EDGAR 10-K Filing

Company CIK: 1045450
Filing Year: 2025
Filename: 1045450_10-K_2025_0001045450-25-000051.json

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ITEM 1. BUSINESS
Item 1. Business
General
EPR Properties (“we,” “us,” “our,” “EPR” or the “Company”) was formed on August 22, 1997 as a self-administered Maryland real estate investment trust (“REIT”), and an initial public offering of our common shares of beneficial interest (“common shares”) was completed on November 18, 1997. Since that time, we have been a leading net lease investor in experiential real estate, venues that create value by facilitating out-of-home leisure and recreation experiences where consumers choose to spend their discretionary time and money. We focus our underwriting of experiential property investments on key industry and property cash flow criteria, as well as the credit metrics of our tenants and customers.
We believe that our position is further supported by the fact that our customers offer popular and affordable entertainment and social outlet options, particularly through our theatres, eat & play and cultural venues. Additionally, we believe we benefit from the regional destinations offered by our experiential lodging, ski, attractions and gaming properties, which are drive-to locations that do not require air travel.
The Company remains focused on future growth targeted in experiential property types. Experiential properties have proven to be an enduring sector of the real estate industry and we believe our strategy of diversified growth, industry relationships and the knowledge of our management team, provides us with a distinct competitive advantage. This strategy aligns with the long-term consumer trends of the growing experiential economy and offers the potential for higher growth, increased diversification and better yields. Our Education portfolio, consisting of early childhood education centers and private schools, continues as a legacy investment and provides additional geographic and property diversity. It is our intention to ultimately dispose of our Education portfolio over time and recycle the proceeds into other experiential investments.
Our theatre customers were more severely impacted by the COVID-19 pandemic and have seen a slower recovery than our non-theatre customers due primarily to changes in the timing of film releases, production delays and experimentation with streaming during this period. Further slowing their recovery, our theatre customers were negatively impacted by labor disputes which caused more production delays. Going forward, we intend to significantly reduce our investments in theatres, thereby increasing the diversity of our experiential property types. We expect this to occur as we limit new investments in theatres, grow other target experiential property types and pursue opportunistic dispositions of theatre properties.
The current environment for REITs is marked by both challenges and opportunities. Despite the recent economic uncertainty, REITs have demonstrated resilience. As a triple-net lease REIT, we are generally experiencing heightened risks and uncertainties associated with key macroeconomic factors, including, but not limited to, inflation and interest rate volatility. This environment has created negative pressure in the financial and capital markets resulting in a higher cost of capital. Although we intend to continue to make future investments, we expect to maintain our investment spending at moderate levels in the near-term due to an elevated cost of capital, and near-term investments will be funded primarily from cash on hand, excess cash flow, disposition proceeds and borrowing availability under our unsecured revolving credit facility, subject to maintaining our leverage levels consistent with past practice. As a result, we intend to continue to be more selective in making future investments and acquisitions until such time as economic conditions and our cost of capital improve.
As of December 31, 2024, our total assets were approximately $5.6 billion (after accumulated depreciation of approximately $1.6 billion) with properties located in 44 states, Ontario and Quebec, Canada. Our investments are generally structured as long-term triple-net leases that require tenants to pay substantially all expenses associated with the operation and maintenance of the property, or as long-term mortgages with economics similar to our triple-net lease structure.
Our total investments (a non-GAAP financial measure) were approximately $6.9 billion at December 31, 2024. See Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" for the reconciliation of "Total assets" in the consolidated balance sheet to total investments and the calculation of total investments at December 31, 2024 and 2023. We group our investments into two reportable segments: Experiential and Education. As of December 31, 2024, our Experiential investments comprised $6.4 billion, or 93%, and our Education investments comprised $0.5 billion, or 7%, of our total investments. A more detailed description of the property types included within these segments is provided below.
Although we are primarily a long-term investor, we may sell assets if we believe that it is in the best interest of our shareholders or pursuant to contractual rights of our tenants or our customers.
Experiential
As of December 31, 2024, our Experiential portfolio (excluding property under development, undeveloped land inventory and the three joint venture properties noted below) consisted of the following property types (owned or financed):
•157 theatre properties;
•58 eat & play properties (including seven theatres located in entertainment districts);
•24 attraction properties;
•11 ski properties;
•four experiential lodging properties;
•22 fitness & wellness properties;
•one gaming property; and
•one cultural property.
We have excluded three experiential lodging properties held in joint ventures from the property count above. One was transferred to our joint venture partner on February 4, 2025. As we have previously disclosed, the remaining two properties sustained significant hurricane damage and we continue to work in good faith with our joint venture partners, the non-recourse debt provider and the insurance companies to identify a path forward, which we expect to result in the eventual removal of the properties from our portfolio, although there can be no assurances as to the outcome of those discussions. Included in the property count are two experiential lodging properties held in unconsolidated joint ventures in which we continue to have interests.
As of December 31, 2024, our wholly-owned Experiential real estate portfolio consisted of approximately 18.8 million square feet, which includes 0.3 million square feet of vacant properties we intend to sell. Our wholly-owned Experiential portfolio, excluding the vacant properties we intend to sell, was 99% leased or operated and included $112.3 million in property under development and $20.2 million in undeveloped land inventory.
Theatres
A significant portion of our Experiential portfolio consists of modern megaplex theatres. During 2024, production delays created by the 2023 writers' and actors' strikes impacted the theatre industry. Total North American box office revenues for 2024 were down approximately 4% versus 2023. It is anticipated that the strikes will have little to no impact on the movie release schedule going forward. Separately, theatre food and beverage revenues per customer visit have notably increased as compared to 2019, contributing to improved theatre rent coverage levels, which were near pre-COVID levels for 2024 despite the decrease in box office revenue.
During the period in which COVID-19 pandemic-response restrictions were placed on theatre operations, certain studios chose to experiment with hybrid content release strategies in support of their direct-to-consumer streaming services. Results of such various release experiments demonstrated the significant economic and strategic importance of theatrical exhibition and studios have broadly returned to exclusive theatrical releases for a period of
approximately 45 days (versus the previous window of approximately 75 days), which is when most of a film's box office revenue is earned.
Two theatre customers remain on a cash-basis for revenue recognition purposes due to the ongoing uncertainty, including American Multi-Cinema, Inc. ("AMC"). We have experienced vacancies at certain theatre properties and have sold many of these properties. The remaining vacant properties are currently in the process of being sold or we are operating these theatres through third-party managers. We will evaluate the best strategy for any vacancies on a property-by-property basis.
The modern megaplex theatre provides a greatly enhanced audio and visual experience for patrons. Additionally, national and local exhibitors have made significant strides to further enhance the customer experience. These enhancements include reserved, luxury seating and expanded food and beverage offerings, such as the addition of alcohol and more efficient point of sale systems. The evolution of the theatre industry over the last 30 years, from the sloped floor theatre to the megaplex stadium theatre to the expanded amenity theatre, demonstrates that exhibitors and their landlords are willing to make investments in their theatres to take the customer experience to the next level.
Movie-going has been a dominant out-of-home entertainment option for decades, with over 1.2 billion tickets sold in North America during 2019 (prior to the pandemic) according to the Motion Picture Association (MPA) 2019 Theme Report. We believe that the evolution in theatres and enhanced customer experience will continue to bring customers back to enjoy film exhibition. While consumers have the option of watching streaming content at home, data has shown that theatre exhibition and streaming options have successfully coexisted. In fact, a survey published by EY (The Relationship Between Movie Theater Attendance and Streaming Behavior - February, 2020) illustrated that the most frequent moviegoers also spend the most time streaming. This is in part likely due to the fact that the majority of content streamed in-home is series-based content.
We intend to significantly reduce our investments in theatres in the future and further diversify our other experiential property types. We expect this to occur as we limit new investments in theatres, grow other target experiential property types and pursue opportunistic dispositions of theatre properties.
As of December 31, 2024, our owned theatre properties were leased to 17 different leading theatre operators. A significant portion of our total revenue was from AMC and Cineworld Group, plc, Regal Entertainment Group and our other Regal theatre tenants (collectively, “Regal”). For the year ended December 31, 2024, approximately $94.4 million, or 13.5%, and $76.4 million, or 10.9%, of the Company's total revenue was from AMC and Regal, respectively.
Eat & Play
The emergence of the "eatertainment" category has inspired an increasing number of successful concepts that appeal to consumers by providing high-quality food and entertainment options all at one location. Our eat & play portfolio includes golf entertainment complexes, entertainment districts and family entertainment centers.
Our golf entertainment complexes combine golf with entertainment, competition and food and beverage service, and are leased to, or we have mortgage receivables from, Topgolf USA ("Topgolf"). By combining interactive entertainment with high-quality food and beverage and a long-lived recreational activity, Topgolf provides an innovative, enjoyable and repeatable customer experience. We expect to continue to pursue select opportunities related to golf entertainment complexes. A significant portion of our total revenue was from Topgolf, which totaled approximately $100.8 million, or 14.4%, of the Company's total revenue for the year ended December 31, 2024.
Entertainment districts are restaurant, retail and other entertainment venues typically anchored by a megaplex theatre. The opportunity to capitalize on the traffic generated by our existing market-dominant theatres to create entertainment districts not only strengthens the execution of the megaplex theatre, but adds diversity to our tenant and asset base. This broad selection of entertainment options creates a convenient and engaging experience for consumers who want to park their cars only once, and experience different forms of entertainment. We have and will continue to evaluate our existing portfolio for additional development of entertainment, retail and restaurant density,
and we will also continue to evaluate the purchase or financing of existing entertainment districts that demonstrate strong financial performance and meet our quality standards. The leasing and property management requirements of our entertainment districts are generally met using third-party professional service providers.
Our family entertainment center operators offer a variety of entertainment options including bowling, bocce ball and karting. Andretti Indoor Karting and Games ("Andretti") represents an operator that delivers a unique combination of entertainment options, combining electric go karts with immersive gaming. We have grown our investments with Andretti as they have consistently created highly entertaining and successful offerings. We will continue to seek opportunities for the acquisition, financing or development of family entertainment centers that leverage our expertise in this area.
Attractions
Our attractions portfolio consists primarily of waterparks and amusement parks, each of which draw a diverse segment of customers. These properties offer themed experiences designed to appeal to all ages while remaining accessible in both cost and proximity.
Our attraction operators continue to deliver innovative and compelling attractions along with high standards of service, making our attractions a day of fun that is accessible for families, teens, locals and tourists. As the attractions industry continues to evolve, innovative technologies and concepts are redefining the attractions experience.
Our attraction properties are leased to, or we have mortgage notes receivable from, eight different operators. We expect to continue to pursue opportunities in this area.
Ski
Our ski portfolio provides a sustainable advantage for the experience-oriented consumer, providing outdoor entertainment in the winter and, in some cases, year-round. All the ski properties that serve as collateral for our mortgage notes in this area, as well as our three owned properties, offer snowmaking capabilities and provide a variety of terrains and vertical drop options. We believe that the primary appeal of our ski properties lies in the convenient and reliable experience consumers can expect. Given that all of our ski properties are located near major metropolitan areas, they offer skiing, snowboarding and other activities without the expense, travel, or lengthy preparations of remote ski resorts. Furthermore, advanced snowmaking capabilities increase the reliability of the experience during the winter versus other ski properties without such capabilities. These properties are leased to, or we have mortgage notes receivable from, three different operators. We expect to continue to pursue opportunities in this area.
Experiential Lodging
Experiential lodging meets the needs of consumers by providing a convenient, central location that combines high-quality lodging amenities with entertainment, recreation and leisure activities. The appeal of these properties attracts multiple generations at once. By offering more than the standard lodging destination, these properties provide an added incentive as consumers opt for distinctive, curated experiences. Our investments in experiential lodging are structured using triple-net leases and mortgage notes, and we currently operate two properties. We expect to continue to pursue opportunities for investments in experiential lodging.
Fitness & Wellness
The increased focus on holistic wellness has become a driving force within the fitness and wellness industry. From relaxing spas to intense spin classes, consumers are seeking an expanded set of offerings delivered across a variety of boutique fitness centers, larger fitness centers and resort spas. By allowing consumers to focus on their individual interests and goals in a community setting, operators gain loyalty and retention which are essential elements in the ongoing success of fitness and wellness facilities. Industry leaders remain at the forefront by offering personalization within congregate settings. Our tenants make it their goal to motivate, educate, and help consumers look and feel better.
We will continue to seek opportunities for the acquisition, financing or development of other Fitness & Wellness properties that leverage our expertise in this area.
Gaming
Our gaming portfolio is strategically focused on casino resorts and hotels leased to leading operators with a strong regulatory track record that seek to drive consumer loyalty and value through quality customer experiences, superior service, world-class affinity programs and continuous innovation on and off the gaming floor. Additionally, we target casino resorts and hotels that provide a wide array of experiential offerings outside of lodging and state-of-the-art gaming. Through live entertainment, various recreational opportunities, dining options and night clubs, the combination of amenities appeals to a broader demographic.
As of December 31, 2024, our investment in gaming consisted solely of land under ground lease related to the Resorts World Catskills casino and resort project in Sullivan County, New York. Our ground lease tenant has invested in excess of $930.0 million in the construction of the casino and resort project, and the casino first opened for business in February 2018. We will continue to pursue opportunities for investment in gaming under triple-net lease structures or mortgages.
Cultural
Our cultural investments seek to engage consumers and create memorable experiences and are evolving to offer immersive and interactive exhibits that encourage repeat visits. Combining an opportunity to experience animals, art or history with a congregate social experience, cultural venues, such as zoos, aquariums and museums, are reemerging as an entertainment option. As appreciation for the importance of leisure time is growing, cultural venues are broadening their appeal to reach a variety of customers.
Desiring to be a preeminent provider of location-based experiences, several trends have developed among cultural venues. Many are utilizing new technology, personalizing the guest experience and implementing an element of play that was previously absent. In making new investments in this property type, we will continue to identify the locations and tenants that execute well on these trends and have a history of strong attendance. City Museum in St. Louis is one of our properties and is a great example of an emerging category called “artainment,” which is an art display that invites guests to interact and explore.
We believe that demand for cultural activities will continue to build, and we expect to continue to pursue opportunities in this area.
Education
As of December 31, 2024, our Education segment consisted of the following property types (owned or financed):
•59 early childhood education center properties; and
•nine private school properties.
As of December 31, 2024, our wholly-owned Education real estate portfolio consisted of approximately 1.2 million square feet, which includes 13 thousand square feet for a vacant property we intend to sell. Our wholly-owned Education portfolio, excluding the vacant property we intend to sell, was 100% leased.
Our private schools provide an alternative to meet the significant demand for high-quality education in the United States. As educational choice remains a priority for parents, private schools provide yet another option for maximizing the educational experience.
Our investment in early childhood education centers recognizes the growing demand for quality early childhood education facilities that offer the best educational experience in a competitive market.
As discussed above, our growth going forward will be focused on experiential properties and therefore we do not expect to seek additional opportunities for education properties.
Business Objectives and Strategies
Our vision is to continue to build the premier diversified experiential REIT. We focus on real estate venues that create value by facilitating out of home leisure and recreation experiences where consumers choose to spend their discretionary time and money. These are properties that make up the social infrastructure of society.
Our long-term primary business objective is to enhance shareholder value by achieving predictable and increasing Funds From Operations As Adjusted ("FFOAA") and dividends per share (See Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures - Funds From Operations (FFO), Funds From Operations As Adjusted (FFOAA) and Adjusted Funds From Operations (AFFO)” for a discussion of FFOAA, which is a non-GAAP financial measure). Our growth strategy focuses on acquiring or developing experiential properties in which we maintain a depth of knowledge and relationships, and which we believe offer sustained performance throughout most economic cycles. We intend to achieve this objective by continuing to execute the Growth Strategies, Operating Strategies and Capitalization Strategies described below.
Growth Strategies
Our strategic growth is focused on acquiring or developing a high-quality, diversified portfolio of experiential real estate venues that create value by facilitating out of home leisure and recreation experiences where consumers choose to spend their discretionary time and money. We may also pursue opportunities to provide mortgage financing for these investments in certain situations where this structure is more advantageous than owning the underlying real estate.
Our focus on experiential properties is consistent with our strategic organizational design, which is structured around building a center of knowledge and strong operating competencies in the experiential real estate market. Retention and building of this knowledge depth creates a competitive advantage allowing us to more quickly identify key market trends.
To this end, we deliberately apply information and our ingenuity to identify properties that represent potential logical extensions within each of our existing experiential property types, or potential future additional experiential property types. As part of our strategic planning and portfolio management process, we assess new opportunities against the following underwriting principles:
Industry
•Experiential Alignment
•Proven Business Model
•Enduring Value
•Addressable Opportunity
Property
•Location Quality
•Competitive Position
•Location Rent Coverage
•Cash Flow Durability
Tenant
•Demonstrated Success
•Commitment
•Reputable Management
•Solid Credit Quality
We believe that our over 25 years of experience and knowledge in the experiential real estate market gives us the opportunity to be the dominant player in this area. Additionally, we have tenant and borrower relationships that provide us with access to investment opportunities.
Elevated interest rates, inflation and the challenging economic environment have increased our cost of capital, which has negatively impacted our ability to make investments in the near-term. Accordingly, we intend to be more selective in making investments and acquisitions until such time as economic conditions improve and our cost of capital returns to acceptable levels.
Operating Strategies
Lease Risk Minimization
To avoid initial lease-up risks and produce a predictable income stream, we typically acquire or develop single-tenant properties that are leased under long-term leases. We believe our willingness to make long-term investments in properties offers our tenants financial flexibility and allows tenants to allocate capital to their core businesses. Although we will continue to emphasize single-tenant properties, we have acquired or developed, and may continue to acquire or develop, multi-tenant properties we believe add shareholder value.
Lease Structure
We structure our leasing arrangements to achieve a positive spread between our cost of capital and the rents paid by our tenants. We typically structure leases on a triple-net basis under which the tenants bear the principal portion of the financial and operational responsibility for the properties. During each lease term and any renewal periods, the leases typically provide for periodic increases in rent and/or percentage rent based upon a percentage of the tenant’s gross sales over a predetermined level. In our multi-tenant property leases and some of our theatre leases, we generally require the tenant to pay a common area maintenance (“CAM”) charge to defray its pro rata share of insurance, taxes and maintenance costs.
Mortgage Structure
We structure our mortgages to achieve economics similar to our triple-net lease structure with a positive spread between our cost of capital and the interest paid by our tenants. During each mortgage term and any renewal periods, the notes typically provide for periodic increases in interest and/or participating features based upon a percentage of the tenant’s gross sales over a pre-determined level.
Traditional REIT Lodging Structure
In certain limited instances, we have utilized traditional REIT lodging structures, where we hold qualified lodging facilities under the REIT and we separately hold the operations of the facilities in taxable REIT subsidiaries ("TRSs"), which are facilitated by management agreements with eligible independent contractors.
Development and Redevelopment
We intend to continue developing properties and redeveloping existing properties that are consistent with our growth strategies. We generally do not begin development of a single-tenant property without a signed lease providing for rental payments that are commensurate with our level of capital investment. In the case of a multi-tenant development, we generally require a significant amount of the development to be pre-leased prior to construction to minimize lease-up risks. In addition, to minimize overhead costs and to provide the greatest amount of flexibility, we generally outsource construction management to third-party firms.
We believe our build-to-suit development program is a competitive advantage. First, we believe our strong relationships with our tenants and developers drive new investment opportunities that are often exclusive to us, rather than bid broadly, and with our deep knowledge of their businesses, we believe we are a value-added partner in the underwriting of each new investment. Second, we offer financing from start to finish for a build-to-suit project such that there is no need for a tenant to seek separate construction and permanent financing, which we believe makes us a more attractive partner. Third, we are actively developing strong relationships with tenants in the experiential sector, leading to multiple investments without strict investment portfolio allocations. Finally, multiple investments with the same tenant allows us in most cases to include cross-default provisions in our lease or financing contracts, meaning a default in an obligation to us at one location is a default under all obligations with that tenant.
We will also investigate opportunities to redevelop certain of our existing properties. We may redevelop properties in conjunction with a lease renewal or new tenant, or we may redevelop properties that have more earnings potential due to the redevelopment. Additionally, certain of our properties have excess land where we will proactively seek opportunities to further develop.
Tenant and Customer Relationships
We intend to continue developing and maintaining long-term working relationships with experiential operators and developers by providing capital for multiple properties on a regional, national and international basis, thereby creating efficiency and value for both the operators and the Company.
Portfolio Diversification
We will endeavor to further diversify our asset base by property type, geographic location and customer. In pursuing this diversification strategy, we will target experiential business operators that we view as leaders in their property types and have the ability to compete effectively and perform under their agreements with the Company.
Dispositions
We will consider discretionary property dispositions for reasons such as underperformance, vacancies, opportunistically taking advantage of an above-market offer, reducing exposure related to a certain tenant, property type or geographic area, or creating price awareness of a certain property type.
Capitalization Strategies
Debt and Equity Financing
We believe that our shareholders are best served by a conservative capital structure. Therefore, we seek to maintain a conservative debt level on our balance sheet as measured primarily by our net debt to adjusted EBITDAre, a non-GAAP measure (see Item 7 - “Management’s Discussion and Analysis of Financial Condition - Non-GAAP Financial Measures" for definitions and reconciliations). We also seek to maintain conservative interest, fixed charge, debt service coverage and net debt to gross asset ratios.
We rely primarily on an unsecured debt structure. In the future, while we may obtain secured debt from time to time or assume secured debt financing obligations in acquisitions, we intend to issue primarily unsecured debt securities to satisfy our debt financing needs. We believe this strategy increases our access to capital and permits us to more efficiently match available debt and equity financing to our ongoing capital requirements.
Our sources of equity financing consist of the issuance of common shares as well as the issuance of preferred shares (including convertible preferred shares). In addition to larger underwritten registered public offerings of both common and preferred shares, we have also offered shares pursuant to registered public offerings through the direct share purchase component of our Dividend Reinvestment and Direct Share Purchase Plan (“DSP Plan”). While such offerings are generally smaller than a typical underwritten public offering, issuing common shares under the direct share purchase component of our DSP Plan allows us to access capital on a more frequent basis in a cost-effective manner.
We expect to opportunistically access the equity markets in the future and, depending primarily on the size and timing of our equity capital needs, may continue to issue shares under the direct share purchase component of our DSP Plan. Furthermore, we may issue shares in connection with acquisitions in the future.
Joint Ventures
We will examine and may pursue potential additional joint venture opportunities with institutional investors or developers if the investments to which they relate meet our guiding principles discussed above. We may employ higher leverage in joint ventures and be more inclined to use secured financing at the property level.
Payment of Regular Dividends
We expect to continue paying dividend distributions to our common shareholders monthly (as opposed to quarterly). We expect to continue paying dividend distributions to our preferred shareholders quarterly. Our Series C
cumulative convertible preferred shares (“Series C preferred shares”) have a dividend rate of 5.75%, our Series E cumulative convertible preferred shares (“Series E preferred shares”) have a dividend rate of 9.00% and our Series G cumulative redeemable preferred shares ("Series G preferred shares") have a dividend rate of 5.75%. Among the factors the Company’s board of trustees (“Board of Trustees”) considers in setting the common share dividend rate are the applicable REIT tax rules and regulations that apply to dividends, the Company’s results of operations, including FFO and FFOAA per share, and the Company’s Cash Available for Distribution (defined as net cash flow available for distribution after payment of operating expenses, debt service, preferred dividends and other obligations).
Competition
We compete for real estate financing opportunities with other companies that invest in real estate, as well as traditional financial sources such as banks and insurance companies. REITs have financed, and may continue to seek to finance, experiential and other specialty properties as new properties are developed or become available for acquisition.
Human Capital
Our strategy is specializing in investments in select enduring experiential properties in the real estate industry, and our people are vital to our success in executing on this strategy. As a human-capital intensive business, the long-term success of our firm depends on our people. Our Senior Vice President, Human Resources and Administration reports directly to our Chief Executive Officer to develop and oversee our human capital management objectives, programs and initiatives. In addition, our Board of Trustees is actively involved in our human capital management in its oversight of our long-term strategy and through its Compensation and Human Capital Committee and engagement with management. Our management regularly reports to the Compensation and Human Capital Committee regarding management's human capital objectives, programs and initiatives.
Our key human capital objectives are to attract, retain and develop the highest quality talent to ensure that we have the right talent, in the right place, at the right time. To achieve these objectives, our human capital programs are designed to develop talent to prepare them for critical roles and leadership positions for the future; reward and support associates through competitive pay, benefits, and perquisite programs; enhance our culture through efforts aimed at making the workplace more engaging and inclusive; acquire talent and facilitate internal talent mobility to create a high-performing workforce; and evolve and invest in technology, tools, and resources to enable associates at work. As of December 31, 2024, we had 55 full-time associates.
Examples of key programs and initiatives that are focused to attract, develop and retain our workforce include:
•Associate Engagement. We use Gallup to measure associate engagement through a survey administered annually. By focusing on engagement, we gather valuable information needed to engage and retain the most talented associates.
•Development. We provide opportunities for our associates to learn and thrive as professionals, including educational reimbursement, mentorship, executive coaching and ongoing professional development. Annually, EPR hosts leadership development sessions for all levels of our organization.
•Culture. We strive to build a dedicated and engaged workforce by nurturing a culture that promotes innovation and teamwork. We work to ensure our culture is evolving and inclusive and believe in building teams with a mix of backgrounds and experiences that reflect the life experiences of our customers and the ultimate consumers of our customers’ services.
•Compensation and Benefits. Our benefits include competitive base pay, performance-based restricted stock awards and a 401(k) with a robust company match. We support our associates’ physical and mental health through paid parental leave, industry-leading health care benefits, unlimited sick leave, flexible paid time
off and associate assistance programs. In addition, we offer yearly wellness reimbursements, an on-site fitness center and fully stocked kitchens.
•Community & Social Impact. Giving back is one of our core values. We demonstrate this through our charitable giving program, EPR Impact, a key cornerstone of our social responsibility. Through a number of associates actively engaged in nonprofits and our commitment to donating to and sponsoring charitable causes and events, we are fortunate to partner with amazing organizations both locally and nationally. As a benefit to associates, EPR Impact’s annual budget includes a pool of funds to support associate-directed contributions to nonprofit organizations where an associate is personally involved. Additionally, EPR will match associate contributions annually up to a given amount for contributions from their personal funds to nonprofit organizations that meet the criteria of the program.
Regulation
To maintain our status as a REIT for federal income tax purposes, we must distribute to our shareholders at least 90% of our taxable income for a calendar year, as well as satisfy certain assets, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. In addition, we are subject to numerous federal, state and local laws and regulations applicable to owners of real property. For instance, under federal, state and local environmental laws, we may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under our properties, as well as certain other potential costs relating to hazardous or toxic substances (including government fines and penalties and damages for injuries to persons and adjacent property). These laws may impose liability without regard to whether we knew of, or were responsible for, the presence or disposal of those substances. In addition, most of our properties must comply with the Americans with Disabilities Act ("ADA"). The ADA requires that public accommodations reasonably accommodate individuals with disabilities and that new construction or alterations be made to commercial facilities to conform to accessibility guidelines. The ownership, operation, and management of our gaming facilities are also subject to pervasive regulation. These gaming regulations impact our gaming tenants and persons associated with our gaming facilities, which in many jurisdictions include us as the landlord and owner of the real estate.
Our properties are also subject to various other federal, state and local regulatory requirements. We do not know whether existing requirements will change or whether compliance with future requirements will involve significant unanticipated expenditures. Although these expenditures would be the responsibility of our tenants in most cases and for our managers to oversee at our properties, if these tenants or managers fail to perform these obligations, we may be required to do so. For additional information regarding regulations applicable to our business, and risks associated with our failure to comply with such regulations, see Item 1A - "Risk Factors" in this Annual Report on Form 10-K.
Principal Executive Offices
The Company’s principal executive offices are located at 909 Walnut Street, Suite 200, Kansas City, Missouri 64106; telephone (816) 472-1700.
Materials Available on Our Website
Our internet website address is www.eprkc.com. We make available, free of charge, through our website copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “Commission” or “SEC”). You may also view our Code of Business Conduct and Ethics, Company Governance Guidelines, Independence Standards for Trustees and the charters of our Audit, Nominating/Company Governance, Finance and Compensation and Human Capital Committees on our website. Copies of these documents are also available in print to any person who requests them. We do not intend for information contained in our website to be part of this Annual Report on Form 10-K.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
There are many risks and uncertainties that can affect our current or future business, operating results, financial condition or share price. The following discussion describes important factors that could adversely affect our current or future business, operating results, financial condition or share price. This discussion includes a number of forward-looking statements. See "Cautionary Statement Concerning Forward-Looking Statements."
Risks That May Impact Our Financial Condition or Performance
Global economic uncertainty, disruptions in the financial markets, inflation, and the challenging economic environment may impair our ability to refinance existing obligations or obtain new financing for acquisition or development of properties.
There continues to be a high level of global economic challenges and uncertainty, including uncertainty regarding interest rates, inflationary pressures, geopolitical conflicts and political changes in the U.S. and abroad, all of which have contributed to volatility in the global financial markets and contributed to negative performance of the real estate sector. REITs are generally experiencing heightened risks and uncertainties resulting from current challenging economic conditions, including significant volatility and negative pressure in financial and capital markets, higher cost of capital, lasting impacts of high inflation and other risks and uncertainties associated with the current economic environment. Our business has been more acutely affected by these risks.
We rely in part on debt financing to finance our investments and development. To the extent that turmoil in the financial markets continues or intensifies, it has the potential to adversely affect our ability to refinance our existing obligations as they mature or obtain new financing for acquisition or development of properties and adversely affect the value of our investments. If we are unable to refinance existing indebtedness on attractive terms at its maturity, we may be forced to dispose of some of our assets. Uncertain economic conditions and disruptions in the financial markets could also result in a substantial decrease in the value of our investments, which could also make it more difficult to refinance existing obligations or obtain new financing. In addition, these factors may make it more difficult for us to sell properties or may adversely affect the price we receive for properties that we do sell, as prospective buyers may experience increased costs of capital or difficulties in obtaining capital. These events in the credit markets may have an adverse effect on other financial markets in the U.S., which may make it more difficult or costly for us to raise capital through the issuance of our common shares or preferred shares. In addition, disruptions in global financial markets may have other adverse effects on us, our tenants, our borrowers or the economy in general.
Although we intend to continue making future investments, we expect that our levels of investment spending will be reduced in the near term due to elevated costs of capital, and near-term investments will be funded primarily from cash on hand, excess cash flow, disposition proceeds and borrowing availability under our unsecured revolving credit facility, subject to maintaining our leverage levels consistent with past practice. As a result, we intend to be more selective in making future investments and acquisitions until such time as economic conditions and our cost of capital improve.
The future outbreak of any highly infectious or contagious diseases, such as the COVID-19 pandemic, could materially and adversely impact or cause disruption to, our performance, financial condition, results of operations and cash flows.
We cannot predict the degree to which the effects of any future pandemic, epidemic or outbreak of any highly infectious disease may adversely affect our business, financial conditions and results of operations. The COVID-19 pandemic severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. In response to the COVID-19 pandemic, many jurisdictions within the United States and abroad instituted health and safety measures, including quarantines, mandated business and school closures and travel restrictions. As a result, the COVID-19 pandemic severely impacted experiential real estate properties given that such properties involve congregate social activity and discretionary consumer spending.
Inflation could adversely impact our customers and our results of operations.
Inflation, both real or anticipated as well as any resulting governmental policies, could adversely affect the economy and the costs of labor, goods and services to our tenants or borrowers. Our long-term leases and loans typically contain provisions such as rent escalators, percentage rent or participating interest, designed to mitigate the adverse impact of inflation. However, these provisions may have limited effectiveness at mitigating the risk of high levels of inflation due to contractual limits on escalation, which exist on substantially all of our escalation provisions and the uncertainty that percentage rent and participating interest provisions will capture the impact of such inflation through higher revenues realized at the applicable properties. Many of our leases are triple-net and typically require the tenant to pay all property operating expenses and, therefore, increases in property-level expenses at our leased properties generally do not directly affect us. However, increased operating costs resulting from inflation could have an adverse impact on our tenants and borrowers if increases in their operating expenses exceed increases in their revenue, which may adversely affect our tenants’ or borrowers' ability to pay rent or other obligations owed to us. An increase in our customers' expenses and a failure of their revenues to increase at least with inflation could adversely impact our customers' and our financial condition and our results of operations.
Additionally, a portion of our leases are not triple-net leases, which exposes us to the risk of potential common area maintenance expense slippage that occurs when the actual cost of taxes, insurance and maintenance at the property exceeds the reimbursements paid by tenants. To the extent any of these leases contain fixed expense reimbursement provisions or limitations, we may be subject to increases in costs resulting from inflation that are not fully passed through to tenants, which could adversely impact our financial condition and our results of our operations.
Some of our investments are managed through a third-party manager. When we manage properties through a third-party manager, we rely on the performance of our properties and the ability of the properties' managers to increase revenues to keep pace with inflation, which may be limited by competitive pressures. An increase in our expenses at these properties and a failure of our revenues to increase at least with inflation could adversely impact our financial condition and our results of operations.
Most of our customers, consisting primarily of tenants and borrowers, operate properties in market segments that depend upon discretionary spending by consumers. Any reduction in discretionary spending by consumers within the market segments in which our customers or potential customers operate could adversely affect such customers' operations and, in turn, reduce the demand for our properties or financing solutions.
Most of our portfolio is leased to or financed with customers operating service or retail businesses on our property locations. Many of these customers operate services or businesses that are dependent upon consumer experiences. The success of most of these businesses depends on the willingness or ability of consumers to use their discretionary income to purchase our customers' products or services. A downturn in the economy, or a trend to not want to go "out of home" could cause consumers in each of our property types to reduce their discretionary spending within the market segments in which our customers or potential customers operate, which could adversely affect such customers' operations and, in turn, reduce the demand for our properties or financing solutions.
Covenants in our debt instruments could adversely affect our financial condition and our acquisitions and development activities.
Our unsecured revolving credit facility, senior notes and other loans that we may obtain in the future contain certain cross-default provisions as well as customary restrictions, requirements and other limitations on our ability to incur indebtedness, including covenants involving our maximum total debt to total asset value; maximum permitted investments; minimum tangible net worth; maximum secured debt to total asset value; maximum unsecured debt to eligible unencumbered properties; minimum unsecured interest coverage; and minimum fixed charge coverage. Our ability to borrow under our unsecured revolving credit facility is also subject to compliance with certain other covenants. We also have senior notes issued in a private placement transaction that are subject to certain covenants. In addition, some of our properties, including those held in joint ventures, are subject to mortgages that contain customary covenants such as those that limit our ability, without the prior consent of the lender, to further mortgage the applicable property or to discontinue insurance coverage.
The current challenging and uncertain economic environment could negatively impact our future compliance with financial covenants of our credit facility and other debt agreements and result in a default and potentially an
acceleration of indebtedness. Under those circumstances, other sources of capital may not be available to us or be available only on unattractive terms. Additionally, our ability to satisfy current or prospective lenders' insurance requirements may be adversely affected if lenders generally insist upon greater insurance coverage than is available to us in the marketplace or on commercially reasonable terms.
We rely on debt financing, including borrowings under our unsecured revolving credit facility, issuances of debt securities and debt secured by individual properties, to finance our acquisition and development activities and for working capital. If we are unable to obtain financing from these or other sources, or to refinance existing indebtedness upon maturity, our financial condition and results of operations would likely be adversely affected. We are also currently experiencing elevated costs of capital, which negatively impacts our ability to make investments in the near term. The ultimate extent to which the current challenging economic environment impacts our ability to comply with existing financial covenants and obtain financing will depend on future developments, which, as discussed above, are highly uncertain and cannot be predicted with confidence.
Adverse changes in our credit ratings could impair our ability to obtain additional debt and equity financing on favorable terms, if at all, and negatively impact the market price of our securities, including our common shares.
The credit ratings of our senior unsecured debt and preferred equity securities are based on our operating performance, liquidity and leverage ratios, overall financial position and other factors employed by the credit rating agencies in their rating analysis of us. Our credit ratings can affect the amount and type of capital we can access, as well as the terms and costs of any financings we may obtain. There can be no assurance that we will be able to maintain our current credit ratings. In the event that our current credit ratings deteriorate, we would likely incur a higher cost of capital and it may be more difficult or expensive to obtain additional financing or refinance existing obligations and commitments. Also, downgrades in our credit ratings would trigger additional costs or other potentially negative consequences under our current and future credit facilities and future debt instruments.
Elevated interest rates and future increases will likely increase interest cost on new debt and could materially adversely impact our ability to refinance existing debt, sell assets and limit our investment activities.
Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies. The U.S. Federal Reserve raised the benchmark interest rate significantly since 2022. Although the benchmark interest rate was decreased in the second half of 2024, there can be no assurances that the rate will not increase in the future. Increases in interest rates could have an adverse impact on our business by increasing the cost of borrowing, affecting our interest costs and our ability to make new investments on favorable terms or at all. Rising interest rates, or the continuation of elevated rates into the future, could limit our ability to refinance existing debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness. In addition, higher interest rates could decrease the amount third parties are willing to pay for our assets, thereby limiting our ability to reposition our portfolio efficiently in response to changes in economic or other conditions.
We depend on leasing space to tenants on economically favorable terms and collecting rent from our tenants, who may not be able to pay.
At any time, a tenant may experience a downturn in its business that may weaken its financial condition. Similarly, a general decline in the economy may result in a decline in demand for space at our commercial properties. Our financial results depend significantly on leasing space at our properties to tenants on economically favorable terms. In addition, because a majority of our income comes from leasing real property, our income, funds available to pay indebtedness and funds available for distribution to our shareholders or share repurchases will decrease if a significant number of our tenants cannot pay their rent or if we are not able to maintain our levels of occupancy on favorable terms. If our tenants cannot pay their rent or we are not able to maintain our levels of occupancy on favorable terms, there is also a risk that the fair value of the underlying property will be considered less than its carrying value and we may have to take a charge against earnings. In addition, if a tenant does not pay its rent, we might not be able to enforce our rights as landlord without significant delays and substantial legal costs.
A tenant becoming bankrupt or insolvent could diminish or eliminate the income we expect from that tenant's leases. If a tenant becomes insolvent or bankrupt, we cannot be sure that we could promptly recover the premises from the tenant or from a trustee or debtor-in-possession in a bankruptcy proceeding relating to the tenant. On the other hand,
a bankruptcy court might authorize the tenant to terminate its leases with us. If that happens, our claim against the bankrupt tenant for unpaid future rent would be subject to statutory limitations that might be substantially less than the remaining rent owed under the leases. In addition, any claim we have for unpaid past rent would likely not be paid in full and we would take a charge against earnings for any accrued straight-line rent receivable related to the leases. We have experienced material customer bankruptcies in the past. Specifically, in 2022, Regal filed for protection under Chapter 11 of the U.S. Bankruptcy Code. At the time of its bankruptcy filing, Regal leased 57 theatres from us pursuant to two master leases and 28 single property leases. As a result of the resolution of this bankruptcy in 2023, we entered into a new master lease with Regal for 41 properties, took back 16 properties and agreed to hold a significant amount of deferred rent owed by Regal in abeyance with a remaining portion discharged in bankruptcy. There can be no assurances that our tenants will not become bankrupt or insolvent in the future.
We could be adversely affected by a borrower's bankruptcy or default.
If a borrower becomes bankrupt or insolvent or defaults under its loan, that could force us to declare a default and foreclose on any available collateral. As a result, future interest income recognition related to the applicable note receivable could be significantly reduced or eliminated. There is also a risk that the fair value of the collateral, if any, will be less than the carrying value of the note and accrued interest receivable at the time of a foreclosure and we may have to take a charge against earnings. If a property serves as collateral for a note, we may experience costs and delays in recovering the property in foreclosure or finding a substitute operator for the property. If a mortgage we hold is subordinated to senior financing secured by the property, our recovery would be limited to any amount remaining after satisfaction of all amounts due to the holder of the senior financing. In addition, to protect our subordinated investment, we may desire to refinance any senior financing. However, there is no assurance that such refinancing would be available or, if it were to be available, that the terms would be attractive. We may experience future defaults and bankruptcies, the breadth of which will depend upon the scope, severity and duration of the future events and circumstances heightening default and bankruptcy risks.
We may sell or divest different properties or assets after an evaluation of our portfolio of businesses. Such sales or divestitures could affect our costs, revenues, results of operations, financial condition and liquidity.
From time to time, we may evaluate our properties and may, as a result, sell or attempt to sell, divest, or spin-off different properties or assets, subject, if applicable, to the terms of lease agreements. Future sales or divestitures could affect our costs, revenues, results of operations, financial condition, liquidity and our ability to comply with applicable financial covenants. Divestitures have inherent risks, including possible delays in closing transactions, potential difficulties in obtaining regulatory approvals, receiving lower-than-expected sales proceeds for the divested assets, and potential post-closing claims for indemnification. In addition, economic conditions, such as high inflation or rising interest rates, and relatively illiquid real estate markets may result in fewer potential bidders and unsuccessful sales efforts with respect to potential sales or divestitures.
