Peter Coughenour
Thank you, Joey. Starting with the balance sheet. We remained active in the capital markets during the first quarter, raising approximately $181 million of forward equity via our ATM program. We also settled 2.7 million shares of forward equity for net proceeds of approximately $183 million. Additionally, we established our inaugural $625 million commercial paper program during the quarter.
The program allows us to tap into another pool of short-term capital and further diversifies our balance sheet. We anticipate that we will be able to efficiently fund our short-term capital needs on the program at rates that are substantially lower than our revolving credit facility today.
Since the end of last quarter, we have taken further steps to hedge against interest rate volatility by entering into $125 million of forward starting swaps. In total, we now have $325 million of forward starting swaps, effectively fixing the base rate for a contemplated 10-year unsecured debt issuance at roughly 3.9%.
Combined with approximately $920 million of outstanding forward equity, we have over $1.2 billion of hedge capital, which provides critical visibility into our intermediate cost of capital particularly during this uncertain period. At quarter end, we had liquidity of approximately $1.9 billion including the aforementioned forward equity and availability on our revolving credit facility.
Pro forma for the settlement of all outstanding forward equity our net debt to recurring EBITDA was approximately 3.4 times. Excluding the impact of unsettled forward equity, our net debt to recurring EBITDA was 4.9 times. Our total debt to enterprise value was under 26% and our fixed charge coverage ratio, which includes the preferred dividend, remains very healthy at 4.3 times. Our only free rate exposure was comprised of amounts outstanding on the revolver at quarter end. And as Joey mentioned, we continue to have no material debt maturities until 2028.
Our balance sheet is extremely well positioned to execute on our accelerating investment activity across all three external growth platforms.
Moving to earnings. Core FFO per share was $1.04 for the first quarter, which represents a 3.1% increase compared to the first quarter of last year. AFFO per share was $1.06 for the quarter, representing a 3% year-over-year increase. As Joey highlighted, we have updated our full year 2025 outlook to reflect our strong start to the year.
We raised the low end of our full year AFFO per share guidance to a new range of $4.27 to $4.30, which implies year-over-year growth of more than 3.5% at the midpoint. We provide parameters on several other inputs in our earnings release, including investment and disposition volume, general and administrative expenses, nonreimbursable real estate expenses as well as income tax and other tax expenses.
In addition to those inputs, our earnings guidance for 2025 includes anticipated treasury stock method dilution related to our outstanding forward equity. As a reminder, if ADC stock trades above the net price of our outstanding forward equity offerings, the dilutive impact of unsettled shares must be included in our share count in accordance with the treasury stock method.
Provided that our stock continues to trade near current levels, we anticipate that treasury stock method dilution will have an impact of roughly $0.02 on full year 2025 AFFO per share. That said, the impact could be higher if our stock moves materially above current levels or if we were to issue additional forward equity.
Our growing and well-covered dividend continues to be supported by our consistent and durable earnings growth. During the first quarter, we declared monthly cash dividends of $0.253 per common share for January, February and March.
The monthly dividend equates to an annualized dividend of almost $3.04 per share and referenced a 2.4% year-over-year increase. Our dividend is very well covered with a payout ratio of 72% of AFFO per share for the first quarter. We anticipate having almost $120 million in free cash flow after the dividend this year, up approximately 15% from last year.
We view this as another source of cost-efficient capital while maintaining a robust and growing dividend. Subsequent to quarter end, we announced an increased monthly cash dividend of $0.256 per common share for April. The monthly dividend equates to an annualized dividend of over $3.07 per share and also represents a 2.4% year-over-year increase.
With that, I'd like to turn the call back over to Joey.
Joey Agree
Thank you, Peter.
Operator at this time, let's open it up for questions.
Operator
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions)
Ki Bin Kim at Truist.
Ki Bin Kim
Thank you. Good morning. So Joey, you guys raised investment guidance by $200 million. You guys also mentioned the treasury stock dilution method. Were there other detracting items? Because I would have thought you guys raising that much of your investment guidance that the AFFO guidance would have been more than $0.5. Thank you.
