Essential Properties Realty Trust, Inc. · NYSE:EPRT
Essential Properties Realty Trust — Investor Presentation (November 2020)
28 slides from Essential Properties Realty Trust's investor presentation, Nov 12, 2020
Slide 1: Investor Presentation – November 2020
Exhibit 99.1 Investor Presentation – November 2020
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: Investment Highlights
Investment Highlights New Vintage Net Lease Portfolio with Strong External Growth Potential Creates a Compelling Investment Opportunity Newly Assembled Portfolio of Single-Tenant Net Lease Properties with 14.6 Years 2.8x Long Duration Leases and Solid Unit-Level Rent Coverage of Weighted Average Uni
Slide 4: Executive Summary
Executive Summary With the Vast Majority of the Portfolio Open and Paying Rent, an Attractive Opportunity Set of Investments and a Well Capitalized Balance Sheet, We Have Resumed Our External Growth Strategy • Vast Majority of Portfolio is Open and Operating: As of late October, approximately 99% of
Slide 5: COVID-19 Impact on Portfolio: Rent Collection and Deferral Information
COVID-19 Impact on Portfolio Portfolio Rent Collection and Deferral Information Reported Period July August September 3Q 2020 October1 Rent Collection2 Paid 88% 91% 91% 90% 91% Deferred 9% 6% 6% 7% 6% -- Recognized3 6% 4% 4% 4% 3% -- Non-Recognized3 3% 3% 3% 3% <3% Other 3% 3% 3% 3% 4% -- Unresolved
Slide 6: COVID-19 Impact on Portfolio: Tenant Industry Breakdown
COVID-19 Impact on Portfolio Tenant Industry Breakdown % of Remaining Current Level % of Total Closed % of 3Q'2020 % of Total Tenant Industry % of ABR % Closed Recognized of Impact ABR Collected Deferred Rent Deferred Rent Movie Theatres Severe 2.5% 0% 0% 16% 11% 0% Health & Fitness Moderate 4.8% 3%
Slide 7: Low Leverage and Ample Liquidity to Drive Robust AFFO/sh Growth
Low Leverage and Ample Liquidity to Drive Robust AFFO/sh Growth Ample Liquidity and Balance Sheet Capacity to Support External Growth • Strong Liquidity: At September 30, 2020, we had $188mm in cash and our $400mm unsecured revolving credit facility fully available for $588mm in total liquidity • Le
Slide 8: Targeted Investment Strategy Based on Decades of Experience
Targeted Investment Strategy Based on Decades of Experience Management’s Investment Discipline Has Been Refined Over Multiple Decades of Managing Assets Through Various Credit Cycles Service-oriented and Service-Oriented & experience-based Experience-Based businesses are performing Industries well i
Slide 9: Seek to be the Capital Provider of Choice
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 Relationship-Based Sourcing Underwriting Methodology 85.7% Unit-Level Profitability Real Estate Valuation Repeat Business
Slide 10: New Vintage Portfolio is Focused on Targeted Industries
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 • E-Commerce Resistant: 96% of cash ABR comes from service-oriented and exper
Slide 11: Top Tenant Concentration
Top 10 Tenant Concentration Our Top 10 Tenants Operate 236 Properties and Represent 22.6% of Cash ABR Top 10 Tenant Exposure % of Cash Top 10 Tenants1,2 Properties ABR 74 3.0% 23 2.8% 13 2.6% 14 2.4% 34 2.2% 5 2.1% 13 1.9% 20 1.9% 14 1.9% 26 1.8% Top 10 Tenants 236 22.6% Total 1,087 100.0% 1. Repres
Slide 12: Disciplined Underwriting Leading to Healthy Portfolio Metrics
Disciplined Underwriting Leading to Healthy Portfolio Metrics 98.7% of Unit-Level Reporting Provides (Near) Real-Time Tenant Visibility Healthy Rent Coverage Ratios1 Long Weighted Remaining Lease Term Only 6.3% of cash ABR has less than 1.5x coverage and an implied Only 3.1% of our expiring cash ABR
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 • 4Q’2020 Update: As of November 5th, we had closed over $70mm of investments • Trailing Quart
Slide 14: Active Asset Management
Active Asset Management Proactive Asset Management Mitigates Risk and Maximizes Risk-Adjusted Returns • 4Q’2020 Update: As of November 5th, we have sold $17.1mm of properties • Dispositions Have Traded at Attractive Cap Rates: Since inception in 2016 through 3Q’2020, we have sold 172 properties for
Slide 15: Differentiated Net Lease Investment Opportunity
