ADC - Earnings call transcript Q3 2024 | Agree Realty Corporation

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Operator

Good morning, and welcome to the Agree Realty Third Quarter 2024 Conference Call. [Operator Instructions] Note that this event is being recorded. I would now like to turn the conference over to Reuben Treatman, Senior Director of Corporate Finance. Please go ahead, Reuben.

Reuben Treatman

Thank you. Good morning, everyone, and thank you for joining us for Agree Realty's Third Quarter 2024 Earnings Call.

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

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

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

Joey Agree

us thank joining all for morning. Thanks, Reuben, and you this

state to running the we sheet standard update, I'd current back to this and like market Before and proactively steps dynamic provide fortify our in through our have on portfolio the take taken a how perspective to our step of balance environment.

capitalize $XXX our enjoy As runway changing capital million without to around into with shift, capital $XXX this growing equity our of billion. forward cost program. to equity via $X execute needs. employment, quarter total improved XXXX approximately significant our the our on with now has approaching during the liquidity We've ATM outstanding fortress and equity our of the raised nearly We readjusted total any able on markets million, This brings inflation balance pipeline bolstering to significantly. been expectations forward sheet

just stood leverage end, at net X.Xx recurring to forma EBITDA. quarter pro At debt

of strength rating and nature to our our of high-quality the BBB+ the our while recognizing S&P credit upgraded portfolio. balance quarter, During sheet

underwriting leveraging process. as able sets our continue high We opportunities. while maintain unique approach off a to identify to patient been distressed This discipline in to capitalize sellers on asymmetric data has our relationships and paid level of we've

value combined improved Our capital, larger these opportunity team's and opened with and identify accelerated our create up cost have deal opportunities, to efforts set of resulted in continued flow. a

balance continue these be well-positioned will sheet, our real stringent that quality disciplined our underwriting we With $XXX maintain standards. estate increasing we guidance for Given to acquisition dynamics and the to full capital and market are million approximately year. our said, allocators

variety pipeline portfolio remain with Our balanced a and of differentiated opportunities.

liquidity our performance, AFFO approximately $X.XX momentarily. to sheet raised at X.X% details Peter growth have profile, to our more per $X.XX year. on our Given balance guidance of This the a the range share portfolio's midpoint. year-over-year will lower the the end provide represents of and for we guidance

X our growth to platforms. external Turning

home During XX quarter, we the retail The to warehouse grocery parts, leased the operating are leading merchandise, during sectors, quarter acquired over million net assets properties in third properties operators including as includes our for stores. improvement, $XXX XX auto third the and across external acquisition general clubs, well as This $XXX the X in service, lease growth tire platforms. of invested million. auto approximately high-quality

for New Anderson, Also the of strong rate and in X.X weighted as acquired largest a increase lease partnership. The accounted a sale weighted of stores of average year-over-year, to over in off-market the array U.S. high-performing tenants Kingston, X a acquired. we York, whom cap the acquisition well as South had leasebacks annualized located During Carolina, expanding average further in our retailers relationship base transactions, the point Elmsford executed XX and quarter retailer XX% rent quarter, with were continue select with included X.X%, term an the a in we including of with Club Walmart relationship basis upon years. of the properties Investment-grade Sam's enjoy

reminder, issuers. Through most that first $XXX the upcoming properties I invested net our of million months do retail be and non-rated year. our investment will ratings XXX XX of Approximately the lease across $XXX the acquisition a active originated impute sectors. XX we've year, for credit X quarter we As the retail our nearly not states million from of platform. spanning activities anticipate

first platform total, X $XX representing million, of commenced In $XX or committed funding completed either September total projects million million. $XXX During of inclusive completing through total $XX the deployed capital, development XX. million and the committed of while XX X third the under during approximately cost capital approximately projects months quarter, with of we construction developer projects had X we of year, representing the

stores of continues pipeline Our in platforms challenges continued to both for that our partners both grow the and significantly, mirroring solve new efforts these merchant to developers fruition. have retail to bringing our

or in & new asset extensions on a Jersey. New XX,XXX feet quarter, of Secaucus, we during HomeGoods and leasable square options in XXX,XXX foot Ohio square Walmart the management leases, foot XXX,XXX square front, Supercenter On a gross executed the area approximately including Marshalls

than result our lease annualized base at XX basis leases, just of our team's X a now representing asset As XXXX management rents. points maturities efforts, stand less of

of to dispositions we for with quarter, continue weighted of XXXX over $X strong total from also a which capital. of of Florida-based Both million command were opportunistically rate cap a average properties these bid assets, the gross X.X%. X disposed During proceeds noncore

received, bankruptcy. that of address the Chapter I our status Given want existing the post stores we've Big Lots XX to for questions filing

upside paying Big limited $X annualized as per rent on of less As end, provide base discussed event before, the foot just given confidence real points with average, estate. which in square quarter rejection underlying should of have in over than basis Lots the exposure of XX we our

letter operator anticipated discount recapture have Only over space intent stores to Grand purchased the it, Virginia of a net at with X effective of a terminating rejected Michigan. XXX% an been executed We leading lease of our the Manassas, effectively retail and Rapids, date, on have with rent. Manassas auction, and in

proactive as example bottoms-up negotiating a in -- in strong progress Big Bath our of ability are on Rapids, recapture coming multiple recapture via to intent arise. should is management look the for quarters updates Lots which & This driving underwriting our to to within result disciplined a real our credit Beyond, approach infrequently another capabilities. Similar our to Bed issues location, our rate testament well. further testament efforts. when embedded We forward portfolio value is value letters We providing our estate and of asset leasing the is Grand Michigan

