Kathryn Graves

Kathryn Graves asked for details on the current investment pipeline, including geographic split (Europe vs. U.S.), property type mix (industrial vs. retail), and cap rate expectations for Q4. She also inquired about the sustainability of mid-2% same-store rent growth if inflation moderates and the expectation for more fixed rent bumps in future acquisitions.

Answer

Jason Fox, Chief Executive Officer, outlined a near-term pipeline of several hundred million dollars, with many deals expected to close in Q4 or early 2026, plus $70 million in capital projects. He noted increased European activity (50/50 split in Q3) and continued focus on industrial, with cap rates consistently in the mid-sevens. Mr. Fox explained that while CPI-linked increases are harder to get in the U.S., fixed increases are now higher (averaging 2.7%). Toni Sanzone, Chief Financial Officer, added that due to lease mechanics and higher fixed increases, contractual same-store growth is expected to surpass 2.5% in 2026, even with stabilizing CPI.

Kathryn Graves inquired about the current investment pipeline, seeking details on geographic split (Europe vs. U.S.), property type mix (industrial vs. retail), and prevailing cap rates for Q4. She also asked about the sustainability of mid-2% same-store rent growth if inflation moderates and the future prevalence of fixed rent bumps in acquisitions.

Answer

CEO Jason Fox outlined a near-term pipeline of several hundred million dollars, with increased activity in Europe and a continued focus on industrial properties at cap rates in the mid-7% range. He noted that while CPI-linked increases are less common in new U.S. deals, fixed increases are now averaging 2.7%. CFO Toni Sanzone added that due to CPI look-back periods and higher fixed increases, contractual same-store growth is expected to remain strong, potentially surpassing 2.5% in 2026, even with stabilizing inflation.

Kathryn Graves of UBS Group AG asked about the criteria for selling education assets and the nature of buyer interest. She also inquired about EPR's comfort level with its Six Flags exposure following headlines about park closures.

Answer

CEO Greg Silvers and CIO Greg Zimmerman clarified that education asset sales are driven by attractive cap rates and would likely be done on a portfolio basis. Regarding Six Flags, Greg Silvers expressed comfort, viewing the park closures as a strategic rationalization by the tenant to lower debt and improve their credit profile, which is ultimately a positive for EPR as a landlord.

Kathryn Graves asked for an update on the company's target leverage ratio and the expected timeline to achieve it, following the recent reduction to 6.8x. She also questioned what factors would influence the decision to maintain or accelerate the pace of office asset dispositions.

Answer

Executive Javier Bitar reiterated that the company's target leverage remains in the 6x range or below. Executive Michael Escalante added that the pace of office dispositions is determined on a case-by-case basis to maximize shareholder value. He suggested a potential acceleration could be driven by strong pricing, continued interest from their existing tenant base, and the advantageous cost of capital for corporate buyers compared to real estate investors.

Kathryn Graves of UBS inquired about the expected cadence of acquisitions for the remainder of 2025, given the strong start to the year. She also asked if a recent bankruptcy of a large Burger King franchisee was a systemic issue or franchisee-specific.

Answer

CEO William Lenehan stated that while the current pipeline is strong, visibility for the second half of the year is limited due to macro uncertainty and typical 60-90 day deal cycles. He noted FCPT does not provide guidance to maintain disciplined decision-making. Regarding the Burger King franchisee, Lenehan confirmed it was 'very much a specific issue to that franchisee' and not a broader concern.

Kathryn Graves of Mizuho Securities asked about Alpine Income Property Trust's plans for its Walgreens exposure and its 2025 appetite for property acquisitions versus construction loans.

Answer

John Albright, CEO, confirmed that another Walgreens property sale is being negotiated and timed with new acquisitions. He elaborated on the investment strategy, highlighting the appeal of construction loans due to enhanced credit, lower LTVs, and higher yields in a capital-constrained market. Albright noted a robust pipeline for both loans and core acquisitions, suggesting a potential 50-50 split between the two investment types in 2025.

Kathryn Graves inquired about the current transaction environment compared to the first half of the year and asked what consumer trends the company is proactively monitoring.

Answer

CEO Mark Manheimer described the transaction opportunity set as having picked up significantly, with the main hurdle remaining seller expectations rather than competition. He noted that the company is cautiously monitoring pressure on lower and middle-income consumers and slowing job growth, ensuring new investments have strong balance sheets and unit-level economics to withstand potential disruption.