EPR Properties Reports Second Quarter Results
EPR Properties Reports Second Quarter Results
KANSAS CITY, Mo.--(BUSINESS WIRE)-- EPR Properties (NYS: EPR) today announced operating results for the second quarter and six months ended June 30, 2013.
Three Months Ended June 30, 2013
Total revenue was $83.6 million for the second quarter of 2013, representing a 7% increase from $78.0 million for the same quarter in 2012.
Net income available to common shareholders was $26.5 million, or $0.56 per diluted common share, for the second quarter of 2013 compared to $30.8 million, or $0.65 per diluted common share, for the same quarter in 2012.
Funds From Operations (FFO) for the second quarter of 2013 was $40.2 million, or $0.85 per diluted common share, compared to $43.1 million, or $0.92 per diluted common share, for the same quarter in 2012. The second quarter of 2013 includes $5.9 million of costs associated with loan refinancing.
FFO as adjusted for the second quarter of 2013 was $46.4 million, or $0.98 per diluted common share, compared to $43.2 million, or $0.92 per diluted common share, for the same quarter in 2012, an increase of 7% per share.
Six Months Ended June 30, 2013
Total revenue was $166.9 million for the six months ended June 30, 2013, representing an 8% increase from $154.8 million for the same period in 2012.
Net income available to common shareholders was $61.8 million, or $1.31 per diluted common share, for the six months ended June 30, 2013, compared to $46.2 million, or $0.98 per diluted common share, for the same period in 2012.
FFO for the six months ended June 30, 2013 was $88.5 million, or $1.88 per diluted common share, compared to $83.4 million, or $1.77 per diluted common share, for the same period in 2012.
FFO as adjusted for the six months ended June 30, 2013 was $90.4 million, or $1.92 per diluted common share, compared to $83.6 million, or $1.78 per diluted common share, for the same period in 2012, an increase of 8% per share.
David Brain, President and CEO, commented, "Our strong second quarter results reflect continuing momentum for EPR Properties as we continue to increase revenues on a growing base of high quality assets. This quarter, we expanded our portfolio in all three of our primary segments while strengthening our balance sheet and lowering our cost of capital as a result of recent financing activities. Given the extensive groundwork for growth laid in the first half of the year, I am pleased to report that we are increasing our earnings guidance for the remainder of the year."
A reconciliation of FFO to FFO as adjusted follows (unaudited, dollars in thousands, except per share amounts):
Three Months Ended June 30, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Amount | FFO/share | Amount | FFO/share | ||||||||||||||||||
FFO | $ | 40,184 | $ | 0.85 | $ | 43,138 | $ | 0.92 | |||||||||||||
Costs associated with loan refinancing or payoff | 5,943 | 0.13 | — | — | |||||||||||||||||
Transaction costs | 224 | — | 31 | — | |||||||||||||||||
FFO as adjusted | $ | 46,351 | $ | 0.98 | $ | 43,169 | $ | 0.92 | |||||||||||||
Dividends declared per common share | $ | 0.79 | $ | 0.75 | |||||||||||||||||
FFO as adjusted payout ratio | 81 | % | 82 | % | |||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Amount | FFO/share | Amount | FFO/share | ||||||||||||||||||
FFO | $ | 88,499 | $ | 1.88 | $ | 83,409 | $ | 1.77 | |||||||||||||
Costs associated with loan refinancing or payoff | 5,943 | 0.13 | — | — | |||||||||||||||||
Transaction costs | 542 | 0.01 | 189 | 0.01 | |||||||||||||||||
Gain on early extinguishment of debt | (4,539 | ) | (0.10 | ) | — | — | |||||||||||||||
FFO as adjusted | $ | 90,445 | $ | 1.92 | $ | 83,598 | $ | 1.78 | |||||||||||||
Dividends declared per common share | $ | 1.58 | $ | 1.50 | |||||||||||||||||
FFO as adjusted payout ratio | 82 | % | 84 | % | |||||||||||||||||
Portfolio Update
As of June 30, 2013, the Company's portfolio of owned entertainment properties consisted of 10.7 million square feet and was 99% leased, including 114 megaplex theatres that were 100% leased. The Company's portfolio of owned education properties consisted of 2.5 million square feet, including 41 public charter schools, and was 100% leased. The Company's portfolio of owned recreation properties was 100% leased. The Company's overall owned portfolio consisted of 13.9 million square feet and was 98% leased. Additionally, the Company had $77.5 million in property under development and $199.0 million in land held for development.
