Entertainment Properties Trust Reports Fourth Quarter and Year-End Results
~ Raises Dividend by 8% ~
KANSAS CITY, Mo.--(BUSINESS WIRE)-- Entertainment Properties Trust (NYSE:EPR) today announced operating results for the fourth quarter and year ended December 31, 2010.
Total revenue was $81.6 million for the fourth quarter of 2010 compared to $66.6 million for the same quarter in 2009. Net income available to common shareholders was $26.7 million, or $0.57 per diluted common share, for the fourth quarter of 2010 compared to $6.7 million, or $0.17 per diluted common share, for the same quarter in 2009. Funds From Operations (FFO) for the fourth quarter of 2010 was $40.4 million, or $0.86 per diluted common share, compared to $17.0 million, or $0.43 per diluted common share, for the same quarter in 2009.
For the year ended December 31, 2010, total revenue was $313.1 million compared to $259.1 million for year ended December 31, 2009. Net income available to common shareholders for the year ended December 31, 2010 was $84.7 million, or $1.86 per diluted common share, versus a net loss available to common shareholders of $22.2 million, or $0.61 per diluted common share, for the year ended December 31, 2009. FFO for the year ended December 31, 2010 was $136.6 million, or $3.00 per diluted common share, compared to $4.9 million, or $0.13 per diluted common share, for the year ended December 31, 2009.
David Brain, President and CEO, commented, "I am proud of what we accomplished in 2010, including over $300 million in accretive transactions, the stabilization of Toronto Dundas Square and the deleveraging of our balance sheet. While these are important achievements, the milestone I am most proud of is the investment grade ratings we received in connection with our inaugural bond offering as we transition from a secured to an unsecured borrower. This transformation augments our ability to grow and should serve to drive our cost of capital lower over time."
A reconciliation of FFO to FFO as adjusted follows (dollars in millions, except per share amounts):
Three Months Ended December 31,
2010 2009
Amount FFO/share Amount FFO/share
FFO $ 40.4 $ 0.86 $ 17.0 $ 0.43
Transaction costs 0.1 - 3.2 0.08
Provision for loan losses - - 5.2 0.13
Impairment charges 0.5 0.01 6.4 0.16
Gain on acquisition (0.5 ) (0.01 ) - -
FFO as adjusted $ 40.5 $ 0.86 $ 31.8 $ 0.80
Dividends declared per common $ 0.65 $ 0.65
share
FFO payout ratio, as adjusted 75 % 81 %
Years Ended December 31,
2010 2009
Amount FFO/share Amount FFO/share
FFO $ 136.6 $ 3.00 $ 4.9 $ 0.13
Costs associated with loan 15.6 0.34 0.1 -
refinancing (1)
Transaction costs 7.8 0.17 3.3 0.09
Provision for loan losses 0.7 0.02 71.0 1.96
Impairment charges (2) 0.5 0.01 42.2 1.17
Gain on acquisition (9.0 ) (0.20 ) - -
FFO as adjusted $ 152.2 $ 3.34 $ 121.5 $ 3.35
Dividends declared per $ 2.60 $ 2.60
common share
FFO payout ratio, as 78 % 78 %
adjusted
(1) Includes $0.4 million of costs associated with loan refinancing included
in discontinued operations for the year
ended December 31, 2010.
(2) Impairment charges for the year ended December 31, 2009 include $35.8
million related to City Center in White
Plains, New York that is included in discontinued operations. The Company no
longer has any ownership interest in
City Center.
Portfolio Update
As of December 31, 2010, the Company's real estate portfolio consisted of 107 megaplex theatres (including two joint venture properties) totaling approximately 8.7 million square feet, and restaurant, retail and other destination recreation and specialty properties totaling 4.5 million square feet. The Company also owned 27 public charter schools, and six vineyards totaling approximately 1,250 acres and ten wineries totaling approximately 850 thousand square feet. At December 31, 2010, the Company's megaplex theatres were 99% occupied, public charter schools were 100% occupied, and its overall real estate portfolio was 97% occupied.
In addition, as of December 31, 2010, the Company's real estate mortgage loan portfolio had a carrying value of $305.4 million and included financing provided for entertainment, retail and recreational properties, including ten metropolitan ski areas covering approximately 6,100 acres in six states.
On February 3, 2011, the Company entered into an agreement to sell its Toronto Dundas Square entertainment retail center in downtown Toronto. The sale proceeds, net of closing costs, are expected to exceed $220 million CAD. Subject to the satisfaction of certain conditions, the transaction is expected to close by the end of the first quarter of 2011 or shortly thereafter. In addition, the Company hedged its foreign currency exposure on this investment by entering into a forward contract to sell $200 million CAD for $201.5 USD with a settlement date of April 15, 2011. Including the impact of foreign currency, the Company expects to record a gain in excess of $17 million upon closing.
