ADC Q1 2026 Earnings Call Summary

Core FFO per share: $1.13, an increase of 8.1% 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 for Q1, representing a 3.6% year-over-year increase. An increased dividend of $0.267 per share was announced for April.
Pro forma net debt to recurring EBITDA: 3.2x, with no material debt maturities until 2028.
Liquidity: Approximately $2.3 billion, including $1.4 billion of outstanding forward equity.

Acquisitions: $403 million in acquisitions during the quarter, the largest quarterly volume since 2022, including properties leased to Hobby Lobby, Home Depot, Sherwin-Williams, Aldi, and Walmart.
Development Activity: Invested nearly $425 million across three growth platforms, with ongoing construction on nine projects totaling approximately $71 million.
Dispositions: Sold seven properties for $11 million, achieving a weighted average cap rate of 6.8%.
Portfolio Quality: 99.7% occupancy rate, with over 65% of base rents derived from investment-grade retailers. Pharmacy exposure reduced to 3.5% of annualized base rent.

AFFO per share guidance for 2026: Reiterated at $4.54 to $4.58, implying approximately 5.4% year-over-year growth at the midpoint.
Investment Activity: Guidance remains unchanged, with a robust pipeline across all three growth platforms. The company anticipates a ramp-up in development activity in Q2 and Q3.
Treasury Stock Method Dilution: Expected to impact AFFO per share by $0.02 to $0.04 due to elevated stock price and forward equity raises.

Market Uncertainty: The macroeconomic environment remains unpredictable, which could affect investment pace and partner decision-making.
Credit Losses: Anticipated credit and occupancy losses of 25 to 50 basis points for the year, although current performance remains strong.
Investment-Grade Tenant Acquisitions: Decreased this quarter due to the acquisition of Hobby Lobby, which is privately held and not rated.
Potential Economic Headwinds: Concerns about consumer spending trends, particularly in discretionary sectors, and the impact of rising gas prices on consumer behavior.

Investment Guidance: The company is cautious about raising investment guidance due to ongoing macro uncertainty but maintains a strong pipeline.
Tenant Behavior: No hesitancy observed from tenants regarding expansion despite geopolitical tensions; brick-and-mortar retailers continue to open new stores.
Cap Rate Trends: No significant changes in cap rates observed over the past 18-20 months, with limited competition in the market.
Private Equity Ownership: 77% of the portfolio is publicly traded, with minimal exposure to private equity ownership.
Consumer Trends: Notable trade-down behavior among consumers, particularly affecting discretionary spending, but no immediate concerns about tenant closures in the portfolio.

This summary encapsulates the key elements from the earnings call, providing a balanced view of Agree Realty's performance and outlook.

ADC — Agree Realty Corporation