EPR Properties at Citi’s 30th Annual Conference: Strategic Growth and Challenges

On Tuesday, 04 March 2025, EPR Properties (NYSE: EPR) presented at Citi’s 30th Annual Global Property CEO Conference 2025, offering a comprehensive overview of its strategic direction. Led by CEO Greg Silvers, the discussion highlighted EPR’s belief in its undervaluation, a robust dividend strategy, and the challenges posed by its theater business. While the company projects growth without needing equity capital markets, it faces hurdles such as failed investments and environmental impacts.

Key Takeaways

• EPR Properties believes it is undervalued, trading below its peers.
• Aims for 3.5% growth with $250 million in spending, without accessing equity markets.
• Strong dividend coverage promises top-tier shareholder returns.
• Strategic reduction in theater exposure to around 20% over time.
• Plans to invest in experiential properties like Topgolf and Andretti Indoor Karting.

Financial Results

• Valuation and Growth: EPR is trading three turns below its peer group average. It projects a 3.5% growth with $250 million planned spending, $100 million of which is already underway, without tapping into equity capital markets. The company generates approximately $120 million in free cash flow annually.
• Dividend: The dividend is a focal point, with a target payout ratio of around 70% of AFFO, aligning with taxable income requirements. EPR’s dividend strength contributes to its top-tier total shareholder returns.

Operational Updates

• Theater Business: EPR plans to reduce its theater exposure to about 20% over time. The company has sold 25 vacant theaters in the past two years and is seeing a positive shift in the theater industry’s dynamics, with increased spending on food and beverage offsetting lower box office numbers.
• Non-Theater Business: The non-theater portfolio coverage is strong at 2.5x, with the largest exposure in the Eat and Play segment, notably through Topgolf, where EPR owns 38 out of approximately 85 locations.

Future Outlook

• Strategic Goals: EPR targets $600 million to $800 million in annual growth, focusing on relationship investing. The company anticipates a same-store NOI of 2% to 2.5% for the net lease space in 2026.
• Investments in Experiential Properties: EPR is committed to investing $25 million per year in Topgolf locations in major metropolitan areas and expanding its Andretti Indoor Karting and Games portfolio.

Q&A Highlights

• Valuation and NAV: CEO Greg Silvers emphasized the changing perception of theaters, positively impacting EPR’s NAV.
• Theater Dispositions: EPR is targeting $25 million to $75 million in theater dispositions, with the midpoint based on deals under contract.
• Dividend Policy: The company maintains a dividend payout target of around 70% AFFO, aligning with its taxable income requirements.

In conclusion, EPR Properties is navigating a complex landscape with a focus on strategic growth and risk management. For a detailed account of the conference call, refer to the full transcript below.

Full transcript - Citi’s 30th Annual Global Property CEO Conference 2025:

Snedes Rose, Analyst, Citi Research: Alright. Welcome to Citi’s two thousand and twenty five Global Property CEO Conference. I’m Snedes Rose of Citi Research. We’re pleased to have with us, EPR and CEO, Greg Silvers. This session is for Citi clients only, and disclosures have been made available at the corporate access desk.

To ask a question, you can raise your hand or go to liveqa.com and enter code GPC25 to submit questions. Greg, I’m going to turn it over you to introduce your company and team, provide any opening remarks, and tell the audience the top reasons you think an investor should be buying your stock today, and then we’ll go into some q and a.

Greg Silvers, CEO, EPR: Darren, sure. Thank you, Smedes, and thank you, Citi. Joining me up here today, so everyone has reference whether you’re here or on the line. To my left is our Chief Investment Officer, Greg Zimmerman, and to my right is our Chief Financial Officer, Mark Peterson. I think, for those who are listening, we are a net lease REIT.

We focused on experiential properties. Those being not necessarily retail focus where you don’t you’re not looking to buy a good, but it’s it’s really about the experience. And so whether that’s ski, Topgolf, movies, amusement parks, things of that nature, that we’ve seen and and still create, I I think, tremendous value in the minds of the consumer. As far as the three reasons, I think one is valuation. If you look, we’re still trading about three turns behind the average.

And so we notwithstanding some movement that we’ve had, we’re very happy with that, but we’re not satisfied of where we’re at. I think number two is that we have, as compared to some others, greatly derisk our execution for this year. If you think about our earnings that just came out, we’re projecting at the midpoint 3.5% growth, with about $250,000,000 of spend of which $100,000,000 of that is already underway. We have no equity capital markets in that plan. And so I think our ability to achieve these objectives is significantly reduced relative to others and what they have to do.

