Company Reports Record Revenue
Increases Earnings Guidance for 2017 and Introduces Guidance for
2018
KANSAS CITY, Mo.--(BUSINESS WIRE)--
EPR Properties (NYSE:EPR) today announced operating results for the
third quarter and nine months ended September 30, 2017.
Three Months Ended September 30, 2017
-
Total revenue was $151.4 million for the third quarter of 2017,
representing a 21% increase from $125.6 million for the same quarter
in 2016.
-
Net income available to common shareholders was $57.0 million, or
$0.77 per diluted common share, for the third quarter of 2017 compared
to $51.6 million, or $0.81 per diluted common share, for the same
quarter in 2016.
-
Funds From Operations (FFO) (a non-GAAP financial measure) for the
third quarter of 2017 was $90.5 million compared to $78.2 million for
the same quarter in 2016, or $1.22 per diluted common share for both
quarters.
-
FFO as adjusted (a non-GAAP financial measure) for the third quarter
of 2017 was $93.3 million, or $1.26 per diluted common share, compared
to $78.8 million, or $1.23 per diluted common share, for the same
quarter in 2016, representing a 2% increase in per share results.
Nine Months Ended September 30, 2017
-
Total revenue was $428.3 million for the nine months ended September
30, 2017, representing a 18% increase from $362.4 million for the same
period in 2016.
-
Net income available to common shareholders was $179.6 million, or
$2.55 per diluted common share, for the nine months ended September
30, 2017 compared to $149.0 million, or $2.35 per diluted common
share, for the same period in 2016.
-
FFO (a non-GAAP financial measure) for the nine months ended September
30, 2017 was $249.4 million compared to $224.2 million for the same
period in 2016, or $3.52 per diluted common share for both periods.
-
FFO as adjusted (a non-GAAP financial measure) for the nine months
ended September 30, 2017 was $264.7 million, or $3.73 per diluted
common share, compared to $227.2 million, or $3.56 per diluted common
share, for the same period in 2016, representing a 5% increase in per
share results.
“We continue to identify quality investment opportunities in each of our
primary investment segments," commented Company President and CEO Greg
Silvers. “Including the nearly $300 million we deployed during the third
quarter, we have made $1.5 billion in investments this year and are
pleased to be increasing both our 2017 investment spending and earnings
guidance. Supported by the broad stability of our investment segments,
along with our unmatched category expertise and relationship-based
pipeline, we are optimistic about our outlook for 2018 in terms of both
earnings growth and investment opportunities.”
A reconciliation of FFO to FFO as adjusted follows (unaudited, dollars
in thousands, except per share amounts):
|
|
| Three Months Ended September 30, |
| | | 2017 |
|
| 2016 |
| | | Amount |
| FFO/share | | | Amount |
| FFO/share |
|
FFO available to common shareholders (1)
| | |
$
|
90,518
| | |
$
|
1.22
| | | |
$
|
78,229
| | |
$
|
1.22
| |
|
Costs associated with loan refinancing or payoff
| | |
1,477
| | |
0.02
| | | |
14
| | |
—
| |
|
Gain on insurance recovery (included in other income)
| | |
—
| | |
—
| | | |
(1,825
|
)
| |
(0.03
|
)
|
|
Termination fee included in gain on sale
| | |
954
| | |
0.02
| | | |
549
| | |
0.01
| |
|
Transaction costs
| | |
113
| | |
—
| | | |
2,947
| | |
0.05
| |
|
Gain on sale of land
| | |
—
| | |
—
| | | |
(1,066
|
)
| |
(0.02
|
)
|
|
Deferred income tax expense (benefit)
