Increases Earnings Guidance for 2015
KANSAS CITY, Mo.--(BUSINESS WIRE)--
EPR Properties (NYSE:EPR) today announced operating results for the
first quarter ended March 31, 2015.
-
Total revenue was $99.4 million for the first quarter of 2015,
representing an 11% increase from $89.9 million for the same quarter
in 2014.
-
Net income available to common shareholders was $36.9 million, or
$0.64 per diluted common share, for the first quarter of 2015 compared
to $37.6 million, or $0.71 per diluted common share, for the same
quarter in 2014.
-
Funds From Operations (FFO) for the first quarter of 2015 was $32.1
million, or $0.56 per diluted common share, compared to $52.7 million,
or $1.00 per diluted common share, for the same quarter in 2014.
-
FFO as adjusted for the first quarter of 2015 was $59.0 million, or
$1.03 per diluted common share, compared to $49.6 million, or $0.94
per diluted common share, for the same quarter in 2014, representing a
10% increase in per share results.
Greg Silvers, President and CEO, commented, “We are pleased to report
another quarter of strong results and increased earnings guidance for
the year, reflecting our solid underwriting and robust portfolio
performance. We have reinforced the quality of our balance sheet and
further reduced our cost of capital with a successful bond issuance and
amended credit facility. We continue to see opportunities in each of our
segments and believe we are very well positioned to fund our pipeline to
drive ongoing earnings growth.”
A reconciliation of FFO to FFO as adjusted follows (unaudited, dollars
in thousands, except per share amounts):
|
| |
| |
| | | Three Months Ended March 31, |
| | | 2015 |
|
| 2014 |
|
| | | Amount |
| FFO/share | | Amount |
| FFO/share |
|
FFO
| |
$
|
32,142
| | |
$
|
0.56
| | |
$
|
52,684
| | |
$
|
1.00
| |
|
Transaction costs (benefit)
| |
1,606
| | |
0.03
| | |
(3,180
|
)
| |
(0.06
|
)
|
|
Retirement severance expense
| |
18,578
| | |
0.32
| | |
—
| | |
—
| |
|
Gain on sale of land
| |
(176
|
)
| |
—
| | |
(330
|
)
| |
(0.01
|
)
|
|
Deferred income tax expense
| |
6,888
|
| |
0.12
|
| |
407
|
| |
0.01
|
|
|
FFO as adjusted
| |
$
|
59,038
|
| |
$
|
1.03
|
| |
$
|
49,581
|
| |
$
|
0.94
|
|
| | | | | | | | |
|
|
Dividends declared per common share
| | | |
$
|
0.908
| | | | |
$
|
0.855
| |
|
FFO as adjusted payout ratio
| | | |
88
|
%
| | | |
91
|
%
|
| | | | | | | |
|
Portfolio Update
The Company's investment portfolio (excluding property under
development) consisted of the following at March 31, 2015:
-
The Entertainment segment included investments in 127 megaplex theatre
properties, nine entertainment retail centers (which include eight
additional megaplex theatre properties and one live performance venue)
and six family entertainment centers. The Company’s portfolio of owned
entertainment properties consisted of 11.6 million square feet and was
99% leased, including megaplex theatres that were 100% leased.
-
The Education segment included investments in 63 public charter school
properties, six early education centers and two private school
properties. The Company’s portfolio of owned education properties
consisted of 3.5 million square feet and was 100% leased.
-
The Recreation segment included investments in 10 metro ski parks,
four waterparks and 11 golf entertainment complexes. The Company’s
portfolio of owned recreation properties was 100% leased.
-
The Other segment consisted primarily of the property under
development and land held for development related to the Adelaar
casino and resort project in Sullivan County, New York.
The combined owned portfolio consisted of 16.3 million square feet and
was 99% leased. As of March 31, 2015, the Company had a total of
approximately $390.2 million invested in property under development,
including $172.9 million related to the Adelaar casino and resort
project in Sullivan County, New York.
