EPR Properties

Hello and welcome to the EPR Properties Q2 2025 earnings call. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question and answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I will now hand the call over to Brian Moriarty, Senior Vice President, Corporate Communications.

Thank you, Abigail. Thanks for joining us today for our second quarter 2025 earnings call and webcast. Participants on today's call are Greg Silvers, Chairman and CEO, Greg Zimmerman, Executive Vice President and CIO, and Mark Peterson, Executive Vice President and CFO. I'll start the call by informing you that this call may include forward-looking statements identified in the Private Securities Litigation Act of 1995, identified by such words as will, be, intend, continue, believe, may, expect, hope, anticipate, or other comparable terms. The company's actual financial condition and the results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of these factors that could cause results to differ materially from these forward-looking statements are contained in the company's SEC filings, including the company's reports on Form 10-K and 10-Q. Additionally, this call will contain references to certain non-GAP measures, which we believe are useful in evaluating the company's performance. A reconciliation of these measures, the most directly comparable GAP measures, are included in today's earnings release and supplemental information furnished to the SEC under Form 10-K. If you wish to follow along, today's earnings release, supplemental, and earnings call presentation are available in the Investor Center page of the company's website, .eprkc.com. Now I'll turn the call over to Greg Silvers.

Thank you, Brian. Good morning, everyone, and thank you for joining us on today's second quarter 2025 earnings call and webcast. Our second quarter results underscore sustained momentum across our diversified portfolio, highlighted by solid earnings growth and a disciplined approach to capital allocation. Additionally, we've seen a significant improvement in our cost of capital, supported by the strong appreciation of our equity valuation. During the first half of the year, our elevated cost of capital dictated a measured approach to capital in our capital deployment. However, we have a robust pipeline of opportunities, including more than 100 million committed to experiential development and redevelopment projects in the coming quarters. While our investment spending guidance remains unchanged, our improved cost of capital positions us to accelerate our future investment spending. Although the full impact of these efforts will play out over future quarters, our deployment strategy has clearly shifted within the last 60 days as our team has taken a more aggressive growth posture to pursue new opportunities. Our pipeline includes both opportunities with both existing and new partners, spending a broad range of deal sizes. However, with an improved cost of capital, larger deals are now becoming a possibility. We are also pleased with our ongoing progress in our strategic capital recycling, which is advancing ahead of our expectations. This initiative is pivotal as we further position our portfolio with productive and diversified experiential assets. Turning to our existing portfolio, our second quarter consolidated coverage was up slightly versus first quarter from 2.0 to 2.1. The box office remains a source of meaningful optimism. We are seeing sustained momentum and resilience as major releases have generally met or exceeded their expectations, reinforcing positive consumer demand for theatrical exhibition. Notably, we anticipate that the regal master lease will land near our percentage rent expectations, which is expected to generate a significant increase from 2024. An encouraging outcome driven by continued box office recovery and the enhanced economic alignment embedded in the revised lease structure. While the broader macroeconomic environment presents ongoing cross currents, our differentiated strategy provides both resilience and opportunity anchored by a sustained consumer orientation toward experiential spending. Now I'll turn it over to Greg's number two over the business in greater detail. Thanks,

