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Summary of Significant Accounting Policies (Policies) | 9 Months Ended
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Sep. 30, 2019
Summary of Significant Accounting Policies |
Consolidation, Policy [Policy Text Block] | Basis of Accounting and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for audited financial statements. The unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results for the interim period presented. Operating results for the three and nine months ended September 30, 2019 may not be indicative of the results that may be expected for the year ending December 31, 2019. Amounts as of December 31, 2018 included in the condensed consolidated financial statements have been derived from the audited consolidated financial statements as of that date. The unaudited condensed consolidated financial statements, included herein, should be read in conjunction with the audited consolidated financial statements and notes thereto, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Company’s Form 10-K for the year ended December 31, 2018. The unaudited condensed consolidated financial statements include the accounts of the Company, the Operating Partnership and its wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated.
Use of Estimates, 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 (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from those estimates.
Reclassification, Policy [Policy Text Block] | Reclassifications The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 842 Leases (“ASC 842”) using the modified retrospective approach as of January 1, 2019 and elected to apply the transition provisions of the standard at the beginning of the period of adoption. The Company adopted the practical expedient in ASC 842 that alleviates the requirement to separately present lease and non-lease rental income. As a result, all income earned pursuant to tenant leases is reflected as one line, “Rental Income,” in the 2019 condensed consolidated statement of operations. To facilitate comparability, the Company has reclassified prior periods’ lease and non-lease income consistently with the classification employed in 2019. The Company recognizes above- and below-market lease intangibles in connection with most acquisitions of real estate (see Accounting for Acquisitions of Real Estate below). The capitalized above- and below-market lease intangibles are amortized over the remaining term of the related leases. The Company historically presented this amortization as a component of Depreciation and Amortization expense within the Consolidated Statement of Income and Comprehensive Income. During 2019, the Company changed this classification to recognize this amortization as an adjustment of Rental Income. The prior period results have been reclassified to conform to the current year classification. The Company incurred amortization of capitalized above- and below-market lease intangibles of $3.4 million and $3.0 million for the three months ended September 30, 2019 and 2018, respectively and $9.9 million and $7.8 million for the nine months ended September 30, 2019 and 2018, respectively. Certain other reclassifications have been made to prior year financial statements to conform to classifications used in the current year. These reclassifications had no impact on net income or shareholders’ equity as previously reported.
Segment Reporting, Policy [Policy Text Block] | Segment Reporting The Company is primarily in the business of acquiring, developing and managing retail real estate which is considered to be one reportable segment. The Company has no other reportable segments.
Real Estate, 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. Assets are classified as held for sale based on specific criteria as outlined in ASC 360, Property, Plant & Equipment. Properties classified as “held for sale” are recorded at the lower of their carrying value or their fair value, less anticipated selling costs. Any properties classified as held for sale are not depreciated. Assets are generally classified as held for sale once management has actively engaged in marketing the asset and has received a firm purchase commitment that is expected to close within one year. The Company classified two operating properties as held for sale at September 30, 2019, the assets for which are separately presented in the Condensed Consolidated Balance Sheet. Real estate held for sale consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | September 30, 2019 |  | December 31, 2018
​ | ​ | ​ | ​ | ​ | ​ | ​
Land | ​ | $ | 2,171 | ​ | $ | —
Building | ​ |  | 4,286 | ​ |  | —
Lease Intangibles - Asset | ​ |  | 2,061 | ​ |  | —
​ | ​ |  | 8,518 | ​ |  | —
Accumulated depreciation and amortization | ​ |  | (590) | ​ |  | —
Total Real Estate Held for Sale, net | ​ | $ | 7,928 | ​ | $ | —
​
Purchase Accounting For Acquisitions Of Real Estate [Policy Text Block] | Acquisitions of Real Estate The acquisition of property for investment purposes is typically accounted for as an asset acquisition. The Company allocates the purchase price to land, buildings and identified intangible assets and liabilities, based in each case on their relative estimated fair values and without giving rise to goodwill. Intangible assets and liabilities represent the value of in-place leases and above- or below-market leases. In making estimates of fair values, the Company may use a number of sources, including data provided by independent third parties, as well as information obtained by the Company as a result of its due diligence, including expected future cash flows of the property and various characteristics of the markets where the property is located. In allocating the fair value of the identified intangible assets and liabilities of an acquired property, in-place lease intangibles are valued based on the Company’s estimates of costs related to tenant acquisition and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. In-place lease intangible assets are amortized to amortization expense over the remaining term of the related leases. Above- and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition and the Company’s estimate of current market lease rates for the property. The capitalized above- and below-market lease intangibles are amortized over the non-cancelable term of the lease unless the Company believes it is reasonably certain that the tenant will renew the lease for an option term in which case the Company amortizes the value attributable to the renewal over the renewal period. Above- and below-market lease intangibles are amortized as a net reduction of rental income (see Reclassifications above).
