EPRT

This article first appeared on GuruFocus. - GAAP Net Income: $60.7 million for Q3 2026. - AFFO: $111.9 million (nominal), up 16% year over year; AFFO per share of $0.51, up 6% versus prior year. - Investment Volume: $342 million invested in 100 properties across 31 transactions; average initial cash yield of 7.7%, GAAP yield of 9.4%; 91% of volume via sale-leasebacks. - Same-Store Rent Growth: 1.4%, consistent with recent quarters. - Occupancy: 99.6%, with only 11 vacant properties. - Rent Coverage: 3.5 times. - Total G&A: $14.1 million; cash G&A of $7.3 million (4.3% of total revenue, down from 4.6% a year ago). - Dividend: $0.32 per share declared; AFFO payout ratio of 63%; retained free cash flow of $42 million in the quarter. - Dispositions: 11 properties sold for $17.9 million at a weighted average cap rate of 6.1%. - Balance Sheet: Income-producing gross assets of $8.1 billion; pro forma net debt to annualized Adjusted EBITDAre of 3.8 times; liquidity of $1.3 billion; $483 million of unsettled forward equity at an average price of $30.50 per share; $809 million of revolver capacity; no debt maturities until 2028. - Portfolio: 2,580 properties leased to tenants operating over 700 concepts; weighted average lease term over 14 years; weighted average lease escalations of 1.9%; only 2% of ABR expiring through 2028; top 10 tenants at 15.2% of ABR and top 20 at 25.1%; car wash exposure reduced 60 basis points to 12% of ABR. - 2026 Guidance: AFFO per share raised to $2.02$2.05 (approximately 8% growth at midpoint); investment volume raised to $1.3 billion$1.5 billion. - 2027 Guidance: Initial AFFO per share range of $2.10$2.18; investment volume of $1 billion$1.5 billion; cash G&A expense of $32 million$37 million; approximately $200 million of dispositions assumed. - Warning! GuruFocus has detected 5 Warning Signs with EPRT. - Is EPRT fairly valued? Test your thesis with our free DCF calculator. Release Date: October 22, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Essential Properties Realty Trust Inc (NYSE:EPRT) invested $342 million in Q3 2026 at a 7.7% cash yield and 9.4% GAAP yield, with 91% of investments in sale-leaseback transactions. - The company increased its 2026 AFFO per share guidance to $2.02-$2.05, implying nearly 8% growth at the midpoint, and set initial 2027 guidance of $2.10-$2.18. - Portfolio performance remains strong with 99.6% occupancy, 3.5x rent coverage, 1.4% same-store rent growth, and a reduced tenant credit watchlist. - Essential Properties Realty Trust Inc (NYSE:EPRT) maintains a strong balance sheet with pro forma leverage of 3.8x, $1.3 billion in liquidity, and no debt maturities until 2028. - The company has pricing power, with new investments being struck at higher cap rates (around 8%) and GAAP yields in the high 9s, reflecting diminished competition. - Essential Properties Realty Trust Inc (NYSE:EPRT) expects a slower pace of deployment over the next two to three quarters due to capital markets choppiness and disciplined pricing. - The probability of closing deals in the pipeline has dropped to 65-70% from the historical 90-95% due to volatile capital markets. - The company's cost of capital has increased, with current incremental cost in the mid-to-high 6s, compressing investment spreads to 100-150 basis points, toward the lower end of the historical range. - Essential Properties Realty Trust Inc (NYSE:EPRT) recorded an impairment this quarter related to a vacant former Art Van location, highlighting idiosyncratic risks in certain segments. - The company faces a hole in its debt maturity ladder at five and seven years, and is evaluating debt refinancing options that could impact future interest costs. Q: What are the building blocks for the 2027 AFFO guidance, and how do you plan to refinance the $430 million term loan currently on the revolver? A: CFO Rob Salisbury explained that the 2027 guidance is driven by the $1 billion-$1.5 billion investment volume range and solid portfolio performance. Regarding the $430 million term loan prepaid in February, the company is evaluating options to term it out, including unsecured bonds (high 6s), converts (south of 5), or bank debt (5.6%-5.7%). The guidance assumes the debt is termed out and not left floating for the entirety of 2027. Q: Can you provide color on the disposition market, specifically the demand and cap rate expectations, and which verticals you might lighten up on? A: CEO Pete Mavoides stated that the company has good liquidity across most verticals and plans to sell a representative sampling of assets rather than cherry-picking. He expects to potentially ramp dispositions from $25 million to $50 million per quarter, achieving cap rates in the mid to high 6% range, which would be accretive to the cost of capital. Q: How are you able to maintain a meaningful spread and pricing power in the current environment, and is this due to looking at more deals or customer needs? A: Pete Mavoides attributed this to high deal throughput and the granularity of investments ($5-$10 million chunks). He noted that middle-market operators are motivated by accessing capital to grow their businesses and are less price-sensitive; an extra 25-75 basis points on the cap rate does not change their overall business plan, allowing EPRT to achieve attractive pricing. Q: With the 2027 acquisition volume target being back-end loaded, is the funding fully covered, and how should we think about leverage? A: Rob Salisbury confirmed the company is fully covered for 2027 from both a liquidity and leverage capacity standpoint. He projects year-end net debt to EBITDA in the low to mid-4s, assuming no common equity is issued. The company does not assume any ATM equity in the near term due to the current share price but would consider it if the price becomes more attractive to build dry powder. Q: What is driving the lower credit loss in the portfolio, and what is the assumption for 2027? A: Rob Salisbury noted that credit losses are trending slightly better than guided for 2026. For 2027, the guidance assumes a conservative posture with losses well in excess of the historical realized loss of just under 30 basis points per year. Pete Mavoides added that the low credit losses are primarily attributed to the investment decisions made at the outset, rather than operational changes post-investment. Q: Can you discuss the pipeline conversion rate and the change in the percentage of deals closing? A: Pete Mavoides stated that the expected probability to close has dropped from the historical 90%-95% to roughly 65%-70% due to capital markets choppiness. He noted the fallout is equally balanced between deals failing due to financing issues and deals failing because EPRT adjusted pricing. Max Jenkins added that the team proactively repriced 60-90 deals in the pipeline to maintain accretive spreads. Q: How should we think about investment spreads in 2027 given the current cost of capital? A: Rob Salisbury explained that while the spread on capital raised in Q3/Q4 is over 200 basis points, the current spot cost of capital is in the mid to high 6s. This results in a current spread of 100 to 150 basis points, which is at the lower end of the historical 100-300 basis point range. Pete Mavoides added that the business plan is not predicated on raising new capital, and spreads are an output of market conditions. Q: Can you provide an update on tenant health and the watchlist? A: Max Jenkins reported that the watchlist is down 50 basis points quarter-over-quarter and sits at 1.1%. The portfolio continues to operate within the guidance range with no material trends to report. Craig Vachris added that rent coverage remains strong at 3.5 times, and tenant performance is consistent. Q: What drove the impairment this quarter, and what is the outlook for the home furnishing industry? A: Rob Salisbury explained the impairment was primarily driven by one vacant site formerly leased to Art Van in the home furnishing segment. The company received more leasing information during the quarterly impairment testing process, triggering the write-down. He noted the company has not been bullish on home furnishing for years and is now down to one location, representing a rounding error in the portfolio. Q: Can you discuss the demand market for bonus depreciation and how sticky that capital is? A: Pete Mavoides noted there is a lot of demand from the bonus depreciation market at attractive costs due to massive tax incentives. He described the capital as "sticky" because selling fully depreciated assets carries big penalties. While EPRT has not delved deeply into this market historically, it is an attractive source of capital, particularly in the fourth quarter, though the disposition plan has not leaned heavily into it yet. Q: What is the appetite for increasing exposure to Dave & Buster's given their credit outlook? A: Max Jenkins clarified that the recent Dave & Buster's transaction was a single asset added to a master lease, which was accretive to coverage and improved the collateral position. He stated it is unlikely the company will add more exposure to that name going forward. Pete Mavoides added that EPRT does not follow S&P ratings as a guide for underwriting and remains confident in the master lease coverage. Q: How do you view the opportunity for rent step-ups on leases coming due given the high rent coverage? A: Pete Mavoides explained that the leases generally include renewal options at the tenant's discretion (typically two 10-year or four to five-year options). EPRT does not have the ability to mark these assets to market. He noted that if coverage is higher than two times, the company assumes a 98% probability that the tenant will exercise their renewal options. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Essential Properties Realty Trust stock jumped 5.5% to US$26.26 by Friday's close, a sharp move for a net lease real estate investment trust that has been drifting over the past quarter. The trigger was Q3 2026 results that put funds from operations and adjusted funds from operations front and center, with Q3 FFO at US$118.1m and adjusted FFO per share at US$0.51. Short term traders are reacting to the pop, while long term holders are weighing that earnings strength against a balance sheet that still relies heavily on external capital to fund an US$8.1b portfolio. Like the earnings power at Essential Properties Realty Trust but uneasy about a balance sheet that leans on external capital to support an US$8.1b portfolio? Scan the list of solid balance sheet and fundamentals stocks (26 results) for ideas that pair income potential with sturdier financing profiles. - Revenue (Q3 2026 vs. Q3 2025): US$168.7m vs. US$144.9m (higher year on year) - Net Income (Excl. Extra Items, Q3 2026 vs. Q3 2025): US$59.8m vs. US$65.4m (lower year on year) - Basic EPS (Q3 2026 vs. Q3 2025): US$0.28 vs. US$0.33 (declined year on year) - Funds From Operations, FFO (Q3 2026 vs. Q3 2025): US$118.1m vs. US$104.8m (up year on year) Management says weaker rivals let them push for higher cap rates. Ask Charlie what gives Essential Properties its pricing power now. Bulls argue Essential Properties Realty Trust can keep growing by leaning on steady deal flow at attractive yields while holding leverage in check. "The main thing that has to go right is that Essential Properties Realty Trust continues to source and fund around US$1.1 to 1.5 billion of annual investments at positive spreads while managing upcoming refinancing and equity dilution so that AFFO per share growth remains aligned with recent guidance increases." Q3 investments of US$342m and the raised 2026 deployment guidance to US$1.3 to 1.5b show that the volume target is on track. AFFO per share of US$0.51 and higher 2026 guidance to US$2.02 to US$2.05 indicate per share economics are still holding up alongside that growth plan. The cautionary view focuses on whether Essential Properties Realty Trust's funding toolkit erodes per share outcomes as rates reset and maturities roll forward. "Refinancing the February 2027 term loan, which is currently fixed around 2.26%, is expected to be dilutive by roughly US$0.04 to US$0.06 of AFFO per share under most replacement debt scenarios." Management has already prepaid a US$430m 2027 term loan and is weighing unsecured bonds, bank debt, or convertibles to term out revolver usage. Q3 pro forma net debt to EBITDAre of 3.8x and a roughly 63% AFFO payout ratio suggest capacity to absorb future refinancing pressure, although unsettled forward equity of US$483m still points to ongoing dilution risk. That disagreement has a full argument behind it. → Uncover the higher Fair Value this Narrative argues for. Essential Properties Realty Trust just reminded investors how much a single quarter can reshape the debate around a stock. The real opportunity is finding stocks that could be undervalued before the market closes that gap. - Company 1 - 40% below our estimate - expand a new manufacturing footprint and installation network for higher margin protective films in dealer and installer channels. - Company 2 - 41% below our estimate - scale a device trade in and refurbishment platform as subsidies and changing consumer habits move electronics into organized recommerce. - Company 3 - 49% below our estimate - win larger fixed price infrastructure and defense contracts as public agencies direct long duration projects to experienced mega project contractors. Three companies from the same screener. Open the full list of 29 companies trading below our fair value estimates → This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include EPRT. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Achieved 9.4% GAAP yields in Q3 by leveraging the company's position as a reliable capital provider for middle-market operators facing restricted lending environments. - Maintained a highly granular investment strategy with an average property size of $3 million, enhancing portfolio fungibility and risk mitigation. - Prioritized 'deliberate selectivity' in new deployments to ensure pricing reflects a meaningful spread over the company's elevated weighted average cost of capital. - Reported stable portfolio fundamentals with 99.6% occupancy and 3.5x rent coverage, indicating tenant resilience despite broader macroeconomic pressures. - Attributed the low level of credit losses to disciplined underwriting at the point of investment rather than active management of existing leases. - Successfully repriced the forward pipeline to approximately 8% cash cap rates, reflecting a rapid adjustment to the current interest rate environment. - Utilized opportunistic dispositions at a 6.1% weighted average cap rate to accretively recycle capital and validate the liquidity of granular assets. - Projected 2027 AFFO per share of $2.10 to $2.18, supported by a gross investment volume range of $1 billion to $1.5 billion. - Anticipates a back-end loaded investment cadence for 2027 to preserve balance sheet capacity while waiting for asset pricing to fully adjust to capital market shifts. - Assumes approximately $200 million in dispositions for 2027 as a strategic funding lever that has become accretive relative to the current cost of equity. - Plans to term out the $430 million revolver balance in late 2026 or early 2027, evaluating unsecured bonds, converts, and bank debt to manage variable rate exposure. - Expects a lower probability of closing for pipeline deals (65-70% vs. historical 90-95%) due to increased capital market choppiness and pricing adjustments. - Recorded a specific impairment on a vacant former ArtVan location, reflecting a strategic decision to exit the home furnishing sector due to poor industry outlook. - Reduced car wash exposure by 60 basis points to 12% of ABR as part of ongoing portfolio diversification and concentration risk management. - Expanded revolver capacity by $300 million to $1.3 billion, providing a liquidity bridge to manage upcoming debt maturities without immediate equity issuance. - Announced a management transition including the appointment of a new Chief Investment Officer and promotions for the President/COO and CFO/CSO roles. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management confirmed 2027 funding is fully covered through retained cash flow, dispositions, and existing revolver capacity without needing new common equity. - Refinancing strategy for the $430 million maturity includes evaluating 10-year bonds (high 6s), converts (sub-5 coupon), or bank debt (mid-5s). - Management noted that middle-market operators are less price-sensitive than auction-market sellers, allowing for faster cap rate adjustments in sale-leasebacks. - Current investment spreads are expected to remain in the 100 to 150 basis point range, which is at the lower end of the historical 100-300 bps range. - Watch list improved to 1.1% of ABR, with management stating the consumer is 'doing okay' despite modest same-store sales declines in some sectors. - Unit-level coverage remains flat as tenants successfully offset sales pressure with margin expansion initiatives. - Management clarified that a recent Dave & Buster's acquisition was a single-asset addition to a master lease that improved overall collateral and coverage. - Indicated it is 'unlikely' they will add significant further exposure to that specific tenant name in the near term.

