Core Insights - Essential Properties (EPRT) reported a revenue of $129.35 million for the quarter ended March 2025, reflecting a 25% increase year-over-year [1] - The earnings per share (EPS) was $0.45, up from $0.28 in the same quarter last year, although it fell short of the consensus estimate of $0.46 [1] - The revenue exceeded the Zacks Consensus Estimate of $126.61 million, resulting in a positive surprise of +2.17% [1] Revenue Breakdown - Rental revenue reached $121.79 million, surpassing the average estimate of $117.26 million by analysts, marking a year-over-year increase of +23.6% [4] - Interest on loans and direct financing lease receivables amounted to $7.53 million, slightly above the average estimate of $7.38 million, with a significant year-over-year growth of +58.8% [4] - Other revenue was reported at $0.04 million, which was below the estimated $0.18 million, indicating a substantial decline of -85.3% compared to the previous year [4] Stock Performance - Over the past month, shares of Essential Properties have returned -0.5%, while the Zacks S&P 500 composite experienced a decline of -6.6% [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Essential Properties (EPRT) came out with quarterly funds from operations (FFO) of $0.45 per share, missing the Zacks Consensus Estimate of $0.46 per share. This compares to FFO of $0.42 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an FFO surprise of -2.17%. A quarter ago, it was expected that this company would post FFO of $0.45 per share when it actually produced FFO of $0.45, delivering no surprise. Over the last four quarters, the company has ...

