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Section 1: 8-K (8-K)

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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): October 29, 2019
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 offices) (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:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading symbol(s)
 
Name of each exchange on which registered
Common shares, par value $0.01 per share
 
EPR
 
New York Stock Exchange
 
 
 
 
 
5.75% Series C cumulative convertible preferred shares, par value $0.01 per share
 
EPR PrC
 
New York Stock Exchange
 
 
 
 
 
9.00% Series E cumulative convertible preferred shares, par value $0.01 per share
 
EPR PrE
 
New York Stock Exchange
 
 
 
 
 
5.75% Series G cumulative redeemable preferred shares, par value $0.01 per share
 
EPR PrG
 
New York Stock Exchange

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

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 October 29, 2019, the Company announced its results of operations and financial condition for the third quarter and nine months ended September 30, 2019. 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 October 29, 2019, the Company made available on its website an investor slide presentation and supplemental operating and financial data for the third quarter and nine months ended September 30, 2019, the text of which are set forth in Exhibits 99.2 and 99.3 hereto, respectively, and are 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, 99.2 and 99.3, 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 October 29, 2019 issued by EPR Properties announcing its results of operations and financial condition for the third quarter and nine months ended September 30, 2019.
 
 
  
Investor slide presentation for the third quarter and nine months ended September 30, 2019, made available by EPR Properties on October 29, 2019.
 
 
 
 
Supplemental Operating and Financial Data for the third quarter and nine months ended September 30, 2019, made available by EPR Properties on October 29, 2019.
 
 
 
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document)







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: October 29, 2019
 




















































(Back To Top)

Section 2: EX-99.1 (PRESS RELEASE)

Exhibit
Exhibit 99.1













EPR PROPERTIES REPORTS THIRD QUARTER 2019 RESULTS
Updates 2019 Guidance

Kansas City, MO, October 29, 2019 -- EPR Properties (NYSE:EPR) today announced operating results for the third quarter and nine months ended September 30, 2019 (dollars in thousands, except per share data):     
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Total revenue (1)
$
184,862

 
$
176,409

 
$
525,102

 
$
534,244

Net income available to common shareholders
27,969

 
85,797

 
147,844

 
194,844

Net income available to common shareholders per diluted common share
0.36

 
1.15

 
1.94

 
2.62

Funds From Operations as adjusted (FFOAA) (a non-GAAP financial measure)
115,309

 
119,567

 
323,519

 
355,353

FFOAA per diluted common share (a non-GAAP financial measure)
1.46

 
1.58

 
4.19

 
4.70


(1) Total revenue for the three and nine months ended September 30, 2018 included $20.0 million and $67.3 million, respectively, in prepayment fees related primarily to the pay-off of a mortgage note that was secured by ski properties.

Third Quarter Company Headlines

Strong quarter anchored by continued demand for experiential assets
Year-to-date investment spending of $684.7 million
Record low bond yield and spread on new 10-year unsecured notes
Well positioned balance sheet with ample capacity
Increasing guidance for FFOAA per diluted common share and investment spending

CEO Comments

“Our third quarter results built on the strong earnings and investment momentum we have established to date,” commented Greg Silvers, President and CEO. “Our expertise in experiential real estate aligns well with an ever growing demand for these assets as consumers continue to demonstrate their desire to spend on experiences. Our confidence in the Company’s outlook is further supported by our recent bond issuance, which was at a record low rate for the Company. With ongoing solid performance in our tenant categories, enhanced investment capacity, a favorable cost of capital, and an attractive growth pipeline, we are increasing both our FFOAA per share and investment spending guidance for the year.”

Portfolio Update

The Company's investment portfolio (excluding property under development) consisted of the following at September 30, 2019:

The Entertainment segment included investments in 176 megaplex theatre properties, seven entertainment retail centers (which include seven additional megaplex theatre properties) and 12 other entertainment properties. The Company’s portfolio of owned entertainment properties consisted of 14.7 million square feet and was 99% leased, including megaplex theatres that were 100% leased.
The Recreation segment included investments in 12 ski areas, 20 attractions, 36 golf entertainment complexes and 15 other recreation properties. The Company’s portfolio of owned recreation properties was 100% leased.
The Education segment included investments in 49 public charter schools, 72 early education centers and 16 private schools. The Company’s portfolio of owned education properties consisted of 4.1 million square feet and was 98% leased.
The Other segment consisted primarily of the land under ground lease and land held for development related to the Resorts World Catskills project in Sullivan County, New York.




The Company's combined owned portfolio consisted of 23.1 million square feet and was 99% leased. As of September 30, 2019, the Company also had a total of $31.8 million invested in property under development.

Investment Update

The Company's investment spending for the three months ended September 30, 2019 totaled $118.1 million (bringing the year-to-date investment spending to $684.7 million), and included investments in each of its operating segments:

Entertainment investment spending during the three months ended September 30, 2019 totaled $10.9 million, including spending on build-to-suit development and redevelopment of megaplex theatres, entertainment retail centers and other entertainment properties.

Recreation investment spending during the three months ended September 30, 2019 totaled $89.6 million, including spending on two mortgage notes secured by two recreation properties totaling $68.7 million, and build-to-suit development of golf entertainment complexes and attractions.

Education investment spending during the three months ended September 30, 2019 totaled $17.6 million, including spending on the acquisition of one early education center totaling $3.3 million, and build-to-suit development and redevelopment of public charter schools, early education centers and private schools.

Capital Recycling

During the third quarter of 2019, pursuant to tenant purchase options, the Company completed the sale of three public charter schools for net proceeds totaling $59.4 million. In addition, the Company completed the sale of one other public charter school, one early education center and one land parcel for net proceeds totaling $27.4 million. The Company recognized a combined gain on these sales of $14.3 million.

