EPR Properties Reports Third Quarter Results

  EPR Properties Reports Third Quarter Results

       Company Increases Investment Spending and FFO Guidance for 2013
                         Introduces Guidance for 2014

Business Wire

KANSAS CITY, Mo. -- November 5, 2013

EPR Properties (NYSE:EPR) today announced operating results for the third
quarter and the nine months ended September 30, 2013.

                    Three Months Ended September 30, 2013

  *Total revenue was $87.8 million for the third quarter of 2013,
    representing an 8% increase from $81.5 million for the same quarter in
    2012.
  *Net income available to common shareholders was $37.6 million, or $0.79
    per diluted common share, for the third quarter of 2013 compared to $28.1
    million, or $0.60 per diluted common share, for the same quarter in 2012.
  *Funds From Operations (FFO) for the third quarter of 2013 was $47.6
    million, or $1.00 per diluted common share, compared to $44.4 million, or
    $0.94 per diluted common share, for the same quarter in 2012.
  *FFO as adjusted for the third quarter of 2013 was $48.2 million, or $1.01
    per diluted common share, compared to $45.1 million, or $0.96 per diluted
    common share, for the same quarter in 2012, an increase of 6% per share.

                     Nine Months Ended September 30, 2013

  *Total revenue was $253.7 million for the nine months ended September 30,
    2013, representing an 8% increase from $235.4 million for the same period
    in 2012.
  *Net income available to common shareholders was $99.3 million, or $2.10
    per diluted common share, for the nine months ended September 30, 2013,
    compared to $74.3 million, or $1.58 per diluted common share, for the same
    period in 2012.
  *FFO for the nine months ended September 30, 2013 was $136.1 million, or
    $2.88 per diluted common share, compared to $127.8 million, or $2.72 per
    diluted common share, for the same period in 2012.
  *FFO as adjusted for the nine months ended September 30, 2013 was $138.6
    million, or $2.93 per diluted common share, compared to $128.7 million, or
    $2.74 per diluted common share, for the same period in 2012, an increase
    of 7% per share.

David Brain, President and CEO, commented, “Our strong performance and updated
guidance continue to validate our primary investment segments, along with
demonstrating the quality of our portfolio and significant potential for
future growth. We also remain diligent in our balance sheet management, making
a number of enhancements to our credit facility and term loan, while raising
approximately $215 million in equity during and subsequent to quarter end. We
expect a continued robust performance in 2014, as we are anticipating an
approximate 25% increase in our investment spending.”

A reconciliation of FFO to FFO as adjusted follows (unaudited, dollars in
thousands, except per share amounts):

                    Three Months Ended September 30,
                       2013                        2012
                       Amount        FFO/share     Amount        FFO/share
                                                                     
FFO                    $ 47,616        $  1.00       $ 44,394        $  0.94
  Costs associated
  with loan            223             —             477             0.01
  refinancing or
  payoff
  Transaction          317            0.01         184            0.01    
  costs
FFO as adjusted        $ 48,156       $  1.01      $ 45,055       $  0.96 
                                                                     
Dividends declared                     $  0.79                       $  0.75
per common share
FFO as adjusted                        78      %                     78      %
payout ratio
                       
                       Nine Months Ended September 30,
                       2013                          2012
                       Amount          FFO/share     Amount          FFO/share
                                                                     
FFO                    $ 136,114       $  2.88       $ 127,802       $  2.72
  Costs associated
  with loan            6,166           0.13          477             0.01
  refinancing or
  payoff
  Transaction          859             0.02          373             0.01
  costs
  Gain on early
  extinguishment       (4,539    )     (0.10   )     —              —       
  of debt
FFO as adjusted        $ 138,600      $  2.93      $ 128,652      $  2.74 
                                                                     
Dividends declared                     $  2.37                       $  2.25
per common share
FFO as adjusted                        81      %                     82      %
payout ratio
                                                                             

Portfolio Update

As of September 30, 2013, the Company's portfolio of owned entertainment
properties consisted of 10.9 million square feet and was 99% leased, including
118 megaplex theatres that were 100% leased. The Company's portfolio of owned
education properties consisted of 2.9 million square feet, including 47 public
charter schools and one early education center, and was 100% leased. The
Company's portfolio of owned recreation properties was 100% leased. The
Company's overall owned portfolio consisted of 14.2million square feet and
was 99% leased. Additionally, the Company had $86.0 million in property under
development and $200.3 million in land held for development.

