EPR Properties(US:EPR)2023-08-02 16:00Financial Performance - Total revenue for the three months ended June 30, 2023, was $172.9 million, an 8% increase from $160.4 million in the same period of 2022 [145]. - FFOAA per diluted share for the three months ended June 30, 2023, was $1.28, a 9% increase from $1.17 in the same period of 2022 [145]. - Total revenue for the six months ended June 30, 2023, was $344.3 million, an increase of 8.3% from $317.9 million in 2022 [151]. - Total rental revenue for the six months ended June 30, 2023, was $303.5 million, an increase of 7.4% from $282.5 million in 2022 [151]. - AFFO available to common shareholders of EPR Properties increased to $100,101,000 for Q2 2023, up from $93,388,000 in Q2 2022, representing an increase of 7.8% [181]. - FFO per common share (diluted) rose to $1.27 in Q2 2023, compared to $1.04 in Q2 2022, reflecting a growth of 22.1% [181]. - The company reported a net income of $13,600,000 for Q2 2023, down from $40,909,000 in Q2 2022, indicating a decline of 66.8% [191]. Assets and Investments - As of June 30, 2023, total assets were approximately $5.7 billion, with total investments at approximately $6.7 billion [133]. - The Experiential segment comprised $6.2 billion, or 92%, of total investments, while the Education segment accounted for $0.5 billion, or 8% [133]. - The owned Experiential real estate portfolio consisted of approximately 20.1 million square feet, which was 98% leased [134]. - Total investments as of June 30, 2023, amounted to $6,718,938,000, slightly up from $6,686,186,000 at the end of 2022 [192]. - The company had commitments for 16 development projects totaling approximately $178.3 million, with $70.7 million expected to be funded in 2023 [169]. Debt and Financing - Total outstanding debt was $2.8 billion, with 99% being unsecured, and $2.5 billion in unsecured senior notes with interest rates ranging from 3.60% to 4.95% [163]. - The debt to total assets ratio was 49%, and the net debt to adjusted EBITDAre ratio was 5.0x as of June 30, 2023 [176]. - The company plans to finance investments primarily through cash from operations and borrowing availability under its unsecured revolving credit facility [167]. - The company had no scheduled debt payments due in 2023 and $136.6 million due in 2024 [173]. - Net Debt stood at $2,741,518,000 as of June 30, 2023, compared to $2,672,963,000 in the previous year, indicating an increase of 2.6% [191]. Impairments and Losses - The company recorded a non-cash impairment charge of $42.4 million during the three months ended June 30, 2023, related to properties surrendered by Regal [143]. - Impairment charges totaled $43.8 million for the six months ended June 30, 2023, related to eight Regal Surrendered Properties [149][158]. - The company recognized a net loss of $1.1 million on the sale of one vacant eat & play property and one early childhood education center during the six months ended June 30, 2023 [148]. Operational Highlights - Regal's new master lease will have an annual base rent of $65.0 million, escalating by 10% every five years, effective August 1, 2023 [141]. - Regal owed approximately $76.3 million in undiscounted deferred rent as of July 31, 2023, with $56.8 million related to Master Lease Properties [143]. - The company collected $7.3 million in deferred rent from cash basis customers during the three months ended June 30, 2023 [138]. - Minimum rent for the six months ended June 30, 2023, increased by $20.0 million to $285.2 million compared to $265.2 million in 2022, primarily due to improved collections and property acquisitions [151][152]. - Interest expense decreased to $63.3 million for the six months ended June 30, 2023, down from $66.5 million in 2022, due to increased interest income on short-term investments [155][160]. - General and administrative expenses increased by $3.3 million to $29.2 million for the six months ended June 30, 2023, primarily due to higher payroll and professional fees [155]. Currency and Interest Rate Risks - The company is exposed to foreign currency risk on its six Canadian properties, with rents received in CAD, and has implemented hedging strategies to mitigate this risk [198]. - The company has entered into three USD-CAD cross-currency swaps with a total fixed original notional value of $150.0 million CAD and $118.7 million USD, locking in an exchange rate of $1.26 CAD per USD on approximately $10.8 million annual CAD denominated cash flows [200]. - The company has two forward contracts with a fixed notional value of $200.0 million CAD and $155.9 million USD, with an exchange rate of approximately $1.28 CAD per USD [203]. - The company has an interest rate cap agreement limiting the variable portion of the interest rate on a $25.0 million bond to 2.5325% until September 30, 2026 [199]. - The joint venture's interest rate cap agreement limits the variable portion of the interest rate (SOFR) to 3.5% from May 19, 2022, to June 1, 2024 [196]. - The net effect of the company's cross-currency swaps is to lock in an exchange rate of $1.30 CAD per USD on approximately $8.1 million of annual CAD denominated cash flows [202]. - The company has entered into two additional forward contracts with a fixed notional value of $90.0 million CAD and $69.2 million USD, with an exchange rate of approximately $1.30 CAD per USD [204].