Agree Realty Earnings 2019-06-30

ADC 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

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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 June 30, 2019, or


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

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)

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, $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 July 19, 2019, the Registrant had 41,967,223 shares of common stock issued and outstanding.

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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 June 30, 2019 and December 31, 2018	1

	Condensed Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2019 and 2018	3

	Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2019 and 2018	4

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

Item 3:	Quantitative and Qualitative Disclosures about Market Risk	39

Item 4:	Controls and Procedures	42

PART II

Item 1:	Legal Proceedings	43

Item 1A:	Risk Factors	43

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3:	Defaults Upon Senior Securities	43

Item 4:	Mine Safety Disclosures	43

Item 5:	Other Information	43

Item 6:	Exhibits	44

SIGNATURES		45

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AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(Unaudited)

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


	June 30,		December 31,
	2019		2018

ASSETS
Real Estate Investments
Land	$	638,946	$	553,704
Buildings		1,375,773		1,194,985
Less accumulated depreciation		(112,951)		(100,312)
		1,901,768		1,648,377
Property under development		16,950		12,957
Net Real Estate Investments		1,918,718		1,661,334

Real Estate Held for Sale, net		2,074		—

Cash and Cash Equivalents		5,520		53,955

Cash Held in Escrows		16,909		20

Accounts Receivable - Tenants		24,914		21,547

Lease intangibles, net of accumulated amortization of
$74,995 and $62,543 at June 30, 2019 and December 31, 2018, respectively		307,303		280,153

Other Assets, net		29,005		11,180

Total Assets	$	2,304,443	$	2,028,189

See accompanying notes to condensed consolidated financial statements.

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AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(Unaudited)


	June 30,		December 31,
	2019		2018
LIABILITIES
Mortgage Notes Payable, net	$	59,670	$	60,926

Unsecured Term Loans, net		237,980		256,419

Senior Unsecured Notes, net		384,143		384,064

Unsecured Revolving Credit Facility		54,000		19,000

Dividends and Distributions Payable		24,119		21,031

Accounts Payable, Accrued Expenses, and Other Liabilities		48,700		21,045

Lease intangibles, net of accumulated amortization of
$17,426 and $15,177 at June 30, 2019 and December 31, 2018, respectively		27,908		27,218

Total Liabilities		836,520		789,703

EQUITY
Common stock, $.0001 par value, 90,000,000 shares authorized, 41,967,282 and 37,545,790 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively		4		4
Preferred Stock, $.0001 par value per share, 4,000,000 shares authorized		—		—
Additional paid-in-capital		1,522,644		1,277,592
Dividends in excess of net income		(51,298)		(42,945)
Accumulated other comprehensive income (loss)		(5,711)		1,424

Total Equity - Agree Realty Corporation		1,465,639		1,236,075
Non-controlling interest		2,284		2,411
Total Equity		1,467,923		1,238,486

Total Liabilities and Equity	$	2,304,443	$	2,028,189

See accompanying notes to condensed consolidated financial statements.

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AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

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

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Revenues
Rental Income	$	44,875	$	33,076	$	87,219	$	65,308
Other		45		92		49		138
Total Revenues		44,920		33,168		87,268		65,446

Operating Expenses
Real estate taxes		3,720		2,624		7,342		5,001
Property operating expenses		1,496		1,238		3,235		2,755
Land lease expense		372		176		568		339
General and administrative		3,880		3,110		7,914		6,018
Depreciation and amortization		10,836		8,046		20,700		15,806
Provision for impairment		1,193		1,163		1,609		1,163
Total Operating Expenses		21,497		16,357		41,368		31,082

Income from Operations		23,423		16,811		45,900		34,364

Other (Expense) Income
Interest expense, net		(7,455)		(5,961)		(15,012)		(11,426)
Gain (loss) on sale of assets, net		2,949		2,434		6,376		7,032
Income tax expense		(195)		(216)		(26)		(266)
Net Income		18,722		13,068		37,238		29,704

