Agree Realty Corporation · NYSE:ADC
Agree Realty — Q4 2023 Earnings Presentation
32 slides from Agree Realty's earnings presentation, Feb 14, 2024
Slide 1: Agree Realty Retail February 2024
AGREE REALTY RETAIL FEBRUARY 2024
Slide 2: Agree Realty Overview (NYSE: ADC)
Agree Realty Overview (NYSE: ADC) NET LEASE REIT FOCUSED ON THE ACQUISITION & DEVELOPMENT OF HIGH-QUALITY RETAIL PROPERTIES Founded in Public on $8.5 billion(1) 2,135 retail Investment OUR 1971 by the NYSE retail net properties grade issuer COMPANY Executive since 1994 lease REIT totaling over 44 ra
Slide 3: Rethinking Retail
RETHINKING RETAIL © 2024 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 © 2024 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTIAL. 3
Slide 5: Recent Highlights
Recent Highlights Announced 2023 investment activity of $1.34 billion of high-quality retail Fortress-like balance sheet with net lease assets(1) over $1.0 billion of total liquidity as of December 31st(4) Outlook for BBB credit rating revised to Positive by S&P Global Fortified balance sheet with R
Slide 6: The Country's Leading Retail Portfolio
The Country’s Leading Retail Portfolio
Slide 7: Agree Realty Snapshot
Agree Realty Snapshot Company Overview Top Tenants ($ in millions) ANNUALIZED TENANT / CONCEPT % OF TOTAL Share Price(1) $58.13 BASE RENT $33.9 6.1% Equity Market Capitalization(1)(2) $5.9 Billion 28.2 5.1% Property Count 2,135 properties 26.8 4.8% 19.5 3.5% Net Debt to EBITDA 4.7x / 4.3x(3) 17.3 3.
Slide 8: Strong Investment Grade Portfolio
Strong Investment Grade Portfolio BEST-IN-CLASS RETAILERS WITH CONSERVATIVE BALANCE SHEETS 69% INVESTMENT GRADE(1) Retail Credit Type (%ABR) 16% 15% SUB-INVESTMENT GRADE NOT RATED As of December 31, 2023. 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 88% NATIONAL Retail Tenant Type (%ABR) 1% 11% FRANCHISE SUPER-REGIONAL As of December 31, 2023. Any differences are a result of rounding. © 2024 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) 11.7% 10.5 14% 224 of total years weighted- Leases portfolio average ABR lease term 12% 12% 6% 88% 6% INVESTMENT GRADE(1) 6% Ground Lease Credit Over
Slide 11: Ground Lease Value Creation
Ground Lease Value Creation FIRST EXPIRATION HIGHLIGHTS EMBEDDED VALUE WITH 159% RECAPTURE RATE Chase Bank - Stockbridge, GA Prior Lease New Lease Rent Per Square Foot $29.26 Rent Per Square Foot $46.54 Remaining Lease Term(1) 0.1 years New Lease Term 15 Years Rental Increases None Remaining Rental
Slide 12: Disciplined Investment Strategy & Active Portfolio Management
Disciplined Investment Strategy & Active Portfolio Management
Slide 13: 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 DEVELOPER FUNDING ACQUISITIONS DEVELOPMENT PLATFO
Slide 14: 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 15: 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 over $82 billion of opportunities since 2018 MARKET RENTS • Rents ≤ market • Fungibility of building COMPETITION • Limited competition • Strong market presenc
Slide 16: Sandbox Offers Runway for Growth
Sandbox Offers Runway for Growth 164,000+ NET LEASE OPPORTUNITIES AND GROWING WITH BEST-IN-CLASS RETAILERS 10,800+ 8,600+ 7,100+ 36,300+ 24,000+ Grocery Home Tire & Auto Dollar Convenience Stores Improvement Stores Service Stores Stores Stores 7,000+ 23,500+ 6,300+ 2,400+ 1,200+ General Auto Parts O
Slide 17: Robust Investment Activity
