EPR Properties

Hello, and welcome to the EPR Properties Q2 2026 earnings call. We ask that you please hold all questions until the completion of the formal remarks at which time you'll 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 of Corporate Communications.

Thank you. Thanks for joining us today for our second quarter 2026 earnings call and webcast. Participants on today's call are Greg Silvers, Chairman and CEO, Ben Fox, 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 as defined 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. Companies' 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 TenQ. Additionally, this call will contain references to certain non-GAAP measures which we believe are useful in evaluating the company's performance. A reconciliation of these measures to the most directly comparable GAAP measures are included in today's earnings release and supplemental information furnished to the SEC under Form 8-K. If you wish to follow along, today's earnings release, supplemental, and earnings call presentation are all available on the Investor Center page of the company's website, www.eprkc.com. Now I'll turn the call over to Greg Silvers.

Thank you, Brian. Good morning, everyone, and welcome to our second quarter 2026 earnings call and webcast. Over the last several quarters, we've highlighted our focus on accelerating growth. And the second quarter marked a significant step forward in executing that strategy. For the quarter, revenue increased 10.1% and FFO as adjusted per share increased 12.7% compared with the same period in 2025. These results demonstrate the strength of our platform and the continued momentum we are building across the business. On the investments front, we set a new post-COVID high for investment activity in a single quarter, totaling more than $440 million. In addition to our previously announced acquisition of the Six Flags Seven Property portfolio, we further diversified our experiential portfolio with additional investments in attractions and fitness and wellness. As part of these investments, we are pleased to welcome Netflix as a new partner through our acquisition of Netflix House in King of Prussia, Pennsylvania. These properties allow Netflix to deepen customer connections by transforming popular digital intellectual property into physical immersive experiences. This level of investment spending reflects both the depth of our opportunity set and our disciplined approach to deploying capital into durable experiential assets. It also reinforces our confidence in the portfolio's long-term growth trajectory as we move through the balance of the year. Turning to our portfolio, tenant performance remains solid as we maintain coverage of two times across the portfolio. The box office is up approximately 10% year to date, driven by a compelling mix of major studio tentpole releases and lower budget breakout films that have broadened attendance and reinforced the enduring appeal of the shared theatrical experience. Notably, titles such as Backrooms and Obsessions, both from filmmakers who built early audiences on YouTube, demonstrate how new creator-driven voices are expanding the theatrical audience and generating outsized box office results. Outside of theaters, fitness and wellness continues to be resilient as consumers increasingly treat it as a protected, non-discretionary category. Our Eat and Play tenants are also reporting steady, healthy trends. We also continue to strengthen our financial position, establishing a new $1.6 billion credit agreement that addresses our maturities later this year and ensures our balance sheet remains a source of strength in support of the pace of our investment growth. With that, I'm also pleased to report that we're increasing both our 2026 investment spending and earnings guidance. At the midpoint, our updated unearnings guidance represents a 7.2% increase over 2025. We believe this underscores our confidence in the durability of our growth. Finally, I want to note that this summer offered an extraordinary reminder of the power of congregate entertainment. The FIFA World Cup, the largest in history, shattered the all-time attendance record as millions of fans traveled across North America and spent at record levels, not for a thing, but to be present for a moment. This is the same consumer impulse that is at the heart of our business, the demand for shared, location-based experiences that cannot be replicated at home. We built this company around that enduring demand, and this summer afforded a powerful reminder of its continued relevance. Now I'll turn the call over to Ben, who will review the business in greater detail.

