Q3 2023 EPR Properties Earnings Call

Okay.

Good day, and thank you for setting by walking through the third quarter 2023, EPR properties earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question answer session to ask a question. During the session you will need to press star one on your telephone.

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Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Brian Moriarty, Vice President Corporate Communications. Please go ahead.

Okay. Thank you Victor Thanks for joining us today for our third 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.

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 $19 95 <unk>.

<unk> identified by such words as will be intend continue believe may expect hope anticipate or other comparable terms.

Companys actual financial condition and the results of the operations May continue may vary materially from those contemplated by such forward looking statements.

Discussion of these factors that could cause results to differ materially from these forward looking statements are contained in the Companys 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 EPR Casey Dot com.

Now I'll turn the call over to Greg Silvers, Thank you Brian.

Turning to everyone and thank you for joining us on todays third quarter 2023 earnings call and webcast I'm.

I'm happy to report another strong quarter highlighted by top line revenue growth of approximately 17% and <unk> as adjusted per share growth of approximately 27% versus the same quarter prior year.

These results were driven by continued strong results in our experiential properties along with significant deferral collections.

With these results as a backdrop, we are pleased to announce that we are increasing our 2023 earnings guidance.

A few matters on tenant health as we've previously previously announced during the quarter, we significantly enhanced our theater portfolio as we entered into a comprehensive restructuring agreement with Regal anchored by a new master lease. Additionally, southern theaters, our fourth largest theatre tenant was acquired by <unk>.

Tainment, who paid the full remaining deferred rent owed by southern theaters.

While the actors' strike is still ongoing resolution of the writer's strike was an important milestone as theatrical exhibition continues its strong recovery.

As of last week in year to date box office has already surpassed 2022 total box office revenues.

As we emphasized previously compelling content translates into theater attendance.

Recently, the RP Barbin Hymer event highlighted the power of theatrical exhibition as it brought in cohorts from diverse age and gender demographics. Additionally, a brought back many who hadn't been to the theater in years.

With the Taylor Swift era's mature movie, we're seeing the true power of theatrical experience combined with highly engaging content. This is an excellent example of alternative content brought to life in a theatrical environment. Many in the industry are seeing the success of this movie as an indicator of opportunities for other genres.

And performers to bring their content to this entertainment platform.

Our non theatre portfolio continues to demonstrate strength in our coverage remains strong with many tenancy and increases in both attendance and revenue.

While the macro environment remains challenging for Reits broadly consumers continue to value experiences and their spending on these activities remains resilient.

Accordingly, we are confident in our plan and our ability to identify and capitalize on compelling opportunities.

With a committed development and redevelopment pipeline of approximately $235 million to be funded over the next two years with $173 million of cash on hand, and no borrowings on our $1 billion unsecured revolving credit facility, we are well positioned to continue our growth without having to issue equity.

Our current value proposition is strong with a solid balance sheet, well covered dividend and significant near term catalysts with a recovery in box office and the potential to realize meaningful percentage rent.

Additionally, we are the only diversified REIT.

Focusing on the highly resilient experiential economy.

We specialize in experiential real estate and as such have developed unique industry knowledge in the segments, we target for growth.

Jose: Jose, and thank you for sending by.

Unknown Executive: Welcome to the third quarter 2023 EPR Properties earnings conference call. At this time, our participants are not listen only mode. After the speakers presentation, there will be a question and answer session to ask a question during session. You need to press star one one on your telephone. You then hear an automated message advising your hand is raised to a draw your question. Please press star one one.

This allows us to develop long term relationships and provides the ability to be selective in the spaces in which we invest.

So we continue to execute our plans anticipated.

Anticipated improvement in our cost of capital, which should allow us to achieve increased levels of growth now I'll turn it over to Greg Zimmerman for more details on the quarter.

Thanks, Greg at the end of the quarter. Our total investments were approximately $6 7 billion with 359 properties in service and 99% leased beginning this quarter, we will exclude properties, we intend to sell from our leasing occupancy statistics during the quarter our investment spending was 30.

Unknown Executive: Please be advised that today's conference is being recorded.

Unknown Executive: I want I like to hand the conference over to each speaker.

Brian Moriarty: Thank you today Brian Moriarty, Vice President corporate communications. Please go ahead. Okay, thank you, Victor.

Brian Moriarty: Thanks for joining us today for our third 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 CFO. I'll start to call by informing you that this call may include forward looking statement as defined in the Private Security's litigation act of 1995 identified by such words as will be intent. Continue believe may expect hope anticipate or other comparable terms.

$6 8 million, bringing our total investment spending for the nine months ending on September 30th two $135 5 million.

100% of the spending was in our experiential portfolio and included continued funding for experiential build to suit development projects and redevelopment projects commenced in 2022 and 2023.

Brian Moriarty: Company's actual financial condition and the results of the operations may continue may vary materially from those contemplated by such forward looking statements. I got some 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 10K and 10Q. This lead is called contain references to certain non gap measures which we believe are useful in evaluating the company's performance. A reconciliation of these measures to the most directly comparable gap measures are included in today's earnings release and supplemental information first to the SEC under form 8K.

Our experiential portfolio comprises 288 properties with 51 operators and accounts for 92% of our total investments or approximately $6 2 billion and at the end of the quarter was 99% occupied our education portfolio comprises 71 properties with eight operators.

And at the end of the quarter was 100% occupied.

Turning to coverage. The most recent data provided is based on a June trailing 12 month period overall portfolio coverage for the trailing 12 months continues to be strong at two times coverage for the non theater portion of our portfolio is two six times.

Coverage for the theaters is one four times with box office for the 12 months ending June 30 at $8 1 billion.

By way of comparison, if the restructured Regal deal, which I will describe in more detail in a moment had been in place for the trailing 12 months ending June 30th theater coverage would be one five times and overall coverage would be two one times beginning next quarter to provide a more accurate view of coverage we will report.

Unknown Executive: 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.

Greg Silvers: Now turn the call over to Greg Silvers. Thank you Brian.

Theater coverage as if the restructured Regal deal was in place for the full trailing 12 months.

Greg Silvers: Good morning everyone and thank you for joining us on today's third quarter 2023 earnings call and webcast. I'm happy to report another strong quarter highlighted by top line revenue growth of approximately 17% and FFO as adjusted per share growth of approximately 27% versus the same quarter prior year. These results were driven by continued strong results in our experiential properties along with significant deferral collections.

Finally, with trailing 12 month box office gross through September 30 at eight 8 billion. We anticipate theater coverage is returning to our pre pandemic range.

Now I will update you on the operating status of our tenants.

As previously reported we entered into a comprehensive restructuring agreement with Regal anchored by a new master lease for 41 of the 57 properties previously operated by Regal The New Master lease became effective August one the.

Greg Silvers: With these results as a backdrop we are pleased to announce that we are increasing our 2023 earnings guidance. A few matters on tenant health. As we previously announced during the quarter we significantly enhanced our theater portfolio as we entered into a comprehensive restructuring agreement with Regal anchored by a new master lease. Additionally Southern theaters our fourth largest theater tenant was acquired by Centico's entertainment who paid the full remaining deferred rent owed by Southern theaters.

The four former Regal locations now managed by Cinemark and one managed by Phoenix are all open ramping up and regaining market share performance is in line with our expectations as we reported in August on July 17th Sand TECOS theaters LLC acquired VSS southern theme.

<unk> through an asset purchase agreement with 10 theatres Southern was our fourth largest theatre holding sand TECOS is owned by the San Antonio Area Foundation, one of the nation's premier community foundations. The combined San TECOS entity operates 27 highly amended ice theaters and eight south Eastern Star.

Greg Silvers: While the actor strike is still ongoing resolution of the writer strike was an important milestone as the actor crew exhibition continues its strong recovery. As the last weekend year-to-date box office has already surpassed 2022 total box office revenues. As we emphasized previously, compelling content translates into theater attendance. Most recently, the Barbonheimer event highlighted the power of theatrical exhibition as it brought in cohorts from diverse age and gender demographics. Additionally, it brought back many who hadn't been to the theater in years.

<unk>, making it the eighth largest theatre circuit in North America.

In connection with the transaction southern paid in full its remaining deferred rent of $11 6 million, which was recognized as rental revenue in the third quarter.

In the quarter, we took an impairment of $20 9 million related to a potential restructuring with a small regional theater chain. We are working on to finalize the agreement.

Greg Silvers: With the Taylor Swift Erasm tour movie, we're seeing the true power of theatrical experience combined with highly engaging content. This is an excellent example of alternative content brought to life in a theatrical environment. Many in the industry are seeing the success of this movie as an indicator of opportunities for other genres and performers to bring their content to this entertainment platform. Our non-theater portfolio continues to demonstrate strength and our coverage remains strong, with many tenants seeing increases in both attendance and revenue.

And we will provide more detail on a future call.

The third quarter was a continuation of box office recovery. Despite the headwinds of the writers and actors strikes. The writer's strike was settled in September and approved by the writers Guild in early October the screen actors Guild remains on strike and we don't have any insight into the timing of resolution <unk>.

Box office for the first three quarters of $2023 7, Billion% to 26% increase over the same time period in 2022 led by $955 million and combined box office gross during the quarter from Barbie and Oppenheimer Q3 total box office was.

Greg Silvers: While the Macro environment remains challenging for REITs broadly, consumers continue to value experiences and their spending on these activities remains resilient. Accordingly, we're confident in our plan and our ability to identify and capitalize on compelling opportunities.

$2 6, Billion% to 38% increase over Q3 2022, six films grossed over $100 million and 13 grossed over $60 million demonstrating the broad based return of exhibition with contributions from both blockbusters and smaller films Q.

