Good afternoon, ladies and gentlemen and welcome to the Q3, 2017 EPR Properties 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 call is being recorded. I would now like to the conference over to your host, Brian Moriarty, VP of Corporate Communications.

Thank you, operator. And thanks to everyone for joining us today on our third quarter 2017 earnings call. As always, I will start the call by informing you that this call may include forward-looking statements as defined in the Private Securities Litigation Act of 1995, identified by such words as will be, intend, continue, 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. Discussions of these factors that could cause results to differ materially from these forward-looking statements are contained in the Company's SEC filings, including the Company's reports on Form 10-K and 10-Q. At this point, I will turn the call over to the Company’s President and CEO, Greg Silvers.

Thank you, Brian, and good afternoon, everyone. Welcome to our third quarter 2017 earnings call. Before we get started I will remind everyone that slides are available to follow along via our website at www.eprkc.com. With me on the call today are the Company's CFO, Mark Peterson and CIO, Jerry Earnest. I will start with our quarterly headlines and then pass the call to Jerry to discuss the business in greater detail. Our first headline, resilient quarterly performance supported by solid fundamentals. Third quarter exhibited continued momentum is our top-line revenue grew 21% compared to the same quarter previous year. Despite the challenges arising from the severe hurricanes our attraction portfolio delivered solid results. Additionally the long-term durability of our theater portfolio was illustrated even as Box Office results were down as predicted for the quarter. Lastly we were pleased to see the continued growth in our public Charter School portfolio. Our stabilized enrollment growth in the portfolio continues to support our investment thesis of investing in the sector driven by strong parental demand for choice in education. Our second headline, we delivered almost $300 million in quality investments across our investment segments. Adding to our record year, we had another strong quarter of investment spending. The investment spending along with our 99% leased rate continues to reflect the broad asset demand across each of our primary investment segments, supported by the strong momentum of the experienced economy. While our spending varies by segment from quarter-to-quarter, we continue to source strong opportunities across all three of our differentiated and discrete segments, throughout the year due in large part to our expertise, reputation and networks that we have developed over the years. Our third headline, increasing 2017 earnings and investment spending guidance and introducing 2018 guidance. Consistent with our theme of…

Thank you, Greg. During the third quarter of 2017 investment spend was $292.8 million bringing year-to-date investments spending to $1.5 billion. Total year-to-date investments spending excluding the CNL Lifestyle Properties transaction, was $725 million. Investments transaction volume during the quarter was significant across all three of our investments segments. Our investments results confirm our thesis that a focused approach within defined segments provides us with the expertise and relationships to allow us to access quality opportunities that deliver consistent and reliable results. I'm pleased to announce that we anticipate the strong paced of investments spending to continue and we are raising the midpoint of our 2017 investment guidance by $100 million to a range of $1.55 billion to $1.6 billion. Before, I get into the detailed discussion of our investments and performance, I wanted to mentioned that our properties in Florida and Texas did not suffer significant damage from the recent hurricanes. However, these communities have suffered and our thoughts and prayers go out to them as they began to process a rebuilding. Many of our tenants in these communities answered the call to help during these trying times and we are incredibly proud and honored to be associated with such fine companies. In the entertainment segment, after two record Box Office years projected Box Office revenues remain stable on a year-over-year basis given the strong fourth quarter movie line up, which was partially demonstrated this past weekend with the successful opening of the four the latest Marvel Franchise movie. The film slate this years is heavily weighted to the holiday season and we will continue with the DC offering Justice League, the new Pixar movie Coco and off course the highly anticipated Star Wars release to The Last Jedi. Please note that minor month-over-month or quarter-over-quarter movements in Box…

