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Agree Realty (ADC) September Rent Collection Improves to 99%

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Zacks Equity Research
·3 min read
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Agree Realty Corporation ADC reported an increase in rent collections for September, relative to the July and August receipts.

As of Sep 30, the company’s rent collections for September aggregated payments from 99% of its portfolio. It entered deferral agreements with tenants, indicating less than 1% of September rents.

The September rent collections were higher than the July and August receipts of 96% and 97% of its portfolio, respectively. Moreover, Agree Realty entered into deferral agreements with tenants, representing 3% of rents for July and 2% of August rents.

Further, the third-quarter rent collections aggregated 97% of its portfolio, while deferral agreements represented 2% of the third-quarter rents. Such encouraging rent-collection figures highlight the strength of the company’s best-in-class portfolio.

Notably, businesses of physical stores widely depend on customer traffic. However, consumers are avoiding public spaces and have been increasingly opting for online purchases amid the pandemic. This, in turn, has been taking a huge toll on tenants’ liquidity, thereby making it difficult to meet their rental obligations.

As a result, retail REITs, which have already been battling against store closures and bankruptcy issues, have been feeling the heat. In fact, apart from Agree Realty, the downside has affected other retail REITs, including Macerich MAC, Simon Property SPG and Kimco KIM, among others.

Nonetheless, with the restart of operations in the retail sector in several parts of the nation, retail tenants now stand in a better position to generate revenues and meet their rent payments, thus, reducing pressure on retail landlords. For Agree Realty too, the reopening of properties and higher footfall at its properties will likely ease concerns over rent collection and rent relief.

Apart from these, having a grocery component has been the saving grace for retail REITs during these challenging times. Agree Realty is not different, as the company received all its second-quarter rent from grocery stores (representing 7% of its annualized base rent), convenience stores (6.5%) and dollar stores (5.6%).

Agree Realty is a pure-play retail net lease REIT and its diversified portfolio of high-quality retail properties are occupied by investment-grade tenants under long-term leases. The company focuses on leading operators in e-commerce resistant sectors or those that have matured in omni-channel structure. It also emphasizes on a balanced portfolio, with exposure to counter-cyclical sectors and retailers with strong credit profiles. These factors place the REIT well to sail through the current turbulent environment.

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Kimco Realty Corporation (KIM) : Free Stock Analysis Report
Macerich Company The (MAC) : Free Stock Analysis Report
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Agree Realty Corporation (ADC) : Free Stock Analysis Report
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