ADC - Earnings call transcript Q4 2017 | Agree Realty Corporation

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Operator

Good morning, and welcome to the Agree Realty’s Fourth Quarter and Full Year 2017 Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Joey Agree, President and CEO. Please go ahead, Joey.

Joel Agree

operator. you, Thank and Realty's everyone call. for us joining Good quarter thank and Agree fourth earnings full for morning, you year XXXX I morning have Officer am with to our very Financial Chief our Clay company. joining his for Thelen, this first call me pleased fit an fantastic our has been made organization has impact immediate Clay team. our on and a with I in the him am to getting know forward looking future. to you every one of near journey we to yet was record for continued another premier on as real our considered This investment past year retail be Agree year the among trusts. Realty estate investment strengthened capital and while continued Opportunistic market activity best-in-class strategic proactive portfolio for have several company growth. our management transactions our position portfolio off company’s and superior quarter the assets fourth we our portfolio The capped during balance best-in-class with year fortified record sheet. with reinforced was which our high-quality nearly delivered by dividend AFFO X% our growth per X.X%. increasing to in we XXXX, In addition well-covered share results share unsecured times per sheet X.X our maintaining average prudently These XX an and to accomplished at were EBITDA rate debt. accessing debt balance net while recurring fixed year When quality returns tenant risk-adjusted real we our impressive. base, the of estate these and even portfolio believe more are with combined On only properties environment world. retailers to I desire and high changing pursue an prior dynamically will retail our have commented on quality thrive believe that calls, retail we and in best-in-class the Omni-channel execution the we this of our the strategy. and have year the undertaken past composition But reflect changes throughout of our portfolio

number transactions on Maxx, notably is hopefully release, materially five our seen the executed TJ comprised XXXX, several our that Companies Home Marshalls of you’ve top As in tenant. Goods earnings base. TJX our altered now we and tenant Most during

as provides relationship consumers. value important off-price to tenant partner and retail are with our We the very off-price proposition bias for and enjoy strong that the and a retailer company. working foremost towards experience world’s have have growing we an pleased TJX strong and for it We

are relationships. leaders Companies, strong with top to and sectors for in Dave partners have Dave enjoy & as their listed management AutoZone tenants are great us. now addition both Both respective and TJX teams In Buster’s, we

Charter retailers were XX impediment in changes Foods eliminated XX% as material are top While Wholesale, aligned longer and leading in that of dispositions. Restaurants, or Meridian portfolio. Taco portfolio Bell’s PJs Fitness, have added our a concentrations and and our successfully These Franchisee growth XXXX, partnering of AMC several opportunistic tenants King we power Hour no goal to through Notably are strategy destructive top ecommerce. our a the retailers significant through of Burger a have implemented Franchisee combination Omni-channel tenants with with several retailers

of XXXX, weighted average XX The net acquired annualized tire are in of off-price AutoZone, total acquisition Marshalls, quarter More were least million rate in and Home auto of Maxx, National fourth Tire $XX.X parts, O'Reilly tenants. auto diverse TJ million XX ten those in the During located the stores, quarter. Auto for X.X% sector-leading states during health volume the sectors including and XX from we were a assets XX XX than operate average Of &Battery. base tenants The properties. convenience These across of investments, acquired acquisition our fitness at platform including retail, comes retail term and crafted through novelties. properties invested and properties service, sourced lease approximately and quarter XX% Goods, rent of Parts investment-grade $XXX acquired cap at representing lease tenants had remaining a weighted the X.X years. high-quality

assets property of Secaucus derived half and Secaucus It project. a time density Bypass Jersey for in of than with located New in that per company Michaels represents Goods population New a X.XX%. asset the and with The base the of the over is mile a miles the PetSmart. connection replaceable Turnpike XXXX this from is the high-performing and X.X combo day across acquired Jersey store, transaction, we interest intersection Marshalls square $XX fixed quarter, at mixed day located rate property leased four than million. rate carries and is five the XXX,XXX October less Manhattan the $XX.X TJX Lincoln rent the a million During in million people. matures very almost foot of an Tunnel and In to mortgage from of use of vehicles million assumed more X.X is the Home annualized part

X.X% average transaction Excluding of years. the the remaining had Secaucus, unique acquisitions at rate term a company’s of and weighted impact of average XX.X quarter cap weighted in this lease purchased a fourth were approximately

retailers the year million. $XXX acquisition With to XX representing record million are XX are we annualized with credit invested in invested million investment-grade operating tenants of and acquired record distinct investment of platform. leading our retail we originated in XX XXXX, in from base in Of rents volume XXXX, properties an leased a states, XX $XXX rating. XX% properties XXXX, For full $XXX derived to in the XX sectors

continue $XXX Subsequent $XX of on While end, guidance XXXX, acquisition fundamentals. our acquisition well real volume as to retail in we we achieve record rigorous estate XXXX to to of to I’ll million. our composition to guidance they speak underwriting of and million, able underwriting are a standard terms adhere standards $XX we materialize portfolio in year to in million $XXX these to disposition minutes. million how that as few announced focus

updating well excited opportunities to this these pipelines as disposition are forward origination about our look year. We and later you on as

