Agree Realty Corporation Q3 FY2025 earnings call

• Achieved largest quarterly investment volume since COVID five years ago, deploying over $450 million across platforms.
• Increased full-year 2025 investment guidance to $1.5 to $1.65 billion, midpoint up 65% y/y.
• Raised AFFO per share guidance to $4.31 to $4.33, midpoint 4.4% y/y growth.
• Achieved A- issuer rating from Fitch Ratings, significant milestone.
• Strong balance sheet with $1.9 billion liquidity and no material debt maturities until 2028.
• Executed new leases on 860,000 sq ft of gross leasable area, dispositions of ~$15 million.
• Occupancy 99.7%, investment-grade exposure 67%.

The company achieved its largest quarterly investment volume since the depth of COVID five years ago, deploying over $450 million across all three platforms during the third quarter. Through the first nine months of the year, nearly $1.2 billion was invested across 257 retail net lease properties. The acquisition platform accounted for approximately $1.1 billion of investment activities. In development, five development for DSP projects with total anticipated costs of approximately $51 million were commenced in the third quarter, and through the first nine months, approximately $190 million was committed across 30 projects. The developer funding platform saw $50 million invested in 20 projects in Q3, with the commencement of two 7-Eleven developments in Michigan and Ohio.

• Full-year 2025 investment guidance increased to $1.5 to $1.65 billion.
• AFFO per share guidance raised to $4.31 to $4.33, midpoint 4.4% y/y growth.
• Pro forma net debt to recurring EBITDA ~3.5x after forward equity settlement.
• Guidance includes 25 basis points of credit loss assumption.

• Macro factors like interest rates, construction costs, and tenant credit issues pose risks.
• Credit loss assumption of 25 basis points includes credit events, occupancy losses, and nets associated with released assets.

Q: Nick Joseph asked about the treasury method for forward equity and if anything could slow the acquisition pace.

A: Peter Coughenour said about 6 million shares of forward equity mature in Q4 and will be settled, Joey Agree said nothing on horizon slowing acquisition pace in 2025.

Q: Michael Goldsmith asked about cap rates and AFFO per share sequentially.

A: Joey Agree said no material factors, Peter Coughenour mentioned term fees contributed to Q3 AFFO but nothing in Q4.

Q: Jana Galan asked about pipeline of external growth platforms and credit loss.

A: Joey Agree said staying within sandbox, Peter Coughenour explained 25 basis points credit loss assumption includes various factors.

Q: Jim Kammert asked about releasing activity recapture rate.

A: Peter Coughenour said year to date recapture rate was 104%.

Q: Linda Tsai asked about ground leases and term fees in Q3.

A: Joey Agree said ground leases in Q4, term fees in Q3 were from two Advance Auto Parts stores.