Agree Realty Q2 Earnings Call Highlights

Agree Realty invested more than $500 million in the second quarter, including $451 million for 82 retail net-lease properties, while development activity also reached record levels. The company increased its full-year investment-volume guidance to $1.6 billion–$1.8 billion and AFFO-per-share guidance to $4.57–$4.59, implying nearly 6% year-over-year growth at the midpoint. Occupancy reached a record 99.8%, liquidity stood at approximately $1.9 billion, and the company raised its monthly dividend by 4.3% year over year.

Agree Realty NYSE: ADC reported record second-quarter investment activity and raised its full-year outlook, citing strong acquisition, development and portfolio performance. President and CEO Joey Agree said the company invested more than $500 million across its three external growth platforms during the quarter, calling it a company record. The investment activity included $451 million of acquisitions involving 82 retail net-lease assets, along with development and developer funding platform activity.

The company raised its full-year 2026 investment-volume guidance to a range of $1.6 billion to $1.8 billion. At the midpoint, the updated range exceeds the company’s investment activity last year and represents a 24% increase from its initial guidance for 2026, according to Agree. Agree Realty also increased its full-year adjusted funds from operations, or AFFO, per-share guidance to $4.57 to $4.59. The midpoint was raised by $0.02 and implies nearly 6% year-over-year growth, CFO Peter Coughenour said. Core FFO per share was $1.13 in the second quarter, up 7.5% from a year earlier. AFFO per share was $1.14, an increase of 7.4% year over year. Coughenour said the updated outlook reflects higher investment activity and continued portfolio strength. The company now assumes 25 basis points of credit and occupancy loss for the year, at the low end of its prior 25-to-50-basis-point range. Through the first half of the year, Agree Realty experienced 10 basis points of fully loaded credit and occupancy loss.

Second-quarter acquisitions were concentrated in sectors including auto parts, home improvement, grocery, farm and rural supply, and convenience stores. Notable investments included three Walmart Supercenter ground leases in Missouri, Ohio and Wisconsin; a Walmart Neighborhood Market in Oregon; BP-branded travel centers; and a Home Depot ground lease in New Hampshire. The acquired assets carried a weighted-average capitalization rate of 7% and a weighted-average lease term of 11.2 years. Investment-grade retailers accounted for more than 73% of annualized base rent acquired during the quarter, while ground leases represented approximately 13.5% of acquired annualized base rent. Agree said the company has not seen material changes in competitive bidding conditions or cap rates, which he said have remained within a relatively consistent range for about three years. He attributed the company’s ability to acquire higher-credit assets without sacrificing yield to its retailer relationships, internal team and ability to offer multiple transaction structures. Regarding the approximately $75 million BP transaction, Agree said the assets are large-format travel centers backed by BP North America, which carries an A-minus credit rating. He said the properties are generally located near interstate ex...