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Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 28, 2018
 
EPR Properties
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
Maryland
 
001-13561
 
43-1790877
(State or other jurisdiction of
incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
909 Walnut Street, Suite 200
Kansas City, Missouri 64106
(Address of principal executive office)(Zip Code)
(816) 472-1700
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    o









Item 2.02 Results of Operations and Financial Condition.

On February 28, 2018, the Company announced its results of operations and financial condition for the fourth quarter and year ended December 31, 2017. The public announcement was made by means of a press release, the text of which is set forth in Exhibit 99.1 hereto and is hereby incorporated by reference herein.
In addition, on February 28, 2018, the Company made available on its website supplemental operating and financial data for the fourth quarter and year ended December 31, 2017, the text of which is set forth in Exhibit 99.2 hereto and is hereby incorporated by reference herein.
The information set forth in Item 2.02 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, is being “furnished” and shall not be deemed “filed” for the purposes of or otherwise subject to liabilities under Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.


Item 9.01 Financial Statements and Exhibits.
 
 
 
 
Exhibit
No.
  
Description
  
  
Press Release dated February 28, 2018 issued by EPR Properties announcing its results of operations and financial condition for the fourth quarter and year ended December 31, 2017.
 
 
  
Supplemental Operating and Financial Data for the fourth quarter and year ended December 31, 2017, made available by EPR Properties on February 28, 2018.







SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
EPR PROPERTIES
 
 
 
 
By:
 
 /s/ Mark A. Peterson
 
 
 
Mark A. Peterson
 
 
 
Executive Vice President, Treasurer and Chief Financial
Officer
Date: February 28, 2018
 




















































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Section 2: EX-99.1 (PRESS RELEASE)

Exhibit





Exhibit 99.1

EPR PROPERTIES REPORTS FOURTH QUARTER AND 2017 YEAR-END RESULTS

Kansas City, MO, February 28, 2018 -- EPR Properties (NYSE:EPR) today announced operating results for the fourth quarter and year ended ended December 31, 2017.
    
Three Months Ended December 31, 2017
Total revenue was $147.7 million for the fourth quarter of 2017, representing a 13% increase from $130.8 million for the same quarter in 2016.
Net income available to common shareholders was $54.7 million, or $0.74 per diluted common share, for the fourth quarter of 2017 compared to $52.2 million, or $0.82 per diluted common share, for the same quarter in 2016.
Funds From Operations (FFO) (a non-GAAP financial measure) for the fourth quarter of 2017 was $78.0 million, or $1.06 per diluted common share, compared to $80.4 million, or $1.25 per diluted common share, for the same period in 2016.
FFO as adjusted (a non-GAAP financial measure) for the fourth quarter of 2017 was $95.9 million, or $1.29 per diluted common share, compared to $80.7 million, or $1.26 per diluted common share, for the same quarter in 2016, representing a 2% increase in per share results.
As further discussed below, the fourth quarter of 2017 was negatively impacted by the Company's write-off of all of the non-cash straight-line rent receivable of $9.0 million against rental revenue and reserve of all accounts receivable of $6.0 million as bad debt expense (included in property operating expenses) related to Children’s Learning Adventure USA, LLC (CLA). These adjustments reduced net income, FFO (a non-GAAP financial measure) and FFO as adjusted (a non-GAAP financial measure) by a total of $15.0 million, or $0.20 per diluted common share for net income and $0.19 per diluted common share for both FFO and FFO as adjusted. In addition, no further revenue was recognized related to CLA during the fourth quarter of 2017.

Year Ended December 31, 2017
Total revenue was $576.0 million for the year ended December 31, 2017, representing a 17% increase from $493.2 million for the same period in 2016.
Net income available to common shareholders was $234.2 million, or $3.29 per diluted common share, for the year ended December 31, 2017 compared to $201.2 million, or $3.17 per diluted common share, for the same period in 2016.
FFO (a non-GAAP financial measure) for the year ended December 31, 2017 was $327.4 million, or $4.58 per diluted common share, compared to $304.6 million, or $4.77 per diluted common share, for the same period in 2016.
FFO as adjusted (a non-GAAP financial measure) for the year ended December 31, 2017 was $360.5 million, or $5.02 per diluted common share, compared to $308.0 million, or $4.82 per diluted common share, for the same period in 2016, representing a 4% increase in per share results.

“With $1.6 billion in investment spending in 2017, EPR concluded the strongest investment year in the Company’s history,” commented Company President and CEO Greg Silvers. “We continue to make enhancements to our balance sheet, and with no debt maturities until 2022, we will thoughtfully allocate capital as we pursue ongoing opportunities in our pipeline. We remain focused on driving shareholder value, as demonstrated by the recently announced increase of nearly 6% in our well covered 2018 monthly dividend. Our differentiated investment thesis remains solidly in place with a diversified portfolio of tenants and assets that are strategically aligned with the experience economy.”






A reconciliation of FFO to FFO as adjusted follows (unaudited, dollars in thousands, except per share amounts):
 
 
Three Months Ended December 31,
 
 
2017
 
2016
 
 
Amount
 
FFO/share
 
Amount
 
FFO/share
FFO available to common shareholders (1)
$
78,040

 
$
1.06

 
$
80,424

 
$
1.25

 
Costs associated with loan refinancing or payoff
58

 

 

 

 
Gain on insurance recovery (included in other income)

 

 
(847
)
 
(0.01
)
 
Termination fee included in gain on sale
13,275

 
0.17

 

 

 
Preferred share redemption costs
4,457

 
0.06

 

 

 
Transaction costs
135

 

 
2,988

 
0.05

 
Gain on sale of land

 

 
(1,430
)
 
(0.02
)
 
Deferred income tax benefit
(99
)
 

 
(401
)
 
(0.01
)
FFO as adjusted available to common shareholders (1)
$
95,866

 
$
1.29

 
$
80,734

 
$
1.26

 
 
 
 
 
 
 
 
 
Dividends declared per common share
 
 
$
1.02

 
 
 
$
0.96

FFO as adjusted available to common shareholders payout ratio
 
 
79
%
 
 
 
76
%
 
 
Year Ended December 31,
 
 
2017
 
2016
 
 
Amount
 
FFO/share
 
Amount
 
FFO/share
FFO available to common shareholders (1)
$
327,431

 
$
4.58

 
$
304,635

 
$
4.77

 
Costs associated with loan refinancing or payoff
1,549

 
0.02

 
905

 
0.01

 
Gain on insurance recovery (included in other income)
(606
)
 
(0.01
)
 
(4,684
)
 
(0.07
)
 
Termination fee included in gain on sale
20,049

 
0.27

 
2,819

 
0.04

 
Preferred share redemption costs
4,457

 
0.06

 

 

 
Gain on early extinguishment of debt
(977
)
 
(0.01
)
 

 

 
Transaction costs
523

 

 
7,869

 
0.12

 
Gain on sale of land

 

 
(2,496
)
 
(0.04
)
 
