Q1 2024 EPR Properties Earnings Call

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Good day and thank you for standing by welcome to the Q1 2020 for 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 and answer session.

Operator: Good day, and thank you for standing by. Welcome to the EPR Properties Q1 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand your conference over to your first speaker today, Brian Moriarty, Senior VP of Corporate Communications. Brian, the floor is yours.

Ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advising you. Your hand is raised to withdraw your question. Please press star one again.

Please be advised that today's conference is being recorded I would now like to hand your conference over to your first speaker today, Brian Moriarty Senior VP of corporate communications, Brian the floor is yours.

Brian Moriarty: Thank you Stacy thanks for joining us today for our first quarter 2024 earnings call and webcast.

Brian Moriarty: Thank you, Stacey. Thanks for joining us today for our first quarter 2024 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 start the call by informing you that this call may include forward-looking statements as defined in the Private Securities Litigation Act of 1995, identified by such words as will be intend, continue, believe, may expect, hope, anticipate, or other comparable terms.

Brian Moriarty: 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 will 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.

Brian Moriarty: The company's actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of those factors that could cause results to differ materially from those forward-looking statements is contained in the company's SEC filings, including the company's reports on Form 10-K and 10-Q. Additionally, this call will contain references to certain non-GAAP measures we believe are useful in evaluating the company's performance. A reconciliation of these measures to the most directly comparable gap measures is included in today's earnings release and supplemental information furnished to the SEC under Form 8K. If you wish to follow along, today's earnings release, supplemental, and earnings call presentation are all available on the Investor Center page of the company's website, www.eprkc.com. Now, I'll turn the call over to Greg Silvers.

Brian Moriarty: Identified by such words as will be intend.

Brian Moriarty: Continue believe May expect hope anticipate or other comparable terms the company's actual financial condition and the results of operations may vary materially from those contemplated by such forward looking statements discussion of those factors that could cause results to differ materially from those forward looking statements.

Brian Moriarty: There are contained in the Companys SEC filings, including the company's reports on Form 10-K and 10-Q.

Brian Moriarty: Additionally, this call will contain references to certain non-GAAP measures. We believe are useful in evaluating the company's performance.

Brian Moriarty: A reconciliation of these measures for the most directly comparable GAAP measures are included in today's earnings release, and supplemental information furnished to the SEC under form 8-K.

Brian Moriarty: 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.

Brian Moriarty: Now I'll turn the call over to Greg Silvers.

Gregory K. Silvers: Thank you, Brian. Good morning, everyone, and thank you for joining us on today's first quarter 2024 earnings call and webcast. In the first quarter, we were pleased to continue the momentum established during the fourth quarter of 2020, executing investment spending across our target experiential property types. Our coverage levels remain strong, and we believe this is indicative of the resiliency of the experiences our customers offer.

Gregory K. Silvers: Thank you Brian Good morning, everyone and thank you for joining us on today's first quarter 2024 earnings call and webcast.

Gregory K. Silvers: In the first quarter, we were pleased to continue the momentum established during the fourth quarter of 2020.

Gregory K. Silvers: Executing investment spending across our target experiential property types.

Speaker Change: Our coverage levels remain strong and we believe are indicative of the resiliency of the experiences our customers offer the.

Gregory K. Silvers: The box office remains in line with our expectations, and we look forward to seeing the results in the coming months as key titles come out. More broadly, I'd like to highlight some of the significant strides made to our overall value proposition as we move into 2023 and 2024. Strengthen Experiential Portfolio. We have continued to diversify and strengthen our portfolio of experiential properties. As evidenced by our coverage metrics, we remain focused on growing an experiential portfolio that is built for the long run and is able to sustain various economic cycles.

Speaker Change: The box office remains in line with our expectations and we look forward to seeing the results of the coming months as key titles come out.

Speaker Change: More broadly I would like to highlight some of the significant strides made to our overall value proposition as we move into 2023 2024.

Speaker Change: Strengthen experiential portfolio, we have continued to diversify and strengthen our portfolio of experiential properties as evidenced by our coverage metrics. We remain focused on growing and experiential portfolio that is built for the long run and is able to sustain various economic cycles.

Speaker Change: Expanded investment opportunity set while we are currently constrained in our capital deployment, we have been actively cultivating our unique relationships and exploring new potential investments that align with our experiential portfolio.

Gregory K. Silvers: Expanded Investment Opportunity Set. While we are currently constrained in our capital deployment, we have been actively cultivating our unique relationships and exploring new potential investments that align with our experiential portfolio. This work provides a foundation for future investments and growth in our portfolio. Economically Rationalized Theater Exhibition Business We saw a strong rebound at the box office last year. And while we anticipate that the 2024 box office will be slightly down versus 2023, we know that this is driven by delays in titles as opposed to consumer demand, and that 2025 looks excellent. Additionally, we firmly believe that the debate around streaming versus theater exhibition for movies has been resolved.

Speaker Change: This work provides a foundation for future investments and growth in our portfolio.

Speaker Change: Economically rationalized theater exhibition business.

Speaker Change: We saw a strong rebound in the box office last year.

Speaker Change: And while we anticipate that the 2024 box office will be slightly down versus 2023, we know that this is driven by delays in titles as opposed to consumer demand.

Speaker Change: And that 2025 looks excellent.

