Agree Realty Corporation. (NYSE:ADC) Q3 2022 Earnings Conference Call November 2, 2022 9:00 AM ET

Company Participants

Reuben Treatman - Director of Corporate Finance

Joey Agree - President, CEO & Director

Peter Coughenour - Chief Financial Officer

Conference Call Participants

RJ Milligan - Raymond James

Brad Heffern - RBC Capital Markets

Josh Dennerlein - Bank of America

Ki Bin Kim - Truist

Nick Joseph - Citi

Ravi Vaidya - Mizuho

Tayo Okusanya - Credit Suisse

Linda Tsai - Jefferies

Wes Golladay - Baird.

Ronald Kamdem - Morgan Stanley

Chris Lucas - CapitalOne

Operator

Good morning, and welcome to the Agree Realty Third Quarter 2022 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Note that this event is being recorded.

I will like to turn the conference over to Mr. Reuben Treatman, Director of Corporate Finance. Please go ahead, Reuben.

Reuben Treatman

Thank you. Good morning, everyone, and thank you for joining us for Agree Realty's third quarter 2022 earnings call. Before turning the call over to Joey and Peter to discuss our results for the quarter, let me first run through the cautionary language.

Please note that during this call, we will make certain statements that may be considered forward-looking under Federal Securities Law. Our actual results may differ significantly from the matters discussed in any forward-looking statements for a number of reasons. Please see yesterday's earnings release and our SEC filings, including our latest annual report on Form 10-K for a discussion of various risks and uncertainties underlying our forward-looking statements.

In addition, we discuss non-GAAP financial measures, including core funds from operations or core FFO, adjusted funds from operations, or AFFO, and net debt to recurring EBITDA. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release, website and SEC filings.

I'll now turn the call over to Joey.

Joey Agree

Thank you, Reuben. Good morning, everyone. And thank you for joining us. Before running through our standard update. I'd like to take a step back to provide some observations on the current state of the market, as well as the steps we've taken to further strengthen our positioning in a challenging macro environment. Our recent capital markets transactions have bolstered our balance sheet with attractively priced capital.

At quarter end, our quarter’s balance sheet stood at approximately 3.1 times pro forma net debt-to-EBITDA providing tremendous flexibility and enabling us to opportunistically execute as buyers and sellers continue to adjust to the market. Cap rates are creeping higher most significantly in the merchant builder space and provided us opportunity to take advantage of distressed situations. We have seen the levered buyer and a number of institutionally capitalized investors exit the market altogether, or move significantly up the risk curve to drive incremental yield.