Q4 2024 Earnings Summary
Reported on Feb 18, 2025 (After Market Close)
Pre-Earnings Price$71.40Last close (Feb 12, 2025)
Post-Earnings Price$70.89Open (Feb 13, 2025)
Price Change
$-0.51(-0.71%)
- Strong retailer demand for new stores and Agree Realty's unique capabilities position the company to capitalize on growth opportunities. Despite challenges like liquidity constraints and elevated construction costs, major retailers are eager to expand, recognizing that the store is the hub of the omnichannel solution. Agree Realty's unique position as a one-stop shop—with development capabilities, cost of capital advantages, and a strong balance sheet—makes it a valued partner for these retailers.
- Increasing exposure to the resilient auto parts sector, which benefits from favorable industry trends. Agree Realty has strategically acquired over 40 assets leased to NAPA, increasing its auto parts exposure by 70 basis points as a percentage of portfolio ABR. With the average age of cars on the road reaching 12.7 years, there is higher demand for auto parts. Auto parts is a top three favorite sector for the company.
- Strong balance sheet with ample liquidity and lower competition enable Agree Realty to capitalize on investment opportunities. The company has over $2 billion of liquidity, including $920 million of outstanding forward equity, and no material debt maturities until 2028. With competition dwindling due to less institutional and individual investors, Agree Realty can acquire assets at favorable pricing to execute its $1.1 billion to $1.3 billion investment guidance for 2025.
- Increased anticipated credit losses in 2025 due to tenant bankruptcies, particularly Big Lots. ADC's guidance includes an assumption for 50 basis points of credit loss in 2025, up from the 35 basis points incurred in 2024, partly accounting for a worst-case scenario with Big Lots bankruptcy.
- Pressures on lower-income consumers may negatively impact certain retail tenants in ADC's portfolio. The company acknowledges that the low-income cohort is under pressure due to inflation, which could affect retailers catering to that demographic.
- Challenges in retailers' expansion plans due to macroeconomic factors may impact ADC's development opportunities. Retailers face constraints in store growth plans due to the current environment, including higher costs and labor shortages, potentially affecting ADC's development and developer funding platforms.