Epr Properties · NYSE:EPR
Epr Properties — Investor Presentation (June 2018)
46 slides from Epr Properties's investor presentation, June 2018
Slide 1: Investing in Life's Enduring Experiences
INVESTING IN LIFE’S ENDURING EXPERIENCES INVESTOR PRESENTATION | JUNE 2018 DATA IN THIS PRESENTATION IS AS OF 3/31/18 UNLESS OTHERWISE NOTED
Slide 2: Disclaimer
DISCLAIMER Statements made in this presentation may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements relate to, without limitation,
Slide 3: Company Overview
COMPANY OVERVIEW
Slide 4: EPR Properties
EPR PROPERTIES COMPANY SNAPSHOT* PRIMARY INVESTMENTS SEGMENTS NYSE: EPR, FOUNDED: 1997 $7.6B Total Market Cap $4.5B Equity, $3.1B Debt $6.8B+ Total Investments 400 Properties, 43 States, DC & Canada ENTERTAINMENT LONG-TERM OUTPERFORMANCE** LIFETIME TOTAL SHAREHOLDER RETURN RECREATION EDUCATION *As o
Slide 5: Investment Thesis
INVESTMENT THESIS EPR is a triple net REIT, specializing in select highly enduring real estate segments DIFFERENTIATED INVESTMENTS EXPERIENTIAL ORIENTATION STRONG RELATIONSHIP-BASED GROWTH PIPELINE UNDERLYING INVESTMENT SEGMENT STRENGTH WELL-CAPITALIZED BALANCE SHEET CONSISTENTLY GROWING DIVIDEND 5
Slide 6: Growth Strategy
GROWTH STRATEGY ESTABLISH EXPAND OPTIMIZE PRIMARY SEGMENTS SUB SEGMENTS ASSET MANAGEMENT Build Significant Growth Continue to Explore Maximize the Long-Term Platforms Potential Extensions Portfolio Value THEATRES Reporting (Assessment) ERCs • Continuous property ENTERTAINMENT FECs tracking • Segment
Slide 7: Experiential Orientation
EXPERIENTIAL ORIENTATION MILLENNIALS ARTS, ENTERTAINMENT AND RECREATION INDUSTRY CONTRIBUTION TO US GDP 75.4M $1.4 Total Industry Output (IN TRILLIONS) As a percent of Total US GDP Output 4.1% people aged 18-34 4.0% $1.2 3.9% LARGEST $1.0 3.8% 3.7% population segment 3.6% $0.8 3.5% they value 2010 2
Slide 8: First Quarter Headlines
FIRST QUARTER HEADLINES 1. Strong Quarter Anchored by Significant Topline Revenue Growth 2. Executing our Capital Recycling Strategy 3. Increasing Earnings Guidance; Reaffirming Investment Spending, Disposition Guidance 4. Debt Management Further Strengthens Balance Sheet 5. Enhanced Disclosure 8
Slide 9: Portfolio
PORTFOLIO
Slide 10: $6.8B+ Portfolio
PORTFOLIO VALUE $6.8B+ PORTFOLIO Generating $595M* in NOI 400 locations with over 250 tenants in 43 states, DC & Canada BY INVESTMENT VALUE 33% RECREATION 21% EDUCATION 3% 43% OTHER ENTERTAINMENT *Represents annualized GAAP NOI – see supplemental for definition and reconciliations of certain Non-GAA
Slide 11: Customer Rent Coverage
CUSTOMER RENT COVERAGE TOTAL 1.74x ENTERTAINMENT RECREATION EDUCATION 1.62x* 2.08x** 1.51x*** METHODOLOGY Coverage numerator is customer's store level EBITDAR and denominator is EPR's minimum rent or interest (excludes non-cash straight-line rent or interest income from the effective interest method
Slide 12: Portfolio Detail
PORTFOLIO DETAIL PROPERTY TYPE PROPERTIES NOI* % of TOTALS % LEASED (In Millions) Megaplex Theatres** 149 225.1 37.8% 100.0% Entertainment Retail Centers (ERCs) 7 40.2 6.8% 95.7% Family Entertainment Centers (FECs) 11 13.4 2.3% 100.0% TOTAL ENTERTAINMENT 167 278.7 46.9% 99.3% Golf Entertainment Comp
