Essential Properties(EPRT) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents unaudited consolidated financial statements and management's discussion of financial performance Item 1. Financial Statements This section presents the unaudited consolidated financial statements for Q3 2025 and FY2024, with detailed notes Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time | ASSETS (in thousands) | Sep 30, 2025 | Dec 31, 2024 | | :---------------------- | :----------- | :----------- | | Total real estate investments, net | $5,952,362 | $5,190,522 | | Loans and direct financing lease receivables, net | $403,347 | $352,066 | | Cash and cash equivalents | $23,842 | $40,713 | | Total assets | $6,610,027 | $5,798,682 | | LIABILITIES AND EQUITY (in thousands) | Sep 30, 2025 | Dec 31, 2024 | | :---------------------- | :----------- | :----------- | | Unsecured term loans, net | $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 | Consolidated Statements of Operations This section details the company's revenues, expenses, and net income over specific reporting periods | (in thousands, except per share data) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 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: | | | | | | 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 | | Basic net income per share | $0.33 | $0.28 | $0.95 | $0.85 | | Diluted net income per share | $0.33 | $0.27 | $0.94 | $0.84 | Consolidated Statements of Comprehensive Income (Loss) This section presents net income and other comprehensive income (loss) components, reflecting total equity changes | (in thousands) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income | $65,800 | $49,293 | $185,453 | $148,089 | | Total other comprehensive loss | $(2,845) | $(51,329) | $(37,629) | $(29,951) | | Comprehensive income (loss) attributable to stockholders | $62,783 | $(2,030) | $147,424 | $117,781 | Consolidated Statements of Stockholders' Equity This section outlines changes in common stock, additional paid-in capital, and retained earnings over time | (in thousands, except share data) | Balance at Dec 31, 2024 | Common Stock Issuance | Dividends Declared | Net Income | Balance at Sep 30, 2025 | | :-------------------------------- | :---------------------- | :-------------------- | :----------------- | :--------- | :---------------------- | | Common Stock (Par Value) | $1,875 | $105 | — | — | $1,981 | | Additional Paid-In Capital | $3,658,219 | $298,809 | — | — | $3,967,376 | | Distributions in Excess of Cumulative Earnings | $(113,302) | $(6,307) | $(177,455) | $184,940 | $(112,224) | | Accumulated Other Comprehensive (Loss) Income | $16,886 | — | — | $(37,629) | $(20,628) | | Total Stockholders' Equity | $3,563,678 | $292,502 | $(177,455) | $184,940 | $3,836,505 | | Non-controlling Interests | $8,449 | — | $(772) | $511 | $7,977 | | Total Equity | $3,572,127 | $292,502 | $(178,227) | $185,451 | $3,844,482 | Consolidated Statements of Cash Flows This section summarizes cash inflows and outflows from operating, investing, and financing activities | (in thousands) | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :------------------------------------ | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $275,933 | $221,415 | | Net cash used in investing activities | $(916,785) | $(848,489) | | Net cash provided by financing activities | $619,716 | $616,822 | | Net decrease in cash and cash equivalents and restricted cash | $(21,136) | $(10,252) | | Cash and cash equivalents and restricted cash, end of period | $23,842 | $38,711 | - Cash paid for interest, net of amounts capitalized, increased from $54,225 thousand in 2024 to $72,354 thousand in 2025 for the nine months ended September 30[27] Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements Note 1. Organization This note describes the company's legal structure, REIT business model, and stock exchange listing - Essential Properties Realty Trust, Inc. is an internally managed REIT that acquires, owns, and manages primarily single-tenant, net-leased properties for middle-market companies in service-oriented or experience-based businesses[30] - The Company was organized on January 12, 2018, elected REIT taxation status from December 31, 2018, and its common stock is listed on the NYSE under 'EPRT'[31][32] Note 2. Summary of Significant Accounting Policies This note outlines key accounting principles and methods used