Earnings Call Transcript - EPR Q4 2025

Brian Moriarty, Senior Vice President of Corporate Communications

Okay. Thank you, Jenny. Thanks for joining us today for our fourth quarter and year-end 2025 earnings call and webcast. Participants on today's call are Greg Silvers, Chairman and CEO; Greg Zimmerman, Executive Vice President and CIO; Mark Peterson, Executive Vice President and CFO; and Ben Fox, Executive Vice President. I will start the call by informing you that this call may include forward-looking statements as defined in the Private Securities Litigation Act of 1995, identified by such words as will be, intend, continue, believe, may, expect, hope, anticipate or other 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 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 contains references to certain 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 8-K. 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.

Greg Silvers, Chairman and CEO

Thank you, Brian. Good morning, everyone, and welcome to our fourth quarter and year-end 2025 earnings call and webcast. The fourth quarter capped a year of solid execution and clear progress toward accelerated growth. Our resilient portfolio benefited from durable tenant performance and steady consumer demand contributing to strong financial performance, including FFO as adjusted per share increase of 5.1% and AFFO per share increase of 6.2%. During the fourth quarter, we announced transactions which significantly expanded our portfolio of championship golf courses along with a premier regional water park acquisition, further diversifying our attraction sector. As we move into 2026, we expect to build on our strong industry relationships while substantially increasing our investment spending. We are actively pursuing opportunities across multiple target property types with a flexible approach that encompasses both potential portfolio scale acquisitions and smaller strategic transactions, positioning us to capitalize on attractive opportunities as they arise. Turning to industry and tenant performance. Our portfolio of properties continues to demonstrate broad stability. For the year, North American box office grew 1% and we anticipate further growth in 2026, supported by an increased number of wide release titles. Performance across our other property sectors remained steady, demonstrating the strength and resilience of our diversified portfolio. As we expand the diversity of our experiential portfolio, we're seeing a balancing effect; strength in certain sectors helping to offset periodic softness in others, reinforcing overall portfolio resilience. Our strategic capital recycling program continued to deliver meaningful results in 2025. By executing targeted dispositions, we strengthened portfolio qualities, reduce concentration and unlock capital to deploy into higher returning experiential investments. We will continue to use disciplined opportunistic recycling as a proven lever for driving value creation. Our balance sheet remains one of our most important competitive strengths. During the fourth quarter, we successfully closed a $550 million public debt offering and established a $400 million at-the-market equity program, two significant capital market initiatives that bolster our financial flexibility and fund our growing investment pipeline. Reflecting the confidence we have in our earnings trajectory and conservative payout ratio, we are also pleased to announce a 5.1% increase to our monthly dividend to common shareholders. In summary, we built a robust pipeline of high-quality experiential investments. Our strong balance sheet and expanded operator relationships now give us access to larger opportunities and our disciplined approach to capital allocation positions us to capitalize on the significant investment opportunities we anticipate in 2026. Now I'll turn the call over to Greg Zimmerman to go over the business in greater detail.

