NYSE:ADC Agree Realty Q1 2025 Earnings Report $76.29 -0.63 (-0.82%) Closing price 05/2/2025 03:59 PM EasternExtended Trading$76.36 +0.07 (+0.09%) As of 05/2/2025 07:37 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Agree Realty EPS ResultsActual EPS$1.06Consensus EPS $1.05Beat/MissBeat by +$0.01One Year Ago EPS$0.43Agree Realty Revenue ResultsActual Revenue$169.16 millionExpected Revenue$167.77 millionBeat/MissBeat by +$1.39 millionYoY Revenue GrowthN/AAgree Realty Announcement DetailsQuarterQ1 2025Date4/22/2025TimeAfter Market ClosesConference Call DateWednesday, April 23, 2025Conference Call Time9:00AM ETUpcoming EarningsAgree Realty's Q2 2025 earnings is scheduled for Tuesday, July 22, 2025, with a conference call scheduled at 12:30 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Agree Realty Q1 2025 Earnings Call TranscriptProvided by QuartrApril 23, 2025 ShareLink copied to clipboard.PresentationSkip to Participants Operator00:00:00Good morning, and welcome to the Agree Realty First Quarter twenty twenty five Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Limit yourself to two questions during this call. Note this event is being recorded. Operator00:00:31I would now like to turn the conference over to Ruben Treatment, Senior Director of Corporate Finance. Please go ahead, Ruben. Reuben TreatmanSenior Director of Corporate Finance at Agree Realty00:00:39Thank you. Good morning, everyone, and thank you for joining us for AGRE Realty's first quarter twenty twenty five earnings call. Before turning the call over to Joey and Peter to discuss our results for the quarter, let me first run through the cautionary language. Please note that during this call, we will make certain statements that may be considered forward looking under federal securities law, including statements related to our updated 2025 guidance. Our actual results may differ significantly from the matters discussed in any forward looking statements for a number of reasons. Reuben TreatmanSenior Director of Corporate Finance at Agree Realty00:01:10Please see yesterday's earnings release and our SEC filings, including our latest annual report on Form 10 Q for a discussion of various risks and uncertainties underlying our forward looking statements. In addition, we discuss non GAAP financial measures, including core funds from operations or core FFO, adjusted funds from operations or AFFO and net debt to recurring EBITDA. Reconciliations of our historical non GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release, website and SEC filings. I'll now turn the call over to Joey. Joey AgreePresident & Chief Executive Officer at Agree Realty00:01:47Thanks, Ruben, and thank you all for joining us this morning. We are extremely pleased with our performance in the first quarter of twenty twenty five as we invested over $375,000,000 across our three external growth platforms, while further strengthening our best in class portfolio. This represents the largest quarter of investment volume since the third quarter of twenty twenty three and is characteristic of the accelerating activity that we're seeing across our three platforms. While the macroeconomic environment remains volatile and unpredictable, our company remains a bastion of stability and poised for growth. Our liquidity bolstered by our outstanding forward equity and swaps combined with our preeminent cost of capital position AG Realty to again take advantage of market dislocations and disruptions. Joey AgreePresident & Chief Executive Officer at Agree Realty00:02:35Year to date, we have added over a dozen team members, initiated several systems improvements and sequenced multiple process improvements to accelerate our investment activities. This growing investment activity is supported by a fortress balance sheet with $1,900,000,000 of liquidity and over $1,200,000,000 of hedge capital. During the quarter, we raised another $181,000,000 of forward equity via our ATM program, effectively replenishing amounts settled in the first quarter and maintaining an ample runway to execute our growth strategy. With no material debt maturities until 2028 and pro form a net debt to recurring EBITDA of just 3.4 times at quarter end, Our fortified balance sheet provides significant flexibility and protection against capital markets volatility. Our balance sheet is paired with what we view to be the country's leading retail portfolio. Joey AgreePresident & Chief Executive Officer at Agree Realty00:03:30We launched the acquisition platform in 2010 with a focus on recession resistant retailers that have adapted to a comprehensive omni channel strategy. Although we have yet to experience a traditional recession since its inception, our portfolio has proven to be pandemic proof and we remain confident it will be tariff resistant. We have and will remain focused on the country's biggest and best retailers that sell necessity goods and services. Many of these retailers benefit from the trade down effect during tougher economic times and they have the scale and balance sheet strength to mitigate higher input costs and withstand margin pressure. While tariff headlines continue to evolve and dominate the news flow, ultimately, we believe the bid will continue to get bigger in this environment, further validating our investment philosophy over the past fifteen years. Joey AgreePresident & Chief Executive Officer at Agree Realty00:04:20Given our robust investment pipeline across our three external growth platforms, we've increased our investment guidance range from 1,100,000,000.0 to $1,300,000,000 to 1,300,000,000.0 to $1,500,000,000 for the year. At the midpoint, this represents a 47% increase over last year's investment volume. As I mentioned, all three of our investment platforms continue to find compelling opportunities that hurdle both our qualitative and quantitative analysis. While increasing our investment guidance for the year, we will remain disciplined and thoughtful in our approach to asset underwriting and portfolio construction during these volatile times. In addition, we are raising the low end of our full year AFFO per share guidance by $0 to a new range of $4.27 to $4.3 representing over 3.5% growth at the midpoint and demonstrating the durability of our cash flows. Joey AgreePresident & Chief Executive Officer at Agree Realty00:05:17As a reminder, this number includes realized potential treasury method dilution due to our significant forward equity position. Peter will provide additional details on our guidance range and the input shortly. Raising our investment and earnings guidance amid the current macroeconomic uncertainty demonstrates that our company is built for all markets. We thrive in periods of uncertainty where we can leverage our speed, relationships, exceptional team, balance sheet flexibility and superior cost of capital. We launched the acquisition platform on the heels of the GFC in 2010, doubled the size of the company during the depths of the pandemic and are always positioned to take on the next challenging economic period. Joey AgreePresident & Chief Executive Officer at Agree Realty00:06:01Turning to our external growth activity, we had an active start to the year, leveraging our unique market positioning and deep relationships with retail partners to uncover opportunities across all three platforms. During the first quarter, we invested over $375,000,000 in 69 properties across all three platforms. This includes three fifty nine million dollars of acquisitions across 46 assets. Acquisitions during the quarter included a lender owned Home Depot in California, a sale leaseback with a leading national grocer, an Albertsons backed Acme grocery store in Bronxville, New York, an off market portfolio from a relationship seller, a CarMax ground lease in Colorado as well as approximately 41 off transactions. Our acquisition activity remains focused on industry leading necessity based retailers. Joey AgreePresident & Chief Executive Officer at Agree Realty00:06:53The properties acquired in the first quarter are leased to operators and sectors including grocery, off price, auto parts, convenience stores and tire and auto service. The acquired properties had a weighted average cap rate of 7.3% and a weighted average lease term of thirteen point four years. Nearly 69% of base rent acquired was derived from investment grade retailers and we continue to add to our ground lease portfolio during the quarter. We continue to see increased activities across our development and DFP platforms as well. During the first quarter, we commenced four new development or developer funding projects with total anticipated costs of approximately $24,000,000 Construction continued on 14 projects during the quarter with aggregate anticipated costs of approximately $80,000,000 We also completed six projects during the quarter, representing a total investment of approximately $27,000,000 These projects are with several leading retail partners, including TJX Companies, Burlington, seven Eleven, Boot Barn, Starbucks, Gerber Collision and Sunbelt Rentals. Joey AgreePresident & Chief Executive Officer at Agree Realty00:08:02Our development in DFP pipeline continue to grow with several upcoming starts to be announced in the near future. Our asset management team continues to proactively address upcoming lease maturities. We executed new leases extensions or options on over 584,000 square feet of gross leasable area during the first quarter. This included a Walmart Supercenter in Rancho Cordova, a Home Depot in Farmington, New Mexico and 16 geographically diverse AutoZone leases comprising over 100,000 square feet. We remain well positioned for the remainder of the year with only 30 leases or 90 basis points of annualized base rents maturing. Joey AgreePresident & Chief Executive Officer at Agree Realty00:08:43Quarter over quarter, our pharmacy and dollar store exposure declined twenty and thirty basis points respectively. We have been clear that our exposure to both of these categories peaked within our portfolio before their challenges had become newsworthy. As of quarter end, our best in class portfolio comprised 2,422 properties spanning all 50 states. The portfolio includes two thirty one ground leases comprising nearly 11% of annualized base rents. Our investment grade exposure stood at 68.3% and occupancy remained solid at 99.2%. Joey AgreePresident & Chief Executive Officer at Agree Realty00:09:21This number represents a temporary dip as we continue to resolve the former remaining Big Lots in our portfolio. Our second former Big Lots in Cedar Park, Texas was successfully released to ALDI at a net effective rental lift of nearly 50% during the quarter, while an additional store was acquired during the bankruptcy process for variety wholesalers. Rent has already commenced on both of these locations. We anticipate further announcements on the next call about the remaining Big Lots in our portfolio. With that said, I'll hand the call over to Peter to discuss our financial results for the quarter. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:09:56Thank you, Joey. Starting with the balance sheet, we remained active in the capital markets during the first quarter, raising approximately $181,000,000 of forward equity via our ATM program. We also settled 2,700,000.0 shares of forward equity for net proceeds of approximately $183,000,000 Additionally, we established our inaugural $625,000,000 commercial paper program during the quarter. The program allows us to tap into another pool of short term capital and further diversifies our balance sheet. We anticipate that we will be able to efficiently fund our short term capital needs on the program at rates that are substantially lower than our revolving credit facility today. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:10:39Since the end of last quarter, we have taken further steps to hedge against interest rate volatility by entering into $125,000,000 of forward starting swaps. In total, we now have $325,000,000 of forward starting swaps, effectively fixing the base rate for a contemplated ten year unsecured debt issuance at roughly 3.9%. Combined with approximately $920,000,000 of outstanding forward equity, we have over 1,200,000,000 of hedge capital, which provides critical visibility into our intermediate cost of capital, particularly during this uncertain period. At quarter end, we had liquidity of approximately $1,900,000,000 including the aforementioned forward equity and availability on our revolving credit facility. Pro form a for the settlement of all outstanding forward equity, our net debt to recurring EBITDA was approximately 3.4 times. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:11:34Excluding the impact of the unsettled forward equity, our net debt to recurring EBITDA was 4.9 times. Our total debt to enterprise value is under 26%, and our fixed charge coverage ratio, which includes the preferred dividend, remains very healthy at 4.3 times. Our only floating rate exposure was comprised of amounts outstanding on the revolver at quarter end. And as Joey mentioned, we continue to have no material debt maturities until 2028. Our balance sheet is extremely well positioned to execute on our accelerating investment activity across all three external growth platforms. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:12:09Moving to earnings. Core FFO per share was $1.04 for the first quarter, which represents a 3.1% increase compared to the first quarter of last year. AFFO per share was $1.06 for the quarter, representing a 3% year over year increase. As Joey highlighted, we have updated our full year 2025 outlook to reflect our strong start to the year. We raised the low end of our full year AFFO per share guidance to a new range of $4.27 to $4.3 which implies year over year growth of more than 3.5% at the midpoint. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:12:43We provide parameters on several other inputs in our earnings release, including investment and disposition volume, general and administrative expenses, non reimbursable real estate expenses, as well as income tax and other tax expenses. In addition to those inputs, our earnings guidance for 2025 includes anticipated treasury stock method dilution related to our outstanding forward equity. As a reminder, if ADC stock trades above the net price of our outstanding forward equity offerings, the dilutive impact of unsettled shares must be included in our share count in accordance with the treasury stock method. Provided that our stock continues to trade near current levels, we anticipate that treasury stock method dilution will have an impact of roughly $02 on full year 2025 AFFO per share. That said, the impact could be higher if our stock moves materially above current levels or if we were to issue additional forward equity. