EPR - Earnings call transcript Q3 2017

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Operator

Good afternoon, ladies and gentlemen and welcome to the Q3, 2017 EPR Properties Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to the conference over to your host, Brian Moriarty, VP of Corporate Communications.

Brian Moriarty

operator. you, Thank everyone quarter to us on today And earnings for call. third XXXX our thanks joining

As statements. operations will as terms. other this identified continue, call condition Private are forward-looking on always, cause filings, and President such over believe, you financial of Litigation The the by by these materially this may could may informing I Securities Silvers. results contemplated those hope, will and include Greg Company's Company's Form start such CEO, the may, from SEC words that actual Discussions results forward-looking At call XX-Q. be, to from point, factors of expect, comparable materially the reports statements Company's Act defined vary and as the by in the including these of XXXX, contained call I Company’s intend, differ XX-K that the or to will anticipate, forward-looking statements in turn

Gregory Silvers

afternoon, to good and Brian, everyone. quarter you, our XXXX call. Welcome Thank earnings third

Before that with Jerry and follow to slides Peterson on pass Company's CIO, will Mark call at will website I to today Jerry are remind headlines the With the www.eprkc.com. CFO, everyone we via greater our discuss to are detail. along and available our the call I quarterly in Earnest. start get started then me the business

supported performance fundamentals. resilient solid headline, by first quarterly Our

quarter the delivered hurricanes continued exhibited year. severe solid same to quarter momentum the Third previous compared challenges revenue is results. top-line portfolio from XX% Despite our attraction our the arising grew

Office results for as our theater portfolio the illustrated the of as predicted was Additionally down long-term Box even were quarter. durability

our see School the Lastly Charter we public portfolio. were continued growth to in pleased

in our of in sector continues education. to in investment choice parental strong stabilized enrollment the the demand portfolio for Our thesis growth driven by investing support

with of we primary the The the to strong our segments. headline, along we investments investment supported investment delivered quarter of spending. our investment record broad in quality our reflect asset economy. continues strong rate million our another almost to segments, Adding across across of spending second the $XXX experienced each XX% momentum year, leased Our investment had demand by

spending and of throughout quarter-to-quarter, due to continue segments, opportunities we the segment differentiated developed in three and years. our across have strong our varies our all discrete large networks While year to reputation by over expertise, that we from the part source

we XXXX earnings and increasing headline, earnings increasing introducing our investment with both be to guidance third guidance XXXX. investment Consistent and Our momentum, XXXX for spending are and theme of guidance. pleased maintaining spending

introducing for we XXXX. spending earnings and guidance Additionally, are investment

are As long-term and to we previously execution mentioned we committed quality delivering growth. sustainable highly

in have optimistic build this out and Our Mark our will underwriting we later. commitment With solid by and record long-term is reliable criteria to growth consistent more investment about seeking cash continue provide that track flows. investments we earnings XXXX that established the deliver to meet detail on and are and persistently mind opportunities,

day Stock the publicly that of EPR a in million approximately XXth of held a Estate headline EPR cap Company IPO On XXXX market investments XX, established and million. at November fourth Our $XXX became Trust. Investment Real the York New traded anniversary. Properties total $XXX Exchange its equity On and

equity of movie later was investing REIT the an the to over on entertainment team, Company dedication of trust, theaters. leadership, original focused years the total and of market our over and perseverance company as $X.X and $X thought Formed billion cap has first properties in billion. the investments only Due XX

than a of and total shareholder delivered or XXXX. the five period three more this return the approximately Company times about about XXXX% index more than the During has RMS times Russell

who this have tenants the to anniversary possible. employees, and thankful are shareholders make helped We

in traditional REIT them. of opportunity that that believed We exist recognize who insightful and people because the today, the the outside are those here assets

have look EPR on years. and success confidence forward next we look the ahead, XX As for enormous the building we our team to in

call Jerry. turn Now, over to the I will

Jerry Earnest

Thank you, Greg.

of Total Lifestyle During during transaction, Investments quarter excluding investment was investments the the of quarter investments year-to-date the all billion. year-to-date segments. $X.X million. third Properties significant spend spending was bringing $XXX XXXX CNL across three transaction to our spending investments $XXX.X volume was million

billion to Our deliver results us expertise opportunities of that $X.XX and to provides our defined raising midpoint a reliable paced consistent a confirm by investments continue to $X.X with million quality range the and thesis that investment allow within our focused investments I'm to anticipate announce spending of billion. we $XXX that access the the relationships we XXXX results. us to to strong of segments are guidance approach pleased and

and into Before, in performance, investments our the did wanted discussion I not properties hurricanes. significant detailed damage get that mentioned the and from our Florida suffer of recent Texas to I