Greg Zimmerman, Executive Vice President and CIO

Thanks, Greg. At the quarter's conclusion, our total investments stood at about $7 billion, encompassing 333 properties that are 99% leased or operated. During the quarter, we allocated $147.7 million towards investments, entirely focused on our experiential portfolio. This portfolio consists of 278 properties with 54 operators and represents 94% of our overall investments, totaling approximately $6.6 billion, all of which were 99% leased or operated at the end of the quarter. Our education portfolio includes 55 properties with five operators, which were fully leased at the quarter's end. Regarding coverage, recent data from the trailing 12-month period ending in December shows our overall portfolio coverage remains robust at 2x. Turning to our tenants' operating status, 2025 box office receipts reached $8.7 billion, marking a 1% increase compared to 2024. For Q4, box office numbers were $2.2 billion, slightly down from $2.4 billion in Q4 2024. This performance was driven by strong box office results from Zootopia 2, which made $337 million in Q4 and has since surpassed $420 million. Wicked: For Good generated $335 million, while Avatar: Fire and Ash earned $250 million in Q4 and picked up an additional $147 million after the new year. Five Nights at Freddy's 2 also performed well. The 2026 slate looks promising with anticipated releases including the Super Mario Galaxy Movie, The Mandalorian and Grogu, Toy Story 5, The Minions 3, Moana, The Odyssey, Spider-Man: Brand New Day, Avengers: Doomsday, and Dune Messiah, with analysts predicting an increase in box office for 2026. Moving forward, we will stop providing annual estimates for box office performance, a practice we initiated as theaters reopened post-pandemic and as we navigated the writers' and actors' strikes. Given the recent stabilization in the business, we believe this is no longer necessary. It's also crucial to emphasize that a significant portion of our theater rent is not dependent on box office fluctuations. The only considerable percentage rent component originates from Regal, based on a lease year instead of a calendar year, and our estimates for Regal percentage rent are included in our percentage rent guidance. Regarding box office dynamics, higher-margin food and beverage sales increasingly represent a larger share of exhibitors' total revenue, meaning we don't need to return to 2019 box office levels to maintain comparable coverage. Additionally, as previously mentioned, the number of major releases is closely linked to box office performance; more major releases generally lead to greater box office growth, with averages often around $70 million per major release. Now, on to updates about our other significant customer segments. Our East Coast ski and Midwest key operators had a strong start thanks to above-average snowfall, which persisted throughout the winter. Our Northern California asset experienced a delayed opening due to snowfall issues, but conditions have notably improved. We'll see if the snowfall continues throughout the season. Alyeska has maintained solid demand due to its membership program and its partnership with the iConnetwork. Our Eat & Play coverage also remains strong, despite ongoing macro pressures on consumers and rising expenses. The Andretti Karting location in Kansas City opened successfully in mid-November, while the Schonburg, Illinois site is expected to open in the second quarter of 2026. Additionally, our second Penn Stack location in Northern Virginia is anticipated to launch in Q2. Notably, in early January, Topgolf Callaway completed its sale of a 60% interest in Topgolf to Leonard Green Partners, valuing the company at around $1.1 billion. We view this positively as it provides Topgolf with a focused private equity majority owner. Many attractions are currently closed for the season, but the Cartes Outdoor Winter Park and Hotel de Glace opened in December and are benefiting from steady domestic travel within Canada. We're quite pleased with performance metrics from Enchanted Forest Water Safari in our operator's inaugural full year of ownership. With the indoor water park and family entertainment center now fully operational at Bavarian Inn, we've observed significant year-over-year increases in revenue and EBITDARM. We are optimistic about the fitness and wellness sector. Since 2024, we have invested roughly $150 million in this area, which includes golf, fitness, and hot springs. All three of our hot springs assets have shown strong year-over-year performance. Our education portfolio continues to perform well, with our customers' trailing 12-month revenue for Q3 remaining stable, although EBITDARM declined due to rising expenses. Coverage continues to be strong. Our investment spending remains entirely focused within our expanding range of experiential asset types, with Q4 investments at $147.7 million, bringing our total for 2025 to $288.5 million. This includes funding for projects that have been completed but are not yet operational. Additionally, we've committed about $85 million to experiential development and redevelopment projects, which we expect to fund in 2026. Our Q4 investment spending was highlighted by the acquisition of a five-property portfolio of championship golf courses in the Dallas Metroplex for around $90.7 million. These properties will be leased and operated by Advance Golf Partners, a leading golf course operator. This investment follows extensive research into the golf sector and complements additional golf investments we made earlier in 2025. With our robust relationships, growing emphasis on fitness and wellness across various generations and demographics, and a wide array of investment opportunities, including golf, climbing gyms, traditional gyms, hot springs, and spas, we are enthusiastic about the growth potential in this area. We also acquired the Ocean Breeze Water Park in Virginia Beach, Virginia, through a sale-leaseback transaction valued at approximately $23.2 million. Ocean Breeze will be leased and operated by an affiliate of Premier Parks, a long-standing strategic partner. Our investment spending for 2026 commenced with the Q1 acquisition of the Vital climbing gym located in Essex Crossing on the Lower East Side for about $34 million. As mentioned earlier, we are particularly optimistic about the fitness and wellness sector and look forward to strengthening our relationship with this exceptional operator while expanding our footprint in Manhattan with this new location alongside our existing facility in Williamsburg, Brooklyn. Our Q4 investments and those made already in Q1 demonstrate an increasing cadence in our investment spending. We are encountering high-quality opportunities for both acquisitions and build-to-suit developments in our targeted experiential categories. Our disciplined capital deployment strategy has allowed us to broaden and deepen our portfolio of experiential properties over recent years. The investment activity throughout 2025 and into 2026 reflects our strong relationships and attractive opportunities. We are providing guidance for 2026 investment spending in the range of $400 million to $500 million. During the quarter, we sold two leased theater properties for alternate uses and two land parcels for combined net proceeds of $16.1 million, realizing a gain of $5.3 million. Additionally, as mentioned during our Q3 call, we received $18.4 million in proceeds from a partial paydown on a mortgage note related to Gravity Haus and Steamboat Springs. Over the past five years, we've sold 33 theaters, and we now have one remaining vacant theater. The total disposition proceeds for 2025 reached $168.3 million, and we are announcing 2025-2026 disposition guidance in the range of $25 million to $75 million. I'll now hand it over to Mark to discuss the financials.

