ADC - Earnings call 4 2023 | Agree Realty Corporation

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Operator

Good morning, and welcome to the Agree Realty Fourth Quarter 2023 Conference Call. [Operator Instructions]. This event is being recorded today. I would now like to turn the conference over to Brian Hawthorne, Director of Corporate Finance. Please go ahead.

Brian Hawthorne

Thank you. thank XXXX joining Earnings and Realty's for everyone, Quarter Fourth Call. morning, you us for Agree Good

Before turning me law. the this may to the discuss be call language. Please call, over to results cautionary under certain the Joey we for considered will quarter, statements that forward-looking let note first make through our run during and that Peter securities federal

earnings reasons. forward-looking differ and yesterday's Our the any a for a from risks forward-looking filings our may SEC on our release uncertainties various and in significantly annual statements actual Please number including of results discussed matters for discussion report of statements. underlying see XX-K our latest Form

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

turn now Joey. the I'll to call over

Joey Agree

Thank strong you, to was and XXXX for all company. that report I'm you another us thank today. for joining pleased our Brian. year Good morning,

net Looking success. of volatility, that of anticipation for the company positioned capital strategic price $XX.XX. continued $XXX million the with back XXXX raised several balance initiatives a our just past equity year, we markets sheet our at we on quarter pre-equitized of in In executed fourth forward of over

unique determined were expanding from verticals or have and investing was illiquid for in cap we either large exhibit financing, the continue customers. country's a best mindset into While and space. We the in value rates via sheet to our while Instead, deviating of disciplined slow our providing confident that our while or biggest to fragmented at be expansion interest and avoid the strategy fulfillment tenant the up price, many we going retailers. in labor and proposition time, new rose time-tested debt balance strategy for were invest would conservative, curve concentrations. risk that core rates creating execute rapidly, Those thought to to credit our

the their with we have While put purchases and cash their and been of not mouths money Directors our in certainly is wavered. $XX Management believe ultimately to lead Board where during reliability has tremendous million of of of consistency, a are stock performance business. lease almost XXXX. Net long-term quality flows will insider We outperformance. frustrating, our

capital value a control capital money with strategic not can't free While macroeconomic mindset of days simply of execute and a were we ubiquitous can volatility, us, philosophy. creation, change behind which earnings accretion. The allocation we in made and short-term strong

spreads have investment at In seen growth. spreads. outsized result to focus this no It is best and aggregating per risk-adjusted opportunities, our on the the de-minimis investing not simply achieving AFFO new of share paradigm, little economic volume. drives We

will opportunities We growth, per risk AFFO meaningful not short-term growth. curve driving and create share the grow move we nor to without up the denominator will

liquidity, anticipated do-nothing scenario drive last that fourth including equity the and positioned over ample complete the which raise remain opportunistic, nimble have we year XXXX visibility million $XXX approximately $XXX capitalize a of raise on disposition of absence over equity growth. on have and at with assumptions of well forward year the the the With million, we the external conservative do-nothing $XXX the of we forward of optionality. With as and any end basis, We cash and importantly, beyond free would for flow X% call, we equity laser any a in invest excluding on in are the and opportunities $X AFFO without allocating billion we per can million manner in runway We the ensuring to growth we additional capital. Most in uncover this leverage-neutral capital scenario. over quarter, is are share disciplined we them. outstanding drive approximately proceeds sustainable. On quarter's total need growth to outlined focused

In pro debt net debt just addition, year-end. EBITDA stood at at have until maturities forma X.Xx to we XXXX no and material

is fortress of a with portfolio metrics credit a flows positive outlook their Our outlook rated investment-grade of for company cash operate that S&P of and record company our in dynamic we the higher our are sheet exposure XX% durable last and paired for another portfolio placed believe evidenced the balance that and balance week. highly BBB of manner is positive step balance on We credit strength are which rating The today's in the gaining environment. sheet best-in-class our over by manage provides recognition and our the quality emblematic our in sheet. our

million. our past through update. as to to over for XX during leased worked our off-price, lease including market and $XXX external service the significant the million supply, ultimately This stores. properties turbulence nearly well on quarter, operators sectors, convenience Moving invested properties high-quality roll net quarter included across growth platforms. fourth leading and in improvement, and auto farm as standard we home properties This acquired acquisition XX The in retail tire $XXX of X

As total billion and derived for of XX.X% expansion approximately XXXX, retailers. We our first cap point of we average more third XX quarter XXXX. than weighted The XX.X acquired the In X.X%, properties spanning acquisition lease to and a weighted since year. XX million $X.X XXX we ground can term representing and the prior points during rate relative properties quarter. a X fourth cap investment-grade from XX% states. XX basis invested acquired to was were quarter rates rents the piercing annualized leases higher continue than time the lease higher, retail net or quarter, average X% had base basis volume demonstrated, $XX activity the years push The of approximately for

all leverage to to platforms find risk-adjusted continue growth compelling external We X opportunities.

