ADC - Earnings call transcript Q4 2024 | Agree Realty Corporation

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Operator

Good morning, and welcome to the Agree Realty Fourth Quarter 2024 Conference Call. [Operator Instructions] Note 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. thank XXXX joining Earnings and Realty's for everyone, Quarter Fourth Call. morning, you us for Agree Good

Before turning me the to the discuss call language. over to results cautionary the Joey for quarter, let first through our run and Peter

will Please that certain federal laws, may call, to related under statements including forward-looking make statements note considered our this that securities during we be XXXX guidance.

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

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

over the now Joey. to I'll turn call

Joey Agree

Thanks, you all XXXX us with our very volatility. joining Reuben, year significant and I'm strategic market our during maintained we of as thank through this pleased a performance morning. discipline for

Approximately Quite the investing partner simply, on country. investment off. retailers steadfast do-nothing that in facilitated our core to valued the deviate retailers our temptation scenario, absence being the curve our introduced we up superior in of even a risk AFFO that XX paid could largest or external from of discipline growth. to in demonstrating conditions deliver we We resisted strongest remain risk-adjusted ago, strategy. Instead, the and objective growth, meaningful months share our per we to with move our commitment the returns the focused in

the with $X.X we concluded quickly in of Paired proactively on forward a position including billion maturities XXXX, $XXX quarter tremendous decisively the liquidity, forward with pre-equitizing strengthened philosophy no our alone. our million to market until of $XXX and during management XXXX balance million in equity. $X equity including of billion us [indiscernible] fourth year, over We balance sheet sheet the As material execute. with outstanding debt put opportunities shifted, capitalized has

XXXX, while deploy to enter to higher equity find fortifying X.Xx and year, underscores with debt and both proactively At investment again We of we capital EBITDA. This guidance at last can rate importance for the prudent X to additional to on recurring volatile stood leverage without the execute year's over year-end, range our net navigating forma billion capital. $X.X raising any interest capital disciplined environment. raising. this net a ourselves need our approach we additional sheet debt equity. just Xx As once target pro year, leverage our we without to ourselves of provided within ample liquidity EBITDA staying allocation this balance By

to across I billion gain would could, and note in in start are to updating conservative, growth incremental billion a committing fact, the confident XXXX, that $X.X $X.X January between and out external had and our in year the we in remain be regular to we've invest very ability visibility. all course It to turn platforms. as strong X market extremely we

the the record portfolio, approximately a gives our This equity trade [indiscernible] note includes I at would year-over-year X.X% the in range. of and fortress with treasury balance the the stock for XX forward stock full our by that if assumptions $X.XX growth dilution per achieving [ to continues this via ] significant midpoint. combined XXXX. [ guidance our supported ] given to position, represents share year outlook This conviction sheet best-in-class AFFO us for in $X.XX

value guidance the to on more tools. I that don't due equity our accounting in or flexibility Peter more any provide mitigation by sheet two penny [ ] said of details balance given earnings importantly, enabled will momentarily. year risk care repeatedly I and a methodologies, forward about other but

with three pleased and Erlich report Agree by our retailers. external relationships enhance proposition to I success. of our core year ], was we growth truly retail the Turning led our to Growth platforms, partners to this understand set effort out am Officer, partnering a [ our Today, deepen our value last Craig with Chief further Realty.

shop is one-stop and development industry. unmatched unique proposition for a This acquisitions, value are in solutions. developer the funding We

our or capabilities access Our operational peers don't development the organization. have real in private peers while the lack public to cost and liquidity, capital, ingrained estate our

by net XX approximately assets retail improvement, properties well the as term marked supply, tire quarter highest lease longest the $XXX the investment XXX lease properties in highest $XXX fourth for million and off-price, average the operators well leading included home grade in X any crafts lease quarter, parts, novelty rule as the evidenced quarter invested are acquired both year, weighted in auto percentage as quality quarter all auto the and This volume the service, and million. farm The leased sectors. over during For quarter and of across high-quality as XXXX. ground platforms. the to we fourth of acquisition highest and The of

with average The a top with weighted which from X.X%, very had and transactions ground XX.X% a of acquired included acquired a rate of enjoy assets. Approximately weighted Depot leased XX.X were years. lease Notable cap relationship. properties well strong a base as ground derived as Home relationship term rents and of a annualized leaseback we average lease, a Walmart sale tenant

accounted investment-grade of acquired. over rents While base for retailers the XX% annualized

net sectors. lease $XXX activity is of XX term acquisitions our in with X.X% completed coming investment of For spanning a at XX The rents a million average rate Approximately years, and the originated full of from retailers. our year XXX invested retail weighted acquisition cap million average XXXX, were X/X roughly states and properties, we retail platform. from XX.X lease investment-grade had weighted $XXX of

nonrated ratings a not for we retailers. impute do As reminder, credit

with or approximately $XXX their capital. and we DFP platforms. both ] committed our with projects of [ We help work in under provide had plans, struggling either year representing development with retail record liquidity We're increased continuing our to partners across activity store execute their to pipeline. construction, to fund a platforms them growth million to developers see Switching completed as XX

