ESSENTIAL PROPERTIES REALTY TRUST INC
For the period ended Dec 31, 2024. Filed Feb 12, 2025.
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FY2024 · Filed Feb 12, 2025
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Item 2. Properties
Our Real Estate Investment Portfolio
As of December 31, 2024, we had a portfolio of 2,104 properties, inclusive of 150 properties that secure our investments in mortgage loans receivable, that was diversified by tenant, concept, industry and geography and had annualized base rent of $460.6 million. Our 413 tenants operate 592 different concepts in 16 industries across 49 states. None of our tenants represented more than 4.2% of our portfolio at December 31, 2024 and our top ten largest tenants represented 17.6% of our annualized base rent as of that date.
Diversification by Tenant
As of December 31, 2024, our top ten tenants included ten different concepts. The following table details information about our tenants and the related concepts they operate as of December 31, 2024 (dollars in thousands):
| Tenant (1) | Concept | Number ofProperties (2) | AnnualizedBase Rent | % ofAnnualizedBase Rent |
|---|---|---|---|---|
| EquipmentShare.com Inc. | EquipmentShare | 59 | $19,210 | 4.2% |
| CNP Holdings, LLC | Chicken N Pickle | 8 | 8,492 | 1.9% |
| BW Ultimate Parent, LLC | YesWay | 13 | 7,472 | 1.6% |
| Busy Bees US Holdings Limited | Various | 32 | 7,215 | 1.6% |
| Undefeated Tribe Operating Company, LLC | Crunch Fitness | 12 | 6,740 | 1.5% |
| Denali Midco 2, LLC | Super Star Car Wash | 20 | 6,627 | 1.4% |
| Pops Mart Holdings, LLC and Pops Mart Fuels, LLC | Various | 26 | 6,601 | 1.4% |
| New Potato Creek Holdings, LLC | Tidal Wave Auto Spa | 16 | 6,546 | 1.4% |
| Mdsfest, Inc. | Festival Foods | 7 | 6,104 | 1.3% |
| Alimentation Couche Tard Inc. | Circle K | 40 | 6,000 | 1.3% |
| Top 10 Subtotal | 233 | 81,007 | 17.6% | |
| Other | 1,864 | 379,564 | 82.4% | |
| Total | 2,097 | $460,571 | 100.0% |
(1)Represents tenant, guarantor or parent company.
(2)Excludes seven vacant properties.
As of December 31, 2024, our five largest tenants, who contributed 10.7% of our annualized base rent, had a rent coverage ratio of 6.4x while our ten largest tenants, who contributed 17.6% of our annualized base rent, had a rent coverage ratio of 5.2x.
As of December 31, 2024, 96.6% of our leases (based on annualized base rent) were triple-net, where the tenant is typically responsible for all improvements and is contractually obligated to pay all operating expenses, such as maintenance, insurance, utility and tax expense, related to the leased property. Due to the triple-net structure of our leases, we do not expect to incur significant capital expenditures relating to our triple-net leased properties, and the potential impact of inflation on our operating expenses is reduced.
Diversification by Concept
Our tenants operate their businesses across 592 concepts (i.e., generally brands). The following table provides information about the top ten concepts in our portfolio as of December 31, 2024 (dollars in thousands):
| Concept | Type ofBusiness | AnnualizedBase Rent | % ofAnnualizedBase Rent | Number ofProperties (1) | Building(Sq. Ft.) (1) |
|---|---|---|---|---|---|
| EquipmentShare | Service | $19,210 | 4.2% | 59 | 1,132,619 |
| Crunch Fitness | Experience | 13,645 | 3.0% | 26 | 1,013,523 |
| Chicken N Pickle | Experience | 8,492 | 1.9% | 8 | 279,483 |
| YesWay | Service | 7,472 | 1.6% | 13 | 75,429 |
| Captain D's | Service | 6,762 | 1.5% | 87 | 225,956 |
| Super Star Car Wash | Service | 6,627 | 1.4% | 20 | 98,234 |
| Pops Mart | Service | 6,601 | 1.4% | 26 | 130,893 |
| Tidal Wave Auto Spa | Service | 6,546 | 1.4% | 16 | 58,154 |
| Festival Foods | Retail | 6,104 | 1.3% | 7 | 520,475 |
| Red Robin Gourmet Burgers & Brews | Service | 5,984 | 1.3% | 28 | 188,041 |
| Top 10 Subtotal | 87,443 | 19.0% | 290 | 3,722,807 | |
| Other | 373,128 | 81.0% | 1,807 | 18,637,908 | |
| Total | $460,571 | 100.0% | 2,097 | 22,360,715 |
(1)Excludes seven vacant properties.