The commenced Mister Both two delivery to subject project Wash announce projects are be new located Turning to we XX year during to schedule a developments and are Car total leases. this capital in anticipated solutions million. project and our partner for both net Orlando are to quarter. are Florida costs is development on additional ground-up approximately we platforms, aggregate construction Tavares, pleased X/X/XXXX $X.X on for and that

the Art The five grand and announced first our store Van located home X. year projects. flagship in completed progress made of across Michigan’s Furniture February was considerable Van Canton new with on to development their with fourth celebrating quarter, Art previously opening their successfully PCS the only after on IKEA During project first we also the company’s

approximately quarter. Mister the These ongoing year commence Our the by as both is rent Grand World Iowa in The new and third at commencing total to will both net first Michigan. this we Rapids, project two in Camping are are in year quarter our subject Mexico, opening anticipate million. is projects projects to Construction costs project well. full in Bernalillo, the and New first their celebrated XX a Anticipated and Wash rent $X.X lease subject Car Urbandale second end developments leases of grand project to net XX on quarter.

also Ridgeville, North quarter. project our leading Finally, King with the fourth Franchisee progressed this Tom’s in King anticipate schedule on Burger We rent to the in Ohio quarter. commence

$XX.X estate investment that focused that investment progress or total total we strategy. the PCS our Four under completed past completed development we year during volume projects million. projects million For real on continue growing the fit of to with to XXXX, net very I pleased XX lease retailers full within construction almost committed capital. representing this had year be full-service and am represent $XX solutions either our of of during providing and those were year

million. diversified In for sold the gross we $XX.X eight year, proactive fourth past efforts. through and properties portfolio disposition also this quarter, of proceeds asset solidified and we During our management

disposed year XXXX, XX For gross the for $XX.X full proceeds. assets in we million

the our Our decreased point of basis at included year roughly its disposition end XXXX X.X% reducing XX/XX/XXXX, the of to down a company XXX sale Walgreens from XX.X% four Similarly, as XXXX. activity the thereby exposure exposure of the pharmacy XX.X% XX.X%. during reduction to from realizing

In reducing addition also Burger sold past Walgreens restaurants. to during company King opportunistically Franchise pharmacy year, and our six this concentrations the

notice Subsequent with are now from our as opportunistically Webster received of Walgreens in and they to Four of to stores two have call divest by have are our located to capital, portfolio leased Rite York assets Albion continue completed representative the New Walgreens. redeploy the lower quality well aren’t tier previously operated year purchase will end, and we Aid. owned high of assets to and stores pleased that We of that as portfolio.

these X.X% in store the our I’d of effective note the will or the it XXXX. four this Following is and this the currently stores, top year-end May, X.X%. Walgreens and exposure sub-lease, currently New the for which Jersey no closing transfers weeks. disclosure ten our transfers, under also store is Inclusive in anticipate close sale contract of half of couple Walgreens remain Aid at our the of our approximately reported Rite Aid Cape Facilius store Rite concentration primary a to that next at term remainder of is a Aid disposition have Post North for is to longer Rite in of Rite sub-leased Aid our portfolio. lease. We

only am as base asset Moving pleased of the XXXX to report maturities I on activities, that to represent our rents. company’s X.X% management annualized today, of lease

During quarter area. executed their exercised the square on year Sam's gross option. or includes we leases, new options leasable Ohio approximately This which extensions of in feet five Club XXX,XXX Brooklyn fourth our contractual

completed XXXX, the of gross space. approximately For options we new leasable leases, full of or at XXX,XXX year feet extensions square

XX portfolio states. retail XXst, in XXX consisted our December properties of As of growing

lease XX.X% remains than occupied from The Our XX.X of term credit tenants a annualized operating are years. and with tenants industry-leading primarily weighted XX investment-grade XX% the retail with distinct portfolio in more coming average base comprised retailers has fully rent sectors of at rating. effectively

In that are base of of quality of our rents ground an total of counts addition leading portfolio, to carry which for metrics, investment-grade our lease which portfolio is retailers rent and credit X% by rating. demonstrated these the to further leased XX% annualized

our including Lowe’s and and add are we asset ground of the A of assets unique of CVS, examination and to XXXX, this closer During underlying lease unique Battery. real & estate. nature portfolio the composition number portfolio Tire National a quality able to the of demonstrates Starbucks,

tenant, is deeper largest more Lowe’s For today our fourth dive compelling. even example, is a taking

is and example construction portfolio exercise a Wal-Mart, full quarter it Florida. year. same thank other to your I’ll maximize expense. in Clay? our and that, our in full-size results Hardware to properties over total Orchard of Wawa, bottoms-up located other turn on properties like we stores. that prototypical with of good has for for the the to Lowe’s the fourth exposures. prototypical at constructed Clay of the mitigate of quality. and two analysis in to stores patience leased building property to Lowe’s Realty their by are Agree small heart are three We and built remaining Silicon have improvements simple ground Supply a leased these Lowe’s owned leased three format of in Lowe’s All the turnkey their One Conversely, which are to both and five our order deformed and thoughtful financial fee who the real and Stores. I’d grand can and you discuss undertake to be Southeast estate The Valley risk for

Clay Thelen

Thank morning you, Joey and good everyone.