X [ Starbucks. Boot quarter, continued total [ the in costs During XX $XX of million. retailers, we with DFP The ], development including projects the on quarter costs during fourth approximately with new commenced projects Marshalls, are Sherwin-Williams approximately ], million. and anticipated totaling leading with projects ] [ and new Construction Aldi [indiscernible], TJ Barn Maxx $XX anticipated

of completed during $XX Lastly, projects quarter on the X total we million. construction with cost

management new leases, options fourth gross quarter. of or we area executed extensions square XXX,XXX on leasable over asset On front, the feet the during

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

We for maturing. positioned rents very base only are with XX XXXX leases, well annualized of XXX or points basis

year, was of XXXX year-end, XX states. properties proceeds XX average total The X At included gross X.X%. for of XX% were in the ground rents. our includes over that comprising fourth base properties X,XXX the opportunistically portfolio disposed million, cap quarter. properties best-in-class $XX The nearly During and leases of XXX including annualized dispositions for rate portfolio weighted we sold during spans all

exposure at strong investment-grade at XX.X%, occupancy XX.X%. year-end Our and stood remained at

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

Peter Coughenour

equity, raising had active Thank balance billion, our a bond completing approximately you, facility year million Joey. of markets, forward revolving billion Starting the $XXX to a offering. capital and We $X.X upsizing very with in sheet. the $X.X credit

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

program via an for forward overnight approximately million anticipated offering During in proceeds shares $XXX ATM million. the sold fourth and our we quarter, net X.X of of equity October

We over also for shares million of X.X million. equity forward proceeds of settled $XXX

forward had mentioned, we approximately which, as of million proceeds upon net shares million year-end, of XX.X settlement. outstanding raise to anticipated of $XXX are As equity

We shares in of $XX.X million XXXX. those are to obligated contractually settle

revolving calls, billion billion a to option an commitments, expanded on $X The us from discussed includes recast billion. $X.XX facility as increased and $X total that of Additionally, facility lender and additional request in we up August. was past to our allows credit accordion to

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

$X liquidity, $X.X As of our we including previously over have the billion cash outstanding of availability on on of revolving forward equity mentioned December XX, billion credit facility, and hand.

was the EBITDA settlement our debt recurring the in marks lowest X which forward for years. approximately to forma Pro X.Xx, equity, outstanding net of level

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

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

debt have million $XXX outstanding Joey with exposure at until maturities rate And XXXX. we the floating remains material as mentioned, year-end. Our minimal on revolver no

from in our company. having in the additional are the execute prudent without stable we further outlook, to excellent to to to with rating BBB+ We a balance in by BBB, S&P received manner strength is credit the The to year position raise investment July. testament this any disciplined was rating upgraded equity our a our sheet which continue fortress grow of validated capital. upgrade guidance issuer which and we

X.X% for respectively. year-over-year to full was year-over-year and for AFFO fourth the and year FFO increases for was $X.XX quarter, Core representing increase. earnings. quarter, share X.X% representing Moving $X.XX fourth XXXX, per $X.XX a share the X.X% per

For year, X.X% per growth. reflects AFFO the our end year-over-year high full guidance the which $X.XX, range was share and of

year-over-year per issued full we approximately X.X% year share midpoint. guidance $X.XX growth XXXX, mentioned, to $X.XX AFFO at the representing Joey for initial As of

other as inputs and disposition expenses. and tax volume, We as release, in other income tax real including investment provide earnings nonreimbursable expenses, our estate several on administrative parameters general expenses, well and

XXXX parameters, includes outstanding to guidance treasury In our forward method earnings addition related equity. to our dilution for stock those anticipated

dilution count stock treasury trade impact unsettled must current As anticipate accordance said, will our the dilutive Provided roughly treasury net method. share. forward trades near the our the method be stock that impact levels. of to an offerings, above outstanding higher a continues included in of materially if stock price with of equity be moves reminder, ADC our could $X.XX XXXX if our to current that the stock $X.XX have on in share price AFFO year above per impact levels, we That stock shares full

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

dividends dividend $X.XXX for share share of monthly per quarter, a of we of The December. [ fourth X.X% to cash an ] almost the and dividend each equates common per October, and monthly increase. represents declared November $X.XX year-over-year During annualized

very Our well for payout of fourth quarter. is dividend covered share XX% per the ratio of AFFO a with

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

Joey Agree

up let's Thank for this Operator, questions. you, time, Peter. open at it

Operator

Securities. Bin Truist First Instructions] Kim [Operator question from at comes Ki

Ki Bin Kim

was that's sure interesting provided I your I'm in a but typical little whole think of study it you on a of portfolio, more significant not an presentation. that these there renewal of do of a renewals come study a of upside? one-off and one their Joey, indicative bump lease example? you I a lease when lease mark-to-market you typically, case ground case just was ground guess, leases ground more Or due, is is where your get curious, bit

Joey Agree

new options, [ you're And and definitely initially ] a that with options, remaining [ Ki starting to, to extend had XX-year stay, going Bin, to the to told you the about. there. about XXX X. a XXX,XXX was tenant referred you no effectively there's study want the of significant to The We case tenant, option upside to believe. north flat The ground market, rental it that's reference upside lease offered at a that the rate. that have to if marking talking you're we mark I X-year year sign tenant inbounds ], had

lease example upside no the building. I space. That's were indicative one a naked options when if occurrence prime But it's for lease a isn't it's with -- think the we an control and of That us. to retain a ground regular the it's in of example, of