Portfolio Overview - As of March 31, 2025, the company had a portfolio of 2,138 properties with an annualized base rent of $484.3 million, achieving a 99.7% occupancy rate[214]. - The occupancy level of the portfolio is high at 99.7% as of March 31, 2025, with only six properties vacant, significantly less than 1% of the portfolio[242]. - The company had a diversified portfolio of 2,138 properties with an annualized base rent of $484.3 million as of March 31, 2025[276]. - As of March 31, 2025, the company has 2,138 properties across 49 states, with an annualized base rent of $484.3 million[286]. - The top ten tenants represented 17.3% of the annualized base rent, with none exceeding 3.9%[277]. - The company’s tenants operated across 604 concepts, with the top ten concepts contributing 18.4% of the annualized base rent[281]. Lease and Rent Details - 93.3% of the annualized base rent was derived from properties leased to tenants in service-oriented and experience-based businesses[212]. - The weighted average remaining lease term was 14.0 years, with only 5.4% of annualized base rent attributable to leases expiring before January 1, 2030[215]. - 98.6% of leases provided for future base rent increases at a weighted average rate of 1.7% per year[217]. - The portfolio's weighted average rent coverage ratio was 3.5x, with 99.0% of leases requiring periodic tenant financial reporting[219][228]. - The weighted average remaining term of leases is 14.0 years, with only 5.4% of annualized base rent attributable to leases expiring before January 1, 2030[287]. - The weighted average rent coverage ratio of the portfolio is 3.5x, with 69.8% of properties having a coverage ratio of ≥ 2.00x[289]. - As of March 31, 2025, the weighted average rent coverage ratio for service-oriented businesses was 3.5x, while experience-based businesses had a ratio of 2.5x[284]. - 96.7% of leases were triple-net, reducing potential capital expenditures and inflation impact on operating expenses[279]. Financial Performance - Total revenues for the three months ended March 31, 2025, were $129.4 million, up from $103.5 million in the same period in 2024[292]. - Net income attributable to stockholders for the three months ended March 31, 2025, was $56.1 million, compared to $47.0 million in 2024, reflecting an increase of $9.1 million[292]. - Net income for the three months ended March 31, 2025, was $56.281 million, up from $47.123 million in 2024[312]. - Funds from operations (FFO) attributable to stockholders and non-controlling interests was $92.130 million for the three months ended March 31, 2025, compared to $77.848 million in 2024[312]. - NOI attributable to stockholders and non-controlling interests for Q1 2025 is $127,097, up from $102,508 in Q1 2024, reflecting a 24.0% increase[323]. - Cash NOI attributable to stockholders and non-controlling interests for Q1 2025 is $116,648, compared to $92,747 in Q1 2024, indicating a 25.8% increase[323]. - The company reported a gain on dispositions of real estate of $5.0 million for the three months ended March 31, 2025, a significant increase of 229.6% compared to the prior year[292]. Investment and Growth Strategy - 90% of the company's investments during the three months ended March 31, 2025, were sale-leaseback transactions[216]. - The company plans to continue disciplined growth by originating sale-leaseback transactions, with 90% of new investments in real estate attributable to these transactions during the three months ended March 31, 2025[231]. - The average investment per property was $3.0 million, allowing for diversification and reduced risk exposure[218]. - The management team has significant experience in the net lease industry, with 86% of new investments involving parties previously engaged with the team[226]. - The company aims to maintain no more than 5% of annualized base rent from any single tenant and no more than 1% from any single property[214]. - The company targets a portfolio that derives no more than 5% of its annualized base rent from any single tenant and no more than 1% from any single property[234]. Debt and Financing - The total principal outstanding debt as of March 31, 2025, was $2.13 billion, with a weighted average interest rate of 4.1%[253]. - The company has a Revolving Credit Facility with a limit of $1.0 billion, maturing on February 6, 2030[255]. - The 2027 Term Loan has a principal amount of $430 million, maturing in February 2027, with an interest rate of 2.4%[253]. - The company issued $400 million of senior unsecured notes due 2031, with a coupon rate of 2.950%[264]. - As of March 31, 2025, the company's weighted average debt maturity was 3.9 years[249]. - The company actively manages its balance sheet to maintain net debt generally less than six times its annualized adjusted EBITDAre[236]. - The company intends to manage long-term debt maturities to avoid significant amounts maturing in any single year[249]. - The company is in compliance with all covenants under its Amended Credit Agreement as of March 31, 2025[258]. - The company is exposed to interest rate risk, particularly when refinancing long-term debt, which may lead to higher interest expenses[329]. - The company aims to match expected cash inflows from long-term leases with cash outflows for long-term debt to manage market risk[324]. - The company may incur variable-rate debt in the future, which could impact earnings if not hedged appropriately[330]. Cash Flow and Distributions - As of March 31, 2025, the company declared total cash distributions of $0.295 per share, totaling $58.7 million[247]. - For the three months ended March 31, 2025, net cash provided by operating activities was $77.2 million, with a net income of $56.3 million[267]. - Net cash used in investing activities was $284.1 million, primarily reflecting investments in real estate totaling $309.5 million[268]. - Net cash provided by financing activities was $209.0 million, including $278.6 million from common stock issuance and $155.0 million from borrowings[270]. - The company expects to fund remaining commitments of approximately $131.9 million by March 31, 2026[244]. - As of March 31, 2025, the company had $47.0 million in cash and cash equivalents, down from $79.2 million a year earlier[266]. Expenses and Impairments - General and administrative expenses increased by $2.2 million for the three months ended March 31, 2025, mainly due to higher salary expenses and professional fees[296]. - Property expenses rose by $1.3 million for the three months ended March 31, 2025, attributed to increased reimbursable property taxes and operating costs[297]. - Depreciation and amortization expenses increased by $6.5 million for the three months ended March 31, 2025, in line with the growth of the real estate investment portfolio[298]. - Impairment charges on real estate investments were $5.9 million for the three months ended March 31, 2025, compared to $3.8 million in 2024, with provisions recorded for seven and four investments, respectively[299]. - Interest expense rose by $8.2 million for the three months ended March 31, 2025, primarily due to an increase in outstanding debt and interest rates[302].