exhibition the out minimal rent theater received the experience of revenues solid opening to Franchise the well the on a four in out communities minor seek record Wars movie. given continue go prayers in these and and the basis the year-over-year the weekend fine during stable projected these Box business League, strong with to Jedi. Coco fourth remain partially help Justice is weighted month-over-month anticipated demonstrated the remains and this However, latest offering this answered The off that of slate holiday new we suffered or them times Office Marvel product we proud Further, represented the of entertainment Pixar entertainment that to the to Many to past impact Last a remains our The rebuilding. segment, and have with with up, coverage. thoughts the revenues have by associated note film years the after was these unique movie to and tenants will be are began home and on to movie course our heavily movie companies. communities trying our two they In movements business. continue which with incredibly quarter The season by Office such DC goers. quarter-over-quarter Box Star the successful call Box process as movie release line honored Please Office consumers years highly

opportunity We and letter that excess The by rents report supported renewals space quarter of explorations. are us extended XXXX will the during couple of by relationships. lease flow the and within renovated the high factors. the by had extended option. high theater growth develop and remains platform amenity Deal our tenants be explorations, lease the high or leases XX for received that intent to a are contractual depth remaining our in theater Eight convert already reflecting of two that XXXX formats amenity provide is of encouraged into of theater leases to negotiation. under continues for under third of to focused are We of remain and still theater entertainment be and being benefits extension three one format consumers. Each top a our the with were of key to plans pursuing pleased these additional we XX theater amenity theaters theater our opportunities. theaters active us ongoing renovation are strong Of well a operators to

of the development, performing and entertainment summary, of quarter properties the have redevelopment service portfolio the Topgolf billion at expansion XX under acquisitions our during the the $X.X quarter, For six In successful and the acquisition. segment portfolio and larger the development, we spending Ski high Megaplex end in had third and due in of properties entertainment invested primarily segment with of the centers. portfolio the of our quarter, theaters, investment centers Lifestyle properties XXX Company family build-to-suit million, operators. Further, recreation third totaled In third with approximately now properties. to consisting in we CNL properties retail attraction segment of continue $XXX.X entertainment a entertainment

weather third At enjoy Our of and acceptance Topgolf an properties our construction prior quarter, and overall end properties. fully performance. have with under was open challenging operating reserves portfolio properties the relatively property properties been seasonal all we with period, continue performance Topgolf of funded. despite basis XX attraction consumer of revenue to our the On many in attraction our flat operating markets had the the year strong of

had attractions approximately CNL in the a properties golf and $X.X Recreation of coast properties the summary, totaled given transition the of conditions Company year. of investment acquisitions spending XXX the third remain operators development and weather We also under ski particularly operators. golf redevelopment areas this of well the XX of quarter exceptionally entertainment million during as billion In adverse other with facilities. new service the development, million in on third-quarter build-to-suit to XX pleased $XX.X with properties attraction of on six segment recreation with number complexes end spending investment as recreation at

Charter which of property and find attractive to education continue enrollment. third Education Schools, Early all the Centers Childhood strong of these types, have opportunities quarter experience Public our Each property schools. three increased During we growth to and investment continued across include types private

quality experience with have advantage us we the program assembly previously, competitive our relationships As education of the in portfolio stated strong facilities. build-to-suit provides sector and education investment our combined with to operator high

year. concentration School calls, previous hope and on our the properties end close contract, Imagine several of increasing we reducing to tenant Imagine We diversity mentioned after our Public of shortly School the Schools. As have have currently under the portfolio Charter of we committed which to

impact tenant other events and unimproved childhood provide have tenant which education operate further which childhood discussions terminated the tenant completed related as discussions the the up flexibility leases seven and completed having by them XXXX, with nine The holdover disclosed In have extreme as brought early to are October been operators. particularly tenant we early terms complicated and to hurricane properties As of restructure seven recently to we of construction ramp challenges land. two the the The with weather previously, assess on we lease to these stabilization. deal their tenants to to properties Harvey rapid recent multiple expansion leasing continue by restructuring the of landlords. have continues we with

impact our to than tenants Our to represent of continues reflect revenue. of less and anticipated forecast continues financial restructuring these the the X%

mortgage totaled quarter, our million notes on segments acquisition well education third childhood build-to-suit Charter early in development and of private During the XX.X XX School in Schools, redevelopment investment of receivable. consisting and for public education million investment in as spending million Charter the public one XX.X and schools, of of spending as centers

expect accounted student the We XXXX million School Charter ultimately level for growth significant enrollments will to school year year. achieved demonstrate XXXX continue last national to that X.X exceeding would

the leased for more school and than year. School increased XX% the XX% our In public education operators. Hotel under development, Charter XXXX quarter. XX% as this for year quarter in to invested service Schools accelerated academic by million Construction the the the Charter in billion in third same of from properties segment with and the We increased last approximately the X.X of XX the was summary, enrollment to formally Catskill known at current eight end of XX% Resorts at period. the Our approximately Overall capacity portfolio World utilization XXXX had development in during on during year XXXX. the third the properties Company quarter XXX Waterpark Adelaar XX development invested located

terms of of tenant recycling real a to X for on the during one proceeds estate Charter Company net third-quarter In public of the gain sold approximately sale and recognizing total pursuant purchase X.X capital net million option of million. property the School

