Good day, and thank you for standing by. Welcome to the EPR Properties First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. And without further ado, I would like to now hand the conference over to your first speaker today, Brian Moriarty, Vice President, Corporate Communications. Brian, please go ahead.

Okay. Thank you, Eric. Thanks for joining us today for our first quarter 2023 earnings call and webcast. Participants on today's call are Greg Silvers, Chairman and CEO; Greg Zimmerman, Executive Vice President and CIO; and Mark Peterson, Executive Vice President and CFO. We'll 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 the results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of those 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. Additionally, this call will contain references to certain non-GAAP measures, which we believe are useful in evaluating the company's performance. A reconciliation of these measures to the most directly comparable GAAP measures are included in today's earnings release and supplemental information furnished to the SEC under Form 8-K. If you wish to follow along, today's earnings release, supplemental and earnings call presentation are all available on the Investor Center page of the company's website www.eprkc.com. Now, I'll turn the call over to Greg Silvers.

Thank you, Brian. Good morning, everyone, and thank you for joining us on today's first quarter 2023 earnings call and webcast. We are pleased to start the year with continued momentum, highlighted by 9% growth in total revenue and 15% growth in FFOAA per share versus the same quarter prior year. We have also collected all scheduled rent from Regal due in 2023 through April, as well as the scheduled deferral payments due from all customers for the same period. These results provide further evidence of our theme of recovery and highlight the resilience of our experiential investments. Additionally, during the month of April, Cineworld reported that it had entered into a restructuring support agreement with its secured lenders and subsequently filed a plan of reorganization. The proposed timeframe within the plan indicates that Cineworld should emerge from bankruptcy in early July. While we cannot comment on the status of our negotiations, the filing of the proposed plan defines the timeframe for resolution. At an industry level, we are encouraged by the continued substantial growth in box office revenues, as content production ramps up. Additionally, we are excited to see the significant news of both Amazon and Apple committing to spend $1 billion a year toward movies with theatrical releases. As we've stated many times, this firmly speaks to the importance of theatrical distribution and maximizing economics and building brands. In reviewing our experiential portfolio, we are seeing sustained demand, highlighted by our eat & play, experiential lodging and ski properties. Additionally, we are pleased to see our overall rent coverage continues to remain above 2019 levels. Our strong liquidity position allows us to deploy capital in a disciplined manner across a variety of experiential properties, including having a committed pipeline that we will fund in the coming quarters. With a durable income stream and ongoing recovery and additional growth from our investment pipeline, we are encouraged by our outlook for the year. Now I'll turn the call over to Greg Zimmerman to review the business in more detail.

Thanks, Greg. At year-end, our total investments were approximately $6.7 billion with 363 properties in service and 98% leased. During the quarter, our investment spending was $66.5 million. 100% of the spending was in our experiential portfolio and included the acquisition of an experiential property and continued funding for experiential development and redevelopment projects commenced in 2022. Our experiential portfolio comprises 289 properties with 49 operators and accounts for 92% of our total investments or approximately $6.2 billion, and, at the end of the quarter, was 98% occupied. Our education portfolio comprises 74 properties with 8 operators and, at the end of the quarter, was 100% occupied. Our value-oriented drive-to-destinations provide a compelling value proposition for families and we are confident they will continue to prove resilient. Turning to coverage. The most recent data provided is based on a December trailing 12 month period. Overall portfolio coverage for the trailing 12 months continues to be strong at 2 times. Trailing 12 month coverage for theatres is 1.3 times, with box office for calendar year 2022 at $7.4 billion. Trailing 12 month coverage for the non-theatre portion of our portfolio is 2.7 times. Now I'll update you on the operating status of our tenants. The first quarter was a continuation of box office recovery and acceleration. Q1 total box office was $1.7 billion, a 28% increase over Q1 2022, led by: Avatar: The Way of Water; Ant-Man and the Wasp: Quantumania; Creed III; and Puss in Boots: The Last Wish. The quarter also had the breakout titles John Wick: Chapter 4 and Cocaine Bear. We were pleased with the performance of the children's offering Puss in Boots and the adult-oriented Tom Hanks film, A Man Called Otto. 11 films grossed over $50 million in the quarter. Led by the outstanding performance…