Before we look I start the success to tremendous begin, fantastic that truly past building upon experienced I’d a saying forward to am I by the like over years. the to has that several company join team. excited

that this statements reminder, federal forward-looking please call, a will may note As law. certain be make considered we that during securities under

Our significantly in matters the actual statements. from may discussed forward-looking results differ any

In release. or addition, operations from operations of including financial in from financial found funds non-GAAP FFO non-GAAP funds measures, be measures our discuss or directly can to earnings comparable these AFFO. the we GAAP most Reconciliations measures and adjusted

XXXX. in rents, yesterday's an of including fourth over XX.X% XXXX increase percentage of quarter rental the revenue, of fourth million, was announced the $XX.X release, quarter As total press for

of increase increased XXXX expenses of in in the received X.X% and full X.X% the quarter quarter, the million. year over in quarter, revenue other G&A revenue and we in $X.X totaled reflect administrative Also, General the total the million. fourth For total revenue year. rental income credit we for to recorded were $XXX.X the total comparable XXXX, full $XXX,XXX fourth to a in post fourth quarter expenses XX% no fourth period from acquisition. time $X.XX per we of On operations $XX.X amount fourth quarter liability per recorded This was over reflects at incur. for the of basis, increase transaction a FFO of and period comparable that an compared we XX.X% the closing a increased XXXX. longer the XX.X% closing will from million, the to as share, an to share XXXX. of the representing a Funds

was was operations over AFFO from of XXXX. fourth an $XX.X operations funds FFO On year increase funds to quarter from quarter XXXX. Adjusted period per over comparable a fourth of share to the compared $X.XX increase XXXX. comparable a basis, X.X% XX.X% of of the period XX.X% XX.X% of XXXX. per XXXX, year for On was the per and increase full representing share, represents the a full as a share million, million, $XX.X increase the $X.XX compared as the basis, For

funds per of year On strong representing the XXXX, a $XX.X full full comparable increase compared basis, over $X.XX per period to was as XXXX increase the million XX.X% share the from year share of an a AFFO operations XXXX. For adjusted XXXX. was X.X%

Now capital markets activities. moving to our

fourth a quarter, was ATM The through what an of at quarter stock approximately only, preeminent issued result transactions and common gross The a shares increase capital raised and fourth total cost-effective of equity we million. of a reversed highly efficient $XX.X entirety proceeds the million proceeds through by of $XX.X During program we long nearly our believe X.X of separate rededicated company’s raising average were activity was investor. represent raise. two the at-the-market price

through issued realizing tool million. gross at at-the-market equity year For given we ATM The nature XXXX, and X.X the continues common $XXX.X our of business. to price the be of $XX.XX a an program shares raise million to of stock proceeds of effective average an granularity total program total full of

the recall the equity offering may totaled completed equity proceeds $XXX offering total discount in a million. XXXX both $XXX you through and in follow-on from and ATM are net offering than common the overnight expenses, of raised June, million. company the June’s million common Total more offering After of stock. As common company’s deducting shares X.X

September markets, have The term efficiently pricing. an at XX-year rate year curve points to interpolated September. senior the accessing all-in fixed at U.S. in XXXX. year we the maturing represented equity X.XX% private-placement interest a pricing The notes a $XXX XXX addition of million XX unsecured yield In time Treasury in basis and notes per a above completed the of bear of

past to shelf agreements. the upon issuance. allow agreements at two been shelf long-term under uncommitted issue this These at additional executing During issued senior year, investors to also million committed $XXX separate end, us remain private-placement notes to the fixed shelf of time two agreed We terms year the we into financings. entered rate, to unsecured had any notes At be no will agreement.

these was to was the five metrics principal total peers EBITDA times. remains company’s debt the X.X Furthermore, As debt-to-recurring net approximately of X.X below range the of approximately our ratio, history amongst XX, fixed enterprise of amortization to of our six All stated our at includes coverage are net and was and debt-to-EBITDA December, strongest strongest value charge times. well three our times. in which XX.X%

the Our is hand $XX powder of upcoming capital totaled year and net in significant balance revolving sheet regards our with optionality dry borrowings for position million. facility tremendous to in on credit sources. on Cash outstanding

In $XXX private-placement $XXX two addition agreements. facility, shelf to have our million million untapped credit we revolving

acquisition $X.XXX capital dividend We leverage January the The to allows opportunistic stockholders are in our on since share to not declared volume XXth to in the fourth share December year increase us allocation dividend and record capital over per markets cash on and quarterly a in company’s targeted its making X represents $X.XX a quarterly The and XXXX over was XXXX approach while of consecutive XXXX. the per This prudent five achieve quarter equity XXXX of the raising company’s reliant the a paid increase to XX% quarter dividend X.X% be XXXX. this dividend. company XX, IPO decisions. of represents dividend

per share increase dividends of declared dividends X.X% the over the For declared XXXX. Company $X.XXX an per of the share, year, in

were ratios XX% consisted of quarterly XX% quarter of for Our the of AFFO. and payout fourth XXXX FFO

well-covered of the full XX% XXXX, targeted I’d ranges are the XX% AFFO. over to and FFO payout of to call reflect the company’s like our back the at turn With payout that, were Joey. For year of a dividend. These ratios ratios low-end and

Joel Agree

any up, company. balance for XXXX wrap it arise. and great our to they up open we To We position with questions. year a XXXX for will Clay. another fortified entered record represented point, of in you, this as take a sheet fantastic Thank team a opportunities At it advantage

Operator

Riley FBR. David ahead. from with question Corak go [Operator first Instructions] comes B. The Please

David Corak

happen I would Joey, something love there helpful. the be for any Aid to competitive on specifically opportunity, there Rite be Just well? Rite color what Walgreens? can gentlemen. implications you needs your think get Do Aid to the with morning, thoughts CVS Good as and provide strategic the you to the are

Joel Agree

David. good Yes, morning,

I is stores, – on think our of prepared I rents or effective Aid really now first, as touched X.X% previous really Rite remarks, exposure our end. and of our reported four now as half at year exposure

through company. And a well as times, so, Rite Rite is we’ve an was larger, Facilius certainly pro we say, billion leader our as made be through progress some the match-up combination interesting fits it Albertsons. I’ll leverage the sub-lease obviously more It will industry as sub-four view that result investment But I’d Aid. in the diversified Aid $XX currently between Aid and forma that purchases don’t an forma from two stronger, companies, Rite Albertsons Walgreens honest, pro significant the criteria.

