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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): November 22, 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 2.06.    Material Impairments.

The information set forth under Item 8.01 below is hereby incorporated by reference herein.

Item 7.01.    Regulation FD Disclosure.

On November 24, 2019, EPR Properties (the "Company") announced that on November 22, 2019 it sold substantially all of its charter school portfolio as described below and, in connection with such sale, the Company has initiated a strategic migration toward focusing its growth on experiential real estate. 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 November 25, 2019, at 8:30 a.m. Eastern Standard Time, the Company will host a conference call discussing the sale and migration in strategy. A copy of the investor slide presentation that will be discussed on the call is attached hereto as Exhibit 99.2 and is hereby incorporated by reference herein. A copy of the investor slide presentation is also being made available on the Company's website.

The information set forth in Item 7.01 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 8.01.    Other Events.

On November 22, 2019, the Company sold substantially all of its charter school portfolio, consisting of 47 charter school related assets, for approximately $454 million of gross cash consideration to a fund sponsored by Rosemawr Management, LLC. The sale did not include three charter schools that the Company previously sold in the fourth quarter of 2019 for proceeds of $21.6 million, or the Company's one remaining charter school, which the Company expects to sell during the fourth quarter of 2019.

During the fourth quarter of 2019, the Company expects to recognize a loss of approximately $19.0 million related to sales of charter schools that includes the write-off of non-cash straight-line rent and effective interest receivables totaling approximately $26.0 million. Included in this expected loss is an impairment on portfolio sale of approximately $21.0 million as a result of the sale to Rosemawr Management, LLC. The Company intends to use the proceeds from these sales to fund investments in experiential real estate, including potential casino resort investments.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This Current Report on Form 8-K contains statements which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws, including with respect to the Company's intended use of proceeds from the sale of substantially all of its charter school portfolio, estimated impairment charges and potential sale of its one remaining charter school. These forward-looking statements are based upon the Company's present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by the Company's forward-looking statements as a result of various factors. You should not place undue reliance upon forward-looking statements.

Item 9.01 Financial Statements and Exhibits.
 
 
 
 
Exhibit
No.
  
Description
  
  
Press Release, dated November 24, 2019, issued by EPR Properties.
 
 
  
Investor slide presentation, made available by EPR Properties on November 25, 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: November 25, 2019
 




















































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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1

EPR Properties Announces Sale of Charter School Portfolio for Approximately $454 Million

Sale Activates the Company’s Strategic Migration to Experiential Real Estate
Conference Call Scheduled for 8:30 a.m. Eastern Standard Time, November 25, 2019

KANSAS CITY, Mo. - (BUSINESS WIRE) - EPR Properties (the “Company”) announced that on November 22, 2019, it sold substantially all of its charter school portfolio, consisting of 47 charter school related assets for approximately $454 million of gross cash consideration to a fund sponsored by Rosemawr Management, LLC (“Rosemawr”). This sale does not include three charter schools that the Company sold previously in the fourth quarter of 2019 for proceeds of $21.6 million and the one remaining charter school which the Company expects to sell during the fourth quarter of 2019.
The Company also announced today that the sale of the charter school portfolio activates its strategic migration toward focusing its growth on experiential real estate.
“Since we entered the charter school market we have enjoyed very attractive returns, but competitive financing alternatives, primarily in the tax-exempt bond market, have caused structural market changes that increased earnings volatility and were incompatible with our mandate as a REIT to provide long-term and predictable income,” stated Greg Silvers, President and CEO of the Company. “After deliberate consideration of our strategic options, we are excited about our decision to refocus our growth on experiential real estate.”
Mr. Silvers continued, “We recognize the strong consumer demand for location-based experiences, and believe our decades of experience, longstanding relationships and institutional knowledge will continue to provide us with a sustainable competitive advantage. We believe our diversified portfolio, with the ultimate addition of casino resorts, distinguishes us from other platforms and uniquely positions us to benefit from the strong tailwinds provided by changing consumer preferences and favorable demographics. Experiential real estate represents an estimated $100 billion market opportunity, and we look forward to continuing to build a diversified portfolio of high-quality assets that deliver attractive returns to our shareholders.”
The Company will also discontinue the organization of its portfolio around the discrete segments of Entertainment, Recreation and Education. Going forward the Company’s Experiential portfolio will be organized by the primary property types targeted for growth in experiential real estate. These property types include: Theatres, Eat & Play, Ski, Attractions, Experiential Lodging, Gaming, Fitness & Wellness, Cultural and Live Venues.

