EPR Properties (NYSE:EPR) today announced operating results for the
first quarter ended March 31, 2013.
Total revenue was $83.4 million for the first quarter of 2013,
representing a 9% increase from $76.8 million for the same quarter in
2012. Net income available to common shareholders was $35.3 million, or
$0.75 per diluted common share, for the first quarter of 2013 compared
to $15.4 million, or $0.33 per diluted common share, for the same
quarter in 2012. Funds From Operations (FFO) for the first quarter of
2013 was $48.3 million, or $1.03 per diluted common share, compared to
$40.3 million, or $0.86 per diluted common share, for the same period in
2012. FFO as adjusted for the first quarter of 2013 was $44.1 million,
or $0.94 per diluted common share, compared to $40.4 million, or $0.86
per diluted common share, for the same period in 2012, an increase of 9%
per share.
David Brain, President and CEO, commented, "I am pleased to report that
we have continued our positive forward momentum with a strong start to
2013, realizing 9% year over year growth in FFO as adjusted. We made
ongoing progress in the expansion of each of our primary investment
segments, investing in new assets with strong fundamentals. While we are
seeing some quarterly variability in the timing of our capital spend, we
believe we have ample current investment commitments and opportunities
in our pipeline to meet our annual guidance.”
A reconciliation of FFO to FFO as adjusted follows (unaudited, dollars
in thousands, except per share amounts):
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Three Months Ended March 31,
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2013
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2012
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Amount
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FFO/share
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Amount
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FFO/share
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FFO
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$
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48,314
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$
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1.03
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|
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$
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40,270
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$
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0.86
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Transaction costs
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318
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|
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0.01
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|
|
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158
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|
|
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—
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Gain on early extinguishment of debt
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(4,539
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)
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(0.10
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)
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—
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—
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FFO as adjusted
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$
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44,093
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$
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0.94
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$
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40,428
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$
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0.86
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Dividends declared per common share
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$
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0.79
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$
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0.75
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FFO as adjusted payout ratio
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84
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%
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87
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%
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Portfolio Update
As of March 31, 2013, the Company's portfolio of entertainment
properties consisted of 10.7 million square feet and was 99% leased,
including 113 megaplex theatres that were 100% leased. The Company's
portfolio of education properties consisted of 2.4 million square feet,
including 38 public charter schools, and was 100% leased. The Company's
portfolio of recreation properties was 100% leased. The Company's
overall portfolio consisted of 13.7 million square feet and was 98%
leased.
As of March 31, 2013, the Company's real estate mortgage loan portfolio
had a carrying value of $468.6 million and included financing provided
for entertainment, education and recreation properties. Additionally,
the Company had $38.4 million in property under development and $197.7
million in land held for development.
Investment Update
The Company's investment spending in the first quarter of 2013 totaled
approximately $38.7 million, and included investments in each of its
four operating segments.
Entertainment investment spending in the first quarter of 2013 totaled
$14.7 million, and related primarily to investments in build-to-suit
construction of six megaplex theatres and one family entertainment
center that are subject to long-term triple net leases or long-term
mortgage agreements.
Education investment spending in the first quarter of 2013 totaled $15.1
million, and related to investments in build-to-suit construction of
five public charter schools and an acquisition of an early childhood
education center located in Peoria, Arizona, that are subject to
long-term triple net leases or long-term mortgage agreements. The new
early childhood education center represents an extension of the
Company's Education segment.
Recreation investment spending in the first quarter of 2013 totaled $7.4
million, and related to fundings under the Company's mortgage notes for
improvements at existing ski and waterpark properties. In addition, the
Company's recreation investment spending related to build-to-suit
construction of three TopGolf golf entertainment facilities as well as
funding improvements at the Company's ski property located in Maryland.
Other investment spending in the first quarter of 2013 totaled $1.5
million and related to the land held for development in Sullivan County,
New York.
In addition to the first quarter investment spending, the Company
expects to spend approximately $250.0 million related to existing
commitments and previously approved investments over the remainder of
2013. Beyond these transactions, the Company has a significant
investment pipeline and expects to complete its 2013 investment spending
plan totaling $300.0 million to $350.0 million.
Progress on Vineyard and Winery Sales
The Company continues to make progress toward selling its remaining
vineyard and winery investments. During the first quarter of 2013, the
Company sold a winery and a portion of related vineyards located in
Sonoma County, California, for proceeds of $24.1 million and recognized
a gain of $0.6 million.