Greg Silvers: With a committed development and redevelopment pipeline of approximately $235 million to be funded over the next two years, with $173 million of cash on hand and no borrowers on our $1 billion to cure revolving credit facility, we are well positioned to continue our growth without having to issue equity. Our current value proposition is strong, with a solid balance sheet well-covered dividend and significant near-term catalysts with a recovering box office and the potential to realize meaningful percentage rent.

Q4 is off to a solid start led by Taylor Swift, the Arris tour, which gross $93 million on its opening weekend. The second highest October opening ever and the highest grossing concert film opening ever.

And as gross $132 million through October 23.

Through October 23rd 21 titles have grossed over $100 million in 2023 and year to date box office growth stands at 744 billion, which exceeds the box office growth for all of 2022.

Greg Silvers: Additionally, we are the only diversified REIT focusing on the highly resilient experiential economy. We specialize in experiential real estate and, as such, have developed unique industry knowledge in the segments we talked about. This allows us to develop long-term relationships and provides the ability to be selective in the spaces in which we invest. As we continue to execute our participation improvement in our cost of capital, which should allow us to achieve increased levels of growth.

Because of the continued strong performance, we believe domestic box office for 2023 will come in slightly above $9 billion, which is in line with the projections, we shared and discussing our Regal resolution and would be a 24% increase over 2022 domestic box office gross we are.

Greg Zimmerman: Now, I'll turn it over to Greg Zimmerman for more details on the quarter. Thanks, Greg. At the end of the quarter, our total investments were approximately $6.7 billion with 359 properties in service and 99% least.

We're optimistic about the remainder of the year with killers of the flower Moon, which opened last weekend and gross $23 million Renaissance a film by beyond say hunger games, the ballad of songbirds, and snakes, the marvels, Napoleon and Aquaman and the loss Kingdom.

Greg Zimmerman: Beginning this quarter, we will exclude properties we intend to sell from our leasing occupancies statistics. During the quarter, our investment spending was $36.8 million, bringing our total investment spending for the nine months ending on September 30 to $135.5 million. 100% of the spending was in our experiential portfolio and included continued funding for experiential build-to-suit development projects and redevelopment projects commenced in 2022 and 2023. Our experiential portfolio comprises 288 properties with 51 operators and accounts for 92% of our total investments or approximately $6.2 billion. And at the end of the quarter was 99% occupied. Our education portfolio comprises 71 properties with eight operators and at the end of the quarter was 100% occupied. Epi.

Importantly, our high quality theater portfolio continues to outperform the industry.

Turning now to an update on our other major customer groups. We continue to see good results and ongoing consumer demand across all segments of our drive to value oriented destinations across the board operators are managing increased operating expenses, which is negatively impacting EBITDA arm for some.

While attendance remains strong and some properties, we are seeing an anticipated pullback from peak post pandemic attendance.

Our eat and play assets continued their strong performance with portfolio revenue and EBITDA arm up over Q3 2022 at its own expense top golf renovated five of our assets in 2023, replacing the outfield turf and lighting repainting and upgrading signage.

Our attractions portfolio saw attendance gains EBIT arm was pressured by increasing insurance and wage costs, but we still have comfortable rent coverage construction of the indoor water park at the Bavarian N and Frank and move Michigan is about 25% complete and on schedule for a summer 2024 opening.

Greg Zimmerman: Turning to coverage, the most recent data provided is based on a June trailing 12 month period. Overall portfolio coverage for the trailing 12 months continues to be strong at two times. Coverage for the non-theater portion of our portfolio is 2.6 times. Coverage for the theaters is 1.4 times, with box office for the 12 months ending June 30th at 8.1 billion. By way of comparison, if the restructured regal deal, which I'll describe in more detail in a moment, had been in place for the trailing 12 months ending June 30th, theater coverage would be 1.5 times and overall coverage would be 2.1 times.

Attendance at City Museum in St. Louis is up 11% year over year, driving increased revenue and EBITDAR or Titanic museums also demonstrated strong attendance revenue and EBITDAR growth year over year.

Across our fitness offerings, we're seeing continued year over year growth in membership revenue as opposed to adding pandemic emphasis on fitness continues. We are also seeing improvements in EBITDAR and EBITDAR margin construction is underway for both the expansion of the Springs resort in Pagosa Springs, which will open in early 2000.

Greg Zimmerman: Beginning next quarter, to provide a more accurate view of coverage, we will report theater coverage as if the restructured regal deal was in place for the full trailing 12 months. Finally, with trailing 12 month box office grossed through September 30th at 8.8 billion, we anticipate theater coverage is returning to our pre-pandemic range.

25, and the redevelopment of our Marietta, California Conference Center into a new natural Hot Springs resort, which is scheduled to open in early 2020 for construction on improvements to both gravity House Steamboat Springs, and Aspen locations is also well underway.

Greg Zimmerman: Now I'll update you on the operating status of our tenants. As previously reported, we entered into a comprehensive restructuring agreement with regal, anchored by a new master lease for 41 of the 57 properties previously operated by regal. The new master lease became effective August 1st. The four former regal locations now managed by Cinemark and one managed by Phoenix are all open, ramping up, and regaining market share. Performance is in line with our expectations.

Vale reported season pass sales are up 7% and alyeska joins the Ikon pass program for the coming season, we continue to be pleased with the strong performance of the Nordic Spa at Alyeska room renovations continue at alyeska, including the addition of the Glacier lounge and new suites.

Our Margarita Bill Hotel Nashville, approximate to all of Nashville's famous downtown destinations continues its upward trajectory in revenue EBITDAR and occupancy at both the beachcomber and bellwether resorts in St. Pete Beach, we continue to see increases in occupancy operating revenue and EBIT arm.

Greg Zimmerman: As we reported in August on July 17th, Fantico's theaters LLC acquired VSS Southern theaters through an asset purchase agreement. With 10 theaters, Southern was our fourth largest theater holding. Fantico's is owned by the San Antonio Area Foundation, one of the nation's premier community foundations. The combined Fantico's entity operates 27 highly amended ice theaters in eight southeastern states, making it the eighth largest theater circuit in North America. In connection with the transaction, Southern paid in full its remaining deferred rent of 11.6 million, which was recognized as rental revenue in the third quarter.

While ADR and Revpar are normalizing from post pandemic highs revenue and EBITDAR increased year over year in Q3 for our overall RV Park portfolio. The conversion of the former Cajun palms to camp Margarita Villa Breaux Bridge is complete and we are starting to see improved results construction.

On improvements at jealous stone cozy rest in suburban Pittsburgh is underway to be complete by Memorial day, and we have completed 80% of the redevelopment at generally stone Warren's in the Wisconsin Dells.

Greg Zimmerman: In the quarter, we took an impairment of 20.9 million related to a potential restructuring with a small regional theater chain. We are working on to finalize the agreement and will provide more detail on a future call.

Our education portfolio continues to perform well with year over year increases through June 30th across a portfolio of 12% of revenue and 6% and EBITDAR attendance is holding steady at very high levels and increased across the entire portfolio for June 2023, trailing 12 months.

Greg Zimmerman: The third quarter was a continuation of box office recovery despite the headwinds of the writers and actor strikes. The writer strike was settled in September and approved by the writer's guild in early October. The screen actor's guild remains on strike and we don't have any insight into the timing of resolution. Box office for the first three quarters of 2023 was $7 billion, a 26% increase over the same time period in 2022.

Turning to capital recycling as we reported in August during the quarter, we sold two more kindercare locations for which the lease was terminated for combined net proceeds of $13 9 million and a gain of approximately $1 5 million. Both will be operated as schools. We have now sold three of the five and have a signed purchase agreement.

Greg Zimmerman: Led by $955 million in combined box office gross during the quarter from Barbie and Oppenheimer, Q3 total box office was $2.6 billion, a 38% increase over Q3 2022. Six films grossed over 100 million and 13 grossed over 60 million, demonstrating the broad-based return of exhibition with contributions from both blockbusters and smaller films. Q4 is off to a solid start led by Taylor Swift, the Arrest Tour, which grossed $93 million on its opening weekend, the second highest October opening ever, and the highest grossing concert film opening ever, and has grossed $132 million through October 23rd.

For the fourth.

Again, as we reported in July in the third quarter, we sold a former Cinemax theater and Hialeah, Florida for a non theater use for net proceeds of $9 million and a gain of around 750000.

We were not able to publicly market any of the 11 surrender Regal theaters, we plan to sell until mid July I am pleased to report that in the third quarter. We sold the first of the 11 for net proceeds of $3 7 million and a gain of about $300000 as of today, we have either executed letters of intent or.

Signed purchase and sale agreements for six of the remaining 10, former Regal theaters as has been our experience over the play out past two plus years the potential future uses are varied and dependent on the location of the real estate.

Greg Zimmerman: Through October 23rd, 21 titles have grossed over $100 million in 2023, and year-to-date box office gross stands at $7.44 billion, which exceeds the box office gross for all of 2022. Because of the continued strong performance, we believe domestic box office for 2023 will come in slightly above $9 billion, which is in line with the projections we shared in discussing our regal resolution, and would be a 24% increase over 2022 domestic box office gross.

Year to date, we have generated approximately $35 million in net proceeds from dispositions subject to satisfaction of customary closing conditions. We anticipate closing additional dispositions in Q4 and are thus revising our 2023 guidance for dispositions from a range of 31% to $41 million to a range.

A $40 million to $60 million.

In Q3, our investment spending was $36 $8 million, bringing our total investment spending for the first nine months of the year to $135 5 million. This consisted of funding of experiential development and redevelopment projects commenced in 2022 and 2023.

