Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Essential Properties Announces First Quarter 2021 Results By: Essential Properties Realty Trust, Inc. via Business Wire May 03, 2021 at 16:10 PM EDT - First Quarter Net Income per Share of $0.14 and AFFO per Share of $0.30 - - Closed Investments of $197.8 million at a 7.0% Weighted Average Cash Cap Rate - - Reiterate 2021 AFFO per Share Guidance - Essential Properties Realty Trust, Inc. (NYSE: EPRT; “Essential Properties” or the “Company”), today announced operating results for the three months ended March 31, 2021. First Quarter 2021 Financial and Operating Highlights Operating Results (as compared to First Quarter 2020): Investments (74 properties) $ Invested $197.8 million Weighted Avg Cash Cap Rate 7.0% Net Income per share Decreased by 7% $0.14 Funds from Operations ("FFO") per share Increased by 7% $0.30 Core Funds from Operations ("Core FFO") per share Remained unchanged $0.30 Adjusted Funds from Operations ("AFFO") per share Increased by 3% $0.30 Equity Activity: Equity Raised - ATM Program $23.22/share $64.9 million Highlights Subsequent to First Quarter 2021 Investments (19 properties) $ Invested $45.6 million Dispositions (4 properties) $ Gross Proceeds $4.8 million Equity Activity: Equity Raised - ATM Program $23.45/share $2.4 million Equity Raised - Follow-On Offering (April 15th, 2021) $23.50/share $193.2 million CEO Comments Commenting on the first quarter 2021 results, Essential Properties’ President and Chief Executive Officer, Pete Mavoides, said, “We are pleased with our first quarter results, particularly the continuation of the key trends that drove our robust fourth quarter results, including the increased stability of our portfolio, strong investment activity, and attractively priced capital raising.” Mr. Mavoides added, “With regards to our $198 million quarterly investment activity, 81% were prior relationship transactions and 85% were direct sale-leasebacks, which speaks to the consistency of our team and our disciplined investment approach. We remain optimistic that these favorable dynamics can continue through 2021 and beyond.” Portfolio Update Investments The Company’s investment activity during the three months ended March 31, 2021 is summarized as follows: Quarter Ended March 31, 2021 Investments: $ Invested $197.8 million # of Properties 74 # of Separate Transactions 22 Weighted Average Cash and GAAP Cap Rate 7.0%/7.9% WALT 16.1 years % Sale-Leaseback Transactions 85% % Subject to Master Lease 79% % Required Financial Reporting (tenant/guarantor) 100% Dispositions The Company’s disposition activity during the three months ended March 31, 2021 is summarized as follows: Quarter Ended March 31, 2021 Dispositions: Net Proceeds $25.2 million # of Properties Sold 16 Net Gain / (Loss) $3.8 million Weighted Average Cash Cap Rate (excluding vacant properties) 7.1% Portfolio Highlights The Company’s investment portfolio as of March 31, 2021 is summarized as follows: Number of properties 1,240 Weighted average lease term 14.3 years Weighted average rent coverage ratio 3.0x Number of tenants 259 Number of states 43 Number of industries 17 Weighted average occupancy 99.1% Total square feet of rentable space 10,801,149 Cash ABR - service-oriented or experience-based 95.3% Cash ABR - properties subject to master lease 59.9% Leverage and Balance Sheet and Liquidity The Company's leverage, balance sheet and liquidity are summarized in the following table. Pro forma adjustments have been made to reflect the impact of the Company’s April 2021 follow-on offering of common stock. On April 15, 2021, the Company issued 8,222,500 shares of common stock for proceeds of $185.5 million, net of underwriters’ discounts. March 31, 2021 Pro Forma March 31, 2021 Leverage: Net debt to Annualized Adjusted EBITDAre 5.1x 4.1x Balance Sheet and Liquidity: Cash and cash equivalents and restricted cash $44.8 million $230.3 million Unused borrowing capacity $262.0 million $262.0 million Total available liquidity $306.8 million $492.3 million ATM Program: 2020 ATM Program availability $250.0 million Aggregate gross sales under the 2020 ATM Program $144.2 million Availability remaining under the 2020 ATM Program $105.8 million Dividend Information As previously announced, on March 5, 2021 Essential Properties' board of directors declared a cash dividend of 0.24 per share of common stock for the quarter ended March 31, 2021. The dividend was paid on April 15, 2021 to stockholders of record as of the close of business on March 31, 2021. 2021 Guidance The Company reiterates its previously issued expectation that 2021 AFFO per share on a fully diluted basis will be within a range of $1.22 to $1.26. Conference Call Information In conjunction with the release of Essential Properties’ operating results, the Company will host a conference call on Tuesday, May 4, 2021 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: 13719029. The telephone replay will be available through May 18, 2021. A replay of the conference call webcast will be available on our website approximately two 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—First Quarter Ended March 31, 2021 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 March 31, 2021, the Company’s portfolio consisted of 1,240 freestanding net lease properties with a weighted average lease term of 14.3 years and a weighted average rent coverage ratio of 3.0x. In addition, as of March 31, 2021, the Company’s portfolio was 99.1% leased to 259 tenants operating 367 different concepts in 17 industries across 43 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 and subsequent Quarterly Reports on Form 10-Q. 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 March 31, 2021 that it will file with the Commission. 