Financial Data and Key Metrics Changes - The company reported GAAP net income of $68.3 million and AFFO of $99.7 million for Q4 2025 [3][4] - AFFO per share totaled $0.49, representing a 9% increase compared to Q4 2024 [14] - The company increased its 2026 AFFO per share guidance range to $1.99-$2.04, implying a growth rate of about 7% at the midpoint and 8% at the high end [6][17] Business Line Data and Key Metrics Changes - The company executed a differentiated investment strategy, sourcing 85% of $296 million in investments through existing relationships [5] - Same-store rent growth was 1.6%, with strong rent coverage of 3.6 times [6][8] - The portfolio ended the quarter with investments in 2,300 properties leased to over 400 tenants, maintaining a weighted average lease term of approximately 14 years [7] Market Data and Key Metrics Changes - The company noted a stabilization in competition, which is expected to lead to a slower decrease in cap rates than previously anticipated [24][32] - The average initial cash yield for investments was 7.7%, with a compelling GAAP yield of 9.1% [6][11] Company Strategy and Development Direction - The company aims to maintain a dominant position as a real estate capital provider to middle-market operators [4] - The focus remains on optimizing cost of capital and delivering shareholder value, with a commitment to a well-capitalized balance sheet [14][17] - The company plans to continue its investment strategy without significant changes, emphasizing relationships with existing operators [32][82] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the health of the portfolio, citing better-than-expected credit trends and a strong investment pipeline [21][22] - The company anticipates modest cap rate compression in the latter half of 2026, driven by market conditions [44][45] - Management remains cautious about the macroeconomic environment but believes the current strategy will support growth [82][84] Other Important Information - The company sold 19 properties for $48.1 million in net proceeds at a 6.9% weighted average cash yield during Q4 [9] - Tenant concentration continues to decline, with the top 10 tenants comprising only 16.5% of ABR [10] Q&A Session Summary Question: Changes in guidance range - The CFO explained that the guidance was adjusted due to better-than-expected portfolio credit trends and same-store rent growth [21][22] Question: Impact of competition stabilization - Management clarified that stabilization in competition does not imply a shift to a safer tenant base but indicates a slower decrease in cap rates [24][25] Question: Acquisition trends and drivers - Management noted that the strong start to the year in acquisitions was partly due to deal slippage from Q4 and emphasized the need for caution in interpreting early trends [30][31] Question: Portfolio credit events - Management confirmed that the only notable credit event was with American Signature, which is expected to recover within normal ranges [36][37] Question: Dividend growth expectations - The CFO indicated that while dividends are important, the decision on future increases will be made by the board, balancing current returns and retained capital [39][40] Question: Cap rate stabilization across industries - Management confirmed that cap rate stabilization is observed across all industries they invest in, with no significant deviations [32][33] Question: Future investment pipeline - Management expressed confidence in the investment pipeline, indicating that the opportunity set is not a constraint for future growth [96][97]

Essential Properties Realty Trust (NYSE:EPRT) Q4 2025 Earnings call February 12, 2026 10:00 AM ET Company ParticipantsAJ Peil - Chief Investment OfficerCheryl Kull - Director of Financial Planning and Data AnalyticsMax Jenkins - COOPete Mavoides - President and CEORich Hightower - Managing Director and Portfolio ManagerRob Salisbury - CFONone - Company RepresentativeConference Call ParticipantsCaitlin Burrows - Equity Research AnalystDan Guglielmo - Equity Research AnalystGreg McGinniss - Equity Research An ...

