Epr Properties (EPR) Q3 2026 Earnings Call Transcript

And welcome to the EPR Properties Q3 2026 Earnings Call. We ask that you please hold all questions until the completion of the formal remarks, at which time you'll be given instructions for the question and answer session. Also, as a reminder, this conference is being recorded today.

If you have any objections, please discuss our 2026 investment spending guidance to a range of $675 million to approximately $86 million, As we do not anticipate any additional...

Thank you, Mark. As you've heard today, the experience economy continues to demonstrate strength and resilience. And EPR is... Our focus remains on prudently deploying capital to acquire high-quality properties that are valued by the consumer and deliver accretive earnings growth to our shareholders. With that, why don't I open it up for questions. Operator?

On the raised hand button, which can be found in the black bar at the bottom of your screen.

Perfect. So I have another question here, Maddy. As this is audio-only call, we will go live on slide on the webinar. And at the time of pre-record, do you want me to spotlight the pre-record to the attendees?

Yes.

Yes, yes, yes, yeah.

Okay, so I'm not sharing the holding slide at the time of pre-record.

You just switch spotlight.

Yeah, yeah, got it. And can I just get the access to the Novi account, Maddy?

Yeah, I sent it to you last night. Did you not get it?

I'm just trying to check.

Let me go double check.

Please refresh. Shut up. I've just opened it, which means it is refreshed, right?

Hold on a second. Okay.

Now it says users are already associated with this account. Okay.

Can I just know the name of the account, please?

And welcome to the EPR Properties Q3 2026 Earnings Call. We ask that you please hold all questions until the completion of the formal remarks.

...field of approximately 8.3%, bringing our year-to-date investments to $664.5.

Both other income and other expense relate primarily to our consolidated operating properties, including our four operating fields, expected non-cash, share-based,

and thoughtfully refinancing our debt with a new term loan execution. Our focus remains on prudently deploying capital to acquire high-quality properties that are valued by the consumer and deliver accretive earnings growth to our shareholders. With that, why don't I open it up for questions. Operator?

And welcome to the EPR Properties Q3 2026 Earnings Call. We ask that you please hold all questions until the completion of the formal remarks, at which time you'll be given instructions for the question and answer session.

Hello, and welcome to the EPR program

and executed a new credit agreement that includes a $600 million term loan. With our credit facilities and forward equity in place, we have the capacity to fund a strong pipeline of opportunities. Given our capacity and our activity to date, we're pleased to raise our investment spending earnings guidance, which represents an increase of 8% at the midpoint over 2025. As our portfolio expands and diversifies, we remain well positioned to capitalize on the continued growth of experiential real estate. With that, I'll turn the call over to Ben for a closer look at the business and our performance.

Thank you, Greg. As Greg just highlighted, this quarter marks several notable firsts for EPR.

Our first investment... ...backup playback in the room as well.

Sure, I'm just doing that.

Okay. Correct me if I'm wrong. Do I need to mute the TV line in the zone?

Oh, yeah, we can mute it. Can you hear us on the turbo bridge line? Yes, I can hear you.

Perfect.

All right, we're going to go ahead and mute the line. Sure, sure.

Perfect.

Okay, cool. Awesome. Okay, and then moderators, can you hear me?

Hello, and welcome to the EPR Properties for Green 2026 Earnings Call. We ask that you please hold all questions until the completion of the formal remarks, at which time you'll be given instructions for the question and answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please.

We're also pleased to see box office running well ahead of last year. The third quarter capped off a record summer and year to date box office was up approximately 20 percent through September, driven by a broad mix of genres and compelling titles that continue to bring audiences back to theaters. Our results underscore that the consumer continues to demonstrate that they value and prioritize experiential offerings.

All right. We're good.

We continue to draw.

Thank you so much. Adithya, for the webinar side, it's audio only. What is the tile up there? Are we going to see people on that? I want to make sure we're not seeing people.

Oh, so I'm spotlighting the holding slide throughout the call. And for the Q&A, I will spotlight the Q&A slide.

Okay. So are you going to see any, you're not going to see any of our titles, will you? No. Okay.

No, Andy. Yeah. Yeah.

Okay, and then the, there's no way to see only the video tile.

You're referring to the prerecord? Yeah, we'll just see that tile. For the prerecord, yes, I can spotlight the prerecord tile, the MCO tile.

Okay.

Yeah.

And then if you do, yeah.

If you can reshare once again, Jelly, I will spotlight. Okay.

And Angelica, I see that the feed is still the same. You can just move to holding, you know, holding slide with music.

