PRINCETON, N.J.--(BUSINESS WIRE)--Essential Properties Realty Trust, Inc. (NYSE: EPRT), today announced operating results for the three months ended March 31, 2020.

First Quarter 2020 Financial and Operating Highlights

• Ended the quarter with a 99.5% leased portfolio with a weighted average lease term (“WALT”) of 14.6 years and a weighted average rent coverage ratio of 2.9x
• Reduced top 10 tenant concentration to 23.1%, a 30 bps sequential decline
• Invested $167.5 million in 63 properties at a 7.1% weighted average cash cap rate
• Net income per fully diluted share increased 15% to $0.15 per share
• Funds from Operations (“FFO”) per fully diluted share decreased 3% to $0.28 per share
• Grew Core Funds from Operations (“Core FFO”) per fully diluted share by 3% to $0.30
• Grew Adjusted Funds from Operations (“AFFO”) per fully diluted share by 7% to $0.29
• Raised $206.3 million in gross proceeds from the sale of shares of common stock through a follow-on equity offering and the Company’s at-the-market equity program (“ATM Program”)
• Net Debt to Annualized Adjusted EBITDAre was 4.6x at quarter end
• Cash and cash equivalents and restricted cash plus available capacity under revolving credit facility of $549.1 million at quarter end

CEO Comments

Commenting on the first quarter 2020 results, Essential Properties’ President and Chief Executive Officer, Pete Mavoides, said, “Our first quarter results were consistent with past quarters as our reliable execution resulted in a high percentage of our first quarter investment activity being relationship-based sale-leaseback transactions with operators of service-oriented and experience-based businesses. However, with the COVID-19 pandemic and wide-spread stay-at-home orders having a significant impact on the vast majority of our tenants, our focus has shifted away from external growth in order to stabilize our portfolio by proactively collaborating with our tenants to manage through the current crisis. While much uncertainty remains, we are confident in our portfolio’s ability to produce an attractive and predictable stream of cash flow over the long-term. Our balance sheet remains in excellent shape with nearly $550 million in available liquidity at quarter-end. Coupled with our experienced team of professionals, we are well positioned to manage the current situation and position this Company for growth as we emerge.”

Net Investment Activity

Investments

During the quarter ended March 31, 2020, Essential Properties invested $167.5 million in 63 properties in 32 separate transactions at a weighted average cash and GAAP cap rate of 7.1% and 8.0%, respectively. These properties are 100% leased with a WALT of 16.1 years. As a percentage of cash ABR, 88.1% of the Company’s investments for the quarter ended March 31, 2020 came from sale-leaseback transactions, 54.1% were subject to a master lease and 100% are required to provide the Company with financial reporting.

Dispositions

During the quarter ended March 31, 2020, Essential Properties sold 10 properties for $19.6 million in net proceeds, recording a net gain on these dispositions of $1.9 million. The disposition weighted average cash cap rate on the properties sold in the quarter ended March 31, 2020 was 7.1%, excluding one property sold pursuant to an existing tenant purchase option.

Portfolio Update

Portfolio Highlights

As of March 31, 2020, Essential Properties’ portfolio consisted of 1,050 freestanding net lease properties, which included 92 properties that secured mortgage notes receivable, with a WALT of 14.6 years and a weighted average rent coverage ratio of 2.9x. As of the same date, the portfolio was 99.5% leased by 212 tenants operating 283 different concepts across 43 states in 16 industries. At quarter end, 94.4% of the Company’s cash ABR was generated from tenants that operate service-oriented or experience-based businesses, and 60.1% of its cash ABR was derived from properties subject to a master lease.

Leasing Activity

During the trailing 12 months ended March 31, 2020, the Company signed three new leases without vacancy and renewed three leases that were expiring for a total recovery rate of 80.5% vs. prior cash rents. Total leasing activity for the trailing 12 months ended March 31, 2020 represented 0.1% of total current cash ABR.

Leverage and Balance Sheet and Liquidity

Leverage

As of March 31, 2020, the Company’s ratio of net debt to Annualized Adjusted EBITDAre was 4.6x.

Balance Sheet and Liquidity

Essential Properties had $214.1 million of cash and cash equivalents and restricted cash as of March 31, 2020. Additionally, Essential Properties had $335 million of unused borrowing capacity under its $400 million unsecured revolving credit facility as of the same date, with $65.0 million in outstanding borrowings.

Partial Repayment of Series 2017-1 ABS Notes

In February 2020, Essential Properties repaid (without penalty) $62 million of its Series 2017-1 ABS Notes.

Seven-Year Unsecured Term Loan

In March 2020, Essential Properties drew the remaining $180 million on its $430 million seven-year unsecured term loan facility. In addition, the Company entered into forward swap agreements that lock in one-month LIBOR at 1.362% for the duration of the loan starting on July 9, 2020.

Follow-On Offering

In January 2020, Essential Properties completed a follow-on offering of 7,935,000 shares of its common stock, including 1,035,000 shares issued pursuant to the underwriters’ exercise of an option to purchase additional shares, raising gross proceeds of $200.0 million at $25.20 per share.

ATM Program

Essential Properties has a $200.0 million ATM Program through which it may, from time to time, sell shares of its common stock. Essential Properties uses the proceeds generated from its ATM Program for general corporate purposes, including funding its investment activity, the repayment or refinancing of outstanding indebtedness, working capital and other general purposes. During the quarter ended March 31, 2020, Essential Properties sold 253,698 shares of common stock through its ATM Program at an average price of $24.74 per share, raising gross proceeds of $6.3 million.

Dividend Information

As previously announced, on March 18, 2020 Essential Properties declared a cash dividend of $0.23 per share of common stock for the quarter ended March 31, 2020. The dividend was paid on April 15, 2020 to stockholders of record as of the close of business on March 31, 2020.

2020 Guidance

The Company has withdrawn its previously issued 2020 AFFO guidance due to the significant volatility in the capital markets and the unprecedented economic uncertainty related to the impact of COVID-19.

Supplemental Materials

The Company’s Supplemental Operating & Financial Data—First Quarter Ended March 31, 2020 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, 2020, the Company’s portfolio consisted of 1,050 freestanding net lease properties with a weighted average lease term of 14.6 years and a weighted average rent coverage ratio of 2.9x. As of the same date, the Company’s portfolio was 99.5% leased to 212 tenants operating 283 different concepts in 16 industries across 43 states.