Differentiated Net Lease Investment Opportunity Portfolio Mix and Underlying Fundamentals are Favorable Relative to Peers Service-Oriented & Experience-Based Less Reliance on Top 10 Tenancy with Smaller Industries (% of ABR) Scale Properties (% of ABR) Total Number of Tenant Industries1 Average
Slide 16: Low Leverage, Strong Liquidity and Dividend Sustainability
Low Leverage, Strong Liquidity and Dividend Sustainability Low Leverage, Strong Liquidity and Healthy Payout Ratio Underscore Sustainability of Current Income Debt / Undepreciated Gross Assets1 Liquidity2 / Projected 2020 Fixed Costs3 and 2020- 2021 Debt Maturities 37.2% 37.5% 36.6% 37.0% 3.8x 3.8x
Slide 17: Implied Cap Rate and NAV Analysis
Implied Cap Rate and NAV Analysis Solid Upside Potential Given Relative Valuation Implied Nominal Cap Rate – Sensitivity Analysis Peer Benchmarking Three Months Implied Ended, (unaudited, in thousands) Cap September 30, Rate3 2020 Adjusted net operating income ("NOI")1 $44,329 5.3% Does not reflect
Slide 18: Appendix
Appendix
Slide 19: Debt Structure Allows for Capital Flexibility
Debt Structure Allows for Capital Flexibility No Significant Debt Maturities Until 2024 • The Series 2017-1 Secured ABS notes: Anticipated repayment date is June 2024, but the notes can be prepaid without penalty starting on November 26, 2021. The weighted average interest rate on the notes is 4.19%
Slide 20: Leasing Summary
Leasing Summary Lease Escalations Lease Escalation Frequency Lease Escalation Type Weighted Average Flat 1,2 Lease Escalation Frequency % of Cash ABR Annual Escalation Rate CPI 1% Annually 80.0% 1.6% 4% Every 2 years 2.3 1.4 Every 3 years 0.8 1.5 Every 4 years 0.5 0.8 Every 5 years 11.1 1.4 Other es
Slide 21: Financial Summary – 3Q'2020: Consolidated Statements of Operations
Financial Summary – 3Q’2020 Consolidated Statements of Operations Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except share and per share data) 2020 2019 2020 2019 (unaudited) (unaudited) (unaudited) (unaudited) Revenues: Rental revenue1,2 $ 40,799 $ 34,958 $ 116,8
Slide 22: Financial Summary – 3Q'2020: FFO and AFFO
Financial Summary – 3Q’2020 Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) Three months ended September 30, Nine months ended September 30, (unaudited, in thousands except per share amounts) 2020 2019 2020 2019 Net income $ 12,336 $ 14,106 $ 36,823 $ 33,399 Depreciation and am
Slide 23: Financial Summary – 3Q'2020: Consolidated Balance Sheets
Financial Summary – 3Q’2020 Consolidated Balance Sheets September 30, 2020 December 31, 2019 (in thousands, except share and per share amounts) (unaudited) (audited) ASSETS Investments: Real estate investments, at cost: Land and improvements $ 686,908 $ 588,279 Building and improvements 1,423,033 1,
Slide 24: Financial Summary – 3Q'2020: GAAP Reconciliations
Financial Summary – 3Q’2020 GAAP Reconciliations to EBITDAre, GAAP NOI, Cash NOI and Estimated Run Rate Metrics Three Months Ended (unaudited, in thousands) September 30, 2020 Net income $ 12,336 Interest expense 7,651 Depreciation and amortization 13,966 Interest income (58) Income tax expense 55 E
Slide 25: Financial Summary – 3Q'2020: Market Capitalization, Debt Summary and Leverage
Financial Summary – 3Q’2020 Market Capitalization, Debt Summary and Leverage Metrics (dollars in thousands, except share and per share amounts) September 30, 2020 Rate Maturity1 Secured debt: Series 2017-1, Class A $ 158,513 4.10% 3.7 years Series 2017-1, Class B 15,669 5.11% 3.7 years Total secured
Slide 26: Glossary: Supplemental Reporting Measures and Other Terms
Glossary Supplemental Reporting Measures and Other Terms 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 eff
Slide 27: Glossary: Supplemental Reporting Measures and Other Terms
Glossary Supplemental Reporting Measures and Other Terms 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 l
Slide 28: Glossary: Adjusted EBITDAre, Adjusted NOI and GE Seed Portfolio
Glossary Supplemental Reporting Measures and Other Terms Adjusted EBITDAre / Adjusted NOI / Adjusted Cash NOI GE Seed Portfolio We further adjust EBITDAre, NOI and Cash NOI i) based on an estimate GE seed portfolio means our acquisition of a portfolio of 262 net leased calculated as if all investmen
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