Essential Properties Realty Trust, Inc. · NYSE:EPRT
Essential Properties Realty Trust — Q4 2024 Earnings Presentation
35 slides from Essential Properties Realty Trust's earnings presentation, Feb 13, 2025
Slide 1: Investor Presentation and Supplemental Information Fourth Quarter 2024
Investor Presentation and Supplemental Information Fourth Quarter 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: Table of Contents
Table of Contents Business Update 2 Investment Highlights 3 Portfolio Review 6 Leverage & Liquidity 16 Peer Comparison 19 Commitment to ESG 22 Financials 24 Glossary 30 1 Investor Presentation and Supplemental Information | As of December 31, 2024
Slide 4: Fourth Quarter 2024 Operating Update
Fourth Quarter 2024 Operating Update Continuing to Execute Our Business Plan • Stable Portfolio: 99.7% leased; same-store rent growth has averaged 1.4% over the last four quarters Healthy • Strong Coverage: Unit-level coverage of 3.5x with ~99% of ABR required to report unit-level P&Ls Net Lease • D
Slide 5: Investment Highlights
Investment Highlights EPRT Board Meeting Management Presentation First Quarter Ended March 31, 2023 3 Investor Presentation and Supplemental Information | As of December 31, 2024
Slide 6: Investment Highlights
Investment Highlights Differentiated Model Built for Higher Growth with Lower Risk, Addressing a Large and Underserved Marketplace • Consistent sector leading annual AFFO growth of ~9%1 per share since IPO Higher Growth with • Methodically expanding the pipeline with compelling risk-adjusted returns
Slide 7: Historical Credit Performance Comparable to Investment Grade (BBB-) Bonds
Historical Credit Performance Comparable to Investment Grade (BBB-) Bonds1 Disciplined Underwriting Approach — Four Key Risk Mitigants Provide Downside Protection Business Concept & Unit-Level Profitability Tenant Corporate Credit Analysis High Unit-Level Coverage Conservative rental rates and cash
Slide 8: Portfolio Review
Portfolio Review 6 Investor Presentation and Supplemental Information | As of December 31, 2024
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: Portfolio Summary
Portfolio Summary Tenant and Industry Diversification 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 Properties2 SqFt3 SqFt3 Car Washes Service $ 65,352 14.2% 195 993,402 $ 6
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 ~77% 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: Investment Summary
Net Investment Activity Investment Summary $360,000 $333,910 $333,435 $314,865 $307,615 $320,000 $277,361 $280,000 $248,770 Activity ($000s) $240,000 $213,327 Investment $207,147 $200,000 $160,000 $120,000 $80,000 $40,000 $— Investments1 1Q'23 2Q'23 3Q'23 4Q'23 1Q'24 2Q'24 3Q'24 4Q'24 Number of Tran
Slide 13: Disposition Summary
Net Investment Activity Disposition Summary $80,000 $70,000 $60,449 $60,000 Activity ($000s)1 $50,000 Disposition $41,736 $40,000 $37,161 $28,496 $30,602 $30,000 $20,000 $16,973 $11,949 $10,000 $4,783 $— Dispositions 1Q'23 2Q'23 3Q'23 4Q'23 1Q'24 2Q'24 3Q'24 4Q'24 1,2 Realized Gain/(Loss) (2.1)% (0.
Slide 14: Leasing Summary: Lease Escalations
Leasing Summary Lease Escalations Lease Escalation Frequency Lease Escalation Type Weighted Average CPI Flat Lease Escalation Frequency % of Cash ABR Annual Escalation Rate 1,2 1.8% 1.6% Annually 82.0% 1.7% Every 2 years 0.9% 1.5% Every 3 years 0.1% 1.7% Every 4 years 0.2% 2.0% Every 5 years 13.6% 1
Slide 15: Leasing Summary: Same-Store Analysis
Leasing Summary Same-Store Analysis Same-Store Portfolio Performance ¹ Contractual Cash Rent ($000s)² % Type of Business 4Q'23 4Q'24 Change Service $ 62,838 $ 63,666 1.3% Experience 10,656 10,833 1.7% Retail 3,273 3,306 1.0% Industrial 2,886 2,940 1.9% Total Same-Store Rent $ 79,653 $ 80,745 1.4% Tr
Slide 16: Portfolio Summary: Portfolio Health
Portfolio Summary Portfolio Health Tenant Financial Reporting Requirements % of Cash ABR by Unit-Level Coverage Tranche1 < 1.00x: % of Cash 3.1% Reporting Requirements ABR Unit-Level Financial Information 98.9% 1.00x to 1.49x: Corporate-Level Financial Reporting 98.8% 10.3% Both Unit-Level and Corpo
Slide 17: Leasing Expiration Schedule, Renewal Activity and Statistics
Leasing Summary Leasing Expiration Schedule, Lease Renewal Activity and Statistics Annual Lease Expiration by Cash ABR Leasing Activity – Trailing 12 Months Cash ABR % of # of Wgt. Avg. Lease Terminated Leases Re-Leased Total Year1 ($000)s Cash ABR Properties2 Coverage3 $(000)s Renewals Without Vaca