in preparing the financial statements - The financial statements are prepared in accordance with GAAP and SEC rules, with all intercompany accounts eliminated in consolidation[33] - The Company held a 99.7% ownership interest in its Operating Partnership as of September 30, 2025, and December 31, 2024[34] - The Company operates in one reportable segment, aggregating real estate owned and leased properties, and loans/direct financing lease receivables[36][37] - Real estate investments are carried at cost less accumulated depreciation and impairment losses, with purchase prices allocated to tangible and intangible assets/liabilities based on fair values[38][40] - Depreciation is computed using the straight-line method over estimated useful lives (up to 40 years for buildings, 15 years for site improvements)[45] - The Company uses a real estate loss estimate model (RELEM) to calculate allowances for credit losses on loans and direct financing lease receivables, evaluating credit deterioration quarterly[52][53] - The Company elected to be taxed as a REIT, generally not subject to U.S. federal income tax, but may be subject to state and local taxes[79] - The Operating Partnership is identified as a Variable Interest Entity (VIE) where the Company is the primary beneficiary, consolidating its assets and liabilities[87] - Recent accounting developments include ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03/2024-09 (Expense Disaggregation Disclosures), with the Company currently evaluating their impact[90][91] Note 3. Investments This note details real estate and loan investments, including acquisition, disposition, and impairment activities | Investment Type | Sep 30, 2025 | Dec 31, 2024 | | :---------------- | :----------- | :----------- | | Owned properties | 2,103 | 1,946 | | Properties securing mortgage loans | 153 | 150 | | Ground lease interests | 10 | 8 | | Total number of investments | 2,266 | 2,104 | | Gross Investment Value (in thousands) | Sep 30, 2025 | Dec 31, 2024 | | :------------------------------------ | :----------- | :----------- | | Real estate investments, at cost | $6,529,729 | $5,667,349 | | Loans and direct financing lease receivables, net | $403,347 | $352,066 | | Real estate investments held for sale, net | $1,359 | $10,018 | | Total gross investments | $6,934,435 | $6,029,433 | | Investment Activity (9 Months Ended Sep 30, in thousands) | 2025 | 2024 | | :---------------------------------------- | :----------- | :----------- | | Acquisitions of and additions to real estate investments | $948,084 | $782,067 | | Sales of investments in real estate | $(81,857) | $(35,667) | | Investments in loans receivable | $81,508 | $120,599 | | Provision for impairment of real estate | $(7,934) | $(12,259) | - The Company's loans receivable portfolio had an aggregate carrying amount of $403.1 million as of September 30, 2025, with the maximum loss exposure limited to this amount[100] | Allowance for Credit Losses (in thousands) | 2025 | 2024 | | :--------------------------------------- | :----------- | :----------- | | Balance at January 1 | $896 | $666 | | Current period provision for expected credit losses | $83 | $249 | | Balance at September 30 | $979 | $915 | - Real estate investments held for sale decreased significantly from $10.0 million (5 properties) at December 31, 2024, to $1.4 million (3 properties) at September 30, 2025[110] - Texas was the only state representing 10% or more of total rental revenue, contributing 11.7% for the three months and 12.4% for the nine months ended September 30, 2025[112] Note 4. Leases This note describes lease arrangements, future minimum receipts, and lease revenue recognition - The Company's investment properties are primarily leased under long-term triple-net operating leases, where tenants are responsible for all property operating expenses[116][117] | Future Minimum Receipts (in thousands) | Operating Leases | Loans and Direct Financing Leases | Total Future Minimum Receipts | | :------------------------------------- | :--------------- | :-------------------------------- | :---------------------------- | | October 1 - December 31, 2025 | $126,223 | $8,445 | $134,668 | | 2026 | $509,662 | $33,973 | $543,635 | | Thereafter | $6,417,955 | $379,910 | $6,797,865 | | Total | $8,613,256 | $523,292 | $9,136,548 | | Lease Revenues (in thousands) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :---------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Fixed