We are exposed to the credit risk of our customers and counterparties and their failure to meet their financial obligations could adversely affect our business.
Our business is subject to credit risk. There is a risk that a customer or counterparty will fail to meet its obligations when due. Customers and counterparties that owe us money may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons. Although we have procedures for reviewing credit exposures to specific customers and counterparties to address present credit concerns, default risk may arise from events or circumstances that are difficult to detect or foresee. Some of our risk management methods depend upon the evaluation of information regarding markets, clients or other matters that are publicly available or otherwise accessible by us. That information may not, in all cases, be accurate, complete, up-to-date or properly evaluated. In addition, concerns about, or a default by, one customer or counterparty could lead to significant liquidity problems, losses or defaults by other customers or counterparties, which in turn could adversely affect us. We may experience future rent deferral requests or defaults, the breadth of which will depend upon the scope, severity and duration of the future events and circumstances heightening credit risks. We may be materially and adversely affected in the event of a significant default by our customers and counterparties.
From time to time, the base terms of some of our leases will expire and there is no assurance that such leases will be renewed at existing lease terms, at otherwise economically favorable terms or at all.
From time to time, the base terms of some of our leases with our tenants will expire. These tenants have and may continue to seek rent or other concessions from us, including requiring us to modify the properties in order to renew their leases. There is no guarantee that we will be able to renew these leases at existing lease terms, at otherwise economically favorable terms or at all. In addition, if we fail to renew these leases, there can be no assurances that we will be able to locate substitute tenants for such properties or enter into leases with these substitute tenants on economically favorable terms.
Operating risks in the experiential real estate industry may affect the ability of our customers to perform under their leases or mortgages.
The ability of our customers to operate successfully in the experiential real estate industry and remain current on their obligations depends on a number of factors, including, with respect to theatres, the availability and popularity of motion pictures, the performance of those pictures in tenants' markets, the allocation of popular pictures to tenants, the release window (the time that elapses from the date of a motion picture's theatrical release to the date it is available on other mediums) and the terms on which the motion pictures are licensed. In addition, motion picture production is highly dependent on labor that is subject to various collective bargaining agreements. The Writers Guild of America strike of 2023 halted motion picture production and may delay or otherwise affect the supply of certain motion pictures. The Screen Actors Guild strike of 2023 also had a similar effect on the production and supply of motion pictures. Studios are party to collective bargaining agreements with a number of other labor unions, and failure to reach timely agreements or renewals of existing agreements or future strikes or labor disruptions may further affect the production, supply and theatrical release of motion pictures. Neither we nor our customers control the operations of studios or motion picture distributors. There can be no assurances that motion picture distributors will continue to rely on theatres as the primary means of distributing first-run films and motion picture distributors have, and may in the future, consider alternative film delivery methods. In addition, in August 2020, a U.S. District Court granted the U.S. Department of Justice's request to terminate the Paramount Consent Decrees, which prohibit movie studios from owning theatres or utilizing "block booking," a practice whereby movie studios sell multiple films as a package to theatres, in addition to other restrictions. There can be no assurances as to the effects of this regulatory action or whether this regulatory action will materially adversely affect our theatre customers' operations and, in turn, their ability to perform under their leases.
Our other experiential customers are exposed to the risk of adverse economic conditions that can affect experiential activities. Eat & play, ski, attraction, experiential lodging, gaming, fitness & wellness and cultural properties are discretionary activities that can entail a relatively high cost of participation and may be adversely affected by an economic slowdown or recession. Economic conditions, including elevated interest rates and inflation, high unemployment and erosion of consumer confidence, may potentially have negative effects on our customers and on their results of operations. We cannot predict what impact these uncertainties may have on overall guest visitation, guest spending or other related trends and the ultimate impact it will have on our customers’ operations and, in turn, their ability to perform under their respective leases or mortgages.
Real estate is a competitive business.
We operate in the highly competitive real estate industry. We compete with a large number of real estate property investors and developers including traded and non-traded public REITS, private equity investors, sovereign funds, institutional investment funds and other investors, some of whom are significantly larger and have greater resources, access to capital and lower costs of capital or different investment parameters. Some of these investors may be willing to accept lower returns on their investments or have greater financial resources or a lower cost of capital than we do, a greater ability to borrow funds to acquire properties and the ability to accept more risk than we prudently manage. This competition may increase the demand for the types of properties in which we typically invest and, therefore, reduce the number of suitable acquisition opportunities available to us and increase the prices paid for such acquisition properties. This competition will increase if investments in real estate become more attractive relative to other types of investment. Accordingly, competition for the acquisition of real property could materially and adversely affect us.
Principal factors of competition are rent or interest charged, attractiveness of location, the quality of the property and breadth and quality of services provided. If our competitors offer space at rental or interest rates below the rates we are currently charging our customers, we may lose potential customers, and we may be pressured to reduce our rental or interest rates below those we currently charge in order to retain customers when our customers’ leases or mortgages expire. Our success depends upon, among other factors, trends of the national and local economies, financial condition and operating results of current and prospective customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation and population trends.
Three customers represent a significant portion of our total revenues.
Topgolf, AMC and Regal represent a significant portion of our total revenue. For the year ended December 31, 2024, total revenues of approximately $100.8 million or 14.4% were from Topgolf, approximately $94.4 million or 13.5% were from AMC and approximately $76.4 million or 10.9% were from Regal. We have diversified and expect to continue to diversify our real estate portfolio by entering into lease transactions or financing arrangements with a number of other tenants or borrowers. If for any reason AMC, Topgolf and/or Regal failed to perform under their lease or mortgage obligations for a significant period of time, or under any modified lease or mortgage obligations, we could be required to reduce or suspend our shareholder dividends or share repurchases and may not have sufficient funds to support operations or service our debt until substitute customers are obtained. If that happened, we cannot predict when or whether we could obtain substitute quality customers on acceptable terms.
Properties we develop may not achieve sufficient operating results within expected timeframes and therefore the tenant or borrowers may not be able to pay their agreed upon rent or interest, and managed properties may not be able to operate profitably, which could adversely affect our financial results.
A portion of our investments include build-to-suit projects. When construction is completed, these projects may require some period of time to achieve targeted operating results. For properties leased or financed, we may provide our tenants or borrowers with lease or financing terms that are more favorable to them during this timeframe. Tenants and borrowers that fail to achieve targeted operating results within expected timeframes may be unable to pay their obligations pursuant to the agreed upon lease or financing terms or at all. If we are required to restructure lease or financing terms or take other action with respect to the applicable property, our financial results may be impacted by lower revenues, recording an impairment or provision for loan loss or writing off rental or interest amounts. Additionally, if we have entered into a management agreement to operate a property we have developed, the project may not be able to achieve targeted operating results, which may impact our financial results by lowering income or recording an impairment loss.
We have entered into management agreements to operate certain of our properties and we could be adversely affected if such managers do not manage these properties successfully.
To maintain our status as a REIT, we are generally not permitted to directly operate our properties. As a result, from time to time, we enter into management agreements with third-party managers to operate certain properties. This practice has been most frequent with our experiential lodging properties. However, we also manage a limited number of theatres formerly operated by our tenants and may manage a greater number in the future if customer defaults or bankruptcies result in our taking back properties. For managed properties, our ability to direct and control how our properties are operated is less than if we were able to manage these properties directly. Under the terms of our management agreements, our participation in operating decisions relating to these properties is generally limited to certain matters. We do not supervise any of these managers or their personnel on a day-to-day basis. We cannot provide any assurances that the managers will manage our properties in a manner that is consistent with their respective obligations under the applicable management agreement or our obligations under any franchise agreements. We could be materially and adversely affected if any of our managers fail to effectively manage revenues and expenses, provide quality services and amenities, or otherwise fail to manage our properties in our best interests, and we may be financially responsible for the actions and inactions of the managers. In certain situations, we may terminate the management agreement. However, we can provide no assurances that we could identify a replacement manager, or that the replacement manager will manage our property successfully. A failure by our third-party managers to successfully manage our properties could lead to an increase in our operating expenses or decrease in our revenue, or both.
Our indebtedness may affect our ability to operate our business and may have a material adverse effect on our financial condition and results of operations.
We have a significant amount of indebtedness. As of December 31, 2024, we had total debt outstanding of approximately $2.9 billion. Our indebtedness could have important consequences, such as:
•limiting our ability to obtain additional financing to fund our working capital needs, acquisitions, capital expenditures or other debt service requirements or for other purposes;
•limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service debt;
•limiting our ability to compete with other companies who are not as highly leveraged, as we may be less capable of responding to adverse economic and industry conditions;
•restricting us from making strategic acquisitions, developing properties or pursuing business opportunities;
•restricting the way in which we conduct our business because of financial and operating covenants in the agreements governing our existing and future indebtedness;
•exposing us to potential events of default (if not cured or waived) under financial and operating covenants contained in our debt instruments that could have a material adverse effect on our business, financial condition and operating results;
•increasing our vulnerability to a downturn in general economic conditions or in pricing of our investments;
•negatively impacting our credit ratings; and
•limiting our ability to react to changing market conditions in our industry and in our customers’ industries.
In addition to our debt service obligations, our operations require substantial investments on a continuing basis. Our ability to make scheduled debt payments, to refinance our obligations with respect to our indebtedness and to fund capital and non-capital expenditures necessary to meet our remaining commitments on existing projects and maintain the condition of our assets, as well as to provide capacity for the growth of our business, depends on our financial and operating performance, which, in turn, is subject to prevailing economic conditions and financial, business, competitive, legal and other factors.
Subject to the restrictions in our unsecured revolving credit facility and the debt instruments governing our existing senior notes, we may incur significant additional indebtedness, including additional secured indebtedness. Although the terms of our unsecured revolving credit facility and the debt instruments governing our existing senior notes contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and additional indebtedness incurred in compliance with these restrictions could be significant. If new debt is added to our current debt levels, the risks described above could increase.
There are risks inherent in having indebtedness and using such indebtedness to fund acquisitions.
We currently use debt to fund portions of our operations and acquisitions. In a rising interest rate environment, the cost of our existing variable rate debt and any new debt will likely increase. We have used leverage to acquire properties and expect to continue to do so in the future. Although the use of leverage is common in the real estate industry, our use of debt exposes us to some risks. If a significant number of our customers fail to make their lease or interest payments for a significant period of time, the risk of which has been heightened as a result of the generally challenging and uncertain economic environment, and we do not have sufficient cash to pay principal and interest on the debt, we could default on our debt obligations. A small amount of our debt financing is secured by mortgages on our properties and we may enter into additional secured mortgage financing in the future. If we fail to meet our mortgage payments, the lenders could declare a default and foreclose on those properties. We expect that our levels of investment spending will be limited in the near term due to elevated costs of capital.
Most of our debt instruments contain balloon payments, which may adversely impact our financial performance and our ability to pay dividends.
Most of our financing arrangements require us to make a lump-sum or "balloon" payment at maturity. There can be no assurance that we will be able to refinance such debt on favorable terms or at all, especially in light of higher interest rates and other negative economic conditions. To the extent we cannot refinance such debt on favorable terms or at all, we may be forced to dispose of properties on disadvantageous terms or pay higher interest rates,
either of which would have an adverse impact on our financial performance and ability to pay dividends to our shareholders.
Without new financing, our growth is limited.
As a REIT, we are required to distribute at least 90% of our taxable net income to shareholders in the form of dividends. Other than deciding to make these dividends in our common shares, we are limited in our ability to use internal capital to acquire properties and must continually raise new capital in order to continue to grow and diversify our investment portfolio. Our ability to raise new capital depends in part on factors beyond our control, including conditions in equity and credit markets, conditions in the industries in which our customers are engaged and the performance of real estate investment trusts generally, all of which have been negatively impacted by generally challenging and uncertain economic conditions. We continually consider and evaluate a variety of potential transactions to raise additional capital, but we cannot assure that attractive alternatives will always be available to us, nor that our share price will increase or remain at a level that will permit us to continue to raise equity capital publicly or privately.
Our real estate investments are concentrated in experiential real estate properties and a significant portion of those investments are in megaplex theatre properties, making us more vulnerable economically than if our investments were more diversified.
We acquire, develop or finance experiential real estate properties. Although we are subject to the general risks inherent in concentrating investments in real estate, the risks resulting from a lack of diversification become even greater as a result of investing primarily in experiential real estate properties. These risks are further heightened by the fact that a significant portion of our investments are in megaplex theatre properties. Although a downturn in the real estate industry could significantly adversely affect the value of our properties, a downturn in the experiential real estate industry could compound this adverse effect. These adverse effects could be more pronounced than if we diversified our investments to a greater degree outside of experiential real estate properties or, more particularly, outside of megaplex theatre properties. Megaplex theatre properties depend on regular production and availability of motion pictures, which were severely disrupted during the COVID-19 pandemic and by the Writers Guild of America and Screen Actors Guild strikes in 2023. As a result, we are subject to more risk associated with megaplex theatres than if we had more diversified investments.
If we fail to qualify as a REIT, we would be taxed as a corporation, which would substantially reduce funds available for payment of dividends to our shareholders.
If we fail to qualify as a REIT for U.S. federal income tax purposes, we will be taxed as a corporation. We are organized and believe we qualify as a REIT, and intend to operate in a manner that will allow us to continue to qualify as a REIT. Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), on which there are only limited judicial and administrative interpretations, and depends on facts and circumstances not entirely within our control, including requirements relating to the sources of our gross income. Accordingly, we cannot provide any assurance that we have always qualified and will remain qualified as a REIT in the future. Even a technical or inadvertent violation could jeopardize our REIT qualification. Rents received or accrued by us from our tenants may not be treated as qualifying income for purposes of these requirements if the leases are not respected as true leases or qualified financing arrangements for U.S. federal income tax purposes and instead are treated as service contracts, joint ventures or some other type of arrangement. If some or all of our leases are not respected as true leases or qualified financing arrangements for U.S. federal income tax purposes and are not otherwise treated as generating qualifying REIT income, we may fail to qualify to be taxed as a REIT. Furthermore, our qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. Our ability to satisfy the asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we may not obtain independent appraisals. In addition, future legislation, new regulations, administrative interpretations or court decisions may significantly change the tax laws, the application of the tax laws to our qualification as a REIT or the U.S. federal income tax consequences of that qualification.
If we were to fail to qualify as a REIT in any taxable year (including any prior taxable year for which the statute of limitations remains open), we would face tax consequences that could substantially reduce the funds available for the service of our debt and payment of dividends:
•we would not be allowed a deduction for dividends paid to shareholders in computing our taxable income and would be subject to federal income tax at regular corporate rates;
•we could be subject to increased state and local taxes;
•unless we are entitled to relief under statutory provisions, we could not elect to be treated as a REIT for four taxable years following the year in which we were disqualified; and
•we could be subject to tax penalties and interest.
In addition, if we fail to qualify as a REIT, we would no longer be required to pay dividends. As a result of these factors, our failure to qualify as a REIT could adversely affect the market price for our shares.
Even if we remain qualified for taxation as a REIT under the Internal Revenue Code, we may face other tax liabilities that reduce our funds available for payment of dividends to our shareholders or the repurchase of shares.
Even if we remain qualified for taxation as a REIT under the Internal Revenue Code, we may be subject to federal, state and local taxes on our income and assets, including taxes on any undistributed income, excise taxes, state or local income, property and transfer taxes, and other taxes. Also, some jurisdictions may in the future limit or eliminate favorable income tax deductions, including the dividends paid deduction, which could increase our income tax expense. In addition, in order to meet the requirements for qualification and taxation as a REIT under the Internal Revenue Code, prevent the recognition of particular types of non-cash income, or avert the imposition of a 100% tax that applies to specified gains derived by a REIT from dealer property or inventory, we may hold or dispose of some of our assets and conduct some of our operations through our taxable REIT subsidiaries ("TRSs") or other subsidiary corporations that will be subject to corporate level income tax at regular rates. In addition, while we intend that our transactions with our TRSs will be conducted on arm's length bases, we may be subject to a 100% excise tax on a transaction that the Internal Revenue Service ("IRS") or a court determines was not conducted at arm's length. Any of these taxes would decrease cash available for distribution to our shareholders or the repurchase of shares under our share repurchase program.
Distribution requirements imposed by law limit our flexibility.
To maintain our status as a REIT for federal income tax purposes, we are generally required to distribute to our shareholders at least 90% of our taxable income for that calendar year. Our taxable income is determined without regard to any deduction for dividends paid and by excluding net capital gains. To the extent that we satisfy the distribution requirement but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any year are less than the sum of (i) 85% of our ordinary income for that year, (ii) 95% of our capital gain net income for that year and (iii) 100% of our undistributed taxable income from prior years. We intend to continue to make distributions to our shareholders to comply with the distribution requirements of the Internal Revenue Code and to reduce exposure to federal income and nondeductible excise taxes. Differences in timing between the receipt of income and the payment of expenses in determining our taxable income and the effect of required debt amortization payments could require us to borrow funds on a short-term basis in order to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying as a REIT.
If arrangements involving our TRSs fail to comply as intended with the REIT qualification and taxation rules, we may fail to qualify for taxation as a REIT under the Internal Revenue Code or be subject to significant penalty taxes.
We lease some of our experiential lodging properties to our TRSs pursuant to arrangements that, under the Internal Revenue Code, are intended to qualify the rents we receive from our TRSs as income that satisfies the REIT gross income tests. We also intend that our transactions with our TRSs be conducted on an arm's length basis so that we and our TRSs will not be subject to penalty taxes under the Internal Revenue Code applicable to mispriced transactions. While relief provisions can sometimes excuse REIT gross income test failures, significant penalty taxes may still be imposed.
For our TRS arrangements to comply as intended with the REIT qualification and taxation rules under the Internal Revenue Code, a number of requirements must be satisfied, including:
•our TRSs may not directly or indirectly operate or manage a lodging facility, other than through an eligible independent contractor, as defined by the Internal Revenue Code;
•the leases to our TRSs must be respected as true leases for federal income tax purposes and not as service contracts, partnerships, joint ventures, financings or other types of arrangements;
•the leased properties must constitute qualified lodging facilities (including customary amenities and facilities) under the Internal Revenue Code;
•our leased properties must be managed and operated on behalf of the TRSs by independent contractors who are less than 35% affiliated with us and who are actively engaged (or have affiliates so engaged) in the trade or business of managing and operating qualified lodging facilities for persons unrelated to us; and
•the rental and other terms of the leases must be arm's length.
We cannot be sure that the IRS or a court will agree with our assessment that our TRS arrangements comply as intended with REIT qualification and taxation rules. If arrangements involving our TRSs fail to comply as we intended, we may fail to qualify for taxation as a REIT under the Internal Revenue Code or be subject to significant penalty taxes.
We may depend on distributions from our direct and indirect subsidiaries to service our debt, pay dividends to our shareholders and repurchase shares. The creditors of these subsidiaries, and our direct creditors, are entitled to amounts payable to them before we pay any dividends to our shareholders or repurchase shares.
Substantially all of our assets are held through our subsidiaries. We depend on these subsidiaries for substantially all of our cash flow from operations. The creditors of each of our direct and indirect subsidiaries are entitled to payment of that subsidiary's obligations to them, when due and payable, before distributions may be made by that subsidiary to us. In addition, our creditors, whether secured or unsecured, are entitled to amounts payable to them before we may pay any dividends to our shareholders or repurchase shares under our share repurchase program. Thus, our ability to service our debt obligations, pay dividends to holders of our common and preferred shares and repurchase shares depends on our subsidiaries' ability first to satisfy their obligations to their creditors and then to pay distributions to us and our ability to satisfy our obligations to our direct creditors. Our subsidiaries are separate and distinct legal entities and have no obligations, other than limited guaranties of certain of our debt, to make funds available to us.
Our development financing arrangements expose us to funding and completion risks.
Our ability to meet our construction financing obligations that we have undertaken or may in the future enter into depends on our ability to obtain equity or debt financing in the required amounts. There is no assurance we can obtain this financing or that the financing rates available will ensure a spread between our cost of capital and the rent or interest payable to us under the related leases or mortgage notes receivable. As a result, we could fail to meet our construction financing obligations or decide to cease such funding, which, in turn, could result in failed projects and penalties, each of which could have a material adverse impact on our results of operations and business.
We have a limited number of associates and loss of personnel could harm our operations and adversely affect the value of our shares.
We had 55 full-time associates as of December 31, 2024 and, therefore, the impact we may feel from the loss of an associate may be greater than the impact such a loss would have on a larger organization. We are particularly dependent on the efforts of our senior leadership team. While we believe that we could find replacements for our personnel, the loss of their services could harm our operations and adversely affect the value of our shares.
We are subject to risks associated with the employment of personnel by managers of certain of our properties.
Managers of certain of our properties are responsible for hiring and maintaining the labor force at each of these properties. Although we do not directly employ or manage associates at these properties, we are subject to many of the costs and risks associated with such labor force, including but not limited to risks associated with that certain union contract binding the manager of our Kartrite Resort and Indoor Waterpark and overall labor shortages. From time to time, the operations of our properties that are managed by third parties may be disrupted as a result of strikes, lockouts, public demonstrations or other negative actions and publicity. We may also incur increased legal costs and indirect labor costs as a result of contract disputes and other events. The resolution of labor disputes or renegotiated labor contracts could lead to increased labor costs, either by increases in wages or benefits or by changes in work rules.
We may in the future have greater dependence upon the gaming industry and may be susceptible to the risks associated with it, which could materially and adversely affect our business, financial condition, liquidity, results of operations and prospects.
As a landlord of gaming facilities or secured creditor to gaming operators, we may be impacted by the risks associated with the gaming industry. Therefore, so long as we make investments in gaming-related assets, our success is dependent on the gaming industry, which could be adversely affected by economic conditions in general, changes in consumer trends and preferences and other factors over which we and our tenants have no control, such as public health crises, labor shortages, travel restrictions, supply chain disruptions and generally challenging and uncertain economic conditions. A component of the rent under our gaming facility lease agreements may be based, over time, on the performance of the gaming facilities operated by our tenants on our properties and any decline in the operating results of our gaming tenants could be material and adverse to our business, financial condition, liquidity, results of operations and prospects.
The gaming industry is characterized by a high degree of competition among a large number of participants, including riverboat casinos, dockside casinos, land-based casinos, video lottery, sweepstakes and poker machines not located in casinos, Native American gaming, internet lotteries and other internet wagering gaming services and, in a broader sense, gaming operators face competition from all manner of leisure and entertainment activities. Competition in the gaming industry is intense in most of the markets where our facilities are located. Recently, there has been additional significant competition in the gaming industry as a result of the upgrading or expansion of facilities by existing market participants, the entrance of new gaming participants into a market, internet gaming and legislative changes. As competing properties and new markets are opened, we may be negatively impacted. Additionally, decreases in discretionary consumer spending brought about by weakened general economic conditions such as, but not limited to, higher interest rates, high inflation, lackluster recoveries from recessions, high unemployment levels, higher income taxes, low levels of consumer confidence, weakness in the housing market, cultural and demographic changes and increased stock market volatility may negatively impact our revenues and operating cash flows.
We and our tenants face extensive regulation from gaming and other regulatory authorities with respect to our gaming properties.
The ownership, operation, and management of gaming facilities are subject to pervasive regulation. These gaming regulations impact our gaming tenants and persons associated with our gaming facilities, which in many jurisdictions include us as the landlord and owner of the real estate. Certain gaming authorities in the jurisdictions in which we hold properties may require us and/or our affiliates to maintain a license as a key business entity or supplier because of our status as landlord. Gaming authorities also retain great discretion to require us to be found suitable as a landlord, and certain of our shareholders, officers and trustees may be required to be found suitable as well.
In many jurisdictions, gaming laws can require certain of our shareholders to file an application, be investigated, and qualify or have their suitability determined by gaming authorities. Gaming authorities have very broad discretion in determining whether an applicant should be deemed suitable. Subject to certain administrative proceeding requirements, the gaming regulators have the authority to deny any application or limit, condition, restrict, revoke or suspend any license, registration, finding of suitability or approval, or fine any person licensed, registered or found suitable or approved, for any cause deemed reasonable by the gaming authorities.
Gaming authorities may conduct investigations into the conduct or associations of our trustees, officers, key associates or investors to ensure compliance with applicable standards. If we are required to be found suitable and are found suitable as a landlord, we will be registered as a public company with the gaming authorities and will be subject to disciplinary action if, after we receive notice that a person is unsuitable to be a shareholder or to have any other relationship with us, we:
•pay that person any distribution or interest upon any of our voting securities;
•allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person;
•pay remuneration in any form to that person for services rendered or otherwise; or
•fail to pursue all lawful efforts to require such unsuitable person to relinquish his or her voting securities, including, if necessary, the immediate purchase of the voting securities for cash at fair market value.
Many jurisdictions also require any person who acquires beneficial ownership of more than a certain percentage of voting securities of a gaming company and, in some jurisdictions, non-voting securities, typically 5% of a publicly-traded company, to report the acquisition to gaming authorities, and gaming authorities may require such holders to apply for qualification, licensure or a finding of suitability, subject to limited exceptions for "institutional investors" that hold a company's voting securities for passive investment purposes only.
Required regulatory approvals can delay or prohibit transfers of our gaming properties, which could result in periods in which we are unable to receive rent for such properties.
The tenant of our gaming property is (and any future tenants of our gaming properties will be) a gaming operator required to be licensed under applicable law. If our gaming facility lease agreement, or any such future lease agreements we enter into, are terminated (which could be required by a regulatory agency) or expire, any new tenant must be licensed and receive other regulatory approvals to operate our properties as gaming facilities. Any delay in, or inability of, the new tenant to receive required licenses and other regulatory approvals from the applicable state and county government agencies to operate the properties as gaming facilities may prolong the period during which we are unable to collect the applicable rent. Further, in the event that our gaming facility lease agreement or future lease agreements are terminated or expire and a new tenant is not licensed or fails to receive other regulatory approvals, the properties may not be operated as gaming facilities and we will not be able to collect the applicable rent. Moreover, we may be unable to transfer or sell the affected properties as gaming facilities, which could materially and adversely affect our business, financial condition, liquidity, results of operations and prospects.
We face risks associated with security breaches through cyber-attacks, cyber-intrusions or otherwise, as well as other significant disruptions of our information technology networks and related systems.
We face risks associated with security breaches, whether through cyber-attacks or cyber-intrusions over the internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our information technology ("IT") networks and related systems. The risk of a security breach or disruption, particularly through cyber-attack or cyber-intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. These risks are further heightened by factors such as developments in artificial intelligence, increased remote working and geopolitical turmoil. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations, including the increase in remote access and operations due to reshaping traditional working dynamics. Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. A security breach or other significant disruption involving our IT networks and related systems could disrupt the proper functioning of our networks and systems; result in misstated financial reports, violations of loan covenants and/or missed reporting deadlines; result in our inability to monitor our compliance with the rules and regulations regarding our qualification as a REIT; result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary,
confidential, sensitive or otherwise valuable information of ours or others, which could be used to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; require significant management attention and resources to remedy any damages that result; subject us to claims for breach of contract, damages, credits, penalties or termination of certain agreements; or damage our reputation among our tenants and investors generally. Any or all of the foregoing could have a material adverse effect on our financial condition, results of operations, cash flow and ability to make distributions with respect to, and the market price of, our common stock. We may also incur losses in connection with security breaches that exceed coverage limits under our cyber insurance policies. Our service providers, tenants, managers of our properties and other customers and their business partners are exposed to similar risks and the occurrence of a security breach or other disruption with respect to their information technology and infrastructure could, in turn, have a material adverse impact on our results of operations and business.
Changes in accounting standards issued by the Financial Accounting Standards Board ("FASB") or other standard-setting bodies may adversely affect our business.
Our financial statements are subject to the application of U.S. GAAP, which is periodically revised and/or expanded. From time to time, we are required to adopt new or revised accounting standards issued by recognized authoritative bodies, including the FASB and the SEC. It is possible that accounting standards we are required to adopt may require changes to the current accounting treatment that we apply to our consolidated financial statements and may require us to make significant changes to our systems. Changes in accounting standards could result in a material adverse impact on our business, financial condition and results of operations.
Risks That Apply to Our Real Estate Business
Real estate income and the value of real estate investments fluctuate due to various factors.
The value of real estate fluctuates depending on conditions in the general economy and the real estate business. These conditions may also limit our revenues and available cash. Valuations and appraisals of our assets are estimates of fair value and may not necessarily correspond to realizable value. The rents, interest and other payments we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of the factors that affect the value of our real estate. If our revenues decline, we generally would expect to have less cash available to pay our indebtedness, distribute to our shareholders and effect share repurchases. In addition, some of our unreimbursed costs of owning real estate may not decline when the related rents decline.
The factors that affect the value of our real estate include, among other things:
•international, national, regional and local economic conditions;
•consequences of any armed conflict involving, or terrorist attack against, the United States or Canada;
•the threat of domestic terrorism or pandemic or other illness outbreaks (such as COVID-19 or variants thereof), which could cause consumers to avoid congregate settings;
•our ability or the ability of our tenants or managers to secure adequate insurance;
•natural disasters, such as earthquakes, hurricanes, wildfires and floods, which could exceed the aggregate limits of insurance coverage;
•impacts of climate change;
•local conditions such as an oversupply of space or lodging properties or a reduction in demand for real estate in the area;
•competition from other available space or, in the case of our experiential lodging properties, competition from other lodging properties or alternative lodging options in our markets;
•whether tenants and users such as customers of our tenants consider a property attractive;
•the financial condition of our tenants, borrowers and managers, including the extent of bankruptcies or defaults;
•higher levels of inflation;
•whether we are able to pass some or all of any increased operating costs through to tenants or other customers;
•how well we manage our properties or how well the managers of properties manage those properties;
•in the case of our experiential lodging properties, dependence on demand from business and leisure travelers, which may fluctuate and be seasonal;
•fluctuations in interest rates;
•changes in real estate taxes and other expenses;
•changes in market rental rates;
•the timing and costs associated with property improvements and rentals;
•changes in taxation or zoning laws;
•government regulation;
•availability of financing on acceptable terms or at all and the costs of such financing;
•potential liability under environmental or other laws or regulations; and
•general competitive factors.
The rents, interest and other payments we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of these factors. If our revenues decline, we generally would expect to have less cash available to pay our indebtedness and distribute to our shareholders. In addition, some of our unreimbursed costs of owning real estate may not decline when the related rents decline.
There are risks associated with owning and leasing real estate.
Although our lease terms in most cases, obligate the tenants to bear substantially all of the costs of operating the properties and our managers to manage such costs, investing in real estate involves a number of risks, including:
•the risk that tenants will not perform under their leases or that managers will not perform under their management agreements, reducing our income from such leases or properties under such management;
•we may not always be able to lease properties at favorable rates or certain tenants may require significant capital expenditures by us to conform existing properties to their requirements;
•we may not always be able to sell a property when we desire to do so at a favorable price; and
•changes in tax, zoning or other laws could make properties less attractive or less profitable.
If a tenant fails to perform on its lease covenants or a manager fails to perform on its management covenants, that would not excuse us from meeting any debt obligation secured by the property and could require us to fund reserves in favor of our lenders, thereby reducing funds available for payment of dividends. We cannot be assured that tenants or managers will elect to renew their leases or management agreements when the terms expire. If a tenant or manager does not renew its lease or agreement or if a tenant or a manager defaults on its lease or management obligations, there is no assurance we could obtain a substitute tenant or manager on acceptable terms. If we cannot obtain another quality tenant or manager, we may be required to modify the property for a different use, which may involve a significant capital expenditure and a delay in re-leasing the property or obtaining a new manager.
Some potential losses are not covered by insurance.
Our leases with tenants, financing arrangements with borrowers and agreements with managers of our properties require the customers and managers to carry comprehensive liability, casualty, workers' compensation, extended coverage and rental loss insurance on our properties, as applicable. We believe the required coverage is of the type, and amount, customarily obtained by an owner of similar properties. We believe all of our properties are adequately insured. However, we are exposed to risks that the insurance coverage levels required under our leases with tenants, financing arrangements with borrowers and agreements with managers of our properties may increase in cost significantly or be inadequate, and these risks may be increased as we expand our portfolio into experiential properties that may present more risk of loss as compared to properties in our existing portfolio. In addition, there are some types of losses, such as pandemics, catastrophic acts of nature, acts of war or riots, for which we, our customers or managers of our properties cannot obtain insurance at an acceptable cost or at all. If there is an uninsured loss or a loss in excess of insurance limits, we could lose both the revenues generated by the affected property and the capital we have invested in the property. We would, however, remain obligated to repay any mortgage indebtedness or other obligations related to the property. In addition, the cost of insurance protection against terrorist acts has risen dramatically over the years. There can be no assurance our customers or managers of
our properties will be able to obtain terrorism insurance coverage, as applicable, or that any coverage they do obtain will adequately protect our properties against loss from terrorist attack.
Joint ventures may limit flexibility with jointly owned investments.
We may continue to acquire or develop properties in joint ventures with third parties when those transactions appear desirable. We would not own the entire interest in any property acquired by a joint venture. Our participation in joint ventures subjects us to risks, including but not limited to, the following risks that:
•we may need our partner(s)' consent for major decisions regarding a joint venture property;
•our joint venture partners may have different objectives than us regarding the appropriate timing and terms of any sale or refinancing of a property, its operation or, if applicable, the commencement of development activities;
•our joint venture partners may be structured differently than us for tax purposes and this could create conflicts of interest, including with respect to our compliance with the REIT requirements, and our REIT status could be jeopardized if any of our joint ventures do not operate in compliance with REIT requirements;
•our joint venture partners may have competing interests in our markets that could create conflicts of interest;
•our joint venture partners may default on their obligations, which could necessitate that we fulfill their obligations ourselves or forfeit our interest in the ventures;
•our joint ventures may be unable to repay any amounts that we may loan to them;
•our joint venture agreements may contain provisions limiting the liquidity of our interest for sale or sale of the entire asset;
•as the general partner or managing member of a joint venture, we could be generally liable under applicable law for the debts and obligations of the venture, and we may not be entitled to contribution or indemnification from our partners; and
•our joint venture agreements may contain provisions that allow our partners to remove us as the general partner or managing member for cause, and this could result in liability for us to our partners under the governing agreement of the joint venture.
If we have a dispute with a joint venture partner, we may feel it necessary or become obligated to acquire the partner's interest in the venture or to forfeit our interest in the venture. However, we cannot ensure that the price we would have to pay or the timing of the acquisition would be favorable to us. If we are invested in a joint venture in which control over significant decisions is shared, the assets and financial results of the joint venture may not be reportable by us on a consolidated basis. To the extent we have commitments to, or on behalf of, or are dependent on, any such "off-balance sheet" arrangements, or if those arrangements or their properties or leases are subject to material contingencies, our liquidity, financial condition and operating results could be adversely affected by those commitments or off-balance sheet arrangements.
Our multi-tenant properties expose us to additional risks.
Our entertainment districts in Colorado, New York, California, and Ontario, Canada, and similar properties we may seek to acquire or develop in the future, involve risks not typically encountered in the purchase and lease-back of real estate properties that are operated by a single tenant. The ownership or development of multi-tenant retail centers could expose us to the risk that a sufficient number of suitable tenants may not be found to enable the centers to operate profitably and provide a return to us. This risk may be compounded by the failure of existing tenants to satisfy their obligations due to various factors, including economic downturns or inflation. These risks, in turn, could cause a material adverse impact to our results of operations and business.
Retail centers are also subject to tenant turnover and fluctuations in occupancy rates, which could affect our operating results. Multi-tenant retail centers also expose us to the risk of potential common area maintenance expense slippage, which may occur when the actual cost of taxes, insurance and maintenance at the property exceeds the common area maintenance fees paid by tenants.
We may from time to time be subject to litigation that could negatively impact our financial condition, cash flows, results of operations and the trading price of our shares.
We may from time to time be a defendant in lawsuits and regulatory proceedings relating to our business or properties. Such litigation and proceedings may result in defense costs, settlements, fines, or judgments against us, some of which may not be covered by insurance. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such litigation or proceedings. An unfavorable outcome may result in our having to pay significant fines, judgments, or settlements, which, if uninsured, or if exceeding insurance coverage, could adversely impact our financial condition, cash flows, results of operations and the trading price of our shares. Additionally, certain proceedings or the resolution of certain proceedings may affect the availability or cost of some of our insurance coverage, exposing us to increased risks for which we may be uninsured.
Failure to comply with the Americans with Disabilities Act and other laws could result in substantial costs.
Most of our properties must comply with the ADA. The ADA requires that public accommodations reasonably accommodate individuals with disabilities and that new construction or alterations be made to commercial facilities to conform to accessibility guidelines. Failure to comply with the ADA can result in injunctions, fines, damage awards to private parties and additional capital expenditures to remedy noncompliance. Our leases with tenants, financing arrangement with borrowers and agreements with managers of our properties require them to comply with the ADA.
Our properties are also subject to various other federal, state and local regulatory requirements. We do not know whether existing requirements will change or whether compliance with future requirements will involve significant unanticipated expenditures. Although these expenditures would be the responsibility of our customers in most cases, if these customers fail to perform these obligations, we may be required to do so.
Potential liability for environmental contamination could result in substantial costs.
Under federal, state and local environmental laws, we may be required to investigate and clean up any release of hazardous or toxic substances or petroleum products at our properties, regardless of our knowledge or actual responsibility, simply because of our current or past ownership of the real estate. If unidentified environmental problems arise, we may have to make substantial payments, which could adversely affect our cash flow and our ability to service our debt and pay dividends to our shareholders. This is because:
•as owner, we may have to pay for property damage and for investigation and clean-up costs incurred in connection with the contamination;
•the law may impose clean-up responsibility and liability regardless of whether the owner or operator knew of or caused the contamination;
•even if more than one person is responsible for the contamination, each person who shares legal liability under environmental laws may be held responsible for all of the clean-up costs; and
•governmental entities and third parties may sue the owner or operator of a contaminated site for damages and costs.
These costs could be substantial and in extreme cases could exceed the value of the contaminated property. The presence of hazardous substances or petroleum products or the failure to properly remediate contamination may adversely affect our ability to borrow against, sell or lease an affected property. In addition, some environmental laws create liens on contaminated sites in favor of the government for damages and costs it incurs in connection with a contamination. Most of our loan agreements require the Company or a subsidiary to indemnify the lender against environmental liabilities. Our leases with tenants and agreements with managers of our properties require them to operate the properties in compliance with environmental laws and to indemnify us against environmental liability arising from the operation of the properties. We believe all of our properties are in material compliance with environmental laws. However, we could be subject to strict liability under environmental laws because we own the properties. There is also a risk that tenants and borrowers may not satisfy their environmental compliance and indemnification obligations under the leases or other agreements. Any of these events could substantially increase our cost of operations, require us to fund environmental indemnities in favor of our lenders, limit the amount we
could borrow under our unsecured revolving credit facility and reduce our ability to service our debt and pay dividends to shareholders.
We are exposed to the potential impacts of future climate change and climate-change related risks.
We are exposed to potential physical risks from possible future changes in climate. We have significant investments in coastal markets, some of which may be targeted for future growth. Those coastal markets have historically experienced severe weather events, such as severe storms and prolonged drought, as well as other natural catastrophes such as wildfires and floods. If the frequency of extreme weather and other natural events increases due to climate change, our exposure to these events could increase. We may also be adversely impacted as a real estate owner, operator and developer in the future by stricter energy and water efficiency standards, water access for our properties or greenhouse gas regulations. Climate change may also have indirect negative effects on our business by increasing the cost of, or decreasing the availability of, property insurance on terms we find acceptable and increasing the cost of energy and building materials.
Compliance with new laws or regulations and investor expectations relating to climate change and climate change disclosure, including compliance with securities law disclosure requirements, voluntary compliance with independent rating systems and “green” building codes, may require us or our customers to make improvements to our existing properties or result in increased operating costs, thereby impacting the financial condition of our customers and their ability to meet their lease or debt obligations. We cannot give any assurance that other such conditions do not exist or may not arise in the future. The potential impacts of future climate change on our real estate properties could adversely affect our ability to lease, develop or sell such properties. If we are unable to comply with laws and regulations on climate change or implement effective sustainability strategies, our reputation among our customers and investors may be damaged and we may incur fines or penalties.
Real estate investments are relatively illiquid.
We may desire to sell properties in the future because of changes in market conditions, poor tenant performance or default of any mortgage we hold, or to avail ourselves of other opportunities. We may also be required to sell a property in the future to meet debt obligations or avoid a default. Specialty real estate projects such as our investments cannot always be sold quickly, and we cannot assure you that we could always obtain a favorable price. In addition, the Internal Revenue Code limits our ability to sell our properties. We may be required to invest in the restoration or modification of a property before we can sell it. The inability to respond promptly to changes in the performance of our property portfolio could adversely affect our financial condition and ability to service our debt, pay dividends to our shareholders and effect share repurchases.
There are risks in owning assets outside the United States.