Diversification by Industry
Our tenants' business concepts are diversified across various industries. The following table summarizes those industries as of December 31, 2024 (dollars in thousands except per sq. ft amounts):
| Tenant Industry | Type ofBusiness | AnnualizedBase Rent | % ofAnnualizedBase Rent | Number ofProperties (1) | Building(Sq. Ft.) (1) | Rent PerSq. Ft. (2) |
|---|---|---|---|---|---|---|
| Car Washes | Service | $65,352 | 14.2% | 195 | 993,402 | $64.32 |
| Medical / Dental | Service | 54,162 | 11.8% | 233 | 1,955,274 | 26.35 |
| Early Childhood Education | Service | 54,093 | 11.7% | 230 | 2,459,190 | 21.50 |
| Quick Service | Service | 42,115 | 9.1% | 428 | 1,135,522 | 37.07 |
| Automotive Service | Service | 36,035 | 7.8% | 265 | 1,956,478 | 18.16 |
| Casual Dining | Service | 34,695 | 7.5% | 145 | 1,006,976 | 31.93 |
| Convenience Stores | Service | 29,867 | 6.5% | 169 | 699,890 | 38.38 |
| Equipment Rental and Sales | Service | 24,723 | 5.4% | 86 | 1,675,003 | 14.76 |
| Other Services | Service | 12,360 | 2.7% | 59 | 763,088 | 16.29 |
| Pet Care Services | Service | 6,953 | 1.5% | 39 | 335,760 | 20.15 |
| Family Dining | Service | 6,666 | 1.5% | 29 | 221,953 | 30.03 |
| Service Subtotal | 367,021 | 79.7% | 1,878 | 13,202,536 | 26.92 | |
| Entertainment | Experience | 36,122 | 7.8% | 62 | 2,247,463 | 15.21 |
| Health and Fitness | Experience | 21,670 | 4.7% | 46 | 1,788,976 | 10.78 |
| Movie Theatres | Experience | 4,404 | 1.0% | 6 | 293,206 | 15.02 |
| Experience Subtotal | 62,196 | 13.5% | 114 | 4,329,645 | 13.38 | |
| Grocery | Retail | 13,677 | 3.0% | 40 | 1,604,320 | 8.53 |
| Home Furnishings | Retail | 1,530 | 0.3% | 3 | 176,809 | 8.65 |
| Retail Subtotal | 15,207 | 3.3% | 43 | 1,781,129 | 8.54 | |
| Other Industrial | Industrial | 12,181 | 2.6% | 39 | 1,790,388 | 6.49 |
| Building Materials | Industrial | 3,966 | 0.9% | 23 | 1,257,017 | 3.16 |
| Industrial Subtotal | 16,147 | 3.5% | 62 | 3,047,405 | 5.11 | |
| Total/Weighted Average | $460,571 | 100.0% | 2,097 | 22,360,715 | $19.88 |
(1)Excludes seven vacant properties.
(2)Excludes properties with no annualized base rent and properties under construction.
As of December 31, 2024, our tenants operating service-oriented businesses had a weighted average rent coverage ratio of 3.5x, our tenants operating experience-based businesses had a weighted average rent coverage ratio of 2.7x, our tenants operating retail businesses had a weighted average rent coverage ratio of 4.1x and our tenants operating other types of businesses had a weighted average rent coverage ratio of 8.8x.