And finally, I think is a very strong and well covered dividend. When you look at what we’ve done and how that’s produced over the last total shareholder returns on a four year, three year, two year, one year, year to date, we are at or near the top of the group. So I I think those things play into that. But why don’t we open it up for questions and see what people wanna discuss?

Snedes Rose, Analyst, Citi Research: Yeah. I just wanted to clarify something. You said valuation three times below average. Are you talking about average for the group or below your historical average?

Greg Silvers, CEO, EPR: Average for the group. So that’s where I was saying is, again, average for the for us, all the time different than but we look at ourselves and say, okay, we’re trading three turns below the average of the group. That’s historically a much greater discount than we’ve traded at. Gotcha.

Snedes Rose, Analyst, Citi Research: Okay. I mean, it does feel like things have have turned a fair amount for your business as you noted or implied your stock is up quite a bit, year to date. And I guess maybe just sort of big picture, maybe movies are not concerning you, but is there anything that is concerning you that you maybe have less disability on or that you’re, you know, wanna talk about, or is it all everything’s hunky dory?

Greg Silvers, CEO, EPR: You know, you always have concerns. I mean, again, there’s no nothing that’s presenting itself wildly. I mean, if you look at theaters, theaters are projected to be up somewhere between 1012% this year. So that’s a really attractive backdrop rather to some other consumer categories. We look at our non experiential.

You’re all everybody’s always asking us about the consumer. Our coverages have held in there. If you look at kind of what our tenant reporting in, it still seems like the consumer is there. So it’s not we never would say we have no worries because we always are mindful that we’re looking at those things. But to date, we just reported our coverages, and they’re still very, very strong.

And so we feel like, we’re we’re at our non theater business. We are 25% of where we were in 02/2019. So we’ve created quite a bit of cushion even from where we’re at right now. And as I said, our theater business is kind of near back to where it was in 2019, but we’re forecast to have 10% to 12% improvement, which should take our coverages even beyond what they were in 2019.

Snedes Rose, Analyst, Citi Research: So for the non theater portfolio coverage, I think it was two times at the Five. Two, five. And it’s been, I feel like the last couple of quarters has been coming down very modestly.

Greg Silvers, CEO, EPR: One way it’s come down, it was two six two six two six two five. So it’s come down a point one. Okay. Okay. And actually related primarily, so that we’re is we sold at one of our cultural assets, which was the Titanic Museum.

Even though it was small, it was probably a five times cover.

Greg Zimmerman, Chief Investment Officer, EPR: Times cover. Actually, two two separate Titanic Museums.

Greg Silvers, CEO, EPR: And so when we sold those, that was the major contributor to that slight reduction in coverage. Coverage.

Mark Peterson, Chief Financial Officer, EPR: And that two five coverage is comparable to a two point zero coverage pre COVID. So it’s up that’s the 25% you referenced. So we got a lot of headroom there.

Snedes Rose, Analyst, Citi Research: Okay. Okay. And you provided an outlook as you noticed of $200,000,000 to $300,000,000 of acquisition activity. I think it’s that’s not too dissimilar to what you completed in ’twenty four. Correct.

Maybe just touch on kind of the near term visibility, kind of what you’re kind of seeing, and any financing commitments that you’ve talked about and releasing on some assets, I think you mentioned on the fourth quarter call.

Greg Silvers, CEO, EPR: Yeah. I don’t know that we have much releasing. What we really have is of that February, what we said was we have 100,000,000 already underway, meaning that it’s it’s build to suit or things that that we’re we’re are committed to. I I’d like Greg talk a little bit about the what we’re doing. Last year, we did to roughly $2.65.

So, again, consistent with that, it’s really being driven. Like I said, our cost of capital is not something we would issue equity at, but if we’re raising I mean, if we’re generating about $120,000,000 of free cash flow, we’ve got about at our midpoint $50,000,000 of dispositions. If you think about that on a sixtyforty leverage neutral, that gets you to that kind of two fifty million dollars But Greg, maybe you want talk about

Greg Zimmerman, Chief Investment Officer, EPR: what we’re seeing as far as the acquisition. Sure. Speeds, we announced on the call that we’ve done our second deal with IEM and attractions operator. This is Diggerland, which is about,

Snedes Rose, Analyst, Citi Research: let me get the mic a little bit closer.

