Agree Realty (ADC) Q2 2024 earnings summary

Executive summary

• Portfolio expanded to 2,202 retail properties across 49 states, totaling 45.8 million sq. ft. and $9.7B, with 99.8% occupancy and 68.4% of base rents from investment grade tenants.

• Net income, Core FFO, and AFFO per share all posted strong year-over-year growth, with Q2 AFFO per share up 6.4% to $1.04 and net income per share up 25.6% to $0.52.

• Raised 2024 acquisition guidance to $700 million and AFFO per share guidance to $4.11–$4.14, reflecting robust investment activity and a high-quality pipeline.

• Focus remains on high-quality, e-commerce and recession-resistant retail tenants, with a three-pronged growth strategy: acquisitions, development, and developer funding.

• Consistent monthly dividend of $0.25 per share, annualized to $3.00, up 2.9% year-over-year, with a conservative payout ratio.

Financial highlights

• Q2 2024 Core FFO per share was $1.03 (up 5.7% YoY); AFFO per share was $1.04 (up 6.4% YoY); net income attributable to common stockholders was $52.9M (up 35.5% YoY).

• Q2 2024 acquisitions totaled $186M–$203M at a 7.7% cap rate; 70 retail net lease properties acquired in Q2, 102 in the first half.

• Q2 2024 dispositions: 10 assets sold for $36.9M–$37M at a 6.4% cap rate; total dispositions since 2010 reached $518M.

• Rental income for Q2 2024 rose 17% YoY to $152.4M; six-month rental income up 18% YoY to $301.8M.

• Annualized base rent as of June 30, 2024, was $578.9M, with top tenants including Walmart, Tractor Supply, and Dollar General.

Outlook and guidance

• 2024 AFFO per share guidance raised to $4.11–$4.14, representing 4.4% growth at midpoint; acquisition guidance increased to $700M, with disposition guidance at $60–$100M.

• General and administrative expenses expected at 5.7–6.0% of adjusted revenue; non-reimbursable real estate expenses at 1.0–1.5%.

• Guidance assumes 50 basis points of credit loss, with year-to-date actuals at 25 basis points.

• Company expects to meet short-term liquidity needs with $24.3M in cash, cash from operations, and $957M available on its revolving credit facility.

• Conservative approach to Q4 guidance due to market volatility and limited forward visibility.