Less Net Income Attributable to Non-Controlling Interest		158		145		327		329

Net Income Attributable to Agree Realty Corporation	$	18,564	$	12,923	$	36,911	$	29,375

Net Income Per Share Attributable to Agree Realty Corporation
Basic	$	0.45	$	0.42	$	0.94	$	0.95
Diluted	$	0.45	$	0.41	$	0.92	$	0.94

Other Comprehensive Income
Net income	$	18,722	$	13,068	$	37,238	$	29,704
Other Comprehensive Income (Loss) - Change in Fair Value and Settlement of Interest Rate Swaps		(3,794)		792		(7,199)		2,712
Total Comprehensive Income		14,928		13,860		30,039		32,416
Less Comprehensive Income Attributable to Non-Controlling Interest		125		154		264		359

Comprehensive Income Attributable to Agree Realty Corporation	$	14,803	$	13,706	$	29,775	$	32,057

Weighted Average Number of Common Shares Outstanding - Basic		40,612,372		30,821,185		39,058,743		30,811,383

Weighted Average Number of Common Shares Outstanding - Diluted		41,141,659		31,222,221		39,745,337		31,036,694

See accompanying notes to condensed consolidated financial statements.

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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, 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	874,268		—		57,845		—		—		—		57,845
Repurchase of common shares	(21,868)		—		(1,398)		—		—		—		(1,398)
Issuance of restricted stock under the Omnibus Incentive Plan	56,592		—		—		—		—		—		—
Stock-based compensation	—		—		913		—		—		—		913
Dividends and distributions declared for the period	—		—		—		(21,342)		—		(193)		(21,535)
Other comprehensive income (loss) - change in fair value of interest rate swaps	—		—		—		—		(3,374)		(31)		(3,405)
Net income	—		—		—		18,347		—		169		18,516
Balance, March 31, 2019	38,454,782	$	4	$	1,334,952	$	(45,940)	$	(1,950)	$	2,356	$	1,289,422
Issuance of common stock, net of issuance costs	3,512,500		—		186,667		—		—		—		186,667
Stock-based compensation	—		—		1,025		—		—		—		1,025
Dividends and distributions declared for the period	—		—		—		(23,922)		—		(197)		(24,119)
Other comprehensive income (loss) - change in fair value and settlement of interest rate swaps	—		—		—		—		(3,761)		(33)		(3,794)
Net income	—		—		—		18,564		—		158		18,722
Balance, June 30, 2019	41,967,282	$	4	$	1,522,644	$	(51,298)	$	(5,711)	$	2,284	$	1,467,923

Cash dividends declared per:
Common shares - for the three months ended March 31, 2019		$	0.555
Common shares - for the three months ended June 30, 2019		$	0.570

See accompanying notes to condensed consolidated financial statements.

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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, 2017	31,004,900	$	3	$	936,046	$	(28,763)	$	1,375	$	2,529	$	911,190
Issuance of common stock, net of issuance costs	—		—		(93)		—		—		—		(93)
Repurchase of common shares	(22,071)		—		(1,074)		—		—		—		(1,074)
Issuance of restricted stock under the Omnibus Incentive Plan	50,841		—		—		—		—		—		—
Forfeiture of restricted stock	(411)		—		—		—		—		—		—
Stock-based compensation	—		—		602		—		—		—		602
Dividends and distributions declared for the period	—		—		—		(16,137)		—		(181)		(16,318)
Other comprehensive income (loss) - change in fair value of interest rate swaps	—		—		—		—		1,899		21		1,920
Net income	—		—		—		16,451		—		185		16,636
Balance, March 31, 2018	31,033,259	$	3	$	935,481	$	(28,449)	$	3,274	$	2,554	$	912,863
Issuance of common stock, net of issuance costs	—		—		(339)		—		—		—		(339)
Stock-based compensation	—		—		686		—		—		—		686
Dividends and distributions declared for the period	—		—		—		(16,759)		—		(187)		(16,946)
Other comprehensive income (loss) - change in fair value and settlement of interest rate swaps	—		—		—		—		783		9		792
Net income	—		—		—		12,924		—		144		13,068
Balance, June 30, 2018	31,033,259	$	3	$	935,828	$	(32,284)	$	4,057	$	2,520	$	910,124

Cash dividends declared per:
Common shares - for the three months ended March 31, 2018		$	0.520
Common shares - for the three months ended June 30, 2018		$	0.540

See accompanying notes to condensed consolidated financial statements.