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:13:37Our growing and well covered dividend continues to be supported by our consistent and durable earnings growth. During the first quarter, we declared monthly cash dividends of $0.02 $53 per common share for January, February, and March. The monthly dividend equates to an annualized dividend of almost $3.04 per share and represents a 2.4% year over year increase. Our dividend is very well covered with a payout ratio of 72% of AFFO per share for the first quarter. We anticipate having almost $120,000,000 in free cash flow after the dividend this year, up approximately 15% from last year. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:14:14We view this as another source of cost efficient capital while maintaining a robust and growing dividend. Subsequent to quarter end, we announced an increased monthly cash dividend of $0.02 $56 per common share for April. The monthly dividend equates to an annualized dividend of over $3.07 per share and also represents a 2.4% year over year increase. With that, I'd like to turn the call back over to Joey. Joey AgreePresident & Chief Executive Officer at Agree Realty00:14:38Thank you, Peter. Operator, at this time, let's open it up for questions. Operator00:14:43Thank you. Ladies and gentlemen, we will now begin the question and answer Please go ahead. Ki Bin KimManaging Director at Truist Securities00:15:11Thank you. Good morning. So Joey, you guys raised investment guidance by $200,000,000 You guys also mentioned the treasury stock dilution method. Were there other detracting items? Because I would have thought you guys raising that much of your investment guidance that the AFFO guidance would have been more than $05 Thank you. Joey AgreePresident & Chief Executive Officer at Agree Realty00:15:31Good morning, Ki Bin. No other detractors. Obviously, we've included, as Peter mentioned in the prepared remarks, approximately $02 of treasury method anticipated treasury method dilution that's hit the Joey AgreePresident & Chief Executive Officer at Agree Realty00:15:46P Joey AgreePresident & Chief Executive Officer at Agree Realty00:15:46and L, but also throughout the year. Obviously, we can't predict the stock price on a daily or for an annual basis here. But we've been conservative, we think, and appropriately included that treasury method dilution as it incurs and what's incurred today. Peter can talk about any other puts and takes in there. But that's really the only offset to the investment increase. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:16:09Ki Bin, yeah, this is Peter. In terms of other puts and takes, there's, to Joey's point, really no other offsets. If you think about the incremental $200,000,000 of investment spend this year subject to timing of that investment spend and spread. We think that should translate to about $1,000,000 or so of incremental earnings or about a penny. Obviously, at the low end of our guidance range, we took up the range by a penny. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:16:36We didn't touch the top end. That's really a reflection of the fact that we do anticipate treasury stock method dilution will be closer to that $02 rather than $01 to $02 given where we're trading currently. And obviously, that remains subject to to where we trade for the remainder of the year and, you know, any other capital markets activity throughout the year as well. Ki Bin KimManaging Director at Truist Securities00:16:57And I guess it's a high class problem that your stock price goes higher and create treasury stock dilution. But when does the kind of calculus start to work out so that we can start to get to a plus like 4% type of AFFO per share growth rate or more from A grade? Joey AgreePresident & Chief Executive Officer at Agree Realty00:17:14Well, I think in Joey AgreePresident & Chief Executive Officer at Agree Realty00:17:15the near term. Obviously, subject to macroeconomic conditions, are outside of our control, this business is built for that. And so we made the decision to pre equitize the balance sheet, put hedges in position in terms of the swaps this year in anticipation of increased volatility. But we think that algorithm kicks in there outside of just balance sheet protection and treasury method dilution. Ki Bin KimManaging Director at Truist Securities00:17:38Okay, thank you. Joey AgreePresident & Chief Executive Officer at Agree Realty00:17:40Thanks, Ki Bin. Operator00:17:43Thank you. The next question comes from Smedes Rose at Citi. Please go ahead. Smedes RoseDirector at Citi00:17:49Hi. Good morning. I just wanted to ask you a little bit about some of your tenant exposure. It looks like grocery exposure went up by about 90 basis points. And within that, your name tenants Kroger's was up. Smedes RoseDirector at Citi00:18:01And I was just wondering, that any specific change in your strategy around groceries? Or is that more just sort of a one off opportunity that you found during the quarter? Joey AgreePresident & Chief Executive Officer at Agree Realty00:18:12Good morning, Steve. That was a one off opportunity predominantly in the quarter. I also mentioned the Acme in Bronxville, New York that we acquired as well. We'll continue to find dominant grocers across the country. There's a number in the pipeline already for the second quarter. Joey AgreePresident & Chief Executive Officer at Agree Realty00:18:32We continue to believe that the dominant grocers will will gain share here. Given the macro obviously, but also just the the challenges is for small grocers to operate in a 2% margin business, ex tariffs and all the other noise out there. Smedes RoseDirector at Citi00:18:51Okay. And then just maybe just touching on tariffs, given your tenant exposures, anyone that you are particularly maybe concerned about or watching more carefully, particularly given the higher tariffs with China specifically, which I realize is kind of a moving, a very fluid situation, but what's on your I Joey AgreePresident & Chief Executive Officer at Agree Realty00:19:13appreciate you acknowledging the moving and fluid situation, it seems to be day to day. I'll be honest, there really is nobody that we're overly concerned with tariff inputs in the portfolio today. Now, all retailers subject to carve outs and exclusives, obviously the electronics carve out for the Truth Social Post or whatever it was last week alleviated concerns for computers and televisions. Now that could all obviously change. But we think this portfolio is in tremendous position to continue to benefit from the trade down effect. Joey AgreePresident & Chief Executive Officer at Agree Realty00:19:47As you mentioned, grocery, obviously, with economic conditions where they are, people will stop eating out. Auto parts, you've seen that accelerate in our portfolio. Obviously, new cars will be impacted significantly by tariffs. The average new car in this country is already approximately $45,000 That's pre tariff. Tire and auto service, another category we highlighted during the prepared remarks. Joey AgreePresident & Chief Executive Officer at Agree Realty00:20:13Off price retail, where one of TJX's and Burlington's largest landlord, we continue to think they'll gain from any tariff implications. So we think this portfolio, as I mentioned in the prepared remarks, was built to be recession resistant. We haven't heard it hit a traditional recession since 2010 upon its inception, but it proved to be pandemic resistant and we're very confident it will be ultimately whatever way shape and form tariffs pan out will be tariff resistant as well. Smedes RoseDirector at Citi00:20:43Okay. Thank you. Appreciate it. Joey AgreePresident & Chief Executive Officer at Agree Realty00:20:45Thanks, Smedes. Operator00:20:48Thank you. The next question comes from RJ Milligan at Raymond James. Please go ahead. RJ MilliganManaging Director at Raymond James00:20:53Hey, good morning, guys. Joey, was wondering, as you are having conversations with your development partners, what's their current appetite for opening new stores? Has there been a pause? Just trying to get a broader market read there. Joey AgreePresident & Chief Executive Officer at Agree Realty00:21:08Yeah. Joey AgreePresident & Chief Executive Officer at Agree Realty00:21:09Good morning, Arjun. We have not seen any pause to date, albeit this is a volatile and fast moving environment. The team was with a number of retailers this week and will be again with two or three in the upcoming couple days here. We haven't seen a pause. We've actually seen announcements. Joey AgreePresident & Chief Executive Officer at Agree Realty00:21:28Sam's Club has announced that they're opening net new stores. Kroger's made announcements in terms of remodels and net new stores in the past two weeks as well. And so we have not seen that pause. We haven't had any deals frankly tabled or put on hold either yet. But obviously again, this is a fluid situation which is out of our control. Joey AgreePresident & Chief Executive Officer at Agree Realty00:21:52But again, I think when you have a discount oriented necessity based tenant roster, those tenants today, don't think are overly scared by tenant tariffs. I think a lot of them see this as an opportunity. As I mentioned in the prepared remarks, the big are getting bigger and this is what we've effectively built this portfolio and constructed around to invest in price, they have to, to invest in labor and invest in omni channel fulfillment And tariffs will require retailers to effectively invest in price unless they're going to pass that entire tariff on to the end consumer. RJ MilliganManaging Director at Raymond James00:22:27Thanks. That's helpful. RJ MilliganManaging Director at Raymond James00:22:28And I wanted to move over. From a portfolio standpoint, is there any tenants out there? Know, obviously, this is not really tariff related where you're just keeping a watch on them and saying, you know, ex the tariffs, there might be some fundamental issue? Joey AgreePresident & Chief Executive Officer at Agree Realty00:22:51No. No new entrants into that. Joey AgreePresident & Chief Executive Officer at Agree Realty00:22:53Obviously, our what are the three movie theaters total in the portfolio? We continue to watch. We have been proactive in reducing, as I mentioned in the prepared remarks, dollar store and pharmacy exposure since 2023. That was prior to the headlines in 2024. And so there are really no changes to our watch list here. RJ MilliganManaging Director at Raymond James00:23:18Just one last follow-up. In terms of cap rates, where do you think we end the year in terms of Agree's acquisition cap rates? Is it going to be higher or lower? And how do RJ MilliganManaging Director at Raymond James00:23:29you think about the inputs there? Joey AgreePresident & Chief Executive Officer at Agree Realty00:23:31RJ to be frank, I have no idea. The volatility in ten year treasury, which has been historically obviously the base rate for the world, the fear read spectrum continues to vacillate. Obviously, we're on the fear side. We are just starting effective Monday, building our Q3 pipeline, just given our sixty six, sixty seven days letter of intent to close. I think this is going to be a volatile world. Joey AgreePresident & Chief Executive Officer at Agree Realty00:24:03I think it's going to change. I think the volatility doesn't effectively move cap rates as a secondary impact. I think the volatility that we were frankly accustomed to, all of us are accustomed to, inclusive of real estate owners or when you have 1015% swings in the ten year treasury, these used to be aberrations. They seem to happen on a monthly basis now, if not a daily basis with 3%, five % swings. And so none of this volatility effectively moves cap rates. Joey AgreePresident & Chief Executive Officer at Agree Realty00:24:40Ultimately, I believe that owners of real estate, and perhaps those that have secured interest in real estate, ultimately make a disposition or investment decisions based upon the fear greed spectrum. And so the ten year going sub four or the ten year piercing five can move cap rates. But with the ten year moving between four point two and four point six and just using a band here, I don't think that ultimately moves cap rates in any material way just because of the frankly people being accustomed to the volatility. RJ MilliganManaging Director at Raymond James00:25:16Great. That's it for me. RJ MilliganManaging Director at Raymond James00:25:17Thanks guys. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:25:18Thanks RJ. Operator00:25:21Thank you. The next question comes from Michael Goldsmith at UBS. Please go ahead. Michael GoldsmithUS REITs Analyst at UBS Securities LLC00:25:27Good morning. Thanks a lot for taking my question. Maybe a similar question that was just asked from a different angle. Have you seen any changes in the transaction market post the April 2 tariff analysis, maybe not directly from the tariff, but just from the overall uncertainty. You sort of touched on the cap rate environment, but are you seeing any changes in competition or any deals pulled just given the uncertainty? Joey AgreePresident & Chief Executive Officer at Agree Realty00:25:55No deals pulled. Competition remains extremely limited. Obviously, the ten thirty one buyer has effectively been cut in over half just due to the commercial real estate transactional volume being down by half, the lack of liquidity in invested markets, just frankly the lending markets. We see very limited competition. I often make the analogy I did during fourth quarter of a door versus a window. Joey AgreePresident & Chief Executive Officer at Agree Realty00:26:26We see a door here. And our balance sheet, our cost of capital as I mentioned, as well as our portfolio and the tremendous team here we have is gonna take advantage of that opportunity. And so we took advantage of the opportunity during the GFC. We took advantage of the opportunity during COVID, obviously, when we doubled the size of the company. We see a a like kind opportunity potentially on the horizon, obviously subject to the next truth social post here and and and changes in the macro. Joey AgreePresident & Chief Executive Officer at Agree Realty00:26:58But with limited competition across all three investment platforms and with our core strengths here, this is a tremendous opportunity for our company to continue to grow this portfolio in an accretive manner and solidify it as the preeminent net lease portfolio in the country. Michael GoldsmithUS REITs Analyst at UBS Securities LLC00:27:18Thanks for that. And as a follow-up on slide 22 of your presentation, you highlight what you're investing in and what you're not and you call out the avoidance of private equity sponsorship. So, just given where we are in the cycle and the uncertainty, what's been your experience with private equity sponsorship at this point in the cycle? Give them some of that uncertainty. Thanks. Joey AgreePresident & Chief Executive Officer at Agree Realty00:27:43Ultimately, and this isn't for this part of the cycle, we seek to work and partner with retailers that have a long term perspective on the operations of their business. So special dividends, levering up the balance sheet, opcopropco structures, sale leasebacks to improve liquidity and frankly in order to special dividend it out probably. Those just aren't things that we believe work in a twenty first century omnichannel world which is hyper competitive. And so we'll continue to focus on our sandbox as the thirty, thirty five biggest and best retailers in this country, rated or unrated, and a few sub investment grade rated retailers that are selling essential goods and services that have long term sponsorship and ownership. Frankly, private equity doesn't match that duration for us. Michael GoldsmithUS REITs Analyst at UBS Securities LLC00:28:35Thank you very much. Good luck in the second quarter. Joey AgreePresident & Chief Executive Officer at Agree Realty00:28:38Appreciate it. Operator00:28:41Thank you. The next question comes from Linda Tsai at Jefferies. Please go ahead. Linda TsaiSenior Analyst at Jefferies00:28:46Hi. The temporary occupancy dip from Big Lots, would that be resolved by year end? Joey AgreePresident & Chief Executive Officer at Agree Realty00:28:52Oh yeah, I would anticipate that would be resolved much sooner than year end, most likely by the end of the second quarter. And so we've resolved a number of them. The off price retailer in Manassas, Virginia was the first one where we have a net effective Peter, jump in. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:29:08Over 150. Joey AgreePresident & Chief Executive Officer at Agree Realty00:29:09A net effective lift of over 150%. Cedar Park, Texas is released with a net effective rent lift of approximately 50% to a large German based grocer. And then Fukui Varina was acquired in the bankruptcy by variety wholesalers and we're working through those others to have optimal solutions here, but we think they will be favorable and not a concern. Linda TsaiSenior Analyst at Jefferies00:29:37And then for the 50% to 150% rent uplift, is there CapEx involved? Joey AgreePresident & Chief Executive Officer at Agree Realty00:29:42That's a net effective basis, not same store NOI. So the lease that we purchased in bankruptcy, we purchased for a couple hundred thousand dollars and that was the only truly expense on that. It was an as is basis. Same with the grocery in Cedar Park, Texas with that approximate 50% net effective rent lift. And then the variety wholesalers dealer, they came current and so that's just the same rent as Big Lots was paying prior. Joey AgreePresident & Chief Executive Officer at Agree Realty00:30:07And so we continue to work on leasing a number of these assets and have letters of intent in hand from large national retailers predominantly. That's our focus there, our first order of business and we hope to further expand upon it on the Q2 call. Linda TsaiSenior Analyst at Jefferies00:30:24And then the comment about drug and dollar stores peaking in your portfolio before it became newsworthy. What were you looking at to recognize this trend? Was it shift in traffic or rent coverage? Joey AgreePresident & Chief Executive Officer at Agree Realty00:30:38Different perspectives on each sector. Pharmacy, we've been pretty adamant about Walgreens exposure. We were pretty adamant about Rite Aid's future. Bankruptcy and liquidation will occur any day, most likely now. Obviously, that's been a theme through the past fifteen years of our history in terms of Walgreens dispositions going from over 40% to sub 1%. Joey AgreePresident & Chief Executive Officer at Agree Realty00:31:03But most importantly, as we talked about on other calls, 13,000 to 14,000 square foot boxes with approximately 11,000 square feet of front end space paying $20 to $30 per square foot that is really isn't relevant in today's world, isn't something that we're overly attracted to. That said, we'll continue to work on unique pharmacy opportunities where we think the basis is rental basis is appropriate or high store sales or barriers to entry. I'd remind everyone, our largest two pharmacy exposures in terms of asset size are Greenwich, Connecticut on Greenwich Avenue, the CVS, and the Walgreens on the corner of the Diag, the best piece of real estate, and the University of Michigan. And so the pharmacy space, we've obviously made a concerted effort to reduce. Dollar stores, we just saw them being overbuilt frankly. Joey AgreePresident & Chief Executive Officer at Agree Realty00:31:52We took advantage in the twenty twenty three of merchant developers that were stressed and took some of those properties out. We've never engaged in a sale leaseback with a dollar store operator. Very different themes running through Dollar General and Dollar Tree Family Dollar, but we saw the space is overbuilt. But also, we we we were having challenges getting our arms around the pricing in conjunction with the residual. And so you'll see, and I mentioned in in the prepared remarks that they fell year over year, quarter over quarter. Joey AgreePresident & Chief Executive Officer at Agree Realty00:32:23They peaked in 2023, and we were pretty clear on the Q3 twenty twenty three call that that would be the case. Linda TsaiSenior Analyst at Jefferies00:32:29Thanks for that helpful context. Just one last one. The dozen team members you added, what departments were they located in? And has AI reduced the need to staff up in other areas? Joey AgreePresident & Chief Executive Officer at Agree Realty00:32:41Certainly. So roll back the clock, 2024 obviously start with the do nothing scenario, effectively a hiring freeze. We are more than caught up now. This is all built into our and a forecast for the year that we've provided to the street. Those team members are strewn across the entire organization from HR to IT to acquisitions, construction development, analyst, accounting, asset management, lease administration. Joey AgreePresident & Chief Executive Officer at Agree Realty00:33:09We are built and poised for growth. Simultaneously, we have deployed effective in the last month a new AI module, which is eliminating legal costs significantly for us. And we got an update actually yesterday from our general counsel that we're very pleased with the results, continue to make some tweaks there. AI will continue to be deployed throughout this company. We have been utilizing AI for lease abstraction. Joey AgreePresident & Chief Executive Officer at Agree Realty00:33:36Again, correct to 2022. Yeah. Dating back to 2022 when no one was talking about AI. We think there's significant opportunities both within our underwriting as we launch the next iteration of ARC in 2026 to deploy AI. But also I would tell you significantly in overall transactional expense. Linda TsaiSenior Analyst at Jefferies00:34:00Thank you. Reuben TreatmanSenior Director of Corporate Finance at Agree Realty00:34:02Thanks, Linda. Operator00:34:05Thank you. The next question comes from John Kilachowski at Wells Fargo. Please go ahead. John KilichowskiVice President - Equity Research Analyst at Wells Fargo00:34:11Thank you. Good morning. Joey, you touched on this briefly earlier, but how will tariffs that they stay on impact your go forward strategy as it relates to investments? And if so, would you not expect tighter pricing on those assets? Joey AgreePresident & Chief Executive Officer at Agree Realty00:34:26I don't think tariffs impact our go forward strategy really at all. I don't think tariffs ultimately impact. I think all retailers will be subject to various levels of tariffs if this continues to go down this route. And I think effectively, the biggest retailers in the country that sell necessity based goods and services will benefit. And so you'll continue to see us invest in the Walmart and Home Depot's and Lowe's and O'Reilly's AutoZone's, the dominant tire and auto service operators, dominant C stores throughout the country, off price retail. Joey AgreePresident & Chief Executive Officer at Agree Realty00:35:00I think all of these sectors are effectively winners in a large tariff environment. There may be some short term pain, but long term they have the balance sheets, the market position to continue to thrive. John KilichowskiVice President - Equity Research Analyst at Wells Fargo00:35:13Got it. And then in a similar vein, on the bad debt non reimbursable side, is it just too early to change your outlook? Or do you feel very comfortable with the conservatism already built in? Joey AgreePresident & Chief Executive Officer at Agree Realty00:35:24I'll let Peter hit it. I think it's it's pretty early to change the outlook. Obviously, that outlook incorporated the few big lots that we continue to work through. But I think it's it's frankly pretty early here, so in the April. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:35:38Yeah, John, just to hit specifically on credit loss and our guidance for the year, our 2025 earnings guidance, as I mentioned on the last call, includes an assumption for 50 basis points of credit loss. And that included an allowance for big lots as we've talked about on this call. In Q1, we experienced roughly 30 basis points of credit loss, and that compares to the 35 basis points roughly that we experienced in 2024. So based on what we have line of sight into today, we feel good about the credit loss guide embedded within our earnings guidance and how the portfolio is continuing to perform. Joey AgreePresident & Chief Executive Officer at Agree Realty00:36:18And just to expound upon our 50 basis points of credit loss a little bit. That 50 basis points is a fully loaded number for any lease expirations where we are carrying a vacancy, taxes, insurance, maintenance of the building, any rejections in bankruptcy, again, where we are carrying any taxes, maintenance, any expenses, that 50 basis points has no carve outs, has no footnotes, has nothing in there. That's a fully loaded 50 basis points that we put in there that is akin to our underwriting on the acquisition side, right? To truly understand the full economic impact and to provide the street transparency into that full economic impact. John KilichowskiVice President - Equity Research Analyst at Wells Fargo00:37:03Just to confirm, the the 40 bits of occupancy loss, would that have been included? Joey AgreePresident & Chief Executive Officer at Agree Realty00:37:08Yep. That was it's specifically tied to the the the variety of the cost and it's included in that number. John KilichowskiVice President - Equity Research Analyst at Wells Fargo00:37:15Okay. Perfect. Thank you. Operator00:37:21Thank you. The next question comes from Ronald Camden at Morgan Stanley. Please go ahead. Ronald KamdemManaging Director & Head of US REITs and CRE Research at Morgan Stanley00:37:26Hey, just two quick ones. Just going back Ronald KamdemManaging Director & Head of US REITs and CRE Research at Morgan Stanley00:37:29to the development in the DFP platform, any sort of early indications of how much construction costs could be going up? And how are you guys thinking about sort of your yield requirements for that channel? Joey AgreePresident & Chief Executive Officer at Agree Realty00:37:41Yes, great question, Ron. We have done a preliminary and had third parties also do studies on tariff implications, obviously a moving target. The tariffs would mostly affect obviously the hard costs, call it the vertical costs here in terms of construction. We would anticipate a 2% to 5% on the high end increase in tariffs. Obviously, those assumptions have to be broken out by country. Joey AgreePresident & Chief Executive Officer at Agree Realty00:38:09Some them are indirect in terms of input, right? Input costs to find finished product here. We don't think there's any material moves in our construction costs for tariffs here. Again, these projects are effectively rectangles and so we have our arms around them. Your second question, sorry, Ron? Ronald KamdemManaging Director & Head of US REITs and CRE Research at Morgan Stanley00:38:32Yes, sorry, part two. Just I don't think we've hit on sort of the dispositions yet. Any sort of thoughts, indication there would be helpful. Joey AgreePresident & Chief Executive Officer at Agree Realty00:38:47It didn't change the guidance for this quarter. It didn't change our annual guidance. I don't think you'll see us change that annual guidance this year unless there's some sort of change, frankly. I think we have done a tremendous job weaning out assets that we didn't think were core in the portfolio over the last several years. That said, we'll look at opportunistic dispositions. Joey AgreePresident & Chief Executive Officer at Agree Realty00:39:10We have inbounds all the time. We'll continue to look for opportunities to prune the portfolio as we get feedback, either on the ground level or the corporate level, or if we just think something is above market and the retenantability is limited. So I don't see dispositions being a major contributor in terms of capital this year, But I will continue obviously to be active on that front, but I don't think it's not a priority as it was last year when we were focused on recycling capital. Ronald KamdemManaging Director & Head of US REITs and CRE Research at Morgan Stanley00:39:43Helpful, thank you. Operator00:39:48You. The next question comes from Spencer Glimsher at Green Street. Please go ahead. Spenser GlimcherManaging Director at Green Street Advisors, LLC00:39:54Thank you. Just one for me. As you started working through your 2Q acquisition pipeline, have you guys observed any cap rate movements or changes to the bid ask spread in any particular retail segments? Joey AgreePresident & Chief Executive Officer at Agree Realty00:40:08No. Good morning, Spencer. Q2 is effectively built. Subject to diligence and closing, Q2 is effectively built Just using that sixty five day plus transaction timeline from letter of intent execution, we're effectively to close. We're effectively through Q2. Joey AgreePresident & Chief Executive Officer at Agree Realty00:40:25If you look at the volatility in the ten year treasury during that sixty five, seventy day sourcing period, the ten year dropped, then it pulled back up. Having a hedged position in terms of both forward equity and the swaps in place allows us to be frankly consistent. And so this is not we're not in a situation where we have to constantly be changing targets in terms of yield hurdles. We'll see how q three now plays out. Again, that sourcing effectively starts on Monday or Friday of this week, just given our our traditional transaction timeline. Joey AgreePresident & Chief Executive Officer at Agree Realty00:41:05And