EPR Properties · NYSE:EPR
EPR Properties — Citi Presentation March 2009
49 slides from EPR Properties's conference presentation, March 2009
Slide 1: Citi Presentation
This information is as of the date indicated and, to our knowledge, was timely and accurate when presented. We are under no obligation to update or remove outdated information other than as required by applicable law or regulation. Citi Presentation March 2009
Slide 2: Agenda
Agenda Introduction EPR Background Information Five Star Principles Investment Portfolio Financial Results Capital Markets and Liquidity Update 2
Slide 3: EPR Background Information
EPR Background Information 3
Slide 4: EPR Background
EPR Background Formed in 1997 Initial assets were megaplex theatres via sale- leasebacks with AMC Expanded to Entertainment Retail Centers (ERCs) and pre-leased development of megaplex theatres and ERCs 4
Slide 5: EPR Background (continued)
EPR Background (continued) Extended investments to other entertainment, recreational and specialty assets Anchored by same 5 star underwriting principles Transaction and structuring consistent with core business History of conservative financial management and outstanding results In excess
Slide 6: Portfolio Overview
Portfolio Overview $2.6B Total Investments as of 12/31/08 Recreational and Specialty, 29% Megaplex Theatres, 41% Entertainment Retail Centers,* 30% *Anchored by megaplex theatres; overall megaplex theatres are 52% of total 6
Slide 7: Property Map
Property Map Geographically diverse portfolio in 31 states, D.C. & Canada - Theaters - Wineries - EPR Corporate Office - Ski Properties - Entertainment Retail Center - Development-Water Park/Concord Resort - Public Charter Schools 7
Slide 8: Five Star Principles
Five Star Principles 8
Slide 9: EPR Five Star Properties
EPR Five Star Properties Investments evaluated against five core criteria: Inflection Opportunity: a generational renewal or restructuring in an industry’s properties that creates an opportunity for insightful capital Enduring Value: investments in real estate devoted to and improving upon long-
Slide 10: Investment Portfolio
Investment Portfolio 10
Slide 11: Theatre Information
Theatre Information 80 megaplex theatres, 6.6M square feet, 100% occupancy, approximately 700 acres of land Avg. remaining lease term = 13 yrs Avg. age <5 years, Avg. screens = 19 Cross-collateralization of properties within each operator Strong 1.6x rent coverage for theaters open at leas
Slide 12: Portfolio Rankings
Portfolio Rankings 25% @ #1 – e.g. LA, Detroit, Phoenix, Denver, Kansas City, Greensboro, New Orleans, Little Rock, Omaha 60% @ #1-4 – e.g. Chicago, Philadelphia, Dallas, Washington, Houston, Ottawa, Tampa, Miami, St. Louis, Baltimore, Raleigh-Durham, San Diego, Columbus, Norfolk, Fresno, Pensac
Slide 13: Box Office Revenue
Box Office Revenue $10 9.42 9.66 9.70 9.17 9.19 9.21 $9 8.41 8.84 $8 7.45 7.66 6.95 $7 6.37 5.91 $6 5.40 5.49 5.15 5.03 5.02 4.87 $5 4.46 4.80 4.25 $4 3.78 $3 $2 $1 $0 Source: MPAA/Box Office Mojo (in billions) 13
Slide 14: Break Even Analysis (in millions)
Break Even Analysis (in millions) COGS EPR Full Variable Portfolio* Variable Only Admission Revenue 480 68% 310 382 Concessions Revenue 217 31% 140 172 Other Revenue 14 2% 9 11 Total Revenue 711 100% 459 -36% 565 -21% Film Cost (259) -36% (167) (206) Concessions Cost (28) -4% (18) (22) Gross Margin
Slide 15: The Promising Future of Digital
The Promising Future of Digital Better quality Alternative content (sports, opera, etc.) / 3D New revenue sources for exhibitors Movie studios’ distribution savings are passed on to operators to fund new equipment EPR’s participation ($0 cost, better product, % rents) 15
Slide 16: Entertainment Retail Centers
Entertainment Retail Centers All anchored by megaplex theatres 2.6 M total square feet (1.0M square feet is theatres) 8 ERC’s located in NY, CA, CO and Canada ERC in Toronto recently completed 93% occupied at 12/31/08 1 ERC in development (Virginia) 16
