Essential Properties Realty Trust ((EPRT)) has held its Q1 earnings call. Read on for the main highlights of the call.
Essential Properties Realty Trust’s recent earnings call painted a positive picture of the company’s financial health and strategic positioning. Despite facing challenges such as the Zipcar wash bankruptcy and increased general and administrative expenses, the company demonstrated strong financial metrics and expressed optimism about its growth potential. The overall sentiment during the call was upbeat, reflecting a robust first quarter with significant investments and a healthy portfolio performance.
Strong Investment Activity
Essential Properties Realty Trust reported a vigorous investment activity, with $308 million invested across 21 transactions. These investments boasted a weighted average cash yield of 7.8%, with an initial lease term averaging 17.5 years and an annual rent escalation of 2.2%. This strategic investment approach underscores the company’s commitment to long-term growth and stability.
Healthy Portfolio Performance
The company’s portfolio performance remained strong, with tenant credit trends showing resilience. Occupancy rates were at an impressive 99.7%, and rent collection was nearly perfect. Same-store rent growth was recorded at 1.5%, marking a slight increase from the previous quarter, indicating a stable and growing revenue stream.
Significant Liquidity Position
Essential Properties maintained a significant liquidity position with pro forma leverage at 3.4 times and $1.5 billion in liquidity. This includes $313 million raised in equity during the quarter, providing the company with a solid financial foundation to support its strategic initiatives and future investments.
AFFO Growth
The company achieved notable growth in Adjusted Funds From Operations (AFFO), with a 7% increase in AFFO per share year-over-year, reaching $0.45. Total AFFO saw a substantial rise of 21% compared to the same period in 2024, highlighting the company’s effective operational strategies and financial management.
Reaffirmed Guidance
During the earnings call, Essential Properties reaffirmed its 2025 AFFO per share guidance range of $1.85 to $1.89, representing over 7% growth at the midpoint. This guidance reflects the company’s confidence in its ability to sustain growth and deliver value to shareholders.
Zipcar Wash Bankruptcy Impact
The ongoing bankruptcy of Zipcar wash has impacted three properties, affecting approximately 20 basis points of Annual Base Rent (ABR). Despite this challenge, the tenant remains current on rental obligations, minimizing the immediate financial impact on the company.
Increased G&A Expenses
The company reported an increase in general and administrative expenses, rising to $11.5 million from $9.4 million in the same period in 2024. This increase is primarily attributed to higher compensation expenses, reflecting the company’s investment in talent and operational capabilities.
Potential Market Volatility
Essential Properties acknowledged ongoing volatility in capital markets, which affects competition and investment dynamics. The company anticipates cap rate compression as markets normalize, which could influence future investment strategies.
Forward-Looking Guidance
Looking ahead, Essential Properties Realty Trust remains optimistic about its growth trajectory. The company reaffirmed its 2025 AFFO per share guidance, expecting growth over 7% at the midpoint. With a strong liquidity position and a high occupancy rate, the company is well-positioned to meet its investment guidance of $900 million to $1.1 billion for 2025 without needing additional capital.
In conclusion, Essential Properties Realty Trust’s earnings call highlighted a strong start to the year, with significant investments and a healthy portfolio performance. Despite some challenges, the company remains confident in its growth potential and strategic direction, reaffirming its guidance and demonstrating resilience in the face of market volatility.