EPR Properties(US:EPR)2024-10-31 16:30Financial Data and Key Metrics Changes - FFO as adjusted for Q3 was $1.30 per share, down from $1.47 in the prior year, while AFFO for the quarter was $1.29 per share compared to $1.47 in the prior year [39] - Total revenue for the quarter was $180.5 million, down from $189.4 million in the prior year, with rental revenue decreasing by $15.3 million [40] - Overall portfolio coverage remains strong at 2.1 times, down slightly from the previous quarter [17][10] Business Line Data and Key Metrics Changes - The Experiential portfolio comprises 283 properties, accounting for 93% of total investments, and was 99% leased at the end of the quarter [15][16] - The Education portfolio consists of 69 properties, which were 100% leased at the end of the quarter [16] - Percentage rents for the quarter increased to $5.9 million from $2.1 million in the prior year, driven by theaters under the Regal master lease [41] Market Data and Key Metrics Changes - North American box office for Q3 totaled $2.7 billion, with a total of $6.2 billion for the first nine months, down 12% year-over-year [21] - Box office gross is expected to recover, with projections for 2024 increased to between $8.3 billion and $8.7 billion [25] - Theaters' trailing 12-month coverage is at 1.5 times, with box office at $8.1 billion for the same period [17] Company Strategy and Development Direction - The company is focused on investing in experiential properties, particularly in fitness and wellness sectors, capitalizing on growing consumer demand [9][10] - A new $1 billion revolving credit facility was established to enhance liquidity and support strategic investments [8] - The company plans to recycle capital from non-core asset sales to fund investments in experiential properties [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of box office revenues and the normalization of film releases post-strikes [18][24] - The impact of recent hurricanes on hotel properties was acknowledged, with plans to work with partners and insurers for recovery [20][19] - Management remains confident in the strategic direction and financial health of the company, expecting continued growth in experiential investments [57] Other Important Information - The company recognized impairment charges of $12.1 million on joint ventures due to hurricane damage [46] - Investment spending for the quarter was $82 million, with year-to-date spending at $214.6 million [31] - The company is narrowing its 2024 FFO guidance to a range of $4.80 to $4.92 per share [50] Q&A Session Summary Question: What is driving the confidence in box office projections? - Management highlighted the normalization of the number of titles released, which is expected to drive box office growth [59][60] Question: What is the strategy regarding exposure to Topgolf post-spin-off? - The company is comfortable with its current exposure and has focused on major markets for its investments [61][62] Question: What are the expectations for the 2025 box office? - Analysts expect a mid-nine billion box office for 2025, with more titles on the slate compared to 2024 [63][64] Question: How is the transaction market looking? - The company has not seen significant changes in pricing but remains disciplined in capital deployment [65][66] Question: What is the outlook for the St. Pete lodging assets? - The decision to exit these assets was influenced by both hurricane damage and rising insurance costs [74][76] Question: Will there be any cash impact from exiting the St. Pete assets? - The company does not expect any significant cash impact from exiting these properties [82] Question: What is the future of investments in fitness and wellness assets? - The company plans to continue investing in curated health and wellness experiences, targeting specific demographic groups [100][101]