Joey Agree
Hey, good morning, Ki Bin. No other detractors. Obviously, we've included, as Peter mentioned in the prepared remarks, approximately $0.02 of treasury method, anticipated treasury method dilution that's already hit the P&L but also throughout the year. Obviously, we can't predict the stock price on a daily or for an annual basis here.
But we've been conservative we think and appropriately included that treasury method dilution as it incurs and what's incurred today. Peter can talk about any other puts and takes in there, but that's really the only offset to the investment increase.
Peter Coughenour
Ki Bin, yeah, this is Peter. In terms of other puts and takes, there's to Joey's point, really no other offsets. If you think about the incremental $200 million of investment spend this year subject to timing of that investment spend and spread, we think that should translate to about $1 million or so of incremental earnings or about $0.01. Obviously, at the low end of our guidance range, we took up the range by $0.01. We didn't touch the top end.
That's really a reflection of the fact that we do anticipate treasury stock method dilution will be closer to that $0.02 rather than $0.01 to $0.02 given where we're trading currently. And obviously, that remains subject to where we trade for the remainder of the year and any other capital markets activity throughout the year as well.
Ki Bin Kim
And I guess it's a high-class problem that your stock price goes higher and create treasury stock dilution. But when does the kind of calculate start to work out so that we can start to get to a plus like 4% type of AFFO per share growth rate or more from Agree?
Joey Agree
Well, I think in the near term, obviously, subject to macroeconomic conditions, which are outside of control, this business is built for that. And so we made the decision to pre-equitize the balance sheet, put hedges in position in terms of the swaps this year in anticipation of increased volatility, but we think that algorithm kicks in there outside of just balance sheet protection and treasury method dilution.
Ki Bin Kim
Okay, thank you.
Joey Agree
Thanks, Kin Bin.
Operator
Smedes Rose, Citi.
Smedes Rose
Hi, good morning, I just wanted to ask you a little bit about some of your tenant exposure. It looks like grocery exposure went up by about 90 basis points. And within that, your name tenants Krogers was up. And I was just wondering, is that any specific change in your strategy around groceries? Or is that more just sort of a one-off opportunity that you found during the quarter?
Joey Agree
Good morning Smedes. That was a one-off opportunity predominantly in the quarter. I also mentioned the Acme in Bronxville, New York who we acquired as well. We'll continue to find dominant grocers across the country. There's a number in the pipeline already for the second quarter. We continue to believe that dominated grocers we'll gain share here.
Given the macro, obviously, but also just the challenges is for small grocers to operate in a 2% margin business, ex tariffs and all the other noise out there.
Smedes Rose
Okay. And then just maybe just touching on tariffs. Given your tenant exposure, is there anyone that you are particularly maybe concerned about or watching more carefully, particularly given the higher tariffs with China specifically, which I realize is kind of a moving a very fluid situation, but what's on your radar?
Joey Agree
I appreciate you acknowledging the moving and fluid situation. It seems to be day. I'll be honest, there really is nobody that we're overly concerned with tariff inputs in the portfolio today. Now all retailers, subject to carve-outs and exclusives, obviously electronics carve out for the Truth Social Post or whatever it was last week, alleviated concerns for computers and televisions. Now that could all obviously change but we think this portfolio is in a tremendous position to continue to benefit from the trade-down effect.
As you mentioned, grocery, obviously, with economic conditions where they are, people will stop eating out. Auto parts, you've seen that accelerate in our portfolio. Obviously, new cars will be impacted significantly by tariffs. The average new cars in this country is already approximately $45,000. That's pre-tariff. Tire and auto service, another category we highlighted during the prepared remarks, off-price retail, where one of TJX in Burlington's largest landlord, we continue to think build-in from any tariff implication.
So we think this portfolio, as I mentioned in the prepared remarks, was built to be recession resistant. We haven't heard of hit a traditional recession since 2010 upon its inception but approved to be pandemic resistance, and we're resistant and we're very confident it will be ultimately whatever way, shape and form tariffs pan out we'll be tariff resistant as well.