Ki Bin Kim

about on equity, your forward there. have And million of out $XXX you forward equity

higher it, you're bit than you've a versus think history, probably you I had. little look when what at

see you equity So curious, It's you I forward Or opportunities cash not on you it. coming how do but just acquisition up because sooner? level, how expense, out dividend a you balance are there is drag? have still the paying that it was high much is larger interest it

Joey Agree

fees. effectively low, construct weren't interest the you the forward with zero you Today, of interest equity or pay do higher, of dividend earning any the XX and of basis maybe the to nets the tune of equity, very rates forward expense factor Historically, the when were is, being of interest. dividend. equity out the in question inclusive Well, last to yes, at net XX points, or forward to rates the

there's So really cash no [indiscernible].

most Fed -- we're time, are -- positive a most lowered that rates, recent the to to the the equity. spread the interest relative was Fed versus forward recent actually that dividend That's lowered the there expense we we're the paying. Before in that rates enduring

And equity historically. than today, minimis, that is a which if de so any, there forward very carrying really to different expense is

there of which prepared Now about dilution, the is treasury the remarks. talked we method in

but So cash. not that's accounting methodology,

how much a function we then of of it's sources upon uses. overlays macro and do terms In really macro, forward where think equity, our the that. And

above And and equity you'll equity activities. in million utilize locked XXXX. our us, prepared we're $XXX to seen to loaded have or carry us, forward see approximately so for and execute to guidance you source or Obviously, forward investment and on ample for here, historically we're with

Operator

comes question Citigroup. from next of Smedes Rose The

Bennett Rose

of slight see see now sort your but cap offsetting ]. in movement in [ upward at continued to you, bias about ], acquisition is ask which XX-year I essentially a to wanted downward of just X.X the [ we continued think kind rates, I

So what buckets just that change? can of share thus looking And maybe in seeing do quarter? assets need you're forward, for far think you cited, those the I first maybe seller do to you higher-quality expectations mean, you even

Joey Agree

It's a great question, Smedes.

looked came the problem after part think basis out. point time spike of last where I have in you XX the today I mornings is print the CPI treasury XX-year the like a

everybody's XX-year That have includes XX the Treasury, become for base has lease XX% minds. day So effectively world, the movement normalized which in XX sellers. the we net in rate with swings or U.S.

broad sellers' And X.XX to using XX-year here, impact and doesn't ranges so really pricing. vacillating between I'm just X.XX, of seem the expectations

to gauge That manage pricing we acquisitions billion deploy environment. quarter the and disciplined. continue this at we've and continue said, Now prudent level in be of been very we're We'll we not careful of and volatile asset how how will very capital to how out spreads. the in And $X gates this to come in going be uses appropriate first we in capital. We'll in below environment. those frankly,

non-asset certainly But seeing distressed, fragmented the What volatility owned anybody partnerships were pricing. in predominantly individual doesn't space. of individually large, usually sale proceeds really here net there again, have or volatility doesn't proceeds, level we stabilized the where cases individuals is potentially such assets help frankly, pricing distress, need reset other lease expectations their disposition or serve need a of from are to and assets. But the in

Bennett Rose

still environment? banks the [ a I do of regional regulatory make that Okay. was think continue competitive to kind about around wanted -- discussion regulatory potentially anything and it's regime ask ], in and lot mean, to might I radar? the and is changing just you, more just -- on a that -- compete of you Or in for I mentioned you them guess, local like just there similar you'll your to have sorry, that there you the past continuing case. I take banks that's market the for wondering, share sounds the there's within

Joey Agree

see merchant open the issues banks multipronged to you I for may up today. regulatory don't problem a any developer as have that But capacity lend. a No,

going ability the liquidity to day space. loans the effectively of to, One, you're construction builders financing of to obviously, upon the visibility lower for the our that side, of they're [indiscernible] loan the The cost rates then to the transact construction where financing, able in as on some to availability merchant construction completion. into and end at higher loans, alluding have be

$X we $X.XX facility and have. the is and continues credit billion forward continues platform developer equity in so a take And gap. what share bridge that to to position With funding liquidity and billion our do

visibility to cost have developers we're into of provide for and fruition capital, bring to solutions projects able to and We pencil. that retailers still our can

and steel You gain it's tremendous continue combine and to like costs said. it solution you challenge these construction tariffs of are with this rising other a going costs and and to country, continues things it aluminum that all construction to on share, in

Operator

comes next Morgan of from Ronald question The Stanley. Kamdem

Zhen Li

Jenny This Ron. for on is

your IG compare increase I on tenant expectations? term based you almost think percentage your all-time near XX.X% anticipate first this how Like in this to with high, of the strategy? reaching long-term does to like exposure, acquisition do

Joey Agree

percentage So an of our investment a, output talk being us a investment-grade proxy or always about really we for strategy.

same you materialize, high. near XX.X% if mentioned, we're and the there retailers. impute if we'll transactions the huge unrated credit And Publix, so be Chick-fil-A, as At is time, [indiscernible] all-time Lobby, ratings as so fans pricing an such of sense. makes we don't Again, Hobby those