As of June 30, 2013, the Company's real estate mortgage loan portfolio had a carrying value of $482.3 million and included financing provided for three entertainment properties, seven education properties and 15 recreation properties.
Investment Update
The Company's investment spending in the second quarter of 2013 totaled approximately $84.0 million (bringing the year-to-date investment spending to $122.7 million), and included investments in each of its four operating segments.
Entertainment investment spending in the second quarter of 2013 totaled $20.0 million, and related primarily to investments in build-to-suit construction of six megaplex theatres and one family entertainment center that are subject to long-term triple net leases or long-term mortgage agreements.
Education investment spending in the second quarter of 2013 totaled $45.4 million, and related to investments in build-to-suit construction of 13 public charter schools and one early childhood education center as well as the acquisition of an early childhood education center located in Peoria, Arizona and a public charter school located in Columbia, South Carolina, all of which are subject to long-term triple net leases or long-term mortgage agreements.
Recreation investment spending in the second quarter of 2013 totaled $17.4 million, and related to fundings under the Company's mortgage notes for improvements at existing ski and waterpark properties. In addition, the Company's recreation investment spending related to build-to-suit construction of three TopGolf golf entertainment facilities as well as funding improvements at the Company's ski property located in Maryland.
Other investment spending in the second quarter of 2013 totaled $1.2 million and related to the land held for development in Sullivan County, New York.
Balance Sheet Update
The Company's balance sheet remains strong with a debt to gross assets ratio (defined as total long-term debt to total assets plus accumulated depreciation) of 43% at June 30, 2013. The Company had $20.0 million of unrestricted cash on hand and $24.0 million of debt outstanding under its unsecured revolving credit facility at June 30, 2013.
On June 18, 2013, the Company issued $275.0 million in senior unsecured notes due on July 15, 2023. The notes bear interest at a rate of 5.25% and are guaranteed by certain of the Company's subsidiaries. The Company used the proceeds from the note offering to (a) repay $89.5 million CAD ($87.9 million US) of outstanding fixed rate mortgage debt secured by four entertainment retail centers located in Ontario, Canada, (b) repay $56.4 million of outstanding fixed rate mortgage debt secured by the Company's entertainment retail center located in New Rochelle, New York and (c) partially pay down its unsecured revolving credit facility. In connection with the repayment in full of the mortgage notes, $239 thousand of net deferred financing costs were written off and $5.7 million of additional costs associated with loan payoff were incurred.
Subsequent to June 30, 2013, the Company amended and restated both its $400.0 million unsecured revolving credit facility as well as its $255.0 million unsecured term loan facility.
The amendments to the unsecured revolving credit facility included (a) increasing the initial amount by $40.0 million from $400.0 million to $440.0 million and increasing the accordion from $100.0 million to $160.0 million, (b) extending the maturity date from October 13, 2015, to July 23, 2017 (with the Company having the same right as before to extend the loan for one additional year) and (c) lowering the interest rate and facility fee pricing.
The amendments to the unsecured term loan facility included (a) increasing the initial amount by $10.0 million from $255.0 million to $265.0 million and increasing the accordion so that the maximum amount available under the facility goes from $350.0 million to $400.0 million, (b) extending the maturity date from January 5, 2017, to July 23, 2018, and (c) lowering the interest rate in all but the lowest rating agencies' ratings categories.
Dividend Information
The Company declared regular monthly cash dividends during the second quarter totaling $0.79 per common share. The Company also declared and paid second quarter cash dividends of $0.359375 per share on its 5.75% Series C cumulative convertible preferred shares, $0.5625 per share on its 9.00% Series E cumulative convertible preferred shares and $0.4140625 per share on its 6.625% Series F cumulative redeemable preferred shares.
Guidance Update
The Company is increasing its range for FFO as adjusted per share to $3.83 to $3.93 from $3.79 to $3.94 and is maintaining its previously announced 2013 guidance for investment spending of $300.0 million to $350.0 million.
In addition to the $122.7 million in investment spending through the second quarter, 2013 investment spending guidance includes approximately $125.0 million of additional expected investment spending over the balance of the year related to projects already in process and approximately $70.0 million of additional investment spending related to projects that have been approved but had not yet closed at June 30, 2013. Beyond these expected investments, the Company continues to maintain a significant investment pipeline.
Quarterly Supplemental
The Company's supplemental information package for the second quarter and six months ended June 30, 2013 is available on the Company's website at http://eprkc.com/earnings-releases-supplemental.
