Essential Properties Realty Trust, Inc. · NYSE:EPRT
Essential Properties Realty Trust — Investor Presentation (September 2024)
34 slides from Essential Properties Realty Trust's investor presentation, September 2024
Slide 1: Investor Presentation September 2024
Investor Presentation September 2024 0 Investor Presentation – September 2024
Slide 2: Disclaimer
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
Slide 3: Business Update
Business Update Continuing to Execute Our Business Plan • Stable Portfolio: 99.8% leased; same-store rent growth has averaged 1.4% over the last four quarters Healthy • Strong Coverage: Unit-level coverage of 3.7x with ~99% of ABR required to report unit-level P&Ls Net Lease Portfolio1 • De-Minimis
Slide 4: Investment Highlights
Investment Highlights EPRT Board Meeting Management Presentation First Quarter Ended March 31, 2023
Slide 5: Investment Highlights
Investment Highlights New Vintage Portfolio + External Growth Capacity = Compelling Investment Opportunity • Newly Assembled Portfolio of Net Lease Properties 14.1 Years 3.7x Weighted Average • Long Duration Leases with Strong Unit-Level Rent Coverage Lease Term Average Unit-Level Rent Coverage1 (WA
Slide 6: Focused Investment Strategy Based on Decades of Experience
Focused Investment Strategy Based on Decades of Experience Investment Discipline Refined Over Multiple Decades Across Various Credit Cycles Service-oriented and experience- based businesses Service-Oriented & Small-scale, fungible net • Strong performance in current Experience-Based leased propertie
Slide 7: Relationship Based Strategy – Capital Provider of Choice
Relationship Based Strategy – Capital Provider of Choice Actively Leveraging Our Relationships to Directly Originate New Investment Opportunities Relationship-Based Sourcing Underwriting Methodology EPRT Originated Sale-Leaseback Unit-Level Profitability Real Estate Valuation Repeat Business1 Transa
Slide 8: Portfolio Review
Portfolio Review
Slide 9: New Vintage Portfolio Focused on Targeted Industries
New Vintage Portfolio Focused on Targeted Industries Disciplined Investing Focused on Service-Oriented and Experience-Based Businesses with Unit-Level Reporting • E-Commerce Resistant1: 93% of cash ABR comes from service-oriented and experience-based tenants • Focus on 16 Industries: Results in grea
Slide 10: Top Tenant Concentration
Top 10 Tenant Concentration Highly Diversified Portfolio by Tenant: Top 10 Tenants Represent less than 19% of Total Cash ABR1 Top 10 Tenants1 Diversification by Industry1 % of Cash Type of Cash ABR % of Cash # of Building Rent Per Top 10 Tenants1 Properties2 ABR Tenant Industry Business ($'000s) ABR
Slide 11: Diversified Portfolio – Our Tenants Identify the Location of Opportunities
Diversified Portfolio – Our Tenants Identify the Location of Opportunities Geographical Diversity is an Output of our Strategy • Geographic Diversity1 ~78% of Total Cash ABR comes from Top 20 States (States with >2.0% of our total ABR) ~51% of Total Cash ABR comes from Sunbelt states, as our tenants
Slide 12: Established and Proven Investment Platform
Established and Proven Investment Platform Scalable Infrastructure – Consistent Investment Sourcing at Attractive Yields without Sacrificing Quality $360,000 $328,370 $333,910 $314,865 $320,000 $277,361 Activity ($000s) $280,000 $248,770 Investment $240,000 $207,147 $213,327 $195,454 $200,000 $160,0
Slide 13: Active Asset Management
Active Asset Management Proactive Asset Management Mitigates Risk, Optimizes Accretive Capital Recycling $80,000 $75,522 $70,000 Activity ($000s)1 Disposition $60,000 $50,000 $41,736 $35,513 $37,161 $40,000 $30,602 $28,496 $30,000 $20,000 $11,949 $10,000 $4,783 $0 Dispositions 3Q’22 4Q’22 1Q’23 2Q’2
Slide 14: Leasing Summary
Leasing Summary Consistent Contractual Rent Escalations Generate Dependable Internal Growth Lease Escalation Frequency Lease Escalation Type Weighted Average CPI 2.1% Flat 1.1% Lease Escalation Frequency % of Cash ABR Annual Escalation Rate1,2 Annually 82.2% 1.7% Every 2 years 1.0% 1.5% Every 3 year
Slide 15: Same-Store Rent Growth
Same-Store Rent Growth Alignment with Average Contractual Rent Bumps is an Indicator of Limited Credit Loss Experience Same-Store Portfolio Performance1 Contractual Cash Rent ($000s) 2 % Type of Business 2Q’23 2Q’24 Change Service $ 59,082 $ 59,897 1.4% Experience 9,041 9,149 1.2% Retail 2,812 2,833
Slide 16: Disciplined Underwriting Leading to Healthy Portfolio Metrics
Disciplined Underwriting Leading to Healthy Portfolio Metrics Virtually 100% Unit-Level Reporting Provides Timely Visibility into Tenant Health and Expansive Intellectual Capital Tenant Financial Reporting Requirements1 % of Cash ABR by Unit-Level Coverage Tranche1,2 % of Cash < 1.00x: Reporting Req
