Breaking Down Essential Properties Realty Trust, Inc. (EPRT) Financial Health: Key Insights for Investors

You're looking at Essential Properties Realty Trust, Inc. (EPRT) because you want to know if their growth engine can keep firing in a high-rate environment, and honestly, the Q3 2025 numbers defintely suggest it can. This isn't just a steady-eddy net lease REIT; it's a disciplined growth story backed by strong fundamentals. The company just raised its full-year Adjusted Funds From Operations (AFFO) per share guidance to a range of $1.87 to $1.89, up from prior estimates, on the back of a Q3 revenue beat, landing at $144.9 million. They're putting capital to work aggressively but smartly, committing $369.8 million to new investments in the third quarter alone at an attractive weighted average cash cap rate of 8.0%. Plus, their portfolio stability is exceptional, holding a near-perfect 99.8% occupancy rate and a healthy tenant rent coverage ratio of 3.6x. That's the kind of precision you need to see before making a move.

Revenue Analysis

You want to know where the money is coming from at Essential Properties Realty Trust, Inc. (EPRT) and if that growth is sustainable. The short answer is that the revenue engine is firing on all cylinders, driven by aggressive, yet disciplined, acquisition of single-tenant properties. Specifically, EPRT's trailing twelve-month (TTM) revenue ending September 30, 2025, hit a robust $531.06 million, marking a year-over-year increase of approximately 24.18%.

The Engine: Net Lease Rental Streams

EPRT's primary revenue source is straightforward: rental income from its portfolio of net-leased, freestanding properties. A net lease (NNN) means the tenant handles most property expenses-taxes, insurance, and maintenance-which is key for a REIT like EPRT because it translates into very high operating margins and predictable cash flow. For the third quarter of 2025 alone, the company reported rental revenue of $136.54 million, a solid 23.6% jump from the same quarter last year. That's a strong, consistent growth trajectory.

The core strategy is simple: acquire properties from middle-market companies and lease them back on long-term, inflation-protected contracts. As of September 30, 2025, the portfolio consisted of 2,266 properties, with an average remaining lease term of 14.4 years. This long-lease structure, combined with annual rent escalations, is the bedrock of their revenue stability, insulating you from short-term market noise.

Segment Contribution: The Power of Diversification

The real story here isn't just the total revenue figure, but the deliberate diversification across service-oriented and experience-based retail sectors. This strategy minimizes the risk of a single industry downturn crushing the portfolio. As of Q3 2025, no single tenant accounted for more than 3.5% of EPRT's Annualized Base Rent (ABR), and the top 10 tenants made up only 16.9% of cash ABR. That's a defintely healthy spread.

Here is a breakdown of the top revenue-generating segments, based on the percentage of cash ABR as of September 30, 2025:

• Car Washes: 14.2%
• Medical / Dental: 12.4%
• Early Childhood Education: 11.2%
• Entertainment: 9.2%
• Quick Service Restaurants: 8.9%

Analysis of Revenue Growth and Changes

The 2025 revenue growth isn't organic in the traditional sense; it's a direct result of the company's aggressive investment strategy. They are actively expanding their asset base. In the third quarter of 2025 alone, EPRT invested $370 million in 87 new properties, securing an initial cash yield of 8%. This capital deployment is the primary fuel for the 24.18% TTM revenue increase.

What this estimate hides is the rising interest expense, which jumped 31.3% year-over-year in Q3 2025. So, while gross rental revenue is soaring, the cost of funding those acquisitions is also climbing. You need to keep an eye on that interest expense vulnerability, even as the company raises its investment volume guidance for 2025 to a range of $1.2 billion to $1.4 billion.

For a deeper dive into how these revenue streams translate into shareholder value, check out the full analysis at Breaking Down Essential Properties Realty Trust, Inc. (EPRT) Financial Health: Key Insights for Investors.

Profitability Metrics

You need to know if Essential Properties Realty Trust, Inc. (EPRT) is just growing revenue, or if that growth is actually translating into profit. The short answer is yes, their profitability is exceptional, but the slight dip in net margin shows the real cost of capital in 2025 is a headwind you can't ignore.

