Experiential Real Estate's New Playbook: How EPR Properties Is Reinventing Resilience

The real estate sector has long been a barometer of economic health, but few subsectors have faced as much scrutiny as experiential real estate—think theaters, theme parks, and entertainment complexes. Once synonymous with vulnerability during the pandemic, these spaces now find themselves at the center of a post-pandemic recovery narrative. EPR Properties (NYSE: EPR), a REIT once heavily reliant on movie theaters, has emerged as a case study in reinvention. Its Q2 2025 earnings report not only underscores its success in pivoting toward less cyclical assets but also offers a blueprint for how experiential real estate can thrive amid shifting consumer trends and economic uncertainty.

The Diversification Dividend

EPR's transformation begins with its portfolio. The company has slashed theater exposure—from 60% of its holdings in 2020 to just 16% today—while expanding into sectors such as fitness centers (22 properties), attractions (25), and experiential lodging (11). Education assets, now 6% of its $6.4 billion portfolio, are fully leased, providing a steady anchor of cash flow. This shift isn't merely about reducing risk; it's about aligning with sectors that benefit from secular trends like the rise of wellness tourism, the “experience economy,” and the enduring demand for lifelong learning.

The data speaks to this strategy's success. Experiential properties now boast a 99% occupancy rate, excluding assets slated for sale—a stark contrast to the 60% occupancy in theaters during the pandemic. Meanwhile, the weighted-average lease term has lengthened, reducing turnover risk and ensuring predictable income streams. These metrics are critical in an era where consumers are spending more on experiences than goods, a trend EPR is positioned to capitalize on.

Capital Recycling and the High-Yield Advantage

EPR's capital-light strategy has been equally vital. By selling non-core assets—$78.9 million in 2025 with plans to raise up to $120 million more—the company has funded a $148 million pipeline of experiential developments. This “buy, fix, and flip” approach ensures capital is directed toward high-potential assets, such as attractions and fitness centers, which command premium valuations.

The financial results reflect this discipline. Funds From Operations (FFO) rose 5.3% to $1.19 per share in Q2, supporting a dividend hike to $0.295 per month. With a payout ratio of 72.2%—down from 83% in 2019—the dividend yield now sits at 7.8%, among the highest in the REIT sector. This combination of income and growth potential is rare in an environment where bond yields are depressed and equity volatility is high.

Navigating Risks: Why EPR's Strategy Matters

Of course, risks remain. Experiential sectors are not immune to economic cycles, and competition for high-quality properties is intensifying. Yet EPR's metrics suggest it has mitigated these threats. Its debt-to-EBITDA ratio of 4.7x is manageable, and its focus on long-term leases and less cyclical sectors—such as education—buffers it against downturns.

The upcoming earnings call will be critical. Investors should watch for guidance on two fronts: first, the pipeline of new developments and their expected returns, and second, how EPR plans to defend against rising competition. Management's ability to articulate a clear vision for scaling its experiential portfolio while maintaining tenant health will determine whether this REIT can sustain its dividend and valuation multiples.

A Buy for Income Seekers and Thematic Investors

At a price-to-Funds From Operations (P/FFO) ratio of 6.3x–6.5x, EPR trades at a discount to its pre-pandemic valuation, offering a compelling entry point. For income investors, the 7.8% dividend yield is hard to ignore, especially with a payout ratio that leaves room for further hikes. Meanwhile, thematic investors focused on secular trends like wellness and experiential consumption can view EPR as a proxy for sectors poised to outperform over the long term.

The bottom line: EPR's Q2 results are more than a rebound story—they're proof that experiential real estate can be reimagined as a resilient asset class. By doubling down on diversification, capital discipline, and tenant stability, EPR has positioned itself as a leader in a sector ripe for reinvention. For investors seeking both income and exposure to the “experience economy,” this REIT is worth a closer look.

Disclosure: This article is for informational purposes only and should not be construed as investment advice.