Greg. At the end of the quarter, our total investments were approximately $6.9 billion with 329 properties that are 99% leased or operated, excluding vacant properties we intend to sell. During the quarter, our investment spending was $48.6 million. 100% of the spending was in our experiential portfolio. Our experiential portfolio comprises 274 properties with 52 operators and accounts for 94% of our total investments or approximately $6.5 billion. And at the end of the quarter, excluding the vacant properties we intend to sell was 99% leased or operated. Our education portfolio comprises 55 properties with five operators and at the end of the quarter was 100% leased. Turning to coverage. The most recent data provided is based on a June trailing 12 month period. Overall, the portfolio coverage remains strong at 2.1 times an increase over the last quarter. Turning to the operating status of our tenants. The rebound in North American box office continues. Q2 box office was 2.7 billion, up 37% compared to Q2 2024, driven by a full slate of strong performing titles. Six titles grossed over 175 million, including a Minecraft movie at 424 million today. Lilo and Stitch at 419 million today. Sinners at 279 million today. And have a trainer dragon at 254 million today. For Q3, three titles are projected to gross over 200 million. Jurassic World Rebirth, Superman, and the Fantastic Four first steps. Jurassic World has already grossed over 286 million and Superman is at 260 million. Fantastic Four opened last weekend to 118 million. We are also very pleased with the success of Apple's F1, which has grossed nearly $160 million to date, making it the most successful Apple theatrical release. The slate for fourth quarter is anchored by three additional films projected to gross over 200 million. Zootopia 2, Wicked for Good, and Avatar Fire Mesh. Box office through the first half of the year was 2.1 billion, a 15% increase over the first half of 2024. Our estimate of North American box office for calendar year 2025 remains between 9.3 and 9.7 billion. Turning now to an update on our other major customer groups. Andretti Karting opened in Oklahoma City on July 15. Construction continues in Kansas City and Shawmore with openings scheduled respectively for late 2025 and early 2026. Notwithstanding some macro pressures on consumers, our Eat and Play coverage remains strong and above pre-COVID levels. Importantly, across our portfolio, our operators are continually refining and developing promotional initiatives to attract customers and deliver value. Our attractions are open for the summer. We are very pleased with the performance of Bavarian Inn. Our major expansion was open for all of Q2 and its driving performance. Throughout the rest of the portfolio, early season performance has been varied because of weather conditions, but historically, they tend to even out over the course of the season. USA Today recently ranked each of our three Hot Springs resorts in the top 10 of all Hot Springs resorts in the United States. Our recently expanded Springs Resort at Pagosa Springs is number one. Our Murrieta Hot Springs Resort in Murrieta, California is number three. And our Iron Mountain Hot Springs in Glenwood Springs, Colorado is number five. We are leaders in this industry and have spent a lot of time focused on building a foundation with strong performing assets. We see a lot of momentum and investment potential in the Hot Springs space as people across the demographic spectrum focus on wellness. The expansion at our Jellystone Cozy Rest RV Resort near Pittsburgh is complete and early season performance shows gains over Q2 2024, driven by the increased number of available rental units. Our education portfolio continues to perform well. Our customers trailing 12-month revenue and even arm across the portfolio for Q1 was essentially flat. Our investment spending for Q2 was $48.6 million, entirely experiential assets and includes funding for projects that we have closed but are not yet open. Our year to date investment spending is $86.3 million. During the quarter, we made our first investment in the traditional golf space, acquiring the land for $1.2 million and providing $5.9 million in mortgage financing, secured by the improvements to ever re-partners for an existing private club in Georgia. We have spent a lot of time analyzing traditional golf while building deep relationships, and we are delighted to announce our foray into what we think is an exciting growth opportunity in a resilient space for the growing outbreak. We also acquired our second PennStack Eat and Play venue in Northern Virginia for $1.6 million, with a commitment to provide -to-suit financing for $19 million. This project is expected to open in 2026. PennStack features bowling, food and beverage, and redemption games. As our cost of capital continues to recover, we are increasing our investment spending cadence as we head into the second half of 2025 and for 2026. We continue to see high-quality opportunities for both acquisition and -to-suit development in our target experiential categories. As we have mentioned frequently, we are especially bullish on the fitness and wellness space, given our deep relationships, the increased focus on fitness and wellness among multiple generations and demographics, and the wide range of investment opportunities, from hot springs to spas to fitness. Ramping up takes time, so we are maintaining our investment spending guidance for funds to be deployed in 2025 in the range of -$300 million. We have committed over $100 million for experiential development and redevelopment projects that have closed but are not yet funded to be deployed over the next 18 months. We anticipate approximately $43 million of this amount will be deployed in 2025, which is included at the midpoint of our 2025 guidance range. We continue to execute our strategy to focus our portfolio on diversified experiential assets. To that end, in Q2, we sold a vacant former Regal Theater in California to Costco for net proceeds of $24 million, demonstrating the value of good real estate. We also sold two theater properties and a nine cap to a smaller operator who leased those locations from us. Total proceeds for these three theater transactions were $35.6 million, with a net gain of $16.8 million. Finally, subsequent to the end of the quarter, we sold our last vacant AMC theater in Hamilton, New Jersey to the Children's Hospital of Philadelphia for net proceeds of approximately $16 million and a gain of approximately $3 million. In the past four years, we have sold 31 theaters. We have one remaining vacant theater. Year to date, we have sold approximately $130 million of assets. We are revising our 2025 disposition guidance to the range of $930 million to $145 million from a range of $80 million to $120 million. I now turn it over to Mark for discussion of the financials. Thank you,

