With the start of the new year, investors are beginning to focus on a potential recession in 2023. During recessions, the investor playbook is a little different, and companies with extremely stable business plans become the stars. Agree Realty (NYSE: ADC) is a retail real estate investment trust (REIT) that has heavy exposure to defensive companies. Is it worth picking up in the new year?
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Agree Realty is a net lease REIT. Net lease REITs are different than the more typical gross lease that most people encounter when renting an apartment. In a gross lease, the tenant is responsible for the rent and little else. Net leases require the tenant to cover the operating costs of the property, including insurance, maintenance, and real estate taxes. These leases tend to last a decade or more and contain automatic escalators. They tend to be expensive to break, so both parties need to be financially capable of handling economic bumps in the road.
Source Fool.com