- Third Quarter Net Income per Share of $0.27
and AFFO per Share of $0.43 - - Closed Investments of $307.6
million at an 8.1% Weighted Average Cash Cap Rate - - Issues 2025
AFFO Guidance of $1.84 to $1.89 per Share -
Essential Properties Realty Trust, Inc. (NYSE: EPRT; “Essential
Properties” or the “Company”) today announced operating results for
the three and nine months ended September 30, 2024.
Third Quarter 2024 Financial and Operating
Highlights:
Operating Results (compared to Third
Quarter 2023):
• Investments (57 properties)
$ Invested
$307.6 million
Weighted Avg Cash Cap Rate
8.1%
• Dispositions (9 properties)
Net Proceeds
$17.0 million
Weighted Avg Cash Cap Rate
6.8%
• Net Income per Share
Decreased by 7%
$0.27
• Funds from Operations ("FFO") per
Share
Increased by 7%
$0.48
• Core Funds from Operations ("Core FFO")
per Share
Increased by 7%
$0.48
• Adjusted Funds from Operations ("AFFO")
per Share
Increased by 2%
$0.43
Debt, Equity & Leverage Update:
• New $450mm 2030 Term Loan (fully swapped
at 4.9% rate)
Amount drawn at Sept. 30,
2024
$450.0 million
• Equity Raised (Gross) - ATM Program
(1)
$31.04/share
$312.4 million
• Pro Forma Net Debt to Annualized
Adjusted EBITDAre (2)
As of Quarter End
3.5x
Year to Date 2024 Financial and Operating Highlights:
Operating Results (compared to YTD Third
Quarter 2023):
• Investments (219 properties)
$ Invested
$890.3 million
Weighted Avg Cash Cap Rate
8.1%
• Dispositions (22 properties)
Net Proceeds
$33.7 million
Weighted Avg Cash Cap Rate
6.8%
• Net Income per share
Decreased by 11%
$0.84
• FFO per share
Increased by 8%
$1.41
• Core FFO per share
Increased by 8%
$1.41
• AFFO per share
Increased by 5%
$1.29
Debt & Equity Activity:
• Equity Raised (Gross) - Follow-On
Offering (March 14, 2024) (1)
$24.75/share
$256.2 million
• Equity Raised (Gross) - ATM Program
(1)
$29.03/share
$502.8 million
____________________
1.
All shares were sold on a forward basis
and a total of 22,937,762 shares remain unsettled for estimated net
proceeds of $626.0 million.
2.
See page 10 for detailed calculation.
Activity Subsequent to Third Quarter 2024:
• Investments
$ Invested
$50.7 million
• Dispositions
$ Gross Proceeds
$4.0 million
CEO Comments
Commenting on the third quarter 2024 results, the Company's
President and Chief Executive Officer, Pete Mavoides, said, “In the
third quarter, our portfolio continued to perform well, as our
middle market tenancy broadly remained healthy. The normalization
of capital markets afforded us the opportunity to stay on the front
foot, raising over $700 million of debt and equity capital, taking
our liquidity position to over $1 billion. While this normalization
is likely to bring increased competition on investments, our strong
balance sheet and differentiated investment strategy position us
for continued success in 2025. Our AFFO per share guidance for 2025
reflects these dynamics as we look to continue to execute our
business plan."
