Agree Realty’s $75.70 Share Offering: A Strategic Play for Growth Amid Uncertainty?

Agree Realty (NYSE: ADC) has announced a public offering of up to 5.175 million shares of its common stock, priced at $75.70 apiece, marking a significant capital-raising move for the net-leased REIT. The offering, structured through a forward sale agreement with Bank of America, offers the company flexibility to delay share issuance—and the associated dilution—until needed, while securing funding for acquisitions and debt repayment. But what does this mean for investors?

The Structure: Forward Sales and Strategic Timing

The offering’s most notable feature is its use of a forward sale agreement, a mechanism that allows Agree Realty to lock in the $75.70 share price today but delay delivering the shares to investors until as late as October 2026. This structure is a calculated risk: it lets the company avoid immediate dilution while securing capital for future growth opportunities. The underwriter, BofA Securities, will initially sell shares borrowed from the forward purchaser, with Agree Realty settling the agreement over time by issuing shares directly.

The move highlights a balancing act common among REITs. On one hand, issuing shares at today’s price (which, as of April 23, is near ADC’s 52-week high) could be seen as advantageous. On the other, the deferred settlement mitigates the risk of issuing shares at an inopportune time if the stock price drops.

What’s the Money For?

Proceeds will fund “general corporate purposes,” including property acquisitions, development, and debt repayment. As of March 2025, Agree Realty’s portfolio spans 2,422 properties across all 50 states, totaling 50.3 million square feet. The REIT’s focus on “omni-channel retail” tenants—businesses thriving in both physical and digital spaces—aligns with a broader trend toward resilient real estate investments.

But the devil is in the details. Let’s break down the math:
- Base offering: 4.5 million shares × $75.70 = $340.65 million
- Max offering (including over-allotment): 5.175 million shares × $75.70 = $392.27 million

These figures represent a meaningful capital injection. For context, Agree Realty’s 2024 net operating income (NOI) was approximately $492 million, so the offering’s upper end could provide 80% of that figure in one fell swoop. Such liquidity could accelerate acquisitions, but it also raises questions about valuation.

The Risks and Rewards

The forward sale structure offers clear advantages. By delaying share issuance, Agree Realty avoids diluting current shareholders if the stock price rises further. However, if the stock price falls below $75.70 before settlement, the company could end up effectively overpaying investors—or, conversely, underpaying if the stock rises.

Investors should also consider ADC’s current valuation. As of April 23, the stock trades at a price-to-FFO (funds from operations) multiple of 17.8x, slightly above the average for retail REITs. This suggests the market already prices in strong growth expectations.

The Bottom Line: A Shrewd Move, but Not Without Hurdles

Agree Realty’s offering is a strategic maneuver that leverages its current stock price while hedging against future uncertainty. The forward sale mechanism buys the company time to deploy capital into accretive acquisitions or debt reduction, which could bolster its already robust portfolio.

However, the move isn’t without risks. The deferred settlement creates uncertainty about when dilution will hit shareholders, and the $75.70 price—while advantageous today—could look less favorable if the stock underperforms.

Looking ahead, the success of this offering hinges on two factors:
1. Execution: Can Agree Realty deploy the capital into properties that generate returns exceeding its cost of equity?
2. Market Conditions: Will the net-leased retail sector remain resilient as economic headwinds persist?

Conclusion: A Prudent Bet on Growth, Backed by Data

Agree Realty’s decision to structure the offering with a forward sale reflects a blend of caution and ambition. The potential $392 million in proceeds, if fully raised, would provide ample fuel for growth. With a portfolio spanning 50 states and a focus on omni-channel tenants—businesses less vulnerable to retail decline—the REIT is positioning itself for long-term stability.

Crucially, the stock’s historical performance supports this strategy. Over the past five years, ADC has delivered an annualized total return of 12%, outpacing the S&P 500 REIT index by 3 percentage points. This track record suggests management’s ability to navigate capital markets effectively.

While investors must remain vigilant about dilution timing and valuation multiples, the offering underscores Agree Realty’s confidence in its growth prospects. For now, this looks like a calculated bet—one that could pay off if the company continues to execute as it has.