10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Mark One

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

For the quarterly period ended September 30, 2015, 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

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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ¨	Accelerated Filer x	Non-accelerated Filer ¨	Smaller reporting company ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

As of October 28, 2015, the Registrant had 18,888,412 shares of common stock, $0.0001 par value, outstanding.

AGREE REALTY CORPORATION

Index to Form 10-Q

		Page
PART I	Financial Information
Item 1:	Interim Consolidated Financial Statements
	Consolidated Balance Sheets as of September 30, 2015 (Unaudited) and December 31, 2014	3
	Consolidated Statements of Income and Comprehensive Income (Unaudited) for the three and nine months ended September 30, 2015 and 2014	5
	Consolidated Statement of Stockholders’ Equity (Unaudited) for the nine months ended September 30, 2015	6
	Consolidated Statements of Cash Flows (Unaudited) for nine months ended September 30, 2015 and 2014	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3:	Quantitative and Qualitative Disclosures about Market Risk	26
Item 4:	Controls and Procedures	27
PART II
Item 1:	Legal Proceedings	27
Item 1A:	Risk Factors	27
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3:	Defaults Upon Senior Securities	28
Item 4:	Mine Safety Disclosures	28
Item 5:	Other Information	28
Item 6:	Exhibits	28
SIGNATURES		29

2

AGREE REALTY CORPORATION

CONSOLIDATED BALANCE SHEETS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

	(Unaudited) September 30,			December 31,
	2015			2014
ASSETS
Real Estate Investments
Land	$	209,688,872		$	195,091,303
Buildings		489,571,159			393,826,467
Less accumulated depreciation		(53,873,530	)		(59,089,851	)
		645,386,501			529,827,919
Property under development		4,921,625			229,242
Net Real Estate Investments		650,308,126			530,057,161
Cash and Cash Equivalents		21,379,827			5,399,458
Accounts Receivable - Tenants, net of allowance of $35,000 for possible losses at September 30, 2015 and December 31, 2014		6,138,906			4,507,735
Unamortized Deferred Expenses
Financing costs, net of accumulated amortization of $3,251,313 and $2,690,005 at September 30, 2015 and December 31, 2014, respectively		3,333,365			3,008,280
Leasing costs, net of accumulated amortization of $529,866 and $543,957 at September 30, 2015 and December 31, 2014, respectively		688,200			783,335
Lease intangibles, net of accumulated amortization of $9,531,410 and $5,719,085 at September 30, 2015 and December 31, 2014, respectively		65,571,624			47,479,602
Other Assets		1,816,501			2,345,290
Total Assets	$	749,236,549		$	593,580,861

See accompanying notes to consolidated financial statements.

3

AGREE REALTY CORPORATION

CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	September 30,			December 31,
	2015			2014
LIABILITIES
Mortgage Notes Payable	$	102,295,587		$	106,762,238
Unsecured Term Loans		100,000,000			100,000,000
Senior Unsecured Notes		100,000,000			-
Unsecured Revolving Credit Facility		27,000,000			15,000,000
Dividends and Distributions Payable		8,942,873			8,048,404
Deferred Revenue		656,488			1,004,023
Accrued Interest Payable		1,968,820			721,459
Accounts Payable and Accrued Expense
Capital expenditures		2,200			200,300
Operating		2,914,549			2,684,599
Interest Rate Swaps		5,038,132			2,383,308
Deferred Income Taxes		705,000			705,000
Tenant Deposits		28,608			36,156
Total Liabilities		349,552,257			237,545,487
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value, 28,000,000 shares  authorized, 18,888,412 and 17,539,946 shares issued and outstanding, respectively		1,889			1,754
Preferred Stock, $.0001 par value per share, 4,000,000  shares authorized
Series A junior participating preferred stock, $.0001 par value, 200,000 authorized, no shares issued and outstanding		-			-
Additional paid-in-capital		428,579,718			388,262,847
Deficit		(26,452,162	)		(32,584,612	)
Accumulated other comprehensive loss		(4,933,446	)		(2,059,998	)
Total Stockholders' Equity - Agree Realty Corporation		397,195,999			353,619,991
Non-controlling interest		2,488,293			2,415,383
Total Stockholders' Equity		399,684,292			356,035,374
Total Liabilities and Stockholders' Equity	$	749,236,549		$	593,580,861

See accompanying notes to consolidated financial statements.

4

AGREE REALTY CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
Revenues
Minimum rents	$	16,735,634		$	12,628,111		$	47,261,815		$	35,941,801
Percentage rents		37,920			4,695			188,748			146,876
Operating cost reimbursement		970,555			1,010,157			3,246,518			2,979,738
Other income		105,703			114,462			115,238			167,838
Total Revenues		17,849,812			13,757,425			50,812,319			39,236,253
Operating Expenses
Real estate taxes		715,685			773,647			2,341,965			2,210,622
Property operating expenses		424,296			337,811			1,411,393			1,294,631
Land lease payments		173,713			125,327			442,858			339,877
General and administrative		1,768,895			1,748,209			5,180,527			4,956,897
Depreciation and amortization		5,525,901			2,855,066			13,196,664			7,959,812
Impairment charge		-			220,000			-			3,020,000
Total Operating Expenses		8,608,490			6,060,060			22,573,407			19,781,839
											12.6	%
Income from Operations		9,241,322			7,697,365			28,238,912			19,454,414
Other (Expense) Income
Interest expense, net		(2,964,319	)		(2,439,105	)		(8,358,343	)		(6,108,076	)
Gain (Loss) on sale of assets		8,599,261			(292,652	)		12,134,571			(292,652	)
Loss on debt extinguishment		-			-			(179,867	)		-
Income From Continuing Operations		14,876,264			4,965,608			31,835,273			13,053,686
Discontinued Operations
Gain on sale of assets from discontinued operations		-			-			-			122,747
Income from discontinued operations		-			-			-			14,573
Net Income		14,876,264			4,965,608			31,835,273			13,191,006
Less Net Income Attributable to Non-Controlling Interest		280,801			112,763			607,854			299,576
Net Income Attributable to Agree Realty Corporation	$	14,595,463		$	4,852,845		$	31,227,419		$	12,891,430
Basic Earnings Per Share
Continuing operations	$	0.81		$	0.33		$	1.77		$	0.87
Discontinued operations		-			-			-			0.01
	$	0.81		$	0.33		$	1.77		$	0.88
Diluted Earnings Per Share
Continuing operations	$	0.81		$	0.33		$	1.76		$	0.86
Discontinued operations		-			-			-			0.01
	$	0.81		$	0.33		$	1.76		$	0.87
Other Comprehensive Income
Net income	$	14,876,264		$	4,965,608		$	31,835,273		$	13,191,006
Other Comprehensive Income (Loss)		(2,538,187	)		727,135			(2,928,837	)		(583,107	)
Total Comprehensive Income		12,338,077			5,692,743			28,906,436			12,607,899
Comprehensive Income Attributable to Non-Controlling Interest		(231,073	)		(129,269	)		(552,114	)		(286,339	)
Comprehensive Income Attributable to Agree Realty Corporation	$	12,107,004		$	5,563,474		$	28,354,322		$	12,321,560
Weighted Average Number of Common Shares Outstanding - Basic		18,008,592			14,713,740			17,653,482			14,712,352
Weighted Average Number of Common Shares Outstanding - Diluted:		18,064,318			14,782,051			17,716,362			14,782,484

See accompanying notes to consolidated financial statements.

5

AGREE REALTY CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Unaudited)

												Accumulated
												Other
	Common Stock						Additional					Comprehensive			Non-Controlling			Total
	Shares			Amount			Paid-In Capital		Deficit			Income (Loss)			Interest			Equity
Balance, December 31, 2014		17,539,946		$	1,754		$	388,262,847	$	(32,584,612	)	$	(2,059,998	)	$	2,415,383		$	356,035,374
Issuance of common stock, net of issuance costs		1,303,011			130			38,794,943		-			-			-			38,795,073
Issuance of restricted stock under the Omnibus Incentive Plan		73,479			7			-		-			-			-			7
Forfeiture of restricted stock		(28,024	)		(2	)		-		-			-			-			(2	)
Vesting of restricted stock		-			-			1,521,928		-			-			-			1,521,928
Dividends and distributions declared for the period		-			-			-		(25,094,969	)		-			(479,555	)		(25,574,524	)
Other comprehensive income (loss) - change in fair value of interest rate swaps		-			-			-		-			(2,873,448	)		(55,389	)		(2,928,837	)
Net income		-			-			-		31,227,419			-			607,854			31,835,273
Balance, September 30, 2015		18,888,412		$	1,889		$	428,579,718	$	(26,452,162	)	$	(4,933,446	)	$	2,488,293		$	399,684,292

See accompanying notes to consolidated financial statements.

6

AGREE REALTY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended
	September 30, 2015			September 30, 2014
Cash Flows from Operating Activities
Net income	$	31,835,273		$	13,191,006
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		8,760,094			6,147,445
Amortization		4,417,752			2,592,226
Stock-based compensation		1,521,928			1,555,712
Impairment charge		-			3,020,000
Loss on extinguishment of debt		179,867			-
Debt extinguishment costs		(150,084	)		-
Gain (loss) on sale of assets		(12,115,668	)		169,905
Increase in accounts receivable		(1,631,171	)		(755,779	)
Decrease in other assets		471,342			170,062
Increase (decrease) in accounts payable		229,068			(533,631	)
Decrease in deferred revenue		(347,535	)		(347,535	)
Increase in accrued interest		1,247,361			91,907
Increase (decrease) in tenant deposits		(7,546	)		3,801
Net Cash Provided by Operating Activities		34,410,681			25,305,119
Cash Flows from Investing Activities
Acquisition of real estate investments		(161,693,175	)		(70,946,751	)
Development of real estate investments and other (including capitalized interest of $16,694 in 2015 and $221,410 in 2014)		(5,346,154	)		(13,096,829	)
Payment of leasing costs		(66,410	)		(302,468	)
Net proceeds from sale of assets		28,117,241			6,740,694
Net Cash Used In Investing Activities		(138,988,498	)		(77,605,354	)
Cash Flows from Financing Activities
Proceeds from common stock offerings, net		38,795,078			(14,529	)
Unsecured revolving credit facility borrowings		128,000,000			95,622,975
Unsecured revolving credit facility repayments		(116,000,000	)		(88,622,975	)
Payments of mortgage notes payable		(4,466,651	)		(11,843,509	)
Term loan payable proceeds		-			65,000,000
Senior unsecured notes proceeds		100,000,000			-
Dividends paid		(24,209,043	)		(18,969,743	)
Limited partners' distributions paid		(474,500	)		(441,475	)
Repayments of payables for capital expenditures		(200,302	)		(144,074	)
Payments for financing costs		(886,396	)		(1,420,064	)
Net Cash Provided by Financing Activities		120,558,186			39,166,606
Net Increase (Decrease) in Cash and Cash Equivalents		15,980,369			(13,133,629	)
Cash and Cash Equivalents, beginning of period		5,399,458			14,536,881
Cash and Cash Equivalents, end of period	$	21,379,827		$	1,403,252
Supplemental Disclosure of Cash Flow Information
Cash paid for interest (net of amounts capitalized)	$	9,142,568		$	5,383,679
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Shares issued under equity incentive plans	$	2,463,751		$	2,325,235
Dividends and limited partners' distributions declared and unpaid	$	8,944,754		$	6,582,370
Real estate acquisitions financed with debt assumption	$	-		$	5,631,183
Real estate investment financed with accounts payable	$	2,200		$	-

See accompanying notes to consolidated financial statements.

7

AGREE REALTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Note 1 – Organization

Agree Realty Corporation (the ”Company”) is a Maryland corporation and 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 listed on the New York Stock Exchange (“NYSE”) in 1994.

The Company’s assets are held by, and all of its operations are conducted through, directly or indirectly, Agree Limited Partnership (the “Operating Partnership”), of which the Company is the sole general partner and in which the Company held a 98.19% interest as of September 30, 2015. 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

Note 2 – Summary of Significant Accounting Policies

Basis of Accounting and Principles of Consolidation

The accompanying unaudited consolidated financial statements for the nine months ended September 30, 2015 have been prepared in accordance with U.S. generally accepted accounting principles (“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 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 nine months ended September 30, 2015 may not be indicative of the results that may be expected for the year ending December 31, 2015. Amounts as of December 31, 2014 included in the consolidated financial statements have been derived from the audited consolidated financial statements as of that date. The unaudited consolidated financial statements, included herein, should be read in conjunction with the 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, 2014.

The unaudited 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 assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although management believes its estimates are reasonable, actual results could differ from those estimates.

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. Properties classified as “held for sale” are recorded at the lower of their carrying value or their fair value less anticipated selling costs.

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, building and identified intangible assets and liabilities, based in each case on their relative estimated fair values and without giving rise to goodwill. Intangible assets and liabilities represent the value of in-place leases and above- or below-market leases. 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.

8

AGREE REALTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

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 estimate 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 of the real estate and management’s estimate of current market lease rates for the property, measured over a period equal to the remaining non-cancelable term of the lease.

The fair value of identified intangible assets and liabilities acquired is amortized to depreciation and amortization over the remaining term of the related leases.

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.

Accounts Receivable – Tenants

The Company reviews its rent receivables for collectability 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 of a receivable with respect to any tenant is in doubt, a provision for uncollectible amounts will be established or a direct write-off of the specific rent receivable will be made. For accrued rental revenues related to the straight-line method of reporting rental revenue, the Company performs a periodic review of receivable balances to assess the risk of uncollectible amounts and establish appropriate provisions.

Earnings per Share

Earnings per share have been computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted average common and potential dilutive common shares outstanding in accordance with the treasury stock method.

The following is a reconciliation of the denominator of the basic net earnings per common share computation to the denominator of the diluted net earnings per common share computation for each of the periods presented:

	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30,2015			September 30,2014
Weighted average number of common shares outstanding		18,213,436			14,960,218			17,858,326			14,958,830
Less: Unvested restricted stock		(204,844	)		(246,478	)		(204,844	)		(246,478	)
Weighted average number of common shares outstanding used in basic earnings per share		18,008,592			14,713,740			17,653,482			14,712,352
Weighted average number of common shares outstanding used in basic earnings per share		18,008,592			14,713,740			17,653,482			14,712,352
Effect of dilutive securities: restricted stock		55,726			68,311			62,880			70,132
Weighted average number of common shares outstanding used in diluted earnings per share		18,064,318			14,782,051			17,716,362			14,782,484

9

AGREE REALTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Income Taxes

The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. As a REIT, the Company generally will not be subject to federal income tax provided it continues to satisfy certain tests concerning the Company’s sources of income, the nature of its assets, the amounts distributed to its stockholders, and the ownership of Company stock. Management believes the Company has qualified and will continue to qualify as a REIT. Notwithstanding the Company’s qualification for taxation as a REIT, the Company is subject to certain state and local taxes on its income and real estate.

The Company has established taxable REIT subsidiaries (“TRS”) pursuant to the provisions of the Internal Revenue Code. The Company’s TRS entities are able to engage in activities resulting in income that would be non-qualifying income for a REIT. As a result, certain activities of the Company which occur within its TRS entities are subject to federal and state income taxes. As of September 30, 2015 and December 31, 2014, the Company had accrued a deferred income tax amount of $705,000. In addition, the Company recognized income tax expense of $0 and $(355) for the three months ended September 30, 2015 and 2014, respectively, and $25,100 and $4,775 for the nine months ended September 30, 2015 and 2014, respectively.

Fair Values of Financial Instruments

The Company’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. The guidance describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels:

Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities.

Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued ASU No. 2014-09 “Revenue from Contracts with Customers”. ASU No. 2014-09 was developed to enable financial statement users to better understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The update’s core principal is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Companies are to use a five-step contract review model to ensure revenue gets recognized, measured and disclosed in accordance with this principle. ASU 2014-09 was to be effective for fiscal years and interim periods beginning after December 15, 2016. In August 2015, the Financial Accounting Standards Board issued ASU No. 2015-14 to defer the effective date of ASU No. 2014-09 for one year. As a result, ASU No. 2014-09 is now effective for fiscal years and interim periods beginning after December 15, 2017. The amendments in this update will be applied retrospectively either to each prior reporting period presented or to disclose the cumulative effect recognized at the date of initial application. We are still in the process of determining the impact that the implementation of ASU 2014-09 will have on the Company’s financial statements.