Deferred income tax expense (benefit)
812

 
0.01

 
(1,065
)
 
(0.01
)
 
Impairment of direct financing lease - allowance for lease loss portion (2)
7,298

 
0.10

 

 

FFO as adjusted available to common shareholders (1)
$
360,536

 
$
5.02

 
$
307,983

 
$
4.82

 
 
 
 
 
 
 
 
 
Dividends declared per common share
 
 
$
4.08

 
 
 
$
3.84

FFO as adjusted available to common shareholders payout ratio
 
 
81
%
 
 
 
80
%
 
 
 
 
 
 
 
 
 
(1)
Per share results for the three months and year ended December 31, 2017 include the effect of the conversion of the 5.75% Series C and 9.00% Series E cumulative convertible preferred shares as the conversion would be dilutive. Per share results for the three months and year ended December 31, 2016 include the effect of the conversion of the 5.75% Series C cumulative convertible preferred shares as the conversion would be dilutive.
(2)
Impairment charges recognized during the year ended December 31, 2017 total $10.2 million and related to our investment in direct financing leases, net, consisting of $2.9 million related to the residual value portion and $7.3 million related to the allowance for lease loss portion.

Portfolio Update

The Company's investment portfolio (excluding property under development) consisted of the following at December 31, 2017:

The Entertainment segment included investments in 147 megaplex theatre properties, seven entertainment retail centers (which include seven additional megaplex theatre properties) and 11 family entertainment centers. The Company’s portfolio of owned entertainment properties consisted of 13.1 million square feet and was 99% leased, including megaplex theatres that were 100% leased.
The Recreation segment included investments in 26 ski areas, 20 attractions, 30 golf entertainment complexes and eight other recreation facilities. The Company’s portfolio of owned recreation properties was 100% leased.



The Education segment included investments in 65 public charter schools, 65 early education centers and 15 private schools. The Company’s portfolio of owned education properties consisted of 4.2 million square feet and was 92% leased. This reflects the termination of nine CLA leases, as further discussed below.
The Other segment consisted primarily of the land under ground lease, property under development and land held for development related to the Resorts World Catskills casino and resort project in Sullivan County, New York (formerly referred to as the Adelaar casino and resort project).

The combined owned portfolio consisted of 20.3 million square feet and was 98% leased. As of December 31, 2017, the Company also had a total of $257.6 million invested in property under development.

Investment Update

The Company's investment spending for the three months ended December 31, 2017 totaled $126.5 million (bringing the full year 2017 total investment spending to $1.6 billion), and included investments in each of its primary operating segments:

Entertainment investment spending during the three months ended December 31, 2017 totaled $54.8 million, including spending on build-to-suit development and redevelopment of megaplex theatres, entertainment retail centers and family entertainment centers.
Recreation investment spending during the three months ended December 31, 2017 totaled $55.1 million, including investment spending on build-to-suit development of golf entertainment complexes and attractions, and redevelopment of ski areas, as well as $10.8 million for the acquisition of a recreation facility.
Education investment spending during the three months ended December 31, 2017 totaled $16.5 million, including spending on build-to-suit development and redevelopment of public charter schools, early education centers and private schools.
Other investment spending during the three months ended December 31, 2017 totaled $0.1 million, and was related to the Resorts World Catskills casino and resort project in Sullivan County, New York.

Early Childhood Education Tenant Update

During 2017, cash flow of CLA was negatively impacted by challenges brought on by its rapid expansion and related ramp up to stabilization and by adverse weather events in Texas during the third quarter of 2017. During 2017, the Company participated in negotiations among CLA and other landlords regarding a potential restructuring. Although negotiations are on-going and progress has been made toward a restructuring, investments necessary to accomplish the restructuring have not yet been secured. As a result of the slow progress with negotiations, in October 2017, the Company terminated nine leases with various subsidiaries of CLA, seven of which relate to completed construction and two of which relate to unimproved land. These subsidiaries of CLA continue to operate these properties (other than the two unimproved properties) as holdover tenants. In December 2017, these CLA subsidiaries (other than one of the CLA tenants for an undeveloped land parcel) and other CLA subsidiaries that are tenants of our remaining leases (“CLA Debtors”) filed petitions in bankruptcy under Chapter 11 seeking the protections of the Bankruptcy Code. It is the Company's understanding that the CLA Debtors filed these bankruptcy petitions to stay our termination of the remaining CLA leases and delay the eviction process.

While the Company continues to support negotiation of a restructuring that would permit CLA to continue operations, the Company is not willing to negotiate indefinitely. The Company intends to pursue legal remedies to secure possession of its properties as expeditiously as possible. The Company believes the time it will take to achieve this outcome gives CLA ample opportunity to negotiate a restructuring which, if successful, would obviate the need to evict CLA from the Company's properties. There can be no assurances as to the ultimate outcome of such a restructuring or the Company's pursuit of its legal remedies with respect to the CLA properties.

The Company fully reserved approximately $6.0 million in receivables from CLA at December 31, 2017. Additionally, during the three months ended December 31, 2017, the Company wrote-off the full amount of non-cash straight-line rent receivables of approximately $9.0 million related to CLA to straight-line rental revenue classified in rental revenue



in the consolidated statements of income. If the Company receives payments from CLA in the future, it will recognize them on a cash basis until a successful restructuring is completed.

Capital Recycling

During the fourth quarter, the Company sold three public charter school properties, pursuant to tenant purchase options, for total net proceeds of approximately $52.5 million and recognized a net gain on sale of real estate of $13.5 million. Additionally, the Company completed the sale of one early education facility for net proceeds of $0.7 million. The Company also received prepayments of $4.2 million on two mortgage notes receivable and recognized prepayment fees of $0.8 million. Dispositions and mortgage note pay-offs (excluding principal amortization) totaled $197.6 million for the year ended December 31, 2017.

Balance Sheet Update

The Company had a net debt to adjusted EBITDA ratio (a non-GAAP financial measure) of 5.39x at December 31, 2017. The Company had $41.9 million of unrestricted cash on hand (including $33.8 million of funds held for a Section 1031 exchange under the Internal Revenue Code) and $210.0 million outstanding under its $1.0 billion unsecured revolving credit facility at December 31, 2017.

On October 31, 2017, the Company entered into three interest rate swap agreements to fix the interest rate at 3.15% on an additional $50.0 million of borrowings under the unsecured term loan facility from November 2017 to April 2019 and on $350.0 million of borrowings under the unsecured term loan facility from April 2019 to February 2022.

As previously announced, on November 30, 2017, the Company issued 6.0 million shares of 5.75% Series G cumulative redeemable preferred shares in a registered public offering at a purchase price of $25.00 per share resulting in net proceeds of approximately $144.5 million, after underwriting discounts and expenses. Additionally, on December 21, 2017, the Company redeemed all 5.0 million outstanding shares of its 6.625% Series F cumulative redeemable preferred shares for a total aggregate redemption price of approximately $126.5 million ($25.00 per share liquidiation plus accrued dividends). In conjunction with the redemption, the Company recognized $4.5 million in expenses representing the original issuance costs that were paid in 2012 and other related expenses.