I mean, we test the audio. Okay, okay.

Yeah.

I got it. I got it.

Hello, and welcome to the EPR

Properties Q3 2026

earnings call and webcast. Our focus this year has been on accelerating growth, and our third quarter results demonstrate...

And welcome to the EPR Properties Q3 2026 earnings call. We ask that you please hold all questions until the completion of the formal remarks, at which time you'll be given instructions for the question and answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I will now hand the call over to Brian Moriarty, Senior Vice President of Corporate Communications.

Thank you. Thanks for joining us today for our third quarter 2026 Earnings Call and Webcast. Participants on today's call are Greg Silvers, Chairman and CEO, Ben Fox, Executive Vice President and CIO, and Mark Peterson, Executive Vice President and CFO. We'll start the call by informing you that this call may include forward-looking statements identified in the Private Securities Litigation Act of 1995 by such words as will, be, intend, continue, believe, may, expect, hope, anticipate, or other such comparable terms. The company's actual financial condition and the results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of those factors that could cause the results to differ materially from these forward-looking statements are contained in the company's SEC filings, including the company's reports on Form 10-K and 10-Q. Additionally, this call will contain certain references to non-GAAP measures, which we believe are useful in evaluating the company's performance. A reconciliation of these measures to the most directly comparable GAAP measures are included in today's earnings release and supplemental information furnished to the SEC under Form 8K. If you wish to follow along, today's earnings release, supplemental, and earnings call presentation are all available on the Investor Center page of the company's website, www.eprkc.com. Now I'll turn the call over to Greg Silvers.

Thank you, Brian. Good morning, everyone, and welcome to our third quarter 2026 earnings call-in webcast. Our focus this year has been on accelerating growth, and our third quarter results demonstrate continued momentum across the business. Revenue increased 12%, while FFO as adjusted per share increased 8.8%, compared with the same period in 2025. These results were supported by a strong in-place portfolio and a robust pace of investment activity. Our investment spending remains strong throughout the quarter as we continue to broaden our experiential portfolio and establish important new relationships. We entered the live venue category through a build-to-suit development in Portland, Oregon, with industry leader Live Nation. We have long discussed the strong, sustained demand fundamentals of live performance, and our team worked diligently to identify the right initial opportunity. We also acquired a lifetime fitness and wellness property in Irvine, California, further expanding both the depth and quality of our fitness and wellness portfolio. Our portfolio coverage incrementally increased during the quarter to 2.1 times. We're also pleased to see box office running well ahead of last year. The third quarter capped off a record summer, and year-to-date box office was up approximately 20% through September, driven by a broad mix of genres and compelling titles that continue to bring audiences back to theaters. Our results underscore that the consumer continues to demonstrate that they value and prioritize experiential offerings. We continue to draw on multiple sources of capital to fund our growth. During the quarter, we recycled capital through the sale of a private school property, entered into forward sell agreements under our ATM program, and executed a new credit agreement that includes a $600 million term loan. With our credit facilities and forward equity in place, we have the capacity to fund a strong pipeline of opportunities. Given our capacity and our activity to date, we're pleased to raise our investment spending earnings guidance, which This represents an increase of 8% at the midpoint over 2025. As our portfolio expands and diversifies, we remain well positioned to capitalize on the continued growth of experiential real estate. With that, I'll turn the call over to Ben for a closer look at the business and our performance.

