Agree Realty Corporation · NYSE:ADC
Agree Realty — Q4 2021 Earnings Presentation
30 slides from Agree Realty's earnings presentation, Feb 23, 2022
Slide 1: Agree Realty Retail February 2022
AGREE REALTY RETAIL FEBRUARY 2022
Slide 2: Agree Realty Overview (NYSE: ADC)
Agree Realty Overview (NYSE: ADC) Net lease growth REIT focused on the acquisition and development of high-quality retail properties Founded in Public on $6.5 billion(1) 1,404 retail Investment OUR 1971 by the NYSE retail net properties grade issuer COMPANY Executive since 1994 lease REIT totaling r
Slide 3: Rethinking Retail
RETHINKING RETAIL © 2022 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTIAL. 2
Slide 4: Consistency
consistency [ kuh n-sis-tuh n-see ] noun steadfast adherence to the same principles, course, or form © 2022 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTIAL. 3
Slide 5: Recent Highlights
Recent Highlights Announced 2022 acquisition guidance of $1.1 billion to $1.3 billion(1) Announced record 2021 acquisition volume of $1.39 billion of retail net lease assets Completed a forward equity offering of 5.75 million shares for anticipated net proceeds of 69.3% of base rents acquired in app
Slide 6: The Country's Leading Retail Portfolio
The Country’s Leading Retail Portfolio
Slide 7: Agree Realty Snapshot
Agree Realty Snapshot Company Overview Tenants ($ in millions) Share Price(1) $63.61 ANNUALIZED TENANT / CONCEPT BASE RENT % OF TOTAL Equity Market Capitalization(1)(2) $4.6 Billion $24.5 6.6% Property Count 1,404 properties 14.4 3.9% 14.4 3.9% Top 3 Tenant Concentration 14.4% 13.2 3.5% Net Debt to
Slide 8: Strong Investment Grade Portfolio
Strong Investment Grade Portfolio BEST-IN-CLASS RETAILERS WITH CONSERVATIVE BALANCE SHEETS 67% INVESTMENT GRADE(1) Retail Credit Type (%ABR) 17% 16% SUB-INVESTMENT GRADE NOT RATED As of December 31, 2021. Any differences are a result of rounding. (1) Based on ABR derived from tenants, or parent enti
Slide 9: National and Super-Regional Retailers
National and Super-Regional Retailers INDUSTRY-LEADERS OPERATING IN E-COMMERCE RESISTANT SECTORS 85% NATIONAL Retail Tenant Type (%ABR) 1% 14% FRANCHISE SUPER-REGIONAL As of December 31, 2021. Any differences are a result of rounding. © 2022 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTIA
Slide 10: Ground Lease Portfolio Breakdown
Ground Lease Portfolio Breakdown FEE SIMPLE OWNERSHIP + SIGNIFICANT TENANT INVESTMENT Ground Lease Portfolio Overview Top Ground Lease Tenants (% ABR) 14.3% 12.0 17% 13% 182 of total years weighted- Properties portfolio average ABR lease term 12% 12% 8% 87% 7% INVESTMENT GRADE(1) 6% Ground Lease Cre
Slide 11: Ground Lease Portfolio Offers Superior Risk-Adjusted Returns
Ground Lease Portfolio Offers Superior Risk-Adjusted Returns BOND-LIKE CASH FLOWS FROM INVESTMENT GRADE CREDITS AT HIGHER YIELDS Ground Lease Key Metrics 10-Year Bloomberg BBB Composite Index(3) 3.5% 182 14.3% 12.0 3.0% Properties of Total Years Portfolio Weighted – ABR Average 2.5% Lease Term 2.0%
Slide 12: Limited Exposure to Sectors Impacted by COVID
Limited Exposure to Sectors Impacted by COVID THREE MOST IMPACTED SECTORS TOTAL LESS THAN 4% OF ABR At least 99% of rent payments received in each of the past nineteen months(1) CHANGE IN EXPOSURE PRIVATE E-COMMERCE RECESSION EQUITY REAL ESTATE SECTOR % ABR SINCE NOTABLE TENANTS RESISTANCE RESISTANC
Slide 13: Disciplined Investment Strategy & Active Portfolio Management
Disciplined Investment Strategy & Active Portfolio Management
Slide 14: Our Investment Strategy
Our Investment Strategy Agree leverages its three distinct investment platforms to target industry-leading THREE-PRONGED retailers in e-commerce and GROWTH STRATEGY recession resistant sectors COMPREHENSIVE REAL ESTATE SOLUTIONS FOR LEADING RETAILERS PARTNER CAPITAL ACQUISITIONS DEVELOPMENT SOLUTION
Slide 15: What Has ADC Been Investing In?