10

AGREE REALTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

In April 2015, the Financial Accounting Standards Board issued ASU No. 2015-03 “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. The objective of ASU 2015-03 is to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. This ASU is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the new guidance and has not determined the impact, if any, this standard may have on the consolidated financial statements.

Note 3 – Real Estate Investments

Real Estate Portfolio

At September 30, 2015 and December 31, 2014, the Company’s gross investment in real estate assets, including properties under development, totaled $704,182,000 and $589,147,000, respectively. Real estate investments consisted of the following as of September 30, 2015 and December 31, 2014:

	September 30, 2015			December 31, 2014
Number of Properties		263			209
Gross Leasable Area		4,823,000			4,315,000
Land	$	209,688,872		$	195,091,303
Buildings		489,571,159			393,826,467
Property under Development		4,921,625			229,242
Gross Real Estate Investments	$	704,181,656		$	589,147,012
Less Accumulated Depreciation	$	(53,873,530	)	$	(59,089,851	)
Net Real Estate Investments	$	650,308,126		$	530,057,161

Lease Intangibles

The following table details lease intangibles, net of accumulated amortization, as of September 30, 2015 and December 31, 2014:

	September 30, 2015			December 31, 2014
Intangible Lease Asset - In-Place Leases	$	44,627,351		$	36,680,630
Less: Accumulated Amortization		(6,490,103	)		(3,897,008	)
Intangible Lease Asset - Above-Market Leases		51,574,206			31,642,267
Less: Accumulated Amortization		(6,662,862	)		(4,111,435	)
Intangible Lease Liability - Below-Market Leases		(21,098,523	)		(15,124,210	)
Less: Accumulated Amortization		3,621,555			2,289,358
Lease Intangible Asset, net	$	65,571,624		$	47,479,602

Investments

During the three months ended September 30, 2015, the Company purchased 15 retail net lease assets for approximately $36,937,000, including acquisition and closing costs. These properties are located in nine states and are leased to nine different tenants operating in six diverse retail sectors for a weighted average lease term of approximately 12.4 years. The underwritten weighted average capitalization rate on the Company’s third quarter 2015 acquisitions was approximately 8.1%.

11

AGREE REALTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

During the nine months ended September 30, 2015, the Company purchased 59 retail net lease assets for approximately $160,587,000, including acquisition and closing costs. These properties are located in 21 states and are leased to 35 different tenants operating in 19 diverse retail sectors for a weighted average lease term of approximately 12.6 years. The underwritten weighted average capitalization rate on the Company’s acquisitions was approximately 8.0%.

The aggregate 2015 acquisitions for the nine months ended September 30, 2015 were allocated $19,667,000 to land, $118,933,000 to buildings and improvements, and $21,987,000 to lease intangibles. The acquisitions were all cash purchases and there was no contingent consideration associated with these acquisitions.

None of the Company’s acquisitions during the first nine months of 2015 caused any new or existing tenant to comprise 10% or more of its total assets or generate 10% or more of its total annualized base rent at September 30, 2015.

The Company calculates the underwritten weighted average capitalization rate on its acquisitions by dividing annual expected net operating income derived from the properties by the total investment in the properties. Annual expected net operating income is defined as the straight-line rent for the base term of the lease less property level expenses (if any) that are not recoverable from the tenant.

Dispositions

During the three months ended September 30, 2015, the Company sold four assets for gross proceeds of $19,805,000 including (i) Ferris Commons, a shopping center in Big Rapids, Michigan; (ii) Lakeland Plaza, a shopping center in Lakeland, Florida; (iii) a vacant land parcel in Sun Valley, Nevada; and (iv) a second outlot to the Company’s Meijer store in Plainfield, Indiana. The Company recorded a net gain of approximately $8,599,000 on the sales.

During the nine months ended September 30, 2015, the Company sold eight assets for gross proceeds of $28,993,000 including the four assets described above, in addition to (i) Marshall Plaza, a Kmart-anchored shopping center in Marshall, Michigan; (ii) a former Border’s store in Lawrence, Kansas, which was the Company’s only vacant retail net lease property; (iii) an outlot to the Company’s Meijer’s store in Plainfield, Indiana; and (iv) a Sonic Restaurant in Waynesboro, Virginia. The Company recorded a net gain of approximately $12,135,000 on the sales.

Note 4 – Debt

As of September 30, 2015, the Company had total indebtedness of approximately $329,296,000, including (i) $102,296,000 of mortgage notes payable; (ii) $100,000,000 of unsecured term loans; (iii) $100,000,000 of senior unsecured notes; and (iv) $27,000,000 of borrowings under its Credit Facility.

Revolving Credit and Term Loan Facility

The Company has in place a $250,000,000 senior unsecured revolving credit and term loan facility (the “Revolving Credit and Term Loan Facility”) consisting of (i) a $150,000,000 revolving credit facility (the “Credit Facility”); (ii) a $65,000,000 seven-year unsecured term loan facility (the “2021 Term Loan”); and (iii) a $35,000,000 unsecured term loan facility due 2020 (the “2020 Term Loan”).

The Credit Facility is due July 21, 2018, with an additional one-year extension at the Company’s option, subject to customary conditions. Borrowings under the Credit Facility are priced at LIBOR plus 135 to 200 basis points, depending on the Company’s leverage. As of September 30, 2015, $27,000,000 was outstanding under the Credit Facility bearing a weighted average interest rate of approximately 1.6% and $123,000,000 was available for borrowing.

The 2021 Term Loan matures on July 21, 2021. Borrowings under the 2021 Term Loan are priced at LIBOR plus 165 to 225 basis points, depending on the Company’s leverage, and the Company entered into interest rate swaps to fix LIBOR at 2.09% until maturity. As of September 30, 2015, $65,000,000 was outstanding under the 2021 Term Loan bearing an all-in interest rate of 3.74%.

12

AGREE REALTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

The 2020 Term Loan matures on September 29, 2020. Borrowings under the 2020 Term Loan are priced at LIBOR plus 165 to 225 basis points, depending on the Company’s leverage, and the Company entered into interest rate swaps to fix LIBOR at 2.20% until maturity. As of September 30, 2015, $35,000,000 was outstanding under the 2020 Term Loan bearing an all-in interest rate of 3.85%.

The Revolving Credit and Term Loan Facility contains customary covenants, including, among others, financial covenants regarding debt levels, total liabilities, tangible net worth, fixed charge coverage, unencumbered borrowing base properties and permitted investments. The Company was in compliance with the covenant terms at September 30, 2015.

Senior Unsecured Notes

On May 28, 2015, the Company completed a private placement of $100,000,000 principal amount of senior unsecured notes (the “Senior Unsecured Notes”). The Senior Unsecured Notes were sold in two series, including $50,000,000 of 4.16% notes due May 30, 2025 and $50,000,000 of 4.26% notes due May 30, 2027. The weighted average term of the Senior Unsecured Notes is 11 years and the weighted average interest rate is 4.21%. Proceeds from the issuance were used to repay borrowings under the Company's Credit Facility and for general corporate purposes.

Mortgage Notes Payable

As of September 30, 2015, the Company had total mortgage indebtedness of $102,296,000 which was collateralized by related real estate with an aggregate net book value of $ 136,479,000. Including mortgages that have been swapped to a fixed interest rate, the weighted average interest rate on the Company’s mortgage notes payable was 4.19%.

In January 2015, the Company prepaid a mortgage note payable with an outstanding balance of approximately $2,406,000. The fully-amortizing loan carried a 6.63% interest rate and the final monthly payment was due in February 2017. The Company incurred a loss on debt extinguishment of approximately $180,000 in connection with the prepayment.

13

AGREE REALTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Mortgages payable consisted of the following:

	(Unaudited)
	September 30, 2015		December 31, 2014
Note payable in monthly interest-only installments of $48,467 at 6.56% annum, with a balloon payment in the amount of $8,580,000 due June 11, 2016;  collateralized by related real estate and tenants’ leases	$	8,580,000	$	8,580,000
Note payable in monthly installments of $99,598 including interest at 6.63% per annum, with the final monthly payment due February 2017; collateralized by related real estate and tenants’ leases		-		2,405,976
Note payable in monthly principal installments of $53,160 plus interest at 170 basis points over LIBOR, swapped to a fixed rate of 3.62% as of December 31, 2013.  A final balloon payment in the amount of $19,744,758 is due on May 14, 2017 unless extended for a two year period at the option of the Company, subject to certain conditions, collateralized by related real estate and tenants’ leases		20,909,978		21,398,078
Note payable in monthly installments of interest only at LIBOR plus 160 basis points, swapped to a fixed rate of 2.49% with balloon payment due April 4, 2018; collateralized by related real estate and tenants' leases		25,000,000		25,000,000
Note payable in monthly installments of $153,838 including interest at 6.90% per annum, with the final monthly payment due January 2020; collateralized by related real estate and tenants’ leases		6,897,413		7,896,078
Note payable in monthly installments of $23,004 including interest at 6.24% per annum, with a balloon payment of $2,766,628 due February 2020; collateralized by related real estate and tenant lease		3,148,257		3,204,294
Note payable in monthly installments of interest only at 3.60% per annum, with a balloon payment due January 1, 2023; collateralized by related real estate and tenants' leases		23,640,000		23,640,000
Note payable in monthly installments of $35,673 including interest at 5.01% per annum, with a balloon payment of $4,034,627 due September 2023; collateralized by related real estate and tenant lease		5,485,763		5,595,327
Note payable in monthly installments of $91,675 including interest at 6.27% per annum, with a final monthly payment due July 2026; collateralized by related real estate and tenants’ leases		8,634,176		9,042,485
Total	$	102,295,587	$	106,762,238

14

AGREE REALTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Debt Maturities

The following table presents scheduled principal payments related to our debt as of September 30, 2015:

	Scheduled		Balloon
	Principal		Payment		Total
Remainder of 2015	$	711,124	$	-	$	711,124
2016		2,953,637		8,580,000		11,533,637
2017 (1)		2,710,276		19,744,758		22,455,034
2018 (2)		2,575,206		52,000,000		54,575,206
2019		2,750,347		-		2,750,347
Thereafter		6,839,089		230,431,150		237,270,239
Total	$	18,539,679	$	310,755,908	$	329,295,587

(1) The balloon payment is related to a mortgage note that matures in May 2017 and may be extended, at the Company’s election, for a two-year term to May 2019, subject to certain conditions.

(2) The balloon payment balance includes the balance outstanding under the Credit Facility as of September 30, 2015. The Credit Facility matures in July 2018 and may be extended for one year at the Company’s election, subject to certain conditions.

Note 5 – Common Stock

On May 6, 2015, the Company implemented a $100,000,000 at-the-market equity program (“ATM program”) by entering into multiple equity distribution agreements through which the Company may, from time to time, sell shares of common stock. The Company uses the proceeds generated from its ATM program for general corporate purposes including funding our investment activity, the repayment or refinancing of outstanding indebtedness, working capital and other general purposes.

During the three months ended September 30, 2015, the Company issued 848,497 shares of common stock under its ATM program at an average price of $30.11, realizing gross proceeds of approximately $25,550,000. The Company has approximately $60,550,000 remaining under the ATM program as of September 30, 2015.

During the nine months ended September 30, 2015, the Company issued 1,303,011 shares of common stock under its ATM program at an average price of $30.28, realizing gross proceeds of approximately $39,450,000.

On March 27, 2015, the Securities and Exchange Commission declared effective a shelf registration statement previously filed by the Company. The securities covered by this registration statement, which expires March 27, 2018, cannot exceed $500,000,000 in the aggregate and include common stock, preferred stock, depositary shares and warrants. The Company may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering.

Note 6 – Dividends and Distribution Payable

On September 15, 2015, the Company declared a dividend of $0.465 per share for the quarter ended September 30, 2015. The holders of limited partnership interests in the Operating Partnership (“OP Units”) were entitled to an equal distribution per OP Unit held as of September 30, 2015. The dividends and distributions payable were recorded as liabilities on the Company's consolidated balance sheet at September 30, 2015. The dividend has been reflected as a reduction of stockholders' equity and the distribution has been reflected as a reduction of the limited partners' non-controlling interest. These amounts were paid on October 13, 2015.

15

AGREE REALTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Note 7 – Derivative Instruments and Hedging Activity

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risk, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and, to a limited extent, the use of derivative instruments.

The Company’s objective in using interest rate derivatives is to manage its exposure to interest rate movements and add stability to interest expense. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed rate payments over the life of the agreement without exchange of the underlying notional amount.

In April 2012, the Company entered into a forward starting interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $22,300,000 in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on one-month LIBOR and pays to the counterparty a fixed rate of 1.92%. This swap effectively converted $22,300,000 of variable-rate borrowings to fixed-rate borrowings from July 1, 2013 to May 1, 2019.

In December 2012, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $25,000,000 in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on one-month LIBOR and pays to the counterparty a fixed rate of 0.89%. This swap effectively converted $25,000,000 of variable-rate borrowings to fixed-rate borrowings from December 6, 2012 to April 4, 2018.

In September 2013, the Company entered into an interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $35,000,000 in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on one-month LIBOR and pays to the counterparty a fixed rate of 2.20%. This swap effectively converted $35,000,000 of variable-rate borrowings to fixed-rate borrowings from October 3, 2013 to September 29, 2020.

In July 2014, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $65,000,000 in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on one-month LIBOR and pays to the counterparty a fixed rate of 2.09%. This swap effectively converted $65,000,000 of variable-rate borrowings to fixed-rate borrowings from July 21, 2014 to July 21, 2021.

Companies are required to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet. The Company has designated these derivative instruments as cash flow hedges. As such, changes in the fair value of the derivative instrument are recorded as a component of other comprehensive income (loss) (“OCI”) for the three months ended September 30, 2015 to the extent of effectiveness. The ineffective portion of the change in fair value of the derivative instrument is recognized in interest expense. For the three months ended September 30, 2015, the Company has determined these derivative instruments to be effective hedges.

The Company does not use derivative instruments for trading or other speculative purposes and did not have any other derivative instruments or hedging activities as of September 30, 2015.

16

AGREE REALTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Note 8 – Discontinued Operations

The Company elected to early adopt ASU 2014-08 "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" in the first quarter of 2014. The following information provides a summary of selected operating results for those properties classified as discontinued operations prior to the adoption of ASU 2014-08.

In January 2014, the Company sold a Kmart-anchored shopping center in Ironwood, Michigan, which was classified as held for sale on December 31, 2013, for approximately $5,000,000. The results of operations for this property are reported in discontinued operations for the nine months ended September 30, 2014, including revenues of approximately $42,600 and expenses of approximately $28,000.

Note 9 – Fair Value Measurements

The table below sets forth the Company’s fair value hierarchy for assets and liabilities measured or disclosed at fair value as of September 30, 2015.

Asset:		Level 1		Level 2		Level 3		Carrying Value
Interest rate swaps	$	-	$	-	$	-	$	-
Liability:	Level 1		Level 2		Level 3		Carrying Value
Interest rate swaps	$	-	$	5,038,132	$	-	$	5,038,132
Mortgage notes payable	$	-	$	-	$	108,077,969	$	102,295,587
Unsecured term loans	$	-	$	-	$	98,675,076	$	100,000,000
Senior unsecured notes	$	-	$	-	$	99,662,808	$	100,000,000
Revolving credit facility	$	-	$	27,000,000	$	-	$	27,000,000

The carrying amounts of the Company’s short-term financial instruments, which consist of cash, cash equivalents, receivables, and accounts payable, approximate their fair values. The fair value of the interest rate swaps were derived using estimates to settle the interest rate swap agreements, which are based on the net present value of expected future cash flows on each leg of the swap utilizing market-based inputs and discount rates reflecting the risks involved. The fair value of fixed rate debt was derived using the present value of future payments based on estimated current market interest rates. The fair value of variable rate debt is estimated to be equal to the face value of the debt because the interest rates are floating and is considered to approximate fair value.