Thank you, Greg. Today, I will discuss our financial performance for the first quarter and provide an update on our balance sheet. We had another strong quarter of results with FFO as adjusted of $1.26 per share versus $1.10 in the prior year, up 15%, and AFFO of $1.30 per share compared to $1.16 in the prior year, up 12%. Now moving to the key variances by line item. Total revenue for the quarter was $171.4 million versus $157.5 million in the prior year. This increase was due primarily to improve collections from certain customers, which continue to be recognized in revenue on a cash basis. During the quarter, we once again collected all scheduled deferred rent and interest from our customers and recognized $6.5 million as additional revenue from those on cash basis accounting. At quarter-end, we had approximately $110 million of deferred rent owed to us not on the books, which will continue to be recognized only as cash is received. Regal makes up approximately $82 million of this balance and is subject to the bankruptcy negotiation. Note, also as Greg mentioned, we have already received full rent and deferral payments from Regal in April and have collected all non-Regal deferral amounts owed for April as well. During the quarter, per court order, we also received a portion of Regal's September rent, totaling approximately $1.9 million that was recognized as additional revenue. Finally, also contributing to the increase for the quarter versus prior year was scheduled rent increases as well as the effect of acquisitions and developments completed over the past year. This increase was partially offset by the impact of property dispositions. Percentage rents for the quarter totaled $1.8 million versus $3.4 million in the prior year. The decrease versus prior year related to less percentage rent…

Thank you, Mark. As we shared with you today, the experience economy continues to demonstrate its strength and resilience. Additionally, content providers are again recognizing power of theatrical exhibition to drive revenues and brand recognition. We now have all the major studios and two of the largest -- two of the three largest streaming groups committed to theatrical release, which should bode well for further recovery of box office. For those who bet on the death of the cinema business, I think you're going to be sadly disappointed. We believe our experiential focus thesis is well supported by a consumer that continues to demonstrate their preference for experience, and we offer the only diversified portfolio to take advantage of those trends. With that, why don't I open it up for questions? Eric?

Yes, thank you. At this time, we'll conduct a question-and-answer session. [Operator Instructions] And our first question comes from the line of Todd Thomas with KeyBanc Capital Markets. Todd, you are live.

Hi, thanks. Good morning. I guess first, Greg, you talked about Amazon and Apple's commitment to theatrical exhibition. As you think about the release pipeline, I guess, do we start to see that release schedule accelerate in 2024? Is it a little bit more of an extended timeframe than that? And any sense on whether they're just targeting a lot more volume in content, or will these be sort of larger tempo-type releases? Any sense there?

Well, I think our thought process, Todd, is that, yes, the volume of overall releases will continue to grow. We're very excited about what 2024 looks like is getting back to kind of more traditional type numbers. I think when you -- if you look at their numbers and they say 10 to 12 films, $1 billion a year, you're talking $100 million production on average. So, I'm sure they will -- as Greg mentioned, the Killers of the Flower Moon is a $200 million production. So, I'm sure there'll be some balance in there, some smaller, some bigger, but they clearly have not hesitated from going after big production number. So, we're excited about seeing them come to the table. Greg, do you have anything to add?

Well, I would also add, Todd, Air with Matt Damon and Ben Affleck probably won't get that close to $100 million, but it's still a solid film with -- over $40 million to date.

It's type of adult products that we've missed, candidly, over the last several years.

Okay. And then, just in terms of Regal, you disclosed that 12.8% exposure from Regal, that does not include the deferral rent payments. But just curious if there's anything else when we think about Regal's FFO contribution that might be sort of baked in the model? Any operating expenses or other expenses, any other non-cash items or any considerations to the model that we should think about?

I don't think so at this point, Todd. Other than I would say the one that's probably really kind of out-of-period [be on the] (ph) deferrals was, as Mark mentioned, the September kind of payment for which their court ordered to continue to pay that stub rent period, which I think was $1.8 million for the quarter.

