Epr Properties · NYSE:EPR
Epr Properties — Q3 2017 Earnings Presentation
48 slides from Epr Properties's earnings presentation, November 2017
Slide 1: Investing in Life's Enduring Experiences
INVESTING IN LIFE’S ENDURING EXPERIENCES INVESTOR PRESENTATION – THIRD QUARTER 2017 AMC THEATRE – COLUMBIA, MD BASIS INDEPENDENT SCHOOL – BROOKLYN, NY TOPGOLF – PHOENIX, AZ DATA IN THIS PRESENTATION IS AS OF 9/30/17 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** LIFETIME TOTAL SHAREHOLDER RETURN $8.5B TOTAL MARKET CAP $5.5B EQUITY, $3.0B DEBT $6.6B+ TOTAL INVE
Slide 5: Investment Thesis and Core Strategies
INVESTMENT THESIS AND CORE STRATEGIES INVESTMENT THESIS CORE STRATEGIES DIFFERENTIATED INVESTMENTS LONG TERM STRONG RELATIONSHIP-BASED GROWTH PIPELINE KNOWLEDGE DRIVEN WELL CAPITALIZED BALANCE SHEET FEWER CATEGORIES GREATER DEPTH UNDERLYING INVESTMENT SEGMENT STRENGTH TRIPLE NET STRUCTURE CONSISTENT
Slide 6: Human Capital
HUMAN CAPITAL OUR ORGANIZATIONAL DESIGN REFLECTS OUR SEGMENT FOCUS 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 GROUP GROUP GROUP 6
Slide 7: Millennials 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 8: Portfolio
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Slide 9: $6.6B+ Portfolio
PORTFOLIO VALUE $6.6B+ PORTFOLIO Generating $594M*+ in NOI BY INVESTMENT VALUE 392 locations with over 250 tenants in 43 states, DC & Canada 32% RECREATION 22% EDUCATION 3% 43% OTHER ENTERTAINMENT *Represents annualized GAAP NOI – see supplemental for definition and reconciliations of certain Non-GA
Slide 10: Portfolio Detail
PORTFOLIO DETAIL PROPERTY TYPE PROPERTIES NOI* % of TOTALS % LEASED (IN MILLIONS) MEGAPLEX THEATRES** 147 219.7 37.0% 100.0% ENTERTAINMENT RETAIL CENTERS (ERCS) 7 41.3 6.9% 96.4% FAMILY ENTERTAINMENT CENTERS (FECS) 9 11.5 1.9% 100.0% TOTAL ENTERTAINMENT 163 272.5 45.8% 99.4% GOLF ENTERTAINMENT COMPL
Slide 11: Focused Growth Total Investments
FOCUSED GROWTH TOTAL INVESTMENTS* (IN MILLIONS) $6,652 OTHER 179 RECREATION $5,307 EDUCATION 178 2,099 $4,606 ENTERTAINMENT 1,148 203 $4,040 $3,562 207 944 1,481 $3,120 $3,211 212 696 $2,844 $2,969 1,303 $2,717 395 267 550 1,006 335 728 $2,271 342 382 318 421 538 337 280 312 230 374 234 286 174 2,89
Slide 12: Property Map
PROPERTY MAP* GEOGRAPHICALLY DIVERSE PORTFOLIO *As of September 30, 2017 12
Slide 13: Distinctive Combination of Lease Characteristics
DISTINCTIVE COMBINATION OF LEASE CHARACTERISTICS CROSS DEFAULT/ DURATION 12 YEARS CREDIT SUPPORT UNIQUE COMBINATION STRONG RENT ESCALATORS COVERAGE GENERALLY 1.5% - 2% OR 7.5%-10% PARTICIPATING RENT/ INTEREST EVERY FIVE YEARS 13
Slide 14: Continuing Trend of Reduced Concentration
CONTINUING TREND OF REDUCED CONCENTRATION Top 5= 70% 64% 5% 60% 7% Percent of Total Revenue 5% Top 5= Camelback Resort 50% 7% 5% 6% 46% 9% 8% Peak Resorts 6% 8% 8% 4% 9% Topgolf 40% 9% 8% 7% 7% 9% 9% 9% Cinemark 10% 9% 30% 6% 8% 7% 4% Regal 6% 8% 20% Rave 34% 29% 25% 23% 23% Imagine 10% 20% 19% AMC
Slide 15: Portfolio Lease Expirations
PORTFOLIO LEASE EXPIRATIONS LEASE EXPIRATIONS OVER NEXT 10 YEARS AVERAGE 2.1% 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,
Slide 16: Entertainment
ENTERTAINMENT UPDATES YTD BOX OFFICE REVENUE IS DOWN*, YET EXPECTED TO FINISH NEAR LAST YEAR’S MEGAPLEX THEATRES RECORD-BREAKING RESULTS THREE PRIMARY STRATEGIES – REDEVELOPMENT, BUILD-TO-SUIT AND ACQUISITION EPR PORTFOLIO ENTERTAINMENT RETAIL CENTERS 163 $2.8B+ PROPERTIES INVESTED IN SERVICE 6** 22
