Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document
false0001045450 0001045450 2020-05-06 2020-05-06 0001045450 us-gaap:SeriesEPreferredStockMember 2020-05-06 2020-05-06 0001045450 us-gaap:SeriesCPreferredStockMember 2020-05-06 2020-05-06 0001045450 us-gaap:SeriesGPreferredStockMember 2020-05-06 2020-05-06 0001045450 us-gaap:CommonStockMember 2020-05-06 2020-05-06


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): May 6, 2020
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 May 6, 2020, the Company announced its results of operations and financial condition for the first quarter ended March 31, 2020. 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 May 6, 2020, the Company made available on its website an investor slide presentation and supplemental operating and financial data for the first quarter ended March 31, 2020, 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 May 6, 2020 issued by EPR Properties announcing its results of operations and financial condition for the first quarter ended March 31, 2020.
 
 
  
Investor slide presentation for the first quarter ended March 31, 2020, made available by EPR Properties on May 6, 2020.
 
 
 
 
Supplemental Operating and Financial Data for the first quarter ended March 31, 2020, made available by EPR Properties on May 6, 2020.
 
 
 
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: May 6, 2020
 




















































(Back To Top)

Section 2: EX-99.1 (PRESS RELEASE)

Exhibit

Exhibit 99.1




EPR PROPERTIES REPORTS FIRST QUARTER 2020 RESULTS

Kansas City, MO, May 6, 2020 -- EPR Properties (NYSE:EPR) today announced operating results for the first quarter ended March 31, 2020 (dollars in thousands, except per share data):    
 
Three Months Ended March 31,
 
 
2020
 
2019 (1)
 
Total revenue from continuing operations
$
151,012

 
$
150,527

 
Net income available to common shareholders
31,084

 
59,315

 
Net income available to common shareholders per diluted common share
0.40

 
0.79

 
Funds From Operations as adjusted (FFOAA) (a non-GAAP financial measure)
75,926

 
102,991

 
FFOAA per diluted common share (a non-GAAP financial measure)
0.97

 
1.36

 
Adjusted Funds From Operations (AFFO) (a non-GAAP financial measure)
89,891

 
104,115

 
AFFO per diluted common share (a non-GAAP financial measure)
1.14

 
1.38

 
(1) The operating results of the Company's public charter school portfolio for the three months ended March 31, 2019, including a $5.0 million termination fee, are included in all metrics in this column except for total revenue from continuing operations. The remaining public charter school portfolio was sold subsequent to this period.

CEO Comments

“As we continue to navigate our way through these uncertain times, the health and safety of our employees and customers remain our top priority,” stated Company President and CEO Greg Silvers. “Given the shelter-in-place and social distancing directives, the majority of our tenants have been particularly impacted given the Company’s focus on experiential real estate.  We have established an internal task force focused on COVID-19 to work with our tenants and borrowers in the near-term to help ensure long-term stability, and assist them in establishing re-opening plans. Today we are announcing further measures to ensure our liquidity, including the temporary suspension of our monthly cash dividend to common shareholders and a planned suspension of our share repurchase program.  We do not take these steps lightly; however, given the uncertainties that exist, we believed it unwise to burden our future with a higher leveraged balance sheet.”

Mr. Silvers continued, “While the country is currently facing tremendous challenges, this will be transient. We entered this period with substantial liquidity, and we have acted swiftly to adjust our plans and maintain our flexibility. Furthermore, our properties are a part of the fabric of society and we believe there will be a strong demand for the time-tested experiences our tenants offer. We remain confident in our investment thesis and in our positioning as the leading experiential real estate investment trust.”

COVID-19 Response and Update

The Company has acted swiftly and taken a number of steps in response to the pandemic. These include the following:

COVID-19 Task Force. This internal team is comprised of individuals from across the Company and is focused on addressing all areas of challenges brought on by the pandemic including monitoring customer status and working with them to help ensure long-term stability and assisting them in establishing re-opening plans.

Enhanced liquidity position. The Company remains focused on maintaining a strong balance sheet, strong liquidity and financial flexibility. The Company deferred an anticipated gaming investment of approximately $1.0 billion and revised its 2020 anticipated investment spending to include only previously committed investment spending totaling approximately $100.0 million. As a precautionary measure, the Company borrowed $750 million under its revolving credit facility in March to increase its cash position and preserve financial flexibility. As further discussed below, in conjunction with waivers or modifications the Company expects to obtain with respect to its bank credit facilities and private placement notes in the second quarter of 2020, the Company is temporarily suspending its monthly cash dividend to common shareholders subsequent to the common share dividend previously declared and payable on May 15, 2020. Additionally, the Company has no scheduled debt maturities until 2022.

Collections. Tenants and borrowers paid approximately 15% of April 2020 contractual base rent and mortgage payments. The Company remains focused on working with its customers for long-term mutual benefit. As substantially all of the Company's customers remain temporarily closed, the Company has agreed to defer the rent and mortgage payments on a month-to-month basis for substantially all of the customers that did not pay rent for the month of April 2020. The



Company does not expect any significant changes in collections until after tenants and borrowers resume operations, which may occur on a state-by-state basis and is subject to local restrictions.

Tenant update. As previously disclosed, the parent of American Multi-Cinema, Inc., or “AMC”, announced the closing of a private offering of $500.0 million of first lien notes on April 24, 2020 and has indicated that these additional proceeds would provide it with sufficient liquidity to withstand a global suspension of operations until a partial reopening ahead of Thanksgiving. Despite this increase in short term liquidity, the Company believes it is prudent to begin recognizing revenue for AMC on a cash basis. Accordingly, the Company recorded a non-cash write-off of straight-line rent receivable of approximately $12.5 million for the quarter ended March 31, 2020 related to AMC as well as two small tenants where a similar assessment was made that cash accounting is appropriate.

Portfolio Update
The Company's total investments (a non-GAAP financial measure) were approximately $6.7 billion at March 31, 2020 with Experiential totaling $6.0 billion, or 89%, and Education totaling $0.7 billion, or 11%.