to property sales of through million an the expects XX charitable to of also Company primarily from outs XXX.X property XX, expects the pursuant of XXXX, in tenant public fourth dispositions options recognize to proceeds the million note to nine-months the totaled September purchase properties and million receive and additional from quarter remains Consequently an occupancy guidance mortgage million our pay additional XX remains dispositions For XX.X volume disposition summary, fees. is overall transaction million. strong significant XXX of XX%. properties segments. with as all In across XXX at Property three XX.X the segments overall in all XXXX business each investments million million lead our to for to termination strong significant in for our

guidance our billion to are spending to X.X we raising X.XX billion. previously stated investment XXXX and I As

spending for XXX investments million. robust XXXX Although remains million size to we for investment CNL another spending XXX have with transaction our do at not guidance XXXX,

financial disposition that, XXX will I turn of Our rejoin is I guidance discussion million. XXXX million to will it you for over for XXX to With for and Mark questions.

Mark Peterson

as quarterly We that Jerry. website. XXXX. quarter can investor we Today remind you strong everyone would the finish anticipate well I momentum numbers on our to supplemental over call the for from initial going that downloaded are our provide I Thank XXXX. guidance our expected the as and for continue will be will like to

compared per $X.XX in the share million year. was for FFO million Now prior income net $XX.X year. or quarter or million turning to was the per the $XX compared to $XX.X slide, $X.XX share the million third to first in prior $XX.X

quarter the million and share adjusted FFOs $X.XX Lastly, the per year increased $X.XX for quarter the to $XX.X million, was per versus prior prior year. or the in $XX.X in share for

adjustments Before as through key variances, I two I to adjusted. to the FFO discuss FFO walk to come briefly to wanted

we quarter have positive refinancing agreement that and a unsecured with amendment and First, from the this of unsecured few X.X been in excluded credit governs during amended million associated revolving the as I adjusted. loan loan term the discuss from our that minutes. recognized cost FFO very will changes resulting facility

gain public sale sale proceed Second, completed for to we to a Charter termination million included on during recognized and pursuant net of X.X the X and our of Schools quarter tenant million. the purchase option fees

key prior the for line variances through walk versus me let year. quarter item the the Now

increased million. to compared total revenue prior the Our XXX.X to XX% year

category year. million revenue financing income million Och-Ziff two by included million with real mortgage year. recovery property by year to was XXXX prior additional and increase Note increase during for $X to the versus primarily in percentage revenue offset The activity and gains real other the $XX.X estate Mortgage funding the Schools the public public to discussed year that This million of including of primarily the the excluded Within of prior million was to million Percentage the connection properties. are note $X.X was versus increased insurance approximately due lease transaction million to to offset and X.X a CNL to the FFO receivable the in recovery by primarily estate related adjusted. dispositions. X.X recreation recognized X.X prior XX.X Charter quarter. quarter for versus decrease for the in fourth to Other due million rents year and last related rental investments XXX.X prior were current quarter million School with insurance rental $XXX in last partially from the gains partially decreased increase the revenue including CNL our from an increase $X revenue the income properties The quarter, was as This restructuring was rental million. XXXX, was rents XXXX, XX.X versus resulted due the quarter quarter leases financing in was million year. sale including due almost lending last of of related transaction. by transactions in of Imagine, the and direct eight Charter with new certain

Additionally we approximately from related parks. Schlitterbahn last down participating water XXX,XXX in of our investment the recognized year, XXX,XXX income approximately interest

share-based asset well for litigation to well restructuring in our education our primarily to fees. to increased benefit benefit compared base million in affiliate due Now increase fees and to payroll side, as as [Louise the prior G&A ongoing increase expense professional personnel on increases to case to X.X to XX.X primarily Capeli as growing related an the legal is in million costs increase additional the expense increases the in tenant. Capeli] related quarter the year due for to professional early support depositions. proceeded The awards. and (Ph) and is payroll to the costs and fees in The discovery is amortization litigation related Activity work with as of

that expense transaction. due a we million pleased this continue the we with the final reaching to decrease to from against is these claims. and in meritorious decreased case in XXX,XXX cost primarily associated CNL its are that We defenses to believe Transaction prior cost have stages, X.X

up next XX our share nine was XX% September to our per revenue and total to was adjusted months ended X% up for FFO $X.XX. the slide Turning

strong I X.X review slide, times. coverage see continue times next at some coverage key to can with company's ratios Turning of will service be times fix X.X coverage of ratios at interest the credit that X.X charge our you coverage and as to

expense the shifting proceeds adjusted fourth at impact annualizes public adjusted annualized and during to debt options XX was for mostly discussed that which X.XX purchase well to X.XX on Our previously. projects build-to-suit lower EBITDA stated acquisitions quarter pursuant quarter in net the range of the penalty the the higher development, about the was during slightly volume our from XX to the range. debt Note from quarter, third high to expected spending adjusted or net due of stated the G&A School tenant XX, dispositions to of of Charter eliminates our basis points within under times, the EBITDA times and investment higher ratio