EPR Properties Consolidated Statements of Income (Unaudited, dollars in thousands except per share data) | ||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
Rental revenue | $ | 60,765 | $ | 58,305 | $ | 121,552 | $ | 115,563 | ||||||||||||
Tenant reimbursements | 4,452 | 4,365 | 9,196 | 9,186 | ||||||||||||||||
Other income | 104 | 107 | 128 | 133 | ||||||||||||||||
Mortgage and other financing income | 18,236 | 15,212 | 36,031 | 29,885 | ||||||||||||||||
Total revenue | 83,557 | 77,989 | 166,907 | 154,767 | ||||||||||||||||
Property operating expense | 5,990 | 5,687 | 12,995 | 12,061 | ||||||||||||||||
Other expense | 243 | 339 | 437 | 689 | ||||||||||||||||
General and administrative expense | 6,051 | 5,821 | 12,703 | 12,288 | ||||||||||||||||
Costs associated with loan refinancing or payoff | 5,943 | — | 5,943 | — | ||||||||||||||||
Gain on early extinguishment of debt | — | — | (4,539 | ) | — | |||||||||||||||
Interest expense, net | 20,000 | 18,459 | 39,989 | 36,600 | ||||||||||||||||
Transaction costs | 224 | 31 | 542 | 189 | ||||||||||||||||
Impairment charges | — | — | — | 3,998 | ||||||||||||||||
Depreciation and amortization | 13,776 | 12,069 | 27,214 | 23,808 | ||||||||||||||||
Income before equity in income | 31,330 | 35,583 | 71,623 | 65,134 | ||||||||||||||||
Equity in income from joint ventures | 466 | 278 | 817 | 324 | ||||||||||||||||
Income from continuing operations | $ | 31,796 | $ | 35,861 | $ | 72,440 | $ | 65,458 | ||||||||||||
Discontinued operations: | ||||||||||||||||||||
Income from discontinued operations | 680 | 519 | 677 | 875 | ||||||||||||||||
Impairment charges | — | — | — | (8,845 | ) | |||||||||||||||
Gain on sale or acquisition of real estate | — | 438 | 565 | 720 | ||||||||||||||||
Net income | 32,476 | 36,818 | 73,682 | 58,208 | ||||||||||||||||
Net income attributable to noncontrolling interests | — | (19 | ) | — | (37 | ) | ||||||||||||||
Net income attributable to EPR Properties | 32,476 | 36,799 | 73,682 | 58,171 | ||||||||||||||||
Preferred dividend requirements | (5,952 | ) | (6,002 | ) | (11,904 | ) | (12,003 | ) | ||||||||||||
Net income available to common shareholders of EPR Properties | $ | 26,524 | $ | 30,797 | $ | 61,778 | $ | 46,168 | ||||||||||||
Per share data attributable to EPR Properties common shareholders: | ||||||||||||||||||||
Basic earnings per share data: | ||||||||||||||||||||
Income from continuing operations | $ | 0.55 | $ | 0.64 | $ | 1.29 | $ | 1.14 | ||||||||||||
Income (loss) from discontinued operations | 0.01 | 0.02 | 0.03 | (0.15 | ) | |||||||||||||||
Net income available to common shareholders | $ | 0.56 | $ | 0.66 | $ | 1.32 | $ | 0.99 | ||||||||||||
Diluted earnings per share data: | ||||||||||||||||||||
Income from continuing operations | $ | 0.55 | $ | 0.63 | $ | 1.28 | $ | 1.13 | ||||||||||||
Income (loss) from discontinued operations | 0.01 | 0.02 | 0.03 | (0.15 | ) | |||||||||||||||
Net income available to common shareholders | $ | 0.56 | $ | 0.65 | $ | 1.31 | $ | 0.98 | ||||||||||||
Shares used for computation (in thousands): | ||||||||||||||||||||
Basic | 47,081 | 46,826 | 46,969 | 46,751 | ||||||||||||||||
Diluted | 47,294 | 47,068 | 47,172 | 47,006 | ||||||||||||||||
EPR Properties Reconciliation of Net Income Available to Common Shareholders to Funds From Operations (FFO) (A) (Unaudited, dollars in thousands except per share data) | ||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
FFO: | ||||||||||||||||||||
Net income available to common shareholders of EPR Properties | $ | 26,524 | $ | 30,797 | $ | 61,778 | $ | 46,168 | ||||||||||||
Gain on sale or acquisition of property | ||||||||||||||||||||