Slide 13: Strong Portfolio Characteristics
STRONG PORTFOLIO CHARACTERISTICS FOCUSED GROWTH DISTINCTIVE LEASE FEATURES TOTAL INVESTMENTS* (IN BILLIONS) OTHER RECREATION $6.7 $6.8 EDUCATION $5.3 ENTERTAINMENT $4.6 $4.0 $3.6 $2.8 $3.1 $3.0 $3.2 $2.3 $2.7 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 REDUCED TENANT CONCENTRATION LO
Slide 14: Entertainment Portfolio Detail
ENTERTAINMENT EPR PORTFOLIO DETAIL $3.0B 167 3** 23*** 1.62x INVESTED PROPERTIES PROPERTIES OPERATORS RENT IN SERVICE UNDER COVERAGE DEVELOPMENT UPDATES YTD Box office revenue is up approx. 8%* High amenity theatres growing in popularity and demonstrating success 3 largest public theatre operators r
Slide 15: Megaplex Theatres
149 PROPERTIES IN SERVICE MEGAPLEX THEATRES 2 UNDER DEVELOPMENT HISTORICALLY DURABLE CATEGORY TRANSFORMING THE CUSTOMER EXPERIENCE EPR’S HIGHLY PRODUCTIVE THEATRES* LONG TERM STABILITY ANNUAL U.S. BOX OFFICE REVENUE** (In billions) EPR EPR 3% vs. 7% TOTAL TOTAL U.S./CANADA U.S./CANADA MARKET SHARE R
Slide 16: Family Entertainment Centers
11 PROPERTIES IN SERVICE FAMILY ENTERTAINMENT CENTERS 1 UNDER DEVELOPMENT ONE LOCATION A VARIETY OF ENTERTAINMENT OPTIONS Upscale venues work well for corporate and consumer events 16
Slide 17: Opportunities for Expansion: Entertainment
OPPORTUNITIES FOR EXPANSION ENTERTAINMENT THEATRES CULTURAL ATHLETIC LIVE SPECIALTY • Megaplex • Zoos VENUES VENUES • FECs • High Amenity • Aquariums • Stadiums • Live Theatres • Race Track • International • Museums • Arenas • Dinner Theatres • Sports/ • Concert Venues Alumni club 17
Slide 18: Recreation Portfolio Detail
RECREATION EPR PORTFOLIO DETAIL $2.2B 86 4* 21 2.08x INVESTED PROPERTIES PROPERTIES OPERATORS RENT IN SERVICE UNDER COVERAGE DEVELOPMENT UPDATES Received substantial paydown on $249M ski property mortgage loan to Och –Ziff Real Estate including prepayment fee Through March, ski visits were up 9% and
Slide 19: Golf Entertainment Complexes
31 PROPERTIES IN SERVICE GOLF ENTERTAINMENT COMPLEXES 3 UNDER DEVELOPMENT GOLF ENTERTAINMENT COMPLEXES REVOLUTIONIZE RECREATIONAL ACTIVITY Topgolf’s 2017 attendance grew over 20%* to 13M* guests *Source: Topgolf 19
Slide 20: Ski Areas
SKI AREAS 25 PROPERTIES IN SERVICE LEADING REGIONAL SKI AND RESORT DESTINATIONS GEOGRAPHIC SNOWMAKING FOUR SEASON DIVERSITY CAPABILITIES APPEAL 20
Slide 21: Attractions
20 PROPERTIES IN SERVICE ATTRACTIONS 1 UNDER DEVELOPMENT PROVEN AND DURABLE RECREATION ACTIVITY Demonstrating a consistent track record of attendance and revenue, the attractions industry is an enduring component of the American lifestyle 21
Slide 22: Other Recreation
OTHER RECREATION 10 PROPERTIES IN SERVICE ACTIVE EXPERIENCES CONSISTENT WITH CONSUMER TRENDS Increased focus on fitness and wellness, along with participation in new generation activities 22
Slide 23: Opportunities for Expansion: Recreation