Yes, $1.9 million, and we backed that out. Also, as noted on that schedule, deferrals and stub rent are backed out of that 12.8%. But -- so, going forward, it's more about the Regal negotiations and the bankruptcy proceedings and where that ends up.

Okay. But it's a pretty clean one-for-one move from revenue to FFO in terms of Regal's exposure, that's the way we should think about it?

Yes.

Okay. And then, again, realize the situation is very fluid and that there's some uncertainty around the outcome. But you're negotiating now, they're preparing to emerge in a few months. It seems like balance sheet is in good shape and you've limited investment spend at $200 million to $300 million for the year. Are you anticipating a ramp in investment spend perhaps once you have a better handle on your cost of capital and have a clear sense of how the resolution plays out with Regal?

Again, I think Todd what we would like to think will happen is once we have -- we've heard a lot of feedback that this is what has depressed our multiple and that if we get resolution of this, that hopefully that will correspond to a expansion in our multiple, which as Greg mentioned, is really the thing that's holding us back, not really opportunity, it's our cost of capital. And I think if we saw that reverse and we had the ability to have a more competitive cost of capital, that we would get more aggressive on the investment pipeline, the execution of it.

Okay. And just last question, I guess around the timeline for you, for EPR, reinstating guidance and the mechanics around that, how should we expect that to play out? Will there be a resolution filed from Regal or Cineworld with a defined outcome for all locations and you'll have full certainty around that outcome and then we should expect EPR to file an 8-K with an update surrounding the company's portfolio and reinstate an outlook or guidance for the year? Is that how we should be thinking about it?

Yes, I think given the importance of this, probably our thinking is we would probably have a conference call to go over the resolution of it so that everybody would be perfectly clear, not only how it ended up, but why and our thinking on that. So, I think it would not just simply be a press release. I think given the importance that people are placing on this, it would be important -- we've maintained all the way through this to be as transparent as possible. So I think it would behoove us to continue that process and kind of have a full disclosure of not only the why, but the how and why we're supportive of whatever resolution that we get to.

Okay, great. All right, thank you.

Thanks, Todd.

[Operator Instructions] And our next question comes from the line of Rob Stevenson with Janney Montgomery Scott. Rob, your line is open. Please go ahead.

Good morning, guys. Greg, given your comments about having more opportunity to cost effective capital today, how should we be thinking about the education segment? Is there an opportunity there to sell chunks of that portfolio at reasonable prices, or is the cash flow to use still more valuable than the cap rates you could sell the assets at today?

I think it's going to be kind of a balance, Rob, and I'll let Greg comment. This is Greg Silvers. I'll jump in. I think we feel like we're very close to one way or another given the emergence that their plan is to getting resolution on Cineworld one way or the other. And hopefully, I think we'll see us if we have a positive impact to our multiple, then we can be a little more thoughtful of either raising capital or selling. I think we'll see if we don't have that, we'll probably explore that education recycling a little more aggressively. But Greg?

Yes. And Rob, we're obviously constantly evaluating the market on the education portfolio. And then as I mentioned in my comments, we are anticipating getting these five back from KinderCare and we're already marketing those, and we're fairly comfortable that those will transact.

Okay. And then I guess how are you and the Board thinking about using some of the cash from this and/or any other sales to buy back some of the preferreds or even maybe some of the common versus making incremental investment these days given the implied yield of the securities as well in excess of what you could probably get on acquisitions?

Well, again, I think we always look at it. Again, it's like an investment. And I think what most people forget is that buying your own shares back is not leverage neutral. And therefore, you have to kind of look at the total impact. But in every investment committee and in every kind of Board discussion, we are having those discussions about what is the right deployment of capital to drive value. So, those are all things that are taken into consideration.

The other thing just to comment on that, as we invest more, we continue to diversify our portfolio, reduce our theatre exposure on a relative basis. And secondly, we maintain relationships with our tenants, because we have ongoing programs with several of them and to be there for them is important, so that when we get to the other side and our cost of capital improves, we can do even more with them.

Okay, that's helpful. And then, last one for me, Mark, while I've got you. Is AMC still on cash basis accounting? And if so, how close are we to hitting the point where it reverts back to normal accrual accounting?

