Attached files
| file | filename |
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| 8-K - 8-K - EPR PROPERTIES | epr-123120128xkforearnings.htm |
| EX-99.2 - SUPPLEMENTAL OPERATING AND FINANCIAL DATA - EPR PROPERTIES | exhibit992-eprx123112suppl.htm |
Exhibit 99.1
EPR PROPERTIES REPORTS FOURTH QUARTER AND
2012 YEAR-END RESULTS
~Increases 2013 Earnings and Investment Spending Guidance~
Kansas City, MO, February 26, 2013 -- EPR Properties (NYSE:EPR) today announced operating results for the fourth quarter and year ended December 31, 2012.
Total revenue was $83.4 million for the fourth quarter of 2012, representing an 11% increase from $75.4 million for the same quarter in 2011. Net income available to common shareholders was $18.8 million, or $0.40 per diluted common share, for the fourth quarter of 2012 compared to $31.9 million, or $0.68 per diluted common share, for the same quarter in 2011. Funds From Operations (FFO) for the fourth quarter of 2012 was $41.0 million, or $0.87 per diluted common share, compared to $42.6 million, or $0.91 per diluted common share, for the same period in 2011. FFO as adjusted for the fourth quarter of 2012 was $45.1 million, or $0.96 per diluted common share, compared to $42.4 million, or $0.90 per diluted common share, for the same period in 2011, an increase of 7% per share.
Total revenue was $321.8 million for the year ended December 31, 2012, representing an 8% increase from $298.3 million for the year ended December 31, 2011. Net income available to common shareholders was $93.2 million, or $1.98 per diluted common share, for the year ended December 31, 2012 compared to $84.3 million, or $1.80 per diluted common share, for the year ended December 31, 2011. Funds From Operations (FFO) for the year ended December 31, 2012 was $168.8 million, or $3.59 per diluted common share, compared to $150.3 million, or $3.20 per diluted common share, for the year ended December 31, 2011. FFO as adjusted for the year ended December 31, 2012 was $173.8 million, or $3.69 per diluted common share, compared to $160.8 million, or $3.43 per diluted common share, for the year ended December 31, 2011, an increase of 8% per share.
David Brain, President and CEO, commented, "The fourth quarter was a continuation of the positive momentum we have been reporting throughout the year, allowing us to deliver an 8% annual increase in FFO as adjusted per share and complete approximately $300 million in total annual investments. We are optimistic about the year ahead as we maintain a strong investment pipeline, and when combined with our strong balance sheet, we believe that we are well-positioned to grow earnings and support our increased dividend level."
A reconciliation of FFO to FFO as adjusted follows (unaudited, dollars in thousands, except per share amounts):
Three Months Ended December 31, | ||||||||||||||||
2012 | 2011 | |||||||||||||||
Amount | FFO/share | Amount | FFO/share | |||||||||||||
FFO | $ | 41,037 | $ | 0.87 | $ | 42,595 | $ | 0.91 | ||||||||
Transaction costs | 31 | — | 233 | — | ||||||||||||
Costs associated with loan refinancing or payoff, net | 150 | — | (390 | ) | (0.01 | ) | ||||||||||
Preferred share redemption costs | 3,888 | 0.09 | — | — | ||||||||||||
FFO as adjusted | $ | 45,106 | $ | 0.96 | $ | 42,438 | $ | 0.90 | ||||||||
Dividends declared per common share | $ | 0.75 | $ | 0.70 | ||||||||||||
FFO as adjusted payout ratio | 78 | % | 78 | % | ||||||||||||
Year Ended December 31, | ||||||||||||||||
2012 | 2011 | |||||||||||||||
Amount | FFO/share | Amount | FFO/share | |||||||||||||
FFO | $ | 168,839 | $ | 3.59 | $ | 150,291 | $ | 3.20 | ||||||||
Transaction costs | 404 | 0.01 | 1,730 | 0.04 | ||||||||||||
Costs associated with loan refinancing or payoff, net | 627 | 0.01 | 5,998 | 0.13 | ||||||||||||
Preferred share redemption costs | 3,888 | 0.08 | 2,769 | 0.06 | ||||||||||||
FFO as adjusted | $ | 173,758 | $ | 3.69 | $ | 160,788 | $ | 3.43 | ||||||||
Dividends declared per common share | $ | 3.00 | $ | 2.80 | ||||||||||||
FFO as adjusted payout ratio | 81 | % | 82 | % | ||||||||||||
Portfolio Update
As of December 31, 2012, the Company's portfolio of entertainment properties consisted of 10.7 million square feet and was 98% leased, including 113 megaplex theatres that were 99% leased. The Company's portfolio of education properties consisted of 2.3 million square feet, including 38 public charter schools, and was 100% leased. The Company's portfolio of recreation properties was 100% leased. The combined portfolio consisted of 13.9 million square feet and was 98% leased.