Speaker Change: Additionally, we firmly believe that the debate around streaming versus theater exhibition for movies has been resolved as studios look for high potential ROI on movie production cost Theater exhibition remains the essential primary distribution channel with streaming complementing the ecosystem downstream.

Gregory K. Silvers: As studios look for high potential ROI on movie production costs, theater exhibition remains the essential primary distribution channel, with streaming complementing the ecosystem downstream. A high-quality balance sheet. Our balance sheet, coupled with significant free cash flow, allows us to fund our anticipated investment spending while also supporting a well-covered monthly dividend, and we are committed to sustaining these important attributes as we work toward an improved cost of capital. Finally, as we stated previously, we're working diligently to control the factors that we can control.

Speaker Change: Our high quality.

Speaker Change: <unk> balance sheet, our balance sheet, coupled with significant free cash flow allows us to fund our anticipated investment spending while also supporting a well covered monthly dividend and we are committed to sustaining these important attributes as we work toward an improved cost of capital.

Speaker Change: Finally, as we stated previously we are working diligently to control the factors that we can control while macroeconomic factors can and have had a significant impact on our business. We continue to focus on being positioned for success now I'll turn the call over to Greg Zimmerman to go over the business in greater detail.

Gregory K. Silvers: While macroeconomic factors can and have had a significant impact on our business, we continue to focus on being positioned for success. Now, I'll turn the call over to Greg Zimmerman to go over the business in greater detail.

Gregory E. Zimmerman: Thanks, Greg. At the end of the quarter, our total investments were approximately $6.9 billion, with 358 properties that are 99% leased, excluding properties we intend to sell. During the quarter, our investment spending was $85.7 million, and 100% of the spending was on our experiential portfolio. Our experiential portfolio comprises 288 properties with 51 operators and accounts for 93% of our total investments, or approximately $6.4 billion. And at the end of the quarter, excluding the properties we intend to sell, it was 99%. Our education portfolio comprises 70 properties with 8 operators, and at the end of the quarter, excluding the properties we intend to sell, it was 100%. Turning to Coverage

Gregory E. Zimmerman: Thanks, Greg at the end of the quarter. Our total investments were approximately $6 9 billion with 358 properties that are 99% leased excluding properties, we intend to sell during the quarter. Our investment spending was $85 7 million, 100% of the spending was in our experiential.

Speaker Change: Portfolio.

Gregory E. Zimmerman: Our experiential portfolio comprises 288 properties with 51 operators and accounts for 93% of our total investments were approximately $6 4 billion and.

Speaker Change: And at the end of the quarter, excluding the properties, we intend to sell was 99% leased.

Speaker Change: Our education portfolio comprises 70 properties with eight operators and at the end of the quarter. Excluding the properties, we intend to sell was 100% leased.

Speaker Change: Turning to coverage.

Gregory E. Zimmerman: The most recent data provided is based on a December trailing 12-month period. Overall portfolio coverage for the trailing 12 months continues to be strong at 2.2 times. Trailing 12-month coverage for theaters is 1.7 times, with box office at $8.9 billion for the same period. Our theater coverage reporting assumes that the regal deal was in place for the entire trailing 12-month period.

Speaker Change: Most recent data provided is based on a December trailing 12 month period.

Speaker Change: Overall portfolio coverage for the trailing 12 months continues to be strong at two two times trailing.

Speaker Change: Trailing 12 months coverage for theaters is one seven times with box office at $8 9 billion for the same period.

Speaker Change: Our theater coverage reporting assumes that the Regal deal was in place for the entire trailing 12 month period.

Gregory E. Zimmerman: Trailing 12-month coverage for the non-theater portion of our portfolio is 2.6 times. Now I'll update you on the operating status of our theaters. Our theater coverage is at 2019 levels, even though North American Box Office remains well below 2019 levels. We continue to see sustained increases in food and beverage spending and spending on premium large format screens. Our portfolio is well positioned to benefit from these trends, and importantly, the box office generated from our high-quality theater portfolio continues to outperform the industry.

Speaker Change: Trailing 12 month coverage for the non theater portion of our portfolio is two six times now.

Speaker Change: Now I'll update you on the operating status of our tenants.

Speaker Change: Our theater coverages at 2019 levels, even though north American box office remains well below 2019 levels. We continue to see sustained increases in food and beverage spending and spending on premium large format screens, our portfolio is well positioned to benefit from these trends and import.

Speaker Change: <unk> the box office generated from our high quality theater portfolio continues to outperform the industry.

Gregory E. Zimmerman: Turning to Box Office and the State of the Industry, Q1 North American Box Office was $1.6 billion. While Q1 performance was down 6.6 percent from Q1 2023, as a result of strong performances by Dune Part 2, Kung Fu Panda 4, Godzilla x Kong: The New Empire, and Ghostbusters Frozen Empire, March's $739 million growth exceeded March 2023 by 17.4 percent. To date, 10 films have grossed more than $60 million in 2024. These results once again demonstrate that consumers want to see good films on the big screen.

Speaker Change: Turning to box office in the state of the industry Q1, North American box office was $1 6 billion. While Q1 performance was down six 6% from Q1 2023 as a result of strong performances by due in part to Kung Fu Panda four Godzilla.

Speaker Change: <unk> com, the new Empire, and Ghostbusters frozen Empire March's $739 million growth exceeded March 2023 by 17, 4%.

