Essential Properties Announces Fourth Quarter 2025 Results

PRINCETON, N.J.--( BUSINESS WIRE)--Essential Properties Realty Trust, Inc. (NYSE: EPRT; “Essential Properties” or the “Company”) today announced operating results for the three months and year ended December 31, 2025.

Fourth Quarter 2025 Financial and Operating Highlights:

Operating Results (compared to Fourth Quarter 2024):

• Investments (58 properties)

$ Invested

$295.8 million

Weighted Avg Cash Cap Rate

7.7%

• Dispositions (19 properties)

Net Proceeds

$48.1 million

Weighted Avg Cash Cap Rate

6.9%

• Net Income per Share

Increased by 13%

$0.34

• Funds from Operations (“FFO”) per Share (1)

Increased by 15%

$0.54

• Core Funds from Operations (“Core FFO”) per Share (1)

Increased by 13%

$0.53

• Adjusted Funds from Operations (“AFFO”) per Share (1)

Increased by 9%

$0.49

Debt, Equity & Leverage:

• Equity Raised (Gross) - ATM Program (2)

$30.93/share

$170.3 million

• Pro Forma Net Debt to Annualized Adjusted EBITDAre (1)

As of Quarter End

3.8x

Full Year 2025 Financial and Operating Highlights:

Operating Results (compared to 2024):

• Investments (270 properties)

$ Invested

$1.3 billion

Weighted Avg Cash Cap Rate

7.9%

• Dispositions (60 properties)

Net Proceeds

$130.1 million

Weighted Avg Cash Cap Rate

7.0%

• Net Income per share

Increased by 11%

$1.28

• FFO per share (1)

Increased by 8%

$2.05

• Core FFO per share (1)

Increased by 8%

$2.04

• AFFO per share (1)

Increased by 9%

$1.89

Debt, Equity & Leverage:

• Public Debt Issuance (August 21, 2025)

10 years; 5.40% coupon

$400.0 million

• Equity Raised (Gross) - Follow-On Offering (March 20, 2025) (2)

$31.00/share

$292.3 million

• Equity Raised (Gross) - ATM Program (2)

$31.59/share

$323.6 million

See page 10 for reconciliations of non-GAAP financial measures to corresponding GAAP metrics.

All shares were sold on a forward basis and a total of 10,900,920 shares remain unsettled as of December 31, 2025 for estimated net proceeds of $332.2 million, assuming full physical settlement.

Activity Subsequent to Fourth Quarter 2025:

• Investments

$ Invested

$239.2 million

• Dispositions

$ Gross Proceeds

$3.3 million

CEO Comments

Commenting on the fourth quarter and full year 2025 results, the Company's Chief Executive Officer, Pete Mavoides, said, “Our fourth quarter wrapped up another very strong year for the Company, as growth in our team has enabled us to efficiently scale our asset base, supporting an impressive 9% growth in AFFO per share. This momentum continued into the beginning of 2026, setting the stage for another year of compelling growth.”

Portfolio Highlights

The Company’s investment portfolio as of December 31, 2025 is summarized as follows:

December 31, 2025

Number of properties

2,300

Weighted average lease term (WALT)

14.4 years

Weighted average rent coverage ratio

3.6x

Top 10 tenant concentration (% of cash ABR)

16.5%

Top 20 tenant concentration (% of cash ABR)

27.1%

Weighted average occupancy (6 vacant properties)

99.7%

Total square feet of rentable space

25.9 million

Service-oriented or experience-based (% of cash ABR)

91.5%

Properties subject to master lease (% of cash ABR)

66.8%

Portfolio Update

Investments

During the three months ended December 31, 2025, the Company's $295.8 million of investment activity had a weighted average closing date of December 7, 2025. Additional details about the Company’s investment activity during the three months and year ended December 31, 2025 are summarized as follows:

Quarter Ended

December 31, 2025

Year Ended

December 31, 2025

Investments:

Investment volume

$295.8 million

$1.3 billion

Number of transactions

115

Property count

270

Weighted average cash / GAAP cap rate

7.7%/9.1%

7.9%/9.6%

Weighted average lease escalation

2.0%

2.2%

% Subject to master lease

76%

73%

% Sale-leaseback transactions

100%

95%

% Existing relationship

85%

82%

% Required financial reporting (tenant/guarantor)

