Good day, ladies and gentlemen, and welcome to the Year-end 2018 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'd now like to introduce Mr. Brian Moriarty, Vice President of Corporate Communications. You may begin.

All right. Thank you. And thanks to everyone for joining us today for our fourth quarter and 2018 year-end earnings call. I’ll start the call today 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 the results of operations may vary materially from those contemplated by such forward-looking statements. A discussion 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. Now with that, I’ll turn the call over to Company President and CEO, Greg Silvers.

Thank you, Brian. And good morning, everyone. Welcome to our fourth quarter and year-end 2018 earnings call. I'd like to remind everyone that slides are available to follow along via our website at www.eprkc.com. With me on the call today is the company’s CFO, Mark Peterson …

Good morning.

… who will review the company's financial summary. First, as always, I'll get started with our quarterly headlines, then discuss the business in greater detail. Our first headline is the strong fourth quarter caps the successful year. In 2018 we delivered record results with both total revenue and FFO as adjusted per share increasing by 22% versus the prior year. Solid performance from our existing investments was enhanced by the $71.3 million in prepayment fees received from payoffs of approximately $280 million of non-education related mortgage notes. Certainly, a strong return by any measure. Second, investment spending regained momentum. During 2018, we were disciplined in our approach to capital allocation as we executed a capital recycling plant and prudently redeployed that capital. As the year progressed, our cost of capital returned to levels which allowed us to achieve reasonable spreads in pursuing accretive investments, and we accelerated our growth during the back half of the year. We also began to broaden our investments in the experiential space, which we’ve highlighted as having a substantial future potential. I will have more on this topic as I review our investment spending in more detail. Third, tenant segments broadly strong and a new tenant for CLA properties. 2018 was a record year for the box office with revenues reaching $11.9 billion, an increase of over 7% versus the prior year and up over 4% versus the previous record year set in 2016. Additionally, attendance was up over 6%. Overall, 2018 provided further affirmation that theater exhibition remains as the dominant out-of-home entertainment option. In our Recreation segment, our ski properties are demonstrating solid performance supported by early and sustained snows across the U.S. Separately we are pleased to announce that we’ve entered into an agreement with Children’s Learning Adventure which will allow us…

Thank you, Greg. I would like to remind everyone on the call that our quarterly investor supplemental can be downloaded from our website. Now turning to the first slide, net income for the fourth quarter was $48 million or $0.65 per share compared to $54.7 million or $0.74 per share in the prior-year. FFO was $97.7 million compared to $78 million in the prior-year. FFO as adjusted for the quarter increased to $105.1 million versus $95.9 million in the prior-year and was a $1.39 per share versus $1.29 per share in the prior-year, an increase of 8%. Before I walk through the key variances, I want to explain the financial impact of three items, which are excluded from FFO as adjusted. First, we recognized $5.9 million of severance expense including $3.2 million of accelerated vesting of common shares related to the termination of the agreement with our former Senior Vice President and CIO and another employee. We expect to have an announcement of a new CIO soon. Second, we recognized an impairment charge of $10.7 million related to our guarantees of $24.7 million in bonds secured by leasehold interests and improvements at two theaters in Louisiana. The operator of these theaters obtained a special bond financing post-hurricane Katrina under our program to spur new investment in the affected area. No further losses are anticipated on these guarantees as the charge book approximates the difference between the estimated market value of our collateral and the outstanding debt should these assets and debt eventually come on to our balance sheet. Note that this is not expected to have much impact on our 2019 results, as the interest on the debt we would take on is about equal to the rent we would likely charge a new tenant. It should also be noted,…

Thank you, Mark. Before we get to questions, I want to summarize our thoughts today. 2018 was about capital recycling and being prudent to capital allocators. And while we’re proud of our success, we're excited about our announcement today of a resolution of CLA and our intent to again ramp up our investment spending. As Mark mentioned, we anticipate making an announcement about a new Chief Investment Officer in the near future, which combined with the strength of our talent and the depth of our opportunities, should translates into productive results for our shareholders for this year and beyond. With that, let's open it up for questions. Tiffany?