Walgreens, of changed. focus terms In hasn’t our really

X.X% those continuing week. still disposition that year-end are Our exposure our dispositions the well remains transactions X% of and portfolio reduce we closing anticipate as focused opportunistic approximately on we we to at And and as – through target exposure towards given growth. next

David Corak

that Is of XXXX still late a target? kind

Joel Agree

it’s the but to that us. very for a a Yes, XXXX these us. not We Aid the our target disposition purchase But Rite still It’s we’ve is hard obviously around get we goal target been some two still XXXX. X%, late wanted clear. are remains stores, XX% plus at for of a X.X,

David Corak

same those for maybe of and of us front Okay. the you the you? you walk through Wawa, appreciate And deeper of if then, level the in exercise sort assets. stats a deeper detail Could dive, of

Joel Agree

around a the portfolio how in responsibility, the are and portfolio, shows really Wawa our our my we’ve I is you assets with and of number Yes, I X% six think ground this broken haven’t done and job but heard lease consistently we Lowe’s really down that articulating because remarks. of the can do to here, that so we’ve said making through that’s Wawa a it I we portfolio thing. tenant. we as same overall first prepared is effort should value composition our concerted poor apologize, the it’s – sure, think and in but do

X.X% million interesting. total four is ground we Wawa have portfolio. all we nine five and stores are Obviously four $X.X the stores of of that which then term ABR, have ground in of and very leased leases. have Wawa developed assets, We on on three are other to the then key one mid-Atlantic, master company. And in our the them lease a we is

So, is our Wawa lease. exposure, XX% remaining and ground of leased it master the under XX% a three is store

key again, term ground among leases, a five So six the master on states. in stores lease, Mid-Atlantic, high-performing diversified under three four,

interesting, And through to and portfolio going now asset not base the so, tenant understand seeing for only do think underwriting shows of top the Wawa and its better how it’s upon so. is that exercise really in think I I composition investors incumbent to our compelling through and Lowe’s us

David Corak

queue. enough. Fair Thanks. in back I’ll the hop

Joel Agree

Great, thanks, David.

Operator

Joseph question comes Please Nick Citi. with ahead. from next The go

Nicholas Joseph

ground that see Where currently. getting trending going ABR could just you Joey, Thanks. leases, of you mentioned again forward?

Joel Agree

to Yes, the The lease Tire add either are opportunistic. are one-offs. they & to we CVS, a both National development continue We a portfolio fortunate portfolio typically as negative XXXX are that mentioned acquisitions. Battery, leases Starbucks, answer. really to as – question through I as in ground well They small to a tough were it’s add the ground

we and than no again think investment. the We to reversionary develop it on There all So in lease. better a skinning have it’s tenant we is building having continue interest nothing We’ll ground We’ve and is X%. the to love since hung source. risk-adjusted a try basis. around

But those it it’s around so difficult there. increase even tell. it level of tough this like to frankly. it’s find We’d types out to or keep investments And to

Nicholas Joseph

just then G&A. on And Thanks.

XXXX XXXX as think You’ve continued of to it down for a revenue it at X.X%. that? drive finished percentage about and are I expectations What for

Clay Thelen

question. Clay. Nick, Appreciate it’s Hi, the

focused going in revenue of on a year. In of runrate terms into X% the total we of XXXX, are terms G&A modeling of into

Operator

come will go Stevenson from Please question next ahead. The Janney. Rob with

Robert Stevenson

effectively been completed partner versus guys. early capital morning Good cap solutions the you talk have do recently? made development in guys about that where XXXX you assets the rates on and Joey, have can XXXX acquisitions

Joel Agree

our we in it’s can hurdles point our of Sure, in we have obviously the been variable those or doing we put we targeting range scope for partner X% that’s returns a and moved. have if the to constructing have are are project we obviously that XXX time, there. come projects we depending build-to-suit, capital where look. basis fixed in that what same upon buy it so around lifetime and historical reverse with are solutions a capital upon over on ourselves component spreads At solutions a taking Right, us. terms, returns targeting and Dependent products, different and are development of are static partner

So us. to and continue are organic XX spend we project. we returns XX X% energy a development terms then time efficiency to of activity in target returns And for important where months on

Robert Stevenson

are Okay. under into about given tenants remainder two likely now you construction I XXXX? then, these. or XXXX $XX the these of out starts with is when over project terms you guys And four in today. pipeline some where or of some on your the million three for significant of look of How and mean, you conversations existing have

