Epr Properties · NYSE:EPR
Epr Properties — FY2016 Earnings Presentation
48 slides from Epr Properties's earnings presentation, March 2017
Slide 1: Investor Presentation
INVESTOR PRESENTATION AMC THEATRE – COLUMBIA, MD BASIS INDEPENDENT SCHOOL – BROOKLYN, NY TOPGOLF – PHOENIX, AZ DATA IN THIS PRESENTATION IS AS OF 12/31/16 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 OV haw EPR Properties
Slide 4: EPR Properties
EPR PROPERTIES EPR IS A TRIPLE NET LEASE REIT, SPECIALIZING IN SELECT, NON-COMMODITY REAL ESTATE SEGMENTS THAT ARE HIGHLY ENDURING COMPANY SNAPSHOT NYSE: EPR, FOUNDED: 1997 LONG-TERM OUTPERFORMANCE TOTAL SHAREHOLDER RETURN $7.4B TOTAL MARKET CAP $4.9B EQUITY, $2.5B DEBT $5.3B+ TOTAL INVESTMENTS 320
Slide 5: Investment Thesis
INVESTMENT THESIS DIFFERENTIATED INVESTMENTS LIFETIME TOTAL STRONG RELATIONSHIP-BASED RETURN TO GROWTH PIPELINE SHAREHOLDERS WELL CAPITALIZED BALANCE SHEET 1,432% * UNDERLYING INVESTMENT SEGMENT OVER 3X THE MSCI US STRENGTH REIT INDEX (RMS) FOR THE SAME PERIOD CONSISTENT COVERAGE *CALCULATED FROM 11
Slide 6: Opportunity and Core Strategies
OPPORTUNITY AND CORE STRATEGIES OPPORTUNITY CORE STRATEGIES OWN THE WHITE SPACE LONG TERM KNOWLEDGE DRIVEN FEWER CATEGORIES GREATER DEPTH TRIPLE NET STRUCTURE 6
Slide 7: Focused Growth: Total Investments
FOCUSED GROWTH TOTAL INVESTMENTS* (IN MILLIONS) OTHER $5,307 RECREATION 178 $4,606 EDUCATION 203 1,148 $4,040 ENTERTAINMENT $3,562 207 944 $3,120 $3,211 212 696 $2,969 1,303 $2,844 $2,717 267 550 395 1,006 $2,271 382 335 421 728 342 318 538 337 280 312 230 374 234 286 174 2,678 2,411 2,453 2,177 2,1
Slide 8: Organizational Integration
ORGANIZATIONAL INTEGRATION OUR SEGMENT FOCUS IS CONSISTENT WITH OUR STRATEGIC ORGANIZATIONAL DESIGN Builds centers of knowledge in each Creates competitive advantage to of our primary segments identify key market trends EXECUTIVE MANAGEMENT CHIEF INVESTMENT OFFICER ENTERTAINMENT RECREATION EDUCATION
Slide 9: Millennials Value Experience
EXPERIENCE EVOLUTION ARTS, ENTERTAINMENT AND RECREATION INDUSTRY MILLENNIALS CONTRIBUTION TO US GDP Total Industry Output (IN TRILLIONS) $1.4 As a percent of Total US GDP Output 4.1% 75.4M $1.2 4.0% 3.9% people aged 18-34 3.8% $1.0 3.7% LARGEST 3.6% population segment $0.8 3.5% 2010 2011 2012 2013 2
Slide 10: Portfolio
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Slide 11: $5.3B+ Portfolio
PORTFOLIO VALUE $5.3B+ PORTFOLIO Generating over $495M* in NOI BY INVESTMENT VALUE 320 locations with over 250 tenants in 41 states, DC & Canada 25% EDUCATION 22% RECREATION 3% 50% OTHER ENTERTAINMENT *Represents annualized GAAP NOI – see supplemental for definition and reconciliations of certain No
Slide 12: Portfolio Detail
PORTFOLIO DETAIL PROPERTY TYPE PROPERTIES NOI* % of TOTALS % LEASED (IN MILLIONS) MEGAPLEX THEATRES** 141 210.9 42.6% 100.0% ENTERTAINMENT RETAIL CENTERS (ERCS) 8 42.8 8.7% 96.0% FAMILY ENTERTAINMENT CENTERS (FECS) 8 8.2 1.7% 100.0% TOTAL ENTERTAINMENT 157 261.9 53.0% 99.3% METROPOLITAN SKI AREAS 11
Slide 13: Property Map
PROPERTY MAP GEOGRAPHICALLY DIVERSE PORTFOLIO 13
Slide 14: Distinctive Combination of Lease Characteristics
DISTINCTIVE COMBINATION OF LEASE CHARACTERISTICS CROSS DEFAULT/ DURATION 11+ YEARS CREDIT SUPPORT UNIQUE COMBINATION STRONG RENT ESCALATORS COVERAGE GENERALLY 2% OR 10% PARTICIPATING RENT/ INTEREST EVERY FIVE YEARS 14