The Company expects several benefits from this migration including:
Enhanced Focus on Experiential Assets. This migration recognizes consumers’ strong preference for location-based experiences and creates a singularly focused organization that is committed to owning real estate that supports experiential activities and lifestyles.

Leveraging Institutional Knowledge. With more than 20 years of experience and knowledge investing in and owning experiential real estate, the Company is uniquely positioned to leverage its relationships, intellectual capital and institutional knowledge.

Reduced Earnings Volatility and Improved Rent Coverage. The sale of the charter school portfolio removes less predictable pre-payments which had increased in the charter school portfolio over time. Additionally, the Company’s overall rent coverage will improve as it moves from 1.89x to 1.94x following the sale of the charter school portfolio.

The Company intends to rapidly redeploy the proceeds from the sale to fund investments in experiential real estate, including potential casino resort investments. Separately, the Company has no present plans to sell its private school and early childhood education assets that are included in the Education portfolio, but will consider strategic dispositions if those opportunities present themselves in the future.




The Company’s internal rate of return over the life cycle of its charter school investments was approximately 10.5% unlevered, including the fourth quarter dispositions which resulted in a loss of approximately $19.0 million that includes the write-off of non-cash straight line rent and effective interest receivables totaling approximately $26.0 million.
As detailed below, management of the Company will host a conference call to discuss the sale of its charter school portfolio and the activation of its strategic experiential migration.
2019 Guidance Update
As a result of this transaction as well as other less significant items, the Company is increasing its 2019 disposition guidance range to $875.0 million to $900.0 million from the prior range of $400.0 million to $475.0 million, and is decreasing its guidance range for 2019 Funds From Operations as adjusted (“FFOAA”) per diluted common share (a non-GAAP financial measure) to $5.42 to $5.46 from the prior range of $5.44 to $5.52. The revised FFOAA per diluted common share guidance range for 2019 is based on a net income available to common shareholders per diluted common share (the most directly comparable GAAP measure) range of $2.35 to $2.39. The Company is confirming its prior 2019 investment spending guidance of a range of $775.0 million to $825.0 million.
2020 Guidance
The Company’s Board of Trustees expects to approve the next common dividend increase in late February 2020 when the Company announces its fourth quarter 2019 earnings and provides 2020 guidance. The Company plans to continue this approach in the future to match the timing of dividend decisions with the Company’s internal budgeting and external guidance process.
Conference Call Information
Management will host a conference call to discuss the sale of its charter school portfolio and the activation of its strategic experiential migration on November 25, 2019 at 8:30 a.m. Eastern Standard Time. The conference call will be webcast and can be accessed at http://investors.eprkc.com/webcasts. To access the call, audio only, dial (866) 587-2930 and when prompted, provide the passcode 2592777. A copy of the investor slide presentation that will be discussed on the conference call will be available on the Company’s website and at the SEC’s website at www.sec.gov.

You may watch a replay of the webcast by visiting the Webcasts page at http://investors.eprkc.com/webcasts.

Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF 2019 GUIDANCE TO NET INCOME AVAILABLE TO COMMON SHAREHOLDERS OF EPR PROPERTIES (PER DILUTED SHARE):
 
2019 CURRENT GUIDANCE
 
2019 PRIOR GUIDANCE
Net income available to common shareholders of EPR Properties
 
 $2.35
to
 $2.39
 
  $2.58
to
 $2.66
Gain on sale of real estate net of impairment on portfolio disposition (1)
 
(0.20)
 
(0.40)
Real estate depreciation and amortization
 
2.21
 
2.22
Allocated share of joint venture depreciation
 
0.03
 
0.03
Impact of Series C and Series E Dilution, if applicable
 
(0.02)
 
(0.02)
FFO available to common shareholders of EPR Properties (2)
 
 $4.37
to
 $4.41
 
 $4.41
to
 $4.49
Costs associated with loan refinancing or payoff
 
0.50
 
0.50
Transaction costs
 
0.31
 
0.30
Severance expense
 
0.03
 
0.03
Termination fees - education properties (1)
 
0.31
 
0.30
Deferred income tax benefit
 
(0.06)
 
(0.06)
Impact of Series C and Series E Dilution, if applicable
 
(0.04)
 
(0.04)
FFO as adjusted available to common shareholders of EPR Properties (2)
 
