How are you acquiring higher credit assets (73% investment grade this quarter) without sacrificing yield, and do you expect this to persist?

The ability to acquire higher credit assets without sacrificing yield is attributed to the team's depth, strong retailer relationships, and asymmetrical opportunities across their three platforms. This is a result of their differentiated business model, not a broader market change. “It's due to our team, the depth of relationships we have, the -- the asymmetrical opportunities that we pursue with our retail partners.”

Can you explain the rationale behind the BP transaction and what makes travel centers attractive for Agree Realty?

The BP transaction was approximately $75 million for large-format travel centers with an A-rated BP North America credit guarantee. These are considered tremendous opportunities within the large-format C-store sector, offering long-term leases and significant escalations, aligning with their strategic focus. “We have the BP transaction was approximately $75 million. These are large-format travel centers with BP North America credit guaranteeing an A- rated credit.”

You've been leaning more into ground leases. What makes them attractive from a risk-adjusted return perspective?

Ground leases offer excellent risk-adjusted returns because the tenant builds the building at their own expense, and the company owns the land. If a tenant leaves, the building reverts free to Agree Realty, allowing for potential significant rent markups. This provides a unique advantage over leaseholds. “My favorite risk-adjusted returns in the overall net lease sector, we'll continue to pursue opportunities across our 3 platforms, and we'll continue to execute on.”

ADC

Agree Realty (ADC) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Real Estate· Jul 31, 2026

Source: earnings call transcript

Executive summary

Agree Realty Q2 FY26 — Record Investment and Raised Guidance

Agree Realty delivered a record-setting quarter, driven by robust investment activity across its three growth platforms and strong portfolio performance. The company raised its full-year investment volume and AFFO per share guidance, underscoring its ability to compound earnings growth while maintaining a conservative balance sheet. Management highlighted its differentiated market position, deep retailer relationships, and internal asset management platform as key competitive advantages, with ongoing investments in AI and technology to further enhance operational efficiency.

Highlights

Invested a company record of over $500 million across three growth platforms in Q2 FY26.
Raised full-year investment volume guidance to $1.6 billion to $1.8 billion, a 24% increase at the midpoint over initial guidance.
Raised full-year AFFO per share guidance by $0.02 at the midpoint to $4.57 to $4.59, implying nearly 6% year-over-year growth.
Achieved a lease recapture rate of approximately 105% on 760,000 square feet of GLA in Q2 FY26.
Occupancy rate ticked up 10 basis points sequentially to a company record of 99.8%.

Concerns

The 10-year treasury rate is elevated at 4.7%, posing potential future headwinds for capital costs.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year investment volume	$1.6 billion to $1.8 billion high materiality	FY26	High
Full-year AFFO per share	$4.57 to $4.59 high materiality	FY26	High
Full-year credit and occupancy loss assumption	25 basis points medium materiality	FY26	High
Annual development and DFP spend	$250 million medium materiality	Medium-term objective	High
Free cash flow after dividend	exceed $140 million medium materiality	FY26	High

ADC operating KPIs by quarter

ADC operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Properties Acquisitions	100 During the first quarter, we invested nearly $425 million in 100 properties across these 3 platforms. Source: earnings call transcript	82 This includes $451 million of acquisitions across 82 retail net lease assets, the highest level of quarterly activity since the depths of COVID. Source: earnings call transcript	-18%
Properties Dispositions	7 We sold 7 properties during the quarter for total gross proceeds of approximately $11 million at a weighted average cap rate of 6.8%. Source: earnings call transcript	14 On the disposition front, we sold 14 properties during the quarter for gross proceeds of approximately $30 million at a weighted average cap rate of 7%. Source: earnings call transcript	+100%
Square feet Leased	876K sq ft+ We executed new leases, extensions or options on over 876,000 square feet of gross leasable area during the first quarter with a recapture rate of over 104%. Source: earnings call transcript	~760K sq ft We executed new leases, extensions or options on approximately 760,000 square feet of gross leasable area during the second quarter with a recapture rate of approximately 105%. Source: earnings call transcript	—
Properties	2,756 As of quarter end, our best-in-class portfolio comprised 2,756 properties spanning all 50 states. Source: earnings call transcript	2,825 At quarter end, our best-in-class portfolio stood at 2,825 properties, spanning all 50 states in the District of Columbia. Source: earnings call transcript	+2.5%
Properties Ground leases	261 The portfolio included 261 ground leases, comprising over 10% of annualized base rent. Source: earnings call transcript	268 The portfolio includes 268 ground leases comprising over 10% of annualized base rents our investment-grade exposure stood at nearly 2/3 of our portfolio. Source: earnings call transcript	+2.7%
Occupancy rate	99.7% Our investment-grade exposure stood at over 65% and occupancy is strong at 99.7%, up 50 basis points year-over-year. Source: earnings call transcript	99.8% Given the progress achieved year-to-date, our occupancy ticked up up 10 basis points sequentially to match another company record of 99.8%. Source: earnings call transcript	+0.1 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

BP North America Acquisition of BP-branded travel centers approximately $75 million long-term leases

Part of the large-format C-store sector focus, located on major interstates.

Various Acquisition of 82 retail net lease assets $451 million weighted average lease term of 11.2 years

Properties leased to operators in auto parts, home improvement, grocery, farm and role supply, and convenience store sectors. Includes 3 Walmart Supercenter ground leases, a Walmart Neighborhood Market, and a Home Depot ground lease.