lease revenues | $137,002 | $110,135 | $387,320 | $311,663 | | Variable lease revenues | $1,427 | $1,457 | $4,352 | $2,952 | | Total lease revenues | $138,429 | $111,592 | $391,672 | $314,615 | - As of September 30, 2025, the Company's right-of-use (ROU) assets and lease liabilities were $8.8 million and $9.0 million, respectively, with a weighted average remaining lease term of 24.2 years and a discount rate of 6.86%[123][126] Note 5. Long-Term Debt This note provides details on unsecured term loans, senior notes, and the revolving credit facility | (in thousands) | Maturity Date | Principal Outstanding Sep 30, 2025 | Principal Outstanding Dec 31, 2024 | Weighted Average Interest Rate Sep 30, 2025 | | :------------- | :------------ | :--------------------------------- | :--------------------------------- | :------------------------------------------ | | Unsecured term loans | | $1,730,000 | $1,730,000 | 5.3% | | Senior unsecured notes | | $800,000 | $400,000 | 4.2% | | Revolving Credit Facility | Feb 2030 | $120,000 | — | 4.9% | | Total principal outstanding | | $2,650,000 | $2,130,000 | 4.9% | | Scheduled Principal Payments (in thousands) | 2027 Term Loan | 2028 Term Loan | 2029 Term Loan | 2030 Term Loan | Senior Unsecured Notes | Revolving Credit Facility | Total | | :---------------------------------------- | :------------- | :------------- | :------------- | :------------- | :--------------------- | :------------------------ | :------ | | 2027 | $430,000 | — | — | — | — | — | $430,000 | | 2028 | — | $400,000 | — | — | — | — | $400,000 | | 2029 | — | — | $450,000 | — | — | — | $450,000 | | Thereafter | — | — | — | $450,000 | $800,000 | $120,000 | $1,370,000 | | Total | $430,000 | $400,000 | $450,000 | $450,000 | $800,000 | $120,000 | $2,650,000 | - The Revolving Credit Facility was amended in February 2025, increasing its maximum aggregate principal amount to $1.0 billion and maturing in February 2029 (with two six-month extension options)[130][131] - In August 2025, the Company completed a public offering of $400.0 million aggregate principal amount of 5.400% Senior Notes due 2035, generating net proceeds of $390.7 million[151] Note 6. Derivative and Hedging Activities This note explains the use of interest rate swaps to manage interest rate risk on the company's debt - The Company uses interest rate swaps as cash flow hedges to protect against adverse fluctuations in interest rates on its floating-rate debt, recording them at fair value in other comprehensive income (loss)[156][157] | Associated Debt Instrument | Fixed Rate Paid by Company | Maturity Date | Aggregate Notional Value (in thousands) | Fair Value of Asset/(Liability) Sep 30, 2025 (in thousands) | | :------------------------- | :------------------------- | :------------ | :-------------------------------------- | :-------------------------------------------------------- | | 2027 Term Loan | 1.41% | Nov 2026 | $430,000 | $10,443 | | 2028 Term Loan | 3.66% | Jan 2028 | $400,000 | $(3,065) | | 2029 Term Loan | 4.40% | Feb 2029 | $450,000 | $(16,149) | | 2030 Term Loan | 3.82% | Dec 2029 | $450,000 | $(9,099) | | Total | | | $1,730,000 | $(17,870) | - For the nine months ended September 30, 2025, the Company realized a gain of $12.7 million on the change in fair value of its interest rate swaps, reducing interest expense[164] Note 7. Equity This note details common stock issuances, equity offerings, and dividends declared by the company - In March 2025, the Company completed a follow-on primary offering of 9,430,000 shares of common stock at $31.00 per share, with expected net proceeds of $284.9 million from forward sale agreements to be settled by September 2026[169] - The Company established an October 2024 ATM Program authorizing sales of common stock up to $750 million, replacing prior programs[170] - As of September 30, 2025, $232.2 million in gross sales were made under this program[171] | Dividends Declared on Common Stock | Dividend per Share | Total Dividend (in thousands) | | :--------------------------------- | :----------------- | :---------------------------- | | Sep 5, 2025 | $0.30 | $59,543 | | May 30, 2025 | $0.30 | $59,544 | | Mar 7, 2025 | $0.295 | $58,368 | | Sep 5, 2024 | $0.29 | $50,964 | | May 31, 2024 | $0.29 | $50,965 | | Mar 7, 2024 | $0.285 | $50,079 | Note 8. Non-controlling Interests This note