Agree Realty Corporation Reports Third Quarter 2024 Results
Raises 2024 Acquisition Guidance to Approximately $
850 Million
Capital Markets Activities Drive Record Liquidity of Over $
1.9 Billion
Third Quarter 2024 Financial and Operating Highlights:
- Invested approximately
$237 million in 93 retail net lease properties - Commenced eight development or Developer Funding Platform ("DFP") projects for total committed capital of approximately
$34 million - Net Income per share attributable to common stockholders increased 2.6% to
$0.42 - Core Funds from Operations ("Core FFO") per share increased 2.2% to
$1.01 - Adjusted Funds from Operations ("AFFO") per share increased 2.8% to
$1.03 - Declared an October monthly dividend of
$0.253 per common share, a 2.4% year-over-year increase - Sold 6.6 million shares of common stock via the forward component of the Company's at-the-market equity ("ATM") program for anticipated net proceeds of approximately
$469 million - Settled 2.9 million shares of outstanding forward equity for net proceeds of approximately
$176 million - Over
$1.9 billion of total liquidity including availability on the revolving credit facility, outstanding forward equity, and cash on hand - Balance sheet well positioned at 3.6 times proforma net debt to recurring EBITDA; 4.9 times excluding unsettled forward equity
Financial Results
Net Income Attributable to Common Stockholders
Net Income for the three months ended
Net Income for the nine months ended
Core FFO
Core FFO for the three months ended
Core FFO for the nine months ended
AFFO
AFFO for the three months ended
AFFO for the nine months ended
Dividend
In the third quarter, the Company declared monthly cash dividends of
For the nine months ended
Subsequent to quarter end, the Company declared an increased monthly cash dividend of
Additionally, subsequent to quarter end, the Company declared a monthly cash dividend on its 4.25% Series A Cumulative Redeemable Preferred Stock of
Earnings Guidance
|
|
Prior 2024 Guidance(1) |
Revised 2024 Guidance |
|
|
|
|
|
AFFO per share(2) |
|
|
|
General and administrative expenses (% of adjusted revenue)(3) |
5.7% to 6.0% |
5.7% to 5.9% |
|
Non-reimbursable real estate expenses (% of adjusted revenue)(3) |
1.0% to 1.5% |
1.1% to 1.4% |
|
Income and other tax expense |
|
|
|
Acquisition volume |
Approximately |
Approximately |
|
Disposition volume |
|
|
The Company's 2024 guidance is subject to risks and uncertainties more fully described in this press release and in the Company's filings with the
(1)
As issued on
(2)
The Company does not provide guidance with respect to the most directly comparable GAAP financial measure or provide reconciliations to GAAP from its forward-looking non-GAAP financial measure of AFFO per share guidance due to the inherent difficulty of forecasting the effect, timing and significance of certain amounts in the reconciliation that would be required by Item 10(e)(1)(i)(B) of Regulation S-K. Examples of these amounts include impairments of assets, gains and losses from sales of assets, and depreciation and amortization from new acquisitions or developments. In addition, certain non-recurring items may also significantly affect net income but are generally adjusted for in AFFO. Based on our historical experience, the dollar amounts of these items could be significant and could have a material impact on the Company's GAAP results for the guidance period.
(3)
Adjusted revenue excludes the impact of the amortization of above and below market lease intangibles.
CEO Comments
"We are very pleased with our year-to-date performance as we have accelerated investment activity while strengthening our balance sheet through proactive capital markets transactions," said
Portfolio Update
As of
Ground Lease Portfolio
As of
At quarter end, the ground lease portfolio was fully occupied, had a weighted-average remaining lease term of approximately 9.8 years, and generated 87.3% of annualized base rents from investment grade retail tenants.
Acquisitions
Total acquisition volume for the third quarter was approximately
For the nine months ended
The Company's outlook for acquisition volume for the full year 2024 is being increased to approximately
Dispositions
During the third quarter, the Company sold two properties for gross proceeds of approximately
During the nine months ended
The Company is increasing the lower end of its full-year 2024 disposition guidance range from
Development and Developer Funding Platform
During the third quarter, the Company commenced eight development or DFP projects, with total anticipated costs of approximately
For the nine months ended
The following table presents estimated costs for the Company's active or completed development or DFP projects as of
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
Number of Projects |
|
|
27 |
|
33 |
|
|
Costs Funded During Q3 2024 |
|
|
|
|
|
|
|
Costs Funded Prior to Q3 2024 |
|
|
43,264 |
|
66,462 |
|
|
Remaining Funding Costs |
|
|
47,131 |
|
47,131 |
|
|
Anticipated Total Project Costs |
|
|
|
|
|
|
Development and DFP project costs are in thousands. Any differences are the result of rounding. Costs Funded During Q3 2024 exclude any costs associated with projects that were completed in prior quarters. Remaining Funding Costs exclude any costs associated with projects that were completed in Q3 2024. Costs Funded Prior to Q3 2024 may include adjustments related to completed projects to arrive at the correct Anticipated Total Project Costs.
