AGREE REALTY CORP (ADC)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered resilient growth: Core FFO per share rose 3.1% to $1.04 and AFFO per share rose 3.0% to $1.06, while GAAP diluted EPS was $0.42 . Revenue grew 13.2% year over year to $169.16M .
• ADC raised FY2025 investment guidance to $1.3–$1.5B (from $1.1–$1.3B) and lifted AFFO/share guidance to $4.27–$4.30 (from $4.26–$4.30), reflecting a stronger pipeline and ample liquidity .
• Earnings beat Wall Street: Primary EPS of $0.459 vs $0.427 consensus and revenue of $169.16M vs $166.53M; beats driven by portfolio expansion and stable credit performance; treasury stock method dilution of ~$0.02 remains a headwind to full-year AFFO per share *.
• Balance sheet and funding catalysts: ~$1.9B liquidity, commercial paper program (up to $625M), and ~$920M forward equity provide visibility into cost of capital and support accelerated investment activity; monthly dividend increased to $0.256 for April .

What Went Well and What Went Wrong

What Went Well

• “We invested over $375 million across our three external growth platforms,” the largest quarter since Q3’23; acquisitions of $358.9M at a 7.3% cap rate and 13.4-year WALT, supporting durable cash flows .
• Liquidity and hedges underpin growth: ~$1.9B total liquidity; $325M forward-starting swaps fixing a contemplated 10-year base rate ~3.9%; ~$920M forward equity, enabling execution despite volatility .
• Active asset management: re-leasing Big Lots boxes to stronger tenants with material rent lifts (e.g., +50% at Cedar Park to ALDI; >150% net effective lift on Virginia site), reducing vacancy risk .

What Went Wrong

• Occupancy dipped temporarily to 99.2% due to remaining Big Lots, though management expects resolution by end of Q2 .
• Treasury stock method dilution estimated at ~$0.02 for FY2025 AFFO/share, constraining the upside from increased investment volume .
• Macro tariff uncertainty persists; while ADC’s necessity retail exposure is structurally advantaged, higher input costs can pressure certain categories and create episodic volatility .

Financial Results

GAAP and Non-GAAP Performance (oldest → newest)

Portfolio KPIs (oldest → newest)

External Growth (oldest → newest)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We are extremely pleased with our performance... invested over $375 million across our 3 external growth platforms while further strengthening our best-in-class portfolio.”
• “We are increasing full-year 2025 investment guidance to $1.3 billion to $1.5 billion and raising our 2025 AFFO per share guidance to $4.27 to $4.30.”
• “Pro forma net debt to recurring EBITDA [is] just 3.4x... no material debt maturities until 2028.”
• “We anticipate treasury stock method dilution will have an impact of roughly $0.02 on full year 2025 AFFO per share.”

Q&A Highlights

• Guidance mechanics: Increased investment guidance adds $1M ($0.01/share) earnings, offset by ~$0.02 treasury stock method dilution; net impact reflected in raised AFFO low end .
• Tariff impact: No outsized tenant concerns; necessity retail (grocery, auto parts, off-price) expected to benefit from trade-down dynamics; procurement diversification helps mitigate effects .
• Cap rates and transaction market: Cap rates less sensitive to daily 10Y volatility; competition limited amid weaker 1031/private capital; ADC positioned to capitalize .
• Big Lots remediation: Multiple boxes re-leased or acquired out of bankruptcy with substantial rent uplifts; occupancy dip expected to resolve by end of Q2 .
• Funding mix: Commercial paper pricing ~40+ bps inside revolver; program reflected in guidance; hedged capital drives wide investment spreads .

Estimates Context

Values retrieved from S&P Global.*

Key Takeaways for Investors

• ADC delivered a clean beat on EPS and revenue, underpinned by strong external growth and stable credit, while proactively acknowledging treasury stock dilution effects in guidance *.
• Raising FY2025 investment guidance to $1.3–$1.5B and lifting AFFO/share guidance signals confidence in pipeline conversion and cost-of-capital visibility amid macro volatility .
• Liquidity (~$1.9B), CP program, hedges, and forward equity create multiple low-cost funding levers; expect wide investment spreads and accretive deployment in a low-competition market .
• Near-term occupancy headwinds tied to Big Lots appear transitory given re-leasing progress and significant rent uplifts, supporting NOI durability into Q2/Q3 .
• Portfolio mix centered on necessity retail (grocery, auto parts, off-price) positions ADC defensively against tariff/macro uncertainty; management expects larger retailers to consolidate share .
• Dividend growth continues with April’s increase to $0.256/month, backed by AFFO coverage (~72% in Q1) and projected ~$120M post-dividend free cash flow in 2025 .
• Watch for continued pipeline acceleration, stable credit loss around ~30–50bps, and further guidance updates as capital is deployed; catalysts include additional re-leasing wins and capital markets execution .

Additional Relevant Press Releases (Q1 2025)

• Commercial paper program established (up to $625M): adds low-cost short-term funding and balance sheet flexibility .
• Dividend increase to $0.256/month for April: maintains 2.4% YoY growth run-rate .
• Forward common stock offering announced, priced, and completed (5.175M shares via forward sale at $75.70): expands forward equity capacity aligned with deployment needs .

Notes:

• We did not find a Form 8-K Item 2.02 document for Q1 2025 in the catalog; the company’s earnings press release was used as the primary source for quarterly results –.
• All GetEstimates data are from S&P Global; marked with an asterisk and accompanied by the required disclaimer.*