Essential Properties(EPRT) - 2025 Q1 - Quarterly Report

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].