Portfolio Highlights
The Company’s investment portfolio as of September 30, 2024 is
summarized as follows:
September 30, 2024
Number of properties
2,053
Weighted average lease term (WALT)
14.1 years
Weighted average rent coverage ratio
3.6x
Number of tenants
407
Number of industries
16
Weighted average occupancy
99.9%
Total square feet of rentable space
21,037,576
Cash ABR - service-oriented or
experience-based
93.2%
Cash ABR - properties subject to master
lease
65.6%
Portfolio Update
Investments
During the three months ended September 30, 2024, the Company's
$307.6 million of investment activity had a weighted average
closing date of September 7, 2024. Additional details about the
Company’s investment activity during the three and nine months
ended September 30, 2024 are summarized as follows:
Quarter Ended September
30, 2024
Year to Date September
30, 2024
Investments:
Investment volume
$307.6 million
$890.3 million
Number of transactions
37
108
Property count
57
219
Weighted average cash / GAAP cap rate
8.1%/9.1%
8.1%/9.2%
Weighted average lease escalation
2.1%
2.0%
% Subject to master lease
57%
71%
% Sale-leaseback transactions
89%
96%
% Existing relationship
79%
82%
% Required financial reporting
(tenant/guarantor)
100%
100%
WALT
17.2 years
17.4 years
Dispositions
The Company’s disposition activity during the three and nine
months ended September 30, 2024 is summarized as follows:
Quarter Ended September
30, 2024
Year to Date September
30, 2024
Dispositions:
Net proceeds
$17.0 million
$33.7 million
Number of properties sold
9
22
Net gain / (loss)
$(0.2) million
$1.4 million
Weighted average cash cap rate (excluding
vacant properties and sales subject to a tenant purchase option
)
6.8%
6.8%
Loan Repayments
Loan repayments to the Company during the three and nine months
ended September 30, 2024 are summarized as follows:
Quarter Ended September
30, 2024
Year to Date September
30, 2024
Loan Repayments:
Proceeds—Principal
$3.0 million
$7.7 million
Number of properties
4
14
Weighted average interest rate
7.0%
7.1%
Leverage and Liquidity
The Company's leverage and liquidity as of September 30, 2024
are summarized in the following table.
September 30, 2024
Pro Forma (1) September 30,
2024
Leverage:
Net debt to Annualized Adjusted
EBITDAre
4.8x
3.5x
Liquidity:
Cash and cash equivalents and restricted
cash
$38.7 million
$584.7 million
Unused revolving credit facility
capacity
$520.0 million
$600.0 million
Forward equity sales - unsettled
$626.0 million
—
Total available liquidity
$1.2 billion
$1.2 billion
ATM Program:
2024 ATM Program initial availability
$500.0 million
Aggregate gross sales under the 2024 ATM
Program
$340.0 million
Availability remaining under the 2024 ATM
Program
$160.0 million
Average price per share of gross sales
since inception in June 2024
$30.68
____________________
1.
Pro forma adjustments have been made to
reflect the 22,937,762 unsettled shares sold on a forward basis
through the Company's March 2024 follow-on offering and through its
ATM Program as if they had been physically settled for cash on
September 30, 2024.
Equity Activity
The Company's equity activity during the three months ended
September 30, 2024 is summarized in the following table.
Primary Offerings
ATM Program
Total
Shares
Price
(Net) (1)
Shares
Price
(Net) (1)
Shares
Price
(Net) (1)
Net Proceeds (000s)
Forward Shares Unsettled - June 30,
2024
7,828,852
$23.48
5,047,448
$26.69
12,876,300
$24.74
$318,568
Shares Sold - Current Quarter
—
—
10,061,462
30.55
10,061,462
30.55
307,404
Shares Settled - Current Quarter
—
—
—
—
—
—
—
Forward Shares Unsettled - September 30,
2024
7,828,852
15,108,910
22,937,762
$27.29
$625,972
____________________
1.
All prices are inclusive of forward price
adjustments as of September 30, 2024.
Guidance
2025 Guidance
The Company currently expects 2025 AFFO per share on a fully
diluted basis to be within a range of $1.84 to $1.89. The guidance
range includes an estimate for investment volume of $900 million to
$1.1 billion, and Cash G&A expense of $28 million to $31
million. Additionally, the guidance range includes an estimate for
the dilutive effect of unsettled shares under the Company's
outstanding forward sale agreements as calculated under the
treasury stock method.
2024 Guidance
The Company reiterates its previously issued expectation that
2024 AFFO per share on a fully diluted basis will be within a range
of $1.72 to $1.75.
Note: The Company does not provide guidance for the most
comparable GAAP financial measure, net income, or a reconciliation
of the forward-looking non-GAAP financial measure of AFFO to net
income computed in accordance with GAAP, because it is unable to
reasonably predict, without unreasonable efforts, certain items
that would be contained in the GAAP measure, including items that
are not indicative of the Company's ongoing operations, such as,
without limitation, potential impairments of real estate assets,
net gain/loss on dispositions of real estate assets, changes in
allowance for credit losses and stock-based compensation expense.
