Agree Realty Corporation (ADC): Business Model Canvas [10-2024 Updated]
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Agree Realty Corporation (ADC) Bundle
In the dynamic world of real estate investment, Agree Realty Corporation (ADC) stands out with its strategic approach to retail net lease properties. This business model canvas outlines how ADC effectively leverages key partnerships, resources, and activities to deliver reliable income streams and long-term value to its investors. Discover how this innovative company navigates the complexities of the real estate market and maintains strong relationships with both tenants and investors in the sections below.
Agree Realty Corporation (ADC) - Business Model: Key Partnerships
Collaborations with retail tenants
Agree Realty Corporation has established strong partnerships with a diverse range of retail tenants. As of September 30, 2024, the company owned 2,271 properties with a total gross leasable area of approximately 47.2 million square feet. The net real estate investments totaled $7.13 billion, showcasing the scale of their retail tenant collaborations.
During the nine months ended September 30, 2024, the company acquired 144 retail net lease assets for approximately $531.4 million, indicating a robust engagement strategy with various retail tenants.
Relationships with brokers and developers
Agree Realty relies on strong relationships with brokers and developers to facilitate acquisitions and developments. The company has completed numerous development projects, with 21 projects under construction as of September 30, 2024. The anticipated total costs for these projects are approximately $92.7 million.
For the nine months ended September 30, 2024, the company recognized a net gain of $11.1 million on the sale of 18 assets, reflecting successful broker partnerships that enhance asset management.
Partnerships with financial institutions for funding
Financial partnerships are crucial for Agree Realty's growth strategy. The company completed an underwritten public offering of $450.0 million in aggregate principal amount of its 5.625% Notes due 2034 in May 2024. This offering yielded net proceeds of $444.7 million, which were utilized for general corporate purposes, including funding property acquisitions.
The company has a $1.25 billion senior unsecured revolving credit facility as of August 2024, with an outstanding balance of $49.0 million at September 30, 2024. The facility's interest rate is based on a pricing grid, reflecting the company's credit ratings and leverage ratios.
Engagement with local governments for zoning and approvals
Engagement with local governments is essential for Agree Realty's operational success. The company actively works with municipal authorities to secure zoning approvals for its properties. This collaboration ensures compliance with local regulations and supports the timely development of new retail locations.
As part of its ongoing development efforts, Agree Realty has completed or commenced multiple projects, showcasing a proactive approach in navigating local governmental processes.
Agree Realty Corporation (ADC) - Business Model: Key Activities
Acquisition of retail net lease properties
As of September 30, 2024, Agree Realty Corporation acquired 66 retail net lease assets for approximately $216.0 million, which includes acquisition and closing costs. These properties are located in 24 states with a weighted average lease term of approximately 9.8 years. For the nine months ending September 30, 2024, the company purchased a total of 144 retail net lease assets for around $531.4 million, comprising properties in 37 states and a weighted average lease term of 9.2 years.
| Time Period | Number of Assets Acquired | Total Acquisition Cost (in millions) | Average Lease Term (years) |
|---|---|---|---|
| Q3 2024 | 66 | $216.0 | 9.8 |
| 9 Months Ended Q3 2024 | 144 | $531.4 | 9.2 |
Management of real estate assets
As of September 30, 2024, Agree Realty managed a portfolio consisting of 2,271 properties with a total gross leasable area (GLA) of approximately 47.2 million square feet. The net real estate investments totaled $7.13 billion, reflecting an increase from $6.74 billion as of December 31, 2023. Rental income for the three months ended September 30, 2024 was $154.3 million, representing a 13% increase from the same period in 2023.
| Metrics | As of September 30, 2024 | As of December 31, 2023 |
|---|---|---|
| Number of Properties | 2,271 | 2,135 |
| GLA (million sq. ft.) | 47.2 | 44.2 |
| Net Real Estate Investments (in billions) | $7.13 | $6.74 |
Development and construction projects
During the three months ended September 30, 2024, Agree Realty commenced eight development projects and completed six. For the nine months ended September 30, 2024, a total of 17 projects were commenced and 12 completed. As of September 30, 2024, there were 21 development projects under construction, with anticipated total costs of approximately $92.7 million.
| Time Period | Projects Commenced | Projects Completed | Projects Under Construction | Total Anticipated Costs (in millions) |
|---|---|---|---|---|
| Q3 2024 | 8 | 6 | 21 | $92.7 |
| 9 Months Ended Q3 2024 | 17 | 12 | — | — |
Asset dispositions and portfolio optimization
In the three months ended September 30, 2024, Agree Realty disposed of two assets for net proceeds of $6.9 million, recognizing a net gain of $1.9 million. For the nine months ending September 30, 2024, the company disposed of 18 assets for net proceeds of $63.6 million, with a net gain of $11.1 million. This reflects an increase in disposition volume compared to the previous year.