As previously announced, on July 1, 2019, the Company received $189.8 million in proceeds representing payment in full on its mortgage notes receivable associated with the Schlitterbahn waterparks. Additionally, during the quarter, the Company received $17.8 million in proceeds representing payment in full on a mortgage note receivable that was secured by one public charter school property. In connection with this prepayment, the Company recognized a prepayment fee of $1.8 million that is included in mortgage and other financing income.

Disposition proceeds and mortgage note pay-offs (excluding principal amortization and including prepayment fees) totaled $390.2 million for the nine months ended September 30, 2019.
Balance Sheet Update
The Company had a net debt to adjusted EBITDA ratio (a non-GAAP financial measure) of 5.2x at September 30, 2019. The Company had $115.8 million of unrestricted cash on hand and no outstanding balance under its $1.0 billion unsecured revolving credit facility at September 30, 2019.
During the quarter, the Company issued 686 thousand common shares under its Dividend Reinvestment and Direct Share Purchase Plan (DSPP) for net proceeds of $52.3 million and subsequent to quarter end, in October, issued another 219 thousand common shares for net proceeds of $16.7 million. The year to date issuances under this plan through October total 4.0 million common shares for net proceeds of $305.6 million.
On August 15, 2019, the Company issued $500.0 million in senior unsecured notes due August 15, 2029. The notes bear interest at an annual rate of 3.75%. The Company used the net proceeds from the note offering to complete the tender offer and subsequent redemption of all of its remaining $350.0 million aggregate principal amount of 5.75% senior notes due August 15, 2022 not repurchased as part of the tender offer.

Additionally, the Company prepaid in full a mortgage note payable totaling $18.6 million with a variable interest rate, which was secured by one theatre property.




Dividend Information

The Company declared regular monthly cash dividends during the third quarter of 2019 totaling $1.125 per common share. This dividend represents an annualized dividend of $4.50 per common share, an increase of 4.2% over the prior year, and is the Company's ninth consecutive year with a significant annual dividend increase.

The Company also declared third 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 and $0.359375 per share on its 5.75% Series G cumulative redeemable preferred shares.

2019 Guidance
(Dollars in millions, except per share data):
 
Measure
 
Current
 
Prior
Net income available to common shareholders per diluted common share
 
$
2.58

to
$
2.66

 
$
2.99

to
$
3.15

FFOAA per diluted common share
 
$
5.44

to
$
5.52

 
$
5.32

to
$
5.48

Investment spending
 
$
775.0

to
$
825.0

 
$
700.0

to
$
850.0

Disposition proceeds
 
$
400.0

to
$
475.0

 
$
300.0

to
$
400.0


Current guidance for 2019 FFOAA per diluted common share is based on a FFO per diluted common share range of $4.41 to $4.49 adjusted for estimated costs associated with loan refinancing or payoff, transaction costs, severance expense, termination fees related to education properties, deferred income tax benefit and the impact of Series C and Series E dilution. FFO per diluted common share for 2019 is based on a net income available to common shareholders per diluted common share range of $2.58 to $2.66 less estimated gain on sale of real estate of $0.40 and the impact of Series C and Series E dilution of $0.02, plus estimated real estate depreciation of $2.22 and allocated share of joint venture depreciation of $0.03 (in accordance with the NAREIT definition of FFO).

Additional earnings guidance detail can be found in the Company's supplemental information package available in the Investor Center on the Company's website located at http://investors.eprkc.com/earnings-supplementals.

Conference Call Information

Management will host a conference call to discuss the Company's financial results on October 30, 2019 at 8:30 a.m. Eastern Daylight Time. The conference will be webcast and can be accessed via the Earnings Call page in the Investor Center on the Company's website located at http://investors.eprkc.com/earnings-call. To access the call, audio only, dial (866) 587-2930 and when prompted, provide the passcode 8887479.

You may watch a replay of the webcast by visiting the Earnings Call page at http://investors.eprkc.com/earnings-call.

Quarterly Supplemental

The Company's supplemental information package for the third quarter and nine months ended September 30, 2019 is available in the Investor Center on the Company's website located at http://investors.eprkc.com/earnings-supplementals.




EPR Properties
Consolidated Statements of Income
(Unaudited, dollars in thousands except per share data)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Rental revenue
$
161,262

 
$
140,905

 
$
469,315

 
$
410,848

Other income
11,464

 
365

 
17,534

 
1,641

Mortgage and other financing income
12,136

 
35,139

 
38,253

 
121,755

Total revenue
184,862

 
176,409

 
525,102

 
534,244

Property operating expense
14,663

 
6,968

 
45,227

 
21,866

Other expense
11,403

 
118

 
19,494

 
118

General and administrative expense
11,600

 
11,424

 
35,540

 
36,724

Severance expense
1,521

 

 
1,941

 

Litigation settlement expense

 

 

 
2,090

Costs associated with loan refinancing or payoff
38,407

 

 
38,407

 
31,958

Interest expense, net
36,640

 
33,576

 
106,744

 
101,992

Transaction costs
5,959

 
1,101

 
18,005

 
2,115

Impairment charges

 

 

 
16,548

Depreciation and amortization
45,134

 
38,623

 
127,232

 
113,889

Income before equity in income (loss) from joint ventures and other items
19,535

 
84,599

 
132,512

 
206,944

Equity in (loss) income from joint ventures
(435
)
 
20

 
524

 
(17
)
Gain on sale of real estate
14,303

 
2,215

 
30,405

 
2,688

Gain on sale of investment in direct financing leases

 
5,514

 

 
5,514

Income before income taxes
33,403

 
92,348

 
163,441

 
215,129

Income tax benefit (expense)
600

 
(515
)
 