Slide 17: Leverage & Liquidity
Leverage & Liquidity
Slide 18: Conservative and Flexible Debt Structure
Conservative and Flexible Debt Structure Investment Grade Balance Sheet with Strong Credit Profile Credit Highlights Unsecured Senior Note Covenants • Well-Laddered Maturities1: Weighted avg. maturity 4.7 yrs Measure Actual3 • Low-Cost Debt Structure1: Weighted avg. interest rate 4.1% (100% fixed) A
Slide 19: Strong Liquidity to Drive Leading AFFO/sh Growth
Strong Liquidity to Drive Leading AFFO/sh Growth $698mm of Liquidity1 and Balance Sheet Capacity to Support External Growth Aspirations Strong Liquidity to Near-Term Investment Opportunities Pro Forma 2Q’24 ($mm) 2Q’241 Cash $ 24.5 $ 548.2 Unused Revolver Capacity 355.0 600.0 Forward Equity - Unsett
Slide 20: Peer Comparison
Peer Comparison
Slide 21: Differentiated Net Lease Investment Opportunity
Differentiated Net Lease Investment Opportunity Portfolio Mix and Underlying Fundamentals are Favorable Relative to Peers Service-Oriented & Experience-Based Industries Less Reliance on Top 10 Tenancy – Fungible Properties (% of ABR) (% of ABR) Total Number of Tenant Industries1 Average Investme
Slide 22: Relative Valuation, Growth and Leverage
Relative Valuation, Growth and Leverage Compelling Valuation, Projected AFFO/sh Growth Relative to Net Lease Peers, and Conservative Leverage 2024E AFFO per Share Multiple1 2024E AFFO per Share Growth2 18.4x 18.1x 16.7x 5.7% 14.9x 14.3x 4.8% 13.7x 13.3x 4.7% 12.9x 12.8x 3.6% 3.3% 3.2% 3.1% 1.2% 3 NA
Slide 23: Commitment to ESG
Commitment to ESG
Slide 24: Environmental, Social and Governance
Environmental, Social and Governance Strong Governance, Innovative Approach to Sustainability, Commitment to Diversity, Equity & Inclusion Governance Environmental Social Leading governance practices, Board Implementing sustainability upgrades at Providing dynamic work environment, accountabilit
Slide 25: Financials
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Slide 26: Financial Summary – 2Q'24
Financial Summary – 2Q’24 Consolidated Statements of Operations Three Months Ended June 30, Six Months Ended June 30, (in thousands, except share and per share data) 2024 2023 2024 2023 (unaudited) (unaudited) (unaudited) (unaudited) Revenues: Rental revenue1,2 $ 104,369 $ 81,819 $ 202,880 $ 159,991
Slide 27: Financial Summary – 2Q'24
Financial Summary – 2Q’24 Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) Three Months Ended June 30, Six Months Ended June 30, (unaudited, in thousands except per share amounts) 2024 2023 2024 2023 Net income $ 51,676 $ 53,000 $ 98,798 $ 96,056 Depreciation and amortization of
Slide 28: Financial Summary – 2Q'24
Financial Summary – 2Q’24 Consolidated Balance Sheets (in thousands, except share and per share amounts) June 30, 2024 December 31, 2023 ASSETS (unaudited) (audited) Investments: Real estate investments, at cost: Land and improvements $ 1,730,117 $ 1,542,302 Building and improvements 3,162,052 2,938
Slide 29: Financial Summary – 2Q'24
Financial Summary – 2Q’24 GAAP Reconciliations to EBITDAre, GAAP NOI, Cash NOI and Estimated Run Rate Metrics Three Months Ended (unaudited, in thousands) June 30, 2024 Net income $ 51,676 Depreciation and amortization 29,927 Interest expense 17,361 Interest income (847) Income tax expense 155 EBITD
Slide 30: Financial Summary – 2Q'24
Financial Summary – 2Q’24 Market Capitalization, Debt Summary and Leverage Metrics (dollars in thousands, except share and per share amounts) June 30, 2024 Rate Wtd. Avg. Maturity Unsecured debt: February 2027 term loan1 $ 430,000 2.4% 2.6 years January 2028 term loan1 400,000 4.6% 3.6 years Februar
Slide 31: Glossary
Glossary
Slide 32: Glossary
Glossary Supplemental Reporting Measures FFO, Core FFO and AFFO evaluation of our operating performance across multiple periods and in comparison to the operating performance of our peers, because it Our reported results are presented in accordance with U.S. generally removes the effect of unusual i
Slide 33: Glossary
Glossary Supplemental Reporting Measures We also present our earnings before interest, taxes and depreciation and may not be comparable to similarly titled measures reported by other amortization for real estate (“EBITDA”), EBITDA further adjusted to equity REITs. exclude gains (or losses) on sales
Slide 34: Glossary
Glossary Supplemental Reporting Measures Adjusted EBITDAre / Adjusted NOI / Adjusted Cash NOI Initial Portfolio We further adjust EBITDAre, NOI and Cash NOI i) based on an estimate Initial Portfolio means our acquisition of a portfolio of 262 net leased calculated as if all re-leasing, investment an
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