describes ownership interests held by external parties in the operating partnership - As of September 30, 2025, the Company held a 99.7% limited partner interest in the Operating Partnership (198,144,552 OP Units), with external parties holding the remaining 0.3% (553,847 OP Units) as non-controlling interests[176] - OP Unit holders receive distributions equal to common stock dividends and can redeem units for cash or common stock on a one-for-one basis after one year[177] Note 9. Equity-Based Compensation This note outlines the company's equity incentive plan and the associated compensation costs - The Company's 2023 Equity Incentive Plan, approved in May 2023, replaced the 2018 plan, authorizing grants of various equity awards up to 4,300,808 shares of common stock[178] | (in thousands) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Compensation cost recognized in general and administrative expense | $3,553 | $2,618 | $11,017 | $8,205 | | Fair value of units vested during the period | $242 | $61 | $15,497 | $10,465 | - As of September 30, 2025, total unrecognized compensation cost was $17.2 million, to be recognized over a weighted average period of 2.1 years[187] Note 10. Net Income Per Share This note provides the calculation of basic and diluted net income per share for reporting periods | (in thousands, except share data) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income available for common stockholders: basic | $65,393 | $49,022 | $184,260 | $147,277 | | Weighted average shares outstanding used in basic net income per share | 198,141,272 | 175,330,976 | 194,753,085 | 172,656,778 | | Weighted average shares outstanding used in diluted net income per share | 199,875,244 | 179,610,599 | 196,853,561 | 175,365,280 | Note 11. Commitments and Contingencies This note discloses future financial obligations and potential legal liabilities of the company - As of September 30, 2025, the Company had future commitments of $118.6 million to tenants for development, construction, and renovation costs[190] - The Company provides a 100% matching contribution on the first 6% of eligible compensation to its 401(k) Plan, totaling $369 thousand for the nine months ended September 30, 2025[194][195] - The Company is subject to various lawsuits and claims in the ordinary course of business, but management does not believe any will have a material adverse effect[192] Note 12. Fair Value Measurements This note explains methodologies and inputs used to determine fair value of financial instruments and assets - The Company measures the fair value of its Senior Notes and derivative financial instruments on a recurring basis, primarily using Level 2 inputs for interest rate swaps and Level 1 for Senior Unsecured Notes[203] | (in thousands) | Net Carrying Value Sep 30, 2025 | Fair Value Sep 30, 2025 | Level 1 | Level 2 | Level 3 | | :------------- | :------------------------------ | :---------------------- | :------ | :------ | :------ | | Senior unsecured notes | $(786,312) | $(762,244) | $(762,244) | — | — | | Interest rate swaps | $(17,870) | $(17,870) | — | $(17,870) | — | - Impaired real estate investments are measured at fair value on a nonrecurring basis, classified as Level 3, using inputs like non-binding sales agreements[205][208] Note 13. Subsequent Events This note reports significant events occurring after the reporting period but before financial statements were issued - Subsequent to September 30, 2025, the Company invested $5.4 million in two real estate properties and $0.8 million in construction/reimbursements, while selling two properties for $0.6 million[210][211] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial condition, operational results, and growth strategies Special Note Regarding Forward-Looking Statements This note cautions readers about forward-looking statements and inherent risks causing actual results to differ - The report contains forward-looking statements regarding business strategies, investments, financing, leasing, and market trends, identified by words like 'estimate,' 'anticipate,' and 'expect'[213] - Actual results may differ materially due to known and unknown risks, including economic conditions, real estate business risks, tenant performance, market volatility, interest rates, and regulatory changes[214] Overview This section introduces the company's REIT business model, portfolio composition, and key