I don’t often write direct comparisons. But after covering both Agree Realty (NYSE:ADC) and NNN REIT (NYSE:NNN) following their fourth-quarter earnings, the contrast became difficult to ignore.
Both delivered strong quarters. Both beat estimates. Both reaffirmed guidance.
But they are preparing for different futures.
The divergence isn’t in quality. It’s in construction.
ADC and NNN operate in the same net lease sector, serve similar tenants, and carry investment-grade ratings. Yet the capital structures beneath those similarities point in different directions — and Q4 made that clearer.
The Q4 Baseline
ADC reported AFFO of $1.11 per share, up 6.5% year over year. Full-year AFFO reached $4.33, at the high end of guidance. The company deployed $1.55 billion in acquisitions during 2025, funded by roughly $1.5 billion in long-term capital raises.
NNN reported AFFO of $0.87 per share, up 6.1% year over year. Revenue rose 9.1%, and the company completed a record $931 million in acquisitions. Occupancy improved 80 basis points to 98.3%.
Operationally, both accelerated.
The distinction lies in how that growth is financed.
Growth Model: External Engine Vs. Internal Discipline
ADC’s model runs on capital access.
In 2025, it raised capital through forward equity offerings, a $400 million bond issuance, and a $350 million term loan fixed at 4.02%. Liquidity exceeded $2.0 billion at year-end, with more than $915 million of hedged capital available for deployment. For 2026, investment guidance increased to $1.4 billion to $1.6 billion.
The company’s Fitch A- rating underpins this approach. Access to attractively priced debt enables faster scaling.
The trade-off is dependency. Growth assumes functional equity and debt markets.
NNN operates differently.
Management guided to $550 million to $650 million in 2026 acquisitions, primarily funded through $210 million of retained free cash flow, $130 million in planned dispositions, and leverage-neutral incremental debt. No equity issuance is assumed.
This is a self-funding structure. It reduces reliance on capital market timing and removes the need to issue equity at uncertain valuations.
The trade-off is speed. NNN cannot match ADC’s deployment pace. But it does not require market cooperation to grow.
Balance Sheet: Two Forms Of Defense
ADC ended the year at 3.8x pro forma net debt-to-EBITDA, including unsettled forward equity. Excluding those forwards, leverage stood at 4.9x. No debt matures until 2028.
NNN reported leverage of 5.6x — higher in absolute terms — paired with a weighted average debt maturity of 10.8 years, the longest in the net lease sector. Liquidity stood at $1.2 billion.
ADC defends through leverage discipline and rating strength.
NNN defends through duration and internal funding.
In a scenario where spreads widen, ADC has more room before rating agencies react. In a capital markets freeze, NNN has less need to access markets in the first place.
The Refinancing Reality
NNN faces a $350 million refinancing in 2026 at an estimated 5.20% to 5.25%. That rate sits above the company’s existing portfolio average. But within a 10.8-year weighted maturity structure, one refinancing does not redefine the overall cost base.
ADC has no maturities until 2028 — which means it is not negotiating with today’s rate environment at all. That optionality is itself a form of structural defense.
2026 Outlook: Acceleration Vs. Stability
ADC guided to AFFO of $4.54 to $4.58, implying 5.4% growth at the midpoint — its strongest projected expansion since 2022.
NNN guided to AFFO of $3.52 to $3.58, implying 3.2% growth.
The yield gap reflects that divergence. NNN’s dividend yield near 5.5% compensates for slower expansion. ADC’s yield around 4.2% reflects investor willingness to pay for higher growth and stronger ratings.
Neither company signaled stress. Both models are functioning.
What The Structure Suggests
This is not about which quarter was better. It is about which balance sheet an investor prefers behind their dividend.
ADC is built to accelerate when capital is available. NNN is built to endure when capital tightens.
If rates moderate and markets remain orderly, ADC’s external growth engine compounds efficiently. If volatility persists or funding windows narrow, NNN’s self-funded model and long duration provide insulation.
Same sector. Same earnings strength. Different structural bets.
The numbers tell a story. Whether it changes anything — that part is yours.
Disclosure: This article is for informational purposes only and does not constitute investment advice. The author holds no position in ADC or NNN at the time of writing.
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
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