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Debt | 9 Months Ended
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Sep. 30, 2020
Debt |
Debt | Note 5 – Debt As of September 30, 2020, the Company had total gross indebtedness of $1.2 billion, including (i) $33.6 million of mortgage notes payable; (ii) $240.0 million of unsecured term loans; (iii) $860.0 million of senior unsecured notes; and (iv) $20.0 million of borrowings under the Revolving Credit Facility (defined below). Mortgage Notes Payable As of September 30, 2020, the Company had total gross mortgage indebtedness of $33.6 million, which was collateralized by related real estate and tenants’ leases with an aggregate net book value of $40.1 million. Including mortgages that have been swapped to a fixed interest rate, the weighted average interest rate on the Company’s mortgage notes payable was 4.22% as of September 30, 2020 and 4.40% as of December 31, 2019. ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | September 30, 2020 |  | December 31, 2019
(not presented in thousands) | ​ | (in thousands)
Note payable in monthly installments of $23,004, including interest at 6.24% per annum, extinguished in January 2020 | ​ | $ | — | ​ | $ | 2,775
​ | ​ |  | ​ | ​ |  |
Note payable in monthly installments of interest only at 3.60% per annum, with a balloon payment due January 2023 | ​ |  | 23,640 | ​ |  | 23,640
​ | ​ |  |  | ​ |  |
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 | ​ |  | 4,639 | ​ |  | 4,779
​ | ​ |  |  | ​ |  |
Note payable in monthly installments of $91,675 including interest at 6.27% per annum, with a final monthly payment due July 2026 | ​ |  | 5,363 | ​ |  | 5,921
​ | ​ |  |  | ​ |  |
Total principal | ​ |  | 33,642 | ​ |  | 37,115
Unamortized debt issuance costs | ​ |  | (338) | ​ |  | (417)
Total | ​ | $ | 33,304 | ​ | $ | 36,698
​ The mortgage loans encumbering the Company’s properties are generally non-recourse, subject to certain exceptions for which it would be liable for any resulting losses incurred by the lender. These exceptions vary from loan to loan, but generally include fraud or material misrepresentations, misstatements or omissions 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, 2020, there were no mortgage loans with partial recourse to us. The Company had 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 the Company defaults 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. Unsecured Term Loan Facilities The following table presents the unsecured term loans balance net of unamortized debt issuance costs as of September 30, 2020 and December 31, 2019 (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | September 30, 2020 |  | December 31, 2019
2023 Term Loan | ​ | $ | 40,000 | ​ | $ | 40,000
2024 Term Loan Facilities | ​ |  | 100,000 | ​ |  | 100,000
2026 Term Loan | ​ |  | 100,000 | ​ |  | 100,000
Total Principal | ​ |  | 240,000 | ​ |  | 240,000
Unamortized debt issuance costs | ​ |  | (2,235) | ​ |  | (2,597)
Total | ​ | $ | 237,765 | ​ | $ | 237,403
​ In August 2016, the Company entered into a $20.3 million unsecured amortizing term loan that matured May 2019 and that was swapped to an all-in rate of 3.62% (the “2019 Term Loan”). The 2019 Term Loan was repaid upon maturity in May 2019. In July 2016, the Company completed a $40.0 million unsecured term loan facility that matures July 2023 (the “2023 Term Loan”). Borrowings under the 2023 Term Loan are priced at LIBOR plus 85 to 165 basis points, depending on the Company’s credit rating. The Company entered into an interest rate swap agreement to fix LIBOR at 140 basis points until maturity. As of September 30, 2020, $40.0 million was outstanding under the 2023 Term Loan, which was subject to an all-in interest rate of 2.40%, including the swap. The Credit Agreement, described below, extended the maturity dates of the $65.0 million unsecured term loan facility (the “$65 Million Term Loan”) and $35.0 million unsecured term loan facility (the “$35 Million Term Loan,” and together with the $65 Million Term Loan, the “2024 Term Loan Facilities”) to January 2024. In connection with entering into the Credit Agreement, the prior notes evidencing the existing $65 Million Term Loan and $35 Million Term Loan were canceled and new notes evidencing the 2024 Term Loan Facilities were executed. Borrowings under the unsecured 2024 Term Loan Facilities bear interest at a variable LIBOR plus 85 to 165 basis points, depending on the Company’s credit rating. The Company utilized existing interest rate swap agreements to effectively fix LIBOR at 213 basis points until September 2020 for the $35 Million Term Loan and July 2021 for the $65 Million Term Loan (refer to Note 9 – Derivative Instruments and Hedging Activity). As of September 30, 2020, $100.0 million was outstanding under the 