Our properties in Canada and future investments in other international markets we may enter are subject to the risks normally associated with international operations. The value of our current international portfolio and any other properties we purchase in non-U.S. jurisdictions may be affected by factors specific to the laws and business practices of such jurisdictions. The laws and business practices of foreign jurisdictions may expose us to risks that are different from and in addition to those commonly found in the United States, including, but not limited to, the following: (i) the burden of complying with non-U.S. laws including land use and zoning laws or more stringent environmental laws; (ii) existing or new laws relating to the foreign ownership of real property and laws restricting our ability to repatriate earnings and cash into the United States; (iii) the potential for expropriation; (iv) adverse effects of changes in the exchange rate between U.S. dollars and foreign currencies in which revenue is generated at our properties outside the United States; (v) imposition of adverse or confiscatory taxes, changes in real estate and other tax rates or laws and changes in other operating expenses in such foreign jurisdictions; (vi) possible challenges to the anticipated tax treatment of our revenue and our properties; (vii) the potential difficulty of enforcing rights and obligations in other countries; and (viii) our more limited experience and expertise in foreign countries relative to our experience and expertise in the United States. Non-U.S. real estate and tax laws are complex and subject to change, and we cannot assure you we will always be in compliance with those laws or that compliance will not expose us to additional expense. We may also be subject to fluctuations in real estate values or markets or the economy as a whole of non-U.S. jurisdictions we enter, which may adversely affect our international investments.
There are risks in owning or financing properties for which the tenants', borrowers', or our operations may be impacted by weather conditions, climate change and natural disasters.
Severe weather events, such as severe storms and prolonged drought, as well as other natural catastrophes such as wildfires and floods may interrupt the operations of an operator, damage our properties, reduce the number of guests who visit the properties in affected areas or negatively impact an operator's revenue and profitability. Damage to our properties could take a long time to repair and there is no guarantee that we would have adequate insurance to cover the costs of repair and recoup lost profits. Furthermore, such a disaster may interrupt or impede access to our affected properties or require evacuations and may cause visits to our affected properties to decrease for an indefinite period. The ability of our operators to attract visitors to our experiential lodging properties is also influenced by the aesthetics and natural beauty of the outdoor environment where these resorts are located. Severe weather events, such as severe storms and prolonged drought, as well as other natural catastrophes such as wildfires and floods could negatively impact the natural beauty of our resort properties and have a long-term negative impact on an operator's overall guest visitation as it could take several years for the environment to recover.
We have acquired and financed ski properties and expect to do so in the future. The operators of these properties, our tenants or borrowers, are dependent upon the operations of the properties to pay their rents and service their loans. The ski property operator's ability to attract visitors is influenced by weather conditions and climate change in general, each of which may impact the amount of snowfall during the ski season. Adverse weather conditions may discourage visitors from participating in outdoor activities. In addition, unseasonably warm weather may result in inadequate natural snowfall, which increases the cost of snowmaking, and could render snowmaking wholly or partially ineffective in maintaining quality skiing conditions and attracting visitors. Excessive natural snowfall may materially increase the costs incurred for grooming trails and may also make it difficult for visitors to obtain access to ski properties. We also own and finance attractions that would also be subject to risks relating to weather conditions such as in the case of waterparks and amusement parks, including excessive rainfall or unseasonable temperatures. Prolonged periods of adverse weather conditions, or the occurrence of such conditions during peak visitation periods, could have a material adverse effect on the operator's financial results and could impair the ability of the operator to make rental or other payments or service our loans.
We face risks associated with the development, redevelopment and expansion of properties and the acquisition of other real estate related companies.
We may develop, redevelop or expand new or existing properties or acquire other real estate related companies, and these activities are subject to various risks. We may not be successful in pursuing such development or acquisition opportunities. In addition, newly developed or redeveloped/expanded properties or newly acquired companies may not perform as well as expected. We are subject to other risks in connection with any such development or acquisition activities, including the following:
•we may not succeed in completing developments or consummating desired acquisitions on time;
•we may face competition in pursuing development or acquisition opportunities, which could increase our costs;
•we may encounter difficulties and incur substantial expenses in integrating acquired properties into our operations and systems and, in any event, the integration may require a substantial amount of time on the part of both our management and associates and therefore divert their attention from other aspects of our business;
•we may undertake developments or acquisitions in new markets or industries where we do not have the same level of market knowledge, which may expose us to unanticipated risks in those markets and industries to which we are unable to effectively respond, such as an inability to attract qualified personnel with knowledge of such markets and industries;
•we may incur construction costs in connection with developments, which may be higher than projected, potentially making the project unfeasible or unprofitable;
•we may incur unanticipated capital expenditures in order to maintain or improve acquired properties;
•we may be unable to obtain zoning, occupancy or other governmental approvals;
•we may experience delays in receiving rental payments for developments that are not completed on time;
•our developments or acquisitions may not be profitable;
•we may need the consent of third parties such as anchor tenants, mortgage lenders and joint venture partners, and those consents may be withheld;
•we may incur adverse tax consequences if we fail to qualify as a REIT for U.S. federal income tax purposes following an acquisition;
•we may be subject to risks associated with providing mortgage financing to third parties in connection with transactions, including any default under such mortgage financing;
•we may face litigation or other claims in connection with, or as a result of, acquisitions, including claims from terminated associates, tenants, former stockholders or other third parties;
•the market price of our common shares, preferred shares and debt securities may decline, particularly if we do not achieve the perceived benefits of any acquisition as rapidly or to the extent anticipated by securities or industry analysts or if the effect of an acquisition on our financial condition, results of operations and cash flows is not consistent with the expectations of these analysts;
•we may issue shares in connection with acquisitions resulting in dilution to our existing shareholders; and
•we may assume debt or other liabilities in connection with acquisitions.
In addition, there is no assurance that planned third-party financing related to development and acquisition opportunities will be provided on a timely basis or at all, thus increasing the risk that such opportunities are delayed or fail to be completed as originally contemplated. We may also abandon development or acquisition opportunities that we have begun pursuing and consequently fail to recover expenses already incurred and have devoted management time to a matter not consummated. In some cases, we may agree to lease or other financing terms for a development project in advance of completing and funding the project, in which case we are exposed to the risk of an increase in our cost of capital during the interim period leading up to the funding, which can reduce, eliminate or result in a negative spread between our cost of capital and the payments we expect to receive from the project. Furthermore, our acquisitions of new properties or companies will expose us to the liabilities of those properties or companies, some of which we may not be aware at the time of acquisition. In addition, development of our existing properties presents similar risks. If a development or acquisition is unsuccessful, either because it is not meeting our expectations or was not completed according to our plans, we could lose our investment in the development or acquisition.
Risks That May Affect the Market Price of Our Shares
We cannot assure you we will continue paying cash dividends at current rates.
Our dividend policy is determined by our Board of Trustees. Our ability to pay dividends on our common shares or to pay dividends on our preferred shares at their stated rates depends on a number of factors, including our liquidity, our financial condition and results of future operations, the performance of lease and mortgage terms by our tenants and customers, our ability to acquire, finance and lease additional properties at attractive rates, and provisions in our loan covenants. Although we currently intend to pay dividends in future periods, there can be no assurances that we will maintain or increase any future common share dividend rate, and the market price of our common shares and possibly our preferred shares could be adversely affected if we fail to maintain or increase such rate. Furthermore, if the Board of Trustees decides to pay dividends on our common shares partially or substantially all in common shares, that could have an adverse effect on the market price of our common shares and possibly our preferred shares.
Market interest rates may have an effect on the value of our shares.
One of the factors that investors may consider in deciding whether to buy or sell our common shares or preferred shares is our dividend rate as a percentage of our share price, relative to market interest rates. If market interest rates increase, prospective investors may desire a higher dividend rate on our common shares or seek securities paying higher dividends or interest. Higher interest rates would also likely increase our future borrowing costs and potentially decrease funds available for distribution, which could have an adverse effect on the market price of our common shares and possibly our preferred shares.
Inflation may have an effect on the value of our shares.
One of the factors that investors may consider in deciding whether to buy or sell our common shares or preferred shares is our ability to increase rent or interest income on existing leases and loans in the event of significant inflation. Our long-term leases and loans typically contain provisions such as rent or interest escalators and percentage rent or percentage interest designed to mitigate the adverse impact of inflation. However, in periods of significant inflation, the impact of these provisions may be limited due to fixed escalators, rent or interest caps and percentage rent or interest breakpoints, potentially resulting in below-market lease rates or loan terms. Accordingly, if inflation increases significantly, prospective investors may desire to invest in a company that can increase revenue without such contractual limitations, which could impact the market value of our shares.
Broad market fluctuations could negatively impact the market price of our shares.
The stock market has experienced extreme price and volume fluctuations in recent years. Such volatility has affected the market price of the common equity of many companies, including companies in industries similar or related to ours. These broad market fluctuations could reduce the market price of our shares. Furthermore, our operating results and prospects may be below the expectations of public market analysts and investors or may be lower than those of companies with comparable market capitalization. Either of these factors could lead to a material decline in the market price of our shares.
Market prices for our shares may be affected by perceptions about the financial health or share value of our tenants, borrowers and managers or the performance of REIT stocks generally.
To the extent any of our customers or their competitors report losses, slower earnings growth, take charges against earnings or enter bankruptcy proceedings, the market price for our shares could be adversely affected. Specifically, the reduced economic activity resulting from the COVID-19 pandemic severely impacted our customers' businesses, financial condition and liquidity and also resulted in one of our largest tenants declaring bankruptcy, which adversely affected the market price for our shares. The market price for our shares could also be affected by any weakness in the performance of REIT stocks generally or weakness in any of the sectors in which our customers operate, any of which may be adversely affected by generally challenging and uncertain economic conditions.
Limits on changes in control may discourage takeover attempts, which may be beneficial to our shareholders.
There are a number of provisions in our Declaration of Trust and Bylaws and under Maryland law and agreements we have with others, any of which could make it more difficult for a party to make a tender offer for our shares or complete a takeover of the Company that is not approved by our Board of Trustees. These include:
•a limit on beneficial ownership of our shares, which acts as a defense against a hostile takeover or acquisition of a significant or controlling interest, in addition to preserving our REIT status;
•the ability of the Board of Trustees to issue preferred or common shares, to reclassify preferred or common shares, and to increase the amount of our authorized preferred or common shares, without shareholder approval;
•limits on the ability of shareholders to remove trustees without cause;
•requirements for advance notice of shareholder proposals at shareholder meetings;
•provisions of Maryland law restricting business combinations and control share acquisitions not approved by the Board of Trustees and unsolicited takeovers;
•provisions of Maryland law protecting corporations (and by extension REITs) against unsolicited takeovers by limiting the duties of the trustees in unsolicited takeover situations;
•provisions in Maryland law providing that the trustees are not subject to any higher duty or greater scrutiny than that applied to any other director under Maryland law in transactions relating to the acquisition or potential acquisition of control;
•provisions of Maryland law creating a statutory presumption that an act of the trustees satisfies the applicable standards of conduct for trustees under Maryland law;
•provisions in loan or joint venture agreements putting the Company in default upon a change in control; and
•provisions of our compensation arrangements with our associates calling for severance compensation and vesting of equity compensation upon termination of employment upon a change in control or certain events of the associates' termination of service.
Any or all of these provisions could delay or prevent a change in control of the Company, even if the change was in our shareholders' interest or offered a greater return to our shareholders.
We may change our policies without obtaining the approval of our shareholders.
Our operating and financial policies, including our policies with respect to acquiring or financing real estate or other companies, growth, operations, indebtedness, capitalization and dividends, are exclusively determined by our Board of Trustees. Accordingly, our shareholders do not control these policies.
Dilution could affect the value of our shares.
Our future growth will depend in part on our ability to raise additional capital. If we raise additional capital through the issuance of equity securities, the interests of holders of our common shares could be diluted. Likewise, our Board of Trustees is authorized to cause us to issue preferred shares in one or more series, the holders of which would be entitled to dividends and voting and other rights as our Board of Trustees determines, and which could be senior to or convertible into our common shares. Accordingly, an issuance by us of preferred shares could be dilutive to or otherwise adversely affect the interests of holders of our common shares. As of December 31, 2024, our Series C preferred shares are convertible, at each of the holder's option, into our common shares at a conversion rate of 0.4316 common shares per $25.00 liquidation preference, which is equivalent to a conversion price of approximately $57.92 per common share (subject to adjustment in certain events). Additionally, as of December 31, 2024, our Series E preferred shares are convertible, at each of the holder's option, into our common shares at a conversion rate of 0.4831 common shares per $25.00 liquidation preference, which is equivalent to a conversion price of approximately $51.75 per common share (subject to adjustment in certain events). Under certain circumstances in connection with a change in control of the Company, holders of our Series G preferred shares may elect to convert some or all of their Series G preferred shares into a number of our common shares per Series G preferred share equal to the lesser of (a) the $25.00 per share liquidation preference, plus accrued and unpaid dividends divided by the market value of our common shares or (b) 0.7389 shares. Depending upon the number of Series C, Series E and Series G preferred shares being converted at one time, a conversion of Series C, Series E and Series G preferred shares could be dilutive to or otherwise adversely affect the interests of holders of our common shares. In addition, we may issue a significant amount of equity securities in connection with acquisitions or investments, with or without seeking shareholder approval, which could result in significant dilution to our existing shareholders.
Future offerings of debt or equity securities, which may rank senior to our common shares, may adversely affect the market price of our common shares.
If we decide to issue debt securities in the future, which would rank senior to our common shares, it is likely that they will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, any equity securities or convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common shares and may result in dilution to owners of our common shares. We and, indirectly, our shareholders, will bear the cost of issuing and servicing such securities. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our common shares will bear the risk of our future offerings reducing the market price of our common shares and diluting the value of their shareholdings in us.
Changes in foreign currency exchange rates may have an impact on the value of our shares.
The functional currency for our Canadian operations is CAD. As a result, our future operating results could be affected by fluctuations in the USD-CAD exchange rate, which in turn could affect our share price. We have attempted to mitigate our exposure to Canadian currency exchange risk by entering into foreign currency exchange contracts to hedge in part our exposure to exchange rate fluctuations. Foreign currency derivatives are subject to future risk of loss. We do not engage in purchasing foreign exchange contracts for speculative purposes.
Additionally, we may enter other international markets that pose similar currency fluctuation risks as described above.
We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our shares.
At any time, the U.S. federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may be changed, possibly with retroactive effect. We cannot predict if or when any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective or whether any such law, regulation or interpretation may take effect retroactively. We and our shareholders could be adversely affected by any such change in, or any new, U.S. federal income tax law, regulation or administrative interpretation. Furthermore, any proposals seeking broader reform of U.S. federal income tax laws, if enacted, could change the federal income tax laws applicable to REITs, subject us to federal tax or reduce or eliminate the current deduction for dividends paid to our shareholders, any of which could negatively affect the market for our shares.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
There are no unresolved comments from the staff of the SEC required to be disclosed herein as of the date of this Annual Report on Form 10-K.

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ITEM 2. PROPERTIES
Item 2. Properties
As of December 31, 2024, our real estate portfolio consisted of investments in our Experiential and Education reportable segments. Except as otherwise noted, all of the real estate investments listed below are owned or ground leased directly by us.
The following table sets forth our wholly-owned properties (excluding properties under development, land held for development, properties owned by unconsolidated real estate joint ventures and properties securing our mortgage notes) listed by segment and property type, gross square footage (except for certain ski and attraction properties where such number is not meaningful), percentage leased and total rental revenue for the year ended December 31, 2024 (dollars in thousands). At certain properties included below, we are the tenant under third-party ground leases and have assumed responsibility for performing the obligations thereunder. However, pursuant to the facility leases, the tenants are generally responsible for performing substantially all of our obligations under the ground leases.
Number of Properties Building Gross Square Footage Percentage Leased (5) Rental Revenue for the Year
Ended December 31, 2024 % of Company's Rental Revenue
Experiential
Theatres (1) 157 10,994,761 100.0 % $ 237,034 40.5 %
Eat & Play (2) 53 5,081,986 96.0 % 172,856 29.5 %
Attractions (3) 22 1,001,169 100.0 % 69,254 11.8 %
Ski 3 330,508 100.0 % 25,217 4.3 %
Experiential Lodging 1 276,210 100.0 % 2,743 0.5 %
Fitness & Wellness 8 631,920 100.0 % 21,534 3.7 %
Gaming (4) 1 - 100.0 % 12,993 2.2 %
Cultural 1 457,093 100.0 % 5,679 1.0 %
Total Experiential 246 18,773,647 98.9 % $ 547,310 93.5 %
Education
Early Childhood Education Centers 57 963,102 100.0 % $ 27,358 4.7 %
Private Schools 9 292,362 100.0 % 10,499 1.8 %
Total Education 66 1,255,464 100.0 % $ 37,857 6.5 %
Total 312 20,029,111 99.0 % $ 585,167 100.0 %
(1) Includes six properties operated by EPR through third-party managers. Revenue for these properties is included in other income in the consolidated statements of income and comprehensive income.
(2) Includes seven theatres located in entertainment districts.
(3) Includes one property operated by EPR through a third-party manager. Revenue for this property is included in other income in the consolidated statements of income and comprehensive income.
(4) Represents land under ground lease to a casino operator.
(5) Excludes properties we intend to sell.
The following table sets forth lease expirations regarding EPR’s wholly-owned portfolio as of December 31, 2024 excluding properties we operate, non-theatre tenant leases at entertainment districts and experiential lodging properties operated through a traditional REIT lodging structure (dollars in thousands):
Year Number of
Properties Square
Footage Rental Revenue for the Year
Ended December 31, 2024 % of Company's Rental
Revenue
2025 1 39,240 $ 653 0.1 %
2026 2 39,289 2,412 0.4 %
2027 4 314,699 21,065 3.6 %
2028 9 604,771 14,905 2.5 %
2029 14 812,144 21,720 3.7 %
2030 19 1,391,775 32,043 5.5 %
2031 4 354,930 7,382 1.3 %
2032 8 460,708 12,236 2.1 %
2033 7 320,563 10,409 1.8 %
2034 36 2,313,989 65,859 11.3 %
2035 29 2,435,642 75,265 12.9 %
2036 40 2,698,769 73,313 12.5 %
2037 29 1,631,637 61,970 10.6 %
2038 41 2,241,304 63,443 10.8 %
2039 9 202,336 6,511 1.1 %
2040 4 209,680 10,235 1.7 %
2041 30 805,130 18,608 3.2 %
2042 4 466,958 17,597 3.0 %
2043 7 123,497 20,529 3.5 %
2044 2 279,281 10,972 1.9 %
Thereafter 1 19,000 1,048 0.2 %
300 17,765,342 $ 548,175 93.7 %
Our wholly-owned properties (excluding properties under development, land held for development, properties owned by unconsolidated real estate joint ventures and properties securing our mortgage notes) are located in 40 states and the Canadian provinces of Ontario and Quebec. The following table sets forth certain information by state or province regarding our owned real estate portfolio as of December 31, 2024 (dollars in thousands):
Location Building (gross sq. ft.) Rental Revenue for the Year Ended
December 31, 2024 % of Rental Revenue
Texas 2,810,267 $ 76,093 13.0 %
California 1,753,099 79,659 13.6 %
Florida 1,286,099 41,789 7.1 %
Ontario, Canada 1,204,639 36,110 6.2 %
Pennsylvania 954,660 33,894 5.8 %
Illinois 831,355 20,959 3.6 %
Ohio 753,055 13,551 2.3 %
New York 682,200 40,622 7.0 %
Tennessee 680,570 17,581 3.0 %
Colorado 634,674 19,839 3.4 %
North Carolina 631,137 20,649 3.5 %
Virginia 618,659 16,168 2.8 %
Louisiana 591,272 14,686 2.5 %
Michigan 521,631 8,958 1.5 %
Georgia 516,315 13,232 2.3 %
Missouri 490,330 6,065 1.0 %
Kansas 482,359 11,845 2.0 %
Arizona 465,755 13,751 2.4 %
Quebec, Canada 399,437 9,306 1.6 %
New Jersey 392,930 8,053 1.4 %
Kentucky 365,971 6,619 1.1 %
South Carolina 349,388 11,233 1.9 %
Indiana 345,941 7,624 1.3 %
Alabama 323,972 5,935 1.0 %
Oregon 201,532 3,686 0.6 %
Connecticut 185,074 4,371 0.8 %
Minnesota 181,764 6,067 1.0 %
Idaho 179,036 3,789 0.7 %
Maryland 177,856 2,160 0.4 %
Arkansas 165,219 4,148 0.7 %
Mississippi 116,900 3,781 0.7 %
Massachusetts 111,166 1,020 0.2 %
Maine 107,000 1,083 0.2 %
New Hampshire 97,400 1,284 0.2 %
Iowa 93,755 1,402 0.2 %
Oklahoma 90,737 6,689 1.1 %
New Mexico 71,297 2,542 0.4 %
Nevada 50,426 1,650 0.3 %
Washington 47,004 3,123 0.5 %
Montana 44,650 1,092 0.2 %
Wisconsin 22,580 432 0.1 %
Hawaii - 2,544 0.4 %
Nebraska (1) - 83 - %
20,029,111 $ 585,167 100.0 %
(1) Property sold during the year ended December 31, 2021 and tenant continues to pay deferred rent to EPR.
Office Location
Our executive office is located in Kansas City, Missouri and is leased from a third-party landlord. The lease has projected 2025 annual rent of approximately $958 thousand and is scheduled to expire on September 30, 2026, with two separate five-year extension options available.
Tenants and Leases
Our existing leases on real estate investments (on a consolidated basis - excluding unconsolidated joint venture properties) provide for aggregate annual minimum rental payments for 2025 of approximately $503.8 million (not including the impact of rent deferrals, ground lease payments for leases in which we are a sublessor, periodic rent escalations that are not fixed, percentage rent or straight-line rent). Our leases have remaining terms ranging from one year to 25 years. These leases may be extended for predetermined extension terms at the option of the tenants. Our leases are typically triple-net leases that require the tenant to pay substantially all expenses associated with the operation of the properties, including taxes, other governmental charges, insurance, utilities, service, maintenance and any ground lease payments.
Additionally, we are lessee in 51 operating ground leases as of December 31, 2024. Our tenants are generally sub-tenants under these ground leases and are responsible for paying rent under these agreements. Our sub-lessor operating ground leases provide for aggregate annual minimum rental payments for 2025 of approximately $26.3 million. Our ground leases have remaining terms ranging from one year to 42 years, most of which include one or more options to renew.
Property Acquisitions and Developments in 2024
Our property acquisitions and developments in 2024 consisted of spending on experiential properties. The percentage of total investment spending related to build-to-suit projects, including investment spending for mortgage notes on such projects, was approximately 64% in 2024. Many of our build-to-suit opportunities come to us from our existing strong relationships with property operators and developers, and we expect to continue to pursue these opportunities.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
We are subject to certain claims and lawsuits in the ordinary course of business, the outcome of which cannot be determined at this time. In the opinion of management, any liability we might incur upon the resolution of these claims and lawsuits will not, in the aggregate, have a material adverse effect on our consolidated financial position or results of operations.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common shares are listed on the New York Stock Exchange (“NYSE”) under the trading symbol “EPR.”
During the year ended December 31, 2024, the Company did not sell any unregistered equity securities.
On February 26, 2025, there were approximately 5,503 holders of record of our outstanding common shares.
Issuer Purchases of Equity Securities
During the quarter ended December 31, 2024, the Company did not repurchase any of its equity securities.
Dividends
We expect to continue paying dividends to our common and preferred shareholders in future periods. Our Series C preferred shares have a dividend rate of 5.75%, our Series E preferred shares have a dividend rate of 9.00% and our Series G preferred shares have a dividend rate of 5.75%. Among the factors the Company’s Board of Trustees considers in setting the common share dividend rate are the applicable REIT tax rules and regulations that apply to dividends, the Company’s results of operations, including FFO and FFOAA per share, and the Company’s Cash Available for Distribution (defined as net cash flow available for distribution after payment of operating expenses, debt service, preferred dividends and other obligations).
Share Performance Graph
The following graph compares the cumulative return on our common shares during the five-year period ended December 31, 2024, to the cumulative return on the MSCI U.S. REIT Index and the Russell 1000 Index for the same period. The comparisons assume an initial investment of $100 and the reinvestment of all dividends during the comparison period. Performance during the comparison period is not necessarily indicative of future performance.
Total Return Analysis
12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024
EPR Properties $ 100.00 $ 47.91 $ 72.15 $ 61.61 $ 85.53 $ 84.46
MSCI U.S. REIT Index $ 100.00 $ 92.43 $ 132.23 $ 99.82 $ 113.54 $ 123.47
Russell 1000 Index $ 100.00 $ 120.96 $ 152.96 $ 123.71 $ 156.53 $ 194.89
Source: S&P Global Market Intelligence
The performance graph and related text are being furnished to and not filed with the SEC, and will not be deemed "soliciting material" or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate such information by reference into such a filing.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. [Reserved]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to promote an understanding of our financial condition, results of operations, liquidity and certain other factors that may affect future results. MD&A is provided as a supplement to, and should be read in conjunction with, the consolidated financial statements and notes thereto included in this Annual Report on Form 10-K. The forward-looking statements included in this discussion and elsewhere in this Annual Report on Form 10-K involve risks and uncertainties, including anticipated financial performance, business prospects, industry trends, shareholder returns, performance of leases by tenants, performance on loans to customers and other matters, which reflect management’s best judgment based on factors currently known. See “Cautionary Statement Concerning Forward-Looking Statements.” Actual results and experience could differ materially from the anticipated results and other expectations expressed in our forward-looking statements as a result of a number of factors, including but not limited to those discussed in this Item and in Item 1A - “Risk Factors.”
A discussion regarding our financial condition and results of operations for fiscal year 2024 compared to fiscal year 2023 is presented below. A discussion regarding our financial condition and results of operations for fiscal year 2023 compared to fiscal year 2022 is incorporated herein by reference and can be found under Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024.
Overview
Business
Our principal business objective is to enhance shareholder value by achieving predictable and increasing Funds From Operations As Adjusted ("FFOAA") and dividends per share. Our strategy is to focus on long-term investments in the Experiential sector that benefit from our depth of knowledge and relationships, and which we believe offer sustained performance throughout most economic cycles. See Item 1 - "Business" for further discussion regarding our strategic rationale for our focus on experiential properties.
Our investment portfolio includes ownership of and long-term mortgages on Experiential and Education properties. Substantially all of our owned single-tenant properties are leased pursuant to long-term, triple-net leases, under which the tenants typically pay all operating expenses of the property. Tenants at our owned multi-tenant properties are typically required to pay common area maintenance charges to reimburse us for their pro-rata portion of these costs. We also own certain experiential lodging assets structured using traditional REIT lodging structures as discussed in Item 1 - "Business."
It has been our strategy to structure leases and financings to ensure a positive spread between our cost of capital and the rentals or interest paid by our tenants. We have primarily acquired or developed new properties that are pre-leased to a single tenant or multi-tenant properties with a high occupancy rate. We have also entered into certain joint ventures and provided mortgage note financing. We intend to continue entering into some or all of these types of arrangements in the foreseeable future.
Historically, our primary challenges had been locating suitable properties, negotiating favorable lease or financing terms (on new or existing properties) and managing our portfolio as we continued to grow. We believe our management’s knowledge and industry relationships have facilitated opportunities for us to acquire, finance and lease properties. More recently, and as further discussed below, the challenging economic environment has increased our cost of capital, which has negatively impacted our ability to make investments in the near-term. Our business is subject to a number of risks and uncertainties, including those described in Item 1A - “Risk Factors” of this report.
As of December 31, 2024, our total assets were approximately $5.6 billion (after accumulated depreciation of approximately $1.6 billion) with properties located in 44 states and the provinces of Ontario and Quebec, Canada. Our total investments (a non-GAAP financial measure) were approximately $6.9 billion as of December 31, 2024. See "Non-GAAP Financial Measures" for the reconciliation of "Total assets" in the consolidated balance sheet to total investments and the calculation of total investments at December 31, 2024 and 2023. We group our investments into two reportable segments, Experiential and Education. As of December 31, 2024, our Experiential investments comprised $6.4 billion, or 93%, and our Education investments comprised $0.5 billion, or 7%, of our total investments.
As of December 31, 2024, our Experiential portfolio (excluding property under development, undeveloped land inventory and the three joint venture properties noted below) consisted of the following property types (owned or financed):
•157 theatre properties;
•58 eat & play properties (including seven theatres located in entertainment districts);
•24 attraction properties;
•11 ski properties;
•four experiential lodging properties;
•22 fitness & wellness properties;
•one gaming property; and
•one cultural property.
We have excluded three experiential lodging properties held in joint ventures from the property count above. One was transferred to our joint venture partner on February 4, 2025, as discussed below in "Recent Developments". As we have previously disclosed, the remaining two properties sustained significant hurricane damage and we continue to work in good faith with our joint venture partners, the non-recourse debt provider and the insurance companies to identify a path forward, which we expect to result in the eventual removal of the properties from our portfolio, although there can be no assurances as to the outcome of those discussions. Included in the property count are two experiential lodging properties held in unconsolidated joint ventures in which we continue to have interests.
As of December 31, 2024, our wholly-owned Experiential real estate portfolio consisted of approximately 18.8 million square feet, which includes 0.3 million square feet of vacant properties we intend to sell. The wholly-owned Experiential portfolio, excluding the vacant properties we intend to sell, was 99% leased or operated and included $112.3 million in property under development and $20.2 million in undeveloped land inventory.
As of December 31, 2024, our Education portfolio consisted of the following property types (owned or financed):
•59 early childhood education center properties; and
•nine private school properties.
As of December 31, 2024, our wholly-owned Education real estate portfolio consisted of approximately 1.2 million square feet, which includes 13 thousand square feet for a vacant property we intend to sell. The wholly-owned Education portfolio, excluding the vacant property we intend to sell, was 100% leased.
The combined wholly-owned portfolio consisted of 19.7 million square feet and was 99% leased or operated excluding the 0.3 million square feet of vacant properties we intend to sell.
Challenging Economic Environment
As a triple-net lease REIT, we are generally experiencing heightened risks and uncertainties associated with key macroeconomic factors including inflation and interest rate volatility. This environment has created negative pressure in the financial and capital markets resulting in a higher cost of capital. Although we intend to continue making future investments, we expect to maintain our investment spending at moderate levels in the near-term due
to an elevated cost of capital, and near-term investments will be funded primarily from cash on hand, excess cash flow, disposition proceeds and borrowing availability under our unsecured revolving credit facility, subject to maintaining our leverage levels consistent with past practice. As a result, we intend to continue to be more selective in making future investments and acquisitions until such time as economic conditions improve and our cost of capital improves.
As of December 31, 2024, as a result of the COVID-19 pandemic, we continue to recognize revenue on a cash basis for AMC and two other tenants, one of which has deferred rent from this period that is not booked as a receivable of approximately $11.5 million. We collected all deferred receivables from accrual basis tenants that were deferred due to the COVID-19 pandemic. During the years ended December 31, 2024 and 2023, we collected $0.6 million and $36.4 million, respectively, in deferred rent and interest from cash basis customers and from customers for which the deferred payments were not previously recognized as revenue.
Operating Results
Our total revenue, net income available to common shareholders per diluted share and Funds From Operations As Adjusted ("FFOAA") per diluted share (a non-GAAP financial measure) are detailed below for the years ended December 31, 2024 and 2023 (dollars in millions, except per share information):
Year ended December 31,
2024 2023 Change
Total revenue $ 698.1 $ 705.7 (1) %
Net income available to common shareholders per diluted share 1.60 1.97 (19) %
FFOAA per diluted share 4.87 5.18 (6) %
The major factors impacting our results for the year ended December 31, 2024, as compared to the year ended December 31, 2023 were as follows:
•The decrease in rental revenue due to a comprehensive restructuring agreement with Regal and higher deferred rental payments from cash basis tenants received in 2023;
•The effect of property acquisitions and dispositions that occurred in 2024 and 2023;
•The increase in other income and other expense related to operating additional properties;
•The decrease in impairment charges and general and administrative expense;
•The increase in equity in loss from joint ventures, impairment charges on joint ventures and provision for credit losses; and
•The recognition of higher net gain on sale of real estate in 2024 versus the recognition of net loss on sale of real estate in 2023.
For further details on items impacting our operating results, see section below titled "Results of Operations". FFOAA is a non-GAAP financial measure. For the definitions and further details on the calculations of FFOAA and certain other non-GAAP financial measures, see section below titled "Non-GAAP Financial Measures."
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related notes. In preparing these financial statements, management has made its best estimates and assumptions that affect the reported assets and liabilities and the reported amounts of revenues and expenses during the reporting periods. The most significant assumptions and estimates relate to the valuation of real estate, accounting for real estate acquisitions, assessing the collectability of receivables and the credit loss related to mortgage and other notes receivable. Applying these assumptions requires exercising judgment as to future uncertainties and, as a result, actual results could differ from these estimates.
Impairment of Real Estate Values
We are required to make subjective assessments as to whether there are impairments in the value of our real estate investments. These impairment estimates may have a direct impact on our consolidated financial statements. We assess the carrying value of our real estate investments whenever events or changes in circumstances indicate that the carrying amount of a property may not be recoverable. Certain factors may indicate that impairments exist, which include, but are not limited to, under-performance relative to projected future operating results, change in the time period we expect to hold the property, tenant difficulties and significant adverse industry or market economic trends. If an indicator of possible impairment exists, the property is evaluated for impairment by completing the undiscounted cash flow test, which compares the carrying amount of the real estate investment to the estimated future cash flows (undiscounted and without interest charges), including the residual value of the real estate. If an impairment is indicated, we will record a loss for the amount by which the carrying value of the asset exceeds its estimated fair value.
The assumptions used to derive the estimated future cash flows for the undiscounted cash flow test are based on capitalization rates, anticipated future market rent and our anticipated hold period, which are all subjective. Market rent assumptions used for the estimated future cash flows and the capitalization rate used to estimate the residual value of the real estate can fluctuate based on economic and industry specific factors. Changes in these assumptions could materially impact the result of the undiscounted cash flow test. If there is a shift in economic conditions, or a change in our property strategy, including a reduction in our anticipated hold period, these changes could materially impact the estimated undiscounted cash flows and lead to an impairment loss. The loss is calculated based upon the difference between the fair value and the carrying value of the property. We generally use the income approach to derive the fair value of the property, which includes estimates for market rent, capitalization rates, and discount rates that are subjective and can be impacted by a lack of comparable transactions. We may also use the sales comparison approach or take into account real estate purchase offers to derive the fair value of the real estate if it is anticipated that the property may be sold.
Real Estate Acquisitions
Upon acquisition of real estate properties, we evaluate the acquisition to determine if it is a business combination or an asset acquisition. Generally, our acquisitions are considered asset acquisitions. If an acquisition is determined to be an asset acquisition, we allocate the purchase price and other related acquisition costs incurred to the acquired tangible assets and identified intangible assets and liabilities on a relative fair value basis. Typically, relative fair values are based on recent independent appraisals or methods similar to those used by independent appraisers, as well as management judgment. In addition, acquisition-related costs incurred for asset acquisitions are capitalized.
The methods used to derive the relative fair value of the acquired tangible and intangible assets and liabilities generally include the income approach, cost approach and sales comparison approach. The assumptions used in these approaches include estimates for market rent, capitalization rates and discount rates that are subjective and can be impacted by a lack of comparable transactions. Market rent assumptions, capitalization rates and discount rates used in the valuation of real estate can fluctuate based on economic and industry specific factors.
Collectability of Lease Receivables
Our accounts receivable balance is comprised primarily of rents and operating cost recoveries due from tenants as well as accrued rental rate increases to be received over the life of the existing leases. We regularly evaluate the collectability of our receivables on a lease-by-lease basis. The evaluation primarily consists of reviewing past due account balances and considering such factors as the credit quality of our tenants, historical trends of the tenant, property level metrics, current economic conditions and changes in customer payment terms. We suspend revenue recognition when the collectability of amounts due is deemed no longer probable and record a direct write-off of the receivable to revenue.
To determine if the collection of lease receivables is probable, we review our tenants' financial condition, including estimates of their expected future operating results, which are subjective. The tenant's current and estimated future operating results, the tenant's ability to obtain additional financing, as well as the ability and intention to pay lease receivables can vary based on economic conditions and industry specific factors. If economic conditions or the
tenant's financial condition or results decline, the anticipated collection of outstanding lease receivables may not be probable and could result in the suspension of revenue recognition and the write-off of the lease receivable.
Collectability of Mortgage and Notes Receivables
Our mortgage and notes receivables consist of loans originated by us and the related accrued and unpaid interest income. We regularly evaluate the collectability of our receivables by considering such factors as the credit quality of our borrowers, historical trends of the borrower, our historical loss experience, current portfolio, market and economic conditions and changes in borrower payment terms. We estimate our current expected credit losses on a loan-by-loan basis using a forward-looking commercial real estate forecasting tool. We record provision (benefit) for credit losses, net and reduce our mortgage note and note receivables balances by the allowance for credit losses on a quarterly basis in accordance with ASC 326. In the event we have a past due mortgage note or note receivable and we determine it is collateral dependent, we measure expected credit losses based on the fair value of the collateral. If foreclosure is deemed probable, and we expect to sell rather than operate the collateral, we adjust the fair value of the collateral for the estimated costs to sell.
The significant assumptions used in the forecasting tool to estimate our current expected credit losses include loan level assumptions such as loan to value ratio and debt service coverage ratio, as well as market level assumptions such as unemployment rates, interest rates and real estate price indices. Changes in these assumptions could materially impact the allowance for credit losses. If economic conditions or the borrower's financial condition declines, this could result in additional provision (benefit) for credit losses, net, the suspension of interest income recognition or the write-off of the receivables.
If a loan is determined to be collateral dependent, the assumptions used to determine the fair value of the underlying collateral vary based on the type of collateral that secures the mortgage or note receivable. The fair value may be impacted based on economic factors, an estimate of future operating cash flows of the collateral and capitalization rates, that are subjective and can be impacted by a lack of comparable transactions. Changes in these assumptions could materially impact the estimated value of the collateral and lead to increased provision (benefit) for credit losses, net.
Recent Developments
Investment Spending
Our investment spending during the years ended December 31, 2024 and 2023 totaled $263.9 million and $269.4 million, respectively, and is detailed below (in thousands):
For the Year Ended December 31, 2024
Investment Type Total Investment Spending New Development Re-development Asset Acquisition Mortgage Notes or Notes Receivable Investment in Joint Ventures
Experiential:
Theatres $ 370 $ - $ 370 $ - $ - $ -
Eat & Play 42,254 30,058 1,118 - 11,078 -
Attractions 78,025 - 164 33,437 44,424 -
Ski 2,018 - - - 2,018 -
Experiential Lodging 9,411 - - - - 9,411
Fitness & Wellness 129,710 24,080 48,412 - 57,218 -
Cultural 2,132 - 2,132 - - -
Total Experiential 263,920 54,138 52,196 33,437 114,738 9,411
Education:
Total Education - - - - - -
Total Investment Spending $ 263,920 $ 54,138 $ 52,196 $ 33,437 $ 114,738 $ 9,411
For the Year Ended December 31, 2023
Investment Type Total Investment Spending New Development Re-development Asset Acquisition Mortgage Notes or Notes Receivable Investment in Joint Ventures
Experiential:
Theatres $ 5,182 $ - $ 5,182 $ - $ - $ -
Eat & Play 24,048 20,750 2,192 - 1,106 -
Attractions 28,384 - 3,669 - 24,715 -
Ski 5,324 - - - 5,324 -
Experiential Lodging 16,034 - - - - 16,034
Fitness & Wellness 184,370 45,632 3,286 53,144 82,308 -
Cultural 6,086 - 6,086 - - -
Total Experiential 269,428 66,382 20,415 53,144 113,453 16,034
Education:
Total Education - - - - - -
Total Investment Spending $ 269,428 $ 66,382 $ 20,415 $ 53,144 $ 113,453 $ 16,034
The above amounts include $3.5 million and $3.6 million in capitalized interest for the years ended December 31, 2024 and 2023, respectively, and $0.2 million in capitalized other general and administrative direct project costs for both the years ended December 31, 2024 and 2023. Excluded from the table above are $7.3 million and $12.4 million of maintenance capital expenditures and other spending for the years ended December 31, 2024 and 2023, respectively.
Dispositions
During the year ended December 31, 2024, we completed the sales of two leased cultural properties, eight vacant theatre properties, one leased theatre property and two vacant early childhood education centers for net proceeds totaling $74.4 million. In connection with these sales, we recognized a net gain on sale totaling $16.1 million.
Impairment Charges and Credit Loss
During the year ended December 31, 2024, we reassessed the holding period of one vacant theatre property, two theatre properties currently operated through a third-party management agreement and two leased theatre properties. We determined that the sum of the undiscounted cash flows did not exceed the carrying value of the theatre properties and estimated the fair value of the real estate investments of these properties using an independent appraisal and purchase offers. Accordingly, we recognized impairment charges totaling $51.8 million for the year ended December 31, 2024 related to these properties.
