Financial Data and Key Metrics Changes - In 2025, the company achieved over 4.5% growth in AFFO per share, with a total investment of $1.55 billion across its platforms, marking over 60% year-over-year growth [6][8] - Core FFO per share for Q4 was $1.10, representing a 7.3% year-over-year increase, while full-year Core FFO per share was $4.28, reflecting a 5.1% increase [21] - AFFO per share for Q4 was $1.11, a 6.5% year-over-year increase, and for the full year, it was $4.33, indicating 4.6% year-over-year growth [21][22] Business Line Data and Key Metrics Changes - In Q4, the company invested approximately $377 million in 94 retail net lease properties, with a weighted average cap rate of 7.1% and a weighted average lease term of 9.6 years [11][12] - For the full year 2025, nearly $1.6 billion was invested in 338 retail net lease properties, with over $1.4 billion originating from the acquisition platform [12][13] - The development and DFP platforms had a record year with 34 projects, representing approximately $225 million of committed capital [13] Market Data and Key Metrics Changes - The company's investment-grade exposure at year-end stood at nearly 67%, with occupancy increasing to 99.7%, reflecting a 50 basis point improvement since Q1 [16] - The properties acquired during Q4 were leased to leading operators in various sectors, including home improvement and grocery stores, indicating a diverse market presence [12] Company Strategy and Development Direction - The company aims to increase its 2026 investment guidance to a range of $1.4 billion-$1.6 billion, representing a 10% increase from the prior range [9] - The company is focused on maintaining a fortress balance sheet and executing on its investment guidance without raising additional equity capital [20] - The company is enhancing operational efficiencies through IT improvements and anticipates a material reduction in G&A as a percentage of revenue [8][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fundamentals supporting the company's outlook, citing a strong portfolio and exceptional team depth [6] - The management highlighted the ongoing challenges faced by middle-income consumers due to rising costs, which may impact retail trends [101] - The company expects to maintain a growth trajectory with a goal of delivering 10% operational returns and achieving two-year stacked AFFO growth [108] Other Important Information - The company raised approximately $1.5 billion in capital during 2025, including a $400 million bond offering and a $350 million term loan [17][18] - The company achieved an A- rating from Fitch, validating its strong balance sheet and disciplined capital allocation [20][21] Q&A Session Summary Question: Increase in 2026 investment guidance - Management noted that the increase is due to secured transactions, including sale-leaseback deals and increased confidence in development projects [26] Question: Non-core asset sales - Management explained that capital recycling focuses on opportunistic sales of non-core assets, driven by valuations and confidence in future performance [27] Question: Cap rate trends - Management indicated no material changes in cap rates and noted that rent escalators have been embedded with historic inflation [31][32] Question: Sale-leaseback interest - Management stated that while there hasn't been a significant increase in sale-leaseback velocity, they have specific transactions lined up with existing tenants [40] Question: Development investment commitments - Management expressed optimism about growth in development investments but noted that timing is often subject to third-party approvals [69] Question: Credit loss assumptions - Management indicated that the assumed credit loss for 2026 guidance is 25-50 basis points, consistent with 2025 performance [70]

Financial Data and Key Metrics Changes - In 2025, the company achieved over 4.5% growth in AFFO per share, with a total investment of $1.55 billion across its three investment platforms, marking over 60% year-over-year growth [6][8] - Core FFO per share for Q4 was $1.10, representing a 7.3% year-over-year increase, while full-year Core FFO per share was $4.28, reflecting a 5.1% increase [21] - AFFO per share for Q4 was $1.11, a 6.5% year-over-year increase, and for the full year, it was $4.33, indicating 4.6% year-over-year growth [21][22] Business Line Data and Key Metrics Changes - In Q4, the company invested approximately $377 million in 94 high-quality retail net lease properties, with notable transactions including ground leases to Lowe's and Home Depot [11][12] - For the full year 2025, nearly $1.6 billion was invested in 338 retail net lease properties, with over $1.4 billion originating from the acquisition platform at a weighted average cap rate of 7.2% [12][13] - The development and DFP platforms had a record year with 34 projects completed or under construction, representing