 $5.42
to
 $5.46
 
 $5.44
to
 $5.52

(1) Termination fees received related to leases where an operator exercises its option to purchase the property and terminates the lease prior to the lease maturity are included in gain on sale of real estate per GAAP and are excluded from FFO (in accordance with the NAREIT definition) but then included in FFO as adjusted. Including in FFO as




adjusted is consistent with how other lease termination fees and fees received for early prepayment of mortgage notes receivable are reflected.
(2) Represents a non-GAAP financial measure. See Supplemental Financial and Operating Data for the quarter ended September 30, 2019 on our website (www.eprkc.com) for the definition.
About EPR Properties
EPR Properties is the leading experiential net lease real estate investment trust (REIT), specializing in select enduring experiential properties in the real estate industry. We focus on real estate venues which create value by facilitating out of home leisure and recreation experiences where consumers choose to spend their discretionary time and money. We have over $6.6 billion in total investments across 43 states and rank among the top five REITs in 20-year total shareholder return. We adhere to rigorous underwriting and investing criteria centered on key industry, property and tenant level cash flow standards. We believe our focused approach provides a competitive advantage, and the potential for higher growth and better yields. Further information is available at www.eprkc.com.




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 change in strategy, acquisition or disposition of properties, our capital resources, future expenditures for development projects, expected net loss on sale of real estate, expected use of proceeds from the sale of our charter school portfolio, 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
Vice President - Corporate Communication
[email protected]com




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Section 3: EX-99.2 (EXHIBIT 99.2)

eprtransactionannounceme
CHARTER SCHOOL PORTFOLIO TRANSACTION ACTIVATING A STRATEGIC EXPERIENTIAL MIGRATION NOVEMBER 25, 2019


 
DISCLAIMER Statements made in this presentation may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements relate to, without limitation, the Company’s future economic performance, plans and objectives for future operations and projections of revenue and other financial items. Forward-looking statements can be identified by the use of words such as "may," "will," "plan," "should," "expect,” "anticipate," "estimate," "continue" or comparable terminology. Forward- looking statements are inherently subject to risks and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, we can give no assurance that such expectations will be achieved. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements and are advised to consider the factors listed under the headings "Risk Factors" in the Company’s Annual Report on Form 10-K, as may be supplemented or amended by the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company assumes no obligation to update and supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise. Definitions and reconciliations of the non-GAAP financial measures used in this presentation are available in our investor supplemental dated September 30, 2019 available on our website at www.eprkc.com. Footnotes for data provided in this presentation are in the Appendix. 2


 
CHARTER SCHOOL PORTFOLIO TRANSACTION EPR’s charter school investing life cycle culminates with $454M liquidity event • Sold 47 charter school assets for ~ $454M in gross cash consideration to a fund sponsored by Rosemawr Management • Key stats from charter school investment life cycle: o Ultimately invested ~$1.1 billion from 2006-2019; 10.5% unlevered IRR inclusive of final sale transaction o Total net gains and prepayment fees of $73M through Q3 2019 o Fourth quarter charter school sales are expected to result in a net loss of ~$19M, which includes the write-off of ~$26M in non-cash straight line rent and effective interest receivables • Sale closed on November 22, 2019 This transaction activates a deliberate strategic migration 3


 
ACTION - STRATEGIC MIGRATION FROM: TO: SEGMENT-FOCUSED EXPERIENTIAL-FOCUSED Annualized NOI(1) Annualized Adjusted Revenue(2) 51% ENTERTAINMENT EXPERIENTIAL 89% PORTFOLIO 45% Theatres 30% RECREATION 23% Eat & Play 7% Ski 18% EDUCATION 11% EDUCATION 6% Attractions 1% OTHER PORTFOLIO 4% Experiential Lodging 6% Private Schools 2% Gaming 1% Fitness & Wellness 5% Early Childhood 1% Cultural 4


 
RATIONALE FOR CHANGE ENHANCES PORTFOLIO CHARACTERISTICS Strengthens our experiential market leadership Reduces income volatility – increases predictability Simplifies message - increases focus Strengthens overall rent coverage Creates path for greater diversity in experiential properties 5


 
WHY EXPERIENTIAL? Growth of Experience Economy • Anchored by Baby Boomers and Millennials, two largest population segments * o Baby Boomers control ~70% of disposable income o Millennials have strong orientation toward experiential lifestyles Leverages Institutionalized Knowledge • EPR has over 20 years of experience and knowledge in this type of real estate Creates Meaningful Market Distinction & Leadership • Moderate investment exposure and correlation in REITs today *Source: U.S. News and World Report: Baby Boomer Report, https://www.usnews.com/pubfiles/USNews_Market_Insights_Boomers2015.pdf 6


