Entertainment Properties Trust (NYSE:EPR) today announced operating
results for the third quarter and nine months ended September 30, 2007.
The Company reported record third quarter revenues, net income and funds
from operations (FFO).
Total revenue increased 26% to $61.0 million for the third quarter
compared to $48.5 million for the same quarter in 2006. Net income
available to common shareholders increased 16% to $20.7 million from
$17.8 million for the same quarter last year. Net income on a diluted
per common share basis increased 17% to $0.77 per share from $0.66 per
share in the same quarter last year.
Funds from operations (FFO) for the third quarter increased 16% to $29.6
million from $25.5 million compared to the same quarter last year. FFO
per diluted common share increased 16% to $1.10 per share from $0.95 per
share for the same quarter last year.
For the nine months ended September 30, 2007, total revenue increased
16% to $168.4 million compared to $145.6 million for the same period in
2006. Net income available to common shareholders increased 15% to $59.7
million from $52.1 million for the same period last year. Net income on
a diluted per common share basis increased 13% to $2.22 from $1.97 for
the same period last year. FFO for the nine months ended September 30,
2007 increased 10% to $82.5 million from $74.9 million a year ago. FFO
per diluted common share increased 8% to $3.07 per share from $2.83 per
share for the same period last year.
Dividend Information
On September 14, 2007, the Company declared a regular quarterly dividend
of $0.76 per common share, which was paid on October 15, 2007 to common
shareholders of record on September 28, 2007. This dividend represents
an increase of 10.5% to an annual dividend rate of $3.04 per common
share compared to last year. The Company also declared and paid a third
quarter cash dividend of $0.4844 per share on the 7.75% Series B
Preferred Shares, a cash dividend of $0.3594 per share on the 5.75%
Series C Convertible Preferred Shares and a cash dividend of $0.4609 per
share on the 7.375% Series D Preferred Shares.
Capital Markets Activity
On July 30, 2007, the Company obtained two non-recourse mortgage loans
totaling $28.0 million. Each of these mortgages is secured by a theatre
property located in Chattanooga, Tennessee and Leawood, Kansas, bear
interest at a rate of 5.86% per year, and mature in 2017.
Additionally, the Company obtained three non-recourse mortgage loans
totaling $75.4 million of which $48.4 million closed during September
2007 and $27.0 million closed during October 2007. Each of these
mortgages is secured by a theatre property and the theatre properties
are located in Houston, Texas, Dallas, Texas and Chicago, Illinois.
These mortgage loans bear interest at an average interest rate of 6.64%
and mature in 2012.
The net proceeds from all of the above mortgage loans were used to pay
down the Company’s unsecured revolving credit
facility.
On October 15, 2007, the Company closed on a public offering of 1.4
million common shares at $54.00 per share. Total net proceeds to the
Company after expenses were approximately $73.9 million and were used to
pay down the Company’s unsecured revolving
credit facility.
On October 26, 2007, the Company obtained a term loan of $120 million.
This loan is secured by a borrowing base that currently contains
primarily non-theatre assets and is recourse to the Company. This loan
bears interest at LIBOR plus 175 basis points and has a four year term
expiring in 2011 with a one year extension available at the Company’s
option. The net proceeds from this loan were used to pay down the Company’s
unsecured revolving credit facility and the balance was invested in
interest bearing money market accounts.
Investment Activity
In August 2007, the Company purchased the land and winery facilities
associated with four vineyards in two separate transactions. The
property acquired consisted of approximately 285 acres of land located
in Paso Robles, Pope Valley, Lockeford, and Clements, California. The
properties were simultaneously leased under long-term triple-net leases
and the total acquisition price for both transactions was approximately
$41.5 million.
Also during the three months ended September 30, 2007, the Company
completed development of a megaplex theatre property located in
Kalispell, Montana. The Stadium 14 Cinema is operated by Signature
Theatres and was completed for a total development cost (including land
and building) of approximately $9.7 million. This theatre is leased
under a long-term triple-net lease.
As of September 30, 2007, the Company had two theatre development
projects under construction for which it has agreed to finance the
development costs. These theatres are expected to have a total of 30
screens and their development costs (including land) are expected to be
approximately $25.6 million.
For the nine months ended September 30, 2007, the Company’s
cash investment spending totaled $326.5 million.
On October 30, 2007, the Company entered into a secured first mortgage
loan agreement for $31.0 million with Peak Resorts, Inc. The loans are
secured by seven daily ski resorts located in Missouri, Indiana, Ohio
and Pennsylvania with a total of approximately 506 acres.
On October 30, 2007, the Company acquired a 50% ownership interest in a
joint venture for $39.2 million. The joint venture currently owns 12
public charter school properties located in Nevada, Arizona, Ohio,
Georgia, Missouri, Michigan, Florida and Washington D.C., and leases
them under a long-term triple net master lease. Imagine Schools, Inc.,
one of the leading operators of charter public schools in the U.S.,
operates the schools and guarantees the lease payments. The Company’s
partner in the joint venture is a wholly-owned subsidiary of JER
Investors Trust Inc., a publicly traded real estate investment trust. As
of the October 30, 2007 purchase date, the joint venture had no
significant liabilities.