Speaker Change: To date 10 films of gross more than $60 million in 2024. These results once again demonstrate consumers want to see good films on the big screen.

Gregory E. Zimmerman: Box office gross is directly tied to the number of titles released, and we remain optimistic that as the year progresses, more titles than anticipated will be released as studios ramp up production coming out of the delays caused by the writers' and actor strikes. April is down somewhat because of a lack of titles, but we expect a return to a stronger cadence in May, continuing throughout the remainder of the year, with titles including If, Inside Out 2, and Deadpool and Wolverine.

Speaker Change: Fox office grosses directly tied to the number of titles released and we remain optimistic that as the year progresses more titles than anticipated will be released as studios ramp up production coming out of the delays caused by the writers and actors strikes April was down somewhat because of a lack of titles, but we.

Speaker Change: A return to stronger cadence and may continuing throughout the remainder of the year with titles, including F inside out too and Deadpool and Wolverine.

Gregory E. Zimmerman: With this, we reaffirm our previous estimate of between $8 and $8.4 billion for calendar year 2024. While it's too early to provide estimates for 2025, we are confident it will be a significant improvement over both 2023 and 2024. 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 destination. As has been the case for several quarters, increases in fixed costs, including labor, insurance, and taxes, continue to pressure EBITARM for many of our operators.

Speaker Change: With this we reaffirm our previous estimate of between eight and $8 4 billion for calendar year 2024.

Speaker Change: While it's too early to provide estimates for 2025, we are confident it will be a significant improvement over both 2023 and 2024.

Speaker Change: 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 as has been the case for several quarters increases in fixed costs, including labor insurance and taxes continue.

Speaker Change: To pressure EBITDA arm for many of our operators.

Gregory E. Zimmerman: Likewise, in some locations, we continue to see some pullback in attendance from post-COVID highs. Nonetheless, our non-theater coverage remains healthy at 2.6 times, the same as we reported on our Q3 and Q4 calls. Our Eat and Play assets continue to perform well, with portfolio EBITDARM up 6% in Q1 2024 over Q1 2023. After completing four refreshes in 2023 that they funded, Topgolf will fund refreshes at three more of our units in 2024.

Speaker Change: Likewise in some locations we continue to see some pullback in attendance from post COVID-19 highs.

Speaker Change: Nonetheless, our non theater coverage remains healthy at two six times the same as we reported on our Q3 and Q4 calls.

Speaker Change: Our eat and play assets continued good performance with portfolio EBITDAR arm up 6% in Q1 2024 over Q1 2023.

Speaker Change: After completing four refreshes in 2023 that they funded top golf will fund refreshes at three more of our units in 2024.

Gregory E. Zimmerman: A number of our attractions were closed seasonally in Q1. Bavarian Inn in Frankenmuth, Michigan, opened the first phase of its family entertainment center in Q4, with a ropes course and climbing wall scheduled to open in Q2.

Speaker Change: A number of our attractions were closed seasonally in Q1, Bavarian Han and Frank and moved from Michigan opened the first phase of its family Entertainment Center in Q4, with a ropes course and climbing wall scheduled to open in Q2, the full project, including the 100000 square foot indoor Waterpark will open.

Gregory E. Zimmerman: The full project, including the 100,000 square foot indoor water park, will open in late 2024. The new offerings are already beginning to drive revenue and EBITDA growth. Our fitness assets continue to show membership growth. Even while under construction for an extensive expansion project scheduled to open in spring 2025, our Springs Resort in Pagosa Springs continues its ADR growth. We're confident the expansion will drive growth at this outstanding asset. Ski results for the season were solid, despite weather-based attendance challenges everywhere but Alaska.

Speaker Change: Late 2020 for the new offerings are beginning to drive revenue and EBITDAR growth.

Speaker Change: Our fitness assets continued to show membership growth, even while under construction for an extensive expansion projects scheduled to open in spring 2025 are springs resort and Pagosa Springs continues its ADR growth.

Speaker Change: Confident the expansion will drive growth at this outstanding asset.

Speaker Change: <unk> results for the season were solid despite weather based attendance challenges everywhere about Alaska in general pass sales across the portfolio offset any weather issues or alyeska resort benefited from above average snowfall and the introduction of the Ikon pass hotel room.

Gregory E. Zimmerman: In general, past sales across a portfolio offset any weather issues. For example, our Alyeska Resort benefited from an above-average snowfall and the introduction of the Icon Pass. Hotel room renovations are complete at Alyeska, with restaurant and lobby renovations expected to be completed by year-end. Additionally, our significant expansion at the Jellystone Cozy Rest RV Park north of Pittsburgh is 90% complete. And with the substantial improvements, we anticipate increases in revenue and EBITDARM. Both the Margaritaville Nashville Hotel and our Camp Margaritaville RV Resort and Lodge in Pigeon Forge continue to perform very well. We have seen some softness in ADR at the St. Petersburg market, which negatively impacts our bellwether and beachcomber resorts.

Speaker Change: Patients are completed alyeska with restaurant and lobby renovations expected to be completed by year end.

Speaker Change: Our significant expansion at the Jelly stone Cozy rest RV Park North of Pittsburgh is 90% complete and with the substantial improvements we anticipate increases in revenue and EBITDAR.