We're Walgreens artificially on to proverbial can so focus capital you're tell best have IG see And and was relationship away sectors. prudent credits exposure there great quickly the comes investment-grade that the would biggest of. going check other we're the some Burlington to if don't to vast a consumer up in retailers majority up big not and grade being -- that exposure mind go and loading ticked that on in retail are us. trends those I box, The almost allocation fans your and country. grade that institutions investment one exposure, by for but you, the that's investment with of

retailers output So again, an our plus the invest our in focusing XX strategy, that's on or country. really of sandbox biggest minus the investment of

Zhen Li

That makes sense.

current Like kind of I I want kind Or quarter? this you first the the the downside to transaction with in your expectations? billion or of second to about your what think do line down the the the environment, $X.X year? pipeline investment do in you transaction trending see that slowed ask like volume, upside see like are like considering volume

Joey Agree

the diligence Right in now, for subject mentioned First a quarter very remarks, sourcing had, to is loaded. quarter. second we're closing of We've and January. the and prepared effectively as strong I locked again,

every a it this executive and new we of on in the changes. exciting to most that that day where our it. of given any pipeline. first part with terms is now. second piece out and pleased data We're [indiscernible] want to focused about hour, Every environment, opportunity we But pop quarter given any day, and the quarter right forward can right business think, up me we're so the on very is that every comes visibility, order exciting In

Operator

Michael The next question at comes UBS. Goldsmith from

Michael Goldsmith

portfolio. about ABR category very parts auto the we a The percentage enters of what portfolio your basis up points, thoughtful know XX stepped and as you're by

So what now? is the thesis parts for and auto parts, why auto

Joey Agree

it specific at AutoZone an portfolio our [indiscernible]. assets, exposure is seller institutional you to XX exposure was in that transaction first top of to and NAPA O'Reilly So tenants. our to semi and a exposure [ over see That's from Obviously, material to transaction, can significant, our genuine ]. or more least or material that

of years, about talked We've good on of auto road at parts a O'Reilly We're and interest Ford a the XX.X auto cars print the about out see age ] week. came environment. [ came auto the going and now tariffs industry. rate today steel said average Bill last just of destroy record could We've talked had the given construct cars and to aluminum [indiscernible] parts, these of with financeability out, lack the

today -- a ] record [ more getting day, Cars need every and they older, parts. or are record

sector. significant auto continue fans love in so And we parts to the the

highly into to work They're exercise or to that with per the you piece the option, rental landlords foot not rates. business real not marketable are second cost. only rectangle ever the floors TIA tenant credit model. square These The have foot are and amortized rectangles multipurpose were X,XXX file no that bankruptcy, $XX vinyl concrete And generally an TI replacement $XX the square to if a leave, X,XXX is or paying boxes. estate, floors, underlying or

favorite of so It's X it sector wheelhouse. fits our right a ours. top And within

Michael Goldsmith

through cadence just the start follow-up and Got market question the for much transaction picked the slower was on year it. move up And Transaction we my expected last year. is to year as XXXX.

you've You that very January. strong a had commented

the that the the but should to back year should also be continue year earnings acquisitions, should balanced and be this -- some of that terms maybe to of last mean growth support help this year So year? be does through half that in loaded more balance relative

Joey Agree

idea happen going second started to don't year. of third building this quarter. We alone no frank. let be have what's know fourth I just I to tomorrow, or quarter

] That's transaction Our We're cycle average approximately the make the why heads days on environment. in [ year, front. forward XX X.X [ of position in with $XXX we're not XX, be to down ], is a XX-year the to I'm this going did honest. now equity. [indiscernible] the acquisition to volatile to the predictions. with million I do markets swap really capital to

decisive right underlying there's chest times opportunities, war but and that where have we we QX. But us pricing volatility is to visibility so into think honestly, to allow going be all move. at see patient, be should in there's And we can we is now,

Operator

Capital. question from Rob at next The comes Stevenson Janney

Robert Stevenson

Big Joey, days? a can other and be had you out [ quarter, new are on you Manassas, with there? look Grand And the to give you locations the Rapids and these where update things think how for an I ] location. Lots playing last Virginia tenant ready

Joey Agree

Yes. to close, of failed The the bankruptcy week supposed they're through out multi-month lease were period. a now to so auction bankruptcy [indiscernible], the another Obviously, original This they extend Big Lots on. and bankruptcy is process. going continues purchaser

square signed. rent. the The per tenant $XX taken has have rent is square foot. per $X.XX foot to lease we to That commence Manassas, from yet

the rent working to where from one that foot. in that $X would to Cedar have would we needs square tenant square $X other lease, of like per Park, that are approvals purchase We ones, a high-quality take that foot per on Texas but

kind running interest significant of of specified And here results, lease Michigan. these which be which just then circles. the to upon continue awaiting auctions, bankruptcy, delayed have We the use based we're asset frankly, is in in the

Robert Stevenson

you going is given with want prospective they stuff that do business to there's helpful. view How others would sort your to where sitting current of tenants? your it are conversations market and there? decrease Is this either tenants likely Or be sale-leaseback and year? a recent that with? volume in to today you And looking major then do That's with the Okay. that

Joey Agree

leaseback That tenant. So mentioned transaction QX with third we closed a prepared in tenant. with a the sale in as already our subject to another CA closed relationship confidentiality. I leaseback tenant was We've relationship and sale remarks, with that

