Agree Realty : Q1 2025 Q1 2025 Transcript
ADC
EDITED TRANSCRIPT
Agree Realty Corporation's
First Quarter 2025 Earnings Conference Call Wednesday, April 23, 2025, 9:00 AM ET
Edited transcript as provided by MultiVu, PR Newswire's multimedia and broadcast services division.
NYSE: ADC
Q1 2025 Agree Realty Corporation Earnings Conference Call
April 23, 2025, 9:00 AM
CORPORATE PARTICIPANTS
Reuben Treatman | Agree Realty Corporation | Senior Director, Corporate Finance Joey Agree | Agree Realty Corporation | President & CEO
Peter Coughenour | Agree Realty Corporation | CFO
CONFERENCE CALL PARTICIPANTS
Ki Bin Kim | Truist Securities
Smedes Rose | Citigroup
RJ Milligan | Raymond James
Michael Goldsmith | UBS
Linda Tsai | Jefferies
John Kilichowski | Wells Fargo
Ronald Kamdem | Morgan Stanley
Spenser Glimcher | Green Street
Jana Galan | Bank of America
Jim Kammert | Evercore ISI
Upal Rana | KeyBanc Capital Markets
Rich Hightower | Barclays
PRESENTATION
Operator
Good morning and welcome to the Agree Realty Fourth Quarter 2024 Conference Call. (Operator Instructions). After today's presentation, there will be an opportunity to ask questions. (Operator Instructions). Note: this event is being recorded.
I'd now like to turn the conference over to Reuben Treatman, Senior Director of Corporate Finance. Please go ahead, Reuben.
Reuben Treatman | Agree Realty Corporation | Senior Director, Corporate Finance
Thank you. Good morning, everyone and thank you for joining us for Agree Realty's First Quarter 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 will 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-Q, 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 recurring EBITDA. 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.
I'll now turn the call over to Joey.
Joey Agree | Agree Realty Corporation | President & CEO
Thanks, Reuben, and thank you all for joining us this morning.
Edited transcript as provided by MultiVu, PR Newswire's multimedia and broadcast services division.
Q1 2025 Agree Realty Corporation Earnings Conference Call
April 23, 2025, 9:00 AM
We are extremely pleased with our performance in the first quarter of 2025, as we invested over $375 million across our three external growth platforms while further strengthening our best-in-class portfolio. This represents the largest quarter of investment volume since the third quarter of 2023 and is characteristic of the accelerating activity that we're seeing across our three platforms.
While the macro-economic environment remains volatile and unpredictable, our Company remains a bastion of stability and poised for growth. Our liquidity, bolstered by our outstanding forward equity and swaps, combined with our preeminent cost of capital, position Agree Realty to again take advantage of market dislocations and disruptions.
Year to date we have added over a dozen team members, initiated several systems improvements and sequenced multiple process improvements to accelerate our investment activities.
This growing investment activity is supported by a fortress balance sheet with $1.9 billion of liquidity and over $1.2 billion of hedged capital. During the quarter we raised another $181 million of forward equity via our ATM program, effectively replenishing amounts settled in the first quarter and maintaining an ample runway to execute our growth strategy. With no material debt maturities until 2028 and proforma net debt to recurring EBITDA of just 3.4 times at quarter end, our fortified balance sheet provides significant flexibility and protection against capital markets volatility.
Our balance sheet is paired with what we view to be the country's leading retail portfolio. We launched the acquisition platform in 2010 with a focus on recession resistant retailers that have adapted to a comprehensive omni-channel strategy. Although we have yet to experience a traditional recession since its inception, our portfolio has proven to be pandemic proof, and we remain confident it will be tariff resistant. We have and will remain focused on the country's biggest and best retailers that sell necessity goods and services. Many of these retailers benefit from the trade-down effect during tougher economic times; and they have the scale and balance sheet strength to mitigate higher input costs and withstand margin pressure. While tariff headlines continue to evolve and dominate the news flow, ultimately, we believe the big will continue to get bigger in this environment, further validating our investment philosophy over the past 15 years.
Given our robust investment pipeline across our three external growth platforms, we increased our investment guidance range from $1.1 to $1.3 billion to $1.3 to $1.5 billion for the year. At the midpoint, this represents a 47% increase over last year's investment volume.