Greg. Today I will discuss our financial performance for the second quarter, provide an update on our balance sheet, and close with an update on 2025 guidance. FFO's adjusted for the quarter was $1.26 per share versus $1.22 in the prior year. An AFFO for the quarter was $1.24 per share compared to $1.20 in the prior year, both an increase of 3.3%. Now moving to the key variances. Total revenue for the quarter was $178.1 million versus $173.1 million in the prior year. Within total revenue, rental revenue increased $5.3 million versus the prior year, mostly due to the impact of investment spending and higher percentage rents. Percentage rents for the quarter were $4.6 million versus $2 million in the prior year, and the increase was due primarily to percentage rent recognized from one of our theater tenants. The increase in mortgage and other financing income of $1.9 million was due to additional investments in mortgage notes over the past year. Both other income and other expense relate primarily to our consolidated operating properties, including the Cartwright Hotel and Indoor Water Park and our operating theaters. The decrease in other income and other expense first prior year is due primarily to the sale of three operating theater properties in the first half of this year. On the expense side, GNA expense for the quarter increased to $13.2 million versus $12 million in the prior year, due primarily to higher payroll costs, including non-cash share-based compensation expense, as well as higher franchise taxes. As you may recall, in the prior year, there was a legislative tax change that created a one-time benefit in franchise taxes. Interest expense net for the quarter increased by $426,000 compared to the previous year due to an increase in our weighted average interest rate on outstanding debt, due to additional borrowing on our unsecured revolving credit facility to pay off lower rate senior unsecured notes at their maturity. With regard to dispositions for the quarter, net proceeds totaled $35.6 million. We recognize a net gain on sale of $16.8 million. Note that this gain is excluded from FFOs adjusted and the AFFO. FFOs adjusted for the six months ended June 30th was $2.45 per share compared to $2.34 in the prior year. And AFFO for the same period was $2.44 per share compared to $2.33 in the prior year, both an increase of 4.7%. To the next slide, I will review some of the company's key credit ratios. As you can see, our coverage ratios continue to be strong with fixed charge coverage at 3.3 times and both interest and debt service coverage ratios at 3.9 times. Our net debt to adjusted EBIT.RE was 5.1 times for the quarter. If you adjust this ratio to include the annualization of investments placed in service, investments required or disposed of during the quarter, and the annualization of percentage participating interest as well as other items, this ratio was 5 times at quarter end, which is at the low end of our targeted range. Additionally, our net debt to gross assets was 39% on a book basis at quarter end. And our common dividend continues to be very well covered with an AFFO payout ratio of 71% for the second quarter. Now let's move to our balance sheet, which is in great shape. At quarter end, we had consolidated debt of $2.8 billion, of which $2.4 billion is either fixed rate debt or debt that has been fixed through interest rate swaps with an overall blended coupon of approximately 4.3%. On April 1st, we repaid $300 million in senior unsecured notes at maturity using funds available under our revolver. We have no other debt maturities in the next 12 months. Our liquidity position remains strong with $13 million cash on hand at quarter end and $405 million drawn on our $1 billion revolver. We are pleased to see the recent significant improvement in our cost of capital. While our leverage is at the low end of our range and our 2025 guidance continues to have no equity issuance assumed, we are excited to announce that we are in the process of establishing an ATM program, which will provide us an additional tool in our toolbox for sources of capital. We are confirming our 2024 FFOs adjusted per share guidance of $5 to $5.16, representing an increase over the prior year of .3% at the midpoint. We're also confirming our 2025 investment spending guidance of $200 million to $300 million. We're increasing guidance for disposition proceeds for 2025 to a range of $130 million to $145 million, for a range of $80 million to $120 million. On the next slide, we are confirming our percentage rent and participating interest income of $21.5 million to $25.5 million, and our G&A expense of $53 million to $56 million. We're also confirming the guidance for our consolidated operating properties, which is provided by giving a range for other income and other expenses. Guidance details can be found on page 23 of our supplemental. Now with that, I'll turn it back over to Greg for his closing

remarks. Thank you, Mark. Lastly, I wanted to comment on Greg Zimmerman's plan retirement in the transition of the chief investment officer role to Ben Fox, who will join the company in August as executive vice president. We are pleased that Greg will be staying into the first quarter of 2026 to ensure a smooth transition. Although it's not quite yet time to say goodbye to Greg, I would like to thank him for the significant contributions he has made to the company. While instilling a disciplined and thoughtful approach as CIO, he has also helped to navigate the company through some very challenging times, and we're thankful for his efforts. We're also very pleased to welcome Ben Fox to EPR properties. Ben brings substantial experience and expertise in the net lease business, having served in senior positions at Realty Income and most recently in the net lease division of Aries Management Corporation. Ben will work with Greg during his remaining tenure, helping to ensure continuity, knowledge sharing and continued success. With that, why don't I open it up for questions. Abigail.

Thank you. At this time, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk and then you will hear your name called. Please accept, unmute your audio and ask your question. If you're on a mobile device using the app, simply tap into the three dots or more button to find the raised hand feature. And lastly, if you're calling in today, star nine will activate the raised hand and use star six to mute and unmute. We will wait just one moment to allow the queue to form. Our first question comes from Rob Stevenson's with Journey Montgomery Scott. Rob, please unmute your line and ask your question.