2,505

 
(2,177
)
Net income
34,003

 
91,833

 
165,946

 
212,952

Preferred dividend requirements
(6,034
)
 
(6,036
)
 
(18,102
)
 
(18,108
)
Net income available to common shareholders of EPR Properties
$
27,969

 
$
85,797

 
$
147,844

 
$
194,844

Net income available to common shareholders of EPR Properties per share:
 
 
 
 
 
 
 
Basic
$
0.36

 
$
1.15

 
$
1.94

 
$
2.62

Diluted
$
0.36

 
$
1.15

 
$
1.94

 
$
2.62

Shares used for computation (in thousands):
 
 
 
 
 
 
 
Basic
77,632

 
74,345

 
76,169

 
74,274

Diluted
77,664

 
74,404

 
76,207

 
74,316










EPR Properties
Condensed Consolidated Balance Sheets
(Unaudited, dollars in thousands)
 
September 30, 2019
 
December 31, 2018
Assets
 
 
 
Real estate investments, net of accumulated depreciation of $989,480 and $883,174 at September 30, 2019 and December 31, 2018, respectively
$
5,569,310

 
$
5,024,057

Land held for development
28,080

 
34,177

Property under development
31,825

 
287,546

Operating lease right-of-use assets
219,459

 

Mortgage notes and related accrued interest receivable
413,695

 
517,467

Investment in direct financing leases, net
20,727

 
20,558

Investment in joint ventures
35,222

 
34,486

Cash and cash equivalents
115,839

 
5,872

Restricted cash
5,929

 
12,635

Accounts receivable
99,190

 
98,369

Other assets
94,014

 
96,223

Total assets
$
6,633,290

 
$
6,131,390

Liabilities and Equity
 
 
 
Accounts payable and accrued liabilities
$
121,351

 
$
168,463

Operating lease liabilities
244,358

 

Dividends payable
35,374

 
32,799

Unearned rents and interest
89,797

 
79,051

Debt
3,101,611

 
2,986,054

Total liabilities
3,592,491

 
3,266,367

Total equity
$
3,040,799

 
$
2,865,023

Total liabilities and equity
$
6,633,290

 
$
6,131,390





Non-GAAP Financial Measures

Funds From Operations (FFO) and Funds From Operations As Adjusted (FFOAA)

The National Association of Real Estate Investment Trusts (“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. 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 disposition of real estate and impairment losses on 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.

In addition to FFO, the Company presents FFOAA. FFOAA is presented by adding to FFO costs (gain) associated with loan refinancing or payoff, net, transaction costs, severance expense, litigation settlement expense, preferred share redemption costs, termination fees associated with tenants' exercises of public charter school buy-out options, impairment of direct financing leases (allowance for lease loss portion) and provision for loan losses and subtracting gain on early extinguishment of debt, gain on insurance recovery and deferred income tax (benefit) expense.

FFO and FFOAA are widely used measures of the operating performance of real estate companies and are provided here as a supplemental measure to GAAP net income available to common shareholders and earnings per share, and management provides FFO and FFOAA herein because it believes this information is useful to investors in this regard. FFO and FFOAA are non-GAAP financial measures. FFO and FFOAA do not represent cash flows from operations as defined by GAAP and are not indicative that cash flows are adequate to fund all cash needs and are not to be considered alternatives 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. It should also be noted that not all REITs calculate FFO and FFOAA the same way so comparisons with other REITs may not be meaningful. The following table summarizes FFO and FFOAA for the three and nine months ended September 30, 2019 and 2018 and reconciles such measures to net income available to common shareholders, the most directly comparable GAAP measure:



EPR Properties
Reconciliation of Non-GAAP Financial Measures
(Unaudited, dollars in thousands except per share data)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
FFO:
 
 
 
 
 
 
 
Net income available to common shareholders of EPR Properties
$
27,969

 
$
85,797

 
$
147,844

 
$
194,844

Gain on sale of real estate
(14,303
)
 
(2,215
)
 
(30,405
)
 
(2,688
)
Gain on sale of investment in direct financing leases

 
(5,514
)
 

 
(5,514
)
Impairment of real estate investments

 

 

 
16,548

Real estate depreciation and amortization
44,863

 
38,388

 
126,475

 
113,211

Allocated share of joint venture depreciation
553

 
54

 
1,662

 
170

FFO available to common shareholders of EPR Properties
$
59,082

 
$
116,510

 
$
245,576

 
$
316,571

 
 
 
 
 
 
 
 
 
FFO available to common shareholders of EPR Properties
$
59,082

 
$
116,510

 
$
245,576

 
$
316,571

Add: Preferred dividends for Series C preferred shares

 
1,940

 
5,817

 
5,820

Add: Preferred dividends for Series E preferred shares

 
1,939

 
5,817

 
5,817

Diluted FFO available to common shareholders of EPR Properties
$
59,082

 
$
120,389

 
$
257,210

 
$
328,208

 
 
 
 
 
 
 
 
FFOAA:
 
 
 
 
 
 
 
FFO available to common shareholders of EPR Properties
$
59,082

 
$
116,510

 
$
245,576

 
$
316,571

Costs associated with loan refinancing or payoff
38,407

 

 
38,407

 
31,958

Transaction costs
5,959

 
1,101

 
18,005

 
2,115

Severance expense
1,521

 

 
1,941

 

Litigation settlement expense

 

 

 
2,090

Termination fee included in gain on sale
11,324

 
1,864

 
22,858

 
1,864

Deferred income tax (benefit) expense
(984
)
 
92

 
(3,268
)
 
755

FFOAA available to common shareholders of EPR Properties
$
115,309

 
$
119,567

 
$
323,519

 
$
355,353

 
 