As of December 31, 2012, the Company's real estate mortgage loan portfolio had a carrying value of $455.8 million and included financing provided for entertainment, education and recreation properties. Additionally, the Company had $196.2 million in land held for development.
Investment Update
The Company's investment spending in the fourth quarter of 2012 totaled $95.9 million and included investments in each of its three primary operating segments. Total investment spending for 2012 was $298.1 million.
Entertainment investment spending of $35.7 million in the fourth quarter of 2012 related primarily to $22.0 million of financing provided to North Carolina Music Factory, an existing live-performance anchored entertainment retail center in Charlotte, North Carolina, as well as investments in build-to-suit construction of eight megaplex theatres and five other entertainment properties that are subject to long-term triple net leases or mortgages.
Education investment spending of $12.8 million in the fourth quarter of 2012 related primarily to investments in build-to-suit construction of nine public charter schools that are subject to long-term triple net leases or mortgages.
Recreation investment spending of $42.7 million in the fourth quarter of 2012 related primarily to the purchase of the Wisp ski resort in McHenry, Maryland, and funding mortgage note agreements with Peak Resorts, Inc. (Peak) for additional improvements at existing properties and Peak's acquisition of a metropolitan ski resort in Ohio. Additionally, the Company funded build-to-suit construction of three golf-entertainment complexes for TopGolf that are subject to long-term triple net leases or mortgages.
Other investment spending totaled $4.7 million in the fourth quarter of 2012 and related primarily to the land held for development in Sullivan County, New York. The Company continues to progress with the development of a planned casino and resort property in Sullivan County, and the Company obtained important local approvals for its comprehensive development plan subsequent to year-end.
Progress on Vineyard and Winery Sales
The Company continues to make progress toward selling its remaining vineyard and winery investments. During the fourth quarter of 2012, the Company completed the sale of the remaining vineyard and winery assets at its Buena Vista property and the sale of the Carneros custom crush facility for total proceeds of $32.0 million. The Company recognized a net loss on the sales of $0.7 million. In addition, the Company has two agreements pending for the sale of another leased winery as well as three other unleased vineyard and winery properties. In conjunction with these agreements, the Company recorded impairment charges of $8.0 million during the fourth quarter of 2012. While there is no assurance that these transactions will close, the carrying value of vineyard and winery assets is expected to be down to approximately $28.0 million subsequent to these sales.
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 41% at December 31, 2012. Combined unrestricted cash and credit line capacity at December 31, 2012 was approximately $371.0 million.
As previously announced, on October 12, 2012, the Company issued 5.0 million shares of 6.625% Series F cumulative redeemable preferred shares in a registered public offering at a purchase price of $25.00 per share resulting in net proceeds of approximately $120.6 million, after underwriting discounts and expenses. Additionally, on November 5, 2012, the Company redeemed all 4.6 million outstanding shares of its 7.375% Series D cumulative redeemable preferred shares for a total aggregate redemption price of approximately $115.8 million.
Dividend Information
The Company is announcing a dividend for the first quarter of 2013 of $0.79 per common share. This dividend is payable on April 15, 2013 to shareholders of record as of March 28, 2013 and represents an annualized dividend of $3.16 per common share, a 5.3% increase over the prior year.
In addition, our Board has approved the payment of dividends to common shareholders on a monthly basis beginning in the second quarter of 2013. Accordingly, it is expected that the first monthly dividend will be payable on May 15, 2013 to common shareholders of record on April 30, 2013. No changes in timing are anticipated related to dividends on preferred shares.
