Essential Properties Realty Trust, Inc.

As a reminder, this conference call is being recorded, and a replay of the call will be available two hours after the completion of the call for the next two weeks. The dial-in details for the replay can be found in yesterday's press release. Additionally, there will be an audio webcast available on Essential Properties Real Trust's website at www.essentialproperties.com, an archive of which will be available for 90 days. On the call this morning are Pete Mavoides, President and Chief Executive Officer, and Mark Patton, Executive Vice President and Chief Financial Officer. It is now my pleasure to turn the conference over to Mark Patton. Please go ahead, sir.

Thank you, Operator. Good morning, everyone, and thank you for joining us today for the first quarter 2023 Earnings Conference Call of Essential Properties Realty Trust. During this call, we will make certain statements that may be considered forward-looking statements under federal securities law. Companies' actual future results may differ significantly from the matters discussed in these forward-looking statements. We may not release revisions to those forward-looking statements to reflect changes after the statements were made. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's filings with the SEC and in yesterday's earnings press release. With that, I'll turn the call over to Pete.

Thanks, Mark, and thank you to everyone who is joining us today for your interest in EPRT. As our first quarter earnings release indicates, we had a very solid first quarter, highlighted by the strength and stability of our portfolio and our strong investment activity. Our properties continue to perform at a high level with unit-level rent coverage staying strong at 3.9 times, our same store rent growth remaining at 1.6% for the second straight quarter, and just four vacant properties. The overall health of our portfolio is a testament to our disciplined underwriting process, the quality of our operators, and the resiliency of our service oriented and experience based businesses. With regard to our investment activity, The benefits of our differentiated strategy and the development of long-standing tenant relationships were evident in the first quarter as we acquired 57 properties in 24 separate transactions that were 100% sell-leaseback transactions with 94% of those deals generated from existing relationships. We were able to increase our initial cap rate to 7.6%, from 7% cash cap rate in our first quarter 2022 investments and achieve an average annual annual rent escalation of 2% on 19 years of weighted average lease term, which results in an average yield over the primary lease term of 9% versus the 7.8% average yield for our first quarter 2022 investments. Our balance sheet remains conservatively positioned and our liquidity remains strong, with quarter-end leverage of 4.4 times and pro forma leverage of 4.1 times when taking into account our unsettled forward equity and liquidity of $775 million. As we've said and have demonstrated consistently, we are committed to maintaining a conservative balance sheet. Based on our first quarter results and our second quarter investment pipeline, we have refined our 2023 AFFO per share guidance to a range of $1.60 to $1.64, which implies 6% growth from midpoint to midpoint. Turning to the portfolio, we ended the quarter with 1,688 properties in our portfolio that were 99.8% leased to 348 tenants operating in 16 industries. Our weighted average lease term stood at 13.9 years, with only 5.7% of ABR expiring through 2027. From a tenant health perspective, our weighted average unit level rent coverage ratio at quarter end was 3.9 times, and the percentage of our ABR that had a 1.0 rent coverage level continued to decline, reaching just 2.9% at quarter end. Regarding our first quarter investments, we invested $207 million in 24 separate transactions at a weighted average cash yield of 7.6%. which was an increase of 10 basis points versus last quarter. Our investments included properties in 11 of our 16 focused industries, with approximately 79% of those investments being made in the car wash, family dining, industrial, and fitness industries. The weighted average lease term of our investments this quarter was 19 years. As I mentioned, The weighted average annual rent escalation reached 2%. The weighted average unit level rent coverage was very healthy at 3.3 times. And the average investment per property was 3.4 million. As I noted in my earlier remarks, 100% of our investments this quarter were originated through direct sale leaseback transactions, meaning that they were completed on our lease form with ongoing financial reporting requirements. And additionally, 86% of our investments were in a master lease structure. Looking ahead into the second quarter, our pipeline remains strong. From an industry perspective, car washes remained our largest industry at 14.6% of ABR, followed by early childhood education, at 12.4%, quick service restaurants at 11.4%, and medical dental at 10.8%. Of note, unit level rent coverage for our early childhood education portfolio continues to increase above pre-pandemic levels as our operators have experienced strong pricing power due to a favorable supply-demand imbalance. From a diversity perspective, our largest tenant represents just 3% of ABR at quarter end, and our top 10 tenants account for only 17.1% of ABR. Both strong indicators of the growing diversity in our portfolio and tenant base. Diversity is an important risk mitigation tool and differentiator for us, and is a direct benefit of our focus on non-credit rated tenants and middle market operators. which offers an expansive opportunity set and, in our view, superior risk-adjusted returns. In terms of dispositions, we sold 17 properties this quarter for $37.2 million in net proceeds at a weighted average cash yield of 6.1%. The weighted average unit-level rent coverage ratio for the properties that were sold was 2.3 times. And capitalizing on that liquidity is an important aspect of our investment discipline. And as we have consistently held, it allows us to proactively manage our industry, tenant, and unit level risks within the portfolio. We expect our level of dispositions to revert more closely to our eight quarter average for the remainder of 2023, as we selectively take advantage of favorable market pricing and accretively recycle capital away from identifiable risks in support of our tenant relationships. With that, I'd like to turn the call over to Mark, who will take you through the financials.