Essential Properties Realty Trust, Inc. · NYSE:EPRT
Essential Properties Realty Trust — Investor Presentation (June 2023)
33 slides from Essential Properties Realty Trust's investor presentation, June 2023
Slide 1: Investor Presentation June 2023
Investor Presentation June 2023 0 Investor Presentation – June 2023
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: Executive Summary
Executive Summary Continuing to Execute Our Strategy • Stable Portfolio: 99.8% leased; same-store rent growth has averaged 1.7% over the last four quarters Healthy • Strong Coverage: Unit-level coverage of 3.9x with ~99% of ABR required to report unit-level P&Ls Net Lease Portfolio1 • De-Minimis Nea
Slide 4: Investment Highlights
Investment Highlights New Vintage Portfolio + External Growth Capacity = Compelling Investment Opportunity • Newly Assembled Portfolio of Net Lease Properties 13.9 Years 3.9x • Long Duration Leases with Strong Unit-Level Rent Coverage Weighted Average Lease Term Average Unit-Level Rent Coverage1 (WA
Slide 5: Differentiated Investment Strategy Based on Decades of Experience
Differentiated Investment Strategy Based on Decades of Experience Investment Discipline Refined Over Multiple Decades, Extensive Experience Through Various Credit Cycles Service-oriented and experience- based businesses Service-Oriented & Small-scale, fungible net • Strong performance in current Exp
Slide 6: Relationship Based Strategy – Capital Provider of Choice
Relationship Based Strategy – Capital Provider of Choice Actively Leveraging Our Relationships to Source New Investment Opportunities Relationship-Based Sourcing Underwriting Methodology EPRT Originated Unit-Level Profitability Real Estate Valuation Sale-Leaseback • Evaluate the profitability • Iden
Slide 7: Portfolio Review
Portfolio Review
Slide 8: 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 Resistant: 93% of cash ABR comes from service-oriented and experience-based tenants • Focus on 16 Industries: Results in great
Slide 9: Top Tenant Concentration
Top 10 Tenant Concentration Highly Diversified Portfolio by Tenant: Top 10 Tenants Represent only 17% of Total Cash ABR Top 10 Tenants Diversification by Industry % of Cash Type of Cash ABR % of Cash # of Building Rent Per Top 10 Tenants1 Properties2 ABR Tenant Industry Business ($'000s) ABR Propert
Slide 10: 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 Diversity ~81% of Total Cash ABR comes from Top 22 States (States with >2.0% of our total ABR) TX, GA, FL, OH, and WI represent 38% of Total Cash ABR 2.5% 4.1%
Slide 11: Established and Proven Investment Platform
Established and Proven Investment Platform Scalable Infrastructure – Consistent Investment Sourcing at Attractive Yields without Sacrificing Quality $360,000 $322,203 $328,370 $320,000 Activity ($000s) $280,000 $237,795 Investment $223,186 $230,755 $240,000 $207,147 $195,454 $200,000 $175,738 $160,0
Slide 12: Active Asset Management
Active Asset Management Proactive Asset Management Mitigates Risk, Optimizes Accretive Capital Recycling and Risk-Adjusted Returns $80,000 $75,522 Activity ($000s)1 $70,000 Disposition $60,000 $50,000 $35,513 $37,161 $40,000 $30,000 $26,091 $19,578 $18,443 $20,000 $10,089 $10,000 $4,466 $0 Dispositi
Slide 13: Leasing Summary
Leasing Summary Consistent Contractual Rent Escalations Generate Dependable Internal Growth Lease Escalation Frequency Lease Escalation Type Weighted Average Flat CPI 1.7% Lease Escalation Frequency % of Cash ABR Annual Escalation Rate1,2 2.8% Annually 81.1% 1.7% Every 2 years 1.3 1.5 Every 3 years
Slide 14: Same-Store Rent Growth
Same-Store Rent Growth Alignment with Average Contractual Rent Bumps is Indicator of Limited Credit Loss Experience Same-Store Portfolio Performance1 Contractual Cash Rent ($000s) 2 % Type of Business 1Q’22 1Q’23 Change Service $ 48,344 $ 49,209 1.8% Experience 6,714 6,741 0.4% Retail 2,915 2,951 1.