Thank you. [Operator Instructions] Our first question comes from Nick Joseph with Citi. Please proceed.

Thanks. The St. Pete Hotels, which is $25 million of planned upgrade and pay what the return on that spend are you targeted?

Again, I think what we're looking at, Nick, is more food and beverage and entertainment options as we talked about. This is a unique property where you add the -- we own the beach we can actually serve and provide a level of entertainment right directly on the beach. And we see that this -- these facilities already drive over 60% of their revenue from food and beverage, and we see ways to enhance that. So, again, I would think that we would be hoping for kind of low double-digit returns on that investment.

Thanks. And then with the return to larger net acquisition growth this year, what those guidance assume in terms of equity issuance?

Again, I think you look at and market speak to this, but I would think we’re traditionally a 60-40 issuer. And if you take out where our dispositions are and that apply that 60-40 balance on that, that would probably be kind of in line market.

Yes, just to elaborate on that, we have investment spending of $600 million to $800 million, so kind of $700 million at the midpoint, dispositions $100 million to $200 million. So that's $500 million to $600 million of capital required. And as Greg said, if you kind of do the math on that, I would say, little less than 60% equity that implies in excess of $250 million of equity. And we do have that in the plan and we’ve plan to raise that via direct share purchase plan or perhaps a bigger offering. I will say that we do have a note maturity related to Schlitterbahn of $180 million. We haven't assumed that paying off, but that is a possibility and obviously that would reduce that need for equity going forward. By the way, on the debt side, we have a lot of capacity in our line of credit. So we probably -- the way things are looking, would probably just be using our line of credit to fund the debt portion of that incremental net investment of $500 million to $600 million.

Thanks.

Thanks, Nick.

Thank you. And our next question comes from Craig Mailman with KeyBanc Capital Markets. Please proceed.

Hey. Good morning, guys. Just on the CLA transition to Crème de la Crème, I mean, could you talk a little bit more about any downtime associated with the leases or any kind of -- how you guys are thinking about the cash flows this year? I know you said maybe a little bit more than $1 million a month that you're currently getting, could you kind to give us maybe what the lease entails relative to currently what you get from CLA? And maybe also relative, I think the $20-ish million that you originally signed, the deal with CLA? Just kind of curious about the recovery is?

Yes, sure. I think this year and in through -- through March of next year it's really a transition period. So I would kind of target that that kind of $12 million range, meaning about -- because at any onetime we're transitioning these over and part of the agreement, Craig, was to not overwhelm an operator and give Crème the chance to really be successful and to not try to take on all of these at once, but kind of orderly migrate them to from CLA to Crème. I think as we go forward, we structured these leases with percentage rents that we've always said that we think that based on that 20 that we can get back to -- get to kind of a 70%, 75% recovery. So you think that of go to the $14 million to $15 million range as they begin to ramp up. We think that's directionally where this will be headed, but I would think over the next 12 months I would plan on that kind of $12 million, because at any one time some will be operated by CLA, some will be in Crème and will be in that transition. But our goal was for this to be orderly to not be disruptive to teachers and students, and we feel like we structured a deal that will allow for that transition and calls the least disruption possible.

And as I mentioned, we include in our guidance a $12 million estimate as well.

Right. And just a clarification, I think $3.5 million of $15 million is for kind of equipment and is that basically the …

Right.

… the note amount that you guys are going to have out to Crème de la Crème and kind of what -- kind of yield of that?

That's correct and it's at a 7% yield.

And then just, Mark, going back to the Schlitterbahn note, potentially can you remind us where that yield is look this up but itself, but just curious.

It's about an 8%.

So if you guys were to use at the finance investments there would be a little bit less accretion on the -- on that kind of 180 than you could do -- just doing the DSP?

