Provides Earnings Guidance for 2023
EPR Properties (NYSE:EPR) today announced operating results for
the second quarter ended June 30, 2023 (dollars in thousands,
except per share data):
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Total revenue
$
172,907
$
160,446
$
344,303
$
317,918
Net income available to common
shareholders
7,560
34,876
59,184
71,035
Net income available to common
shareholders per diluted common share
0.10
0.46
0.78
0.95
Funds From Operations as adjusted
(FFOAA)(1)
97,792
88,739
193,798
171,952
FFOAA per diluted common share (1)
1.28
1.17
2.53
2.27
Adjusted Funds From Operations (AFFO)
(1)
100,101
93,388
198,835
181,233
AFFO per diluted common share (1)
1.31
1.23
2.60
2.39
(1) A non-GAAP financial measure
Second Quarter Company Headlines
- Regal Bankruptcy Resolution - As previously announced,
the Company entered into a comprehensive restructuring agreement
with Regal anchored by a new master lease for 41 of the 57
properties previously leased to Regal.
- Solid Deferral Collections - During the second quarter
of 2023, the Company collected $7.3 million of deferred rent from
cash basis customers that was booked as additional revenue and $0.5
million of deferred rent from accrual basis customers that reduced
receivables. Through June 30, 2023, the Company has collected
approximately $135.0 million of rent and interest that had been
deferred as a result of the COVID-19 pandemic.
- Strong Liquidity Position - As of June 30, 2023, the
Company had cash on hand of $99.7 million, no borrowings on its
$1.0 billion unsecured revolving credit facility and a consolidated
debt profile that is all at fixed interest rates with no maturities
until 2024.
- Santikos Acquires Southern Theatres - On July 17, 2023,
Santikos Theaters, LLC (“Santikos”) acquired VSS-Southern Theatres
(“Southern”) through an asset purchase agreement. The combined
Santikos entity operates 27 highly amenitized theaters in eight
southeastern states. The Company has investments in 10 Southern
properties and there were no structural changes to existing lease
terms. In conjunction with the transaction, Southern paid in full
its remaining deferred rent of $11.6 million, which will be
recognized as rental revenue in the third quarter of 2023.
- Introduces 2023 Earnings Guidance - The Company is
providing FFOAA per diluted common share guidance for 2023 of $5.05
to $5.15, representing an increase of 9% at the midpoint versus
2022 performance. Additionally, the Company is confirming 2023
investment spending guidance of a range of $200.0 million to $300.0
million.
“During the quarter, we reached a meaningful milestone as we
entered into a restructuring agreement with Regal, providing us
with a significantly stronger tenant credit, a long-term master
lease and a percentage rent component allowing us to participate in
the recovery of the box office. With this resolution, we also have
more visibility into our earnings outlook, and we are pleased to
provide earnings guidance for 2023,” stated Company President and
CEO Greg Silvers. “With the recent record-setting performance of
Barbie and Oppenheimer, consumers continue to demonstrate the
relevance and economic vitality of the exhibition industry.
Additionally, Santikos' acquisition of Southern demonstrates that
capital is again flowing to the sector, and as a result, we
received full payment of our remaining deferred rent and have a
stronger positioned tenant. Having completed approximately $100
million of investments this year, we are selectively growing our
experiential portfolio while being prudent in our capital
allocation, as we have committed to approximately $224 million of
additional experiential development and redevelopment projects over
the next two years without the need to raise additional capital. We
have continued to enhance our financial flexibility with a priority
on maintaining our strong liquidity position and leverage
profile.”
Regal Bankruptcy Resolution
On September 7, 2022, Cineworld Group, plc, Regal Entertainment
Group and the Company's other Regal theatre tenants (collectively,
“Regal”) filed for protection under Chapter 11 of the U.S.
Bankruptcy Code (the “Code”). Regal leased 57 theatres from the
Company pursuant to two master leases and 28 single property leases
(the “Regal Leases”). As a result of the filing, Regal did not pay
its rent or monthly deferral payment for September 2022 but
subsequently paid portions of this amount pursuant to an order of
the bankruptcy court. Regal resumed payment of rent and deferral
payments for all Regal Leases commencing in October 2022 and has
continued making these payments through July 2023. Regal's plan of
reorganization became effective on July 31, 2023 (the "Effective
Date"), and Regal emerged from the Chapter 11 bankruptcy cases.