United leases comprising nearly XXX across rents. annualized now ground continental XX% States, including all portfolio of best-in-class Our spans X,XXX over properties XX base

to exposure and and up end hand then it strong at questions. can open occupancy investment-grade XX.X%. With we stood quarter Our at I'll call at over that, the for XX.X%, Peter, remained

Peter Coughenour

of fortress in Thank active upgraded Joey a raising BBB+ achieving the July, our The our investment-grade concentration tripled in strength million you, with sheet. to Joey. which our a sheet we've balance upsizing facility the our issuer over to nearly retail rating improved is our of we've capital equity sheet. company. Since and Starting our of the portfolio quarter initial reflects $XXX the the had credit deleveraging ago, and testament balance rating In mentioned, years and revolving S&P manner outlook. rating X thoughtful simultaneously a billion. investment stable size our increasing markets, and with $X.XX balance best-in-class the as very from forward We disciplined credit grown to BBB, grade while

a forward rate quarter, our also for provides fixing fund during outstanding swaps us $XXX contemplated of XX-year approximately million capital at this with issuance equity, investment the of entered the with effectively X.X%. We million into XXXX. hedge base forward $XXX unsecured debt into starting to activity Combined

equity our of million ATM approximately program, sold the of million. shares over During $XXX raising proceeds via quarter, forward we X.X net

which under As of remaining settlement. sale we of XX, raise are to forward proceeds upon settled net be million $XXX XX.X anticipated million had to shares existing September agreements, approximately

Additionally, of commitments as credit $X us The to $X billion. we revolving an lender recast previously accordion request announced, $X.XX includes additional from that up increasing option to to billion. facility billion allows a total facility, commitments our

also credit facility and ratio. including our term options, reduced by points X of extension basis to the ratings We borrowing cost leverage based current our the extended XXXX, and on

from billion facility, to of September availability on last mentioned total of Pro forma hand. on we for previously credit outstanding north down of was and which recurring As billion liquidity, the X.X of our approximately $X.X settlement revolving net the of including quarter. $X.X debt our have turn outstanding equity, cash X.Xx, XX, is forward equity forward EBITDA

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

only $XX as enterprise until We of maturities minimis very while we approximately total at was ratio, and our end, healthy de XXXX. quarter Our the coverage value reminder, no balance. includes X.Xx. amortization And to indebtedness which charge floating a rate debt of fixed material our have revolver had debt preferred is dividend, principal at consisting million XX%,

well We any pipeline positioned without uncommitted leverage execute range additional our raising our stated are very stay and well capital. on to within

a Moving to to AFFO per $X.XX X.X% the year-over-year increased third $X.XX. representing quarter Core X.X% third earnings. quarter for share, FFO per increase. was share for the year-over-year

income share mentioned, Joey to nonreimbursable and volume, $X.XX, our several As We release, AFFO expenses, and disposition parameters tax other the at our $X.XX expenses. guidance of earnings representing administrative X.X% on end to including other estate have we full and in approximately plus midpoint. expenses, inputs range growth increased year provide year-over-year XXXX real the per lower acquisition tax general

equity reminder, to these in above outstanding over the price offerings forward ADC impact share a included prior related method in of stock is our treasury to settlement the third the As quarter. aggregate net diluted if count stock dilutive trades our The offerings. impact was $X.XX

in Under impact if again, have stock treasury range AFFO in over near scenario, method Our on stock fourth dilution stock the to levels, per similar quarter updated anticipate share contemplates treasury our price will current a quarter. line an the we fourth with stock trade $X.XX current in levels. continues dilution assuming method that of guidance

drive to Our and guidance earnings well-covered ability a our further growing which growth, consistent dividend. demonstrates supports

dividends an the we of and represent for annualized a During of July, dividends XXXX. of quarter each dividend third declared from the annualized the On basis, August common increase cash third quarter, the monthly per share over $X.XX X.X% monthly September.

an $X.XXX is very to quarter back for to $X.XX dividend end, quarter. Subsequent equates monthly for and over dividend like increased Our monthly to to common dividend X.X% share the share turn the cash annualized to With dividend increase. that, October. share AFFO payout XX% a year-over-year well ratio I'd third of a per with per represents The of of Joey. the per we almost call covered

Joey Agree

you, growing $X will we operator, and quarter open investment to position are billion nearly in and questions. the tremendous Peter. this up into With it execute pipeline liquidity, time, a robust fourth we Thank in XXXX. At a and into for

Operator

comes Rose Smedes Citi. Instructions] First [Operator from question at

Nicholas Joseph

on starting right sequential quarter just It's Nick Smedes. maybe back up Joseph decline cap the obviously We in with here rate XX-year a XX has now. movement. The X.XX% saw X.X%. to point the basis just Joey, obviously moved third to

cap of curious, to here, in quarter, kind could the your thoughts XX-year? that on the movement where rates particularly but on move obviously So just sensitivity a fourth from

Joey Agree

pretty been front XX-year XX-year ride awaiting Yes. the wild awaiting the then rate and a doing the the It's yield the eagerly opposite, Fed with the Obviously, with here. -- cut treasury. on everybody obviously,

