EPR Properties (EPR) Nareit REIT Week: 2024 Investor Conference summary

Business performance and portfolio trends

• Rent coverage for theaters has returned to 2019 levels, while non-theater assets are 30% ahead of 2019, reflecting strong consumer demand for experiential properties.

• Experiential assets, including theaters, ski resorts, and attractions, have historically performed well even during recessions due to consumer preference for affordable escapism and staycations.

• The portfolio benefits from support by both Baby Boomers and Millennials, the two largest demographic groups.

• The company is highly selective in acquisitions, focusing on durable assets with long-term leases and strong underwriting.

• Relationship-based investments and servicing existing clients, such as Andretti Karting, are prioritized for future growth.

Movie theater segment insights

• Theaters account for nearly 40% of EBITDA, with 3% of U.S. screens generating 8% of the national box office.

• Food and beverage spend per patron has risen from $4.50 pre-COVID to $7.75, driven by alcohol sales, boosting margins.

• Major operators have improved balance sheets post-COVID, with restructured leases and higher productivity.

• Box office is expected to rebound to $9.5–$10 billion next year, with percentage rent components in some leases allowing participation in growth.

• Plans to reduce theater exposure include selective asset sales as market conditions improve, aiming for greater portfolio diversity.

Eat & play and alternative concepts

• Eat & play is the second largest segment, with average spend in the low $40s per person and strong same-store growth at Topgolf.

• New concepts include Goodsurf (surf park), bowling (Bowlero, Pinstripes), and climbing gyms, with a focus on activities that foster social interaction.

• The company avoids concepts with low barriers to entry, such as pickleball, favoring those with proven durability and efficient space utilization.