Why Did Agree Realty Stock Surge Over 11% in July?

2 min read | August 05, 2024 05:00 PM AEST | By Team Kalkine Media

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Why Did Agree Realty Stock Surge Over 11% in July? — Image source: Shutterstock

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Shares of Agree Realty (ADC) surged by 11.4% in July, according to data from S&P Global Market Intelligence. The real estate investment trust (REIT) experienced notable gains due to an improved growth forecast and a credit rating upgrade.

Strong Quarterly Performance

Agree Realty (NYSE:ADC) delivered impressive results for the second quarter, reporting a 6.4% increase in adjusted funds from operations (FFO) per share. This growth was driven by rising rental income and a continually expanding portfolio. During the quarter, the REIT allocated $203 million towards acquiring 70 retail net lease properties, bringing the total investment for the first half of the year to $343 million across 102 properties.

Despite these significant acquisitions, the REIT maintained robust liquidity. Leveraging its rising stock price, Agree Realty issued 3.2 million shares, generating $194 million. Additionally, the expansion of its credit facility to $1.25 billion, with a maturity extended until 2029, contributed to a total capital raise of $650 million, increasing its liquidity to $1.7 billion.

Credit Rating Upgrade and Revised Guidance

At the end of the second quarter, Agree Realty reported a low leverage ratio of 4.1 times. This favorable metric led S&P Global to upgrade the REIT's bond rating from BBB to BBB+. The upgraded investment-grade rating is anticipated to facilitate access to lower-cost capital in the future.

The REIT's strong liquidity and solid balance sheet prompted a revision in its acquisition guidance for the year. Agree Realty now aims to allocate $700 million for new property acquisitions, a $100 million increase from the previous guidance. This adjustment also led to an upward revision in the full-year FFO forecast. CEO Joey Agree noted in the second-quarter earnings report, "Given accelerating investment activity and the strong performance of our portfolio year-to-date, we are raising our 2024 AFFO per share guidance to a range of $4.11 to $4.14, reflecting 4.4% growth at the midpoint."

Overall, Agree Realty's recent performance and developments reflect a positive trajectory, positioning the REIT for continued growth and financial strength.

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