Essential Properties Realty Trust, Inc.

The company reported GAAP net income of $74.5 million and AFFO of $110.1 million in Q2 2026. AFFO per share was $0.50, up 9% versus Q2 2025, and nominal AFFO increased 18% year over year. Same-store rent growth improved to 1.5%, occupancy remained 99.6%, and portfolio rent coverage was 3.5x. For the quarter, the company invested $332 million at an average initial cash yield of 7.8% and a GAAP yield of 9.1%, and disposed of $54.3 million of assets at a 7.3% weighted average cap rate. Management raised 2026 AFFO per share guidance to $2.01-$2.05 and investment volume guidance to $1.2 billion-$1.5 billion, implying AFFO per share growth of over 7% at the midpoint and over 8% at the high end.

Pete Mavoides said the quarter reflected strong sourcing, a deep operator network, and the ability to keep closing attractive sale-leasebacks even in a volatile capital markets backdrop. He emphasized that the company’s spread between investment yields and cost of capital remained attractive, and that the balance sheet is well funded for the rest of 2026 and into 2027. His tone was confident and constructive, with repeated emphasis on durability, diversification, and execution.

Rob Salisbury said AFFO per share of $0.50 was ahead of expectations, helped by stronger portfolio performance and better investment volume and pricing. He highlighted total G&A of $10.9 million, cash G&A of $7.2 million, and cash G&A at 4.4% of total revenue versus 5.2% a year ago; cash G&A is trending toward the bottom half of the $30 million-$34 million annual range. He also pointed to $43 million of retained free cash flow after dividends in the quarter, a $400 million 10-year unsecured bond at a 5 3/8% coupon, approximately $85 million of equity raised in the quarter and after quarter-end, $575 million of unsettled forward equity at quarter end, and pro forma net debt to annualized adjusted EBITDA of 3.5x with $1.7 billion of liquidity.

Analysts focused on the use of OP Units, category mix, restaurant coverage, credit loss assumptions, the pace of acquisitions versus earlier pipeline disclosures, and how the company plans to handle the February 2027 term loan. Management said the OP Unit deal was a tax-efficient, one-off-style tool for a seller that did not need cash, not a broad new strategy, and that early childhood education was just one larger opportunity in the quarter rather than a deliberate shift in focus. On credit, management said restaurant coverage looked flat, the under-1.5x bucket improved, bad debt assumptions were conservatively set, and the 2027 term loan could create $0.04-$0.06 of dilution depending on how it is refinanced, with bonds preferred if market conditions allow.