operational attributes - Essential Properties Realty Trust, Inc. is an internally managed REIT focused on acquiring, owning, and managing single-tenant, net-leased properties for middle-market service-oriented or experience-based businesses[217] - As of September 30, 2025, the portfolio comprised 2,266 properties, with $537.0 million in annualized base rent and 99.8% occupancy[217][219] - 92.1% of annualized base rent was from service-oriented and experience-based businesses[219] - Key portfolio attributes include diversification (no tenant >3.5% of ABR), a weighted average remaining lease term of 14.4 years, 94% sale-leaseback transactions, 66.0% master leases, 97.7% contractual rent escalation (1.8% average annual rate), average investment of $3.1 million per property, and a weighted average rent coverage ratio of 3.6x[219][220][221][222][223][224] Our Competitive Strengths This section highlights the company's diversified portfolio, differentiated investment strategy, and experienced management - The Company's portfolio is strategically diversified across 645 concepts in 48 states, with a focus on service-oriented or experience-based tenants, reducing e-commerce exposure[225][226] - A differentiated investment strategy targets unrated middle-market companies, offering attractive real estate financing solutions for smaller, fungible properties ($2M-$100M aggregate purchase price)[227][228] - The senior management team possesses significant experience in net lease, driving a scalable platform with strong origination, underwriting, and asset management capabilities, including 94% internally originated sale-leaseback transactions in 9M 2025[229][230][231] - Extensive tenant financial reporting (99.0% of ABR) supports active asset management, credit risk monitoring, and proactive portfolio adjustments[232] Our Business and Growth Strategies This section outlines the company's approach to maximizing stockholder value through focused underwriting and risk management - The Company aims to maximize stockholder value through focused underwriting, risk management, and maintaining a diversified portfolio with long-term leases, attractive rent escalations, and healthy rent coverage ratios[233][234] - Growth is driven by relationship-based sourcing, originating sale-leaseback transactions (94% of new investments in 9M 2025), and opportunistically acquiring net-leased properties[236] - Strategic focus on middle-market companies in service-oriented or experience-based businesses (e.g., car washes, restaurants, education, medical/dental) to mitigate e-commerce pressure[237][238] - Active asset management includes regular property reviews, use of Moody's Analytics RiskCalc for credit deterioration, and selective dispositions to optimize portfolio and returns[240] - Balance sheet management targets pro forma net debt generally less than 5.5 times annualized adjusted EBITDAre, utilizing diverse debt capital sources and hedging strategies to limit interest rate sensitivity[241][253] Historical Investment and Disposition Activity This section provides a quarterly breakdown of the company's real estate acquisition and sale transactions | Investment Activity (in thousands) | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | | :------------------------------- | :----------- | :----------- | :----------- | :----------- | | Investment activity | $333,435 | $307,706 | $334,041 | $369,848 | | Number of transactions | 37 | 21 | 25 | 35 | | Property count | 78 | 48 | 77 | 87 | | Avg. investment per unit | $3,281 | $5,453 | $3,971 | $3,849 | | Cash cap rate | 8.0% | 7.8% | 7.9% | 8.0% | | GAAP cap rate | 9.2% | 9.4% | 9.7% | 10.0% | | Master lease percentage | 69% | 71% | 69% | 76% | | Sale-leaseback percentage | 100% | 90% | 93% | 97% | | Existing relationship percentage | 79% | 86% | 88% | 70% | | Rent coverage ratio | 3.4x | 3.0x | 3.4x | 5.9x | | Lease term (years) | 17.7 | 17.5 | 19.5 | 18.6 | | Disposition Activity (in thousands) | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | | :-------------------------------- | :----------- | :----------- | :----------- | :----------- | | Disposition volume | $60,449 | $24,338 | $46,193 | $11,455 | | Cash cap rate on leased assets | 7.0% | 6.9% | 7.3% | 6.6% | | Leased properties sold | 24 | 10 | 18 | 6 | | Vacant properties sold | — | 1 | 5 | 1 | Liquidity and Capital Resources This section discusses the company's ability to meet