EPR Properties Reports Fourth Quarter and 2023 Year-End Results
- Strong financial performance with total revenue of $705.7 million for the year ended December 31, 2023.
- Net income available to common shareholders was $148.9 million for the same period.
- FFOAA stood at $397.2 million for the year.
- Investment spending totaled $269.4 million for the year, including notable acquisitions.
- Company's liquidity position remains robust with $78.1 million in cash on hand and no borrowings on its credit facility.
- Introduces 2024 guidance with FFOAA per diluted common share of $4.76 to $4.96, representing a 3.2% increase over 2023.
- Monthly dividend increased by 3.6% based on expected financial results for 2024.
- Retirement announcement of Executive Vice President, General Counsel, and Secretary, effective March 1, 2024.
- Conference call scheduled for February 29, 2024, to discuss financial results and company developments.
- None.
Insights
The announcement from EPR Properties regarding its operating results and dividend increase is a noteworthy event for investors, as it directly relates to the company's financial health and shareholder returns. The reported increase in net income available to common shareholders from $36,287 thousand to $39,489 thousand and a 3.6% increase in monthly dividends, signals a positive trajectory in profitability and a commitment to returning value to shareholders. The guidance for 2024, projecting an increase in FFOAA per diluted common share, suggests management's confidence in the company's future performance.
However, the slight decrease in total revenue and AFFO per diluted common share year-over-year warrants attention. This could indicate a more competitive environment or operational challenges that may affect future earnings. The emphasis on maintaining a strong liquidity position and the planned capital recycling through dispositions are strategic moves that could enhance financial flexibility and support growth initiatives. Investors should monitor the execution of the company's investment spending and the impact of its capital allocation decisions on long-term value creation.
As a REIT, EPR Properties' focus on experiential properties aligns with a growing consumer trend towards spending on experiences over goods. The substantial investment spending in experiential properties, including premier resort and day spas and a climbing gym, reflects a targeted strategy to capitalize on this sector. The reported 99% lease occupancy rate in the experiential portfolio, excluding properties intended for sale, is a strong indicator of asset performance and suggests a resilient income stream.
However, the net loss on sale of properties in the fourth quarter and the non-GAAP measures such as FFOAA and AFFO used to evaluate REITs require careful analysis, as they adjust for items not included in GAAP net income. These metrics are critical in assessing the company's operating performance and its ability to sustain and grow dividends. The projected increase in FFOAA for 2024 and the guidance on investment spending and disposition proceeds will be key factors in evaluating the company's growth prospects and risk profile.
The consumer spending on experiences and the strong North American box office growth mentioned by the company's CEO provide context to the company's strategic focus and market positioning. EPR Properties' investments in experiential properties appear to be in line with current market trends, which may drive demand for their assets. The 2024 guidance reflects an optimistic outlook, potentially resonating well with investors seeking growth in niche real estate segments.
It is important to note the balance between new investments and dispositions, as it indicates the company's approach to portfolio management and its ability to adapt to market changes. The strategic sale of non-core assets and reinvestment into higher growth potential properties could be a positive sign for the company's long-term strategy. However, the success of these initiatives will depend on the company's ability to execute and realize the anticipated benefits from these transactions.
