Good morning, and welcome to the Agree Realty Fourth Quarter and Full Year 2021 Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Reuben Treatman, Director of Corporate Finance. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us for Agree Realty's fourth quarter and full year 2021 earnings call. Before turning the call over to Joey and Peter to discuss the 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, including uncertainty related to the scope, clarity, and duration of the COVID-19 pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and the containment measures on us and our tenants. Please see yesterday's earnings release and our SEC filings, including our latest annual report on Form 10-K for 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 will now turn the call over to Joey.

Thanks Reuben, and thank you all for joining us this morning. I am pleased to report that 2021 was another terrific year for our growing company. We achieved several notable milestones over the past 12 months including, but not limited to, record investment activity of $1.43 billion, surpassing our robust volume in 2020. The addition of 294 properties to our growing portfolio including six Walmarts, maintaining Walmart as our top tenant at 6.6% of annualized base rent. The completion of our inaugural preferred equity offering with extremely attractive pricing, setting a non-PSA REIT record, surpassing $5 billion in equity cap while approaching $7 billion in total enterprise value. And most importantly, the investments in our team and our information technology infrastructure led by our proprietary ARC database had paid tremendous dividends. While our investment volumes were once again at record levels, our continued focus on best-in-class retailers was reinforced by nearly 70% of annualized base rents acquired being derived from investment-grade operators. Our disciplined approach is further demonstrated by the ground leased opportunities that we executed on during this past year. We added 93 ground leases to the portfolio, representing nearly 30% of annualized base rents acquired and increasing our ground lease exposure to 14.3% of our total portfolio. Several notable ground lease assets were acquired during the year, including our second Wegmans in Parsippany, New Jersey, nine long-term Wawa convenience stores, three Walmart and Sam's Clubs, a Lowe's in Ohio, and nearly 20 Outlots to dominant power and grocery-anchored centers. As a reminder, our ground lease portfolio derives 87% of rents from investment grade tenants and is largely comprised of the company's preeminent retailers. We closed out the year with a strong fourth quarter, investing $315 million in 74 properties across our three external growth platforms. Over 67% of annualized base rents acquired during the quarter were derived from retailers with an investment-grade credit rating, while over 22% of annualized base rents acquired were derived from ground leased assets. The 71 properties acquired during the fourth quarter are leased to 34 tenants operating in 18 distinct sectors, including general merchandise, home improvement, grocery, off-price retail, convenience stores, tire and auto service, auto parts, farm and rural supply, and dollar stores. The properties were acquired at a weighted average cap rate of 6.1% and had a weighted average lease term of 10.1 years. We have entered 2022 with the largest pipeline in the history of the company. As disclosed in our December prospectus supplement, included in our pipeline are two portfolio transactions, including the largest portfolio the company has ever pursued. This portfolio is comprised of over 50 properties for an anticipated purchase price of more than $180 million. The first tranche of the transaction has closed and the second tranche is anticipated to close during the first quarter of this year. The portfolio has a weighted average lease term of nearly 10 years and derives approximately 90% of annualized base rent from investment grade retailers. In addition, we are currently under contract on a portfolio of three high-performing Walmart supercenters and a home depot store. While these portfolios demonstrate our capability to execute on larger scale transactions, they are incremental to the more granular activity that is characteristic of our traditional acquisition volume. As indicated by our initial guidance of $1.1 billion to $1.3 billion, we are extremely confident in our team's ability to aggregate high-quality opportunities comprised of leading omni-channel retailers. As mentioned, at year end our portfolio's investment grade exposure stood at 67%, representing a two-year stacked increase of more than 880 basis points. Our focus on best-in-class retailers will continue as we do not believe it's prudent to move up the risk curve in a dynamic retail environment. Moving on to our development and partner capital solutions platforms, both platforms are seeing increased opportunities and have expanding and sizable pipelines. We anticipate both of these platforms to produce outsized activity this year as we focus on driving incremental value by leveraging all of our real estate capabilities and relationships. While still quite early in the year, I would anticipate commencing between $50 million and $100 million through our development and PCS platforms during 2022. For comparison, we had seven development in PCS projects either completed or under construction during 2021 that represented total capital committed of approximately $40 million. Four of those projects were completed during this past year, representing total investment volume of $31 million. Construction continued during the fourth quarter on the company's third project with Gerber Collision in Newport Richey, Florida. The company's first development was 7-Eleven in Saginaw, Michigan, and our second Gerber project in Pooler, Georgia. Dispositions during 2021 remain consistent with prior years as we sold 18 properties for total gross proceeds of $58 million. These dispositions were completed at a weighted average cap rate of 6.4%. Notably, we sold six franchise restaurants during the year, reducing the company's franchise restaurant exposure to less than 1% of annualized base rents. Our asset management team remains diligently focused on addressing our upcoming lease maturities. As a result of these efforts, at year end, our 2022 lease maturities stand at just 0.5% of annualized base rents, representing a year-over-year decrease of approximately 80 basis points. During the fourth quarter, we executed new leases, extensions, or options on approximately 256,000 square feet of gross leaseable area. For the full year 2021, we executed new leases, extensions, or options on over 603,000 square feet. Notable new leases, options, or extensions included a new 15-year lease with Gardner White Furniture for the former Art Van flagship store in Canton, Michigan, as well as a new 15-year lease with Burlington in Mount Pleasant, Michigan for the former JC Penney space. As of December 31st, our rapidly growing retail portfolio consisted of 1,404 properties spread across 47 states. This represents an approximately 24% increase in total property count over the course of the year. The portfolio remains nearly fully occupied at 99.5%. As evidenced by our increasing investment grade exposure, our expanding ground lease portfolio, and our minimal near-term lease rollover, our portfolio is better positioned than it has ever been. With a balance sheet to match, I envision 2022 being another significant year for our company. Before I turn the call over to Peter to discuss our financial results, I'd like to highlight the announcement of our new corporate headquarters. As previously announced, we recently closed on the acquisition of a former Art Van Furniture Store on Woodward Avenue here in Royal Oak, Michigan. This building offers the unique redevelopment opportunity to create a state-of-the-art space for our growing team. Plans call for additional training and development space, health and wellness facilities, and collaborative meeting areas aligned with our ADC university and ADC wellness initiatives. Construction is anticipated to commence during the second quarter of this year with a targeted move-in date during the first half of 2023. With that, I'll hand the call over to Peter and then we can open it up for questions.