Ki Bin Kim
Okay, thank you. I appreciate it.
Joey Agree
Thanks, Smedes .
Operator
RJ Milligan, Raymond James
RJ Milligan
Hey, good morning guys. Joey, I was wondering, as you are having conversations with your development partners, what's their current appetite for opening new stores? Has there been a pause? Just trying to get a broader market read there?
Joey Agree
Yeah, good morning, RJ. We have not seen any pause to date, albeit this is a volatile and fast-moving environment. The team was with a number of retailers this week and will be again with two or three in the upcoming couple of days here. We haven't seen a pause. We've actually seen announcements. Sam's Club has announced that they're opening net new stores.
Kroger's made announcements in terms of remodels and net new stores in the past two weeks as well. And so we have not seen that pause. We haven't had any deals, frankly, tabled or put on hold either yet. But obviously, again, this is a fluid situation, which is out of our control.
But again, I think when you have a discount-oriented necessity-based tenant roster, those tenants today, I don't think are overly scared by tenant tariffs. I think a lot of them see this as an opportunity. As I mentioned in the prepared remarks, the big are getting bigger. And this is what we've effectively built this portfolio and constructed around to invest in price, they have to invest in labor and invest in omnichannel fulfillment and tariffs will require retailers to effectively invest in price unless they're going to ask that entire tariff on to the end consumer.
RJ Milligan
That's helpful. And I wanted to move over from a portfolio standpoint, is there any tenants out there. Obviously, this is not really tariff related where you're just keeping a watch on them and saying ex the tariffs, there might be some fundamental issue?
Joey Agree
No, no new entrants into that. Obviously, one of the three movie theaters total in the portfolio, we continue to watch. We have been proactive in reducing, as I mentioned in the prepared remarks, dollar store and pharmacy exposure in 2023. That was prior to the headlines in 2024. And so there are really no changes to our watch list here.
RJ Milligan
Just one last follow-up. In terms of cap rates, where do you think we end the year in terms of Agree's acquisition cap rates? Is it going to be higher or lower? And sort of how do you think about the inputs there?
Joey Agree
RJ to be frank, I have no idea. The volatility in the 10-year treasury, which has been historically, obviously, the base rate for the world, the fear greed spectrum continues to vacillate. Obviously, we're on the fee side. We are just starting effective Monday, building our Q3 pipeline, just given our 66, 67 days letter of intent to close. I think this is going to be a volatile world.
I think it's going to change. I think the volatility doesn't effectively move cap rates as a secondary impact. I think the volatility that we were frankly accustomed to, all of us are accustomed to inclusive of real estate owners or when you have 10%, 15% swings in the 10-year treasury. These used to be aberrations. They seem to happen on a monthly basis now, if not a daily basis with 3%, 5% swings.
And so none of this volatility effectively moved cap rates. Ultimately, I believe that owners of real estate and perhaps those that have secured interest in real estate ultimately make a disposition or investment decisions based upon the fear greed spectrum. And so the 10-year going sub-4 or the 10-year piercing five can move cap rates. But with the 10-year moving between 4, 2 and 4, 6 I'm just using a band here, I don't think that ultimately moves cap rates in any material way just because of the, frankly, people being accustomed to that volatility.
RJ Milligan
Great, that's it for me. Thanks guys.
Joey Agree
Thanks RJ.
Operator
Michael Goldsmith at UBS.
Michael Goldsmith
Good morning. Thanks a lot for taking my question. Maybe a similar question that was just asked but from a different angle. Have you seen any changes in the transaction market post the April 2 tariff out. Maybe not directly from the tariff, but just from the overall uncertainty. You sort of touched on the cap rate environment, but are you seeing any changes in competition? Or any deals pulled just given the uncertainty?