Investment Update
The Company's investment spending during the three months ended March
31, 2015 totaled $136.4 million, and included investments in each of its
four operating segments:
-
Entertainment investment spending totaled $16.9 million, and was
related primarily to investments in build-to-suit construction of
three megaplex theatres and development of one family entertainment
center, as well as the acquisition of one megaplex theatre located in
Virginia, each of which is subject to a long-term triple net lease or
long-term mortgage agreement.
-
Education investment spending totaled $47.8 million, and was related
primarily to investments in build-to-suit construction of 16 public
charter schools, four private schools and 16 early childhood education
centers, each of which is subject to a long-term triple net lease or
long-term mortgage agreement.
-
Recreation investment spending totaled $68.8 million, and was related
to build-to-suit construction of 11 Topgolf golf entertainment
facilities and Camelback Mountain Resort, as well as the acquisition
of one ski resort located in Wintergreen, Virginia, each of which is
subject to a long-term triple net lease or a long-term mortgage
agreement.
-
Other investment spending totaled $2.9 million, and was related to the
Adelaar casino and resort project in Sullivan County, New York.
Balance Sheet Update
The Company's balance sheet remains strong with a debt to gross assets
ratio (defined as total debt to total assets plus accumulated
depreciation) of 42% at March 31, 2015. The Company had $102.2 million
of unrestricted cash on hand and no balance outstanding under its
unsecured revolving credit facility at March 31, 2015. In addition,
during the quarter the Company prepaid in full a $30.4 million secured
mortgage note payable that had an annual interest rate of 5.56%.
On March 16, 2015, the Company issued $300.0 million in senior unsecured
notes due on April 1, 2025. The notes bear interest at an annual rate of
4.50% and are guaranteed by certain of the Company's subsidiaries. The
Company used the net proceeds from the note offering to pay down its
unsecured revolving credit facility and expects to use the remaining
amount of net proceeds for general business purposes, including funding
the Company's ongoing pipeline of acquisition and build-to-suit projects.
Subsequent to quarter end, on April 24, 2015, the Company amended,
restated and combined its unsecured revolving credit and term loan
facilities. These amendments increased the borrowing capacity, extended
the maturity and lowered the rate of the Company's facility.
The amendments to the unsecured revolving credit portion of the
facility, among other things, (i) increase the initial amount from
$535.0 million to $650.0 million, (ii) extend the maturity date from
July 2017, to April 2019 (with the Company having the same right as
before to extend the loan for one additional year, subject to certain
terms and conditions), and (iii) lower the interest rate and facility
fee pricing based on a grid related to the Company's senior unsecured
credit ratings which was LIBOR plus 1.25% and 0.25%, respectively, at
closing, versus LIBOR plus 1.40% and 0.30%, respectively, under the
previous terms.
The amendments to the unsecured term loan portion of the facility, among
other things, (i) increase the initial amount from $285.0 million to
$350.0 million, (ii) extend the maturity date from July 2018, to April
2020 and (iii) lower the interest rate in all senior unsecured credit
rating tiers which was LIBOR plus 1.40% at closing versus LIBOR plus
1.60% under the previous terms.
In addition, there is a $1.0 billion accordion feature on the combined
unsecured revolving credit and term loan facility that increases the
maximum borrowing amount available under the combined facility, subject
to lender approval, from $1.0 billion to $2.0 billion.
Property Disposition
On January 27, 2015, the Company completed the sale of a theatre located
in Los Angeles, California for net proceeds of $42.7 million and
recognized a gain on sale of $23.7 million.
Chief Executive Officer Retirement
As previously announced, David Brain, the Company's President and Chief
Executive Officer, retired from the Company effective March 31, 2015 and
Gregory Silvers, a 17 year veteran of the Company, was named as his
replacement. In connection with this change, the Company recorded
retirement severance expense during the three months ended March 31,
2015 of $18.6 million.