Slide 17: Westminster Promenade – Denver, CO
Westminster Promenade – Denver, CO 17
Slide 18: Recreational & Specialty Properties
Recreational & Specialty Properties 29% or $792M of Total Investments as of 12/31/08 Public Charter Schools, $170M Ski, $146M Water Park Development, $135M Vineyards, Resort $207M Development, $134M 18
Slide 19: Ski Assets
Ski Assets Substantial land assets- over 6,000 acres Geographic diversity and snowmaking ability mitigate weather risk Long track record of success and lower risk in metropolitan vs. destination resorts Admissions and concessions business vs. speculative bed-based development Growth is in
Slide 20: Ski Assets - Continued
Ski Assets - Continued EPR’s structure provides for additional security via: Cross collateralization Prepayment in advance of ski season Rent coverage ~1.8x; Revenues up 10%+ in 07-08 Attractive Economics - Initial ~9.5% caps with annual escalators and % rent; ~11.25% YTM 20
Slide 21: Ski Properties Map
Ski Properties Map Markets Served - Kansas City - St. Louis - Columbus - Cleveland - Louisville and Indianapolis - Philadelphia - New York and Boston 21
Slide 22: Ski Asset Performance
Ski Asset Performance 5 yr Avg. 2008 % Change Skier Visits 1,516 1,584 4.5% Revenue $79,244 $84,856 7.1% EBITDAR $15,372 $17,992 17.0% Rent Coverage 1.65 1.76 (in thousands, except rent coverage) Source: Operator financials 22
Slide 23: Vineyard and Winery Assets
Vineyard and Winery Assets Wine is a fast growing market segment Higher priced wine has much lower volatility vs. lower priced wine Vineyard property has appreciated at a compound annual rate in excess of 7% over the last 20 years Estate planning has created additional opportunities for sale
Slide 24: More Wine Consumers
More Wine Consumers Millions of Adults 2000 2006 # Chg % Chg Wine Drinkers 48.1 72.9 24.8 52% All Others 144.3 139.1 (5.2) (4%) Total Adults 192.4 212.0 19.6 10% Source: Wine Market Council 24
Slide 25: U.S. Wine Market Segment Growth
U.S. Wine Market Segment Growth U.S. $ Sales of California Wine (Winery Revenue by Retail Bottle Price Segment) 180 160 LOW - Under $8 MID - $8-15 140 HIGH - Over $15 120 100 80 60 40 20 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: MKF Rese
Slide 26: Vineyard and Winery Assets
Vineyard and Winery Assets 8 Vineyards and 10 Wineries Located in California and Washington Havens, EOS, Cosentino, Geyser Peak, Gary Farrel, Buena Vista, Covey Run, Columbia ~1,145 plantable acres Attractive Economics - Initial ~9% caps with ~2-3% escalators/yr. & repurchase only at appre
Slide 27: Public Charter School Assets
Public Charter School Assets Public Charter Schools are independent, nonsectarian and tuition free Choice Accountability Freedom Currently 4,000 schools; 300-400 added per year Clear disconnect between growth, the need for facility funding and the lack of organized funding Public chart
Slide 28: Public Charter School Assets
Public Charter School Assets Tenant is Imagine Schools, operator of ~75 schools Master lease Cross collateralization of 22 schools in 8 states plus DC Credit support via letter of credit (one yr of rent) Attractive Economics 10% cap rate 3% min escalator 12% YTM 28
Slide 29: Public Charter School Performance
Public Charter School Performance Tranche I and II (12 schools, ~$80M invested, coverage ~1.85) 07/08 08/09 Increase Capacity 7,461 7,944 6.5 % Enrollment 6,284 6,943 10.5 % Occupancy % 84% 87% 3.0 % 29
Slide 30: Public Charter School Performance
Public Charter School Performance Tranche III (9 schools, ~$80M invested) 08/09 Capacity 6,941 Enrollment 5,987 Occupancy % 86% 30
Slide 31: Schlitterbahn Vacation Village
Schlitterbahn Vacation Village Location: Kansas City, KS (adjacent to NASCAR speedway) Description: Entertainment village anchored by world-class water park Total Project Cost: $600-$700 M (phased) EPR Commitment: $163 M Key Advantages: a.) $225M STAR bonds (phased) b.) Credit support – existing Sch
Slide 32: Schlitterbahn Vacation Village – cont.