while ground from represented leases X% acquired. retailers, XX% year, of full investment-grade base nearly acquired annualized the rents rents For of the almost were

totaling operators a partnering in XX% sectors. Notably, the we store rural in our help increased development supply with X and and ability leading farm activity acquisition year funding as XXXX, to compared struggling prior, and plans to to across approximately the we convenience DFP in X/X our and partners leasebacks projects demonstrating represented further our growth the activity and new increased full-service both comprehensive in projects on our over sale-leaseback during HomeGoods just Illinois. and of had execute activity continuing Sale under the projects in store a during in $XX We include XXXX, with fourth with quarter anticipated The the quarter their to Arizona be record $XX with or work Yuma, total representing anticipated developers see platforms. retail Burlington new projects $XXX Starbucks Development pipeline. We million to million. of platforms merchant in with with partners. Switching provide X million. either for a DFP completed continued approximately commenced and to lock committed We're approximately construction, costs retail XX real XX solution year estate ability their for capital. cost them of our Construction

X were XXXX $XX to gross Lastly, during million. dispositions we accretive opportunistic projects We redeploy was million, completed disposed total of sold anticipate that rates during fourth costs approximately I construction sell including cap at properties total on in on approximately the for of for rate that an X.X%. with basis. X X quarter. and the $XX properties during XXXX proceeds cap additional in The assets weighted capital dispositions will as XXXX average attractive seek we quarter

Kentucky. a front, Including of area gross in T.J.Maxx leasing during quarter. Illinois, a leases, the on Lenox, leasable On XXX,XXX we executed the or Walmart and fourth in extensions options Hazard, new square Supercenter feet New

year the we extensions XXXX, million options approximately of square on or feet new For full X.X leases, executed GLA.

annualized points base spanned leases maturing. At properties ground our rents in for position exposure great XX%. to annualized best-in-class X,XXX with reached We XX.X%. basis XXX again, up XX of only slightly across are leases record including representing base rents. our of a a portfolio ticked of And XX XX.X% Occupancy investment-grade states, over year-end, XXX XXXX total or

first Information as Lastly, Leadership companies. and Rocket a was our engineer Linglong development she to of of where for nation's has leadership add for over Chief years. mortgage she executive of welcome the Directors. Prior her XX largest XX the our lenders XX Adviser Board He responsible expertise served to Chief I'd to Linglong of experience, Linglong ago technology one for excited Officer of years Board to to leadership, we're and serves role, today is like years that Rocket's Central software Rocket over Mortgage, Rocket for truly esteemed as and Directors.

it and then Peter, to can open for over we call questions. the up hand now I'll

Peter Coughenour

and $X.XX respectively. per was X.X% $X Thank XXXX, Core $X.XX representing the earnings. full year-over-year and year, you, increases, for full FFO AFFO $X.XX share year-over-year X.X% respectively. X.X% and increases, for fourth Starting Joey. was per quarter year for X.X% and fourth with the share quarter per share representing for the

As ADC stock diluted treasury the year. The forward ] if full in for included share trades related prior outstanding offerings. stock approximately settlement impact the to of above aggregate a these equity deal our reminder, is dilutive was offerings [ price $X.XX our to count

Our to growing dividend. consistent and reliable and a well-covered earnings continues growth support

During monthly represent annualized monthly December. for On October, the and dividends basis, declared the an November $X.XXX cash fourth a year-over-year dividends quarter, X.X% we of increase. share per

company a basis. increase X-year on dividends share, increase a For of XX% and declared the approximately the per full year-over-year year, a almost $X.XX X.X% stack

range for or reflect or $X.XX of dividends cash of below amount an over The year the and decreased the to monthly XX% market from adjusted per XX% over below we fourth per lease monthly share noncash for Subsequent X.X% the of per intangibles. revenue, per to January share February for the Our annualized and targeted amortization increase amount quarter dividend $X.XXX low and remained dividend first the end share. expenses payout ratios of quarter-over-quarter administrative to of full a above our dividend X.X% a XXXX. General declared of quarter year-end, $X.XX share AFFO of annualized of of XXXX. at and

of percentage total our expense year, a that the of for we expense totaled the of million to during With the brings ongoing $XX.X or midpoint year G&A database, X.X% XXXX. We ARC guidance. as revenue. This proprietary the continued our will expense enhancements fourth adjusted recorded revenue in million, investments systems, the continue anticipate to in scale near of G&A including $XXX,XXX For to tax adjusted quarter. $X.X income our

via new program. the fourth during of our raised weeks we in year component place markets to a Turning $XXX late more putting forward equity normal of equity our of quarter, the million ATM in forward activities. We in proceeds than program in With course. raised capital anticipate ATM $XXX million the over the gross coming

to us ability activity. from X.XX% into our loan received term inclusive the support term and attractive relationships bank of at extend loan key The strong $XXX access a rate hedging term also fixed We the a banking X.X-year debt X.X-year allowed to market-leading demonstrated million maturity of XXXX. with prior our

As maturities Joey an our excellent position debt schedule no maturity with remains in mentioned, XXXX. material until

