On February 16, 2023, Essential Properties Realty Trust, Inc., a Maryland corporation (the “Company”), and Essential Properties, L.P., a Delaware limited partnership (the “Operating Partnership”), entered into an underwriting agreement (the “Underwriting Agreement”) with BofA Securities, Inc., Citigroup Global Markets Inc. and Wells Fargo Securities, LLC, as representatives of the several underwriters named therein (in such capacities, the “Underwriters”), forward sellers (in such capacities, the “Forward Sellers”) and affiliates thereof as forward purchasers (in such capacities, the “Forward Purchasers”), relating to the offer and sale of 8,855,000 shares of the Company’s common stock, $0.01 par value per share (the “Common Stock”), on a forward basis (including 1,155,000 shares of Common Stock relating to the Underwriters’ option to purchase additional shares, which option the Underwriters exercised in full) (the “Offering”). The Offering closed on February 22, 2023.
The Underwriting Agreement contains customary representations, warranties and covenants among the parties. These representations, warranties and covenants are not representations of factual information to investors about the Company, the Operating Partnership or their respective subsidiaries, and the sale of Common Stock pursuant to the Underwriting Agreement is not a representation that there has not been any change in the condition of the Company or the Operating Partnership.
In connection with the Offering, on February 16, 2023, the Company entered into forward sale agreements (the “Initial Forward Sale Agreements”) with each Forward Purchaser. On February 17, 2023, in connection with the exercise in full of the Underwriters’ option to purchase additional shares, the Company entered into additional forward sale agreements (together with the Initial Forward Sale Agreements, the “Forward Sale Agreements”) with each Forward Purchaser.
On February 22, 2023, the Forward Sellers borrowed and sold an aggregate of 8,855,000 shares of Common Stock. The Company intends (subject to the Company’s right to elect cash or net share settlement subject to certain conditions) to deliver, upon physical settlement of the Forward Sale Agreements on one or more dates specified by the Company occurring no later than February 16, 2024, an aggregate of 8,855,000 shares of Common Stock to the Forward Purchasers in exchange for cash proceeds per share equal to the applicable forward sale price, which will be the public offering price less the underwriting discounts and commissions and subject to certain adjustments as provided in the Forward Sale Agreements. The Company intends to contribute the net proceeds from the settlement of the Forward Sale Agreements to the Operating Partnership in exchange for units of limited partnership interest in the Operating Partnership, and the Operating Partnership intends to use such net proceeds for general corporate purposes, including potential future investments.
The Offering was made pursuant to the Company’s effective automatic shelf registration statement on Form S-3 (File No. 333-257202) filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, on June 21, 2021.
A copy of the Underwriting Agreement is attached hereto as Exhibit 1.1 and incorporated herein by reference, and copies of the Forward Sale Agreements are attached hereto as Exhibits 1.2, 1.3, 1.4, 1.5, 1.6 and 1.7 and are incorporated herein by reference. The summaries of the Underwriting Agreement and the Forward Sale Agreements set forth herein are qualified in their entirety by reference to these exhibits.