As where C-suite, they where the looking number estate I'll want are these CFO, it's can can really on going We've balance the to looking had a issue. how their issuers far sale sale-leaseback what price. at unsecured developing the market as what leave of are retailers it year a unsecured real We'll at market to on partnerships on interesting Generally different who they discussions at where see for the progresses, capitalize new be sheet. are lot they happening. of that structured leasebacks, that. their they balance sheet. There's transpire. conversations They're

the with probably print that, make it more, frankly, X% at active. morning's more could frankly, or market the change This CPI

cost they're sale-leaseback cost And comparing year, always though. transaction. capital, would like a comparing of capital I so our activity of look, to we're expect additional this

Operator

comes The Green [indiscernible] Spencer at question Street. next from

Spenser Allaway

segment. on development one your just Maybe

macro political demand any retailers' been regards in new stores, given and to to there's the build if curious backdrop? just change Just

then it that any now been your it as labor development relates And fears have to around is topical there the right in space? And how talks shortages? about discussion relates as to that,

Joey Agree

the X-plus the largest are have around and Our built get going all Speedway. in AutoZone, I'm talked earlier they there with, growth. X-Eleven, challenges want to the constraints But new I Q&A, wanting to in retailers. in retailers retailers the about O'Reilly, been are how past or that's XX or for they myself Supply, tenants do to These the all stores discussions, I've their These it. say days, given Tractor Whether country and revolved grow. Walmart Lowe's

can capabilities our sheet a Our three-pronged plus multilevel balance platform and solution. our be

of on I being discussed. previous as lot answer, a the so mentioned solutions And there's just different

opportunities unique have today our be to and but cost potentially plus capabilities individual we here given our the it's level. capital subject bridge the all front there and to that's development that transaction gap out balance organic think solution, I in sheet of

when platform, their realized if basically XX retailers or is free store part Spenser, that then It today from It's doesn't outside hub. opposed of retailers for the free off-price, the the FedEx. all of send All That one that model to as them ago significant of years home omnichannel we today good return cannot not solution. dead, to for have brick-and-mortar XX% solution. omnichannel common that's their a And work. the of via hub large an theme and today, they piece e-commerce one is, omnichannel hear them of people is is is have UPS the

And so driving traffic if store a store, MSA, to don't that have and in critical. you is the

play. no desire So is private in do challenge this that's with our for cost our development elevated liquidity capabilities. retailers, is where as greatest there's can think, great and space today company our mentioned we remarks, I the in since how unique in expand that capabilities company space I've or of and liquidity have. our prepared to balance I financial The before in environment. the retailers so And crisis. the fully they that And seen this cost to And the constrained, come that construction appreciate because again, capital public cost there's no sheet with

some these us solutions. of So can provide that it's and us alone

Spenser Allaway

Okay. Great. Yes.

that of and shortages sense. your immigration financing makes appetite obviously, and the policy, and labor certainly grow, most retailer on labor alternatives comments to Now people's that's But out hands.

just coming in and least at going curious discussions right to as see if you delay that at all development, deter or So in up pipeline potentially if the now? has that's been it

Joey Agree

get just the it But we to and biggest some No, costs. if Could not up challenge yet. is deportations. up constructability see construction has come mass come

Operator

question at next Kilichowski from Wells The comes John Fargo.

Unknown Analyst

concerns on emerged terms tenants? your have for is of behalf Cheryl themes to plans of in This what John. I just understand growth some of want or

like of waiting to given are light capitalize And vacant these space the the in closures, any and tenants of recent retail bankruptcies on your available? opportunities store

Joey Agree

auction Dollar of about think, City It's We space leases. where Tree lack available. Party in the and of the I [indiscernible], XX% the that's seated

so to we've so. efficient talked bankruptcies acquiring retailers, and effective want and frankly, And to in if of leases and is, new do them them you educated and stores, means some

sandwich of day. the a their have at there, in and ultimately, at subleasing. we're retailers put environment be want buying the do given to Now we today. ourselves growth end the going position constraints not But That's what creative with the to a leasehold have to

Unknown Analyst

That makes have not on sense. seen if players private any any you access Or exit market? private instances, private arising And you've just in liquidity the quick capital. to or one acquisitions? don't that from participate discuss seeing your opportunities are capital follow-up players Can able being to you comment

Joey Agree

capital the across right. real level. platforms, a and the estate, of sheet The individual that's with is X in capital can't balance I Again, lack capital all across a rates, to commercial elevated lack in transaction enough, of a at cost advantage locked space both to institutional today. of massive slowdown fortress due to stress XXXX Definitely private this due

Operator

comes The Capital Upal next Markets. Rana at KeyBanc question from

Upal Rana

you embedded remind how us came much was last bad year? year? guidance this is 'XX? much embedded how And Could guys into to debt much then realization in how And

Peter Coughenour

Sure. This is Peter.

that XX In is compares of basis XXXX, slightly of longer-term an roughly average. that incurred to terms for points points of above of loss. our in the guide we that credit our basis for assumption credit loss includes which XX And XXXX,

during allowance other scenario, loss. also to issues guide I worst-case XX points included Lots. that credit of that, will, Big may includes year, allows in our an XX basis the would this points an basis you for year. a arise potential it addition that credit the In say for assumption XXXX, for if with And