OPPORTUNITIES FOR EXPANSION RECREATION SKI ATTRACTIONS REC BASED FITNESS EAT & PLAY SPECIALTY • Metro • Amusement LODGING WELLNESS • Karting • Golf Parks entertainment • Regional • Ski based • Lifestyle • Bowling • Stand alone lodging centers complexes • Destination waterparks • National Park • Fitn
Slide 24: Education Portfolio Detail
EDUCATION EPR PORTFOLIO DETAIL $1.4B 146 8* 59 1.51x INVESTED PROPERTIES PROPERTIES OPERATORS RENT IN SERVICE UNDER COVERAGE DEVELOPMENT UPDATES Entered into short-term agreement with Children’s Learning Adventure (CLA), which includes rent payments scheduled from March through July, leases terminat
Slide 25: Public Charter Schools
65 PROPERTIES IN SERVICE PUBLIC CHARTER SCHOOLS * 3 UNDER DEVELOPMENT DRIVEN BY PARENTAL DEMAND FOR CHOICE; OVER 20 YEARS OLD AND GROWING STRONG Started in 1992 Currently adopted in 44 states and D.C. 3.2M students growing at ~12% CAGR 7,000 schools growing at ~7% CAGR Waiting list of over 1M studen
Slide 26: Public Charter Schools
PUBLIC CHARTER SCHOOLS * 26
Slide 27: Private Schools
PRIVATE SCHOOLS * 14 PROPERTIES IN SERVICE LIMITED QUALITY PRIVATE OPTIONS FUEL DEMAND In select markets, quality public and private school options are limited Non-sectarian private schools in the >$15K tuition level have seen double-digit growth since 2008 Proven operators are capitalizing on the o
Slide 28: Private Schools
28 cs EPR Properties”
Slide 29: Early Childhood Education
67 PROPERTIES IN SERVICE EARLY CHILDHOOD EDUCATION 5 UNDER DEVELOPMENT DEMAND FOR EDUCATION BEYOND DAYCARE Large number of dual income families Increasing per capita disposable income/stabilizing unemployment rate Desire for quality education instead of daycare According to the U.S. Census Bureau, t
Slide 30: Resorts World Catskills Summary
RESORTS WORLD CATSKILLS SUMMARY Property Map Kartrite Hotel & Indoor Waterpark EPR is the land lessor on the casino/hotel and two adjoining parcels The Monster Golf Course • Resorts World Casino and Hotel opened Feb 2018 Ent. Village • Empire Resorts also funding improvements to the Resorts World go
Slide 31: Financial Review
FINANCIAL REVIEW
Slide 32: Financial Strategy
FINANCIAL STRATEGY MAINTAIN INVESTMENT GRADE DISCIPLINE • LOW LEVERAGE – Committed to conservative balance sheet management • UNSECURED MODEL – Emphasis is on common equity and unsecured debt o DSPP available for short-term equity needs o Have refinanced secured debt maturities with unsecured debt •
Slide 33: Capital Structure and Financial Highlights
CAPITAL STRUCTURE AND FINANCIAL HIGHLIGHTS* CAPITAL STRUCTURE FINANCIAL HIGHLIGHTS (In Millions) Total Market Cap = $7.6B COMMON $2.5B is fixed rate or fixed EQUITY, $4,117 through interest rate swaps, SECURED DEBT, wtd. avg. = 4.6% $25 1% 54% Unsecured Debt = 99% Redeemed $250M of 7.75% Senior 40%
Slide 34: Well Laddered Debt Maturity Profile
WELL LADDERED DEBT MATURITY PROFILE* NO DEBT MATURITIES UNTIL 2022 $600 $570** $500 $450 $450 $400 $400 $350 $300 $300 $275 $192 $200 $148 $100 $25 $0 Secured Debt Unsecured Credit Facility Unsecured Term Loan Unsecured Senior Notes Private Placement * Data in millions as of 3/31/18 ** Subsequent to
Slide 35: Operating Performance History