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 expense 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 expense, non-cash compensation expense, other amortization expense, other non-cash charges (including changes to our provision for loan losses following the adoption of ASC 326), capitalized interest expense and transaction costs. 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 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. Disclaimer Essential Properties Realty Trust, Inc. and the Essential Properties Realty Trust REIT are not affiliated with or sponsored by Griffin Capital Essential Asset Operating Partnership, L.P. or the Griffin Capital Essential Asset REIT, information about which can be obtained at (https://www.gcear.com). Essential Properties Realty Trust, Inc. Consolidated Statements of Operations Three months ended March 31, (in thousands, except share and per share data) 2021 2020 (unaudited) (unaudited) Revenues: Rental revenue1,2 $ 45,432 $ 39,542 Interest on loans and direct financing leases 3,105 1,938 Other revenue 15 7 Total revenues 48,552 41,487 Expenses: General and administrative3 6,431 7,536 Property expenses4 1,414 373 Depreciation and amortization 15,646 13,012 Provision for impairment of real estate 5,722 373 Provision for loan losses 38 468 Total expenses 29,251 21,762 Other operating income: Gain on dispositions of real estate, net 3,788 1,875 Income from operations 23,089 21,600 Other (expense)/income: Loss on repayment of secured borrowings5 — (924 ) Interest expense (7,678 ) (6,833 ) Interest income 20 231 Income before income tax expense 15,431 14,074 Income tax expense 56 31 Net income 15,375 14,043 Net income attributable to non-controlling interests (80 ) (84 ) Net income attributable to stockholders $ 15,295 $ 13,959 Basic weighted-average shares outstanding 106,986,308 90,322,402 Basic net income per share $ 0.14 $ 0.15 Diluted weighted-average shares outstanding 108,055,741 91,332,297 Diluted net income per share $ 0.14 $ 0.15 1. Includes contingent rent (based on a percentage of the tenant's gross sales at the leased property) of $169 and $192 for the three months ended March 31, 2021 and 2020, respectively. 2. Includes reimbursable income from the Company’s tenants of $453 and $165 for the three months ended March 31, 2021 and 2020, respectively. 3. During the three months ended March 31, 2020, includes non-recurring expenses of $652 for costs and charges incurred in connection with the departure of one of our executive officers. 4. Includes reimbursable expenses from the Company’s tenants $452 and $165 for the three months ended March 31, 2021 and 2020, respectively. 5. Includes the write-off of $924 of deferred financing costs during the three months ended March 31, 2020. Essential Properties Realty Trust, Inc. Consolidated Balance Sheets (in thousands, expect share and per share amounts) March 31, 2021 December 31, 2020 (Unaudited) (Audited) ASSETS Investments: Real estate investments, at cost: Land and improvements $ 790,395 $ 741,254 Building and improvements 1,631,763 1,519,665 Lease incentive 14,192 14,297 Construction in progress 4,029 3,908 Intangible lease assets 83,030 80,271 Total real estate investments, at cost 2,523,409 2,359,395 Less: accumulated depreciation and amortization (150,835 ) (136,097 ) Total real estate investments, net 2,372,574 2,223,298 Loans and direct financing lease receivables, net 176,025 152,220 Real estate investments held for sale, net — 17,058 Net investments 2,548,599 2,392,576 Cash and cash equivalents 42,842 26,602 Restricted cash 1,974 6,388 Straight-line rent receivable, net 41,475 37,830 Rent receivables, prepaid expenses and other assets, net 27,827 25,406 Total assets $ 2,662,717 $ 2,488,802 LIABILITIES AND EQUITY Secured borrowings, net of deferred financing costs $ 170,161 $ 171,007 Unsecured term loans, net of deferred financing costs 626,450 626,272 Revolving credit facility 138,000 18,000 Intangible lease liabilities, net 10,046 10,168 Dividend payable 26,398 25,703 Derivative liabilities 20,893 38,912 Accrued liabilities and other payables 16,486 16,792 Total liabilities 1,008,434 906,854 Commitments and contingencies — — Stockholders' equity: Preferred stock, $0.01 par value; 150,000,000 authorized; none issued and outstanding as of March 31, 2021 and December 31, 2020 — — Common stock, $0.01 par value; 500,000,000 authorized; 109,171,639 and 106,361,524 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively 1,092 1,064 Additional paid-in capital 1,753,847 1,688,540 Distributions in excess of cumulative earnings (88,635 ) (77,665 ) Accumulated other comprehensive loss (19,248 ) (37,181 ) Total stockholders' equity 1,647,056 1,574,758 Non-controlling interests 7,227 7,190 Total equity 1,654,283 1,581,948 Total liabilities and equity $ 2,662,717 $ 2,488,802 Essential Properties Realty Trust, Inc. Reconciliation of Non-GAAP Financial Measures Three months ended March 31, (unaudited, in thousands except per share amounts) 2021 2020 Net income $ 15,375 $ 14,043 Depreciation and amortization of real estate 15,621 12,988 Provision for impairment of real estate 5,722 373 Gain on dispositions of real estate, net (3,788 ) (1,875 ) Funds from Operations 32,930 25,529 Other non-recurring expenses1 — 1,576 Core Funds from Operations 32,930 27,105 Adjustments: Straight-line rental revenue, net (3,644 ) (3,191 ) Non-cash interest expense 479 534 Non-cash compensation expense 1,595 1,291 Other amortization expense 1,105 434 Other non-cash charges 36 468 Capitalized interest expense (20 ) (95 ) Transaction costs — 67 Adjusted Funds from Operations $ 32,481 $ 26,613 Net income per share2: Basic $ 0.14 $ 0.15 Diluted $ 0.14 $ 0.15 FFO per share2: Basic $ 0.31 $ 0.28 Diluted $ 0.30 $ 0.28 Core FFO per share2: Basic $ 0.31 $ 0.30 Diluted $ 0.30 $ 0.30 AFFO per share2: Basic $ 0.30 $ 0.29 Diluted $ 0.30 $ 0.29 1. Includes non-recurring expenses of $652 for accruals of severance payments and acceleration of non-cash compensation expense in connection with the departure of one of our executive officers and our $924 loss on repayment of secured borrowings during the three months ended March 31, 2020. 