EPR Properties Q2 FY2025 earnings call

• Sustained momentum across diversified portfolio with solid earnings growth and disciplined capital allocation.
• Improved cost of capital positions to accelerate future investment spending, with a robust pipeline of over $100 million committed to experiential dev/redev projects.
• Strategic capital recycling advancing ahead of expectations, focusing portfolio on diversified experiential assets.
• Box office shows resilience with major releases meeting/exceeding expectations, Regal master lease near percentage rent expectations.
• Hot springs resorts ranked highly in US, expansion at Jellystone Kozy Rest RV Resort complete with early season gains.
• Entered traditional golf and Pinstack Eat & Play, with Pinstack project expected to open in 2026.
• Greg Zimmerman to retire, CIO role to transition to Ben Fox in August, with Greg staying until Q1 2026 for transition.

The Experiential portfolio accounts for 94% of total investments, approximately $6.5 billion, with 274 properties, 99% leased or operated. The Education portfolio has 55 properties, 100% leased. Second quarter consolidated coverage was 2.1x, up from 2.0x in Q1. Q2 box office was $2.7 billion, up 37% compared to Q2 2024, with 2025 calendar year estimate between $9.3 million and $9.7 million. Investment spending in Q2 was $48.6 million, all in the Experiential portfolio. Year-to-date investment spending is $86.3 million. Net proceeds from dispositions in Q2 were $35.6 million, and 2025 disposition guidance is revised to $130 million to $145 million from $80 million to $120 million.

• Confirm 2024 FFO as adjusted per share guidance of $5 to $5.16.
• Maintain 2025 investment spending guidance of $200 million to $300 million.
• Revise 2025 disposition proceeds guidance to $130 million to $145 million from $80 million to $120 million.
• Confirm percentage rent and participating interest income guidance of $21.5 million to $25.5 million.
• Confirm G&A expense guidance of $53 million to $56 million.

Q: Is there a significant amount of assets out there for sale at reasonable prices that you want to own? Or does expanding your pipeline going forward mean expanding the development pipeline as much or more than acquisitions?

A: Greg Silvers and Greg Zimmerman state there are robust opportunities, with well over half the pipeline being acquisitions, and they are discerning in deploying capital to best targets.

Q: How are you guys thinking about dispositions in the back half of this year and the early part of next year?

A: Greg Silvers and Greg Zimmerman mention they have strategic objectives to lower theater exposure, with dispositions continuing opportunistically to achieve that and generate capital, with the range indicating they are close to targeted dispositions but will continue pursuing strategic objectives.

Q: On the disposition activity, how should we think about the demand for these assets and maybe pricing for your more core assets?

A: Gregory Silvers and Gregory Zimmerman note beginning activity in the theater space with box office recovery, and within the past 2 years, they sold Titanic museums and theater portfolios at certain cap rates, indicating interest in non-theater and education assets.

Q: You mentioned larger deals are more likely. Can you give us a sense of what's out there in the market and that's attractive to you? And what do you think potential cap rates on those deals potentially look like?

A: Gregory Silvers and Gregory Zimmerman state they are comfortably in the 8s range for cap rates, seeing opportunities across a wide spectrum of deal sizes from $10 million to several hundred million in various verticals.

Q: It's been mentioned about the ATM program. As you think about potentially raising new equity, what kind of spreads or sort of like maybe a minimum between cap rates and how you think about your weighted cost of capital?

A: Mark Peterson states they generally look at cost of capital and whether it's accretive to deploy equity into a deal on a 60-40 basis, looking for a 100 basis point spread, and the ATM provides another source of capital optionality.