Thank you, Greg. As Greg just highlighted, this quarter marks several notable firsts for EPR, our first investment in a live performance venue with Live Nation, and our first acquisition of a fitness facility leased to Lifetime. Both transactions highlight not only our continuing investment momentum, but also the accelerating diversification of our portfolio. During the quarter, we invested $172.4 million at an average initial cash yield of approximately 8.3%, bringing our year-to-date investments to $664.5 million. That volume includes a new experiential category, live venues, along with continued additions to our fitness and wellness, eat and play, and experiential lodging portfolios. Two of this quarter's investments stand out for their exceptional A-plus real estate, Lifetime in Irvine, California, and One Life Fitness at Tyson's Galleria in Virginia. Both occupy world-class locations that we believe support their long-term success. In addition to these investments, we expect to invest another $21 million this year in experiential development and redevelopment projects already underway. As we noted last quarter, our theater exposure continues to decline as our experiential investment volume accelerates. Theaters now represent roughly one-third of our portfolio, and we expect that share to continue trending toward our long-term goal of approximately 20%. Given our investment pace and the depth of our pipeline, we are pleased to once again increase our 2026 investment spending guidance to a range of $675 million to $725 million. Two points on our pipeline in the current investment environment. First, the breadth of our pipeline is unparalleled in recent memory, and we look forward to sharing some of the exciting opportunities we're pursuing in the coming quarters. Second, on cost of capital and investment spreads, three factors are working in our favor. Our transactions generally have rate protection built in prior to closing, which provides a buffer during periods of market volatility. As we've said before, our biggest competition is debt, not net lease. In this market, debt capital has repriced even faster, so our clients are receptive to conversations on pricing. And because our business is relationship-driven with a proprietary pipeline, we enjoy higher average entry yields, which give us a natural cushion. Turning to the portfolio, at the end of the third quarter, our portfolio totaled $7.6 billion of gross investment value across 350 properties, which were 99% leased or operated. By ABR, 96% is in our core experiential categories, represented by 296 properties operated by 61 clients, Which remain 99% leased or operated. The remaining 4% is our education portfolio, made up of 54 properties leased to four operators, which were 100% leased at quarter end. Portfolio health remains sound, with unit-level rent coverage increasing to 2.1 times. While data indicate pockets of strain among the lowest-income consumers, people's enduring preference for experiences over things continues to support our portfolio. Our portfolio also benefits from diversification across multiple demographic dimensions, with experiences that appeal to many generations and income levels. Theaters are a great example. Not only do they span all of these demographics, but they also have historically proven resilient in economic downturns. And most importantly, as Greg has said many times, content drives performance. People want to see cool stuff. This year's box office, which is up 20% year-to-date and on track for its best year since 2019, demonstrates exactly that. We've talked about who goes to the movies before, but with the strength we continue to see across our theater portfolio, a few points are worth repeating. Gen Z accounts for 40% of all moviegoers, and in multiple polls, Gen Alpha has said it prefers the big screen. Format matters. People can't replicate IMAX and other premium large format screens at home, and the industry has created real urgency around seeing certain films in these formats. Our portfolio over-indexes to exactly those experiences. 71% of our theaters have recliners, 84% offer enhanced food and beverage, and 69% have premium large format screens. These features help our theaters generate roughly 8% of North American box office gross, with only 3% of screens. Finally, the industry has coalesced around a 45-day theatrical window, which supports exhibitors and spares studios, a second marketing push after films leave theaters. Some films will run longer, including the upcoming Netflix release of Narnia, with a seven-week window. And it's not just the movies. Young people are lining up for concerts, comedy shows, and other live events. They want to get out of the house, and they are hungry for shared experiences. We're capitalizing on this momentum through partnership with industry leaders like Live Nation, whose venue will host concerts and comedy shows. Turning to other areas of our portfolio, our Eat and Play segment remains resilient, strengthened by the quality of our locations, despite broader industry moderation. Topgolf's positive momentum since the sale continues. Expense reductions and revenue initiatives are delivering results, and our top golf portfolio remains very healthy. Attractions performed well in the third quarter, with several parks outperforming. As we saw in Ski during the winter, geographic diversification and attractions helped offset isolated summer weather events. Our fitness and wellness portfolio continued with solid performance in the third quarter, with stabilizing trends at several recently renovated and expanded properties. Finally, our education portfolio continues to face industry-wide headwinds, including higher labor costs, grant funding challenges, and regulatory pressure. Despite this backdrop, this portfolio remains resilient. Moving on to dispositions. Reflecting our commitment to accretive capital recycling, in the third quarter, we completed the sale of the British School of Chicago to a public net lease peer, transacting at a cap rate in the low 7% range. Following this sale, we are updating our 2026 disposition guidance to approximately $86 million, as we do not anticipate any additional dispositions prior to year-end. In summary, our portfolio remains resilient, our diversification is accelerating, and we are very excited about the investment opportunities in front of us. With that, I'll turn it over to Mark for a review of our financial performance.