Yes, it depends upon the transaction and how you deploy it. But again, there could be a little -- could be a push. It should not be measurably different relative to -- but I mean, as opposed to if we issued equity depending upon our price, it could not be as attractive as issuing equity. That’s true. It's probably a couple of pennies impact if it pays off and then we reduce our equity needs, probably a couple of pennies, it's not that significant because it mostly replaces equity [indiscernible].

And then just last one for me, as you guys have kind of evolved the portfolio from primarily theaters to now education and some other retail kind of assets now, a little bit more is lodging that could be 10%. I mean, I guess just the thought process: number one on a little bit more of, I guess, destination type attractions of some of this lodging at this point in the cycle and the volatility that doing some of these traditional lodging structures at least in the interim could kind of introduce to earnings just kind of the thought process on that evolution and the risk reward of doing that?

Hey, Craig, the only thing I would do is I think this is consistent with our focus on what we think of our experiential assets. And let me assure you that we actually went back on these assets or these types of assets and look how they performed during different economic cycles. If you look at how these assets have performed, they performed quite well. These are the dry 2 to destinations, which is consistent with our theme that we've had across the board. And I think, again, we keep going back to the -- to the comment that that these experiential assets are where consumers are wanting to spend their money, where they’re frequenting and we see them actually as very stable and that we're very comfortable that this portfolio that we're building and I -- like I said I reference City Museum, it's a 20-year history go back and look at how well this did during the recession and these are assets that perform and perform well during these periods. And therefore rather than volatility, we think we're introducing stability.

Okay, great. Thank you.

Thank you.

Thank you. And our next question Rob Stevenson with Janney. Please proceed.

Hi. Good morning, guys.

Good morning, Rob.

Mark, other than the $7 million of Kartrite preopening costs that you’re excluding from FFO as adjusted and the $11 million from CLA Crème that you're doing that $18 million, is there anything else material that’s -- that you’re -- that’s the gap between FFO NAREIT and FFO adjusted?

Well, we do have the add back for termination fees, and so forth that we typically have on the charter school side. But I pointed out that transaction costs just because that’s much larger than normal. We typically have some transaction costs, but certainly those two events, the Kartrite preopening and then the CLA consideration will increase that. As far as the difference, I think it's kind of the ordinary stuff. It's the difference between FFO and FFO as adjusted other than that.

Okay. And the $7 million of Kartrite preopening costs that’s all in the first half of the year?

Yes.

Yes.

Okay. And then the Crème stuff is throughout the year?

Yes, periodically it's -- I mean, again, as you can imagine we structured this to incentivize the orderly transition.

Okay. And then how -- do you any assets currently with Crème, before this new deal?

We do not. We did not. We had a relationship …

Okay.

… that talking to them and they came to the table, interested. I mean they operate larger size children's centers, so this was a natural fit for their type and size of business with facilities that we had.

Rob, I know [indiscernible] track. Sorry, I was just going to give you a little more guidance on the transaction cost. That $7 million, because I know you track FFO NAREIT, that $7 million is -- since it opened in the spring, its primarily first quarter. So I want to give you a little more guidance on that. And then the CLA amount that $11 million, is probably more weighted to the back half of the year just the way the transition goes. So just wanted to help you out a little bit on the timing of those two things.

Okay. And then just back to Crème, I mean, when you take a look at them versus your other early childhood operators in the portfolio, excluding CLA, I mean what -- how did they sort of stack up and compare and sort of what’s the expectations there operationally? I mean, are they at the top end of the operating spectrum? They sort of middle of the road, how should we be thinking about them as an operator within your overall early childhood operating portfolio?

I would say consistent with their name there at the top end. They are highly thought of and offer a premier experience, which we thought, Rob, partnered well with what we think were our premier facilities. As I said, this kind of felt like a natural fit with their kind of upper-level kind of focus and their ability to deliver outstanding kind of performance and reviews. And I think if -- when people go out and look at them, they will see that alignment between our facilities in their operations.