Introduces Earnings and Investment Spending Guidance for 2024 Announces
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||
|
|
2023 (2) |
|
|
2022 (3) |
|
|
2023 (2) |
|
|
2022 (3) |
Total revenue |
$ |
171,981 |
|
$ |
178,703 |
|
$ |
705,668 |
|
$ |
658,031 |
Net income available to common shareholders |
|
39,489 |
|
|
36,287 |
|
|
148,901 |
|
|
152,088 |
Net income available to common shareholders per diluted common share |
|
0.52 |
|
|
0.48 |
|
|
1.97 |
|
|
2.03 |
Funds From Operations as adjusted (FFOAA)(1) |
|
90,240 |
|
|
94,967 |
|
|
397,194 |
|
|
355,157 |
FFOAA per diluted common share (1) |
|
1.18 |
|
|
1.25 |
|
|
5.18 |
|
|
4.69 |
Adjusted Funds From Operations (AFFO) (1) |
|
88,475 |
|
|
96,799 |
|
|
400,643 |
|
|
370,340 |
AFFO per diluted common share (1) |
|
1.16 |
|
|
1.27 |
|
|
5.22 |
|
|
4.89 |
|
|
|
|
|
|
|
|
||||
Note: Each of the measures above include deferred rent and interest collections from cash basis customers that were recognized as revenue of |
|||||||||||
(1) A non-GAAP financial measure. |
|||||||||||
(2) Each of the measures above for the three months and year ended December 31, 2023 include lease termination fees recognized as revenue of |
|||||||||||
(3) Total revenue, net income available to common shareholders and net income available to common shareholders per diluted common share for the three months and year ended December 31, 2022 each include |
|||||||||||
Fourth Quarter Company Headlines
-
Executes on Investment Pipeline - During the fourth quarter of 2023, the Company's investment spending totaled
$133.9 million $269.4 million $77.0 million Northeastern U.S. and$9.4 million Belmont, California . -
Strong Liquidity Position - As of December 31, 2023, the Company had cash on hand of
$78.1 million $1.0 billion $136.6 million -
Introduces 2024 Guidance - The Company is introducing FFOAA per diluted common share guidance for 2024 of
$4.76 $4.96 3.2% at the midpoint over 2023 after excluding the impact from both years of out-of-period deferred rent and interest collections from cash-basis customers included in income. The Company is also introducing investment spending guidance for 2024 of$200.0 million $300.0 million $50.0 million $75.0 million -
Announces Increase in Monthly Dividend - Based on the Company's expectation of its financial results for 2024, the Company is announcing an increase in its monthly dividend of
3.6% .
“We concluded 2023 with positive momentum, as we executed on our investment spending and delivered strong earnings growth. We also saw sustained strength in our customers’ businesses, with continued consumer spending on experiences and strong North American box office growth of over
Investment Update
The Company's investment spending during the three months ended December 31, 2023 totaled
As of December 31, 2023, the Company has committed an additional approximately
Strong Liquidity Position
The Company remains focused on maintaining strong liquidity and financial flexibility. The Company had
Capital Recycling
During the fourth quarter of 2023, the Company completed the sales of two operating theatre properties, one vacant theatre property and one vacant early childhood education center property for net proceeds totaling
Subsequent to year-end, the Company completed the sale of two cultural properties for net proceeds of approximately
Portfolio Update
The Company's total assets were
The Company's Experiential portfolio (excluding property under development and undeveloped land inventory) consisted of the following property types (owned or financed) at December 31, 2023:
- 166 theatre properties;
- 58 eat & play properties (including seven theatres located in entertainment districts);
- 23 attraction properties;
- 11 ski properties;
- seven experiential lodging properties;
- 20 fitness & wellness properties;
- one gaming property; and
- three cultural properties.
As of December 31, 2023, the Company's owned Experiential portfolio consisted of approximately 19.8 million square feet, which includes 0.6 million square feet of properties the Company intends to sell. The Experiential portfolio, excluding the properties the Company intends to sell, was
The Company's Education portfolio consisted of the following property types (owned or financed) at December 31, 2023:
- 61 early childhood education center properties; and
- nine private school properties.
As of December 31, 2023, the Company's owned Education portfolio consisted of approximately 1.3 million square feet, which includes 39 thousand square feet of properties the Company intends to sell. The Education portfolio, excluding the properties the Company intends to sell, was
The combined owned portfolio consisted of 21.1 million square feet and was
Dividend Information
The Company's Board of Trustees declared its monthly cash dividend to common shareholders of
Additionally, the Company's Board of Trustees declared its regular quarterly dividends to preferred shareholders of
Retirement of Executive Vice President, General Counsel and Secretary
Today the Company announced the retirement of Craig Evans, Executive Vice President, General Counsel and Secretary, effective March 1, 2024. Paul Turvey, who currently serves as Senior Vice President and Associate General Counsel, will assume the role of General Counsel and Secretary upon Mr. Evans' retirement.
