8-K: Agree Realty Unveils Strong 2025 Performance, Robust 2026 Outlook

Agree Realty Corporation announced its 2025 investment activity, a positive 2026 investment outlook, and updates on its fortified balance sheet and capital markets.

Summary

• Total real estate investment volume for 2025, including acquisitions, development, and Developer Funding Platform (DFP) projects, amounted to approximately $1.55 billion across 338 properties in 29 retail sectors and 41 states.
• The Company acquired 305 retail net lease properties in 2025 for approximately $1.44 billion, at a weighted-average capitalization rate of 7.2% and a weighted-average remaining lease term of 11.5 years.
• Approximately 64.9% of annualized base rents acquired in 2025 were derived from investment grade retail tenants, with 6.9% from ground leased assets.
• Fourth quarter 2025 acquisition volume totaled over $347 million at a weighted-average capitalization rate of 7.1%, with 65.7% of annualized base rents from investment grade retail tenants and 18.2% from ground leased assets.
• As of December 31, 2025, the portfolio generated approximately 66.8% of annualized base rents from investment grade retail tenants, and ground leased assets represented 10.2% of total annualized base rents (approximately $75 million).
• The investment outlook for 2026, covering acquisitions, development, and DFP platforms, is projected to be between $1.25 billion and $1.50 billion in retail net lease properties.
• In November 2025, the Company secured an unsecured $350 million 5.5-year term loan with a fixed interest rate of 4.02%, inclusive of forward starting swaps.
• During Q4 2025, the Company entered into forward sale agreements for 1.5 million shares of common stock, anticipating net proceeds of over $109 million, and settled 5.9 million shares under existing agreements, receiving approximately $428 million.
• Total liquidity as of December 31, 2025, exceeded $2.0 billion, comprising approximately $1.3 billion in revolving credit facility and term loan availability, over $716 million in outstanding forward equity, and cash on hand.
• The Company's portfolio as of December 31, 2025, consisted of 2,674 properties across all 50 states, totaling approximately 55.5 million square feet of gross leasable area.
• Weighted average common shares outstanding for basic earnings per share were 114,695,645 for the three months ended December 31, 2025, and 110,723,375 for the twelve months ended December 31, 2025.
• Weighted average common shares outstanding for diluted earnings per share were 114,998,257 for the three months ended December 31, 2025, and 111,200,645 for the twelve months ended December 31, 2025.

Sentiment

Score: 9

Explanation: The filing details strong investment activity in 2025, provides robust guidance for 2026, highlights a fortified balance sheet with significant liquidity, and showcases successful capital markets execution. The company's strategic focus on high-quality, e-commerce resistant retail tenants and its track record of outperforming peers contribute to a highly positive outlook.

Positives

• Achieved a strong 2025 total real estate investment volume of approximately $1.55 billion, demonstrating robust growth.
• Maintained a high percentage of annualized base rents from investment grade retail tenants (66.8% portfolio-wide as of December 31, 2025), indicating a high-quality and stable tenant base.
• Fortified the balance sheet with over $2.0 billion in total liquidity as of December 31, 2025, providing significant financial flexibility.
• Secured a $350 million 5.5-year term loan at a favorable fixed interest rate of 4.02%, enhancing capital structure stability.
• Successfully executed capital markets activities, settling $428 million in forward equity and initiating new forward sales for over $109 million.
• Introduced a positive 2026 investment guidance of $1.25 billion to $1.50 billion, signaling continued external growth opportunities.
• Declared a monthly cash dividend of $0.262 per common share for December 2025, representing a 3.6% year-over-year increase, reflecting confidence in earnings and commitment to shareholder returns.
• Achieved an Aissuer rating with a stable outlook from Fitch Ratings, affirming strong creditworthiness.
• Maintains a low leverage profile with a Proforma Net Debt to Recurring EBITDA of 3.5x as of Q3 2025.
• No material debt maturities are scheduled until 2028, providing stability and reducing refinancing risk.

Risks

• Potential adverse effect of ongoing worldwide economic uncertainties, disruptions in the banking system and financial markets, and increased inflation on the financial condition, results of operations, cash flows, and performance of the Company and its tenants.
• General deterioration in national economic conditions.
• Tenant financial health, which could impact rent collection and property values.
• Risks associated with property acquisitions and the timing of these investments and acquisitions.
• Weakening of real estate markets, potentially affecting property valuations and investment opportunities.
• Decreases in the availability of credit, which could hinder financing for future investments.
• Increases in interest rates, which could raise borrowing costs and impact profitability.
• Adverse changes in the retail industry, affecting tenant performance and demand for retail properties.
• The Company's continuing ability to qualify as a Real Estate Investment Trust (REIT), which is crucial for its tax status.