Speaker Change: Both the Margaritaville Nashville hotel in our camp Margaritaville, RV resort and lodge in Pigeon Forge continue to perform very well.

Speaker Change: We have seen some softness in ADR at the St. Petersburg market, which was negatively impacted.

Speaker Change: Our bellwether in Beachcomber resorts.

Speaker Change: Our education portfolio continues to perform well with year over year increases across the portfolio through Q4 of 6% in revenue and 13% and EBITDAR.

Gregory E. Zimmerman: Our education portfolio continues to perform well, with year-over-year increases across the portfolio through Q4 of 6% in revenue and 13% in EBITDA. As we indicated last year, our kinder care portfolio was subject to a rent reset retroactive to January 1st, but calculated in the first quarter. We have reached an overall agreement with Kindercare to reset the rent. As we anticipated, our overall rent increased by approximately $1 million, and we will receive one location back at the end of the quarter, which we are actively marketing. We have sold four of the five Kindercare locations we took back last year.

Speaker Change: As we indicated last year, our Kinder care portfolio was subject to a rent reset retroactive to January one the calculated in the first quarter.

Speaker Change: We have reached an overall agreement with Kindercare to reset the rent as we anticipated our overall rent increased by approximately $1 million and we will receive one location back at the end of the quarter, which we are actively marketing we have sold four of the five kinder relocation kindercare locations, we took back last.

Speaker Change: <unk>.

Speaker Change: During Q1, our investment spending was $85 7 million, we closed on the $33 $4 million acquisition of Enchanted Forest water Safari and old forged New York and a sale leaseback transaction and established a relationship with attractions operator, new to EPR.

Gregory E. Zimmerman: During Q1, our investment spending was $85.7 million. We closed on the $33.4 million acquisition of Enchanted Forest Water Safari in Old Forge, New York, in a sale-leaseback transaction, and established a relationship with an attractions operator new to EPR. Enchanted Forest Water Safari is a four-season resort in the heart of the Adirondacks with the largest water park in New York, amusement rides, a hotel, a private lake, RV sites, and cabins, and access to hundreds of miles of snowmobile trails.

Speaker Change: And chanted forests water Safari is a four season resort in the heart of the Adirondacks with the largest water Park in New York amusement rides hotel private Lake RV sites in cabins and access to hundreds of miles of snowmobile trails.

Gregory E. Zimmerman: We also extended our relationship with Andretti Carding, closing on two new Build-a-Suit locations. Additionally, as we announced on the year-end call, we provided bill-to-suit financing for our sixth Andretti Carding location, this one in the greater Kansas City area. The total commitment is $35 million, with $8.8 million funded at closing. After our year-end call, we also closed on a $5.8 million loan to Andretti to acquire land in Schaumburg, Illinois, for another build-to-suit Andretti carting location.

Speaker Change: We also extended our relationship with Andretti Karting closing on two new build to suit locations as we announced on the year end call. We provided build to suit financing for our sixth Andretti Karting location. This one in the greater Kansas City area.

Speaker Change: The total commitment is 35 million with $8 8 million funded at closing.

Speaker Change: After our year end call. We also closed on a $5 8 million dollar loan to and ready to acquire land in Schaumburg, Illinois for another build to suit Andretti Karting location.

Speaker Change: Upon finalization of the construction contract and completion of due diligence items, the mortgage will be converted to a triple net lease with funding capped at $38 billion.

Gregory E. Zimmerman: Upon finalization of the construction contract and completion of due diligence items, the mortgage will be converted to a triple-net lease, with funding capped at $38 billion. Cap rates for these deals exceeded 8%, creating compelling long-term value.

Speaker Change: Cap rates for these deals exceeded 8%, creating compelling long term value.

Mark Alan Peterson: We're maintaining investment spending guidance for funds to be deployed in 2024 in a range of 200 million to 300 million. Through quarter end, we have committed approximately 220 million for experiential development and redevelopment projects that have been closed, but are not yet funded to be deployed over the next two years. We anticipate approximately $111 million of the $220 million will be deployed in 2024, which amount is included at the midpoint of our 2024 guidance range.

Speaker Change: We're maintaining investment spending guidance for funds to be deployed in 2024, and a range of $200 million to $300 million through quarter end, we have committed approximately $220 million for experiential development and redevelopment projects that had been closed but are not yet funded to be deployed over the.

Speaker Change: The next two years, we anticipate approximately $111 million of the $220 million will be deployed in 2024, which amount is included at the midpoint of our 2024 guidance range.

Mark Alan Peterson: In most of our experiential categories, we continue to see high-quality opportunities for both acquisition and build-to-suit redevelopment and expansion. We have a robust pipeline with new and existing customers in concept. Given our cost of capital, we will continue to maintain discipline and fund those investments primarily from cash on hand, cash from operations, proceeds from dispositions, and with our borrowing availability under our unsecured revolving credit. Now, a quick update on Capital Recycle.

Speaker Change: And most of our experiential categories, we continue to see high quality opportunities for both acquisition and build to suit redevelopment and expansion.

Speaker Change: We have a robust pipeline with new and existing customers and concepts given our cost of capital. We will continue to maintain discipline and to fund those investments primarily from cash on hand cash from operations proceeds from dispositions and with our borrowing availability under our unsecured revolving credit.

Speaker Change: Okay.

