EPR Properties · NYSE:EPR
EPR Properties — Investor Presentation (September 2017)
50 slides from EPR Properties's investor presentation, September 2017
Slide 1: Investing in Life's Enduring Experiences
INVESTING IN LIFE’S ENDURING EXPERIENCES INVESTOR PRESENTATION – SEPTEMBER 2017 AMC THEATRE – COLUMBIA, MD BASIS INDEPENDENT SCHOOL – BROOKLYN, NY TOPGOLF – PHOENIX, AZ DATA IN THIS PRESENTATION IS AS OF 6/30/17 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 $8.4B TOTAL MARKET CAP $5.6B EQUITY, $2.8B DEBT $6.3B+ TOTAL INVE
Slide 5: Recent Updates
RECENT UPDATES PORTFOLIO GROWTH – Increased investment spending and expanded tenant base in primary investment areas CNL TRANSACTION COMPLETED ON APRIL 6 – Total investment of $730.8M for ski and attractions assets ASSET RECYCLING – Achieved attractive economics, lowered tenant concentration a
Slide 6: 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 7: 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 7
Slide 8: Experience Evolution
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 9: Portfolio
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Slide 10: $6.3B+ Portfolio
PORTFOLIO VALUE $6.3B+ PORTFOLIO Generating $574M+* in NOI BY INVESTMENT VALUE 378 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 11: Portfolio Detail
PORTFOLIO DETAIL PROPERTY TYPE PROPERTIES NOI* % of TOTALS % LEASED (IN MILLIONS) MEGAPLEX THEATRES** 144 208.0 36.2% 100.0% ENTERTAINMENT RETAIL CENTERS (ERCS) 7 40.8 7.1% 96.3% FAMILY ENTERTAINMENT CENTERS (FECS) 8 9.4 1.6% 100.0% TOTAL ENTERTAINMENT 159 258.2 44.9% 99.4% GOLF ENTERTAINMENT COMPLE
Slide 12: CNL Lifestyle Properties Transaction Overview
CNL LIFESTYLE PROPERTIES TRANSACTION EPR acquired from CNL Properties (CNL) the Northstar California Ski Resort and attractions portfolio, and provided OVERVIEW debt financing to funds affiliated with Och-Ziff Real Estate (OZRE) for the remainder of CNL’s ski portfolio. TIMING Closed on April 6, 201
Slide 13: CNL Lifestyle Properties Transaction
CNL LIFESTYLE PROPERTIES TRANSACTION 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 14: Focused Growth Total Investments
FOCUSED GROWTH TOTAL INVESTMENTS* (IN MILLIONS) OTHER $6,353 179 RECREATION $5,307 EDUCATION 178 2,026 $4,606 ENTERTAINMENT 1,148 203 $4,040 $3,562 207 944 $3,120 $3,211 212 696 1,422 $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 2,67
Slide 15: Property Map
PROPERTY MAP* GEOGRAPHICALLY DIVERSE PORTFOLIO *As of June 30, 2017 15
Slide 16: 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 16
Slide 17: Continuing Trend of Reduced Concentration
CONTINUING TREND OF REDUCED CONCENTRATION Top 5= 70% 64% 5% 60% 7% Percent of Total Revenue 5% Top 5= 50% 7% 5% 6% 45% 9% 8% 6% Premier Parks 9% 8% 8% 4% 40% 9% 8% 7% Peak Resorts 7% 8% 9% 9% Topgolf 10% 9% 30% 6% 8% 7% 4% Cinemark 6% 8% 20% Regal 34% 29% 25% Rave 23% 20% 23% 10% 19% Imagine 0% AMC
Slide 18: Portfolio Lease Expirations
PORTFOLIO LEASE EXPIRATIONS LEASE EXPIRATIONS OVER NEXT 10 YEARS AVERAGE 2.5% 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 19: Entertainment $2.7B+
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 159 $2.7B+ PROPERTIES INVESTED IN SERVICE 6** 22
Slide 20: Megaplex Theatres
MEGAPLEX THEATRES LONG HISTORY OF STEADY GROWTH 151 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 fluxuation has historically
Slide 21: 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 22: Entertainment Retail Centers (ERCs)
ENTERTAINMENT RETAIL CENTERS ( E R C s) ONE STOP SHOPPING, DINING AND FUN 7 ENTERTAINMENT RETAIL CENTERS Theatre or live performance venue provides anchor 22
Slide 23: Family Entertainment Centers (FECs)
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 23
Slide 24: Recreation Highlights
RECREATION HIGHLIGHTS RECREATION UPDATES GOLF ENTERTAINMENT COMPLEXES TOPGOLF MAINTAINED SUPERIOR PERFORMANCE SKI SEASON REVENUE UP 18%* AND VISITATION UP 22%* OVER LAST YEAR SKI AREAS EPR PORTFOLIO 78 $2.0B+ ATTRACTIONS PROPERTIES INVESTED IN SERVICE 5 ** 19 PROPERTIES OPERATORS UNDER DEVELOPMENT O
Slide 25: Golf Entertainment Complexes
GOLF ENTERTAINMENT COMPLEXES GOLF ENTERTAINMENT COMPLEXES REVOLUTIONIZE RECREATIONAL ACTIVITY 27 GOLF ENTERTAINMENT COMPLEXES Topgolf’s 2016 attendance grew over 30%** 4 UNDER DEVELOPMENT* *Properties not yet in service **Source: Topgolf 25
Slide 26: Ski Areas
SKI AREAS LEADING REGIONAL SKI AND RESORT DESTINATIONS 26 SKI AREAS GEOGRAPHIC SNOWMAKING FOUR SEASON DIVERSITY CAPABILITIES APPEAL 26
Slide 27: 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 27
Slide 28: Other Recreation