Thank you, Greg. As Greg just noted, the second quarter marked another strong step forward in our growth strategy, building on the momentum we established at the start of the year. During the quarter, we invested $440.8 million at an average initial cash yield of approximately 8.5%, bringing our year-to-date total investments to $492.2 million. This investment volume is inclusive of our previously announced acquisition of seven theme parks formerly operated by Six Flags, as well as two additional attractions properties, A new investment in golf and a new investment in hot springs. On the Netflix house investment, not only is Netflix an A-rated corporate credit, but is one of the leading streaming platforms. Our partnership with them further validates the powerful role that physical experiences play in an increasingly digital world. Equally noteworthy is the continued diversification of our portfolio and the corresponding decrease in our theater concentration from 36% reported last quarter to roughly a third of the portfolio today. Beyond these investments, as of June 30th, we expect approximately 92 million in additional investment for existing experiential development and redevelopment projects of which approximately 65 million is anticipated to be funded throughout the remainder of 2026. Given the velocity of investment activity in the first half of the year and the expanded breadth and depth of our pipeline, we're pleased to increase our 2026 investment guidance to $600 million to $700 million. We continue to expect investment activity for 2026 to be tilted more toward acquisitions than development. To reiterate a theme from the first quarter, our investment pipeline is sourced almost exclusively from non-marketed investments generated by direct relationships our investment team has established over many years. And demonstrating that EPR is the partner of choice for experiential real estate, approximately half of our investment pipeline represents repeat relationships. On market pricing, we continue to see investment yields holding steady despite volatility in the debt capital markets. Turning now to an update on the portfolio, at the end of the second quarter, our portfolio represented $7.5 billion of gross investment value consisting of 346 properties, which were 99% leased or operated. 95% of this value reflects investments across our core experiential categories. These 291 properties are operated by 57 clients and continue to be 99% leased or operated. The remaining 5% of the portfolio represents our education segment comprised of 55 properties leased by five operators. At the end of the quarter, these properties were 100% leased. The portfolio remains resilient with unit level rent coverage steady at two times. As consumers redefine wellness and human connection as essential rather than discretionary, we expect to see these trends translate into continued strength in the portfolio. Within our theater segment, the second quarter saw a continuation of the outperformance witnessed in the first quarter. Ticket sales are approximately 10% above the same point in 2025 as the industry demonstrates sustainable growth. What's especially encouraging is that younger moviegoers are helping fuel the comeback. 87% of Gen Zers and 82% of millennials saw at least one movie in a cinema during the past 12 months. Within the Eat and Play segment, Rent coverage is stable with positive trends emerging at Topgolf from early operational enhancements post separation from Callaway. Attractions delivered strong performance in the second quarter with a reversal of some of the prior year's negative weather impact and the removal of certain geopolitical variables which adversely impacted 2025. Our fitness and wellness segment continues to deliver solid performance with stabilizing trends at some of our recently renovated and expanded properties. Lastly, our education portfolio continues to remain healthy despite industry-wide labor headwinds. Pivoting to dispositions, as referenced on the first quarter's call, the pace of dispositions is moderating given our renewed focus on opportunistic sales relative to defensive sales. This shift is reflective of the general health of our portfolio and the outstanding work done by the asset management team in reducing legacy vacancies. Accordingly, we are maintaining our disposition guidance of $50 million to $100 million. In summary, our company benefits from durable, demographic, and consumer spending tailwinds. These same forces fueling our growth also reinforce the stability of our portfolio. We see significant opportunities ahead and look forward to continuing to expand and diversify. With that, I'll turn it over to Mark for a review of our financial performance.