Mr. Evans has been with the Company as General Counsel since 2015, having previously worked closely with the Company for many years as a partner at the law firm Stinson LLP, the Company’s outside counsel. Mr. Turvey joined the Company in 2013 as Associate General Counsel and has been a valuable member of the management team. Prior to joining the Company, he was a partner at the law firm Dentons, and practiced in the firm’s Real Estate Group.
“Craig has been a trusted advisor, providing legal and strategic counsel on a wide range of matters,” stated Company Chairman and CEO Greg Silvers. “We are very grateful to
2024 Guidance |
||||||
(Dollars in millions, except per share data): |
||||||
Measure |
|
|
||||
Net income available to common shareholders per diluted common share |
|
$ |
2.74 |
to |
$ |
2.94 |
FFOAA per diluted common share |
|
$ |
4.76 |
to |
$ |
4.96 |
Investment spending |
|
$ |
200.0 |
to |
$ |
300.0 |
Disposition proceeds |
|
$ |
50.0 |
to |
$ |
75.0 |
The Company is introducing its 2024 guidance for FFOAA per diluted common share of
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 February 29, 2024 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 and Year-End Supplemental
The Company's supplemental information package for the fourth quarter and year ended December 31, 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 December 31, |
|
Year Ended December 31, |
||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
Rental revenue |
$ |
148,738 |
|
|
$ |
152,652 |
|
$ |
616,139 |
|
|
$ |
575,601 |
Other income |
|
12,068 |
|
|
|
16,756 |
|
|
45,947 |
|
|
|
47,382 |
Mortgage and other financing income |
|
11,175 |
|
|
|
9,295 |
|
|
43,582 |
|
|
|
35,048 |
Total revenue |
|
171,981 |
|
|
|
178,703 |
|
|
705,668 |
|
|
|
658,031 |
Property operating expense |
|
14,759 |
|
|
|
13,747 |
|
|
57,478 |
|
|
|
55,985 |
Other expense |
|
13,539 |
|
|
|
7,705 |
|
|
44,774 |
|
|
|
33,809 |
General and administrative expense |
|
13,765 |
|
|
|
13,082 |
|
|
56,442 |
|
|
|
51,579 |
Severance expense |
|
— |
|
|
|
— |
|
|
547 |
|
|
|
— |
Transaction costs |
|
401 |
|
|
|
993 |
|
|
1,554 |
|
|
|
4,533 |
Provision (benefit) for credit losses, net |
|
1,285 |
|
|
|
1,369 |
|
|
878 |
|
|
|
10,816 |
Impairment charges |
|
2,694 |
|
|
|
22,998 |
|
|
67,366 |
|
|
|
27,349 |
Depreciation and amortization |
|
40,692 |
|
|
|
41,303 |
|
|
168,033 |
|
|
|
163,652 |
Total operating expenses |
|
87,135 |
|
|
|
101,197 |
|
|
397,072 |
|
|
|
347,723 |
(Loss) gain on sale of real estate |
|
(3,612 |
) |
|
|
347 |
|
|
(2,197 |
) |
|
|
651 |
Income from operations |
|
81,234 |
|
|
|
77,853 |
|
|
306,399 |
|
|
|
310,959 |
Interest expense, net |
|
30,337 |
|
|
|
31,879 |
|
|
124,858 |
|
|
|
131,175 |
Equity in loss from joint ventures |
|
4,701 |
|
|
|
3,559 |
|
|
6,768 |
|
|
|
1,672 |
Impairment charges on joint ventures |
|
— |
|
|
|
— |
|
|
— |
|
|
|
647 |
Income before income taxes |
