Agree Realty Corporation (ADC): A Bull Case Theory

We came across a bullish thesis on Agree Realty Corporation on ValueInvestorsClub.com by mm202. In this article, we will summarize the bull’s thesis on ADC. Agree Realty Corporation’s share was trading at $72.35 as of June 27^th. ADC’s trailing and forward P/E were 40.88 and 38.61, respectively, according to Yahoo Finance.

Aerial city skyline highlighting a large modern office building owned by the REIT.

Agree Realty (NYSE: ADC) is a high-conviction net lease REIT specializing in necessity-based, e-commerce-resistant single-tenant retail properties across 49 U.S. states. With 2,422 assets, ADC focuses on grocery, convenience, auto service, and home improvement retailers, underpinned by triple-net lease structures that transfer most operating costs to tenants, ensuring stable and predictable returns.

Its disciplined three-pronged growth strategy—acquisitions, development, and structured developer funding—emphasizes credit quality and long-term cash flow. In Q1 2025, ADC delivered strong results with 24% YoY revenue growth and 3.9% AFFO growth, reaffirming full-year guidance and raising its monthly dividend to $0.256/share (~4.1% yield). The REIT boasts a fortress balance sheet with $2.2B in liquidity, investment-grade ratings, and no major debt maturities until 2028, giving it exceptional financial flexibility.

While trading at a ~17.5× AFFO multiple—above peers—ADC justifies its premium via superior tenant quality (68% investment-grade rent), low leverage (<5× net debt/EBITDA), and consistent execution. Unlike peers that diversify into riskier formats, ADC maintains focus on resilient sectors and avoids volatile categories like fitness or theaters. In Q1 alone, the firm invested $346.5 million at a 7.2% cap rate, far exceeding its cost of capital and underscoring its strategic edge.

Risks include interest rate sensitivity, tenant shifts, execution missteps, and potential equity dilution, though ADC’s track record inspires confidence. Near-term catalysts include continued acquisitions, dividend increases, and potential multiple rerating as investors increasingly reward quality. ADC stands out not just for growth, but for compounding high-quality cash flows with precision, making it a durable, low-volatility income play in the REIT universe.

Previously, we covered a bullish thesis on Simon Property Group, Inc. (SPG) by David in April 2025, which highlighted the company’s conservative capital structure, resilient luxury-anchored tenant base, and strong free cash flow. The company’s stock price has appreciated by approximately 8.05% since our coverage. This is because the dividend-driven strategy played out well. The thesis still stands as SPG remains defensively positioned within premium retail. MM202 shares a similar outlook but emphasizes ADC’s necessity-focused tenant mix and best-in-class balance sheet.