adjusted FFOs ratio our Lastly was XX%. payout

update capital and for we as growth. enhanced ongoing turn a it our in our quarter liquidity our very let’s further which support slide financial next sheet markets to and Now to balance was productive flexibility

at points at pricing in total. XXX by nearly unsecured loan reduced XX the and ever As to to revolving capacity our our unsecured interest I interest we seven-month by XXXX things loan. XXXX borrowing credit February rate to three from during Similarly the we basis a term low on is Subsequent XX have spread us The maturity our loan. end the X agreements mentioned for and rate other interest XXX million unsecured LIBOR previously November XXXX the the from Thus the date amendments our plus the interest XXX extension XXX from the noted to also on to be years be we the points rate that the on by maturity term with things Extended amended had million calculations million rate more April facility all in basis that the from received years increased cap million million also the April should it XXX revolving points revolver. XXXX XXXX extended on and assets new signed XXXX the governs our credit XXX agreement a of million fee facility segments blended XXX three quarter rates types. record term XXX February to in facility among nearly as other new among April the our to amendments significantly to recognizing strength The to lowest additional the initial X.XX% option fixed increased by the with the the the until of XXXX. from swap quarter XX amount loan of previous for February fixed combined and entered to basis and hedged million. of billion spread on rate spread we term-loan now on closing LIBOR reduced the our revolver durability of the spread hold plus will covenant basis asset the were term across points in for value lower term-loan X.XX%. unsecured date

of conjunction with last transaction placement subsidiary those notes private released we senior in our our at Finally, all guarantors year. closing unsecured changes these on including offered the in

the such Going cost this burden guarantees. maintain administrative forward will incurred at significantly reduce and to

quarter-end, swap of loan rate at or our the We through billion hand. $XXX the and next has cash credit on a total been had impact discussed debt had I blended we $X swaps billion, coupon on with interest additional at of term had outstanding of we approximately debt of of debt slide, unrestricted of the rate to million $X $XX.X is fixed including this debt X.X%. line quarter end a Turning fixed outstanding that earlier. either XX%

are debt. full also rate million X.X%. through have we properties we three were manageable these mortgage prepaid secured XX interest maturities paid substantially of maturities only of for million downs and $XX.X quarter, XXXX in out secured thereafter three After had now payable theater weighted in the notes the During and by with we which

can just balance stronger. liquidity see you and As keeps sheet position our getting

fourth Disposition $X.X mentioned share as guidance $X.X per to range in slide, next guidance range increase million to as recognize to are $XXX we FFO proceeds range $X.XX to $XX properties total range proceeds sales investment and $XX billion. Schools in are for for to to quarter in of the we as of purchase $XXX XXXX, a million from billion expect a billion to a termination for Charter $X.XX million fees quarter. XXXX, the associated $X.XX primarily options to our of the to we $X.XX pursuant $X.XX of increasing expect to to XX.X spending $X.XX. of from million from Turning our expected XX.X billion million Greg tenant to in fourth million And a of of disposition public adjusted the to

in about are of for but diluted earnings. $X.XX of become funding previously The the for year source investment adjusted our there we are opportunities, million another Disposition such impact term right dilutive Note again and and expected near and XXXX what slide, share Exercises results roughly we do to of of not strategic a million. of and to maximize the rather X% annualized between we categories. two these and spending XXXX of FFO XXX opportunities dispositions in the XXXX as $X.XX sales The introducing expect to dispositions investments for options impact and are to XXXX XXXX tenants adjusted XXXX fit Turning of XXX XXX capital environment capital expect have are the for the purchase million dispositions in capital of to XXX value dispositions million loss roughly guidance in proceeds thing shareholder into dispositions long-term. million guidance Charter of do is the that to enable not $X.XX revenue to positive the to total $X.XX XXXX. a thus Because by in per partial adding roughly for Schools XXX or XXX over as identified. current a we to next FFO for impact spread the as cost we million constraint a in incremental per-share. a is

this ratio of approved that further continue adjusted our XXXX the considering yet rate we of board account XX%. our Taking we has while not dividend into guidance payout for midpoint as to target and Lastly FFO an dividend Guidance implies rate growth for XXXX. projecting X% our in XXXX, XXXX is XX are detailed ratio for approximately supplemental. the will below for and Page of be that on XX% this XXXX slightly

to that, remarks. I Greg his turn over with will it for Now closing

Gregory Silvers

Thank you Mark.