| | |
227
|
| |
—
|
| | |
(44
|
)
| |
—
|
|
|
FFO as adjusted available to common shareholders (1)
| | |
$
|
93,289
|
| |
$
|
1.26
|
| | |
$
|
78,804
|
| |
$
|
1.23
|
|
| | | | | | | | | |
|
|
Dividends declared per common share
| | | | |
$
|
1.02
| | | | | |
$
|
0.96
| |
|
FFO as adjusted available to common shareholders payout ratio
| | | | |
81
|
%
| | | | |
78
|
%
|
|
|
| Nine Months Ended September 30, |
| | | 2017 |
|
| 2016 |
| | | Amount |
| FFO/share | | | Amount |
| FFO/share |
|
FFO available to common shareholders (1)
| | |
$
|
249,391
| | |
$
|
3.52
| | | |
$
|
224,211
| | |
$
|
3.52
| |
|
Costs associated with loan refinancing or payoff
| | |
1,491
| | |
0.02
| | | |
905
| | |
0.01
| |
|
Gain on insurance recovery (included in other income)
| | |
(606
|
)
| |
(0.01
|
)
| | |
(3,837
|
)
| |
(0.06
|
)
|
|
Termination fee included in gain on sale
| | |
6,774
| | |
0.09
| | | |
2,819
| | |
0.04
| |
|
Gain on early extinguishment of debt
| | |
(977
|
)
| |
(0.01
|
)
| | |
—
| | |
—
| |
|
Transaction costs
| | |
388
| | |
0.01
| | | |
4,881
| | |
0.08
| |
|
Gain on sale of land
| | |
—
| | |
—
| | | |
(1,066
|
)
| |
(0.02
|
)
|
|
Deferred income tax expense (benefit)
| | |
911
| | |
0.01
| | | |
(664
|
)
| |
(0.01
|
)
|
Impairment of direct financing lease - allowance for lease loss
portion
(2)
| | |
7,298
|
| |
0.10
|
| | |
—
|
| |
—
|
|
|
FFO as adjusted available to common shareholders (1)
| | |
$
|
264,670
|
| |
$
|
3.73
|
| | |
$
|
227,249
|
| |
$
|
3.56
|
|
| | | | | | | | | |
|
|
Dividends declared per common share
| | | | |
$
|
3.06
| | | | | |
$
|
2.88
| |
|
FFO as adjusted available to common shareholders payout ratio
| | | | |
82
|
%
| | | | |
81
|
%
|
|
(1)
|
|
Per share results for the three and nine months ended September 30,
2017 and 2016 include the effect of the conversion of the 5.75%
Series C cumulative convertible preferred shares as the conversion
would be dilutive.
|
|
(2)
| |
Impairment charges recognized during the nine months ended September
30, 2017 total $10.2 million and related to our investment in a
direct financing lease, net, consisting of $2.9 million related to
the residual value portion and $7.3 million related to the allowance
for lease loss portion.
|
| |
|
| |
|
Portfolio Update
The Company's investment portfolio (excluding property under
development) consisted of the following at September 30, 2017:
-
The Entertainment segment included investments in 147 megaplex theatre
properties, seven entertainment retail centers (which include seven
additional megaplex theatre properties) and nine family entertainment
centers. The Company’s portfolio of owned entertainment properties
consisted of 12.8 million square feet and was 99% leased, including
megaplex theatres that were 100% leased.
-
The Education segment included investments in 69 public charter
schools, 63 early education centers and 15 private schools. The
Company’s portfolio of owned education properties consisted of 4.3
million square feet and was 98% leased.
-
The Recreation segment included investments in 26 ski areas, 20
attractions, 28 golf entertainment complexes and seven other
recreation facilities. The Company’s portfolio of owned recreation
properties was 100% leased.
-
The Other segment consisted primarily of the land under ground lease,
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 20.0 million square feet and
was 99% leased. As of September 30, 2017, the Company also had a total
of $284.2 million invested in property under development.
