PART I - FINANCIAL INFORMATION

Item 1.Financial Statements

EPR PROPERTIES
Consolidated Balance Sheets
(Dollars in thousands except share data)
September 30, 2017 December 31, 2016
(unaudited)
Assets
Rental properties, net of accumulated depreciation of $711,384 and $635,535 at September 30, 2017 and December 31, 2016, respectively $ 4,535,994
$ 3,595,762
Land held for development 33,674
22,530
Property under development 284,211
297,110
Mortgage notes and related accrued interest receivable 972,371
613,978
Investment in a direct financing lease, net 57,698
102,698
Investment in joint ventures 5,616
5,972
Cash and cash equivalents 11,412
19,335
Restricted cash 24,323
9,744
Accounts receivable, net 99,213
98,939
Other assets 108,498
98,954
Total assets $ 6,133,010
$ 4,865,022
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities $ 140,582
$ 119,758
Common dividends payable 25,046
20,367
Preferred dividends payable 5,951
5,951
Unearned rents and interest 85,198
47,420
Debt 2,987,925
2,485,625
Total liabilities 3,244,702
2,679,121
Equity:
Common Shares, $.01 par value; 100,000,000 shares authorized; and 76,397,669 and 66,263,487 shares issued at September 30, 2017 and December 31, 2016, respectively 764
663
Preferred Shares, $.01 par value; 25,000,000 shares authorized:
5,399,050 Series C convertible shares issued at September 30, 2017 and December 31, 2016; liquidation preference of $134,976,250 54
54
3,449,165 and 3,450,000 Series E convertible shares issued at September 30, 2017 and December 31, 2016, respectively; liquidation preference of $86,229,125 34
35
5,000,000 Series F shares issued at September 30, 2017 and December 31, 2016; liquidation preference of $125,000,000 50
50
Additional paid-in-capital 3,420,867
2,677,046
Treasury shares at cost: 2,732,736 and 2,616,406 common shares at September 30, 2017 and December 31, 2016, respectively (121,539 ) (113,172 )
Accumulated other comprehensive income 10,919
7,734
Distributions in excess of net income (422,841 ) (386,509 )
Total equity $ 2,888,308
$ 2,185,901
Total liabilities and equity $ 6,133,010
$ 4,865,022
EPR PROPERTIES

Consolidated Balance Sheets

(Dollars in thousands except share data)


	September 30, 2021		December 31, 2020
	(unaudited)
Assets
Real estate investments, net of accumulated depreciation of $1,142,513 and $1,062,087 at September 30, 2021 and December 31, 2020, respectively	$	4,800,561	$	4,851,302
Land held for development	21,875		23,225
Property under development	20,166		57,630
Operating lease right-of-use assets	175,987		163,766
Mortgage notes and related accrued interest receivable	369,134		365,628

Investment in joint ventures	38,729		28,208
Cash and cash equivalents	144,433		1,025,577
Restricted cash	5,142		2,433


Accounts receivable	80,491		116,193

Other assets	64,639		70,223
Total assets	$	5,721,157	$	6,704,185
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities	$	87,021	$	105,379
Operating lease liabilities	214,065		202,223
Common dividends payable	18,802		36
Preferred dividends payable	6,033		6,034
Unearned rents and interest	79,692		65,485
Debt	2,684,063		3,694,443
Total liabilities	3,089,676		4,073,600
Equity:
Common Shares, $0.01 par value; 100,000,000 shares authorized; and 82,219,663 and 81,917,876 shares issued at September 30, 2021 and December 31, 2020, respectively	822		819
Preferred Shares, $0.01 par value; 25,000,000 shares authorized:
5,392,916 and 5,394,050 Series C convertible shares issued at September 30, 2021 and December 31, 2020, respectively; liquidation preference of $134,822,900	54		54
3,447,381 Series E convertible shares issued at September 30, 2021 and December 31, 2020; liquidation preference of $86,184,525	34		34
6,000,000 Series G shares issued at September 30, 2021 and December 31, 2020; liquidation preference of $150,000,000	60		60
Additional paid-in-capital	3,872,777		3,857,632
Treasury shares at cost: 7,413,853 and 7,315,087 common shares at September 30, 2021 and December 31, 2020, respectively	(264,679)		(261,238)
Accumulated other comprehensive income	9,625		216
Distributions in excess of net income	(987,212)		(966,992)


Total equity	$	2,631,481	$	2,630,585
Total liabilities and equity	$	5,721,157	$	6,704,185

See accompanying notes to consolidated financial statements.

EPR PROPERTIES
Consolidated Statements of Income
(Unaudited)
(Dollars in thousands except per share data)
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Rental revenue $ 122,827
$ 102,282
$ 349,333
$ 292,115
Tenant reimbursements 3,734
3,821
11,424
11,577
Other income 522
2,476
2,518
5,812
Mortgage and other financing income 24,314
17,031
65,016
52,907
Total revenue 151,397
125,610
428,291
362,411
Property operating expense 6,340
5,626
18,762
16,687
Other expense —
—
—
5
General and administrative expense 12,070
9,091
33,787
27,309
Costs associated with loan refinancing or payoff 1,477
14
1,491
905
Gain on early extinguishment of debt —
—
(977 ) —
Interest expense, net 34,194
24,265
97,853
70,310
Transaction costs 113
2,947
388
4,881
Impairment charges —
—
10,195
—
Depreciation and amortization 34,694
27,601
95,919
79,222
Income before equity in income from joint ventures and other items 62,509
56,066
170,873
163,092
Equity in income from joint ventures 35
203
86
501
Gain on sale of real estate 997
1,615
28,462
3,885
Income before income taxes 63,541
57,884
199,421
167,478
Income tax expense (587 ) (358 ) (2,016 ) (637 )
Net income 62,954
57,526
197,405
166,841
Preferred dividend requirements (5,951 ) (5,951 ) (17,855 ) (17,855 )
Net income available to common shareholders of EPR Properties $ 57,003
$ 51,575
$ 179,550
$ 148,986
Per share data attributable to EPR Properties common shareholders:
Basic earnings per share data:
Net income available to common shareholders $ 0.77
$ 0.81
$ 2.55
$ 2.35
Diluted earnings per share data:
Net income available to common shareholders $ 0.77
$ 0.81
$ 2.55
$ 2.35
Shares used for computation (in thousands):
Basic 73,663
63,627
70,320
63,296
Diluted 73,724
63,747
70,385
63,393

EPR PROPERTIES

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(Unaudited)

(Dollars in thousands except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Rental revenue	$	123,040	$	55,591	$	341,537	$	288,165
Other income	8,091		182		9,802		8,171
Mortgage and other financing income	8,516		8,104		25,435		24,913
Total revenue	139,647		63,877		376,774		321,249
Property operating expense	13,815		13,759		43,806		42,181
Other expense	7,851		2,680		13,428		15,012
General and administrative expense	11,154		10,034		33,866		31,454


Costs associated with loan refinancing or payoff	4,741		—		4,982		820

Interest expense, net	36,584		41,744		114,090		114,837
Transaction costs	2,132		2,776		3,342		4,622
Credit loss (benefit) expense	(14,096)		5,707		(19,677)		10,383
Impairment charges	2,711		11,561		2,711		62,825
Depreciation and amortization	42,612		42,059		123,476		128,319
Income (loss) before equity in loss from joint ventures and other items	32,143		(66,443)		56,750		(89,204)
Equity in loss from joint ventures	(418)		(1,044)		(3,000)		(3,188)
Impairment charges on joint ventures	—		—		—		(3,247)
Gain on sale of real estate	787		—		1,499		242

Income (loss) before income taxes	32,512		(67,487)		55,249		(95,397)
Income tax expense	(395)		(18,417)		(1,200)		(16,354)









Net income (loss)	32,117		(85,904)		54,049		(111,751)
Preferred dividend requirements	(6,033)		(6,034)		(18,100)		(18,102)

Net income (loss) available to common shareholders of EPR Properties	$	26,084	$	(91,938)	$	35,949	$	(129,853)
Per share data attributable to EPR Properties common shareholders:
Net income (loss) available to common shareholders of EPR Properties per share:


Basic	$	0.35	$	(1.23)	$	0.48	$	(1.70)




Diluted	$	0.35	$	(1.23)	$	0.48	$	(1.70)
Shares used for computation (in thousands):
Basic	74,804		74,613		74,738		76,456
Diluted	74,911		74,613		74,819		76,456

Other comprehensive income (loss):
Net income (loss)	$	32,117	$	(85,904)	$	54,049	$	(111,751)

Foreign currency translation adjustment	(5,169)		4,148		(195)		(5,063)
Change in net unrealized gain (loss) on derivatives	6,280		(1,923)		6,355		(4,318)
Comprehensive income (loss) attributable to EPR Properties	$	33,228	$	(83,679)	$	60,209	$	(121,132)

See accompanying notes to consolidated financial statements.

EPR PROPERTIES

Consolidated Statements of Changes in Equity

(Unaudited)

(Dollars in thousands except per share data)


	EPR Properties Shareholders’ Equity
	Common Stock			Preferred Stock			Additional paid-in capital		Treasury shares		Accumulated other comprehensive income (loss)		Distributions in excess of net income		Total
	Shares	Par		Shares	Par
Balance at December 31, 2019	81,588,489	$	816	14,841,431	$	148	$	3,834,858	$	(147,435)	$	7,275	$	(689,857)	$	3,005,805
Credit loss expense for implementation of Current Expected Credit Loss standard	—	—		—	—		—		—		—		(2,163)		(2,163)

Issuance of nonvested shares and performance shares, net of cancellations	211,549	2		—	—		6,221		(90)		—		—		6,133
Purchase of common shares for vesting	—	—		—	—		—		(6,769)		—		—		(6,769)
Share-based compensation expense	—	—		—	—		3,509		—		—		—		3,509

Foreign currency translation adjustment	—	—		—	—		—		—		(16,495)		—		(16,495)

Change in unrealized gain on derivatives	—	—		—	—		—		—		3,931		—		3,931

Net income	—	—		—	—		—		—		—		37,118		37,118
Issuances of common shares	10,368	—		—	—		442		—		—		—		442




Stock option exercises, net	1,410	—		—	—		63		(63)		—		—		—
Dividends to common shareholders ($1.1325 per share)	—	—		—	—		—		—		—		(88,996)		(88,996)
Dividends to Series C preferred shareholders ($0.359375 per share)	—	—		—	—		—		—		—		(1,939)		(1,939)
Dividends to Series E preferred shareholders ($0.5625 per share)	—	—		—	—		—		—		—		(1,939)		(1,939)
Dividends to Series G preferred shareholders ($0.359375 per share)	—	—		—	—		—		—		—		(2,156)		(2,156)

Balance at March 31, 2020	81,811,816	$	818	14,841,431	$	148	$	3,845,093	$	(154,357)	$	(5,289)	$	(749,932)	$	2,936,481

Restricted share units issued to Trustees	74,767	1		—	—		—		—		—		—		1


Share-based compensation expense	—	—		—	—		3,463		—		—		—		3,463

Foreign currency translation adjustment	—	—		—	—		—		—		7,284		—		7,284

Change in unrealized loss on derivatives	—	—		—	—		—		—		(6,326)		—		(6,326)

Net loss	—	—		—	—		—		—		—		(62,965)		(62,965)
Issuances of common shares	17,203	—		—	—		428		—		—		—		428
Repurchase of common shares	—	—		—	—		—		(105,994)		—		—		(105,994)





Dividend equivalents accrued on performance shares	—	—		—	—		—		—		—		(19)		(19)
Dividends to common shareholders ($0.3825 per share)	—	—		—	—		—		—		—		(30,062)		(30,062)
Dividends to Series C preferred shareholders ($0.359375 per share)	—	—		—	—		—		—		—		(1,939)		(1,939)
Dividends to Series E preferred shareholders ($0.5625 per share)	—	—		—	—		—		—		—		(1,939)		(1,939)
Dividends to Series G preferred shareholders ($0.359375 per share)	—	—		—	—		—		—		—		(2,156)		(2,156)

Balance at June 30, 2020	81,903,786	$	819	14,841,431	$	148	$	3,848,984	$	(260,351)	$	(4,331)	$	(849,012)	$	2,736,257

Continued on next page.

EPR PROPERTIES
Consolidated Statements of Comprehensive Income
(Unaudited)
(Dollars in thousands)
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income $ 62,954
$ 57,526
$ 197,405
$ 166,841
Other comprehensive income (loss):
Foreign currency translation adjustment 7,317
(2,802 ) 13,539
9,340
Change in net unrealized (loss) gain on derivatives (6,096 ) 4,015
(10,354 ) (10,264 )
Comprehensive income $ 64,175
$ 58,739
$ 200,590
$ 165,917


	EPR Properties Shareholders’ Equity
	Common Stock			Preferred Stock			Additional paid-in capital		Treasury shares		Accumulated other comprehensive income (loss)		Distributions in excess of net income		Total
	Shares	Par		Shares	Par
Continued from previous page.
Balance at June 30, 2020	81,903,786	$	819	14,841,431	$	148	$	3,848,984	$	(260,351)	$	(4,331)	$	(849,012)	$	2,736,257

Cancellations of nonvested shares	—	—		—	—		220		(220)		—		—		—
Purchase of common shares for vesting	—	—		—	—		—		(23)		—		—		(23)
Share-based compensation expense	—	—		—	—		3,410		—		—		—		3,410

Foreign currency translation adjustment	—	—		—	—		—		—		4,148		—		4,148

Change in unrealized loss on derivatives	—	—		—	—		—		—		(1,923)		—		(1,923)

Net loss	—	—		—	—		—		—		—		(85,904)		(85,904)
Issuances of common shares	4,544	—		—	—		148		—		—		—		148





Dividend equivalents accrued on performance shares	—	—		—	—		—		—		—		(10)		(10)

Dividends to Series C preferred shareholders ($0.359375 per share)	—	—		—	—		—		—		—		(1,939)		(1,939)
Dividends to Series E preferred shareholders ($0.5625 per share)	—	—		—	—		—		—		—		(1,939)		(1,939)
Dividends to Series G preferred shareholders ($0.359375 per share)	—	—		—	—		—		—		—		(2,156)		(2,156)
Balance at September 30, 2020	81,908,330	$	819	14,841,431	$	148	$	3,852,762	$	(260,594)	$	(2,106)	$	(940,960)	$	2,650,069

Continued on next page.


	EPR Properties Shareholders’ Equity
	Common Stock			Preferred Stock			Additional paid-in capital		Treasury shares		Accumulated other comprehensive income (loss)		Distributions in excess of net income		Total
	Shares	Par		Shares	Par
Continued from previous page.
Balance at December 31, 2020	81,917,876	$	819	14,841,431	$	148	$	3,857,632	$	(261,238)	$	216	$	(966,992)	$	2,630,585

Issuance of nonvested shares and performance shares, net of cancellations	246,562	2		—	—		2,899		—		—		—		2,901
Purchase of common shares for vesting	—	—		—	—		—		(2,744)		—		—		(2,744)
Share-based compensation expense	—	—		—	—		3,784		—		—		—		3,784

Foreign currency translation adjustment	—	—		—	—		—		—		2,300		—		2,300

Change in unrealized gain on derivatives	—	—		—	—		—		—		462		—		462

Net income	—	—		—	—		—		—		—		3,380		3,380
Issuances of common shares	2,509	—		—	—		107		—		—		—		107





Dividend equivalents accrued on performance shares	—	—		—	—		—		—		—		(8)		(8)

Dividends to Series C preferred shareholders ($0.359375 per share)	—	—		—	—		—		—		—		(1,939)		(1,939)
Dividends to Series E preferred shareholders ($0.5625 per share)	—	—		—	—		—		—		—		(1,939)		(1,939)
Dividends to Series G preferred shareholders ($0.359375 per share)	—	—		—	—		—		—		—		(2,156)		(2,156)
Balance at March 31, 2021	82,166,947	$	821	14,841,431	$	148	$	3,864,422	$	(263,982)	$	2,978	$	(969,654)	$	2,634,733

Restricted share units issued to Trustees	43,306	1		—	—		—		—		—		—		1
Cancellations of nonvested shares	—	—		—	—		484		(484)		—		—		—

Share-based compensation expense	—	—		—	—		3,675		—		—		—		3,675

Foreign currency translation adjustment	—	—		—	—		—		—		2,674		—		2,674

Change in unrealized loss on derivatives	—	—		—	—		—		—		(387)		—		(387)

Net income	—	—		—	—		—		—		—		18,552		18,552
Issuances of common shares	1,826	—		—	—		90		—		—		—		90

Conversion of Series C Convertible Preferred shares to common shares	330	—		(800)	—		—		—		—		—		—



Stock option exercises, net	4,065	—		—	—		194		(194)		—		—		—
Dividend equivalents accrued on performance shares	—	—		—	—		—		—		—		(10)		(10)

Dividends to Series C preferred shareholders ($0.359375 per share)	—	—		—	—		—		—		—		(1,938)		(1,938)
Dividends to Series E preferred shareholders ($0.5625 per share)	—	—		—	—		—		—		—		(1,939)		(1,939)
Dividends to Series G preferred shareholders ($0.359375 per share)	—	—		—	—		—		—		—		(2,156)		(2,156)
Balance at June 30, 2021	82,216,474	$	822	14,840,631	$	148	$	3,868,865	$	(264,660)	$	5,265	$	(957,145)	$	2,653,295







Continued on next page.


	EPR Properties Shareholders’ Equity
	Common Stock			Preferred Stock			Additional paid-in capital		Treasury shares		Accumulated other comprehensive income (loss)		Distributions in excess of net income		Total
	Shares	Par		Shares	Par
Continued from previous page.
Balance at June 30, 2021	82,216,474	822		14,840,631	148		3,868,865		(264,660)		5,265		(957,145)		2,653,295
Purchase of common shares for vesting	—	—		—	—		—		(19)		—		—		(19)
Share-based compensation expense	—	—		—	—		3,759		—		—		—		3,759

Foreign currency translation adjustment	—	—		—	—		—		—		(5,169)		—		(5,169)

Change in unrealized loss on derivatives	—	—		—	—		—		—		6,280		—		6,280
Loss reclassified from accumulated other comprehensive income into earnings from termination of interest rate swaps	—	—		—	—		—		—		3,249		—		3,249
Net income	—	—		—	—		—		—		—		32,117		32,117
Issuances of common shares	3,051	—		—	—		153		—		—		—		153

Conversion of Series C Convertible Preferred shares to common shares	138	—		(334)	—		—		—		—		—		—



Dividend equivalents accrued on performance shares	—	—		—	—		—		—		—		(47)		(47)
Dividends to common shareholders ($0.75 per share)	—	—		—	—		—		—		—		(56,104)		(56,104)
Dividends to Series C preferred shareholders ($0.359375 per share)	—	—		—	—		—		—		—		(1,938)		(1,938)
Dividends to Series E preferred shareholders ($0.5625 per share)	—	—		—	—		—		—		—		(1,939)		(1,939)
Dividends to Series G preferred shareholders ($0.359375 per share)	—	—		—	—		—		—		—		(2,156)		(2,156)
Balance at September 30, 2021	82,219,663	$	822	14,840,297	$	148	$	3,872,777	$	(264,679)	$	9,625	$	(987,212)	$	2,631,481

See accompanying notes to consolidated financial statements.

EPR PROPERTIES

Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)


	Nine Months Ended September 30,
	2021		2020
Operating activities:
Net income (loss)	$	54,049	$	(111,751)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Impairment charges	2,711		62,825
Impairment charges on joint ventures	—		3,247


Gain on sale of real estate	(1,499)		(242)
Gain on insurance recovery	(30)		—
Deferred income tax expense	—		15,246

Costs associated with loan refinancing or payoff	4,982		820
Equity in loss from joint ventures	3,000		3,188
Distributions from joint ventures	90		—
Credit loss (benefit) expense	(19,677)		10,383
Depreciation and amortization	123,476		128,319
Amortization of deferred financing costs	5,331		4,783
Amortization of above/below market leases and tenant allowances, net	(293)		(384)
Share-based compensation expense to management and Trustees	11,218		10,382

Change in assets and liabilities:
Operating lease assets and liabilities	(379)		574
Mortgage notes accrued interest receivable	11		(4,279)
Accounts receivable	35,644		(42,961)

Other assets	(1,924)		(3,065)
Accounts payable and accrued liabilities	5,511		(15,724)
Unearned rents and interest	14,203		(1,883)


Net cash provided by operating activities	236,424		59,478
Investing activities:
Acquisition of and investments in real estate and other assets	(33,203)		(37,128)
Proceeds from sale of real estate	30,821		3,839
Investment in unconsolidated joint ventures	(13,611)		(1,690)

Investment in mortgage notes receivable	(7,670)		(6,438)
Proceeds from mortgage notes receivable paydowns	8,106		414
Investment in promissory notes receivable	(4,379)		—
Proceeds from promissory note receivable paydowns	7,124		69

Proceeds from insurance recovery	30		—


Additions to properties under development	(26,695)		(29,963)



Net cash used by investing activities	(39,477)		(70,897)
Financing activities:
Proceeds from debt facilities and senior unsecured notes	—		750,000
Principal payments on debt	(1,013,765)		—
Deferred financing fees paid	(336)		(2,944)
Costs associated with loan refinancing or payoff (cash portion)	(3,258)		(820)
Net proceeds from issuance of common shares	308		861



Purchase of common shares for treasury for vesting	(2,763)		(6,792)
Purchase of common shares under share repurchase program	—		(105,994)

Dividends paid to shareholders	(55,459)		(166,426)


Net cash (used) provided by financing activities	(1,075,273)		467,885
Effect of exchange rate changes on cash	(109)		(110)
Net change in cash and cash equivalents and restricted cash	(878,435)		456,356
Cash and cash equivalents and restricted cash at beginning of the period	1,028,010		531,440
Cash and cash equivalents and restricted cash at end of the period	$	149,575	$	987,796
Supplemental information continued on next page.

EPR PROPERTIES
Consolidated Statements of Changes in Equity
Nine Months Ended September 30, 2017
(Unaudited)
(Dollars in thousands)
EPR Properties Shareholders’ Equity
Common Stock Preferred Stock
Additional
paid-in capital

Treasury
shares

Accumulated
other
comprehensive
income (loss)

Distributions
in excess of
net income
Total
Shares Par Shares Par
Balance at December 31, 2016 66,263,487
$ 663
13,849,050
$ 139
$ 2,677,046
$ (113,172 ) $ 7,734
$ (386,509 ) $ 2,185,901
Restricted share units issued to Trustees 19,030
—
—
—
—
—
—
—
—
Issuance of nonvested shares, net 295,754
3
—
—
5,585
(90 ) —
—
5,498
Purchase of common shares for vesting —
—
—
—
—
(6,729 ) —
—
(6,729 )
Amortization of nonvested shares and restricted share units —
—
—
—
10,038
—
—
—
10,038
Share option expense —
—
—
—
528
—
—
—
528
Foreign currency translation adjustment —
—
—
—
—
—
13,539
—
13,539
Change in unrealized gain (loss) on derivatives —
—
—
—
—
—
(10,354 ) —
(10,354 )
Net income —
—
—
—
—
—
—
197,405
197,405
Issuances of common shares 939,472
9
—
—
68,739
—
—
—
68,748
Issuances of common shares for acquisition 8,851,264
89
—
—
657,384
—
—
—
657,473
Conversion of Series E Convertible Preferred shares to common shares 381
—
(835 ) (1 ) —
—
—
—
(1 )
Stock option exercises, net 28,281
—
—
—
1,547
(1,548 ) —
—
(1 )
Dividends to common and preferred shareholders —
—
—
—
—
—
—
(233,737 ) (233,737 )
Balance at September 30, 2017 76,397,669
$ 764
13,848,215
$ 138
$ 3,420,867
$ (121,539 ) $ 10,919
$ (422,841 ) $ 2,888,308
EPR PROPERTIES

Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)


Continued from previous page
	Nine Months Ended September 30,
	2021		2020
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents at beginning of the period	$	1,025,577	$	528,763
Restricted cash at beginning of the period	2,433		2,677
Cash and cash equivalents and restricted cash at beginning of the period	$	1,028,010	$	531,440

Cash and cash equivalents at end of the period	$	144,433	$	985,372
Restricted cash at end of the period	5,142		2,424
Cash and cash equivalents and restricted cash at end of the period	$	149,575	$	987,796

Supplemental schedule of non-cash activity:
Transfer of property under development to real estate investments	$	87,620	$	20,547


Issuance of nonvested shares and restricted share units at fair value, including nonvested shares issued for payment of bonuses	$	21,921	$	19,956





Credit loss expense related to adoption of ASC Topic 326	$	—	$	2,163
Operating lease right-of-use asset and related operating lease liability recorded for new ground lease	$	22,126	$	—







Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	107,456	$	105,141
Cash paid during the period for income taxes	$	1,193	$	995
Interest cost capitalized	$	1,341	$	829
Change in accrued capital expenditures	$	2,172	$	(12,232)

See accompanying notes to consolidated financial statements.

EPR PROPERTIES
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
Nine Months Ended September 30,
2017 2016
Operating activities:
Net income $ 197,405
$ 166,841
Adjustments to reconcile net income to net cash provided by operating activities:
Gain from early extinguishment of debt (977 ) —
Impairment charges 10,195
—
Gain on sale of real estate (28,462 ) (3,885 )
Gain on insurance recovery (606 ) (3,837 )
Deferred income tax expense (benefit) 911
(664 )
Costs associated with loan refinancing or payoff 1,491
905
Equity in income from joint ventures (86 ) (501 )
Distributions from joint ventures 442
511
Depreciation and amortization 95,919
79,222
Amortization of deferred financing costs 4,579
3,522
Amortization of above and below market leases, net and tenant improvements (41 ) 138
Share-based compensation expense to management and Trustees 10,566
8,282
Increase in restricted cash (744 ) (1,463 )
Decrease (increase) in mortgage notes accrued interest receivable 875
(188 )
Decrease (increase) in accounts receivable, net 10,220
(19,066 )
Increase in direct financing lease receivable (1,003 ) (2,503 )
Increase in other assets (2,225 ) (5,193 )
Decrease in accounts payable and accrued liabilities (13,969 ) (5,260 )
Increase (decrease) in unearned rents and interest 15,818
(1,088 )
Net cash provided by operating activities 300,308
215,773
Investing activities:
Acquisition of and investments in rental properties and other assets (354,277 ) (177,362 )
Proceeds from sale of real estate 136,467
20,651
Investment in mortgage notes receivable (130,076 ) (80,786 )
Proceeds from mortgage note receivable paydown 16,608
63,876
Investment in promissory notes receivable (1,868 ) (66 )
Proceeds from promissory note receivable paydown 1,599
—
Proceeds from sale of infrastructure related to issuance of revenue bonds —
43,462
Proceeds from insurance recovery 579
3,036
Proceeds from sale of investment in a direct financing lease, net —
825
Additions to properties under development (304,084 ) (288,887 )
Net cash used by investing activities (635,052 ) (415,251 )
Financing activities:
Proceeds from debt facilities and senior unsecured notes 1,175,000
854,360
Principal payments on debt (667,091 ) (587,109 )
Deferred financing fees paid (14,207 ) (3,047 )
Costs associated with loan refinancing or payoff (cash portion) (7 ) (482 )
Net proceeds from issuance of common shares 68,552
142,452
Impact of stock option exercises, net —
(717 )
Purchase of common shares for treasury for vesting (6,729 ) (4,211 )
Dividends paid to shareholders (228,861 ) (198,678 )
Net cash provided by financing activities 326,657
202,568
Effect of exchange rate changes on cash 164
(62 )
Net (decrease) increase in cash and cash equivalents (7,923 ) 3,028
Cash and cash equivalents at beginning of the period 19,335
4,283
Cash and cash equivalents at end of the period $ 11,412
$ 7,311
Supplemental information continued on next page.

EPR PROPERTIES
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
Continued from previous page.
Nine Months Ended September 30,
2017 2016
Supplemental schedule of non-cash activity:
Transfer of property under development to rental properties $ 301,612
$ 364,234
Issuance of nonvested shares and restricted share units at fair value, including nonvested shares issued for payment of bonuses $ 23,893
$ 19,626
Issuance of common shares for acquisition $ 657,473
$ —
Assumption of liabilities net of accounts receivable for acquisition $ 12,083
$ —
Transfer of investment in direct financing lease to rental properties $ 35,807
$ —
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 103,702
$ 83,307
Cash paid during the period for income taxes $ 1,253
$ 1,380
Interest cost capitalized $ 7,833
$ 7,983
Decrease in accrued capital expenditures $ 7,137
$ 5,621

~~See accompanying notes to consolidated financial statements.~~

EPR PROPERTIES

Notes to Consolidated Financial Statements (Unaudited)

1. Organization

Description of Business

EPR Properties (the Company) iswas formed on August 22, 1997 as a ~~specialty~~Maryland real estate investment trust (REIT) ~~organized~~, and an initial public offering of the Company's common shares of beneficial interest (common shares) was completed on ~~August 29, 1997 in Maryland. The~~November 18, 1997. Since that time, the Company ~~develops, owns, leases and finances properties~~has been a leading diversified Experiential net lease REIT specializing in select ~~market segments primarily related to Entertainment, Education~~enduring experiential properties. The Company's underwriting is centered on key industry and ~~Recreation.~~property cash flow criteria, as well as the credit metrics of the Company's tenants and customers. The Company’s properties are located in the United States and Canada.

2. Summary of Significant Accounting Policies and Recently Issued Accounting Standards

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. In addition, operating results for the nine month period ended September 30, ~~2017~~2021 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~2021. Amounts as of December 31, 2020 have been derived from the audited Consolidated Financial Statements as of that date and should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission (SEC) on February 25, 2021.

The Company consolidates certain entities when it is deemed to be the primary beneficiary in a variable interest entity (VIE) in which it has a controlling financial interest in accordance with the consolidation guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The equity method of accounting is applied to entities in which the Company is not the primary beneficiary as defined in the FASB ASC Topic on Consolidation (Topic 810) but can exercise influence over the entity with respect to its operations and major decisions.

The ~~consolidated balance sheet~~Company’s variable interests in VIEs currently are in the form of equity ownership and loans provided by the Company to a VIE or other partner. The Company examines specific criteria and uses its judgment when determining if the Company is the primary beneficiary of a VIE. The primary beneficiary generally is defined as the party with the controlling financial interest. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. As of September 30, 2021 and December 31, ~~2016 has been derived~~2020, the Company does not have any investments in consolidated VIEs.

Risks and Uncertainties

The Company continues to be subject to risks and uncertainties resulting from the ~~audited consolidated balance sheet at~~COVID-19 pandemic. The COVID-19 pandemic severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. In response to the COVID-19 pandemic, many jurisdictions within the United States and abroad instituted health and safety measures, including quarantines, mandated business and school closures and travel restrictions. As a result, the COVID-19 pandemic severely impacted experiential real estate properties, given that ~~date~~such properties involve congregate social activity and discretionary consumer spending. Although many of these health and safety measures have been lifted, the extent of the impact of the COVID-19 pandemic on the Company's business still remains highly uncertain and difficult to predict.

As of September 30, 2021, the Company had no properties closed due to COVID-19 restrictions. The continuing impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but ~~does~~ not ~~include~~limited to, the scope, severity and duration of any resurgence of the pandemic (including COVID-19 variants), the actions taken to contain the outbreak or any resurgence or mitigate their impacts, the distribution of vaccines and the efficacy of those vaccines, the ability of communities to achieve herd immunity, the public’s confidence in the health and safety measures implemented by the Company's tenants and borrowers, the continuing direct and indirect economic effects of the outbreak and containment measures, and the ability of the Company's tenants and borrowers to recover from the negative economic impacts of the pandemic as it subsides, and in many cases, service elevated levels of debt resulting from the pandemic, all of which are uncertain and cannot be predicted. During 2020 and the ~~information~~nine months ended September 30, 2021, the COVID-19 pandemic negatively affected the Company's business, and ~~footnotes required~~could continue to have material adverse effects on the Company's financial condition, results of operations and cash flows.

The Company’s consolidated financial statements reflect estimates and assumptions made by ~~U.S. GAAP for complete financial statements. For further information, refer to~~management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and ~~footnotes thereto included~~reported amounts of revenue and expenses during the reporting periods presented. The Company considered the continuing impact of, and recovery from, the COVID-19 pandemic on the assumptions and estimates used in determining the Company’s financial condition and results of operations for the nine months ended September 30, 2021. The following were impacts to the Company's financial statements and business during the nine months ended September 30, 2021 arising out of or relating to the COVID-19 pandemic:

•The Company continued to recognize revenue on a cash basis for certain tenants including American-Multi Cinema, Inc. (AMC) and Regal Cinemas (Regal), a subsidiary of Cineworld Group.

•The Company reduced rental revenue by $9.1 million due to rent abatements.

•As of September 30, 2021, the Company has deferred amounts due from tenants of approximately $39.2 million and amounts due from borrowers of $1.7 million that are booked as receivables. Additionally, the Company has amounts due from tenants that were not booked as receivables because the full amounts were not deemed probable of collection as a result of the COVID-19 pandemic. The amounts not booked as receivables remain obligations of the tenants and will be recognized as revenue when received. During the nine months ended September 30, 2021, the Company collected $6.0 million in deferred rent from cash basis tenants and from tenants for which the deferred payments were not previously recognized as revenue. In addition, the Company collected $53.5 million of deferred rent and interest from accrual basis tenants and borrowers that reduced related accounts and interest receivable. The repayment terms for all of these deferments vary by tenant or borrowers.