Joel Agree

the REITs. platforms, to to that we of in tough be three during leverage relationships is preeminent And that. three have company quarter I’ll as are XXXX. said falls the It’s quarter estate the of synergies – to tell. our think the with this it exactly. we finance exciting become time effectuate view one hopefully anticipate continue full-service real ability as ground here remarks, a going goal as frankly and growth early I view external get with that solution. is my couple all couple retailers a starts to to to prepared to opportunities that work out. be when We projects and considered retail estate new team those balance a in platforms, we We’ve to And don’t tell second ourselves hard on we find you ourselves comprehensive a tenants the and or I’d it’s to company. our Well, the a real we got as sheet,

Robert Stevenson

– is you that sort it – you I another quarter – able million, and are Okay. completed there million the year it likely are what and think $XX the pipeline Car be three, the then as guys this sort well, chances that you service now and are in Art have I Van spurt I you’ve or XXXX? mean, to Wash is Mister to keep throughout said of be King likely – of and is the got that the to taste mean, going Burger in out $XX of portfolio into is the stuff comes the and

Joel Agree

that’s No, runrate that I a fair say it’s us. think good for to

spectacular. Our excuse Iowa do – grand goal, are call Both years $XX Bernalillo, Car flagship doing me intermediate Mexico. is Washes to X operating $XXX had into development we store leasing It’s that Van, it’s about our The camping activity an we future, Urbandale the a year-and-a-half and it’s sorry, fantastic, New to and world so very approximately to deliver million focus and in in I well. mean, that. and said spectacular basis Mister three and opening It open on February million going open. Art in going ago was PCS annual

open. are stores three all now those So

Robert Stevenson

guys. Thanks Okay.

Joel Agree

Rob. Thanks,

Operator

comes Please question Nick with Citi. Joseph go ahead. next The from

Michael Bilerman

a becoming you Bilerman. of enterprise Hey do approaching billion. a I consider what at giving I – point just guess, value mean, about premium just retail it’s REIT retail? talking and Joey, $X guidance are the curiosity, is XX.X% like, Michael had you

Joel Agree

you? Good How morning, Michael. are

Michael Bilerman

it’s And Joe, Friday.

Joel Agree

I What happened? off, Nick second. got I thought that felt like chopped - dropped for buddy a

Michael Bilerman

questions. Two

Joel Agree

can, didn’t as and well, think, and – so, I is disposition inputs to are flows give agree and G&A activity in cash many are. lease as I that we do look, they try the Okay, we we acquisition, that consistent

and you we same We the so well billion of $X approaching into on a want to really truly LOI opportunistic to and sources bunch XX base timing bone really to our want days raise close. extends have visibility as outside do said I hopefully remain real I cap anything development to capital a are move The and uses like of execution huge and strong in challenge cash quickly the decisively. inhibits you At is days that average driver. out. things existing a do ability factor. capital And we And flesh investors. is the flows XX of the and our small of said, course We visibility timing would deploy time, never of as that

XXXX. remains goal solid double-digit achieved growth to total are the AFFO that dividend, same X.X% and X% almost growing investors we as to with Our share per deliver returns in

in We are focused on doing XXXX.

wide very worthless. So, I know guidance the frankly longwinded, it and – bottom-line capital timing be of that is would for challenging, uses cap be timing that was would the but small us the so to it’s it base the make sources and of get accurate that wouldn’t

Michael Bilerman

Well, dispositions the and our and I reason mean, are, are and people lay out smart what can and put expense you mean, in run G&A we acquisitions assumptions the in is there you that running model I various terms asking G&A of rates call, through can you instead and I and the if mean, right of about cap how a of guidance release. the that press can it not so, I why provide know…. REITs interest affects a on us bulk

Joel Agree

think sheet X.X% changed. taking of I think course, ATM in balance to I down capital anticipated example, for the really time of we the activity Well, which I a don’t the the it’s QX I sources our drag. has mean, have timing – it’s think of

with balance opportunistically and We earnings. sheets space. have one position drag XXXX advertised balance time, on along right the of When some run to same into than sheet you strongest put at I do REIT the consider ourselves REIT net but in the we that, the in what

and I But flexible, to what understand And be asking want for. so, are you any way. nimble to ability our opportunistic I just inhibit in wouldn’t

Michael Bilerman

activity I putting perspective and inhibits or from a or sheet to don’t number you some want convention a Yes, there transaction doing think giving guidance and mid-quarter out it you. post necessarily having the where mid-year see about balance a goal would on

to reverse of think actually explain off does and evolving are how you I sooner number the to a expectations. actually allows later relative and or it either pivot things

you if a So, minimum. pieces in I on out something put of executed think you’ve least know, pieces as all press gotten larger, the don’t details to that, underlying number, but you release want at well. give always at I a more It is your guidance don’t the

Joel Agree

saying. X it’s It’s X.X That said, what of I a stated in But, you uses changed all you to This and none taken. information billion the be continue not capital dropped more place there is provide sure will point off tell have down approaching far for evolving that and a posts to well company, year. we of advance times that growing of our understand term times. are think X But am or are is. I profile, how to right and you time I’ll investors. more it’s in of and $X goal I a leverage and

Michael Bilerman

as board some to on changing and a there the And corporate and doing the company yet annual any bigger elections of is you improvements? approach going change get and governance

Joel Agree

all fully – fully the has the would analyst level business top some the from to Most continue dive going of opportunity Board this really we’ve notably, we in a think look we support that to the to our to there think been I Board and got the an to quarter year We supportive board opinions all way X.X potentially into all Board opportunity all at at ADC the the to of starting ourselves call, take, bottom, is year But Board. our a to from, fresh those from take great have level frankly put and to us getting looking to Board. position, is each deep the potentially that. think I are at X.X new level an We things. for X.X. divergent Yes, way achieve take on we it really the ADC’s Board members what this

Michael Bilerman

And annual elections.