Thank you, Ben. Today I will discuss our strong financial performance for the second quarter, provide an update on our balance sheet, and close by discussing the increases in our earnings and investment spending guidance for the year. FFO as adjusted for the quarter was $1.42 per share versus $1.26 in the prior year, an increase of 12.7%, and AFFO for the quarter was $1.43 per share compared to $1.24 in the prior year, an increase of 15.3%. Now moving to a few key variances. Total revenue for the quarter was $196.1 million versus $178.1 million in the prior year, an increase of $18 million. This increase was primarily due to the impact of investment spending as well as rent and interest bumps. Percentage rents and participating interest for the quarter were $4.8 million, up slightly from $4.6 million in the prior year. As an increase in percentage rent accrued related to the Regal Lease was partially offset by a decrease in percentage rent related to our Northern California ski property that was impacted by unfavorable weather conditions. Additionally, during the quarter, we recognized $500,000 in defeasance fee income related to the prepayment in full of a $10.8 million mortgage note receivable secured by an Eat and Play property. On the expense side, interest expense net increased by $5 million due to an increase in average borrowings and a decrease in capitalized interest versus the prior year. Partially offsetting this was an increase in interest income related to short-term investments. Lastly, equity and loss from joint ventures for the quarter was $1 million compared to $1.7 million in the prior year and was due to better performance at our two RV Park joint ventures. FFO is adjusted for the six months ended June 30th was 267 per share compared to 245 in the prior year, an increase of 9% and AFFO for the same period was 271 per share compared to 244 in the prior year, an increase of 11.1%. Turn 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 very strong with fixed charge coverage at 3.4 times, and both interest and debt service coverage ratios at 4.0 times. Our pro forma net debt to annualized adjusted EBITDA RE was 5.1 times at quarter end, which is at the low end of our target range of 5 to 5.6 times. Pro forma net debt is calculated by subtracting the estimated net proceeds from all forward sales agreements under our ATM program from net debt. Additionally, our pro forma net debt to gross assets was 41% on a book basis at quarter end, and our common dividend continues to be very well covered with an AFFO payout ratio of 65% for the second quarter. Now let's move on to the debt and capital markets activities and our balance sheet, which is in great shape to support our continued growth. At quarter end, we had consolidated debt of $3.3 billion, of which $3 billion is either fixed rate debt or debt that has been fixed through interest rate swaps with an overall blended coupon of approximately 4.4%. During the quarter, we entered into two forward sales agreements under our ATM program for initial gross sales proceeds of $23.4 million or an average sale price of $59.70 per share. No forward sales agreements were settled during the quarter, and as of quarter end, we had total estimated net proceeds from unsettled forward sales agreements of 69.5 million, representing just under 1.2 million common shares. Subsequent to quarter end on July 17th, we were pleased to also enter into a new amended and restated 1.6 billion credit agreement that, among other things, Thank you for joining us. Our bank group, which was expanded as part of this financing, was very supportive of these new facilities. We want to thank them once again for their confidence in our long-term strategy. Our liquidity position remains strong, and we are well positioned for continued growth. At quarter end, we had $16.2 million in cash on hand and $640 million available on our $1 billion revolver. In addition to the amount available on our revolver, as well as positive cash flow and disposition proceeds expected over the back half of the year, we have the cash available to draw down on our new term loan facility and unsettled forward sales agreements that I just discussed. These liquidity sources significantly exceed our anticipated outflows Thank you for joining us. Turning to guidance, we are increasing our 2026 FFOs adjusted per share guidance to a range of 541 to 557 from a range of 537 to 553, representing an increase versus the prior year of 7.2% at the midpoint. We expect a similar percentage increase in AFFO per share. We are also increasing our 2026 guidance for investment spending to a range of 600 to 700 million from a range of 500 million to 600 million. The increase in earnings guidance reflects this increase in investment spending as well as other favorable impacts from our investment activity to date and strong portfolio performance. We are confirming disposition proceeds of $50 million to $100 million and our percentage rent and participating interest income guidance of $18.5 million to $22.5 million. We are also confirming our G&A expense guidance of $56 million to $59 million. Finally, our guidance for consolidated operating properties has been updated by providing a range for both other income and other expense of $40 to $50 million with no change to the expected net difference. 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. We are very pleased with the pace and quality of our investments today, and our focus remains on supporting our strong growth trajectory. The performance and momentum across our businesses allows us to confidently increase our investment guidance and demonstrates our ability to source attractive transactions in this competitive landscape. We remain focused on executing our strategy and advancing our growth objectives in the quarters ahead. With that, why don't we open it up for questions?