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents and Cash Held in Escrows The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of cash and money market accounts. Cash held in escrows relates to delayed like-kind exchange transactions pursued under Section 1031 of the Internal Revenue Code. The account balances of cash and cash held in escrow 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. The Company had $9.7 million and $52.7 million in cash and cash held in escrow as of September 30, 2019 and December 31, 2018, respectively, in excess of the FDIC insured limit.
Trade and Other Accounts Receivable, Policy [Policy Text Block] | Accounts Receivable – Tenants The Company reviews the collectability of charges under its tenant operating leases on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located. In the event that collectability with respect to any tenant changes, beginning with the adoption of ASC 842 as of January 1, 2019, the Company recognizes an adjustment to rental income. Prior to the adoption of ASC 842, the Company recognized a provision for uncollectible amounts or a direct write-off of the specific rent receivable. The Company’s review of collectability of charges under its operating leases includes any accrued rental revenues related to the straight-line method of reporting rental revenue. The Company’s leases provide for reimbursement from tenants for common area maintenance (“CAM”), insurance, real estate taxes and other operating expenses. A portion of the Company’s operating cost reimbursements is estimated each period and is recognized as revenue in the period the recoverable costs are incurred and accrued. Receivables from operating cost reimbursements are included in the Accounts Receivable - Tenants line item in the condensed consolidated balance sheets. The balance of unbilled operating cost reimbursement receivable at September 30, 2019 and December 31, 2018 was $2.8 million and $3.3 million, respectively. In addition, many of the Company’s leases contain escalations for which revenue is recognized on a straight-line basis over the non-cancelable lease term. This method results in revenue in the early years of a lease being higher than actual cash received, creating a straight-line rental income receivable asset which is included in the Accounts Receivable - Tenants line item in the condensed consolidated balance sheets. The balance of straight-line rental income receivables at September 30, 2019 and December 31, 2018 was $21.3 million and $16.7 million, respectively. To the extent any of the tenants under these leases become unable to pay its contractual cash rents, the Company may be required to write-off the straight-line receivable from the tenants, which would reduce rental income.
Sales Tax [Policy Text Block] | Sales Tax The Company collects various taxes from tenants and remits these amounts, on a net basis, to the applicable taxing authorities.
Deferred Charges, Policy [Policy Text Block] | Unamortized Deferred Expenses Deferred expenses recognized as Lease Intangibles and within Other Assets, net on the condensed consolidated balance sheets include debt financing costs related to the Company’s revolving credit facility, leasing costs and lease intangibles, and are amortized as follows: (i) debt financing costs related to the line of credit on a straight-line basis to interest expense over the term of the related loan, which approximates the effective interest method; (ii) leasing costs on a straight-line basis to amortization expense over the term of the related lease entered into; (iii) in-place lease intangibles on a straight-line basis to amortization expense over the remaining term of the related lease acquired; and (iv) above- and below- market lease intangibles on a straight-line basis as a net reduction of rental income over the remaining lease term. See Reclassifications above regarding changes in presentation relating to above-and below- market lease intangibles. The following schedule summarizes the Company’s amortization of deferred expenses for the three and nine months ended September 30, 2019 and 2018 (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended | ​ | Nine Months Ended | ​
​ |  | September 30, 2019 |  | September 30, 2018 |  | September 30, 2019 |  | September 30, 2018 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred Financing Costs | ​ | $ | 140 | ​ | $ | 133 | ​ | $ | 425 | ​ | $ | 335 | ​
Leasing Costs | ​ |  | 84 | ​ |  | 82 | ​ |  | 245 | ​ |  | 166 | ​
Lease Intangibles (In-place) | ​ |  | 2,854 | ​ |  | 1,877 | ​ |  | 7,298 | ​ |  | 5,819 | ​
Lease Intangibles (Above-Market) | ​ | ​ | 4,562 | ​ | ​ | 3,935 | ​ | ​ | 13,297 | ​ | ​ | 10,898 | ​