Greg Zimmerman: We are optimistic about the remainder of the year with killers of the flower moon, which opened last weekend and grossed $23 million. Renaissance, a film by Beyoncé, Hunger Games, the ballad of songbirds and snakes, the Marvels, Napoleon, and Aquaman in the Lost Kingdom. Importantly, our high-quality theater portfolio continues to outperform the industry.

We're narrowing our investment spending guidance range for funds to be deployed in 2023 from a range of $200 million to $300 million to a range of 225 to 275.

At the end of Q3, we have committed an additional approximately $235 million and experiential development and redevelopment projects, which we expect to fund over the next two years without the need to raise additional capital we anticipate approximately $63 million of that $235 million will be deployed over the <unk>.

Greg Zimmerman: Turning now to an update on our other major customer groups, we continue to see good results in ongoing consumer demand across all segments of our drive-to value-oriented destinations. Across the board, operators are managing increased operating expenses, which is negatively impacting EBIT arm for some. While attendance remains strong, in some properties, we are seeing an anticipated pullback from peak post-pandemic attendance. Our Eat and Play assets continued their strong performance with portfolio, revenue, and EBIT arm up over Q3 2022.

Remainder of 2023 and that is the amount included in our 2023 guidance range.

Cap rates continue to be in the 8% range and most of our experiential categories. We are seeing high quality opportunities for both acquisition and build to suit redevelopment and expansion. We continue to be pleased with our pipeline and with new and existing customers and concepts, but as we have consistently said over the past several.

Greg Zimmerman: At its own expense, Topgolf renovated five of our assets in 2023, replacing the outfield turf and lighting, repainting, and upgrading signage. Our attraction portfolio saw attendance gains. EBIT arm was pressured by increasing insurance and wage costs, but we still have comfortable rent coverage. Construction of the indoor water park at the Bavarian Inn and Frankenmuth, Michigan is about 25% complete and on schedule for a summer 2024 opening. Attendance at City Museum in St. Louis is up 11% year-over-year driving increased revenue and EBIT arm.

Quarters, we are exercising discipline and evaluating new transactions, given our cost of capital and the current interest rate environment I'll now turn it over to Mark for a discussion of the financials.

Thank you, Greg and today I will discuss our financial performance for the third quarter provide an update on our balance sheet and close with providing updated 2023 guidance.

We had another strong quarter of results with <unk> as adjusted of $1 47 per share versus $1 16 in the prior year up 27% and <unk> of $1 47 per share compared to $1 22 in the prior year up 20%.

Greg Zimmerman: Our Titanic museums also demonstrated strong attendance, revenue, and EBIT arm growth year-over-year. Across our fitness offerings, we're seeing continued year-over-year growth in membership revenue as the post-pandemic emphasis on fitness continues. We are also seeing improvements in EBIT arm and EBIT arm margin. Construction is underway for both the expansion of the Springs Resort in Begoza Springs, which will open in early 2025, and the redevelopment of our Murray at a California Conference Center into a new natural hot Springs Resort, which is scheduled to open in early 2024.

Now moving to the key variances by line item total revenue for the quarter was $189 4 million versus $161 4 million in the prior year, an increase of 17% and.

In addition to the effect of acquisitions development and scheduled rent increases a number of other items contributed to this increase as we discussed last quarter Regal emerged from bankruptcy on July 31, and the new Master lease became effective on August one.

In connection with reestablishing accrual basis accounting for Regal, we recognized approximately 700000 is straight line rental revenue during the quarter as anticipated related to the new Master lease with Regal. In addition, we recognized straight line rental revenue that was not anticipated totaling $2 1 million primarily related to <unk>.

Greg Zimmerman: Construction on improvements to both Gravity House Steamboat Springs and Aspen locations is also well under. Way. Veil reported season past sales are up 7 percent, and Aliasca joins the icon past program for the coming season. We continue to be pleased with the strong performance of the Nordic Spa at Aliasca. Room renovations continue at Aliasca, including the addition of the glacier lounge and new suites. Our Margaritaville Hotel Nashville, proximate to all of Nashville's famous upward trajectory in revenue, EBIDARM, and occupancy.

Recording of straight line receivable on the master lease.

On the effective date.

Related to four ground leases that are sublease to Regal.

During the quarter, we collected a total of $19 $3 million of deferral payments from cash basis customers that was recognized as additional revenue.

This included among other collections the $11 6 million of remaining deferred rent received from southern related to its sale to Santee goes and Regal stub rent and pre petition rent for September of 'twenty, two totaling $3 8 million as I outlined on our last call. We also received an additional $1 2 million of <unk>.

Greg Zimmerman: At both the Beach Comer and Bellweather resorts in St. Pete Beach, we continue to see increases in occupancy, operating revenue and EBIDARM while ADR and RevPAR are normalizing from post-pandemic highs. Revenue and EBIDARM increased year-over-year in Q3 for our overall RV park portfolio. The conversion of the former Cajun Palms to Camp Margaritaville-Bro Bridge is complete, and we are starting to see improved results. Construction on improvements at Yellowstone, Kozy Rest and suburban Pittsburgh is underway to be complete on Memorial Day, and we have completed 80 percent of the redevelopment at Jellystone Warrants in the Wisconsin Dells.

Prior period property operating expense reimbursement from Regal that were not previously anticipated.

Going forward, we could receive an amount related to a rejection damages with regal that is treated as an unsecured claim in the bankruptcy, but any such amount is expected to be insignificant.

With regards bankruptcy resolution in the full deferral payment by southern the deferred rent receivable will not on our books, excluding the amount held in advance related to Regal is reduced to approximately $12 7 million at quarter end.

Greg Zimmerman: Our education portfolio continues to perform well with year-over-year increases through June 30th across the portfolio of 12 percent in revenue and 6 percent in EBIDARM. Attendance is holding steady at very high levels and increased across the entire portfolio for June 2023 to early 12 months.

Of this amount approximately $11 6 million relates to one cash basis attraction tenant whose repayment timing is based on an earnings <unk> threshold, which is not expected to be achieved in 2023.

The remaining amount of approximately $1 1 million relates to to cash basis tenants that are paying according to agreed upon scheduled through 2024.

Greg Zimmerman: Turning to capital recycling, as we reported in August during the quarter, we sold two more kindergarten care locations for which the lease was terminated for combined net proceeds of 13.9 million and a gain of approximately 1.5 million. Both will be operated at schools. We have now sold three of the five and have assigned purchase agreement for the fourth.

Thus, while as you can see on the schedule of cash basis defer our collections. We have recognized significant amounts of such revenue in 2022 and through the third quarter of 2023.

We expect such amounts to be nominal in the fourth quarter of 2003 and for all of 2024.

Greg Zimmerman: Again, as we reported in July, in the third quarter, we sold a former Cinemax Theater in High LA, Florida, for a non-theater use, for net proceeds of 9 million and a gain of around 750,000. We were not able to publicly market any of the 11 surrender regal theaters we planned to sell until mid-July. On police report, but in the third quarter, we sold the first of the 11 for net proceeds of 3.7 million and a gain of about 300,000.

After I go over our 2023 revised guidance I will illustrate the impact these out of period deferral collections are expected to have on our anticipated growth in <unk> as adjusted per share for 2023 versus prior year.

Both other income and other expense related primarily to our operating properties. The increases in these amounts of $3 1 million and $4 million, respectively compared to the prior year due primarily the fact that five of the 16 theaters surrendered by and previously leased to Regal had been operated by third parties on <unk> on <unk>.

Greg Zimmerman: As of today, we have either executed letters of intent or signed purchase and sale agreements for six of the remaining 10 former regal theaters. As has been our experience over the past two plus years, the potential future uses are varied and dependent on the location of the real estate. Here to date, we have generated approximately $35 million in net proceeds from dispositions.

Half since early August these.

These properties experienced a slight loss during the third quarter as anticipated. In addition, the net profit of the remaining managed properties taken as a whole was also slightly lower than prior year.

Percentage rents for the quarter increased to $2 1 million versus $1 5 million in the prior year, primarily due to increased revenue at one cultural property.

Greg Zimmerman: Subject to satisfaction of customary closing conditions, we anticipate closing additional dispositions in Q4 and are thus revising our 2023 guidance for dispositions from a range of 31 to 41 million to a range of 40 to 60 million. In Q3, our investment spending was 36.8 million, bringing our total investment spending for the first nine months of the year to 135.5 million. This consisted of funding of experiential development and redevelopment projects commenced in 2022 and 2023.

On the expense side G&A expense for the quarter increased to $13 5 million versus $12 6 million in the prior year due primarily to higher payroll costs, including noncash share based compensation expense as well as higher professional fees.

Including those related to the Regal resolution.

Interest expense net for the quarter decreased by $1 5 million compared to prior year due to an increase in interest income on short term investments and an increase in capitalized interest on projects under development.

Greg Zimmerman: We're narrowing our investment spending guidance range for funds to be deployed in 2023 from a range of 200 to 300 million to a range of 225 million to 275. At the end of Q3, we have committed an additional approximately 235 million in experiential development and redevelopment projects, which we expect to fund over the next two years without the need to raise additional capital. We anticipate approximately 63 million of that 235 million will be deployed over the remainder of 2023, and that is the amount included in our 2023 guidance range.

As Greg mentioned previously during the quarter, we recognized impairment charges of $29 million related to two theater properties that are part of a workout with a small theater tenants.

These charges are excluded from <unk> <unk> and <unk>.

Turning to the next slide I want to review some of the company's key credit ratios.

As you can see our coverage ratios continue to be strong with fixed charge coverage at three eight times.

And both interest and debt service coverage at four five times.

Our net debt to adjusted EBITDA was four four times for the quarter. However, excluding excluding the favorable impacts of out of period revenue in annualized other items net debt to annualized adjusted EBITDA was five one times for the quarter still at the low end of our stated range of 5% to five six times.

