Q3 2025 Agree Realty Corp Earnings Call

Speaker #3: Good morning , and welcome to the Agree Realty third Quarter 2025 conference call . All participants will be in listen only mode should you need assistance , please signal a conference specialist by pressing the star key , followed by zero .

Operator: Good morning and welcome to the Agree Realty Q4 2025 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star, then one again. Please limit yourself to two questions during this call. Note, this call is being recorded. I would now like to turn the conference over to Reuben Treatman, Senior Director of Corporate Finance. Please go ahead, Reuben.

Speaker #3: After today's presentation , there will be an opportunity to ask questions , to ask a question , you may press star , then one on your touchtone phone to withdraw your question , please press star .

Speaker #3: Then one again . Please limit yourself to two questions during this call . Note this call is being event is being recorded . I would now like to turn the conference over to Reuben Treatman Senior Director of Corporate Finance .

Speaker #3: Please go ahead, Reuben.

Speaker #4: Thank you . Good morning everyone , and thank you for joining us for Agree Realty third quarter 2020 Earnings Call . Before turning the call over to Joey and Peter to discuss our results for the quarter , let me first run through the cautionary language , please note that during this call , we will make certain statements that may be considered forward looking under federal securities law , including statements related to our updated 2025 guidance .

Reuben Treatman: Thank you. Good morning, everyone, and thank you for joining us for Agree Realty's Q3 2025 earnings call. Before turning the call over to Joey and Peter to discuss our results for the quarter, let me first run through the cautionary language. Please note that during this call, we'll make certain statements that may be considered forward-looking under federal securities law, including statements related to our updated 2025 guidance. Our actual results may differ significantly from the matters discussed in any forward-looking statements for a number of reasons. Please see yesterday's earnings release and our SEC filings, including our latest annual report on Form 10-K, for a discussion of various risks and uncertainties underlying our forward-looking statements. In addition, we discussed non-GAAP financial measures, including core FFO, AFFO, and net debt to recurring EBITDA.

Speaker #4: Our actual results may differ significantly from the matters discussed in any forward looking statements . For a number of reasons . Please see yesterday's earnings release and our SEC filings , including our latest annual report on Form 10-K .

Speaker #4: For a discussion of various risks and uncertainties underlying our forward looking statements in addition , we discuss non-GAAP financial measures , including core funds from operations or core FFO , adjusted funds from operations or AFFO , and net debt to EBITDA .

Speaker #4: Reconciliations of our historical non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release website and SEC filings .

Reuben Treatman: Reconciliations of our historical non-GAAP financial measures to the most directly comparable GAAP measures can be found at our earnings release, website, and SEC filings. I'll now turn the call over to Joey.

Speaker #4: I'll now turn the call over to Joey.

Speaker #5: Thanks , Reuben , and thank you all for joining us this morning . I'm pleased to report another very strong quarter in ADC as we further expanded and strengthened what we view to be the nation's leading retail portfolio .

Joey Agree: Thanks, Reuben, and thank you all for joining us this morning. I'm pleased to report another very strong quarter in Agree Realty Corporation as we further expanded and strengthened what we view to be the nation's leading retail portfolio. The unmatched value proposition of our three-pronged approach continues to drive a compelling opportunity set and expansive pipelines across all platforms. We achieved our largest quarterly investment volume since the depths of COVID five years ago, deploying over $450 million across all three platforms while maintaining a high level of discipline in our underwriting process. Given growing pipelines across our three external growth platforms, we are increasing our full-year 2025 investment guidance to a new range of $1.5 to $1.65 billion. At the midpoint, this represents an increase of over 65% above last year's investment volume.

Speaker #5: The unmatched value proposition of our three pronged approach continues to drive a compelling opportunity set and expansive pipelines across all platforms . We achieved our largest quarterly investment volume since the depths of Covid five years ago , deploying over $450 million across all three platforms while maintaining a high level of discipline in our underwriting process .

Speaker #5: Given growing pipelines across our three external growth platforms , we are increasing our full year 2025 investment guidance to a new range of 1.5 to $1.65 billion at the midpoint .

Speaker #5: This represents an increase of over 65% above last year's investment volume. This exceptional level of activity demonstrates our ability to efficiently scale our investment platforms while partnering with the best retailers in the country.

Joey Agree: This exceptional level of activity demonstrates our ability to efficiently scale our investment platforms while partnering with the best retailers in the country. We will continue to be disciplined capital allocators while maintaining our stringent real estate quality underwriting standards. Our best-in-class portfolio is paired with a fortress balance sheet that is over $1.9 billion of liquidity and no material debt maturities until 2028. With pro forma net debt to recurring EBITDA of just 3.5 times and over $1 billion of forward equity available to us, we enjoy significant runway and have pre-funded our growth well into next year. During the quarter, we received an A-minus issuer rating from Fitch Ratings, making us one of only 13 publicly listed U.S. REITs with an A-minus credit rating or better.

Speaker #5: We will continue to be disciplined capital allocators while maintaining our stringent real estate quality , underwriting standards . Our best in class portfolio is paired with a fortress balance sheet that is over 1.9 billion of liquidity and no material debt maturities until 2028 .

Speaker #5: With pro-forma net debt to EBITDA of just 3.5 times and over 1 billion of forward equity available to us , we enjoy significant runway and prefunded our growth well into next year .

Speaker #5: During the quarter , we received an A-minus issuer rating from Fitch Ratings , making us one of only 13 publicly listed US REIT's with an A-minus credit rating or better .

Speaker #5: This was a significant milestone for our growing company and is a testament to over 15 years of disciplined growth in keen portfolio construction.

Joey Agree: This was a significant milestone for our growing company and is a testament to over 15 years of disciplined growth and keen portfolio construction, having invested over $10 billion during that period while maintaining a preeminent balance sheet and leading the way on capital markets activities. Given our robust liquidity profile, fortress balance sheet, and strong portfolio performance, we are raising our AFFO per share guidance to a new range of $4.31 to $4.33 for the year. The new midpoint represents approximately 4.4% year-over-year growth. Peter will provide more details on our guidance momentarily. Turning to our three external growth platforms, during the third quarter, we invested over $450 million in 110 high-quality retail net lease properties across our three platforms. This includes the acquisition of 90 assets for over $400 million.

Speaker #5: Having invested over $10 billion during that period while maintaining a preeminent balance sheet and leading the way on capital markets activities . Given our robust liquidity profile , Fortress balance sheet and strong portfolio performance , we are raising our AFFO per share guidance to a new range of $4.31 to $4.33 for the year .

Speaker #5: The new midpoint represents approximately 4.4% year over year growth . Peter will provide more details on our guidance momentarily . Turning to our three external growth platforms , during the third quarter , we invested over $450 million in 110 high quality retail net leased properties across our three platforms .

Speaker #5: This includes the acquisition of 90 assets for over $400 million . The properties acquired during the quarter are leased to leading operators and home improvement auto parts , grocery off Price farm and rural supply convenience stores , and tire and auto service .

Joey Agree: The properties acquired during the quarter are leased to leading operators in home improvement, auto parts, grocery, off-price, farm and rural supply, convenience stores, and tire and auto service. The acquisitions had a weighted average cap rate of 7.2% and a weighted average lease term of 10.7 years. Investment-grade retailers accounted for 70% of the annualized base rent acquired, the highest mark so far this year. Notable transactions during the quarter included a sale-leaseback with a relationship tenant in the tire and auto service sector, multiple ALDIs, a high-performing Kroger in Cincinnati, a Sherwin-Williams portfolio, a Home Depot in New York, as well as a Walmart Supercenter in Illinois. For the first nine months of the year, we've invested nearly $1.2 billion across 257 retail net lease properties spanning 40 states and 29 retail sectors.

Speaker #5: The acquisitions had a weighted average cap rate of 7.2% and a weighted average lease term of 10.7 years . Investment grade retailers accounted for 70% of the annualized base rent acquired , the highest mark so far this year .

Speaker #5: Notable transactions . During the quarter included a sale leaseback with a relationship tenant in the tire and auto service sector , multiple Aldi's , a high performing Kroger in Cincinnati , a Sherwin-Williams portfolio , a Home Depot in New York , as well as a Walmart Supercenter in Illinois .

Speaker #5: For the first nine months of the year, we've invested nearly $1.2 billion across 257 retail net lease properties, spanning 40 states and 29 retail sectors.

Speaker #5: Approximately 1.1 billion of our investment activities originated for our acquisition platform , with the remainder emanating from our development and developer funding platforms .

Joey Agree: Approximately $1.1 billion of our investment activities originated for our acquisition platform, with the remainder emanating from our development and developer funding platforms. During the third quarter, we commenced five development or DFP projects with total anticipated costs of approximately $51 million. We are well on our way to commencing over $100 million of projects in the second half of the year, as discussed on last quarter's call. Through the first nine months of the year, we've committed approximately $190 million across 30 projects that are either completed or under construction, representing a significant increase in development and DFP spend compared to prior years. We remain confident that we'll achieve our medium-term goal of $250 million commenced annually. In the third quarter alone, we invested a record of approximately $50 million across 20 development and DFP projects, representing a twofold increase in capital deployment quarter over quarter.

Speaker #5: During the third quarter , we commenced five development for DFP projects with total anticipated costs of approximately $51 million . We are well on our way to commencing over $100 million of projects in the second half of the year , as discussed on last quarter's call .

Speaker #5: Through the first nine months of the year , we've committed approximately $190 million across 30 projects that are either completed or under construction , representing a significant increase in development in DFP spend compared to prior years .

Speaker #5: We remain confident that we'll achieve our medium term goal of 250 . Million commenced annually in the third quarter alone , we invested a record of approximately $50 million across 20 development in DFP projects , representing a two fold increase in capital deployment quarter over quarter .

Speaker #5: These platforms are a growing component of our investment strategy , allowing us to partner with best in class retailers and private developers to add high quality , real estate to our portfolio at superior returns than we can achieve via acquisitions of note , during the quarter , we commenced construction on two of our first 7-Eleven developments located in Michigan and Ohio .

Joey Agree: These platforms are a growing component of our investment strategy, allowing us to partner with best-in-class retailers and private developers to add high-quality real estate to our portfolio at superior returns than we can achieve via acquisitions. Of note, during the quarter, we commenced construction on two of our first 7-Eleven developments. Located in Michigan and Ohio, we anticipate total costs for the two projects will be approximately $18 million. The Ohio location marks our first commercial fueling site for 7-Eleven, a compelling addition to our large format convenience store portfolio. These projects underscore the strategic depth of our relationship with yet another leading retailer. We're delivering our full complement of capabilities, ground-up development, developer funding projects, as well as acquisitions. I look forward to providing more details as we continue to roll out additional projects in the coming quarters.

Speaker #5: We anticipate total costs for the two projects will be approximately $18 million . The Ohio location marks our first commercial fueling site for 7-Eleven , a compelling addition to our large format convenience store portfolio .