Slide 15: Reduced Top Tenant Concentration
REDUCED TOP 5 TENANT CONCENTRATION 70% 64% 5% 60% 7% 5% 45% Percent of Total Revenue 50% 7% 5% 6% 9% 6% 8% Premier Parks 8% 8% 4% 9% Peak Resorts 40% 9% 8% 7% 7% 8% Topgolf 9% 9% 10% 9% 30% 6% Cinemark 8% 7% 4% 6% 7% Regal 20% 34% Rave 29% 25% 23% 23% 10% 20% 20% Imagine AMC 0% FY2011 FY2012 FY2013
Slide 16: Portfolio Lease Expirations
PORTFOLIO LEASE EXPIRATIONS LEASE EXPIRATIONS OVER NEXT 10 YEARS AVERAGE ~3% TOTAL REVENUE ANNUALLY 50% ENTERTAINMENT RECREATION EDUCATION 40% Percent of Total Revenue 30% 20% 10% 0% This schedule relates to owned megaplex theatres, public charter schools, early education centers, private schools, s
Slide 17: Entertainment $2.6B+
ENTERTAINMENT UPDATES 2016 RECORD BOX OFFICE YEAR, REVENUE APPROX. $11.4B, UP 2% OVER PREVIOUS YEAR MEGAPLEX THEATRES 25% OF THEATRES IN PORTFOLIO RENOVATED, EXPECTED TO EXCEED 50% IN 36 MONTHS EPR PORTFOLIO ENTERTAINMENT RETAIL CENTERS 157 $2.6B+ PROPERTIES INVESTED IN SERVICE 6* 22** PROPERTIES OP
Slide 18: Megaplex Theatres
MEGAPLEX THEATRES LONG HISTORY OF STEADY GROWTH 149 MEGAPLEX THEATRES* 3 UNDER DEVELOPMENT** *Includes theatres in ERCs **Properties not yet in service Source: BoxOfficeMojo FUTURE LOOKS BRIGHT MILLENNIALS ACCOUNT FOR 50% MILLENNIALS JUST BECAME THE LARGEST POPULATION SEGMENT AND WILL CONTINUE TO GR
Slide 19: Megaplex Theatres: Admissions-Based Entertainment
MEGAPLEX THEATRES * DRIVEN BY STRONG VALUE, THEATRES CONTINUE TO BE THE DOMINANT CHOICE IN ADMISSIONS-BASED ENTERTAINMENT ADMISSIONS-BASED ATTENDANCE RELATIVE VALUE 2015 ATTENDANCE (IN MILLIONS) 2015 Average Ticket Price for a Family of Four (US$) Sources: NATO, Sports Leagues, International Theme P
Slide 20: Transforming the Customer Experience
MEGAPLEX THEATRES TRANSFORMING THE CUSTOMER EXPERIENCE +40% AVERAGE INCREASES IN TOTAL REVENUE * NEW LUXURY SEATING NEW FOOD AND BEVERAGE CONCEPTS 60% Seat Reduction Replaced with Lo unges and In-T hea tr e Dining A lco ho l and Luxury Seating E xp anded Menus Res taura n ts Enhanced Customer Experi
Slide 21: Entertainment Retail Centers
ENTERTAINMENT RETAIL CENTERS ( E R C s) ONE STOP SHOPPING, DINING AND FUN 8 ENTERTAINMENT RETAIL CENTERS Theatre or live performance venue provides anchor 21
Slide 22: Family Entertainment Centers
FAMILY ENTERTAINMENT CENTERS ( F EC s) ONE LOCATION. A VARIETY OF ENTERTAINMENT OPTIONS. 8 FAMILY ENTERTAINMENT CENTERS Upscale venues work well for corporate and consumer events. 3 UNDER DEVELOPMENT* *Properties not yet in service 22
Slide 23: Recreation Highlights
RECREATION HIGHLIGHTS RECREATION UPDATES TOPGOLF COVERAGE EXCEEDING 3.0X GOLF ENTERTAINMENT COMPLEXES SKI SEASON RETURNS TO HISTORICAL AVERAGE PERFORMANCE EPR PORTFOLIO SKI AREAS 42 $1.1B+ PROPERTIES INVESTED IN SERVICE 7* 8 PROPERTIES OPERATORS UNDER DEVELOPMENT WATERPARKS SKI AREAS *Properties not
Slide 24: Recreation: Topgolf, Ski Areas, Waterparks
RECREATION NEW GENERATION INDUSTRY 25 GOLF ENTERTAINMENT COMPLEXES (TOPGOLF) RECREATION Combines golf with LEADER Topgolf’s 2016 attendance grew over 5 UNDER DEVELOPMENT* entertainment, competition, technology, food & 30% To more than 10.5M visitors* fun Source: Topgolf METROPOLITAN VS. RISK DESTINA
Slide 25: Ski Areas