Upal Rana

was of the than targeting your be this industries could That or thoughts for guidance last And this types less year. year? little tenants are Great. a question then you What what year kind there? And dispositions of dispositions Okay. helpful. was are other

Joey Agree

to we months, we and transactions hit, it, million XX do-nothing with in we roll XX, driven the flowing out months, call clock back in which January into effectively Florida, some a which approximately, capital assets leverage-neutral saw the throughout We the XX million included there rates, recycling approximately dispositions, odd year. assets Florida. talking came was we we about cap took in If a $XXX scenario. which aggressive were When Yes. for scenario, $XXX capital paying in opportunity by recycle Florida, low-yield ball

the X,XXX focus necessary the really do. frankly, all of will the that year noncore with. dispositions certainly $X we for a in all it's values ended source of But than a sale, someone on billion This them given or They're price. property assets, more we capital if year, right liquidity not not for

Operator

Linda next Tsai Jefferies. question comes from The at

Linda Yu Tsai

improving you of on across who you rent seeing margin landscape When retailers, coverages the the are look versus a ago? or year deteriorating

Joey Agree

small and most and we car see or this something middle-market for the at sheets going balance O'Reilly, situated is sectors level. see think relevant tenants Callaway. can our sale-leaseback experiential can Topgolf through of store not or rent EBITDA operators at across TGX today publicly retail, washes, having the [ obviously Linda, coverages portfolio. levered highly transaction. But store we in get report and really the there degradation isn't like line the to our top ] level. But that look challenges to at restaurants, not rent don't That's -- given Walmart, that That's we I a generally provide coverage the of

Linda Yu Tsai

metrics BBB? what aspects And you or to rating pushed you how And another from upgrade? are far a then

Joey Agree

last So BBB+, upgraded got we year. to

The rating my too frankly, us BBB+. S&P, slow. to fairly agencies, late years just it's size. are X honestly, to was upgrade opinion, to Just X

sit we BAAX, at today, BBB+. So

sheet, best debt the top until we balance [indiscernible]. frankly, chest. is of have probably with war no this a If think at it's not, X, maturities all material I XXXX

the [ diversity our portfolio, related of geographic assets with and a perspective, You and portfolio, sector just our combine against the from recession and that size difficult the credit then it's pretty A- nature cash resistance of them, argue rating. ] of tenant the flows to and the to our

We come ]. either at to and to [ course. will agencies. move this it continue they billion, point continue don't threshold with billion in it's that But just that So then size timing really around. rating they barometer $XX It the move be of control and to the due used $X

Operator

Baird. question comes Wes from next The at Golladay

Wesley Golladay

]? one-stop tenants shop evolving? then with interest Can new with, Napa you you no [ sandbox a about [indiscernible] how with do talk the is and but now did the a Maybe few do conversely, you you business you're deal longer

Joey Agree

the always out slow. mean consumer following trends, I to we're as The mentioned we're evolution biggest of, dealing retailers static. get at of or There's I nothing we're prepared big relevant the looking retailers, world, actively ], is all are We're which fan project data doing sandbox. in We're remarks, in which with pretty those sectoral in sandbox, the points. frankly, retailers, trends, the there a such with. but here the a BeatBarne [

the the to But watching or points all enter either is and/or sandbox consumer data right. of slow, the credit relevant evolution the I and sandbox. we exit trends, mean of methodically are those profile,

take perspective, Walmart up a is driver portfolio. X%, asset or the second it's of well-balanced want overall somebody portfolio exposure want a tenant sector a have have portfolio. The to XX% well-balanced don't maybe geographic. as We We think that as perspective to appropriate ilk. to tenants a of from well in the to We just or that

Wesley Golladay

then a And on G&A. Okay. question quick

This increase? the sort the What in been of noncash? few year much scaling of parts And is driving how big story One of the cash flatlining. as has last to the that versus is G&A years. due is

Joey Agree

in Obviously, speak to We and in significant the people the half then versus once noncash. during preparation finalize the to scenario. systems cash made last for I'll with of Peter year investments activated Both we and let started do-nothing of last XXXX. terms year. the we second year

be number for a onboarded have XXXX, team few here XXXX. a hiring of members that We've that full will we're year in still new positions for here

be see I think number that would ultimately down. scale driven you'll

is mentioned, there. obviously, in you line Our as initial guidance,

versus In terms you of Peter, the cash take let that. I'll noncash,

Peter Coughenour

of we've of couple expense, a G&A to seen noncash percent G&A as just to clarify, noncash Yes, our years. To adjusted we of your revenue, over guide question, the relative and Wes, greater in growth that G&A the total to G&A. cash last point includes

adjusted about we're as to of that, And at cash we anticipate continues. the continuing trend to so the when revenue. thinking would scale a that percent AFFO, impact see we to business scale G&A And continue as

Joey Agree

is stock time-based I a terms [indiscernible] from X-year, to change, And the was really of the in... restricted made noncash would going a We from critical. function driver note Peter, management X-year purposes talent of the G&A the is Yes. that that that thought of which we

Peter Coughenour

XXXX, years of ago. a couple

Joey Agree

team obviously period, terms and industry didn't members to XXXX, frankly, just team And the standards. in mobility value X-year vesting was here. jobs with more years that we X retain of think with today that line and wanted in we top fully