The Company's Experiential portfolio (excluding property under development) consisted of the following property types (owned or financed) at March 31, 2020:
181 theatre properties;
56 eat & play properties (including seven theatres located in entertainment districts);
18 attraction properties;
13 ski properties;
six experiential lodging properties;
one gaming property;
three cultural properties; and
seven fitness & wellness properties.

As of March 31, 2020, the Company's owned Experiential portfolio consisted of approximately 19.5 million square feet, which was 98.3% leased and included $30.1 million in property under development and $24.6 million in undeveloped land inventory.

The Company's Education portfolio consisted of the following property types (owned or financed) at March 31, 2020:
70 early childhood education center properties; and
16 private school properties.

As of March 31, 2020, the Company's owned Education portfolio consisted of approximately 1.9 million square feet, which was 100% leased and included $3.5 million in undeveloped land inventory.

The combined owned portfolio consisted of 21.4 million square feet and was 98.4% leased.

Investment Update
The Company's investment spending for the three months ended March 31, 2020 totaled $41.9 million and included the acquisition of two theatre properties for approximately $22.1 million, and spending on Experiential build-to-suit development and redevelopment projects.




Balance Sheet and Liquidity Update
At March 31, 2020, the Company's net debt to gross assets ratio (a non-GAAP Financial Measure) was 38% and its net debt to adjusted EBITDA ratio (a non-GAAP financial measure) was 5.1x.

The Company had $1.2 billion of unrestricted cash on hand and $750.0 million outstanding under its $1.0 billion unsecured revolving credit facility at March 31, 2020. The Company has no scheduled debt maturities until 2022 when its unsecured revolving credit facility comes due.

During the quarter, the Company's Board of Trustees (the "Board") approved a share repurchase program to which the Company may repurchase up to $150.0 million of the Company's common shares. The share repurchase program is scheduled to expire on December 31, 2020, however, the Company will suspend the program upon the effective date of the covenant modification agreements, as discussed below. Subsequent to March 31, 2020, the Company repurchased 1,015,731 common shares under the share repurchase program for approximately $20.4 million. The repurchases were made under a Rule 10b5-1 trading plan.

Dividend and Debt Covenant Waiver Information
The Board declared monthly cash dividends during the first quarter of 2020 totaling $1.1325 per common share. Subsequent to quarter-end, the Board declared a monthly cash dividend of $0.3825 per common share payable on May 15, 2020 to shareholders of record as of April 30, 2020.

The Board also declared its regular quarterly dividends to preferred shareholders 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.

Because certain financial covenants under the Company’s bank credit facilities and its private placement notes are calculated based on the most recent quarterly net operating income, the Company expects that it will not be in technical compliance (non-payment related) with such covenants at the end of the second quarter of 2020. Accordingly, the Company is in discussions with its lenders and private placement note holders to obtain a temporary suspension or modification of these covenants, with some suspended financial covenants expected to extend through the first quarter of 2021. As a part of this process, the Company has also determined that it will temporarily suspend its monthly cash dividend to common shareholders after the common share dividend payable May 15, 2020 (except as may be necessary to maintain REIT status and to not owe income tax) and will suspend the share repurchase program upon the effective date of the covenant modification agreements, which is expected to occur in the next 30 days. 

Conference Call Information
Management will host a conference call to discuss the Company's financial results on May 7, 2020 at 8:30 a.m. Eastern Daylight Time. The call may also include discussion of Company developments, and forward-looking and other material information about business and financial matters. The conference will be webcast and can be accessed via the Webcasts page in the Investor Center on the Company's website located at http://investors.eprkc.com/webcasts. To access the call, audio only, dial (866) 587-2930 and when prompted, provide the passcode 6981919.

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

Quarterly Supplemental
The Company's supplemental information package for the first quarter ended March 31, 2020 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 March 31,
 
2020
 
2019
Rental revenue
$
135,043

 
$
140,292

Other income
7,573

 
344

Mortgage and other financing income
8,396

 
9,891

Total revenue
151,012

 
150,527

Property operating expense
13,093

 
15,551

Other expense
9,534

 

General and administrative expense
10,988

 
11,710

Severance expense

 
420

Interest expense, net
34,753

 
33,963

Transaction costs
1,075

 
5,123

Credit loss expense
1,192

 

Depreciation and amortization
43,810

 
36,002

Income before equity in loss from joint ventures, other items and discontinued operations
36,567

 
47,758

Equity in (loss) income from joint ventures
(420
)
 
489

Gain (loss) on sale of real estate
220

 
(388
)
Income before income taxes
36,367

 
47,859

Income tax benefit
751

 
605

Income from continuing operations
$
37,118

 
$
48,464

Discontinued operations:
 
 
 
Income from discontinued operations before other items

 
10,169

Gain on sale of real estate from discontinued operations

 
6,716

Income from discontinued operations

 
16,885

Net income
37,118

 
65,349

Preferred dividend requirements
(6,034
)
 
(6,034
)
Net income available to common shareholders of EPR Properties
$
31,084

 
$
59,315

Net income available to common shareholders of EPR Properties per share:
 
 
 
Continuing operations
$
0.40

 
$
0.57

Discontinued operations

 
0.22

Basic
$
0.40

 
$
0.79

 
 
 
 
Continuing operations
$
0.40

 
$
0.57

Discontinued operations

 
0.22

Diluted
$
0.40

 
$
0.79

Shares used for computation (in thousands):
 
 
 
Basic
78,467

 
74,679

Diluted
78,476

 
74,725




EPR Properties
Condensed Consolidated Balance Sheets
(Unaudited, dollars in thousands)
 
March 31, 2020
 
December 31, 2019
Assets
 
 
 
Real estate investments, net of accumulated depreciation of $1,023,993 and $989,254 at March 31, 2020 and December 31, 2019, respectively
$
5,184,692