Speaker Change: Turning to a quick update on capital recycling as we announced on our year end call. In Q1, we sold both of our Titanic museums in Pigeon Forge, Tennessee, and Branson, Missouri to a private equity firm at a 6% cap rate on in place income for a combined $45 million in net proceeds.

Mark Alan Peterson: As we announced on our year-end call, in Q1, we sold both of our Titanic museums in Pigeon Forge, Tennessee, and Branson, Missouri, to a private equity firm at a 6% cap rate on in-place income for a combined $45 million in net proceeds and a gain on sale of approximately $17 million. The cap rate and gain demonstrate the value of our experiential investment. We also sold the third of our vacant former Regal theaters for $1.2 million and a gain of approximately $900,000.

Speaker Change: And a gain on sale of approximately $17 million.

Speaker Change: The cap rate and gain demonstrate the value of our experiential investments. We also sold a third of our vacant former Regal theaters for $1 2 million and a gain of approximately 900000, we have eight remaining to sell with signed purchase and sale agreements for three of those eight.

Mark Alan Peterson: We have eight remaining to sell, with signed purchase and sale agreements for three of those eight. Beyond the eight vacant former Regal Theaters, we have one remaining vacant AMC Theater and a vacant X-Gate Theater we terminated in Q4. We are maintaining our 2024 disposition guidance in the range of $50 million to $75 million. I now turn it over to Mark for a discussion of the financials.

Speaker Change: Beyond the eight vacant former Regal theaters, we have one remaining vacant AMC theater and a vacant escape theater, we terminated in Q4.

Speaker Change: We are maintaining our 2020 for disposition guidance in the range of 50 million to $75 million I'll now turn it over to Mark for a discussion of the financials.

Mark Alan Peterson: Thank you, Greg. Today I will discuss our financial performance for the first quarter, provide an update on our balance sheet, and close with an update on our 2024 guidance. FFO as adjusted for the quarter was $1.13 per share versus $1.26 in the prior year, and AFFO for the quarter was $1.12 per share compared to $1.30 in the prior year. Note that out-of-period deferral collections from cash basis customers included in income were $0.6 million for the quarter versus $6.5 million in the prior year, resulting in a decrease of $0.08 per share versus the prior year. Now moving to the key variances.

Mark Alan Peterson: Thank you Greg today, I will discuss our financial performance for the first quarter provide an update on our balance sheet and close with an update on 2020 for guidance.

Mark Alan Peterson: <unk> as adjusted for the quarter was $1 13 per share versus $1 26 in the prior year and <unk> for the quarter was $1 12 per share compared to $1 30 in the prior year.

Mark Alan Peterson: Note that out of period deferral collections from cash basis customers included in income were <unk> 6 million for the quarter were $6 5 million in the prior year, resulting in a decrease of <unk> <unk> per share versus prior year.

Mark Alan Peterson: Now moving to the key variances.

Mark Alan Peterson: Total revenue for the quarter was $167.2 million versus $171.4 million in the prior year. Within total revenue, rental revenue decreased by $9.3 million versus the prior year. The positive impact of net investment spending in the current quarter and prior year was more than offset by the reduction in out-of-period deferral collections that I just mentioned, as well as a reduction in rental revenue related to the Rego restructuring that took place in August of 2023.

Mark Alan Peterson: Total revenue for the quarter was $167 2 million versus $171 4 million in the prior year.

Mark Alan Peterson: Within total revenue rental revenue decreased by $9 3 million versus the prior year.

Mark Alan Peterson: The positive impact of net investment spending in the current quarter and prior year was more than offset by the reduction in out of period deferral collections that I just mentioned as.

Mark Alan Peterson: As well as a reduction in rental revenue related to the Regal restructuring that took place in August of 2023.

Mark Alan Peterson: Additionally percentage rents for the quarter increased slightly to $1 9 million versus $1 8 million in the prior year.

Mark Alan Peterson: Additionally, percentage rents for the quarter increased slightly to $1.9 million versus $1.8 million in the prior year. Recall that percentage rent is expected to be recognized for the first time later this year for theaters under the Regal Master Lease. Based on the current film slate, we expect that all of this percentage rent will be recognized in July of Q3, the last month of the lease year.

Mark Alan Peterson: We call that percentage rent is expected to be recognized for the first time later this year for theaters under the Regal Master lease.

Mark Alan Peterson: Based on the current film slate, we expect that all of this percentage rent will be recognized in July of Q3, the last month of the lease here.

Mark Alan Peterson: The increase in mortgage and other financing income of $2 4 million was due to additional investments in mortgage notes in the current quarter and prior year.

Mark Alan Peterson: The increase in mortgage and other financing income of $2.4 million was due to additional investments in mortgage notes in the current quarter and prior year. Both other income and other expense relate primarily to our consolidated operating properties, including the Cartwright Hotel and Indoor Water Park and seven operating theaters. The increase in other income and other expense compared to the prior year was due primarily to the additional five theaters surrendered by and previously leased to Regal, which have been operated by third parties on EPR's behalf since early August of 2023.

Mark Alan Peterson: Both other income and other expense relates primarily to our consolidated operating properties, including the Cartwright Hotel and indoor water Park and seven operating theaters.

Mark Alan Peterson: The increase in other income and other expense compared to the prior year was due primarily to the additional five theatres surrendered by and previously leased to Regal, which have been operated by third parties on <unk> behalf since early August of 2023.