Dividend Information
The Company declared regular monthly cash dividends during the first
quarter of 2015 totaling $0.9075 per common share. This dividend
represents an annualized dividend of $3.63 per common share, an increase
of 6.1% over the prior year.
The Company also declared 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
The Company is increasing its 2015 guidance for FFO as adjusted per
diluted share to a range of $4.34 to $4.44 from a range of $4.32 to
$4.42 and is maintaining its 2015 investment spending guidance of $500.0
million to $550.0 million.
Quarterly Supplemental
The Company's supplemental information package for the first quarter
ended March 31, 2015 is available on the Company's website at http://eprkc.com/earnings-releases-supplemental.
|
| |
EPR Properties
Consolidated Statements of Income
(Unaudited,
dollars in thousands except per share data) |
| |
|
| | Three Months Ended March 31, |
| | 2015 |
| 2014 |
|
Rental revenue
| |
$
|
76,740
| | |
$
|
66,431
| |
|
Tenant reimbursements
| |
4,303
| | |
4,588
| |
|
Other income
| |
550
| | |
174
| |
|
Mortgage and other financing income
| |
17,843
|
| |
18,664
|
|
|
Total revenue
| |
99,436
| | |
89,857
| |
|
Property operating expense
| |
6,357
| | |
6,449
| |
|
Other expense
| |
102
| | |
98
| |
|
General and administrative expense
| |
7,682
| | |
7,462
| |
|
Retirement severance expense
| |
18,578
| | |
—
| |
|
Interest expense, net
| |
18,587
| | |
19,899
| |
|
Transaction costs
| |
1,606
| | |
196
| |
|
Depreciation and amortization
| |
19,355
|
| |
15,327
|
|
|
Income before equity in income from joint ventures and other items
| |
27,169
| | |
40,426
| |
|
Equity in income from joint ventures
| |
164
| | |
311
| |
|
Gain on sale of real estate
| |
23,924
|
| |
330
|
|
|
Income before income taxes
| |
51,257
| | |
41,067
| |
|
Income tax expense
| |
8,426
|
| |
925
|
|
|
Income from continuing operations
| |
$
|
42,831
| | |
$
|
40,142
| |
|
Discontinued operations:
| | | | |
|
Income (loss) from discontinued operations
| |
(10
|
)
| |
15
| |
|
Transaction (costs) benefit
| |
—
|
| |
3,376
|
|
|
Net income attributable to EPR Properties | |
42,821
| | |
43,533
| |
|
Preferred dividend requirements
| |
(5,952
|
)
| |
(5,952
|
)
|
|
Net income available to common shareholders of EPR Properties | |
$
|
36,869
|
| |
$
|
37,581
|
|
|
Per share data attributable to EPR Properties common shareholders:
| | | | |
|
Basic earnings per share data:
| | | | |
|
Income from continuing operations
| |
$
|
0.65
| | |
$
|
0.65
| |
|
Income from discontinued operations
| |
—
|
| |
0.07
|
|
|
Net income available to common shareholders
| |
$
|
0.65
|
| |
$
|
0.72
|
|
|
Diluted earnings per share data:
| | | | |
|
Income from continuing operations
| |
$
|
0.64
| | |
$
|
0.65
| |
|
Income from discontinued operations
| |
—
|
| |
0.06
|
|
|
Net income available to common shareholders
| |
$
|
0.64
|
| |
$
|
0.71
|
|
|
Shares used for computation (in thousands):
| | | | |
|
Basic
| |
57,111
| | |
52,541
| |
|
Diluted
| |
57,378
| | |
52,719
| |
| | | | | |
|
|
| |
EPR Properties
Reconciliation of Net Income
Available to Common Shareholders
to Funds From
Operations (FFO) (A)
(Unaudited, dollars in thousands
except per share data) |
| |
|
| | Three Months Ended March 31, |
| | 2015 |
| 2014 |
FFO: | | | | |
|
Net income available to common shareholders of EPR Properties | |
$
|
36,869
| | |
$
|
37,581
|
|
Gain on sale of real estate (excluding land sale)
| |
(23,748
|
)
| |
—
|
|
Real estate depreciation and amortization
