ADC - Agree Realty: Waiting For Rate Cuts With The Commons And Preferreds
2024-05-26 17:34:22 ET
Summary
- Agree Realty's common and preferred shares have experienced weakness, with the preferreds trading at a 32% discount to their liquidation value.
- The REIT's outlook for AFFO to grow by 4.2% at the midpoint in 2024 means the dividend is 137% covered.
- ADC's debt maturities are extremely back-loaded, providing enhanced capacity for acquisition volume and AFFO growth.
I've been buying more of Agree Realty's ( ADC ) common and preferred shares since the start of the year in response to the continued weakness of these securities. The commons are down 9% over the last 1 year with the 4.25% Series A preferreds ( ADC.PR.A ) trading at a material 32% discount to their $25 per share liquidation value. The commons last declared a monthly cash dividend of $0.250 per share , kept unchanged from the prior month and $3 per share annualized for a 5.1% dividend yield. This yield sits close to a historical 10-year high with ADC trading hands for a 14.4x multiple to the midpoint of its full-year 2024 adjusted funds from operations ("AFFO") guidance of $4.10 to $4.13 per share . This multiple was roughly 19x through 2022, just as the Fed ramped up base interest rates to a more than two-decade high. Hence, a retrenchment of rates remains the core catalyst for positive total returns for both the commons and preferreds. ...
Agree Realty: Waiting For Rate Cuts With The Commons And Preferreds