2. Calculations exclude $119 and $130 from the numerator for the three months ended March 31, 2021 and 2020, 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 March 31, 2021 Net income $ 15,375 Depreciation and amortization 15,646 Interest expense 7,678 Interest income (20 ) Income tax expense 56 EBITDA 38,735 Provision for impairment of real estate 5,722 Gain on dispositions of real estate, net (3,788 ) EBITDAre 40,669 Adjustment for current quarter re-leasing, acquisition and disposition activity1 2,987 Adjustment to exclude other non-recurring expenses2 123 Adjusted EBITDAre - Current Estimated Run Rate 43,779 General and administrative 6,431 Adjusted net operating income ("NOI") 50,210 Straight-line rental revenue, net1 (3,374 ) Other amortization expense 1,105 Adjusted Cash NOI $ 47,941 Annualized EBITDAre $ 162,676 Annualized Adjusted EBITDAre $ 175,116 Annualized Adjusted NOI $ 200,840 Annualized Adjusted Cash NOI $ 191,764 1. These adjustments are made to reflect EBITDAre, NOI and Cash NOI as if all re-leasing activity, investments in and dispositions of real estate made during the three months ended March 31, 2021 had occurred on January 1, 2021. 2. Adjustment excludes the $38 adjustment to our provision for loan loss and an $85 write-off of receivables from prior periods. Essential Properties Realty Trust, Inc. Reconciliation of Non-GAAP Financial Measures (dollars in thousands, except share and per share amounts) March 31, 2021 Secured debt: Series 2017-1, Class A $ 156,522 Series 2017-1, Class B 15,669 Total secured debt 172,191 Unsecured debt: $200mm term loan 200,000 $430mm term loan 430,000 Revolving credit facility1 138,000 Total unsecured debt 768,000 Gross debt 940,191 Less: cash & cash equivalents (42,842 ) Less: restricted cash available for future investment (1,974 ) Net debt 895,375 Equity: Preferred stock — Common stock & OP units (109,725,486 shares @ $22.83/share as of 3/31/21)2 2,505,033 Total equity 2,505,033 Total enterprise value ("TEV") $ 3,400,408 Pro forma adjustments to Net Debt and TEV:3 Net debt $ 895,375 Less: cash received — April 2021 follow-on offering (185,500 ) Pro forma net debt 709,875 Total equity 2,505,033 Common stock — April 2021 follow-on offering (8,222,500 shares @ $22.83/share as of 3/31/21) 187,720 Pro forma TEV $ 3,402,628 Net Debt / TEV 26.3 % Net Debt / Annualized Adjusted EBITDAre 5.1x Pro Forma Net Debt / Pro Forma TEV 20.9 % Pro Forma Net Debt / Annualized Adjusted EBITDAre 4.1x 1. The Company’s revolving credit facility provides a maximum aggregate initial original principal amount of up to $400 million and includes an accordion feature to increase, subject to certain conditions, the maximum availability of the facility by up to $200 million. 2. Common equity & units as of March 31, 2021, based on 109,171,639 common shares outstanding (including unvested restricted share awards) and 553,847 OP units held by non-controlling interests. 3. Pro forma adjustments have been made to reflect the impact of the Company’s April 2021 follow-on offering of common stock. On April 15, 2021, the Company issued 8,222,500 shares of common stock for proceeds of $185.5 million, net of underwriters’ discounts. View source version on businesswire.com: https://www.businesswire.com/news/home/20210503005692/en/Contacts Investor/Media: Essential Properties Realty Trust, Inc. Daniel Donlan, Senior Vice President, Capital Markets 609-436-0619 info@essentialproperties.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Essential Properties Announces First Quarter 2021 Results By: Essential Properties Realty Trust, Inc. via Business Wire May 03, 2021 at 16:10 PM EDT - First Quarter Net Income per Share of $0.14 and AFFO per Share of $0.30 - - Closed Investments of $197.8 million at a 7.0% Weighted Average Cash Cap Rate - - Reiterate 2021 AFFO per Share Guidance - Essential Properties Realty Trust, Inc. (NYSE: EPRT; “Essential Properties” or the “Company”), today announced operating results for the three months ended March 31, 2021. First Quarter 2021 Financial and Operating Highlights Operating Results (as compared to First Quarter 2020): Investments (74 properties) $ Invested $197.8 million Weighted Avg Cash Cap Rate 7.0% Net Income per share Decreased by 7% $0.14 Funds from Operations ("FFO") per share Increased by 7% $0.30 Core Funds from Operations ("Core FFO") per share Remained unchanged $0.30 Adjusted Funds from Operations ("AFFO") per share Increased by 3% $0.30 Equity Activity: Equity Raised - ATM Program $23.22/share $64.9 million Highlights Subsequent to First Quarter 2021 Investments (19 properties) $ Invested $45.6 million Dispositions (4 properties) $ Gross Proceeds $4.8 million Equity Activity: Equity Raised - ATM Program $23.45/share $2.4 million Equity Raised - Follow-On Offering (April 15th, 2021) $23.50/share $193.2 million CEO Comments Commenting on the first quarter 2021 results, Essential Properties’ President and Chief Executive Officer, Pete Mavoides, said, “We are pleased with our first quarter results, particularly the continuation of the key trends that drove our robust fourth quarter results, including the increased stability of our portfolio, strong investment activity, and attractively priced capital raising.” Mr. Mavoides added, “With regards to our $198 million