Leasing Activity and Expirations
During the third quarter, the Company executed new leases, extensions or options on approximately 785,000 square feet of gross leasable area throughout the existing portfolio. Notable new leases, extensions or options included a 211,000-square foot Walmart in
For the nine months ended
As of
|
Year |
Leases |
|
Annualized Base Rent (1) |
|
Percent of Annualized Base Rent |
|
Gross Leasable Area |
|
Percent of Gross Leasable Area |
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
3 |
|
|
|
0.0 % |
|
24 |
|
0.1 % |
|
2025 |
51 |
|
10,019 |
|
1.7 % |
|
977 |
|
2.1 % |
|
2026 |
124 |
|
27,924 |
|
4.7 % |
|
2,819 |
|
6.0 % |
|
2027 |
164 |
|
36,927 |
|
6.2 % |
|
3,460 |
|
7.4 % |
|
2028 |
176 |
|
46,297 |
|
7.8 % |
|
4,135 |
|
8.8 % |
|
2029 |
201 |
|
64,092 |
|
10.8 % |
|
6,214 |
|
13.2 % |
|
2030 |
287 |
|
60,707 |
|
10.2 % |
|
4,879 |
|
10.4 % |
|
2031 |
190 |
|
44,758 |
|
7.5 % |
|
3,286 |
|
7.0 % |
|
2032 |
243 |
|
50,240 |
|
8.4 % |
|
3,676 |
|
7.8 % |
|
2033 |
208 |
|
47,274 |
|
7.9 % |
|
3,734 |
|
7.9 % |
|
Thereafter |
803 |
|
207,559 |
|
34.8 % |
|
13,818 |
|
29.3 % |
|
Total Portfolio |
2,450 |
|
|
|
100.0 % |
|
47,022 |
|
100.0 % |
The contractual lease expirations presented above exclude the effect of replacement tenant leases that had been executed as of
(1)
Annualized Base Rent represents the annualized amount of contractual minimum rent required by tenant lease agreements as of
Top Tenants
The following table presents annualized base rents for all tenants that represent 1.5% or greater of the Company's total annualized base rent as of
|
Tenant |
|
Annualized |
|
Percent of Annualized Base Rent |
|
|
|
|
|
|
|
Walmart |
|
|
|
6.3 % |
|
Tractor Supply |
|
28,191 |
|
4.7 % |
|
Dollar General |
|
27,591 |
|
4.6 % |
|
Best Buy |
|
20,382 |
|
3.4 % |
|
TJX Companies |
|
19,067 |
|
3.2 % |
|
CVS |
|
18,836 |
|
3.2 % |
|
Dollar Tree |
|
18,236 |
|
3.1 % |
|
Lowe's |
|
17,877 |
|
3.0 % |
|
Kroger |
|
17,102 |
|
2.9 % |
|
O'Reilly Auto Parts |
|
16,962 |
|
2.8 % |
|
|
|
16,434 |
|
2.8 % |
|
|
|
14,179 |
|
2.4 % |
|
|
|
13,831 |
|
2.3 % |
|
|
|
13,361 |
|
2.2 % |
|
Sunbelt Rentals |
|
13,134 |
|
2.2 % |
|
Sherwin-Williams |
|
11,612 |
|
1.9 % |
|
Wawa |
|
9,916 |
|
1.7 % |
|
Home Depot |
|
9,591 |
|
1.6 % |
|
Other(2) |
|
272,059 |
|
45.7 % |
|
Total Portfolio |
|
|
|
100.0 % |
Annualized Base Rent is in thousands; any differences are the result of rounding.
(1)
Refer to footnote 1 on page 5 for the Company's definition of Annualized Base Rent.
(2)
Includes tenants generating less than 1.5% of Annualized Base Rent.
