EPR Properties(EPR) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a 5.1% increase in FFO as adjusted per share, reaching $1.30, compared to $1.23 in the prior year [20] - AFFO per share increased by 6.2% to $1.30, up from $1.22 in the previous year [20] - Total revenue for the quarter was $183 million, an increase from $177.2 million in the prior year [22] - G&A expenses rose to $14.6 million from $12.2 million, primarily due to higher payroll and benefits [23] Business Line Data and Key Metrics Changes - The experiential portfolio, comprising 278 properties, accounted for 94% of total investments and was 99% leased or operated [10] - The education portfolio, with 55 properties, was fully leased at the end of the quarter [10] - Percentage rents and participating interest for the quarter were $7.8 million, up from $4.9 million in the prior year, driven by higher performance from attraction and cultural properties [22] Market Data and Key Metrics Changes - The North American box office grew by 1% in 2025, totaling $8.7 billion, with Q4 box office at $2.2 billion, down from $2.4 billion in Q4 2024 [11] - The company anticipates further growth in the box office for 2026, supported by an increased number of wide release titles [6] Company Strategy and Development Direction - The company plans to increase investment spending significantly in 2026, targeting $400 million to $500 million [18][27] - A strategic capital recycling program is in place to strengthen portfolio quality and unlock capital for higher returning investments [8] - The company is focusing on expanding its experiential portfolio, particularly in fitness and wellness, attractions, and eat-and-play sectors [68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the earnings trajectory and highlighted a strong investment pipeline for 2026 [8][31] - The company noted that the bulk of theater rent is not tied to box office fluctuations, which provides stability [12] - Management acknowledged the importance of maintaining strong relationships with operators to capitalize on growth opportunities [9] Other Important Information - The company successfully closed a $550 million public debt offering and established a $400 million at-the-market equity program [8] - A 5.1% increase in the monthly dividend to common shareholders was announced, reflecting confidence in future earnings [30] Q&A Session Summary Question: Acquisition Targets and Confidence Level - Management indicated confidence in achieving the $400 million to $500 million acquisition target, emphasizing a strong pipeline across various sectors [34][35] Question: Topgolf's Transition to Private Equity - Management has had multiple discussions with Topgolf's new private equity owner and is encouraged by their alignment on growth strategies [38][39] Question: Cost of Capital and ATM Program - Management discussed the current cost of capital and indicated that it is becoming favorable for potential equity issuance through the ATM program [43][44] Question: Education Portfolio Trends - Management noted the strength of the education portfolio and indicated potential for future dispositions to accelerate growth [84]