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AGREE REALTY CORP (ADC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered a clean beat and a guidance raise: AFFO per share was $1.10, up 7.2% YoY and $0.02 above consensus; Core FFO per share was $1.09, up 8.4% YoY .
  • Management raised 2025 AFFO per share guidance to $4.31–$4.33 and investment volume guidance to $1.50–$1.65B on the back of the largest quarterly investment since COVID (~$450M across 110 properties) .
  • Balance sheet catalysts: Fitch assigned an A- issuer rating (Aug), a $350M delayed-draw term loan at ~4% was secured post-quarter, and total liquidity increased to ~$2.2B (pro forma) .
  • Pipeline breadth across acquisitions, development, and developer funding supports sustained external growth; occupancy remains 99.7% with investment-grade exposure ~67%, underpinning durability .
  • Near-term stock reaction catalysts: upward guidance revisions, strong external deployment, and credit upgrade visibility; note that ~$0.01 of the AFFO beat was due to lease termination fees (not recurring) .

What Went Well and What Went Wrong

What Went Well

  • Record external deployment and high-quality mix: ~$450M invested in Q3 across 110 assets, with ~$400M of acquisitions at a 7.2% cap rate and 10.7-year WALT; 70% of ABR acquired from investment-grade tenants (best mark YTD) .
  • Guidance and dividend trajectory improved: AFFO per share guidance raised to $4.31–$4.33; monthly dividend increased to $0.2602 post-quarter with payout ratios of ~70% on Core FFO/AFFO .
  • Balance sheet strengthened: A- Fitch issuer rating (one of 13 U.S. REITs at A- or better), $350M term loan at ~4% fixed via swaps, pro forma net debt/recurring EBITDA ~3.5x; liquidity ~$2.2B post loan .
  • Quote: “We achieved our largest quarterly investment volume since the depths of COVID… deploying over $450 million… while maintaining a high level of discipline” — Joey Agree, CEO .

What Went Wrong

  • Non-recurring contributors to the beat: ~$0.01 of AFFO per share benefited from lease termination fees; Q4 midpoint implies roughly flat sequential AFFO without such fees .
  • Ex-forward leverage snapshot still elevated: net debt to recurring EBITDA was ~5.1x excluding unsettled forward equity (vs 3.5x pro forma) .
  • Credit loss still present, though controlled: Q3 realized ~21 bps credit loss; full-year assumption remains ~25 bps (fully loaded definition including nets during downtime) .

Financial Results

FFO/AFFO per share and occupancy

MetricQ1 2025Q2 2025Q3 2025
Core FFO per share ($)$1.04 $1.05 $1.09
AFFO per share ($)$1.06 $1.06 $1.10 (includes ~$0.01 lease term fees)
Occupancy (%)99.2% 99.6% 99.7%

Revenues, EPS, margins (GAAP)

MetricQ1 2025Q2 2025Q3 2025
Revenues ($USD Millions)$169.11*$175.40*$183.19*
Diluted EPS ($)$0.42*$0.43*$0.45*
EBITDA Margin (%)86.34%*85.70%*86.84%*
Net Income Margin (%)27.78%*28.03%*28.44%*

Values retrieved from S&P Global.*

Q3 2025 Actual vs Wall Street Consensus (S&P Global)

MetricConsensusActual
EPS ($)$0.444*$0.468*
Revenue ($USD Millions)$181.52*$183.22*

Values retrieved from S&P Global.*

External Growth and Mix

MetricQ1 2025Q2 2025Q3 2025
Investment volume ($USD Millions)~$377 ~$350 >$450
Acquisitions ($USD Millions)~$359 ~$328 >$400
Weighted avg acquisition cap rate (%)7.3% 7.1% 7.2%
Weighted avg remaining lease term (years)13.4 12.2 10.7
Investment-grade ABR acquired (%)68.7% 53.3% 70%

Portfolio & Balance Sheet KPIs

KPIQ1 2025Q2 2025Q3 2025
Properties (count)2,422 >2,500 >2,600
Ground leases (% ABR / count)10.6% / 231 ~10% / 232 10% / 237
Investment-grade exposure (%)68.3% 68% 67%
Liquidity ($USD Billions)~1.9 ~2.3 ~$1.9; pro forma ~$2.2 post term loan
Net debt / recurring EBITDA (x)4.9x (3.4x pro forma) 5.2x (3.1x pro forma) ~5.1x excl. forward; ~3.5x pro forma
Fixed charge coverage (x)4.3x 4.2x 4.2x
Credit loss (bps, fully loaded)n/aguided 25–50 realized ~21; FY ~25 guided

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
AFFO per shareFY 2025$4.29–$4.32 (raised in Q2 PR) $4.31–$4.33 Raised
Investment volumeFY 2025$1.40–$1.60B (Q2 PR) $1.50–$1.65B Raised
Credit loss assumptionFY 202525–50 bps (Q2 call) ~25 bps (tightened) Lowered/Tightened
Dividend (monthly)Q4 2025$0.256 (Q2 PR) $0.2602 (Oct) Raised
Treasury stock method dilution assumptionFY 2025~$0.02 impact (Q2 call) ~$0.01 impact (updated) Lowered
Liquidity actionsQ4 2025n/a$350M delayed-draw term loan at ~4% fixed; pro forma liquidity ~$2.2B Added

