Third Quarter 2026
Filed Oct 21, 2026Third Quarter Net Income per Share of $0.27 and AFFO per Share of $0.51; Closed Investments of $342.2 million at a 7.7% Weighted Average Cash Cap Rate; increases 2026 AFFO guidance to $2.02 to $2.05 per share and issues 2027 AFFO guidance of $2.10 to $2.18 per share.
Third-quarter AFFO per diluted share increased by 6% to $0.51, investment volume was $342.2 million at a 7.7% weighted average cash cap rate, and the Company raised the low end of its 2026 AFFO and investment-volume guidance. GAAP diluted net income per share decreased by 18% to $0.27, while real estate impairment provision and interest expense increased.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Three months ended September 30, 2026 total revenuesGAAP | $168.7M | – | – |
| Three months ended September 30, 2026 rental revenueGAAP | $157.8M | – | – |
| Three months ended September 30, 2026 interest on loans and direct financing lease receivablesGAAP | $10.48M | – | – |
| Three months ended September 30, 2026 other revenueGAAP | $430K | – | – |
| Three months ended September 30, 2026 general and administrative expenseGAAP | $14.11M | – | – |
| Three months ended September 30, 2026 property expensesGAAP | $2.14M | – | – |
| Three months ended September 30, 2026 depreciation and amortizationGAAP | $46.92M | – | – |
| Three months ended September 30, 2026 provision for impairment of real estateGAAP | $15.03M | – | – |
| Three months ended September 30, 2026 change in provision for credit lossesGAAP | $196K | – | – |
| Three months ended September 30, 2026 total expensesGAAP | $78.4M | – | – |
| Three months ended September 30, 2026 gain on dispositions of real estate, netGAAP | $4.23M | – | – |
| Three months ended September 30, 2026 income from operationsGAAP | $94.50M | – | – |
| Three months ended September 30, 2026 loss on debt extinguishmentGAAP | −$138K | – | – |
| Three months ended September 30, 2026 interest expenseGAAP | −$34.21M | – | – |
| Three months ended September 30, 2026 interest incomeGAAP | $722K | – | – |
| Three months ended September 30, 2026 income before income tax expenseGAAP | $60.88M | – | – |
| Three months ended September 30, 2026 income tax expenseGAAP | $218K | – | – |
| Three months ended September 30, 2026 net incomeGAAP | $60.66M | – | – |
| Three months ended September 30, 2026 net income attributable to stockholdersGAAP | $60.16M | – | – |
| Three months ended September 30, 2026 basic net income per shareGAAP | $ 0.28 | – | – |
| Three months ended September 30, 2026 diluted net income per shareGAAP | $ 0.27 | – | Decreased by 18% |
| Three months ended September 30, 2026 Funds from Operationsnon-GAAP | $118.1M | – | – |
| Three months ended September 30, 2026 FFO per diluted sharenon-GAAP | $ 0.54 | – | Increased by 4% |
| Three months ended September 30, 2026 Core Funds from Operationsnon-GAAP | $121.7M | – | – |
| Three months ended September 30, 2026 Core FFO per diluted sharenon-GAAP | $ 0.55 | – | Increased by 6% |
| Three months ended September 30, 2026 Adjusted Funds from Operationsnon-GAAP | $111.9M | – | – |
| Three months ended September 30, 2026 AFFO per diluted sharenon-GAAP | $ 0.51 | – | Increased by 6% |
| Three months ended September 30, 2026 Cash G&Anon-GAAP | $7.25M | – | – |
| Nine months ended September 30, 2026 total revenuesGAAP | $489.4M | – | – |
| Nine months ended September 30, 2026 rental revenueGAAP | $458.3M | – | – |
| Nine months ended September 30, 2026 interest on loans and direct financing lease receivablesGAAP | $28.91M | – | – |
| Nine months ended September 30, 2026 other revenueGAAP | $2.18M | – | – |
| Nine months ended September 30, 2026 income from operationsGAAP | $288.6M | – | – |
| Nine months ended September 30, 2026 net incomeGAAP | $195.1M | – | – |
| Nine months ended September 30, 2026 net income attributable to stockholdersGAAP | $194.2M | – | – |
| Nine months ended September 30, 2026 diluted net income per shareGAAP | $ 0.90 | – | Decreased by 4% |
| Nine months ended September 30, 2026 Funds from Operationsnon-GAAP | $349.7M | – | – |
| Nine months ended September 30, 2026 FFO per diluted sharenon-GAAP | $ 1.61 | – | Increased by 7% |
| Nine months ended September 30, 2026 Core Funds from Operationsnon-GAAP | $353.0M | – | – |
