of the pandemic which could impact our future compliance with financial covenants of our credit facility and other debt agreements; and
weaker economic conditions which could cause us to recognize impairment in value of our tangible or intangible assets.

During the quarter ended March 31, 2021, the Company collected over 99% of rent payments originally contracted for in the period. However, the extent to which the COVID-19 pandemic continues to impact our operations and those of our tenants will depend on future developments which are still highly uncertain and cannot be predicted with confidence, including the scope, severity and remaining duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business and geographies. However, as a result of the many uncertainties surrounding the COVID-19 pandemic, we are still not able to fully predict the impact that it ultimately will have on our financial condition, results of operations and cash flows.

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 real estate held for sale based on specific criteria as outlined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Property, Plant & Equipment. Properties classified as real estate held for sale are recorded at the lower of their carrying value or their fair value, less anticipated selling costs. Any properties classified as held for sale are not depreciated. Assets are generally classified as real estate 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 four and one operating properties as real estate held for sale at March 31, 2021 and December 31, 2020, respectively, the assets for which are separately presented in the Condensed Consolidated Balance Sheets.  

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Table of Contents

Real estate held for sale consisted of the following as of March 31, 2021 and December 31, 2020 (in thousands):

    

March 31, 2021

    

December 31, 2020

Land

$

6,338

$

313

Building

 

7,530

 

1,019

Lease intangibles - asset

1,895

132

Lease intangibles - (liability)

 

(1,168)

 

(285)

 

14,595

 

1,179

Accumulated depreciation and amortization, net

 

(1,046)

 

20

Total Real Estate Held for Sale, net

$

13,549

$

1,199

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 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, in which case 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 adjustment to rental income.  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 to rental income.

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Table of Contents

The following schedule summarizes the Company’s amortization of lease intangibles for the three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended

    

March 31, 2021

    

March 31, 2020

    

Lease intangibles (in-place)

$

5,915

$

3,508

Lease intangibles (above-market)

 

6,401

 

5,051

Lease intangibles (below-market)

 

(1,645)

 

(1,242)

Total

$

10,671

$

7,317

The following schedule represents estimated future amortization of lease intangibles as of March 31, 2021 (in thousands):