Agree Realty Corporation · NYSE:ADC
Agree Realty — Investor Presentation (November 2020)
29 slides from Agree Realty's investor presentation, November 2020
Slide 1: Develop | Acquire | Partner
DEVELOP | ACQUIRE | PARTNER N O V E M B E R 2 0 2 0
Slide 2: Rethinking Retail
RETHINKING RETAIL © 2020 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTIAL. 1
Slide 3: Agree Realty Corporation Overview
Agree Realty Corporation Overview (NYSE: ADC) Net lease growth REIT focused on the acquisition and development of high-quality retail properties Founded in Public on $5.0 billion(1) 1,027 retail Investment OUR 1971 by the NYSE retail net properties grade issuer COMPANY Executive since 1994 lease REI
Slide 4: Consistency
consistency [ kuh n-sis-tuh n-see ] noun steadfast adherence to the same principles, course, or form © 2020 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTIAL. 3
Slide 5: Consistent Performance Results Through COVID-19
Consistent Performance Results Through COVID-19 Raised 2020 acquisition guidance to $1.25 billion 3.2x Proforma Net Debt / Recurring EBITDA as of to $1.35 billion(1) the end of Q3 2020(4) 91 properties acquired in Q3 2020 for a record $458.3 million 99%, 99%, 97% and 96% of October, September, Augus
Slide 6: Agree Realty at September 30, 2020
Agree Realty at September 30, 2020 Company Overview Tenants ($ in millions) Share Price(1) $67.12 ANNUALIZED TENANT / CONCEPT BASE RENT % OF TOTAL Equity Market Capitalization(1)(2) $3.7 Billion $19.6 7.4% 12.3 4.6% Property Count 1,027 properties 10.5 3.9% Top 3 Tenant Concentration 15.9% 10.3 3.9%
Slide 7: The Country's Leading Retail Portfolio
The Country’s Leading Retail Portfolio
Slide 8: Strong Investment Grade Portfolio
Strong Investment Grade Portfolio BEST-IN-CLASS RETAILERS WITH CONSERVATIVE BALANCE SHEETS 66% INVESTMENT GRADE(1) (2) Retail Credit Type (%ABR) 18% 16% SUB-INVESTMENT GRADE (3) NOT RATED As of September 30, 2020. Any differences are a result of rounding. (1) Based on ABR derived from tenants, or pa
Slide 9: National and Super-Regional Retailers
National and Super-Regional Retailers INDUSTRY-LEADERS OPERATING IN E-COMMERCE RESISTANT SECTORS 86% NATIONAL Retail Tenant Type (%ABR) 2% 12% FRANCHISE SUPER-REGIONAL As of September 30, 2020. Any differences are a result of rounding. © 2020 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTI
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) 8.8% 11.6 17% 73 of total ADC years weighted- Properties portfolio average ABR lease term 17% 13% 8% 91% 7% INVESTMENT GRADE(1) 5% Ground Lease Credi
Slide 11: Limited Exposure to At-Risk Sectors
Limited Exposure to At-Risk Sectors SINCE JAN 1, 2018 SECTOR % ABR(1) CHANGE IN NOTABLE TENANTS E-COMMERCE RECESSION PRIVATE REAL ESTATE COMMENTS EXPOSURE(2) RESISTANCE RESISTANCE EQUITY ATTRIBUTES SPONSORSHIP Private equity sponsorship, Health & 299 proliferation 2.8% HIGH YES HIGH WEAK Fitness BPS
Slide 12: Leading Pure-Play Retail Net Lease REIT
Leading Pure-Play Retail Net Lease REIT DIVERSIFIED PORTFOLIO OF HIGH-QUALITY RETAIL PROPERTIES OCCUPIED BY INVESTMENT GRADE TENANTS UNDER LONG-TERM LEASES Retail % Of Total Portfolio Investment Grade Tenants 100% 70% 100% 100% 66% 60% 80% 85% 80% 50% 60% 66% 49% 58% 40% 40% 38% 30% 20% 24% 20% 18%
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: E COMMERCE RECESSION
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 $34 billion in opportunities since 2018 MARKET RENTS • Rents ≤ market • Fungibility of building COMPETITION • Limited competition • Strong market presence REA
Slide 17: Ramping Investment Activity
Ramping Investment Activity ADC HAS INVESTED MORE THAN $3.8 BILLION IN HIGH-QUALITY RETAIL NET LEASE PROPERTIES SINCE 2010 Investment Activity ($ in millions) $37.3 $1,200 $1.25B To 1,100 $1.35B 1,000 900 800 $32.4 700 $701.4 $74.4 600 $607.0 500 400 $38.0 $62.7 300 $336.9 $14.9 $295.8 200 $220.1 10
Slide 18: Active Portfolio Management
Active Portfolio Management FOCUSED ON NON-CORE ASSET SALES & CAPITAL RECYCLING Total Dispositions 2010-2020: $344 million(1) MICHIGAN (3) BELTON, MO UPLAND, CA MAPLEWOOD, MN APOPKA, FL FLOWOOD, MS LA (1) & PA (1) TYLER, TX KIRKLAND, WA ATLANTIC BEACH, FL MN (2) & ND (2) VA (3) INDIANAPOLIS, IN MINN
Slide 19: Fortified Balance Sheet
Fortified Balance Sheet
Slide 20: Leading With Our "Fortress" Balance Sheet
Leading With Our “Fortress” Balance Sheet $500(1) $475(2) $ 140 Debt Maturities ($ in millions) 120 $125 100 $100 $100 $100 80 $40 $77 60 $60 $50 $50 40 20 $28.3 $5.4 22% 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 REVOLVING CREDIT FACILITY UNSECURED SECURED CAPITALIZATION STATISTICS
Slide 21: Capital Markets Track Record
Capital Markets Track Record STRONG CAPITAL MARKETS EXECUTION HAS PROVIDED AMPLE LIQUIDITY; $3.8 BILLION IN ACTIVITY SINCE 2010 Capital Markets Activity ($ in millions) $ 1,000 $887 (72%) 800 $531 (70%) 600 $433 (78%) 400 $237 $229 $350 (28%) 200 $225 (30%) $77 $40 $100 $125 $100 $100 (22%) $65 $22
Slide 22: Low Leverage = Strong Positioning
Low Leverage = Strong Positioning ADC HAS BEEN AT OR BELOW 4X PROFORMA NET DEBT TO RECURRING EBITDA SINCE 2018 5.4X 5.1X 5.0X 4.8X 4.8X 4.7X 4.7X 4.7X 4.4X 4.5X 4.0X 4.0X 3.7X 3.7X 3.5X 3.4X 3.3X 3.2X 3.2X 3.2X 2.5X 1.6X Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
Slide 23: 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 24: 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 © 2020 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTIAL. 23
Slide 25: Appendix
APPENDIX © 2020 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTIAL. 24
Slide 26: 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 27: 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 28: Net Debt to Recurring EBITDA Reconciliation
Net Debt to Recurring EBITDA Reconciliation Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Net Income $16,636 $13,068 $15,756 $13,338 $18,516 $18,722 $20,781 $22,744 $21,370 $25,424 $21,416 Interest expense, net 5,465 5,961 6,538 6,908 7,558 7,455 8,352 9,730
Slide 29: Contact
DEVELOP | ACQUIRE | PARTNER CONTACT CLAY THELEN Chief Financial Officer (248) 737-4190 cthelen@agreerealty.com © 2020 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTIAL. 28