|
46,196 |
|
|
|
42,415 |
|
|
174,773 |
|
|
|
177,465 |
Income tax expense |
|
667 |
|
|
|
86 |
|
|
1,727 |
|
|
|
1,236 |
Net income |
$ |
45,529 |
|
|
$ |
42,329 |
|
$ |
173,046 |
|
|
$ |
176,229 |
Preferred dividend requirements |
|
6,040 |
|
|
|
6,042 |
|
|
24,145 |
|
|
|
24,141 |
Net income available to common shareholders of EPR Properties |
$ |
39,489 |
|
|
$ |
36,287 |
|
$ |
148,901 |
|
|
$ |
152,088 |
Net income available to common shareholders of EPR Properties per share: |
|
|
|
|
|
|
|
||||||
Basic |
$ |
0.52 |
|
|
$ |
0.48 |
|
$ |
1.98 |
|
|
$ |
2.03 |
|
|
|
|
|
|
|
|
||||||
Diluted |
$ |
0.52 |
|
|
$ |
0.48 |
|
$ |
1.97 |
|
|
$ |
2.03 |
Shares used for computation (in thousands): |
|
|
|
|
|
|
|
||||||
Basic |
|
75,330 |
|
|
|
75,022 |
|
|
75,260 |
|
|
|
74,967 |
Diluted |
|
75,883 |
|
|
|
75,111 |
|
|
75,715 |
|
|
|
75,043 |
EPR Properties Condensed Consolidated Balance Sheets (Unaudited, dollars in thousands) |
|||||
|
December 31, 2023 |
|
December 31, 2022 |
||
Assets |
|
|
|
||
Real estate investments, net of accumulated depreciation of |
$ |
4,537,359 |
|
$ |
4,714,136 |
Land held for development |
|
20,168 |
|
|
20,168 |
Property under development |
|
131,265 |
|
|
76,029 |
Operating lease right-of-use assets |
|
186,628 |
|
|
200,985 |
Mortgage notes and related accrued interest receivable, net |
|
569,768 |
|
|
457,268 |
Investment in joint ventures |
|
49,754 |
|
|
52,964 |
Cash and cash equivalents |
|
78,079 |
|
|
107,934 |
Restricted cash |
|
2,902 |
|
|
2,577 |
Accounts receivable |
|
63,655 |
|
|
53,587 |
Other assets |
|
61,307 |
|
|
73,053 |
Total assets |
$ |
5,700,885 |
|
$ |
5,758,701 |
Liabilities and Equity |
|
|
|
||
Accounts payable and accrued liabilities |
$ |
94,927 |
|
$ |
80,087 |
Operating lease liabilities |
|
226,961 |
|
|
241,407 |
Dividends payable |
|
31,307 |
|
|
27,438 |
Unearned rents and interest |
|
77,440 |
|
|
63,939 |
Debt |
|
2,816,095 |
|
|
2,810,111 |
Total liabilities |
|
3,246,730 |
|
|
3,222,982 |
Total equity |
$ |
2,454,155 |
|
$ |
2,535,719 |
Total liabilities and equity |
$ |
5,700,885 |
|
$ |
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, provision (benefit) for credit losses, net, 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 and share-based compensation expense to management and Trustees; and subtracting amortization of above and below market leases, net and tenant allowances, 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 months and years ended December 31, 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 December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
FFO: |
|
|
|
|
|
|
|
||||||||
Net income available to common shareholders of EPR Properties |
$ |
39,489 |
|
|
$ |
36,287 |
|
|
$ |
148,901 |
|
|
$ |
152,088 |
|
Loss (gain) on sale of real estate |
|
3,612 |
|
|
|
(347 |
) |
|
|
2,197 |
|
|
|
(651 |
) |
Impairment of real estate investments, net (1) |