On June 28, 2023, the Company announced that it had entered into
a comprehensive restructuring agreement with Regal anchored by a
new master lease ("Master Lease") for 41 of the 57 properties
previously leased to Regal ("Master Lease Properties"), which
became effective on the Effective Date. The Master Lease is a
triple-net lease with $65.0 million in total annual fixed rent
payable beginning on August 1, 2023 that escalates by 10% every
five years. The Master Lease has three tranches of properties. The
initial terms of the tranches are staggered, expiring on the 11th,
13th and 15th anniversaries from the Effective Date. Additionally,
the Master Lease provides for a guaranty from a parent entity of
Regal and percentage rents based on gross sales of the Master Lease
Properties. Due to Regal's expected significantly improved credit
profile, continuing box office recovery and Regal's payment
history, among other factors, the Company will recognize revenue
related to the Master Lease on an accrual basis beginning on the
Effective Date.
Additionally, as part of the comprehensive restructuring
agreement with Regal, Regal surrendered to the Company the
remaining 16 properties not included in the Master Lease on the
Effective Date. The Company has entered into management agreements
whereby Cinemark will manage four and Phoenix Theatres will manage
one of the surrendered properties. The Company plans to sell the
remaining 11 surrendered properties and deploy the proceeds to
acquire non-theatre experiential properties. In conjunction with
taking back the surrendered properties, the Company recorded a
non-cash impairment charge in the second quarter of $42.4 million
based on recently appraised values.
For more details on the Master Lease and comprehensive
restructuring agreement between the Company and Regal, see the
Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 2023.
Solid Deferral Collections
In addition to regular quarterly collections, during the second
quarter of 2023, the Company collected $7.3 million of deferred
rent from cash basis customers that was booked as additional
revenue and $0.5 million of deferred rent from accrual basis
customers that reduced receivables, leaving only $1.0 million of
deferred rent receivable remaining on the balance sheet at June 30,
2023. Through June 30, 2023, the Company has collected
approximately $135.0 million of rent and interest that had been
deferred as a result of the pandemic.
Strong Liquidity Position
The Company remains focused on maintaining strong liquidity and
financial flexibility. The Company had $99.7 million of cash on
hand at quarter-end, no borrowings on its $1.0 billion unsecured
revolving credit facility and a consolidated debt profile that is
all at fixed interest rates with no maturities in 2023 and only
$136.6 million due in 2024.
Santikos Acquisition of Southern Theatres
On July 17, 2023, Santikos acquired Southern through an asset
purchase agreement. The combined Santikos entity operates 27 highly
amenitized theaters in eight southeastern states. The Company has
investments in 10 Southern properties in six states and there were
no structural changes to existing lease terms. Santikos had
investments in 10 theaters located in the San Antonio area prior to
the transaction and purchased a total of 17 theaters in eight
states from Southern, making Santikos the eighth largest theater
circuit in North America. Santikos is owned by The San Antonio Area
Foundation, one of the nation’s premier Community Foundations. In
conjunction with the transaction, Southern paid in full its
remaining deferred rent of $11.6 million, which will be recognized
as rental revenue in the third quarter of 2023.
Investment Update
The Company's investment spending during the three months ended
June 30, 2023 totaled $32.2 million, bringing the total investment
spending for the six months ended June 30, 2023 to $98.7 million.
Investment spending for the quarter was primarily related to
experiential build-to-suit development and redevelopment
projects.
As of June 30, 2023, the Company has also committed an
additional approximately $224.0 million for experiential
development and redevelopment projects, which is expected to be
funded over the next two years without the need to raise additional
capital. During the remainder of 2023, the Company intends to
continue to be more selective in making investments, utilizing
excess cash flow and borrowings under our line of credit, until
such time as the Company's cost of capital returns to acceptable
levels.
Portfolio Update
The Company's total assets were $5.7 billion (after accumulated
depreciation of approximately $1.4 billion) and total investments
(a non-GAAP financial measure) were approximately $6.7 billion at
June 30, 2023, with Experiential investments totaling $6.2 billion,
or 92%, and Education investments totaling $0.5 billion, or 8%.