Earnings and Investment Spending Guidance
Management is raising its previously announced 2007 FFO guidance to a
range of $4.13 - $4.18 per diluted common share from the previous range
of $4.09 - $4.18, and raising its cash investment spending estimate for
2007 to approximately $420 million from the previous estimate of $300
million. These increases reflect the Company’s
performance to date, the recent financing activity (including the public
offering of 1.4 million common shares on October 15, 2007) and management’s
expectation for the timing of additional investments over the remainder
of 2007.
Additionally, management is announcing 2008 guidance for FFO per diluted
common share in a range of $4.52 to $4.62 and cash investment spending
of approximately $250 million.
Comments from President and CEO David Brain "We are not only pleased to report another
record quarterly performance but equally proud of the competitive
advantage created by our success in securing attractive long-term debt
and equity in a very volatile capital market environment. This
additional capital positions us well to build on our track record of
profitable growth.
"We have been applying the principles of our
Five Star investment criteria to several compelling real estate
opportunities. Our decision to make a joint venture investment in public
charter schools is an excellent example of the rigors of this process,”
Brain said, adding that the Company’s
exploration of public charter schools started more than two years ago.
ENTERTAINMENT PROPERTIES TRUST Consolidated Statements of Income (Unaudited) (Dollars in thousands, except share data)
Three Months Ended September 30, Nine Months Ended September 30, 2007
2006
2007
2006
Rental revenue
$ 48,148
$ 41,362
$ 136,703
$ 125,442
Tenant reimbursements
4,704
3,782
12,621
10,721
Other income
506
737
1,780
2,663
Mortgage financing interest
7,651
2,629
17,300
6,808
Total revenue
61,009
48,510
168,404
145,634
Property operating expense
5,810
4,799
15,860
14,262
Other expense
1,048
897
2,590
2,903
General and administrative expense
3,023
2,253
9,083
10,030
Costs associated with loan refinancing
-
-
-
673
Interest expense, net
16,085
12,234
41,669
35,179
Depreciation and amortization
9,881
7,855
27,269
23,092
Income before gain on sale of land, equity in income from joint
ventures, minority interest and discontinued operations
25,162
20,472
71,933
59,495
Gain on sale of land
-
-
-
345
Equity in income from joint ventures
200
191
597
566
Minority interest
988
-
988
-
Income from continuing operations
$ 26,350
$ 20,663
$ 73,518
$ 60,406
Discontinued operations:
Income from discontinued operations
-
53
777
488
Gain on sale of real estate
-
-
3,240
-
Net income
26,350
20,716
77,535
60,894
Preferred dividend requirements
(5,611
)
(2,916
)
(15,701
)
(8,747
)
Series A preferred share redemption costs
-
-
(2,101
)
-
Net income available to common shareholders
$ 20,739
$ 17,800
$ 59,733
$ 52,147
Per share data:
Basic earnings per share data:
Income from continuing operations available to common shareholders
$ 0.78
$ 0.67
$ 2.11
$ 1.98
Income from discontinued operations
-
0.01
0.15
0.02
Net income available to common shareholders
$ 0.78
$ 0.68
$ 2.26
$ 2.00
Diluted earnings per share data:
Income from continuing operations available to common shareholders
$ 0.77
$ 0.66
$ 2.07
$ 1.95
Income from discontinued operations
-
-
0.15
0.02
Net income available to common shareholders
$ 0.77
$ 0.66
$ 2.22
$ 1.97
Shares used for computation (in thousands):
Basic
26,432
26,298
26,378
26,093
Diluted
26,824
26,769
26,858
26,511
The additional 1.9 million common shares that would result from the
conversion of the Company’s Series C
convertible preferred shares and the corresponding add-back of the
preferred dividends declared on those shares are not included in the
calculation of diluted earnings per share for the three and nine months
ended September 30, 2007 because the effect is anti-dilutive. However,
because a conversion would be dilutive to FFO per share, these
adjustments have been made in the calculation of diluted FFO and diluted
FFO per share.