As I mentioned, all three of our investment platforms continue to find compelling opportunities that hurdle both our qualitative and quantitative analysis. While increasing our investment guidance for the year, we will remain disciplined and thoughtful in our approach to asset underwriting and portfolio construction during these volatile times.
In addition, we are raising the low end of our full-year AFFO per share guidance by a penny to a new range of $4.27 to $4.30, representing over 3.5% growth at the midpoint and demonstrating the durability of our cash flows. As a reminder, this number includes realized and potential treasury method dilution due to our significant forward equity position. Peter will provide additional details on our guidance range and the inputs shortly.
Raising our investment and earnings guidance amid the current macroeconomic uncertainty demonstrates that our company is built for all markets. We thrive in periods of uncertainty where we can leverage our speed, relationships, exceptional team, balance sheet flexibility and superior cost of capital.
Edited transcript as provided by MultiVu, PR Newswire's multimedia and broadcast services division.
Q1 2025 Agree Realty Corporation Earnings Conference Call
April 23, 2025, 9:00 AM
We launched the acquisition platform on the heels of the GFC in 2010, doubled the size of the Company during the depths of the pandemic, and are always positioned to take on the next challenging economic period.
Turning to our external growth activity, we had an active start to the year, leveraging our unique market positioning and deep relationships with retail partners to uncover opportunities across all three platforms. During the first quarter, we invested over $375 million in 69 properties across all three platforms. This includes $359 million of acquisition across 46 assets. Acquisitions during the quarter included a lender- owned Home Depot in California, a sale-leaseback with a leading national grocer, an Albertson's backed Acme grocery store in Bronxville, New York, an off-market portfolio from a relationship seller, a CarMax ground lease in Colorado as well as approximately 40 one-off transactions.
Our acquisition activity remains focused on industry-leading, necessity-based retailers. The properties acquired in the first quarter are leased to strong operators in sectors including grocery, off-price, auto parts, convenience stores and tire and auto service.
The acquired properties had a weighted-average cap rate of 7.3% and a weighted-average lease term of
13.4 years. Nearly 69% of base rent acquired was derived from investment-grade retailers, and we continued to add to our ground lease portfolio during the quarter.
We continue to see increased activities across our development and DFP platforms, as well. During the first quarter, we commenced four new development or DFP projects with total anticipated costs of approximately $24 million. Construction continued on 14 projects during the quarter, with aggregate anticipated costs of approximately $80 million. We also completed six projects during the quarter, representing a total investment of approximately $27 million. These projects are with several leading retail partners, including TJX Companies, Burlington, 7-Eleven, Boot Barn, Starbucks, Gerber Collision, and Sunbelt Rentals. Our development and DFP pipeline continues to grow with several upcoming starts to be announced in the near future.
Our Asset Management Team continues to proactively address upcoming lease maturities. We executed new leases, extensions or options on over 584,000 square feet of gross leasable area during the first quarter. This included a Walmart Supercenter in Rancho Cordova, a Home Depot in Farmington, New Mexico, and 16 geographically diverse AutoZone leases comprising over 100,000-square feet. We remain well positioned for the remainder of the year with only 30 leases or 90 basis points of annualized based rents maturing.
Quarter over quarter, our pharmacy and dollar store exposure declined 20 and 30 basis points, respectively. We have been clear that our exposure to both of these categories peaked within our portfolio before their challenges became newsworthy.
As of quarter end, our best-in-class portfolio comprised 2,422 properties spanning all 50 states. The portfolio includes 231 ground leases, compromising nearly 11% of annualized base rents. Our investment grade exposure stood at 68.3% and occupancy remains solid at 99.2%. This number represents a temporary dip as we continue to resolve the remaining former Big Lots in our portfolio. Our second former Big Lots in Cedar Park, Texas, was successfully re-leased to ALDI at a net effective rental lift of nearly 50% during the quarter, while an additional store was acquired during the bankruptcy process by Variety Wholesalers. Rent has already commenced on both of these locations. We anticipate further announcements on the next call about remaining Big Lots in our portfolio.
Edited transcript as provided by MultiVu, PR Newswire's multimedia and broadcast services division.
Q1 2025 Agree Realty Corporation Earnings Conference Call
April 23, 2025, 9:00 AM
With that said, I'll hand the call over to Peter to discuss our financial results for the quarter.
Peter Coughenour | Agree Realty Corporation | CFO
Thank you, Joey.