The Company's Experiential portfolio (excluding property under
development and undeveloped land inventory) consisted of the
following property types (owned or financed) at June 30, 2023:
- 171 theatre properties;
- 57 eat & play properties (including seven theatres located
in entertainment districts);
- 24 attraction properties;
- 11 ski properties;
- seven experiential lodging properties;
- 16 fitness & wellness properties;
- one gaming property; and
- three cultural properties.
As of June 30, 2023, the Company's owned Experiential portfolio
consisted of approximately 20.1 million square feet, which was 98%
leased and included a total of $80.7 million in property under
development and $20.2 million in undeveloped land inventory.
The Company's Education portfolio consisted of the following
property types (owned or financed) at June 30, 2023:
- 64 early childhood education center properties; and
- nine private school properties.
As of June 30, 2023, the Company's owned Education portfolio
consisted of approximately 1.4 million square feet, which was 93%
leased.
The combined owned portfolio consisted of 21.5 million square
feet and was 97% leased.
Dividend Information
The Company declared regular monthly cash dividends during the
second quarter of 2023 totaling $0.825 per common share.
Additionally, the Board declared its regular quarterly dividends to
preferred shareholders of $0.359375 per share on both the Company's
5.75% Series C cumulative convertible preferred shares and Series G
cumulative redeemable preferred shares and $0.5625 per share on its
9.00% Series E cumulative convertible preferred shares.
Guidance
(Dollars in millions, except per share
data):
Measure
2023 Guidance
Net income available to common
shareholders per diluted common share
$
2.14
to
$
2.24
FFOAA per diluted common share
$
5.05
to
$
5.15
Investment spending
$
200.0
to
$
300.0
Disposition proceeds
$
31.0
to
$
41.0
The Company is providing its 2023 guidance for FFOAA per diluted
common share of $5.05 to $5.15, the midpoint of which represents
approximately 9% growth over 2022. The 2023 guidance for FFOAA per
diluted common share is based on a FFO per diluted common share
range of $4.97 to $5.07 adjusted for severance expense, transaction
costs, credit loss expense (benefit), deferred income tax benefit
and the impact of Series C and Series E dilution. FFO per diluted
common share for 2023 is based on a net income available to common
shareholders per diluted common share range of $2.14 to $2.24 plus
impairment of real estate investments, net of $0.58, estimated real
estate depreciation and amortization of $2.20 and allocated share
of joint venture depreciation of $0.12, less gain on sale of real
estate of $0.02 and the impact of Series C and Series E dilution of
$0.05 (in accordance with the NAREIT definition of FFO).
Additional earnings guidance detail can be found in the
Company's supplemental information package available in the
Investor Center of the Company's website located at
https://investors.eprkc.com/earnings-supplementals.
Conference Call Information
Management will host a conference call to discuss the Company's
financial results on August 3, 2023 at 8:30 a.m. Eastern 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 https://investors.eprkc.com/webcasts.
To access the audio-only call, visit the Webcasts page for the link
to register and receive dial-in information and a PIN providing
access to the live call. It is recommended that you join 10 minutes
prior to the start of the event (although you may register and
dial-in at any time during the call).
You may watch a replay of the webcast by visiting the Webcasts
page at https://investors.eprkc.com/webcasts.
Quarterly Supplemental
The Company's supplemental information package for the second
quarter and six months ended June 30, 2023 is available in the
Investor Center on the Company's website located at
https://investors.eprkc.com/earnings-supplementals.