Thank you, Joey. I'll start by providing an update on our balance sheet and capital markets activities during 2021. We had another very active year in the capital markets, raising a record of $1.9 billion to fortify our balance sheet and position us for continued growth. In addition to external capital raised, we also generated nearly $100 million during the year via asset sales and free cash flow after the dividend. Adjusting for the impact of the transition to a monthly dividend during the first quarter of 2021, which resulted in 14 months of dividends being paid during the year, this figure would have been closer to $120 million. We anticipate that our increasing free cash flow after the dividend will be a valuable source of capital as we continue to grow. We completed several notable capital markets transactions during the past year, including the sale of almost 16 million common shares for total gross proceeds of approximately $1.1 billion via three follow-on equity offerings, one of which was on a forward basis, as well as the forward ATM program. The completion of a dual tranche public bond offering for $650 million at a blended all-in rate of 2.1%, including the forward-starting swaps that were terminated at the time of the transaction. This transaction allowed us to repay all $240 million of our unsecured term loans and reduce our weighted average interest rate to 3.2% while extending our weighted average debt maturity. Our inaugural preferred equity offering for gross proceeds of $175 million at a 4.25 coupon, a record for REITs aside from public storage. Lastly, in December, we amended our revolving credit facility increasing the capacity from $500 million to $1 billion. The facility includes an accordion option that allows us to request additional lender commitments up to a total of $1.75 billion. We also extended the term of the facility and reduced our cost to borrow by five basis points based on our current credit ratings and leverage ratio. As a result of our capital markets activities, our balance sheet is exceptionally well-positioned to start the year and affords us tremendous flexibility. We had over $1.4 billion in liquidity at year end, including cash on hand, a largely undrawn revolver, and almost $520 million of net proceeds available to us from our outstanding forward equity. Additionally, consistent with our hedging strategy, we have previously entered into $300 million of forward-starting swaps in contemplation of a future long-term unsecured debt issuance, effectively fixing the base rate at approximately 1.7%. Together with our outstanding forward equity, we have hedged the cost of more than $800 million of capital to fund this year's investment activity. When considering free cash flow after the dividend, as well as disposition proceeds, the majority of our capital needs for the year have been satisfied. Our significant liquidity, more than $800 million of hedge capital, and a robust pipeline gives us confidence that we can achieve high single-digit AFFO per share growth in 2022. Building upon our nearly 10% AFFO per share growth in 2021, this implies two-year stacked growth in the high teens. We view this level of per share growth as very compelling when combined with our best-in-class portfolio and our fortress-like balance sheet. Our net debt to recurring EBITDA stood at 4.9 times on December 31st or 3.4 times pro forma for the settlement of our almost $520 million of outstanding forward equity. At year end, total debt to enterprise value was approximately 24.5%. Fixed charge coverage, which includes principal amortization and the preferred dividend, remained at a company record 5.2 times. As demonstrated by these metrics, our balance sheet remains a consistent source of strength for our company as we navigate uncertainty in the capital markets. And as Joey mentioned, we are very well-positioned to fund our robust pipeline without reliance on the capital markets. Moving to earnings, core FFO was $0.92 per share for the fourth quarter and $3.58 per share for the full year 2021, representing 10.2% and 10.9% year-over-year increases respectively. AFFO per share was $0.91 for the fourth quarter and $3.51 for the full year, representing 9.2% and 9.7% year-over-year increases respectively. On a quarterly and full-year basis, core FFO per share and AFFO per share were impacted by dilution related to our outstanding forward equity offerings. In accordance with GAAP, treasury stock is to be included within our diluted share account in the event that prior to settlement our stock trades above the deal price from the offerings. The aggregate dilutive impact related to these offerings was less than $0.005 to both core FFO and AFFO per share for the fourth quarter and approximately $0.01 for the 12-month period. Our consistent and reliable earnings growth continues to support a growing and well-covered dividend. During the fourth quarter, we declared monthly cash dividends of $0.227 per common share for each of October, November, and December. On an annualized basis, the monthly dividends represent a 9.8% increase over the annualized dividend from the fourth quarter of 2020. For the full year, the company declared dividends of just over $2.60 per share, an 8.3% year-over-year increase and a 14% increase on a two-year stacked basis. Our payout ratios for the fourth quarter and full year remained at or below the low end of our targeted range of 75% to 85% of AFFO per share. Subsequent to quarter end, we declared monthly cash dividends of $0.227 per common share for January and February. The monthly dividends reflect an annualized dividend amount of $0.272 per share or a 9.7% increase over the annualized dividend amount of $2.48 per share from the first quarter of 2021. As in years past and sticking with our consistent dividend policy, investors can anticipate our monthly dividend to grow at or just below AFFO for the upcoming year, indicating significant dividend growth once again. General and administrative expenses in 2021 totaled $25.5 million. G&A expense was 7.5% of total revenue or 7% excluding the non-cash amortization of above and below market lease intangibles. For 2022, while we continue to support our growing organization, we expect that G&A expense will continue to scale, decreasing between 20 to 50 basis points as a percentage of total adjusted revenue. Lastly, income tax expense for the full year 2021 totaled $2.4 million. For 2022, we anticipate total income tax expense to be in the range of $2.5 million to $3.5 million. With that, I'd like to turn the call back over to Joey.