Investment Update
The Company's investment spending for the three months ended September
30, 2017 totaled $292.8 million (bringing the year-to-date investment
spending to $1.5 billion), and included investments in each of its
primary operating segments:
-
Entertainment investment spending during the three months ended
September 30, 2017 totaled $150.7 million, including spending on
build-to-suit development and redevelopment of megaplex theatres,
entertainment retail centers and family entertainment centers, as well
as $106.2 million in acquisitions of three megaplex theatres.
-
Education investment spending during the three months ended September
30, 2017 totaled $56.5 million, including spending on build-to-suit
development and redevelopment of public charter schools, early
education centers and private schools, as well as $11.1 million for
the acquisition of one public charter school and an investment of
$20.0 million in mortgage notes receivable.
-
Recreation investment spending during the three months ended September
30, 2017 totaled $85.4 million, including investment spending on
build-to-suit development of golf entertainment complexes and
attractions, and redevelopment of ski areas, as well as $17.7 million
in acquisitions of other recreation facilities.
-
Other investment spending during the three months ended September 30,
2017 totaled $0.2 million, and was related to the Adelaar casino and
resort project in Sullivan County, New York.
Capital Recycling
During the third quarter, the Company sold one public charter school
property, pursuant to a tenant purchase option, for total net proceeds
of approximately $5.7 million and recognized a net gain on sale of real
estate of $1.0 million. Dispositions and mortgage note pay-off
(excluding principal amortization) totaled $140.3 million for the nine
months ended September 30, 2017.
The Company expects to receive an additional $45.0 million to $60.0
million of proceeds from property dispositions in the fourth quarter,
primarily from sales of public charter school properties pursuant to
tenant purchase options, and expects to recognize an additional $11.7
million to $12.7 million in lease termination fees in FFO as adjusted
for the fourth quarter.
Balance Sheet Update
The Company had a net debt to adjusted EBITDA ratio (a non-GAAP
financial measure) of 5.66x at September 30, 2017. The Company had $11.4
million of unrestricted cash on hand and $170.0 million outstanding
under its $1.0 billion unsecured revolving credit facility at September
30, 2017.
On September 27, 2017, the Company amended its unsecured consolidated
credit agreement which governs its unsecured revolving credit facility
and its unsecured term loan facility. These amendments increased the
borrowing capacity, extended the maturity, released the Company's
subsidiaries as co-borrowers and lowered the interest rate and related
pricing terms of the Company's facilities. In connection with the
amendment, $1.5 million of deferred financing fees (net of accumulated
amortization) were written off during the three months ended September
30, 2017, and are included in costs associated with loan refinancing.
The amendments to the unsecured revolving portion of the credit
facility, among other things, (i) increased the initial maximum
available amount from $650.0 million to $1.0 billion, (ii) extended the
maturity date from April 2019, to February 2022 (with the Company having
the right to extend the loan for an additional seven months) and (iii)
lowered the interest rate and facility fee pricing based on a grid
related to the Company's senior unsecured credit ratings which at
closing was LIBOR plus 1.00% and 0.20%, versus LIBOR plus 1.25% and
0.25%, respectively, under the previous terms.
The amendments to the unsecured term loan portion of the credit
facility, among other things, (i) increased the initial amount from
$350.0 million to $400.0 million, (ii) extended the maturity date from
April 2020, to February 2023 and (iii) lowered the interest rate based
on a grid related to the Company's senior unsecured credit ratings which
at closing was LIBOR plus 1.10% versus LIBOR plus 1.40% under the
previous terms. At closing, the Company borrowed the remaining $50.0
million available on the $400.0 million term loan portion of the
facility, which was used to pay down a portion of the Company's
unsecured revolving credit facility.
In addition, there is a $1.0 billion accordion feature on the combined
unsecured revolving credit and term loan facility that increases the
maximum amount available under the combined facility, subject to lender
approval, from $1.4 billion to $2.4 billion. If the Company exercises
all or any portion of the accordion feature, the resulting increase in
the facility may have a shorter or longer maturity date and different
pricing terms.
