Agree Realty vs. Essential Properties Realty Trust: A Detailed Outlook for 2026 Investors

As global investors prepare for 2026, real estate investment trusts (REITs)—especially those focused on net-lease properties—are once again drawing strong attention. Two names frequently compared are Agree Realty and Essential Properties Realty Trust. Both operate in the net-lease retail space, offer attractive dividend profiles, and emphasize long-term stability. However, they differ in portfolio composition, tenant quality, growth strategy, and risk exposure.

This article rewrites and expands on the original analysis, presenting a comprehensive and easy-to-understand comparison in English. The goal is to help long-term investors decide which REIT may be better positioned for 2026 and beyond.

Understanding Net-Lease REITs

Net-lease REITs own properties that are leased to tenants under long-term agreements. In these contracts, tenants usually pay property taxes, insurance, and maintenance costs. This structure provides REITs with predictable cash flows, lower operating risk, and stable dividend distributions.

Because of these characteristics, net-lease REITs are often favored by income-focused investors, retirees, and those seeking protection against economic uncertainty.

Company Overview: Agree Realty

Business Model and Strategy

Agree Realty is a net-lease REIT with a strong focus on high-quality retail tenants. Its strategy emphasizes:

• Investment-grade tenants
• Long lease terms
• Single-tenant retail properties
• Defensive retail categories

The company aims to reduce risk by partnering with nationally recognized brands that demonstrate strong balance sheets and consistent cash flows.

Tenant Quality and Portfolio Strength

A major advantage of Agree Realty is its tenant roster. A large portion of its rental income comes from investment-grade tenants such as big-box retailers, grocery chains, and essential service providers.

This focus significantly lowers default risk, especially during economic downturns. As a result, Agree Realty has shown resilience during periods of market stress, including inflationary environments and rising interest rates.

Geographic Diversification

Agree Realty’s portfolio is well diversified across the United States. No single tenant or region dominates its revenue stream, which helps protect the company from localized economic weakness.

Dividend Profile

One of Agree Realty’s most attractive features is its monthly dividend payment. The company has a track record of consistent dividend growth, supported by stable funds from operations (FFO).

For income investors, the combination of reliability and gradual growth makes Agree Realty especially appealing.

Company Overview: Essential Properties Realty Trust

Business Model and Strategy

Essential Properties Realty Trust (EPRT) also operates in the net-lease sector but follows a slightly different approach. Instead of focusing heavily on investment-grade tenants, EPRT targets:

• Middle-market service-oriented businesses
• Experiential retail tenants
• Smaller but higher-yielding properties

This strategy allows the company to generate higher initial yields compared to many peers.

Tenant Mix and Risk Profile

EPRT’s tenant base includes restaurants, car washes, medical service providers, early childhood education centers, and fitness operators. While many of these businesses are resilient, fewer tenants carry formal investment-grade credit ratings.

This introduces a higher level of tenant risk, particularly during economic slowdowns. However, the company mitigates this risk by:

• Maintaining unit-level profitability requirements
• Structuring leases with strong rent coverage ratios
• Diversifying across industries

Growth Orientation

Essential Properties Realty Trust has positioned itself as a growth-focused net-lease REIT. Its management actively acquires new properties at attractive cap rates, which can accelerate FFO growth when economic conditions are favorable.

Dividend Characteristics

EPRT offers a competitive dividend yield, often higher than Agree Realty’s. While its dividend growth history is solid, it is generally considered slightly less conservative due to the higher-risk tenant base.

Financial Performance Comparison

Revenue and FFO Growth

Both REITs have delivered steady revenue and FFO growth over recent years. However, the drivers differ:

• Agree Realty: Growth driven by acquisitions of high-quality assets and modest rent escalations
• Essential Properties: Growth driven by higher acquisition yields and portfolio expansion

Looking toward 2026, Agree Realty is expected to deliver more stable but slower growth, while Essential Properties may achieve faster growth with higher volatility.

Balance Sheet Strength

Agree Realty maintains a very strong balance sheet with:

• Lower leverage ratios
• Access to low-cost capital
• High credit quality

Essential Properties also manages leverage responsibly, but its balance sheet reflects a slightly higher risk tolerance due to its growth-oriented strategy.

Interest Rate Sensitivity

Interest rates remain a key factor for REIT investors. Higher rates can increase borrowing costs and pressure valuations.

Agree Realty is generally viewed as more defensive in a high-rate environment due to its investment-grade profile and strong access to capital markets.

Essential Properties, while still well-managed, may experience greater sensitivity to rate changes because of its higher leverage and reliance on external growth.

Risk Factors to Consider

Agree Realty Risks

• Lower growth potential compared to higher-yield peers
• Premium valuation may limit upside
• Heavy exposure to retail, despite its defensive nature

Essential Properties Risks

• Greater tenant credit risk
• Higher sensitivity to economic downturns
• Potential dividend volatility during stressed periods

Valuation Outlook for 2026

As investors look ahead to 2026, valuation becomes critical. Agree Realty often trades at a premium multiple due to its quality and stability. This premium reflects lower risk but also caps potential returns.

Essential Properties typically trades at a discount or fair value multiple, offering greater upside if economic conditions remain favorable and tenant performance stays strong.

Which REIT Is Better for 2026?

For Conservative Investors

Agree Realty may be the better choice for investors prioritizing:

• Capital preservation
• Dividend reliability
• Lower volatility

Its focus on investment-grade tenants and strong balance sheet makes it well suited for uncertain economic environments.

For Growth-Oriented Investors

Essential Properties Realty Trust may appeal more to investors seeking:

• Higher dividend yields
• Faster FFO growth
• Greater total return potential

However, these benefits come with increased risk, particularly during economic downturns.

Frequently Asked Questions (FAQs)

Is Agree Realty safer than Essential Properties?

Yes, Agree Realty is generally considered safer due to its higher-quality tenant base and stronger balance sheet.

Which REIT offers higher dividends?

Essential Properties often offers a higher dividend yield, while Agree Realty emphasizes dividend consistency.

Are net-lease REITs good for long-term investing?

Net-lease REITs are well suited for long-term investors seeking predictable income and lower operational risk.

How do interest rates affect these REITs?

Higher interest rates can increase borrowing costs and pressure valuations, but high-quality REITs tend to adapt better.

Which REIT is better during a recession?

Agree Realty is typically more resilient during recessions due to its investment-grade tenants.

Can investors own both REITs?

Yes, owning both can provide diversification between stability and growth within the net-lease sector.

Conclusion

Both Agree Realty and Essential Properties Realty Trust are well-managed net-lease REITs with compelling long-term prospects. The better choice for 2026 ultimately depends on an investor’s risk tolerance, income needs, and growth expectations.

Agree Realty stands out for stability, safety, and consistency, while Essential Properties offers higher yield and growth potential at the cost of additional risk. Understanding these differences allows investors to make informed decisions aligned with their financial goals.

#REITInvesting #NetLeaseREITs #DividendStocks #LongTermInvesting #SlimScan #GrowthStocks #CANSLIM