quarterly investment activity, 81% were prior relationship transactions and 85% were direct sale-leasebacks, which speaks to the consistency of our team and our disciplined investment approach. We remain optimistic that these favorable dynamics can continue through 2021 and beyond.” Portfolio Update Investments The Company’s investment activity during the three months ended March 31, 2021 is summarized as follows: Quarter Ended March 31, 2021 Investments: $ Invested $197.8 million # of Properties 74 # of Separate Transactions 22 Weighted Average Cash and GAAP Cap Rate 7.0%/7.9% WALT 16.1 years % Sale-Leaseback Transactions 85% % Subject to Master Lease 79% % Required Financial Reporting (tenant/guarantor) 100% Dispositions The Company’s disposition activity during the three months ended March 31, 2021 is summarized as follows: Quarter Ended March 31, 2021 Dispositions: Net Proceeds $25.2 million # of Properties Sold 16 Net Gain / (Loss) $3.8 million Weighted Average Cash Cap Rate (excluding vacant properties) 7.1% Portfolio Highlights The Company’s investment portfolio as of March 31, 2021 is summarized as follows: Number of properties 1,240 Weighted average lease term 14.3 years Weighted average rent coverage ratio 3.0x Number of tenants 259 Number of states 43 Number of industries 17 Weighted average occupancy 99.1% Total square feet of rentable space 10,801,149 Cash ABR - service-oriented or experience-based 95.3% Cash ABR - properties subject to master lease 59.9% Leverage and Balance Sheet and Liquidity The Company's leverage, balance sheet and liquidity are summarized in the following table. Pro forma adjustments have been made to reflect the impact of the Company’s April 2021 follow-on offering of common stock. On April 15, 2021, the Company issued 8,222,500 shares of common stock for proceeds of $185.5 million, net of underwriters’ discounts. March 31, 2021 Pro Forma March 31, 2021 Leverage: Net debt to Annualized Adjusted EBITDAre 5.1x 4.1x Balance Sheet and Liquidity: Cash and cash equivalents and restricted cash $44.8 million $230.3 million Unused borrowing capacity $262.0 million $262.0 million Total available liquidity $306.8 million $492.3 million ATM Program: 2020 ATM Program availability $250.0 million Aggregate gross sales under the 2020 ATM Program $144.2 million Availability remaining under the 2020 ATM Program $105.8 million Dividend Information As previously announced, on March 5, 2021 Essential Properties' board of directors declared a cash dividend of 0.24 per share of common stock for the quarter ended March 31, 2021. The dividend was paid on April 15, 2021 to stockholders of record as of the close of business on March 31, 2021. 2021 Guidance The Company reiterates its previously issued expectation that 2021 AFFO per share on a fully diluted basis will be within a range of $1.22 to $1.26. Conference Call Information In conjunction with the release of Essential Properties’ operating results, the Company will host a conference call on Tuesday, May 4, 2021 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: 13719029. The telephone replay will be available through May 18, 2021. A replay of the conference call webcast will be available on our website approximately two 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—First Quarter Ended March 31, 2021 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 March 31, 2021, the Company’s portfolio consisted of 1,240 freestanding net lease properties with a weighted average lease term of 14.3 years and a weighted average rent coverage ratio of 3.0x. In addition, as of March 31, 2021, the Company’s portfolio was 99.1% leased to 259 tenants operating 367 different concepts in 17 industries across 43 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 and subsequent Quarterly Reports on Form 10-Q. 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 March 31, 2021 that it will file with the Commission. 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 expense 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 expense, non-cash compensation expense, other amortization expense, other non-cash charges (including changes to our provision for loan losses following the adoption of ASC 326), capitalized interest expense and transaction costs. 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 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. Disclaimer Essential Properties Realty Trust, Inc. and the Essential Properties Realty Trust REIT are not affiliated with or sponsored by Griffin Capital Essential Asset Operating Partnership, L.P. or the Griffin Capital Essential Asset REIT, information about which can be obtained at (https://www.gcear.com). Essential Properties Realty Trust, Inc. Consolidated Statements of Operations Three months ended March 31, (in thousands, except share and per share data) 2021 2020 (unaudited) (unaudited) Revenues: Rental revenue1,2 $ 45,432 $ 39,542 Interest on loans and direct financing leases 3,105 1,938 Other revenue 15 7 Total revenues 48,552 41,487 Expenses: General and administrative3 6,431 7,536 Property expenses4 1,414 373 Depreciation and amortization 15,646 13,012 Provision for impairment of real estate 5,722 373 Provision for loan losses 38 468 Total expenses 29,251 21,762 Other operating income: Gain on dispositions of real estate, net 3,788 1,875 Income from operations 23,089 21,600 Other (expense)/income: Loss on repayment of secured borrowings5 — (924 ) Interest expense (7,678 ) (6,833 ) Interest income 20 231 Income before income tax expense 15,431 14,074 Income tax expense 56 31 Net income 15,375 14,043 Net income attributable to non-controlling interests (80 ) (84 ) Net income attributable to stockholders $ 15,295 $ 13,959 Basic weighted-average shares outstanding 106,986,308 90,322,402 Basic net income per share $ 0.14 $ 0.15 Diluted weighted-average shares outstanding 108,055,741 91,332,297 Diluted net income per share $ 0.14 $ 0.15 1. Includes contingent rent (based on a percentage of the tenant's gross sales at the leased property) of $169 and $192 for the three months ended March 31, 2021 and 2020, respectively. 