Speaker #5: These projects underscore the strategic depth of our relationship with yet another leading retailer . We're delivering our full complement of capabilities , ground up development , developer funding projects , as well as acquisitions .

Speaker #5: I look forward to providing more details as we continue to roll out additional projects in the coming quarters . On the asset management front , we executed new leases , extensions or options that approximately 860,000ft² of gross leasable area during the quarter , including a 50,000 square foot TJ Maxx and home goods combo in Eugene , Oregon .

Joey Agree: On the asset management front, we executed new leases, extensions, or options on approximately 860,000 square feet of gross leasable area during the quarter, including a 50,000 square foot TJ Maxx and HomeGoods Combo in Eugene, Oregon, a 27,000 square foot Burlington in Midland, Texas, and two Walmarts comprising over 310,000 square feet. For the first nine months of the year, we executed new leases, extensions, or options on 2.4 million square feet of gross leasable area with a recapture rate of approximately 104%. We are in an excellent position for the remainder of the year with just 9 leases or 20 basis points of annualized base rent maturing. Dispositions this quarter totaled approximately $15 million and included our only At Home in Provo, Utah, as well as three Advance Auto Parts. The At Home disposition is emblematic of our underlying focus on real estate.

Speaker #5: A 27,000 square foot Burlington and Midland , Texas , and two Walmarts comprising over 310,000ft² . For the first nine months of the year , we executed new leases , extensions or options on two point 4,000,000ft² of gross leasable area with a recapture rate of approximately 104% .

Speaker #5: We are in an excellent position for the remainder of the year , with just nine leases for 20 basis points of annualized base rents maturing dispositions this quarter totaled approximately $15 million and included our only at home in Provo , Utah , as well as three Advanced Auto Parts .

Speaker #5: The at home disposition is emblematic of our underlying focus on real estate . The disposition cap rate of approximately 7% is nearly 50 basis points inside of where we acquired the asset , resulting in an unlevered IRR of approximately 9% .

Joey Agree: The disposition cap rate of approximately 7% is nearly 50 basis points inside of where we acquired the asset, resulting in an unlevered IRR of approximately 9%. Our best-in-class portfolio now spans over 2,600 properties across all 50 states, including 237 ground leases, representing 10% of total annualized base rents. Occupancy for the quarter remained very strong at 99.7%, and our investment-grade exposure remains sector-leading at 67%. Heading into the fourth quarter, I'm extremely excited to wrap up the year as we head into 2026 in a tremendous position as our earning algorithm kicks into gear. I'll now hand the call over to Peter, and then we can open it up for questions.

Speaker #5: Our best in class portfolio now spans over 2600 properties across all 50 states , including 237 ground leases , representing 10% of total annualized base rents .

Speaker #5: Occupancy for the quarter remained very strong at 99.7% , and our investment grade exposure remains sector leading at 67% . Heading into the fourth quarter .

Speaker #5: I'm extremely excited to wrap up the year as we head into 2026 . In a tremendous position as our earning algorithm kicks into gear .

Speaker #5: I'll now hand the call over to Peter , and then we can open it up for questions . Thank you Joey . Starting with earnings core FFO per share for the third quarter of $1.09 was 8.4% higher than the same period last year .

Peter Coughenour: Thank you, Joey. Starting with earnings, core FFO per share for the third quarter of $1.09 was 8.4% higher than the same period last year. AFFO per share for the third quarter increased 7.2% year over year to $1.10, which is $0.02 above consensus. A portion of the beat is attributable to lease termination fees, which contributed roughly a penny to AFFO per share in the quarter. As Joey highlighted, we have updated our 2025 earnings outlook to reflect our strong performance year to date. We raised both the lower and upper end of our full-year AFFO per share guidance to a new range of $4.31 to $4.33, which implies year-over-year growth of approximately 4.4% at the midpoint. Our new guidance range includes an assumption for approximately 25 basis points of credit loss for the year.

Speaker #5: AFFO per share for .

Speaker #6: The third quarter increased 7.2% year over year to $1.10 , which is $0.02 above consensus . A portion of the beat is attributable to lease termination fees , which contributed roughly a penny to AFFO per share in the quarter .

Speaker #6: As Joey highlighted , we have updated our 2025 earnings outlook to reflect our strong performance year to date . We raised both the lower and upper end of our full year AFFO per share guidance to a new range of $4.31 to $4.33 , which implies year over year growth of approximately 4.4% at the midpoint .

Speaker #6: Our new guidance range includes an assumption for approximately 25 basis points of credit loss for the year. As a reminder, the Treasury stock method impact is included in our diluted share count prior to settlement.

Peter Coughenour: As a reminder, the Treasury stock method impact is included in our diluted share count prior to settlement if Agree Realty stock trades above the net price of our outstanding forward equity offerings. The aggregate dilutive impact related to these offerings was fairly de minimis in the third quarter. Our updated guidance range contemplates a minimal Treasury stock method dilution in the fourth quarter as well, though that remains subject to how the stock trades for the remainder of the year. For full-year 2025, we still anticipate roughly a penny of dilution related to the Treasury stock method, largely given the impact recognized in the first half of the year. In the third quarter, we declared monthly cash dividends of $0.2506 per share for July, August, and September. This represents a 2.4% year-over-year increase.

Speaker #6: If ADC stock trades above the net price of our outstanding forward equity offerings, the aggregate dilutive impact related to these offerings was fairly diminished in the third quarter.

Speaker #6: Our updated guidance range contemplates a minimal Treasury stock method dilution in the fourth quarter , as well , though that remains subject to how the stock trades for the remainder of the year .

Speaker #6: For the full year 2025, we still anticipate roughly a penny of dilution related to the Treasury Stock Method, largely given the impact recognized in the first half of the year.

Speaker #6: In the third quarter , we declared monthly cash dividends of 25.6 cents per share for July , August and September . This represents a 2.4% year over year increase while raising our dividend twice over the past year .

Peter Coughenour: While raising our dividend twice over the past year, we maintain conservative payout ratios for the third quarter of 70% of core FFO per share and AFFO per share, respectively. Subsequent to quarter end, we again increased our monthly cash dividend to $0.2602 per share for October. The monthly dividend reflects an annualized dividend amount of over $3.14 per share, or a 3.6% increase over the annualized dividend amount of $3.04 per share from the fourth quarter of last year. Moving to the balance sheet, as Joey mentioned, in August, we achieved an A-minus issuer rating from Fitch with a stable outlook. This significant accomplishment is a testament to the strength of our portfolio, as well as our balance sheet, and reflects a thoughtful and disciplined way we have and will continue to grow the company.

Speaker #6: We maintain conservative payout ratios for the third quarter of 70% of core FFO per share , and AFFO per share , respectively . Subsequent to quarter end , we again increased our monthly cash dividend to 26.2 cents per share for October .

Speaker #6: The monthly dividend reflects an annualized dividend amount of over $3.14 per share , or a 3.6% increase over the annualized dividend amount of $3.04 per share from the fourth quarter of last year .

Speaker #6: Moving to the balance sheet, as Joey mentioned, in August, we achieved an 'A' issuer rating from Fitch with a stable outlook.

Speaker #6: The significant accomplishment is a testament to the strength of our portfolio as well as our balance sheet , and reflects the thoughtful and disciplined way we have and will continue to grow the company .

Speaker #6: The A-minus rating reduced the interest rate on our 2029 term loan by five basis points. In addition, the F1 short-term rating assigned by Fitch translated into a similar pricing improvement for our commercial paper notes.

Peter Coughenour: The A-minus rating reduced the interest rate on our 2029 term loan by five basis points. In addition, the F1 short-term rating assigned by Fitch translated into a similar pricing improvement for our commercial paper notes. During the quarter, we settled approximately 3.5 million shares of forward equity for net proceeds of over $250 million. As of September 30, we had approximately 14 million shares remaining to be settled under existing forward sale agreements, which are anticipated to raise net proceeds of over $1 billion upon settlement. At quarter end, total liquidity stood at $1.9 billion, including cash on hand, forward equity, as well as over $850 million of availability on our revolving credit facility, which is net of amounts outstanding on our commercial paper program. Pro forma for the settlement of all outstanding forward equity, our net debt to recurring EBITDA was approximately 3.5 times.

Speaker #6: During the quarter , we settled approximately 3.5 million shares of Forward equity for net proceeds of over $250 million . As of September 30th .

Speaker #6: We had approximately 14 million shares remaining to be settled under existing forward sale agreements , which are anticipated to raise net proceeds of over $1 billion upon settlement at quarter end , total liquidity stood at $1.9 billion , including cash on hand , forward equity , as well as over $850 million of availability on our revolving credit facility , which is net of amounts outstanding on our commercial paper program .

Speaker #6: Pro forma for the settlement of all outstanding forward equity . Our net debt to EBITDA was approximately 3.5 times , excluding the impact of unsettled forward equity .

Peter Coughenour: Excluding the impact of unsettled forward equity, our net debt to recurring EBITDA was 5.1 times. Our total debt to enterprise value was approximately 29%, while our fixed charge coverage ratio, which includes principal amortization and the preferred dividend, remains very healthy at 4.2 times. Subsequent to quarter end, we further strengthened our balance sheet, securing commitments for a $350 million 5.5-year delayed draw term loan that will mature in 2031. We anticipate closing later this quarter and have entered into $350 million of forward starting swaps to fix SOFR until maturity. Including the impact of the swaps, the interest rate on the term loan is fixed at approximately 4% based on our current A-minus credit rating. The term loan demonstrates continued strong support from our key banking partners and enables us to fill a gap in our debt maturity schedule while achieving opportunistic pricing in today's rate environment.

Speaker #6: Our net debt to EBITDA was 5.1 times, our total debt to enterprise value was approximately 29%, while our fixed charge coverage ratio, which includes principal amortization and the preferred dividend, remains very healthy at 4.2 times.

Speaker #6: Subsequent to quarter end , we further strengthened our balance sheet , securing commitments for a $350 million , 5.5 year delayed draw term loan that will mature in 2031 .

Speaker #6: We anticipate closing later this quarter and have entered into $350 million of forward starting swaps to fixed sofr until maturity , including the impact of swaps , the interest rate on the term loan is fixed at approximately 4% .

Speaker #6: Based on our current A-minus credit rating . The term loan demonstrates continued strong support from our key banking partners and enables us to fill a gap in our debt maturity schedule while achieving opportunistic pricing .

Speaker #6: In today's rate environment, upon closing, the term loan will increase our pro forma liquidity to approximately $2.2 billion, and we have now locked in attractively priced equity and debt capital to fund our growth well into 2026.

Peter Coughenour: Upon closing, the term loan will increase our pro forma liquidity to approximately $2.2 billion, and we have now locked in attractively priced equity and debt capital to fund our growth well into 2026. With that, I'd like to turn the call back over to Joey.

Speaker #6: With that , I'd like to turn the call back over to Joey .

Speaker #5: Thank you . Peter . At this time , operator , we'll open it up for questions .

Joey Agree: Thank you, Peter. At this time, operator, we'll open it up for questions.