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 and ask your question. If you're on a mobile device using the app, simply tap on the three dots or more button to find the raise hand feature. And lastly, if you're calling in today, star nine will activate the raise hand and use star six to mute and unmute. We will wait one moment to allow the queue to form. Our first question will come from Jana Galan at Bank of America. You'll receive a message on your screen allowing you to talk. Please accept, unmute your audio and ask your question. Jana, you may ask your question.

Thank you. Good morning and congrats on an excellent quarter. Maybe starting on the transaction environment and the initial yields were about 50 bps higher this quarter. I know, Ben, in your remarks, you said that, you know, pricing is about the same. I guess maybe if you can help us understand, was it the mix? Was it portfolios? How were you able to kind of bump that up 50 basis points?

I think what we've said historically is, you know, in the low to mid eights. And so we're hovering in the same general vicinity. Really, the mix is holding pretty steady, as is the pricing.

And would that be similar kind of on the forward pipeline?

Yes.

And then maybe just quickly, Mark, if you can help us understand the magnitude of the guidance increase given the strong second quarter outperformance.

Yeah, some of the second quarter performance is timing, particularly percentage rents was a little higher in Q2 than we expected, which turns around if you look at our guidance for the year. But overall, if you look at our guidance for the year, we're up four cents. I'd say three and a half cents of that or so is due to the investment spending and better performance in the portfolio, i.e. less bad debt expense that we envisioned. And then about a half a penny from that defeasance fee that I called out in my comments from the prepayment of a mortgage loan. So that's really what the four cents is about. We did have some, like I said, some timing in the first quarter related to percentage rents that were a little outsized from what we had anticipated. and then Managed Properties was a little higher, but we think that turns around to the back half and really comes into line with what we had anticipated.

Thank you. Thank you. Our next question will come from John Kilachowski with Wells Fargo. You'll receive a message on your screen allowing you to talk. Please accept, unmute your audio and ask your question. John, you may ask your question.

Good morning. Can you hear me? Yes. Awesome. Thank you. Just want to make sure I got that right. So, you know, you're trading well north of where you issued on the ATM in this quarter. And I'm curious today, you know, how does that impact how you're thinking about funding the rest of your pipeline, you know, with access to more capital? And is there room to take up that acquisition pipeline now that the second half may look better than the first half just from, you know, accessibility to capital point of view?

John, again, that's something we'll evaluate. Again, it's in conjunction with finding deals not only that we like, but that can get done within the timeframe. I think Ben and his team are actively in the market looking and searching out quality deals. I think Mark and his team are doing a great job of providing an attractive capital source and capital cost. So those two work in conjunction. And as we've seen, when we have the availability and both of those things come together, we've accelerated. So we will continue to look at those opportunities.

Yeah, I'll just add to that. If you look at our cash flow over the last six months, it's pretty balanced in terms of uses and sources. On the use side, we've got investment spending, some bond maturities. And on the source side, we've got the term loan and disposition proceeds and excess cash flow and the potential to settle some ATM shares. Those are about equal. And we start the end of the quarter at $360 million. So we have that $640 million availability and liquidity balance. through the end of the year, and really our plan is fully funded. As far as leverage, that's the other thing you consider when looking at equity. We are at 5.1 times at the end of 630, including our forward equity. That number only grows to about 5.2, raising no more equity. So I think what that tells you, we have a lot of flexibility here to decide when and how we access the market for equity and or debt. given our leverage profile and given our liquidity profile over the remainder of the year.

Okay, that was very helpful. And then, you know, my second one, Mark, you kind of highlighted earlier on the percentage rent side that 2Q ran a little bit above expectations, but the guide remains flat. So I'm curious what that, you know, is implying now for the second half, especially given the strength that we're seeing in the box office. How is that impacting, you know, your outlook on percentage rent for the rest of the year?