100%

WALT

19.4 years

18.8 years

Dispositions

The Company’s disposition activity during the three months and year ended December 31, 2025 is summarized as follows:

Quarter Ended

December 31, 2025

Year Ended

December 31, 2025

Dispositions:

Net proceeds

$48.1 million

$130.1 million

Number of properties sold

Net gain / (loss)

$4.4 million

$12.8 million

Weighted average cash cap rate

(excluding vacant properties and sales subject to a tenant purchase option)

6.9%

7.0%

Loan Repayments

Loan repayments received by the Company during the three months and year ended December 31, 2025 are summarized as follows:

Quarter Ended

December 31, 2025

Year Ended

December 31, 2025

Loan Repayments:

Proceeds—Principal

$18.0 million

$37.8 million

Number of properties

Weighted average interest rate

8.7%

8.8%

Leverage and Liquidity

The Company's leverage and liquidity as of December 31, 2025 are summarized in the following table.

December 31, 2025

Pro Forma (1) December 31, 2025

Leverage:

Net debt to Annualized Adjusted EBITDAre

4.4x

3.8x

Liquidity:

Cash and cash equivalents and restricted cash

$70.4 million

$402.5 million

Unused revolving credit facility capacity

$1.0 billion

Forward equity sales - unsettled

$332.2 million

—

Total available liquidity

$1.4 billion

ATM Program:

October 2024 ATM Program initial availability

$750.0 million

Aggregate gross sales under the October 2024 ATM Program

$402.5 million

Availability remaining under the October 2024 ATM Program

$347.5 million

Pro forma adjustments have been made to reflect 10,900,920 unsettled shares sold on a forward basis as if they had been physically settled for cash on December 31, 2025.

Equity Activity

The Company's equity activity during the three months ended December 31, 2025 is summarized in the following table.

Primary Offering

ATM Program

Total

Price

(Net) (1)

Price

(Net) (1)

Price

(Net) (1)

Net Proceeds (000s)

Forward Shares Unsettled -

September 30, 2025

9,430,000

$30.19

7,521,624

$31.24

16,951,624

$30.84

$522,755

Shares Sold - Current Quarter

—

5,507,177

30.53

5,507,177

30.53

168,134

Shares Settled - Current Quarter

(4,715,000)

30.47

(6,842,881)

31.43

(11,557,881)

31.04

(358,738)

Forward Shares Unsettled - December 31, 2025

4,715,000

6,185,920

10,900,920

$30.47

$332,151

All prices are inclusive of forward price adjustments as of December 31, 2025.

Guidance

2026 Guidance

The Company is increasing its previously issued 2026 AFFO per share estimate and now expects that fully diluted 2026 AFFO per share will be within a range of $1.99 to $2.04. The guidance range includes an estimate for investment volume of $1.0 billion to $1.4 billion, and Cash G&A of $31 million to $35 million.

Note: The Company does not provide guidance for the most comparable GAAP financial measures, net income and general and administrative expense, or a reconciliation of the forward-looking non-GAAP financial measures of AFFO to net income computed in accordance with GAAP and Cash G&A expense to general and administrative expense computed in accordance with GAAP, because it is unable to reasonably predict, without unreasonable efforts, certain items that would be contained in the GAAP measures, including items that are not indicative of the Company's ongoing operations, such as, without limitation, potential impairments of real estate assets, net gain/loss on dispositions of real estate assets, changes in allowance for credit losses and non-cash compensation expense. These items are uncertain, depend on various factors, and could have a material impact on the Company's GAAP results for the guidance period.

Dividend Information

As previously announced, on December 5, 2025, Essential Properties' board of directors declared a cash dividend of $0.31 per share of common stock for the quarter ended December 31, 2025. The fourth quarter 2025 dividend represents an annualized dividend of $1.24 per share of common stock. The dividend was paid on January 14, 2026 to stockholders of record as of the close of business on December 31, 2025.

Conference Call Information

In conjunction with the release of Essential Properties’ operating results, the Company will host a conference call on Thursday, February 12, 2026 at 10:00 a.m. ET to discuss the results. To access the conference, dial 800-245-3047 (International: 203-518-9765) and use the conference ID: EPRT. A live webcast will also be available in listen-only mode by clicking on the webcast link in the Investor Relations section at www.essentialproperties.com.

