EPR Properties (NYSE:EPR) has recently released its 10-K report, providing a comprehensive overview of the company's financial performance and operations for the year. EPR Properties is a leading diversified experiential net lease real estate investment trust (REIT), with a focus on real estate venues that facilitate out-of-home leisure and recreation experiences. The company boasts total assets of approximately $5.7 billion across 44 states, adhering to rigorous underwriting and investing criteria centered on key industry, property, and tenant level cash flow standards.
In the Management’s Discussion and Analysis of Financial Condition and Results of Operations, EPR Properties outlines its strategic objective to enhance shareholder value by achieving predictable and increasing Funds From Operations As Adjusted (FFOAA) and dividends per share. The company's investment portfolio includes ownership of and long-term mortgages on experiential and education properties, with a focus on long-term investments in the experiential sector. EPR Properties also discusses its strategy to structure leases and financings to ensure a positive spread between its cost of capital and the rentals or interest paid by its tenants.
The company's total assets as of December 31, 2024, were approximately $5.6 billion, with properties located in 44 states and the provinces of Ontario and Quebec, Canada. EPR Properties' Experiential investments comprised $6.4 billion, or 93%, while its Education investments comprised $0.5 billion, or 7%, of its total investments. The Experiential portfolio included various property types such as theatre properties, eat & play properties, attraction properties, ski properties, experiential lodging properties, fitness & wellness properties, gaming property, and cultural property. The wholly-owned Experiential real estate portfolio consisted of approximately 18.8 million square feet, with a 99% lease rate.
EPR Properties also addressed the challenging economic environment, citing heightened risks and uncertainties associated with key macroeconomic factors including inflation and interest rate volatility. As a result, the company expects to maintain its investment spending at moderate levels in the near-term due to an elevated cost of capital, with future investments primarily funded from cash on hand, excess cash flow, disposition proceeds, and borrowing availability under its unsecured revolving credit facility.
In terms of operating results, EPR Properties reported total revenue of $698.1 million for the year ended December 31, 2024, representing a 1% decrease from the previous year. Net income available to common shareholders per diluted share decreased by 19%, while FFOAA per diluted share decreased by 6% compared to the prior year. The company attributed these changes to various factors including a comprehensive restructuring agreement with Regal and higher deferred rental payments from cash basis tenants received in 2023, as well as the effect of property acquisitions and dispositions that occurred in 2024 and 2023.
Furthermore, EPR Properties discussed its critical accounting policies and estimates, emphasizing the subjective assessments required for the valuation of real estate, accounting for real estate acquisitions, and assessing the collectability of receivables and credit loss related to mortgage and other notes receivable.
As a result of these announcements, the company's shares have moved 2.0% on the market, and are now trading at a price of $52.36. Check out the company's full 10-K submission here.