Lease Intangibles (Below-Market) | ​ |  | (1,181) | ​ |  | (897) | ​ |  | (3,415) | ​ |  | (3,104) | ​
Total | ​ | $ | 6,459 | ​ | $ | 5,130 | ​ | $ | 17,850 | ​ | $ | 14,114 | ​
​ The following schedule represents estimated future amortization of deferred expenses as of September 30, 2019 (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2019 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Year Ending December 31, |  | (remaining) | ​ |  | 2020 |  | 2021 |  | 2022 |  | 2023 |  | Thereafter |  | Total
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred Financing Costs | ​ | $ | 142 | ​ |  | $ | 561 |  | $ | 37 |  | $ | — |  | $ | — | ​ | $ | — |  | $ | 740
Leasing Costs | ​ |  | 85 | ​ |  |  | 405 |  |  | 385 |  |  | 373 |  |  | 314 | ​ |  | 1,117 |  |  | 2,679
Lease Intangibles (In-place) | ​ |  | 3,147 | ​ |  |  | 12,385 |  |  | 11,237 |  |  | 10,371 |  |  | 9,594 | ​ |  | 56,716 |  |  | 103,450
Lease Intangibles (Above-Market) | ​ | ​ | 4,631 | ​ | ​ | ​ | 19,114 | ​ | ​ | 18,827 | ​ | ​ | 18,534 | ​ | ​ | 17,680 | ​ | ​ | 153,641 | ​ | ​ | 232,427
Lease Intangibles (Below-Market) | ​ |  | (1,211) | ​ | ​ |  | (4,765) | ​ |  | (4,332) | ​ |  | (3,422) | ​ |  | (2,852) | ​ |  | (10,750) | ​ |  | (27,332)
Total | ​ | $ | 6,794 | ​ |  | $ | 27,700 |  | $ | 26,154 |  | $ | 25,856 |  | $ | 24,736 | ​ | $ | 200,724 |  | $ | 311,964
Earnings Per Share, Policy [Policy Text Block] | Earnings per Share Basic earnings per share has been computed by dividing net income less net income attributable to unvested restricted shares by the weighted average number of common shares outstanding less unvested restricted shares. Diluted earnings per share is computed by dividing net income by the weighted average common shares and potentially dilutive common shares outstanding in accordance with the treasury stock method. The following is a reconciliation of the numerator and denominator for the basic net earnings per common share and diluted net earnings per common share computation for each of the periods presented: (in thousands, except for share data) ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended | ​ | Nine Months Ended
​ |  | September 30, 2019 |  | September 30, 2018 |  | September 30, 2019 |  | September 30, 2018
Net income attributable to Agree Realty Corporation | ​ | $ | 20,611 | ​ | $ | 15,586 | ​ | $ | 57,522 | ​ | $ | 44,961
Less: Income attributable to unvested restricted shares | ​ | ​ | (98) | ​ | ​ | (95) | ​ | ​ | (283) | ​ | ​ | (296)
Net income used in basic and diluted earnings per share | ​ | $ | 20,513 | ​ | $ | 15,491 | ​ | $ | 57,239 | ​ | $ | 44,665
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Weighted average number of common shares outstanding | ​ |  | 42,034,685 |  | ​ | 31,969,749 |  | ​ | 40,194,931 | ​ |  | 31,342,354
Less: Unvested restricted stock | ​ |  | (202,228) |  | ​ | (210,824) |  | ​ | (202,228) | ​ |  | (210,824)
Weighted average number of common shares outstanding used in basic earnings per share | ​ |  | 41,832,457 |  | ​ | 31,758,925 |  | ​ | 39,992,703 | ​ |  | 31,131,530
​ | ​ | ​ | ​ |  | ​ | ​ |  | ​ | ​ | ​ |  | ​
Weighted average number of common shares outstanding used in basic earnings per share | ​ |  | 41,832,457 |  | ​ | 31,758,925 |  | ​ | 39,992,703 | ​ |  | 31,131,530
Effect of dilutive securities: Share-based compensation | ​ |  | 109,027 |  | ​ | 80,211 |  | ​ | 102,845 | ​ |  | 71,855
Effect of dilutive securities: March 2018 forward equity offering | ​ | ​ | — | ​ | ​ | 439,761 | ​ | ​ | — | ​ | ​ | 265,048
Effect of dilutive securities: September 2018 forward equity offering | ​ | ​ | — | ​ | ​ | 8,455 | ​ | ​ | 359,713 | ​ | ​ | 2,818
Effect of dilutive securities: April 2019 forward equity offering | ​ |  | 376,558 |  | ​ | — |  | ​ | 170,180 | ​ |  | —
Weighted average number of common shares outstanding used in diluted earnings per share | ​ |  | 42,318,042 |  | ​ | 32,287,352 |  | ​ | 40,625,441 | ​ |  | 31,471,251
​