approximately $225 million of committed capital [13][14] Market Data and Key Metrics Changes - The company's investment-grade exposure at year-end stood at nearly 67%, with occupancy increasing to 99.7%, reflecting a 50 basis point improvement since the first quarter [16] - The weighted average cap rate for acquired properties was 7.1%, with a weighted average lease term of 9.6 years [12] Company Strategy and Development Direction - The company aims to increase its 2026 investment guidance to a range of $1.4 billion to $1.6 billion, representing a 10% increase from the prior range [9] - The company is focused on maintaining a fortress balance sheet and executing on its investment guidance without raising additional equity capital [20] - The company is enhancing operational efficiencies through IT improvements and anticipates a material reduction in G&A as a percentage of revenue [8][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fundamentals supporting the company's outlook, citing a strong portfolio and exceptional team depth [6] - The management noted that the current economic environment is challenging for middle-income consumers, which may impact retail trends [101] - The company expects to maintain a growth trajectory with a goal of delivering 10% operational returns and achieving two-year stacked AFFO growth [108] Other Important Information - The company raised approximately $1.5 billion in capital during the year, including a $400 million bond offering and a $350 million term loan [17][18] - The company achieved an A- rating from Fitch, which is expected to deliver long-term benefits to its cost of capital [16][20] Q&A Session Summary Question: Increase in 2026 investment guidance - Management indicated that the increase is due to secured transactions, including sale-leaseback deals and increased confidence in development projects [26] Question: Non-core asset sales - Management explained that capital recycling focuses on opportunistic sales of non-core assets, driven by valuations in the market [27] Question: Cap rate trends - Management noted no material changes in cap rates and that rent escalators have been stable, reflecting historical inflation [31][32] Question: Construction costs - Management confirmed that construction costs are not decreasing and are in line with last year's levels, with efforts to find efficiencies [33][34] Question: Sale-leaseback interest - Management stated that while there is no increase in sale-leaseback velocity, they have specific transactions lined up with existing tenants [40] Question: Development investment commitments - Management expressed optimism about growth in development investments but noted that timing is often subject to third-party approvals [69] Question: Credit loss assumptions - Management indicated that credit loss assumptions for 2026 are in line with 2025, with a focus on maintaining a strong portfolio [70]

Financial Data and Key Metrics Changes - The company achieved over 4.5% growth in AFFO per share for 2025, with a total investment of $1.55 billion across its platforms, marking over 60% year-over-year growth [4][5] - Core FFO per share was $1.10 for Q4 and $4.28 for the full year 2025, reflecting year-over-year increases of 7.3% and 5.1% respectively [19] - AFFO per share for Q4 was $1.11, a 6.5% year-over-year increase, while the full year AFFO per share was $4.33, representing 4.6% growth [19][20] Business Line Data and Key Metrics Changes - In Q4, the company invested approximately $377 million in 94 retail net lease properties, with a weighted average cap rate of 7.1% and a lease term of 9.6 years [8][9] - For the full year 2025, nearly $1.6 billion was invested in 338 properties across 41 states, with over $1.4 billion originating from the acquisition platform [9][10] - The development and DFP platforms had a record year with 34 projects, representing approximately $225 million of committed capital [10] Market Data and Key Metrics Changes - The company's investment-grade exposure at year-end stood at nearly 67%, with occupancy increasing to 99.7%, a 50 basis point improvement since Q1 [12] - The properties acquired during Q4 were leased to leading operators in various sectors, including home improvement and grocery stores, indicating a strong market presence [9] Company Strategy and Development Direction - The company plans to increase its 2026 investment guidance to a range of $1.4 billion to $1.6 billion, a 10% increase from the prior range, supported by a strong pipeline of over $0.5 billion [6][8] - The company emphasizes a disciplined approach to capital allocation and maintaining a fortress balance sheet, with no material debt maturities until 2028 [5][18] - The focus remains on necessity-based retailers, avoiding luxury and experiential sectors, to cater to the trade-down effect observed in consumer behavior [99] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fundamentals