Brad Thomas
Founder & Lead Analyst of Wide Moat Research
Essential Properties' disciplined underwriting is delivering steady growth amid a changing cost-of-capital environment without stretching for growth. Q3 AFFO per share rose 6% year over year to $0.51, rental revenue of $157.8 million beat estimates, and 2027 AFFO guidance debuted at $2.10-$2.18. Strong margins and deal flow were expected ahead of earnings; it remains one of the best net-lease REITs to own. x.com x.comÂ
Essential Properties Realty Trust combines income, safety and growth: a 4.5% dividend yield, a conservative 63% AFFO payout ratio and just 3.1% exposure to its largest tenant, with attractive long-term growth. Cost of capital is the key swing factor, since expensive equity and debt compress acquisition spreads, but its low payout, diversification and disciplined underwriting give it more ways to fund accretive growth without stretching the balance sheet. x.com x.comÂ
Realty Income's 20%+ correction is among the most attractive long-term opportunities in the market, since such drops in a blue-chip dividend REIT typically do not last. The business keeps performing, with AFFO per share up 3.8% year over year and 136 monthly dividend increases since its NYSE listing. The stock sits about 10% below its 200-week moving average with a historically oversold daily RSI. x.comÂ
Realty Income is no longer interesting because, as a net-lease landlord, it earns only a thin financing spread, roughly a 5% dividend, which rising rates will squeeze further. It uses its capital scale to buy land and lease it back to operators. Its data-center move, $1.9B of a $6.7B commitment with partners including Digital Realty, uses the same spread model, and REITs accepting such spreads erode data-center leasing profits. Vertically integrated businesses are riskier but more worthwhile. … Show more
Applied Digital's landlord model is finally showing in results, while cheaper capital and a removed tail risk strengthen the case. Base rent of $44.1M produced $39.9M of NOI at a 91% margin. New debt of $2.15B at 6.75% and $1.59B at 7.0% came 225 basis points inside its first financing, after CoreWeave won an investment-grade rating and backed the leases. The 10-K shows the roughly $2.4B Base Electron guarantee, the single biggest concern, was ended on May 29 for a $37M payment. x.comÂ
REITs stay in the penalty box because a reaccelerating labor market rules out Fed cuts this year. Job openings jumped to 7.618M against a 7.295M forecast and a prior 6.887M, and with core inflation still hot, Warsh can't cut into that. Rate-sensitive sectors such as REITs, small caps and anything long-duration stay under pressure, while shorter-duration, cash-flow-positive value keeps working. x.com x.comÂ
