Good day, ladies and gentlemen and welcome to the EPR Properties Q3 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today’s conference, Mr. Brian Moriarty, Vice President, Corporate Communications. Sir, you may begin.

Okay. Thank you for joining us today. I’ll start the call by informing you that this call may include forward-looking statements as defined by the Private Securities Litigation Act of 1995, identified by such words as will be, intend, continued, believe, may, expect, hope, anticipate, or other comparable terms. The Company’s actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of these factors that could cause results to differ materially from those forward-looking statements are contained in the Company’s SEC filings, including the Company’s reports on Form 10-K and 10-Q. Now, I’ll turn the call over to Company President and CEO, Greg Silvers.

Thank you, Brian and good afternoon to everyone. I’d like to remind everyone that slides are available to follow along via our Web site at www.eprkc.com. With me on the call today are the company's CFO, Mark Peterson.

Good afternoon.

And CIO, Jerry Earnest.

Good afternoon.

I’ll start with our quarterly headlines and then pass the call to Jerry to discuss the business in greater detail. Before I began I want to acknowledge the similarity of the majority of these quarterly headlines to last quarter, along with the positive update on the Adelaar project. These analogues headlines are by designed as we strive to create a narrative of strong and reparative performance that results in consistent growth and reliable outcomes that are valued by our shareholders. The first headline today is strong quarterly results. In the third quarter we had record setting quarterly revenue and again delivered very solid FFO as adjusted versus same quarter previous year. Second, investment segments continue to robust performance. Our underline tenant industries continue to demonstrate outstanding performance in the face of a lackluster economic recovery. Our education segment exhibited solid enrollment with nearly 37,000 students enrolled in our public charter schools an increase of over 17% and openings are ahead of expectations at most of the private and early education schools. Box Office receipts remain on pace for a record year with the new Star Wars release generating enormous buzz in advanced tickets sales and Topgolf continues to perform very well. Third EPR planned investment spinning in Adelaar is reduced. As we mentioned at our recent Investor Day we have revised our agreement with Empire Resorts which translates the lower investment spending on behalf of EPR. Our fourth headline is increasing 2015 investment spending and earnings guidance. Our differentiated investment strategy and repeatable platform have provided very strong momentum with our deep industry knowledge and relationships we continue to grow our pipeline even more than we had previously expected. Additionally, the strength of our tenant businesses is translating to increased opportunity to deploy additional capital in 2015. We are very pleased to be able to share this news and Jerry will follow with more detail. Lastly our final headline is introducing 2016 guidance. Given our results to date we are very well positioned as we move into 2016 with strong spending and earnings guidance. Jerry and Mark will have further detail on this topic also. At this point I'll turn the call over to Jerry and then I will rejoin you for questions following Mark's presentation.

Thank you, Greg. We maintained strong capital deployment throughout the third quarter with $174.8 million of new investments spending, bringing year-to-date spending to 509.5 million. The quarter’s strong spending pace reflects the continued momentum within our primary investment segments, I'm particularly pleased that we anticipate this momentum will continue and we are raising the midpoint of our 2015 investment spending guidance by $75 million to a range of 575 million to 625 million. In the entertainment segment the theatre exhibition business continued the strong growth that began in the first and second quarters. To the end of September on a year-over-year basis Box Office revenues were up 6% over 2014. And with the strong holiday season slate including the last installment of the Hunger Games another James Bond film and the restarting of the Star Wars franchise we anticipate the Box Office revenues will set an all time record surpassing the $11 billion mark. As we have been communicating we continue to partner with our exhibition operators and the deployment of the enhanced seating theatres with the conversions of the existing theatres and new build to suite opportunities. From the consumer acceptance of enhanced seating format continues to drive increased revenue well net of the conversion is equal our operating partners are reporting average revenue gains of 30% to 40% upon completion of the conversion. For the quarter the investment spending in our entertainment segment was approximately $29.9 million consisting primarily of investments in two build to suite theaters, the redevelopment of three existing theaters, the development of one family entertainment center and the acquisition of one theater. Both of the theater build-to-suites as well as the redevelopments involve construction of or conversion to enhance seating theatres and EPR remains committed to being a preferred supplier of capital to the…