Greg Zimmerman: Cap rates continue to be in the 8% range. In most of our experiential categories, we are seeing high-quality opportunities for both acquisition and build-to-suit redevelopment and expansion. We continue to be pleased with our pipeline and with new and existing customers and concepts.

Greg Zimmerman: But, as we have consistently said over the past several quarters, we are exercising discipline in evaluating new transactions given our cost of capital and the current interest rate environment.

Additionally, our net debt to gross assets was 38% on a book basis at September 30.

Lastly, our common dividend continues to be very well covered with an <unk> payout ratio for the third quarter of only 56%.

Now, let's move to our balance sheet, which is in great shape.

Mark Peterson: I now turn it over to Mark for discussion of the financials. Thank you, Greg. Today, I'll discuss our financial performance for the third quarter, provide an update on our balance sheet and close with providing updated 2023 guidance. We had another strong quarter of results with FFO's adjust of $1.47 per share versus $1.16 in the prior year, up 27%, and AFFO of $1.47 per share compared to $1.22 in the prior year, up 20%.

At quarter end, we had consolidated debt of $2 8 billion all of which is either fixed rate debt or debt that has been fixed through interest rate swaps with a blended coupon of approximately four 3%.

Additionally, our weighted average consolidated debt maturities for five years with no scheduled debt maturities in 2023, and only $136 $6 million due in 2024.

We had $173 million of cash on hand at quarter end and no balance drawn on our $1 billion revolver, which puts us in an enviable position given the difficult backdrop of the capital markets.

Mark Peterson: Now moving to the key variances by line item, total revenue for the quarter was 189.4 million versus 161.4 million in the prior year, an increase of 17%. In addition to the effective acquisitions development and scheduled rent increases, a number of other items contributed to this increase.

We are pleased to be increasing our 2023 <unk> as adjusted per share guidance to a range of $5 10 to $5 18 from a range of $505 to $5 15.

Mark Peterson: As we discussed last quarter, Regal emerged from bankruptcy on July 31, and the new master lease became effective on August 1. In connection with reestablishing a cruel basis accounting for Regal, we recognized approximately 700,000 in straight line rental revenue during the quarter as anticipated related to the new master lease with Regal. In addition, we recognized straight line rental revenue that was not anticipated, totaling 2.1 million, primarily related to recording a straight line receivable on the master lease on the effective date related to four ground leases that are sub leased to Regal.

I will go over the changes from our previous midpoint of guidance in a moment note that the revised 2023 guidance range implies an <unk> as adjusted per share range for the fourth quarter of $1 10 to $1 18.

As we have discussed previously given our cost of capital in the current inflationary environment, we have consciously decided to limit our near term investment spending.

We are narrowing our 2023 investment spending guidance to a range of 225 million to $275 million from a range of $200 million to $300 million and we do not anticipate the need to raise additional capital to fund these amounts.

Mark Peterson: During the quarter, we collected a total of 19.3 million of deferral payments from cash basis customers that was recognized as additional revenue. This included, among other collections, the 11.6 million of remaining deferred rent received from southern related to its fail to San Ticos, and Regal's sub rent and pre-pretition rent for September of 22 totaling 3.8 million as I outlined on our last call. We also received an additional 1.2 million of prior period property operating expense reimbursements from Regal that were not previously anticipated.

We're increasing our guidance for disposition proceeds for 2023 to a range of $45 million or $60 million from a range of 31 million to $41 million.

Lastly guidance guidance for percentage rent and G&A expense is unchanged I want to remind everyone that none of the percentage rent expected for 2023 relates to the new Regal Master lease, which is based on lease year and is expected to start being recognized in 2024.

Guidance details can be found on page 24 of our supplemental.

I thought it would be helpful to provide a bridge from the midpoint of our previous <unk> as adjusted per share guidance of $5 10 to the midpoint of our increased guidance of $5 14.

Mark Peterson: Going forward, we could receive an amount related to our rejection damages with Regal that is treated as an unsecured claim in the bankruptcy that any such amount is expected to be insignificant. With Regal's bankruptcy resolution and the full deferral payment by southern, the deferred rent receivable will not on our books, excluding the amount held in advance related to Regal is reduced to approximately 12.7 million at quarter end. Of this amount, approximately 11.6 million relates to one cash basis attraction tenant whose repayment timing is based on an earnings threshold which is not expected to be achieved in 2023.

As you can see on the slide the <unk> <unk> increase in guidance is driven primarily by the two favorable revenue items recognized during the third quarter that I discussed earlier.

The $2 1 million of additional straight line rent and the additional $1 2 million of operating expense reimbursements related to Regal.

As I mentioned earlier on the next slide I want to illustrate the anticipated impact on growth in <unk> as adjusted per share for 2023, when you remove the impact of out of period cash basis deferred collections from 2022% to $18 4 million or 24 cents per share and for the midpoint of guidance for 2023.

Mark Peterson: The remaining amount of approximately 1.1 million relates to two cash basis tenants that are paying according to agreed upon schedules through 2024. Thus, as you can see on the schedule of cash basis deferral collections, we have recognized significant amounts of such revenue in 2022 and through the third quarter of 2023. We expect such amounts to be nominal in the fourth quarter of 23 and for all of 2024.

Of $36 million or <unk> 47 per share.

As you can see on the slide <unk> as adjusted per share growth from 'twenty 2022 to 2023 is expected to still be a healthy four 9%.

Finally, I want to make one last point that I think is important to understand and perhaps sets <unk> apart in a difficult environment for all rates.

Mark Peterson: After I go over our 2023 revised guidance, I will illustrate the impact these out of period deferral collections are expected to have on our anticipated growth and FFO's adjusted per share for 2023 versus prior year. Both other income and other expense relate primarily to our operating properties. The increases in these amounts of 3.1 million and 4 million respectively compared to the prior year would do primarily the fact that five of the 16 theaters rendered by and produced release to regal have been operated by third parties on EPR's behalf since early August.

Over the next couple of years, given our low dividend payout ratio and modest debt maturities. We believe we can use excess cash flow disposition disposition proceeds and some of our line capacity to increase investments a modest amount and still grow <unk> as adjusted per share excluding the impact from cash basis deferral collections.

By around 4% each year, while maintaining our targeted debt to adjusted EBITDA range of five to five six times.

When this growth is combined with a well covered dividend yield of nearly 8% currently.

Mark Peterson: These properties experience a slight loss during the third quarter as anticipated. In addition, the net profit of the remaining managed properties taken as a whole was also slightly lower than prior year. Percentage rents for the quarter increase to 2.1 million versus 1.5 million in the prior year primarily due to increase revenue at one cultural property. On the expense by GNA expense for the quarter increase to 13.5 million versus 12.6 million in the prior year due primarily to higher payroll costs including non cash share based compensation expense as well as higher professional fees including those related to the regal resolution. Interest expense and that for the quarter decrease by 1.5 million compared to prior year due to an increase in interest income on short term investments and an increase in capitalized interest on projects under development.

We believe that EPR offers shareholders a compelling investment opportunity.

Now with that I'll turn it back over to Greg for his closing remarks, Thank you Mark.

In conclusion I want to leave you with a few salient points regarding our performance.

One as Greg pointed out 2023 box office is expected to be at or above 9, billion% to 24% increase over last year.

Two our theater coverage normalized for the Regal transaction currently stands at one five times and this is computed on a trailing 12 month box office of $8 1 billion.

With an anticipated 9 billion box office for 2023, we expect that we will be back to our long standing pre pandemic cover theater coverage range of one six to one eight.

Mark Peterson: As Greg mentioned previously during the quarter, we recognize impairment charges of 20.9 million related to two theater properties that are part of a workout with a small theater tenant. These charges are excluded from FFO, FFOA and FFO.

Three even with the ongoing actor strike.

Currently most industry participants predict 2024 box office to be at least 9 billion.

For our non theatre portfolio continues to significantly outperform pre pandemic metrics.

Mark Peterson: Turning to the next slide, I want to review some of the company's key credit ratios. As you can see, our covered ratios continue to be strong with fixed charge coverage at 3.8 times and both interest and debt service coverage at 4.5 times. Our net debt to adjusted EBITDARE was 4.4 times for the quarter. However, excluding the favorable impacts of auto period revenue and annualizing other items, net debt to annualize adjusted EBITDARE was 5.1 times for the quarter still at the low end of our state of range of 5 to 5.6 times.

As these points demonstrate our belief in the resilience of the experiential economy is grounded in performance.

Not only have we collected over $150 million of deferred rents, but our properties are now performing at or above their pre pandemic levels.

With that why don't I open it up for questions Victor.

Thank you.

And as a reminder to ask a question. Please press star one on your telephone and wait for them to be announce to withdraw your question. Please press star one again.

Mark Peterson: Additionally, our net debt to gross assets was 38% on a book basis at September 30th. Lastly, our common dividend continues to be very well covered with an AFFO pay route ratio for the third quarter of only 56%.

One moment for our first question.

Our first question will come from the line of Joshua Denner Lane from Bank of America. Your line is open.

Mark Peterson: Now let's move to our balance sheet, which is a great shape. At quarter end, we had consolidated debt of 2.8 billion, all of which is either fixed rate debt that has been fixed or interest rate swaps with a blended coupon of approximately 4.3%. Additionally, our weighted average consolidated debt maturities 4.5 years with no scheduled debt maturities in 2023 and only 136.6 million due in 2024. We had 173 million of cash on hand at quarter end and no balanced run on our $1 billion revolver which puts us in an enviable position given the difficult backdrop of the capital markets.

Yeah, Hey, guys.

