Oct 21, 2026 earnings call — Capital strategy and rising cap rates
Updated 2026 AFFO per share guidance to a range of $4.58-$4.59, implying year-over-year growth of nearly 6% at the midpoint.
Revenue $0.2B (est $0.2B) · EPS $1.15 (est $0.47)
Key quotes
"At quarter end, total liquidity stood at approximately $2 billion, including cash on hand, outstanding forward equity, and full availability on our revolving credit facility."
"Acquisition cap rates expanded by 30 basis points this quarter to 7.3%, and we will expand them materially further in the fourth quarter as we lean into our capabilities and prioritize value creation over volume."
"We continue to make progress toward our medium-term objective of $250 million in annual development and developer funding platform commencements."
Analyst Q&A 13
private buyers and development timing
Q (Rich Hightower · Barclays): The analyst asked what other buyers are doing in the private net-lease market, how tax motivations and year-end seasonality affect activity, and the cadence of development spending and earnings contributions.
A: Management said they cannot speak for other buyers and are focused on their balance sheet. They have seen a rise in bonus depreciation buyers and will lean into dispositions; for development, revenue is recognized when projects are delivered and the supplemental table shows anticipated delivery quarters.
"I would think about revenue recognition beginning when the project is delivered and using that table as a guide for future projects coming online for those that have been announced." — Peter Coughenour
cost of capital and leverage capacity
Q (Michael Goldsmith · UBS): The analyst asked about the spot WACC versus acquisition cap rates, whether ADC can be in the favorable zone in Q4 and 2027, and how much the environment must improve to hit mid-single-digit AFFO growth.
A: Management said they have $0 short-term borrowings and raised nearly $2 billion at prior pricing, giving them capital to deploy. They can invest about $2 billion until 5x leverage, expect some cap-rate expansion in Q4, and said their 2027 earnings algorithm assumes disciplined deployment of that capital rather than a do-nothing scenario.
"We can invest approximately $2 billion until we are 5x levered, while the majority of our peers are sitting at 5.5x plus." — Joey Agree
cap-rate outlook and sector differences
Q (Nick Joseph · Citi): The analyst asked whether the recent cap-rate moves will normalize or keep expanding into early 2027, and which retail sectors are seeing the most cap-rate expansion or stickiness.
A: Management said they reacted quickly to the 10-year rise and repriced and culled their pipeline, expecting a rise in Q4 but not assuming further expansion in their model. They said movements are more price-point driven than sector-driven, with lower price-point assets showing more stickiness.
"We're not assuming in the model, which I just talked about, any further expansion of cap rates." — Joey Agree
investment-grade tenant reset and rent recapture
Q (Jana Galan · BofA): The analyst asked how long it takes cap rates to reset for investment-grade tenants and whether recapture could trend higher in this inflationary environment and how far rents are below market.
A: Management said investment-grade vs non-investment-grade is the wrong sole focus and provided acquisition mix percentages by quarter; they urged looking at retailer quality and portfolio diversity instead. They said recapture trends are driven by contractual escalations and options, with minimal lease rollovers, and they cannot quantify a change now.
"The IG, non-IG disparity, shadow IG, let's see through that and look at the quality of the individual retailers, the underlying real estate, and then the complexion of the overall portfolio and the diversity within it." — Joey Agree
competition and developer funding opportunity
Q (Ronald Kamdem · Morgan Stanley): The analyst asked who is getting stronger or weaker in the acquisition market and whether the $250 million developer funding run rate could grow if other capital sources are strained.
A: Management said competition is less because capital is more expensive and constrained, and they mostly compete in a fragmented owner market. They said construction and long-term financing could be more problematic for developers, so DFP activity could rise and they are exploring options.
"Overall competition is less because capital is more expensive and constrained." — Joey Agree
development returns and dead-deal costs
Q (Brad Heffern · RBC): The analyst asked whether higher rates change attractiveness or counterparties' views on development deals, and how much dead-deal fees hurt guidance in Q3 and whether that continues into Q4.
A: Management said higher rates could allow them to push returns on cost but they enter deals with a significant margin and safety. Management said elevated dead-deal costs reduced AFFO by close to roughly a penny in Q3 and they expect normalization in G&A and dead-deal costs in Q4.
