Essential Properties Realty Trust, Inc. · NYSE:EPRT
Essential Properties Realty Trust — Investor Presentation (April 2020)
32 slides from Essential Properties Realty Trust's investor presentation, Apr 15, 2020
Slide 1: Investor Presentation – April 2020
Investor Presentation – April 2020 Exhibit 99.1
Slide 2: Disclaimer
Disclaimer 242, 242, 242 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," “estim
Slide 3: Investment Highlights
Investment Highlights 242, 242, 242 Service and Experiential Cash ABR2 94.4% Average Investment Per Property $2.0mm Internally-Originated Sale-Leasebacks2,3 81.4% Average Quarterly Investment Activity4 $150mm As of December 31, 2019. Based on cash ABR as of December 31, 2019. Exclusive of GE Seed Po
Slide 4: Covid-19 Impact: Status of Portfolio and April Rent
242, 242, 242 Covid-19 Impact: Status of Portfolio and April Rent Over 65% of Our Portfolio is Currently Open or Operating in a Limited Capacity Effect from Covid-19 is Not Binary: The general lack of economic activity, combined with mandatory shutdowns, is impacting nearly all of EPRT’s industries.
Slide 5: Covid-19 Impact: Tenant Industry Breakdown
242, 242, 242 As of December 31, 2019. Property operating status as measured by cash ABR as of March 31, 2020, on a preliminary basis, for each tenant industry. Covid-19 Impact: Tenant Industry Breakdown Long-term Conviction in Our Targeted Industries Remains Unchanged Despite Negative Impact from C
Slide 6: Subsequent Events and Liquidity Benchmarking
Subsequent Events and Liquidity Benchmarking 242, 242, 242 This is the all-in interest rate once our forward LIBOR swap becomes effective on July 9, 2020. Before that date, LIBOR is floating. Liquidity is defined as the sum of (i) cash and cash equivalents; (ii) availability on a revolving credit fa
Slide 7: Well Capitalized Balance Sheet
Well Capitalized Balance Sheet 242, 242, 242 Balances and ratios are preliminary and subject to further adjustment. Maturity figures for our secured debt are based off of our anticipated repayment schedule. The Series 2017-1 notes mature in June 2047 but have an anticipated repayment date of June 20
Slide 8: Debt Structure Allows for Capital Flexibility
Debt Structure Allows for Capital Flexibility Debt Maturity Schedule1,2,3 242, 242, 242 Debt balances are as of March 31, 2020. Maturity figures for our secured debt are based off of our anticipated repayment schedule. The Series 2017-1 notes mature in June 2047 but have an anticipated repayment dat
Slide 9: Service-Oriented & Experience-Based Industries
242, 242, 242 242, 242, 242 Service-Oriented & Experience-Based Industries Sale-Leaseback Transactions with Middle-Market Tenants Small-Scale Net Leased Properties E-commerce resistant Profit centers essential to tenant’s operations Customers must visit to receive service/experience Longer lease ter
Slide 10: Seek to be the Capital Provider of Choice
242, 242, 242 Seek to be the Capital Provider of Choice Maintain Direct Relationships with Our Tenants and Actively Seek to Leverage Our Relationships to Identify New Investment Opportunities 242, 242, 242 Relationship-Based Sourcing Percentage of portfolio cash ABR as of December 31, 2019 that was
Slide 11: New Vintage Portfolio is Focused on Targeted Industries
242, 242, 242 New Vintage Portfolio is Focused on Targeted Industries Our Portfolio is the Result of a Disciplined Adherence to Investing in Properties Leased to Service-Oriented and Experience-Based Businesses with Unit-Level Reporting Investment Properties (#)1 1,000 Square Footage (mm) 7.9 Tenant
Slide 12: Top Tenant Concentration
Top 10 Tenant Concentration EPRT Has 205 Tenants Across 1,000 Properties with the Top 10 Representing 189 Properties and 23.4% of Cash ABR 242, 242, 242 Top 10 Tenant1 Properties % of Cash ABR 74 3.4% 13 2.8% 4 2.5% 5 2.5% 34 2.4% 12 2.1% 13 2.1% 26 2.0% 5 1.9% 3 1.8% Top 10 Tenants 189 23.4% Total
Slide 13: Long-Term Risk Factors Mitigation by Essential Properties
242, 242, 242 Long-Term Risk Factors Mitigation by Essential Properties Challenged Retail Categories No exposure to big-box apparel, electronics, sporting goods or department stores At-Risk Retail Categories No exposure to pharmacy, dollar stores or discount retailers; de minimis exposure to grocers
Slide 14: Disciplined Underwriting Leading to Healthy Portfolio Metrics
42.3% Disciplined Underwriting Leading to Healthy Portfolio Metrics 98.2% of Unit-Level Reporting Provides (Near) Real-Time Tenant Visibility 242, 242, 242 Tenant Financial Reporting % of Cash ABR by Unit-Level Coverage Tranche2 Long Weighted Remaining Lease Term Healthy Rent Coverage Ratios1 Only 1
Slide 15: Established and Proven Investment Infrastructure
Established and Proven Investment Infrastructure Scalable Platform Allows for Consistent Sourcing of Investment Activity at Attractive Yields without Sacrificing Underwriting Standards and Investment Focus 242, 242, 242 Investment activity has averaged ~$150mm per quarter over the last eight quarter
Slide 16: Active Asset Management
Dispositions Have Traded at Attractive Cap Rates: Since inception in 2016 through 2019, we have sold 145 properties for $203mm and achieved a weighted average cash cap rate of 6.7% on the sale of 104 leased properties8 Trailing 12-Month (TTM) Sales Came from a Diverse Mix of Industries: No single in
Slide 17: Differentiated Net Lease Investment Opportunity