Note 10 – Equity Incentive Plan

The Company estimates the fair value of restricted stock grants at the date of grant and amortizes those amounts into expense on a straight line basis or amount vested, if greater, over the appropriate vesting period.

As of September 30, 2015, there was $4,421,000 of total unrecognized compensation costs related to the outstanding restricted stock, which is expected to be recognized over a weighted average period of 3.1 years. The Company used 0% for both the discount factor and forfeiture rate for determining the fair value of restricted stock. The Company has deemed historical forfeitures insignificant and does not consider discount rates to be material.

The holder of a restricted stock award is generally entitled at all times on and after the date of issuance of the restricted shares to exercise the rights of a stockholder of the Company, including the right to vote the shares and the right to receive dividends on the shares.

17

AGREE REALTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Restricted stock activity is summarized as follows:

	Shares Outstanding			Weighted Average  Grant Date  Fair Value
Unvested restricted stock at December 31, 2014		238,626		$	26.24
Restricted stock granted		73,479		$	33.53
Restricted stock vested		(79,238	)	$	25.10
Restricted stock forfeited		(28,024	)	$	29.95
Unvested restricted stock at September 30, 2015		204,843		$	28.79

Note 11 – Subsequent Events

In connection with the preparation of its financial statements for the nine months ended September 30, 2015, the Company has evaluated events that occurred subsequent to September 30, 2015 through the date on which these financial statements were available to be issued to determine whether any of these events required disclosure in the financial statements. The Company is not aware of any subsequent events that would require recognition or disclosure in the financial statements.

18

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

The following should be read in conjunction with the Interim Consolidated Financial Statements of Agree Realty Corporation (the “Company”), including the respective notes thereto, which are included in this Quarterly Report on Form 10-Q.

Cautionary Note Regarding Forward-Looking Statements

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Securities 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 include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” “may,” “will,” “seek,” “could,” “project,” or similar expressions. Forward-looking statements in this report include information about possible or assumed future events, including, among other things, discussion and analysis of our future financial condition, results of operations, our strategic plans and objectives, occupancy and leasing rates and trends, liquidity and ability to refinance our indebtedness as it matures, anticipated expenditures of capital, and other matters. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect actual results, performances or achievements. Factors which may cause actual results to differ materially from current expectations, include, but are not limited to: the global and national economic conditions and changes in general economic, financial and real estate market conditions; changes in our business strategy; risks that our acquisition and development projects will fail to perform as expected; the potential need to fund improvements or other capital expenditures out of operating cash flow; financing risks, such as the inability to obtain debt or equity financing on favorable terms or at all; the level and volatility of interest rates; our ability to re-lease space as leases expire; loss or bankruptcy of one or more of our major tenants; a failure of our properties to generate additional income to offset increases in operating expenses; our ability to maintain our qualification as real estate investment trust (“REIT”) for federal income tax purposes and the limitations imposed on our business by our status as a REIT; and legislative or regulatory changes, including changes to laws governing REITs. The factors included in this quarterly report, including the documents incorporated by reference, and documents the Company subsequently files with the SEC and incorporates by reference, are not exhaustive and additional factors could adversely affect its business and financial performance. For a discussion of additional risk factors, see the factors included under the caption “Risk Factors” in the Company’s most recent Annual Report on Form 10-K. All forward-looking statements are based on information that was available, and speak only, as of the date on which they were made. Except as required by law, the Company disclaims any obligation to review or update these forward–looking statements to reflect events or circumstances as they occur.

Overview

The Company is a fully integrated REIT primarily focused on the ownership, acquisition, development and management of retail properties net leased to industry leading tenants. The Company was founded in 1971 by its current Executive Chairman, Richard Agree, and listed on the New York Stock Exchange (“NYSE”) in 1994. The Company’s assets are held by, and all of its operations are conducted through, directly or indirectly, Agree Limited Partnership (the “Operating Partnership”), of which the Company is the sole general partner and in which it held a 98.19% interest as of September 30, 2015.

As of September 30, 2015, the Company’s portfolio consisted of 263 properties located in 41 states and totaling approximately 4.8 million square feet of gross leasable area. As of September 30, 2015, the portfolio was approximately 99.5% leased and had a weighted average remaining lease term of approximately 11.8 years. Substantially all of the Company’s tenants are subject to net lease agreements. A net lease typically requires the tenant to be responsible for minimum monthly rent and property operating expenses including property taxes, insurance and maintenance.

Third Quarter 2015 Highlights

During the three months ended September 30, 2015, the Company purchased 15 retail net lease assets for approximately $36,937,000, including acquisition and closing costs. These properties are located in 9 states and are 100% leased to 9 different tenants operating in 6 diverse retail sectors for a weighted average lease term of approximately 12.4 years. The underwritten weighted average capitalization rate on the Company’s third quarter 2015 acquisitions was approximately 8.1%.

19

During the three months ended September 30, 2015, the Company sold four assets for gross proceeds of $19,805,000 including (i) Ferris Commons, a shopping center in Big Rapids MI; (ii) Lakeland Plaza, a shopping center in Lakeland, FL; (iii) a vacant land parcel in Sun Valley, NV; and (iv) an outlot to the Company’s Meijer store in Plainfield, IN. The Company recorded a net gain of approximately $8,599,000 on the sales.

During the three months ended September 30, 2015, the Company closed on a parcel of land located in Salem, Oregon through its Joint Venture Capital Solutions program, a platform that allows the Company to acquire properties by partnering with private developers on their in-process developments. Cash & Carry Smart Foodservice executed a 15-year net lease to occupy a 23,500 square foot store to be constructed on the parcel. The total project cost is approximately $5.8 million. Rent is anticipated to commence during the first quarter of 2016. The Company will own a 100% interest in the project. Additionally, construction commenced on the development of a Hobby Lobby store in Springfield, Ohio. Hobby Lobby has executed a 15-year net lease to occupy the premises. The project has anticipated total costs of approximately $5.0 million and is expected to be complete by the end of the second quarter of 2016.

Recent Accounting Pronouncements

Refer to Note 2 to the September 30, 2015, Interim Consolidated Financial Statements.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires the Company’s management to use judgment in the application of accounting policies, including making estimates and assumptions. Management bases estimates on the best information available at the time, its experience, and on various other assumptions believed to be reasonable under the circumstances. These estimates affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. If management’s judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of the interim consolidated financial statements. From time to time, the Company may re-evaluate its estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. A summary of the Company’s critical accounting policies is included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. The Company has not made any material changes to these policies during the periods covered by this quarterly report.

Results of Operations

Comparison of Three Months Ended September 30, 2015 to Three Months Ended September 30, 2014

Minimum rental income increased $4,108,000, or 33%, to $16,736,000 in 2015, compared to $12,628,000 in 2014. Approximately $4,631,000 of the increase was due to the acquisition of additional net lease properties and approximately $300,000 was due to the development of new net lease properties. These increases were partially offset by a reduction in minimum rental income of approximately $823,000 relating to properties that were sold.

Percentage rents increased $33,000 to $38,000 in 2015, compared to $5,000 in 2014. The increase was the result of two tenants commencing to pay percentage rent for the first time.

Operating cost reimbursements decreased $39,000, or 4%, to $971,000 in 2015, compared to $1,010,000 in 2014. Operating cost reimbursements decreased primarily due to lower levels of recoverable property operating expenses, including real estate taxes, as a result of recent acquisition, development and disposition activity. The portfolio recovery rate decreased to 85.1% in 2015 compared to 90.9% in 2014.

Other income decreased by $9,000 in 2015 from $114,000 in 2014. The primary driver of the decrease was non-recurring fee income earned in 2014.

20

Real estate taxes decreased $58,000, or 7%, to $716,000 in 2015, compared to $774,000 in 2014. The decrease was due to the disposition of shopping center properties that eliminated the Company’s responsibility for the payment of those real estate taxes.

Property operating expenses increased $86,000, or 26%, to $424,000 in 2015, compared to $338,000 in 2014. The increase is primarily due to higher operating expenses at the Company’s shopping center properties.

Land lease payments increased $49,000, or 39%, to $174,000 in 2015, compared to $125,000 for 2014. The increase is the result of properties acquired after the third quarter of 2014 that are subject to land leases.

General and administrative expenses increased $21,000, or 1%, to $1,769,000 in 2015, compared to $1,748,000 in 2014. The increase is primarily the result of increased employee and professional costs. General and administrative expenses as a percentage of total revenue decreased to 9.9% for 2015 from 12.7% in 2014.

Depreciation and amortization increased $2,671,000, or 94%, to $5,526,000 in 2015, compared to $2,855,000 in 2014. The increase was primarily the result of recent acquisition and development activity.

The Company recorded no impairment charges during the third quarter of 2015. The Company recognized an impairment charge of $220,000 in the third quarter of 2014 related to the Chippewa Commons shopping center. Chippewa Commons was subsequently sold in December 2014.

Interest expense increased $525,000, or 22%, to $2,964,000 in 2015, compared to $2,439,000 for 2014. The increase in interest expense is a result of higher levels of borrowings to finance the acquisition and development of additional properties, including the $65,000,000 unsecured term loan entered into in July 2014 and the $100,000,000 senior unsecured notes issued in May 2015.

The Company recognized a net gain of $8,599,000 on the sale of four properties during the third quarter of 2015, including (i) a gain of $630,000 on the sale of Ferris Commons, a shopping center in Big Rapids, Michigan; (ii) a gain of $8,043,000 on the sale of Lakeland Plaza, a shopping center in Lakeland, Florida; (iii) a loss of $85,000 on the sale of a second outlot to the Company’s Meijer’s store in Plainfield, Indiana. There was no gain or loss on the sale of a parcel of land in Sun Valley, Nevada. The Company also recorded additional income of approximately $11,000 in connection with its disposition activity during the quarter. In 2014 we recognized a loss of $293,000 on the sale of a parcel of land in East Lansing, Michigan.

Net income attributable to the Company increased $9,742,000, to $14,595,000 in 2015, from $4,853,000 in 2014 as a result of the foregoing factors.

Comparison of Nine Months Ended September 30, 2015 to Nine Months Ended September 30, 2014

Minimum rental income increased $11,320,000, or 31%, to $47,262,000 in 2015, compared to $35,942,000 in 2014. Approximately $12,234,000 of the increase was due to the acquisition of additional net lease properties and approximately $967,000 was due to the development of new net lease properties. These increases were partially offset by a reduction in minimum rental income of approximately $1,881,000 from properties that were sold.

Percentage rents increased $42,000, or 29%, to $189,000 in 2015, compared to $147,000 in 2014, due to percentage rents received from tenants in 2015 that were not required to pay percentage rents in 2014.

Operating cost reimbursements increased $267,000, or 9%, to $3,247,000 in 2015, compared to $2,980,000 in 2014. Operating cost reimbursements increased primarily due to higher levels of recoverable property operating expenses as a result of recent acquisition, development and disposition activity. The portfolio recovery rate increased to 86.5% in 2015 compared to 85% in 2014.

Other income decreased to $115,000 in 2015 from $168,000 in 2014. The primary driver of the decrease was non-recurring fee income earned in 2014.

Real estate taxes increased $131,000, or 6%, to $2,342,000 in 2015, compared to $2,211,000 in 2014. The increase is due to the acquisition of additional properties for which the Company remits real estate taxes and is subsequently reimbursed by tenants.

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Property operating expenses increased $116,000, or 9%, to $1,411,000 in 2015, compared to $1,295,000 in 2014. The increase is primarily due to the ownership of additional properties which contributed to higher property maintenance, utilities and insurance expenses, offset by lower operating expenses at the Company’s shopping center properties. The Company’s tenants subsequently reimburse it for the majority of these expenses.

Land lease payments increased $103,000, or 30%, to $443,000 in 2015, compared to $340,000 for 2014. The increase is the result of properties acquired after September 30, 2014 that are subject to land leases.

General and administrative expenses increased $224,000, or 5%, to $5,181,000 in 2015, compared to $4,957,000 in 2014. The increase is primarily the result of increased employee and professional costs. General and administrative expenses as a percentage of total revenue decreased to 10.2% for 2015 from 12.6% in 2014.

Depreciation and amortization increased $5,237,000, or 66%, to $13,197,000 in 2015, compared to $7,960,000 in 2014. The increase was primarily the result of recent acquisition and development activity.

The Company recorded no impairment charges during the first nine months of 2015. The Company recognized an impairment charge of $3,020,000 in the first nine months of 2014 related to the Chippewa Commons shopping center. Chippewa Commons was subsequently sold in December 2014.

Interest expense increased $2,250,000, or 37%, to $8,358,000 in 2015, compared to $6,108,000 for 2014. The increase in interest expense is a result of higher levels of borrowings to finance the acquisition and development of additional properties, including the $65,000,000 unsecured term loan entered into in July 2014 and the $100,000,000 senior unsecured notes issued in May 2015.

The Company recognized a net gain of $12,135,000 on the sale of eight properties during the first nine months of 2015, including (i) a gain of $3,315,000 on the sale of Marshall Plaza, a Kmart-anchored shopping center in Marshall, Michigan; (ii) a gain of $376,000 on the sale of a former Border’s store in Lawrence, Kansas; (iii) a loss of $319,000 on the sale of two outlots to the Company’s Meijer’s store in Plainfield, Indiana; (iv) a gain of $99,000 on the sale of a Sonic restaurant in Waynesboro, Virginia; (v) a gain of $8,043,000 on the sale of Lakeland Plaza a shopping center in Lakeland, Florida; and (vi) a gain of $630,000 on the sale of Ferris Commons, a shopping center located in Big Rapids, Michigan. During the nine months ended September 30, 2015, the Company also recorded additional costs of approximately $9,000 associated with properties sold at the end of 2014. During the first nine months of 2014, the Company recognized a loss of $293,000 on the sale of a parcel of land in East Lansing, Michigan and a gain on sale of $123,000 attributable to Ironwood Commons which was classified as held for sale at December 31, 2013 and subsequently sold in January 2014.

The Company recorded a loss on debt extinguishment of approximately $180,000 in 2015. The loss on debt extinguishment was related to the prepayment of a mortgage note payable with an outstanding balance of approximately $2,406,000. The fully-amortizing loan carried a 6.63% interest rate and the final monthly payment was due in February 2017. No such items were recognized in 2014.

The Company recognized no income from discontinued operations in 2015. Income from discontinued operations of $15,000 in 2014 was attributable to Ironwood Commons which was classified as held for sale at December 31, 2013 and subsequently sold in January 2014.

Net income attributable to the Company increased $18,336,000, to $31,227,000 in 2015, from $12,891,000 in 2014 as a result of the foregoing factors.

Liquidity and Capital Resources

The Company’s principal demands for funds include payment of operating expenses, payment of principal and interest on its outstanding indebtedness, distributions to its shareholders and future property acquisitions and development.

The Company expects to meet its short term liquidity requirements through cash provided from operations and borrowings under its $150,000,000 unsecured revolving credit facility (the “Credit Facility”). As of September 30, 2015, $27,000,000 was outstanding on the Credit Facility and $123,000,000 was available for future borrowings. The Company anticipates funding its long term capital needs through cash provided from operations, borrowings under the Credit Facility, the issuance of long term debt or the issuance of common or preferred equity or other instruments convertible into or exchangeable for common or preferred equity.

22

We continually evaluate alternative financing and believe that we can obtain financing on reasonable terms. However, there can be no assurance that additional financing or capital will be available, or that the terms will be acceptable or advantageous to us.

Capitalization

As of September 30, 2015, the Company’s total market capitalization was approximately $903,491,000. Market capitalization consisted of $574,196,000 of common equity (based on the September 30, 2015 closing price on the NYSE of $29.85 per common share and assuming the conversion of operating partnership units in the Operating Partnership (“OP units”)) and $329,296,000 of total debt, including (i) $102,296,000 of mortgage notes payable; (ii) $100,000,000 of unsecured term loans; (ii) $100,000,000 of senior unsecured notes; and (iii) $27,000,000 of borrowings under our Credit Facility. Our ratio of total debt to total market capitalization was 36.45% at September 30, 2015.

