S&P ups Essential Properties Realty

S&P said it upgraded Essential Properties Realty Trust Inc.’s issuer rating to BBB- from BB+. Its senior unsecured notes rating remains BBB-.

The issuer’s portfolio continues to recover from the pandemic’s effect because certain industries such as early childhood education and movie theaters were hurt for a longer period, the agency said.

Total portfolio rent coverage improved to 3.8x as of March 31, 2022, from 3x the previous year. There has been clear improvement to this metric across EPRT's entire tenant base, as the percentage of annual base rate (ABR) generated by tenants with coverage below 1.5x declined to 14.7% as of March 31, 2022, from 24.9% a year prior, while ABR generated from tenants with coverage above 2x increased to 73.8% from 56.6% over the same time frame,” S&P said in a press release.

The agency also noted that EPRT has been using equity to fund investments instead of debt. S&P Global Ratings-adjusted debt to EBITDA declined to 5.6x as of March 31, 2022, from 6x as of year-end 2021

The outlook is stable.

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