"In terms of the impact from elevated dead deal costs in the third quarter, that contributed close to roughly a penny in terms of a decrease in AFFO per share in the third quarter." — Peter Coughenour
risk profile and recycling assets
Q (Eric Borden · BMO): The analyst asked how much of the recent 30 bps cap-rate increase was true repricing versus mix, whether future expansion is on comparable risk, and how much room there is to recycle non-core assets.
A: Management said they will not move up the risk curve and will stay focused on large U.S. retailers, and that Q3 repricing was often take-it-or-leave-it which caused dead deals. They said the biggest disposal opportunity is with bonus-depreciation buyers, particularly in C-stores, and they expect to recycle at roughly 175-200 basis point spreads into Q4 and 2027.
"We will stay retail focused, the largest retailers in the United States, and continue to partner with them on their growth strategy as well as existing stores." — Joey Agree
capital mix: development vs acquisitions
Q (Alex Bacon · Baird): The analyst asked if the mix of investments will shift toward development versus regular acquisitions.
A: Management said the percentage of capital allocated to development depends on overall acquisition volumes, which they do not yet have visibility into. If acquisitions trend down, development could become a larger percentage of capital deployed.
"No, the mix in terms of percentage of capital allocation will ultimately depend on." — Joey Agree
leverage intent and WALT change
Q (Upal Rana · KeyBanc): The analyst asked whether ADC intends to lever up toward 5x using the $1.9 billion deployable and whether the higher WALT in Q3 was mix or an ability to secure longer terms.
A: Management said their stated leverage target range is 4x-5x and they will always consider capital sources while maintaining a strong balance sheet; the $2 billion war chest is context for that. They said the higher WALT was due to mix, citing specific large deals.
"I think we will always be looking at capital sources, whether it was a preferred at 4.25% back in the heyday, or whether it is common equity through ATM." — Joey Agree
repricing development deals and ground leases
Q (Rob Stevenson · Huntington): The analyst asked how quickly ADC can adjust yields on development deals if cap rates move 50-60 bps, and whether ground leases show different cap-rate moves versus fee simple.
A: Management said they can adjust fairly quickly depending on project stage and various levers like land cost and rents, and often don't need to reprice due to development margins and terminal values. They said they have not seen a material difference between ground leases and fee-simple assets and expect significant ground-lease activity in Q4.
"Subject to the project and the stage of the project, we are able to adjust pretty quickly." — Joey Agree
hedging for 2028 maturities
Q (Jim Kammert · Evercore): The analyst asked if there are any hedges in place for the 2028 debt maturities.
A: Management confirmed the 2028 offerings would be fixed-rate and said there are no hedges currently in place for prospective debt issuances. That was the direct answer.
"As we think about the 2028 debt maturities, those are fixed rate offerings, and currently, there are no hedges in place for prospective debt issuances." — Peter Coughenour
grocery tenants and portfolio thesis
Q (Michael Gorman · BTIG): The analyst asked how ADC thinks about traditional mainline grocers facing negative headlines and competition in the grocery space.
A: Management referred to their prior white paper and said they pushed back on the idea that grocery-anchored centers are a safe haven; grocery retailing is a low-margin business under pressure. They said they will continue to invest only in market leaders and differentiated grocers, and view lower-tier grocers as risky.
"I pushed back pretty vehemently about the narrative of grocery anchor shopping centers being the general safe haven in retail real estate for years now." — Joey Agree
lessons from 2023 and capital strategy
Q (Jamie Feldman · Wells Fargo): The analyst asked what was learned from the 2023 10-year move and how that changed capital allocation for the next 12-18 months, and whether 4.5x is a soft leverage maximum.
A: Management said the lesson from 2023 was not moving quickly or decisively enough; this time they raised $2 billion and moved aggressively, prioritizing value over volume and preserving their balance sheet. They reiterated their stated leverage range is 4x-5x and said they would remain nimble rather than treating 4.5x as a hard maximum.
"My personal lessons learned from the 2023 rapid rise in its 10-year north of 5% was we did not move quickly and decisively enough." — Joey Agree