| |
18,957
| | |
15,049
|
|
Allocated share of joint venture depreciation
| |
64
|
| |
54
|
|
FFO available to common shareholders of EPR Properties | |
$
|
32,142
|
| |
$
|
52,684
|
| | | |
|
|
FFO per common share attributable to EPR Properties:
| | | | |
|
Basic
| |
$
|
0.56
| | |
$
|
1.00
|
|
Diluted
| |
0.56
| | |
1.00
|
|
Shares used for computation (in thousands):
| | | | |
|
Basic
| |
57,111
| | |
52,541
|
|
Diluted
| |
57,378
| | |
52,719
|
| | | |
|
|
Other financial information:
| | | | |
|
Straight-lined rental revenue
| |
$
|
2,943
| | |
$
|
1,111
|
|
Dividends per common share
| |
$
|
0.908
| | |
$
|
0.855
|
| | | | | | |
|
|
(A)
|
| 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 provision for loan losses, costs (gain)
associated with loan refinancing or payoff, net, retirement
severance expense, preferred share redemption costs and transaction
costs (benefit), less gain on early extinguishment of debt, gain
(loss) on sale of land and deferred tax benefit (expense). 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.
|
| |
|
The additional 2.0 million common shares that would result from the
conversion of our 5.75% Series C cumulative convertible preferred shares
and the additional 1.6 million common shares that would result from the
conversion of our 9.0% 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 for the three months ended March 31, 2015 and 2014 because the
effect is anti-dilutive.
|
| |
| |
EPR Properties
Condensed Consolidated Balance Sheets
(Unaudited,
dollars in thousands) |
| | | |
|
| | March 31, 2015 | | December 31, 2014 |
| Assets | | | | |
Rental properties, net of accumulated depreciation of $471,057 and
$465,660
at March 31, 2015 and December 31, 2014, respectively
| |
$
|
2,473,349
| | |
$
|
2,451,534
|
|
Land held for development
| |
28,119
| | |
206,001
|
|
Property under development
| |
390,205
| | |
181,798
|
|
Mortgage notes and related accrued interest receivable
| |
527,104
| | |
507,955
|
|
Investment in a direct financing lease, net
| |
200,266
| | |
199,332
|
|
Investment in joint ventures
| |
5,902
| | |
5,738
|
|
Cash and cash equivalents
| |
102,206
| | |
3,336
|
|
Restricted cash
| |
22,454
| | |
13,072
|
|
Deferred financing costs, net
| |
22,777
| | |
19,909
|
|
Accounts receivable, net
| |
56,397
| | |
47,282
|
|
Other assets
| |
74,523
|
| |
66,091
|
|
Total assets
| |
$
|
3,903,302
|
| |
$
|
3,702,048
|
| Liabilities and Equity | | | | |
|
Accounts payable and accrued liabilities
| |
$
|
78,499
| | |
$
|
82,180
|
|
Dividends payable
| |
23,248
| | |
22,233
|
|
Unearned rents and interest
| |
42,628
| | |
25,623
|
|
Debt
| |
1,849,424
|
| |
1,645,523
|
|
Total liabilities
| |
1,993,799
| | |
1,775,559
|
| EPR Properties shareholders’ equity
| |
1,909,126
| | |
1,926,112
|
|
Noncontrolling interests
| |
377
|
| |
377
|
|
Total equity
| |
1,909,503
|
| |
1,926,489
|
|
Total liabilities and equity
| |
$
|
3,903,302
|
| |
$
|
3,702,048
|
| | | | | | |
|
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 $4.1 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.
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 ouracquisition or
disposition of properties, our capital resources, future expenditures
for development projects, and our results of operations and financial
condition.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,” “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.
EPR Properties
Brian Moriarty, 888-EPR-REIT
www.eprkc.com
Source: EPR Properties