The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.

Essential Properties reported Q1 results ahead of expectations with GAAP net income $60M and AFFO $105.8M, invested $389M across 126 sale-leasebacks (including a $147M Denny’s portfolio) and achieved 11% YoY AFFO/share growth.

Management raised 2026 guidance, boosting AFFO per share to $2.00–$2.05 and increasing investment volume guidance by $100M to $1.1B–$1.5B, citing a faster investment pace and improved credit trends.

Balance sheet and capital plan remain supportive: pro forma net debt/EBITDAre ~3.5x, ~$1.5B available liquidity, ~$419M equity raised this quarter, a $0.31 quarterly dividend (62% AFFO payout), and a planned mid-year unsecured debt issuance to fund growth.

Interested in Essential Properties Realty Trust, Inc.? Here are five stocks we like better.

Look To REITs For Reliable Yield Even In Recessionary Environment

Essential Properties Realty Trust (NYSE:EPRT) reported first-quarter 2026 results that management said came in ahead of internal expectations, driven by earlier-than-expected investment deployment, lower cash general and administrative expenses, and favorable portfolio credit trends. The net-lease REIT posted GAAP net income of $60 million and adjusted funds from operations (AFFO) of $105.8 million, according to Director of Financial Planning and Data Analytics Sheryl Kaul.

Chief Executive Officer Peter Mavoides said the company “had a productive Q1,” highlighted by $389 million of investments across 126 properties and $419 million of equity raised to support the pipeline. He added that AFFO per share grew 11% year over year and that the company’s investment spreads remained supportive of earnings growth despite a “macro backdrop characterized by heightened volatility.”

→ Amazon Stock Up 30%: Is AMZN Still a Buy Before Earnings?

Management increased full-year 2026 guidance for AFFO per share to a range of $2.00 to $2.05, with Chief Financial Officer Robert Salisbury noting the updated outlook implies “a growth rate of 7% at the midpoint and over 8% at the high end.” Mavoides said investment activity and portfolio credit trends “have started the year ahead of our budgeted expectations,” supporting the guidance increase.

The company also raised its 2026 investment volume guidance by $100 million to a range of $1.1 billion to $1.5 billion, following what Chief Operating Officer Max Jenkins described as a “great start to the year on the investment side.” Salisbury said cash G&A guidance was reduced by $1 million to a range of $30 million to $34 million, attributing the change to cost discipline as the platform scales.

→ Allbirds Exits Shoes, Pivots to AI With NewBird Rebrand

Jenkins said Essential Properties invested $389 million during the quarter at a weighted-average cash yield (initial cap rate) of 7.7% and an average GAAP yield of 8.8%. The quarter’s investments carried a weighted-average initial lease term of 17.7 years and weighted-average annual rent escalations of 2.1%. Jenkins also said the investments had weighted-average unit-level rent coverage of 3.1x, which he characterized as reflecting “a conservative rent level and healthy unit profitability for our operators.”

All 126 properties acquired during the quarter were sale-leasebacks, and the average investment per property was $2.9 million, consistent with the company’s historical approach emphasizing “fungible assets,” Jenkins said.

→ 3M Stock Pulls Back, But Catalysts Point to New Highs

Management singled out a portfolio transaction completed in January: a $147 million sale-leaseback of 74 properties with Denny’s, completed as part of Denny’s privatization transaction. Jenkins said the deal involved an average purchase price “of under $2 million per asset” and included “strong unit level coverage,” which management said aligned with its focus on real estate fungibility. In response to analyst questions about the tenant, Jenkins emphasized that the average operating history across the acquired portfolio exceeded 40 years and cited “durable, strong unit level coverage” and “stable performance across the board.”

On lease structure, Jenkins said the transaction included “a combination of both corporate owned and operated stores as well as multiple franchisees,” which he said provided tenant credit diversification. Later, Mavoides said the franchise exposure was “pretty diverse,” adding that Essential Properties has “up to 15 franchisees,” though the company did not provide a corporate-versus-franchise split.