Greg Zimmerman, Chief Investment Officer, EPR: About a half an hour, East Of Philadelphia. In addition, we will complete two Andretti cardings, one in June and July that we started last year, and we’re seeing a lot of opportunities in most of our verticals. We’ve got a couple of other deals not ready to announce, but we’re fairly comfortable they’ll happen in the second half of the year. Okay.

Snedes Rose, Analyst, Citi Research: So, you know, you’re going back maybe to the cost of of capital and and not wanting to access the equity markets. But I mean, you’re kind of getting to the point where it seems like at least relative to consensus NAV or kind of your stock is approaching that or maybe even a little ahead of that at this point?

Greg Silvers, CEO, EPR: Yeah. I think it’s again, when we see that, but I think it that’s all shaped if you look at the the NAV basically by the theaters. And I and I would tell you that I think the perception of those are are changing. I get I get that feel just from this conference of how people are looking at it. If you look, you know, you look at Topgolf right now, there’s two Topgolfs in the market that have recently transacted sub seven.

I don’t know if we’re getting if your NA models are giving us that credit. If you look into the rest, our top tier ski tenant is Vail. Our top tier amusement tenant is Six Flags. So, again, I think that NAV model is very much shaped by the the perception of theaters. We’re going to sell or we have under contract our first couple of leased theaters where they’re selling for lease, and it’s a small operator in a small market in New England, and we’re selling those for a nine cap.

So if we think about, like, a Cinemark with a double b credit and and and, you know, a real, a regal who are less than three times levered. We think that market is moving our direction, and we think that people people’s perception of those are changing. And as I said, we feel that here in this conference from talking to investors.

Snedes Rose, Analyst, Citi Research: And you’ve yeah. So just maybe let’s just touch on the dispositions then, because I and and maybe just kind of recap what you’re selling on the theater side and and anything else that’s in the near term sites. It’s 25,000,000 to 75,000,000 is targeted, so pretty big range. But, you know, what’s kind of the variation from the high end to the low end? Sure.

Greg Silvers, CEO, EPR: The high end to the low end. The midpoint is really based on everything that’s under contract right now scheduled to close. So, again, we always create a range because something could fall out. And could we do more? It could be.

But it’s really gonna be driven by, you know, Greg and his team have done a great job of selling some. We had some vacant theaters as a result of the restructuring. So over the last two years, he sold 25 of those. Now we’re selling some of the theaters that we had managed, and there’s a couple of those in that deal. And then there’s two theaters that we said are leased theaters that are that are in that, that transaction.

Greg Zimmerman, Chief Investment Officer, EPR: And we also announced on the call that we’d already sold one theater, in q one and one vacant there early childhood education.

Snedes Rose, Analyst, Citi Research: Okay. So as you work through the remaining theaters, are you basically done on you’re you’re happy with your theater portfolio after that?

Greg Silvers, CEO, EPR: Or would you Oh, again, I I think we’re still mindful. And if you if anyone follows our strategic plan, it is to lower our theater exposure. The the question and what we’ve said all along is we’re not a fire seller of theaters. We have the most productive theater portfolio in the country. As many of you have heard us say, we control 3% of The US theaters and 8% of the box office.

So, again, it’s it’s a highly productive. As that mindset is changing on theaters, we will continue to look to reduce that exposure. We have great opportunities outside of theaters, and we’ll continue to to lower that exposure over time. It’s just we’re as I said, that that perception that we’re starting to see and beginning to feel and and, you know, the confidence in that industry as it comes back, we will we will lean into that. And so hopefully, that’ll create greater opportunities.

Snedes Rose, Analyst, Citi Research: And you mentioned selling one at a nine cap. Like, maybe how does that just compare to kind of where Like

Greg Silvers, CEO, EPR: I said, it’s it’s two small New England towns to a small operator. Wouldn’t even be a top 20 operate you know, a top 20 operator. So again, I think the coverage is in line with our our overall portfolio. So when you compare that, like I said, to a Cinemark or a Regal that are under three times levered, yet yet, you know, much more on national scale. Centimark’s public already.