As to of XXXX With about you EPR are and balance deliver continue for excited the year we been that, beyond. I it very are discussed far. to year the we have team's will questions. our such up there? so results a Julie, productive today has for And ability open for outstanding

Operator

Instructions] Our comes question [Operator from of first line Corak Riley. the from David B.

line Your open. is

David Corak

moving start will onto AMC, with I the some other before topic.

their at to trying plan be for on like are the and going high spend United It bunch renovate in your looking just CapEx but Just relatively spend XXXX that as next figures a year. bit overall XXXX States. you talked a the it to call year, little still previous where relative balance guidance against see looks about they would less to to

you us walk the you the on the front? extent is overlap So plan through can what to guidance and assumes spend maybe your

Gregory Silvers

delays any is down are slowing not have tell identified. projects what can them not on they that referencing David you on without have or other any I put Sure we that

So last I theaters them may want the them, to in met But slow spend. any not with down somatic specific back bigger and we we any are but side think weeks just and with seeing several pulling are to-date not pullback. seeing some be of the areas, the seeing over I other on that are we to our is their speak don't they not a of

David Corak

like of now? that’s you to assuming as Okay then still and XX% that’s XX% theater your narrated do guys you have of to the would helpful plan

Gregory Silvers

are XX that Yes, two And XXXX, eight Cinemark in we said one in and of continued are that’s XXXX as you look renovate and with to renovations of and of we three we mentioned is with. of big leases at the extend Jerry options still earlier we I had I three on. if negotiations active are those of took Regal extended negotiations years and year the think and AMC, expired our others mentioned two and later which those very third a all XX were were of in to extension the kind their just in and minimum active

seeing to we are the that invest wanting in operators are those theaters, three covers of So these their board productive actively they and across are because still they theaters. all all

David Corak

Okay enough. fair

then a front. you fees XXXX, what over kind segment of disposition that’s the the the are termination for with think midpoint, So education switching going to than you Mark related on bit talk fee selling assumed million year, I in initial higher little exactly this the coming to the they $X over can guidance. prepayment and about but to of are be less

just the those on pressure on helpful, balance of would the maybe be sort So would on color map some there how the useful? work be

Mark Peterson

School Yes, also first schools of in more of kind notice kind Charter for split prepayment And midpoint early there several third all related tightening if guidance as between the you a selling of and wasn’t that’s year so QX $XX an of on focused and QX fees probably go fees then termination of terminations. or additional the of kind to is actually quarter it is school school. is for also million this kind and which to year we midpoint you are the of guidance forward next year

as it happens but stated option, they have these these can to what got a the are on up periods fees option So is guys relate sale that's exercise shows the you seeing it that what called significant we what their a we would on statement, those penalty, treat a at and is because lease income termination gain that's in on as pay loan just that's they that fees XX% but what to. like our penalties and prepayment penalty us in call those

the more increase as a little and bit year next is is there couple larger yes there a schools year. So current there of volume than

David Corak

and between XXX fees as types made upwards board and a what XQ Just in to are if that we you million XXX to have in does the of of given of fees are map, it's billion in [Indiscernible]. talk million year do going or on it XXX imply XX next going XX this with the year to million be two going you sell fees

Gregory Silvers

a on it so that's gave have fee is basis said probably school-by-school - and of as some some you decent it's doesn’t uniform it's Yes fees a there premium - higher that and so Mark premium. are that he general what the year-to-year number, and but kind not a a

Mark Peterson

actually to to cases we the Yes, is the a penalty. now rent prepay some the rent will in to economic all and there plus and coming way they them letting prepayment decision feature are a option us period are take - the

doesn’t correlate So said exactly. like necessarily it Greg

David Corak

I it Okay. guys. appreciate

Gregory Silvers

David. Thank you

Operator

from comes the question next Your Capital. of line from KeyBanc Craig Mailman

open. is line Your

Craig Mailman

give could guys. us bit more term and guess those kind of you XXXX in fees Mark when more little a clarity and hit? a color on little I on Hey think rents will dispositions you also the bit

Mark Peterson

Yes, sure.

school one-third that's as our that's first. slated to quarter. Let that they early me penalty fees I the take you is expectation million But quarters. prepayment the third will then but and loan as Termination paying a this this roughly a can off prepayment two-thirds that's for quarter fee second saw QX, we one also more tell QX two-third, termination between which one-third XX and its move and fees around

So those how that's breakout.

difference this what for XXX year's The year current our was million million million. million guidance it’s is guidance much other XXX XXXX to question was a not XXX to is and that last XXX

public last The number year-over-year. the Charter while theater towards that have year and sales isn’t this because more probably much mix was our absolute it options so forth. So is School different we than year,

Gregory Silvers

dispositions imagine had to as commitment exposure. in continue stated we that as our some intended put more for that lower we candidly Jerry And

Craig Mailman

not of it just was kind there, you fees of of that's in just guidance because guess a fees bigger you the after miss why kind this quarter back, to really fact, guys turn level looks away and probably why just it give hit higher street gives when given fluidity these I is it some all keys. I of the term relative of get just - term think the basically missed there guidance adding like question but and of optically and because a

Mark Peterson

saying. But years per I I we between moved sort far we quarters, guess say, between so didn’t what hear of guidance so haven’t they quarterly moved that are give annual give and it couldn’t you guidance.