Speaker #3: Thank you . We will now begin the question and answer session . If you have dialed in and would like to ask a question , please press star One on your telephone keypad to raise your hand and join the queue .

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Please limit yourself to two questions during the call. We'll take our first question from Smedes Rose at Citi.

Speaker #3: If you would like to withdraw your question, simply press star one again. Please limit yourself to two questions during the call. We'll take our first question from Smedes Rose at Citi.

Speaker #7: Thanks . It's Nick Joseph here with Smedes . Appreciate the color around the Treasury method for the forward equity , but can you just walk through what's required in terms of the actual timing and settlement , just given to the upcoming expirations ?

[Analyst]: Thanks. It's Nick Joseph here with Smedes. Appreciate the color around the Treasury method for the forward equity, but can you just walk through what's required in terms of the actual timing and settlement, just given the upcoming expirations around the forward equity?

Speaker #7: Around the forward equity?

Speaker #6: Sure . Nick , this is Peter . In terms of our outstanding forward equity we have about 14 million shares of forward equity outstanding as of the end of the third quarter , roughly 6 million of those shares .

Peter Coughenour: Sure, Nick. This is Peter. In terms of our outstanding forward equity, we have about 14 million shares of forward equity outstanding as of the end of the third quarter. Roughly 6 million of those shares, the contracts mature on at some point during the fourth quarter. We anticipate settling those shares, those 6 million shares, at some point during the fourth quarter as those contracts come to maturity. As for the remainder of the outstanding forward equity, we would anticipate settling that at some point in 2026.

Speaker #6: The contracts mature on at some point during the fourth quarter . And so we anticipate settling those shares , those 6 million shares , at some point during the fourth quarter , as those contracts come to maturity , as for the remainder of the outstanding forward equity , we would anticipate settling that at some point in 2026 .

Speaker #7: Thanks . That's very helpful . And then just on acquisitions , I understand the visibility is limited , but it does continue to track ahead of expectations .

[Analyst]: Thanks. That's very helpful. On acquisitions, I understand the visibility is limited, but it does continue to track ahead of expectations. Is there anything on the horizon that you're seeing right now that could slow that pace that you're currently seeing?

Speaker #7: But is there anything on the horizon that you're seeing right now that could slow that pace that you're currently seeing?

Speaker #5: Morning , Nick . It's Joey , nothing on the horizon that we see that pace slowing in in 2025 . Obviously the ten year Treasury is down to the 3.95396 level .

Joey Agree: Morning, Nick. It's Joey. Nothing on the horizon that we see that pace slowing in 2025. Obviously, the 10-year Treasury is down to the 3.95-3.96 level, but we haven't seen anything that just slow us down this year.

Speaker #5: But we haven't seen anything that should slow us down this year .

Speaker #7: Thank you .

[Analyst]: Thank you.

Speaker #5: Thanks , Nick .

Joey Agree: Thanks, Nick.

Speaker #3: We'll move next to Michael Goldsmith at UBS.

Operator: We'll move next to Michael Goldsmith at UBS.

Speaker #8: Yes .

Michael Goldsmith: Yes.

Speaker #9: Good morning. Thanks a lot for taking my questions. First, on the cap rates, the acquisition cap rates actually ticked up in the period.

Peter Coughenour: Good morning. Thanks a lot for taking my questions. First, on the cap rates, the acquisition cap rates actually ticked up in the period, and we keep hearing from others about the pricing landscape, and there's a narrative of increased competition. Are you seeing any of that out there, and how have you been able to navigate some of those headwinds that others are seeing?

Speaker #9: And we keep hearing from others about the pricing landscape . And there's a narrative of increased competition . So are you seeing any of that out there .

Speaker #9: And how have you been able to navigate some of those , you know , headwinds that others are seeing ?

Speaker #5: Yes . As I talked about , you know , pretty frequently , Michael , I wouldn't get I wouldn't get overly enthralled with the narratives that are out there from from different institutional acquirers .

Joey Agree: Yeah. As I talk about pretty frequently, Michael, I wouldn't get overly enthralled with the narratives that are out there from different institutional acquirers. We haven't seen any material change in cap rates year to date through 9/30 or to, frankly, today. What we do is differentiated. It's bespoke. We're doing one-off transactions, generally short-term, blend and extends, and different types of transactions. The output this quarter was 10 basis points higher than last quarter just because of the composition. Like I said, I wouldn't get carried away in the overall narratives of the largest, most fragmented and least institutionally owned market in commercial real estate, that being retail net lease.

Speaker #5: We haven't seen any material change in cap rates year to date through 930 or to Frank , frankly , today , what we do is , is differentiated .

Speaker #5: It's bespoke . We're doing one off transactions , generally short term blend and extends and different types of transactions . Then the output this quarter was the ten basis points higher than last quarter just because of the composition .

Speaker #5: So I like I said I wouldn't get carried away in the overall narratives of the largest , most fragmented and least institutionally owned market in commercial real estate .

Speaker #5: That being retail net lease.

Speaker #9: Thanks for that , Joey . And as a follow up , the fourth quarter implied FFO per share is consistent with the third quarter .

Peter Coughenour: Thanks for that, Joey. As a follow-up, the fourth quarter implied AFFO per share is consistent with the third quarter. Is there any reason why that would be kind of flat sequentially, or any one-time items that impacted the third quarter or impact the fourth quarter that would cause that to be kind of consistent?

Speaker #9: So any reason why that would be kind of flat sequentially or any one time items that impacted the third quarter or will impact the fourth quarter that to to expect that to be kind of consistent .

Speaker #5: I'll turn it over to Peter . But I don't really see anything . I think the third quarter was fairly front in terms of acquisition volume .

Joey Agree: I'll turn it over to Peter, but I don't really see anything. I think the third quarter was fairly front-loaded in terms of acquisition volume. Nothing overly material there. Peter, am I missing anything?

Speaker #5: Nothing overly material there . Peter , am I missing anything ?

Speaker #6: No , Michael , the only thing I would add is just in my prepared remarks , I did mention the term fees received during the third quarter , which contributed to FFO per share .

Peter Coughenour: No, Michael, the only thing I would add is just in my prepared remarks, I did mention the term fees received during the third quarter, which contributed to AFFO per share in the third quarter. We typically don't receive much in the way of term fees. We don't have anything contemplated in the fourth quarter. As you look at Q4 being roughly flat at the midpoint to Q3, I think the term fees are a contributing factor there.

Speaker #6: In the third quarter, we typically don't receive much in the way of term fees. We don't have anything contemplated in the fourth quarter.

Speaker #6: And so, as you look at Q4 being roughly flat at the midpoint to Q3, I think the term fees are a contributing factor.

Speaker #6: There .

Speaker #9: Thanks very much. Good luck with the fourth quarter.

Joey Agree: Thanks very much. Good luck with the fourth quarter.

Speaker #5: Thanks , Michael .

Peter Coughenour: Thanks, Michael.

Speaker #3: Our next question comes from Janet Galen at Bank of America .

Operator: Our next question comes from Jana Galan at Bank of America.

Speaker #10: Thank you . Good morning . Following up on your comments on the growing pipelines for the different external growth platforms , can you talk to how much is current tenants versus new to portfolio ?

[Analyst]: Thank you. Good morning. Following up on your comments on the growing pipelines for the different external growth platforms, can you talk to how much is current tenants versus new to portfolio, and then kind of where you see cap rates trending for Q4 and potentially into 2026?

Speaker #10: And then kind of where you see cap rates trending for for Q and potentially into 2026 ?

Speaker #5: Good morning . No new tenants that I can think of that we don't exist own existing in the 2600 assets . We're staying within our sandbox amongst all all three external growth platforms in terms of cap rate trends .

Joey Agree: Good morning, Ana. No new tenants that I can think of that we don't own existing in the 2,600 assets. We're staying within our sandbox amongst all three external growth platforms. In terms of cap rate trends, we'll see how the macro works out. Again, we haven't seen anything different to date. We don't anticipate any material deviation in Q4. Our Q4 pipeline in terms of acquisitions is very strong. I will say that there's a significant component of ground leases in there in Q4. As we've said previously, we anticipate breaking ground on over $100 million in projects in the second half of this year. Obviously, that was approximately $50 million in Q3. I would anticipate a potential acceleration of that as well into Q4 through development and developer funding platform.

Speaker #5: We'll see how the macro works out . Again , we haven't seen anything different to date . We don't anticipate any material deviation in Q4 .

Speaker #5: Our Q4 pipeline in terms of acquisitions is very strong . I will say that there is a significant component of ground leases in their in Q4 .

Speaker #5: And then, as we've said previously, we anticipate breaking ground on over $100 million in projects in the second half of this year.

Speaker #5: Obviously , that was approximately $50 million in Q3 . I would anticipate a potential acceleration of that as well into Q4 through development and developer funding platform .

Speaker #10: Thank you . Joey . And then maybe for Peter , you had mentioned in the guidance , there's 25 basis points of credit loss .

[Analyst]: Thank you, Joey. Maybe for Peter, you had mentioned in the guidance there's 25 bps of credit loss. Can you just kind of update us on where you stand as of third quarter?

Speaker #10: Can you just kind of update us on where you stand as of third quarter ?

Speaker #6: Yeah . So in the third quarter we experienced just under that about 21 basis points of credit loss during the third quarter . To your point , for the year , we're assuming in our guidance range approximately 25 basis points of credit loss .

Peter Coughenour: Yeah. In the third quarter, we experienced just under that, about 21 basis points of credit loss during the third quarter. To your point, for the year, we're assuming in our guidance range approximately 25 basis points of credit loss. With only a couple of months left here in the year, at this point, most of that is known or identified at this point. I do want to reiterate, I know we've talked about it on past calls, how we think about credit loss here. That is a fully loaded number inclusive not only of credit events, but also of any occupancy loss related to releasing assets that may not have been tied to a tenant that is in any form of distress or having credit issues.

Speaker #6: And with only a couple of months left here in the year at this point, most of that is known or identified at this point.

Speaker #6: Again , I do want to reiterate , I know we've talked about it on past calls , but how we think about credit loss here , that is a fully loaded number , inclusive not only of credit events , but also of any occupancy loss related to releasing assets that may not have been tied to a tenant .

Speaker #6: That is any form of distress or having credit issues . It also includes not only base rent , but any nets associated with any space that we get back and that we're responsible for during a period of downtime .

Peter Coughenour: It also includes not only base rent, but any nets associated with any space that we get back and that we're responsible for during a period of downtime. A fully loaded number, I think it's different than how others in the space think and talk about credit loss. Again, 25 basis points is what we anticipate for the year.

Speaker #6: And so a fully loaded number , I think it's different than somehow others in the space think and talk about credit loss . And again , 25 basis points is what we anticipate for the year .

Speaker #10: Great . Thank you very much .

[Analyst]: Great. Thank you very much.

Speaker #5: Thanks , Yana .

Peter Coughenour: Thanks, Ana.

Speaker #3: We'll move next to Jim Cramer at Evercore .