Thank you, Peter. At this time, operator, we'll open it up for questions.

We will now begin the question and answer session. Our first question will come from Wes Golladay of RBC Capital Markets. Please go ahead.

Hey, good morning everyone. I'm actually at Baird. I have a quick question on the developer PCS program going to $50 million to $100 million. Can you talk about the relative economics of the yield that you're going to get on those deals? And how big would you like that pipeline to get?

Hey, good morning Wes. Relative yields for our development and PCS programs are in line historically with what we've talked about: 100 to 250 basis point spreads over market cap rates. Our expectation for that program is to continue to ramp throughout the course of this year. We think we'll see significant activity during the first quarter in terms of starts, as well as Q2. But we have some programmatic relationships that we're focused on, that we're excited to roll out, and that have already begun putting shovels in the ground there.

Got it. And are you getting new relationships out of this expansion of the program?

I think our focus is on working with our existing tenant base. The retailers we refer to are either in a growth phase or are considering high-priority relocations. Many of them have reached out to us for assistance in achieving their growth goals across the country.

Got it. When we consider your current pipeline, which has a midpoint guidance of $1.2 billion, how much of that is allocated to smaller acquisitions compared to the small portfolios you mentioned?

It's a great question. We'll have to see as the year continues to transpire, given the disclosure in the prospectus, in the commentary today, we have approximately $260 million between the two portfolios. The first tranche of the $180 million portfolio has already closed. So about $260 million in those two portfolios as well, and I'll tell you there are other portfolios that we are working on currently. But at the end of the day, we don't rely on portfolio-level activity. The more granular approaches is our day-to-day. But we'll be prepared from a balance sheet as well as a human capital position to execute on anything that comes our way.