You know, they’ve been a great performing stock this year, so there’s confidence coming back. That name Regal, if you saw, they have announced they’re exploring an IPO, so they’re going to be a public name. I think we feel like the confidence is growing in that sector and, you know, against the backdrop. Again, as we talked about, 10 to 12% growth this year, further growth in 02/1926 in the box office. In In the box office.

Right. Yeah. So that should flow. And what’s really interesting, and I think it’s it’s that people should understand because everybody looks at box office. Mhmm.

But the dynamics have changed so much. So if you go back and you look at 02/2019, you had $11,300,000,000 box office and everybody points to that. But you also had a average per cap spend of food and beverage of about $4.20. That now, if you look at all the public reporting, AMC, Regal take us for sure, we get all the numbers and and Cinemark, that per cap spending has changed to nearly $8 So on a the business is set up this way. There’s a the theater sales ticket sales is roughly a 45% margin business.

Snedes Rose, Analyst, Citi Research: Mhmm.

Greg Silvers, CEO, EPR: I know this will come at surprise to no one, but the food and beverage is about an 80% margin business that popcorn and soda does not cost a lot. So if you say that is moved up, that is doubled, that the equivalent from an EBITDA contribution of a $9,400,000,000 box office with a $8 per cap spend is the same as an $11.3 and a $4.2 So again, from an EBITDA standpoint, the operators are back where they’re at. And now we are expected to, in 2026 and beyond, go above that number. So it’s the trend line is really working right now.

Snedes Rose, Analyst, Citi Research: And I suppose there’s not really any new supply in theater world?

Greg Silvers, CEO, EPR: Not really. No. We’re not seeing it. Occasionally, I mean, it’s very intermittent, but you will see I mean, we got noticed today Mall of America is trying to do a new theater, but we’re not participating in any theater of investments.

Snedes Rose, Analyst, Citi Research: Okay. Okay. And then you’re going to stop providing theater level coverage.

Greg Silvers, CEO, EPR: Right? Yeah. Our our process was it was very important again to to show kind of the difference between the two because people for evaluation standpoint. But theater but the coverages are both above will be above where they were before in 2019. So we we put them back together.

And what we did also was our reporting historically had been one quarter delayed. Mhmm. We now, through the pandemic and working with our tenants, we’ve got everything safe education up to the same quarter. So we’ll be reporting on the quarter performance in the quarter that we’re reporting for all of our tenants other than education. Okay.

Snedes Rose, Analyst, Citi Research: And theater will be just be weaved into that same Yep. Bridge? Yes. Okay. Okay.

And then maybe just talk about, you know, as you move to de expose yourself to theaters just to some degree, I guess, what would be kind of the right amount of, right now, it’s 37%, I guess, is About 36%. Thirty six %. Where would you like to see it over time?

Greg Silvers, CEO, EPR: Probably over time, get it down to around 20% or or around there because if you think about the experiential market, that’s kind of where theaters kind of represent as as part of the landscape. So, that’s significant. It’ll take time. But, again, we’re it’s we’re clearly not growing that area, and we’re also have stayed clear in our intent to lower that. And does

Snedes Rose, Analyst, Citi Research: it come through, more of a sell down, or does it come by buying more stuff that

Greg Silvers, CEO, EPR: I actually think it will require some selling. Yeah. I I don’t think you can, again, grow your way into that, that at some time, it will take selling some of that exposure. And like I said, there’s growing interest in that Yeah. As a as an asset class.

Snedes Rose, Analyst, Citi Research: And from when you and just kind of maybe it’s just too soon to really tell, but kind of when you say growing interest, like, who are the who are the buyers that you’re seeing come out of the

Greg Silvers, CEO, EPR: Again, what we’re starting to see right now are privates. Again, when you think about What’s that?

Snedes Rose, Analyst, Citi Research: Private equity or just private

Greg Silvers, CEO, EPR: Equity, family office, things of that nature that where people are saying, I I like the yield. I think I’m comfortable with it. I can get you know, if you’re buying in the aids with some leverage, you’ve got very, very comfortable double digit without having to have any cap rate compression. Whereas someone who’s trying to buy something at six and finance it, you gotta count on compression to get you back up to that number. So I I think as people look for those or people are starting to explore that, we’re starting to see that interest.

Okay.