•Through July 12, 2021, the Company remained in the Covenant Relief Period under the agreement that governs its unsecured revolving credit facility and its unsecured term loan facility (Consolidated Credit Agreement) and the agreement that governs its private placement notes (Note Purchase Agreement). During the Covenant Relief Period, the Company's ~~Annual~~obligation to comply with certain covenants under these agreements was waived in light of the uncertainty related to impacts of the COVID-19 pandemic on the Company and its tenants and borrowers. The Company paid higher interest costs during the Covenant Relief Period. The Consolidated Credit Agreement and Note Purchase Agreement also imposed additional restrictions on the Company during the Covenant Relief Period, including limitations on making investments, incurring indebtedness, making capital expenditures, paying dividends or making other distributions, repurchasing the Company's shares, voluntarily prepaying certain indebtedness, encumbering certain assets and maintaining a minimum liquidity amount, in each case subject to certain exceptions. The term "Covenant Relief Period," as used in this Quarterly Report on Form ~~10-K~~10-Q, generally means the period of time beginning on June 29, 2020 and ending on (i) December 31, 2021, in the case of the Company's Consolidated Credit Agreement, or (ii) October 1, 2021 (subject to extension to January 1, 2022 at the Company's election, subject to certain conditions), in the case of the Company's Note Purchase Agreement governing its private placement notes. The Company had the right under certain circumstances to terminate the Covenant Relief Period earlier, which it exercised on July 12, 2021.

•On July 12, 2021, the Company provided notice of its election to terminate the Covenant Relief Period early. The Company’s election to terminate the Covenant Relief Period early meant that, effective July 13, 2021, the interest rates on the debt governed by these agreements returned to the previous levels defined in

the agreements, in each case based on the Company's unsecured debt ratings. By terminating the Covenant Relief Period, the Company was also released from certain restrictions under these agreements, including restrictions on investments, capital expenditures, incurrences of indebtedness and payment of dividends.

•In connection with amending the Company's Consolidated Credit Agreement and Note Purchase Agreement to provide for the ~~year~~Covenant Relief Period discussed above, certain of the Company's key subsidiaries guaranteed the Company's obligations based on the Company's unsecured debt ratings. During the three months ended ~~December 31, 2016 filed~~September 30, 2021, the Company received an investment grade rating from S&P Global Ratings on its unsecured debt. As a result, the subsidiary guarantors were released from their guarantees under these debt agreements in accordance with the ~~Securities~~terms of such agreements. Additionally, during October of 2021, Moody's revised its outlook on the Company's investment grade rating on its unsecured debt from negative to stable.

•During the nine months ended September 30, 2021, the Company decreased its expected credit losses by $19.7 million due to cash collections from a borrower on a previously fully reserved note and ~~Exchange Commission (SEC)~~the release of its commitment to fund additional amounts to the borrower as well as a change in the expectation in the credit loss model of the timing of the economic recovery from the impacts of the COVID-19 pandemic.

The monthly cash dividends to common shareholders were temporarily suspended following the common share dividend paid on ~~March 1, 2017.~~May 15, 2020 to shareholders of record as of April 30, 2020. On July 13, 2021, following termination of the Covenant Relief Period, the Company resumed regular monthly cash dividends to common shareholders. During the three months ended September 30, 2021, the Company declared cash dividends totaling $0.75 per common share.

~~Operating~~Reportable Segments

The Company has ~~four~~2 reportable operating segments: ~~Entertainment,~~Experiential and Education. The Experiential segment includes the following property types: theatres, eat & play (including 7 theatres located in entertainment districts), attractions, ski, experiential lodging, gaming, cultural and fitness & wellness. The Education ~~Recreation~~segment includes the following property types: early childhood education centers and ~~Other.~~private schools. See Note 1415 for financial information related to these ~~operating~~reportable segments.

~~Rental Properties~~Real Estate Investments

~~Rental properties~~Real estate investments are carried at ~~cost~~initial recorded value less accumulated depreciation. Costs incurred for the acquisition and development of the properties are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which generally are estimated to be 30 years to 40 years for buildings, ~~and~~ 3three years to 25 years for furniture, fixtures and ~~equipment.~~equipment and 10 years to 20 years for site improvements. Tenant improvements, including allowances, are depreciated over the shorter of the ~~base~~lease term ~~of the lease~~ or the estimated useful ~~life. Expenditures for ordinary maintenance~~life and ~~repairs~~leasehold interests are ~~charged to operations in the period incurred. Significant renovations and improvements that improve or extend~~depreciated over the useful life of the ~~asset are capitalized and depreciated over their estimated useful life.~~underlying ground lease.

Management reviews ~~a property~~the Company's real estate investments, including operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying value of a property may not be ~~recoverable. The review of recoverability~~recoverable, which is based on an estimate of undiscounted future cash flows expected to result from its use and eventual disposition. If impairment exists due to the inability to recover the carrying value of the property, an impairment loss is recorded to the extent that the carrying value of the property exceeds its estimated fair value.

The Company evaluates the held-for-sale classification of its real estate as of the end of each quarter. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value less costs to ~~sell. Assets~~sell and are generally classified as held for sale once management has initiated an active program to market them for sale and it is

probable the assets will be sold within one year. On occasion, the Company will receive unsolicited offers from third parties to buy individual Company owned properties. Under these circumstances, the Company will classify the properties as held for sale when a sales contract is executed with no contingencies and the prospective buyer has funds at risk to ensure performance.

~~Accounting for~~Real Estate Acquisitions

Upon acquisition of real estate properties, the Company evaluates the acquisition to determine if it is a business combination or an asset acquisition. ~~In January 2017,~~If the ~~FASB issued Accounting Standards Update (ASU) No. 2017-01, Business Combinations (Topic 805):~~ ~~Clarifying the Definition of a Business. The update clarifies the definition of a business with the objective of adding guidance~~acquisition is determined to ~~assist entities with evaluating whether acquisitions should~~ be ~~accounted for as business combinations or~~an asset acquisitions. The standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years, with early application of the guidance permitted. The Company has elected to early adopt ASU No. 2017-01~~as of January 1, 2017. As a result,~~acquisition, the Company ~~expects that fewer of its real estate acquisitions will be accounted for as business combinations.~~records

~~Costs incurred for asset acquisitions and development properties, including transaction costs, are capitalized. For asset acquisitions, the Company allocates~~ the purchase price and other related costs incurred to the acquired tangible assets and identified intangible assets and liabilities on a relative fair value basis. In addition, costs incurred for asset acquisitions, including transaction costs, are capitalized.

If the acquisition is determined to be a business combination, the Company records the fair value of acquired tangible assets and identified intangible assets and liabilities as well as any noncontrolling interest. Acquisition-related costs in connection with business combinations are expensed as incurred and included in "Transaction costs" in the accompanying consolidated statements of income (loss) and comprehensive income (loss).

For real estate acquisitions (asset acquisitions or business combinations), the fair value (or relative fair value in an asset acquisition) of the tangible assets ~~acquired based on~~is determined by valuing the property using recent independent appraisals or methods similar to those used by independent ~~appraisers~~appraisers. Land is valued using the sales comparison approach which uses available market data from recent comparable land sales as an input to estimate the fair value. Site improvements and ~~management judgment. Acquisition-related costs in connection with business combinations~~tenant improvements are ~~expensed~~valued using the cost approach which uses replacement cost data obtained from industry recognized guides less depreciation as ~~incurred. Costs related~~an input to ~~such transactions,~~estimate the fair value. The building is valued either using the cost approach described above or a combination of the cost and the income approach. The income approach uses market leasing assumptions to estimate the fair value of the property as ~~well as costs associated with terminated transactions,~~if vacant. The cost and income approaches are ~~included in the accompanying consolidated statements of income as transaction costs.~~reconciled to arrive at an estimated building fair value.

Deferred Financing Costs

Deferred financing costs are amortized over the terms of the related debt obligations or mortgage note receivable as applicable. Deferred ~~financing~~financing costs of ~~$34.0~~$32.2 million and ~~$29.3~~$35.6 million as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively, are shown as a reduction of debt. The deferred financing costs of $1.7 million and $4.8 million as of September 30, 2021 and December 31, 2020, respectively, related to the unsecured revolving credit facility are included in ~~other assets.~~"Other assets" in the accompanying consolidated balance sheets.

~~Allowance~~Rental Revenue

The Company leases real estate to its tenants under leases that are classified as operating leases. The Company's leases generally provide for ~~Doubtful Accounts~~

~~Accounts receivable~~rent escalations throughout the lease terms. Rents that are fixed are recognized on a straight-line basis over the lease term. Base rent escalations that include a variable component are recognized upon the occurrence of the specified event as defined in the Company's lease agreements. Many of the Company's leasing arrangements include options to extend the lease, which are not included in the minimum lease terms unless it is ~~reduced by~~reasonably certain to be exercised. Straight-line rental revenue is subject to an ~~allowance~~evaluation for ~~amounts where collection~~collectibility, and the Company records a direct write-off against rental revenue if collectibility of these future rents is not probable. ~~The Company’s~~For the nine months ended September 30, 2021, the Company recognized straight-line write-offs totaling $0.2 million. Straight-line rental revenue, net of write-offs, was $3.7 million for the nine months ended September 30, 2021. For the nine months ended September 30, 2020, the Company recognized straight-line write-offs totaling $36.9 million, which were comprised of $25.4 million of straight-line accounts receivable ~~balance~~and $11.5 million of sub-lessor ground lease straight-line accounts receivable. Straight-line rental revenue, net of write-offs, was a reduction to total rental revenue of $25.4 million for the nine months ended September 30, 2020.

The Company has agreed to defer rent for a substantial portion of its customers in response to the impact of the COVID-19 pandemic on their operations. On April 10, 2020, the FASB issued a Staff Q&A on Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic. In reliance upon the FASB Staff Q&A, the Company has not treated qualifying deferrals or rent concessions during the period affected by the COVID-19 pandemic as lease modifications. While deferments for this and future periods delay rent payments, these deferments generally do not release customers from the obligation to pay the deferred amounts in the future. Deferred rent amounts are reflected in the Company's financial statements as accounts receivable if collection is ~~comprised primarily of rents and operating cost recoveries due from tenants as well as accrued rental rate increases~~determined to be probable or recognized when received as variable lease payments if collection is determined to not be probable. Certain agreements with tenants where remaining lease terms are extended, or other changes are made that do not qualify for the treatment in the FASB Staff Q&A, are treated as lease modifications. In these circumstances, upon an executed lease modification, if the tenant is not being recognized on a cash basis, the contractual rent reflected in accounts receivable and straight-line rent receivable will be amortized over the ~~life~~remaining term of the ~~existing leases.~~ lease against rental revenue. In limited cases, customers may be entitled to the abatement of

rent during governmentally imposed prohibitions on business operations which is recognized in the period to which the abatement relates, or the Company may provide rent concessions to tenants. In cases where the Company provides concessions to tenants to which they are not otherwise entitled, those amounts will be recognized in the period in which the concession is granted unless the changes are accounted for as lease modifications.

Most of the Company’s lease contracts are triple-net leases, which require the tenants to make payments to third parties for lessor costs (such as property taxes and insurance) associated with the properties. In accordance with Topic 842, the Company does not include these lessee payments to third parties in rental revenue or property operating expenses. In certain situations, the Company pays these lessor costs directly to third parties and the tenants reimburse the Company. In accordance with Topic 842, these payments are presented on a gross basis in rental revenue and property operating expense. During the nine months ended September 30, 2021 and 2020, the Company recognized $2.8 million and $1.4 million, respectively, in tenant reimbursements related to the gross up of these reimbursed expenses which are included in rental revenue.

Certain of the Company's leases, particularly at its entertainment districts, require the tenants to make payments to the Company for property-related expenses such as common area maintenance. The Company has elected to combine these non-lease components with the lease components in rental revenue. For the nine months ended September 30, 2021 and 2020, the non-lease components included in rental revenue totaled $11.2 million and $8.9 million, respectively.

In addition, most of the Company's tenants are subject to additional rents (above base rents) if gross revenues of the properties exceed certain thresholds defined in the lease agreements (percentage rents). Percentage rents are recognized at the time when specific triggering events occur as provided by the lease agreement. Rental revenue included percentage rents of $7.2 million and $5.5 million for the nine months ended September 30, 2021 and 2020, respectively. Furthermore, due to the impact of the COVID-19 pandemic, certain of the Company's tenants paid a portion of base rent in 2021 based on a percentage of gross revenue. This variable rent totaled $11.3 million for the nine months ended September 30, 2021.

The Company regularly evaluates the ~~adequacy~~collectibility of its ~~allowance for doubtful accounts.~~receivables on a lease-by-lease basis. The evaluation primarily consists of reviewing past due account balances and considering such factors as the credit quality of the ~~Company’s~~Company's tenants, historical trends of the tenant, ~~and/or other debtor,~~ current economic conditions and changes in customer payment terms. ~~Additionally, with respect to tenants in bankruptcy,~~When the collectibility of lease receivables or future lease payments are no longer probable, the Company ~~estimates~~records a direct write-off of the ~~expected recovery through bankruptcy claims~~receivable to rental revenue and ~~increases~~recognizes future rental revenue on a cash basis.

Property Sales

Sales of real estate properties are recognized when a contract exists and the ~~allowance~~purchaser has obtained control of the property. Gains on sales of properties are recognized in full in a partial sale of nonfinancial assets, to the extent control is not retained. Any noncontrolling interest retained by the seller would, accordingly, be measured at fair value.

The Company evaluates each sale or disposal transaction to determine if it meets the criteria to qualify as discontinued operations. A discontinued operation is a component of an entity or group of components that have been disposed of or are classified as held for ~~amounts deemed uncollectible. These estimates~~sale and represent a strategic shift that has or will have a ~~direct impact~~major effect on the Company's ~~net income.~~operations and financial results. If the sale or disposal transaction does not meet the criteria, the operations and related gain or loss on sale is included in income from continuing operations.

~~Revenue Recognition~~

Rents that are fixed and determinable are recognized on a straight-line basis over the minimum term of the leases. Base rent escalation on leases that are dependent upon increases in the Consumer Price Index (CPI) is recognized when known. In addition, most of the Company's tenants are subject to additional rents if gross revenues of the properties exceed certain thresholds defined in the lease agreements (percentage rents). Percentage rents as well as participating interest for those mortgage agreements that contain similar such clauses are recognized at the time when specific triggering events occur as provided by the lease or mortgage agreements. Rental revenue included percentage rents of $4.7 million and $2.7 million for the nine months ended September 30, 2017 and 2016, respectively. Mortgage and other financing income included participating interest income of $0.7 million and $0.9 million for the nine months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2016, mortgage and other financing income included a $3.6 million prepayment fee related to a mortgage note that was paid fully in advance of its maturity date.

Direct financing lease income is recognized on the effective interest method to produce a level yield on funds not yet recovered. Estimated unguaranteed residual values at the date of lease inception represent management's initial estimates of fair value of the leased assets at the expiration of the lease, not to exceed original cost. Significant assumptions used

in estimating residual values include estimated net cash flows over the remaining lease term and expected future real estate values. The Company evaluates on an annual basis (or more frequently, if necessary) the collectability of its direct financing lease receivable and unguaranteed residual value to determine whether they are impaired. A direct financing lease receivable is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms. When a direct financing lease receivable is considered to be impaired, the amount of loss is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the direct financing lease receivable's effective interest rate or to the fair value of the underlying collateral, less costs to sell, if such receivable is collateralized.

Mortgage Notes and Other Notes Receivable

Mortgage notes and other notes receivable, including related accrued interest receivable, consist of loans originated by the Company and the related accrued and unpaid interest income as of the balance sheet date. Mortgage notes and other notes receivable are initially recorded at the amount advanced to the borrower less allowance for credit loss. Interest income is recognized using the effective interest method over the estimated life of the note. Interest income includes both the stated interest and the amortization or accretion of premiums or discounts (if any).

In accordance with ASC Topic 326, Measurement of Credit Losses on Financial Instruments, the Company records allowance for credit loss to reflect that all mortgage notes and notes receivable have some inherent risk of loss regardless of credit quality, collateral, or other mitigating factors. While Topic 326 does not require any particular method for determining the reserves, it does specify that it should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions, as well as reasonable and supportable forecasts for the term of each mortgage note or note receivable. The Company uses a forward looking commercial real estate forecasting tool to estimate its current expected credit losses (CECL) for each of its mortgage notes and notes receivable on a loan by loan basis. The CECL allowance required by Topic 326 is a valuation account that is deducted from the related mortgage note or note receivable.

Certain of the Company’s mortgage notes and notes receivable include commitments to fund incremental amounts to its borrowers. These future funding commitments are also subject to the CECL model. The allowance related to future funding is recorded as a liability and is included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheet.

As permitted under Topic 326, the Company made an accounting policy election to not measure an allowance for credit losses for accrued interest receivables related to its mortgage notes and notes receivable. Accordingly, if accrued interest receivable is deemed to be uncollectible, the Company will record any necessary write-offs as a reversal of interest income. As of September 30, 2021, the Company believes that all outstanding accrued interest is collectible.

In the event the Company has a past due mortgage note or note receivable and the Company ~~defers certain loan origination and commitment fees, net of certain origination costs, and amortizes them over~~determines it is collateral dependent, the ~~term~~Company measures expected credit losses based on the fair value of the ~~related loan. Interest income on performing loans is accrued as earned.~~collateral. The Company evaluates the collectability of both interest and principal offor each of its ~~loans~~mortgage notes and notes receivable on a quarterly basis to determine ~~whether it~~if foreclosure is ~~impaired. A loan is considered~~probable. As of September 30, 2021, the Company does not have any mortgage notes or notes receivable with past due principal balances.

Mortgage and Other Financing Income

Certain of the Company's borrowers are subject to ~~be impaired when,~~additional interest based on current information and events, the Company determines that it is probable that it will be unable to collect all amounts due according to the existing contractual terms. An insignificant delay or shortfall in amounts of payments does not necessarily resultcertain thresholds defined in the loan being identified as impaired. When a loan is considered to be impaired, the amount of loss, if any, is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the loan’s effective interest rate or to the fair value of the Company’s interest in the underlying collateral, less costs to sell, if the loan is collateral dependent. For impaired loans,mortgage agreements (participating interest). Participating interest income is recognized ~~on a cash basis, unless~~at the ~~Company determines based on the loan to estimated fair value ratio the loan should be on the cost recovery method, and any cash payments received would then be reflected~~time when specific parameters have been met as ~~a reduction of principal. Interest income recognition is recommenced if and when the impaired loan becomes contractually current and performance is demonstrated to be resumed.~~

~~Concentrations of Risk~~

On December 21, 2016, American Multi-Cinema, Inc. (AMC) announced that it closed its acquisition of Carmike Cinemas Inc. (Carmike). AMC was the lessee of a substantial portion (34%) of the megaplex theatre rental properties heldprovided by the ~~Company at September 30, 2017. For~~mortgage agreement. There was no participating interest income for the nine months ended September 30, ~~2017, approximately $85.7 million or 20.0%~~2021 and 2020.

Concentrations of Risk

AMC and Topgolf USA (Topgolf) represented a significant portion of the Company's total ~~revenues were derived from rental payments by AMC. For~~revenue for the nine months ended September 30, ~~2016, approximately $65.3 million or 18.0%~~2021 and 2020. The Company began recognizing revenue on a cash basis for AMC at the end of the first quarter of 2020 and cash payments have been reduced due to the impact of the COVID-19 pandemic. The following is a summary of the Company's total ~~revenues were~~revenue derived from rental or interest payments byfrom AMC and approximately $16.9 million or 4.7% of the Company's total revenues were derived from rental payments by Carmike. These rental payments are from AMC under the leases, or from its parent, AMC Entertainment, Inc. (AMCE), as the guarantor of AMC’s obligations under the leases. AMCE is wholly owned by AMC Entertainment Holdings, Inc. (AMCEH). AMCEH is a publicly held company (NYSE: AMC) and its consolidated financial information is publicly available at www.sec.gov.Topgolf (dollars in thousands):


	Nine Months Ended September 30,
	2021				2020
	Total Revenue		% of Company's Total Revenue		Total Revenue		% of Company's Total Revenue
AMC	$	71,000	18.8	%	$	26,226	8.2	%
Topgolf	63,445		16.8	%	60,330		18.8	%

Share-Based Compensation

Share-based compensation to employees of the Company is granted pursuant to the Company's Annual Incentive Program and Long-Term Incentive Plan and share-based compensation to non-employee Trustees of the Company is granted pursuant to the Company's Trustee compensation program. Prior to May 12, 2016, share-based compensation granted to employees and non-employee Trustees were issued under the 2007 Equity Incentive Plan. The 2016 Equity Incentive Plan was approved by shareholders at the May 11, 2016 annual shareholder meeting and this plan replaced the 2007 Equity Incentive Plan. Accordingly, all share-based compensation granted on or after May 12, 2016 has been issued under the 2016 Equity Incentive Plan.

Share-based compensation expense consists of share option expense and amortization of ~~nonvested~~non-vested share grants issued to employees, and amortization of share units issued to non-employee Trustees for payment of their annual

retainers. Share-based compensation is included in ~~general~~"General and administrative ~~expense~~expense" in the accompanying consolidated statements of income ~~totaled $10.6 million~~(loss) and ~~$8.3 million for the nine months ended September 30, 2017 and 2016, respectively.~~comprehensive income (loss).

Share Options

Share options are granted to employees pursuant to the Long-Term Incentive Plan. The fair value of share options granted is estimated at the date of grant using the Black-Scholes option pricing model. Share options granted to employees vest over a period of four years and share option expense for these options is recognized on a straight-line basis over the vesting period. Expense recognized related to share options and included in ~~general~~"General and administrative ~~expense~~expense" in the accompanying consolidated statements of income (loss) and comprehensive income (loss) was ~~$528~~$13 thousand ~~and $684~~and $9 thousand for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively.

Nonvested Shares Issued to Employees

The Company grants nonvested shares to employees pursuant to both the Annual Incentive Program and the Long-Term Incentive Plan. The Company amortizes the expense related to the nonvested shares awarded to employees under the Long-Term Incentive Plan and the premium awarded under the nonvested share alternative of the Annual Incentive Program on a straight-line basis over the future vesting period (~~three~~(three years or four years). Expense recognized related to nonvested shares and included in ~~general~~"General and administrative ~~expense~~expense" in the accompanying consolidated statements of income (loss) and comprehensive income (loss)was ~~$9.1~~$6.6 million and ~~$6.8~~ $8.0 million for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively.

Nonvested Performance Shares Issued to Employees

The Company awards performance shares to the Company's executive officers pursuant to the Long-Term Incentive Plan. The performance shares contain both a market condition and a performance condition. The Company amortizes the expense related to the performance shares over the future vesting period of three years. Expense recognized related to performance shares and included in "General and administrative expense" in the accompanying consolidated statements of income (loss) and comprehensive income (loss) was $2.9 million and $0.7 million for the nine months ended September 30, 2021 and 2020, respectively.

Restricted Share Units Issued to Non-Employee Trustees

The Company issues restricted share units to non-employee Trustees for payment of their annual retainers under the Company's Trustee compensation program. The fair value of the share units granted was based on the share price at the date of grant. The share units vest upon the earlier of the day preceding the next annual meeting of shareholders or a change of control. The settlement date for the shares is selected by the non-employee Trustee, and ranges from one year from the grant date to upon termination of service. This expense is amortized by the Company on a straight-line basis over the year of service by the non-employee Trustees. Total expense recognized related to shares issued to non-employee Trustees and included in "General and administrative expense" in the accompanying consolidated statements of income (loss) and comprehensive income (loss)was ~~$936 thousand and $813 thousand~~$1.7 million and $1.6 million for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively.

Derivative Instruments

The Company ~~has acquired certain~~uses derivative instruments to reduce exposure to fluctuations in foreign currency exchange rates and variable interest rates. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. These derivatives consist of foreign currency forward contracts, cross-currency swaps and interest rate swaps.

The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as ~~interest rate~~foreign currency risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows ~~or other types of forecasted transactions,~~ are considered cash flow hedges. ~~Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation.~~ Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value ~~of the hedged asset or liability that are attributable to the hedged risk in a fair value~~ hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. For its net investment hedges that hedge the foreign currency exposure of its Canadian investments, the Company has elected to assess hedge effectiveness using a method based on changes in spot exchange rates and record the changes in the

fair value amounts excluded from the assessment of effectiveness into earnings on a systematic and rational basis. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. If hedge accounting is not applied, realized and unrealized gains or losses are reported in earnings.

The Company's policy is to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Impact of Recently Issued Accounting Standards

In ~~May 2014,~~March 2020, the FASB issued ASU No. ~~2014-09,~~ ~~Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to~~

~~customers when it satisfies performance obligations.~~2020-04, Reference Rate Reform (Topic 848). The ASU ~~will replace most existing revenue recognition~~contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ~~U.S. GAAP when it becomes effective.~~

~~In February 2017,~~ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the ~~FASB issued ASU No. 2017-05,~~ ~~Other Income: Gains and Losses from the Derecognition of Nonfinancial Assets~~, which amends ASC Topic 610-20. ASU No. 2017-05 provides guidance on how entities recognize sales, including partial sales, of nonfinancial assets (and in-substance nonfinancial assets) to non-customers. ASU No. 2017-05 requires the seller to recognize a full gain or loss in a partial sale of nonfinancial assets, to the extent control is not retained. Any noncontrolling interest retained by the seller would, accordingly, be measured at fair value. Both ASU No. 2014-09 and 2017-05 will become effective foryear ended December 31, 2020, the Company ~~beginning with~~elected to apply the ~~first quarter~~hedge accounting expedients related to probability and the assessments of ~~2018. The standards permit~~effectiveness for future LIBOR-indexed cash flows to assume that the ~~use of either the full retrospective method or the modified retrospective method. The Company anticipates it will use the modified retrospective method for transition under both standards, in~~index upon which ~~case the cumulative effect of applying the standards, if any, would be recognized at the date of initial application.~~

~~The Company has reviewed its revenue streams and determined the significant majority of its revenue is derived from lease revenue (which~~future hedged transactions will be ~~impacted upon adoption~~based matches the index on the corresponding derivatives. Application of these expedients preserves the ~~lease standard in 2019 discussed below) and mortgage and other financing income (which is not in scope~~presentation of derivatives consistent with past presentation. On March 5, 2021, the ~~revenue standard). In addition,~~Financial Conduct Authority ("FCA") announced that the USD LIBOR will no longer be published after June 30, 2023. At September 30, 2021, the Company ~~also has sales~~had 10 agreements (including debt, derivative, mortgage note and lease agreements) that are indexed to LIBOR, of ~~real estate~~ which ~~have historically been in all-cash transactions with no contingencies and no future involvement in the operations. Accordingly, the Company does not anticipate a significant change~~3 mature prior to ~~the timing of revenue recognition upon adoption of this new revenue standard.~~

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases~~, which amends existing accounting standards for lease accounting and is intended to improve financial reporting related to lease transactions. The ASU will require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Lessor accounting will remain largely unchanged from current U.S. GAAP. However, ASU No. 2016-02 is expected to impact the Company’s consolidated financial statements as the Company has certain operating land leases and other arrangements for which it is the lessee and will be required to recognize these arrangements on the financial statements. The ASU will become effective for the Company for interim and annual reporting periods in fiscal years beginning after December 15, 2018. The Company expects to adopt the new standard on its effective date. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company has assembled an implementation team that is assessing the effect that ASU No. 2016-02 will have on its consolidated financial statements and related disclosures. Additionally, the Company is developing an implementation plan based on the results of the assessment. The Company currently believes substantially all of its leases will continue to be classified as operating leases under the new standard. Subsequent to the adoption of the new standard, common area maintenance provided in lease contracts will be accounted for as a non-lease component within the scope of the new revenue standard. As a result, the Company will be required to recognize revenues associated with leases separately from revenues associated with common area maintenance.June 30, 2023. The Company is ~~continuing to evaluate whether the variable payment provisions in the new lease standard or the allocation~~monitoring and ~~recognition provisions of the new revenue standard will affect the timing of recognition of lease and non-lease revenue.~~

~~In June 2016, the FASB issued ASU No. 2016-13,~~ ~~Measurement of Credit Losses on Financial Instruments~~, which amends ASC Topic 326, Financial Instruments - Credit Losses. The ASU changes the methodology for measuring credit losses on financial instruments and timing of when such losses are recorded. ASU No. 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company is currently evaluating the ~~impact that the ASU will have on its consolidated financial statements and~~ related ~~disclosures.~~risks with transitioning these contracts to a replacement index.

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments, which amends ASC Topic 230,~~ ~~Statement of Cash Flows~~. The ASU clarifies the treatment of several cash flow issues with the objective of reducing diversity in practice. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017. The Company has determined that the adoption of ASU 2016-15 will not impact its financial position or results of operations and there are no known changes in presentation as a result of adopting this standard.

~~In November 2016, the FASB issued ASU No. 2016-18,~~ ~~Statement of Cash Flows~~, which amends ASC Topic 230, Statement of Cash Flows. The ASU requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Entities will also be required to reconcile such total to amounts on the balance sheet and disclose the nature of the

restrictions. ASU No. 2016-18 is effective for fiscal years beginning after December 15, 2017. The Company has determined that the adoption of this ASU will result in the Company including restricted cash and cash and cash equivalents on its Consolidated Statement of Cash Flows.

~~In August 2017, the FASB issued ASU No. 2017-12,~~ ~~Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities~~. The ASU better aligns a company's financial reporting for hedging activities with the economic objectives of those activities. ASU No. 2017-12 is effective for fiscal years beginning after December 15, 2018 with early adoption allowed using a modified retrospective transition approach. This adoption method would require the Company to recognize the cumulative effect of initially applying the ASU as an adjustment to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that the Company adopts the update. The Company is currently reviewing the ASU to assess the potential impact on its consolidated financial statements and related disclosures but does not anticipate that this ASU will have a material impact.

3. ~~Rental Properties~~Real Estate Investments

The following table summarizes the carrying amounts of ~~rental properties~~real estate investments as of September 30, ~~2017~~2021 and December 31, ~~2016~~2020 (in thousands):


	September 30, 2021		December 31, 2020
Buildings and improvements	$	4,557,213	$	4,526,342
Furniture, fixtures & equipment	117,978		118,334
Land	1,241,166		1,242,663
Leasehold interests	26,717		26,050
	5,943,074		5,913,389
Accumulated depreciation	(1,142,513)		(1,062,087)
Total	$	4,800,561	$	4,851,302

September 30, 2017 December 31, 2016
Buildings and improvements $ 4,037,328
$ 3,272,865
Furniture, fixtures & equipment 86,831
40,684
Land 1,097,445
917,748
Leasehold interests 25,774
—
5,247,378
4,231,297
Accumulated depreciation (711,384 ) (635,535 )
Total $ 4,535,994
$ 3,595,762

Depreciation expense on ~~rental properties~~ real estate investments was ~~$93.2~~$119.2 million and ~~$76.3~~$122.1 million for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively.

4. Impairment Charges

The Company reviews its properties for changes in circumstances that indicate that the carrying value of a property may not be recoverable based on an estimate of undiscounted future cash flows. During the nine months ended September 30, 2021, the Company received various offers to sell 2 of its vacant properties. As a result, the Company reassessed the expected holding periods of such properties, and determined that the estimated cash flows were not sufficient to recover the carrying values of these properties. The Company estimated the fair value of these properties by taking into account these purchase offers. The Company reduced the carrying value of the real estate investments, net to $7.0 million. The Company recognized impairment charges of $2.7 million on the real estate investments, which is the amount that the carrying value of the assets exceeded the estimated fair value.

5. Investments and Dispositions

The Company's investment spending during the nine months ended September 30, ~~2017~~2021 totaled $107.9 million, and included the acquisition of 1 eat and play property for approximately $26.7 million, spending on build-to-suit development, redevelopment projects and the acquisition of interests in 2 joint ventures described in Note 9.

During the nine months ended September 30, 2021, the Company completed the sale of 2 theatre properties, 2 land parcels and 1 outparcel for net proceeds totaling $30.8 million and recognized a combined gain on sale of $1.5 ~~billion,~~million. Subsequent to September 30, 2021, the Company completed the sale of 2 ski properties for net proceeds of $48.0 million and ~~included investments~~recognized a gain on sale of approximately $15.4 million.

6. Investment in ~~each~~Mortgage Notes and Notes Receivable

The Company measures expected credit losses on its mortgage notes and notes receivable on an individual basis over the related contractual term as its financial instruments do not have similar risk characteristics. The Company has not experienced historical losses on its mortgage note portfolio; therefore, the Company uses a forward looking commercial real estate loss forecasting tool to estimate its expected credit losses. The loss forecasting tool is comprised of a probability of default model and a loss given default model that utilizes the Company’s loan specific inputs as well as selected forward looking macroeconomic variables and mean loss rates. Based on certain inputs, such as origination year, balance, interest rate as well as collateral value and borrower operating income, the model produces life of loan expected losses on a loan by loan basis. As of September 30, 2021, the Company did not anticipate any prepayments therefore the contractual term of its ~~four~~ ~~operating segments.~~mortgage notes was used for the calculation of the expected credit losses. The Company updates the model inputs at each reporting period to reflect, if applicable, any newly originated loans, changes to loan specific information on existing loans and current macroeconomic conditions.