Craig Mailman

just just what XXXX us early a rent up? on then for it or in perspective, is from Jerry you kind shows where Mark tenant let know education holdover of And guidance the Okay. could

Jerry Earnest

their there have we we Craig, and don't terminated for because again actively got we think included us I tenant it's think we - the that number to them is probably through putting rent. much on well related work to tell are these not of to restructuring have I the as have wise

time to So that, these least think on up. a because there tell we back but those not got will terminated, would some lot I have at you we have we I releasing is hold for

successful there a upside those that and be are So to could rent we if more positive quicker.

Craig Mailman

backfilling, you I just guys their up potential still... guess or say, what could signed maybe the limit what tenants but [indiscernible] yet in progress are you are there will is you take to

Gregory Silvers

exposure than negotiations there Craig diversify had us we with we to of of for and it regarding properties. control the and exposure. lot we going was opportunities really where hoped this our put people of thought some kind we a was about this us Yes, have for from Again, about active away longer good it and lowering was to taking had several taking was on things

Craig Mailman

Great. Thanks guys.

Gregory Silvers

Thank you Craig.

Operator

comes form question next Paolone Morgan. J.P. from Your Anthony

Your line open. is

Anthony Paolone

I of years will guess of the I Okay guidance ago I X% with few start thanks. that up if about you and it discussion. didn't XXXX I have a at add earnings. you seems look termination to of any fees guess much that

a to they you you are flow just continual because and education just and gone. think recognition about the on sales income of of an be will basis or assets So just tapers portion level how off that’s then a do of like get certain of that do ongoing that this

Gregory Silvers

and events to our had looking idea said end have who Mark kind certain prepayment ability we - a this or as of I access have these what the those No, that that Tony fair people the said it's given municipal question prepaid tax-free is I that think - mean that and at so are their ability Again, Greg penalty. it we fact that are of are who rent part want a its concerned rates about bond that a market we to have business think to have of tax of level continue. I year are the public will they

a are can And So volatility less get we talking we view internally guys are now. and better that how to spending working about a on right that. we in time you that give

Anthony Paolone

got your Okay, it in through at that now from about million that the you $XXX where look have you visible the at you $XXX I'm had expected midpoint the coming you so wondering XXXX like about seems at I piece. underway prior leaves I if you. a was talk for then kind on just And expectations think investment and it standing outset pretty right remaining see million. of of lot years Can even and that what you

Gregory Silvers

it's this evenly of consistent the on that that we we that, confidence to it's the it's our we for so not with our names visibility, for that regard three of out of nature things think projects again would have balanced I have that throw lot to got. that point a Yes, fairly between kind that we segments year, say at all with have great don’t still number. but remains high to

Mark Peterson

split pretty in carryover. pretty as feel nearly what you Page is you you regard evenly quarter from quite but of see and be thereafter, probably but in the with have it's Gregg about fourth XX the is years might good as to because prior a And that's the still quarter high remainder, and as a were the we carryover year as percentage, healthy segments if percentage XX% Yes on it. fourth three it's as this between in don’t not that add XXXX, said

Anthony Paolone

cash Okay how GAAP on talk up. shaping XXXX the even and are and for can yields expected to you maybe those investments and

Gregory Silvers

the in still that would of in we low-eights kind the kind or sevens, I theater eight of so are and very say I probably around space educations then the would eights Sure. similar high again space. recreation realm business the in mid

Anthony Paolone

those the a box If between to to is looks greater (Ph) profits as box it give just rough coverage Okay just to more on skew from [amenitized] maybe and traditional last there the two possible revenue where EBITDA Megaplex got rate. a there Is theaters? like sketch as come theater and versus it. interest then what And theater question us front. economics of the highly

Gregory Silvers

and Yes, to of predominantly high recognition the a there is to I a food alcohol it’s that's skew beverage margin greater going sales, doubt no mean is low that there the and spoilage business.

talked higher we If a increases which significantly revenue at before, to of what corresponds you look have have yet about wall coverage. four about seen XX% we

cap in a that look you the mix and if from you that’s concession different spin think a standpoint, seeing theater pick-ups an little amenitized significant per at bit we food are the a from is those terms spend to So of theater non-amenitized beverage. in and

Anthony Paolone

get want the so it you per you XX% more extra just about in close to your do a or or coverage profits get foot I bunch box, guess up as And those. if do think how basis that in you well we

Gregory Silvers

well. a we No, as the question. reset factors rent co-investing, we are again escalating but percentage good I as mean it’s we so rents amenitized for generally the often well, are are

really, escalating really escalating feel escalating at good So than coverage, is. and rents pace the are rent coverage when is we the much we higher a and

getting we So even rents. we higher are are though growing coverage

Anthony Paolone

you. Thank you. got Okay

Gregory Silvers

you. Thank

Operator

Joseph Nick question next comes Your from Citi. from

open. Your line is

Unidentified Analyst

here Hey with Nick. it’s a [indiscernible]

a questions. Just few

for change think and the think sales about assets add by $X.XX if from fee Mark being is in fees term about relative so I the $X.XX all correct? the and As from at I prepayment XXXX so being term the talked about guidance dilution XXXX looking offset the are anticipate just penalties in XXXX repayment just the that you and fees, about dilution $X.XX XXXX you in you I to