 
$
5,197,308

Land held for development
28,080

 
28,080

Property under development
30,063

 
36,756

Operating lease right-of-use assets
207,605

 
211,187

Mortgage notes and related accrued interest receivable
356,666

 
357,391

Investment in joint ventures
33,897

 
34,317

Cash and cash equivalents
1,225,122

 
528,763

Restricted cash
4,583

 
2,677

Accounts receivable
72,537

 
86,858

Other assets
112,095

 
94,174

Total assets
$
7,255,340

 
$
6,577,511

Liabilities and Equity
 
 
 
Accounts payable and accrued liabilities
$
112,167

 
$
122,939

Operating lease liabilities
232,343

 
235,650

Dividends payable
36,097

 
35,458

Unearned rents and interest
84,190

 
74,829

Debt
3,854,062

 
3,102,830

Total liabilities
4,318,859

 
3,571,706

Total equity
$
2,936,481

 
$
3,005,805

Total liabilities and equity
$
7,255,340

 
$
6,577,511


The historical financial results of the public charter schools sold by the Company in 2019 are reflected in the Company's consolidated statements of income as discontinued operations for the three months ended March 31, 2019. The operating results relating to discontinued operations are as follows (dollars in thousands):
 
Three Months Ended March 31,
 
 
2019
 
Rental revenue
$
10,431

 
Mortgage and other financing income
3,584

 
Total revenue
14,015

 
Property operating expense
242

 
Interest expense, net
(137
)
 
Depreciation and amortization
3,741

 
Income from discontinued operations before other items
10,169

 
Gain on sale of real estate
6,716

 
Income from discontinued operations
$
16,885

 




Non-GAAP Financial Measures

Funds From Operations (FFO), Funds From Operations As Adjusted (FFOAA) and Adjusted Funds From Operations (AFFO)
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 and AFFO. FFOAA is presented by adding to FFO costs (gain) associated with loan refinancing or payoff, net, transaction costs, severance expense, preferred share redemption costs, termination fees associated with tenants' exercises of public charter school buy-out options and credit loss expense and subtracting deferred income tax (benefit) expense. AFFO is presented by adding to FFOAA non-real estate depreciation and amortization, deferred financing fees amortization, share-based compensation expense to management and Trustees and amortization of above and below market leases, net and tenant allowances; and subtracting maintenance capital expenditures (including second generation tenant improvements and leasing commissions), straight-lined rental revenue, and the non-cash portion of mortgage and other financing income.

FFO, FFOAA and AFFO 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, FFOAA and AFFO herein because it believes this information is useful to investors in this regard. FFO, FFOAA and AFFO are non-GAAP financial measures. FFO, FFOAA and AFFO 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, FFOAA and AFFO the same way so comparisons with other REITs may not be meaningful.

The following table summarizes FFO, FFOAA and AFFO for the three months ended March 31, 2020 and 2019 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 March 31,
 
 
 
2020
 
2019
 
FFO:
 
 
 
 
Net income available to common shareholders of EPR Properties
$
31,084

 
$
59,315

 
Gain on sale of real estate
(220
)
 
(6,328
)
 
Real estate depreciation and amortization
43,525

 
39,514

 
Allocated share of joint venture depreciation
383

 
555

 
FFO available to common shareholders of EPR Properties
$
74,772

 
$
93,056

 
 
 
 
 
 
 
FFO available to common shareholders of EPR Properties
$
74,772

 
$
93,056

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

 
1,939

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

 
1,939

 
Diluted FFO available to common shareholders of EPR Properties
$
78,650

 
$
96,934

 
 
 
 
 
 
FFOAA:
 
 
 
 
FFO available to common shareholders of EPR Properties
$
74,772

 
$
93,056

 
Transaction costs
1,075

 
5,123

 
Severance expense

 
420

 
Termination fees included in gain on sale

 
5,001

 
Credit loss expense
1,192

 

 
Deferred income tax benefit
(1,113
)
 
(609
)
 
FFOAA available to common shareholders of EPR Properties
$
75,926

 
$
102,991

 
 
 
 
 
 
 
FFOAA available to common shareholders of EPR Properties
$
75,926

 
$
102,991

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

 
1,939

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

 
1,939

 
Diluted FFOAA available to common shareholders of EPR Properties
$
79,804

 
$
106,869

 
 
 
 
 
 
AFFO:
 
 
 
 
FFOAA available to common shareholders of EPR Properties
$
75,926

 
$
102,991

 
Non-real estate depreciation and amortization
285

 
229

 
Deferred financing fees amortization
1,634

 
1,502

 
Share-based compensation expense to management and trustees
3,509

 
3,177

 
Amortization of above and below market leases, net and tenant allowances
(152
)
 
(59
)
 
Maintenance capital expenditures (1)
(928
)
 
(297
)
 
Straight-lined rental revenue
9,708

 
(2,414
)
 
Non-cash portion of mortgage and other financing income
(91
)
 
(1,014
)
 
AFFO available to common shareholders of EPR Properties
$
89,891

 
$
104,115

 
 
 
 
 
 
AFFO available to common shareholders of EPR Properties
$
89,891

 
$
104,115

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

 
1,939

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

 
1,939

 
Diluted AFFO available to common shareholders of EPR Properties
$
93,769

 
$
107,993

 
 
 
 
 
 
FFO per common share:
 
 
 
 
Basic
$
0.95

 
$
1.25

 
Diluted
0.95

 
1.23

 
FFOAA per common share:
 
 
 
 
Basic
$
0.97

 
$
1.38

 
Diluted
0.97

 
1.36

 
AFFO per common share:
 
 
 
 
Basic
$
1.15

 
$
1.39

 
Diluted
1.14

 
1.38

 
Shares used for computation (in thousands):
 
 
 
 
Basic
78,467

 
74,679

 
Diluted
78,476

 
74,725

 
 
 
 
 
 
 
Weighted average shares outstanding-diluted EPS
78,476

 
74,725

 
Effect of dilutive Series C preferred shares
2,232

 
2,145

 
Effect of dilutive Series E preferred shares
1,664

 
1,622

 
Adjusted weighted average shares outstanding-diluted Series C and Series E
82,372

 
78,492

 
Other financial information:
 
 
 
 
Dividends per common share
$
1.1325

 
$
1.1250

 



Amounts above include the impact of discontinued operations, which are separately classified in the consolidated statements of income for all 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 FFO and FFOAA per share for the three months ended March 31, 2020 and 2019. 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 and 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.

