Essential Properties(EPRT) - 2025 Q3 - Quarterly Results

Executive Summary & Key Highlights The company reported strong Q3 and year-to-date 2025 financial and operating results, marked by significant investments, increased per-share metrics, strategic capital raising, and positive CEO outlook Third Quarter 2025 Financial and Operating Highlights Essential Properties reported strong third-quarter 2025 results, with significant investment activity, increased net income, FFO, and AFFO per share, alongside strategic debt issuance and equity raising | Operating Results (compared to Third Quarter 2024): | | | | :--- | :--- | :--- | | • Investments (87 properties) | $ Invested | $369.8 million | | | Weighted Avg Cash Cap Rate | 8.0% | | • Dispositions (7 properties) | Net Proceeds | $11.5 million | | | Weighted Avg Cash Cap Rate | 6.6% | | • Net Income per Share | Increased by 22% | $0.33 | | • Funds from Operations ("FFO") per Share | Increased by 8% | $0.52 | | • Adjusted Funds from Operations ("AFFO") per Share | Increased by 12% | $0.48 | | Debt, Equity & Leverage Update: | | | | • Public Debt Issuance (August 21, 2025) | 10 years; 5.40% coupon | $400.0 million | | • Equity Raised (Gross) - ATM Program | $31.35/share | $13.8 million | | • Pro Forma Net Debt to Annualized Adjusted EBITDAre | As of Quarter End | 3.8x | Year to Date 2025 Financial and Operating Highlights For the nine months ended September 30, 2025, the Company invested $1.0 billion across 212 properties, with notable increases in per-share metrics and substantial equity raised through a follow-on offering and ATM program | Operating Results (compared to 2024): | | | | :--- | :--- | :--- | | • Investments (212 properties) | $ Invested | $1.0 billion | | | Weighted Avg Cash Cap Rate | 7.9% | | • Dispositions (41 properties) | Net Proceeds | $82.0 million | | | Weighted Avg Cash Cap Rate | 7.1% | | • Net Income per share | Increased by 12% | $0.94 | | • FFO per share | Increased by 7% | $1.51 | | • AFFO per share | Increased by 8% | $1.39 | | Debt & Equity Activity: | | | | • Public Debt Issuance (August 21, 2025) | 10 years; 5.40% coupon | $400.0 million | | • Equity Raised (Gross) - Follow-On Offering (March 20, 2025) | (1) $31.00/share | $292.3 million | | • Equity Raised (Gross) - ATM Program | $32.35/share | $153.3 million | CEO Comments The CEO highlighted favorable operating trends, resilient tenant credit performance, and strong investment origination, leading to increased guidance. A record 10.0% GAAP Cap Rate on investments underscored attractive risk-adjusted returns, supporting strategic growth ambitions for 2026 - Operating trends remained favorable with resilient tenant credit performance and strong origination activity[5] - The Company increased guidance due to strong performance[5] - Achieved a company record 10.0% GAAP Cap Rate on investments for the quarter, indicating attractive risk-adjusted returns[5] Portfolio Performance and Activity The company's portfolio demonstrates strong performance with high occupancy and long lease terms, supported by active investment, disposition, and loan repayment strategies Portfolio Highlights As of September 30, 2025, the Company's portfolio comprised 2,266 properties with a strong weighted average lease term of 14.4 years and high occupancy, primarily focused on service-oriented or experience-based businesses | | September 30, 2025 | | :--- | :--- | | Number of properties | 2,266 | | Weighted average lease term (WALT) | 14.4 years | | Weighted average rent coverage ratio | 3.6x | | Top 10 tenant concentration (% of cash ABR) | 16.9% | | Top 20 tenant concentration (% of cash ABR) | 27.6% | | Weighted average occupancy | 99.8% | | Total square feet of rentable space | 25.2 million | | Service-oriented or experience-based (% of cash ABR) | 92.1% | | Properties subject to master lease (% of cash ABR) | 66.0% | Investment Activity The Company invested $369.8 million in Q3 2025 and $1.0 billion year-to-date, primarily through sale-leaseback transactions with existing relationships, maintaining attractive weighted average cash and GAAP cap rates | | Quarter Ended | Year to Date | | :--- | :--- | :--- | | | September 30, 2025 | September 30, 2025 | | Investments: | | | | Investment volume | $369.8 million | $1.0 billion | | Number of transactions | 35 | 81 | | Property count | 87 | 212 | | Weighted average cash / GAAP cap rate | 8.0%/10.0% | 7.9%/9.7% | | Weighted average lease escalation | 2.3% | 2.2% | | % Subject to master lease | 76% | 72% | | % Sale-leaseback transactions | 97% | 94% | | % Existing relationship | 70% | 81% | | % Required financial reporting (tenant/guarantor) | 100% | 100% | | WALT | 18.6 years | 18.6 years | Disposition Activity The Company completed dispositions totaling $11.5 million in net proceeds from 7 properties in Q3 2025, and $82.0 million from 41 properties year-to-date, realizing a net gain on sales | | Quarter Ended | Year to Date | | :--- | :--- | :--- | | | September 30, 2025 | September 30, 2025 | | Dispositions: | | | | Net proceeds | $11.5 million | $82.0 million | | Number of properties sold | 7 | 41 | | Net gain / (loss) | $1.4 million | $8.4 million | | Weighted average cash cap rate (excluding vacant properties and sales subject to a tenant purchase option ) | 6.6% | 7.1% | Loan Repayments Loan repayments generated $13.9 million in principal proceeds from 4 properties in Q3 2025, and $19.8 million from 9 properties year-to-date, with a weighted average interest rate of 9.1% for the quarter | | Quarter Ended | Year to Date | | :--- | :--- | :--- | | | September 30, 2025 | September 30, 2025 | | Loan Repayments: | | | | Proceeds—Principal | $13.9 million | $19.8 million | | Number of properties | 4 | 9 | | Weighted average interest rate | 9.1% | 8.5% | Capital Structure and Liquidity The company maintains a strong capital structure with low leverage and substantial liquidity, supported by ongoing equity raising activities Leverage and Liquidity As of September 30, 2025, the Company maintained a healthy pro forma net debt to annualized adjusted EBITDAre of 3.8x and robust total available liquidity of $1.4 billion, including significant unused revolving credit facility capacity and unsettled forward equity sales | | | (1) Pro Forma | | :--- | :--- | :--- | | | September 30, 2025 | September 30, 2025 | | Leverage: | | | | Net debt to Annualized Adjusted EBITDAre | 4.8x | 3.8x | | Liquidity: | | | | Cash and cash equivalents and restricted cash | $23.8 million | $424.4 million | | Unused revolving credit facility capacity | $880.0 million | $1.0 billion | | Forward equity sales - unsettled | $520.6 million | — | | Total available liquidity | $1.4 billion | $1.4 billion | | ATM Program: | | | | October 2024 ATM Program initial availability | $750.0 million | | | Aggregate gross sales under the October 2024 ATM Program | $232.2 million | | | Availability remaining under the October 2024 ATM Program | $517.8 million | | Equity Activity The Company's equity activity during Q3 2025 included the sale of 438,703 shares under the ATM Program, generating $13.6 million in net proceeds, with 16,951,624 forward shares remaining unsettled for estimated net proceeds of $520.6 million | | Primary Offering | | ATM Program | | Total | | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | | | | | | | Net | | | Shares | Price (1) (Net) | Shares | Price (1) (Net) | Shares | Price (1) (Net) | Proceeds (000s) | | Forward Shares Unsettled - June 30, 2025 | 9,430,000 | $30.26 | 7,082,921 | $31.30 | 16,512,921 | $30.70 | $507,007 | | Shares Sold - Current Quarter | — | — | 438,703 | 30.95 | 438,703 | 30.95 | 13,578 | | Shares Settled - Current Quarter | — | — | — | — | — | — | — | | Forward Shares Unsettled - September 30, 2025 | 9,430,000 | | 7,521,624 | | 16,951,624 | $30.71 | $520,584 | Financial Guidance The company provided initial 2026 guidance and updated 2025 guidance, reflecting strong performance and anticipated investment volumes 2026 Guidance The Company issued its initial 2026 guidance, projecting AFFO per share between $1.98 and $2.04, with anticipated investment volume of $1.0 billion to $1.4 billion - Expected 2026 AFFO per share on a fully diluted basis: $1.98 to $2.04[14] - Estimated investment volume for 2026: $1.0 billion to $1.4 billion[14] - Estimated Cash G&A expense for 2026: $31 million to $35 million[14] 2025 Guidance Update The Company increased its 2025 AFFO per share guidance to a range of $1.87 to $1.89, reflecting strong performance, while maintaining investment volume estimates - Increased 2025 AFFO per share guidance on a fully diluted basis: $1.87 to $1.89 (previously lower)[15] - Estimated investment volume for 2025: $1.2 billion to $1.4 billion[15] - Estimated Cash G&A expense for 2025: $28 million to $31 million[15] Shareholder Information This section details the company's dividend declaration and provides information for upcoming conference calls and supplemental materials for shareholders Dividend Information Essential Properties declared a cash dividend of $0.30 per share for Q3 2025, representing an annualized dividend of $1.20 per share - Declared a cash dividend of $0.30 per share for the quarter ended September 30, 2025[17] - The Q3 2025 dividend represents an annualized dividend of $1.20 per share[17] - Dividend paid on October 14, 2025, to stockholders of record as of September 30, 2025[17] Conference Call