Mark Peterson, Executive Vice President and CFO

Thank you, Greg. Today, I'll discuss our financial performance for the fourth quarter and the year, provide an update on our balance sheet and close with introducing 2026 guidance. FFO as adjusted for the quarter was $1.30 per share versus $1.23 in the prior year, an increase of 5.7%. And AFFO for the quarter was also $1.30 per share compared to $1.22 in the prior year, an increase of 6.6%. Before I walk through the key variances, I want to point out that we had disposition proceeds totaling $34.5 million for the quarter and recognized a gain on sale of $5.3 million, for the year we had disposition proceeds totaling $168.3 million and recognized a gain on sale of $39.5 million as we continue to make progress reducing our investments in theater and education properties and recycling those proceeds into other experiential assets. Note that these gains are excluded from FFO adjusted and AFFO. Now moving to the key variances. Total revenue for the quarter was $183 million versus $177.2 million in the prior year. Within total revenue, rental revenue increased $7.9 million versus the prior year, mostly due to the impact of investment spending, rent and interest bumps, and higher percentage rents and participating interest. Percentage rents and participating interest for the quarter were $7.8 million versus $4.9 million in the prior year, and the increase was due primarily to higher percentage rent recognized from our attraction and cultural properties as well as from one of our early childhood education tenants. We also had higher participating interest related to our Northeast ski property. Both other income and other expense relate primarily to our consolidated operating properties, including the Kartrite Hotel & Indoor Water Park and our four operating theaters. The decrease in other income and other expense versus the prior year is due primarily to the sale of three operating theater properties in the first half of 2025. On the expense side, G&A expense for the quarter increased to $14.6 million versus $12.2 million in the prior year due primarily to higher payroll and benefit expense, particularly incentive compensation. Equity and loss from joint ventures for the quarter was $2.4 million compared to $3.4 million in the prior year. This better performance is due to our decision to exit our joint venture in Breaux Bridge, Louisiana in late 2024 as well as improved results at our two remaining RV Park joint ventures. Shifting to full year results, FFO as adjusted was $5.12 per share at the high end of guidance versus $4.87 in the prior year, an increase of 5.1% and AFFO was $5.14 per share compared to $4.84 in the prior year, an increase of 6.2%. 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 3.4x and both interest and debt service coverage ratios at 4x. Our net debt to annualized adjusted EBITDAre was 4.9x at year-end, which is below the lower end of our targeted range. Additionally, our net debt to gross assets was 39% on a book basis at year-end, and our common dividend continues to be very well covered with an AFFO payout ratio of 68% for the fourth quarter and the full year. Now let's move on to our capital market activities and balance sheet, which is in great shape to support our expected growth. At year-end, we had consolidated debt of $2.9 billion of which all is either fixed-rate debt or debt that has been fixed through interest rate swaps with an overall blended coupon of approximately 4.4%. In November, we closed on $550 million of new five-year senior unsecured notes at a coupon of 4.75%. And at year-end, we had $90.6 million of cash on hand and no balance drawn on our $1 billion revolver. Additionally, in December, we finalized our new ATM program. While no equity issuance is required to fund our plan for 2026, given that we project to be below the midpoint of our target leverage range at year-end without any such issuance. This program provides us with an additional tool in our toolbox to issue equity opportunistically, including forward sales. We are introducing our 2026 FFO as adjusted per share guidance of $5.28 to $5.48, representing an increase versus the prior year of 5.1% at the midpoint. We expect a similar percentage increase in AFFO per share. Note that due primarily to the timing of expected percentage rents, which are heavily weighted to the last three quarters of the year, as well as the fact that the first quarter is off-season for our operating properties, we expect results for the first quarter of '26 to be lower than the full year divided by four by about $0.11 per share. We are also providing our 2026 guidance for investment spending of $400 million to $500 million and disposition proceeds of $25 million to $75 million. We expect percentage rent and participating interest of $18.5 million to $22.5 million. As you can see on the slide, I have provided a reconciliation of the prior year amount to the midpoint of this guidance. The changes include out-of-period percentage rents and participating interest of $3.5 million recognized in 2025 that does not repeat lower projected percentage rents in 2026 of $1.1 million related to our Northern California ski property due to delayed snowfall for the season and lower projected percentage rents of $0.4 million related to certain properties having base rent increases in '26, causing the breakpoint for percentage rents to increase. These decreases were offset by a projected net increase of $1 million in percentage rent for other tenants, including Regal. We expect G&A expense of $56 million to $59 million. In addition, guidance for our consolidated operating properties is provided by giving a range for other income and other expense. Guidance details can be found on Page 23 of our supplemental. Finally, based on our expected 2026 performance, we are pleased to announce a 5.1% increase in our monthly dividend, beginning with the dividend payable April 15 to shareholders of record as of March 31. We expect our 2026 dividend to be well covered with an AFFO per share payout continuing to be about 70% based on the midpoint of guidance. Now with that, I'll turn it back over to Greg for his closing remarks.