Okay. And then just last one for me. In terms of -- if you guys look at other lodging opportunities, are you guys willing to go Caribbean, Mexico all-inclusive and things of that nature or was this more or less a unique opportunity for you, and mostly consistent with staying in the U.S?

I would say where we’re at is, these are what we think of as recreation anchored lodging, that's the way we look at it. That’s really kind of what we're looking at and what I would say the U.S., this is not if you look at where we've been with waterpark hotels, with these type of things, I don't think this is going to be this big. We are -- as I said, we’re not going to become a lodging REIT. These are unique assets that have unique opportunities to exploit what we think our recreation or entertainment options. And those are quite unique compared to the lodging world. So I think these are what we think are tuck-in opportunities to an experiential portfolio, but not a driving force.

Okay. Looking forward to the Investor Day, gentlemen next year.

Thanks, Rob.

Thanks, Rob.

Thank you. And our next question comes from Collin Mings with Raymond James. Please proceed.

Good morning.

Good morning, Collin.

Just given the JV structure on the properties here in St. Pete, how should we think about your appetite for additional joint venture deals, particularly as you look at maybe some property types that are outside of kind of your traditional buckets?

I think that’s always an interesting kind of way for us to look at to derisk those to share kind of capital to create alignment and to present an ability for us to execute and combine our expertise on those recreation entertainment availability and what we can bring to the table with someone who also has that unique lodging experience. So I think, Collin, we looked at it as a way to not only derisk our investment, but create alignment and we also had to find someone who saw the vision that we did at some point in time converting these more into a traditional structure. So it will take -- it takes the right partner, but we have to create kind of alignment of interests and we think we've done that.

Okay. So it sounds like you’re open to it with there pretty selective?

Yes, always.

Okay. And then you touched on the museum deal in the quarter and just the appetite two more deals on that front. Just maybe update us on where you stand as far as moving forward like live performance venue investment opportunity? I know that’s kind of another area that you guys have highlighted of potential growth going into the future?

Sure. I would say right now our opportunity set and the level and depth of what we're talking to as far as opportunities have never been greater. There is a lot of transaction opportunity as we expand and talk to people about the aperture of this experiential portfolio. And so, while we don't have anything to beyond what we’ve said, we're constantly seeing where the consumer is moving and spending their dollars and want to spend their dollars. And we think that's going to create new opportunities. We think that -- that investors want exposure to these macro trends that we're taking advantage of, and we think we are uniquely positioned to not be just what it's not theaters, not just attractions, but the entire experiential focus. And so, we're working hard at it, Collin, and we think there'll be new and exciting announcements to come that will continue this focus on all things experiential.

Okay. And then maybe just on the investment spend number. Any additional thoughts on kind of the mix that -- kind of look at the pipeline right now as far as what that might look like in terms of acquisitions versus a development or other spending?

Right. I think it will be weighted more towards the acquisition side this year. I mean, last year it ended up about 50% acquisition. I think it could be higher this year and it will be more focused in our entertainment and recreation segments. As I said, we are spending a lot of time on our experiential segments those two, and seeing a lot of receptivity both from opportunities and from appreciation from investors. So I think acquisition -- more acquisition weighted and more weighted in those two areas.

Okay. One last one for me, just following up on the alternate and I'll it turn over. Just is there anything in particular that kind of is driving as you think about what areas you want to focus in on, why that’s cleaving itself for you guys to be a little bit more focused on acquisitions versus the development or some other investment? Why is it blend itself more towards acquisitions?

You know I just think right now construction costs are rising at a pretty rapid pace, and I think it's -- that acquisition opportunities are probably just more prevalent than the level of spread that we used to achieve on a risk-adjusted basis on development is not quite as attractive right now as it is on acquisitions.