Financial Data and Key Metrics Changes - The company reported GAAP net income of $68.3 million and AFFO of $99.7 million for Q4 2025, with AFFO per share totaling $0.49, representing a 9% increase compared to Q4 2024 [2][12][13] - The company increased its 2026 AFFO per share guidance range to $1.99-$2.04, implying a growth rate of about 7% at the midpoint and 8% at the high end [4][15] Business Line Data and Key Metrics Changes - The company executed $296 million in investments during Q4 2025, with an average initial cash yield of 7.7% and a GAAP yield of 9.1% [3][10] - Same-store rent growth was reported at 1.6%, with a robust rent coverage of 3.6 times [4][7] Market Data and Key Metrics Changes - The company ended the quarter with investments in 2,300 properties leased to over 400 tenants, maintaining a weighted average lease term of approximately 14 years [5] - Tenant concentration declined, with the top 10 tenants comprising only 16.5% of ABR, and the top 20 representing 27.1% of ABR [9] Company Strategy and Development Direction - The company continues to focus on its differentiated investment strategy, sourcing 85% of its investments through existing relationships while adding new operator relationships [3][4] - The company expects modest cap rate compression in the latter half of 2026, with competition stabilizing based on current visibility [5][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the health of the portfolio, noting better-than-expected credit trends and a strong investment pipeline [4][20] - The company remains committed to maintaining a well-capitalized balance sheet with low leverage and significant liquidity to support future growth [15][19] Other Important Information - The company declared a cash dividend of $0.31 in Q4 2025, resulting in an AFFO payout ratio of 63% [13] - The company sold 19 properties for $48.1 million in net proceeds at a 6.9% weighted average cash yield during Q4 [8] Q&A Session Summary Question: Changes in Guidance Range - The CFO explained that the guidance range was adjusted due to better-than-expected portfolio credit trends and same-store rent growth [19][20] Question: Impact of Stabilizing Competition - Management clarified that stabilization in competition has led to a slower decrease in cap rates, which is beneficial for earnings but does not change their investment strategy [22][23] Question: Acquisition Trends - Management noted that the strong start to the year in acquisitions was partly due to deal slippage from Q4, and they remain cautious about reading too much into early-year performance [28][29] Question: Tenant Credit Events - Management confirmed that the only notable credit event was with American Signature, which is expected to recover within normal ranges [35][36] Question: Dividend Growth Expectations - The CFO indicated that while the dividend is expected to grow, the decision will ultimately be made by the board, balancing current returns and retained capital [37][38] Question: Cap Rate Stabilization Across Industries - Management confirmed that cap rate stabilization is observed across all industries they invest in, with no significant deviations [30][31] Question: Future Investment Pipeline - Management expressed confidence in the investment pipeline, indicating that their desire to create shareholder growth drives their investment volume rather than the opportunity set [90]

Investor Presentation and Supplemental Information Fourth Quarter 2025 Disclaimer This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements can be identified by the use of words such as "expect," "plan," "will," "estimate," "project," "intend," "believe," "guidance," and other similar expressions that do not relate to historical matters. These forward-looking statements ...

For the quarter ended December 2025, Essential Properties (EPRT) reported revenue of $149.87 million, up 25.2% over the same period last year. EPS came in at $0.49, compared to $0.30 in the year-ago quarter.The reported revenue represents a surprise of -1.16% over the Zacks Consensus Estimate of $151.63 million. With the consensus EPS estimate being $0.49, the EPS surprise was +0.35%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to ...

Core Insights - Essential Properties (EPRT) reported quarterly funds from operations (FFO) of $0.49 per share, matching the Zacks Consensus Estimate and showing an increase from $0.45 per share a year ago, resulting in an FFO surprise of +0.35% [1] - The company posted revenues of $149.87 million for the quarter ended December 2025, which was 1.16% below the Zacks Consensus Estimate, but an increase from $119.71 million year-over-year [2] - Essential Properties shares have increased approximately 7.6% since the beginning of the year, outperforming the S&P 500's gain of 1.4% [3] Financial Performance - Over the last four quarters, Essential Properties has surpassed consensus FFO estimates only once, while it has topped consensus revenue estimates three times [2] - The current consensus FFO estimate for the upcoming quarter is $0.49 on revenues of $158.66 million, and for the current fiscal year, it is $2.04 on revenues of $673.59 million [7] Industry Context - The REIT and Equity Trust - Retail industry, to which Essential Properties belongs, is currently ranked in the top 27% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - The performance of Essential Properties may be influenced by the overall industry outlook, as empirical research shows a strong correlation between stock movements and trends in estimate revisions [5][8]