2. Includes reimbursable income from the Company’s tenants of $453 and $165 for the three months ended March 31, 2021 and 2020, respectively. 3. During the three months ended March 31, 2020, includes non-recurring expenses of $652 for costs and charges incurred in connection with the departure of one of our executive officers. 4. Includes reimbursable expenses from the Company’s tenants $452 and $165 for the three months ended March 31, 2021 and 2020, respectively. 5. Includes the write-off of $924 of deferred financing costs during the three months ended March 31, 2020. Essential Properties Realty Trust, Inc. Consolidated Balance Sheets (in thousands, expect share and per share amounts) March 31, 2021 December 31, 2020 (Unaudited) (Audited) ASSETS Investments: Real estate investments, at cost: Land and improvements $ 790,395 $ 741,254 Building and improvements 1,631,763 1,519,665 Lease incentive 14,192 14,297 Construction in progress 4,029 3,908 Intangible lease assets 83,030 80,271 Total real estate investments, at cost 2,523,409 2,359,395 Less: accumulated depreciation and amortization (150,835 ) (136,097 ) Total real estate investments, net 2,372,574 2,223,298 Loans and direct financing lease receivables, net 176,025 152,220 Real estate investments held for sale, net — 17,058 Net investments 2,548,599 2,392,576 Cash and cash equivalents 42,842 26,602 Restricted cash 1,974 6,388 Straight-line rent receivable, net 41,475 37,830 Rent receivables, prepaid expenses and other assets, net 27,827 25,406 Total assets $ 2,662,717 $ 2,488,802 LIABILITIES AND EQUITY Secured borrowings, net of deferred financing costs $ 170,161 $ 171,007 Unsecured term loans, net of deferred financing costs 626,450 626,272 Revolving credit facility 138,000 18,000 Intangible lease liabilities, net 10,046 10,168 Dividend payable 26,398 25,703 Derivative liabilities 20,893 38,912 Accrued liabilities and other payables 16,486 16,792 Total liabilities 1,008,434 906,854 Commitments and contingencies — — Stockholders' equity: Preferred stock, $0.01 par value; 150,000,000 authorized; none issued and outstanding as of March 31, 2021 and December 31, 2020 — — Common stock, $0.01 par value; 500,000,000 authorized; 109,171,639 and 106,361,524 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively 1,092 1,064 Additional paid-in capital 1,753,847 1,688,540 Distributions in excess of cumulative earnings (88,635 ) (77,665 ) Accumulated other comprehensive loss (19,248 ) (37,181 ) Total stockholders' equity 1,647,056 1,574,758 Non-controlling interests 7,227 7,190 Total equity 1,654,283 1,581,948 Total liabilities and equity $ 2,662,717 $ 2,488,802 Essential Properties Realty Trust, Inc. Reconciliation of Non-GAAP Financial Measures Three months ended March 31, (unaudited, in thousands except per share amounts) 2021 2020 Net income $ 15,375 $ 14,043 Depreciation and amortization of real estate 15,621 12,988 Provision for impairment of real estate 5,722 373 Gain on dispositions of real estate, net (3,788 ) (1,875 ) Funds from Operations 32,930 25,529 Other non-recurring expenses1 — 1,576 Core Funds from Operations 32,930 27,105 Adjustments: Straight-line rental revenue, net (3,644 ) (3,191 ) Non-cash interest expense 479 534 Non-cash compensation expense 1,595 1,291 Other amortization expense 1,105 434 Other non-cash charges 36 468 Capitalized interest expense (20 ) (95 ) Transaction costs — 67 Adjusted Funds from Operations $ 32,481 $ 26,613 Net income per share2: Basic $ 0.14 $ 0.15 Diluted $ 0.14 $ 0.15 FFO per share2: Basic $ 0.31 $ 0.28 Diluted $ 0.30 $ 0.28 Core FFO per share2: Basic $ 0.31 $ 0.30 Diluted $ 0.30 $ 0.30 AFFO per share2: Basic $ 0.30 $ 0.29 Diluted $ 0.30 $ 0.29 1. Includes non-recurring expenses of $652 for accruals of severance payments and acceleration of non-cash compensation expense in connection with the departure of one of our executive officers and our $924 loss on repayment of secured borrowings during the three months ended March 31, 2020. 2. Calculations exclude $119 and $130 from the numerator for the three months ended March 31, 2021 and 2020, 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 March 31, 2021 Net income $ 15,375 Depreciation and amortization 15,646 Interest expense 7,678 Interest income (20 ) Income tax expense 56 EBITDA 38,735 Provision for impairment of real estate 5,722 Gain on dispositions of real estate, net (3,788 ) EBITDAre 40,669 Adjustment for current quarter re-leasing, acquisition and disposition activity1 2,987 Adjustment to exclude other non-recurring expenses2 123 Adjusted EBITDAre - Current Estimated Run Rate 43,779 General and administrative 6,431 Adjusted net operating income ("NOI") 50,210 Straight-line rental revenue, net1 (3,374 ) Other amortization expense 1,105 Adjusted Cash NOI $ 47,941 Annualized EBITDAre $ 162,676 Annualized Adjusted EBITDAre $ 175,116 Annualized Adjusted NOI $ 200,840 Annualized Adjusted Cash NOI $ 191,764 1. These adjustments are made to reflect EBITDAre, NOI and Cash NOI as if all re-leasing activity, investments in and dispositions of real estate made during the three months ended March 31, 2021 had occurred on January 1, 2021. 