Retail Sectors
The following table presents annualized base rents for all the Company's retail sectors as of
|
Sector |
|
Annualized |
|
Percent of Annualized Base Rent |
|
|
|
|
|
|
|
Grocery Stores |
|
|
|
9.4 % |
|
Home Improvement |
|
55,305 |
|
9.3 % |
|
Tire and Auto Service |
|
49,162 |
|
8.3 % |
|
Convenience Stores |
|
46,077 |
|
7.7 % |
|
Dollar Stores |
|
44,618 |
|
7.5 % |
|
Off-Price Retail |
|
36,596 |
|
6.1 % |
|
Auto Parts |
|
33,966 |
|
5.7 % |
|
General Merchandise |
|
33,151 |
|
5.6 % |
|
Farm and Rural Supply |
|
29,963 |
|
5.0 % |
|
Pharmacy |
|
23,787 |
|
4.0 % |
|
Consumer Electronics |
|
23,606 |
|
4.0 % |
|
Crafts and Novelties |
|
18,752 |
|
3.1 % |
|
|
|
15,617 |
|
2.6 % |
|
Discount Stores |
|
14,595 |
|
2.4 % |
|
Health Services |
|
14,249 |
|
2.4 % |
|
Equipment Rental |
|
14,190 |
|
2.4 % |
|
Dealerships |
|
12,429 |
|
2.1 % |
|
|
|
10,882 |
|
1.8 % |
|
Restaurants - Quick Service |
|
10,800 |
|
1.8 % |
|
Sporting Goods |
|
8,162 |
|
1.4 % |
|
Specialty Retail |
|
7,172 |
|
1.2 % |
|
Financial Services |
|
6,718 |
|
1.1 % |
|
Restaurants - Casual Dining |
|
5,830 |
|
1.0 % |
|
Theaters |
|
3,854 |
|
0.7 % |
|
|
|
3,714 |
|
0.6 % |
|
Home Furnishings |
|
3,672 |
|
0.6 % |
|
Beauty and Cosmetics |
|
3,482 |
|
0.6 % |
|
Shoes |
|
3,421 |
|
0.6 % |
|
Entertainment Retail |
|
2,323 |
|
0.4 % |
|
Apparel |
|
1,883 |
|
0.3 % |
|
Miscellaneous |
|
1,242 |
|
0.2 % |
|
|
|
784 |
|
0.1 % |
|
Total Portfolio |
|
|
|
100.0 % |
Annualized Base Rent is in thousands; any differences are the result of rounding.
(1)
Refer to footnote 1 on page 5 for the Company's definition of Annualized Base Rent.
Geographic Diversification
The following table presents annualized base rents for all states that represent 1.5% or greater of the Company's total annualized base rent as of
|
State |
|
Annualized |
|
Percent of Annualized Base Rent |
|
|
|
|
|
|
|
|
|
|
|
|
|
6.9 % |
|
|
|
|
33,355 |
|
5.6 % |
|
|
|
|
31,900 |
|
5.4 % |
|
|
|
|
31,791 |
|
5.3 % |
|
|
|
|
31,307 |
|
5.3 % |
|
|
|
|
30,269 |
|
5.1 % |
|
|
|
|
27,081 |
|
4.5 % |
|
|
|
|
27,078 |
|
4.5 % |
|
|
|
|
24,209 |
|
4.1 % |
|
|
|
|
23,850 |
|
4.0 % |
|
|
|
|
23,811 |
|
4.0 % |
|
|
|
|
17,200 |
|
2.9 % |
|
|
|
|
17,031 |
|
2.9 % |
|
|
|
|
15,456 |
|
2.6 % |
|
|
|
|
14,817 |
|
2.5 % |
|
|
|
|
14,763 |
|
2.5 % |
|
|
|
|
14,162 |
|
2.4 % |
|
|
|
|
14,120 |
|
2.4 % |
|
|
|
|
13,172 |
|
2.2 % |
|
|
|
|
12,653 |
|
2.1 % |
|
|
|
|
11,631 |
|
2.0 % |
|
|
|
|
11,351 |
|
1.9 % |
|
|
|
|
9,560 |
|
1.6 % |
|
|
|
|
9,436 |
|
1.6 % |
|
|
|
|
9,421 |
|
1.6 % |
|
|
|
|
9,267 |
|
1.6 % |
|
|
Other(2) |
|
76,041 |
|
12.5 % |
|
|
Total Portfolio |
|
|
|
100.0 % |
|
Annualized Base Rent is in thousands; any differences are the result of rounding.
(1) Refer to footnote 1 on page 5 for the Company's definition of Annualized Base Rent.
(2) Includes states generating less than 1.5% of Annualized Base Rent.