Helpful color. I will turn it over. Thank you.

Thank you, Collin.

Thanks.

Thank you. And our next question comes from Michael Carroll with RBC Capital Markets. Please proceed.

Yes. Thanks, Greg. I wanted to see if we can talk about CLA and Crème de la Crème's again real quick. And I believe in the press release you were talking about the initial rental rates for Crème de la Crème would depend largely on in-place operations or transition to them. I mean, what's expectations there? Do you -- and I guess, what does CLA have to do to ensure an orderly transition of the operations and do you expect that there's risks that they won't transition those?

Well, again, this is -- and I think it's written, Michael, in fairness, any time you’re doing something over time, there is a risk that that breaks apart. We don't anticipate that, but I think the nature of the business that we're in says [indiscernible] things happen if people have -- if we get sideways, we structured this deal to incentivize that and payments or structure to incentivize that. So we anticipate that it will be orderly and it will be a natural and easy transition, but the nature of public disclosure is you've got to account for what if something goes wrong, and so you see some of that language in there. But that's not our anticipation.

Okay. I mean, you are talking about the rent stream from the new operator. I know Mark said I think, $12 million is included in the 2019 guidance. How is the lease written to account for ramp ups? Is there a variable amount that they include, or they achieve certain operational hurdles then the rent stream goes up? Is it written fix that it goes up $2 million every year? I mean, how is that written?

It's a great question, Michael. It's actually written that that there is you've got it both ways. There's a ramp up that's based upon and how well the properties do, and then there's a reset of the property rent and several years were stabilization has occurred. So I think we tried to incorporate both of those concepts to allow for them to introduce their concept to make any adjustments that they need to do to ramp fees up to levels that we've seen them do, and then to reset that more to a fixed rent level.

So what is the stabilized rental rate that could be achieved if everything goes as planned over the next few years?

I think $15 million, $16 million which would get us 80% -- 75% to 80% of our original rate.

Okay, great. And then how should we think about the TRS structure? Are you going to keep it as a TRS structure, or would you eventually switch that to a triple net lease structure over time?

Our goal is to get it to a more triple net kind of lease structure.

CLA is -- CLA will be triple net. I think he is referring to …

That [indiscernible] lodging.

Yes, if you’re asking about recreational lodging, we would -- as Greg mentioned, hope to transition that to triple net down the road, but CLA is triple net.

Yes. I was referring to lodging. Great. Thanks, Mark. And then, I guess, last question related to the Schlitterbahn loans. I know you don't expect the repayment of those this year, but you said there's a possibility that occurring. I guess what would have to happen for that to actually occur? Will they need to be able to refinance those bonds with the government agencies or how do we think about that?

Yes, let me jump in on that. Michael, it's Greg. I think there's a lot of avenues that they could pursue. They could recap their entire business. They could refinance that if they were to able to access the bond financing that is -- that’s available in Kansas and pay that. So we just allow for, I mean, again a variety of scenarios that we have to account for. And I think that's why Mark said, we don't necessarily -- we are not planning for that, but it is a possibility.

Okay, great. Thank you.

Thank you, Michael.

Thanks.

[Operator Instructions] Our next question comes from Ki Bin Kim with SunTrust. Please proceed.

Ki Bin?

You may be on mute. Can you please unmute.

Operator, I think …

Hello, can you hear me?

Yes.

Yes. Hi. This is Alexei. Ki Bin's associate.

Okay.

My first question relates to CLA. Just want to make sure I understand the situation correctly. So the tenant currently pays a minimum rent of $1 million per month or $12 million per year, which is what you have in your 2019 guidance. But I understand that the tenant does not pay property taxes, so what is that property tax leakage on an annual basis?

They will -- depending upon who is operating the property we will pay the property taxes. So there should not be leakage on that number.

Either CLA or the new tenant will [multiple speakers].

We [indiscernible] at in the transition.