A telephone replay of the conference call can also be accessed by calling 844-512-2921 (International: 412-317-6671) and entering the access code: 11160701. The telephone replay will be available through February 26, 2026.

A replay of the conference call webcast will be available on our website approximately three hours after the conclusion of the live broadcast. The webcast replay will be available for 90 days. No access code is required for this replay.

Supplemental Materials

The Company’s Investor Presentation and Supplemental Information—Fourth Quarter 2025 is available on Essential Properties’ website at investors.essentialproperties.com.

About Essential Properties Realty Trust, Inc.

Essential Properties Realty Trust, Inc. is an internally managed REIT that acquires, owns and manages primarily single- tenant properties that are net leased on a long-term basis to companies operating service-oriented or experience-based businesses. As of December 31, 2025, the Company’s portfolio consisted of 2,300 freestanding net lease properties with a weighted average lease term of 14.4 years and a weighted average rent coverage ratio of 3.6x. In addition, as of December 31, 2025, the Company’s portfolio was 99.7% leased to tenants operating 659 different concepts across 48 states.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. When used in this press release, the words “estimate,” “anticipate,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “seek,” “approximately” or “plan,” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters, are intended to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions of management. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and the Company may not be able to realize them. The Company does not guarantee that the transactions and events described will happen as described (or that they will happen at all). You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this press release. While forward-looking statements reflect the Company’s good faith beliefs, they are not guarantees of future performance. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as required by law. In light of these risks and uncertainties, the forward-looking events discussed in this press release might not occur as described, or at all.

Additional information concerning factors that could cause actual results to differ materially from these forward-looking statements is contained in the company’s Securities and Exchange Commission (the “Commission”) filings, including, but not limited to, the Company’s most recent Annual Report on Form 10-K. Copies of each filing may be obtained from the Company or the Commission. Such forward-looking statements should be regarded solely as reflections of the Company’s current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this press release.

The results reported in this press release are preliminary and not final. There can be no assurance that these results will not vary from the final results reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 that it will file with the Commission.

Essential Properties Realty Trust, Inc.

Consolidated Statements of Operations

Three months ended December 31,

Year ended December 31,

(in thousands, except share and per share data)

2025

2024

2025

2024

(Unaudited)

(Audited)

Revenues:

Rental revenue 1,2

140,091

112,358

527,534

425,749

Interest on loans and direct financing lease receivables

8,397

7,333

31,625

23,409

Other revenue

1,380

2,060

452

Total revenues

149,868

119,708

561,219

449,610

Expenses:

General and administrative

8,441

8,469

40,864

35,161

Property expenses 2

1,975

1,313

7,576

4,997

Depreciation and amortization

41,044

32,829

153,602

122,161

Provision for impairment of real estate

4,063

2,587

11,997

14,845

Change in provision for credit losses

(19

)

108

230

Total expenses

55,549

45,179

214,147

177,394

Other operating income:

Gain on dispositions of real estate, net

4,428

4,575

12,849

5,977

Income from operations

98,747

79,104

359,921

278,193

Other (expense)/income:

Interest expense

(30,944

)

(23,958

)

(108,083

)

(78,544

)

Interest income

631

559

2,537

3,069

Other income

—

1,548

Income before income tax expense

68,434

55,705

254,375

204,266

Income tax expense

160

157

644

628

Net income

68,274

55,548

253,731

203,638

Net income attributable to non-controlling interests

(207

)

(174

)

(718

)

(634

)

Net income attributable to stockholders

68,067

55,374

253,013

203,004

Basic weighted-average shares outstanding

199,903,360

177,425,316

196,051,237

173,855,427

Basic net income per share

0.34

0.31

1.29

1.16

Diluted weighted-average shares outstanding

201,619,219

182,326,800

198,054,768

177,115,170

Diluted net income per share

0.34

0.30

1.28

1.15

Includes contingent rent (based on a percentage of the tenant's gross sales at the leased property) of $104, $244, $775 and $863 for the three months and year ended December 31, 2025 and 2024, respectively.

Includes reimbursable income or reimbursable expenses from the Company’s tenants of $873, $854, $4,554 and $3,188 for the three months and year ended December 31, 2025 and 2024, respectively.