At September 30, 2015, the non-controlling interest in the Operating Partnership represented ownership of 1.81% of the Operating Partnership. The OP Units may, under certain circumstances, be exchanged for shares of common stock on a one-for-one basis. The Company, as sole general partner of the Operating Partnership, has the option to settle exchanged OP Units held by others for cash based on the current trading price of its shares. Assuming the exchange of all OP Units, there would have been 19,236,031 shares of common stock outstanding at September 30, 2015.

Debt

Revolving Credit and Term Loan Facility

The Company has in place a $250,000,000 senior unsecured revolving credit and term loan facility (the “Revolving Credit and Term Loan Facility) consisting of (i) a $150,000,000 Credit Facility; (ii) a $65,000,000 seven-year unsecured term loan facility (the “2021 Term Loan”); and (iii) a $35,000,000 unsecured term loan facility due 2020 (the “2020 Term Loan”).

The Credit Facility is due July 21, 2018, with an additional one-year extension at the Company’s option, subject to customary conditions. Borrowings under the Credit Facility are priced at LIBOR plus 135 to 200 basis points, depending on the Company’s leverage. As of September 30, 2015, $27,000,000 was outstanding under the Credit Facility bearing a weighted average interest rate of approximately 1.6% and $123,000,000 was available for borrowing.

The 2021 Term Loan matures on July 21, 2021. Borrowings under the 2021 Term Loan are priced at LIBOR plus 165 to 225 basis points, depending on the Company’s leverage, and the Company entered into interest rate swaps to fix LIBOR at 2.09% until maturity. As of September 30, 2015, $65,000,000 was outstanding under the 2021 Term Loan bearing an all-in interest rate of 3.74%.

The 2020 Term Loan matures on September 29, 2020. Borrowings under the 2020 Term Loan are priced at LIBOR plus 165 to 225 basis points, depending on the Company’s leverage, and the Company entered into interest rate swaps to fix LIBOR at 2.20% until maturity. As of September 30, 2015, $35,000,000 was outstanding under the 2020 Term Loan bearing an all-in interest rate of 3.85%.

The Revolving Credit and Term Loan Facility contains customary covenants, including, among others, financial covenants regarding debt levels, total liabilities, tangible net worth, fixed charge coverage, unencumbered borrowing base properties, and permitted investments. The Company was in compliance with the covenant terms at September 30, 2015.

Senior Unsecured Notes

As of September 30, 2015, the Company had outstanding $100,000,000 principal amount of senior unsecured notes (the “Senior Unsecured Notes”) consisting of two series, including $50,000,000 of 4.16% notes due May 30, 2025 and $50,000,000 of 4.26% notes due May 30, 2027. The weighted average term of the Senior Unsecured Notes is 11 years and the weighted average interest rate is 4.21%.

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Mortgage Notes Payable

As of September 30, 2015, the Company had total mortgage indebtedness of $102,296,000. Including our mortgages that have been swapped to a fixed interest rate, our weighted average interest rate on mortgage debt was 4.19%. The following table summarizes our mortgage notes payable as of September 30, 2015:

($ in thousands)
	Interest				Principal Amount Outstanding
Mortgage Note Payable	Rate (1)			Maturity	September 30, 2015		December 31, 2014
Portfolio Mortgage Loan due 2016		6.56	%	June 2016	$	8,580	$	8,580
Portfolio Mortgage Loan due 2017		6.63	%	February 2017		-		2,406
Secured Term Loan due 2017		3.62	%	May 2017 (2)		20,910		21,398
Secured Term Loan due 2018		2.49	%	April 2018		25,000		25,000
Portfolio Mortgage Loan due 2020		6.90	%	January 2020		6,898		7,896
Single Asset Mortgage Loan due 2020		6.24	%	January 2020		3,148		3,204
CMBS Portfolio Loan due 2023		3.60	%	January 2023		23,640		23,640
Single Asset Mortgage Loan due 2023		5.01	%	September 2023		5,486		5,595
Portfolio CTL due 2026		6.27	%	July 2026		8,634		9,043
Total					$	102,296	$	106,762

(1) Includes the effects of variable interest rates that have been swapped to a fixed interest rates.

(2) Subject to certain conditions, the maturity date of this loan can be extended to May 2019 at our option.

The mortgage loans encumbering our properties are generally non-recourse, subject to certain exceptions for which we would be liable for any resulting losses incurred by the lender. These exceptions vary from loan to loan, but generally include fraud or a material misrepresentation, misstatement or omission by the borrower, intentional or grossly negligent conduct by the borrower that harms the property or results in a loss to the lender, filing of a bankruptcy petition by the borrower, either directly or indirectly, and certain environmental liabilities. At September 30, 2015, the mortgage loan of $20,910,000 was partially recourse to us and secured by a limited guaranty of payment and performance for approximately 50% of the loan amount.

We have entered into mortgage loans which are secured by multiple properties and contain cross-default and cross-collateralization provisions. Cross-collateralization provisions allow a lender to foreclose on multiple properties in the event that we default under the loan. Cross-default provisions allow a lender to foreclose on the related property in the event a default is declared under another loan.

Contractual Obligations

The following table summarizes our contractual obligations as of September 30, 2015:

($ in thousands)
			Remainder of
	Total		2015		2016-2017		2018-2019		Thereafter
Mortgage Notes Payable	$	102,296	$	711	$	33,989	$	30,326	$	37,270
Revolving Credit Facility		27,000		-		-		27,000		-
Unsecured Term Loans		100,000		-		-		-		100,000
Senior Unsecured Notes		100,000		-		-		-		100,000
Land Lease Obligations		11,773		160		1,280		1,275		9,058
Estimated Interest Payments on Mortgage Notes Payable, Unsecured Term Loans and Senior Unsecured Notes		84,216		4,123		22,931		20,045		37,117
Total	$	425,285	$	4,994	$	58,200	$	78,646	$	283,445

Estimated interest payments are based on (i) the stated rates for mortgage notes payable, including the effect of interest rate swaps; (ii) the stated rates for unsecured term loans, including the effect of interest rate swaps and assuming the interest rate in effect for the most recent quarter remains in effect through the respective maturity dates; and (iii) the stated rates for senior unsecured notes.

Dividends

During the quarter ended September 30, 2015, we declared a quarterly dividend of $0.465 per share. The cash dividend was paid on October 13, 2015 to holders of record on September 30, 2015.

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Inflation

The Company’s leases typically contain provisions to mitigate the adverse impact of inflation on its results of operations. Tenant leases generally provide for limited increases in rent as a result of fixed increases or increases in the consumer price index. Certain of the Company’s leases contain clauses enabling it to receive percentage rents based on tenants’ gross sales, which generally increase as prices rise. During times when inflation is greater than increases in rent, rent increases will not keep up with the rate of inflation.

Substantially all of the Company’s properties are leased to tenants under long-term, net leases which require the tenant to pay certain operating expenses for a property, thereby reducing the Company’s exposure to operating cost increases resulting from inflation. Inflation may have an adverse impact on the Company’s tenants.

Funds from Operations

Funds from Operations (“FFO”) is defined by the National Association of Real Estate Investment Trusts, Inc. (NAREIT) to mean net income computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization and any impairment charges on a depreciable real estate asset, and after adjustments for unconsolidated partnerships and joint ventures. Management uses FFO as a supplemental measure to conduct and evaluate the Company’s business because there are certain limitations associated with using GAAP net income by itself as the primary measure of the Company’s operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, management believes that the presentation of operating results for real estate companies that use historical cost accounting is insufficient by itself.

FFO should not be considered as an alternative to net income as the primary indicator of the Company’s operating performance, or as an alternative to cash flow as a measure of liquidity. Further, while the Company adheres to the NAREIT definition of FFO, its presentation of FFO is not necessarily comparable to similarly titled measures of other REITs due to the fact that all REITs may not use the same definition.

Adjusted Funds from Operations (“AFFO”) is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. AFFO further adjusts FFO for certain non-cash items that reduce or increase net income in accordance with GAAP and for non-recurring items that are not reflective of ongoing operations. 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 the Company’s 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. Note that, during the year ended December 31, 2014, the Company adjusted its calculation of AFFO to exclude non-recurring capitalized building improvements and to include non-real estate related depreciation and amortization. Management believes that these changes provide a more useful measure of operating performance in the context of AFFO.

The following table provides a reconciliation of FFO and net income for the three and nine months ended September 30, 2015 and 2014:

	Three Months Ended					Nine Months Ended
Reconciliation of Funds from Operations to Net Income	September 30, 2015			September 30, 2014		September 30, 2015			September 30, 2014
Net income	$	14,876,264		$	4,965,608	$	31,835,273		$	13,191,006
Depreciation of real estate assets		3,220,655			2,138,757		8,698,302			6,103,303
Amortization of leasing costs		1,710,045			34,846		3,812,719			94,020
Amortization of lease intangibles		29,320			666,743		88,392			1,718,346
Impairment charge		-			220,000		-			3,020,000
Gain on sale of assets		(8,599,261	)		292,652		(12,134,571	)		169,905
Funds from Operations	$	11,237,023		$	8,318,606	$	32,300,115		$	24,296,580
Funds from Operations Per Share - Diluted	$	0.61		$	0.55	$	1.79		$	1.61
Weighted average shares and OP units outstanding
Basic		18,356,211			15,061,359		18,001,079			15,059,971
Diluted		18,411,938			15,129,670		18,063,958			15,130,103

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The following table provides a reconciliation of AFFO and net income for the three and nine months ended September 30, 2015 and 2014:

	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
Reconciliation of Adjusted Funds from Operations to Net Income
Net income	$	14,876,264		$	4,965,608		$	31,835,273		$	13,191,006
Cumulative adjustments to calculate FFO		(3,639,241	)		3,352,998			464,842			11,105,574
Funds from Operations	$	11,237,023		$	8,318,606		$	32,300,115		$	24,296,580
Straight-line accrued rent		(609,526	)		(385,535	)		(1,815,875	)		(989,231	)
Deferred revenue recognition		(115,845	)		(115,845	)		(347,535	)		(347,535	)
Stock based compensation expense		477,131			513,000			1,521,928			1,555,712
Amortization of financing costs		129,890			104,145			355,193			285,865
Non-real estate depreciation		15,371			-			46,737			-
Loss on debt extinguishment		-			-			179,867			-
Adjusted Funds from Operations	$	11,134,044		$	8,434,371		$	32,240,430		$	24,801,391
Additional supplemental disclosure
Scheduled principal repayments	$	701,095		$	874,773		$	2,060,674		$	2,675,936
Capitalized interest	$	14,182		$	107,863		$	16,694		$	221,410
Capitalized building improvements	$	72,701		$	37,486		$	72,701		$	113,473

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to interest rate risk primarily through borrowing activities. There is inherent roll-over risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and our future financing requirements.

Our interest rate risk is monitored using a variety of techniques. The table below presents the principal payments and the weighted average interest rates on outstanding debt, by year of expected maturity, to evaluate the expected cash flows and sensitivity to interest rate changes.

($ in thousands)
	2015		2016			2017			2018			2019		Thereafter			Total
Mortgage Notes Payable	$	711	$	11,534		$	22,455		$	27,575		$	2,751	$	37,270		$	102,296
Average Interest Rate		-		6.56	%		3.62	%		2.49	%		-		4.42	%
Unsecured Revolving Credit Facility	$	-	$	-		$	-		$	27,000		$	-	$	-		$	27,000
Average Interest Rate										1.57	%
Unsecured Term Loans	$	-	$	-		$	-		$	-		$	-	$	100,000		$	100,000
Average Interest Rate															3.78	%
Senior Unsecured Notes	$	-	$	-		$	-		$	-		$	-	$	100,000		$	100,000
Average Interest Rate															4.21	%

The fair value (in thousands) is estimated at $108,078, $98,675 and $99,663 for mortgage notes payable, unsecured term loans and senior unsecured notes, respectively, as of September 30, 2015. 

The table above incorporates those exposures that exist as of September 30, 2015; it does not consider those exposures or positions which could arise after that date. As a result, our ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the period and interest rates.

We seek to limit the impact of interest rate changes on earnings and cash flows and to lower the overall borrowing costs by closely monitoring our variable rate debt and converting such debt to fixed rates when we deem such conversion advantageous. From time to time, we may enter into interest rate swap agreements or other interest rate hedging contracts. While these agreements are intended to lessen the impact of rising interest rates, they also expose us to the risks that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly-effective cash flow hedges under GAAP guidance.

In April 2012, we entered into a forward starting interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $22,300,000 in variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one-month LIBOR and pay to the counterparty a fixed rate of 1.92%. This swap effectively converted $22,300,000 of variable-rate borrowings to fixed-rate borrowings from July 1, 2013 to May 1, 2019. As of September 30, 2015, this interest rate swap was valued as a liability of $693,701.

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In December 2012, we entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $25,000,000 in variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one-month LIBOR and pay to the counterparty a fixed rate of 0.89%. This swap effectively converted $25,000,000 of variable-rate borrowings to fixed-rate borrowings from December 6, 2012 to April 4, 2018. As of September 30, 2015, this interest rate swap was valued as a liability of $76,583.

In September 2013, we entered into an interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $35,000,000 in variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one-month LIBOR and pay to the counterparty a fixed rate of 2.20%. This swap effectively converted $35,000,000 of variable-rate borrowings to fixed-rate borrowings from October 3, 2013 to September 29, 2020. As of September 30, 2015, this interest rate swap was valued as a liability of $1,642,738.

In July 2014, we entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $65,000,000 in variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one-month LIBOR and pay to the counterparty a fixed rate of 2.09%. This swap effectively converted $65,000,000 of variable-rate borrowings to fixed-rate borrowings from July 21, 2014 to July 21, 2021. As of September 30, 2015, this interest rate swap was valued as a liability of $2,625,110.

We do not use derivative instruments for trading or other speculative purposes and we did not have any other derivative instruments or hedging activities as of September 30, 2015.

As of September 30, 2015, a 100 basis point increase in interest rates on the portion of our debt bearing interest at variable rates would result in an increase in interest expense of approximately $270,000.

ITEM 4. Controls and Procedures

Disclosure Controls and Procedures

At the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II Other Information

Item 1. Legal Proceedings

We are not presently involved in any litigation nor, to our knowledge, is any other litigation threatened against us, except for routine litigation arising in the ordinary course of business which is expected to be covered by our liability insurance.

Item 1A. Risk Factors

There have been no material changes from our risk factors set forth under Item 1A of Part 1 of our most recently filed Form 10-K.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

*31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Joel N. Agree, Chief Executive Officer

*31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Kenneth R. Howe, Interim Chief Financial Officer

*32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Joel N. Agree, Chief Executive Officer

*32.2 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Kenneth R. Howe, Interim Chief Financial Officer

*101 The following materials from Agree Realty Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income and Comprehensive Income, (iii) the Consolidated Statement of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these consolidated financial statements.