Thank you, Ben. Today, I'll discuss our strong financial performance for the third quarter, provide an update on our balance sheet, and close by discussing the increases in our earnings and investment spending guidance for the year. FFO as adjusted for the quarter was $1.49 per share versus $1.37 in the prior year, an increase of 8.8%. And AFFO for the quarter was $1.54 per share compared to $1.39 in the prior year, an increase of 10.8%. Please note that this quarter we have revised our definition of AFFO to no longer deduct maintenance capital expenditures. This change was made to be consistent with most other triple net REITs and is immaterial. All prior periods have been recast to reflect this change, and reconciliations from the previous definition to the new definition are included in the supplemental and press release. Before I walk through the key variances, I want to explain two items excluded from both FFO as adjusted and AFFO. First, during the quarter, we had disposition proceeds of $74 million, which included the sale of a private school property for net proceeds of $68.2 million, and a gain of $30.5 million was recognized. Second, as discussed last quarter, we entered into a new amended and restated $1.6 billion credit agreement, and in connection with this, we recognized $605,000 of costs associated with loan refinancing or payoff. Now, moving to a few key variances. Total revenue for the quarter was $204.1 million versus $182.3 million in the prior year, an increase of $21.8 million, or 12%. This increase was primarily due to the impact of investment spending as well as rent and interest bumps. Percentage rents and participating interest for the quarter were $9.8 million, up from $7 million in the prior year, primarily due to higher percentage rent recognized from our attraction and theater properties. Both other income and other expense relate primarily to our consolidated operating properties, including our four operating theaters and the Cartwright Hotel and Indoor Water Park. The increase in other income and other expense versus prior year is due primarily to better performance at our theater properties as a result of strong box office during the quarter. On the expense side, interest expense net increased by $7.1 million due to an increase in average borrowings and the weighted average interest rate on our outstanding debt, as well as a decrease in capitalized interest versus the prior year. FFOs adjusted for the nine months ended September 30th was $4.16 per share, compared to $3.81 in the prior year, an increase of 9.2%. And AFFO for the same period was $4.26 per share, compared to $3.88 in the prior year, an increase of 9.8%. Turning to the next slide, I'll review some of the company's key credit ratios. As you can see, our coverage ratios continue to be very strong, with fixed-charge coverage at 3.5 times, and both interest and debt service coverage ratios at 4.0 times. Our pro forma net debt to annualized adjusted EBITDA RE was 4.9 times at quarter end, which is below the low end of our targeted range of 5 to 5.6 times. Pro Forma net debt is calculated by subtracting the estimated net proceeds from all forward sale agreements under our ATM program from net debt. Additionally, our Pro Forma net debt to gross assets was 40% on a book basis at quarter end, and our common dividend continues to be very well covered with an AFFO payout ratio of 60% for the third quarter. Now let's move on to debt and capital market activities and our balance sheet, which is in great shape to support our continued growth. At quarter end, we had consolidated debt of $3.3 billion, of which $2.8 billion is fixed rate debt with an average blended coupon of approximately 4.4%. During the quarter, upon maturity, we repaid in full $179.6 million of senior unsecured notes that were originally issued in a private placement transaction. As discussed in our last call on July 17th, we entered into a new amended and restated $1.6 billion credit agreement that, among other things, extended the maturity date and reduced the interest rate on our $1 billion revolving credit facility and established a new $600 million delayed draw term loan facility that was fully drawn at quarter end. The term loan is due in 2032 with interest based on our current credit ratings at SOFR plus 115 basis points. Additionally, during the quarter, we entered into two forward sale agreements under our ATM program for initial gross sales proceeds of $66.6 million or an average sale price of $60.79 per share. No forward sale agreements were settled during the quarter, and as of quarter end, we had total estimated net proceeds from unsettled forward sale agreements of $134.6 million, representing just under $2.3 million common shares. Our liquidity position remains strong, and we are well positioned to support our continued growth. In addition to the amount available under forward sale agreements that I just discussed, at quarter end, we had $52.4 million of cash on hand and no balance on our $1 billion revolver. As far as upcoming debt maturities, we have $450 million of debt coming due in December, and then nothing comes due until June of next year. Turning to guidance, we are increasing our 2026 FFOs adjusted per share guidance to a range of 549 to 557, from a range of 541 to 557, representing an increase versus the prior year of 8% at the midpoint. We expect a slightly higher percentage increase in AFFO per share. We are also increasing our 2026 guidance for investment spending to a range of $675 million to $725 million from a range of $600 million to $700 million. We are revising disposition proceeds to $86 million for the year from a range of $50 million to $100 million. We are increasing our percentage rent and participating interest income guidance to a range of $21.5 million to $24.5 million, from a range of $18.5 million to $22.5 million, primarily due to higher amounts expected related to our theater and attraction properties. Please note that the midpoint of this range implies that fourth quarter percentage rent and participating interest income will be approximately $6 million. This is lower than the prior year's fourth quarter amount of nearly $8 million due to the recognition of a part of one tenant's percentage rent in the third quarter of this year versus the fourth quarter in the prior year. We are revising our G&A expense guidance to a range of $57 million to $59 million from a range of $56 million to $59 million due primarily to an increase in expected non-cash share-based compensation expense. Finally, our guidance for other income and other expense has been updated to a range of $44 million to $50 million and a range of $43 million to $49 million, respectively. The net increase in this guidance of $1 million reflects the additional contribution expected from our operating theaters given the strong box office performance, as well as additional gains anticipated related to our Canadian FX hedges, which is booked to other income. The guidance details can be found on page 23 of our supplemental. Now, with that, I'll turn it back over to Greg for his closing remarks. Thank you, Mark.