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AGREE REALTY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended
	June 30, 2019		June 30, 2018
Cash Flows from Operating Activities
Net income	$	37,238	$	29,704
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		20,700		15,806
Amortization from above (below) lease intangibles, net		6,501		4,756
Amortization from financing and credit facility costs		650		500
Stock-based compensation		1,938		1,288
Provision for impairment		1,609		1,163
Settlement of interest rate swap		802		—
(Gain) loss on sale of assets		(6,376)		(7,032)
(Increase) decrease in accounts receivable		(3,837)		(4,143)
(Increase) decrease in other assets		(963)		(754)
Increase (decrease) in accounts payable, accrued expenses, and other liabilities		(663)		(4,250)
Net Cash Provided by Operating Activities		57,599		37,038

Cash Flows from Investing Activities
Acquisition of real estate investments and other assets		(320,930)		(199,608)
Development of real estate investments and other assets
(including capitalized interest of $203 in 2019 and $292 in 2018)		(10,363)		(8,818)
Payment of leasing costs		(224)		(10)
Net proceeds from sale of assets		26,803		30,385
Net Cash Used In Investing Activities		(304,714)		(178,051)

Cash Flows from Financing Activities
Proceeds (costs) from common stock offerings, net		244,512		(432)
Repurchase of common shares		(1,398)		(1,074)
Unsecured revolving credit facility borrowings (repayments), net		35,000		152,000
Payments of mortgage notes payable		(1,353)		(26,267)
Payments of unsecured term loans		(18,543)		(381)
Dividends paid		(42,180)		(32,260)
Distributions to Non-Controlling Interest		(386)		(361)
Payments for financing costs		(83)		(8)
Net Cash Provided by Financing Activities		215,569		91,217

Net Increase (Decrease) in Cash and Cash Equivalents		(31,546)		(49,796)
Cash and cash equivalents and cash held in escrow, beginning of period		53,975		58,782
Cash and cash equivalents and cash held in escrow, end of period	$	22,429	$	8,986

Supplemental Disclosure of Cash Flow Information
Cash paid for interest (net of amounts capitalized)	$	15,510	$	10,842
Cash paid for income tax	$	748	$	368

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	$	—
Dividends and limited partners’ distributions declared and unpaid	$	24,119	$	16,946
Accrual of development, construction and other real estate investment costs	$	6,588	$	570

See accompanying notes to condensed consolidated financial statements.

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AGREE REALTY CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

(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 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 June 30, 2019. 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

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 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 and six months ended June 30, 2019 may not be indicative of the results that may be expected for the year ending December 31, 2019. Amounts as of December 31, 2018 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 our Form 10-K for the year ended December 31, 2018.

The unaudited condensed consolidated financial statements include the accounts of the Company, the Operating Partnership and its wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with 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.

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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 separately present lease and non-lease rental income. As a result, all income earned pursuant to tenant leases is reflected as one line, “Rental Income,” in the 2019 condensed consolidated statement of operations. To facilitate comparability, the Company has reclassified prior periods’ lease and non-lease income consistently with the classification employed in 2019.

The Company recognizes above- and below-market lease intangibles in connection with most acquisitions of real estate (see Accounting for 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 incurred amortization of capitalized above- and below-market lease intangibles of $3.2 million and $2.5 million for the three months ended June 30, 2019 and 2018, respectively and $6.5 million and $4.8 million for the six months ended June 30, 2019 and 2018, 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.

Segment Reporting

The Company is primarily in the business of acquiring, developing and managing retail real estate which is considered to be one reportable segment. The Company has no other reportable segments.