During the year ended December 31, 2024, two experiential lodging properties located in St. Pete Beach, Florida, in which we hold unconsolidated equity investments through two joint ventures, were significantly damaged by two weather events. On September 26, 2024, Hurricane Helene made landfall on St. Pete Beach as a Category 3 storm and damaged the experiential lodging properties. On October 9, 2024, further damage was caused by Hurricane Milton. The properties will remain closed as the joint ventures continue to assess and repair damage and we do not anticipate that the properties will re-open until well into 2025. We are working in good faith with our joint venture partners, the non-recourse debt provider and the insurance companies to identify a path forward, which we expect will result in the eventual removal of both experiential properties from our portfolio. Accordingly, we determined that our investment in these joint ventures had no fair value and was not recoverable, and during the year ended December 31, 2024, recognized $12.1 million in other-than-temporary impairment charges on joint ventures related to these equity investments. There can be no assurance as to the ultimate outcome of our negotiations to exit from these joint ventures.
In addition, we made the decision during the fourth quarter of 2024 to exit our unconsolidated equity investment in an operating RV property located in Breaux Bridge, Louisiana, and entered into good faith negotiations with our joint venture partners and the non-recourse debt provider to identify a path forward to remove the experiential lodging property from our portfolio. The RV property has underperformed expectations and would have required ongoing capital infusion to service the non-recourse debt and property operations. We finalized our exit from the investment on February 4, 2025. Accordingly, during the fourth quarter of 2024, we determined that our investment was not recoverable and recognized a $16.1 million impairment charge to fully write-off our carrying value of this equity investment. We also received $1.0 million in exchange for the sale of our remaining subordinated mortgage note receivable on the property. Accordingly, during the fourth quarter of 2024, we recognized $10.3 million as provision for credit loss.
Retirement and Severance Expense
On March 1, 2024, our Executive Vice President, General Counsel and Secretary, Craig Evans, retired. Details of Mr. Evans' retirement are included in the previously disclosed Retirement and Release Agreement entered into between us and Mr. Evans. The role of General Counsel and Secretary was assumed by Paul Turvey upon Mr. Evans' retirement. For the three months ended March 31, 2024, we recorded retirement and severance expense related to Mr. Evans' retirement, as well as the departure of another associate, totaling $1.8 million, which included cash payments totaling $0.2 million and accelerated vesting of nonvested shares totaling $1.6 million.
Capital Markets Activities
On August 22, 2024, we repaid our $136.6 million Series A unsecured private placement notes due 2024, using funds available on our $1.0 billion senior unsecured revolving credit facility.
During the year ended December 31, 2024, we entered into a Fourth Amended, Restated and Consolidated Credit Agreement (the "Amended Credit Agreement"). See discussion below in Liquidity and Capital Resources and Note 9 to the consolidated financial statements in this Annual Report on Form 10-K for additional information.
Results of Operations
Year ended December 31, 2024 compared to year ended December 31, 2023
Analysis of Revenue
The following table summarizes our total revenue (dollars in thousands):
Year Ended December 31, Change
2024 2023
Minimum rent (1) $ 530,664 $ 570,549 $ (39,885)
Percentage rent (2) 14,540 12,192 2,348
Straight-line rent (3) 17,327 10,591 6,736
Tenant reimbursements 20,758 21,285 (527)
Other rental revenue 1,878 1,522 356
Total Rental Revenue $ 585,167 $ 616,139 $ (30,972)
Other income (4) 57,071 45,947 11,124
Mortgage and other financing income (5) 55,830 43,582 12,248
Total revenue $ 698,068 $ 705,668 $ (7,600)
(1) For the year ended December 31, 2024 compared to the year ended December 31, 2023, the decrease in minimum rent resulted from a decrease of $11.5 million related to the comprehensive restructuring agreement with Regal entered into on June 27, 2023, a $33.3 million decrease in deferred rental repayments from cash basis tenants, a $6.9 million decrease from property dispositions, a $3.4 million decrease from lease termination fees recognized during the year ended December 31, 2023 and a $0.2 million decrease from vacant properties. This decrease was partially offset by an increase in rental revenue of $9.4 million related to property acquisitions and developments completed in 2024 and 2023 and an increase in rental revenue on existing properties of $6.0 million.
During the year ended December 31, 2024, we renewed 11 lease agreements on approximately 295 thousand square feet and experienced a decrease of approximately 0.5% in rental rates and paid no leasing commissions with respect to these lease renewals.
(2) The increase in percentage rent (i.e., amounts above base rent) for the year ended December 31, 2024 compared to the year ended December 31, 2023 was due primarily to higher percentage rent recognized from two of our theatre tenants and was offset by lower percentage rent recognized in 2024 related to two cultural properties that were sold early in the year.
(3) The increase in straight-line rent for the year ended December 31, 2024 compared to the year ended December 31, 2023 was due primarily to property acquisitions and developments completed in 2024 and 2023 and straight-line rent receivable for Regal recognized during the year ended December 31, 2024 in connection with reestablishing accrual basis accounting for Regal on August 1, 2023.
(4) The increase in other income for the year ended December 31, 2024 compared to the year ended December 31, 2023 related primarily to an increase in operating income from the addition of five operating theatre properties in the third quarter of 2023 that were previously leased by Regal. One of these properties closed on September 20, 2024 and is currently vacant as we prepare to sell it.
(5) The increase in mortgage and other financing income during the year ended December 31, 2024 compared to the year ended December 31, 2023 related to interest income on new mortgage notes funded in 2024 and 2023 and from additional investments on existing mortgage note receivables.
Analysis of Expenses and Other Line Items
The following table summarizes our expenses and other line items (dollars in thousands):
Year Ended December 31, Change
2024 2023
Property operating expense $ 59,146 $ 57,478 $ 1,668
Other expense (1) 56,877 44,774 12,103
General and administrative expense (2) 50,096 56,442 (6,346)
Retirement and severance expense 1,836 547 1,289
Transaction costs 798 1,554 (756)
Provision (benefit) for credit losses, net (3) 12,247 878 11,369
Impairment charges (4) 51,764 67,366 (15,602)
Depreciation and amortization 165,733 168,033 (2,300)
Gain (loss) on sale of real estate (5) 16,101 (2,197) 18,298
Costs associated with loan refinancing or payoff 337 - 337
Interest expense, net (6) 130,810 124,858 5,952
Equity in loss from joint ventures (7) 8,809 6,768 2,041
Impairment charges on joint ventures (8) 28,217 - 28,217
Income tax expense 1,433 1,727 (294)
Preferred dividend requirements 24,144 24,145 (1)
(1) The increase in other expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 related primarily to the addition of operating expense from five theatre properties that were previously leased by Regal. One of these properties closed on September 20, 2024 and is currently vacant as we prepare to sell it.
(2) The decrease in general and administrative expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 related primarily to a decrease in payroll and benefit costs, a decrease in franchise taxes due to a state legislative change that went into effect during the second quarter of 2024 and a decrease in professional fees, including those related to the comprehensive restructuring agreement with Regal in 2023.
(3) The change in provision (benefit) for credit losses, net for the year ended December 31, 2024 compared to the year ended December 31, 2023 was due primarily to credit loss expense of $10.3 million related to one mortgage note receivable recognized during the year ended December 31, 2024.
(4) Impairment charges recognized during the year ended December 31, 2024 related to one vacant theatre property, two theatre properties being operated through third-party property management agreements and two leased theatre properties. Impairment charges recognized during the year ended December 31, 2023 related to eight theatre properties surrendered by Regal in connection with their bankruptcy resolution, two leased theatre properties and two early childhood education center properties.
(5) The gain on sale of real estate for the year ended December 31, 2024 related to the sale of two cultural properties, eight vacant theatre properties, one leased theatre property and two vacant early childhood education centers. The loss on sale of real estate for the year ended December 31, 2023 related to the sale of three vacant theatre properties, two leased theatre properties, one vacant eat & play property, four vacant early childhood education centers and three land parcels.
(6) The increase in interest expense, net, for the year ended December 31, 2024 compared to the year ended December 31, 2023 resulted primarily from an increase in average borrowings and an increase in our weighted average interest rate on outstanding debt due to borrowings on our unsecured revolving credit facility. This increase was also due to a decrease in interest income from short-term investments related to cash on hand.
(7) The increase in equity in loss from joint ventures for the year ended December 31, 2024 compared to the year ended December 31, 2023 related to higher expenses, including insurance, depreciation and interest, at certain of our joint venture investments during the year ended December 31, 2024.
(8) The increase in impairment charges on joint ventures for the year ended December 31, 2024 compared to the year ended December 31, 2023 related to other-than-temporary impairments of our equity investments in joint ventures holding three experiential lodging properties.
Liquidity and Capital Resources
Cash and cash equivalents were $22.1 million at December 31, 2024. In addition, we had restricted cash of $13.6 million at December 31, 2024, which related primarily to escrow deposits required for property management, mortgage note and debt agreements or held for potential acquisitions, developments and redevelopments.
Mortgage Debt, Senior Notes, Unsecured Revolving Credit Facility and Unsecured Term Loan Facility
As of December 31, 2024, we had total debt outstanding of $2.9 billion of which 99% was unsecured.
At December 31, 2024, we had outstanding $2.5 billion in aggregate principal amount of unsecured senior notes (excluding the private placement notes discussed below) ranging in interest rates from 3.60% to 4.95%. The notes contain various covenants, including: (i) a limitation on incurrence of any debt that would cause the ratio of our debt to adjusted total assets to exceed 60%; (ii) a limitation on incurrence of any secured debt that would cause the ratio of secured debt to adjusted total assets to exceed 40%; (iii) a limitation on incurrence of any debt that would cause our debt service coverage ratio to be less than 1.5 times; and (iv) the maintenance at all times of our total unencumbered assets such that they are not less than 150% of our outstanding unsecured debt. Interest payments on our unsecured senior notes are due semiannually.
At December 31, 2024, we had a $175.0 million outstanding balance under our $1.0 billion unsecured revolving credit facility. On July 3, 2024, we amended our Third Amended, Restated and Consolidated Credit Agreement, which governs our unsecured revolving credit facility, to incorporate the Canadian Overnight Repo Rate Average (CORRA) as a replacement index rate benchmark with respect to loans denominated in Canadian Dollars (CAD) as the Canadian Dollar Offered Rate (CDOR) has been phased out.
On September 19, 2024, we entered into the Amended Credit Agreement providing for a new amended and restated senior unsecured revolving credit facility. The Amended Credit Agreement amended, restated and replaced our prior senior unsecured revolving credit facility provided under the Third Amended, Restated and Consolidated Credit Agreement. The amendments to the prior facility, among other things: (i) extended the maturity date of the revolving credit facility; (ii) generally reduced the interest rate payable on outstanding loans; (iii) eliminated the tangible net worth covenant; (iv) modified the secured debt to total assets financial covenant to permit increased secured debt if we so elect; and (v) modified and simplified the capitalization rates used to value assets under the facility.
The Amended Credit Agreement provides for an initial maximum principal amount of borrowing availability of $1.0 billion, which includes a $100.0 million letter-of-credit subfacility and a $300.0 million foreign currency revolving credit subfacility. The new credit facility contains an "accordion" feature under which we may increase the total maximum principal amount available by $1.0 billion, to a total of $2.0 billion, subject to lender consent. The new credit facility matures on October 2, 2028. We have two options to extend the maturity date of the new credit facility by an additional six months each (i.e., for a total of 12 months), subject to paying additional fees and the absence of any default. The unsecured revolving credit facility bears interest at a floating rate of the Secured Overnight Funds Rate (SOFR) plus 1.15% (based on our unsecured debt ratings and with a SOFR floor of zero), which was 5.46% at December 31, 2024. Additionally, the facility fee on the revolving credit facility is 0.25%.
In connection with entering into the Amended Credit Agreement, we incurred $9.0 million in fees that were capitalized in deferred financing costs and amortized as part of the effective yield. These fees are included in "Other assets" in the accompanying consolidated balance sheet as of December 31, 2024. During the year ended December 31, 2024, we also recorded a non-cash write-off of deferred financing costs (net of accumulated
amortization), totaling $0.3 million to "Costs associated with loan refinancing or payoff" in connection with entering into the Amended Credit Agreement.
At December 31, 2024, we had outstanding $179.6 million of Series B senior unsecured notes that were issued in a private placement transaction and are due on August 22, 2026. At December 31, 2024, the interest rate for these Series B private placement notes was 4.56%. The private placement notes were originally issued in two tranches: Series A due 2024; and Series B due 2026. On August 22, 2024, we repaid in full the Series A notes for $136.6 million using funds available under our $1.0 billion senior unsecured revolving credit facility.
Our unsecured revolving credit facility and the private placement notes contain financial covenants or restrictions that limit our levels of consolidated debt, secured debt, investments outside certain categories, stock repurchases and dividend distributions and require us to meet certain coverage levels for fixed charges and debt service. Additionally, these debt instruments contain cross-default provisions if we default under other indebtedness exceeding certain amounts. Those cross-default thresholds vary from $50.0 million to $75.0 million, depending upon the debt instrument. We were in compliance with all financial and other covenants under our consolidated debt instruments at December 31, 2024.
As discussed above in "Recent Developments", our unconsolidated joint ventures holding our equity investments in two experiential lodging properties located in St. Pete Beach, Florida were severely damaged by two hurricanes in 2024. We are working in good faith with our joint venture partners, the non-recourse debt provider and the insurance companies to identify a path forward in which we expect to result in the eventual removal of the unconsolidated equity investments in these experiential lodging properties and the related non-recourse debt from our portfolio, although there can be no assurances as to the outcome of those discussions.
Our principal investing activities are acquiring, developing and financing Experiential properties. These investing activities have generally been financed with senior unsecured notes and the proceeds from equity offerings. Our unsecured revolving credit facility and cash from operations are also used to finance the acquisition or development of properties, and to provide mortgage financing. We have and expect to continue to issue debt securities in public or private offerings. We have and may in the future assume mortgage debt in connection with property acquisitions or incur new mortgage debt on existing properties. We may also issue equity securities in connection with acquisitions. Continued growth of our real estate investments and mortgage financing portfolios will depend in part on our continued ability to access funds through additional borrowings and securities offerings and, to a lesser extent, our ability to assume debt in connection with property acquisitions. We may also fund investments with the proceeds from asset dispositions. As discussed above, due to our current elevated cost of capital, we intend to fund our investments in the near-term primarily from cash on hand, excess cash flow, disposition proceeds and borrowing availability under our unsecured revolving credit facility, subject to maintaining our leverage levels consistent with past practice.
Liquidity Requirements
Short-term liquidity requirements consist primarily of normal recurring corporate operating expenses, debt service requirements, and distributions to shareholders. We have historically met these requirements primarily through cash provided by operating activities. The table below summarizes our cash flows (dollars in thousands):
Year Ended December 31,
2024 2023
Net cash provided by operating activities $ 393,137 $ 447,094
Net cash used by investing activities (176,352) (201,048)
Net cash used by financing activities (261,619) (275,695)
Liquidity and material cash requirements at December 31, 2024 consisted primarily of maturities of debt. Contractual obligations as of December 31, 2024 are as follows (in thousands):
Year ended December 31,
Contractual Obligations 2025 2026 2027 2028 2029 Thereafter Total
Long Term Debt Obligations $ 300,000 $ 629,597 $ 450,000 $ 575,000 $ 500,000 $ 424,995 $ 2,879,592
Interest on Long Term Debt Obligations 116,328 109,150 71,575 46,862 26,752 38,130 408,797
Operating Lease Obligation - Corporate Office 958 717 - - - - 1,675
Operating Ground Lease Obligations (1) 27,844 26,401 25,075 24,192 22,635 190,198 316,345
Total $ 445,130 $ 765,865 $ 546,650 $ 646,054 $ 549,387 $ 653,323 $ 3,606,409
(1) Our tenants, who are generally sub-tenants under the ground leases, are responsible for paying the rent under these ground leases. As of December 31, 2024, rental revenue from one of our tenants, who is also a sub-tenant under certain ground leases, is being recognized on a cash basis. In addition, two of our ground leases do not currently have sub-tenants. In the event the tenant fails to pay the ground lease rent or the property does not have sub-tenants, we would be primarily responsible for the payment, assuming we do not sell or re-tenant the property. The above amounts exclude contingent rent due under leases where the ground lease payment, or a portion thereof, is based on the level of the tenant's sales.
Commitments
As of December 31, 2024, we had 15 development projects with commitments to fund an aggregate of approximately $164.4 million, of which approximately $113.2 million is expected to be funded in 2025. We advance development costs in periodic draws. If we determine that construction is not being completed in accordance with the terms of the development agreement, we can discontinue funding construction draws. We have agreed to lease the properties to the operators at pre-determined rates upon completion of construction.
We have certain commitments related to our mortgage notes and notes receivable investments that we may be required to fund in the future. We are generally obligated to fund these commitments at the request of the borrower or upon the occurrence of events outside of its direct control. As of December 31, 2024, we had three mortgage notes with commitments totaling approximately $49.3 million, of which approximately $2.4 million is expected to be funded in 2025. If commitments are funded in the future, interest will be charged at rates consistent with the existing investments.
In connection with construction of our development projects and related infrastructure, certain public agencies require posting of surety bonds to guarantee that our obligations will be satisfied. These bonds expire upon the completion of the improvements or infrastructure. As of December 31, 2024, we had three surety bonds outstanding totaling $0.6 million.
Liquidity Analysis
We currently anticipate that our cash on hand, cash from operations, funds available under our unsecured revolving credit facility and proceeds from asset dispositions will provide adequate liquidity to meet our financial commitments, including the amounts needed to fund our operations, make recurring debt service payments, allow distributions to our shareholders and avoid corporate level federal income or excise tax in accordance with REIT Internal Revenue Code requirements.
Long-term liquidity requirements consist primarily of debt maturities. We have $300.0 million of consolidated debt maturities due April 1, 2025. We currently believe that we will be able to repay, extend, refinance or otherwise settle our debt maturities as the debt comes due and that we will be able to fund our remaining commitments, as necessary. However, there can be no assurance that additional financing or capital will be available, or that terms will be
acceptable or advantageous to us, particularly in light of the impact of the challenging economic environment and our elevated cost of capital.
Our primary use of cash after paying operating expenses, debt service, distributions to shareholders and funding existing commitments is growing our investment portfolio through acquiring, developing and financing additional properties. We expect to finance these investments with cash on hand, excess cash flow, proceeds from asset dispositions or borrowings under our unsecured revolving credit facility as well as debt and equity financing alternatives. If we borrow the maximum amount available under our $1.0 billion unsecured revolving credit facility, there can be no assurance that we will be able to obtain additional or substitute investment financing. We may also assume mortgage debt in connection with property acquisitions. The availability and terms of any such financing or sales will depend upon market and other conditions.
The challenging economic environment has increased our cost of capital which has negatively impacted our ability to make investments in the near-term. Accordingly, we intend to continue to be more selective in making future investments and acquisitions until such time as economic conditions improve and our cost of capital improves.
Capital Structure
We believe that our shareholders are best served by a conservative capital structure. Therefore, we seek to maintain a conservative debt level on our balance sheet as measured primarily by our net debt to adjusted EBITDAre ratio (see "Non-GAAP Financial Measures" for definitions). Because adjusted EBITDAre, as defined, does not include the annualization of investments put in service, acquired or disposed of during the quarter, as well as the potential earnings on property under development, the annualization of percentage rent and adjustments for other items, we also look at an additional ratio that reflects these adjustments. We also seek to maintain conservative interest, fixed charge, debt service coverage and net debt to gross asset ratios (see "Non-GAAP Financial Measures" for calculations).
Non-GAAP Financial Measures
Funds From Operations (FFO), Funds From Operations As Adjusted (FFOAA) and Adjusted Funds From Operations (AFFO)
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 GAAP. Pursuant to the definition of FFO by the Board of Governors of NAREIT, we calculate FFO as net income available to common shareholders, computed in accordance with GAAP, excluding gains and losses from disposition of real estate and impairment losses on real estate, 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. We have calculated FFO for all periods presented in accordance with this definition.
In addition to FFO, we present FFOAA and AFFO. FFOAA is presented by adding to FFO retirement and severance expense, transaction costs, provision (benefit) for credit losses, net, costs associated with loan refinancing or payoff, preferred share redemption costs and impairment of operating lease right-of-use assets and subtracting sale participation income, gain on insurance recovery and deferred income tax (benefit) expense. AFFO is presented by adding to FFOAA non-real estate depreciation and amortization, deferred financing fees amortization and share-based compensation expense to management and Trustees; and subtracting amortization of above and below market leases, net and tenant allowances, maintenance capital expenditures (including second generation tenant improvements and leasing commissions), straight-lined rental revenue (removing the impact of straight-line ground sublease expense), the non-cash portion of mortgage and other financing income and the allocated share of joint venture non-cash items.
FFO, FFOAA and AFFO are widely used measures of the operating performance of real estate companies and are provided here as supplemental measures to GAAP net income available to common shareholders and earnings per share, and management provides FFO, FFOAA and AFFO herein because it believes this information is useful to
investors in this regard. FFO, FFOAA and AFFO are non-GAAP financial measures. FFO, FFOAA and AFFO do not represent cash flows from operations as defined by GAAP and are not indicative that cash flows are adequate to fund all cash needs and are not to be considered alternatives to net income or any other GAAP measure as a measurement of the results of our operations or our cash flows or liquidity as defined by GAAP. It should also be noted that not all REITs calculate FFO, FFOAA and AFFO the same way so comparisons with other REITs may not be meaningful.
The following table summarizes our FFO, FFOAA and AFFO including per share amounts for FFO and FFOAA, for the years ended December 31, 2024, 2023 and 2022 and reconciles such measures to net income available to common shareholders, the most directly comparable GAAP measure (unaudited, in thousands, except per share information):
Year ended December 31,
2024 2023 2022
FFO:
Net income available to common shareholders of EPR Properties $ 121,922 $ 148,901 $ 152,088
(Gain) loss on sale of real estate (16,101) 2,197 (651)
Impairment of real estate investments 51,764 67,366 25,381
Real estate depreciation and amortization 165,029 167,219 162,821
Allocated share of joint venture depreciation 9,419 8,876 7,409
Impairment charges on joint ventures 28,217 - 647
FFO available to common shareholders of EPR Properties $ 360,250 $ 394,559 $ 347,695
FFO available to common shareholders of EPR Properties $ 360,250 $ 394,559 $ 347,695
Add: Preferred dividends for Series C preferred shares 7,752 7,752 7,752
Add: Preferred dividends for Series E preferred shares 7,752 7,752 7,756
Diluted FFO available to common shareholders of EPR Properties $ 375,754 $ 410,063 $ 363,203
FFOAA:
FFO available to common shareholders of EPR Properties $ 360,250 $ 394,559 $ 347,695
Retirement and severance expense 1,836 547 -
Transaction costs 798 1,554 4,533
Provision (benefit) for credit losses, net 12,247 878 10,816
Costs associated with loan refinancing or payoff 337 - -
Impairment of operating lease right-of-use assets - - 1,968
Sale participation income (included in other income) - - (9,134)
Gain on insurance recovery (included in other income) - - (552)
Deferred income tax benefit (1,539) (344) (169)
FFOAA available to common shareholders of EPR Properties $ 373,929 $ 397,194 $ 355,157
FFOAA available to common shareholders of EPR Properties $ 373,929 $ 397,194 $ 355,157
Add: Preferred dividends for Series C preferred shares 7,752 7,752 7,752
Add: Preferred dividends for Series E preferred shares 7,752 7,752 7,756
Diluted FFOAA available to common shareholders of EPR Properties $ 389,433 $ 412,698 $ 370,665
Year ended December 31,
2024 2023 2022
AFFO:
FFOAA available to common shareholders of EPR Properties $ 373,929 $ 397,194 $ 355,157
Non-real estate depreciation and amortization 704 814 831
Deferred financing fees amortization 8,844 8,637 8,360
Share-based compensation expense to management and trustees 14,066 17,512 16,666
Amortization of above/below-market leases, net and tenant allowances (333) (535) (355)
Maintenance capital expenditures (1) (7,299) (12,399) (4,545)
Straight-lined rental revenue (17,327) (10,591) (6,993)
Straight-lined ground sublease expense 97 1,099 1,692
Non-cash portion of mortgage and other financing income (1,984) (1,088) (473)
Allocated share of joint venture non-cash items 712 - -
AFFO available to common shareholders of EPR Properties $ 371,409 $ 400,643 $ 370,340
FFO per common share:
Basic $ 4.76 $ 5.24 $ 4.64
Diluted 4.70 5.15 4.60
FFOAA per common share:
Basic $ 4.94 $ 5.28 $ 4.74
Diluted 4.87 5.18 4.69
Shares used for computation (in thousands):
Basic 75,636 75,260 74,967
Diluted 75,999 75,715 75,043
Weighted average shares outstanding-diluted EPS 75,999 75,715 75,043
Effect of dilutive Series C preferred shares 2,314 2,283 2,250
Effect of dilutive Series E preferred shares 1,664 1,663 1,664
Adjusted weighted average shares outstanding - diluted Series C and Series E 79,977 79,661 78,957
Other financial information:
Dividends per common share $ 3.400 $ 3.300 $ 3.250
(1) Includes maintenance capital expenditures and certain second-generation tenant improvements and leasing commissions.
The effect of the conversion of our convertible preferred shares is calculated using the if-converted method and the conversion, which results in the most dilution is included in the computation of per share amounts. The conversion of the 5.75% Series C cumulative convertible preferred shares and the 9.00% Series E cumulative convertible preferred shares would be dilutive to FFO, FFOAA and AFFO per share for the years ended December 31, 2024, 2023 and 2022. Therefore, the additional common shares that would result from the conversion and the corresponding add-back of the preferred dividends declared on those shares are included in the calculation of diluted FFO and FFOAA per share and would be included in a calculation of AFFO per share for these periods.
Net Debt
Net Debt represents debt (reported in accordance with GAAP) adjusted to exclude deferred financing costs, net and reduced for cash and cash equivalents. By excluding deferred financing costs, net and reducing debt for cash and cash equivalents on hand, the result provides an estimate of the contractual amount of borrowed capital to be repaid, net of cash available to repay it. We believe this calculation constitutes a beneficial supplemental non-GAAP financial disclosure to investors in understanding our financial condition. Our method of calculating Net Debt may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
Gross Assets
Gross Assets represents total assets (reported in accordance with GAAP) adjusted to exclude accumulated depreciation and reduced by cash and cash equivalents. By excluding accumulated depreciation and reducing cash and cash equivalents, the result provides an estimate of the investment made by us. We believe that investors commonly use versions of this calculation in a similar manner. Our method of calculating Gross Assets may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
Net Debt to Gross Assets Ratio
Net Debt to Gross Assets Ratio is a supplemental measure derived from non-GAAP financial measures that we use to evaluate capital structure and the magnitude of debt to gross assets. We believe that investors commonly use versions of this ratio in a similar manner. Our method of calculating the Net Debt to Gross Assets Ratio may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
EBITDAre
NAREIT developed EBITDAre as a relative non-GAAP financial measure of REITs, independent of a company's capital structure, to provide a uniform basis to measure the enterprise value of a company. Pursuant to the definition of EBITDAre by the Board of Governors of NAREIT, we calculate EBITDAre as net income, computed in accordance with GAAP, excluding interest expense (net), income tax (benefit) expense, depreciation and amortization, gains and losses from disposition of real estate, impairment losses on real estate, costs associated with loan refinancing or payoff and adjustments for unconsolidated partnerships, joint ventures and other affiliates.
Management provides EBITDAre herein because it believes this information is useful to investors as a supplemental performance measure because it can help facilitate comparisons of operating performance between periods and with other REITs. Our method of calculating EBITDAre may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. EBITDAre is not a measure of performance under GAAP, does not represent cash generated from operations as defined by GAAP and is not indicative of cash available to fund all cash needs, including distributions. This measure should not be considered an alternative to net income or any other GAAP measure as a measurement of the results of our operations or cash flows or liquidity as defined by GAAP.
Adjusted EBITDAre
Management uses Adjusted EBITDAre in its analysis of the performance of the business and operations of the Company. Management believes Adjusted EBITDAre is useful to investors because it excludes various items that management believes are not indicative of operating performance, and because it is an informative measure to use in computing various financial ratios to evaluate the Company. We define Adjusted EBITDAre as EBITDAre (defined above) for the quarter excluding sale participation income, gain on insurance recovery, retirement and severance expense, transaction costs, provision (benefit) for credit losses, net, impairment losses on operating lease right-of-use assets and prepayment fees.
Our method of calculating Adjusted EBITDAre may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. Adjusted EBITDAre is not a measure of performance under GAAP, does not represent cash generated from operations as defined by GAAP and is not indicative of cash available to fund all cash needs, including distributions. This measure should not be considered as an alternative to net income or any other GAAP measure as a measurement of the results of our operations or cash flows or liquidity as defined by GAAP.
Net Debt to Adjusted EBITDAre Ratio
Net Debt to Adjusted EBITDAre Ratio is a supplemental measure derived from non-GAAP financial measures that we use to evaluate our capital structure and the magnitude of our debt against our operating performance. We believe that investors commonly use versions of this ratio in a similar manner. In addition, financial institutions use versions of this ratio in connection with debt agreements to set pricing and covenant limitations. Our method of calculating the Net Debt to Adjusted EBITDAre Ratio may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
Reconciliations of debt, total assets and net income (all reported in accordance with GAAP) to Net Debt, Gross Assets, Net Debt to Gross Assets Ratio, EBITDAre, Adjusted EBITDAre and Net Debt to Adjusted EBITDAre Ratio (each of which is a non-GAAP financial measure), as applicable, are included in the following tables (unaudited, in thousands except ratios):
December 31,
2024 2023
Net Debt:
Debt $ 2,860,458 $ 2,816,095
Deferred financing costs, net 19,134 25,134
Cash and cash equivalents (22,062) (78,079)
Net Debt $ 2,857,530 $ 2,763,150
Gross Assets:
Total Assets $ 5,616,507 $ 5,700,885
Accumulated depreciation 1,562,645 1,435,683
Cash and cash equivalents (22,062) (78,079)
Gross Assets $ 7,157,090 $ 7,058,489
Debt to Total Assets Ratio 51 % 49 %
Net Debt to Gross Assets Ratio 40 % 39 %
Three Months Ended December 31,
2024 2023
EBITDAre and Adjusted EBITDAre:
Net (loss) income $ (8,395) $ 45,529
Interest expense, net 33,472 30,337
Income tax expense 653 667
Depreciation and amortization 40,995 40,692
(Gain) loss on sale of real estate (112) 3,612
Impairment of real estate investments 39,952 2,694
Allocated share of joint venture depreciation 1,965 2,344
Allocated share of joint venture interest expense 589 1,879
Impairment charges on joint ventures 16,087 -
EBITDAre $ 125,206 $ 127,754
Transaction costs 423 401
Provision (benefit) for credit losses, net 9,876 1,285
Adjusted EBITDAre $ 135,505 $ 129,440
Adjusted EBITDAre (annualized) (1) $ 542,020 $ 517,760
Net Debt to Adjusted EBITDAre Ratio 5.3 5.3
(1) Adjusted EBITDAre for the quarter is multiplied by four to calculate an annual amount but does not include the annualization of investments put in service, acquired or disposed of during the quarter, as well as the potential earnings on property under development, the annualization of percent rent and participating interest and adjustments for other items.
Total Investments
Total investments is a non-GAAP financial measure defined as the sum of the carrying values of real estate investments (before accumulated depreciation), land held for development, property under development, mortgage notes receivable and related accrued interest receivable, net, investment in joint ventures, intangible assets, gross (before accumulated amortization and included in other assets) and notes receivable and related accrued interest receivable, net (included in other assets). Total investments is a useful measure for management and investors as it illustrates across which asset categories the Company's funds have been invested. Our method of calculating total investments may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. A reconciliation of total assets (computed in accordance with GAAP) to total investments is included in the following table (unaudited, in thousands):
December 31, 2024 December 31, 2023
Total assets $ 5,616,507 $ 5,700,885
Operating lease right-of-use assets (173,364) (186,628)
Cash and cash equivalents (22,062) (78,079)
Restricted cash (13,637) (2,902)
Accounts receivable (84,589) (63,655)
Add: accumulated depreciation on real estate investments 1,562,645 1,435,683
Add: accumulated amortization on intangible assets (1) 31,876 30,589
Prepaid expenses and other current assets (1) (39,464) (22,718)
Total investments $ 6,877,912 $ 6,813,175
Total Investments:
Real estate investments, net of accumulated depreciation $ 4,435,358 $ 4,537,359
Add back accumulated depreciation on real estate investments 1,562,645 1,435,683
Land held for development 20,168 20,168
Property under development 112,263 131,265
Mortgage notes and related accrued interest receivable 665,796 569,768
Investment in joint ventures 14,019 49,754
Intangible assets, gross (1) 64,317 65,299
Notes receivable and related accrued interest receivable, net (1) 3,346 3,879
Total investments $ 6,877,912 $ 6,813,175
(1) Included in "Other assets" in the accompanying consolidated balance sheets. Other assets include the following:
December 31, 2024 December 31, 2023
Intangible assets, gross $ 64,317 $ 65,299
Less: accumulated amortization on intangible assets (31,876) (30,589)
Notes receivable and related accrued interest receivable, net 3,346 3,879
Prepaid expenses and other current assets 39,464 22,718
Total other assets $ 75,251 $ 61,307
Impact of Recently Issued Accounting Standards
See Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K for additional information on the impact of recently issued accounting standards on our business.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks, primarily relating to potential losses due to changes in interest rates and foreign currency exchange rates. We seek to mitigate the effects of fluctuations in interest rates by matching the term of new investments with new long-term fixed rate borrowings whenever possible. As of December 31, 2024, we had a $1.0 billion unsecured revolving credit facility with $175.0 million outstanding. We also had a $25.0 million bond that bears interest at a floating rate but has been fixed through an interest rate swap agreement as discussed below.
We are subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of such refinancing may not be as favorable as the terms of current indebtedness. The
majority of our borrowings are subject to contractual agreements or mortgages, which limit the amount of indebtedness we may incur. Accordingly, if we are unable to raise additional equity or borrow money due to these limitations or otherwise, our ability to make additional real estate investments may be limited.
The following table presents the principal amounts, weighted average interest rates, and other terms required by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes as of December 31 (including the impact of the interest rate swap agreements described below):
Expected Maturities (dollars in millions)
2025 2026 2027 2028 2029 Thereafter Total Estimated
Fair Value
December 31, 2024:
Fixed rate debt $300.0 $629.6 $450.0 $400.0 $500.0 $425.0 $2,704.6 $2,590.3
Average interest rate 4.50 % 4.70 % 4.50 % 4.95 % 3.75 % 3.54 % 4.32 % 5.50 %
Variable rate debt $ - $ - $ - $175.0 $ - $ - $175.0 $175.0
Average interest rate (as of December 31, 2024)
- % - % - % 5.46 % - % - % 5.46 % 5.46 %
2024 2025 2026 2027 2028 Thereafter Total Estimated
Fair Value
December 31, 2023:
Fixed rate debt $136.6 $300.0 $629.6 $450.0 $400.0 $925.0 $2,841.2 $2,606.8
Average interest rate 4.35 % 4.50 % 4.70 % 4.50 % 4.95 % 3.65 % 4.32 % 6.56 %
Variable rate debt $ - $ - $ - $ - $ - $ - $ - $ -
Average interest rate (as of December 31, 2023)
- % - % - % - % - % - % - % - %
The fair value of our debt as of December 31, 2024 and 2023 is estimated by discounting the future cash flows of each instrument using current market rates and current market spreads.
Cash Flow Hedges of Interest Rate Risk
In order to hedge our interest rate risk, we entered into an interest rate swap agreement on our variable rate secured bonds with a notional amount of $25.0 million. The interest rate cap agreement limits the variable portion of the interest rate (SOFR) on this bond to 2.5325% until September 30, 2026.
We are exposed to foreign currency risk against our functional currency, the U.S. dollar ("USD"), on our six Canadian properties and the rents received from tenants of the properties are payable in the Canadian dollar ("CAD"). In order to hedge our CAD denominated cash flows and our net investment in our six Canadian properties, we entered into cross-currency swaps designated as cash flow hedges and foreign currency forwards designated as net investment hedges as further described below.
Cash Flow Hedges of Foreign Exchange Risk-Cross Currency Swaps
We entered into six USD-CAD cross-currency swaps that became effective October 1, 2024 with a total fixed original notional value of $170.0 million CAD and $125.0 million USD. The net effect of these swaps is to lock in an exchange rate of $1.35 CAD per USD on approximately $15.3 million annual CAD denominated cash flows through December 2026.
We entered into two USD-CAD cross-currency swaps that became effective December 1, 2024 with a total fixed original notional value of $90.0 million CAD and $66.2 million USD. The net effect of these swaps is to lock in an exchange rate of $1.35 CAD per USD on approximately $8.1 million annual CAD denominated cash flows through December 2026.
Net Investment Hedges - Foreign Currency Forward Contracts
We entered into two forward contracts that became effective December 19, 2024 with a fixed notional value of $200.0 million CAD and $142.8 million USD with a settlement date of December 1, 2026. The exchange rate of these forward contracts is approximately $1.40 CAD per USD.
We entered into a forward contract that became effective December 19, 2024 with a fixed notional value of $90.0 million CAD and $64.3 million USD with a settlement date of December 1, 2026. The exchange rate of this forward contract is approximately $1.40 CAD per USD.
On December 19, 2024, we terminated our previous CAD to USD forward contracts in conjunction with entering into the new forward agreements described above. We received $10.4 million in connection with the settlement of the CAD to USD forward contracts.
For foreign currency derivatives designated as net investment hedges, the change in the fair value of the derivatives, including any cash settlements, is reported in AOCI as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated.
See Note 10 to the consolidated financial statements in this Annual Report on Form 10-K for additional information on our derivative financial instruments and hedging activities.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
EPR Properties
Contents
Report of Independent Registered Public Accounting Firm 59
Audited Financial Statements
Consolidated Balance Sheets 62
Consolidated Statements of Income and Comprehensive Income 63
Consolidated Statements of Changes in Equity 64
Consolidated Statements of Cash Flows 66
Notes to Consolidated Financial Statements 68
Financial Statement Schedules
Schedule III - Real Estate and Accumulated Depreciation 105
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders
EPR Properties:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of EPR Properties and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income and comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024 based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of indicators real estate investments may not be recoverable
As discussed in Notes 2 and 3 to the consolidated financial statements, the real estate investments, net balance as of December 31, 2024 was $4,435,358 thousand. The Company reviews a real estate investment for impairment whenever events or changes in circumstances indicate that the carrying value of the real estate investment may not be recoverable.
We identified the evaluation of indicators real estate investments may not be recoverable as a critical audit matter. There is a high degree of subjective judgement in evaluating the events or changes in circumstances that may indicate the carrying value of real estate investments may not be recoverable. In particular, the judgments regarding the expected period the Company will hold the real estate investments on the determination of the recoverability of the real estate investments required a higher degree of auditor judgment.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of an internal control related to the critical audit matter. This control related to the Company’s process to identify and evaluate events or changes in circumstances that may indicate the carrying amount of real estate investments may not be recoverable, which includes determining the period the Company will hold the real estate investments. We inquired of Company officials and inspected documents such as meeting minutes of the Board of Trustees to evaluate the likelihood that a real estate investment would be sold prior to the estimated holding period.
Impairment of real estate investments
As discussed in Notes 2, 5, and 11 to the consolidated financial statements, the real estate investments, net balance as of December 31, 2024 was $4,435,358 thousand. The Company reviews a property for impairment whenever events or changes in circumstances indicate that the carrying value of the property may not be recoverable. The Company recognized impairment charges of $51,764 thousand on real estate investments, which are the amounts that the carrying value of the assets exceeded the estimated fair value.
We identified the assessment of the fair values of real estate investments based on recent independent appraisals used to determine the impairment charges as a critical audit matter. There is a high degree of subjective auditor judgment in evaluating the relevance of land value per acre used to determine the fair value of these assets.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of an internal control related to the critical audit matter. This
control related to the determination of land value per acre. We involved valuation professionals with specialized skills and knowledge, who assisted in comparing the Company’s estimated assumptions of land value per acre to a range of independently developed estimates based on publicly available industry data.
/s/ KPMG LLP
We have served as the Company’s auditor since 2002.