Snedes Rose, Analyst, Citi Research: And I guess to buy theaters, I mean, you have to be comfortable that Hollywood is gonna continue to produce because you I think as you said before, it’s not about it’s content. Movie so hard about how many they are Yeah. And that drives the box office. Is that

Greg Silvers, CEO, EPR: It’s still still true. I think if anything, one of the great things that was challenging but also great is the great streaming debate is over. I mean, again, streaming is gonna be the killer of your cable. It’s not gonna be the killer. And in fact, you just had Amazon.

They’re going to be one of the presenting partners this year at CinemaCon, which is the theater exhibition conference. They are deeply they just bought the double o paid off and bought the double o seven brand. All of these people, Apple Apple is spending more money on feature length films now than almost anything in their content. I mean, if you see that the new film that’s gonna come out this summer, f one, they spend a ridiculously amount of money making that money making that movie. And in fact, what we’re seeing going forward is a greater number of titles coming in as we look at 26, would you?

Greg Zimmerman, Chief Investment Officer, EPR: Yeah. I mean, we as I said on the call, we already have, 78 major releases scheduled for this year. Same time last year, we were at 64. That’ll continue to grow through the year and into 26. And I I can’t, we can’t underestimate enough there overestimate enough the value of Amazon getting into the mix.

Snedes Rose, Analyst, Citi Research: Okay. Okay. Maybe we can just touch on moving away from movies for a minute. You’re probably kind of talking about them, but it is it’s an important part of your business. But you’ve talked about growing in the Eat and Play segment.

That’s the second largest contributor to EBITDA at about 24%. Maybe kind of remind us, you know, who your largest exposure there and kind of how would you, where would you like to grow to kind of your

Greg Silvers, CEO, EPR: I clearly, our largest exposure there is Topgolf, and we could talk about Topgolf because they’ve been in the news. I think, from our perspective, Topgolf’s a great tenant. They’ve continued. I think the challenge for when Callaway bought them is that they wanted them to be a high growth vehicle. So if you look at what happened with Topgolf, Topgolf did about five to seven venues a year, and then Callaway bought them and said we’re going to do 12 to 15 venues a year.

We’re we’re very public about this, and we talked to their manage Topgolf’s management team all the way that Topgolf, in our opinion, needs a million people in their catchment area to have a successful those sites, if you’re doing five to seven a year, are achievable. Yeah. Think about it. You gotta identify. You gotta entitle.

You gotta get everything done in major metropolitan areas. When Callaway was pushing them to do 12 to 15, you maybe chose some secondary cities. Nothing against anybody, but didn’t meet that that kind of number. If you look at what they’ve said subsequent in about the spin, first thing that Artie Stares, who’s their CEO, said we’re going back to doing five a year. We hit our numbers every time when we do that.

So I think we feel very good. They’re being if if everything goes as planned, they’re being spun out with no financial leverage and $200,000,000 of cash. So their financial profile will be better than they were in 2018. And we still see their active commitment today as four is it four of our sites? Four of our sites are under refurbishment right now at their expense.

They’re actively kind of spending dollars on those and and refurbishing those. So we still see that as a a a good tenant. We’ve clearly took down our growth with them. We’ve only done three with them over the last four years. So again, but all three open to top five in the history of the company.

So when they hit the right number and they hit the right site, we did Suburban LA, San Jose, California, and King Of Prussia. And as somebody reminded me today, they’ve been by our King of Prussia, but they can’t find a parking space to get into the place. Not a problem. We love that kind of problem. But, but so more parking, I guess.

Yes. Well yes. And then, we’ve also as Greg said, we announced we’ve got three Andretti’s under construction to deliver this year. One will deliver next. Highly successful concept that that we’ve seen kind of great performance by.

But Greg, I don’t know if you wanna add any.

Greg Zimmerman, Chief Investment Officer, EPR: No. Yeah. It’s I can’t say enough about Andretti. I mean, obviously, a great operator brand with the Andretti family. We’ll be opening in Kansas City, Oklahoma City, and then in in Suburban Chicago, Schaumburg, Illinois, first part of next year.

And we’re always on the lookout for other eat and play concepts. But, to Greg’s point, though, those are our two largest tenants.

Snedes Rose, Analyst, Citi Research: Okay. And just to kinda go back to Topgolf for a moment. So when that spins, there’s no changes to your payments. And how many do you own out of their total portfolio?

Greg Silvers, CEO, EPR: 38 out of about 85.

Snedes Rose, Analyst, Citi Research: Okay. And that’s an area where you’d be willing to to grow with them either in new cities?