OPERATING PERFORMANCE HISTORY CONSISTENTLY STRONG OPERATING METRICS FFOAA TOTAL REVENUE $400 $700 $350 $600 $300 $500 $250 $400 $200 $150 $300 $100 $200 $50 $100 $0 $0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 FFOAA PER SHARE NET INCOME TO COMMON SHAREHOLDERS $250 $6.00 $5.00 $200 $4.00 $150
Slide 36: Annual Dividends
ANNUAL DIVIDENDS ATTRACTIVE & GROWING ANNUAL DIVIDENDS * Projected for full year 36
Slide 37: Financial Performance
FINANCIAL PERFORMANCE QUARTER ENDED MARCH 31, 2018 2017 $ CHANGE % CHANGE Total Revenue $155.0 $129.1 $25.9 20% Net Income – Common 23.5 48.0 (24.5) (51%) FFO – Common* 61.0 73.9 (12.9) (17%) FFO as adj. – Common* 94.0 76.5 17.5 23% Net Income/share – Common 0.32 0.75 (0.43) (57%) FFO/share – Common
Slide 38: Reconciliation of Midpoint of FFOAA/Share Guidance
* RECONCILIATION OF MIDPOINT OF FFOAA/SHARE GUIDANCE FFO AS ADJUSTED PER SHARE (previous guidance midpoint) $5.31 Prepayment fee from OZRE 0.61 Incremental dilution from convertible preferreds (0.03) Net impact of OZRE prepayment fee 0.58 Lower term fees related to Education Properties (0.13) Net in
Slide 39: Key Ratios
KEY RATIOS* QUARTER ENDED MARCH 31, 2018 2017 2016 2015 2014 Fixed charge coverage 3.2x 2.8x 3.3x 2.9x 2.8x Debt service coverage 3.7x 3.1x 3.7x 3.1x 3.2x Interest coverage 3.7x 3.3x 4.0x 3.6x 3.6x Net debt to Adjusted EBITDA 5.8x 5.9x 4.8x 5.1x 4.8x FFO as adjusted payout 86% 86% 82% 88% 91% *See i
Slide 40: 2018 Guidance
2018 GUIDANCE FFO AS ADJUSTED PER SHARE Revised $5.75 - $5.90 Prior Guidance $5.23 - $5.38 INVESTMENT SPENDING $400M - $700M DISPOSITION PROCEEDS $350M - $450M 40
Slide 41: Appendix
APPENDIX
Slide 42: Megaplex Theatres
MEGAPLEX THEATRES * DRIVEN BY STRONG VALUE, THEATRES CONTINUE TO BE THE DOMINANT CHOICE IN ADMISSIONS-BASED ENTERTAINMENT ADMISSIONS-BASED ATTENDANCE RELATIVE VALUE 2017 ATTENDANCE (IN MILLIONS) 2017 Average Ticket Price for a Family of Four (US$) Sources: NATO, Sports Leagues, International Theme P
Slide 43: Public Charter Schools
PUBLIC CHARTER SCHOOLS CURRENT FAMILY PROFILE SCHOOL PROFILE TARGET STATES Parents who want an Strong organizational leadership ARIZONA alternative to and governance traditional public COLORADO schools Favorable market analysis of FLORIDA enrollment and waiting list CALIFORNIA Highly engaged High po
Slide 44: Private Schools
PRIVATE SCHOOLS FAMILY PROFILE OPERATOR PROFILE HIGH POTENTIAL MARKETS Mid to high affluence Nonsectarian schools NEW YORK Strong academic Branded school group with SAN FRANCISCO BAY orientation history of success AREA High parental Academically rigorous at LOS ANGELES education achievement moderate
Slide 45: Early Childhood Education
EARLY CHILDHOOD EDUCATION FAMILY PROFILE OPERATOR PROFILE MARKET PROFILE Dual income Academic focus Suburban areas of major MSAs High income Multi-site operations Target segment growth Well-educated parents Superior real estate execution Underserved trade areas Children ages 0-5 (lack of competition
Slide 46: EPR Properties contact
vat EPR Properties” Return on Insight EPR Properties 909 Walnut Street, Suite 200 Kansas City, MO 64106 www-.eprkc.com (888) EPR REIT [email protected]