Thu. Sep 21st, 2023
This REIT is a great value at these levels

It’s always a good sign for shareholders when they see a company insider buying shares of the company’s stock. It is known that insiders may sell shares for dozens of personal reasons that have nothing to do with the company’s performance, but in general, insiders are buyers only when they feel that the share price is undervalued and is likely to rise over time.

It is even more significant when several insiders buy shares of a company’s stock, as this indicates optimism among more than one executive who knows the company’s performance best.

This was the case last week for one REIT (Rhett) in particular, where three different insiders bought thousands of shares of the company’s stock, adding to the large positions that were already in place.

Take a look at a REIT that insiders agree is worth buying near current levels.

Realty Corp. agrees. (NYSE:ADC) is a Bloomfield Hills, Michigan-based net lease fund focused on retail real estate. Its portfolio includes just over 2,000 properties totaling 42 million square feet in 49 states. Sixty-eight percent of the tenants are investment grade.

Agree Realty was incorporated as Agree Development Co. in 1971. It went public as a REIT company on the New York Stock Exchange in 1994 as Agree Realty Corp. Some of its biggest tenants include well-known names such as: Wal-Mart Corporation (NYSE: WMT), Best Buy Company Limited (NYSE: BBY) Dollar General Corporation (NYSE: DG) and Kroger Corporation (NYSE: KR).

Three company insiders at Agree Realty recently purchased significant amounts of Agree Realty stock, as filed on Form 4 by the U.S. Securities and Exchange Commission (SEC). These purchases were:

August 2: President and CEO Joey Agree purchased 10,000 shares of Agree Realty stock at an average price of $62.79, for a total cost of $627,900. After the purchase, Agree now owns 539,253 shares of Agree Realty.

August 2: Director John Rakolta Jr. 30,000 shares of Agree Realty at a weighted average price of $63.02 for a total cost of $1.89 million. Rakolta now owns 330,056 shares.

August 2: Richard Agree, director and CEO of the Board of Directors, purchased 11,750 shares of the company’s stock at an average cost of $62.95, for a total of $739,739. The next day, he added to his total buying 18,250 shares at an average price of $63.70 for a total of $1.16 million. Agree’s now owns 533,290 shares of the company’s stock, although some are indirectly owned by other family members.

On August 1, Agree Realty announced its operating results for the second quarter of 2023. Adjusted Funds From Operations (AFFO) of $0.98 was in line with estimates and was a penny higher than the second quarter of 2022. Revenue of $129.9 million did not beat estimates of $130.64 million but was 23.9% higher than revenue of $104.88 million in the second quarter of 2022.

The timing of the buys, which occur after the price drops after the earnings announcement, demonstrates a keen sense of technical acumen. Over the past year, on numerous occasions when Agree Realty shares traded between $62.60 and $63.50, it found strong support in the market, which led to subsequent increases of several dollars.

Like many other REITs, Agree Realty has struggled this year and has a total year-to-date return of negative 8.79%.

Agree Realty Corp. It pays a monthly dividend of $0.243, with an annual dividend of $2.916 currently yielding 4.54%.

Analysts are moderately bullish on Agree Realty. On August 2, Stifel analyst Simon Yarmak maintained the buy rating on Agree Realty and raised the price target from $76 to $76.50. The next day, Brad Heffern, an analyst at RBC Capital Markets, maintained the Outperform rating on Agree Realty but lowered the price target from $75 to $74.

The stock market is very complex right now, especially for REITs, as investors grapple with the challenge of determining whether inflation is waning slowly, fast, or not waning at all. It will be interesting to see if investors also agree with these insiders that now might be a good time to buy Agree Realty Trust shares.

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