Agree Realty Corporation

Good morning and welcome to the AGRI Realty second quarter 2025 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then one. Please limit yourself to two questions during this call. And note, this event is being recorded. I would now like to turn the conference over to Ruben Treatment, Senior Director of Corporate Finance. Please go ahead, Ruben.

Thank you. Good morning, everyone, and thank you for joining us for Agri-Realty's second quarter 2025 earnings call. Before turning the call over to Joey and Peter to discuss our results for the quarter, let me first run through our cautionary language. Please note that during this call, we will make certain statements that may be considered forward-looking under federal securities law, including statements related to our updated 2025 guidance. Our actual results may differ significantly from the matters discussed in any forward-looking statements for a number of reasons. Please see yesterday's earnings release and our SEC filings, including our latest annual report on Form 10-K, for a discussion of various risks and uncertainties underlying our forward-looking statements. In addition, we discussed non-GAAP financial measures, including core funds from operations or core FFO, adjusted funds from operations or AFFO, and net debt to recurring EBITDA. Reconciliations of our historical non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release, website, and SEC filings. I'll now turn the call over to Joey. Thanks, Ruben, and thank you all for joining us this morning.

I am extremely pleased with our performance during the first half of the year. having invested over $725 million across our three external growth platforms while further solidifying what we believe to be the preeminent retail portfolio in the country. The $725 million plus invested year to date represents more than two-fold increase relative to the first half of last year. All three of our external growth platforms have broad and expansive pipelines and we'll see acceleration in the third quarter. Hence, We are raising our full year investment volume guidance once again to an updated range of $1.4 to $1.6 billion. The midpoint of this range represents a 58% increase over total investment volume for last year. Most exciting is not the defensive nature of our portfolio or balance sheet in a dynamic world. It is now our dominant market position driven by a best-in-class team that executes on hundreds of transactions annually across our three growth platforms. This value proposition is unparalleled, and when combined with our internal asset management platform and deep retailer relationships, has built a differentiated and unmatched company. It has been 15 years in the making since this vision was outlined in our one-page operating strategy, December of 2009 to be exact, and I am delighted to say that it has been realized. I am confident that these factors will drive an increased earnings algorithm in the coming years without moving up the risk curve in any manner. We continue to expand our war chest during the quarter, now having raised over $1 billion of capital year to date, with $1.3 billion of outstanding forward equity. With over $2.3 billion in total liquidity, no material debt maturities until 2028, and pro forma net debt to recurring EBITDA of just 3.1 times a quarter end, our balance sheet remains best in class and is positioned to support our growth well into next year. To support this growth, we've continued to scale our team, enhance our systems, and refine our processes, building a well-oiled machine and widening our competitive moat. We've added over 20 new team members year-to-date across the organization, increasing the scale of our horizontally integrated platform to support current activities as well as growth for years to come. We have driven industry-leading efficiencies with the deployment of additional systems, including AI and machine learning tools, as well as enhanced integrations and streamlined workflows. Additionally, we have commenced the next iteration of ARC, which will come online next year. We've already started to reap these benefits in 2025, as we're raising our full-year AFFO per share guidance by $0.02 at the midpoint to a new range of $4.29 to $4.32. This represents over 4% growth at the midpoint and demonstrates our ability to provide consistent and reliable earnings growth without deviating from our investment strategy. Peter will provide further details on the guidance range and its key inputs shortly. We continue to see the biggest and best retailers take market share, which acts as a tailwind to all three of our external growth platforms. Even in today's uncertain macro environment, we are seeing the highest level of retailer demand for new brick and mortar locations since the great financial crisis. Nearly every retailer in our sandbox is focused on adding net new stores, underscoring the critical role that retail net lease assets play in an omnichannel retail world and is outlined in our previous commentary and white papers. Moving on to the second quarter in detail, we invested over $350 million in 110 properties across all three platforms. This includes $328 million of acquisition volume across 91 high-quality retail net lease assets. Notable acquisitions during the quarter included a sale leaseback with the leading national auto parts retailer, a one-off Walmart Supercenter in Ohio, and a $75 million grocery-dominated portfolio representing one of our largest non-sale leaseback transactions since the inception of our acquisition platform in 2010. This unique opportunity was owned by an elderly woman and was sourced through 18 months of working an off-market opportunity. These differentiated examples underscore the strength of our platform and its ability to source differentiated opportunities in a substantial and highly fragmented space. The acquired properties had a weighted average cap rate of 7.1% and a weighted average lease term of 12.2 years. Over 53% of base rent acquired was derived from investment-grade retailers, and we continue to add to our ground-lease portfolio during the quarter. We anticipate selling a few lower-yield non-core assets from the aforementioned $75 million grocery-dominated portfolio, which will improve both acquisition cap rate and investment-grade percentage for the quarter post-disposition. Although we only commenced one project in our development and DSP platforms during the quarter, Don't be fooled. We continue to see increased activity and have a deep pipeline. We anticipated announcing several projects in the quarters ahead while construction continued on 14 projects during the quarter with aggregate anticipated costs of over $90 million. We wrapped up four projects during the quarter representing aggregate investment of over $13 million. These projects are with leading retail partners, including TGX, Burlington, 7-Eleven, Boot Barn, Starbucks, Gerber Collision, and Sunbelt Rentals. In total, we had 25 projects either completed or under construction during the first half of the year, representing $140 million of committed capital, including $98 million of costs incurred through June 30th. We anticipate development spend to be up at least 50% year over year as both platforms continue to ramp. Our asset management team continues to address upcoming lease maturities. We executed new leases, extensions, or options on approximately 950,000 square feet of gross leaseable area during the quarter. This included a Walmart Supercenter in Ohio, a Best Buy in California, and five geographically diverse leases with the TGX companies. In the first half of the year, we executed new leases, extensions, or options at 1.5 million square feet of GLA, with recapture rates of approximately 104%. Notable examples in recent quarters include the releasing of our former Big Lots in Manassas, Virginia and Cedar Park, Texas, with net effective recapture rates of almost 170 and 150% respectively. As well as the releasing of our former party city in Port Arthur, Texas, with a net effective recapture rate of 115%. Demonstrating our emphasis on fungible boxes in dominant retail corridors. At quarter end, our best-in-class portfolio surpassed 2,500 properties spanning all 50 states. The portfolio includes 232 ground leases comprising over 10% of annualized base rents. Our investment-grade exposure stood at 68%, and occupancy rebound posted re-tenanting of the former big lots by 40 basis points to 99.6%. Dispositions remain limited. However, our only at-home, located in Provo, Utah, across from a new target is currently under contract to sell and non-refundable at a seven cap. We purchased the at-home as a pure real estate play in 2016 and have had interest in the site from multiple retailers and prospective purchasers. The disposition cap rate of seven percent is nearly 50 basis points inside of where we acquired the asset and we anticipate realizing an unlevered IRR of approximately nine percent upon closing this quarter. Although at-home recently exercised a five-year option and the lease is anticipated to be infirmed in bankruptcy, I'm confident that at-home will ultimately suffer the same fate as Party City, Joanne, and Rite Aid, and ultimately Liquidate. With that said, I'll hand the call over to Peter to discuss our financial results for the quarter.