 
 
 
 
 
 
FFOAA available to common shareholders of EPR Properties
$
115,309

 
$
119,567

 
$
323,519

 
$
355,353

Add: Preferred dividends for Series C preferred shares
1,939

 
1,940

 
5,817

 
5,820

Add: Preferred dividends for Series E preferred shares
1,939

 
1,939

 
5,817

 
5,817

Diluted FFOAA available to common shareholders of EPR Properties
$
119,187

 
$
123,446

 
$
335,153

 
$
366,990

 
 
 
 
 
 
 
 
FFO per common share:
 
 
 
 
 
 
 
Basic
$
0.76

 
$
1.57

 
$
3.22

 
$
4.26

Diluted
0.76

 
1.54

 
3.21

 
4.21

FFOAA per common share:
 
 
 
 
 
 
 
Basic
$
1.49

 
$
1.61

 
$
4.25

 
$
4.78

Diluted
1.46

 
1.58

 
4.19

 
4.70

Shares used for computation (in thousands):
 
 
 
 
 
 
 
Basic
77,632

 
74,345

 
76,169

 
74,274

Diluted
77,664

 
74,404

 
76,207

 
74,316

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding-diluted EPS
77,664

 
74,404

 
76,207

 
74,316

Effect of dilutive Series C preferred shares
2,170

 
2,122

 
2,158

 
2,110

Adjusted weighted average shares outstanding-diluted Series C
79,834

 
76,526

 
78,365

 
76,426

Effect of dilutive Series E preferred shares
1,634

 
1,610

 
1,628

 
1,604

Adjusted weighted average shares outstanding-diluted Series C and Series E
81,468

 
78,136

 
79,993

 
78,030

 
 
 
 
 
 
 
 
Other financial information:
 
 
 
 
 
 
 
Straight-lined rental revenue
$
4,399

 
$
3,079

 
$
10,036

 
$
7,013

Dividends per common share
$
1.125

 
$
1.080

 
$
3.375

 
$
3.240

 
 




The conversion of the 5.75% Series C cumulative convertible preferred shares and the 9.00% Series E cumulative convertible preferred shares does not result in more dilution to per share results and therefore is not included in the calculation of diluted FFO per share data for the three months ended September 30, 2019. 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 per share for the nine months ended September 30, 2019 and the three and nine months ended September 30, 2018. Therefore, the additional 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 per share for these periods.

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 FFOAA per share for the three and nine months ended September 30, 2019 and 2018. Therefore, the additional 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 FFOAA per share for these periods.

Net Debt

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.

EBITDAre

NAREIT developed EBITDAre as a relative non-GAAP financial measure of REITs, independent of a company's capital structure, to provide a uniform basis to measure the enterprise value of a company. Pursuant to the definition of EBITDAre by the Board of Governors of NAREIT, the Company calculates EBITDAre as net income, computed in accordance with GAAP, excluding interest expense (net), income tax (benefit) expense, depreciation and amortization, gains and losses from disposition of real estate, impairment losses on real estate, costs (gain) associated with loan refinancing or payoff and adjustments for unconsolidated partnerships, joint ventures and other affiliates.

Management provides EBITDAre herein because it believes this information is useful to investors as a supplemental performance measure as it can help facilitate comparisons of operating performance between periods and with other REITs. The Company's method of calculating EBITDAre may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. EBITDAre 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 an alternative to net income or any other GAAP measure as a measurement of the results of the Company's operations or cash flows or liquidity as defined by GAAP.

Adjusted EBITDA

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 EBITDAre (defined above) excluding gain on insurance recovery, severance expense, litigation settlement expense, impairment of direct financing lease (allowance for lease loss portion), the provision for loan losses, transaction costs and prepayment fees, and which is then multiplied by four to get an annual amount.




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 or any other GAAP measure as a measurement of the results of the Company's operations or cash flows or liquidity as defined by GAAP.

Net Debt to Adjusted EBITDA Ratio

Net Debt to Adjusted EBITDA Ratio is a supplemental measure derived from non-GAAP financial measures that the Company uses to evaluate our capital structure and the magnitude of our debt against our 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 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 (both reported in accordance with GAAP) to Net Debt, EBITDAre, 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):
 
September 30,
 
2019
 
2018
Net Debt:
 
 
 
Debt
$
3,101,611

 
$
2,954,962

Deferred financing costs, net
38,384

 
35,033

Cash and cash equivalents
(115,839
)
 
(74,153
)
Net Debt
$
3,024,156

 
$
2,915,842

 
 
 
 
 
Three Months Ended September 30,
 
2019
 
2018
EBITDAre and Adjusted EBITDA:
 
 
 
Net income
$
34,003

 
$
91,833

Interest expense, net
36,640

 
33,576

Income tax (benefit) expense
(600
)
 
515

Depreciation and amortization
45,134

 
38,623

Gain on sale of real estate
(14,303
)
 
(2,215
)
Gain on sale of investment in direct financing leases

 
(5,514
)
Costs associated with loan refinancing or payoff
38,407

 

Equity in (income) loss from joint ventures
435

 
(20
)
EBITDAre (for the quarter)
$
139,716

 
$
156,798

 
 
 
 
Severance expense
1,521

 

Transaction costs
5,959

 
1,101

Prepayment fees
(1,760
)
 
(20,026
)
Adjusted EBITDA (for the quarter)
$
145,436

 
$
137,873

 
 
 
 
Adjusted EBITDA (1)
$
581,744

 
$
551,492

 
 
 
 