~~Entertainment investment spending~~Investment in mortgage notes, including related accrued interest receivable, at September 30, 2021 and December 31, 2020 consists of the following (in thousands):


					Outstanding principal amount of mortgage		Carrying amount as of				Unfunded commitments
Description	Year of Origination	Interest Rate		Maturity Date			September 30, 2021		December 31, 2020		September 30, 2021
Private school property Mableton, Georgia (1)	2017	9.02	%	Prepaid in full	$	—	$	—	$	5,278	$	—
Attraction property Powells Point, North Carolina	2019	7.75	%	6/30/2025	28,521		27,908		27,045		—
Fitness & wellness property Omaha, Nebraska	2017	7.85	%	1/3/2027	10,905		11,278		11,225		—
Fitness & wellness property Merriam, Kansas	2019	7.55	%	7/31/2029	9,090		9,398		9,355		—
Ski property Girdwood, Alaska	2019	8.21	%	12/31/2029	44,605		44,537		40,680		12,395
Fitness & wellness property Omaha, Nebraska	2016	7.85	%	6/30/2030	10,539		10,797		8,630		379
Experiential lodging property Nashville, Tennessee	2019	7.01	%	9/30/2031	71,223		70,422		67,235		—
Eat & play property Austin, Texas	2012	11.31	%	6/1/2033	10,915		11,073		11,929		—
Ski property West Dover and Wilmington, Vermont	2007	11.96	%	12/1/2034	51,050		51,045		51,031		—
Four ski properties Ohio and Pennsylvania	2007	10.91	%	12/1/2034	37,562		37,506		37,413		—
Ski property Chesterland, Ohio	2012	11.38	%	12/1/2034	4,550		4,509		4,396		—
Ski property Hunter, New York	2016	8.72	%	1/5/2036	21,000		21,000		21,000		—
Eat & play property Midvale, Utah	2015	10.25	%	5/31/2036	17,505		17,729		18,289		—
Eat & play property West Chester, Ohio	2015	9.75	%	8/1/2036	18,068		18,285		18,830		—
Fitness & wellness property Fort Collins, Colorado	2018	7.85	%	1/31/2038	10,292		10,568		10,408		—
Early childhood education center Lake Mary, Florida	2019	7.98	%	5/9/2039	4,200		4,321		4,348		—
Eat & play property Eugene, Oregon	2019	8.13	%	6/17/2039	14,700		14,759		14,799		—
Early childhood education center Lithia, Florida	2017	8.42	%	10/31/2039	3,959		3,999		3,737		—
					$	368,684	$	369,134	$	365,628	$	12,774

(1) On March 22, 2021, the Company received $5.1 million in proceeds representing prepayment in full on a mortgage note receivable that was secured by a private school property in Mableton, Georgia. No prepayment fee was received in connection with this note payoff.

Investment in notes receivable, including related accrued interest receivable, was $7.3 million at both September 30, 2021 and December 31, 2020, and is included in "Other assets" in the accompanying consolidated balance sheets.

During the year ended December 31, 2020, the Company entered into an amended and restated loan and security agreement with 1 of its notes receivable borrowers in response to the impacts of the COVID-19 pandemic. Although the borrower was not in default, nor has the borrower declared bankruptcy, the Company determined these modifications resulted in a troubled debt restructuring. At September 30, 2021, these note receivables are considered collateral dependent and expected credit losses are based on the fair value of the underlying collateral at the reporting date. The notes are secured by the working capital and non-real estate assets of the borrower. The Company assessed the fair value of the collateral as of September 30, 2021 and the notes remain fully reserved with an allowance for credit loss totaling $10.2 million, which represents the outstanding principal balance of the note as of September 30, 2021. Income for this borrower is recognized on a cash basis. During the nine months ended September 30, 2021, the borrower repaid $6.8 million on amounts due under the note and the Company was released from an additional $8.5 million in funding commitments. As a result, the Company recognized a credit loss benefit totaling $15.3 million related to this borrower during the nine months ended September 30, ~~2017 totaled $264.9 million, including spending on build-to-suit development~~2021. The remaining credit loss benefit for the nine months ended September 30, 2021 was due to a change in the expectation in the credit loss model of the timing of the economic recovery from the impacts of the COVID-19 pandemic.

The following summarizes the activity within the allowance for credit losses related to mortgage notes, unfunded commitments and ~~redevelopment of megaplex theatres, entertainment retail centers and family entertainment centers, as well as $154.1 million in acquisitions of six megaplex theatres.~~

~~Education investment spending during~~notes receivable for the nine months ended September 30, 2017 totaled $238.7 million, including spending on build-to-suit development and redevelopment of public charter schools, early education centers and private schools, as well as $38.3 million in acquisitions of seven early education centers and two public charter schools and an investment of $95.5 million in mortgage notes receivable.

Recreation investment spending during the nine months ended September 30, 2017 totaled $951.6 million, including the transaction with CNL Lifestyle Properties Inc. (CNL Lifestyle) and funds affiliated with Och-Ziff Real Estate (OZRE) valued at $730.8 million discussed below. Additionally, included in recreation investment spending was build-to-suit development of golf entertainment complexes and attractions, redevelopment of ski areas, $51.9 million in acquisitions of five other recreation facilities, and an investment of $10.7 million in a mortgage note secured by one other recreation facility.

On April 6, 2017, the Company completed a transaction with CNL Lifestyle and OZRE. The Company acquired the Northstar California Resort, 15 attraction properties (waterparks and amusement parks), five small family entertainment

centers and certain related working capital for aggregate consideration valued at $479.8 million, including final purchase price adjustments. Additionally, the Company provided $251.0 million of secured debt financing to OZRE for its purchase of 14 CNL Lifestyle ski properties valued at $374.5 million. Subsequent to the transaction, the Company sold the five family entertainment centers for approximately $6.8 million and one waterpark for approximately $2.5 million. No gain or loss was recognized on these sales.

The secured debt financing with OZRE has an initial term of five years with three 2.5 year options to extend. The note bears interest fixed at 8.5%. The Company received a $3.0 million origination fee upon closing that will be recognized using the effective interest method.

The Company assumed long-term, triple-net leases on the Northstar California Resort and three of the attractions properties and entered into new long-term, triple-net lease agreements on the remaining attractions properties at closing. Additionally, the Company assumed ground lease agreements on nine of the properties.

The Company’s aggregate investment in this transaction was $730.8 million and was funded with $657.5 million of the Company’s common shares, consisting of 8,851,264 newly issued registered common shares valued at $74.28 per share, $61.2 million of cash and assumed working capital liabilities (net of assumed accounts receivable) of $12.1 million. CNL Lifestyle subsequently distributed the common shares to its stockholders on April 20, 2017. The Company's portion of the cash purchase price was funded with borrowings under its unsecured revolving credit facility.

This transaction was previously announced as a business combination and, accordingly, related expenses were recognized as transaction costs through December 31, 2016. In connection with the adoption of ASU No. 2017-01 on January 1, 2017, this transaction was determined to be an asset acquisition. As such, transaction costs related to this asset acquisition incurred in 2017 have been capitalized.

~~The aggregate investment of $730.8 million in this transaction was recorded as follows~~2021 (in thousands):


	Mortgage notes receivable		Unfunded commitments - mortgage notes receivable		Notes receivable		Unfunded commitments - notes receivable		Total
Allowance for credit losses at December 31, 2020	$	7,000	$	138	$	12,854	$	12,866	$	32,858
Credit loss (benefit) expense	(4,152)		(54)		(2,605)		(12,866)		(19,677)
Charge-offs	—		—		—		—		—
Recoveries	—		—		—		—		—
Allowance for credit losses at September 30, 2021	$	2,848	$	84	$	10,249	$	—	$	13,181

April 6, 2017
Rental properties, net $ 481,006
Mortgage notes and related accrued interest receivable 251,038
Tradenames (included in other assets) 6,355
Below market leases (included in accounts payable and accrued liabilities) (7,611 )
Total investment $ 730,788

~~Other investment spending during the nine months ended September 30, 2017 totaled $1.0 million, and was related to the Adelaar casino and resort project in Sullivan County, New York.~~

During the nine months ended September 30, 2017, the Company completed the sale of four entertainment properties for net proceeds totaling $72.3 million. In connection with these sales, the Company recognized a gain on sale of $19.4 million.

During the nine months ended September 30, 2017, pursuant to tenant purchase options, the Company completed the sale of five public charter schools located in Colorado, Arizona and Utah for net proceeds totaling $44.8 million. In connection with these sales, the Company recognized a gain on sale of $7.2 million. Additionally, the Company completed the sale of two other education facilities for net proceeds of $9.8 million. In connection with these sales, the Company recognized a gain on sale of $1.9 million.

During the nine months ended September 30, 2017, the Company received a partial prepayment of $4.0 million on one mortgage note receivable that is secured by the observation deck of the John Hancock building in Chicago, Illinois. In connection with the partial prepayment of this note, the Company received a prepayment fee of $800 thousand, which is being recognized over the term of the remaining note using the effective interest method.

5.7. Accounts Receivable ~~Net~~

The following table summarizes the carrying amounts of accounts receivable ~~net as of~~ ~~September 30, 2017~~ ~~and December 31, 2016 (in thousands):~~

September 30,
2017 December 31,
2016
Receivable from tenants $ 15,977
$ 7,564
Receivable from non-tenants 128
497
Receivable from insurance proceeds 27
1,967
Receivable from Sullivan County Infrastructure Revenue Bonds 10,808
22,164
Straight-line rent receivable 73,657
67,618
Allowance for doubtful accounts (1,384 ) (871 )
Total $ 99,213
$ 98,939

The above total includes receivable from tenants of approximately $5.4 million and straight-line rent receivable of approximately $9.0 million from one of the Company's early education tenants at September 30, 2017. This tenant has been negatively impacted by challenges brought on by its rapid expansion and ramp up to stabilization. The Company is negotiating a restructuring which has been complicated by the impact of recent extreme weather events and the tenant having multiple landlords. However, the Company believes it has made significant progress in these negotiations. The receivable from tenant and straight-line rent receivable balances at September 30, 2017 have been recorded at levels that approximate the estimate of the final restructured reduced rent amounts which are expected to be made effective as of the beginning of 2017. In October 2017, the Company terminated nine leases with the tenant, seven of which have completed construction and two of which are unimproved land. There were only $64 thousand outstanding receivables related to these properties and such amounts were fully reserved at September 30, 2017. The tenant continues to operate these properties (other than the two unimproved properties) as a holdover tenant. The Company will continue to consider whether these and other properties should be leased to other operators based on results of the restructuring process.

~~6. Investment in a Direct Financing Lease~~

~~The Company’s investment in a direct financing lease relates to the Company’s master lease of six public charter school properties~~ as of September 30, 2017 and 12 public charter school properties as of December 31, 2016, with affiliates of Imagine Schools, Inc. (Imagine). Investment in a direct financing lease, net represents estimated unguaranteed residual values of leased assets and net unpaid rentals, less related deferred income. The following table summarizes the carrying amounts of investment in a direct financing lease, net as of ~~September 30, 2017~~2021 and December 31, ~~2016~~2020 (in thousands):


	September 30, 2021		December 31, 2020
Receivable from tenants	$	41,531	$	81,120
Receivable from non-tenants	923		505



Straight-line rent receivable	38,037		34,568

Total	$	80,491	$	116,193

As of September 30, 2021, receivable from tenants includes payments of approximately $39.2 million that were deferred due to the COVID-19 pandemic and determined to be collectible. Additionally, the Company has amounts due from tenants that were not booked as receivables as the full amounts were not deemed probable of collection as a result of COVID-19 pandemic. While deferments for this and future periods delay rent payments, these deferments do not release tenants from the obligation to pay the deferred amounts in the future. During the nine months ended September 30, 2021, the Company collected $6.0 million in deferred rent from cash basis tenants and from tenants for which the deferred payments were not previously recognized as revenue. In addition, during the nine months

September 30, 2017 December 31, 2016
Total minimum lease payments receivable $ 113,956
$ 215,753
Estimated unguaranteed residual value of leased assets 47,000
85,247
Less deferred income ⁽¹⁾
(103,258 ) (198,302 )
Less allowance for lease losses —
—
Investment in a direct financing lease, net $ 57,698
$ 102,698

⁽¹⁾~~Deferred income is net of $0.8 million and $1.3~~ended September 30, 2021, the Company collected $53.5 million of ~~initial direct costs at~~deferred rent and interest from accrual basis tenants and borrowers that reduced related accounts and interest receivable. The repayment terms for these deferments vary by tenant.

8. Capital Markets and Dividends

During the three and nine months ended September 30, ~~2017~~2021, the Board declared cash dividends of $0.359375 and $1.078125 per share, respectively, on both the Company's 5.75% Series C cumulative convertible preferred shares and the Company's 5.75% Series G cumulative redeemable preferred shares and $0.5625 and $1.6875 per share, respectively, on the Company's 9.00% Series E cumulative convertible preferred shares.

The monthly cash dividend to common shareholders was temporarily suspended following the common share dividend paid on May 15, 2020 to shareholders of record as of April 30, 2020. On July 13, 2021, following termination of the Covenant Relief Period, the Company resumed regular monthly cash dividends to common shareholders. During the three months ended September 30, 2021, the Company declared cash dividends totaling $0.75 per common share.

During the year ended December 31, ~~2016,~~2020, the Company amended the Consolidated Credit Agreement and the Note Purchase Agreement to modify certain provisions and waive its obligations to comply with certain covenants under these agreements. During the Covenant Relief Period, the Company's obligation to comply with certain covenants under these agreements was waived in light of the uncertainty related to impacts of the COVID-19 pandemic on the Company and its tenants and borrowers. The Company paid higher interest costs during the Covenant Relief Period and the interest rates on the revolving credit and term loan facilities both during and after the Covenant Relief Period are dependent on the Company's unsecured debt ratings.

The amendments to the Consolidated Credit Agreement and Note Purchase Agreement also imposed additional restrictions on the Company during the Covenant Relief Period, including limitations on making investments, incurring indebtedness, making capital expenditures, paying dividends or making other distributions, repurchasing the Company's shares, voluntarily prepaying certain indebtedness, encumbering certain assets and maintaining a minimum liquidity amount, in each case subject to certain exceptions. The Company had the right under certain circumstances to terminate the Covenant Relief Period earlier, which it exercised on July 12, 2021 as discussed below.

On July 12, 2021, the Company provided notice of its election to terminate the Covenant Relief Period early and was released from the additional restrictions described above. Also, as a result of this election, effective July 13, 2021, the interest rates for the revolving credit and term loan facilities, based on the Company's unsecured debt ratings, returned to LIBOR plus 1.20% and LIBOR plus 1.35%, respectively (both with a LIBOR floor of zero), and the facility fee on the revolving credit facility was reduced to 0.25%. Additionally, the interest rates for the private placement notes returned to 4.35% and 4.56% for the Series A notes and the Series B notes, respectively.

During the nine months ended September 30, 2021, the Company paid off the balance of $590.0 million on its unsecured revolving credit facility. In addition, the Company paid down principal of approximately $23.8 million on its private placement notes resulting from the sale of assets in accordance with the amendments.

On September 13, 2021, the Company paid off its $400.0 million unsecured term loan facility and $1.5 million of deferred financing costs (net of accumulated amortization) were written off during the three months ended September 30, 2021. In connection with the payoff, the Company terminated the related interest rate swap agreements on its term loan facility for a cash settlement of $3.2 million. Both amounts, totaling $4.7 million, are included in costs associated with loan refinancing or payoff for the three months ended September 30, 2021. See Note 10 for further details.

During the three months ended September 30, ~~2017,~~2021, the Company ~~entered into revised lease terms with Imagine which reduced~~received an investment grade rating from S&P Global Ratings on its unsecured debt, adding to its current investment grade rating from Moody's Investors Services. The Company previously caused certain of its key subsidiaries to guarantee its obligations under its existing bank

credit facility, private placement notes and senior unsecured bonds due to a decrease in the ~~rental payments and term on six properties.~~Company's credit ratings resulting from the impact of the COVID-19 pandemic. As a result of the Company obtaining an investment grade rating on its long-term unsecured debt from both S&P and Moody's, the Company's subsidiary guarantors were released from their guarantees under these debt agreements in accordance with the terms of such agreements. Additionally, during October of 2021, Moody's revised ~~lease terms, these six properties were classified as operating leases during~~its outlook on the ~~three months ended~~Company's investment grade rating on its unsecured debt from negative to stable.

Subsequent to September 30, ~~2017. Due~~2021, on October 6, 2021, the Company entered into a Third Amended, Restated and Consolidated Credit Agreement, governing a new amended and restated senior unsecured revolving credit facility. The new facility, which will mature on October 6, 2025, replaced the Company’s existing $1.0 billion senior unsecured revolving credit facility and $400.0 million senior unsecured term loan facility. The new facility provides for an initial maximum principal amount of borrowing availability of $1.0 billion with an “accordion” feature under which the Company may increase the total maximum principal amount available by $1.0 billion, to ~~lease negotiations during~~a total of $2.0 billion, subject to lender consent. The new facility has the ~~three months ended June 30, 2017, management evaluated whether it could recover its investment in these leases taking into account the revised lease~~same pricing terms and ~~independent appraisals prepared~~financial covenants as the prior facility (with improved valuation of ~~June 30, 2017,~~certain asset types), as well as customary covenants and ~~determined~~events of default. The Company has 2 options to extend the

~~carrying value~~ maturity date of the ~~investment in the direct financing leases exceeded the expected lease payments~~new credit facility by an additional six months each (for a total of 12 months), subject to be received and residual values for these six leases. Accordingly, the Company recorded an impairment charge of $9.6 million during the nine months ended September 30, 2017, which included an allowance for lease loss of $7.3 million and a charge of $2.3 million related to estimated unguaranteed residual value. The Company determined that no allowance for losses was necessary at December 31, 2016.

Additionally, during the nine months ended September 30, 2017, the Company performed its annual review of the estimated unguaranteed residual value on its other properties leased to Imagine and determined that the residual value on one of these properties was impaired. As such, the Company recorded an impairment charge of the unguaranteed residual value of $0.6 million during the nine months ended September 30, 2017.

~~The Company’s direct financing lease has expiration dates ranging from approximately 15 to 18 years. Future minimum rentals receivable on this direct financing lease at~~ ~~September 30, 2017~~ ~~are as follows (in thousands):~~

Amount
Year:
2017 $ 1,545
2018 6,301
2019 6,490
2020 6,685
2021 6,885
Thereafter 86,050
Total $ 113,956

~~7. Debt and Capital Markets~~

During the nine months ended September 30, 2017, the Company prepaid in full nine mortgage notes payable totaling $73.0 million that were secured by nine theatre properties. In addition, the Company prepaid in full a mortgage note payable of $87.0 million that was secured by 11 theatre properties. In connection with this note payoff, the Company recorded a gain on early extinguishment of debt of $1.0 million for the nine months ended September 30, 2017. The gain represents the difference between the carrying value of the notepaying additional fees and the ~~amount due at payoff as the note was recorded at fair value upon acquisition and was not anticipated to be paid off in advance~~absence of ~~maturity.~~any default.

On ~~May 23, 2017,~~October 27, 2021, the Company issued ~~$450.0~~$400.0 million in aggregate principal amount of senior notes due ~~on June 1, 2027~~November 15, 2031 pursuant to an underwritten public offering. The notes bear interest at an annual rate of ~~4.50%~~3.60%. Interest is payable on ~~June 1~~May 15 and ~~December 1~~November 15 of each year beginning on ~~December 1, 2017~~May 15, 2022 until the stated maturity ~~date of June 1, 2027.~~date. The notes were issued at ~~99.393%~~99.174% of their face value and are ~~unsecured and guaranteed by certain of the Company's subsidiaries.~~unsecured. The ~~notes~~notes contain various covenants, including: (i) a limitation on incurrence of any debt which would cause the ratio of the Company’s debt to adjusted total assets to exceed 60%; (ii) a limitation on incurrence of any secured debt which would cause the ratio of the Company’s secured debt to adjusted total assets to exceed 40%; (iii) a limitation on incurrence of any debt which would cause the Company’s debt service coverage ratio to be less than 1.5 ~~times~~times; and (iv) the maintenance at all times of the Company's total unencumbered assets such that they are not less than 150% of the Company’s outstanding unsecured debt. Net proceeds from the note offering will be used for the redemption of the Company's senior notes due in 2023 discussed below and for general business purposes, including the acquisition of experiential properties consistent with the Company’s current strategy.

In addition, on October 13, 2021, the Company delivered notice of redemption to redeem all of the $275.0 million principal amount of its 5.25% senior notes due in 2023. The redemption date has been set for November 12, 2021 and the Company will use a portion of the proceeds from the senior note offering completed in October to fund this redemption plus the make-whole premium payment.

9. Unconsolidated Real Estate Joint Ventures

As of September 30, 2021 and December 31, 2020, the Company had a 65% investment interest in 2 unconsolidated real estate joint ventures related to 2 experiential lodging properties located in St. Petersburg Beach, Florida. The Company's partner, Gencom Acquisition, LLC and its affiliates, own the remaining 35% interest in the joint ventures. There are 2 separate joint ventures, one that holds the investment in the real estate of the experiential lodging properties and the other that holds lodging operations, which are facilitated by a management agreement with an eligible independent contractor. The Company's investment in the operating entity is held in a taxable REIT subsidiary (TRS). The Company accounts for its investment in these joint ventures under the equity method of accounting. As of September 30, 2021 and December 31, 2020, the Company had equity investments of $27.2 million and $27.4 million, respectively, in these joint ventures.

The joint venture that holds the real property has a secured mortgage loan of $85.0 million at September 30, 2021, that is due April 1, 2022. The note can be extended for 2 additional 1-year periods upon the satisfaction of certain conditions. Additionally, the Company has guaranteed the completion of the renovations in the amount of approximately $34.8 million, with $0.2 million remaining to fund at September 30, 2021. The mortgage loan bears interest at an annual rate equal to the greater of 6.00% or LIBOR plus 3.75%. Interest is payable monthly beginning on May 1, 2019 until the stated maturity date of April 1, 2022, which can be extended to April 1, 2023. The joint

venture has an interest rate cap agreement to limit the variable portion of the interest rate (LIBOR) on this note to 3.0% from March 28, 2019 to April 1, 2023.

The Company recognized losses of $2.8 million and $2.5 million during the nine months ended September 30, 2021 and 2020, respectively, and received no distributions during the nine months ended September 30, 2021 and 2020 related to the equity investments in these joint ventures.

As of September 30, 2021 and December 31, 2020, the Company's investments in these 2 joint ventures were considered to be variable interests and the underlying entities are VIEs. The Company is not the primary beneficiary of the VIEs as the Company does not individually have the power to direct the activities that are most important to the joint ventures and accordingly these investments are not consolidated. The Company's maximum exposure to loss at September 30, 2021, is its investment in the joint ventures of $27.2 million as well as the Company's guarantee of the estimated costs to complete renovations of approximately $0.2 million.

On August ~~30, 2017,~~26, 2021, the Company ~~refinanced~~entered into 2 real estate joint venture agreements to acquire an experiential lodging property located in Wisconsin with an initial investment of $11.0 million. The Company's investments in these joint ventures were considered to be variable interests, however, the underlying entities are not VIEs. The Company has a 95% interest in these joint ventures and accounts for its ~~variable-rate bonds payable totaling $25.0 million~~investment under the equity method of accounting. The Company's partner, TJO Warrens, LLC and its affiliates, owns the remaining 5% interest in the joint ventures. There are 2 separate joint ventures, one that holds the investment in the real estate of the experiential lodging property and the other that holds lodging operations, which are facilitated by a management agreement. The Company's investment in the operating entity is held in a TRS.

The joint venture that holds the real property has a secured ~~by three theatre properties.~~mortgage loan of $15.0 million at September 30, 2021 and provides for additional draws of approximately $9.6 million to fund renovations. The maturity date ~~was extended from October 1, 2037 to August 1, 2047 and the outstanding principal balance and~~of this mortgage loan is September 15, 2031. The loan bears interest at an annual fixed rate ~~were not changed.~~of 4.00% with monthly interest payments required.

OnAs of September ~~27, 2017,~~30, 2021, the Company ~~amended its unsecured consolidated credit agreement which governs its unsecured revolving credit facility and its unsecured term loan facility.~~

had equity investments of $10.8 million in these 2 joint ventures. The ~~amendments to the unsecured revolving portion~~Company recognized losses of ~~the credit facility, among other things, (i) increase the initial maximum available amount from $650.0~~$0.2 million ~~to $1.0 billion, (ii) extend the maturity date from April 24, 2019, to~~

February 27, 2022 (with the Company having the right to extend the loan for an additional seven months) and (iii) lower the interest rate and facility fee pricing based on a grid related to the Company's senior unsecured credit ratings which at closing was LIBOR plus 1.00% and 0.20%, versus LIBOR plus 1.25% and 0.25%, respectively, under the previous terms. In connection with the amendment, $19 thousand of deferred financing costs (net of accumulated amortization) were written off during the three months ended September 30, ~~2017~~2021 and ~~are included in costs associated with loan refinancing. At September 30, 2017, the Company had $170.0 million outstanding under this portion of the facility.~~

The amendments to the unsecured term loan portion of the credit facility, among other things, (i) increase the initial amount from $350.0 million to $400.0 million, (ii) extend the maturity date from April 24, 2020, to February 27, 2023 and (iii) lower the interest rate based on a grid related to the Company's senior unsecured credit ratings which at closing was LIBOR plus 1.10% versus LIBOR plus 1.40% under the previous terms. In connection with the amendment, $1.5 million of deferred financing costs (net of accumulated amortization) were written offreceived no distributions during the three months ended September 30, 2017 and are included in costs associated with loan refinancing. At closing, the Company borrowed the remaining $50.0 million available on the $400.0 million term loan portion of the facility, which was used to pay down a portion of the Company's unsecured revolving credit facility.

In addition, there is a $1.0 billion accordion feature on the combined unsecured revolving credit and term loan facility that increases the maximum amount available under the combined facility, subject to lender approval, from $1.4 billion to $2.4 billion. If the Company exercises all or any portion of the accordion feature, the resulting increase in the facility may have a shorter or longer maturity date and different pricing terms.

~~In connection with the amendment~~2021 related to the unsecured consolidated credit agreement, the obligations of the Company’s subsidiaries that were co-borrowers under the Company’s prior senior unsecured revolving credit and term loan facility were released. As a result, simultaneously with the amendment, the guarantees by the Company’s subsidiaries that were guarantors with respect to the Company’s outstanding 4.50% Senior Notes due 2027, 4.75% Senior Notes due 2026, 4.50% Senior Notes due 2025, 5.25% Senior Notes due 2023, 5.75% Senior Notes due 2022, and 7.75% Senior Notes due 2020 were releasedequity investments in ~~accordance with the terms of the applicable indentures governing such notes.~~these joint ventures.

In addition, the guarantees by the Company’s subsidiaries that were guarantors of the Company’s outstanding 4.35% Series A Guaranteed Senior Notes due August 22, 2024 and 4.56% Series B Guaranteed Senior Notes due August 22, 2026 (referred to herein as the "private placement notes") were also released. The foregoing release was effected by the Company entering into an amendment to the Note Purchase Agreement, dated as of September ~~27, 2017. The amendment to~~30, 2021 and December 31, 2020, the ~~private placement notes releases~~Company had equity investments of $0.7 million and $0.8 million, respectively, in unconsolidated joint ventures for 3 theatre projects located in China. During the Company’s subsidiary guarantors as described above and among other things: (i) amends certain financial and other covenants and provisions in the Note Purchase Agreement to conform generally to the corresponding covenants and provisions contained in the amended unsecured consolidated credit agreement; (ii) provides the investors thereunder certain additional guaranty and lien rights, in the event that certain subsequent events occur; (iii) expands the scope of the “most favored lender” covenant contained in the Note Purchase Agreement; and (iv) imposes restrictions on debt that can be incurred by certain subsidiaries of the Company.

~~Subsequent to~~nine months ended September 30, ~~2017,~~2020, the Company ~~entered into three interest rate swap agreements~~recognized $3.2 million in other-than-temporary impairment charges on these equity investments. The Company determined the estimated fair value of these investments using Level 3 inputs, based primarily on discounted cash flow projections. The Company recognized income of $7 thousand and losses of $649 thousand during the nine months ended September 30, 2021 and 2020, respectively, and received distributions of $90 thousand from its ~~unsecured term loan. See Note 9~~investment in these joint ventures for ~~further details.~~

~~During~~ the nine months ended September 30, 2017, the Company issued an aggregate of 928,219 common shares under the direct share purchase component of its Dividend Reinvestment and Direct Share Purchase Plan (DSPP) for total net proceeds of $67.9 million. These proceeds2021. No distributions were ~~used to pay down a portion of the Company's unsecured revolving credit facility.~~

~~During~~received during the nine months ended September 30, ~~2017, the Company issued 8,851,264 common shares in connection with the transactions with CNL Lifestyle and OZRE. See Note 4 for further information.~~2020.

~~8. Variable Interest Entities~~

The Company’s variable interest in VIEs currently are in the form of equity ownership and loans provided by the Company to a VIE or other partner. The Company examines specific criteria and uses its judgment when determining if the Company is the primary beneficiary of a VIE. Factors considered in determining whether the Company is the primary beneficiary include risk and reward sharing, experience and financial condition of other partner(s), voting rights, involvement in day-to-day capital and operating decisions, representation on a VIE’s executive committee, existence of unilateral kick-out rights or voting rights, and level of economic disproportionality between the Company and the other partner(s).

~~Consolidated VIEs~~

~~As of~~ ~~September 30, 2017~~, the Company had invested approximately $18.5 million in one real estate project which is a VIE. This entity does not have any other significant assets or liabilities at September 30, 2017 and was established to facilitate the development of a theatre project.

~~Unconsolidated VIE~~

At September 30, 2017, the Company's recorded investment in two unconsolidated VIEs totaled $178.4 million. The Company's maximum exposure to loss associated with these VIEs is limited to the Company's outstanding mortgage notes and related accrued interest receivable of $178.4 million. These mortgage notes are secured by three recreation properties and one public charter school. While these entities are VIEs, the Company has determined that the power to direct the activities of these VIEs that most significantly impact the VIEs' economic performance is not held by the Company.

9.10. Derivative Instruments

All derivatives are recognized at fair value in the consolidated balance sheets within the line items "Other assets" and "Accounts payable and accrued liabilities" as applicable. The ~~Company's derivatives are subject to a master netting arrangement and the~~ Company has elected not to offset its derivative position for purposes of balance sheet presentation and disclosure. The Company had no derivative assets at September 30, 2021 and December 31, 2020. The Company had derivative liabilities of ~~$0.2~~$4.4 million and ~~$2.5~~$14.0 million ~~recorded in “Accounts payable and accrued liabilities” and derivative assets of $23.3 million and $35.9 million recorded in “Other assets” in the consolidated balance sheet~~ at September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively. The Company ~~had~~has not posted or received collateral with its derivative counterparties as of September 30, ~~2017~~2021 or December 31, ~~2016.~~2020. See Note 1011 for disclosures relating to the fair value of the derivative ~~instruments as of~~ ~~September 30, 2017~~ ~~and December 31, 2016.~~instruments.

Risk Management Objective of Using Derivatives

The Company is exposed to certain risk arising from both its business operations and economic conditions including the effect of changes in foreign currency exchange rates on foreign currency transactions and interest rates on its ~~LIBOR based~~LIBOR-based borrowings. The Company manages this risk by following established risk management policies and procedures including the use of derivatives. The Company’s objective in using derivatives is to add stability to reported earnings and to manage its exposure to foreign exchange and interest rate movements or other identified risks. To accomplish this objective, the Company primarily uses interest rate swaps, cross-currency swaps and foreign currency forwards.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements on its LIBOR based borrowings. To accomplish these objectives, the Company ~~currently~~ uses interest rate swaps as its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt or payment of variable-rate amounts from a counterparty which results in ~~exchange for~~ the Company ~~making fixed-rate payments~~recording net interest expense that is fixed over the life of the agreements without exchange of the underlying notional amount.

~~As of~~During the three months ended September 30, ~~2017,~~2021, the Company ~~had two~~terminated 4 of its interest rate swap agreements ~~to fix~~in connection with the ~~interest rate at 2.64% on $300.0 million~~payoff of the related unsecured term loan ~~facility from July 6, 2017~~facility. These interest rate swaps had a combined notional amount of $400.0 million at termination and $3.2 million was reclassified into earnings as expense during the three months ended September 30, 2021, as the forecasted future transactions were no longer probable.

At September 30, 2021, the Company had 1 interest rate swap agreement designated as a cash flow hedge of interest rate risk related to ~~April 5, 2019.~~its variable rate secured bonds totaling $25.0 million. The interest rate swap agreement outstanding as of September 30, 2021 is summarized below:

Fixed rate

Notional Amount (in millions)

Index

Maturity

1.3925%

25.0

USD LIBOR

September 30, 2024

The ~~effective portion of changes~~change in the fair value of interest rate derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (AOCI) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects ~~earnings. During~~earnings within the ~~nine months ended September 30, 2017 and 2016, such derivatives were used to hedge~~same income statement line item as the ~~variable cash flows associated with existing variable-rate debt. The~~

~~ineffective portion~~earnings effect of the ~~change in fair value of the derivatives is recognized directly in earnings. No hedge ineffectiveness on cash flow hedges was recognized during the nine months ended September 30, 2017 and 2016.~~hedged transaction.

Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of September 30, ~~2017~~,2021, the Company estimates that during the twelve months ~~ending~~ending September 30, ~~2018, $0.2~~2022, $0.3 million of losses will be reclassified from AOCI to interest expense.

Subsequent to September 30, 2017, on October 31, 2017, the Company entered into three interest rate swap agreements to fix the interest rate at 3.15% on an additional $50.0 million of its unsecured term loan facility from November 6, 2017 to April 4, 2019 and on $350.0 million of the unsecured term loan facility from April 5, 2019 to February 7, 2022.

Cash Flow Hedges of Foreign Exchange Risk

The Company is exposed to foreign currency exchange risk against its functional currency, USD, on CAD denominated cash flow from its ~~four~~4 Canadian properties. The Company uses ~~cross currency~~cross-currency swaps ~~and foreign currency forwards~~ to mitigate its exposure to fluctuations in the USD-CAD exchange rate on ~~its Canadian properties. These foreign currency derivatives~~cash inflows associated with these properties which should hedge a significant portion of the Company's expected CAD denominated cash flow of the Canadian properties as their impact on the Company's cash flow when settled should move in the opposite direction of the exchange rates used to translate revenues and expenses of these properties.flows.

~~As of~~ ~~September 30, 2017, the~~The Company ~~had~~entered into three USD-CAD cross-currency swaps that were effective July 1, 2020 with a fixed original notional value of $100.0 million CAD and ~~$98.1~~$76.6 million USD. The net effect of these swaps is to lock in an exchange rate of ~~$1.05~~$1.31 CAD per USD on approximately ~~$13.5~~$7.2 million of annual CAD denominated cash flows ~~on the properties~~ through June 2018. Additionally, on August 30, 2017, the Company entered into a cross-currency swap that will be effective July 1, 2018 with a fixed original notional value of $100.0 million CAD and $79.5 million USD. 2022.