Capital Markets, Liquidity and Balance Sheet
Capital Markets
In August, the Company entered into a Fourth Amended and Restated Revolving Credit Agreement to increase its senior unsecured revolving credit facility (the "Credit Facility") to
During the third quarter, the Company entered into forward sale agreements in connection with its ATM program to sell an aggregate of 6.6 million shares of common stock for net proceeds of
The following table presents the Company's outstanding forward equity offerings as of
|
Forward Equity |
|
Shares |
|
Shares |
|
Shares |
|
Net Proceeds |
|
Anticipated Net |
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2023 ATM Forward Offerings |
|
3,833,871 |
|
800,000 |
|
3,033,871 |
|
|
|
|
|
Q1 2024 ATM Forward Offerings |
|
20,743 |
|
- |
|
20,743 |
|
- |
|
|
|
Q2 2024 ATM Forward Offerings |
|
3,235,964 |
|
2,100,000 |
|
1,135,964 |
|
|
|
|
|
Q3 2024 ATM Forward Offerings |
|
6,602,317 |
|
- |
|
6,602,317 |
|
- |
|
|
|
Total Forward Equity Offerings |
|
13,692,895 |
|
2,900,000 |
|
10,792,895 |
|
|
|
|
Liquidity
As of
Balance Sheet
As of
The Company's total debt to enterprise value was 25.3% as of
For the three months and nine months ended September 30, 2024, the Company's fully diluted weighted-average shares outstanding were 101.7 million and 100.9 million, respectively. The basic weighted-average shares outstanding for the three and nine months ended
For the three and nine months ended
The Company's assets are held by, and its operations are conducted through, the
Conference Call/Webcast
The Company will host its quarterly analyst and investor conference call on
Additionally, a webcast of the conference call will be available via the Company's website. To access the webcast, visit www.agreerealty.com ten minutes prior to the start time of the conference call and go to the Investors section of the website. A replay of the conference call webcast will be archived and available online through the Investors section of www.agreerealty.com.
About
Forward-Looking Statements
This press release contains forward-looking statements
, including statements about projected financial and operating results,
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"). The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions.
Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may,", "can", "will," "should," "potential," "intend," "expect," "seek," "anticipate," "estimate," "approximately," "believe," "could," "project," "predict," "forecast," "continue," "assume," "plan," "outlook" or other similar words or expressions. Forward-looking statements, including our updated 2024 guidance, are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. Although these forward-looking statements are based on good faith beliefs, reasonable assumptions and the Company's best judgment reflecting current information, you should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company's control and which could materially affect the Company's results of operations, financial condition, cash flows, performance or future achievements or events. Currently, some of the most significant factors, include the potential adverse effect of ongoing worldwide economic uncertainties and increased inflation and interest rates on the financial condition, results of operations, cash flows and performance of the Company and its tenants, the real estate market and the global economy and financial markets. The extent to which these conditions will impact the Company and its tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence. Moreover, investors are cautioned to interpret many of the risks identified in the risk factors discussed in the Company's Annual Report on Form 10-K and subsequent quarterly reports filed with the
For further information about the Company's business and financial results, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of the Company's
The Company defines the "weighted-average capitalization rate" for acquisitions and dispositions as the sum of contractual fixed annual rents computed on a straight-line basis over the primary lease terms and anticipated annual net tenant recoveries, divided by the purchase and sale prices for occupied properties.
References to "Core FFO" and "AFFO" in this press release are representative of Core FFO attributable to OP common unitholders and AFFO attributable to OP common unitholders. Detailed calculations for these measures are shown in the Reconciliation of Net Income to FFO, Core FFO and Adjusted FFO table as "Core Funds From Operations – OP Common Unitholders" and "Adjusted Funds from Operations – OP Common Unitholders".