Image source: The Motley Fool. Thu, Oct. 22, 2026 - chief executive officer - Peter Mavoides - CFO and chief strategy officer - Robert W. Salisbury - president and chief operating officer - Robert Max Jenkins - chief investment officer - Craig J. Vachris - director of financial planning and data analytics - Sheryl Kaul Operator: Thank you for choosing Education. You may be calling again shortly. Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press 0, and a member of our team will be happy to help. Good morning, ladies and gentlemen. And welcome to Essential Properties Realty Trust Third Quarter 26 Earnings Conference Call. At this time, all participants are in a listen-only mode. During the question and answer session. To register to ask a question at any time, please press star 1 on your telephone keypad. This conference call is being recorded. And a replay of the call will be available 3 hours after the completion of the call for the next 2 weeks. The dial in details for the replay can be found in yesterday's press release. Additionally, there will be an audio webcast available on Essential Properties website at www.essentialproperty.com, an archive of which will be available for 90 days. are Pete Mavoides, chief executive officer Robert W. Salisbury, CFO and chief strategy officer Max Jenkins, president and chief operating officer Craig J. Vachris, chief investment officer and Sheryl Kaul, director of financial planning and data analytics. It is now my pleasure to turn the call over to Sheryl Kaul. Sheryl Kaul: Thank you, operator. Good morning, everyone. And thank you for joining us today for Essential Properties Third Quarter 26 Earnings Conference Call. During this conference call, we will make certain statements that may be considered forward looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward looking statements and we may not release revisions to those forward looking statements to reflect changes after the statements were made. Factors and risks that could cause actual results to differ materially from expectations, are disclosed from time to time in greater detail in the company's filings with the SEC and in yesterday's earnings press release. In our earnings release last night, for the quarter, we reported GAAP net income of $60.7 million and AFFO of $111.9 million. With that, I will turn the call over to Peter. Peter Mavoides: Thank you, Sheryl. And thank you to everyone joining us today for your interest in Essential Properties. In the third quarter, we continued to execute on our goal of driving compelling earnings growth for shareholders through owning a diverse portfolio with an increasing revenue stream, and accretively deploying capital to grow and diversify that portfolio. On the external growth front, we invested $342 million into 100 properties at an average initial cash yield of 7.7%. And a GAAP yield of 9.4%. 90-1 percent of our investments in this quarter were sale leaseback transactions which continues to be a compelling source of growth capital for middle market operators across our targeted industries. In an elevated cost of capital environment, our ability to deliver reliable permanent capital to operators gives us compelling pricing and structuring leverage and that is showing up in our pipeline. Our investments team continues to find attractive opportunities across our targeted industries. That said, we are being deliberately selective prioritizing transactions where pricing reflects a meaningful spread to our cost of capital, supporting long term earnings growth for our shareholders. As Max will discuss later, we are achieving pricing power in real time with new investments being struck at higher cap rates than the third quarter investments, which were largely contracted over the summer. Importantly, a methodical approach to deployment protects our capital runway and preserves our corporate liquidity in a period of capital markets choppiness. Our capital position remains strong, with pro forma leverage of 3.8x and liquidity of $1.3 billion. Providing ample financial capacity to execute our business plan As Rob will discuss later, Turning to the portfolio. We ended the quarter with investments in 2.58 thousand properties, that were leased to tenants operating over 700 concepts. Our weighted average lease term is over 14 years, Our weighted average lease escalations are 1.9%, and just 2 percent of our annual base rent is expiring through 2028. Our portfolio continued to deliver solid and consistent performance this quarter, with same-store rent growth of 1.4 percent healthy rent coverage of 3.5x, and occupancy of 99.6 percent. And a reduction in our tenant credit watch list. With investment activity and portfolio performance tracking ahead of our budgeted expectations, we are increasing our 2026 AFFO per share guidance to a new range of $2.02 to $2.05, and our investment volume guidance to a range of $1.3 billion to $1.5 billion Our revised AFFO per share guidance implies a growth of almost 8 percent at the midpoint. We are establishing our initial 2027 guidance with an AFFO per share range of 2 dollars and 10 cents to 2 dollars and 18 cents investment volume of $1 billion to $1.5 billion and cash G&A expense of $32 million to $37 million Our operating plan calls for a slow pace of deployment over the next 2 to 3 quarters as our investment teams remain disciplined on pricing allowing us to retain balance sheet capacity. Historically, asset pricing adjustments tend to lag the rapid movement of pricing in the capital markets. Based on our current weighted average cost of capital, dispositions have become an accretive source of capital and are likely to trend higher in the near term to alleviate capital markets funding requirements. Lastly, I would like to congratulate Max and Robert on the recent promotions. Which recognize the meaningful contributions they have made to the company and position them with greater responsibilities going forward. I would also like to welcome Craig J. Vachris to the company as our new Chief Investment Officer. These management changes reflect the continued evolution of the management team as we pass our 10-year anniversary. With that, I will turn the call over to Craig, who will provide an update on our portfolio and asset management activities. Craig? Craig J. Vachris: Thanks, Peter. Overall, our portfolio fundamentals remained healthy during the quarter. And continued to perform in line with our expectations. Same store rent growth was 1.4%, consistent with recent quarters. Occupancy remained strong at 99.6% with only 11 vacant properties. Portfolio rent coverage remained at a very healthy level of 3.5 times The percentage of ABR with rent coverage below 1x was consistent quarter over quarter. And our watch list improved reflecting continued stability in tenant credit. On the disposition front, we sold 11 properties for $17.9 million at a weighted average cap rate of 6.1%. The dispositions were primarily driven by opportunistic sales led by restaurant and car wash properties. Notably, these dispositions were transacted at cap rates that were accretive to our weighted average cost of capital highlighting the value of owning granular fungible properties with a deep buyer pool. Additionally, healthy buyer demand enables us to have the flexibility to scale our disposition activity should we choose to lean further into capital recycling. Our portfolio continues to benefit from broad diversification as our top 10 tenants represent just 15.2 percent of ABR at quarter end. While our top 20 tenants account for only 25.1 percent, reflecting our continued focus on partnering with a broad base of middle market operators and limiting concentration risk. We also reduced our car wash exposure by 60 basis points during the quarter to 12 percent of ABR, and our portfolio construction remains healthy. Lastly, you may have noticed that we relabeled certain industry categories in our supplemental to better reflect the businesses in our portfolio. This was simply a name change. For example, medical slash dental is now health and wellness. And health and fitness is now fitness. With that, I will turn the call over to Max Jenkins our President and Chief Operating Officer, who will provide an update on our investment activities and the current market dynamics. Robert Max Jenkins: Thanks, Craig. On the investment side, during the third quarter, we invested 3 hundred 42 million dollars at a weighted average initial cash yield of 7.7%. Our investments in the quarter had a weighted average initial lease term of 17.9 years and a weighted average annual rent escalations of 2.3 percent. Generating a strong average GAAP yield of 9.4%. Our capital deployment during the third quarter was broad based across most of our top industries we completed 31 transactions totaling 100 properties. With alternative financing sources becoming more difficult for many companies, operators continue to monetize their own real estate through sale leasebacks, which encompass 91% of our investment volume in the quarter. Our average investment size was 3 million dollars per property during the quarter, reflecting our focus on granular highly fungible assets that provide attractive risk adjusted returns. As Pete mentioned, pricing is front and center for us. As our cost of capital has moved higher, we have been proactive in managing our pipeline and pushing for higher returns reflective of the current environment. Without taking on any incremental risk. Diminished competition from private players in a more restrictive middle market lending landscape, are factors contributing to our pricing power. Consequently, our forward pipeline has cap rates around 8 percent with gap yields in the high 9s. With over 1 billion dollars of investments closed year to date, we have again increased our full year investment guidance to a new range of $1.3 billion to $1.5 billion With that, I would like to turn the call over to Robert W. Salisbury, our CFO and Chief Strategy Officer, who will take us through the financials for the third quarter. Robert W. Salisbury: Thanks, Max. Overall, we delivered another strong quarter of operating and financial performance. Our AFFO per share was $0.51 representing an increase of 6 percent versus the year ago period, while nominal AFFO increased 16 percent year over year $112 million This AFFO performance was ahead of our expectations, driven by strong investment volume and a modest benefit from the lack of treasury stock method dilution. On our unsettled forward equity balance. Total G&A in the quarter was 14 point 1 million dollars Our cash G&A was $7.3 million which is trending favorably towards the lower half of our guidance range of $30 million to $34 million for the year and represents just 4.3 percent of total revenue, down from 4.6 percent in the same period a year ago. We declared a cash dividend of 32 cents in the third quarter, which represents an AFFO payout ratio of 63 percent. This low payout ratio enabled us to retain free cash flow totaling 42 million dollars in the quarter. Representing a substantial source of internally generated capital. Turning to the balance sheet. At quarter end, our income producing gross assets totaled 8 point 1 billion dollars The growth and diversification of our portfolio continues to further strengthen our credit profile. During the quarter, we partially exercised the accordion feature on our revolving credit facility. Increasing capacity by 3 hundred million dollars to 1 point 3 billion dollars We would like to thank our entire bank group for their overwhelming support in this successful transaction. We utilize this extra liquidity to support the prepayment of our sole 2027 maturity a 4 hundred 30 million dollars term loan. Leaving us with no debt maturities until 2028. As a reminder, we retained our favorable interest rate swaps, which had previously hedged that maturity. Our revolving credit facility will utilize this hedge until it expires next month. Looking ahead, we are evaluating a range of debt capital to term out our revolver balance and extend our robust liquidity profile. With 4 hundred 83 million dollars of unsettled forward equity, at an average price of 30 dollars and 50 cents per share, and 8 hundred 9 million dollars of revolver capacity, we have more than enough liquidity to continue funding our growth plan. Allowing us to be opportunistic when it comes to sourcing external capital. Additionally, from a leverage standpoint, our pro form a net debt to annualized adjusted EBITDAre remains low at 3.8 times at quarter end. Underscoring our commitment to maintaining a low leverage profile. As Pete mentioned, we increased our 2026 AFFO per share guidance. To a range of 2 dollars and 20 cents to 2 dollars and 50 cents reflecting a growth rate of approximately 8 percent at the midpoint. We also established an initial AFFO per share guidance range for 2027 of 2 dollars and 10 cents to 2 dollars and 18 cents reflecting our expectation of another year of best in class earnings growth. The guidance range includes investment volume of 1 billion dollars to 1 point 5 billion dollars which is expected to be back end loaded as we seek to preserve balance sheet capacity in the near term. Importantly, our annual free cash flow after dividends is approaching 2 hundred million dollars and our guidance assumes approximately 2 hundred million dollars of dispositions next year. Combined with our expanded revolver capacity, and unsettled forward equity balance, these sources provide sufficient funding to support our investment guidance for 2027 without the need to source external capital. With that, I will turn the call back over to Peter. Peter Mavoides: Thanks, Robert. In summary, we are pleased with our third quarter results. Volatile capital markets present both challenges and opportunities for disciplined investors. We have positioned this company to manage both the challenges and capitalize on the opportunities with a strong balance sheet long standing relationships built on reliable execution, and a great team. We are excited about the business plan that supports our 2027 guidance. Operator, please open the call for questions. Operator: Thank you. And we will take our first question from Michael Goldsmith with UBS. Your line is open. Michael Goldsmith: Good morning. Thanks a lot for taking my questions. First, on the 2027 guidance, I think you started to touch on it, but can you provide us the building blocks for how you are going to achieve that? And then as also, what are you assuming on the debt refinancing and, how you are going to approach that? I know you put it on the revolver, but just can you talk about your different options there and how you plan to proceed? Peter Mavoides: I will let Rob handle