What Has ADC Been Investing In? The retail landscape continues to dynamically evolve as market forces cause disruption and change. To mitigate risk in a period of continued disruption, the Company adheres to a number of investment criteria, with a focus on four core principles: OMNI-CHANNEL RECESSIO
Slide 16: Large & Fragmented Opportunity Set
Large & Fragmented Opportunity Set TOP-DOWN FOCUS ON LEADING RETAILERS IN THE U.S. PAIRED WITH A BOTTOMS-UP REAL ESTATE ANALYSIS ADC reviewed $44 billion of opportunities since 2018 MARKET RENTS • Rents ≤ market • Fungibility of building COMPETITION • Limited competition • Strong market presence REA
Slide 17: Sandbox Offers Runway for Growth
Sandbox Offers Runway for Growth 150,000+ NET LEASE OPPORTUNITIES AND GROWING WITH BEST-IN-CLASS RETAILERS 10,200+ 8,800+ 20,700+ 4,600+ 6,900+ Grocery Home Convenience Tire & Auto General Stores Improvement Stores Stores Service Stores Merchandise Stores 6,000+ 22,900+ 33,800+ 2,100+ 1,200+ Off-Pri
Slide 18: Ramping Investment Activity
Ramping Investment Activity ADC HAS INVESTED $5.6 BILLION IN HIGH-QUALITY RETAIL NET LEASE PROPERTIES SINCE 2010 Investment Activity ($ in millions) $1,500 $40.0 1,400 $43.2 1,300 1,200 $1.1B 1,100 to $1.3B 1,000 900 800 $32.4 700 $1.39B $74.4 $1.31B 600 500 400 $38.0 $62.7 $701.4 300 $607.0 $14.9 2
Slide 19: Active Portfolio Management
Active Portfolio Management FOCUSED ON NON-CORE ASSET SALES & CAPITAL RECYCLING Total Dispositions 2010-2021: $404 million(1) MICHIGAN (3) BELTON, MO UPLAND, CA MAPLEWOOD, MN AURORA, CO APOPKA, FL FLOWOOD, MS JACKSONVILLE BEACH, FL SC (1) & MN (1) LA (1) & PA (1) TYLER, TX KIRKLAND, WA JACKSONVILLE,
Slide 20: Fortified Balance Sheet
Fortified Balance Sheet
Slide 21: Leading With Our "Fortress" Balance Sheet
Leading With Our “Fortress” Balance Sheet 2021 PUBLIC BOND OFFERING & TERM LOAN PAYOFF EXTENDED MATURITIES AND REDUCED AVERAGE INTEREST RATE TO ~3.2% $500 Debt Maturities ($ in millions) $475 $400 $410 $300 $300 $200 $160 1 c $100 $125 $100 $50 $50 $28 $4 $0 (1) 2022 2023 2024 2025 2026 2027 2028 20
Slide 22: Capital Markets Track Record
Capital Markets Track Record STRONG CAPITAL MARKETS EXECUTION HAS PROVIDED AMPLE LIQUIDITY; OVER $5.8 BILLION OF ACTIVITY SINCE 2010 Capital Markets Activity ($ in millions) $2,000 $175 (9%) $1,750 $1,500 $1,250 $1,095 (57%) $1,000 $988 (74%) $750 $500 $531 (70%) $433 $650 (78%) (34%) $250 $229 $237
Slide 23: Low Leverage = Strong Positioning
Low Leverage = Strong Positioning ADC HAS BEEN AT OR BELOW 4.2X PROFORMA NET DEBT TO RECURRING EBITDA SINCE 2018 5.1X 5.0X 4.8X 4.8X 4.9X 4.9X 4.7X 4.4X 4.5X 4.5X 4.4X 4.2X 4.0X 4.0X 3.7X 3.7X 3.6X 3.7X 3.5X 3.4X 3.2X 3.2X 2.5X 1.6X Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 3.2
Slide 24: Agree Realty's ESG Practices
Agree Realty’s ESG Practices DEDICATED TO SUSTAINABILITY AND GOOD CORPORATE CITIZENSHIP ENVIRONMENTAL SOCIAL CORPORATE PRACTICES RESPONSIBILITY GOVERNANCE Embraces responsibility The Agree Wellness program ADC’s Board has nine directors, to be a good steward focuses on Health Wellness & seven of who
Slide 25: Investment Summary Highlights
Investment Summary Highlights trajectory growth Robust Well-covered FORTIFIED BALANCE SHEET ÷nd consistent HIGHEST-QUALITY RETAIL REAL ESTATE MULTI-YEAR INVESTMENT GRADE TRACK RECORD OF EXECUTION ISSUER RATINGS © 2022 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTIAL. 24
Slide 26: Appendix
APPENDIX © 2022 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTIAL. 25
Slide 27: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends such forwar
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes a non-GAAP financial measure, Net Debt to Recurring EBITDA, which is presented on an actual and proforma basis. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure appears on the following page. The c
Slide 29: Net Debt to Recurring EBITDA Reconciliation
Net Debt to Recurring EBITDA Reconciliation Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Net Income $18,516 $18,722 $20,781 $22,744 $21,370 $25,424 $21,416 $23,760 $30,278 $22,461 $36,830 $33,306 Interest expense, net 7,558 7,455 8,352 9,730 9,670 8
Slide 30: Contact
CONTACT PETER COUGHENOUR Chief Financial Officer (248) 737-4190 peter@agreerealty.com © 2022 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTIAL. 29