OTHER RECREATION ACTIVE EXPERIENCES CONSISTENT WITH CONSUMER TRENDS 5 OTHER RECREATION PROPERTIES Increased focus on fitness and wellness, along with participation in new generation activities 28
Slide 29: Education $1.4B+
EDUCATION EDUCATION FACILITIES UPDATES CONTINUE TO SEE ATTRACTIVE OPPORTUNITIES FOR INVESTMENTS ACROSS OUR EDUCATION PUBLIC CHARTER SCHOOLS FACILITIES PLATFORM PUBLIC CHARTER SCHOOLS EPR PORTFOLIO EDUCATION INVESTMENT SPENDING 140 $1.4B+ PRIVATE SCHOOLS PROPERTIES INVESTED IN SERVICE 13 * 61 PROPERT
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 3 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: Private Schools
PRIVATE SCHOOLS LIMITED QUALITY PRIVATE OPTIONS FUEL DEMAND 14 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 32: Private Schools
PRIVATE SCHOOLS PROVIDING AN ALTERNATIVE TO MEET THE DEMAND FOR QUALITY PRIVATE EDUCATION 32
Slide 33: 15.1M Children
EARLY CHILDHOOD EDUCATION DEMAND FOR EDUCATION BEYOND DAYCARE 59 EARLY CHILDHOOD EDUCATION CENTERS Large number of dual income families Increasing per capita disposable income/stabilizing 10 UNDER DEVELOPMENT* unemployment rate Desire for quality education instead of daycare According to the U.S. Ce
Slide 34: 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 34
Slide 35: Adelaar Summary
ADELAAR SUMMARY • EPR is the land lessor on the casino parcel and two adjoining parcels. o Empire Resorts expected to invest ~$800M 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 ~$155M for developm
Slide 36: Adelaar Update
ADELAAR UPDATE Steady progress towards planned opening of Montreign Resort Casino on or before March 31, 2018 Casino will be rebranded a Resort Worlds Property, an internationally- recognized hospitality and casino brand Development continues on the hotel waterpark site with projected opening in ear
Slide 37: Financial Review
FINANCIAL haw EPR Properties
Slide 38: Capital Structure and Financial Highlights
CAPITAL STRUCTURE AND FINANCIAL HIGHLIGHTS* Total Market Cap = $8.4B CAPITAL STRUCTURE (IN MILLIONS) Fixed Rate Debt = 97% COMMON SECURED EQUITY, Weighted Average = 5.0% DEBT, $62 $5,294 1% 63% Unsecured Debt = 98% Leverage = 5.3X on Net Debt UNSECURED 32% to Adjusted EBITDA DEBT, $2,731 4% In May,
Slide 39: Well Laddered Debt Maturity Profile
WELL LADDERED DEBT MATURITY PROFILE* $500 $450 $450 $400 $350 $350 $300 $300 $275 $250 $192 $200 $148 $100 $25 $12 $25 $0 Secured Debt Unsecured Term Loan Unsecured Senior Notes Unsecured Credit Facility Private Placement *Data in millions as of 6/30/17; excludes amortization 39
Slide 40: 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 41: Annual Dividends
ANNUAL DIVIDENDS ATTRACTIVE & GROWING ANNUAL DIVIDENDS Dividend Yield of 6%* *As of 9/1/17 ** Projected 41
Slide 42: Financial Performance
FINANCIAL PERFORMANCE QUARTER ENDED JUNE 30, 2017 2016 $ CHANGE % CHANGE Total Revenue $147.8 $118.0 $29.8 25% Net Income - Common 74.6 49.2 25.4 52% FFO - Common 85.0 72.2 12.8 18% FFO as adj. - Common 94.9 74.7 20.2 27% Net Income/share – Common 1.02 0.77 0.25 32% FFO/share - Common 1.15 1.13 0.02
Slide 43: Key Ratios
KEY RATIOS KEY RATIOS* FOR THE THREE MONTHS ENDED 6-30 2017 2016 Fixed charge coverage 3.1x 3.2x Debt service coverage 3.6x 3.6x Interest coverage 3.6x 4.0x Net debt to Adjusted EBITDA 5.3x 5.2x FFO as adjusted payout 79% 82% INVESTMENT GRADE CREDIT RATINGS S&P MOODY’S FITCH Senior Notes BBB- Baa2 B
Slide 44: Confirming 2017 Earnings Guidance and Increasing Investment Spending Guidance
CONFIRMING 2017 EARNINGS GUIDANCE AND INCREASING INVESTMENT SPENDING GUIDANCE FFO AS ADJUSTED PER SHARE $5.05 - $5.20 INVESTMENT SPENDING Prior Guidance $1.30B - $1.35B Revised Guidance $1.45B - $1.50B DISPOSITIONS Prior Guidance $150M - $300M Revised Guidance $175M - $250M 44
Slide 45: Appendix
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Slide 46: Megaplex Theatres
MEGAPLEX THEATRES * DRIVEN BY STRONG VALUE, THEATRES CONTINUE TO BE THE DOMINANT CHOICE IN ADMISSIONS-BASED ENTERTAINMENT ADMISSIONS-BASED ATTENDANCE RELATIVE VALUE 2015 ATTENDANCE (IN MILLIONS) 2015 Average Ticket Price for a Family of Four (US$) Sources: NATO, Sports Leagues, International Theme P
Slide 47: 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 48: 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 49: 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 50: EPR Properties contact
Val EPR Properties” Return on Insight EPR Properties 909 Walnut Street, Suite 200 Kansas City, MO 64106 www.eprkc.com (888) EPR REIT info@eprkc.com
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