Gross Assets
Gross Assets represents total assets (reported in accordance with GAAP) adjusted to exclude accumulated depreciation and reduced for cash and cash equivalents. By excluding accumulated depreciation and reducing cash and cash equivalents, the result provides an estimate of the investment made by the Company. The Company believes that investors commonly use versions of this calculation in a similar manner. The Company's method of calculating Gross Assets may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

Net Debt to Gross Assets
Net Debt to Gross Assets is a supplemental measure derived from non-GAAP financial measures that the Company uses to evaluate capital structure and the magnitude of debt to gross assets. The Company believes that investors commonly use versions of this ratio in a similar manner. The Company's method of calculating Net Debt to Gross Assets 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) for the quarter excluding severance expense, credit loss expense, transaction costs and prepayment fees. This number for the quarter is then multiplied by four to get an annual amount. For the three months ended March 31, 2020, Adjusted EBITDA was further adjusted to reflect the write-offs of straight-line rent receivables against rental revenue of $12.5 million related to the COVID-19 disruption.

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, total assets and net income (all reported in accordance with GAAP) to Net Debt, Gross Assets, Net Debt to Gross Assets, 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):
 
March 31,
 
2020
 
2019
Net Debt:
 
 
 
Debt
$
3,854,062

 
$
3,045,742

Deferred financing costs, net
35,933

 
32,838

Cash and cash equivalents
(1,225,122
)
 
(11,116
)
Net Debt
$
2,664,873

 
$
3,067,464

 
 
 
 
Gross Assets:
 
 
 
Total Assets
$
7,255,340

 
$
6,431,231

Accumulated depreciation
1,023,993

 
920,409

Cash and cash equivalents
(1,225,122
)
 
(11,116
)
Gross Assets
$
7,054,211

 
$
7,340,524

 
 
 
 
Net Debt to Gross Assets
38
%
 
42
%
 
 
 
 
 
Three Months Ended March 31,
 
2020
 
2019
EBITDAre and Adjusted EBITDA:
 
 
 
Net income
$
37,118

 
$
65,349

Interest expense, net
34,753

 
33,826

Income tax benefit
(751
)
 
(605
)
Depreciation and amortization
43,810

 
39,743

Gain on sale of real estate
(220
)
 
(6,328
)
Equity in loss (income) from joint ventures
420

 
(489
)
EBITDAre (for the quarter)
$
115,130

 
$
131,496

 
 
 
 
Severance expense

 
420

Transaction costs
1,075

 
5,123

Credit loss expense
1,192

 

Straight-line rental revenue write-offs (1)
12,532

 

Prepayment fees

 
(900
)
Adjusted EBITDA (for the quarter)
$
129,929

 
$
136,139

 
 
 
 
Adjusted EBITDA (2)
$
519,716

 
$
544,556

 
 
 
 
Net Debt/Adjusted EBITDA Ratio
5.1

 
5.6

 
 
 
 
Amounts above include the impact of discontinued operations, which are separately classified in the consolidated statements of income.
 
(1) Included in rental revenue from continuing operations in the accompanying consolidated statements of income. Rental revenue includes the following:
 
Three Months Ended March 31,
 
2020
 
2019
Minimum rent
$
138,219

 
$
130,497

Tenant reimbursements
3,698

 
6,102

Percentage rent
2,757

 
1,355

Straight-line rental revenue
2,824

 
2,245

Straight-line rental revenue write-offs
(12,532
)
 

Other rental revenue
77

 
93

Rental revenue
$
135,043

 
$
140,292

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




Total Investments
Total investments is a non-GAAP financial measure defined as the sum of the carrying values of real estate investments (before accumulated depreciation), land held for development, property under development, mortgage notes receivable (including related accrued interest receivable), investment in joint ventures, intangible assets, gross (before accumulated amortization and included in other assets) and notes receivable and related accrued interest receivable, net (included in other assets). Total investments is a useful measure for management and investors as it illustrates across which asset categories the Company's funds have been invested. Our method of calculating total investments may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. A reconciliation of total investments to total assets (computed in accordance with GAAP) is included in the following table (unaudited, in thousands):
 
March 31, 2020
 
December 31, 2019
Total Investments:
 
 
 
Real estate investments, net of accumulated depreciation
$
5,184,692

 
$
5,197,308

Add back accumulated depreciation on real estate investments
1,023,993

 
989,254

Land held for development
28,080

 
28,080

Property under development
30,063

 
36,756

Mortgage notes and related accrued interest receivable
356,666

 
357,391

Investment in joint ventures
33,897

 
34,317

Intangible assets, gross (1)
58,784

 
57,385

Notes receivable and related accrued interest receivable, net (1)
14,011

 
14,026

Total investments
$
6,730,186

 
$
6,714,517

 
 
 
 
Total investments
$
6,730,186

 
$
6,714,517

Cash and cash equivalents
1,225,122

 
528,763

Restricted cash
4,583

 
2,677

Operating lease right-of-use assets
207,605

 
211,187

Accounts receivable
72,537

 
86,858

Less: accumulated depreciation on real estate investments
(1,023,993
)
 
(989,254
)
Less: accumulated amortization on intangible assets
(13,531
)
 
(12,693
)
Prepaid expenses and other current assets
52,831

 
35,456

Total assets
$
7,255,340

 
$
6,577,511

 
 
 
 
(1) Included in other assets in the accompanying consolidated balance sheet. Other assets include the following:
 
 
 
 
 
March 31, 2020
 
December 31, 2019
Intangible assets, gross
$
58,784

 
$
57,385

Less: accumulated amortization on intangible assets
(13,531
)
 