|
2,694 |
|
|
|
21,030 |
|
|
|
67,366 |
|
|
|
25,381 |
|
Real estate depreciation and amortization |
|
40,501 |
|
|
|
41,100 |
|
|
|
167,219 |
|
|
|
162,821 |
|
Allocated share of joint venture depreciation |
|
2,344 |
|
|
|
1,833 |
|
|
|
8,876 |
|
|
|
7,409 |
|
Impairment charges on joint ventures (1) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
647 |
|
FFO available to common shareholders of EPR Properties |
$ |
88,640 |
|
|
$ |
99,903 |
|
|
$ |
394,559 |
|
|
$ |
347,695 |
|
|
|
|
|
|
|
|
|
||||||||
FFO available to common shareholders of EPR Properties |
$ |
88,640 |
|
|
$ |
99,903 |
|
|
$ |
394,559 |
|
|
$ |
347,695 |
|
Add: Preferred dividends for Series C preferred shares |
|
1,938 |
|
|
|
1,938 |
|
|
|
7,752 |
|
|
|
7,752 |
|
Add: Preferred dividends for Series E preferred shares |
|
1,938 |
|
|
|
1,939 |
|
|
|
7,752 |
|
|
|
7,756 |
|
Diluted FFO available to common shareholders of EPR Properties |
$ |
92,516 |
|
|
$ |
103,780 |
|
|
$ |
410,063 |
|
|
$ |
363,203 |
|
|
|
|
|
|
|
|
|
||||||||
FFOAA: |
|
|
|
|
|
|
|
||||||||
FFO available to common shareholders of EPR Properties |
$ |
88,640 |
|
|
$ |
99,903 |
|
|
$ |
394,559 |
|
|
$ |
347,695 |
|
Severance expense |
|
— |
|
|
|
— |
|
|
|
547 |
|
|
|
— |
|
Transaction costs |
|
401 |
|
|
|
993 |
|
|
|
1,554 |
|
|
|
4,533 |
|
Provision (benefit) for credit losses, net |
|
1,285 |
|
|
|
1,369 |
|
|
|
878 |
|
|
|
10,816 |
|
Impairment of operating lease right-of-use assets (1) |
|
— |
|
|
|
1,968 |
|
|
|
— |
|
|
|
1,968 |
|
Sale participation income (included in other income) |
|
— |
|
|
|
(9,134 |
) |
|
|
— |
|
|
|
(9,134 |
) |
Gain on insurance recovery (included in other income) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(552 |
) |
Deferred income tax benefit |
|
(86 |
) |
|
|
(132 |
) |
|
|
(344 |
) |
|
|
(169 |
) |
FFOAA available to common shareholders of EPR Properties |
$ |
90,240 |
|
|
$ |
94,967 |
|
|
$ |
397,194 |
|
|
$ |
355,157 |
|
|
|
|
|
|
|
|
|
||||||||
FFOAA available to common shareholders of EPR Properties |
$ |
90,240 |
|
|
$ |
94,967 |
|
|
$ |
397,194 |
|
|
$ |
355,157 |
|
Add: Preferred dividends for Series C preferred shares |
|
1,938 |
|
|
|
1,938 |
|
|
|
7,752 |
|
|
|
7,752 |
|
Add: Preferred dividends for Series E preferred shares |
|
1,938 |
|
|
|
1,939 |
|
|
|
7,752 |
|
|
|
7,756 |
|
Diluted FFOAA available to common shareholders of EPR Properties |
$ |
94,116 |
|
|
$ |
98,844 |
|
|
$ |
412,698 |
|
|
$ |
370,665 |
|
|
|
|
|
|
|
|
|
||||||||
AFFO: |
|
|
|
|
|
|
|||||||||
FFOAA available to common shareholders of EPR Properties |
$ |
90,240 |
|
|
$ |
94,967 |
|
|
$ |
397,194 |
|
|
$ |
355,157 |
|
Non-real estate depreciation and amortization |
|
191 |
|
|
|
203 |
|
|
|
814 |
|
|
|
831 |
|
Deferred financing fees amortization |
|
2,188 |
|
|
|
2,109 |
|
|
|
8,637 |
|
|
|
8,360 |
|
Share-based compensation expense to management and trustees |
|
4,359 |
|
|
|
4,114 |
|