Essential Properties Realty Trust, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

December 31, 2025

December 31, 2024

(Unaudited)

(Audited)

ASSETS

Investments:

Real estate investments, at cost:

Land and improvements

2,200,829

1,865,610

Building and improvements

4,388,959

3,536,000

Lease incentives

24,154

17,903

Construction in progress

49,881

153,789

Intangible lease assets

99,217

94,047

Total real estate investments, at cost

6,763,040

5,667,349

Less: accumulated depreciation and amortization

(612,674

)

(476,827

)

Total real estate investments, net

6,150,366

5,190,522

Loans and direct financing lease receivables, net

401,323

352,066

Real estate investments held for sale, net

2,635

10,018

Net investments

6,554,324

5,552,606

Cash and cash equivalents

60,181

40,713

Restricted cash

10,184

4,265

Straight-line rent receivable, net

191,008

143,435

Derivative assets

7,861

27,714

Rent receivables, prepaid expenses and other assets, net

39,465

29,949

Total assets

6,863,023

5,798,682

LIABILITIES AND EQUITY

Unsecured term loans, net of deferred financing costs

1,725,010

1,721,114

Senior unsecured notes, net

786,708

396,403

Revolving credit facility

—

Intangible lease liabilities, net

10,766

10,700

Dividend payable

65,391

55,608

Derivative liabilities

26,226

7,585

Accrued liabilities and other payables

41,028

35,145

Total liabilities

2,655,129

2,226,555

Commitments and contingencies

—

Stockholders' equity:

Preferred stock, $0.01 par value; 150,000,000 authorized; none issued and outstanding as of December 31, 2025 and 2024

—

Common stock, $0.01 par value; 500,000,000 authorized; 209,702,433 and 187,537,592 issued and outstanding as of December 31, 2025 and 2024, respectively

2,097

1,875

Additional paid-in capital

4,328,137

3,658,219

Distributions in excess of cumulative earnings

(109,261

)

(113,302

)

Accumulated other comprehensive (loss) income

(20,979

)

16,886

Total stockholders' equity

4,199,994

3,563,678

Non-controlling interests

7,900

8,449

Total equity

4,207,894

3,572,127

Total liabilities and equity

6,863,023

5,798,682

Essential Properties Realty Trust, Inc.

Reconciliation of Non-GAAP Financial Measures

Three months ended December 31,

Year ended December 31,

(unaudited, in thousands except per share data)

2025

2024

2025

2024

Net income

68,274

55,548

253,731

203,638

Depreciation and amortization of real estate

41,018

32,786

153,453

121,997

Provision for impairment of real estate

4,063

2,587

11,997

14,845

Gain on dispositions of real estate, net

(4,428

)

(4,575

)

(12,849

)

(5,977

)

Funds from Operations

108,927

86,346

406,332

334,503

Non-core expense (income) 1

(2,354

)

—

(2,354

)

—

Core Funds from Operations

106,573

86,346

403,978

334,503

Adjustments:

Straight-line rental revenue, net

(12,638

)

(7,403

)

(50,162

)

(38,661

)

Non-cash interest

1,770

1,088

5,802

4,086

Non-cash compensation expense

3,420

2,622

14,438

10,827

Other amortization expense

345

1,066

1,723

1,802

Other non-cash adjustments

663

101

2,054

1,075

Capitalized interest expense

(437

)

(2,070

)

(3,192

)

(5,760

)

Adjusted Funds from Operations

99,696

81,750

374,641

307,872

Net income per share 2:

Basic

0.34

0.31

1.29

1.16

Diluted

0.34

0.30

1.28

1.15

FFO per share 2:

Basic

0.54

0.48

2.06

1.92

Diluted

0.54

0.47

2.05

1.89

Core FFO per share 2:

Basic

0.53

0.48

2.05

1.92

Diluted

0.53

0.47

2.04

1.89

AFFO per share 2:

Basic

0.50

0.46

1.90

1.76

Diluted

0.49

0.45

1.89

1.74

Includes the recognition of $2.4 million of cash and non-cash compensation expense that was not incurred due to the departure of an executive during the three months and year ended December 31, 2025.

Calculations exclude $211, $120, $893 and $472 from the numerator for the three months and year ended December 31, 2025 and 2024, respectively, related to dividends paid on unvested restricted stock units and LTIP units.