I see. Okay. And then my second question relates to the two theater assets where you’ve recorded an impairment on the bond going. Who is the operator there? And if it comes to that, how difficult do you think would be to find a suitable replacement for those location?

Again, the operator on that was -- it was southern theaters on that which is they only operate two properties currently. They have a management agreement with Regal who is operating that. To give a little bit of color on that, so that we -- everybody understands this was a very unique opportunity in which these were bonds that were associated with the Katrina catastrophe and some rebuilding of New Orleans. Due to the nature of the bonds, the ability to do reinvestment in the properties was very difficult just because putting additional capital or using different ways to get that was complicated. So, however, again there was -- all the theaters in that market monetized. And so they were -- their attendance was greatly affected. And so, when we look at that and looked at the level of debt on those, we felt like there was a need to make the charge that we did to right size that investment relative to our guarantee.

Okay. Thanks for that color. That’s it for me.

Thank you. And our next question is a follow-up from Nick Joseph with Citi. Please proceed.

Hey, it's Michael Bilerman speaking. Greg, when you talked about the 10%, what falls into that 10%? Is that a bucket what you're going to have a certain amount of transition assets, whether they would be lodging or something else that eventually roll to a net lease structure? And how should we think about that 10% you referenced?

I would say -- what we referenced was recreational lodging assets that are not in a triple net structure.

And your [multiple speakers] the eventuality is that those just like the beach, Fulmer and assets and asset you bought, that eventually your intend is to transition those to a net lease structure?

That is correct.

You’re saying that anyone moment in time you’re not going to have more than enough to your balance sheet $8 billion today, $800 million in the transition assets?

That is correct.

And then how -- from a -- and I understand that these two assets at St. Pete are doing a high amount of SNB, but relative to whether it's a waterpark, casino, it still is a hotel and a hotel market that just happens to have a handful of restaurants, right? People are still going there probably to vacation rather than to go see -- go to the casino, go to a waterpark, so on a sort of rank order of recreational activity, it's more an extension of a vacation right being eating and drinking rather than the actual recreational activity of going to the slot machines, going down the waterslide, going to ski. So I’m just trying to better understand the inter traditional lodging.

Well, I think about -- I think you’re thinking about it in terms of traditional lodging, but what if you put a wave park right there on the beach that that you have. There are things that you can do to introduce new recreational or entertainment concepts, given the fact that you own the beach that you have a lot more optionality as far as creating more destination.

Well, that’s [indiscernible] $24 million, right? These are [multiple speakers]?

Well, again …

… need a lot of probably uplift.

And we are working through all the planning of all of that, but we think there is a lot of potential to add, again, more recreation and entertainment concepts.

And then what happened to the transition as to a net lease as your partner. Do you have a buyout on your partner share, because your buyer continue with an operating subject to 65% being a net lease to you. What -- how will this unfold?

Yes, we have kind of the traditional kind of buy rights kind of pre-negotiated on the transaction.

And at what point does that -- when you say stabilization, what's the expectation about when these assets -- either this or even the Kartrite would transition to a full net lease?

I mean, I think we would think it's somewhere in a 3-year time horizon.

And how do you view sort of the accretion dilution, right? Because arguably being in the equity position getting the full operational EBITDA, then in transition to a lease structure which arguably is going to be set at a coverage ratio that's going to be much less than EBITDA, right? Different security [indiscernible]. Obviously, but how do you think about that transition from an FFO perspective, which could be a dilutive event?

Again. like I said, you’re right. Exactly correct, but that in some ways we're going to get hopefully what we're planning on is some lift to that and then given the fact that we're doing these or doing that when in a JV, we think that we will have the ability that that when we ramp as we're ramping up, when we set this that it will not be as diluted. It has the potential, there's no doubt that relative to that risk that taking -- setting lower levels with rent. But we think from an investor standpoint, that risk reward has been more of a fixed income instrument as opposed to carrying the volatility of the P&L that that's a trade we're willing to make.