Thank you, Jerry. I'd like to remind everyone on the call that our quarterly investor supplemental can be downloaded from our Web site also please note Page 31 is a new page in the supplemental that provide detail information regarding our 2015 and 2016 guidance that I'll touch on later in my comments. We hope investors find this information useful. Now turning to the first slide, FFO for the second quarter increased to 67.4 million or $1.15 per share from 54 million or $1 per share in the prior year. FFO as adjusted per share was $1.17 versus $1.08 in the prior year, an increase of over 8%. Now let me walk through the key line item variances for the quarter versus the prior year, our total revenue increased 10% compared to the prior year to 108.3 million within the revenue category rental revenue increased by 11.3 million versus the prior year to 85.7 million and resulted primarily from new investments. The increase from new investments was partially offset by the impact of the weaker Canadian dollar exchange rate versus the prior year of over 16% which reduced rental revenue as well as tenant reimbursements at our Canadian properties on a comparable basis by approximately 1.6 million. Note that this decrease was partially offset in the total revenue line item by an increase in other income of 540,000 due to favorable settlements of foreign currency swap contracts. When combined with the impact of lower property operating expense as a result of the weaker Canadian dollar FFO as adjusted per share was lower by a penny compared to the prior year, as a result of the movement in Canadian exchange rates. Percentage rents for the quarter included in rental revenue were 1.4 million was 1.2 million in the prior year and…

Thank you, Mark. Thank you, Jerry. With that, why don’t we open up the call for questions and see what people want to know further about.

[Operator Instructions] And our first question comes from Dan Altscher from FBR. Your line is now open.

I want to start actually very level first, I remember when we started or we ended 2014 there was a lot about 2015 box office being another record year with a great box office playing that’s turning to be as to be the case. How do you think 2016 is shaping up with the box office slate that we’re kind of I am aware of?

Yes Dan it’s Greg. I think what we’re seeing right now 2016 looks probably from our early indications probably closer to flat to ’15 it’s actually ’17 right now that people are projecting as another big up year. If you think about the cycle of the sequels to everything that occurs in ’15 will come back again in ’17. So there is a couple of franchise films again there has been Star Wars, you will get some of the repeats that we have this year. So ’15 right now at least early indications are flat.

Mark just wanted to ask a couple milling questions about the guidance, thanks for laying out that page by the way I think that’s really-really helpful. But can you give us a sense as to what your capital plans are, or how that’s incorporated in the guidance for rest of this year and predominantly 2016?

Yes sure so we have spent investment to-date 510 million talking about ’15 and to get the midpoint of guidance that’s about another 90 million of spending over the balance of the year. And remember as I discussed we did raise 31 million at direct stock purchase plan shares subsequent to the end of the quarter and also we see that $45 million for the bond payment. So we don’t have a whole lot of capital need in my line of credit at the end of this quarter was under $200 million on a $650 million line, so I am in pretty good shape as we close the year. We could raise some additional equity if we decided to or we don’t have to, we have a lot of flexibility in that regard. As you move ’16 we have the midpoint of guidance to $625 million and we have about $100 million of debt payoffs so say $725 million in uses. We did model as Jerry and I discussed $125 million at the midpoint of dispositions, so that leaves about $600 million in lease. And think about that we generally do one debt deal think of that around $300 million and the rest of the combination of equity and cash flow as we look into ’16, so kind of more the same keeping the leverage, low 40s just like we did this year and the year before. And I think we’ve got a lot of flexibility as we finish this year and go into 2016.

And then also during the Investor Day you touched on the asset sales so we got clear on lot more color into what you’re looking to do I guess predominantly the charter schools. But something that I think I feel you doesn’t come up very often is within the entertainment are the family recreation centers and so forth. I mean are you guys -- how committed are you really to building that part of the entertainment business out at this point?

I think for us it’s an element of opportunity that I don’t think it’s going to be a -- could we make that a $25 million to $35 million year segment within our entertainment yes, but it’s never going to be an explosive growth option. But if we feel that it’s a natural extension of what we do, it’s consumer discretionary we think we have a good understanding that the operators how to underwrite that Dan and we see it as I said as natural extension.

