EPR Properties(EPR) - 2024 Q4 - Annual Report

Investment Strategy - Total investments as of December 31, 2024, were approximately $6.9 billion, with Experiential investments comprising$ 6.4 billion (93%) and Education investments comprising $0.5 billion (7%) of total investments[28]. - The company intends to significantly reduce investments in theatres and diversify into other experiential property types[38]. - The company plans to continue pursuing opportunities in experiential lodging, fitness & wellness, and cultural investments to enhance shareholder value[60][61]. - The growth strategy focuses on acquiring or developing a diversified portfolio of experiential real estate venues that facilitate out-of-home leisure and recreation experiences[62]. - The company plans to be more selective in investments and acquisitions due to elevated interest rates and inflation impacting the cost of capital[65]. - The company aims to diversify its asset base by property type, geographic location, and customer, targeting experiential business operators[74]. - The company will explore joint venture opportunities with institutional investors or developers that align with its investment principles[80]. Real Estate Portfolio - The wholly-owned Experiential real estate portfolio consisted of approximately 18.8 million square feet, with 99% leased or operated, excluding 0.3 million square feet of vacant properties intended for sale[31]. - The wholly-owned Education real estate portfolio consisted of approximately 1.2 million square feet, with 100% leased, excluding 13 thousand square feet of a vacant property intended for sale[57]. - The company intends to continue developing and redeveloping properties consistent with growth strategies, requiring signed leases or significant pre-leasing before construction[70]. - The company typically acquires or develops single-tenant properties under long-term leases to minimize lease-up risks and ensure predictable income streams[66]. - The company structures leases on a triple-net basis, allowing tenants to bear financial and operational responsibilities, with periodic rent increases based on gross sales[67]. Financial Performance - Total North American box office revenues for 2024 were down approximately 4% compared to 2023, but theatre rent coverage levels were near pre-COVID levels despite the decrease in box office revenue[32]. - Approximately$ 94.4 million (13.5%) of total revenue for the year ended December 31, 2024, was from AMC, and $76.4 million (10.9%) was from Regal tenants[39]. - The investment in golf entertainment complexes, specifically Topgolf, contributed approximately$ 100.8 million (14.4%) to total revenue for the year ended December 31, 2024[41]. Capital Structure and Debt Management - As of December 31, 2024, the company had a $1.0 billion unsecured revolving credit facility with$ 175.0 million outstanding, and a $25.0 million bond fixed through an interest rate swap[304]. - The company is focused on maintaining a conservative capital structure, seeking to keep a low net debt to adjusted EBITDA ratio[76]. - As of December 31, 2024, the total fixed rate debt amounts to$ 2,704.6 million with an average interest rate of 4.32%[308]. - The fair value of fixed rate debt decreased from $2,606.8 million in 2023 to$ 2,590.3 million in 2024[310]. - The estimated fair value of total debt as of December 31, 2024, is $2,590.3 million, reflecting the company's ongoing management of interest rate and foreign currency risks[310]. Risk Management - The company is exposed to market risks related to interest rates and foreign currency exchange rates, actively seeking to mitigate these risks[304]. - The company has entered into an interest rate swap agreement with a notional amount of$ 25.0 million, capping the variable interest rate at 2.5325% until September 30, 2026[311]. - The company has six USD-CAD cross-currency swaps effective October 1, 2024, with a total notional value of $170.0 million CAD and$ 125.0 million USD, locking in an exchange rate of $1.35 CAD per USD[313]. - Two additional USD-CAD cross-currency swaps effective December 1, 2024, have a total notional value of$ 90.0 million CAD and $66.2 million USD, also locking in an exchange rate of$ 1.35 CAD per USD[314]. - The company entered into two forward contracts with a fixed notional value of $200.0 million CAD and$ 142.8 million USD, with an exchange rate of approximately $1.40 CAD per USD, effective December 19, 2024[315]. - A forward contract with a notional value of$ 90.0 million CAD and $64.3 million USD was also established, effective December 19, 2024, at an exchange rate of approximately$ 1.40 CAD per USD[316]. - The company terminated previous CAD to USD forward contracts on December 19, 2024, receiving $10.4 million from the settlement[317]. - Changes in the fair value of foreign currency derivatives designated as net investment hedges are reported in AOCI, impacting earnings when the hedged net investment is sold or liquidated[318]. Dividend Policy - The company expects to continue paying monthly dividends to common shareholders and quarterly dividends to preferred shareholders, with specific rates for different series of preferred shares[81][82].