What Agree Realty (ADC) Said on Its Q3 Earnings Call

Key Points

• Agree Realty raised its 2026 AFFO guidance to $4.58–$4.59 per share, reflecting nearly 6% year-over-year growth at the midpoint, while third-quarter core FFO and AFFO rose 4.9% to $1.15 per share and occupancy remained 99.8%.
• The company reduced its 2026 investment-volume outlook to approximately $1.6 billion as acquisition cap rates rose to 7.3% and management prioritized returns over transaction volume. Agree invested about $360 million in 94 properties during the quarter and expects further yield expansion.
• Agree Realty continued expanding its development platform, commencing six projects and targeting $250 million of annual development and developer-funding activity over the medium term. It also raised its 2026 disposition guidance to $100 million–$150 million and increased its monthly dividend by 3.4% year over year.

Agree Realty NYSE: ADC reported third-quarter 2026 core funds from operations and adjusted funds from operations of $1.15 per share, each up 4.9% from the prior-year quarter, while maintaining portfolio occupancy of 99.8%.

The retail net lease REIT raised its full-year 2026 AFFO guidance to $4.58 to $4.59 per share, implying nearly 6% year-over-year growth at the midpoint. Chief Financial Officer Peter Coughenour said the higher outlook reflected portfolio performance and lower assumed treasury stock method dilution, partly offset by lower projected investment activity, a steeper SOFR curve for short-term borrowing assumptions and elevated dead-deal costs in the third quarter.

Investment volume reduced as acquisition yields rise

President and Chief Executive Officer Joey Agree said the company reduced its 2026 investment-volume outlook to approximately $1.6 billion as it removed lower-yield opportunities from its pipeline and repriced prospective transactions amid a changing macroeconomic environment.

Agree said the company is prioritizing value creation over volume and expects acquisition cap rates to rise further in the fourth quarter. Acquisition cap rates expanded 30 basis points sequentially to 7.3% during the third quarter. The company invested about $360 million in 94 retail net lease properties during the period, including $310 million spent to acquire 68 assets at a weighted-average 7.3% cap rate.

The acquired properties carried a weighted-average lease term of 14.5 years, and investment-grade retailers represented more than 52% of acquired annualized base rent. Transactions included a Walmart Supercenter in Virginia, a new BJ’s Wholesale location in western Massachusetts, Gerber Collision properties, Hobby Lobby and Five Below locations, and ground leases to Lowe’s and Home Depot.

Agree said it has raised $1.1 billion of capital during 2026, including forward equity at approximately $75 per share and a recently completed 10-year unsecured bond offering with an effective interest rate just under 5.4%. The company ended the quarter with approximately $2 billion of liquidity and, on a pro forma basis for unsettled forward equity, net debt to recurring EBITDA of 3.9 times.

During the call, Agree said the company can remain disciplined because it has no material debt maturities until 2028 and no short-term or floating-rate borrowings. He said the company expects to generate mid-single-digit AFFO per-share growth and double-digit operational returns in 2027 without changes in interest rates, its stock price or other market assumptions.

Development platform expands

The company continued to build its development and developer funding platform. It commenced six projects during the third quarter with total anticipated costs of $57 million, including four new 7-Eleven projects. Agree said the company has now commenced 12 7-Eleven projects through the platform.

Agree also acquired a former furniture store in a Philadelphia power center for redevelopment with an off-price retailer, with completion expected in early 2027. Seven projects were completed in the quarter at a record total cost of more than $82 million, including three 7-Eleven stores and several Burlington and Ross locations.

Construction continued on eight projects with anticipated aggregate costs of $88 million. Through Sept. 30, the company had commenced projects totaling about $163 million, nearly double the prior-period level. Agree said the company continues to target $250 million of annual development and developer funding commencements over the medium term.

Across acquisitions, development and developer funding, Agree Realty invested approximately $1.3 billion in 261 retail net lease properties during the first nine months of 2026. The investments spanned 42 states, the District of Columbia and 29 retail sectors.

Dispositions and leasing activity

The company sold 11 properties during the third quarter for about $27 million in gross proceeds at a weighted-average 6.5% cap rate, 80 basis points below the acquisition cap rate recorded during the period. The sales were primarily franchise-operated Taco Bell locations, Goodyear properties and Advance Auto Parts stores. None carried an investment-grade credit rating.

Agree raised its expected 2026 disposition volume to $100 million to $150 million from a previous range of $50 million to $100 million. Joey Agree said the company expects to continue recycling capital through sales to buyers using 1031 exchanges and bonus depreciation strategies, particularly in the convenience-store sector.

On the leasing front, Agree Realty executed new leases, extensions or options on more than 860,000 square feet during the third quarter, producing a recapture rate of about 106%, its highest in six quarters. Only 11 leases, representing 20 basis points of annualized base rent, remained scheduled to mature during 2026 at quarter-end.

The portfolio approached 2,900 properties across all 50 states and the District of Columbia. Investment-grade exposure represented approximately 65% of annualized base rent, while ground leases accounted for 10% of annualized base rent.

Capital markets activity and dividend

Agree Realty raised or settled more than $825 million of debt and equity during the third quarter, bringing year-to-date capital raised or settled to nearly $1.5 billion. In September, the company completed a $400 million offering of 5.65% senior unsecured notes due 2036. Coughenour said the company’s termination of $300 million in forward-starting swaps generated more than $19 million in proceeds and reduced the notes’ all-in interest rate to 5.36%.

The company also settled approximately 5.7 million shares of forward equity for more than $425 million in net proceeds. At quarter-end, it had 8.8 million shares of outstanding forward equity representing anticipated proceeds exceeding $657 million.

Agree Realty declared monthly dividends of $0.267 per common share for July through September, representing a 4.3% year-over-year increase on an annualized basis. Subsequent to quarter-end, it announced an October monthly dividend of $0.271 per share, annualizing to more than $3.25 per share and representing a 3.4% year-over-year increase.

About Agree Realty (NYSE:ADC)

Agree Realty Corporation is a real estate investment trust (REIT) that acquires, develops, and manages retail properties across the United States. The company primarily uses a net-lease structure, under which tenants generally are responsible for property-level operating expenses such as taxes, insurance, and maintenance.

Its portfolio is focused mainly on essential retail properties occupied by nationally recognized and regional tenants, including grocery stores, home improvement retailers, dollar stores, pharmacies, and other necessity-based businesses.

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