Thank you Jerry. I would like to remind everyone on the call that our quarterly investor supplemental can be downloaded from our website. Today we are going over the numbers for the quarter as well as our expected strong finish to 2017. We anticipate that momentum will continue and I will provide initial guidance for 2018. Now turning to the first slide, net income for the third quarter was $57 million or $0.77 per share compared to $51.6 million or $0.81 per share in the prior year. FFO was $90.5 million compared to $78.2 million in the prior year. Lastly, FFOs adjusted for the quarter increased to $93.3 million, or $78.8 million in the prior year and was $1.26 per share for the quarter versus $1.23 per share in the prior year. Before I walk through the key variances, I wanted to briefly discuss two adjustments to FFO to come to FFO as adjusted. First, we amended the agreement that governs our unsecured revolving credit facility and unsecured term loan during the quarter and recognized cost associated with loan refinancing of 1.5 million that have been excluded from FFO as adjusted. I will discuss the very positive changes resulting from this amendment in a few minutes. Second, pursuant to a tenant purchase option we completed the sale of our public Charter Schools during the quarter for net proceed to 5.7 million and recognized termination fees included and gain on sale of 1 million. Now let me walk through the key line item variances for the quarter versus the prior year. Our total revenue increased 21% compared to the prior year to 151.4 million. Within the revenue category rental revenue increased by 20.5 million versus the prior year to 122.8 million. This increase resulted primarily from 23.5 million rental revenue related…

Thank you Mark. As we have discussed today 2017 has been a very productive year for EPR so far. And we are excited about our team's ability to continue to deliver such outstanding results for the balance of the year and beyond. With that, I will open it up for questions. Julie, are you there?

[Operator Instructions] Our first question comes from the line of David Corak from B. Riley. Your line is open.

I will start with the AMC, before moving onto some other topic. Just looking at their CapEx plan for 2018 as you talked about on the call just trying to balance it against your 2018 spend guidance to see where that overall would be relative to previous year. It looks like they are going to spend a little bit less next year, but still relatively high figures and renovate a bunch in the United States. So can you walk us through the overlap to the extent you plan and maybe what is your guidance assumes on the spend front?

Sure without referencing them what I can tell you David is that they are not slowing down or have not put on any delays on any other projects that we have identified. So I don't want to speak to their specific spend. But I think the bigger is the somatic side of we are not seeing a slow down on our theaters with them, they may be pulling back in some other areas, but to-date we are not seeing any of that and we just met with them over the last several weeks and are not seeing any pullback.

Okay that’s helpful and then you guys have narrated you would like to do 50% to 75% of your theater assuming that’s still the plan as of now?

Yes, that’s still and as I said if you look at our big three of AMC, Cinemark and Regal all three are very active and we mentioned earlier and I think Jerry mentioned we had 13 leases that were expired in 2018, eight of those were extended to 2030 with renovations two of those just took their extension options and continued on. And two of the others we are in active negotiations to renovate and extend a minimum of 10 years and the third one which is kind of later in the year we are in negotiations with. So we are seeing across the board and that covers all three of those operators they are all actively still wanting to invest in these theaters, because they are their productive theaters.

Okay fair enough. So switching over to kind of the disposition front. Mark can you talk a little bit about the prepayment fees assumed for the education segment of 2018, what exactly that’s going to be related to and then with the termination fee this year, I think they are coming in over $2 million higher on the midpoint, but you are selling less than initial guidance. So just some color on the balance there would be helpful, maybe the sort of pressure on the map on how those work would be useful?

Yes, first of all for this year we are actually selling an additional school so kind of tightening the midpoint of guidance it wasn’t related to Charter School terminations. And as you go forward to next year kind of the midpoint of guidance for termination fees is $20 million that’s several schools kind of split between or early in the year and kind of third quarter probably more focused on Q1 and Q3 and then there is also prepayment fees if you notice which is also a school. So what happens is these guys have a stated option periods that they can exercise their option, but they got to pay us the significant penalties call it 25% and that's what you are seeing in these fees that shows up as gain on sale on our income statement, but we treat those termination fees just like we would at prepayment penalty on a loan as a penalty, because that's what it is called in the lease and that's what those relate to. So yes there is a increase next year as there is couple of larger schools and a little bit more volume there than the current year.