|
|
17,512 |
|
|
|
16,666 |
|
Amortization of above and below market leases, net and tenant allowances |
|
(79 |
) |
|
|
(90 |
) |
|
|
(535 |
) |
|
|
(355 |
) |
Maintenance capital expenditures (2) |
|
(5,015 |
) |
|
|
(2,674 |
) |
|
|
(12,399 |
) |
|
|
(4,545 |
) |
Straight-lined rental revenue |
|
(2,930 |
) |
|
|
(2,291 |
) |
|
|
(10,591 |
) |
|
|
(6,993 |
) |
Straight-lined ground sublease expense |
|
56 |
|
|
|
581 |
|
|
|
1,099 |
|
|
|
1,692 |
|
Non-cash portion of mortgage and other financing income |
|
(535 |
) |
|
|
(120 |
) |
|
|
(1,088 |
) |
|
|
(473 |
) |
AFFO available to common shareholders of EPR Properties |
$ |
88,475 |
|
|
$ |
96,799 |
|
|
$ |
400,643 |
|
|
$ |
370,340 |
|
|
|
|
|
|
|
|
|
||||||||
AFFO available to common shareholders of EPR Properties |
$ |
88,475 |
|
|
$ |
96,799 |
|
|
$ |
400,643 |
|
|
$ |
370,340 |
|
Add: Preferred dividends for Series C preferred shares |
|
1,938 |
|
|
|
1,938 |
|
|
|
7,752 |
|
|
|
7,752 |
|
Add: Preferred dividends for Series E preferred shares |
|
1,938 |
|
|
|
1,939 |
|
|
|
7,752 |
|
|
|
7,756 |
|
Diluted AFFO available to common shareholders of EPR Properties |
$ |
92,351 |
|
|
$ |
100,676 |
|
|
$ |
416,147 |
|
|
$ |
385,848 |
|
|
|
|
|
|
|
|
|
||||||||
FFO per common share: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
1.18 |
|
|
$ |
1.33 |
|
|
$ |
5.24 |
|
|
$ |
4.64 |
|
Diluted |
|
1.16 |
|
|
|
1.31 |
|
|
|
5.15 |
|
|
|
4.60 |
|
FFOAA per common share: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
1.20 |
|
|
$ |
1.27 |
|
|
$ |
5.28 |
|
|
$ |
4.74 |
|
Diluted |
|
1.18 |
|
|
|
1.25 |
|
|
|
5.18 |
|
|
|
4.69 |
|
AFFO per common share: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
1.17 |
|
|
$ |
1.29 |
|
|
$ |
5.32 |
|
|
$ |
4.94 |
|
Diluted |
|
1.16 |
|
|
|
1.27 |
|
|
|
5.22 |
|
|
|
4.89 |
|
Shares used for computation (in thousands): |
|
|
|
|
|
|
|
||||||||
Basic |
|
75,330 |
|
|
|
75,022 |
|
|
|
75,260 |
|
|
|
74,967 |
|
Diluted |
|
75,883 |
|
|
|
75,111 |
|
|
|
75,715 |
|
|
|
75,043 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding-diluted EPS |
|
75,883 |
|
|
|
75,111 |
|
|
|
75,715 |
|
|
|
75,043 |
|
Effect of dilutive Series C preferred shares |
|
2,293 |
|
|
|
2,261 |
|
|
|
2,283 |
|
|
|
2,250 |
|
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 |
|
79,839 |
|
|
|
79,036 |
|
|
|
79,661 |
|
|
|
78,957 |
|
Other financial information: |
|
|
|
|
|
|
|
||||||||
Dividends per common share |
$ |
0.8250 |
|
|
$ |
0.8250 |
|
|
$ |
3.3000 |
|
|
$ |
3.2500 |
|
|
|
|
|
|
|
|
|
||||||||
(1) Impairment charges recognized during the year ended December 31, 2022 totaled |
|||||||||||||||
(2) Includes maintenance capital expenditures and certain second generation tenant improvements and leasing commissions. |
|||||||||||||||
The conversion of the
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 dispositions 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, provision (benefit) for credit losses, net, 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):