As of September 30, 2013, the Company's real estate mortgage loan portfolio
had a carrying value of $514.1 million and included financing provided for
four entertainment properties, seven education properties and 15 recreation
properties.

Investment Update

The Company's investment spending in the third quarter of 2013 totaled
approximately $130.1 million (bringing the year-to-date investment spending to
$252.8 million), and included investments in each of its four operating
segments.

Entertainment investment spending in the third quarter of 2013 totaled $55.7
million, and related to investments in build-to-suit construction of eight
megaplex theatres that are subject to long-term triple net leases. In
addition, the Company's entertainment investment spending for the third
quarter included the acquisition of three megaplex theatres located in
Louisiana and Alabama, which are leased under long-term triple-net lease
agreements.

Education investment spending in the third quarter of 2013 totaled $55.6
million, and related to investments in build-to-suit construction of 15 public
charter schools and five early childhood education centers, all of which are
subject to long-term triple net leases or long-term mortgage agreements.

Recreation investment spending in the third quarter of 2013 totaled $17.5
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 for the third quarter included the
build-to-suit construction of six TopGolf golf entertainment facilities as
well as funding improvements at the Company's ski property located in
Maryland.

Other investment spending in the third quarter of 2013 totaled $1.3 million
and related to the land held for development in Sullivan County, New York.

Subsequent to the end of the quarter, the Company completed the acquisition of
the Camelback Mountain Resort located in Tannersville, Pennsylvania for a
purchase price of $69.3 million. The investment consists of an acquisition of
160 acres of skiable terrain with a 30-acre outdoor waterpark and adventure
park, 40-lane tubing hill, base lodge, parking, ancillary buildings and land.
The Camelback Mountain Resort is located approximately 90 miles outside of New
York City in the popular Poconos Mountain region. The property is leased to
the operator pursuant to a triple net lease with a 20-year term.

In addition, the Company has provided a commitment to finance the construction
of a 453 room Wilderness Lodge hotel, with an attached 125,000 square foot
indoor waterpark, to be located at the base of the mountain. The total project
cost for the indoor waterpark hotel is estimated to be approximately $155.0
million, of which the Company will provide up to $110.7 million or
approximately 70% of total estimated project costs. Upon completion of the
indoor waterpark hotel, it is expected that this investment will be
incorporated into the triple net lease of the ski property described above,
which will then have an initial term of 20 years from the completion date.

Progress on Vineyard and Winery Sales

The Company continues to make progress toward selling its remaining vineyard
and winery investments. During the third quarter, the Company sold three
vineyard and winery properties for net proceeds of $22.3 million and a net
gain of $3.2 million was recognized.

Dismissal of Litigation

On September 18, 2013, the United States District Court for the Southern
District of New York dismissed the $1.5 billion antitrust suit filed by
affiliates of Louis Cappelli against the Company and certain of its
subsidiaries, Empire Resorts, Inc. and Monticello Raceway Management, Inc.
(collectively, “Empire”), and Kien Huat Realty III Limited and Genting New
York LLC (collectively, “Genting”). The complaint alleged, among other things,
that the Company and its subsidiaries had conspired with Empire to monopolize
the racing and gaming market in the Catskills by entering into exclusivity and
development agreements to develop a comprehensive resort destination in
Sullivan County, New York. The plaintiffs are seeking $500 million in damages
(trebled to $1.5 billion under antitrust law), punitive damages, and
injunctive relief. The District Court dismissed plaintiffs’ federal antitrust
claims against all defendants with prejudice, and dismissed the pendent state
law claims against Empire and Genting without prejudice, meaning they could be
further pursued in state court. The plaintiffs have filed a motion for
reconsideration with the District Court, seeking permission to file a Second
Amended Complaint, and also have filed a Notice of Appeal.