that. Robert W. Salisbury: Hey, Michael. Good morning. So we outlined, some of the high level drivers in our press release, most notably the investment volume range. As it relates to financing, yes. So we currently have 4 hundred 30 million dollars on the revolver that was attributed to the prepayment of that term loan that was set to mature in February. So, we had 8-K would that about a month ago, but we went ahead and, expanded our revolver capacity that helps support taking that down a little bit early. Just as a reminder, we kept that swap in place. You can see some expanded disclosure in our supplemental to show you where that is currently swapped. That swap will mature at the end of November, at which time it will become a floating rate obligation just like the rest of our revolving credit facility. And so as we look at some potential options to term that out, you know, clearly, we do not want to leave it floating and seek to have as low variable rate debt exposure as we can. So as we sit here today, we are evaluating all of the debt alternatives. I think we mentioned in the earnings call script. And, when we look at the menu, right now, unsecured bonds on a 10-year basis would probably price in the high 6s. A convert would probably price south of a 5. On the. On a coupon basis, I should say. And then bank debt would probably be somewhere in between, in the 5.6% to 5.7% range. We are looking at all of those. You know, as a general comment, we are always looking to extend the duration on our liability stack. We recently did a 10-year bond offering back in June. So, strategically, we are continuing to focus on that understanding, of course, that we do have a hole in our ladder at both the 5- and 7-year maturity. So we would consider shortening up just a little bit, you know, support the refinancing of that obligation. And I should say that we have included a range of, scenarios for that baked into our guidance range. The range does not assume that we leave it floating for the entirety of 2027. We assume that we do term that out. I think that, just given where the swap is today, we will probably have more to talk about in a month or 2 as we continue to assess those options. But, know, clearly, interest rates are evolving, dynamically, and, we will see where that shakes out. Peter Mavoides: Yeah. Thanks for the answers. Yeah. Mike, the other building blocks for, you know, 2027. Obviously, we have the investment guidance out there. A billion to a $1.5 billion, which is a conservative range relative to our historical performance. And then all of that guidance kind of predicated on continued solid portfolio performance and our compelling growth within the portfolio. So Thanks for that. Michael Goldsmith: And just as a follow-up, speaking about the solid portfolio performance, can you just talk a little bit about tenant health and the watch list? I think you are sub 1 time coverage bucket was flat last quarter. So just trying to get a sense of, you know, is there any change in the watch list, how you think about your tenant base and how they have been able to navigate the macro? Thanks. Peter Mavoides: Hey, Max. Why do not you handle that? Robert Max Jenkins: No problem. Thanks, Peter. it is been very consistent. We do not really see any trends or movement 1 way or another. Obviously, it is. I guess that it is going to be pretty consistent We are happy with the way our tenants are performing. Coverage remains strong. Robert W. Salisbury: And Michael on that, specifically the watch list, it is actually down 50 basis points quarter over quarter and sits at 1 point 1 percent. And as Max noted, the portfolio continues to operate within the guidance range. And no trends, nothing material to report, and we are happy with how our tenants are performing. Michael Goldsmith: Thank you very much. Good luck in the fourth quarter. Peter Mavoides: Thank you. Operator: We will take our next question from Haendel St. Juste with Mizuho. Your line is open. Analyst: Hey there, guys. Good morning. Wanted to follow-up on this. Love it. I wanted to follow-up on the 2027 line of questioning for Michael before. Can you talk a bit more about capital deployment strategy and balance sheet management a bit more? Sounds like Peter, you mentioned investments may be back end loaded. Should we expect to see leverage tick up a little bit here over the course of 2027? Maybe some color on the key swing factors for the upper and lower end of the of the range for next year. Is it basically volume spreads and debt refis or anything else we should consider? Thanks. Peter Mavoides: Yeah. Listen. I think, you know, we are going through a period of time here, as we said in the call, where there is been a rapid movement in our weighted average cost of capital. And that, you know, we are going through a process of repricing assets and repricing our pipeline. And so as we go through that period of time, we expect volumes to decrease as sellers expectations are adjusted. Overall, we would expect you know, there to be a lower level of transaction opportunities. But, you know, I think on a bigger picture, we would expect a more than commensurate lower level of competition that you know, continues to afford us ample opportunities to invest But it is it is a very dynamic time, and we are gonna react to the market as it evolves. You know, and as we are, you know, we are focusing on achieving attractive spreads and price. Pricing transactions appropriately for the risk in the current market. And you know, we are we are uncertain, you know, what that looks like as we think about you know, certainly, 2Q and 3Q and add into 4Q. So there is a wide range of scenarios supporting our guidance. And I guess it really just depends on, 1, our cost of capital and 2, the pricing of assets and our ability to maintain spread We are pretty optimistic. The pipeline is strong, and we have gone through and repriced a large proportion of the opportunities in the pipeline. And those transactions have held together and are consummating at attractive rates. But it is early days, and, we will see what happens. Robert W. Salisbury: Just on. I would add on the capital side, Haendel, we are not assuming a dramatic re leveraging of the sheet. We are gonna continue to run at a low leverage point. And we are assuming really nothing on the ATM in the very near term just to recognition of where our share price is today. So no common equity in the near term. Analyst: Got it. Got it. Super helpful. Gracias. And maybe 1 follow-up if I could on the dispositions. Certainly seems like there is an opportunity out there, as you alluded to, to sell some assets at good pricing and perhaps accretively recycle into investments. So maybe color on the market, the demand, your ability to sustain low 6 cap rates or maybe the range of expectations for cap rates as well? As you look at the marketplace and any color on verticals you may lighten up as well. Thanks. Peter Mavoides: Yeah. I think we will take a deep look at the portfolio. And I think we have good liquidity across most of our industry verticals, and we will probably try to sell a representative sample of those assets. Certainly, we would not wanna cherry pick the portfolio. Solely to achieve, you know, pricing. We would probably sell a representative sample and overall try to improve our hold positions. You know, historically, we have been about 2 hundred 25 million dollars a quarter. I think it is. We could conceivably you know, ramp that up very easily to 50 million dollars a quarter. And I would expect us to be able to achieve in the mid- to high- 7s cap. Excuse me, mid to high 6% cap rate range on those transactions. Analyst: Got it. Got it. Very helpful. Thank you, guys. Operator: We will take our next question from Jana Galan with Bank of America. Your line is open. Jana Galan: Thank you. Good morning and congrats on a strong quarter. Just going back to the investment guide for 2027, Curious, is that gross or net? Robert W. Salisbury: I think, Robert, you mentioned 2 hundred million dollars of potential dispositions next year. Peter Mavoides: Yeah. We tend to. We guide to a gross investment number. Jana Galan: Thank you. And then on the activity in the quarter, we noticed early childhood education picked up. Just curious if there is any tenant categories that look more attractive today, anything that you are, you know, looking to lean into. Robert Max Jenkins: Hey. Thanks for the question. This is Max. Our investment strategy has not changed in the last decade. And we going to price deals within each industry based on the appropriate risk adjusted returns and maintaining an attractive spread in this environment. You know, notably about early childhood education, it was 5 different portfolio transactions within the quarter with different tenants. And so no large portfolio, just our normal right of way relationship based investing. Jana Galan: Thank you. Operator: We will take our next question from Caitlin Bowers with Goldman Sachs. Your line is open. Analyst: Good morning, everyone. Peter, you mentioned earlier, now that we have talked about it a bunch about how you are continuing to find attractive opportunities but are being deliberately selective and getting a meaningful spread. So I was just wondering if you can talk a little bit more about how that is possible. Is it that you look at more deals so then you can be more selective? Is it that your customers need you, so you have that, call it, it upper hand? Or, yeah, how can you continue to achieve that outcome? Peter Mavoides: I think part of this is looking at a lot of deals, having a lot of throughput, We have a very granular portfolio, where we are investing in 5 to 10 million dollars chunks. And so that granularity gives us good optionality. I think the bigger picture is that we are negotiating and doing providing capital to operators who are motivated by accessing capital and growing their business. And so, you know, an extra 25, 50, 75 basis points on cap rate. Does not change the complexion of their overall business plan, and they are more focused on kinda expanding units, growing sales, and improving margins. And having that access to capital is important to them. So we have always focused on a value added investment strategy by providing capital to middle market operators. That are not that price sensitive and, you know, through those relationships, we have been able to, you know, kinda price our deals. On the flip side of that, those operators are getting transactions and opportunities that are attractive to them, you know, in the current market environment too, such that the overall transaction can hire can handle a higher cost of capital supporting it. Got it. And then just as you think of, industries going forward, I think last quarter we talked a lot about how you guys have your kind of different industries. You did not expect to really change that. Guess a lot has happened in the past quarter. So as you think of the investment volume in the next 12 months or through 2027 and maintaining attractive spreads, would you consider some shift in, like, industry focus where you could get that larger spread? Are you still expect it to be, like, ratable? Yeah. I would expect it to be more ratable, and we certainly built the business plan that way. You know, I would not wanna look at a business plan that focus up solely on out the risk spectrum on the wider industries or the or the more risky transactions. We generally follow our relationships with 80% to 90% repeat business and I would expect the composition of our 2020 investment pipeline to be very ratable to the overall portfolio. Analyst: Thanks. Operator: We will take our next question from Smedes Rose with Citigroup. Your line is open. Bennett Rose: Hi. Thanks. I just wanted to ask a little bit just in your experience in the space. Are there any segments where you might expect to see kind of seller expectations adjusting maybe more quickly, more rapidly, I guess, as expectations do reset over the next several months or quarters, or is it generally kind of similar across all categories? Peter Mavoides: Yeah. You know, I. The flip side of that to me is that I would expect seller expectations in the auction market of existing net lease product to adjust less rapidly. You know, I think where we focus providing capital to middle market operators and sale leasebacks that is very dynamic and those operators are less price sensitive. But if you are sitting on a portfolio of net lease assets that are cash flowing you know, your sole motivation is gonna be price. And unless you have a debt financing or some maturity or some artificial catalyst that forces you to effectuate a sale, you are gonna hold on for the best price. And so that market tends to be the slowest to adjust. But, you know, with our granular middle market operators, you know, that adjustment has happened really in a matter of a month and a half. Bennett Rose: Okay. And then I was just wondering, we heard from other reports, either deals being canceled in the fourth quarter or of an aggressive efforts to reprice deals that were underway. Is that something that you are, I guess, currently doing now? And could you maybe just sort of update us on where the kind of total of line of sight is on your on your pipeline? Relative to your September update? Peter Mavoides: Yeah, Max, why do not you tackle that? Robert Max Jenkins: Hey, Bennett. You know, we took a pretty granular and tactical approach. We took all 60 to 90 deals in the pipeline and when you have relationship investing, you wanna be proactive and reach out to those partners and those operators. And so it is a mixed bag. Some deals you know, are M&A related, and so the financing just did not come together, and they naturally fell out in a volatile environment. But you know, generally, we are pretty happy with how quickly we have kind of been able to, to move cap rates to make investments accretive, and I think that is just a testament to the you know, the pipeline engine that we built over the last decade and a lot of repeat business. And so we are focused on, you know, maintaining those relationships, but as Peter said, when you are providing a service and you are provide. You are 1 of the only capital providers in the middle market right now in this volatile period. We are encouraged by where the pipeline sits and where we have been able to move cap rates. Peter Mavoides: I would add, Bennett, you know, the complexion of our pipeline is, call it, 3 to 10 million dollars deals in any given quarter that are being priced, you know, every week. And so we have a very real time ability to price transactions and react to our movements in cost of capital, and we certainly have done that on a go