|
December 31, |
||||||
|
|
2023 |
|
|
|
2022 |
|
Net Debt: |
|
|
|
||||
Debt |
$ |
2,816,095 |
|
|
$ |
2,810,111 |
|
Deferred financing costs, net |
|
25,134 |
|
|
|
31,118 |
|
Cash and cash equivalents |
|
(78,079 |
) |
|
|
(107,934 |
) |
Net Debt |
$ |
2,763,150 |
|
|
$ |
2,733,295 |
|
|
|
|
|
||||
Gross Assets: |
|
|
|
||||
Total Assets |
$ |
5,700,885 |
|
|
$ |
5,758,701 |
|
Accumulated depreciation |
|
1,435,683 |
|
|
|
1,302,640 |
|
Cash and cash equivalents |
|
(78,079 |
) |
|
|
(107,934 |
) |
Gross Assets |
$ |
7,058,489 |
|
|
$ |
6,953,407 |
|
|
|
|
|
||||
Debt to Total Assets Ratio |
|
49 |
% |
|
|
49 |
% |
Net Debt to Gross Assets Ratio |
|
39 |
% |
|
|
39 |
% |
|
|
|
|
||||
|
Three Months Ended December 31, |
||||||
|
|
2023 |
|
|
|
2022 |
|
EBITDAre and Adjusted EBITDAre: |
|
|
|
||||
Net income |
$ |
45,529 |
|
|
$ |
42,329 |
|
Interest expense, net |
|
30,337 |
|
|
|
31,879 |
|
Income tax expense |
|
667 |
|
|
|
86 |
|
Depreciation and amortization |
|
40,692 |
|
|
|
41,303 |
|
Loss (gain) on sale of real estate |
|
3,612 |
|
|
|
(347 |
) |
Impairment of real estate investments, net (1) |
|
2,694 |
|
|
|
21,030 |
|
Allocated share of joint venture depreciation |
|
2,344 |
|
|
|
1,833 |
|
Allocated share of joint venture interest expense |
|
1,879 |
|
|
|
2,215 |
|
EBITDAre |
$ |
127,754 |
|
|
$ |
140,328 |
|
|
|
|
|
||||
Sale participation income (2) |
|
— |
|
|
|
(9,134 |
) |
Transaction costs |
|
401 |
|
|
|
993 |
|
Provision (benefit) for credit losses, net |
|
1,285 |
|
|
|
1,369 |
|
Impairment of operating lease right-of-use assets (1) |
|
— |
|
|
|
1,968 |
|
Adjusted EBITDAre |
$ |
129,440 |
|
|
$ |
135,524 |
|
|
|
|
|
||||
Adjusted EBITDAre (annualized) (3) |
$ |
517,760 |
|
|
$ |
542,096 |
|
|
|
|
|
||||
Net Debt/Adjusted EBITDA Ratio |
|
5.3 |
|
|
|
5.0 |
|
|
|
|
|
||||
(1) Impairment charges recognized during the three months ended December 31, 2022 totaled |
|||||||
(2) Included in other income in the accompanying consolidated statements of income and comprehensive income for the quarter. Other income includes the following: |
|||||||
|
Three Months Ended December 31, |
||||||
|
|
2023 |
|
|
|
2022 |
|
Income from settlement of foreign currency swap contracts |
$ |
243 |
|
|
$ |
246 |
|
Sale participation income |
|
— |
|
|
|
9,134 |
|
Operating income from operated properties |
|
11,809 |
|
|
|
7,325 |
|
Miscellaneous income |
|
16 |
|
|
|
51 |
|
Other income |
$ |
12,068 |
|
|
$ |
16,756 |
|
|
|
|
|
||||
(3) Adjusted EBITDA for the quarter is multiplied by four to calculate an annualized amount but does not include the annualization of investments put in service, acquired or disposed of during the quarter, as well as the potential earnings on property under development, the annualization of percent rent and adjustments for other items. |
|||||||