The ~~net effect of these swaps is to lock in an exchange rate of 1.26 CAD per USD on approximately $13.5 million of annual CAD denominated cash flows on the properties through June 2020.~~

~~The effective portion of changes~~change in the fair value of foreign currency derivatives designated and that qualify as cash flow hedges of foreign exchange risk is recorded in AOCI and ~~subsequently~~ reclassified into earnings in the period that the hedged forecasted transaction affects ~~earnings. The ineffective portion~~earnings within the same income statement line item as the earnings effect of the ~~change in fair value~~hedged

transaction. As of the derivative, as well as amounts excluded from the assessment of hedge effectiveness, is recognized directly in earnings. No hedge ineffectiveness on foreign currency derivatives was recognized for the nine months ended September 30, ~~2017 and 2016. As of~~ ~~September 30, 2017~~,2021, the Company estimates that during the twelve months ending September 30, ~~2018, $1.5~~2022, $0.1 million of ~~gains will~~losses will be reclassified from AOCI to other ~~income.~~expense.

Net Investment Hedges

~~As discussed above, the~~The Company is exposed to fluctuations in ~~foreign~~the USD-CAD exchange ~~rates~~rate on its ~~four Canadian properties.~~net investments in Canada. As such, the Company uses either currency forward agreements or cross-currency swaps to ~~hedge~~manage its exposure to changes in foreign exchange ~~rates. Currency forward agreements involve fixing~~rates on certain of its foreign net investments. As of September 30, 2021, the USD-CAD exchange rate for delivery of a specified amount of foreign currency on a specified date. The currency forward agreements are typically cash settled in USD for their fair value at or close to their settlement date. In order to hedgeCompany had the following cross-currency swaps designated as net investment hedges:

Fixed rate

Notional Amount (in millions, CAD)

Maturity

$1.32 CAD per USD

100.0

July 1, 2023

$1.32 CAD per USD

100.0

July 1, 2023

Total

200.0

The cross-currency swaps also have a monthly settlement feature locked in ~~four~~ ~~of the Canadian properties, on June 13, 2013, the Company entered into a forward contract with a fixed notional value of~~ ~~$100.0 million~~ ~~CAD and~~ ~~$94.3 million~~ ~~USD with a~~ ~~July 2018~~ ~~settlement. The~~at an exchange rate of ~~this forward contract is approximately~~ ~~$1.06~~$1.32 CAD per ~~USD. Additionally,~~USD on ~~February 28, 2014,~~$4.5 million of CAD annual cash flows, the ~~Company entered into a forward contract with a fixed notional value~~net effect of ~~$100.0 million~~ ~~CAD and~~ ~~$88.1 million~~ ~~USD with a July 2018 settlement date. The exchange rate~~which is an excluded component from the effectiveness testing of this ~~forward contract is approximately~~ ~~$1.13~~ ~~CAD per USD. These forward contracts should hedge a significant portion of the Company’s CAD denominated net investment in these~~ ~~four~~ ~~centers through July 2018 as the impact on AOCI from marking the derivative to market should move in the opposite direction of the translation adjustment on the net assets of these~~ ~~four~~ ~~Canadian properties.~~hedge.

For qualifying foreign currency derivatives designated as net investment hedges, the ~~effective portion of changes~~change in the fair value of the derivatives are reported in AOCI as part of the cumulative translation adjustment. ~~The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. No hedge ineffectiveness on net investment~~

~~hedges was recognized for the nine months ended September 30, 2017 and 2016.~~ Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company's accounting policy election. The earnings recognition of excluded components are presented in other income.

Below is a summary of the effect of derivative instruments on the consolidated statements of changes in equity and income for the three and nine months ended September 30, ~~2017~~2021 and ~~2016.~~2020.

Effect of Derivative Instruments on the Consolidated Statements of Changes in Equity and Comprehensive Income for the Three and Nine Months Ended September 30, 2021 and 2020 (Dollars in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
Description	2021		2020		2021		2020
Cash Flow Hedges
Interest Rate Swaps
Amount of Gain (Loss) Recognized in AOCI on Derivative	$	(3,338)	$	123	$	(3,209)	$	(11,550)
Amount of Expense Reclassified from AOCI into Earnings (1)	(4,962)		(2,037)		(9,074)		(4,103)
Cross-Currency Swaps
Amount of Gain (Loss) Recognized in AOCI on Derivative	143		(243)		(71)		424
Amount of (Expense) Income Reclassified from AOCI into Earnings (2)	(57)		13		(205)		455
Net Investment Hedges
Cross-Currency Swaps
Amount of Gain (Loss) Recognized in AOCI on Derivative	4,456		(3,827)		356		3,160
Amount of Income Recognized in Earnings (2) (3)	97		141		270		475



Total
Amount of Gain (Loss) Recognized in AOCI on Derivatives	$	1,261	$	(3,947)	$	(2,924)	$	(7,966)
Amount of Expense Reclassified from AOCI into Earnings	(5,019)		(2,024)		(9,279)		(3,648)
Amount of Income Recognized in Earnings	97		141		270		475

Interest expense, net in accompanying consolidated statements of income (loss) and comprehensive income (loss)	$	36,584	$	41,744	$	114,090	$	114,837
Other income in accompanying consolidated statements of income (loss) and comprehensive income (loss)	$	8,091	$	182	$	9,802	$	8,171

Effect of Derivative Instruments on the Consolidated Statements of Changes in Equity and Income for the Three and Nine Months Ended September 30, 2017 and 2016
(Dollars in thousands)
Three Months Ended September 30, Nine Months Ended September 30,
Description 2017 2016 2017 2016
Interest Rate Swaps
Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) $ 110
$ 1,327
$ 317
$ (5,299 )
Amount of Expense Reclassified from AOCI into Earnings (Effective Portion) (1) (263 ) (1,317 ) (2,247 ) (3,970 )
Cross Currency Swaps
Amount of (Loss) Gain Recognized in AOCI on Derivative (Effective Portion) (532 ) 279
(907 ) (1,159 )
Amount of Income Reclassified from AOCI into Earnings (Effective Portion) (2) 520
643
1,879
1,957
Currency Forward Agreements
Amount of (Loss) Gain Recognized in AOCI on Derivative (Effective Portion) (5,417 ) 1,735
(10,132 ) (5,819 )
Amount of Income Reclassified from AOCI into Earnings (Effective Portion) —
—
—
—
Total
Amount of (Loss) Gain Recognized in AOCI on Derivative (Effective Portion) $ (5,839 ) $ 3,341
$ (10,722 ) $ (12,277 )
Amount of Income (Expense) Reclassified from AOCI into Earnings (Effective Portion) 257
(674 ) (368 ) (2,013 )


~~(1)~~	~~Included in "Interest expense, net" in the accompanying consolidated statements of income for the three and nine months ended September 30, 2017 and 2016.~~


~~(2)~~	~~Included in "Other income" in the accompanying consolidated statements of income for the three and nine months ended September 30, 2017 and 2016.~~

(1) Included in "Interest expense, net" in the accompanying consolidated statements of income (loss) and comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020.

~~Credit-risk-related Contingent Features~~(2) Included in "Other income" in the accompanying consolidated statements of income (loss) and comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020.

~~The Company has agreements with each of its interest rate~~(3) Amounts represent derivative ~~counterparties that contain a provision where if~~gains excluded from the Company defaults on any of its obligations for borrowed money or credit in an amount exceeding $25.0 million and such default is not waived or cured within a specified period of time, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its interest rate derivative obligations.effectiveness testing.

As of September 30, ~~2017~~,2021, the fair value of the ~~Company’s~~Company's derivatives in a liability position related to these agreements ~~was $0.2~~was $4.4 million. If ~~the~~the Company breached any of the contractual provisions of these derivative contracts, it would be required to settle its obligations under the agreements at their termination ~~value, after considering the right~~value of ~~offset,~~$4.5 million. As of September 30, 2021, the Company ~~would have no obligation.~~had not posted any collateral related to these agreements and was not in breach of any provisions in these agreements.

~~10.~~11. Fair Value Disclosures

The Company has certain financial instruments that are required to be measured under the FASB’s Fair Value Measurement guidance. The Company currently does not have any non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis.

As a basis for considering market participant assumptions in fair value measurements, the FASB’s Fair Value Measurement guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Derivative Financial Instruments

The Company uses interest rate swaps, foreign currency forwards and ~~cross-currency~~cross currency swaps to manage its interest rate and foreign currency risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities. The fair ~~values~~value of interest rate swaps ~~are~~is determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. In conjunction with the FASB's ~~Fair Value Measurement~~fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Although the Company determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives also use Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. As of September 30, ~~2017~~,2021, the Company assessed the significance of the impact of the credit valuation adjustments on the

overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives and therefore, classified its derivatives as Level 2 within the fair value reporting hierarchy.

The table below presents the Company’s financial ~~assets and~~ liabilities measured at fair value on a recurring basis as of September 30, ~~2017~~2021 and December 31, ~~2016~~2020 aggregated by the level in the fair value hierarchy within which those measurements are classified and by derivative type.

Liabilities Measured at Fair Value on a Recurring Basis at

Assets and Liabilities Measured at Fair Value on a Recurring Basis at
September 30, 2017 and December 31, 2016
(Dollars in thousands)
Description
Quoted Prices in
Active Markets
for Identical
Assets (Level I)

Significant
Other
Observable
Inputs (Level 2)

Significant
Unobservable
Inputs (Level 3)

Assets (Liabilities) Balance at
end of period
September 30, 2017
Cross-Currency Swaps* $ —
$ 1,372
$ —
$ 1,372
Currency Forward Agreements* $ —
$ 21,650
$ —
$ 21,650
Interest Rate Swap Agreements* $ —
$ 83
$ —
$ 83
December 31, 2016:
Cross-Currency Swaps* $ —
$ 4,158
$ —
$ 4,158
Currency Forward Agreements* $ —
$ 31,782
$ —
$ 31,782
Interest Rate Swap Agreements** $ —
$ (2,482 ) $ —
$ (2,482 )
September 30, 2021 and December 31, 2020

(Dollars in thousands)


Description	Quoted Prices in Active Markets for Identical Assets (Level I)		Significant Other Observable Inputs (Level��2)		Significant Unobservable Inputs (Level 3)		Balance at end of period
September 30, 2021

Cross-Currency Swaps*	$	—	$	(3,781)	$	—	$	(3,781)


Interest Rate Swap Agreements*	—		(610)		—		(610)
December 31, 2020

Cross-Currency Swaps*	—		(4,271)		—		(4,271)


Interest Rate Swap Agreements*	—		(9,723)		—		(9,723)

*~~Included in "Other assets" in the accompanying consolidated balance sheets.~~

**Included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets.

Non-recurring fair value measurements

The table below presents the Company's assets measured at fair value on a non-recurring basis ~~during the nine months ended~~as of September 30, ~~2017~~2021andDecember 31, 2020, aggregated by the level in the fair value hierarchy within which those measurements fall.

Assets Measured at Fair Value on a Non-Recurring Basis ~~During the Nine Months Ended~~at September 30, ~~2017~~2021 and December 31, 2020

(Dollars in thousands)


Description	Quoted Prices in Active Markets for Identical Assets (Level I)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at end of period
September 30, 2021
Real estate investments, net	$	—	$	6,956	$	—	$	6,956
December 31, 2020:
Real estate investments, net	$	—	$	29,684	$	9,860	$	39,544
Operating lease right-of-use assets	—		—		12,953		12,953
Investment in joint ventures	—		—		771		771
Other assets (1)	—		—		—		—

(1) Includes collateral dependent notes receivable, which are presented within "Other assets" in the accompanying consolidated balance sheet.

Description Quoted Prices in
Active Markets
for Identical
Assets (Level I) Significant
Other
Observable
Inputs (Level 2) Significant
Unobservable
Inputs (Level 3) Balance at
end of period

Investment in a direct financing lease, net $ —
$ —
$ 35,807
$ 35,807

~~As discussed further in Note 6, during~~During the nine months ended September 30, ~~2017,~~2021, the Company recorded impairment charges ~~totaling $10.2 million~~ related to real estate investments, net on 2 of its ~~investment in a direct financing lease, net.~~properties. Management estimated the fair values of ~~this investment~~these investments taking into account various factors including purchase offers, shortened hold periods and market conditions. The Company determined, based on the inputs, that the valuation of these properties with purchase offers were classified within Level 2 of the fair value hierarchy and were measured at fair value.

During the year ended December 31, 2020, the Company recorded impairment charges related to real estate investments, net and operating lease right-of-use assets. Management estimated the fair value of these investments taking into account various factors including purchase offers, independent appraisals, ~~input from an outside broker~~shortened hold periods and market conditions. The Company determined, based on the inputs, that its valuation of 6 of its properties with purchase offers were classified within Level 2 of the fair value hierarchy and were measured at fair value. NaN

properties, 2 of which included operating lease right-of-use assets, were measured at fair value using independent appraisals which used discounted cash flow models. These measurements were classified within Level 3 of the fair value hierarchy as many of the assumptions were not observable.

During the year ended December 31, 2020, the Company recorded impairment charges related to its investment in joint ventures. Management estimated the fair value of these investments, taking into account various factors including implied asset value changes based on discounted cash flow projections and current market conditions. The Company determined, based on the inputs, that its valuation of ~~the~~ investment in joint ventures was classified within Level 3 of the fair value hierarchy as many of the assumptions are not observable.

During the ~~three months~~year ended ~~September 30, 2017,~~December 31, 2020, the Company ~~entered into revised lease terms on these properties~~recorded expected credit loss expense related to notes receivable from one borrower to fully reserve the outstanding principal balance and unfunded commitment, as a result ~~these properties were~~of changes in the borrower's financial status due to the impact of the COVID-19 pandemic. Management valued the loan based on the fair value of the underlying collateral which was based on review of the financial statements of the borrower, and was classified ~~as operating leases and moved to rental properties, net during~~within Level 2 of the ~~three months ended September 30, 2017.~~fair value hierarchy.

Fair Value of Financial Instruments

The following methods and assumptions were used by the Company to estimate the fair value of each class of financial instruments at September 30, ~~2017~~2021 and December 31, ~~2016:~~2020:

Mortgage notes receivable and related accrued interest receivable:

The fair value of the Company’s mortgage notes and related accrued interest receivable is estimated by discounting the future cash flows of each instrument using current market rates. At September 30, ~~2017,~~2021, the Company had a carrying value of $369.1 million in fixed rate mortgage notes receivable outstanding, including related accrued interest and allowance for credit losses, with a weighted average interest rate of approximately 9.02%. The fixed rate mortgage notes bear interest at rates of 7.01% to 11.96%. Discounting the future cash flows for fixed rate mortgage notes receivable using rates of 7.25% to 9.00%, management estimates the fair value of the fixed rate mortgage notes receivable to be approximately $406.0 million with an estimated weighted average market rate of 7.80% at September 30, 2021.

At December 31, 2020, the Company had a carrying value of ~~$972.4~~$365.6 million in fixed rate mortgage notes receivable outstanding, including related accrued interest, with a weighted average interest rate of approximately ~~8.40%~~9.03%. The fixed rate mortgage notes bear interest at rates of ~~7.00%~~7.01% to ~~11.31%~~11.78%. Discounting the future cash flows for fixed rate mortgage notes receivable using rates of ~~7.00%~~7.50% to ~~12.00%~~10.00%, management estimates the fair value of the fixed rate mortgage notes receivable to be ~~approximately $1.0 billion~~$394.0 million with an estimated weighted average market rate of ~~8.53% at~~ ~~September 30, 2017~~.

~~At December 31, 2016, the Company had a carrying value of~~ ~~$614.0 million~~ ~~in fixed rate mortgage notes receivable outstanding, including related accrued interest, with a weighted average interest rate of approximately~~ ~~8.77%. The fixed rate mortgage notes bear interest at rates of~~ ~~7.00%~~ to ~~11.31%. Discounting the future cash flows for fixed rate mortgage notes receivable using rates of~~ ~~7.00%~~ to ~~12.00%, management estimates the fair value of the fixed rate mortgage notes receivable to be~~ ~~$648.5 million~~ ~~with an estimated weighted average market rate of~~ ~~8.48%~~8.11% at December 31, ~~2016.~~2020.

~~Investment in a direct financing lease, net:~~

At September 30, 2017, the Company had an investment in a direct financing lease with a carrying value of $57.7 million, and with a weighted average effective interest rate of 11.98%. At September 30, 2017, the investment in a direct financing lease bears interest at effective rates of 11.90% to 12.38%. The carrying value of the $57.7 million investment in a direct financing lease approximated the fair market value at September 30, 2017.

At December 31, 2016, the Company had an investment in a direct financing lease with a carrying value of $102.7 million, and a weighted average effective interest rate of 12.00%. At December 31, 2016, the investment in a direct financing lease bears interest at effective interest rates of 11.79% to 12.38%. The carrying value of the investment in a direct financing lease approximated the fair market value at December 31, 2016.

Derivative instruments:

Derivative instruments are carried at their fair ~~market~~ value.

Debt instruments:

The fair value of the Company's debt is estimated by discounting the future cash flows of each instrument using current market rates. At September 30, ~~2017~~,2021, the Company had a carrying value of $25.0 million in variable rate debt outstanding with an average interest rate of approximately 0.13%. The carrying value of the variable rate debt outstanding approximated the fair value at September 30, 2021.

At December 31, 2020, the Company had a carrying value of ~~$595.0 million~~$1.0 billion in variable rate debt outstanding with a weighted average interest rate of approximately ~~2.42%~~2.23%. The carrying value of the variable rate debt outstanding approximated the fair ~~market value at~~ ~~September 30, 2017~~.

At December 31, 2016, the Company had a carrying value of $375.0 million in variable rate debt outstanding with a weighted average interest rate of approximately 3.23%. The carrying value of the variable rate debt outstanding approximated the fair market value at December 31, ~~2016.~~2020.

At September 30, ~~2017~~2021 and December 31, ~~2016, $300.0~~2020, $25.0 million and $425.0 million, respectively, of the Company's variable rate debt, ~~outstanding under the Company's unsecured term loan facility~~discussed above, had been effectively converted to a fixed rate ~~through April 5, 2019~~ by interest rate swap agreements. See Note 10 for additional information related to the Company's interest rate swap agreements.

At September 30, ~~2017~~,2021, the Company had a carrying value of ~~$2.43~~$2.69 billion in fixed rate long-term debt outstanding with a weighted average interest rate of approximately ~~5.15%~~4.54%. Discounting the future cash flows for fixed rate debt using September 30, ~~2017~~2021 market rates of ~~2.89%~~1.91% to 4.56%, management estimates the fair value of the fixed rate debt to be approximately ~~$2.54~~$2.86 billion with an estimated weighted average market rate of ~~3.96%~~3.04% at September 30, ~~2017~~.2021.

At December 31, ~~2016,~~2020, the Company had a carrying value of ~~$2.14~~$2.72 billion in fixed rate long-term debt outstanding with an average weighted interest rate of approximately ~~5.27%~~4.70%. Discounting the future cash flows for fixed rate debt using December 31, ~~2016~~2020 market rates of ~~2.97%~~4.09% to ~~4.75%~~5.81%, management estimates the fair value of the fixed rate debt to be approximately ~~$2.21~~$2.69 billion with an estimated weighted average market rate of ~~4.26%~~4.70% at December 31, ~~2016.~~2020.

~~11.~~

12. Earnings Per Share

The following table summarizes the Company’s computation of basic and diluted earnings per share (EPS) for the three and nine months ended September 30, ~~2017~~2021 and ~~2016~~2020 (amounts in thousands except per share information):


	Three Months Ended September 30, 2021					Nine Months Ended September 30, 2021
	Income (numerator)		Shares (denominator)	Per Share Amount		Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS:
Net income	$	32,117				$	54,049
Less: preferred dividend requirements	(6,033)					(18,100)



Net income available to common shareholders	$	26,084	74,804	$	0.35	$	35,949	74,738	$	0.48
Diluted EPS:
Net income available to common shareholders	$	26,084	74,804			$	35,949	74,738
Effect of dilutive securities:
Share options and performance shares	—		107			—		81


Net income available to common shareholders	$	26,084	74,911	$	0.35	$	35,949	74,819	$	0.48


	Three Months Ended September 30, 2020					Nine Months Ended September 30, 2020
	Income (numerator)		Shares (denominator)	Per Share Amount		Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS:
Net loss	$	(85,904)				$	(111,751)
Less: preferred dividend requirements	(6,034)					(18,102)



Net loss available to common shareholders	$	(91,938)	74,613	$	(1.23)	$	(129,853)	76,456	$	(1.70)
Diluted EPS:
Net loss available to common shareholders	$	(91,938)	74,613			$	(129,853)	76,456
Effect of dilutive securities:
Share options and performance shares	—		—			—		—


Net loss available to common shareholders	$	(91,938)	74,613	$	(1.23)	$	(129,853)	76,456	$	(1.70)

The effect of the potential common shares from the conversion of the Company’s convertible preferred shares and from the exercise of share options are included in diluted earnings per share if the effect is dilutive. Potential

Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017

Income
(numerator)

Shares
(denominator)

Per Share
Amount
Income
(numerator) Shares
(denominator) Per Share
Amount
Basic EPS:
Income from continuing operations $ 62,954
$ 197,405

Less: preferred dividend requirements (5,951 ) (17,855 )
Net income available to common shareholders $ 57,003
73,663
$ 0.77
$ 179,550
70,320
$ 2.55
Diluted EPS:
Net income available to common shareholders $ 57,003
73,663
$ 179,550
70,320

Effect of dilutive securities:
Share options —
61
—
65

Net income available to common shareholders $ 57,003
73,724
$ 0.77
$ 179,550
70,385
$ 2.55
common shares from the performance shares are included in diluted earnings per share upon the satisfaction of certain performance and market conditions. These conditions are evaluated at each reporting period and if the conditions have been satisfied during the reporting period, the number of contingently issuable shares are included in the computation of diluted earnings per share.

Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016
Income
(numerator) Shares
(denominator) Per Share
Amount Income
(numerator) Shares
(denominator) Per Share
Amount
Basic EPS:
Income from continuing operations $ 57,526
$ 166,841

Less: preferred dividend requirements (5,951 ) (17,855 )
Net income available to common shareholders $ 51,575
63,627
$ 0.81
$ 148,986
63,296
$ 2.35
Diluted EPS:
Net income available to common shareholders $ 51,575
63,627
$ 148,986
63,296

Effect of dilutive securities:
Share options —
120
—
97

Net income available to common shareholders $ 51,575
63,747
$ 0.81
$ 148,986
63,393
$ 2.35

The ~~additional 2.1 million~~following shares have an anti-dilutive effect and ~~2.0~~are therefore excluded from the calculation of diluted earnings per share:

•The additional 2.2 million common shares that would result from the conversion of the Company’s 5.75% Series C cumulative convertible preferred shares and the corresponding add-back of the preferred dividends declared on those shares for both the three and nine months ended September 30, 2021 and 2020.

•The additional ~~1.6~~1.7 million common shares that would result from the conversion of the Company’s 9.0% Series E cumulative convertible preferred shares and the corresponding add-back of the preferred dividends declared on those shares ~~are not included in the calculation of diluted earnings per share~~ for both the three and nine months ended September 30, ~~2017~~2021 and ~~2016, respectively, because the effect is anti-dilutive.~~2020.

~~The dilutive effect of potential~~•Outstanding options to purchase 89 thousand common shares ~~from the exercise of share options is included in diluted earnings~~at per share prices ranging from $44.44 to $76.63 for both the three and nine months ended September 30, ~~2017 and 2016. However,~~2021.

•Outstanding options to purchase 7117 thousand ~~shares of~~ common shares at per share prices ranging from ~~$61.79~~$44.62 to $76.63 ~~were outstanding~~ for both the three months ended September 30, 2017, but were not included in the computation of diluted earnings per share because they were anti-dilutive. For the three months ended September 30, 2016, there were no anti-dilutive options. Options to purchase 5 thousand and ~~84 thousand shares of common shares, respectively at per share prices ranging from $61.79 to $76.63 and $61.79 were outstanding for the~~ nine months ended September 30, ~~2017~~2020.

•The effect of 56 thousand contingently issuable performance shares granted during 2020 for both the three and ~~2016, respectively, but~~nine months ended September 30, 2021 and 2020 as performance and market conditions were not ~~included in the computation of diluted earnings per share because they were anti-dilutive.~~met.

~~12.~~

13. Equity Incentive Plan

All grants of common shares and options to purchase common shares were issued under the Company's 2007 Equity Incentive Plan prior to May 12, 2016 and under the 2016 Equity Incentive Plan on and after May 12, 2016. Under the 2016 Equity Incentive Plan, an aggregate of 1,950,000 common shares, options to purchase common shares and restricted share units, subject to adjustment in the event of certain capital events, may be granted. The 2016 Equity Incentive Plan was amended by shareholders at the May 28, 2021 annual shareholder meeting. The amendment increased the number of authorized shares issuable under the plan from 1,950,000 shares to 3,950,000 shares. Additionally, the 2020 Long Term Incentive Plan (2020 LTIP) is a sub-plan under the Company's 2016 Equity Incentive Plan. Under the 2020 LTIP, the Company awards performance shares and restricted shares to the Company's executive officers. At September 30, ~~2017,~~2021, there ~~were 1,633,001~~were 2,362,709 shares available for grant under the 2016 Equity Incentive Plan.

Share Options

Share options ~~granted under the 2007 Equity Incentive Plan and the 2016 Equity Incentive Plan~~ have exercise prices equal to the fair market value of a common share at the date of grant. The options may be granted for any reasonable term, not to exceed 10 ~~years, and for employees typically become exercisable at a rate of 25% per year over a four-year period.~~years. The Company generally issues new common shares upon option exercise. A summary of the Company’s share option activity and related information is as follows:


	Number of options	Option price per share					Weighted avg. exercise price
Outstanding at December 31, 2020	116,690	$	44.62	—	$	76.63	$	56.36
Exercised	(4,065)	47.77		—	47.77		47.77
Granted	1,838	44.44		—	44.44		44.44
Forfeited/Expired	(4,806)	45.20		—	61.79		51.42
Outstanding at September 30, 2021	109,657	$	44.44	—	$	76.63	$	56.69

Number of
options

Option price
per share

Weighted avg.
exercise price
Outstanding at December 31, 2016 285,986
$ 19.02
—
$ 61.79
$ 51.93
Exercised (28,281 ) 46.86
—
61.79
54.72
Granted 2,215
76.63
—
76.63
76.63
Forfeited/Expired (1,342 ) 51.64
—
61.79
59.52
Outstanding at September 30, 2017 258,578
$ 19.02
—
$ 76.63
$ 51.80

The weighted average fair value of options granted was ~~$7.91~~$20.34 and $3.73 during the nine months ended September 30, ~~2017. There were no options granted during the nine months ended September 30, 2016.~~2021 and 2020, respectively. The intrinsic value of ~~stock~~share options exercised was ~~$0.5 million~~$7 thousand and ~~$3.4 million~~$22 thousand for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively. Additionally, the Company repurchased 21,260 shares into treasury shares in conjunction with the stock options exercised during the nine months ended September 30, 2017 with a total value of $1.5 million. At September 30, 2017, stock-option expense to be recognized in future periods was $0.5 million.

The expense related to share options included in the determination of net income for the nine months ended September 30, 2017 and 2016 was $0.5 million and $0.7 million, respectively. The following assumptions were used in applying the Black-Scholes option pricing model at the grant dates for the nine months ended September 30, 2017: risk-free interest rate of 2.1%, dividend yield of 5.4%, volatility factors in the expected market price of the Company’s common shares of 22.0%, 0.74% expected forfeiture rate and an expected life of approximately six years. The Company uses historical data to estimate the expected life of the option and the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Additionally, expected volatility is computed based on the average historical volatility of the Company’s publicly traded shares.

The following table summarizes outstanding ~~options at~~ ~~September 30, 2017~~:

Exercise price range
Options
outstanding

Weighted avg.
life remaining

Weighted avg.
exercise price

Aggregate intrinsic
value (in thousands)
$ 19.02 - 19.99 11,097
1.6

20.00 - 29.99 —
—

30.00 - 39.99 1,428
2.3

40.00 - 49.99 86,863
4.3

50.00 - 59.99 75,939
6.1

60.00 - 69.99 81,036
7.4

70.00 - 76.63 2,215
9.4

258,578
5.7
$ 51.80
$ 4,654

~~The following table summarizes~~and exercisable options at September 30, ~~2017~~:2021:


	Options outstanding						Options exercisable
Exercise price range	Options outstanding	Weighted avg. life remaining	Weighted avg. exercise price		Aggregate intrinsic value (in thousands)		Options exercisable	Weighted avg. life remaining	Weighted avg. exercise price		Aggregate intrinsic value (in thousands)



$44.44 - 49.99	22,295	3.1					20,457	0.9
50.00 - 59.99	31,008	2.8					30,050	2.6
60.00 - 69.99	52,198	4.8					50,031	3.7
70.00 - 76.63	4,156	6.3					3,186	6.0
	109,657	3.9	$	56.69	$	66	103,724	2.9	$	56.48	$	57

Exercise price range
Options
outstanding

Weighted avg.
life remaining

Weighted avg.
exercise price

Aggregate intrinsic
value (in thousands)
$ 19.02 - 19.99 11,097
1.6

20.00 - 29.99 —
—

30.00 - 39.99 1,428
2.3

40.00 - 49.99 86,863
4.3

50.00 - 59.99 51,276
6.0

60.00 - 69.99 38,375
7.4

70.00 - 76.63 —
—

189,039
5.2
$ 49.28
$ 3,868

Nonvested Shares

A summary of the Company’s nonvested share activity and related information is as follows:


	Number of shares	Weighted avg. grant date fair value		Weighted avg. life remaining
Outstanding at December 31, 2020	445,402	$	68.47
Granted	246,562	44.44
Vested	(201,380)	67.87
Forfeited	(10,025)	59.75
Outstanding at September 30, 2021	480,559	$	56.58	1.10

Number of
shares

Weighted avg.
grant date
fair value

Weighted avg.
life remaining
Outstanding at December 31, 2016 534,317
$ 59.22

Granted 295,754
76.53

Vested (208,822 ) 57.43

Forfeited (1,342 ) 66.88

Outstanding at September 30, 2017 619,907
$ 68.07
1.21

The holders of nonvested shares have voting rights and receive dividends from the date of grant. ~~These shares vest ratably over a period of~~ ~~three~~ to ~~four~~ ~~years.~~ The fair value of the nonvested shares that vested was ~~$15.0~~$6.6 million ~~and $9.2~~and $16.0 million for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively. At September 30, ~~2017,~~2021, unamortized share-based compensation expense related to nonvested shares was ~~$24.2~~$12.8 million.

Nonvested Performance Shares

A summary of the Company's nonvested performance share activity and related information is as follows:


			Target Number of Performance Shares
Outstanding at December 31, 2020			56,338
Granted			102,438


Outstanding at September 30, 2021			158,776

The number of common shares issuable upon settlement of the performance shares granted during the nine months ended September 30, 2021 and 2020, will be based upon the Company's achievement level relative to the following performance measures at December 31, 2023 and 2022, respectively: 50% based upon the Company's Total Shareholder Return (TSR) relative to the TSRs of the Company's peer group companies, 25% based upon the Company's TSR relative to the TSRs of companies in the MSCI US REIT Index and 25% based upon the Company's Average Annual Growth in AFFO per share over the three-year performance period. The Company's achievement level relative to the performance measures is assigned a specific payout percentage which is multiplied by a target number of performance shares.

The performance shares based on relative TSR performance have market conditions and are valued using a Monte Carlo simulation model on the grant date, which resulted in a grant date fair value of approximately $6.6 million and $3.0 million for the nine months ended September 30, 2021 and 2020, respectively. The estimated fair value is amortized to expense over the three-year vesting period, which ends on December 31, 2023 and 2022 for performance shares granted in 2021 and 2020, respectively. The following assumptions were used in the Monte Carlo simulation for computing the grant date fair value of the performance shares with a market condition for the nine months ended September 30, 2021: risk-free interest rate of 0.2%, volatility factors in the expected market price of the Company's common shares of 69% and an expected life of approximately three years.

The performance shares based on growth in AFFO have a performance condition. The probability of achieving the performance condition is assessed at each reporting period. If it is deemed probable that the performance condition will be met, compensation cost will be recognized based on the closing price per share of the Company's common stock on the date of the grant multiplied by the number of awards expected to be earned. If it is deemed that it is not probable that the performance condition will be met, the Company will discontinue the recognition of compensation cost and any compensation cost previously recorded will be reversed. At September 30, 2021, achievement of the performance condition was deemed probable for the performance shares granted during the nine months ended September 30, 2021, with an expected payout percentage of 200%, which resulted in a grant date fair value of approximately $2.3 million. Achievement of the performance condition for the performance shares granted during the nine months ended September 30, 2020 was deemed not probable at September 30, 2021.

At September 30, 2021, unamortized share-based compensation expense related to nonvested performance shares was $7.8 million.

The performance shares accrue dividend equivalents which are paid only if common shares are issued upon settlement of the performance shares. During the nine months ended September 30, 2021 and 2020, the Company accrued dividend equivalents expected to be paid on earned awards of $65 thousand and $29 thousand, respectively.

Restricted Share Units

A summary of the Company’s restricted share unit activity and related information is as follows:


	Number of shares	Weighted avg. grant date fair value		Weighted avg. life remaining
Outstanding at December 31, 2020	74,767	$	31.57
Granted	43,306	49.15
Vested	(74,767)	31.57
Outstanding at September 30, 2021	43,306	$	49.15	0.67

Number of
shares

Weighted avg.
grant date
fair value

Weighted avg.
life remaining
Outstanding at December 31, 2016 15,805
$ 70.93

Granted 19,030
70.91

Vested (15,805 ) 70.93

Outstanding at September 30, 2017 19,030
$ 70.91
0.58

The holders of restricted share units receive dividend equivalents from the date of grant. The share units vest upon the earlier of the day preceding the next annual meeting of shareholders or a change of control. The settlement date for the shares is selected by the non-employee Trustee, and ranges from one year from the grant date to upon termination of service. At September 30, ~~2017,~~2021, unamortized share-based compensation expense related to ~~restricted~~restricted share units was ~~$0.8~~$1.4 million.

