Agree Realty Corporation · NYSE:ADC
Agree Realty — Investor Presentation (March 2024)
42 slides from Agree Realty's investor presentation, Mar 1, 2024
Slide 1: Agree Realty Retail, March 2024
AGREE REALTY RETAIL MARCH 2024
Slide 2: Agree Realty Overview
1 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. Agree Realty Overview (NYSE: ADC) OUR COMPANY NET LEASE REIT FOCUSED ON THE ACQUISITION & DEVELOPMENT OF HIGH - QUALITY RETAIL PROPERTIES Founded in 1971 by Executive Chairman, Richard Agree Public on the NYSE since 1994 $ 8.2 b
Slide 3: Consistency
2 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. consistency noun steadfast adherence to the same principles, course, or form [ kuh n - sis - tuh n - see ]
Slide 4: Recent Highlights
3 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. As of December 31, 2023, unless otherwise noted. (1) As of February 28, 2024. (2) Includes capital committed to acquisitions, de velopment and Developer Funding Platform projects completed or under construction during the twelve
Slide 5: ADC's Retail Thought Leadership
4 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. ADC’s Retail Thought Leadership x Launched acquisition platform in 2010 with a focus on e - commerce resistance x Launched RE THINK RETAIL campaign to challenge misperceptions about the future of brick & mortar x Published propr
Slide 6: Omni-Channel Vision
5 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. Omni - Channel Vision IDENTIFIED CRITICAL ROLE OF NET LEASE IN DRIVING OMNI - CHANNEL STRATEGY “The strongest and most resilient retailers in today’s omni - channel world have embraced a comprehensive approach that blurs the his
Slide 7: Investment Foresight
6 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. October 2020 Rated BBB by S&P Rated Baa1 by Moody’s Q 2 2016 “While neither Tractor Supply Company nor Hobby Lobby maintains a public credit rating, both possess investment - grade quality financials with very strong balance she
Slide 8: Investment Foresight: Gerber Collision
7 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. Investment Foresight A DEEPER DIVE ON ADC’S THOUGHT LEADERSHIP & TRACK RECORD OF EXECUTION Q3 2017 Acquired first Gerber Collision Q4 2018 “…We think they're the premier auto collision operator in the United States… We'll contin
Slide 9: Investment Foresight: Sunbelt Rentals
8 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. Investment Foresight A DEEPER DIVE ON ADC’S THOUGHT LEADERSHIP & TRACK RECORD OF EXECUTION Leveraged all three external growth platforms to make Sunbelt Rentals our 14 th largest tenant today with 50 locations. As of December 31
Slide 10: Investment Foresight: TJX
9 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. Investment Foresight A DEEPER DIVE ON ADC’S THOUGHT LEADERSHIP & TRACK RECORD OF EXECUTION Since 2012, ADC has acquired 50 TJX locations, and TJX is now our 6 th largest tenant. As of December 31, 2023. Exposure measured as a pe
Slide 11: Investment Foresight: Walgreens exposure reduction
10 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. Investment Foresight A DEEPER DIVE ON ADC’S THOUGHT LEADERSHIP & TRACK RECORD OF EXECUTION 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 30% 27% 22% 17% 12% 8% 5% 3% 2% 1% 1% 1% Q2 2017 “our Walgreens concentratio
Slide 12: Maintaining Our Discipline: Diverse Sectors
11 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. Restaurants Convenience & Gas Dollar Stores Manufacturing Convenience Stores Retail Stores Car Washes Grocery Grocery Auto Service Car Wash Grocery Distribution & Warehouse Automotive Services Consumer Services Early Childhood
Slide 13: Capital Markets Leader
12 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. Capital Markets Leader INNOVATIVE BALANCE SHEET MANAGEMENT “ We view the forward equity offering as a prudent way to further fortify our balance sheet and lock in an accretive cost of capital while mitigating external risks and
Slide 14: Disciplined Capital Allocator
13 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. Disciplined Capital Allocator CONSERVATIVE WACC CALCULATION DRIVES CONSISTENT & SUPERIOR EARNINGS GROWTH ADC WACC CALCULATION WEIGHTING FORM OF CAPITAL COST 75% Equity (1) 6.7% 25% Long - Term Debt (2) 5.7% WACC 6.4% PEER WACC
Slide 15: Driving Results
14 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. 4.7x 5.2x 4.3x 5.3x 4Q18 4Q23 51% 38% 69% 31% 4Q18 4Q23 7% 6% 5% 4% 4% (0%) (1%) (3%) ADC GTY O FCPT NNN BNL WPC EPR Driving Results As of December 31, 2023. Data is from S&P Capital IQ and company filings. For Investment Grade
Slide 16: The Country's Leading Retail Portfolio
The Country’s Leading Retail Portfolio
Slide 17: Agree Realty Snapshot
16 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. TENANT / CONCEPT ANNUALIZED BASE RENT % OF TOTAL $33.9 6.1% 28.2 5.1% 26.8 4.8% 19.5 3.5% 17.3 3.1% 17.0 3.1% 17.0 3.1% 16.3 2.9% 16.1 2.9% 14.6 2.6% 14.0
Slide 18: Strong Investment Grade Portfolio
17 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. BEST - IN - CLASS RETAILERS WITH CONSERVATIVE BALANCE SHEETS Strong Investment Grade Portfolio 16% SUB - INVESTMENT GRADE 15% NOT RATED 69% INVESTMENT GRADE (1) As of December 31, 2023. Any differences are a result of rounding.
