ADC

This article first appeared on GuruFocus. - Core FFO per Share: $1.15 for Q3 2026, up 4.9% year-over-year. - AFFO per Share: $1.15 for Q3 2026, up 4.9% year-over-year. - Full-Year 2026 AFFO per Share Guidance: Raised to $4.58$4.59, implying nearly 6% year-over-year growth at the midpoint. - Portfolio Occupancy: Company-record 99.8% occupied at quarter end. - Investment Volume: ~$360 million invested in 94 retail net lease properties during Q3, including 68 acquisitions for ~$310 million; 2026 guidance reduced to ~$1.6 billion. - Acquisition Cap Rate: Weighted average cap rate of 7.3%, a 30 basis point expansion quarter-over-quarter; weighted average lease term of 14.5 years; investment-grade retailers over 52% of annualized base rents acquired. - Dispositions: 11 properties sold for ~$27 million at a 6.5% weighted average cap rate (80 basis points inside acquisition cap rates); full-year disposition guidance raised to $100$150 million. - Development Platform: Six projects broke ground ($57 million anticipated cost); seven projects completed at a record $82 million in total costs; eight projects under construction ($88 million); ~$163 million commenced year-to-date. - Leasing Activity: New leases, extensions or options on over 860,000 square feet of GLA in Q3 at a ~106% recapture rate (highest in six quarters); 2.5 million square feet year-to-date at over 105% recapture. - Credit and Occupancy Loss: Full-year assumption lowered to 15 basis points from 25 basis points; only 9 basis points experienced year-to-date. - Free Cash Flow After Dividend: Anticipated to exceed $140 million in 2026, a more than 10% year-over-year increase. - Leverage: Pro forma net debt to recurring EBITDA of ~3.9x (4.8x excluding unsettled forward equity, down 0.4x from prior quarter); net debt to enterprise value of ~29%. - Fixed Charge Coverage Ratio: 4.1x, including the preferred dividend. - Liquidity: ~$2 billion total liquidity at quarter end, including cash, outstanding forward equity and full revolver availability; no material debt maturities until 2028. - Capital Raising: Over $825 million of debt and equity raised or settled in Q3, nearly $1.5 billion year-to-date; $400 million 5.65% senior unsecured notes due 2036 (all-in rate of 5.36% after swap termination proceeds of over $19 million). - Dividend: Q3 monthly dividends of $0.267 per share (annualized over $3.20, up 4.3% year-over-year); October dividend raised to $0.271 per share (annualized over $3.25, up 3.4% year-over-year); payout ratio of ~69% of AFFO per share. - Portfolio Composition: Approaching 2,900 properties across all 50 states and DC; investment-grade exposure ~65% of annualized base rents; 270 ground leases comprising 10% of annualized base rents with ~85% investment-grade exposure. - Warning! GuruFocus has detected 7 Warning Signs with ADC. - Is ADC fairly valued? Test your thesis with our free DCF calculator. Release Date: October 21, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Portfolio occupancy reached a company record 99.8%, reflecting the high quality and durability of Agree Realty Corp (NYSE:ADC)'s assets. - Agree Realty Corp (NYSE:ADC) raised $1.1 billion of attractive capital in 2026, including forward equity at ~$75/share and a 10-year unsecured bond at 5.36%, providing a low-cost war chest. - The company has a fortress balance sheet with pro forma net debt to recurring EBITDA of 3.9x, no material debt maturities until 2028, and $2 billion of liquidity. - Acquisition cap rates expanded 30 basis points sequentially to 7.3% in Q3, and management expects further expansion, enhancing investment spreads. - Agree Realty Corp (NYSE:ADC) increased full-year 2026 AFFO per share guidance to $4.58-$4.59, implying ~6% year-over-year growth, and expects mid-single-digit AFFO growth in 2027. - Agree Realty Corp (NYSE:ADC) reduced 2026 investment volume guidance to ~$1.6 billion due to a higher spot cost of capital, culling lower-yield opportunities. - Elevated debt deal costs in Q3 reduced AFFO per share by approximately $0.01, and G&A expenses were higher. - The company faces a dynamic macroeconomic environment with increased spot cost of capital, which may pressure future investment spreads. - Disposition volume guidance was increased to $100-$150 million, indicating a need to recycle capital to fund growth accretively. - Agree Realty Corp (NYSE:ADC) has no hedges in place for 2028 debt maturities, leaving it exposed to interest rate risk when refinancing. Q: With acquisition cap rates up 30 basis points to 7.3% in Q3 and your spot WACC at 6.8%, how far are you from an accretive spread, and can you reach your target zone in Q4 and into 2027? A: CEO Joel Agree emphasized that the spot cost of capital reflects raising capital today, but the company already raised nearly $2 billion at "yesteryear's pricing," including forward equity at roughly $75 per share and 10-year unsecured debt at 5.37%. With zero short-term borrowings, no material maturities until 2028, and capacity to invest about $2 billion before reaching 5x leverage, he expects cap rates to expand another ~25 basis points in Q4 on top of Q3's 30 basis points, plus roughly $200 million of sub-6% cap rate dispositions to bonus depreciation buyers, supporting mid-single-digit AFFO growth per share and double-digit operational returns in 2027. Q: How much does the environment need to improve to achieve mid-single-digit AFFO growth per share in 2027 versus the 3% do-nothing baseline? A: CEO Joel Agree said there is no do-nothing scenario for 2027 the 3% figure is only a baseline. The $2 billion war chest was raised and priced at prior market levels, so the 2027 earnings algorithm assumes no change in the short end or long end of the curve, no change in the stock price, and standard credit loss assumptions. He stressed the company will deploy that capital decisively at expanding cap rates rather than wait for market improvement. Q: What lessons from the 2023 rise in the 10-year Treasury are shaping capital allocation over the next 12 to 18 months? A: CEO Joel Agree said his key lesson from 2023 was not moving quickly and decisively enough the company kept deploying balance sheet capacity at spot pricing while hoping for normalization. This time, with $2 billion of liquidity and leverage at 3.8x, management moved immediately and aggressively: reducing 2026 investment guidance, repricing the pipeline, and taking a "take it or leave it" stance on deals. He said the volume game in net lease is over and Agree will prioritize value creation and preserve its balance sheet. Q: How much room is there to lean further into capital recycling, and is there a meaningful pool of noncore assets to monetize? A: CEO Joel Agree said the biggest opportunity is with bonus depreciation buyers, particularly in the convenience store space where that tax treatment applies. He expects to recycle capital at spreads of roughly 175 to 200 basis points in Q4 and into 2027, after raising full-year disposition guidance to $100 million to $150 million from the prior $50 million to $100 million range. Q: What are you seeing in private market buyer behavior and year-end seasonality, including tax-motivated demand? A: CEO Joel Agree declined to speak for other buyer pools but said Agree has been decisive given lessons from 2023. He noted a significant rise in bonus depreciation purchasers since the "Big Beautiful Bill," and said Agree will lean into dispositions to those buyers, while 1031 exchange acquirers remain fickle. He expects disposition activity to continue into next year. Q: How should we think about the cadence of development and developer funding platform (DFP) spend, rent commencement, and earnings contribution toward the $250 million annual target? A: CFO Peter Coughenour pointed to page 35 of the supplemental, which lists announced development and DFP projects with anticipated delivery quarters and total project costs; revenue recognition begins upon delivery. CEO Joel Agree added that Agree leaned into development about six to seven quarters ago to diversify external growth sources and offer retailers a one-stop solution, and said the $250 million target could be reached this year subject to entitlements and permitting. Q: Which retail sectors have seen the most cap rate expansion, and where are cap rates stickiest? A: CEO Joel Agree said the dynamic is more price-point driven than sector driven. Negative leverage is pressuring private and public buyers, so lower price-point assets show stickier cap rates, while larger institutional buyers with capital and lower cost of capital can still transact at higher price points. He said Agree's average transaction size could rise in 2027, and while no sector is currently off-limits, some challenged tenants are simply not trading. Q: How much of the Q3 cap rate increase reflects true repricing versus mix, and will the Q4 expansion be on a comparable risk profile? A: CEO Joel Agree said simply, yes Agree will not move up the risk curve and will stay focused on the largest retailers in the U.S. The Q3 repricing reflected a "take it or leave it" approach in which Agree killed deals that did not meet return thresholds, which also drove elevated debt deal costs in Q3. He said those costs will not repeat in Q4, and sellers willing to move with the 10-year Treasury and Agree's stock price were the ones that transacted. Q: Does the higher rate environment change the relative attractiveness of development for Agree or its counterparties? A: CEO Joel Agree said higher rates could give Agree the ability to push return on cost higher, though the company already enters development deals with a significant margin of safety and spread on invested capital. He also noted terminal value support from bonus depreciation buyers for assets such as gas stations, and said it is certainly possible returns could be pushed even higher. Q: What was the impact of elevated debt deal costs in Q3, and should we expect more in Q4? A: CFO Peter Coughenour said elevated debt deal costs reduced Q3 AFFO per share by close to roughly $0.01, with the costs running through G&A. He expects some normalization in G&A and debt deal costs in Q4. Q: Is the intention to lever up to 5x, given you can deploy about $1.9 billion and still reach that level? A: CEO Joel Agree said the stated leverage target is 4x to 5x and the $2 billion war chest should be viewed in the context of the overall balance sheet. He said Agree will always evaluate capital sources, including For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Agree Realty came into this Q3 2026 report with a stock that had drifted lower in recent months, then jumped about 2.5% today to around US$66 after the release. The move suggests relief. The numbers tell a calmer story. The headline is clear. Adjusted funds from operations, the core cash flow metric for a net lease REIT, landed at US$1.15 per share for the quarter with updated full year guidance of US$4.58 to US$4.59. That cash engine, not the one day price bounce, is what really matters for the company's outlook from here. Love the steady adjusted funds from operations at Agree Realty but concerned about relying on a single REIT for income stability? Compare it with our 7 dividend fortresses - Revenue (Q3 2026 vs. Q3 2025): US$213.884 million vs. US$183.222 million (up about 16.8%) - Net Income (Excl. Extra Items, Q3 2026 vs. Q3 2025): US$66.39 million vs. US$50.146 million (up about 32.4%) - Basic EPS (Q3 2026 vs. Q3 2025): US$0.53384 vs. US$0.450639 (up about 18.5%) - Funds From Operations (FFO, Q3 2026 vs. Q3 2025): US$131.531 million vs. US$112.926 million (up about 16.5%) Prefer clean visual charts instead of scrolling through another wall of REIT earnings tables? See Agree Realty's full picture, including how analysts are framing the story around this latest quarter, in the company report for Agree Realty. Supporters of Agree Realty argue that the external growth machine only works if balance sheet discipline and underwriting quality hold up as deployment scales. "The main thing that has to go right is that Agree Realty continues to use its conservative balance sheet, interest rate hedging and selective tenant mix to fund growth while keeping credit losses and development economics under control." Q3 points in that direction. AFFO per share of US$1.15 and a raised full year range of US$4.58 to US$4.59 show accretion despite trimmed investment guidance. Net debt to recurring EBITDA of about 3.9x and credit losses tracking below revised assumptions indicate growth is still paired with restraint. On the worry list, critics focus on whether a funding dependent REIT like Agree Realty can preserve spreads as rates rise and external capital stays central to the playbook. "External equity and debt funding remain central to Agree Realty's record investment volumes, and the company currently carries large forward equity commitments alongside planned unsecured debt issuance, so a prolonged period of higher inflation and interest rates could raise its cost of capital, slow accretive deal flow and compress net margins and earnings growth." Recent moves partly confront that risk. The firm raised roughly US$1.5b of capital year to date, including a US$400m 10 year bond and forward equity struck near US$75. Management cut 2026 investment guidance by US$150m at midpoint, prioritising spread protection over sheer volume. This suggests some pressure from funding costs but not a breakdown in economics. One Narrative disagrees with today's price. → See where this Narrative says Agree Realty should trade. Agree Realty reports a quarter that makes the long term picture appear more measured than the recent share price reaction. The real opportunity is identifying stocks that could be undervalued before many investors concentrate on them. - Company 1 - 47% below our estimate - ties demand for reinforcing products to ongoing infrastructure spending and data center development. - Company 2 - 30% below our estimate - turns cloud provider commitments for AI capacity into integrated hardware, networking and software systems. - Company 3 - 33% below our estimate - converts extended AI infrastructure and database contracts into subscription-focused cloud software and services revenue. That is three of the list. See all 33 potentially undervalued companies → This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ADC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Wed, Oct. 21, 2026 - Senior Director of Corporate Finance - Reuben Treatman - President and Chief Executive Officer - Joey Agree - Chief Financial Officer - Peter Coughenour Operator: Good morning, and welcome to the Agree Realty third quarter 2026 earnings call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then one. Please limit yourself to two questions during this call. Note, this event is being recorded. I would now like to turn the conference over to Reuben Treatman, Senior Director of Corporate Finance. Please go ahead, Ruben. Reuben Treatman: Thank you. Good morning, everyone, and thank you for joining us for Agree Realty's third quarter 2026 earnings call. Before turning the call over to Joey and Peter to discuss our results for the quarter, let me first run through the cautionary language. Please note that during this call, we will make certain statements that may be considered forward-looking under federal securities law, including statements related to our updated 2026 guidance and outlook for 2027. Our actual results may differ significantly from the matters discussed in any forward-looking statements for a number of reasons. Please see yesterday's earnings release in our SEC filings, including our latest annual report on Form 10-K, for a discussion of various risks and uncertainties underlying our forward-looking statements. In addition, we discuss non-GAAP financial measures, including core funds from operations or core FFO, adjusted funds from operations or AFFO, net debt to enterprise value, fixed charge coverage ratio, and pro forma net debt to recurring EBITDA. Reconciliations of our historical non-GAAP financial measures to the most directly comparable GAAP measures can be found on our earnings release website and SEC filings. I will now turn the call over to Joey. Joey Agree: Thanks, Ruben. Good morning, and thank you all for joining us today. I am pleased to report another strong quarter of performance reflecting our disciplined execution of our operating strategy. We invested in high-quality opportunities across all three external growth platforms, while our best-in-class portfolio remained at a company record 99.8% occupied. I want to start by directly hitting the elephant in the room, the dynamic and changing macroeconomic environment, which has increased our spot cost of capital. I have had the privilege to lead this company through the launch of our acquisition platform on the heels of the great financial crisis, as well as through a pandemic in which we doubled in size and reshaped the complexion of our portfolio. I intend to do the