~~13.~~

14. Operating Leases

The Company’s real estate investments are leased under operating leases. The Company adopted Topic 842 on January 1, 2019 and elected to not reassess its prior conclusions about lease classification. Accordingly, these lease arrangements continue to be classified as operating leases. In addition to its lessor arrangements on its real estate investments, as of September 30, 2021 and December 31, 2020, the Company was lessee in 54 and 53 operating ground leases, respectively. The Company's tenants, who are generally sub-tenants under these ground leases, are responsible for paying the rent under these ground leases. As of September 30, 2021, rental revenue from several of the Company's tenants, who are also sub-tenants under the ground leases, is being recognized on a cash basis. In most cases, the ground lease sub-tenants have continued to pay the rent under these ground leases. In addition, 1 of these properties is vacant. In the event the tenant fails to pay the ground lease rent or if the property is vacant, the Company is primarily responsible for the payment, assuming the Company does not sell or re-tenant the property. The Company is also the lessee in an operating lease of its executive office.

The following table summarizes rental revenue, including sublease arrangements and lease costs, for the three and nine months ended September 30, 2021 and 2020 (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,
	Classification	2021		2020		2021		2020
Operating leases (1)	Rental revenue	$	117,408	$	54,785	$	325,429	$	283,891
Sublease income - operating ground leases (2)	Rental revenue	$	5,632	$	806	$	16,108	$	4,274

Lease costs
Operating ground lease cost	Property operating expense	$	5,827	$	6,015	$	17,051	$	18,515
Operating office lease cost	General and administrative expense	$	226	$	226	$	678	$	678
Operating lease right-of-use asset impairment charges (3)	Impairment charges	$	—	$	—	$	—	$	15,009

(1) During the three and nine months ended September 30, 2020, the Company wrote-off straight-line rent receivables of $20.4 million and $25.4 million, respectively, to straight-line rental revenue classified in "Rental revenue" in the accompanying consolidated statements of income (loss) and comprehensive income (loss). Additionally, during the three and nine months ended September 30, 2020, the Company wrote-off lease receivables from tenants totaling $22.8 million and $23.0 million, respectively, to minimum rent and percentage rent classified in rental revenue in the accompanying consolidated statements of income (loss) and comprehensive income (loss) related to tenants being recognized on a cash basis.

(2) During the three and nine months ended September 30, 2020, the Company wrote-off sub-lessor ground lease straight-line rent receivables totaling $3.5 million and $11.5 million, respectively, to straight-line rental revenue classified in "Rental revenue" in the accompanying consolidated statements of income (loss) and comprehensive income (loss). Additionally, during both the three and nine months ended September 30, 2020, the Company wrote-off sub-lessor ground lease receivables from tenants totaling $1.4 million, to minimum rent classified in rental revenue in the accompanying consolidated statements of income (loss) and comprehensive income (loss) related to tenants being recognized on a cash basis.

(3) During the nine months ended September 30, 2020, the Company recognized impairment charges of $15.0 million related to the operating lease right-of-use assets at two of its properties.

15. Segment Information

The Company groups its investments into 2 reportable operating segments: Experiential and Education.

The financial information summarized below is presented by reportable operating segment (in thousands):


Balance Sheet Data:
	As of September 30, 2021
	Experiential		Education		Corporate/Unallocated		Consolidated
Total Assets	$	5,060,248	$	511,170	$	149,739	$	5,721,157

	As of December 31, 2020
	Experiential		Education		Corporate/Unallocated		Consolidated
Total Assets	$	5,133,486	$	529,755	$	1,040,944	$	6,704,185


Operating Data:
	Three Months Ended September 30, 2021
	Experiential		Education		Corporate/Unallocated		Consolidated
Rental revenue	$	113,589	$	9,451	$	—	$	123,040
Other income	8,052		—		39		8,091
Mortgage and other financing income	8,283		233		—		8,516
Total revenue	129,924		9,684		39		139,647

Property operating expense	13,572		16		227		13,815
Other expense	7,851		—		—		7,851
Total investment expenses	21,423		16		227		21,666
Net operating income - before unallocated items	108,501		9,668		(188)		117,981

Reconciliation to Consolidated Statements of Income (Loss) and Comprehensive Income (Loss):
General and administrative expense							(11,154)


Costs associated with loan refinancing or payoff							(4,741)

Interest expense, net							(36,584)
Transaction costs							(2,132)
Credit loss benefit							14,096
Impairment charges							(2,711)
Depreciation and amortization							(42,612)
Equity in loss from joint ventures							(418)

Gain on sale of real estate							787

Income tax expense							(395)




Net income							32,117

Preferred dividend requirements							(6,033)
Net income available to common shareholders of EPR Properties							$	26,084


Operating Data:
	Three Months Ended September 30, 2020
	Experiential		Education		Corporate/Unallocated		Consolidated
Rental revenue	$	40,270	$	15,321	$	—	$	55,591
Other income	14		13		155		182
Mortgage and other financing income	7,761		343		—		8,104
Total revenue	48,045		15,677		155		63,877

Property operating expense	13,011		550		198		13,759
Other expense	2,680		—		—		2,680
Total investment expenses	15,691		550		198		16,439
Net operating income - before unallocated items	32,354		15,127		(43)		47,438

Reconciliation to Consolidated Statements of Income (Loss) and Comprehensive Income (Loss):
General and administrative expense							(10,034)




Interest expense, net							(41,744)
Transaction costs							(2,776)
Credit loss expense							(5,707)
Impairment charges							(11,561)
Depreciation and amortization							(42,059)
Equity in loss from joint ventures							(1,044)



Income tax expense							(18,417)



Net loss							(85,904)
Preferred dividend requirements							(6,034)
Net loss available to common shareholders of EPR Properties							$	(91,938)


Operating Data:
	Nine Months Ended September 30, 2021
	Experiential		Education		Corporate/Unallocated		Consolidated
Rental revenue	$	313,424	$	28,113	$	—	$	341,537
Other income	9,442		—		360		9,802
Mortgage and other financing income	24,663		772		—		25,435
Total revenue	347,529		28,885		360		376,774

Property operating expense	42,985		113		708		43,806
Other expense	13,428		—		—		13,428
Total investment expenses	56,413		113		708		57,234
Net operating income - before unallocated items	291,116		28,772		(348)		319,540
Reconciliation to Consolidated Statements of Income (Loss) and Comprehensive Income (Loss):
General and administrative expense							(33,866)

Costs associated with loan refinancing or payoff							(4,982)

Interest expense, net							(114,090)
Transaction costs							(3,342)
Credit loss benefit							19,677
Impairment charges							(2,711)
Depreciation and amortization							(123,476)
Equity in loss from joint ventures							(3,000)

Gain on sale of real estate							1,499

Income tax expense							(1,200)




Net income							54,049

Preferred dividend requirements							(18,100)
Net income available to common shareholders of EPR Properties							$	35,949


Operating Data:
	Nine Months Ended September 30, 2020
	Experiential		Education		Corporate/Unallocated		Consolidated
Rental revenue	$	243,134	$	45,031	$	—	$	288,165
Other income	7,227		13		931		8,171
Mortgage and other financing income	23,913		1,000		—		24,913
Total revenue	274,274		46,044		931		321,249

Property operating expense	39,854		1,719		608		42,181
Other expense	15,012		—		—		15,012
Total investment expenses	54,866		1,719		608		57,193
Net operating income - before unallocated items	219,408		44,325		323		264,056

Reconciliation to Consolidated Statements of Income (Loss) and Comprehensive Income (Loss):
General and administrative expense							(31,454)

Costs associated with loan refinancing or payoff							(820)

Interest expense, net							(114,837)
Transaction costs							(4,622)
Credit loss expense							(10,383)
Impairment charges							(62,825)
Depreciation and amortization							(128,319)
Equity in loss from joint ventures							(3,188)
Impairment charges on joint ventures							(3,247)
Gain on sale of real estate							242

Income tax benefit							(16,354)




Net loss							(111,751)

Preferred dividend requirements							(18,102)
Net loss available to common shareholders of EPR Properties							$	(129,853)

16. Other Commitments and Contingencies

As of September 30, ~~2017,~~2021, the Company had 15 development projects with commitments to fund an aggregate of approximately $202.4 million of commitments to fund development projects including 34 entertainment development projects for which it had commitments to fund approximately $97.0 million, nine education development projects for which it had commitments to fund approximately $40.9 million, and six recreation development projects for which it had commitments to fund approximately $64.5$66.9 million. Development costs are advanced by the Company in periodic draws. If the Company determines that construction is not being completed in accordance with the terms of the development agreement, it can discontinue funding construction draws. The Company has agreed to lease the properties to the operators at pre-determined rates upon completion of construction.

Additionally as of September 30, 2017, the Company had a commitment to fund approximately $155.0 million over the next three years, of which $22.3 million had been funded, to complete an indoor waterpark hotel and adventure park at the Adelaar casino and resort project in Sullivan County, New York. The Company is also responsible for the construction of the casino and resort project common infrastructure. In June 2016, the Sullivan County Infrastructure Local Development Corporation issued $110.0 million of Series 2016 Revenue Bonds which is expected to fund a substantial portion of such construction costs. The Company received an initial reimbursement of $43.4 million of construction costs during the year ended December 31, 2016 and an additional reimbursement of $23.9 million during the nine months ended September 30, 2017. The Company expects to receive an additional $21.0 million of reimbursements over the balance of the construction period. Construction of infrastructure improvements is currently expected to be completed in 2018.

The Company has certain commitments related to its mortgage ~~note~~notes and notes receivable investments that it may be required to fund in the future. The Company is generally obligated to fund these commitments at the request of the borrower or upon the occurrence of events outside of its direct control. As of September 30, ~~2017,~~2021, the Company had ~~eight~~2 mortgage notes ~~receivable~~ with commitments totaling approximately ~~$25.7~~$12.8 million. If commitments are funded in the future, interest will be charged at rates consistent with the existing investments.

The Company has provided guarantees of the payment of certain economic development revenue bonds totaling $24.9 million related to two theatres in Louisiana for which the Company earns a fee at annual rates of 2.88% to 4.00% over the 30-year terms of the related bonds. The Company recorded $10.4 million as a deferred asset included in other assets and $10.4 million included in other liabilities in the accompanying consolidated balance sheet as of ~~September 30, 2017~~ ~~related to these guarantees. No amounts have been accrued as a loss contingency related to these guarantees because payment by the Company is not probable.~~

In connection with construction of its development projects and related infrastructure, certain public agencies require posting of surety bonds to guarantee that the Company's obligations are satisfied. These bonds expire upon the completion of the improvements or infrastructure. As of September 30, ~~2017,~~2021, the Company had ~~six~~4 surety bonds outstanding totaling ~~$24.3~~$33.3 million.

Prior proposed casino and resort developers Concord Associates, L.P., Concord Resort, LLC and Concord Kiamesha LLC, which are affiliates of Louis Cappelli and from whom the Company acquired the Adelaar resort property (the Cappelli Group), commenced litigation against the Company beginning in 2011 regarding matters relating to the acquisition of that property and the Company's relationship with the Empire Resorts, Inc. and certain of its subsidiaries. This litigation involves three separate cases filed in state and federal court. Two of the cases, a state and the federal case, are closed and resulted in no liability by the Company.

The remaining case was filed on October 20, 2011 by the Cappelli Group against the Company and two of its affiliates in the Supreme Court of the State of New York, County of Westchester (the Westchester Action), asserting a claim for breach of contract and the implied covenant of good faith, and seeking damages of at least $800 million, based on allegations that the Company had breached an agreement (the Casino Development Agreement), dated June 18, 2010. The Company moved to dismiss the complaint in the Westchester Action based on a decision issued by the Sullivan County Supreme Court (one of the two closed cases referenced above) on June 30, 2014, as affirmed by the Appellate Division, Third Department (the Sullivan Action). On January 26, 2016, the Westchester County Supreme Court denied

the Company's motion to dismiss but ordered the Cappelli Group to amend its pleading and remove all claims and allegations previously determined by the Sullivan Action. On February 18, 2016, the Cappelli Group filed an amended complaint asserting a single cause of action for breach of the covenant of good faith and fair dealing based upon allegations the Company had interfered with plaintiffs’ ability to obtain financing which complied with the Casino Development Agreement. On March 23, 2016, the Company filed a motion to dismiss the Cappelli Group’s revised amended complaint. On January 5, 2017, the Westchester County Supreme Court denied the Company’s second motion to dismiss. Discovery is ongoing.

The Company has not determined that losses related to the remaining Westchester Action are probable. In light of the inherent difficulty of predicting the outcome of litigation generally, the Company does not have sufficient information to determine the amount or range of reasonably possible loss with respect to these matters. The Company’s assessments are based on estimates and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause the Company to change those estimates and assumptions. The Company intends to vigorously defend the claims asserted against the Company and certain of its subsidiaries by the Cappelli Group and its affiliates, for which the Company believes it has meritorious defenses, but there can be no assurances as to the outcome of the claims and related litigation.

~~14. Segment Information~~

~~The Company groups investments into~~ ~~four~~ ~~reportable operating segments: Entertainment, Education, Recreation and Other. The financial information summarized below is presented by reportable operating segment:~~

Balance Sheet Data:
As of September 30, 2017
Entertainment Education Recreation Other Corporate/Unallocated Consolidated
Total Assets $ 2,343,778
$ 1,489,459
$ 2,057,172
$ 193,766
$ 48,835
$ 6,133,010

As of December 31, 2016
Entertainment Education Recreation Other Corporate/Unallocated Consolidated
Total Assets $ 2,168,669
$ 1,308,288
$ 1,120,498
$ 202,394
$ 65,173
$ 4,865,022

Operating Data:
Three Months Ended September 30, 2017
Entertainment Education Recreation Other Corporate/Unallocated Consolidated
Rental revenue $ 66,888
$ 21,478
$ 32,171
$ 2,290
$ —
$ 122,827
Tenant reimbursements 3,733
1
—
—
—
3,734
Other income 2
—
—
—
520
522
Mortgage and other financing income 1,151
9,023
14,140
—
—
24,314
Total revenue 71,774
30,502
46,311
2,290
520
151,397

Property operating expense 5,680
119
29
327
185
6,340
Total investment expenses 5,680
119
29
327
185
6,340
Net operating income - before unallocated items 66,094
30,383
46,282
1,963
335
145,057

Reconciliation to Consolidated Statements of Income:
General and administrative expense (12,070 )
Costs associated with loan refinancing or payoff (1,477 )
Interest expense, net (34,194 )
Transaction costs (113 )
Depreciation and amortization (34,694 )
Equity in income from joint ventures 35
Gain on sale of real estate 997
Income tax expense (587 )
Net income 62,954
Preferred dividend requirements (5,951 )
Net income available to common shareholders of EPR Properties $ 57,003

Operating Data:
Three Months Ended September 30, 2016
Entertainment Education Recreation Other Corporate/Unallocated Consolidated
Rental revenue $ 64,134
$ 19,900
$ 15,958
$ 2,290
$ —
$ 102,282
Tenant reimbursements 3,816
5
—
—
—
3,821
Other income 8
—
1,825
—
643
2,476
Mortgage and other financing income 1,294
7,319
8,384
34
—
17,031
Total revenue 69,252
27,224
26,167
2,324
643
125,610

Property operating expense 5,228
—
—
233
165
5,626
Total investment expenses 5,228
—
—
233
165
5,626
Net operating income - before unallocated items 64,024
27,224
26,167
2,091
478
119,984

Reconciliation to Consolidated Statements of Income:
General and administrative expense (9,091 )
Costs associated with loan refinancing or payoff (14 )
Interest expense, net (24,265 )
Transaction costs (2,947 )
Depreciation and amortization (27,601 )
Equity in income from joint ventures 203
Gain on sale of real estate 1,615
Income tax expense (358 )
Net income 57,526
Preferred dividend requirements (5,951 )
Net income available to common shareholders of EPR Properties $ 51,575

Operating Data:
Nine Months Ended September 30, 2017
Entertainment Education Recreation Other Corporate/Unallocated Consolidated
Rental revenue $ 197,441
$ 66,168
$ 78,854
$ 6,870
$ —
$ 349,333
Tenant reimbursements 11,423
1
—
—
—
11,424
Other income 614
1
—
—
1,903
2,518
Mortgage and other financing income 3,426
26,440
35,150
—
—
65,016
Total revenue 212,904
92,610
114,004
6,870
1,903
428,291

Property operating expense 17,060
151
86
1,020
445
18,762
Total investment expenses 17,060
151
86
1,020
445
18,762
Net operating income - before unallocated items 195,844
92,459
113,918
5,850
1,458
409,529

Reconciliation to Consolidated Statements of Income:
General and administrative expense (33,787 )
Costs associated with loan refinancing or payoff (1,491 )
Gain on early extinguishment of debt 977
Interest expense, net (97,853 )
Transaction costs (388 )
Impairment charges (10,195 )
Depreciation and amortization (95,919 )
Equity in income from joint ventures 86
Gain on sale of real estate 28,462
Income tax expense (2,016 )
Net income 197,405
Preferred dividend requirements (17,855 )
Net income available to common shareholders of EPR Properties $ 179,550

Operating Data:
Nine Months Ended September 30, 2016
Entertainment Education Recreation Other Corporate/Unallocated Consolidated
Rental revenue $ 185,530
$ 54,797
$ 45,443
$ 6,345
$ —
$ 292,115
Tenant reimbursements 11,570
7
—
—
—
11,577
Other income 222
—
3,635
—
1,955
5,812
Mortgage and other financing income 4,927
25,228
22,650
102
—
52,907
Total revenue 202,249
80,032
71,728
6,447
1,955
362,411

Property operating expense 15,815
—
8
419
445
16,687
Other expense —
—
—
5
—
5
Total investment expenses 15,815
—
8
424
445
16,692
Net operating income - before unallocated items 186,434
80,032
71,720
6,023
1,510
345,719

Reconciliation to Consolidated Statements of Income:
General and administrative expense (27,309 )
Costs associated with loan refinancing or payoff (905 )
Interest expense, net (70,310 )
Transaction costs (4,881 )
Depreciation and amortization (79,222 )
Equity in income from joint ventures 501
Gain on sale of real estate 3,885
Income tax expense (637 )
Net income 166,841
Preferred dividend requirements (17,855 )
Net income available to common shareholders of EPR Properties $ 148,986

~~15. Condensed Consolidating Financial Statements~~

A portion of the Company's subsidiaries have guaranteed the Company’s indebtedness under the Company's unsecured credit facilities and existing senior unsecured notes. The guarantees are joint and several, full and unconditional and subject to customary release provisions. The following summarizes the Company’s condensed consolidating information as of ~~September 30, 2017~~ ~~and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016 (in thousands):~~

Condensed Consolidating Balance Sheet
As of September 30, 2017

EPR Properties
(Issuer)

Wholly Owned
Subsidiary
Guarantors

Non-
Guarantor
Subsidiaries

Consolidated
Elimination
Consolidated
Assets
Rental properties, net $ —
$ 3,640,225
$ 895,769
$ —
$ 4,535,994
Land held for development —
12,402
21,272
—
33,674
Property under development —
236,916
47,295
—
284,211
Mortgage notes and related accrued interest receivable —
963,738
8,633
—
972,371
Investment in a direct financing lease, net —
57,698
—
—
57,698
Investment in joint ventures —
—
5,616
—
5,616
Cash and cash equivalents 8,788
1,472
1,152
—
11,412
Restricted cash 395
23,599
329
—
24,323
Accounts receivable, net 675
89,230
9,308
—
99,213
Intercompany notes receivable —
179,589
—
(179,589 ) —
Investments in subsidiaries 5,892,529
—
—
(5,892,529 ) —
Other assets 26,485
32,417
49,596
—
108,498
Total assets $ 5,928,872
$ 5,237,286
$ 1,038,970
$ (6,072,118 ) $ 6,133,010
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities $ 58,308
$ 65,910
$ 16,364
$ —
$ 140,582
Dividends payable 30,997
—
—
—
30,997
Unearned rents and interest —
69,615
15,583
—
85,198
Intercompany notes payable —
—
179,589
(179,589 ) —
Debt 2,951,259
—
36,666
—
2,987,925
Total liabilities 3,040,564
135,525
248,202
(179,589 ) 3,244,702
Total equity 2,888,308
5,101,761
790,768
(5,892,529 ) 2,888,308
Total liabilities and equity $ 5,928,872
$ 5,237,286
$ 1,038,970
$ (6,072,118 ) $ 6,133,010

Condensed Consolidating Balance Sheet
As of December 31, 2016

EPR
Properties
(Issuer)

Wholly Owned
Subsidiary
Guarantors

Non-
Guarantor
Subsidiaries

Consolidated
Elimination
Consolidated
Assets
Rental properties, net $ —
$ 3,164,622
$ 431,140
$ —
$ 3,595,762
Land held for development —
1,258
21,272
—
22,530
Property under development 1,010
247,239
48,861
—
297,110
Mortgage notes and related accrued interest receivable —
612,141
1,837
—
613,978
Investment in a direct financing lease, net —
102,698
—
—
102,698
Investment in joint ventures —
—
5,972
—
5,972
Cash and cash equivalents 16,586
1,157
1,592
—
19,335
Restricted cash 365
8,352
1,027
—
9,744
Accounts receivable, net 556
89,145
9,238
—
98,939
Intercompany notes receivable —
179,589
—
(179,589 ) —
Investments in subsidiaries 4,521,095
—
—
(4,521,095 ) —
Other assets 21,768
23,068
54,118
—
98,954
Total assets $ 4,561,380
$ 4,429,269
$ 575,057
$ (4,700,684 ) $ 4,865,022
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities $ 63,431
$ 52,061
$ 4,266
$ —
$ 119,758
Dividends payable 26,318
—
—
—
26,318
Unearned rents and interest —
46,647
773
—
47,420
Intercompany notes payable —
—
179,589
(179,589 ) —
Debt 2,285,730
—
199,895
—
2,485,625
Total liabilities 2,375,479
98,708
384,523
(179,589 ) 2,679,121
Total equity 2,185,901
4,330,561
190,534
(4,521,095 ) 2,185,901
Total liabilities and equity $ 4,561,380
$ 4,429,269
$ 575,057
$ (4,700,684 ) $ 4,865,022

Condensed Consolidating Statement of Income
Three Months Ended September 30, 2017

EPR Properties
(Issuer)

Wholly Owned
Subsidiary
Guarantors

Non-
Guarantor
Subsidiaries

Consolidated
Elimination
Consolidated
Rental revenue $ —
$ 97,398
$ 25,429
$ —
$ 122,827
Tenant reimbursements —
1,274
2,460
—
3,734
Other income —
1
521
—
522
Mortgage and other financing income 232
23,960
122
—
24,314
Intercompany fee income 732
—
—
(732 ) —
Interest income on intercompany notes receivable —
2,580
—
(2,580 ) —
Total revenue 964
125,213
28,532
(3,312 ) 151,397
Equity in subsidiaries’ earnings 100,527
—
—
(100,527 ) —
Property operating expense —
3,434
2,906
—
6,340
Intercompany fee expense —
—
732
(732 ) —
General and administrative expense —
9,830
2,240
—
12,070
Costs associated with loan refinancing or payoff 1,474
—
3
—
1,477
Interest expense, net 36,364
(2,368 ) 198
—
34,194
Interest expense on intercompany notes payable —
—
2,580
(2,580 ) —
Transaction costs 113
—
—
—
113
Depreciation and amortization 232
26,633
7,829
—
34,694
Income before equity in income from joint ventures and other items 63,308
87,684
12,044
(100,527 ) 62,509
Equity in income from joint ventures —
—
35
—
35
Gain on sale of real estate —
997
—
—
997
Income before income taxes 63,308
88,681
12,079
(100,527 ) 63,541
Income tax expense (354 ) —
(233 ) —
(587 )
Net income 62,954
88,681
11,846
(100,527 ) 62,954
Preferred dividend requirements (5,951 ) —
—
—
(5,951 )
Net income available to common shareholders of EPR Properties $ 57,003
$ 88,681
$ 11,846
$ (100,527 ) $ 57,003
Comprehensive income $ 64,175
$ 88,681
$ 12,694
$ (101,375 ) $ 64,175

Condensed Consolidating Statement of Income
Three Months Ended September 30, 2016

EPR
Properties
(Issuer)

Wholly Owned
Subsidiary
Guarantors

Non-
Guarantor
Subsidiaries

Consolidated
Elimination
Consolidated
Rental revenue $ —
$ 89,178
$ 13,104
$ —
$ 102,282
Tenant reimbursements —
1,338
2,483
—
3,821
Other income —
1,829
647
—
2,476
Mortgage and other financing income 286
16,692
53
—
17,031
Intercompany fee income 677
—
—
(677 ) —
Interest income on intercompany notes receivable —
2,460
—
(2,460 ) —
Total revenue 963
111,497
16,287
(3,137 ) 125,610
Equity in subsidiaries’ earnings 84,755
—
—
(84,755 ) —
Property operating expense —
2,916
2,710
—
5,626
Intercompany fee expense —
—
677
(677 ) —
General and administrative expense —
7,927
1,164
—
9,091
Costs associated with loan refinancing or payoff —
14
—
—
14
Interest expense, net 24,414
(2,395 ) 2,246
—
24,265
Interest expense on intercompany notes payable —
—
2,460
(2,460 ) —
Transaction costs 2,947
—
—
—
2,947
Depreciation and amortization 449
23,768
3,384
—
27,601
Income before equity in income from joint ventures and other items 57,908
79,267
3,646
(84,755 ) 56,066
Equity in income from joint ventures —
—
203
—
203
Gain on sale of real estate —
1,615
—
—
1,615
Income before income taxes 57,908
80,882
3,849
(84,755 ) 57,884
Income tax (expense) benefit (382 ) —
24
—
(358 )
Income from continuing operations 57,526
80,882
3,873
(84,755 ) 57,526
Net income 57,526
80,882
3,873
(84,755 ) 57,526
Preferred dividend requirements (5,951 ) —
—
—
(5,951 )
Net income available to common shareholders of EPR Properties $ 51,575
$ 80,882
$ 3,873
$ (84,755 ) $ 51,575
Comprehensive income $ 58,739
$ 80,882
$ 2,440
$ (83,322 ) $ 58,739

~~Condensed Consolidating Statement of Income~~

~~Nine Months Ended September 30, 2017~~

EPR Properties
(Issuer)

Wholly Owned
Subsidiary
Guarantors

Non-
Guarantor
Subsidiaries

Consolidated
Elimination
Consolidated
Rental revenue $ —
$ 285,977
$ 63,356
$ —
$ 349,333
Tenant reimbursements —
3,955
7,469
—
11,424
Other income —
614
1,904
—
2,518
Mortgage and other financing income 696
64,103
217
—
65,016
Intercompany fee income 2,094
—
—
(2,094 ) —
Interest income on intercompany notes receivable —
7,435
—
(7,435 ) —
Total revenue 2,790
362,084
72,946
(9,529 ) 428,291
Equity in subsidiaries’ earnings 300,631
—
—
(300,631 ) —
Property operating expense —
9,756
9,006
—
18,762
Intercompany fee expense —
—
2,094
(2,094 ) —
General and administrative expense —
28,112
5,675
—
33,787
Costs associated with loan refinancing or payoff 1,474
—
17
—
1,491
Gain on early extinguishment of debt —
—
(977 ) —
(977 )
Interest expense, net 102,424
(7,482 ) 2,911
—
97,853
Interest expense on intercompany notes payable —
—
7,435
(7,435 ) —
Transaction costs 388
—
—
—
388
Impairment charges —
10,195
—
—
10,195
Depreciation and amortization 662
76,594
18,663
—
95,919
Income before equity in income from joint ventures and other items 198,473
244,909
28,122
(300,631 ) 170,873
Equity in income from joint ventures —
—
86
—
86
Gain on sale of real estate —
27,344
1,118
—
28,462
Income before income taxes 198,473
272,253
29,326
(300,631 ) 199,421
Income tax expense (1,068 ) —
(948 ) —
(2,016 )
Net income 197,405
272,253
28,378
(300,631 ) 197,405
Preferred dividend requirements (17,855 ) —
—
—
(17,855 )
Net income available to common shareholders of EPR Properties $ 179,550
$ 272,253
$ 28,378
$ (300,631 ) $ 179,550
Comprehensive income $ 200,590
$ 272,253
$ 28,998
$ (301,251 ) $ 200,590

~~Condensed Consolidating Statement of Income~~

~~Nine Months Ended September 30, 2016~~

EPR Properties
(Issuer)

Wholly Owned
Subsidiary
Guarantors

Non-
Guarantor
Subsidiaries

Consolidated
Elimination
Consolidated
Rental revenue $ —
$ 251,900
$ 40,215
$ —
$ 292,115
Tenant reimbursements —
4,059
7,518
—
11,577
Other income —
3,648
2,164
—
5,812
Mortgage and other financing income 710
48,370
3,827
—
52,907
Intercompany fee income 2,018
—
—
(2,018 ) —
Interest income on intercompany notes receivable —
7,297
—
(7,297 ) —
Total revenue 2,728
315,274
53,724
(9,315 ) 362,411
Equity in subsidiaries’ earnings 240,420
—
—
(240,420 ) —
Property operating expense —
8,135
8,552
—
16,687
Intercompany fee expense —
—
2,018
(2,018 ) —
Other expense —
—
5
—
5
General and administrative expense —
23,318
3,991
—
27,309
Costs associated with loan refinancing or payoff —
353
552
—
905
Interest expense, net 69,042
(5,596 ) 6,864
—
70,310
Interest expense on intercompany notes payable —
—
7,297
(7,297 ) —
Transaction costs 4,778
—
103
—
4,881
Depreciation and amortization 1,338
67,516
10,368
—
79,222
Income before equity in income from joint ventures and other items 167,990
221,548
13,974
(240,420 ) 163,092
Equity in income from joint ventures —
—
501
—
501
Gain on sale of real estate —
3,885
—
—
3,885
Income before income taxes 167,990
225,433
14,475
(240,420 ) 167,478
Income tax (expense) benefit (1,149 ) —
512
—
(637 )
Net income 166,841
225,433
14,987
(240,420 ) 166,841
Preferred dividend requirements (17,855 ) —
—
—
(17,855 )
Net income available to common shareholders of EPR Properties $ 148,986
$ 225,433
$ 14,987
$ (240,420 ) $ 148,986
Comprehensive income $ 165,917
$ 225,433
$ 15,391
$ (240,824 ) $ 165,917

Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2017

EPR
Properties
(Issuer)

Wholly Owned
Subsidiary
Guarantors

Non-Guarantor
Subsidiaries
Consolidated
Intercompany fee income (expense) $ 2,094
$ —
$ (2,094 ) $ —
Interest income (expense) on intercompany receivable/payable —
7,435
(7,435 ) —
Net cash (used) provided by other operating activities (95,174 ) 332,846
62,636
300,308
Net cash (used) provided by operating activities (93,080 ) 340,281
53,107
300,308
Investing activities:
Acquisition of rental properties and other assets (1,012 ) (297,658 ) (55,607 ) (354,277 )
Proceeds from sale of real estate 203
107,022
29,242
136,467
Investment in mortgage notes receivable —
(123,060 ) (7,016 ) (130,076 )
Proceeds from mortgage note receivable paydown —
16,608
—
16,608
Investment in promissory notes receivable —
(1,868 ) —
(1,868 )
Proceeds from promissory notes receivable paydown —
1,599
—
1,599
Proceeds from insurance recovery —
579
—
579
Additions to property under development (725 ) (289,810 ) (13,549 ) (304,084 )
Advances to subsidiaries, net (402,145 ) 246,622
155,523
—
Net cash (used) provided by investing activities (403,679 ) (339,966 ) 108,593
(635,052 )
Financing activities:
Proceeds from debt facilities and senior unsecured notes 1,175,000
—
—
1,175,000
Principal payments on debt (505,000 ) —
(162,091 ) (667,091 )
Deferred financing fees paid (14,001 ) —
(206 ) (14,207 )
Costs associated with loan refinancing or payoff (cash portion) —
—
(7 ) (7 )
Net proceeds from issuance of common shares 68,552
—
—
68,552
Purchase of common shares for treasury for vesting (6,729 ) —
—
(6,729 )
Dividends paid to shareholders (228,861 ) —
—
(228,861 )
Net cash provided (used) by financing activities 488,961
—
(162,304 ) 326,657
Effect of exchange rate changes on cash —
—
164
164
Net (decrease) increase in cash and cash equivalents (7,798 ) 315
(440 ) (7,923 )
Cash and cash equivalents at beginning of the period 16,586
1,157
1,592
19,335
Cash and cash equivalents at end of the period $ 8,788
$ 1,472
$ 1,152
$ 11,412

Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2016

EPR
Properties
(Issuer)

Wholly Owned
Subsidiary
Guarantors

Non-Guarantor
Subsidiaries
Consolidated
Intercompany fee income (expense) $ 2,018
$ —
$ (2,018 ) $ —
Interest income (expense) on intercompany receivable/payable —
7,297
(7,297 ) —
Net cash (used) provided by other operating activities (74,550 ) 254,721
35,602
215,773
Net cash (used) provided by operating activities (72,532 ) 262,018
26,287
215,773
Investing activities:
Acquisition of rental properties and other assets (180 ) (175,075 ) (2,107 ) (177,362 )
Proceeds from sale of real estate —
19,175
1,476
20,651
Investment in mortgage note receivable —
(80,786 ) —
(80,786 )
Proceeds from mortgage note receivable paydown —
44,556
19,320
63,876
Investment in promissory notes receivable —
(66 ) —
(66 )
Proceeds from sale of infrastructure related to issuance of revenue bonds —
43,462
—
43,462
Proceeds from insurance recovery —
2,635
401
3,036
Proceeds from sale of investments in a direct financing lease, net —
825
—
825
Additions to property under development (181 ) (282,554 ) (6,152 ) (288,887 )
Investment in (repayment of) intercompany notes payable —
(2,063 ) 2,063
—
Advances to subsidiaries, net (203,471 ) 231,048
(27,577 ) —
Net cash used by investing activities (203,832 ) (198,843 ) (12,576 ) (415,251 )
Financing activities:
Proceeds from debt facilities 840,000
—
14,360
854,360
Principal payments on debt (496,000 ) (63,727 ) (27,382 ) (587,109 )
Deferred financing fees paid (3,020 ) —
(27 ) (3,047 )
Costs associated with loan refinancing or payoff (cash portion) —
—
(482 ) (482 )
Net proceeds from issuance of common shares 142,452
—
—
142,452
Impact of stock option exercises, net (717 ) —
—
(717 )
Purchase of common shares for treasury for vesting (4,211 ) —
—
(4,211 )
Dividends paid to shareholders (198,678 ) —
—
(198,678 )
Net cash provided (used) by financing activities 279,826
(63,727 ) (13,531 ) 202,568
Effect of exchange rate changes on cash —
—
(62 ) (62 )
Net increase (decrease) in cash and cash equivalents 3,462
(552 ) 118
3,028
Cash and cash equivalents at beginning of the period 1,089
1,289
1,905
4,283
Cash and cash equivalents at end of the period $ 4,551
$ 737
$ 2,023
$ 7,311

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the ~~Consolidated Financial Statements~~consolidated financial statements and ~~Notes~~notes thereto included in this Quarterly Report on Form 10-Q of EPR Properties (the “Company”, “EPR”, “we” or “us”). The forward-looking statements included in this discussion and elsewhere in this Quarterly Report on Form 10-Q involve risks and uncertainties, including anticipated financial performance, anticipated liquidity and capital resources, business prospects, industry trends, shareholder returns, performance of leases by tenants, performance on loans to customers and other matters, which reflect management's best judgment based on factors currently known. See “Cautionary Statement Concerning Forward-Looking Statements” which is incorporated herein by reference. Actual results and experience could differ materially from the anticipated results and other expectations expressed in our forward-looking statements as a result of a number of factors, including but not limited to those discussed in ~~Part II,~~ Item 1A - "Risk Factors" ~~in this Quarterly Report on Form 10-Q and Item 1A - “Risk Factors”~~ in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 filed with the SEC on ~~March 1, 2017.~~February 25, 2021.