| Time Period | Number of Assets Disposed | Net Proceeds (in millions) | Net Gain (in millions) |
|---|---|---|---|
| Q3 2024 | 2 | $6.9 | $1.9 |
| 9 Months Ended Q3 2024 | 18 | $63.6 | $11.1 |
Agree Realty Corporation (ADC) - Business Model: Key Resources
Diverse portfolio of retail properties
As of September 30, 2024, Agree Realty Corporation owned a total of 2,271 properties, with a gross leasable area (GLA) of approximately 47.2 million square feet. The net real estate investments totaled $7.13 billion, reflecting a significant increase from $6.74 billion as of December 31, 2023 .
Experienced management team
The management team at Agree Realty Corporation has extensive experience in real estate investment and management, led by Executive Chairman Richard Agree, who founded the company in 1971. The team's expertise is essential in navigating the complexities of retail property management and acquisitions, contributing to the company’s growth and stability in the market.
Capital resources for acquisitions and developments
In May 2024, the Operating Partnership completed a public offering of $450.0 million in 5.625% Notes due 2034. The proceeds were utilized for general corporate purposes, including acquisitions and development activities . Additionally, the company has a $1.25 billion senior unsecured revolving credit facility, which provides liquidity for future investments .
Recent Acquisitions
| Period | Number of Properties | Total Investment (in millions) | Weighted Average Lease Term (years) |
|---|---|---|---|
| Q3 2024 | 66 | $216.0 | 9.8 |
| 9 Months 2024 | 144 | $531.4 | 9.2 |
| 9 Months 2023 | 232 | $1,010.0 | 11.5 |
Strong credit ratings from tenants
Agree Realty maintains strong relationships with its tenants, which include industry-leading retailers. The company benefits from high credit quality tenants, ensuring stable cash flows and reducing risks associated with tenant defaults. As of September 30, 2024, the company had a net income of $144.5 million, a 16% increase from the prior year, attributed to the growth in its portfolio .
Furthermore, the company has a significant amount of cash and cash equivalents totaling $13.2 million as of September 30, 2024 . This financial strength positions Agree Realty favorably for future growth and operational stability.
Agree Realty Corporation (ADC) - Business Model: Value Propositions
High-quality retail properties leased to reputable tenants
Agree Realty Corporation focuses on acquiring and managing high-quality retail properties. As of September 30, 2024, the company owned 2,271 properties with a total gross leasable area of approximately 47.2 million square feet, representing a net investment of $7.13 billion. These properties are strategically located and leased to industry-leading tenants across diverse retail sectors.
Reliable and steady rental income for investors
The company generates significant rental income, which provides a reliable income stream for investors. For the nine months ended September 30, 2024, rental income was $456.1 million, compared to $393.3 million for the same period in 2023, reflecting a year-over-year increase of approximately 16%. The consistent income generation underscores the company’s focus on stability and investor returns.
Long-term leases providing income stability
Agree Realty Corporation emphasizes long-term lease agreements, which contribute to income stability. The weighted average lease term for properties acquired during the nine months ended September 30, 2024, was approximately 9.2 years. This long-term strategy minimizes tenant turnover and enhances predictability in cash flows.
Focus on net lease structures minimizing operational responsibilities
The company primarily utilizes net lease structures, where tenants are responsible for property expenses, including taxes, insurance, and maintenance. This approach reduces the operational responsibilities of Agree Realty Corporation, allowing it to focus on property acquisition and management. As of September 30, 2024, the company reported a total of $81.7 million in operating expenses, which is manageable due to the net lease structure.
| Metric | September 30, 2024 | September 30, 2023 | Year-over-Year Change (%) |
|---|---|---|---|
| Total Properties Owned | 2,271 | 2,135 | 6.4% |
| Total Gross Leasable Area (GLA) | 47.2 million sq. ft. | 44.2 million sq. ft. | 6.8% |
| Net Investment Amount | $7.13 billion | $6.74 billion | 5.8% |
| Rental Income (9 months) | $456.1 million | $393.3 million | 16.0% |
| Weighted Average Lease Term | 9.2 years | 11.5 years | -19.8% |
Agree Realty Corporation (ADC) - Business Model: Customer Relationships
Long-term partnerships with tenants
Agree Realty Corporation (ADC) focuses on establishing long-term partnerships with its tenants, which include leading retail brands across various sectors. As of September 30, 2024, the company owns approximately 2,271 properties, with a total gross leasable area (GLA) of about 47.2 million square feet. The weighted average lease term for newly acquired properties is around 9.2 to 9.8 years.