So the another saw saw, I XX points. elevating basis last, the We've you that QX, basis XX, days, QX. leaned see in as leveraging of capital. XX point what but speaking about point the compression in into be a rates cost basis focused about opportunities mentioned, XX, effectively will in generally say, some We prior on seen you XX to where in let's XX, quality our think you we compression. We'll XX a I'll only our tell compression XX-year highest cap

be be for only largest by the of us for will the year. not the guidance, will highest quarter QX think the for indicated our also year quality quarter it as I but us

mentioned. this QX going the starts to rates of given backing when this overall sellers' to X.XX%, move interesting that to be cap X.XX% it's up again environment going expectations week, we see now, QX in asking are adjust terms and to that you As into if sourcing XX-year in effectively prices

once this moved fragmented and the with given aware, it's again but well market elevated begin here unison, tell move back on doesn't in I'll quickly. pushing we'll the very price point as So rates you, you're XX-year cap nature, small yield. nature

Nicholas Joseph

to then list talk consumer kind any helpful. That's been your the as broadly. of And watch you on health if there's curious and thoughts on more changes tenants just

Joey Agree

recapture a be prepared sectors and Manassas, the list, to the the added C-stores, the changes for us lease mentioned way the Big to to Virginia both We tenants actually provide watch the No all opportunity. a effectively TJXs, Lots. early there the Wawa, I'll include Home as acquisition in significant my looking continues the QuikTrip, the the on tenants. like Target, since I as through and with grow remarks, and tenants, on of well all are in. the it in the continues space to we we illiquidity merchants, on meeting nonexperiential, I non-luxury terminating based builder a huge the Sheetz, liquidity do as Burlington negotiating Look, down our development week, step Depot lease, the as stores. to where But at the of purchased then effectively the have general call, still with large-format auction road grow. And the time are opportunity career merchant retailers of aggressively. is in next of as a continue and to challenge, as from banks, Walmart indicated new are course, aggressively. world. well. We've last to off-price given to a their local number those in that this are eager challenges Ross and, nondiscretionary, pre-GFC grow as focused, regional in that Walmart, and And DFP growth, number market Lowe's pipeline. first Those Tenants in

have omnichannel to fulfill and the and sectors, headed tenants invest. pendulum So those attribute frankly, future years that consumer less realization counts That respective fleet. experience e-commerce their in to they're store neglecting the effectively. in look, frankly, of And to the would swinging tenants' to grow towards, environment, want still from to brick-and-mortar going and back the adding that the to investment more to continue we're that now true includes to I

Operator

RBC Capital Next of question Markets. comes from Heffern Brad

Brad Heffern

Is confident is get significantly set other sounds that It macro would opened Is the I'm more happening happening up reason you and rates are meaningfully. in to sellers curious are because better? because point some has where that pricing Or opportunity they it going? just think is is? why like think to? you going there

Joey Agree

It's question, a Brad. great

we've We've that a think post enjoyed money multitude them, Amongst with had had there's post I a rate low flying and that here. COVID environment obviously, we around. free of reasons a all reset, reset.

buyers lack activity. transactional which capital real effectively in and reset, space a out to expectations overall a had in the commercial we've XXXX So because We've of this of of reality. brought flushed had a lot the of reset sellers' estate terms

in I And in so that obviously, number had increasing. We've cost with don't the continues to be our anticipate of capital, our it fractional, reset a and increase stock price.

to us So terms mentioned, just our we a more to store the obviously developers' market. just match retailer I And growth on in that choose. in question, cost competitive want challenges developers' of as that capability we've reset capital Nick's of capability, makes then had because assets of

say, is in not ground the there, the goal And to of and so platforms. platform an prepared I'll look, to million with relationships continue through here our production medium in through our as the in remarks, our for grow new through sandbox developer term opportunity our funding the a discussed acquisitions and put $XXX development them see we on stores interim X those huge basis. We retailers only also net to annual but

it's or And different side, world. whole obviously, whether this experiential world. participants noncredit. public are casinos so or in different international We've on There or it's the also different a focuses, seen,

operating call in pre-COVID. today we're very it, paradigm And so a it's different than, I'll

Brad Heffern

similar XXXX? that in, this back capital, rates, the Got set, volumes Okay. And say, could then think you stay similar to cap if cost XXXX to it. you conditions opportunity similar similar did of do levels to XXXX, in go

Joey Agree

more and think ground, I share. continue market as can X other take Yes. we external through put to think platforms, mentioned, the I we growth the And on I can

Operator

from Morgan Next question comes at Kamdem Stanley. Ronald

Ronald Kamdem

for quick Two ones me.

just product back on you is that? is what activity, there's seeing driving the so you to you that Just think guys -- maybe entire and going the again, just Do And talk sort can it forth? do market about of ramp in are there? more is more -- shares out think you

Joey Agree

of XXX like we have X the transactions to, more market transactions out can aggregate attribute aren't X understood Ron, decisively data. sure don't services -- XX, relative any there. I'm our the -- on being brokers XX, market-listed or Most quickly, has proposition of value across out us I do more product total success there quantitative the I all on our act call really by more it CoStar, there's feels for available ago. market days the developers, volume there. product has it, and to would close and owners that well quickly platforms really move just retailers, taken hold. as ability to

we look, -- that firing If invested scenario. platforms X, X it's most we're notably the with and developer hell doing year, all development cylinders. to watch the the We've we today. all back X pleasure so of All way all it's of frankly, this obviously a in We're beginning do-nothing platform. lot. year, harken a And from started to far a platforms. on whole And funding

Ronald Kamdem

Great. us furniture watch And the a was bad of on you that. some about you X lot I change been year-to-date to can ago, some know just on of those or you how love sectors you're then or and it's going just months just about what the into And talk guidance? of dollar has would some can Maybe there thinking updated us stores, whether just some give the forward? debt remind thoughts One, the no said pharmacies thoughts you updated what list. baked

Joey Agree

want part? you to debt do Peter, Yes, bad hit the

Peter Coughenour

Sure, Ron.

