EPR Properties: Tax Advantages and Diversification Strategies

As an investor, you're always on the lookout for opportunities that offer a mix of growth, income, and tax advantages. EPR Properties (NYSE: EPR), a leading diversified experiential net lease real estate investment trust (REIT), specializing in select enduring experiential properties, presents an attractive option for investors seeking such a combination. With a total asset base of approximately $5.7 billion and a focus on real estate venues that create value by facilitating out-of-home leisure and recreation experiences, EPR Properties offers a compelling investment case.

EPR Properties' distributions for 2024 provide valuable insights into the tax treatment of its common shares and preferred shares. For common shares, the total distributions amount to $3.39 per share, with 74.043% ($2.510064) classified as taxable ordinary dividends and 25.957% ($0.879936) as non-taxable return of capital. This return of capital component is particularly advantageous for investors, as it reduces their cost basis rather than being immediately taxable.

Preferred share distributions show distinct tax treatments, with Series C 5.75% Cumulative Convertible Preferred Shares including both cash and non-cash components. The non-cash distributions stem from conversion ratio adjustments, which are deemed distributions for federal income tax purposes. Series E 9.00% Cumulative Convertible Preferred Shares and Series G 5.750% Cumulative Redeemable Preferred Shares are classified as 100% taxable ordinary dividends, which impacts tax planning differently than the common shares.

For tax efficiency planning, investors should note that the common shares' return of capital portion creates tax deferral opportunities, while preferred shareholders face full ordinary income treatment on their distributions. By understanding the tax implications of EPR Properties' distributions, investors can make informed decisions about their portfolios and optimize their tax liabilities.



EPR Properties' diversification strategy is another key aspect to consider. The company has been gradually reducing its exposure to movie theaters, selling $10 million in real estate leased to theaters in Q2 2024, and investing just under $47 million in other categories. This transition has led to properties like water parks, amusement parks, ski resorts, and golf attractions, which are less sensitive to economic downturns and offer more stable cash flows.



In conclusion, EPR Properties offers investors a unique combination of tax advantages, income, and growth potential. By understanding the tax treatments of its distributions and the company's diversification strategy, investors can make informed decisions about their portfolios and optimize their tax liabilities. As EPR Properties continues to execute its long-term plan, investors can expect a steady stream of income and potential capital appreciation.