Item 1.01. Entry into a Material Agreement.
On October 27, 2021, EPR Properties (the “Company”) completed the public offering of $400 million aggregate principal amount of the Company’s 3.600% Senior Notes due 2031 (the “2031 Notes”). The 2031 Notes have been registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-231909), as supplemented by the prospectus supplement dated October 13, 2021, previously filed with the Securities and Exchange Commission under the Securities Act.
The 2031 Notes were issued pursuant to an indenture, dated as of October 27, 2021 (the “Indenture”), between the Company and UMB Bank, n.a., as trustee (the “Trustee”).
The 2031 Notes are senior unsecured obligations of the Company. The 2031 Notes rank equal in right of payment with all of the Company’s existing and future senior indebtedness, including the Company’s unsecured revolving credit facility, 5.250% Senior Notes due 2023, 4.350% Senior Notes due 2024, 4.500% Senior Notes due 2025, 4.560% Senior Notes due 2026, 4.750% Senior Notes due 2026, 4.500% Senior Notes due 2027, 4.950% Senior Notes due 2028 and 3.750% Senior Notes due 2029, and rank senior in right of payment to any of the Company’s existing and future indebtedness that is subordinated to the 2031 Notes. The 2031 Notes are effectively subordinated to all of the Company’s existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness. The 2031 Notes are structurally subordinated to all liabilities of any of the Company’s subsidiaries. None of the Company’s subsidiaries will initially guarantee the 2031 Notes. However, certain of the Company’s domestic subsidiaries will be obligated to guarantee the 2031 Notes under certain circumstances as further described in the Indenture.
The 2031 Notes accrue interest at a rate of 3.600% per year from October 27, 2021, payable semi-annually in arrears, until maturity or earlier redemption. The Company will pay interest on the 2031 Notes on May 15 and November 15 of each year, beginning May 15, 2022, to holders of record on the preceding May 1 and November 1, as the case may be. Interest will be calculated on the basis of a 360-day year of twelve 30-day months. The 2031 Notes will mature on November 15, 2031 (the “Maturity Date”), unless earlier redeemed by the Company at its option.
The Company may redeem some or all of the 2031 Notes at a redemption price equal to 100% of the principal amount of the 2031 Notes, plus accrued and unpaid interest, up to, but excluding, the applicable redemption date, plus a make-whole premium. If the 2031 Notes are redeemed on or after August 15, 2031 (three months prior to the Maturity Date), the redemption price will be 100% of the principal amount of the 2031 Notes being redeemed, plus accrued and unpaid interest, up to, but excluding, the redemption date.
The Company and its restricted subsidiaries are subject to certain negative covenants under the Indenture. The provisions of the Indenture limit the Company’s and its restricted subsidiaries’ ability to, among other things, (i) incur additional indebtedness and (ii) consolidate, merge or transfer substantially all of their assets. The Company and its restricted subsidiaries must also maintain total unencumbered assets of at least 150% of their unsecured debt.
The Indenture also contains customary events of default. In the case of an event of default resulting from certain events of bankruptcy, insolvency or reorganization, the principal of and accrued and unpaid interest, if any, on all outstanding 2031 Notes will become due and payable immediately without further action or notice. If any other event of default under the Indenture occurs and is continuing, the Trustee or holders of not less than 25% in principal amount of the then outstanding 2031 Notes may declare all of the Notes due and payable immediately.
The foregoing descriptions of the Indenture and the 2031 Notes do not purport to be complete and are subject to, and qualified in their entirety by, reference to the Indenture and form of Note, which are attached hereto as Exhibits 4.1 and 4.2, respectively, and are incorporated herein by reference.