On October 31, 2017, the Company entered into three interest rate swap
agreements to fix the interest rate at 3.15% on an additional $50.0
million of the unsecured term loan facility from November 2017 to April
2019 and on $350.0 million of the unsecured term loan facility from
April 2019 to February 2022.
During the third quarter, the Company also prepaid in full three
mortgage notes payable totaling $24.9 million, which were secured by
three theatre properties.
Dividend Information
The Company declared regular monthly cash dividends during the third
quarter of 2017 totaling $1.02 per common share. This dividend
represents an annualized dividend of $4.08 per common share, an increase
of 6.25% over the prior year, and would be the Company's seventh
consecutive year with an annual dividend increase.
The Company also declared third 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.
2017 Guidance
The Company is increasing its 2017 guidance for FFO as adjusted per
diluted share to a range of $5.15 to $5.20 from a range of $5.05 to
$5.20. The Company is increasing its 2017 investment spending guidance
to a range of $1.55 billion to $1.60 billion from $1.45 billion to $1.50
billion. Disposition proceeds are expected to total $185.0 million to
$200.0 million for 2017.
FFO as adjusted guidance for 2017 is based on FFO per diluted share of
$4.76 to $4.80 adjusted for estimated costs associated with loan
refinancing or payoff, gain on insurance recovery, transaction costs,
gain on early extinguishment of debt, termination fees included in gain
on sale, deferred income tax expense and impairment of direct financing
lease (allowance for lease loss portion). FFO per diluted share is based
on a net income per diluted share range of $3.50 to $3.55 less estimated
gain on sale of real estate of a range of $0.57 to $0.58 and the impact
of Series C and Series E dilution of $0.05, plus estimated real estate
depreciation of $1.84 per diluted share and impairment of direct
financing lease (residual value portion) of $0.04 per share (in
accordance with the NAREIT definition of FFO).
2018 Guidance
The Company is also introducing its 2018 guidance for FFO as adjusted
per diluted share of a range of $5.33 to $5.48. In addition, the Company
is introducing its 2018 investment spending guidance of a range of
$700.0 million to $800.0 million. Disposition proceeds are expected to
total $125.0 million to $225.0 million for 2018.
FFO as adjusted guidance for 2018 is based on FFO per diluted share of
$5.07 to $5.16 adjusted for estimated transaction costs, termination
fees related to public charter schools and deferred income tax expense.
FFO per diluted share is based on a net income per diluted share range
of $3.44 to $3.59 less estimated gain on sale of real estate of a range
of $0.25 to $0.31 and the impact of Series C and Series E dilution of
$0.06, plus estimated real estate depreciation of $1.94 per diluted
share (in accordance with the NAREIT definition of FFO).
Quarterly Supplemental
The Company's supplemental information package for the third quarter and
nine months ended September 30, 2017 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 September 30, |
|
| Nine Months Ended September 30, |
| | | 2017 |
| 2016 | | | 2017 |
| 2016 |
|
Rental revenue
| | |
$
|
122,827
| | |
$
|
102,282
| | | |
$
|
349,333
| | |
$
|
292,115
| |
|
Tenant reimbursements
| | |