Future Outlook

The Company projects its total investment volume for 2026, encompassing capital deployment through its acquisition, development, and Developer Funding Platform (DFP) platforms, to be between $1.25 billion and $1.50 billion in retail net lease properties. This outlook signals continued robust growth and strategic expansion in its target sectors.

Management Comments

• "I’m very pleased with our performance over the past twelve months. We enter 2026 with a fortified balance sheet with no material debt maturities, a best-in-class portfolio, and strong pipelines across our three external growth platforms positioning us to accelerate earnings growth in the new year." Joey Agree, President and Chief Executive Officer.
• "We view the forward equity offering as a prudent way to further fortify our balance sheet and lock in an accretive cost of capital while mitigating external risks and market volatility." Joey Agree, Q3 2018 Earnings Call (quoted in investor presentation).
• "Even in today's uncertain macro environment, we are seeing the highest level of retailer demand for new brick-and-mortar locations since the Great Financial Crisis. Nearly every retailer in our sandbox is focused on adding net new stores, underscoring the critical role that retail net lease assets play in an omnichannel retail world." Joey Agree, Q2 2025 Earnings Call (quoted in investor presentation).

Industry Context

Agree Realty's strategy, encapsulated by its 'RETHINKING RETAIL' campaign, aligns with the evolving retail landscape where physical stores are integral to an omni-channel strategy. The company's focus on acquiring and developing properties net leased to industry-leading, e-commerce resistant, and national/super-regional retail tenants positions it to capitalize on the resilience and adaptation of strong brick-and-mortar operations. This approach mitigates risks associated with traditional retail decline by targeting tenants that leverage physical presence for online fulfillment, customer experience, and brand visibility, reflecting a broader industry trend towards integrated retail ecosystems.

Comparison to Industry Standards

• The Company highlights its 'Best-in-Class Total Shareholder Returns,' outperforming a peer group including EPR Properties, Getty Realty Corp., NNN REIT, Inc., Realty Income Corporation, and W.P. Carey, as well as the MSCI US REIT Index and the S&P MidCap 400 over a 10-year period.
• Agree Realty reports the lowest retail rent per square foot ($12.78) among its listed peers (NTST, O, BNL, WPC, NNN, EPRT, FCPT, EPR, GTY) as of September 30, 2025, indicating efficient asset utilization or a focus on value-oriented properties.
• The Company boasts the highest investment grade concentration (67% of ABR) compared to its listed peers (FCPT 53%, NTST 47%, O 32%, WPC 22%, BNL 21%, NNN 14%, EPRT 0%, EPR 0%, GTY 0%) as of December 31, 2025, signifying a superior credit quality portfolio.
• Agree Realty was the first net lease REIT to issue forward equity in March 2018, demonstrating innovation in capital markets, with $39 billion of forward equity raised in the net lease space since then.
• The Company closed a market-leading 5.5-year term loan at a fixed rate of 4.02% in November 2025, reflecting favorable financing terms compared to broader market conditions.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Likely positive impact due to strong investment performance, robust growth outlook, fortified balance sheet, increased dividend, and strong capital markets execution, potentially leading to share price appreciation and consistent returns.
• Employees: Positive impact through the 'Agree Wellness' program focusing on health, wellness, and financial well-being, along with ongoing professional development opportunities.
• Customers (Tenants): Continued strong relationships with industry-leading, omni-channel retail tenants, supported by the company's three external growth platforms and strategic focus on e-commerce resistant sectors.
• Creditors: Positive impact from a fortified balance sheet, significant liquidity, no material debt maturities until 2028, and strong credit ratings (A/ Baa1 / BBB+), indicating low credit risk and reliable debt servicing capacity.

Next Steps

• Deploy capital through acquisition, development, and Developer Funding Platform (DFP) platforms in 2026, targeting $1.25 billion to $1.50 billion in retail net lease properties.
• Draw on the $350 million term loan within its 12-month delayed draw feature.
• Continue to settle outstanding forward equity agreements to realize anticipated net proceeds.
• Maintain focus on acquiring and developing properties net leased to industry-leading, omni-channel retail tenants.

Key Dates

Recommendation

The filing presents a highly positive outlook for Agree Realty, characterized by robust 2025 investment activity, an ambitious yet achievable 2026 growth forecast, and a significantly strengthened balance sheet with ample liquidity. The company's strategic focus on high-quality, e-commerce resistant, investment-grade retail tenants, coupled with its proven track record of outperforming peers in total shareholder returns and maintaining low leverage, positions it for continued earnings growth. The recent dividend increase and favorable credit ratings further underscore its financial health and commitment to shareholder value. These factors collectively suggest a strong investment opportunity.

Keywords

Retail Net Lease, REIT, Real Estate Investment Trust, Commercial Real Estate, Investment Grade Tenants, Capital Markets, Liquidity, Acquisitions, Development, Portfolio, Dividend, Balance Sheet, Agree Realty, Corporate Governance