The color on the opening remarks, just kind of thinking about.

Your guide for the full year and then what it implies for <unk>, you kind of help us bridge.

Like where you are in <unk> like implied range.

Yes, there's a lot to that reconciliation, Josh, but I think I can go over to kind of the major components here in a second.

So.

First of all obviously you have got about 25 of deferrals in Q3, and we expect that to be nominal in Q4. So that's a big one as you heard from Q3 to Q4.

We also had straight line rent kind of one time of the $2 1 million. So that's another three.

Mark Peterson: We are pleased to be increasing our 2023 FFO's Adjusted for Shared Guidance to a range of 510-518 from a range of 505-515. I will go over the changes from our previous midpoint of guidance in a moment.

And then if you think about it.

Once you get deferrals out of the way the Regal base rent is higher for one month in Q3 than it is in Q4 and that's about another <unk> <unk>.

Mark Peterson: Note that the revised 2023 guidance range implies an FFO's Adjusted for Shared Range for the fourth quarter of a $1.10 to a $1.18. As we have discussed previously given our cost of capital and the current inflationary environment we have consciously decided to limit our near-term investment spending.

So you work that down to get to about $1 17 venues ahead to Q4, there's a couple of things that are pretty big to keep in mind.

The managed properties in JV is really drop in Q4, that's their off season. So there's quite a bit of drop in <unk> from Q3 to Q4 for those properties, but on the other side.

Mark Peterson: We are narrowing our 2023 investment spending guidance to a range of 225 million to 275 million from a range of 200 million to 300 million and we do not anticipate the need to raise additional capital to fund these amounts. We are increasing our guidance for disposition proceeds for 2023 to a range of 45 million to 60 million from a range of 31 million to 41 million.

About 50% of our percentage rent of that $12 million was recognized in Q4. So that's that's an up of about five whereas the timing of managing <unk> is kind of down about eight.

And then Theres other minor items, so long that's a long way of saying that's the way of getting from $1 47, this quarter to $1 14, but those are the major those are the major pieces as you head into Q4.

Mark Peterson: Lastly, guidance for percentage rent and GNA expense is unchanged. I want to remind everyone that none of the percentage rent expected for 2023 relates to the new regal master lease, which is based on lease year and is expected to start being recognized in 2024.

Okay Alright.

Very helpful. I appreciate that.

And then.

Mark you did mention just kind of where you think the company can kind of stabilize on a go forward basis for for growth I think without equity in her opening remarks.

Kind of go over that.

Mark Peterson: Guidance details can be found on page 24 of our supplemental. I thought it would be helpful to provide a bridge from the midpoint of our previous FFO's Adjusted for Shared Guidance of 510 to the midpoint of our increase guidance of 514. As you can see on the slide, the four cents increase in guidance is driven primarily by the two favorable revenue items recognized during the third quarter that I discussed earlier, the 2.1 million of additional straight line rent and the additional 1.2 million of operating expense reimbursements related to regal.

Those assumptions again, and just kind of how youre thinking about it maybe.

Drive maybe upside to that.

So those comments about over the next couple of years. So we're talking about 2024 and 2025, we think we can grow approximately 4%.

And both of those years.

Driven by the fact, the free cash flow that we're investing.

Of over $100 million.

Eight eight in a quarter cap also if you think about next year next year versus this year, we have the regal percentage rents and operating theaters coming online that we didn't get the benefit of this year. So this year, there's kind of a drop the 20% drop in base rent, but next year, we'll get the benefit of the performance of those.

Mark Peterson: As I mentioned earlier, on the next slide, I want to illustrate the anticipated impact on growth of an FFO's Adjusted for Shared for 2023. When you remove the impact of audit period cash basis deferral collections from 2022 of 18.4 million or 24 cents per share and from the midpoint of guidance for 2023 of 36 million or 47 cents per share. As you can see on the slide, FFO's Adjusted for Shared growth from 2022 to 2023 is expected to still be a healthy 4.9 percent.

Theaters.

As lease year during the last year in the operating theatres for the whole year, so theres quite a bit of improvement there and then I just think the investments some of the investments we did in <unk> and 'twenty. Two frankly that was kind of outsized. If you remember we did.

$600 million worth of deals and those are starting to come online this year and next year.

Mark Peterson: Finally, I want to make one last point that I think is important to understand in perhaps set CPR apart in a difficult environment for all reads. Over the next couple of years, given our low dividend payout ratio and modest debt maturities, we believe we can use excess cash flow, disposition proceeds and some of our line capacity to increase investments on modest amount and still grow FFO's Adjusted for Shared actually the impact from cash basis deferral collections by around 4 percent each year while maintaining our targeted debt to Adjusted EBITDA range of 5 to 5.6 times. When this growth is combined with a well-covered dividend yield of nearly 8 percent currently, we believe that EPR offers shareholders a compelling investment opportunity.

So you put that altogether.

And and you have some things going the other way as well you put it all together, though we think that translates to about a 4% growth in both years, but Fortunately, we have cash on hand, and nothing drawn on our line. So and we only have the $136 million of maturities in 'twenty, four and then $300 million and 25% we don't.

<unk>.

If you do the math on our line that we will need to access the capital markets to achieve that 4% growth.

Through 2025, so we're encouraged by that.

Okay.

Okay.

Thanks, Joe.

One moment for our next question.

Greg Silvers: Malafad, I'll turn it back over to Greg for his closing remarks. Thank you, Mark. In conclusion, I want to leave you with a few salient points regarding our performance.

And our next question comes from the line of Eric Wolfe from Citi. Your line is open.

Greg Silvers: One, as Greg pointed out, 2023 box office is expected to be at or above 9 billion, a 24 percent increase over last year. Two, our theater coverage normalized for the regal transaction currently stands at 1.5 times, and this is computed on a trailing 12-month box office of 8.1 billion. With an anticipated 9 billion box office for 2023, we expect that we will back to our longstanding pre-pandemic theater coverage range of 1.6 to 1.8.

Okay.

I think you had previously given any sort of run rate.

<unk> guidance for like 471, which excluded.

So it will be.

Before but also included the impossible.

The other thing is that still a good base from which to think about.

The growth that you guys offline.

When you look at run rate for us, it's a bit difficult because if you pick say fourth quarter quote run rate, we've got build to suits going in service.

Throughout the period, we have of course, the Regal percentage rent and operating profit that really doesn't kick in until next year. So.

Greg Silvers: Three, even with the ongoing act for strike, currently, most industry participants predict 2,024 box office to be at least 9 billion. Our non-theater portfolio continues to significantly outperform pre-pandemic metrics. As these points demonstrate, our belief in the resilience of the experiential economy is grounded in performance. Not only have we collected over 150 million of different prints, but our properties are now performing at or above their pre-pandemic levels.

Our run rate picking a quarter or even a kind of run rate for the year I think 471 sort of base run rate is probably a little bit high but we have that embedded growth that I talked about in terms of regal in terms of build to suits coming online and so forth but.

What I think you should focus on if you remove the deferrals, which is important to <unk> previous comment if you remove the deferrals.

We think we can grow that base amount that's that $4 67 that we showed in that slide by about 4% next year.

And then another roughly 4% and we'll crystallize that number when we give guidance in February for the year, but that's how we look at it.

Unknown Executive: With that, why don't I open it up for questions, Victor? Thank you. And as a reminder to ask a question, please press star 1-1 on your telephone and wait for you to be announced. To withdraw your question, please press star 1-1 again. One moment for our first question.

Got it thanks Tom.

And then your cash balance grew by $73 million quarter over quarter.

I'm, just trying to understand sort of what what drove that.

<unk> actually had some net investment activity in the quarter and as you mentioned that free cash flow is about little over 109 years call. It.

Mark Peterson: Our first question will come from land of Joshua, Denner Lane, from Bank of America. Your line is open. Yeah, hey guys, I appreciate the color and the opening remarks. Just kind of thinking about your guide to the floor here and then what it implies for 4Q. You kind of help us bridge where you are in 3Q to 4Q's like implied range. Yeah, there's a lot to that reconciliation, Josh, but I can go over the major components here for a second.

For the quarter so just.

Wondering why so much during the quarter.

Yes, we did collect the $19 $3 million of deferrals that are shown on that schedule. So that's a huge number also the timing of bond payments matters and they are heavier and heavier in Q2 and Q4. So there is some reversal of that coming in Q4, just the timing of the way our bond payments work, but yes.

It was a heavy high cash flow quarter, given the low bond payments extra deferrals.

And then just the growth in our operating business.

Mark Peterson: So first of all, obviously you've got about 25 cents of deferrals in Q3, and we expect that to be nominal in Q4, so that's a big one as you head from Q3 to Q4. We also had straight line rent kind of one time of the 2.1 million, so that's another 3 cents. And then if you think about it once you get the furls out of the way, the regal base rent is higher for one month in Q3 than it is in Q4, and that's in about another 2 cents.

Got it that's helpful. Thank you.

One moment for our next question.

And our next question comes from the line of Rob Stevenson from Janney Montgomery Scott Your line is open.

Good morning, guys. Gregg obviously, you have expansion commitments made of partners that you are still working on but beyond that or any new investments really penciling today, given where the bid ask spread is and your cost of capital in this interest rate world.

Mark Peterson: So you work that down, you get to about $1.17. Then as you head to Q4, there's a couple things that are pretty big to keep in mind. The managed properties in JV is really dropping Q4, that's their off-season, so there's quite a bit of drop in FFO from Q3 to Q4 for those properties, but on the other side, you know, about 50% of our percentage rent of that 12 million is recognized in Q4, so that's up of about 5 cents, whereas the timing of managing JV is kind of down about 8 cents.

