ADC-PA — Agree Realty Corporation

Agree Realty Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Core FFO per Share: $1.13, an 8.1% increase year-over-year.
• AFFO per Share: $1.14, a 7.9% year-over-year increase, marking the highest quarterly growth since Q2 2022.
• Dividend: Monthly cash dividends declared at $0.262 per share, representing a 3.6% year-over-year increase. Increased to $0.267 for April, a 4.3% year-over-year increase.
• Pro Forma Net Debt to Recurring EBITDA: 3.2x, indicating strong leverage metrics.
• Liquidity: Approximately $2.3 billion, including $1.4 billion of outstanding forward equity.
• Occupancy Rate: 99.7%, up 50 basis points year-over-year.
• Percentage Rent: Increased to $2.4 million from $1.6 million in Q1 2025.

2. Strategic Updates and Business Highlights:

• Acquisitions: $403 million in acquisitions, the highest quarterly volume since 2022, including properties leased to Hobby Lobby, Home Depot, and Walmart.
• Development Activity: Invested nearly $425 million across three external growth platforms; robust pipeline expected to ramp up in Q2 and Q3.
• Dispositions: Sold 7 properties for approximately $11 million, showcasing the ability to recycle capital effectively.
• Tenant Quality: 60% of base rents from investment-grade retailers, with a focus on high-quality operators.

3. Forward Guidance and Outlook:

• AFFO Guidance for 2026: Reiterated at $4.54 to $4.58 per share, implying approximately 5.4% growth year-over-year.
• Investment Activity: While guidance remains unchanged, the company anticipates a strong pipeline across all platforms, contingent on macroeconomic conditions.

4. Bad News, Challenges, or Points of Concern:

• Macro Uncertainty: Ongoing geopolitical tensions and economic volatility may impact partner decision-making and investment pace.
• Credit Loss Guidance: Anticipated credit and occupancy loss remains at 25 to 50 basis points for the year, reflecting cautious optimism.
• Dilution Concerns: Increased treasury stock method dilution anticipated due to higher stock prices and additional forward equity raises.

5. Notable Q&A Insights:

• Investment Pipeline: The company has a strong pipeline across all platforms, but macroeconomic conditions will influence the pace of investment.
• Tenant Behavior: No observed hesitancy from tenants despite macro uncertainties; brick-and-mortar retailers continue to expand.
• Cap Rate Trends: No significant changes in cap rates for investment-grade versus non-investment-grade tenants; competition remains steady.
• Private Equity Ownership: Approximately 77% of the portfolio is publicly traded, with minimal exposure to private equity.
• Consumer Behavior: Observations of a trade-down effect among consumers, particularly in discretionary spending sectors.

Overall, Agree Realty demonstrated strong financial performance in Q1 2026, with significant acquisition activity and a robust development pipeline. However, the company remains vigilant regarding macroeconomic uncertainties and potential credit losses.