UPDATE: BMO Capital Raises PT on Agree Realty Corporation Following 4Q Earnings Call
In a report published Friday, BMO Capital Markets reiterated its Market Perform rating on Agree Realty Corporation (NYSE: ADC), and raised its price target from $26.00 to $30.00.
BMO Capital Markets noted, “ADC's 27% y/y FFO growth in 4Q reflects management's effective recycling of Borders assets and prudent capital recycling strategy, having disposed of six non-core assets and acquired $81.5 million last year. With the portfolio again operating at 98% (from 92.7% at year-end 2011), ADC's 12-year average lease term and quality tenant roster will bolster cash flow as the company leans toward a more aggressive acquisition approach. In the wake of continued cap-rate compression, ADC will seek more value-add investments that, combined with its declining cost of capital, should provide FFO accretion. While we like ADC's investment strategy and momentum, diversification remains a key concern as Walgreens accounts for 30% of base rents and will likely grow as it accounts for two of the five assets in the development pipeline. We acknowledge the web-resistant nature of Walgreens but think diversification – even from top tier credits -- is preferred.”
Agree Realty Corporation closed on Thursday at $28.07.
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