$X Our approximately We balance growth cash million activity million us continued XXXX. further the equity, year of of and of than on total over our and fortified million revolver liquidity, hand. on the ended sheet including $XXX forward $XXX with capital billion more outstanding markets positioned availability of for in $XX

revolving us and In to credit million respectively. lender request have additional addition, and allowing facility options, loan accordion $XXX our term $XXX of million, commitments

In addition now basis. the cash flow is our to million position, liquidity on $XXX an approaching strong free annualized dividend after

settlement to was As forma the equity, of X.Xx. our December net of debt XX, approximately forward outstanding for EBITDA recurring pro

EBITDA our of impact forward the recurring debt net to Excluding was unsettled equity, X.Xx.

which while approximately ratio, our total in preferred principal Our a at fixed amortization includes healthy charge Xx. in position enterprise to XX%, very coverage debt is the was dividend value

I'd call over back that, to turn the like With to Joey.

Joey Agree

growing XXXX At this well-covered drive time, you, in execute very it we and To earnings up positioned are well questions. a Thank sustainable and operator, dividend. open let's to to summarize, Peter. for

Operator

question [Operator will Street Instructions] Spenser our of from Allaway And first Advisors. Green come

Spenser Allaway

you very guys time? mentioned, provide acquisition in a liquidity Why not strong guidance that capital locked you position. Given as this at and some formal have have you

Joey Agree

we're that's so first I think, including interest here on. going all, Spenser, volatility an extremely environment, in of rate volatile macroeconomic

retailers. prepared the we talked disciplined our aggregating at and today focus team de think in minimis or intent basis going going not close, what's letter duration leading We're days XX the spreads, into spreads later country's you in is #X visibility tell net of And focusing days, average can't focused sandbox with lease point XXX-plus in XX XXX% space, let remarks. happen our on the about I as at of frankly, be to here, summer the that's alone the to is deploying to from our of so capital volume I And fall.

Spenser Allaway

about you different Okay. as you're where can you And verticals about play in, of think just that investment the spreads talk today? then seeing you X best kind the

Joey Agree

-- speculative of spreads, best or duration, the and without development, all fully in land Well, that in bid in buildings don't tenant specking of hand Duration a we acquiring be risk secured. without terms course, being take development right? would permits

So me, would, returns course, the best -- the excuse best development of the spectrum. be risks on

And so risk. duration equals

XXX to Again, again, So our approach of using deploying deploy as we're be points at light-kind is forward XXX basis XX-year cash unburdened other a we've where if But to free our we're that looking to a basis capital. the We're that. develop a a with cost before, here. of capital, can spectrum unsecured for capital a yield significantly to cost XX/XX end it points of cost acquire where as our going of acquisitions. see AFFO that significant perceive goal, not spread of capital of would wide asset. And we It's capital. noted we is conservative here wide focus where And flow pricing. split our we the

Operator

Next Rose Citigroup. question comes from of Smedes

Bennett Rose

have I to provide of activity. outlook cap Maybe able don't So and moved kind you've of you sequentially X.X%. little of rates But acquisition you're of moved -- been up kind lock a what seen at quarter what were could and talk get you kind term? in you year a just about about year-to-date fourth on color maybe the from want where -- have near seeing full thinking just where to kind

Joey Agree

XX% underlying the we all would and to are all what speakers the markets coaster. see base in XX days roller and the right be Fourth quarter say. Smedes, are morning. interest given the world you, board Sure. rate. X% going dropped that go Fed X% or over up to the going XX% Obviously, do XX rates it's the then from this subsequent the I was a not sure in I'm volatility for days, tell the we goals cap now saw over to what rate

that I get year more March cut likely think at a it's in this point. hike rate a we this than

opportunities, acquisition most focusing short-term basis still XX over opportunities, a without on all sacrificing high-performing over to spread it you tell board, rate terms are will expectations market XX of What board. economy rates upon the transactional my our of is we XX a last rates that will of cap points that overall environment expectations as points our in extend QX, jump volume fractional -- answer, where point asymmetric that XXX historically. effectively are be basis cost in sellers' opportunities. But and by likely, Again, see an to blend in material was unique the where of QX. over basis so and retail the will over capital building would board. interest stores cap is And the to sellers' I credit result quality. our and And in jump side aggregation And all partners the directed XX imagine you the all of

at we volatility seems early we -- fourth in new so It it. a amongst XX-year. really kind borrowers has X% consternation were the hope approaching then, -- unfortunately, of was don't forth. obviously, that the some quarter, normal and XX-year of X% have back got vacillates the when And Since some like

Bennett Rose

of you sense then continue move course do Okay. what we just mentioned to that percent of to just Do have of -- up will the you revenue. you move as should G&A I expense of wanted a 'XX? expect to ask, And percentage over a to that a have kind

Joey Agree

down. the going given else go of growth, the our revenue anticipate I've I'm guidance everything X% add color equity Peter, given the right auditors, base of up on world. number percentage professional because forward of color, and in case AFFO the will the G&A any I'll is pipeline, table we've let clearly which our Peter go now absolute off raised that continues over and So in this -- missing? up in The we anything to embedded services embedded

Peter Coughenour

No, that's correct.

years, average. scale G&A at but much continue on basis basis approximately recent percentage a as seen on XX anticipate predict of percent in that do in difficult come points in annual It's down. will revenue XX scale as think we've of point adjusted see to we'll revenue this to G&A or how an XXXX, I of a we

Operator

Ki Kim from comes question Next Bin Truist. of

Ki Bin Kim

have I XX question, guys first noticed Big you about So Lots.