Diversification by Geography
Our 2,104 properties locations are located in 49 states. The following table details the geographical locations of our properties as of December 31, 2024 (dollars in thousands):
| State | Annualized Base Rent | % of Annualized Base Rent | Number of Properties | Building (Sq. Ft.) |
|---|---|---|---|---|
| Texas | $58,094 | 12.6% | 232 | 2,688,743 |
| Georgia | 33,687 | 7.3% | 159 | 1,170,288 |
| Florida | 29,609 | 6.4% | 102 | 1,009,063 |
| Ohio | 26,224 | 5.7% | 141 | 1,558,468 |
| Wisconsin | 23,063 | 5.0% | 89 | 1,203,062 |
| North Carolina | 18,040 | 3.9% | 86 | 823,149 |
| Arizona | 15,975 | 3.5% | 65 | 687,393 |
| Oklahoma | 15,603 | 3.4% | 70 | 961,748 |
| Missouri | 15,174 | 3.3% | 72 | 900,451 |
| Illinois | 13,925 | 3.0% | 63 | 603,709 |
| South Carolina | 12,663 | 2.7% | 66 | 542,546 |
| Indiana | 12,092 | 2.6% | 64 | 652,790 |
| Michigan | 12,062 | 2.6% | 62 | 1,135,416 |
| Minnesota | 11,099 | 2.4% | 44 | 628,174 |
| New Jersey | 10,728 | 2.3% | 31 | 429,474 |
| Alabama | 10,383 | 2.3% | 57 | 548,645 |
| New York | 9,528 | 2.1% | 61 | 390,778 |
| Virginia | 9,496 | 2.1% | 30 | 367,074 |
| Arkansas | 9,474 | 2.1% | 62 | 509,900 |
| Tennessee | 8,989 | 2.0% | 52 | 361,919 |
| Pennsylvania | 8,039 | 1.7% | 42 | 419,149 |
| Mississippi | 7,975 | 1.7% | 59 | 371,968 |
| New Mexico | 7,653 | 1.7% | 29 | 194,880 |
| Colorado | 7,465 | 1.6% | 30 | 353,655 |
| Connecticut | 7,174 | 1.6% | 23 | 579,458 |
| Kentucky | 6,410 | 1.4% | 48 | 310,474 |
| Massachusetts | 6,255 | 1.4% | 32 | 439,465 |
| California | 5,679 | 1.2% | 19 | 149,755 |
| Louisiana | 5,651 | 1.2% | 29 | 172,990 |
| Iowa | 5,650 | 1.2% | 32 | 363,483 |
| Nevada | 5,155 | 1.1% | 15 | 114,488 |
| Kansas | 4,683 | 1.0% | 18 | 201,900 |
| Utah | 4,426 | 1.0% | 5 | 321,256 |
| New Hampshire | 3,638 | 0.8% | 14 | 279,182 |
| South Dakota | 2,727 | 0.6% | 9 | 130,153 |
| Maryland | 2,411 | 0.5% | 9 | 75,410 |
| Oregon | 2,320 | 0.5% | 8 | 131,957 |
| Washington | 2,267 | 0.5% | 12 | 94,427 |
| West Virginia | 2,045 | 0.4% | 24 | 84,684 |
| Nebraska | 1,750 | 0.4% | 11 | 138,797 |
| Maine | 1,147 | 0.2% | 4 | 71,000 |
| Vermont | 1,006 | 0.2% | 9 | 64,622 |
| North Dakota | 876 | 0.2% | 5 | 72,400 |
| Idaho | 659 | 0.1% | 2 | 41,146 |
| Rhode Island | 473 | 0.1% | 2 | 22,865 |
| Delaware | 408 | 0.1% | 1 | 4,186 |
| Wyoming | 289 | 0.1% | 2 | 14,001 |
| Alaska | 253 | 0.1% | 2 | 6,630 |
| Montana | 179 | 0.1% | 1 | 3,400 |
| Total | $460,571 | 100.0% | 2,104 | 22,400,571 |
Lease Expirations
As of December 31, 2024, the weighted average remaining term of our leases was 14.0 years (based on annualized base rent), with only 5.8% of our annualized base rent attributable to leases expiring prior to January 1, 2030. The following table sets forth our lease expirations for leases in place as of December 31, 2024 (dollars in thousands):
| Lease Expiration Year (1) · AnnualizedBase Rent · % ofAnnualizedBase Rent · Number ofProperties (2) · WeightedAverage RentCoverage Ratio (3) | |||||
|---|---|---|---|---|---|
| 2025 | $2,535 | 0.6% | 17 | 3.0 | x |