The company's triple-net lease structure-where the tenant pays for property taxes, insurance, and maintenance-is the engine behind its remarkable gross profitability. For the latest twelve months, Essential Properties Realty Trust, Inc. reported a Gross Profit Margin of approximately 98.7%. That's defintely a clean one-liner on efficiency.

To put that in perspective, the average Gross Profit Margin for the broader Real Estate Sector sits closer to 56.8%. This massive gap highlights how the triple-net model fundamentally shifts operating expenses away from the landlord, making the Gross Profit line nearly identical to the Revenue line for Essential Properties Realty Trust, Inc. This is a structural advantage, not a temporary trend.

Net Profit Margin and Trends

While the Gross Profit is stellar, your focus should be on the Net Profit Margin, which accounts for all expenses, including interest and corporate overhead. Essential Properties Realty Trust, Inc.'s Net Profit Margin for the latest period is around 45.2%, which is still very strong for a company with a Price-to-Earnings (P/E) ratio of 26.62, sitting below the REIT industry average of 29.4x. However, this margin is a modest slip from the prior year's 45.8%.

Here's the quick math on that margin pressure: the primary drag is the rising cost of debt. Essential Properties Realty Trust, Inc.'s interest expense surged by 31.3%, increasing from $21.627 million to $28.348 million in the third quarter of 2025 alone. That's a direct hit to the bottom line, even with robust revenue growth.

Operational Efficiency and Cost Management

Despite rising interest costs, management is showing tight control over internal operations. They measure operational efficiency by tracking Cash General & Administrative (G&A) expenses as a percentage of total revenue. For Q3 2025, Cash G&A was approximately $6.7 million, which translates to just 4.6% of total revenue.

This 4.6% figure is down from 5.1% in the same period a year ago, showing real improvement in scaling their platform without proportionally increasing overhead. This is the mark of a well-run, internally managed REIT. You can see this discipline in their key profitability metrics for the third quarter of 2025:

• Q3 2025 Revenue: $144.93 million
• Q3 2025 Net Income: $65.6 million
• Gross Profit Margin: 98.64%
• Cash G&A as % of Revenue: 4.6%

The company's ability to maintain high gross margins while simultaneously driving down the relative cost of its corporate operations is a strong indicator of management quality. If you want to dig deeper into the shareholder base driving these numbers, check out Exploring Essential Properties Realty Trust, Inc. (EPRT) Investor Profile: Who's Buying and Why?

What this estimate hides, still, is the full impact of their aggressive investment pace-they invested $369.8 million in 87 properties in Q3 2025-which will continue to drive up debt and, consequently, interest expense. The key is whether the yield on those new properties can outpace the rising cost of capital.

Debt vs. Equity Structure

You're looking at Essential Properties Realty Trust, Inc. (EPRT)'s balance sheet to understand how they fund their growth, and that's the right place to start. The quick takeaway is that the company operates with a conservative capital structure, prioritizing equity and fixed-rate, long-term debt to minimize interest rate risk and maintain flexibility.

As of the most recent reporting in late 2025, Essential Properties Realty Trust's debt profile is heavily weighted toward long-term liabilities, a smart move for a real estate investment trust (REIT) focused on stability. Specifically, their total long-term debt and capital lease obligations stood at approximately $2,641.3 million as of September 30, 2025. This long-term focus gives them predictable financing costs. Plus, their short-term debt and capital lease obligations were effectively $0.0 million, which means they aren't facing any immediate, large-scale refinancing pressure. That's a clean balance sheet.

Here's the quick math on leverage: The company's Debt-to-Equity (D/E) ratio is a key metric for gauging financial leverage-how much debt they use versus shareholder funding. For Essential Properties Realty Trust, this ratio is a conservative 0.68 as of November 2025. To be fair, this is significantly lower than the average for the Retail REIT sector, which often sits around 1.04, showing a clear preference for a lower-risk funding model. A D/E of 0.68 means for every dollar of shareholder equity, the company uses only 68 cents of debt to finance its assets.

Essential Properties Realty Trust actively manages its debt to support its acquisitions, which are primarily middle-market sale-leasebacks. They balance debt and equity funding through a few key actions:

• Issue new equity (common stock) to fund a significant portion of new property investments, which keeps the D/E ratio low.
• Utilize a large, flexible unsecured revolving credit facility for immediate funding needs.
• Tap the bond market for long-dated, fixed-rate financing to lock in interest costs.