2024 Term Loan Facilities, bearing an all-in interest rate of 3.13%, including the swaps. In December 2018, the Company entered into a $100.0 million unsecured term loan facility that matures January 2026 (the “2026 Term Loan”). Borrowings under the 2026 Term Loan are priced at LIBOR plus 145 to 240 basis points, depending on the Company’s credit rating. The Company entered into interest rate swap agreements to fix LIBOR at 266 basis points until maturity. As of September 30, 2020, $100.0 million was outstanding under the 2026 Term Loan, which was subject to an all-in interest rate of 4.26%, including the swap. ​ Senior Unsecured Notes The following table presents the senior unsecured notes balance net of unamortized debt issuance costs and original issue discount as of September 30, 2020, and December 31, 2019 (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | September 30, 2020 |  | December 31, 2019
2025 Senior Unsecured Notes | ​ | $ | 50,000 | ​ | $ | 50,000
2027 Senior Unsecured Notes | ​ |  | 50,000 | ​ |  | 50,000
2028 Senior Unsecured Notes | ​ |  | 60,000 | ​ |  | 60,000
2029 Senior Unsecured Notes | ​ |  | 100,000 | ​ |  | 100,000
2030 Senior Unsecured Notes | ​ |  | 125,000 | ​ |  | 125,000
2030 Senior Unsecured Public Notes | ​ | ​ | 350,000 | ​ | ​ | —
2031 Senior Unsecured Notes | ​ |  | 125,000 | ​ | ​ | 125,000
Total Principal | ​ |  | 860,000 | ​ |  | 510,000
Unamortized debt issuance costs and original issue discount | ​ |  | (4,768) | ​ |  | (802)
Total | ​ | $ | 855,232 | ​ | $ | 509,198
​ In May 2015, the Company and the Operating Partnership completed a private placement of $100.0 million principal amount of senior unsecured notes. The senior unsecured notes were sold in two series; $50.0 million of 4.16% notes due May 2025 (the “2025 Senior Unsecured Notes”) and $50.0 million of 4.26% notes due May 2027 (the “2027 Senior Unsecured Notes”). In July 2016, the Company and the Operating Partnership entered into a note purchase agreement with institutional purchasers. Pursuant to the note purchase agreement, the Operating Partnership completed a private placement of $60.0 million aggregate principal amount of 4.42% senior unsecured notes due July 2028 (the “2028 Senior Unsecured Notes”). In September 2017, the Company and the Operating Partnership completed a private placement of $100.0 million aggregate principal amount of 4.19% senior unsecured notes due September 2029 (the “2029 Senior Unsecured Notes”). In September 2018, the Company and the Operating Partnership entered into two supplements to uncommitted master note facilities with institutional purchasers. Pursuant to the supplements, the Operating Partnership completed a private placement of $125.0 million aggregate principal amount of 4.32% senior unsecured notes due September 2030 (the “2030 Senior Unsecured Notes”). In October 2019, the Company and the Operating Partnership closed on a private placement of $125.0 million of 4.47% senior unsecured notes due October 2031 (the “2031 Senior Unsecured Notes”). In March 2019, the Company entered into forward-starting interest rate swap agreements to fix the interest for $100.0 million of long-term debt until maturity. The Company terminated the swap agreements at the time of pricing the 2031 Senior Unsecured Notes, which resulted in an effective annual fixed rate of 4.41% for $100.0 million aggregate principal amount of the 2031 Senior Unsecured Notes. Considering the effect of the terminated swap agreements, the blended all-in rate to the Company for the $125.0 million aggregate principal amount of 2031 Senior Unsecured Notes is 4.42%. All of the senior unsecured notes described in the preceding paragraphs were sold solely to institutional investors in private placements pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. In August 2020, the Operating Partnership completed an underwritten public offering of $350.0 million aggregate principal amount of 2.900% Notes due 2030 (the “2030 Senior Unsecured Public Notes”). The 2030 Senior Unsecured Public Notes are fully and unconditionally guaranteed by Agree Realty Corporation and certain wholly owned subsidiaries of the Operating Partnership. The terms of the 2030 Senior Unsecured Public Notes are governed by an indenture, dated August 17, 2020, among the Operating Partnership, the Company and U.S. Bank National Association, as trustee (as amended and supplemented by an officer’s certificate dated August 17, 2020, the “Indenture”). The Indenture contains various restrictive covenants, including limitations on the ability of the guarantors and the issuer to incur additional indebtedness and requirements to maintain a pool of unencumbered assets. The Company terminated related swap agreements of $200.0 million that hedged the 2030 Senior Unsecured Public Notes. Considering