Just talk with the on board map, if you are going to sell a 100 or 110 billion this year given what you are going to do in 4Q and it's going to be 19 million in fees and we have made it 25 million in fees between the two types of fees next year does that imply upwards of 150 million of as [Indiscernible].

Yes that's probably a decent number, but as Mark said he gave you a general fee there are some that have the higher fees and so some - and on a year-to-year basis it's school-by-school what that premium is and so it doesn’t - it's not a uniform kind of premium.

Yes, in some cases they are actually coming to us and will prepay the rent all the way to a feature option period and we are letting them - there is a economic decision to take the rent now plus the prepayment penalty. So like Greg said it doesn’t necessarily correlate exactly.

Okay. I appreciate it guys.

Thank you David.

Your next question comes from the line of Craig Mailman from KeyBanc Capital. Your line is open.

Hey guys. Mark I guess could you give us a little bit more clarity on kind of the rents and dispositions in 2018 and also a little bit more color on when you think those term fees will hit?

Yes, sure. Let me take this second one first. Termination fees the 20 million to termination fees roughly two-thirds Q1 and one-third Q3, but I will tell you as we saw this quarter they can move around between quarters. But that's our expectation as two-third, one-third and then that the prepayment fee which is also a school that's paying off its loan early and a prepayment penalty that's more slated for third quarter. So that's how those breakout. The other question was that last year's guidance was a 185 million to 200 million is what our current guidance is for 2017 and this year it’s not much difference 125 million to 225 million. So while the mix is probably more towards public Charter School options this year than it was last year, because we have our theater sales and so forth. The absolute number isn’t that much different year-over-year.

And candidly we had some more imagine dispositions put in for that as we continue as Jerry stated our intended commitment to lower that exposure.

I guess just away you gives guidance question given the kind of fluidity of when some of these term fees hit and get adding it back, but why not just give - just guidance after the fact, because that's why you guys kind of missed this quarter relative to the street I think there was probably a higher level of term fees in there, and just optically it looks like a bigger miss and it really is because of basically all turn keys.

I guess we didn’t give quarterly guidance per say, so that moved it between quarters, so far they haven’t moved between years and we couldn’t sort of give annual guidance. But I hear what you are saying.

Okay. And then just Mark or Jerry just on the early education tenant could you kind of let us know what is in guidance for 2018 from a holdover rent perspective, where it shows up?

Craig, well I think again there is not much related to these that we have terminated because we have got to work through their putting as we are actively and restructuring tenant on - I don't think it's probably wise of us to tell them the number we have included for the rent. So I think we will hold back on that, but I would tell you there is not a lot for these we have terminated, because we have got some releasing time to at least those up. So there could be a positive upside to that if we are more successful and rent those quicker.

I guess maybe you will limit what you could say, but just what is the progress there in backfilling, are their tenants signed up to potential take [indiscernible] yet or are you guys still...

Yes, we have active negotiations with regarding to several of the properties. Again, for us it was about kind of there was a lot of things going on this was taking longer than we had hoped and it was really for us Craig about taking control and lowering our exposure where we thought we had good opportunities to put some people and diversify away from this exposure.

Great. Thanks guys.

Thank you Craig.

Your next question comes from Anthony Paolone form J.P. Morgan. Your line is open.

Okay thanks. I will start with I guess the termination fees discussion. I guess a few years ago you didn't have much of any of that that and if I look at 2018 guidance it seems you add up to about 6% of earnings. So how do you think about that just on an ongoing basis like will this be just a continual flow of sales and recognition of that level of income or do you get to a certain portion of the education assets and then that’s just tapers off because they are gone.

