Agree Realty Corporation (ADC) Q2 2024 Earnings Call Transcript

In the recent earnings call for the second quarter of 2024, Agree Realty showcased a robust performance, with significant achievements and strategic moves that underscore the company's resilience and adaptability in a dynamic market environment. Here are the key takeaways from the call.

Financial Performance and Outlook

Agree Realty reported a strong first half of the year, with high-quality transactions and a disciplined approach to capital allocation. The company's balance sheet stands at a fortress level, with liquidity of $1.7 billion and a net debt to recurring EBITDA ratio of 4.1 times, providing unparalleled optionality for future growth. The company also raised AFFO per share guidance for the year, reflecting a 4.4% year-over-year growth.

Acquisition Strategy and Pipeline

Agree Realty's acquisition strategy has been key to its success, with a focus on high-quality retail net lease properties across three external growth platforms. The company has invested over $345 million in 102 retail net lease properties spanning 37 states and 24 retail sectors, highlighting its dynamic sourcing approach. With an increased acquisition guidance of approximately $700 million for the year, the company is well-positioned to capitalize on market opportunities.

Dispositions and Capital Recycling

The company's asset management capabilities have been instrumental in optimizing its portfolio. Agree Realty sold 10 properties for nearly $37 million in the quarter, with a focus on recycling non-core assets and strategic dispositions. This approach not only enhances the company's liquidity but also enables it to maintain a high-quality portfolio.

Competition and Market Conditions

Agree Realty is navigating a competitive landscape, with a focus on unique transactions and relationship-based deals. The company's disciplined approach, coupled with its strong balance sheet, positions it well to execute on its strategy. Despite some challenges, such as the impact of the low-end consumer on retail performance, the company is confident in its ability to identify and underwrite value-add real estate opportunities.

C-Stores and the Future of Retail

Agree Realty's white paper on C-stores offers insights into the growing importance of this sector and its potential to transform retail real estate. The company's strategic focus on C-stores, with a large-format emphasis, reflects its forward-looking approach to retail real estate.

In conclusion, Agree Realty's earnings call underscored a company that is navigating market challenges with confidence and strategic acumen. With a robust pipeline, a disciplined approach to capital allocation, and a focus on high-quality assets, Agree Realty is well-positioned for continued growth and success in the evolving retail real estate landscape.