Yes, they are still on cash basis accounting. They don't have any receivables on or off the balance sheet. As far as getting back on accrual, really want to see continued performance. The box office is undergoing a nice recovery. We're monitoring that. We're monitoring the credit situation of AMC and, of course, Regal who is emerging from bankruptcy. So, I think we just want to see this play out, make sure see the continued box office recovery and see their credit improve as that improves before we make any moves. From an AFFO point of view, it really doesn't make much difference, because the difference would be recording some straight line rent and most analysts kind of look at more cash flow. So, we're not in a rush to start recording a bunch a straight line rent or even an initial straight line rent entry. So that's kind of our thoughts on how we look at that.

Okay. I mean, I think more so than anything else people are looking at it as a signaling impact as to when AMC is maybe not off the watchlist, but basically moved off of the accrual stuff -- off the cash stuff. And so it sounds like that probably more like a '24 event than a '23 event at this point, would you say?

Yes, they're just going through the approval, which is subject to the court ruling, I'm talking about AMC, to issue additional equity. So, of course, we'd like to see that and reduce their debt. So, we're monitoring that. Hard to predict when exactly that happens, but I think that we have some good prospects with box office improving and the ability to issue capital on their part going forward. So, we'll just have to monitor that.

Okay. Thanks guys. I appreciate the time.

Thanks, Rob.

Thank you very much. [Operator Instructions] And our next question comes from the line of Eric Wolfe with Citibank. Eric, your line is open. Please go ahead.

Hi, thanks for taking my questions. First question, I'm just assuming the Regal capital structure gets cleaned up as proposed, I mean, do you think that sort of afterward there will be a sales market for some of those assets? And just in general, what do you think it takes to sort of get a little more liquid market for some of these theatre assets?

I think what we're seeing generally is the recovery. I think there's no doubt that we'll see better liquidity in the Regal name if they have a better credit profile and emerge from this because what they're proposing is a dramatic reduction in debt that they'll have. And so, I think if you think that backstop against an improving market, I think you'll begin to see liquidity. It will probably be much better in '24 as box office we continue to believe will continue to ramp up. And as the narrative changes from there's an industry issue to there were a guy that had a -- or a company that had a balance sheet problem and over levered themselves, then I think there'll be more interest in the space.

Got it. A tough one. And then, I guess, as we should think about sort of the quality of different theatre assets, I mean, what do you think we should primarily look to? Should we mainly look to coverage sort of being in dense market locations? And I guess within your own portfolio, would you say that there's sort of a wide range of quality or everything sort of consistent around certain levels of quality?

I would say it's not as wide as people -- it's not as diverse. I think generally speaking, we're in more major markets and secondary markets, we're not really in the highly rural markets. So I think, it's one of the things when people always talk about -- there's 40,000 screens in the U.S. The reality, about 15,000 to 20,000 of those matter. The other 20,000 of those, Eric, are in small towns all across America that no one -- they don't really affect box office. And what we have always looked at is high grossing, meaning that if you're driving top-line numbers, that's something that's important not only to the exhibitor, but it's also important to the studio and you have a lot of alignment. So top-line revenue generation has always been kind of a key metric for success of a theatre. Greg, do you have anything?

Well, the other thing I would add, Eric, is that as we repeatedly say we have 3% of the theatres and generate 8.5% of the box office. And I would also say that there are plenty of middle market theatres that cover extremely well.

Makes sense. And then I guess just last question. As you think about sort of how to improve your equity cost of capital and sort of hopefully improves after there's a resolution around Regal. I guess if not, I mean, is there any thought that's sort of spinning off sort of a percentage of the portfolio, whether theatres or other non -- sort of non-core areas simply just sort of try to help the rest of the portfolio achieve the multiple that would allow you to grow?

Yes. I mean, I think we're always looking at ways to create value. Again, I think that's part of the Board's not only their task, but their purview. I don't think we have anything to comment on that, but I think our job and the Board's job is to drive value to shareholders. And any avenue to do that, we're going to look at. And if it makes sense, we will look at it very diligently. Just we have no comment on that now.

