Essential Properties Realty Trust, Inc. Announces Pricing of Upsized Public Offering of Common Stock
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Insights
The upsizing of Essential Properties Realty Trust's public offering from 8 million to 9 million shares at a price of $24.75 per share indicates robust investor demand and a positive market reception. This capital raise is a strategic move to bolster the company's balance sheet. The involvement of forward sale agreements allows the company to potentially delay equity dilution, as actual shares may only be issued upon settlement within an estimated 12-month period.
The decision to use net proceeds for general corporate purposes, including potential future investments, suggests a proactive approach to growth and operational expansion. Investors should monitor how these funds are allocated to gauge the effectiveness of the company's growth strategy and its impact on future earnings.
The granting of a 30-day option to underwriters to purchase additional shares could lead to further capital inflow but also potential dilution for existing shareholders. The timing and execution of this option will be key factors in determining the immediate impact on the stock's performance.
The engagement of a diverse group of financial institutions as book-runners and co-managers reflects the offering's complexity and the need for widespread distribution channels. The breadth of underwriters and co-managers, including well-known entities such as BofA Securities and Wells Fargo Securities, enhances the credibility of the offering and could contribute to a more successful capital raise.
Additionally, the use of forward sale agreements in this offering is indicative of a cautious approach to market volatility. By deferring the actual sale of shares, Essential Properties Realty Trust can mitigate potential market risks. However, this strategy also adds a layer of complexity for investors to consider, including the conditions under which the forward purchasers may not be required to borrow and sell shares.
The utilization of a shelf registration statement for this offering streamlines the process, allowing Essential Properties Realty Trust to act swiftly in capitalizing on favorable market conditions. Investors should be aware that the final prospectus supplement will provide critical legal disclosures, including specific terms of the forward sale agreements and risks associated with the offering.
It is essential for stakeholders to understand that the offering is subject to customary closing conditions and regulatory compliance. The legal framework, including the potential for the offering not to proceed if certain conditions are not met, could influence the company's ability to raise the expected capital.
BofA Securities, Wells Fargo Securities, Truist Securities and Mizuho are acting as the joint book-running managers for the offering. BMO Capital Markets, TD Securities, Barclays, Capital One Securities, Citigroup and Goldman Sachs & Co. LLC are acting as the book-running managers of the offering. Stifel, Raymond James, Wolfe Capital Markets and Advisory, Scotiabank, BNP PARIBAS and Huntington Capital Markets are acting as co-managers of the offering.
In connection with the offering, the Company entered into forward sale agreements with BofA Securities, Wells Fargo Securities, Truist Securities and Mizuho (or affiliates thereof) (the “forward purchasers”), with respect to 9,000,000 shares of the Company’s common stock.
The underwriters have been granted a 30-day option, exercisable in whole or in part from time to time, to purchase up to an additional 1,350,000 shares of the Company’s common stock. If the option to purchase additional shares of the Company’s common stock is exercised, the Company expects to enter into one or more additional forward sale agreements with the forward purchasers in respect of the number of shares of the Company’s common stock that are subject to exercise of the option to purchase additional shares.
In connection with the forward sale agreements and any additional forward sale agreements, the forward purchasers (or their affiliates) are expected to borrow from third parties and sell to the underwriters an aggregate of 9,000,000 shares of the Company’s common stock (or an aggregate of 10,350,000 shares of the Company’s common stock if the underwriters’ option to purchase additional shares is exercised in full). However, a forward purchaser (or its affiliate) is not required to borrow and sell such shares if, after using commercially reasonable efforts, such forward purchaser (or its affiliate) is unable to borrow such shares, or if borrowing costs exceed a specified threshold or if certain specified conditions have not been satisfied. If a forward purchaser (or its affiliate) does not deliver and sell all of the shares of the Company’s common stock to be sold by it to the underwriters, the Company will issue and sell to the underwriters a number of shares of its common stock equal to the number of shares that such forward purchaser (or its affiliate) did not deliver and sell, and the number of shares underlying the relevant forward sale agreement or such additional forward sale agreement will be decreased by the number of shares that the Company issues and sells.
Pursuant to the terms of the forward sale agreements and any additional forward sale agreements, and subject to its right to elect cash or net share settlement, the Company intends to issue and sell, upon physical settlement of the forward sale agreements and any additional forward sale agreements, an aggregate of 9,000,000 shares of common stock (or an aggregate of up to 10,350,000 shares of common stock if the underwriters’ option to purchase additional shares is exercised in full) to the forward purchasers. The Company expects to physically settle the forward sale agreements and any additional forward sale agreements within approximately 12 months from the date of the prospectus supplement relating to the offering.
The Company will not receive any proceeds from the sale of shares of its common stock by the forward purchasers (or affiliates thereof). The Company intends to contribute any net proceeds from the settlement of the forward sale agreements to the Company’s operating partnership in exchange for OP Units, and the operating partnership intends to use such net proceeds for general corporate purposes, including potential future investments.
All of the shares of common stock are being offered pursuant to the Company’s effective shelf registration statement filed with the Securities and Exchange Commission (the “SEC”). A final prospectus supplement and accompanying prospectus relating to the offering will be filed with the SEC. When available, a copy of the final prospectus supplement and accompanying prospectus relating to the offering may be obtained from BofA Securities, Inc., NC1-022-02-25, 201 North Tryon Street,
This press release does not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of these securities in any state or other jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
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 “expect” and “will,” or the negative of these words, or similar words or phrases that are predictions of or indicate future events 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 regarding strategy, plans or intentions. 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. 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 from time to time in the Company’s SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2023. Copies of each filing may be obtained from the Company or the SEC. Such forward-looking statements should be regarded solely as reflections of the Company’s current plans and estimates. Actual results may differ materially from what is expressed or forecast in this press release.
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, 2023, the Company’s portfolio consisted of 1,873 freestanding net lease properties with a weighted average lease term of 14.0 years and a weighted average rent coverage ratio of 3.8x. In addition, as of December 31, 2023, the Company’s portfolio was
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Investor/Media:
Essential Properties Realty Trust, Inc.
Robert W. Salisbury, CFA
Senior Vice President, Head of Capital Markets
609-436-0619
investors@essentialproperties.com
Source: Essential Properties Realty Trust, Inc.
FAQ
How many shares of common stock were offered by Essential Properties Realty Trust, Inc. (EPRT) in the public offering?
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Who are the joint book-running managers for the public offering of Essential Properties Realty Trust, Inc. (EPRT) common stock?
What will Essential Properties Realty Trust, Inc. (EPRT) do with the net proceeds from the settlement of the forward sale agreements?