same here on our terms and at our price, and we will emerge from this period stronger than before. Disruption is advantageous in a fragmented, non-institutionalized market such as ours in many ways. Our relationships, balance sheet, three growth verticals, and myriad of capabilities are poised to further validate our leading market position. Three years ago, we introduced our do nothing scenario to demonstrate the durability of our earnings algorithm during a period of uncertainty. Our position today is tremendously stronger, while the underlying earnings durability remains unchanged. Most importantly, we have learned from 2023. We have moved decisively as the macro began to shift this time around. While we have raised $1.1 billion of attractive capital this year, including forward equity at approximately $75 per share and a recently completed 10-year unsecured bond offering at just under 5.4%, we are in no rush to deploy at yesteryear's pricing. We have deliberately reduced our 2026 investment volume guidance to approximately $1.6 billion by culling lower yield opportunities and aggressively repricing our pipeline. Today, we sit on a $2 billion war chest, pro forma net debt to recurring EBITDA of just 3.9x and no material debt maturities until 2028. Our best-in-class retail portfolio with highly durable cash flows and limited lease rollover, in conjunction with our fortress balance sheet, provide for a meaningful competitive advantage. That foundation positions us to generate the mid-single AFFO growth per share and double-digit operational returns in 2027 that we have consistently delivered over the past few years. We expect to do so without sacrificing our balance sheet strength or investment criteria. Prudently deploying capital while driving cap rates higher, preserving our dry powder, and leaning further into recycling capital. We can achieve similar levels of earnings growth with less capital deployment at higher cap rates. We have already begun that shift. Acquisition cap rates expanded by 30 basis points this quarter to 7.3%, and we will expand them materially further in the fourth quarter as we lean into our capabilities and prioritize value creation over volume. This past quarter, we invested a total of approximately $360 million in 94 high-quality retail net lease properties, including the acquisition of 68 assets for approximately $310 million. The properties acquired during the quarter are leased to leading operators in sectors including auto parts, tire and auto service, home improvement, grocery, and warehouse clubs. Notable acquisitions during the quarter included a Walmart Supercenter in Virginia, a new BJ's Wholesale in the economic center of Western Massachusetts, a portfolio of Gerber Collisions, two Hobby Lobbies, Five Belows, as well as ground leases to Lowe's and Home Depot in Connecticut and Minnesota, respectively. The acquired properties had a weighted average cap rate of 7.3%. As mentioned, this represents a 30 basis point expansion quarter-over-quarter. The weighted average lease term was 14.5 years, and investment-grade retailers accounted for over 52% of the annualized base rents acquired. During the third quarter, we broke ground on six developments, representing total anticipated costs of $57 million. This included four new 7-Eleven projects, which now total 12 7-Eleven commenced in our development platform. Additionally, working in conjunction with the premier off-price retailer, we acquired a former furniture store located in a dominant power center in Philadelphia for an exciting redevelopment to be completed in early 2027. Seven projects were completed in the quarter, representing a company record of over $82 million in total costs. For perspective, this exceeds the total cost of all projects completed in 2024. Completed projects included three 7-Elevens and several Burlington and Ross locations. Construction continued on eight projects during the quarter, with aggregate anticipated costs of $88 million. Through September 30th, we have commenced projects totaling approximately $163 million, nearly doubling the level achieved in the prior period. We continue to make progress toward our medium-term objective of $250 million in annual development and developer funding platform commencements. This progress reflects the strength of our best-in-class team and platforms, which provide the country's leading retailers with a one-stop shop to execute on their growth objectives. In total, we had 26 projects either completed or under construction during the first nine months of the year, representing a company record of over $255 million of committed capital. Through the first nine months of the year across all three platforms, we have invested approximately $1.3 billion in 261 retail net lease properties, spanning 42 states and the District of Columbia across 29 retail sectors. Moving on to the disposition front. We sold 11 properties during the quarter for gross proceeds of approximately $27 million at a weighted average cap rate of 6.5%, 80 basis points inside the cap rate on acquisitions completed during the period. The dispositions consisted primarily of five franchise-operated Taco Bell locations, two Goodyears, and two Advance Auto Parts stores. None of the dispositions carried an investment-grade credit rating, and the assets had a weighted average remaining lease term of approximately 7.6 years. For the year, we now anticipate total disposition volume of $100 million-$150 million, a material increase from our prior range of $50 million-$100 million. We are, and we will continue to pursue additional opportunities to recycle capital via strong demand from 1031 and bonus depreciation buyers on an accretive basis. Our asset management team continues to address upcoming lease maturities. We executed new leases, extensions, or options on over 860,000 sq ft of GLA during the third quarter with a recapture rate of approximately 106%, the highest level in six quarters. Through the first nine months of the year, we executed new leases, extensions, or options on 2.5 million sq ft of gross leasable area at a recapture rate of more than 105%. Only 11 leases, representing 20 basis points of annualized base rent, remain scheduled to mature this year. At quarter end, our best-in-class portfolio is approaching 2,900 properties spanning all 50 states and the District of Columbia. Our investment-grade exposure stood at approximately 65% of annualized base rents. Our portfolio includes 270 ground leases comprising 10% of annualized base rents, which have investment-grade exposure of approximately 85%. With that, I will hand the call over to Peter to discuss our financial results for the quarter. Peter Coughenour: Thank you, Joey. Starting with the balance sheet, we had a very active quarter with over $825 million of debt and equity capital raised or settled, bringing this figure to nearly $1.5 billion year-to-date. In September, we completed a $400 million public bond offering of 5.65% senior unsecured notes due in 2036. The offering priced at a spread of 90 basis points, the tightest level achieved for a 10-year public bond offering in the company's history. In connection with the offering, we terminated $300 million of forward starting swap agreements and received more than $19 million of proceeds. Those proceeds reduced the all-in interest rate on the notes by nearly 50 basis points from the yield to maturity to a rate of 5.36%. Over the past six years, we have generated more than $82 million of net proceeds from our hedging program, translating into nearly $8 million of annual interest savings. We view that as a direct result of our disciplined and proactive hedging policy. Our approach has been to avoid just-in-time financing, which has provided better visibility into our medium-term cost of capital and has created meaningful value for shareholders over time. During the quarter, we settled approximately 5.7 million shares of existing forward equity for net proceeds of over $425 million. At period end, we had approximately 8.8 million shares of outstanding forward equity, representing anticipated net proceeds of over $657 million. At quarter end, total liquidity stood at approximately $2 billion, including cash on hand, outstanding forward equity, and full availability on our revolving credit facility. In addition, we anticipate free cash flow after the dividend to exceed $140 million this year, a more than 10% year-over-year increase. Pro forma for the settlement of all outstanding forward equity, net debt to recurring EBITDA was approximately 3.9x, reflecting our conservative and well-positioned balance sheet. Excluding unsettled forward equity, net debt to recurring EBITDA was 4.8x, a decline of four-tenths of a turn from the prior quarter. Net debt to enterprise value was approximately 29%, while our fixed charge coverage ratio, including the preferred dividend, remained very healthy at 4.1x. We had no short-term or floating rate borrowings at quarter end, and we continue to have no material debt maturities until 2028. Our balance sheet remains exceptionally well-positioned, providing ample liquidity and flexibility to strategically allocate capital and remain disciplined in our investment approach. Put simply, we are and can afford to be judicious in how and when we deploy our capital. Our consistent and reliable earnings growth continues to support a growing and well-covered dividend. During the third quarter, we declared monthly cash dividends of $0.267 per common share for July, August, and September. The monthly dividend equates to an annualized dividend of over $3.20 per share and represents a 4.3% year-over-year increase. Our dividend is very well-covered with a payout ratio of approximately 69% of AFFO per share for the third quarter. Subsequent to quarter end, we announced a monthly cash dividend of $0.271 per common share for October. The monthly dividend equates to an annualized dividend of over $3.25 per share and represents a 3.4% year-over-year increase. Moving on to earnings, core FFO and AFFO per share were each $1.15 for the third quarter, representing a 4.9% increase from the same quarter last year. We have increased our full year 2026 AFFO per share guidance to a range of $4.58-$4.59, implying year-over-year growth of nearly 6% at the midpoint. The increase in our earnings guidance is driven by the continued strong performance of our portfolio and lower assumed treasury stock method dilution for the year. These benefits are partly offset by a decrease in net investment activity of $150 million at the midpoint, a steeper SOFR curve for short-term borrowings, and elevated dead deal cost in the third quarter as we adjusted to a new pricing paradigm. Our guidance has been updated to include an assumption of 15 basis points of credit and occupancy loss for the year, down from 25 basis points previously. As a reminder, our definition of credit and occupancy loss is fully loaded, encompassing not only credit events, but downtime due to a tenant vacating at lease maturity unrelated to credit issues and other partial or non-payments for any reason. It also includes all operating and tax expenses that ADC is responsible for paying while a space is vacant, in addition to lost rental revenue. Year-to-date, we have experienced only 9 basis points of fully loaded credit and occupancy loss. With that, I would like to turn the call back over to Joey. Joey Agree: Thank you, Peter. Operator, at this time, let's open it up for questions. Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Rich Hightower with Barclays. Your line is open. Please go ahead. Rich Hightower: Hey, good morning, guys. Thanks for taking the question. As far as the sort of behavior in the private market for net lease transactions goes nowadays, can you give us a little more color on what you're seeing from other buyers, other buyer pools, competitors, and then maybe talk about how tax motivations, and just kind of general year-end fourth quarter seasonality. How do you expect that to play out broadly, even if Agree per se is not participating at the same level that we would've thought even 60 or 90 days ago? Joey Agree: Yeah. Good morning. In terms of private buyer pools or other acquirers in the space, I really can't speak to their behavior. As I mentioned in the prepared remarks, we have been decisive. We've learned from 2023 from the volatility here. We understand that our balance sheet and our cost of capital that we have historically raised here is probably our greatest asset. I can't speak to other buyers or buyer pools. We're really focused. In terms of tax-motivated behavior of purchasers, we have seen a significant rise since the One Big Beautiful Bill Act was purchased for bonus depreciation purchasers. You'll see us lean into dispositions, as we mentioned to those types of purchasers. 1031 acquirers still remain fickle. But obviously we've increased our disposition activity and guidance here. I think that will continue into next year. Rich Hightower: That's helpful. I guess my second question, just to go to development and DFP, I think you got maybe a little over a dozen projects currently expected to deliver through towards the end of next year I guess. Just help us understand. I know you said there's about a $250 million kind of annual target for that sort of spend. Help us understand the cadence of run rate spend and rent commencement and earnings contributions. Just how does that sort of flow through the model on a stabilized kind of run rate basis from here? Joey Agree: Yeah. I'll let Peter get into the details of the numbers. The one thing I'd point out is we have really leaned into our development and our developer funding platform starting approximately 18 months. Call it six, seven quarters ago and set that target with two purposes. One, to diversify our external growth sources, right? Our uses of capital. Then two, to balance out our relationships with retailers to provide a one-stop, really differentiated solution. Those have obviously come to fruition. As I said on the last call, subject to entitlements and permitting, we could hit that $250 million number this year. We're obviously well on the way, as you can see through three quarters. Peter, I'll let you get into the specifics. Peter Coughenour: Sure, Rich. Just to hit on the modeling impacts or how we should think about revenue coming online. We have disclosure in our supplemental on page 35 that lays out our development and DFP projects and the anticipated quarter of delivery. We announce projects once construction commences, and then looking at that table, we lay out the anticipated quarter of delivery and total project costs for each quarter. I would think about revenue recognition beginning when the project is delivered and using that table as a guide for future projects coming online for those that have been announced. Rich Hightower: Good. Thank you, guys. Joey Agree: Thank you. Operator: Your next question comes from the line of Michael Goldsmith with UBS. Your line is open. Please go ahead. Michael Goldsmith: Good morning. Thanks a lot for taking my question. You highlighted a spot WACC of 6.8% in your presentation. Acquisition costs, or acquisition cap rates moved up 30 basis points to 7.3%, so it is a 50 basis point spread, and you expect cap rates to continue to move higher. I think you said materially in the fourth quarter. I guess how far away are you right now from I know you used that traffic light analogy, but where are you right now? Do you think you can be in that green zone, heading out during the fourth quarter and into 2027? Joey Agree: Michael, I appreciate the question. We put our spot cost of capital in there because we always want to be transparent. Again, we are not using unburdened free cash flow. We are not using dispositions. I think we have got to back up and let us recap for a second to right-set the conversation. We have zero short-term borrowings. Again, that is zero short-term borrowings. We have a war chest of nearly $2 billion that we raised at yesteryear's pricing, which is in that same slide, including a 10-year bond that was effectively 10 basis points wide of where the Treasury was, due to our proactive hedging policy at 5.37%. We can invest approximately $2 billion until we are 5x levered, while the majority of our peers are sitting at 5.5x plus. We have no debt maturities until 2028. Yes, we have said cap rates will expand in the fourth quarter. Let us assume 25 basis points on top of our Q3 expansion of 30 basis points that we already saw. I will add, we will add another $200 million that we will dispose in probably in the nearer term, extending into Q4 into Q1, sub 6 cap, primarily those bonus depreciation buyers. We are really deploying really cheap capital that we deployed at yesteryear's pricing at the largest spreads we ever have and driving cap rates higher to make those spreads even larger. Our spot cost of capital is if we raise capital today. Again, our balance sheet is sitting at 