Good morning guys. Can you hear me okay? Thank you. Perfect. Thank you. So, Greg or Greg, is there a significant amount of assets out there for sale at reasonable prices that you'd want to own? Or does expanding your pipeline going forward here, at least in the near term, mean expanding the development pipeline as much or more than acquisitions? How should we be thinking about the acquisition market that you guys are in for quality assets at this point?

Sure. And I'll let Greg comment as well, but I think we've still seen a robust amount of opportunities. I mean, again, as we've talked about, when you have limited amount of capital, you're being very discerning. And yet, you know, what is the best targeted of that? It doesn't mean they're not good deals. It's just, you know, you're trying to deploy that in the best manner of supporting existing tenants and otherwise. But I think we still feel there's really good opportunities. And I think Greg would say that we're starting to see that growing.

Yeah, 100 percent, Greg. Rob, I would say well over half of our pipeline is acquisitions. To Greg's point, we've been unable to participate in some higher deal volume acquisitions just because we were being careful. And again, we're always mindful of balancing development with acquisitions. So to answer your question directly, I don't see us turning to a lot more development in the future to grow pipeline. OK.

And then how are you guys thinking about dispositions in the back half of this year and the early part of next year? You guys have been selling a decent amount of assets. Is there still more stuff that you want to do there and take advantage of the market and use that as capital? Or, you know, were acquisitions or dispositions this year, you know, sort of more front end loaded and we'll see that sort of petering out in the back half of this year and into 26.

I mean, I think, Rob, we've talked about, you know, we've already kind of at the low end of our guidance on that. So there could be. But we have as a strategic objective to lower our theater exposure. You saw the first element of selling operating theaters. Now we will continue to look at that opportunistically as as an opportunity to achieve that strategic objective and generate what we think could be meaningful capital. But again, the range kind of says we're we're pretty much close to being done with our targeted disposition. But as I said, we have strategic objectives that we will continue to pursue. And Rob, that would

also include education. So, you know, we sold an education portfolio this year and we're always just opportunistic about that. So if we get a good deal, we'll execute them. I

think the good news is we only have one remaining theater, a vacant theater, and there's no vacant education. So the asset management team has done an excellent job of selling the vacant theaters. And as Greg said, there's as far as the plan, there's not much to accomplish, given the midpoint isn't of our range, isn't much higher than what we've done today. So some some to come for the remainder of the year, but not much more in our plan.

OK, and then last one for me, Mark, since I've got you, how are you thinking about the balance sheet over the next year? You moved the 300 million of notes onto the line. You've got another 630 of notes coming due next year in August and December. Are you thinking about doing something in the near term? Do you wait until the, you know, sometime in 26 and potentially lower rates to do something? How are you sort of thinking about balance sheet strategy over the sort of short and intermediate term here?

Sure. Yeah, good question. As we look over the remainder of the year, you know, if you look at our investment spending, we've got about one hundred sixty four million left to hit our midpoint and guidance as far as uses will generate through remaining disposition subsequent to six thirty plus free cash flow, probably nearly one hundred million. So there's a net use there about sixty four million. Our line is at four hundred and five million. So I think the point is we have flexibility in that we'd be less than half drawn even if we didn't do a bond transaction. That said, in the last half of the year, we do have a bond transaction contemplated, which would bring down that that line balance heading into next year and bring it down to a pretty low number. And then as we head into next year, of course, as those as we look to those bond maturities later in twenty six, we'd likely have another bond transaction to refinance those as well. So that's that's kind of how we're looking at it in the near term.

OK, thanks, guys. Appreciate the time this morning.

Thank

you.

Our next question comes from John Kielichowski with Wells Fargo. John, you may now unmute your audio and ask your question.

Good morning. Can you hear me, Tim? Yes, yes. Awesome. Thank you. You know, on the disposition activity, it looked like pretty good execution on the theaters that you sold at a nine and these are non core assets. How should we think about the demand for these assets and maybe pricing for your more core assets?

I think what we would say is, you know, we're seeing the beginning of activity in the theater space with recovery in the box office. I mean, these are clearly not these were not major markets, nor was it a major operator. How that translates, we'll just have to see. But clearly there is more interest in the space and we're starting to see more activity in the acceptance of it again as a as an asset class. But Greg, maybe. Yeah. And more broadly,

John, I would say, you know, within the past two years, we told we sold to Titanic Museums for Capra in the low sixes and we sold a theater portfolio for Capra in the low sevens. If that helps on the non theater portion, what's it like in education?