Balance Sheet Update
The Company's balance sheet remains strong with a debt to gross assets
ratio (defined as total long-term debt to total assets plus accumulated
depreciation) of 41% at March 31, 2013. The Company had $11.8 million of
unrestricted cash on hand and $59.0 million of debt outstanding under
its $400.0 million unsecured revolving credit facility at March 31, 2013.
During the first quarter of 2013, the Company completed a discounted
payoff prior to maturity of one if its loan agreements secured by a
theatre property. The Company made a cash payment of $9.7 million in
full satisfaction of the loan and recorded a gain on early
extinguishment of debt of $4.5 million.
Additionally during the first quarter of 2013, the Company added to its
unsecured term loan facility that matures on January 5, 2017, increasing
the size of the facility from $240.0 million to $255.0 million. The
additional $15.0 million bears interest based on a grid related to the
Company's senior unsecured credit ratings, which at closing was LIBOR
plus 175 basis points.
Dividend Information
The Company previously announced that it will begin paying a monthly
common share cash dividend beginning in the second quarter of 2013, with
the first monthly dividend payable on May 15, 2013 to shareholders of
record as of April 30, 2013. This dividend represents an annualized
dividend of $3.16 per common share, a 5.3% increase over the prior year.
On February 26, 2013, the Company declared a regular quarterly cash
dividend of $0.79 per common share, which was paid on April 15, 2013 to
common shareholders of record on March 28, 2013. The Company also
declared and paid first quarter cash dividends of $0.359375 per share on
its 5.75% Series C cumulative convertible preferred shares, $0.5625 per
share on its 9.00% Series E cumulative convertible preferred shares and
$0.4140625 per share on its 6.625% Series F cumulative redeemable
preferred shares.
Guidance Confirmation
The Company is maintaining its previously announced 2013 guidance for
investment spending of $300.0 million to $350.0 million and FFO as
adjusted per share of $3.79 to $3.94.
Quarterly Supplemental
The Company's supplemental information package for the first quarter
ended March 31, 2013 is available on the Company's website at www.eprkc.com.
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EPR Properties
Consolidated Statements of Income
(Unaudited, dollars in thousands except per share data)
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Three Months Ended March 31,
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2013
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2012
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Rental revenue
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$
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60,787
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$
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57,258
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Tenant reimbursements
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4,744
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4,822
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Other income
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24
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25
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Mortgage and other financing income
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17,795
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14,674
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Total revenue
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83,350
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76,779
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Property operating expense
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7,005
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6,374
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Other expense
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194
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350
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General and administrative expense
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6,652
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6,467
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Gain on early extinguishment of debt
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(4,539
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)
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—
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Interest expense, net
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19,989
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18,141
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Transaction costs
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318
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158
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Impairment charges
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—
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3,998
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Depreciation and amortization
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13,438
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11,740
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Income before equity in income from joint ventures and discontinued
operations
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40,293
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29,551
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Equity in income from joint ventures
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351
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47
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Income from continuing operations
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$
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40,644
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$
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29,598
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Discontinued operations:
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Income (loss) from discontinued operations
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(3
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)
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355
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Impairment charges
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—
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(8,845
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)
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Gain on sale or acquisition of real estate
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565
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282
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Net income
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41,206
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21,390
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Add: Net income attributable to noncontrolling interests
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—
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(18
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)
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Net income attributable to EPR Properties
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41,206
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21,372
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Preferred dividend requirements
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(5,952
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)
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(6,001
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)
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Net income available to common shareholders of EPR Properties
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$
|
35,254
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$
|
15,371
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Per share data attributable to EPR Properties common shareholders:
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Basic earnings per share data:
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Income from continuing operations
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$