And just one final one, related to the asset sales the capital is coming back the disclosure on the termination fees that are coming in. But that capital is coming back I mean is it right to assume that’s probably going to be used to fund more built to suit in that maybe that’s actually little bit of a drag on FFO and earnings for ’16 and it is more about ’17 then is that capital actually starts to become -- starts actually being earned if you will on deployments?

Interesting if you think about it the termination fees as kind of $6 million at the midpoint and if you take the dispositions which as you said relate mostly to charter schools which carry a higher GAAP rate kind of assume mid-year on that to get to sort of a $6 million impact that offset by the termination fees, they tend to offset each other. As far as in that calculation I am assuming a bit of a deleveraging from the proceeds, so a bit conservative because we don’t know if they’re going to happen. So I guess you could say it’s a bit of a drag but it’s kind of offset by the termination fees this year.

And our next question comes from Nick Joseph from Citigroup. Your line is now open.

I appreciate the quarterly walkthrough for forward investment spends. But it’s missing obviously the fourth quarter of ’16. I am just wondering big picture. What percentage of the 2016 investment spend guidance is already been identified through built to suit projects? And what is the actual acquisition assumption within that?

So I’ll answer the first question, so the midpoint $625 million we have -- if you look at that schedule there is not a lot that’s not disclosures, $30 million moves ’15, ’16 call it over $200 million is spending for 2016 is for projects that were started here we are at the end of third quarter that we’ll carry into ’16. So I’d say that’s roughly a third of the guidance right there. That number will grow as we approach the end of the year but today it is about a third.

I would say Nick historically that’s been 40% to 50% as we go through the fourth quarter as we move into ’16 and things projects that are already started that are just funding in through ’16.

And then Nick, built to suit is predominantly build to suit we do have some acquisitions probably 80-20 or…

Yes, I’d say it’s around 15% to 20% of acquisitions for us it’s actually acquisitions become a little more opportunistic and it’s easier to plan and budget on our build to suit pipeline.

And then in terms of the acquisition this quarter, the theatre and the public school, can you talk about the cap rates on those deals?

Sure on the theatre acquisition was around an 8 cap deal we felt it was a very strong theatre an AMC theatre that we had good relationships with and a commitment that’s been renovated with a new lease. So we were pleased with that. The charter school was -- I am looking to Jerry. Jerry what’s…

Upper 8% around that…

Upper 8 around that…

Initial cash total yields around that…

And the same thing on the theatre that was the initial cap.

And then just finally on guidance for G&A, what’s putting it up about 10% next year?

We’ve added quite a few people as we’ve kind of bulked up and are growing fast. And I also think if you look at even ’15 versus ’14, we have quite a bit more incentive compensation planned in ’15 and ’16 given the strong performance that we expect or close to have. We’ve had FFO growth to-date of almost of over 9% we expect strong FFO growth next year. So that’s primarily it. We’ll see some leverage of G&A next year we expect revenue to grow by more than G&A expense, so we’ll see some leverage there. And I think all in all I think we’ll be in the low 7% range of G&A as a percent of total revenue which I think is very good level of G&A relative to your total revenue.

And our next question comes from Tony Paolone from JPMorgan. Your line is now open.

Just staying on Page 20 with that pipeline that you’re just discussing with Nick, so you got about $200 million of the 600 for ’16 basically identified on that schedule it seems, so the other 400, at what stage does that feel like that’s in at the moment like how much of that do you feel is identified and you’re just getting it through the pipe versus being more speculative that you just presume will happen.

I would say Tony we’re at about 80% rate on the identified but not yet closed. But some of that begins just stage when you take the land down and how that moves out. But we feel real confident in our ability to hit those numbers based on where we’re at right now.

And we don’t have just to further that, we don’t have large speculative acquisitions. As Greg said there’ll be some unidentified that we plan to have names for of build to suits but to the extent those don’t have and there is not a lot of earnings impact in 2016 that would be more of an earnings impact in the following year when the project was supposed to completed yes.

Okay, that sure sounds like that just to can paraphrase I make sure understand that of the if I were to have think about 600 million boggy 200 ongoing and then another 80% as a 400 you guys have pretty good brackets around right now.