No education. Got it. And then maybe on the percentage rent side of things. I could just sort of bifurcated into the theater and non theater portion. It sounded like your commentary around theaters felt very positive. I'm curious how the box office today stands maybe from your beginning of your expectations and if there's some conservatism and not moving up your expectations around it and then sort of part two of that would be, you know, what comprises maybe the other half or the other part of percentage rent. And are there any maybe opportunities for upside that you're seeing that you just haven't baked in yet?

I think what I'd say is we've got a really good Greg and his team has a really good group of people who understand the market and predict are very good at their predictions. And I think, as my comments indicated, we're coming at or right on top of what we thought was our early predictions. Now, I would tell you, honestly, it's it's an over the river and through the woods. Some movies we thought would do well, didn't and some that we didn't have predicted actually do quite well. And so they balance each other out. But overall, we feel pretty good in that side. I think for the rest of the year, I mean, it's it's coming from everywhere. It's coming from ski. It's coming from attractions. It's coming from education. So, again, we'll see how it plays out if there's additional upside in that. But I think, like I said, Greg and then Mark and his team and putting together the the ranges and the estimates, we feel really good about kind of how we've approached that. And that's why we haven't moved that yet. And from

a mixed perspective, theaters represent about roughly a third of our kind of the midpoint of guidance. You kind of get a perspective that a lot of it's coming from a lot of other categories, as Greg mentioned, eating, play, ski, attractions, gaming, fitness. We get it from a lot of different areas. So let's put some context around it. Got it. Thank you. Thank

you, John. Our next question will come from you, Paul Rana with Key Bank Capital Markets. You, Paul, you may now unmute your audio and ask your question.

Hey, good morning, everyone. Greg, you mentioned larger deals are more likely. You prepared a remark.

You probably lost you.

Hey, can you hear me now?

Yes, we can hear you now. Sorry, could you start your question over,

please? Sure. Greg, you mentioned larger deals are more likely. Could you give us a sense of what's out there in the market and that's attracted to you and what would you potential cap rates on those deals potentially look like?

Again, I'll let Greg jump in. I don't know that. I think it's broadly. I mean, without going into too much detail over specific transactions, I think we're seeing it pretty much across the board and seeing opportunities. And I think we're still comfortably in the eights on where we're looking.

Yeah, 100% comfortably in the eights. And, you know, we're always looking at deals in a wide spectrum of ranges. So we're looking at deals in the 10 million range and we're looking at deals in the 700 million range. And there are deals in those categories. And as we both said in our scripts, we're seeing opportunities in all of our verticals open.

Yeah. Okay, great. That was helpful. And then, you know, I had a question on fuel costs. You know, it's down about 10% this year. And I'm curious if this has any impact on your customers and their willingness to either visit more of your properties or spend more of your properties. So just want to get your thoughts there.

Again, I think anything that creates additional discretionary income is positive and it's helping to offset some inflationary factors for the consumer. So, you know, I don't know that there's any direct correlation that we're seeing, but, you know, it's probably welcome in the pocketbooks of our consumers and that's much appreciated. And I'd say in today's world, we feel like

being in the experiential space is a positive because people still want to get out and do things.

Okay, great. Thank you.

Thank you. Our next question will come from Anthony Powerloan with JP Morgan. Anthony, you may now unmute your audio and ask your question.

Okay, thank you. The first question relates to just the deal pipeline. You mentioned some larger transactions that you're starting to see as well. Can you maybe just give us some sense as to, you know, what definition of larger would be for you all?

I think for us, we would think of it as 100 million plus. I think, you know, when you are, when we were thinking of a midpoint of 250, looking at a hundred million dollar transaction takes, you know, nearly 40% of your deal. So we were, and I know Greg and his team were a little bit hesitant to deploy that in one thing, but with our, with our cost of capital becoming more favorable, I think we're looking at those. So I would say that's the term I would, the deminitializing I would use, but Greg, no, I agree. Yeah, Tony, I think the

best way to think of it is in terms of, you know, in relation to our guidance. So, yeah, 100 million and some in the high tens, millions.

Okay, thanks. And then on these transactions, you know, you mentioned your better capital costs make you more competitive. But if we think about the last, I don't know, a few quarters or so, have these deals been occurring away from you in the market or have they just not happened and they might still be out there just trying to understand like who's, who's been competitive as, you know, before your capital costs improved here?