|
0.74
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$
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0.51
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Income (loss) from discontinued operations
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0.01
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(0.18
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)
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Net income available to common shareholders
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$
|
0.75
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$
|
0.33
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Diluted earnings per share data:
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Income from continuing operations
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$
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0.74
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$
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0.50
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Income (loss) from discontinued operations
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0.01
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(0.17
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)
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Net income available to common shareholders
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$
|
0.75
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$
|
0.33
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Shares used for computation (in thousands):
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Basic
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46,854
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46,677
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Diluted
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47,047
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46,945
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EPR Properties
Reconciliation of Net Income Available to Common Shareholders
to Funds From Operations (FFO) (A)
(Unaudited, dollars in thousands except per share data)
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Three Months Ended March 31,
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2013
|
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2012
|
FFO:
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Net income available to common shareholders of EPR Properties
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$
|
35,254
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|
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|
$
|
15,371
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|
Gain on sale or acquisition of property
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|
(565
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)
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|
|
(282
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)
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Real estate depreciation and amortization
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|
13,468
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|
12,197
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|
Allocated share of joint venture depreciation
|
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|
157
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|
141
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|
Impairment charges
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—
|
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|
12,843
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|
FFO available to common shareholders of EPR Properties
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$
|
48,314
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|
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|
$
|
40,270
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|
|
|
|
|
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|
FFO per common share attributable to EPR Properties:
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Basic
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$
|
1.03
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|
$
|
0.86
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|
Diluted
|
|
|
1.03
|
|
|
|
0.86
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|
Shares used for computation (in thousands):
|
|
|
|
|
|
|
Basic
|
|
|
46,854
|
|
|
|
46,677
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|
Diluted
|
|
|
47,047
|
|
|
|
46,945
|
|
Other financial information:
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|
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Straight-lined rental revenue
|
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|
$
|
1,214
|
|
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|
$
|
801
|
|
Dividends per common share
|
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|
$
|
0.79
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|
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$
|
0.75
|
|
|
|
|
|
|
|
|
|
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(A)
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The National Association of Real Estate Investment Trusts (“NAREIT”)
developed FFO as a relative non-GAAP financial measure of
performance of an equity REIT in order to recognize that
income-producing real estate historically has not depreciated on the
basis determined under GAAP and management provides FFO herein
because it believes this information is useful to investors in this
regard. FFO is a widely used measure of the operating performance of
real estate companies and is provided here as a supplemental measure
to GAAP net income available to common shareholders and earnings per
share. Pursuant to the definition of FFO by the Board of Governors
of NAREIT, we calculate FFO as net income available to common
shareholders, computed in accordance with GAAP, excluding gains and
losses from sales or acquisitions of depreciable operating
properties and impairment losses of depreciable real estate, plus
real estate related depreciation and amortization, and after
adjustments for unconsolidated partnerships, joint ventures and
other affiliates. Adjustments for unconsolidated partnerships, joint
ventures and other affiliates are calculated to reflect FFO on the
same basis. We have calculated FFO for all periods presented in
accordance with this definition. FFO is a non-GAAP financial
measure. FFO does not represent cash flows from operations as
defined by GAAP and is not indicative that cash flows are adequate
to fund all cash needs and is not to be considered an alternative to
net income or any other GAAP measure as a measurement of the results
of our operations or our cash flows or liquidity as defined by GAAP.
It should also be noted that not all REITs calculate FFO the same
way so comparisons with other REITs may not be meaningful. In
addition to FFO, we present FFO as adjusted. Management believes it
is useful to provide it here as a supplemental measure to GAAP net
income available to common shareholders and earnings per share. FFO
as adjusted is FFO plus charges for loan losses, costs (gain)
associated with loan refinancing or payoff, net, preferred share
redemption costs and transaction costs, less gain on early
extinguishment of debt. FFO as adjusted is a non-GAAP financial
measure. FFO as adjusted does not represent cash flows from
operations as defined by GAAP and is not indicative that cash flows
are adequate to fund all cash needs and is not to be considered an
alternative to net income or any other GAAP measure as a measurement
of the results of the Company's operations, cash flows or liquidity
as defined by GAAP.
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The additional 1.9 million common shares that would result from the
conversion of the Company's 5.75% Series C cumulative convertible
preferred shares and the additional 1.6 million common shares that would
result from the conversion of the Company's 9.00% Series E cumulative
convertible preferred shares and the corresponding add-back of the
preferred dividends declared on those shares are not included in the
calculation of diluted earnings per share and FFO per share for the
three months ended March 31, 2013 and 2012 because the effect is
not-dilutive.