So a And your XX I embedded question is about about basis loss guidance. points think credit you reserves.

So out what that move and that curious unknown the how of for Lots, Big known likely or highly the much ABR a as percent is accounts please? of versus

Joey Agree

Yes.

where plays Lots these the approximately exposure watch Big won, estate of So any have is of any our us end total today are Home we or list at day. exposure the At inclusive for real

a real obviously, with that's a immaterial can monitor. amongst new Utah. our at look approximately estate undergoing Home. format a target. it's X% watch in we and overall, play You piece large . Big portfolio, to list -- Provo, in take mall embedded That's At Lots, that an a our At of renovation with across Home continue It's

X% example. had for didn't base And so partner term. XX-year -- in lease you renew. now I'll at a We ours of give great Lots we're right a new parts auto space, on with a on a the just Big lift the national NOI approximately an that We X retailer

with So our the comfortable exposures frankly, we're very underlying and estate real here.

want lot total watch list that is we're that So of basically on it, X% again, focused frankly, we and back. a

Ki Bin Kim

Big And percentage? Lots ABR Okay. the

Peter Coughenour

And in the average, Yes. being exposure just paying also of our Ki per over with in point, basis of on to Lots. to on $X comfortable overall square it's Big they're I'd average. terms terms basis, sub-XX Bin, note, points today foot Joey's

Ki Bin Kim

pricing more slightly has your if lower. last obviously, whole being on make about comments raise, a the lot stock capital equity of Okay. Since drifted And your price I disciplined appreciate doesn't sense. your deployment

imply cap is round would at be if pace X% you you rate. raise prices, new you I'm GAAP And the like had an something So to if acquisition have product commentary? basis you if to provide buy XXX desirable slowing target, hold spread again? want a that the sure equity can today, probably if those to so of not you comfortable down would just if would point enough to still on there's and it the some case, to closer that

Joey Agree

putting putting with that year analysis and X% case inputs Well, conservative those out gave we year out year -- over base investment We growth started by the started went by descriptive volume with a a we with just the AFFO base. last more Peter no too. through

So we of that opportunity capital spread case. that that point merits south a justifies will justify not basis put compelling out something it mark-to-market XXX is or the a -- has unless business to unique

where -- where anticipate I absent stock economic material a is This volatility go, honest, price where I'll rates the macro large now. be we see so expansion cap incrementally our throughout is, liquid of And stock space. volatility the than don't course more goes, year, price more fragmented

deploying deploy Our focus accretive AFFO simple. spread. again, is capital yield, capital, This focused yield, being does AFFO is, it is you not disciplined forward material a work. a inside if that on that and And business very forward XXX% of

unsecured capital. don't look We for I how we price of of using XX% XX-year our care cost paper. bonds. that. Forget capital cost our at overnight That's using

an to you're if share forward basis. going on inside accretion drive it's shareholder and deploying of to it's AFFO per AFFO going work But yield, capital your no not

driving day our And out of not our and per share and The volume linear. rates per not the value growth relationship at denominator, is not there for cap and going nuts, growing exponential share so we're collecting end shareholders. the to between be

evidence have growth points as is not anecdotal is again, annualized XX large inside basis the empirical year. yellow XXX the light We've points evidence in well numbers producing some say, light. heard XX the of red subsequent so volume in the as business. And people this me a to of seen basis

including basis green. turned debt or free at the capital, XXX Over short-term start you cash flow unburdened look true of selectively. be cost light invest could to You your become not when points

years. If did you can on points, for several to like get slam we you XXX gas basis the

you at XXX point want is the not that at go adverse today, in we basis to curve, this risk in space unless believe to up significantly We're everything market this which company.

And how inside in bogey, going aggregate our be it, ball, of crystal deploy not that able don't we're certainly to point denominator the that not sure but XXX just for much asset I grow -- basis our have we're to going year. capital base. so to to

Operator

from of comes question Joshua Next Bank Dennerlein America. of

Unknown Analyst

few This for increase. on development maybe is over amount it you I your Josh. pipeline. going like fair development? know about was a know a XXXX, I Is assume behalf [indiscernible] comments a XXXX, total say, to of already of was XXXX about it I some a XX% curious, comparable amount into made

Joey Agree

to that frankly is the get grow for answering on the appropriate shovels all put to are going can merchant of developers going liquidity different Where merchant responding there and ultimate the this net inquiries provide types ground, just out retailers, the consistently constantly We accretion and develop builders of market to year number capital. for construction to number new the lack and where and from risk take up levels stores. phones constituents deployed in in ability not of duration the not be from from lending our that returns. lack of subject given We're to ends to we

where of projects a by well as day. the difficult will as in say number that to So this can it's We go. change completed It quarter. new announced

Retailers really continues want to bottom That's to pipeline grow grows, pace ultimate at the grow Our air. in the which up the it's today. it line.