Investment Update
The Company's investment spending in the fourth quarter totaled $3.3 million bringing the total for the year ended December 31, 2010 to approximately $323.0 million.
On January 5, 2011, the Company entered into an agreement to acquire four theatre properties for a total investment of $36.8 million from a third-party. The transaction is expected to close in the first quarter of 2011. The theatre properties are located in New Hampshire and Maine and contain an aggregate of 56 screens. The theatre properties will be leased to Cinemagic pursuant to lease agreements that are structured as triple net with the tenant responsible for all taxes, costs and expenses arising from the use or operation of the properties. As a part of this transaction, the Company will assume a mortgage loan of $3.8 million on one of the four theatres.
Balance Sheet Update
The Company's balance sheet remains strong with a debt to gross assets ratio (i.e., total long-term debt to total assets plus accumulated depreciation) of 37% at December 31, 2010 and no debt maturities through September 2012. Combined unrestricted cash and credit line capacity at December 31, 2010 totaled $190 million.
On February 7, 2011, the Company paid off all of its secured term loans totaling $86.2 million related to its vineyard and winery portfolio with borrowings under its unsecured line of credit. In conjunction with this pay-off, the Company incurred $4.6 million in costs related to early settlement of interest rate swap agreements and $1.8 million of net deferred financing fees were written off.
Dividend
The Company is announcing a dividend for the first quarter of 2011 of $0.70 per common share. This dividend represents an annualized dividend of $2.80 per common share, an 8% increase over the prior year.
Guidance Update
The Company is revising its 2011 guidance for FFO as adjusted per diluted share to $3.40 to $3.50 from the previous guidance of $3.40 to $3.60. Including expected charges of $0.14 per diluted share for costs associated with the pay-off of the vineyard and winery loan facility, the guidance for FFO per diluted share is $3.26 to $3.36. The Company is maintaining its 2011 investment spending guidance of approximately $300 million.
This 2011 guidance reflects the anticipated sale of Toronto Dundas Square and the Company's initiative to exit the vineyard and winery business over time. This initiative includes the pay-off of the vineyard and winery term loans, modifying or terminating existing lease agreements as well as asset dispositions.
Quarterly and Year-End Supplemental
The Company's supplemental information package for the fourth quarter and year ended December 31, 2010 is available on the Company's website at www.eprkc.com.
ENTERTAINMENT PROPERTIES TRUST
Consolidated Statements of Income
(Unaudited)
(Dollars in thousands except per share data)
Three Months Ended December Year Ended December 31,
31,
2010 2009 2010 2009
Rental revenue $ 61,003 $ 50,445 $ 235,008 $ 195,784
Tenant 7,223 3,960 25,225 15,438
reimbursements
Other income 52 581 568 2,890
Mortgage and
other 13,358 11,607 52,263 44,999
financing
income
Total revenue 81,636 66,593 313,064 259,111
Property
operating 10,094 6,382 35,830 21,969
expense
Other expense 433 437 1,297 2,495
General and
administrative 4,430 3,373 18,227 15,169
expense
Costs
associated - - 15,247 117
with loan
refinancing
Interest 19,298 16,702 74,802 65,747
expense, net
Transaction 141 3,165 7,787 3,321
costs
Provision for - 5,197 700 70,954
loan losses
Impairment 463 6,357 463 6,357
charges
Depreciation
and 13,933 10,515 52,099 42,111
amortization
Income before
equity in
income from
joint
ventures, 32,844 14,465 106,612 30,871
gain from
acquisition
and
discontinued
operations
Equity in
income from 776 222 2,138 895
joint ventures
Gain on 555 - 9,023 -
acquisition
Income from
continuing $ 34,175 $ 14,687 $ 117,773 $ 31,766
operations
Discontinued
operations:
Loss from
discontinued - (1,321 ) (3,982 ) (43,672 )
operations
Loss on sale - - (736 ) -
of real estate
Net income 34,175 13,366 113,055 (11,906 )
(loss)
Net loss
attributable
to 28 899 1,819 19,913
noncontrolling
interests
Net income
attributable
to 34,203 14,265 114,874 8,007
Entertainment
Properties
Trust
Preferred
dividend (7,551 ) (7,550 ) (30,206 ) (30,206 )
requirements
Net income
(loss)
available to
common
shareholders $ 26,652 $ 6,715 $ 84,668 $ (22,199 )
of
Entertainment
Properties
Trust
Per share data
attributable
to
Entertainment
Properties
Trust
common
shareholders:
Basic earnings
per share
data:
Income from
continuing $ 0.57 $ 0.18 $ 1.93 $ 0.04
operations
Loss from
discontinued - (0.01 ) (0.06 ) (0.65 )
operations
Net income
(loss)
available to $ 0.57 $ 0.17 $ 1.87 $ (0.61 )
common
shareholders
Diluted
earnings per
share data:
Income from
continuing $ 0.57 $ 0.18 $ 1.92 $ 0.04
operations
Loss from
discontinued - (0.01 ) (0.06 ) (0.65 )
operations
Net income
(loss)
available to $ 0.57 $ 0.17 $ 1.86 $ (0.61 )
common
shareholders
Shares used
for
computation
(in
thousands):
Basic 46,539 39,641 45,206 36,122
Diluted 46,893 39,901 45,555 36,235
ENTERTAINMENT PROPERTIES TRUST
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 December 31, Year Ended December 31,
2010 2009 2010 2009
Net income
(loss)
available to
common
shareholders $ 26,652 $ 6,715 $ 84,668 $ (22,199 )
of
Entertainment
Properties
Trust
Loss on sale - - 736 -
of real estate
Real estate
depreciation 13,694 11,143 52,827 46,947
and
amortization
Allocated
share of joint 90 66 309 263
venture
depreciation
Noncontrolling - (956 ) (1,905 ) (20,143 )
interest
FFO available
to common
shareholders
of $ 40,436 $ 16,968 $ 136,635 $ 4,868
Entertainment
Properties
Trust
FFO per common
share
attributable
to
Entertainment
Properties
Trust:
Basic $ 0.87 $ 0.43 $ 3.02 $ 0.13
Diluted 0.86 0.43 3.00 0.13
Shares used
for
computation
(in
thousands):
Basic 46,539 39,641 45,206 36,122
Diluted 46,893 39,901 45,555 36,236
Other
financial
information:
Straight-line $ 642 $ 696 $ 1,883 $ 2,483
rental revenue
Dividends per $ 0.65 $ 0.65 $ 2.60 $ 2.60
common share
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 Generally
Accepted Accounting Principles (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 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 defined under the NAREIT
definition and presented by us, is net income available to common
shareholders, computed in accordance with GAAP, excluding gains and
losses from sales of depreciable operating properties, 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. FFO is a
(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 the Company's operations, 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 associated with loan
refinancing, impairments and transaction costs, less gain on
acquisitions. 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 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 and years ended December 31, 2010 and 2009 because the effect is anti-dilutive.
ENTERTAINMENT PROPERTIES TRUST
Condensed Consolidated Balance Sheets
(Dollars in thousands)
As of As of
December 31, 2010 December 31, 2009
Assets
Rental properties, net of accumulated $ 2,026,623 $ 1,854,629
depreciation of $297,068
and $258,638 at December 31, 2010 and
2009, respectively;
Land held for development 184,457 4,457
Property under development 5,967 8,272
Mortgage notes and related accrued 305,404 522,880
interest receivable, net
Investment in a direct financing 226,433 169,850
lease, net
Investment in joint ventures 22,010 4,080
Cash and cash equivalents 11,776 23,138
Restricted cash 16,279 12,857
Intangible assets, net 35,644 6,727
Deferred financing costs, net 20,371 12,136
Accounts receivable, net 39,814 30,727
Notes and related accrued interest 5,127 7,898
receivable, net
Other assets 23,515 23,081
Total assets $ 2,923,420 $ 2,680,732
Liabilities and Equity
Accounts payable and accrued $ 56,488 $ 28,411
liabilities
Dividends payable 37,804 35,432
Unearned rents and interest 6,691 7,509
Long-term debt 1,191,179 1,141,423
Total liabilities 1,292,162 1,212,775
Entertainment Properties Trust 1,603,239 1,472,862
shareholders' equity
Noncontrolling interests 28,019 (4,905 )
Equity 1,631,258 1,467,957
Total liabilities and equity $ 2,923,420 $ 2,680,732
About Entertainment Properties Trust
Entertainment Properties Trust (NYSE:EPR) is a specialty real estate investment trust (REIT) that invests in properties in select categories which require unique industry knowledge, while offering the potential for stable and attractive returns. Our total assets exceed $2.9 billion and include megaplex movie theatres and adjacent retail, public charter schools and other destination recreational and specialty investments. We adhere to rigorous underwriting and investing criteria, centered on key industry and property level cash flow criteria. 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 Jon Weis at 888-EPR-REIT or info@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 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," "anticipates," "estimates," "offers," "plans" "would," "may" or other similar expressions or other comparable terms or discussions of strategy, plans or intentions contained or incorporated by reference herein. Forward-looking statements necessarily are dependent on assumptions, data or methods that may be incorrect or imprecise. In addition, references to our budgeted amounts and guidance are forward looking statements. 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.
Source: Entertainment Properties Trust
Released February 28, 2011