Yeah, so June came a little bit higher, particularly for Regal, really strong June. We'll see how July plays out. July is anticipated to be lower than previous year, although strong. And there's innings to play on that. I mean, Spider-Man's out, and Friday could be a $100 million day, which moves the needle on percentage rent. So we kept it the same, but there's potential for some upside should – Spider-Man perform, you know, over, you know, really, really tomorrow is the last day of the week.

Today's previews tomorrow. But I mean, as Mark said, John, that could be in excess of 100 million. And as we've said, 100 million, that's where since we're across the barrier, we'll fall right to the bottom line of where we're at. So I think we it's it's. Given the short time period, we decided just to not move things. We'll see how it plays out.

The upside would be fairly modest, but could be if things play out, like you said, see how things go tomorrow.

Thank you.

Congrats on the quarter. Thank you, Jonathan.

One thing I'd add to that is we projected a lot of increase in the box office. We anticipated a lot of that, so it wasn't like a surprise to us that the box office is doing well.

Thank you. Our next question comes from Rob Stevenson with Huntington. You'll receive a message on your screen allowing you to talk. Please accept, unmute your audio, and ask your question. Rob, you may ask your question.

Good morning, guys. Mark, what are the bigger variables that pushes you towards the 541 of FFOAA at the low end versus the upper end at 557?

There's quite a few things. You think about percentage rents. There's still innings to play. It's not just about Regal. Nearly two-thirds of our percentage rent is from other tenants. Obviously, we have operating properties, and the third quarter is its primary operating season, so we'll see how that goes, up or down. Obviously, the timing of forward acquisitions and cap rate changes. Those are some of the variables. GNA can vary in terms of incentive comp. So there are several variables that could impact that, but we do feel confident in that midpoint in terms of our guidance.

Okay. And then Greg or Ben, can you give us any indication as to how the, I know it's early, but how the former Six Flags Park assets are doing versus what they were doing over the last couple of years directionally?

Yeah, I think, listen, being open a month, what we're really looking at is kind of almost guest reviews, certainly. And there seems to be some really positive momentum in terms of kind of cleanliness, friendliness, availability of rides. So the initial indications seem positive. Talking with our operator, they seem still very positive. As we talked about, any major changes since they only got control of the parks in April will come after the season. So this really was kind of getting the operations up and moving and controlling certain things that they can control. But things have been positive so far, Ben. I don't know if you have anything to add on that. That's right.

Across those and then with our other attractions, we are seeing continued strength and a little bit of outperformance relative to the prior year.

And then last one for me. How many of these Netflix houses are there today? And is this a concept that they're looking to expand? Is there an opportunity for you to expand with them if that's the case?

I think there's three total. Again, Ben and his team are in constant contact, again, with all of our tenants, and we'll have to just see how it plays out. But, you know, I think it's evidence of our ability to kind of, even when new concepts come in, we're on top of it quickly and see if it's something that we think grows with us. And so we'll continue to stay in contact with them.

Okay. Thanks, guys. Appreciate the time.

Thank you, Rob.

Thanks.

Thank you. Our next question will come from Nicholas Joseph with Citi. You will receive a message on your screen allowing you to talk. Please accept, unmute your audio, and ask your question. Nicholas, you may ask your question.

Great. Thank you. The two times coverage has been pretty consistent for several quarters now. Have there been any changes in the underlying composition of that metric?

Yeah, Nick, definitely as we talked about, the ski was a little softer this year because of the weather, but the theaters are stronger. So you have that kind of nice balance. There's also, you know, again, it's a pretty tight range, but yeah, you're having, you know, some things come a little bit. There's no doubt that theaters are coming up a little bit and and where there has been some softness where that ski or we talked about earlier in the in the first quarter some softness and eat and play it's that's manifesting that but given their size it's not it's not huge it's a pretty tight band but

Thanks, that's very helpful. And then maybe just more broadly, you know, as you have obviously a lot of exposure across different consumers and different part of the economic spectrum, what are you seeing from the consumer right now, just on the relative strength across, you know, different economic classes?