Slide 17: Megaplex Theatres
MEGAPLEX THEATRES LONG HISTORY OF STEADY GROWTH 154 MEGAPLEX THEATRES* 3 UNDER DEVELOPMENT** *Includes theatres in ERCs **Properties not yet in service Source: BoxOfficeMojo THEATRE RENT COVERAGE STABILITY $12,000 2.0X $10,000 1.5X Annual Box Office Box Office $8,000 1.0X fluctuation has historicall
Slide 18: 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 19: Entertainment Retail Centers
ENTERTAINMENT RETAIL CENTERS ( E R C s) ONE STOP SHOPPING, DINING AND FUN 7 ENTERTAINMENT RETAIL CENTERS Theatre or live performance venue provides anchor 19
Slide 20: Family Entertainment Centers
FAMILY ENTERTAINMENT CENTERS ( F EC s) ONE LOCATION A VARIETY OF ENTERTAINMENT OPTIONS 9 FAMILY ENTERTAINMENT CENTERS Upscale venues work well for corporate and consumer events 3 UNDER DEVELOPMENT* *Properties not yet in service 20
Slide 21: Recreation Highlights
RECREATION HIGHLIGHTS RECREATION UPDATES GOLF ENTERTAINMENT COMPLEXES TOPGOLF CONTINUES TO OUTPERFORM ATTRACTIONS DEMONSTRATED DURABILITY IN PERFORMANCE SKI AREAS EPR PORTFOLIO 81 $2.0B+ ATTRACTIONS PROPERTIES INVESTED IN SERVICE 6 ** 21 PROPERTIES OPERATORS UNDER DEVELOPMENT OTHER RECREATION *Sourc
Slide 22: Golf Entertainment Complexes
GOLF ENTERTAINMENT COMPLEXES GOLF ENTERTAINMENT COMPLEXES REVOLUTIONIZE RECREATIONAL ACTIVITY 28 GOLF ENTERTAINMENT COMPLEXES Topgolf’s 2016 attendance grew over 30%** 5 UNDER DEVELOPMENT* *Properties not yet in service **Source: Topgolf 22
Slide 23: Ski Areas
SKI AREAS LEADING REGIONAL SKI AND RESORT DESTINATIONS 26 SKI AREAS GEOGRAPHIC SNOWMAKING FOUR SEASON DIVERSITY CAPABILITIES APPEAL 23
Slide 24: Attractions
ATTRACTIONS PROVEN AND DURABLE RECREATION ACTIVITY 20 ATTRACTIONS Demonstrating a consistent track record of attendance and revenue, the attractions industry is an enduring component of 1 UNDER DEVELOPMENT* the American lifestyle. *Properties not yet in service 24
Slide 25: Other Recreation
OTHER RECREATION ACTIVE EXPERIENCES CONSISTENT WITH CONSUMER TRENDS 7 OTHER RECREATION PROPERTIES Increased focus on fitness and wellness, along with participation in new generation activities 25
Slide 26: Education
EDUCATION EDUCATION FACILITIES UPDATES EPR 2017-2018 PUBLIC CHARTER SCHOOL ENROLLMENT INCREASED MORE THAN 10% PUBLIC CHARTER SCHOOLS PUBLIC CHARTER SCHOOLS ATTRACTIVE OPPORTUNITIES EXIST ACROSS EPR’S EDUCATION PLATFORM EDUCATION EPR INVESTMENT SPENDING PORTFOLIO PRIVATE SCHOOLS 147 $1.4B+ PROPERTIES
Slide 27: Public Charter Schools
PUBLIC CHARTER SCHOOLS * DRIVEN BY PARENTAL DEMAND FOR CHOICE; OVER 20 YEARS OLD AND GROWING STRONG 69 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 28: Private Schools
PRIVATE SCHOOLS LIMITED QUALITY PRIVATE OPTIONS FUEL DEMAND 15 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 29: Private Schools
PRIVATE SCHOOLS PROVIDING AN ALTERNATIVE TO MEET THE DEMAND FOR QUALITY PRIVATE EDUCATION 29
Slide 30: Early Childhood Education
EARLY CHILDHOOD EDUCATION DEMAND FOR EDUCATION BEYOND DAYCARE 63 EARLY CHILDHOOD EDUCATION CENTERS Large number of dual income families Increasing per capita disposable income/stabilizing 7 UNDER DEVELOPMENT* unemployment rate Desire for quality education instead of daycare According to the U.S. Cen
Slide 31: Early Childhood Education
EARLY CHILDHOOD 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 31