and Supplemental Materials The Company will host a conference call on October 23, 2025, to discuss results, with webcast and replay options available. Supplemental materials are accessible on the investor relations website - Conference call to discuss results on Thursday, October 23, 2025, at 10:00 a.m. ET[18] - Live webcast available in the Investor Relations section at www.essentialproperties.com[18](index=18&type=chunk) - Supplemental Information—Third Quarter 2025 is available on Essential Properties' website at investors.essentialproperties.com[21] Consolidated Financial Statements The consolidated financial statements present the company's strong revenue growth, increased net income, and a robust balance sheet with growing assets and equity Consolidated Statements of Operations The Consolidated Statements of Operations show a significant increase in total revenues and net income for both the three and nine months ended September 30, 2025, compared to the prior year, driven by higher rental and interest income | (in thousands, except share and per share data) | | | Three months ended September 30, | | | | Nine months ended September 30, | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | 2025 | | 2024 | | 2025 | | 2024 | | Revenues: | | | | | | | | | | Rental revenue | $ 136,544 | | $ 110,512 | | $ 387,444 | | $ 313,392 | | Interest on loans and direct financing lease receivables | 8,129 | | 6,477 | | 23,228 | | 16,075 | | Total revenues | 144,934 | | 117,132 | | 411,352 | | 329,901 | | Expenses: | | | | | | | | | | General and administrative | 10,211 | | 8,623 | | 32,423 | | 26,691 | | Depreciation and amortization | 38,976 | | 30,879 | | 112,559 | | 89,332 | | Total expenses | 52,559 | | 46,979 | | 158,603 | | 132,216 | | Income from operations | 93,736 | | 69,910 | | 261,170 | | 199,087 | | Interest expense | (28,348) | | (21,627) | | (77,139) | | (54,586) | | Net income attributable to stockholders | $ 65,620 | | $ 49,140 | | $ 184,942 | | $ 147,629 | | Diluted net income per share | $ 0.33 | | $ 0.27 | | $ 0.94 | | $ 0.84 | Consolidated Balance Sheets The Consolidated Balance Sheets show an increase in total assets to $6.61 billion as of September 30, 2025, from $5.79 billion at December 31, 2024, primarily driven by growth in real estate investments and an increase in senior unsecured notes | (in thousands, expect share and per share amounts) | | September 30, 2025 | | December 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | ASSETS | | | | | | Total real estate investments, net | | 5,952,362 | | 5,190,522 | | Loans and direct financing lease receivables, net | | 403,347 | | 352,066 | | Net investments | | 6,357,068 | | 5,552,606 | | Cash and cash equivalents | | 23,842 | | 40,713 | | Total assets | $ | 6,610,027 | $ | 5,798,682 | | LIABILITIES AND EQUITY | | | | | | Unsecured term loans, net of deferred financing costs | $ | 1,724,055 | $ | 1,721,114 | | Senior unsecured notes, net | | 786,312 | | 396,403 | | Revolving credit facility | | 120,000 | | — | | Total liabilities | | 2,765,545 | | 2,226,555 | | Total stockholders' equity | | 3,836,505 | | 3,563,678 | | Total equity | | 3,844,482 | | 3,572,127 | | Total liabilities and equity | $ | 6,610,027 | $ | 5,798,682 | Non-GAAP Financial Measures and Definitions This section provides reconciliations of GAAP to non-GAAP financial measures like FFO, AFFO, and EBITDAre, along with definitions of key operational metrics for comprehensive performance analysis Reconciliation of Non-GAAP Financial Measures The Company provides reconciliations of GAAP net income to FFO, Core FFO, and AFFO, demonstrating improved performance across these key REIT metrics for both the quarter and year-to-date periods. Additionally, reconciliations for EBITDA, EBITDAre, and Adjusted EBITDAre are presented, highlighting operational performance before certain non-cash and non-recurring items FFO, Core FFO, and AFFO Reconciliation | (unaudited, in thousands except per share amounts) | | | Three months ended September 30, | | | | Nine months ended September 30, | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | | 2025 | | 2024 | | 2025 | | 2024 | | Net income | $ | 65,800 | $ | 49,293 | $ | 185,453 | $ | 148,089 | | Funds from Operations | | 104,814 | | 86,070 | | 297,401 | | 248,157 | | Core Funds from Operations | | 104,814 | | 86,070 | | 297,401 | | 248,157 | | Adjusted Funds from Operations | $ | 96,213 | $ | 77,892 | $ | 274,939 | $ | 226,122 | | Diluted FFO per share | $ | 0.52 | $ | 0.48 | $ | 1.51 | $ | 1.41 | | Diluted Core FFO per share | $ | 0.52 | $ | 0.48 | $ | 1.51 | $ | 1.41 | | Diluted AFFO per share | $ | 0.48 | $ | 0.43 | $ | 1.39 | $ | 1.29 | EBITDAre and Adjusted EBITDAre