Essential Properties Realty Trust, Inc. · NYSE:EPRT
Essential Properties Realty Trust — Investor Presentation (June 2019)
32 slides from Essential Properties Realty Trust's investor presentation, Jun 4, 2019
Slide 1: Investor Presentation – June 2019
Investor Presentation – June 2019
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 91.7% Average Investment Per Property $2.1mm Internally-Originated Sale-Leasebacks2,3 82.0% Average Quarterly Investment Activity4 $128mm As of March 31, 2019. Based on cash ABR as of March 31, 2019. Exclusive of GE Seed Portfoli
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
1Q 2019 Building Essential Properties 242, 242, 242 Our History Cumulative Acquisition Volume1 Partnered with Eldridge Industries to build net lease investment platform Feb 2016 Jun 2016 Aug 2016 Dec 2016 Jan 2017 Feb 2017 Jul 2017 Jun 2018 Mar 2016 Commenced investment activities with a $280mm port
Slide 6: Key Accomplishments Since IPO
Key Accomplishments Since IPO 242, 242, 242 Maintained Investment Discipline While Generating Compelling Growth Consistent Investment Underwriting and Growth: Over the trailing 12 months1, EPRT has invested $142.5mm on avg. per quarter at a 7.6% wgt. avg. cash cap rate with 82.9% of transactions bei
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 March 31, 2019 that was acq
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 (#)1 711 Square Footage (mm) 6.4 Tenants
Slide 10: Top Tenant Concentration
Top 10 Tenant Concentration Essential Has 172 Tenants Across 711 Properties with the Top 10 Representing 181 Properties and 30.7% of Cash ABR 242, 242, 242 Top 10 Tenant1 Properties % of Cash ABR 77 4.5% 5 3.9% 13 3.6% 15 3.3% 5 3.2% 13 2.7% 26 2.5% 3 2.3% 19 2.3% 5 2.2% Top 10 Tenants 181 30.7% Tot
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 other soft goods retailers At-Risk Retail Categories No exposure to pharmacy, dollar stores or discount retailers; de minimis exposure to
Slide 12: Disciplined Underwriting Leading to Healthy Portfolio Metrics
19.1% 40.6% Disciplined Underwriting Leading to Healthy Portfolio Metrics 97.7% 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
Slide 13: Established and Proven Investment Infrastructure
Established and Proven Investment Infrastructure Scalable Platform Allows for Consistent and Attractive Investment Activity without Sacrificing Underwriting Standards and Investment Focus 242, 242, 242 Investment activity has averaged $128mm per quarter over the last eight quarters Cash ABR for the
Slide 14: Active Asset Management: Dispositions
Dispositions Have Traded at Attractive Cap Rates: Since inception in 2016 through 1Q’19, we have sold 116 properties for over $141mm and achieved a weighted average cash cap rate of 6.6% on the sale of 78 leased properties7 Trailing 12-Month (TTM) Sales Came from a Diverse Mix of Industries: No sing
Slide 15: Growth Oriented Balance Sheet
Growth Oriented Balance Sheet $2.1 Billion Total Capitalization1,2 Selected Credit Ratios 242, 242, 242 Share price of $20.97 as of May 30, 2019. We adjusted our March 31, 2019 balance sheet to include various subsequent events. On May 17, 2019, the Company announced it fully funded its $200 million
Slide 16: Debt Structure Allows for Capital Flexibility
Debt Structure Allows for Capital Flexibility Debt Maturity Schedule1,2,3,4 242, 242, 242 As of March 31, 2019. We adjusted our March 31, 2019 balance sheet to include various subsequent events. On May 17, 2019, the Company announced it fully funded its $200 million senior unsecured term loan in add
Slide 17: Differentiated Net Lease Investment Opportunity
Differentiated Net Lease Investment Opportunity Strong Unit-Level Coverage2 Service-Oriented & Experience-Based Tenant Profile Limited Immediate-Term Lease Maturities Smaller-Scale Net Leased Properties ü ü ü ü Source: Public filings. Note: Essential Properties data as of March 31, 2019. Public net
Slide 18: Public Net Lease REIT Benchmarking: AFFO Multiple and Growth
Public Net Lease REIT Benchmarking 2019E AFFO per Share Multiple1 2019E AFFO per Share Growth2 Source: Public filings, FactSet and SNL. Note: Market data as of May 30, 2019. 2019E AFFO per share multiple calculated based on current price per share and FactSet mean 2019E AFFO per share estimates. EPR
Slide 19: Public Net Lease REIT Benchmarking: Payout, Leverage, Yield
Public Net Lease REIT Benchmarking 2020E 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 May 30, 2019. Companies may define adjusted annualized EBITDAre differently. Accordingl
Slide 20: Net Asset Value Sensitivity
(unaudited, in thousands) Three Months Ended, March 31, 2019 Adjusted net operating income ("NOI")1 $31,226 Straight-line rental revenue, net1 (3,089) Other amortization and non-cash charges 229 Adjusted Cash NOI 28,366 Annualized Adjusted Cash NOI 113,464 Applied Cap Rate 5.75% 5.50% 5.25% 5.00% 4.