In terms of recent activity, the company has been busy in 2025. In February, they expanded their unsecured credit facility to $2.3 billion, which includes a $1.0 billion revolving credit line. This provides ample liquidity for new investments. Also, in August 2025, they priced an offering of $400 million in 5.400% Senior Notes due in 2035, using the proceeds to repay the revolving credit facility and fund new acquisitions. This is a classic move: use the revolver for speed, then term out the debt with long-term notes. While they have a stable, long-term focus, any investor should also review the Mission Statement, Vision, & Core Values of Essential Properties Realty Trust, Inc. (EPRT). to understand the strategic intent behind this capital allocation.

The company's conservative approach is also reflected in its credit profile. While a more recent rating is defintely preferred, the last public rating from S&P Global was 'BB+' with a stable outlook, which is a solid non-investment-grade rating that reflects their unencumbered asset base and stable cash flows from triple-net leases. This financial discipline helps them maintain a pro forma net debt to annualized EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of 4.4x, which is also favorable compared to the REIT industry median of 6.7x.

The clear action here is to monitor the use of the expanded $2.3 billion credit facility. If the company starts to rely too heavily on the revolver for long-term funding without consistently issuing new equity or terming out the debt, that low 0.68 D/E ratio could creep up, changing the risk profile.

Liquidity and Solvency

You need to know if Essential Properties Realty Trust, Inc. (EPRT) can cover its near-term obligations and fund its aggressive growth strategy. The short answer is yes: EPRT's liquidity position is defintely strong, backed by high current and quick ratios, plus a healthy retained free cash flow that supports its investment-heavy model.

For a Real Estate Investment Trust (REIT) like EPRT, liquidity is a measure of its ability to meet short-term debts with short-term assets. Looking at the most recent quarter (MRQ) data for the 2025 fiscal year, the numbers speak for themselves. The company's Current Ratio sits at a robust 2.61, meaning it has $2.61 in current assets for every dollar of current liabilities. This is a very comfortable buffer.

The Quick Ratio, which strips out less-liquid assets like inventory (negligible for a REIT anyway), is nearly identical at 2.59. This tells us the quality of their current assets-mostly cash and receivables-is high. A ratio above 1.0 is the benchmark for safety; EPRT is well over double that. That's a strong signal of immediate financial health.

Here's the quick math on their short-term financial standing:

• Current Ratio (MRQ 2025): 2.61
• Quick Ratio (MRQ 2025): 2.59
• Working Capital: Strong, as current assets significantly exceed current liabilities.

The working capital trend for EPRT is essentially a story of managing cash from operations against short-term obligations, and the high ratios confirm a conservative, well-managed balance sheet. While working capital is a less critical metric for a REIT compared to a retailer, a strong position here shows operational excellence. The real estate sector generally has a wide range for its Cash Conversion Cycle (CCC), but EPRT's high liquidity shows they are not struggling with cash flow conversion.

A deeper look at the cash flow statement for the Trailing Twelve Months (TTM) ending in Q3 2025 reveals the engine of the business:

The $363.00 million in cash from operating activities (CFO) is the core strength; it's the cash generated from their primary business-rent collection. The large negative cash from investing (CFI) of -$1.19 billion is not a concern, but a deliberate strategy. They are a growth-focused REIT, so they are constantly deploying capital to acquire new properties, like the $370 million invested in 87 properties in Q3 2025 alone.

This investment is primarily funded by a mix of debt and equity, evidenced by the financing activities, which included a public debt issuance of $400 million in 5.40% Senior Notes due 2035. Crucially, their retained free cash flow after paying the dividend was a healthy $36.4 million in Q3 2025, which can be reinvested or used to pay down debt. The key strength here is the predictability of cash flow from their long-term, triple-net leases (where the tenant pays most expenses), which underpins their ability to service debt and fund growth simultaneously.

For a more comprehensive look at the company's financial structure, you can read the full post: Breaking Down Essential Properties Realty Trust, Inc. (EPRT) Financial Health: Key Insights for Investors.