(12,693
)
Notes receivable and related accrued interest receivable, net
14,011

 
14,026

Prepaid expenses and other current assets
52,831

 
35,456

Total other assets
$
112,095

 
$
94,174

About EPR Properties
EPR Properties is a 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 $6.7 billion in total investments across 44 states. 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 stable and attractive returns. 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 the uncertain financial impact of COVID-19, our capital resources and liquidity, expected waivers of financial covenants related to the Company's bank credit facilities and private placement notes, expected liquidity and performance of our customers, including AMC, our expected dividend payments and share repurchases and our results of operations and financial condition. The estimates presented herein are based on the Company's current expectations and, given the current economic uncertainty, there can be no assurances that definitive agreements providing for the expected waivers of financial covenant compliance will be entered into or that the waivers will be obtained in the time presently expected, if at all, or that the Company will be able to continue to comply with other applicable covenants under its debt agreements, which could materially impact actual performance. 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. 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 Quarterly Report 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)

q12020earningscall
First Quarter 2020 Earnings Call May 7, 2020


 
DISCLAIMER 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 the uncertain financial impact of COVID-19, our capital resources and liquidity, expected waivers of financial covenants related to the Company's bank credit facilities and private placement notes, expected liquidity and performance of our customers, including AMC, our expected dividend payments and share repurchases and our results of operations and financial condition. The estimates presented herein are based on the Company's current expectations and, given the current economic uncertainty, there can be no assurances that definitive agreements providing for the expected waivers of financial covenant compliance will be entered into or that the waivers will be obtained in the time presently expected, if at all, or that the Company will be able to continue to comply with other applicable covenants under its debt agreements, which could materially impact actual performance. 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. 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. 2


 
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. 3


 
PORTFOLIO UPDATE 4


 
PORTFOLIO OVERVIEW Portfolio Snapshot Q1 Update $6.7B Total Investments* Investment Spending $41.9M Occupancy at 98% 371 Properties, 64 Operators ** Company-level rent coverage 1.92x * See investor supplemental for the applicable period for definitions and calculations of this Non-GAAP measure ** Coverage numerator is customer's store level EBITDARM and denominator is EPR's minimum rent or interest (excludes non-cash straight-line rent or interest income from the effective interest method of accounting). Coverage is weighted average. Theatres, Eat and Play, Experiential Lodging, Cultural, Fitness and Wellness, and Early Childhood Education data is TTM December 2019. Attractions data is TTM August 2019. Private School data is TTM June 2019. Ski data is TTM April 2019. 5


 
EXPERIENTIAL PORTFOLIO PORTFOLIO HIGHLIGHTS $6.0B INVESTED* 98% OCCUPIED 285 PROPERTIES IN SERVICE THEATRES EAT & PLAY SKI ATTRACTIONS 2 PROPERTIES UNDER DEVELOPMENT EXPERIENTIAL GAMING CULTURAL FITNESS & LODGING WELLNESS 48 OPERATORS * See investor supplemental for the applicable period for definitions and calculations of this Non-GAAP measure 6


 
ESTIMATED PORTFOLIO REOPENING Theatres Reopening – Expected to begin July 1 • Operators are diligently developing health & safety measures • Anticipate gradual ramp up until new product is released Film Slate – Strong titles scheduled for remainder of 2020 and 2021 7


 
ESTIMATED PORTFOLIO REOPENING Phased Reopening – Based on industry/tenant/location; new health protocols will be in place to enhance customer protection & confidence • May – Fitness & Wellness, Eat & Play, Early Childhood Education • June – Experiential Lodging • July – Theatres, Attractions, Cultural, Gaming • August/September – Private Schools • Q4 – Ski Rent and Mortgage Payments – Actively working with customers, anticipate ramp up of rent and mortgage payments in Q3 & Q4 • Strong relationships with operators • Make long-term investments 8


 
FINANCIAL REVIEW 9


 
FINANCIAL HIGHLIGHTS Financial Performance* Quarter ended March 31, 2020 2019(1) $ Change % Change Total Revenue (Continuing Ops) $151.0 $150.5 $0.5 -% Net Income - Common 31.1 59.3 (28.2) (48%) FFO as adj. – Common* 75.9 103.0 (27.1) (26%) AFFO – Common* 89.9 104.1 (14.2) (14%) Net Income/share – Common 0.40 0.79 (0.39) (49%) FFO/share - Common, as adj.* 0.97 1.36 (0.39) (29%) AFFO/share - Common* 1.14 1.38 (0.24) (17%) (In millions except per-share data) (1) The operating results of the Company's public charter school portfolio for the three months ended March 31, 2019, including a $5.0 million termination fee, are included in all metrics in this column except for total revenue from continuing operations. The remaining public charter school portfolio was sold subsequent to this period. * See investor supplementals for the applicable periods for definitions and calculations of these non-GAAP measures 10


 
FINANCIAL HIGHLIGHTS Key Ratios* Quarter ended March 31, 2020 2019 Net debt to gross assets (book basis) 38% 42% Net debt to Adjusted EBITDA 5.1x 5.6x Fixed charge coverage 3.1x 3.2x Debt service coverage 3.6x 3.7x * 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. 11


 
CAPITAL MARKETS UPDATE Total Debt is $3.9B at 3/31/20 • $3.1B fixed rate or fixed through int. rate swaps; wtd. avg. = 4.3% • $750M drawn on $1B revolver • Weighted average debt maturity ~6 years; No scheduled debt maturities until revolver matures in 2022 Liquidity Position • $1.2B unrestricted cash • Suspension of monthly common share dividend after the dividend payable May 15, 2020 Share Repurchase Plan • During Q1, $150M share repurchase plan approved by our Board • Repurchased 1.0M common shares subsequent to 3/31/20 for $20.4M • Expiration on 12/31/2020; Suspension of program upon effective date of covenant modification agreements 12


 
EXPECTED REVENUE RECOGNITION AND COLLECTIONS Last 3 Quarters Full Year of 2020 2020 % of pre-COVID contractual cash 75% - 85% 80% - 90% revenue to be recognized % of pre-COVID contractual cash 35% - 45% 50% - 60% revenue to be collected 13