Management reported stable portfolio operating metrics. The company cited same-store rent growth of 1.4% for the first quarter, occupancy of 99.7%, and just seven vacant properties. Portfolio rent coverage was 3.5x, and the portion of annual base rent (ABR) with rent coverage below 1.5x declined by 140 basis points. Mavoides said the portfolio ended the quarter at 2,417 properties leased to more than 400 tenants, with a weighted-average lease term of about 15 years and only 2.8% of ABR expiring over the next three years.

On dispositions, the company sold $10.2 million of properties at a 6.9% cap rate, with management describing that as a moderation from an elevated fourth quarter that included car wash property sales. Mavoides said he expects normalized disposition activity of roughly “$20 million a quarter” and cautioned investors against reading too much into quarter-to-date second-quarter timing.

The company also discussed one tenant credit event during the quarter, involving a restaurant operator that filed for bankruptcy. Salisbury said Essential Properties owned seven properties leased to the tenant, representing about 30 basis points of ABR. He said the company had identified backfill tenants for five sites and had two locations under contract for sale, with an expected recovery rate “consistent with our historical range of approximately 80%,” which he said was better than budget expectations. In response to a question, Mavoides added that the five sites had a “new Applebee’s tenant come right in and step in to the lease,” and said the locations were open and “paying rent.”

Management also addressed an impairment item recorded in the quarter. Salisbury said the impairment was driven primarily by one site formerly occupied by American Signature, a tenant that went bankrupt in the fourth quarter. He said lease rejection during the first quarter triggered the impairment testing process and added that the company is “down to one location now” in home furnishings exposure, which he characterized as immaterial.

Salisbury said AFFO per share was $0.50 in the first quarter. He reported total G&A of $12.3 million and cash G&A of $8 million, equal to 5% of total revenue, down from 5.9% in the same quarter a year earlier. The company declared a $0.31 dividend for the quarter, representing an AFFO payout ratio of 62%, and Salisbury said retained free cash flow after dividends was $40 million for the quarter, or about $160 million on an annualized basis.

On the balance sheet, management reported income-producing gross assets of more than $7.5 billion and pro forma net debt to annualized adjusted EBITDAre of 3.5x. Mavoides said the company had $1.5 billion of available liquidity.

In capital markets activity, Salisbury said Essential Properties completed an overnight equity offering in February, raising more than $402 million, and raised about $17 million through its at-the-market (ATM) program. He said all equity issuance was completed on a forward basis, with $193 million of forward equity settled during the quarter and $541 million remaining unsettled at quarter end at a weighted-average forward price of $30.55.

Looking ahead, Salisbury said the company continues to anticipate an unsecured debt issuance “in the middle of the year” to help fund the growth pipeline and extend liability maturities. Mavoides also addressed a term loan maturing in early February, saying the company is “likely to look to the unsecured bond market at some point to take out that term loan,” while emphasizing that investment plans are developed on a longer-term basis rather than to offset near-term refinancing headwinds.

During the Q&A, management said cap rates were expected to remain in the mid-to-high 7% range, with Mavoides citing capital markets and competition as well as industry mix as factors. Salisbury framed the investment spread as an “output,” noting that the company’s weighted-average cost of capital was in the mid-to-high 5% range, compared with deployment yields in the mid-to-high 7% range.

Management also pointed to areas it is monitoring within the portfolio. Mavoides said the company expects the “most weakness” in casual dining and entertainment, describing potential impacts as modest, while noting that overall credit performance was coming in better than anticipated.

Essential Properties Realty Trust, Inc (NYSE: EPRT) is a self-administered real estate investment trust that acquires, owns and manages single-tenant commercial properties subject to long-term, triple-net leases. The company’s portfolio primarily consists of small-box retail and industrial assets, including convenience stores, automotive service centers, quick-service restaurants, fitness centers and other necessity-based businesses. Under a triple-net lease structure, tenants assume responsibility for property taxes, insurance and most maintenance expenses, providing Essential Properties with predictable, stable cash flows.

Since its founding in April 2016 and its initial public offering later that year, Essential Properties has pursued a growth strategy focused on partnering with creditworthy tenants operating in densely populated trade areas.

The article "Essential Properties Realty Trust Q1 Earnings Call Highlights" was originally published by MarketBeat.