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 ASC 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. Any properties classified as held for sale are not depreciated. 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 June 30, 2019, the assets for which are separately presented in the Condensed Consolidated Balance Sheet.

Real estate held for sale consisted of the following as of June 30, 2019 and December 31, 2018 (in thousands):


	June 30, 2019		December 31, 2018

Land	$	1,104	$	-
Building		2,043		-
		3,147		-
Accumulated depreciation and amortization		(1,073)		-
Total Real Estate Held for Sale, net	$	2,074	$	-

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Accounting for 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. In-place lease intangible assets are amortized to amortization expense over the remaining term of the related 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. 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. Above- and below-market lease intangibles are amortized as a net reduction of rental income (see Reclassifications above).

Cash and Cash Equivalents

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. 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 of FDIC insurance coverage. We had $21.3 million and $52.7 million in cash and cash held in escrow as of June 30, 2019 and December 31, 2018, respectively, in excess of the FDIC insured limit.

Accounts Receivable – Tenants

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 the 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 reimbursements is estimated each period and is recognized as revenue in the period the recoverable costs are incurred and accrued. Receivables from operating cost reimbursements are included in our Accounts Receivable - Tenants line item in our condensed consolidated balance sheets. The balance of unbilled operating cost reimbursement receivable at June 30, 2019 and December 31, 2018 was $2.7 million and $3.3 million, respectively.

In addition, many of the Company’s leases contain escalations for which we recognize revenue on a straight-line basis over the non-cancelable lease term. This method results in revenue in the early years of a lease being higher than actual cash received, creating a straight-line rental income receivable asset which is included in the Accounts Receivable - Tenants line item in our condensed consolidated balance sheets. The balance of straight-line rental income receivables at June 30, 2019 and December 31, 2018 was $19.4 million and $16.7 million, respectively. To the extent any of the

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tenants under these leases becomes unable to pay its contractual cash rents, the Company may be required to write-off the straight-line receivable from the tenants, which would reduce rental income.

Sales Tax

The Company collects various taxes from tenants and remits these amounts, on a net basis, to the applicable taxing authorities.

Unamortized Deferred Expenses

Deferred expenses recognized as Lease Intangibles and within Other Assets, net on the condensed consolidated balance sheets include debt financing costs related to the Company’s revolving credit facility, leasing costs and lease intangibles, and are amortized as follows: (i) debt financing costs related to the line of credit on a straight-line basis to interest expense over the term of the related loan, which approximates the effective interest method; (ii) leasing costs on a straight-line basis to amortization expense over the term of the related lease entered into; (iii) in-place lease intangibles on a straight-line basis to amortization expense over the remaining term of the related lease acquired; and (iv) above- and below- market lease intangibles on a straight-line basis as a net reduction of rental income over the remaining lease term. See Reclassifications above regarding changes in presentation relating to above-and below- market lease intangibles.

The following schedule summarizes the Company’s amortization of deferred expenses for the three and six months ended June 30, 2019 and 2018 (in thousands):


	Three months ended				Six Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018

Deferred Financing Costs	$	143	$	101	$	285	$	202
Leasing Costs		81		41		161		84
Lease Intangibles (In-place)		2,392		2,014		4,443		4,006
Lease Intangibles (Above-Market)		4,360		3,619		8,734		6,963
Lease Intangibles (Below-Market)		(1,135)		(1,106)		(2,233)		(2,207)
Total	$	5,841	$	4,669	$	11,390	$	9,048

The following schedule represents estimated future amortization of deferred expenses as of June 30, 2019 (in thousands):


	2019
Year Ending December 31,	(remaining)		2020		2021		2022		2023		Thereafter		Total

Deferred Financing Costs	$	271	$	542	$	28	$	—	$	—	$	—	$	841
Leasing Costs		161		402		383		371		313		1,085		2,715
Lease Intangibles (In-place)