I would say Rob the answer's, yes, I think things are taking time because of that bid ask spread and getting people comfortable with that but again as mark pointed out given that where we're spending cash.

As opposed to issuing new equity, we think on a risk reward standpoint things are and as the implied into our future growth will continue to do that it has taking more.

Mark Peterson: Then there's other minor items, so the long way of saying, that's the way of getting from $1.47 in this quarter to $1.14, but those are the major pieces as you head into Q4. Okay, all right. That's super helpful. Appreciate that.

Longer for <unk> to achieve that kind of price awareness that the market has moved substantially for everyone, but I think Greg and I will ask Greg to comment we're still seeing things that.

Mark Peterson: And then Mark, you did mention just kind of where you think that the company can kind of be stabilized on a go forward basis for growth with I think without equity or opening remarks, could you kind of go over that? Those assumptions again and just kind of how kind of thinking about it, maybe what could drive maybe upside to that. Those comments are about over the next couple of years. So we're talking about 2024 and 2025.

Again, we like the assets, we like the performance of these assets, but making them pencil to where we think is where value is has taken a little longer but we're seeing some movement in that area, Yes, Greg I think that's absolutely right and the other thing Rob I would add is that we're seeing these opportunities and most of our verticals.

We're seeing the Eaton play attractions experiential lodging so.

Mark Peterson: We think we can go approximately 4% in both of those years driven by the fact the free cash flow that we're investing of of over a hundred million dollars, you know, at eight eight in a quarter cap. Also, if you think about next year, next year versus this year, we have the regal percentage rents and operating theaters coming online that we didn't get the benefit of this year. So this year, there's kind of a drop, the 20% drop in base rent, but next year we'll get the benefit of the performance of those theaters, you know, as lease year during the lease year and the operating theaters for the whole year.

We still have what we feel is a pretty good pipeline, but I echo what greg's comments arches, it's just taking a little longer given the current environment.

Okay, and then Mark how should we be thinking about how the NOI from the.

The $200 million of expansion commitments sort of comes in.

Over the next couple of years, Brian I mean, just round numbers, if I think about it is call. It 300 million at a seven cap I mean, how does that sort of pro ratably sort of hit in 'twenty four 'twenty five 'twenty six what's the sort of and sort of period is when all of that stuff.

Mark Peterson: So there's quite a bit improvement there. And then I just think the investments, some of the investments we did in in 22, frankly, that was kind of outsized. Remember, we did 600 million worth of deals. And those are starting to come online this year. And next year, so you put that all together and, you know, you have some things going the other way as well. You put it all together, though, we think that translates to about a 4% growth in both years.

<unk> is income producing at full speed.

Yes, we show a schedule property under development on page 20 of the supplemental that shows spending on build to suit and then when it goes in service.

If you look from beginning of 'twenty four forward, we've got about $127 million worth of build to suit spending as it finishes out so.

Mark Peterson: The fortunately, we have cash on hand and nothing drawn on our line. So, and we only have the 136 million of maturities in 24 and then 300 million in 25. We don't think that if you do the math on our line that we will need to access the capital markets to achieve that 4% growth. So we're encouraged by that. Okay. Thank you. Thanks for asking.

Unknown Executive: One moment for our next question.

And then it shows on that schedule sort of how that build to suit comes into service and then on the mortgage side of course, as we put the money out that kind of earn that money right away. So by the way don't think seven cap think 8% or more in terms of when it goes in service, but I think that schedule is helpful to understand that timing.

Like I said of that 200 plus million about $127 million of it.

Yes.

<unk> will be spent over most of which will be spent in 'twenty four but there is some into 'twenty five as well.

Eric Wolfe: And our next question will come from line of Eric Wolf from City. Your line is open. Okay. Thanks. I think you have previously given a sort of run rate. FFO guidance for like 471, which excluded. So the impact of the falls, but also included the impact in the real or stretching other things. Is that still a good base for us to think about the growth that you just outlined? You know, when you look at run rate for us, it's a bit difficult because if you pick, say, fourth quarter, quote, run rate, we've got build the suits going in service. Throughout the period, we have a course, the regal percentage red and operating profit that really doesn't kick in till next year.

Okay, and there is no and there is no meaningful delay like the Waterpark theres going to be finished next summer or does that start producing at full speed immediately or is there a ramp up and it really doesn't start hitting it full speed until 'twenty five.

Once it goes.

Once it goes in service.

Which is what we're showing on that schedule interims this full cap rate.

Okay. That's helpful. Thanks, guys I appreciate the time.

Thanks, Rob.

Our next question.

Our next question comes from the line of Vod.

Bob.

JMP Securities Your line is open.

Mark Peterson: So run rate picking a quarter or even a kind of run rate for the year, I think 471 sort of base run rates, probably a little bit high. But we have that embedded growth that I talked about in terms of regal. In terms of build the suits coming online and so forth. But what I think you should focus on if you remove the deferrals, which is important to Joss's previous comment, if you remove the deferrals.

Hey, guys. This is actually Mitch here.

Just help me out with the 2020 for that because you had suggested that youre not.

Looking to tap the capital markets. So is that a suggestion that youre going to redeem the maturity.

We would pay it off our line of credit we have nothing drawn on our line of credit. So the plan currently is to pay it off our line of course, we will look at the debt markets at that time and see if longer term financing makes sense, but in the near term, we got plenty of capacity through cash on hand, and line of credit capacity to pay that off.

Mark Peterson: We think we can grow that base amount, that 467 that we showed in that slide by about 4% next year, and then another roughly 4%. We'll crystallize that number when we give guidance in February for the year, but that's how we look at it. Make sense. And then your cash balance screen by I think 73 million quarter of a quarter, just trying to understand, you know, sort of what what drove back and seem like, you know, you actually had some net investment activity in the quarter.

And so when you talk about that 4%.

For next year, you're implying a little bit of dilution associated with the.

The refi of that debt is that kind of the way, perhaps you think about it I'll correct, because we're paying it off our line and its cheaper. Yes. We are you are correct. Okay, great and then whats Santee goes long term plan is that just a onetime purchase or do you think that theyre going to look to maybe do some further consolidation.

Mark Peterson: And as you mentioned the three cash those about a little over a hundred million years, they were called 25 million quarter. So just, there's just one and why do you say much during the quarter? Yeah, we did collect the 19.3 million of deferrals that are shown on that schedule, so that's a huge number. Also, the timing of bond payments matters and their heavier heavier in Q2 and Q4. So there's some reversal of that coming in Q4 just the timing of the way our bond payments work. But yeah, it was a heavy high cash flow quarter given the low bond payments, the extra deferrals and then just the growth in our operating business. That's helpful. Thank you. One moment for next question.

Again, I think clearly if you know.

The St TECOS brand I think they are.

Thoughts or could you continue to operate theatres to be opportunistic.

If presented.

So I think they're still looking to grow their chain. So.

Greg.

Mitch we have had the opportunity to meet with them at length and understand what they're doing and we're pleased to have them as partners.

Great and then I think my last question is I think you. Greg you had mentioned 9 billion base case for 2024 box office, so kind of flattish year over year.

Rob Stevenson: And our next question of conflina, Rob Stevenson from Jamie Montgomery Scott. Your line is open.

Obviously, we continue to get some indication of some movies that are big releases that are getting delayed I mean do you think that there is any sort of downside risk to that number should the strike on the active side continue or are you pretty confident that that kind of bakes in.

Rob Stevenson: Good morning, guys. Great. Obviously you have expansion commitments made to partners that you're still working on. But beyond that, are any new investments really penciling today given where the bid aspect is and your cost of capital in this interest rate world? I would say Rob, the answer is yes. I think things are taking time because of that bid aspect and getting people comfortable with that. But again, as Mark pointed out, given that we're we're spending cash as opposed to issuing new equity.

And elongated strike front with regards to the actors.

Well again, there's always risk that we can't anticipate I think what we've said all along is the first half of next year is fairly bake I mean again, a lot of a lot of things.

Our complete.

So we'll start to see what's going to occur is.

Rob Stevenson: We think on a risk reward standpoint things are and as he implied in our future growth, we'll continue to do that. It has taken more and longer for to achieve that kind of price awareness that the market has moved substantially for everyone. But I think Greg and I'll ask Greg to comment, we're still seeing things that again, we like the assets. We like the performance of these assets, but making them pencil to where we think is where value is has taken a little longer, but we're seeing some movement in that area.

When the strike gets resolved, which we know it will be resolved at some point, there's going to be a mad rush of okay, completing anything that needs to be completed 24 versus starting new projects. So how that breaks out I mean remember again even.

Two months ago, Mitch the estimate was probably closer to the high nines. So that 9 billion kind of has some of that built in just kind of anticipating I mean, there is really not the only major release Gregg that I'm aware of that's moved right now with MRI eight yep.

Rob Stevenson: Yeah, Greg, I think that's absolutely right. And the other thing Rob, I would add, is that we're seeing these opportunities in most of our verticals. We're seeing the neat and play attractions, experiential lodging. So we still have what we feel is a pretty good pipeline, but I echo what Greg's comments are just it's just taking a little longer, given the current environment.

We don't have a whole lot of things and remember dune moved in to that period of time from this year. So.

Right now a lot.

A lot of significant movement like I said, it's probably got a 10% factor in there from a high <unk> to low <unk>.

Mark Peterson: Okay, and then Mark, how should we be thinking about how the NOI from the expand the $200 some million of expansion commitments sort of comes in over the next couple of years? Right? I mean, just round numbers if I think about it is, you know, call it 300 million at, you know, a seven cap. I mean, how does that sort of parodably sort of hit in 24, 25, 26? What's the sort of end sort of period is when all of that stuff is incomproducing it full sort of speed?