Chicago, Illinois
February 27, 2025
EPR PROPERTIES
Consolidated Balance Sheets
(Dollars in thousands except share data)
December 31,
2024 2023
Assets
Real estate investments, net of accumulated depreciation of $1,562,645 and $1,435,683 at December 31, 2024 and 2023, respectively
$ 4,435,358 $ 4,537,359
Land held for development 20,168 20,168
Property under development 112,263 131,265
Operating lease right-of-use assets 173,364 186,628
Mortgage notes and related accrued interest receivable, net of allowance for credit losses of $17,111 and $3,656 at December 31, 2024 and 2023, respectively
665,796 569,768
Investment in joint ventures 14,019 49,754
Cash and cash equivalents 22,062 78,079
Restricted cash 13,637 2,902
Accounts receivable 84,589 63,655
Other assets 75,251 61,307
Total assets $ 5,616,507 $ 5,700,885
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities $ 107,976 $ 94,927
Operating lease liabilities 212,400 226,961
Common dividends payable 25,831 25,275
Preferred dividends payable 6,032 6,032
Unearned rents and interest 80,565 77,440
Debt 2,860,458 2,816,095
Total liabilities 3,293,262 3,246,730
Equity:
Common Shares, $0.01 par value; 125,000,000 shares authorized at December 31, 2024 and 2023; and 83,619,740 and 82,964,231 shares issued at December 31, 2024 and 2023, respectively
836 829
Preferred Shares, $0.01 par value; 25,000,000 shares authorized:
5,392,716 and 5,392,916 Series C convertible shares issued at December 31, 2024 and 2023, respectively; liquidation preference of $134,817,900
54 54
3,445,980 Series E convertible shares issued at December 31, 2024 and 2023; liquidation preference of $86,149,500
34 34
6,000,000 Series G shares issued at December 31, 2024 and 2023; liquidation preference of $150,000,000
60 60
Additional paid-in-capital 3,950,528 3,924,467
Treasury shares at cost: 7,883,581 and 7,631,725 common shares at December 31, 2024 and 2023, respectively
(285,413) (274,038)
Accumulated other comprehensive income (3,756) 3,296
Distributions in excess of net income (1,339,098) (1,200,547)
Total equity $ 2,323,245 $ 2,454,155
Total liabilities and equity $ 5,616,507 $ 5,700,885
See accompanying notes to consolidated financial statements.
EPR PROPERTIES
Consolidated Statements of Income and Comprehensive Income
(Dollars in thousands except per share data)
Year Ended December 31,
2024 2023 2022
Rental revenue $ 585,167 $ 616,139 $ 575,601
Other income 57,071 45,947 47,382
Mortgage and other financing income 55,830 43,582 35,048
Total revenue 698,068 705,668 658,031
Property operating expense 59,146 57,478 55,985
Other expense 56,877 44,774 33,809
General and administrative expense 50,096 56,442 51,579
Retirement and severance expense 1,836 547 -
Transaction costs 798 1,554 4,533
Provision (benefit) for credit losses, net 12,247 878 10,816
Impairment charges 51,764 67,366 27,349
Depreciation and amortization 165,733 168,033 163,652
Total operating expenses 398,497 397,072 347,723
Gain (loss) on sale of real estate 16,101 (2,197) 651
Income from operations 315,672 306,399 310,959
Costs associated with loan refinancing or payoff 337 - -
Interest expense, net 130,810 124,858 131,175
Equity in loss from joint ventures 8,809 6,768 1,672
Impairment charges on joint ventures 28,217 - 647
Income before income taxes 147,499 174,773 177,465
Income tax expense 1,433 1,727 1,236
Net income 146,066 173,046 176,229
Preferred dividend requirements 24,144 24,145 24,141
Net income available to common shareholders of EPR Properties $ 121,922 $ 148,901 $ 152,088
Net income available to common shareholders of EPR Properties per share:
Basic $ 1.61 $ 1.98 $ 2.03
Diluted $ 1.60 $ 1.97 $ 2.03
Shares used for computation (in thousands):
Basic 75,636 75,260 74,967
Diluted 75,999 75,715 75,043
Other comprehensive income:
Net income $ 146,066 $ 173,046 $ 176,229
Foreign currency translation adjustment (23,036) 6,851 (20,474)
Unrealized gain (loss) on derivatives, net 15,984 (5,452) 12,416
Comprehensive income attributable to EPR Properties $ 139,014 $ 174,445 $ 168,171
See accompanying notes to consolidated financial statements.
EPR PROPERTIES
Consolidated Statements of Changes in Equity
Years Ended December 31, 2024, 2023 and 2022
(Dollars in thousands)
EPR Properties Shareholders’ Equity
Common Stock Preferred Stock Additional
paid-in capital Treasury
shares Accumulated
other
comprehensive
income Distributions
in excess of
net income Total
Shares Par Shares Par
Balance at December 31, 2021 82,225,061 $ 822 14,840,297 $ 148 $ 3,876,817 $ (264,817) $ 9,955 $ (1,004,886) $ 2,618,039
Restricted share units issued to Trustees 41,399 - - - - - - - -
Issuance of nonvested shares and performance share units, net of cancellations 243,286 3 - - 4,496 (83) - - 4,416
Purchase of common shares for vesting - - - - - (4,257) - - (4,257)
Share-based compensation expense - - - - 16,666 - - - 16,666
Foreign currency translation adjustment - - - - - - (20,474) - (20,474)
Change in unrealized gain on derivatives, net - - - - - - 12,416 - 12,416
Net income - - - - - - - 176,229 176,229
Issuances of common shares 23,196 - - - 1,063 - - - 1,063
Issuances of captive REIT preferred shares - - - - 107 - - - 107
Stock option exercises, net 12,559 - - - 583 (594) - - (11)
Dividend equivalents accrued on performance share units - - - - - - - (579) (579)
Dividends to captive REIT preferred shareholders - - - - - - - (6) (6)
Dividends to common shareholders ($3.25 per share)
- - - - - - - (243,757) (243,757)
Dividends to Series C preferred shareholders ($1.4375 per share)
- - - - - - - (7,752) (7,752)
Dividends to Series E preferred shareholders ($2.25 per share)
- - - - - - - (7,756) (7,756)
Dividends to Series G preferred shareholders ($1.4375 per share)
- - - - - - - (8,625) (8,625)
Balance at December 31, 2022 82,545,501 $ 825 14,840,297 $ 148 $ 3,899,732 $ (269,751) $ 1,897 $ (1,097,132) $ 2,535,719
Restricted share units issued to Trustees 43,497 - - - - - - - -
Issuance of nonvested shares and performance share units, net of cancellations 352,090 4 - - 5,960 (591) - - 5,373
Purchase of common shares for vesting - - - - - (3,696) - - (3,696)
Share-based compensation expense - - - - 17,512 - - - 17,512
Share-based compensation included in retirement and severance expense - - - - 304 - - - 304
Foreign currency translation adjustment - - - - - - 6,851 - 6,851
Change in unrealized loss on derivatives, net - - - - - - (5,452) - (5,452)
Net income - - - - - - - 173,046 173,046
Issuances of common shares 22,469 - - - 959 - - - 959
Conversion of Series E Convertible Preferred shares to common shares 674 - (1,401) - - - - - -
Dividend equivalents accrued on performance share units - - - - - - - (3,787) (3,787)
Dividends to captive REIT preferred shareholders - - - - - - - (16) (16)
Dividends to common shareholders ($3.30 per share)
- - - - - - - (248,530) (248,530)
Dividends to Series C preferred shareholders ($1.4375 per share)
- - - - - - - (7,752) (7,752)
Dividends to Series E preferred shareholders ($2.25 per share)
- - - - - - - (7,752) (7,752)
Dividends to Series G preferred shareholders ($1.4375 per share)
- - - - - - - (8,624) (8,624)
Balance at December 31, 2023 82,964,231 $ 829 14,838,896 $ 148 $ 3,924,467 $ (274,038) $ 3,296 $ (1,200,547) $ 2,454,155
Continued on next page.
EPR PROPERTIES
Consolidated Statements of Changes in Equity
Years Ended December 31, 2024, 2023 and 2022
(Dollars in thousands) (continued)
EPR Properties Shareholders’ Equity
Common Stock Preferred Stock Additional
paid-in capital Treasury
shares Accumulated
other
comprehensive
income Distributions
in excess of
net income Total
Shares Par Shares Par
Continued from previous page.
Balance at December 31, 2023 82,964,231 $ 829 14,838,896 $ 148 $ 3,924,467 $ (274,038) $ 3,296 $ (1,200,547) $ 2,454,155
Restricted share units issued to Trustees 45,410 1 - - - - - - 1
Issuance of nonvested shares and performance share units, net of cancellations 583,135 6 - - 9,212 - - - 9,218
Purchase of common shares for vesting - - - - - (11,375) - - (11,375)
Share-based compensation expense - - - - 14,066 - - - 14,066
Share-based compensation included in retirement and severance expense - - - - 1,598 - - - 1,598
Foreign currency translation adjustment - - - - - - (23,036) - (23,036)
Change in unrealized gain on derivatives, net - - - - - - 15,984 - 15,984
Net income - - - - - - - 146,066 146,066
Issuances of common shares 26,878 - - - 1,185 - - - 1,185
Conversion of Series C Convertible Preferred shares to common shares 86 - (200) - - - - - -
Dividend equivalents accrued on performance share units - - - - - - - (3,492) (3,492)
Dividends to captive REIT preferred shareholders - - - - - - - (16) (16)
Dividends to common shareholders ($3.40 per share)
- - - - - - - (256,981) (256,981)
Dividends to Series C preferred shareholders ($1.4375 per share)
- - - - - - - (7,752) (7,752)
Dividends to Series E preferred shareholders ($2.25 per share)
- - - - - - - (7,752) (7,752)
Dividends to Series G preferred shareholders ($1.4375 per share)
- - - - - - - (8,624) (8,624)
Balance at December 31, 2024 83,619,740 $ 836 14,838,696 $ 148 $ 3,950,528 $ (285,413) $ (3,756) $ (1,339,098) $ 2,323,245
See accompanying notes to consolidated financial statements.
EPR PROPERTIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Year Ended December 31,
2024 2023 2022
Operating activities:
Net income $ 146,066 $ 173,046 $ 176,229
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment charges 51,764 67,366 27,349
Impairment charges on joint ventures 28,217 - 647
(Gain) loss on sale of real estate (16,101) 2,197 (651)
Gain on insurance recovery - - (552)
Deferred income tax benefit (1,539) (344) (169)
Provision (benefit) for credit losses, net 12,247 878 10,816
Costs associated with loan refinancing or payoff 337 - -
Equity in loss from joint ventures 8,809 6,768 1,672
Distributions from joint ventures - 1,300 780
Depreciation and amortization 165,733 168,033 163,652
Amortization of deferred financing costs 8,844 8,637 8,360
Amortization of above/below market leases and tenant allowances, net (333) (535) (355)
Share-based compensation expense to management and Trustees 14,066 17,512 16,666
Share-based compensation expense included in retirement and severance expense 1,598 304 -
Change in assets and liabilities:
Operating lease assets and liabilities (1,299) (6) 463
Mortgage notes accrued interest receivable (2,171) (1,231) (500)
Accounts receivable (22,031) (10,091) 25,974
Other assets (7,935) (2,738) (473)
Accounts payable and accrued liabilities 11,950 8,488 14,576
Unearned rents and interest (5,085) 7,510 (2,768)
Net cash provided by operating activities 393,137 447,094 441,716
Investing activities:
Acquisition of and investments in real estate and other assets (45,706) (60,703) (174,533)
Proceeds from sale of real estate 74,421 57,160 10,965
Investment in unconsolidated joint ventures (1,290) (4,859) (26,088)
Distributions from joint venture related to refinancing - - 6,695
Settlement of derivative 10,403 10,022 (3,830)
Investment in mortgage notes receivable (113,939) (110,428) (95,234)
Proceeds from mortgage notes receivable paydowns 618 552 1,749
Investment in notes receivable - (3,025) -
Proceeds from note receivable paydowns 1,406 1,386 701
Proceeds from insurance recovery, net - - 3,700
Additions to properties under development (102,265) (91,153) (75,710)
Net cash used by investing activities (176,352) (201,048) (351,585)
Financing activities:
Proceeds from long-term debt facilities 244,000 - -
Principal payments on debt (205,638) - -
Deferred financing fees paid - (369) (328)
Costs associated with loan refinancing or payoff (cash portion) (9,534) - -
Net proceeds from issuance of common shares 816 615 758
Impact of stock option exercises, net - - (11)
Issuances of captive REIT preferred shares - - 107
Purchase of common shares for treasury for vesting (11,375) (3,696) (4,257)
Dividends paid to shareholders (279,888) (272,245) (265,661)
Net cash used by financing activities (261,619) (275,695) (269,392)
Effect of exchange rate changes on cash (448) 119 (129)
Net change in cash and cash equivalents and restricted cash (45,282) (29,530) (179,390)
Cash and cash equivalents and restricted cash at beginning of the year 80,981 110,511 289,901
Cash and cash equivalents and restricted cash at end of the year $ 35,699 $ 80,981 $ 110,511
Supplemental information continued on next page.
EPR PROPERTIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Continued from previous page.
Year Ended December 31,
2024 2023 2022
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents at beginning of the year $ 78,079 $ 107,934 $ 288,822
Restricted cash at beginning of the year 2,902 2,577 1,079
Cash and cash equivalents and restricted cash at beginning of the year $ 80,981 $ 110,511 $ 289,901
Cash and cash equivalents at end of the year $ 22,062 $ 78,079 $ 107,934
Restricted cash at end of the year 13,637 2,902 2,577
Cash and cash equivalents and restricted cash at end of the year $ 35,699 $ 80,981 $ 110,511
Supplemental schedule of non-cash activity:
Transfer of property under development to real estate investments $ 115,683 $ 44,291 $ 41,872
Transfer of mortgage note receivable to property under development $ 6,008 $ - $ -
Transfer of real estate investments to mortgage note $ - $ 1,321 $ -
Issuance of nonvested shares and restricted share units at fair value, including nonvested shares issued for payment of bonuses $ 21,325 $ 25,277 $ 21,751
Operating lease right-of-use asset and related operating lease liability recorded for new ground lease $ - $ - $ 36,741
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 129,457 $ 125,654 $ 125,808
Cash paid during the period for income taxes $ 2,646 $ 1,495 $ 1,282
Interest cost capitalized $ 3,468 $ 3,566 $ 1,286
Change in accrued capital expenditures $ (824) $ 6,466 $ 896
See accompanying notes to consolidated financial statements.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
1. Organization
Description of Business
EPR Properties (the Company) was formed on August 22, 1997 as a Maryland real estate investment trust (REIT), and an initial public offering of the Company's common shares of beneficial interest (common shares) was completed on November 18, 1997. Since that time, the Company has been a leading diversified experiential net lease REIT specializing in select enduring experiential properties. The Company's underwriting is centered on key industry and property cash flow criteria, as well as the credit metrics of the Company's tenants and customers. The Company’s properties are located in the United States (U.S.) and Canada.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of EPR Properties and its subsidiaries, all of which are wholly owned.
Variable Interest Entities
The Company consolidates certain entities when it is deemed to be the primary beneficiary in a variable interest entity (VIE) in which it has a controlling financial interest in accordance with the consolidation guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The equity method of accounting is applied to joint ventures and other similar entities in which the Company is not the primary beneficiary as defined in the FASB ASC Topic on Consolidation (Topic 810), but can exercise influence over the entity with respect to its operations and major decisions.
The Company’s variable interest in VIEs currently are in the form of equity ownership and loans provided by the Company to a VIE. The Company examines specific criteria and uses its judgment when determining if the Company is the primary beneficiary of a VIE. The primary beneficiary generally is defined as the party with the controlling financial interest. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. As of December 31, 2024 and 2023, the Company does not have any investments in consolidated VIEs.
Use of Estimates
Management of the Company has made estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP). Actual results could differ from those estimates.
Real Estate Investments
Real estate investments are carried at initial recorded value less accumulated depreciation. Costs incurred for the acquisition and development of the properties are capitalized. In addition, the Company capitalizes certain costs that relate to property under development including interest and a portion of internal legal personnel costs. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which generally are estimated to be 30 years to 40 years for buildings, three years to 25 years for furniture, fixtures and equipment and 10 years to 20 years for site improvements. Tenant improvements, including allowances, are depreciated over the shorter of the lease term or the estimated useful life and leasehold interests are depreciated over the useful life of the underlying ground lease.
Management reviews the Company's real estate investments, including operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying value of a property may not be recoverable, which is based on an estimate of undiscounted future cash flows expected to result from its use and eventual disposition. If impairment exists due to the inability to recover the carrying value of the property, an impairment loss is recorded to the extent that the carrying value of the property exceeds its estimated fair value.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
The Company evaluates the held-for-sale classification of its real estate as of the end of each quarter. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value less costs to sell. Assets are generally classified as held for sale once management has initiated an active program to market them for sale and it is probable the assets will be sold within one year. Occasionally, the Company will receive unsolicited offers from third parties to buy individual Company properties. Under these circumstances, the Company will classify the properties as held for sale when a sales contract is executed with no contingencies and the prospective buyer has significant funds at risk to ensure performance.
Real Estate Acquisitions
Upon acquisition of real estate properties, the Company evaluates the acquisition to determine if it is a business combination or an asset acquisition. If the acquisition is determined to be an asset acquisition, the Company records the purchase price and other related costs incurred to the acquired tangible assets and identified intangible assets and liabilities on a relative fair value basis. In addition, costs incurred for asset acquisitions including transaction costs, are capitalized.
If the acquisition is determined to be a business combination, the Company records the fair value of acquired tangible assets and identified intangible assets and liabilities as well as any noncontrolling interest. Acquisition-related costs in connection with business combinations are expensed as incurred and included in "Transaction costs" in the accompanying consolidated statements of income and comprehensive income.
In addition to acquisition-related costs in connection with business combinations, transaction costs include costs associated with terminated transactions, pre-opening costs and certain leasing and tenant transition costs. Transaction costs expensed totaled $0.8 million, $1.6 million and $4.5 million for the years ended December 31, 2024, 2023 and 2022, respectively.
For real estate acquisitions (asset acquisitions or business combinations), the fair value (or relative fair value in an asset acquisition) of the tangible assets is determined by valuing the property using recent independent appraisals or methods similar to those used by independent appraisers. Land is valued using the sales comparison approach, which uses available market data from recent comparable land sales as an input to estimate the fair value. Site improvements and tenant improvements are valued using the cost approach, which uses replacement cost data obtained from industry recognized guides less depreciation as an input to estimate the fair value. The building is valued either using the cost approach described above or a combination of the cost and the income approach. The income approach uses market leasing assumptions to estimate the fair value of the property as if vacant. The cost and income approaches are reconciled to arrive at an estimated building fair value.
Intangibles
The fair value of acquired in-place leases also includes management’s estimate, on a lease-by-lease basis, of the present value of the following amounts: (i) the value associated with avoiding the cost of originating the acquired in-place leases (i.e. the market cost to execute the leases, including leasing commissions, legal and other related costs); (ii) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed re-leasing period, (i.e. real estate taxes, insurance and other operating expenses); (iii) the value associated with lost rental revenue from existing leases during the assumed re-leasing period; and (iv) the value associated with avoided tenant improvement costs or other inducements to secure a tenant lease. These values are amortized over the lease term of the respective leases.
In determining the fair value of acquired above and below-market leases, the Company considers many factors. On a lease-by-lease basis, management considers the present value of the difference between the contractual amounts to be paid pursuant to the leases and management’s estimate of fair market lease rates. For above-market leases and below-market leases, management considers such differences over the lease terms. The capitalized above-market lease values are amortized as a reduction of rental income over the lease terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the lease terms of the respective leases. The lease term includes the minimum base term plus any extension options that are reasonably certain to be exercised. Management considers several factors in determining the discount rate used in the present value calculations, including the credit risks associated with the respective tenants.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
If debt is assumed in the acquisition, the determination of whether it is above or below-market is based upon a comparison of similar financing terms for similar real estate investments at the time of the acquisition.
In determining the fair value of tradenames, the Company historically uses the relief from royalty method, which estimates the fair value of hypothetical royalty income that could be generated if the intangible asset was licensed from an independent third-party.
In determining the fair value of a contract intangible, the Company considers the present value of the difference between the estimated "with" and "without" scenarios. The "with" scenario presents the contract in place and the "without" scenario incorporates the potential profits that may be lost over the period without the contract in place. The capitalized contract value is amortized over the estimated useful life of the underlying asset.
The excess of the cost of an acquired business (in a business combination) over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired.
Management of the Company reviews the carrying value of intangible assets for impairment on an annual basis.
Intangible assets and liabilities (included in "Other assets" and "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets) consist of the following at December 31 (in thousands):
2024 2023
Assets:
In-place leases, net of accumulated amortization of $27.3 million and $26.6 million, respectively
$ 14,677 $ 16,402
Above-market lease, net of accumulated amortization of $1.4 million and $1.3 million, respectively
165 211
Tradenames, net of accumulated amortization of $850 thousand and $716 thousand, respectively (1)
8,314 8,447
Contract value, net of accumulated amortization of $2.4 million and $2.0 million, respectively
8,592 8,957
Goodwill 693 693
Total intangible assets, net $ 32,441 $ 34,710
Liabilities:
Below-market lease, net of accumulated amortization of $3.5 million and $3.1 million, respectively
$ 7,139 $ 7,557
(1) At December 31, 2024 and 2023, $5.4 million in tradenames had indefinite lives and were not amortized.
Aggregate intangible amortization included in expense was $2.2 million, $7.1 million and $3.3 million for the years ended December 31, 2024, 2023 and 2022, respectively. The net amount amortized as an increase to rental revenue for capitalized above and below-market lease intangibles was $0.4 million, $0.5 million and $0.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Future amortization of in-place leases, net, above-market lease, net, tradenames, net, contract value, net and below-market lease, net at December 31, 2024 is as follows (in thousands):
In place leases Tradenames (1) Contract Value Above-market lease Below-market lease
Year:
2025 $ 1,689 $ 133 $ 365 $ 46 $ (408)
2026 1,606 133 365 46 (324)
2027 1,600 133 365 46 (259)
2028 1,506 133 365 27 (254)
2029 1,233 133 365 - (251)
Thereafter 7,043 2,293 6,767 - (5,643)
Total $ 14,677 $ 2,958 $ 8,592 $ 165 $ (7,139)
Weighted average amortization period (years) 12.6 23.3 23.5 3.6 28.3
(1) Excludes $5.4 million in tradenames with indefinite lives.
Deferred Financing Costs
Deferred financing costs are amortized over the terms of the related debt obligations or mortgage note receivable as applicable. Deferred financing costs of $19.1 million and $25.1 million as of December 31, 2024 and 2023, respectively, are shown as a reduction of "Debt" in the accompanying consolidated balance sheets. The deferred financing costs related to the unsecured revolving credit facility of $10.5 million and $4.1 million as of December 31, 2024 and 2023, respectively, are included in "Other assets" in the accompanying consolidated balance sheets.
Reportable Segments
The Company has two reportable operating segments: Experiential and Education. The Experiential segment includes the following property types: theatres, eat & play (including seven theatres located in entertainment districts), attractions, ski, experiential lodging, gaming, cultural and fitness & wellness. The Education segment includes the following property types: early childhood education centers and private schools. The Company’s business is focused on Experiential real estate. The economic characteristics of Experiential properties are similar across type, geographic location and industries in which our tenants and borrowers operate. The Company’s segment structure reflects the financial information and reports used by the Company’s management team, specifically its chief operating decision maker (CODM), to make decisions regarding the Company’s business, including resource allocation and performance assessments. The Company’s CODM is its Chairman, President and Chief Executive Officer.
While the Company does not plan to seek additional opportunities in the Education segment, information provided to the CODM is separated and decisions are made based on these two operating segments. The CODM uses segment assets as reported on the balance sheet as Total Assets and Net Operating Income (NOI) before unallocated items to assess and allocate resources. NOI is calculated as total revenue (consisting of rental revenue, other income and mortgage and other financing income) less property operating expense and other expense. Revenue from both segments is derived substantially from investments structured as long-term triple-net leases or mortgages. Corporate items are not allocated to segments. See Note 18 for financial information related to these reportable segments.
Rental Revenue
The Company leases real estate to its tenants under leases classified as operating leases. The Company's leases generally provide for rent escalations throughout the lease terms. Rents that are fixed are recognized on a straight-line basis over the lease term. Base rent escalations that include a variable component are recognized upon the occurrence of the specified event as defined in the Company's lease agreements. Many of the Company's leasing arrangements include options to extend the lease, which are not included in the minimum lease terms unless the option is reasonably certain to be exercised. Straight-line rental revenue is subject to an evaluation for collectability, and the Company records a direct write-off against rental revenue if collectability of these future rents is not probable. The Company recognized straight-line write-offs of $0.1 million, $0.7 million and $0.2 million for the
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
years ended December 31, 2024, 2023 and 2022, respectively. Straight-line rental revenue, net of write-offs, was $17.3 million, $10.6 million and $7.0 million, for the years ended December 31, 2024, 2023 and 2022, respectively.
Most of the Company’s lease contracts are triple-net leases, which require the tenants to make payments directly to third parties for lessor costs (such as property taxes and insurance) associated with the properties. In accordance with Topic 842, the Company does not include these lessee payments to third parties in rental revenue or property operating expenses. In certain situations, the Company pays these lessor costs directly to third parties and the tenants reimburse the Company. In accordance with Topic 842, these payments are presented on a gross basis in rental revenue and property operating expense. During the years ended December 31, 2024, 2023 and 2022, the Company recognized $2.0 million, $1.7 million and $2.6 million, respectively, in tenant reimbursements related to the gross-up of these reimbursed expenses, which are included in rental revenue.
Certain of the Company's leases, particularly at its entertainment districts, require the tenants to make payments to the Company for property related expenses such as common area maintenance. In accordance with Topic 842, the Company has elected to combine these non-lease components with the lease components in rental revenue. For the years ended December 31, 2024, 2023 and 2022, the amounts due for non-lease components included in rental revenue totaled $18.8 million, $19.6 million and $17.2 million, respectively.
In addition, most of the Company's tenants are subject to additional rents (above base rents) if gross revenues of the properties exceed certain thresholds defined in the lease agreements (percentage rents). Percentage rents are recognized at the time when specific triggering events occur as provided by the lease agreement. Rental revenue included percentage rents of $14.5 million, $12.2 million and $10.5 million for the years ended December 31, 2024, 2023 and 2022, respectively. Furthermore, due to the impact of the COVID-19 pandemic, certain of the Company's tenants paid a portion of base rent in 2022 based on a percentage of gross revenue. This variable rent totaled $0.4 million for the year ended December 31, 2022.
Rental revenue included lease termination fees of approximately $3.4 million for the year ended December 31, 2023, relating to the early terminations of two leases by two tenants. No lease termination fees were received for the years ended December 31, 2024 and 2022.
The Company regularly evaluates the collectability of its receivables on a lease-by-lease basis. The evaluation primarily consists of reviewing past due account balances and considering such factors as the credit quality of the Company's tenants, projected performance of the tenant, historical trends of the tenant, current economic conditions and changes in customer payment terms. When the collectability of lease receivables or future lease payments are no longer probable, the Company records a direct write-off of the receivable to rental revenue and recognizes future rental revenue on a cash basis.
Property Sales
Sales of real estate properties are recognized when a contract exists and the purchaser has obtained control of the property. Gains on sales of properties are recognized in full in a partial sale of nonfinancial assets, to the extent control is not retained. Any noncontrolling interest retained by the seller would, accordingly, be measured at fair value.
The Company evaluates each sale or disposal transaction to determine if it meets the criteria to qualify as discontinued operations. A discontinued operation is a component of an entity or group of components that have been disposed of or are classified as held for sale and represent a strategic shift that has or will have a major effect on the Company's operations and financial results. If the sale or disposal transaction does not meet the criteria, the operations and related gain or loss on sale is included in income from continuing operations.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Mortgage Notes and Other Notes Receivable
Mortgage notes and other notes receivable, including related accrued interest receivable, consist of loans originated by the Company and the related accrued and unpaid interest income as of the balance sheet date. Mortgage notes and other notes receivable are initially recorded at the amount advanced to the borrower less allowance for credit loss. Interest income is recognized using the effective interest method over the estimated life of the note. Interest income includes both the stated interest and the amortization or accretion of premiums or discounts (if any).
The Company made an accounting policy election to not measure an allowance for credit losses for accrued interest receivables related to its mortgage notes and notes receivable. Accordingly, if accrued interest receivable is deemed to be uncollectible, the Company will record any necessary write-offs as a reversal of interest income. During the year ended December 31, 2022, the Company wrote off approximately $1.5 million of accrued interest and fees receivable against interest income related to one mortgage note receivable and two notes receivable. No such amounts were written-off for the years ended December 31, 2024 and 2023. As of December 31, 2024, the Company believes that all outstanding accrued interest is collectible.
In the event the Company has a past due mortgage note or note receivable that the Company determines is collateral-dependent, the Company measures expected credit losses based on the fair value of the collateral with the credit allowance being the difference between the outstanding principal balance of the notes and the estimated fair value. As of December 31, 2024, the Company does not have any mortgage notes or notes receivable with past due principal balances. See Note 7 for further discussion of mortgage notes and notes receivable for which the Company elected to apply the collateral dependent practical expedient.
Mortgage and Other Financing Income
Certain of the Company's borrowers are subject to additional interest based on certain thresholds defined in the mortgage agreements (participating interest). Participating interest income is recognized at the time when specific triggering events occur as provided by the mortgage agreement. Participating interest income for the years ended December 31, 2024 and 2023 related to one borrower and was $197 thousand and $57 thousand, respectively. There was no participating interest income for the year ended December 31, 2022.
Income Taxes
The Company has elected to be taxed as a REIT pursuant to Section 856(c) of the Internal Revenue Code. A REIT that distributes at least 90% of its taxable income to its shareholders each year and meets certain other conditions is not taxed on that portion of its taxable income which is distributed to its shareholders. The Company intends to continue to qualify as a REIT and distribute substantially all of its taxable income to its shareholders.
The Company is subject to income tax in certain instances in both the U.S. and in certain foreign jurisdictions, as more fully described herein. The Company’s income tax expense includes deferred income tax expense or benefit, which represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. The Company evaluates the realizability of its deferred income tax assets and assesses the need for a valuation allowance for each jurisdiction for which it is subject to income tax. The realization of the deferred tax assets depends upon all positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets.
The Company owns certain real estate assets that are subject to income tax in Canada. At December 31, 2024, the net deferred tax assets related to the Company's Canadian operations totaled $22.6 million resulting from the temporary differences between income for financial reporting purposes and taxable income relating primarily to depreciation, capital improvements and straight-line rents. At December 31, 2024, it is more likely than not the Company will not generate sufficient taxable income to realize any of these net deferred tax assets.
The Company has certain taxable REIT subsidiaries (TRSs), as permitted under the Internal Revenue Code, through which it conducts certain business activities and are subject to federal and state income taxes on their net taxable income. The Company uses four such TRS entities exclusively to hold the operational aspect of the traditional REIT
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
lodging structure for five Experiential lodging properties that are facilitated by management agreements with eligible independent contractors. The real estate for these investments are held by the REIT either directly or through an investment in a joint venture and leased to the respective operations entity under a triple-net lease. Management has determined which of the real estate assets meets the requirements to be classified as qualified lodging facilities as required in a traditional REIT lodging structure and recognizes revenue on these structures accordingly for REIT testing purposes.
The Company also uses one such TRS entity to hold the operational aspect of four theatre assets, which are operated by third party property managers. The real estate for these assets is held by the REIT directly and leased to the respective operating TRS entity under a triple-net lease.
At December 31, 2024, the net deferred tax assets related to the Company's TRSs totaled $12.4 million, resulting from the temporary differences between income for financial reporting purposes and taxable income relate primarily to net operating loss carryovers and pre-opening cost amortization. At December 31, 2024, it is more likely than not that the Company will not generate sufficient taxable income to realize any of these net deferred tax assets.
As of December 31, 2024 and 2023, the Canadian operations and the Company's TRSs had deferred tax assets included in "Other assets" in the accompanying consolidated balance sheets totaling approximately $41.0 million and $41.7 million, respectively, and deferred tax liabilities included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets totaling approximately $20.1 million and $4.6 million, respectively. At December 31, 2024 and 2023, the Company had valuation allowances offsetting the net deferred tax assets included in the accompanying consolidated balance sheets totaling $34.9 million and $36.6 million, respectively. The Company’s consolidated deferred tax position is summarized as follows at December 31 (in thousands):
2024 2023
Fixed assets $ 22,268 $ 25,416
Net operating losses 14,208 11,296
Start-up costs 2,144 2,301
Other 2,385 2,698
Total deferred tax assets $ 41,005 $ 41,711
Fixed assets $ (14,546) $ -
Capital improvements (2,562) (2,786)
Straight-line receivable (904) (982)
Other (2,129) (805)
Total deferred tax liabilities $ (20,141) $ (4,573)
Valuation allowance (34,936) (36,613)
Net deferred tax (liability) asset $ (14,072) $ 525
Additionally, during the years ended December 31, 2024, 2023 and 2022, the Company recognized current income and withholding tax expense of $3.0 million, $2.1 million and $1.4 million, respectively, primarily related to certain state income taxes and foreign withholding tax. The table below details the current and deferred income tax benefit (expense) for the years ended December 31, 2024, 2023 and 2022 (in thousands):
2024 2023 2022
Current TRS income tax $ 137 $ - $ (137)
Current state income tax expense (360) (240) (226)
Current foreign income tax (1,460) (513) (1)
Current foreign withholding tax (1,290) (1,318) (1,041)
Deferred TRS income tax (expense) benefit - - -
Deferred foreign withholding tax - - -
Deferred income tax benefit 1,540 344 169
Income tax expense $ (1,433) $ (1,727) $ (1,236)
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
The Company's effective tax rate for the years ended December 31, 2024, 2023 and 2022 was 1.2%, 1.2% and 0.8%, respectively. The differences between the income tax expense calculated at the statutory U.S. federal income tax rates and the actual income tax expense recorded is mostly attributable to the dividends paid deduction available for REITs.
Furthermore, the Company qualified as a REIT and distributed the necessary amount of taxable income such that no current U.S. federal income taxes were due for the years ended December 31, 2024, 2023 and 2022. Accordingly, no provision for current U.S. federal income taxes was recorded for any of those years. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain provisions, it will be subject to federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax for years prior to January 1, 2021) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company is subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed taxable income. Tax years 2021 through 2023 remain generally open to examination for U.S. federal income tax and state tax purposes and from 2019 through 2023 for Canadian income tax purposes.
The Company’s policy is to recognize interest and penalties as general and administrative expense. The Company did not recognize any interest and penalties in 2024, 2023 or 2022. The Company did not have any accrued interest and penalties at December 31, 2024, 2023 and 2022. Additionally, the Company did not have any unrecorded tax benefits as of December 31, 2024, 2023 and 2022.
During the year ended December 31, 2024, the Company made a $5.9 million payment to the City of Kansas City, Missouri under protest related to an assessment of tax years ending December 31, 2018 through 2022. The City has denied the Company’s necessary deduction for dividends paid for each of these years resulting in assessment of additional tax, penalties and interest. The Company filed a lawsuit and demanded a refund of the $5.9 million payment during the year ended December 31, 2024 on grounds that the dividend is deductible and/or that the standard apportionment unfairly represents EPR’s economic presence in the City. Subsequent to the filing of the lawsuit, the City granted EPR a variance to the standard apportionment on a prospective basis. If applied retrospectively, the apportionment variance alone would reduce the purported deficiency by 98%. Although there can be no assurances, based on an agreement reached with the City regarding the treatment of future taxes and the Company's position in the lawsuit, the Company believes that it is more likely than not that the payment will be refunded.
Concentrations of Risk
Topgolf USA (Topgolf), American-Multi Cinema, Inc. (AMC) and Regal Cinemas (Regal) represented a significant portion of the Company's total revenue for the years ended December 31, 2024, 2023 and 2022. The Company had higher revenue from Regal during the years ended December 31, 2023 and 2022 due to the payment of higher base rent (pre-bankruptcy) and the repayment of deferred rent due, both of which were recognized as rental revenue when received. The following is a summary of the Company's total revenue derived from rental or interest payments from Topgolf, AMC and Regal (dollars in thousands):
Year ended December 31,
2024 2023 2022
Total Revenue % of Company's Total Revenue Total Revenue % of Company's Total Revenue Total Revenue % of Company's Total Revenue
Topgolf $ 100,810 14.4 % $ 98,022 13.9 % $ 94,177 14.3 %
AMC 94,358 13.5 % 94,687 13.4 % 94,476 14.4 %
Regal 76,395 10.9 % 103,716 14.7 % 90,678 13.8 %
Cash Equivalents
Cash equivalents include bank demand deposits and other short-term investments.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Restricted Cash
Restricted cash represents cash held for escrow deposits required in connection with property management and debt agreements or held for potential acquisitions and redevelopments.
Share-Based Compensation
Share-based compensation to associates of the Company is granted pursuant to the Company's Annual Incentive Program and Long-Term Incentive Plan and share-based compensation to non-associate Trustees of the Company is granted pursuant to the Company's Trustee compensation program.
Share-based compensation expense consists of amortization of nonvested share grants and share options issued to associates, and amortization of share units issued to non-associate Trustees for payment of their annual retainers. Share-based compensation is included in "General and administrative expense" in the accompanying consolidated statements of income and comprehensive income.
Nonvested Shares Issued to Associates
The Company grants nonvested shares to associates pursuant to both the Annual Incentive Program and the Long-Term Incentive Plan. The Company amortizes the expense related to the nonvested shares awarded to associates under the Long-Term Incentive Plan and the premium awarded under the nonvested share alternative of the Annual Incentive Program on a straight-line basis over the future vesting period (three years to four years).
Nonvested Performance Share Units Issued to Associates
The Company awards performance share units to the Company's executive officers pursuant to the Long-Term Incentive Plan. The performance share units contain both a market condition and a performance condition. The Company amortizes the expense related to the performance share units over the future vesting period of three years.
Restricted Share Units Issued to Non-Associate Trustees
The Company issues restricted share units to non-associate Trustees for payment of their annual retainers under the Company's Trustee compensation program. The fair value of the share units granted was based on the share price at the date of grant. The share units vest upon the earlier of the day preceding the next annual meeting of shareholders or a change of control. The settlement date for the shares is selected by the non-associate Trustee, and ranges from one year from the grant date to upon termination of service. This expense is amortized by the Company on a straight-line basis over the year of service by the non-associate Trustees.
Share Options
Prior to 2022, share options were granted to associates pursuant to the Long-Term Incentive Plan. The fair value of share options granted is estimated at the date of grant using the Black-Scholes option pricing model. Share options granted to associates vest over a period of four years and share option expense for these options is recognized on a straight-line basis over the vesting period.
Foreign Currency Translation
The Company accounts for the operations of its Canadian properties in Canadian dollars. The assets and liabilities related to the Company’s Canadian properties and mortgage note are translated into U.S. dollars using the spot rates at the respective balance sheet dates; revenues and expenses are translated at average exchange rates. Resulting translation adjustments are recorded as a separate component of comprehensive income.
Derivative Instruments
The Company uses derivative instruments to reduce exposure to fluctuations in foreign currency exchange rates and variable interest rates.
The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as foreign
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
currency risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. If hedge accounting is not applied, realized and unrealized gains or losses are reported in earnings.
The Company's policy is to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.
Impact of Recently Issued Accounting Standards
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU enhances annual income tax disclosures by requiring entities to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, the ASU requires annual disclosure of income taxes paid disaggregated by jurisdiction. The guidance is effective for fiscal years beginning after December 15, 2024 on a prospective basis, with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact this guidance will have on the Company's financial statements and related disclosures.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 22-40): Disaggregation of Income Statement Expenses. The ASU requires entities to provide enhanced disclosures related to certain costs and expenses in the notes to the financial statements. The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact this guidance will have on the Company's financial statements and related disclosures.
3. Real Estate Investments
The following table summarizes the carrying amounts of real estate investments as of December 31, 2024 and 2023 (in thousands):
2024 2023
Buildings and improvements $ 4,632,557 $ 4,609,050
Furniture, fixtures & equipment 118,575 115,596
Land 1,218,418 1,219,943
Leasehold interests 28,453 28,453
5,998,003 5,973,042
Accumulated depreciation (1,562,645) (1,435,683)
Total $ 4,435,358 $ 4,537,359
Depreciation expense on real estate investments was $161.9 million, $159.3 million and $158.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
4. Investments and Dispositions
Acquisitions and Development
The Company's investment spending during the years ended December 31, 2024 and 2023 totaled $263.9 million and $269.4 million, respectively, and is detailed below (in thousands):
For the Year Ended December 31, 2024
Investment Type Total Investment Spending New Development Re-development Asset Acquisition Mortgage Notes or Notes Receivable Investment in Joint Ventures
Experiential:
Theatres $ 370 $ - $ 370 $ - $ - $ -
Eat & Play 42,254 30,058 1,118 - 11,078 -
Attractions 78,025 - 164 33,437 44,424 -
Ski 2,018 - - - 2,018 -
Experiential Lodging 9,411 - - - - 9,411
Fitness & Wellness 129,710 24,080 48,412 - 57,218 -
Cultural 2,132 - 2,132 - - -
Total Experiential 263,920 54,138 52,196 33,437 114,738 9,411
Education:
Total Education - - - - - -
Total Investment Spending $ 263,920 $ 54,138 $ 52,196 $ 33,437 $ 114,738 $ 9,411
For the Year Ended December 31, 2023
Investment Type Total Investment Spending New Development Re-development Asset Acquisition Mortgage Notes or Notes Receivable Investment in Joint Ventures
Experiential:
Theatres $ 5,182 $ - $ 5,182 $ - $ - $ -
Eat & Play 24,048 20,750 2,192 - 1,106 -
Attractions 28,384 - 3,669 - 24,715 -
Ski 5,324 - - - 5,324 -
Experiential Lodging 16,034 - - - - 16,034
Fitness & Wellness 184,370 45,632 3,286 53,144 82,308 -
Cultural 6,086 - 6,086 - - -
Total Experiential 269,428 66,382 20,415 53,144 113,453 16,034
Education:
Total Education - - - - - -
Total Investment Spending $ 269,428 $ 66,382 $ 20,415 $ 53,144 $ 113,453 $ 16,034
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Dispositions
During the year ended December 31, 2024, the Company completed the sale of two leased cultural properties, eight vacant theatre properties, one leased theatre property and two vacant early childhood education centers for net proceeds totaling $74.4 million and recognized a net gain on sale totaling $16.1 million.