Okay. Thank you.

Thanks, Eric.

Thank you very much. Standby for our next question. And our next question comes from Joshua Dennerlein with BofA Securities. Joshua, your line is open. Please go ahead.

Yeah. Good morning, everyone.

Hi, Josh.

I was kind of curious on the -- you mentioned Regal negotiations. I guess just what is the focus? Is it on those three leases that they were originally going to reject, or is it like brand, or kind of just -- kind of what the scope of the negotiation?

I guess the easy thing would say, all the above. I think it's -- I wish I could tell you that it's one issue that we're incrementally a part of on, but there's not one thing. Greg, you...

No, it's holistic. We're just trying to come to a resolution.

Yes. It's kind of like in everything. They have a position, we have a position and leverage and who's moving to that and we'll see. I think we feel very comfortable with our approach. We think the market is supporting our approach with continued box office growth. So I think we'll see. In the end, we've tried to create what we think is a reasonable. Invariably, we think we're reasonable. And sometimes they don't necessarily agree with that. But we think our approach is thoughtful and holistic, as Greg said.

Appreciate that. And then, maybe moving over to KinderCare, you mentioned that they'll terminate in five weeks, but [indiscernible]. I guess what's driving that?

I think there's a lot of things, Josh, that can be into that. I mean, remember is really about KinderCare buying another entity. So I think they're rationalizing their store set. Do they have multiple stores in the same market? What makes sense? So, I think there's a lot of things that go into kind of how they want -- as we said, we announced this last -- at our year-end call on what we were talking about, because we wanted to be very transparent. But there's a substantial number -- vast number they took. So, I think this is what you see behind any major M&A activity and they had the ability to do that. As Mark talked about I think in the last quarter, we also have kind of a rent reset coming into next year, which we think will allow us to kind of move our [rents] (ph) higher. So hopefully, we recover some or all of this that we lost in this and then we'll have the use of the proceeds, as Greg talked about, from selling these properties to drive additional investment.

And Josh, as I mentioned, we're already marketing them and we've already had expressions of interest on all of them. So, we're very comfortable that we'll be able to transact these.

Okay. Thanks, guys.

Thank you.

Okay. Please stand by for our next question. And our next question comes from the line of John Massocca with Ladenburg Thalmann. John, please go ahead. Your line is open.

Good morning.

Good morning, John.

So, as we think about the $245 million you kind of have locked up to invest over the next two years, what's kind of the rough split of that by property type?

Greg?

By property type...

By segment...

Yes. No, I understand. I'm just trying to do the math in my head. Fitness and wellness...

Experiential, eat and play...

Eat and play, yes.

I think it is pretty well -- pretty balanced.

Experiential lodging, yes. Less so cultural, no gaming, no theatres.

No theatres, yes. So, across other group, it's pretty balanced.

Okay. So, basically, kind of roughly kind of an even -- maybe not even split, but kind of a split between eat and play and kind of experiential lodging is kind of what we should expect?

Well, and fitness and wellness.

Fitness and wellness, too.

Oh, fitness and wellness.

Yes, Pagosa Springs and Murrieta.

Okay. That makes sense. And then as we kind of think about, I mean it's not a huge number, but the kind of stub rents that you were paid in the quarter by a -- I'm sorry, by Regal for September, is that something you could receive more of going forward? Is that just a one-time thing? I know there was kind of a mentioning of a stub rent in prior quarters. I don't know if it's kind of getting paid in increments. Just trying to think if we could expect kind of an additional kind of number to kind of fulfill all that they owed in September?

Yes. So, the court order provided for four stub payments. We got one in December and three this quarter. So the court ordered stub payments are over. This quarter, the total amount of those deferred -- those stub payments was $2.3 million, $1.9 million in rent and the other $0.4 million was deferral repayment. What that leaves is a post-petition receivable for rent from them, from Regal, of about $3.4 million. So, we don't expect stub payments, but upon resolution of the bankruptcy, there's $3.4 million of post-petition rent that we'll see how that gets paid, but that's the amount remaining.