These items are uncertain, depend on various factors, and could
have a material impact on the Company's GAAP results for the
guidance period.
Dividend Information
As previously announced, on September 5, 2024, Essential
Properties' board of directors declared a cash dividend of $0.29
per share of common stock for the quarter ended September 30, 2024.
The third quarter 2024 dividend represents an annualized dividend
of $1.16 per share of common stock. The dividend was paid on
October 11, 2024 to stockholders of record as of the close of
business on September 30, 2024.
Conference Call Information
In conjunction with the release of Essential Properties’
operating results, the Company will host a conference call on
Thursday, October 24, 2024 at 10:00 a.m. EDT to discuss the
results. To access the conference, dial 877-407-9208
(International: 201-493-6784). A live webcast will also be
available in listen-only mode by clicking on the webcast link in
the Investor Relations section at www.essentialproperties.com.
A telephone replay of the conference call can also be accessed
by calling 844-512-2921 (International: 412-317-6671) and entering
the access code: 13749125. The telephone replay will be available
through November 7, 2024.
A replay of the conference call webcast will be available on our
website approximately three hours after the conclusion of the live
broadcast. The webcast replay will be available for 90 days. No
access code is required for this replay.
Supplemental Materials
The Company’s Supplemental Operating & Financial Data—Third
Quarter 2024 is available on Essential Properties’ website at
investors.essentialproperties.com.
About Essential Properties Realty Trust, Inc.
Essential Properties Realty Trust, Inc. is an internally managed
REIT that acquires, owns and manages primarily single- tenant
properties that are net leased on a long-term basis to companies
operating service-oriented or experience-based businesses. As of
September 30, 2024, the Company’s portfolio consisted of 2,053
freestanding net lease properties with a weighted average lease
term of 14.1 years and a weighted average rent coverage ratio of
3.6x. In addition, as of September 30, 2024, the Company’s
portfolio was 99.9% leased to 407 tenants operating 583 different
concepts in 16 industries across 49 states.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws. When used in this press
release, the words “estimate,” “anticipate,” “expect,” “believe,”
“intend,” “may,” “will,” “should,” “seek,” “approximately” or
“plan,” or the negative of these words and phrases or similar words
or phrases that are predictions of or indicate future events or
trends and that do not relate solely to historical matters are
intended to identify forward-looking statements. You can also
identify forward-looking statements by discussions of strategy,
plans or intentions of management. Forward-looking statements
involve numerous risks and uncertainties and you should not rely on
them as predictions of future events. Forward-looking statements
depend on assumptions, data or methods that may be incorrect or
imprecise and the Company may not be able to realize them. The
Company does not guarantee that the transactions and events
described will happen as described (or that they will happen at
all). You are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date of this
press release. While forward-looking statements reflect the
Company’s good faith beliefs, they are not guarantees of future
performance. The Company undertakes no obligation to publicly
release the results of any revisions to these forward-looking
statements that may be made to reflect events or circumstances
after the date of this press release or to reflect the occurrence
of unanticipated events, except as required by law. In light of
these risks and uncertainties, the forward-looking events discussed
in this press release might not occur as described, or at all.
Additional information concerning factors that could cause
actual results to differ materially from these forward-looking
statements is contained in the company’s Securities and Exchange
Commission (the "Commission”) filings, including, but not limited
to, the Company’s most recent Annual Report on Form 10-K. Copies of
each filing may be obtained from the Company or the Commission.
Such forward-looking statements should be regarded solely as
reflections of the Company’s current operating plans and estimates.
Actual operating results may differ materially from what is
expressed or forecast in this press release.
The results reported in this press release are preliminary and
not final. There can be no assurance that these results will not
vary from the final results reported in the Company’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2024 that
it will file with the Commission.
Essential Properties Realty
Trust, Inc.