As you've heard today, the experience economy continues to demonstrate strength and resilience, and EPR is uniquely positioned to take advantage of this trend as it is the only diversified REIT that focuses solely on the experiential economy. So far this year, we've delivered post-COVID highs in investments and sector-leading FFO is adjusted per share growth. During the quarter, we utilize multiple tools in our tool shed, including opportunistically raising equity through our ATM program, recycling capital through dispositions, and thoughtfully refinancing our debt with a new term loan execution. Our focus remains on prudently deploying capital to acquire high-quality properties that are valued by the consumer and deliver accretive earnings growth to our shareholders. With that, why don't I open it up for questions. Operator?

Thank you. At this time, if you'd like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you'll receive a message on your screen from the host allowing you to talk, and then you'll hear your name called. Please accept, unmute your audio, and ask your question. If you're on a mobile device using the app, simply tap into the three dots or more button to find the raised hand feature. And lastly, if you're calling in today, star 9 will activate the raised hand and use star 6 to mute and unmute. We'll wait just one moment to allow the cue to form. We'll take our first question from Anthony Pallone with J.P. Morgan. Please unmute your line and ask your question.

Great, thanks, and good morning. Morning, Johnny. My first question relates to what you described as an unparalleled pipeline of deals. So can you talk a bit more about just what's in that? How much is maybe acquisition opportunities versus build-to-suits, portfolios, areas that you would invest in, et cetera?

Sure, Tony. Good morning. So by breadth, we really are talking about all those things that you've mentioned. It's that the diversity of opportunities we're seeing is really, really exciting, right? So we've talked about fitness and wellness before, and even within that category, we're really seeing opportunities that stretch all the way from, you know, things that we've talked about from golf to fitness facilities and everything in between. Then beyond that, we're seeing opportunities in a lot of our other verticals with Eat and Play, attractions, live entertainment. All of them have activity, and the conversations have just been very engaging and encouraging.

Tony, I would add, I think part of what, again, that's going on right now is we're seeing a really continued focus on people, even in these categories, continuing to focus on spending money on these experiential properties. And the consumers continues to be highly supportive of this. And so our operators and our tenants are continuing to invest and grow their businesses. So that's creating opportunities, even in the face of some of the challenges that are generally going in the economy.

And then on the point of development versus acquisitions, we're seeing a split. And, you know, consistent with this year, there are a number of acquisitions that we can expect for the coming year. For development, there's always a high hurdle, and in the current rate environment, that hurdle is probably even a little bit higher, but we are exploring those opportunities and, as discussed on the call, have a pipeline of those already in place.

Okay. Thanks for that. And then just my second one is, as it relates to your more recent theme park acquisitions this year, how did they do this summer? How are they performing, and also your appetite to do more in that space?

Again, Tony, and I will let Ben chime in. I think, again, as we anticipated, this was a transitory year, so we're consistent with that. I think we think these are performing in line with kind of where we anticipated. It doesn't mean we anticipated some degree of challenges as you change the operator and things. I think as we move into this coming year, you'll see a ramp up. Remember, we committed to the capital, additional capital going into those properties, and I think that will do. I think likewise, again, the overall attractions industry has been incredibly resilient over time and continues to demonstrate that. We've had certain events toward the end of the season this year that have brought attention to that. I think everyone in the industry, any sort of event that occurs that we've seen is tragic, and all of our operators are very much in the focus of that. Safety is of utmost importance to them, and they have demonstrated programs of inspection and safety. And literally, if you look over the billions of people that have ridden rides and things, they have a great overall track record of safety. So we'll have to see if that impacts our belief on what we would do in the future. But right now, everything's playing out the way I think we thought it would be. And we'll see about opportunities as we go forward. But Ben, I don't know if you had anything to add to that. I think that covers it very well.

That's exactly what we're seeing.

Great. Thank you. Thank you, Tony.

Our next question comes from James Feldman with Wells Fargo. You may now unmute your line and ask a question.

Hi, thank you. You've got Connor here on with Jamie. Given your first investment in Live Nation for a performance venue this quarter, can you talk through what makes performance venues attractive from both a credit and real estate perspective? And can you describe what your runway to grow exposure here looks like?