3,734
| | |
3,821
| | | |
11,424
| | |
11,577
| |
|
Other income
| | |
522
| | |
2,476
| | | |
2,518
| | |
5,812
| |
|
Mortgage and other financing income
| | |
24,314
|
| |
17,031
|
| | |
65,016
|
| |
52,907
|
|
|
Total revenue
| | |
151,397
| | |
125,610
| | | |
428,291
| | |
362,411
| |
|
Property operating expense
| | |
6,340
| | |
5,626
| | | |
18,762
| | |
16,687
| |
|
Other expense
| | |
—
| | |
—
| | | |
—
| | |
5
| |
|
General and administrative expense
| | |
12,070
| | |
9,091
| | | |
33,787
| | |
27,309
| |
|
Costs associated with loan refinancing or payoff
| | |
1,477
| | |
14
| | | |
1,491
| | |
905
| |
|
Gain on early extinguishment of debt
| | |
—
| | |
—
| | | |
(977
|
)
| |
—
| |
|
Interest expense, net
| | |
34,194
| | |
24,265
| | | |
97,853
| | |
70,310
| |
|
Transaction costs
| | |
113
| | |
2,947
| | | |
388
| | |
4,881
| |
|
Impairment charges
| | |
—
| | |
—
| | | |
10,195
| | |
—
| |
|
Depreciation and amortization
| | |
34,694
|
| |
27,601
|
| | |
95,919
|
| |
79,222
|
|
|
Income before equity in income from joint ventures and other items
| | |
62,509
| | |
56,066
| | | |
170,873
| | |
163,092
| |
|
Equity in income from joint ventures
| | |
35
| | |
203
| | | |
86
| | |
501
| |
|
Gain on sale of real estate
| | |
997
|
| |
1,615
|
| | |
28,462
|
| |
3,885
|
|
|
Income before income taxes
| | |
63,541
| | |
57,884
| | | |
199,421
| | |
167,478
| |
|
Income tax expense
| | |
(587
|
)
| |
(358
|
)
| | |
(2,016
|
)
| |
(637
|
)
|
|
Net income
| | |
62,954
| | |
57,526
| | | |
197,405
| | |
166,841
| |
|
Preferred dividend requirements
| | |
(5,951
|
)
| |
(5,951
|
)
| | |
(17,855
|
)
| |
(17,855
|
)
|
|
Net income available to common shareholders of EPR Properties | | |
$
|
57,003
|
| |
$
|
51,575
|
| | |
$
|
179,550
|
| |
$
|
148,986
|
|
|
Per share data attributable to EPR Properties common shareholders:
| | | | | | | | | | |
|
Basic earnings per share data:
| | | | | | | | | | |
|
Net income available to common shareholders
| | |
$
|
0.77
|
| |
$
|
0.81
|
| | |
$
|
2.55
|
| |
$
|
2.35
|
|
|
Diluted earnings per share data:
| | | | | | | | | | |
|
Net income available to common shareholders
| | |
$
|
0.77
|
| |
$
|
0.81
|
| | |
$
|
2.55
|
| |
$
|
2.35
|
|
|
Shares used for computation (in thousands):
| | | | | | | | | | |
|
Basic
| | |
73,663
| | |
63,627
| | | |
70,320
| | |
63,296
| |
|
Diluted
| | |
73,724
| | |
63,747
| | | |
70,385
| | |
63,393
| |
| | | | | | | | | | | | | |
|
| | | | | | | | | | | | | |
|
| EPR Properties |
| Condensed Consolidated Balance Sheets |
| (Unaudited, dollars in thousands) |
|
|
|
|
| September 30, 2017 |
|
| December 31, 2016 |
| Assets | | | | | | |
|
Rental properties, net of accumulated depreciation of $711,384 and
$635,535 at September 30, 2017 and December 31, 2016, respectively
| | |
$
|
4,535,994
| | | |
$
|
3,595,762
|
|
Land held for development
| | |
33,674
| | | |
22,530
|
|
Property under development
| | |
284,211
| | | |
297,110
|
|
Mortgage notes and related accrued interest receivable
| | |
972,371
| | | |
613,978
|
|
Investment in a direct financing lease, net
| | |
57,698
| | | |
102,698
|
|
Investment in joint ventures
| | |
5,616
| | | |
5,972
|
|
Cash and cash equivalents
| | |
11,412
| | | |
19,335
|
|
Restricted cash
| | |
24,323
| | | |
9,744
|
|
Accounts receivable, net
| | |
99,213
| | | |
98,939
|
|
Other assets
| | |
108,498
|
| | |
98,954
|
|
Total assets
