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Agree Realty on an Acquisition Spree

Zacks Equity Research

Agree Realty Corporation (ADC), a retail real estate investment trust (:REIT), shelled out $6 million to acquire 4 single tenant assets recently. Leased to well-known retailers for an average lease period of approximately ten years, these properties offer scope for Agree Realty to augment its top line.

Among the acquisitions by Agree Realty, two of the properties are in Madisonville, TX and Forest, MS. These are leased to Tractor Supply Company (TSCO), which commands a large chain of retail stores. Among the other two properties, one is occupied by Mattress Firm Holding Corp. (MFRM) in Baton Rouge, LA and the other by AutoZone, Inc. (AZO) in Sun Valley, NV.

On an acquisition spree in recent times, in June Agree Realty disclosed $22.4 million in acquisitions of 2 single-tenant properties – one occupied by Wal-Mart Stores and the other by AutoZone. The renovated Wal-Mart asset that operates as Sam’s Club is based in Brooklyn, OH and spans 147,771 square feet. The second property is situated in South Kedzie Road in Chicago, IL. and encompasses 7,840 square feet. To date, the Sam’s Club buyout is the largest acquisition by Agree Realty at around $21 million.

Agree Realty has also been focusing on strengthening ties with its present tenants. In May, the company acquired 2 single tenant assets leased to Petsmart and Starbucks for a combined purchase price of about $5.4 million. In Apr 2013, the company announced the extension of the existing lease deal with Kmart at 2 retail properties in Michigan and Kentucky, respectively.

We expect such opportunistic deals to boost Agree Realty’s strong tenant base and its relationship with existing tenants and prove accretive to the company’s earnings in the future.

Agree Realty specializes in the acquisition and development of single tenant properties net leased to national and regional retail companies in the United States. At present, the company owns a portfolio of 124 properties, located in 33 states, comprising roughly 3.6 million square feet of gross leasable space.

Agree Realty currently carries a Zacks Rank #3 (Hold).

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