Core Viewpoint - Essential Properties Realty Trust (EPRT) is positioned as a compelling investment alternative in the retail REIT sector, focusing on mid-market properties and smaller tenants, which allows for higher growth potential despite associated risks [1][19]. Group 1: Company Overview - EPRT specializes in retail properties, particularly in the experience and services sectors, differentiating itself from larger peers like Realty Income Corp. and NNN REIT by targeting smaller, non-investment grade tenants [1]. - The REIT has a total of 2,009 properties and 395 tenants, with an impressive occupancy rate of 99.9% since its IPO, indicating strong demand and effective management [4]. - EPRT's portfolio is diversified across 16 industries and 49 states, with a significant focus on services, which constitute 80.3% of its annual base rent (ABR) [5][6]. Group 2: Financial Performance - In Q2, EPRT reported a funds from operations (FFO) per share of $1.84, maintaining consistent growth in both FFO and dividends per share since its IPO in 2018 [2][3]. - The REIT has demonstrated a controlled payout ratio, with a dividend per share of $1.14 and a dividend payout ratio of 0.95, reflecting a healthy balance between growth and returns [3][16]. - EPRT's average cash cap rate for acquisitions in Q2 2024 was 8%, significantly higher than larger REITs, indicating its ability to secure more profitable investment opportunities [11]. Group 3: Investment Strategy - EPRT employs a strategy focused on sale-leaseback transactions, which typically involve long-term contracts and enhance tenant quality, contributing to predictable cash flows [11]. - The REIT's focus on tenants with lower credit ratings allows it to capture a risk premium, with 38.4% of its portfolio under long-term contracts expiring after 2039 [7][10]. - EPRT has invested over $195 million per quarter since Q1 2022, indicating a proactive approach to growth and expansion in a less competitive market [10][19]. Group 4: Valuation and Growth Prospects - EPRT is currently trading at a price-to-FFO ratio of 17.3x, higher than its peers, reflecting its growth potential and lower leverage [14][15]. - The projected annualized FFO per share growth for 2024 is 5.5%, which is favorable compared to Realty Income's 4.4% and NNN's 2.6% [15]. - EPRT's dividend yield stands at 3.56%, the lowest among major retail REITs, but its payout is considered the healthiest based on net income, suggesting room for future increases [16][18].

IvelinRadkov My initial bull thesis on Essential Properties Realty Trust, Inc. (NYSE:EPRT) was circulated back in September 2023. At the time, the P/FFO multiple of 13x seemed just too low given the robust balance sheet, ample liquidity, and conservative cash flows. My view was that by opening a position in EPRT, investors would access sizeable returns from price appreciation on top of an attractive and well-supported dividend of ~5%. In the total return performance chart below, we can see how EPRT has deli ...

ttp 0.00 ... . III f11photo Data by YCharts Introduction Guess what? Real estate is back! All three major real estate ETFs are up more than 20% over the past 12 months. This is entirely caused by the rally that started in April, as we can see in the chart below. On the one hand, this is fantastic news, as I have discussed many REIT opportunities this year. In general, real investors are in a great spot again. On the other hand, it's not very easy to find bargains anymore, as valuations have increased substa ...

Ibrahim Akcengiz The outbreak of COVID-19 and subsequent change in the monetary policy from extremely accommodative to restrictive had caused a significant pain in the equity REIT markets. By being forced to stay at home for a prolonged period, the work-from-home dynamic strengthened, leading to a structurally impaired demand for many office buildings. Similarly, the retail segment has become less attractive since the temporary closure of brick and mortar stores during the COVID-19 period provided a strong ...

DNY59 Overview The real estate sector (XLRE) continues to be one of the worst performing asset classes since the initial pandemic drop in 2020. The embracing of remote work changed the sentiment around demand for real estate and this was coupled with aggressive interest rate hikes throughout 2022 and 2023. As a result, the sector severely underperformed the rest of the market indexes like the S&P 500 (SPY). However, I believe that the outlook has drastically improved and we can look forward to interest rate ...

jetcityimage Introduction I've previously covered many companies that have significant real estate assets that are often non-core to their business (often as a hidden source of value). Often times, these may be regular brick and mortar businesses with a restaurant or warehouse operations where they happen to own the real estate upon which their primary business sits on. For these companies, being involved in the real estate business isn't their main focus. As the prices of land rises over time, many compani ...