Starting with the balance sheet, we remained active in the capital markets during the first quarter, raising approximately $181 million of forward equity via our ATM program. We also settled 2.7 million shares of forward equity for net proceeds of approximately $183 million.
Additionally, we established our inaugural $625 million commercial paper program during the quarter. The program allows us to tap into another pool of short-term capital and further diversifies our balance sheet. We anticipate that we will be able to efficiently fund our short-term capital needs on the program at rates that are substantially lower than our revolving credit facility today.
Since the end of last quarter, we have taken further steps to hedge against interest rate volatility by entering into $125 million of forward starting swaps. In total, we now have $325 million of forward starting swaps, effectively fixing the base rate for a contemplated 10-year unsecured debt issuance at roughly 3.9%. Combined with approximately $920 million of outstanding forward equity, we have over $1.2 billion of hedged capital which provides critical visibility into our intermediate cost of capital, particularly during this uncertain period.
At quarter end, we had liquidity of approximately $1.9 billion, including the aforementioned forward equity and availability on our revolving credit facility. Proforma for the settlement of all outstanding forward equity, our net debt to recurring EBITDA was approximately 3.4 times. Excluding the impact of the unsettled forward equity, our net debt to recurring EBITDA was 4.9 times. Our total debt to enterprise value is under 26%, and our fixed charge coverage ratio, which includes the preferred dividend, remains very healthy at 4.3 times.
Our only floating rate exposure was comprised of amounts outstanding on the revolver at quarter end, and as Joey mentioned we continue to have no material debt maturities until 2028. Our balance sheet is extremely well positioned to execute on our accelerating investment activity across all three external growth platforms.
Moving to earnings, Core FFO per share was $1.04 for the first quarter, which represents a 3.1% increase compared to the first quarter of last year. AFFO per share was $1.06 for the quarter, representing a 3% year-over-year increase.
As Joey highlighted, we have updated our full-year 2025 outlook to reflect our strong start to the year. We raised the low end of our full-year AFFO per share guidance to a new range of $4.27 to $4.30, which implies year-over-year growth of more than 3.5% at the midpoint. We provide parameters on several other inputs in our earnings release, including investment and disposition volume, general and administrative expenses, non-reimbursable real estate expenses, as well as income tax and other tax expenses.
In addition to those inputs, our earnings guidance for 2025 includes anticipated treasury stock method dilution related to our outstanding forward equity. As a reminder, if ADC stock trades above the net price of our outstanding forward equity offerings, the dilutive impact of unsettled shares must be included in our share count in accordance with the treasury stock method. Provided that our stock continues to trade
Edited transcript as provided by MultiVu, PR Newswire's multimedia and broadcast services division.
Q1 2025 Agree Realty Corporation Earnings Conference Call
April 23, 2025, 9:00 AM
near current levels, we anticipate that treasury stock method dilution will have an impact of roughly two pennies on full-year 2025 AFFO per share. That said, the impact could be higher if our stock moves materially above current levels, or if we were to issue additional forward equity.
Our growing and well-covered dividend continues to be supported by our consistent and durable earnings growth. During the first quarter, we declared monthly cash dividends of 25.3 cents per common share for January, February, and March. The monthly dividend equates to an annualized dividend of almost $3.04 per share and represents a 2.4% year-over-year increase. Our dividend is very well covered with a payout ratio of 72% of AFFO per share for the first quarter. We anticipate having almost $120 million in free cash flow after the dividend this year, up approximately 15% from last year. We view this as another source of cost-efficient capital while maintaining a robust and growing dividend.
Subsequent to quarter end, we announced an increased monthly cash dividend of 25.6 cents per common share for April. The monthly dividend equates to an annualized dividend of over $3.07 per share and also represents a 2.4% year-over-year increase.
With that, I'd like to turn the call back over to Joey.
Joey Agree | Agree Realty Corporation | President & CEO
Thank you, Peter. Operator, at this time let's open it up for questions.
QUESTIONS AND ANSWERS
Operator
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. And if you are using a speakerphone, please lift the handset before pressing any keys.
The first question comes from Ki Bin Kim at Truist. Please go ahead.
Ki Bin Kim | Truist Securities
Thank you. Good morning. Joey, you guys raised investment guidance by $200 million and also mentioned the treasury stock dilution method. Were there other detracting items? Because I would have thought you guys raising that much of your investment guidance that the AFFO guidance would have been more than $0.005. Thank you.