Net Debt/Adjusted EBITDA Ratio
5.2

 
5.3

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

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 are nearly $7.2 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, 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 (EARNINGS RELEASE PRESENTATION)

q32019earningscall
Q3 2019 EARNINGS CALL OCTOBER 30, 2019


 
INTRODUCTORY COMMENTS This information is as of the date indicated and, to our knowledge, was timely and accurate when presented. We are under no obligation to update or remove outdated information other than as required by applicable law or regulation. 2


 
HEADLINES 1. Strong Quarter Anchored by Continued Demand For Experiential Assets 3


 
HEADLINES 1. Strong Quarter Anchored by Continued Demand For Experiential Assets 2. Record Low Bond Yield and Spread 4


 
HEADLINES 1. Strong Quarter Anchored by Continued Demand For Experiential Assets 2. Record Low Bond Yield and Spread 3. Well-Positioned Balance Sheet with Ample Capacity 5


 
HEADLINES 1. Strong Quarter Anchored by Continued Demand For Experiential Assets 2. Record Low Bond Yield and Spread 3. Well Positioned Balance Sheet with Ample Capacity 4. Increasing Earnings and Investment Spending Guidance 6


 
PORTFOLIO UPDATE 7


 
PORTFOLIO STATISTICS $7.2B TOTAL INVESTMENTS* 416 PROPERTIES IN SERVICE 99% OCCUPANCY $118.1M Q3 INVESTMENT SPENDING 1.89X RENT ** * See investor supplemental for the applicable period for definitions and calculations of these non-GAAP COVERAGE measures // ** Coverage is weighted average for the segments. Theatres and Family Entertainment Centers data is TTM June 2019. Golf Entertainment Complexes and Other Recreation data is TTM June 2019. Ski 8 Area data is TTM April 2019 and Attractions data is TTM August 2019. Public Charter School data is TTM June 2018, Private School data is TTM June 2019 and Early Childhood Education data is TTM June 2019.


 
ENTERTAINMENT SEGMENT HIGHLIGHTS UPDATES • Third quarter box office was up ~3% year-over-year* • Fourth quarter opened strong with the Joker’s record-breaking $3.4B opening weekend and year end 2019 box office revenue expected to INVESTED** be near 2018’s all-time high 195 PROPERTIES IN SERVICE 2 PROPERTIES UNDER DEVELOPMENT*** MEGAPLEX THEATRES 26 OPERATORS**** 1.76x RENT COVERAGE $10.9M FAMILY ENTERTAINMENT CENTERS ENTERTAINMENT RETAIL CENTERS Q3 INVESTMENT SPENDING * Source: Box Office Mojo // ** See investor supplemental for the applicable period for definitions and calculations of these non-GAAP measures // *** Properties not yet in service // **** Does not include 9 operators at ERCs


 
RECREATION SEGMENT UPDATES HIGHLIGHTS • Attractions portfolio visits up 4% and revenue up 7% through August over the three-year average $2.3B • Financed Margaritaville Nashville Hotel in Nashville’s SoBro district, INVESTED* one of the country’s hottest experiential destinations • Vail Resorts closed on Peak Resorts acquisition, becoming our 5th largest customer 83 PROPERTIES IN SERVICE 19 OPERATORS GOLF ENTERTAINMENT COMPLEXES ATTRACTIONS 2.28x RENT COVERAGE $89.6M SKI AREAS OTHER RECREATION Q3 INVESTMENT SPENDING * See investor supplemental for the applicable period for definitions and calculations of these non-GAAP measures 10


 
EDUCATION SEGMENT UPDATES HIGHLIGHTS • Received $104 million in disposition proceeds Excellent progress on Crème de la Crème transition, 17 completed and $1.3B • * remaining 4 anticipated in fourth quarter INVESTED 137 PROPERTIES IN SERVICE 55 OPERATORS PUBLIC CHARTER SCHOOLS 1.51x RENT COVERAGE PRIVATE SCHOOLS EARLY CHILDHOOD EDUCATION $17.6M Q3 INVESTMENT SPENDING * See investor supplemental for the applicable period for definitions and calculations of these non-GAAP measures 11


 
FINANCIAL REVIEW 12


 
FINANCIAL HIGHLIGHTS FINANCIAL PERFORMANCE Quarter ended September 30, (In millions except per-share data) 2019 2018 $ CHANGE % CHANGE Total Revenue $184.9 $176.4 $8.5 5% Net Income - Common 28.0 85.8 (57.8) (67%) FFO – Common* 59.1 116.5 (57.4) (49%) FFO as adj. – Common* 115.3 119.6 (4.3) (4%) Net Income/share – Common 0.36 1.15 (0.79) (69%) FFO/share – Common* 0.76 1.54 (0.78) (51%) FFO/share - Common, as adj.* 1.46 1.58 (0.12) (8%) * See investor supplementals for the applicable periods for definitions and calculations of these non- GAAP measures 13


 
FINANCIAL HIGHLIGHTS KEY RATIOS * Quarter ended September 30, 2019 2018 Net debt to Adjusted EBITDA 5.2x 5.3x Fixed charge coverage 3.3x 3.3x Debt service coverage 3.8x 3.8x Net debt to gross assets (book) 40% 42% Net debt to gross assets (market) 32% 35% FFO as adjusted payout 77% 68% * See investor supplementals for the applicable periods for definitions and calculations for these non-GAAP measures. Net debt to Adjusted EBITDA and coverage ratios exclude all termination and prepayment fees. 14


