Agree Realty Corp. (NYSE:ADC) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 24, 2018 • 09:00 am ET


Agree Realty Corp. (NYSE:ADC) Q1 2018 Earnings Conference Call - Preliminary Transcript


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Good morning, and welcome to the Agree Realty's First Quarter 2018 Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note that today's event is being recorded. I would now like to turn the conference over to Joey Agree, President and CEO. Please go ahead, Joey.

Joey Agree

Thank you, operator. Good morning everyone and thank you for joining us for Agree Realty's first quarter 2018 earnings call. Joining me this morning is Clay Thelen, our Chief Financial Officer. We are very pleased to report that we are off to a strong start in 2018. During a busy quarter we further diversified and strengthened our industry leading portfolio through disciplined investment activity and proactive asset management and executed on a strategic capital market transaction that further fortified our balance sheet, positioning us for continued growth.

Capital invested across our three external growth platforms totaled $102.7 million in the first quarter among 39 high quality retail net lease properties. Of those 39 investments, 30 properties were sourced through our acquisition platform, representing aggregate acquisition volume of approximately $98.6 million for the quarter. The properties were acquired at a weighted-average cap rate of 7.2% and had a weighted-average remaining lease term of 13.6 years.

The acquired properties are located in 15 states and our leased and leading operators operating in 12 different sectors, including off-price, convenience store, auto parts, tire and auto service, grocery and crafts and novelties. Notable retailers include AutoZone, Tire Kingdom, O'Reilly Auto Parts, Hobby Lobby, T.J. Maxx, Home Goods, Panera Bread, Starbucks, Firestone and Gerber Collision. During the quarter we are also very pleased to have closed on a sale lease back with Belle Tire, a leading regional tire and auto service retailer, with a 95 year operating history.

The portfolio is comprised on seven master lease properties, a very strong tire and auto service stores. Belle Tire is a local family owned company and the 11th largest tire retailer in the country with approximately 100 stores. They are the clear market leader in Michigan with more than a 33% share. This transaction was Belle's first sale leaseback and we are excited to partner with a leading retailer in our own backyard that many of us have frequented over the years. We look forward to continuing to build upon our strong relationship with the Belle Tire team, as well as the Barnes family.

As our pipeline continues to ramp we remain focused on adhering to our stringent underwriting standards. Given the dynamic nature of the retail landscape and often the binary outcomes associated with second and third tier operators, we continue to emphasize high quality retail real-estate leased to industry leading operators that have a comprehensive omni-channel strategy, a value oriented business model, or a service base component.

Our disciplined focus has served to strengthen our best-in-class portfolio. Today our portfolio is stronger and more diverse than it has even been in our company's history. Turning to our development and partner capital solutions platform, in the first quarter