SKI AREAS RESORT NAME MARKETS SERVED TRAILS LIFTS 11 METROPOLITAN DAILY SKI PARKS MAD RIVER Columbus: 50 miles 20 12 BOSTON MILLS Cleveland: 30miles 7 8 BRANDYWINE Cleveland: 20 miles 11 8 Philadelphia: 80 miles JACK FROST 20 12 NY: 110 miles Philadelphia: 80 miles BIG BOULDER 15 10 NY: 110 miles Bo
Slide 26: Golf Entertainment Complexes
GOLF ENTERTAINMENT COMPLEXES GOLF ENTERTAINMENT COMPLEXES REVOLUTIONIZE RECREATIONAL ACTIVITY 25 GOLF ENTERTAINMENT COMPLEXES 5 UNDER DEVELOPMENT* *Properties not yet in service 26
Slide 27: CNL Lifestyle Properties Transaction
CNL LIFESTYLE PROPERTIES TRANSACTION EPR has agreed to acquire the CNL Lifestyle Properties (CNL) Northstar California Ski Resort and attractions OVERVIEW portfolio, along with providing 65% debt financing to funds affiliated with Och-Ziff Real Estate (OZRE) for the remainder of the ski portfolio. A
Slide 28: Recreation Portfolio Under Agreement
RECREATION PORTFOLIO UNDER AGREEMENT NORTHSTAR CALIFORNIA • Leading regional destination mountain resort and retail village, with a proven operator, Vail Resorts • 5-year average rent coverage of ~1.6x* • Year round resort with extensive co-investments MOUNTAIN RESORT RETAIL VILLAGE ATTRACTIONS PORT
Slide 29: Education $1.3B+
EDUCATION EDUCATION FACILITIES UPDATES 2016/17 PUBLIC CHARTER SCHOOL ENROLLMENT AT 3.1 MILLION STUDENTS, 7% GROWTH PUBLIC CHARTER SCHOOLS PUBLIC CHARTER SCHOOLS EPR PORTFOLIO 120 $1.3B+ EDUCATION INVESTMENT SPENDING 100% EARLY CHILDHOOD EDUCATION PROPERTIES INVESTED IN SERVICE 17* 56 PROPERTIES OPER
Slide 30: Public Charter Schools
PUBLIC CHARTER SCHOOLS * DRIVEN BY PARENTAL DEMAND FOR CHOICE; OVER 20 YEARS OLD AND GROWING STRONG 67 PUBLIC CHARTER SCHOOLS Started in 1992 1 UNDER DEVELOPMENT** Currently adopted in 42 states and D.C. 3.1M students growing at ~12% CAGR 6,900 schools growing at ~7% CAGR Waiting list of over 1M stu
Slide 31: Public Charter Schools: Market Opportunity
PUBLIC CHARTER SCHOOLS CURRENT FAMILY PROFILE SCHOOL PROFILE TARGET STATES Parents who want an Strong organizational leadership ARIZONA alternative to traditional and governance public schools COLORADO Favorable market analysis of FLORIDA Highly engaged enrollment and waiting list CALIFORNIA High po
Slide 32: Private Schools
PRIVATE SCHOOLS LIMITED QUALITY PRIVATE OPTIONS FUEL DEMAND 12 PRIVATE SCHOOLS 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 opportuni
Slide 33: Private Schools: Market Opportunity
PRIVATE SCHOOLS FAMILY PROFILE OPERATOR PROFILE HIGH POTENTIAL Mid to high affluence Nonsectarian schools MARKETS Strong academic Branded school group with NEW YORK orientation history of success SAN FRANCISCO BAY AREA High parental education Academically rigorous at LOS ANGELES achievement moderate
Slide 34: Private Schools: Providing an Alternative
PRIVATE SCHOOLS PROVIDING AN ALTERNATIVE TO MEET THE DEMAND FOR QUALITY PRIVATE EDUCATION 34
Slide 35: Early Childhood Education
EARLY CHILDHOOD EDUCATION DEMAND FOR EDUCATION BEYOND DAYCARE 41 EARLY CHILDHOOD EDUCATION CENTERS Large number of dual income families Increasing per capita disposable income/stabilizing 16 UNDER DEVELOPMENT* unemployment rate Desire for quality education instead of daycare According to the U.S. Ce
Slide 36: Early Childhood Education Redefined