Slide 32: Resorts World Catskills Summary
RESORTS WORLD CATSKILLS SUMMARY • EPR is the land lessor on the casino parcel and two adjoining parcels. o Empire Resorts expected to invest ~$800M in Resorts World Catskills Resort Casino. o Empire Resorts will now also fund improvements to both the golf course and retail village. o EPR is expected
Slide 33: Adelaar Update
ADELAAR UPDATE Steady progress towards planned opening of Montreign Resort Casino on or before March 31, 2018 Development continues on the hotel waterpark site with projected opening in early 2019 33
Slide 34: Financial Review
FINANCIAL haw EPR Properties
Slide 35: Capital Structure and Financial Highlights
CAPITAL STRUCTURE AND FINANCIAL HIGHLIGHTS* Total Market Cap = $8.5B CAPITAL STRUCTURE (IN MILLIONS) COMMON Fixed Rate Debt = 92%** EQUITY, Weighted Average = 4.8%** SECURED $5,139 DEBT, $37 1% 60% Unsecured Debt = 99% Increased capacity and reduced interest rate spreads UNSECURED 35% • Unsecured Re
Slide 36: Well Laddered Debt Maturity Profile
WELL LADDERED DEBT MATURITY PROFILE* $500 $450 $450 $400 $400 $350 $300 $300 $275 $250 $192 $200 $170 $148 $100 $12 $25 $0 Secured Debt Unsecured Term Loan Unsecured Senior Notes Unsecured Credit Facility Private Placement *Data in millions as of 9/30/17; excludes amortization 36
Slide 37: 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 38: Annual Dividends
ANNUAL DIVIDENDS ATTRACTIVE & GROWING ANNUAL DIVIDENDS Dividend Yield of 6%* *As of 11/6/17 ** Projected 38
Slide 39: Financial Performance
FINANCIAL PERFORMANCE NINE MONTHS ENDED SEPTEMBER 30, 2017 2016 $ CHANGE % CHANGE Total Revenue $428.3 $362.4 $65.9 18% Net Income - Common 179.6 149.0 30.6 21% FFO – Common* 249.4 224.2 25.2 11% FFO as adj. – Common* 264.7 227.2 37.5 17% Net Income/share – Common 2.55 2.35 0.20 9% FFO/share – Commo
Slide 40: Key Ratios
KEY RATIOS KEY RATIOS* FOR THE THREE MONTHS ENDED 9-30 2017 2016 Fixed charge coverage 3.1x 3.2x Debt service coverage 3.6x 3.6x Interest coverage 3.6x 3.9x Annualized Net debt to 5.4x 5.1x Annualized Adjusted EBITDA FFO as adjusted payout 81% 78% INVESTMENT GRADE CREDIT RATINGS S&P MOODY’S FITCH Se
Slide 41: Increasing 2017 Guidance
INCREASING 2017 GUIDANCE FFO AS ADJUSTED PER SHARE Revised Guidance $5.15 - $5.20 Prior Guidance $5.05 - $5.20 INVESTMENT SPENDING Revised guidance $1.55B - $1.60B Prior Guidance $1.45B - $1.5B DISPOSITIONS Revised guidance $185M - $200M Prior Guidance $175M - $250M 41
Slide 42: Introducing 2018 Guidance
INTRODUCING 2018 GUIDANCE FFO AS ADJUSTED PER SHARE $5.33 - $5.48 INVESTMENT SPENDING $700M - $800M DISPOSITIONS $125M - $225M 42
Slide 43: Appendix
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Slide 44: Megaplex Theatres
MEGAPLEX THEATRES * DRIVEN BY STRONG VALUE, THEATRES CONTINUE TO BE THE DOMINANT CHOICE IN ADMISSIONS-BASED ENTERTAINMENT ADMISSIONS-BASED ATTENDANCE RELATIVE VALUE 2015 ATTENDANCE (IN MILLIONS) 2015 Average Ticket Price for a Family of Four (US$) Sources: NATO, Sports Leagues, International Theme P
Slide 45: Public Charter Schools
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 46: Private Schools
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 47: Early Childhood Education
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 48: EPR Properties
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]