Operator: We'll move next to James Kammert at Evercore.

Speaker #11: Good morning. Thank you, Joey. Maybe I should've been listening more carefully. Did you indicate or say that on the releasing activity, in aggregate, it was a 104% recovery for the quarter, or did I mishear that?

[Analyst]: Good morning. Thank you. Joey, maybe I should have been listening more carefully. Did you indicate or say that on the releasing activity in aggregate, it was a 104% recovery for the quarter, or did I mishear that?

Speaker #5: No, that's correct, Jim.

Peter Coughenour: No, that's correct, Jim.

Speaker #11: And is that and what could you remind what the year to date was ? Is that .

[Analyst]: Could you remind me what the year-to-date was? Is that.

Speaker #5: Year ? I can't recall .

Joey Agree: Year, I can't recall. Yeah.

Speaker #6: So we've released two point 4,000,000ft² of GLA year to date with the recapture rate of 104% through the first six months of the year .

Peter Coughenour: We have released 2.4 million square feet of GLA year to date with a recapture rate of 104%. Through the first six months of the year, we were also at 104%. That recapture rate has trended pretty steadily around that 104% throughout the year.

Speaker #6: We were also at 104% . And so that recapture rate has trended pretty steadily around that 104% throughout the year .

Speaker #11: Okay . My apologies . Great . And then obviously , Peter , you mentioned obviously you have the new term loan that will be funding here in November .

[Analyst]: Okay, my apologies. Great. Peter, you mentioned you have the new term loan that will be funding here in November, probably. Given you have no unsecured maturities, as you say, we just think about it as liquidity and you either put it in cash or just pay down the line. There's no real targeted use for the funds immediately.

Speaker #11: Probably there's no given. You have no unsecured maturities, etc. as you say. We just think about it as liquidity, and you either put it in cash or just pay down the line.

Speaker #11: There's no real targeted use for the funds . Immediately .

Speaker #6: Yeah. So we'll close on that term loan in November. We have a 12-month delay draw feature on that term loan.

Peter Coughenour: We'll close on that term loan in November. We have a 12-month delayed draw feature on that term loan, and we don't necessarily need to draw down the proceeds right away. We have flexibility there. In terms of when we draw those proceeds down, what the intended use is, we do have about $390 million of outstanding commercial paper notes as of the end of the quarter. I think the intended use will be to pay down short-term borrowings with any remaining funds used to fund incremental investment activity.

Speaker #6: And so we don't necessarily need to draw down the proceeds right away . We have flexibility there in terms of when we draw those proceeds down what the intended use is .

Speaker #6: We do have about 390 million of outstanding commercial paper notes as of the end of the quarter . And so I think the intended use will be to pay down short term borrowings with any remaining funds used to fund incremental investment activity .

Speaker #11: Great. Thanks for the clarification. Thank you.

[Analyst]: Great. Thanks for the clarification. Thank you.

Speaker #5: Thanks , Jim .

Peter Coughenour: Thanks, Jim.

Speaker #3: Next we'll move to Linda Sy at Jefferies .

Operator: Next we'll move to Linda Tsai at Jefferies.

Speaker #12: Hi . With the ground leases being a bigger portion of the for Q acquisitions and 10% of the overall portfolio ABR any thoughts on how much do you want to grow this piece of the business ?

[Analyst]: Hi. With the ground leases being a bigger portion of the Q4 acquisitions and 10% of the overall portfolio ABR, any thoughts on how much you want to grow this piece of the business?

Speaker #5: We'd love to continue to grow it . Linda . We're going to do so opportunistically if we find opportunities that obviously hurdle qualitatively and quantitatively .

Joey Agree: We'd love to continue to grow it. Linda, we're going to do so opportunistically. If we find opportunities that obviously hurdle qualitatively and quantitatively, we're going to strike. Like I said, there are a number of ground leases, a much higher percentage in Q4 currently. That could change here as we wrap up sourcing for Q4 over the next couple of weeks. They're just opportunistic sellers here generally that we're finding opportunities, both institutional as well as individual sellers.

Speaker #5: We're going to strike . Like I said , there are a number of ground leases a much higher percentage in Q4 currently that could change here .

Speaker #5: As we wrap up sourcing for Q4 over the next couple of weeks . But there just opportunistic sellers here generally that we're finding opportunities both institutional as well as individual sellers .

Speaker #12: Thanks . And then I know you said the term fees are always minimal for you . Always . But would you be okay sharing who the retailer was in three ?

[Analyst]: Thanks. I know you said the term fees are always minimal for you always, but would you be okay sharing who the retailer was in Q3?

Speaker #5: Q yeah , that was two Advance Auto Parts stores that we liked . The real estate and we are actively working on retaining those assets .

Joey Agree: Yeah, that was two Advance Auto Parts stores that we like the real estate, and we are actively working on retenanting those assets. You'll also notice that we divested of a few Advance Auto Parts during the quarter, as I mentioned during the prepared remarks. Just continuing to diversify the portfolio and take advantage of opportunities.

Speaker #5: You'll also notice that we divested a few Advance Auto Parts during the quarter. As I mentioned during the prepared remarks, we are continuing to diversify the portfolio and take advantage of opportunities.

Speaker #12: Thanks .

[Analyst]: Thanks.

Speaker #3: We'll move next to Omotayo Okusanya at Deutsche Bank .

Operator: We'll move next to Reuben Treatman at Deutsche Bank.

Speaker #13: Yes . Good morning everyone . Good to see you guys firing on all cylinders . The credit rating , the you know , upgrade .

[Analyst]: Yes. Good morning, everyone. Good to see you guys firing on all cylinders. The credit rating, the upgrade, could you just talk a little bit about how you expect that to ultimately impact your cost of debt? Are you suddenly, you know, 25 bps tighter, or like how do we kind of think about that as it pertains to your long-term debt and maybe term loan funding?

Speaker #13: Could you just talk a little bit about how you expect that to ultimately impact your cost of debt . Are you certainly , you know , 25 Bips tighter or like how do we kind of think about that as it pertains to your long term debt ?

Speaker #13: And maybe term loan funding?

Speaker #6: Sure . I think with the receipt of the A minus rating from Fitch during the quarter , we saw an immediate improvement on our existing 2029 term loan , where we saw five basis points of pricing improvement .

Peter Coughenour: Sure. I think with the receipt of the A-minus rating from Fitch during the quarter, we saw an immediate improvement on our existing 2029 term loan, where we saw five basis points of pricing improvement there. We were also active issuing commercial paper during the quarter, and we saw a similar pricing improvement on commercial paper issuance after receiving the A-minus rating. As we think about long-term debt issuance in the public markets going forward, I certainly think the A-minus rating helps. I think it's validation of the manner in which we've built the company in a very conservative manner, the strength of our balance sheet and our portfolio, and frankly, what we hear from fixed-income investors about how they view the credit today.

Speaker #6: There . We were also active issuing commercial paper during the quarter , and we saw similar pricing improvement on commercial paper issuance . After receiving the A rating .

Speaker #6: As we think about long term debt issuance in the public markets going forward , I certainly think the A-minus rating helps . I think it's it's validation of the manner in which we built the company in a very conservative manner .

Speaker #6: The strength of our balance sheet in our portfolio and, frankly, what we hear from fixed income investors about how they view the credit today.

Speaker #6: And so I think in time , that will allow us to continue to compress spreads and and achieve better pricing in the public .

Peter Coughenour: I think in time, that will allow us to continue to compress spreads and achieve better pricing in the public unsecured markets when we come back to those markets. We've seen immediate pricing improvement on our term loan and commercial paper issuance this year as well.

Speaker #6: Unsecured markets, you know, when we come back to those markets. But we've seen immediate pricing improvement on our term loan and commercial paper issuances here as well.

Speaker #13: Well , that's very helpful . And then on the DFP side , could you just talk a little bit about , again , you're ramping up pretty nicely .

[Analyst]: Yeah, that's very helpful. On the DFP side, could you just talk a little bit about, again, you're ramping up pretty nicely. You guys have put out a really good target for that business, which you know implies a decent amount of growth and demand. Probably every other property type everyone's kind of talking about development is really, really hard, whether it's due to construction costs or what have you. Could you just talk a little bit about what's driving all of a sudden you know your ability to kind of ramp up that business.

Speaker #13: You guys have put out a really good target for that business, which, you know, implies a decent amount of growth and demand.

Speaker #13: I mean , probably every other property type , everyone's kind of talking about development is really , really hard , whether it's due to construction costs or what have you .

Speaker #13: So, you can just talk a little bit about what's driving all of a sudden, you know, your ability to kind of ramp up that business.

Speaker #5: Yeah . Just to to clarify , when development , when we talk about the Speedway projects and the prepared remarks , those are true development projects .

Joey Agree: Yeah. Just to clarify, when development, when we talk about the Speedway projects and the prepared remarks, those are true development projects. We're working hand in hand, the team here with 7-Eleven Speedway, everything from site selection to entitlements and permitting, A&E overseeing construction and turning over. That's true organic development projects, Agree Realty working with 7-Eleven hand in glove. The developer funding platform is really being utilized as a bridge for developers to get projects complete. Many of the times in the developer funding projects, usually we're providing the capital. It's more of a financial structure. We own the asset upon completion. The developer is able to obtain a TIF to help make his numbers work or her numbers work on their side of the equation, or we'll retain outlots or ancillary real estate where they see eventual upside.

Speaker #5: We’re working hand in hand with the team here at 7-Eleven Speedway, everything from site selection to entitlements and permitting, as well as A&E overseeing construction and turnover.

Speaker #5: So that's true . Organic development projects . Agree Realty working with 7-Eleven hand-in-glove , the developer funding platform is really being utilized as as a as a bridge for developers to get projects complete .

Speaker #5: And many of these , many of the times in the developer funding projects , usually we're providing the capital . It's more of a financial structure .

Speaker #5: We own the asset upon completion , the developer is able to obtain a TIF to help make his numbers work or her numbers work on their side of the equation , or will retain Outlots or ancillary or ancillary real estate where they see eventual upside .

Speaker #5: I will note both pipelines have both platforms. Excuse me, they have deep pipelines. There are some fairly large projects also in both platforms right now that could hit in Q4 or, due to entitlement and permitting issues, could hit in Q1.

Joey Agree: I will note both pipelines have, both platforms, excuse me, have deep pipelines. There are some fairly large projects also in both platforms right now that could hit in Q4 or due to entitlement and permitting issues could hit in Q1. That's why we've got a kind of a wide stance there in terms of what we anticipated. That number could be well over $100 million or it could move into the back half this year, as I mentioned, or could move into Q1, really out of our control, third-party municipal and governmental control there.

Speaker #5: That's why we're we've got kind of a wide stance there in terms of what we anticipate , but that number could be well over $100 million or could move into for the back half of this year , as I mentioned , or could move into Q1 , really out of our control .

Speaker #5: Third-party municipal and governmental controller.

Speaker #13: Great . Thank you .

[Analyst]: Great, thank you.