And how should we think about the security of the operator? Lodging net lease -- leased assets is typically not worked that well given the volatility in that business. And I can understand you talked a little bit about the stability of [indiscernible] more the recreational aspects. In many times what is protected, the leasehold interest is there in some sort of corporate backstop from the operator. So how should we think about those aspects to protect EPR shareholders in the event of very weak operations?

Again, I think it is -- it will be some combination of really strong coverage and corporate backstop to make that work. I think your insights are spot on, Michael, in a sense that you look at the coverage levels that we have set in some of our recreational anchored lodging, which are near 2x. So there is substantial free cash flow beyond our rent payment, which creates very strong incentives for the operator or the tenant in that case.

And you mentioned it, we do expect that I think it's the key less volatility with these investments than in traditional lodging, as we looked over a long-term and there is in fact less volatility in these assets than you would see in traditional lodging.

Right. And is there a split on those two assets and others -- two assets, what what's the split between count between. And sort of the value between the two and [indiscernible] anticipate the stand and [indiscernible]?

Yes, but again, we will have more on that. I don't think on the call we're ready to go into all the detail on that investment spend and we will be working with our partner on rolling that out.

Okay. All right. Thank you.

Thank you, Michael.

Thanks.

Thank you. And our next question comes from John Massocca with Ladenburg Thalmann. Please proceed.

Good morning.

Good morning, John.

Good morning.

Particularly [indiscernible] own Kartrite for at least initially and kind of a non-lease structure. What -- can you just remind us maybe what’s some of the other drivers potentially to that waterpark asset are besides the casino property there? And just kind of how reliant do you feel that waterpark is on the casino? And maybe what prevents someone from going in and opening at a similar indoor waterpark type establishment down the road closer to the measure in New York area that kind of [indiscernible], if you will?

Again, like I said, I don't think it is that significantly tied in to the casino. I think there are other drivers up in the area whether it's the music festivals in that area, there's a lot of things going on in the Catskills. I think likewise to what we see in the Poconos, there are people, there are multiple waterpark operators that operate in that area, but it's truly about the execution in the property that drive the fundamental success of the property. And, yes, when we open that property here in the spring, I think we will invite everyone here up to see, and I think it will be readily apparent why we're going to be successful there. This is an outstanding property in a very bucolic setting, which offers the latest state-of-the-art kind of waterpark hotel that I think are -- is that the public is going to embrace. So we feel that it's well-positioned relative to the marketplace and with a depth of population in and around that we think it will be very successful.

Okay. And then switching gears to the investment you made in St. Louis. Quick clarifying point, that is on a net lease?

That is, yes.

Okay. And then other -- you kind of talked maybe more opportunities to do other acquisitions in the kind of recreational museum space. How is the underwriting different for those properties and what maybe your kind of the yields on those properties, or the yield specifically on the St. Louis asset you purchased?

Again, I don't know that we -- I think the yields are consistent with what we've done in that space. So I think those are -- I think we look at these relatively like any sort of attraction in that broad in the sense of what are the drivers, what is the -- what's the history. The good thing about these, John, is that that most of them have long-term historical performance that you're able to underwrite and see kind of what is the refreshment that that the new sort of innovation that's coming into this. Again, it's a very unique asset in the sense that it's been embraced by the creative and artistic community of St. Louis, and so you actually have this evolving exhibition as artists continue to add to and enhance the experience. So as we said, it's a very visual and sensory type experience. And I think it -- it's only grown over the years, and it's truly a creative outlet for the community, but it's also one of the most highly attended attractions in the city. So I think those are the type of drivers that we're looking for in future investments, be they this one or any sort of community.

And, I mean, kind of going forward basis, when you look at coverages on these type of assets is, let's say something that maybe we doesn’t have the history of the asset you buy in St. Louis. Is there a thought of maybe just because it's a little newer in the portfolio taking a little less risk on rent and putting in little more coverage, and was that the case here?