 
CLOSING COMMENTS 14


 
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


403894672_eprsupplementalcoverd1a01.jpg


                        
Supplemental Operating and Financial Data
First Quarter Ended March 31, 2020




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
Investment Spending and Disposition Summaries
Property Under Development - Investment Spending Estimates
Annualized Adjusted Revenue by Property Type
Lease Expirations
Top Ten Customers by Total Revenue
Definitions-Non-GAAP Financial Measures
Appendix-Reconciliation of Certain Non-GAAP Financial Measures


403894672_image5a12.jpg
 
 
Q1 2020 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 the uncertain financial impact of COVID-19, our capital resources and liquidity, expected dividend payments, expected liquidity and performance of our customers, including AMC, future expenditures for development projects and our results of operations and financial condition. The estimates presented herein are based on the Company's current expectations and, given the current economic uncertainty, there can be no assurances that the Company will be able to continue paying dividends at expected levels, or at all, or continue to comply with applicable covenants under its debt agreements, which could materially impact actual performance. 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. 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 Quarterly Report 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 23 through 25 for definitions of certain non-GAAP financial measures used in this document and the reconciliations of certain non-GAAP measures on pages 9 and 10 and in the Appendix on pages 26 through 30.




403894672_image5a12.jpg
 
 
Q1 2020 Supplemental
Page 3
 
 
 


COMPANY PROFILE
THE COMPANY
 
COMPANY STRATEGY
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.
 
EPR's primary business objective is to enhance shareholder value by achieving predictable growth in Funds from Operations As Adjusted ("FFOAA") and dividends per share.
 
 
Since that time, the Company has been a leading Experiential net lease REIT, specializing in select enduring experiential properties. We are focused on growing our Experiential portfolio with properties that offer a variety of enduring, congregate entertainment, recreation and leisure activities. Separately, our Education portfolio is a legacy investment that provides additional geographic and operator diversity.
 
Our strategic growth is focused on acquiring or developing experiential real estate venues which create value by facilitating out of home congregate entertainment, recreation and leisure experiences where consumers choose to spend their discretionary time and money. These are properties which make up the social infrastructure of society.
 
This focus is consistent with our depth of knowledge across each of our property types, creating a competitive advantage that allows us to more quickly identify key market trends. We deliberately apply information and our ingenuity to target properties that represent logical extensions within each of our existing property types or potential future investments.
403894672_portfoliocompositionnewa01.jpg
 
 
As part of our strategic planning and portfolio management process we assess new opportunities against the following underwriting principles:
 
403894672_iptgraphica01.jpg
 
 
 
 
 
BUILDING THE PREMIER EXPERIENTIAL REAL ESTATE PORTFOLIO
 
 
 
 
 
 
 
403894672_amca01.jpg
 
403894672_topgolfa01.jpg
 
403894672_aquatopiaa01.jpg
 
403894672_skia01.jpg

403894672_image5a12.jpg
 
 
Q1 2020 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
Executive 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 - 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.

403894672_image5a12.jpg
 
 
Q1 2020 Supplemental
Page 5
 
 
 


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

 
 
 
 
 
THREE MONTHS ENDED MARCH 31,
Operating Information:
2020
 
2019
Revenue (1)
$
151,012

 
$
150,527

Net income available to common shareholders of EPR Properties
31,084

 
59,315

EBITDAre (2)
115,130

 
131,496

Adjusted EBITDA (2)
129,929

 
136,139

Interest expense, net (1)
34,753

 
33,963

Capitalized interest
262

 
3,137

Straight-lined rental revenue
(9,708
)
 
2,414

Dividends declared on preferred shares
6,034

 
6,034

Dividends declared on common shares
88,996

 
84,343

General and administrative expense
10,988

 
11,710

 
 
 
 
 
MARCH 31,
Balance Sheet Information:
2020
 
2019
Total assets
$
7,255,340

 
$
6,431,231

Accumulated depreciation
1,023,993

 
920,409

Cash and cash equivalents
1,225,122

 
11,116

Total assets before accumulated depreciation less cash and cash equivalents (gross assets)
7,054,211

 
7,340,524

Debt
3,854,062

 
3,045,742

Deferred financing costs, net
35,933

 
32,838

Net debt (2)
2,664,873

 
3,067,464

Equity
2,936,481

 
2,912,779

Common shares outstanding
78,588

 
75,483

Total market capitalization (using EOP closing price)
4,939,300

 
9,243,164

Net debt/gross assets
38
%
 
42
%
Net debt/Adjusted EBITDA (3)
5.1

 
5.6

Adjusted net debt/Annualized adjusted EBITDA (2)(4)(5)
4.9

 
5.4

 
 
 
 
(1) Excludes discontinued operations.
(2) See pages 23 through 25 for definitions. See calculation as applicable on page 29.
(3) Adjusted EBITDA is for the quarter multiplied times four. See pages 23 through 25 for definitions. See calculation on page 29.
(4) Adjusted net debt is net debt less 40% times property under development. See pages 23 through 25 for definitions.
(5) Annualized adjusted EBITDA is adjusted EBITDA for the quarter further adjusted for in-service and disposed projects, percentage rent and participating interest and other non-recurring items which is then multiplied times four. These calculations can be found on page 29 under the reconciliation of Adjusted EBITDA and Annualized Adjusted EBITDA. See pages 23 through 25 for definitions.