Slide 15: 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 Requirements % of Cash ABR by Unit-Level Coverage Tranche1 % of Cash < 1.00x Reporting Require
Slide 16: Leverage & Liquidity
Leverage & Liquidity EPRT Board Meeting Management Presentation First Quarter Ended March 31, 2023
Slide 17: Conservative and Flexible Debt Structure
Conservative and Flexible Debt Structure 100% Unsecured Debt – 100% Unencumbered Asset Base – Manageable Near-Term Debt Maturity • Well-Laddered Maturities: Weighted average debt maturity of 5.0 years • Low-Cost Debt Structure: Weighted average interest rate of 3.3% • 100% Unsecured Balance Sheet: A
Slide 18: Strong Liquidity to Drive Leading AFFO/sh Growth
Strong Liquidity to Drive Leading AFFO/sh Growth $775mm of Liquidity1 and Balance Sheet Capacity to Support External Growth Aspirations Strong Liquidity to Support Growth Pro Forma 1Q’23 ($000s) 1Q’231 Cash $ 71.0 $ 174.6 Unused Revolver Capacity 600.0 600.0 Forward Equity Sales - Unsettled 103.6 0
Slide 19: Peer Comparison
ie Peer Comparison
Slide 20: 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 21: Relative Valuation, Growth and Leverage
Relative Valuation, Growth and Leverage Compelling Valuation, Projected AFFO/sh Growth Relative to Net Lease Peers, and Conservative Leverage 2023E AFFO per Share Multiple1 2023E AFFO per Share Growth2 16.5x 6.6% 15.7x 15.6x 15.0x 14.9x 14.7x 13.3x 13.2x 4.7% 11.4x 11.1x 3.4% 2.9% 2.2% 2.0% 1.8% 1.2
Slide 22: Commitment to ESG
S RECTOLE Ox FoR YOU. 7
Slide 23: 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 24: Financials
ials — inanc F
Slide 25: Financial Summary – 1Q'23
Financial Summary – 1Q'23 Consolidated Statements of Operations Three Months Ended March 31, (in thousands, except share and per share data) 2023 2022 (unaudited) (unaudited) Revenues: Rental revenue1,2 $ 78,172 $ 66,112 Interest on loans and direct financing lease receivables 4,446 3,822 Other reve
Slide 26: Financial Summary – 1Q'23
Financial Summary – 1Q'23 Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) Three Months Ended March 31, (unaudited, in thousands except per share amounts) 2023 2022 Net income $ 43,056 $ 26,818 Depreciation and amortization of real estate 23,799 20,287 Provision for impairment o
Slide 27: Financial Summary – 1Q'23
Financial Summary – 1Q'23 Consolidated Balance Sheets (in thousands, except share and per share amounts) March 31, 2023 December 31, 2022 ASSETS (unaudited) (audited) Investments: Real estate investments, at cost: Land and improvements $ 1,274,398 $ 1,228,687 Building and improvements 2,554,139 2,44
Slide 28: Financial Summary – 1Q'23
Financial Summary – 1Q'23 GAAP Reconciliations to EBITDAre, GAAP NOI, Cash NOI and Estimated Run Rate Metrics Three Months Ended (unaudited, in thousands) March 31, 2023 Net income $ 43,056 Depreciation and amortization 23,824 Interest expense 12,133 Interest income (638) Income tax expense 153 EBIT
Slide 29: Financial Summary – 1Q'23
Financial Summary – 1Q'23 Market Capitalization, Debt Summary and Leverage Metrics (dollars in thousands, except share and per share amounts) March 31, 2023 Rate Wtd. Avg. Maturity Unsecured debt: April 2024 term loan1 $ 200,000 2.9% 1.0 years February 2027 term loan1 430,000 2.4% 3.9 years January
Slide 30: Glossary
Glossary
Slide 31: 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 32: 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 33: 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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