On October 2, 2013, the New York Supreme Court in Sullivan County denied in
its entirety the Article 78 petition (the “Petition”) filed by Concord
Associates, L.P., an entity controlled by Louis Cappelli. The Petition
challenged the actions taken by the Town of Thompson, New York and its Town
Board and Planning Board regarding the Concord Project. The Plaintiff has
filed a Notice of Appeal.

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 44% at September 30, 2013. The Company had $24.1 million of
unrestricted cash on hand and $68.0 million of debt outstanding under its
unsecured revolving credit facility at September 30, 2013.

As previously announced, on July 23, 2013, the Company amended and restated
both its unsecured revolving credit facility as well as its unsecured term
loan facility. Additionally, subsequent to these amendments, the Company
exercised a portion of the accordion under its new unsecured revolving credit
facility to increase the initial borrowing amount available under the facility
to $475.0 million.

During the third quarter, the Company issued an aggregate of 784,978 common
shares under its Dividend Reinvestment and Direct Share Purchase Plan (the
Plan) for total net proceeds of $38.5 million. Subsequent to quarter end, the
Company issued an additional 61,289 shares under the Plan for total net
proceeds for $2.9 million.

On October 23, 2013, the Company issued 3.6 million common shares in a
registered public offering. Total net proceeds, after the underwriting
discount and offering expenses, were approximately $174.0 million.

Dividend Information

The Company declared regular monthly cash dividends during the third quarter
totaling $0.79 per common share. The Company also declared and paid third
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 2013 guidance for FFO as adjusted per share to a
range of $3.87 to $3.93 from a range of $3.83 to $3.93. In addition, the
Company is increasing its 2013 investment spending guidance to a range of $400
million to $425 million from a range of $300 million to $350 million.

The Company is also introducing its 2014 guidance for FFO as adjusted per
diluted share of $4.12 to $4.22. In addition, the Company is introducing 2014
investment spending guidance in a range of $500 million to $550 million.

Quarterly Supplemental

The Company's supplemental information package for the third quarter and nine
months ended September 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           Nine Months Ended September
                    September 30,                  30,
                    2013          2012           2013          2012
Rental revenue      $  62,209       $ 59,755       $ 182,758       $ 174,364
Tenant              4,552           4,608          13,748          13,794
reimbursements
Other income        1,441           203            1,538           336
Mortgage and
other financing     19,639         16,976        55,670         46,861    
income
Total revenue       87,841          81,542         253,714         235,355
Property
operating           6,579           5,939          19,604          17,999
expense
Other expense       204             455            508             1,049
General and
administrative      6,764           5,486          19,468          17,774
expense
Costs
associated with
loan                223             477            6,166           477
refinancing or
payoff
Gain on early
extinguishment      —               —              (4,539    )     —
of debt
Interest            20,435          19,994         60,424          56,594
expense, net
Transaction         317             184            859             373
costs
Impairment          —               —              —               1,914
charges
Depreciation
and                 13,141         11,733        39,140         34,497    
amortization
Income before
equity in
income from
joint ventures      40,178          37,274         112,084         104,678
and
discontinued
operations
Equity in
income from         351            342           1,168          666       
joint ventures
Income from
continuing          $  40,529       $ 37,616       $ 113,252       $ 105,344
operations
Discontinued
operations:
Income (loss)
from                (195      )     (355     )     198             334
discontinued
operations
Impairment          —               (3,086   )     —               (14,015   )
charges
Gain on sale or
acquisition of      3,168          —             3,733          720       
real estate
Net income          43,502          34,175         117,183         92,383
Net income
attributable to     —              (24      )     —              (61       )
noncontrolling
interests
Net income
attributable to     43,502          34,151         117,183         92,322
EPR Properties
Preferred
dividend            (5,951    )     (6,002   )     (17,855   )     (18,005   )
requirements
Net income
available to
common              $  37,551      $ 28,149      $ 99,328       $ 74,317  
shareholders of
EPR Properties
Per share data
attributable to
EPR Properties
common
shareholders:
Basic earnings
per share data:
Income from
continuing          $  0.73         $ 0.67         $ 2.03          $ 1.87
operations
Income (loss)
from                0.06           (0.07    )     0.08           (0.28     )
discontinued
operations
Net income
available to        $  0.79        $ 0.60        $ 2.11         $ 1.59    
common
shareholders
Diluted
earnings per
share data:
Income from
continuing          $  0.73         $ 0.67         $ 2.02          $ 1.86
operations
Income (loss)
from                0.06           (0.07    )     0.08           (0.28     )
discontinued
operations
Net income
available to        $  0.79        $ 0.60        $ 2.10         $ 1.58    
common
shareholders
Shares used for
computation (in
thousands):
Basic               47,349          46,840         47,097          46,781
Diluted             47,524          47,090         47,290          47,035
                                                                             