Yeah, I actually think that these have been more that are just starting to come to the market that people are gaining more acceptance that we're not going back to, you know, substantial low cap rates, but there have been kind of major transactions that have occurred. If you look in the, look in the attraction space, Park Green Day did a $700 million attractions deal that we were solicited for a bid on and really couldn't participate. So there were big transactions. I think that ended up going on a debt route. And we were asked to be part of a solution and really just couldn't, but we feel now that those are starting to open up for us.

Okay. And if I could just sneak one in for Mark, you know, given where the stock is now, I think you're you're kind of in the money on the two convertible preps. Is there anything for you all to do there? Like, can you convert them? Does that make sense? Or can you call them? Just, just noticing that it's been a while since been in the money on those.

Yeah, they're not really callable. You could go in the market and tender for them, but that would be at a pre-market price. It really doesn't make sense. It's also hard to cobble together any meaningful amount. We've looked at that in the past. So wouldn't expect, wouldn't expect anything happening on those two preferents. Okay. Thank you.

Thank you.

Our next question will come from Smiths Rose with city global markets. Smiths, you may now unmute your audio and ask your question.

Hi, thank you. I wanted to ask you just a little bit more about establishing the ATM program. You know, as you think about potentially, you know, raising new equity, you know, what, what kind of spreads are sort of like maybe a minimum between cap rates and how you think about your weighted cost of capital. Do you look at kind of consensus, NAV or an internal NAV kind of maybe just help us think about, you know, when you would pull the trigger on issuing new equity?

I know that Mark jump in on this, but Smiths historically, we look at all those things we look for to be able, it's actually a balance of what we can buy assets at and incredibly deploy. So historically it's, that's kind of required a minimum of a hundred basis points that we've looked at. And I think what Mark will tell you is again, I think we're getting, we're getting prepared. It doesn't mean, as he said in his comments, that we have any imminent equity issuance, but the idea that we want this toolbox, this tool in the toolbox as we go forward. And as we begin to continue to execute on our plan, it will create the optionality that we're looking for. But Mark. No,

I'd agree. We generally look at cost of capital and probably in the primary sense, is it a creative to deploy equity into a deal kind of on a 60 40 basis, 60% equity, 40%. So it doesn't make sense to raise equity. As Greg said, we generally look for that hundred basis points of spread, initial spread. You know, it's not to say we could do less than that to further diversify our portfolio, but that's generally how we look at it. I think the ATM provides us another source of capital. We've used the direct share purchase plan, which is another ability to the direct share purchase plan to dribble out shares. And I think we've raised over the, since I've been here, probably an excess of 700 million in that regard through that plan. But the ATM provides us the ability to kind of larger blocks. Isuances and also to look at, you know, the ability to do forward. So like Greg said, no eminent issuance in our plan. We're at the low end of leverage. And we don't have any equity in our plan, but this will get this will just give us another tool as we go forward.

Okay, thank you. And then I just, I wanted to ask you, I'm sorry, you might have said this, but does your guidance still contemplate a bond deal later this year to pay down the credit line? Yes, it still does. Okay.

Okay, thank you. I appreciate it. Thank you, Speeds.

Our next question comes from Yana Gallen with Bank of America. Yana, you may now unmute your line and ask your question.

Thank you. Good morning. It's great to see the coverage improve quarter over quarter given the continued headlines on kind of the pressured, more pressured consumer. I was curious if you could talk a bit on how coverage ranges between your different concepts or segments. And then at the Eat and Play locations, I think last quarter, you mentioned that, you know, everyone was showing up, but maybe not eating as much and just curious if that trend is continuing this summer.

Again, I think it's always, and we've seen this, John, spread that, you know, the consumer is aware and looking for value. But I also think our Eat and Play tenants are responding to that and creating different ways to engage with the consumer and creating value. I think overall, coverages have been relatively stable. You know, the uptick is probably more about the recovery and the continuing recovery of the theater space. But again, given the fact that that's only 37%, that means the other part of that has to be relatively stable. And I think we've seen that. I think not as much as the consumer, weather and heat and then rain have impacted some attractions, but that's kind of normal. Those are kind of the things that are normally incurred, but we're still seeing really good resilience in the consumer as evidenced by some of the recent Fed and GDP growth that we've seen generally.

Thank you.

Our next question will come from Katherine Graves with UBS. Katherine, you may now unmute your line and ask your question.

Great. Good morning. Thank you for taking my questions. Can you all hear me?

Yes, morning.

Awesome. Thank you. Great. So my first question, you mentioned that you have no big education centers at this point. You didn't sell any in the second quarter. I was wondering if you could just talk a little bit more about what makes an education center a good candidate for sale, what you're seeing as far as interest in those assets. And would you be looking to do, you know, primarily more portfolio sales or would you be willing to sell some one on one off basis?