Okay. And then big picture, you talked a bit about ski resort properties' performance, and apologies if I missed this detail in the prepared remarks. But I guess given some of the weather pushes and pulls at the end of the ski season, how does that impact maybe coverage? And I guess how do those tenants look in terms of their off-season reserves?

I think there -- covers was -- again, I think what Greg was talking about was this is one of the weird seasons especially in the West where we had too much snow. So, again, things -- but the beginning of the season was so good it out balanced it. So essentially coverage was very similar to what we've seen in previous years and all reserves are full.

Okay. That makes sense. That's it for me. Thank you very much.

Thanks.

[Operator Instructions] Our next question is from Mitch Germain with [JPM] (ph) Securities. Mitch, your line is open. Please go ahead.

Hey, guys. Good morning. Just a quick question about the non-balance sheet deferrals. I guess you kind of talked about it just recently in the last answer. But is there some sort of schedule for that $100 million or so that's still owed? I mean, how should we think about that coming in over time?

Yes. So, the $82.4 million of the $110 million is Regal related. So we'll see how that all shakes out in the bankruptcy. The remaining what $38 million -- or 30-ish -- yes, $38 million, that -- or yes, $38 million, that -- most of that subject to a schedule that we're getting paid quarterly. It's running about $500,000 to $600,000 per month. And you see that we got that the last several quarters. So that continues on. The largest part of it really continues on through '24 primarily. And then in addition to that, there's one tenant that's -- in that deferral that's repayment is more EBITDA based. So that one -- we'll see how the EBITDA shakes out and sort of how that comes in, but it's not subject to a schedule.

Great. Thank you for that. Anything you could share about the acquisition this quarter?

Again, Greg, what don't you...

Well, yes, Mitch, we're very enthusiastic about the climbing gym space. It provides a great opportunity for people to come together. We're equally as excited to do business with Vital, which is one of the best climbing gyms in the country. The other one we have is Movement. And then lastly, we're very excited about the real estate. The Movement is in Lincoln Park and this one is in Williamsburg, Brooklyn. So tremendous real estate and we're really excited with the opportunity to do more business with both Movement and Vital.

Okay. Thank you.

And by the way, I just want to update one thing. My non-Regal number for that deferral is $28 million. I was doing some bad math, $110 million in total, $82 million of which is Regal and $28 of which is non-Regal.

Thank you.

You're welcome.

Thanks, Mitch.

Thanks, Mitch.

And our next question comes from the line RJ Milligan with Raymond James. RJ, your line is open. Please go ahead.

Great. Good morning, guys. I wanted to focus on the non-theatre portfolio and it sounds like all the segments have seen good revenue growth. And I'm just curious if there's anybody in the non-theatre portfolio, whether it be people that popped up on a watch list or credit issues? I'm curious how bad debt is trending relative to budget.

Again, I'll let Mark talk about debt, because I don't think there are any issues. But again, performance wise, we've not seen any sort of degradation either in coverage or in performance. As Greg talked about, we've seen strong revenue growth, strong EBITDA, growth. So, I think we're still -- as I talked about in my comments, the consumer continues to be very supportive of these experiences. But Mark, I'll let you comment the...

Yes. I mean, as Greg said, our coverage on the non-theatre portfolio at 2.7 times versus 2.2 times in 2019 pre pandemic. So, it's very strong and we're not seeing really any credit issues in non-theatre business.

Okay. That's helpful. And then, I'm curious just if you're seeing any theatre transact and at what cap rates or what -- if there is a buyer pool, who's that made up of?

Again, we're not still seeing -- I mean you're seeing theatres being bought by theatre companies. We've started to see some of that. But we haven't necessarily seen real estate kind of transactions yet. I don't.

No. And I think we'll see that as the box office continues to recover. I mean, all the news this year is just so positive that we expect to see that loosen up. I mean, last year we had 18 $100 million releases. This year, we're going to have 26. Last year, we had 71 films open on 2,000 screens or more. This year, we're going to have over 100. Next year, we'll have even more. Then we have the Apple news, the Amazon news, and then the outsized performance of a lot of films. So, I think it's very positive.