2. Adjustment excludes the $38 adjustment to our provision for loan loss and an $85 write-off of receivables from prior periods. Essential Properties Realty Trust, Inc. Reconciliation of Non-GAAP Financial Measures (dollars in thousands, except share and per share amounts) March 31, 2021 Secured debt: Series 2017-1, Class A $ 156,522 Series 2017-1, Class B 15,669 Total secured debt 172,191 Unsecured debt: $200mm term loan 200,000 $430mm term loan 430,000 Revolving credit facility1 138,000 Total unsecured debt 768,000 Gross debt 940,191 Less: cash & cash equivalents (42,842 ) Less: restricted cash available for future investment (1,974 ) Net debt 895,375 Equity: Preferred stock — Common stock & OP units (109,725,486 shares @ $22.83/share as of 3/31/21)2 2,505,033 Total equity 2,505,033 Total enterprise value ("TEV") $ 3,400,408 Pro forma adjustments to Net Debt and TEV:3 Net debt $ 895,375 Less: cash received — April 2021 follow-on offering (185,500 ) Pro forma net debt 709,875 Total equity 2,505,033 Common stock — April 2021 follow-on offering (8,222,500 shares @ $22.83/share as of 3/31/21) 187,720 Pro forma TEV $ 3,402,628 Net Debt / TEV 26.3 % Net Debt / Annualized Adjusted EBITDAre 5.1x Pro Forma Net Debt / Pro Forma TEV 20.9 % Pro Forma Net Debt / Annualized Adjusted EBITDAre 4.1x 1. The Company’s revolving credit facility provides a maximum aggregate initial original principal amount of up to $400 million and includes an accordion feature to increase, subject to certain conditions, the maximum availability of the facility by up to $200 million. 2. Common equity & units as of March 31, 2021, based on 109,171,639 common shares outstanding (including unvested restricted share awards) and 553,847 OP units held by non-controlling interests. 3. Pro forma adjustments have been made to reflect the impact of the Company’s April 2021 follow-on offering of common stock. On April 15, 2021, the Company issued 8,222,500 shares of common stock for proceeds of $185.5 million, net of underwriters’ discounts. View source version on businesswire.com: https://www.businesswire.com/news/home/20210503005692/en/Contacts Investor/Media: Essential Properties Realty Trust, Inc. Daniel Donlan, Senior Vice President, Capital Markets 609-436-0619 info@essentialproperties.com
- First Quarter Net Income per Share of $0.14 and AFFO per Share of $0.30 - - Closed Investments of $197.8 million at a 7.0% Weighted Average Cash Cap Rate - - Reiterate 2021 AFFO per Share Guidance -
Essential Properties Realty Trust, Inc. (NYSE: EPRT; “Essential Properties” or the “Company”), today announced operating results for the three months ended March 31, 2021. First Quarter 2021 Financial and Operating Highlights Operating Results (as compared to First Quarter 2020): Investments (74 properties) $ Invested $197.8 million Weighted Avg Cash Cap Rate 7.0% Net Income per share Decreased by 7% $0.14 Funds from Operations ("FFO") per share Increased by 7% $0.30 Core Funds from Operations ("Core FFO") per share Remained unchanged $0.30 Adjusted Funds from Operations ("AFFO") per share Increased by 3% $0.30 Equity Activity: Equity Raised - ATM Program $23.22/share $64.9 million Highlights Subsequent to First Quarter 2021 Investments (19 properties) $ Invested $45.6 million Dispositions (4 properties) $ Gross Proceeds $4.8 million Equity Activity: Equity Raised - ATM Program $23.45/share $2.4 million Equity Raised - Follow-On Offering (April 15th, 2021) $23.50/share $193.2 million CEO Comments Commenting on the first quarter 2021 results, Essential Properties’ President and Chief Executive Officer, Pete Mavoides, said, “We are pleased with our first quarter results, particularly the continuation of the key trends that drove our robust fourth quarter results, including the increased stability of our portfolio, strong investment activity, and attractively priced capital raising.” Mr. Mavoides added, “With regards to our $198 million quarterly investment activity, 81% were prior relationship transactions and 85% were direct sale-leasebacks, which speaks to the consistency of our team and our disciplined investment approach. We remain optimistic that these favorable dynamics can continue through 2021 and beyond.” Portfolio Update Investments The Company’s investment activity during the three months ended March 31, 2021 is summarized as follows: Quarter Ended March 31, 2021 Investments: $ Invested $197.8 million # of Properties 74 # of Separate Transactions 22 Weighted Average Cash and GAAP Cap Rate 7.0%/7.9% WALT 16.1 years % Sale-Leaseback Transactions 85% % Subject to Master Lease 79% % Required Financial Reporting (tenant/guarantor) 100% Dispositions The Company’s disposition activity during the three months ended March 31, 2021 is summarized as follows: Quarter Ended March 31, 2021 Dispositions: Net Proceeds $25.2 million # of Properties Sold 16 Net Gain / (Loss) $3.8 million Weighted Average Cash Cap Rate (excluding vacant properties) 7.1% Portfolio Highlights The Company’s investment portfolio as of March 31, 2021 is summarized as follows: Number of properties 1,240 Weighted average lease term 14.3 years Weighted average rent coverage ratio 3.0x Number of tenants 259 Number of states 43 Number of industries 17 Weighted average occupancy 99.1% Total square feet of rentable space 10,801,149 Cash ABR - service-oriented or experience-based 95.3% Cash ABR - properties subject to master lease 59.9% Leverage and Balance Sheet and Liquidity The Company's leverage, balance sheet and liquidity are summarized in the following table. Pro forma adjustments have been made to reflect the impact of the Company’s April 2021 follow-on offering of common stock. On April 15, 2021, the Company issued 8,222,500 shares of common stock for proceeds of $185.5 million, net of underwriters’ discounts. March 31, 2021 Pro Forma March 31, 2021 Leverage: Net debt to Annualized Adjusted EBITDAre 5.1x 4.1x Balance Sheet and Liquidity: Cash and cash equivalents and restricted cash $44.8 million $230.3 million Unused borrowing capacity $262.0 million $262.0 million Total available liquidity $306.8 million $492.3 million ATM Program: 2020 ATM Program availability $250.0 million Aggregate gross sales under the 2020 ATM Program $144.2 million Availability remaining under the 2020 ATM Program $105.8 million Dividend Information As previously announced, on March 5, 2021 Essential Properties' board of directors declared a cash dividend of 0.24 per share of common stock for the quarter ended March 31, 2021. The dividend was paid on April 15, 2021 to stockholders of record as of the close of business on March 31, 2021. 