EPR Properties Q2 Earnings Call Highlights

EPR Properties NYSE: EPR reported higher revenue and funds from operations in the second quarter of 2026, supported by investment activity, rent and interest increases, and portfolio performance. The experiential real estate investment trust also raised its full-year investment spending and earnings guidance after completing more than $440 million of investments during the quarter.

Revenue rose 10.1% year over year to $196.1 million, while FFO as adjusted increased 12.7% to $1.42 per share, from $1.26 per share in the prior-year period. Adjusted funds from operations increased 15.3% to $1.43 per share. For the first six months of the year, FFO as adjusted rose 9% to $2.67 per share and AFFO increased 11.1% to $2.71 per share.

Investment Activity Reaches Post-COVID High

The company invested $440.8 million during the quarter at an average initial cash yield of about 8.5%, bringing year-to-date investment volume to $492.2 million. Chief Executive Officer Greg Silvers described the quarter as a “significant step forward” in the company’s effort to accelerate growth.

Investment activity included the previously announced acquisition of 17 parks formerly operated by Six Flags, two additional attraction properties, a golf investment and an investment in Hot Springs. EPR also acquired a Netflix House location in King of Prussia, Pennsylvania, establishing Netflix as a new partner.

Chief Investment Officer Ben Fox said Netflix House reflects the role of physical experiences for digital entertainment brands. He also said the investments reduced theater concentration to roughly one-third of the portfolio, compared with 36% at the end of the prior quarter.

As of June 30, EPR expected about $92 million of additional investment in existing experiential development and redevelopment projects, including approximately $65 million expected to be funded through the remainder of 2026.

The company raised its full-year investment spending guidance to $600 million to $700 million from $500 million to $600 million. Fox said activity for the year is still expected to lean more toward acquisitions than development, with the pipeline sourced “almost exclusively” through direct, non-marketed relationships. About half of the investment pipeline consists of repeat relationships, according to the company.

Management said investment yields and pricing have remained generally steady despite debt-market volatility. Fox said opportunities are appearing across EPR’s verticals, with a potential modest increase in fitness and wellness opportunities. Competition has primarily come from family offices and other alternative capital sources rather than traditional net-lease REIT investors, he said.

Portfolio Coverage Holds at Two Times

At quarter-end, EPR’s portfolio had a gross investment value of $7.5 billion across 346 properties and was 99% leased or operated. Its core experiential portfolio comprised 291 properties operated by 57 clients and was also 99% leased or operated. The education segment included 55 properties leased to five operators and was 100% leased.

Unit-level rent coverage remained at two times. Silvers said the composition underlying that figure shifted during the quarter, with stronger theaters partly balancing weather-related softness at ski properties and some earlier softness in Eat & Play assets.

Theater ticket sales were approximately 10% above the same point in 2025, management said. Silvers attributed the increase to a mix of major studio releases and lower-budget breakout films, while Fox said younger moviegoers were helping support theater attendance. The company said 87% of Generation Z consumers and 82% of millennials saw at least one movie in a theater over the past 12 months.

Percentage rents and participating interest totaled $4.8 million, up from $4.6 million a year earlier. An increase in percentage rent tied to the RIO lease was partly offset by lower percentage rent from a Northern California ski property affected by unfavorable weather.

Management maintained its full-year percentage rent and participating interest outlook of $18.5 million to $22.5 million. Chief Financial Officer Mark Peterson said second-quarter percentage rent was above internal expectations partly because stronger June box office caused Regal to reach lease thresholds earlier than in the prior year. The company said that timing could reverse in July and noted that the full-year outlook remained unchanged.

Elsewhere, the company reported stable Eat & Play rent coverage and positive early trends at Topgolf following operational changes after its separation from Callaway. Fox said Topgolf’s new leadership has pursued cost efficiencies, including headcount reductions, along with efforts to improve utilization of its existing locations and use dynamic pricing.

Balance Sheet and Updated Outlook

Net interest expense increased $5 million year over year, reflecting higher average borrowings and lower capitalized interest, partly offset by increased interest income from short-term investments. EPR also recorded $500,000 of defeasance fee income from the full repayment of a $10.8 million mortgage note receivable secured by an Eat & Play property.

The company ended the quarter with $3.3 billion of consolidated debt, including $3 billion of fixed-rate debt or debt fixed through swaps. The blended coupon was approximately 4.4%. Pro forma net debt to annualized adjusted EBITDAre was 5.1 times, at the low end of EPR’s stated 5.0 to 5.6 times target range.

On July 17, EPR entered into a new amended and restated $1.6 billion credit agreement. The agreement extended the maturity and reduced the interest rate on its $1 billion revolving credit facility and added a $600 million delayed-draw term loan due in 2032.

At quarter-end, the company had $16.2 million of cash and $640 million available under its revolver. Peterson said liquidity sources, including revolver capacity, anticipated cash flow, potential disposition proceeds, the new term loan and unsettled forward equity sales agreements, exceeded expected investment spending and debt maturities for the rest of the year.

EPR raised its 2026 FFO as adjusted guidance to $5.41 to $5.57 per share, from $5.37 to $5.53 per share. The midpoint represents projected growth of 7.2% from 2025. Peterson said the guidance increase primarily reflects additional investment spending, favorable investment activity and lower-than-expected bad debt and other portfolio-related costs, along with $0.005 per share from the defeasance fee income.

The company reaffirmed expected disposition proceeds of $50 million to $100 million and general and administrative expense guidance of $56 million to $59 million. Management said dispositions have moderated as the company shifts toward opportunistic sales rather than defensive asset sales.

About EPR Properties (NYSE:EPR)

EPR Properties is a real estate investment trust that specializes in experiential properties across the United States, Canada and select international markets. Established in 1997 and headquartered in Kansas City, Missouri, the company targets properties in the entertainment, recreation and education sectors. Its portfolio includes movie theaters, ski resorts, family entertainment centers, charter schools and other venues that benefit from consumer-driven experiences.

The trust employs long-term, triple-net lease agreements, where tenants are responsible for real estate taxes, insurance and maintenance.

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