I think what we would say, RJ, is the narrative had to change and now the narrative is changed, that this industry is not only going to recover but it's going to be valued by studios and by streamers. And when that -- when people start to see that, then the productivity of the boxes will matter and there will be a transaction market. But we're coming out of several years, which these boxes were effectively shut down and people questioned the viability. Well, that's now being disproven. We now have support. The support is coming from the content side, that's got to filter into the real estate side to where -- they now hear that and believe that. And when the numbers start to demonstrate that, then transactions will occur.

That's it for me guys. Thank you.

Thank you, RJ.

Standby for our next question, which will also be our last question, comes from the line of Michael Carroll with RBC. Michael, your line is open. Please go ahead.

Yes, thanks. I jumped on late. So hopefully these questions haven't been asked already. So can you talk a little bit about just the transaction market in general and how has it changed over the past six months? I mean, have you seen I guess different or better opportunities kind of with the capital markets dislocation that's been going on?

I'll let Greg talk about this, but I think generally the answer is yes. I think not only are we seeing our kind of our opportunities with our core group of people that we've dealt with for long-standing relationships, but also new relationships. We talked about Vital. We talked about things that are -- I think what is really difficult for people to understand is the private market is really challenged right now with the debt the way it is. So, if you are out -- what we used to see is a lot of competition from kind of private or family office and we're just not seeing that much. But, Greg?

No, I think you've covered it.

And then, Greg, how are you looking at new deal today? I know you're a little tight on, I guess your capital availability given where your cost of capital is. I mean, so what type of deals are you willing to pursue? And how much can you kind of get done here this year if things don't change?

Yes. I think again, we're kind of very much taken to what we've said all along, and Greg highlighted this, quality real estate with quality relationships. I mean, we're buying 20 -- 15, 20-year relationships. So, we're wanting -- the actual stretching for more yield is less important than the quality. And so, now we're able to get nice attractive yields, as Greg said, but always focused on something we want to be happy with for 20-plus years. I think as it regards to the capital, I think we're encouraged that as we get resolution of this that our multiple will see kind of a resolution and we'll get that pop that we think we've been told by a lot investors is the overhang for us. I think it could help us to drive further growth as we go forward. I think everybody to a little bit degree has kind of taken a little more long-term view of how much growth they want right now. But I think for us, the thing that's so really positive is the consumer is still heavily supporting this. And so, our tenants are growing organically. It's not necessarily what we are doing by buying that asset off of somebody who needs to raise capital. Greg and his team are forming these long-lasting relationships. And it's more important to us to get not only a deal but a view towards future deals so that we're not only filling the pipeline for '23, but for '24 and '25. And so, I think that's part of focus...

Yes. And I mean just to give you data points. I mean, we announced last quarter we did a deal with Gravity House. We have a go-forward arrangement with them. We're very excited about it. I think ultimately the fact that we did the Movement Gym led us to the Vital Climbing Gym. So, we're being, to Greg's point, very strategic, and to Mark's point earlier, focused on helping our existing clients grow.

In terms of volume, you said how much can you get done and our guidance is $200 million to $300 million, we can do that, well, as I said, without raising capital, but as importantly maintaining leverage kind of that low 5. So, all that's consistent with that. And that's really because of our significant cash flow and the way we set our dividend payout ratio so low, we're able to reinvest that cash flow and still grow, but without raising capital and maintaining that low leverage.

Okay. Great. And then just last one. I know you talked a little bit about the theatre, I guess, private market valuations. I mean, have you had any discussions with potential JV partners or somebody that might be interested in acquiring a part of your portfolio?

It's a great question, Mike, but we would not discuss it on an earnings call if we had. So, I'm going to leave that [indiscernible] meaning that we have or haven't, but it's not the venue that we had to disclose that anyway.

Okay, great. Thank you.

Thank you. All right. I think Eric said that was our last caller. So, I want to thank everyone for joining us. I hope everyone takes the opportunity tonight for -- we're based in Kansas City and we're on display today for tonight's NFL draft. So, please take the time to let our city show proud. So, thanks for joining us and have a great day.

Thank you.

Thank you.

Thank you for your participation in today's conference. This does conclude our program, and you may now disconnect.