the effect of the terminated swap agreements, the blended all-in rate to the Company for the $350.0 million aggregate principal amount of 2030 Senior Unsecured Public Notes is 3.49%. Senior Unsecured Revolving Credit Facility In December 2019, the Company entered into a Second Amended and Restated Revolving Credit and Term Loan Agreement (the “Credit Agreement”). The Credit Agreement provides for a $500.0 million unsecured revolving credit facility (the “Revolving Credit Facility”), the $65 Million Term Loan and the $35 Million Term Loan. The Credit Agreement amended and restated in its entirety the Company’s previous amended and restated credit agreement dated December 15, 2016. The Credit Agreement provides $600.0 million unsecured borrowing capacity, composed of the Revolving Credit Facility, which matures on January 15, 2024, as well as the 2024 Term Loan Facilities, which mature on January 15, 2024. Subject to certain terms and conditions set forth in the Credit Agreement, the Company (i) may request additional lender commitments under any or all facilities of up to an additional aggregate of $500.0 million and (ii) may elect, for an additional fee, to extend the maturity date of the Revolving Credit Facility by six months up to two times, for a maximum maturity date of January 15, 2025. No amortization payments are required under the Credit Agreement, and interest is payable in arrears no less frequently than quarterly. All borrowings under the Revolving Credit Facility (except for swing line loans) bear interest at a rate per annum equal to, at the option of the Company, (i) LIBOR plus a margin that is based upon the Company’s credit rating, or (ii) the Base Rate (which is defined as the greater of the rate of interest as publicly announced from time to time by PNC Bank, National Association, as its prime rate, the Federal Funds Open Rate plus 0.50%, or the Daily Eurodollar Rate plus 1.0%) plus a margin that is based upon the Company’s credit rating. The margins for the Revolving Credit Facility range in amount from 0.775% to 1.450% for LIBOR-based loans and 0.00% to 0.45% for Base Rate loans, depending on the Company’s credit rating. The margins for the Revolving Credit Facility are subject to improvement based on the Company’s leverage ratio, provided its credit rating meets a certain threshold. Concurrent with entering into the Credit Agreement, certain conforming changes, including customary financial covenants, were made to the 2023 Term Loan and 2026 Term Loan. The Company and Richard Agree, the Executive Chairman of the Company, are parties to a Reimbursement Agreement dated November 18, 2014 (the “Reimbursement Agreement”). Pursuant to the Reimbursement Agreement, Mr. Agree has agreed to reimburse the Company for any loss incurred under the Revolving Credit Facility in an amount not to exceed $14.0 million to the extent that the value of the Operating Partnership’s assets available to satisfy the Operating Partnership’s obligations under the Revolving Credit Facility is less than $14.0 million. Debt Maturities The following table presents scheduled principal payments related to the Company’s debt as of September 30, 2020 (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | Scheduled |  | Balloon |  | ​ | ​
​ | Principal | ​ | Payment | ​ | Total
Remainder of 2020 | $ | 240 | ​ | $ | — | ​ | $ | 240
2021 |  | 998 | ​ |  | — | ​ |  | 998
2022 |  | 1,060 | ​ |  | — | ​ |  | 1,060
2023 |  | 1,069 | ​ |  | 67,656 | ​ |  | 68,725
2024 (1) | ​ | 963 | ​ | ​ | 120,000 | ​ | ​ | 120,963
Thereafter |  | 1,656 | ​ |  | 960,000 | ​ |  | 961,656
Total scheduled principal payments | ​ | 5,986 | ​ | ​ | 1,147,656 | ​ | ​ | 1,153,642
Original issue discount | ​ | — | ​ | ​ | (252) | ​ | ​ | (252)
Total | $ | 5,986 | ​ | $ | 1,147,404 | ​ | $ | 1,153,390
(1) | The Revolving Credit Facility matures in January 2024, with options to extend the maturity as described under Senior Unsecured Revolving Credit Facility above. The Revolving Credit Facility had a balance of $20.0 million as of September 30, 2020.
​ Loan Covenants Certain loan agreements contain various restrictive covenants, including the following financial covenants: maximum total leverage ratio, maximum secured leverage ratios, consolidated net worth requirements, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, a minimum unsecured interest expense ratio, a minimum interest coverage ratio, a minimum unsecured debt yield and a minimum unencumbered interest expense ratio. As of September 30, 2020, the most restrictive covenant was the minimum unencumbered interest expense ratio. The Company was in compliance with all of its loan covenants and obligations as of September 30, 2020.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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