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EPR Properties
Condensed Consolidated Balance Sheets
(Dollars in thousands)
|
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|
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|
March 31, 2013
|
|
|
December 31, 2012
|
Assets
|
|
|
(unaudited)
|
|
|
|
Rental properties, net of accumulated depreciation of $383,332 and $375,684
at March 31, 2013 and December 31, 2012, respectively
|
|
|
$
|
1,858,204
|
|
|
|
$
|
1,885,093
|
Rental properties held for sale, net
|
|
|
2,788
|
|
|
|
2,788
|
Land held for development
|
|
|
197,740
|
|
|
|
196,177
|
Property under development
|
|
|
38,369
|
|
|
|
29,376
|
Mortgage notes and related accrued interest receivable
|
|
|
468,557
|
|
|
|
455,752
|
Investment in a direct financing lease, net
|
|
|
235,302
|
|
|
|
234,089
|
Investment in joint ventures
|
|
|
12,287
|
|
|
|
11,971
|
Cash and cash equivalents
|
|
|
11,763
|
|
|
|
10,664
|
Restricted cash
|
|
|
32,614
|
|
|
|
23,991
|
Deferred financing costs, net
|
|
|
18,708
|
|
|
|
19,679
|
Accounts receivable, net
|
|
|
38,246
|
|
|
|
38,738
|
Other assets
|
|
|
37,214
|
|
|
|
38,412
|
Total assets
|
|
|
$
|
2,951,792
|
|
|
|
$
|
2,946,730
|
Liabilities and Equity
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
$
|
47,798
|
|
|
|
$
|
65,481
|
Dividends payable
|
|
|
43,113
|
|
|
|
41,186
|
Unearned rents and interest
|
|
|
19,984
|
|
|
|
11,333
|
Long-term debt
|
|
|
1,383,392
|
|
|
|
1,368,832
|
Total liabilities
|
|
|
1,494,287
|
|
|
|
1,486,832
|
EPR Properties shareholders’ equity
|
|
|
1,457,128
|
|
|
|
1,459,521
|
Noncontrolling interests
|
|
|
377
|
|
|
|
377
|
Equity
|
|
|
1,457,505
|
|
|
|
1,459,898
|
Total liabilities and equity
|
|
|
$
|
2,951,792
|
|
|
|
$
|
2,946,730
|
|
|
|
|
|
|
|
|
|
|
About EPR Properties
EPR Properties is a specialty real estate investment trust (REIT) that
invests in properties in select market segments which require unique
industry knowledge, while offering the potential for stable and
attractive returns. Our total investments exceed $3.2 billion and our
primary investment segments are Entertainment, Recreation and Education.
We adhere to rigorous underwriting and investing criteria centered on
key industry and property level cash flow standards. We believe our
focused niche approach provides a competitive advantage, and the
potential for higher growth and better yields. Further information is
available at www.eprkc.com
or from Brian Moriarty at 888-EPR-REIT.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
With the exception of historical information, certain statements
contained or incorporated by reference herein may contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), such as those pertaining to our acquisition or
disposition of properties, our capital resources, future expenditures
for development projects, and our results of operations. Forward-looking
statements involve numerous risks and uncertainties and you should not
rely on them as predictions of actual events. There is no
assurance the events or circumstances reflected in the forward-looking
statements will occur. You can identify forward-looking
statements by use of words such as “will be,” “intend,” “continue,”
“believe,” “may,” “expect,” “hope,” “anticipate,” “goal,” “forecast,”
“expects,” “pipeline,” “anticipates,” “estimates,” “offers,” “plans,”
“would” or other similar expressions or other comparable terms or
discussions of strategy, plans or intentions contained or incorporated
by reference herein. While references to commitments for
investment spending are based on present commitments and agreements of
the Company, we cannot provide assurance that these transactions will be
completed on satisfactory terms. In addition, references to our
budgeted amounts and guidance are forward-looking statements. Forward-looking
statements necessarily are dependent on assumptions, data or methods
that may be incorrect or imprecise. These forward-looking
statements represent our intentions, plans, expectations and beliefs and
are subject to numerous assumptions, risks and uncertainties. Many of
the factors that will determine these items are beyond our ability to
control or predict. For further discussion of these factors see “Item
1A. Risk Factors” in our most recent Annual Report on Form 10-K and, to
the extent applicable, our Quarterly Reports on Form 10-Q.
For these statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. You are cautioned not to place undue
reliance on our forward-looking statements, which speak only as of the
date hereof or the date of any document incorporated by reference
herein. All subsequent written and oral forward-looking statements
attributable to us or any person acting on our behalf are expressly
qualified in their entirety by the cautionary statements contained or
referred to in this section. We do not undertake any obligation to
release publicly any revisions to our forward-looking statements to
reflect events or circumstances after the date hereof.