Financial Performance - First Quarter 2025 net income per share was $0.29, representing a 4% increase compared to the same period in 2024[2] - Adjusted Funds from Operations (AFFO) per share for Q1 2025 was $0.45, reflecting a 7% increase year-over-year[2] - Total revenues for the three months ended March 31, 2025, increased to $129,354,000, up 25.0% from $103,501,000 in the same period of 2024[27] - Net income attributable to stockholders for Q1 2025 was $56,108,000, representing a 19.0% increase compared to $46,975,000 in Q1 2024[27] - Basic net income per share rose to $0.30 in Q1 2025, up from $0.28 in Q1 2024, reflecting a 7.1% increase[27] - Funds from Operations (FFO) for Q1 2025 were $92,130,000, a 18.4% increase from $77,848,000 in Q1 2024[32] - Adjusted Funds from Operations (AFFO) per share for Q1 2025 was $0.45, compared to $0.42 in Q1 2024, indicating a 7.1% growth[32] Investment Activity - The company closed investments totaling $307.7 million at a weighted average cash cap rate of 7.8% during the first quarter[2] - The investment volume for 2025 is estimated to be between $900 million and $1.1 billion[13] - The company reported net proceeds of $24.3 million from the disposition of 11 properties during the first quarter[7] Portfolio and Asset Management - As of March 31, 2025, the investment portfolio consisted of 2,138 properties with a weighted average lease term of 14.0 years and a weighted average rent coverage ratio of 3.5x[5] - The weighted average occupancy rate of the portfolio was 99.7%[5] - Total assets as of March 31, 2025, increased to $6,056,913,000, compared to $5,798,682,000 as of December 31, 2024, marking a 4.5% increase[30] - The company’s total equity increased to $3,823,237,000 as of March 31, 2025, up from $3,572,127,000 at the end of 2024, a growth of 7.0%[30] - The company reported a total of 197,512,316 common shares outstanding and 553,847 OP units held by non-controlling interests as of March 31, 2025[41] Liquidity and Capital Structure - Total available liquidity as of March 31, 2025, was $1.5 billion, including $47.0 million in cash and cash equivalents[10] - The company raised $292.3 million through a follow-on offering at $31.00 per share and $20.6 million through its ATM program at $32.43 per share[2] - Total liabilities stood at $2,233,676,000 as of March 31, 2025, slightly up from $2,226,555,000 at the end of 2024[30] - The company’s net debt as of March 31, 2025, was $2,082,997,000, with a Net Debt to Annualized Adjusted EBITDAre ratio of 4.3x[39] Non-GAAP Financial Measures - The company utilizes non-GAAP financial measures such as FFO, Core FFO, and AFFO to provide insights into its operating performance, which are commonly used in the REIT industry[43] - FFO is defined as GAAP net income adjusted for extraordinary items, net gains or losses from sales of depreciable real estate assets, and real estate-related depreciation and amortization[44] - Core FFO excludes infrequent and unusual GAAP income and expense amounts, providing a clearer view of the company's core operations[45] - AFFO further adjusts Core FFO by including non-cash items and other adjustments, offering a supplemental measure for assessing operating performance[46] - The company calculates net debt by subtracting cash and cash equivalents from its gross debt, providing a clearer picture of its borrowed capital obligations[51] Operational Metrics - The company reported an annualized Adjusted EBITDAre of $488,428,000 for Q1 2025, reflecting strong operational performance[35] - NOI is computed as total revenues minus property expenses, while Cash NOI excludes non-cash items, reflecting property-level performance[52] - Adjusted EBITDAre, NOI, and Cash NOI are annualized estimates based on quarterly investment and disposition activity, providing insights into the company's current run rate[54] - Cash ABR represents the annualized contractually specified cash base rent for all leases as of the end of the current quarter[55] - The company defines the Rent Coverage Ratio as the ratio of tenant-reported annual EBITDA to the annualized base rental obligation, indicating financial health of tenants[58]

Group 1 - The investment approach has received over 500 five-star reviews from members, indicating high satisfaction and perceived benefits [1] - The company invests significant resources, over $100,000 annually, into researching profitable investment opportunities, particularly in real estate strategies [1] - The leader of the investing group, High Yield Landlord, shares real-time transactions and maintains three distinct portfolios: core, retirement, and international [2] Group 2 - Jussi Askola, the President of Leonberg Capital, is recognized for his expertise in REIT investing and has authored award-winning academic papers on the subject [2] - The investing group offers features such as buy/sell alerts and direct access to analysts for member inquiries [2]

Group 1 - Essential Properties (NYSE: EPRT) has been recognized for its stable tenant portfolio, which focuses on long-term leases [1] - The investment thesis emphasizes the attractiveness of high-quality stocks and businesses led by disciplined capital allocators [1] Group 2 - The company is noted for its ability to generate exceptional returns on capital and compound invested capital over extended periods [1]

