EPR Properties Posts 28% YTD Rally, Remains a Buy After 5-Year High?

EPR Properties has been a top-performing REIT in 2025, with a 28% YTD increase, following a 41% rally in the past year. The company's stock has reached a new 5-year high, driven by strong performance and investor optimism. Despite the blistering rally, some analysts may still view EPR as a buy due to its solid fundamentals and growth prospects.

EPR Properties (NYSE: EPR) has been one of the standout real estate investment trusts (REITs) in 2025, with its stock surging by 28% year-to-date (YTD), following a 41% rally over the past year. This impressive performance has propelled EPR to new 5-year highs, driven by strong operational results and investor optimism.

The REIT's commons have been trading at a new 5-year high, with a 28% YTD increase and a 41% gain over the past year. This performance has significantly outperformed the S&P 500 (SPY), which has seen a 10% increase over the same period. EPR's monthly cash dividend of $0.295 per share, unchanged from its prior distribution, has remained attractive, offering an annualized yield of 6.22%. This yield is 175 basis points above the U.S. 10-year Treasury yield (US10Y), indicating robust income potential for shareholders [1].

EPR's solid financial performance is evident in its first-quarter (Q1) 2025 results. The REIT reported total revenue of $175 million, a 4.66% increase from the previous year. Operating expenses decreased by $4 million to $82.8 million, leading to net income of $59.77 million and funds from operations as adjusted (FFOAA) of $91.74 million, or $1.19 per share. This represents a 6-cent increase, or 5.3%, over the year-ago quarter, providing 134% coverage for the REIT's dividend [1].

The REIT's growth prospects are further bolstered by its guidance for full-year FFOAA of $5.00 to $5.16 per share, with the midpoint of $5.08 indicating 144% coverage of the annualized dividend. Pending Fed rate cuts of approximately 50 basis points through 2025 could help reduce interest expenses and support potential dividend hikes [1].

EPR's exposure to theater properties, which accounted for 38% of its annualized adjusted EBITDA as of the end of Q1, presents a core risk. However, the REIT's portfolio has seen significant changes, with the disposal of 14 early education centers and three theater properties during Q1 2025, generating net proceeds of $78.9 million and a net gain of $9.4 million [1]. This capital recycling program aims to address long-held concerns around the exposure to theaters and forms a lever for valuation expansion.

EPR's valuation remains attractive, trading at 11.19x times the midpoint of its 2025 FFOAA guidance, which is lower than VICI Properties (VICI) at 13.67x. The gap in valuation between both REITs has closed significantly year-to-date, despite the changes to EPR's portfolio being less dramatic [1].

In summary, EPR Properties has demonstrated strong performance and growth prospects in 2025, with solid fundamentals and a diversified portfolio. Despite the recent rally, some analysts may still view EPR as a buy due to its attractive income potential and growth prospects.

References:
[1] https://seekingalpha.com/article/4793847-is-epr-properties-still-a-buy-after-blistering-rally
[2] https://www.barchart.com/story/news/32722148/epr-properties-achieves-38th-52-week-high-among-mid-caps-continues-to-offer-value