Slide 21: Recent Developments & Upcoming Events
Recent Developments & Upcoming Events 242, 242, 242 Recent Developments: As of May 31st for 2Q 2019: Investments1: Continued to scale portfolio by investing $53mm into high-quality net lease properties Invested in 19 properties at a 7.7% weighted average cash cap rate, 1.5% annual rent bumps, 17.8 y
Slide 22: Appendix
+ Appendix
Slide 23: Contractual Base Rent Escalation Provisions
Contractual Base Rent Escalation Provisions Provides Source of Internal Growth and a Measure of Inflation Protection 242, 242, 242 Leases contributing 98% of cash ABR provided for base rent escalation, generally ranging from 1.0% to 4.0% annually, with a weighted average annual escalation rate of 1.
Slide 24: Same-Store Analysis
Same-Store Analysis Same-Store NOI Growth of 1.8% in 1Q 2019 was Healthy vs. Our Weighted Average Annual Rent Escalation of ~1.5% 242, 242, 242 Same-Store Portfolio: All properties owned, excluding new sites under construction, for the entire same-store measurement period, which is January 1, 2018 t
Slide 25: Financial Summary: Condensed Statement of Operations
Financial Summary Condensed Statement of Operations 242, 242, 242 Includes contingent rent (based on a percentage of the tenant's gross sales at the leased property) of $349 and $515 for the three months ended March 31, 2019 and 2018, respectively. Includes reimbursable income from our tenants of $7
Slide 26: Financial Summary: FFO and AFFO
Financial Summary Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) 242, 242, 242 Calculations exclude $155 from the numerator related to dividends paid on our unvested restricted share awards. Three Months Ended March 31, (unaudited, in thousands except per share amounts) 2019 2
Slide 27: Financial Summary: Consolidated Balance Sheets
Financial Summary Consolidated Balance Sheets 242, 242, 242 March 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 $ 451,459 $ 420,848 Building and improvements 956,497 885,
Slide 28: GAAP Reconciliations to EBITDAre, NOI and Cash NOI
Financial Summary 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 acquisitions and dispositions of real estate investments made during the three months ended March 31, 2019 ha
Slide 29: Market Capitalization, Debt Summary and Leverage Metrics
Financial Summary 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 mature in November 2046 but have an anticipated repayment date of November 2021. The Series 2017
Slide 30: Glossary of Supplemental Reporting Measures
Glossary Supplemental Reporting Measures 242, 242, 242 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”) and adjusted funds from operations (“AFFO”), both of which are non-GAAP fin
Slide 31: Glossary of Supplemental Reporting Measures
Glossary Supplemental Reporting Measures 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 losses (“EBITDAre”
Slide 32: Glossary of Supplemental Reporting Measures: Other Terms
Glossary of Supplemental Reporting Measures Other Terms 242, 242, 242 Cash ABR Cash ABR means annualized contractually specified cash base rent in effect as of the end of the current quarter for all of our leases (including those accounted for as direct financing leases) commenced as of that date an
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