Overview

Business

Our principal business objective is to enhance shareholder value by achieving predictable and increasing Funds From Operations As Adjusted ("~~FFO"~~FFOAA") and dividends per share. Our ~~prevailing~~ strategy is to focus on long-term investments in ~~a limited number of categories in~~the Experiential sector which ~~we maintain a~~benefit from our depth of knowledge and relationships, and which we believe offer sustained performance throughout ~~all~~most economic cycles.

Our investment portfolio includes ownership of and long-term mortgages on ~~entertainment, education~~Experiential and ~~recreation~~Education properties. Substantially all of our owned single-tenant properties are leased pursuant to long-term, ~~triple net~~triple-net leases, under which the tenants typically pay all operating expenses of the property. Tenants at our owned multi-tenant properties are typically required to pay common area maintenance charges to reimburse us for their pro-rata portion of these costs. We also own certain experiential lodging assets structured using traditional REIT lodging structures.

It has been our strategy to structure leases and financings to ensure a positive spread between our cost of capital and the rentals or interest paid by our tenants. We have primarily acquired or developed new properties that are pre-leased to a single tenant or multi-tenant properties that have a high occupancy rate. We have also entered into certain joint ventures and we have provided mortgage note financing. We intend to continue entering into some or all of these types of arrangements in the foreseeable future.

Historically, our primary challenges ~~have~~had been locating suitable properties, negotiating favorable lease or financing terms (on new or existing properties), and managing our portfolio as we have continued to grow. We believe our management’s knowledge and industry relationships have facilitated opportunities for us to acquire, finance and lease properties. The current economic situation created by the COVID-19 pandemic has impeded our growth in the near term while our focus has been addressing challenges brought on by the pandemic, including monitoring customer status and working with customers to help ensure long-term stability as well as assisting them in reopening plans. Following our election to terminate the Covenant Relief Period early and recent improvements in the business operations of our customers, we expect our focus to return to the growth of the Company. See more discussion on the impact of the pandemic on our business and the early termination of the Covenant Relief Period below. Our business is subject to a number of risks and uncertainties, including those described in ~~Part II, Item 1A - "Risk Factors" in this Quarterly Report on Form 10-Q and~~ Item 1A - “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 filed with the SEC on ~~March 1, 2017.~~February 25, 2021.

~~We group our investments into four reportable operating segments: Entertainment, Education, Recreation and Other.~~ As of September 30, ~~2017,~~2021, our total assets were ~~approximately $6.1~~approximately $5.7 billion (after accumulated depreciation of approximately ~~$0.7~~$1.1 billion) ~~which included investments in each of our four operating segments~~ with properties located in 4344 states ~~the District of Columbia~~ and Ontario, Canada.

Our Entertainment segment included investments in 147 megaplex theatre properties, seven entertainment retail centers (which include seven additional megaplex theatre properties) and nine family entertainment centers. Our portfolio of owned entertainment properties consisted of 12.8 million square feet and was 99% leased, including megaplex theatres that were 100% leased.

Our Education segment included investments in 69 public charter school properties, 15 private schools and 63 early education centers. Our portfolio of owned education properties consisted of 4.3 million square feet and was 98% leased.

Our Recreation segment included investments in 26 ski areas, 20 attractions, 28 golf entertainment complexes and seven other recreation facilities. Our portfolio of owned recreation properties was 100% leased.

Our Other segment consisted primarily of land under ground lease, property under development and land held for development related to the Adelaar casino and resort project in Sullivan County, New York.

~~The combined owned portfolio consisted of 20.0 million square feet and was 99% leased. As of September 30, 2017, we had a total of approximately $284.2 million invested in property under development.~~

Our total investments (a non-GAAP financial measure) were approximately ~~$6.7~~$6.5 billion at September 30, 2017. We define total investments as the sum of the carrying values of rental properties and rental properties held for sale (before accumulated depreciation), land held for development, property under development, mortgage notes receivable (including related accrued interest receivable), investment in a direct financing lease, net, investment in joint ventures, intangible assets, gross (before accumulated amortization and included in other assets) and notes receivable and related accrued interest receivable (included in other assets). Total investments is a non-GAAP financial measure.2021. See "Non-GAAP Financial Measures" for the calculation of total investments and reconciliation of total investments to "Total assets" in the consolidated balance sheet at September 30, ~~2017~~2021 and December 31, ~~2016.~~

Of2020. We group our investments into two reportable segments, Experiential and Education. As of September 30, 2021, our Experiential investments comprised $5.9 billion, or 91%, and our Education investments comprised $0.6 billion, or 9%, of our total ~~investments~~investments.

As of ~~$6.7 billion at~~ September 30, ~~2017, $2.9 billion~~2021, our Experiential segment (excluding property under development and undeveloped land inventory) consisted of the following property types (owned or ~~43%~~financed):

•177 theatre properties;

•57 eat & play properties (including seven theatres located in entertainment districts);

•18 attraction properties;

•13 ski properties;

•eight experiential lodging properties;

•one gaming property;

•three cultural properties; and

•seven fitness & wellness properties.

As of September 30, 2021, our owned Experiential real estate portfolio consisted of approximately 19.4 million square feet, which was 95.0% leased and included a total of $40.4 million in property under development and undeveloped land inventory.

As of September 30, 2021, our Education segment (excluding undeveloped land inventory) consisted of the following property types (owned or financed):

•65 early childhood education center properties; and

•nine private school properties.

As of September 30, 2021, our owned Education real estate portfolio consisted of approximately 1.4 million square feet, which was 100% leased and included $1.7 million in undeveloped land inventory.

The combined owned portfolio consisted of 20.8 million square feet and was 96% leased.

COVID-19 Update

We continue to be subject to risks and uncertainties resulting from the COVID-19 pandemic. The COVID-19 pandemic severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. In response to the COVID-19 pandemic, many jurisdictions within the United States and abroad instituted health and safety measures, including quarantines, mandated business and school closures and travel restrictions. As a result, the COVID-19 pandemic severely impacted experiential real estate properties, given that

such properties involve congregate social activity and discretionary consumer spending. Although many of these health and safety measures have been lifted, the extent of the impact of the COVID-19 pandemic on our business still remains highly uncertain and difficult to predict.

As of September 30, 2021, we had no properties closed due to COVID-19 restrictions. The continuing impact of the COVID-19 pandemic on our business will depend on several factors, including, but not limited to, the scope, severity and duration or any resurgence of the pandemic (including COVID-19 variants), the actions taken to contain the outbreak or any resurgence or mitigate their impacts, the distribution of vaccines and the efficacy of those vaccines, the ability of communities to achieve herd immunity, the public’s confidence in the health and safety measures implemented by our tenants and borrowers, and the continuing direct and indirect economic effects of the outbreak and containment measures, and the ability of our tenants and borrowers to recover from the negative economic impacts of the pandemic as it subsides and, in many cases, service elevated levels of debt resulting from the pandemic, all of which are uncertain and cannot be predicted. During 2020 and the nine months ended September 30, 2021, the COVID-19 pandemic negatively affected our business, and could continue to have material adverse effects on our financial condition, results of operations and cash flows.

Our consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented. We considered the continuing impact of, and recovery from, the COVID-19 pandemic on the assumptions and estimates used in determining our financial condition and results of operations for the nine months ended September 30, 2021. The following were impacts to our financial statements during the nine months ended September 30, 2021 arising out of or relating to the COVID-19 pandemic:

•We continued to recognize revenue on a cash basis for certain tenants including American-Multi Cinema, Inc. ("AMC") and Regal Cinemas ("Regal"), a subsidiary of Cineworld Group.

•We reduced rental revenue by $9.1 million due to rent abatements.

•As of September 30, 2021, we have deferred amounts due from tenants of approximately $39.2 million and amounts due from borrowers of $1.7 million that are booked as receivables. Additionally, we have amounts due from tenants that were not booked as receivables because the full amounts were not deemed probable of collection as a result of the COVID-19 pandemic. The amounts not booked as receivables remain obligations of the tenants and will be recognized as revenue when received. The repayment terms for all of these deferments vary by tenant or borrowers.

•Through July 12, 2021, we remained in the Covenant Relief Period under the agreement that governs our unsecured revolving credit facility and our unsecured term loan facility ("Consolidated Credit Agreement") and the agreement that governs our private placement notes ("Note Purchase Agreement"). During the Covenant Relief Period, our obligation to comply with certain covenants under these agreements was waived in light of the uncertainty related to impacts of the COVID-19 pandemic on us and our tenants and borrowers. We paid higher interest costs during the Covenant Relief Period. The Consolidated Credit Agreement and Note Purchase Agreement also imposed additional restrictions on us during the Covenant Relief Period, including limitations on making investments, incurring indebtedness, making capital expenditures, paying dividends or making other distributions, repurchasing our shares, voluntarily prepaying certain indebtedness, encumbering certain assets and maintaining a minimum liquidity amount, in each case subject to certain exceptions. The term "Covenant Relief Period," as used in this Quarterly Report on Form 10-Q, generally means the period of time beginning on June 29, 2020 and ending on (i) December 31, 2021, in the case of our Consolidated Credit Agreement, or (ii) October 1, 2021 (subject to extension to January 1, 2022 at our election, subject to certain conditions), in the case of our Note Purchase Agreement governing our private placement notes. We had the right under certain circumstances to terminate the Covenant Relief Period earlier, which we exercised on July 12, 2021.

•On July 12, 2021, we provided notice of our election to terminate the Covenant Relief Period early. Our election to terminate the Covenant Relief Period early meant that, effective July 13, 2021, the interest rates on the debt governed by these agreements returned to the previous levels defined in the agreements, in each case based on our unsecured debt ratings. By terminating the Covenant Relief Period, we were also released

from certain restrictions under these agreements, including restrictions on investments, capital expenditures, incurrences of indebtedness and payment of dividends.

•In connection with amending our Consolidated Credit Agreement and Note Purchase Agreement to provide for the Covenant Relief Period discussed above, certain of our key subsidiaries guaranteed our obligations based on our unsecured debt ratings. During the three months ended September 30, 2021, we received an investment grade rating from S&P Global Ratings on our unsecured debt. As a result, the subsidiary guarantors were released from their guarantees under these debt agreements in accordance with the terms of such agreements. Additionally, during October of 2021, Moody's revised its outlook on our investment grade rating related to our ~~Entertainment segment, $1.5 billion~~unsecured debt from negative to stable.

•During the nine months ended September 30, 2021, we decreased our expected credit losses by $19.7 million due to cash collections from a borrower on a previously fully reserved note and the release of our commitments to fund additional amounts to the borrower as well as a change in the expectation in the credit loss model of the timing of the economic recovery from the impacts of the COVID-19 pandemic.

The monthly cash dividends to common shareholders were temporarily suspended following the common share dividend paid on May 15, 2020 to shareholders of record as of April 30, 2020. On July 13, 2021, following termination of the Covenant Relief Period, we resumed regular monthly cash dividends to common shareholders. During the three months ended September 30, 2021, we declared cash dividends totaling $0.75 per common share.

Collections of rent and interest were impacted by the COVID-19 pandemic. During the three months ended September 30, 2021, tenants and borrowers paid approximately 90% of contractual cash revenue. During the nine months ended September 30, 2021, we collected $53.5 million of deferred rent and interest from accrual basis tenants and borrowers that reduced related accounts and interest receivable and approximately $6.0 million in deferred rent from cash basis tenants and from tenants for which the deferred payments were not previously recognized as revenue. Contractual cash revenue is an operational measure and represents aggregate cash payments for which we are entitled under existing contracts, excluding the impact of any temporary abatements or ~~22%~~deferrals, percentage rent (rents received over base amounts), non-cash revenue and revenue from taxable REIT subsidiaries ("TRSs"). While deferments for this and future periods delay rent or mortgage payments, these deferments generally do not release customers from the obligation to pay the deferred amounts in the future. Deferred rent amounts are reflected in our financial statements as accounts receivable if collection is determined to be probable or will be recognized when received as variable lease payments if collection is determined to not be probable, while deferred mortgage payments are reflected as mortgage notes and related accrued interest receivable, less any allowance for credit loss. Certain agreements with tenants where remaining lease terms are extended, or other changes are made that do not qualify for the treatment in the Financial Accounting Standards Board ("FASB") Staff Q&A on Topic 842 and Topic 840: Accounting for Lease Concessions Related to ~~our Education segment, $2.1 billion~~the Effects of the COVID-19 Pandemic, are treated as lease modifications. In these circumstances upon an executed lease modification, if the tenant is not being recognized on a cash basis, the contractual rent reflected in accounts receivable and the straight-line rent receivable will be amortized over the remaining term of the lease against rental revenue. In limited cases, tenants may be entitled to the abatement of rent during governmentally imposed prohibitions on business operations which is recognized in the period to which it relates, or ~~32% related~~we may provide rent concessions to ~~our Recreation segment and $179.0 million or 3% related~~tenants. In cases where we provide concessions to ~~our Other segment.~~tenants to which they are not otherwise entitled, those amounts are recognized in the period in which the concession is granted unless the changes are accounted for as lease modifications.

Operating Results

Our total revenue, net income (loss) available to common shareholders per diluted share and Funds From Operations As Adjusted ("FFOAA") per diluted share (a non-GAAP financial measure) are detailed below for the three and nine months ended September 30, ~~2017~~2021 and ~~2016~~2020 (in millions, except per share information):

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Increase 2017 2016 Increase
Total revenue (1) $ 151.4
$ 125.6
21 % $ 428.3
$ 362.4
18 %
Net income available to common shareholders per diluted share (2) 0.77
0.81
-5 % 2.55
2.35
9 %
FFOAA per diluted share (3) 1.26
1.23
2 % 3.73
3.56
5 %


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
Total revenue	$	139.6	$	63.9	118	%	$	376.8	$	321.2	17	%
Net income (loss) available to common shareholders per diluted share	$	0.35	$	(1.23)	128	%	$	0.48	$	(1.70)	128	%
FFOAA per diluted share	$	0.86	$	(0.16)	638	%	$	2.01	$	1.25	61	%

~~(1) Total revenue~~The major factors impacting our results for the three and nine months ended September 30, ~~2017 versus~~2021, as compared to the three and nine months ended September 30, ~~2016 was favorably impacted by~~2020 were as follows:

•The effects of the COVID-19 pandemic as described above;

•The effect of ~~investment spending, including our transaction with CNL Lifestyle Properties Inc. ("CNL Lifestyle")~~write-offs of receivables from tenants and funds affiliated with Och-Ziff Real estate ("OZRE") which closed on April 6, 2017. Total revenue for the three and nine months ended September 30, 2017 versus the three and nine months ended September 30, 2016 was unfavorably impacted by property dispositions and note payoffs that occurred in 2017 and 2016, as well as lower gains related to insurance claims. Total revenue forstraight-line receivables totaling $62.6 million recognized during the nine months ended September 30, ~~2016 was favorably impacted by a $3.6 million prepayment fee from the early payoff~~2020;

•The effect of aproperty acquisitions as well as dispositions and mortgage note ~~secured by a public charter school property.~~payoffs that occurred in 2021 and 2020;

•The change in other income and other expenses primarily due to the government-required closure of the Kartrite Resort and Indoor Waterpark in Sullivan County, New York due to the COVID-19 pandemic in mid-March of 2020 and the re-opening of this property in July of 2021;

(2) Net income available to common shareholders per diluted share for the three and nine months ended September 30, 2017 versus the three and nine months ended September 30, 2016 was also impacted by the items affecting total revenue as described above. Additionally, net income available to common shareholders per diluted share for the three and nine months ended September 30, 2017 versus the three and nine months ended September 30, 2016 was favorably impacted by lower transaction costs. Net income available to common shareholders per diluted share for the three and nine months ended September 30, 2017 versus the three and nine months ended September 30, 2016 was unfavorably impacted by increases•The increase in ~~interest expense,~~ costs associated with loan refinancing or payoff, general and administrative expense, bad debt expense and common shares outstanding primarily due to shares issued in connection with the transactions with CNL Lifestyle and OZRE. Additionally, net income available to common shareholders per diluted share for the nine months ended September 30, 2017 versus the nine months ended September 30, 2016 was favorably impacted by higher gains on sale of real estate and a gain on early extinguishment of debt recognized in 2017. Netpayoff;

income available to common shareholders per diluted share for the nine months ended September 30, 2017 versus the nine months ended September 30, 2016 was unfavorably impacted by a $10.2 million impairment charge recognized in 2017 and an increase in income tax expense.

(3) FFOAA per diluted share for the three and nine months ended September 30, 2017 versus the three and nine months ended September 30, 2016 was favorably impacted by the effect of investment spending in 2017 and 2016, including our transaction with CNL Lifestyle and OZRE which closed on April 6, 2017, and termination fees recognized with the exercise of tenant purchase options. FFOAA per diluted share for the three and nine months ended September 30, 2017 versus the three and nine months ended September 30, 2016 was unfavorably impacted by increases•The decrease in interest expense ~~general and administrative expense, bad debt expense and common shares outstanding, primarily~~ due to ~~shares issued~~the repayment of our unsecured term loan facility and revolving credit facility;

•The decrease in ~~connection with~~credit loss (benefit) expense, impairment charges and income tax expense.

For further detail on items impacting our operating results, see the transactions with CNL Lifestyle and OZRE, as well as property dispositions and note payoffs that occurred in 2017 and 2016. FFOAA per diluted share for the nine months ended September 30, 2016 was favorably impacted by a $3.6 million prepayment fee from the early payoffsection below titled "Results of ~~a mortgage note secured by a public charter school property.~~

Operations". FFOAA is a non-GAAP financial measure. For the definitions and further details on the calculations of FFOAA and certain other non-GAAP financial measures, see the section below titled "Non-GAAP Financial Measures."

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related notes. In preparing these financial statements, management has made its best estimates and assumptions that affect the reported assets and ~~liabilities.~~liabilities and the reported amounts of revenues and expenses during the reporting period. The most significant assumptions and estimates relate to ~~consolidation, revenue recognition, depreciable lives of the real estate,~~ the valuation of real estate, accounting for real estate acquisitions, ~~estimating reserves for uncollectible~~assessing the collectibility of receivables and the ~~accounting for~~credit loss related to mortgage and other notes ~~receivable, all of which are described as our critical accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2016.~~receivable. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates. A summary of critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2020. For the nine months ended September 30, ~~2017,~~2021, there were no changes to critical accounting ~~policies except as noted below.~~policies.

~~Accounting for Acquisitions~~

Upon acquisition of real estate properties, we evaluate the acquisition to determine if it is a business combination or an asset acquisition. In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-01, Business Combinations (Topic 805): ~~Clarifying the Definition of a Business~~. The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether acquisitions should be accounted for as business combinations or asset acquisitions. The standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years, with early application of the guidance permitted. We have elected to early adopt ASU 2017-01~~as of January 1, 2017. As a result, we expect that fewer of our real estate acquisitions will be accounted for as business combinations.~~

Costs incurred for asset acquisitions and development properties, including transaction costs, are capitalized. For asset acquisitions, we allocate the purchase price and other related costs incurred to the real estate assets acquired based on recent independent appraisals or methods similar to those used by independent appraisers and management judgment. Acquisition-related costs in connection with business combinations are expensed as incurred. Costs related to such transactions, as well as costs associated with terminated transactions, are included in the accompanying consolidated statements of income as transaction costs.

Recent Developments

~~Debt Financing~~

During the nine months ended September 30, 2017, we prepaid in full nine mortgage notes payable totaling $73.0 million that were secured by nine theatre properties. In addition, we prepaid in full a mortgage note payable of $87.0 million that was secured by 11 theatre properties. In connection with this note payoff, we recorded a gain on early extinguishment of debt of $1.0 million for the nine months ended September 30, 2017. The gain represents the difference between the carrying value of the note and the amount due at payoff as the note was recorded at fair value upon acquisition and was not anticipated to be paid off in advance of maturity.

On May 23, 2017, we issued $450.0 million in aggregate principal amount of senior notes due on June 1, 2027 pursuant to an underwritten public offering. The notes bear interest at an annual rate of 4.50%. Interest is payable on June 1 and December 1 of each year beginning on December 1, 2017 until the stated maturity date of June 1, 2027. The notes were issued at 99.393% of their face value and are unsecured. We used the net proceeds from the note offering to pay down our unsecured revolving credit facility, invest in mortgage notes secured by education properties and for general business purposes.

On August 30, 2017, we refinanced our variable-rate bonds payable totaling $25.0 million which are secured by three theatre properties. The maturity date was extended from October 1, 2037 to August 1, 2047 and the outstanding principal balance and interest rate were not changed.

~~On September 27, 2017, we amended our unsecured consolidated credit agreement which governs our unsecured revolving credit facility and our unsecured term loan facility.~~

The amendments to the unsecured revolving portion of the credit facility, among other things, (i) increase the initial maximum available amount from $650.0 million to $1.0 billion, (ii) extend the maturity date from April 24, 2019, to February 27, 2022 (with us having the right to extend the loan for an additional seven months) and (iii) lower the interest rate and facility fee pricing based on a grid related to our senior unsecured credit ratings which at closing was LIBOR plus 1.00% and 0.20%, versus LIBOR plus 1.25% and 0.25%, respectively, under the previous terms. In connection with the amendment, $19 thousand of deferred financing costs (net of accumulated amortization) were written off during the three months ended September 30, 2017 and are included in costs associated with loan refinancing. At September 30, 2017, the we had $170.0 million outstanding under this portion of the facility.

The amendments to the unsecured term loan portion of the credit facility, among other things, (i) increase the initial amount from $350.0 million to $400.0 million, (ii) extend the maturity date from April 24, 2020, to February 27, 2023 and (iii) lower the interest rate based on a grid related to our senior unsecured credit ratings which at closing was LIBOR plus 1.10% versus LIBOR plus 1.40% under the previous terms. In connection with the amendment, $1.5 million of deferred financing costs (net of accumulated amortization) were written off during the three months ended September 30, 2017 and are included in costs associated with loan refinancing. At closing, we borrowed the remaining $50.0 million available on the $400.0 million term loan portion of the facility, which was used to pay down a portion of our unsecured revolving credit facility.

In addition, there is a $1.0 billion accordion feature on the combined unsecured revolving credit and term loan facility that increases the maximum amount available under the combined facility, subject to lender approval, from $1.4 billion to $2.4 billion. If we exercise all or any portion of the accordion feature, the resulting increase in the facility may have a shorter or longer maturity date and different pricing terms.

In connection with the amendment to the unsecured consolidated credit agreement, the obligations of our subsidiaries that were co-borrowers under our prior senior unsecured revolving credit and term loan facility were released. As a result, simultaneously with the amendment, the guarantees by our subsidiaries that were guarantors with respect to our outstanding 4.500% Senior Notes due 2027, 4.750% Senior Notes due 2026, 4.500% Senior Notes due 2025, 5.250% Senior Notes due 2023, 5.750% Senior Notes due 2022, and 7.750% Senior Notes due 2020 were released in accordance with the terms of the applicable indentures governing such notes.

In addition, the guarantees by our subsidiaries that were guarantors of our outstanding 4.35% Series A Guaranteed Senior Notes due August 22, 2024 and 4.56% Series B Guaranteed Senior Notes due August 22, 2026 (referred to herein as the "private placement notes") were also released. The foregoing release was effected by us entering into an amendment to the Note Purchase Agreement, dated as of September 27, 2017. The amendment to the private placement notes releases our subsidiary guarantors as described above and among other things: (i) amends certain financial and other covenants and provisions in the Note Purchase Agreement to conform generally to the corresponding covenants and provisions contained in the amended unsecured consolidated credit agreement; (ii) provides the investors thereunder certain additional guaranty and lien rights, in the event that certain subsequent events occur; (iii) expands the scope of the “most favored lender” covenant contained in the Note Purchase Agreement; and (iv) imposes restrictions on debt that can be incurred by certain of our subsidiaries.

On October 31, 2017, we entered into three interest rate swap agreements to fix the interest rate at 3.15% on an additional $50.0 million of our unsecured term loan facility from November 6, 2017 to April 4, 2019 and on $350.0 million of the unsecured term loan facility from April 5, 2019 to February 7, 2022.

~~Issuance of Common Shares~~

During the nine months ended September 30, 2017, we issued an aggregate of 928,219 common shares under the direct share purchase component of our Dividend Reinvestment and Direct Share Purchase Plan ("DSPP") for total net proceeds of $67.9 million. These proceeds were used to pay down a portion of our unsecured revolving credit facility.

~~During the nine months ended September 30, 2017, we also issued 8,851,264 common shares in connection with our transaction with CNL Lifestyle and OZRE.~~

Investment Spending

Our investment spending during the nine months ended September 30, ~~2017~~2021 and 2020 totaled ~~$1.5 billion,~~$107.9 million and $62.3 million, respectively, and ~~included investments~~is detailed below (in thousands):


Nine Months Ended September 30, 2021
Operating Segment	Total Investment Spending		New Development		Re-development		Asset Acquisition		Mortgage Notes or Notes Receivable		Investment in Joint Ventures
Experiential:
Theatres	$	4,190	$	3,785	$	405	$	—	$	—	$	—
Eat & Play	36,414		9,347		315		26,752		—		—
Attractions	46		—		46		—		—		—
Ski	5,546		—		—		—		5,546		—
Experiential Lodging	55,193		16,300		11,070		—		—		27,823

Cultural	4,394		—		15		—		4,379		—
Fitness & Wellness	2,124		—		—		—		2,124		—
Total Experiential	107,907		29,432		11,851		26,752		12,049		27,823

Education:


Total Education	—		—		—		—		—		—

Total Investment Spending	$	107,907	$	29,432	$	11,851	$	26,752	$	12,049	$	27,823


Nine Months Ended September 30, 2020
Operating Segment	Total Investment Spending		New Development		Re-development		Asset Acquisition		Mortgage Notes or Notes Receivable		Investment in Joint Ventures
Experiential:
Theatres	$	28,959	$	3,515	$	3,336	$	22,108	$	—	$	—
Eat & Play	14,989		13,915		1,074		—		—		—
Attractions	655		—		655		—		—		—
Ski	89		—		—		—		89		—
Experiential Lodging	13,673		10,849		1,134		—		—		1,690

Cultural	156		—		156		—		—		—
Fitness & Wellness	3,768		—		—		—		3,768		—
Total Experiential	62,289		28,279		6,355		22,108		3,857		1,690

Education:
Early Childhood Education Centers	3		—		—		—		3		—


Total Education	3		—		—		—		3		—

Total Investment Spending	$	62,292	$	28,279	$	6,355	$	22,108	$	3,860	$	1,690

The above amounts include $1.3 million and $0.8 million in ~~each of our four operating segments.~~

~~Entertainment investment spending during~~capitalized interest for the nine months ended September 30, ~~2017 totaled $264.9 million, including spending on build-to-suit development~~2021 and ~~redevelopment of megaplex theatres, entertainment retail centers~~2020, respectively, and ~~family entertainment centers, as well as $154.1 million in acquisitions of six megaplex theatres.~~

Education investment spending during the nine months ended September 30, 2017 totaled $238.7 million, including spending on build-to-suit development and redevelopment of public charter schools, early education centers and private schools, as well as $38.3 million in acquisitions of seven early education centers and two public charter schools and an investment of $95.5 million in mortgage notes receivable.

Recreation investment spending during the nine months ended September 30, 2017 totaled $951.6 million, including the transaction with CNL Lifestyle and OZRE valued at $730.8 million discussed below. Additionally, included in recreation investment spending was build-to-suit development of golf entertainment complexes and attractions, redevelopment of ski areas, $51.9 million in acquisitions of five other recreation facilities, and an investment of $10.7 million in a mortgage note secured by one other recreation facility.

On April 6, 2017, we completed a transaction with CNL Lifestyle and OZRE. We acquired the Northstar California Resort, 15 attraction properties (waterparks and amusement parks), five small family entertainment centers and certain related working capital for aggregate consideration valued at $479.8 million, including final purchase price adjustments. Additionally, we provided $251.0 million of secured debt financing to OZRE for its purchase of 14 CNL Lifestyle ski properties valued at $374.5 million. Subsequent to the transaction, we sold the five family entertainment centers for approximately $6.8 million and one waterpark for approximately $2.5 million. No gain or loss was recognized on these sales. See Note 4 for further information.

~~Other investment spending during the nine months ended September 30, 2017 totaled $1.0 million, and was related to the Adelaar casino and resort project in Sullivan County, New York.~~

~~The following table details our investment spending by category during the nine months ended September 30, 2017 and 2016 (in thousands):~~

Nine Months Ended September 30, 2017
Operating Segment Total Investment Spending New Development Re-development Asset Acquisition Mortgage Notes or Notes Receivable
Entertainment $ 264,889
$ 48,180
$ 55,549
$ 154,144
$ 7,016
Education 238,667
104,842
—
38,293
95,532
Recreation 951,574
146,530
585
531,638
272,821
Other 1,002
1,002
—
—
—
Total Investment Spending $ 1,456,132
$ 300,554
$ 56,134
$ 724,075
$ 375,369

Nine Months Ended September 30, 2016
Operating Segment Total Investment Spending New Development Re-development Asset Acquisition Mortgage Notes or Notes Receivable
Entertainment $ 198,228
$ 24,512
$ 25,710
$ 126,006
$ 22,000
Education 187,305
167,747
—
8,379
11,179
Recreation 140,017
90,505
1,836
—
47,676
Other 1,313
1,313
—
—
—
Total Investment Spending $ 526,863
$ 284,077
$ 27,546
$ 134,385
$ 80,855

~~The above amounts include $110 thousand and $129 thousand in capitalized payroll, $7.8 million and $8.0 million in capitalized interest and $3.2 million and $1.2~~$0.3 million in capitalized other general and administrative direct project costs for both the nine months ended September 30, ~~2017~~2021 and ~~2016, respectively.~~2020. Excluded from the table above is approximately ~~$3.7~~$2.8 million and ~~$3.1~~$11.1 million of maintenance capital expenditures and other spending for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively. ~~In addition, excluded from~~

We limited our investment spending during the ~~table above is $17.1 million of infrastructure spending for the Adelaar casino~~three and ~~resort project for the~~ nine months ended September 30, ~~2016.~~2021 to enhance our liquidity position in light of the negative impact of the COVID-19 pandemic. As discussed in more detail in Note 8, on July 12, 2021, we provided notice of our election to terminate the Covenant Relief Period early. Effective July 13, 2021, we were released from certain restrictions under the credit facilities and private placement notes that limited our investments and capital expenditures.

~~Property Dispositions~~

Impairment Charges

During the nine months ended September 30, ~~2017,~~2021, we received various offers to purchase two vacant properties. As a result, we reassessed the expected holding periods of such properties, and determined that the estimated cash flows

were not sufficient to recover the carrying values of these properties. Accordingly, we recognized impairment charges of $2.7 million on the real estate investments for these two properties.

Dispositions

During the nine months ended September 30, 2021, we completed the sale of ~~four entertainment~~two theatre properties and three land parcels for net proceeds totaling ~~$72.3~~$30.8 million. In connection with these sales, we recognized a combined gain on sale of ~~$19.4~~$1.5 million. Subsequent to September 30, 2021, we completed the sale of two ski properties for net proceeds of $48.0 million and recognized a gain on sale of approximately $15.4 million.

On March 22, 2021, we received $5.1 million in proceeds representing prepayment in full on a mortgage note receivable that was secured by a private school property. No prepayment fee was received in connection with this note payoff.