Joey Agree
No deals pulled. Competition remains extremely limited. Obviously, the 1031 buyer has effectively been cut over half just due to commercial real estate transactional volume being down by half, the lap of liquidity and investment markets. Just frankly, the -- sorry, the lending markets. We see very limited competition. The analogy I did during the fourth quarter of a door versus a window, we see a door here.
In our balance sheet, our cost of capital, as I mentioned, as well as our portfolio and the tremendous team here we have is going to take advantage of that opportunity. And so we took advantage of the opportunity during the GFC.
We took advantage of the opportunity during COVID, obviously, when we doubled the size of the company, we see a light-kind opportunity potentially on the horizon, obviously, subject to the next TruthSocial post here and changes in the macro. But with limited competition across all three investment platforms and with our core strength here, this is a tremendous opportunity for our company to continue to grow this portfolio in an accretive manner and solidify it as the preeminent net lease portfolio in the country.
Michael Goldsmith
Thanks for that. And as a follow-up, on slide 22 of your presentation, you highlight what you're investing in and what you're not and you call out the avoidance of private equity sponsorship. Just given where we are in the cycle and the uncertainty, what's been your experience with private equity sponsorship at this point in the cycle? Just get them some of that uncertainty. Thanks.
Joey Agree
Ultimately, and this isn't for this part of the cycle, we seek to work and partner with retailers that have a long-term perspective on the operations of their business. So special dividends, levering up the balance sheet, OpCo, PropCo structures, sale leasebacks to improve liquidity and frankly, in order to special dividend it out probably those just aren't things that we believe work in a 21st century omnichannel world, which is hypercompetitive.
And so we'll continue to focus on our sandbox is the 30, 35 biggest and best retailers in this country rated or unrated. And if you sub-investment grade rate retailers that are selling essential goods and services that have long-term sponsorship and ownership. And frankly, private equity doesn't match that duration for us.
Michael Goldsmith
Thank you very much. Good luck in the second quarter. Appreciate it.
Operator
Linda Tsai, Jefferies.
Linda Tsai
Hi. The temporary occupancy dip from big loss. Would that be resolved by year-end?
Joey Agree
Yeah. I would anticipate that would be resolved much sooner than year-end, most likely by the end of the second quarter. And so we've resolved a number of them the off-price retailer in Manassas, Virginia was the first one where we have a net effective lift, Peter to jump over 150%.
Net effective lift of over 150%. Cedar Park, Texas is released with a net effective rent lift of approximately 50% to a large German-based grocer. And then Fuqua Barina was acquired in the bankruptcy by variety wholesalers, and we're working through those others to have optimal solutions here, but we think they will be favorable and not a concern.
Linda Tsai
And then for the 50% to 150% rent uplift, is there CapEx involved.
Joey Agree
That's a net effective basis, not same-store NOI. So the lease that we purchased in bankruptcy, we purchased for a couple of hundred thousand dollars, and that was the only truly expense on that. It was an as-is basis. Same with the grocery in Cedar Park, Texas with that approximately 50% net effective rent lift and then the variety wholesalers dealer they came current, and so that's just the same rent as big lots was paying prior. And so we continue to work on leasing a number of these assets and have letters of intent in hand from large national retailers predominantly.
That's our focus there, our first order of business and we hope to further expand upon on the Q2.
Linda Tsai
And then the comment about drug and dollar stores peaking in our portfolio became -- before it became newsworthy what were you looking at direct to recognize this trend? Was it shift in traffic or rent coverage?
Joey Agree
Different perspectives on each sector pharmacy. We've been pretty adamant about our Walgreens exposure. We were pretty adamant about Rite Aid's future, that bankruptcy and liquidation will occur any day, most likely now.
Obviously, that's been a theme through the past 15 years of our history in terms of Walgreens depositions going from over 40% to sub-1%. Most importantly, as we talked about another call, 13,000 to 14,000 square foot boxes with approximately 11,000 square feet of front-end space paying $20 to $30 per square foot that is really isn't relevant in today's world isn't something that we're overly attracted to.