During the year ended December 31, 2023, the Company completed the sale of three vacant theatre properties, two leased theatre properties, one vacant eat & play property, four vacant early childhood education centers and three land parcels for net proceeds totaling $57.2 million and recognized a net loss on sale of $2.2 million. Additionally, during the year ended December 31, 2023, the Company, as lessee, terminated one ground lease that held one theatre property.
During the year ended December 31, 2022, the Company completed the sale of three vacant theatre properties and a land parcel for net proceeds of $11.0 million and recognized a combined gain on sale of $0.7 million.
Dispositions during the years ended December 31, 2024 and 2023 did not meet the criteria for discontinued operations reporting.
5. Impairment Charges
The Company reviews its properties for changes in circumstances that indicate that the carrying value of a property may not be recoverable based on an estimate of undiscounted future cash flows. During the year ended December 31, 2024, the Company reassessed the holding period of one vacant theatre property, two theatre properties currently operated through a third-party management agreement and two leased theatre properties. The Company determined that the sum of the undiscounted cash flows did not exceed the carrying value of the theatre properties and estimated the fair value of the real estate investments using independent appraisals and purchase offers. During the year ended December 31, 2024, the Company reduced the carrying value of the real estate investments, net to $45.9 million and recognized an impairment charge of $51.8 million on real estate investments, which is the amount that the carrying values of the assets exceeded the estimated fair values.
During the year ended December 31, 2024, the Company also recognized $28.2 million of other-than-temporary impairment charges related to its equity investments in two unconsolidated real estate joint ventures that own two experiential lodging properties located in St. Pete Beach, Florida and two unconsolidated real estate joint ventures that own an experiential lodging property in Breaux Bridge, Louisiana. See Note 8 for further details on these impairments.
During the year ended December 31, 2023, the Company reassessed the holding period of 16 theatre properties surrendered by Regal as part of its bankruptcy resolution and not included in the Company's new master lease with Regal, four other theatre properties that were part of a workout with a smaller theatre tenant and two early childhood education center properties subject to lease terminations (one of which was triggered by a casualty event). The Company determined that the estimated cash flows for eight of the Regal surrendered properties, two of the other theatre properties and both of the early childhood education center properties were not sufficient to recover the carrying values and estimated the fair value of the real estate investments of these properties using independent appraisals. During the year ended December 31, 2023, the Company reduced the carrying value of the real estate investments, net to $39.2 million and recognized impairment charges of $67.4 million on real estate investments, which is the amount that the carrying values of the assets exceeded the estimated fair values.
During the year ended December 31, 2022, the Company reassessed the holding period of five early education properties subject to lease terminations, a vacant property that received an offer to purchase and two of the Regal theatre properties subject to a motion to reject leases. One of these properties has an operating ground lease arrangement with right-of-use asset. The Company determined that the estimated cash flows were not sufficient to recover the carrying values. During the year ended December 31, 2022, the Company determined the estimated fair value of the real estate investments and right-of-use assets of these properties using independent appraisals and the purchase offer. The Company reduced the carrying value of the real estate investments, net to $38.4 million and the operating lease right-of-use asset to $7.0 million. The Company recognized impairment charges of $25.3 million on
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
real estate investments and a $2.0 million impairment on the right-of-use asset, which is the amount that the carrying values of the assets exceeded the estimated fair values.
During the year ended December 31, 2022, the Company also recognized $0.6 million in other-than-temporary impairments related to its equity investments in joint ventures in two theatre projects located in China. See Note 8 for further details on these impairments.
6. Accounts Receivable
The following table summarizes the carrying amounts of accounts receivable as of December 31, 2024 and 2023 (in thousands):
2024 2023
Receivable from tenants $ 5,160 $ 7,298
Receivable from non-tenants (1) 7,094 824
Straight-line rent receivable 72,335 55,533
Total $ 84,589 $ 63,655
(1) Receivable from non-tenants includes a payment of $5.9 million made to the City of Kansas City, Missouri under protest related to an assessment of tax years ending December 31, 2018 through 2022. The City has denied the Company’s necessary deduction for dividends paid for each of these years resulting in assessment of additional tax, penalties and interest. The Company filed a lawsuit and demanded a refund of the $5.9 million payment during the year ended December 31, 2024. Although there can be no assurances, based on an agreement reached with the City regarding the treatment of future taxes and the Company's position in the lawsuit, the Company believes that it is more likely than not that the payment will be refunded.
As of December 31, 2024, as a result of the COVID-19 pandemic, the Company continues to recognize revenue on a cash basis for AMC and two other tenants, one of which has deferred rent from this period that is not booked as a receivable of approximately $11.5 million. The Company has collected all deferred receivables from accrual basis tenants that were deferred due to the COVID-19 pandemic. During the years ended December 31, 2024 and 2023, the Company collected $0.6 million and $36.4 million, respectively, in deferred rent and interest from cash basis customers and from customers for which the deferred payments were not previously recognized as revenue.
7. Investment in Mortgage Notes and Notes Receivable
The Company measures expected credit losses on its mortgage notes and notes receivable on an individual basis because its financial instruments do not have similar risk characteristics. The Company uses a forward-looking commercial real estate loss forecasting tool to estimate its current expected credit losses (CECL) for each of its mortgage notes and notes receivable on a loan-by-loan basis. As of December 31, 2024, the Company did not anticipate any prepayments. Therefore, the contractual terms of its mortgage notes and notes receivable were used for the calculation of the expected credit losses. The Company updates the model inputs at each reporting period to reflect, if applicable, any newly originated loans, changes to specific loan information on existing loans and current macroeconomic conditions. The CECL allowance is a valuation account that is deducted from the related mortgage note or note receivable. Effective January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures.
Certain of the Company’s mortgage notes and notes receivable include commitments to fund future incremental amounts to its borrowers. These future funding commitments are also subject to the CECL model. The CECL allowance related to future funding is recorded as a liability and is included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Investment in mortgage notes, including related accrued interest receivable, at December 31, 2024 and 2023 consists of the following (in thousands):
Year of Origination Interest Rate Maturity Date Periodic Payment Terms Outstanding principal amount of mortgage at December 31, 2024 Carrying amount as of December 31, Unfunded commitments
Description 2024 2023 December 31, 2024
Attraction property Powells Point, North Carolina 2019 7.23 % 6/30/2025 Interest only $ 29,378 $ 29,173 $ 29,200 $ -
Eat & play property Eugene, Oregon 2019 8.13 % 12/31/2025 Interest only 10,750 10,417 10,417 -
Fitness & wellness property Merriam, Kansas 2019 8.15 % 7/31/2029 Interest only 9,090 9,238 9,223 -
Fitness & wellness property Omaha, Nebraska 2017 9.25 % 6/30/2030 Interest only 10,905 10,996 10,951 -
Fitness & wellness property Omaha, Nebraska 2016 9.25 % 6/30/2030 Interest only 10,539 10,659 10,615 -
Experiential lodging property Nashville, Tennessee 2019 7.69 % 9/30/2031 Interest only 70,000 71,041 71,187 -
Ski property Girdwood, Alaska 2019 8.79 % 7/31/2032 Interest only 80,120 79,742 78,062 1,880
Fitness & wellness properties Colorado and California 2022 7.15 % 1/10/2033 Interest only 64,252 64,275 59,207 298
Eat & play property Austin, Texas 2012 11.31 % 6/1/2033 Principal & Interest-fully amortizing 9,083 9,083 9,701 -
Eat & play property Dallas, Texas 2023 10.25 % 11/26/2033 Interest only 6,175 6,163 1,105 -
Experiential lodging property Breaux Bridge, Louisiana (1) 2022 7.25 % 3/8/2034 Interest only 11,305 1,000 11,373 -
Fitness & wellness property Glenwood Springs, Colorado 2024 8.45 % 8/16/2034 Interest only 52,000 51,892 - -
Ski property West Dover and Wilmington, Vermont 2007 12.50 % 12/1/2034 Interest only 51,050 51,049 51,049 -
Four ski properties Ohio and Pennsylvania 2007 11.58 % 12/1/2034 Interest only 37,562 37,430 37,495 -
Ski property Chesterland, Ohio 2012 12.07 % 12/1/2034 Interest only 4,550 4,394 4,508 -
Ski property Hunter, New York 2016 9.19 % 1/5/2036 Interest only 21,000 21,000 21,000 -
Eat & play property Midvale, Utah 2015 10.25 % 5/31/2036 Interest only 17,505 17,505 17,505 -
Eat & play property West Chester, Ohio 2015 9.75 % 8/1/2036 Interest only 18,068 18,068 18,067 -
Fitness & wellness property Fort Collins, Colorado 2018 8.00 % 1/31/2038 Interest only 10,292 9,896 10,070 -
Early childhood education center Lake Mary, Florida 2019 8.35 % 5/9/2039 Interest only 4,200 4,412 4,387 -
Early childhood education center Lithia, Florida 2017 9.11 % 10/31/2039 Interest only 3,959 4,103 4,018 -
Attraction property Frankenmuth, Michigan 2022 8.25 % 10/14/2042 Interest only 69,139 67,966 24,375 -
Fitness & wellness properties Massachusetts and New York 2023 8.30 % 1/10/2044 Interest only 77,000 76,294 76,253 47,100
Total $ 677,922 $ 665,796 $ 569,768 $ 49,278
(1) During the fourth quarter of 2024, the Company made the decision to exit its unconsolidated equity investment in an operating RV property located in Breaux Bridge, Louisiana. The Company had previously provided an
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
$11.3 million subordinated mortgage note receivable to the joint venture. On February 4, 2025, the Company received $1.0 million in exchange for the sale of its remaining subordinated mortgage note receivable. Accordingly, during the fourth quarter of 2024, the Company recognized $10.3 million as a provision for credit loss. See Note 8 for further details on this mortgage note receivable.
Investment in notes receivable, including related accrued interest receivable, was $3.3 million and $3.9 million at December 31, 2024 and 2023, respectively, and is included in "Other assets" in the accompanying consolidated balance sheets.
At December 31, 2024, two of the Company's mortgage notes receivable and two of the Company's notes receivable are considered collateral-dependent. Expected credit losses are based on the fair value of the underlying collateral with the credit allowance being the difference between the outstanding principal balance of the notes and the estimated fair value at the reporting date. The Company assessed the fair value of the collateral as of December 31, 2024 on the mortgage notes receivable and the notes receivable. One mortgage note receivable has a carrying amount at December 31, 2024 of approximately $10.4 million net of an allowance for credit loss totaling $0.4 million. One mortgage note receivable has a carrying amount at December 31, 2024 of approximately $1.0 million net of an allowance for credit loss totaling $10.3 million. This mortgage note receivable became collateral dependent during the three months ended December 31, 2024 and is a subordinated loan due from an unconsolidated real estate joint venture. See Note 8 for more details. The two notes receivable remain fully reserved with an allowance for credit loss totaling $6.9 million and $1.9 million, respectively, which represents the outstanding principal balances of the notes as of December 31, 2024. Income from these borrowers is recognized on a cash basis. During the years ended December 31, 2024 and 2023, the Company received cash basis interest payments of $0.9 million for each period from the mortgage note receivable borrower and $0.7 million for each period from one of the note receivable borrowers. During the years ended December 31, 2024 and 2023, the Company received principal payments totaling $0.8 million and $0.7 million, respectively, from one of the note receivable borrowers.
At December 31, 2024, the Company's investment in one of the notes receivable was a variable interest investment and the underlying entity is a VIE. The Company is not the primary beneficiary of this VIE because the Company does not individually have the power to direct the activities that are most significant to the entity and accordingly, this investment is not consolidated. The Company's maximum exposure to loss associated with this VIE is limited to the Company's outstanding note receivable in the amount of $6.9 million, which is fully reserved in the allowance for credit losses at December 31, 2024.
The following summarizes the activity within the allowance for credit losses related to mortgage notes, unfunded commitments and notes receivable for the years ended December 31, 2024 and 2023 (in thousands):
Mortgage notes receivable Unfunded commitments - mortgage notes receivable Notes receivable Unfunded commitments - notes receivable Total
Allowance for credit losses at December 31, 2022 $ 8,999 $ 751 $ 11,952 $ - $ 21,702
Provision (benefit) for credit losses, net 2,428 321 (1,871) - 878
Charge-offs (7,771) - (394) - (8,165)
Recoveries - - - - -
Allowance for credit losses at December 31, 2023 $ 3,656 $ 1,072 $ 9,687 $ - $ 14,415
Provision (benefit) for credit losses, net 13,455 (332) (876) - 12,247
Charge-offs - - - - -
Recoveries - - - - -
Allowance for credit losses at December 31, 2024 $ 17,111 $ 740 $ 8,811 $ - $ 26,662
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
8. Unconsolidated Real Estate Joint Ventures
The following table summarizes our investment in unconsolidated joint ventures as of December 31, 2024 and 2023 (in thousands):
Investment as of December 31, (Loss) Income for the Year Ended December 31,
Property Type Location Ownership Interest 2024 2023 2024 2023
Experiential lodging St. Pete Beach, FL 65 % (1) $ - $ 14,727 $ (2,597) $ (2,684)
Experiential lodging Warrens, WI 95 % (2) 7,835 9,945 (2,111) (919)
Experiential lodging Breaux Bridge, LA 85 % (3) - 18,996 (3,095) (2,944)
Experiential lodging Harrisville, PA 66 % (4) 6,184 6,086 (1,006) (221)
Theatres China various (5) - - - -
$ 14,019 $ 49,754 $ (8,809) $ (6,768)
(1) The Company has equity investments in two unconsolidated real estate joint ventures, one that holds the investment in the real estate of the experiential lodging properties and the other that holds the lodging operations, which are facilitated by a management agreement. The joint venture that holds the real property has a secured non-recourse mortgage loan of $105.0 million at December 31, 2024. The maturity date of this mortgage loan is May 18, 2025. The note can be extended for two additional one-year periods from the original maturity date upon the satisfaction of certain conditions. The mortgage loan bears interest at SOFR plus 3.65%, with monthly interest payments required. The Company received distributions of $1.3 million from its investments in these joint ventures during the year ended December 31, 2023. No distributions were received during the year ended December 31, 2024.
On September 26, 2024, Hurricane Helene made landfall on St. Pete Beach as a Category 3 storm and damaged the joint ventures' experiential lodging properties. On October 9, 2024, further damage was caused by Hurricane Milton. The properties will remain closed as the joint ventures continue to assess and repair damage and the Company does not anticipate that the properties will re-open until well into 2025. The Company is working in good faith with its joint venture partners, the non-recourse debt provider and the insurance companies to identify a path forward which the Company expects to result in the eventual removal of both experiential properties from the Company's portfolio. Accordingly, the Company determined that its investment in these joint ventures had no fair value and was not recoverable, and during the third quarter of 2024, recognized $12.1 million in other-than-temporary impairment charges on joint ventures related to these equity investments. There can be no assurance as to the ultimate outcome of the Company's negotiations regarding its exit from these joint ventures.
(2) The Company has equity investments in two unconsolidated real estate joint ventures, one that holds the investment in the real estate of the experiential lodging property and the other that holds the lodging operations, which are facilitated by a management agreement. The joint venture that holds the real property has a secured non-recourse mortgage loan of $23.7 million at December 31, 2024. The maturity date of this mortgage loan is September 15, 2031. The loan bears interest at an annual fixed rate of 4.00% with monthly interest payments required.
(3) During the fourth quarter of 2024, the Company made the decision to exit this unconsolidated equity investment in an operating RV property located in Breaux Bridge, Louisiana and entered into good faith negotiations with its joint venture partners and the non-recourse debt provider to identify a path forward to remove the experiential lodging property from the Company's portfolio. The RV property underperformed expectations and would have required ongoing capital infusion to service the non-recourse debt and property operations. The Company finalized its exit from this investment on February 4, 2025. Accordingly, during the fourth quarter of 2024, upon the Company's determination that the investment was not recoverable, the Company recognized a $16.1 million impairment charge to fully write-off its carrying value of this equity investment. The Company also received
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
$1.0 million in exchange for the sale of its remaining subordinated mortgage note receivable on the property. Accordingly, during the fourth quarter of 2024, the Company recognized $10.3 million as a provision for credit loss.
(4) The Company has a 92% equity investment in two unconsolidated real estate joint ventures, that through subsequent joint ventures (described below), hold the investments in the real estate of the experiential lodging property and the lodging operations, which are facilitated by a management agreement. The Company's investment in these two unconsolidated real estate joint ventures were considered to be variable interest investments and the Company's investment in the joint venture that holds the lodging operations is a VIE. The Company is not the primary beneficiary of the VIE because the Company does not individually have the power to direct the activities that are most important to the joint venture and, accordingly, this investment is not consolidated. Other than the guarantee described below, the Company's maximum exposure to loss is limited to its initial investment, which was nominal.
The Company's investments in the two unconsolidated real estate joint ventures have a 62% equity interest in the consolidated joint venture that holds the investments in the real estate of the experiential lodging property and a 92% equity interest in the consolidated joint venture that holds the lodging operations, which are facilitated by a management agreement. The weighted average combined equity interest for both partnerships is 66%. The consolidated joint venture that holds the real estate property has a secured non-recourse senior mortgage loan commitment of up to $22.5 million at December 31, 2024 in order to fund renovations, with $19.6 million outstanding at December 31, 2024. The maturity date of this mortgage loan is November 1, 2029. The mortgage loan bears interest at an annual fixed rate of 6.38% with monthly interest payments required. The Company has guaranteed $10.0 million in principal on the secured mortgage loan, and, upon completion of construction and achieving a specified debt service coverage ratio, the principal guarantee will be reduced to $5.0 million. The guarantee will be removed completely upon achievement of specified debt service coverage for three consecutive calculation periods. Additionally, the Company has guaranteed the completion of the renovations in the amount of approximately $13.9 million, with $1.8 million remaining to fund at December 31, 2024.
(5) The Company has equity investments in unconsolidated joint ventures for three theatre projects located in China, with ownership interests ranging from 30% to 49%. During the year ended December 31, 2022, the Company recognized $0.6 million in other-than-temporary impairment charges related to these equity investments. The Company determined that these investments had no fair value based primarily on discounted cash flow projections.
9. Debt
Debt at December 31, 2024 and 2023 consists of the following (in thousands):
2024 2023
Senior unsecured notes payable, 4.35%, paid in full on August 22, 2024 (1)
$ - $ 136,637
Senior unsecured notes payable, 4.50%, due April 1, 2025 (2)
300,000 300,000
Senior unsecured notes payable, 4.56%, due August 22, 2026 (3)
179,597 179,597
Senior unsecured notes payable, 4.75%, due December 15, 2026 (2)
450,000 450,000
Senior unsecured notes payable, 4.50%, due June 1, 2027 (2)
450,000 450,000
Senior unsecured notes payable, 4.95%, due April 15, 2028 (2)
400,000 400,000
Unsecured revolving variable rate credit facility, SOFR + 1.15%, due October 2, 2028 (4)
175,000 -
Senior unsecured notes payable, 3.75%, due August 15, 2029 (2)
500,000 500,000
Senior unsecured notes payable, 3.60%, due November 15, 2031 (2)
400,000 400,000
Bonds payable, variable rate, fixed at 2.53% through September 30, 2026, due August 1, 2047 (5)
24,995 24,995
Less: deferred financing costs, net (19,134) (25,134)
Total $ 2,860,458 $ 2,816,095
(1) On August 22, 2024, the Company repaid its $136.6 million Series A unsecured private placement notes due 2024, using funds available under its $1.0 billion senior unsecured revolving credit facility.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
(2) These notes contain various covenants, including: (i) a limitation on incurrence of any debt that would cause the ratio of the Company’s debt to adjusted total assets to exceed 60%; (ii) a limitation on incurrence of any secured debt that would cause the ratio of the Company’s secured debt to adjusted total assets to exceed 40%; (iii) a limitation on incurrence of any debt that would cause the Company’s debt service coverage ratio to be less than 1.5 times; and (iv) the maintenance at all times of the Company's total unencumbered assets such that they are not less than 150% of the Company’s outstanding unsecured debt.
(3) The amended Note Purchase Agreement, which governs the private placement notes, contains certain financial and other covenants that generally conform to the Company's unsecured revolving credit facility.
(4) At December 31, 2024, the Company had $175.0 million balance outstanding under its $1.0 billion unsecured revolving credit facility. On September 19, 2024, the Company entered into the Fourth Amended, Restated and Consolidated Credit Agreement (the Amended Credit Agreement) providing for a new amended and restated senior unsecured revolving credit facility. The Amended Credit Agreement amended, restated and replaced the Company's prior senior unsecured revolving credit facility provided under the Third Amended, Restated and Consolidated Credit Agreement. The amendments to the prior facility, among other things: (i) extended the maturity date of the revolving credit facility; (ii) generally reduced the interest rate payable on outstanding loans; (iii) eliminated the tangible net worth covenant; (iv) modified the secured debt to total assets financial covenant to permit increased secured debt if the Company so elects; and (v) modified and simplified the capitalization rates used to value assets under the facility.
The Amended Credit Agreement provides for an initial maximum principal amount of $1.0 billion, which includes a $100.0 million letter-of-credit subfacility and a $300.0 million foreign currency revolving credit subfacility. The new credit facility contains an "accordion" feature under which the Company may increase the total maximum principal amount available by $1.0 billion, to a total of $2.0 billion, subject to lender consent. The new credit facility matures on October 2, 2028. The Company has two options to extend the maturity date of the new credit facility by an additional six months each (for a total of 12 months), subject to applicable fees and the absence of any default. The unsecured revolving credit facility bears interest at a floating rate of SOFR plus 1.15% (based on our unsecured debt ratings and with a SOFR floor of zero), which was 5.46% at December 31, 2024. Additionally, the facility fee on the revolving credit facility is 0.25%.
In connection with entering into the Amended Credit Agreement, the Company incurred $9.0 million in fees that were capitalized in deferred financing costs and amortized as part of the effective yield. These fees are included in "Other assets" in the accompanying consolidated balance sheet as of December 31, 2024. During the year ended December 31, 2024, the Company also recorded a non-cash write-off of deferred financing costs (net of accumulated amortization), totaling $0.3 million to "Costs associated with loan refinancing or payoff" in connection with entering into the Amended Credit Agreement.
The facility contains financial covenants or restrictions that limit the Company's level of consolidated debt, secured debt, investment levels outside certain categories and dividend distribution and require the Company to meet certain coverage levels for fixed charges and debt service.
(5) The bonds have a variable interest rate that was approximately 4.46% at December 31, 2024. See Note 10 for further details on the Company's interest rate swap agreement related to the Company's variable rate secured bonds.
Certain of the Company’s debt agreements contain customary restrictive covenants related to financial and operating performance and certain cross-default provisions. The Company was in compliance with all financial covenants under the Company's consolidated debt instruments at December 31, 2024.
As discussed above in Note 8, the Company's unconsolidated joint ventures holding its equity investments in two experiential lodging properties located in St. Pete Beach, Florida, were severely damaged by two hurricanes in 2024. The Company is working in good faith with its joint venture partners, the non-recourse debt provider and the insurance companies to identify a path forward in which the Company expects to result in the eventual removal of
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
the unconsolidated equity investments in these experiential lodging properties and the related non-recourse debt from its portfolio, although there can be no assurances as to the outcome of those discussions.
Certain of the Company’s debt agreements contain customary restrictive covenants related to financial and operating performance and certain cross-default provisions. The Company was in compliance with all financial covenants under the Company's consolidated debt instruments at December 31, 2024. As discussed in Note 8, the Company is working in good faith with its joint venture partners, the non-recourse debt providers and insurance companies (as applicable) to identify a path forward in which the Company expects will result in the eventual removal of the unconsolidated equity investments in three experiential lodging properties and related non-recourse debt from the Company's portfolio.
Principal payments due on long-term debt obligations subsequent to December 31, 2024 (without consideration of any extensions) are as follows (in thousands):
Amount
Year:
2025 $ 300,000
2026 629,597
2027 450,000
2028 575,000
2029 500,000
Thereafter 424,995
Less: deferred financing costs, net (19,134)
Total $ 2,860,458
The Company capitalizes a portion of interest costs as a component of property under development. The following is a summary of interest expense, net, for the years ended December 31, 2024, 2023 and 2022 (in thousands):
2024 2023 2022
Interest on loans $ 125,261 $ 122,968 $ 123,070
Amortization of deferred financing costs 8,844 8,637 8,360
Credit facility and letter of credit fees 2,664 2,676 2,682
Interest cost capitalized (3,468) (3,566) (1,286)
Interest income (2,491) (5,857) (1,651)
Interest expense, net $ 130,810 $ 124,858 $ 131,175
10. Derivative Instruments
All derivatives are recognized at fair value in the consolidated balance sheets within the line items "Other assets" and "Accounts payable and accrued liabilities" as applicable. The Company has elected not to offset its derivative position for purposes of balance sheet presentation and disclosure. The Company had derivative assets of $2.2 million and $1.3 million at December 31, 2024 and 2023, respectively. The Company had derivative liabilities of $0.03 million and $4.9 million at December 31, 2024 and 2023, respectively. The Company has neither posted nor received collateral with its derivative counterparties as of December 31, 2024 and 2023. See Note 11 for disclosures relating to the fair value of the derivative instruments.
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions, including the effect of changes in foreign currency exchange rates on foreign currency transactions and interest rates on its SOFR based borrowings. The Company manages this risk by following established risk management policies and procedures including the use of derivatives. The Company’s objective in using derivatives is to add stability to reported earnings and to manage its exposure to foreign exchange and interest rate movements or other identified risks. To accomplish this objective, the Company primarily uses interest rate swaps, cross-currency swaps and foreign currency forwards.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Cash Flow Hedges of Interest Rate Risk
The Company uses interest rate swaps as its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt or payment of variable-rate amounts from a counterparty, which results in the Company recording net interest expense that is fixed over the life of the agreements without exchange of the underlying notional amount.
At December 31, 2024, the Company had one interest rate swap agreement designated as a cash flow hedge of interest rate risk. The interest rate swap agreement outstanding as of December 31, 2024 is summarized below:
Fixed rate Notional Amount (in millions) Index Maturity
2.5325% $ 25.0 USD SOFR September 30, 2026
The change in the fair value of interest rate derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (AOCI) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction.
Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of December 31, 2024, the Company estimates that during the year ended December 31, 2025, $55 thousand of gains will be reclassified from AOCI to interest expense.
Cash Flow Hedges of Foreign Exchange Risk
The Company is exposed to foreign currency exchange risk against its functional currency, USD, on CAD denominated cash flow from its six Canadian properties. The Company uses cross-currency swaps to mitigate its exposure to fluctuations in the USD-CAD exchange rate on cash inflows associated with these properties, which should hedge a significant portion of the Company's expected CAD denominated cash flows. As of December 31, 2024, the Company had the following cross-currency swaps:
Fixed rate Notional Amount (in millions, CAD) Annual Cash Flow (in millions, CAD) Maturity
$1.35 CAD per USD
$ 170.0 $ 15.3 December 1, 2026
$1.35 CAD per USD
90.0 8.1 December 1, 2026
$ 260.0 $ 23.4
The change in the fair value of foreign currency derivatives designated and that qualify as cash flow hedges of foreign exchange risk is recorded in AOCI and reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. As of December 31, 2024, the Company estimates that during the year ended December 31, 2025, $0.9 million of gains will be reclassified from AOCI to other income.
Net Investment Hedges
The Company is exposed to fluctuations in the USD-CAD exchange rate on its net investments in Canada. As such, the Company uses currency forward agreements to manage its exposure to changes in foreign exchange rates on certain of its foreign net investments. As of December 31, 2024, the Company had the following foreign currency forwards designated as net investment hedges:
Fixed rate Notional Amount (in millions, CAD) Maturity
$1.40 CAD per USD
$ 200.0 December 1, 2026
$1.40 CAD per USD
90.0 December 1, 2026
Total $ 290.0
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
On December 19, 2024, the Company terminated its CAD to USD forward contracts in conjunction with entering into the new forward agreements described above. The Company received $10.4 million in connection with the settlement of the CAD to USD forward contracts, which continues to be reported in AOCI until the net investment is sold or liquidated.
For qualifying foreign currency derivatives designated as net investment hedges, the change in the fair value of the derivatives are reported in AOCI as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company's accounting policy election. The earnings recognition of excluded components are presented in other income.
Below is a summary of the effect of derivative instruments on the consolidated statements of changes in equity and income for the years ended December 31, 2024, 2023 and 2022:
Effect of Derivative Instruments on the Consolidated Statements of Changes in Equity and Comprehensive Income for the Years Ended December 31, 2024, 2023 and 2022
(Dollars in thousands)
Year Ended December 31,
Description 2024 2023 2022
Cash Flow Hedges
Interest Rate Swaps
Amount of Gain (Loss) Recognized in AOCI on Derivative $ 305 $ (91) $ 1,539
Amount of Income Reclassified from AOCI into Earnings (1) 697 648 96
Cross Currency Swaps
Amount of Gain (Loss) Recognized in AOCI on Derivative 2,099 (260) 1,898
Amount of Income Reclassified from AOCI into Earnings (2) 1,008 880 276
Net Investment Hedges
Cross Currency Swaps
Amount of Gain Recognized in AOCI on Derivative - - 665
Amount of Income Recognized in Earnings (2) (3) - - 170
Currency Forward Agreements
Amount of Gain (Loss) Recognized in AOCI on Derivative 15,285 (3,573) 8,686
Total
Amount of Gain (Loss) Recognized in AOCI on Derivative $ 17,689 $ (3,924) $ 12,788
Amount of Income Reclassified from AOCI into Earnings 1,705 1,528 372
Amount of Income Recognized in Earnings - - 170
Interest expense, net in accompanying consolidated statements of income and comprehensive income $ 130,810 $ 124,858 $ 131,175
Other income in accompanying consolidated statements of income and comprehensive income $ 57,071 $ 45,947 $ 47,382
(1) Included in “Interest expense, net” in accompanying consolidated statements of income and comprehensive income.
(2) Included in "Other income" in the accompanying consolidated statements of income and comprehensive income.
(3) Amounts represent derivative gains excluded from the effectiveness testing.
Credit-risk-related Contingent Features
The Company has an agreement with its interest rate derivative counterparty that contains a provision where if the Company defaults on any of its obligations for borrowed money or credit in an amount exceeding $50.0 million and such default is not waived or cured within a specified period of time, including default where repayment of the
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its interest rate derivative obligations.
As of December 31, 2024, the fair value of the Company's derivatives in a liability position related to these agreements was $0.03 million. If the Company breached any of the contractual provisions of these derivative contracts, it would be required to settle its obligations under the agreements at their termination value, which after considering the right of offset, was zero at December 31, 2024. As of December 31, 2024, the Company had not posted any collateral related to these agreements and was not in breach of any provisions in these agreements.
11. Fair Value Disclosures
The Company has certain financial instruments that are required to be measured under the FASB’s Fair Value Measurement guidance. The Company currently does not have any non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis.
As a basis for considering market participant assumptions in fair value measurements, the FASB’s Fair Value Measurement guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little to no related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
Derivative Financial Instruments
The Company uses interest rate swaps, foreign currency forwards and cross currency swaps to manage its interest rate and foreign currency risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities. The fair value of interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. In conjunction with the FASB's fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives also use Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. As of December 31, 2024, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives and therefore, has classified its derivatives as Level 2 within the fair value reporting hierarchy.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
The table below presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2023, aggregated by the level in the fair value hierarchy within which those measurements are classified and by derivative type.
Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2024 and 2023
(Dollars in thousands)
Description Quoted Prices in
Active Markets
for Identical
Assets (Level I) Significant
Other
Observable
Inputs (Level 2) Significant
Unobservable
Inputs (Level 3) Balance at
end of period
2024:
Cross Currency Swaps (1) $ - $ 1,475 $ - $ 1,475
Currency Forward Agreements (2) $ - $ (26) $ - $ (26)
Interest Rate Swap Agreements (1) $ - $ 677 $ - $ 677
2023:
Cross Currency Swaps (1) $ - $ 384 $ - $ 384
Currency Forward Agreements (2) $ - $ (4,908) $ - $ (4,908)
Interest Rate Swap Agreements (1) $ - $ 876 $ - $ 876
(1) Included in "Other assets" in the accompanying consolidated balance sheets.
(2) Included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets.
Non-recurring fair value measurements
The table below presents the Company's assets measured at fair value on a non-recurring basis as of December 31, 2024 and 2023, aggregated by the level in the fair value hierarchy within which those measurements fall.
Assets Measured at Fair Value on a Non-Recurring Basis at December 31, 2024 and 2023
(Dollars in thousands)
Description Quoted Prices in
Active Markets
for Identical
Assets (Level I) Significant
Other
Observable
Inputs (Level 2) Significant
Unobservable
Inputs (Level 3) Balance at
end of period
2024:
Real estate investments, net (1) $ - $ 39,440 $ 6,500 $ 45,940
Investment in joint ventures (2) - - - -
2023:
Real estate investments, net (3) $ - $ - $ 39,150 $ 39,150
(1) As further discussed in Note 5, during the year ended December 31, 2024, the Company recorded impairment charges of $51.8 million related to real estate investments, net, on five theatre properties. Management estimated the fair value of these investments taking into account various factors, including purchase offers, independent appraisals, shortened hold periods and market conditions. The Company determined, based on the inputs, that its valuation of four of these properties with purchase offers were classified as Level 2 of the fair value hierarchy and were measured at fair value. One property was measured at fair value using an independent appraisal, which used a discounted cash flow model. The significant inputs and assumptions used in the real estate appraisal included land valued at approximately $475 thousand per acre less demolition costs of approximately $13.91 per square foot of building. These measurements were classified within Level 3 of the fair value hierarchy because many of the assumptions were not observable.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
(2) As further discussed in Note 8, during the year ended December 31, 2024, the Company recorded impairment charges of $28.2 million related to its investment in two unconsolidated real estate joint ventures that own two experiential lodging properties located in St. Pete Beach, Florida and two unconsolidated real estate joint ventures that own an experiential lodging property located in Breaux Bridge, Louisiana. Management estimated the fair value of these investments, taking into account various factors including implied asset value changes based on discounted cash flow projections and current market conditions. The Company determined, based on the inputs, that its valuation of investment in joint ventures were classified within Level 3 of the fair value hierarchy as many of the assumptions were not observable.
(3) As further discussed in Note 5, during the year ended December 31, 2023, the Company recorded impairment charges of $67.4 million related to real estate investments, net, on 12 properties. Management estimated the fair values of these investments taking into account various factors including independent appraisals, shortened hold periods and market conditions. The significant inputs and assumptions used in the real estate appraisals included market rents ranging from $4.50 per square foot to $20.00 per square foot, discount rates ranging from 8.50% to 11.50% and terminal capitalization rates ranging from 7.75% to 10.25%. Estimating future cash flows is highly subjective and estimates can differ materially from actual results. These measurements were classified within Level 3 of the fair value hierarchy because many of the assumptions were not observable.
Fair Value of Financial Instruments
The following methods and assumptions were used by the Company to estimate the fair value of each class of financial instruments at December 31, 2024 and 2023:
Mortgage notes receivable and related accrued interest receivable:
The fair value of the Company’s mortgage notes and related accrued interest receivable is estimated by discounting the future cash flows of each instrument using current market rates. At December 31, 2024, the Company had a carrying value of $665.8 million in fixed rate mortgage notes receivable outstanding, including related accrued interest, with a weighted average interest rate of approximately 8.88%. The fixed rate mortgage notes bear interest at rates of 7.15% to 12.50%. Discounting the future cash flows for fixed rate mortgage notes receivable using rates of 7.45% to 10.00%, management estimates the fair value of the fixed rate mortgage notes receivable to be $701.7 million with an estimated weighted average market rate of 8.08% at December 31, 2024.
At December 31, 2023, the Company had a carrying value of $569.8 million in fixed rate mortgage notes receivable outstanding, including related accrued interest, with a weighted average interest rate of approximately 8.82%. The fixed rate mortgage notes bear interest at rates of 6.99% to 12.32%. Discounting the future cash flows for fixed rate mortgage notes receivable using rates of 7.15% to 10.25%, management estimates the fair value of the fixed rate mortgage notes receivable to be $611.2 million with an estimated weighted average market rate of 7.84% at December 31, 2023.
Derivative instruments:
Derivative instruments are carried at their fair value.
Debt instruments:
The fair value of the Company's debt is estimated by discounting the future cash flows of each instrument using current market rates. At December 31, 2024, the Company had a carrying value of $200.0 million in variable rate debt outstanding with an interest rate of approximately 5.34%. The carrying value of the variable rate debt outstanding approximates the fair value at December 31, 2024.
At December 31, 2023, the Company had a carrying value of $25.0 million in variable rate debt outstanding with an interest rate of approximately 5.48%. The carrying value of the variable rate debt outstanding approximates the fair value at December 31, 2023.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
At both December 31, 2024 and 2023, the $25.0 million of variable rate debt outstanding, discussed above, had been effectively converted to a fixed rate by an interest rate swap agreement. See Note 10 for additional information related to the Company's interest rate swap agreement.
At December 31, 2024, the Company had a carrying value of $2.68 billion in fixed rate long-term debt outstanding with an average weighted interest rate of approximately 4.34%. Discounting the future cash flows for fixed rate debt using December 31, 2024 market rates of 5.22% to 5.83%, management estimates the fair value of the fixed rate debt to be approximately $2.57 billion with an estimated weighted average market rate of 5.53% at December 31, 2024.
At December 31, 2023, the Company had a carrying value of $2.82 billion in fixed rate long-term debt outstanding with an average weighted interest rate of approximately 4.34%. Discounting the future cash flows for fixed rate debt using December 31, 2023 market rates of 6.46% to 6.70%, management estimates the fair value of the fixed rate debt to be approximately $2.58 billion with an estimated weighted average market rate of 6.60% at December 31, 2023.
12. Common and Preferred Shares
On June 3, 2022, the Company filed a shelf registration statement with the SEC, which is effective for a term of three years. The securities covered by this registration statement include common shares, preferred shares, debt securities, depository shares, warrants and units. The Company may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering.
Additionally, on June 3, 2022, the Company filed a shelf registration statement with the SEC, which is effective for a term of three years, for its Dividend Reinvestment and Direct Share Purchase Plan (DSP Plan), which permits the issuance of up to 25,000,000 common shares.
Common Shares
The Company's Board declared cash dividends totaling $3.40 and $3.30 per common share for the years ended December 31, 2024 and 2023, respectively.
Of the total distributions calculated for tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid per common share for the years ended December 31, 2024 and 2023 are as follows:
Cash Distributions Per Share
2024 2023
Taxable ordinary income (1) $ 2.5101 $ 2.3248
Return of capital 0.8799 0.9752
Long-term capital gain - -
Totals
$ 3.3900 $ 3.3000
(1) Amounts qualify in their entirety as 199A distributions.
During the years ended December 31, 2024 and 2023, the Company issued an aggregate of 26,878 and 22,469 common shares under its DSP Plan for net proceeds of $1.2 million and $1.0 million, respectively.
Series C Convertible Preferred Shares
The Company has 5.4 million outstanding 5.75% Series C cumulative convertible preferred shares (Series C preferred shares). The Company will pay cumulative dividends on the Series C preferred shares from the date of original issuance in the amount of $1.4375 per share each year, which is equivalent to 5.75% of the $25 liquidation preference per share. Dividends on the Series C preferred shares are payable quarterly in arrears. The Company does not have the right to redeem the Series C preferred shares except in limited circumstances to preserve the
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Company’s REIT status. The Series C preferred shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption. As of December 31, 2024, the Series C preferred shares are convertible, at the holder’s option, into the Company’s common shares at a conversion rate of 0.4316 common shares per Series C preferred share, which is equivalent to a conversion price of $57.92 per common share. This conversion ratio may increase over time upon certain specified triggering events including if the Company’s common dividends per share exceed a quarterly threshold of $0.6875.