Differentiated Net Lease Investment Opportunity Strong Unit-Level Coverage2 & Transparency Service-Oriented & Experience-Based Industries Limited Immediate-Term Lease Maturities ü ü ü Source: Public filings and press releases. Note: Essential Properties data as of December 31, 2019. Public net lease
Slide 18: Peer Benchmarking: Payout, Leverage and Dividend Yield
2019 AFFO Payout Ratio4 Net Debt + Preferred / EBITDAre Debt / Undepreciated Gross Assets2 Dividend Yield3 Source: Public filings and FactSet. Note: Financial data as of December 31, 2019 as adjusted for subsequent publicly-disclosed events. Companies may calculate Adjusted Annualized EBITDAre diffe
Slide 19: Implied Cap Rate and NAV Analysis
Implied Cap Rate and NAV Analysis (unaudited, in thousands) Three Months Ended, December 31, 20194 Adjusted net operating income ("NOI")1 $41,112 Straight-line rental revenue, net1 (3,544) Other amortization and non-cash charges 79 Adjusted Cash NOI 37,647 Annualized Adjusted Cash NOI 150,588 Applie
Slide 20: Appendix
+ Appendix
Slide 21: Unsecured Covenants Calculation
242, 242, 242 Unsecured Covenants Calculation 12/31/19 Limit Consolidated Leverage Ratio Total debt / total asset value (TAV) 33.5% 60.0% Unencumbered Leverage Ratio Unsecured debt / unencumbered TAV 35.9% 60.0% Consolidated Secured Debt Leverage Ratio Consolidated secured debt / TAV 10.9% 50.0% Con
Slide 22: Public Net Lease REIT Benchmarking – Liquidity Analysis
Public Net Lease REIT Benchmarking – Liquidity Analysis EPRT is in a Superior Liquidity Position Source: Public filings and SNL. Note: Financial data as of December 31, 2019 as adjusted for subsequent publicly-disclosed events. Liquidity is defined as the sum of (i) cash and cash equivalents; (ii) a
Slide 23: Focused on Highly Fungible and Liquid Real Estate
Focused on Highly Fungible and Liquid Real Estate Lower ABR per Property2,3 Smaller Average Property Size Smaller-Scale Net Leased Investments ü ü ü Source: Public filings and press releases. Note: Essential Properties data as of December 31, 2019. Public net lease REIT data as of most recent report
Slide 24: Leasing Summary: Same-Store Analysis
Leasing Summary Same-Store Analysis 242, 242, 242 Same-Store Portfolio: All properties owned, excluding new sites under construction, for the entire same-store measurement period, which is October 1, 2018 through December 31, 2019. The same-store portfolio for 4Q 2019 is comprised of 590 properties
Slide 25: Leasing Summary: Lease Escalations
Leasing Summary Lease Escalations 242, 242, 242 Leases contributing 99% of cash ABR provided for base rent escalation, generally ranging from 1.0% to 3.0% annually, with a weighted average annual escalation rate of 1.5%, which assumes 0.0% change in annual CPI 6% of contractual rent escalations by c
Slide 26: Financial Summary – 4Q 2019: Consolidated Statements of Operations
Financial Summary – 4Q 2019 Consolidated Statements of Operations 242, 242, 242 Includes contingent rent (based on a percentage of the tenant's gross sales at the leased property) of $137 and $205 for the three months ended December 31, 2019 and 2018 and $855 and $1,082 for the years ended December
Slide 27: Financial Summary – 4Q 2019: FFO and AFFO
Financial Summary – 4Q 2019 Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) 242, 242, 242 Includes non-recurring expenses of $887 related to our retirement of secured borrowings during the three months ended December 31, 2019 and $2,473 for costs and charges incurred in connect
Slide 28: Financial Summary – 4Q 2019: Consolidated Balance Sheets
Financial Summary – 4Q 2019 Consolidated Balance Sheets 242, 242, 242 December 31, 2019 December 31, 2018 (in thousands, except share and per share amounts) (unaudited) (audited) ASSETS Investments: Real estate investments, at cost: Land and improvements $ 588,279 $ 420,848 Building and improvements
Slide 29: GAAP Reconciliations to EBITDAre, GAAP NOI, Cash NOI
Financial Summary – 4Q 2019 GAAP Reconciliations to EBITDAre, GAAP NOI, Cash NOI and Estimated Run Rate Metrics 242, 242, 242 These adjustments are made to reflect EBITDAre, NOI and Cash NOI as if all investments in and dispositions of real estate made during the three months ended December 31, 2019
Slide 30: Glossary: Supplemental Reporting Measures and Other Terms
Glossary Supplemental Reporting Measures and Other Terms 242, 242, 242 FFO, Core FFO and AFFO Our reported results are presented in accordance with U.S. generally accepted accounting principles ("GAAP"). We also disclose funds from operations (“FFO”), core funds from operations (“Core FFO”) and adju
Slide 31: Glossary: Supplemental Reporting Measures and Other Terms
Glossary Supplemental Reporting Measures and Other Terms 242, 242, 242 We also present our earnings before interest, taxes and depreciation and amortization for real estate (“EBITDA”), EBITDA further adjusted to exclude gains (or losses) on sales of depreciable property and real estate impairment lo
Slide 32: Glossary: Adjusted EBITDAre / Adjusted NOI / Adjusted Cash NOI
Glossary Supplemental Reporting Measures and Other Terms 242, 242, 242 Adjusted EBITDAre / Adjusted NOI / Adjusted Cash NOI We further adjust EBITDAre, NOI and Cash NOI i) based on an estimate calculated as if all investment and disposition activity that took place during the quarter had been made o
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