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q1)Current Period (Q3)Trend
AI/technology initiativesImplemented AI for lease abstraction; launching ARC 3.0 in 2026 Continued AI deployment; ARC 3.0 targeted for 2026 Improving
Macro/tariffsTariffs could pressure smaller retailers; focus on largest operators Tariffs discussed; limited impact on vertical construction costs (~1.5% within contingencies) Stable/Cautious
Development & DFP rampTargeting ≥$100M starts in 2H; medium-term goal ~$250M/year Record ~$50M invested in Q3; pipelines across both platforms deep Accelerating
Ground leases strategy~10% of ABR; opportunistic growth Larger ground lease component anticipated in Q4 acquisitions Growing
Grocery/auto parts exposureScaling with leading grocers; auto parts hub-store thesis Continued emphasis on largest retailers; auto parts ~6.8% concentration Stable
Balance sheet/liquidity~$2.3B liquidity; pro forma net debt/EBITDA ~3.1x A- Fitch rating; $350M term loan; pro forma net debt/EBITDA ~3.5x; liquidity ~$2.2B Strengthening
Tenant health/credit lossWatchlist largely At Home & Big Lots; 25–50 bps guidance Q3 credit loss ~21 bps; FY ~25 bps; watchlist “very de minimis” Improving

Management Commentary

  • “We achieved our largest quarterly investment volume since the depths of COVID… increasing our full-year 2025 investment guidance to $1.5 to $1.65 billion.” — Joey Agree, CEO .
  • “AFFO per share for the third quarter increased 7.2% year over year to $1.10, which is $0.02 above consensus… lease termination fees contributed roughly a penny.” — Peter Coughenour, CFO .
  • “We received an A-minus issuer rating from Fitch… and secured commitments for a $350 million delayed draw term loan… fixed at approximately 4%.” — Peter Coughenour, CFO .
  • “Retailers have realized the store is the hub of a successful omnichannel operation… largest operators are expanding voraciously.” — Joey Agree, CEO .

Q&A Highlights

  • Forward equity settlement timeline: ~14M shares outstanding at Q3-end; ~6M maturing/settling in Q4; remaining likely in 2026 .
  • Cap rates and competition: No material change seen YTD; Q3 cap rate tick-up was mix-driven; differentiated sourcing vs. auctioned sale-leasebacks .
  • Sequential AFFO: Q4 implies flat vs Q3 largely due to absence of termination fees; acquisitions were front-loaded in Q3 .
  • Ground leases and pipeline: Expect a higher percentage of ground leases in Q4; development/DFP could accelerate above $100M in 2H .
  • Balance sheet actions: $350M term loan to fill maturity gap; intended to pay down ~$390M commercial paper and fund growth .
  • Sector stance: Reduced exposure to Dollar Tree/Family Dollar; continued caution on dollar stores and pharmacy; focus on biggest grocers/auto parts .

Estimates Context

  • Q3 results beat Street expectations: EPS $0.468 vs $0.444 consensus; revenue $183.22M vs $181.52M consensus; AFFO per share beat by $0.02 per management commentary. Values retrieved from S&P Global.*
  • Implication: Modest upward revisions likely to FY AFFO and investment volume; note non-recurring ~$0.01 termination fee in Q3 may temper sequential AFFO expectations .

Key Takeaways for Investors

  • Guidance raises and A- credit rating materially improve the risk-adjusted growth path; external deployment across acquisitions, development, and DFP appears sustainable into Q4 and 2026 .
  • The quality mix (70% IG ABR in Q3 acquisitions) and 99.7% occupancy reinforce downside protection; development/DFP spreads (50–150 bps wider than like-kind acquisitions) support medium-term earnings algorithm expansion .
  • Near-term print included ~$0.01 non-recurring benefits; expect Q4 AFFO per share roughly flat sequentially at the midpoint absent term fees, but continued investment activity should underpin FY targets .
  • Liquidity (~$2.2B pro forma) and laddered capital structure limit refinancing risk; net debt/EBITDA at ~3.5x pro forma affords runway without immediate equity needs .
  • Strategy remains biased toward scale leaders in grocery, auto parts, and large-format convenience; continued de-emphasis of dollar store and pharmacy exposure .
  • Watch for Q4 mix: greater ground lease component and potential acceleration in development/DFP commencements; catalysts include additional project rollouts and forward equity settlements .

Sources: Q3 2025 earnings call transcript (prepared remarks and Q&A) ; Dividend increases ; Fitch A- rating ; Q2 results and portfolio metrics ; Q2 call themes ; Q1 results and guidance .

The company’s Q3 2025 8‑K Item 2.02 earnings press release was not available in the catalog; this recap relies on the Q3 earnings call transcript, Q3 10‑Q, and related press releases.

Values retrieved from S&P Global.*