| | |
$
|
6,133,010
|
| | |
$
|
4,865,022
|
| | | | | |
|
| Liabilities and Equity | | | | | | |
|
Accounts payable and accrued liabilities
| | |
$
|
140,582
| | | |
$
|
119,758
|
|
Dividends payable
| | |
30,997
| | | |
26,318
|
|
Unearned rents and interest
| | |
85,198
| | | |
47,420
|
|
Debt
| | |
2,987,925
|
| | |
2,485,625
|
|
Total liabilities
| | |
3,244,702
|
| | |
2,679,121
|
|
Total equity
| | |
$
|
2,888,308
|
| | |
$
|
2,185,901
|
|
Total liabilities and equity
| | |
$
|
6,133,010
|
| | |
$
|
4,865,022
|
| | | | | | | | |
|
| | | | | | | | |
|
| EPR Properties |
| Reconciliation of Non-GAAP Financial Measures |
| (Unaudited, dollars in thousands except per share data) |
|
|
| |
| | |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| | | | | 2017 |
| 2016 | | | 2017 |
| 2016 |
| | FFO: (A) | | | | | | | | | | |
| |
Net income available to common shareholders of EPR Properties | | |
$
|
57,003
| | |
$
|
51,575
| | | |
$
|
179,550
| | |
$
|
148,986
| |
| |
Gain on sale of real estate (excluding land sale)
| | |
(997
|
)
| |
(549
|
)
| | |
(28,462
|
)
| |
(2,819
|
)
|
| |
Real estate depreciation and amortization
| | |
34,457
| | |
27,147
| | | |
95,243
| | |
77,870
| |
| |
Allocated share of joint venture depreciation
| | |
55
| | |
56
| | | |
163
| | |
174
| |
| |
Impairment of direct financing lease - residual value portion (1)
| | |
—
|
| |
—
|
| | |
2,897
|
| |
—
|
|
| |
FFO available to common shareholders of EPR Properties | | |
$
|
90,518
|
| |
$
|
78,229
|
| | |
$
|
249,391
|
| |
$
|
224,211
|
|
| | | | | | | | | | | |
|
| |
FFO available to common shareholders of EPR Properties | | |
$
|
90,518
| | |
$
|
78,229
| | | |
$
|
249,391
| | |
$
|
224,211
| |
| |
Add: Preferred dividends for Series C preferred shares
| | |
1,941
|
| |
1,941
|
| | |
5,823
|
| |
5,823
|
|
| |
Diluted FFO available to common shareholders of EPR Properties | | |
$
|
92,459
|
| |
$
|
80,170
|
| | |
$
|
255,214
|
| |
$
|
230,034
|
|
| | | | | | | | | | | |
|
| |
FFO per common share:
| | | | | | | | | | |
| |
Basic
| | |
$
|
1.23
| | |
$
|
1.23
| | | |
$
|
3.55
| | |
$
|
3.54
| |
| |
Diluted
| | |
1.22
| | |
1.22
| | | |
3.52
| | |
3.52
| |
| |
Shares used for computation (in thousands):
| | | | | | | | | | |
| |
Basic
| | |
73,663
| | |
63,627
| | | |
70,320
| | |
63,296
| |
| |
Diluted
| | |
73,724
| | |
63,747
| | | |
70,385
| | |
63,393
| |
| | | | | | | | | | | |
|
| |
Weighted average shares outstanding-diluted EPS
| | |
73,724
| | |
63,747
| | | |
70,385
| | |
63,393
| |
| |
Effect of dilutive Series C preferred shares
| | |
2,072
|
| |
2,036
|
| | |
2,063
|
| |
2,029
|
|
| |
Adjusted weighted average shares outstanding-diluted
| | |
75,796
|
| |
65,783
|
| | |
72,448
|
| |
65,422
|
|
| |
Other financial information:
| | | | | | | | | | |
| |
Straight-lined rental revenue
| | |
$
|
2,357
| | |
$
|
4,597
| | | |
$
|
11,417
| | |
$
|
10,950
| |
| |
Termination and prepayment fees
| | |
$
|
954
| | |
$
|
549
| | | |
$
|
6,774
| | |
$
|
2,819
| |
| |
Dividends per common share
| | |
$
|
1.02
| | |
$
|
0.96
| | | |
$
|
3.06
| | |
$
|
2.88
| |
|
|
|
(1)
|
|
Impairment charges recognized during the nine months ended September
30, 2017 total $10.2 million and related to our investment in a
direct financing lease, net, consisting of $2.9 million related to
the residual value portion and $7.3 million related to the allowance
for lease loss portion.