Joey Agree | Agree Realty Corporation | President & CEO
Good morning, Ki Bin. No other detractors. Obviously, we've included, as Peter mentioned in the prepared remarks, approximately $0.02 of treasury method, anticipated treasury method dilution that's already hit the P&L but also throughout the year. Obviously, we can't predict the stock price on a daily or for an annual basis here, but we've been conservative, we think, and appropriately included that treasury method dilution as it incurs and what's incurred today. Peter can talk about any other puts and takes in there, but that's really the only offset to the investment increase.
Peter Coughenour | Agree Realty Corporation | CFO
Ki Bin, yeah, this is Peter. In terms of other puts and takes, there's, to Joey's point, really no other offset. If you think about the incremental $200 million of investment spend this year, subject to timing of that investment spend and spread, we think that that should translate to about $1 million or so of incremental earnings, or about $0.01. Obviously, at the low end of our guidance range. We took up the range by $0.01. We didn't touch the top end. That's really a reflection of the fact that we do anticipate treasury
Edited transcript as provided by MultiVu, PR Newswire's multimedia and broadcast services division.
Q1 2025 Agree Realty Corporation Earnings Conference Call
April 23, 2025, 9:00 AM
stock method dilution will be closer to that $0.02 rather than $0.01 to $0.02 given where we're trading currently and obviously that remains subject to where we trade for the remainder of the year and any other capital markets activity throughout the year as well.
Ki Bin Kim | Truist Securities
And I guess this is a high-class problem that your stock price goes higher and creates treasury stock dilution, but when does the kind of calculus start to work out so that we can start to get to a plus like 4% type of AFFO per share growth rate or more from Agree?
Joey Agree | Agree Realty Corporation | President & CEO
I think in the near term. Obviously, subject to macroeconomic conditions, which are outside of our control, this business is built for that, and so we made a decision to pre-equitize the balance sheet, put hedges in position in terms of the swaps this year in anticipation of increased volatility, but we think that algorithm kicks in there outside of just balance sheet protection and treasury method dilution.
Ki Bin Kim | Truist Securities
Okay. Thank you.
Joey Agree | Agree Realty Corporation | President & CEO
Thanks, Ki Bin.
Operator
Thank you. The next question comes from Smedes Rose at Citi. Please go ahead.
Smedes Rose | Citigroup
Hi. Good morning. I just wanted to ask you a little bit about some of your tenant exposure. It looks like grocery exposure went up by about 90 basis points and within that your named tenants Kroger's was up, and I was just wondering, is that any specific change in your strategy around groceries or is that more just sort of a one-off opportunity that you found during the quarter?
Joey Agree | Agree Realty Corporation | President & CEO
Good morning, Smedes. That was a one-off opportunity predominantly in the quarter. I also mentioned the ACME in Bronxville, New York who we acquired as well. We'll continue to find dominant grocers across the country. There's a number in the pipeline already for the second quarter. We continue to believe that dominated grocers will gain share here, given up in the macro, obviously, but also just the challenges for small grocers to operate in a 2% margin business, ex tariffs and all the other noise out there.
Smedes Rose | Citigroup
Okay. And then just maybe just touching on tariffs, given your tenant exposure, is there anyone that you are particularly maybe concerned about or watching more carefully, particularly given the higher tariffs with China specifically, which I realize is kind of a moving, a very fluid situation, but what's on your radar?
Joey Agree | Agree Realty Corporation | President & CEO
I appreciate you acknowledging the moving and fluid situation. It seems to be day to day. I'll be honest, there really is nobody that we're overly concerned with tariff inputs in the portfolio today. Now all retailers, subject to carve-outs and exclusives, obviously the electronics carve-out, per the Truth Social post or whatever it was last week, alleviated concerns for computers and televisions. Now that could all obviously change.
But we think this portfolio is in tremendous position to continue to benefit from the trade-down effect. As you mentioned, grocery, obviously, with economic conditions where they are, people will stop eating out. Auto parts. You've seen that accelerate in our portfolio. Obviously, new cars will be impacted significantly by tariffs. The average new car in this country is already approximately $45,000. That's pre-tariff. Tire and auto service, another category we highlighted during the prepared remarks. Off-price retail. We're one of
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Q1 2025 Agree Realty Corporation Earnings Conference Call
April 23, 2025, 9:00 AM
TJX's and Burlington's largest landlord. We continue to think they'll gain from any tariff implications. So, we think this portfolio, as I mentioned in the prepared remarks, was built to be recession resistant. We haven't hit a traditional recession since 2010 upon its inception, but it proved to be pandemic resistant and we're very confident it will be, ultimately, whatever way, shape and form tariffs pan out, will be tariff resistant as well.