Got it. Thanks for the questions.

Thanks Wes.

The next question comes from Brad Heffern of RBC Capital Markets. Please go ahead.

Hey, good morning everyone. I was wondering if they were going to say, I was with Baird. Cost of capital is obviously higher than it was a couple of months ago. I know you've locked in most of the capital for this year. But can you pursue the same types of opportunities and still generate attractive spreads on a longer term basis?

I believe we are in a strong position with $520 million in forward equity, $300 million in forward-starting swaps related to our debt, and about 1.7% as a base rate over ten years. Our capital position is robust, and our hedging policy continues to provide benefits. We are also pleased to have completed the follow-on offering in December, which allows us to address most of our capital needs for the year. With substantial free cash flow after dividends and proceeds from dispositions, we are well-equipped to move forward with our pipeline.

Okay. Got it. Maybe trying it a different way. I mean, do you think that cap rates eventually are going to start adjusting to these higher rates? And how long do you think that will take?

Now, that's a difficult question. I think here with the 10-year approaching 2%, historically, there is causation between cap rates and the 10-year U.S. treasury. Usually, it has a lag of three to six months and we haven't started to see cap rates materially move up yet. But my expectation is the cap rates will follow like they have historically the 10-year treasury. So, I think we're in a good position not only given our balance sheet and liquidity position today, but also to execute on the latter half of the year.

Okay. Thank you.

And our next question will come from Linda Tosai of Jefferies. Please go ahead.

Hi. Good morning. In terms of the $180 million portfolio, how does the cap rate for this compare to the weighted average cap rate of 6.1% in 4Q?

Yes. Good morning Linda. We talked about that during the transaction in December. That cap rate is just south of where we've transacted historically and in this quarter, given the composition of that portfolio being 90% investment-grade really tends to fit within our wheelhouse and just the synergies and obviously reduce frictional costs. We thought that was appropriate. But we also see additional opportunities that will pull that cap rate back up. But we anticipate printing a six or north for Q1 in terms of acquisition volume and it will definitely be a robust quarter for us.

And then, you mentioned there's high quality tenants within that portfolio. Are there any other new tenants that you would be acquiring?

In that portfolio? There's a couple miscellaneous tenants in there that we'd be acquiring that would potentially be dispositions, but they're fairly de minimis. The bulk of that portfolio fits extremely well within our top, call it, 15 tenant roster.

Thanks. Could you remind us of your bad debt expectations for 2022? Additionally, in this improving credit environment, are there new types of tenants you are considering?

So Linda, with respect to our bad debt expectations for 2022, we specifically identify potential bad debt issues based on our assessment of recoverability with any troubled tenants. There are no significant outstanding balances for which we haven't already recorded a reserve. So pending any developments with existing tenants, we don't anticipate any meaningful bad debt expense in 2022.

Thanks. And then, just in terms of the better credit environment. Are there new tenants that you're looking at?

I would say our sandbox remains fairly constant. There are always tenants that we look at for minority investments or there are the fringe of that sandbox that we monitor historically that had been tenants such as Boot Barn where we've done a number of transactions. We'll continue to monitor. I think given the surge sales of the pandemic and the adjustments of some of the balance sheets that will prove to be temporary as we continue to migrate toward a true omni-channel future. So, while we see improved balance sheets with some weaker performers pre-COVID, some of whom have gone public and entered, we were able to execute on an initial public offering. Our focus is still going to be on those leading operators that everybody's familiar with that we consistently transact with.

Got it. Thank you.

Thanks Linda.

The next question comes from Josh Dennerlein of Bank of America. Please go ahead.

Hey, guys. Hope everyone's doing well. Joey, Peter, just maybe kind of big picture. Are you thinking about capital raising in a rising interest rate environment? And is there any kind of maybe shift or anything even lean into?

The good news is that we don't need to consider capital raising in the current environment, especially after the December offering and the strong position of our balance sheet, including the expanded credit facility and existing swaps. It's crucial for us to have capital that can be deployed effectively with significant spreads in an external growth strategy, similar to any net lease company. Additionally, I want to mention that the execution of our inaugural preferred last year appears very attractive from our viewpoint. We plan to take advantage of any opportunistic capital available, whether in the form of common equity, debt, or preferred stock. Most importantly, our balance sheet has been extensively discussed and is solid, which will continue to support our growth trajectory and allow us to act on the robust pipeline we currently have. Peter, would you like to add anything?