Greg Silvers, CEO, EPR: Like I said, we’re very mindful of our concentration. We see every project we’ve done. It wouldn’t surprise me if we did one a year.

Snedes Rose, Analyst, Citi Research: Okay. Something like that. What’s the scope of investment for one a year?

Greg Silvers, CEO, EPR: Early, 25,000,000.

Greg Zimmerman, Chief Investment Officer, EPR: Okay. And speeds, I would say, we would probably be looking at the kind of markets that Greg mentioned. So San Jose, Ontario, King Of Prussia, very, very major markets. Okay.

Greg Silvers, CEO, EPR: Again, it’s our backdrop on that is if you have control of 15 to 20 acres in these major metropolitan areas, we feel pretty good about where we’re going and the underlying valuation of that. Okay.

Snedes Rose, Analyst, Citi Research: Is there an international opportunity with Topgolf?

Greg Silvers, CEO, EPR: They have taken us asked us multiple times, Australia, Europe. It just doesn’t make sense for us to do something on a scale. I think we would hear it’s more distraction than it is value add. So again, notwithstanding the fact that I had plenty of people on Greg’s team, we wanted to go explore the Australia alternative. They were willing to do two weeks going down and speak to the we passed on it.

Greg Zimmerman, Chief Investment Officer, EPR: And so One of the other challenges, Sneasel, is, some of those were gonna be set up as franchises. So, you know, we’re happy to have the Topgolf brand, but we really want the Topgolf credit as well. Okay. Okay. And just maybe final on Topgolf, the leases are are

Snedes Rose, Analyst, Citi Research: I mean, they’re cross collateralized.

Greg Silvers, CEO, EPR: Yeah. So we have two two master leases and then yeah. And then everything’s crossed. Okay.

Snedes Rose, Analyst, Citi Research: And then on the Andretti, so you have three, you will have three. What’s kind of the typical investment to build one? And what do you think the opportunity there is? Yeah.

Greg Zimmerman, Chief Investment Officer, EPR: Just to correct, I mean, we actually have five already, so we’ll have eight total. Okay. And the investment is around the same

Greg Silvers, CEO, EPR: as a Topgolf. So about $25,000,000 Yeah.

Snedes Rose, Analyst, Citi Research: And is that something you would see one a year? Or how do you think about I’m just trying because you have said you’re going to grow this section. So I’m just kind of wanted to get a sense of pace of growth.

Greg Silvers, CEO, EPR: I think it clearly we could it’s clearly a lower concentration. We could do you saw us do three. Again, we could we could do more. I I think the overall theme, Smedes, would be when we had a cost of capital that worked, we were doing $600,000,000 to $800,000,000 a year in around variety of our categories. In 2022, we did $600,000,000 We’re comfortable that we can identify, underwrite, and secure those types of investments.

It will be what what I would say is what we’re seeing now is we’re probably not as an aggressive bidder on bigger deals. And so, you know, if somebody comes to us right now and says, I’ve got a $200 3 hundred million dollars deal or bigger, it’s not something you know, we’re not gonna kid somebody and go, yeah, let’s let’s do it because that we don’t have that capacity without raising capital. We’re aware of at least three of those in the market right now that have come to see us and we’re like, we’ll be honest. We just we can’t do it. They wanna do it with us, but we can’t do it.

And so I I think we’ll be able to but part of our business has always been about relationship investing and taking tenants. We we tell people all along, we’re not venture capital, we’re growth capital. But if you have two or three units that we can study, underwrite, understand, we can grow you. And and we’ve done that repeatedly and across all our categories. If you look at Miraval, which is a wellness investment that we made last year.

We have three right now. They’re under construction on the fourth. We have the ability to take them out of that in, I think, ’26. Mhmm. So, again, it’s creating those things that allow us to not only see new concepts, but to grow from those.

And Greg and his team does a great job of anytime we get introduced and we’re doing a new concept that we want some sort of relationship agreement that we will have, not the obligation, but the opportunity to see future deals that will allow us to create a depth of pipeline because we’ve always planned to get back to that $600,000,000,000 or $800,000,000,000 kind of growth trajectory.

Snedes Rose, Analyst, Citi Research: Okay. That’s that’s the longer term move. Okay. Mhmm. And then you’re extricating yourself from the Margaritaville RV.

Right? Is that was that a significant it wasn’t a significant trend.