Greg Silvers, Chairman and CEO

Thank you, Mark. 2025 was a very solid year as we delivered strong per share earnings and our portfolio delivered the resilience that we anticipated. In 2026, we expect to increase our investment spending materially over the levels we achieved in 2025, which should result in another year of strong per share earnings growth. As we begin the year, we are excited about our investment pipeline, our balance sheet, and the team to create value out of this combination. I would also like to take a minute to express my sincere appreciation to Greg Zimmerman, who is participating in his last earnings call as he is retiring from EPR. Greg provided leadership and a steady hand as we navigated COVID and then emerged on the other side. He is my business partner, colleague, and friend, and he will be missed. Ben Fox will now officially take over the role of Chief Investment Officer, and we are excited about his leadership and vision for our future. With that, why don't I open it up for questions? Jenny?

Operator, Operator

Our first question will come from Michael Goldsmith with UBS. Michael Goldsmith with UBS, you may ask your question.

Michael Goldsmith, Analyst

Consistent with last quarter, where you pointed to $400 million to $500 million in acquisitions, you put this out formally with your guidance. Can you just talk a little bit about what you're targeting, what you have line of sight in because it represents an acceleration? So just trying to get a sense of what you're looking at, what you have line of sight, and just your confidence level of hitting that $400 million to $500 million in acquisitions?

Greg Silvers, Chairman and CEO

We wouldn't discuss this if we didn't have confidence in it. Historically, we've not only met our targets but have also raised them throughout the year. We feel optimistic about our positioning at the beginning of the year and see opportunities across most, if not all, of our sectors. We believe we have unique access to the areas where we invest. Let Greg expand on this.