GFC inclusive Walmart, of a retailers announced the in first since today. -- our to grow the since time new of the As really stores slew want portfolio, just who

foot square can availability The and rent is question pay. on costs, return capital, what cost they per construction of

goal with is, partners. wish those things had us those our sense calibrate number what to calibrating that and visibility. ultimately I that What out those figure again, make things I retail projects so is And for

Unknown Analyst

on some close. assist stores just retailers were And Is up -- comments Great. further there of this bringing update to along I about kind believe with last with what any to is mentioning quarter, of other made partnering that that? you lines you the

Joey Agree

Continued tomorrow, our it, discussion. we're frankly, constantly occurring to at obviously, going not The shareholders. the help this the familiar team today of that break of with logjam spreads. We're going we're new to stores. X to national and get development trying appropriate dialogue is right retailers to said, the you're That now in in that's do detriment

I So is is the world conversations, can continue dialogue out imagine, quarter. know inside But they going management the going value to the of think our all ongoing. proposition with we're is our have is to inclusive and our and fluid, it full-service -- I very appreciate It capabilities, in I of unique capabilities. know it to fourth those is. retailers as you asset

Operator

from Next Stevenson Rob Janney. question of comes

Robert Stevenson

cash leasing other was? inflation spread Can the size and fourth 'XX the the for lease the change terms these persistently you And talk whole the given have of about what as quarter days? a or done bumps in on higher

Joey Agree

de fairly one, you do I a On handy, mean it's number the have minimis. first Peter,

Peter Coughenour

activity rate tenant our for XXX%. that I have option, the would year that typically first we up The said, and just of expiration are vast in a an recapture say full the leases re-leasing bump which so that within option. of That QX of don't north has the exercise for Rob, an embedded was portfolio. Yes, ton actually for majority

Robert Stevenson

leases to people starting mitigate deals are Are higher guys terms? you're CPI. other bumps, you cetera, How what to about then or about lease trying stuff? new that as given the the on bumps, any frequent any et trying to more thinking push higher or of the Okay. guys development these of you inflation And

Joey Agree

Yes.

-- echo mean, that's go-forward the we're I so a they to So going at since inflation on thematic is no that retailers They X%, think generally over as understanding CPI-based X%, to in X%, rent that want is I national alone inflationary an know basis will what environment. yes, everybody plan be seen can bumps. let but we've to

as And lease relooking size of as bumps, are amenable tenants their those terms there. most so well at I the think the frequency to

Robert Stevenson

acquisitions. rates leases seeing spread between and Are talk ground ground consistent? in should the or you we fee for better then of today opportunities overall opportunities in stayed can on sort And difference about How the quarter leases that be versus cap you thinking relatively simple the Okay. the that? fourth year forward? going less about Is

Joey Agree

any between if generally -- spread the we're leases net consistent, retail minimis there. de working with ground very leases, Very, a partners our and

I first think of the in quarter. same see you'll more the

are shorter by some term, with in targeted are retailers partnership them us. of of them Some

de I think. So very minimis spread,

Operator

comes Next St. from Haendel question

Juste of Mizuho.

Haendel St. Juste

Joey, range you mentioned call the call in let's cap or -- opportunities I think year. to in much anticipating expectations? you pricing to you're earlier this that dispositions potentially you like categories client call what how see Curious of want rates -- any color potential

Joey Agree

I would things The that not look we're capital category overly chasing significant -- that. or low exposure tell market to our will perspective, decreasing significant from still We'll like to at Yes. redeploy fairly a Walmart approximately opportunistic basis XXX be point seems generally have dominated at yields. capital, you you, capital, the dispositions anything in interested be into where XXXX pretty markets it in spreads. deploy tenuous

service auto the in space. it see can You

exposure, -- tax-motivated car supply to we're other space, purchasers with generally the still potentially where You can see the in there them. have geographies, there maybe rural which our heat opportunistic, comfortable farm spaces it still very but categories, and seem wash amongst out space, to is

Haendel St. Juste

to Got minimum expecting then looks to rates back to That's you're guiding higher interest for capital probably like messaging longer. X, a the here. light just And X% now earnings deployment, be helpful. Clearly, going it. growth,

for think, mode from likely your X% today, I to peers, the but buying investment isn't to of what's case here degree the perspective, still kind curious, a we basically of earnings I it, stock I'm guess get I your X% growth wait-and-see a too here? to lag in this investors So a environment, shabby number in are