|
|
|||
|
Consolidated Balance Sheet |
|||
|
($ in thousands, except share and per-share data) |
|||
|
(Unaudited) |
|||
|
|
|
|
|
|
Assets: |
|
|
|
|
Real Estate Investments: |
|
|
|
|
Land |
$ 2,404,085 |
|
$ 2,282,354 |
|
Buildings |
5,197,392 |
|
4,861,692 |
|
Accumulated depreciation |
(526,443) |
|
(433,958) |
|
Property under development |
52,746 |
|
33,232 |
|
Net real estate investments |
7,127,780 |
|
6,743,320 |
|
Real estate held for sale, net |
13,611 |
|
3,642 |
|
Cash and cash equivalents |
13,237 |
|
10,907 |
|
Cash held in escrows |
- |
|
3,617 |
|
Accounts receivable - tenants, net |
98,205 |
|
82,954 |
|
Lease Intangibles, net of accumulated amortization of |
837,865 |
|
854,088 |
|
Other assets, net |
93,505 |
|
76,308 |
|
Total Assets |
$ 8,184,203 |
|
$ 7,774,836 |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
Mortgage notes payable, net |
42,366 |
|
42,811 |
|
Unsecured term loan, net |
347,274 |
|
346,798 |
|
Senior unsecured notes, net |
2,236,948 |
|
1,794,312 |
|
Unsecured revolving credit facility |
49,000 |
|
227,000 |
|
Dividends and distributions payable |
26,587 |
|
25,534 |
|
Accounts payable, accrued expenses, and other liabilities |
142,196 |
|
101,401 |
|
Lease intangibles, net of accumulated amortization of
|
45,202 |
|
36,827 |
|
Total Liabilities |
$ 2,889,573 |
|
$ 2,574,683 |
|
|
|
|
|
|
Equity: |
|
|
|
|
Preferred Stock, |
175,000 |
|
175,000 |
|
Common stock, |
10 |
|
10 |
|
Additional paid-in-capital |
5,534,978 |
|
5,354,120 |
|
Dividends in excess of net income |
(434,485) |
|
(346,473) |
|
Accumulated other comprehensive income (loss) |
18,459 |
|
16,554 |
|
Total Equity - |
$ 5,293,962 |
|
$ 5,199,211 |
|
Non-controlling interest |
668 |
|
942 |
|
Total Equity |
$ 5,294,630 |
|
$ 5,200,153 |
|
Total Liabilities and Equity |
$ 8,184,203 |
|
$ 7,774,836 |
|
|
|
|
|
|
|
|||||||
|
Consolidated Statements of Operations and Comprehensive Income |
|||||||
|
($ in thousands, except share and per share-data) |
|||||||
|
(Unaudited) |
|||||||
|
|
|||||||
|
|
Three months ended
|
|
Nine months ended
|
||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Revenues |
|
|
|
|
|
|
|
|
Rental Income |
$ 154,292 |
|
$ 136,774 |
|
$ 456,139 |
|
$ 393,259 |
|
Other |
40 |
|
38 |
|
222 |
|
71 |
|
Total Revenues |
$ 154,332 |
|
$ 136,812 |
|
$ 456,361 |
|
$ 393,330 |
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
Real estate taxes |
$ 11,935 |
|
$ 10,124 |
|
$ 33,357 |
|
$ 29,429 |
|
Property operating expenses |
6,015 |
|
5,518 |
|
19,875 |
|
18,120 |
|
Land lease expense |
421 |
|
411 |
|
1,251 |
|
1,252 |
|
General and administrative |
9,114 |
|
8,844 |
|
28,336 |
|
26,087 |
|
Depreciation and amortization |
51,504 |
|
45,625 |
|
150,421 |
|
129,020 |
|
Provision for impairment |
2,694 |
|
3,195 |
|
7,224 |
|
4,510 |
|
Total Operating Expenses |
$ 81,683 |
|
$ 73,717 |
|
$ 240,464 |
|
$ 208,418 |
|
|
|
|
|
|
|
|
|
|
Gain (loss) on sale of assets, net |
1,850 |
|
(20) |
|
11,102 |
|
299 |
|
Gain (loss) on involuntary conversion, net |
(56) |
|
- |
|
(91) |
|
- |
|
|
|
|
|
|
|
|
|
|
Income from Operations |
$ 74,443 |
|
$ 63,075 |
|
$ 226,908 |
|
$ 185,211 |
|
|
|
|
|
|
|
|
|
|
Other (Expense) Income |
|
|
|
|
|
|
|
|
Interest expense, net |
$ (28,942) |
|
$ (20,803) |
|
$ (79,809) |
|
$ (58,748) |
|
Income and other tax (expense) benefit |
(1,077) |
|
(709) |
|
(3,231) |
|
(2,201) |
|
Other (expense) income |
104 |
|
94 |
|
587 |
|
184 |
|
|
|
|
|
|
|
|
|
|
Net Income |
$ 44,528 |
|
$ 41,657 |
|
$ 144,455 |
|
$ 124,446 |
|
|
|
|
|
|
|
|
|
|
Less net income attributable to non-controlling interest |
153 |
|
135 |
|
497 |
|
442 |
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to |
$ 44,375 |
|
$ 41,522 |
|
$ 143,958 |
|
$ 124,004 |
|
|
|
|
|
|
|
|
|
|
Less Series A Preferred Stock Dividends |
1,859 |
|
1,859 |
|
5,578 |
|
5,578 |