Speaker #5: Thanks , Tom .

Joey Agree: Thanks, Tim.

Speaker #3: We'll move next to John Kieliszkowski at Wells Fargo.

Operator: We'll move next to John Kilichowski at Wells Fargo.

Speaker #14: Good morning. Maybe just starting off, given the distress we've seen in autos this year, I think there was a BK announced this morning for a subprime lender.

[Analyst]: Good morning. Maybe just starting off, given the distress we've seen in autos this year, I think there was a BK announced this morning for a subprime lender. How do you think about your exposure there? Are there any of those tenants entering watchlist territory for you?

Speaker #14: How do you think about your exposure there ? And are there any of those tenants entering watch list territory for you ?

Speaker #5: No , I think the subprime lending market actually plays into our thesis on , frankly , auto parts . The distress you're seeing in the in those borrowers is car .

Joey Agree: No, I think the subprime lending market actually plays into our thesis on, frankly, auto parts. The distress you're seeing in those borrowers is every day is a new record for cars on the road. Auto parts obviously is a substantial part of our portfolio, being number five in terms of sector concentrations at 6.8%. We're amongst O'Reilly's and AutoZone's largest landlords and partners. I'll be down in O'Reilly pretty soon with the team here. We continue to work with leading auto parts operators and obviously Gerber Collision as well. I think that really plays into the hands here. We're not ownerships of, we're not owning new car dealerships. That's not our business. We're really focused on the age of the cars on the road, the durability of the cars on the road, and ultimately the fungibility of the boxes of the real estate that we're acquiring.

Speaker #5: Every day is a new record for cars on the road. Auto parts, obviously, are a substantial part of our portfolio, meaning number five in terms of sector concentrations at 6.8%. We are amongst O'Reilly's and AutoZone's largest landlords and partners.

Speaker #5: I'll be down in O'Reilly pretty soon with the team here . We continue to work with with leading auto parts operators and obviously Gerber Collision as well .

Speaker #5: But I think that really plays into the hands here. We're not owners of, we're not owning new car dealerships. That's not our business.

Speaker #5: And so, we're really focused on the age of the cars on the road, the durability of the cars on the road, and ultimately the fungibility of the boxes of the real estate that we're acquiring.

Speaker #5: So, we've put a white paper out on that. It's on our website, and I think we've stayed aligned with that thesis.

Joey Agree: We've put a white paper out on that. It's on our website, and I think we've stayed aligned with that thesis.

Speaker #14: Got it . That's very helpful . And then maybe jumping to the 7-Eleven developments , there are those discussions for new builds on a one off basis .

[Analyst]: Got it. That's very helpful. Maybe jump into the 7-Eleven developments there. Are those discussions for new builds on a one-off basis, or is there any sort of visibility in a larger opportunity set there where you have some idea of what the runway is?

Speaker #14: Or is there any sort of visibility in a larger opportunity set there where you have some idea of what the runway is ?

Speaker #5: The latter we're working with, with 7-Eleven in defined geographic territories, and have a pipeline of opportunities behind us.

Joey Agree: The latter. We're working with 7-Eleven in defined geographic territories and have a pipeline of opportunities behind this.

Speaker #14: Got it. Very helpful. Thanks, Joey.

[Analyst]: Got it. Very helpful. Thanks, Joey.

Speaker #5: Thanks , John .

[Analyst]: Thanks, John.

Speaker #3: Next we'll move to Rob Stevenson at Janney .

Operator: Next, we'll move to Rob Stevenson at Janney.

Speaker #15: Good morning Joey . Given the spreads on developments over comparable acquisitions and the fact that these already have tenants in place , what's the limiting factor for you today in terms of growing that beyond the sort of 250 million in the external growth story ?

[Analyst]: Good morning. Joey, given the spreads on developments over comparable acquisitions and the fact that these already have tenants in place, what's the limiting factor for you today in terms of growing that beyond the sort of $250 million in the external growth story? Is it the construction partners and finding those? Is it targeted tenants and their expansion, or just a reluctance to make this too big of a percentage of the balance sheet?

Speaker #15: Is it the construction partners and finding those? Is it targeted tenants and their expansion, or just a reluctance to make this too big of a percentage of the balance sheet?

Speaker #5: No. Again, we're not doing anything on a speculative basis here. We know our returns, and we go into the project here.

Joey Agree: No, again, we're not doing anything on a speculative basis here. We know our returns when we go into the project here, and we have everything in hand when we close, including a guaranteed maximum price bid from a general contractor. That contract is executed. The only limiting factor is opportunities. I'd love to grow it commensurate, obviously, with the returns being appropriate. I would love to grow it more. I think you've seen this material acceleration in these platforms. We hope to continue to materially accelerate it further. As I talked about, there is a deep pipeline behind this where we do have visibility. These are projects that generally take 12 to 18 months. It's not like acquisitions where we turn and burn in 67 days. We are working actively through site selection, permitting, entitlements.

Speaker #5: So we have everything in hand when we are when we close , including a guaranteed maximum price bid from a general contractor , that contract is executed .

Speaker #5: It's the only limiting factor is opportunities. I'd love to grow it commensurate. Obviously, with the returns being appropriate, I would love to grow it more.

Speaker #5: And I think you've seen material acceleration in in these platforms . We hope to continue to material accelerate it further . And as , as I talked about , there is a deep pipeline behind this where we do have visibility .

Speaker #5: These are projects that generally take 12 to 18 months . It's not like acquisitions where we turn and burn in 67 days . And so we are working actively through site selection , permitting entitlements .

Speaker #5: We've closed projects subsequent to the quarter end , and we will close more projects this quarter . First quarter and second quarter and onward next year .

Joey Agree: We've closed projects subsequent to the quarter end, and we will close more projects this quarter, first quarter, and second quarter and onward next year.

Speaker #15: Okay . And then in terms of conversations with major tenants , anybody changing or thinking about expanding or shrinking the size of their prototypical boxes , for example , you know , a typical 10,000 square foot tenant wanting to downsize towards 7500ft² , going forward , or Upsizing to 15,000 .

[Analyst]: Okay. In terms of conversations with major tenants, anybody changing or thinking about expanding or shrinking the size of their prototypical boxes? For example, you know a typical 10,000 square foot tenant wanting to downsize towards 7,500 square feet going forward or upsizing to 15,000. Any sort of material changes to any of your major tenants' boxes, preferred boxes going forward?

Speaker #15: Any sort of material changes to any of your major tenants' boxes, preferred boxes going forward?

Speaker #5: No , it's a great question . Tenants are always tinkering with their prototypes and square footages . For those different prototypes . We get moved to a larger prototype .

Joey Agree: No, it's a great question. Tenants are always tinkering with their prototypes and square footages for those different prototypes. We are getting moved to a larger prototype, obviously. There's always, but nothing material in terms of just quantity of tenants changing prototypical structures. What we've seen over the last few years, frankly, is more of the bonus elements here and the pickup, you know, from store, the parking spaces, the drive-throughs, the pickup windows. Those are the types of elements we've seen a lot more changed than prototypical size.

Speaker #5: Obviously , there's always but nothing material in terms of just just quantity of tenants changing prototypical structures . What we've seen over the last few years , frankly , is more of the bopus elements here .

Speaker #5: And the pickup , you know , from store , the parking spaces , the drive thrus , the pickup windows , those are the types of elements we've seen a lot more change than prototypical size .

Speaker #15: Okay. Thanks, guys. I appreciate the time this morning.

[Analyst]: Okay, thanks, guys. Appreciate the time this morning.

Speaker #5: Thank you . Rob .

Joey Agree: Thank you, Rob.

Speaker #3: We'll go next to Spencer Glimcher at Green Street.

Operator: We'll go next to Spenser Glimcher at Green Street.

Speaker #10: Thank you. Maybe just.

[Analyst]: Thank you. Maybe just another one on the development front. In your conversations with these clients, are you getting a sense of future growth appetite beyond these initial projects that are either commenced or in some form of zoning or entitlement? If so, how much confidence does this give you in your ability to achieve those annual DFP goals that you outlined, Joey?

Speaker #16: Another one on the development front in your conversations with these clients , are you getting a sense of future growth appetite beyond these initial projects that are either commenced or in some form of zoning or entitlement ?

Speaker #16: And then, if so, how much confidence does this give you in your ability to achieve those annual goals that you outlined?

Speaker #16: Joey .

Speaker #5: What we hear from major tenants and the largest retailers in this country is they want to grow , grow , grow , grow , grow their store base .

Joey Agree: What we hear from major tenants and the largest retailers in this country is they want to grow, grow, grow, grow, grow their store base. I think I talked about it on the last call. There was too much attention in terms of both physical attention, mental attention, and capital turned to distribution for e-commerce. What all retailers have now realized is the store is the hub of a successful omnichannel operation and not just a spoke. Whether it's auto parts or off-price, Walmart, Costco, BJ's, Home Depot, Lowe's, all the way down, obviously, to the fast food operations that we're seeing today, c-stores are growing voraciously across this country. It's the continued expansion mode, even in the face of tariffs and construction costs and the other macro challenges that are out there. Will you repeat the second part of your question, Spenser?

Speaker #5: And I think I talked about on the last call, there was too much attention in terms of both physical attention, mental attention, and capital turned to distribution for e-commerce. What all retailers have now realized is that the store is the hub of a successful omnichannel operation, and not just a spoke.

Speaker #5: And so whether it's auto parts or off price , Walmart , Costco , BJ's , Home Depot , Lowe's , all the way down , obviously to the fast food operations that we're seeing today , see stores growing voraciously across this country is the continued expansion mode .

Speaker #5: Even in the face of tariffs and construction costs . And the other macro challenges that are out there . We repeat the second part of your question , Spencer .

Speaker #16: No . Well , I was just asking if if you had a sense of their near-term growth appetite , if that gave you confidence in achieving those annual DSP goals , the few hundred million that you want to put to work on that vertical ?

[Analyst]: Yeah, I was just asking if you had a sense of their near-term growth appetite, if that gave you confidence in achieving those annual DFP goals, you know, the few hundred million that you want to put to work in that vertical.

Speaker #5: Yeah. Look, we were lucky enough to have the president of a major off-price retailer up here speak to our board and talk about their growth ambitions with their differentiated banners.

Joey Agree: Yeah. Look, we were lucky enough to have the President of a major off-price retailer up here speak to our board and talk about their growth ambitions with their differentiated banners recently, speak to the entire real estate team. That gives me confidence. What also gives me, I think, the most confidence is our capabilities and our team here and the fact that we can effectuate all three growth platforms. I'll tell you, I think what we've created here, and I talked about this a little bit on the last call, is a different type of net lease company. I think it's imperative now that the sell side and the buy side start being discerning about the types of net lease companies. I know it's easy to group companies, obviously, in property types and sectors.

Speaker #5: Recently speak to the entire real estate team . Yeah , that gives me confidence . But it also gives me , I think , the most confidence is our capabilities and our team here .

