Agree Realty Corporation (ADC) Earnings & Analysis

Latest quarter

Agree Realty reported third-quarter revenue of $213.9 million, above the consensus estimate of $211.1 million and up from $183.2 million a year earlier. Adjusted earnings per share, as counted by the consensus, were $1.15, above the $1.14 estimate; diluted earnings per share rose to $0.53 from $0.45.

The company’s filing attributed changes in rental income and property expenses to acquiring and owning more properties. It said the portfolio grew to 2,888 properties at September 30, 2026, from 2,603 a year earlier, and that some rental-income growth reflected a full period of revenue from projects completed in 2025.

Agree Realty reported an operating margin of 51.2%, compared with 47.6% a year earlier, while gross margin was 87.7%, compared with 88.0%. The filing said net interest expense rose to $41.0 million from $35.2 million, primarily because of higher borrowing to finance properties. Free cash flow was −$148.5 million, compared with −$296.9 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Joey Agree said the company’s current cost of capital had risen, prompting it to reduce its investment plan, remove lower-yield opportunities and reprice its pipeline. He said third-quarter acquisitions had a weighted-average capitalization rate of 7.3%, up 30 basis points from the previous quarter, and that Agree Realty intended to push rates higher in the fourth quarter.

Agree said the company invested approximately $360 million across 94 retail net-lease properties in the quarter, including approximately $310 million in acquisitions. He said the portfolio was 99.8% occupied and investment-grade tenants accounted for approximately 65% of annualized base rent. The company also sold 11 properties for approximately $27 million, he said, and planned to pursue further sales to recycle capital.

Asked about competition, Agree said capital was more expensive and constrained and that the company had not seen an increase in competition. On tenant selection, he said an investment-grade rating alone was not the focus: the company also considered retailers’ businesses, underlying real estate and portfolio diversity.

Analysts asked about the company’s investment approach and the effect of abandoned transactions. Agree said, “We will kill a deal if it didn’t hit a certain threshold for us.” CFO Peter said elevated dead-deal costs reduced third-quarter AFFO per share by roughly a penny and that he expected some normalization in those costs and general and administrative expenses in the fourth quarter.

Agree also said the company had not responded quickly enough to rising Treasury rates in 2023 and had moved immediately this time. Peter said quarter-end liquidity was approximately $2 billion, including cash, outstanding forward equity and revolving-credit availability, and that the company had no short-term or floating-rate borrowings.

Guidance

Agree Realty raised its full-year 2026 AFFO-per-share guidance to $4.58 to $4.59. CFO Peter attributed the change to portfolio performance and lower assumed dilution, partly offset by reduced net investment activity and other costs.

CEO Joey Agree said the company reduced its 2026 investment-volume guidance to approximately $1.6 billion. He also said it now anticipated disposition volume of $100 to $150 million, versus its prior range of $50 to $100 million. Peter said the company lowered its assumed credit and occupancy loss to 15 basis points from 25 basis points.