forward basis. That said, we generally operate with a 90 percent to 95 percent expected probability to close within our pipeline, And. but given the capital markets choppiness, I would say that is probably closer to 70 percent or 65 percent in the current market. So there is more volatility, but that is offset by the number of opportunities and the diminished competition. Bennett Rose: Great. Thank you. Operator: Thank you, Steve. And we will take our next question from Eric Borden with BMO. Your line is open. Eric Borden: Hey. Good morning. Thanks for taking the question. I know you do not provide specific credit loss guidance, but with tenant performance stable and the watch list improving, should we think about the credit loss assumption embedded in 2027? Relative to what you have actually experienced this year? I know I think you had talked previously that the credit loss assumption within guidance was trending a little bit higher. So if you could just provide a little bit more color on 2027, that would be great. And then just to follow-up on the, impairment this quarter, can you just talk about what drove that? Was it primarily related to dispositions, or was there other factors? Robert W. Salisbury: Eric, it is Robert. Thanks for the questions. Yes. So credit losses generally are trending slightly better than we had guided to, for this year. And as we think about 2027, similarly, we tend to guide well in excess of where our realized losses had historically been. Just as a reminder, that is, that realized loss has been, just under 30 basis points per year since the inception of this portfolio. And so while we do not give a specific number out, you know, the assumption that is baked in into that guidance range is well in excess of that roughly 30 basis point range. So that. that is where credit loss starts today. And, yeah, as you noted, all the indicators that we monitor are very healthy right now. So, know, hopefully, that will prove to be conservative again next year, but our starting point is a conservative posture. As we do on a lot of lines in our guidance range. And then on your second question as it relates to, the impairments, I guess we have discussed in the past, a lot of these situations are much more idiosyncratic in nature. It relates to this 1 specifically, you know, we have a robust quarterly impairment testing process well established. it is been in place for a very long time. And part of that rigorous process, we are constantly testing on a quarterly basis. This quarter specifically is driven primarily by 1 site that is on a former ArtVan location. it is in the home furnishing retailer segment. We have talked about in quarters past, the tenant that went bankrupt in the fourth quarter of last year that used to be in those sites. We owned 2 sites at that time. And this specific property from Q3 had been vacant We have been assessing sale and leasing alternatives for the site. We received more leasing information this quarter, which triggered the impairment testing process. But in general, we have not been bullish on the home furnishing industry. that is an industry that we have not invested in for many years. We are down to 1 location now, which represents effectively a rounding error terms of the exposure to the portfolio broadly. So it is not a surprise in terms of where the exposure is there. And all of that is outlined in Footnote 12 of our 10 Q if you want to dig into more of the details behind those assumptions. Peter Mavoides: Thanks, Robert. Great job. Eric Borden: Thank you. And then just 1 on the disposition timing. Sorry if I missed this earlier, but just how should we be thinking about the dispositions as it relates to acquisitions? Would you be looking to match fund those, or would there be some sort of, delay between the 2? Peter Mavoides: You know, we are not tying dispositions to acquisitions. Our disposition activity is very granular, single $3 million dollars average assets, and our investments are, tend to be, you know, $10 million dollars. And so, you know, both are very granular. And really, you know, it is not tied 1 for 1. As I said, we are maybe taking 25 million a quarter to 50 million dollars a quarter, and they are both, you know, kind of be very much on a flow basis. Eric Borden: Great. Thank you very much. Operator: Thank you. We will move next to Richard Hightower with Barclays. Barclays. Your line is open. Richard Hightower: Hi. Good morning, guys. Just 1 for me. Robert, I think you mentioned in your prepared comments that the acquisition volume target for 2027 is back end loaded. Presumably kind of related to some of the capital markets choppiness we have been discussing. But when I think about sources of funding and kind of adding up all available sources as they exist today. Can you express that as sort of a runway to complete 2027 you know, expected activity and, you know, is 2027 fully covered? Is it kinda covered through the first half? Does the back end loading affect that calculation? Just help us think through that. Robert W. Salisbury: Yeah. Hey, Richard. Good question. Yes. We are fully covered in terms of funding for next year, and that is maybe from a liquidity standpoint. We would also add from a leverage capacity standpoint. We are also covered, you know, That would end the year assuming no common equity that we would be in the low to mid fours in terms of net debt to annualized adjusted EBITDAre on a pro form a basis, which is in line with our historical average. That being said, we have run at a lower leverage point over the last several years. And so you know, clearly, should our share price get to a more attractive level, that would be something that we would think about to build more dry powder. But, obviously, where we are today, the math does not make a whole lot of sense to issue common, which is why we noted earlier we are not, assuming any ATM equity in the near term. And then, you know, as it relates to the sources on that, think we mentioned earlier about the dispositions as 1 lever. You know, we are trading at a 7.3% cap rate right now. And, you know, as Peter noted, we are able to dispose in the 7-cap or even better than 7-cap territory. Something that is new. We have not really talked about sourcing that capital because it is been dilutive relative to our weighted average cost of capital over the last several years. But, you know, obviously, to the extent that, we are able to source more that is a potential lever that we could pull, to And so that is the quick picture on where it sits today. In terms of the cadence, you know, part of that is really just making sure that we extend the runway, not just over the next quarter or 2, but really as we are moving through the year. And as you think about the high end of the guidance range, you know, that. that is assuming that we have a much higher investment volume activity level. And so, obviously, that would be a world where, our cost of capital has improved as well. So that is kind of the scenario that we are outlining at the high end. Peter Mavoides: All right. that is great. Richard Hightower: Thanks so much. Operator: We will take our next question from Linda Tsai with Truist. Your line is open. Analyst: Thanks for taking my question. What is driving the lower credit loss in your portfolio? Do you attribute it to how you are operating the portfolio? Or are you seeing lower tenant distress for the tenants in which you are investing in I would say it is certainly more the latter. Peter Mavoides: You know, we buy these assets and make an investment decision, you know, we have 15 years away at average lease term. You know, there is a little we can do to effectuate change, you know, after our initial investment. And so the vast majority of our low level of credit losses can be attributed to the investment decisions we make at the outset. And then in terms of achieving more favorable disposition cap rates and seeing expansion in acquisition cap rates, could we expect investment spreads to improve in 2027 versus 2026 since your funding for next year is in place? Yeah. You know, we have historically invested anywhere as tight as 100 basis points to as wide as 300 basis points. I would say, you know, that is an output, not an input. And as we move cap rates, you know, obviously, spread will improve relative to the capital that we have raised. And hopefully relative to the capital that we continue to raise. But as Robert just said, you know, our business plan in 2027 is not predicated on raising new capital And then, you know, generally, cap rates cap rate movements lag the movements in cost of capital, and that is why we are in a compressed cap rate spread environment today. And it really just depends on what happens to interest rates and what happens to our cost of capital. And our ability to move the pipeline. So it is it is early as we sit here in the fourth quarter of 2026. To make a prediction on our net investment spread in 2027. But I would say, it would be about the same. Analyst: Thanks. Operator: We will take our next question from Jim Kamert with Evercore. Your line is open. Analyst: Good morning. Thank you I think it was mentioned earlier that kind of 8 percent is the new floor for going in transaction cap rates. Obviously, that is the cash cap rate. And I am wondering can you still extract portfolio average of 1.9% escalators on that type of cap rate? Or is there a bit of a trade off going on? Thank you. Robert Max Jenkins: Hey, James. This is Max. I would say you have seen over the last year or 2 that we have been able to push the escalations, and they have kind of increased, and we are sitting at 1.9%. The forward pipeline is pretty consistent with that, and internal growth has been a focus for us as we are striking new deals. And like we said in the prepared remarks, the forward pipeline has an 8 in front of it. And the GAAP yields will be approaching the, you know, mid to high nines at this point. So we are we are happy with the pricing and making sure we are investing at accretive spreads. Peter Mavoides: Yeah, James. I would not want it to be lost, you know, last quarter, we were at 2 point 3 percent on our new deals. And a and a gap yield, you know, well into the 9s. So, you know, the overall economic package we negotiate with tenants is fluid. You know, I think the highest sense of sensitivity is on initial cap rate. But, you know, we continue to do the best we can on that front. Analyst: Thank you. Operator: And we will move next to Greg McGinniss with Scotiabank. Your line is open. Greg, you may need to check the mute function on your device. Greg McGinniss: Sure do. Thanks you for that. I just wanted to go back and touch on your commentary regarding the change in the percentage of deals closing. And how it related to this year. Is that entirely the seller backing away after not getting financing or whatever other reason? They may have? Or is that your team adjusting underwriting and stepping away from deals that no longer make sense? Peter Mavoides: Yeah. it is it is not our team adjusting underwriting. It could be our team adjusting pricing. You know, we do not have not changed the way we look at credit or the way we underwrite credit. But I would say it is equally balanced between deals not closing because of the choppy capital markets backdrop our deal is not closing because of the pricing that, we are offering. Greg McGinniss: Okay. And then looking forward, is there a targeted investment spread where you feel more comfortable transacting? I am trying to get some sense of how much cap rates need to adjust before you guys kind of hit the accelerator again. And then how are you thinking about cost of capital as it relates to what you have kind of previously raised versus what you could do today. When you are evaluating these investment spreads? Peter Mavoides: Yeah. I will let Robert tackle the cost of capital end of it. We do not necessarily have a targeted spread. it is not that mathematical. We try to negotiate the best deals we can with our counterparties, and we try to source the cheapest capital that we can. From the market. And as I said earlier, you know, it is been about 100 on the low end, 300 on the wide end, and, you know, we are just working hard to make it as wide as possible both on initial cap rate and the GAAP cap rate. Basis. So, you know, it is not that formulaic because the markets are not that efficient. But Rob, from a weighted average cost of capital, how are we looking at that. Yeah. Robert W. Salisbury: So on the capital that we have raised, where we have, an unsettled forward equity balance that is struck at $30.50, and a 10-year debt issuance that we did in June in the low 5s. Looking at a spread that is over 2 hundred basis points in Q3, Q4. Obviously, that is not where our spot cost of capital is now, So, you know, that is probably what you will see pull through the model in the back half of 26. But for the incremental deal and the incremental dollar that goes out the door, our cost of capital today is, in the mid to high 6s. Depends a little bit on which debt instrument you wanna choose for that calculation. But that would get you to a range of a 100 to 150 basis points of spread is Peter noted, I think, on an earlier question. Is within the range of a 1 hundred to 3 hundred basis points that we have enjoyed historically, but obviously, that lower end. So, you know, we would hope to continue to achieve good pricing power to widen that spread out over time. Without maybe giving any guidance on where that might ultimately shake out. Greg McGinniss: Great. Thank you. Operator: Thanks, Greg. And we will take our next question from James Feldman with Wells Fargo. Your line is open. Analyst: Great. Thanks for taking the question. I was hoping you can dig deeper into the bonus depreciation market. You know, we keep hearing from brokers that there is a pretty healthy appetite. You know, concerns about maybe rules eventually changing if there is a change in administration in a couple years. Can you just provide more color on how deep it is, how sticky it is? Sounds like you and some of your peers are saying the same thing in terms of that should be a pretty good source of funds going forward. Just wanted to kinda get your latest thoughts on that. And, you know, especially given the moving rates. Yeah. Peter Mavoides: You know, we. We have got a lot of demand for products from that market. Historically, we have not delved into it too deeply. But it is certainly there, and it is certainly there at attractive cost given the massive tax incentives that could benefit that capital. Given the fact that the tax benefits are, you know, pretty dramatic. It tends to be pretty sticky. There tends to be pretty big penalties for