Agree Realty Q1 Earnings Call Highlights

Key Points

• Agree invested nearly $425 million in Q1—including $403 million of acquisitions across 100 properties (its largest quarterly acquisition volume since 2022)—with acquired assets averaging a 7.1% cap rate, 11.3-year leases, portfolio occupancy at 99.7%, and >65% investment-grade exposure.
• The company said its development and developer-funding pipeline is growing “significantly” and is expected to ramp meaningfully in Q2–Q3, with a real chance to hit its intermediate goal of $250 million of annual development commencements this year.
• Agree raised about $658 million of forward equity in Q1 and reports roughly $2.3 billion of liquidity (pro forma net debt/recurring EBITDA ~3.2x), reiterated 2026 AFFO guidance of $4.54–$4.58 while increasing forward-equity dilution assumptions by $0.02–$0.04, and raised its monthly dividend to $0.267 (annualized > $3.20).

Agree Realty NYSE: ADC executives highlighted a busy start to 2026, pointing to strong acquisition volume, a growing development pipeline, and what management described as a “fortress” balance sheet as the company reiterated full-year earnings guidance while adjusting for higher forward-equity dilution assumptions.

First-quarter investment activity and portfolio updates

President and CEO Joey Agree said the company invested nearly $425 million across its “three external growth platforms” during the first quarter, including $403 million of acquisitions—its largest quarterly acquisition volume since 2022. Agree said the company completed investments in 100 properties during the quarter.

Agree detailed several transaction highlights, including a sale-leaseback with Hobby Lobby involving its corporately owned stores. The quarter’s acquisitions also included a Home Depot, five Wawa ground leases in Pennsylvania and Maryland, a portfolio of 11 Sherwin-Williams stores, several Aldi properties, and three Walmart locations in Georgia and South Carolina.

Agree said the acquired properties carried a weighted average cap rate of 7.1% and a weighted average lease term of 11.3 years. Nearly 60% of acquired base rent came from investment-grade retailers, he added, and the company continued to increase its ground lease exposure.

On dispositions, Agree Realty sold seven properties for about $11 million of gross proceeds at a weighted average cap rate of 6.8%. Agree noted the sales included a Jiffy Lube and Dutch Bros that had been part of a grocery-portfolio acquisition last year, and said the company sold those outparcels “approximately 300 basis points inside of where we acquired them less than one year ago,” framing it as an example of opportunistic capital recycling.

From an operating standpoint, Agree said the company executed new leases, extensions, or options on more than 876,000 square feet of gross leasable area with a recapture rate above 104%. He said upcoming lease expirations remain limited, with 29 leases—about 90 basis points of annualized base rent—maturing for the remainder of the year.

Agree also pointed to a continued reduction in pharmacy exposure, ending the quarter at 3.5% of annualized base rent and outside the company’s top 10 sectors. Overall, the portfolio ended the quarter at 2,756 properties across all 50 states, including 261 ground leases representing more than 10% of annualized base rent. Investment-grade exposure stood above 65%, and occupancy was 99.7%.

Development and developer funding expected to ramp

Agree said activity is increasing across the company’s development and developer funding platforms. During the quarter, the company commenced two new development or developer funding platform (DFP) projects totaling about $18 million of anticipated costs. Construction continued on nine projects (about $71 million of anticipated costs), and four projects were completed (about $23 million of investment).

Agree said the development and DFP pipeline is growing “significantly” and is expected to “meaningfully ramp in the second and third quarters,” including projects that began after quarter end.

In response to questions about construction costs and tenant demand, Agree said the company is seeing “absolutely no hesitancy on the part of tenants,” and described retailers as viewing stores as “the hub of an omnichannel world.” He added that projects are typically structured with guaranteed maximum price contracts and emphasized that the company is not “speculating on land” or small-tenant space, but rather building build-to-suit or ground-lease projects for large operators that are committed at closing.

Asked about its previously discussed “intermediate goal” of $250 million of development commencements per year, Agree said there is “a chance we hit it this year,” noting first-quarter seasonality and that Q2 and Q3 are expected to be stronger, while also acknowledging that some projects depend on entitlement and municipal approvals.

Capital markets activity, hedging, and leverage

CFO Peter Coughenour said Agree Realty raised about $658 million of anticipated net proceeds in the first quarter by selling 8.7 million shares of forward equity through its at-the-market (ATM) program. At quarter end, the company had 18.4 million shares of outstanding forward equity expected to raise about $1.4 billion of net proceeds upon settlement.