Yes, Josh. I just add. Look, we're always evaluating the capital markets to determine what's the most efficient and effective way for us to raise capital to support our continued growth. As Joey mentioned, the balance sheet is in excellent shape today. And I think it's evidence that we will look for alternate ways to raise capital as evidenced by the preferred equity offering we completed last year to fund growth, but we're always going to evaluate all options available to us with respect to any particular capital race.

One other thing I would add there, Josh, is we have never believed in just-in-time funding. At times we've been criticized for being under-levered, but in an external growth business that's growing on a relative and absolute basis as quickly as this company is just-in-time funding, to me, means a just-in-time potential problem. And so, whether it's the use of the forward equity or forward-starting swaps on the debt side, we always want to maintain our balance sheet as that offensive line. I understand people will say you're under-leverage at times. Well, my response to that is that's always, it's very easy to increase leverage. It is not painful to increase leverage as it is to deliver the balance sheet. It is a lever that we can pull in the future if we feel that it's appropriate or the cost of respected capital we are aligned with. But I think the just-in-time funding as we have proven time and time again in this space can lead to disastrous consequences. And so, we're very happy that with the December raise. We're very happy with our position from a financial perspective today.

Great. Thank you, guys.

Thanks, Josh.

The next question comes from Tayo Okusanya of Credit Suisse. Please go ahead.

Good morning, Joey and team. I have a high-level question. The balance sheet looks strong, and there's a clear focus on investment-grade tenants and high tenant credit quality, which is great. However, I’m curious about your positive perspective on the retail environment compared to some peers who are taking more risks with lower-quality investments and higher leverage. It seems like the market is rewarding their stocks with higher valuations than yours. What are your thoughts on why this is happening, and what could potentially change that? Is it rising interest rates leading to issues with tenant credit, or is there another reason for this trend?

It's an important macro question. In the future, we will reflect on the past two years and better understand the context of what has happened. If we consider the recession triggered by the pandemic, followed by a recovery driven by monetary and fiscal policy and the remarkable speed of vaccine development, many investors are currently trying to navigate these changes. However, we do not believe that the pandemic or the recovery has altered the risk profile of sectors, underlying real estate, or single-purpose buildings. Therefore, we think the risk-adjusted returns do not align with an omni-channel reality. I have mentioned before in earnings calls and various investor meetings that in ten years, my children likely won’t recall whether Walmart was originally a brick-and-mortar store or Amazon an e-commerce platform. We observe a convergence in the market. We believe we have executed well on our rethink retail strategy, as detailed on our website and in white papers, but we do not find it suitable to take on more risk. Recent performances from Lowe's and Walmart indicate that major retailers with the financial resources to invest in an omni-channel strategy, address pricing pressures, and enhance their distribution networks will continue to prosper. We consider this crucial. Therefore, we will concentrate on our strategy of investing in the most promising retailers in the country who we believe will thrive not just for a few years, but for decades. This is a long-term business; we sign long-term leases and expect our tenants to meet their rent obligations for the full term of their lease, which may be extended through options.

That's helpful. And then second question just around again the land deals. Just kind of curious how much opportunity you're seeing on that side and ultimately the target of how big that becomes as part of the portfolio? I think it's about 14% now. I don't know whether your goal is 20%, 25% in three years.

Yes. No real goal. Those opportunities ebb and flow. They come from the same sourcing and origination mechanisms as the remainder of any opportunities. It's just a different lease structure. We found tremendous opportunities. We highlighted some of them. The Wegmans in Parsippany, the Aldi portfolio. We acquired the Wawa's. I believe it was nine Wawa's on ground leases where the tenant has invested significant capital in the improvements in the buildings. Those opportunities truly ebb and flow. There's no long-term goal for that portfolio. It's approximately $50 million in NOI today. As we mentioned in the prepared remarks, almost 90% investment grade, it's extremely unique. We'll continue to execute on those opportunities. But as we mentioned before, we're not going to reach in terms of pricing or drive cap rates down. And so, they'll ebb and flow. They're typically one-off opportunities that we'll transact on.

Great. Thank you.

Thanks Tayo.

This concludes our question and answer session. I would like to turn the conference back over to Joey Agree for any closing remarks.

Well, thank you everybody. We look forward to seeing everybody hopefully in person during the upcoming conference season. I appreciate everybody's time. Thanks again.

The conference is now concluded. Thank you for attending today's presentation. And you may now disconnect.