3.8x levered. If we did nothing, which we are not going to do, we have been very clear there is no do nothing scenario. We have 3% growth next year. Add it all up and there is really no material change in our earnings algorithm, and hence why I talked about mid-single digit AFFO growth in 2027, double-digit total shareholder returns. It is pretty simple math. The spot cost of capital is to highlight if we raise capital today. Let us not forget we raised almost $2 billion of capital at yesteryear's pricing, which we are going to be disciplined and drive cap rates higher and drive the largest spreads that we have had, frankly, since COVID. Michael Goldsmith: Got it. Joey, you talked about still achieving that mid-single digit AFFO growth per share and double-digit operational returns next year. How much of that is a function of the environment? Maybe you can kind of qualify how much does the environment need to improve in order to achieve that versus your do nothing scenario of 3%? Joey Agree: There is no do nothing scenario for us in 2027. That is a baseline that we are just using, that we learned from in 2023 and 2024. When we entered 2024 and we talked about a do nothing scenario, we were 4.7x levered. We said we are going to proactively engage and discuss a do nothing scenario. That is not an option for us. We have a $2 billion war chest that was raised at yesteryear's pricing. We are going to deploy it disciplined and decisively at cap rates that we are going to continue to push on. That assumes zero changes in the short end, the long end of the curve, our stock price, anything. Again, that capital is raised. It is in the bank. It is priced. The equity was at $75. The 10-year Treasury. Our 10-year unsecured debt was at $5.37. That includes standard credit loss assumptions for 2027. No change in the curve, no change in our stock price. We are not guessing on where the economy is going to go in 2027. That is our earnings algorithm. I think the focus on our spot cost of capital, which we want to clearly delineate because we want to be transparent in our debt relative to our historically raised cost of capital, which we have in the same page in an adjacent column, are very different things. Again, we are sitting here with a $2 billion war chest, $2 billion in capital to deploy until we broach 5x lever, the upper end of our guidance, with the majority of our peers sitting at 5.5x plus already. Michael Goldsmith: Thank you very much. Good luck in the fourth quarter. Joey Agree: Appreciate it. Thanks. Operator: Your next question comes from the line of Nick Joseph with Citigroup. Your line is open. Please go ahead. Nick Joseph: Thanks. Joey, you talked about the 30 basis points quarter-over-quarter increase in cap rates in the third quarter. I think you just mentioned an expectation of 25 basis points in the fourth quarter. Does that normalize cap rates relative to movement of rates, or would you expect further expansion in the first half of 2027, assuming that rates stabilize at current levels? Joey Agree: Good morning, Nick. I wish I knew. Honestly, we are focused on time and place right now. We reacted very quickly to the meteoric rise in the 10-year. We repriced our pipeline. We culled our pipeline very aggressively. Again, as you mentioned, you'll see that rise in our Q4 cap rates. We haven't even begun sourcing for 2027. We're not assuming in the model, which I just talked about, any further expansion of cap rates. We're going to keep pushing. The key here is that we can create value across all three external growth platforms, whether it's working with retailers. We were in Walmart, we were in TJ Maxx in Framingham, Massachusetts last week, working with our retail partners, creating value across all three platforms. Where cap rates go, what's the next Truth Social post? I have no idea for 2027. All I know is we are going to be disciplined and deploy capital and material spreads to drive that earnings algorithm. Nick Joseph: Sounds good. You are in over 30 different retail sectors. What areas have you seen cap rate expansion the most? Where are you seeing the stickiness? On the go forward, if there is any you would call out that you could see more expansion or stability. Joey Agree: Yeah, I do not think it is truly sectoral driven. I think it is more price point driven. Obviously, negative leverage does not help for private purchasers out there or public purchasers today, given where the 10-year Treasury is. We have seen some stickiness in cap rates and lower price point assets because you climb that price point ladder. Obviously, it dwindles down to institutional buyers that have the capital and the cost of capital to make those transactions work. We could see some rise in our average transaction size, possibly. I am not foreshadowing Q4 by any means, but we could see that in 2027 if all else remains equal. I think it is really price point driven. Obviously, there are tenants that are distressed that are not trading. The converse of that is the Big Beautiful Bill bonus depreciation buyers that are really just tax motivated. I cannot think of a sector that is recently in the no-go or no-fly territory, but I think there are tenants that obviously have challenges getting moved. Nick Joseph: Thanks. Joey Agree: Thanks, Nick. Operator: Your next question comes from the line of Jana Galan with Bank of America. Your line is open. Please go ahead. Jana Galan: Thank you. Good morning, and appreciate the comments on value creation over volume and the cap rates and acquisitions in Q4 trending higher. Just curious again, if you could just provide any expectations on how long it takes cap rates to reset for your more investment-grade tenant base, maybe looking at prior cycles of this type of interest rate volatility. Joey Agree: Yeah. I would tell you, I think that, Jana, it's a misnomer that IG takes longer than non-IG to reset. I think these are all just narratives, frankly, that are false. Q1 investment grade, this is just acquisition activity for us, was at 59%. Q2 was 73%+. Q3 was down to 52.1%. Q4 will pop back up, I'll tell you that now. Again, these numbers are solely for acquisitions. They don't include development or DFP. Add in our development and DFP activity in Q3 is approximately nearly 60% investment grade. But again, as I've been consistent, I think investment grade alone is the wrong focus. It's an output of what we do. Walgreens was investment grade. Everyone remembers. We called that. Tractor Supply was an investment grade. We called that. Hobby Lobby, Gerber Collision, Publix, Wegmans, Ulta, Aldi, Boot Barn, and a whole bunch of other tremendous retailers, preeminent retailers in this country have no rating. We can play the shadow IG game and we can say, run a Moody's RiskCalc and not use some random threshold or score, ADC score and say inclusive of shadow IG Q3, we would be 65%. Would you include Five Below and Hobby Lobby and Ulta? Our entire portfolio we ran through the Moody's RiskCalc is 76% investment grade. But again, I can't emphasize enough. Aldi's probably my favorite grocer in the country today. Hobby Lobby is the preeminent crafts and hobby retailer. We did a sale-leaseback, obviously, and acquired a number more of them this quarter. Ulta carries no debt. They are the preeminent retailer in this country. Some of the best grocers in the country outside of Ulta, Publix, Wegmans. These retailers don't carry debt and not investment grade. That doesn't preclude our investment in them, and frankly, it doesn't even factor into our decision because we know the quality of their business and their balance sheet. The IG, non-IG disparity, shadow IG, let's see through that and look at the quality of the individual retailers, the underlying real estate, and then the complexion of the overall portfolio and the diversity within it. Jana Galan: Thank you. Maybe just congratulations on the 106% recapture rate. I'm curious if in this more inflationary environment, you think that could trend higher and maybe if you have a view of how below market your rents are. Joey Agree: That trend is really driven by escalations that are contractually driven in options. We have very minimal lease rollovers. We highlighted those have mark-to-market opportunities. I can't quantify it for you at this time. But that's really driven by the stability of our portfolio, the contractual options embedded, approximately the 1% internal growth through same store NOI that we're receiving every single year. You'll see that number come up and down subject to what options are being exercised in any quarter. Jana Galan: Thank you. Joey Agree: Thanks, Jana. Operator: Your next question comes from the line of Ronald Kamdem with Morgan Stanley. Your line is open. Please go ahead. Ronald Kamdem: Great. Thanks so much. Just going back to the conversation on the sort of the acquisition environment, and I think your comments about cap rate rising from here. I was just curious if you could just dig in a little bit deeper in terms of the competition for deals that you're seeing out there and who's getting stronger, who's getting weaker, would be helpful. Thanks. Joey Agree: Yeah, Ron, I think overall competition is less because capital is more expensive and constrained. Again, we don't compete with institutional purchasers generally. We're competing in a very fragmented space here that is primarily owned by individuals, and we're out there looking for value and creating value hand in hand with our retailers. I would assume that overall bids will go down as cap rates stabilize and try to move up and ultimately, hopefully stabilize at some point. But we're obviously not seeing any increase in competition, that's for sure. Ronald Kamdem: Then just a quick follow-up on the DFP, that $250 million run rate in this environment. Could that potentially even be more opportunity if other capital sources are strained, or how should we think about that? Thanks. Joey Agree: Certainly. But the transactions also, they have to hurdle, they have to make sense. But yeah, I think construction financing and ultimate end financing, long-term financing or dispositions could be more problematic for developers. In DFP, we could see a rise in that activity, and we're exploring a number of options there. Ronald Kamdem: Thank you. Joey Agree: Thanks, Ron. Operator: Your next question comes from the line of Brad Heffern with RBC Capital Markets. Your line is open. Please go ahead. Brad Heffern: Yeah. Hey, everybody. On the development front, do higher rates, the higher rate environment, does that change anything in terms of just the relative attractiveness either for you or for the counterparties? I would think from a pricing standpoint, you're able to dictate that more, but I don't know if there's any difference in terms of how counterparties look at the offering in a higher rate environment. Joey Agree: Yeah, I think it could possibly give us the ability to push on return on costs in a higher rate environment. But we enter into those transactions with a significant margin, and the product type that we're developing ultimately has significant value or terminal value because, one, the One Big Beautiful Bill Act for these gas stations, obviously the bonus depreciation purchasers. But we enter in with a larger margin of, obviously, I'll call it safety and spread or return on invested capital due to that development platform. But could it give us the opportunity to push those returns even higher? Certainly possible. Brad Heffern: Okay. Got it. Peter, you talked about the dead deal fees. I am assuming that was a headwind to guidance above the reduction in acquisition volumes. Is there any number you can put around that in terms of what the impact was for the third quarter? Should we expect to see any more of that in the fourth quarter, or is that all done at this point, assuming rates stay where they are? Peter Coughenour: Yeah. In terms of the impact from elevated dead deal costs in the third quarter, that contributed close to roughly a penny in terms of a decrease in AFFO per share in the third quarter. That runs through general administrative expenses on our income statement. You can see that line item was elevated in Q3. I would expect some normalization in G&A and dead deal costs as we move to the fourth quarter. Brad Heffern: Okay. Thank you. Operator: Your next question comes from the line of Eric Borden with BMO Capital Markets. Your line is open. Please go ahead. Eric Borden: Hey, good morning. Thanks for taking my question. Joe, you have been clear that you do not want to move up the risk curve. Just curious, how much of the 30 basis point increase in cap rates in this quarter reflects true repricing versus mix? When you talk about another potential 25 basis points of cap rate expansion in the fourth quarter, is that on a comparable risk profile? Joey Agree: Yeah. Simply put, yes. We will not move up the risk curve. We have constructed this portfolio over the last 16 years, that we believe is preeminent retail portfolio in the country, and we will not move up the risk curve. We are not. We will stay retail focused, the largest retailers in the United States, and continue to partner with them on their growth strategy as well as existing stores. The repricing in the fourth quarter was a function of, well, tie it back to the dead deal costs that Peter just discussed. For us, it was a take it or leave it, effectively. We will kill a deal if it did not hit a certain threshold for us. You saw those dead deal costs run through Q3. You will not see that again in Q4. If the seller was willing to move along with the 10-year Treasury, as well as our stock price, we were willing to transact. But for us, it effectively became a take it or leave it. Eric Borden: Great. Thank you. Just on the disposition front, you have given the accretive spread between the dispositions and the acquisition yields this quarter. How much room is there to lean further into recycling? Is there a meaningful pool of non-core assets that you could increase the monetization without compromising the quality of the portfolio? Joey Agree: Certainly. I think the biggest opportunity there is with the bonus depreciation purchasers, and obviously we are very active in the C-store space where that bonus depreciation is applicable. So we will look to recycle at a couple of hundred, 175-200 basis point spreads in Q4 and into 2027. Eric Borden: Great. Thank you very much. Joey Agree: Thank you. Operator: Your next question comes from the line of Alex Bacon with Baird. Your line is open. Please go ahead. Alex Bacon: Hey, thank you for taking the question. Just on the development side, do you expect that the mix of investments is likely to shift towards development versus regular acquisitions? Joey Agree: No, the mix in terms of percentage of capital allocation will ultimately depend on. We have a pretty good visibility into our development pipeline, will ultimately depend on ultimate acquisition volumes, which we don't have visibility. If acquisition volumes trend down, development could be a larger percentage. But again, with limited foresight into the ultimate denominator, including acquisitions for 2027, it's difficult to answer that question. Speaker 11: Got it. That's it for me. Thank you. Joey Agree: Thank you. Operator: Your next question comes from the line of Upal Rana with KeyBanc Capital Markets. Your line is open. Please go ahead. Upal Rana: Great. Thank you for taking the question. Joe, you mentioned that you can deploy $1.9 billion and still get to 5x leverage. Is that sort of the intention to potentially lever up to 5x, or was that you just playing out a scenario? Joey Agree: Our stated leverage target is 4x-5x. We obviously have a $2 billion war chest. I am just putting that in context of the overall balance sheet. I think we will always be looking at capital sources, whether it was a preferred at 4.25% back in the heyday, or whether it is common equity through ATM. We will always maintain a fortress balance sheet and liquidity profile. But I think when you look on a relative basis, our balance sheet has a significant firepower. Upal Rana: Okay, great. That was helpful. The Q3 investment activity had an average WALT of over 14 years versus 10 or 11 years in the quarter prior. Was that a result of just mix, or were you seeing the ability to ask for higher WALTs given the current environment? Joey Agree: No, that was specifically mix. There was the Gerber Collision transaction, the brand new Hobby Lobbies, one in Apple Valley, California, that was 15 years. Just mix. A new BJ's and Hobby Lobby in Springfield, Massachusetts. Again, just mix. Upal Rana: Okay, great. Thank you. Joey Agree: Thank you. Operator: Your next question comes from the line of Rob Stevenson with Huntington. Your line is open. Please go ahead. Rob Stevenson: Good morning, guys. Joey, given that some of the development DFP deals that have yet to break ground might have been put under contract in the past, how quickly are you able