In This Article:
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Investments: $333 million invested through 37 transactions at an 8% weighted average cash yield.
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Average Lease Term: 17.7 years with a 2% annual rent escalation.
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Dispositions: Sold 24 properties for $60.4 million in net proceeds at a 7.0% weighted average cash yield.
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AFFO Per Share: $0.45, a 7% increase from Q4 2023.
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Total AFFO: $81.8 million, up 22% from the same period in 2023.
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Total G&A Expenses: $8.5 million, compared to $7.3 million in Q4 2023.
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Recurring Cash G&A: 4.8% of total revenue for the quarter.
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Cash Dividend: $0.295 with an AFFO payout ratio of 66%.
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Retained Free Cash Flow: $30.6 million in Q4, over $120 million annually.
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Income-Producing Gross Assets: $6 billion at quarter end.
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Forward Equity Sales: $79 million of stock sold on a forward basis at $32.01 per share.
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Net Debt to Annualized Adjusted EBITDAre: 3.8x at quarter end.
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Senior Unsecured Credit Facility: Amended to $2.3 billion with a $1 billion upsized revolver.
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2025 AFFO Guidance: $1.85 to $1.89 per share, implying over 7% growth at the midpoint.
Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Essential Properties Realty Trust Inc (NYSE:EPRT) invested $333 million in the fourth quarter through 37 transactions, maintaining a strong investment pace.
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The company achieved an AFFO per share of $0.45, marking a 7% increase compared to Q4 2023.
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Tenant concentration is low, with the largest tenant representing only 4.2% of ABR, enhancing risk diversification.
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The company declared a cash dividend of $0.295, with a payout ratio of 66%, indicating strong cash flow management.
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EPRT's balance sheet remains strong with a pro forma net debt to annualized adjusted EBITDAre of 3.8x, reflecting low leverage and significant liquidity.
Negative Points
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The company is dealing with a bankruptcy situation involving Zips Car Wash, which could impact future lease expectations.
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There was a slight increase in total G&A expenses, rising to $8.5 million in Q4 2024 from $7.3 million in Q4 2023.
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The carwash sector exposure remains a concern, with efforts to reduce it from above the 15% soft ceiling.
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Interest rate volatility poses challenges, potentially affecting transaction pricing and cap rate compression.
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Occupancy slightly decreased, with vacant properties increasing from 3 to 7, indicating potential leasing challenges.
Q & A Highlights
Q: Can you provide more details on the Zips bankruptcy and your exposure to the carwash segment? A: Peter Mavoides, President and CEO, explained that it's too early to discuss specifics about Zips as negotiations are ongoing. However, the company feels well-positioned with only three properties and 20 basis points of ABR exposure. Historically, recoveries have been $0.70 to $0.80 on the dollar. The carwash industry remains a strong investment area, with robust risk-adjusted returns and deep industry expertise across 54 operators.