Consolidated Statements of
Operations
Three months ended September
30,
Nine months ended September
30,
(in thousands, except share and per
share data)
2024
2023
2024
2023
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenues:
Rental revenue1,2
$
110,512
$
86,969
$
313,392
$
246,960
Interest on loans and direct financing
lease receivables
6,477
4,568
16,075
13,548
Other revenue
143
120
434
1,353
Total revenues
117,132
91,657
329,901
261,861
Expenses:
General and administrative
8,623
7,174
26,691
23,343
Property expenses2
1,536
1,359
3,685
3,346
Depreciation and amortization
30,879
26,212
89,332
74,779
Provision for impairment of real
estate
5,695
165
12,259
1,645
Change in provision for credit losses
246
(63
)
249
(85
)
Total expenses
46,979
34,847
132,216
103,028
Other operating income:
(Loss) gain on dispositions of real
estate, net
(243
)
1,859
1,402
19,320
Income from operations
69,910
58,669
199,087
178,153
Other (expense)/income:
Loss on debt extinguishment
—
(116
)
—
(116
)
Interest expense
(21,627
)
(12,633
)
(54,586
)
(36,837
)
Interest income
1,169
330
2,510
1,416
Other income
—
—
1,548
—
Income before income tax
expense
49,452
46,250
148,559
142,616
Income tax expense
159
162
470
472
Net income
49,293
46,088
148,089
142,144
Net income attributable to
non-controlling
(153
)
(174
)
(460
)
(532
)
Net income attributable to
stockholders
$
49,140
$
45,914
$
147,629
$
141,612
Basic weighted-average shares
outstanding
175,330,976
155,917,176
172,656,778
150,314,073
Basic net income per share
$
0.28
$
0.29
$
0.85
$
0.94
Diluted weighted-average shares
outstanding
179,610,599
157,182,984
175,365,280
151,609,426
Diluted net income per share
$
0.27
$
0.29
$
0.84
$
0.94
____________________
1.
Includes contingent rent (based on a
percentage of the tenant's gross sales at the leased property) of
$285, $198, $619 and $518 for the three and nine months ended
September 30, 2024 and 2023, respectively.
2.
Includes reimbursable income or
reimbursable expenses from the Company’s tenants of $1,172, $820,
$2,333 and $2,161 for the three and nine months ended September 30,
2024 and 2023, respectively.
Essential Properties Realty
Trust, Inc.
Consolidated Balance
Sheets
(in thousands, expect share and per
share amounts)
September 30, 2024
December 31, 2023
(Unaudited)
(Audited)
ASSETS
Investments:
Real estate investments, at cost:
Land and improvements
$
1,799,183
$
1,542,302
Building and improvements
3,302,198
2,938,012
Lease incentive
18,731
17,890
Construction in progress
200,725
96,524
Intangible lease assets
94,894
89,209
Total real estate investments, at cost
5,415,731
4,683,937
Less: accumulated depreciation and
amortization
(450,454
)
(367,133
)
Total real estate investments, net
4,965,277
4,316,804
Loans and direct financing lease
receivables, net
336,210
223,854
Real estate investments held for sale,
net
6,882
7,455
Net investments
5,308,369
4,548,113
Cash and cash equivalents
32,656
39,807
Restricted cash
6,055
9,156
Straight-line rent receivable, net
137,729
107,545
Derivative assets
17,823
30,980
Rent receivables, prepaid expenses and
other assets, net
29,423
32,660
Total assets
$
5,532,055
$
4,768,261
LIABILITIES AND EQUITY
Unsecured term loans, net of deferred
financing costs
$
1,720,158
$
1,272,772
Senior unsecured notes, net
396,264
395,846
Revolving credit facility
80,000
—
Intangible lease liabilities, net
10,894
11,206
Dividend payable
51,124
47,182
Derivative liabilities
40,403
23,005
Accrued liabilities and other payables
31,566
31,248
Total liabilities
2,330,409
1,781,259
Commitments and contingencies
—
—
Stockholders' equity:
Preferred stock, $0.01 par value;
150,000,000 authorized; none issued and outstanding as of September
30, 2024 and December 31, 2023
—
—
Common stock, $0.01 par value; 500,000,000
authorized; 175,331,836 and 164,635,150 issued and outstanding as
of September 30, 2024 and December 31, 2023, respectively
1,753
1,646
Additional paid-in capital
3,330,653
3,078,459
Distributions in excess of cumulative
earnings
(113,232
)
(105,545
)
Accumulated other comprehensive income
(25,834
)
4,019
Total stockholders' equity
3,193,340
2,978,579
Non-controlling interests
8,306
8,423
Total equity
3,201,646
2,987,002
Total liabilities and equity
$
5,532,055
$
4,768,261
Essential Properties Realty
Trust, Inc.