That said, we'll continue to work on unique pharmacy opportunities where we think the basis is rental basis is appropriate or high store sales or barriers to entry. I'd remind everyone, our largest two pharmacy exposures in terms of asset size, our Greenwich, Connecticut, and Greenwich avenue, the CVS and the Walgreens on the corner of the Diag, the best piece of real estate and the University of Michigan.
And so the pharmacy space, we've obviously made a considered effort to reduce. Dollar stores, we just saw them being overbuilt, frankly. We took advantage in the 2023 of merchant developers that were stressed and took some of those properties out. We've never engaged in a sale leaseback with a dollar store operator, very different themes running through Dollar General and Dollar Tree Family Dollar, but we saw the space is overbuilt.
But also we were having challenges getting our arms around the pricing in conjunction with the residual. And so you'll see, and I mentioned in the prepared remarks that they fell year-over-year quarter-over-quarter. They peaked in 2023, and we were pretty clear on the Q3 2023 call that would be the case.
Linda Tsai
Thanks for that helpful context. Just one last one. The dozen team members you added, what departments were they located in? And has AI reduced the need to stock up in other areas?
Joey Agree
Certainly. So to roll back the clock, 2024 obviously start with the do-nothing scenario effectively a hiring freeze we are more than caught up now. This is all built into our G&A forecast for the year that we've provided to The Street.
Those team members is true across the entire organization, from HR to IT to acquisitions, construction, development, analysts, accounting, asset management, lease administration, we are built and poised for growth. Simultaneously, we have deployed effective in the last month a new AI module, which is eliminating legal costs significantly for us.
And we got an update actually yesterday from our General Counsel that we're very pleased with the results, continue to make some tweaks there. AI will continue to be deployed throughout this company. We have been utilizing AI for lease abstraction again, Peter referenced.
Reuben Treatman
To 2022.
Joey Agree
Dating back to 2022 when no one was talking about AI. We think there's significant opportunities, both within our underwriting as we launch the next iteration of ARC in 2026 to deploy AI. But also, I would tell you, significantly in overall transactional expense.
Linda Tsai
Thank you.
Joey Agree
Thanks, Linda.
Operator
John Kilichowski, Wells Fargo
John Kilichowski
Thank you. Good morning, Joey, you touched on this briefly earlier, but how will tariffs that they stay on impact your go-forward strategy as it relates to investments? And if so, would you not expect tighter pricing on those assets?
Joey Agree
I don't think tariffs impact our go-forward strategy really at all. I don't think tariffs ultimately impact -- all retailers will be subject to various levels of tariffs if this continues to go down this route. And I think effectively, the biggest retailers, the country that sell necessity-based goods and services will benefit. And so you'll continue to see us invest in the Walmart and Home Depot and Lowe's and O'Reilly's AutoZone, the dominant tire and auto service operators, dominant C stores throughout the country, off-price retail. I think all of these sectors are effectively winners in a large tariff environment.
There may be some short-term pain, but long term, they have the balance sheets, the market position to continue to thrive.
John Kilichowski
Got it. And then in a similar vein, on the bad debt nonreimbursable side, is it just too early to change your outlook? Or do you feel very comfortable with conservatism already built in?
Joey Agree
I'll let Peter hit. I think it's pretty early to change the outlook. Obviously, that outlook incorporated the few big lots that we continue to work through. But I think it's frankly pretty early here in the middle of April.
Peter Coughenour
Yeah, John, just to hit specifically on credit loss and our guidance for the year. Our 2025 earnings guidance, as I mentioned on the last call, includes an assumption for 50 basis points of credit loss. And that included an allowance for Big Lots as we've talked about on this call.
In Q1, we experienced roughly 30 basis points of credit loss and that compares to the 35 basis points roughly that we experienced in 2024. So based on what we have line of sight into today, we feel good about the credit loss guide embedded within our earnings guidance and how the portfolio is continuing to perform.
Joey Agree
And just to expound upon our 50 basis points of credit loss a little bit. That 50 basis points is a fully loaded number for any lease expirations where we are carrying vacancy taxes, insurance, maintenance of the building, any rejections in bankruptcy, again, where we are carrying any taxes, maintenance, any expenses that 50 basis points has no carve-outs, has no footnote, has nothing in there.