Mark Alan Peterson: On the expense side. The following three items are excluded from <unk> as adjusted but I would like to give some details on the increases over prior year.

Mark Alan Peterson: On the expense side, the following three items are excluded from FFOs adjusted, but I would like to give some details on the increases over prior years. First, retirement and severance expenses for the quarter of $1.8 million related primarily to a previously announced executive retirement. Second, the increase in provision for credit losses of 2.2 million is due to applying the credit loss accounting standard to our portfolio of mortgage notes, including the impact of additional investments funded in the quarter and commitments, as well as the impact of changes in the macroeconomic environment.

Mark Alan Peterson: First retirement and severance expenses for the quarter of $1 $8 million related primarily to a previously announced executive retirement.

Mark Alan Peterson: Second the increase in provision for credit losses of $2 2 million is due to applying due to applying the credit loss accounting standard to our portfolio of mortgage notes.

Mark Alan Peterson: Including the impact from additional investments funded in the quarter and commitments as.

Mark Alan Peterson: As well as the impact of changes in the macroeconomic environment.

Mark Alan Peterson: And third the gain on sale of real estate of $17 9 million for the quarter is primarily attributable to the sale of the two cultural properties that Greg mentioned in his comments.

Mark Alan Peterson: And third, the gain on sale of real estate of $17.9 million for the quarter is primarily attributable to the sale of the two cultural properties that Greg mentioned in his comment. Lastly, FFOs adjusted from joint ventures for the quarter decreased by $1.3 million versus the prior year due to softer performance at our experiential lodging properties in St. Petersburg, Florida. In addition, while the first quarter of the year is the off-season for our RV parks, these properties had increases in expenses versus the prior year.

Mark Alan Peterson: Lastly, <unk> adjusted from joint ventures for the quarter decreased by $1 3 million versus the prior year due to softer performance at our experiential lodging properties in St. Petersburg, Florida. In addition, while the first quarter of the year as the off season for RV for our RV parks. These properties had increases increases.

Mark Alan Peterson: The increases in expenses versus the prior year.

Mark Alan Peterson: Turning to the next slide of review some of the Companys key credit ratios.

Mark Alan Peterson: Turning to the next slide, I've reviewed some of the company's pre-credit ratios. As you can see, our coverage ratios continue to be strong, with fixed charge coverage at 3.1 times and both interest and debt service coverage ratios at 3.6 times. Our net debt to adjusted EBITDA RE was 5.5 times for the quarter. However, net debt to annualized adjusted EBITDA RE, a better measure of leverage, was 5.2 times, or about 30 basis points lower.

Mark Alan Peterson: As you can see our coverage ratios continue to be strong with fixed charge coverage at three one times in both interest and debt service coverage ratio is at three six times.

Mark Alan Peterson: Our net debt to adjusted EBITDA was five five times for the quarter. However, net debt to annualized adjusted EBITDA, sorry, a better measure of leverage was five two times or about 30 basis points lower.

Mark Alan Peterson: Annualized Adjusted EBIT DIRE includes the annualization of investments put in service acquired or disposed of during the quarter as well as the expected earnings on property under development, the annualization of percentage rents, and adjustments for other items.

Mark Alan Peterson: Annualized adjusted EBITDA, sorry includes the <unk> of investment put in service acquired or disposed of during the quarter as well as the expected earnings on property under development, the <unk> of percentage rents and adjustments for other items.

Mark Alan Peterson: Additionally, our net debt to gross assets was 39% on a book basis at March 31. Lastly, we increased our common dividend by 3.6% beginning with the dividend that was paid in April. Our common dividend continues to be very well covered with an AFFO payout ratio for the first quarter of 75%. Now let's move to our balance sheet, which is in great shape at Coeur d'Alene. We had consolidated debt of $2.8 billion.

Mark Alan Peterson: Additionally, our net debt to gross assets was 39% on a book basis at March 31.

Mark Alan Peterson: Lastly, we increased our common dividend by three 6% beginning with the dividend that was paid in April our common dividend continues to be very well covered with an <unk> payout ratio for the first quarter of <unk>, 75%.

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

Mark Alan Peterson: At quarter end.

Mark Alan Peterson: We had consolidated debt of $2 8 billion.

Mark Alan Peterson: 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%.

Mark Alan Peterson: All of which is either fixed-rate debt or debt that has been fixed through interest rate swaps with a blended coupon of approximately 4.3%. Additionally, our weighted average consolidated debt maturity is four years, with only $136.6 million due in August 2024, which we anticipate paying off using our line of credit. We had $59.5 million of cash on hand at quarter end and no balance drawn on our $1 billion revolver, which positions us well given the continued difficult backdrop of the capital market.

Mark Alan Peterson: Additionally, our weighted average consolidated debt maturity is four years with only $136 $6 million due in August 2020 for.

Mark Alan Peterson: Which we anticipate paying off using our line of credit.

Mark Alan Peterson: We had $59 $5 million of cash on hand at quarter end and no balance drawn on our $1 billion revolver.

Mark Alan Peterson: Which positions us well given the continued difficult backdrop of the capital markets.

Mark Alan Peterson: We are confirming our previously announced 2020 for <unk> as adjusted per share guidance of $4 76 to $4 96, and investment spending guidance of $200 million to $300 million.

