EPR Properties (NYSE:EPR) Q3 2023 Earnings Call Transcript

Gregory Zimmerman: And the breadth, as I mentioned before, I mean, we’re seeing a lot of opportunities in many of our verticals, which is really reassuring.

Todd Thomas: Okay. And just lastly, I think you mentioned in your prepared remarks that in the attractions category, you’re seeing some softness from lower spend, maybe lower traffic. Can you just provide a little bit more detail around what you’re seeing there and how operator performance has trended? And then can you also just comment on whether you’re seeing any softness at any other property types? I didn’t hear anything, but just curious about experiential lodging.

Gregory Zimmerman: Yes. I actually said, Todd, that we were seeing pressure on EBITDARM from insurance and wage costs, we’re actually seeing attendance gains and attractions. So I would say, generally, the takeaway is there is some pressure mostly on wages and insurance in many of the verticals but really hits attractions because it just got a larger insurance bill. And then I also mentioned in the experiential lodging, we’re seeing some normalization on RevPAR and ADR, but I would consider that coming back to normal from pre-pandemic levels rather than a decrease. Greg, I’m done here.

Gregory Silvers: Yes, I was going to add, I think what we would say is across the — pretty much across the board, we’re not seeing backing up from the consumer side. Whether it’s revenues or attendance. I mean, almost across the board, we saw continued positive growth in that. As Greg pointed out, insurance cost for a lot of our operators have gone up substantially. So we have seen some margin pressure. But as the coverage indicates going — on a quarter-over basis, we went from a 2.7% last quarter to a 2.6% this quarter. That’s really about some of that expense pressure, but we’ve not seen any kind of pullback from the consumer at all, especially on experiential assets.

Todd Thomas: Okay, appreciate that clarification. Thank you.

Operator: One moment for our next question. Our next question will come from the line of Aditi Balachandran from RBC. Your line is open.

Aditi Balachandran: Hi, thank you. Just a quick question. Can you talk a little bit about the biomarker or like, I guess, the depth of the buyer market, especially as you still have these 4 Regal theaters to sell in the pipeline?

Gregory Zimmerman: Yes. I think the buyer market is pretty good. I’d say again, this is rough, but about 50% of the theaters we’re selling will likely go to an existing smaller theater chain and the rest to various uses. And again, it’s all dependent on the location of the real estate. So it could be multifamily. It could be industrial, it could be retail. We always market broadly. So we don’t just target any particular user. We hire a broker and target widely. So we feel like we have a pretty good handle on what the demand is for any particular.

Gregory Silvers: I would say Aditi, that the 1 indication is the speed at which Greg and his team have secured purchase and sale agreements or LOIs. When you look at that with 1 sold already in 6, that’s 7 of 11. So that’s a pretty high hit rate for what has really been about a 60-day period. So I think there’s been a lot of interest. And I’ll ask Greg to comment it, but multiple parties involved in most of these assets.

Gregory Zimmerman: That factor. Yes.

Mark Peterson: And as you saw this quarter, and we expect the future slightly above — in terms of price, slightly above what we’re carrying that. So we’re seeing some gains upon sale as well.

Aditi Balachandran: Thank you.

Operator: Thank you. One moment for our next question. Our next question from the line of Ray Zhong from JPMorgan. Your line is open.