 
DEMAND DRIVERS SPENDING ON EXPERIENCES INCREASING* LEISURE SPENDING AS A % OF TOTAL CONSUMPTION LEISURE EXPERIENCE SPENDING $1,000 9.5% $900 9.0% 9.0% $800 $700 8.5% $600 8.0% $500 7.5% $400 (In Billions) (In $300 7.0% $200 6.5% $100 6.0% $0 '90 '94 '98 '02 '06 '10 '14 '18 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 EXPERIENTIAL DRIVERS DESIRE TO CONNECT & CREATING MEMORABLE SHARING THE CONGREGATE EXPERIENCES EXPERIENCES *Source: U.S. Bureau of Economic Analysis 7


 
MARKET OPPORTUNITY BUILDING THE PREMIER EXPERIENTIAL REAL ESTATE PORTFOLIO ESTIMATED $100+ BILLION ADDRESSABLE MARKET Deep Market | Property Diversification Experienced Team | Institutional Knowledge TARGET EXPERIENTIAL PROPERTY TYPES 8


 
PORTFOLIO OVERVIEW $6.6B+ PORTFOLIO(3) Generating Annualized Adjusted Revenue(2) $587M+ 367 locations with over 200 tenants in 43 states & Canada (4) Rent coverage increases to 1.94x from 1.89x PORTFOLIO BY ANNUALIZED ADJUSTED REVENUE(2) Experiential 89% Education 11% 9


 
EXPERIENTIAL PORTFOLIO PORTFOLIO HIGHLIGHTS $5.9B INVESTED(3) 89% ANNUALIZED ADJUSTED REVENUE (2) 279 Diversified portfolio which consists of a variety of enduring, PROPERTIES IN SERVICE congregant entertainment, recreation and leisure activities • Location Based Experiences (LBE) - Combines long-lived activities and innovative concepts 2 PROPERTIES UNDER (5) • Provides a social component and enhanced food and beverage options DEVELOPMENT • Diversity of Experiences - Includes experiences that last from hours to days, some close to home and others a regional destination 47 OPERATORS (6) 10


 
EDUCATION PORTFOLIO PORTFOLIO HIGHLIGHTS $753M INVESTED (3) 11% ANNUALIZED ADJUSTED REVENUE (2) Portfolio of private schools and early childhood education 88 centers that provides additional geographic and operator PROPERTIES IN SERVICE diversity • Private Schools - located in gateway cities, providing an alternative to meet the demand for high quality education in the U.S. 18 • Early Childhood Education Centers – deliver an education-focused OPERATORS approach to childcare • Traditional long-term, triple-net lease structure 11


 
PORTFOLIO DETAIL % ANNUALIZED NUMBER OF ADJUSTED PROPERTY TYPE PROPERTIES OPERATORS REVENUE(2) Theatres(7) 176 18 45% Eat & Play 55 10(6) 23% Ski 12 5 7% Attractions 18 6 6% Experiential Lodging 7 2 4% Gaming 1 1 2% Fitness & Wellness 7 2 1% Cultural 3 3 1% TOTAL EXPERIENTIAL PORTFOLIO 279 47 89% Private Schools 16 4 6% Early Childhood Education 72 14 5% TOTAL EDUCATION PORTFOLIO 88 18 11% 12


 
CAPITAL REDEPLOYMENT – GUIDANCE REDEPLOYMENT OF CAPITAL • We expect rapid redeployment into experiential real estate – including casino resorts 2019 UPDATED GUIDANCE MEASURE UPDATED PRIOR Net income available to common $2.35 to $2.39 $2.58 to $2.66 shareholders per diluted common share FFOAA per diluted common share(8) $5.42 to $5.46 $5.44 to $5.52 Disposition proceeds $875M to $900M $400M to $475M Investment spending No Change $775M to $825M 2020 GUIDANCE • Guidance to be provided with Q4 & YE 2019 earnings in late February • 2020 increase in monthly cash dividend to common shareholders also to be announced with Q4 & YE 2019 earnings 13


 
IN SUMMARY Transaction Reduces Earnings Volatility and Improves Rent Coverage • Sale of charter school portfolio removes less predictable pre-payments • Rent coverage improves from 1.89x to 1.94x Enhanced Focus on Experiential Assets • Recognizes consumers’ strong preference for location-based experiences – an estimated $100B market opportunity • Creates a singularly focused organization committed to owning real estate that supports experiential activities and lifestyles Leverages Institutional Knowledge • Over 20 years experience investing experiential real estate • We are uniquely positioned to leverage relationships, intellectual capital and institutional knowledge 14