Again, I'll let Ben give more details, but I think, Connor, first of all, again, if you just look about the resilience of it, I mean, live performance has been, you know, it has been incredible as far as its strength in the underlying experiential economy. I think the model for how musicians make their money has substantially changed to where they're all out and supported on that road. And let's be candid, Live Nation is the 800-pound gorilla in that market. So I think they've announced a multibillion-dollar expansion program that they're looking for to increase the depth and breadth of their venues. That doesn't mean we're going to be able to do all of those. But I think we're excited about the underlying dynamics of demand compared with the ability to partner with the world-class operator. And I think that just opens up a whole other opportunity for growth for us.

Yeah, that's exactly what we're seeing. And then what's very exciting is you look at the growth that Live Nation, some of the other operators are having. There's a void still of midsize venues. If you think about 4,000 seat, right? So you have the larger amphitheater, and then there's smaller local, but that midsize still is an underserved market. And it's really a sweet spot in that it's the perfect size that attracts headline performances, and you can command very attractive pricing, and there's just a lot of unmet demand. So that gives us a lot of encouragement about the pipeline and the future opportunity in the sector.

And just to note, when we say very attractive pricing, we think that's very attractive pricing for ourselves. The cost of the tickets, I know everyone's complaining about the cost of tickets, but very attractive pricing is relative to which side of the equation you're sitting on. So we think it's very attractive from our perspective.

You also mentioned credit. We have Live Nation credit, so that's important to point out as well.

Thank you. Really appreciate the insight. And then maybe given the tick up in rank coverage in the portfolio to 2.1 times this quarter, can you walk us through what you're seeing that's driving this increase? And are there any specific sectors or types of tennis driving that?

I think overall, clearly, there's no doubt that the overall rent coverage is being helped by the theater and the performance of that. But I think overall and experiential, I think there's some really good data points. And I'd reference you guys to McKinsey's report on the state of the consumer in 2026, where they wrote that the experience economy has become one of the structural forces reshaping global consumer markets. Rather than viewing experiences as discretionary indulgences, consumers are increasingly treating them as an important part of how they choose to spend both their time and money. So what we're seeing is people are choosing experiences over stuff, and they're continuing to demonstrate that with their spending patterns. And whether you look at credit card data or spending data from the various banks, we're continuing to see experiential spending up and to the right. So we think we're in the right categories, and we think we're the only REIT that offers that level of exposure. So we feel really well with how we're positioned.

Thank you. Really appreciate it.

Our next question comes from Rob Stevenson with Huntington. Please unmute your line and ask a question.

Good morning, guys. Greg or Ben, the new Live Nation asset, press reports have that opening next summer. Is that still accurate? Can you talk about how big of an investment that is and if there's a period of free rent or that starts to get rent to you guys next summer?

That timeline is still accurate, and in line with our other practice, we're not going to disclose

the specific transaction

economics, but that timeline for opening is consistent.

Okay. And then, Mark, you have roughly $50 million in cash and $135 million available under the ATM. How much additional debt can you issue from here and still stay in your targeted leverage range? Just curious as to how much dry powder, so to speak, you have to deploy here without having to go back to the market and issue more equity.

Yeah, let's just kind of roll forward where we're at. As you mentioned, 50 million of cash, so kind of 35 million of excess. As we kind of roll forward to the rest of the year, that should cover our investment spending, which remaining is about 35 million. So we kind of finished the year. That's covered. We have zero on our line today. We do have $450 million of debt due in December. And we can take that down with our line since we have zero on it. Or, of course, we have those proceeds from the forwards. But we probably don't need the forward equity until next year, so we can kind of have that in the tank for next year's spending. And as that line gets to about that mid-fours, you start to look at potentially a bond transaction that would pay down that line. Typically, when that gets to $450,000, we look to the market to pay down the line. In terms of leverage, you know, we finished the quarter here, third quarter at 4.9 times pro forma. Just even with the refinancing of the debt in fourth quarter, should that happen, we finished the year around five times. That's without taking down any forward equity. So we're in great shape kind of approaching next, going into next year when our leverage range is five to five, six and being at the lower end of the range. I think we have plenty of capacity to support the growth.

Okay. Thanks, guys. Appreciate the time.

Our next question comes from Apul Rana with KeyBank Capital Markets. Please unmute your line and ask your question.