Forward Equity Sales, Policy [Policy Text Block] | Forward Equity Sales In March 2018, the Company entered into a forward sale agreement to sell an aggregate of 3,450,000 shares of its common stock, which included the underwriters option to purchase an additional 450,000 shares of common stock, at a public offering price of $48.00 per share, before underwriting discounts. In September 2018, the Company settled, in its entirety, the forward sale agreement and received proceeds of $160.2 million, net of underwriting discounts, fees and expenses. In September 2018, the Company entered into a forward sale agreement to sell an aggregate of 3,500,000 shares of its common stock at a public offering price of $55.20 per share, before issuance costs, underwriters’ discount, and further adjustments as provided for in the forward sale agreement. In May 2019, the Company settled, in its entirety, the forward sale agreement and received proceeds of $186.0 million, net of underwriting discounts, fees, and expenses. In April 2019, the Company entered into forward sale agreements to sell an aggregate of 3,162,500 shares of its common stock at a public offering price of $65.85 per share, before underwriting discounts. The Company is obligated to settle the forward sale agreement no later than May 1, 2020. To account for the forward sale agreements, the Company considered the accounting guidance governing financial instruments and derivatives and concluded that its forward sale agreement was not a liability as it did not embody obligations to repurchase its shares nor did it embody obligations to issue a variable number of shares for which the monetary value was predominantly fixed, varying with something other than the fair value of the shares, or varying inversely in relation to its shares. The Company then evaluated whether the agreement met the derivatives and hedging guidance scope exception to be accounted for as an equity instrument, and concluded that the agreement can be classified as an equity contract based on the following assessment: (i) none of the agreement’s exercise contingencies were based on observable markets or indices besides those related to the market for its own stock price and operations; and (ii) none of the settlement provisions precluded the agreement from being indexed to its own stock. The Company also considered the potential dilution resulting from the forward sale agreements on the earnings per share calculations. The Company uses the treasury stock method to determine the dilution resulting from the forward sale agreements during the period of time prior to settlement. The impact to the Company’s weighted-average number of common shares – diluted for the three and nine months ended September 30, 2019, was 376,558 and 529,893 weighted-average incremental shares, respectively.
Income Tax, Policy [Policy Text Block] | Income Taxes (not presented in thousands) The Company made an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) and related regulations. The Company generally will not be subject to federal income taxes on amounts distributed to stockholders, providing it distributes 100% of its REIT taxable income and meets certain other requirements for qualifying as a REIT. For the periods ending September 30, 2019 and December 31, 2018, the Company believes it has qualified as a REIT. Notwithstanding its qualification for taxation as a REIT, the Company is subject to certain state taxes on its income and real estate. The Company and its taxable REIT subsidiaries (“TRS”) have made a timely TRS election pursuant to the provisions of the REIT Modernization Act. A TRS is able to engage in activities resulting in income that previously would have been disqualified from being eligible REIT income under the federal income tax regulations. As a result, certain activities of the Company which occur within its TRS entity are subject to federal and state income taxes. All provisions for federal income taxes in the accompanying condensed consolidated financial statements are attributable to the Company’s TRS. As of December 31, 2018, the Company had accrued a deferred income tax liability in the amount of $475,000. This deferred income tax balance represented the federal and state tax effect of deferring income tax in 2007 on the sale of an asset under section 1031 of the Internal Revenue Code. This transaction was accrued within the TRS entities described above. During the nine months ended September 30, 2019, the Company restructured its ownership of the TRS to which the deferred tax liability was related, resulting in a reversal of the previously accrued amount. The Company recognized total federal and state tax expense of approximately $184,000 and $125,000 for the three months ended September 30, 2019 and 2018, respectively and approximately $210,000 and $391,000 for the nine months ended September 30, 2019 and 2018, 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.
Going Concern, Policy [Policy Text Block] | Management’s Responsibility to Evaluate Our Ability to Continue as a Going Concern When preparing financial statements for each annual and interim reporting period, management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. No such conditions or events were identified as of the issuance date of the financial statements contained in this Quarterly Report on Form 10-Q.