Results of Operations

Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020

Analysis of Revenue

The following table summarizes our total revenue (dollars in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
Minimum rent (1)	$	114,375	$	69,697	$	44,678	$	315,665	$	297,505	$	18,160
Percentage rent (2)	3,149		1,303		1,846		7,195		5,514		1,681
Straight-line rent (3)	981		(17,969)		18,950		3,690		(25,448)		29,138
Tenant reimbursements (4)	4,187		2,413		1,774		14,009		10,280		3,729
Other rental revenue	348		147		201		978		314		664
Total Rental Revenue	$	123,040	$	55,591	$	67,449	$	341,537	$	288,165	$	53,372

Other income (5)	8,091		182		7,909		9,802		8,171		1,631
Mortgage and other financing income	8,516		8,104		412		25,435		24,913		522
Total revenue	$	139,647	$	63,877	$	75,770	$	376,774	$	321,249	$	55,525

(1) For the three months ended September 30, 2021 compared to the three months ended September 30, 2020, the increase in minimum rent resulted primarily from an increase of $47.7 million related to rental revenue on existing properties including improved collections of rent being recognized on a cash basis, less receivable write-offs as well as scheduled rent increases. In addition, there was an increase in minimum rent of $2.5 million related to property acquisitions and developments completed in 2021 and 2020. This was partially offset by a decrease in rental revenue of $5.0 million from property dispositions and $0.5 million due to vacant properties.

For the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, the increase in minimum rent resulted primarily from an increase of $34.9 million related to rental revenue on existing properties including improved collections of rent being recognized on a cash basis, less receivable write-offs as well as scheduled rent increases. In addition, there was an increase in minimum rent of $5.2 million related to property acquisitions and developments completed in 2021 and 2020. This was partially offset by a decrease in rental revenue of $16.0 million from property dispositions and $5.9 million due to vacant properties.

During the nine months ended September 30, 2017, pursuant to tenant purchase options, we completed the sale of five public charter schools located in Colorado, Arizona and Utah for net proceeds totaling $44.8 million. In connection with these sales, we recognized a gain on sale of $7.2 million. Additionally, we completed the sale of two other education facilities for net proceeds of $9.8 million. In connection with these sales, we recognized a gain on sale of $1.9 million.

~~Mortgage Notes Receivable~~

During the nine months ended September 30, 2017, we received a partial prepayment of $4.0 million on one mortgage note receivable that is secured by the observation deck of the John Hancock building in Chicago, Illinois. In connection with the partial prepayment of this note, we received a prepayment fee of $800.0 thousand, which is being recognized over the term of the remaining note using the effective interest method.

~~Investment in a Direct Financing Lease~~

As previously discussed, we are committed to increasing the tenant diversity of our public charter school portfolio and reducing the concentration with Imagine Schools, Inc. ("Imagine"). As part of this effort, we have engaged various brokers to help in this process and part of their feedback included the need for additional lease term on these assets. During the three months ended September 30, 2017, we entered into revised lease terms with Imagine which reduced rental payments and the lease term on six properties. In exchange for lowering the existing annual cash payments by approximately $0.5 million and reducing the remaining lease term to 10 years, Imagine agreed that upon the sale of these properties, they would enter into new 20-year leases with the buyer(s). While we believe the restructure will aid in the disposition of these assets, the changes resulted in the lease structure no longer being classified as a direct financing lease. Accordingly, we recorded an impairment charge of $9.6 million during the nine months ended September 30, 2017, which included an allowance for lease loss of $7.3 million and an impairment charge of $2.3 million related to the estimated unguaranteed residual value.

Additionally, during the nine months ended September 30, 2017, we performed our annual review of the estimated unguaranteed residual value on our other properties leased to Imagine and determined that the residual value on one of these properties was impaired. As such, we recorded an impairment of the unguaranteed residual value of $0.6 million during the nine months ended September 30, 2017.

~~Early Childhood Education Tenant Update~~

As previously disclosed, the cash flow of one of our early childhood education tenants has been negatively impacted by challenges brought on by its rapid expansion and related ramp up to stabilization. We are currently negotiating a restructuring which has been complicated by the impact of recent extreme weather events and the tenant having multiple landlords. However, we believe we have made significant progress. We have accrued rent for this tenant during 2017 at levels that approximate our estimate of the final restructured reduced rent amounts which are expected to be made effective as of the beginning of 2017. Accrued rent and property taxes, less rent payments received, resulted in accounts receivable of approximately $5.4 million at September 30, 2017. Additionally, we have accrued straight-line rent receivable related to this tenant of approximately $9.0 million at September 30, 2017. In October 2017, we terminated nine leases with the tenant, seven of which have completed construction and two of which are unimproved land. There were only $64 thousand outstanding receivables related to these properties and such amounts were fully reserved at September 30, 2017. The tenant continues to operate these properties (other than the two unimproved properties) as a holdover tenant. We will continue to consider whether these and other properties should be leased to other operators based on results of the restructuring process.

~~Results of Operations~~

~~Three months ended September 30, 2017 compared to three months ended September 30, 2016~~

Rental revenue was $122.8 million for the three months ended September 30, 2017 compared to $102.3 million for the three months ended September 30, 2016. This increase resulted primarily from $23.5 million of rental revenue related to property acquisitions and developments completed in 2017 and 2016, including our transaction with CNL Lifestyle which closed on April 6, 2017, partially offset by a decrease of $3.0 million in rental revenue due primarily to property dispositions. Percentage rents of $2.2 million and $1.7 million were recognized during the three months ended September 30, 2017 and 2016, respectively. Straight-line rents of $2.4 million and $4.6 million were recognized during the three months ended September 30, 2017 and 2016, respectively.

~~During the three months ended September 30, 2017,~~2021, we renewed 19seven lease agreements on approximately ~~1.6 million~~394 thousand square ~~feet and funded or agreed to fund an average of $22.58 per square foot in tenant improvements.~~feet. We experienced an increase of ~~approximately 16.43%~~9.5% in rental rates and paid no leasing commissions with respect to these lease renewals.

~~Other income was $0.5 million~~

(2) The increase in percentage rent for the three months ended September 30, ~~2017~~2021 compared to ~~$2.5 million for~~ the three months ended September 30, ~~2016. The $2.0 million decrease~~2020 was ~~primarily~~due to higher percentage rent recognized from one early childhood education center tenant due to a ~~gain from an insurance claim~~restructured lease and better performance at two attraction properties and one ski property. These increases were offset by lower percentage rent recognized during the three months ended September 30, ~~2016.~~2021 from three private school properties that were disposed of during the fourth quarter of 2020.

~~Mortgage~~The increase in percentage rent for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was due to the same items as for the three months September 30, 2021, and was further offset by higher percentage rents at our gaming property in the first quarter of 2020.

(3) The increase in straight-line rent for the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020 was primarily due to write-offs totaling $23.9 million and $36.9 million recognized during the three and nine months ended September 30, 2020, respectively, which were comprised of straight-line accounts receivable and sub-lessor ground lease straight-line accounts receivable due to the COVD-19 pandemic. This increase was partially offset by a reduction in straight-line rental revenue due to revenue from several tenants being recognized on a cash basis.

(4) The increase in tenant reimbursements for the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020 was primarily due to increased collections from cash basis tenants as well as a decrease in COVID-19 contractual abatements.

(5) The increase in other ~~financing~~ income for the three months ended September 30, ~~2017~~2021, related primarily to an increase in operating income as a result of the re-opening of the Kartrite Resort, which was ~~$24.3 million compared~~previously closed due to ~~$17.0 million~~the COVID-19 pandemic. Additionally, during the three and nine months ended September 30, 2021 the increase in other income was the result of operating income from two theatre properties.

Analysis of Expenses and Other Line Items

The following table summarizes our expenses and other line items (dollars in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
Property operating expense	$	13,815	$	13,759	$	56	$	43,806	$	42,181	$	1,625
Other expense (1)	7,851		2,680		5,171		13,428		15,012		(1,584)
General and administrative expense	11,154		10,034		1,120		33,866		31,454		2,412


Costs associated with loan refinancing or payoff (2)	4,741		—		4,741		4,982		820		4,162
Interest expense, net (3)	36,584		41,744		(5,160)		114,090		114,837		(747)
Transaction costs	2,132		2,776		(644)		3,342		4,622		(1,280)
Credit loss (benefit) expense (4)	(14,096)		5,707		(19,803)		(19,677)		10,383		(30,060)
Impairment charges (5)	2,711		11,561		(8,850)		2,711		62,825		(60,114)
Depreciation and amortization (6)	42,612		42,059		553		123,476		128,319		(4,843)
Equity in loss from joint ventures	(418)		(1,044)		626		(3,000)		(3,188)		188
Impairment charges on joint ventures (7)	—		—		—		—		(3,247)		3,247
Gain on sale of real estate	787		—		787		1,499		242		1,257

Income tax expense (8)	(395)		(18,417)		18,022		(1,200)		(16,354)		15,154


Preferred dividend requirements	(6,033)		(6,034)		1		(18,100)		(18,102)		2

(1) The increase in other expense for the three months ended September 30, ~~2016. The $7.3 million increase was~~2021 related primarily due to additional real estate lending activities during 2017 and 2016, including our investment in a mortgage note receivable with OZRE secured by 14 ski properties which closed on April 6, 2017. This increase was partially offset by the sale of nine public charter school properties that were accounted for as direct financing leases during 2016.

Our property operating expenses totaled $6.3 million for the three months ended September 30, 2017 compared to $5.6 million for the three months ended September 30, 2016. These property operating expenses arise from the operations of our retail centers and other specialty properties. The $0.7 million increase resulted primarily from an increase in bad debt expense, as well as higher property operating expenses at our multi-tenant properties.

Our general and administrative expense totaled $12.1 million for the three months ended September 30, 2017 compared to $9.1 million for the three months ended September 30, 2016. The increase of $3.0 million primarily related to an increase in ~~payroll and benefits costs, including share based compensation,~~operating expenses as a result of the re-opening of the Kartrite Resort, which was previously closed due to the COVID-19 pandemic as well as ~~an increase in professional fees.~~operating expenses from two theatre properties.

(2) Costs associated with loan refinancing or payoff for the three and nine months ended September 30, ~~2017 was $1.5 million and were~~2021 related to the ~~amendment to~~pay-off of our unsecured ~~revolving credit~~term loan facility and ~~term loan. Costs associated with loan refinancing or payoff~~the termination of related interest rate swaps.

(3) The decrease in interest expense, net for the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020, resulted primarily from a decrease in average borrowings. This was partially offset by a decrease in interest income from short-term investments related to cash on hand.

(4) The change in the credit loss (benefit) expense for the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020 was primarily due to repayments of $6.8 million from a borrower on a previously fully reserved note receivable and the release from an additional $8.5 million in funding commitments. Additionally, the decrease in credit loss expense was due to a change in the expectation in the credit loss model of the timing of the economic recovery from the impacts of the COVID-19 pandemic as well as an improvement in macroeconomic factors.

(5) Impairment charges recognized during the three and nine months ended September 30, 2021 related to two vacant properties that we intend to sell and we determined that the cash flows were not sufficient to recover the carrying value. Impairment charges recognized during the three months ended September 30, ~~2016 was $14 thousand and~~2020, related to ~~fees associated~~two properties with revised estimated undiscounted cash flows and shorter hold periods as a result of the ~~repayment~~COVID-19 pandemic and was comprised of ~~secured fixed rate mortgage notes payable.~~

~~Our net interest expense increased by $9.9~~$11.6 million to $34.2 million for the three months ended September 30, 2017 from $24.3 million for the three months ended September 30, 2016. This increase resulted from an increase in average borrowings used to finance our real estate acquisitions and fund our mortgage notes receivable.

~~Transaction costs totaled $0.1 million for the three months ended September 30, 2017 compared to $2.9 million for the three months ended September 30, 2016. The decrease~~ of ~~$2.8 million was due to a decrease in potential and terminated transactions as well as our early adoption of ASU 2017-01.~~

Depreciation and amortization expense totaled $34.7 million for the three months ended September 30, 2017 compared to $27.6 million for the three months ended September 30, 2016. The $7.1 million increase resulted primarily from acquisitions and developments completed in 2017 and 2016, including our transaction with CNL Lifestyle which closed on April 6, 2017. This increase was partially offset by property dispositions.

~~Gain on sale~~impairments of real estate was $1.0 million for the three months ended September 30, 2017 and related to the exercise of a tenant purchase option on a public charter school property. Gain on sale of real estate was $1.6 million for the three months ended September 30, 2016 and related to the exercise of a tenant purchase option on one of our public charter school properties and the sale of a parcel of land adjacent to one of our megaplex theatres.

~~Nine Months Ended September 30, 2017 compared to nine months ended September 30, 2016~~

Rental revenue was $349.3 million for the nine months ended September 30, 2017 compared to $292.1 million for the nine months ended September 30, 2016. This increase resulted primarily from $58.4 million of rental revenue related to property acquisitions and developments completed in 2017 and 2016, including our transaction with CNL Lifestyle which closed on April 6, 2017, partially offset by a decrease of $1.2 million in rental revenue due primarily to property dispositions. Percentage rents of $4.7 million and $2.7 million wereinvestments. Impairment charges recognized during the nine months ended September 30, ~~2017~~2020 related to eight properties with revised estimated undiscounted cash flows and ~~2016, respectively. Straight-line rents~~shorter hold periods as a result of ~~$11.4~~the COVID-19 pandemic and was comprised of $47.8 million of impairments of real estate investments, and ~~$10.9~~$15.0 million ~~were recognized during the nine months ended September 30, 2017~~of impairments of operating lease right-of-use assets.

(6) The decrease in depreciation and ~~2016, respectively.~~

During the nine months ended September 30, 2017, we renewed 26 lease agreements on approximately 2.2 million square feet and funded or agreed to fund an average of $27.20 per square foot in tenant improvements. We experienced an increase of approximately 15.23% in rental rates and paid no leasing commissions with respect to these lease renewals.

~~Other income was $2.5 million~~amortization expense for the nine months ended September 30, ~~2017~~2021 compared to ~~$5.8 million~~the nine months ended September 30, 2020 resulted primarily from property dispositions that occurred during 2020 and 2021 as well as property impairments. This decrease was partially offset by acquisitions and developments completed in 2020 and 2021.

(7) Impairment charges on joint ventures for the nine months ended September 30, ~~2016.~~2020 related to other-than-temporary impairment charges on three theatre projects located in China.

(8) The ~~$3.3 million~~ decrease ~~was primarily due to a higher gain from an insurance claim recognized during~~in income tax expense for the three and nine months ended September 30, ~~2016.~~

~~Mortgage and other financing~~2021 compared to the income tax expense for the three and nine months ended September 30, 2017 was $65.0 million compared to $52.9 million for the nine months ended September 30, 2016. The $12.1 million increase was primarily due to additional real estate lending activities during 2017 and 2016, including our investment in a mortgage note receivable with OZRE secured by 14 ski properties which closed on April 6, 2017. This increase was offset by a $3.6 million prepayment fee we received in conjunction with the full prepayment of one mortgage note receivable during the nine months ended September 30, 2016, as well as the sale of nine public charter school properties that were accounted for as direct financing leases during 2016.

Our property operating expenses totaled $18.8 million for the nine months ended September 30, 2017 compared to $16.7 million for the nine months ended September 30, 2016. These property operating expenses arise from the operations of our retail centers and other specialty properties. The $2.1 million increase resulted primarily from an increase in bad debt expense, as well as higher property operating expenses at our multi-tenant properties.

Our general and administrative expense totaled $33.8 million for the nine months ended September 30, 2017 compared to $27.3 million for the nine months ended September 30, 2016. The increase of $6.5 million2020 is primarily related to ~~an increase in payroll and benefits costs, including share based compensation, as well as an increase in professional fees.~~

~~Costs associated with loan refinancing or payoff for~~ the nine months ended September 30, 2017 was $1.5 million and related to the amendment to our unsecured revolving credit facility and term loan and the prepayment of secured fixed rate mortgage notes payable. Costs associated with loan refinancing or payoff for the nine months ended September 30, 2016 was $0.9 million and related to fees associated with the repayment of secured fixed rate mortgage notes payable and the write off of prepaid mortgage fees in conjunction with our borrowers' prepayment of two mortgage notes receivable.

Gain on early extinguishment of debt for the nine months ended September 30, 2017 was $1.0 million and related to a note payoff in advance of maturity that was initially recorded at fair value upon acquisition. There was no gain on early extinguishment of debt for the nine months ended September 30, 2016.

Our net interest expense increased by $27.6 million to $97.9 million for the nine months ended September 30, 2017 from $70.3 million for the nine months ended September 30, 2016. This increase resulted from an increase in average borrowings as well as an increase in the weighted average interest rate used to finance our real estate acquisitions and fund our mortgage notes receivable.

Transaction costs totaled $0.4 million for the nine months ended September 30, 2017 compared to $4.9 million for the nine months ended September 30, 2016. The decrease of $4.5 million was due to a decrease in potential and terminated transactions as well as our early adoption of ASU 2017-01.

Impairment charges for the nine months ended September 30, 2017 totaled $10.2 million and related to six charter school properties previously included in our investment in a direct financing lease. There were no impairment charges for the nine months ended September 30, 2016. See Note 6 for further information.

Depreciation and amortization expense totaled $95.9 million for the nine months ended September 30, 2017 compared to $79.2 million for the nine months ended September 30, 2016. The $16.7 million increase resulted primarily from acquisitions and developments completed in 2017 and 2016, including our transaction with CNL Lifestyle which closed on April 6, 2017. This increase was partially offset by property dispositions.

Gain on sale of real estate was $28.5 million for the nine months ended September 30, 2017 and related to the sale of four entertainment properties, the exercise of five tenant purchase options on public charter school properties and the sale of two other education properties. Gain on sale of real estate was $3.9 million for the nine months ended September 30, 2016 and related to the exercise of two tenant purchase options on public charter school properties and the salerecognition of a ~~parcel of land adjacent to a megaplex theatre.~~

Income tax expense was $2.0 million for the nine months ended September 30, 2017 compared to $0.6 million for the nine months ended September 30, 2016 and related primarily to Canadian income taxes on our Canadian trust and Federal income taxes on our taxable REIT subsidiaries, as well as state income taxes and withholding tax for distributions related to our unconsolidated joint venture projected located in China. The $1.4 million increase in expense related primarily to the reversal of afull valuation allowance ~~associated with the taxable REIT subsidiaries,~~on deferred tax assets ~~recorded in the nine months ended September 30, 2016, as well as higher deferred tax expense in 2017 related to~~for our Canadian ~~trust.~~operations and certain TRSs as a result of the economic uncertainty caused by the COVID-19 pandemic.

Liquidity and Capital Resources

Cash and cash ~~equivalents~~equivalents were ~~$11.4~~$144.4 million at September 30, ~~2017.~~2021. In addition, we had restricted cash of ~~$24.3~~$5.1 million at September 30, ~~2017.~~2021. Of the restricted cash at September 30, ~~2017, $20.6~~2021, $4.1 million related to cash held for our ~~borrowers’ debt service reserves for mortgage notes receivable or~~ tenants' off-season rent reserves and ~~$3.6~~$1.0 million related primarily to escrow deposits required for property management agreements or held for potential acquisitions and redevelopments. ~~The remaining $0.1 million was required in connection with our debt outstanding and related to debt service, payment of real estate taxes and capital improvements.~~

Mortgage Debt, Senior Notes, ~~and~~ Unsecured Revolving Credit Facility and Unsecured Term Loan Facility ~~and Equity Issuances~~

At September 30, ~~2017,~~2021, we had total debt ~~outstanding~~outstanding of ~~$3.0~~$2.7 billion of which 99% was ~~unsecured.~~unsecured.

At September 30, ~~2017~~,2021, we had ~~outstanding $2.1~~outstanding $2.4 billion in ~~aggregate~~aggregate principal amount of unsecured senior notes (excluding the private placement notes discussed below) ranging in interest rates from ~~4.50%~~3.75% to ~~7.75%~~5.25%. The notes contain various covenants, including: (i) a limitation on incurrence of any debt that would cause the ratio of our debt to adjusted total assets to exceed 60%; (ii) a limitation on incurrence of any secured debt that would cause the ratio of secured debt to adjusted total assets to exceed 40%; (iii) a limitation on incurrence of any debt that would cause our debt service coverage ratio to be less than 1.5 times; and (iv) the maintenance at all times of our total unencumbered assets such that they are not less than 150% of our outstanding unsecured debt.

On October 27, 2021, we issued $400.0 million in aggregate principal amount of senior notes due November 15, 2031 pursuant to an underwritten public offering. The notes bear interest at an annual rate of 3.60%. Interest is payable on May 15 and November 15 of each year beginning on May 15, 2022 until the stated maturity date. The notes were issued at 99.174% of their face value and are unsecured. The notes contain various covenants, including: (i) a limitation on incurrence of any debt which would cause the ratio of our debt to adjusted total assets to exceed 60%; (ii) a limitation on incurrence of any secured debt which would cause the ratio of our secured debt to adjusted total assets to exceed 40%; (iii) a limitation on incurrence of any debt which would cause our debt service coverage ratio to be less than 1.5 times; and (iv) the maintenance at all times of our total unencumbered assets such that they are not less than 150% of our outstanding unsecured debt. Net proceeds from the note offering will be used for the redemption of our senior notes due in 2023 discussed below and for general business purposes, including the acquisition of experiential properties consistent with our current strategy.

~~On September 27, 2017,~~In addition, on October 13, 2021, we delivered notice of redemption to redeem all of the $275.0 million principal amount of our 5.25% senior notes due in 2023. The redemption date has been set for November 12, 2021 and we will use a portion of the proceeds from the senior note offering discussed above to fund this redemption plus the make-whole premium payment estimated to be approximately $20.1 million based on interest rates as of October 29, 2021 (the final make-whole premium will be determined closer to the redemption date).

In light of the financial and operational impacts of the COVID-19 pandemic on us, our tenants and borrowers, during the year ended December 31, 2020, we amended ~~and restated~~ our ~~unsecured revolving credit and term loan facilities. We also amended our private placement notes. See "Recent Developments" for further discussion.~~

~~At September 30, 2017, we had $170.0 million outstanding under~~Consolidated Credit Agreement, which governs our unsecured revolving credit facility and our unsecured term loan facility. The amendments modified certain provisions and waived our obligation to comply with ~~$830.0~~certain covenants under this debt agreement during the Covenant Relief Period. Additionally, during the year ended December 31, 2020, we further amended our Note Purchase Agreement, which governs our private placement notes. The amendments modified certain provisions and waived our obligation to comply with certain covenants under this debt agreement during the Covenant Relief Period. We had the right under certain circumstances to terminate the Covenant Relief Period earlier.

Due to improved financial performance, on July 12, 2021, we provided notice of our election to terminate the Covenant Relief Period early. Our election to terminate the Covenant Relief Period early meant that, effective July 13, 2021, the interest rates on the debt governed by these agreements returned to the previous levels defined in the agreements, in each case based on our unsecured debt ratings. By terminating the Covenant Relief Period, we were also released from certain restrictions under these agreements, including restrictions on investments, capital expenditures, incurrences of indebtedness and payment of dividends.

On September 13, 2021, we paid off our $400.0 million unsecured term loan facility and $1.5 million of ~~availability and with interest at a floating rate~~deferred financing costs (net of ~~LIBOR plus 100 basis points, which was 2.24% at~~accumulated amortization) were written off during the three months ended September 30, ~~2017.~~2021 and are included in costs associated with loan refinancing. In connection with the pay off, we terminated the related interest rate swap agreements on our term loan facility for a cash settlement of $3.2 million.

At September 30, ~~2017,~~2021, we had no outstanding balance under our $1.0 billion unsecured revolving credit facility. Effective July 13, 2021, after we terminated the Covenant Relief Period, the interest rate, based on our unsecured debt ratings, returned to LIBOR plus 1.20% (with a LIBOR floor of zero) and the facility fee on the revolving credit facility was reduced to 0.25%.

Subsequent to September 30, 2021, on October 6, 2021, we entered into a Third Amended, Restated and Consolidated Credit Agreement, governing a new amended and restated senior unsecured revolving credit facility. The new facility, which will mature on October 6, 2025, replaced our existing $1.0 billion senior unsecured revolving credit facility and $400.0 million senior unsecured term loan facility. The new facility ~~had~~provides for an initial maximum principal amount of borrowing availability of $1.0 billion with an “accordion” feature under which we may increase the total maximum principal amount available by $1.0 billion, to a ~~balance~~total of ~~$400.0 million with interest at a floating rate~~$2.0 billion, subject to lender consent. The new facility has the same pricing terms and financial covenants as the prior facility (with improved valuation of ~~LIBOR plus 110 basis points, which was 2.34% at September 30, 2017,~~certain asset types), as well as customary covenants and ~~$300.0 million~~events of ~~this LIBOR-based debt has been fixed with interest rate swaps at a blended rate~~default. We have two

options to extend the maturity date of ~~2.64% through April 5, 2019. The loan matures on February 27, 2023.~~

~~On October 31, 2017, we entered into three interest rate swap agreements to fix~~ the ~~interest rate at 3.15% on~~new credit facility by an additional ~~$50.0 million~~six months each (for a total of 12 months), subject to paying additional fees and the ~~unsecured term loan facility from November 6, 2017 to April 4, 2019 and on $350.0 million~~absence of ~~the unsecured facility from April 5, 2019 to February 27, 2022.~~any default.

At September 30, ~~2017,~~2021, we had outstanding ~~$340.0~~$316.2 million of senior unsecured notes that were issued in a private placement transaction. The private placement notes were issued in two tranches with $148.0 million ~~bearing interest at 4.35% and~~ due August 22, 2024, and $192.0 million ~~bearing interest at 4.56% and~~ due August 22, 2026. At September 30, 2021, the interest rates for the private placement notes were 4.35% and 4.56% for the Series A notes due 2024 and the Series B notes due 2026, respectively. During the nine months ended September 30, 2021, we used a portion of our cash proceeds from property sales to reduce the principal of our private placement notes by $23.8 million in accordance with the above amendments to the Note Purchase Agreement.

Our unsecured credit facilities and the private placement notes contain financial covenants or restrictions that limit our levels of consolidated debt, secured debt, ~~investment levels~~investments outside certain categories, stock repurchases and dividend ~~distributions;~~distributions and require us to maintain a minimum consolidated tangible net worth and meet certain coverage levels for fixed charges and debt service.

During the three months ended September 30, 2021, we received an investment grade rating from S&P Global Ratings on our unsecured debt, adding to our current investment grade rating from Moody's Investors Services. Additionally, during October of 2021, Moody's revised its outlook on our investment grade rating on our unsecured debt from negative to stable. As discussed above, we previously caused certain of our key subsidiaries to guarantee our obligations under our existing bank credit facility, private placement notes and senior unsecured bonds due to a decrease in our credit ratings resulting from the impact of the COVID-19 pandemic. As a result of us obtaining an investment grade rating on our long-term unsecured debt from both S&P and Moody's, our subsidiary guarantors were released from their guarantees under these debt agreements in accordance with the terms of such agreements.

Additionally, the debt instruments described above contain cross-default provisions if we default under other indebtedness exceeding certain amounts. Those cross-default thresholds vary from ~~$25.0~~$50.0 million to in$75.0 million, depending upon the ~~case of the note purchase agreement governing the private placement notes, $75.0 million.~~debt instrument. We were in compliance with all financial and other covenants under our debt instruments at September 30, ~~2017.~~2021.

Our principal investing activities are acquiring, developing and financing ~~entertainment, education~~Experiential and ~~recreation~~Education properties. These investing activities have generally been financed with ~~mortgage debt and~~ senior unsecured notes, as well as the proceeds from equity offerings. Our unsecured revolving credit facility is also used to finance the acquisition or development of properties, and to provide mortgage financing. We have and expect to continue to issue debt securities in public or private offerings. We have and may in the future assume mortgage debt in connection with property ~~acquisitions.~~acquisitions or incur new mortgage debt on existing properties. We may also issue equity securities in connection with acquisitions. Continued growth of our ~~rental property~~real estate investments and mortgage financing portfolios will depend in part on our continued ability to access funds through additional borrowings and securities offerings and, to a lesser extent, our ability to assume debt in connection with property acquisitions. We may also fund investments with the proceeds from asset dispositions.

Certain of our other long-term debt agreements contain customary restrictive covenants related to financial and operating performance as well as certain cross-default provisions. We were in compliance with all financial covenants at ~~September 30, 2017~~.

During the nine months ended September 30, 2017, we issued an aggregate of 928,219 common shares under the direct share purchase component of our DSPP for total net proceeds of $67.9 million. These proceeds were used to pay down a portion of our unsecured revolving credit facility.

~~During the nine months ended September 30, 2017, we issued 8,851,264 common shares in connection with the transactions with CNL Lifestyle and OZRE. See Note 4 for further information.~~

Liquidity Requirements

Short-term liquidity requirements consist primarily of normal recurring corporate operating expenses, debt service requirements and distributions to shareholders. We ~~meet~~have historically met these requirements primarily through cash provided by operating activities. Net cash provided by operating activities was $300.3 million and $215.8 million for the nine months ended September 30, 2017 and 2016, respectively. Net cash used by investing activities was $635.1 million and $415.3 million for the nine months ended September 30, 2017 and 2016, respectively. Net cash provided by financing activities was $326.7 million and $202.6 million for the nine months ended September 30, 2017 and 2016, respectively. We anticipate thatThe table below summarizes our cash ~~on hand, cash from operations, funds available~~flows (dollars in thousands):


	Nine Months Ended September 30,
	2021		2020
Net cash provided by operating activities	$	236,424	$	59,478
Net cash used by investing activities	(39,477)		(70,897)
Net cash (used) provided by financing activities	(1,075,273)		467,885

As discussed above, we have agreed to rent and mortgage payment deferral arrangements with most of our customers as a result of the COVID-19 pandemic. Under these deferral arrangements, our customers are required to

resume rent and mortgage payments at negotiated times, and begin repaying deferred amount under negotiated schedules. In addition, the continuing impact of the COVID-19 pandemic may result in further extensions or adjustments for our unsecured revolving credit facility and proceeds from asset dispositions will provide adequate liquidity to meet our financial commitments including to fund our operations, make interest and principal payments on our debt, and allow distributions to our shareholders and avoid corporate level federal income or excise tax in accordance with REIT Internal Revenue Code requirements.

customers, which we cannot predict at this time.

Commitments

As of September 30, ~~2017, we~~2021, we had 15 development projects with commitments to fund an aggregate of approximately $202.4 million of commitments to fund development projects including 34 entertainment development projects for which we had commitments to fund approximately $97.0 million, nine education development projects for which we had commitments to fund approximately $40.9 million and six recreation development projects for which we had commitments to fund approximately $64.5$66.9 million, of which approximately ~~$65.9~~$0.3 million is expected to be funded in ~~2017 and the remainder is expected to be funded in 2018.~~2021. Development costs are advanced by us in periodic draws. If we determine that construction is not being completed in accordance with the terms of the development agreement, we can discontinue funding construction draws. We have agreed to lease the properties to the operators at pre-determined rates upon completion of construction.

Additionally, as of September 30, 2017, we had a commitment to fund approximately $155.0 million over the next three years, of which $22.3 million had been funded, to complete an indoor waterpark hotel and adventure park at the Adelaar casino and resort project in Sullivan County, New York. We are also responsible for the construction of the casino and resort project common infrastructure. In June 2016, the Sullivan County Infrastructure Local Development Corporation issued $110.0 million of Series 2016 Revenue Bonds which is expected to fund a substantial portion of such construction costs. We received an initial reimbursement of $43.4 million of construction costs during the year ended December 31, 2016 and an additional reimbursement of $23.9 million during the nine months ended September 30, 2017. We expect to receive an additional $21.0 million of reimbursements over the balance of the construction period. Construction of infrastructure improvements is currently expected to be completed in 2018.

We have certain commitments related to our mortgage ~~note~~notes and notes receivable investments that we may be required to fund in the future. We are generally obligated to fund these commitments at the request of the borrower or upon the occurrence of events outside of ~~its~~our direct control. As of September 30, ~~2017, we~~2021, we had ~~eight~~two mortgage notes ~~receivable~~ with commitments totaling approximately ~~$25.7 million.~~$12.8 million of which approximately $2.4 million is expected to be funded in 2021. If commitments are funded in the future, interest will be charged at rates consistent with the existing investments.

We have provided guarantees of the payment of certain economic development revenue bonds totaling $24.9 million related to two theatres in Louisiana for which we earn a fee at annual rates of 2.88% to 4.00% over the 30-year terms of the related bonds. We have recorded $10.4 million as a deferred asset included in other assets and $10.4 million included in other liabilities in the accompanying consolidated balance sheet as of September 30, 2017 related to these guarantees. No amounts have been accrued as a loss contingency related to these guarantees because payment by us is not probable.

In connection with construction of our development projects and related infrastructure, certain public agencies require posting of surety bonds to guarantee that our obligations are satisfied. These bonds expire upon the completion of the improvements or ~~infrastructure.~~infrastructure. As of September 30, ~~2017,~~2021, we had ~~six~~four surety bonds outstanding totaling ~~$24.3~~$33.3 million.

Liquidity ~~Analysis~~Analysis

~~In analyzing our liquidity, we expect~~We currently anticipate that our cash ~~provided by operating activities will meet our normal recurring operating expenses, recurring debt service requirements and distributions to shareholders.~~

~~We have no debt balloon payments coming due for the remainder of 2017. Our sources of liquidity as of September 30, 2017 to pay the above 2017 commitments include the remaining amount~~on hand, cash from operations, funds available under our unsecured revolving credit facility ~~as well as unrestricted cash on hand~~and proceeds from asset dispositions will provide adequate liquidity to meet our financial commitments, including to fund our operations, make recurring debt service payments, and allow distributions to our shareholders and avoid corporate level federal income or excise tax in accordance with REIT Internal Revenue Code requirements.

After our senior notes due 2023 are redeemed in November of ~~$11.4 million. Accordingly, while there can be~~2021, we will have no ~~assurance, we expect that our sources of cash will exceed our existing commitments over the remainder of 2017.~~

scheduled debt payments due until 2024. We ~~also~~currently believe that we will be able to repay, extend, refinance or otherwise settle our debt maturities ~~for 2018 and thereafter~~ as the debt comes due and that we will be able to fund our remaining commitments, as necessary. However, there can be no assurance that additional financing or capital will be available, or that terms will be acceptable or advantageous to ~~us.~~us, particularly in light of the continuing economic uncertainty caused by the COVID-19 pandemic.