Operator

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

Eric Borden

lease the known XXXX any list expirations. there the today? this on are year, on disposition of XX Of any are Or move-outs? XX Just the leases set target the to expire

Joey Agree

weekly daily. Those in, rolling them as known options. not of exercise Most will are honestly, we, material Really no move-outs. if contractual

], so an some potentially material have excited known if we're Provo exercise of piece if And estate. they was, A+ no see there in move-outs their about we real [ would Utah to -- that's We'll it. option,

had Walmart, subsequent That's ] some the reporting, X-year we've options Cordova lease. Rancho a option a Since including [ to exercise. ground with exercised,

dwindle And subsequent so XX/XX. that list continues to to

Peter Coughenour

in well. that would But I there's captured for lease loss add just to we've our of Eric, with year identified there. roll -- terms as would Joey, of guide credit extent material agree in nothing terms the I within be anything the

Eric Borden

that on acquisitions. capital don't And as then and allocation. you potential is markets that any you I equity need XXXX know acquire just liquidity But look Okay. helpful. to access the That's of the to full you capital for chest debt war mentioned potential yes, issuance. Peter, how the you had the replenish on beyond, But color think, and would thinking that I long-term about XXXX appreciated. mix? to be are any a

Joey Agree

in don't dollar. at unsecured future to million excuse X.X% issuance we any swap need But $XXX XX-year a the tune of debt markets. me, have the We in this the for year reality,

As in $X.X this we can year prepared the by sub-Xx we stay dispositions. billion without mentioned investing any remarks, incremental

sheet that swap to is a place that that's volatile. access unsecured pre-equitized a in a highly dollar, market treasury the this markets balance a doesn't has So need in XX-year

Operator

America. The next question comes from Farrell Granath at Bank of

Farrell Granath

if thinking lower consumer, end may comments to? the exposed the make of health specifically the that about how a few wondering retail you're you that was the how on can you I and were impact

Joey Agree

their Look, with consumer income on news obviously, and with call take the their inflation share. feels and the looking Steel income to And median we in, XXX pressure and at looking are trade the it, to well. and The then necessity-based. eggs with continue portfolio. to let's at that down Walmart, back continuing XXX(k)s services -- goods low see the cohort undoubtedly Walmart high-end household in

evolve to we inflation, year, to not continue will trifurcated if a subject that throughout macroeconomic the consumer. to so see bifurcated factors, And but obviously, subject

Farrell Granath

quarters? terms any and last And few are competition going of shifts also today in forward you seeing market, compared the in the to

Joey Agree

XXXX with competition, lagging, continues past couple over competition the to transactions XX% obviously, by rate historic we in individual is XXXX world competition, the with competition, competition pricing dwindle. transactional And of DST market institutional competition. years from today Again, this at end motivated themselves. expectations that interest Our the with are an be less think and of averages, less cycle seeing of sellers' in. order they super new The should cut we're tax-motivated where

encourage brokers we so time of XXXX. all XXXX pretending February is sellers stop to wake the the And all time, up and to

Operator

Rich at question next comes from The Barclays. Hightower

Richard Hightower

marketplace of DFP of that to today? you if factors in the that, it business, for spent on little the on how and lot morning capital? of you a the the it a it's simply store Joey, talking within how guess, size retailer a solution unique time company of gating kind it's this about becoming, concentration I Maybe side, what the is What retailer issue your growth. Is multiples spend of the demand allocates mind. time terms don't in are

Joey Agree

they thing, our returns as into Sure. well sandbox. as One fit

upon that are development did platform the deploy We a returns we here, to Counsel that duration. But a premium team. acquisition and need not risk, tremendous [ days in ], days ] that or can going risk our close again, her to development into capital based to our XX, General XX job funding to [ Danielle space. we in and compressing execute XX down and in duration equals [indiscernible], XXXX,

rent the there, a take to in paying acquire churn rather call points days. and expansion improvements do That spread, we burn And than to a and site can where tighter going on so be be is can if to a days in building it, tenant can like-kind basis asset. ] as XX XX about, XXX structure, we and add existing improve get we've that renovation, [ it, talked a

process, XX- spread to entitlement, be a to permitting go going XX-month to and is going through If we're wider. that construction

on if of decide thousands cost, sort annually of for kind expectations And factor through sense us is retailers' projects return here on think And those so where the we which the make given that's true they to hundreds, not gating have cost. brackets. for projects, we returns ones developers,

Richard Hightower

the especially predictions, That's I'm in could about think But think be And make uses, appreciate to as and about ways. another mind hard obvious again? reasons, think the I for your which that pretty in has XXXX, funding start asked to to sources choppiness few that question, what -- XXXX do-nothing scenario we ask Okay. But we future. different very a helpful. I going as been over all it's chances months of just last the the are given and

Joey Agree

don't Well, -- -- scenario look, going do-nothing think you I don't really think in I a to me I think be asked XXXX. it's

accounting chest the methodologies. dilution a will out penny two here or think dilution penny are prefunded or a as in said method take I've potential right XX position in a swap versus prepared XX-year XX for pole concerned again, ], the times a in treasury there. sitting I now. of war the remarks, I of we potential XX I'm [ not to about, the penny for

space. on do-nothing and XXXX. And balance going would the in What February only this it's schedule, be to scenario. terms and a think of But endure unprecedented, I this portfolio of value truly sheet, to continue anticipate inclusive I wouldn't we're it in think it's its sitting maturity is XXXX. I