to readjust the yield on new deals if you are looking at 50-60 basis points of acquisition cap rate expansion in the back half of this year? Joey Agree: Subject to the project and the stage of the project, we are able to adjust pretty quickly. Obviously, there is multiple levers there. There is the underlying land cost. There are rents with the retailer. Given the margin that we are developing and the margin of safety relative to our cost of capital and relative to ultimate terminal values if we dispose, as we talked about with the One Big Beautiful Bill Act purchasers, I do not think there is a need to necessarily reprice those transactions. Rob Stevenson: Okay. Given the term, have you seen any material difference in the level of cap rate expansion or the availability of the product in ground leases today versus just fee simple assets? Joey Agree: No. You will see a significant component of ground leases in Q4. Most of the ground lease stuff that we do acquire, either sellers are not even familiar with the ground leases, or they are short-term and working hand in hand with the retailer. There really is not a thread to pull through ground leases versus turnkey leases. It is all a mixed bag. Rob Stevenson: Okay. Thanks, guys. Joey Agree: Thanks, Rob. Operator: Your next question comes from the line of Jim Kammert with Evercore ISI. Your line is open. Please go ahead. Jim Kammert: Hi. Good morning. Thank you. Lawson Trevor here. Just one quick housekeeping item. Looking at the Q, Peter, there's no hedging in place for the 2028 maturities, is that correct? Peter Coughenour: Correct. As we think about the 2028 debt maturities, those are fixed rate offerings, and currently, there are no hedges in place for prospective debt issuances. Speaker 14: Sounds good. Thank you. Operator: Your next question comes from the line of Michael Gorman with BTIG. Your line is open. Please go ahead. Michael Gorman: Yeah, thanks. Good morning. Joey, you mentioned taking a closer look at the retailers, and your track record there is certainly very strong. Then you mentioned some of your favorites in the grocery space, Aldi, Publix, Wegmans, obviously makes sense. I am curious if you have any thoughts on some of the more traditional mainline grocers that maybe had some negative headlines around them recently, and just how you are thinking about the grocery space that somehow seems to be getting even more competitive than it has been in recent years. Joey Agree: Yeah. I would refer everyone to the white paper on our website from, what? 12, 18 months ago, Peter? Peter Coughenour: Roughly. Joey Agree: About the grocery space. I pushed back pretty vehemently about the narrative of grocery anchor shopping centers being the general safe haven in retail real estate for years now. The grocery space ultimately is a 2% margin business, and you see those margins contracting while they move to advertising revenue, alternate sources. Again, three of the largest grocers in the country are grocery retailers that sell groceries, I should say, aren't grocers. Right? Walmart, the largest, Amazon, and Costco. We have always been very clear that we will only invest in those market leaders. Sometimes they are regional leaders. I think our white paper lays out that thesis and we'll continue to execute upon that thesis. But as you mentioned, we have seen pressures there. There is price transparency in the grocery space, like all retail spaces today. Basket sizes are going down, even in the face of gas prices going up. Consumers are being much more discerning about what they acquire. Obviously, we have a number of grocers who are going through their overall pricing strategy right now and have been very public about it in saying we have to compete on price. Our thesis has always been to invest in differentiated grocers that are the regional leaders, H-E-B, Wegmans, Publix, Market Basket. The national grocers that are price leaders, Walmart Neighborhood Market, Aldi, Kroger. We will continue to execute in that manner. We've been very clear. B minus C grocers are suspect at best in a 2% margin business today. I think we're going to see continued challenges amongst those lower tier grocers. Michael Gorman: Great. Thank you. Joey Agree: Thank you. Operator: Your next question comes from the line of Jamie Feldman with Wells Fargo. Your line is open. Please go ahead. Jamie Feldman: Hi. Thank you. You've got Connor on here with Jamie. Maybe from a higher level, can you talk us through any lessons learned from the last significant move in the 10-year, like in 2023, and how has that influenced your capital allocation strategy over the next 12-18 months? Joey Agree: Yeah. It's a great question, Connor. We emphasize here always constantly improving. I'll tell you my personal lessons learned from the 2023 rapid rise in its 10-year north of 5% was we did not move quickly and decisively enough. We continued to acquire and deploy our most precious asset, our balance sheet, utilized that balance sheet capacity at spot pricing instead of waiting. I'll call it lack of discipline, and I'll take the full accountability for that. That lack of discipline had our balance sheet been in the position which I did not want to deploy incremental capital without knowing what came next. This time coming in with $2 billion of liquidity and the balance sheet at 3.8x levered, we moved immediately, and it was aggressive. I'll be frank. It was an aggressive move. You saw the dead deals run through. I talked about how it was a take it or leave it approach. We reduced our investment guide. We again, focused on value over volume. I think the volume game in net lease is over, which I am excited about because we are value creators ultimately. I think in 2023, in really looking back, hope of normalization or stabilization, probably encouraged me to stay the course on our existing pipeline. This time around, we said go immediately when we saw that meteoric rise in the 10-year Treasury and the correlating stock price depreciation. It was a very different tactic for us. We are going to preserve our most, again, we are going to preserve our most precious asset. That is our balance sheet liquidity. We are going to deploy it at larger spreads, and we have been decisive about it, as you can see with the rise in cap rates. The rise in cap rates in Q4 I talked about for us, and we will be patient in discipline. Speaker 16: Thank you. That is super helpful. Sorry if this has been talked about already, but I think you mentioned last time you are in a do nothing scenario was in 2024 around kind of 4.7x leverage. Your investor presentation shows you have not been above 4.5x since 2018. Should we maybe think about that 4.5x sort of as a soft maximum for your leverage? Joey Agree: I would not think of it as a maximum. Our stated range is 4x-5x. We are obviously nowhere near $2 billion, including free cash flow approximately, to get to the do nothing scenario. That do nothing scenario once again is 3% growth. We are not going to do nothing. Look, we will be nimble, flexible. We will be opportunistic, obviously. But the most important thing there is we are not in that position, and we want to emphasize that here. Speaker 16: Thank you. Really appreciate the time. Joey Agree: Thank you. Operator: There are no further questions at this time. I will now turn the call back to Joey Agree for closing remarks. Joey Agree: Well, thank you, everybody, for joining us this morning, and we look forward to seeing you during the upcoming conferences and best of luck through the remainder of earnings season. Thanks again. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Agree Realty, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Agree Realty wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Agree Realty (ADC) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Management is aggressively repricing its acquisition pipeline in response to the shifting macroeconomic environment, prioritizing wider spreads and value creation over total investment volume. - The company deliberately reduced its 2026 investment guidance to $1.6 billion by culling lower-yield opportunities and adopting a 'take it or leave it' approach with sellers. - Performance is anchored by a record 99.8% occupancy rate and a portfolio where 65% of annualized base rents are derived from investment-grade retailers. - The company successfully expanded acquisition cap rates by 30 basis points to 7.3% in Q3 and expects material further expansion in the fourth quarter. - Management emphasized that their 'fortress balance sheet'—with 3.9x pro forma net debt to recurring EBITDA—serves as a primary competitive advantage during market disruption. - The development and developer funding platforms (DFP) reached record levels, with $255 million in committed capital across 26 projects in the first nine months of the year. - Management projects mid-single digit AFFO growth per share and double-digit operational returns for 2027, even without assuming improvements in the interest rate environment. - The company intends to deploy its $2 billion in liquidity—raised at 'yesteryear's pricing'—to drive earnings growth at higher cap rates with less total capital deployment. - Guidance for 2026 AFFO per share was increased to $4.58-$4.59, reflecting strong portfolio performance and lower-than-expected credit and occupancy losses. - The company is targeting a medium-term objective of $250 million in annual development and DFP commencements to further diversify external growth sources. - Disposition volume guidance for 2026 was increased to $100 million-$150 million, targeting accretive capital recycling through sales to tax-motivated buyers. - Completed a $400 million 10-year bond offering at an effective rate of 5.36%, aided by a proactive hedging program that generated $19 million in swap termination proceeds. - G&A expenses were elevated in Q3 by approximately $0.01 per share due to 'dead deal costs' resulting from the aggressive culling of the acquisition pipeline. - The company has no material debt maturities until 2028, providing significant flexibility to remain patient in the current high-rate environment. - Credit and occupancy loss assumptions for 2026 were lowered from 25 basis points to 15 basis points based on year-to-date performance of only 9 basis points. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Joey Agree admitted that in 2023, the company did not move quickly enough to reprice its pipeline when rates rose above 5%. - In the current cycle, the company moved immediately to kill deals that did not meet new yield thresholds, resulting in the reported dead deal costs. - Management expects cap rates to expand by approximately another 25 basis points in Q4 on top of the 30 basis point expansion seen in Q3. - The company has not yet begun sourcing for 2027 and is not currently assuming further expansion in its baseline 2027 earnings algorithm. - Management argued that the distinction between investment-grade and non-rated tenants is often a 'misnomer,' highlighting that many top-tier retailers like Aldi and Hobby Lobby carry no debt and thus no rating. - The company's internal analysis using Moody's RiskCalc suggests the portfolio is effectively 76% investment grade when including 'shadow IG' retailers. - The 106% recapture rate in Q3 was driven primarily by contractual escalations and lease options rather than speculative mark-to-market activity. - Management noted that the portfolio's limited lease rollover provides high cash flow stability with approximately 1% embedded internal growth.

- Interested in Agree Realty Corporation? Here are five stocks we like better. - Agree Realty raised its 2026 AFFO guidance to $4.58–$4.59 per share, reflecting nearly 6% year-over-year growth at the midpoint, while third-quarter core FFO and AFFO rose 4.9% to $1.15 per share and occupancy remained 99.8%. - The company reduced its 2026 investment-volume outlook to approximately $1.6 billion as acquisition cap rates rose to 7.3% and management prioritized returns over transaction volume. Agree invested about $360 million in 94 properties during the quarter and expects further yield expansion. - Agree Realty continued expanding its development platform, commencing six projects and targeting $250 million of annual development and developer-funding activity over the medium term. It also raised its 2026 disposition guidance to $100 million–$150 million and increased its monthly dividend by 3.4% year over year. - 3 Stocks to Buy After Heavy Insider Buying Agree Realty (NYSE:ADC) reported third-quarter 2026 core funds from operations and adjusted funds from operations of $1.15 per share, each up 4.9% from the prior-year quarter, while maintaining portfolio occupancy of 99.8%. The retail net lease REIT raised its full-year 2026 AFFO guidance to $4.58 to $4.59 per share, implying nearly 6% year-over-year growth at the midpoint. Chief Financial Officer Peter Coughenour said the higher outlook reflected portfolio performance and lower assumed treasury stock method dilution, partly offset by lower projected investment activity, a steeper SOFR curve for short-term borrowing assumptions and elevated dead-deal costs in the third quarter. → The AI Sell-Off Continues—These 3 Stocks Keep Raising Guidance Anyway President and Chief Executive Officer Joey Agree said the company reduced its 2026 investment-volume outlook to approximately $1.6 billion as it removed lower-yield opportunities from its pipeline and repriced prospective transactions amid a changing macroeconomic environment. Agree said the company is prioritizing value creation over volume and expects acquisition cap rates to rise further in the fourth quarter. Acquisition cap rates expanded 30 basis points sequentially to 7.3% during the third quarter. The company invested about $360 million in 94 retail net lease properties during the period, including $310 million spent to acquire 68 assets at a weighted-average 7.3% cap rate. → Tesla's Roadster Reveal Hints at 2 Much Bigger Moves The acquired properties carried a weighted-average lease term of 14.5 years, and investment-grade retailers represented more than 52% of acquired annualized base rent. Transactions included a Walmart Supercenter in Virginia, a new BJ's Wholesale location in western Massachusetts, Gerber Collision properties, Hobby Lobby and Five Below locations, and ground leases to Lowe's and Home Depot. Agree said it has raised $1.1 billion of capital during 2026, including forward equity at approximately $75 per share and a recently completed 10-year unsecured bond offering with an effective interest rate just under 5.4%. The company ended the quarter with approximately $2 billion of liquidity and, on a pro forma basis for unsettled forward equity, net debt to recurring EBITDA of 3.9 times. → Luxury's Middle Market Is Cracking—These 3 Stocks Could Win During the call, Agree said the company can remain disciplined because it has no material debt maturities until 2028 and no short-term or floating-rate borrowings. He said the company expects to generate mid-single-digit AFFO per-share growth and double-digit operational returns in 2027 without changes in interest rates, its stock price or other market assumptions. The company continued to build its development and developer funding platform. It commenced six projects during the third quarter with total anticipated costs of $57 million, including four new 7-Eleven projects. Agree said the company has now commenced 12 7-Eleven projects through the platform. Agree also acquired a former furniture store in a Philadelphia power center for redevelopment with an off-price retailer, with completion expected in early 2027. Seven projects were completed in the quarter at a record total cost of more than $82 million, including three 7-Eleven stores and several Burlington and Ross locations. Construction continued on eight projects with anticipated aggregate costs of $88 million. Through Sept. 30, the company had commenced projects totaling about $163 million, nearly double the prior-period level. Agree said the company continues to target $250 million of annual development and developer funding commencements over the medium term. Across acquisitions, development and developer funding, Agree Realty invested approximately $1.3 billion in 261 retail net lease properties during the first nine months of 2026. The investments spanned 42 states, the District of Columbia and 29 retail sectors. The company sold 11 properties during the third quarter for about $27 million in gross proceeds at a weighted-average 6.5% cap rate, 80 basis points below the acquisition cap rate recorded during the period. The sales were primarily franchise-operated Taco Bell locations, Goodyear properties and Advance Auto Parts stores. None carried an investment-grade credit rating. Agree raised its expected 2026 disposition volume to $100 million to $150 million from a previous range of $50 million to $100 million. Joey Agree said the company expects to continue recycling capital through sales to buyers using 1031 exchanges and bonus depreciation strategies, particularly in the convenience-store sector. On the leasing front, Agree Realty executed new leases, extensions or options on more than 860,000 square feet during the third quarter, producing a recapture rate of about 106%, its highest in six quarters. Only 11 leases, representing 20 basis points of annualized base rent, remained scheduled to mature during 2026 at quarter-end. The portfolio approached 2,900 properties across all 50 states and the District of Columbia. Investment-grade exposure represented approximately 65% of annualized base rent, while ground leases accounted for 10% of annualized base rent. Agree Realty raised or settled more than $825 million of debt and equity during the third quarter, bringing year-to-date capital raised or settled to nearly $1.5 billion. In September, the company completed a $400 million offering of 5.65% senior unsecured notes due 2036. Coughenour said the company's termination of $300 million in forward-starting swaps generated more than $19 million in proceeds and reduced the notes' all-in interest rate to 5.36%. The company also settled approximately 5.7 million shares of forward equity for more than $425 million in net proceeds. At quarter-end, it had 8.8 million shares of outstanding forward equity representing anticipated proceeds exceeding $657 million. Agree Realty declared monthly dividends of $0.267 per common share for July through September, representing a 4.3% year-over-year increase on an annualized basis. Subsequent to quarter-end, it announced an October monthly dividend of $0.271 per share, annualizing to more than $3.25 per share and representing a 3.4% year-over-year increase. Agree Realty Corporation is a real estate investment trust (REIT) that acquires, develops, and manages retail properties across the United States. The company primarily uses a net-lease structure, under which tenants generally are responsible for property-level operating expenses such as taxes, insurance, and maintenance. Its portfolio is focused mainly on essential retail properties occupied by nationally recognized and regional tenants, including grocery stores, home improvement retailers, dollar stores, pharmacies, and other necessity-based businesses. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "What Agree Realty (ADC) Said on Its Q3 Earnings Call" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