Three months ended December 31,

Year ended December 31,

(unaudited, in thousands)

2025

2024

2025

2024

General and administrative expense

8,441

8,469

40,864

35,161

Non-core general and administrative expense 1

2,354

—

2,354

—

Non-cash compensation expense

(3,420

)

(2,622

)

(14,438

)

(10,827

)

Straight-line rent expense

)

—

(26

)

Cash G&A

7,369

5,847

28,754

24,333

Includes the recognition of $2.4 million of cash and non-cash compensation expense that was not incurred due to the departure of an executive during the three months and year ended December 31, 2025.

Essential Properties Realty Trust, Inc.

Reconciliation of Non-GAAP Financial Measures

(unaudited, in thousands)

Three months ended December 31, 2025

Net income

68,274

Depreciation and amortization

41,044

Interest expense

30,944

Interest income

(631

)

Income tax expense

160

EBITDA

139,791

Provision for impairment of real estate

4,063

Gain on dispositions of real estate, net

(4,428

)

EBITDAre

139,426

Adjustment for current quarter re-leasing, acquisition and disposition activity 1

4,645

Adjustment for other non-core or non-recurring activity 2

(2,047

)

Adjustment to exclude termination/prepayment fees and certain percentage rent 3

(1,420

)

Adjusted EBITDAre - Current Estimated Run Rate

140,604

General and administrative expense

11,126

Adjusted net operating income ("NOI")

151,730

Straight-line rental revenue, net 1

(14,136

)

Other amortization expense

345

Adjusted Cash NOI

137,939

Annualized EBITDAre

557,704

Annualized Adjusted EBITDAre

562,416

Annualized Adjusted NOI

606,920

Annualized Adjusted Cash NOI

551,756

Adjustment is made to reflect EBITDAre, NOI and Cash NOI as if all re-leasing activity, investments in and dispositions of real estate and loan repayments completed during the three months ended December 31, 2025 had occurred on October 1, 2025.

Adjustment is made to i) exclude non-core adjustments made in computing Core FFO, if any, ii) exclude changes in the Company's provision for credit losses and iii) eliminate the impact of seasonal fluctuation in certain non-cash compensation expense recorded in the period.

Adjustment excludes lease termination or loan prepayment fees and contingent rent (based on a percentage of the tenant's gross sales at the leased property) where payment is subject to exceeding a sales threshold specified in the lease, if any.

Essential Properties Realty Trust, Inc.

Reconciliation of Non-GAAP Financial Measures

(unaudited, dollars in thousands, except share and per share data)

December 31, 2025

Rate

Wtd. Avg. Maturity

Unsecured debt:

February 2027 term loan 1

430,000

2.36%

1.1 years

January 2028 term loan 1

400,000

4.51%

2.1 years

February 2029 term loan 1,2

450,000

5.25%

3.2 years

January 2030 term loan 1,2

450,000

4.67%

4.0 years

Senior unsecured notes due July 2031

400,000

3.12%

5.5 years

Senior unsecured notes due December 2035

400,000

5.40%

9.9 years

Revolving credit facility 2,3

—

—%

4.1 years

Total unsecured debt

2,530,000

4.23%

4.2 years

Gross debt

2,530,000

Less: cash & cash equivalents

(60,181)

Less: restricted cash available for future investment

(10,184)

Net debt

2,459,635

Equity:

Preferred stock

—

Common stock & OP units (210,256,280 shares @ $29.66/share as of 12/31/25) 4

6,236,201

Total equity

6,236,201

Total enterprise value ("TEV")

8,695,836

Pro forma adjustments to Net debt and TEV: 5

Net debt

2,459,635

Less: Unsettled forward equity (10,900,920 shares @ $30.47/share as of 12/31/25)

(332,151)

Pro forma net debt

2,127,484

Total equity

6,236,201

Common stock — unsettled forward equity (10,900,920 shares @ $29.66/share as of 12/31/25)

323,321

Pro forma TEV

8,687,006

Gross Debt / Undepreciated Gross Assets

33.8%

Net Debt / TEV

28.3%

Net Debt / Annualized Adjusted EBITDAre

4.4x

Pro Forma Gross Debt / Undepreciated Gross Assets

32.4%

Pro Forma Net Debt / Pro Forma TEV

24.5%

Pro Forma Net Debt / Annualized Adjusted EBITDAre

3.8x

Rates presented for the Company's term loans are fixed at the stated rates after giving effect to its interest rate swaps plus applicable margin of 95bps (for the 2027 term loan) or 85bps (for the 2028, 2029 and 2030 term loans).