Speaker #5: And the fact that we can, that we can, that we can effectuate all three growth platforms. And I'll tell you, I think we're what we've created here.

Speaker #5: And I talked about this a little bit on the last call is a different type of net lease company . And I think it's I think it's imperative now that the sell side and the buy side start being discerning about the types of net lease companies .

Speaker #5: I know it's easy to group companies , obviously in property types and sectors , but but we have we have companies in the net lease space that are high yield spread .

Joey Agree: We have companies in the net lease space that are high-yield spread investors, that are sale-leaseback organizations, that are global investors across asset classes. Now we have Agree Realty, which is a real estate company that happens to be in the retail net lease space. When we talk about these other two platforms and acquisitions is in the focus, obviously, that's the predominance of the investment capital we'll put to work this year, and I assume next year and the year after. It's not typical spread investing anymore. I've talked about it. I grew up on a site moving dirt, and the goal was always to create that real estate company in the net lease space. We started as a developer, and it's quite ironic. We launched the acquisition platform when we had never acquired a property in 2010.

Speaker #5: Investors that are selling back , organizations that are global investors across asset classes . And now we have a Agree Realty , which is a real estate company that happens to be in the retail net lease space .

Speaker #5: And so when we talk about these other two platforms and acquisitions is in the focus , obviously that's predominance of the investing capital .

Speaker #5: We'll put to work this year . And I assume next year in the year after , it's not typical spread investing anymore . You know , and I've talked about it , I grew up on a site moving dirt , and the goal was always to create that real estate company in the net lease space .

Speaker #5: And so we started as a developer, and it's quite ironic. We launched the acquisition platform and we had never acquired a property in 2010.

Speaker #5: Development kind of dropped off the radar , but was still a small piece of what we were doing at the time . Today , we're in a position where we can invest and have invested in all three platforms , and they are firing on all cylinders , and I think , I think it's time for everyone to use , hopefully a different way .

Joey Agree: Development kind of dropped off the radar, but was still a small piece of what we were doing at the time. Today, we're in a position where we can invest and have invested in all three platforms, and they are firing on all cylinders. I think it's time for everyone to use, hopefully, a different, I would hope, a different lens when they're viewing net lease companies than just multiple spreads because we have a lot of different types of businesses on operations and, frankly, investment philosophies in this space. What we're doing today is differentiated. It's been 15 years in the making, as I've talked about in prepared remarks. It's here, and it's here now. We're excited about development. We're excited about developer funding platform. We're excited about acquisition platform.

Speaker #5: I would hope a different lens when they're viewing net lease companies than just multiple spreads , because we have a lot of different types of businesses and operations and frankly , investment philosophies in this space .

Speaker #5: And what we're doing today is differentiated . It's been 15 years in the making , as I've talked about in prepared remarks , and it's here and it's here now .

Speaker #5: And so we're excited about development. We're excited about the developer funding platform. We're excited about the acquisition platform. And I'll tell you, retailers are just as excited with us.

Joey Agree: I'll tell you, retailers are just as excited with us that we can help them grow across all of those different efforts.

Speaker #5: And we can help them grow across all of those different efforts .

Speaker #16: Okay . Great . Thank you for that color . And then maybe just one on the ground lease front . You recently had a really favorable releasing outcome with an existing ground lease .

[Analyst]: Okay, great. Thank you for that color. Maybe just one on the ground lease front. You've recently had a really favorable releasing outcome with an existing ground lease. Can you just remind us if you have any other near-term lease maturities, and would you expect to have similar favorable outcomes?

Speaker #16: Can you just remind us if you have any other near-term lease maturities , and would you expect to have similar favorable outcomes ?

Speaker #5: We have a few that are . I'll call naked leases don't have any options . Nothing overly material . We have had a vacant Brinker ground lease back .

Joey Agree: We have a few that are, I'll call, naked leases, don't have any options. Nothing overly material. We have had a vacant Brinker ground lease, Brinker-backed ground lease sitting out in front of a former Borders that my father developed, which is now a Walmart Neighborhood Market, which is shorter-term in nature. Nothing overly material in 2026 that will be a significant mark-to-market opportunity.

Speaker #5: Brinker background lease sitting out in front of a former Borders that my father developed, which is now a Walmart Neighborhood Market. This lease is shorter term in nature, but nothing overly material.

Speaker #5: In 2026, that will be a significant mark-to-market opportunity.

Speaker #16: Okay . Thank you .

[Analyst]: Okay, thank you.

Speaker #5: Thanks , Spencer .

Joey Agree: Thanks, Spencer.

Speaker #3: We'll go next to you, Paul Rana at KeyBanc Capital Markets.

Operator: We'll go next to Upal Rana at Q Bank Capital Markets.

Speaker #17: Great . Thanks for taking my question . I wanted to get your stance on the current consumer environment . You know , given continued ambiguity on the macro tariffs and the softness in the jobs market , have you noticed any impact starting to creep into any of the industry categories you have exposure to ?

[Analyst]: Great. Thanks for taking my question. I wanted to get your stance on the current consumer environment. Given continued ambiguity on the macro tariffs and the softness in the jobs market, have you noticed any impacts starting to creep into any of the industry categories you have exposure to? You already mentioned auto parts earlier, but any other categories that you're seeing any impact?

Speaker #17: You already mentioned auto parts earlier , but any other categories that you'd see , you're seeing any impact ?

Speaker #5: I think we're seeing positive flow through for the majority of the vast majority of the categories . We invested . And so we're not doing entertainment , we're not doing experience , we're not doing anything fun .

Joey Agree: I think we're seeing positive flow-through for the vast majority of the categories we invest in. We're not doing entertainment. We're not doing experiential. We're not doing anything fun. We are the trade down. We own the trade down: Walmart, TJX, auto parts, right? We own, we focus on the trade down. Our tenants are the beneficiaries, generally speaking, of that trade down effect. It continues to permeate, I think, most notably right now, the middle class. The target customer is shifting to TJX and Walmart. We see that in their prints. That middle-class customer is trading down to our tenant base. We love Target. I think we own two or three, three of them. We see that tenant, that customer trading down, looking for savings, and being a more discerning shopper today.

Speaker #5: We are the trade down . We own the trade down . Walmart , TJX , Auto Parts , right . So we own we focus on the trade down .

Speaker #5: And so we're we're our tenants are the beneficiaries . Generally speaking of that trade down effect . And it continues to to permeate I think most notably right now the middle class the target customer is shifting to TJX and Walmart .

Speaker #5: We see that in their prints. And so that middle-class customer is trading down to our tenant base. We love Target.

Speaker #5: I think we own two or three. Three of them. But we see that tenants, that customers, are trading down, looking for savings and being more discerning shoppers.

Speaker #5: Today .

Speaker #17: Great . That was helpful . And then , you know , are you seeing any impact on the accelerated depreciation policy from the big beautiful bill , you know , creeping in as well on the transaction market or the 1031 market ?

[Analyst]: Great. That was helpful. Are you seeing an impact on the accelerated depreciation policy from the big beautiful bill creeping in as well on the transaction market or the 1031 market?

Speaker #5: Not in any spaces . We follow . You know , maybe in the car wash space where you get the accelerated depreciation with 1031 or private investors maybe on edges on the c-store space , but nothing overly beautiful .

Joey Agree: Not in any spaces we file in, maybe in the car wash space where you get the accelerated depreciation with 1031 or private investors, maybe on the edges on the C-store space, but nothing overly beautiful.

Speaker #17: Okay . Great . Thank you .

[Analyst]: Okay, great. Thank you.

Speaker #5: Thank you .

Joey Agree: Thank you.

Speaker #3: We'll take our next question from Eric Borden at BMO Capital Markets .

Operator: We'll take our next question from Eric Borden at BMO Capital Markets.

Speaker #18: Hey , good morning everyone . Just going back to the forward equity contracts . Peter , can you remind us if the forward equity in place has to be settled before the date of expiry ?

[Analyst]: Hey, good morning, everyone. Just going back to the forward equity contracts. Peter, can you remind us if the forward equity in place has to be settled before the date of expiry, or can those agreements be rolled forward?

Speaker #18: Or can those agreements be rolled forward ?

Speaker #6: Yeah , I think there's certainly the opportunity to to go back to the banks or counterparties to extend those contracts . If we thought , thought that was the appropriate thing to do .

Peter Coughenour: Yeah, I think there's certainly the opportunity to go back to the banks or counterparties to extend those contracts if we thought that was the appropriate thing to do. I think for a few reasons, we think it makes sense to settle our upcoming forwards at maturity. First and foremost, it's not like we're going to be sitting in cash when we settle that forward equity. We have $390 million of short-term borrowings outstanding as of quarter end. Obviously, as we continue to invest, that number will grow. I think there's a use of proceeds for the forward equity settlements that we have contemplated here in the fourth quarter. I think there are other considerations as well when you think about extending those contracts from a rating agency or leverage perspective.

Speaker #6: I think for a few reasons , we think it makes sense to settle our upcoming forwards at maturity . First and foremost , it's not like we're going to be sitting in cash when we settle that forward equity .

Speaker #6: We have 390 million of short term borrowings outstanding as of quarter end . And obviously , as we continue to invest , that number will grow .

Speaker #6: And so I think there's a use of proceeds for the forward equity settlements that we have contemplated here in the fourth quarter. I think there are other considerations as well.

Speaker #6: When you think about extending those contracts from a rating agency or leverage perspective.

Speaker #18: Okay. Thank you. And then can we just get your early thoughts on the Series A preferred shares that can be redeemed in September of next year?

[Analyst]: Okay. Thank you. Can we just get your early thoughts on the Series A preferred shares that can be redeemed in September of next year?

Speaker #6: We think that is a very attractive piece of paper today . And I would not anticipate that . That gets called anytime in the near future , given the coupon on it , which was the lowest REIT coupon in history for preferred outside of of PSA .

Peter Coughenour: We think that is a very attractive piece of paper today, and I would not anticipate that that gets called anytime in the near future, given the coupon on it, which was the lowest REIT coupon in history for a preferred outside of PSA. We continue to view that as an attractive piece of paper.

Speaker #6: And we continue to view that as an attractive piece of paper .

Speaker #18: Thank you very much .

[Analyst]: All right, thank you very much.

Speaker #6: Thank you .

Peter Coughenour: Thank you.

Speaker #3: Next, we'll go to Brad Heffern at RBC Capital Markets.

Operator: Next, we'll go to Brad Heffern at RBC Capital Markets.

Speaker #19: Yeah , thanks everybody . Joe , you talked about cap rates . Not really changing them in a material way . I'm wondering why you think that is .

[Analyst]: Yeah. Morning. Thanks, everybody. Joey, you talked about cap rates not really changing in a material way. I'm wondering why you think that is. I mean, obviously, we've seen cost of debt come down quite a bit. SOFR is hopefully moving lower, and we've heard these anecdotes about increased competition. Were spreads just anonymous? Narrow.

Speaker #19: I mean , obviously we've seen cost of debt come down quite a bit . So first hopefully moving lower . And we've heard these anecdotes about increased competition .