During the fourth quarter, the Company issued 454,511 common shares under its Direct Share Purchase Plan (DSPP) for net proceeds of $30.3 million. The proceeds were used to pay down a portion of the Company's unsecured revolving credit facility.

Subsequent to December 31, 2017, the Company redeemed all of its outstanding 7.75% Senior Notes due July 15, 2020. The notes were redeemed on February 28, 2018 at a price equal to the principal amount of $250.0 million plus a premium calculated pursuant to the terms of the indenture of $28.6 million, together with accrued and unpaid interest up to, but not including the redemption date. Additionally, the Company prepaid in full a mortgage note payable totaling $11.7 million with an annual interest rate of 6.19%, which was secured by one theatre property. Subsequent to these transactions, the Company has no debt maturities until 2022.

Dividend Information

The Company declared regular monthly cash dividends during the fourth quarter of 2017 totaling $1.02 per common share, bringing total declared dividends for the year ended December 31, 2017, to $4.08 per common share, an increase of 6.25% over the prior year. The Company also declared fourth quarter cash dividends of $0.359375 per share on its 5.75% Series C cumulative convertible preferred shares, $0.5625 per share on its 9.00% Series E cumulative convertible preferred shares, $0.2990425 per share on its 6.625% Series F cumulative redeemable preferred shares and $0.183681 per share on its 5.75% Series G cumulative redeemable preferred shares.

As previously announced, the Company declared a regular monthly cash dividend to common shareholders of $0.36 per common share for each of the months of January and February 2018. This dividend level represents an annualized



dividend of $4.32 per common share, an increase of almost 6% over 2017, and would be the Company's eighth consecutive year with a significant annual dividend increase.

2018 Guidance

The Company is reducing its 2018 guidance for FFO as adjusted per diluted share to a range of $5.23 to $5.38 from a range of $5.33 to $5.48. In addition, the Company is reducing its 2018 investment spending guidance to a range of $400.0 million to $700.0 million from a range of $700.0 million to $800.0 million and increasing its disposition proceeds guidance to a range of $350.0 million to $450.0 million from a range of $125.0 million to $225.0 million for 2018.

FFO as adjusted guidance for 2018 is based on FFO per diluted share of $4.60 to $4.70 adjusted for estimated costs associated with loan refinancing or payoff, transaction costs, termination fees related to public charter schools and deferred income tax expense. FFO per diluted share is based on a net income per diluted share range of $2.98 to $3.13 less estimated gain on sale of real estate of a range of $0.35 to $0.40 and the impact of Series C and Series E dilution of $0.06, plus estimated real estate depreciation of $2.03 per diluted share (in accordance with the NAREIT definition of FFO).

Quarterly and Year-Ended Supplemental

The Company's supplemental information package for the fourth quarter and year ended ended December 31, 2017 is available on the Company's website at http://investors.eprkc.com/earnings-supplementals.




EPR Properties
Consolidated Statements of Income
(Unaudited, dollars in thousands except per share data)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2017
 
2016
 
2017
 
2016
Rental revenue
$
119,315

 
$
107,474

 
$
468,648

 
$
399,589

Tenant reimbursements
4,131

 
4,018

 
15,555

 
15,595

Other income
577

 
3,227

 
3,095

 
9,039

Mortgage and other financing income
23,677

 
16,112

 
88,693

 
69,019

Total revenue
147,700

 
130,831

 
575,991

 
493,242

Property operating expense
12,891

 
5,915

 
31,653

 
22,602

Other expense
242

 

 
242

 
5

General and administrative expense
9,596

 
10,234

 
43,383

 
37,543

Costs associated with loan refinancing or payoff
58

 

 
1,549

 
905

Gain on early extinguishment of debt

 

 
(977
)
 

Interest expense, net
35,271

 
26,834

 
133,124

 
97,144

Transaction costs
135

 
2,988

 
523

 
7,869

Impairment charges

 

 
10,195

 

Depreciation and amortization
37,027

 
28,351

 
132,946

 
107,573

Income before equity in income from joint ventures and other items
52,480

 
56,509

 
223,353

 
219,601

Equity in (loss) income from joint ventures
(14
)
 
118

 
72

 
619

Gain on sale of real estate
13,480

 
1,430

 
41,942

 
5,315

Income before income taxes
65,946

 
58,057

 
265,367

 
225,535

Income tax (expense) benefit
(383
)
 
84

 
(2,399
)
 
(553
)
Net income
65,563

 
58,141

 
262,968

 
224,982

Preferred dividend requirements
(6,438
)
 
(5,951
)
 
(24,293
)
 
(23,806
)
Preferred share redemption costs
(4,457
)
 

 
(4,457
)
 

Net income available to common shareholders of EPR Properties
$
54,668

 
$
52,190

 
$
234,218

 
$
201,176

Per share data attributable to EPR Properties common shareholders:
 
 
 
 
 
 
 
Basic earnings per share data:
 
 
 
 
 
 
 
Net income available to common shareholders
$
0.74

 
$
0.82

 
$
3.29

 
$
3.17

Diluted earnings per share data:
 
 
 
 
 
 
 
Net income available to common shareholders
$
0.74

 
$
0.82

 
$
3.29

 
$
3.17

Shares used for computation (in thousands):
 
 
 
 
 
 
 
Basic
73,774

 
63,635

 
71,191

 
63,381

Diluted
73,832

 
63,716

 
71,254

 
63,474

 













EPR Properties
Condensed Consolidated Balance Sheets
(Unaudited, dollars in thousands)
 
December 31,
 
2017
 
2016
Assets
 
 
 
Rental properties, net of accumulated depreciation of $741,334 and $635,535 at December 31, 2017 and 2016, respectively
$
4,604,231

 
$
3,595,762

Land held for development
33,692

 
22,530

Property under development
257,629

 
297,110

Mortgage notes and related accrued interest receivable
970,749

 
613,978

Investment in direct financing leases, net
57,903

 
102,698

Investment in joint ventures
5,602

 
5,972

Cash and cash equivalents
41,917

 
19,335

Restricted cash
17,069

 
9,744

Accounts receivable, net
93,693

 
98,939

Other assets
109,008

 
98,954

Total assets
$
6,191,493

 
$
4,865,022

 
 
 
 
Liabilities and Equity
 
 
 
Accounts payable and accrued liabilities
$
136,929

 
$
119,758

Dividends payable
30,185

 
26,318

Unearned rents and interest
68,227

 
47,420

Debt
3,028,827

 
2,485,625

Total liabilities
3,264,168

 
2,679,121

Total equity
$
2,927,325

 
$
2,185,901

Total liabilities and equity
$
6,191,493

 
$
4,865,022





EPR Properties
Reconciliation of Non-GAAP Financial Measures
(Unaudited, dollars in thousands except per share data)
 
