Sign in

You're signed outSign in or to get full access.

EP

EPR PROPERTIES (EPR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered modest top-line growth and strong GAAP EPS, with total revenue up 2.9% year-over-year to $178.07M and diluted EPS at $0.91; FFOAA/share rose 3.3% to $1.26 .
  • Versus Wall Street: revenue slightly beat consensus ($178.07M vs $176.51M*) and GAAP EPS materially beat ($0.91 vs $0.70*), while FFO/share was modestly below consensus ($1.24 vs $1.26*) .
  • Guidance unchanged for FFOAA/share ($5.00–$5.16) and investment spending ($200–$300M), while disposition proceeds were raised to $130–$145M from $80–$120M; net income/share guidance increased to $3.20–$3.36 .
  • Capital recycling advanced ahead of plan (three theatres sold in Q2 for $35.6M and ~+$16.8M gain; one additional vacant theatre sold post-quarter for ~$16.0M, ~+$3.0M gain expected in Q3), supporting portfolio repositioning and liquidity .
  • Catalysts: improving box office and percentage rent outlook, accelerated pipeline with potential larger deals enabled by improved cost of capital, and raised disposition guidance signaling execution momentum .

What Went Well and What Went Wrong

What Went Well

  • “Continued momentum…with solid earnings growth while maintaining our disciplined approach to capital allocation,” underpinned by FFOAA/share growth and strong GAAP EPS .
  • Capital recycling outpaced expectations: Q2 dispositions of $35.6M (+$16.8M gain) and post-quarter sale of a vacant theatre for ~$16.0M (expected ~$3.0M gain in Q3), prompting higher 2025 disposition guidance to $130–$145M .
  • Pipeline strengthening with >$100M committed to experiential development/redevelopment over next 18 months, and entry into traditional golf plus a second PINSTACK “eat & play” project .

What Went Wrong

  • FFO/share modestly below consensus despite FFOAA/share increase; Q2 diluted FFO/share of $1.24 versus consensus ~$1.26* .
  • G&A expense increased to $13.23M (vs $12.02M prior year) due to higher payroll and share-based comp, plus franchise tax normalization, partly diluting operating leverage .
  • TRS operating properties: theatre improvements were offset by softer performance at Cartwright Hotel & Indoor Waterpark; management reiterated a move away from these types of investments longer-term .

Financial Results

Core Financials vs Prior Periods

MetricQ4 2024Q1 2025Q2 2025
Total revenue ($USD Millions)$177.23 $175.03 $178.07
Diluted EPS (GAAP, $)($0.19) $0.78 $0.91
FFO/share – diluted ($)$1.10 $1.20 $1.24
FFOAA/share – diluted ($)$1.23 $1.19 $1.26
AFFO/share – diluted ($)$1.22 $1.21 $1.24

Revenue Composition

MetricQ4 2024Q1 2025Q2 2025
Rental revenue ($USD Millions)$149.12 $146.36 $150.35
Mortgage & other financing income ($USD Millions)$14.92 $17.04 $15.50
Other income ($USD Millions)$13.20 $11.64 $12.22
Total revenue ($USD Millions)$177.23 $175.03 $178.07

Actual vs Wall Street Consensus (Q2 2025)

MetricActualConsensus
Total revenue ($USD Millions)$178.07 $176.51*
Diluted EPS (GAAP, $)$0.91 $0.70*
FFO/share – diluted ($)$1.24 $1.26*

Values with asterisks retrieved from S&P Global.