Valuation Analysis

You want to know if Essential Properties Realty Trust, Inc. (EPRT) is a buy, a hold, or a sell right now, and the numbers point to a clear opportunity. The short answer is that the market currently views EPRT as a Moderate Buy, and the valuation metrics suggest it's trading at a discount to its intrinsic value, offering a compelling near-term upside.

The stock is sitting around $30.90 as of November 2025, which is about 11% below its 52-week high of $34.88, but still comfortably above the 52-week low of $27.44. [cite: 7, 11 from step 1, 10]

• Buy: 11 analysts [cite: 2, 3, 13 from step 1]
• Hold: 2 analysts [cite: 2, 3 from step 1]
• Sell: 0 analysts [cite: 13 from step 1]

The consensus average price target is $35.46, implying a potential upside of approximately 14.76% from the current price. [cite: 2, 3, 6 from step 1]

Is EPRT Overvalued or Undervalued?

To be fair, valuation for a Real Estate Investment Trust (REIT) is tricky because standard Price-to-Earnings (P/E) can be misleading due to depreciation rules. That's why we lean heavily on Price-to-Adjusted Funds From Operations (P/AFFO). Still, let's break down the core multiples for the 2025 fiscal year.

The key takeaway is that EPRT's valuation multiples are generally in line with or slightly below its peers, especially when you look at the forward-looking metrics. The market is pricing in growth, but not excessively.

Here's the quick math on the key ratios:

The forward P/E of 16.53x is defintely attractive when you consider the overall market average is much higher. The P/B of 1.59 shows investors are willing to pay a premium for the real estate portfolio and management's ability to grow, which is fair given the company's track record of acquiring operationally-essential properties. You can see their strategy in depth here: Mission Statement, Vision, & Core Values of Essential Properties Realty Trust, Inc. (EPRT).

Dividend Safety and Yield

For a REIT, the dividend is half the story. Essential Properties Realty Trust, Inc. currently pays an annual dividend of $1.20 per share, which translates to a yield of about 3.89%.

What really matters is the payout ratio (the percentage of earnings paid out as dividends). While the ratio based on GAAP earnings is high at 96.77%, the more relevant payout ratio based on Adjusted Funds From Operations (AFFO) is a much more sustainable 60.61% to 64.9%. [cite: 6, 7 from step 1] This is a healthy range for a REIT, meaning the dividend is well-covered by cash flow and has room for continued growth-which EPRT has delivered for 6 consecutive years. [cite: 6 from step 1]

The dividend is safe, and the yield is competitive, but what this estimate hides is the impact of interest rate movements. As a REIT, EPRT's stock price remains sensitive to the Federal Reserve's rate decisions, which can temporarily pressure valuations and stock performance.

Next Step: Review the recent acquisition pipeline and debt maturity schedule to stress-test the AFFO coverage.

Risk Factors

You're looking at Essential Properties Realty Trust, Inc. (EPRT) and seeing strong growth, but every seasoned analyst knows you must map the risks before committing capital. The core challenge for EPRT is balancing its aggressive acquisition strategy with inherent exposure to cyclical, middle-market tenants.

The company's financial health is solid, but there are clear external and internal pressures. External market volatility, particularly in U.S. Treasuries, continues to pressure the entire REIT sector, causing share price weakness even with strong earnings. Plus, persistent inflation, like the higher core PCE revisions we saw recently, means consumers and businesses remain pressured, which is a headwind for EPRT's tenants.

Operational and Portfolio Risks: The Cyclical Exposure

The most tangible risk is tenant concentration in recession-sensitive industries. EPRT focuses on experience-based and service-oriented businesses, which is great until an economic downturn hits. For example, car washes make up roughly 15% of the company's annualized base rent. If the economy weakens, discretionary spending on things like car washes and casual dining drops fast. We've already seen a modest dip in occupancy, falling from 99.7% to 99.6% in Q2 2025, though it rebounded to 99.8% in Q3 2025, which is defintely a good sign. Still, that small fluctuation shows the sensitivity.

• Car wash exposure: Roughly 15% of annualized base rent.
• Net profit margin: Slipped to 45.2% in Q3 2025 from 45.8% last year due to rising expenses.
• Occupancy: High, but a single tenant bankruptcy can cause a ripple effect.