EPR Properties
Consolidated Statements of
Income
(Unaudited, dollars in
thousands except per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Rental revenue
$
151,870
$
142,875
$
303,461
$
282,478
Other income
10,124
9,961
19,457
19,266
Mortgage and other financing income
10,913
7,610
21,385
16,174
Total revenue
172,907
160,446
344,303
317,918
Property operating expense
13,972
13,592
28,127
27,531
Other expense
9,161
8,872
18,111
16,969
General and administrative expense
15,248
12,691
29,213
25,915
Severance expense
547
—
547
—
Transaction costs
36
1,145
306
3,392
Credit loss (benefit) expense
(275
)
9,512
312
9,206
Impairment charges
43,785
—
43,785
4,351
Depreciation and amortization
43,705
40,766
84,909
80,810
Total operating expenses
126,179
86,578
205,310
168,174
Loss on sale of real estate
(575
)
—
(1,135
)
—
Income from operations
46,153
73,868
137,858
149,744
Interest expense, net
31,591
33,289
63,313
66,549
Equity in loss (income) from joint
ventures
615
(1,421
)
2,600
(1,315
)
Impairment charges on joint ventures
—
647
—
647
Income before income taxes
13,947
41,353
71,945
83,863
Income tax expense
347
444
688
762
Net income
$
13,600
$
40,909
$
71,257
$
83,101
Preferred dividend requirements
6,040
6,033
12,073
12,066
Net income available to common
shareholders of EPR Properties
$
7,560
$
34,876
$
59,184
$
71,035
Net income available to common
shareholders of EPR Properties per share:
Basic
$
0.10
$
0.47
$
0.79
$
0.95
Diluted
$
0.10
$
0.46
$
0.78
$
0.95
Shares used for computation (in
thousands):
Basic
75,297
74,986
75,191
74,915
Diluted
75,715
75,234
75,571
75,142
EPR Properties
Condensed Consolidated Balance
Sheets
(Unaudited, dollars in
thousands)
June 30, 2023
December 31, 2022
Assets
Real estate investments, net of
accumulated depreciation of $1,369,790 and $1,302,640 at June 30,
2023 and December 31, 2022, respectively
$
4,659,678
$
4,714,136
Land held for development
20,168
20,168
Property under development
80,650
76,029
Operating lease right-of-use assets
192,325
200,985
Mortgage notes and related accrued
interest receivable, net
466,459
457,268
Investment in joint ventures
53,763
52,964
Cash and cash equivalents
99,711
107,934
Restricted cash
2,623
2,577
Accounts receivable
53,305
53,587
Other assets
74,882
73,053
Total assets
$
5,703,564
$
5,758,701
Liabilities and Equity
Accounts payable and accrued
liabilities
$
74,493
$
80,087
Operating lease liabilities
233,126
241,407
Dividends payable
28,321
27,438
Unearned rents and interest
71,746
63,939
Debt
2,813,007
2,810,111
Total liabilities
3,220,693
3,222,982
Total equity
$
2,482,871
$
2,535,719
Total liabilities and equity
$
5,703,564
$
5,758,701
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 severance expense, transaction costs,
credit loss (benefit) expense, costs associated with loan
refinancing or payoff, preferred share redemption costs and
impairment of operating lease right-of-use assets and subtracting
sale participation income, gain on insurance recovery and 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 (removing the
impact of straight-lined ground sublease expense), 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
supplemental measures 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
and six months ended June 30, 2023 and 2022 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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
FFO:
Net income available to common
shareholders of EPR Properties
$
7,560
$
34,876
$
59,184
$
71,035
Loss on sale of real estate
575
—
1,135
—
Impairment of real estate investments,
net
43,785
—
43,785
4,351
Real estate depreciation and
amortization
43,494
40,563
84,494
80,390
Allocated share of joint venture
depreciation
2,162
1,996
4,217
3,483
Impairment charges on joint ventures
—
647
—
647
FFO available to common shareholders of
EPR Properties
$
97,576
$
78,082
$
192,815
$
159,906
FFO available to common shareholders of
EPR Properties
$
97,576
$
78,082
$
192,815
$
159,906
Add: Preferred dividends for Series C
preferred shares
1,938
1,938
3,876
3,876
Add: Preferred dividends for Series E
preferred shares
1,938
1,939
3,876
3,878
Diluted FFO available to common
