Agree Realty Seizes Opportunities Amidst Macro Disruption, Reports Strong Q3 2026 Earnings
Agree Realty has navigated the shifting macroeconomic landscape with aplomb, as evidenced by its robust third quarter 2026 earnings report. The company's senior management team took to the conference call stage to walk investors through their latest financial performance and provide insights into their strategic plans for the remainder of the year.
Reuben Treatman, Senior Director of Corporate Finance, kicked off the call with a customary disclaimer regarding forward-looking statements before handing over to Joey, who was pleased to report another strong quarter of performance. The company's best-in-class portfolio remained at an impressive 99.8% occupied, while their disciplined execution of the operating strategy yielded high-quality opportunities across all three external growth platforms.
Joey did acknowledge the impact of the dynamic macroeconomic environment on the company's cost of capital, which had increased as a result. However, he was confident that Agree Realty would emerge from this period stronger than before. The disruption caused by changing market conditions is seen as advantageous for the company in a fragmented and non-institutionalized market such as theirs.
One of the key highlights of the quarter was the introduction of the "do nothing" scenario three years ago, which demonstrated the durability of their earnings algorithm during periods of uncertainty. The position of Agree Realty today is indeed stronger, with underlying earnings durability remaining unchanged. Importantly, the company has learned from previous experiences and moved decisively as the macro began to shift this time around.
Agree Realty's capital deployment strategy was also a point of emphasis on the call. With $1.1 billion raised in attractive capital this year, including forward equity at approximately $75 per share and a recently completed 10-year unsecured bond offering at just under 5.4%, they have deliberately reduced their investment volume guidance to approximately $1.6 billion by culling lower yield opportunities and aggressively repricing their pipeline.
The company's best-in-class retail portfolio with highly durable cash flows, combined with its fortress balance sheet, provide a meaningful competitive advantage. This foundation positions Agree Realty to generate mid-single AFFO growth per share and double-digit operational returns in 2027, while preserving balance sheet strength and investment criteria.
Agree Realty has already begun shifting their strategy to prioritize value creation over volume. Acquisition cap rates expanded by 30 basis points this quarter to 7.3%, and the company will continue to expand them further in the fourth quarter as they lean into their capabilities and focus on capital recycling.
The company's investment in high-quality retail net lease properties, totaling approximately $360 million in 94 assets, including the acquisition of 68 assets for approximately $310 million, is a testament to their commitment to delivering strong returns.