Speaker #19: So we're just anonymous anomalously narrow before . And they're getting back to normal levels now . Or is there something else that you would call out .

Operator: Before, and they're getting back to normal levels now, or is there something else that you would call out?

Speaker #5: So just just to clarify , Brad , I'm not I'm not predicting cap rates for 2026 . I'm just talking about my visibility into 2025 .

Joey Agree: Just to clarify, Brad, I'm not predicting cap rates for 2026. I'm just talking about my visibility into 2025. By the time I had any visibility into 2026, we'll get a new true social post and something will change. I'm not predicting it. We just haven't seen any material change in cap rates year to date, and I don't expect it in the fourth quarter of 2025. Obviously, things outside of our control will drive that overall narrative, but we'll continue to try to look for opportunities to push cap rates and obviously only transact where we think the appropriate pricing levels are.

Speaker #5: By the time I had any visibility into 2026 , we'll get a new true social post and something will change . So I'm not predicting it .

Speaker #5: We just haven't seen any material change in cap rates year-to-date, and I don't expect it in the fourth quarter of 2020.

Speaker #5: Five . Obviously , things outside of our control will will drive that overall narrative , but we'll continue to try to look for opportunities to push cap rates and obviously only transact where we think the the appropriate pricing levels are .

Speaker #19: Okay, got it. And then I know you've had kind of a self-imposed hiatus on new equity issuance since the April offering.

Operator: Okay. Got it. I know you've had kind of a self-imposed hiatus on new equity issuance since the April offering, and obviously, you have plenty of equity as you sit here today. I'm curious how you view the attractiveness of equity right now and when you might look to issue again.

Speaker #19: And obviously you have , you plenty of equity as you sit here today . But I'm curious how you view the attractiveness attractiveness of equity right now and when you might look to issue again .

Speaker #5: I appreciate the self-imposed hiatus . I hadn't thought I hadn't thought about it that way when we did that too , we promised investors and we stick to our word here .

Joey Agree: I appreciate the self-imposed hiatus. I hadn't thought about it that way. When we did that deal, we promised investors, and we stick to our word here. Consistency is the third slide in our deck. We told investors, "We weren't donating. We're not coming back." Right? That's what we've done. We obviously don't need to raise equity at 3.5 times levered and $1.7 billion, Peter, in liquidity. Is that correct?

Speaker #5: Consistency is the third slide in our deck . We told investors we weren't don't we're not coming back . Right . And and that's what we've done .

Speaker #5: We obviously don't need to raise equity at three and a half times levered. And 1,000,000,007, Peter. And liquidity, is that correct?

Speaker #6: 1,000,000,009 or over 2.2 billion including the term on it closes .

Operator: $1.9 billion or over $2.2 billion, including the term loan when it closes.

Speaker #5: So, we obviously don't need to raise any capital. The term loan, as Peter mentioned, the delayed draw feature of that term loan gives us a lot of flexibility.

Joey Agree: We obviously don't need to raise any capital. The term loan, as Peter mentioned, the delayed draw feature of that term loan gives us a lot of flexibility. When we raised that equity, I guess we did put on a self-imposed hiatus. I think the most important piece of that was that we stayed true to our word to investors, that we weren't going to constantly be flooding the equity markets with new issuance, whether it would be the ATM or a block or overnight transaction. We'll continue to look, obviously. We're an external growth-driven company, as in that lease REIT. We are growing voraciously. We'll continue to look at all different types of accesses to sources of capital. We're in the pull position here. Peter, we can spend how much until we got to five times levered?

Speaker #5: And so when we raise that equity , we I guess we did put on a self-imposed hiatus . But I think the most important piece of that was that we stayed true to our word to investors , that we work to constantly be flooding the equity markets with new issuance , whether it would be the ATM or obviously a block or overnight transaction , we'll continue to look , obviously , we're an external growth driven company as a net lease free .

Speaker #5: We are growing voraciously. We'll continue to look at all different types of access to sources of capital, but we're in the pole position here.

Speaker #5: And Peter , we can spend how much until we got to five times levered .

Speaker #6: We could spend approximately $1.5 billion, excluding free cash flow, until we get to five times we can execute on the high end of our investment guidance range.

Operator: We could spend approximately $1.5 billion, excluding free cash flow, until we get to five times. We can execute on the high end of our investment guidance range this year without raising any additional equity, and we would end the year at four times pro forma net debt to EBITDA. We have plenty of runway, and we're in a great position.

Speaker #6: This year without raising any additional equity . And we would end the year at four times pro forma net debt to EBITDA . So we have plenty of runway and we're in a great position .

Speaker #5: To add in free cash flow next year of over $125 million , minimally , and then you add in disposition proceeds and we clearly don't need a dollar and no debt maturities .

Joey Agree: You add in free cash flow next year of over $125 million minimally, and then you add in disposition proceeds, and we clearly don't need a dollar.

Operator: is no debt maturity.

Speaker #5: So we're we maintain full flexibility . I think the most important thing to I appreciate again , the self-imposed hiatus was we want to be consistent with investors .

Joey Agree: We maintain full flexibility. I think the most important thing too, I appreciate, again, the self-imposed hiatus was we want to be consistent with investors so they understand where we're going and what we're doing. This is net lease. It should be predictable.

Speaker #5: So they understand where we're going and what we're doing . This is net least . It should be predictable .

Speaker #19: Got it. Thank you.

Operator: Got it. Thank you.

Speaker #3: Our next question comes from West Golladay at Baird .

Reuben Treatman: Our next question comes from Wes Golladay at Baird.

Speaker #20: Hey good morning guys . I want to have a question on the true development platform . Are you willing to develop for all your targeted tenants , or do you have do you view some as being a little bit more risk or too complex ?

Joey Agree: Hey, good morning, guys. I want to have a question on the true development platform. Are you willing to develop for all your targeted tenants, or do you view some as being a little bit more risk or too complex?

Speaker #5: Interesting question . Complexity certainly would not be an issue . We generally stick to rectangles . Those aren't overly complex . We're not building anything overly overly difficult .

Joey Agree: Interesting question. Complexity certainly would not be an issue. We generally stick to rectangles. Those aren't overly complex. We're not building anything overly difficult. I think we would. I can't think off the top of my head of when we wouldn't develop for. Again, all three platforms are targeting the same tenant base. Will we do industrial for those retailers or distribution? No. Will we develop their traditional retail formats? Certainly. I'll tell you, we have been approached to develop in Canada. That's a no. We have been approached in other instances to try new prototypes or concepts. That's generally a no as well. We're not interested in 180,000 square foot sporting goods experiential constructs. I think I would tell you for 95% of them, yes, we will develop. We will use our developer funding platform, and we will acquire a third party or sell these things.

Speaker #5: Yeah , I think we would . I can't think one off the off my hand , but when we wouldn't develop for again , all three platforms are targeting the same tenant base .

Speaker #5: And so will we . Do industrial for those retailers or distribution ? No . But will we develop their traditional retail formats ? Certainly .

Speaker #5: I'll tell you, we have been approached to develop in Canada. That's a no. We have been approached in other instances to try new prototypes or concepts.

Speaker #5: That's generally a no as well . We're not interested in 180,000 square foot sporting goods , experiential constructs . And so but I think I would tell you , for 95% of them , yes , we will develop we will use our developer funding platform and we will acquire third party or sale leaseback .

Speaker #20: Okay . Thank you .

Joey Agree: Okay, thank you.

Speaker #5: Thank you .

Joey Agree: Thank you.

Speaker #3: Next, we'll go to R.J. Milligan at Raymond James.

Reuben Treatman: Next, we'll go to RJ Milligan at Raymond James.

Speaker #21: Hey, good morning, guys. Joey, I just wanted to get your higher-level views as we look into Q3 2026. The investment volume jumped quite a bit.

Joey Agree: Hey, good morning, guys. Joey, I just wanted to get your higher-level views as we look into 2026. Third quarter, investment volume jumped quite a bit. You've got all the growth platforms that are delivering. You've got, as I said, debt and equity lined up with the forwards and the term loan. Guidance for this year is about $1.6 billion of investment volume. Two questions. Would you want to do more next year in terms of investment volume? Is the gating factor really what's just available on the market, or is there like a number of incremental investment activity that just doesn't deliver enough so you'd want to smooth it out? I'm just trying to gauge at what levels of investment volume are you comfortable on a longer-term basis?

Speaker #21: You've got all the growth platforms that are delivering. You've got access to debt and equity lined up, with the forwards and the term loan guidance for this year being about $1.6 billion of investment volume.

Speaker #21: And so two questions . Would you want to do more next year in terms of investment volume . And two is the gating factor really which just available on the market or is there is there like a number of incremental investment activity that just doesn't deliver enough .

Speaker #21: So you'd want to smooth it out ? I'm just trying to gauge like what levels of investment volume are you comfortable on a longer term basis ?

Speaker #5: A great question , RJ . We have never thought of hazing here . We don't we don't do pacing . We take advantage of opportunities .

Joey Agree: A great question, RJ. We have never thought of pacing here. We do not do pacing. We take advantage of opportunities. We turn windows into doors, and then we sprint through them. Whether it was COVID or whether it was a disruption from a macro perspective or when we launched the acquisition platform, if we find a $5 billion transaction that fits this company's profile from a quality perspective and provides for a creative spread—that is making up the number of $5 billion, obviously—we will strike. I do not think of any gating factor except qualitative and quantitative hurdles. We have a cost of capital. We now have 93 team members here. We are 90 team members. Excuse me. We have hired 23 new team members this year. Hence the increase in G&A as a % of revenue in the updated guidance. We do not anticipate anything like that.

Speaker #5: We . Turn windows into doors and then we sprint through them . And so whether it was Covid or whether it was a disruption from a macro perspective or when we launched the acquisition platform , if we find a $5 billion transaction that fits this company's profile from a quality perspective and provides for accretive spreads and making up the number 5 billion , obviously we will strike .

Speaker #5: And so, I don't think of any gating factor except qualitative and quantitative hurdles. We have a cost of capital. We now have 93 team members here.

Speaker #5: We have 90 team members . Excuse me . We've hired 23 new team members this year . Hence the increase in the in G&A as a percentage of revenue in the updated guidance .

Speaker #5: We don't anticipate anything like that . We are built to grow . The only thing that will limit that growth is opportunities . And we will not stretch for them .

Joey Agree: We are built to grow. The only thing that will limit that growth is opportunities, and we will not stretch for them.

Speaker #21: Okay . That's helpful . That's it for me guys . Thank you .

Joey Agree: Okay. That's helpful. That's it from me, guys. Thank you.

Speaker #5: Thanks , RJ .

Joey Agree: Thanks, RJ.

Speaker #3: We'll go next to Rich Hightower at Barclays.

Reuben Treatman: We'll go next to Rich Hightower at Barclays.

Speaker #22: Hey good morning guys . Thanks for taking the question here . I guess , Joey , just to continue the line of thinking from the last question , you know , you just talked about it and you've talked about it before , sort of increasing the size of the investment team .