2021 Guidance The Company reiterates its previously issued expectation that 2021 AFFO per share on a fully diluted basis will be within a range of $1.22 to $1.26. Conference Call Information In conjunction with the release of Essential Properties’ operating results, the Company will host a conference call on Tuesday, May 4, 2021 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: 13719029. The telephone replay will be available through May 18, 2021. A replay of the conference call webcast will be available on our website approximately two 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—First Quarter Ended March 31, 2021 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 March 31, 2021, the Company’s portfolio consisted of 1,240 freestanding net lease properties with a weighted average lease term of 14.3 years and a weighted average rent coverage ratio of 3.0x. In addition, as of March 31, 2021, the Company’s portfolio was 99.1% leased to 259 tenants operating 367 different concepts in 17 industries across 43 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 and subsequent Quarterly Reports on Form 10-Q. 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 March 31, 2021 that it will file with the Commission. 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 expense 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 expense, non-cash compensation expense, other amortization expense, other non-cash charges (including changes to our provision for loan losses following the adoption of ASC 326), capitalized interest expense and transaction costs. 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 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. Disclaimer Essential Properties Realty Trust, Inc. and the Essential Properties Realty Trust REIT are not affiliated with or sponsored by Griffin Capital Essential Asset Operating Partnership, L.P. or the Griffin Capital Essential Asset REIT, information about which can be obtained at (https://www.gcear.com). Essential Properties Realty Trust, Inc. Consolidated Statements of Operations Three months ended March 31, (in thousands, except share and per share data) 2021 2020 (unaudited) (unaudited) Revenues: Rental revenue1,2 $ 45,432 $ 39,542 Interest on loans and direct financing leases 3,105 1,938 Other revenue 15 7 Total revenues 48,552 41,487 Expenses: General and administrative3 6,431 7,536 Property expenses4 1,414 373 Depreciation and amortization 15,646 13,012 Provision for impairment of real estate 5,722 373 Provision for loan losses 38 468 Total expenses 29,251 21,762 Other operating income: Gain on dispositions of real estate, net 3,788 1,875 Income from operations 23,089 21,600 Other (expense)/income: Loss on repayment of secured borrowings5 — (924 ) Interest expense (7,678 ) (6,833 ) Interest income 20 231 Income before income tax expense 15,431 14,074 Income tax expense 56 31 Net income 15,375 14,043 Net income attributable to non-controlling interests (80 ) (84 ) Net income attributable to stockholders $ 15,295 $ 13,959 Basic weighted-average shares outstanding 106,986,308 90,322,402 Basic net income per share $ 0.14 $ 0.15 Diluted weighted-average shares outstanding 108,055,741 91,332,297 Diluted net income per share $ 0.14 $ 0.15 1. Includes contingent rent (based on a percentage of the tenant's gross sales at the leased property) of $169 and $192 for the three months ended March 31, 2021 and 2020, respectively. 2. Includes reimbursable income from the Company’s tenants of $453 and $165 for the three months ended March 31, 2021 and 2020, respectively. 3. During the three months ended March 31, 2020, includes non-recurring expenses of $652 for costs and charges incurred in connection with the departure of one of our executive officers. 4. Includes reimbursable expenses from the Company’s tenants $452 and $165 for the three months ended March 31, 2021 and 2020, respectively. 5. Includes the write-off of $924 of deferred financing costs during the three months ended March 31, 2020. Essential Properties Realty Trust, Inc. Consolidated Balance Sheets (in thousands, expect share and per share amounts) March 31, 2021 December 31, 2020 (Unaudited) (Audited) ASSETS Investments: Real estate investments, at cost: Land and improvements $ 790,395 $ 741,254 Building and improvements 1,631,763 1,519,665 Lease incentive 14,192 14,297 Construction in progress 4,029 3,908 Intangible lease assets 83,030 80,271 Total real estate investments, at cost 2,523,409 2,359,395 Less: accumulated depreciation and amortization (150,835 ) (136,097 ) Total real estate investments, net 2,372,574 2,223,298 Loans and direct financing lease receivables, net 176,025 152,220 Real estate investments held for sale, net — 17,058 Net investments 2,548,599 2,392,576 Cash and cash equivalents 42,842 26,602 Restricted cash 1,974 6,388 Straight-line rent receivable, net 41,475 37,830 Rent receivables, prepaid expenses and other assets, net 27,827 25,406 Total assets $ 2,662,717 $ 2,488,802 LIABILITIES AND EQUITY Secured borrowings, net of deferred financing costs $ 170,161 $ 171,007 Unsecured term loans, net