That's a fully loaded 50 basis points that we put in there that is akin to our underwriting on the acquisition side, right? To truly understand the full economic impact and it provides the street transparency into that full economic impact.
John Kilichowski
Just to confirm, the 40 bps of occupancy loss, would that have been included?
Joey Agree
Yes, that was -- it's specifically tied to the -- last and is included in that number.
John Kilichowski
Okay, perfect. Thank you.
Operator
Ronald Camden, Morgan Stanley.
Ronald Kamdem
Hey, just two quick ones. Just going back to the development in the DFP platform. Any sort of early indications of how much construction costs could be going up? And how are you guys thinking about sort of your yield requirements for that channel?
Joey Agree
Yeah, great question, Ron. We have done a preliminary and had third parties also do studies on tariff implications, obviously, a moving target. The tariffs would mostly affect obviously the hard costs call it, the vertical cost here. In terms of construction, we would anticipate a 2% to 5% on the high-end increase in tariffs.
Obviously, those assumptions have to be broken out by country. Some of them are indirect in terms of input, right, input costs finished product here. We don't think there's any material moves in our construction costs for tariffs here. Again, these projects are effectively rectangle. And so we have our arms around them.
Your second question, sorry Ron?
Ronald Kamdem
Yeah, sorry. Part two just I don't think we've hit on sort of the decisions yet. Just any sort of thought indication there would be helpful.
Joey Agree
It didn't change the guidance for this quarter. It didn't change our annual guidance. I don't think you'll see us change that annual guidance this year unless there's some sort of change, frankly. I think we have done a tremendous job leaning out assets that we didn't think were core in the portfolio over the last several years. That said, we'll look at opportunistic dispositions.
We have inbounds all of the time. We'll continue to look for opportunities to prune the portfolio as we get feedback, either on the ground level or the corporate level or if we just think something is above market and the retenantability is limited.
So I don't see dispositions being a major contributor in terms of capital this year but we'll continue obviously to be active on that front, but I don't think it's not a priority as it was last year, when we were focused on recycling capital.
Ronald Kamdem
Helpful. Thank you.
Operator
Spenser Glimcher, Green Street.
Spenser Glimcher
Thank you. Just one for me. As you started working through your 2Q acquisition pipeline, have you guys observed any cap rate movements or changes spread in any particular retail segments?
Joey Agree
No, good morning, Spencer. Q2 is effectively built, right? Subject to diligence and closing, Q2 is effectively built just using that 65-day plus transaction time line on execution we're effectively to close, we're effectively through Q2.
And if you look at the volatility in the 10-year treasury during that 65, 70-day sourcing period, obviously, the 10-year dropped, then it pulled back up. Having this hedge position in terms of both forward equity and the swap in place allows us to be frankly consistent. And so this is not -- we're not in a situation where we have to constantly be changing our targets in terms of yield hurdles.
We'll see how Q3 now plays out. Again, that sourcing effectively starts on Monday or Friday of this week just given our traditional transaction time line. And then frankly I have no idea what the next again, what the next move from the administration will be where the 10-year treasury goes where our stock price goes, but the good news is we're locked and loaded and we'll come into with a running start here.
Spenser Glimcher
Okay, I understood you have the pricing power, I guess, and you don't have to be volatile, as you mentioned in terms of your cost of capital. But if you observe anything in terms of tenant ask or where kind of pricing expectations were on the other side of the bidding?
Joey Agree
Not really. I think the only thing we noticed is some of the larger institutions would like to play in the space given the dislocation in the debt markets could be out for a little while here. As spreads widen or the 10-year treasury yield spiked. But again, I forewarn everyone the number one sale-leaseback is a minority of what we do. We're traditionally a third-party acquirer.
We think we create more value there rather than being just a financier of real estate. And then two, drawing parallels or even putting threads through transactions in this massive, fragmented individual owned market called net lease is very difficult.