Reconciliation of Non-GAAP
Financial Measures
Three months ended September
30,
Nine months ended September
30,
(unaudited, in thousands except per
share amounts)
2024
2023
2024
2023
Net income
$
49,293
$
46,088
$
148,089
$
142,144
Depreciation and amortization of real
estate
30,839
26,186
89,211
74,701
Provision for impairment of real
estate
5,695
165
12,259
1,645
(Loss) gain on dispositions of real
estate, net
243
(1,859
)
(1,402
)
(19,320
)
Funds from Operations
86,070
70,580
248,157
199,170
Non-core expense (income)1
—
116
—
(588
)
Core Funds from Operations
86,070
70,696
248,157
198,582
Adjustments:
Straight-line rental revenue, net
(11,099
)
(7,191
)
(31,259
)
(20,739
)
Non-cash interest
1,115
762
2,999
2,195
Non-cash compensation expense
2,618
2,144
8,205
7,022
Other amortization expense
261
708
736
1,244
Other non-cash adjustments
413
(68
)
974
(101
)
Capitalized interest expense
(1,486
)
(750
)
(3,690
)
(1,765
)
Adjusted Funds from Operations
$
77,892
$
66,301
$
226,122
$
186,438
Net income per share2:
Basic
$
0.28
$
0.29
$
0.85
$
0.94
Diluted
$
0.27
$
0.29
$
0.84
$
0.94
FFO per share2:
Basic
$
0.49
$
0.45
$
1.43
$
1.32
Diluted
$
0.48
$
0.45
$
1.41
$
1.31
Core FFO per share2:
Basic
$
0.49
$
0.45
$
1.43
$
1.31
Diluted
$
0.48
$
0.45
$
1.41
$
1.31
AFFO per share2:
Basic
$
0.44
$
0.42
$
1.30
$
1.23
Diluted
$
0.43
$
0.42
$
1.29
$
1.23
____________________
1.
Includes the following during the: i)
three months ended September 30, 2023 — $0.1 million loss on debt
extinguishment; ii) nine months ended September 30, 2023 — $0.1
million loss on debt extinguishment, $0.9 million of insurance
recovery income and $0.2 million of severance expense and non-cash
compensation expense.
2.
Calculations exclude $118, $101, $352 and
$304 from the numerator for the three and nine months ended
September 30, 2024 and 2023, respectively, related to dividends
paid on unvested restricted share awards and restricted share
units.
Essential Properties Realty
Trust, Inc.
Reconciliation of Non-GAAP
Financial Measures
(in thousands)
Three months ended September
30, 2024
Net income
$
49,293
Depreciation and amortization
30,879
Interest expense
21,627
Interest income
(1,169
)
Income tax expense
159
EBITDA
100,789
Provision for impairment of real
estate
5,695
(Loss) gain on dispositions of real
estate, net
243
EBITDAre
106,727
Adjustment for current quarter re-leasing,
acquisition and disposition activity1
5,052
Adjustment to exclude other non-core or
non-recurring activity2
319
Adjustment to exclude
termination/prepayment fees and certain percentage rent3
(172
)
Adjusted EBITDAre - Current Estimated
Run Rate
111,926
General and administrative expense
8,814
Adjusted net operating income
("NOI")
120,740
Straight-line rental revenue, net1
(11,713
)
Other amortization expense
261
Adjusted Cash NOI
$
109,288
Annualized EBITDAre
$
426,908
Annualized Adjusted EBITDAre
$
447,704
Annualized Adjusted NOI
$
482,960
Annualized Adjusted Cash NOI
$
437,152
____________________
1.
