UPDATE: BMO Capital Markets Reiterates Market Perform Rating, 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 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.