Guidance Update
The Company is increasing its 2013 guidance for FFO per diluted share to $3.79 to $3.94, from the previous guidance of $3.77 to $3.92, and increasing its 2013 investment spending guidance to $300 million to $350 million, from the previous guidance of $275 million to $325 million. Approximately one-third of the expected investment spending in 2013 relates to carry-over spending on build-to-suit projects initiated in 2012.
Quarterly and Year-End Supplemental
The Company's supplemental information package for the fourth quarter and year ended December 31, 2012 is available on the Company's website at www.eprkc.com.
EPR Properties
Consolidated Statements of Income
(Unaudited, dollars in thousands except per share data)
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Rental revenue | $ | 61,031 | $ | 57,025 | $ | 238,440 | $ | 224,253 | |||||||
Tenant reimbursements | 4,780 | 4,370 | 18,575 | 17,965 | |||||||||||
Other income | 434 | 106 | 769 | 427 | |||||||||||
Mortgage and other financing income | 17,117 | 13,947 | 64,002 | 55,633 | |||||||||||
Total revenue | 83,362 | 75,448 | 321,786 | 298,278 | |||||||||||
Property operating expense | 6,915 | 5,647 | 25,283 | 24,216 | |||||||||||
Other expense | 408 | 390 | 1,681 | 1,947 | |||||||||||
General and administrative expense | 5,396 | 5,045 | 23,170 | 20,173 | |||||||||||
Costs associated with loan refinancing or payoff, net | 150 | (390 | ) | 627 | 3,700 | ||||||||||
Interest expense, net | 20,062 | 17,658 | 76,656 | 71,481 | |||||||||||
Transaction costs | 31 | 233 | 404 | 1,727 | |||||||||||
Impairment charges | 6,872 | — | 10,870 | 18,684 | |||||||||||
Depreciation and amortization | 13,192 | 11,527 | 50,254 | 45,755 | |||||||||||
Income before equity in income from joint ventures and discontinued operations | 30,336 | 35,338 | 132,841 | 110,595 | |||||||||||
Equity in income from joint ventures | 358 | 616 | 1,025 | 2,847 | |||||||||||
Income from continuing operations | $ | 30,694 | $ | 35,954 | $ | 133,866 | $ | 113,442 | |||||||
Discontinued operations: | |||||||||||||||
Income (loss) from discontinued operations | 441 | 778 | 864 | (346 | ) | ||||||||||
Impairment charges | (1,107 | ) | — | (13,039 | ) | (17,372 | ) | ||||||||
Transaction costs | — | — | — | (3 | ) | ||||||||||
Gain (loss) on sale or acquisition of real estate | (747 | ) | 1,236 | (27 | ) | 19,545 | |||||||||
Net income | 29,281 | 37,968 | 121,664 | 115,266 | |||||||||||
Add: Net income attributable to noncontrolling interests | (47 | ) | (25 | ) | (108 | ) | (38 | ) | |||||||
Net income attributable to EPR Properties | 29,234 | 37,943 | 121,556 | 115,228 | |||||||||||
Preferred dividend requirements | (6,503 | ) | (6,003 | ) | (24,508 | ) | (28,140 | ) | |||||||
Preferred share redemption costs | (3,888 | ) | — | (3,888 | ) | (2,769 | ) | ||||||||
Net income available to common shareholders of EPR Properties | $ | 18,843 | $ | 31,940 | $ | 93,160 | $ | 84,319 | |||||||
Per share data attributable to EPR Properties common shareholders: | |||||||||||||||
Basic earnings per share data: | |||||||||||||||
Income from continuing operations | $ | 0.43 | $ | 0.64 | $ | 2.25 | $ | 1.77 | |||||||
Income (loss) from discontinued operations | (0.03 | ) | 0.04 | (0.26 | ) | 0.04 | |||||||||
Net income available to common shareholders | $ | 0.40 | $ | 0.68 | $ | 1.99 | $ | 1.81 | |||||||
Diluted earnings per share data: | |||||||||||||||
Income from continuing operations | $ | 0.43 | $ | 0.64 | $ | 2.24 | $ | 1.76 | |||||||
Income (loss) from discontinued operations | (0.03 | ) | 0.04 | (0.26 | ) | 0.04 | |||||||||
Net income available to common shareholders | $ | 0.40 | $ | 0.68 | $ | 1.98 | $ | 1.80 | |||||||
