Stock Analysis · Agree Realty Corporation (ADC)
Overview
Agree Realty Corporation is a retail real estate investment trust, or REIT. In simple terms, it owns properties that are leased to businesses, mainly under long-term net lease agreements. In a net lease, the tenant usually pays property taxes, insurance, and maintenance, which makes the landlord’s cash flow more predictable than in many other types of real estate. The company focuses largely on standalone retail properties occupied by national tenants, and it also develops some sites and participates in sale-leaseback transactions in which businesses sell a property and continue operating there as tenants.
The business is built around collecting rent from a large portfolio of retail properties across the United States. Based on recent company disclosures, rent from retail net lease properties is by far the dominant source of revenue, while smaller contributions come from ground leases, development-related income, and other real estate items such as reimbursements or fees when applicable. The portfolio is intentionally concentrated in categories management considers resilient, including value-oriented retail, grocery, home improvement, auto service, convenience, and select service-oriented uses.
The revenue mix can be summarized at a high level as follows:
- Rental income from net lease retail properties: approximately 90% to 95% of total revenue. This is the core business and includes rent paid by tenants under long-duration leases.
- Ground lease income: approximately 3% to 7%. These are arrangements where Agree Realty owns the land and the tenant controls and operates the building while paying rent on the land.
- Development, sale-leaseback, and other property-related income: typically a small remaining share. This can include gains, fees, or income tied to projects and portfolio activity.
That structure matters because it means the company is not relying on many different business lines. Its results mainly depend on how well it acquires, finances, and leases retail properties to tenants that keep paying rent through economic cycles.
The long-term financial picture has been one of rising revenue and profit dollars. Total revenue increased from about $339 million in 2021 to about $718 million in 2025, while net income also moved higher over that period. At the same time, interest expense rose materially as the portfolio expanded and borrowing costs moved up, which is an important theme for any REIT.
The financial flow shows a business with strong gross profitability and healthy operating margins, but also a clear increase in interest expense over the last several years. Revenue has scaled steadily, and operating income has followed, yet financing costs have taken a larger share of that growth as the company continued expanding its property base.
Key Figures
| Metric | Value | Sector ⓘ |
|---|---|---|
| Date | Oct 24, 2026 | |
| Context | ||
| Sector | Real Estate | |
| Industry | REIT - Retail | |
| Market Cap ⓘ | $8.04B | |
| Beta ⓘ | 0.42 | |
Value (Cheapness) | ||
| P/E Ratio ⓘ | 33.24 | 17.85 |
| P/B Ratio ⓘ | 1.20 | 0.87 |
| FCF Yield ⓘ | 6.51% | 7.30% |
| Dividend Yield ⓘ | 4.59% | 4.83% |
| EBIT / EV ⓘ | 2.98% | 3.78% |
| PEG ⓘ | 0.13 | |
Growth (Business expansion) | ||
| Revenue Growth ⓘ | 16.70% | 5.35% |
| RPS Growth (5Y CAGR) ⓘ | 6.33% | 6.02% |
| EPS Growth (5Y CAGR) ⓘ | 12.80% | -10.65% |
| BVPS Growth (5Y CAGR) ⓘ | 3.96% | 0.43% |
| Margin Growth (5Y Trend) ⓘ | -4.25% | -0.69% |
| FCF Growth (5Y CAGR) ⓘ | 19.61% | 5.40% |
| DPS Growth (5Y CAGR) ⓘ | 1.78% | 5.07% |
Quality (Business durability) | ||
| ROIC (Latest) ⓘ | 3.61% | 5.69% |
| ROE (Latest) ⓘ | 3.62% | 7.37% |
| ROA (Latest) ⓘ | 2.33% | 2.85% |
| ROIC (5Y Median) ⓘ | 3.81% | 4.26% |
| ROE (5Y Median) ⓘ | 3.39% | 6.04% |
| ROA (5Y Median) ⓘ | 2.35% | 2.45% |
| Net Debt / EBIT (Latest) ⓘ | 9.91 | 7.55 |
| Net Debt / EBIT (5Y Median) ⓘ | 9.57 | 8.26 |
| Net Debt / EBITDA (Latest) ⓘ | 5.63 | 5.26 |
| Net Debt / Assets ⓘ | 33.42% | 37.45% |
| EBITDA / Interest ⓘ | 4.27 | 4.11 |
| Operating Margin (Latest) ⓘ | 45.59% | 33.86% |
| Operating Margin (5Y Median) ⓘ | 49.11% | 37.49% |
| Debt to Equity (Latest) ⓘ | 53.87% | 88.76% |
| Profit Margin (Latest) ⓘ | 29.75% | 18.94% |
| Free Cash Flow (Latest) ⓘ | $523.96M | |
Momentum (Price trend) | ||
| 3Y Return ⓘ | +41.81% | +36.33% |
| 12M Return (excl. last month) ⓘ | -0.88% | +4.32% |
| 6M Return ⓘ | -10.61% | -1.74% |
| Price vs. 200-Day MA ⓘ | -8.68% | -1.42% |
Agree Realty is a mid-to-large retail REIT with a stock that has shown relatively low volatility, reflected in a beta well below 1. On growth, the company looks better than much of its sector: recent revenue growth and five-year revenue per share growth are ahead of the median, and free cash flow growth has also been strong. On quality, the picture is more mixed. Margins are solid, but returns on assets, equity, and invested capital are below sector medians, while leverage has moved above the typical peer level. On valuation, the shares trade at richer earnings and book multiples than the sector median, so the market appears to be paying a premium for stability, portfolio quality, and external growth potential rather than for deep value.
Growth
Agree Realty operates in a part of real estate that still has room to grow, even though retail real estate is often treated as a mature sector. The key distinction is that the company is not broadly exposed to malls or weaker retail formats. Its emphasis is on necessity-based and value-oriented tenants, single-tenant net lease structures, and long lease terms. That niche has remained active because many retailers and operators still want to free up capital tied in real estate, creating sale-leaseback opportunities, while developers and property owners continue to recycle assets.
The company’s strategy is straightforward and coherent. It grows by acquiring additional properties, funding selected development projects, and deepening relationships with large retail operators that want reliable real estate capital. Because leases are typically long and contractual, each successful acquisition can add recurring rent for years. This gives Agree Realty a visible path to expansion as long as it can keep sourcing properties at spreads that remain attractive after financing costs.
Revenue per share has moved upward consistently over the past five years. That matters because it suggests growth has not come only from issuing more shares to finance acquisitions; the business has also been increasing the revenue base on a per-share basis, which is a more meaningful signal for long-term compounding.
The dividend per share has also trended upward, though at a slower pace than revenue. There was a modest dip earlier in the period, followed by resumed growth. This pattern fits a REIT that is balancing expansion, financing discipline, and the need to preserve room for future investment rather than simply maximizing near-term distributions.
A notable catalyst is Agree Realty’s continued ability to scale in a fragmented market. Net lease retail remains highly decentralized, and large public REITs can often access capital and tenants more efficiently than smaller buyers. The company’s focus on strong tenants and defensive retail categories may also give it an advantage when weaker parts of retail face pressure. If interest rates stabilize or decline, that could improve acquisition economics and support property values across the sector.
Recent company updates have also pointed to continued investment activity and portfolio management rather than any major strategic disruption. For a business like Agree Realty, that consistency is important: a steady pipeline of acquisitions, development completions, and long lease execution can be more valuable than one headline-grabbing event.
Risks
This article is for informational purposes only and does not constitute financial advice. Some content is AI-generated. See Disclaimer