 
CAPITAL MARKETS UPDATE TOTAL DEBT IS $3.1B AT 9/30/19 • All is fixed rate or fixed through int. rate swaps; wtd. avg. = 4.3% • No balance on $1B revolver; $115.8M unrestricted cash DEBT ACTIVITY • Issued $500M of new 3.75% 10-year senior unsecured notes • Redeemed all $350M of 5.75% senior unsecured notes due in 2022 at make whole cost • Prepaid in full a secured mortgage note payable totaling $18.6M and entered into an interest rate swap to fix int. rate at 1.39% on $25M secured debt through 2024 LOW COST EQUITY ISSUANCE THROUGH DSPP • Issued 0.7M common shares in Q3 for net proceeds of $52M. Issued 0.2M common shares in October for net proceeds of $17M; YTD total = 4.0M common shares for net proceeds of $306M 15


 
2019 GUIDANCE UPDATE 2019 GUIDANCE FF0 AS ADJUSTED PER SHARE Revised Guidance $5.44 - $5.52 Prior Guidance $5.32 - $5.48 INVESTMENT SPENDING Revised Guidance $775M - $825M Prior Guidance $700M - $850M DISPOSITION PROCEEDS Guidance $400M - $475M Prior Guidance $300M - $400M 16


 
RECONCILIATION OF MIDPOINT OF FFOAA/SHARE* GUIDANCE FFO as adjusted per share (previous guidance midpoint) $5.40 Increase in termination and prepayment fees - education properties 0.10 Increase in core business performance 0.03 Impact of additional capital raising activities (0.02) Impact of increase in dispositions (0.03) FFO as adjusted per share (current guidance midpoint) $5.48 *See investor supplementals for the definition of this non-GAAP measure. 17


 
CLOSING COMMENTS 18


 
EPR Properties 909 Walnut Street, Suite 200 Kansas City, MO 64106 www.eprkc.com 816-472-1700 [email protected]


 
(Back To Top)

Section 4: EX-99.3 (SUPPLEMENTAL OPERATING AND FINANCIAL DATA)

Exhibit



Exhibit 99.3


400715877_eprsupplementalcoverva09.jpg




400715877_image0a19.jpg                
Supplemental Operating and Financial Data
Third Quarter and Nine Months Ended September 30, 2019








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 Total Revenue
Net Asset Value (NAV) Components
Annualized GAAP Net Operating Income
Guidance
Definitions-Non-GAAP Financial Measures
Appendix-Reconciliation of Certain Non-GAAP Financial Measures


400715877_image5a10.jpg
 
 
Q3 2019 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 40.



400715877_image5a10.jpg
 
 
Q3 2019 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, Recreation, Education and Other specialty investments.

 
400715877_eprsegmentsv2a06.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, Recreation and Education. 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



400715877_image5a10.jpg
 
 
Q3 2019 Supplemental
Page 4
 
 
 




INVESTOR INFORMATION
 
 
 
SENIOR MANAGEMENT
 
 
 
Greg Silvers
 
Mark Peterson
President and Chief Executive Officer
 
Executive Vice President and Chief Financial Officer
 
 
 
Craig Evans
 
Greg Zimmerman
Senior Vice President, General Counsel and Secretary
 
Executive Vice President and Chief Investment Officer
 
 
 
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
Janney Montgomery Scott
Rob Stevenson
646-840-3217
J.P. Morgan
Anthony Paolone/Nikita Bely
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
Raymond James & Associates
Collin Mings
727-567-2585
RBC Capital Markets
Michael Carroll
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.

400715877_image5a10.jpg
 
 
Q3 2019 Supplemental
Page 5
 
 
 




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

 
 
 
 
 
 
 
 
 
THREE MONTHS ENDED SEPTEMBER 30,
 
NINE MONTHS ENDED SEPTEMBER 30,
Operating Information:
2019
 
2018
 
2019
 
2018
Revenue
$
184,862

 
$
176,409

 
$
525,102

 
$
534,244

Net income available to common shareholders of EPR Properties
27,969

 
85,797

 
147,844

 
194,844

EBITDAre (1)
139,716

 
156,798

 
404,895

 
471,331

Adjusted EBITDA (1)
145,436

 
137,873

 
421,761

 
408,217

Interest expense, net
36,640

 
33,576

 
106,744

 
101,992

Capitalized interest
386

 
2,697

 
5,053

 
7,235

Straight-lined rental revenue
4,399

 
3,079

 
10,036

 
7,013

Dividends declared on preferred shares
6,034

 
6,036

 
18,102

 
18,108

Dividends declared on common shares
87,507

 
80,288

 
257,947

 
240,827

General and administrative expense
11,600

 
11,424

 
35,540

 
36,724

 
 
 
 
 
 
 
 
 
SEPTEMBER 30,
 
 
 
 
Balance Sheet Information:
2019
 
2018
 
 
 
 
Total assets
$
6,633,290

 
$
6,114,070

 
 
 
 
Accumulated depreciation
989,480

 
848,280

 
 
 
 
Total assets before accumulated depreciation (gross assets)
7,622,770

 
6,962,350

 
 
 
 
Cash and cash equivalents
115,839

 
74,153

 
 
 
 
Debt
3,101,611

 
2,954,962

 
 
 
 
Deferred financing costs, net
38,384

 
35,033

 
 
 
 
Net debt (1)
3,024,156

 
2,915,842

 
 
 
 
Equity
3,040,799

 
2,897,195

 
 
 
 
Common shares outstanding
78,240

 
74,337

 
 
 
 
Total market capitalization (using EOP closing price)
9,408,682

 
8,372,395

 
 
 
 
Net debt/total market capitalization
32
%
 
35
%
 
 
 
 
Net debt/gross assets
40
%
 
42
%
 
 
 
 
Net debt/Adjusted EBITDA (2)
5.2

 
5.3

 
 
 
 
Adjusted net debt/Annualized adjusted EBITDA (1)(3)(4)
5.2

 
5.3

 
 
 
 
 
 
 
 
 
 
 
 
(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.