Upon the occurrence of certain fundamental changes, the Company will under certain circumstances increase the conversion rate by a number of additional common shares or, in lieu thereof, may in certain circumstances elect to adjust the conversion rate upon the Series C preferred shares becoming convertible into shares of the public acquiring or surviving company.
The Company may, at its option, cause the Series C preferred shares to be automatically converted into that number of common shares that are issuable at the then prevailing conversion rate. The Company may exercise its conversion right only if, at certain times, the closing price of the Company’s common shares equals or exceeds 135% of the then prevailing conversion price of the Series C preferred shares.
Owners of the Series C preferred shares generally have no voting rights, except under certain dividend defaults. Upon conversion, the Company may choose to deliver the conversion value to the owners in cash, common shares, or a combination of cash and common shares.
The Company's Board declared cash dividends totaling $1.4375 per Series C preferred share for each of the years ended December 31, 2024 and 2023. There were non-cash distributions associated with conversion adjustments of $0.2769 and $0.2368 per Series C preferred share for the years ended December 31, 2024 and 2023, respectively. The conversion adjustment provision entitles the shareholders of the Series C preferred shares, upon certain quarterly common share dividend thresholds being met, to receive additional common shares of the Company upon a conversion of the preferred shares into common shares. The increase in common shares to be received upon a conversion is a deemed distribution for federal income tax purposes.
For tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid and non-cash deemed distributions per Series C preferred share for the years ended December 31, 2024 and 2023 are as follows:
Cash Distributions per Share
2024 2023
Taxable ordinary income (1) $ 1.4375 $ 1.4375
Return of capital - -
Long-term capital gain - -
Totals
$ 1.4375 $ 1.4375
(1) Amounts qualify in their entirety as 199A distributions.
Non-cash Distributions per Share
2024 2023
Taxable ordinary income (2) $ - $ -
Return of capital 0.2769 0.2368
Long-term capital gain - -
Totals
$ 0.2769 $ 0.2368
(2) For the years ended December 31, 2024 and 2023, no amounts qualify as 199A distributions.
Series E Convertible Preferred Shares
The Company has 3.4 million outstanding 9.00% Series E cumulative convertible preferred shares (Series E preferred shares). The Company will pay cumulative dividends on the Series E preferred shares from the date of original issuance in the amount of $2.25 per share each year, which is equivalent to 9.00% of the $25 liquidation preference per share. Dividends on the Series E preferred shares are payable quarterly in arrears. The Company does
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
not have the right to redeem the Series E preferred shares except in limited circumstances to preserve the Company’s REIT status. The Series E preferred shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption. As of December 31, 2024, the Series E preferred shares are convertible, at the holder’s option, into the Company’s common shares at a conversion rate of 0.4831 common shares per Series E preferred share, which is equivalent to a conversion price of $51.75 per common share. This conversion ratio may increase over time upon certain specified triggering events including if the Company’s common dividends per share exceeds a quarterly threshold of $0.84.
Upon the occurrence of certain fundamental changes, the Company will under certain circumstances increase the conversion rate by a number of additional common shares or, in lieu thereof, may in certain circumstances elect to adjust the conversion rate upon the Series E preferred shares becoming convertible into shares of the public acquiring or surviving company.
The Company may, at its option, cause the Series E preferred shares to be automatically converted into that number of common shares that are issuable at the then prevailing conversion rate. The Company may exercise its conversion right only if, at certain times, the closing price of the Company’s common shares equals or exceeds 150% of the then prevailing conversion price of the Series E preferred shares.
Owners of the Series E preferred shares generally have no voting rights, except under certain dividend defaults. Upon conversion, the Company may choose to deliver the conversion value to the owners in cash, common shares, or a combination of cash and common shares.
The Company's Board declared cash dividends totaling $2.25 per Series E preferred share for each of the years ended December 31, 2024 and 2023. There were no non-cash distributions associated with conversion adjustments per Series E preferred share for both years ended December 31, 2024 and 2023. The conversion adjustment provision entitles the shareholders of the Series E preferred shares, upon certain quarterly common share dividend thresholds being met, to receive additional common shares of the Company upon a conversion of the preferred shares into common shares. The increase in common shares to be received upon a conversion is a deemed distribution for federal income tax purposes.
For tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid per Series E preferred share for the years ended December 31, 2024 and 2023 are as follows:
Cash Distributions per Share
2024 2023
Taxable ordinary income (1) $ 2.2500 $ 2.2500
Return of capital - -
Long-term capital gain - -
Totals
$ 2.2500 $ 2.2500
(1) Amounts qualify in their entirety as 199A distributions.
Series G Preferred Shares
The Company has 6.0 million outstanding 5.75% Series G cumulative redeemable preferred shares (Series G preferred shares). The Company will pay cumulative dividends on the Series G preferred shares from the date of original issuance in the amount of $1.4375 per share each year, which is equivalent to 5.75% of the $25.00 liquidation preference per share. Dividends on the Series G preferred shares are payable quarterly in arrears. The Company may, at its option, redeem the Series G preferred shares in whole at any time or in part from time to time by paying $25.00 per share, plus any accrued and unpaid dividends up to, but not including the date of redemption. The Series G preferred shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption. The Series G preferred shares are not convertible into any of the Company's securities, except under certain circumstances in connection with a change of control. Owners of the Series G preferred shares generally have no voting rights except under certain dividend defaults.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
The Company's Board declared cash dividends totaling $1.4375 per Series G preferred share for each of the years ended December 31, 2024 and 2023. For tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid per Series G preferred share for the years ended December 31, 2024 and 2023 are as follows:
Cash Distributions per Share
2024 2023
Taxable ordinary income (1) $ 1.4375 $ 1.4375
Return of capital - -
Long-term capital gain - -
Totals
$ 1.4375 $ 1.4375
(1) Amounts qualify in their entirety as 199A distributions.
13. Earnings Per Share
The following table summarizes the Company’s computations of basic and diluted earnings per share (EPS) for the years ended December 31, 2024, 2023 and 2022 (amounts in thousands except per share information):
Year Ended December 31, 2024
Income
(numerator) Shares
(denominator) Per Share
Amount
Basic EPS:
Net income $ 146,066
Less: preferred dividend requirements (24,144)
Net income available to common shareholders $ 121,922 75,636 $ 1.61
Diluted EPS:
Net income available to common shareholders $ 121,922 75,636
Effect of dilutive securities:
Share options and performance share units - 363
Net income available to common shareholders $ 121,922 75,999 $ 1.60
Year Ended December 31, 2023
Income
(numerator) Shares
(denominator) Per Share
Amount
Basic EPS:
Net income $ 173,046
Less: preferred dividend requirements (24,145)
Net income available to common shareholders $ 148,901 75,260 $ 1.98
Diluted EPS:
Net income available to common shareholders $ 148,901 75,260
Effect of dilutive securities:
Share options and performance share units - 455
Net income available to common shareholders $ 148,901 75,715 $ 1.97
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Year Ended December 31, 2022
Income
(numerator) Shares
(denominator) Per Share
Amount
Basic EPS:
Net income $ 176,229
Less: preferred dividend requirements (24,141)
Net income available to common shareholders $ 152,088 74,967 $ 2.03
Diluted EPS:
Net income available to common shareholders $ 152,088 74,967
Effect of dilutive securities:
Share options and performance share units - 76
Net income available to common shareholders $ 152,088 75,043 $ 2.03
The effect of the potential common shares from the conversion of the Company’s convertible preferred shares and from the exercise of share options are included in diluted earnings per share if the effect is dilutive. Potential common shares from the performance share units are included in diluted earnings per share upon the satisfaction of certain performance and market conditions. These conditions are evaluated at each reporting period and if the conditions have been satisfied during the reporting period, the number of contingently issuable shares are included in the computation of diluted earnings per share.
The following shares have been excluded from the calculation of diluted earnings per share because they are anti-dilutive, or in the case of contingently issuable performance share units, are not probable of issuance:
•The additional 2.3 million common shares that would result from the conversion of the Company’s 5.75% Series C cumulative convertible preferred shares and the corresponding add-back of the preferred dividends declared on those shares for each of the years ended December 31, 2024, 2023 and 2022.
•The additional 1.7 million common shares that would result from the conversion of the Company’s 9.0% Series E cumulative convertible preferred shares and the corresponding add-back of the preferred dividends declared on those shares for each of the years ended December 31, 2024, 2023 and 2022.
•Outstanding options to purchase 57 thousand, 81 thousand and 96 thousand common shares at per share prices ranging from $44.44 to $76.63 for the years ended December 31, 2024, 2023 and 2022, respectively.
•The effect of 116 thousand contingently issuable performance share units granted during 2024 for the year ended December 31, 2024.
•The effect of 99 thousand contingently issuable performance share units granted during 2022 and 56 thousand contingently issuable performance share units granted during 2020 for the year ended December 31, 2022.
14. Retirement of Executive Vice President, General Counsel and Secretary
On March 1, 2024, the Company's Executive Vice President, General Counsel and Secretary, Craig Evans, retired from the Company. Details of Mr. Evans' retirement are included in the previously disclosed Retirement and Release Agreement entered into between the Company and Mr. Evans. The role of General Counsel and Secretary was assumed by Paul Turvey upon Mr. Evans' retirement. For the year ended December 31, 2024, the Company recorded retirement and severance expense related to Mr. Evans' retirement, as well as the departure of another employee, totaling $1.8 million, which included cash payments totaling $0.2 million and accelerated vesting of nonvested shares totaling $1.6 million.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
15. Equity Incentive Plans
All grants of common shares and options to purchase common shares were issued under the Company's 2007 Equity Incentive Plan prior to May 12, 2016, and under the 2016 Equity Incentive Plan on and after May 12, 2016. Under the 2016 Equity Incentive Plan, an aggregate of 3,950,000 common shares, options to purchase common shares and restricted share units, subject to adjustment in the event of certain capital events, may be granted. Additionally, the 2020 Long Term Incentive Plan (2020 LTIP) is a sub-plan under the Company's 2016 Equity Incentive Plan. Under the 2020 LTIP, the Company awards performance share units and restricted shares to the Company's executive officers. At December 31, 2024, there were 904,048 shares available for grant under the 2016 Equity Incentive Plan.
Nonvested Shares
A summary of the Company’s nonvested share activity and related information is as follows:
Number of
shares Weighted avg. grant date
fair value Weighted avg.
life remaining
Outstanding at December 31, 2023
609,228 $ 44.44
Granted 290,271 41.96
Vested (284,885) 45.47
Outstanding at December 31, 2024
614,614 $ 42.79 0.86
The holders of nonvested shares have voting rights and receive dividends from the date of grant. The fair value of the nonvested shares that vested was $13.7 million, $8.7 million, and $10.2 million for the years ended December 31, 2024, 2023 and 2022, respectively. Expense recognized related to nonvested shares and included in "General and administrative expense" in the accompanying consolidated statements of income and comprehensive income was $6.9 million, $7.6 million and $7.9 million for the years ended December 31, 2024, 2023 and 2022, respectively. Expense related to nonvested shares and included in "Retirement and severance expense" in the accompanying consolidated statements of income and comprehensive income was $0.7 million and $0.4 million for the years ended December 31, 2024 and 2023, respectively. At December 31, 2024, unamortized share-based compensation expense related to nonvested shares was $9.6 million and will be recognized in future periods as follows (in thousands):
Amount
Year:
2025 $ 5,254
2026 3,078
2027 1,246
Total $ 9,578
Nonvested Performance Share Units
A summary of the Company's nonvested performance share unit activity and related information is as follows:
Number of
Performance Share Units Weighted avg. grant date fair value (1)
Outstanding at December 31, 2023
312,641 $ 70.04
Granted 116,266 44.76
Vested (2) (102,438) 75.14
Outstanding at December 31, 2024
326,469 $ 59.44
(1) The grant date fair value was determined utilizing (i) a Monte Carlo simulation model to generate an estimate of the Company's future stock price over the three-year performance period for performance share units based on the Company's Total Shareholder Return (TSR) performance further described below and (ii) the Company's grant date fair value for performance share units based on the Company's Compounded Annual Growth Rate (CAGR) in AFFO per share over the three-year performance period.
(2) The achievement of the performance conditions for the performance share units granted during the year ended December 31, 2021 resulted in a performance payout percentage of 250% for both the Company's TSR relative to
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
the TSRs of the Company's peer group companies and the Company's TSR relative to the TSRs of companies in the MSCI US REIT Index and a payout percentage of 200% for the Company's CAGR in AFFO per share over the three-year performance period. The achievement of the performance conditions and the above payout percentages resulted in the issuance of 243,290 common shares and 49,574 common shares from dividend equivalents. The fair value of the performance share units and dividend equivalents that vested was $12.6 million.
The number of common shares issuable upon settlement of the performance share units granted during the years ended December 31, 2024, 2023 and 2022 will be based upon the Company's achievement level relative to the following performance measures over a three-year performance period ending December 31, 2026, 2025 and 2024, respectively. The Company's achievement level relative to the performance measures is assigned a specific payout percentage which is multiplied by the target number of performance share units.
Granted during the years ended December 31, TSR vs. Triple-Net Peer Group TSR vs. MSCI US REIT Index CAGR in AFFO per share growth
2022 50.0 % 25.0 % 25.0 %
2023 50.0 % 25.0 % 25.0 %
2024 52.2 % 26.1 % 21.7 %
The performance share units based on relative TSR performance have market conditions and are valued using a Monte Carlo simulation model on the grant date, which resulted in a grant date fair value of approximately $4.1 million, $5.9 million and $6.0 million for the years ended December 31, 2024, 2023 and 2022, respectively. The estimated fair value is amortized to expense over the three-year vesting period, which ends on December 31, 2026, 2025 and 2024 for performance share units granted in 2024, 2023 and 2022, respectively. The following assumptions were used in the Monte Carlo simulation for computing the grant date fair value of the performance share units with a market condition for the years ended December 31, 2024, 2023 and 2022, respectively: risk-free interest rate of 4.5%, 4.4% and 1.7%, volatility factors in the expected market price of the Company's common shares of 30%, 52% and 71% and an expected life of approximately three years.
The performance share units based on growth in AFFO per share have a performance condition. The probability of achieving the performance condition is assessed at each reporting period. If it is deemed probable that the performance condition will be met, compensation cost will be recognized based on the closing price per share of the Company's common shares on the date of the grant multiplied by the number of awards expected to be earned. If it is deemed that it is not probable that the performance condition will be met, the Company will discontinue the recognition of compensation cost and any compensation cost previously recorded will be reversed. At December 31, 2024, achievement of the performance condition was deemed probable for the performance share units granted during the year ended December 31, 2022 with an expected payout percentage of 200%, which resulted in a grant date fair value of approximately $2.3 million. Achievement of the performance condition for the performance share units granted during the years ended December 31, 2024 and 2023 was deemed not probable at December 31, 2024.
Expense recognized related to performance share units and included in "General and administrative expense" in the accompanying consolidated statements of income and comprehensive income was $5.4 million, $7.9 million and $6.6 million for the years ended December 31, 2024, 2023 and 2022, respectively. Expense related to performance share units and included in "Retirement and severance expense" in the accompanying consolidated statements of income and comprehensive income was $0.9 million for the year ended December 31, 2024.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
At December 31, 2024, unamortized share-based compensation expense related to nonvested performance share units was $4.3 million and will be recognized in future periods as follows (in thousands):
Amount
Year:
2025 $ 2,978
2026 1,350
Total $ 4,328
The performance share units accrue dividend equivalents, that are paid only if common shares are issued upon settlement of the performance share units. During the years ended December 31, 2024 and 2023, the Company accrued dividend equivalents expected to be paid on earned awards of $3.5 million and $3.8 million, respectively. During the year ended December 31, 2024, the Company paid dividend equivalents of $3.8 million related to the issuance of the performance share units granted during the year ended December 31, 2021. No dividend equivalents were paid for the year ended December 31, 2023 as the performance conditions for the performance share units granted during the year ended December 31, 2020 were not achieved.
Restricted Share Units
A summary of the Company’s restricted share unit activity and related information is as follows:
Number of
Shares Weighted Average Grant Date Fair Value Weighted Average Life Remaining
Outstanding at December 31, 2023
42,048 $ 41.67
Granted 45,410 40.69
Vested (42,048) 41.67
Outstanding at December 31, 2024
45,410 $ 40.69 0.42
The holders of restricted share units receive dividend equivalents from the date of grant. Total expense recognized related to shares issued to non-associate Trustees and included in "General and administrative expense" in the accompanying consolidated statements of income and comprehensive income was $1.8 million, $1.9 million and $2.2 million for the years ended December 31, 2024, 2023 and 2022, respectively. At December 31, 2024, unamortized share-based compensation expense related to restricted share units was $794 thousand, which will be recognized in 2025.
Share Options
Share options have exercise prices equal to the fair market value of a common share at the date of grant and have a term of 10 years. The Company generally issues new common shares upon option exercise. A summary of the Company’s share option activity and related information is as follows:
Number of
shares Option price
per share Weighted avg.
exercise price
Outstanding at December 31, 2021 108,671 $ 44.44 - $ 76.63 $ 56.79
Exercised (12,559) 44.62 - 47.15 46.43
Outstanding at December 31, 2022 96,112 $ 44.44 - $ 76.63 $ 58.15
Forfeited/Expired (14,921) 46.86 - 61.79 52.68
Outstanding at December 31, 2023 81,191 $ 44.44 - $ 76.63 $ 59.16
Forfeited/Expired (23,752) 51.64 - 51.64 51.64
Outstanding at December 31, 2024 57,439 $ 44.44 - $ 76.63 $ 62.26
No options were granted during the years ended December 31, 2024, 2023 and 2022. The intrinsic value of stock options exercised was $62 thousand during the year ended December 31, 2022. No options were exercised during the years ended December 31, 2024 and 2023.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Expense recognized related to share options and included in "General and administrative expense" in the accompanying consolidated statements of income and comprehensive income was $9 thousand, $12 thousand and $14 thousand for the years ended December 31, 2024, 2023 and 2022, respectively.
The following table summarizes outstanding and exercisable options at December 31, 2024:
Options outstanding Options exercisable
Exercise price range Options
outstanding Weighted avg. life remaining Weighted avg. exercise price Aggregate intrinsic value (in thousands) Options exercisable Weighted avg. life remaining Weighted avg. exercise price Aggregate intrinsic value (in thousands)
44.44 - 49.99
1,838 6.1 1,380 6.1
50.00 - 59.99
3,835 3.1 3,835 3.1
60.00 - 69.99
47,610 1.6 47,610 1.6
70.00 - 76.63
4,156 3.0 4,156 3.0
57,439 2.0 $ 62.26 $ - 56,981 2.0 $ 62.41 $ -
16. Operating Leases
The Company’s real estate investments are leased under operating leases with remaining terms ranging from one year to 25 years.
The following table summarizes the future minimum rentals on the Company's lessor and sublessor arrangements at December 31, 2024 (in thousands):
December 31, 2024
Operating leases Sub-lessor operating ground leases
Amount (1) Amount (1) Total
Year:
2025 $ 503,782 $ 26,324 $ 530,106
2026 508,235 24,829 533,064
2027 494,307 24,303 518,610
2028 486,042 23,489 509,531
2029 481,912 21,930 503,842
Thereafter 3,010,617 176,095 3,186,712
Total $ 5,484,895 $ 296,970 $ 5,781,865
(1) Included in rental revenue.
In addition to its lessor arrangements on its real estate investments, as of December 31, 2024 and 2023, the Company was lessee in 51 operating ground leases, as well as lessee in an operating lease of its executive office. The Company's tenants, who are generally subtenants under these ground leases, are responsible for paying the rent under these ground leases. As of December 31, 2024, rental revenue from one of the Company's tenants, who is also a subtenant under certain ground leases, is being recognized on a cash basis. In addition, two of the Company's ground leases do not currently have subtenants. In the event the tenant fails to pay the ground lease rent or if the property does not have sub-tenants, the Company is primarily responsible for the payment, assuming the Company does not sell or re-tenant the property. As of December 31, 2024, the ground lease arrangements have remaining terms ranging from one year to 42 years. Most of these leases include one or more options to renew. The Company assesses these options using a threshold of reasonably certain, which also includes an assessment of the term of the Company's tenants' leases. For leases where renewal is reasonably certain, those option periods are included within the lease term and also the measurement of the operating lease right-of-use asset and liability. The ground lease arrangements do not contain any residual value guarantees or any material restrictions. As of December 31, 2024, the Company does not have any leases that have not commenced but that create significant rights and obligations.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
The Company determines whether an arrangement is or includes a lease at contract inception. For arrangements in which the Company is lessee, operating lease right-of-use assets and liabilities are recognized at commencement date and initially measured based on the present value of lease payments over the defined lease terms. As the Company's leases do not provide an implicit rate, the Company used its incremental borrowing rate in determining the present value of lease payments. The incremental borrowing rate was adjusted for collateral based on the information available at adoption or the commencement date. Inputs to the calculation of the Company's incremental borrowing rate include its senior notes and their option adjusted credit spreads over comparable U.S. Treasury rates, adjusted to a collateralized basis by estimating the credit spread improvement that would result from an upgrade of one ratings classification.
The following table summarizes the future minimum lease payments under the ground lease obligations and the office lease at December 31, 2024, excluding contingent rent due under leases where the ground lease payment, or a portion thereof, is based on the level of the tenant's sales (in thousands):
December 31, 2024
Ground Leases (1) Office lease (2)
Year:
2025 $ 27,844 $ 958
2026 26,401 717
2027 25,075 -
2028 24,192 -
2029 22,635 -
Thereafter 190,198 -
Total lease payments $ 316,345 $ 1,675
Less: imputed interest 105,531 89
Present value of lease liabilities $ 210,814 $ 1,586
(1) Included in property operating expense.
(2) Included in general and administrative expense.
The following table summarizes the carrying amounts of the operating lease right-of-use assets and liabilities as of December 31, 2024 and 2023 (in thousands):
As of December 31,
Classification 2024 2023
Assets:
Operating ground lease assets Operating lease right-of-use assets $ 171,885 $ 184,376
Office lease asset Operating lease right-of-use assets 1,479 2,252
Total operating lease right-of-use assets $ 173,364 $ 186,628
Sub-lessor straight-line rent receivable Accounts receivable 17,527 17,430
Total leased assets $ 190,891 $ 204,058
Liabilities:
Operating ground lease liabilities Operating lease liabilities $ 210,814 $ 224,540
Office lease liability Operating lease liabilities 1,586 2,421
Total lease liabilities $ 212,400 $ 226,961
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
The following table summarizes rental revenue, including sublease arrangements and lease costs, including impairment charges on operating lease right-of-use assets for the years ended December 31, 2024, 2023 and 2022(in thousands):
Year ended December 31,
Classification 2024 2023 2022
Rental revenue
Operating leases Rental revenue $ 559,079 $ 588,751 $ 551,383
Sublease income - operating ground leases Rental revenue 26,088 27,388 24,218
Lease costs
Operating ground lease cost Property operating expense $ 26,277 $ 26,290 $ 25,167
Operating office lease cost General and administrative expense 896 896 904
Operating lease right-of-use asset impairment charges (1) Impairment charges - - 1,968
(1) During the year ended December 31, 2022, the Company recognized an impairment charge of $2.0 million. See Note 5 for the details on this impairment.
The following table summarizes the weighted-average remaining lease term and the weighted-average discount rate for arrangements where the Company is the lessee as of December 31, 2024 and 2023:
As of December 31,
2024 2023
Weighted-average remaining lease term in years
Operating ground leases 14.1 14.6
Operating office lease 1.8 2.8
Weighted-average discount rate
Operating ground leases 5.40 % 5.37 %
Operating office lease 6.04 % 6.04 %
17. Other Commitments and Contingencies
As of December 31, 2024, the Company had 15 development projects with commitments to fund an aggregate of approximately $164.4 million. The Company advances development costs in periodic draws. If the Company determines that construction is not being completed in accordance with the terms of the development agreement, it can discontinue funding construction draws. The Company has agreed to lease the properties to the operators at pre-determined rates upon completion of construction.
The Company has certain commitments related to its mortgage notes and notes receivable investments that it may be required to fund in the future. The Company is generally obligated to fund these commitments at the request of the borrower or upon the occurrence of events outside of its direct control. As of December 31, 2024, the Company had three mortgage notes with commitments totaling approximately $49.3 million. If commitments are funded in the future, interest will be charged at rates consistent with the existing investments.
In connection with construction of the Company's development projects and related infrastructure, certain public agencies require posting of surety bonds to guarantee that the Company's obligations are satisfied. These bonds expire upon the completion of the improvements or infrastructure. As of December 31, 2024, the Company had three surety bonds outstanding totaling $0.6 million.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
18. Segment Information
The Company groups its investments into two reportable segments: Experiential and Education.
The financial information summarized below is presented by reportable segment (in thousands):
Balance Sheet Data:
As of December 31, 2024
Experiential Education Corporate/Unallocated Consolidated
Total Assets $ 5,171,845 $ 409,801 $ 34,861 $ 5,616,507
As of December 31, 2023
Experiential Education Corporate/Unallocated Consolidated
Total Assets $ 5,189,831 $ 433,177 $ 77,877 $ 5,700,885
Operating Data:
For the Year Ended December 31, 2024
Experiential Education Corporate/Unallocated Consolidated
Rental revenue $ 547,310 $ 37,857 $ - $ 585,167
Other income 56,297 100 674 57,071
Mortgage and other financing income
55,005 825 - 55,830
Total revenue 658,612 38,782 674 698,068
Property operating expense
57,616 573 957 59,146
Other expense 56,877 - - 56,877
Total investment expenses
114,493 573 957 116,023
Net operating income (loss) - before unallocated items 544,119 38,209 (283) 582,045
Reconciliation to Consolidated Statements of Income and Comprehensive Income:
General and administrative expense (50,096)
Retirement and severance expense (1,836)
Transaction costs (798)
(Provision) benefit for credit losses, net (12,247)
Impairment charges (51,764)
Depreciation and amortization (165,733)
Gain on sale of real estate 16,101
Costs associated with loan refinancing or payoff (337)
Interest expense, net (130,810)
Equity in loss from joint ventures (8,809)
Impairment charges on joint ventures (28,217)
Income tax expense (1,433)
Net income 146,066
Preferred dividend requirements (24,144)
Net income available to common shareholders of EPR Properties $ 121,922
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
For the Year Ended December 31, 2023
Experiential Education Corporate/Unallocated Consolidated
Rental revenue $ 577,715 $ 38,424 $ - $ 616,139
Other income 45,112 1 834 45,947
Mortgage and other financing income 42,717 865 - 43,582
Total revenue 665,544 39,290 834 705,668
Property operating expense 56,543 192 743 57,478
Other expense 44,774 - - 44,774
Total investment expenses 101,317 192 743 102,252
Net operating income - before unallocated items 564,227 39,098 91 603,416
Reconciliation to Consolidated Statements of Income and Comprehensive Income:
General and administrative expense (56,442)
Severance expense (547)
Transaction costs (1,554)
(Provision) benefit for credit losses, net (878)
Impairment charges (67,366)
Depreciation and amortization (168,033)
Loss on sale of real estate (2,197)
Interest expense, net (124,858)
Equity in loss from joint ventures (6,768)
Income tax expense (1,727)
Net income 173,046
Preferred dividend requirements (24,145)
Net income available to common shareholders of EPR Properties $ 148,901
For the Year Ended December 31, 2022
Experiential Education Corporate/Unallocated Consolidated
Rental revenue $ 535,382 $ 40,219 $ - $ 575,601
Other income 37,558 7,000 2,824 47,382
Mortgage and other financing income 34,139 909 - 35,048
Total revenue 607,079 48,128 2,824 658,031
Property operating expense 55,499 (8) 494 55,985
Other expense 33,984 - (175) 33,809
Total investment expenses 89,483 (8) 319 89,794
Net operating income - before unallocated items 517,596 48,136 2,505 568,237
Reconciliation to Consolidated Statements of Income and Comprehensive Income:
General and administrative expense (51,579)
Transaction costs (4,533)
(Provision) benefit for credit losses, net (10,816)
Impairment charges (27,349)
Depreciation and amortization (163,652)
Gain on sale of real estate 651
Interest expense, net (131,175)
Equity in loss from joint ventures (1,672)
Impairment charges on joint ventures (647)
Income tax expense (1,236)
Net income 176,229
Preferred dividend requirements (24,141)
Net income available to common shareholders of EPR Properties $ 152,088
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
EPR Properties
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2024
(Dollars in thousands)
Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2024
Location Debt Land Buildings,
Equipment, Leasehold Interests &
Improvements Land Buildings,
Equipment, Leasehold Interests &
Improvements Total Accumulated
depreciation Date
acquired Depreciation
life
Theatres
Sugar Land, TX $ - $ - $ 19,100 $ 4,152 $ - $ 23,252 $ 23,252 $ (14,113) 11/97 40 years
San Antonio, TX - 3,006 13,662 8,455 3,006 22,117 25,123 (12,884) 11/97 40 years
Columbus, OH - - 12,685 1,133 - 13,818 13,818 (10,882) 11/97 28 years
San Diego, CA - - 16,028 - - 16,028 16,028 (10,619) 11/97 40 years
Ontario, CA - 5,521 19,449 7,130 5,521 26,579 32,100 (15,358) 11/97 40 years
Leawood, KS - 3,714 12,086 4,110 3,714 16,196 19,910 (9,221) 11/97 40 years
Houston, TX - 7,957 22,861 (1,455) 7,712 21,651 29,363 (14,596) 02/98 40 years
South Barrington, IL - 6,577 27,723 4,618 6,577 32,341 38,918 (20,298) 03/98 40 years
Mesquite, TX - 2,912 20,288 4,885 2,912 25,173 28,085 (15,684) 04/98 40 years
Hampton, VA - 3,822 24,678 4,510 3,822 29,188 33,010 (18,123) 06/98 40 years
Pompano Beach, FL - 6,771 9,899 10,984 6,771 20,883 27,654 (20,231) 08/98 24 years
Raleigh, NC - 2,919 5,559 3,492 2,919 9,051 11,970 (5,110) 08/98 40 years
Davie, FL - 2,000 13,000 11,512 2,000 24,512 26,512 (14,885) 11/98 40 years
Aliso Viejo, CA - 8,000 14,000 - 8,000 14,000 22,000 (9,100) 12/98 40 years
Boise, ID - - 16,003 400 - 16,403 16,403 (10,513) 12/98 40 years
Cary, NC - 3,352 11,653 3,091 3,352 14,744 18,096 (8,384) 12/99 40 years
Tampa, FL - 6,000 12,809 1,452 6,000 14,261 20,261 (9,484) 06/99 40 years
Metairie, LA - - 11,740 3,049 - 14,789 14,789 (7,559) 03/02 40 years
Harahan, LA - 5,264 14,820 - 5,264 14,820 20,084 (8,460) 03/02 40 years
Hammond, LA - 2,404 6,780 1,607 1,839 8,952 10,791 (4,290) 03/02 40 years
Houma, LA - 2,404 6,780 - 2,404 6,780 9,184 (3,870) 03/02 40 years
Harvey, LA - 4,378 12,330 3,735 4,266 16,177 20,443 (8,120) 03/02 40 years
Greenville, SC - 1,660 7,570 473 1,660 8,043 9,703 (4,460) 06/02 40 years
Sterling Heights, MI - 5,975 17,956 3,400 5,975 21,356 27,331 (13,500) 06/02 40 years
Olathe, KS - 4,000 15,935 2,558 3,042 19,451 22,493 (11,609) 06/02 40 years
Livonia, MI - 4,500 17,525 - 4,500 17,525 22,025 (9,821) 08/02 40 years
Alexandria, VA - - 22,035 - - 22,035 22,035 (12,257) 10/02 40 years
Little Rock, AR - 3,858 7,990 - 3,858 7,990 11,848 (4,411) 12/02 40 years
Macon, GA - 1,982 5,056 1,462 1,982 6,518 8,500 (2,970) 03/03 40 years
Lawrence, KS - 1,500 3,526 2,017 1,500 5,543 7,043 (2,526) 06/03 40 years
Columbia, SC - 1,000 10,534 339 1,000 10,873 11,873 (5,022) 11/03 40 years
Phoenix, AZ - 4,276 15,934 3,518 4,276 19,452 23,728 (9,283) 03/04 40 years
Hamilton, NJ - 4,869 18,143 20 4,869 18,163 23,032 (9,422) 03/04 40 years
Mesa, AZ - 4,446 16,565 3,263 4,446 19,828 24,274 (9,572) 03/04 40 years
Peoria, IL - 2,948 11,177 - 2,948 11,177 14,125 (5,705) 07/04 40 years
Lafayette, LA - - 10,318 - - 10,318 10,318 (5,364) 07/04 24 years
Hurst, TX - 5,000 11,729 1,015 5,000 12,744 17,744 (6,414) 11/04 40 years
Melbourne, FL - 3,817 8,830 320 3,817 9,150 12,967 (4,575) 12/04 40 years
D'Iberville, MS - 2,001 8,043 3,612 808 12,848 13,656 (5,808) 12/04 40 years
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2024
Location Debt Land Buildings,
Equipment, Leasehold Interests &
Improvements Land Buildings,
Equipment, Leasehold Interests &
Improvements Total Accumulated
depreciation Date
acquired Depreciation
life
Wilmington, NC - 1,650 7,047 3,033 1,650 10,080 11,730 (4,318) 02/05 40 years
Chattanooga, TN - 2,799 11,467 - 2,799 11,467 14,266 (5,686) 03/05 40 years
Conroe, TX - 1,836 8,230 2,304 1,836 10,534 12,370 (4,493) 06/05 40 years
Indianapolis, IN - 1,481 4,565 2,375 1,481 6,940 8,421 (2,899) 06/05 40 years
Hattiesburg, MS - 1,978 7,733 4,720 1,978 12,453 14,431 (5,445) 09/05 40 years
Arroyo Grande, CA - 2,641 3,810 - 2,641 3,810 6,451 (1,818) 12/05 40 years
Auburn, CA - 2,178 6,185 (65) 2,113 6,185 8,298 (2,951) 12/05 40 years
Fresno, CA - 7,600 11,613 2,894 7,600 14,507 22,107 (8,708) 12/05 40 years
Modesto, CA - 2,542 3,910 1,889 2,542 5,799 8,341 (2,380) 12/05 40 years
Columbia, MD - - 12,204 - - 12,204 12,204 (5,721) 03/06 40 years
Garland, TX - 8,028 14,825 - 8,028 14,825 22,853 (6,949) 03/06 40 years
Garner, NC - 1,305 6,899 - 1,305 6,899 8,204 (3,219) 04/06 40 years
Winston Salem, NC - - 12,153 4,188 - 16,341 16,341 (7,111) 07/06 40 years
Huntsville, AL - 3,508 14,802 - 3,508 14,802 18,310 (6,784) 08/06 40 years
Pensacola, FL - 5,316 15,099 - 5,316 15,099 20,415 (6,794) 12/06 40 years
Slidell, LA 10,635 - 11,499 - - 11,499 11,499 (5,175) 12/06 40 years
Panama City Beach, FL - 6,486 11,156 2,704 6,486 13,860 20,346 (5,424) 05/07 40 years
Kalispell, MT - 2,505 7,323 - 2,505 7,323 9,828 (3,173) 08/07 40 years
Greensboro, NC - - 12,606 914 - 13,520 13,520 (10,271) 11/07 20 years
Glendora, CA - - 10,588 - - 10,588 10,588 (4,279) 10/08 40 years
Ypsilanti, MI - 4,716 227 2,817 4,716 3,044 7,760 (741) 12/09 40 years
Manchester, CT - 3,628 11,474 2,315 3,628 13,789 17,417 (4,746) 12/09 40 years
Centreville, VA - 3,628 1,769 - 3,628 1,769 5,397 (663) 12/09 40 years
Davenport, IA - 3,599 6,068 2,265 3,564 8,368 11,932 (2,800) 12/09 40 years
Fairfax, VA - 2,630 11,791 2,000 2,630 13,791 16,421 (4,877) 12/09 40 years
Flint, MI - 1,270 1,723 - 1,270 1,723 2,993 (646) 12/09 40 years
Hazlet, NJ - 3,719 4,716 - 3,719 4,716 8,435 (1,769) 12/09 40 years
Huber Heights, OH - 970 3,891 - 970 3,891 4,861 (1,459) 12/09 40 years
North Haven, CT - 5,442 1,061 2,000 3,458 5,045 8,503 (1,969) 12/09 40 years
Okolona, KY - 5,379 3,311 2,000 5,379 5,311 10,690 (1,624) 12/09 40 years
Voorhees, NJ - 1,723 9,614 - 1,723 9,614 11,337 (3,605) 12/09 40 years
Louisville, KY - 4,979 6,567 (1,046) 3,933 6,567 10,500 (2,463) 12/09 40 years
Beaver Creek, OH - 1,578 6,630 1,700 1,578 8,330 9,908 (2,823) 12/09 40 years
West Springfield, MA - 2,540 3,755 2,650 2,540 6,405 8,945 (1,915) 12/09 40 years
Cincinnati, OH - 1,361 1,741 - 635 2,467 3,102 (845) 12/09 40 years