Operator: Hey, good morning, guys. Thanks for taking the question here. I guess, Joey, just to continue the line of thinking from the last question, you know, you just talked about it and you've talked about it before, sort of increasing the size of the investment team. I guess, you know, all else constant, is it reasonable to think that that implies you can sort of continue along the pace of acquisitions and other deal volumes, you know, that you sort of paced in the third quarter going forward, or is that not the right way to think about that?

Speaker #22: And so I guess all else constant does that is it reasonable to think that that implies you can sort of continue along the pace of acquisitions and other deal volumes that you sort of pasted in the third quarter going forward ?

Speaker #22: Or is that not the right way to think about that?

Speaker #5: Well , I think the size and scale of the team is to accommodate all different types of transactions that we're managing , and we don't see that as a constraint .

Joey Agree: I think the size and scale of the team is to accommodate all different types of transactions that we're managing, and we don't see that as a constraint. Right? Again, it's opportunity-dependent. Q4 will be a strong quarter for us. We know what development in DFP looks like going into 2026 for the first half right now, and that looks strong. We are able to handle 400 discrete transactions. We had 110 transactions, not including dispositions or leasing, in Q3 alone, and the team has incremental capacity. We continue to invest in systems. We're launching ARC 3.0 in 2026. We continue to lean out processes and eliminate wasted inefficiencies here. The team continues to get better at all levels, and we built redundancy in succession. We're in a great position to take advantage of those opportunities.

Speaker #5: Right . Again , it's opportunity dependent . Q4 will be a strong quarter for us . We know it development in DFP looks like going into 2026 for the first half .

Speaker #5: Right now , and that looks strong . But again , we are able to handle 400 discrete transactions . We had 110 transactions , not including dispositions or leasing in Q3 alone .

Speaker #5: And the team has an incremental capacity . We continue to invest in systems . We're launching AAC 3.0 in 2026 . We continue to lean out processes and eliminate waste and inefficiencies .

Speaker #5: Here . And the team continues to get better at all levels . And we build redundancy and succession . So we're in a great position to take advantage of those opportunities in terms of how it materializes into numbers and volume , that's going to be subject to what we find .

Joey Agree: In terms of how it materializes into numbers and volume, that's going to be subject to what we find, the grit and determination that we put forth, and in context of the overall marketplace.

Speaker #5: The grit and determination that we put forth, and in the context of the overall marketplace.

Speaker #22: Okay , that's that's helpful . And then one , one , just small one , I did notice , I guess your exposure to Dollar Tree fell quarter on quarter .

Operator: Okay. That's helpful. One just small one. I did notice, I guess, your exposure to Dollar Tree fell quarter on quarter. Maybe talk about the moving parts there. Was that part of the group of assets that was sold? Maybe just talk about how you feel about the Dollar Store concept in general, kind of relative to everything else that you own, if you don't mind.

Speaker #22: So just maybe talk about the moving parts . There . Was that part of the the group of assets that was sold . And maybe just talk about how you feel about the dollar store concept in general , kind of relative to everything else that you own .

Speaker #22: If you don't mind .

Speaker #5: Yeah . The bulk piece of that is the separation of Family Dollar . Obviously , from Dollar Tree with that sale . We've also made a couple dispositions .

Joey Agree: Yeah. The bulk piece of that is the separation of Family Dollar, obviously, from Dollar Tree with that sale. We've also made a couple of dispositions. Dollar Store, as I'll note, year over year over year have dropped 87 basis points as a component of our portfolio. Similarly, Pharmacy has dropped 30 basis points from 4% to 3.7%. We will continue to be extremely discerning. We're not going to increase exposures, especially in any material way, to either of those sectors. If we find a unique opportunity, we will strike. They are certainly not at the top of our list in terms of new investment appetite.

Speaker #5: Our stores , I'll note year , year over year over year have dropped 87 basis points as a as a component of our portfolio .

Speaker #5: Similarly , pharmacy has dropped 30 basis points from 4 to 3.7% . We will continue to be extremely discerning . We're not going to increase exposures , especially in any material way , to either of those sectors .

Speaker #5: If we find a unique opportunity , we we we will strike . But there's certainly not at the top of our list in terms of new investment appetite .

Speaker #22: Understood . Thank you .

Operator: Understood. Thank you.

Speaker #5: Thank you .

Joey Agree: Thank you.

Speaker #3: We'll move next to Ronald Camden at Morgan Stanley.

Reuben Treatman: We'll move next to Ronald Kamdem at Morgan Stanley.

Speaker #23: Hey , two quick ones . Just going back on ten and health 25 basis points I think baked into the the guide . I think that's lower from last quarter is that is that part of the sale of the at home just maybe talk through that and just general color of I know we've talked a few tenant groups , but how are you feeling about tenant health today .

Joey Agree: Hey, two quick ones. Just going back on tenant health, 25 basis points, I think, baked into the guide. I think that's lower from last quarter. Is that part of the sale of the at-home? Just maybe talk through that in general color of I know we've talked to a few tenant groups, but how are you feeling about tenant health today? Thanks.

Speaker #23: Thanks .

Speaker #5: To the at home question . That was an opportunistic sale . We bought that seven years ago . I think , Peter , correct me if I'm wrong , about seven years ago it was a street real estate play .

Joey Agree: To the at-home question, that was an opportunistic sale. We bought that seven years ago, I think. Peter, correct me if I'm wrong. Seven years ago, it was a straight real estate play. It was directly across from a mall that was to be redeveloped in a high-growth area, obviously, Provo, Utah, at a signalized intersection with outlet capability to be developed in the future at a very, very low basis, effectively below land basis. The purchaser of that at a 7% cap is going to do multifamily for BYU, which is just north. It obviously worked out for us in terms of the acquisition and disposition. I think that's emblematic of our real estate vision here. We were never and will never be focused on at-home or secondary or tertiary home furniture and accessory retailers.

Speaker #5: It was directly across from a mall that was to be redeveloped in a high growth area . Obviously , Provo , Utah , at a signalized intersection with Outlot capability to be developed in the future .

Speaker #5: At a very , very low basis , effectively below land basis . The purchaser of that at a seven cap is going to do multifamily for BYU , which is just north .

Speaker #5: And so it obviously worked out for us in terms of the acquisition and disposition. Again, I think that's emblematic of our real estate vision here.

Speaker #5: We were never and will never be focused on at-home or secondary or tertiary home furniture and accessory retailers. In terms of the 25 basis points, Peter, do you want anything color on that?

Joey Agree: In terms of the 25 basis points, Peter, you want to add anything in color there?

Speaker #6: Yeah. Around last quarter, our guidance contemplated 25 basis points of credit loss at the high end of our AFFO per share range.

Operator: Yeah, Ron. Last quarter, our guidance contemplated 25 basis points of credit loss at the high end of our AFFO per share range and 50 basis points of credit loss at the low end of the range. We have tightened that up to 25 basis points. That compares to the 50 basis points of credit loss that we assumed in our initial guidance range going back to February. As the portfolio has continued to perform very well and we haven't realized that higher level of credit loss, we've continued to trim up and bring down our assumption for credit loss for the year.

Speaker #6: And 50 basis points of credit loss at the low end of the range. So we have tightened that up to 25 basis points.

Speaker #6: And that compares to the 50 basis points of credit loss that we assumed in our initial guidance range, going back to February.

Speaker #6: And so, as the portfolio has continued to perform very well and we haven't realized that higher level of credit loss, we've continued to trim up and bring down our assumption for credit loss for the year.

Speaker #23: Great. And then just to get back on the cap rate question, I know it's been asked a bunch of different ways, but maybe you can comment on any sort of larger deals or larger portfolios and what you see in terms of cap rates?

Joey Agree: Great. Just back on the cap rate question, I know it's going to be asked a bunch of different ways, but maybe can you comment on any sort of larger deals or larger portfolios and what you see in terms of cap rates there? Thanks.

Speaker #23: There ? Thanks .

Speaker #5: I will say we have passed on a couple larger deals that I'm sure you'll see hit the wires that we didn't think were priced appropriately.

Joey Agree: I will say we have passed on a couple of larger deals that I'm sure you'll see hit the wires that we didn't think were priced appropriately. Most notably, sale-leaseback portfolios. We think we can create more value through alternative means, including development. That's really only the color I can give.

Speaker #5: Most notably sale leaseback portfolios . We think we can create more value through alternative means , including development , but that's that's really only the color I can give .

Speaker #23: Thank you .

Joey Agree: Thank you.

Speaker #5: Thanks , Ron .

Joey Agree: Thanks, Ron.

Speaker #3: And we'll go next to Linda Sy at Jefferies .

Reuben Treatman: We'll go next to Linda Tsai at Jefferies.

Speaker #12: Hi . Just a follow up to an earlier question . Given your investment levels reverting back to historical highs , I just want to confirm , are you growing the investment team or is the investment team getting more productive with the aid of technology like Ark ?

Peter Coughenour: Hi. Just a follow-up to an earlier question. Given your investment levels reverting back to historical highs, I just wanted to confirm, are you growing the investment team, or is the investment team getting more productive with the aid of technology like ARC?

Speaker #5: Both . We have grown the investment team again . That's part of the 23 team members that we've added this year . We have grown the investment team , all three platforms all the way down to the the analyst level and interns .

Joey Agree: We have grown the investment team. Again, that's part of the 23 team members that we've added this year. We have grown the investment team off all three platforms, all the way down to the analyst level and interns that have become analysts. We feel like we're fully staffed that team. We continue to make IT improvements from the use of AI for lease abstraction and lease underwriting checklists and continue to work on ARC 3.0. We think that team has been built, and we'll continue to coach, obviously, coach and develop the younger team members. We're in position for 2026, and I don't anticipate any material hires there.

Speaker #5: That have become analysts . And so we feel like we're fully staffed that team . We continue to make it improvements from the use of AI for lease abstraction and lease underwriting , checklists and continue to work on Ark 3.0 .

Speaker #5: But we think that the team has been built, and we'll continue to coach, obviously coaching and developing the younger team members.

Speaker #5: So we're in we're in we're in position for 2026 . And I don't anticipate any any material hires there .

Speaker #12: Thank you .

Peter Coughenour: Thank you.

Speaker #5: Thanks , Linda .

Joey Agree: Thanks, Linda.

Speaker #3: And that concludes our Q&A session. I will now turn the conference back over to Joey Aguirre for closing remarks.

Reuben Treatman: That concludes our Q&A session. I will now turn the conference back over to Joey Agree for closing remarks.

Speaker #5: Thank you, everybody, for joining us. We look forward to seeing you in Dallas or at any upcoming conferences. And good luck through the rest of earnings season.

Joey Agree: Thank you, everybody, for joining us. We look forward to seeing you in Dallas or at any upcoming conferences, and good luck through the rest of the earning season. Appreciate it.

Speaker #5: Appreciate it .

Reuben Treatman: This concludes today's conference call. Thank you for your participation. You may now disconnect.