Increases 2026 AFFO Per Share Guidance to $4.58 to $4.59 Balance Sheet Fortified with Approximately $2.0 Billion of Liquidity ROYAL OAK, Mich., October 20, 2026--(BUSINESS WIRE)--Agree Realty Corporation (NYSE: ADC) (the "Company") today announced results for the quarter ended September 30, 2026. All per share amounts included herein are on a diluted per common share basis unless otherwise stated. Third Quarter 2026 Financial and Operating Highlights: - Invested approximately $358 million in 94 retail net lease properties - Commenced six development or Developer Funding Platform ("DFP") projects for total committed capital of approximately $57 million - Net Income per share attributable to common stockholders increased 18.5% to $0.53 - Core Funds from Operations ("Core FFO") per share increased 4.9% to $1.15 - Adjusted Funds from Operations ("AFFO") per share increased 4.9% to $1.15 - Declared a monthly dividend of $0.267 per common share for September, a 4.3% year-over-year increase - Completed a public bond offering of $400 million of 5.65% senior unsecured notes due 2036 with an all-in rate of 5.36% inclusive of prior hedging activity - Settled 5.7 million shares of outstanding forward equity for net proceeds of approximately $426 million - Balance sheet well positioned at 3.9 times proforma net debt to recurring EBITDA; 4.8 times excluding unsettled forward equity - Ended the quarter with approximately $2.0 billion of liquidity including availability on the revolving credit facility, outstanding forward equity, and cash on hand Financial Results Net Income Attributable to Common Stockholders Net Income for the three months ended September 30, 2026 increased 32.3% to $66.5 million, compared to $50.3 million for the comparable period in 2025. Net Income per share for the three months ended September 30th increased 18.5% to $0.53, compared to $0.45 for the comparable period in 2025. Net Income for the nine months ended September 30, 2026 increased 25.7% to $179.5 million, compared to $142.7 million for the comparable period in 2025. Net Income per share for the nine months ended September 30th increased 13.4% to $1.47, compared to $1.30 for the comparable period in 2025. Core FFO Core FFO for the three months ended September 30, 2026 increased 17.2% to $143.4 million, compared to $122.4 million for the comparable period in 2025. Core FFO per share for the three months ended September 30th increased 4.9% to $1.15, compared to $1.09 for the comparable period in 2025. Core FFO for the nine months ended September 30, 2026 increased 18.5% to $415.8 million, compared to $351.0 million for the comparable period in 2025. Core FFO per share for the nine months ended September 30th increased 6.8% to $3.40, compared to $3.18 for the comparable period in 2025. AFFO AFFO for the three months ended September 30, 2026 increased 17.2% to $144.2 million, compared to $123.1 million for the comparable period in 2025. AFFO per share for the three months ended September 30th increased 4.9% to $1.15, compared to $1.10 for the comparable period in 2025. AFFO for the nine months ended September 30, 2026 increased 18.3% to $419.8 million, compared to $354.8 million for the comparable period in 2025. AFFO per share for the nine months ended September 30th increased 6.7% to $3.43, compared to $3.22 for the comparable period in 2025. Dividend In the third quarter, the Company declared monthly cash dividends of $0.267 per common share for each of July, August and September 2026. The monthly dividends declared during the third quarter reflect an annualized dividend amount of $3.204 per common share, representing a 4.3% year-over-year increase. The dividends represent payout ratios of approximately 70% of Core FFO per share and 69% of AFFO per share, respectively. For the nine months ended September 30, 2026, the Company declared monthly cash dividends totaling $2.388 per common share, a 4.1% increase over the dividends of $2.295 per common share declared for the comparable period in 2025. The dividends represent payout ratios of approximately 70% of Core FFO per share and 70% of AFFO per share, respectively. Subsequent to quarter end, the Company declared an increased monthly cash dividend of $0.271 per common share for October 2026. The October monthly dividend reflects an annualized dividend amount of $3.252 per common share, representing a 3.4% increase over the annualized dividend amount of $3.144 per common share from October 2025. The October dividend is payable on November 13, 2026 to stockholders of record at the close of business on October 30, 2026. Additionally, subsequent to quarter end, the Company declared a monthly cash dividend on its 4.25% Series A Cumulative Redeemable Preferred Stock of $0.08854 per depositary share, which is equivalent to $1.0625 per annum. The dividend is payable on November 2, 2026 to stockholders of record at the close of business on October 23, 2026. Earnings Guidance The table below provides estimates for significant components of our 2026 earnings guidance. | | Prior 2026 | | Revised 2026 | | Guidance | | Guidance AFFO per share(1)(2) | | $4.57 to $4.59 | | $4.58 to $4.59 Investment volume | | $1.6 to $1.8 billion | | Approximately $1.6 billion Disposition volume | | $50 to $100 million | | $100 to $150 million General and administrative expenses (% of adjusted revenue)(3)(4) | | 5.3% to 5.6% | | 5.3% to 5.6% Non-reimbursable real estate expenses (% of adjusted revenue)(3) | | 1.0% to 1.5% | | 1.0% to 1.5% Income and other tax expense | | Approximately $2 million | | Approximately $2 million Treasury stock method dilution(5) | | $0.02 to $0.04 | | $0.01 to $0.02 | The Company's 2026 guidance is subject to risks and uncertainties more fully described in this press release and in the Company's filings with the Securities and Exchange Commission (the "SEC"). (1) | The Company does not provide guidance with respect to the most directly comparable GAAP financial measure or provide reconciliations to GAAP from its forward-looking non-GAAP financial measure of AFFO per share guidance due to the inherent difficulty of forecasting the effect, timing and significance of certain amounts in the reconciliation that would be required by Item 10(e)(1)(i)(B) of Regulation S-K. Examples of these amounts include impairments of assets, gains and losses from sales of assets, and depreciation and amortization from new acquisitions or developments. In addition, certain non-recurring items may also significantly affect net income but are generally adjusted for in AFFO. Based on our historical experience, the dollar amounts of these items could be significant and could have a material impact on the Company's GAAP results for the guidance period. (2) | The Company's AFFO per share guidance utilizes the current forward SOFR curve to forecast interest expense related to any outstanding commercial paper notes and revolver borrowings during the year. (3) | Adjusted revenue equates to "Total Revenues" as presented in our consolidated statements of operations and comprehensive income, excluding the amortization of above and below market lease intangibles. (4) | Cash G&A expense is expected to be in a range of 3.7% to 4.0% of adjusted revenue. Cash G&A is defined as "General and administrative" expenses as presented in our consolidated statements of operations and comprehensive income, less stock-based compensation expense. (5) | Represents the estimated dilutive impact of the Company's outstanding forward equity calculated in accordance with the treasury stock method, which is included in the AFFO per share guidance range. CEO Comments "We are very pleased with our performance through the first nine months of the year, as we invested approximately $1.3 billion across all three of our external growth platforms and are raising our 2026 AFFO per share guidance to a range of $4.58 to $4.59," said Joey Agree, President and Chief Executive Officer. "During the quarter, we completed a $400 million public bond offering at an all-in rate of 5.36%, further strengthening our fortress balance sheet. With approximately $2.0 billion of liquidity, proforma net debt to recurring EBITDA of 3.9 times and a portfolio that is 99.8% leased, we are exceptionally well positioned heading into 2027. We will remain disciplined capital allocators, focusing on value over volume and preserving our liquidity to capitalize on shifts in the transaction market, as we have throughout our history." Investment and Disposition Activity Total investment volume for the third quarter was approximately $357.7 million across 94 retail net lease properties, representing capital deployed across all three of the Company's external growth platforms. The properties are located in 30 states and leased to tenants operating in 22 retail sectors. For the nine months ended September 30, 2026, total investment volume was approximately $1.3 billion across 261 properties. Acquisitions Total acquisition volume for the third quarter was approximately $308.6 million and included 68 properties net leased to leading retailers operating in sectors including auto parts, tire & auto service, home improvement, grocery stores, and warehouse clubs. The properties are located in 27 states and leased to tenants operating in 17 retail sectors. Third quarter activity included the acquisition of two ground leases for an aggregate purchase price of approximately $19.5 million, representing 5.5% of annualized base rents acquired. The properties were acquired at a weighted-average capitalization rate of 7.3% and had a weighted-average lease term of approximately 14.5 years. Approximately 52.1% of annualized base rents acquired were generated from investment grade retail tenants. For the nine months ended September 30, 2026, total acquisition volume was approximately $1.2 billion. The 235 acquired properties are located in 41 states and the District of Columbia and leased to tenants who operate in 27 retail sectors. The properties were acquired at a weighted-average capitalization rate of 7.1% and had a weighted-average lease term of approximately 12.1 years. Approximately 62.6% of annualized base rents acquired were generated from investment grade retail tenants. Development and Developer Funding Platform During the third quarter, the Company commenced six development or DFP projects, with total anticipated costs of approximately $57.4 million. Construction continued during the quarter on eight projects with anticipated costs totaling approximately $87.9 million. The Company completed seven projects during the quarter with total costs of approximately $82.4 million. For the nine months ended September 30, 2026, the Company had 26 development or DFP projects completed or under construction with anticipated total costs of approximately $256.7 million. The projects are leased to leading retailers including 7-Eleven, TJX Companies, Ross Dress for Less, Burlington, Boot Barn, Gerber Collision, Starbucks, and Sunbelt Rentals. The following table presents estimated costs for the Company's active or completed development and DFP projects for the nine months ended September 30, 2026: | | | | | | | | Anticipated Anticipated | | Number of | | Costs Funded | | Remaining | | Total Project Quarter of Delivery | | Projects | | to Date | | Funding Costs | | Costs Q1 2026 | | 4 | | $ | 22,534 | | $ | — | | $ | 22,534 Q2 2026 | | 1 | | | 6,478 | | | — | | | 6,478 Q3 2026 | | 7 | | | 82,394 | | | — | | | 82,394 Q4 2026 | | 1 | | | 4,427 | | | 782 | | | 5,209 Q1 2027 | | 4 | | | 23,692 | | | 8,170 | | | 31,862 Q2 2027 | | 4 | | | 16,257 | | | 32,770 | | | 49,027 Q3 2027 | | 5 | | | 18,714 | | | 40,486 | | | 59,200 Total | | 26 | | | 174,496 | | | 82,208 | | | 256,704 Development and DFP project costs are in thousands; any differences are the result of rounding. Costs Funded to Date may include adjustments related to completed projects to arrive at the correct Anticipated Total Project Costs. Dispositions During the third quarter, the Company sold 11 properties for gross proceeds of approximately $26.9 million. The dispositions were completed at a weighted-average capitalization rate of 6.5%. During the nine months ended September 30, 2026, the Company sold 32 properties for gross proceeds of approximately $67.9 million. The dispositions were completed at a weighted-average capitalization rate of 6.8%. Portfolio Update As of September 30, 2026, the Company's portfolio consisted of 2,888 properties located in all 50 states and the District of Columbia, comprised of approximately 61.1 million square feet of gross leasable area. At quarter end, the portfolio was approximately 99.8% leased, had a weighted-average lease term of approximately 7.8 years, and generated approximately 65.1% of annualized base rents from investment grade retail tenants. Ground Lease Portfolio As of September 30, 2026, the Company's ground lease portfolio consisted of 270 leases located in 39 states and the District of Columbia and totaled approximately 8.0 million square feet of gross leasable area. Properties ground leased to tenants represented 10.0% of annualized base rents. At quarter end, the ground lease portfolio was fully occupied, had a weighted-average lease term of approximately 8.6 years, and generated 85.2% of annualized base rents from investment grade retail tenants. Leasing Activity and Expirations During the third quarter, the Company executed new leases, extensions or options on approximately 862,000 square feet of gross leasable area throughout the existing portfolio. Notable new leases, extensions or options included a 28,000-square-foot T.J. Maxx in Turlock, California and a 25,000-square-foot Ross Dress for Less in Springfield, Missouri. For the nine months ended September 30, 2026, the Company executed new leases, extensions or options on approximately 2.5 million square feet of gross leasable area throughout the existing portfolio. As of September 30, 2026, the Company's 2026 lease maturities represented 0.2% of annualized base rents. The following table presents contractual lease expirations within the Company's portfolio as of September 30, 2026, assuming no tenants exercise renewal options: | | | | Annualized Base Rent(1) | | Gross Leasable Area Year | | Number ofLeases | | Dollars | | % ofTotal | | Square Feet | | % ofTotal 2026 | | 11 | | $ | 1,762 | | 0.2 | % | | 151 | | 0.2 | % 2027 | | 111 | | | 24,693 | | 3.0 | % | | 2,529 | | 4.2 | % 2028 | | 174 | | | 47,404 | | 5.8 | % | | 4,426 | | 7.3 | % 2029 | | 227 | | | 70,071 | | 8.5 | % | | 6,540 | | 10.7 | % 2030 | | 343 | | | 75,510 | | 9.2 | % | | 6,297 | | 10.3 | % 2031 | | 284 | | | 73,578 | | 8.9 | % | | 5,826 | | 9.6 | % 2032 | | 292 | | | 66,286 | | 8.1 | % | | 4,590 | | 7.5 | % 2033 | | 241 | | | 55,675 | | 6.8 | % | | 4,193 | | 6.9 | % 2034 | | 247 | | | 56,972 | | 6.9 | % | | 3,951 | | 6.5 | % 2035 | | 240 | | | 65,068 | | 7.9 | % | | 4,518 | | 7.4 | % Thereafter | | 974 | | | 286,362 | | 34.7 | % | | 17,916 | | 29.4 | % Total Portfolio | | 3,144 | | $ | 823,381 | | 100.0 | % | | 60,937 | | 100.0 | % | The contractual lease expirations presented above exclude the effect of replacement tenant leases that had been executed as of September 30, 2026, but that had not yet commenced. Annualized Base Rent and Gross Leasable Area (square feet) are in thousands; any differences are the result of rounding. (1) | Refer to the Glossary for the Company's definition of Annualized Base Rent ("ABR"). Top Tenants The following table presents annualized base rents for all tenants that represent 1.5% or greater of the Company's total annualized base rent as of September 30, 2026: Tenant | | ABR(1) | | % of Total ABR Walmart | | $ | 46,515 | | 5.6 | % Tractor Supply | | | 37,739 | | 4.6 | % Dollar General | | | 30,614 | | 3.7 | % Hobby Lobby | | | 28,387 | | 3.4 | % O'Reilly Auto Parts | | | 24,724 | | 3.0 | % TJX Companies | | | 24,444 | | 3.0 | % CVS | | | 24,104 | | 2.9 | % Gerber Collision | | | 22,269 | | 2.7 | % Best Buy | | | 22,133 | | 2.7 | % Kroger | | | 21,645 | | 2.6 | % 7-Eleven | | | 21,636 | | 2.6 | % Lowe's | | | 21,320 | | 2.6 | % Sunbelt Rentals | | | 19,789 | | 2.4 | % Sherwin-Williams | | | 17,814 | | 2.2 | % Burlington | | | 16,929 | | 2.1 | % Home Depot | | | 16,433 | | 2.0 | % BP | | | 13,527 | | 1.6 | % Wawa | | | 13,252 | | 1.6 | % Dollar Tree | | | 13,019 | | 1.6 | % Other(2) | | | 387,088 | | 47.1 | % Total Portfolio | | $ | 823,381 | | 100.0 | % | ABR is in thousands; any differences are the result of rounding. (1) | Refer to the Glossary for the Company's definition of ABR. (2) | Includes tenants generating less than 1.5% of ABR. Retail Sectors The following table presents annualized base rents for all the Company's retail sectors as of September 30, 2026: Sector | | ABR(1) | | % of Total ABR Grocery Stores | | $ | 80,880 | | 9.8 | % Home Improvement | | | 73,274 | | 8.9 | % Convenience Stores | | | 68,166 | | 8.3 | % Tire & Auto Service | | | 61,403 | | 7.5 | % Auto Parts | | | 52,196 | | 6.3 | % Dollar Stores | | | 51,613 | | 6.3 | % Off-Price Retail | | | 49,151 | | 6.0 | % Farm & Rural Supply | | | 39,549 | | 4.8 | % General Merchandise | | | 39,050 | | 4.7 | % Crafts & Novelties | | | 30,951 | | 3.8 | % Pharmacy | | | 28,644 | | 3.5 | % Consumer Electronics | | | 26,628 | | 3.2 | % Discount Stores | | | 25,025 | | 3.0 | % Health & Fitness | | | 24,430 | | 3.0 | % Equipment Rental | | | 20,845 | | 2.5 | % Health Services | | | 20,201 | | 2.5 | % Warehouse Clubs | | | 20,082 | | 2.4 | % Restaurants - Quick Service | | | 16,609 | | 2.0 | % Dealerships | | | 16,470 | | 2.0 | % Sporting Goods | | | 15,848 | | 1.9 | % Financial Services | | | 13,021 | | 1.6 | % Specialty Retail | | | 9,721 | | 1.2 | % Restaurants - Casual Dining | | | 7,386 | | 0.9 | % Shoes | | | 6,899 | | 0.8 | % Home Furnishings | | | 5,212 | | 0.6 | % Pet Supplies | | | 4,836 | | 0.6 | % Beauty & Cosmetics | | | 4,265 | | 0.5 | % Theaters | | | 3,976 | | 0.5 | % Entertainment Retail | | | 2,729 | | 0.3 | % Apparel | | | 2,392 | | 0.3 | % Miscellaneous | | | 1,301 | | 0.2 | % Office Supplies | | | 628 | | 0.1 | % Total Portfolio | | $ | 823,381 | | 100.0 | % | ABR is in thousands; any differences are the result of rounding. (1) | Refer to the Glossary for the Company's definition of ABR. Geographic Diversification The following table presents annualized base rents for all states that represent 1.5% or greater of the Company's total annualized base rent as of September 30, 2026: State | | ABR(1) | | % of Total ABR Texas | | $ | 59,052 | | 7.2 | % Illinois | | | 47,215 | | 5.7 | % North Carolina | | | 42,226 | | 5.1 | % Ohio | | | 42,100 | | 5.1 | % Michigan | | | 41,282 | | 5.0 | % Pennsylvania | | | 39,243 | | 4.8 | % New York | | | 38,614 | | 4.7 | % Florida | | | 37,738 | | 4.6 | % California | | | 35,434 | | 4.3 | % Georgia | | | 31,422 | | 3.8 | % New Jersey | | | 27,300 | | 3.3 | % Wisconsin | | | 25,902 | | 3.1 | % Missouri | | | 23,093 | | 2.8 | % Louisiana | | | 21,406 | | 2.6 | % Virginia | | | 20,769 | | 2.5 | % South Carolina | | | 19,421 | | 2.4 | % Minnesota | | | 19,218 | | 2.3 | % Mississippi | | | 19,206 | | 2.3 | % Kansas | | | 16,979 | | 2.1 | % Connecticut | | | 16,667 | | 2.0 | % Massachusetts | | | 15,965 | | 1.9 | % Alabama | | | 15,801 | | 1.9 | % Indiana | | | 15,718 | | 1.9 | % Tennessee | | | 15,656 | | 1.9 | % Oklahoma | | | 12,782 | | 1.6 | % Other(2) | | | 123,172 | | 15.1 | % Total Portfolio | | $ | 823,381 | | 100.0 | % | ABR is in thousands; any differences are the result of rounding. (1) | Refer to the Glossary for the Company's definition of ABR. (2) | Includes states generating less than 1.5% of ABR. Capital Markets, Liquidity and Balance Sheet Capital Markets In September 2026, the Company completed a $400.0 million public bond offering of 5.65% senior unsecured notes due 2036 (the "Notes"). In connection with the offering, the Company terminated related swap agreements of $300.0 million, receiving net proceeds of $19.4 million upon termination. Considering the effect of the terminated swap agreements, the all-in rate to the Company for the Notes is 5.36%. During the third quarter, the Company settled 5.7 million shares under existing forward sale agreements for net proceeds of $425.7 million. The following table presents the Company's outstanding forward equity offerings as of September 30, 2026: | | | | | | | | | | Anticipated Net Forward Equity | | Shares | | Shares | | Shares | | Net Proceeds | | Proceeds Offerings | | Sold | | Settled | | Remaining | | Received | | Remaining Q1 2026 ATM Forward Offerings | | 8,738,029 | | 375,189 | | 8,362,840 | | $ | 26,897,562 | | $ | 626,111,096 Q2 2026 ATM Forward Offerings | | 399,886 | | — | | 399,886 | | | — | | | 31,012,639 Total Forward Equity Offerings | | 9,137,915 | | 375,189 | | 8,762,726 | | $ | 26,897,562 | | $ | 657,123,735 Liquidity As of September 30, 2026, the Company had total liquidity of approximately $2.0 billion, which includes $1.25 billion of availability under its revolving credit facility, $657.1 million of outstanding forward equity, and $91.5 million of cash on hand. The Company's $1.25 billion revolving credit facility includes an accordion option that allows the Company to request additional lender commitments of up to a total of $2.0 billion. Balance Sheet As of September 30, 2026, the Company's net debt to recurring EBITDA was 4.8 times. The Company's proforma net debt to recurring EBITDA was 3.9 times when deducting the $657.1 million of anticipated net proceeds from the outstanding forward equity offerings from the Company's net debt of approximately $3.7 billion as of September 30, 2026. The Company's fixed charge coverage ratio was 4.1 times at quarter end. The Company's net debt to enterprise value was 29.2% as of September 30, 2026. For the three and nine months ended September 30, 2026, the Company's fully diluted weighted-average shares outstanding were 124.6 million and 121.9 million, respectively. The basic weighted-average shares outstanding for the three and nine months ended September 30, 2026 were 124.4 million and 121.4 million, respectively. For the three and nine months ended September 30, 2026, the Company's fully diluted weighted-average shares and units outstanding were 125.0 million and 122.2 million, respectively. The basic weighted-average shares and units outstanding for the three and nine months ended September 30, 2026 were 124.7 million and 121.8 million, respectively. The Company's assets are held by, and its operations are conducted through, the Operating Partnership, of which the Company is the sole general partner. As of September 30, 2026, there were 347,619 Operating Partnership common units outstanding, and the Company held a 99.7% common interest in the Operating Partnership. Conference Call/Webcast The Company will host its quarterly analyst and investor conference call on Wednesday, October 21, 2026 at 9:00 AM ET. To participate in the conference call, please dial (833) 461-5787 approximately ten minutes before the call begins. Additionally, a webcast of the conference call will be available via the Company's website. To access the webcast, visit www.agreerealty.com five minutes prior to the start of the conference call and go to the Investors section of the website. A replay of the conference call webcast will be archived and available online through the Investors section of www.agreerealty.com. About Agree Realty Corporation Agree Realty Corporation is a publicly traded real estate investment trust that is RETHINKING RETAIL through the acquisition and development of properties net leased to industry-leading, omni-channel retail tenants. As of September 30, 2026, the Company owned and operated a portfolio of 2,888 properties, located in all 50 states and the District of Columbia, comprised of approximately 61.1 million square feet of gross leasable area. The Company's common stock is listed on the New York Stock Exchange under the symbol "ADC". For additional information on the Company and RETHINKING RETAIL, please visit www.agreerealty.com. Forward-Looking Statements This press release 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 Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, are generally identifiable by use of the words "anticipate," "estimate," "should," "expect," "believe," "intend," "may," "will," "seek," "could," "project" or other similar words or expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company's control and which could materially affect the Company's results of operations, financial condition, cash flows, performance or future achievements or events. Factors which may cause actual results to differ materially from current expectations include, but are not limited to, the factors included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, including those set forth under the headings "Business," "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and subsequent quarterly reports filed with the SEC. The forward-looking statements included in this press release are made as of the date hereof. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events, changes in the Company's expectations or assumptions or otherwise. For further information about the Company's business and financial results, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of the Company's SEC filings, including, but not limited to, its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which may be obtained at the Investor Relations section of the Company's website at www.agreerealty.com. Glossary AFFO Payout Ratio is calculated as common dividends per share divided by AFFO per share for the same period. The Company believes this measure is a useful supplemental indicator of dividend coverage and the sustainability of its dividend policy. This measure is not a substitute for measures prepared in accordance with GAAP, and the Company's calculation may differ from similarly titled measures used by other companies. Annualized Base Rent ("ABR") represents the annualized amount of contractual minimum rent required by tenant lease agreements as of September 30, 2026, computed on a straight-line basis. Annualized Base Rent is not, and is not intended to be, a presentation in accordance with GAAP. The Company believes annualized contractual minimum rent is useful to management, investors, and other interested parties in analyzing concentrations and leasing activity. Enterprise Value is calculated as the sum of net debt, the liquidation value of the Company's preferred stock, and the market value of the Company's outstanding shares of common stock, assuming the conversion of Agree Limited Partnership common units into common stock. Fixed Charge Coverage Ratio is calculated as Trailing Twelve Month ("TTM") Fixed Charge EBITDA divided by TTM Fixed Charges. TTM Fixed Charge EBITDA represents TTM EBITDA adjusted for straight-line rent and capital expenditure adjustments, and TTM Fixed Charges consist of interest expense, preferred share dividend payments, and scheduled principal payments. The Company believes this measure is a useful supplemental indicator of its ability to service fixed financial obligations, though it is not a substitute for measures prepared in accordance with GAAP and may not be comparable to similarly titled measures used by other companies. Investment Grade ("IG") refers to ABR derived from tenants, or parent or subsidiary entities thereof, that have an investment grade credit rating from S&P Global Ratings, Moody's Investors Service, Fitch Ratings, or the National Association of Insurance Commissioners ("NAIC"). Net Debt to Enterprise Value represents the ratio of the Company's net debt to its Enterprise Value and is used to evaluate the Company's capital structure and balance sheet leverage. Occupancy equals the sum of leased square feet divided by gross leasable area. Excludes properties under redevelopment. Weighted-Average Capitalization Rate for acquisitions and dispositions, it is defined as the sum of contractual fixed annual rents computed on a straight-line basis over the primary lease terms and anticipated annual net tenant recoveries, divided by the purchase and sale prices for occupied properties. Weighted-Average Lease Term ("WALT") represents the remaining contractual lease term of in‑place leases, weighted by ABR, and excludes vacant properties and lease extension options. References to "Core FFO" and "AFFO" in this press release are representative of Core FFO attributable to OP common unitholders and AFFO attributable to OP common unitholders. Detailed calculations for these measures are shown in the Reconciliation of Net Income to FFO, Core FFO and Adjusted FFO table as "Core Funds From Operations – Operating Partnership Common Unitholders" and "Adjusted Funds from Operations – Operating Partnership Common Unitholders". AGREE REALTY CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per-share data) (Unaudited) | | | | | | September 30, | | December 31, | | 2026 | | 2025 ASSETS | | | | Real estate investments | | | | Land | | $ | 3,236,200 | | | $ | 2,895,495 | Buildings | | | 7,053,021 | | | | 6,330,249 | Less accumulated depreciation | | | (847,331 | ) | | | (715,733 | ) | | | 9,441,890 | | | | 8,510,011 | Property under development | | | 73,656 | | | | 62,690 | Net real estate investments | | | 9,515,546 | | | | 8,572,701 | Real estate held for sale, net | | | 2,304 | | | | — | Cash and cash equivalents | | | 80,559 | | | | 16,295 | Cash held in escrow | | | 10,924 | | | | 4,327 | Accounts receivable - tenants, net | | | 140,713 | | | | 122,477 | Lease intangibles, net of accumulated amortization of $675,725 and $576,945 at September 30, 2026 and December 31, 2025, respectively | | | 1,084,831 | | | | 1,000,967 | Other assets, net | | | 116,045 | | | | 80,845 | | | | | Total Assets | | $ | 10,950,922 | | | $ | 9,797,612 | | | | | LIABILITIES | | | | Mortgage notes payable, net | | $ | 41,183 | | | $ | 41,546 | Unsecured term loans, net | | | 696,523 | | | | 348,074 | Senior unsecured notes, net | | | 2,977,602 | | | | 2,584,608 | Unsecured revolving credit facility and commercial paper notes | | | — | | | | 320,500 | Dividends and distributions payable | | | 35,450 | | | | 32,158 | Accounts payable, accrued expenses, and other liabilities | | | 183,613 | | | | 139,384 | Lease intangibles, net of accumulated amortization of $54,622 and $49,797 at September 30, 2026 and December 31, 2025, respectively | | | 73,939 | | | | 60,189 | | | | | Total Liabilities | | $ | 4,008,310 | | | $ | 3,526,459 | | | | | EQUITY | | | | Preferred stock, $0.0001 par value per share, 4,000,000 shares authorized, 7,000 shares Series A outstanding, at stated liquidation value of $25,000 per share, at September 30, 2026 and December 31, 2025 | | | 175,000 | | | | 175,000 | Common stock, $0.0001 par value, 360,000,000 shares authorized, 130,101,031 and 120,028,406 shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively | | | 13 | | | | 12 | Additional paid-in-capital | | | 7,422,355 | | | | 6,679,142 | Dividends in excess of net income | | | (732,649 | ) | | | (618,675 | ) Accumulated other comprehensive income | | | 77,908 | | | | 35,506 | | | | | Total equity - Agree Realty Corporation | | | 6,942,627 | | | | 6,270,985 | Non-controlling interest | | | (15 | ) | | | 168 | Total Equity | | | 6,942,612 | | | | 6,271,153 | | | | | Total Liabilities and Equity | | $ | 10,950,922 | | | $ | 9,797,612 | AGREE REALTY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (In thousands, except share and per-share data) (Unaudited) | | | | | | Three Months Ended | | Nine Months