Goodyear, Advance Auto Parts Disposition of 14 properties approximately $30 million limited term remaining of approximately 6.9 years

Primarily comprised of 3 Goodyear locations and 4 Advance Auto Parts stores. None were investment-grade credit.

Sam's Club, Walmart Supercenter Executed new leases, extensions, or options

Covered approximately 760,000 square feet of gross leasable area in Q2 FY26, including a Sam's Club in Maryland and a Walmart Supercenter in Georgia.

Capital programs

Development and DFP projects commenced underway $88 million

Start: Q2 FY26

Benefit:5 projects

Includes 7-Elevens, Ross, Burlington, and TJX concepts. Total anticipated costs.

Development and DFP projects commenced underway

Period spend: $105 million

Start: Year-to-date

More than 3x the level achieved in the prior period.

Development and DFP projects (completed or under construction) underway $200 million

Funding: committed capital

Start: First half FY26

Benefit:20 projects

Company record.

Projects under construction underway $83 million

Start: Q2 FY26

Benefit:10 projects

Includes Burlington, Sunbelt Rentals, and Ross.

Sunbelt Rentals project in Missouri completed just over $6 million

One project completed during the quarter.

Risks & headwinds

Interest rate sensitivity Near term

10-year treasury elevated at 4.7%

Mitigation:Proactive hedging activity with $300 million of forward starting swaps; $1.9 billion total liquidity; no material debt maturities until 2028.

Tenant concentration / credit quality (AMCs) Ongoing

Few AMCs in the portfolio

Mitigation:AMCs were upgraded by S&P, raised equity capital, and show box office momentum. Overall watchlist is in a good spot, lower than prior years.

What to watch in Q3 FY26

Full-year investment volume

FY26

Current $500M+ invested in Q2

Target $1.6B-$1.8B

Why it matters

This metric indicates the company's ability to deploy capital and drive external growth, directly impacting future earnings.

All 3 of our external growth platforms have broad and expansive pipelines, enabling us to once again raise our full year investment volume guidance to an updated range of $1.6 billion to $1.8 billion.

Find out whether ADC delivers this. Inve re-checks your case every morning.

Q&A highlights

With accelerating acquisition activity in the net lease sector, are you seeing any changes in bidding behavior, especially for larger portfolios or investment-grade assets?

Management stated no material change in bidding behavior or competitive landscape. Cap rates have remained within a consistent band for three years, and they don't anticipate significant changes despite elevated 10-year treasury rates.

“Michael, no material change as we've seen. Again, cap rates have effectively been within a band for going on 3 years now. So we haven't seen any material changes, any new entrants to the competitive set.”

asked by Michael Goldsmith · answered by Joey Agree

2 min read 6 chapters

Detailed narrative

Record Investment Activity and Portfolio Quality

Agree Realty achieved a company record investment of over $500 million in Q2 FY26 across 102 properties, marking the highest quarterly activity since the depths of COVID. These acquisitions, primarily retail net lease assets, boasted a weighted average cap rate of 7% and a weighted average lease term of 11.2 years.

The portfolio's quality was highlighted by over 73% of annualized base rents from investment-grade retailers and 13.5% from ground lease assets, reflecting a strategic focus on high-credit, long-term leases.

Scaling Development and DFP Platforms

The development and Developer Funding Platform (DFP) continued to scale, setting a company record for construction start volume with five projects breaking ground, totaling approximately $88 million in anticipated costs. Year-to-date, the company commenced over $105 million of projects, more than triple the prior period, and had 20 projects completed or under construction representing $200 million of committed capital.

This progress positions the company well to achieve its medium-term objective of $250 million in annual development and DFP spend.

Strategic Focus on Ground Leases and Key Sectors

Agree Realty continues to strategically pursue ground lease opportunities, which now comprise over 10% of its annualized base rents. Management emphasized the attractive risk-adjusted returns of ground leases, where the tenant builds the structure, and the land reverts to the company if the tenant vacates.

The company also maintains a deep investment focus on off-price and large-format convenience store sectors, where it is already among the largest owners nationally, leveraging these sectors for significant pipeline opportunities.

Robust Balance Sheet and Capital Management

The company maintains a strong financial position with total liquidity of approximately $1.9 billion at quarter-end, including cash on hand, forward equity, and over $750 million available on its revolving credit facility. Pro forma net debt to recurring EBITDA stood at 3.7x, demonstrating a conservative leverage profile.

Proactive hedging activities, including $300 million of forward starting swaps, have locked in attractive capital costs and provide significant visibility into medium-term funding during macro uncertainty.

Operational Efficiency and Technology Integration

Agree Realty is actively investing in technology and AI to enhance operational efficiency, streamline workflows, and accelerate transaction execution. These initiatives, combined with the upcoming launch of ARC 3.0, are expected to further strengthen operating leverage and compress G&A as a percentage of revenues.

The company's lean organizational structure, with approximately 100 team members, supports its ability to execute a high volume of transactions while continuously improving processes.

Differentiated Retailer Partnerships

The company highlighted its unique market position, built on durable competitive advantages and deep retailer relationships. Agree Realty offers a full suite of solutions to its partners, including development, sale-leaseback acquisitions, third-party acquisitions, and early lease extensions. This comprehensive value proposition, coupled with an active asset management team, distinguishes the company as a preferred partner for leading retailers, fostering a continuous pipeline of transactional activity.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.