|
| | | |
|
|
(A)
|
|
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, the Company calculates FFO as net income available to
common shareholders, computed in accordance with GAAP, excluding
gains and losses from sales 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.
The Company has 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.
In addition to FFO, the Company presents 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, termination
fees associated with tenants' exercises of education properties
buy-out options, impairment of direct financing lease (allowance for
lease loss portion) and transaction costs, less gain on early
extinguishment of debt, gain (loss) on sale of land, gain on
insurance recovery 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. It should
also be noted that not all REITs calculate FFO or FFO as adjusted
the same way so comparisons of each of these non-GAAP measures with
other REITs may not be meaningful.
|
|
|
The conversion of the 5.75% Series C cumulative convertible preferred
shares would be dilutive to FFO and FFOAA per share for the three and
nine months ended September 30, 2017 and 2016. Therefore, the additional
2.1 million and 2.0 million common shares that would result from the
conversion and the corresponding add-back of the preferred dividends
declared on those shares are included in the calculation of diluted FFO
and diluted FFOAA per share for the three and nine months ended
September 30, 2017 and 2016, respectively. The effect of the conversion
of our 9.0% Series E cumulative convertible preferred shares and the
additional 1.6 million common shares that would result from the
conversion do not result in more dilution to per share results and are
therefore not included in the calculation of diluted per share data for
the three and nine months ended September 30, 2017 and 2016.
Net Debt to Adjusted EBITDA Ratio
Net Debt to Adjusted EBITDA Ratio is a supplemental measure derived from
non-GAAP financial measures the Company uses to evaluate its capital
structure and the magnitude of its debt against its operating
performance. The Company believes that investors commonly use versions
of this ratio in a similar manner. In addition, financial institutions
use versions of this ratio in connection with debt agreements to set
pricing and covenant limitations. The Company's method of calculating
Net Debt to Adjusted EBITDA Ratio may be different from methods used by
other REITs and, accordingly, may not be comparable to such other REITs.
Reconciliations of debt and net income available to common shareholders
(both reported in accordance with GAAP) to Net Debt, Adjusted EBITDA,
and Net Debt to Adjusted EBITDA Ratio (each of which is a non-GAAP
financial measure) are included in the following tables (unaudited, in
thousands):
|
|
| |
|
| September 30, |
| | | | | 2017 |
|
| 2016 |
| | Net Debt: (B) | | | | | | |
| |
Debt
| | |
$
|
2,987,925
| | | |
$
|
2,248,576
| |
| |
Deferred financing costs, net
| | |
33,951
| | | |
18,885
| |
| |
Cash and cash equivalents
| | |
(11,412
|
)
| | |
(7,311
|
)
|
| |
Net Debt
| | |
$
|
3,010,464
|
| | |
$
|
2,260,150
|
|
| | | | | | | |
|
| | | | | Three Months Ended September 30, |
| | | | | 2017 | | | 2016 |
| | Adjusted EBITDA: (C) | | | | | | |
| |
Net income available to common shareholders of EPR Properties | | |
$
|
57,003
| | | |
$
|
51,575
| |
| |
Costs associated with loan refinancing or payoff
| | |
1,477
| | | |
14
| |
| |
Interest expense, net
| | |
34,194
| | | |
24,265
| |
| |
Transaction costs
| | |
113
| | | |
2,947
| |
| |
Depreciation and amortization
| | |
34,694
| | | |
27,601
| |
| |
Equity in income from joint ventures
| | |
(35
|
)
| | |
(203
|
)
|
| |
Gain on sale of real estate
| | |
(997
|
)
| | |
(1,615
|