Joey Agree

let's take a step back. So

target X% of We plus of and dividend our ratio XX%. covered payout the that's have low a growing at end

agree. AFFO We portfolio, qualitatively while X-year strongest and is exception I without of XX% country have It would most think, improving growth investors retail in the now and to X% approaching and CAGR the the grade portfolio leases. a analysts ground investment XX%

a line anything sheet of no material that balance have until outstanding liquidity fortified $X exposure has debt on rate XXXX, the We maturities billion no floating credit. with except is of

fortress X%, and then the there take you balance grow you're can total to X% high year if and an this take dividend with underlying an your take So sheet growth, end, alone, the which no will go at returns assuming fortress X% you underlying ahead X% growing it and dividend, portfolio.

that here, our in And to I case insiders said invest is prepared inclusive think environment compelling in as in a remarks, I agree. very think, of today's ADC. I myself,

we diminishing done I have without qualitative portfolio, is, without aspect of we the peer. think, what built our have and What is

We We've Walgreens about We haven't We're CVS pharmacy been talking box. loaded Walgreens double-digit space. our there We've reducing Walgreens checking an overtake just ran Walgreens watching on double-digit from IG pharmacy exposure for number, exposure to inconsequential not in now out years, exposure. up exposure. have and store dollar don't the the pharmacies.

our we balance earnings I we predictions track proven have sheet profile of the being frankly on. retail the a also think but to record not and to, management, the world, bank now omnichannel in have correct in only growth an about -- predilections concerns

today's I especially said, and think environment so And be there's in for predictability. something to stability

Operator

JP of Germain Mitch from ] (sic) Securities. comes question [ Next JMP

Mitch Germain

seeing but you're if any year, the early know just I'm to I pool? it's the buyer changes in curious

Joey Agree

fragmented Mitch, toss-up in liquid becomes environment, of I market honestly rate you buyer begin interest and environment the to with, a stress pool and is air. so credit the higher mean in a a in no. that kind this large it

I'll this? a disposition Who sometimes an is who is or Who the difficult. is into be this? riddle. answer So honest, committee, it's investment like . turns buying something And ask this? selling I very mean I'll

is -- about It's and throwing it's fluid is you no or to being honest, it's hit drawn. It disciplined not in want what and be I'll a there right There is so be decisive market -- about are now. parallels there being to accomplish. And darts miss.

Operator

question Next Milligan R.J. from Raymond James. comes of

R.J. Milligan

So up. follow I just want to

an far? in asked think the what year-to-date sure if you Smedes so of I I'm been this. has terms activity not provided answer

Joey Agree

No.

activity. or update answer any any provided haven't We the year-to-date on

I that side. basis QX Although to on XX anticipate by acquisition XX we in mention jumping cap points rates approximately the did

R.J. Milligan

Got it.

quarter versus trying via capital out today. new right, And to equity previously know the so and last capital go there's raise between a I capital raised, -- ATM difference

given just that goal be X.X% still to a curious deploy guess, expansion, the a rate raised previously it ATM are high outlook the would wait going the quickly cap QX Or proceeds that, that the pretty X.X% you I deploy rates? or to if average rate? what cap is cap proceeds? it So a rate today, even is or at with see cap I'm for absolute seeing that's and of Is then more

Joey Agree

Yes.

nowhere are there where cap process. through we out today the near a to market. not clarify, marketed buying rates We're and highly market That creating transactions here there glossy auction value. Just product. on not manufactured out like-kind that is sent that's These work brochures are

of cap disposition achieve types look cost can today, to relative in highlighted, capital, we that deploy as equity. our that of those spread But $XXX if million so power buying proceeds. And inclusive any think rates, we we'll of at leverage-neutral we I not have

pipeline capital the and options as materializes, us, year again, pipeline for do today. but so And need the look all don't the at grows, anything to we we'll as

billion neutral leverage that liquidity that's $XXX in and million with power. I pretty think clear of $X

R.J. Milligan

just follow-up. And X

a to guideposts? provide, So the to confidence do growth Joey, at or what very curious, volatile to environment. you've that often capital days, or to been about in talked able external XX see need for sort are guidepost I'm in have of we just lot you the acquisition a of visibility transaction lack of I the resume as markets least however, markets capital you market get the understand an visibility despite a that lack volume.

Joey Agree

I a again. level think have of get normalcy we to to

have an mean, to haven't I'd I I to $X.X be get economist haven't who's honest, this since of trillion lowered macroeconomic right I in X. think level I -- environment. we seen the and gotten a into to economy rates stability the underlying we pumped

the And next months so myself. me over [ XX to to anticipate dumb ] materialize here and estate be of here going try during to year, a the of ahead would this sit sit real getting and specifically for course I us as frankly to guy what's

some were out able we're in today. underlying seeing we're guidepost historic crash seeing world in geopolitical to event today there provide because or it's the aberration absent these had into level a clarity volatility of markets we And we of that lack frankly, in foggy those markets, with type these mean, anything so or of and visibility the a I

that I get get level be And XXX% based so But ourselves. ahead we we just provide when we it. getting we upon of clarity will and did if if -- that we of would stability, think anything anything else,