Core Viewpoint - Essential Properties Realty Trust (EPRT) is highlighted as a strong option for investors seeking a reliable passive income stream through real estate investment trusts (REITs) [2][12] Company Overview - Essential Properties Realty Trust owns over 2,100 properties leased to 413 tenants across 16 industries in 49 states [3] - The REIT's top tenant, Equipment Share, contributes 4.2% of its annual base rent, while the top 10 tenants account for 17.6% of the total rent [3] Lease Structure - The REIT signs long-term net leases with a weighted average remaining lease term of 14 years, ensuring stable rental income as tenants cover all operating expenses [4] - Nearly 97% of its leases have a low fixed annual escalation rate of 1.7%, leading to steadily rising rental income [4] Financial Profile - Essential Properties maintains a conservative financial profile with a low leverage ratio of 3.8 times and an investment-grade rated balance sheet (BBB/BBB-) [7] - The REIT pays out about two-thirds of its stable cash flow in dividends, which is conservative compared to Realty Income's 74.6% payout ratio [5][6] Dividend Growth - The REIT has consistently increased its dividend every year since going public in 2018, providing investors with approximately 2% raises every six months [9] - Essential Properties has a lower dividend yield of 3.6% compared to Realty Income's 5.5%, but retains $120 million in excess free cash flow annually for further investments [6] Property Types - Service-related properties make up 79% of the REIT's annual base rent, while experience-related properties account for 13.5%, retail properties for 3.3%, and industrial properties for 3.5% [10]

Group 1 - Samuel Smith has extensive experience in dividend stock research and investment, having served as lead analyst and Vice President at notable firms [1] - He is a Professional Engineer and Project Management Professional with degrees in Civil Engineering & Mathematics and a Master's in Engineering focused on applied mathematics and machine learning [1] - Samuel leads the High Yield Investor investing group, collaborating with Jussi Askola and Paul R. Drake to balance safety, growth, yield, and value in investment strategies [2] Group 2 - High Yield Investor provides real-money core, retirement, and international portfolios, along with regular trade alerts and educational content for investors [2] - The service includes an active chat room for like-minded investors to share insights and strategies [2]

Core Insights - Essential Properties Realty Trust (NYSE: EPRT) is positioned as a strong player in the retail/service-oriented real estate sector, although it does not enjoy the same level of popularity as Realty Income (O), NNN REIT (NNN), or Agree Realty (ADC) [1] Company Overview - The company focuses on dividend investing, which is highlighted as a key strategy for achieving financial freedom [1] - The author emphasizes the importance of financial modeling, commercial and financial due diligence, and negotiation in assessing the health of companies within the real estate sector [1] Investment Strategy - Dividend investing is presented as an accessible path for individuals seeking to build long-term wealth [1] - The insights shared aim to demystify the investment process, making it more approachable for those interested in dividend investing [1]

Core Viewpoint - The Zacks REIT and Equity Trust - Retail industry is facing challenges due to e-commerce growth, fiscal and trade policies, and changing consumer spending patterns, which may lead to high interest rates negatively impacting retail REITs [1][4]. Industry Overview - The industry includes REITs that own, develop, manage, and lease various retail properties, with performance significantly influenced by economic conditions, employment levels, and consumer spending trends [3]. - The industry is experiencing a rebound driven by renewed consumer interest in in-store shopping, despite past challenges such as declining foot traffic and store closures [3]. Market Dynamics - Macroeconomic uncertainty and tariff impacts present risks to the retail real estate market, with potential fluctuations in consumer spending due to economic volatility [4]. - The rise of e-commerce is challenging brick-and-mortar retailers, leading to downsizing and consolidation of physical stores, particularly in sectors like apparel and electronics [5]. Consumer Trends - A resilient consumer environment and limited new construction support stable demand, with high-quality locations outperforming [2]. - Experiential retail is expected to play a significant role in revitalizing retail real estate by enhancing customer experience through entertainment and interactive features [6]. Performance Metrics - The Zacks REIT and Equity Trust - Retail industry has underperformed the broader Zacks Finance sector and the S&P 500, advancing only 6.6% over the past year compared to the S&P 500's 24.1% [11]. - The industry is currently trading at a forward 12-month price-to-FFO of 16.37X, below the S&P 500's forward P/E of 22.71X and the Finance sector's 17.38X [13]. Company Highlights - Essential Properties Realty Trust, Inc. (EPRT) focuses on single-tenant properties leased to service-oriented businesses, with a weighted average lease term of 14 years and a projected FFO per share growth of 8.6% year-over-year for 2025 [16][18]. - Urban Edge Properties (UE) operates in densely populated regions, with 75% of its portfolio value grocery-anchored, ensuring stable cash flows and a projected FFO per share growth of 3.7% year-over-year for 2025 [19][21].