ESSENTIAL PROPERTIES REALTY TRUST, INC. (EPRT) Q3 2025 Earnings Summary

Executive Summary

EPRT delivered a clean beat on revenue and EPS: revenue $144.9M vs $140.5M consensus* and diluted EPS $0.33 vs $0.315*; AFFO/share rose 12% YoY to $0.48 on strong origination and better-than-budget tenant credit performance .
Deployment was robust: $369.8M of investments at an 8.0% cash cap and a company-record 10.0% GAAP cap rate; dispositions were modest at $11.5M (6.6% cash cap) .
Guidance raised again: 2025 AFFO/share to $1.87–$1.89 (from $1.86–$1.89) and initial 2026 AFFO/share $1.98–$2.04 (6–8% growth) on strong portfolio trends and ample pipeline; 2025 investment guidance lifted to $1.2–$1.4B (from $1.0–$1.2B) .
Balance sheet remains conservative: pro forma net debt/Annualized Adjusted EBITDAre ~3.8x and ~$1.4B total liquidity after a $400M 10-year unsecured bond at 5.4%; modest dilution headwind from unsettled forwards persists but was manageable .
Stock catalysts: repeat guidance raise, record GAAP cap rate, and commentary pointing to modest cap rate compression with stable spreads as rates ease could support multiple and estimate revisions near-term .

What Went Well and What Went Wrong

What Went Well

Record pricing power: 10.0% GAAP cap rate on Q3 investments—a company record—driven by strong origination and relationships; CEO: “our 10.0% GAAP Cap Rate…represents a company record” .
Portfolio health ahead of plan: rent coverage improved to 3.6x; only five vacancies; occupancy 99.8%; top-10 ABR concentration dropped to 16.9%; watch list down 40 bps QoQ .
Repeat guidance raise with de-risked plan: 2025 AFFO/share lifted to $1.87–$1.89 and 2026 introduced at $1.98–$2.04; management frames 6–8% growth as “ample and adequate and de-risked from an execution perspective” .

What Went Wrong

Higher G&A as platform scales: total G&A rose to $10.2M (from $8.6M YoY), mainly compensation/stock comp; cash G&A was ~$6.7M (~4.6% of revenue) .
Interest burden up with growth/cap structure: Q3 interest expense $28.3M vs $21.6M YoY despite swaps; partially offset by hedges and terming-out debt .
Straight-line rent and impairments persist: Q3 included $(14.4)M straight-line revenue adjustment in AFFO bridge and $1.4M real estate impairment; AFFO neutralized these non-cash impacts .

Financial Results

Quarterly trend – revenue, EPS, AFFO/share

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Total Revenues ($USD)	$117.1M	$129.4M	$137.1M	$144.9M
Diluted EPS ($)	$0.27	$0.29	$0.32	$0.33
AFFO per Share (Diluted) ($)	$0.43	$0.45	$0.46	$0.48

Q3 2025 actuals vs S&P Global consensus

Metric	Consensus	Actual	Surprise
Revenue ($USD)	$140.5M*	$144.9M	+$4.4M (+3.1%)
Diluted EPS ($)	$0.315*	$0.33	+$0.015 (+4.8%)
EBITDA (company-reported EBITDAre) ($USD)	$128.7M*	$132.8M	+$4.1M (+3.2%)

Values marked with * retrieved from S&P Global.

EBITDAre and margins (company-reported)

Metric	Q1 2025	Q2 2025	Q3 2025
EBITDAre ($USD)	$115.5M	$124.9M	$132.8M
Revenue ($USD)	$129.4M	$137.1M	$144.9M
EBITDAre Margin (%)	89.3%	91.1%	91.7%
Note: EBITDAre margin calculated from company-reported EBITDAre and revenues.

Key portfolio KPIs

KPI	Q2 2025	Q3 2025
WALT (years)	14.3	14.4
Weighted Avg Rent Coverage	3.4x	3.6x
Occupancy	99.6%	99.8%
Top 10 Tenants (% of cash ABR)	17.6%	16.9%
Investments ($)	$334.0M @ 7.9% cash/9.7% GAAP cap	$369.8M @ 8.0% cash/10.0% GAAP cap
Dispositions ($)	$46.2M @ 7.3% cash cap	$11.5M @ 6.6% cash cap
Sale-Leaseback Share	93%	97%
Master Lease Share	69%	76%
Avg Lease Escalation	2.2%	2.3%

Segment breakdown: EPRT reports one segment (single-tenant net lease) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
AFFO/share (diluted)	FY2025	$1.86–$1.89	$1.87–$1.89	Raised (narrowed up)
Investment Volume	FY2025	$1.0–$1.2B	$1.2–$1.4B	Raised
Cash G&A Expense	FY2025	$28–$31M	$28–$31M	Maintained
AFFO/share (diluted)	FY2026	—	$1.98–$2.04	New
Investment Volume	FY2026	—	$1.0–$1.4B	New
Dividend	Quarterly	$0.30 declared (Q2)	$0.30 declared (Q3)	Maintained