                                              
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            Nine Months Ended September
                    September 30,                  30,
                    2013          2012           2013          2012
FFO:
Net income
available to
common              $  37,551       $ 28,149       $ 99,328        $ 74,317
shareholders of
EPR Properties
Gain on sale or
acquisition of      (3,168    )     —              (3,733    )     (720      )
property
Real estate
depreciation        13,069          13,013         40,036          37,844
and
amortization
Allocated share
of joint            164             146            483             432
venture
depreciation
Impairment          —              3,086         —              15,929    
charges
FFO available
to common           $  47,616      $ 44,394      $ 136,114      $ 127,802 
shareholders of
EPR Properties
                                                                   
FFO per common
share
attributable to
EPR Properties:
Basic               $  1.01         $ 0.95         $ 2.89          $ 2.73
Diluted             1.00            0.94           2.88            2.72
Shares used for
computation (in
thousands):
Basic               47,349          46,840         47,097          46,781
Diluted             47,524          47,090         47,290          47,035
Other financial
information:
Straight-lined      $  1,350        $ 2,042        $ 3,271         $ 3,705
rental revenue
Dividends per       $  0.79         $ 0.75         $ 2.37          $ 2.25
common share
                                                                             

      The National Association of Real Estate Investment Trusts (“NAREIT”)
      developed FFO as a relative non-GAAP financial measure of performance of
      an equity REIT in order to recognize that income-producing real estate
      historically has not depreciated on the basis determined under GAAP and
      management provides FFO herein because it believes this information is
      useful to investors in this regard. FFO is a widely used measure of the
      operating performance of real estate companies and is provided here as a
      supplemental measure to GAAP net income available to common shareholders
      and earnings per share. Pursuant to the definition of FFO by the Board
      of Governors of NAREIT, we calculate FFO as net income available to
      common shareholders, computed in accordance with GAAP, excluding gains
      and losses from sales or acquisitions of depreciable operating
      properties and impairment losses of depreciable real estate, plus real
      estate related depreciation and amortization, and after adjustments for
      unconsolidated partnerships, joint ventures and other affiliates.
      Adjustments for unconsolidated partnerships, joint ventures and other
      affiliates are calculated to reflect FFO on the same basis. We have
      calculated FFO for all periods presented in accordance with this
(A)  definition. FFO is a non-GAAP financial measure. FFO does not represent
      cash flows from operations as defined by GAAP and is not indicative that
      cash flows are adequate to fund all cash needs and is not to be
      considered an alternative to net income or any other GAAP measure as a
      measurement of the results of our operations or our cash flows or
      liquidity as defined by GAAP. It should also be noted that not all REITs
      calculate FFO the same way so comparisons with other REITs may not be
      meaningful. In addition to FFO, we present FFO as adjusted. Management
      believes it is useful to provide it here as a supplemental measure to
      GAAP net income available to common shareholders and earnings per share.
      FFO as adjusted is FFO plus charges for loan losses, costs (gain)
      associated with loan refinancing or payoff, net, preferred share
      redemption costs and transaction costs, less gain on early
      extinguishment of debt. FFO as adjusted is a non-GAAP financial measure.
      FFO as adjusted does not represent cash flows from operations as defined
      by GAAP and is not indicative that cash flows are adequate to fund all
      cash needs and is not to be considered an alternative to net income or
      any other GAAP measure as a measurement of the results of the Company's
      operations, cash flows or liquidity as defined by GAAP.

The additional 1.9 million common shares that would result from the conversion
of the Company's 5.75% Series C cumulative convertible preferred shares and
the additional 1.6 million common shares that would result from the conversion
of the Company's 9.00% Series E cumulative convertible preferred shares and
the corresponding add-back of the preferred dividends declared on those shares
are not included in the calculation of diluted earnings per share and FFO per
share for the three and nine months ended September 30, 2013 and 2012 because
the effect is not-dilutive.