403894672_image5a12.jpg
 
 
Q1 2020 Supplemental
Page 6
 
 
 


SELECTED BALANCE SHEET INFORMATION
(UNAUDITED, DOLLARS IN THOUSANDS)
 
 
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
1ST QUARTER 2020
 
4TH QUARTER 2019
 
3ND QUARTER 2019
 
2ND QUARTER 2019
 
1ST QUARTER 2019
 
4TH QUARTER 2018
Real estate investments
 
$
6,208,685

 
$
6,186,562

 
$
6,558,790

 
$
6,553,052

 
$
5,992,707

 
$
5,907,231

Less: accumulated depreciation
 
(1,023,993
)
 
(989,254
)
 
(989,480
)
 
(954,806
)
 
(920,409
)
 
(883,174
)
Land held for development
 
28,080

 
28,080

 
28,080

 
28,080

 
28,080

 
34,177

Property under development
 
30,063

 
36,756

 
31,825

 
80,695

 
315,237

 
287,546

Operating lease right-of-use assets
 
207,605

 
211,187

 
219,459

 
220,758

 
211,299

 

Mortgage notes and related accrued interest receivable
 
356,666

 
357,391

 
413,695

 
550,131

 
527,627

 
517,467

Investment in direct financing leases, net
 

 

 
20,727

 
20,675

 
20,616

 
20,558

Investment in joint ventures
 
33,897

 
34,317

 
35,222

 
35,658

 
35,188

 
34,486

Cash and cash equivalents
 
1,225,122

 
528,763

 
115,839

 
6,927

 
11,116

 
5,872

Restricted cash
 
4,583

 
2,677

 
5,929

 
5,010

 
11,166

 
12,635

Accounts receivable
 
72,537

 
86,858

 
99,190

 
108,433

 
111,146

 
98,369

Other assets
 
112,095

 
94,174

 
94,014

 
92,042

 
87,458

 
96,223

Total assets
 
$
7,255,340

 
$
6,577,511

 
$
6,633,290

 
$
6,746,655

 
$
6,431,231

 
$
6,131,390

 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
112,167

 
$
122,939

 
$
121,351

 
$
126,015

 
$
117,746

 
$
168,463

Operating lease liabilities
 
232,343

 
235,650

 
244,358

 
245,372

 
235,612

 

Common dividends payable
 
30,063

 
29,424

 
29,340

 
29,084

 
28,306

 
26,765

Preferred dividends payable
 
6,034

 
6,034

 
6,034

 
6,034

 
6,034

 
6,034

Unearned rents and interest
 
84,190

 
74,829

 
89,797

 
78,629

 
85,012

 
79,051

Line of credit
 
750,000

 

 

 
240,000

 
70,000

 
30,000

Deferred financing costs, net
 
(35,933
)
 
(37,165
)
 
(38,384
)
 
(31,957
)
 
(32,838
)
 
(33,941
)
Other debt
 
3,139,995

 
3,139,995

 
3,139,995

 
3,008,580

 
3,008,580

 
2,989,995

Total liabilities
 
4,318,859

 
3,571,706

 
3,592,491

 
3,701,757

 
3,518,452

 
3,266,367

Equity:
 
 
 
 
 
 
 
 
 
 
 
 
Common stock and additional paid-in-capital
 
3,845,911

 
3,835,674

 
3,815,278

 
3,759,032

 
3,597,916

 
3,505,266

Preferred stock at par value
 
148

 
148

 
148

 
148

 
148

 
148

Treasury stock
 
(154,357
)
 
(147,435
)
 
(147,435
)
 
(147,143
)
 
(146,906
)
 
(130,728
)
Accumulated other comprehensive income
 
(5,289
)
 
7,275

 
4,659

 
5,174

 
8,397

 
12,085

Distributions in excess of net income
 
(749,932
)
 
(689,857
)
 
(631,851
)
 
(572,313
)
 
(546,776
)
 
(521,748
)
Total equity
 
2,936,481

 
3,005,805

 
3,040,799

 
3,044,898

 
2,912,779

 
2,865,023

Total liabilities and equity
 
$
7,255,340

 
$
6,577,511

 
$
6,633,290

 
$
6,746,655

 
$
6,431,231

 
$
6,131,390

 
 
 
 
 
 
 
 
 
 
 
 
 

403894672_image5a12.jpg
 
 
Q1 2020 Supplemental
Page 7
 
 
 


SELECTED OPERATING DATA
(UNAUDITED, DOLLARS IN THOUSANDS)
 
 
 
 
 
 
 
 
 
 
 
 
 
1ST QUARTER 2020
 
4TH QUARTER 2019
 
3RD QUARTER 2019
 
2ND QUARTER 2019
 
1ST QUARTER 2019
 
4TH QUARTER 2018
Rental revenue
$
135,043

 
$
154,765

 
$
150,962

 
$
147,003

 
$
140,292

 
$
133,491

Other income
7,573

 
8,386

 
11,464

 
5,726

 
344

 
435

Mortgage and other financing income
8,396

 
7,195

 
6,930

 
9,011

 
9,891

 
16,991

Total revenue
151,012

 
170,346

 
169,356

 
161,740

 
150,527

 
150,917

 


 
 
 
 
 
 
 
 
 
 
Property operating expense
13,093

 
16,097

 
14,494

 
14,597

 
15,551

 
8,285

Other expense
9,534

 
10,173

 
11,403

 
8,091

 

 
325

General and administrative expense
10,988

 
10,831

 
11,600

 
12,230

 
11,710

 
12,165

Severance expense

 
423

 
1,521

 

 
420

 
5,938

Costs associated with loan refinancing or payoff

 

 
38,269

 

 

 

Interest expense, net
34,753

 
34,914

 
36,667

 
36,458

 
33,963

 
33,584

Transaction costs
1,075

 
5,784

 
5,959

 
6,923

 
5,123

 
1,583

Credit loss expense
1,192

 

 

 

 

 

Impairment charges

 
2,206

 

 

 

 
10,735

Depreciation and amortization
43,810

 
42,398

 
41,644

 
38,790

 
36,002

 
35,728

Income before equity in (loss) income from joint ventures and other items
36,567

 
47,520

 
7,799

 
44,651

 
47,758

 
42,574

Equity in (loss) income from joint ventures
(420
)
 
(905
)
 
(435
)
 
470

 
489

 
(5
)
Gain (loss) on sale of real estate
220

 
3,717

 
845

 

 
(388
)
 
349

Income tax benefit (expense)
751

 
530

 
600

 
1,300

 
605

 
(108
)
Income from continuing operations
37,118

 
50,862

 
8,809

 
46,421

 
48,464

 
42,810

Discontinued operations:
 
 
 
 
 
 
 
 
 
 
 
Income from discontinued operations before other items

 
4,937

 
11,736

 
10,399

 
10,169

 
11,221

Impairment on public charter school portfolio sale

 
(21,433
)
 