Shares used for computation (in thousands): | |||||||||||||||
Basic | 46,850 | 46,726 | 46,798 | 46,640 | |||||||||||
Diluted | 47,090 | 46,967 | 47,049 | 46,901 | |||||||||||
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 December 31, | Year Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net income available to common shareholders of EPR Properties | $ | 18,843 | $ | 31,940 | $ | 93,160 | $ | 84,319 | |||||||
Loss (gain) on sale or acquisition of property | 747 | (1,236 | ) | 27 | (19,545 | ) | |||||||||
Real estate depreciation and amortization | 13,318 | 11,773 | 51,162 | 49,009 | |||||||||||
Allocated share of joint venture depreciation | 150 | 118 | 581 | 452 | |||||||||||
Impairment charges | 7,979 | — | 23,909 | 36,056 | |||||||||||
FFO available to common shareholders of EPR Properties | $ | 41,037 | $ | 42,595 | $ | 168,839 | $ | 150,291 | |||||||
FFO per common share attributable to EPR Properties: | |||||||||||||||
Basic | $ | 0.88 | $ | 0.91 | $ | 3.61 | $ | 3.22 | |||||||
Diluted | 0.87 | 0.91 | 3.59 | 3.20 | |||||||||||
Shares used for computation (in thousands): | |||||||||||||||
Basic | 46,850 | 46,726 | 46,798 | 46,640 | |||||||||||
Diluted | 47,090 | 46,967 | 47,049 | 46,901 | |||||||||||
Other financial information: | |||||||||||||||
Straight-lined rental revenue | $ | 927 | $ | 298 | $ | 4,632 | $ | 966 | |||||||
Dividends per common share | $ | 0.75 | $ | 0.70 | $ | 3.00 | $ | 2.80 | |||||||
(A) | 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 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 acquisitions. 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 months and years ended December 31, 2012 and 2011 because the effect is anti-dilutive.
EPR Properties
Condensed Consolidated Balance Sheets
(Dollars in thousands)
December 31, | |||||||
2012 | 2011 | ||||||
Assets | |||||||
Rental properties, net of accumulated depreciation of $375,684 and $335,116 at December 31, 2012 and 2011, respectively | $ | 1,885,093 | $ | 1,819,176 | |||
Rental properties held for sale, net | 2,788 | 4,696 | |||||
Land held for development | 196,177 | 184,457 | |||||
Property under development | 29,376 | 22,761 | |||||
Mortgage notes and related accrued interest receivable, net | 455,752 | 325,097 | |||||
Investment in a direct financing lease, net | 234,089 | 233,619 | |||||
Investment in joint ventures | 11,971 | 25,053 | |||||
Cash and cash equivalents | 10,664 | 14,625 | |||||
Restricted cash | 23,991 | 19,312 | |||||
Deferred financing costs, net | 19,679 | 18,527 | |||||
Accounts receivable, net | 38,738 | 35,005 | |||||
Other assets | 38,412 | 31,667 | |||||
Total assets | $ | 2,946,732 | $ | 2,733,997 | |||
Liabilities and Equity | |||||||
Accounts payable and accrued liabilities | $ | 65,481 | $ | 36,036 | |||
Dividends payable | 41,186 | 38,711 | |||||
Unearned rents and interest | 11,333 | 6,850 | |||||
Long-term debt | 1,368,832 | 1,154,295 | |||||
Total liabilities | 1,486,832 | 1,235,892 | |||||
EPR Properties shareholders’ equity | 1,459,521 | 1,470,049 | |||||
Noncontrolling interests | 377 | 28,054 | |||||
Equity | 1,459,898 | 1,498,103 | |||||
Total liabilities and equity | $ | 2,946,730 | $ | 2,733,995 | |||
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 $3.2 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 or from Brian Moriarty at 888-EPR-REIT.
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 Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E 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. 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,” “expects,” “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.