Slide 18: Leverage & Liquidity
Leverage & Liquidity 16 Investor Presentation and Supplemental Information | As of December 31, 2024
Slide 19: 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 Maturities: Weighted avg. maturity 4.2 yrs Measure Actual3 • Low-Cost Debt Structure: Weighted avg. interest rate 4.1% Aggregate Debt <
Slide 20: Strong Liquidity to Drive Leading AFFO/sh Growth
Strong Liquidity to Drive Leading AFFO/sh Growth $1.0B of Liquidity and Balance Sheet Capacity to Support External Growth Aspirations Strong Liquidity to Near-Term Investment Opportunities Pro Forma 4Q'24 ($mm) 4Q'241 Cash $ 45.0 $ 425.8 Unused Revolver Capacity 600.0 1,000.0 Forward Equity - Unsett
Slide 21: Peer Comparison
Peer Comparison 19 Investor Presentation and Supplemental Information | As of December 31, 2024
Slide 22: 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 Investment P
Slide 23: Relative Valuation, Growth and Leverage
Relative Valuation, Growth and Leverage Compelling Valuation, Projected AFFO/sh Growth Relative to Net Lease Peers, and Conservative Leverage 2025E AFFO per Share Multiple1 2025E AFFO per Share Growth2 17.1x 16.9x 15.4x 8.1% 13.0x 12.7x 11.6x 11.5x 11.2x 11.4x 4.3% 4.0% 3.8% 3.5% 3.2% 3.0% 2.5% 1.7%
Slide 24: Commitment to ESG
Commitment to ESG 22 Investor Presentation and Supplemental Information | As of December 31, 2024
Slide 25: Environmental, Social and Governance
Environmental, Social and Governance Strong Governance, Innovative Approach to Sustainability, Commitment to Diversity, Equity & Inclusion Plan Governance Environmental Social • Leading governance practices, Board Implementing sustainability upgrades at • Providing dynamic work environment, accounta
Slide 26: Financials
Financials 24 Investor Presentation and Supplemental Information | As of December 31, 2024
Slide 27: Financial Summary: Consolidated Statements of Operations
Financial Summary Consolidated Statements of Operations Three Months Ended December 31, Year Ended December 31, (in thousands, except share and per share data) 2024 2023 2024 2023 (Unaudited) (Unaudited) (Unaudited) (Audited) Revenues: Rental revenue1,2 $ 112,358 $ 92,937 $ 425,749 $ 339,897 Interes
Slide 28: Financial Summary: FFO and AFFO
Financial Summary Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) Three Months Ended December 31, Year Ended December 31, (unaudited, in thousands except per share amounts) 2024 2023 2024 2023 Net income $ 55,548 $ 49,271 $ 203,638 $ 191,415 Depreciation and amortization of rea
Slide 29: Financial Summary: Consolidated Balance Sheets
Financial Summary Consolidated Balance Sheets (in thousands, except share and per share amounts) December 31, 2024 December 31, 2023 ASSETS (Unaudited) (Audited) Investments: Real estate investments, at cost: Land and improvements $ 1,865,610 $ 1,542,302 Building and improvements 3,536,000 2,938,012
Slide 30: GAAP Reconciliations to EBITDAre, NOI and Run Rate Metrics
Financial Summary GAAP Reconciliations to EBITDAre, GAAP NOI, Cash NOI and Estimated Run Rate Metrics Three Months Ended (unaudited, in thousands) December 31, 2024 Net income $ 55,548 Depreciation and amortization 32,829 Interest expense 23,958 Interest income (559) Income tax expense 157 EBITDA 11
Slide 31: Market Capitalization, Debt Summary and Leverage Metrics
Financial Summary Market Capitalization, Debt Summary and Leverage Metrics (dollars in thousands, except share and per share amounts) December 31, 2024 Rate Wtd. Avg. Maturity Unsecured debt: February 2027 term loan1 $ 430,000 2.5% 2.1 years January 2028 term loan1 400,000 4.7% 3.1 years February 20
Slide 32: Glossary
Glossary 30 Investor Presentation and Supplemental Information | As of December 31, 2024
Slide 33: Glossary: Supplemental Reporting Measures
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 34: Glossary: Supplemental Reporting Measures
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 35: Glossary: Supplemental Reporting Measures
Glossary Supplemental Reporting Measures Adjusted EBITDAre / Adjusted NOI / Adjusted Cash NOI GAAP Cap Rate We further adjust EBITDAre, NOI and Cash NOI i) based on an estimate GAAP Cap Rate means annualized rental income computed in calculated as if all investment and disposition activity that took
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