Yeah, I mean, I think what makes a good sale is a very attractive cap rate. I mean, it's just that candid and, you know, we continue to field calls for people who are who are interested in the space. I think the way our our remaining tenants are set up, they're probably going to be more in portfolios. Meaning we would sell a tenant exposure, just kind of somebody the way those are grouped together. Now, that probably means, Greg, they're probably in the 40 to 100 million dollar range. So, you know, some of that is just candidly, Catherine, just being opportunistic. But that's a space that's been very, very resilient. I mean, COVID created actually strengthen that space with the kind of the elimination of kind of a lot of at home child care options. And so we're not unhappy at all with the space, as Greg talked about in his comments, it's performing very well. And we look at that as opportunistically when things are presented to us, we'll evaluate them and see if they make sense for us and to

amplify that there's a growing market for the for them. So we're not really concerned about the ability to transact.

Got it. That's helpful. Thank you. And then my second question, there's been a couple of headlines of six flags closing or preparing to close a couple of their parks. And I was just wondering if you could provide some color on how you're thinking about your exposure to that tenant and just sort of your comfort with with that tenant going forward.

Yeah, I mean, I think we see those in our discussions with them and they will comment on their own as as you know, this is a continuation of the merger of of kind of rationalizing their their fleet of locations and candidly opportunistically selling and deployment of of what we think are will be a creative transactions for them. I mean, people forget that often these locations are in and around major metropolitan areas with somewhere in the neighborhood of, you know, 300 to 400 acres. And when you look at some of the areas they're in, sometimes there's just a higher and better use that generates, you know, a great sell price. And I commend them for aggressively looking at their overall strategy to lower their their debt level and when they can sell out of property and make substantial gains and lower and create a better credit tenant for us. That's a positive.

That's really helpful. Thanks so much for the color. Thank you.

Our next question will come from Ryan Caviola with Green Street. Ryan, you may now unmute your audio and ask your question.

Spencer here. Hi, guys. Just one for me. I was hoping you could. Good morning. I was hoping you guys could provide an update on the competitive landscape. And then I was also wondering, do you guys tend to see more or less competition for deals as you go up and check size?

Again, I think it's it changes. What we see is, especially on 50 million or less, it's a lot more. We occasionally see some of the other reads, but also family office. As you move up in deal size, it becomes that group kind of falls away in the sense that anytime with private equity, their second question is, how do I exit this in three to five years? And a lot of these are kind of long term capital. So I think we start to see a different set of competitors. And, you know, that's nothing new for us, Spencer, that's been that way for our, you know, 27, 28 years. I think it's it's not I wouldn't say the number of competitors are more robust. But I would say the interesting thing is the credit funds and their need to deploy capital becomes more into that side of the equation when it's larger. But Greg, I don't know. I think you agree.

OK, that's helpful. And do you guys get inbounds from sellers often, especially maybe just for the some of the larger deals and wherever just get like a first look, just given your brand in the space?

No

doubt that

those are those are the calls we love. I'd say honestly, Spencer, more often than not, I mean, we see most deals for sure.

Great. Thank you, guys. Thank you.

Our next question will come from Michael Carroll with RBC Capital Markets. Michael, you may now unmute your line and ask your question.

Thanks, Mark. Given that we're pretty much at the end of July right now, will the regal percentage rents that were reported in prior presentations and after the bankruptcy matching what the box office is doing, is that still a pretty good ballpark of what we expect could be reported in July related to those percentage rents?

Yeah, correct. I think that chart that we put out initially is still in line with our expectations.

And how many how much percentage rents have been recorded so far in two queues? I know that there is it's going to largely straddle between two queue and three queues. So how much of a pickup could we expect in three queue related to the percentage rents and the box office that we've already seen?

Yeah, we don't get that specific as far as tenants and what's in one quarter versus the next. I can tell you overall for the quarter, we had four point six million of percentage rents. Obviously, looking at our midpoint, that's going to ratchet up in Q3 and Q4, probably fairly evenly between the two to achieve that midpoint of twenty three and a half million. So the bigger chunk of Regal hits in Q3, but I think between Q and Q2-3 with respect to Regal, it's kind of in line with our expectations.

OK, and then just lastly on the Regal topic, I know you get paid based off of what the revenues that the Regal boxes, right? So how have those assets been performing relative to market? I mean, is it largely in line? And do you typically see a lot of deviations between specific theaters within a market depending on how well they're doing or not? Does that vary very much?