Our primary use of cash after paying operating expenses, debt service, distributions to shareholders, funding share repurchases and funding existing commitments is in growing our investment portfolio through the acquisition, development and financing of additional properties. We expect to finance these investments with borrowings under our unsecured revolving credit facility as well as debt and equity financing alternatives or proceeds from asset dispositions. The availability and terms of any such financing or sales will depend upon market and other conditions. If we borrow the maximum amount available under our unsecured revolving credit facility, there can be no assurance that we will be able to obtain additional or substitute investment financing. We may also assume mortgage debt in connection with property acquisitions.

Capital Structure

We believe that our shareholders are best served by a conservative capital structure. Therefore, we seek to maintain a conservative debt level on our balance sheet as measured primarily by our net debt to adjusted ~~EBITDA~~EBITDAre ratio (see "Non-GAAP Financial Measures" for definitions). We also seek to maintain conservative interest, fixed charge, debt service coverage and net debt to gross asset ratios.

~~We expect to maintain our net debt to adjusted EBITDA ratio between 4.6x to 5.6x.~~

Our net debt to adjusted ~~EBITDA~~EBITDAre ratio was ~~slightly above this range~~not meaningful at ~~5.66x~~September 30, 2021 given the temporary disruption caused by the COVID-19 pandemic and the associated accounting for tenant rent deferrals and other lease

modifications. Our net debt to gross assets ratio was 38% as of September 30, 2017 (see "Non-GAAP financial measures" for calculation). Because adjusted EBITDA as defined does not include the annualization of adjustments for projects put in service or acquired during the quarter and other items, and net debt includes the debt provided for build-to-suit projects under development that do not have any current EBITDA, we also look at a ratio adjusted for these items, which was within the range at September 30, 2017. The level of this additional ratio, along with the timing and size of our equity and debt offerings as well as dispositions, may cause us to temporarily operate outside our stated range for the net debt to adjusted EBITDA ratio of 4.6x to 5.6x.

~~Our net debt~~2021 (see "Non-GAAP Financial Measures" for definition) to gross assets ratio (i.e. net debt to total assets plus accumulated depreciation less cash and cash equivalents) was 44% as of September 30, 2017. Our net debt as a percentage of our total market capitalization at September 30, 2017 was 35%calculation). ~~We calculate our total market capitalization of $8.5 billion by aggregating the following at September 30, 2017:~~

~~Common shares outstanding of 73,664,933 multiplied by the last reported sales price of our common shares on the NYSE of $69.74 per share, or $5.1 billion;~~

~~Aggregate liquidation value of our Series C convertible preferred shares of $135.0 million;~~

~~Aggregate liquidation value of our Series E convertible preferred shares of $86.2 million;~~

~~Aggregate liquidation value of our Series F redeemable preferred shares of $125.0 million; and~~

~~Net debt of $3.0 billion.~~

Non-GAAP Financial Measures

Funds From Operations (FFO), Funds From Operations As Adjusted (FFOAA) and Adjusted Funds ~~from~~From Operations (AFFO)

The National Association of Real Estate Investment Trusts (“NAREIT”) developed FFO as a relative non-GAAP financial measure of performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. Pursuant to the definition of FFO by the Board of Governors of NAREIT, we calculate FFO as net income ~~available~~(loss) available to common shareholders, computed in accordance with GAAP, excluding gains and losses from ~~sales~~disposition of ~~depreciable operating properties~~real estate and impairment losses ~~of depreciable~~on real estate, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships, joint ventures and other affiliates. Adjustments for unconsolidated partnerships, joint ventures and other affiliates are calculated to reflect FFO on the same basis. We have calculated FFO for all periods presented in accordance with this definition.

In addition to FFO, we present FFOAA and AFFO. FFOAA is presented by adding to FFO costs ~~(gain)~~ associated with loan refinancing or payoff, ~~net,~~ transaction costs, ~~retirement~~ severance expense, preferred share redemption costs, ~~termination fees associated with tenants' exercises of public charter school buy-out options,~~ impairment of ~~direct financing~~operating lease ~~(allowance for lease~~right-of-use assets and credit loss ~~portion)~~(benefit) expense and ~~provision for loan losses and~~ subtracting ~~gain on early extinguishment of debt, gain (loss) on sale of land,~~ gain on insurance recovery and deferred income tax ~~benefit (expense).~~(benefit) expense. AFFO is presented by adding to FFOAA non-real estate depreciation and amortization, deferred financing fees amortization, share-based compensation expense to management and Trustees and amortization of above and below market leases, ~~net;~~net and tenant allowances; and subtracting maintenance capital expenditures (including second generation tenant improvements and leasing commissions), straight-lined rental revenue (removing the impact of straight-line ground sublease expense), and the non-cash portion of mortgage and other financing income.

FFO, FFOAA and AFFO are widely used measures ofof the operating performance of real estate companies and are provided here as a supplemental ~~measure~~measures to GAAP net income ~~available~~(loss) available to common shareholders and earnings per share, and management provides FFO, FFOAA and AFFO herein because it believes this information is useful to investors in this regard. FFO, FFOAA and AFFO are non-GAAP financial measures. FFO, FFOAA and AFFO do not represent cash flows from operations as defined by GAAP and are not indicative that cash flows are adequate to fund all cash needs and are not to be considered alternatives to net income or any other GAAP measure as a measurement of the results of our operations or our cash flows or liquidity as defined by GAAP. It should also be noted that not all REITs calculate FFO, FFOAA and AFFO the same way so comparisons with other REITs may not be meaningful.

The following table summarizes our FFO, FFOAA and AFFO including per share amounts for FFO and FFOAA, for the three and nine months ended September 30, ~~2017~~2021 and ~~2016~~2020 and reconciles such measures to net income (loss) available to common shareholders, the most directly comparable GAAP measure (unaudited, in thousands, except per share information):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
FFO:
Net income (loss) available to common shareholders of EPR Properties	$	26,084	$	(91,938)	$	35,949	$	(129,853)
Gain on sale of real estate	(787)		—		(1,499)		(242)

Impairment of real estate investments, net (1)	2,711		11,561		2,711		47,816

Real estate depreciation and amortization	42,415		41,791		122,856		127,467
Allocated share of joint venture depreciation	966		369		1,779		1,130
Impairment charges on joint ventures	—		—		—		3,247
FFO available to common shareholders of EPR Properties	$	71,389	$	(38,217)	$	161,796	$	49,565






FFOAA:
FFO available to common shareholders of EPR Properties	$	71,389	$	(38,217)	$	161,796	$	49,565
Costs associated with loan refinancing or payoff	4,741		—		4,982		820
Transaction costs	2,132		2,776		3,342		4,622



Impairment of operating lease right-of-use assets(1)	—		—		—		15,009

Credit loss (benefit) expense	(14,096)		5,707		(19,677)		10,383


Gain on insurance recovery (included in other income)	—		—		(30)		—
Deferred income tax benefit	—		18,035		—		15,246

FFOAA available to common shareholders of EPR Properties	$	64,166	$	(11,699)	$	150,413	$	95,645






AFFO:
FFOAA available to common shareholders of EPR Properties	$	64,166	$	(11,699)	$	150,413	$	95,645
Non-real estate depreciation and amortization	197		268		620		852
Deferred financing fees amortization	2,210		1,498		5,331		4,783
Share-based compensation expense to management and trustees	3,759		3,410		11,218		10,382
Amortization of above and below market leases, net and tenant allowances	(98)		(124)		(293)		(384)
Maintenance capital expenditures (2)	(690)		(8,911)		(2,913)		(11,130)
Straight-lined rental revenue	(981)		17,969		(3,690)		25,448
Straight-lined ground sublease expense	98		216		293		599
Non-cash portion of mortgage and other financing income	55		71		(332)		(117)
AFFO available to common shareholders of EPR Properties	$	68,716	$	2,698	$	160,647	$	126,078






FFO per common share:
Basic	$	0.95	$	(0.51)	$	2.16	$	0.65
Diluted	0.95		(0.51)		2.16		0.65
FFOAA per common share:
Basic	$	0.86	$	(0.16)	$	2.01	$	1.25
Diluted	0.86		(0.16)		2.01		1.25
Shares used for computation (in thousands):
Basic	74,804		74,613		74,738		76,456
Diluted	74,911		74,613		74,819		76,456






Other financial information:
Dividends per common share	$	0.7500	$	—	$	0.7500	$	1.5150

(1) Impairment charges recognized during the three and nine months ended September 30, 2020 totaled $62.8 million, which was comprised of $47.8 million of impairments of real estate investments and $15.0 million of

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
FFO:
Net income available to common shareholders of EPR Properties $ 57,003
$ 51,575
$ 179,550
$ 148,986
Gain on sale of real estate (excluding land sale) (997 ) (549 ) (28,462 ) (2,819 )
Real estate depreciation and amortization 34,457
27,147
95,243
77,870
Allocated share of joint venture depreciation 55
56
163
174
Impairment of direct financing lease - residual value portion (1) —
—
2,897
—
FFO available to common shareholders of EPR Properties $ 90,518
$ 78,229
$ 249,391
$ 224,211
FFO available to common shareholders of EPR Properties $ 90,518
$ 78,229
$ 249,391
$ 224,211
Add: Preferred dividends for Series C preferred shares 1,941
1,941
5,823
5,823
Diluted FFO available to common shareholders of EPR Properties $ 92,459
$ 80,170
$ 255,214
$ 230,034
FFOAA:
FFO available to common shareholders of EPR Properties $ 90,518
$ 78,229
$ 249,391
$ 224,211
Costs associated with loan refinancing or payoff 1,477
14
1,491
905
Gain on insurance recovery (included in other income) —
(1,825 ) (606 ) (3,837 )
Termination fee included in gain on sale 954
549
6,774
2,819
Gain on early extinguishment of debt —
—
(977 ) —
Transaction costs 113
2,947
388
4,881
Gain on sale of land —
(1,066 ) —
(1,066 )
Deferred income tax expense (benefit) 227
(44 ) 911
(664 )
Impairment of direct financing lease - allowance for lease loss portion (1) —
—
7,298
—
FFOAA available to common shareholders of EPR Properties $ 93,289
$ 78,804
$ 264,670
$ 227,249
FFOAA available to common shareholders of EPR Properties $ 93,289
$ 78,804
$ 264,670
$ 227,249
Add: Preferred dividends for Series C preferred shares 1,941
1,941
5,823
5,823
Diluted FFOAA available to common shareholders of EPR Properties $ 95,230
$ 80,745
$ 270,493
$ 233,072
AFFO:
FFOAA available to common shareholders of EPR Properties $ 93,289
$ 78,804
$ 264,670
$ 227,249
Non-real estate depreciation and amortization 237
454
676
1,352
Deferred financing fees amortization 1,598
1,187
4,579
3,522
Share-based compensation expense to management and Trustees 3,605
2,778
10,566
8,282
Maintenance capital expenditures (2) (1,125 ) (805 ) (4,316 ) (3,805 )
Straight-lined rental revenue (2,357 ) (4,597 ) (11,417 ) (10,950 )
Non-cash portion of mortgage and other financing income (905 ) (962 ) (2,361 ) (2,907 )
Amortization of above and below market leases, net and tenant improvements (55 ) 42
(41 ) 138
AFFO available to common shareholders of EPR Properties $ 94,287
$ 76,901
$ 262,356
$ 222,881
AFFO available to common shareholders of EPR Properties $ 94,287
$ 76,901
$ 262,356
$ 222,881
Add: Preferred dividends for Series C preferred shares 1,941
—
5,823
—
Diluted AFFO available to common shareholders of EPR Properties $ 96,228
$ 76,901
$ 268,179
$ 222,881
impairments of operating lease right-of-use assets.

(2) Includes maintenance capital expenditures and certain second-generation tenant improvements and leasing commissions.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016

FFO per common share:
Basic $ 1.23
$ 1.23
$ 3.55
$ 3.54
Diluted 1.22
1.22
3.52
3.52
FFOAA per common share:
Basic $ 1.27
$ 1.24
$ 3.76
$ 3.59
Diluted 1.26
1.23
3.73
3.56
Shares used for computation (in thousands):
Basic 73,663
63,627
70,320
63,296
Diluted 73,724
63,747
70,385
63,393

Weighted average shares outstanding-diluted EPS 73,724
63,747
70,385
63,393
Effect of dilutive Series C preferred shares 2,072
2,036
2,063
2,029
Adjusted weighted average shares outstanding-diluted 75,796
65,783
72,448
65,422

Other financial information:
Dividends per common share $ 1.02
$ 0.96
$ 3.06
$ 2.88


~~(1)~~	Impairment charges recognized during the nine months ended September 30, 2017 total $10.2 million and related to our investment in a direct financing lease, net, consisting of $2.9 million related to the residual value portion and $7.3 million related to the allowance for lease loss portion. See Note 6 for further information.


~~(2)~~	~~Includes maintenance capital expenditures and certain second generation tenant improvements and leasing commissions.~~

The effect of the conversion of our convertible preferred shares is calculated using the if-converted method and the conversion which results in the most dilution is included in the computation of per share amounts. The additional common shares that would result from the conversion of the 5.75% Series C cumulative convertible preferred shares ~~would be dilutive to FFO~~ and ~~FFOAA per share~~the 9.00% Series E cumulative convertible preferred shares for each of the three and nine months ended ~~September~~June 30, ~~2017~~2021 and ~~2016. Therefore, the additional 2.1 million and 2.0 million common shares that would result from the conversion~~2020, and the corresponding add-back of the preferred dividends declared on those shares are not included in the calculation of diluted FFO and ~~diluted~~ FFOAA per share ~~for~~because the ~~three and nine months ended September 30, 2017 and 2016, respectively. The~~ effect of the conversion of our 9.0% Series E cumulative convertible preferred shares do not result in more dilution to per share results and are therefore not included in the calculation of diluted per share data for the three and nine months ended September 30, 2017 and 2016.is anti-dilutive.

Net Debt

Net Debt represents debt (reported in accordance with GAAP) adjusted to exclude deferred financing costs, net and reduced for cash and cash equivalents. By excluding deferred financing costs, net and reducing debt for cash and cash equivalents on hand, the result provides an estimate of the contractual amount of borrowed capital to be repaid, net of cash available to repay it. We believe this calculation constitutes a beneficial supplemental non-GAAP financial disclosure to investors in understanding our financial condition. Our method of calculating Net Debt may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

Gross Assets

Gross Assets represents total assets (reported in accordance with GAAP) adjusted to exclude accumulated depreciation and reduced for cash and cash equivalents. By excluding accumulated depreciation and reducing cash and cash equivalents, the result provides an estimate of the investment made by us. We believe that investors commonly use versions of this calculation in a similar manner. Our method of calculating Gross Assets may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

Net Debt to Gross Assets

Net Debt to Gross Assets is a supplemental measure derived from non-GAAP financial measures that we use to evaluate capital structure and the magnitude of debt to gross assets. We believe that investors commonly use versions of this ratio in a similar manner. Our method of calculating Net Debt to Gross Assets may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

EBITDAre

NAREIT developed EBITDAre as a relative non-GAAP financial measure of REITs, independent of a company's capital structure, to provide a uniform basis to measure the enterprise value of a company. Pursuant to the definition of EBITDAre by the Board of Governors of NAREIT, we calculate EBITDAre as net income (loss), computed in accordance with GAAP, excluding interest expense (net), income tax (benefit) expense, depreciation and amortization, gains and losses from disposition of real estate, impairment losses on real estate, costs associated with loan refinancing or payoff and adjustments for unconsolidated partnerships, joint ventures and other affiliates.

Management provides EBITDAre herein because it believes this information is useful to investors as a supplemental performance measure as it can help facilitate comparisons of operating performance between periods and with other REITs. Our method of calculating EBITDAre may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. EBITDAre is not a measure of performance under GAAP, does not represent cash generated from operations as defined by GAAP and is not indicative of cash available to fund all cash needs, including distributions. This measure should not be considered an alternative to net income or any other GAAP measure as a measurement of the results of our operations or cash flows or liquidity as defined by GAAP.

Adjusted ~~EBITDA~~

EBITDAre

Management uses Adjusted ~~EBITDA~~EBITDAre in its analysis of the performance of the business and operations of the Company. Management believes Adjusted ~~EBITDA~~EBITDAre is useful to investors because it excludes various items that management believes are not indicative of operating performance, and that it is an informative measure to use in computing various financial ratios to evaluate the Company. We define Adjusted ~~EBITDA~~EBITDAre as ~~net income available to common shareholders~~EBITDAre (defined above) for the quarter excluding costs associated with loan refinancing or payoff, interest expense (net), depreciation and amortization, equity in (income) loss from joint ventures, gain (loss) on the sale of real estate, gain on early extinguishment of debt, gain on insurance recovery, ~~income tax expense (benefit), preferred dividend requirements, the effect of non-cash impairment~~

~~charges, retirement~~ severance expense, ~~the provision for loan losses and~~ credit loss (benefit) expense,

transaction costs, ~~(benefit),~~impairment losses on operating lease right-of-use assets and ~~which is then multiplied by four~~prepayment fees. For the three months ended September 30, 2020, Adjusted EBITDAre was further adjusted to ~~get an annual amount.~~reflect Adjusted EBITDAre on a cash basis related to Regal and one attraction tenant.

Our method of calculating Adjusted ~~EBITDA~~EBITDAre may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. Adjusted ~~EBITDA~~EBITDAre is not a measure of performance under GAAP, does not represent cash generated from operations as defined by GAAP and is not indicative of cash available to fund all cash needs, including distributions. This measure should not be considered as an alternative to net income ~~for~~or any other GAAP measure as a measurement of the ~~purpose~~results of ~~evaluating the Company's performance~~our operations or to cash flows or liquidity as ~~a measure of liquidity.~~defined by GAAP.

~~Net Debt to Adjusted EBITDA Ratio~~

Net Debt to Adjusted EBITDA Ratio is a supplemental measure derived from non-GAAP financial measures that we use to evaluate our capital structure and the magnitude of our debt against our operating performance. We believe that investors commonly use versions of this ratio in a similar manner. In addition, financial institutions use versions of this ratio in connection with debt agreements to set pricing and covenant limitations. Our method of calculating Net Debt to Adjusted EBITDA may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

Reconciliations of debt, total assets and net income ~~available to common shareholders (both~~(loss) (all reported in accordance with GAAP) to Net Debt, ~~Adjusted EBITDA and~~Gross Assets, Net Debt to Gross Assets, EBITDAre and Adjusted ~~EBITDA Ratio~~EBITDAre (each of which is a non-GAAP financial measure), as applicable, are included in the following tables (unaudited, in thousands):


	September 30,
	2021			2020
Net Debt:
Debt	$	2,684,063		$	3,854,855
Deferred financing costs, net	32,166			35,140
Cash and cash equivalents	(144,433)			(985,372)
Net Debt	$	2,571,796		$	2,904,623
Gross Assets:
Total Assets	$	5,721,157		$	6,907,210
Accumulated depreciation	1,142,513			1,072,201
Cash and cash equivalents	(144,433)			(985,372)
Gross Assets	$	6,719,237		$	6,994,039

Net Debt to Gross Assets	38		%	42		%

	Three Months Ended September 30,
	2021			2020
EBITDAre and Adjusted EBITDAre:
Net income (loss)	$	32,117		$	(85,904)
Interest expense, net	36,584			41,744
Income tax expense	395			18,417
Depreciation and amortization	42,612			42,059
Gain on sale of real estate	(787)			—

Impairment of real estate investments, net	2,711			11,561

Costs associated with loan refinancing or payoff	4,741			—

Allocated share of joint venture depreciation	966			369
Allocated share of joint venture interest expense	981			741

EBITDAre	$	120,320		$	28,987




Transaction costs	2,132			2,776

Credit loss (benefit) expense	(14,096)			5,707
Accounts receivable write-offs from prior periods (1)	—			13,533
Straight-line receivable write-offs from prior periods (1)	—			19,927


Adjusted EBITDAre	$	108,356		$	70,930

September 30,
2017 2016
Net Debt:
Debt $ 2,987,925
$ 2,248,576
Deferred financing costs, net 33,951
18,885
Cash and cash equivalents (11,412 ) (7,311 )
Net Debt $ 3,010,464
$ 2,260,150

Three Months Ended September 30,
2017 2016
Adjusted EBITDA:
Net income available to common shareholders of EPR Properties $ 57,003
$ 51,575
Costs associated with loan refinancing or payoff 1,477
14
Interest expense, net 34,194
24,265
Transaction costs 113
2,947
Depreciation and amortization 34,694
27,601
Equity in income from joint ventures (35 ) (203 )
Gain on sale of real estate (997 ) (1,615 )
Income tax expense 587
358
Preferred dividend requirements 5,951
5,951
Gain on insurance recovery (1) —
(1,825 )
Adjusted EBITDA (for the quarter) $ 132,987
$ 109,068

Adjusted EBITDA (2) $ 531,948
$ 436,272

Net Debt/Adjusted EBITDA Ratio 5.66
5.18

(1) Included in other income in the accompanying consolidated statements of income. Other income includes the following:
Three Months Ended September 30,
2017 2016
Income from settlement of foreign currency swap contracts $ 520
$ 643
Gain on insurance recovery —
1,825
Fee income 1
—
Miscellaneous income 1
8
Other income $ 522
$ 2,476


(1) Included in "Rental revenue" in the accompanying consolidated statements of income (loss) and comprehensive income (loss). Rental revenue includes the following:
	Three Months Ended September 30,
	2021		2020
Minimum rent	$	114,375	$	83,230
Accounts receivable write-offs from prior periods	—		(13,533)
Tenant reimbursements	4,187		2,413
Percentage rent	3,149		1,303
Straight-line rental revenue	981		1,958
Straight-line receivable write-offs from prior periods	—		(19,927)
Other rental revenue	348		147
Rental revenue	$	123,040	$	55,591

~~(2) Adjusted EBITDA for the quarter is multiplied by four to calculate an annual amount.~~

Total Investments

Total investments is a non-GAAP financial measure defined as the sum of the carrying values of ~~rental properties~~real estate investments (before accumulated depreciation), land held for development, property under development, mortgage notes receivable (including related ~~accrued~~accrued interest receivable), ~~investment in a direct financing lease, net,~~ investment in joint ventures, intangible assets, gross (before accumulated amortization and included in other assets) and notes receivable and related accrued interest receivable, net (included in other assets). Total investments is a useful measure for management and investors as it illustrates across which asset categories the Company's funds have been invested. Our method of calculating total investments may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. A reconciliation of total investments to total assets (computed in accordance with GAAP) is included in the following table (unaudited, in thousands):


	September 30, 2017			December 31, 2016				September 30, 2021			December 31, 2020
Total Investments:							Total Investments:
Rental properties, net of accumulated depreciation	$	4,535,994		$	3,595,762
Add back accumulated depreciation on rental properties	711,384			635,535
Real estate investments, net of accumulated depreciation							Real estate investments, net of accumulated depreciation	$	4,800,561		$	4,851,302
Add back accumulated depreciation on real estate investments							Add back accumulated depreciation on real estate investments	1,142,513			1,062,087
Land held for development	33,674			22,530			Land held for development	21,875			23,225
Property under development	284,211			297,110			Property under development	20,166			57,630
Mortgage notes and related accrued interest receivable	972,371			613,978			Mortgage notes and related accrued interest receivable	369,134			365,628
Investment in a direct financing lease, net	57,698			102,698

Investment in joint ventures	5,616			5,972			Investment in joint ventures	38,729			28,208
Intangible assets, gross⁽¹⁾	45,848			28,787			Intangible assets, gross (1)	57,962			57,962
Notes receivable and related accrued interest receivable, net⁽¹⁾	5,213			4,765			Notes receivable and related accrued interest receivable, net (1)	7,338			7,300
Total investments	$	6,652,009		$	5,307,137		Total investments	$	6,458,278		$	6,453,342

Total investments	$	6,652,009		$	5,307,137		Total investments	$	6,458,278		$	6,453,342
Operating lease right-of-use assets							Operating lease right-of-use assets	175,987			163,766
Cash and cash equivalents	11,412			19,335			Cash and cash equivalents	144,433			1,025,577
Restricted cash	24,323			9,744			Restricted cash	5,142			2,433
Account receivable, net	99,213			98,939
Less: accumulated depreciation on rental properties	(711,384		)	(635,535		)
Less: accumulated amortization on intangible assets	(16,318		)	(14,008		)
Accounts receivable							Accounts receivable	80,491			116,193
Less: accumulated depreciation on real estate investments							Less: accumulated depreciation on real estate investments	(1,142,513)			(1,062,087)
Less: accumulated amortization on intangible assets (1)							Less: accumulated amortization on intangible assets (1)	(19,362)			(16,330)
Prepaid expenses and other current assets(1)	73,755			79,410			18,701			21,291
Total assets	$	6,133,010		$	4,865,022		Total assets	$	5,721,157		$	6,704,185

⁽¹⁾ Included in other assets in the accompanying consolidated balance sheet. Other assets includes the following:
(1) Included in "Other assets" in the accompanying consolidated balance sheet. Other assets include the following:							(1) Included in "Other assets" in the accompanying consolidated balance sheet. Other assets include the following:

	September 30, 2017			December 31, 2016				September 30, 2021			December 31, 2020
Intangible assets, gross	$	45,848		$	28,787		Intangible assets, gross	$	57,962		$	57,962
Less: accumulated amortization on intangible assets	(16,318		)	(14,008		)	Less: accumulated amortization on intangible assets	(19,362)			(16,330)
Notes receivable and related accrued interest receivable, net	5,213			4,765			Notes receivable and related accrued interest receivable, net	7,338			7,300
Prepaid expenses and other current assets	73,755			79,410			Prepaid expenses and other current assets	18,701			21,291
Total other assets	$	108,498		$	98,954		Total other assets	$	64,639		$	70,223



Maryland		43-1790877
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

909 Walnut Street,	Suite 200 ~~Kansas City, Missouri~~	~~64106~~
Kansas City,	Missouri	64106
(Address of principal executive offices)		(Zip Code)



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Registrant’s telephone number, including area code:			(816)			472-1700



	April 6, 2017
Rental properties, net	$	481,006
Mortgage notes and related accrued interest receivable	251,038
Tradenames (included in other assets)	6,355
Below market leases (included in accounts payable and accrued liabilities)	(7,611		)
Total investment	$	730,788



	September 30, 2017			December 31, 2016
Receivable from tenants	$	15,977		$	7,564
Receivable from non-tenants	128			497
Receivable from insurance proceeds	27			1,967
Receivable from Sullivan County Infrastructure Revenue Bonds	10,808			22,164
Straight-line rent receivable	73,657			67,618
Allowance for doubtful accounts	(1,384		)	(871		)
Total	$	99,213		$	98,939



	September 30, 2017			December 31, 2016
Total minimum lease payments receivable	$	113,956		$	215,753
Estimated unguaranteed residual value of leased assets	47,000			85,247
Less deferred income ⁽¹⁾	(103,258		)	(198,302		)
Less allowance for lease losses	—			—
Investment in a direct financing lease, net	$	57,698		$	102,698



	Amount
Year:
2017	$	1,545
2018	6,301
2019	6,490
2020	6,685
2021	6,885
Thereafter	86,050
Total	$	113,956



	Three Months Ended September 30, 2017						Nine Months Ended September 30, 2017
	Income (numerator)			Shares (denominator)	Per Share Amount		Income (numerator)			Shares (denominator)	Per Share Amount
Basic EPS:
Income from continuing operations	$	62,954					$	197,405
Less: preferred dividend requirements	(5,951		)				(17,855		)
Net income available to common shareholders	$	57,003		73,663	$	0.77	$	179,550		70,320	$	2.55
Diluted EPS:
Net income available to common shareholders	$	57,003		73,663			$	179,550		70,320
Effect of dilutive securities:
Share options	—			61			—			65
Net income available to common shareholders	$	57,003		73,724	$	0.77	$	179,550		70,385	$	2.55



	Three Months Ended September 30, 2016						Nine Months Ended September 30, 2016
	Income (numerator)			Shares (denominator)	Per Share Amount		Income (numerator)			Shares (denominator)	Per Share Amount
Basic EPS:
Income from continuing operations	$	57,526					$	166,841
Less: preferred dividend requirements	(5,951		)				(17,855		)
Net income available to common shareholders	$	51,575		63,627	$	0.81	$	148,986		63,296	$	2.35
Diluted EPS:
Net income available to common shareholders	$	51,575		63,627			$	148,986		63,296
Effect of dilutive securities:
Share options	—			120			—			97
Net income available to common shareholders	$	51,575		63,747	$	0.81	$	148,986		63,393	$	2.35



Exercise price range	Options outstanding	Weighted avg. life remaining	Weighted avg. exercise price		Aggregate intrinsic value (in thousands)
$ 19.02 - 19.99	11,097	1.6
20.00 - 29.99	—	—
30.00 - 39.99	1,428	2.3
40.00 - 49.99	86,863	4.3
50.00 - 59.99	75,939	6.1
60.00 - 69.99	81,036	7.4
70.00 - 76.63	2,215	9.4
	258,578	5.7	$	51.80	$	4,654



Balance Sheet Data:
	As of September 30, 2017
	Entertainment		Education		Recreation		Other		Corporate/Unallocated		Consolidated
Total Assets	$	2,343,778	$	1,489,459	$	2,057,172	$	193,766	$	48,835	$	6,133,010

	As of December 31, 2016
	Entertainment		Education		Recreation		Other		Corporate/Unallocated		Consolidated
Total Assets	$	2,168,669	$	1,308,288	$	1,120,498	$	202,394	$	65,173	$	4,865,022

Condensed Consolidating Balance Sheet As of September 30, 2017

	EPR Properties (Issuer)		Wholly Owned Subsidiary Guarantors		Non- Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Assets
Rental properties, net	$	—	$	3,640,225	$	895,769	$	—		$	4,535,994
Land held for development	—		12,402		21,272		—			33,674
Property under development	—		236,916		47,295		—			284,211
Mortgage notes and related accrued interest receivable	—		963,738		8,633		—			972,371
Investment in a direct financing lease, net	—		57,698		—		—			57,698
Investment in joint ventures	—		—		5,616		—			5,616
Cash and cash equivalents	8,788		1,472		1,152		—			11,412
Restricted cash	395		23,599		329		—			24,323
Accounts receivable, net	675		89,230		9,308		—			99,213
Intercompany notes receivable	—		179,589		—		(179,589		)	—
Investments in subsidiaries	5,892,529		—		—		(5,892,529		)	—
Other assets	26,485		32,417		49,596		—			108,498
Total assets	$	5,928,872	$	5,237,286	$	1,038,970	$	(6,072,118	)	$	6,133,010
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities	$	58,308	$	65,910	$	16,364	$	—		$	140,582
Dividends payable	30,997		—		—		—			30,997
Unearned rents and interest	—		69,615		15,583		—			85,198
Intercompany notes payable	—		—		179,589		(179,589		)	—
Debt	2,951,259		—		36,666		—			2,987,925
Total liabilities	3,040,564		135,525		248,202		(179,589		)	3,244,702
Total equity	2,888,308		5,101,761		790,768		(5,892,529		)	2,888,308
Total liabilities and equity	$	5,928,872	$	5,237,286	$	1,038,970	$	(6,072,118	)	$	6,133,010

Condensed Consolidating Balance Sheet As of December 31, 2016

	EPR Properties (Issuer)		Wholly Owned Subsidiary Guarantors		Non- Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Assets
Rental properties, net	$	—	$	3,164,622	$	431,140	$	—		$	3,595,762
Land held for development	—		1,258		21,272		—			22,530
Property under development	1,010		247,239		48,861		—			297,110
Mortgage notes and related accrued interest receivable	—		612,141		1,837		—			613,978
Investment in a direct financing lease, net	—		102,698		—		—			102,698
Investment in joint ventures	—		—		5,972		—			5,972
Cash and cash equivalents	16,586		1,157		1,592		—			19,335
Restricted cash	365		8,352		1,027		—			9,744
Accounts receivable, net	556		89,145		9,238		—			98,939
Intercompany notes receivable	—		179,589		—		(179,589		)	—
Investments in subsidiaries	4,521,095		—		—		(4,521,095		)	—
Other assets	21,768		23,068		54,118		—			98,954
Total assets	$	4,561,380	$	4,429,269	$	575,057	$	(4,700,684	)	$	4,865,022
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities	$	63,431	$	52,061	$	4,266	$	—		$	119,758
Dividends payable	26,318		—		—		—			26,318
Unearned rents and interest	—		46,647		773		—			47,420
Intercompany notes payable	—		—		179,589		(179,589		)	—
Debt	2,285,730		—		199,895		—			2,485,625
Total liabilities	2,375,479		98,708		384,523		(179,589		)	2,679,121
Total equity	2,185,901		4,330,561		190,534		(4,521,095		)	2,185,901
Total liabilities and equity	$	4,561,380	$	4,429,269	$	575,057	$	(4,700,684	)	$	4,865,022


Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
July 1 through July 31, 2021 common shares	—		$	—	—	$	—
August 1 through August 31, 2021 common shares	382	(1)	50.57		—	—
September 1 through September 30, 2021 common shares	—		—		—	—

Total	382		$	50.57	—	$	—



~~10.1~~31.1*		Second Amended, Restated and Consolidated Credit Agreement, dated as of September 27, 2017, among the Company, as borrower, KeyBank National Association, as administrative agent, and the other agents and lenders party thereto, which is attached as Exhibit 10.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on September 27, 2017, is hereby incorporated as Exhibit 10.1.
~~10.2~~	First Amendment, dated as of September 27, 2017, to Note Purchase Agreement, dated as of August 1, 2016, by and among the Company and the institutional investors party thereto, which is attached as Exhibit 10.2 to the Company's Form 8-K (Commission File No. 001-13561) filed on September 27, 2017, is hereby incorporated as Exhibit 10.2.
~~12.1~~*	~~Computation of Ratio of Earnings to Fixed Charges is attached hereto as Exhibit 12.1.~~
~~12.2~~*	~~Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends is attached hereto as Exhibit 12.2.~~
~~31.1~~*	Certification of Gregory K. Silvers pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 31.1.
~~31.2~~31.2**		Certification of Mark A. Peterson pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 31.2.
~~32.1~~32.1***		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 32.1.
~~32.2~~32.2***		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 32.2.
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104*		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)