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements In August 2018, the FASB issued ASU No. ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). These amendments modify the disclosure requirements in Topic 820 on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty. ASU 2018-13 will be effective for all entities for fiscal years beginning after December 15, 2019, including interim periods in the year of adoption. Early adoption is permitted for any interim or annual period. The Company is in the process of determining the impact of the implementation of ASU 2018-13, but does not believe it will have a material effect on its financial statements. In June 2018, the FASB issued ASU No. 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). These amendments expand the scope of Topic 718, Compensation—Stock Compensation, which currently only includes share-based payments to employees, to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned, and the ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees. The Company adopted ASU 2018-07 on January 1, 2019. The adoption did not have a material effect on its financial statements. In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). The objective of ASU 2017-12 is to expand hedge accounting for both financial (interest rate) and commodity risks and create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes. The Company adopted ASU 2017-12 on January 1, 2019. The adoption did not have a material effect on the financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which changes how entities measure credit losses for most financial assets. This guidance requires an entity to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses”, which clarified that receivables arising from operating leases are within the scope of the leasing standard (Topic 842), not Topic 326. This new standard will be effective for the Company on January 1, 2020. The Company is evaluating the impact this new standard would have on its consolidated financial statements, in the event any of its leases ever were to be classified as sales-type or direct finance leases and become subject to the provisions of ASU 2016-13. However, the Company does not currently have any such leases, nor does it have a significant number of other financial instruments subject to the new standard. Therefore, the Company is not currently expecting the adoption of ASU 2016-13 to have a material effect on its financial statements. In February 2016, the FASB issued ASU No. 2016-02 “Leases” (“ASU 2016-02”). The new standard creates ASC 842 and supersedes FASB ASC 840, Leases, which the Company adopted on January 1, 2019 along with related interpretations. The adoption of the new Leases standard ASU 2016-02 generally had, and will have, the following impacts on the Company:
| • | Topic 842 requires a lessee to recognize right of use the assets and lease obligation liabilities that arise from leases (operating and finance). On January 1, 2019, the Company recognized $7.5 million of right of use assets and lease liabilities, within Other Assets and Accounts Payable, Accrued Expenses, and Other Liabilities on the Condensed Consolidated Balance Sheet. The Company was not required to reassess the classification of existing land leases and therefore these leases continue to be accounted for as operating leases. In the event the Company modifies existing land leases or enters into new land leases after adoption of the new standard, such leases may be classified as finance leases. Business activity occurring subsequent to January 1, 2019, including the Company entering into additional operating leases as lessee, has increased the balances of the right to use assets and lease liabilities to $16.2 million and $16.3 million as of September 30, 2019.
| • | Topic 842 requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases and operating leases. Based on its election of practical expedients, the Company’s existing retail leases, where it is the lessor, continue to be accounted for as operating leases under the new standard. However, Topic 842 changed certain requirements regarding the classification of leases that could result in the Company recognizing certain long-term leases entered into or modified after January 1, 2019 as sales-type leases, as opposed to operating leases.
| • | The Company elected an optional transition method that allows entities to initially apply Topic 842 at the adoption date (January 1, 2019) and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. However, the Company ultimately did not have any cumulative-effect adjustment as of the adoption date.
| • | The Company elected a practical expedient which allows lessors to not separate non-lease components from the lease component when the timing and pattern of transfer for the lease components and non-lease components are the same and if the lease component is classified as an operating lease. As a result, the Company now presents all rentals and reimbursements from tenants as a single line item Rental Income within the Condensed Consolidated Statement of Income and Comprehensive Income, and made certain reclassifications to prior periods for comparability. See Reclassifications above.
| • | Under Topic 842, beginning on January 1, 2019, changes in the probability of collecting tenant rental income will result in direct adjustments of rental income and tenant receivables. The Company no longer will recognize any separate specific bad debt provision or allowance for doubtful accounts. See Accounts Receivable – Tenants above.
| • | The Company elected an optional transition method allowing entities to not evaluate under ASC 842 land easements that existed or expired before the adoption of ASC 842 and that were not previously accounted for as leases under ASC 840.
| • | In connection with its adoption of Topic 842 the Company also began recognizing amortization of above- and below- market lease intangibles as a net reduction of Rental Income. See Reclassifications above.

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