EPR Properties (EPR) Q3 Earnings call transcript Oct 31, 2024

EPR Properties, a leading experiential real estate investment trust, recently held its third quarter 2024 earnings call, highlighting the company's steady progress in positioning for continued growth. The call, led by Chairman and CEO, Greg Silvers, was marked by a focus on strategic investments, market trends, and the company's robust financial health.

Strategic Investments and Financial Health

One of the key highlights of the call was EPR Properties' entry into a new $1 billion revolving credit facility, a move that underscores the confidence of banking partners in the company's strategic direction. This facility enhances the company's liquidity profile, positioning it for further investments in select experiential properties. The company also reported strong coverage, with the overall portfolio at 2.1x, down slightly from last quarter, while non-theater coverage remained steady at 2.6x. This coverage highlights the sustained consumer demand and the company's strategic focus on growing non-commodity areas, such as fitness and wellness.

Growth Opportunities and Challenges

The call also touched upon the growing demand for wellness-focused experiences, with EPR Properties' investment in Premier Hot Springs properties. This strategic move capitalizes on the trend towards experiential wellness, underscoring the company's commitment to diversified investments. The company also addressed the impact of Hurricanes Helene and Milton on its Florida properties, noting that the Bellwether Beach Resort and Beachcomber in St. Petersburg Beach sustained significant damage. Despite this, EPR Properties remains optimistic, working in good faith with partners to identify the path forward.

Outlook and Market Trends

Looking ahead, EPR Properties remains confident in the recovery of theater coverage, with the National Association of Theater Owners announcing a $2.2 billion investment to modernize and upgrade theaters nationwide. The company is also seeing strong performance from its TopGolf portfolio and looks forward to the spin-off of Topgolf into a separate entity, which is expected to enhance strategic focus and capitalize the company for future success.

Financial Performance

Mark Peterson, Executive Vice President and CFO, provided a detailed overview of the company's financial performance, noting a decrease in FFO and AFFO per share compared to the prior year. However, excluding the impact of on-period deferral collections, FFO's adjusted per share increased by over 6%. The company's net debt to adjusted EBITDAre was 5.0x for the quarter, with a net debt to gross assets ratio of 39% on a book basis. These figures underscore EPR Properties' robust financial health and ability to manage debt effectively.

Conclusion

EPR Properties' third quarter 2024 earnings call painted a picture of a company on the rise, with a strategic focus on experiential investments, a robust financial profile, and a keen eye on market trends. Despite challenges, such as hurricane damage and the impact of the writers and actors strikes, EPR Properties remains optimistic about its future, with a commitment to continue investing in select experiential properties and navigating the evolving landscape of the real estate sector.