EPR Properties Q1 2025 slides: Experiential REIT reports 8% AFFO growth, lifts outlook

Introduction & Market Context

EPR Properties (NYSE:EPR), the self-described "Diversified Experiential REIT," presented its Q1 2025 earnings results on May 8, showcasing continued growth in its experiential property portfolio amid a strengthening experience economy.

The company highlighted the resilience of experiential spending in the U.S., which has demonstrated consistent growth over the past 25 years despite economic downturns. This trend provides a favorable backdrop for EPR’s business model focused on experience-based properties.

As shown in the following chart of U.S. experiential spending trends, the sector has recovered strongly from the COVID-19 pandemic and continues its long-term growth trajectory:

Quarterly Performance Highlights

EPR reported solid financial results for Q1 2025, with growth across all key metrics compared to the same period last year. Total (EPA:TTEF) revenue reached $175.0 million, a 4.7% increase from $167.2 million in Q1 2024. Net income available to common shareholders rose 5.5% to $59.8 million.

The company’s adjusted funds from operations (AFFO), a key metric for REITs, showed particularly strong growth, increasing 8.4% to $92.9 million. On a per-share basis, AFFO grew 8.0% to $1.21, compared to $1.12 in the prior-year period.

The following table details EPR’s financial performance for Q1 2025:

EPR maintains strong financial ratios, with a fixed charge coverage of 3.2x, debt service coverage of 3.8x, and interest coverage of 3.8x. The company’s net debt to adjusted EBITDAre stands at 5.3x, while its AFFO payout ratio is 71%.

Portfolio Performance and Investments

EPR’s total investment portfolio stands at approximately $6.8 billion across 331 properties, with an impressive 99% occupancy rate. The portfolio is predominantly focused on experiential properties (94% of investments), with the remainder in education properties.

The following overview illustrates EPR’s diverse property portfolio:

In the theater segment, while North American box office gross was down 11.6% in Q1 compared to 2024, Q2 has quickly offset this with strong performances from films like "A Minecraft Movie" and "Sinners." Year-to-date box office through May 5 reached $2.5 billion, up 17.1% versus 2024.

EPR highlighted an important trend in theater economics beyond box office performance. Food and beverage spending per patron has increased approximately 60% from 2019 to 2024, compared to a 26% increase in ticket costs. This shift toward higher-margin F&B sales (82% margin vs. 46% for ticket sales) has positively impacted theater profitability.

The following slide illustrates this important shift in theater economics:

Investment Activity and Capital Recycling

EPR invested $37.7 million in Q1, including the $14.3 million acquisition of Diggerland USA in West Berlin, NJ, described as the only construction-themed attraction and water park in the United States. After the quarter end, the company made two additional investments: its first traditional golf investment and a second Pinstack Eat & Play location in Northern Virginia.

On the capital recycling front, EPR sold multiple properties during the quarter, including 10 leased early childhood education centers, one vacant ECE, one vacant theater, and two operating theaters. These sales generated net proceeds of $70.8 million and a net gain of $9.4 million. The company also received $8.1 million from the payment in full of two mortgages secured by ECEs.

EPR noted that it sold a portfolio of nine leased ECEs at a 7.4% cap rate, demonstrating the value of its education portfolio. The company has made significant progress in addressing vacant properties, having sold 27 theaters over the past four years, with only three vacant theaters remaining, two of which are under contract.

Updated 2025 Guidance

Based on its strong Q1 performance, EPR raised its full-year 2025 guidance for several key metrics. The company now expects FFO as adjusted per share to be between $5.00 and $5.16, up from the previous guidance of $4.94 to $5.14.

The following slide details EPR’s updated guidance for 2025:

EPR also increased its guidance for disposition proceeds to $80-120 million (from $25-75 million) and percentage rent and participating interest to $21.5-25.5 million (from $18.0-22.0 million). Additionally, the company announced a 3.5% increase in its monthly dividend to $0.295 per share.

Financial Position and Outlook

EPR maintains a solid financial position with $2.8 billion in total debt, of which $2.7 billion is fixed rate or fixed through interest rate swaps at an overall weighted average of 4.4%. The company fully repaid $300 million of senior unsecured notes at maturity on April 1, 2025, using borrowings under its revolving credit facility, and has no further debt maturities in 2025.

As of March 31, 2025, EPR had $20.6 million in unrestricted cash and $105.0 million outstanding on its $1 billion revolving credit facility, providing substantial liquidity for future investments.

The company’s raised guidance and dividend increase signal management’s confidence in continued growth through 2025, supported by the ongoing recovery in experiential spending and strategic portfolio management. With investment spending projected at $200-300 million for the year, EPR appears well-positioned to capitalize on opportunities in the experiential property market.

Full presentation:

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