Essential Properties Realty Trust, Inc. · NYSE:EPRT
Essential Properties Realty Trust — Investor Presentation (March 2020)
33 slides from Essential Properties Realty Trust's investor presentation, Mar 2, 2020
Slide 1: Investor Presentation – March 2020
Investor Presentation – March 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: Experienced and Proven Management Team
Experienced and Proven Management Team Pete Mavoides President & CEO +20 years of experience in the single-tenant net lease industry and has overseen $8 billion of aggregate acquisitions Previously served as President and Chief Operating Officer of Spirit Realty Capital (SRC) and was there from Sept
Slide 5: Building Essential Properties: Our History
Oct 2019 Nov 2019 Building Essential Properties 242, 242, 242 Our History Cumulative Investment Activity1 Partnered with Eldridge Industries to build net lease investment platform Feb 2016 Aug 2016 Dec 2016 Jun 2018 Mar 2019 Apr 2019 Jul 2019 Aug 2019 Jun 2016 Began core investing activities and clo
Slide 6: Key Accomplishments Since IPO
Key Accomplishments Since IPO 242, 242, 242 Maintained Investment Discipline While Generating Compelling Growth Consistent Underwriting and Investment Growth: Over the trailing eight quarters1, EPRT has invested ~$150mm on avg. per quarter at a 7.5% wgt. avg. cash cap rate with 80% of transactions b
Slide 7: 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 8: 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 9: 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 10: 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 11: Net Lease Risk Factor Mitigation by Essential Properties
242, 242, 242 Net Lease Risk Factor 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 12: 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 13: 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 14: 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 15: Growth Oriented Balance Sheet
Growth Oriented Balance Sheet $2.8 Billion Total Capitalization1,2,4 Selected Credit Ratios 242, 242, 242 Share price of $22.61 as of February 27, 2020. Debt balances are as of December 31, 2019, with the exception of our Series 2017-1 Secured ABS Notes of which $62mm was paid down without penalty o
Slide 16: 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 December 31, 2019, with the exception of our Series 2017-1 Secured ABS Notes of which $62mm was paid down without penalty on February 10, 2020. Maturity figures for our secured debt are ba
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: Public Net Lease REIT Benchmarking
Public Net Lease REIT Benchmarking 2020E AFFO per Share Multiple1 2020E AFFO per Share Growth3 Source: Public filings, FactSet and SNL. Note: Market data as of February 27, 2020. 2020E AFFO per share multiple calculated based on current price per share and FactSet mean 2020E AFFO per share estimates
Slide 19: Public Net Lease REIT Benchmarking
Public Net Lease REIT Benchmarking 2021E AFFO Payout Ratio3 Net Debt + Preferred / EBITDAre Net Debt + Preferred / Enterprise Value Dividend Yield2 Source: Public filings, FactSet and SNL. Note: Market data as of February 27, 2020. Companies may define adjusted annualized EBITDAre differently. Accor
Slide 20: Implied Cap Rate
Implied Cap Rate3 4.6% 4.8% 5.1% 5.5% 5.7% 6.1% 6.5% 6.8% 6.9% 7.8% Average 6.0% (unaudited, in thousands) Three Months Ended, December 31, 20196 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,
Slide 21: Appendix
+ Appendix
Slide 22: 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 23: 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 24: 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 25: Public REIT Benchmarking
Public REIT Benchmarking Enterprise Value 2020E - 2021E AFFO per Share Growth CAGR 242, 242, 242 Attractively Valued and Positioned Relative to AFFO per Share Growth Leaders in Other REIT Sectors 2020E AFFO per Share Multiple1 Source: Public filings, FactSet and SNL. Note: Market data as of February
Slide 26: Financial Summary – 4Q 2019: 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, 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: Market Capitalization, Debt Summary and Leverage Metrics
Financial Summary – 4Q 2019 Market Capitalization, Debt Summary and Leverage Metrics 242, 242, 242 Maturity figures for our secured debt are based off of our anticipated repayment schedule. The Series 2016-1 notes were due to mature in November 2046 but were fully repaid in November 2019. The Series
Slide 31: 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 32: 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 33: Glossary: Supplemental Reporting Measures and Other Terms
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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