COVID retail reckoning offers Agree Realty big opportunity, big growth

At the onset of the COVID-19 pandemic, a Bloomfield Hills-based real estate investment trust felt it was poised to capitalize on the upheaval the global health crisis had brought to retail real estate.

Turns out Agree Realty Corp. (NYSE: ADC) was right.

The company, run by President and CEO Joey Agree, has more than doubled its portfolio size and outgrown a headquarters it expanded less than three years ago, last week announcing it would redevelop the former Art Van Furniture Inc. store into its new base of operations across 50,000 square feet.

Focusing on retail properties leased to investment-grade tenants, Agree Realty has spent the last decade-plus reinventing itself with the second generation of the Agree family at the helm.

The company has done that by rapidly buying up properties with a diverse mix of tenants that have strength in all facets of the retail game, in stores, online and the spaces in between.

“COVID-19 has reaffirmed our belief that the strongest retailers with the largest balance sheets are going to get even stronger,” Agree said in an interview. “Their omni-channel, including buy-online, pick-up-in-store, click-and-collect and fulfillment initiatives, helped get consumers essential goods and services during the days of the lockdown. Now as we emerge from this pandemic, hopefully sooner rather than later, retailers’ focus today is truly on omni-channel execution.”

The company’s portfolio of properties has ballooned to 1,404 across 47 states totaling a little over 29 million square feet, growing from the 660 properties and 11.5 million square feet it had less than three years ago and the 860 properties and 16.3 million square feet it had less than two years ago.

The growth is expected to continue in 2022, as the company’s current estimation is an acquisition volume of $1.1 billion to $1.3 billion, although those estimations can change over the course of the year.

The company will announce its fourth quarter and full-year 2021 financials Feb. 22

Its core funds from operations for the third quarter were $64 million, up 44 percent from $44.5 million in the third quarter 2020, the company said in November. For the first three quarters of 2021, core FFO was $175.9 million, up 43.2 percent from $122.9 million from the same period in 2020.

Although today it has an enterprise value of about $6.7 billion and is in growth mode, the company’s ran into some bumps more than a decade ago as its revenue was tied to the fate of some ultimately doomed tenants.