It's really interesting. It's surprisingly resilient. I mean, if you think about ski being kind of a higher end, again, that's really been a reflection of lack of ski, of snow, but it's the hanging in there. And you saw Vail reported that season passes were down 10%, but that's still relatively strong. If you look at the theater business, the thing that we're always and continue to be mindful of is not only are ticket sales up, but the food and beverage spend continues to be strong. And so I think it's been kind of a very, very positive kind of feeling. The other side of that is, like I said, we've seen continued strength. I mean, with that consumer and you see that reflective in like AMC's recent reporting yesterday about the best quarter ever that they had. And so I think it seems I would characterize it as resilient. But I mean, Ben, I don't know if you have any other additional thing to add to that.

That's right. And I think that resilience is really across the board. I mean, even middle income consumers are demonstrating the propensity to spend on experiential Thank you.

Our next question will come from Mike Carroll with RBC Capital Markets. You'll receive a message on your screen allowing you to talk. Please accept, unmute your audio and ask your question. Mike, you may ask your question.

Thanks. I want to circle back to guidance and Mark's comments on the recent increase. I know I think you said that the increase was largely due to the recent investment activity and the outperformance due to better operating performance. Where is the better operating performance coming from? I mean, if I just look at the individual guidance lines, it looks like the percentage rents and the other income and expenses were unchanged. So you just, are you expecting that those to come in at the higher end and you're just trying to be conservative on that front? Or was the increase largely driven by the acquisition activity?

When I talk about performance portfolio, we build in a bad debt reserve or a general reserve, if you will, for things like bad debt. And that's really coming in better than expected. So I'd say part of that increase is investment activity. And when I talk about portfolio performance, really less issues in the portfolio than we conservatively estimated.

Mark, can you give us a little detail on that? Like how what is the typical bad debt that you expect? I'm assuming that's what you just assume is the historical averages. And where is that coming in right now?

Yeah, so, you know, we called out in the original plan about 50 to 75 basis points. It's probably more like in terms of 40 basis points in terms of when I call bad debt, bad debt or anything that impacts earnings. It's lower than anticipated. Okay, great.

And then I know also you said that percentage rents were higher in 2Q26 than you expected, and it was largely due to timing. I guess what drove that? Did you just have some tenants that paid earlier and that's not going to reoccur in the back half of the year? So 2Q was just abnormally high. I know you talked a little bit about the regal lease, but that happens every year. And I don't know if I would say that's temporary. It seems like if it's from that, that would be like a true increase.

Regal is a little different in that it depends on the dollar value of box office during the quarter. So in June, June this year was bigger than June last year. And so we hit the threshold earlier and accrued more into June. July could be strong, but it's still expected to be less than a year ago. So overall, you know, we'll see how July shakes out, but we're kind of budgeting, planning on sort of as we planned. There's a little bit of timing between June and July versus the prior year, and it's all about box office. That's the primary thing driving the year-over-year timing with respect to Regal, which is the primary tenet that's causing that change.

Again, if you look, Michael, June was quite a bit bigger than June last year, and July this year is a little bit smaller than July of last year. So that flips the timing of when you get that. So that timing just kind of rolled in that way, but the net to the year is virtually kind of where we projected.

Exactly, which is up over prior year because we anticipated a box office increase.

Okay. And then where is the box office coming in at versus your expectations? I mean, is it exceeding your expectations right now?

Again, as I said, right now, we would say that we're pretty close to where our expectations were for the regal lease. Now, the overall year, again, is up. And so that's positive. But remember, half the year is Last year for Regal. So again, some of that was overcoming what was some softness in the second half of last year without performance this year. But our team does a really good job of kind of where that's at. I think, you know, as I said earlier, our variable really will be kind of how well I think Spider-Man does plus or minus. It's not going to be a huge variable. I mean, we're talking Mark, half a million top. So it's not a huge number, but our guys are really good at projecting this. And I think, you know, depending upon how that first kind of opening days, you know what they're talking now, Spider-Man could easily be the best opening of the year so far, which is also the best opening since 2019. So, no, we didn't forecast that good. So if it comes in, we could have some upside to that. Thank you. Thank you, Michael.