 
Three Months Ended December 31,
 
Year Ended Ended December 31,
 
 
2017
 
2016
 
2017
 
2016
FFO: (A)
 
 
 
 
 
 
 
Net income available to common shareholders of EPR Properties
$
54,668

 
$
52,190

 
$
234,218

 
$
201,176

Gain on sale of real estate (excluding land sale)
(13,480
)
 

 
(41,942
)
 
(2,819
)
Real estate depreciation and amortization
36,797

 
28,179

 
132,040

 
106,049

Allocated share of joint venture depreciation
55

 
55

 
218

 
229

Impairment of direct financing lease-residual value portion (1)

 

 
2,897

 

FFO available to common shareholders of EPR Properties
$
78,040

 
$
80,424

 
$
327,431

 
$
304,635

 
 
 
 
 
 
 
 
 
FFO available to common shareholders of EPR Properties
$
78,040

 
$
80,424

 
$
327,431

 
$
304,635

Add: Preferred dividends for Series C preferred shares
1,940

 
1,941

 
7,763

 
7,764

Add: Preferred dividends for Series E preferred shares
1,940

 

 
7,761

 

Diluted FFO available to common shareholders of EPR Properties
$
81,920

 
$
82,365

 
$
342,955

 
$
312,399

 
 
 
 
 
 
 
 
 
FFO per common share:
 
 
 
 
 
 
 
Basic
$
1.06

 
$
1.26

 
$
4.60

 
$
4.81

Diluted
1.06

 
1.25

 
4.58

 
4.77

Shares used for computation (in thousands):
 
 
 
 
 
 
 
Basic
73,774

 
63,635

 
71,191

 
63,381

Diluted
73,832

 
63,716

 
71,254

 
63,474

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding-diluted EPS
73,832

 
63,716

 
71,254

 
63,474

Effect of dilutive Series C preferred shares
2,083

 
2,044

 
2,068

 
2,032

Effect of dilutive Series E preferred shares
1,592

 

 
1,586

 

Adjusted weighted average shares outstanding-diluted
77,507

 
65,760

 
74,908

 
65,506

 
 
 
 
 
 
 
 
Other financial information:
 
 
 
 
 
 
 
Straight-lined rental revenue
$
(7,085
)
 
$
6,062

 
$
4,332

 
$
17,012

Dividends per common share
$
1.02

 
$
0.96

 
$
4.08

 
$
3.84

 
 
(1)
Impairment charges recognized during the year ended December 31, 2017 total $10.2 million and related to our investment in direct financing leases, net, consisting of $2.9 million related to the residual value portion and $7.3 million related to the allowance for lease loss portion.

(A)
NAREIT developed FFO as a relative non-GAAP financial measure of performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP and management provides FFO herein because it believes this information is useful to investors in this regard. FFO is a widely used measure of the operating performance of real estate companies and is provided here as a supplemental measure to GAAP net income available to common shareholders and earnings per share. Pursuant to the definition of FFO by the Board of Governors of NAREIT, the Company calculates FFO as net income available to common shareholders, computed in accordance with GAAP, excluding gains and losses from sales of depreciable operating properties and impairment losses of depreciable real estate, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships, joint ventures and other affiliates. Adjustments for unconsolidated partnerships, joint ventures and other affiliates are calculated to reflect FFO on the same basis. The Company has calculated FFO for all periods presented in accordance with this definition. FFO is a non-GAAP financial measure. FFO does not represent cash flows from operations as defined by GAAP and is not indicative that cash flows are adequate to fund all cash needs and is not to be considered an alternative to net income or any other GAAP measure as a measurement of the results of our operations or our cash flows or liquidity as defined by GAAP. In addition to FFO, the Company presents FFO as adjusted. Management believes it is useful to provide it here as a supplemental measure to GAAP net income available to common shareholders and earnings per share. FFO as adjusted is FFO plus provision for loan losses, costs (gain) associated with loan refinancing or payoff, net, retirement severance expense, preferred share redemption costs, termination fees associated with tenants'



exercises of education properties buy-out options, impairment of direct financing lease (allowance for lease loss portion) and transaction costs, less gain on early extinguishment of debt, gain (loss) on sale of land, gain on insurance recovery and deferred tax benefit (expense). FFO as adjusted is a non-GAAP financial measure. FFO as adjusted does not represent cash flows from operations as defined by GAAP and is not indicative that cash flows are adequate to fund all cash needs and is not to be considered an alternative to net income or any other GAAP measure as a measurement of the results of the Company's operations, cash flows or liquidity as defined by GAAP. It should also be noted that not all REITs calculate FFO or FFO as adjusted the same way so comparisons of each of these non-GAAP measures with other REITs may not be meaningful.

The conversion of the 5.75% Series C cumulative convertible preferred shares and the 9.00% Series E cumulative convertible preferred shares would be dilutive to FFO and FFOAA per share for the three months and year ended December 31, 2017. Therefore, the additional 2.1 million and 1.6 million common shares that would result from the conversion and the corresponding add-back of the preferred dividends declared on those shares are included in the calculation of diluted FFO and diluted FFOAA per share for the three months and year ended December 31, 2017.

The conversion of 5.75% Series C cumulative convertible preferred shares would be dilutive to FFO and FFOAA per share for the three months and year ended December 31, 2016. Therefore, the additional 2.0 million common shares that would result from the conversion and the corresponding add-back of the preferred dividends declared on those shares are included in the calculation of diluted FFO and diluted FFOAA per share for the three months and year ended December 31, 2016.The effect of the conversion of our 9.0% Series E cumulative convertible preferred shares and the additional 1.6 million common shares that would result from the conversion do not result in more dilution to per share results and are therefore not included in the calculation of diluted FFO and FFOAA per share data for the three months and year ended December 31, 2016.

Net Debt to Adjusted EBITDA Ratio

Net Debt to Adjusted EBITDA Ratio is a supplemental measure derived from non-GAAP financial measures the Company uses to evaluate its capital structure and the magnitude of its debt against its operating performance. The Company believes that investors commonly use versions of this ratio in a similar manner. In addition, financial institutions use versions of this ratio in connection with debt agreements to set pricing and covenant limitations. The Company's method of calculating Net Debt to Adjusted EBITDA Ratio may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. Reconciliations of debt and net income available to common shareholders (both reported in accordance with GAAP) to Net Debt, Adjusted EBITDA, and Net Debt to Adjusted EBITDA Ratio (each of which is a non-GAAP financial measure) are included in the following tables (unaudited, in thousands):



 
December 31,
 
2017
 
2016
Net Debt: (B)
 
 
 
Debt
$
3,028,827

 
$
2,485,625

Deferred financing costs, net
32,852

 
29,320

Cash and cash equivalents
(41,917
)
 
(19,335
)
Net Debt
$
3,019,762

 
$
2,495,610

 
 
 
 
 
Three Months Ended December 31,
 
2017
 
2016
Adjusted EBITDA: (C)
 
 
 
Net income available to common shareholders of EPR Properties
$
54,668

 
$
52,190

Costs associated with loan refinancing or payoff
58

 