selling those assets, you know, once you fully depreciated them So it is a market we can look at. It tends, you know, as you would imagine, given any sort of tax-motivated capital tends to be more robust in the fourth quarter than the first and the second quarter. And, you know, I would say our guidance and our disposition plan has not really, leaned into that too much. But it is certainly out there as a attractive source of capital, should we wanna tap it deeper. Analyst: Okay. Thanks for that. And then I guess just focusing a little bit more on some of the tenant moves. So we saw Flagstop Car Wash fall out of the top 10. TA Express is in. Was that primarily a function of pruning car washers? or are you leaning more into truck stops and C stores? And then, also, it looks like you bought another Dave and Buster's. what is your appetite to increase exposure with that tenant given their credit outlook from S&P? Robert Max Jenkins: Hey. Thanks. This is Max. First, I would point out that our top 10 concentration of 15.2% is among the most diversified across the space. And you are talking about tenants that are less than 200 basis points of exposure, we do a ton of repeat business relationship investing. Every quarter, we have movement, so we never wanna look too much into you know, each quarter over quarter, slight changes. But, you know, TA Express, we have been working with the largest franchisee in the space that operates over a 100 truck stops in convenience stores, you know, 2 asset classes that we have invested in since inception, and this was just a follow on transaction. We have done multiple deals over the past couple years. And so they are a great operator, great partner. You mentioned Dave and Buster's. It was a single transaction that was added to the master lease. It was extremely accretive both from a master lease coverage standpoint as a lower basis that improved our collateral position. And the cap rate was accretive to the Q3 overall cap rate. So it is a good deal for us, but, it is unlikely we would probably add more exposure to that name on a go-forward basis. that is what I would say. Peter Mavoides: You know, we, We do not follow S&P as a to guide our investment activity or underwriting. And so, you know, S&P certainly did not drive our decision there. You know, it is more just managing exposures and assets and we remain, you know, we remain confident in our master lease there and our coverage and think that company will be a great tenant long term. Okay. Thanks for that. I mean, are you are you changing your perspective at all on the consumer heading into next year? Or areas where you would feel less and have less appetite? No. Listen, we know our industry as well. We have deep data and experience to support our investment in these industries. Ultimately, we are real estate investors in these industries, and we specifically know and like and know the real estate assets in these industries. And as we as we study our portfolio performance, our tenant performance, there is there are no trends that alarm us. Generally, the consumer is doing okay. You know, the worst, we have modest same store sales down 2% to 3% with margin expansion, which results in flat, unit level coverage. And that kind of commentary runs across a lot of our sectors. So do not expect any material shift in our capital allocation strategy. Okay. Thank you Operator: Thank you. We will take our next question from Spenser Allaway with Green Street. Your line is open. Analyst: Thank you. On the releasing front, I realized you guys have very little coming due in the near term just given the long term of the portfolio. But just curious how you think about the high rent coverage on the leases coming due in the next few years. You see this as an opportunity to step up the rent at all, or is it a priority to keep these coverage levels close to the portfolio average? Peter Mavoides: Generally, inherent in our lease are renewal options that the tenants have, Typically, it is either 10-year renewal options or 4, 5 year renewal options. And that option is at the tenant's discretion. So we do not have the ability to mark these assets to market. So and generally, we assume you know, if there is a higher than 2 times coverage, if there is a 98% probability that tenant is going to exercise those options. Analyst: That makes sense. that is it for me, guys. Thank you. Operator: Thank you, Spenser Allaway. And we will take our next question from John Massocca with B. Riley Securities. Your line is open. John Massocca: Good morning, everyone. You kind of the step up in cap rate in the pipeline versus what you closed in 3Q. I mean how fast should we expect that to flow through closed transactions? Robert Max Jenkins: Hey, John. it is Max. We put out the pipeline early in Q3 before conference season and that showed a 6% handle. And, you know, in the prepared remarks, we said cap rates are around an 8. And as we have always said, you know, our pipeline is about a 90-day forward look. So you can kind of infer from there. And as Peter said, it is a volatile market, and, you know, it seems you know, rate environment, cost of capital is changing pretty rapidly and we are taking along duration, you know, long term hold, 20-year investment horizon. So, you know, we will continue to invest in price deals as they come in. But that is about as best as I can give you right now. John Massocca: Okay. And then on the disposition front, I mean, how fast should we expect those to potentially accelerate? You mentioned 200 million being kind of in the guidance for 27. But you know, is that something that could accelerate as soon as Q4 I know you have earned 22 million. Just kinda trying to think about how fast you kind of push on that lever for proceeds. Peter Mavoides: Just to be clear, we did not guide the 200. Is that. Is it is it an indicative level. We are constantly marketing assets. Generally, you know, there is a 30 day premarket period, a 30 day market period, and then it could be a 30-day close. So there is some typical lag in ramping those up. But we are in the market. We have listed assets for sale. And so you know, And you know, going from a 25 to a 50 or 75 is you know, it could happen over, you know, a couple quarters, but it is not gonna be a material change immediately. John Massocca: Okay. And then, you know, in terms of. I am trying to kinda think about the lower kinda close percentage on deals in the pipeline and the call for kind of investment volumes to be back end loaded next year. I mean, how much of that, if any, reflects kind of like demand destruction for kind of the net lease offering? Like, you seeing some of your counterparties maybe, you know, at current prices or yields just not being able to kinda pencil in the growth opportunities that maybe traditionally had kind of catalyzed them to seek out your financing? Peter Mavoides: Yeah. I think I said in an earlier comment, John, you know, we would expect overall transaction volumes to be down but we also expect diminished competition to be down on a greater level such that overall, there is. There should be plenty of opportunities for us to invest. So I guess the why would deal volume be so back end loaded next year? You know, and part of part of that it is not driven by the opportunity set. You know, we have always maintained that our opportunity set is ample. And we have plenty of deals to do. And, you know, I think as we said in the prepared remarks, part of that is preserving our capital runway. And, you know, waiting for asset pricing to catch up with the movement in capital pricing. And, you know, we are sitting at a pretty wide level of capital pricing that we would expect to normalize over time as well. So it is more the capital front driving that than the opportunity set driving that. John Massocca: Okay. that is it for me. Thank you very much. Operator: Thanks, John. Thank you. At this time, there are no further questions in queue. I will now turn the meeting back to Peter Mavoides for any additional or closing remarks. Peter Mavoides: Great. Well, thank you all for your time today. You know, as we try to indicate, it is certainly an interesting time for the capital markets, the net lease industry, our company, but we are excited about our, the opportunity. We are excited about our abilities to execute in this backdrop and continue to drive earnings growth for shareholders. And, we look forward to seeing everyone in the coming months at the conferences. Thank you all, and have a great day. Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect. Before you buy stock in Essential Properties Realty Trust, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Essential Properties Realty Trust wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $350,756!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,363,905!* Now, it's worth noting Stock Advisor's total average return is 922% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 22, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Essential Properties (EPRT) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

- Interested in Essential Properties Realty Trust, Inc.? Here are five stocks we like better. - Raised outlook: Essential Properties increased its 2026 AFFO-per-share guidance to $2.02–$2.05 and introduced 2027 guidance of $2.10–$2.18, supported by strong third-quarter AFFO growth and internally generated cash flow. - Investment and portfolio strength: The REIT invested $342 million across 100 properties at a 7.7% initial cash yield, while maintaining 99.6% occupancy, 3.5x rent coverage and a diversified portfolio with limited near-term lease expirations. - Financial flexibility: Essential Properties expanded its revolver to $1.3 billion, prepaid a $430 million term loan and has no debt maturities until 2028. Management expects a slower investment pace but plans to fund 2027 activity through cash flow, dispositions, revolver capacity and existing forward equity. - Look To REITs For Reliable Yield Even In Recessionary Environment Essential Properties Realty Trust (NYSE:EPRT) raised its 2026 outlook and issued initial 2027 guidance after reporting third-quarter results supported by investment activity, portfolio occupancy and internally generated cash flow. The real estate investment trust reported third-quarter GAAP net income of $60.7 million and adjusted funds from operations, or AFFO, of $111.9 million. AFFO per share was $0.51, up 6% from the year-earlier period, while total AFFO rose 16% year over year, according to CFO and Chief Strategy Officer Rob Salisbury. → Aurora Rejects Curaleaf's Higher Bid, But the Takeover Fight Isn't Over The company raised its 2026 AFFO-per-share guidance to $2.02 to $2.05, which implies growth of nearly 8% at the midpoint, and increased projected investment volume to $1.3 billion to $1.5 billion. It also introduced 2027 AFFO-per-share guidance of $2.10 to $2.18, alongside expected investment volume of $1 billion to $1.5 billion and cash general and administrative expense of $32 million to $37 million. During the third quarter, Essential Properties invested $342 million across 100 properties in 31 transactions. The investments carried a weighted average initial cash yield of 7.7%, a GAAP yield of 9.4%, a weighted average initial lease term of 17.9 years and average annual rent escalations of 2.3%. → Could Quantinuum's Breakthrough Make Its Sell-Off a Bargain? Sale-leaseback transactions represented 91% of quarterly investment volume. President and Chief Operating Officer Max Jenkins said the company's average investment was approximately $3 million per property, reflecting its focus on granular and potentially fungible assets. Management said it has sought higher returns as its cost of capital has increased. Jenkins said the forward pipeline carried cap rates around 8% and GAAP yields in the high 9% range, compared with investments largely contracted during the summer and closed in the third quarter. → IonQ's Bold Expansion Could Leave Shareholders Paying the Price Chief Executive Officer Pete Mavoides said the company expects a slower deployment pace over the next two to three quarters while it remains selective on pricing and preserves balance-sheet capacity. He said asset pricing historically adjusts more slowly than shifts in capital-market pricing. Management said investment volumes across the market could decline as sellers adjust to higher capital costs, though Mavoides expects reduced competition to create opportunities for Essential Properties. The company said its 2027 investment guidance is based on gross investment activity, rather than net activity after asset sales. The company ended the quarter with investments in 2,580 properties leased to tenants operating more than 700 concepts. The portfolio had a weighted average lease term exceeding 14 years, weighted average lease escalations of 1.9%, and only 2% of annual base rent scheduled to expire through 2028. Same-store rent growth was 1.4%, occupancy was 99.6%, and portfolio rent coverage was 3.5 times. Chief Investment Officer Craig Vachris said the company had 11 vacant properties at quarter-end and that its tenant credit watchlist improved. Management later said the watchlist declined by 50 basis points from the prior quarter to 1.1%. Essential Properties sold 11 properties for $17.9 million during the quarter at a weighted average capitalization rate of 6.1%. Vachris said the sales were primarily opportunistic dispositions of restaurant and car-wash properties. Mavoides said the company could increase its historical disposition pace from roughly $25 million per quarter to about $50 million per quarter. He said management expects potential asset sales in the mid-to-high 6% capitalization-rate range and plans to market a representative sample of properties across industry verticals rather than selectively selling only the most favorably priced assets. For 2027, Salisbury said the company's guidance assumes about $200 million of dispositions. He said dispositions have become an accretive source of capital as sale cap rates compare favorably with the company's weighted average cost of capital. Income-producing gross assets totaled $8.1 billion at quarter-end. The company reported pro forma net debt to annualized adjusted EBITDAre of 3.8 times and liquidity of $1.3 billion. During the quarter, Essential Properties expanded its revolving credit facility by $300 million to $1.3 billion. The additional capacity supported the prepayment of a $430 million term loan that had been scheduled to mature in 2027, leaving the company with no debt maturities until 2028. Salisbury said the company retained an interest-rate swap associated with the prepaid term loan. The swap is set to mature at the end of