Joel Agree

Board. the saying, we all Annual something election is is governance is the continue will that with something, corporate there

We consider. will continue to

Michael Bilerman

you. thank Okay,

Joel Agree

Thank you, Michael.

Operator

ahead. Collin The comes James. next Raymond go question with from Mings Please

Collin Mings

Clay. Good Good Thanks. morning, Joey. morning,

Joel Agree

Good morning Collin.

Collin Mings

expirations lease opportunities last the XXXX Joey, maybe Beach at Just on one year? are like you and any XXXX, executed as even we there Boynton other look redevelopment

Joel Agree

are. potentially There

it’s hands potential and that that in in basis. opportunities a quality And $X estate think of now came Investor X.X%. lease X.X%, – tied remaining real our those do expirations on getting we to came sub our portfolio, which potentially three in of spoke on in foot we down forward We on underlying square is We’ve executing that online. those out XXXX. to so, the that paying are XXXX on – as in to XXXX redevelopment outs notifications sorry, have that net some here. shortly – XX% note our posted I of effectively quite and look mentioned I’ll depth Deck in option that are there average our a The them and

Collin Mings

and conservative so, impacted community And And decisions given, the or the pipeline a company standpoint? leverage here. you’ve below you’ve a some just through you of out makes as then, of Does year times, that Okay. what’s any at been just a going times. have coming again, How with finished even been given a last about of are running thinking Board in for period really clearly far a a the balance higher there, it we have question target? price think, then, target to the you, from just down I the time. having rewarded sub-five sheet? that little but couple bit? over leverage ratchet I really as operating in recognizing X.X if sense prepared comments that Just by highlighted two-part times back Clay’s Has recent remarks, back the debt-to-EBITDA been just mean, Kind investment pullback you’ve stock look really XXXX

Joel Agree

the I this conservative the foundation our company underpinnings think, of are Look, of execution.

we be of sources We are times remains, platforms to but are earlier, of as executing to our sheet capital. never going we stated We way. connect platform. a the want focused well on And leverage our I operating with the in target know balance X in QX disposition we said terms three get to our as origination as opportunistic of X strategy, to

And X.X% growth growing approximately dividend to a – at today. able very by drive is so, growing think dividend X.X% compelling. when X% sheet X.X% levered you of with nearly AFFO times of X.X We are run it a balance

if undertook frankly permanent unsecured accessing in are and what few there XX REITs year rate. look that, think structure ability when then XXXX at the I our have financing we before that in you that to and fixed do XXXX long-term and debt,

said, plus XXXX. going you we review are take AFFO you If we line with our are wouldn’t as be That well percent our looking leverage positioned as looking XXXX. today the up at – in in growth into size X into peer mid

So basis. a we company on this don’t run quarter-to-quarter

of all in lowest are times we frankly those the on implications of space levered, with XXXX and our that’s team in no into million outstanding are $XX delivering balance going facility, profile the in focused leverage We a X.X decisions, our firepower, cognizant results. but the

Collin Mings

Okay.

they low-end it takes – price on same. I fair So, really – those as you the both the an sounds transitory continue decision like stock has it that guess, temporary as get impact the towards statements? Are in of the is maybe Nothing and movement really or leverage target. to high your

Joel Agree

investment think front margins. those operate or and We when stock the didn’t the the had first stock fair in I there, impact look, investment the start our because a just to front on impact your decisions, it prices we or price. two the decisions Yes, statements don’t even five upon first a stock statement three are of in of our – a

spreads We have space. the the widest lease net in

are same of buy and focused all today capital three have assets that acquire at frankly across of but a to time, assets We we that like our us on individual value-creation allows cost platforms. are the origination go Secaucus, trophies

us which the a powder and puts our are we position So think optionality for we position in prime the and a XXXX has balance Clay unique dry today, to spoke that sheet and beyond. a very in

Collin Mings

Joey, over. it I’ll turn Thanks, Great.

Joel Agree

you, Thank Collin.

Operator

question with Hoglund go comes ahead. Please from next Jefferies. George The

George Hoglund

good morning Hey, guys.

the King how bit reducing given some in you exposure growing shift especially the exposure, terms provide little of one have color you of of give you little Burger can be of a sales on asset can Burger one Just more of a before, there. the some bit color King and just, been it a to seems

Joel Agree

We divesting that specifically, King fit accretively on The that of opportunistic capital us. we dispositions sold remain don’t are restaurants XXXX assets Sure. on Burger within Meridian the focused recycling the in for portfolio. six

six of I’d or from You than area combo million are restaurants. Marshalls King about a Manhattan, people high-performing cap Marshalls four TJ New with store in rather trades. miles combo trade Maxx Goods Home Franchise Secaucus, talking in Burger own number a X.X the Jersey TJ Maxx

a century it’s that’s the market in point focused so, building opportunistic portfolio. channel an aggressiveness disposition time, Omni And the same XX based upon are at on price leading XXst the of XX, we

