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]