It is that 200 will grow by the end of year so as Greg said is generally more like 50% by the end of the year and then the other one the rest of it we have good names around and wait for a small piece while we don’t do as Mark said we don’t do it a probably the speculative of our pipeline is probably 15% to 20% at this point in the year we kind of have names on everything now but the timing of that can be effected as far as when our tenants want to begin projects or they clear the ability to begin construction with permit issues and things like that but they are identified Tony.

Okay. And then just sticking on that page on Topgolf I think in the press release you mentioned ’15 ongoing projects but I am just trying to tie that to the schedule on 20?

I think the amount we spent on ’15 projects in the press release that doesn’t mean that ’15 is still going we have a lot to finish.

Five finish in the quarter so there is that would imply that there was spending and remember that there are even they open we may have a little trailing that goes on.

Yes some of that could open in third quarter still had a little bit of trailing assuming…

My guess is that we that we have probably five to seven ongoing projects right now that are in construction.

Okay. And then remind me if I think about what you guys have left on your option or you write a first reviews so I think you guys have about how many more projects is that and dollars that could be spent on those?

We currently have with the five that's open that I'm going to get to but I think we have about 14 or 15 open. We have but we think total number of that we will complete will be 30 so think of it about in that sense we’re probably 250 million into what will be 500 million and we probably have 250 million to go.

Okay. And any sense of timeline as you think about their cadence of opening stores?

Yes I think that will take us ’16 and into ’17 probably and that will probably be that years ’16 and ’17 will probably exhaust that.

Okay. And then just on the charter school sales are these purchase options typical across all of them or this is just a sub bucket of those, how does that work?

No this is typical with most of the schools we have. And we do have some schools with no purchase options we have some schools with longer initial purchase options but this is a if you will an early wave of schools we did years ago.

And is there a mechanism on price or it is guarantee or any sort of minimum IRR like how the economics work?

In effect we set a significant exit fee or termination fee really that yes it does enhance our IRR and the sense allows us to have a higher yield for having less duration in the sense it's a formal compensation for not being any assets as long as maybe we wanted to be but it's also a reality of the business that some of these schools are opportunities through not only bonds but also some states would be running kind of blue plate specials if you will enhancements do to bonds and things that are make it attractive for somebody's schools at times to hit these are earlier windows.

Okay, but does it assure your price that's at least what you paid for these or [Multiple Speakers].

It's typically a multiple as a percentage on top of our original basis but we’re all covered in and I would say it probably enhances our yields by anywhere from a 150 to 200 basis points over our original yield.

Yes we are talking of 15% to 20% over a region of 15% to 25% over initial cost.

Okay got it. And then just last question Mark you give us a lot of good numbers but I couldn’t write them all down. What did you get so far in terms of cash in the door on the shorter bond revenue bond proceeds?

So we received $45 million and the final allocation about half of that it all reduces our note balance but above half of it we did to get paid back on and not reduce our interest income so about half of it like I said kind of like a fee equity raise when it comes to liquidity and earnings and that I get half of it for free without reducing my interest income. The other half pays back advances that related to the bond so there is a off course by a reduction and interest income. I think the other exciting part is going forward I have another 28 million and I expect to get not in the near term but next 12 to 18 months that I get effect in effect that free equity rates again while you have 28 million in the door with all the change in the forward interest income or an interest income level as previously recognizing so a little benefit now and some more benefit to come.

Okay so you got $45 million of cash in the door of which have speculators pretty half reduces the advance and then the 28 is 12 to 18 months and that is free.

That’s correct.

And our next question comes from Dan Donlan from Ladenburg Thalmann. Your line is now open.

So, just going back to the buyouts on the charter schools, how much of that is part of this -- what is the -- how much that is in dispositions in terms of your guidance, if you had 125 million what you expected to the purchase options in exercise…

We range it is 3 to 4 school range on 35 million to 40 million.

And the termination fees is it's on the guidance page is 5 million to 7 million and that’s where you get into that 15% to 20% premium that we are talking about little while ago in terms of the penalty we have paid if they exercised it early is compensation for them getting out early.

Okay so the loss in rent on the 35 to 40, I would think it to be less than 5 to 7 though right?