Pasadena, TX - 2,951 10,684 1,759 2,951 12,443 15,394 (4,208) 06/10 40 years
Plano, TX - 1,052 1,968 - 1,052 1,968 3,020 (714) 06/10 40 years
Mishawaka, IN - 2,399 5,454 1,383 2,399 6,837 9,236 (2,329) 06/10 40 years
Grand Prairie, TX - 1,873 3,245 2,104 1,873 5,349 7,222 (1,751) 06/10 40 years
Redding, CA - 2,044 4,500 1,177 2,044 5,677 7,721 (1,856) 06/10 40 years
Pueblo, CO - 2,238 5,162 1,265 2,238 6,427 8,665 (2,115) 06/10 40 years
Beaumont, TX - 1,065 11,669 1,644 1,065 13,313 14,378 (4,597) 06/10 40 years
Pflugerville, TX - 4,356 11,533 1,963 4,263 13,589 17,852 (4,633) 06/10 40 years
Houston, TX - 4,109 9,739 2,617 4,109 12,356 16,465 (3,995) 06/10 40 years
El Paso, TX - 4,598 13,207 2,296 4,598 15,503 20,101 (5,259) 06/10 40 years
Colorado Springs, CO - 4,134 11,220 1,427 2,938 13,843 16,781 (4,660) 06/10 40 years
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2024
Location Debt Land Buildings,
Equipment, Leasehold Interests &
Improvements Land Buildings,
Equipment, Leasehold Interests &
Improvements Total Accumulated
depreciation Date
acquired Depreciation
life
Hooksett, NH - 2,639 11,605 (8,306) 1,382 4,556 5,938 - 03/11 40 years
Saco, ME - 1,508 3,826 1,124 1,508 4,950 6,458 (1,528) 03/11 40 years
Merrimack, NH - 3,160 5,642 (2,865) 2,712 3,225 5,937 - 03/11 40 years
Westbrook, ME - 2,273 7,119 - 2,273 7,119 9,392 (2,462) 03/11 40 years
Twin Falls, ID - - 4,783 - - 4,783 4,783 (1,505) 04/11 40 years
Dallas, TX - - 12,146 (3,869) - 8,277 8,277 (494) 03/12 n/a
Albuquerque, NM - - 13,733 - - 13,733 13,733 (3,805) 06/12 40 years
Austin, TX - 2,608 6,373 - 2,608 6,373 8,981 (1,819) 09/12 40 years
Champaign, IL - - 9,381 125 - 9,506 9,506 (2,634) 09/12 40 years
Opelika, AL - 1,314 8,951 - 1,314 8,951 10,265 (2,350) 11/12 40 years
Gainesville, VA - - 10,846 95 - 10,941 10,941 (3,029) 02/13 40 years
Lafayette, LA 14,360 - 12,728 1,438 - 14,166 14,166 (3,726) 08/13 40 years
Tuscaloosa, AL - - 11,287 450 1,815 9,922 11,737 (2,697) 09/13 40 years
Tampa, FL - 1,700 23,483 3,648 1,579 27,252 28,831 (10,147) 10/13 40 years
Warrenville, IL - 14,000 17,318 (5,344) 8,270 17,704 25,974 (6,743) 10/13 40 years
San Francisco, CA - 2,077 12,914 - 2,077 12,914 14,991 (2,906) 08/13 40 years
Wilder, KY - 983 11,233 2,004 983 13,237 14,220 (3,573) 04/14 40 years
Bowling Green, KY - 1,241 10,222 - 1,241 10,222 11,463 (2,902) 04/14 40 years
New Albany, IN - 2,461 14,807 210 2,461 15,017 17,478 (4,204) 04/14 40 years
Clarksville, TN - 3,764 16,769 4,706 3,764 21,475 25,239 (5,546) 04/14 40 years
Noblesville, IN - 886 7,453 2,019 886 9,472 10,358 (2,515) 04/14 40 years
McDonough, GA - 2,235 16,842 - 2,235 16,842 19,077 (4,728) 04/14 40 years
Sterling Heights, MI - 10,849 - (3,712) 6,949 188 7,137 (183) 12/14 15 years
Virginia Beach, VA - 2,544 6,478 - 2,544 6,478 9,022 (1,592) 02/15 40 years
Yulee, FL - 1,036 6,934 - 1,036 6,934 7,970 (1,705) 02/15 40 years
Jacksonville, FL - 5,080 22,064 - 5,080 22,064 27,144 (8,451) 05/15 25 years
Denham Springs, LA - - 5,093 4,162 - 9,255 9,255 (2,013) 05/15 40 years
Crystal Lake, IL - 2,980 13,521 568 2,980 14,089 17,069 (5,444) 07/15 25 years
Kennewick, WA - 2,484 4,901 - 2,484 4,901 7,385 (1,871) 06/16 25 years
Franklin, TN - 10,158 17,549 8,685 9,825 26,567 36,392 (9,269) 06/16 25 years
Mobile, AL - 2,116 16,657 - 2,116 16,657 18,773 (6,018) 06/16 25 years
El Paso, TX - 2,957 10,961 3,905 2,957 14,866 17,823 (5,147) 06/16 25 years
Edinburg, TX - 1,982 16,964 5,680 1,982 22,644 24,626 (7,693) 06/16 25 years
Hendersonville, TN - 2,784 8,034 4,245 2,784 12,279 15,063 (3,247) 07/16 30 years
Houston, TX - 965 10,002 - 965 10,002 10,967 (2,332) 10/16 40 years
Detroit, MI - 4,299 13,810 - 4,299 13,810 18,109 (3,759) 11/16 30 years
Fort Worth, TX - - 11,385 - - 11,385 11,385 (1,874) 02/17 40 years
Fort Wayne, IN - 1,926 11,054 - 1,926 11,054 12,980 (3,363) 05/17 27 years
Wichita, KS - 3,132 23,270 - 3,132 23,270 26,402 (8,076) 05/17 23 years
Richmond, TX - 7,251 36,535 (30,720) 2,296 10,770 13,066 (157) 08/17 40 years
Tomball, TX - 3,416 26,918 - 3,416 26,918 30,334 (5,380) 08/17 40 years
Cleveland, OH - 5,060 21,072 374 5,060 21,446 26,506 (7,195) 08/17 25 years
Little Rock, AR - 1,789 10,780 - 1,789 10,780 12,569 (2,135) 01/18 40 years
Conway, AR - 1,316 5,553 - 1,316 5,553 6,869 (1,381) 03/18 30 years
Lynbrook, NY - 1,753 28,400 - 1,753 28,400 30,153 (4,724) 06/18 40 years
Staten Island, NY - - 12,479 (6,529) - 5,950 5,950 (508) 12/18 19 years
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2024
Location Debt Land Buildings,
Equipment, Leasehold Interests &
Improvements Land Buildings,
Equipment, Leasehold Interests &
Improvements Total Accumulated
depreciation Date
acquired Depreciation
life
Beaumont, CA - 2,421 12,026 - 2,421 12,026 14,447 (1,298) 01/19 40 years
Brandywine, MD - 5,251 10,520 (10,971) 1,783 3,017 4,800 (154) 03/19 34 years
Louisville, KY - 3,726 27,312 - 3,726 27,312 31,038 (4,335) 03/19 40 years
Riverview, FL - 2,339 15,901 - 2,339 15,901 18,240 (2,770) 03/19 37 years
Savoy, IL - 1,938 10,554 1,802 1,938 12,356 14,294 (3,421) 06/19 25 years
Dublin, CA - 15,662 25,496 - 15,662 25,496 41,158 (5,559) 06/19 30 years
Ontario, CA - 8,019 15,708 - 8,019 15,708 23,727 (4,076) 06/19 24 years
Columbia, SC - 7,009 17,318 - 7,009 17,318 24,327 (2,695) 06/19 40 years
Columbia, MD - 12,642 14,152 (10,729) 8,494 7,571 16,065 - 06/19 34 years
Charlotte, NC - 4,257 15,121 - 4,257 15,121 19,378 (2,764) 06/19 35 years
Foothill Ranch, CA - 7,653 14,090 (15,243) 6,500 - 6,500 - 06/19 n/a
Wilsonville, OR - 2,742 1,301 - 2,742 1,301 4,043 (545) 06/19 23 years
Raleigh, NC - 5,376 12,516 - 5,376 12,516 17,892 (2,859) 06/19 30 years
Gastonia, NC - 4,039 9,199 - 4,039 9,199 13,238 (2,142) 06/19 30 years
Port Richey, FL - 1,564 7,103 - 1,564 7,103 8,667 (2,113) 06/19 26 years
Hillsboro, OR - 3,392 5,697 - 3,392 5,697 9,089 (2,139) 06/19 23 years
San Jacinto, CA - 1,960 5,073 - 1,960 5,073 7,033 (1,626) 06/19 23 years
Albany, OR - 2,049 3,920 - 2,049 3,920 5,969 (1,034) 06/19 30 years
Lake City, FL - 1,257 4,756 - 1,257 4,756 6,013 (1,285) 06/19 27 years
Anderson, SC - 1,554 3,948 - 1,554 3,948 5,502 (1,276) 06/19 24 years
New Hartford, NY - 946 11,985 (141) 946 11,844 12,790 (2,251) 10/19 31 years
Columbus, OH - 5,211 14,179 1,086 5,211 15,265 20,476 (3,077) 10/19 38 years
Kenner, LA - 5,299 14,000 - 5,299 14,000 19,299 (4,201) 10/19 34 years
Marana, AZ - 2,384 5,438 - 2,384 5,438 7,822 (1,452) 12/19 28 years
Bluffton, SC - 1,912 3,053 826 1,912 3,879 5,791 (987) 03/20 25 years
Cherry Hill, NJ - 5,038 9,206 - 5,038 9,206 14,244 (3,137) 03/20 25 years
Eat & Play
Westminster, CO - 12,055 29,914 25,545 10,848 56,666 67,514 (34,382) 06/99 40 years
New Rochelle, NY - 6,100 97,696 15,759 6,100 113,455 119,555 (61,230) 10/03 40 years
Kanata, ON - 10,044 36,630 27,044 8,757 64,961 73,718 (31,575) 03/04 40 years
Mississagua, ON - 9,221 17,593 18,242 10,571 34,485 45,056 (15,913) 03/04 40 years
Oakville, ON - 10,044 23,646 11,245 8,757 36,178 44,935 (18,001) 03/04 40 years
Whitby, ON - 10,202 21,960 27,651 11,426 48,387 59,813 (22,593) 03/04 40 years
Burbank, CA - 16,584 35,016 13,151 16,584 48,167 64,751 (22,006) 03/05 40 years
Northbrook, IL - - 7,025 586 - 7,611 7,611 (2,499) 07/11 40 years
Allen, TX - - 10,007 1,151 - 11,158 11,158 (4,881) 02/12 29 years
Dallas, TX - - 10,007 1,771 - 11,778 11,778 (4,978) 02/12 30 years
Jacksonville, FL - 4,510 5,061 4,748 4,510 9,809 14,319 (4,381) 02/12 30 years
Oakbrook, IL - - 8,068 536 - 8,604 8,604 (2,755) 03/12 15 years
Houston, TX - - 12,403 394 - 12,797 12,797 (4,067) 09/12 40 years
Colony, TX - 4,004 13,665 (240) 4,004 13,425 17,429 (3,692) 12/12 40 years
Alpharetta, GA - 5,608 16,616 (26) 5,582 16,616 22,198 (4,362) 05/13 40 years
Scottsdale, AZ - - 16,942 - - 16,942 16,942 (4,447) 06/13 40 years
Spring, TX - 4,928 14,522 - 4,928 14,522 19,450 (3,873) 07/13 40 years
Warrenville, IL - - 6,469 9,625 2,906 13,188 16,094 (5,514) 10/13 40 years
San Antonio, TX - - 15,976 79 - 16,055 16,055 (3,940) 12/13 40 years
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2024
Location Debt Land Buildings,
Equipment, Leasehold Interests &
Improvements Land Buildings,
Equipment, Leasehold Interests &
Improvements Total Accumulated
depreciation Date
acquired Depreciation
life
Tampa, FL - - 15,726 (67) - 15,659 15,659 (4,007) 02/14 40 years
Gilbert, AZ - 4,735 16,130 (267) 4,735 15,863 20,598 (3,966) 02/14 40 years
Overland Park, KS - 5,519 17,330 - 5,519 17,330 22,849 (4,110) 05/14 40 years
Centennial, CO - 3,013 19,106 403 3,013 19,509 22,522 (4,548) 06/14 40 years
Atlanta, GA - 8,143 17,289 - 8,143 17,289 25,432 (4,070) 06/14 40 years
Ashburn VA - - 16,873 101 - 16,974 16,974 (3,952) 06/14 40 years
Naperville, IL - 8,824 20,279 (665) 8,824 19,614 28,438 (4,577) 08/14 40 years
Oklahoma City, OK - 3,086 16,421 (252) 3,086 16,169 19,255 (3,840) 09/14 40 years
Webster, TX - 5,631 17,732 799 5,210 18,952 24,162 (4,325) 11/14 40 years
Virginia Beach, VA - 6,948 18,715 (304) 6,348 19,011 25,359 (4,275) 12/14 40 years
Edison, NJ - - 22,792 1,489 - 24,281 24,281 (4,847) 04/15 40 years
Jacksonville, FL - 6,732 21,823 (1,201) 6,732 20,622 27,354 (4,242) 09/15 40 years
Roseville, CA - 6,868 23,959 (1,928) 6,868 22,031 28,899 (4,573) 10/15 30 years
Portland, OR - - 23,466 (541) - 22,925 22,925 (4,814) 11/15 40 years
Orlando, FL - 8,586 22,493 1,120 8,586 23,613 32,199 (4,635) 01/16 40 years
Marietta, GA - 3,116 11,872 - 3,116 11,872 14,988 (3,320) 02/16 35 years
Charlotte, NC - 4,676 21,422 (867) 4,676 20,555 25,231 (4,160) 04/16 40 years
Orlando, FL - 9,382 16,225 58 9,382 16,283 25,665 (2,951) 05/16 40 years
Fort Worth, TX - 4,674 17,537 - 4,674 17,537 22,211 (3,361) 08/16 40 years
Nashville, TN - - 26,685 136 - 26,821 26,821 (5,096) 12/16 40 years
Dallas, TX - 3,318 7,835 4 3,318 7,839 11,157 (1,831) 12/16 40 years
San Antonio, TX - 6,502 15,338 (628) 6,502 14,710 21,212 (2,485) 08/17 40 years
Huntsville, AL - 53 17,595 (1,938) 53 15,657 15,710 (3,286) 08/17 40 years
El Paso, TX - 2,688 17,373 - 2,688 17,373 20,061 (3,647) 02/18 40 years
Pittsburgh, PA - 7,897 21,812 (1,039) 7,897 20,773 28,670 (3,586) 07/18 40 years
Philadelphia, PA - 5,484 25,211 97 5,484 25,308 30,792 (4,193) 12/18 40 years
Auburn Hills, MI - 4,219 27,704 (2,881) 4,219 24,823 29,042 (4,005) 12/18 40 years
Greenville, SC - 6,272 18,240 - 6,272 18,240 24,512 (3,398) 06/18 40 years
Thornton, CO - 5,419 23,635 - 5,419 23,635 29,054 (3,488) 09/18 40 years
Katy, TX - 5,210 16,247 232 3,431 18,258 21,689 (2,336) 06/19 40 years
Gwinnett, GA - 3,318 17,873 - 3,318 17,873 21,191 (2,425) 06/20 40 years
San Jose, CA - - 26,752 - - 26,752 26,752 (3,276) 03/21 40 years
Ontario, CA - - 34,943 - - 34,943 34,943 (3,639) 12/21 40 years
King of Prussia, PA - - 35,196 - - 35,196 35,196 (1,535) 02/22 40 years
Ski
Bellefontaine, OH - 5,108 5,994 8,327 5,251 14,178 19,429 (6,839) 11/05 40 years
Tannersville, PA - 34,940 34,629 4,377 34,940 39,006 73,946 (22,429) 09/13 40 years
Northstar, CA - 56,005 106,644 - 56,005 106,644 162,649 (39,193) 04/17 40 years
Attractions
Kiamesha Lake, NY - 34,897 228,462 2,650 34,897 231,112 266,009 (61,218) 07/10 30 years
Tannersville, PA - - 120,354 1,615 - 121,969 121,969 (28,665) 05/15 40 years
Denver, CO - 753 6,218 - 753 6,218 6,971 (1,641) 02/17 30 years
Fort Worth, TX - 824 7,066 - 824 7,066 7,890 (1,825) 03/17 30 years
Corfu, NY - 5,112 43,637 2,500 5,112 46,137 51,249 (15,798) 04/17 30 years
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2024
Location Debt Land Buildings,
Equipment, Leasehold Interests &
Improvements Land Buildings,
Equipment, Leasehold Interests &
Improvements Total Accumulated
depreciation Date
acquired Depreciation
life
Oklahoma City, OK - 7,976 17,624 - 7,976 17,624 25,600 (5,597) 04/17 30 years
Hot Springs, AR - 3,351 4,967 - 3,351 4,967 8,318 (1,536) 04/17 30 years
Riviera Beach, FL - 17,450 29,713 5,794 17,450 35,507 52,957 (9,526) 04/17 30 years
Oklahoma City, OK - 1,423 18,097 - 1,423 18,097 19,520 (5,848) 04/17 30 years
Spring, TX - 18,776 31,402 - 18,776 31,402 50,178 (10,127) 04/17 30 years
Glendale, AZ - - 20,514 2,969 - 23,483 23,483 (8,026) 04/17 30 years
Kapolei, HI - - 8,351 1,542 - 9,893 9,893 (3,105) 04/17 30 years
Federal Way, WA - - 13,949 (12,149) - 1,800 1,800 (878) 04/17 12 years
Colony, TX - - 7,617 305 - 7,922 7,922 (5,411) 04/17 30 years
Garland, TX - - 5,601 1,188 - 6,789 6,789 (4,105) 04/17 30 years
Santa Monica, CA - - 13,874 15,717 - 29,591 29,591 (9,783) 04/17 30 years
Concord, CA - - 9,808 5,120 - 14,928 14,928 (4,900) 04/17 30 years
Tampa, FL - - 8,665 2,493 2,493 8,665 11,158 (2,118) 08/17 30 years
Fort Lauderdale, FL - - 10,816 - - 10,816 10,816 (2,584) 10/17 30 years
Valcartier, QC - 5,906 81,534 3,693 5,560 85,573 91,133 (10,275) 06/22 31 years
Ottawa, ON - 13,482 32,357 4,504 12,690 37,653 50,343 (5,927) 06/22 20 years
Old Forge, NY - 1,722 31,718 - 1,722 31,718 33,440 (1,817) 03/24 30 years
Experiential Lodging
Pigeon Forge, TN - 5,697 14,100 16,869 8,604 28,062 36,666 (3,523) 04/20 15 years
Fitness & Wellness
Olathe, KS - 2,417 16,878 - 2,417 16,878 19,295 (4,360) 03/17 30 years
Roseville, CA - 1,807 6,082 - 1,807 6,082 7,889 (1,699) 09/17 30 years
Fort Collins, CO - 2,043 5,769 - 2,043 5,769 7,812 (1,507) 01/18 30 years
Pagosa Springs, CO - 9,791 15,635 2,339 9,791 17,974 27,765 (5,173) 06/18 30 years
Chicago, IL - 4,501 13,461 - 4,501 13,461 17,962 (1,188) 02/22 40 years
Murrieta, CA - 28,787 92,207 - 28,787 92,207 120,994 (2,849) 08/22 30 years
Brooklyn, NY - 14,465 25,294 - 14,465 25,294 39,759 (1,235) 02/23 40 years
Belmont, CA - 3,923 4,720 - 3,923 4,720 8,643 (163) 12/23 30 years
Gaming
Kiamesha Lake, NY - 155,658 - 19,524 156,785 18,397 175,182 (2,740) 07/10 50 years
Cultural
St. Louis, MO - 5,481 41,951 3,153 5,481 45,104 50,585 (8,931) 12/18 40 years
Early Childhood Education Centers
Lake Pleasant, AZ - 986 3,524 902 986 4,426 5,412 (1,667) 03/13 30 years
Goodyear, AZ - 1,308 7,275 222 1,308 7,497 8,805 (2,876) 06/13 30 years
Oklahoma City, OK - 1,149 9,839 979 1,149 10,818 11,967 (3,802) 08/13 40 years
Mesa, AZ - 762 6,987 1,501 762 8,488 9,250 (3,554) 01/14 30 years
Gilbert, AZ - 1,295 9,192 316 1,295 9,508 10,803 (3,369) 03/14 30 years
Cedar Park, TX - 1,520 10,500 418 1,278 11,160 12,438 (3,766) 07/14 30 years
Chicago, IL - 1,294 4,375 19 1,294 4,394 5,688 (1,198) 07/14 30 years
McKinney, TX - 1,812 12,419 1,841 1,812 14,260 16,072 (4,790) 11/14 30 years
West Chester, OH - 1,807 12,913 455 1,807 13,368 15,175 (3,929) 07/15 30 years
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2024
Location Debt Land Buildings,
Equipment, Leasehold Interests &
Improvements Land Buildings,
Equipment, Leasehold Interests &
Improvements Total Accumulated
depreciation Date
acquired Depreciation
life
Ellisville, MO - 2,465 15,063 - 2,465 15,063 17,528 (4,211) 07/15 30 years
Chanhassen, MN - 2,603 15,613 523 2,603 16,136 18,739 (4,568) 08/15 30 years
Maple Grove, MN - 3,743 14,927 561 3,743 15,488 19,231 (5,066) 08/15 30 years
Carmel, IN - 1,567 12,854 366 1,561 13,226 14,787 (3,932) 09/15 30 years
Fishers, IN - 1,226 13,144 700 1,226 13,844 15,070 (3,855) 12/15 30 years
Westerville, OH - 2,988 14,339 362 2,988 14,701 17,689 (4,449) 04/16 30 years
Las Vegas, NV - 1,476 14,422 (1,287) 1,476 13,135 14,611 (3,720) 06/16 30 years
Louisville, KY - 377 1,526 - 377 1,526 1,903 (428) 08/16 30 years
Louisville, KY - 216 1,006 - 216 1,006 1,222 (282) 08/16 30 years
Cheshire, CT - 420 3,650 - 420 3,650 4,070 (992) 11/16 30 years
Edina, MN - 1,235 5,493 (323) 1,235 5,170 6,405 (1,353) 11/16 30 years
Eagan, MN - 783 4,833 (286) 783 4,547 5,330 (1,311) 11/16 30 years
Louisville, KY - 481 2,050 - 481 2,050 2,531 (552) 12/16 30 years
Bala Cynwyd, PA - 1,785 3,759 - 1,785 3,759 5,544 (1,013) 12/16 30 years
Schaumburg, IL - 642 4,962 - 642 4,962 5,604 (1,260) 12/16 30 years
Kennesaw, GA - 690 844 - 690 844 1,534 (225) 01/17 30 years
Charlotte, NC - 1,200 2,557 - 1,200 2,557 3,757 (553) 01/17 35 years
Charlotte, NC - 2,501 2,079 - 2,501 2,079 4,580 (450) 01/17 35 years
Richardson, TX - 474 2,046 - 474 2,046 2,520 (463) 01/17 35 years
Frisco, TX - 999 3,064 - 999 3,064 4,063 (678) 01/17 35 years
Allen, TX - 910 3,719 - 910 3,719 4,629 (841) 01/17 35 years
Southlake, TX - 920 2,766 - 920 2,766 3,686 (624) 01/17 35 years
Lewis Center, OH - 410 4,285 (2,065) 270 2,360 2,630 (184) 01/17 20 years
Dublin, OH - 581 4,223 - 581 4,223 4,804 (883) 01/17 35 years
Plano, TX - 400 2,647 - 400 2,647 3,047 (612) 01/17 35 years
Carrollton, TX - 329 1,389 - 329 1,389 1,718 (330) 01/17 35 years
Davenport, FL - 3,000 5,877 - 3,000 5,877 8,877 (1,275) 01/17 35 years
Tallahassee, FL - 952 3,205 - 952 3,205 4,157 (739) 01/17 35 years
Sunrise, FL - 1,400 1,856 - 1,400 1,856 3,256 (414) 01/17 35 years
Chaska, MN - 328 6,140 - 328 6,140 6,468 (1,279) 01/17 35 years
Loretto, MN - 286 3,511 - 286 3,511 3,797 (756) 01/17 35 years
Minneapolis, MN - 920 3,700 - 920 3,700 4,620 (774) 01/17 35 years
Wayzata, MN - 810 1,962 - 810 1,962 2,772 (428) 01/17 35 years
Plymouth, MN - 1,563 4,905 - 1,563 4,905 6,468 (1,072) 01/17 35 years
Maple Grove, MN - 951 3,291 - 951 3,291 4,242 (706) 01/17 35 years
Chula Vista, CA - 210 2,186 - 210 2,186 2,396 (511) 01/17 35 years
Lincolnshire, IL - 1,006 4,799 - 1,006 4,799 5,805 (1,251) 02/17 30 years
New Berlin, WI - 368 1,704 - 368 1,704 2,072 (450) 02/17 30 years
Oak Creek, WI - 283 1,690 - 283 1,690 1,973 (446) 02/17 30 years
Minnetonka, MN - 911 4,833 659 931 5,472 6,403 (1,501) 03/17 30 years
Berlin, CT - 494 2,958 - 494 2,958 3,452 (747) 06/17 30 years
Portland, OR - 2,604 585 - 2,604 585 3,189 (137) 01/18 35 years
Orlando, FL - 955 4,273 - 955 4,273 5,228 (901) 02/18 35 years
McKinney, TX - 1,233 4,447 - 1,233 4,447 5,680 (926) 02/18 30 years
Fort Mill, SC - 629 3,957 - 629 3,957 4,586 (761) 09/18 35 years
Indian Land, SC - 907 3,784 - 907 3,784 4,691 (773) 09/18 35 years
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2024
Location Debt Land Buildings,
Equipment, Leasehold Interests &
Improvements Land Buildings,
Equipment, Leasehold Interests &
Improvements Total Accumulated
depreciation Date
acquired Depreciation
life
Sicklerville, NJ - 694 1,876 - 694 1,876 2,570 (497) 06/19 30 years
Pennington, NJ - 1,018 2,284 - 1,018 2,284 3,302 (877) 08/19 24 years
Private Schools
Chicago, IL - 3,057 46,784 - 3,057 46,784 49,841 (11,111) 02/14 40 years
Cumming, GA - 500 6,892 - 500 6,892 7,392 (1,625) 01/17 35 years
Cumming, GA - 325 4,898 - 325 4,898 5,223 (1,188) 01/17 35 years
Henderson, NV - 1,400 6,914 - 1,400 6,914 8,314 (1,589) 01/17 35 years
Atlanta, GA - 2,001 5,989 - 2,001 5,989 7,990 (1,246) 01/17 35 years
Pearland, TX - 2,360 9,292 - 2,360 9,292 11,652 (2,048) 01/17 35 years
Pearland, TX - 372 2,568 - 372 2,568 2,940 (557) 01/17 35 years
Palm Harbor, FL - 1,490 1,400 - 1,490 1,400 2,890 (322) 01/17 35 years
Mason, OH - 975 11,243 - 975 11,243 12,218 (2,336) 01/17 35 years
Property under development - 112,263 - - 112,263 - 112,263 - n/a n/a
Land held for development - 20,168 - - 20,168 - 20,168 - n/a n/a
Unsecured revolving credit facility 175,000 - - - - - - - n/a n/a
Senior unsecured notes payable 2,679,597 - - - - - - - n/a n/a
Less: deferred financing costs, net (19,134) - - - - - - - n/a n/a
Total $ 2,860,458 $ 1,378,728 $ 4,397,319 $ 354,387 $ 1,350,849 $ 4,779,585 $ 6,130,434 $ (1,562,645)
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022
EPR Properties
Schedule III - Real Estate and Accumulated Depreciation (continued)
Reconciliation
(Dollars in thousands)
December 31, 2024
Real Estate Investments:
Reconciliation:
Balance at beginning of the year $ 6,124,475
Acquisition and development of real estate investments during the year 141,336
Disposition of real estate investments during the year (64,274)
Impairment of real estate investments during the year (71,103)
Balance at close of year $ 6,130,434
Accumulated Depreciation:
Reconciliation:
Balance at beginning of the year $ 1,435,683
Depreciation during the year 152,600
Disposition of real estate investments during the year (5,391)
Impairment of real estate investments during the year (20,247)
Balance at close of year $ 1,562,645
See accompanying report of independent registered public accounting firm.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
Evaluation of disclosure controls and procedures
As of December 31, 2024, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon and as of the date of that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Limitations on the effectiveness of controls
Our disclosure controls were designed to provide reasonable assurance that the controls and procedures would meet their objectives. Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable assurance of achieving the designed control objectives and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Because of the inherent limitations in a cost-effective, maturing control system, misstatements due to error or fraud may occur and not be detected.
Change in internal controls
There have not been any changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of the fiscal year to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control-Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2024. KPMG LLP, the independent registered public accounting firm that audited the consolidated financial statements included in this Annual Report on Form 10-K, has issued a report on the effectiveness of our internal control over financial reporting, which is included in Item 8.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements, errors or fraud. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of or compliance with the policies or procedures may deteriorate.
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2024, 2023 and 2022

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
During the three months ended December 31, 2024, no "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K, was adopted or terminated by any trustee or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance
The Company’s definitive Proxy Statement for its Annual Meeting of Shareholders to be held on May 6, 2025 (the “Proxy Statement”), will contain under the captions “Election of Trustees”, “Company Governance”, “Executive Officers” and "Delinquent Section 16(a) Reports" the information required by Item 10 of this Annual Report on Form 10-K, which information is incorporated herein by this reference.
Code of Conduct
We have adopted a Code of Business Conduct and Ethics that applies to our Chief Executive Officer, Chief Financial Officer, and all other officers, associates and trustees. The Code of Business Conduct and Ethics may be viewed on our website at www.eprkc.com. Changes to and waivers granted with respect to the Code of Business Conduct and Ethics required to be disclosed pursuant to applicable rules and regulations will be posted on our website.
Insider Trading Policy
We have adopted an Insider Trading Policy governing the purchase, sale and other disposition of our securities by trustees, officers and associates that is designed to promote compliance with insider trading laws, rules and regulations, and applicable NYSE listing standards, as well as procedures designed to further the foregoing purposes. In addition, the Insider Trading Policy requires the Company to comply with applicable laws and regulations relating to trading in its securities. A copy of our Insider Trading Policy is filed with this Annual Report on Form 10-K as Exhibit 19.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
The Proxy Statement will contain under the captions “Election of Trustees”, “Executive Compensation”, “Compensation Committee Report”, and "Grant Practices Regarding Equity", the information required by Item 11 of this Annual Report on Form 10-K, which information is incorporated herein by this reference.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The Proxy Statement will contain under the captions “Share Ownership” and “Equity Compensation Plan Information” the information required by Item 12 of this Annual Report on Form 10-K, which information is incorporated herein by this reference.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence
The Proxy Statement will contain under the captions “Transactions Between the Company and Trustees, Officers or their Affiliates,” “Election of Trustees” and “Additional Information Concerning the Board of Trustees” the information required by Item 13 of this Annual Report on Form 10-K, which information is incorporated herein by this reference.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services
The Proxy Statement will contain under the caption “Ratification of Appointment of Independent Registered Public Accounting Firm” the information required by Item 14 of this Annual Report on Form 10-K, which information is incorporated herein by this reference.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules
(1) Financial Statements: See Part II, Item 8 hereof
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2024 and 2023
Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2024, 2023 and 2022
Consolidated Statements of Changes in Equity for the years ended December 31, 2024, 2023 and 2022
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022
Notes to Consolidated Financial Statements
The report of EPR Properties' independent registered public accounting firm (PCAOB ID: 185) with respect to the above-referenced financial statements and their report on internal control over financial reporting are included in Item 8 of this Form 10-K. Their consent appears as Exhibit 23 of this Form 10-K.
(2)Financial Statement Schedules: See Part II, Item 8 hereof
Schedule III - Real Estate and Accumulated Depreciation
(3)Exhibits
The Company has incorporated by reference certain exhibits as specified below pursuant to Rule 12b-32 under the Exchange Act.
Exhibit No. Description
3.1
Composite of Amended and Restated Declaration of Trust of the Company (inclusive of all amendments through May 26, 2023), which is attached as Exhibit 3.1 to the Company's Form 10-Q (Commission File No. 001-13561) filed on August 3, 2023, is hereby incorporated by reference as Exhibit 3.1
3.2
Articles Supplementary designating the powers, preferences and rights of the 5.750% Series C Cumulative Convertible Preferred Shares, which is attached as Exhibit 3.2 to the Company's Form 8-K (Commission File No. 001-13561) filed on December 21, 2006, is hereby incorporated by reference as Exhibit 3.2
3.3
Articles Supplementary designating powers, preferences and rights of the 9.000% Series E Cumulative Convertible Preferred Shares, which is attached as Exhibit 3.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on April 2, 2008, is hereby incorporated by reference as Exhibit 3.3
3.4
Articles Supplementary designating the powers, preferences and rights of the 5.750% Series G Cumulative Redeemable Preferred Shares, which is attached as Exhibit 3.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on November 30, 2017, is hereby incorporated by reference as Exhibit 3.4
3.5
Amended and Restated Bylaws of the Company (inclusive of all amendments through May 30, 2019), which is attached as Exhibit 3.2 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 30, 2019, is hereby incorporated by reference as Exhibit 3.5
4.1
Form of share certificate for common shares of beneficial interest of the Company, which is attached as Exhibit 4.3 to the Company's Registration Statement on Form S-3ASR (Registration No. 333-35281), filed on June 3, 2013, is hereby incorporated by reference as Exhibit 4.1
4.2
Form of 5.750% Series C Cumulative Convertible Preferred Shares Certificate, which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on December 21, 2006, is hereby incorporated by reference as Exhibit 4.2
4.3
Form of 9.000% Series E Cumulative Convertible Preferred Shares, which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on April 2, 2008, is hereby incorporated by reference as Exhibit 4.3
4.4
Form of 5.750% Series G Cumulative Redeemable Preferred Shares Certificate, which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on November 30, 2017, is hereby incorporated by reference as Exhibit 4.4
4.5
Indenture, dated March 16, 2015, by and among the Company, certain of its subsidiaries, and UMB Bank, n.a., as trustee (including the form of 4.500% Senior Notes due 2025 included as Exhibit A thereto), which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on March 16, 2015, is hereby incorporated by reference as Exhibit 4.5
4.6
Indenture, dated December 14, 2016, by and among the Company, certain of its subsidiaries, and UMB Bank, n.a., as trustee (including the form of 4.750% Senior Notes due 2026 included as Exhibit A thereto), which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on December 14, 2016, is hereby incorporated by reference as Exhibit 4.6
4.7
Indenture, dated May 23, 2017, by and among the Company, certain of its subsidiaries, and UMB Bank, n.a., as trustee (including the form of 4.500% Senior Notes due 2027 included as Exhibit A thereto), which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 23, 2017, is hereby incorporated by reference as Exhibit 4.7
4.8
Indenture, dated April 16, 2018, by and between the Company and UMB Bank, n.a., as trustee (including the form of 4.950% Senior Notes due 2028 included as Exhibit A thereto), which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on April 16, 2018, is hereby incorporated by reference as Exhibit 4.8
4.9
Indenture, dated August 15, 2019, between the Company and UMB Bank, n.a., as trustee (including the form of 3.750% Senior Note due 2029 included as Exhibit A thereto), which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on August 15, 2019, is hereby incorporated by reference as Exhibit 4.9
4.10
Indenture, dated October 27, 2021, between the Company and UMB Bank, n.a., as trustee (including the form of 3.600% Senior Note due 2031 included as Exhibit A thereto), which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on October 27, 2021, is hereby incorporated by reference as Exhibit 4.10
4.11.1
Note Purchase Agreement, dated August 1, 2016, by and among the Company and the purchasers named therein, which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on August 3, 2016, is hereby incorporated by reference as Exhibit 4.11.1
4.11.2
First Amendment to Note Purchase Agreement, dated September 27, 2017, by and among the Company and the purchasers named therein, which is attached as Exhibit 10.2 to the Company's Form 8-K (Commission File No. 001-13561) filed on September 27, 2017, is hereby incorporated as Exhibit 4.11.2
4.11.3
Second Amendment to Note Purchase Agreement, dated June 29, 2020, by and among the Company and the purchasers named therein, which is attached as Exhibit 10.2 to the Company's Form 10-Q (Commission File No. 001-13561) filed on August 6, 2020, is hereby incorporated by reference as Exhibit 4.11.3
4.11.4
Third Amendment to Note Purchase Agreement, dated December 24, 2020, by and among the Company and the purchasers named therein, which is attached as Exhibit 4.11.4 to the Company's Form 10-K (Commission File No. 001-13561) filed on February 25, 2021, is hereby incorporated by reference as Exhibit 4.11.4
4.11.5
Fourth Amendment to Note Purchase Agreement, dated January 14, 2022, by and among the Company and the purchasers named therein, which is attached as Exhibit 4.11.5 to the Company's Form 10-K (Commission File No. 001-13561) filed on February 23, 2022, is hereby incorporated by reference as Exhibit 4.11.5
4.12
Description of Securities Registered under Section 12 of the Exchange Act, which is attached as Exhibit 4.12 to the Company's Form 10-K (Commission File No. 001-13561) filed on February 29, 2024, is hereby incorporated by reference as Exhibit 4.12
10.1.1
Third Amended, Restated and Consolidated Credit Agreement, dated as of October 6, 2021, by and among the Company, as borrower, KeyBank National Association, as administrative agent, and the other agents and lenders party thereto, which is attached as Exhibit 10.1.1 to the Company's Form 10-Q (Commission File No. 001-13561) filed on October 6, 2021, is hereby incorporated by reference as Exhibit 10.1.1
10.1.2
Amendment No. 1 to Third Amended, Restated and Consolidated Credit Agreement, dated February 17, 2023, by and among the Company, as borrower, KeyBank National Association, as administrative agent, and the other agents and lenders party thereto, which is attached as Exhibit 10.1.2 to the Company's Form 10-K (Commission File No. 001-13561) filed on February 23, 2023, is hereby incorporated by reference as Exhibit 10.1.2
10.1.3
Amendment No. 2 to Third Amended, Restated and Consolidated Credit Agreement, dated July 3, 2024, by and among the Company, as borrower, KeyBank National Association, as administrative agent, and the other agents and lenders party thereto, which is attached as Exhibit 10.1 to the Company's Form 10-Q (Commission File No. 001-13561) filed on August 1, 2024, is hereby incorporated by reference as Exhibit 10.1.3
10.2*
Form of Indemnification Agreement entered into between the Company and each of its trustees and officers, is attached hereto as Exhibit 10.2
10.3*
Deferred Compensation Plan for Non-Employee Trustees, which is attached as Exhibit 10.10 to Amendment No. 2, filed on November 5, 1997, to the Company's Registration Statement on Form S-11 (Registration No. 333-35281), is hereby incorporated by reference as Exhibit 10.3
10.4*
2007 Equity Incentive Plan, as amended, which is attached as Exhibit 10.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 15, 2013, is hereby incorporated by reference as Exhibit 10.4
10.5*
Form of 2007 Equity Incentive Plan Nonqualified Share Option Agreement for Employee Trustees, which is attached as Exhibit 10.2 to the Company's Registration Statement on Form S-8 (Registration No. 333-142831) filed on May 11, 2007, is hereby incorporated by reference as Exhibit 10.5
10.6*
Form of 2007 Equity Incentive Plan Nonqualified Share Option Agreement for Non-Employee Trustees, which is attached as Exhibit 10.3 to the Company's Registration Statement on Form S-8 (Registration No. 333-142831) filed on May 11, 2007, is hereby incorporated by reference as Exhibit 10.6
10.7*
Form of 2007 Equity Incentive Plan Restricted Shares Agreement for Employees, which is attached as Exhibit 10.4 to the Company's Registration Statement on Form S-8 (Registration No. 333-142831) filed on May 11, 2007, is hereby incorporated by reference as Exhibit 10.7
10.8*
Form of 2007 Equity Incentive Plan Restricted Shares Agreement for Non-Employee Trustees, which is attached as Exhibit 10.3 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 20, 2009, is hereby incorporated by reference as Exhibit 10.8
10.9*
EPR Properties 2016 Equity Incentive Plan (as amended and restated effective May 28, 2021), which is attached as Exhibit 10.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on June 1, 2021, is hereby incorporated by reference as Exhibit 10.9
10.10*
Form of 2016 Equity Incentive Plan Incentive and Nonqualified Share Option Award Agreement for Employees, which is attached as Exhibit 10.2 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 12, 2016, is hereby incorporated by reference as Exhibit 10.10
10.11*
Form of 2016 Equity Incentive Plan Restricted Shares Award Agreement for Employees, which is attached as Exhibit 10.3 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 12, 2016, is hereby incorporated by reference as Exhibit 10.11
10.12*
Form of 2016 Equity Incentive Plan Restricted Share Unit Award Agreement for Non-Employee Trustees, which is attached as Exhibit 10.4 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 12, 2016, is hereby incorporated by reference as Exhibit 10.12
10.13*
Annual Performance-Based Incentive Plan, which is attached as Exhibit 10.1 to the Company's 8-K (Commission File No. 001-13561) filed on June 2, 2017, is hereby incorporated by reference as Exhibit 10.13
10.14*
EPR Properties Employee Severance Plan (as amended June 1, 2018), which is attached as Exhibit 10.1 to the Company's Form 10-Q (Commission File No. 001-13561) filed on July 31, 2018, is hereby incorporated by reference as Exhibit 10.14
10.15*
EPR Properties Employee Severance and Retirement Vesting Plan (effective July 31, 2020), which is attached as Exhibit 10.15 to the Company's Form 10-K (Commission File No. 001-13561) filed on February 25, 2020, is hereby incorporated by reference as Exhibit 10.15
10.16*
2020 Long Term Incentive Plan, which is attached as Exhibit 10.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on February 26, 2020, is hereby incorporated by reference as Exhibit 10.16
10.17*
Form of Performance Shares Awards Agreement under the 2020 Long Term Incentive Plan, which is attached as Exhibit 10.2 to the Company's Form 8-K (Commission File No. 001-13561) filed on February 26, 2020, is hereby incorporated by reference as Exhibit 10.17
10.18*
Form of Restricted Shares Award Agreement under the 2020 Long Term Incentive Plan, which is attached as Exhibit 10.3 to the Company's Form 8-K (Commission File No. 001-13561) filed on February 26, 2020, is hereby incorporated by reference as Exhibit 10.18
10.19*
Retirement and Release Agreement, dated as of February 26, 2023, by and between the Company and Craig L. Evans, which is attached as Exhibit 10.1 to the Company's Form 10-Q (Commission File No. 001-13561) filed on May 2, 2024, is hereby incorporated by reference as Exhibit 10.19
10.20
Fourth Amended, Restated and Consolidated Credit Agreement, dated as of September 19, 2024, by and among the Company, as borrower, KeyBank National Association, as administrative agent, and the other agents and lenders party thereto, which is attached as Exhibit 10.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on September 23, 2024, is hereby incorporated by reference as Exhibit 10.20
Insider Trading Policy is attached hereto as Exhibit 19
The list of the Company's Subsidiaries is attached hereto as Exhibit 21
Consent of KPMG LLP is attached hereto as Exhibit 23
Power of Attorney (included in signature page)
31.1
Certification of Gregory K. Silvers pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 is attached hereto as Exhibit 31.1
31.2
Certification of Mark A. Peterson pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 is attached hereto as Exhibit 31.2
32.1
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 32.1
32.2
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 32.2
97.1
Policy relating to the Recovery of Erroneously Awarded Compensation is attached hereto as Exhibit 97.1
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* Management contracts or compensatory plans
PLEASE NOTE: Pursuant to the rules and regulations of the Securities and Exchange Commission, we have filed or incorporated by reference the agreements referenced above as exhibits to this Annual Report on Form 10-K. The agreements have been filed to provide investors with information regarding their respective terms. The agreements are not intended to provide any other factual information about the Company or its business or operations. In particular, the assertions embodied in any representations, warranties and covenants contained in the agreements may be subject to qualifications with respect to knowledge and materiality different from those applicable to investors and may be qualified by information in confidential disclosure schedules not included with the exhibits. These disclosure schedules may contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants set forth in the agreements. Moreover, certain representations, warranties and covenants in the agreements may have been used for the purpose of allocating risk between the parties, rather than establishing matters as facts. In addition, information concerning the subject matter of the representations, warranties and covenants may have changed after the date of the respective agreement, which subsequent information may or may not be fully reflected in the Company's public disclosures. Accordingly, investors should not rely on the representations, warranties and covenants in the agreements as characterizations of the actual state of facts about the Company or its business or operations on the date hereof.