Yeah, no, that's that's exactly correct, because it ends up being what is the market share of the individual theaters. Now, some of this, both good and bad, is is impacted. And this is really positive as we go forward is Regal's investing back into these theaters and adding features and some of those that causes some disruption. So there may be auditoriums that are shut down. But as we've talked about, we still think we're hitting plan, but we're getting new IMAXs put in at some of our theaters and things like that, which really bode well. As we go forward, because the consumer has kind of clearly demonstrated the demand for that type of product. But Greg and Michael, I would say

we're very pleased with they recaptured market share coming out of bankruptcy. Come back to where we sort of thought they would. And as we've shared with you before, it's very granular. I mean, it gets down to the number of hyper, you know, large format screens in any given theater, depending on the film. And we monitor that closely. So the takeaway is we're pleased with how they recaptured market share and how they

perform. Right now, and those investments are a Regal largely making those investments by themselves?

Well, there's Regal making investments. And then remember, as part of our deal, we agreed to make certain investments with them as limited over a period of years. But it's at least 50% or more of Regal's investment. Yeah. And again,

they're required to prove that it'll be revenue enhancing before we are required to invest.

Great. Thank

you. So in other words, we get more percentage rent. That's the idea. All right.

Our next question will come from Kyle Bonquet with True Securities. Kyle, you may now unmute your audio and ask your question.

Thanks. Good morning. Can you guys hear me?

Yes.

Great. So the Box Office guidance implies some acceleration into the second half of the year. And I think most of that was addressed in the opening comments. But curious how the production pipeline looks today. More of a forward basis versus where you guys were last year. And if you expect to see a continued acceleration, a number of releases.

I think we're very encouraged. If you saw what came out of the industry kind of discussions is that more films are being developed. And as Greg said, the success for Apple having an F1 is encouraging for them. So it's too early for us right now to give you our opinion on 26. But nothing has changed our optimism about the direction that the

industry is moving. And I would add significantly Amazon a couple of months ago announced that they were going to participate more in theatrical production over time.

Gotcha. Understood. I think some of the performance at the TRS operating properties is where it looks to be ahead of last year. And I imagine some of that is due to the improving theater performance. But it appears to be, I guess, trending ahead of neutral earnings contribution. Do you think that's fair to say at this point?

I think, you know, second quarter was a great quarter for theaters versus the prior year quarter, which was fairly rough. And keep in mind, we sold it's kind of apples to oranges because we sold three theaters since since last year. So, yes, we did do quite a bit better quarter over quarter. And it's mostly due to theaters, as you said. That said, you know, for the year, the contribution will be fairly similar to the prior year. We had a nominal nominal increase, a nominal difference last year between other netting, other income, minus other expense. We expect a similar result as guidance and flies and kind of a break even theaters being ahead and offset by Cartwright being somewhat behind as far as, you know, FFO. So I think, you know, our guidance implies kind of similar net results for the year, but certainly for the quarter, we benefited by a quarter over quarter. Big improvement in theaters.

OK, understood. Thanks for your time. Thank

you. Our last question will come from Anthony Powerloan with JP Morgan. Anthony, you may now unmute your audio and ask your question.

Thanks for the follow up here. Just to for me, one is just is there any cap rate spread between larger and smaller deals?

Go ahead, Greg. Yeah, for sure, Tony. I mean, I think, you know, you're probably looking at 25 basis points to 50 basis points spread. And I think Mark mentioned, you know, obviously we're always looking for a spread of 100 basis points, but, you know, there are some strategic decisions we have to make to in terms of, you know, expanding our diversity and getting into spaces.

So 25 to 50 basis points better on the larger deal. I would say so. Do you agree with that? Yeah, no, I think that's realism. OK, and then just second one, the car rate, I think, still makes up the bulk of the other sort of revenue and expenses and just seems to still be a break evenish type asset. Can you maybe give us a sense of if there's anything to do there to monetize it or maybe even hazard guess as to what that might be worth despite it not really doing much for earnings right now?

Yeah, I mean, again, Tony, what we've said before is the I mean, candidly, we've struggled with the operating costs, the union that is there that makes it very, very difficult relative to we see how our other waterpark hotels operate. As far as value, again, it's nothing we would speculate on right now. We look at the project in its entirety with the with the gaming ground lease because, you know, the one was done to activate the other. But again, it's not for lack of us working hard at trying to improve that. It's just some of the challenges that we're facing. We continue. No, when we say there's that kind of responses. OK, thank you. Thank you. Thanks.

There are no further questions, so I will now turn the call back over to Greg Silvers for any closing remarks.

I just want to say thank you, everyone. We look forward to talking with you in the in the coming months and have a great day. Thanks, everyone. Thank you.

Thank you for joining EPR Properties Q2 2025 earnings call. This concludes today's call. You may now disconnect.