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Agree Realty's (ADC) August Rent Collection Improves to 96%

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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 August, relative to July and the second-quarter receipts.

As of Sep 2, 2020, the company’s rent collections for August aggregated 96% of its portfolio. It entered deferral agreements with tenants, indicating 2% of August rents.

August rent collections were higher than July receipts of 95% of the company’s portfolio. Moreover, Agree Realty entered deferral agreements with tenants, representing 3% of rents for July. July rent collections also improved from 94% of receipts as of Jul 17, as noted by the company in its second-quarter earnings release.

Further, second-quarter rent collections aggregated 91% of its portfolio, while deferral agreements represented 3% of second-quarter rents.

Such encouraging rent-collection figures demonstrate the strength of the company’s best-in-class portfolio. Moreover, the restarting of operations in the retail sector in several parts of the nation comes as a breather for retail tenants that now stand in a better position to generate revenues and meet their rent payments, thereby, reducing pressure on retail landlords.

For the company too, the reopening of properties and higher footfall at its properties will ease concerns over rent collection and rent relief. In fact, in these challenging times, having a grocery component has been the saving grace for retail REITs. 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%).

However, since businesses of other physical stores widely depend on customer traffic but consumers are by and large avoiding crowded public spaces due to the pandemic and increasingly opting for online purchases, there has been deterioration in the liquidity of several of the company’s tenants. This is impairing their ability to pay rents. Specifically, tenants from sectors like health and fitness (3.2% of annualized base rent), entertainment retail, apparel and shoes had significant unpaid rents for second-quarter 2020.

Shares of this Zacks Rank #3 (Hold) company have lost 2.7% over the past three months compared with the industry’s 2.3% decline.


Stocks to Consider

Duke Realty Corporation’s DRE Zacks Consensus Estimate for 2020 funds from operations (FFO) per share has been revised 3.5% upward to $1.49 over the past month. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sabra Healthcare REIT, Inc.’s SBRA FFO per share estimates for the ongoing year have been revised 4.3% upward to $1.71 over the past month. The company currently carries a Zacks Rank of 2.

Alpine Income Property Trust, Inc.’s PINE FFO per share estimates for 2020 have been revised 20.2% upward to $1.99 over the past 30 days. It currently carries a Zacks Rank of 2.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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Duke Realty Corporation (DRE) : Free Stock Analysis Report
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Alpine Income Property Trust, Inc. (PINE) : Free Stock Analysis Report
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