Mark Alan Peterson: We are confirming our previously announced 2024 FFOs adjusted per share guidance of $476 to $496 and investment spending guidance of $200 million to $300 million. We are also confirming the guidance we previously provided for certain other categories. Note that about 75% to 80% of our total anticipated percentage rent is expected to be recognized in the back half of the year. Guidance details can be found on page 24 of our supplemental. On the next slide, I wanted to illustrate, as I did last quarter, the anticipated impact on growth and FFOs adjusted per share for 2024 at the midpoint of guidance when you remove the impact of out-of-period cash basis deferral collections from 2023 of $36.4 million, or $0.48 per share, and the amount we collected of such amounts in the first quarter of $0.6 million, or a penny per share, which is all that we anticipate collecting for this year.

Mark Alan Peterson: We are also confirming the guidance we previously provided for certain other categories.

Mark Alan Peterson: Note that about 75% to 80% of our total anticipated percentage rent is expected to be recognized in the back half of the year.

Mark Alan Peterson: Guidance details can be found on page 24 of our supplemental.

Mark Alan Peterson: On the next slide I wanted to illustrate as I did last quarter the anticipated impact on growth in <unk> as adjusted per share for 24 for 2024 at the midpoint of guidance. When you remove the impact of out of period cash basis deferral collections from 2023 of $36 4 million or <unk> 48 per share.

Mark Alan Peterson: And the amount we collected of such amounts in the first quarter of $2 6 million or a penny per share, which is all that we anticipate collecting for this year.

Mark Alan Peterson: As you can see on the scheduled <unk> as adjusted per share growth without deferral collections from 2023 to 2024 is expected to be three 2%.

Mark Alan Peterson: As you can see on the schedule, FFOs adjusted per share growth without deferral collections from 2023 to 2024 is expected to be 3.2%. However, effective growth is just over 4% when also excluding the impact of lease termination fees recognized in 2023 of $3.4 million. Now with that, I'll turn it back over to Greg for his closing remarks. Thank you, Mark.

Mark Alan Peterson: Expected growth at just over 4% when also excluding the impact of lease termination fees recognized in 2023 of $3 4 million.

Mark Alan Peterson: Now with that I'll turn it back over to Greg for his closing remarks.

Greg: Thank you Mark.

Gregory K. Silvers: As we are all learning to operate in a higher for longer environment, our portfolio continues to demonstrate the resilience of consumer demand for value-oriented experiential assets. Additionally, we're off to a solid start for our investment spending and disposition target. In summary, we continue to be positioned to succeed for our shareholders with a well-covered dividend and a path for growth. Stacey?

Greg: Because we're all learning to operate in a higher for longer environment. Our portfolio portfolio continues to demonstrate the resilience of consumer demand for value oriented experiential assets.

Greg: <unk>, we're off to a solid start for our investment spending in disposition targets.

Greg: In summary, we continue to be positioned to succeed for our shareholders with a well covered dividend and a path for growth.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while I compile the Q&A roster. Our first question comes from Joshua Dennerlein of Bank of America. Joshua, please go ahead with your question.

Greg: Now, let's open it up for questions Stacy.

Greg: Yes.

Stacy: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.

Stacy: To withdraw your question. Please press star one again, please standby while I compile the Q&A roster.

Stacy: Our first question comes from Joshua dinner Lin of Bank of America. Joshua go ahead with your question.

Joshua Dennerlein: Good morning, everyone. Greg, you mentioned in your prepared remarks your capital constraint, but I also noticed you have three categories of properties you want to reduce. Early Childhood Education, Private Schools, and Theaters.

Joshua Dennerlein: Yes, good morning, everyone. Greg you mentioned in the prepared.

Joshua Dennerlein: You mentioned in your prepared remarks, you're capital constrained, but I also noticed you have a.

Joshua Dennerlein: Three categories of properties you want to reduce.

Joshua Dennerlein: The early childhood education private schools and theaters.

Gregory K. Silvers: How do you think about tapping those for your PAP or recycling them?

Joshua Dennerlein: About tapping those for capital recycling.

Speaker Change: Again, I think Josh we clearly have and will continue to explore that.

Gregory K. Silvers: Again, I think, Josh, we clearly have and will continue to explore that. Again, our first priority is probably to deal as we can with vacant properties, because not only are they not income-producing, but there's a cost associated with that. But as we move and see what markets and other opportunities become available, we definitely will continue to look at those. I think the obvious choice, I mean, there's no doubt the theater market remains a challenge.

Speaker Change: Our first priority is probably to deal as we can with vacant properties because not only are they not income producing but theres costs associated with that but as we move in and see as markets and other opportunities become available. We definitely will continue to look at those I think.

Speaker Change: The obvious choice I mean, there's no doubt the theater market remains challenged Greg and his team have done a great job of executing on some of those but our.

Gregory E. Zimmerman: Greg and his team have done a great job of executing on some of those. But our education portfolio is one that, as we start to marry opportunities with capital needs, we're going to explore further. Greg, I don't know if you have anything. Yeah, Josh, it's a strong portfolio, obviously, 100% leased with revenue and EBITDA continuing to grow. So I think it's actionable at the right time.

Speaker Change: Our education portfolio as one debt.

Speaker Change: As we start to marry opportunities with capital needs, we're going to explore further Greg I don't know if you.