Big perform to very in points we've of where our credit In portfolio healthy remarks, seeing in overall, recapture of for roughly downtime earnings. XX which credit year-to-date, we bode should is well. & average. as above Lots, longer-term well Bath the at rates, slightly loss we're Joey continues such Bed very instances as which experienced basis mentioned have loss, the Beyond or terms But experienced future prepared And

in the guidance But that assuming our of end of in higher the guidance credit In terms of range, our end credit at for we're loss year-to-date with we're low what's basis range, that's points still year. of contemplated average. the guidance at approximately XX more line assuming loss

Operator

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

Eric Borden

up acquisition you're seeing that in Joey, it Or is you seemingly opening mainly and deals market assets the portfolio targeting, doubles? singles more larger with the come to market? are

Joey Agree

opportunities, a opportunities. can sale-leaseback directed in Single a is we've QX I'd -- recall. one-off types. retailers, I of largest leaseback breadth QX scale sale smaller which tell the tell did QX myriad a here, this It's into portfolios, you, in closing you, we different credit anticipate all set seen from it's that opportunity that opportunities of I'll

it's point premiums the I'd means, by all we're today. it's this portfolio over but so the And you, over board board. look, really at all tell paying not any

Eric Borden

That's How your then disasters fires helpful. on a with more states becoming you picture hurricanes a of increasing exposure today. with risks higher your and bigger are And future today? affected question, of probability California? the thoughts acquisitions and to is bigger thinking how as such And threat natural just forest about current Florida

Joey Agree

an It's impacted. disasters. our potential of natural from or part occurrence looking the those definitely occurrence frankly, at It's it looking areas. We're insurance underwriting. perspective. the also Look, And we're in of

been definitely at And program on forefront. so Peter actively is for XXXX for working us. insurance it the the has

be has negligent not it be And something considered, to. so would it's to that

pretty those to any coastal we're fire we're areas insurance that place mentioned, you going in covering to all run to our we make get those sure challenges careful have we so we're as to into of program bases. if be And don't there. just that into the going or And zones,

Operator

Kilichowski Wells next The from at Fargo. question John comes

William John Kilichowski

Thank you.

fair How issues changing of space start bit portfolio into there's the headline for move tenant lease in as -- you of net I'll construction So credit in year. are we in about this a thinking top 'XX with been preferences sectors? terms

Joey Agree

I think tremendous we're position. in a

concentrations and perspective. been both questioning these we've sector look, think, the tenant from a issues in and lot I of credit the talking about

That and X for look I acquisition harping divesting decade you pharmacy today. close pharmacy, launched If nearly was been number at there's company at here we when that's XX% of mean, we're example, platform. now. X% to Walgreens Walgreens on for the a

theaters aren't pharmacies, to go Pharmacies transcripts. pharmacies new prior the you world order. And acquire the side pharmacy and specific movie, disposition product away. a country. necessarily pharmacies We're this of over-pharmacied in CVS Select space, If theater clear, over-screened or to are to it's and Movie today. to aren't we'll TV. I been course, movie away. the we're theaters watch pharmaceutical multiple think our or read going at go in Apple but And avenues in need Netflix CVS your on similar an there Select We've very to home the fulfill a whether going are for or

continue of of prepared Walmart, XX%. tire so biggest the thrive. and service. the I in at our at Groceries balanced X.X%, country, continues going to No in obviously about north is is we're only as to And The and which portfolio. tenant home mentioned our by in X% portfolio that a over in operate added, the remarks, we followed X list portfolio the sector retailer to improvement opportunities top

think I balanced a portfolio, concentration or risk taking us. not a benefited sector from has unnecessary So ultimately, tenant

by in the least BAM. headline for People by that a secondarily And community while. the it. risk ignored think was I the investor comes the suffer pushed to community investor or frankly at from side

lines historically, a absent from well-balanced And perspective, sectors. by gray and portfolio operate operators a sector we've we'll a the respective in been tenant number, that, exceeding their from those continue Walmart to have XX% perspective, and abided leading so with X% X% that

William John Kilichowski

so that, marketed its large rounds it's X.X. a around stores. last then closure portfolio of X-Eleven the also sounds And XXX week on And like making announced that been being X-Eleven with has

then how to think going yields would impact verticals price those forward? And of acquisition any communicated X your they target kind are of discovery would have of question that do that some my closures would be, So be, first part you of yours? you on

Joey Agree

a first tell it actually leaseback you're to, you that will with question, scale discovery impact referring be team next I at at all. question, your does price large week. To no, To your I X-Eleven sale second would the

capital will that that just portfolio no the disproportionate and concentration in size institutional spoke drive I in have would be transaction chasing is everything But appropriate pricing, a price think it, is to compress of will a you cap think pipeline. pay concentration. our premium they that sector rates, on their necessary our to terms has tenant impact Frankly, of discovery. that I of volume

Operator

Next question comes Jefferies. from Linda at Tsai

Linda Yu Tsai

what this Just topic credit, it BBB+? to credit made Fitch impact rating does increase debt And cost the on that that your then of was to want your of capital?