Well yes, and there is no doubt we also as we said this, Mark said earlier Dan, we plan to some sale of some Imagine charter schools that as we said those are pretty high earning, you remember those were in the effected interest method…

Yes.

And about 12 so if you start to take those off and you sell -- I mean just in kind of back of the napkin and Mark in his opinion if you say you sold 50 million of those at a 12 and you are at 6 million and you are getting 6 million of fees there is kind of almost a watch there…

It's a simple math maybe you take a blended 11 you have imagine up over 12 under charter school and we have some other sales at average of 125 million at midpoint and at average 11 cap for half a year that’s about 6 million bucks roughly which is the termination fee, so while there is termination fee there is somewhat buffer sales not only if the schools that are being sold that for which we get a termination fee but the other sales in the plan.

Okay, so you think in 11 on the gap is what is the cash significantly lower like 9 something like that or?

Well on the Imagine the cash is in excess of 10 and on the other charter schools the cash is probably closer to what you would think about nine plus because this been ask later so cash is less of course I was talking gap earnings but.

Right, right okay and I am just trying to -- is any reason why the Imagines that you are selling are those comparable to the existing portfolio or, it's seem to me that if you are selling them for a cash somewhere north to 10 you see be high relative to maybe what I thought the portfolio might be worth.

But we will not you thought what we think for selling for or hope to sell them for we are talking about what the earnings…

That could change dramatically, I mean we did -- we just picked the current value in -- and the end of what we are earning on it now, we didn’t actually make a prediction as to what we could sell those for because that you are correct if we sell those at and then we redeploy that capital or even take it against our cost of capital, it could be better than that but we just took a static number of more…

That goes on our regional cost going in regional going out for planning purpose by then.

Okay, okay.

We imagine that’s we sold 18 months to go with this sell at a premium toward them.

And then with the water park hotel, just kind of curious how that works and I know it's just recently been delivered I would imagine this is kind of be off season, is there any type of seasonality to that or it is just straight tripping at least and is any percentage of rents or participate interest, how does that work?

It is just a straight triple mate in and actually there is less seasonality then you might anticipate that the actually they focus on those region has a pretty robust summer season, so it's -- it is a pretty much around you do are percentage -- participating risk expect to that but those are kind of out in front of us, would not at year those at this time.

You will see the next clip items, because we converted in 120 million mortgages at completion to a lease and it's not a master lease with the existing SKI and indoor water park so it is not all under one master lease.

Okay and then as I am looking at your Page 22 already you have it in service stuff on I think it's Page 20, it's look like an entertainment kind of 8% of your own build to suit in service estimates recreations is 18 education is 74, is that roughly kind of how you feel like the next few years are going to trend or what kind of moves that in one director or another or is just education really where you are seeing the best opportunities or is a more less as it really just hasn’t meet as much opportunities in other places?

I actually to see over like next year when we look at it I think we look at it as probably education 50 recreation 30 to 35 and entertainment 15 to 20 next year. Now that can change in the sense that as I said we don’t know loathe in a lot of acquisitions and we’re looking at some portfolio deals in entertainment which if we were successful with those could as it turn to us a couple of years ago when we did the Regal portfolio and that came in it would materially changed that. But most of our as we said our built to suits now are ever they’re heavy conversions. And so we’re extending lease term, we’re spending smaller dollars but we’re actually extending the life of our existing assts but there’re not as many true ground up construction opportunities.

Interestingly those numbers are not that similar before we expect to finish ’15 as far as relative range maybe a little bit higher to education next year relatively, but pretty much same kind of context of that breakout.

And our next question comes from Craig Mailman from KeyBanc. Your line is now open.

Just a clarification, so on the purchase -- or the sale options to the school and what you guys the termination fees where you’re gaining premium on a sale price versus your basis it’s in line, is that the right way to think about it? I guess I am just trying to see are there taxable gains that you guys need to shield from these sales?

Well there will be some gains, if you think about it, because it would have depreciated and then I am going to get my original cost plus a premium termination fees. But in the grand context in grand scheme of our total tax situation I don’t think we have any particular big planning to do because it’s not that big, we can handle it.

And then Mark could you just -- you kind of ran through the Adelaar stuff a little quicker. Can you just roam through the $0.16 where it hits and the different components?