Schlitterbahn Vacation Village – cont. Project Update Acquired 368 acres for ~ $90M (~$5/ft) Infrastructure improvements for ~ $25M YTD investment of ~ $125M Finalized lease with Scheels as the anchor retail tenant (220K sq. ft.) Phased approach 32
Slide 33: Concord Resort Development
Concord Resort Development Location: Sullivan County, New York Description: Casino and resort complex including spa hotel, waterpark hotel, convention center, waterpark, two golf courses and retail/residential development Total Project Cost: $675M; ~1,600 acres (phased) EPR Investment: $225M ($132.5
Slide 34: Concord - Original Capital Plan
Concord - Original Capital Plan Bank Syndicate $ 750M EPR 225M Developer Equity 100M $ 1.1B 34
Slide 35: Concord - Revised Capital Plan
Concord - Revised Capital Plan Bank Syndicate 350M EPR 225M Developer Equity 100M $ 675M 35
Slide 36: Concord – EPR Collateral
Concord – EPR Collateral 1st Mortgage on 1,500 acres, including existing golf courses and planned development for resort and retail properties Pledge of developer interest in the casino development and gaming license Personal guaranty of developer 36
Slide 37: EPR Financial Results
EPR Financial Results 37
Slide 38: Operating Performance History
Operating Performance History CAGR CAGR 2005 2006 2007 2008 3 Yr 5 Yr Total Revenue $164.8 196.0 235.7 286.1 20% 25% Net Income – common 57.7 70.4 81.3 101.7 21% 26% FFO – common 85.0 101.0 113.7 142.6 19% 23% FFO/share – common 3.33 3.79 4.18 4.57 11% 12% Div/share – common 2.50 2.75 3.04 3.36 10%
Slide 39: Balance Sheet Highlights
Balance Sheet Highlights CAGR CAGR 2005 2006 2007 2008 3 Yr 5 Yr Assets $1,414 1,571 2,172 2,634 23% 22% Asset Growth 17% 11% 38% 21% Debt $715 675 1,081 1,262 Leverage % 51% 43% 50% 48% (Book Basis) (in millions) 39
Slide 40: Debt – December 31, 2008
Debt – December 31, 2008 Fixed Rate $1,041 (Avg. rate – 5.9%) Variable Rate 221 Total Debt $1,262 (in millions) 40
Slide 41: Key Credit Ratios
Key Credit Ratios 2005 2006 2007 2008 Interest Coverage 3.2x 3.3x 3.2x 3.3x Fixed Charge Covg. 2.5x 2.7x 2.4x 2.4x Debt Service 2.4x 2.6x 2.5x 2.5x 41
Slide 42: Capital Markets and Liquidity Update
Capital Markets and Liquidity Update 42
Slide 43: Capital Markets Update
Capital Markets Update Line of Credit Extension to 1/31/10 All other terms remain the same No debt maturities in 2009 Vineyard and Winery Facility Expansion Expanded from $129.5M to $160.0M $67M undrawn at 12/31/08 43
Slide 44: Capital Markets Update
Capital Markets Update Reduced leverage to 48% (book) at 12/31/08 Equity Capital Raised $308M of equity issued in 2008 $44M in equity raised subsequent to 12/31/08 Total Debt at 12/31/08 = $1.3B All but $221M is fixed rate, avg = 5.9% $149M on revolver, Unrestricted cash = $50M 44
Slide 45: Debt Maturities – Next Three Years
Debt Maturities – Next Three Years Year* Amount 2009 $ - 2010 205.3 (Revolver $149M, Concord $56.3M) 2011 - $ 205.3 (in millions) * Includes extensions 45
Slide 46: 2009 Updated Guidance
2009 Updated Guidance Previous Guidance: $4.65 - $4.95 per share Approximately $125M of cash investment spending Current Guidance: $4.05 - $4.35 per share Approximately $125M of cash investment spending 46
Slide 47: Liquidity Update – 12/31/08
Liquidity Update – 12/31/08 Revolver (235 max – 149 drawn – 8 LCs) $ 78 Unrestricted cash as of 12/31/08 50 Wine facility ($67M undrawn,$26M available) 26 Resort complex term loan (112 max – 56 drawn) 56 Jan/Feb 2009 DSPP 44 254 2009 Inv. spending guidance (125) $ 129 (in millions) 47
Slide 48: Summary of Company Highlights
Summary of Company Highlights Stable revenue base and strong cash flow coverage Diversified revenue streams with recession resistant assets Market dominant assets; geographically diverse portfolio; long average remaining lease term Conservative balance sheet management Minimal debt maturit
Slide 49: Entertainment Properties Trust
5g a x | ENTERTAINMENT PROPERTIES TRUST FIVE STAR PROPERTIES