Interest expense, net
35,271

 
26,834

Transaction costs
135

 
2,988

Depreciation and amortization
37,027

 
28,351

Equity in loss (income) from joint ventures
14

 
(118
)
Gain on sale of real estate
(13,480
)
 
(1,430
)
Income tax expense (benefit)
383

 
(84
)
Preferred dividend requirements
6,438

 
5,951

Preferred share redemption costs
4,457

 

Gain on insurance recovery (1)

 
(847
)
Straight-line rental revenue write-off related to CLA (2)
9,010

 

Bad debt expense related to CLA (3)
6,003

 

Adjusted EBITDA (for the quarter)
$
139,984

 
$
113,835

 
 
 
 
Adjusted EBITDA (4)
$
559,936

 
$
455,340

 
 
 
 
Net Debt/Adjusted EBITDA Ratio
5.39

 
5.48

 
 
 
 
(1) Included in other income in the accompanying consolidated statements of income. Other income includes the following:
 
Three Months Ended December 31,
 
2017
 
2016
Income from settlement of foreign currency swap contracts
$
577

 
$
705

Gain on insurance recovery

 
847

Fee income

 
1,588

Miscellaneous income

 
87

Other income
$
577

 
$
3,227

 
 
 
 
(2) Included in rental revenue in the accompanying consolidated statements of income. Rental revenue includes the following:
 
Three Months Ended December 31,
 
2017
 
2016
Minimum rent
$
123,208

 
$
99,354

Percentage rent
3,108

 
1,966

Straight-line rental revenue
1,925

 
6,062

Straight-line rental revenue write-off related to CLA
(9,010
)
 

Other rental revenue
84

 
92

Rental revenue
$
119,315

 
$
107,474

 
 
 
 
(3) Included in property operating expense in the accompanying consolidated statements of income. Property operating expense includes the following:
 
Three Months Ended December 31,
 
2017
 
2016
Expenses related to the operations of our retail centers and other specialty properties
$
6,649

 
$
5,778

Bad debt expense
239

 
137

Bad debt expense related to CLA
6,003

 

Property operating expense
$
12,891

 
$
5,915

 
 
 
 
(4) Adjusted EBITDA for the quarter is multiplied by four to calculate an annual amount.




(B)
Net Debt represents debt (reported in accordance with GAAP) adjusted to exclude deferred financing costs, net and reduced for cash and cash equivalents. By excluding deferred financing costs, net and reducing debt for cash and cash equivalents on hand, the result provides an estimate of the contractual amount of borrowed capital to be repaid, net of cash available to repay it. The Company believes this calculation constitutes a beneficial supplemental non-GAAP financial disclosure to investors in understanding our financial condition. The Company's method of calculating Net Debt may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

(C)
Management uses Adjusted EBITDA in its analysis of the performance of the business and operations of the Company. Management believes Adjusted EBITDA is useful to investors because it excludes various items that management believes are not indicative of operating performance, and that it is an informative measure to use in computing various financial ratios to evaluate the Company. The Company defines Adjusted EBITDA as net income available to common shareholders excluding costs associated with loan refinancing or payoff, interest expense (net), depreciation and amortization, equity in (income) loss from joint ventures, gain (loss) on the sale of real estate, gain on insurance recovery, income tax expense (benefit), preferred dividend requirements, preferred share redemption costs, the effect of non-cash impairment charges, retirement severance expense, the provision for loan losses and transaction costs, and which is then multiplied by four to get an annual amount. For the three months ended December 31, 2017, Adjusted EBITDA was further adjusted to reflect zero Adjusted EBITDA related to one of our early education tenants, CLA.

The Company's method of calculating Adjusted EBITDA may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. Adjusted EBITDA is not a measure of performance under GAAP, does not represent cash generated from operations as defined by GAAP and is not indicative of cash available to fund all cash needs, including distributions. This measure should not be considered as an alternative to net income for the purpose of evaluating the Company's performance or to cash flows as a measure of liquidity.

About EPR Properties

EPR Properties is a specialty real estate investment trust (REIT) that invests in properties in select market segments which require unique industry knowledge, while offering the potential for stable and attractive returns. Our total investments exceed $6.7 billion and our primary investment segments are Entertainment, Recreation and Education. We adhere to rigorous underwriting and investing criteria centered on key industry and property level cash flow standards. We believe our focused niche approach provides a competitive advantage, and the potential for higher growth and better yields.




CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

With the exception of historical information, certain statements contained or incorporated by reference herein may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), such as those pertaining to our acquisition or disposition of properties, our capital resources, future expenditures for development projects, expected dividend payments, expectations regarding CLA, and our results of operations and financial condition. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of actual events. There is no assurance the events or circumstances reflected in the forward-looking statements will occur. You can identify forward-looking statements by use of words such as “will be,” “intend,” “continue,” “believe,” “may,” “expect,” “hope,” “anticipate,” “goal,” “forecast,” “pipeline,” “estimates,” “offers,” “plans,” “would” or other similar expressions or other comparable terms or discussions of strategy, plans or intentions contained or incorporated by reference herein. While references to commitments for investment spending are based on present commitments and agreements of the Company, we cannot provide assurance that these transactions will be completed on satisfactory terms. In addition, references to our budgeted amounts and guidance are forward-looking statements.  Forward-looking statements necessarily are dependent on assumptions, data or methods that may be incorrect or imprecise. These forward-looking statements represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond our ability to control or predict. For further discussion of these factors see “Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K and, to the extent applicable, our Quarterly Reports on Form 10-Q.
 
For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date hereof or the date of any document incorporated by reference herein. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except as required by law, we do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date hereof.


EPR Properties
Brian Moriarty, 888-EPR-REIT
www.eprkc.com

(Back To Top)

Section 3: EX-99.2 (SUPPLEMENTAL OPERATING AND FINANCIAL DATA)

Exhibit


Exhibit 99.2

392385426_eprsupplementalcoverva02.jpg





392385426_image0a12.jpg                
Supplemental Operating and Financial Data
Fourth Quarter and Year Ended December 31, 2017






TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
SECTION
 
 
 
 
 
 
 
PAGE
 
 
 
 
 
 
 
 
 
Company Profile
Investor Information
Selected Financial Information
Selected Balance Sheet Information
Selected Operating Data
Funds From Operations and Funds From Operations as Adjusted
Adjusted Funds From Operations
Capital Structure
Summary of Ratios
Summary of Mortgage Notes Receivable
Capital Spending and Disposition Summaries
Property Under Development - Investment Spending Estimates
Financial Information and Total Investment by Segment
Lease Expirations
Top Ten Customers by Revenue from Continuing Operations
Net Asset Value (NAV) Components
Annualized GAAP Net Operating Income
Guidance
Definitions-Non-GAAP Financial Measures
Appendix-Reconciliation of Certain Non-GAAP Financial Measures


392385426_image5a03.jpg
 
 
Q4 2017 Supplemental
Page 2
 
 
 



CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

With the exception of historical information, certain statements contained or incorporated by reference herein may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), such as those pertaining to our acquisition or disposition of properties, our capital resources, future expenditures for development projects, and our results of operations and financial condition. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of actual events. There is no assurance the events or circumstances reflected in the forward-looking statements will occur. You can identify forward-looking statements by use of words such as “will be,” “intend,” “continue,” “believe,” “may,” “expect,” “hope,” “anticipate,” “goal,” “forecast,” “pipeline,” “estimates,” “offers,” “plans,” “would,” or other similar expressions or other comparable terms or discussions of strategy, plans or intentions contained or incorporated by reference herein. In addition, references to our budgeted amounts and guidance are forward-looking statements. Forward-looking statements necessarily are dependent on assumptions, data or methods that may be incorrect or imprecise. These forward-looking statements represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond our ability to control or predict. For further discussion of these factors see “Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K and, to the extent applicable, our Quarterly Reports on Form 10-Q.