shareholders of EPR Properties
$
101,452
$
81,959
$
200,567
$
167,660
FFOAA:
FFO available to common shareholders of
EPR Properties
$
97,576
$
78,082
$
192,815
$
159,906
Severance expense
547
—
547
—
Transaction costs
36
1,145
306
3,392
Credit loss (benefit) expense
(275
)
9,512
312
9,206
Gain on insurance recovery (included in
other income)
—
—
—
(552
)
Deferred income tax benefit
(92
)
—
(182
)
—
FFOAA available to common shareholders of
EPR Properties
$
97,792
$
88,739
$
193,798
$
171,952
FFOAA available to common shareholders of
EPR Properties
$
97,792
$
88,739
$
193,798
$
171,952
Add: Preferred dividends for Series C
preferred shares
1,938
1,938
3,876
3,876
Add: Preferred dividends for Series E
preferred shares
1,938
1,939
3,876
3,878
Diluted FFOAA available to common
shareholders of EPR Properties
$
101,668
$
92,616
$
201,550
$
179,706
AFFO:
FFOAA available to common shareholders of
EPR Properties
$
97,792
$
88,739
$
193,798
$
171,952
Non-real estate depreciation and
amortization
211
203
415
420
Deferred financing fees amortization
2,150
2,090
4,279
4,161
Share-based compensation expense to
management and trustees
4,477
4,169
8,799
8,414
Amortization of above and below market
leases, net and tenant allowances
(185
)
(89
)
(274
)
(176
)
Maintenance capital expenditures (1)
(3,455
)
(134
)
(5,631
)
(1,485
)
Straight-lined rental revenue
(1,149
)
(1,733
)
(3,254
)
(2,328
)
Straight-lined ground sublease expense
401
261
966
509
Non-cash portion of mortgage and other
financing income
(141
)
(118
)
(263
)
(234
)
AFFO available to common shareholders of
EPR Properties
$
100,101
$
93,388
$
198,835
$
181,233
AFFO available to common shareholders of
EPR Properties
$
100,101
$
93,388
$
198,835
$
181,233
Add: Preferred dividends for Series C
preferred shares
1,938
1,938
3,876
3,876
Add: Preferred dividends for Series E
preferred shares
1,938
1,939
3,876
3,878
Diluted AFFO available to common
shareholders of EPR Properties
$
103,977
$
97,265
$
206,587
$
188,987
FFO per common share:
Basic
$
1.30
$
1.04
$
2.56
$
2.13
Diluted
1.27
1.04
2.52
2.12
FFOAA per common share:
Basic
$
1.30
$
1.18
$
2.58
$
2.30
Diluted
1.28
1.17
2.53
2.27
AFFO per common share:
Basic
$
1.33
$
1.25
$
2.64
$
2.42
Diluted
1.31
1.23
2.60
2.39
Shares used for computation (in
thousands):
Basic
75,297
74,986
75,191
74,915
Diluted
75,715
75,234
75,571
75,142
Weighted average shares
outstanding-diluted EPS
75,715
75,234
75,571
75,142
Effect of dilutive Series C preferred
shares
2,279
2,245
2,276
2,243
Effect of dilutive Series E preferred
shares
1,663
1,664
1,663
1,664
Adjusted weighted average shares
outstanding-diluted Series C and Series E
79,657
79,143
79,510
79,049
Other financial information:
Dividends per common share
$
0.8250
$
0.8250
$
1.6500
$
1.6000
(1) Includes maintenance capital
expenditures and certain second generation tenant improvements and
leasing commissions.
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, FFOAA and AFFO per share
for the three and six months ended June 30, 2023 and June 30, 2022.
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, FFOAA and AFFO per share for those 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 Ratio
Net Debt to Gross Assets Ratio 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 the Net
Debt to Gross Assets Ratio 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 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 because 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 EBITDAre
Management uses Adjusted EBITDAre in its analysis of the
performance of the business and operations of the Company.
Management believes Adjusted EBITDAre is useful to investors
because it excludes various items that management believes are not
indicative of operating performance, and because it is an
informative measure to use in computing various financial ratios to
evaluate the Company. The Company defines Adjusted EBITDAre as
EBITDAre (defined above) for the quarter excluding sale
participation income, gain on insurance recovery, severance
expense, transaction costs, credit loss (benefit) expense,
impairment losses on operating lease right-of-use assets and
prepayment fees.
