Agree Realty Corporation Q4 FY2025 earnings call

Management Statement and Operational Highlights: - 2025 was a year of consistent execution with over 4.5% AFFO per share growth. - $1.55 billion invested across three platforms, second highest in company history, +60% YOY. - 2026 guidance is strong with portfolio well-positioned, balance sheet in great shape. - Commenced IT undertakings like ARC construction and process improvements for efficiency. - Raised ~$1.5 billion in capital in 2025, ended with over $2 billion liquidity and no material debt maturities until 2028. - Fourth quarter investment activity included $377 million in 94 properties, full year 2025 had $1.6 billion in 338 properties. - Development and DFP had 34 projects in 2025, with new projects commenced in Q4. - Asset management executed new leases, extensions, etc. on significant GLA. - Disposed of 22 properties in 2025 for ~$44 million. - Achieved A-minus rating from Fitch and launched commercial paper program.

Segment Performance: In the fourth quarter of 2025, Agree Realty invested approximately $377 million in 94 high-quality retail net leased properties across its three external growth platforms, including the acquisition of 94 assets for over $347 million. The properties acquired were leased to leading operators in various sectors. For the full year 2025, the company invested nearly $1.6 billion in 338 retail net lease properties spanning 41 states. Over $1.4 billion of investment activities originated from the acquisition platform. The development and DFP platforms had a record year with 34 projects either completed or under construction, representing approximately $225 million of committed capital. Asset management saw new leases, extensions, or options executed on over 640,000 square feet of gross leasable area in the fourth quarter, and 3 million square feet for the full year. Dispositions in 2025 totaled $44 million from 22 properties. Revenue contribution details: Acquisition platform was over $1.4 billion for full year 2025, development and DFP had ~$225 million committed capital, asset management and dispositions contributed as noted.

Guidance: - 2026 investment guidance increased to $1.4 billion to $1.6 billion, ~10% increase from prior range. - AFFO per share guidance for 2026 is $4.54 to $4.58, midpoint represents 5.4% YOY growth. - Pro forma net debt to recurring EBITDA at year-end was 3.8 times. - Treasury stock method dilution impact on 2026 AFFO per share anticipated to be ~1p, could be higher if stock price moves significantly. - Dividend declared with annualized dividend of over $3.14 per share, 3.6% YOY increase, payout ratio 71% of AFFO per share in Q4.

Risks: - Macro environment uncertainties. - Construction costs increasing. - Potential credit losses; portfolio assumed 25-50 basis points of credit loss for 2026 guidance. - Tenant risks, including exposure to certain retailers and sectors. - Market risks related to dispositions and redevelopment potential.

Q: Michael Goldsmith asked about the increase in 2026 investment guidance and how it's split across platforms.

A: Joey Agree responded that the increase is due to secured transactions like sale-leasebacks and increased confidence in development/DFP projects, with all three platforms seeing accelerated activity.

Q: Jon Golan inquired about cap rates on acquisitions and construction costs.

A: Joey Agree said no material cap rate deviations, construction costs are increasing and being managed with alternative methods.

Q: Spencer Glimcher asked about development projects and ground lease market.

A: Joey Agree stated development projects are not one-off and there are ground lease opportunities, though the ground lease market is unique.

Q: John Kilichowski asked about forward equity and investment guidance.

A: Joey Agree and Peter Coughenour responded that investment guidance is separate from forward equity, with strong balance sheet and liquidity to support guidance.

Q: Brad Heffern asked about development investment commitments and credit losses.

A: Joey Agree said development pipeline is growing, and Peter Coughenour discussed credit loss assumptions for 2026 guidance.

Q: Other questions covered topics like tenant exposure, CVS performance, retail trends, and disposition cap rates.