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Agree Realty Corporation

/s/ JOEL N. AGREE

Joel N. Agree

President and Chief Executive Officer

/s/ KENNETH R. HOWE

 Kenneth R. Howe

Interim Chief Financial Officer and Secretary

(Principal Financial and Accounting Officer)

Date:     October 30, 2015

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joel N. Agree, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Agree Realty Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 30, 2015	/s/ Joel N. Agree
	Name:  Joel N. Agree
	Title:  President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kenneth R. Howe, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Agree Realty Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  October 30, 2015	/s/ Kenneth R. Howe
	Name:  Kenneth R. Howe
	Title:    Interim Chief Financial Officer and Secretary

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Based on a review of the Quarterly Report on Form 10-Q for the period ending September 30, 2015 of Agree Realty Corporation (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joel N. Agree, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report, containing the financial statements, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Joel N. Agree

Joel N. Agree

President and Chief Executive Officer

October 30, 2015

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Based on a review of the Quarterly Report on Form 10-Q for the period ending September 30, 2015 of Agree Realty Corporation (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kenneth R. Howe, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report, containing the financial statements, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Kenneth R. Howe

Kenneth R. Howe

Interim Chief Financial Officer and Secretary

October 30, 2015

XML

Equity Incentive Plan (Details) - Restricted Stock [Member]	9 Months Ended
	Sep. 30, 2015 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares Outstanding, Unvested restricted stock at beginning of the period	238,626
Shares Outstanding, Restricted stock granted	73,479
Shares Outstanding Restricted stock vested	(79,238)
Shares Outstanding, Restricted stock forfeited	(28,024)
Shares Outstanding, Unvested restricted stock at end of the period	204,843
Weighted Average Grant Date Fair Value, Unvested restricted stock at beginning of the period (in dollars per share) | $ / shares	$ 26.24
Weighted Average Grant Date Fair Value, Restricted stock granted (in dollars per share) | $ / shares	33.53
Weighted Average Grant Date Fair Value, Restricted stock vested (in dollars per share) | $ / shares	25.1
Weighted Average Grant Date Fair Value, Restricted stock forfeited (in dollars per share) | $ / shares	29.95
Weighted Average Grant Date Fair Value, Unvested restricted stock at end of the period (in dollars per share) | $ / shares	$ 28.79

XML

Debt (Details Textual) - USD ($)	1 Months Ended		3 Months Ended		9 Months Ended		12 Months Ended
	May. 28, 2015	Jan. 31, 2015	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2013	Dec. 31, 2014
Debt Instrument [Line Items]
Long-term Line of Credit			$ 27,000,000		$ 27,000,000			$ 15,000,000
Long-term Debt, Total			329,295,587		329,295,587
Secured Debt			102,295,587		102,295,587			106,762,238
Unsecured Debt			100,000,000		100,000,000			100,000,000
Repayments Of Secured Debt					4,466,651	$ 11,843,509
Gains (Losses) on Extinguishment of Debt			0	$ 0	(179,867)	$ 0
Private Placement [Member]
Debt Instrument [Line Items]
Unsecured Debt	$ 100,000,000
Debt [Member]
Debt Instrument [Line Items]
Long-term Debt, Total			329,296,000		329,296,000
Secured Debt			102,296,000		102,296,000
Unsecured Debt			100,000,000		100,000,000
Revolving Credit and Term Loan Facility [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount			$ 250,000,000		$ 250,000,000
Mortgage Note Payable [Member]
Debt Instrument [Line Items]
Long-term Debt, Weighted Average Interest Rate			4.19%		4.19%
Debt Instrument, Interest Rate, Stated Percentage		6.63%
Real Estate Investments, Net			$ 136,479,000		$ 136,479,000
Secured Debt			102,296,000		102,296,000
Repayments Of Secured Debt		$ 2,406,000
Gains (Losses) on Extinguishment of Debt		$ 180,000
2021 Term Loan [Member] | Revolving Credit and Term Loan Facility [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount			$ 65,000,000		$ 65,000,000
Debt Instrument, Maturity Date					Jul. 21, 2021
Debt Instrument, Interest Rate, Stated Percentage			3.74%		3.74%
Debt Instrument, Description of Variable Rate Basis					interest rate swaps to fix LIBOR at 2.09% until maturity
Unsecured Debt			$ 65,000,000		$ 65,000,000
Debt Instrument, Interest Rate Terms					Borrowings under the 2021 Term Loan are priced at LIBOR plus 165 to 225 basis points, depending on the Companys leverage
2020 Term Loan [Member] | Revolving Credit and Term Loan Facility [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount			$ 35,000,000		$ 35,000,000
Debt Instrument, Maturity Date					Sep. 29, 2020
Debt Instrument, Interest Rate, Stated Percentage			3.85%		3.85%
Debt Instrument, Description of Variable Rate Basis					interest rate swaps to fix LIBOR at 2.20% until maturity
Unsecured Debt			$ 35,000,000		$ 35,000,000
Debt Instrument, Interest Rate Terms					Borrowings under the 2020 Term Loan are priced at LIBOR plus 165 to 225 basis points, depending on the Companys leverage
Unsecured Debt [Member]
Debt Instrument [Line Items]
Long-term Debt, Weighted Average Interest Rate	4.21%
Unsecured Debt [Member] | Weighted Average [Member]
Debt Instrument [Line Items]
Debt Instrument, Term					11 years
Unsecured Debt One [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 50,000,000
Debt Instrument, Maturity Date	May 30, 2025
Debt Instrument, Interest Rate, Stated Percentage	4.16%
Unsecured Debt Two [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 50,000,000
Debt Instrument, Maturity Date	May 30, 2027
Debt Instrument, Interest Rate, Stated Percentage	4.26%
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Long-term Line of Credit			150,000,000		$ 150,000,000
Revolving Credit Facility [Member] | Revolving Credit and Term Loan Facility [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Interest Rate Description					Borrowings under the Credit Facility are priced at LIBOR plus 135 to 200 basis points, depending on the Companys leverage
Long-term Line of Credit			$ 27,000,000		$ 27,000,000
Long-term Debt, Weighted Average Interest Rate			1.60%		1.60%
Line of Credit Facility, Remaining Borrowing Capacity			$ 123,000,000		$ 123,000,000
Line of Credit Facility, Expiration Date					Jul. 21, 2018
Unsecured Term Loan [Member]
Debt Instrument [Line Items]
Unsecured Debt			100,000,000		$ 100,000,000
April 4 2018 [Member]
Debt Instrument [Line Items]
Secured Debt			25,000,000		$ 25,000,000			25,000,000
April 4 2018 [Member] | Mortgages [Member]
Debt Instrument [Line Items]
Debt Instrument, Description of Variable Rate Basis					interest only at LIBOR plus 160 basis points, swapped to a fixed rate of 2.49%
January 1 2023 [Member]
Debt Instrument [Line Items]
Secured Debt			$ 23,640,000		$ 23,640,000			23,640,000
January 1 2023 [Member] | Mortgages [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage			3.60%		3.60%
May 14 2017 [Member]
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment, Principal					$ 53,160
Secured Debt			$ 20,909,978		20,909,978			21,398,078
May 14 2017 [Member] | Mortgages [Member]
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid			19,744,758		19,744,758
Debt Instrument, Description of Variable Rate Basis							interest at 170 basis points over LIBOR, swapped to a fixed rate of 3.62%
January 2020 [Member]
Debt Instrument [Line Items]
Secured Debt			$ 6,897,413		6,897,413			7,896,078
January 2020 [Member] | Mortgages [Member]
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment, Principal					$ 153,838
Debt Instrument, Interest Rate, Stated Percentage			6.90%		6.90%
July 2026 [Member]
Debt Instrument [Line Items]
Secured Debt			$ 8,634,176		$ 8,634,176			9,042,485
July 2026 [Member] | Mortgages [Member]
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment, Principal					$ 91,675
Debt Instrument, Interest Rate, Stated Percentage			6.27%		6.27%
February 2017 [Member]
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment, Principal					$ 99,598
Debt Instrument, Interest Rate, Stated Percentage			6.63%		6.63%
Secured Debt			$ 0		$ 0			2,405,976
June 11 2016 [Member]
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment, Principal					48,467
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid			$ 8,580,000		$ 8,580,000
Debt Instrument, Interest Rate, Stated Percentage			6.56%		6.56%
Secured Debt			$ 8,580,000		$ 8,580,000			8,580,000
February 2020 [Member]
Debt Instrument [Line Items]
Secured Debt			3,148,257		3,148,257			3,204,294
February 2020 [Member] | Mortgages [Member]
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment, Principal					23,004
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid			$ 2,766,628		$ 2,766,628
Debt Instrument, Interest Rate, Stated Percentage			6.24%		6.24%
September 2023 [Member]
Debt Instrument [Line Items]
Secured Debt			$ 5,485,763		$ 5,485,763			$ 5,595,327
September 2023 [Member] | Mortgages [Member]
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment, Principal					35,673
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid			$ 4,034,627		$ 4,034,627
Debt Instrument, Interest Rate, Stated Percentage			5.01%		5.01%

XML

Organization (Details Textual)	Sep. 30, 2015
Nature of Operations [Line Items]
Ownership Percentage On Controlling Interest By Parent	98.19%

XML

Discontinued Operations (Details Textual) - USD ($)	1 Months Ended	9 Months Ended
	Jan. 31, 2014	Sep. 30, 2014
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from Sale of Property Held-for-sale	$ 5,000,000
Disposal Group, Including Discontinued Operation, Revenue		$ 42,600
Disposal Group, Including Discontinued Operation, Operating Expense		$ 28,000

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Note 2 – Summary of Significant Accounting Policies

Basis of Accounting and Principles of Consolidation

The accompanying unaudited consolidated financial statements for the nine months ended September 30, 2015 have been prepared in accordance with U.S. generally accepted accounting principles (“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 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 nine months ended September 30, 2015 may not be indicative of the results that may be expected for the year ending December 31, 2015. Amounts as of December 31, 2014 included in the consolidated financial statements have been derived from the audited consolidated financial statements as of that date. The unaudited consolidated financial statements, included herein, should be read in conjunction with the 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, 2014.

The unaudited 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 assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although management believes its estimates are reasonable, actual results could differ from those estimates.

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. Properties classified as “held for sale” are recorded at the lower of their carrying value or their fair value less anticipated selling costs.

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, building and identified intangible assets and liabilities, based in each case on their relative estimated fair values and without giving rise to goodwill. Intangible assets and liabilities represent the value of in-place leases and above- or below-market leases. 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 estimate 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 of the real estate and management’s estimate of current market lease rates for the property, measured over a period equal to the remaining non-cancelable term of the lease.

The fair value of identified intangible assets and liabilities acquired is amortized to depreciation and amortization over the remaining term of the related leases.

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.

Accounts Receivable – Tenants

The Company reviews its rent receivables for collectability 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 of a receivable with respect to any tenant is in doubt, a provision for uncollectible amounts will be established or a direct write-off of the specific rent receivable will be made. For accrued rental revenues related to the straight-line method of reporting rental revenue, the Company performs a periodic review of receivable balances to assess the risk of uncollectible amounts and establish appropriate provisions.

Earnings per Share

Earnings per share have been computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted average common and potential dilutive common shares outstanding in accordance with the treasury stock method.

The following is a reconciliation of the denominator of the basic net earnings per common share computation to the denominator of the diluted net earnings per common share computation for each of the periods presented:

	Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30,2015		September 30,2014
Weighted average number of common shares outstanding		18,213,436		14,960,218		17,858,326		14,958,830
Less: Unvested restricted stock		(204,844)		(246,478)		(204,844)		(246,478)
Weighted average number of common shares outstanding used in basic earnings per share		18,008,592		14,713,740		17,653,482		14,712,352
Weighted average number of common shares outstanding used in basic earnings per share		18,008,592		14,713,740		17,653,482		14,712,352
Effect of dilutive securities: restricted stock		55,726		68,311		62,880		70,132
Weighted average number of common shares outstanding used in diluted earnings per share		18,064,318		14,782,051		17,716,362		14,782,484

Income Taxes

The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. As a REIT, the Company generally will not be subject to federal income tax provided it continues to satisfy certain tests concerning the Company’s sources of income, the nature of its assets, the amounts distributed to its stockholders, and the ownership of Company stock. Management believes the Company has qualified and will continue to qualify as a REIT. Notwithstanding the Company’s qualification for taxation as a REIT, the Company is subject to certain state and local taxes on its income and real estate.

The Company has established taxable REIT subsidiaries (“TRS”) pursuant to the provisions of the Internal Revenue Code. The Company’s TRS entities are able to engage in activities resulting in income that would be non-qualifying income for a REIT. As a result, certain activities of the Company which occur within its TRS entities are subject to federal and state income taxes. As of September 30, 2015 and December 31, 2014, the Company had accrued a deferred income tax amount of $705,000. In addition, the Company recognized income tax expense of $0 and $(355) for the three months ended September 30, 2015 and 2014, respectively, and $25,100 and $4,775 for the nine months ended September 30, 2015 and 2014, respectively.

 

Fair Values of Financial Instruments

The Company’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. The guidance describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels:

Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities.

Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued ASU No. 2014-09 “Revenue from Contracts with Customers”. ASU No. 2014-09 was developed to enable financial statement users to better understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The update’s core principal is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Companies are to use a five-step contract review model to ensure revenue gets recognized, measured and disclosed in accordance with this principle. ASU 2014-09 was to be effective for fiscal years and interim periods beginning after December 15, 2016. In August 2015, the Financial Accounting Standards Board issued ASU No. 2015-14 to defer the effective date of ASU No. 2014-09 for one year. As a result, ASU No. 2014-09 is now effective for fiscal years and interim periods beginning after December 15, 2017. The amendments in this update will be applied retrospectively either to each prior reporting period presented or to disclose the cumulative effect recognized at the date of initial application. We are still in the process of determining the impact that the implementation of ASU 2014-09 will have on the Company’s financial statements.

In April 2015, the Financial Accounting Standards Board issued ASU No. 2015-03 “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. The objective of ASU 2015-03 is to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. This ASU is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the new guidance and has not determined the impact, if any, this standard may have on the consolidated financial statements.

XML

Real Estate Investments (Details 1) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Less: Accumulated Amortization	$ (9,531,410)	$ (5,719,085)
Lease Intangible Asset, net	65,571,624	47,479,602
Leases, Acquired-in-Place [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible Lease Asset/Liability	44,627,351	36,680,630
Less: Accumulated Amortization	(6,490,103)	(3,897,008)
Above-Market Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible Lease Asset/Liability	51,574,206	31,642,267
Less: Accumulated Amortization	(6,662,862)	(4,111,435)
Below-Market Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible Lease Asset/Liability	(21,098,523)	(15,124,210)
Less: Accumulated Amortization	$ 3,621,555	$ 2,289,358

XML

Real Estate Investments (Details)	Sep. 30, 2015 USD ($) ft²	Dec. 31, 2014 USD ($) ft²
Real Estate Properties [Line Items]
Number of Properties	263	209
Gross Leasable Area | ft²	4,823,000	4,315,000
Land	$ 209,688,872	$ 195,091,303
Buildings	489,571,159	393,826,467
Property under Development	4,921,625	229,242
Gross Real Estate Investments	704,181,656	589,147,012
Less Accumulated Depreciation	(53,873,530)	(59,089,851)
Net Real Estate Investments	$ 650,308,126	$ 530,057,161

XML

Real Estate Investments (Details Textual) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Dec. 31, 2014
Real Estate Properties [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Land	$ 19,667,000	$ 19,667,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Buildings	118,933,000	118,933,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill	21,987,000	21,987,000
Proceeds from Sale of Real Estate	19,805,000	28,993,000
Gains (Losses) on Sales of Investment Real Estate	8,599,000	12,135,000
Real Estate Investment Property, at Cost	704,181,656	704,181,656	$ 589,147,012
Fifteen Retail Net Lease Assets [Member]
Real Estate Properties [Line Items]
Payments to Acquire Property, Plant, and Equipment	$ 36,937,000
Weighted Average Capitalization Rate For Acquired Assets (In Percentage)	8.10%
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life (in year)	12 years 4 months 24 days
Fifty Nine Retail Net Lease Assets [Member]
Real Estate Properties [Line Items]
Payments to Acquire Property, Plant, and Equipment		$ 160,587,000
Weighted Average Capitalization Rate For Acquired Assets (In Percentage)		8.00%
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life (in year)		12 years 7 months 6 days

XML

Debt (Details) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Mortgages Notes Payable	$ 102,295,587	$ 106,762,238
June 11 2016 [Member]
Debt Instrument [Line Items]
Mortgages Notes Payable	8,580,000	8,580,000
February 2017 [Member]
Debt Instrument [Line Items]
Mortgages Notes Payable	0	2,405,976
May 14 2017 [Member]
Debt Instrument [Line Items]
Mortgages Notes Payable	20,909,978	21,398,078
April 4 2018 [Member]
Debt Instrument [Line Items]
Mortgages Notes Payable	25,000,000	25,000,000
January 2020 [Member]
Debt Instrument [Line Items]
Mortgages Notes Payable	6,897,413	7,896,078
February 2020 [Member]
Debt Instrument [Line Items]
Mortgages Notes Payable	3,148,257	3,204,294
January 1 2023 [Member]
Debt Instrument [Line Items]
Mortgages Notes Payable	23,640,000	23,640,000
September 2023 [Member]
Debt Instrument [Line Items]
Mortgages Notes Payable	5,485,763	5,595,327
July 2026 [Member]
Debt Instrument [Line Items]
Mortgages Notes Payable	$ 8,634,176	$ 9,042,485

XML

Organization

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1 – Organization

Agree Realty Corporation (the ”Company”) is a Maryland corporation and 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 listed on the New York Stock Exchange (“NYSE”) in 1994.