supporting the company's outlook, citing a strong portfolio and exceptional team depth [4] - The company anticipates continued growth in AFFO per share, with guidance for 2026 set at $4.54 to $4.58, representing a 5.4% year-over-year growth at the midpoint [6][20] - Management noted that the current economic environment presents challenges for middle-income consumers, which could impact retail dynamics [99] Other Important Information - The company raised approximately $1.5 billion in capital during 2025, enhancing its liquidity to over $2 billion [5][17] - The company achieved an A- rating from Fitch, validating its strong balance sheet and capital market execution [13][18] Q&A Session Summary Question: Increase in 2026 investment guidance - Management indicated that the increase is due to secured transactions, including sale-leaseback deals and increased confidence in development projects [25] Question: Non-core asset sales - Management explained that capital recycling focuses on opportunistic sales of non-core assets, driven by market valuations [26] Question: Cap rate trends - Management noted no material changes in cap rates and that rent escalators remain stable, reflecting historical inflation [30] Question: Construction costs - Management confirmed that construction costs are not decreasing and are in line with last year, with efforts to explore alternative methods to manage costs [33] Question: Sale-leaseback interest - Management stated that while there is no increase in sale-leaseback velocity, they have specific transactions lined up with existing tenants [38] Question: G&A savings - Management anticipates G&A savings of approximately 30+ basis points relative to total revenues due to IT improvements and operational efficiencies [41] Question: Development projects - Management confirmed that the new projects are part of larger expansions for retailers, indicating significant future opportunities [47] Question: Exposure to lower-income consumers - Management acknowledged the challenges faced by middle-income consumers and emphasized a focus on necessity-based retailers to mitigate risks [99]

Core Insights - Agree Realty Corporation (ADC) reported strong investment activity in 2025, deploying approximately $1.55 billion into retail net lease properties across 41 states, including 338 properties net leased to top-tier tenants [1][9] - The company has reinforced its investment-grade tenant base, with about 66.8% of annualized base rent coming from high-credit tenants as of December 31, 2025, enhancing income stability and long-term cash flow [2][9] - ADC's balance sheet strength is notable, with over $2 billion in liquidity, positioning the REIT to capitalize on acquisition and development opportunities in 2026 [4][5] Investment Activity - In 2025, the company acquired 305 retail net lease properties valued at around $1.44 billion at a 7.2% cap rate, with remaining long-lease terms averaging 11.5 years [3] - Approximately 64.9% of annualized base rents acquired came from investment-grade tenants, contributing to resilient earnings in a competitive retail environment [3] Future Outlook - Agree Realty forecasts 2026 investment activity between $1.25 billion and $1.5 billion, supported by its three growth platforms: acquisitions, development, and the Developer Funding Platform (DFP) [5][6] - The company's disciplined approach reflects a focus on high-quality retail tenants and strategic capital allocation, with a strong pipeline and conservative balance sheet providing a solid foundation for continued earnings growth [5][6] Market Performance - Shares of Agree Realty have increased by 1.9% over the past three months, contrasting with the industry's decline of 0.9% [7] - The Zacks Consensus Estimate for its 2025 and 2026 funds from operations (FFO) per share has slightly increased to $4.31 and $4.54, respectively [7]

Company Overview - Agree Realty Corporation (ADC) is a retail net lease REIT with an enterprise value of $116 billion as of July 25, 2025[10] - The company owns 2,513 retail properties across all 50 states, totaling approximately 520 million square feet[10] - The company has investment grade issuer ratings of Baa1 from Moody's and BBB+ from S&P[10] Financial Highlights - The company raised 2025 AFFO per share guidance to $429 to $432, representing over 4% growth at the midpoint[13] - The company increased 2025 investment guidance to $14 billion to $16 billion of high-quality retail net lease assets[13] - The company invested $727 million during the first half of the year across 162 high-quality retail net lease assets spanning 27 states[13] - The company issued $400 million of senior unsecured notes due 2035 at an all-in interest rate of 535%[13] - The company has total liquidity of approximately $23 billion, including approximately $13 billion of outstanding forward equity as of June 30th[14] - The company declared a monthly cash dividend of $0256 per common share for July, representing a 24% year-over-year increase[14] Portfolio Composition - Investment grade tenants account for 678% of the portfolio's annualized base rent (ABR)[49] - National tenants comprise 88% of the portfolio's ABR[57] - Grocery stores represent 106% of the portfolio's ABR, amounting to $715 million[50]