Another operational risk is the margin decline. While Q3 2025 revenue was strong at $144.93 million, the net profit margin edged down to 45.2% from 45.8% the prior year. This modest slip is a warning sign that rising operating expenses are testing the resilience of their long-term leases, demanding tight expense control going forward. Mission Statement, Vision, & Core Values of Essential Properties Realty Trust, Inc. (EPRT).

Financial and Strategic Risks

The financial structure presents a couple of risks you need to watch closely. The dividend payout ratio, when measured against earnings per share (EPS), is high-around 101.69% based on recent data, or 0.98 against EPS. This is a red flag for long-term dividend sustainability, even though the company has been raising its dividend for seven consecutive years. It means they are paying out more than they are earning in net income, which isn't sustainable without relying on other cash flow sources like Adjusted Funds From Operations (AFFO).

Here's the quick math on their leverage and liquidity, which is the primary mitigation strategy:

The good news is that management is actively mitigating these risks. Their low leverage of 3.8x and massive liquidity of $1.4 billion mean they can continue making accretive investments-they are guiding for $1.0 billion to $1.2 billion in investments for 2025-without straining the balance sheet. They are also proactively managing portfolio risk by selling properties; in Q3 2025 alone, they sold 7 properties for $11.5 million in net proceeds to refine the portfolio. That's how you manage credit risk: keep the balance sheet clean and the portfolio liquid.

Growth Opportunities

You need a clear picture of where Essential Properties Realty Trust, Inc. (EPRT) is headed, not just where it's been. The direct takeaway is that their highly specialized acquisition model-focusing on middle-market, service-oriented tenants-continues to be the primary engine for predictable, above-average growth, but you must watch rising interest expense.

The company's strategy is simple and effective: buy properties from growing, middle-market operators through sale-leaseback transactions (where a company sells its property and immediately leases it back). This niche keeps them out of the direct crosshairs of the largest net lease real estate investment trusts (REITs) like Realty Income, allowing them to capture attractive investment yields. They've been executing on this plan with force, increasing their 2025 investment volume guidance to a range of $1.2 billion to $1.4 billion.

Growth Drivers and Strategic Edge

Essential Properties Realty Trust, Inc.'s growth is fueled by a few core, repeatable drivers. Their focus on the service and experience-based sectors-like car washes, quick-service restaurants, and medical services-provides a structural advantage because these businesses are less susceptible to e-commerce disruption. Honestly, people still need to eat out and get their car washed.

Their competitive edge is built on three pillars:

• Sale-Leaseback Expertise: They specialize in these complex deals with non-rated, middle-market companies, often achieving higher cash yields, like the 8.0% weighted average cash yield on their Q3 2025 investments.
• Granular Diversification: The portfolio is highly diversified, with over 2,266 properties leased to 645 different concepts as of September 30, 2025. The largest tenant only accounts for 3.5% of annualized base rent, which significantly mitigates single-tenant risk.
• Strong Lease Structure: Their weighted average lease term is long at 14.4 years, and most leases include contractual annual rent escalations above 2%, providing built-in inflation protection.

Revenue and Earnings Projections

The financial results for 2025 defintely reinforce the strength of this model. For the full year 2025, the consensus revenue estimate sits at $541.69 million. More importantly for a REIT, the company has raised its 2025 Adjusted Funds From Operations (AFFO) per share guidance to a range of $1.87 to $1.89. This is the real cash flow metric you should be watching.

Looking ahead, the initial 2026 AFFO per share guidance is set between $1.98 and $2.04, implying a solid growth rate of 6% to 8%. This growth is largely supported by their robust investment pipeline and strong balance sheet, which maintains a low pro forma net debt to annualized adjusted EBITDAre of 3.8x.

Here's the quick math on recent performance:

What this estimate hides is the risk of increasing interest expense, which rose 31.3% year-over-year in Q3 2025, a natural headwind in a choppy capital market environment. Still, the company's high occupancy rate of 99.8% and healthy unit-level rent coverage of 3.6x provide a strong buffer.

For a deeper dive into the risks and valuation, you should read the full post: Breaking Down Essential Properties Realty Trust, Inc. (EPRT) Financial Health: Key Insights for Investors.