Management notes 2026 guide implies 6–8% AFFO/share growth; cap rates expected to compress modestly with stable spreads in a lower/stable rate environment .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Cap rates & spreads	Investments at 7.8–7.9% cash cap; pipeline healthy; increased 2025 investment guide	Record 10.0% GAAP cap; expect modest cap rate compression as rates ease; spreads roughly stable	Slight compression ahead but spreads resilient
Portfolio credit	Coverage ~3.5x; resilient trends ; Q2 coverage 3.4x, occupancy 99.6%	Coverage 3.6x; occupancy 99.8%; watch list down ~40 bps QoQ	Improving
Competition/private capital	Healthy pipeline; relationship-driven sourcing	Competition present, but EPRT competes on certainty/reliability; willing to pass on price-stretched deals	Stable competitive dynamics
Funding mix & leverage	Revolver upsized to $1.0B; pro forma leverage ~3.4–3.5x; unsettled forward equity >$500M	$400M 2035 notes @5.4%; pro forma leverage ~3.8x; selective on equity; minor TSM dilution	Prudent, terming-out debt
G&A efficiency/platform scale	Scaling platform; reiterates efficiency focus	Cash G&A ~4.6% of revenue; continued efficiency gains expected	Improving operating leverage
Industrial exposure	Not specifically highlighted	IOS/industrial assets focus on fungible real estate; durable tenancy; not expected to be disproportionate	Selective growth
Automotive sector risk	Not highlighted	Auto service focus; insulated from auto retail/dealer noise; no notable flow-through	Stable

Management Commentary

CEO Pete Mavoides: “Resilient tenant credit performance… and strong origination activity… have put the Company in a position to hike guidance again… our 10.0% GAAP Cap Rate on investments this quarter represents a company record” .
CFO Mark Patten: “AFFO per share… $0.48, +12% YoY… $400M 10-year unsecured bond at 5.4%… weighted average debt maturity improved ~18% to 4.5 years… unsettled forward equity $521M at quarter end” .
Strategy/tone: Management emphasizes a “de-risked” plan targeting 6–8% AFFO/share growth in 2026 with investment pace consistent with trailing eight quarters and modest cap-rate compression expected as rates stabilize .

Q&A Highlights

Cap rate outlook: Expect some compression with lower rates; spreads likely static to slightly tighter; 60–90 day lag versus rate moves .
Competition/discipline: EPRT loses deals mainly on price by choice; prioritizes certainty of execution and risk-adjusted returns; reliability differentiates against new entrants .
Credit risk/watch list: Watch list (B- and <1.5x coverage) down ~40 bps QoQ; credit issues are idiosyncratic across sectors/geographies; historical credit loss ~30 bps used in planning .
Funding and forward equity: Minor Treasury stock method dilution included in diluted share count; unsettled forward equity provides optionality to fund pipeline and repay revolver .
Industrial exposure: Focused on granular IOS with service operators; coverage measured at site level; durable tenancy with high switching costs .

Estimates Context

Q3 2025 results exceeded consensus across revenue, EPS, and EBITDAre: revenue $144.9M vs $140.5M*, EPS $0.33 vs $0.315*, EBITDAre $132.8M vs $128.7M* .
Target price consensus $35.95*; consensus recommendation text not available*. Near-term estimate revisions: upside bias to AFFO given repeated 2025 raises and explicit 2026 guide; cap rate compression commentary suggests cautious forward underwriting of spreads*.
Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Repeatable growth algorithm intact: rising AFFO/share (12% YoY in Q3) with a de-risked 6–8% 2026 guide and higher 2025 investment volume should support estimate momentum and premium relative valuation .
Superior origination economics: 8.0% cash/10.0% GAAP cap rates and high master-lease/SLB mix underscore underwriting edge and relationship flywheel .
Credit quality trending better: higher rent coverage, fewer assets under watch, and near-full occupancy reduce tail risk and support multiple .
Balance sheet optionality: $1.4B liquidity, low pro forma leverage (~3.8x), and $521M unsettled forwards enable funding without immediate equity prints; bond access improved duration profile .
Watch for modest cap rate compression: management expects lower cap rates with stable spreads; monitor cost of capital and private competition for potential spread pressure .
Trading/near-term: Beats plus raised guide and 2026 visibility are positive catalysts; any signs of accelerating deployment at attractive yields or continued credit improvements could extend outperformance .
Medium-term thesis: Scalable platform, disciplined risk underwriting (granular, fungible assets), and improving operating leverage (lower cash G&A as % of revenue) underpin durable AFFO growth .

Appendix: Additional financial detail (Q3 2025)

Income statement highlights: Revenues $144.9M; G&A $10.2M; D&A $39.0M; interest expense $28.3M; net income $65.8M; diluted shares 199.9M; diluted EPS $0.33 .
Non-GAAP: FFO/share (diluted) $0.52; AFFO/share (diluted) $0.48; Adjusted EBITDAre (annualized) $552.0M; pro forma net debt/Annualized Adjusted EBITDAre 3.8x .
Capital markets: $400M 2035 notes @5.4% issued Aug 21, 2025; pro forma liquidity ~$1.4B (cash + revolver + unsettled forwards) .