Smedes Rose | Citigroup
Okay. Thank you. I appreciate it.
Joey Agree | Agree Realty Corporation | President & CEO
Thanks, Smedes.
Operator
Thank you. The next question comes from RJ Milligan at Raymond James. Please go ahead.
RJ Milligan | Raymond James
Hey. Good morning, guys. Joey, I was wondering, as you are having conversations with your development partners, what's their current appetite for opening new stores? Has there been a pause? Just trying to get a broader market read there.
Joey Agree | Agree Realty Corporation | President & CEO
Good morning, RJ. We have not seen any pause to date, albeit this is a volatile and fast-moving environment. The team was with a number of retailers this week and will be again with two or three in the upcoming couple of days here. We haven't seen a pause. We've actually seen announcements. Sam's Club has announced that they're opening net new stores, Kroger's made announcements in terms of remodels and net new stores in the past two weeks as well, and so we have not seen that pause. We haven't had any deals, frankly, tabled or put on hold either yet. But obviously, again, this is a fluid situation, which is out of our control.
But again, I think when you have a discount-oriented, necessity-based tenant roster, those tenants today I don't think are overly scared by tenant tariffs. I think a lot of them see this as an opportunity. As I mentioned in the prepared remarks, the big are getting bigger and this is what we've effectively built this portfolio constructed around, to invest in price if they have to, to invest in labor and invest in omnichannel fulfillment, and tariffs will require retailers to effectively invest in price unless they're going to pass that entire tariff on to the end consumer.
RJ Milligan | Raymond James
Thanks. That's helpful. And I wanted to move over, ah, from a portfolio standpoint, is there any tenants out there, obviously this is not really tariff related, where you're just keeping a watch on them and saying, you know, ex the tariffs, there might be some fundamental issue?
Joey Agree | Agree Realty Corporation | President & CEO
No new entrants into that. Obviously, our three movie theaters total in the portfolio we continue to watch. We have been proactive in reducing, as I mentioned in the prepared remarks, dollar store and pharmacy exposures in 2023, that was prior to the headlines in 2024, and so there are really no changes to our watchlist here.
RJ Milligan | Raymond James
Just one last follow up. In terms of cap rates, where do you think we end the year in terms of Agree's acquisition cap rates? Is it going to be higher or lower? And sort of how do you think about the inputs there?
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Q1 2025 Agree Realty Corporation Earnings Conference Call
April 23, 2025, 9:00 AM
Joey Agree | Agree Realty Corporation | President & CEO
RJ, to be frank, I have no idea. The volatility in the 10-year treasury, which has been historically, obviously, the base rate for the world, the fear/greed spectrum continues to vacillate. Obviously, we're on the fear side. We are just starting, effective Monday, building our Q3 pipeline, just given our 66, 67 days letter of intent to close. I think this is going to be a volatile world. I think it's going to change. I think the volatility doesn't effectively move cap rates as a secondary impact. I think the volatility that we were frankly accustomed to, all of us are accustomed to, inclusive of real estate owners, you know, when you have 10%, 15% swings in the 10-year treasury, these used to be aberrations. They seem to happen on a monthly basis now, if not a daily basis, with 3%, 5% swings. And so none of this volatility effectively moves cap rates. Ultimately I believe that owners of real estate, and perhaps those that have secured interest in real estate, ultimately make disposition or investment decisions based upon the fear/greed spectrum. And so the 10-year going sub-4 or the 10-year piercing 5 can move cap rates, but with the 10- year moving between 4.2 and 4.6, I'm just using a band here, I don't think that ultimately moves cap rates in any material way just because of, frankly, people being accustomed to that volatility.
RJ Milligan | Raymond James
Great. That's it for me. Thanks, guys.
Joey Agree | Agree Realty Corporation | President & CEO
Thanks, RJ.
Operator
Thank you. The next question comes from Michael Goldsmith at UBS. Please go ahead.
Michael Goldsmith | UBS
Good morning. Thanks a lot for taking my question. Maybe a similar question that was just asked, but from a different angle. Have you seen any changes in the transaction market post the April 2nd tariff announcement? Maybe not directly from the tariffs but just from the overall uncertainty. You sort of touched on the cap rate environment, but are you seeing any changes in competition or any deals pulled just given the uncertainty?