Weighted average maturity calculation is made after giving effect to extension options exercisable at the Company's election.

The Company's revolving credit facility provides a maximum aggregate initial original principal amount of up to $1.0 billion and includes an accordion feature to increase, subject to certain conditions, the maximum availability of the facility by up to $1.0 billion. Borrowings bear interest at Term SOFR plus applicable margin of 77.5bps.

Common stock & OP units as of December 31, 2025, based on 209,702,433 common shares outstanding and 553,847 OP units held by non-controlling interests.

Pro forma adjustments have been made to reflect the unsettled portion of shares sold on a forward basis as if they had been physically settled for cash on December 31, 2025.

Non-GAAP Financial Measures and Certain Definitions

The Company’s reported results are presented in accordance with GAAP. The Company also discloses the following non-GAAP financial measures: FFO, Core FFO, AFFO, earnings before interest, taxes, depreciation and amortization (“EBITDA”), EBITDA further adjusted to exclude gains (or losses) on sales of depreciable property and real estate impairment losses (“EBITDAre”), net debt, net operating income (“NOI”), cash NOI (“Cash NOI”), adjusted EBITDAre, adjusted NOI, adjusted Cash NOI and cash general and administrative expense (“Cash G&A”). The Company believes these non-GAAP financial measures are industry measures used by analysts and investors to compare the operating performance of REITs.

FFO, Core FFO and AFFO

The Company computes FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as GAAP net income or loss adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO is used by management, and may be useful to investors and analysts, to facilitate meaningful comparisons of operating performance between periods and among the Company’s peers primarily because it excludes the effect of real estate depreciation and amortization and net gains and losses on sales (which are dependent on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions).

The Company computes Core FFO by adjusting FFO, as defined by NAREIT, to exclude certain GAAP income and expense amounts that it believes are infrequent and unusual in nature and/or not related to its core real estate operations. Exclusion of these items from similar FFO-type metrics is common within the equity REIT industry, and management believes that presentation of Core FFO provides investors with a metric to assist in their evaluation of our operating performance across multiple periods and in comparison to the operating performance of our peers, because it removes the effect of unusual items that are not expected to impact our operating performance on an ongoing basis. Core FFO is used by management in evaluating the performance of our core business operations. Items included in calculating FFO that may be excluded in calculating Core FFO include certain transaction related gains, losses, income or expenses or other non-core amounts as they occur.

To derive AFFO, the Company modifies its computation of Core FFO to include other adjustments to GAAP net income related to certain items that it believes are not indicative of the Company’s operating performance, including straight-line rental revenue, non-cash interest, non-cash compensation expense, other amortization expense, other non-cash adjustments and capitalized interest expense. Such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. The Company believes that AFFO is an additional useful supplemental measure for investors to consider when assessing the Company’s operating performance without the distortions created by non-cash items and certain other revenues and expenses.

FFO, Core FFO and AFFO do not include all items of revenue and expense included in net income, they do not represent cash generated from operating activities and they are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. Additionally, our computation of FFO, Core FFO and AFFO may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs.

EBITDA and EBITDAre

The Company computes EBITDA as earnings before interest, income taxes and depreciation and amortization. In 2017, NAREIT issued a white paper recommending that companies that report EBITDA also report EBITDAre. The Company computes EBITDAre in accordance with the definition adopted by NAREIT. NAREIT defines EBITDAre as EBITDA (as defined above) excluding gains (or losses) from the sales of depreciable property and real estate impairment losses. The Company presents EBITDA and EBITDAre as they are measures commonly used in its industry and the Company believes that these measures are useful to investors and analysts because they provide supplemental information concerning its operating performance, exclusive of certain non-cash items and other costs. The Company uses EBITDA and EBITDAre as measures of its operating performance and not as measures of liquidity.