The Company’s assets are held by, and all of its operations are conducted through, directly or indirectly, Agree Limited Partnership (the “Operating Partnership”), of which the Company is the sole general partner and in which the Company held a 98.19% interest as of September 30, 2015. 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

XML

Debt (Details 1)	Sep. 30, 2015 USD ($)
For the Year Ending December 31,
Remainder of 2015	$ 711,124
2016	11,533,637
2017	22,455,034	[1]
2018	54,575,206	[2]
2019	2,750,347
Thereafter	237,270,239
Total debt	329,295,587
Scheduled Principal [Member]
For the Year Ending December 31,
Remainder of 2015	711,124
2016	2,953,637
2017	2,710,276	[1]
2018	2,575,206	[2]
2019	2,750,347
Thereafter	6,839,089
Total debt	18,539,679
Balloon Payment [Member]
For the Year Ending December 31,
Remainder of 2015	0
2016	8,580,000
2017	19,744,758	[1]
2018	52,000,000	[2]
2019	0
Thereafter	230,431,150
Total debt	$ 310,755,908

[1] The balloon payment is related to a mortgage note that matures in May 2017 and may be extended, at the Company’s election, for a two-year term to May 2019, subject to certain conditions.

[2] The balloon payment balance includes the balance outstanding under the Credit Facility as of September 30, 2015. The Credit Facility matures in July 2018 and may be extended for one year at the Company’s election, subject to certain conditions.

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Equity Incentive Plan (Details Textual) - Restricted Stock [Member]	9 Months Ended
	Sep. 30, 2015 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair Value Inputs Forfeiture Rate	0.00%
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 4,421,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	3 years 1 month 6 days

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CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Real Estate Investments
Land	$ 209,688,872	$ 195,091,303
Buildings	489,571,159	393,826,467
Less accumulated depreciation	(53,873,530)	(59,089,851)
Property, Plant and Equipment, Net	645,386,501	529,827,919
Property under development	4,921,625	229,242
Net Real Estate Investments	650,308,126	530,057,161
Cash and Cash Equivalents	21,379,827	5,399,458
Accounts Receivable - Tenants, net of allowance of $35,000 for possible losses at September 30, 2015 and December 31, 2014	6,138,906	4,507,735
Unamortized Deferred Expenses
Financing costs, net of accumulated amortization of $3,251,313 and $2,690,005 at September 30, 2015 and December 31, 2014, respectively	3,333,365	3,008,280
Leasing costs, net of accumulated amortization of $529,866 and $543,957 at September 30, 2015 and December 31, 2014, respectively	688,200	783,335
Lease intangibles, net of accumulated amortization of $9,531,410 and $5,719,085 at September 30, 2015 and December 31, 2014, respectively	65,571,624	47,479,602
Other Assets	1,816,501	2,345,290
Total Assets	749,236,549	593,580,861
LIABILITIES
Mortgage Notes Payable	102,295,587	106,762,238
Unsecured Term Loans	100,000,000	100,000,000
Senior Unsecured Notes	100,000,000	0
Unsecured Revolving Credit Facility	27,000,000	15,000,000
Dividends and Distributions Payable	8,942,873	8,048,404
Deferred Revenue	656,488	1,004,023
Accrued Interest Payable	1,968,820	721,459
Accounts Payable and Accrued Expense
Capital expenditures	2,200	200,300
Operating	2,914,549	2,684,599
Interest Rate Swaps	5,038,132	2,383,308
Deferred Income Taxes	705,000	705,000
Tenant Deposits	28,608	36,156
Total Liabilities	349,552,257	237,545,487
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value, 28,000,000 shares authorized, 18,888,412 and 17,539,946 shares issued and outstanding, respectively	1,889	1,754
Preferred Stock, $.0001 par value per share, 4,000,000 shares authorized Series A junior participating preferred stock, $.0001 par value, 200,000 authorized, no shares issued and outstanding	0	0
Additional paid-in-capital	428,579,718	388,262,847
Deficit	(26,452,162)	(32,584,612)
Accumulated other comprehensive loss	(4,933,446)	(2,059,998)
Total Stockholders' Equity - Agree Realty Corporation	397,195,999	353,619,991
Non-controlling interest	2,488,293	2,415,383
Total Stockholders' Equity	399,684,292	356,035,374
Total Liabilities and Stockholders' Equity	$ 749,236,549	$ 593,580,861

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash Flows from Operating Activities
Net income	$ 31,835,273	$ 13,191,006
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	8,760,094	6,147,445
Amortization	4,417,752	2,592,226
Stock-based compensation	1,521,928	1,555,712
Impairment charge	0	3,020,000
Loss on extinguishment of debt	179,867	0
Debt extinguishment costs	(150,084)	0
Gain (loss) on sale of assets	(12,115,668)	169,905
Increase in accounts receivable	(1,631,171)	(755,779)
Decrease in other assets	471,342	170,062
Increase (decrease) in accounts payable	229,068	(533,631)
Decrease in deferred revenue	(347,535)	(347,535)
Increase in accrued interest	1,247,361	91,907
Increase (decrease) in tenant deposits	(7,546)	3,801
Net Cash Provided by Operating Activities	34,410,681	25,305,119
Cash Flows from Investing Activities
Acquisition of real estate investments	(161,693,175)	(70,946,751)
Development of real estate investments and other (including capitalized interest of $16,694 in 2015 and $221,410 in 2014)	(5,346,154)	(13,096,829)
Payment of leasing costs	(66,410)	(302,468)
Net proceeds from sale of assets	28,117,241	6,740,694
Net Cash Used In Investing Activities	(138,988,498)	(77,605,354)
Cash Flows from Financing Activities
Proceeds from common stock offerings, net	38,795,078	(14,529)
Unsecured revolving credit facility borrowings	128,000,000	95,622,975
Unsecured revolving credit facility repayments	(116,000,000)	(88,622,975)
Payments of mortgage notes payable	(4,466,651)	(11,843,509)
Term loan payable proceeds	0	65,000,000
Senior unsecured notes proceeds	100,000,000	0
Dividends paid	(24,209,043)	(18,969,743)
Limited partners' distributions paid	(474,500)	(441,475)
Repayments of payables for capital expenditures	(200,302)	(144,074)
Payments for financing costs	(886,396)	(1,420,064)
Net Cash Provided by Financing Activities	120,558,186	39,166,606
Net Increase (Decrease) in Cash and Cash Equivalents	15,980,369	(13,133,629)
Cash and Cash Equivalents, beginning of period	5,399,458	14,536,881
Cash and Cash Equivalents, end of period	21,379,827	1,403,252
Supplemental Disclosure of Cash Flow Information
Cash paid for interest (net of amounts capitalized)	9,142,568	5,383,679
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Shares issued under equity incentive plans	2,463,751	2,325,235
Dividends and limited partners' distributions declared and unpaid	8,944,754	6,582,370
Real estate acquisitions financed with debt assumption	0	5,631,183
Real estate investment financed with accounts payable	$ 2,200	$ 0

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Dividends and Distribution Payable (Details Textual)	Sep. 30, 2015 $ / shares
Agree Limited Partnership [Member]
Dividends Payable [Line Items]
Dividends Payable, Amount Per Share (in dollars per share)	$ 0.465

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Debt (Tables)

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments [Table Text Block]

Mortgages payable consisted of the following:

	(Unaudited)
	September 30, 2015		December 31, 2014
Note payable in monthly interest-only installments of $48,467 at 6.56% annum, with a balloon payment in the amount of $8,580,000 due June 11, 2016; collateralized by related real estate and tenants’ leases	$	8,580,000	$	8,580,000
Note payable in monthly installments of $99,598 including interest at 6.63% per annum, with the final monthly payment due February 2017; collateralized by related real estate and tenants’ leases		-		2,405,976
Note payable in monthly principal installments of $53,160 plus interest at 170 basis points over LIBOR, swapped to a fixed rate of 3.62% as of December 31, 2013. A final balloon payment in the amount of $19,744,758 is due on May 14, 2017 unless extended for a two year period at the option of the Company, subject to certain conditions, collateralized by related real estate and tenants’ leases		20,909,978		21,398,078
Note payable in monthly installments of interest only at LIBOR plus 160 basis points, swapped to a fixed rate of 2.49% with balloon payment due April 4, 2018; collateralized by related real estate and tenants' leases		25,000,000		25,000,000
Note payable in monthly installments of $153,838 including interest at 6.90% per annum, with the final monthly payment due January 2020; collateralized by related real estate and tenants’ leases		6,897,413		7,896,078
Note payable in monthly installments of $23,004 including interest at 6.24% per annum, with a balloon payment of $2,766,628 due February 2020; collateralized by related real estate and tenant lease		3,148,257		3,204,294
Note payable in monthly installments of interest only at 3.60% per annum, with a balloon payment due January 1, 2023; collateralized by related real estate and tenants' leases		23,640,000		23,640,000
Note payable in monthly installments of $35,673 including interest at 5.01% per annum, with a balloon payment of $4,034,627 due September 2023; collateralized by related real estate and tenant lease		5,485,763		5,595,327
Note payable in monthly installments of $91,675 including interest at 6.27% per annum, with a final monthly payment due July 2026; collateralized by related real estate and tenants’ leases		8,634,176		9,042,485
Total	$	102,295,587	$	106,762,238

Schedule of Maturities of Long-term Debt [Table Text Block]

The following table presents scheduled principal payments related to our debt as of September 30, 2015:

	Scheduled		Balloon
	Principal		Payment		Total
Remainder of 2015	$	711,124	$	-	$	711,124
2016		2,953,637		8,580,000		11,533,637
2017 (1)		2,710,276		19,744,758		22,455,034
2018 (2)		2,575,206		52,000,000		54,575,206
2019		2,750,347		-		2,750,347
Thereafter		6,839,089		230,431,150		237,270,239
Total	$	18,539,679	$	310,755,908	$	329,295,587

(1) The balloon payment is related to a mortgage note that matures in May 2017 and may be extended, at the Company’s election, for a two-year term to May 2019, subject to certain conditions.

(2) The balloon payment balance includes the balance outstanding under the Credit Facility as of September 30, 2015. The Credit Facility matures in July 2018 and may be extended for one year at the Company’s election, subject to certain conditions.

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Derivative Instruments and Hedging Activity (Details Textual) - USD ($)	1 Months Ended
	Jul. 31, 2014	Sep. 30, 2013	Dec. 31, 2012	Apr. 30, 2012
Interest Rate Swap Agreement One [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, Notional Amount				$ 22,300,000
Derivative, Inception Date				Jul. 01, 2013
Derivative, Maturity Date				May 01, 2019
Description of Interest Rate Cash Flow Hedge Activities				the Company receives from the counterparty interest on the notional amount based on one-month LIBOR and pays to the counterparty a fixed rate of 1.92%.
Interest Rate Swap Agreement Two [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, Notional Amount			$ 25,000,000
Derivative, Inception Date			Dec. 06, 2012
Derivative, Maturity Date			Apr. 04, 2018
Description of Interest Rate Cash Flow Hedge Activities			the Company receives from the counterparty interest on the notional amount based on one-month LIBOR and pays to the counterparty a fixed rate of 0.89%.
Interest Rate Swap Agreement Three [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, Notional Amount		$ 35,000,000
Derivative, Inception Date		Oct. 03, 2013
Derivative, Maturity Date		Sep. 29, 2020
Description of Interest Rate Cash Flow Hedge Activities		the Company receives from the counterparty interest on the notional amount based on one-month LIBOR and pays to the counterparty a fixed rate of 2.20%.
Interest Rate Swap Agreement Four [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, Notional Amount	$ 65,000,000
Derivative, Inception Date	Jul. 21, 2014
Derivative, Maturity Date	Jul. 21, 2021
Description of Interest Rate Cash Flow Hedge Activities	the Company receives from the counterparty interest on the notional amount based on one-month LIBOR and pays to the counterparty a fixed rate of 2.09%.

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Equity Incentive Plan (Tables)

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

Restricted stock activity is summarized as follows:

			Weighted Average
	Shares		Grant Date
	Outstanding		Fair Value
Unvested restricted stock at December 31, 2014		238,626	$	26.24
Restricted stock granted		73,479	$	33.53
Restricted stock vested		(79,238)	$	25.10
Restricted stock forfeited		(28,024)	$	29.95
Unvested restricted stock at September 30, 2015		204,843	$	28.79

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CONSOLIDATED STATEMENTS OF CASH FLOWS [Parenthetical] - USD ($)	Sep. 30, 2015	Sep. 30, 2014
Real Estate Inventory, Capitalized Interest Costs	$ 16,694	$ 221,410

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CONSOLIDATED BALANCE SHEETS [Parenthetical] - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Allowance for doubtful accounts receivable (in dollars)	$ 35,000	$ 35,000
Deferred financing costs, accumulated amortization (in dollars)	3,251,313	2,690,005
Deferred leasing costs, accumulated amortization (in dollars)	529,866	543,957
Finite-lived intangible assets, accumulated amortization (in dollars)	$ 9,531,410	$ 5,719,085
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	28,000,000	28,000,000
Common stock, shares, issued	18,888,412	17,539,946
Common stock, shares, outstanding	18,888,412	17,539,946
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	4,000,000	4,000,000
Series A Junior Participating Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	200,000	200,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

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Equity Incentive Plan

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 10 – Equity Incentive Plan

The Company estimates the fair value of restricted stock grants at the date of grant and amortizes those amounts into expense on a straight line basis or amount vested, if greater, over the appropriate vesting period.

As of September 30, 2015, there was $4,421,000 of total unrecognized compensation costs related to the outstanding restricted stock, which is expected to be recognized over a weighted average period of 3.1 years. The Company used 0% for both the discount factor and forfeiture rate for determining the fair value of restricted stock. The Company has deemed historical forfeitures insignificant and does not consider discount rates to be material.

 

The holder of a restricted stock award is generally entitled at all times on and after the date of issuance of the restricted shares to exercise the rights of a stockholder of the Company, including the right to vote the shares and the right to receive dividends on the shares.

Restricted stock activity is summarized as follows:

			Weighted Average
	Shares		Grant Date
	Outstanding		Fair Value
Unvested restricted stock at December 31, 2014		238,626	$	26.24
Restricted stock granted		73,479	$	33.53
Restricted stock vested		(79,238)	$	25.10
Restricted stock forfeited		(28,024)	$	29.95
Unvested restricted stock at September 30, 2015		204,843	$	28.79

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 28, 2015
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Entity Registrant Name	AGREE REALTY CORP
Entity Central Index Key	0000917251
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Trading Symbol	ADC
Entity Common Stock, Shares Outstanding		18,888,412

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Subsequent Events

9 Months Ended

Sep. 30, 2015

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 11 – Subsequent Events

In connection with the preparation of its financial statements for the nine months ended September 30, 2015, the Company has evaluated events that occurred subsequent to September 30, 2015 through the date on which these financial statements were available to be issued to determine whether any of these events required disclosure in the financial statements. The Company is not aware of any subsequent events that would require recognition or disclosure in the financial statements.