Portfolio Overview - As of December 31, 2025, the total annualized base rent was $555.0 million, with 91.5% attributable to properties leased to service-oriented and experience-based businesses[20] - The portfolio consisted of 2,300 properties, with a 99.7% occupancy rate and 659 different concepts across 48 states, ensuring no single tenant contributed more than 3.4% of annualized base rent[21] - The weighted average remaining lease term was 14.4 years, with only 5.2% of annualized base rent from leases expiring before January 1, 2031[22] - As of December 31, 2025, 66.8% of annualized base rent was from master leases, which spread investment risk across multiple properties[26] - The company's portfolio was 99.7% occupied as of December 31, 2025, with a weighted average remaining lease term of 14.4 years[38] Financial Performance - The company's net income for the year ended December 31, 2025, was $253.7 million, with an EBITDAre of $512.7 million and an Annualized Adjusted EBITDAre of $562.4 million, resulting in a net debt to Annualized Adjusted EBITDAre ratio of 4.4x[38] - In 2025, the company completed $1.3 billion of investments in 270 properties, with total gross investment in real estate reaching $7.2 billion[29] - Liquidity as of December 31, 2025, totaled $1.4 billion, including $70.4 million in cash and cash equivalents[36] - The company had $2.5 billion of gross debt outstanding with a weighted average maturity of 4.2 years, and total liquidity of $1.4 billion as of December 31, 2025[38] - The company sold 60 properties for net sales proceeds of $130.1 million during the year ended December 31, 2025[44] Investment Strategy - 95% of investments were made through a sale-leaseback structure, which allows for favorable lease terms and financial reporting from tenants[23] - The average investment per property was $3.1 million, focusing on smaller, low basis single-tenant properties to mitigate risk[25] - During the year ended December 31, 2025, the company completed $1.3 billion in investments, with 95% of new investments attributable to internally originated sale-leaseback transactions[39] - The company focuses on middle-market companies in service-oriented or experience-based businesses, which are believed to be more insulated from e-commerce pressures[45] - The company maintains a disciplined underwriting process, targeting properties with strong operating performance and healthy rent coverage ratios[41] Lease Structure and Terms - 97.9% of leases provided for base rent increases at a weighted average rate of 1.8% per year, offering protection against inflation[27] - Leases contributing 97.9% of annualized base rent provide for annual rent increases ranging from 1.0% to 4.0%, with a weighted average annual escalation of 1.8%[39] - The portfolio's weighted average rent coverage ratio was 3.6x, with 99.2% of leases requiring periodic financial reporting from tenants[28] - 97.3% of the company's leases were triple-net, enhancing the stability of rental revenue[39] Environmental, Social, and Governance (ESG) Initiatives - The company maintains a strong focus on Environmental, Social, and Governance (ESG) initiatives, integrating ESG performance metrics into executive compensation to align leadership incentives with sustainability goals[56] - The company aims to reduce its carbon footprint by implementing sustainability upgrades at corporate offices and income properties[57] - The company has established a goal to publish its 2025 Corporate Responsibility Report, aligned with the Sustainability Accounting Standards Board and the Financial Stability Board Task Force on Climate-related Financial Disclosure indices[57] - The company conducts environmental assessments before property acquisitions to identify potential environmental concerns, following the Standard Practice for Environmental Site Assessments[65] - The company requires lessees to comply with environmental laws and indemnify the company for any losses incurred due to violations[66] - The company is subject to various environmental laws and regulations, which may impose significant liabilities and require compliance expenditures[67] Workforce and Diversity - As of December 31, 2025, the company had 56 full-time employees, with women comprising 38% of the workforce and holding approximately 55% of non-executive management positions[50] - The company is committed to diversity, with minorities making up approximately 30% of the employee base and 35% of non-executive management positions[50] - The company has a commitment to maintaining a workplace free from discrimination and harassment, supported by annual training for employees[53] Debt and Interest Rate Management - Total principal outstanding for the company is $2,530,000,000 as of December 31, 2025, with a weighted average interest rate of 4.23%[333] - The 2027 Term Loan has a principal of $430,000,000 with a fixed interest rate of 2.36%[333] - The company has effectively fixed the interest rate on variable-rate borrowings through interest rate swap agreements, with an aggregate liability of $18.5 million in case of early termination[335] - The estimated fair value of the senior unsecured notes is $766,504,000, compared to a carrying value of $800,000,000[340] - The company is exposed to interest rate risk, which may affect earnings and cash flows due to potential refinancing at higher rates upon maturity of long-term debt[337] - Future variable-rate debt may be incurred without hedging, increasing exposure to interest rate fluctuations[338] - The company aims to limit the impact of future interest rate changes on its earnings and cash flows through effective risk management strategies[337] - An increase in interest rates could adversely impact earnings if the company cannot acquire real estate with rental rates high enough to offset increased borrowing costs[338] - The 2028 Term Loan has a principal of $400,000,000 with a fixed interest rate of 4.51%[333] - The total principal outstanding for 2024 was $2,130,000,000, indicating an increase of approximately 18.8% year-over-year[333]