And our so Maxx ten is are in our retailer of in about stores as see TJ world. the addition what now portfolio retailer We talking box TJ base. you five off-price Maxx tenant best the have the the can we leading number and in junior and

of Omni And so, portfolio source on creating the changing focus a of are importantly, we to dynamically is environment. focus a to our the Century. going channel And continue portfolio stability most in retail XXst –

assets change that but a of you opportunistically function divesting are to see in and of us And composition, of so, portfolio also redeployment the capital. our and out of movements both wanting

George Hoglund

tenant, watch there? thanks of just for sort then that. also Okay, any changes looking the the at notable And list,

Joel Agree

frankly I the Aid change on. think commented Rite notable most I which is

down to now it’s down X.X% portfolio. four X.X% we the the are to to We after Walgreens and from so sales asset an Rite of are Aid, effective X.X%

immaterial so consider is an And portfolio. our overall there part of we immaterial,

so, the pleased and the there frankly change most last we are weeks. three two that’s which in with came And very to notable fruition to

George Hoglund

guys. thanks Okay,

Joel Agree

George. Thanks,

Operator

comes with Ladenburg go John Massocca question Please next The Thalmann. ahead. from

John Massocca

everyone. morning Good

Joel Agree

Good morning, John.

John Massocca

kind coastal last It deal recent the you been those two to deal of guys a you those seems and markets over capping have REITs get in that a Secaucus Secaucus rates properties find allows Lowe's able rates hard acquire Valley you these more in like to into areas lease in have transactions invest Silicon think been given do the – low you may dense do for attractive? years What in cap cap them and the net that markets. to

Joel Agree

examples. question, a It’s those good prime are two

you know cover First, want we and that net you I lease how well congratulate miss space. the to Dan, we’ll but

Just want congratulate to on taking you seat. that

John Massocca

you. Thank

Joel Agree

short-term of a the It’s sourcing and through multiple people tenants. room of function I relationships with Look, look of multiple is come summer. that from a fantastic our looking channels. I’ll out here function today tell creative an eighth and I inclusive growing opportunities mean, we with and dynamic team. have of our our starting The am here seven this long-term, different conference acquisition relationships. you, team opportunities directions We it’s at a team

relationships with And starts in all so, business. it this

lease Our execute opportunities net coastal opportunities some atypical be unique to for would most those provides REITs on. us relationships that including you

And function and Secaucus New it’s of that so, compelling, us go transaction into of that combined to in ground that is frankly allows on capital cost with an that us in was today hours Valley our Secaucus, was allows asset XX see go relationships. the a into Jersey, a when to we our think function and team Silicon we

John Massocca

So, other drove That's the that lease some sound net Secaucus, atypical maybe like. there relationship or how that specifically was that the tenant transaction? to you brought

Joel Agree

enjoy We Michaels and no, fantastic with Well, was I’ll TJ Board MAXX, have fantastic Board we our relationship the former from a stem enjoy we unique a that feel with on you, working way all we PetSmart Rossi perspective unique so working and insights relationship President. with tell the a level. the like to and Jerry

John Massocca

big sense. an Sports, call the would your not really Okay, with resistant especially then, Academy your ecommerce of retail used it’s view And on portfolio, it’s what – you makes of be, as kind but a not portfolio subsector? given portion to existing what’s

Joel Agree

sector the of goods are Yes, sporting fans overall. we not big

Boynton two goods, big Supply Hardware. have adjacent Beach I new we Orchard think to the one in sporting

We have portfolio. our three in Academy Sports

We are adding goods focused today. portfolio not on any in our sporting frankly

and hard the commoditized it’s stem Omni on or And of for is a the overcome. over be shopper soft to internet. sporting with goods that the the can’t struggles easily Channel experience just focus sold to them and world space of difficult lot retail Our is goods me,

is one One across going with - in basis. So overall very low a a our Kansas, ABR. center is of of Sports. Academy a high-performing is down have percentage high-performing Belton, Academy in Texas. of portfolio stores Those directly piece three terms real ABR of street. We three which that in the also we And went third and a Topeka, in Sports, store a is Missouri, anticipate estate store is fantastic which power up number

are we at And so, those looking assets.

goods Academy topical is watching in component and are is sporting We outdoor the the today, component the which firearm space obviously which trends the fishing gun hunting overall Sports inclusive the of component.

sporting continue space the to I frankly anticipate wouldn’t so, I our in additional and reduced. be to us investments anticipate goods making exposure And would

John Massocca

Car Understood. there lastly, runway is ground at of kind And them, Mister know with hard of of developments of kind you the worked structure additional these pretty I for Wash? kind then, what developments.

that I you this are thing, think ground-up with kind kind of unique is or of along them out competitors to of projects kind same guys? there doing there these something

Joel Agree

or historically grown No, and to had these two through operator. Green are Leonard Wash, Car organic organic obviously. were and Mister prototype for smaller an wash with in Bernalillo – Urbandale. first we the sponsored of developments the opened change worked the first They have create independent the Mister four largest nation’s car company Wash Car acquisition

any are in competitors Car importantly, Orlando Wash, inorganically Wash’s Florida and see we’ll how of through how Car we well organically, Mister under stores are as The to second grow no, construction have function performing, we’ll – ability acquisitions. and most a as those Mister don’t now Tavares as see and two really but

John Massocca

very That’s it me. guys much. Thank for you sense. Makes

Joel Agree

Great, you. thank

Operator

The next question Wells comes from Fargo. ahead. Todd with go Stender Please

Todd Stender

sounds lease your detail give Thanks. just averages. also shorter on The acquisition Can may compelling, you lower but this? Secaucus little rate a and cap carry more a pretty based term on