I gave some examples of the transactions that we executed on the acquisition front in Q1, they were wholly disparate from a sale leaseback with a national grocer to a portfolio with a relationship seller. It's our probably seventh or eighth transaction with that seller to a family office that owned the Bronxville, Acme grocery store. And so the seller pool remains extremely disparate. We're seeing more institutions to the table to recycle capital and potentially dispose of assets. We're in those types of conversations.
We're also in the midst of a conversation with a 80-year-plus-old window about a transaction, who effectively owns a portfolio that are husband acquired. And so at the end of the day, the aggregation of those transaction is comprised the quarter and I always say the most exciting part about this business is you never know where the next one is going to come from.
Spenser Glimcher
Great thank you.
Joey Agree
Thanks, Spencer.
Operator
Jana Galan, Bank of America.
Jana Galan
Thank you, good morning. Just following up on the commercial paper program. Peter, can you quantify the spread relative to the revolver and if this benefit is included in the updated guidance? Or did you already plan to launch the program with the initial guide?
Peter Coughenour
Sure. And just in terms of pricing on the commercial paper program, obviously, we closed on the program on March 31, dependent on the tenor of commercial paper notes that we're issuing as well as conditions in the commercial paper market, which are subject to change.
Today, we think we can issue commercial paper notes 40 basis points-plus inside of our borrowing cost on the revolver. The current borrowing cost on the revolver at quarter end was around 5.2% for reference. To date, so far in Q2, we have been active in the CP market and use that for short-term borrowings.
And in our current guidance range, we have contemplated the impact of using commercial paper throughout the year is appropriate.
Jana Galan
Thank you. And I know you think of your kind of long-term WACC, but just between this and the swaps that you have in place, I mean, I think investment spreads should be kind of at historic highs currently. Can you maybe comment to that?
Joey Agree
I would agree absent the depths of the pandemic when the rates were at effectively 0 and we were issuing 10-year paper at 2%-plus and perpetual preferred 4.25, there's no doubt that our investment spreads are wide, we'll be the beneficiary of those investment spreads and our superior cost of capital here, but we are in no doubt in that disposition.
Jana Galan
Thank you.
Joey Agree
Thanks, Jana.
Operator
Jim Kammert, Evercore.
James Kammert
Hi, good morning. Thank you. Joey, you obviously had the conviction to raise your investment volume for the year. Is that really built just expanding with your existing relationships? Or have you kind of started to identify additional partners?
Joey Agree
All over the board, Jim, the existing relationships. It's additional partners. It's the breadth and depth of the coverage that this team has across the country. We are the go-to-buyer for net lease retail, high quality net lease retail bar on today. And so our transactional history, the quality of the team, our marketing and e-marketing campaign, they are owner to our benefit here.
Our ability to look at real estate with a different lens, our relationships with the retailers, the end users of these properties is the secret sauce, part of the secret sauce. And so it's all of the above and more.
James Kammert
Great. And more tender question. The ground leases have about a 9.5-year remaining [walt]. Is that -- remind me, is that to final expiration? Or is that really just the first potential extension? Because I kind of think about the organic growth opportunities if they -- sort of any help there? Thank you.
Joey Agree
That's exclusive of options just as Walt is for the remainder of the portfolio.
James Kammert
Got it. Thank you guys.
Joey Agree
Thanks Jim.
Operator
Upal Rana, KeyBanc Capital Markets.
Upal Rana
Great thank you. Joey, you mentioned seeing more opportunities in the development and DFP side. And you know the increase in construction costs as well. But just wondering how big do you think the development pipeline could potentially get from here?
Joey Agree
So we set that medium-term target of putting $250 million in the ground per year. We are on track. Again, it's a medium-term target, not for this year. We are on track. Our pipeline and our shadow pipeline are very large.
They're obviously subject to diligence and closing conditions, sometimes entitlements as well. I would tell you very distinctly our development platform, and the team has done a tremendous job. We've added team members that have really hit the ground running and Craig Erlich, our Chief Growth Officer, working with retailers all the time, has a very significant pipeline.
