Agree Buys Two Premium Assets - Analyst Blog

By Zacks | December 03, 2012 AAA

Farmington Hills, Michigan-based real estate investment trust (REIT), Agree Realty Corporation (ADC), recently added a Big Lots unit and a Dollar General Market unit in its portfolio for an aggregate price of $5.3 million. With these twin acquisitions, the company's portfolio now exceeds a hundred properties.

The acquired 30,000 square foot Big Lots Inc. (BIG) store is located in The Shoppes at Lakestone Commons. The shopping center in Fuquay-Varina town of North Carolina, also anchors a Kohl's Corp. (KSS) department store.

On the other hand, the Dollar General Corporation (DG) unit, which spans 20,834 square foot, is situated in State Street in Lyons, Georgia. The department store houses many world class brands such as Kellogg Company (K), Hanesbrands Inc. (HBI) and Unilever plc (UL). As a matter of fact, both the acquired units have recently opened for business.

Agree Realty is actively repositioning its portfolio by divesting assets that have limited opportunities and acquiring properties which have the potential to generate higher returns. Last month, the company acquired a unit of Harris Teeter, Inc. - a wholly-owned subsidiary of Harris Teeter Supermarkets, Inc. (HTSI) - for approximately $3.0 million. The company has acquired 37 premium assets across 20 states for roughly $135 million, since the inception of its acquisition policy in 2010.

In addition, the company is also focused on potential ground lease and build-to-suit opportunities for retailers under long-term net leases, thereby guaranteeing a consistent source of income.  The company acquired seven single tenant retail properties in third-quarter 2012 for roughly $22 million. The acquired properties were net leased to some world-class tenants such as AutoZone Inc. (AZO) and Family Dollar Stores Inc. (FDO).

Agree Realty is primarily engaged in the ownership, management, acquisition and development of single tenant properties leased to industry leading retail tenants. Currently, it owns a portfolio of 101 properties, spanning 3.2 million square feet, located across 25 states.

We have a long-term Neutral recommendation on Agree Realty. However, it holds a short-term Zacks #2 Rank (Buy).

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