The Company's method of calculating Adjusted EBITDAre may be
different from methods used by other REITs and, accordingly, may
not be comparable to such other REITs. Adjusted 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 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 EBITDAre Ratio
Net Debt to Adjusted EBITDAre 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 the Net Debt to
Adjusted EBITDAre Ratio 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 Ratio, EBITDAre, Adjusted EBITDAre and Net
Debt to Adjusted EBITDAre Ratio (each of which is a non-GAAP
financial measure), as applicable, are included in the following
tables (unaudited, in thousands except ratios):
June 30,
2023
2022
Net
Debt:
Debt
$
2,813,007
$
2,807,080
Deferred financing costs, net
28,222
34,149
Cash and cash equivalents
(99,711
)
(168,266
)
Net Debt
$
2,741,518
$
2,672,963
Gross Assets:
Total Assets
$
5,703,564
$
5,793,442
Accumulated depreciation
1,369,790
1,243,240
Cash and cash equivalents
(99,711
)
(168,266
)
Gross Assets
$
6,973,643
$
6,868,416
Debt to Total Assets Ratio
49
%
48
%
Net Debt to Gross Assets Ratio
39
%
39
%
Three Months Ended June
30,
2023
2022
EBITDAre and
Adjusted EBITDAre:
Net income
$
13,600
$
40,909
Interest expense, net
31,591
33,289
Income tax expense
347
444
Depreciation and amortization
43,705
40,766
Loss on sale of real estate
575
—
Impairment of real estate investments,
net
43,785
—
Impairment charges on joint ventures
—
647
Allocated share of joint venture
depreciation
2,162
1,996
Allocated share of joint venture interest
expense
2,172
1,276
EBITDAre
$
137,937
$
119,327
Severance expense
547
—
Transaction costs
36
1,145
Credit loss (benefit) expense
(275
)
9,512
Adjusted EBITDAre
$
138,245
$
129,984
Adjusted EBITDAre (annualized) (1)
$
552,980
$
519,936
Net Debt/Adjusted EBITDA Ratio
5.0
5.1
(1) Adjusted EBITDA for the quarter is
multiplied by four to calculate an annualized 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 and related accrued
interest receivable, net, 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
assets (computed in accordance with GAAP) to total investments is
included in the following table (unaudited, in thousands):
June 30, 2023
December 31, 2022
Total assets
$
5,703,564
$
5,758,701
Operating lease right-of-use assets
(192,325
)
(200,985
)
Cash and cash equivalents
(99,711
)
(107,934
)
Restricted cash
(2,623
)
(2,577
)
Accounts receivable
(53,305
)
(53,587
)
Add: accumulated depreciation on real
estate investments
1,369,790
1,302,640
Add: accumulated amortization on
intangible assets (1)
27,173
23,487
Prepaid expenses and other current assets
(1)
(33,625
)
(33,559
)
Total investments
$
6,718,938
$
6,686,186
Total
Investments:
Real estate investments, net of
accumulated depreciation
$
4,659,678
$
4,714,136
Add back accumulated depreciation on real
estate investments
1,369,790
1,302,640
Land held for development
20,168
20,168
Property under development
80,650
76,029
Mortgage notes and related accrued
interest receivable, net
466,459
457,268
Investment in joint ventures
53,763
52,964
Intangible assets, gross (1)
64,156
60,109
Notes receivable and related accrued
interest receivable, net (1)
4,274
2,872
Total investments
$
6,718,938
$
6,686,186
(1) Included in other assets in the
accompanying consolidated balance sheet. Other assets include the
following:
June 30, 2023
December 31, 2022
Intangible assets, gross
$
64,156
$
60,109
Less: accumulated amortization on
intangible assets
(27,173
)
(23,487
)
Notes receivable and related accrued
interest receivable, net
4,274
2,872
Prepaid expenses and other current
assets
33,625
33,559
Total other assets
$
74,882
$
73,053
About EPR Properties
EPR Properties (NYSE:EPR) is the leading diversified
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 that create value
by facilitating out of home leisure and recreation experiences
where consumers choose to spend their discretionary time and money.
We have total assets of approximately $5.7 billion (after
accumulated depreciation of approximately $1.4 billion) 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
The financial results in this press release reflect preliminary,
unaudited results, which are not final until the Company’s
Quarterly Report on Form 10-Q is filed. 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 guidance, the uncertain financial
impact of the COVID-19 pandemic, our capital resources and
liquidity, our pursuit of growth opportunities, the timing of
transaction closings and investment spending, our expected cash
flows, the performance of our customers, our expected cash
collections and our results of operations and financial condition.
The forward-looking statements presented herein are based on the
Company's current expectations. Forward-looking statements involve
numerous risks and uncertainties, and you should not rely on them
as predictions of actual events. There is no assurance that 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802797923/en/
EPR Properties Brian Moriarty, 816-472-1700 www.eprkc.com
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