Mark Peterson

is are quite $X.XX, the but is increase an it’s there about there, sales penalty offsetting the correct, offset not Yes, and say say prepayment dilution fee about you about termination I the right are I would and sales. XX would that’s the of $X.XX, so

Unidentified Analyst

to What capital $X.XX I on being door is dilution, up where it's assuming that are get mean your the you going that at what being reinvested? math the to is and

Mark Peterson

at you XXX do it last XXX were million. sales the about on this but year's we it dilution So can million do precisely, call if year you high sales take level

about grown So in these the just at the hit sold that are we million XXX around cap because some selling, Imagine Schools, of sold some of We have to upon say average we theaters around going cap is points basis rate. terms theaters. XX XXX are P&L these

this cost is over points of spread capital. about So our basis XXX

roughly more points thumbnail high-level you a XXX how do were We it the you by shares the and if $X.XX. but to by So XXX then the gives that take million basis divide the number. multiply get precisely that’s and of you

Unidentified Analyst

they these to you fees and how thinking Okay fees sell at about not prepayment and assets, point. the losing I to then assets completely, generate won’t that mean that of only the too, because go fees. don’t income about you away and just the you the off from termination point run enough are [indiscernible] but talked some the fees have assets you sell to

Mark Peterson

Because continue… we Schools, reinvesting we in are Charter

Gregory Silvers

adding taking are more recurring That’s out. why they nature. We than are are actually in we

Unidentified Analyst

Theater where quarter? it does on trailing coverage this basis stand

Mark Peterson

we that was told you X% are was Again, down would were purely think Office it at you within XX should have of range. talk we same XX.X been we about XX, about if is XX about XX so theaters are it consistent out XX.X, on say about - our apples-to-apples what I portfolio, Box theater right we about we at XX we about actually if but to

Unidentified Analyst

about are you believe sort lot weakness talking you Box are they and last , that’s market I time to perceive way had lows, too right, trading go have about was clearly AMC a they stock with all have deflect the even don’t you I some Regal and quarter the Office of news at within talked reported renewal the new decent and that [indiscernible] think near to people look Cinemark far to you of after the how a in so as you confidence disposed don’t And the a which earnings.

those and business? I'm that way just talking reconcile relative to about trying overall sort two together confidence talking the are their exhibitors to things operators are So your of

Gregory Silvers

back to appose a talking have Office fourth animalization the question listen near you to fair we will quarter, they Box all think go anticipating you they have Yes I sure that calls, think of expected. kind if talked all [Michael] if their I'm of robust a I you (Ph) - back the and is quarter-to-quarter about it's very as are to and think the are levels about I all performed XXXX get narrative exhibitors the so what as

idea the discussed think the is and talked within five I that that the performance it about is third on Box minus content matters we content. driven have idea the content deliver what is Office that they didn't all have second five and to lot So quarter and a plus

content it as So think fundamentally the they I anything strong record it off two coming as just don’t think been. is business, could have wrong not that the there was is years with

Unidentified Analyst

newer of XXX at As of about Megaplex revenue, I'm been portfolio has much million into has that point way? think highly the that rental how and much XXX terms wondering we in touched of amenitized theaters. of redeveloping the just been a this how in

Gregory Silvers

is guess ours. are My we approach starting XX% to of near

for candidate don’t about - ours they talk of high not performing some are they we that really so As are a it.

to will three anticipate So that we being we of quarters still amenitized. around get portfolio our

Unidentified Analyst

and noticed there located, market And theaters entire I'm versus major just differences on off-mall, any you based curious located. discern performing that on your XXX can is are retail theaters landscape anything they those on-mall have how the upon standalone are which over where your where based you are

Gregory Silvers

XX% about over probably there seen of are biggest doubt, because no think the what biggest expanded I be second amenitizaiton, mover, mover, we the you you I you and we haven’t are said as appose in the introduction and we type if Like we alcohol, beverage tell the that. about is talk mover, have setting would - including use thing fourth and indicator we food the not there and probably to are when third the first mover we is, talk - I to defined is we so that is need of - other more is term

talking reclining high talk been of we seen, suburban both received not have removal we it's about when we we urban are and the fully So markets seen. the well that amenitized, But really have necessarily and introduction in about seats.

Unidentified Analyst

probably where average free probably you little talked some the the and you after being above would the flow be cash as guidance you Last I dividend, range in the but start forecast recognize is have a recognize balance to would baked question of to do from on little equity, terms Mark of sheet is you for additional range maybe - bit a in bit I probably investments forward of modeling and say the about equity XXXX want spend I have you the currently?

