EPR Properties Q1 Earnings Call Highlights

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EPR Properties (NYSE:EPR) reported higher first-quarter funds from operations and raised its 2026 guidance, citing accelerated investment activity, stable portfolio performance and continued consumer demand for experiential real estate.

Chairman and CEO Greg Silvers said the company delivered a 5.9% increase in FFO as adjusted per share compared with the prior year and has “established strong momentum” as it increases investment spending. He highlighted EPR’s recently announced $315 million acquisition of a seven-park regional portfolio from Six Flags as the company’s largest acquisition in the post-COVID period.

The portfolio includes more than 1,600 acres across six states and Canada, 418 attractions and parks that draw approximately 4.5 million visitors annually, according to Silvers. The U.S. parks will be operated by Enchanted Parks, while La Ronde in Montreal will be operated by La Ronde Operations.

“These parks have become staples in their communities and have established multi-generational patronage by delivering fun, excitement, and lasting memories,” Silvers said.

FFO and AFFO Rise in the First Quarter

Mark Peterson, executive vice president, CFO and treasurer, said FFO as adjusted was $1.26 per share for the quarter, up from $1.19 a year earlier. AFFO was $1.29 per share, compared with $1.21 in the prior-year period, an increase of 6.6%.

Total revenue was $181.3 million, up from $175 million a year earlier. Peterson said the increase was mostly due to investment spending, as well as rent and interest escalations. Those gains were partially offset by dispositions and lower percentage rents and participating interest, which totaled $2.5 million in the quarter versus $5.1 million a year earlier.

Peterson also noted that EPR exercised a purchase option during the quarter to convert a $70 million mortgage note receivable secured by an experiential lodging property into a wholly owned rental property subject to a long-term triple-net lease. He said the conversion produced a $1 million gain on real estate transactions and a $1.3 million benefit for credit losses.

Interest expense, net, increased by $1.7 million due to higher average borrowings and lower capitalized interest compared with the prior year.

Investment Guidance Increased After Six Flags Deal

Ben Fox, executive vice president and chief investment officer, said EPR completed $51.3 million of investments in the first quarter, including the previously announced acquisition of a VITAL Climbing Gym on Manhattan’s Lower East Side and committed development capital.

After quarter-end, EPR completed the acquisition of six properties from Six Flags Entertainment, representing the substantial majority of the seven-property transaction. Fox said the remaining property, La Ronde in Canada, is expected to close in the second quarter.

EPR increased its 2026 investment spending guidance to a range of $500 million to $600 million, up from $400 million to $500 million. Fox said the revised range represents the company’s highest investment expectation since COVID and reflects opportunities across its verticals. He said investment activity in 2026 is expected to be weighted more toward acquisitions than development.

Fox also said EPR expects approximately $71 million in additional investment for existing experiential development and redevelopment projects as of March 31, with substantially all of that expected to fund over the remainder of the year.

Portfolio Remains Highly Leased

At the end of the quarter, EPR’s portfolio represented $7.1 billion of gross investment value and included 335 properties that were 99% leased or operated. Fox said 94% of that value was tied to experiential assets, consisting of 280 properties operated by 54 clients. The remaining 6% was in the education segment, made up of 55 properties leased by five operators and 100% leased.

Fox said the portfolio remained “very healthy,” with two times unit-level rent coverage. He attributed that coverage to portfolio diversification, resilient consumer spending patterns and continued prioritization of experiences.

Within the theater segment, Fox said North American box office gross rose 25% in the first quarter, benefiting from both increased attendance and more film releases. He also pointed to studio commitments to theatrical windows, including Amazon MGM’s commitment to 15 theatrical releases in 2027 with a standard 45-day window, Universal’s move to a window of at least 45 days and Netflix’s planned theatrical window for the upcoming release of “Narnia.”

In the Eat and Play segment, operators performed in line with the prior year, with some attendance volatility offset by higher average spending per visit. Fox said EPR’s ski portfolio benefited from geographic diversification, with outperformance in Mid-Atlantic and East Coast properties offsetting poor snowfall in the Western United States. Fitness and wellness continued to deliver solid performance, while education coverage remained strong.

Balance Sheet and Dividend

Peterson said EPR’s balance sheet remains positioned to support growth. At quarter-end, the company had consolidated debt of $2.9 billion, all of which was either fixed-rate debt or debt fixed through interest rate swaps, with an overall blended coupon of approximately 4.4%.

The company had $68.5 million of cash on hand and no balance drawn on its $1 billion revolver. Pro forma net debt to annualized adjusted EBITDARE was 4.8 times, below EPR’s targeted range of five to 5.6 times, while fixed charge coverage was 3.3 times.

In March, EPR entered into a forward sales agreement under its at-the-market program to sell 797,422 common shares for initial gross proceeds of $47.5 million, or an average sale price of $59.52 per share. Peterson said the company had not settled any of those shares as of the call.

EPR also increased its monthly common dividend by 5.1% to an annualized $3.72 per share, beginning with the dividend payable April 15 to shareholders of record as of March 31. Peterson said the company expects the 2026 dividend to be well covered, with an AFFO payout ratio below 70% based on the midpoint of guidance.

2026 Outlook Raised

EPR raised its 2026 FFO as adjusted guidance to a range of $5.37 to $5.53 per share, up from $5.28 to $5.48. Peterson said the new midpoint represents 6.5% growth versus the prior year, and the company expects a similar percentage increase in AFFO per share.

The company also increased its disposition proceeds guidance to $50 million to $100 million, from $25 million to $75 million. Fox said dispositions aimed at proactive risk management will remain part of EPR’s strategy, but the near-term emphasis will be on generating accretive proceeds through sales of non-core assets.

During the question-and-answer session, Peterson said the guidance increase reflected a slightly better first quarter, the impact of higher investment spending, the timing and economics of remaining investments, and the conversion of the Margaritaville-related mortgage note into a lease.

Asked about convertible mortgage structures, Fox said more than 80% of EPR’s mortgage book is convertible and described the Margaritaville transaction as representative of the company’s approach, calling such mortgages “pathways to real estate ownership.”

Silvers said macro uncertainty and capital market volatility have generated inbound interest from potential counterparties seeking to de-risk. He also said EPR continues to see opportunities across attractions, fitness, Eat and Play and other experiential categories, while maintaining its strategic goal of increasing portfolio diversity.

About EPR Properties (NYSE:EPR)

EPR Properties is a real estate investment trust that specializes in experiential properties across the United States, Canada and select international markets. Established in 1997 and headquartered in Kansas City, Missouri, the company targets properties in the entertainment, recreation and education sectors. Its portfolio includes movie theaters, ski resorts, family entertainment centers, charter schools and other venues that benefit from consumer-driven experiences.

The trust employs long-term, triple-net lease agreements, where tenants are responsible for real estate taxes, insurance and maintenance.

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