Ended | | September 30,2026 | | September 30,2025 | | September 30,2026 | | September 30,2025 Revenues | | | | | | | | Rental income | | $ | 213,806 | | | $ | 183,191 | | | $ | 619,463 | | | $ | 527,701 | Other | | | 78 | | | | 31 | | | | 328 | | | | 208 | Total Revenues | | | 213,884 | | | | 183,222 | | | | 619,791 | | | | 527,909 | | | | | | | | | Operating Expenses | | | | | | | | Real estate taxes | | | 15,779 | | | | 13,173 | | | | 45,749 | | | | 37,519 | Property operating expenses | | | 9,924 | | | | 8,243 | | | | 29,066 | | | | 25,040 | Land lease expense | | | 601 | | | | 556 | | | | 1,753 | | | | 1,592 | General and administrative | | | 12,392 | | | | 10,887 | | | | 35,827 | | | | 32,990 | Depreciation and amortization | | | 71,913 | | | | 61,179 | | | | 207,706 | | | | 175,872 | Provision for impairment | | | — | | | | 2,980 | | | | 7,300 | | | | 10,272 | Total Operating Expenses | | | 110,609 | | | | 97,018 | | | | 327,401 | | | | 283,285 | | | | | | | | | Gain on sale of assets, net | | | 5,416 | | | | 924 | | | | 9,127 | | | | 3,207 | Gain on involuntary conversion, net | | | 886 | | | | 132 | | | | 1,925 | | | | 132 | Income from Operations | | | 109,577 | | | | 87,260 | | | | 303,442 | | | | 247,963 | | | | | | | | | Other (Expense) Income | | | | | | | | Interest expense, net | | | (41,001 | ) | | | (35,212 | ) | | | (117,249 | ) | | | (98,250 | ) Income and other tax expense | | | (375 | ) | | | (225 | ) | | | (1,250 | ) | | | (1,475 | ) Other income | | | 342 | | | | 456 | | | | 642 | | | | 542 | Net Income | | | 68,543 | | | | 52,279 | | | | 185,585 | | | | 148,780 | | | | | | | | | Less net income attributable to non-controlling interest | | | 191 | | | | 162 | | | | 528 | | | | 468 | Net income attributable to Agree Realty Corporation | | | 68,352 | | | | 52,117 | | | | 185,057 | | | | 148,312 | Less Series A preferred stock dividends | | | 1,859 | | | | 1,859 | | | | 5,578 | | | | 5,578 | Net Income Attributable to Common Stockholders | | $ | 66,493 | | | $ | 50,258 | | | $ | 179,479 | | | $ | 142,734 | | | | | | | | | Net Income Per Share Attributable to Common Stockholders | | | | | | | | Basic | | $ | 0.53 | | | $ | 0.45 | | | $ | 1.48 | | | $ | 1.30 | Diluted | | $ | 0.53 | | | $ | 0.45 | | | $ | 1.47 | | | $ | 1.30 | | | | | | | | | Other Comprehensive Income | | | | | | | | Net income | | $ | 68,543 | | | $ | 52,279 | | | $ | 185,585 | | | $ | 148,780 | Amortization of interest rate swaps | | | (1,120 | ) | | | (1,077 | ) | | | (3,270 | ) | | | (2,692 | ) Change in fair value and settlement of interest rate swaps | | | 29,252 | | | | 713 | | | | 45,792 | | | | (5,884 | ) Total comprehensive income | | | 96,675 | | | | 51,915 | | | | 228,107 | | | | 140,204 | Less comprehensive income attributable to non-controlling interest | | $ | 269 | | | $ | 161 | | | $ | 648 | | | $ | 441 | | | | | | | | | Comprehensive Income Attributable to Agree Realty Corporation | | $ | 96,406 | | | $ | 51,754 | | | $ | 227,459 | | | $ | 139,763 | | | | | | | | | Weighted Average Number of Common Shares Outstanding - Basic | | | 124,363,105 | | | | 111,277,316 | | | | 121,423,613 | | | | 109,383,735 | | | | | | | | | Weighted Average Number of Common Shares Outstanding - Diluted | | | 124,602,961 | | | | 111,511,615 | | | | 121,879,652 | | | | 109,875,336 | AGREE REALTY CORPORATION RECONCILIATION OF NET INCOME TO FFO, CORE FFO, AND AFFO (In thousands, except share and per-share data) (Unaudited) | | | | | | Three Months Ended | | Nine Months Ended | | September 30,2026 | | September 30,2025 | | September 30,2026 | | September 30,2025 Reconciliation from Net Income to Funds from Operations | | | | | | | | Net income | | $ | 68,543 | | | $ | 52,279 | | | $ | 185,585 | | | $ | 148,780 | Less Series A preferred stock dividends | | | 1,859 | | | | 1,859 | | | | 5,578 | | | | 5,578 | Net income attributable to Operating Partnership common unitholders | | $ | 66,684 | | | $ | 50,420 | | | $ | 180,007 | | | $ | 143,202 | Depreciation of rental real estate assets | | | 48,024 | | | | 40,867 | | | | 138,558 | | | | 116,728 | Amortization of lease intangibles - in-place leases and leasing costs | | | 23,125 | | | | 19,715 | | | | 67,022 | | | | 57,458 | Provision for impairment | | | — | | | | 2,980 | | | | 7,300 | | | | 10,272 | Gain on sale or involuntary conversion of assets, net | | | (6,302 | ) | | | (1,056 | ) | | | (11,052 | ) | | | (3,339 | ) Funds from Operations - Operating Partnership common unitholders | | $ | 131,531 | | | $ | 112,926 | | | $ | 381,835 | | | $ | 324,321 | | | | | | | | | Amortization of above (below) market lease intangibles, net and assumed mortgage debt discount, net | | | 11,887 | | | | 9,428 | | | | 33,966 | | | | 26,679 | Core Funds from Operations - Operating Partnership common unitholders | | $ | 143,418 | | | $ | 122,354 | | | $ | 415,801 | | | $ | 351,000 | | | | | | | | | Straight-line accrued rent | | | (5,701 | ) | | | (4,976 | ) | | | (15,226 | ) | | | (12,774 | ) Stock-based compensation expense | | | 3,650 | | | | 3,306 | | | | 10,959 | | | | 9,694 | Amortization of financing costs and original issue discounts | | | 2,116 | | | | 1,836 | | | | 6,175 | | | | 5,150 | Non-real estate depreciation | | | 764 | | | | 597 | | | | 2,126 | | | | 1,686 | Adjusted Funds from Operations - Operating Partnership common unitholders | | $ | 144,247 | | | $ | 123,117 | | | $ | 419,835 | | | $ | 354,756 | | | | | | | | | Funds from Operations per common share and partnership unit - diluted | | $ | 1.05 | | | $ | 1.01 | | | $ | 3.12 | | | $ | 2.94 | Core Funds from Operations per common share and partnership unit - diluted | | $ | 1.15 | | | $ | 1.09 | | | $ | 3.40 | | | $ | 3.18 | Adjusted Funds from Operations per common share and partnership unit - diluted | | $ | 1.15 | | | $ | 1.10 | | | $ | 3.43 | | | $ | 3.22 | | | | | | | | | Weighted average shares and Operating Partnership common units outstanding | | | | | | | | Basic | | | 124,710,724 | | | | 111,624,935 | | | | 121,771,232 | | | | 109,731,354 | Diluted | | | 124,950,580 | | | | 111,859,234 | | | | 122,227,271 | | | | 110,222,955 | | | | | | | | | Additional supplemental disclosure | | | | | | | | Scheduled principal repayments | | $ | 91 | | | $ | 258 | | | $ | 629 | | | $ | 763 | Capitalized interest | | $ | 777 | | | $ | 558 | | | $ | 1,925 | | | $ | 1,497 | Capitalized building improvements | | $ | 7,514 | | | $ | 2,502 | | | $ | 12,965 | | | $ | 5,864 | Non-GAAP Financial Measures Funds from Operations ("FFO" or "Nareit FFO") FFO is defined by the National Association of Real Estate Investment Trusts, Inc. ("Nareit") to mean net income computed in accordance with GAAP, excluding gains (or losses) from sales of real estate assets and/or changes in control, plus real estate related depreciation and amortization and any impairment charges on depreciable real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company's operations. FFO should not be considered an alternative to net income as the primary indicator of the Company's operating performance, or as an alternative to cash flow as a measure of liquidity. Further, while the Company adheres to the Nareit definition of FFO, its presentation of FFO is not necessarily comparable to similarly titled measures of other REITs due to the fact that all REITs may not use the same definition. Core Funds from Operations ("Core FFO") The Company defines Core FFO as Nareit FFO with the add-back of (i) noncash amortization of acquisition purchase price related to above- and below-market lease intangibles and discount on assumed debt and (ii) certain infrequently occurring items that reduce or increase net income in accordance with GAAP. Management believes that its measure of Core FFO facilitates useful comparison of performance to its peers who predominantly transact in sale-leaseback transactions and are thereby not required by GAAP to allocate purchase price to lease intangibles. Unlike many of its peers, the Company has acquired the substantial majority of its net-leased properties through acquisitions of properties from third parties or in connection with the acquisitions of ground leases from third parties. Core FFO should not be considered an alternative to net income as the primary indicator of the Company's operating performance, or as an alternative to cash flow as a measure of liquidity. Further, the Company's presentation of Core FFO is not necessarily comparable to similarly titled measures of other REITs due to the fact that all REITs may not use the same definition. Adjusted Funds from Operations ("AFFO") AFFO is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. AFFO further adjusts FFO and Core FFO for certain non-cash items that reduce or increase net income computed in accordance with GAAP. Management considers AFFO a useful supplemental measure of the Company's performance, however, AFFO should not be considered an alternative to net income as an indication of its performance, or to cash flow as a measure of liquidity or ability to make distributions. The Company's computation of AFFO may differ from the methodology for calculating AFFO used by other equity REITs, and therefore may not be comparable to such other REITs. AGREE REALTY CORPORATION RECONCILIATION OF PROFORMA NET DEBT TO RECURRING EBITDA (In thousands, except share and per-share data) (Unaudited) | | | | Three Months Ended | | September 30, 2026 Mortgage notes payable, net | | $ | 41,183 | Unsecured term loans, net | | | 696,523 | Senior unsecured notes, net | | | 2,977,602 | Unsecured revolving credit facility and commercial paper notes | | | — | Total Debt per the Consolidated Balance Sheet | | $ | 3,715,308 | | | Unamortized debt issuance costs and discounts, net | | | 36,942 | Total Debt | | $ | 3,752,250 | | | Cash and cash equivalents | | $ | (80,559 | ) Cash held in escrow | | | (10,924 | ) Net Debt | | $ | 3,660,767 | | | Anticipated Net Proceeds from Forward Equity Offerings | | | (657,124 | ) Proforma Net Debt | | $ | 3,003,643 | | | Net Income | | $ | 68,543 | Interest expense, net | | | 41,001 | Income and other tax expense | | | 375 | Depreciation of rental real estate assets | | | 48,024 | Amortization of lease intangibles - in-place leases and leasing costs | | | 23,125 | Non-real estate depreciation | | | 764 | (Gain) loss on sale or involuntary conversion of assets, net | | | (6,302 | ) EBITDAre | | $ | 175,530 | | | Run-Rate Impact of Investment, Disposition and Leasing Activity | | | 3,840 | Amortization of above (below) market lease intangibles, net | | | 11,803 | Recurring EBITDA | | $ | 191,173 | | | Annualized Recurring EBITDA | | $ | 764,692 | | | Total Debt per the Consolidated Balance Sheet to Annualized Net Income | | 13.6 x | | Net Debt to Recurring EBITDA | | 4.8 x | | Proforma Net Debt to Recurring EBITDA | | 3.9 x Financial Measures Total Debt and Net Debt The Company defines Total Debt as debt per the consolidated balance sheet excluding unamortized debt issuance costs, original issue discounts and debt discounts. Net Debt is defined as Total Debt less cash, cash equivalents and cash held in escrow. The Company considers the non-GAAP measures of Total Debt and Net Debt to be key supplemental measures of the Company's overall liquidity, capital structure and leverage because they provide industry analysts, lenders and investors useful information in understanding our financial condition. The Company's calculation of Total Debt and Net Debt may not be comparable to Total Debt and Net Debt reported by other REITs that interpret the definitions differently than the Company. The Company presents Net Debt on both an actual and proforma basis, assuming the net proceeds of the Forward Equity Offerings (see below) are used to pay down debt. The Company believes the proforma measure may be useful to investors in understanding the potential effect of the Forward Equity Offerings on the Company's capital structure, its future borrowing capacity, and its ability to service its debt. Forward Equity Offerings The Company has 8,762,726 shares remaining to be settled under the Forward Equity Offerings. Upon settlement, the offerings are anticipated to raise net proceeds of approximately $0.7 billion based on the applicable forward sale price as of September 30, 2026. The applicable forward sale price varies depending on the offering. The Company is contractually obligated to settle the offerings by certain dates between September 2027 and April 2028. EBITDAre EBITDAre is defined by Nareit to mean net income computed in accordance with GAAP, plus interest expense, income tax expense, depreciation and amortization, any gains (or losses) from sales of real estate assets and/or changes in control, any impairment charges on depreciable real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. The Company considers the non-GAAP measure of EBITDAre to be a key supplemental measure of the Company's performance and should be considered along with, but not as an alternative to, net income or loss as a measure of the Company's operating performance. The Company considers EBITDAre a key supplemental measure of the Company's operating performance because it provides an additional supplemental measure of the Company's performance and operating cash flow that is widely known by industry analysts, lenders and investors. The Company's calculation of EBITDAre may not be comparable to EBITDAre reported by other REITs that interpret the Nareit definition differently than the Company. Recurring EBITDA The Company defines Recurring EBITDA as EBITDAre with the add-back of noncash amortization of above- and below-market lease intangibles, and after adjustments for the run-rate impact of the Company's investment and disposition activity for the period presented, as well as adjustments for non-recurring benefits or expenses. The Company considers the non-GAAP measure of Recurring EBITDA to be a key supplemental measure of the Company's performance and should be considered along with, but not as an alternative to, net income or loss as a measure of the Company's operating performance. The Company considers Recurring EBITDA a key supplemental measure of the Company's operating performance because it represents the Company's earnings run rate for the period presented and because it is widely followed by industry analysts, lenders and investors. Our Recurring EBITDA may not be comparable to Recurring EBITDA reported by other companies that have a different interpretation of the definition of Recurring EBITDA. Our ratio of net debt to Recurring EBITDA is used by management as a measure of leverage and may be useful to investors in understanding the Company's ability to service its debt, as well as assess the borrowing capacity of the Company. Our ratio of net debt to Recurring EBITDA is calculated by taking our net debt and dividing it by annualized Recurring EBITDA. Annualized Net Income Represents net income for the three months ended September 30, 2026, on an annualized basis. AGREE REALTY CORPORATION RENTAL INCOME (In thousands, except share and per-share data) (Unaudited) | | | | | | Three Months Ended | | Nine Months Ended | | September 30,2026 | | September 30,2025 | | September 30,2026 | | September 30,2025 Rental Income Source(1) | | | | | | | | Minimum rents(2) | | $ | 196,026 | | | $ | 167,576 | | | $ | 566,207 | | | $ | 481,788 | Percentage rents(2) | | | 88 | | | | 142 | | | | 2,651 | | | | 2,254 | Operating cost reimbursement(2) | | | 23,794 | | | | 19,841 | | | | 69,094 | | | | 57,312 | Straight-line rental adjustments(3) | | | 5,701 | | | | 4,976 | | | | 15,226 | | | | 12,774 | Amortization of (above) below market lease intangibles(4) | | | (11,803 | ) | | | (9,344 | ) | | | (33,715 | ) | | | (26,427 | ) Total Rental Income | | $ | 213,806 | | | $ | 183,191 | | | $ | 619,463 | | | $ | 527,701 | (1) | The Company adopted Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") 842 "Leases" using the modified retrospective approach as of January 1, 2019. The Company adopted the practical expedient in FASB ASC 842 that alleviates the requirement to separately present lease and non-lease components of lease contracts. As a result, all income earned pursuant to tenant leases is reflected as one line, "Rental Income," in the consolidated statement of operations. The purpose of this table is to provide additional supplementary detail of Rental Income. (2) | Represents contractual rentals and/or reimbursements as required by tenant lease agreements, recognized on an accrual basis of accounting. The Company believes that the presentation of contractual lease income is not, and is not intended to be, a presentation in accordance with GAAP. The Company believes this information is frequently used by management, investors, analysts and other interested parties to evaluate the Company's performance. (3) | Represents adjustments to recognize minimum rents on a straight-line basis, consistent with the requirements of FASB ASC 842. (4) | In allocating the fair value of an acquired property, above- and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition and the Company's estimate of current market lease rates for the property. View source version on businesswire.com: https://www.businesswire.com/news/home/20261020945016/en/ Contacts Peter Coughenour Chief Financial Officer Agree Realty Corporation (248) 737-4190