Mark Peterson

million equity the XXX we CapEx pay about flow for rest. a in you we midpoint sales think kind other and that have well could to as XXX equity so guidance debt for cash million XXX the guidance then - you of fund, for think the of net have and and combination and a XXX said -- of cash really equity to of million yes, Absolutely like offering then debt being of large flow to bond funding, a if you

the So yes equity next year. have in plan we do

Unidentified Analyst

appetite have just traditional and that I fund being the to ATM and via secondary I deal last merger an ATM the you know the match offering? equity versus raise you that a forward during able do to was you have just desire on way don’t whether recognize going secondary did versus delever And

Mark Peterson

raise we sometimes amounts done a direct You the a the when we inexpensive. want of we we our combination, stock what both those plan know we plan cost alternatives, as we two really we use past. plan time, purchase XXXX use call that a larger ATM because have so same in in both the blended we very or At and to recognize

Unidentified Analyst

it. Got

the Okay, time. thanks for

Gregory Silvers

you. Thank

Operator

Instructions] from Ladenburg comes Daniel question from The Donian Thalmann. next [Operator

line open. is Your

Unidentified Analyst

[John] This Dan. took is on for (Ph) actually

of below market of theaters the bought or in eight kind the rate is in there just clarifying or of seven were being to the kind So you range kind million reason Multiplex quarter, XXX some that? cap that you those at, of mentioned above

Mark Peterson

so rate high-performing XXX cap in were of were theaters those theaters. top we range. them I the very are think call high sevens are range, of would they that group in attractive Those we country, said so what near both kind No for those

Unidentified Analyst

- those money make are to amount will performing the of likely theaters, high they things mean amenitize of they near-term. given are at is the or it And less those you doing nature I look the just revenue manage you amenitize

Mark Peterson

so that down know but they or not you I sense already near a alcohol take they to not? it probably truly less does You to amenities likely, performing, question of mean doesn't will are in it introduced - high and out they say as seats make would is it time term are over will I said because the see gets there and

Unidentified Analyst

but… occupancy Okay you tied just the switching in I little the and mean kind over call early as education was education, - of a them that picked a them know I to temporary tenant then quarter put in like all bit operator as down to

Gregory Silvers

has it thing think primarily think other is look that we when at overall was the note and actually our that we I to Yes, talk picked - I factor about up. actually utilization

Schools some drivers had we underlying of but kind with as occupancy School portfolio. we some we known So dealing that discussed, have - our they rate utilization actual are of picked we we as enrollment was XX XX and Charter a talked the in utilization own, well from to about was up in Charter some issues especially across from pretty the schools occupancy the overall and up are XX% our the that

Unidentified Analyst

in of - quarter? School in the in an property dark no from But Charter Schools performance Charter kind individual the

Gregory Silvers

in and we that School Charter school charters once replace a are we partial. other working two the building, - other and so the have was was did to are We charter it one it

Unidentified Analyst

think but kind are of the call, of contract and the imagine the Imagine earlier was calls you Jerry of that of to [Indiscernible]? sell kind you that alluded sense and prior the dispositions next makes if you in that That to to kind of year, on the it alluded million then on beginning XX you looking

Gregory Silvers

in some have could has so contract was it closing earlier target. first anticipate that close Yes, that now that those there will there the we putting out under we just and and that close the got been quarter delays in we those it's they as are

Unidentified Analyst

XXXX other as guidance on so well is dispositions and top of that or sense in kind - without then Makes of… Imagine there

Gregory Silvers

selling - that a that we got had about call but would an is we restructured that those. some that to have Yes, we continuing to about also and leases aid idea talked worked talked we We beyond other what down exposure.

for group able we that a marketing we we could to and sale got a that and that The it's marker then of marketed. the now - now exit just group of of actively we group to hope of that a Jerry have those to being contract, be number are that we see So other kind talked about contract from under a we a we proceeds combination more pick for Imagine several disposition others will specific and probably we right or have we tie if a in just the certain have are number. what have market anticipate

Unidentified Analyst

weren’t Makes properties weren’t XX on you those sense. none million right. leased contracts - those those that But of under leases have those restructured

XX million. the sell to the Just are beyond ones you looking

Gregory Silvers

correct. is That

Unidentified Analyst

much. very Thank alright. you from it me. Perfect, That’s

Gregory Silvers

Thanks.

Operator

no at back like showing I I’m to now further questions Silvers. this would conference the to Greg time. turn

Gregory Silvers

Joy. everyone attention. of We to NAREIT. seeing for And thank at Thank you, you you and many forward time again next week the look

attendance. your for you thank So

Jerry Earnest

you. Thank

Mark Peterson

Bye-bye.

Brian Moriarty	Vice President of Corporate Communications
Gregory Silvers	President and Chief Executive Officer
Mark Peterson	Chief Financial Officer
Jerry Earnest	Chief Investment Officer
David Corak	B. Riley & Company
Craig Mailman	KeyBanc Capital Markets
Anthony Paolone	J.P. Morgan
Nicholas Joseph	Citigroup

EPR Properties (EPR) 9 Nov 172017 Q3 Earnings call transcript