EPR Properties' Q2 2025: Navigating Contradictions in Theater Asset Demand, Strategy, and Financial Outlook

Theater asset demand and pricing, disposition strategy and theater exposure, credit line and bond transactions, investment strategy and capital deployment, percentage rent expectations and drivers are the key contradictions discussed in EPR Properties' latest 2025Q2 earnings call.



Improved Cost of Capital and Investment Strategy:
- EPR Properties saw a significant improvement in the cost of capital, leading to a more aggressive growth posture.
- The enhanced cost of capital positions the company to accelerate investment spending, with more than $100 million committed to experiential development and redevelopment projects.
- This shift is driven by a robust pipeline of opportunities and improved market conditions, allowing for larger deal considerations.

Box Office Recovery and Revenue Growth:
- The North American box office recovered, with Q2 2025 revenue of $2.7 billion, up 37% compared to Q2 2024.
- This growth was driven by strong performance of major releases, contributing to increased percentage rent expectations from theater tenants.
- The recovery in the box office is attributed to sustained consumer demand for theatrical exhibition and positive economic alignment in lease structures.

Strategic Capital Recycling and Asset Management:
- EPR Properties is advancing its strategic capital recycling initiative, positioning its portfolio with productive and diversified experiential assets.
- The company sold 35.6 million worth of assets in the quarter, including theaters and other properties, with a net gain of $16.8 million.
- The sale of these assets is part of a strategic objective to lower theater exposure and generate capital, supported by strong consumer performance across experiential spending.

Operating Performance Across Portfolio:
- The company's consolidated coverage improved slightly from 2.0x to 2.1x, supported by strong tenant performance.
- Key attractions like Andretti Karting and Jellystone RV Resort showed performance gains, driven by promotions and increased capacity.
- This resilience is attributed to the company's focus on consumer-oriented experiential spending and strategic investments in high-potential sectors.