EPR Properties(US:EPR)2025-09-09 16:07Financial Data and Key Metrics Changes - The company is expecting to close a significant transaction involving a gaming asset in the Catskills, which could provide approximately $200 million at an attractive cap rate, potentially reducing leverage below five times [3][4]. - The company reported a growth rate of 4.3% this year, positioning it near sector-leading growth [5]. Business Line Data and Key Metrics Changes - The company has shifted focus towards acquisitions rather than development, with a robust pipeline of transactions exceeding $400 million currently available in the market [7][8]. - The company has successfully disposed of vacant theaters, which has set the stage for energizing its growth engine in 2026 [5][14]. Market Data and Key Metrics Changes - The company is observing a competitive environment where credit funds are becoming more prominent in the market, with loan-to-value ratios increasing from 55-60% to 80-85% [12]. - The average ticket price for theaters in the U.S. is around $10, making it an affordable entertainment option for families, which has historically performed well during recessions [21]. Company Strategy and Development Direction - The company aims to diversify away from theaters while maintaining a focus on quality real estate, with a target to align its portfolio with the investable universe of experiential theater business [17][14]. - The management is optimistic about the growth potential in 2026, with plans to ramp up acquisitions to a $500 million run rate [5][19]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the theater business, noting that the average spend on food and beverage has increased significantly, contributing to higher margins [15]. - The company is well-positioned for growth as it has cleared out distractions and is focusing on capitalizing on opportunities in the market [16][18]. Other Important Information - The company has reduced its operating theaters from seven to four, simplifying its business model and focusing on higher-performing assets [39][40]. - The company is generating between $130 million and $150 million in free cash flow, which supports its growth strategy [49]. Q&A Session Summary Question: What is the expectation for long-term debt rates when the Fed starts to cut? - Management expects rates to stay flat or potentially rise [70]. Question: How does the company plan to ramp up spending on AI initiatives? - The company plans to increase spending on AI initiatives, incorporating elements into finance and administrative functions [71]. Question: What is the outlook for same-store NOI in the sector next year? - Management believes that same-store NOI will be slightly up [72].