 

 

 

Gain on sale of real estate from discontinued operations

 
1,931

 
13,458

 
9,774

 
6,716

 

(Loss) income from discontinued operations

 
(14,565
)
 
25,194

 
20,173

 
16,885

 
11,221

Net income
37,118

 
36,297

 
34,003

 
66,594

 
65,349

 
54,031

Preferred dividend requirements
(6,034
)
 
(6,034
)
 
(6,034
)
 
(6,034
)
 
(6,034
)
 
(6,034
)
Net income available to common shareholders of EPR Properties
$
31,084

 
$
30,263

 
$
27,969

 
$
60,560

 
$
59,315

 
$
47,997

 
 
 
 
 
 
 
 
 
 
 
 

403894672_image5a12.jpg
 
 
Q1 2020 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):
 
1ST QUARTER 2020
 
4TH QUARTER 2019
 
3RD QUARTER 2019
 
2ND QUARTER 2019
 
1ST QUARTER 2019
 
4TH QUARTER 2018
Net income available to common shareholders of EPR Properties
 
$
31,084

 
$
30,263

 
$
27,969

 
$
60,560

 
$
59,315

 
$
47,997

Gain on sale of real estate
 
(220
)
 
(5,648
)
 
(14,303
)
 
(9,774
)
 
(6,328
)
 
(349
)
Impairment charges
 

 
23,639

 

 

 

 
10,735

Real estate depreciation and amortization
 
43,525

 
44,242

 
44,863

 
42,098

 
39,514

 
39,297

Allocated share of joint venture depreciation
 
383

 
551

 
553

 
554

 
555

 
56

FFO available to common shareholders of EPR Properties
 
$
74,772

 
$
93,047

 
$
59,082

 
$
93,438

 
$
93,056

 
$
97,736

FFO available to common shareholders of EPR Properties
 
$
74,772

 
$
93,047

 
$
59,082

 
$
93,438

 
$
93,056

 
$
97,736

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

 
1,937

 

 
1,939

 
1,939

 
1,939

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

 
1,939

 

 
1,939

 
1,939

 
1,939

Diluted FFO available to common shareholders of EPR Properties
 
$
78,650

 
$
96,923

 
$
59,082

 
$
97,316

 
$
96,934

 
$
101,614

 
 
 
 
 
 
 
 
 
 
 
 
 
FUNDS FROM OPERATIONS AS ADJUSTED ("FFOAA") (1):
 
 
 
 
 
 
 
 
 
 
 
 
FFO available to common shareholders of EPR Properties
 
$
74,772

 
$
93,047

 
$
59,082

 
$
93,438

 
$
93,056

 
$
97,736

Costs associated with loan refinancing or payoff
 

 
43

 
38,407

 

 

 

Transaction costs
 
1,075

 
5,784

 
5,959

 
6,923

 
5,123

 
1,583

Severance expense
 

 
423

 
1,521

 

 
420

 
5,938

Termination fee included in gain on sale
 

 
1,217

 
11,324

 
6,533

 
5,001

 

Credit loss expense
 
1,192

 

 

 

 

 

Deferred income tax benefit
 
(1,113
)
 
(847
)
 
(984
)
 
(1,675
)
 
(609
)
 
(182
)
FFO as adjusted available to common shareholders of EPR Properties
 
$
75,926

 
$
99,667

 
$
115,309

 
$
105,219

 
$
102,991

 
$
105,075

 
 
 
 
 
 
 
 
 
 
 
 
 
FFO as adjusted available to common shareholders of EPR Properties
 
$
75,926

 
$
99,667

 
$
115,309

 
$
105,219

 
$
102,991

 
$
105,075

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

 
1,937

 
1,939

 
1,939

 
1,939

 
1,939

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

 
1,939

 
1,939

 
1,939

 
1,939

 
1,939

Diluted FFO as adjusted available to common shareholders of EPR Properties
 
$
79,804

 
$
103,543

 
$
119,187

 
$
109,097

 
$
106,869

 
$
108,953

FFO per common share:
 


 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.95

 
$
1.19

 
$
0.76

 
$
1.23

 
$
1.25

 
$
1.31

Diluted
 
0.95

 
1.18

 
0.76

 
1.22

 
1.23

 
1.30

FFO as adjusted per common share:
 


 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.97

 
$
1.27

 
$
1.49

 
$
1.38

 
$
1.38

 
$
1.41

Diluted
 
0.97

 
1.26

 
1.46

 
1.36

 
1.36

 
1.39

Shares used for computation (in thousands):
 


 
 
 
 
 
 
 
 
 
 
Basic
 
78,467

 
78,456

 
77,632

 
76,164

 
74,679

 
74,343

Diluted
 
78,476

 
78,485

 
77,664

 
76,199

 
74,725

 
74,402

Effect of dilutive Series C preferred shares
 
2,232

 
2,184

 
2,170

 
2,158

 
2,145

 
2,133

Effect of dilutive Series E preferred shares
 
1,664

 
1,640

 
1,634

 
1,628

 
1,622

 
1,615

Adjusted weighted-average shares outstanding-diluted Series C and Series E
 
82,372

 
82,309

 
81,468

 
79,985

 
78,492

 
78,150

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) See pages 23 through 25 for definitions.
 
 
 
 
 
 
 
 
 
 
 
 
Amounts above include the impact of discontinued operations, which are separately classified in the consolidated statements of income.

403894672_image5a12.jpg
 
 
Q1 2020 Supplemental
Page 9
 
 
 


ADJUSTED FUNDS FROM OPERATIONS
(UNAUDITED, DOLLARS IN THOUSANDS EXCEPT PER SHARE INFORMATION)
ADJUSTED FUNDS FROM OPERATIONS ("AFFO") (1):
 
1ST QUARTER 2020
 
4TH QUARTER 2019
 
3RD QUARTER 2019
 
2ND QUARTER 2019
 
1ST QUARTER 2019
 
4TH QUARTER 2018
 
 

 
 
 
 
 
 
 
 
 
 
FFO available to common shareholders of EPR Properties