Welcome to EPR Properties Q3 2025 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to Brian Moriarty, Senior Vice President of Corporate Communications.

Thank you, Sophie. Thanks for joining us today for our Third Quarter 2025 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. I I'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 such 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 these 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 Silver.

Thank you, Brian. Good morning, everyone, and welcome to our third quarter 2025 earnings call and webcast. The third quarter marked another period of steady progress as we continue to position the company for accelerated growth and expansion. We are pleased to report a 5.4% increase in FFO as adjusted per share versus the same quarter last year and an increase at the midpoint in our FFO as adjusted guidance for the current year. Our disciplined deployment strategy is enabling us to expand our portfolio of experiential properties. Our team is leveraging both existing relationships and new partnerships, and we have a pipeline of investments that are actionable over the next 90 to 120 days. However, given the fluidity of timing, we felt it prudent to not raise investment spending guidance at this time. Larger opportunities are now accessible, and we're moving decisively to capture them as we look towards 2026. During the quarter, we also made continued progress on our strategic capital recycling program. This program has largely been focused on planned noncore theater and opportunistic education dispositions with targeted reinvestment in growth experiential sectors. Our work here has materially strengthened our portfolio and provided for accretive reinvestments. Turning to our portfolio and industry health. Our third quarter consolidated coverage remained strong at 2.0, reflecting continued portfolio stability. At the Box Office, we anticipate a robust fourth quarter and expect 2025 to set a new post-COVID high. The continued recovery of the Box Office has led to a significant increase in percentage rent from our Regal lease. We believe this percentage rent feature has strong upside in the future as we anticipate continued growth at the Box Office. We continue to be pleased with the resilience that our tenants have exhibited as consumers prioritize experiences. At the same time,…

Thanks, Greg. At the end of the quarter, our total investments were approximately $6.9 billion with 330 properties that are 99% leased or operated. During the quarter, our investment spending was $54.5 million. 100% of the spending was in our experiential portfolio. Our experiential portfolio comprises 275 properties with 53 operators and accounts for 94% of our total investments, or approximately $6.5 billion. And at the end of the quarter was 99% leased or operated. Our education portfolio comprises 55 properties with 5 operators and at the end of the quarter was 100% leased. Turning to coverage. The most recent data provided is based on June trailing 12-month period. Overall portfolio coverage remains strong at 2x. Turning to the operating status of our tenants. Q3 Box Office was $2.4 billion, down from $2.7 billion in Q3 2024. 7 titles grossed over $100 million, led by Superman, Jurassic World: Rebirth, and a Fantastic Four: First Steps. The Q3 2025 comparison was difficult because Q3 2024 was anchored by the strong performance of from Deadpool & Wolverine, Despicable Me, Twisters and Beetlejuice Beetlejuice. The slate for the fourth quarter is anchored by 3 films projected to gross over $200 million, Zootopia 2, Wicked: For Good, and Avatar: Fire & Ash. Box Office through the first 3 quarters was $6.5 billion, a 4% increase over the first 3 quarters of 2024. Our estimate of North American Box Office for calendar year 2025 is between $9 billion and $9.2 billion, an increase of approximately 6% at the midpoint from 2024. Turning now to an update on our other major customer groups. Andretti Karting opened strongly in Oklahoma City in mid-July. The Kansas City location opens in mid-November and Schaumburg, Illinois is expected to open in the second quarter of 2026. Our second Pinstack located…

Thank you, Greg. Today, I will discuss our financial performance for the third quarter, provide an update on our balance sheet and close with an update on 2025 guidance. FFO as adjusted for the quarter was $1.37 per share versus $1.30 in the prior year, an increase of 5.4% and AFFO for the quarter was $1.39 per share compared to $1.29 in the prior year, an increase of 7.8%. Before I walk through the key variances, I want to explain 2 offsetting items excluded from FFO as adjusted and AFFO. First, with regard to dispositions for the quarter, net proceeds totaled $19.3 million. We recognized a net gain on sale of $4.6 million. Also included in gain on sale for the quarter was a $3.5 million gain related to the exercise of an early termination option of a ground lease. Second, provision for credit losses net was $9.1 million for the quarter, and related to fully reserving one mortgage note receivable for $6 million related to our only investment with 1 small borrower, and changes in our estimated current expected credit losses, mostly due to macroeconomic conditions. Now moving to the key variances. Total revenue for the quarter was $182.3 million versus $180.5 million in the prior year. Within total revenue, rental revenue increased $6.2 million versus the prior year, mostly due to the impact of investment spending, rent bumps and higher percentage rents. Percentage rents for the quarter were $7 million versus $5.9 million in the prior year, and the increase was due primarily to higher percentage rent recognized from one of our theater tenants, offset by lower percentage rents recognized from our attraction properties. Both other income and other expense related primarily to our consolidated operating properties, including The Kartrite Hotel and Indoor Water Park and our 4…