We get a little bit hesitant about the different components because as we said before the least itself is -- we are supposed to keep that confidential so the award is issued I did think it was appropriate to give you a guidance at least in FFO per share in terms of how it would impact next year. But there will be revenue higher revenue because we’ll start booking revenue as I said and we’ll start having some higher operating expenses. We’ll have lower capitalized interest. And at the end of the day that impact on FFO for the year would be about $0.16 which is $0.02 higher than this year if you think about it this year we’re pretty much just looking capitalized interest. So that’s what I meant. As far as the breakout I want to give that to you, but we’ll probably wait till we have the call on Adelaar or need to wait till we have the call on Adelaar when we have the actual award in hand, or Empire has their award in hand.

And then just lastly the $0.04 of difference that you guys have for the adjusted FFO versus headline how much of that is transaction cost versus the deferred tax?

The $0.04 difference from headline I don’t think is really due to a couple of things, higher percentage rent, if you think about it, we had -- we were little more conservative on Schlitterbahn because they had a wet June and they came out even higher than last year. They also got that percentage rent on that one private school. We also had some in service earlier than we expected particularly the British School of Chicago and a couple of Topgolf. So I don’t think it’s so much -- the deferred taxes were right in line with what we expected. Transaction costs aren’t in our FFO as adjusted number, we excluded that. So those really weren’t the FFO as adjusted difference, it was more due to really operations.

Kind of a true plain beta.

I know, I was getting more into 2016 guidance, the ranges?

Okay. So 2016 guidance we have transaction costs again are excluded from FFO as adjusted which what we like to focus on. And taxes are very similar to this year because they relate to Canada and nothing in particular is happening up there that would change that number dramatically. So those two numbers are about the same. The increase year-over-year is all about in service higher percentage rents, higher participating interest and…

Utilization of our investments this year…

I guess I am just getting at 466 to 476 versus the 470 to 480, the $0.04 difference you guys said is transaction cost and deferred income tax expense. I am just trying to get what’s the $0.04 mainly comprise of? Is that all transaction cost with minimal deferred income tax…

You meant us all that on the -- we reconcile that transaction cost is the $0.04. The deferred income tax expense isn’t big enough to reach the rounding to a penny so to speak. So, the $0.04 is transaction cost. We have higher transaction cost this year than we expect next year, but we never know what is before us in ’16 we’re just banking out a normal year next year.

And our next question comes from Rich Moore from RBC. Your line is now open.

I am curious I am getting kind of mix signals from the marketplace on what’s happening with theatres I mean it seemed for a little while there, the analyst community if you will was downgrading the theatre operators and there seemed to be some big concern that everything was going crazy have then Regal comes out with a pretty good quarter just recently so I'm wondering what did you heard from the operators are you sensing any softness even though obviously the box office has this time again had a record year, but are you sensing anything might be wrong in the theatre business?

No I mean right now the discussions that we are having is very positive and the sense that I think what's going on is a lot more reinvestment dollars than and I think you are seeing them spin more money you've had as I said over the last 12 to 18 months you had Regal and Cinemark both announce 35 to 40 redevelopments remodels so I think there is some especially some of those that are more or little more dividend paying that would people were thinking this might be a means to raise the dividend does that all those dollars are getting refocused back into and getting paid in reinvestment in the redevelopment of the enhanced amenity theatres so I think that could be the it may if people may have thought there might have been some dividend increases that are not giving direct to that Rich.

Okay so you are not hearing any pull back?

No. Like I said everybody seems very positive as far as directionally where we are going.

Okay. And then on same line on Page 20 somewhere when you guys show your explorations you don’t have a huge number I think in particular year over year you have ’16 and 2018 and as these come up are you finding that you are converting some of these or is it just straight renewals of leases I mean already doing the amenity theatres what is that lease happening?

It's kind chained I will tell you mostly they are being extended and now some of that may have been involved also a conversion and them changing it six or ’18 has a master lease portfolio in there with the one operator I will tell you they are spending significant dollars themselves right now enhancing all of those theatres so we feel very good about that renewal and do not anticipate any issues with that master lease portfolio.

Okay so none of these near term guidance are losing you are not losing on any of these guys?