Greg Silvers, CEO, EPR: It wasn’t a significant. It was just candidly, it was a mistake. And and then listen, I don’t wanna we so we have a Margarita RV in Pigeon Forge, Tennessee that’s on a net lease, and it does phenomenal. It it’s incredible. And so we had this opportunity presented to us in Louisiana, and we thought, okay, we can buy this and convert this.

Snedes Rose, Analyst, Citi Research: Mhmm.

Greg Silvers, CEO, EPR: The reality is that is not a margarita customer. That’s a Bud Light customer, maybe a Bush Light customer, maybe that and it was a disaster. There’s no getting around it. We just Can you get sorry.

Snedes Rose, Analyst, Citi Research: Not to be dumb, but, like, what so what’s the difference? I mean, when you say Margaritaville versus a bushel Just

Greg Silvers, CEO, EPR: the brand the brand didn’t die.

Snedes Rose, Analyst, Citi Research: Customer? Is that what’s the

Greg Silvers, CEO, EPR: I’m gonna tell you, Schmeidze, it was worse than just people, like, I don’t like it. It was like getting letters, like, you’ve screwed this up. We this is not who we are.

Greg Zimmerman, Chief Investment Officer, EPR: Alright. We just missed the mark on the customer Schmeidze.

Snedes Rose, Analyst, Citi Research: That’s all.

Greg Silvers, CEO, EPR: I mean, it’s I mean, we own it. That’s that’s our risk our fault.

Mark Peterson, Chief Financial Officer, EPR: But but our capital was 16,000,000.

Greg Silvers, CEO, EPR: So it’s not a huge number, but small number. To rebrand it, to get out of that branding group, to do all of these things was gonna cost more than it made sense to invest. So we’ve decided we’re we’re gonna take our medicine, admit our mistake, and and and move on. Okay.

Snedes Rose, Analyst, Citi Research: And what’s sort of the timing on that, I guess, to wind that?

Greg Silvers, CEO, EPR: Under We’re done. We’re done. We’re done. And then

Snedes Rose, Analyst, Citi Research: the St. Petersburg, similar kind of situation. It’s not that one, I

Greg Silvers, CEO, EPR: wouldn’t say is a mistake. Here is what occurred in there, and we could talk about is that that property worked very well, for several years. We, we refinanced it, got our investment down to a de minimis, and then we got hit by two hurricanes in the same season. If those of you who don’t have Florida properties, a hurricane named Storm has a separate deductible, a 10% deductible. So on a hundred million dollar policy, we just had $20,000,000 worth of deductible.

It also had, one of the buildings was hit significantly enough that in Florida, if they have more than 40% damage, you have to bring the building up to new code, which is not covered by insurance. And so when we did the math, we only had about

Mark Peterson, Chief Financial Officer, EPR: 12,000,000.

Greg Silvers, CEO, EPR: 12 million dollars in it. And so not only were we gonna have to pay 20,000,000, we were going to have to pay additional money to bring it up to code, and then insurance rates were already up. We got hit with back to back years of 20% increases before we were hit with two hurricanes. So we just said economically, it didn’t make sense. And therefore, we decided to we had a nonrecourse loan, and we decided to give that back to the lender.

Mark Peterson, Chief Financial Officer, EPR: I think the good I think I was gonna say that the good news is we have only two more operating JVs with an investment of, like, $14,000,000 so pretty de minimis left in the JV land. And on the consolidated side, we have Cartwright indoor hotel and water park, six operating theaters, but two under contract for sale. So from an operations, it’s declining. It’s gonna simplify understanding EPR, you know, the operations. We’re not doing operations going forward.

The the theaters were more a result of what we got back from Right. Regal. We’ll probably keep a couple theaters operating so we get the data. Because we get when you when you own and operate a theater, you get a lot of data on the theater that helps us for the broader market. But

Snedes Rose, Analyst, Citi Research: They’ll be like your guinea pigs, but otherwise

Greg Silvers, CEO, EPR: Yeah. Yeah. Yeah. That’s a good way to put it. It’s down to guinea pigs.

Okay. Okay.

Snedes Rose, Analyst, Citi Research: You know, I mean, just I know we’re coming into the last few minutes, but you’ve talked about in addition to producing theaters over time, you know, early childhood education, private schools, that’s about 7% of EBITDA. What’s kind of the time frame there?

