Agree Realty Secures Strategic Capital with $391M Forward Offering Amid Growth Momentum

Agree Realty Corporation (NYSE: ADC) has successfully closed a $391.7 million forward sale agreement, marking a pivotal capital-raising move to fuel its expansion in the net-lease retail sector. The offering underscores the company’s disciplined approach to capital allocation, leveraging a forward structure to balance growth ambitions with shareholder value preservation.

The Offering Mechanics: Flexibility Meets Price Certainty

Agree Realty sold 5,175,000 shares of its common stock at $75.70 per share, with underwriters fully exercising their options to purchase an additional 675,000 shares. The transaction, structured as a forward sale with Bank of America, allows the company to lock in the share price immediately while deferring the issuance of shares—and receipt of proceeds—until needed, up to October 26, 2026. This approach avoids immediate dilution to existing shareholders, as shares will only be issued upon settlement.

The forward agreement’s flexibility aligns with Agree Realty’s growth strategy, enabling it to time capital deployment with investment opportunities. Proceeds are earmarked for property acquisitions, development projects, and potential debt repayment, all while maintaining a robust liquidity position of $1.9 billion as of March 31, 2025.

Strategic Rationale: Growth and Resilience in Motion

The forward offering builds on Agree Realty’s Q1 2025 results, which highlighted its execution strength. During the quarter, the company:
- Raised $364 million through existing forward agreements and ATM (at-the-market) sales, including $181 million from a forward component and $183 million from settled shares.
- Increased its 2025 investment guidance to $1.3–1.5 billion, up from prior projections, driven by acquisitions like the $377 million spent on 69 properties and $24 million committed to new developments.

This capital influx supports the company’s 99.2% leased portfolio of 2,422 properties, 68.3% of which are anchored by investment-grade tenants. The weighted-average lease term of 8.0 years further stabilizes cash flows, a critical advantage in volatile markets.

Financial Performance: AFFO Growth and Dividend Expansion

Agree Realty’s Q1 2025 AFFO per share rose 3.0% year-over-year to $1.06, while its dividend was increased by 2.4% to an annualized $3.072 per share. These metrics reflect the company’s ability to grow its dividend while deploying capital aggressively.

The forward structure’s benefits are already materializing. By securing a fixed share price today, Agree Realty mitigates the risk of future market declines, ensuring capital is available at a pre-agreed rate. This is particularly prudent amid ongoing macroeconomic uncertainties, including rising interest rates and tenant performance risks.

Risks and Considerations

While the forward offering is a strategic move, it carries risks. Settlements could occur during periods of market volatility, potentially diluting shares at a lower price than current valuations. Additionally, the company’s reliance on tenant credit quality—already strong but not immune to economic shifts—remains a key risk factor.

Conclusion: A Growth Catalyst with Strong Fundamentals

Agree Realty’s $391.7 million forward offering positions it to capitalize on a robust net-lease retail market, where its 50.3 million-square-foot portfolio and tenant-stable income streams provide a solid foundation. With $1.9 billion in liquidity, a 99.2% occupancy rate, and a 3% AFFO growth, the company is well-equipped to execute its $1.5 billion investment plan while maintaining financial flexibility.

The forward structure’s delayed dilution and price certainty are particularly advantageous, allowing Agree Realty to navigate market fluctuations while preserving shareholder value. While risks remain, the company’s track record of disciplined capital allocation and tenant diversification suggests this offering is a strategic win for long-term investors.

In a sector where liquidity and execution matter most, Agree Realty’s move reinforces its status as a leader in net-lease real estate—a position that could yield further upside as it deploys capital into high-quality assets.