Great. Good morning. Thank you for taking my question. You know, Ben, you touched on this briefly, but given the increase in cost of capital, you know, how much have investments yields moved on a like-for-like basis? You mentioned sellers are open to pricing adjustments, but are you getting enough to preserve your targeted spreads?

It's a good question, Upal. And, you know, we are very comfortable with maintaining our spreads. Like we talked about, you know, our average entry yield is already very attractive and conversations, you know, are probably in the neighborhood though in terms of movement these days of 25 basis points, give or take. And we're also seeing movement on escalators in that we're able to drive more attractive lease increases in a lot of our conversations.

Yeah, I think that these conversations are dynamic. I mean, a lot of the deals that we closed this year were based upon the cost of capital that we had done previous to the year. And as we move forward, you know, we are, and I think over the years, we've demonstrated our commitment to accretive growth. And therefore, if we were able to either expand or contract that to hit that. And so I think the good thing is what I talked about earlier, we're in markets that are demonstrating growth and fundamental consumer support. So, our operators are looking to deploy capital, and there is a cost of capital to do that if they want to grow. So, I think, as Ben said, they're more receptive to at least continuing their growth, and for us to be there, there's a cost for us doing that, and we've had these discussions, and we'll have more of them.

So, and ultimately, as Greg highlighted, we're going to remain disciplined in our deployment, and we're not going to sacrifice red for volume.

Okay, great. That was helpful. And then maybe, you know, last quarter, you mentioned some of the percentage rent strength was, you know, timing related rather than incremental, you know, full year upside. You know, with the percentage rent guidance raised this quarter, you know, what changed relative to those assumptions? And was that really the Odyssey and Spider-Man or any kind of other experiential categories?

Yeah, you're right about a little bit of timing between Q3 and Q4, but overall, the overall increase of $2.5 million is really a combination of theater performance, particularly the regal percentage rents and a couple other smaller amounts. And we also saw strength overall in the attraction space, particularly with our Canadian assets. So those are really the two primary areas that drove the increase

for the year of two and a half million at the midpoint.

Okay, great.

Thank you.

Sure.

Our next question comes from Smeeds Roads with Citigroup. Please unmute your line and ask your question.

Hi, can you hear me? Yes. Okay, great. Sorry. Yeah, I wanted to ask just a little bit about maybe just the lifetime fitness acquisition. I think you said it's at Tyson's Corner. You know, so we clearly see a lot of other REITs that have, you know, frankly, a better cost of capital relative to you buying those assets. And I'm just wondering, could you talk a little bit about the pricing on that specific opportunity and kind of maybe how it came to you and maybe the competitive landscape when it comes to those kinds of facilities?

First of all, let's be clear. The Tyson's Gallery asset was not. Lifetime was in Irvine, California. Oh, sorry. Okay. But that's quite all right. I just want to make sure that we get that. But second of all, I think as we've talked about, all of ours are relationship driven. I think, you know, for us, without displaying any sort of particular that, you know, we said our caps rates were average in the eights and these were consistent with that. So I think our ability to source those deals is really a long time, kind of us working with people and Ben's relationships and other people's relationships here. So I think we are, like I said, uniquely positioned to kind of take advantage of some of that. We continue to be, I think, fluid and be able to kind of respond in very quickly and timely manners. And so it positions us to kind of take advantage of some of these deals. And like Ben talked about, we probably have, you know, again, you talk about that cap rate with probably, again, I don't know if they report, but maybe the best lifetime of performance west of the Mississippi. So I think we feel pretty good about our ability to continue to consistently do things that, as you say, others should be able to beat us, but they don't.

It wasn't, it's not a criticism. It was just, you know, observation. I wanted to ask you also on the build to suit opportunities, you mentioned that it's sort of, you know, a higher bar. But I guess just in general, you know, what sort of spread to your typical going in cap rates would you look for on a development opportunities?

Yeah, Smeez. The higher bar is really that development projects always, you know, multiple factors come into play. And it's not just for us, but it's for the operators as well, right? So when they're looking at projects, the cost of capital and their cost to build, so construction costs, everything comes into play. And so that's really what we're talking about with the higher bar. In terms of spreads, it's very consistent with where we always target and the kind of 50 to 75 basis point premium to in place.

The other thing I would point out is, again, they're all, and add on to what Ben said, like I said, there are challenges. Like I said, even with – like we talked about with the live performance, again, the credit quality of the tenant, you know, where do the – where are the escalators at? It's a combination of what Ben and his team put together to what we think is the overall risk-reward of that. But as he said, yeah, the bar is a little higher on an unproven asset, so we kind of get some level of support to rationalize where that is. Thank you. I appreciate it.

