Agree Realty(US:ADC)2025-10-22 14:00Financial Data and Key Metrics Changes - The company reported a core FFO per share of $1.09 for the third quarter, an increase of 8.4% year over year [13] - AFFO per share for the third quarter increased 7.2% year over year to $1.10, which is $0.02 above consensus [13] - The company raised its AFFO per share guidance for the year to a new range of $4.31 to $4.33, implying approximately 4.4% year-over-year growth at the midpoint [15][6] Business Line Data and Key Metrics Changes - During the third quarter, the company invested over $450 million in 110 high-quality retail net lease properties across three platforms [7] - The acquisitions had a weighted average cap rate of 7.2% and a weighted average lease term of 10.7 years [8] - The company executed new leases, extensions, or options on approximately 860,000 square feet of gross leasable area during the quarter, with a recapture rate of approximately 104% [11][43] Market Data and Key Metrics Changes - The company received an A- issuer rating from Fitch Ratings, making it one of only 13 publicly listed U.S. REITs with an A- credit rating or better [6] - The total debt to enterprise value was approximately 29%, while the fixed charge coverage ratio remained healthy at 4.2 times [18] Company Strategy and Development Direction - The company is increasing its full-year 2025 investment guidance to a new range of $1.5 billion to $1.65 billion, representing an increase of over 65% from last year's investment volume [4] - The company aims to achieve its medium-term goal of commencing $250 million annually in development projects [9] - The company is focused on maintaining stringent real estate quality underwriting standards while being disciplined capital allocators [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current investment pace and does not foresee any slowdown in 2025 [25] - The company noted that the trade-down effect is benefiting its tenant base, particularly in sectors like auto parts and retail [87] - Management highlighted that retailers are increasingly viewing stores as essential to successful omnichannel operations, indicating a strong growth appetite [75] Other Important Information - The company has approximately $1.9 billion of liquidity, including cash on hand and availability on its revolving credit facility [18] - The company declared monthly cash dividends of $0.0256 per share for July, August, and September, representing a 2.4% year-over-year increase [16] Q&A Session Summary Question: Can you walk through the timing and settlement of the forward equity? - Management indicated that approximately 6 million shares of forward equity contracts will mature in the fourth quarter, and they anticipate settling those shares at that time [24] Question: Is there anything on the horizon that could slow the acquisition pace? - Management stated that they do not see any factors that would slow down the acquisition pace in 2025, despite the current interest rate environment [25] Question: How have you navigated increased competition in the market? - Management noted that they have not seen any material change in cap rates year to date and emphasized their differentiated approach to transactions [29] Question: What is the anticipated impact of credit loss on guidance? - Management reported experiencing just under 21 basis points of credit loss in the third quarter and anticipates approximately 25 basis points for the year [37] Question: How do you view the current consumer environment? - Management indicated that the majority of categories they invest in are seeing positive flow-through, particularly benefiting from the trade-down effect among consumers [86]