Financial Data and Key Metrics Changes - The company raised approximately $1,100,000,000 of forward equity during the year, with $423,000,000 in the fourth quarter alone [6][16] - Core FFO per share was $1.02 for the fourth quarter and $4.08 for the full year 2024, representing year-over-year increases of 3.5% to 3.7% respectively [19] - AFFO per share was $1.04 for the fourth quarter, reflecting a 4.7% year-over-year increase, and $4.14 for the full year, marking a 4.6% year-over-year growth [19][22] Business Line Data and Key Metrics Changes - In Q4 2024, the company invested approximately $371,000,000 in 127 high-quality retail net lease properties, including the acquisition of 98 assets for over $341,000,000 [10][11] - For the full year 2024, the company invested $951,000,000 in 282 retail net lease properties, with a weighted average cap rate of 7.5% and a weighted average lease term of 10.4 years [11][12] - The development and DFP platforms had a record year with 41 projects representing approximately $180,000,000 of committed capital [12] Market Data and Key Metrics Changes - The company reported a strong occupancy rate of 99.6% at year-end, with investment grade exposure at 68.2% [15][19] - The weighted average cap rate for dispositions in 2024 was 6.7% [14] Company Strategy and Development Direction - The company remains committed to investing in strong retailers with superior risk-adjusted returns and aims to deepen relationships with core retailers [5][9] - The company plans to deploy over $1,500,000,000 in 2025 while maintaining a target leverage range of four to five times net debt to EBITDA [7][20] - The company emphasizes a disciplined approach to capital allocation and raising, with no material debt maturities until 2028 [6][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a volatile higher interest rate environment and achieving AFFO per share guidance of $4.26 to $4.30 for 2025, representing approximately 3.5% year-over-year growth [8][20] - The management noted that the current economic environment presents both challenges and opportunities, particularly in the retail sector [40][76] Other Important Information - The company declared monthly cash dividends of $0.253 per common share for Q4 2024, representing a 2.4% year-over-year increase [22] - The company received a credit rating upgrade to BBB+ from BBB with a stable outlook, reflecting its prudent growth strategy [19] Q&A Session Summary Question: Insights on ground lease renewals and market upside - Management indicated significant mark-to-market upside in ground lease renewals, with a case study highlighting a tenant's need to sign a new lease at a higher rate [26][28] Question: Balancing forward equity and cash drag - Management explained that the cost of forward equity is minimal due to current interest rates, allowing for ample liquidity for investment activities [29][31] Question: Acquisition cap rates and seller expectations - Management noted that seller expectations have not significantly changed despite fluctuations in the ten-year treasury rates, emphasizing a disciplined approach to capital deployment [35][37] Question: Investment grade tenant exposure and future expectations - Management stated that the current investment grade exposure is near an all-time high, but they remain open to unrated retailers if the pricing is favorable [45][47] Question: Transaction volume expectations for 2025 - Management expressed optimism about a strong start to 2025, with ongoing sourcing for the second quarter, but refrained from making predictions about the overall year [49][50] Question: Update on Big Lots and lease auctions - Management provided updates on the Big Lots bankruptcy process, indicating ongoing negotiations and interest in the properties [66][68] Question: Sale leaseback market activity - Management noted ongoing discussions regarding sale leasebacks and anticipated increased activity in the market [70] Question: Development demand and labor shortages - Management reported strong demand from major retailers for new store builds, despite challenges related to construction costs and liquidity [75][78] Question: Growth plans for tenants amid recent bankruptcies - Management highlighted the lack of available retail space as a challenge for retailers looking to expand, emphasizing the need for creative growth strategies [83][85] Question: Bad debt assumptions in guidance - Management indicated that the 2025 guidance includes an assumption for 50 basis points of credit loss, compared to 35 basis points in 2024 [90][91]