Joel Agree

Todd. morning. good Yes,

of the a is would cap store. seeing you It’s the tied of to that rates store. NOI our Home in interesting, is transaction have the at about materially remarks forward to high-performing Goods We almost conference. very, combo so, been Looking outside the Secaucus again, Yes, Marshalls, week extremely XX% higher. next prepared talked

So six has the least for that XX% and a strong remaining eight years a MAXX NOI, really almost them. transaction. It was but shorter transaction TJ a mid term that’s performer of

a points as of remarks, would our lease And said XX, transaction, prepared outside little rates dragged the it as basis cap what XX in well have so, higher that well. been, I as down term as,

the it’s the given underlying know for are dynamics which It’s compelling of perform, very most We pretty what’s New strong stores real irreplaceable. transaction. think New markets. the we York think, the how I it’s and and Jersey estate that compelling

Todd Stender

– Do these into lease existing I get behind master added structure or think it? what’s the

Joel Agree

leases. single No,

leases that So in were place. these existing were

Todd Stender

to probably stick guess mean, six renewal lease want around. or is make that though, want to I it upon you entering make sure your so, I at angle? probably they it shorter are do you you in if term a

Joel Agree

– transaction, any master are that and don’t We wasn’t – those we six of low that it they real a wasn’t not confident But am will this but terms very that they a would leases. tenants. are adding they in stick confident stick around we any do around. those very in lease, we I very underlying master It of are with aware confident with have into estate. the

Todd Stender

forget they other Okay, what how the then, to two? yields Mister to I thanks. in New know location. just you the back are was And Wash, And I developing Mexico, compare Car in do the one Florida? other

Joel Agree

that yield we’ve historically been same developing. Yes,

again, X% structure. the is So, some bit same really lower, higher, but projects across some yields, our target board, in come projects come a in little

Todd Stender

Great, thank you.

Joel Agree

Todd. Thanks,

Operator

from go The Please next question comes ahead. Ki with Bin SunTrust. Kim

Ki Bin Kim

that XXXX the for for like assets you you look that done What leases all Thanks. sort rent recoveries of guys sold? or you’ve in

Joel Agree

XXXX. no off, first in so, we assets dark sold Yes,

to – disposition asset Kmart with luck real directly to doesn’t besides finding looked estate, our anybody we of rates, portfolio. the until know only us up in a we drove we that Kmart It was finding that Michigan. with But for the that was our developed question father it Our who point don’t an notably, dark not Oscoda, your you cap preference go my criteria profile. plan the and what, the the to it Kmart assets on dark. credit have Most the sell said, at we asset is the that didn’t Michigan. Good wait – fit disposition at looked we the goes

unique we XXXX, terms really of to it’s rollover us. for spoke in lease In XXXX,

XXXX, Off in dozen Hardware. half we Shoes that Beach, about Supply had lease real First was Orchard Broadway most rolled. all, material only rolled with of that which The replaced the a Boynton we leases in

XXXX or then a NOI-to-NOI, sample lease And of ABR-to-ABR, and in so, you are tell look a good has sample or I’ll runrate. there and it’s you at at across XX% effectively expired good terms looking XXXX on not those versus increase if you rent-to-rent a size,

Ki Bin Kim

good. that’s Okay, pretty

Joel Agree

the on that – Corporate expect an Hardware Supply Shoes Orchard that as basis, that when as was lack very the look, Off opportunity think with the estate, an wouldn’t the replace a and of to go-forward and Credit, Lowe’s underlying Broadway I as tenant. real well Yes, existing a with you for can Broadway Off options unique said, I that I Shoes quality speaks of

Ki Bin Kim

– if pipeline to today, done of a activity? you And, get been change is could the just seller what to takes or Okay. speak kind mindset there how in adjustment of deal any the long has a type it or of in

Joel Agree

what one your we is a question, context to believe market’s or an be. it’s perceive So, the seller, interesting in mindset us as of

Ki Bin Kim

market. The

Joel Agree

takes on you, come it right is cap interest the We Well, to in a opportunistic. of fear. rates I I six Sure, were cap up would correlation? you rates, like rates hope deals months. would – tell We to we that I on. but XX tell make and there side terms it’s

that we opportunities – we to and better going emotions, that’s primary about slips about often greed so. at seen asset so we are in find where change I’ve from of sensitive marketing when we more all we hoping cap haven’t and talked how across origination fear leases. our two were We platforms over organic to and that opportunities we owners an three – and typically So can third-party and from short-term hope thinking are any rates, developments to hope developers fear greed – when

huge that And will take time. market. so, This fragmented a is

you, we cap be I’ll so, rates when mover. tell to if move, going And and first we see are the

Ki Bin Kim

you. Okay, thank

Joel Agree

Ki Great, Bin. thanks,

Operator

Joey Agree remarks. for back I the would turn This concludes session. to closing conference to our question any over and like answer

Joel Agree

everybody to have or seeing morning, joining great conferences and you and quarter at upcoming you for weekend. the look you us thank again next Well, first this speaking to forward discuss Thanks results. a we XXXX with our quarter

Operator

conference The for now Thank is you concluded. presentation. today's attending

disconnect. You may now

Agree Realty (ADC) 23 Feb 182017 Q4 Earnings call transcript