The company also drew $250 million on its previously announced $350 million delayed-draw term loan. Coughenour said forward-starting swaps were used to fix SOFR through the loan’s 2031 maturity, resulting in a fixed rate of 4.02%. He added the company entered into an additional $50 million of forward-starting swaps during the quarter, bringing total forward-starting swaps to $250 million, which he said effectively fixes the base rate for a contemplated 10-year unsecured debt issuance at roughly 4.1%.

Coughenour said the company ended the quarter with about $2.3 billion of liquidity (including forward equity, revolver availability, term loan capacity, and cash). Pro forma for settlement of forward equity, net debt to recurring EBITDA was approximately 3.2x. He also cited debt to enterprise value under 29% and a fixed charge coverage ratio of 4.2x, and reiterated management’s comment that there are “no material debt maturities until 2028.”

On settlement timing for forwards, Coughenour said roughly 8 million of the forward shares mature sometime this year and that, while contracts can be extended, he expects there is “a good chance that we settle those shares at or prior to maturity,” adding he would expect those shares “are likely settled at some point in 2026.”

Earnings, guidance, and dividend

For the first quarter, Coughenour reported Core FFO per share of $1.13, up 8.1% from the prior-year quarter, and AFFO per share of $1.14, up 7.9% year over year, which he said was the highest quarterly AFFO per share growth since the second quarter of 2022.

The company reiterated full-year 2026 AFFO per share guidance of $4.54 to $4.58, which implies about 5.4% year-over-year growth at the midpoint. However, management noted an update to dilution assumptions: Coughenour said treasury stock method dilution from outstanding forward equity is expected to reduce 2026 AFFO per share by $0.02 to $0.04, up from about $0.01 in prior guidance, due to both a higher share price and more forward equity outstanding.

Percentage rent totaled about $2.4 million for the quarter, up from $1.6 million a year earlier. Coughenour said roughly one-third of the increase reflected strong same-store sales across the group of percentage-rent leases, with the remainder driven by timing, as some tenants that historically paid in Q2 contributed in Q1.

Agree Realty declared monthly dividends of $0.262 per share for January through March, equating to an annualized dividend of more than $3.14 per share and a 3.6% year-over-year increase. Coughenour said the first-quarter payout ratio was 69% of AFFO per share. He also said the company expects more than $140 million of free cash flow after dividends this year, up more than 10% from last year. After quarter end, the company announced an increased monthly dividend of $0.267 per share for April, representing a 4.3% year-over-year increase and an annualized rate of more than $3.20 per share.

Management commentary on retail trends, credit, and convenience stores

Agree said the macro environment remains “highly unpredictable,” but argued that leading retailers are positioned to gain share in what he described as a “K-shaped economy.” In Q&A, he said the company’s decision on investment pace is “totally unilateral” and that it did not feel appropriate to raise investment guidance amid heightened uncertainty.

On credit assumptions, Agree said there were “no anticipated closures” and described guidance assumptions as precautionary. Coughenour added that the company disclosed 14 basis points of credit and occupancy loss in the first quarter, while full-year guidance still assumes 25 to 50 basis points, implying greater loss in the remaining quarters; management said it was prudent to keep the range unchanged at this stage.

Asked about 7‑Eleven store closures, Agree said he had “absolutely zero concerns,” adding the company had no 7‑Eleven stores closing in its portfolio. He described closures as involving older, smaller-format stores and contrasted them with larger-format convenience stores focused on food and beverage offerings. Agree said the convenience channel is evolving toward a model where inside-store sales drive profitability and suggested this evolution is playing out nationally.

Agree also addressed investment-grade mix, noting that the quarter’s investment-grade percentage was affected by the inclusion of privately held Hobby Lobby, which the company does not count as investment grade because it is not rated. Agree described Hobby Lobby as a market leader with “zero” net debt and said it would be “a high investment grade operator” if it pursued a rating. Coughenour also noted in response to a question about ownership type that 77% of the portfolio’s annualized base rent comes from publicly traded tenants, with the remainder from various forms of private ownership; he said private equity is a “small component” within that private bucket.

On pricing, Agree said he has not seen meaningful movement in cap rates over the past 18 to 20 months, and said the volatility in the 10-year Treasury has not materially changed market pricing in his view.

About Agree Realty NYSE: ADC

Agree Realty Corporation NYSE: ADC is a publicly traded real estate investment trust headquartered in Chicago, Illinois. Founded in 1971, the company converted to a REIT structure in 2013 and focuses on acquiring, developing and managing a diversified portfolio of retail properties under long-term, triple-net (NNN) leases. Its tenant roster spans national and regional retailers in sectors such as grocery, home improvement, convenience and specialty retail.

Agree Realty's primary business activities include sourcing and underwriting new property acquisitions, originating build-to-suit projects and executing value-add redevelopment programs.

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