Essential Properties Realty Trust, Inc. · NYSE:EPRT
Essential Properties Realty Trust — Investor Presentation (December 2019)
31 slides from Essential Properties Realty Trust's investor presentation, Dec 10, 2019
Slide 1: Investor Presentation – December 2019
Investor Presentation – December 2019 Exhibit 99.1
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 93.5% Average Investment Per Property $2.0mm Internally-Originated Sale-Leasebacks2,3 81.2% Average Quarterly Investment Activity4 $145mm As of September 30, 2019. Based on cash ABR as of September 30, 2019. Exclusive of GE Seed
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
Oct 2019 Nov 2019 Building Essential Properties 242, 242, 242 Our History Cumulative Investment Activity1 Partnered with Eldridge Industries to build net lease investment platform Feb 2016 Aug 2016 Dec 2016 Jun 2018 Mar 2019 Apr 2019 Jul 2019 Aug 2019 Jun 2016 Began core investing activities and clo
Slide 6: Key Accomplishments Since IPO
Key Accomplishments Since IPO 242, 242, 242 Maintained Investment Discipline While Generating Compelling Growth Consistent Underwriting and Investment Growth: Over the trailing 12 months1, EPRT has invested ~$145mm on avg. per quarter at a 7.5% wgt. avg. cash cap rate with 76% of transactions being
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 September 30, 2019 that was
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 (#)1 917 Square Footage (mm) 7.5 Tenants
Slide 10: Top Tenant Concentration
Top 10 Tenant Concentration EPRT Has 199 Tenants Across 917 Properties with the Top 10 Representing 192 Properties and 25.5% of Cash ABR 242, 242, 242 Top 10 Tenant1 Properties % of Cash ABR 74 3.7% 13 3.0% 4 2.8% 5 2.7% 34 2.7% 12 2.3% 13 2.3% 5 2.1% 25 2.1% 7 2.0% Top 10 Tenants 192 25.5% Total 91
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
Disciplined Underwriting Leading to Healthy Portfolio Metrics 98.0% 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 Only 2.1% of
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 ~$145mm per quarter over the last eight quarters Cash ABR for the
Slide 14: Active Asset Management: Dispositions at Attractive Cap Rates
Dispositions Have Traded at Attractive Cap Rates: Since inception in 2016 through 3Q 2019, we have sold 137 properties for $187mm and achieved a weighted average cash cap rate of 6.6% on the sale of 97 leased properties8 Trailing 12-Month (TTM) Sales Came from a Diverse Mix of Industries: No single
Slide 15: Growth Oriented Balance Sheet
Growth Oriented Balance Sheet $2.8 Billion Total Capitalization1,2 Selected Credit Ratios 242, 242, 242 Share price as of December 5, 2019. Debt balances are as of December 9, 2019. ($mm) Balance Sheet Primed for Growth Long-Term Leverage Target: <6.0x Net Debt-to-Annualized Adjusted EBITDAre 3Q 201
Slide 16: Debt Structure Allows for Capital Flexibility
Debt Structure Allows for Capital Flexibility Debt Maturity Schedule1,2,3 242, 242, 242 On December 9, 2019, the Company borrowed $250mm of its available $430mm unsecured seven-year term loan, and fully paid down the outstanding balance on its $400mm unsecured revolving line of credit. Maturity figu
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 September 30, 2019. Public
Slide 18: Public Net Lease REIT Benchmarking
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 December 5, 2019. Companies may define adjusted annualized EBITDAre differently. Accord
Slide 19: 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 December 5, 2019. 2019E AFFO per share multiple calculated based on current price per share and FactSet mean 2019E AFFO per share estimates.
Slide 20: Implied Nominal Cap Rate – Sensitivity Analysis
(unaudited, in thousands) Three Months Ended, September 30, 2019 Adjusted net operating income ("NOI")1 $37,816 Straight-line rental revenue, net1 (3,086) Other amortization and non-cash charges 292 Adjusted Cash NOI 35,022 Annualized Adjusted Cash NOI 140,088 Applied Cap Rate 5.25% 5.00% 4.75% 4.50
Slide 21: Appendix
+ Appendix
Slide 22: Leasing Summary: Same-Store Analysis
Leasing Summary Same-Store Analysis 242, 242, 242 Same-Store Portfolio: All properties owned, excluding new sites under construction, for the entire same-store measurement period, which is July 1, 2018 through September 30, 2019. The same-store portfolio for 3Q 2019 is comprised of 538 properties an
Slide 23: Leasing Summary: Lease Escalations
Leasing Summary Lease Escalations 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 1.6%, which assumes 0.0% change in annual CPI 7% of contractual rent escalations by c
Slide 24: Financial Summary – 3Q 2019: Consolidated Statements of Operations
Financial Summary – 3Q 2019 Consolidated Statements of Operations 242, 242, 242 Includes contingent rent (based on a percentage of the tenant's gross sales at the leased property) of $142, $194, $717 and $877 for the three and nine months ended September 30, 2019 and 2018, respectively. Includes rei
Slide 25: Financial Summary – 3Q 2019: FFO and AFFO
Financial Summary – 3Q 2019 Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) 242, 242, 242 Includes non-recurring expenses of $2,473 for costs and charges incurred in connection with the Eldridge secondary offering and $275 for a provision for potential settlement of litigation
Slide 26: Financial Summary – 3Q 2019: Consolidated Balance Sheets
Financial Summary – 3Q 2019 Consolidated Balance Sheets 242, 242, 242 September 30, 2019 December 31, 2018 (in thousands, except share and per share amounts) (unaudited) (audited) ASSETS Investments: Real estate investments, at cost: Land and improvements $ 547,549 $ 420,848 Building and improvement
Slide 27: Financial Summary – 3Q 2019: GAAP Reconciliations
Financial Summary – 3Q 2019 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 investments in and dispositions of real estate made during the three months ended September 30, 201
Slide 28: Market Capitalization, Debt Summary and Leverage Metrics
Financial Summary – 3Q 2019 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 S
Slide 29: Glossary: Supplemental Reporting Measures and Other Terms
Glossary Supplemental Reporting Measures and Other Terms 242, 242, 242 FFO, Core 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”), core funds from operations (“Core FFO”) and adju
Slide 30: Glossary: Supplemental Reporting Measures and Other Terms
Glossary Supplemental Reporting Measures and Other Terms 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 lo
Slide 31: Glossary: Adjusted EBITDAre / Adjusted NOI / Adjusted Cash NOI
Glossary Supplemental Reporting Measures and Other Terms 242, 242, 242 Adjusted EBITDAre / Adjusted NOI / Adjusted Cash NOI We further adjust EBITDAre, NOI and Cash NOI i) based on an estimate calculated as if all acquisition and disposition activity that took place during the quarter had been made
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