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):
|
December 31, 2023 |
|
December 31, 2022 |
||||
Total assets |
$ |
5,700,885 |
|
|
$ |
5,758,701 |
|
Operating lease right-of-use assets |
|
(186,628 |
) |
|
|
(200,985 |
) |
Cash and cash equivalents |
|
(78,079 |
) |
|
|
(107,934 |
) |
Restricted cash |
|
(2,902 |
) |
|
|
(2,577 |
) |
Accounts receivable |
|
(63,655 |
) |
|
|
(53,587 |
) |
Add: accumulated depreciation on real estate investments |
|
1,435,683 |
|
|
|
1,302,640 |
|
Add: accumulated amortization on intangible assets (1) |
|
30,589 |
|
|
|
23,487 |
|
Prepaid expenses and other current assets (1) |
|
(22,718 |
) |
|
|
(33,559 |
) |
Total investments |
$ |
6,813,175 |
|
|
$ |
6,686,186 |
|
|
|
|
|
||||
Total Investments: |
|
|
|
||||
Real estate investments, net of accumulated depreciation |
$ |
4,537,359 |
|
|
$ |
4,714,136 |
|
Add back accumulated depreciation on real estate investments |
|
1,435,683 |
|
|
|
1,302,640 |
|
Land held for development |
|
20,168 |
|
|
|
20,168 |
|
Property under development |
|
131,265 |
|
|
|
76,029 |
|
Mortgage notes and related accrued interest receivable, net |
|
569,768 |
|
|
|
457,268 |
|
Investment in joint ventures |
|
49,754 |
|
|
|
52,964 |
|
Intangible assets, gross (1) |
|
65,299 |
|
|
|
60,109 |
|
Notes receivable and related accrued interest receivable, net (1) |
|
3,879 |
|
|
|
2,872 |
|
Total investments |
$ |
6,813,175 |
|
|
$ |
6,686,186 |
|
|
|
|
|
||||
(1) Included in other assets in the accompanying consolidated balance sheet. Other assets include the following: |
|||||||
|
|
|
|
||||
|
December 31, 2023 |
|
December 31, 2022 |
||||
Intangible assets, gross |
$ |
65,299 |
|
|
$ |
60,109 |
|
Less: accumulated amortization on intangible assets |
|
(30,589 |
) |
|
|
(23,487 |
) |
Notes receivable and related accrued interest receivable, net |
|
3,879 |
|
|
|
2,872 |
|
Prepaid expenses and other current assets |
|
22,718 |
|
|
|
33,559 |
|
Total other assets |
$ |
61,307 |
|
|
$ |
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
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 Annual Report on Form 10-K 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, 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/20240228053604/en/
EPR Properties
Brian Moriarty, 816-472-1700
www.eprkc.com
Source: EPR Properties
FAQ
What was EPR Properties' total revenue for the year ended December 31, 2023?
What was the net income available to common shareholders for the same period?
What was the Funds From Operations as adjusted (FFOAA) for the year?
What was the total investment spending for the year ended December 31, 2023?
What is the 2024 guidance for FFOAA per diluted common share?
By what percentage did EPR Properties increase its monthly dividend?
When is the retirement of Executive Vice President, General Counsel, and Secretary effective?
When is the conference call to discuss the financial results scheduled?