For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date hereof or the date of any document incorporated by reference herein. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except as required by law, we do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date hereof.

NON-GAAP INFORMATION

This document contains certain non-GAAP measures. These non-GAAP measures, as calculated by the Company, are not necessarily comparable to similarly titled measures reported by other companies. Additionally, these non-GAAP measures are not measurements of financial performance or liquidity under GAAP and should not be considered alternatives to the Company's other financial information determined under GAAP. See pages 31 through 33 for definitions of certain non-GAAP financial measures used in this document and the reconciliations of certain non-GAAP measures in the Appendix on pages 34 through 41.



392385426_image5a03.jpg
 
 
Q4 2017 Supplemental
Page 3
 
 
 



COMPANY PROFILE

    
 
THE COMPANY
 
EPR Properties (“EPR” or the “Company”) is a self-administered and self-managed real estate investment trust. EPR was formed in August 1997 as a Maryland real estate investment trust (“REIT”), and an initial public offering was completed on November 18, 1997.

 
Since that time, the Company has grown into a leading specialty real estate investment trust with an investment portfolio that includes Entertainment, Education, Recreation and Other specialty investments.

 
392385426_eprsegments06.jpg
 
 
 
 
 
 
        
COMPANY STRATEGY
Our vision is to become the leading specialty REIT by focusing our unique knowledge and resources on select underserved real estate segments which provide the potential for outsized returns.
EPR’s primary business objective is to enhance shareholder value by achieving predictable growth in Funds from Operations (“FFO”) and dividends per share. Central to our growth is remaining focused on acquiring or developing properties in our primary investment segments: Entertainment, Education and Recreation. We may also pursue opportunities to provide mortgage financing for these investment segments in certain situations where this structure is more advantageous than owning the underlying real estate.
Our segment focus is consistent with our strategic organizational design which is structured around building centers of knowledge and strong operating competencies in each of our primary segments. Retention and building of this knowledge depth creates a competitive advantage allowing us to more quickly identify key market trends.
To this end we will deliberately apply information and our ingenuity to identify properties which represent potential logical extensions within each of our segments, or potential future investment segments. As part of our strategic planning and portfolio management process we assess new opportunities against the following five key underwriting principles:
INFLECTION OPPORTUNITY - Renewal or restructuring in an industry’s properties
ENDURING VALUE - Real estate devoted to and improving long-lived activities
EXCELLENT EXECUTION - Market-dominant performance that creates value beyond tenant credit
ATTRACTIVE ECONOMICS - Accretive initial returns along with growth in yield
ADVANTAGEOUS POSITION - Sustainable competitive advantages



392385426_image5a03.jpg
 
 
Q4 2017 Supplemental
Page 4
 
 
 



INVESTOR INFORMATION
 
 
 
SENIOR MANAGEMENT
 
 
 
Greg Silvers
 
Mark Peterson
President and Chief Executive Officer
 
Executive Vice President and Chief Financial Officer
 
 
 
Jerry Earnest
 
Craig Evans
Senior Vice President and Chief Investment Officer
 
Senior Vice President, General Counsel and Secretary
 
 
 
Tonya Mater
 
Mike Hirons
Vice President and Chief Accounting Officer
 
Senior Vice President - Strategy and Asset Management
 
 
 
COMPANY INFORMATION
 
 
 
CORPORATE HEADQUARTERS
 
TRADING SYMBOLS
909 Walnut Street, Suite 200
 
Common Stock:
Kansas City, MO 64106
 
EPR
888-EPR-REIT
 
Preferred Stock:
www.eprkc.com
 
EPR-PrC
 
 
EPR-PrE
STOCK EXCHANGE LISTING
 
EPR-PrG
New York Stock Exchange
 
 
EQUITY RESEARCH COVERAGE
 
 
 
Bank of America Merrill Lynch
Jeffrey Spector/Joshua Dennerlein
646-855-1363
Citi Global Markets
Michael Bilerman/Nick Joseph
212-816-4471
FBR & Co.
David Corak
703-312-1610
Janney Montgomery Scott
Rob Stevenson
646-840-3217
J.P. Morgan
Anthony Paolone
212-622-6682
Kansas City Capital Associates
Jonathan Braatz
816-932-8019
Keybanc Capital Markets
Jordan Sadler/Craig Mailman
917-368-2280
Ladenburg Thalmann
John Massocca
212-409-2056
RBC Capital Markets
Michael Carroll/Wes Golladay
440-715-2649
Stifel
Simon Yarmak
443-224-1345
SunTrust Robinson Humphrey
Ki Bin Kim
212-303-4124

EPR Properties is followed by the analysts identified above.  Please note that any opinions, estimates, forecasts or recommendations regarding EPR Properties’ performance made by these analysts are theirs alone and do not represent opinions, estimates, forecasts or recommendations of EPR Properties or its management.  EPR Properties does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions or recommendations.

392385426_image5a03.jpg
 
 
Q4 2017 Supplemental
Page 5
 
 
 



SELECTED FINANCIAL INFORMATION
(UNAUDITED, DOLLARS AND SHARES IN THOUSANDS)

 
 
 
 
 
 
 
 
 
THREE MONTHS ENDED DECEMBER 31,
 
YEAR ENDED DECEMBER 31,
Operating Information:
2017
 
2016
 
2017
 
2016
Revenue
$
147,700

 
$
130,831

 
$
575,991

 
$
493,242

Net income available to common shareholders of EPR Properties
54,668

 
52,190

 
234,218

 
201,176

Adjusted EBITDA (1)
139,984

 
113,835

 
507,722

 
428,408

Interest expense, net
35,271

 
26,834

 
133,124

 
97,144

Recurring principal payments
197

 
2,516

 
3,241

 
9,963

Capitalized interest
2,046

 
2,715

 
9,879

 
10,697

Straight-lined rental revenue
(7,085
)
 
6,062

 
4,332

 
17,012

Dividends declared on preferred shares
6,438

 
5,951

 
24,293

 
23,806

Dividends declared on common shares
75,297

 
61,095

 
291,179

 
244,043

General and administrative expense
9,596

 
10,234

 
43,383

 
37,543

 
 