| 2026 | 3,476 | 0.8% | 24 | 3.2 | x |
| 2027 | 5,741 | 1.2% | 43 | 3.5 | x |
| 2028 | 4,378 | 1.0% | 16 | 2.6 | x |
| 2029 | 10,479 | 2.3% | 119 | 4.9 | x |
| 2030 | 4,129 | 0.9% | 45 | 3.8 | x |
| 2031 | 12,401 | 2.7% | 66 | 3.0 | x |
| 2032 | 12,835 | 2.8% | 43 | 4.1 | x |
| 2033 | 7,984 | 1.7% | 30 | 2.7 | x |
| 2034 | 30,100 | 6.5% | 201 | 6.4 | x |
| 2035 | 16,260 | 3.5% | 104 | 4.1 | x |
| 2036 | 40,300 | 8.8% | 159 | 4.1 | x |
| 2037 | 24,005 | 5.2% | 126 | 4.1 | x |
| 2038 | 53,264 | 11.6% | 206 | 3.6 | x |
| 2039 | 39,941 | 8.7% | 159 | 3.6 | x |
| 2040 | 22,551 | 4.9% | 104 | 2.3 | x |
| 2041 | 19,399 | 4.2% | 92 | 2.9 | x |
| 2042 | 33,408 | 7.3% | 149 | 2.7 | x |
| 2043 | 48,689 | 10.6% | 178 | 2.5 | x |
| 2044 | 54,227 | 11.7% | 178 | 3.3 | x |
| Thereafter | 14,469 | 3.0% | 38 | 2.9 | x |
| Total/Weighted Average | $460,571 | 100.0% | 2,097 | 3.5 | x |
(1)Expiration year of contracts in place as of December 31, 2024, excluding any tenant option renewal periods that have not been exercised.
(2)Excludes seven vacant properties.
(3)Weighted by annualized base rent.
Unit Level Rent Coverage
Generally, we seek to acquire investments with healthy rent coverage ratios, and as of December 31, 2024, the weighted average rent coverage ratio of our portfolio was 3.5x. Our portfolio’s unit-level rent coverage ratios (by annualized base rent and excluding leases that do not report unit-level financial information) as of December 31, 2024 are displayed below:
| Unit Level Coverage Ratio | % of Total |
|---|---|
| ≥ 2.00x | 70.4% |
| 1.50x to 1.99x | 15.1% |
| 1.00x to 1.49x | 10.3% |
| < 1.00x | 3.1% |
| Not reported | 1.1% |
| 100.0% |
Implied Tenant Credit Ratings
Tenant financial distress is typically caused by consistently poor or deteriorating operating performance, near-term liquidity issues or unexpected liabilities. To assess the probability of tenant insolvency, we utilize Moody’s Analytics RiskCalc, which is a model for predicting private company defaults based on Moody’s Analytics Credit Research Database, which incorporates both market and company-specific risk factors. The following table illustrates the portions of our annualized base rent as of December 31, 2024 attributable to leases with tenants having specified implied credit ratings based on their Moody’s RiskCalc scores:
| Credit Rating | NR | < 1.00x | 1.00 to 1.49x | 1.50 to 1.99x | ≥ 2.00x |
|---|---|---|---|---|---|
| CCC+ | —% | 0.6% | 0.9% | 0.4% | 2.0% |
| B- | —% | 0.4% | 0.1% | 1.1% | 5.4% |
| B | 0.1% | 0.2% | 1.4% | 2.3% | 8.3% |
| B+ | —% | 0.5% | 2.1% | 2.5% | 12.4% |
| BB- | —% | 0.4% | 1.6% | 2.3% | 9.8% |
| BB | —% | 0.5% | 2.3% | 2.3% | 9.4% |
| BB+ | 0.2% | 0.1% | 0.1% | 1.7% | 6.3% |
| BBB- | 0.2% | 0.2% | 1.4% | 0.6% | 6.7% |
| BBB | —% | —% | 0.5% | 1.5% | 2.2% |
| BBB+ | —% | 0.1% | —% | 0.1% | 2.7% |
| A- | —% | —% | —% | —% | 1.9% |
| A | —% | —% | —% | —% | 0.6% |
| A+ | —% | —% | —% | —% | 0.5% |
| AA- | —% | —% | —% | —% | —% |
NR Not reported
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.