November, after which the revolver obligation will become floating rate. Management is evaluating unsecured bonds, convertible debt and bank debt as options to term out the revolver balance. The company had $483 million of unsettled forward equity at an average price of $30.50 per share and $809 million of revolver capacity. Salisbury said Essential Properties expects to fund its 2027 plan without issuing new external capital, using annual free cash flow after dividends approaching $200 million, projected dispositions, revolver capacity and the forward equity balance. The company declared a third-quarter cash dividend of $0.32 per share, representing an AFFO payout ratio of 63%. It retained $42 million of free cash flow during the quarter. Management said tenant performance remained stable and did not identify broad deterioration across the portfolio. Salisbury said realized credit losses have averaged just under 30 basis points annually since the portfolio's inception, while the assumptions embedded in 2027 guidance remain above that historical level. The company recorded an impairment tied primarily to a vacant former Art Van home-furnishings location. Salisbury said Essential Properties had been evaluating sale and leasing alternatives for the property and received additional leasing information during the quarter that triggered impairment testing. He added that the company has not invested in the home-furnishings sector for many years and now has one remaining location in that category. Essential Properties' top 10 tenants represented 15.2% of annual base rent, while its top 20 tenants accounted for 25.1%. The company reduced car-wash exposure by 60 basis points during the quarter to 12% of annual base rent. Essential Properties Realty Trust, Inc (NYSE:EPRT) is an internally managed real estate investment trust that acquires, owns and manages single-tenant commercial properties. The company primarily leases these properties to middle-market businesses under long-term, net lease agreements, which generally require tenants to pay a substantial portion of the property's operating expenses, including taxes, insurance and maintenance. EPRT's portfolio is diversified across businesses such as automotive services, medical services, restaurants, retail, early childhood education and other service-oriented industries. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Essential Properties Realty Trust Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

- Third Quarter Net Income per Share of $0.27 and AFFO per Share of $0.51 - - Closed Investments of $342.2 million at a 7.7% Weighted Average Cash Cap Rate - - Increases 2026 AFFO Guidance to $2.02 to $2.05 per Share - - Issues 2027 AFFO Guidance of $2.10 to $2.18 per Share - PRINCETON, N.J., October 21, 2026--(BUSINESS WIRE)--Essential Properties Realty Trust, Inc. (NYSE: EPRT; "Essential Properties" or the "Company") today announced operating results for the three and nine months ended September 30, 2026. Third Quarter 2026 Financial and Operating Highlights: Operating Results (compared to Third Quarter 2025): | | • Investments (100 properties) | $ Invested | $342.2 million | Weighted Avg Cash Cap Rate | 7.7% | Weighted Avg GAAP Cap Rate | 9.4% • Dispositions (11 properties) | Net Proceeds | $17.9 million | Weighted Avg Cash Cap Rate | 6.1% • Net Income per Share | Decreased by 18% | $0.27 • Funds from Operations ("FFO") per Share (1) | Increased by 4% | $0.54 • Core Funds from Operations ("Core FFO") per Share (1) | Increased by 6% | $0.55 • Adjusted Funds from Operations ("AFFO") per Share (1) | Increased by 6% | $0.51 Debt, Equity & Leverage: | | • Equity Raised (Gross) - ATM Program (2) | $31.13/share | $28.4 million • Credit Facility Amendment - Upsized | 5 bps Spread Reduction | $1.3 billion Capacity • Pro Forma Net Debt to Annualized Adjusted EBITDAre (1) | As of Quarter End | 3.8x Year to Date 2026 Financial and Operating Highlights: Operating Results (compared to YTD Third Quarter 2025): | | • Investments (329 properties) | $ Invested | $1.1 billion | Weighted Avg Cash Cap Rate | 7.7% | Weighted Avg GAAP Cap Rate | 9.1% • Dispositions (34 properties) | Net Proceeds | $82.3 million | Weighted Avg Cash Cap Rate | 7.0% • Net Income per Share | Decreased by 4% | $0.90 • FFO per Share (1) | Increased by 7% | $1.61 • Core FFO per Share (1) | Increased by 8% | $1.63 • AFFO per Share (1) | Increased by 9% | $1.51 Debt, Equity & Leverage: | | • Public Debt Issuance (June 4, 2026) | 10 years; 5.38% coupon | $400.0 million • Equity Raised (Gross) - Follow-On Offering & ATM Program (2) | $32.00/share | $484.2 million • Equity Raised (Gross) - Common OP Units | $30.39/unit | $36.6 million - See page 8 for reconciliations of non-GAAP financial measures to corresponding GAAP metrics. - All shares were sold on a forward basis and a total of 15,828,249 shares remain unsettled for estimated net proceeds of $482.8 million. CEO Comments Commenting on the third quarter 2026 results, the Company's Chief Executive Officer, Pete Mavoides, said, "We delivered a strong third quarter, supported by healthy portfolio performance and investment momentum across our origination platform. Our well-positioned balance sheet and capital position provide us with meaningful flexibility to execute on the pipeline of opportunities. With an eye toward 2027, we expect to remain disciplined in our investment approach, ensuring that our cap rates appropriately reflect the evolving cost of capital environment, while continuing to serve as a trusted capital partner to our operators and drive attractive risk-adjusted returns for our shareholders." Portfolio Highlights The Company's investment portfolio as of September 30, 2026 is summarized as follows: | | September 30, 2026 Number of properties | | 2,580 Weighted average lease term (WALT) | | 14.2 years Weighted average unit-level rent coverage ratio | | 3.5x Top 10 tenant concentration (% of cash ABR) | | 15.2% Top 20 tenant concentration (% of cash ABR) | | 25.1% Weighted average occupancy (11 vacant properties) | | 99.6% Total square feet of rentable space | | 29.3 million Service-oriented or experience-based (% of cash ABR) | | 91.7% Properties subject to master lease (% of cash ABR) (1) | | 67.4% - Includes investments in mortgage loans receivable collateralized by more than one property. Portfolio Update Investments During the three months ended September 30, 2026, the Company's $342.2 million of investment activity had a weighted average closing date of September 6, 2026. Additional details about the Company's investment activity during the three and nine months ended September 30, 2026 are summarized as follows: | | Quarter EndedSeptember 30, 2026 | | Year to DateSeptember 30, 2026 Investments: | | | | Investment volume | | $342.2 million | | $1.1 billion Number of transactions | | 31 | | 89 Property count | | 100 | | 329 Weighted average cash / GAAP cap rate | | 7.7%/9.4% | | 7.7%/9.1% Weighted average lease escalation | | 2.3% | | 2.0% % Subject to master lease(1) | | 65% | | 54% % Sale-leaseback transactions(1) | | 91% | | 92% % Existing relationship | | 60% | | 63% % Required financial reporting (tenant/guarantor) | | 100% | | 100% WALT | | 17.9 years | | 17.2 years - Includes investments in mortgage loans receivable collateralized by more than one property or made in support of sale-leaseback transactions. Dispositions The Company's disposition activity during the three and nine months ended September 30, 2026 is summarized as follows: | | Quarter EndedSeptember 30, 2026 | | Year to DateSeptember 30, 2026 Dispositions: | | | | Net proceeds | | $17.9 million | | $82.3 million Number of properties sold | | 11 | | 34 Net gain / (loss) | | $4.2 million | | $14.2 million Weighted average cash cap rate(excludes vacant property sales and properties repurchased by the tenant) | | 6.1% | | 7.0% Loan Repayments Loan repayments received by the Company during the three and nine months ended September 30, 2026 are summarized as follows: | | Quarter EndedSeptember 30, 2026 | | Year to DateSeptember 30, 2026 Loan Repayments: | | | | Proceeds—Principal | | $1.8 million | | $35.9 million Number of properties | | 2 | | 15 Weighted average interest rate | | 7.0% | | 9.2% Leverage and Liquidity The Company's leverage and liquidity as of September 30, 2026 are summarized in the following table. | | September 30, 2026 | | Pro Forma (1) September 30, 2026 Leverage: | | | | Net debt to Annualized Adjusted EBITDAre | | 4.6x | | 3.8x | | | | Liquidity: | | | | Cash and cash equivalents and restricted cash | | $29.6 million | | $21.4 million Unused revolving credit facility capacity | | $809.0 million | | $1.3 billion Forward equity sales - unsettled | | $482.8 million | | — Total available liquidity | | $1.3 billion | | $1.3 billion | | | | ATM Program: | | | | 2026 ATM Program initial availability | | $750.0 million | | Aggregate gross sales under the 2026 ATM Program | | $14.1 million | | Availability remaining under the 2026 ATM Program | | $735.9 million | | - Pro forma adjustments have been made to reflect 15,828,249 unsettled shares sold on a forward basis as if they had been physically settled for cash on September 30, 2026. Equity Activity The Company's equity activity during the three months ended September 30, 2026 is summarized in the following table. | | Shares | | Price(Net) (1) | | Net Proceeds (000s) Forward Shares Unsettled - June 30, 2026 | | 18,887,181 | | $30.40 | | $574,262 Shares Sold - Current Quarter | | 910,636 | | 30.75 | | 28,002 Shares Settled - Current Quarter | | (3,969,568) | | 30.10 | | (119,503) Forward Shares Unsettled - September 30, 2026 | | 15,828,249 | | $30.50 | | $482,762 - Prices are inclusive of forward price adjustments as of September 30, 2026. Guidance 2027 Guidance The Company currently expects 2027 AFFO per share on a fully diluted basis to be within a range of $2.10 to $2.18. The guidance range includes an estimate for investment volume of $1.0 billion to $1.5 billion, and Cash G&A expense of $32.0 million to $37.0 million. 2026 Guidance The Company is increasing its previously issued 2026 AFFO per share estimate from $2.01 to $2.05 to a new range of $2.02 to $2.05. The Company is also increasing its guidance range for 2026 investment volume from $1.2 billion to $1.5 billion to an updated range of $1.3 billion to $1.5 billion, and is reiterating its prior guidance range for 2026 Cash G&A of $30.0 million to $34.0 million. Note: The Company does not provide guidance for the most comparable GAAP financial measures, net income and general and administrative expense, or a reconciliation of the forward-looking non-GAAP financial measures of AFFO to net income computed in accordance with GAAP and Cash G&A expense to general and administrative expense computed in accordance with GAAP, because it is unable to reasonably predict, without unreasonable efforts, certain items that would be contained in the GAAP measures, including items that are not indicative of the Company's ongoing operations, such as, without limitation, potential impairments of real estate assets, net gain/loss on dispositions of real estate assets, changes in allowance for credit losses and non-cash compensation expense. These items are uncertain, depend on various factors, and could have a material impact on the Company's GAAP results for the guidance period. Dividend Information As previously announced, on September 4, 2026, Essential Properties' board of directors declared a cash dividend of $0.32 per share of common stock for the quarter ended September 30, 2026. The third quarter 2026 dividend represents an annualized dividend of $1.28 per share of common stock. The dividend was paid on October 14, 2026 to stockholders of record as of the close of business on September 30, 2026. Conference Call Information In conjunction with the release of Essential Properties' operating results, the Company will host a conference call on Thursday, October 22, 2026 at 10:00 a.m. ET to discuss the results. To access the conference, dial 800-274-8461 (International: 203-518-9814) and use the conference ID: EPRT. 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: 11162626. The telephone replay will be available through November 5, 2026. A replay of the conference call webcast will be available on our website approximately three 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 Investor Presentation and Supplemental Information—Third Quarter 2026 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 September 30, 2026, the Company's portfolio consisted of 2,580 freestanding net lease properties with a weighted average lease term of 14.2 years and a weighted average unit-level rent coverage ratio of 3.5x. In addition, as of September 30, 2026, the Company's portfolio was 99.6% leased to tenants operating 727 different concepts across 49 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. 