No, I mean this -- I mean we went into this, this has high coverage. So let's don't -- I don’t want to concede that. These are high coverage assets, but always when something has less history, if that translates to more risk we're either lowering our investment to drive higher coverage or getting other kind of concessions to account for that risk. I mean, what we are in the business of is trying to create durable and long lasting reliable cash flows. And so, however, we need to structure that either by high coverage or by additional credit we're going to do.

Okay. And then one last one on the impaired assets in Louisiana. If you get them kind of out from under this loan structure, I mean, is there potential to [indiscernible] them and kind of maybe get the more on par with the other theater product in markets, or …?

At least one of the assets -- I think one of the assets we believe that's directionally what we will do. The other asset probably is more of a challenge given the fact that candidly the entire property that it's what hasn't really returned to its -- to what the expectation would be with reinvestment in the city.

That’s it for me. Thank you very much.

Thank you, John.

Thank you. And our next question is from Nick Joseph with Citi. Please proceed.

Hey, it's Michael Bilerman again. Greg, over the years we spent on the amount of time talking about PGOD on these calls and the potential impact and shortening the release window. Of late, I think the discussion is probably going to be more about streaming and you look at more room and then one picture with lot of awards. Netflix definitely has changed the game a little bit in that arena, putting that content and extraordinarily very limited release to get the Oscar nominations, but releasing it on streaming and I’m sure you’re acutely aware of what’s happening with Disney Plus. How do you think the evolution of streaming and that content may impact movie theaters?

You know, it's actually a really, really good point. I think, first of all, Roma is for those who haven't seen, it's a fantastic movie, but it's gross less than $1 million in the U.S. So, again, it's not that, but I actually would direct your attention that you …

That [indiscernible] added a $100 million subscriber. So it's a large quarter, so I think …

I don't think they -- I don't think they launched for -- I don’t think they added dose for Roma, but let's talk about what E&Y just did a study, which I will -- we will share this with you. We will have this coming out, which if -- and this is independent of the theater operators, which actually proves the point that we're talking about. If you look at the highest peak -- that highest content streamers are actually the highest attendees of movie theaters. So we see this as we frame this as competing interests when there are actually complementary interests. And I think this is the latest data and we will probably have this out, I’m looking at Brian out on our website here in the next week or so, which will show that again those who are streaming more eight hours or more a week, are actually the highest moviegoers as a populace. So I think the data which is again we think that these are complementary issues and are not conflicting issues. And like I said, we now have independent third-party data that is proving this point.

It's just a question whether more content gets on to the streaming platforms in lieu of releasing in full theater, right, where that’s just becomes -- Disney puts more movies that I can make the Disney plus rather than into the theater. And at some point, its cannibalize each other.

Right. And again and there I would get points to Greg point of that he is a supporter of and continues to favor first run exhibition in the theaters.

And did you find some of the theater operators wouldn’t show the exact point of the PGOD discussion. I guess, what are your most recent discussions with them on streaming services and films that are being released like that.

Again, I think most operators and I -- this is because of the fact that its -- it was a very good movie, don’t get me wrong. Most operators, because Roma came out as a first run exhibition. Netflix had an exclusive window within that. They didn’t show it because it didn’t rose. It didn’t make money, so they -- it's not because of the fact that it wasn’t -- if it will make money and they have an exclusivity window , they will show it.

Right. So this is the exclusivity window that’s, I guess, debating and how long and what that should be.

Okay, great. Thanks for the time.

Thank you, Michael.

Thank you.

Thank you. And at this time, showing no questions in queue. I would like to turn the call back over to Greg Silvers for closing remarks.

Again, thank you everyone for attending and we look forward to talking to you in a few months at the end of our first quarter.

Thank you, everyone.

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program. You may now disconnect. Everyone have a great day.