400715877_image5a10.jpg
 
 
Q3 2019 Supplemental
Page 6
 
 
 




SELECTED BALANCE SHEET INFORMATION
(UNAUDITED, DOLLARS IN THOUSANDS)
 
 
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
3ND QUARTER 2019
 
2ND QUARTER 2019
 
1ST QUARTER 2019
 
4TH QUARTER 2018
 
3RD QUARTER 2018
 
2ND QUARTER 2018
Real estate investments:
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment
 
$
3,324,320

 
$
3,307,670

 
$
3,018,987

 
$
2,909,024

 
$
2,875,959

 
$
2,854,274

Recreation
 
1,949,502

 
1,921,868

 
1,610,071

 
1,614,100

 
1,502,639

 
1,476,759

Education
 
1,108,679

 
1,147,220

 
1,188,959

 
1,209,393

 
1,204,851

 
1,175,973

Other
 
176,289

 
176,294

 
174,690

 
174,714

 
156,786

 
156,786

Less: accumulated depreciation
 
(989,480
)
 
(954,806
)
 
(920,409
)
 
(883,174
)
 
(848,280
)
 
(810,604
)
Land held for development
 
28,080

 
28,080

 
28,080

 
34,177

 
31,076

 
31,076

Property under development
 
31,825

 
80,695

 
315,237

 
287,546

 
289,228

 
268,090

Operating lease right-of-use assets
 
219,459

 
220,758

 
211,299

 

 

 

Mortgage notes receivable: (1)
 
 
 


 
 
 
 
 
 
 
 
Entertainment
 
14,800

 
14,670

 

 

 
23,327

 
23,321

Recreation
 
257,315

 
378,292

 
375,094

 
368,655

 
365,100

 
439,759

Education
 
141,580

 
157,169

 
152,533

 
148,812

 
184,273

 
178,348

Investment in direct financing leases, net
 
20,727

 
20,675

 
20,616

 
20,558

 
20,495

 
58,305

Investment in joint ventures
 
35,222

 
35,658

 
35,188

 
34,486

 
5,018

 
4,999

Cash and cash equivalents
 
115,839

 
6,927

 
11,116

 
5,872

 
74,153

 
3,017

Restricted cash
 
5,929

 
5,010

 
11,166

 
12,635

 
22,031

 
11,283

Accounts receivable
 
99,190

 
108,433

 
111,146

 
98,369

 
104,757

 
97,804

Other assets
 
94,014

 
92,042

 
87,458

 
96,223

 
102,657

 
135,034

Total assets
 
$
6,633,290

 
$
6,746,655

 
$
6,431,231

 
$
6,131,390

 
$
6,114,070

 
$
6,104,224

 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
121,351

 
$
126,015

 
$
117,746

 
$
168,463

 
$
138,829

 
$
122,359

Operating lease liabilities
 
244,358

 
245,372

 
235,612

 

 

 

Common dividends payable
 
29,340

 
29,084

 
28,306

 
26,765

 
26,761

 
26,765

Preferred dividends payable
 
6,034

 
6,034

 
6,034

 
6,034

 
6,036

 
6,036

Unearned rents and interest
 
89,797

 
78,629

 
85,012

 
79,051

 
90,287

 
79,121

Line of credit
 

 
240,000

 
70,000

 
30,000

 

 
30,000

Deferred financing costs, net
 
(38,384
)
 
(31,957
)
 
(32,838
)
 
(33,941
)
 
(35,033
)
 
(36,020
)
Other debt
 
3,139,995

 
3,008,580

 
3,008,580

 
2,989,995

 
2,989,995

 
2,989,995

Total liabilities
 
3,592,491

 
3,701,757

 
3,518,452

 
3,266,367

 
3,216,875

 
3,218,256

Equity:
 
 
 
 
 
 
 
 
 
 
 
 
Common stock and additional paid-in- capital
 
3,815,278

 
3,759,032

 
3,597,916

 
3,505,266

 
3,497,055

 
3,492,333

Preferred stock at par value
 
148

 
148

 
148

 
148

 
148

 
148

Treasury stock
 
(147,435
)
 
(147,143
)
 
(146,906
)
 
(130,728
)
 
(129,801
)
 
(129,048
)
Accumulated other comprehensive income
 
4,659

 
5,174

 
8,397

 
12,085

 
19,246

 
17,497

Distributions in excess of net income
 
(631,851
)
 
(572,313
)
 
(546,776
)
 
(521,748
)
 
(489,453
)
 
(494,962
)
Total equity
 
3,040,799

 
3,044,898

 
2,912,779

 
2,865,023

 
2,897,195

 
2,885,968

Total liabilities and equity
 
$
6,633,290

 
$
6,746,655

 
$
6,431,231

 
$
6,131,390

 
$
6,114,070

 
$
6,104,224

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Includes related accrued interest receivable.

400715877_image5a10.jpg
 
 
Q3 2019 Supplemental
Page 7
 
 
 




SELECTED OPERATING DATA
(UNAUDITED, DOLLARS IN THOUSANDS)
 
 
 
 
 
 
 
 
 
 
 
 
 
3RD QUARTER 2019
 
2ND QUARTER 2019
 
1ST QUARTER 2019
 
4TH QUARTER 2018
 
3RD QUARTER 2018
 
2ND QUARTER 2018
Rental revenue:

 
 
 
 
 
 
 
 
 
 
Entertainment
$
87,720

 
$
83,718

 
$
80,513

 
$
76,742

 
$
75,552

 
$
74,640

Recreation
42,784

 
42,886

 
40,529

 
38,732

 
36,215

 
34,443

Education
27,643

 
28,059

 
26,707

 
27,757

 
26,851

 
25,649

Other
3,115

 
2,667

 
2,974

 
2,284

 
2,287

 
2,287

Mortgage and other financing income:


 
 
 
 
 
 
 
 
 
 
Entertainment
382

 
107

 
56

 
4,457

 
612

 
2,100

Recreation
6,238

 
8,654

 
9,312

 
8,277

 
29,678

 
57,540

Education
5,516

 
3,881

 
4,107

 
7,803

 
4,849

 
5,562

Other income
11,464

 
5,726

 
344

 
435

 
365

 
646

Total revenue
$
184,862

 
$
175,698

 
$
164,542

 
$
166,487

 
$
176,409

 
$
202,867

 


 
 
 
 
 
 
 
 
 
 
Property operating expense
14,663

 
14,771

 
15,793

 
8,890

 
6,968

 
7,334

Other expense
11,403

 
8,091

 

 
325

 
118

 

General and administrative expense
11,600

 
12,230

 
11,710

 
12,165

 
11,424

 
12,976

Severance expense
1,521

 

 
420

 
5,938

 

 

Litigation settlement expense

 

 

 

 

 
2,090

Costs associated with loan refinancing or payoff
38,407

 

 

 

 

 
15

Interest expense, net
36,640

 
36,278

 
33,826

 
33,515

 
33,576

 
34,079

Transaction costs
5,959

 
6,923

 
5,123

 
1,583

 
1,101

 
405

Impairment charges

 

 

 
10,735

 

 
16,548

Depreciation and amortization
45,134

 
42,355

 
39,743

 
39,541

 
38,623

 
37,582

Income before equity in income (loss) in joint ventures and other items
19,535

 
55,050

 
57,927

 
53,795

 
84,599

 
91,838

Equity in (loss) income from joint ventures
(435
)
 
470

 
489

 
(5
)
 
20

 
(88
)
Gain on sale of real estate
14,303

 
9,774

 
6,328

 
349

 
2,215

 
473

Gain on sale of investment in direct financing leases

 

 

 

 
5,514

 

Income tax benefit (expense)
600

 
1,300

 
605

 
(108
)
 
(515
)
 
(642
)
Net income
34,003

 
66,594

 
65,349

 
54,031

 
91,833

 
91,581

Preferred dividend requirements
(6,034
)
 
(6,034
)
 
(6,034
)
 
(6,034
)
 
(6,036
)
 
(6,036
)
Net income available to common shareholders of EPR Properties
$
27,969

 
$
60,560

 
$
59,315

 
$
47,997

 
$
85,797

 
$
85,545

 
 
 
 
 
 
 
 
 
 
 
 

400715877_image5a10.jpg
 
 
Q3 2019 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):
 
3RD QUARTER 2019
 
2ND QUARTER 2019
 
1ST QUARTER 2019
 
4TH QUARTER 2018
 
3RD QUARTER 2018
 
2ND QUARTER 2018
Net income available to common shareholders of EPR Properties
 
$
27,969

 
$
60,560

 
$
59,315

 
$
47,997

 
$
85,797

 
$
85,545

Gain on sale of real estate
 
(14,303
)
 
(9,774
)
 
(6,328
)
 
(349
)
 
(2,215
)
 
(473
)
Gain on sale of investment in direct financing leases
 

 

 

 

 
(5,514
)
 

Impairment of real estate investments
 

 

 

 
10,735

 

 
16,548

Real estate depreciation and amortization
 
44,863

 
42,098

 
39,514

 
39,297

 
38,388

 
37,359

Allocated share of joint venture depreciation
 
553

 
554

 
555

 
56

 
54

 
58

FFO available to common shareholders of EPR Properties
 
$
59,082

 
$
93,438

 
$
93,056

 
$
97,736

 
$
116,510

 
$
139,037

 
 
 
 
 
 
 
 
 
 
 
 
 
FFO available to common shareholders of EPR Properties
 
$
59,082

 
$
93,438

 
$
93,056

 
$
97,736

 
$
116,510

 
$
139,037

Add: Preferred dividends for Series C preferred shares
 

 
1,939

 
1,939

 
1,939

 
1,940

 
1,940

Add: Preferred dividends for Series E preferred shares
 

 
1,939

 
1,939

 
1,939

 
1,939

 

Diluted FFO available to common shareholders of EPR Properties
 
$
59,082

 
$
97,316

 
$
96,934

 
$
101,614

 
$
120,389

 
$
140,977

 
 
 
 
 
 
 
 
 
 
 
 
 
FUNDS FROM OPERATIONS AS ADJUSTED (1):
 
 
 
 
 
 
 
 
 
 
 
 
FFO available to common shareholders of EPR Properties
 
$
59,082

 
$
93,438

 
$
93,056

 
$
97,736

 
$
116,510

 
$
139,037

Costs associated with loan refinancing or payoff
 
38,407

 

 

 

 

 
15

Transaction costs
 
5,959

 
6,923

 
5,123

 
1,583

 
1,101

 
405

Severance expense
 
1,521

 

 
420

 
5,938

 

 

Litigation settlement expense
 

 

 

 

 

 
2,090

Termination fee included in gain on sale
 
11,324

 
6,533

 
5,001

 

 
1,864

 

Deferred income tax (benefit) expense
 
(984
)
 
(1,675
)
 
(609
)
 
(182
)
 
92

 
235

FFO as adjusted available to common shareholders of EPR Properties
 
$
115,309

 
$
105,219

 
$
102,991

 
$
105,075

 
$
119,567

 
$
141,782

 
 
 
 
 
 
 
 
 
 
 
 
 
FFO as adjusted available to common shareholders of EPR Properties
 
$
115,309

 
$
105,219

 
$
102,991

 
$
105,075