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Financial Data and Key Metrics Changes - The company reiterated its AFFO per share guidance range of $1.72 to $1.75 for 2024, indicating a strong operational performance [4][41] - AFFO per share for Q2 2024 was $0.43, a 5% increase compared to Q2 2023, with total AFFO reaching $77.1 million, up 25% year-over-year [12][41] - General and administrative expenses (G&A) increased to $8.7 million in Q2 2024 from $7.6 million in Q2 2023, but G&A as a percentage of total revenue improved to 5.6% from 6.1% [13] Business Line Data and Key Metrics Changes - The company ended the quarter with investments in 2009 properties, 99.8% leased to 395 tenants across 16 industries, with a weighted average lease term of 14.1 years [4] - Same-store rent growth was 1.4% in Q2 2024, slightly down from the previous quarter, impacted by properties affected by the Red Lobster bankruptcy [4] Market Data and Key Metrics Changes - The company invested $334 million through 35 transactions in Q2 2024, maintaining a weighted average cash yield of 8%, consistent with the previous quarter and up 60 basis points year-over-year [8] - The investment pipeline remains solid, with expectations of modest cap rate compression later in the year due to potential Fed easing [9] Company Strategy and Development Direction - The company aims to maintain a well-capitalized balance sheet with low leverage and significant liquidity to support external growth, with pro forma net debt to annualized adjusted EBITDAre at 3.8x [16] - The focus remains on sale-leaseback transactions, which constitute 80% to 90% of the portfolio, as they provide a higher value-added way to deploy capital [78] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business prospects, highlighting strong tenant credit trends and investment volumes, despite short-term headwinds from conservative leverage posture [32] - The competitive landscape is expected to normalize as interest rates decline, which may lead to increased competition and downward pressure on lease terms and cap rates [81][95] Other Important Information - The company recognized $1.5 million of other income related to a legal settlement, which was included in AFFO for the quarter [36] - A cash dividend of $0.29 was declared, representing an AFFO payout ratio of 67% [37] Q&A Session Summary Question: Why not raise the AFFO guidance? - Management indicated that while performance is strong, the capital position poses a headwind, limiting visibility to raise guidance [44] Question: Details on acquisition guidance and pipeline? - The pipeline is ahead of last year, but timing variability affects closings, making it hard to forecast [26] Question: Will the company issue forward equity to lock in current share prices? - Management is open to being opportunistic with equity issuance but is currently well-funded [54] Question: How does the company view tenant categories amid consumer weakness? - The company remains focused on service and experience-based industries, which are less affected by consumer spending fluctuations [104] Question: What is the outlook for cap rates and competition? - Management expects some downward pressure on cap rates as competition normalizes with rate cuts [95][141]

The reported revenue represents a surprise of +0.19% over the Zacks Consensus Estimate of $109.06 million. With the consensus EPS estimate being $0.43, the company has not delivered EPS surprise. As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Revenues- Interest on loans and direct financing lease receivables: $4.86 million versus the threeanalyst average estim ...

Company Performance - Essential Properties (EPRT) reported quarterly funds from operations (FFO) of $0.43 per share, matching the Zacks Consensus Estimate and showing an increase from $0.41 per share a year ago [1] - The company posted revenues of $109.27 million for the quarter ended June 2024, exceeding the Zacks Consensus Estimate by 0.19% and up from $86.52 million in the same quarter last year [2] - Essential Properties shares have increased approximately 21.1% since the beginning of the year, outperforming the S&P 500's gain of 16.5% [3] Future Outlook - The company is expected to report quarterly earnings of $0.60 per share in its upcoming report, reflecting a year-over-year change of +1.7% [5] - The current consensus FFO estimate for the upcoming quarter is $0.45 on revenues of $114.73 million, and for the current fiscal year, it is $1.74 on revenues of $447.45 million [12] - The estimate revisions trend for Essential Properties is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [9] Industry Context - The REIT and Equity Trust - Retail industry, to which Essential Properties belongs, is currently ranked in the top 13% of over 250 Zacks industries, suggesting a strong performance potential [10] - Empirical research indicates a strong correlation between near-term stock movements and trends in estimate revisions, which can be tracked using tools like the Zacks Rank [11]