                                                        
EPR Properties

Condensed Consolidated Balance Sheets

(Dollars in thousands)
                                                             
                                      September 30, 2013     December 31, 2012
Assets                                (unaudited)
Rental properties, net of
accumulated depreciation of
$398,037 and                          $   1,933,782          $    1,885,093
$375,684 at September 30, 2013
and December 31, 2012,
respectively
Rental properties held for sale,      2,788                  2,788
net
Land held for development             200,325                196,177
Property under development            86,048                 29,376
Mortgage notes and related            514,071                455,752
accrued interest receivable
Investment in a direct financing      240,990                234,089
lease, net
Investment in joint ventures          13,683                 11,971
Cash and cash equivalents             24,141                 10,664
Restricted cash                       18,110                 23,991
Deferred financing costs, net         24,318                 19,679
Accounts receivable, net              40,326                 38,738
Other assets                          36,691                38,412
Total assets                          $   3,135,273         $    2,946,730
Liabilities and Equity
Accounts payable and accrued          $   58,273             $    65,481
liabilities
Dividends payable                     18,587                 41,186
Unearned rents and interest           18,979                 11,333
Long-term debt                        1,545,973             1,368,832
Total liabilities                     1,641,812              1,486,832
EPR Properties shareholders’          1,493,084              1,459,521
equity
Noncontrolling interests              377                   377
Total equity                          1,493,461             1,459,898
Total liabilities and equity          $   3,135,273         $    2,946,730
                                                                  

About EPR Properties

EPR Properties is a specialty real estate investment trust (REIT) that invests
in properties in select market segments which require unique industry
knowledge, while offering the potential for stable and attractive returns. Our
total investments exceed $3.4 billion and our primary investment segments are
Entertainment, Recreation and Education. We adhere to rigorous underwriting
and investing criteria centered on key industry and property level cash flow
standards. We believe our focused niche approach provides a competitive
advantage, and the potential for higher growth and better yields. Further
information is available at www.eprkc.com.

          CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

With the exception of historical information, certain statements contained or
incorporated by reference herein may contain forward-looking statements within
the meaning of Section27A of the Securities Act of 1933, as amended (the
“Securities Act”), and Section21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), such as those pertaining to our acquisition or
disposition of properties, our capital resources, future expenditures for
development projects, and our results of operations and financial condition.
Forward-looking statements involve numerous risks and uncertainties and you
should not rely on them as predictions of actual events. There is no assurance
the events or circumstances reflected in the forward-looking statements will
occur. You can identify forward-looking statements by use of words such as
“will be,” “intend,” “continue,” “believe,” “may,” “expect,” “hope,”
“anticipate,” “goal,” “forecast,” “pipeline,” “anticipates,” “estimates,”
“offers,” “plans,” “would” or other similar expressions or other comparable
terms or discussions of strategy, plans or intentions contained or
incorporated by reference herein. While references to commitments for
investment spending are based on present commitments and agreements of the
Company, we cannot provide assurance that these transactions will be completed
on satisfactory terms. In addition, references to our budgeted amounts and
guidance are forward-looking statements. Forward-looking statements
necessarily are dependent on assumptions, data or methods that may be
incorrect or imprecise. These forward-looking statements represent our
intentions, plans, expectations and beliefs and are subject to numerous
assumptions, risks and uncertainties. Many of the factors that will determine
these items are beyond our ability to control or predict. For further
discussion of these factors see “Item 1A. Risk Factors” in our most recent
Annual Report on Form 10-K and, to the extent applicable, our Quarterly
Reports on Form 10-Q.

For these statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. You are cautioned not to place undue reliance on our
forward-looking statements, which speak only as of the date hereof or the date
of any document incorporated by reference herein. All subsequent written and
oral forward-looking statements attributable to us or any person acting on our
behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section. We do not undertake any obligation
to release publicly any revisions to our forward-looking statements to reflect
events or circumstances after the date hereof.

Contact:

EPR Properties
Brian Moriarty, 888-EPR-REIT
www.eprkc.com
 
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