Thank you, Mark. As our results demonstrate, our portfolio continues to be strong and resilient. We have executed on a very aggressive capital recycling plan this year with our guidance implying over $150 million of sales. Notwithstanding this capital recycling, we are projecting to deliver over 4.5% growth in FFO as adjusted. As a result of this recycling and cash flow generation, we have positioned ourselves to materially accelerate our capital deployment in 2026. We are very pleased and excited as we bring 2025 to an end and look forward to 2026. With that, why don't I open it up for questions? Sophie?

[Operator Instructions] We'll take our first question from Smedes Rose from Citi. [Operator Instructions].

I wanted to ask a little bit more about the credit losses that you're reserving for? You mentioned a $6 million mortgage note, and then just some changes -- expectations around the broader macro economy. Could you maybe just talk about that a little more? And any sort of incremental detail around what happens with the underlying property there?

Sure, Smedes. I think, first of all, again, it's a small tenant that we will -- we will see how they continue to perform. We just thought it was prudent to reserve that. If not, we have assets related to that, that we can look to take control and sell. Then the larger macro issue is just, I'm going to get this wrong, Mark, it's CECL so how that works. And there's a lot of factors that go into that. Mark, maybe you can give some more detail on them.

Yes. So there's macroeconomic indicators that go into that. That can move up and down as it does every quarter, sometimes positive, sometimes negative. So really, I think just the outsized number this quarter was really the $6 million note that, as Greg said, that we determined we needed to reserve. Again, it's the only investment we have with that small tenant.

Okay. And then, I just wanted to ask you, too, you've talked a little bit about accelerating acquisition volumes in 2026. Could you maybe just put some sort of scope around that in terms of where you think volume could go and let's putting aside the whole Genting thing for a minute, but if you wanted to stay leverage-neutral for '26?

Well, I think that's the question. And I think we need to be really clear about this that we -- in this acceleration plan, the Genting was never ever requirement for us to do that. Again, and Mark can detail this, we've significantly moved leverage down to below -- at or below the low end of our leverage range. So when we think about taking that up to what is our natural kind of in the midpoint of that at 5.3, and looking at our cash flow generation, we feel comfortable that we can go to that $400 million, $500 million range without any additional need of capital recycling. So when we talk about those levels, we're very comfortable without Genting or without any transaction involving that property being able to do that. So I think the narrative that we need that to occur in order to allow us to do those levels is factually inaccurate. But Mark, maybe.

Yes. And just to add to that, if you just do the math, forget Genting, do the math on, say, $500 million investment spending when you utilize our cash flow, a little bit of disposition kind of do the math. You end up still probably below the midpoint of our targeted leverage range, again, because we're beginning so low at about 5x. So we'll be below 5.3 if you just do the math. The Genting thing purely becomes an opportunity to delever our balance sheet by about 0.3 turns if you do the math on that. So again, as Greg said, we view Genting as an opportunity, not an overhang, not necessary to execute our plan, but would provide us additional dry powder, but again, not necessary to execute our plan next year to grow significantly.

We'll take our next question from Kathryn Graves with UBS. [Operator Instructions].

My first, I'm wondering if you could just provide some capital on the duration of the mortgage financing investment with Altea Active? And then, maybe just talk a bit about how that kind of investment fits within your larger array of investments that you have available to you?

Sure. Greg, do you want to...

Yes. So it's structured as a mortgage mostly because of implications of Canadian currency, et cetera. And the idea is to provide growth capital for Altea as they grow their business. It's structured as, I believe, a 20-year mortgage. So long-term mortgage, not short-term financing, and we expect to be in a long-term partnership with Altea.