R.J. Milligan

I'm proactive or other the there's curious sort is exposure of ahead over you're in additional of year categories down get over that you Walgreens been to looking selling curve clearly, One next if any the X? time. pretty your have guys

Joey Agree

frankly, very beauty with exposure from We pharmacy had Walgreens to to of of attempted with M&A approximately developing -- which front had the us it to Walgreens in we the specifically. end, Not saw perspective. was and count, Their and intimate X XX% of specific sense in exposure. failure them make XXXX, store store Walgreens front experience of and to we I of need we XX fragrance. their category attempts XX didn't constant in the very repurpose XXXX, at XX% of the space, something a In Walgreens exposure a really increase desire do the that end to context [indiscernible] And the degradation of overabundance approximately. were saw to lot states. I mean Walgreens we think, an the

portfolio healthy. in that the really tell doing retailers was and us our generally to are those abundantly really erode. I'll watching well you, And so stores today, clear are

in portfolio and look investing The figuring We've they're this Now today, doing stayed well. stuff space. from the away really and price, continue drive we away to. at getting if our from bigger But the out in the retailers labor EBITDA are then and stayed distribution dining how stronger. we'll getting to you bigger, world. They're casual experiential omnichannel

Operator

The next question Jefferies. comes Tsai from of Linda

Linda Yu Tsai

cap you easy level what to being Regarding XX, is through difficult XX or expansion how in on auction achieve as and up it process. color you bps Any rates XQ that drive of to how the referred more manufactured this?

Joey Agree

Yes.

find Just and we opportunities. landlord highly our creating long out value to term they want glossy extend to blend brokers. brochure We're there clarify, off-market national be These opportunities, long want those to opportunities cap rates term, and to aren't you. partners marketed working seeking are where be through us there, their retail with effectively

repeat you question? What was the the would part of second -- that

Linda Yu Tsai

is easy -- or difficult its this to -- how sustainability? it and achieve to Just

Joey Agree

tremendous easy. today. relationships. We this The world Not anything in and Look, this grit. grit. core here. is one takes -- That's team requires I takes here retailers. with grit. leverage It credibility our is It our of don't Greatness values relationships has think easy

to to in aren't that's buying own the returns capital hopefully, team wholesale our outsized growth continue to and are. across the market opportunities where cost external X -- confident relative uncover out But XXX% We given provides platforms process the all there will anymore be able I'm going of internal that that both expectations.

Linda Yu Tsai

leaseback in as volume, sale was DFP if X/X can of the similarly, grow to to acquisition then of the grow what a can And 'XX? percentage And it where volume?

Joey Agree

retailer large to with, perspective, tenant unsecured need don't want From we the tenants a are creditor any those we capital, a sale that's that to business leaseback become any doesn't equity only and sponsors. do typically private that

the their know things Their today, settle are they the at they're right? estate CFOs, departments market volatility. paper, looked well. waiting sale the did as unsecured leaseback, retailers, we here on can They watching issue you for to in if real where So down they're pause,

in number possible get fully year. stabilization I if the we It's so given And approaching X/X. today's anticipate wouldn't status later quo, that

day, it In terms of changes. DFP, every

built that built have context ARC. out system of out. team We've that We in

our those We in if just willing developers And context they're and return pricing as -- specific of it returns more on made is a Again, to question of processes able profile. accept the to pay ultimately, have efficient. the works well as it's rents And our retailers, obviously both pricing. the with they're the and improved the sites.

Operator

Ronald next question comes Stanley. of Kamdem The from Morgan

Zhen Li

and just you questions. have Joey Jenny quick have on X Ron. I Peter, for

is, it's year? you IG the on is like But than first bit is market? the focused that on environment better a year-over-year low, competition or this compare like The actually if transaction getting talk a basis, of mentioned volume you kind worse can year. like for And little today last you

Joey Agree

and slowdown infrequent There in the sandbox is really what random amount is XXXX is minimis. or the miss, it They high competition, composition individuals. the but competition Competition the given are similar, similar historically, just except you The our the is very of amount transactional net XXXX right? hit of very competition. the to was worth de specific or tell slowdown,

sellers' the expectations repeat part I often And you that competitors themselves. Would so are second of say question? our largest

Zhen Li

transaction volumes. is the second The

or year last basis, transaction low, of than the actually year-over-year year this like better on volume is mentioned year? than actually but you compare You if last a it's worse kind

Joey Agree

Well, the acquisitions? closed transaction volume in terms of

Zhen Li

and overall? pipelines the Of just

Joey Agree

relative basis. our improving we build volume Look, We're early. QX still a pipeline. significantly But to relative have those the to I as on for just QX We're cap undoubtedly. down QX year-over-year starting very into on QX, mentioned, will transaction focus visibility is be year-over-year rates

difficult looking what it's get forward, or of us. type to It's normalcy underlying we we So get difficult -- in again, see I very think stabilization macro. the predict, we'll impossible for