No, I mean I think what we have said Tony its Greg is that those are a part of this business given the fact that they want to have that ability to access that public - that are tax-free municipal bond market so I think it will continue. Again, it's a fair question that we are looking at the idea of the level of these and our ability to - as Mark said we have had people who are concerned about certain tax events or rates who have kind of prepaid a year end rent and their prepayment penalty. So we are spending time internally talking about how we can get a less volatility in that and give you guys a better view to that. And we are working on that right now.

Okay, got you. And then if I look at your investment expectations for 2018 at the midpoint $750 million and it seems like the expected standing remaining on what you have underway right now it leaves you about $400 million. Can you talk through kind of where you see that coming from I think in prior years a lot of that even at the outset you had was pretty visible and so I'm just wondering about that piece.

Yes, I would say that it's still consistent with that, that we have great visibility, we have names on projects for all of that so again it's not our nature to kind of to throw out a lot of things that we don’t think that we have got. it's fairly evenly balanced between the three segments for the year, but our confidence at this point remains high with regard to that number.

Yes and what you don’t see on Page 20 is the fourth quarter of 2018, because it's in thereafter, but if you were to add in the fourth quarter you probably have nearly 40% is carryover from this year that might not be as quite as high as in prior years as a percentage, but still a healthy percentage that's carryover. And as Gregg said with regard the remainder, it's pretty evenly split between the three segments and we feel pretty good about it.

Okay and can you talk to expected cash and maybe even GAAP yields on the investments for 2018 and how those are shaping up.

Sure. I would in the theater business we are still again kind of the high sevens, low-eights realm very similar I would say kind of the mid eights in recreation space and then probably that around eight or so in the educations space.

Okay got it. And then just last question on the theater front. Is it possible to give us just a rough sketch as to what the economics of the highly [amenitized] (Ph) theater box looks like and EBITDA coverage there versus maybe more traditional Megaplex box interest rate. If there is a greater skew as to where revenue and profits come from between those two theaters?

Yes, there is no doubt that there is a greater recognition of the food and beverage and predominantly I mean that's going to skew to the alcohol sales, it’s a high margin low spoilage business. If you look at what we have talked about before, we have seen a four wall revenue increases of about 40% which corresponds to yet significantly higher coverage. So we think that mix is a little bit different if you look at the per cap spend from a concession standpoint, from an amenitized theater to a non-amenitized theater that’s significant and you are seeing those pick-ups in terms of spin in the food and beverage.

And so if you get 40% more I guess profits in the box, do you just get that extra coverage or do you close your per foot basis or how we want to think about it up a bunch as well in those.

No, again it’s a good question. I mean generally we reset the percentage rent factors as well, but we are for amenitized often we are co-investing, so the rents are escalating as well. So when we are escalating rents and escalating coverage, we feel really, really good and the coverage is escalating at a much higher pace than the rent is. So we are growing coverage even though we are getting higher rents.

Okay got you. Thank you.

Thank you.

Your next question comes from Nick Joseph from Citi. Your line is open.

Hey it’s a [indiscernible] here with Nick. Just a few questions. As I think about just the term fee change and Mark I think you talked about dilution from assets sales from 2017 and 2018 being about $0.10 so if I just add repayment and the term fees, you are looking at about $0.34 in guidance for 2018 relative to the $0.25 in 2017 so all the dilution that you anticipate is being offset by the prepayment penalties in the fees correct?

Yes, I would say about $0.08, I would say the sales are about 11 and the termination fee and prepayment penalty increase is about $0.08, so you are right there is an offset there, that’s correct, but it’s not quite offsetting the dilution of the sales.

What is your math to get to that $0.10 on the dilution, I mean what are you assuming that capital is being going up the door at and where it's being reinvested?

