Essential Properties Realty Trust Inc Reports Solid Q4 and Full Year 2023 Earnings
Net Income per Share: Increased by 24% year-over-year to $0.31 in Q4.
AFFO per Share: Grew by 8% year-over-year to $0.42 in Q4, with full-year growth also at 8%.
Investment Activity: Closed investments of $314.9 million in Q4 at a 7.9% weighted average cash cap rate.
Disposition Activity: Net proceeds from dispositions totaled $30.6 million in Q4 with a 6.6% weighted average cash cap rate.
Debt and Equity: Drew remaining $75.0 million on $450 million 2029 Term Loan; raised $47.9 million in equity at $24.72/share through ATM program.
Leverage: Pro forma net debt to annualized adjusted EBITDAre stood at 4.0x at quarter end.
2024 AFFO Guidance: Reiterated at $1.71 to $1.75 per share.
On February 14, 2024, Essential Properties Realty Trust Inc (NYSE:EPRT) announced its financial results for the fourth quarter and full year ended December 31, 2023, through its 8-K filing. The company, a real estate investment trust specializing in acquiring, owning, and managing single-tenant properties net leased to middle-market companies, reported a 24% increase in net income per share for Q4, reaching $0.31, and an 8% increase in adjusted funds from operations (AFFO) per share to $0.42. These results underscore the company's robust investment activity and operational efficiency.
Financial Performance and Strategic Transactions
EPRT's Q4 investment activity included the acquisition of 93 properties for $314.9 million at a weighted average cash cap rate of 7.9%. The company also disposed of 9 properties, generating net proceeds of $30.6 million at a 6.6% weighted average cash cap rate. For the full year, EPRT invested in 293 properties totaling $1.0 billion and sold 52 properties with net proceeds of $138.0 million.
The company's leverage strategy involved drawing the remaining principal on a $450 million 2029 Term Loan, adding $75.0 million in debt. On the equity front, EPRT raised $47.9 million gross through its ATM program by selling shares at an average price of $24.72. This capital raising activity, combined with disciplined investment, has contributed to a pro forma net debt to annualized adjusted EBITDAre ratio of 4.0x, maintaining a strong balance sheet.
Portfolio and Operational Highlights
As of December 31, 2023, EPRT's portfolio boasted 1,873 properties with a weighted average lease term (WALT) of 14.0 years and a high occupancy rate of 99.8%. The portfolio's weighted average rent coverage ratio stood at 3.8x, indicating a healthy margin of rental income over tenant operating costs.
"We were pleased to close out the year with a great fourth quarter, highlighted by strong AFFO per share growth of 8%, reflecting a strong and consistent year of investment activity," said Pete Mavoides, President and Chief Executive Officer of Essential Properties. "With substantial liquidity of nearly $800 million, we remain well-positioned to capitalize on an increasingly attractive investment landscape as we continue to deploy sale-leaseback capital supporting the growth of our middle-market tenant relationships."
EPRT's focus on service-oriented and experience-based businesses has resulted in a diversified tenant base, with 374 tenants operating 588 different concepts across 16 industries. The company's investment strategy, emphasizing sale-leaseback transactions, has fostered strong tenant relationships and contributed to the portfolio's stability and growth.
Looking Ahead
Looking forward to 2024, EPRT has reiterated its AFFO guidance, projecting a per-share range of $1.71 to $1.75. This guidance reflects the company's confidence in its strategic direction and its ability to generate sustainable income and growth.
Essential Properties Realty Trust Inc's robust Q4 and full-year 2023 performance, marked by solid net income and AFFO growth, positions the company well for continued success in the dynamic real estate investment trust market. Investors and stakeholders can anticipate a steady course of strategic investments and prudent financial management as EPRT navigates the year ahead.
Explore the complete 8-K earnings release (here) from Essential Properties Realty Trust Inc for further details.
This article first appeared on GuruFocus.