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$66.05	38	$2,540

10-Q	2019-06-30	Quarter: 2019-06-30
10-Q	2019-03-31	Quarter: 2019-03-31
10-K	2018-12-31	Annual: 2018-12-31
10-Q	2018-09-30	Quarter: 2018-09-30
10-Q	2018-06-30	Quarter: 2018-06-30
10-Q	2018-03-31	Quarter: 2018-03-31
10-K	2017-12-31	Annual: 2017-12-31
10-Q	2017-09-30	Quarter: 2017-09-30
10-Q	2017-06-30	Quarter: 2017-06-30
10-Q	2017-03-31	Quarter: 2017-03-31
10-K	2016-12-31	Annual: 2016-12-31
10-Q	2016-09-30	Quarter: 2016-09-30
10-Q	2016-06-30	Quarter: 2016-06-30
10-Q	2016-03-31	Quarter: 2016-03-31
10-K	2015-12-31	Annual: 2015-12-31
10-Q	2015-09-30	Quarter: 2015-09-30
10-Q	2015-06-30	Quarter: 2015-06-30
10-Q	2015-03-31	Quarter: 2015-03-31
10-K	2014-12-31	Annual: 2014-12-31
10-Q	2014-09-30	Quarter: 2014-09-30
10-Q	2014-06-30	Quarter: 2014-06-30
10-Q	2014-03-31	Quarter: 2014-03-31
10-K	2013-12-31	Annual: 2013-12-31

8-K	2019-07-19	Earnings, Officers, Exhibits
8-K	2019-07-01	Other Events
8-K	2019-06-14	Enter Agreement, Off-BS Arrangement
8-K	2019-04-29	Other Events, Exhibits
8-K	2019-04-25	Amend Bylaw, Shareholder Vote, Exhibits
8-K	2019-04-22	Earnings, Exhibits
8-K	2019-02-21	Earnings, Exhibits
8-K	2018-12-27	Enter Agreement, Off-BS Arrangement, Regulation FD, Other Events, Exhibits
8-K	2018-12-17	Enter Agreement, Regulation FD, Exhibits
8-K	2018-12-11	Regulation FD, Exhibits
8-K	2018-12-10	Other Events
8-K	2018-12-04	Officers, Exhibits
8-K	2018-11-02	Enter Agreement, Regulation FD, Exhibits
8-K	2018-10-22	Earnings, Exhibits
8-K	2018-10-01	Other Events
8-K	2018-09-26	Enter Agreement, Off-BS Arrangement, Regulation FD, Exhibits
8-K	2018-09-04	Other Events, Exhibits
8-K	2018-07-18	Enter Agreement, Earnings, Off-BS Arrangement, Officers, Regulation FD, Exhibits
8-K	2018-07-02	Other Events
8-K	2018-05-31	Other Events, Exhibits
8-K	2018-05-18	Other Events, Exhibits
8-K	2018-05-15	Shareholder Vote
8-K	2018-05-03	Leave Agreement, Shareholder Rights
8-K	2018-04-23	Earnings, Exhibits
8-K	2018-03-19	Other Events, Exhibits
8-K	2018-03-13	Other Events, Exhibits
8-K	2018-01-03	Regulation FD, Exhibits

ZBRA	Zebra Technologies	10,550
CW	Curtiss Wright	4,870
WMS	Advanced Drainage Systems	1,590
EQBK	Equity Bancshares	427
TESS	Tessco Technologies	155
SND	Smart Sand	153
NOVN	Novan	32
FCEL	Fuelcell Energy	25
SUSG	SusGlobal Energy	0
XCUR	Exicure	0

EX-10.1	adc-20190630ex101bbeb56.htm
EX-10.2	adc-20190630ex102b3b902.htm
EX-10.3	adc-20190630ex103f575e2.htm
EX-10.4	adc-20190630ex104a24909.htm
EX-31.1	adc-20190630ex311512b80.htm
EX-31.2	adc-20190630ex31218e525.htm
EX-32.1	adc-20190630ex32169ad44.htm
EX-32.2	adc-20190630ex322c55a8d.htm