Joey Agree
BLOOMFIELD HILLS, MI—Last December Agree Realty closed on a fairly significant transaction for the net lease space: the $142 million sale leaseback with Sherwin Williams.
In one swoop the net lease REIT picked up a high-quality portfolio of more than 100 retail properties, a feat that is all the more significant when you consider that net lease acquisitions are usually done on an asset-by-asset basis.
Now it appears the REIT has other interesting deals in its pipeline, per comments Joey Agree, president and CEO of the REIT, made during last week's earnings call, which covered the fourth quarter and year-end review. Our current pipeline, he said, “contains several unique opportunities that are anticipated to close in the upcoming months.”
Some of these deals are under contract, some are going through due diligence; there is no one theme to these properties as Agree noted that these assets have “different unique capabilities.”
Urban Condos and Blend and Extends
They include, he said, according to a transcript of the call, “everything from urban condos that we're working on in core city center locations to smaller sale-leaseback transactions with our retail partners to our typical granular sourcing activity inclusive of early extensions or what we call blend and extends.”
Agree Realty has a hard corner portfolio and dominant intersections, Agree said later during the call. More typical of a net lease REIT, it also has in its pipeline junior boxes adjacent to Targets and Costcos and outlets to dominant power and grocery-anchored centers.
He also described the REIT's pipeline as “of a similar quality and of similar nature as we executed in Q4, albeit, most likely not as big, given the Sherwin-Williams transaction.”
What It Did in Q4
With Q4 serving as a guide for Agree Realty's 2019 activities, the REIT reported that during the quarter it added eight ground lease assets, including a Walmart Supercenter in Franklin, Ohio and a Home Depot in Forked River, New Jersey. Its ground lease portfolio derives 89% of rents from investment-grade tenants and is comprised of such retailers as Walmart, Home Depot, Lowe's, Wawa, Aldi, AutoZone, Chick-fil-A, McDonald's and Starbucks.
But even here, the REIT hints at new opportunities. Agree said that it will continue to evolve its ground lease portfolio “as we proactively embrace today's changing omni-channel retail environment.”
Agree Realty's 2019 acquisition guidance ranges from $350 million to $400 million and its disposition guidance of $25 million to $75 million.
Its acquisition activity for 2019 appears to be more muted compared to 2018, when it closed on $607 million of deals.
Join the 17th Annual GlobeSt Net Lease Conference (formerly a RealShare event) on April 3 & 4 in NYC alongside the industry's most influential and knowledgeable real estate executives from the net lease sector. Click here to register and view the agenda.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