Slide 19: National and Super-Regional Retailers
18 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. INDUSTRY - LEADERS OPERATING IN E - COMMERCE RESISTANT SECTORS National and Super - Regional Retailers 1% FRANCHISE 11% SUPER - REGIONAL 88% NATIONAL As of December 31, 2023. Any differences are a result of rounding. Retail Ten
Slide 20: Ground Lease Portfolio Breakdown
19 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. 14% 12% 12% 6% 6% 6% 3% 3% 3% 2% As of December 31, 2023. (1) Refer to footnote 1 on slide 17 for the Company’s definition of Investment Grade. Any differences are a result of rounding. FEE SIMPLE OWNERSHIP + SIGNIFICANT TENANT
Slide 21: Ground Lease Value Creation
20 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. FIRST EXPIRATION HIGHLIGHTS EMBEDDED VALUE WITH 159% RECAPTURE RATE Ground Lease Value Creation Chase Bank - Stockbridge, GA New Lease Rent Per Square Foot $46.54 New Lease Term 15 Years Rental Increases 10% Every 5 Years Optio
Slide 22: Disciplined Investment Strategy & Active Portfolio Management
Disciplined Investment Strategy & Active Portfolio Management
Slide 23: Our Investment Strategy
22 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. Engage in consistent dialogue to understand store performance and tenant sustainability Leverage relationships to identify the best risk - adjusted opportunities Our Investment Strategy Agree leverages its three distinct invest
Slide 24: What Has ADC Been Investing In?
23 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. 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 investm
Slide 25: Top-Down Focus With Bottoms-Up Real Estate Analysis
24 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. TOP - DOWN FOCUS ON LEADING RETAILERS IN THE U.S. PAIRED WITH A BOTTOMS - UP REAL ESTATE ANALYSIS Large & Fragmented Opportunity Set REAL ESTATE FUNDAMENTALS • Rents ≤ market • Fungibility of building MARKET RENTS • Limited com
Slide 26: Sandbox Offers Runway for Growth
25 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. As of February 8, 2023. Store counts include both leased and owned locations and were obtained from company filings and third - pa rty sources including CS News, CSP Daily News, CT Insider, and Progressive Grocer. Table is repr
Slide 27: Robust Investment Activity
26 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. ADC HAS INVESTED $8.7 BILLION IN HIGH - QUALITY RETAIL NET LEASE PROPERTIES SINCE 2010 Robust Investment Activity DEVELOPMENT & DFP (1) ACQUISITIONS Investment Activity ($ in millions) As of December 31, 2023. (1) Represents de
Slide 28: Active Portfolio Management
27 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. $29.7M $45.8M $67.6M $67.2M $49.4M $58.0M $45.8M $9.7M 2016 2017 2018 2019 2020 2021 2022 2023 BERLIN, NJ HOUSTON, TX PORTAGE, MI CANTON, MI FOCUSED ON NON - CORE ASSET SALES & CAPITAL RECYCLING Active Portfolio Management As o
Slide 29: Fortified Balance Sheet
Fortified Balance Sheet
Slide 30: Leading With Our Fortress Balance Sheet
29 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. Leading With Our “Fortress” Balance Sheet CAPITALIZATION STATISTICS Equity Market Capitalization (2) $5.6 Billion Enterprise Value (2)(3) $8.2 Billion Total Debt to Enterprise Value 27.2% CREDIT METRICS Fixed Charge Coverage Ra
Slide 31: Capital Markets Track Record
30 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. $100 $100 $225 $125 $350 $650 $300 $350 $237 $229 $531 $433 $988 $1,095 $1,322 $371 $42 $175 $0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 2016 2017 2018 2019 2020 2021 2022 2023 STRONG CAPITAL MARKETS EXECUTION HAS PROV
Slide 32: Low Leverage = Strong Positioning
31 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. (includes outstanding forward equity offerings) ADC HAS BEEN AT OR BELOW 4.5X PROFORMA NET DEBT TO RECURRING EBITDA SINCE 2018 Low Leverage = Strong Positioning As of December 31, 2023. Proforma Net Debt to Recurring EBTIDA ded
Slide 33: Growing, Well-Covered Monthly Dividend
32 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. $1.50 $1.70 $1.90 $2.10 $2.30 $2.50 $2.70 $2.90 $3.10 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Annual Dividends Declared Per Share 144 CONSECUTIVE COMMON DIVIDENDS PAID; AVERAGE AFFO PAYOUT RATIO OF 76% OVER PAST
Slide 34: Agree Realty's ESG Practices
33 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. The Agree Wellness program focuses on Health Wellness & Financial Wellness to enhance employee well - being Ongoing professional development is offered to help all team members advance their careers The Company has recently spo
Slide 35: Investment Summary Highlights
34 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. Investment Summary Highlights FORTIFIED BALANCE SHEET HIGHEST - QUALITY RETAIL REAL ESTATE INVESTMENT GRADE ISSUER RATINGS Robust growth trajectory MULTI - YEAR TRACK RECORD OF EXECUTION Well - covered & consistent dividend
Slide 36: Appendix
35 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. APPENDIX
Slide 37: Forward-Looking Statements
36 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. 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
Slide 38: Non-GAAP Financial Measures
37 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. Non - GAAP Financial Measures This presentation includes a non - GAAP financial measure, Net Debt to Recurring EBITDA, which is presented on an actual and profo rma basis. A reconciliation of this non - GAAP financial measure t
Slide 39: Non-GAAP Financial Measures
38 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. 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 F
Slide 40: Reconciliation of Net Debt to Recurring EBITDA
39 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. 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 $
Slide 41: Reconciliation of FFO and AFFO
40 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. 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,
Slide 42: Contact
41 © 20 24 AGREE REALTY CORPORATION . ALL RIGHTS RESERVED. CONFIDENTIAL. CONTACT PETER COUGHENOUR Chief Financial Officer (248) 737 - 4190 investors@agreerealty.com