We're we'll still have to see.

I appreciate that thank you.

Okay.

One moment for our next question.

Our next question comes from the line of Todd Thomas from Keybanc Capital markets. Your line is open.

Hi, Thanks, Good morning, I appreciate the update on the additional dispositions.

And the details around.

The theater portfolio can you just comment on the pace of dispositions relative to your initial estimate that was provided with the Regal resolution and your ability to.

Mark Peterson: Yeah, you know, we show a schedule, property under development on page 20 of the supplemental that shows spending on build the suit and then when it goes in service. And I think if you look from the beginning of 24 forward, we've got about 127 million worth of build the suit spending as it finishes out. So, and then it shows on that schedule sort of how that build the suit comes into service.

Mitigate the dilution from carrying those assets or generate the recovery rent that you previously outlined.

Yes, Todd I think we said last quarter.

History, we've had since COVID-19 is selling five or six per year, and we feel pretty comfortable about that pace continuing as I mentioned, we have signed PSA as our LOI for six of the remaining 10.

Mark Peterson: And then on the mortgage side, of course, as we put the money out, that kind of earns that money right away. So by the way, don't think seven cap think 8% or more in terms of when it goes in service. But I think that schedule is helpful to understand that timing. Like I said, of that 200 plus million, about 127 million of it will be spent over most of which will be spent in 24, but there is some end to 25 as well. Okay.

And we're seeing good traction on all of them, so and that's from a standing start in July because we werent able to market any of these before we announced the Regal deal. The other thing I would add Todd is is what we're achieving is consistent with with the forecast that we gave at the time of the repo. So.

I don't think.

Changing from that expectation hopefully it appears that again as Greg and his team has gotten into this that they've achieved.

Mark Peterson: And there's no meaningful delay, like the water park that's going to be finished next summer. Does that start producing at full speed immediately or is there a ramp up and it really doesn't start hitting at full speed until 25? That sort of thing. Once it goes, yeah, once it goes in service, which is what we're showing on that schedule, it earns its full cap rate. Okay, that's helpful. Thanks guys. Appreciate the time. Thanks for the moment.

Unknown Executive: Our next question.

Robley.

How long does it take the closing, but the interest has probably been faster than we had initially anticipated which helps us as you point out not only with getting capital in but eliminating some of those carrying cost and allowing us to deploy that capital and making it productive faster.

Okay.

Helpful. And then your comments about investing free cash flow and continuing to put capital out the door.

Mitch: I'm going to come for a line of Yodav from JMP Securities. Your line is open. Hey guys, this is actually a mitch here. Just help me out with the 2024 debt because you had suggested that you're not looking to tap the capital markets. So is that a suggestion that you're going to redeem the maturity? We would pay it off our line of credit. We have nothing drawn on our line of credit.

As you look ahead I am assuming the committed.

Pipeline.

<unk> has been established on those investments youre locked in and that sort of eight to eight 5% range, but.

Are you seeing investment yields.

Improve at all more recently such that you would expect.

To be north of that eight to eight 5% range going forward just curious if youre seeing.

Mitch: So the plan currently is to pay it off our line. Of course, we'll look at the debt markets at that time and see if longer term financing makes sense. But in the near term, we got plenty of capacity through cash on hand and line of credit capacity to pay that off.

Mitch: Great. And so when you talk about that 4% for next year, you're implying a little bit of dilution associated with the refive that debt. Is that kind of the way you think about it? Correct. Because we're paying off our line and it's cheaper. Yes, we are. You're correct.

The adjustment in pricing as you continue to have conversations about about new investments here.

I think it is again I wouldn't say necessarily there has always been kind of.

Price awareness, but there's also issues of of risk reward, meaning maybe where we would have been 75% of a deal and we're now 60% of a deal but we're still at eight five so again, it's all of those things come into play I think what we'd say is we're comfortably in the eights.

Greg Silvers: Okay, great. And then what's in Tico's long term plan? Is that just the one time purchase or do you think that they're going to look to maybe do some further consolidation? Again, I think, clearly, if you know the San Tico's plan, I think their thoughts are to continue to operate theaters to be opportunistic if presented. So I think they're still looking to grow their chain. But Greg? No, and Mitch, we've had the opportunity to meet with them at length and understand what they're doing and we're pleased to have them as partners.

That.

We're very comfortable with the with the property types that we're seeing with the quality of those types with the quality of our operators.

Building, a resilient portfolio with Greg and the breadth as I mentioned before I mean, we're seeing a lot of opportunities and many of our verticals, which is really.

Reassuring.

Okay, and just lastly, I think you mentioned in your.

Your prepared remarks that in the attractions category, you're seeing some softness.

From lower spend maybe lower traffic can you just.

Provide a little bit more detail around around what youre seeing there and how operator.

Greg Silvers: Great. And then I think my last question is, you know, I think you, Greg, you'd mentioned 9 billion base case for 2024 box office. So kind of flatish year over year. Obviously, we continue to get some indication of some movies that are or big releases that are getting delayed. I mean, you think that there is any sort of downside risk to that number? Should this strike on the actor side continue? Or are you pretty confident that that kind of bakes in an elongated strike with regards to the act?

Performance has trended and then can you also just comment on whether youre seeing any.

Any softness at any other property types.

And here or anything, but just curious about experiential lodging, yes I am.

I actually said Todd that we were seeing pressure on EBITDAR from insurance and wage costs were actually seeing attendance gains and attractions. So I would say generally the takeaway is there is some pressure mostly on wages and insurance.

Greg Silvers: Well, again, there's always risk that we can't anticipate. I think what we've said all along is the first half of next year is fairly baked. I mean, again, a lot of things are complete. So we'll start to see what's going to occur is when the strike gets resolved, which we know it will be resolved at some point. There's going to be a mad rush of, okay, completing anything that needs to be completed 24 versus starting new projects.

In many of the verticals, but really hits attractions because it just got a larger insurance bill.

And then I also mentioned in the experiential lodging, we're seeing some normalization on revpar and ADR, but I would consider that coming back to normal from pre pandemic levels, rather than a decrease Greg.

Yes, I was going to add I think what we would say is across the board pretty much across the board, we're not seen backing up from the consumer side.

Greg Silvers: So how that breaks out. I mean, remember, again, even two months ago, Mitch, the estimate was probably closer to the high nines. So that nine billion kind of has some of that built in just kind of anticipating. I mean, there's really not the only major release Greg that I'm aware of that's moved right now with MI8. So we don't have a whole lot of things and remember, do moved in to that period of time from this year. So again, right now, not a lot of significant movement. It's like I said, it's probably got a 10% factor in there from high nines to low nines, but we'll still have to see.

Whether its whether its revenues or attendance.

Unknown Executive: Appreciate that. Thank you. One moment for our next question.

I mean almost across the board. We saw continued positive growth in that as Greg pointed out insurance cost for a lot of our operators have gone up substantially. So we have seen some margin pressure, but as the coverage indicates going.

On a quarter over basis, we went from a $2 seven last quarter to a $2 six this quarter.

That's really about some of that expense pressure, but we've not seen any kind of pullback from the consumer at all.

Especially on experiential assets.

Yeah.

Okay I appreciate that clarification. Thank you.

Thanks Pam.

Thank you one moment for our next question.

Our next question comes from the line of <unk> Chandra from RBC. Your line is open.

Todd Thomas: Our next question comes from line of Todd Thomas from Keybank Capital Markets. Your line is open. Hi, thanks. Good morning. Appreciate the update on the additional dispositions, you know, and the details around, you know, the theater portfolio. Can you just comment on the pace of dispositions relative to your initial estimate that was provided with the regal resolution and your ability to, you know, mitigate the delusion from carrying those assets or generate the recovery rent that you previously outlined.

Hi, Thank you just a quick question can you talk a little bit about the biomarker.

The depth of the buyer market, especially as you saw before Regal theaters to follow in the pipeline.

Yes, I think that the.

Buyer market is.

Pretty good I'd say again this is rough but about 50% of the theatres were selling will likely go to an existing smaller theater chain.

And the rest to various uses and again, it's all dependent on the location of the real estate, so could be multifamily it could be industrial could be retail.

Todd Thomas: Yeah, Todd, I think we said last quarter, the history we've had since COVID is selling five or six per year, and we feel pretty comfortable about that pace continuing. As I mentioned, you know, we have signed PSAs or LLIs for six of the remaining 10. So we, and we're seeing good traction on all of them. So, and that's from a standing start in July because we weren't able to market any of these before we announced the regal deal.

We always market broadly so we don't just target any particular user we hire broker and target wisely. So we feel like we have a pretty good handle on what the demand is for any particular asset.

I would say that the one indication is.

The speed at which Greg and his team have secured yes.

Todd Thomas: The other thing I would add, Todd, is what we're achieving is consistent with with the forecast that we gave at the time of the regal. So I don't think that, you know, we're changing from that expectation. Hopefully it appears that again, as Greg and his team has gotten into this that they've achieved probably. You know, it's how long does it take to close them, but the interest has probably been faster than we had initially anticipated, which helps us as you point out, not only with getting capital in, but eliminated some of those carrying cost and allowing us to deploy that. That capital and making it productive faster.

Purchase and sale agreements or LOI is when you look at that with one sold already in six seven of 11. So that's a pretty high hit rate for what has really been about a 60 day period. So.

There's been a lot of interest and I'll ask Greg to comment but multiple.

Multiple parties involved in most of these assets that's accurate yes.

This quarter and we expect the future slightly above.

In terms of price slightly above what we're carrying them at so we're seeing some gains upon sale as well.