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Common Stockholders |
$ 42,516 |
|
$ 39,663 |
|
$ 138,380 |
|
$ 118,426 |
|
|
|
|
|
|
|
|
|
|
Net Income Per Share Attributable to Common Stockholders |
|
|
|
|
|
|
|
|
Basic |
$ 0.42 |
|
$ 0.41 |
|
$ 1.38 |
|
$ 1.26 |
|
Diluted |
$ 0.42 |
|
$ 0.41 |
|
$ 1.37 |
|
$ 1.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Income |
|
|
|
|
|
|
|
|
Net Income |
$ 44,528 |
|
$ 41,657 |
|
$ 144,455 |
|
$ 124,446 |
|
Amortization of interest rate swaps |
(739) |
|
(631) |
|
(2,043) |
|
(1,889) |
|
Change in fair value and settlement of interest rate swaps |
(11,760) |
|
8,324 |
|
3,955 |
|
11,664 |
|
Total Comprehensive Income (Loss) |
32,029 |
|
49,350 |
|
146,367 |
|
134,221 |
|
Less comprehensive income attributable to non-controlling interest |
110 |
|
162 |
|
504 |
|
477 |
|
Comprehensive Income Attributable to |
$ 31,919 |
|
$ 49,188 |
|
$ 145,863 |
|
$ 133,744 |
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares Outstanding - Basic |
100,383,207 |
|
97,255,143 |
|
100,343,493 |
|
93,474,182 |
|
Weighted Average Number of Common Shares Outstanding - Diluted |
101,715,311 |
|
97,349,473 |
|
100,882,858 |
|
93,732,359 |
|
|
|||||||
|
Reconciliation of Net Income to FFO, Core FFO and Adjusted FFO |
|||||||
|
($ in thousands, except share and per-share data) |
|||||||
|
(Unaudited) |
|||||||
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
Net Income |
$ 44,528 |
|
$ 41,657 |
|
$ 144,455 |
|
$ 124,446 |
|
Less Series A Preferred Stock Dividends |
1,859 |
|
1,859 |
|
5,578 |
|
5,578 |
|
Net Income attributable to OP Common Unitholders |
42,669 |
|
39,798 |
|
138,877 |
|
118,868 |
|
Depreciation of rental real estate assets |
33,941 |
|
29,769 |
|
99,438 |
|
84,498 |
|
Amortization of lease intangibles - in-place leases and leasing costs |
17,056 |
|
15,258 |
|
49,476 |
|
43,356 |
|
Provision for impairment |
2,694 |
|
3,195 |
|
7,224 |
|
4,510 |
|
(Gain) loss on sale or involuntary conversion of assets, net |
(1,794) |
|
20 |
|
(11,011) |
|
(299) |
|
Funds from Operations - OP Common Unitholders |
$ 94,566 |
|
$ 88,040 |
|
$ 284,004 |
|
$ 250,933 |
|
Amortization of above (below) market lease intangibles, net and assumed mortgage debt discount, net |
8,377 |
|
8,377 |
|
25,137 |
|
25,866 |
|
Core Funds from Operations - OP Common Unitholders |
$ 102,943 |
|
$ 96,417 |
|
$ 309,141 |
|
$ 276,799 |
|
Straight-line accrued rent |
(3,332) |
|
(2,795) |
|
(9,675) |
|
(8,942) |
|
Stock based compensation expense |
2,780 |
|
2,172 |
|
7,993 |
|
6,180 |
|
Amortization of financing costs and original issue discounts |
1,871 |
|
1,160 |
|
4,359 |
|
3,217 |
|
Non-real estate depreciation |
507 |
|
598 |
|
1,507 |
|
1,166 |
|
Adjusted Funds from Operations - OP Common Unitholders |
$ 104,768 |
|
$ 97,552 |
|
$ 313,325 |
|
$ 278,420 |
|
|
|
|
|
|
|
|
|
|
Funds from Operations Per Common Share and OP Unit - Basic |
$ 0.94 |
|
$ 0.90 |
|
$ 2.82 |
|
$ 2.67 |
|
Funds from Operations Per Common Share and OP Unit - Diluted |
$ 0.93 |
|
$ 0.90 |
|
$ 2.81 |
|
$ 2.67 |
|
|
|
|
|
|
|
|
|
|
Core Funds from Operations Per Common Share and OP Unit - Basic |
$ 1.02 |
|
$ 0.99 |
|
$ 3.07 |
|
$ 2.95 |
|
Core Funds from Operations Per Common Share and OP Unit - Diluted |
$ 1.01 |
|
$ 0.99 |
|
$ 3.05 |
|
$ 2.94 |
|
|
|
|
|
|
|
|
|
|
Adjusted Funds from Operations Per Common Share and OP Unit - Basic |
$ 1.04 |
|
$ 1.00 |
|
$ 3.11 |
|
$ 2.97 |
|
Adjusted Funds from Operations Per Common Share and OP Unit - Diluted |
$ 1.03 |
|
$ 1.00 |
|
$ 3.10 |
|
$ 2.96 |
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares and OP Units Outstanding - Basic |
100,730,826 |
|
97,602,762 |
|
100,691,112 |
|
93,821,801 |
|
Weighted Average Number of Common Shares and OP Units Outstanding – Diluted |
102,062,930 |
|
97,697,092 |
|
101,230,477 |
|
94,079,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional supplemental disclosure |
