EPR Properties NYSE: EPR reported higher third-quarter revenue and funds from operations as the experiential real estate investment trust expanded into live entertainment venues and added fitness and wellness properties to its portfolio.
Revenue rose 12% year over year to $204.1 million, while FFO as adjusted increased 8.8% to $1.49 per share. AFFO increased 10.8% to $1.54 per share, though the company revised its AFFO definition during the quarter to exclude maintenance capital expenditures, aligning its presentation with many other triple-net REITs. Prior periods were recast to reflect the change.
For the first nine months of 2026, FFO as adjusted totaled $4.16 per share, up 9.2% from the prior-year period, while AFFO rose 9.8% to $4.26 per share.
Investment Activity Expands Into Live Venues
EPR invested $172.4 million during the quarter at an average initial cash yield of approximately 8.3%, bringing year-to-date investment volume to $664.5 million. The investments included the company’s first live-performance venue transaction, a build-to-suit development in Portland, Oregon, with Live Nation, as well as its first acquisition of a property leased to Life Time Fitness and Wellness in Irvine, California.
Ben Fox, EPR’s executive vice president and chief investment officer, said the company also invested in an Onelife Fitness location at Tysons Galleria in Virginia. He described both the Irvine Life Time property and the Tysons Galleria location as “exceptional A+ real estate.”
The company expects to invest another $21 million this year in experiential development and redevelopment projects already underway. EPR raised its full-year investment-spending guidance to between $675 million and $725 million, from a prior range of $600 million to $700 million.
Management said its pipeline spans acquisitions and development opportunities across fitness and wellness, eat-and-play concepts, attractions and live entertainment. Fox said the company remains disciplined on investment spreads and would not “sacrifice spread for volume.”
Regarding live entertainment, management pointed to demand for midsize venues, particularly those with roughly 4,000 seats. Fox said those venues can attract headline performers while addressing what he described as an underserved segment between large amphitheaters and smaller local facilities. The Portland Live Nation venue is expected to open next summer, according to management.
Portfolio Diversification and Theater Performance
At the end of the third quarter, EPR’s portfolio had $7.6 billion of gross investment value across 350 properties and was 99% leased or operated. Core experiential categories accounted for 96% of annualized base rent and included 296 properties operated by 61 clients. The company’s education portfolio comprised the remaining 4% of annualized base rent and was 100% leased.
Theater exposure continued to decline as the company increased investment in other experiential categories. Theaters now represent roughly one-third of EPR’s portfolio, with management maintaining a long-term objective of approximately 20% exposure.
Unit-level rent coverage increased to 2.1 times during the quarter. Greg Silvers, EPR’s chairman and chief executive officer, said theater performance was a contributor to the improvement, as domestic box office revenue was up about 20% year to date through September and was on track for its best year since 2019.
Fox said EPR’s theater portfolio is positioned toward premium offerings, with 71% of its theaters featuring recliner seating, 84% offering enhanced food and beverage and 69% providing premium large-format screens. He said the company’s theaters generate roughly 8% of North American box office gross despite accounting for 3% of screenings.
Management also cited resilient performance in eat-and-play assets, attractions, and fitness and wellness properties. Topgolf’s performance remained healthy, while attractions benefited from geographic diversification that helped offset localized summer weather events. The education portfolio continued to face pressure from higher labor costs, grant funding issues and regulatory challenges, according to management.
Capital Recycling and Balance Sheet
During the quarter, EPR sold the British School of Chicago to a public net-lease peer at a cap rate in the low-7% range. The company reported $74 million in disposition proceeds during the quarter, including $68.2 million in net proceeds from the private-school sale and a recognized gain of $30.5 million.
EPR revised its 2026 disposition guidance to approximately $86 million and said it does not anticipate further dispositions before year-end.
The company ended the quarter with $3.3 billion of consolidated debt, including $2.8 billion of fixed-rate debt with an average blended coupon of about 4.4%. It repaid $179.6 million of senior unsecured notes at maturity during the quarter.
EPR also highlighted its amended and restated $1.6 billion credit agreement, which includes a $1 billion revolving credit facility and a $600 million delayed-draw term loan that was fully drawn at quarter-end. The term loan matures in 2032 and carries interest at SOFR plus 115 basis points based on the company’s current credit ratings.
Through its at-the-market equity program, EPR entered into two forward sale agreements for initial gross proceeds of $66.6 million at an average price of $60.79 per share. At quarter-end, unsettled forward sale agreements represented estimated net proceeds of $134.6 million, or just under 2.3 million shares. The company had $52.4 million in cash and no borrowings under its $1 billion revolving credit facility.
Guidance Raised
EPR increased its 2026 FFO as adjusted guidance to a range of $5.49 to $5.57 per share, compared with a previous range of $5.41 to $5.57. The midpoint represents 8% growth over 2025, according to the company.
The company also increased its projected percentage rent and participating interest income to $21.5 million to $24.5 million, from $18.5 million to $22.5 million. Mark Peterson, EPR’s executive vice president and chief financial officer, said the increase was primarily driven by stronger theater results, including Regal percentage rent, and improved attraction performance, particularly at Canadian properties.
Peterson said EPR expects box office to be higher in 2027 than in 2026 and, as a result, expects Regal percentage rents to increase next year.
About EPR Properties (NYSE:EPR)
EPR Properties NYSE: EPR is a specialty real estate investment trust that owns and leases experiential real estate. The company focuses on properties designed for entertainment, recreation and leisure activities, including movie theaters, ski resorts, waterparks, attractions, fitness and wellness facilities, and other destination-based venues.
EPR generally leases its properties to operators under long-term, often triple-net lease agreements, under which tenants are typically responsible for property-level operating expenses, maintenance, taxes and insurance.
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