Greg Zimmerman, Executive Vice President and CIO

No, I agree, Greg. And I would also say that developing a pipeline is usually a multiyear process. So we've been building up to this with line of sight to the fact that we turn on investment spending this year. So again, as Greg mentioned, we're very confident about it, and that's why we're...

Michael Goldsmith, Analyst

Got it. And then second question, just Topgolf is one of your top tenants, and they've been taken private by private equity. Have you had conversations with Leonard Green and just trying to get an understanding of what they're going to do with the company now that they have their hands on it and just the path and your comfort level with your specific locations that you own?

Greg Silvers, Chairman and CEO

Yes, Michael, we’ve had several discussions with them. As you might expect, during their evaluation process and now afterward, we’re encouraged by what they’ve shared with us. They are aligned with our view that growth should slow to three to five units per year to meet the demographic and location criteria we agree upon. Our units continue to provide strong coverage, which we believe is crucial to their value proposition. They are likely to explore opportunities given their extensive background in multi-unit retail, including in the fitness and wellness sector. They are particularly focused on food and beverage and promotional opportunities. We’ve seen early benefits from these areas in the second half of last year, as Topgolf made strides that resulted in very positive numbers leading into the latter part of the year, especially in the fourth quarter.

Greg Zimmerman, Executive Vice President and CIO

I would also like to mention, Michael, that we are very pleased they will continue their refresh program, which greatly benefits us. They update several of our units every year with a nice refresh to keep them current.

Operator, Operator

Our next question will come from John Kilichowski with Wells Fargo. John Kilichowski with Wells Fargo, you may ask your question.

John Kilichowski, Analyst

My first question is just on where you see your cost of capital today. You're trading back close to a range where we were at the end of the third quarter. When does it start making sense to tap the ATM?

Greg Silvers, Chairman and CEO

Sure, John. Great question. I'll join in and I'll ask Mark. I think we probably see it now in the kind of upper 50s or low 60s at kind of low 7s, low mid-7s. I think that works. We can make that work. We're doing things in the low to mid-8s. So there's a 100 basis points of spread. I think it's important for us to let people know that we can execute that way and get back on that flywheel of issuing equity. As Mark talked about in his comments, we don't need to. And in fact, we'll still be not even near the midpoint of our leverage range doing the plan that we have executed. But what it does mean is maybe we can do more, maybe we could even further delever. I think it gives us a lot of options, and we are clearly entering the zone where it makes sense, but Mark?

Mark Peterson, Executive Vice President and CFO

I think, as Greg said, I think we'll be kind of opportunistic about it, particularly if we're headed to the higher end of spending, investment spending. As Greg said, I think as you get to the high 50s, low 60s, you're low to mid-7s type of cost of capital. And as Greg said, you get nearly 100 basis points out of the gate. And then, of course, on an IRR basis, it's quite a bit higher than that when you factor in our rent bumps. So I feel good about that and the opportunity that lies ahead.

John Kilichowski, Analyst

That was very helpful. And maybe just along the same lines, if we could do sort of a sensitivity analysis, let's say, if your cost of capital got 50 basis points better from here on a blended basis, where does that take maybe the high end of your investment guide, if this is a better buying opportunity here? I'm just curious how much more you think you could do if you just had a little bit of improvement on that cost of capital?

Greg Silvers, Chairman and CEO

Yes. We believe there are opportunities available, John. However, it's probably not as straightforward as a 50 basis point improvement. It really depends on the right opportunities regarding risk and reward. Overall, we are enthusiastic about the opportunities that lie ahead. There are still good prospects, and we are optimistic about them. We're also encouraged by the trend of our cost of equity. We hope this combination will allow us to continue to grow and expand our base. However, discussing a detailed sensitivity analysis at this moment may not be very productive for us.

Operator, Operator

Our next question will come from Smedes Rose with Citi Global Markets. Smedes Rose, you may ask your question.