And then our developer funding platform continues to benefit from just the lack of liquidity out there as well as unknown exit cap rates through other third-party developers. And so we've used our developer funding platform as a bridge to get projects across the finish line.
A lot of them are directed to us by retailers, some sourced by the acquisition team, by our development team here. But both pipelines, they don't get a lot of pipelines but both pipelines, we think, combined with our acquisition and active asset management platform, provide really a full-service value proposition to retailers and it's recognized by all of them today that we can step into any and all types of situations and frankly, create value and provide for value in that partnership.
Upal Rana
Okay, great, that was helpful. And then just a quick follow-up on the commercial paper program. Does this put ADC in a position to push more investments in the future, especially combined with your increase in team members?
Joey Agree
No, I think the commercial paper program, as Peter mentioned, while it's priced inside of the revolving credit facility, we don't use a revolver short-term cost of capital to impact or to impact or even in our calculus for our weighted average cost of capital. These are short-term borrowing needs. The commercial paper program effectively the plants, the use of the credit facility and cheaper pricing but that does not impact how we look at deals or impact our weighted average cost of capital.
Upal Rana
Okay, great. Thank you.
Joey Agree
Thank you.
Operator
Rich Hightower, Barclays.
Richard Hightower
Hey, good morning guys. Thanks for taking the question. I really just got one, but I want to go all the way back to Ki Bin's line of questioning to start the call just on equity issuance. Now I think we all appreciate the TSM dilution conundrum and things like that, but it is sort of a high-class problem. And so it looks like equity issuance went down quarter-over-quarter relative to fourth quarter.
Stock price has done obviously very well, absolute and relative year-to-date. So maybe why not lean in a little more to equity issuance in this environment, especially, but it seems like the acquisition pipeline is biased to get bigger, not smaller. Thanks.
Joey Agree
Well, I think if you look at the amount settled during Q1 of existing forward or formerly existing forward, but net of what we issued, we effectively ended up neutral, right, 3.3 times, 3.4 times, just over $180 million each.
And so the balance sheet while deploying $370 million approximately, ended up effectively in a neutral position. And so we continue to have nearly $2 billion in hedged capital. We have significant liquidity. We're in -- $2 billion in liquidity, excuse me, and $1.3 billion of hedged capital approximately and so we're in a terrific position here from a balance sheet or liquidity and cost of capital perspective to execute on our pipeline. Does that answer your question?
Richard Hightower
Yeah, it does. I mean I didn't know if there was any sort of internal back and forth on if it makes sense to go any bigger in that light. But obviously, you guys are in a really great position, no one would dispute that. And actually, if I may ask a quick follow-up, just again on bad debt. I think you guys have articulated pretty clearly how that gets built up.
But just to be clear, is that a it sounds like from your perspective, given the creditworthiness of the tenant base, it really is kind of a bottoms up location by location, tenant by tenant situation to get to that 50 basis points. Is there any sort of general credit overlay on top of that, that gets you to the $50 million? Or is it really sort of highly specific as it sounds, at least from my end?
Peter Coughenour
Yeah, thanks, Rich. This is Peter. I think in terms of the buildup and how we think about that 50 basis points of credit loss, I mentioned in the first quarter, we had roughly 30 basis points of credit loss and so to answer your question, it is a location by location and tenant by tenant buildup that we look at as we think about credit loss based on what's identified or known today, I think the 30 basis points that we experienced in Q1, we anticipate more or less seen throughout the remainder of the year.
And then we have some level of cushion built into that 50 basis points that allows for other potential tenants that we're monitoring, but there's not a known issue.
Richard Hightower
Okay helpful. Thank you guys.
Peter Coughenour
Thank you.
Operator
Thank you, we have no further questions, I will turn the call back over for closing comments.
Joey Agree
Well, thank you all for joining us this morning. We look forward to seeing everybody at the upcoming conferences, and we appreciate your time. Thank you.
Operator
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.