Financial Performance - Fourth Quarter 2025 net income per share was $0.34, representing a 13% increase compared to the same quarter in 2024[2] - Adjusted Funds from Operations (AFFO) per share for Q4 2025 was $0.49, a 9% increase year-over-year[2] - Net income attributable to stockholders for Q4 2025 was $68,067,000, compared to $55,374,000 in Q4 2024, reflecting a 22.9% increase[28] - Funds from Operations (FFO) for Q4 2025 were $108,927,000, a 26.2% increase from $86,346,000 in Q4 2024[33] - Core Funds from Operations (CFFO) for the year ended December 31, 2025, were $403,978,000, up 20.8% from $334,503,000 in 2024[33] - Total revenues for the year ended December 31, 2025, reached $561,219,000, up 24.8% from $449,610,000 in 2024[28] - Rental revenue for Q4 2025 was $140,091,000, a 24.8% increase from $112,358,000 in Q4 2024[28] - Basic net income per share for Q4 2025 was $0.34, up from $0.31 in Q4 2024[33] - Net income for the three months ended December 31, 2025, was $68,274,000[37] Investments and Portfolio - The company closed investments totaling $295.8 million at a weighted average cash cap rate of 7.7% during Q4 2025[2] - For the full year 2025, total investments amounted to $1.3 billion across 270 properties, with a weighted average cash cap rate of 7.9%[3] - As of December 31, 2025, the company had a total of 2,300 properties in its portfolio, with a weighted average lease term of 14.4 years and a weighted average rent coverage ratio of 3.6x[21] Liquidity and Capital Structure - Total available liquidity as of December 31, 2025, was $1.4 billion, including cash and cash equivalents of $70.4 million[12] - The company raised $170.3 million through its ATM program at an average price of $30.93 per share during Q4 2025[2] - Total unsecured debt amounted to $2,530,000,000 with a weighted average interest rate of 4.23%[41] - Net debt stood at $2,459,635,000, resulting in a Net Debt to Annualized Adjusted EBITDAre ratio of 4.4x[41] - Pro forma net debt, after adjustments for unsettled forward equity, was $2,127,484,000[41] Dividends - A cash dividend of $0.31 per share was declared for the quarter ended December 31, 2025, representing an annualized dividend of $1.24 per share[17] Assets and Liabilities - Total assets as of December 31, 2025, were $6,863,023,000, an increase from $5,798,682,000 in 2024[31] - Total liabilities increased to $2,655,129,000 as of December 31, 2025, compared to $2,226,555,000 in 2024[31] - Cash and cash equivalents increased to $60,181,000 as of December 31, 2025, from $40,713,000 in 2024[31] - The company reported a total of 199,903,360 basic weighted-average shares outstanding for Q4 2025, compared to 177,425,316 in Q4 2024[28] Operational Metrics - Adjusted EBITDAre for the current estimated run rate was $140,604,000[37] - Annualized EBITDAre was reported at $557,704,000[37] - The company reported an annualized adjusted NOI of $606,920,000[37] - Cash NOI for the quarter was $137,939,000[37] - The company’s total enterprise value (TEV) was $8,695,836,000[41] Ratios and Metrics - GAAP Cap Rate is calculated as expected annual rental and interest income divided by the gross investment in the property, including transaction costs[62] - Rent Coverage Ratio measures the ratio of annual EBITDA and cash rent to the annualized base rental obligation[63] - Weighted Average Annual Escalation reflects the entire portfolio as if all escalations occur annually, assuming fixed percentage escalations in leases[64]