Robust Investment Activity ADC HAS INVESTED $8.7 BILLION IN HIGH-QUALITY RETAIL NET LEASE PROPERTIES SINCE 2010 Investment Activity ($ in millions) $ 2,000 1,800 $118.5 1,600 $1.59B $40.0 1,400 $43.2 $1.39B $1.31B $149.9 1,200 $1.19B 1,000 800 $32.4 $74.4 $701.4 600 $607.0 400 $38.0 $62.7 $336.8 $29
Slide 18: Active Portfolio Management
Active Portfolio Management FOCUSED ON NON-CORE ASSET SALES & CAPITAL RECYCLING Total Dispositions 2010-2023: $459 million MICHIGAN (3) BELTON, MO AURORA, CO UPLAND, CA MAPLEWOOD, MN JACKSONVILLE BEACH, FL SC (1) & MN (1) APOPKA, FL FLOWOOD, MS KIRKLAND, WA JACKSONVILLE, FL LA (1) & PA (1) TYLER, TX
Slide 19: Fortified Balance Sheet
Fortified Balance Sheet
Slide 20: Leading With Our "Fortress" Balance Sheet
Leading With Our “Fortress” Balance Sheet NO MATERIAL DEBT MATURITIES UNTIL 2028 & WEIGHTED-AVERAGE DEBT MATURITY OF ALMOST 7 YEARS $600 Debt Maturities ($ in millions) $500 $450 $475 $400 $410 $300 $300 $300 $200 1 c $100 $125 $50 $3 $50 $42 $0 $0 $0 (1) 2024 2025 2026 2027 2028 2029 2030 2031 2032
Slide 21: Capital Markets Track Record
Capital Markets Track Record STRONG CAPITAL MARKETS EXECUTION HAS PROVIDED AMPLE LIQUIDITY; $8.2 BILLION OF ACTIVITY SINCE 2010 Capital Markets Activity ($ in millions) $2,000 $175 $1,750 $42 $1,500 $1,250 $1,095 $1,000 $1,322 $988 $750 $371 $500 $531 $433 $650 $250 $237 $229 $350 $300 $350 $225 $10
Slide 22: Low Leverage = Strong Positioning
Low Leverage = Strong Positioning ADC HAS BEEN AT OR BELOW 4.5X PROFORMA NET DEBT TO RECURRING EBITDA SINCE 2018 5.0x 5.0x 4.9x 4.9x 4.8x 4.7x 4.5x 4.5x 4.5x 4.5x 4.5x 4.4x 4.4x 4.3x 4.3x 4.2x 4.1x 4.0x 4.0x 3.8x 3.7x 3.7x 3.6x 3.4x 3.1x 3.1x Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q
Slide 23: Growing, Well-Covered Monthly Dividend
Growing, Well-Covered Monthly Dividend 143 CONSECUTIVE COMMON DIVIDENDS PAID; AVERAGE AFFO PAYOUT RATIO OF 76% OVER PAST 10 YEARS $3.10 $2.90 Annual Dividends Declared Per Share $2.70 $2.50 $2.30 $2.10 $1.90 $1.70 $1.50 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 As of February 7, 2024. R
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 Focus on industry leading, The Agree Wellness program ADC’s Board has 10 directors, national & super-regional focuses on Health Wellness & eight
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 © 2024 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTIAL. 24
Slide 26: Appendix
APPENDIX © 2024 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 is included in the following pages.
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation also includes the non-GAAP measures of Annualized Base Rent (“ABR”), Funds From Operations (“FFO” or “Nareit FFO”), Core Funds From Operations (“Core FFO”) and Adjusted Funds From Operations (“AFFO”). ABR represents the annualized amount of contractual m
Slide 30: Reconciliation of Net Debt to Recurring EBITDA
Reconciliation of Net Debt to Recurring EBITDA Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Net Income $23,760 $30,278 $22,461 $36,830 $33,306 $36,289 $36,130 $39,577 $41,039 $41,774 $41,015 $41,657 $46,101 Interest expense, net 11,791 11,65
Slide 31: Reconciliation of Net Income to FFO, Core FFO and AFFO
Reconciliation of Net Income to FFO, Core FFO and AFFO 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Net Income $20,190 $18,913 $39,762 $45,797 $58,790 $58,798 $80,763 $91,972 $122,876 $153,035 $170,547 Series A Preferred Stock Dividends 0 0 0 0 0 0 0 0 (2,148) (7,437) (7,437) Net Income at
Slide 32: Contact
CONTACT PETER COUGHENOUR Chief Financial Officer (248) 737-4190 investors@agreerealty.com © 2024 AGREE REALTY CORPORATION. ALL RIGHTS RESERVED. CONFIDENTIAL. 31