|
|
|
|
|
|
|
|
Scheduled principal repayments |
$ 243 |
|
$ 228 |
|
$ 717 |
|
$ 673 |
|
Capitalized interest |
425 |
|
466 |
|
1,126 |
|
1,669 |
|
Capitalized building improvements |
6,714 |
|
3,602 |
|
10,504 |
|
6,697 |
|
|
|||||||
Non-GAAP Financial Measures
Funds from Operations ("FFO" or "Nareit FFO")
FFO is defined by the
Core Funds from Operations ("Core FFO")
The Company defines Core FFO as Nareit FFO with the addback of (i) noncash amortization of acquisition purchase price related to above- and below- market lease intangibles and discount on assumed debt and (ii) certain infrequently occurring items that reduce or increase net income in accordance with GAAP. 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 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.
|
|
||||||
|
Reconciliation of Non-GAAP Financial Measures |
||||||
|
($ in thousands, except share and per-share data) |
||||||
|
(Unaudited) |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
|
|
|
2024 |
|
|
|
|
|
|
|
|
|
Mortgage notes payable, net |
|
|
|
|
|
$ 42,366 |
|
Unsecured term loan, net |
|
|
|
|
|
347,274 |
|
Senior unsecured notes, net |
|
|
|
|
|
2,236,948 |
|
Unsecured revolving credit facility |
|
49,000 |
||||
|
Total Debt per the Consolidated Balance Sheet |
|
$ 2,675,588 |
||||
|
|
|
|
|
|
|
|
|
Unamortized debt issuance costs and discounts, net |
|
|
|
|
27,563 |
|
|
Total Debt |
|
|
|
|
|
$ 2,703,151 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
(13,237) |
|
Net Debt |
|
|
|
|
|
$ 2,689,914 |
|
|
|
|
|
|
|
|
|
Anticipated Net Proceeds from ATM Forward Offerings |
|
$ (724,955) |
||||
|
Proforma Net Debt |
|
1,964,959 |
||||
|
|
|
|
||||
|
Net Income |
|
$ 44,528 |
||||
|
Interest expense, net |
|
28,942 |
||||
|
Income and other tax expense |
|
1,077 |
||||
|
Depreciation of rental real estate assets |
|
33,941 |
||||
|
Amortization of lease intangibles - in-place leases and leasing costs |
|
17,056 |
||||
|
Non-real estate depreciation |
|
507 |
||||
|
Provision for impairment |
|
2,694 |
||||
|
(Gain) loss on sale or involuntary conversion of assets, net |
|
(1,794) |
||||
|
EBITDAre |
|
$ 126,951 |
||||
|
|
|
|
||||
|
Run-Rate Impact of Investment, Disposition and Leasing Activity |
|
$ 2,446 |
||||
|
Amortization of above (below) market lease intangibles, net |
|
8,294 |
||||
|
Recurring EBITDA |
|
$ 137,691 |
||||
|
|
|
|
||||
|
Annualized Recurring EBITDA |
|
$ 550,764 |
||||
|
|
|
|
||||
|
Total Debt per the Consolidated Balance Sheet to Annualized Net Income |
15.2x |
|||||
|
|
|
|
||||
|
Net Debt to Recurring EBITDA |
|
4.9x |
||||
|
|
|
|
||||
|
Proforma Net Debt to Recurring EBITDA |
|
3.6x |
||||
Non-GAAP Financial Measures
Total Debt and Net Debt
The Company defines Total Debt as debt per the consolidated balance sheet excluding unamortized debt issuance costs, original issue discounts and debt discounts. Net Debt is defined as Total Debt less cash, cash equivalents and cash held in escrows. The Company considers the non-GAAP measures of Total Debt and Net Debt to be key supplemental measures of the Company's overall liquidity, capital structure and leverage because they provide industry analysts, lenders and investors useful information in understanding our financial condition. The Company's calculation of Total Debt and Net Debt may not be comparable to Total Debt and Net Debt reported by other REITs that interpret the definitions differently than the Company. The Company presents Net Debt on both an actual and proforma basis, assuming the net proceeds of the Forward Offerings (see below) are used to pay down debt. The Company believes the proforma measure may be useful to investors in understanding the potential effect of the Forward Offerings on the Company's capital structure, its future borrowing capacity, and its ability to service its debt.