Greg Silvers, CEO, EPR: And I think you’ll see that starting this year. We’ll start to look at at at again, we wanted to get through selling down our vacant theaters, you know, and how many people we’ve sold 25 over the last two years. So I think we’ll start to look at that portfolio and say, okay, that’s the the great performing assets. And, as that market we get calls on it all the time. So I think we’ll be we’ll we’ll start to see some movement.

Greg Zimmerman, Chief Investment Officer, EPR: Fairly liquid market too. A lot of a lot of people invest in those.

Snedes Rose, Analyst, Citi Research: K. And so your reason to reduce even though they’re Just strategically,

Greg Silvers, CEO, EPR: as much as I wanna tell people that going to daycare is an experiential asset. I even I have a difficult time convincing that. So, you know, from a strategic focus Okay. That’s just it.

Snedes Rose, Analyst, Citi Research: It’s the because of its goals, I guess, too. Not really that. Okay. Okay. And what’s the what’s the market like for those?

Greg Zimmerman, Chief Investment Officer, EPR: Again, I said it’s fairly liquid. A lot of buyers, including, you know, other triple net lease REITs. And as Greg said, we get calls weekly on the portfolio.

Greg Silvers, CEO, EPR: I mean, WPC owns several schools of private school. I mean, our major private school is the British School of Chicago. So we we are always meeting with people who like, oh, my kids go there. So, again, it’s it’s a quality name, well well attended and well located in Chicago. So, I think there will be we may even have an assembly group of parents who wanna own that.

Snedes Rose, Analyst, Citi Research: Okay. And then maybe just to touch on the dividend, you know, you talked about very a very healthy yield, and I think you’ve targeted about 70% as an AFFO payout. And does that correspond with your taxable requirement payout? Are you paying above your taxable requirements? Or Well, we’re not expected

Mark Peterson, Chief Financial Officer, EPR: to pay any taxes, so it’s covering our taxable income for sure. So if you look at this year, we had actually had a return of capital fairly significant. If you look again project next year, 70 will cover us. So it’s close?

Snedes Rose, Analyst, Citi Research: It’s close to your taxable required taxable distributions. Okay.

Mark Peterson, Chief Financial Officer, EPR: Yeah. Well, we have some room there. I mean, if we could go up further and or we could go down a bit further and still be okay, but there’s not that tight, but it’s it it works. 70% works.

Snedes Rose, Analyst, Citi Research: Okay. I guess I was just thinking it didn’t seem like you’re necessarily being rewarded for the yield and maybe the if you have the opportunity to retain capital, maybe that would make Yeah.

Greg Silvers, CEO, EPR: I think we look at it and say, you know, we went up 3.5%. We’ve told the market we’re gonna grow it commiserate with our growth, and and we project 3.5%. So if you say on a $75,000,000 share count, 75 plus, and we’re going up 12¢, it it’s really it’s 6 and a half million dollars. So it’s not like it’s 65,000,000.

Snedes Rose, Analyst, Citi Research: It’s Yeah. No. Fair. Fair.

Mark Peterson, Chief Financial Officer, EPR: And the 70% is a conservative number. And, you know, triple net investors want yield, and and so we wanted to reward that while keeping that conservative.

Snedes Rose, Analyst, Citi Research: Okay. As we come down to less than a minute, I just want to ask you, if you think about the net lease space for 2026, kind of what do you think the same store, NOI can be? Not for you guys, but just for the

Greg Silvers, CEO, EPR: I mean, from what we’re seeing, call it two and a half.

Snedes Rose, Analyst, Citi Research: Two Two and a half percent?

Greg Silvers, CEO, EPR: Yeah. I mean, again, from what we’re hearing, two, two and a half. Okay. I hear people saying that.

Snedes Rose, Analyst, Citi Research: Okay. Okay. And do you think there’ll be more, the same, or fewer net lease companies in the public space a year from now?

Greg Silvers, CEO, EPR: Again, I guess the safe thing to say is the same, but there always seems to I think we got two new ones this year, so who knows? I my crystal ball is horribly poor with that.

Snedes Rose, Analyst, Citi Research: Have to give me one of those answers. I have a spreadsheet.

Greg Silvers, CEO, EPR: Say yeah. Yeah. The same. I apologize. The same.

Hey.

Snedes Rose, Analyst, Citi Research: We’re gonna go with the same. Thank you for your time, guys. Thank you.

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