Agree Realty has delivered a strong 37.5% share price gain over the past three years, yet the current valuation checks suggest the stock leans expensive rather than a clear bargain. Recent short term softness sits alongside that longer track record, which puts more focus on whether the current price already reflects a full view of the company’s strengths. The 37.5% return over three years points to a stock that has rewarded patient holders, so the question now is how much of that performance is already baked into today’s valuation. Future growth in rental income and the stability of tenant cash flows can support the current market view of Agree Realty. Any setback in occupancy, rent collection or funding costs may pressure what investors are willing to pay for those cash flows. The broader valuation checks are cautious, with Agree Realty scoring a low value score of 2 out of 6, which points to a stock that leans expensive rather than obviously cheap on standard metrics. The issue now is whether Agree Realty’s current price still offers enough potential reward over the next few years to justify that richer valuation profile. Balance Agree Realty’s recent 37.5% three year return against valuation by comparing it with hand picked companies in the 47 high quality undervalued stocks. The P/E ratio is a useful guide for Agree Realty because earnings are a key driver of how investors assess income focused real estate stocks. Right now, Agree Realty trades on a P/E of about 41.6x, which is higher than the Retail REITs industry average of roughly 27.6x and also above the peer group average of around 23.1x. That places the stock at a clear premium to many similar companies on an earnings basis. The valuation model suggests a fair P/E of about 36.8x, which already reflects the company’s profile, sector, size and risk. The current 41.6x multiple sits above that fair ratio, so the market is pricing Agree Realty more richly than this framework would imply. For investors, the key question is whether the company’s income profile and balance sheet qualities justify paying this higher earnings multiple compared with both industry averages and the modelled fair level. On this P/E measure, Agree Realty stock appears overvalued compared with both its fair ratio and sector benchmarks. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Agree Realty pick up where the P/E puzzle leaves off and spell out the growth, margin and earnings paths that would need to hold for the stock to be worth materially more or materially less than today’s price. Instead of stopping at a single ratio output, they describe the future that number is based on so you can track over time whether Agree Realty’s actual progress lines up with those expectations on the Community page. You can add your voice to the Simply Wall St community by sharing a number driven Narrative on Agree Realty’s valuation and a view on where its growth, margins and execution go from here. Do you think there's more to the story for Agree Realty? Head over to our Community to see what others are saying! Agree Realty screens as overvalued on its current P/E compared with both peers and the modelled fair ratio, so the stock is no longer a straightforward value idea. The key judgement now is whether the quality and resilience of its rental income justify paying that premium. For many investors the crux will be how well Agree Realty sustains occupancy, rent collection and funding access. If those supports hold up, the higher multiple may prove acceptable. If they weaken, the valuation could face pressure. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ADC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Realty Income Corporation O entered the second half of 2026 with better earnings visibility after a solid second quarter. AFFO per share increased 3.8% year over year to $1.09, while first-half AFFO per share rose 5.2% to $2.22. Management also raised its full-year AFFO guidance and investment target, pointing to continued opportunities across its expanding property and capital platforms. The stock reaction, however, was muted. Realty Income shares fell 0.54% to $62.36 on Aug. 6, the first trading session after the Aug. 5 results, and closed at $61.89 on Aug. 10 after another 0.99% decline. So far this year, Realty Income stock has gained 9.8% but underperformed the Zacks REIT and Equity Trust - Retail industry. However, O stock has outpaced its close peers, like Agree Realty Corporation ADC and Essential Properties Realty Trust, Inc. EPRT. Image Source: Zacks Investment Research The question now is whether stronger investment activity, steady property fundamentals and an expanding funding platform can support further per-share growth. At the same time, interest rates, acquisition pricing and the valuation investors assign to dependable REIT income remain important considerations. Realty Income's underlying business remained healthy in the second quarter. Revenues increased to $1.55 billion from $1.41 billion a year ago, while AFFO available to common shareholders rose to $1.02 billion from $947.5 million. Portfolio occupancy was 98.8% compared with 98.9% at the end of the first quarter and 98.6% a year earlier.The company also generated a 102.7% rent recapture rate on re-leased properties. Same-store rental revenues increased 1.2%, showing that organic growth remains modest but positive. Realty Income's portfolio included 15,588 properties across 92 industries at quarter-end, giving it a level of diversification that is difficult for smaller net-lease operators to match. Agree Realty and Essential Properties offer similar exposure to long-duration net leases, but both operate with smaller portfolios and somewhat different tenant mixes. Realty Income’s larger scale gives it broader sourcing access across retail, industrial and international markets, while ADC remains more concentrated in high-quality retail properties and EPRT has built a strong position in service-oriented and middle-market tenants. That scale can help Realty Income find more investment opportunities, although it also means the company needs a much larger volume of acquisitions to generate meaningful per-share growth. Investment activity remains central to Realty Income's outlook. The company invested roughly $2.6 billion during the second quarter, or $2.1 billion at its pro-rata share, at a weighted average initial cash yield of 7.3%. First-half investments totaled about $5.34 billion. Management consequently raised 2026 investment guidance from $9.5 billion to $10 billion. Industrial properties represented about 65% of second-quarter real estate investment activity. Realty Income is also expanding in Europe, private capital and data centers. Its $6 billion programmatic hyperscale data-center venture with Cloud Capital could involve up to $1.4 billion of equity from Realty Income over time. Management said its wider investment channels allow it to pursue opportunities across asset types, geographies and different parts of the capital structure.The broader investment approach gives Realty Income more growth channels than either Agree Realty or Essential Properties. ADC remains focused largely on retail net lease, while EPRT continues to expand through a smaller and more targeted acquisition platform. Realty Income, by comparison, is deploying capital across industrial properties, Europe, private-capital vehicles and data centers. This diversification can support longer-term growth, but it also introduces more execution risk as management moves into areas that sit outside the traditional retail net-lease model. Realty Income ended the second quarter with about $3.5 billion of available liquidity and net debt to annualized pro forma adjusted EBITDAre of 5.4 times. After quarter-end, the company expanded its revolving credit facilities to $5.5 billion, increased its commercial-paper capacity and issued €600 million of unsecured notes. Private capital is also reducing Realty Income’s dependence on common-equity issuance. Management noted that public equity represented only 18% of year-to-date investment volume compared with an average of 47% during the prior three years. This broader funding base could strengthen Realty Income’s ability to compete with Agree Realty, Essential Properties and private-market buyers for attractive assets. Still, higher Treasury yields remain a challenge for REIT valuations. The real-estate sector came under pressure again on Monday as long-term bond yields rose. Higher financing costs can narrow acquisition spreads and make income-oriented REIT shares less attractive relative to bonds. Over the past 30 days, FFO per share estimates for both 2026 and 2027 have remained unchanged, though the figures suggest 3.97% and 3.47% growth year over year, indicating a balanced view of growth and cost pressures. Image Source: Zacks Investment Research Valuation-wise, Realty Income stock is trading at a forward 12-month price-to-FFO of 13.62X, below the retail REIT industry average of 16.75X but ahead of its three-year median of 13.24X. O stock is also currently trading at a reasonable discount compared with its industry peers, Agree Realty Corporation and Essential Properties Realty Trust. This valuation disparity might not be as favorable as it seems. Agree Realty is trading at a forward 12-month price-to-FFO of 15.80X, while Essential Properties Realty Trust is trading at 14.22X.The Value Score of C suggests that Realty Income may not be a bargain at current levels. Still, the company’s strategic investments, consistent dividend growth, underpinned by predictable rental income, keep it appealing for long-term income-oriented investors. Management's higher AFFO guidance is encouraging, yet the increase is modest. Realty Income now expects about 4% AFFO-per-share growth at the midpoint. This suggests investors should weigh the reliable income profile against a growth rate that remains measured. Image Source: Zacks Investment Research Realty Income's second-quarter results support the case for patience rather than a major change in positioning. The company is producing AFFO growth, maintaining high occupancy and finding enough investment opportunities to raise its 2026 deployment target. Its stronger liquidity position and broader access to private capital are additional upsides. However, the post-earnings share-price weakness, interest-rate sensitivity and modest internal growth argue against chasing the stock after its earlier gains. For investors who already own Realty Income, maintaining the existing position appears appropriate while collecting the monthly dividend and monitoring whether the larger investment pipeline produces sustained per-share growth over the coming quarters. Check Realty Income’s dividend history here.At present, Realty Income carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Realty Income Corporation (O) : Free Stock Analysis Report Agree Realty Corporation (ADC) : Free Stock Analysis Report Essential Properties Realty Trust, Inc. (EPRT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Realty Income Corporation O, a leader in the net lease sector, is slated to release second-quarter 2026 results on Aug. 5, after market close. The Zacks Consensus Estimate for the to-be-reported quarter’s adjusted funds from operations (AFFO) and revenues is pegged at $1.09 per share and $1.54 billion, respectively.While the Zacks Consensus Estimate for second-quarter 2026 AFFO per share has remained unchanged over the past two months, it suggests 3.81% growth year over year. The Zacks Consensus Estimate for quarterly revenues implies a notable year-over-year increase of 8.98%. Image Source: Zacks Investment Research For the current year, the Zacks Consensus Estimate for Realty Income’s revenues is pegged at $6.27 billion, indicating a rise of 9.03% year over year. The consensus mark for 2026 AFFO per share is pinned at $4.45, calling for an expansion of around 3.97% on a year-over-year basis. Over the trailing four quarters, the company’s AFFO per share surpassed the Zacks Consensus Estimate on two occasions, met it once and missed it in the other. This is depicted in the graph below: Realty Income Corporation price-eps-surprise | Realty Income Corporation Quote Our proven model doesn’t predict a surprise in terms of AFFO per share for Realty Income this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an AFFO beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.Realty Income currently carries a Zacks Rank #2 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Realty Income’s second-quarter 2026 earnings report is expected to show that the company continued to benefit from the momentum built in the first quarter, supported by strong occupancy, steady investment activity and growing contributions from its private capital platform. Investors are likely to have focused on whether acquisition-driven growth and resilient property fundamentals were enough to offset the impact of higher financing costs during the quarter under review.Management’s updated 2026 guidance provides the benchmark for second-quarter expectations. Realty Income is expected to have experienced continued AFFO growth, supported by occupancy around its 98.5% target, same-store rent growth of 1-1.3% and a full-quarter contribution from investments completed earlier in the year. The company’s diversified portfolio and long-term lease structure are expected to have supported stable rental income, while recent acquisitions are likely to have contributed to revenue growth.The company is also expected to have experienced another active investment quarter. After deploying $2.8 billion during the first quarter and raising its full-year investment target to $9.5 billion, Realty Income’s acquisition pipeline is expected to have remained healthy across the United States and Europe. Continued capital deployment at attractive yields may have benefited rental revenue growth and strengthened earnings visibility.Realty Income is further expected to have seen broader support from its expanding private capital strategy. The Apollo retail joint venture, additional capital raised through the U.S. Core Plus Fund and other institutional partnerships are expected to have improved revenue visibility while providing greater funding flexibility. These initiatives are likely to have contributed to investment capacity without relying solely on the public equity markets.On the other hand, higher borrowing costs are expected to have pressured results in the quarter under review, although the company’s use of cross-currency swaps may have partially offset financing costs. Overall, Realty Income is expected to have delivered another stable quarter, with resilient operating fundamentals outweighing the impact of a higher-rate funding environment. Shares of Realty Income have rallied 11.4% so far in the year, aligning with the S&P 500 composite’s increase but underperforming the Zacks REIT and Equity Trust - Retail industry’s rise of 21.4%. While Realty Income has underperformed its industry, it has rallied more than its peers like Agree Realty Corporation ADC and Essential Properties Realty Trust, Inc. EPRT. Image Source: Zacks Investment Research Valuation-wise, Realty Income trades at a forward price-to-FFO of 13.98X, below the retail REIT industry average of 17.19X but above its one-year median of 13.71X. O stock is also currently trading at a reasonable discount compared with its industry peers, Agree Realty Corporation and Essential Properties Realty Trust. However, this valuation disparity might not be as favorable as it seems. Agree Realty is trading at a forward 12-month price-to-FFO of 16.40X, while Essential Properties Realty Trust is trading at 14.69X.However, the Value Score of D suggests that Realty Income may not be a bargain at current levels. Image Source: Zacks Investment Research Realty Income’s second-quarter setup supports a favorable investment view. High occupancy, steady rent growth and contributions from recent acquisitions are expected to have supported AFFO, while the Apollo venture and U.S. Core Plus Fund may have improved funding flexibility and fee income. The company’s diversified portfolio, disciplined capital deployment, strong liquidity and raised 2026 guidance suggest that operating momentum remains intact.For investors seeking dependable income with moderate growth potential, the outlook supports adding the shares at present levels.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Realty Income Corporation (O) : Free Stock Analysis Report Agree Realty Corporation (ADC) : Free Stock Analysis Report Essential Properties Realty Trust, Inc. (EPRT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research