Regular communication and support for tenant needs
ADC emphasizes regular communication and support for its tenants. The company engages with tenants to address their needs promptly. For instance, as of September 30, 2024, ADC reported total lease payments of $159.6 million for the quarter, highlighting the ongoing financial interactions with its tenants.
Commitment to maintaining property standards
ADC is committed to maintaining high property standards, ensuring that its retail spaces are appealing and functional for tenants. This commitment is reflected in the company’s operating expenses, which include real estate taxes of $11.9 million and property operating expenses of $6.0 million for the quarter ending September 30, 2024.
Engagement in community and tenant events
Engagement in community and tenant events is vital for ADC's relationship-building strategy. The company actively participates in local community events to foster stronger connections with tenants and enhance brand loyalty. For example, the company has completed or commenced numerous development projects, which not only improve its portfolio but also engage local communities.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Lease Payments | $159.6 million | $141.9 million | 12.0% |
| Real Estate Taxes | $11.9 million | $10.1 million | 17.8% |
| Property Operating Expenses | $6.0 million | $5.5 million | 9.0% |
| Net Income | $144.5 million | $124.4 million | 16.1% |
Agree Realty Corporation (ADC) - Business Model: Channels
Direct leasing agreements with tenants
Agree Realty Corporation (ADC) primarily operates by establishing direct leasing agreements with tenants across its extensive portfolio. As of September 30, 2024, the company owned 2,271 properties with a total gross leasable area (GLA) of approximately 47.2 million square feet. The net real estate investments totaled $7.13 billion.
Online platforms for property listings and investor relations
ADC utilizes its online platform to maintain transparency and accessibility for investors and tenants. The company’s website includes comprehensive property listings and investor relations information, enhancing communication and engagement. The company's market capitalization was approximately $7.82 billion as of September 30, 2024.
Investor presentations and financial reports
Agree Realty Corporation regularly conducts investor presentations and publishes financial reports to communicate its performance and strategy. For the nine months ended September 30, 2024, the company reported net income of $144.5 million, representing a 16% increase compared to the same period in 2023. The company's annualized common stock dividend declared during the three months ended September 30, 2024, was $3.00 per common share, a 2.9% increase from the previous year.
Networking through real estate conferences and events
ADC actively participates in real estate conferences and events to network with industry professionals, enhance business relationships, and explore new opportunities. The company completed a public offering of $450 million in senior unsecured notes due 2034 in May 2024 to support its growth strategy.
| Channel | Details | Key Metrics |
|---|---|---|
| Direct Leasing Agreements | 2,271 properties leased directly to tenants | Net Real Estate Investments: $7.13 billion |
| Online Platforms | Website for property listings and investor relations | Market Capitalization: $7.82 billion |
| Investor Presentations | Regular updates on financial performance and strategy | Net Income (9M 2024): $144.5 million |
| Networking Events | Participation in industry conferences | Public Offering: $450 million in 2024 |
Agree Realty Corporation (ADC) - Business Model: Customer Segments
Retail tenants across diverse sectors
Agree Realty Corporation focuses on retail properties leased to industry-leading tenants across various sectors. As of September 30, 2024, the company reported total rental income of $456.1 million for the nine months ended, an increase from $393.3 million in the same period of 2023. The tenant mix includes essential retail categories such as convenience stores, dollar stores, and quick-service restaurants, which are resilient to economic fluctuations. The company aims to maintain a diversified portfolio to mitigate risks associated with tenant defaults.
Institutional and individual investors
Agree Realty attracts both institutional and individual investors. As of September 30, 2024, the company’s market capitalization was approximately $7.82 billion, based on the closing price of its common stock at $75.33. The REIT structure appeals to investors seeking regular income through dividends, which for the third quarter of 2024, were declared at $0.750 per common share. The company’s strategic focus on net-leased properties provides a stable cash flow, making it an attractive investment for those seeking income stability.
Real estate investment trusts (REITs)
Agree Realty Corporation collaborates with other REITs for property acquisitions and joint ventures. The company reported total equity of approximately $5.29 billion as of September 30, 2024. This collaboration allows Agree Realty to leverage resources and expand its portfolio efficiently. The company’s operational model is designed to appeal to REITs by providing a steady stream of rental income and potential for capital appreciation through strategic property investments.