| Nine months ended September 30, 2026 Core FFO per diluted sharenon-GAAP | $ 1.63 | – | Increased by 8% |
| Nine months ended September 30, 2026 Adjusted Funds from Operationsnon-GAAP | $327.8M | – | – |
| Nine months ended September 30, 2026 AFFO per diluted sharenon-GAAP | $ 1.51 | – | Increased by 9% |
| Nine months ended September 30, 2026 Cash G&Anon-GAAP | $22.45M | – | – |
| September 30, 2026 cash and cash equivalentsGAAP | $25.22M | – | – |
| September 30, 2026 restricted cashGAAP | $4.37M | – | – |
| September 30, 2026 total assetsGAAP | $7.69B | – | – |
| September 30, 2026 total liabilitiesGAAP | $3.11B | – | – |
| September 30, 2026 total stockholders' equityGAAP | $4.54B | – | – |
| September 30, 2026 total equityGAAP | $4.58B | – | – |
| Third quarter 2026 investment volumeother | $342.2M | – | – |
| Third quarter 2026 weighted average cash / GAAP cap rate on investmentsother | 7.7%/9.4% | – | – |
| Year to date September 30, 2026 investment volumeother | $1.1B | – | – |
| Year to date September 30, 2026 weighted average cash / GAAP cap rate on investmentsother | 7.7%/9.1% | – | – |
| Third quarter 2026 disposition net proceedsother | $17.9M | – | – |
| Year to date September 30, 2026 disposition net proceedsother | $82.3M | – | – |
| September 30, 2026 net debt to Annualized Adjusted EBITDA renon-GAAP | 4.6x | – | – |
| September 30, 2026 pro forma net debt to Annualized Adjusted EBITDA renon-GAAP | 3.8x | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
2027 outlook
- NoteAFFO per share on a fully diluted basis of $2.10 to $2.18
- NoteInvestment volume of $1.0 billion to $1.5 billion
- NoteCash G&A expense of $32.0 million to $37.0 million
- Note2026 AFFO per share estimate of $2.02 to $2.05
- Note2026 investment volume of $1.3 billion to $1.5 billion
- Note2026 Cash G&A of $30.0 million to $34.0 million
Capital returns
- Cash dividend of $0.32 per share of common stock for the quarter ended September 30, 2026.
- The third quarter 2026 dividend represents an annualized dividend of $1.28 per share of common stock.
- The dividend was paid on October 14, 2026 to stockholders of record as of the close of business on September 30, 2026.
- Equity raised (gross) through the ATM Program during the third quarter: $28.4 million at $31.13/share.
- Equity raised (gross) through the follow-on offering and ATM Program year to date: $484.2 million at $32.00/share.
- Equity raised (gross) through common OP Units year to date: $36.6 million at $30.39/unit.
What drove it
- Third-quarter investments totaled $342.2 million across 31 transactions and 100 properties, with 91% of investments structured as sale-leaseback transactions and 60% involving an existing relationship.
- Year-to-date investments totaled $1.1 billion across 89 transactions and 329 properties; 92% were sale-leaseback transactions and 63% involved an existing relationship.
- The portfolio comprised 2,580 properties, had a weighted average lease term of 14.2 years, a weighted average unit-level rent coverage ratio of 3.5x, and weighted average occupancy of 99.6%.
- Service-oriented or experience-based tenants represented 91.7% of cash ABR and properties subject to master lease represented 67.4% of cash ABR.
- Third-quarter dispositions generated $17.9 million of net proceeds and a $4.2 million net gain.
Concerns
- GAAP diluted net income per share decreased by 18% to $0.27 in the third quarter and decreased by 4% to $0.90 year to date.
- Third-quarter provision for impairment of real estate was $15,032 (in thousands), compared with $1,439 (in thousands) in the prior-year quarter.
- Third-quarter interest expense was $34,214 (in thousands), compared with $28,348 (in thousands) in the prior-year quarter.
- Top 10 tenant concentration was 15.2% of cash ABR and top 20 tenant concentration was 25.1% of cash ABR.
- The release states that results are preliminary and not final and may vary from results reported in the Form 10-Q for the quarter ended September 30, 2026.
What to watch
- Execution against 2026 investment-volume guidance of $1.3 billion to $1.5 billion and 2027 investment-volume guidance of $1.0 billion to $1.5 billion.
- Delivery of 2026 AFFO per share guidance of $2.02 to $2.05 and 2027 AFFO per share guidance of $2.10 to $2.18.
- Settlement of 15,828,249 forward shares sold on a forward basis for estimated net proceeds of $482.8 million.
