Essential Properties(US:EPRT)2024-07-24 21:28Portfolio Overview - As of June 30, 2024, the company had a portfolio of 2,009 properties with an annualized base rent of $412.2 million and an occupancy rate of 99.8%[190] - As of June 30, 2024, the net investment value of the income property portfolio totaled $5.0 billion, consisting of investments in 2,009 properties[228] - The company operates 2,004 properties with a total building area of 20,067,873 square feet[332] - The company has a total of 2,009 properties across various states, with a significant presence in Texas and Georgia[333] Financial Performance - Rental revenue for the six months ended June 30, 2024, was $202.9 million, representing a 26.8% increase from $160.0 million in the same period of 2023[193] - For the six months ended June 30, 2024, total lease revenues were $203,022 thousand, compared to $159,995 thousand for the same period in 2023, representing a 27% increase[344] - Total revenues for the three months ended June 30, 2024, were $109.3 million, up from $86.5 million in the same period of 2023, reflecting a change of $22.8 million[314] - Rental revenue increased by $22.6 million, or 27.6%, to $104.4 million for the three months ended June 30, 2024, compared to $81.8 million for the same period in 2023[314] Income and Expenses - For the three months ended June 30, 2024, net income was $51,676,000, a decrease of 2.5% from $53,000,000 in the same period of 2023[216] - General and administrative expenses increased by $1.9 million for the six months ended June 30, 2024, primarily due to non-cash share-based compensation and salary expenses[240] - General and administrative expenses rose by $1.1 million, or 14.8%, to $8.7 million for the three months ended June 30, 2024[314] - Interest expense increased by 36.2% to $32.96 million for the six months ended June 30, 2024, compared to $24.20 million in the same period of 2023[193] Debt and Financing - The company aims to maintain a net debt level generally less than six times its annualized adjusted EBITDAre[203] - As of June 30, 2024, the company's long-term debt was entirely fixed-rate or effectively converted to fixed-rate, with a weighted average debt maturity of 4.1 years[210] - Total principal outstanding debt as of June 30, 2024, is $1,925,000, compared to $1,680,000 on December 31, 2023, reflecting an increase of approximately 14.6%[251] - The weighted average interest rate on total principal outstanding debt increased from 3.6% on December 31, 2023, to 4.2% as of June 30, 2024[251] Impairment and Provisions - The company recorded a provision for impairment of real estate of $6.6 million for the six months ended June 30, 2024, compared to $1.5 million in 2023, indicating a 343.8% increase[195] - Impairment charges on real estate investments were $2.8 million for the three months ended June 30, 2024, compared to $0.8 million for the same period in 2023, reflecting a significant increase in impairment recognition[267] Cash Flow and Distributions - Total cash distributions declared during the six months ended June 30, 2024, amounted to $101.4 million, with a distribution of $0.575 per share[209] - For the six months ended June 30, 2024, net cash provided by operating activities was $147.9 million, with a net income of $98.8 million[281] - The company reported net cash provided by financing activities of $388.5 million, including $244.7 million from the issuance of common stock[282] Tenant and Lease Information - 93.3% of the annualized base rent as of June 30, 2024, was attributable to tenants operating in service-oriented and experience-based businesses[196] - The top ten tenants contributed 18.6% of the annualized base rent, with the largest tenant representing 4.7%[303] - The rent coverage ratio for the five largest tenants was 7.1x, indicating strong financial health[303] - The weighted average remaining term of leases was 14.1 years, with only 4.1% of annualized base rent attributable to leases expiring before January 1, 2029[309] Investment Strategy - The investment strategy focuses on middle-market companies in service-oriented or experience-based businesses, which are believed to offer superior risk-adjusted returns[225] - The company aims to maximize stockholder value by generating attractive risk-adjusted returns through a diversified portfolio of commercially desirable properties[223] Market and Economic Conditions - The company expects to meet short-term liquidity requirements primarily through cash and cash equivalents, net cash from operating activities, and potential asset sales[208] - The estimated market risk exposure for variable-rate borrowings under the revolving credit facility was $2.5 million based on a hypothetical adverse change in interest rates of 100 basis points as of June 30, 2024[347]