Local government entities for development projects
Local government entities represent another key customer segment for Agree Realty Corporation. The company engages with local governments to facilitate development projects, which can involve public-private partnerships. As of September 30, 2024, the total enterprise value of the company was approximately $10.69 billion. This includes $2.70 billion of total debt principal, which can be influenced by agreements with local governments. Such partnerships can enhance community development while providing the company with favorable lease terms and public support for its projects.
| Customer Segment | Key Characteristics | Financial Metrics |
|---|---|---|
| Retail tenants | Essential sectors, diversified portfolio | Total rental income: $456.1 million (9M 2024) |
| Institutional investors | Stable income through dividends | Market cap: $7.82 billion |
| REITs | Collaboration for acquisitions | Total equity: $5.29 billion |
| Local governments | Facilitation of development projects | Total enterprise value: $10.69 billion |
Agree Realty Corporation (ADC) - Business Model: Cost Structure
Property acquisition and development costs
The total costs associated with property acquisitions and developments for the nine months ended September 30, 2024, amounted to approximately $531.4 million. This includes acquisition and closing costs for 144 retail net lease assets, with an average acquisition cost of around $3.7 million per property.
During the three months ended September 30, 2024, the company acquired 66 retail net lease assets for about $216.0 million. The properties were located in 24 states, with a weighted average lease term of approximately 9.8 years. The underwritten weighted-average capitalization rate on these acquisitions was 7.5%.
Operational expenses including maintenance and taxes
For the nine months ended September 30, 2024, total operating expenses were $240.5 million. This includes:
- Real estate taxes: $33.4 million
- Property operating expenses: $19.9 million
- Land lease expenses: $1.3 million
- General and administrative expenses: $28.3 million
- Depreciation and amortization: $150.4 million
For the three months ended September 30, 2024, operating expenses were $81.7 million, broken down as follows:
- Real estate taxes: $11.9 million
- Property operating expenses: $6.0 million
- Land lease expense: $421,000
- General and administrative: $9.1 million
- Depreciation and amortization: $51.5 million
Marketing and leasing expenses
The company incurs marketing and leasing expenses primarily when acquiring new tenants and maintaining occupancy rates. For the nine months ended September 30, 2024, the total marketing expenses were approximately $1.6 million, which includes costs related to tenant sourcing, lease negotiations, and property marketing initiatives.
Administrative and management costs
Administrative and management costs for the nine months ended September 30, 2024, were approximately $28.3 million. These costs encompass salaries, benefits, and office expenses related to corporate governance and operational management. The company aims to maintain efficient administrative processes while ensuring compliance with regulatory standards and optimizing operational effectiveness.
| Cost Category | Q3 2024 (in $ millions) | YTD 2024 (in $ millions) |
|---|---|---|
| Property Acquisition Costs | 216.0 | 531.4 |
| Real Estate Taxes | 11.9 | 33.4 |
| Property Operating Expenses | 6.0 | 19.9 |
| Land Lease Expenses | 0.4 | 1.3 |
| General and Administrative | 9.1 | 28.3 |
| Depreciation and Amortization | 51.5 | 150.4 |
| Marketing Costs | N/A | 1.6 |
Agree Realty Corporation (ADC) - Business Model: Revenue Streams
Rental income from leased properties
For the nine months ended September 30, 2024, Agree Realty Corporation reported rental income of $456.1 million, a 16% increase from $393.3 million in the same period in 2023. The rental income for the third quarter of 2024 was $154.3 million, compared to $136.8 million in the third quarter of 2023.
| Period | Rental Income (in millions) |
|---|---|
| Q3 2024 | $154.3 |
| Q3 2023 | $136.8 |
| 9M 2024 | $456.1 |
| 9M 2023 | $393.3 |
Sale proceeds from property dispositions
During the nine months ended September 30, 2024, Agree Realty Corporation disposed of 18 assets, generating net proceeds of $63.6 million and recognizing a net gain of $11.1 million. In the third quarter of 2024, the company sold two assets for net proceeds of $6.9 million, with a net gain of $1.9 million.
| Period | Net Proceeds from Dispositions (in millions) | Net Gain (in millions) |
|---|---|---|
| Q3 2024 | $6.9 | $1.9 |
| 9M 2024 | $63.6 | $11.1 |
Development fees from construction projects
As of September 30, 2024, Agree Realty Corporation had 21 development or Developer Funding Platform (DFP) projects under construction. For the nine months ended September 30, 2024, the company commenced 17 projects and completed 12. The financial impact from development fees is embedded within the broader rental income and not separately disclosed.
Income from tenant reimbursements for operating expenses
During the nine months ended September 30, 2024, tenant reimbursements for operating expenses were part of the total revenue but were not explicitly broken out in the financial statements. The operating expenses for the same period included real estate taxes of $33.4 million and property operating expenses of $19.9 million, which might include tenant reimbursements.
| Operating Expense Type | Amount (in millions) |
|---|---|
| Real Estate Taxes | $33.4 |
| Property Operating Expenses | $19.9 |
Article updated on 8 Nov 2024
Resources:
- Agree Realty Corporation (ADC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Agree Realty Corporation (ADC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Agree Realty Corporation (ADC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.