KPIs and Credit Metrics

KPIQ4 2024Q1 2025Q2 2025
Interest coverage (x)3.8 3.8 3.9
Fixed charge coverage (x)3.2 3.2 3.3
Net debt / Adjusted EBITDAre (x)5.3 5.3 5.1
Net debt / Gross assets (%)40% 39% 39%
AFFO payout ratio (%)70% 71% 71%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net income/share (diluted)FY 2025$2.98–$3.14 $3.20–$3.36 Raised
FFOAA/share (diluted)FY 2025$5.00–$5.16 $5.00–$5.16 Maintained
Investment spending ($M)FY 2025$200–$300 $200–$300 Maintained
Disposition proceeds ($M)FY 2025$80–$120 $130–$145 Raised
Percentage rent & participating interest ($M)FY 2025$21.5–$25.5 $21.5–$25.5 Maintained
G&A expense ($M)FY 2025$53–$56 $53–$56 Maintained
Other income ($M)FY 2025$42–$52 $42–$52 Maintained
Other expense ($M)FY 2025$42–$52 $42–$52 Maintained
Common dividend ($/mo)Ongoing$0.295 (ann. $3.54) $0.295 (ann. $3.54) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Box office trajectory & percentage rentRecovery underway; 2025 NABOG $9.3–$9.7B, % rent midpoint framework YTD box office rebounding; confirming NABOG range Q2 box office $2.7B (+37% YoY); Regal percentage rent expected to significantly increase vs 2024 Improving
Capital recyclingImpairments and disposals; plan to sell theatres/ECEs Sold theatres & ECEs; under contract to sell more Three theatre sales in Q2; additional vacant theatre sold post-quarter; raised dispositions guidance Accelerating
Pipeline & larger dealsActive but cautious given cost of capital Committed ~$148M; new attraction & fitness/wellness Improved cost of capital; pipeline includes $100M+ commitments; larger ($100M+) deals now feasible Expanding
Financing strategy (ATM/bonds)Debt ladder manageable; 2025 maturity $300M Revolver used to repay $300M; no equity in plan Establishing ATM; bond deal contemplated later in 2025 to reduce revolver Proactive
Operating properties (TRS)Exit underperforming JV lodging; no longer pursue certain operating assets Operational variability; seasonality/weather impacts Theatres improved; Cartwright under pressure; overall break-even guidance for consolidated properties Mixed/stable
Cost of capital & spreadsStable ratings; selectivity No equity issuance assumed Improved cost of capital; target initial spreads ≥100bps; cap rates “comfortably in the eights”; larger check sizes available Improving

Management Commentary

  • CEO: “Our second quarter results demonstrate continued momentum…with solid earnings growth while maintaining our disciplined approach to capital allocation…more than $100 million committed to experiential development and redevelopment projects in the coming quarters.”
  • CFO: “We are in the process of establishing an ATM program…confirming FFOAA/share guidance…increasing dispositions guidance to $130–$145 million.”
  • CIO: “We are seeing opportunities across all verticals…cap rates comfortably in the eights…well over half of our pipeline is acquisitions.”

Q&A Highlights

  • Pipeline composition and size: Majority acquisitions with comfort pursuing $100M+ transactions given improved equity valuation and cost of capital .
  • Disposition cadence: At/near low end of range already realized; opportunistic further theatre and education sales, but not much more planned in 2025 after midpoint ~$130M .
  • Financing roadmap: Anticipated bond issuance in 2H25 to reduce revolver; follow-on refinancing for 2026 maturities; ATM as optionality, no imminent equity issuance in plan .
  • Percentage rent mix: Roughly one-third theatre-derived at guidance midpoint; broader contributions from eat & play, ski, attractions, gaming, fitness & wellness .
  • Operating properties: Theatres improved QoQ; Cartwright remains pressured; consolidated “other income vs other expense” expected broadly break-even for the year .

Estimates Context

  • Revenue: modest beat versus S&P Global consensus ($178.07M vs $176.51M*) .
  • GAAP diluted EPS: material beat ($0.91 vs $0.70*) .
  • FFO/share: slight miss ($1.24 vs $1.26*) despite FFOAA/share +3.3% YoY .
    Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Box office momentum and a structurally improved Regal lease support higher percentage rent into 2H, a near-term catalyst for income growth .
  • Raised 2025 disposition guidance to $130–$145M, with successful theatre sales demonstrating asset liquidity and progress on theatre exposure reduction .
  • Investment pipeline broadened; improved cost of capital enables pursuit of larger ($100M+) experiential deals at cap rates “in the eights,” potentially accelerating external growth .
  • Balance sheet steady: net debt/gross assets at 39% and coverage ratios healthy (interest 3.9x; fixed charge 3.3x); bond transaction targeted in 2H25 to optimize revolver usage .
  • Operationally, consolidated properties should be viewed as neutral for FFO this year; focus remains on net-leased experiential assets with robust coverage .
  • Dividend maintained at $0.295/month (annualized $3.54), aligned with a ~71% AFFO payout, supporting income investor appeal .
  • Watch for execution on capital recycling, larger acquisitions, and percentage rent trajectory as key narrative drivers into Q3/Q4 .