Forward Offerings
The Company has 10,792,895 shares remaining to be settled under the ATM Forward Offerings. Upon settlement, the offerings are anticipated to raise net proceeds of approximately
EBITDAre
EBITDAre is defined by Nareit to mean net income computed in accordance with GAAP, plus interest expense, income tax expense, depreciation and amortization, any gains (or losses) from sales of real estate assets and/or changes in control, any impairment charges on depreciable real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. The Company considers the non-GAAP measure of EBITDAre to be a key supplemental measure of the Company's performance and should be considered along with, but not as an alternative to, net income or loss as a measure of the Company's operating performance. The Company considers EBITDAre a key supplemental measure of the Company's operating performance because it provides an additional supplemental measure of the Company's performance and operating cash flow that is widely known by industry analysts, lenders and investors. The Company's calculation of EBITDAre may not be comparable to EBITDAre reported by other REITs that interpret the Nareit definition differently than the Company.
Recurring EBITDA
The Company defines Recurring EBITDA as EBITDAre with the addback of noncash amortization of above- and below- market lease intangibles, and after adjustments for the run-rate impact of the Company's investment and disposition activity for the period presented, as well as adjustments for non-recurring benefits or expenses. The Company considers the non-GAAP measure of Recurring EBITDA to be a key supplemental measure of the Company's performance and should be considered along with, but not as an alternative to, net income or loss as a measure of the Company's operating performance. The Company considers Recurring EBITDA a key supplemental measure of the Company's operating performance because it represents the Company's earnings run rate for the period presented and because it is widely followed by industry analysts, lenders and investors. Our Recurring EBITDA may not be comparable to Recurring EBITDA reported by other companies that have a different interpretation of the definition of Recurring EBITDA. Our ratio of net debt to Recurring EBITDA is used by management as a measure of leverage and may be useful to investors in understanding the Company's ability to service its debt, as well as assess the borrowing capacity of the Company. Our ratio of net debt to Recurring EBITDA is calculated by taking annualized Recurring EBITDA and dividing it by our net debt per the consolidated balance sheet.
Annualized Net Income
Represents net income for the three months ended
|
|
|||||||||||
|
Rental Income |
|||||||||||
|
($ in thousands, except share and per share-data) |
|||||||||||
|
(Unaudited) |
|||||||||||
|
|
Three months ended
|
|
Nine months ended
|
||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|||
|
Rental Income Source(1) |
|
|
|
|
|
|
|
|
|||
|
Minimum rents(2) |
$ 143,143 |
|
$ 127,756 |
|
$ 421,122 |
|
$ 364,462 |
|
|||
|
Percentage rents(2) |
12 |
|
- |
|
1,717 |
|
1,314 |
|
|||
|
Operating cost reimbursement(2) |
16,099 |
|
14,516 |
|
48,511 |
|
44,156 |
|
|||
|
Straight-line rental adjustments(3) |
3,332 |
|
2,795 |
|
9,675 |
|
8,942 |
|
|||
|
Amortization of (above) below market lease intangibles(4) |
(8,294) |
|
(8,293) |
|
(24,886) |
|
(25,615) |
|
|||
|
Total Rental Income |
$ 154,292 |
|
$ 136,774 |
|
$ 456,139 |
|
$ 393,259 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company adopted Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") 842 "Leases" using the modified retrospective approach as of
(2) Represents contractual rentals and/or reimbursements as required by tenant lease agreements, recognized on an accrual basis of accounting. The Company believes that the presentation of contractual lease income is not, and is not intended to be, a presentation in accordance with GAAP. The Company believes this information is frequently used by management, investors, analysts and other interested parties to evaluate the Company's performance.
(3) Represents adjustments to recognize minimum rents on a straight-line basis, consistent with the requirements of FASB ASC 842.
(4) In allocating the fair value of an acquired property, 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.
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