then frankly, I have no idea what the next again, what the next move from the administration will be, where the ten year treasury goes, where our stock price goes. But the good news is we're locked and loaded and we'll come into with a running start here. Spenser GlimcherManaging Director at Green Street Advisors, LLC00:41:21Okay. Understood you have the pricing power, I guess, and you don't have to be volatile, as you mentioned, in terms of your cost of capital. But did you observe anything in terms of tenant ask or where pricing expectations were on the other side of the bidding? Joey AgreePresident & Chief Executive Officer at Agree Realty00:41:40Not really. I think the only Joey AgreePresident & Chief Executive Officer at Agree Realty00:41:41thing we noticed is some of the larger institutions would like to play in the space, given the dislocation in the debt markets, could be out for a little while here as spreads wind out or the ten year treasury yield spiked. But again, forewarn everyone, the number one sale leasebacks is a minority of what we do. We're traditionally a third party acquirer. We think we create more value there rather than being just a financier of real estate. And then two, drawing parallels or even putting threads through transactions in this massive fragmented individually owned market called net lease is very difficult. Joey AgreePresident & Chief Executive Officer at Agree Realty00:42:27I gave some examples of the transactions that we executed on the acquisition front in Q1. They were wholly disparate from a sale leaseback with a national grocer to a portfolio with a relationship seller, it's our probably seventh or eighth transaction with that seller to a family office that owned the Bronxville Acme grocery store. And so the seller pool remains extremely disparate, we're seeing more institutions come to the table to recycle capital and potentially dispose of assets. In those types of conversations. We're also in the midst of a conversation with a 80 year old widow about a transaction, who effectively owns a portfolio that her husband acquired. Joey AgreePresident & Chief Executive Officer at Agree Realty00:43:17And so at the end of the day, the aggregation of those transactions comprise the quarter. I always say the most exciting part about this business is you never know where the next one's gonna come from. Spenser GlimcherManaging Director at Green Street Advisors, LLC00:43:31Great, thank you. Joey AgreePresident & Chief Executive Officer at Agree Realty00:43:33Thanks Spencer. Operator00:43:36Thank you. The next question comes from Jenna Gillen at Bank of America. Please go ahead. Jana GalanDirector at Bank of America00:43:42Thank you. Good morning. Just following up on the commercial paper program. Peter, can you quantify the spread relative to the revolver? And if this benefit is included in the updated guidance? Jana GalanDirector at Bank of America00:43:53Or did you already plan to launch the program with the initial guide? Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:43:58Sure. Just in terms of pricing on the commercial paper program, obviously, we closed on the program on March 31, dependent on the tenure of commercial paper notes that we're issuing, as well as conditions in the commercial paper market which are subject to change. Today, we think we can issue commercial paper notes 40 plus basis points inside of our borrowing cost on the revolver. The current borrowing cost on the revolver at quarter end was around 5.2% for reference. To date, so far in Q2, we have been active in the CP market and use that for short term borrowings. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:44:40In our current guidance range, we have contemplated the impact of using commercial paper throughout the year as appropriate. Jana GalanDirector at Bank of America00:44:48Thank you. And I know you think of your kind of long term WACC, but just between this and the swaps that you have in place, I mean, I think investment spreads should be kind of at historic highs currently. Can you maybe comment to that? Joey AgreePresident & Chief Executive Officer at Agree Realty00:45:06I would agree, absent the deaths of the pandemic, when rates were at effectively zero and we were issuing ten year paper at two plus percent and perpetual preferred at 4.25%. There's no doubt that our investment spreads are wide, will be the beneficiary of those investment spreads and our superior cost of capital here, but we're in no doubt in an advantageous position. Jana GalanDirector at Bank of America00:45:33Thank you. Joey AgreePresident & Chief Executive Officer at Agree Realty00:45:36Thanks, Anna. Operator00:45:39Thank you. The next question comes from Jim Kamut at Evercore. Please go ahead. James KammertManaging Director at Evercore ISI00:45:44Good morning. Thank you. Joey, obviously, you had the conviction to raise your investment volume for the year. Is that really built just expanding with your existing relationships? Or have you kind of started to identify additional partners? Joey AgreePresident & Chief Executive Officer at Agree Realty00:45:58All over the board, Jim. It's existing relationships. It's additional partners. It's the breadth and depth of the coverage that this team has across the country. But we are the go to buyer for net lease retail, high quality net lease retail assets bar none today. Joey AgreePresident & Chief Executive Officer at Agree Realty00:46:17And so I think our transactional history, the quality of the team, our marketing and e marketing campaign, they all nerd to our benefit here. Our ability to look at real estate with a different lens, our relationships with the retailers, the end users of these properties is the secret sauce, part of the secret sauce. And so it's all of the above and more. James KammertManaging Director at Evercore ISI00:46:45Great. And a more technical question, The ground leases have about a nine point five year remaining WALT. Is that remind me, is that through final expiration or is that really just a first potential extension? Because I'm kind of thinking about potential organic growth opportunities, if any help there? Thank you. Joey AgreePresident & Chief Executive Officer at Agree Realty00:47:02That's exclusive of options just as Walt is for the remainder of the portfolio. James KammertManaging Director at Evercore ISI00:47:06Got it. Thank you, guys. Joey AgreePresident & Chief Executive Officer at Agree Realty00:47:08Thanks, Jim. Operator00:47:11Thank you. The next question comes from Upal Rana at KeyBanc Capital Markets. Please go ahead. Upal RanaDirector - Senior Equity Research Analyst at KeyBanc Capital Markets00:47:18Great. Thank you. Joey, you mentioned seeing more opportunities in the development and DFP side and you noted the increase in construction costs as well. But just wondering how big do you think the development pipeline could potentially get from here? Joey AgreePresident & Chief Executive Officer at Agree Realty00:47:31So we've set that medium term target of putting $250,000,000 in the ground per year. We are on track. Again, that's a medium term target, not for this year. We are on track. Our pipeline and our shadow pipeline are very large. Joey AgreePresident & Chief Executive Officer at Agree Realty00:47:49They're obviously subject to diligence and closing conditions, sometimes entitlements as well. I would tell you very distinctly our development platform and the team has done a tremendous job. We've added team members that have really hit the ground running. Craig Gurlik and his team, our chief growth officer, are working with retailers all the time, has a very significant pipeline. And then our developer funding platform continues to benefit from just the lack of liquidity out there, as well as unknown exit cap rates through other third party developers. Joey AgreePresident & Chief Executive Officer at Agree Realty00:48:24And so we've used our developer funding platform as a bridge to get projects across the finish line. A lot of them are directed to us by retailers, some sourced by the acquisition team, by our development team here. But both pipelines, they don't get a lot of headlines. But both pipelines, we think, combined with our acquisition and active asset management platform, provide really a full service value proposition to retailers. And it's recognized by all of them today that we can step into any and all types of situations and frankly create value and provide for value in that partnership. Upal RanaDirector - Senior Equity Research Analyst at KeyBanc Capital Markets00:49:06Okay, great. That was helpful. And then just a quick follow-up on the commercial paper program. Does this put ADC in a position to push more on investments in the future, especially combined with your increase in team members? Joey AgreePresident & Chief Executive Officer at Agree Realty00:49:18No, I think the commercial paper program, as Peter mentioned, while it's priced inside of the revolving credit facility, we don't use a revolver short term cost of capital to impact or to impact or even in our calculus for our weighted average cost of capital. These short term borrowing needs. The commercial paper program effectively supplants the use of the credit facility at cheaper pricing. But that does not impact how we look at deals or impact our weighted average cost capital. Upal RanaDirector - Senior Equity Research Analyst at KeyBanc Capital Markets00:49:49Okay, great. Thank you. Joey AgreePresident & Chief Executive Officer at Agree Realty00:49:51Thank you. Operator00:49:54You. The next question comes from Rich Hightower at Barclays. Please go ahead. Rich HightowerManaging Director, U.S. REIT Research at Barclays00:49:58Hey, good morning, guys. Thanks for taking the question. I really just got one, but I want to go all the way back to Ki Bin's line of questioning to start the call just on equity issuance. Now I think we all appreciate the TSM dilution conundrum and things like that but it is sort of a high class problem and so it looks like equity issuance went down quarter over quarter relative to the fourth quarter. Stock price has done obviously very well absolute and relative year to date. Rich HightowerManaging Director, U.S. REIT Research at Barclays00:50:30Maybe why not lean in a little more to equity issuance in this environment especially if it seems like the acquisition pipeline is biased to get bigger, not smaller? Thanks. Joey AgreePresident & Chief Executive Officer at Agree Realty00:50:43Well, think if you look at the amount settled during Q1 of existing forward, or formerly existing forward, but net of what we issued, we effectively ended up neutral. Right? 3.3, three point four times, just over a hundred and $80,000,000 each. And so the balance sheet, deploying $370,000,000 approximately, ended up effectively in neutral position. And so we continue to have nearly $2,000,000,000 in hedged capital. Joey AgreePresident & Chief Executive Officer at Agree Realty00:51:16We have significant liquidity. We're in there's $2,000,000,000 in liquidity, excuse me, and $1,300,000,000 of hedged capital approximately. And so we're in a in a terrific position here from a balance sheet of liquidity and cost of capital perspective to to execute on our pipeline. Does that answer your question? Rich HightowerManaging Director, U.S. REIT Research at Barclays00:51:38Yeah, it does. I mean, didn't know if there was any sort of internal back and forth on if it makes sense to go any bigger in that light. But obviously, you guys are in a really great position no one would dispute that and actually if I may ask a quick follow-up just again on bad debt I think you guys have articulated pretty clearly how that gets built up but just to be clear is that a it sounds like from your perspective given the credit worthiness of the tenant base it really is kind of a bottoms up location by location tenant by tenant situation build up to get to that 50 basis points is there any sort of general credit overlay on top of that that gets you to the 50 or is really sort of highly, highly specific as it sounds at least from my end? Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:52:31Yeah, thanks Rich. This is Peter. I think in terms of the build up and how we think about that 50 basis points of credit loss, I mentioned in the first quarter we had roughly 30 basis points of credit loss. And so to answer your question, it is a location by location and tenant by tenant build up that we look at as we think about credit loss. Based on what's identified or known today, I think the 30 basis points that we experienced in Q1, we anticipate more or less seen throughout the remainder of the year. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:53:03And then we have some level of cushion, if you will, built into that 50 basis points that allows for other potential tenants that we're monitoring, but there's not a known issue today. Rich HightowerManaging Director, U.S. REIT Research at Barclays00:53:14Okay, helpful. Thank you, guys. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:53:17Thank you. Operator00:53:19Thank you. We have no further questions. I will turn the call back over for closing comments. Joey AgreePresident & Chief Executive Officer at Agree Realty00:53:23Well, thank you all for joining us this morning. We look forward to seeing everybody at the upcoming conferences, and we appreciate your time. Thank you. Operator00:53:32Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.Read moreParticipantsExecutivesReuben TreatmanSenior Director of Corporate FinanceJoey AgreePresident & Chief Executive OfficerPeter CoughenourCFO, Secretary & Investor Relations ProfessionalAnalystsKi Bin KimManaging Director at Truist SecuritiesSmedes RoseDirector at CitiRJ MilliganManaging Director at Raymond JamesMichael GoldsmithUS REITs Analyst at UBS Securities LLCLinda TsaiSenior Analyst at JefferiesJohn KilichowskiVice President - Equity Research Analyst at Wells FargoRonald KamdemManaging Director & Head of US REITs and CRE Research at Morgan StanleySpenser GlimcherManaging Director at Green Street Advisors, LLCJana GalanDirector at Bank of AmericaJames KammertManaging Director at Evercore ISIUpal RanaDirector - Senior Equity Research Analyst at KeyBanc Capital MarketsRich HightowerManaging Director, U.S. REIT Research at BarclaysPowered by Conference Call Audio Live Call not available Earnings Conference CallAgree Realty Q1 202500:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipants Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Agree Realty Earnings HeadlinesAgree Realty (NYSE:ADC) Earns Market Perform Rating from JMP SecuritiesMay 3 at 3:17 AM | americanbankingnews.comAgree Realty (ADC) Poised for Growth with Raised Price Target | ADC Stock NewsMay 2 at 3:59 PM | gurufocus.comTrump wipes out trillions overnight…Is there anybody more powerful than Donald Trump right now? In a single tariff announcement, he wiped out nearly $5 trillion in wealth from the S&P 500 and $6.4 trillion from the Dow Jones… Not to mention the countless trillions of dollars lost in every market around the world… leaving the major political powers scrambling in fear of Trump’s next move.May 4, 2025 | Porter & Company (Ad)Agree Realty Corporation (ADC): One of the Cheap Dividend Stocks Being Targeted by Short SellersApril 30, 2025 | msn.comAgree Realty: The Steady Eddy Monthly Payer You Need Amidst Market UncertaintyApril 30, 2025 | seekingalpha.comSutro Biopharma to Highlight its Next-Generation Exatecan and Dual-Payload ADC Programs in Presentations at AACR 2025April 28, 2025 | globenewswire.comSee More Agree Realty Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Agree Realty? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Agree Realty and other key companies, straight to your email. Email Address About Agree RealtyAgree Realty (NYSE:ADC) is a publicly traded real estate investment trust that is RETHINKING RETAIL through the acquisition and development of properties net leased to industry-leading, omni-channel retail tenants. As of December 31, 2023, the Company owned and operated a portfolio of 2,135 properties, located in 49 states and containing approximately 44.2 million square feet of gross leasable area. 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PresentationSkip to Participants Operator00:00:00Good morning, and welcome to the Agree Realty First Quarter twenty twenty five Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Limit yourself to two questions during this call. Note this event is being recorded. Operator00:00:31I would now like to turn the conference over to Ruben Treatment, Senior Director of Corporate Finance. Please go ahead, Ruben. Reuben TreatmanSenior Director of Corporate Finance at Agree Realty00:00:39Thank you. Good morning, everyone, and thank you for joining us for AGRE Realty's first quarter twenty twenty five earnings call. Before turning the call over to Joey and Peter to discuss our results for the quarter, let me first run through the cautionary language. Please note that during this call, we will make certain statements that may be considered forward looking under federal securities law, including statements related to our updated 2025 guidance. Our actual results may differ significantly from the matters discussed in any forward looking statements for a number of reasons. Reuben TreatmanSenior Director of Corporate Finance at Agree Realty00:01:10Please see yesterday's earnings release and our SEC filings, including our latest annual report on Form 10 Q for a discussion of various risks and uncertainties underlying our forward looking statements. In addition, we discuss non GAAP financial measures, including core funds from operations or core FFO, adjusted funds from operations or AFFO and net debt to recurring EBITDA. Reconciliations of our historical non GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release, website and SEC filings. I'll now turn the call over to Joey. Joey AgreePresident & Chief Executive Officer at Agree Realty00:01:47Thanks, Ruben, and thank you all for joining us this morning. We are extremely pleased with our performance in the first quarter of twenty twenty five as we invested over $375,000,000 across our three external growth platforms, while further strengthening our best in class portfolio. This represents the largest quarter of investment volume since the third quarter of twenty twenty three and is characteristic of the accelerating activity that we're seeing across our three platforms. While the macroeconomic environment remains volatile and unpredictable, our company remains a bastion of stability and poised for growth. Our liquidity bolstered by our outstanding forward equity and swaps combined with our preeminent cost of capital position AG Realty to again take advantage of market dislocations and disruptions. Joey AgreePresident & Chief Executive Officer at Agree Realty00:02:35Year to date, we have added over a dozen team members, initiated several systems improvements and sequenced multiple process improvements to accelerate our investment activities. This growing investment activity is supported by a fortress balance sheet with $1,900,000,000 of liquidity and over $1,200,000,000 of hedge capital. During the quarter, we raised another $181,000,000 of forward equity via our ATM program, effectively replenishing amounts settled in the first quarter and maintaining an ample runway to execute our growth strategy. With no material debt maturities until 2028 and pro form a net debt to recurring EBITDA of just 3.4 times at quarter end, Our fortified balance sheet provides significant flexibility and protection against capital markets volatility. Our balance sheet is paired with what we view to be the country's leading retail portfolio. Joey AgreePresident & Chief Executive Officer at Agree Realty00:03:30We launched the acquisition platform in 2010 with a focus on recession resistant retailers that have adapted to a comprehensive omni channel strategy. Although we have yet to experience a traditional recession since its inception, our portfolio has proven to be pandemic proof and we remain confident it will be tariff resistant. We have and will remain focused on the country's biggest and best retailers that sell necessity goods and services. Many of these retailers benefit from the trade down effect during tougher economic times and they have the scale and balance sheet strength to mitigate higher input costs and withstand margin pressure. While tariff headlines continue to evolve and dominate the news flow, ultimately, we believe the bid will continue to get bigger in this environment, further validating our investment philosophy over the past fifteen years. Joey AgreePresident & Chief Executive Officer at Agree Realty00:04:20Given our robust investment pipeline across our three external growth platforms, we've increased our investment guidance range from 1,100,000,000.0 to $1,300,000,000 to 1,300,000,000.0 to $1,500,000,000 for the year. At the midpoint, this represents a 47% increase over last year's investment volume. As I mentioned, all three of our investment platforms continue to find compelling opportunities that hurdle both our qualitative and quantitative analysis. While increasing our investment guidance for the year, we will remain disciplined and thoughtful in our approach to asset underwriting and portfolio construction during these volatile times. In addition, we are raising the low end of our full year AFFO per share guidance by $0 to a new range of $4.27 to $4.3 representing over 3.5% growth at the midpoint and demonstrating the durability of our cash flows. Joey AgreePresident & Chief Executive Officer at Agree Realty00:05:17As a reminder, this number includes realized potential treasury method dilution due to our significant forward equity position. Peter will provide additional details on our guidance range and the input shortly. Raising our investment and earnings guidance amid the current macroeconomic uncertainty demonstrates that our company is built for all markets. We thrive in periods of uncertainty where we can leverage our speed, relationships, exceptional team, balance sheet flexibility and superior cost of capital. We launched the acquisition platform on the heels of the GFC in 2010, doubled the size of the company during the depths of the pandemic and are always positioned to take on the next challenging economic period. Joey AgreePresident & Chief Executive Officer at Agree Realty00:06:01Turning to our external growth activity, we had an active start to the year, leveraging our unique market positioning and deep relationships with retail partners to uncover opportunities across all three platforms. During the first quarter, we invested over $375,000,000 in 69 properties across all three platforms. This includes three fifty nine million dollars of acquisitions across 46 assets. Acquisitions during the quarter included a lender owned Home Depot in California, a sale leaseback with a leading national grocer, an Albertsons backed Acme grocery store in Bronxville, New York, an off market portfolio from a relationship seller, a CarMax ground lease in Colorado as well as approximately 41 off transactions. Our acquisition activity remains focused on industry leading necessity based retailers. Joey AgreePresident & Chief Executive Officer at Agree Realty00:06:53The properties acquired in the first quarter are leased to operators and sectors including grocery, off price, auto parts, convenience stores and tire and auto service. The acquired properties had a weighted average cap rate of 7.3% and a weighted average lease term of thirteen point four years. Nearly 69% of base rent acquired was derived from investment grade retailers and we continue to add to our ground lease portfolio during the quarter. We continue to see increased activities across our development and DFP platforms as well. During the first quarter, we commenced four new development or developer funding projects with total anticipated costs of approximately $24,000,000 Construction continued on 14 projects during the quarter with aggregate anticipated costs of approximately $80,000,000 We also completed six projects during the quarter, representing a total investment of approximately $27,000,000 These projects are with several leading retail partners, including TJX Companies, Burlington, seven Eleven, Boot Barn, Starbucks, Gerber Collision and Sunbelt Rentals. Joey AgreePresident & Chief Executive Officer at Agree Realty00:08:02Our development in DFP pipeline continue to grow with several upcoming starts to be announced in the near future. Our asset management team continues to proactively address upcoming lease maturities. We executed new leases extensions or options on over 584,000 square feet of gross leasable area during the first quarter. This included a Walmart Supercenter in Rancho Cordova, a Home Depot in Farmington, New Mexico and 16 geographically diverse AutoZone leases comprising over 100,000 square feet. We remain well positioned for the remainder of the year with only 30 leases or 90 basis points of annualized base rents maturing. Joey AgreePresident & Chief Executive Officer at Agree Realty00:08:43Quarter over quarter, our pharmacy and dollar store exposure declined twenty and thirty basis points respectively. We have been clear that our exposure to both of these categories peaked within our portfolio before their challenges had become newsworthy. As of quarter end, our best in class portfolio comprised 2,422 properties spanning all 50 states. The portfolio includes two thirty one ground leases comprising nearly 11% of annualized base rents. Our investment grade exposure stood at 68.3% and occupancy remained solid at 99.2%. Joey AgreePresident & Chief Executive Officer at Agree Realty00:09:21This number represents a temporary dip as we continue to resolve the former remaining Big Lots in our portfolio. Our second former Big Lots in Cedar Park, Texas was successfully released to ALDI at a net effective rental lift of nearly 50% during the quarter, while an additional store was acquired during the bankruptcy process for variety wholesalers. Rent has already commenced on both of these locations. We anticipate further announcements on the next call about the remaining Big Lots in our portfolio. With that said, I'll hand the call over to Peter to discuss our financial results for the quarter. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:09:56Thank you, Joey. Starting with the balance sheet, we remained active in the capital markets during the first quarter, raising approximately $181,000,000 of forward equity via our ATM program. We also settled 2,700,000.0 shares of forward equity for net proceeds of approximately $183,000,000 Additionally, we established our inaugural $625,000,000 commercial paper program during the quarter. The program allows us to tap into another pool of short term capital and further diversifies our balance sheet. We anticipate that we will be able to efficiently fund our short term capital needs on the program at rates that are substantially lower than our revolving credit facility today. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:10:39Since the end of last quarter, we have taken further steps to hedge against interest rate volatility by entering into $125,000,000 of forward starting swaps. In total, we now have $325,000,000 of forward starting swaps, effectively fixing the base rate for a contemplated ten year unsecured debt issuance at roughly 3.9%. Combined with approximately $920,000,000 of outstanding forward equity, we have over 1,200,000,000 of hedge capital, which provides critical visibility into our intermediate cost of capital, particularly during this uncertain period. At quarter end, we had liquidity of approximately $1,900,000,000 including the aforementioned forward equity and availability on our revolving credit facility. Pro form a for the settlement of all outstanding forward equity, our net debt to recurring EBITDA was approximately 3.4 times. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:11:34Excluding the impact of the unsettled forward equity, our net debt to recurring EBITDA was 4.9 times. Our total debt to enterprise value is under 26%, and our fixed charge coverage ratio, which includes the preferred dividend, remains very healthy at 4.3 times. Our only floating rate exposure was comprised of amounts outstanding on the revolver at quarter end. And as Joey mentioned, we continue to have no material debt maturities until 2028. Our balance sheet is extremely well positioned to execute on our accelerating investment activity across all three external growth platforms. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:12:09Moving to earnings. Core FFO per share was $1.04 for the first quarter, which represents a 3.1% increase compared to the first quarter of last year. AFFO per share was $1.06 for the quarter, representing a 3% year over year increase. As Joey highlighted, we have updated our full year 2025 outlook to reflect our strong start to the year. We raised the low end of our full year AFFO per share guidance to a new range of $4.27 to $4.3 which implies year over year growth of more than 3.5% at the midpoint. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:12:43We provide parameters on several other inputs in our earnings release, including investment and disposition volume, general and administrative expenses, non reimbursable real estate expenses, as well as income tax and other tax expenses. In addition to those inputs, our earnings guidance for 2025 includes anticipated treasury stock method dilution related to our outstanding forward equity. As a reminder, if ADC stock trades above the net price of our outstanding forward equity offerings, the dilutive impact of unsettled shares must be included in our share count in accordance with the treasury stock method. Provided that our stock continues to trade near current levels, we anticipate that treasury stock method dilution will have an impact of roughly $02 on full year 2025 AFFO per share. That said, the impact could be higher if our stock moves materially above current levels or if we were to issue additional forward equity. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:13:37Our growing and well covered dividend continues to be supported by our consistent and durable earnings growth. During the first quarter, we declared monthly cash dividends of $0.02 $53 per common share for January, February, and March. The monthly dividend equates to an annualized dividend of almost $3.04 per share and represents a 2.4% year over year increase. Our dividend is very well covered with a payout ratio of 72% of AFFO per share for the first quarter. We anticipate having almost $120,000,000 in free cash flow after the dividend this year, up approximately 15% from last year. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:14:14We view this as another source of cost efficient capital while maintaining a robust and growing dividend. Subsequent to quarter end, we announced an increased monthly cash dividend of $0.02 $56 per common share for April. The monthly dividend equates to an annualized dividend of over $3.07 per share and also represents a 2.4% year over year increase. With that, I'd like to turn the call back over to Joey. Joey AgreePresident & Chief Executive Officer at Agree Realty00:14:38Thank you, Peter. Operator, at this time, let's open it up for questions. Operator00:14:43Thank you. Ladies and gentlemen, we will now begin the question and answer Please go ahead. Ki Bin KimManaging Director at Truist Securities00:15:11Thank you. Good morning. So Joey, you guys raised investment guidance by $200,000,000 You guys also mentioned the treasury stock dilution method. Were there other detracting items? Because I would have thought you guys raising that much of your investment guidance that the AFFO guidance would have been more than $05 Thank you. Joey AgreePresident & Chief Executive Officer at Agree Realty00:15:31Good morning, Ki Bin. No other detractors. Obviously, we've included, as Peter mentioned in the prepared remarks, approximately $02 of treasury method anticipated treasury method dilution that's hit the Joey AgreePresident & Chief Executive Officer at Agree Realty00:15:46P Joey AgreePresident & Chief Executive Officer at Agree Realty00:15:46and L, but also throughout the year. Obviously, we can't predict the stock price on a daily or for an annual basis here. But we've been conservative, we think, and appropriately included that treasury method dilution as it incurs and what's incurred today. Peter can talk about any other puts and takes in there. But that's really the only offset to the investment increase. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:16:09Ki Bin, yeah, this is Peter. In terms of other puts and takes, there's, to Joey's point, really no other offsets. If you think about the incremental $200,000,000 of investment spend this year subject to timing of that investment spend and spread. We think that should translate to about $1,000,000 or so of incremental earnings or about a penny. Obviously, at the low end of our guidance range, we took up the range by a penny. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:16:36We didn't touch the top end. That's really a reflection of the fact that we do anticipate treasury stock method dilution will be closer to that $02 rather than $01 to $02 given where we're trading currently. And obviously, that remains subject to to where we trade for the remainder of the year and, you know, any other capital markets activity throughout the year as well. Ki Bin KimManaging Director at Truist Securities00:16:57And I guess it's a high class problem that your stock price goes higher and create treasury stock dilution. But when does the kind of calculus start to work out so that we can start to get to a plus like 4% type of AFFO per share growth rate or more from A grade? Joey AgreePresident & Chief Executive Officer at Agree Realty00:17:14Well, I think in Joey AgreePresident & Chief Executive Officer at Agree Realty00:17:15the near term. Obviously, subject to macroeconomic conditions, are outside of our control, this business is built for that. And so we made the decision to pre equitize the balance sheet, put hedges in position in terms of the swaps this year in anticipation of increased volatility. But we think that algorithm kicks in there outside of just balance sheet protection and treasury method dilution. Ki Bin KimManaging Director at Truist Securities00:17:38Okay, thank you. Joey AgreePresident & Chief Executive Officer at Agree Realty00:17:40Thanks, Ki Bin. Operator00:17:43Thank you. The next question comes from Smedes Rose at Citi. Please go ahead. Smedes RoseDirector at Citi00:17:49Hi. Good morning. I just wanted to ask you a little bit about some of your tenant exposure. It looks like grocery exposure went up by about 90 basis points. And within that, your name tenants Kroger's was up. Smedes RoseDirector at Citi00:18:01And I was just wondering, that any specific change in your strategy around groceries? Or is that more just sort of a one off opportunity that you found during the quarter? Joey AgreePresident & Chief Executive Officer at Agree Realty00:18:12Good morning, Steve. That was a one off opportunity predominantly in the quarter. I also mentioned the Acme in Bronxville, New York that we acquired as well. We'll continue to find dominant grocers across the country. There's a number in the pipeline already for the second quarter. Joey AgreePresident & Chief Executive Officer at Agree Realty00:18:32We continue to believe that the dominant grocers will will gain share here. Given the macro obviously, but also just the the challenges is for small grocers to operate in a 2% margin business, ex tariffs and all the other noise out there. Smedes RoseDirector at Citi00:18:51Okay. And then just maybe just touching on tariffs, given your tenant exposures, anyone that you are particularly maybe concerned about or watching more carefully, particularly given the higher tariffs with China specifically, which I realize is kind of a moving, a very fluid situation, but what's on your I Joey AgreePresident & Chief Executive Officer at Agree Realty00:19:13appreciate you acknowledging the moving and fluid situation, it seems to be day to day. I'll be honest, there really is nobody that we're overly concerned with tariff inputs in the portfolio today. Now, all retailers subject to carve outs and exclusives, obviously the electronics carve out for the Truth Social Post or whatever it was last week alleviated concerns for computers and televisions. Now that could all obviously change. But we think this portfolio is in tremendous position to continue to benefit from the trade down effect. Joey AgreePresident & Chief Executive Officer at Agree Realty00:19:47As you mentioned, grocery, obviously, with economic conditions where they are, people will stop eating out. Auto parts, you've seen that accelerate in our portfolio. Obviously, new cars will be impacted significantly by tariffs. The average new car in this country is already approximately $45,000 That's pre tariff. Tire and auto service, another category we highlighted during the prepared remarks. Joey AgreePresident & Chief Executive Officer at Agree Realty00:20:13Off price retail, where one of TJX's and Burlington's largest landlord, we continue to think they'll gain from any tariff implications. So we think this portfolio, as I mentioned in the prepared remarks, was built to be recession resistant. We haven't heard it hit a traditional recession since 2010 upon its inception, but it proved to be pandemic resistant and we're very confident it will be ultimately whatever way shape and form tariffs pan out will be tariff resistant as well. Smedes RoseDirector at Citi00:20:43Okay. Thank you. Appreciate it. Joey AgreePresident & Chief Executive Officer at Agree Realty00:20:45Thanks, Smedes. Operator00:20:48Thank you. The next question comes from RJ Milligan at Raymond James. Please go ahead. RJ MilliganManaging Director at Raymond James00:20:53Hey, good morning, guys. Joey, was wondering, as you are having conversations with your development partners, what's their current appetite for opening new stores? Has there been a pause? Just trying to get a broader market read there. Joey AgreePresident & Chief Executive Officer at Agree Realty00:21:08Yeah. Joey AgreePresident & Chief Executive Officer at Agree Realty00:21:09Good morning, Arjun. We have not seen any pause to date, albeit this is a volatile and fast moving environment. The team was with a number of retailers this week and will be again with two or three in the upcoming couple days here. We haven't seen a pause. We've actually seen announcements. Joey AgreePresident & Chief Executive Officer at Agree Realty00:21:28Sam's Club has announced that they're opening net new stores. Kroger's made announcements in terms of remodels and net new stores in the past two weeks as well. And so we have not seen that pause. We haven't had any deals frankly tabled or put on hold either yet. But obviously again, this is a fluid situation which is out of our control. Joey AgreePresident & Chief Executive Officer at Agree Realty00:21:52But again, I think when you have a discount oriented necessity based tenant roster, those tenants today, don't think are overly scared by tenant tariffs. I think a lot of them see this as an opportunity. As I mentioned in the prepared remarks, the big are getting bigger and this is what we've effectively built this portfolio and constructed around to invest in price, they have to, to invest in labor and invest in omni channel fulfillment And tariffs will require retailers to effectively invest in price unless they're going to pass that entire tariff on to the end consumer. RJ MilliganManaging Director at Raymond James00:22:27Thanks. That's helpful. RJ MilliganManaging Director at Raymond James00:22:28And I wanted to move over. From a portfolio standpoint, is there any tenants out there? Know, obviously, this is not really tariff related where you're just keeping a watch on them and saying, you know, ex the tariffs, there might be some fundamental issue? Joey AgreePresident & Chief Executive Officer at Agree Realty00:22:51No. No new entrants into that. Joey AgreePresident & Chief Executive Officer at Agree Realty00:22:53Obviously, our what are the three movie theaters total in the portfolio? We continue to watch. We have been proactive in reducing, as I mentioned in the prepared remarks, dollar store and pharmacy exposure since 2023. That was prior to the headlines in 2024. And so there are really no changes to our watch list here. RJ MilliganManaging Director at Raymond James00:23:18Just one last follow-up. In terms of cap rates, where do you think we end the year in terms of Agree's acquisition cap rates? Is it going to be higher or lower? And how do RJ MilliganManaging Director at Raymond James00:23:29you think about the inputs there? Joey AgreePresident & Chief Executive Officer at Agree Realty00:23:31RJ to be frank, I have no idea. The volatility in ten year treasury, which has been historically obviously the base rate for the world, the fear read spectrum continues to vacillate. Obviously, we're on the fear side. We are just starting effective Monday, building our Q3 pipeline, just given our sixty six, sixty seven days letter of intent to close. I think this is going to be a volatile world. Joey AgreePresident & Chief Executive Officer at Agree Realty00:24:03I think it's going to change. I think the volatility doesn't effectively move cap rates as a secondary impact. I think the volatility that we were frankly accustomed to, all of us are accustomed to, inclusive of real estate owners or when you have 1015% swings in the ten year treasury, these used to be aberrations. They seem to happen on a monthly basis now, if not a daily basis with 3%, five % swings. And so none of this volatility effectively moves cap rates. Joey AgreePresident & Chief Executive Officer at Agree Realty00:24:40Ultimately, I believe that owners of real estate, and perhaps those that have secured interest in real estate, ultimately make a disposition or investment decisions based upon the fear greed spectrum. And so the ten year going sub four or the ten year piercing five can move cap rates. But with the ten year moving between four point two and four point six and just using a band here, I don't think that ultimately moves cap rates in any material way just because of the frankly people being accustomed to the volatility. RJ MilliganManaging Director at Raymond James00:25:16Great. That's it for me. RJ MilliganManaging Director at Raymond James00:25:17Thanks guys. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:25:18Thanks RJ. Operator00:25:21Thank you. The next question comes from Michael Goldsmith at UBS. Please go ahead. Michael GoldsmithUS REITs Analyst at UBS Securities LLC00:25:27Good morning. Thanks a lot for taking my question. Maybe a similar question that was just asked from a different angle. Have you seen any changes in the transaction market post the April 2 tariff analysis, maybe not directly from the tariff, but just from the overall uncertainty. You sort of touched on the cap rate environment, but are you seeing any changes in competition or any deals pulled just given the uncertainty? Joey AgreePresident & Chief Executive Officer at Agree Realty00:25:55No deals pulled. Competition remains extremely limited. Obviously, the ten thirty one buyer has effectively been cut in over half just due to the commercial real estate transactional volume being down by half, the lack of liquidity in invested markets, just frankly the lending markets. We see very limited competition. I often make the analogy I did during fourth quarter of a door versus a window. Joey AgreePresident & Chief Executive Officer at Agree Realty00:26:26We see a door here. And our balance sheet, our cost of capital as I mentioned, as well as our portfolio and the tremendous team here we have is gonna take advantage of that opportunity. And so we took advantage of the opportunity during the GFC. We took advantage of the opportunity during COVID, obviously, when we doubled the size of the company. We see a a like kind opportunity potentially on the horizon, obviously subject to the next truth social post here and and and changes in the macro. Joey AgreePresident & Chief Executive Officer at Agree Realty00:26:58But with limited competition across all three investment platforms and with our core strengths here, this is a tremendous opportunity for our company to continue to grow this portfolio in an accretive manner and solidify it as the preeminent net lease portfolio in the country. Michael GoldsmithUS REITs Analyst at UBS Securities LLC00:27:18Thanks for that. And as a follow-up on slide 22 of your presentation, you highlight what you're investing in and what you're not and you call out the avoidance of private equity sponsorship. So, just given where we are in the cycle and the uncertainty, what's been your experience with private equity sponsorship at this point in the cycle? Give them some of that uncertainty. Thanks. Joey AgreePresident & Chief Executive Officer at Agree Realty00:27:43Ultimately, and this isn't for this part of the cycle, we seek to work and partner with retailers that have a long term perspective on the operations of their business. So special dividends, levering up the balance sheet, opcopropco structures, sale leasebacks to improve liquidity and frankly in order to special dividend it out probably. Those just aren't things that we believe work in a twenty first century omnichannel world which is hyper competitive. And so we'll continue to focus on our sandbox as the thirty, thirty five biggest and best retailers in this country, rated or unrated, and a few sub investment grade rated retailers that are selling essential goods and services that have long term sponsorship and ownership. Frankly, private equity doesn't match that duration for us. Michael GoldsmithUS REITs Analyst at UBS Securities LLC00:28:35Thank you very much. Good luck in the second quarter. Joey AgreePresident & Chief Executive Officer at Agree Realty00:28:38Appreciate it. Operator00:28:41Thank you. The next question comes from Linda Tsai at Jefferies. Please go ahead. Linda TsaiSenior Analyst at Jefferies00:28:46Hi. The temporary occupancy dip from Big Lots, would that be resolved by year end? Joey AgreePresident & Chief Executive Officer at Agree Realty00:28:52Oh yeah, I would anticipate that would be resolved much sooner than year end, most likely by the end of the second quarter. And so we've resolved a number of them. The off price retailer in Manassas, Virginia was the first one where we have a net effective Peter, jump in. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:29:08Over 150. Joey AgreePresident & Chief Executive Officer at Agree Realty00:29:09A net effective lift of over 150%. Cedar Park, Texas is released with a net effective rent lift of approximately 50% to a large German based grocer. And then Fukui Varina was acquired in the bankruptcy by variety wholesalers and we're working through those others to have optimal solutions here, but we think they will be favorable and not a concern. Linda TsaiSenior Analyst at Jefferies00:29:37And then for the 50% to 150% rent uplift, is there CapEx involved? Joey AgreePresident & Chief Executive Officer at Agree Realty00:29:42That's a net effective basis, not same store NOI. So the lease that we purchased in bankruptcy, we purchased for a couple hundred thousand dollars and that was the only truly expense on that. It was an as is basis. Same with the grocery in Cedar Park, Texas with that approximate 50% net effective rent lift. And then the variety wholesalers dealer, they came current and so that's just the same rent as Big Lots was paying prior. Joey AgreePresident & Chief Executive Officer at Agree Realty00:30:07And so we continue to work on leasing a number of these assets and have letters of intent in hand from large national retailers predominantly. That's our focus there, our first order of business and we hope to further expand upon it on the Q2 call. Linda TsaiSenior Analyst at Jefferies00:30:24And then the comment about drug and dollar stores peaking in your portfolio before it became newsworthy. What were you looking at to recognize this trend? Was it shift in traffic or rent coverage? Joey AgreePresident & Chief Executive Officer at Agree Realty00:30:38Different perspectives on each sector. Pharmacy, we've been pretty adamant about Walgreens exposure. We were pretty adamant about Rite Aid's future. Bankruptcy and liquidation will occur any day, most likely now. Obviously, that's been a theme through the past fifteen years of our history in terms of Walgreens dispositions going from over 40% to sub 1%. Joey AgreePresident & Chief Executive Officer at Agree Realty00:31:03But most importantly, as we talked about on other calls, 13,000 to 14,000 square foot boxes with approximately 11,000 square feet of front end space paying $20 to $30 per square foot that is really isn't relevant in today's world, isn't something that we're overly attracted to. That said, we'll continue to work on unique pharmacy opportunities where we think the basis is rental basis is appropriate or high store sales or barriers to entry. I'd remind everyone, our largest two pharmacy exposures in terms of asset size are Greenwich, Connecticut on Greenwich Avenue, the CVS, and the Walgreens on the corner of the Diag, the best piece of real estate, and the University of Michigan. And so the pharmacy space, we've obviously made a concerted effort to reduce. Dollar stores, we just saw them being overbuilt frankly. Joey AgreePresident & Chief Executive Officer at Agree Realty00:31:52We took advantage in the twenty twenty three of merchant developers that were stressed and took some of those properties out. We've never engaged in a sale leaseback with a dollar store operator. Very different themes running through Dollar General and Dollar Tree Family Dollar, but we saw the space is overbuilt. But also, we we we were having challenges getting our arms around the pricing in conjunction with the residual. And so you'll see, and I mentioned in in the prepared remarks that they fell year over year, quarter over quarter. Joey AgreePresident & Chief Executive Officer at Agree Realty00:32:23They peaked in 2023, and we were pretty clear on the Q3 twenty twenty three call that that would be the case. Linda TsaiSenior Analyst at Jefferies00:32:29Thanks for that helpful context. Just one last one. The dozen team members you added, what departments were they located in? And has AI reduced the need to staff up in other areas? Joey AgreePresident & Chief Executive Officer at Agree Realty00:32:41Certainly. So roll back the clock, 2024 obviously start with the do nothing scenario, effectively a hiring freeze. We are more than caught up now. This is all built into our and a forecast for the year that we've provided to the street. Those team members are strewn across the entire organization from HR to IT to acquisitions, construction development, analyst, accounting, asset management, lease administration. Joey AgreePresident & Chief Executive Officer at Agree Realty00:33:09We are built and poised for growth. Simultaneously, we have deployed effective in the last month a new AI module, which is eliminating legal costs significantly for us. And we got an update actually yesterday from our general counsel that we're very pleased with the results, continue to make some tweaks there. AI will continue to be deployed throughout this company. We have been utilizing AI for lease abstraction. Joey AgreePresident & Chief Executive Officer at Agree Realty00:33:36Again, correct to 2022. Yeah. Dating back to 2022 when no one was talking about AI. We think there's significant opportunities both within our underwriting as we launch the next iteration of ARC in 2026 to deploy AI. But also I would tell you significantly in overall transactional expense. Linda TsaiSenior Analyst at Jefferies00:34:00Thank you. Reuben TreatmanSenior Director of Corporate Finance at Agree Realty00:34:02Thanks, Linda. Operator00:34:05Thank you. The next question comes from John Kilachowski at Wells Fargo. Please go ahead. John KilichowskiVice President - Equity Research Analyst at Wells Fargo00:34:11Thank you. Good morning. Joey, you touched on this briefly earlier, but how will tariffs that they stay on impact your go forward strategy as it relates to investments? And if so, would you not expect tighter pricing on those assets? Joey AgreePresident & Chief Executive Officer at Agree Realty00:34:26I don't think tariffs impact our go forward strategy really at all. I don't think tariffs ultimately impact. I think all retailers will be subject to various levels of tariffs if this continues to go down this route. And I think effectively, the biggest retailers in the country that sell necessity based goods and services will benefit. And so you'll continue to see us invest in the Walmart and Home Depot's and Lowe's and O'Reilly's AutoZone's, the dominant tire and auto service operators, dominant C stores throughout the country, off price retail. Joey AgreePresident & Chief Executive Officer at Agree Realty00:35:00I think all of these sectors are effectively winners in a large tariff environment. There may be some short term pain, but long term they have the balance sheets, the market position to continue to thrive. John KilichowskiVice President - Equity Research Analyst at Wells Fargo00:35:13Got it. And then in a similar vein, on the bad debt non reimbursable side, is it just too early to change your outlook? Or do you feel very comfortable with the conservatism already built in? Joey AgreePresident & Chief Executive Officer at Agree Realty00:35:24I'll let Peter hit it. I think it's it's pretty early to change the outlook. Obviously, that outlook incorporated the few big lots that we continue to work through. But I think it's it's frankly pretty early here, so in the April. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:35:38Yeah, John, just to hit specifically on credit loss and our guidance for the year, our 2025 earnings guidance, as I mentioned on the last call, includes an assumption for 50 basis points of credit loss. And that included an allowance for big lots as we've talked about on this call. In Q1, we experienced roughly 30 basis points of credit loss, and that compares to the 35 basis points roughly that we experienced in 2024. So based on what we have line of sight into today, we feel good about the credit loss guide embedded within our earnings guidance and how the portfolio is continuing to perform. Joey AgreePresident & Chief Executive Officer at Agree Realty00:36:18And just to expound upon our 50 basis points of credit loss a little bit. That 50 basis points is a fully loaded number for any lease expirations where we are carrying a vacancy, taxes, insurance, maintenance of the building, any rejections in bankruptcy, again, where we are carrying any taxes, maintenance, any expenses, that 50 basis points has no carve outs, has no footnotes, has nothing in there. That's a fully loaded 50 basis points that we put in there that is akin to our underwriting on the acquisition side, right? To truly understand the full economic impact and to provide the street transparency into that full economic impact. John KilichowskiVice President - Equity Research Analyst at Wells Fargo00:37:03Just to confirm, the the 40 bits of occupancy loss, would that have been included? Joey AgreePresident & Chief Executive Officer at Agree Realty00:37:08Yep. That was it's specifically tied to the the the variety of the cost and it's included in that number. John KilichowskiVice President - Equity Research Analyst at Wells Fargo00:37:15Okay. Perfect. Thank you. Operator00:37:21Thank you. The next question comes from Ronald Camden at Morgan Stanley. Please go ahead. Ronald KamdemManaging Director & Head of US REITs and CRE Research at Morgan Stanley00:37:26Hey, just two quick ones. Just going back Ronald KamdemManaging Director & Head of US REITs and CRE Research at Morgan Stanley00:37:29to the development in the DFP platform, any sort of early indications of how much construction costs could be going up? And how are you guys thinking about sort of your yield requirements for that channel? Joey AgreePresident & Chief Executive Officer at Agree Realty00:37:41Yes, great question, Ron. We have done a preliminary and had third parties also do studies on tariff implications, obviously a moving target. The tariffs would mostly affect obviously the hard costs, call it the vertical costs here in terms of construction. We would anticipate a 2% to 5% on the high end increase in tariffs. Obviously, those assumptions have to be broken out by country. Joey AgreePresident & Chief Executive Officer at Agree Realty00:38:09Some them are indirect in terms of input, right? Input costs to find finished product here. We don't think there's any material moves in our construction costs for tariffs here. Again, these projects are effectively rectangles and so we have our arms around them. Your second question, sorry, Ron? Ronald KamdemManaging Director & Head of US REITs and CRE Research at Morgan Stanley00:38:32Yes, sorry, part two. Just I don't think we've hit on sort of the dispositions yet. Any sort of thoughts, indication there would be helpful. Joey AgreePresident & Chief Executive Officer at Agree Realty00:38:47It didn't change the guidance for this quarter. It didn't change our annual guidance. I don't think you'll see us change that annual guidance this year unless there's some sort of change, frankly. I think we have done a tremendous job weaning out assets that we didn't think were core in the portfolio over the last several years. That said, we'll look at opportunistic dispositions. Joey AgreePresident & Chief Executive Officer at Agree Realty00:39:10We have inbounds all the time. We'll continue to look for opportunities to prune the portfolio as we get feedback, either on the ground level or the corporate level, or if we just think something is above market and the retenantability is limited. So I don't see dispositions being a major contributor in terms of capital this year, But I will continue obviously to be active on that front, but I don't think it's not a priority as it was last year when we were focused on recycling capital. Ronald KamdemManaging Director & Head of US REITs and CRE Research at Morgan Stanley00:39:43Helpful, thank you. Operator00:39:48You. The next question comes from Spencer Glimsher at Green Street. Please go ahead. Spenser GlimcherManaging Director at Green Street Advisors, LLC00:39:54Thank you. Just one for me. As you started working through your 2Q acquisition pipeline, have you guys observed any cap rate movements or changes to the bid ask spread in any particular retail segments? Joey AgreePresident & Chief Executive Officer at Agree Realty00:40:08No. Good morning, Spencer. Q2 is effectively built. Subject to diligence and closing, Q2 is effectively built Just using that sixty five day plus transaction timeline from letter of intent execution, we're effectively to close. We're effectively through Q2. Joey AgreePresident & Chief Executive Officer at Agree Realty00:40:25If you look at the volatility in the ten year treasury during that sixty five, seventy day sourcing period, the ten