ENTERTAINMENT PROPERTIES TRUST Reconciliation of Net Income Available to Common Shareholders
to Funds From Operations (A) (Dollars in thousands except per share data)
Three Months Ended September 30, Nine Months Ended September 30, 2007
2006
2007
2006
Net income available to common shareholders
$20,739
$17,800
$59,733
$52,147
Subtract: Gain on sale of real estate from discontinued operations
-
-
(3,240
)
-
Subtract: Minority Interest
(988
)
-
(988
)
-
Add: Real estate depreciation and amortization
9,751
7,687
26,770
22,584
Add: Allocated share of joint venture depreciation
61
61
184
182
FFO available to common shareholders
29,563
25,548
82,459
74,913
FFO available to common shareholders
$29,563
$25,548
$82,459
$74,913
Add: Preferred dividends for Series C
1,941
-
5,822
-
Diluted FFO available to common shareholders
31,504
25,548
88,281
74,913
FFO per common share:
Basic
$1.12
0.97
$3.13
$2.87
Diluted
1.10
0.95
3.07
2.83
Shares used for computation (in thousands):
Basic
26,432
26,298
26,378
26,093
Diluted
28,724
26,769
28,755
26,511
Weighted average shares outstanding - diluted EPS
26,824
26,769
26,858
26,511
Effect of dilutive Series C preferred shares
1,900
-
1,897
-
Adjusted weighted average shares outstanding - diluted
28,724
26,769
28,755
26,511
Other financial information:
Straight-lined rental revenue
$1,178
1,014
3,229
2,853
Dividends per common share
$0.7600
$0.6875
$2.2800
$2.0625
FFO payout ratio
69
%
72
%
74
%
73
%
(A) The National Association of Real Estate Investment Trusts (NAREIT)
developed FFO as a relative non-GAAP financial measure of performance of
an equity REIT in order to recognize that income-producing real estate
historically has not depreciated on the basis determined under GAAP. FFO
is a widely used measure of the operating performance of real estate
companies and is provided here as a supplemental measure to Generally
Accepted Accounting Principles (GAAP) net income available to common
shareholders and earnings per share. FFO, as defined under the revised
NAREIT definition and presented by us, is net income available to common
shareholders, computed in accordance with GAAP, excluding gains and
losses from sales of depreciable operating properties, plus real estate
related depreciation and amortization, and after adjustments for
unconsolidated partnerships, joint ventures and other affiliates.
Adjustments for unconsolidated partnerships, joint ventures and other
affiliates are calculated to reflect FFO on the same basis. FFO is a
non-GAAP financial measure. FFO does not represent cash flows from
operations as defined by GAAP and is not indicative that cash flows are
adequate to fund all cash needs and is not to be considered an
alternative to net income or any other GAAP measure as a measurement of
the results of our operations or our cash flows or liquidity as defined
by GAAP. It should also be noted that not all REITs calculate FFO the
same way so comparisons with other REITs may not be meaningful.
ENTERTAINMENT PROPERTIES TRUST Condensed Consolidated Balance Sheets (dollars in thousands)
As of September 30, 2007 As of December 31, 2006 (unaudited) Assets
Rental properties, net
$ 1,643,446
$ 1,395,903
Property under development
27,366
19,272
Mortgage notes and related accrued interest receivable
277,447
76,093
Investment in joint ventures
2,312
2,182
Cash and cash equivalents
10,758
9,414
Restricted cash
10,571
7,365
Intangible assets, net
17,058
9,366
Deferred financing costs, net
10,000
10,491
Accounts and notes receivable
49,629
30,043
Other assets
13,768 11,150
Total assets
$ 2,062,355 $ 1,571,279
Liabilities and Shareholders’ Equity
Accounts payable and accrued liabilities
$ 23,271
$ 16,480
Dividends payable
25,890
21,314
Unearned rents and interest
4,358
1,024
Long-term debt
1,060,607 675,305
Total liabilities
1,114,126
714,123
Minority interests
18,584
4,474
Shareholders' equity
929,645 852,682
Total liabilities and shareholders' equity
$ 2,062,355 $ 1,571,279 About Entertainment Properties Trust
Entertainment Properties Trust (NYSE:EPR) is a real estate investment
trust (REIT) that develops, owns, leases and finances properties for
consumer-preferred, high-quality businesses. EPR’s
investments are guided by a focus on inflection opportunities that offer
enduring values, excellent executions, attractive economics and an
advantageous market position. Our total assets exceed $2 billion and
include megaplex movie theatres and entertainment retail centers, as
well as other destination recreational and specialty investments.
Further information is available at www.eprkc.com
or contact Jon Weis at 888-EPR-REIT or info@eprkc.com.
Safe Harbor Statement
With the exception of historical information, this press release
contains forward-looking statements within the meaning of the securities
laws, such as those pertaining to our acquisition or disposition of
properties, our capital resources and future expenditures for
development projects. The Company's actual financial condition, results
of operations, funds from operations, or business may vary materially
from those contemplated by such forward-looking statements and involve
various risks and uncertainties. Forward-looking statements involve
numerous risks and uncertainties and you should not rely on them as
predictions of actual events. There is no assurance the events or
circumstances reflected in the forward-looking statements will occur.
You can identify forward-looking statements by use of words such as
"will be," "intend," "continue," "believe," "may," "expect," "hope,"
"anticipate," "goal," "forecast," or other comparable terms, or by
discussions of strategy, plans or intentions. Forward-looking statements
necessarily are dependent on assumptions, data or methods that may be
incorrect or imprecise.
You should consider the risks described in the "Risk Factors" section of
our most recent annual report on Form 10-K and, to the extent
applicable, our quarterly reports on Form 10-Q, in evaluating any
forward-looking statements included in this press release.
Given these uncertainties, you should not place undue reliance on these
forward-looking statements. We undertake no obligation to publicly
update or revise any forward-looking statements included in this press
release whether as a result of new information, future events or
otherwise. In light of the factors referred to above, the future events
discussed in this press release may not occur and actual results,
performance or achievements could differ materially from those
anticipated or implied in the forward-looking statements.
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