Adjustment is made to reflect EBITDAre,
NOI and Cash NOI as if all re-leasing activity, investments in and
dispositions of real estate and loan repayments completed during
the three months ended September 30, 2024 had occurred on July 1,
2024.
2.
Adjustment is made to i) exclude non-core
adjustments made in computing Core FFO, ii) exclude changes in the
Company's provision for credit losses and iii) eliminate the impact
of seasonal fluctuation in certain non-cash compensation expense
recorded in the period.
3.
Adjustment excludes lease termination or
loan prepayment fees and contingent rent (based on a percentage of
the tenant's gross sales at the leased property) where payment is
subject to exceeding a sales threshold specified in the lease, if
any.
Essential Properties Realty
Trust, Inc.
Reconciliation of Non-GAAP
Financial Measures
(dollars in thousands, except share and
per share amounts)
September 30, 2024
Rate
Wtd. Avg. Maturity
Unsecured debt:
February 2027 term loan1
$
430,000
2.4
%
2.4 years
January 2028 term loan1
400,000
4.6
%
3.3 years
February 2029 term loan1,2
450,000
5.4
%
4.4 years
January 2030 term loan1,2
450,000
4.9
%
5.3 years
Senior unsecured notes due July 2031
400,000
3.1
%
6.8 years
Revolving credit facility3
80,000
5.7
%
1.4 years
Total unsecured debt
2,210,000
4.2
%
4.3 years
Gross debt
2,210,000
Less: cash & cash equivalents
(32,656
)
Less: restricted cash available for future
investment
(6,055
)
Net debt
2,171,289
Equity:
Preferred stock
—
Common stock & OP units (175,885,683
shares @ $34.15/share as of 9/30/24)4
6,006,496
Total equity
6,006,496
Total enterprise value ("TEV")
$
8,177,785
Pro forma adjustments to Net debt and
TEV:5
Net debt
$
2,171,289
Less: Unsettled forward equity (22,937,762
shares @ $27.29/share as of 9/30/24)
(625,972
)
Pro forma net debt
1,545,317
Total equity
6,006,496
Common stock — unsettled forward equity
(22,937,762 shares @ $34.15/share as of 9/30/24)
783,325
Pro forma TEV
$
8,335,138
Gross Debt / Undepreciated Gross
Assets
36.9
%
Net Debt / TEV
26.6
%
Net Debt / Annualized Adjusted
EBITDAre
4.8x
Pro Forma Gross Debt / Undepreciated
Gross Assets
33.4
%
Pro Forma Net Debt / Pro Forma
TEV
18.5
%
Pro Forma Net Debt / Annualized
Adjusted EBITDAre
3.5x
____________________
1.
Rates presented for the Company's term
loans are fixed at the stated rates after giving effect to its
interest rate swaps plus applicable margin and SOFR premium of
95bps (for 2027 and 2028 Term Loans) or 105bps (for 2029 and 2030
Term Loans).
2.
Weighted average maturity calculation is
made after giving effect to extension options exercisable at the
Company's election.
3.
The Company's revolving credit facility
provides a maximum aggregate initial original principal amount of
up to $600 million. Borrowings bear interest at Term SOFR plus
applicable margin and SOFR premium of 87.5bps.
4.
Common stock & OP units as of
September 30, 2024, based on 175,331,836 common shares outstanding
and 553,847 OP units held by non-controlling interests.
5.
Pro forma adjustments have been made to
reflect the unsettled portion of shares sold on a forward basis
through the Company's March 2024 follow-on offering and through its
ATM Program as if they had been physically settled for cash on
September 30, 2024.