Core Insights - Essential Properties Realty Trust, Inc. reported a fourth quarter net income per share of $0.34, representing a 13% increase compared to the same period in 2024 [1] - The company closed investments totaling $295.8 million at a weighted average cash cap rate of 7.7% [1] - The 2026 AFFO guidance has been increased to a range of $1.99 to $2.04 per share [2] Financial Highlights - **Fourth Quarter 2025 Results**: - Net income per share increased by 13% to $0.34 [1] - Funds from Operations (FFO) per share increased by 15% to $0.54 [1] - Adjusted Funds from Operations (AFFO) per share increased by 9% to $0.49 [1] - **Full Year 2025 Results**: - Net income per share increased by 11% to $1.28 [1] - FFO per share increased by 8% to $2.05 [1] - AFFO per share increased by 9% to $1.89 [1] Investment Activity - **Investments**: - Total investment volume for the fourth quarter was $295.8 million across 58 properties [1] - For the full year, total investments reached $1.3 billion across 270 properties [1] - **Dispositions**: - The company disposed of 19 properties in the fourth quarter, generating net proceeds of $48.1 million [1] - For the full year, 60 properties were disposed of, yielding net proceeds of $130.1 million [1] Portfolio Overview - As of December 31, 2025, the company’s portfolio consisted of 2,300 properties with a weighted average lease term of 14.4 years [2] - The weighted average rent coverage ratio was reported at 3.6x [2] - The portfolio was 99.7% leased, with 91.5% of cash ABR coming from service-oriented or experience-based businesses [2] Debt and Equity - The company raised $170.3 million through its ATM program at an average price of $30.93 per share [1] - Pro forma net debt to annualized adjusted EBITDA ratio stood at 3.8x as of the quarter end [1] - Total available liquidity was reported at $1.4 billion, including cash and cash equivalents of $70.4 million [1] Guidance and Future Outlook - The company anticipates an investment volume of $1.0 billion to $1.4 billion for 2026 [2] - Cash general and administrative expenses are expected to be between $31 million and $35 million [2]

Core Insights - The article emphasizes the importance of purchasing companies when they are attractively priced, highlighting a key lesson learned in the investment journey [1] Group 1: Investment Philosophy - The author identifies as a buy-and-hold investor who prioritizes quality over quantity in investment choices [2] - The focus is on dividend investing in high-quality blue-chip stocks, Business Development Companies (BDCs), and Real Estate Investment Trusts (REITs) [2] - The goal is to help lower and middle-class workers build investment portfolios that consist of high-quality, dividend-paying companies [2] Group 2: Personal Background - The author is a Navy veteran with a personal aspiration to supplement retirement income through dividends within the next 5-7 years [2] - The author aims to provide a new perspective to investors to assist them in achieving financial independence [2]