Reconciliation (Q3 2025) | (in thousands) | | Three months ended September 30, 2025 | | :--- | :--- | :--- | | Net income | $ | 65,800 | | EBITDA | | 132,712 | | EBITDAre | | 132,790 | | Adjusted EBITDAre - Current Estimated Run Rate | | 138,011 | | Annualized EBITDAre | $ | 531,160 | | Annualized Adjusted EBITDAre | $ | 552,044 | | Annualized Adjusted NOI | $ | 594,212 | | Annualized Adjusted Cash NOI | $ | 533,784 | Pro Forma Net Debt and TEV | (dollars in thousands, except share and per share amounts) | September 30, 2025 | | Rate | Wtd. Avg. Maturity | | :--- | :--- | :--- | :--- | :--- | | Total unsecured debt | | 2,650,000 | 4.3% | 4.5 years | | Net debt | | 2,626,158 | | | | Total enterprise value ("TEV") | $ | 8,539,422 | | | | Pro forma net debt | | 2,105,574 | | | | Pro forma TEV | $ | 8,523,318 | | | | Net Debt / Annualized Adjusted EBITDAre | | 4.8x | | | | Pro Forma Net Debt / Annualized Adjusted EBITDAre | | 3.8x | | | Non-GAAP Financial Measures and Certain Definitions This section defines various non-GAAP financial measures used by the Company, including FFO, Core FFO, AFFO, EBITDA, EBITDAre, Net Debt, NOI, and Cash NOI, explaining their relevance for investors and analysts in assessing REIT operating performance. It also provides definitions for key operational metrics like Cash ABR, Cash Cap Rate, GAAP Cap Rate, and Rent Coverage Ratio - FFO, Core FFO, and AFFO are non-GAAP measures used to compare REIT operating performance by adjusting GAAP net income for items like real estate depreciation and gains/losses on sales[43][44][46] - EBITDA and EBITDAre provide supplemental information on operating performance, exclusive of certain non-cash items and other costs, by adjusting earnings before interest, taxes, depreciation, and amortization[48][49] - Net Debt is calculated as gross debt less cash and cash equivalents and restricted cash, providing an estimate of the net contractual amount of borrowed capital[51] - NOI and Cash NOI reflect property-level revenues and expenses on an unlevered basis, with Cash NOI further excluding non-cash items[52] - Adjusted EBITDAre, NOI, and Cash NOI are annualized estimates reflecting investment and disposition activity as if they occurred on the first day of the quarter, excluding certain non-core items[54] - Key definitions include Cash ABR (annualized cash base rent), Cash Cap Rate (annualized cash base rent divided by purchase/sale price), GAAP Cap Rate (annualized GAAP rental income divided by purchase price), and Rent Coverage Ratio (tenant EBITDA to annualized base rental obligation)[55][56][57][58] Company Information and Legal Disclosures This section provides an overview of Essential Properties Realty Trust, Inc., includes important forward-looking statement disclaimers, and lists investor and media contact information About Essential Properties Realty Trust, Inc. Essential Properties Realty Trust, Inc. is an internally managed REIT specializing in acquiring, owning, and managing single-tenant, net-leased properties for service-oriented or experience-based businesses, with a portfolio of 2,266 properties across 48 states - Essential Properties Realty Trust, Inc. is an internally managed REIT[22] - Focuses on acquiring, owning, and managing primarily single-tenant properties net leased on a long-term basis to service-oriented or experience-based businesses[22] - As of September 30, 2025, the portfolio consisted of 2,266 freestanding net lease properties, 99.8% leased to tenants operating 645 different concepts across 48 states, with a weighted average lease term of 14.4 years and a rent coverage ratio of 3.6x[22] Forward-Looking Statements This section serves as a disclaimer regarding forward-looking statements, highlighting that they involve risks and uncertainties and are not guarantees of future performance. It advises against undue reliance and notes that actual results may differ materially from forecasts - The press release contains forward-looking statements identified by words like "estimate," "anticipate," "expect," and similar phrases[23] - Forward-looking statements involve numerous risks and uncertainties and should not be relied upon as predictions of future events[23] - The Company undertakes no obligation to publicly release revisions to these statements, except as required by law[23] Investor/Media Contact Contact information for investor and media inquiries is provided, directing interested parties to Robert W. Salisbury, CFA, Senior Vice President, Head of Corporate Finance & Strategy - Contact for Investor/Media inquiries: Robert W. Salisbury, CFA, Senior Vice President, Head of Corporate Finance & Strategy[42] - Contact email: investors@essentialproperties.com[42]