Our next question comes from Mitch Germain with Citizens Bank. Please unmute your line and ask your question.

Thank you very much. I know you guys talked about declining theater exposure, and I'm curious if there is a thought around maybe capitalizing on some of the momentum and pursuing asset sales on some of your portfolio, Or is that decline just going to be through your deployment into other sectors?

Again, I think, Mitch, it's a good question. I think it would be open to both. I think from a data standpoint, I think there's some things that are very positive going on. We just, in the last quarter, we got messaging of one of our net lease peers has bought a theater, a build-a-suit theater for Cinemark below eight cap. So yeah, that's an encouraging data point. And to see other net lease peers starting to tip their toe back into the water, that's exciting. So that may create an opportunity for us. As we've talked about, in that space, we have two large master leases, which with Regal and AMC, which means we wouldn't want to break those. But to do that, it'd have to be a rather large transaction. But we're not opposed to selling theaters. We'd actively look at it. We need to get value for what we thought. And like I said, when we're starting to see eight or below eights, it's beginning to get quite interesting in how we can redeploy capital. But we'll just have to see how that plays out.

That's helpful. And maybe just one last one for Mark. Obviously, you guys increased your percentage rent in Regal in the most recent guidance. I'm just curious, without asking for specific commentary on the forward outlook, is there anything that you would consider to be somewhat one time in nature that's in that number that we need to consider thinking about 2027?

Not really. There was one time in 25, but not really in 26. And, you know, we do expect box offs to be higher next year than this year. So we would expect regal percentage rents to go up next year. So without getting too specific, we do expect an increase in percentage rents in 27. Thank you. Thank you, Mitch.

Our next question comes from Michael Goldsmith for DBS. Please unmute your line and ask a question.

Hi, good morning. This is Anna on for Michael. Just one, I was wondering if you could help us understand how much of the guidance increase was driven by 3Q outperformance, and then, I guess, sort of relatedly, maybe the variables that would push you towards the low end versus the high end of the updated guidance? Thanks.

Yeah, I mean, this quarter was a little bit higher, some of which was timing, some of which was performance. It's probably easier to look at what drives the full year guidance than trying to identify the quarter. And if you look at the full year guidance, we're up four cents. A little over three cents of that is percentage rents. As you saw, we increased our other income and other expense, and that net is a million higher than it used to be, primarily driven by theater performance on the operating side. And then going the other way, G&A guidance was up a half a million. So call that a half a penny. That's really the drivers of the four cent increase for the year. And like I said, some of that's outperformance from Q3, but some of that was that timing of percentage rents Q3 to Q4. So I think it's really better to look at full year is a lot easier to understand.

Our last question comes from Jana Gannon with Bank of America Securities. Please unmute your line and ask your question.

Thank you. Good morning, and congrats on a great quarter. Mark, thank you for highlighting the maintenance CapEx change in AFFO. I believe in the SUP, you also changed the top tenant contributions from percent of revenue to percent of ABR. I'm just wondering if there's anything to highlight on ground leases there, or if this was just to be more comparable with peers who report on ABR, and if there's any other kind of, you know, changes you made in terms of the sub-presentation.

Really, you're right. We switched from total revenue to ABR. You know, total revenue has straight-line rent and so forth, and we thought a much better representation of sort of cash rents was to use ABR, and that's more consistent with what peers show. So you're right, we did make that change. You know, it didn't significantly change the lineup in terms of who, you know, percentages and so forth, but that was a change we made in terms of the SUP. And we've kind of moved to more of an ABR than a gap revenue type presentation. With respect to AFFO, you know, we did some work looking at peers and noted that most of our peers, the vast majority, do not subtract maintenance capex from AFFO. So we made that change, and then to make sure everyone understood, recast prior peers and so forth. It didn't really have a whole lot of impact on growth. It's fairly immaterial, but we do think to be more consistent with the peer group, that made a lot of sense. It does affect, it does reduce our payout ratio a little bit, but that's the right way to look at on a comparative basis to our peer set. And it has, you know, mildly increases AFFO, as I mentioned, sort of on a near material basis. But those were the, those were the two changes that we thought were good changes that we made this quarter.

Thank you.

There are no more questions, so I will now turn the call back over to Greg Silvers, Chairman and CEO, for any closing remarks.

I just want to say thank you to everyone. I hope everyone has the great balance of the year, and we'll look forward to talking to you in the new year. Thanks, everyone.

Thank you for joining EPR Properties Q3 2026 Earnings Call. This concludes today's call.

You may now disconnect.