Joey Agree | Agree Realty Corporation | President & CEO
No deals pulled. Competition remains extremely limited. Obviously, the 1031 buyer has effectively been cut in over half just due to the commercial real estate transactional volume being down by half, the lack of liquidity in investment markets, just frankly, sorry, the lending markets. We see very limited competition. I often make the analogy I did during the fourth quarter of a door versus a window; we see a door here. And our balance sheet, our cost of capital, as I mentioned, as well as our portfolio and the tremendous team here we have is going to take advantage of that opportunity.
And so we took advantage of the opportunity during the GFC, we took advantage of the opportunity during COVID, obviously, when we doubled the size of the company. We see a like-kind opportunity potentially on the horizon, obviously subject to the next Truth Social post here and changes in the macro. But with limited competition across all three investment platforms and with our core strength here, this is a tremendous opportunity for our company to continue to grow this portfolio in an accretive manner and solidify it as the preeminent net lease portfolio in the country.
Michael Goldsmith | UBS
Thanks for that. And as a follow up, on slide 22 of your presentation you highlight what you're investing in and what you're not and you call out the avoidance of private equity sponsorship. So, just given where we are in the cycle and the uncertainty, what's been your experience with private equity sponsorship at this point in the cycle just given some of that uncertainty? Thanks.
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Q1 2025 Agree Realty Corporation Earnings Conference Call
April 23, 2025, 9:00 AM
Joey Agree | Agree Realty Corporation | President & CEO
Ultimately, and this isn't for this part of the cycle, we seek to work and partner with retailers that have a long-term perspective on the operations of their business. So special dividends, levering up the balance sheet, OpCo, PropCo structures, sale leasebacks to improve liquidity and, frankly, in order to special dividend it out probably, those just aren't things that we believe work in a 21st century omnichannel world which is hypercompetitive. And so we'll continue to focus on our sandbox of the 30, 35 biggest and best retailers in this country, rated or unrated and a few sub-investment-grade-rated retailers that are selling essential goods and services that have long-term sponsorship and ownership. And frankly, private equity doesn't match that duration for us.
Michael Goldsmith | UBS
Thank you very much. Good luck in the second quarter.
Joey Agree | Agree Realty Corporation | President & CEO
Appreciate it.
Operator
Thank you. The next question comes from Linda Tsai at Jefferies. Please go ahead.
Linda Tsai | Jefferies
Hi. The temporary occupancy dip from Big Lots, would that be resolved by year end?
Joey Agree | Agree Realty Corporation | President & CEO
Oh, yeah, I would anticipate that would be resolved much sooner than year end, most likely by the end of the second quarter. And so we've resolved a number of them. The off-price retailer in Manassas, Virginia was the first one where we have a net effective lift, Peter jump in.
Peter Coughenour | Agree Realty Corporation | CFO
Over 150%.
Joey Agree | Agree Realty Corporation | President & CEO
Net effective lift of over 150%. Cedar Park, Texas is re-leased with a net effective rent lift of approximately 50% to a large German-based grocer and then Fuquay-Varina was acquired in the bankruptcy by Variety Wholesalers. And we're working through those others to have optimal solutions here, but we think they will be favorable and not a concern.
Linda Tsai | Jefferies
And then for the 50% to 150% rent uplift, is there CapEx involved?
Joey Agree | Agree Realty Corporation | President & CE
That's a net effective basis, not same-store NOI. So the lease that we purchased in bankruptcy we purchased for a couple of hundred thousand dollars and that was the only truly expense on that. It was an as-is basis. Same with the grocery in Cedar Park, Texas with that approximately 50% net effective rent lift. And then the Variety Wholesalers, they came current, and so that's just the same rent as Big Lots was paying prior. And so we continue to work on leasing a number of these assets and have letters of intent in hand from large national retailers predominantly. That's our focus there, our first order of business, and we hope to further expand upon it on the Q2 call.
Linda Tsai | Jefferies
And then the comment about drug and dollar stores peaking in your portfolio before it became newsworthy, what were you looking at to recognize this trend? Was it shift in traffic or rent coverage?
Edited transcript as provided by MultiVu, PR Newswire's multimedia and broadcast services division.
Disclaimer
Agree Realty Corporation published this content on April 24, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 24, 2025 at 20:39 UTC.