EBITDA and EBITDAre do not include all items of revenue and expense included in net income, they do not represent cash generated from operating activities and they are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. Additionally, the Company’s computation of EBITDA and EBITDAre may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs.

Net Debt

The Company calculates its net debt as its gross debt (defined as total debt plus net deferred financing costs on its secured borrowings) less cash and cash equivalents and restricted cash available for future investment. The Company believes excluding cash and cash equivalents and restricted cash available for future investment from gross debt, all of which could be used to repay debt, provides an estimate of the net contractual amount of borrowed capital to be repaid, which it believes is a beneficial disclosure to investors and analysts.

NOI and Cash NOI

The Company computes NOI as total revenues less property expenses. NOI excludes all other items of expense and income included in the financial statements in calculating net income or loss. Cash NOI further excludes non-cash items included in total revenues and property expenses, such as straight-line rental revenue and other amortization and non-cash adjustments. The Company believes NOI and Cash NOI provide useful information because they reflect only those revenue and expense items that are incurred at the property level and present such items on an unlevered basis.

NOI and Cash NOI are not measures of financial performance under GAAP. You should not consider the Company’s NOI and Cash NOI as alternatives to net income or cash flows from operating activities determined in accordance with GAAP. Additionally, the Company’s computation of NOI and Cash NOI may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs.

Adjusted EBITDAre / Adjusted NOI / Adjusted Cash NOI

The Company further adjusts EBITDAre, NOI and Cash NOI i) based on an estimate calculated as if all investment and disposition activity that took place during the quarter had occurred on the first day of the quarter, ii) to exclude certain GAAP income and expense amounts that the Company believes are infrequent and unusual in nature and iii) to eliminate the impact of lease termination or loan prepayment fees and contingent rental revenue from its tenants which is subject to sales thresholds specified in the lease. The Company then annualizes these estimates for the current quarter by multiplying them by four, which it believes provides a meaningful estimate of the Company’s current run rate for all investments as of the end of the current quarter. You should not unduly rely on these measures, as they are based on assumptions and estimates that may prove to be inaccurate. The Company’s actual reported EBITDAre, NOI and Cash NOI for future periods may be significantly less than these estimates of current run rates.

Cash G&A

The Company computes Cash G&A as general and administrative expense, as determined in accordance with GAAP, less non-core general and administrative expense, non-cash compensation expense and straight-line rent expense on leases where it is the lessee. The Company excludes non-core general and administrative expense, non-cash compensation expense and straight-line rent expense because they may cause short-term fluctuations in general and administrative expense but have no impact on operating cash flows or long-term operating performance. The Company believes that Cash G&A is a useful supplemental measure for investors to consider when assessing its operating performance without the distortion created by non-cash and non-core items.

Cash G&A is not a measure of financial performance under GAAP. You should not consider the Company's Cash G&A as an alternative to general and administrative expense determined in accordance with GAAP. Additionally, the Company's computation of Cash G&A may differ from the methodology for calculating this metric used by other equity REITs, and, therefore, may not be comparable to similarly titled measures reported by other equity REITs.

Cash ABR

Cash ABR means annualized contractually specified cash base rent in effect as of the end of the current quarter for all of the Company’s leases (including those accounted for as direct financing leases) commenced as of that date and annualized cash interest on its mortgage loans receivable as of that date.

Cash Cap Rate

Cash Cap Rate means expected annual contractually specified cash rent and interest at the time of investment or disposition divided by the gross investment or sale price, as applicable, for the property, including transaction costs.

GAAP Cap Rate

GAAP Cap Rate means expected annual rental and interest income computed in accordance with GAAP at the time of investments divided by the gross investment in the property, including transactions costs.

Rent Coverage Ratio

Rent coverage ratio means the ratio of tenant-reported or, when unavailable, management’s estimate based on tenant-reported financial information, annual EBITDA and cash rent attributable to the leased property (or properties, in the case of a master lease) to the annualized base rental obligation as of a specified date.

Weighted Average Annual Escalation

Weighted average annual escalation rate means the entire portfolio reflects as if all escalations occur annually. For leases in which rent escalates by the greater of a stated fixed percentage or CPI, we have assumed an escalation equal to the stated fixed percentage in the lease. As any future increase in CPI is unknowable at this time, we have not included an increase in the rent pursuant to these leases in the weighted average annual escalation rate presented.