year dropped, then it pulled back up. Having a hedged position in terms of both forward equity and the swaps in place allows us to be frankly consistent. And so this is not we're not in a situation where we have to constantly be changing targets in terms of yield hurdles. We'll see how q three now plays out. Again, that sourcing effectively starts on Monday or Friday of this week, just given our our traditional transaction timeline. Joey AgreePresident & Chief Executive Officer at Agree Realty00:41:05And then frankly, I have no idea what the next again, what the next move from the administration will be, where the ten year treasury goes, where our stock price goes. But the good news is we're locked and loaded and we'll come into with a running start here. Spenser GlimcherManaging Director at Green Street Advisors, LLC00:41:21Okay. Understood you have the pricing power, I guess, and you don't have to be volatile, as you mentioned, in terms of your cost of capital. But did you observe anything in terms of tenant ask or where pricing expectations were on the other side of the bidding? Joey AgreePresident & Chief Executive Officer at Agree Realty00:41:40Not really. I think the only Joey AgreePresident & Chief Executive Officer at Agree Realty00:41:41thing we noticed is some of the larger institutions would like to play in the space, given the dislocation in the debt markets, could be out for a little while here as spreads wind out or the ten year treasury yield spiked. But again, forewarn everyone, the number one sale leasebacks is a minority of what we do. We're traditionally a third party acquirer. We think we create more value there rather than being just a financier of real estate. And then two, drawing parallels or even putting threads through transactions in this massive fragmented individually owned market called net lease is very difficult. Joey AgreePresident & Chief Executive Officer at Agree Realty00:42:27I gave some examples of the transactions that we executed on the acquisition front in Q1. They were wholly disparate from a sale leaseback with a national grocer to a portfolio with a relationship seller, it's our probably seventh or eighth transaction with that seller to a family office that owned the Bronxville Acme grocery store. And so the seller pool remains extremely disparate, we're seeing more institutions come to the table to recycle capital and potentially dispose of assets. In those types of conversations. We're also in the midst of a conversation with a 80 year old widow about a transaction, who effectively owns a portfolio that her husband acquired. Joey AgreePresident & Chief Executive Officer at Agree Realty00:43:17And so at the end of the day, the aggregation of those transactions comprise the quarter. I always say the most exciting part about this business is you never know where the next one's gonna come from. Spenser GlimcherManaging Director at Green Street Advisors, LLC00:43:31Great, thank you. Joey AgreePresident & Chief Executive Officer at Agree Realty00:43:33Thanks Spencer. Operator00:43:36Thank you. The next question comes from Jenna Gillen at Bank of America. Please go ahead. Jana GalanDirector at Bank of America00:43:42Thank you. Good morning. Just following up on the commercial paper program. Peter, can you quantify the spread relative to the revolver? And if this benefit is included in the updated guidance? Jana GalanDirector at Bank of America00:43:53Or did you already plan to launch the program with the initial guide? Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:43:58Sure. Just in terms of pricing on the commercial paper program, obviously, we closed on the program on March 31, dependent on the tenure of commercial paper notes that we're issuing, as well as conditions in the commercial paper market which are subject to change. Today, we think we can issue commercial paper notes 40 plus basis points inside of our borrowing cost on the revolver. The current borrowing cost on the revolver at quarter end was around 5.2% for reference. To date, so far in Q2, we have been active in the CP market and use that for short term borrowings. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:44:40In our current guidance range, we have contemplated the impact of using commercial paper throughout the year as appropriate. Jana GalanDirector at Bank of America00:44:48Thank you. And I know you think of your kind of long term WACC, but just between this and the swaps that you have in place, I mean, I think investment spreads should be kind of at historic highs currently. Can you maybe comment to that? Joey AgreePresident & Chief Executive Officer at Agree Realty00:45:06I would agree, absent the deaths of the pandemic, when rates were at effectively zero and we were issuing ten year paper at two plus percent and perpetual preferred at 4.25%. There's no doubt that our investment spreads are wide, will be the beneficiary of those investment spreads and our superior cost of capital here, but we're in no doubt in an advantageous position. Jana GalanDirector at Bank of America00:45:33Thank you. Joey AgreePresident & Chief Executive Officer at Agree Realty00:45:36Thanks, Anna. Operator00:45:39Thank you. The next question comes from Jim Kamut at Evercore. Please go ahead. James KammertManaging Director at Evercore ISI00:45:44Good morning. Thank you. Joey, obviously, you had the conviction to raise your investment volume for the year. Is that really built just expanding with your existing relationships? Or have you kind of started to identify additional partners? Joey AgreePresident & Chief Executive Officer at Agree Realty00:45:58All over the board, Jim. It's existing relationships. It's additional partners. It's the breadth and depth of the coverage that this team has across the country. But we are the go to buyer for net lease retail, high quality net lease retail assets bar none today. Joey AgreePresident & Chief Executive Officer at Agree Realty00:46:17And so I think our transactional history, the quality of the team, our marketing and e marketing campaign, they all nerd to our benefit here. Our ability to look at real estate with a different lens, our relationships with the retailers, the end users of these properties is the secret sauce, part of the secret sauce. And so it's all of the above and more. James KammertManaging Director at Evercore ISI00:46:45Great. And a more technical question, The ground leases have about a nine point five year remaining WALT. Is that remind me, is that through final expiration or is that really just a first potential extension? Because I'm kind of thinking about potential organic growth opportunities, if any help there? Thank you. Joey AgreePresident & Chief Executive Officer at Agree Realty00:47:02That's exclusive of options just as Walt is for the remainder of the portfolio. James KammertManaging Director at Evercore ISI00:47:06Got it. Thank you, guys. Joey AgreePresident & Chief Executive Officer at Agree Realty00:47:08Thanks, Jim. Operator00:47:11Thank you. The next question comes from Upal Rana at KeyBanc Capital Markets. Please go ahead. Upal RanaDirector - Senior Equity Research Analyst at KeyBanc Capital Markets00:47:18Great. Thank you. Joey, you mentioned seeing more opportunities in the development and DFP side and you noted the increase in construction costs as well. But just wondering how big do you think the development pipeline could potentially get from here? Joey AgreePresident & Chief Executive Officer at Agree Realty00:47:31So we've set that medium term target of putting $250,000,000 in the ground per year. We are on track. Again, that's a medium term target, not for this year. We are on track. Our pipeline and our shadow pipeline are very large. Joey AgreePresident & Chief Executive Officer at Agree Realty00:47:49They're obviously subject to diligence and closing conditions, sometimes entitlements as well. I would tell you very distinctly our development platform and the team has done a tremendous job. We've added team members that have really hit the ground running. Craig Gurlik and his team, our chief growth officer, are working with retailers all the time, has a very significant pipeline. And then our developer funding platform continues to benefit from just the lack of liquidity out there, as well as unknown exit cap rates through other third party developers. Joey AgreePresident & Chief Executive Officer at Agree Realty00:48:24And so we've used our developer funding platform as a bridge to get projects across the finish line. A lot of them are directed to us by retailers, some sourced by the acquisition team, by our development team here. But both pipelines, they don't get a lot of headlines. But both pipelines, we think, combined with our acquisition and active asset management platform, provide really a full service value proposition to retailers. And it's recognized by all of them today that we can step into any and all types of situations and frankly create value and provide for value in that partnership. Upal RanaDirector - Senior Equity Research Analyst at KeyBanc Capital Markets00:49:06Okay, great. That was helpful. And then just a quick follow-up on the commercial paper program. Does this put ADC in a position to push more on investments in the future, especially combined with your increase in team members? Joey AgreePresident & Chief Executive Officer at Agree Realty00:49:18No, I think the commercial paper program, as Peter mentioned, while it's priced inside of the revolving credit facility, we don't use a revolver short term cost of capital to impact or to impact or even in our calculus for our weighted average cost of capital. These short term borrowing needs. The commercial paper program effectively supplants the use of the credit facility at cheaper pricing. But that does not impact how we look at deals or impact our weighted average cost capital. Upal RanaDirector - Senior Equity Research Analyst at KeyBanc Capital Markets00:49:49Okay, great. Thank you. Joey AgreePresident & Chief Executive Officer at Agree Realty00:49:51Thank you. Operator00:49:54You. The next question comes from Rich Hightower at Barclays. Please go ahead. Rich HightowerManaging Director, U.S. REIT Research at Barclays00:49:58Hey, good morning, guys. Thanks for taking the question. I really just got one, but I want to go all the way back to Ki Bin's line of questioning to start the call just on equity issuance. Now I think we all appreciate the TSM dilution conundrum and things like that but it is sort of a high class problem and so it looks like equity issuance went down quarter over quarter relative to the fourth quarter. Stock price has done obviously very well absolute and relative year to date. Rich HightowerManaging Director, U.S. REIT Research at Barclays00:50:30Maybe why not lean in a little more to equity issuance in this environment especially if it seems like the acquisition pipeline is biased to get bigger, not smaller? Thanks. Joey AgreePresident & Chief Executive Officer at Agree Realty00:50:43Well, think if you look at the amount settled during Q1 of existing forward, or formerly existing forward, but net of what we issued, we effectively ended up neutral. Right? 3.3, three point four times, just over a hundred and $80,000,000 each. And so the balance sheet, deploying $370,000,000 approximately, ended up effectively in neutral position. And so we continue to have nearly $2,000,000,000 in hedged capital. Joey AgreePresident & Chief Executive Officer at Agree Realty00:51:16We have significant liquidity. We're in there's $2,000,000,000 in liquidity, excuse me, and $1,300,000,000 of hedged capital approximately. And so we're in a in a terrific position here from a balance sheet of liquidity and cost of capital perspective to to execute on our pipeline. Does that answer your question? Rich HightowerManaging Director, U.S. REIT Research at Barclays00:51:38Yeah, it does. I mean, didn't know if there was any sort of internal back and forth on if it makes sense to go any bigger in that light. But obviously, you guys are in a really great position no one would dispute that and actually if I may ask a quick follow-up just again on bad debt I think you guys have articulated pretty clearly how that gets built up but just to be clear is that a it sounds like from your perspective given the credit worthiness of the tenant base it really is kind of a bottoms up location by location tenant by tenant situation build up to get to that 50 basis points is there any sort of general credit overlay on top of that that gets you to the 50 or is really sort of highly, highly specific as it sounds at least from my end? Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:52:31Yeah, thanks Rich. This is Peter. I think in terms of the build up and how we think about that 50 basis points of credit loss, I mentioned in the first quarter we had roughly 30 basis points of credit loss. And so to answer your question, it is a location by location and tenant by tenant build up that we look at as we think about credit loss. Based on what's identified or known today, I think the 30 basis points that we experienced in Q1, we anticipate more or less seen throughout the remainder of the year. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:53:03And then we have some level of cushion, if you will, built into that 50 basis points that allows for other potential tenants that we're monitoring, but there's not a known issue today. Rich HightowerManaging Director, U.S. REIT Research at Barclays00:53:14Okay, helpful. Thank you, guys. Peter CoughenourCFO, Secretary & Investor Relations Professional at Agree Realty00:53:17Thank you. Operator00:53:19Thank you. We have no further questions. I will turn the call back over for closing comments. Joey AgreePresident & Chief Executive Officer at Agree Realty00:53:23Well, thank you all for joining us this morning. We look forward to seeing everybody at the upcoming conferences, and we appreciate your time. Thank you. Operator00:53:32Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.Read moreParticipantsExecutivesReuben TreatmanSenior Director of Corporate FinanceJoey AgreePresident & Chief Executive OfficerPeter CoughenourCFO, Secretary & Investor Relations ProfessionalAnalystsKi Bin KimManaging Director at Truist SecuritiesSmedes RoseDirector at CitiRJ MilliganManaging Director at Raymond JamesMichael GoldsmithUS REITs Analyst at UBS Securities LLCLinda TsaiSenior Analyst at JefferiesJohn KilichowskiVice President - Equity Research Analyst at Wells FargoRonald KamdemManaging Director & Head of US REITs and CRE Research at Morgan StanleySpenser GlimcherManaging Director at Green Street Advisors, LLCJana GalanDirector at Bank of AmericaJames KammertManaging Director at Evercore ISIUpal RanaDirector - Senior Equity Research Analyst at KeyBanc Capital MarketsRich HightowerManaging Director, U.S. REIT Research at BarclaysPowered by