Bennett Rose, Analyst

I was just wondering if you had any updates on what's going on in Sullivan County in terms of the ability to sell the ground lease that kind of came up a while ago? That would be my first question.

Greg Silvers, Chairman and CEO

Thanks, Smedes. I can say that we haven't had any significant discussions with them. This is really up to our operator on how they choose to move forward. It's not part of our plan. Our plan focuses on using our existing cash flow and previous decisions. But to put it simply, Smedes, no, we haven't had any substantial conversations with the operator.

Bennett Rose, Analyst

Okay. And then I was just wondering, when we look in a sort of theme park world, there seems to be, I guess, a certain amount of disruption going on and some new management changes. I'm just wondering, are they kind of showing up on your radar screen as a possible solution to some of the issues they might be facing?

Greg Silvers, Chairman and CEO

I think that's a very reasonable approach. If you consider the names being mentioned, we collaborate with many, if not all, of those entities. We believe that this business is quite stable and generates consistent cash flow over time. It requires a strategic and well-managed approach, but we are active in that space. Greg, would you like to add anything?

Greg Zimmerman, Executive Vice President and CIO

Well, I agree. And as we announced, we acquired something in the fourth quarter. So yes, we're enthusiastic about the attraction space.

Operator, Operator

Our next question comes from Anthony Paolone with JPMorgan. Anthony Paolone with JPMorgan, you may ask your question.

Anthony Paolone, Analyst

Just, Greg, going back to the opportunity set that you talked about, can you be a little bit more specific and maybe how much of it is development, redevelopment versus buying existing assets? And maybe kind of the range of cap rates and like what would take you into the 8s versus where you'd probably be maybe in the 7s if something is perhaps a bit higher quality or different?

Greg Silvers, Chairman and CEO

Sure. I think it's going to gear at least early part of this year, going to be more on the acquisition side. So I would say, and I'm looking at Greg and Ben, probably 70-30 acquisitions. Right now, I think, again, where you would look at, most of our stuff has been in the 8s, where you would look at something below that potentially would be a much lower advance rate. It's really going to be risk return or if you had a credit, you had a much, much higher credit scenario to where you would think lower 7s, but better growth profile. But I would say most of our stuff right now that we're looking at has at least an initial 8 handle on it.

Greg Zimmerman, Executive Vice President and CIO

And Tony, obviously, development deals are going to carry a higher cap rate because there's more risk adjusted, there's more risk. So that's kind of what we look at...

John Kilichowski, Analyst

Okay. Got it. And then my only other question, maybe for Mark, and just on the spending here. If I look at Page 19 of the supplemental, there's about $63 million of spending outlined there. Is that different than the $85 million that you guys talked about in the presentation? Or do you put those together?

Greg Silvers, Chairman and CEO

The $63 million is only related to those projects that have been started at the end of the year. So the difference between that and the $85 million is projects that haven't been started, but that we have commitments and line of sight to. So if you're looking at kind of spending sort of what's spoken for kind of heading into the year, $85 million is the number to use. And then if you add, for example, the Vital Climbing Gym that we did, we're sort of sitting at around $119 million right now and sort of spoken for spending. As Greg said, I think the amounts that we will add to get to the midpoint of guidance of $450 million will be mostly acquisition-oriented.

Operator, Operator

Our next question comes from Michael Carroll with RBC Capital Markets. Michael Carroll of RBC Capital Markets, you may ask your question.

Michael Carroll, Analyst

I guess, Mark, just sticking with the guidance ranges that you provided in the investment. With that remaining investments to get back up to that $450 million with guidance, when do you assume that gets completed? Is it just kind of ratably throughout the year? Or do you kind of have a back-end weighted? What's kind of implied in that guidance range?

Greg Silvers, Chairman and CEO

Yes, it's actually, frankly, weighted more towards the first half of the year, the way we see things kind of laying out.

Michael Carroll, Analyst

Okay. And then on the Regal percentage rents, what you put in guidance, what did you assume would be the box office, at least for the Regal lease year ended July 2026 versus the prior year? Is it kind of a similar box office, so we're expecting percentage rents for Regal to be kind of in line with what it was last year?