EARLYEARLY CHILDHOOD EDUCATION CHILDHOOD REDEFINED EDUCATION FAMILY PROFILE OPERATOR PROFILE MARKET PROFILE Dual income Academic Focus Suburban areas of major MSA’s High income Multi-site operations Target segment growth Well-educated parents Superior real estate execution Underserved trade areas Ch
Slide 37: Early Childhood Education Redefined
EARLYEARLY CHILDHOOD EDUCATION CHILDHOOD REDEFINED EDUCATION EARLY CHILDHOOD EDUCATION REDEFINED Teaching kids through simulation of real world environments, utilizing technology as part of the curriculum and providing opportunities to learn through play 37
Slide 38: Adelaar Summary
ADELAAR SUMMARY • EPR is the land lessor on the casino parcel and two adjoining parcels. o Empire Resorts expected to invest ~$650M in Montreign Resort Casino o Empire Resorts will now also fund improvements to both the golf course and retail village o EPR is expected to invest ~$100M-$120M for deve
Slide 39: Adelaar Updates
ADELAAR UPDATES Empire Resorts closed on $500M of debt financing Development has begun on the hotel waterpark site One tract of land sold for development 39
Slide 40: Financial Review
FINANCIAL haw EPR Properties
Slide 41: Capital Structure and Financial Highlights
CAPITAL STRUCTURE AND FINANCIAL HIGHLIGHTS Total Market Cap = $7.4B CAPITAL STRUCTURE (IN MILLIONS) COMMON Fixed Rate Debt = 97% EQUITY, Weighted Average = 5.06% SECURED $4,568 DEBT, $200 3% 61% Unsecured Debt = 92% Leverage = 5.48X on Net Debt 31% to Adjusted EBITDA UNSECURED DEBT, $2,286 5% Issued
Slide 42: Well Laddered Debt Maturity Profile
WELL LADDERED DEBT MATURITY PROFILE* $500 $450 $400 $350.0 $350 $300 $300 $275 $250 $192 $200 $158 $148 $100 $12 $25 $0 Secured Debt Unsecured Term Loan Unsecured Senior Notes Unsecured Credit Facility Private Placement *Data in millions as of 12/31/16; excludes amortization 42
Slide 43: Operating Performance History
OPERATING PERFORMANCE HISTORY CONSISTENTLY STRONG OPERATING METRICS FFOAA TOTAL REVENUE $350 $600 $300 $500 $250 $400 $200 $300 $150 $100 $200 $50 $100 $0 $0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 FFOAA PER SHARE NET INCOME TO COMMON SHAREHOLDERS $250 $6.00 $5.00 $200 $4.00 $150 $3.00 $10
Slide 44: Annual Dividends
ANNUAL DIVIDENDS ATTRACTIVE & GROWING ANNUAL DIVIDENDS Dividend Yield of 5.4%* *As of 2/20/17 ** Projected 44
Slide 45: Financial Performance
FINANCIAL PERFORMANCE YEAR ENDED DECEMBER 31, 2016 2015 $ CHANGE % CHANGE Total Revenue $493.2 $421.3 $71.9 17% Net Income - Common 201.2 170.7 30.5 18% FFO - Common 304.6 235.2 69.4 30% FFO as adj. - Common 308.0 260.3 47.7 18% Net Income/share – Common 3.17 2.93 0.24 8% FFO/share - Common 4.77 4.0
Slide 46: Key Ratios
* KEY RATIOS KEY RATIOS* YEAR ENDED DECEMBER 31, 2016 2015 2014 2013 Fixed charge coverage 3.2x 3.0x 2.9x 2.7x Debt service coverage 3.6x 3.2x 3.3x 3.0x Interest coverage 3.9x 3.7x 3.7x 3.5x FFO as adjusted payout 80% 82% 83% 81% Net debt to Adjusted EBITDA 5.5x 5.1x 4.5x 4.8x INVESTMENT GRADE CREDI
Slide 47: 2017 Guidance
2017 GUIDANCE FFO AS ADJUSTED PER SHARE $5.05 - $5.20 INVESTMENT SPENDING $1.30B - $1.35B DISPOSITIONS $150M - $300M 47
Slide 48: EPR Properties: Return on Insight
Val EPR Properties” Return on Insight EPR Properties 909 Walnut Street, Suite 200 Kansas City, MO 64106 www.eprkc.com (888) EPR REIT [email protected]