Non-GAAP Financial Measures and Certain Definitions
The Company’s reported results are presented in accordance with
GAAP. The Company also discloses the following non-GAAP financial
measures: FFO, Core FFO, AFFO, earnings before interest, taxes,
depreciation and amortization (“EBITDA”), EBITDA further adjusted
to exclude gains (or losses) on sales of depreciable property and
real estate impairment losses (“EBITDAre”), adjusted EBITDAre,
annualized adjusted EBITDAre, net debt, net operating income
(“NOI”) and cash NOI (“Cash NOI”). The Company believes these
non-GAAP financial measures are industry measures used by analysts
and investors to compare the operating performance of REITs.
FFO, Core FFO and AFFO
The Company computes FFO in accordance with the definition
adopted by the Board of Governors of the National Association of
Real Estate Investment Trusts ("NAREIT"). NAREIT defines FFO as
GAAP net income or loss adjusted to exclude extraordinary items (as
defined by GAAP), net gain or loss from sales of depreciable real
estate assets, impairment write-downs associated with depreciable
real estate assets and real estate-related depreciation and
amortization (excluding amortization of deferred financing costs
and depreciation of non-real estate assets), including the pro rata
share of such adjustments of unconsolidated subsidiaries. FFO is
used by management, and may be useful to investors and analysts, to
facilitate meaningful comparisons of operating performance between
periods and among the Company’s peers primarily because it excludes
the effect of real estate depreciation and amortization and net
gains and losses on sales (which are dependent on historical costs
and implicitly assume that the value of real estate diminishes
predictably over time, rather than fluctuating based on existing
market conditions).
The Company computes Core FFO by adjusting FFO, as defined by
NAREIT, to exclude certain GAAP income and expense amounts that it
believes are infrequent and unusual in nature and/or not related to
its core real estate operations. Exclusion of these items from
similar FFO-type metrics is common within the equity REIT industry,
and management believes that presentation of Core FFO provides
investors with a metric to assist in their evaluation of our
operating performance across multiple periods and in comparison to
the operating performance of our peers, because it removes the
effect of unusual items that are not expected to impact our
operating performance on an ongoing basis. Core FFO is used by
management in evaluating the performance of our core business
operations. Items included in calculating FFO that may be excluded
in calculating Core FFO include certain transaction related gains,
losses, income or expenses or other non-core amounts as they
occur.
To derive AFFO, the Company modifies its computation of Core FFO
to include other adjustments to GAAP net income related to certain
items that it believes are not indicative of the Company’s
operating performance, including straight-line rental revenue,
non-cash interest, non-cash compensation expense, other
amortization expense, other non-cash charges and capitalized
interest expense. Such items may cause short-term fluctuations in
net income but have no impact on operating cash flows or long-term
operating performance. The Company believes that AFFO is an
additional useful supplemental measure for investors to consider
when assessing the Company’s operating performance without the
distortions created by non-cash items and certain other revenues
and expenses.
FFO, Core FFO and AFFO do not include all items of revenue and
expense included in net income, they do not represent cash
generated from operating activities and they are not necessarily
indicative of cash available to fund cash requirements;
accordingly, they should not be considered alternatives to net
income as a performance measure or cash flows from operations as a
liquidity measure and should be considered in addition to, and not
in lieu of, GAAP financial measures. Additionally, our computation
of FFO, Core FFO and AFFO may differ from the methodology for
calculating these metrics used by other equity REITs and,
therefore, may not be comparable to similarly titled measures
reported by other equity REITs.
EBITDA and EBITDAre
The Company computes EBITDA as earnings before interest, income
taxes and depreciation and amortization. In 2017, NAREIT issued a
white paper recommending that companies that report EBITDA also
report EBITDAre. The Company computes EBITDAre in accordance with
the definition adopted by NAREIT. NAREIT defines EBITDAre as EBITDA
(as defined above) excluding gains (or losses) from the sales of
depreciable property and real estate impairment losses. The Company
presents EBITDA and EBITDAre as they are measures commonly used in
its industry and the Company believes that these measures are
useful to investors and analysts because they provide supplemental
information concerning its operating performance, exclusive of
certain non-cash items and other costs. The Company uses EBITDA and
EBITDAre as measures of its operating performance and not as
measures of liquidity.