Our next question will come from Spencer Glimcher with Green Street. You will receive a message on your screen allowing you to talk. Please accept, unmute your audio and ask your question. Spencer, you may ask your question.

of your investment opportunity side. Can you just give us a sense of what you're seeing in terms of competition for assets and what segments or industries are you seeing more of in terms of buying opportunities, irrespective of them getting across the finish line and being added to the portfolio?

Yeah, similar to last quarter, we're really seeing opportunities across all of our verticals, you know, Probably if you were to kind of drill a layer down, maybe a slight pickup in fitness and wellness, broadly speaking. And the competitive landscape remains very consistent as well, where we're not seeing a lot of the traditional net lease REITs or other net lease investors. It's primarily family offices or alternative forms of capital.

Great. And then you also talked about opportunistic divestment. So can you just provide some color on whether there's still a continuation of developer interest in theater assets? Because I know you've had success in the past divesting these theaters for redevelopment or densification purposes.

Yeah, that dynamic persists. We do have very high quality real estate throughout the portfolio. And then also within some of our segments, notably in education, which we're looking to reduce, there are opportunities there where there's strong investor interest.

I think, Spencer, one of the challenges, just to be candid with you, is they've done a great job of selling things that are vacant, although we only have one vacant theater. Now, these are leased theaters, so we would have to either A, pull them out of a master lease or get the Thank you. Our final question will come from John Kilichowski with Wells Fargo.

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Tophie, I don't know that John is there, so.

No problem. We have one final question from Upal Rana with KeyBank Capital Markets. You will receive a message on your screen. Please unmute and ask your question.

Great, thank you. Just want to go back to the funding, your future investments. Mark, you talked about this a little bit already. How are you thinking about the preference or the ideal mix on your funding strategy going forward? And I also wanted to get an update on your appetite to issue more equity, given the higher share price as you're issuing so far has been a little bit more on the modest side.

Yeah, we generally tend to think about it for incremental investments, debt and equity, kind of 60% equity, 40% debt, roughly. So that's how we look at it. The good news is with our leverage and our liquidity, We're not compelled to raise equity. That said, we continue to look at the pipeline, continues to be strong, and it does make sense at this price. It is accretive to incrementally raise equity at today's price to fund additional pipeline. But I think the bottom line is that incremental capital will be used for incremental investing because we're not really compelled to fund the current plan using equity.

Okay, great. That was helpful. And then maybe just on Topgolf, you mentioned there were some encouraging improvements from positive trends there from the operational announcements. Maybe you could talk a little bit more on what you're seeing there.

Yeah, Paul. The new CEO, David, he's taken several steps to address different opportunities he saw within that business. And they range from a headcount reduction to to create operational efficiencies as well as better utilization of the existing footprint. And a lot of those initiatives are starting to bear fruit and we expect that trend to continue in a positive direction as more and more of those initiatives take hold.

Yeah, I think one of the things that they specifically we've followed up on is there's more thinking about dynamic pricing and how that affects during the day and early in the evening. And they've seen that show up with greater foot traffic with foot traffic counts. So those are always kind of real positives as data points that we see. With that said, I want to reiterate that the strength of our portfolio continues to be very, very resilient. And so we feel very good about where we're at. It's just there's a lot of talking. So when we see positives, we want to share that.

OK, great. Thank you. Thank you.

There are no more questions. So I'll now turn the call back over to Greg Silvers, chairman and CEO, for any closing remarks.

Thank you, Sophie. Thank you, everyone, for your time and attention. We look forward to talking to you next quarter. Thanks, everyone. Bye bye.