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CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenues
Minimum rents	$ 16,735,634	$ 12,628,111	$ 47,261,815	$ 35,941,801
Percentage rents	37,920	4,695	188,748	146,876
Operating cost reimbursement	970,555	1,010,157	3,246,518	2,979,738
Other income	105,703	114,462	115,238	167,838
Total Revenues	17,849,812	13,757,425	50,812,319	39,236,253
Operating Expenses
Real estate taxes	715,685	773,647	2,341,965	2,210,622
Property operating expenses	424,296	337,811	1,411,393	1,294,631
Land lease payments	173,713	125,327	442,858	339,877
General and administrative	1,768,895	1,748,209	5,180,527	4,956,897
Depreciation and amortization	5,525,901	2,855,066	13,196,664	7,959,812
Impairment charge	0	220,000	0	3,020,000
Total Operating Expenses	8,608,490	6,060,060	22,573,407	19,781,839
Income from Operations	9,241,322	7,697,365	28,238,912	19,454,414
Other (Expense) Income
Interest expense, net	(2,964,319)	(2,439,105)	(8,358,343)	(6,108,076)
Gain (Loss) on sale of assets	8,599,261	(292,652)	12,134,571	(292,652)
Loss on debt extinguishment	0	0	(179,867)	0
Income From Continuing Operations	14,876,264	4,965,608	31,835,273	13,053,686
Discontinued Operations
Gain on sale of assets from discontinued operations	0	0	0	122,747
Income from discontinued operations	0	0	0	14,573
Net Income	14,876,264	4,965,608	31,835,273	13,191,006
Less Net Income Attributable to Non-Controlling Interest	280,801	112,763	607,854	299,576
Net Income Attributable to Agree Realty Corporation	$ 14,595,463	$ 4,852,845	$ 31,227,419	$ 12,891,430
Basic Earnings Per Share
Continuing operations (in dollars per share)	$ 0.81	$ 0.33	$ 1.77	$ 0.87
Discontinued operations (in dollars per share)	0	0	0	0.01
Earnings Per Share, Basic (in dollars per share)	0.81	0.33	1.77	0.88
Diluted Earnings Per Share
Continuing operations (in dollars per share)	0.81	0.33	1.76	0.86
Discontinued operations (in dollars per share)	0	0	0	0.01
Earnings Per Share, Diluted (in dollars per share)	$ 0.81	$ 0.33	$ 1.76	$ 0.87
Other Comprehensive Income
Net income	$ 14,876,264	$ 4,965,608	$ 31,835,273	$ 13,191,006
Other Comprehensive Income (Loss)	(2,538,187)	727,135	(2,928,837)	(583,107)
Total Comprehensive Income	12,338,077	5,692,743	28,906,436	12,607,899
Comprehensive Income Attributable to Non-Controlling Interest	(231,073)	(129,269)	(552,114)	(286,339)
Comprehensive Income Attributable to Agree Realty Corporation	$ 12,107,004	$ 5,563,474	$ 28,354,322	$ 12,321,560
Weighted Average Number of Common Shares Outstanding - Basic (in shares)	18,008,592	14,713,740	17,653,482	14,712,352
Weighted Average Number of Common Shares Outstanding - Diluted (in shares)	18,064,318	14,782,051	17,716,362	14,782,484

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Common Stock

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Note 5 – Common Stock

On May 6, 2015, the Company implemented a $100,000,000 at-the-market equity program (“ATM program”) by entering into multiple equity distribution agreements through which the Company may, from time to time, sell shares of common stock. The Company uses the proceeds generated from its ATM program for general corporate purposes including funding our investment activity, the repayment or refinancing of outstanding indebtedness, working capital and other general purposes.

During the three months ended September 30, 2015, the Company issued 848,497 shares of common stock under its ATM program at an average price of $30.11, realizing gross proceeds of approximately $25,550,000. The Company has approximately $60,550,000 remaining under the ATM program as of September 30, 2015.

During the nine months ended September 30, 2015, the Company issued 1,303,011 shares of common stock under its ATM program at an average price of $30.28, realizing gross proceeds of approximately $39,450,000.

On March 27, 2015, the Securities and Exchange Commission declared effective a shelf registration statement previously filed by the Company. The securities covered by this registration statement, which expires March 27, 2018, cannot exceed $500,000,000 in the aggregate and include common stock, preferred stock, depositary shares and warrants. The Company may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering.

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Debt

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Note 4 – Debt

As of September 30, 2015, the Company had total indebtedness of approximately $329,296,000, including (i) $102,296,000 of mortgage notes payable; (ii) $100,000,000 of unsecured term loans; (iii) $100,000,000 of senior unsecured notes; and (iv) $27,000,000 of borrowings under its Credit Facility.

 

Revolving Credit and Term Loan Facility

The Company has in place a $250,000,000 senior unsecured revolving credit and term loan facility (the “Revolving Credit and Term Loan Facility”) consisting of (i) a $150,000,000 revolving credit facility (the “Credit Facility”); (ii) a $65,000,000 seven-year unsecured term loan facility (the “2021 Term Loan”); and (iii) a $35,000,000 unsecured term loan facility due 2020 (the “2020 Term Loan”).

The Credit Facility is due July 21, 2018, with an additional one-year extension at the Company’s option, subject to customary conditions. Borrowings under the Credit Facility are priced at LIBOR plus 135 to 200 basis points, depending on the Company’s leverage. As of September 30, 2015, $27,000,000 was outstanding under the Credit Facility bearing a weighted average interest rate of approximately 1.6% and $123,000,000 was available for borrowing.

The 2021 Term Loan matures on July 21, 2021. Borrowings under the 2021 Term Loan are priced at LIBOR plus 165 to 225 basis points, depending on the Company’s leverage, and the Company entered into interest rate swaps to fix LIBOR at 2.09% until maturity. As of September 30, 2015, $65,000,000 was outstanding under the 2021 Term Loan bearing an all-in interest rate of 3.74%.

 

The 2020 Term Loan matures on September 29, 2020. Borrowings under the 2020 Term Loan are priced at LIBOR plus 165 to 225 basis points, depending on the Company’s leverage, and the Company entered into interest rate swaps to fix LIBOR at 2.20% until maturity. As of September 30, 2015, $35,000,000 was outstanding under the 2020 Term Loan bearing an all-in interest rate of 3.85%.

 

The Revolving Credit and Term Loan Facility contains customary covenants, including, among others, financial covenants regarding debt levels, total liabilities, tangible net worth, fixed charge coverage, unencumbered borrowing base properties and permitted investments. The Company was in compliance with the covenant terms at September 30, 2015.

Senior Unsecured Notes

On May 28, 2015, the Company completed a private placement of $100,000,000 principal amount of senior unsecured notes (the “Senior Unsecured Notes”). The Senior Unsecured Notes were sold in two series, including $50,000,000 of 4.16% notes due May 30, 2025 and $50,000,000 of 4.26% notes due May 30, 2027. The weighted average term of the Senior Unsecured Notes is 11 years and the weighted average interest rate is 4.21%. Proceeds from the issuance were used to repay borrowings under the Company's Credit Facility and for general corporate purposes.

 

Mortgage Notes Payable

As of September 30, 2015, the Company had total mortgage indebtedness of $102,296,000 which was collateralized by related real estate with an aggregate net book value of $ 136,479,000. Including mortgages that have been swapped to a fixed interest rate, the weighted average interest rate on the Company’s mortgage notes payable was 4.19%.

In January 2015, the Company prepaid a mortgage note payable with an outstanding balance of approximately $2,406,000. The fully-amortizing loan carried a 6.63% interest rate and the final monthly payment was due in February 2017. The Company incurred a loss on debt extinguishment of approximately $180,000 in connection with the prepayment.

Mortgages payable consisted of the following:

	(Unaudited)
	September 30, 2015		December 31, 2014
Note payable in monthly interest-only installments of $48,467 at 6.56% annum, with a balloon payment in the amount of $8,580,000 due June 11, 2016; collateralized by related real estate and tenants’ leases	$	8,580,000	$	8,580,000
Note payable in monthly installments of $99,598 including interest at 6.63% per annum, with the final monthly payment due February 2017; collateralized by related real estate and tenants’ leases		-		2,405,976
Note payable in monthly principal installments of $53,160 plus interest at 170 basis points over LIBOR, swapped to a fixed rate of 3.62% as of December 31, 2013. A final balloon payment in the amount of $19,744,758 is due on May 14, 2017 unless extended for a two year period at the option of the Company, subject to certain conditions, collateralized by related real estate and tenants’ leases		20,909,978		21,398,078
Note payable in monthly installments of interest only at LIBOR plus 160 basis points, swapped to a fixed rate of 2.49% with balloon payment due April 4, 2018; collateralized by related real estate and tenants' leases		25,000,000		25,000,000
Note payable in monthly installments of $153,838 including interest at 6.90% per annum, with the final monthly payment due January 2020; collateralized by related real estate and tenants’ leases		6,897,413		7,896,078
Note payable in monthly installments of $23,004 including interest at 6.24% per annum, with a balloon payment of $2,766,628 due February 2020; collateralized by related real estate and tenant lease		3,148,257		3,204,294
Note payable in monthly installments of interest only at 3.60% per annum, with a balloon payment due January 1, 2023; collateralized by related real estate and tenants' leases		23,640,000		23,640,000
Note payable in monthly installments of $35,673 including interest at 5.01% per annum, with a balloon payment of $4,034,627 due September 2023; collateralized by related real estate and tenant lease		5,485,763		5,595,327
Note payable in monthly installments of $91,675 including interest at 6.27% per annum, with a final monthly payment due July 2026; collateralized by related real estate and tenants’ leases		8,634,176		9,042,485
Total	$	102,295,587	$	106,762,238

Debt Maturities

The following table presents scheduled principal payments related to our debt as of September 30, 2015:

	Scheduled		Balloon
	Principal		Payment		Total
Remainder of 2015	$	711,124	$	-	$	711,124
2016		2,953,637		8,580,000		11,533,637
2017 (1)		2,710,276		19,744,758		22,455,034
2018 (2)		2,575,206		52,000,000		54,575,206
2019		2,750,347		-		2,750,347
Thereafter		6,839,089		230,431,150		237,270,239
Total	$	18,539,679	$	310,755,908	$	329,295,587

(1) The balloon payment is related to a mortgage note that matures in May 2017 and may be extended, at the Company’s election, for a two-year term to May 2019, subject to certain conditions.

(2) The balloon payment balance includes the balance outstanding under the Credit Facility as of September 30, 2015. The Credit Facility matures in July 2018 and may be extended for one year at the Company’s election, subject to certain conditions.

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Schedule of Derivative Liabilities at Fair Value [Table Text Block]

The table below sets forth the Company’s fair value hierarchy for assets and liabilities measured or disclosed at fair value as of September 30, 2015.

Asset:	Level 1		Level 2		Level 3		Carrying Value
Interest rate swaps	$	-	$	-	$	-	$	-

Liability:	Level 1		Level 2		Level 3		Carrying Value
Interest rate swaps	$	-	$	5,038,132	$	-	$	5,038,132
Mortgage notes payable	$	-	$	-	$	108,077,969	$	102,295,587
Unsecured term loans	$	-	$	-	$	98,675,076	$	100,000,000
Senior unsecured notes	$	-	$	-	$	99,662,808	$	100,000,000
Revolving credit facility	$	-	$	27,000,000	$	-	$	27,000,000

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Basis of Accounting and Principles of Consolidation

The accompanying unaudited consolidated financial statements for the nine months ended September 30, 2015 have been prepared in accordance with U.S. generally accepted accounting principles (“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 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 nine months ended September 30, 2015 may not be indicative of the results that may be expected for the year ending December 31, 2015. Amounts as of December 31, 2014 included in the consolidated financial statements have been derived from the audited consolidated financial statements as of that date. The unaudited consolidated financial statements, included herein, should be read in conjunction with the 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, 2014.

The unaudited 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, Policy [Policy Text Block]

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 assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although management believes its estimates are reasonable, actual results could differ from those estimates.

Real Estate, Policy [Policy Text Block]

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. Properties classified as “held for sale” are recorded at the lower of their carrying value or their fair value less anticipated selling costs.

Purchase Accounting For Acquisitions Of Real Estate [Policy Text Block]

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, building and identified intangible assets and liabilities, based in each case on their relative estimated fair values and without giving rise to goodwill. Intangible assets and liabilities represent the value of in-place leases and above- or below-market leases. 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 estimate 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 of the real estate and management’s estimate of current market lease rates for the property, measured over a period equal to the remaining non-cancelable term of the lease.

The fair value of identified intangible assets and liabilities acquired is amortized to depreciation and amortization over the remaining term of the related leases.

Cash and Cash Equivalents, Policy [Policy Text Block]

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.

Trade and Other Accounts Receivable, Policy [Policy Text Block]

Accounts Receivable – Tenants

The Company reviews its rent receivables for collectability 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 of a receivable with respect to any tenant is in doubt, a provision for uncollectible amounts will be established or a direct write-off of the specific rent receivable will be made. For accrued rental revenues related to the straight-line method of reporting rental revenue, the Company performs a periodic review of receivable balances to assess the risk of uncollectible amounts and establish appropriate provisions.

Earnings Per Share, Policy [Policy Text Block]

Earnings per Share

Earnings per share have been computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted average common and potential dilutive common shares outstanding in accordance with the treasury stock method.

The following is a reconciliation of the denominator of the basic net earnings per common share computation to the denominator of the diluted net earnings per common share computation for each of the periods presented:

	Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30,2015		September 30,2014
Weighted average number of common shares outstanding		18,213,436		14,960,218		17,858,326		14,958,830
Less: Unvested restricted stock		(204,844)		(246,478)		(204,844)		(246,478)
Weighted average number of common shares outstanding used in basic earnings per share		18,008,592		14,713,740		17,653,482		14,712,352
Weighted average number of common shares outstanding used in basic earnings per share		18,008,592		14,713,740		17,653,482		14,712,352
Effect of dilutive securities: restricted stock		55,726		68,311		62,880		70,132
Weighted average number of common shares outstanding used in diluted earnings per share		18,064,318		14,782,051		17,716,362		14,782,484

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. As a REIT, the Company generally will not be subject to federal income tax provided it continues to satisfy certain tests concerning the Company’s sources of income, the nature of its assets, the amounts distributed to its stockholders, and the ownership of Company stock. Management believes the Company has qualified and will continue to qualify as a REIT. Notwithstanding the Company’s qualification for taxation as a REIT, the Company is subject to certain state and local taxes on its income and real estate.

The Company has established taxable REIT subsidiaries (“TRS”) pursuant to the provisions of the Internal Revenue Code. The Company’s TRS entities are able to engage in activities resulting in income that would be non-qualifying income for a REIT. As a result, certain activities of the Company which occur within its TRS entities are subject to federal and state income taxes. As of September 30, 2015 and December 31, 2014, the Company had accrued a deferred income tax amount of $705,000. In addition, the Company recognized income tax expense of $0 and $(355) for the three months ended September 30, 2015 and 2014, respectively, and $25,100 and $4,775 for the nine months ended September 30, 2015 and 2014, respectively.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Values of Financial Instruments

The Company’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. The guidance describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels:

Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities.

Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued ASU No. 2014-09 “Revenue from Contracts with Customers”. ASU No. 2014-09 was developed to enable financial statement users to better understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The update’s core principal is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Companies are to use a five-step contract review model to ensure revenue gets recognized, measured and disclosed in accordance with this principle. ASU 2014-09 was to be effective for fiscal years and interim periods beginning after December 15, 2016. In August 2015, the Financial Accounting Standards Board issued ASU No. 2015-14 to defer the effective date of ASU No. 2014-09 for one year. As a result, ASU No. 2014-09 is now effective for fiscal years and interim periods beginning after December 15, 2017. The amendments in this update will be applied retrospectively either to each prior reporting period presented or to disclose the cumulative effect recognized at the date of initial application. We are still in the process of determining the impact that the implementation of ASU 2014-09 will have on the Company’s financial statements.

In April 2015, the Financial Accounting Standards Board issued ASU No. 2015-03 “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. The objective of ASU 2015-03 is to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. This ASU is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the new guidance and has not determined the impact, if any, this standard may have on the consolidated financial statements.