Joey Agree

I'll let Peter with talk time coming. was long fixed about the a tell we've of pretty income you, impact capital. to And the I'll been cost the think it we clear market.

company, think fixed us. the when that? last -- rated the market at and was were of the When we with I initially income onset had Peter, meeting, S&P COVID has agreed they the in

Peter Coughenour

XXXX. of March

Joey Agree

you XXXX, the here. X/X March of just Yes. to... I'll take it going I'm were let we size. from

Peter Coughenour

prepared Yes. concentration the remarks, were investment-grade balance I Linda, to in portfolio. early portfolio. answer in your our our the initially of We've We've since, the tripled as We've sheet. mentioned in size question, we the XXXX. back increased deleveraged rated

So point, this coming. I to Joey's time has long a been think

we indicative, credit to very company BBB+ and conservative as well-positioned our balance going of and metrics I stronger continue that's think maintain a a to than we're view frankly, sheet.

a viewed most as, we to and the us of terms our before think frankly, we of upgrade, got debt impact capital, outlook. the company investors In were cost a on BBB+ positive I

spreads a continue the the attractive of impact the continue balance we maintain seen maintain from in but to to sheet, we'll material that way unsecured necessarily we do alone, markets capital upgrade our to And cost because the so. and so of debt haven't we

Linda Yu Tsai

perspective closing XXX morning space. the seeing in is with And Can what's weakness on chain? stores. We're restaurant tenant then, a have Joey, you happening headline Denny's this There's credit. good always restaurant on opine some that you the a

Joey Agree

I that at clear been Denny's. But them, specifically our continue are restaurants in not we've Linda, not to sandbox. eat pretty

the the our rates amortized We'll mechanical, back operate all Our most probably for exposure rental the on the build-outs fixtures, the plumbing, -- furnitures, sectors is the in difficult restaurant is ground electrical to X forte. X building take restaurant of not retail specifically, business free. But business retail into and in leases. the the

elevated on focused And they're Again, are tenant we're fungible rents those and rectangles specific. generally, here.

And in acquiring away anticipate one I so has in not the our the acquire We'll one restaurant focus the We real stay to us enjoy didn't QX. continue space. in been from food don't QX. estate. and

Linda Yu Tsai

on they might why general any be now? struggling thoughts But

Joey Agree

also Certainly. constrained Eats. as at retailers DoorDash to just cheap and low their elevated home, at that proposition access elevated had shakeout labor but post-COVID while here, the labor free money numbers costs tell business, of in probably you elevated obligations restaurants. not at undeniably. But we'll difficult excuse of different the if look is such their a me, and ongoing elongated end, things the no value first I for bankruptcies continue would place, mean, now their elevated consumers, you, I led cost it's preference, not mean, to eating consumer world I utilizing by frankly, And have they in just a down to and Those Uber propositions elevated What California, levels. the consumer there's value we're have refinance it's pre-COVID come life to the today to seeing that erode. but that continued cycle had capital see state sales

And seeing so And that restaurant capital goods there. we're the the shakeout. the space, delayed sporting see that in are These space, nearly was or free the in in out we're supply space, space. in pet that inevitably now going were free by to capital the office things

is capitalism, I to back think it's so And which healthy.

Operator

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

R.J. Milligan

credit might where just think potential terms higher in you spreads think potentially you be you And next current the Joey, on upside of a the it I or lower-than-expected lower-than-expected I'm is year? had from volume, then looking the spreads that bigger XXXX. picture think into we're question is expectations? downside. same Do volume? loss? is as Or question it's potential upside Do curious, what

Joey Agree

here, R.J., are, including that's of billion going we've on obviously, been think I'm in to sure they a where a it We war chest -- those don't this today. expectations are execute. What the after expect sourcing quarter. a Vegas, honestly slide NAREIT liquidity street, feel more deck the distinct But second people I'm vary, pretty clear Look, the for I get today, not potentially fourth and Las what for with $X proposition not they where it's certain. I space. says pretty value today, focused truly XXXX closing in same from nearly all. much think can are in us. We're our those expectations across built expectations We've better the out it are in

And obviously, to won't toward get execute. be any assume. so And near turn future, we're people as We'll going I here. would attention the to in it. their think that's There sense, a XXXX I surprises continue

R.J. Milligan

guess night? another Is to as gotten concerns you it keep think be, question keeps credit? to up? also where does the it would about you you've as the and up about moves? what XX-year Is concerns ask at you What way XXXX, I about it

Joey Agree

I don't a with. I job sleep a from perspective. look, much to has tremendous Peter begin done -- hedging don't

issuance prepared X.X% he million, $XXX as in mentioned have for anticipated hedged in XXXX. at XX-year remarks, the We issuance,

million We have of $XXX forward equity.

are going I'm me the up, the side accretive very And not balance quality capital find be so confident I'll sources we're right? to that of able sheet to the So tell to that opportunities are, keeping and you, is invest. high

that's by risk that that's last $X then it's critical heading not sound in I is the a $X with lease macro with trying wait out strategy a nothing not swaps, executing on where fundamental underlying to And whether an with think from so perspective, you to having for trying night. From basis the estate. forward or or price. retail at up internal is real here for driven equity consumer a top share hedging that perspective, market, a aligned And there's consistent the policy, mitigation think keeps me the

And on we'll mentioned, as we in outcomes. Peter we We'll -- Beyond basis Lots so Big have just of Bed not here. have in & Manassas, net the gross out, have we goes basis, a Bath lift them, bankruptcy. a files bankruptcy, X lease buy great effective buy XXX%