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 September 30, 2026 that it will file with the Commission. Essential Properties Realty Trust, Inc. Consolidated Statements of Operations | | Three months ended September 30, | | Nine months ended September 30, (unaudited, in thousands, except share and per share data) | | | 2026 | | | | 2025 | | | | 2026 | | | | 2025 | Revenues: | | | | | | | | Rental revenue (1)(2) | | $ | 157,763 | | | $ | 136,544 | | | $ | 458,267 | | | $ | 387,444 | Interest on loans and direct financing lease receivables | | | 10,478 | | | | 8,129 | | | | 28,910 | | | | 23,228 | Other revenue | | | 430 | | | | 261 | | | | 2,180 | | | | 680 | Total revenues | | | 168,671 | | | | 144,934 | | | | 489,357 | | | | 411,352 | | | | | | | | | Expenses: | | | | | | | | General and administrative | | | 14,107 | | | | 10,211 | | | | 37,347 | | | | 32,423 | Property expenses (2) | | | 2,140 | | | | 1,850 | | | | 4,716 | | | | 5,604 | Depreciation and amortization | | | 46,925 | | | | 38,976 | | | | 136,244 | | | | 112,559 | Provision for impairment of real estate | | | 15,032 | | | | 1,439 | | | | 33,227 | | | | 7,934 | Change in provision for credit losses | | | 196 | | | | 83 | | | | 3,453 | | | | 83 | Total expenses | | | 78,400 | | | | 52,559 | | | | 214,987 | | | | 158,603 | Other operating income: | | | | | | | | Gain on dispositions of real estate, net | | | 4,234 | | | | 1,361 | | | | 14,200 | | | | 8,421 | Income from operations | | | 94,505 | | | | 93,736 | | | | 288,570 | | | | 261,170 | Other (expense)/income: | | | | | | | | Loss on debt extinguishment | | | (138 | ) | | | — | | | | (138 | ) | | | — | Interest expense | | | (34,214 | ) | | | (28,348 | ) | | | (94,429 | ) | | | (77,139 | ) Interest income | | | 722 | | | | 582 | | | | 1,711 | | | | 1,907 | Other income, net | | | — | | | | — | | | | 387 | | | | — | Income before income tax expense | | | 60,875 | | | | 65,970 | | | | 196,101 | | | | 185,938 | Income tax expense | | | 218 | | | | 170 | | | | 1,013 | | | | 485 | Net income | | | 60,657 | | | | 65,800 | | | | 195,088 | | | | 185,453 | Net income attributable to non-controlling interests | | | (500 | ) | | | (180 | ) | | | (852 | ) | | | (511 | ) Net income attributable to stockholders | | $ | 60,157 | | | $ | 65,620 | | | $ | 194,236 | | | $ | 184,942 | | | | | | | | | Basic weighted-average shares outstanding | | | 216,679,914 | | | | 198,141,272 | | | | 214,396,578 | | | | 194,753,085 | Basic net income per share | | $ | 0.28 | | | $ | 0.33 | | | $ | 0.90 | | | $ | 0.95 | | | | | | | | | Diluted weighted-average shares outstanding | | | 219,121,415 | | | | 199,875,244 | | | | 216,394,255 | | | | 196,853,561 | Diluted net income per share | | $ | 0.27 | | | $ | 0.33 | | | $ | 0.90 | | | $ | 0.94 | - Includes contingent rent (based on a percentage of the tenant's gross sales at the leased property) of $238, $229, $608 and $671 for the three and nine months ended September 30, 2026 and 2025, respectively. - Includes reimbursable income or reimbursable expenses from the Company's tenants of $1,095, $1,198, $2,400 and $3,680 for the three and nine months ended September 30, 2026 and 2025, respectively. Essential Properties Realty Trust, Inc. Consolidated Balance Sheets (in thousands, except share and per share data) | | September 30, 2026 | | December 31, 2025 | | (Unaudited) | | (Audited) ASSETS | | | | Investments: | | | | Real estate investments, at cost: | | | | Land and improvements | | $ | 2,465,500 | | | $ | 2,200,829 | Building and improvements | | | 4,916,832 | | | | 4,388,959 | Lease incentives | | | 25,113 | | | | 24,154 | Construction in progress | | | 37,298 | | | | 49,881 | Intangible lease assets | | | 119,712 | | | | 99,217 | Total real estate investments, at cost | | | 7,564,455 | | | | 6,763,040 | Less: accumulated depreciation and amortization | | | (730,526 | ) | | | (612,674 | ) Total real estate investments, net | | | 6,833,929 | | | | 6,150,366 | Loans and direct financing lease receivables, net | | | 495,209 | | | | 401,323 | Real estate investments held for sale, net | | | 18,863 | | | | 2,635 | Net investments | | | 7,348,001 | | | | 6,554,324 | Cash and cash equivalents | | | 25,222 | | | | 60,181 | Restricted cash | | | 4,373 | | | | 10,184 | Straight-line rent receivable, net | | | 241,136 | | | | 191,008 | Derivative assets | | | 20,462 | | | | 7,861 | Rent receivables, prepaid expenses and other assets, net | | | 50,357 | | | | 39,465 | Total assets | | $ | 7,689,551 | | | $ | 6,863,023 | | | | | LIABILITIES AND EQUITY | | | | Unsecured term loans, net of deferred financing costs | | $ | 1,297,361 | | | $ | 1,725,010 | Senior unsecured notes, net | | | 1,176,756 | | | | 786,708 | Revolving credit facility | | | 491,000 | | | | — | Intangible lease liabilities, net | | | 13,929 | | | | 10,766 | Dividends and distributions payable | | | 71,469 | | | | 65,391 | Derivative liabilities | | | 8 | | | | 26,226 | Accrued liabilities and other payables | | | 54,804 | | | | 41,028 | Total liabilities | | | 3,105,327 | | | | 2,655,129 | Commitments and contingencies | | | — | | | | — | Stockholders' equity: | | | | Preferred stock, $0.01 par value; 150,000,000 authorized; none issued and outstanding as of September 30, 2026 and December 31, 2025 | | | — | | | | — | Common stock, $0.01 par value; 500,000,000 authorized; 220,275,169 and 209,702,433 issued and outstanding as of September 30, 2026 and December 31, 2025, respectively | | | 2,203 | | | | 2,097 | Additional paid-in capital | | | 4,651,877 | | | | 4,328,137 | Distributions in excess of cumulative earnings | | | (131,154 | ) | | | (109,261 | ) Accumulated other comprehensive income (loss) | | | 17,974 | | | | (20,979 | ) Total stockholders' equity | | | 4,540,900 | | | | 4,199,994 | Non-controlling interests | | | 43,324 | | | | 7,900 | Total equity | | | 4,584,224 | | | | 4,207,894 | Total liabilities and equity | | $ | 7,689,551 | | | $ | 6,863,023 | Essential Properties Realty Trust, Inc. Reconciliation of Non-GAAP Financial Measures | | Three months ended September 30, | | Nine months ended September 30, (unaudited, in thousands except per share data) | | | 2026 | | | | 2025 | | | | 2026 | | | | 2025 | Net income | | $ | 60,657 | | | $ | 65,800 | | | $ | 195,088 | | | $ | 185,453 | Depreciation and amortization of real estate | | | 46,690 | | | | 38,936 | | | | 135,574 | | | | 112,435 | Provision for impairment of real estate | | | 15,032 | | | | 1,439 | | | | 33,227 | | | | 7,934 | Gain on dispositions of real estate, net | | | (4,234 | ) | | | (1,361 | ) | | | (14,200 | ) | | | (8,421 | ) Funds from Operations | | | 118,145 | | | | 104,814 | | | | 349,689 | | | | 297,401 | Non-core expense, net (1) | | | 3,505 | | | | — | | | | 3,287 | | | | — | Core Funds from Operations | | | 121,650 | | | | 104,814 | | | | 352,976 | | | | 297,401 | Adjustments: | | | | | | | | Straight-line rental revenue, net | | | (15,404 | ) | | | (14,446 | ) | | | (45,902 | ) | | | (37,524 | ) Non-cash interest | | | 1,517 | | | | 1,396 | | | | 4,411 | | | | 4,032 | Non-cash compensation expense | | | 3,493 | | | | 3,553 | | | | 11,119 | | | | 11,018 | Other amortization expense | | | (35 | ) | | | 858 | | | | 1,198 | | | | 1,378 | Change in provision for credit losses | | | 196 | | | | 83 | | | | 3,453 | | | | 83 | Other non-cash adjustments | | | 811 | | | | 574 | | | | 2,006 | | | | 1,307 | Capitalized interest expense | | | (320 | ) | | | (619 | ) | | | (1,430 | ) | | | (2,756 | ) Adjusted Funds from Operations | | $ | 111,908 | | | $ | 96,213 | | | $ | 327,831 | | | $ | 274,939 | | | | | | | | | Net income per share: (2) | | | | | | | | Basic | | $ | 0.28 | | | $ | 0.33 | | | $ | 0.90 | | | $ | 0.95 | Diluted | | $ | 0.27 | | | $ | 0.33 | | | $ | 0.90 | | | $ | 0.94 | FFO per share: (2) | | | | | | | | Basic | | $ | 0.54 | | | $ | 0.53 | | | $ | 1.63 | | | $ | 1.52 | Diluted | | $ | 0.54 | | | $ | 0.52 | | | $ | 1.61 | | | $ | 1.51 | Core FFO per share: (2) | | | | | | | | Basic | | $ | 0.56 | | | $ | 0.53 | | | $ | 1.64 | | | $ | 1.52 | Diluted | | $ | 0.55 | | | $ | 0.52 | | | $ | 1.63 | | | $ | 1.51 | AFFO per share: (2) | | | | | | | | Basic | | $ | 0.51 | | | $ | 0.48 | | | $ | 1.52 | | | $ | 1.40 | Diluted | | $ | 0.51 | | | $ | 0.48 | | | $ | 1.51 | | | $ | 1.39 | - During the three and nine months ended September 30, 2026, includes severance and accelerated non-cash compensation expense, loss on debt extinguishment and non-core technology expenses and, during the nine months ended September 30, 2026, includes net insurance recovery income. - Calculations exclude $407, $227, $1,146 and $682 from the numerator for the three and nine months ended September 30, 2026 and 2025, respectively, related to dividend equivalents and distributions paid on unvested restricted stock units and LTIP units. | | Three months ended September 30, | | Nine months ended September 30, (unaudited, in thousands) | | | 2026 | | | | 2025 | | | | 2026 | | | | 2025 | General and administrative expense | | $ | 14,107 | | | $ | 10,211 | | | $ | 37,347 | | | $ | 32,423 | Non-core general and administrative expense (1) | | | (3,367 | ) | | | — | | | | (3,536 | ) | | | — | Non-cash compensation expense | | | (3,493 | ) | | | (3,553 | ) | | | (11,119 | ) | | | (11,018 | ) Straight-line rent expense, net | | | 6 | | | | 11 | | | | (244 | ) | | | 32 | Cash G&A | | $ | 7,253 | | | $ | 6,669 | | | $ | 22,448 | | | $ | 21,437 | - Includes severance and accelerated non-cash compensation expense and non-core technology expenses during the three and nine months ended September 30, 2026. Essential Properties Realty Trust, Inc. Reconciliation of Non-GAAP Financial Measures (unaudited, in thousands) | | Three months ended September 30, 2026 Net income | | $ | 60,657 | Depreciation and amortization | | | 46,925 | Interest expense | | | 34,214 | Interest income | | | (722 | ) Income tax expense | | | 218 | EBITDA | | | 141,292 | Provision for impairment of real estate | | | 15,032 | Gain on dispositions of real estate, net | | | (4,234 | ) EBITDAre | | | 152,090 | Adjustment for current quarter re-leasing, acquisition and disposition activity (1) | | | 5,720 | Adjustment for other non-core or non-recurring activity (2) | | | 5,289 | Adjustment to exclude termination/prepayment fees and certain percentage rent (3) | | | (531 | ) Adjusted EBITDAre - Current Estimated Run Rate | | | 162,568 | General and administrative expense | | | 11,063 | Adjusted net operating income ("NOI") | | | 173,631 | Straight-line rental revenue, net (1) | | | (17,144 | ) Other amortization expense | | | 283 | Adjusted Cash NOI | | $ | 156,770 | | | Annualized EBITDAre | | $ | 608,360 | Annualized Adjusted EBITDAre | | $ | 650,272 | Annualized Adjusted NOI | | $ | 694,524 | Annualized Adjusted Cash NOI | | $ | 627,080 | - Adjustment is made to reflect EBITDAre, NOI and Cash NOI as if all re-leasing activity, investments in and dispositions of real estate and loan repayments completed during the three months ended September 30, 2026 had occurred on July 1, 2026. - Adjustment is made to i) exclude non-core adjustments made in computing Core FFO, if any, ii) exclude changes in the Company's provision for credit losses, iii) exclude the write-off of receivables from prior periods and iv) eliminate the impact of seasonal fluctuation in certain non-cash compensation expense recorded in the period. - Adjustment excludes lease termination or loan prepayment fees and contingent rent (based on a percentage of the tenant's gross sales at the leased property) where payment is subject to exceeding a sales threshold specified in the lease, if any. Essential Properties Realty Trust, Inc. Reconciliation of Non-GAAP Financial Measures (unaudited, dollars in thousands, except share and per share data) | | September 30, 2026 | | Rate | | Wtd. Avg. Maturity | | | | | | Unsecured debt: | | | | | | January 2028 term loan (1) | | 400,000 | | 4.46% | | 1.3 years February 2029 term loan (1)(2) | | 450,000 | | 5.20% | | 2.4 years January 2030 term loan (1)(2) | | 450,000 | | 4.62% | | 3.3 years Senior unsecured notes due July 2031 | | 400,000 | | 3.12% | | 4.8 years Senior unsecured notes due December 2035 | | 400,000 | | 5.40% | | 9.2 years Senior unsecured notes due July 2036 | | 400,000 | | 5.38% | | 9.8 years Revolving credit facility maturing February 2030 - Fixed(2)(3) | | 430,000 | | 2.13% | | 3.4 years Revolving credit facility maturing February 2030 - Floating (2)(3) | | 61,000 | | 4.60% | | 3.4 years Total unsecured debt | | 2,991,000 | | 4.33% | | 4.8 years Gross debt | | 2,991,000 | | | | Less: cash & cash equivalents | | (25,222) | | | | Less: restricted cash available for future investment | | (4,373) | | | | Net debt | | 2,961,405 | | | | | | | | | | Equity: | | | | | | Preferred stock | | — | | | | Common stock, OP Units & vested LTIP Units (222,069,873 shares @ $25.81/share as of 9/30/26) (4) | | 5,731,623 | | | | Total equity | | 5,731,623 | | | | Total enterprise value ("TEV") | | $ 8,693,028 | | | | | | | | | | Pro forma adjustments to Net debt and TEV: (5) | | | | | | Net debt | | $ 2,961,405 | | | | Less: Unsettled forward equity (15,828,249 shares @ $30.50/share as of 9/30/26) | | (482,762) | | | | Pro forma net debt | | 2,478,643 | | | | Total equity | | 5,731,623 | | | | Common stock — unsettled forward equity (15,828,249 shares @ $25.81/share as of 9/30/26) | | 408,527 | | | | Pro forma TEV | | $ 8,618,793 | | | | | | | | | | Gross Debt / Undepreciated Gross Assets | | 35.5% | | | | Net Debt / TEV | | 34.1% | | | | Net Debt / Annualized Adjusted EBITDAre | | 4.6x | | | | | | | | | | Pro Forma Gross Debt / Undepreciated Gross Assets | | 33.6% | | | | Pro Forma Net Debt / Pro Forma TEV | | 28.8% | | | | Pro Forma Net Debt / Annualized Adjusted EBITDAre | | 3.8x | | | | - Rates presented for the Company's term loans are fixed at the stated rates after giving effect to its interest rate swaps plus applicable margin of 80bps. - Weighted average maturity calculation is made after giving effect to extension options exercisable at the Company's election. - The Company's revolving credit facility permits maximum aggregate principal of up to $1.3 billion and includes an accordion feature to increase the maximum availability by up to $700.0 million. $61.0 million of borrowings bear interest at Term SOFR plus applicable margin of 72.5bps. Interest on remaining $430.0 million of borrowings has been effectively fixed via interest rate swap agreements. - Includes 220,275,169 shares of common stock outstanding and 1,794,704 OP Units and vested LTIP Units held by non-controlling interests. - Pro forma adjustments have been made to reflect the unsettled portion of shares sold on a forward basis as if they had been physically settled for cash on September 30, 2026. 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"), net debt, net operating income ("NOI"), cash NOI ("Cash NOI"), adjusted EBITDAre, adjusted NOI, adjusted Cash NOI and cash general and administrative expense ("Cash G&A"). 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 expenses 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, non-cash compensation expense, other amortization expense, the change in our provision for credit losses, other non-cash adjustments and capitalized interest expense. 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 adjustments. 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 or loan prepayment 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 G&A The Company computes Cash G&A as general and administrative expense, as determined in accordance with GAAP, less non-core general and administrative expense, non-cash compensation expense and straight-line rent expense on leases where it is the lessee. The Company excludes non-core general and administrative expense, non-cash compensation expense and straight-line rent expense because they may cause short-term fluctuations in general and administrative expense but have no impact on operating cash flows or long-term operating performance. The Company believes that Cash G&A is a useful supplemental measure for investors to consider when assessing its operating performance without the distortion created by non-cash and non-core items. Cash G&A is not a measure of financial performance under GAAP. You should not consider the Company's Cash G&A as an alternative to general and administrative expense determined in accordance with GAAP. Additionally, the Company's computation of Cash G&A may differ from the methodology for calculating this metric used by other equity REITs, and, therefore, may not be comparable to similarly titled measures reported by other equity REITs. 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 expected annual contractually specified cash rent and interest at the time of investment or disposition divided by the gross investment or sale price, as applicable, for the property, including transaction costs for new investments but excluding transaction costs for dispositions. GAAP Cap Rate GAAP Cap Rate means expected annual rental and interest income computed in accordance with GAAP at the time of investments divided by the gross investment in the property, including transaction costs. Unit-Level Rent Coverage Ratio Unit-level rent coverage ratio means the ratio of (x) tenant-reported or, when unavailable, management's estimate (based on tenant-reported financial information) of annual EBITDA and cash rent attributable to the leased property (or properties, in the case of a master lease) to (y) the annualized base rental obligation, excluding properties with no cash ABR and properties under construction. Weighted Average Annual Escalation Weighted average annual escalation rate means the entire portfolio reflects as if all escalations occur annually. For leases in which rent escalates by the greater of a stated fixed percentage or CPI, we have assumed an escalation equal to the stated fixed percentage in the lease. As any future increase in CPI is unknowable at this time, we have not included an increase in the rent pursuant to these leases in the weighted average annual escalation rate presented. View source version on businesswire.com: https://www.businesswire.com/news/home/20261021039638/en/ Contacts Investor/Media: Essential Properties Realty Trust, Inc. Sheryl Kaul Director, Financial Planning & Data Analytics 609-436-0619 [email protected]