)
|
| |
Income tax expense
| | |
587
| | | |
358
| |
| |
Preferred dividend requirements
| | |
5,951
| | | |
5,951
| |
| |
Gain on insurance recovery (1)
| | |
—
|
| | |
(1,825
|
)
|
| |
Adjusted EBITDA (for the quarter)
| | |
$
|
132,987
|
| | |
$
|
109,068
|
|
| | | | | | | |
|
| |
Adjusted EBITDA (2)
| | |
$
|
531,948
|
| | |
$
|
436,272
|
|
| | | | | | | |
|
| |
Net Debt/Adjusted EBITDA Ratio
| | |
5.66
| | | |
5.18
| |
| | | | | | | |
|
| |
(1) Included in other income in the accompanying consolidated
statements of income. Other income includes the following:
|
| |
|
| | | | | Three Months Ended September 30, |
| | | | | 2017 | | | 2016 |
| |
Income from settlement of foreign currency swap contracts
| | |
$
|
520
| | | |
$
|
643
| |
| |
Gain on insurance recovery
| | |
—
| | | |
1,825
| |
| |
Fee income
| | |
1
| | | |
—
| |
| |
Miscellaneous income
| | |
1
|
| | |
8
|
|
| |
Other income
| | |
$
|
522
|
| | |
$
|
2,476
|
|
| | | | | | | |
|
| |
(2) Adjusted EBITDA for the quarter is multiplied by four to
calculate an annual amount.
|
|
(B)
|
|
Net Debt represents debt (reported in accordance with GAAP) adjusted
to exclude deferred financing costs, net and reduced for cash and
cash equivalents. By excluding deferred financing costs, net and
reducing debt for cash and cash equivalents on hand, the result
provides an estimate of the contractual amount of borrowed capital
to be repaid, net of cash available to repay it. The Company
believes this calculation constitutes a beneficial supplemental
non-GAAP financial disclosure to investors in understanding our
financial condition. The Company's method of calculating Net Debt
may be different from methods used by other REITs and, accordingly,
may not be comparable to such other REITs.
|
|
|
|
(C)
| |
Management uses Adjusted EBITDA in its analysis of the performance
of the business and operations of the Company. Management believes
Adjusted EBITDA is useful to investors because it excludes various
items that management believes are not indicative of operating
performance, and that it is an informative measure to use in
computing various financial ratios to evaluate the Company. The
Company defines Adjusted EBITDA as net income available to common
shareholders excluding costs associated with loan refinancing or
payoff, interest expense (net), depreciation and amortization,
equity in (income) loss from joint ventures, gain (loss) on the sale
of real estate, gain on insurance recovery, income tax expense
(benefit), preferred dividend requirements, the effect of non-cash
impairment charges, retirement severance expense, the provision for
loan losses and transaction costs, and which is then multiplied by
four to get an annual amount.
|
|
|
| |
The Company's method of calculating Adjusted EBITDA may be different
from methods used by other REITs and, accordingly, may not be
comparable to such other REITs. Adjusted EBITDA is not a measure of
performance under GAAP, does not represent cash generated from
operations as defined by GAAP and is not indicative of cash
available to fund all cash needs, including distributions. This
measure should not be considered as an alternative to net income for
the purpose of evaluating the Company's performance or to cash flows
as a measure of liquidity.
|
| |
|
| |
|
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 $6.6 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.
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, expected dividend payments, 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,” “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. Except as required by law, 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171108006592/en/
EPR Properties
Brian Moriarty, 888-EPR-REIT
www.eprkc.com
Source: EPR Properties