We don’t think so like I said we may have to rework some of those into higher amenity theatres we may put more money into those I'm not telling you as we looked forward if there are issues if we do and not all theatres are as good as other theatres they one off issues they are not.

There is nothing systematic at all for systematically it's very positive.

Okay that's it and then I kind of lose track how the box office is doing very well and it sounds like everything is good so I would think that we get more of the theatres into the percentage rent category but I always kind of loose where you guys are with how many of these guys are getting percentage rent or giving you percentage rent as to we look at it and what it takes to get more of them into that sort of level?

Right and I think the numbers about 10 theatres that we have right now.

And keep in mind that rate point keeps moving as the rent goes up [Multiple Speakers] you need an increase in Box office.

Greater than 2% if we are getting 2% accelerators I think as we evolve into the more high amenity theatres I think you will see an opportunity set there that's greater because the food and beverage spend increases so the per cap spending is going up those are still kind of in the early stages and the conversions are going on so we anticipate that as we extend these leases we are definitely looking at those percentage rent factors and making adjustments to those as we see that could be a material enhancement as we go forward Rich.

And our next question comes from Tony Paolone from JPMorgan. Your line is now open.

And sorry to just keep counting on this purchase option for the charter schools but I got confused with one of your answers to another question earlier so if I just think about the simplistically that one of these schools you built or bought for 10 million bucks and you went in at a ten cash cap rate maybe your gap was 12 or something I'm guessing what is that like year five option that's being exercised like what's the timeline and so like what is sort of the exit economics in that example?

I think Tony your first hit question is correct it's literally like they open up around year five that can be somewhere seven, ten some have nine but at different points and then and Mark you can help me on this we are going to recover any sort of straight line difference out of that fee so that we are made whole and then the remaining balance of that is just the is kind of a lease termination.

So think of the gain or loss on sale is being the original price we paid minus depreciation plus straight line versus the original versus the original cost that's what they are paying to buy that theatre so if depreciation is greater than straight line there is a gain which is what we expect the gain on sale separately lease and we get that premium which is the determination fee on top of that gain if you will to the extent depreciation there is but you kind of clear off your assets related to the sale which is the straight line and the net book value and versus that purchase price which is original cost and then premium becomes kind of the gravy the payment for the fact that we’re shutting down the leases as long as we anticipate it because we are taking the early option.

Okay so there is two things is that the accounting which I guess you are suggesting is our some write down of the straight line accrual in this kind of wash out adjustment that happens. But then on just from an economic point of view there if there again there is $10 million box and we ended at 10 cap cash-on-cash you had a few bumps along the way at year five. What is the actual sale price lease terminated and then what is the lease yield and just sort of an example?

So sale price is set mechanically in the lease at original cost. So that the sale price of the asset and separately you get the -- if it is early on you might get a 20% premium in year five or seven depending how it's written and that premium declines overtime. So that’s how it works if you kind of paid your original cost for the asset and you have a premium on top of that.

Okay understand so effectively your exit cap may just be a little bit higher by way of the ramp bumps along the way. Got it I understand that thank you.

And our next question comes from Dan Donlan from Ladenburg Thalmann. Your line is now open.

If we exclude the 35 million to 40 million that you expect that could be purchased back by your sort of tenants what do you think the cap rate range is for what you are selling the remaining portion of what you're selling? On a cash…

I think that’s interesting, I think on the Imagines that’s just we break these down as kind of a -- as a opportunistic as Jerry referenced price awareness and a derisking and I think we look at the Imagine as a derisking and we've said those have generally the last trade that we did was kind of an eight and half to nine on those Imagine assets. The other sales that we think in there we think will be more of that kind of price awareness opportunity set which we've had discussions all the way six and a half to seven and a half.

And that’s for charter schools too?

No that’s probably other assets in the portfolio be those in our entertainment area and our recreation area but probably not in our education segment.

Okay that’s extremely helpful thanks so much.

And I'm showing no further questions at this time. I'd now like to turn the call back to Greg Silvers for any further remarks.

Well I want to thank everyone for their attention today and all the good questions and as Dan kind of alluded we want to leave you with one final thought and with one slide and that’s go royal we appreciate your time and attention and we look forward to talking to you next quarter. Thank you.