Greg Silvers: Okay, that's helpful. And then your comments about investments. Fisting, Free Cash Flow, and continuing to put capital out the door. As you look ahead, I'm assuming the committed pipeline pricing has been established on those investments you're locked in and that sort of eight to eight and a half percent range. But are you seeing investment yield, improve it all more recently such that you'd expect to be north of that, eight to eight and a half percent range going forward, just curious if you're seeing any adjustment in pricing as as you continue to have conversations about about new investments here?

Great. Thank you.

Thank you.

One moment for our next question.

Greg Silvers: I think it's a, again, I wouldn't say necessarily there's always been kind of price awareness, but there's also issues of risk remodeled, meaning maybe where we would have been 75% of a deal and we're now 60% of a deal, but we're still at eight and a half. So again, it's all of those things come into place. Secondly, I think what we'd say is we're comfortably in the eights that we're very comfortable with the property types that we're seeing, with the quality of those types, with the quality of our operators and building a resilient portfolio. But Greg, as I mentioned before, I mean, we're seeing a lot of opportunities in many of our verticals, which is really reassuring.

Our next question comes from the line of Ryan Zhong from Jpmorgan. Your line is open.

Hi, Good morning, I appreciate the color there.

Got it.

Question on other income line I know you guys mentioned the operating assets that are in there. So assume car right. It's there and operating theaters and I know you guys mentioned, the theatres, where actually add a little bit last quarter.

Just kind of help us out in terms of modeling maybe moving forward I know you guys.

Talked about the if the box office is nine daily and what the other income should be for next year on the <unk> or the car right can you guys help us out a little bit on the seasonality and the magnitude.

How far can become stabilized amount.

Amounts.

From here.

Anything there would be appreciated thank you.

So other income versus other expense, we were down about 900000.

This quarter end.

Really there are a couple of things going on there we had.

Additional the loss, we said from taking on those five theatres, which was about four or 500000, and we expect that to reverse in the fourth quarter and still more or less breakeven.

Greg Silvers: Okay. And just lastly, I think you mentioned in your prepared remarks that in the attraction category, you're seeing some softness from lower spend, maybe lower traffic. Can you just provide a little bit more detail around what you're seeing there and how operator performance has trended? And then can you also just comment on whether you're seeing any softness at any other property types? You know, I didn't hear anything, but just curious about the experiential logic.

In terms of that in terms of part right.

Greg mentioned the expense pressure on some of the some of our experiential lodging and actually the margin decrease there and so that was the other contributor to that 901000, if you will degradation versus last year, both the operating theatres operating a loss for the quarter and then the Cartwright, having a slight increase in expenses that rich.

Their margin.

If you go to the fourth quarter. This year other income over this quarter. Other income over expense was $1 $3 million, we expect that number to be a slight loss in Q4, just due to the seasonality of the managed properties. If you think about Cartwright that sits off season theme.

Greg Silvers: Yeah, I actually, I actually said Todd that we, we were seeing pressure on EBIT arm from insurance and wage costs. We're actually seeing attendance gains and attractions. So I would say generally, the takeaway is there is some pressure mostly on wages and insurance in many of the verticals, but really hits attractions because it just got a larger insurance bill. And then I also mentioned in the experiential logic, we're seeing some normalization on rev par and ADR, but I would consider that coming back to normal from pre-pandemic levels, rather than a decrease.

<unk> will do better that will slightly offset the cartwright.

In fourth quarter, but really cart writes off seasons, what's going to drive that number down in that net net profit down in Q4.

Got it and then just kind of.

Is that a fair run rate on a cartwright chief moving forward to think about.

A little over 1 million.

Quarter on the <unk> or is that.

Greg Silvers: Greg, I think what we would say is across the board, pretty much across the board, we're not seeing backing up from the consumer side. Whether it's revenues or attendance, I mean, almost across the board, we saw continued positive growth in that. As Greg pointed out, insurance costs for a lot of our operators have gone up substantially, so we have seen some margin pressure. But as the coverage indicates going, you know, on a quarter over basis, we went from a 27 last quarter to a 26 this quarter. That's really about some of that expense pressure, but we've not seen any kind of pullback from the consumer at all, especially on experiential assets.

There are still some run rate stabilization there.

Okay.

Well Cartwright, it's been interesting because this is kind of the first year, it's been open for a full year.

Unknown Executive: Okay. Appreciate that clarification. Thank you.

And.

There were some there was some balcony construction going on there. So we do expect that to improve.

Hard to say with the expense pressure how much of that will improve remember too when you talk about run rates, they're going to have.

Aditi Balachandran: One moment for our next question.

First and fourth quarter would be lower than second and third quarter with respect to Cartwright because they are in season second and third quarter and you have off season sort of first and fourth quarter. So just make sure you get the timing of that right.

But.

I do think we're hopeful that cartwright improves over this year given the kind of the next year. After the first year out of Covid.

Having a full year and sort of having this balcony issue would shut down some rooms for a while that will be fully open next year. So we are hoping for improved performance, but again there is some expense pressure, we're seeing in that regard and that property.

Got it I appreciate it thank you.

Thanks.

Thank you and I'm not showing any further questions in the queue.

Aditi Balachandran: Our next question. I'm conflian of Aditi Balachandran from RBC. Your line is open.

Aditi Balachandran: Hi. Thank you. Just a quick question.

To turn the call back over to Greg Silvers CEO for closing remarks.

Well, thank you Victor and thank you everyone for joining US today, we look forward to talking to you on our next call and have a.

Greg Silvers: Can you talk a little bit about the buyer market or like I guess the death of the buyer market, especially if you still have these four legal theaters to sell on the pipeline? Yeah, I think that the buyer market is pretty good. I'd say, again, this is rough, but about 50% of the theaters we're selling will likely go to an existing smaller theater chain and the rest to various uses. And again, it's all dependent on the location of the real estate.

Thank you.

And with that this concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

Okay.

[music].

Greg Silvers: So it could be multifamily, it could be industrial, it could be retail. We always market broadly, so we don't just target any particular user, we hire a broker and target widely. So we feel like we have a pretty good handle on what the demand is for any particular asset. I would say that the one indication is the speed at which Greg and his team have secured, you know, purchase and sell agreements or LOIs, you know, when you look at that with one sold already in six, that's seven of 11.

Greg Silvers: So that's a pretty high hit rate for what has really been about a 60 day period. So I think there's been a lot of interest and I'll ask Greg to comment, but multiple parties involved in most of these assets. Yeah, that's accurate. Yes. And if you saw this quarter and we expect the futures slightly above, it's our terms of price slightly above what we're carrying that so we're seeing some gains upon sales as well.

Greg Silvers: Great. Thank you.

Unknown Executive: One moment for next question. Our next question we're going to fly in a very song from JP Morgan. Your line is open. Hi, good morning. I appreciate a color earlier. I have a question on other income line. I know you guys mentioned the operating assets are in there. So assume car rides it's there and operating theaters. I know you guys mentioned the theaters were actually at a little bit of loss this quarter.

Unknown Executive: You know, just kind of help us out in terms of modeling, maybe moving forward. I know you guys, you know, talked about the if the box office is 9 billion, what the other income should be for next year on the theaters. What about car rides? Can you guys, you know, help us out a little bit on the seasonality and the magnitude, you know, how far is it from stabilized amounts from here?

Unknown Executive: Just, you know, anything help there will be appreciated. Thank you. Yeah. So, you know, other income versus other expense, we were down about 900,000 this quarter and and really there's a couple of things going on there. We had additional the loss we said from taking on those five theaters, which was about four or five hundred thousand, and we expect that to reverse in fourth quarter and still more or less break even in terms of that.

Unknown Executive: In terms of cart right, Greg mentioned the expense pressure on some of our experiential lodging and actually the margin decreased there, and so that was the other contributor to that nine hundred a thousand, if you will, degradation versus last year, both the operating theaters, operating a loss for the quarter, and then the cart right having a slight increase in expenses that reduce their margin. If you go to the fourth quarter, this year, this quarter, other income over expense was 1.3 million.

Unknown Executive: We expect that numbered to be a slight loss in Q4, just due to the seasonality of the managed properties. If you think about cart right, that's its off season. Theaters will do better that will slightly offset the cart right in fourth quarter, but really cart rights off seasons was going to drive that numbered down in Q4. That kind of net profit down in Q4. Got it. And then just kind of, you know, is that a fair run rate on a cart right, he's moving forward to think about, you know, a little over 1 million, a quarter on the QQ and 3Q, or is that, you know, there still some run rate to stabilize it in there.

Unknown Executive: Well, you know, cart rights been interesting. It was kind of the first year it's been open for a full year, and there were some, there was some balcony construction going on there, so we do expect that to improve, you know, hard to say with the expense pressure, how much of that will improve. Remember, too, when you've been talking about run rates, they're going to have first and fourth quarter be lower than second and third quarter with respect to cart right, because they have in season, second and third quarter, and you have off season sort of first and fourth quarter, so just make sure you get the timing of that right.

Unknown Executive: But, you know, I do think we're hopeful that cart right improves over this year given the kind of the next year, after the first year out of COVID, having a full year and sort of having this balcony issue, which shut down some rooms for a while, that will be fully open next year, so we're hoping for improved performance. But again, there is some expense pressure we're seeing in that regard, in that, in that property. Got it, appreciate it. Thank you. Thanks.

Greg Silvers: Thank you, and I'm not showing any further questions in the Q.

Greg Silvers: I'd like to turn the call back over to Greg Silver, CEO for Closer Mike's. Well, thank you, Victor, and thank you, everyone, for joining us today.

Unknown Executive: We look forward to talking to you on our next call, and have a wonderful day. Thank you. And with that, this concludes today's conference call. Thank you for participating.

Unknown Executive: You may now disconnect, everyone. Have a great day.