Greg Silvers, Chairman and CEO

No, I think it's slightly up, consistent with kind of analysts. But as you can see, it's probably kind of up 2% over where they were last year as our number is up slightly over there.

Greg Zimmerman, Executive Vice President and CIO

Yes. When we lay out that percentage rent slide, you can see once you cut through the prior period and so forth, you get to about $1 million of net growth amongst all our tenants, and a good chunk of that is Regal because we do expect box office to be higher next year. And again, Mike, the Regal lease year ends in July. So you're not going to have the advantage of the fall season.

Michael Carroll, Analyst

Yes. And then just last one for me. I know, Greg, you mentioned and talked a little bit about the investment opportunities you have across all your property types. I mean, are there any specific property types where you're seeing bigger opportunities or other types of activity that you could pursue?

Greg Silvers, Chairman and CEO

I think as we've talked about, we've hit several things. I would say the top three continue to be fitness and wellness, attractions, and Eat & Play. Again, when you look at those, we're still seeing an occasional opportunity in gaming, but not as much. Ski is more opportunistic. So those other three, I think, are going to be where the anchor part of what our investment is going to come from.

Greg Zimmerman, Executive Vice President and CIO

Mike, when we refer to fitness and wellness, it's a very expansive category for us. We've engaged in several golf deals, a climbing gym deal this quarter, a regular fitness deal last quarter, and also some hot springs deals. We see a significant opportunity to broaden our reach in that area.

Operator, Operator

Our next question comes from Upal Rana with KeyBanc Capital Markets. Upal Rana with KeyBanc Capital Markets, you may ask your question.

Upal Rana, Analyst

Just curious on how the transaction market looks like in terms of larger deals. Are you seeing more or less out there?

Greg Silvers, Chairman and CEO

I think we are beginning to see an increased ability to participate in larger deals, which is beneficial for us. Looking at our performance, we have achieved over 5% earnings growth for two consecutive years, indicating a return to our normal trajectory of generating significant value for our shareholders. With the potential to generate substantial proceeds from asset sales or our upcoming ability to issue equity through our ATM program, we will be better positioned to engage in these deals, further driving our growth. We achieved 5% growth last year, and we are on track to achieve the same this year, aiming to return to the growth levels we experienced prior to COVID.

Upal Rana, Analyst

Great. That was helpful. And then it looks like negotiations start to begin to start up again on SAG-AFTRA with the contracts that were negotiated in '23, expiring in May for writers and in tune for the actors. So the environment is certainly much different today than it was three years ago. So I just wanted to get your take on those negotiations and how that could play out?

Greg Silvers, Chairman and CEO

It's still quite early, but I agree with you. The focus will remain on AI and the capabilities it brings, and they have established a solid framework to address that. Everyone is aware of the negative impact a strike can have on the market. Similar to other sectors like baseball, there is a concerted effort to avoid strikes due to their long-lasting consequences, and there is a general consensus on the importance of preventing that scenario.

Operator, Operator

Our last question comes from Jana Galan with Bank of America Merrill Lynch.

Jana Galan, Analyst

I know this is a much smaller part of your portfolio, but curious if you could just provide an update on the education portfolio and kind of any changing trends there between early childhood and the private school.

Greg Silvers, Chairman and CEO

Again, I think if anything, the strength of that portfolio has continued to be demonstrated over the last several years. I think one area that as we think about dispositions this year, maybe an area that we start to think about. I mean last year was all about cleaning up the theater portfolio and getting through that. I think the strength of that will allow us to capture good value if we want to do that and could be another lever that we pull to accelerate growth.

Jana Galan, Analyst

Great. And also wanted to congratulate Greg.

Operator, Operator

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

Greg Silvers, Chairman and CEO

I just want to thank you all. As we said, we're excited about the year. I look forward to talking through the year and look forward to delivering on the guidance that we've set forth. Thanks, everyone. Thank you.