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Discontinued Operations

9 Months Ended

Sep. 30, 2015

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Note 8 – Discontinued Operations

The Company elected to early adopt ASU 2014-08 "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" in the first quarter of 2014. The following information provides a summary of selected operating results for those properties classified as discontinued operations prior to the adoption of ASU 2014-08.

In January 2014, the Company sold a Kmart-anchored shopping center in Ironwood, Michigan, which was classified as held for sale on December 31, 2013, for approximately $5,000,000. The results of operations for this property are reported in discontinued operations for the nine months ended September 30, 2014, including revenues of approximately $42,600 and expenses of approximately $28,000.

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Dividends and Distribution Payable

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

Dividends And Distributions Payable [Text Block]

Note 6 – Dividends and Distribution Payable

On September 15, 2015, the Company declared a dividend of $0.465 per share for the quarter ended September 30, 2015. The holders of limited partnership interests in the Operating Partnership (“OP Units”) were entitled to an equal distribution per OP Unit held as of September 30, 2015. The dividends and distributions payable were recorded as liabilities on the Company's consolidated balance sheet at September 30, 2015. The dividend has been reflected as a reduction of stockholders' equity and the distribution has been reflected as a reduction of the limited partners' non-controlling interest. These amounts were paid on October 13, 2015.

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Derivative Instruments and Hedging Activity

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note 7 – Derivative Instruments and Hedging Activity

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risk, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and, to a limited extent, the use of derivative instruments.

The Company’s objective in using interest rate derivatives is to manage its exposure to interest rate movements and add stability to interest expense. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed rate payments over the life of the agreement without exchange of the underlying notional amount.

In April 2012, the Company entered into a forward starting interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $22,300,000 in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on one-month LIBOR and pays to the counterparty a fixed rate of 1.92%. This swap effectively converted $22,300,000 of variable-rate borrowings to fixed-rate borrowings from July 1, 2013 to May 1, 2019.

In December 2012, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $25,000,000 in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on one-month LIBOR and pays to the counterparty a fixed rate of 0.89%. This swap effectively converted $25,000,000 of variable-rate borrowings to fixed-rate borrowings from December 6, 2012 to April 4, 2018.

In September 2013, the Company entered into an interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $35,000,000 in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on one-month LIBOR and pays to the counterparty a fixed rate of 2.20%. This swap effectively converted $35,000,000 of variable-rate borrowings to fixed-rate borrowings from October 3, 2013 to September 29, 2020.

In July 2014, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $65,000,000 in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on one-month LIBOR and pays to the counterparty a fixed rate of 2.09%. This swap effectively converted $65,000,000 of variable-rate borrowings to fixed-rate borrowings from July 21, 2014 to July 21, 2021.

Companies are required to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet. The Company has designated these derivative instruments as cash flow hedges. As such, changes in the fair value of the derivative instrument are recorded as a component of other comprehensive income (loss) (“OCI”) for the three months ended September 30, 2015 to the extent of effectiveness. The ineffective portion of the change in fair value of the derivative instrument is recognized in interest expense. For the three months ended September 30, 2015, the Company has determined these derivative instruments to be effective hedges.

The Company does not use derivative instruments for trading or other speculative purposes and did not have any other derivative instruments or hedging activities as of September 30, 2015.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

Note 9 – Fair Value Measurements

The table below sets forth the Company’s fair value hierarchy for assets and liabilities measured or disclosed at fair value as of September 30, 2015.

Asset:	Level 1		Level 2		Level 3		Carrying Value
Interest rate swaps	$	-	$	-	$	-	$	-

Liability:	Level 1		Level 2		Level 3		Carrying Value
Interest rate swaps	$	-	$	5,038,132	$	-	$	5,038,132
Mortgage notes payable	$	-	$	-	$	108,077,969	$	102,295,587
Unsecured term loans	$	-	$	-	$	98,675,076	$	100,000,000
Senior unsecured notes	$	-	$	-	$	99,662,808	$	100,000,000
Revolving credit facility	$	-	$	27,000,000	$	-	$	27,000,000

The carrying amounts of the Company’s short-term financial instruments, which consist of cash, cash equivalents, receivables, and accounts payable, approximate their fair values. The fair value of the interest rate swaps were derived using estimates to settle the interest rate swap agreements, which are based on the net present value of expected future cash flows on each leg of the swap utilizing market-based inputs and discount rates reflecting the risks involved. The fair value of fixed rate debt was derived using the present value of future payments based on estimated current market interest rates. The fair value of variable rate debt is estimated to be equal to the face value of the debt because the interest rates are floating and is considered to approximate fair value.

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Common Stock (Details Textual) - USD ($)		3 Months Ended	9 Months Ended
	May. 06, 2015	Sep. 30, 2015	Sep. 30, 2015	Sep. 30, 2014	Mar. 27, 2015
Class of Stock [Line Items]
Stock Issued During Period, Value, New Issues			$ 38,795,073
Proceeds From Issuance Of Common Stock			$ 38,795,078	$ (14,529)
ATM Program [Member]
Class of Stock [Line Items]
Gross Amount Remaining To Be Issued		$ 60,550,000
Common Stock Average Price		$ 30.11	$ 30.28
Common Stock [Member]
Class of Stock [Line Items]
Registration Payment Arrangement, Maximum Potential Consideration					$ 500,000,000
Common Stock [Member] | ATM Program [Member]
Class of Stock [Line Items]
Stock Issued During Period, Value, New Issues		$ 848,497	$ 1,303,011
Proceeds From Issuance Of Common Stock		$ 25,550,000	$ 39,450,000
Value Of Equity Instruments To Be Issued	$ 100,000,000

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Real Estate Investments (Tables)

9 Months Ended

Sep. 30, 2015

Real Estate [Abstract]

Schedule of Real Estate Properties [Table Text Block]

Real estate investments consisted of the following as of September 30, 2015 and December 31, 2014:

 

	September 30, 2015		December 31, 2014
Number of Properties		263		209
Gross Leasable Area		4,823,000		4,315,000
Land	$	209,688,872	$	195,091,303
Buildings		489,571,159		393,826,467
Property under Development		4,921,625		229,242
Gross Real Estate Investments	$	704,181,656	$	589,147,012
Less Accumulated Depreciation	$	(53,873,530)	$	(59,089,851)
Net Real Estate Investments	$	650,308,126	$	530,057,161

Schedule of Finite-Lived Intangible Assets [Table Text Block]

The following table details lease intangibles, net of accumulated amortization, as of September 30, 2015 and December 31, 2014:

	September 30, 2015		December 31, 2014
Intangible Lease Asset - In-Place Leases	$	44,627,351	$	36,680,630
Less: Accumulated Amortization		(6,490,103)		(3,897,008)
Intangible Lease Asset - Above-Market Leases		51,574,206		31,642,267
Less: Accumulated Amortization		(6,662,862)		(4,111,435)
Intangible Lease Liability - Below-Market Leases		(21,098,523)		(15,124,210)
Less: Accumulated Amortization		3,621,555		2,289,358
Lease Intangible Asset, net	$	65,571,624	$	47,479,602

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Summary of Significant Accounting Policies (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Earnings Per Share Basic And Diluted [Line Items]
Weighted average number of common shares outstanding	18,213,436	14,960,218	17,858,326	14,958,830
Less: Unvested restricted stock	(204,844)	(246,478)	(204,844)	(246,478)
Weighted average number of common shares outstanding used in basic earnings per share	18,008,592	14,713,740	17,653,482	14,712,352
Weighted average number of common shares outstanding used in basic earnings per share	18,008,592	14,713,740	17,653,482	14,712,352
Effect of dilutive securities: restricted stock	55,726	68,311	62,880	70,132
Weighted average number of common shares outstanding used in diluted earnings per share	18,064,318	14,782,051	17,716,362	14,782,484

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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2015 - USD ($)	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Non-Controlling Interest [Member]
Balance at Dec. 31, 2014	$ 356,035,374	$ 1,754	$ 388,262,847	$ (32,584,612)	$ (2,059,998)	$ 2,415,383
Balance (in shares) at Dec. 31, 2014		17,539,946
Issuance of common stock, net of issuance costs	38,795,073	$ 130	38,794,943	0	0	0
Issuance of common stock, net of issuance costs (in shares)		1,303,011
Issuance of restricted stock under the Omnibus Incentive Plan	7	$ 7	0	0	0	0
Issuance of restricted stock under the Omnibus Incentive Plan (in shares)		73,479
Forfeiture of restricted stock	(2)	$ (2)	0	0	0	0
Forfeiture of restricted stock (in shares)		(28,024)
Vesting of restricted stock	1,521,928	$ 0	1,521,928	0	0	0
Dividends and distributions declared for the period	(25,574,524)	0	0	(25,094,969)	0	(479,555)
Other comprehensive income (loss) - change in fair value of interest rate swaps	(2,928,837)	0	0	0	(2,873,448)	(55,389)
Net income	31,835,273	0	0	31,227,419	0	607,854
Balance at Sep. 30, 2015	$ 399,684,292	$ 1,889	$ 428,579,718	$ (26,452,162)	$ (4,933,446)	$ 2,488,293
Balance (in shares) at Sep. 30, 2015		18,888,412

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Real Estate Investments

9 Months Ended

Sep. 30, 2015

Real Estate [Abstract]

Real Estate Disclosure [Text Block]

Note 3 – Real Estate Investments

Real Estate Portfolio

At September 30, 2015 and December 31, 2014, the Company’s gross investment in real estate assets, including properties under development, totaled $704,182,000 and $589,147,000, respectively. Real estate investments consisted of the following as of September 30, 2015 and December 31, 2014:

 

	September 30, 2015		December 31, 2014
Number of Properties		263		209
Gross Leasable Area		4,823,000		4,315,000
Land	$	209,688,872	$	195,091,303
Buildings		489,571,159		393,826,467
Property under Development		4,921,625		229,242
Gross Real Estate Investments	$	704,181,656	$	589,147,012
Less Accumulated Depreciation	$	(53,873,530)	$	(59,089,851)
Net Real Estate Investments	$	650,308,126	$	530,057,161

Lease Intangibles

The following table details lease intangibles, net of accumulated amortization, as of September 30, 2015 and December 31, 2014:

	September 30, 2015		December 31, 2014
Intangible Lease Asset - In-Place Leases	$	44,627,351	$	36,680,630
Less: Accumulated Amortization		(6,490,103)		(3,897,008)
Intangible Lease Asset - Above-Market Leases		51,574,206		31,642,267
Less: Accumulated Amortization		(6,662,862)		(4,111,435)
Intangible Lease Liability - Below-Market Leases		(21,098,523)		(15,124,210)
Less: Accumulated Amortization		3,621,555		2,289,358
Lease Intangible Asset, net	$	65,571,624	$	47,479,602

Investments

During the three months ended September 30, 2015, the Company purchased 15 retail net lease assets for approximately $36,937,000, including acquisition and closing costs. These properties are located in nine states and are leased to nine different tenants operating in six diverse retail sectors for a weighted average lease term of approximately 12.4 years. The underwritten weighted average capitalization rate on the Company’s third quarter 2015 acquisitions was approximately 8.1%.

During the nine months ended September 30, 2015, the Company purchased 59 retail net lease assets for approximately $160,587,000, including acquisition and closing costs. These properties are located in 21 states and are leased to 35 different tenants operating in 19 diverse retail sectors for a weighted average lease term of approximately 12.6 years. The underwritten weighted average capitalization rate on the Company’s acquisitions was approximately 8.0%.

The aggregate 2015 acquisitions for the nine months ended September 30, 2015 were allocated $19,667,000 to land, $118,933,000 to buildings and improvements, and $21,987,000 to lease intangibles. The acquisitions were all cash purchases and there was no contingent consideration associated with these acquisitions.

 

None of the Company’s acquisitions during the first nine months of 2015 caused any new or existing tenant to comprise 10% or more of its total assets or generate 10% or more of its total annualized base rent at September 30, 2015.

The Company calculates the underwritten weighted average capitalization rate on its acquisitions by dividing annual expected net operating income derived from the properties by the total investment in the properties. Annual expected net operating income is defined as the straight-line rent for the base term of the lease less property level expenses (if any) that are not recoverable from the tenant.

Dispositions

During the three months ended September 30, 2015, the Company sold four assets for gross proceeds of $19,805,000 including (i) Ferris Commons, a shopping center in Big Rapids, Michigan; (ii) Lakeland Plaza, a shopping center in Lakeland, Florida; (iii) a vacant land parcel in Sun Valley, Nevada; and and (iv) a second outlot to the Company’s Meijer store in Plainfield, Indiana. The Company recorded a net gain of approximately $8,599,000 on the sales.

During the nine months ended September 30, 2015, the Company sold eight assets for gross proceeds of $28,993,000 including the four assets described above, in addition to (i) Marshall Plaza, a Kmart-anchored shopping center in Marshall, Michigan; (ii) a former Border’s store in Lawrence, Kansas, which was the Company’s only vacant retail net lease property; (iii) an outlot to the Company’s Meijer’s store in Plainfield, Indiana; and (iv) a Sonic Restaurant in Waynesboro, Virginia. The Company recorded a net gain of  approximately $12,135,000 on the sales.

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Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Income Taxes [Line Items]
Deferred Tax Liabilities, Gross	$ 705,000		$ 705,000		$ 705,000
Income Tax Expense (Benefit)	$ 0	$ (355)	$ 25,100	$ 4,775

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Fair Value Measurements (Details) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	$ 5,038,132	$ 2,383,308
Interest rate swaps [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Assets, at Fair Value	0
Interest Rate Derivative Liabilities, At Fair Value	5,038,132
Interest rate swaps [Member] | Fair Value, Inputs, Level 1 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Assets, at Fair Value	0
Interest Rate Derivative Liabilities, At Fair Value	0
Interest rate swaps [Member] | Fair Value, Inputs, Level 2 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Assets, at Fair Value	0
Interest Rate Derivative Liabilities, At Fair Value	5,038,132
Interest rate swaps [Member] | Fair Value, Inputs, Level 3 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Assets, at Fair Value	0
Interest Rate Derivative Liabilities, At Fair Value	0
Mortgage notes payable [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	102,295,587
Mortgage notes payable [Member] | Fair Value, Inputs, Level 1 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	0
Mortgage notes payable [Member] | Fair Value, Inputs, Level 2 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	0
Mortgage notes payable [Member] | Fair Value, Inputs, Level 3 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	108,077,969
Unsecured term loan [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	100,000,000
Unsecured term loan [Member] | Fair Value, Inputs, Level 1 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	0
Unsecured term loan [Member] | Fair Value, Inputs, Level 2 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	0
Unsecured term loan [Member] | Fair Value, Inputs, Level 3 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	98,675,076
Senior unsecured notes [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	100,000,000
Senior unsecured notes [Member] | Fair Value, Inputs, Level 1 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	0
Senior unsecured notes [Member] | Fair Value, Inputs, Level 2 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	0
Senior unsecured notes [Member] | Fair Value, Inputs, Level 3 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	99,662,808
Revolving Credit Facility [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	27,000,000
Revolving Credit Facility [Member] | Fair Value, Inputs, Level 1 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	0
Revolving Credit Facility [Member] | Fair Value, Inputs, Level 2 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	27,000,000
Revolving Credit Facility [Member] | Fair Value, Inputs, Level 3 [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, At Fair Value	$ 0

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The following is a reconciliation of the denominator of the basic net earnings per common share computation to the denominator of the diluted net earnings per common share computation for each of the periods presented:

	Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30,2015		September 30,2014
Weighted average number of common shares outstanding		18,213,436		14,960,218		17,858,326		14,958,830
Less: Unvested restricted stock		(204,844)		(246,478)		(204,844)		(246,478)
Weighted average number of common shares outstanding used in basic earnings per share		18,008,592		14,713,740		17,653,482		14,712,352
Weighted average number of common shares outstanding used in basic earnings per share		18,008,592		14,713,740		17,653,482		14,712,352
Effect of dilutive securities: restricted stock		55,726		68,311		62,880		70,132
Weighted average number of common shares outstanding used in diluted earnings per share		18,064,318		14,782,051		17,716,362		14,782,484