So we do it precisely, but you can do at high level on the dilution if you take last year's sales were about 200 million this year sales call it 200 million. So just say around 200 million is going to hit the P&L at around 375 basis points upon average these are about 10 cap that we are selling, because these theaters have grown in terms of cap rate. We sold some of the Imagine Schools, we sold some theaters. So this is about 375 basis points spread over our cost of capital. So if you were to take the 200 million and multiply by 375 basis points and then divide by the shares that’s how you get the roughly $0.11. We do it more precisely but that gives you a high-level thumbnail of the number.

Okay and then I mean just thinking about the prepayment fees and termination fees and you talked about how they won’t run off completely, at some point you sell enough of these assets that you are not only losing income from the assets, but the fees go away too, because you don’t have the assets to sell to generate the fees. [indiscernible] to that point.

Because we are reinvesting in Charter Schools, we continue…

We are actually adding more than we are taking out. That’s why they are recurring in nature.

Theater coverage where does it stand on trailing basis this quarter?

Again, I would say we are about 16.3, we told you we were at 17 theater if you think about it theaters Box Office was down about 5% so purely if it was actually apples-to-apples we should have been at about 16 - right out of 16, but we are about 16.3 on our portfolio, is consistent what we talk about same within that 16 to 18 range.

And you talked a lot about the confidence you have within Box Office and talking about the renewal you had which I believe you disposed last quarter in the [indiscernible] so I don’t think that’s was a new news as a way to sort of deflect some of the weakness that people perceive and clearly with the stock market you don’t have to go too far to look how AMC and Regal , Cinemark are trading right, they are at near all time lows, even after they reported decent earnings. So I'm just trying to reconcile those two things together sort of your overall confidence relative to the way that operators are talking and exhibitors are talking about their business?

Yes I think it's a fair question [Michael] (Ph) I think what all the exhibitors have talked about is the quarter-to-quarter kind of narrative as appose to the animalization and I think if you go back and you listen to - I'm sure you have all of their calls, they are talking about a very robust fourth quarter, so they are all anticipating that we will get back to near 2016 levels if the Box Office performed as expected. So I think what they have all discussed is that the idea that content is matters and the idea we have talked about within that plus five to minus five Box Office performance is a lot content driven and the second and third quarter it didn't deliver on the content. So I don’t think they think there is anything fundamentally wrong with the business, it is just coming off two record years that the content was not as strong as it could have been.

As we think about the 152 Megaplex and 235 million of rental revenue, how much of that has been a highly amenitized at this point in terms of redeveloping into newer theaters. I'm just wondering how much of the portfolio has been touched in that way?

My guess is we are starting to approach near 40% of ours. As we talk about some of ours are so high performing that they don’t - they are not really a candidate for it. So we still anticipate that we will get to around three quarters of our portfolio being amenitized.

And have you noticed any differences upon which where your theaters are located, I'm just curious major market on-mall versus off-mall, standalone and is there anything that you can discern over your 153 theaters based on the entire retail landscape how those are performing based on where they are located.

Like I said we haven’t seen the biggest - there is no doubt, what I would tell you is, the biggest indicator is are you first mover, second mover, third mover, fourth mover type as appose to the setting that you are in and so I think we have not - the other thing is we use the term and we need to probably be more defined and when we talk about amenitizaiton, because there is - if we talk about the introduction of expanded food and beverage including alcohol, we are probably over 90% of that. So when we talk about high amenitized, we are really talking about the introduction of the fully reclining and removal seats. But we have not necessarily seen, it's been well received both in urban and suburban markets that we have seen.

Last question is on guidance in terms of equity, Mark I recognize you talked a little bit about the balance sheet being - the range is probably maybe I would say probably a little bit above the average of the range of probably where you would want to be and as you start modeling forward the additional investments spend and I recognize you have some free cash flow from after dividend, but do you have equity baked in to the forecast for 2018 currently?

Absolutely yes, we have the combination of debt and equity like you said equity and cash flow and then a debt as well to - really we have a net 575 million of funding, if you think about 750 million of guidance midpoint for CapEx 175 million guidance for sales so 575 to fund, you could think of that kind of being a large -- bond offering and then the other equity in cash flow to pay for the rest. So yes we do have equity in the plan next year.