 
 
 
 
 
 
 
DECEMBER 31,
 
 
 
 
Balance Sheet Information:
2017
 
2016
 
 
 
 
Total assets
$
6,191,493

 
$
4,865,022

 
 
 
 
Accumulated depreciation
741,334

 
635,535

 
 
 
 
Total assets before accumulated depreciation (gross assets)
6,932,827

 
5,500,557

 
 
 
 
Cash and cash equivalents
41,917

 
19,335

 
 
 
 
Debt
3,028,827

 
2,485,625

 
 
 
 
Deferred financing costs, net
32,852

 
29,320

 
 
 
 
Net debt (1)
3,019,762

 
2,495,610

 
 
 
 
Equity
2,927,325

 
2,185,901

 
 
 
 
Common shares outstanding
74,125

 
63,647

 
 
 
 
Total market capitalization (using EOP closing price)
8,243,194

 
7,409,787

 
 
 
 
Net debt/total market capitalization
37
%
 
34
%
 
 
 
 
Net debt/gross assets
44
%
 
45
%
 
 
 
 
Net debt/Adjusted EBITDA (2)
5.39

 
5.48

 
 
 
 
Adjusted net debt/Annualized adjusted EBITDA (1)(3)(4)
5.37

 
5.37

 
 
 
 
 
 
 
 
 
 
 
 
(1) See pages 31 through 33 for definitions.
 
 
 
 
 
 
 
(2) Adjusted EBITDA is for the quarter multiplied times four. See pages 31 through 33 for definitions. See calculation on page 40.
 
(3) Adjusted net debt is net debt less 40% times property under development. See pages 31 through 33 for definitions.
 
(4) Annualized adjusted EBITDA is adjusted EBITDA for the quarter further adjusted for in-service projects, percentage rent and participating interest and other non-recurring items which is then multiplied times four. These calculations can be found on page 40 under the reconciliation of Adjusted EBITDA and Annualized Adjusted EBITDA. See pages 31 through 33 for definitions.
 

392385426_image5a03.jpg
 
 
Q4 2017 Supplemental
Page 6
 
 
 



SELECTED BALANCE SHEET INFORMATION
(UNAUDITED, DOLLARS IN THOUSANDS)
 
 
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
4TH QUARTER 2017
 
3RD QUARTER 2017
 
2ND QUARTER 2017
 
1ST QUARTER 2017
 
4TH QUARTER 2016
 
3RD QUARTER 2016
Rental properties:
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment
 
$
2,762,801

 
$
2,696,125

 
$
2,549,940

 
$
2,545,532

 
$
2,511,432

 
$
2,483,321

Education
 
1,005,340

 
1,033,149

 
938,673

 
877,716

 
848,883

 
811,359

Recreation
 
1,420,690

 
1,361,445

 
1,320,216

 
754,521

 
715,323

 
650,350

Other
 
156,734

 
156,659

 
156,420

 
156,390

 
155,659

 
155,071

Less: accumulated depreciation
 
(741,334
)
 
(711,384
)
 
(676,364
)
 
(661,029
)
 
(635,535
)
 
(609,103
)
Land held for development
 
33,692

 
33,674

 
33,672

 
22,530

 
22,530

 
22,530

Property under development
 
257,629

 
284,211

 
271,692

 
331,934

 
297,110

 
263,026

Mortgage notes receivable: (1)
 


 


 
 
 
 
 
 
 
 
Entertainment
 
31,105

 
39,679

 
36,418

 
33,735

 
37,669

 
36,032

Education
 
337,499

 
329,991

 
303,271

 
288,409

 
243,315

 
70,609

Recreation
 
602,145

 
602,701

 
601,910

 
349,653

 
332,994

 
331,726

    Other
 

 

 

 

 

 
2,511

Investment in direct financing leases, net
 
57,903

 
57,698

 
93,307

 
103,095

 
102,698

 
189,152

Investment in joint ventures
 
5,602

 
5,616

 
5,581

 
5,522

 
5,972

 
6,159

Cash and cash equivalents
 
41,917

 
11,412

 
70,872

 
14,446

 
19,335

 
7,311

Restricted cash
 
17,069

 
24,323

 
24,255

 
28,523

 
9,744

 
20,463

Accounts receivable, net
 
93,693

 
99,213

 
106,480

 
96,267

 
98,939

 
81,217

Other assets
 
109,008

 
108,498

 
102,543

 
99,538

 
98,954

 
99,236

Total assets
 
$
6,191,493

 
$
6,133,010

 
$
5,938,886

 
$
5,046,782

 
$
4,865,022

 
$
4,620,970

 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
136,929

 
$
140,582

 
$
142,526

 
$
101,438

 
$
119,758

 
$
101,019

Common dividends payable
 
25,203

 
25,046

 
25,044

 
22,022

 
20,367

 
20,361

Preferred dividends payable
 
4,982

 
5,951

 
5,952

 
5,952

 
5,951

 
5,951

Unearned rents and interest
 
68,227

 
85,198

 
71,098

 
61,579

 
47,420

 
55,636

Line of credit
 
210,000

 
170,000

 

 
150,000

 

 
200,000

Deferred financing costs, net
 
(32,852
)
 
(33,951
)
 
(34,086
)
 
(28,231
)
 
(29,320
)
 
(18,885
)
Other debt
 
2,851,679

 
2,851,876

 
2,827,006

 
2,494,613

 
2,514,945

 
2,067,461

Total liabilities
 
3,264,168

 
3,244,702

 
3,037,540

 
2,807,373

 
2,679,121

 
2,431,543

Equity:
 

 
 
 
 
 
 
 
 
 
 
Common stock and additional paid-in- capital
 
3,479,755

 
3,421,631

 
3,417,750

 
2,755,783

 
2,677,709

 
2,669,330

Preferred stock at par value
 
148

 
138

 
139

 
139

 
139

 
139

Treasury stock
 
(121,591
)
 
(121,539
)
 
(121,533
)
 
(120,955
)
 
(113,172
)
 
(107,136
)
Accumulated other comprehensive income
 
12,483

 
10,919

 
9,698

 
8,606

 
7,734

 
4,698

Distributions in excess of net income
 
(443,470
)
 
(422,841
)
 
(404,708
)
 
(404,164
)
 
(386,509
)
 
(377,604
)
Total equity
 
2,927,325

 
2,888,308

 
2,901,346

 
2,239,409

 
2,185,901

 
2,189,427

Total liabilities and equity
 
$
6,191,493

 
$
6,133,010

 
$
5,938,886

 
$
5,046,782

 
$
4,865,022

 
$
4,620,970

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Includes related accrued interest receivable.

