Lowest Payout Ratio In Net Lease Is Doing What It Was Built To Do

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Feb 13

In net lease, payout ratios are usually discussed as a measure of dividend safety. In Essential Properties Realty Trust’s (NYSE:EPRT) case, the 63% payout ratio is functioning as something else ...

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In Essential Properties Realty Trust’s (NYSE:EPRT) case, the 63% payout ratio is functioning as something else ...</p>\n\n<a href=\"https://www.benzinga.com/Opinion/26/02/50607617/lowest-payout-ratio-in-net-lease-is-doing-what-it-was-built-to-do\">Source Link</a>\n\n</div>\n","source":"benzinga_recent_news","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Lowest Payout Ratio In Net Lease Is Doing What It Was Built To Do</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nLowest Payout Ratio In Net Lease Is Doing What It Was Built To Do\n</h2>\n\n<h4 class=\"meta\">\n\n\n2026-02-13 21:16 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.benzinga.com/Opinion/26/02/50607617/lowest-payout-ratio-in-net-lease-is-doing-what-it-was-built-to-do><strong>Benzinga_recent_news</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>In net lease, payout ratios are usually discussed as a measure of dividend safety. In Essential Properties Realty Trust’s (NYSE:EPRT) case, the 63% payout ratio is functioning as something else ...</p>\n\n<a href=\"https://www.benzinga.com/Opinion/26/02/50607617/lowest-payout-ratio-in-net-lease-is-doing-what-it-was-built-to-do\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"EPRT","symbol_name":"Essential Properties Realty Trust Inc.","start_time":0,"source_url":"https://www.benzinga.com/Opinion/26/02/50607617/lowest-payout-ratio-in-net-lease-is-doing-what-it-was-built-to-do","article_id":"2611157967","we_media_id":null,"thumbnails":["https://static.tigerbbs.com//next-assets/images/benzinga-post-card-placeholder.svg?optimize=medium&dpr=2&auto=webp&width=240?op=imageView2&mode=2&width=256&height=256&quality=70&format=png"],"rights":{"source":"benzinga_recent_news","url":"https://www.benzinga.com/Opinion/26/02/50607617/lowest-payout-ratio-in-net-lease-is-doing-what-it-was-built-to-do","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2611157967","pubTimestamp":1770988560,"columns":[],"sourceInfo":{"source_id":"benzinga_recent_news","name":"Benzinga"},"weMediaInfo":null,"summary":"In net lease, payout ratios are usually discussed as a measure of dividend safety. In Essential Properties Realty Trust’s  case, the 63% payout ratio is functioning as something else entirely — a capital recycling mechanism that funds growth before the company turns to the debt or equity markets.Fourth-quarter results suggest the structure is functioning as intended.Essential Properties reported AFFO of $99.7 million for the quarter, consistent with the high end of its guidance range. AFFO per share grew 9% year over year. Revenue came in at $149.87 million, roughly in line with expectations and up year over year. The company deployed $295.8 million in investments during Q4, and full-year 2025 investment volume reached $1.3 billion across 270 properties.Occupancy held at 99.7%. The weighted average lease term remained at 14.4 years for the 19th consecutive quarter. The credit watch list fell below 1% of annual base rent, with all listed tenants current on their obligations.The portfoli","collect":0,"end_time":0,"defaultTopTitle":"benzinga.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"EPRT":"Essential Properties Realty Trust Inc.","BK4160":"多样化房地产投资信托v"},"translate_title":"净租赁中最低的支付率是做它建造的目的","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"EPRT":1},"content_text":"In net lease, payout ratios are usually discussed as a measure of dividend safety. In Essential Properties Realty Trust’s (NYSE:EPRT) case, the 63% payout ratio is functioning as something else entirely — a capital recycling mechanism that funds growth before the company turns to the debt or equity markets.\nFourth-quarter results suggest the structure is functioning as intended.\nThe Q4 Numbers\nEssential Properties reported AFFO of $99.7 million for the quarter, consistent with the high end of its guidance range. AFFO per share grew 9% year over year. Revenue came in at $149.87 million, roughly in line with expectations and up year over year. The company deployed $295.8 million in investments during Q4, and full-year 2025 investment volume reached $1.3 billion across 270 properties.\nThat investment pace has not slowed. Management disclosed that $239 million in additional acquisitions have already closed in early 2026.\nOccupancy held at 99.7%. The weighted average lease term remained at 14.4 years for the 19th consecutive quarter. The credit watch list fell below 1% of annual base rent, with all listed tenants current on their obligations.\nOn the surface, these are strong operating metrics. But the structural story runs deeper.\nThe Retained Cash Flow Cycle\nEssential Properties declared a $0.31 quarterly dividend, representing a 63% AFFO payout ratio. In a sector where payout ratios between 68% and 75% are common, that gap is not small.\nThe result: nearly $40 million of retained free cash flow in the fourth quarter alone. Annualized, that implies roughly $150 to $160 million of internally generated capital before tapping debt or equity markets.\nManagement framed this explicitly on the earnings call as a substantial source of internally generated capital. That retained cash flow is being recycled directly into the acquisition pipeline — a model that reduces reliance on equity issuance and preserves funding flexibility.\nThis is distinct from how most net lease peers operate. Agree Realty’s growth model relies heavily on forward equity offerings and capital markets access. NNN REIT’s self-funding approach uses retained cash flow plus dispositions to largely avoid equity issuance. Essential Properties sits between the two — retaining more cash flow than the sector norm while still accessing capital markets when pricing is attractive.\nThe 63% payout is not a sign of a company underpaying shareholders. It is a design choice in the capital structure.\nA lower payout ratio improves internal funding flexibility — but it also means current yield remains below some higher-distributing peers. That is the trade-off built into the model.\nThe Investment Pipeline\n85% of the company’s Q4 investments were sourced through existing tenant relationships. Initial cash yields on those investments averaged 7.7%, with GAAP yields at 9.1%.\nThe portfolio now stands at 2,300 properties leased to over 400 tenants operating 659 concepts across 48 states. Top 10 tenants represent 16.5% of annual base rent. Top 20 represent 27.1%.\nThat tenant diversity is a structural feature, not a cosmetic one. When no single tenant drives more than low single digits of total rent, the credit risk profile shifts from concentrated to distributed. The rent coverage ratio of 3.6 times provides a secondary layer of cushion at the tenant level.\nSame-store rent growth came in at 1.6% for the quarter, consistent with prior periods. Only 5.2% of annual base rent is set to expire within the next five years, which limits near-term re-leasing risk.\n2026 Guidance\nManagement guided 2026 AFFO per share to $1.99 to $2.04, representing 6% to 8% growth over 2025’s $1.89. Given the $239 million already deployed in early 2026, the pace suggests the company may be tracking toward the upper end of its investment assumptions.\nGeneral and administrative costs ended the year at $28.8 million, representing 5.1% of total revenue — down from 5.4% in 2024. The operating leverage is visible.\nWhat The Numbers Show\nEssential Properties is not the largest net lease REIT. It does not carry the highest credit rating. But the structural position it has built — a 63% payout that generates over $150 million annually in retained capital, a relationship-driven pipeline with 85% repeat sourcing, and tenant diversity that limits concentration risk — is producing 9% AFFO growth and 6% to 8% guided expansion for 2026.\nThe lowest payout ratio in net lease is not a weakness. It functions as the engine behind the company’s reinvestment cycle.\nThe numbers tell a story. Whether it changes anything — that part is yours.\nDisclosure: The author holds no position in EPRT at the time of writing.\nBenzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.\nTo add Benzinga News as your preferred source on Google, click here.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"}}}