And do you have a desire that secondary versus ATM and I recognize the last deal you did was via the merger being able to delever that way and raise equity I just don’t know going forward whether you have an appetite to just match fund on ATM versus during the traditional secondary offering?

You know we really plan a combination, we use both alternatives, the ATM or what we call a direct stock purchase very inexpensive. At the same time, we recognize that sometimes we want to raise larger amounts and so when we plan a blended cost of those two in our 2018 plan because we use both as we have done in the past.

Got it. Okay, thanks for the time.

Thank you.

[Operator Instructions] The next question comes from Daniel Donian from Ladenburg Thalmann. Your line is open.

This is actually [John] (Ph) took on for Dan. So just kind of clarifying the 106 million of Multiplex theaters you bought in the quarter, were those in that kind of seven to eight cap rate range you kind of mentioned the market being at, or there is some reason above or below that?

No they were in that range, so I would call them high sevens range. Those were both kind of near top 100 theaters in the country, so we said those are what we think are very attractive cap rate for those high-performing group of theaters.

And given the high performing nature of the theaters, I mean are those things you look at amenitize or is the - just amount of money they manage to revenue they are doing make it less likely you will amenitize those near-term.

You know I would say in the near term they are probably less likely, because they are so high performing, but it doesn't mean that over time they will not introduced amenities and as I said alcohol is already there and you will see - it truly gets down to a question of does it make sense to take seats out or not?

Okay and then switching over to kind of education, occupancy picked down a little bit in the quarter I mean was that just all tied to the early education operator I know you put them in as - call them as like a temporary tenant but…

Yes, I think it was primarily that and I think the other thing is to note that our overall - actually we look at when we talk about utilization factor actually has picked up. So we had some as we talked about some occupancy some issues that we are dealing with they are pretty well known as we have discussed, but the actual underlying drivers of kind of the schools that we own, the occupancy especially in our Charter Schools was - and the utilization picked up from 84 to 86 from a utilization rate and in overall enrollment was up 10% across our Charter School portfolio.

But from an individual kind of Charter School property performance in - no Charter Schools in the dark in the quarter?

We did have once Charter School that we are - it was two charters and one school and we are working to replace the other charter in the other building, so it was a partial.

That makes sense and then Jerry kind of alluded to it earlier in the call, but if you imagine that you think on the contract and you are looking to sell kind of the beginning of the next year, was that the kind of 50 million of Imagine dispositions that you alluded to on prior calls [Indiscernible]?

Yes, it was that there has been some delays in that closing and so we have now got those under contract and we anticipate that those will close in the first quarter they could close earlier it's just we are putting that out there as the target.

Makes sense and then - so there is other Imagine dispositions in 2018 guidance on top of that as well or without kind of…

Yes, but beyond that we have also got an idea that we would - what we talked about is continuing to worked down that exposure. We talked about a call that we had restructured some other leases to aid and selling those. So we are actively marketing a group of Imagine that - we have a certain group that we have under contract now we anticipate or hope to have others that we will be able to exit from and it's probably more just a marker right now for a number. The group that Jerry talked about we could tie to a specific contract, the other we have got several in the market for sale and we just kind of pick a number of disposition proceeds and then we see if what combination of those that are being marketed.

Makes sense. But none of those 50 million that you have under contracts those weren’t leased - those leases on those properties weren’t restructured right. Just the ones you are looking to sell beyond the 50 million.

That is correct.

Perfect, alright. Thank you very much. That’s it from me.

Thanks.

I’m showing no further questions at this time. I would now like to turn the conference back to Greg Silvers.

Thank you, Joy. And again thank you everyone for the time and attention. We look forward to seeing many of you next week at NAREIT. So thank you for your attendance.

Thank you.

Bye-bye.