XXXX. and the sources capital I'm and about it's to into And into for in to remainder quarter heading visibility cost the we're So always that tremendous think of position and I good have this execute your of the excited year. year, fourth

Operator

Next question at Joshua America. Bank of from Dennerlein comes

Joshua Dennerlein

John's Joey, to maybe question follow-up just earlier. a

for You to like it issues your ahead process tenant others. watching of like is out issues before getting of kind or for years kind companies mentioned about Walgreens allows that that? you sector What of most do

Joey Agree

to look, retail obviously attribute I up Walgreens reports Walgreens that. through, think, wouldn't tenants Well, the portfolio, we in but place that the a credit we're process Peter, not only that here perspective in watching, market. broader that have just -- our I monitoring

supercenters pharmacy or the to any end alternative it's to lose if back about front country Cuban's step And startup took I I've of of there. upwards Walmart anybody of share Mark or it's space out means store talked products, retail length. The we to for continued fulfilling in were Amazon, Amazon itself, of it decade, pharmacy C-stores it's a pressures, looked this back the generic of the at the or several whether and at pharmaceutical think the overstored. now years a end

I think estate end a It's clear. And at XX,XXX you it at square it to perspective, real fill. when of space very then store a the is a speaking. generally from XX,XXX a dollar look foot difficult the was day, rectangle to

when so test passed what to I drives the proposition always earnings the frankly, Walgreens on And to probably in and think, up efficient. toothpaste, go the value figure I again, consumers, out and have day. I wait it's before, pretty at need to line. And toothpaste store consumers fill is the don't test. a find said store next is what to drive think the shows that baskets in-store order store, I or pharmacy smell best that And test. I've and make I hit hadn't the purchases. Walk And that the out call,

pharmacy efficiently, in Compare So fell say, can be love ecosystem can't of fulfill, it's outlets there's those of off-price. you environment, the the lots middle faster, or lots if sector, right this at and else can and hunting the look where And right, you at here You other TJX's you say, that look can where as critical of replicated entire to shoes, We -- purse concentric unless off-price, else of else similar now to shirt fill retail and crossover. the you really, in contrast circles. We're it's you X fulfill that they're same a concentric you experience, today? They're or and well. Where or more retail retail that do at cheaper it's landlords. partner. you their a largest whether bargain Burlington a it can't it online. business, circles

lack there the lack the of crossover critical. again, competition, is so of And

we $X that being And would we just their challenges thought real And Walgreens facing. a Walgreens chose paying we we divest that back was a identified for the to capital. as estate so Lots, to on and challenge. Combine credit with Bed recycle due Big Bath Beyond ago, which foot rates years getting artificially think I pose that also profile to cap or compressed, marketable understood that rectangles, then that opposed & are quickly

Operator

UBS. Your next question comes from at Michael Goldsmith

Michael Goldsmith

that be year. acquisitions the mean in you tenant I have What attention is but on always the the quality, that focus by you highest would that? heightened quality believe environment? said do the Joey, you a current fourth I quarter in of know

Joey Agree

transactions a optically made that year. to just the with to extending advantage quarter highest effort some -- I our fourth underlying about the purposes. we in that's Weighted concerted is the utilize now. quality perspective. mean, into I anticipate transactions way very the unique the There the of that the from discrete unique quarter. an term that will real the highest actively investment-grade we're be we're be capital will There year all in lease the are quarter well. excited of in average perspective, distinct highest And and working target in from retailers talk to a as estate first credit perspective, of an cost from we've quarter fourth on the be will

level So function estate, store it's credit as real well profile. the performance of as tenant a the the

Michael Goldsmith

on Got just the question, guidance. then And it. second

in guidance, the all a XXXX. more make end in be function guidance late that reflected AFFO the the of your on growth and going just larger this rate low that year Is a in of is fourth You the impact brought it's the right? -- up to quarter activity kept acquisition to that the high too end. in Is

Joey Agree

which in fourth the earnings weight fourth minimis for to sometimes in it, is Yes. even the terms quarter year. Look, accruing quarter, anything during difficult to do you is just if holidays, of de the acquired middle given the

with take method are the treasury third we you $X.XX guide the I quarter, have if prepared miss? Those into the here incorporated of remarks in Peter, of quarter. dilution. the in Secondarily, inclusive Peter's $X.XX fourth quarter fourth the $X.XX anything

Peter Coughenour

timing saw typically No, acquisitions right, which Michael, a Joey. XXXX. our be back quarter, November, I weighted going think XXXX. third closing these any really it around in X/X timing quarter, that's are we or most the December And from to impact the to not and be that are significant recently in more given get point, your going back-weighted To perspective, means to lot late of actually acquisitions in a that we're so just here was will

Joey Agree

Yes.

raised second. equity, company perfectly years I'm the been in year, the a net XX% of pennies part the of Look, to dilution is to of shareholders money. virtuous $X.XX impact net raising of to forward speak the space, dilution X the basis. me think that, getting and cycle capital treasury of lease And $X.XX of take we of we couple methodology with to the earnings obviously needs have a We're first in method. fine method or make that. this forward correct due We last is utilize the that the because ahead accounting Obviously, the to anticipate. a we Peter, treasury nearly wrong, if space for has Just to equity in lease of on a were X of

with perfectly that happy scenario. are We

going we're And not We're such a market. again utilizing forward not again, dumb a don't as treasury capital is so not do top have swaps the here. to about get forward into starting swaps opportunities trying equity are as full estate of real just is well hedging What We ball. visibility, on our what worry over with of to we run head so that -- we guys visibility steam have can to and as XXXX -- be. on cost the to the we're crystal trying medium-term XX-year