financial obligations and its funding sources - As of September 30, 2025, the Company's income property portfolio totaled $6.4 billion across 2,266 properties, generating $537.0 million in annualized base rent[247] - Short-term liquidity needs include funding investment activities, servicing debt, and covering G&A/dividends[248] - The Company expects to fund $118.6 million in tenant construction/renovation reimbursements by June 30, 2026[249] - Long-term liquidity will be met through operating cash flows, Revolving Credit Facility borrowings, future debt financings, common stock sales, and property dispositions[251] - The Company targets net debt less than 5.5 times annualized adjusted EBITDAre[253] - As of September 30, 2025, all long-term debt was fixed-rate or effectively fixed through hedging, with a weighted average debt maturity of 4.5 years[254] Supplemental Guarantor Information This section clarifies the company's guarantee of its operating partnership's senior notes - The Company fully and unconditionally guarantees the Operating Partnership's $800.0 million outstanding senior notes[256] - Separate financial statements for the Operating Partnership are not presented due to consolidation and immaterial differences[257] Description of Certain Debt This section provides details on the company's unsecured term loans, senior notes, and revolving credit facility | (in thousands) | Maturity Date | Principal Outstanding Sep 30, 2025 | Principal Outstanding Dec 31, 2024 | Weighted Average Interest Rate Sep 30, 2025 (1) | | :------------- | :------------ | :--------------------------------- | :--------------------------------- | :------------------------------------------ | | Unsecured term loans | | $1,730,000 | $1,730,000 | 4.5% | | Senior unsecured notes | | $800,000 | $400,000 | 4.2% | | Revolving Credit Facility | Feb 2030 | $120,000 | — | 4.9% | | Total principal outstanding | | $2,650,000 | $2,130,000 | 4.3% | - The Revolving Credit Facility has a fully-extended maturity of February 6, 2030[261] - The CF Term Loans (2028, 2029, 2030) have principal amounts fully drawn as of September 30, 2025, with extended maturities up to January 2030[262] - The Company was in compliance with all financial covenants under the Amended Credit Agreement and 2027 Term Loan as of September 30, 2025[264][268] Cash Flows This section analyzes the changes in cash from operating, investing, and financing activities | Cash Flow Summary (in thousands) | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :------------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $275,933 | $221,415 | | Net cash used in investing activities | $(916,800) | $(848,500) | | Net cash provided by financing activities | $619,700 | $616,800 | | Net decrease in cash and cash equivalents and restricted cash | $(21,136) | $(10,252) | - Operating cash flow increased by $54.5 million YoY, driven by higher net income and non-cash adjustments[273] - Investing activities used $916.8 million, primarily for real estate investments and construction, partially offset by $80.5 million from asset sales[274] - Financing activities provided $619.7 million, including $298.8 million from common stock issuance and $390.7 million from senior unsecured notes, partially offset by $174.1 million in dividends and $545.0 million in Revolving Credit Facility repayments[275] Off-Balance Sheet Arrangements This section confirms the absence of any material off-balance sheet arrangements for the company - The Company had no off-balance sheet arrangements as of September 30, 2025[276] Contractual Obligations This section details the company's future payment commitments for debt, leases, and tenant financing | (in thousands) | Total | Oct 1 - Dec 31, 2025 | 2026-2027 | 2028-2029 | Thereafter | | :------------- | :----------- | :------------------- | :----------- | :----------- | :----------- | | Unsecured term loans | $1,730,000 | — | $430,000 | $850,000 | $450,000 | | Senior unsecured notes | $800,000 | — | — | — | $800,000 | | Revolving Credit Facility | $120,000 | — | — | — | $120,000 | | Tenant construction financing and reimbursement obligations | $118,641 | $118,641 | — | — | — | | Operating lease obligations | $21,982 | $347 | $1,855 | $1,766 | $18,014 | | Total | $2,790,623 | $118,988 | $431,855 | $851,766 | $1,388,014 | Critical Accounting Policies and Estimates This section discusses key accounting policies