- Real estate impairment provision, credit-loss provision and interest expense.
- Portfolio occupancy, rent coverage, tenant concentration and investment cap rates.
Balance sheet and cash flow
- Cash and cash equivalents and restricted cash were $29.6 million as of September 30, 2026; pro forma cash and cash equivalents and restricted cash were $21.4 million.
- Unused revolving credit facility capacity was $809.0 million; pro forma unused revolving credit facility capacity was $1.3 billion.
- Total available liquidity was $1.3 billion on both reported and pro forma bases.
- Forward equity sales unsettled were $482.8 million, representing 15,828,249 shares estimated net proceeds of $482.8 million.
- Gross debt was $2,991,000 (dollars in thousands), net debt was $2,961,405 (dollars in thousands), and pro forma net debt was $2,478,643 (dollars in thousands).
- Public debt issuance on June 4, 2026: $400.0 million, 10 years, 5.38% coupon.
- Annualized Adjusted EBITDA re was $650,272 (in thousands).
Analysis
Essential Properties reported third-quarter total revenues of $ 168,671 (in thousands), compared with $ 144,934 (in thousands) in the prior-year quarter. Rental revenue was $ 157,763 (in thousands) and interest on loans and direct financing lease receivables was $ 10,478 (in thousands). Investment activity totaled $342.2 million across 100 properties, at a 7.7% weighted average cash cap rate and 9.4% weighted average GAAP cap rate. The activity mix was predominantly sale-leaseback, at 91%, and 60% involved existing relationships.
GAAP earnings weakened despite higher revenue. Net income attributable to stockholders was $ 60,157 (in thousands), compared with $ 65,620 (in thousands), and diluted net income per share was $ 0.27 versus $ 0.33. The release identifies an 18% decrease in net income per share. Expenses included $ 15,032 (in thousands) of real estate impairment provision, versus $ 1,439 (in thousands), while interest expense rose to $ 34,214 (in thousands) from $ 28,348 (in thousands). Gain on dispositions of real estate, net, increased to $ 4,234 (in thousands) from $ 1,361 (in thousands).
Non-GAAP operating measures improved. FFO per diluted share increased by 4% to $ 0.54, Core FFO per diluted share increased by 6% to $ 0.55, and AFFO per diluted share increased by 6% to $ 0.51. For the nine months ended September 30, 2026, AFFO per diluted share increased by 9% to $ 1.51. Cash G&A was $ 7,253 (in thousands) in the quarter, compared with $ 6,669 (in thousands) a year earlier.
The portfolio remained highly occupied, with weighted average occupancy of 99.6% and 11 vacant properties. It had a 14.2-year weighted average lease term and 3.5x weighted average unit-level rent coverage ratio. The Company reported $17.9 million of third-quarter disposition proceeds on 11 properties, at a 6.1% weighted average cash cap rate, and $1.8 million of principal proceeds from loan repayments.
Liquidity and capital formation supported the investment program. Reported net debt to Annualized Adjusted EBITDA re was 4.6x, falling to 3.8x on a pro forma basis reflecting unsettled forward equity. Total available liquidity was $1.3 billion. The Company raised the low end of 2026 AFFO per share guidance to $2.02 from $2.01, maintained the high end at $2.05, raised the low end of 2026 investment-volume guidance to $1.3 billion from $1.2 billion, and reiterated Cash G&A guidance of $30.0 million to $34.0 million. It also issued 2027 AFFO per share guidance of $2.10 to $2.18.
Management, verbatim
We delivered a strong third quarter, supported by healthy portfolio performance and investment momentum across our origination platform. Our well-positioned balance sheet and capital position provide us with meaningful flexibility to execute on the pipeline of opportunities. With an eye toward 2027, we expect to remain disciplined in our investment approach, ensuring that our cap rates appropriately reflect the evolving cost of capital environment, while continuing to serve as a trusted capital partner to our operators and drive attractive risk-adjusted returns for our shareholders.
Pete Mavoides, Chief Executive Officer
Not in the filing
stated, not guessed- Previous-release outlook was not provided; therefore, no comparison of actual results with prior guidance is available.
- Gross margin was not reported.
- Operating cash flow was not reported.
- Free cash flow was not reported.
- Share repurchases were not reported.
- Revenue by operating segment was not reported.
- A prior-quarter comparison for reported income-statement and non-GAAP metrics was not reported.
- Guidance for GAAP net income and GAAP general and administrative expense was not provided.
- The Company did not provide a reconciliation of forward-looking AFFO to net income or Cash G&A to general and administrative expense because it stated it could not reasonably predict certain GAAP items without unreasonable efforts.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.