Operator

Janney Next Stevenson from question comes at Capital Markets. Rob

Robert Stevenson

largely or the Is Joey, on I that talk any going of leases sidelines? ground Can product of more market? high acquired think that's it don't you too year-to-date. has been you on about in pricing what's lack you've a kept

Joey Agree

combination. a It's

in ground QX. see You'll leases

leases even points to to that XX the pipeline XXX been for them. of continued We year to and given going in with spread we But basis there in QX. the going continue of leverage-neutral source started We've a or on time. to discerning to with tune the are of lean XX that weren't to pipeline have the We're at minimum currently. basis -- a number anything We look that point number a very them point in we'll what ground acquire, are in we certainly basis. them

wasn't there were But first extremely much year, if the us, on Sellers frankly, extremely Buyers, inclusive hesitant. hesitant. the half at you of were of look product market. the

it's of halves. tell the really tale I X you, So

fourth first prior predominantly the the in The quarter sourced generally year. quarter is of

conditions. timing And so as well of it's just a as the function market

Robert Stevenson

closer today a theaters into getting are normal Are doing Okay. on distressed seeing to way still asset future out rates? given normal And it in marketplace trade how versus then assets, theaters? we the stigma Or operating some the or at cap non-vacant the your is pre-COVID?

Joey Agree

Thank ever estate. through real high underlying a bankruptcy it too think God, with many had don't I comes Look, them. was Regal, a we tremendous that have that the of that's performer we don't one, back. firm went

but a the couple in no I theater Cinemark, have is that's probably think AMCs, wishful we have in And rebound We performer space high and anticipating a interest theater the X, space. a of thinking.

Robert Stevenson

for that guys? something from disposition Is you sooner later a that's standpoint or

Joey Agree

to direct of don't I a theater, today. buy theaters market be for to a wants dispose happy there's movie Someone to us. one. them think We'd real

Operator

comes St. from question Next Haendel

Juste at Mizuho.

Ravi Vaidya

the Vaidya is for This on Ravi Haendel. line

are the interest But what under You have contract Any volatility? cap a right widening And and your in massive on contract? going XQ set. liquidity rates and what's want risks? What's potential guys just election I visibility for now capacity under rate today? and to XQ opportunity given understand any

Joey Agree

both increased that we're of just to We and our here, hose, be transactions the guidance was approximately can earnings intent have on days second million, as missed? XX we'll will deploying be obviously, capital, so the already XX either mentioned, couple for the the But turning to accretive it's very we to to again, basis. largest will think given are I there of of portfolio. What QX. anticipate accretive or approximately that question astutely a I frankly, to quarter on forward our days closing. $XXX you what QX, the we -- be in do pricing QX We've well letter a watching in execution QX, deduce week as that this as qualitatively us.

Ravi Vaidya

in Anything with -- contract election your the yields contract risk under have what for are -- what XQ? -- do you under or and

Joey Agree

Look, Election risks, not that some on again, some specifically actually likely of most quarter when XQ, spending beginning yet. isn't We'll policies we the the year I tax tariff November obviously, proposals the are fourth table. related policy motivation in impact to secondary real monetary report out of they're horizon. That are out the XXXX real nothing But we see have there, of January. of that estate. sellers or any really think, a heard specific done up sum the the the speaking, generally on table these or that on on fiscal policy. estate see But the such for waiting being that said, historically, effects, we number X. as XXXX and there's from is there, will the to eliminated

secondary actually the you election are waiting no goes. policy they plays can or to implications, this direct certainly but November tertiary That impacts. to way wait you But how have XX for has which into read response Our out. November been, to and the see election may X see

Ravi Vaidya

Got it.

tenant balance when you evaluating any you Can that here. further and about them? distressed more the credit how X offer you're and opportunities yield Just seeing commentary

Joey Agree

reasons. in When opportunities, acquired was In QX, or these you refer trust, obviously, debt or asset of referenced for that for, was Yes. I'll the have example. non-asset-specific X tax likely generally an pay distressed Clubs that Sam's sellers we we trust that liquidating give either -- we a are distressed most off specific to the it's to and

real not there we're sets, estate or sellers. distressed out distressed utilizing credit. distressed buying data We're So different targeting,

Operator

from Street. at comes Green question Spenser Allaway Next

Spenser Allaway

Just as the topical on and landscape, costs then been they've development to can back really provide just some are color construction yields where going today? you

Joey Agree

costs Good no with elevated sight. Construction extremely morning, Spenser. end remain in

up I've while sequentially have this rates have As in the mentioned gone sectors previous calls, for last century country for year-over-year cost construction rental varied. commercial across

prohibitive they're let not any And construction a Frankly, up on seeing so we're costs. number projects. in of

Specifically if the tenant deal. an it can't on absorb ST&L

of builders think here regional I liquidity which developers. secondary merchant generally the lack and real is driver system, in the and And the finance local banking

can't number us subsidy. retailers, And so opportunity those costs step an But of opportunity type us only but doing relationship not it's build a as to provided we're of to third-party financing some for with it a or opportunities also make a tremendous developer, when the tremendous to bridge and/or anything without retailers. place you sense, which TIF but in into leverage organic expansive provides platform in developer a our here step

year, a I it of ground with million And record anticipate not said, likely so We most growing. putting to pipeline year, target being if close a, a as next medium-term the that is annually. $XXX in