Realty Income Corporation O entered the second half of 2026 with better earnings visibility after a solid second quarter. AFFO per share increased 3.8% year over year to $1.09, while first-half AFFO per share rose 5.2% to $2.22. Management also raised its full-year AFFO guidance and investment target, pointing to continued opportunities across its expanding property and capital platforms. The stock reaction, however, was muted. Realty Income shares fell 0.54% to $62.36 on Aug. 6, the first trading session after the Aug. 5 results, and closed at $61.89 on Aug. 10 after another 0.99% decline. So far this year, Realty Income stock has gained 9.8% but underperformed the Zacks REIT and Equity Trust - Retail industry. However, O stock has outpaced its close peers, like Agree Realty Corporation ADC and Essential Properties Realty Trust, Inc. EPRT. Image Source: Zacks Investment Research The question now is whether stronger investment activity, steady property fundamentals and an expanding funding platform can support further per-share growth. At the same time, interest rates, acquisition pricing and the valuation investors assign to dependable REIT income remain important considerations. Realty Income's underlying business remained healthy in the second quarter. Revenues increased to $1.55 billion from $1.41 billion a year ago, while AFFO available to common shareholders rose to $1.02 billion from $947.5 million. Portfolio occupancy was 98.8% compared with 98.9% at the end of the first quarter and 98.6% a year earlier.The company also generated a 102.7% rent recapture rate on re-leased properties. Same-store rental revenues increased 1.2%, showing that organic growth remains modest but positive. Realty Income's portfolio included 15,588 properties across 92 industries at quarter-end, giving it a level of diversification that is difficult for smaller net-lease operators to match. Agree Realty and Essential Properties offer similar exposure to long-duration net leases, but both operate with smaller portfolios and somewhat different tenant mixes. Realty Income’s larger scale gives it broader sourcing access across retail, industrial and international markets, while ADC remains more concentrated in high-quality retail properties and EPRT has built a strong position in service-oriented and middle-market tenants. That scale can help Realty Income find more investment opportunities, although it also means the company needs a much larger volume of acquisitions to generate meaningful per-share growth. Investment activity remains central to Realty Income's outlook. The company invested roughly $2.6 billion during the second quarter, or $2.1 billion at its pro-rata share, at a weighted average initial cash yield of 7.3%. First-half investments totaled about $5.34 billion. Management consequently raised 2026 investment guidance from $9.5 billion to $10 billion. Industrial properties represented about 65% of second-quarter real estate investment activity. Realty Income is also expanding in Europe, private capital and data centers. Its $6 billion programmatic hyperscale data-center venture with Cloud Capital could involve up to $1.4 billion of equity from Realty Income over time. Management said its wider investment channels allow it to pursue opportunities across asset types, geographies and different parts of the capital structure.The broader investment approach gives Realty Income more growth channels than either Agree Realty or Essential Properties. ADC remains focused largely on retail net lease, while EPRT continues to expand through a smaller and more targeted acquisition platform. Realty Income, by comparison, is deploying capital across industrial properties, Europe, private-capital vehicles and data centers. This diversification can support longer-term growth, but it also introduces more execution risk as management moves into areas that sit outside the traditional retail net-lease model. Realty Income ended the second quarter with about $3.5 billion of available liquidity and net debt to annualized pro forma adjusted EBITDAre of 5.4 times. After quarter-end, the company expanded its revolving credit facilities to $5.5 billion, increased its commercial-paper capacity and issued €600 million of unsecured notes. Private capital is also reducing Realty Income’s dependence on common-equity issuance. Management noted that public equity represented only 18% of year-to-date investment volume compared with an average of 47% during the prior three years. This broader funding base could strengthen Realty Income’s ability to compete with Agree Realty, Essential Properties and private-market buyers for attractive assets. Still, higher Treasury yields remain a challenge for REIT valuations. The real-estate sector came under pressure again on Monday as long-term bond yields rose. Higher financing costs can narrow acquisition spreads and make income-oriented REIT shares less attractive relative to bonds. Over the past 30 days, FFO per share estimates for both 2026 and 2027 have remained unchanged, though the figures suggest 3.97% and 3.47% growth year over year, indicating a balanced view of growth and cost pressures. Image Source: Zacks Investment Research Valuation-wise, Realty Income stock is trading at a forward 12-month price-to-FFO of 13.62X, below the retail REIT industry average of 16.75X but ahead of its three-year median of 13.24X. O stock is also currently trading at a reasonable discount compared with its industry peers, Agree Realty Corporation and Essential Properties Realty Trust. This valuation disparity might not be as favorable as it seems. Agree Realty is trading at a forward 12-month price-to-FFO of 15.80X, while Essential Properties Realty Trust is trading at 14.22X.The Value Score of C suggests that Realty Income may not be a bargain at current levels. Still, the company’s strategic investments, consistent dividend growth, underpinned by predictable rental income, keep it appealing for long-term income-oriented investors. Management's higher AFFO guidance is encouraging, yet the increase is modest. Realty Income now expects about 4% AFFO-per-share growth at the midpoint. This suggests investors should weigh the reliable income profile against a growth rate that remains measured. Image Source: Zacks Investment Research Realty Income's second-quarter results support the case for patience rather than a major change in positioning. The company is producing AFFO growth, maintaining high occupancy and finding enough investment opportunities to raise its 2026 deployment target. Its stronger liquidity position and broader access to private capital are additional upsides. However, the post-earnings share-price weakness, interest-rate sensitivity and modest internal growth argue against chasing the stock after its earlier gains. For investors who already own Realty Income, maintaining the existing position appears appropriate while collecting the monthly dividend and monitoring whether the larger investment pipeline produces sustained per-share growth over the coming quarters. Check Realty Income’s dividend history here.At present, Realty Income carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Realty Income Corporation (O) : Free Stock Analysis Report Agree Realty Corporation (ADC) : Free Stock Analysis Report Essential Properties Realty Trust, Inc. (EPRT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Realty Income Corporation O, a leader in the net lease sector, is slated to release second-quarter 2026 results on Aug. 5, after market close. The Zacks Consensus Estimate for the to-be-reported quarter’s adjusted funds from operations (AFFO) and revenues is pegged at $1.09 per share and $1.54 billion, respectively.While the Zacks Consensus Estimate for second-quarter 2026 AFFO per share has remained unchanged over the past two months, it suggests 3.81% growth year over year. The Zacks Consensus Estimate for quarterly revenues implies a notable year-over-year increase of 8.98%. Image Source: Zacks Investment Research For the current year, the Zacks Consensus Estimate for Realty Income’s revenues is pegged at $6.27 billion, indicating a rise of 9.03% year over year. The consensus mark for 2026 AFFO per share is pinned at $4.45, calling for an expansion of around 3.97% on a year-over-year basis. Over the trailing four quarters, the company’s AFFO per share surpassed the Zacks Consensus Estimate on two occasions, met it once and missed it in the other. This is depicted in the graph below: Realty Income Corporation price-eps-surprise | Realty Income Corporation Quote Our proven model doesn’t predict a surprise in terms of AFFO per share for Realty Income this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an AFFO beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.Realty Income currently carries a Zacks Rank #2 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Realty Income’s second-quarter 2026 earnings report is expected to show that the company continued to benefit from the momentum built in the first quarter, supported by strong occupancy, steady investment activity and growing contributions from its private capital platform. Investors are likely to have focused on whether acquisition-driven growth and resilient property fundamentals were enough to offset the impact of higher financing costs during the quarter under review.Management’s updated 2026 guidance provides the benchmark for second-quarter expectations. Realty Income is expected to have experienced continued AFFO growth, supported by occupancy around its 98.5% target, same-store rent growth of 1-1.3% and a full-quarter contribution from investments completed earlier in the year. The company’s diversified portfolio and long-term lease structure are expected to have supported stable rental income, while recent acquisitions are likely to have contributed to revenue growth.The company is also expected to have experienced another active investment quarter. After deploying $2.8 billion during the first quarter and raising its full-year investment target to $9.5 billion, Realty Income’s acquisition pipeline is expected to have remained healthy across the United States and Europe. Continued capital deployment at attractive yields may have benefited rental revenue growth and strengthened earnings visibility.Realty Income is further expected to have seen broader support from its expanding private capital strategy. The Apollo retail joint venture, additional capital raised through the U.S. Core Plus Fund and other institutional partnerships are expected to have improved revenue visibility while providing greater funding flexibility. These initiatives are likely to have contributed to investment capacity without relying solely on the public equity markets.On the other hand, higher borrowing costs are expected to have pressured results in the quarter under review, although the company’s use of cross-currency swaps may have partially offset financing costs. Overall, Realty Income is expected to have delivered another stable quarter, with resilient operating fundamentals outweighing the impact of a higher-rate funding environment. Shares of Realty Income have rallied 11.4% so far in the year, aligning with the S&P 500 composite’s increase but underperforming the Zacks REIT and Equity Trust - Retail industry’s rise of 21.4%. While Realty Income has underperformed its industry, it has rallied more than its peers like Agree Realty Corporation ADC and Essential Properties Realty Trust, Inc. EPRT. Image Source: Zacks Investment Research Valuation-wise, Realty Income trades at a forward price-to-FFO of 13.98X, below the retail REIT industry average of 17.19X but above its one-year median of 13.71X. O stock is also currently trading at a reasonable discount compared with its industry peers, Agree Realty Corporation and Essential Properties Realty Trust. However, this valuation disparity might not be as favorable as it seems. Agree Realty is trading at a forward 12-month price-to-FFO of 16.40X, while Essential Properties Realty Trust is trading at 14.69X.However, the Value Score of D suggests that Realty Income may not be a bargain at current levels. Image Source: Zacks Investment Research Realty Income’s second-quarter setup supports a favorable investment view. High occupancy, steady rent growth and contributions from recent acquisitions are expected to have supported AFFO, while the Apollo venture and U.S. Core Plus Fund may have improved funding flexibility and fee income. The company’s diversified portfolio, disciplined capital deployment, strong liquidity and raised 2026 guidance suggest that operating momentum remains intact.For investors seeking dependable income with moderate growth potential, the outlook supports adding the shares at present levels.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Realty Income Corporation (O) : Free Stock Analysis Report Agree Realty Corporation (ADC) : Free Stock Analysis Report Essential Properties Realty Trust, Inc. (EPRT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research