392385426_image5a03.jpg
 
 
Q4 2017 Supplemental
Page 7
 
 
 



SELECTED OPERATING DATA
(UNAUDITED, DOLLARS IN THOUSANDS)
 
 
 
 
 
 
 
 
 
 
 
 
 
4TH QUARTER 2017
 
3RD QUARTER 2017
 
2ND QUARTER 2017
 
1ST QUARTER 2017
 
4TH QUARTER 2016
 
3RD QUARTER 2016
Rental revenue and tenant reimbursements:

 
 
 
 
 
 
 
 
 
 
Entertainment
$
74,383

 
$
70,621

 
$
69,403

 
$
68,840

 
$
69,147

 
$
67,950

Education
12,862

 
21,479

 
22,333

 
22,357

 
22,971

 
19,905

Recreation
33,909

 
32,171

 
29,384

 
17,299

 
17,084

 
15,958

Other
2,292

 
2,290

 
2,290

 
2,290

 
2,290

 
2,290

Mortgage and other financing income:


 
 
 
 
 
 
 
 
 
 
Entertainment
981

 
1,151

 
1,096

 
1,179

 
1,260

 
1,294

Education (1)
9,106

 
9,023

 
8,868

 
8,549

 
7,311

 
7,319

Recreation
13,590

 
14,140

 
13,104

 
7,906

 
7,540

 
8,384

Other

 

 

 

 
1

 
34

Other income
577

 
522

 
1,304

 
692

 
3,227

 
2,476

Total revenue
$
147,700

 
$
151,397

 
$
147,782

 
$
129,112

 
$
130,831

 
$
125,610

 


 
 
 
 
 
 
 
 
 
 
Property operating expense
12,891

 
6,340

 
6,072

 
6,350

 
5,915

 
5,626

Other expense
242

 

 

 

 

 

General and administrative expense
9,596

 
12,070

 
10,660

 
11,057

 
10,234

 
9,091

Costs associated with loan refinancing or payoff
58

 
1,477

 
9

 
5

 

 
14

Gain on early extinguishment of debt

 

 
(977
)
 

 

 

Interest expense, net
35,271

 
34,194

 
32,967

 
30,692

 
26,834

 
24,265

Transaction costs
135

 
113

 
218

 
57

 
2,988

 
2,947

Impairment charges

 

 
10,195

 

 

 

Depreciation and amortization
37,027

 
34,694

 
33,148

 
28,077

 
28,351

 
27,601

Income before equity in income in joint ventures and other items
52,480

 
62,509

 
55,490

 
52,874

 
56,509

 
56,066

Equity in (loss) income from joint ventures
(14
)
 
35

 
59

 
(8
)
 
118

 
203

Gain on sale of real estate
13,480

 
997

 
25,461

 
2,004

 
1,430

 
1,615

Income tax (expense) benefit
(383
)
 
(587
)
 
(475
)
 
(954
)
 
84

 
(358
)
Net income
65,563

 
62,954

 
80,535

 
53,916

 
58,141

 
57,526

Preferred dividend requirements
(6,438
)
 
(5,951
)
 
(5,952
)
 
(5,952
)
 
(5,951
)
 
(5,951
)
Preferred share redemption costs
(4,457
)
 

 

 

 

 

Net income available to common shareholders of EPR Properties
$
54,668

 
$
57,003

 
$
74,583

 
$
47,964

 
$
52,190

 
$
51,575

 
 
 
 
 
 
 
 
 
 
 
 
(1) Represents income from owned assets under direct financing leases and 19 mortgage notes receivable.

392385426_image5a03.jpg
 
 
Q4 2017 Supplemental
Page 8
 
 
 



FUNDS FROM OPERATIONS AND FUNDS FROM OPERATIONS AS ADJUSTED
(UNAUDITED, DOLLARS IN THOUSANDS EXCEPT PER SHARE INFORMATION)
FUNDS FROM OPERATIONS ("FFO") (1):
 
4TH QUARTER 2017
 
3RD QUARTER 2017
 
2ND QUARTER 2017
 
1ST QUARTER 2017
 
4TH QUARTER 2016
 
3RD QUARTER 2016
Net income available to common shareholders of EPR Properties
 
$
54,668

 
$
57,003

 
$
74,583

 
$
47,964

 
$
52,190

 
$
51,575

Gain on sale of real estate (excluding land sale)
 
(13,480
)
 
(997
)
 
(25,461
)
 
(2,004
)
 

 
(549
)
Real estate depreciation and amortization
 
36,797

 
34,457

 
32,906

 
27,880

 
28,179

 
27,147

Allocated share of joint venture depreciation
 
55

 
55

 
54

 
54

 
55

 
56

Impairment of direct financing lease - residual value portion (2)
 

 

 
2,897

 

 

 

FFO available to common shareholders of EPR Properties
 
$
78,040

 
$
90,518

 
$
84,979

 
$
73,894

 
$
80,424

 
$
78,229

 
 
 
 
 
 
 
 
 
 
 
 
 
FFO available to common shareholders of EPR Properties
 
$
78,040

 
$
90,518

 
$
84,979

 
$
73,894

 
$
80,424

 
$
78,229

Add: Preferred dividends for Series C preferred shares
 
1,940

 
1,941

 
1,941

 
1,941

 
1,941

 
1,941

Add: Preferred dividends for Series E preferred shares
 
1,940

 

 

 

 

 

Diluted FFO available to common shareholders of EPR Properties
 
$
81,920

 
$
92,459

 
$
86,920

 
$
75,835

 
$
82,365

 
$
80,170

 
 
 
 
 
 
 
 
 
 
 
 
 
FUNDS FROM OPERATIONS AS ADJUSTED (1):
 


 
 
 
 
 
 
 
 
 
 
FFO available to common shareholders of EPR Properties
 
$
78,040

 
$
90,518

 
$
84,979

 
$
73,894

 
$
80,424

 
$
78,229

Costs associated with loan refinancing or payoff
 
58

 
1,477

 
9

 
5

 

 
14

Gain on insurance recovery (included in other income)
 

 

 
(606
)
 

 
(847
)
 
(1,825
)
Termination fee included in gain on sale
 
13,275

 
954

 
3,900

 
1,920

 

 
549

Preferred share redemption costs
 
4,457

 

 

 

 

 

Gain on early extinguishment of debt
 

 

 
(977
)
 

 

 

Transaction costs
 
135

 
113

 
218

 
57

 
2,988

 
2,947

Gain on sale of land
 

 

 

 

 
(1,430
)
 
(1,066
)
Deferred income tax expense (benefit)
 
(99
)
 
227

 
50

 
634

 
(401
)
 
(44
)
Impairment of direct financing lease - allowance for lease loss portion (2)
 

 

 
7,298

 

 

 

FFO as adjusted available to common shareholders of EPR Properties
 
$
95,866

 
$
93,289

 
$
94,871

 
$
76,510

 
$
80,734

 
$
78,804

 
 
 
 
 
 
 
 
 
 
 
 
 
FFO as adjusted available to common shareholders of EPR Properties
 
$
95,866

 
$
93,289

 
$
94,871

 
$
76,510

 
$
80,734

 
$
78,804

Add: Preferred dividends for Series C preferred shares