and estimates requiring significant management judgment - The Company's critical accounting policies and estimates, including judgments on fair values, useful lives, collectability, and impairment, remain consistent with those disclosed in the Annual Report on Form 10-K for fiscal year ended December 31, 2024, with no material changes in the current period[279][281] Our Real Estate Investment Portfolio This section provides a detailed overview of the company's diversified real estate portfolio - As of September 30, 2025, the portfolio included 2,266 properties across 48 states, with $537.0 million in annualized base rent[282] - No single tenant contributed more than 3.5% of ABR, and the top ten tenants accounted for 16.9%[283] - The portfolio is diversified across 645 concepts, with EquipmentShare (3.5% of ABR) and Crunch Fitness (2.7% of ABR) being the top two concepts[287] | Tenant Industry | % of Annualized Base Rent | | :-------------- | :------------------------ | | Car Washes | 14.2% | | Medical / Dental | 12.4% | | Early Childhood Education | 11.2% | | Quick Service | 8.9% | | Automotive Service | 8.0% | | Convenience Stores | 6.8% | | Casual Dining | 6.1% | | Equipment Rental and Sales | 4.8% | | Other Services | 2.7% | | Pet Care Services | 1.3% | | Family Dining | 1.2% | | Entertainment | 9.2% | | Health and Fitness | 4.4% | | Movie Theatres | 0.8% | | Other Industrial | 4.2% | | Building Materials | 0.9% | | Grocery | 2.6% | | Home Furnishings | 0.3% | - Texas is the largest geographic concentration, accounting for 11.9% of annualized base rent and 240 properties[292] - The weighted average remaining lease term is 14.4 years, with only 4.5% of annualized base rent expiring before January 1, 2030[293] | Unit-Level Coverage Ratio | % of Total (by ABR) | | :------------------------ | :------------------ | | ≥ 2.00x | 70.5% | | 1.50x to 1.99x | 16.2% | | 1.00x to 1.49x | 9.9% | | < 1.00x | 2.7% | | Not reported | 0.7% | Results of Operations This section analyzes the company's revenues, expenses, and net income for the reported periods | (in thousands) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | Change ($) | Change (%) | | :------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Rental revenue | $136,544 | $110,512 | $26,032 | 23.6% | | Interest on loans and direct financing lease receivables | $8,129 | $6,477 | $1,652 | 25.5% | | Total revenues | $144,934 | $117,132 | $27,802 | 23.7% | | Total expenses | $52,559 | $46,979 | $5,580 | 11.9% | | Income from operations | $93,736 | $69,910 | $23,826 | 34.1% | | Interest expense | $(28,348) | $(21,627) | $(6,721) | 31.1% | | Net income attributable to stockholders | $65,620 | $49,140 | $16,480 | 33.5% | | (in thousands) | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | Change ($) | Change (%) | | :------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Rental revenue | $387,444 | $313,392 | $74,052 | 23.6% | | Interest income on loans and direct financing lease receivables | $23,228 | $16,075 | $7,153 | 44.5% | | Total revenues | $411,352 | $329,901 | $81,451 | 24.7% | | Total expenses | $158,603 | $132,216 | $26,387 | 19.9% | | Income from operations | $261,170 | $199,087 | $62,083 | 31.2% | | Interest expense | $(77,139) | $(54,586) | $(22,553) | 41.3% | | Net income attributable to stockholders | $184,942 | $147,629 | $37,313 | 25.3% | - The increase in rental revenue and interest income on loans was primarily driven by the growth in the real estate investment portfolio, which expanded by 209 rental properties (11%) since September 30, 2024[299][300][312][313] - General and administrative expenses increased due to higher salary expense and professional fees[302][304][315][317] - Provision for impairment of real estate decreased significantly, from $5.7 million to $1.4 million for the three months, and from $12.3 million to $7.9 million for the nine months, reflecting fewer impairment charges[305][318] Non-GAAP Financial Measures This section presents and reconciles non-GAAP financial measures used to assess operating performance - The Company discloses non-GAAP measures like FFO, Core FFO, AFFO, EBITDA, EBITDAre, Adjusted EBITDAre, Annualized Adjusted EBITDAre, Net Debt, NOI, Cash NOI, and Cash G&A to provide investors with supplemental information on operating performance, excluding non-cash items and certain other costs[325][326][327][328][331][334][338][340][342] | (in