 
APPENDIX 15


 
FOOTNOTES (1) Annualized GAAP NOI (a non-GAAP financial measure) is as of September 30, 2019. See Supplemental Financial and Operating data for the quarter ended September 30, 2019 on our website (www.eprkc.com) for definition and calculation. (2) Annualized Adjusted Revenue (a non-GAAP financial measure) is Total Revenue for the quarter ended September 30, 2019, excluding public charter school total revenue, other income, and pass through revenues, further adjusted for in-service projects and percentage rent and participating interest. This number is then multiplied by four to get an annual amount. See reconciliation of Annualized Adjusted Revenue to Total Revenue on Slide 17. (3) Total Investments (a non-GAAP financial measure) is as of September 30, 2019, and is adjusted to remove all public charter school investments. See reconciliation of Total Investments on Slide 18. (4) Coverage is weighted average. Theatres and Family Entertainment Centers data is TTM June 2019. Golf Entertainment Complexes and Other Recreation data is TTM June 2019. Ski Area data is TTM April 2019 and Attractions data is TTM August 2019. Private School data is TTM June 2019 and Early Childhood Education data is TTM June 2019. (5) Properties not yet in service (6) Does not include operators at Entertainment Districts (7) Excludes 7 theatres located in Entertainment Districts (included in Eat & Play) (8) See Supplemental Financial and Operating data for the quarter ended September 30, 2019 on our website (www.eprkc.com) for definition. See Slide 19 for reconciliation of this non-GAAP financial measure. 16


 
RECONCILIATION RECONCILIATION OF ANNUALIZED ADJUSTED REVENUE TO TOTAL REVENUE(2) (Dollars in thousands) For the Three Months Ended September 30, 2019 Total Revenue $ 184,862 Total revenue for Public Charter Schools (15,507) Other income (11,464) Pass through revenues (11,059) In-service adjustments(a) 2 Percentage rent/participation adjustments(b) (80) Quarterly Adjusted Revenue $ 146,754 x4 Annualized Adjusted Revenue $ 587,016 (a) Adjustments for GAAP revenue during the quarter. (b) To adjust percentage rents and participating interest income from the actual latest quarterly amount to the trailing 12 month amount divided by 4. 17


 
RECONCILIATION RECONCILIATION OF TOTAL INVESTMENTS (Dollars in thousands) As of September 30, 2019 Real estate investments, net of accumulated depreciation $ 5,569,310 Add back accumulated depreciation on real estate investments 989,480 Land held for development 28,080 Property under development 31,825 Mortgage notes and related accrued interest receivable 413,695 Investment in direct financing leases, net 20,727 Investment in joint ventures 35,222 Intangible assets, gross (a) 52,932 Notes receivable and related accrued interest receivable, net (a) 12,502 Total investments related to Public Charter Schools (528,609) Total investments $ 6,625,164 (a) Included in other assets in the consolidated balance sheets as of September 30, 2019 in the Company's Quarterly Report on Form 10-Q. Reconciliation is as follows: Intangible assets, gross $ 52,932 Less: accumulated amortization on intangible assets (11,816) Notes receivable and related accrued interest receivable, net 12,502 Prepaid expenses and other current assets 40,396 Total other assets $ 94,014 18


 
RECONCILIATION RECONCILIATION OF 2019 GUIDANCE TO NET INCOME AVAILABLE TO COMMON SHAREHOLDERS OF EPR PROPERTIES (PER DILUTED SHARE): 2019 CURRENT 2019 PRIOR GUIDANCE GUIDANCE Net income available to common shareholders of EPR Properties $2.35 to $2.39 $2.58 to $2.66 Gain on sale of real estate net of impairment on portfolio disposition (0.20) (0.40) Real estate depreciation and amortization 2.21 2.22 Allocated share of joint venture depreciation 0.03 0.03 Impact of Series C and Series E Dilution, if applicable (0.02) (0.02) FFO available to common shareholders of EPR Properties(8) $4.37 to $4.41 $4.41 to $4.49 Costs associated with loan refinancing or payoff 0.50 0.50 Transaction costs 0.31 0.30 Severance expense 0.03 0.03 Termination fees - education properties 0.31 0.30 Deferred income tax benefit (0.06) (0.06) Impact of Series C and Series E Dilution, if applicable (0.04) (0.04) FFO as adjusted available to common shareholders of EPR Properties(8) $5.42 to $5.46 $5.44 to $5.52 19


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


 
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