I would say, I would echo what Greg said. What we found often in Canada is for taxation purposes, mortgage structures, allowing you to have a more efficient structure. And so we've leaned into that, but I would just tell you that mortgage is probably more like a synthetic mortgage, it reads like a lease -- synthetic lease, I'm sorry, synthetic lease.

Got it. That's helpful. And then my second question, several of your more retail-focused peers have reported seeing increased competition for deals from private players, family offices, et cetera. I'm wondering if you've also seen any of this competition in your acquisition landscape or whether you're asset class and sort of the uniqueness of it, maybe it helps buffer from some of that competition. And then has that also allowed cap rates to kind of stay where they are? Have you seen some compression more recently in your current pipeline?

I'll let Greg also jump in. But I would say always, I think there's competition out there. I don't think it's as many debt play in our spaces as do in the retail space, but I do think there is -- as we talked about, there's been increased deal flow. I think that's starting to work in our favor. And I think cap rates have fairly -- been fairly stable, right?

Yes. I think cap rates are stable, for sure. And again, we'll run into all those kind of investors in larger deals. But as we say repeatedly, we've got a pretty granular approach, our team is out all over the country in Canada, looking for deals. So that's how we're able to find great assets like Altea Active and some of our Hot Springs resorts. So I think we're pretty comfortable that in that space, we've got a very nice run rate, and as we increase our ability to participate in larger ticket deals, we'll probably run into more of the competitors the change.

We'll take our next question from Upal Rana with KeyBanc Capital Markets. [Operator Instructions].

Could you touch on the larger investment opportunities that you're seeing in the market today?

Well, without disclosing any specific, I think it's pretty broad-based. I think we're seeing nice large opportunities in several of our verticals, so it's not limited to kind of one area. And like I said, we think of those as over $100 million and over. And I think, there's probably somewhere between 3% and 5% in the market right now. So I think it's, again, somewhat of a change from what we've seen from the first half of the year, no doubt. So it's both exciting. And as we talked about in the spaces that we play, we're very much known to all the players. And so we're seeing all these deals, and we're excited about the opportunity set.

Okay. Great. That was helpful. And then I appreciate the ATM program status update you provided. Could you provide some color on your strategy and how you plan to issue equity in terms of what your pricing is and when?

Yes. As we mentioned, we're not dependent on equity for next year's plan with just debt financing and our free cash flow, et cetera. We'd be under the midpoint of our range. That said, opportunistically, we may decide to raise equity. Certainly, the price has to be at a point where it makes sense, and that would just allow us to delever further and provide more dry powder. And our ATM program will allow us to do that in an effective way, currently, we have a direct share purchase plan, and we can also dribble out stock, but we are excited about the ATM program and the ability to do forward-type deals and so forth. So -- but it's entirely contingent on the market and the market is in a good place, a good price for us, and it doesn't make sense to issue equity to lower our leverage.

Our last question comes from Jana Galan with Bank of America Merrill Lynch.

Thank you for quantifying the larger deals on the market that you're looking at. Can you also give some color on the smaller ones and then maybe kind of yield differentials between the large and smaller investment opportunities?

Yes. And I'll let Greg also join in. I mean, we've made a lot of our path over the last several years of kind of what we would say is the $25 million to $75 million deals, and those are still very much out there. Those are the, what I would say, much more of the bespoke relationship deals that we have, and those have always been part of what we have done. I think those are less -- they're less competitive and they're, again, because of this bespoke nature, how we get those deals, but I think those are still comfortably in the 8s. I think it gets a little more competitive when you get into larger deals, and people looking for volume. It doesn't mean that those are materially moving that may be 25 basis points, but I think we feel like we're in a position to be competitive with those given our understanding of those deals. But Greg, probably...

No, I think, you covered this.

Great. And then just maybe on the new Altea mortgage loan, and maybe it's due to the discussion you had about the way it was structured, but just curious on the yield there. Is that more representative of the Canadian market?

No. I mean, the number we quoted is in U.S. dollars. And so if you use U.S. dollars, the yields we're getting are similar to what we would get in the U.S.

This completes the allotted time for questions. I will now turn the call back over to Greg Silvers for any closing remarks.

Thank you, everyone. We appreciate your time and attention. Look forward to talking to you guys many times in the fall, and have a great day. Thank you.

Thank you.