EBITDA and EBITDAre do not include all items of revenue and
expense included in net income, they do not represent cash
generated from operating activities and they are not necessarily
indicative of cash available to fund cash requirements;
accordingly, they should not be considered alternatives to net
income as a performance measure or cash flows from operations as a
liquidity measure and should be considered in addition to, and not
in lieu of, GAAP financial measures. Additionally, the Company’s
computation of EBITDA and EBITDAre may differ from the methodology
for calculating these metrics used by other equity REITs and,
therefore, may not be comparable to similarly titled measures
reported by other equity REITs.
Net Debt
The Company calculates its net debt as its gross debt (defined
as total debt plus net deferred financing costs on its secured
borrowings) less cash and cash equivalents and restricted cash
available for future investment. The Company believes excluding
cash and cash equivalents and restricted cash available for future
investment from gross debt, all of which could be used to repay
debt, provides an estimate of the net contractual amount of
borrowed capital to be repaid, which it believes is a beneficial
disclosure to investors and analysts.
NOI and Cash NOI
The Company computes NOI as total revenues less property
expenses. NOI excludes all other items of expense and income
included in the financial statements in calculating net income or
loss. Cash NOI further excludes non-cash items included in total
revenues and property expenses, such as straight-line rental
revenue and other amortization and non-cash charges. The Company
believes NOI and Cash NOI provide useful information because they
reflect only those revenue and expense items that are incurred at
the property level and present such items on an unlevered
basis.
NOI and Cash NOI are not measures of financial performance under
GAAP. You should not consider the Company’s NOI and Cash NOI as
alternatives to net income or cash flows from operating activities
determined in accordance with GAAP. Additionally, the Company’s
computation of NOI and Cash NOI may differ from the methodology for
calculating these metrics used by other equity REITs and,
therefore, may not be comparable to similarly titled measures
reported by other equity REITs.
Adjusted EBITDAre / Adjusted NOI / Adjusted Cash NOI
The Company further adjusts EBITDAre, NOI and Cash NOI i) based
on an estimate calculated as if all investment and disposition
activity that took place during the quarter had occurred on the
first day of the quarter, ii) to exclude certain GAAP income and
expense amounts that the Company believes are infrequent and
unusual in nature and iii) to eliminate the impact of lease
termination or loan prepayment fees and contingent rental revenue
from its tenants which is subject to sales thresholds specified in
the lease. The Company then annualizes these estimates for the
current quarter by multiplying them by four, which it believes
provides a meaningful estimate of the Company’s current run rate
for all investments as of the end of the current quarter. You
should not unduly rely on these measures, as they are based on
assumptions and estimates that may prove to be inaccurate. The
Company’s actual reported EBITDAre, NOI and Cash NOI for future
periods may be significantly less than these estimates of current
run rates.
Cash ABR
Cash ABR means annualized contractually specified cash base rent
in effect as of the end of the current quarter for all of the
Company’s leases (including those accounted for as direct financing
leases) commenced as of that date and annualized cash interest on
its mortgage loans receivable as of that date.
Cash Cap Rate
Cash Cap Rate means annualized contractually specified cash base
rent for the first full month after investment or disposition
divided by the purchase or sale price, as applicable, for the
property.
GAAP Cap Rate
GAAP Cap Rate means annualized rental income computed in
accordance with GAAP for the first full month after investment
divided by the purchase price, as applicable, for the property.
Rent Coverage Ratio
Rent coverage ratio means the ratio of tenant-reported or, when
unavailable, management’s estimate based on tenant-reported
financial information, annual EBITDA and cash rent attributable to
the leased property (or properties, in the case of a master lease)
to the annualized base rental obligation as of a specified
date.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241023686407/en/
Investor/Media: Essential Properties Realty Trust, Inc.
Robert W. Salisbury, CFA Senior Vice President, Head of Capital
Markets 609-436-0619 investors@essentialproperties.com
Essential Properties Rea... (NYSE:EPRT)
Historical Stock Chart
Von Dez 2024 bis Jan 2025
Essential Properties Rea... (NYSE:EPRT)
Historical Stock Chart
Von Jan 2024 bis Jan 2025