of deferred financing costs 626,450 626,272 Revolving credit facility 138,000 18,000 Intangible lease liabilities, net 10,046 10,168 Dividend payable 26,398 25,703 Derivative liabilities 20,893 38,912 Accrued liabilities and other payables 16,486 16,792 Total liabilities 1,008,434 906,854 Commitments and contingencies — — Stockholders' equity: Preferred stock, $0.01 par value; 150,000,000 authorized; none issued and outstanding as of March 31, 2021 and December 31, 2020 — — Common stock, $0.01 par value; 500,000,000 authorized; 109,171,639 and 106,361,524 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively 1,092 1,064 Additional paid-in capital 1,753,847 1,688,540 Distributions in excess of cumulative earnings (88,635 ) (77,665 ) Accumulated other comprehensive loss (19,248 ) (37,181 ) Total stockholders' equity 1,647,056 1,574,758 Non-controlling interests 7,227 7,190 Total equity 1,654,283 1,581,948 Total liabilities and equity $ 2,662,717 $ 2,488,802 Essential Properties Realty Trust, Inc. Reconciliation of Non-GAAP Financial Measures Three months ended March 31, (unaudited, in thousands except per share amounts) 2021 2020 Net income $ 15,375 $ 14,043 Depreciation and amortization of real estate 15,621 12,988 Provision for impairment of real estate 5,722 373 Gain on dispositions of real estate, net (3,788 ) (1,875 ) Funds from Operations 32,930 25,529 Other non-recurring expenses1 — 1,576 Core Funds from Operations 32,930 27,105 Adjustments: Straight-line rental revenue, net (3,644 ) (3,191 ) Non-cash interest expense 479 534 Non-cash compensation expense 1,595 1,291 Other amortization expense 1,105 434 Other non-cash charges 36 468 Capitalized interest expense (20 ) (95 ) Transaction costs — 67 Adjusted Funds from Operations $ 32,481 $ 26,613 Net income per share2: Basic $ 0.14 $ 0.15 Diluted $ 0.14 $ 0.15 FFO per share2: Basic $ 0.31 $ 0.28 Diluted $ 0.30 $ 0.28 Core FFO per share2: Basic $ 0.31 $ 0.30 Diluted $ 0.30 $ 0.30 AFFO per share2: Basic $ 0.30 $ 0.29 Diluted $ 0.30 $ 0.29 1. Includes non-recurring expenses of $652 for accruals of severance payments and acceleration of non-cash compensation expense in connection with the departure of one of our executive officers and our $924 loss on repayment of secured borrowings during the three months ended March 31, 2020. 2. Calculations exclude $119 and $130 from the numerator for the three months ended March 31, 2021 and 2020, 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 March 31, 2021 Net income $ 15,375 Depreciation and amortization 15,646 Interest expense 7,678 Interest income (20 ) Income tax expense 56 EBITDA 38,735 Provision for impairment of real estate 5,722 Gain on dispositions of real estate, net (3,788 ) EBITDAre 40,669 Adjustment for current quarter re-leasing, acquisition and disposition activity1 2,987 Adjustment to exclude other non-recurring expenses2 123 Adjusted EBITDAre - Current Estimated Run Rate 43,779 General and administrative 6,431 Adjusted net operating income ("NOI") 50,210 Straight-line rental revenue, net1 (3,374 ) Other amortization expense 1,105 Adjusted Cash NOI $ 47,941 Annualized EBITDAre $ 162,676 Annualized Adjusted EBITDAre $ 175,116 Annualized Adjusted NOI $ 200,840 Annualized Adjusted Cash NOI $ 191,764 1. These adjustments are made to reflect EBITDAre, NOI and Cash NOI as if all re-leasing activity, investments in and dispositions of real estate made during the three months ended March 31, 2021 had occurred on January 1, 2021. 2. Adjustment excludes the $38 adjustment to our provision for loan loss and an $85 write-off of receivables from prior periods. Essential Properties Realty Trust, Inc. Reconciliation of Non-GAAP Financial Measures (dollars in thousands, except share and per share amounts) March 31, 2021 Secured debt: Series 2017-1, Class A $ 156,522 Series 2017-1, Class B 15,669 Total secured debt 172,191 Unsecured debt: $200mm term loan 200,000 $430mm term loan 430,000 Revolving credit facility1 138,000 Total unsecured debt 768,000 Gross debt 940,191 Less: cash & cash equivalents (42,842 ) Less: restricted cash available for future investment (1,974 ) Net debt 895,375 Equity: Preferred stock — Common stock & OP units (109,725,486 shares @ $22.83/share as of 3/31/21)2 2,505,033 Total equity 2,505,033 Total enterprise value ("TEV") $ 3,400,408 Pro forma adjustments to Net Debt and TEV:3 Net debt $ 895,375 Less: cash received — April 2021 follow-on offering (185,500 ) Pro forma net debt 709,875 Total equity 2,505,033 Common stock — April 2021 follow-on offering (8,222,500 shares @ $22.83/share as of 3/31/21) 187,720 Pro forma TEV $ 3,402,628 Net Debt / TEV 26.3 % Net Debt / Annualized Adjusted EBITDAre 5.1x Pro Forma Net Debt / Pro Forma TEV 20.9 % Pro Forma Net Debt / Annualized Adjusted EBITDAre 4.1x 1. The Company’s revolving credit facility provides a maximum aggregate initial original principal amount of up to $400 million and includes an accordion feature to increase, subject to certain conditions, the maximum availability of the facility by up to $200 million. 2. Common equity & units as of March 31, 2021, based on 109,171,639 common shares outstanding (including unvested restricted share awards) and 553,847 OP units held by non-controlling interests. 3. Pro forma adjustments have been made to reflect the impact of the Company’s April 2021 follow-on offering of common stock. On April 15, 2021, the Company issued 8,222,500 shares of common stock for proceeds of $185.5 million, net of underwriters’ discounts. View source version on businesswire.com: https://www.businesswire.com/news/home/20210503005692/en/
Investor/Media: Essential Properties Realty Trust, Inc. Daniel Donlan, Senior Vice President, Capital Markets 609-436-0619 info@essentialproperties.com