EPR Properties Adjusted Model w/ More Investment Spending/Higher FFOAA For 2026 And 2027

Research evidence excerpt

EPR Properties Adjusted Model w/ More Investment Spending/Higher FFOAA For 2026 And 2027

$18.5-22.5 million) for

percentage rents, despite the U.S. box office showing solid trends so far this year;

Quarterly Forecasts (FYE Dec)we think this could be the source of an extra $0.01-0.02, potentially. But even

without the pennies, the simple fact that the box office is performing well should AFFO per share ($)

2025A 2026E 2027E

allay some of the concerns around EPR’s portfolio, which still derives 36% of Q1 1.21 1.29A 1.34

annualized EBITDA (as of 1Q26) from movie theaters. Q2 1.24 1.38 1.41

Q3 1.39 1.47 1.51

With EPR stock trading at about $59/share, we think its capital costs are such that Q4 1.30 1.37 1.43

FY 5.14 5.51 5.69

it can make accretive investments using its equity and debt and keeping leverage

at or slightly above 5x. We calculate that EPR’s equity trades at a roughly 9.25% Style Exposure

run-rate earnings yield and its borrowing costs are in the mid-5s, putting its blended

earnings hurdle rate on investments at 7.75% using a 60/40 equity/debt split. This

should allow it to garner a roughly 100bp spread versus the GAAP yields of 8.75%

we assume. Further, we estimate that EPR should produce about $150 million

annually in free cash flow after dividends. If EPR does $500-600 million in annual

investments and uses free cash flow and the cost of capital we just outlined, it

should be able to add about $0.20/share to earnings, or 3-4%. Our meeting with

management in early June at the NAREIT REITweek conference was positive in

that it seems to have a strong deal pipeline and is returning to doing a fluid amount

of one-off acquisitions, so we think the setup looks good for growth.

At the property level, assuming an 8.6% blended cap rate, we arrive at our NAV/