Zhen Li

Yes, it sense. makes

to overall environment? is your rate think -- cap you about this based dispositions, maybe in do talk year. think you cap just trending mentioned the bit you talk And I dispose target on about expecting the more you're If disposition like little more rates, a

Joey Agree

Yes. We're we generally north think sell looking we where plus assets asset an redeploy the and XXX potential term it basis necessarily within -- or range for above areas the those can of portfolio. minimally that opportunistic in points, in then minus the profile long that that in have growth cap -- don't X

Operator

comes [ Next Baird. ] from of question Alex Hagan

Unknown Analyst

are yields the on deals? where off, development new the funding First current

Joey Agree

and significantly acquisition. just new overall project is of I until rent an to new points that it's of starting the of risk. new X approximately let's we're deals, terms takes in DFP wide If the rates net say commencement, transaction it, that in duration development XX XX months targeting lifetime call cap funding now, mean, entitlements, generally, basis you over because that we're approvals we're When targeting -- the

Unknown Analyst

attractive reduce now source kind of most of soon? kind have Okay. your today? hike debt be cut curious you guess, debt put issuing company of And said a you And on the the -- hat long-term the what's rate I a of plans does second, might the higher to think anytime macro chance rate on any than revolver earlier is

Joey Agree

Yes.

is rate market, more any expectation debt cut think hot than the rate We'll we'll the and rate that repeat, let I to I cut table, Just, we this terms the of market that March. see probably said But is the that. Peter I'll the prints in I'll is that off take Peter, data, answer March better of of come year if obviously, had second hike get for than chance in see a out. tomorrow. just clearly better more question. change you probably the let

Peter Coughenour

Yes.

we to think billion this available I liquidity total of us. came with -- $X year into

And the no debt near-term markets. so access need to there's

have XXXX. We no material until debt maturities

can And continue debt opportunistic the in we and so access capital we to markets. when of be terms how

We bank to markets markets the unsecured strong we have debt have access as continue as to our well where group. support both the bank from

And portfolio. debt match a swaps as preference the for XX-K, underlying I fourth typically Those rate rate issuance, XX-year at end, forward starting the quarter. duration and unsecured swaps contemplated million future unsecured into swapped entered disclosed during an is $XXX effective lease that that our financings X%. they're just in of under fixed think the of longer-term our we to

in June So future. in They we us of terms at contemplates back to optionality that have coming market have of use termination some date when 'XX, the in we those mandatory swaps. but point a

Operator

question BMO next Capital Borden Eric comes from Markets. of The

Eric Borden

watch a Just expiring list. assets today? I X the mentioned What's Big or mid-single the think space on in the back on Lots quick the mark-to-market taking there you digits. in

the about of curious portfolio? the Just rest

Joey Agree

I that In expiration least approximately parts, reference overall where is think was auto the on now that mark-to-market of within the we XX-year a lease. is? portfolio Lots Big remainder which The X% new to at mentioned,

Eric Borden

portion the -- list the back? the watch of remainder the you anticipate on of that that the base portfolio is Just or taking

Joey Agree

but rental to we're a extremely have those, that are back to we we if market these that [ where boxes rates to is, across ] impossible. range in marking foot. the acquired is today given mid-single-digit build comfortable were we've vertical mid-single-digit These the find that are that any I'd comfortable we're any is of tell that rental $XXX feel that box Again, extremely mid-single-digit them to these market box you, today comfortable. varies has like $XXX, no it we'll even rates across almost rates to merit it get any rental board, extremely challenge a here

Operator

comes of Wells question Siversky next from The Fargo. Connor

Jesus Garcia

Jesus on for this morning. Connor

Just the backdrop? in you in some continue temperature of macro these your willingness a expand retail conversations on offer current check with tenants, for can to this operations to

Joey Agree

time we're the construction is demand pay there voracious they in on foot is square voracious we're can that don't all is continue again, a as per expanding It flags. talk what continue the different space, ultimately, challenge TJX costs we Burlington, to to the desire operators, in We're all the Depot, Home across and a before is all new are making of supply large-format board, to the and Yes, it touched really to the But rental retailers here. focused and concepts, way expand I stores. the seeing to from to large remember have AutoZone a to prior net off-price again, expand C-stores, I necessity-based demand the the when aggressively. on acquisition auto their except open and parts rate. GFC, Walmart Below. and retailers, arena operators discount to the And to whether the the expand tracker a to it's earlier, Lowe's Ross, -- want obviously stores. across Five that continue it's Walmart These which ALDI, expand continue O'Reilly to and to opening today

operators. you I area terms in discount-oriented across that the see think of

Operator

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

Joey Agree

appreciate everybody's you for this the you, look upcoming operator, thank morning, us time. conferences. and at Well, and seeing you to forward thank we all joining We

Operator

The conference disconnect. and for attending has today's you now you may Thank concluded. presentation, now

Agree Realty (ADC) 14 Feb 242023 Q4 Earnings call transcript