So the executive what and see signed today we'll orders year. throughout are

Operator

And question St. Haendel the last from comes

Mizuho. at Juste

Haendel St. Juste

Two quick ones for me.

reserve. on not or the [indiscernible], trying Lots, ballpark more of to Dollar? sense just color portfolio tenants could I basis better First, to get or in Big points the a guess hoping I'm City, a I and Party Family some closely specifically here. exposure credit was watching comments of categories on earlier follow ballpark also bit but to add wanted the the -- to and you up XX I

Joey Agree

Haendel. Yes, to lot out. continues scenario the as It's really this play big

We Target-anchored waiting. get lined shopping have get one thrilled be in Arthur. to is Davenport, thrilled Iowa be back that a Texas, two back. in is in those party we'll cities and tenants up One Port in portfolio that center the and to have We'd and

would anyone We the again, all project file stores were in don't the a making we'd sure, [ X need on time. lease. All structure. own environment lease Joanne's today's retail Not worst frankly, of we bankruptcy later, any in ]. net months Probably why money,

them our to favorite. expect liquidate to We effectively this [indiscernible], who's just point at

watching. But I that's I titles. that's movie best we're really Oscars mean, theaters one it. -- I come always out. of the saw the A know couple of don't

see didn't In concerns me. always the of films a great any one that So in best them. that, of place. Besides we're

Haendel St. Juste

categories ask to Got at I like home might your I supply. about potential Canada, produced of of Mexico, it. risk tariffs that of wanted to tenants. tenant items number some because appreciate also in have improvement, that. they auto the China. looking more a what assembled are be parts, Got of farm could was them be think you at some that it. you I curious if I your impact was hearing about

be curious of might these that maybe some your your and how impacting categories? thinking underwriting so And in

Joey Agree

the nonstop That's is Look, to, today which retail bottom to anywhere talk, the all effectively going consumer. consumer categories and be doesn't down ultimately flow and line. to tariff the categories appear going

it's whether components into forward other any still manufactured country. this cars are about So imported or talking that and/or

sourcing. they're is first diversified really good retailers that due Trump retailers, to they their in the The presidency right, national news the most the tariffs, source,

like won't seems coming only have so And from tariffs. now, it Australia

tariffs, global example, purchasing I be these tariffs the trade the you'll So think diversify believe, TJX, offices global their their frankly, I and give looking administration see, -- across did for XXXX beneficiary retailers think procurement a that XX came those from it's which Those procurement in purchasing. sources from because efforts countries around opportunity down efforts, would their I globe. XX and to hopefully, and the has,

down to flow it the to That want said, in ultimately eat margin. tariffs retailers unless consumer

which to country the can tariffs. takes in and choose. it directly related can and in price be They share. Walmart have a the balance TJX can portfolio to reason. invest price have for We move in labor, liquidity the in the to retailers to sheet right our invest biggest choose not

retailer, I'm somehow balance multibillion-dollar have and Now and some a middle if savings tariffs, going a pass have market that in I'm those or to I find through sheet, don't to small to I'm subject SG&A.

And work -- small news, look, see in so We're they any to what from from it's any -- of But they it and here. tariffs the the greatest retailers as impact will the suffer the continue resolved. that middle to those are consequences be market tariffs through going get be tariff will them.

Operator

an Amol the question last [ Investor. ] now Kayo And is from

Unknown Analyst

[indiscernible], can on talking just some I give This Dollar to ask retail categories for Tayo. you is guys update if of you Sam about an the wanted us on experienced stores specifically pharmacies? on and

Joey Agree

pharmacy CVS saw but this What year-over-year. just morning, a sector, That's obviously, for pharmacy XX% almost, we us strong XXXX. dispositions look and outlook you year-over-year, I beat that's mean CBS print guidance The if is without any which specifically. down is for material

the obviously those so that sectors some And in news headwinds, those were macroeconomic experience some will continue to absent changes. of

We'll sticking continue to environment, think same we the invest recession-resistant in our are sandbox. in best retailers to what a

So us won't into see you move experientially.

that's You won't every single see our store exposure just ramp us going day. dollar down

pharmacy You us increase exposure. our see won't

auto the the out. best here, focused like Wegmans parts auto We're in off-price, really be country, let Walmart, our about and service, -- [ going to categories best grocers and as of best in whether we're HEB earlier, general tire that's Publix. all ] shake else on the focused such on the We'll the merchandise, talked Kroger, and dominant opinion, we this brightest everything

Unknown Analyst

[indiscernible] That And didn't your change perspective? anything from miss question, All you Are watch I seeing it. guess guys the hope credit sense. right. last makes I I list

Joey Agree

No.

much the few lots to mentioned we're I just do big earlier, As with really or lots continuing bankruptcy this big have. we watch, navigate that can't and through

but With just is different great go And our continue shape. like hands. to the next through portfolio, auction, feel we in lease they --

Operator

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

Joey Agree

joining morning. we this conferences, forward to seeing look you appreciate upcoming We everybody's us all Thank and again. for time. you at Thanks

Operator

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

Agree Realty (ADC) 12 Feb 252024 Q4 Earnings call transcript