thousands) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income | $65,800 | $49,293 | $185,453 | $148,089 | | FFO attributable to stockholders and non-controlling interests | $104,814 | $86,070 | $297,401 | $248,157 | | Core FFO attributable to stockholders and non-controlling interests | $104,814 | $86,070 | $297,401 | $248,157 | | AFFO attributable to stockholders and non-controlling interests | $96,213 | $77,892 | $274,939 | $226,122 | | (in thousands) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | EBITDAre attributable to stockholders and non-controlling interests | $132,790 | $106,727 | $373,242 | $300,824 | | Annualized Adjusted EBITDAre attributable to stockholders and non-controlling interests (Q3 2025) | $552,044 | | | | | Net Debt Reconciliation (in thousands) | Sep 30, 2025 | Dec 31, 2024 | | :------------------------------------- | :----------- | :----------- | | Total debt | $2,630,367 | $2,117,517 | | Gross debt | $2,650,001 | $2,130,000 | | Net debt | $2,626,159 | $2,085,022 | | (in thousands) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | NOI attributable to stockholders and non-controlling interests | $143,084 | $115,596 | $405,748 | $326,216 | | Cash NOI attributable to stockholders and non-controlling interests | $130,153 | $105,171 | $370,992 | $296,667 | | Cash G&A | $6,658 | $6,005 | $21,405 | $18,486 | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to market risks, primarily interest rate risk, and management strategies - The Company aims to match cash inflows from long-term leases/loans with outflows for long-term debt, using senior unsecured notes, revolving credit, and term loans[345] | (in thousands) | Maturity Date | Principal Outstanding Sep 30, 2025 | Weighted Average Interest Rate Sep 30, 2025 (1) | | :------------- | :------------ | :--------------------------------- | :------------------------------------------ | | Unsecured term loans | | $1,730,000 | 4.5% | | Senior unsecured notes | | $800,000 | 4.2% | | Revolving Credit Facility | Feb 2030 | $120,000 | 4.9% | | Total principal outstanding | | $2,650,000 | 4.3% | - Interest rates on variable-rate term loans are effectively fixed through interest rate swap agreements[348] - The aggregate liability for early termination of swaps was $18.1 million as of September 30, 2025[348] - A 100 basis point adverse change in interest rates would result in an estimated market risk exposure of $1.2 million for variable-rate borrowings under the Revolving Credit Facility[349] | (in thousands) | Carrying Value | Estimated Fair Value | | :------------- | :------------- | :------------------- | | Senior unsecured notes | $800,000 | $762,244 | Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and reports no material changes in internal control - The Company's disclosure controls and procedures were effective as of September 30, 2025, providing reasonable assurance of compliance with SEC reporting requirements[355] - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[356] PART II. OTHER INFORMATION This section provides additional information not covered in financial statements, including legal proceedings and risks Item 1. Legal Proceedings This section discusses ongoing legal proceedings and management's assessment of their potential financial impact - Management does not believe current legal or regulatory proceedings will have a material adverse effect on the Company's business, financial condition, results of operations, or liquidity[359] - Third parties, such as tenants, are contractually obligated to indemnify and defend the Company in some matters, but their ability to satisfy these obligations could impact the Company[359] Item 1A. Risk Factors No material changes to the risk factors as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[360] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - None[361] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[362] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company's operations - Not applicable[363] Item 5. Other Information No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter ended September 30, 2025[364] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents and certifications - The exhibits include Articles of Amendment and Restatement, Amended and Restated Bylaws, Indentures for Senior Notes, Certifications of Principal Executive and Financial Officers, and Inline XBRL documents[366]