Spenser Allaway

years, future that helpful. you wondering was do to I think, ask, up? could sort if outlined going investment guys I I implied think And vertical? on have if annual this you know of yes, not, the the kind really cap was I any actually target, do this tick of but in you

Joey Agree

spread duration a product, based project. like-kind we off over buy the of is looking and that the of scope where we're and can Generally, Yes. for

when points, XX it example, Let's into retailer, basis we call existing, work or that it, go we can for jump spread a structure or project days. that's XXX-day in turn So if to a retrofit off-price with to XX- can duration. an building, down right? modify Sunbelt it, a That Gerber over XX

extensive is project, return, of days, like that acquisition. If a XX Now can XX-month and go through we're there. things process, entitlement that going that we expenses closing an have double relative spread an an stabilized you triple average or to to internal and this

enjoy in a Obviously, true a all if of credit and doing partners and not really we really partnership, we tremendous That real will stabilized lease scope them. relationship pinch, understand as step retail the this it's here. largest we and of partners, it landlord-tenant in our our we duration. relationships. that where there. estate But So term We're price help when and amongst not product. just view a for really a neutral said, off the We get retail the buy largest, we're and can landlord they

projects, in both and joined development X those team next another scaling in our the actually more so And from actually construction we X members and And have development scale platform, joining joining it both should a really well say, here. human We're opportunities to week. a as process perspective. it, I continued we And a human X resource a flood resource -- continue a see systems, -- of from a from as to there.

Operator

The question next KeyBanc. at from Upal Rana comes

Upal Rana

portfolio your improved years the you recent Joey, of to talked expect in investment profile quarters. you've given come -- acquisition in trend capital? cost higher X recent But or quarters. profile to forward going to IG begin about has going Do your So of grade be quality down highest your XQ

Joey Agree

said? come think Look, Peter, I'm -- in I not you sure it's what recent down, it's... years,

Upal Rana

quarters. recent In

Joey Agree

for take Gerber long-term I'll see is Lobby, investment quarters, lease-adjusted balance recent which you which Group, don't in The XX% changes but tell Hobby some remainder Lobby, Collision, that impute debt. leverage. Boyd XX%, let's private QX, company some Xx grade. with -- can with in you've we seen approximately their deviations, sheet, of with example, a just a Hobby effectively you, was to ratings credit Yes, no

-- doesn't doesn't does doing a is have billion Eagle, really then He's it fine. Hobby He's grocer revenue it. need of owner Eagle, an Green company, else's Giant just high-performing Lobby. a and And effective Giant which money. David a anybody the $XX

outstanding any best to Gerber Aldi of credit or again, debt and us or the Collision, those Hobby away or there that credit to them ratings in a shy so rating. Publix retailers, operators of biggest And public leading Chick-fil-A have But the are the not out from don't of those or Lobby output an we're have and majority country. going

Notably, a don't all there's so us. are grade. in ratings. that of They We partner in And sandbox subinvestment are credit a have There retailers retailers number tremendous for our Burlington, sandbox. work across today, platforms our that third believe, stores their a notch Burlington, of on space recently surpassed in player, upgraded, grade, player X real the X being I goal this with most they to off-price X,XXX trajectory as investment are here. the below

So investment-grade exposure transactions output complexion earlier, be just pipeline. It's that's due the us. of I really not year the to highest the in driver. QX said, the an for the of That will mentioned the as

Upal Rana

it. Got

Okay. And me. last then X for

ways still these mentioned an have these the tenants of go? sectors mentioned the capital of free or a or of of of troubled credit think do to well. tenants in number broadly want growing have that heightened grow You some are are that you as elongating But a tenant concerns life end and to some nearing we

Joey Agree

No, think a go. I got we've ways to

I as their basket there's we necessarily in middle the as and S&P, But do that of can innings size, think their agencies, landscape, well But around ticket the we're not a the number retail or middle here. their look a I job analyzing just innings. size you think third-party are traffic. tremendous in Moody's

inclusive office we look here look a I you through gone electronics. And high that's the full sporting think, historical cycle value all competition, competition has only look true have them, historical again, consumer the all their their investment-grade space, service proposition if supply have pet true the gone, and if the you if gone. you geek selected goods gone, space, is health killer is HHGregg a Buy, CompUSA Best and of at rated the proposition. we Circuit company gone, where is at space, at remember you a City, with why squad other if of category

the at that. look category seen you killers, other haven't if we Now

to We going PetSmart of haven't exposure day, certainly But increase end pet that. not is Petco. we the material we're think still Petco, At to Today, in probably have investing this, the be pet PetSmart, there. going winner. not the We're I seen that.

on goods, amongst others, Sporting are Sportsman's ropes. Warehouse, the

merchants, can earlier. course, And to follow you look talked of the so restaurant also anyone continue space at going the Kohl's. can General here, we about malls, we're but

off-price. going merchant general consumers value no and doesn't your If true you're food today, that a proposition to guess sell they're have to what,

And tenants is is attrition winners there sandbox our those to going there's that lot be to so losers. And our happen. and a going with of is Again, on to continue focus winners.

Operator

Thank you.

comments. will further have back the no We closing I over call questions. for turn

Joey Agree

conferences. we Thank Have to you, in Vegas for one. of or everybody, joining you us, you. great upcoming look Las and seeing forward Thank any a the

Operator

Ladies participating, this you and for your we you for concludes your gentlemen, lines. today. disconnect conference please that We thank ask and

Agree Realty (ADC) 23 Oct 242024 Q3 Earnings call transcript