Greg: Yes, Josh it's a strong portfolio, obviously, 100% leased with revenue and EBITDAR on continuing to grow so I think it's actionable at the right time.

Mark Alan Peterson: Okay. And then Mark, I just wanted to go over the guidance, some of the guidance line items, just what gets you to the high and low ends of the percentage rent guidance. And then could you remind us where the operating property income flows through the guidance lines, and just like what gets you to the high and low ends this year?

Speaker Change: Okay, Okay and then.

Greg: Just wanted to go over the guidance sort of the guidance line items, just what gets you to the high and low end of that percentage rent guidance, and then could you remind us where.

Greg: Operating properties income always through the guidance lines into site.

Speaker Change: The high and low end of this year.

Speaker Change: Sure.

Mark Alan Peterson: Sure, probably, you know, the biggest one.

Mark Alan Peterson: Sure, probably, you know, the biggest variable on percentage rents is probably the theater portfolio. Remember, with a real lease, we have a low threshold, so we expect to be in percentage rents.

Speaker Change: Biggest variable on percentage rents is probably that theater portfolio remember with the Regal lease we have a low threshold. So we expect to be in percentage rents.

Mark Alan Peterson: And that's all going to be contingent on box office and, more specifically, how our individual properties perform. Beyond the theaters, there are other percentage rents that can go up or down, certainly based on the performance of other property types. But probably the biggest variable is theater percentage rents. As far as how operating properties flow through the income statement, you have, on the consolidated side, you've got the seven operating theaters and cartwright, and those are operating properties that show up in other income and other expense. So we guide them to those.

Speaker Change: And that's all going to be contingent on box office and more specifically, how our individual properties perform.

Mark Alan Peterson: Beyond the theaters there is other percentage rents that can go up or down certainly based on the performance of other property types, but probably the biggest variable.

Speaker Change: As theater percentage rents as far as how operating properties flow through the income statement you have on the consolidated side, you've got the seven operating theatres in Cartwright and those are.

Mark Alan Peterson: <unk> properties that show up in other income and other expense.

Mark Alan Peterson: You can see the guidance on page 24 of our supplementary, where we give a range for other income and other expense so you get a sense of what those numbers will be. In addition to the operating theaters there and the cartwright, there is some other income and expense that can go through there like FX and so forth, but the primary thing is those operating properties. And then the other operating impact is really on the JV side, which is reported as equity and income lost from joint ventures, and we also provide guidance on that along with the FFO impact from those joint ventures. So that's our properties in St. Petersburg and then the RV parks, and those are, again, operating properties that we have a percentage interest in.

Speaker Change: So we guide to those you can see the guidance on page 24 of our supplemental where we give a range for other income and other expense. So you get a sense of what those numbers will be.

Mark Alan Peterson: In addition to the operating theatres there in the Cartwright. There is some other income and expense that can go through there like FX and so forth, but the primary thing is those operating properties.

Mark Alan Peterson: And then the other operating impact is really on the JV side, which is reported as equity in equity income or loss from joint ventures, and we also provide guidance on that along with the <unk> impact from those joint ventures. So that's.

Mark Alan Peterson: That's our properties in St. Petersburg, and then the RV parks and those are again operating properties that we have a percentage interest in.

Speaker Change: Thanks, guys.

Speaker Change: Thank you Josh.

Speaker Change: Standby for your next question.

Mark Alan Peterson: Our next.

Smedes Rose: Stand by for our next question. Our next question comes from Smedes Rose with Citi. Smedes, please go ahead with your question.

Mark Alan Peterson: <unk> comes from Smedes Rose with Citi.

Speaker Change: Please go ahead with your question.

Smedes Rose: Hi, Thanks.

Smedes Rose: Hi, thanks. I'm just wondering when you talk to your tenants, I guess, particularly maybe on the operating side, are they seeing any or voicing any concerns around consumer propensity to spend? I mean, as you know, there's been rising concerns around the healthcare field economy to create kind of a middle market consumer. And I'm just wondering if you've kind of had any thoughts along that front. Yeah, Smedes.

Smedes Rose: I was just wondering when you talk to your tenants I guess, particularly maybe on the.

Smedes Rose: The operating side.

Smedes Rose: Are they seeing any or voicing any concerns around consumer propensity to spend.

Smedes Rose: As you know theres been rising concerns around the health of the U S economy, particularly it's kind of a middle market before and then just wondering.

Smedes Rose: If you have any thoughts on that.

Smedes Rose: Along that front.

Smedes Rose: Yes, Smedes again, we continue to be as close in contact with them as we can see as we can we're not seen it.

Gregory K. Silvers: Yeah, Smedes. Again, we continue to be as close in contact with them as we can. We're not seeing, clearly, the concern is being voiced, but we're not seeing it flow through to the numbers. I think there's a general kind of concern broadly that is in the media and in the discussion point, but so far, not flowing through the numbers, as we talked about and Greg talked about in his comments about EBITDARM going up, especially kind of in the eat and play area, you know, which we would see kind of

Gregory K. Silvers: Clearly the concern is being invoiced, but we're not seeing it flowed through to the numbers.

Gregory K. Silvers: I think there is a general kind of concern broadly.

Gregory K. Silvers: As in the media and in the discussion point, but so far flowing through the numbers as we talked about and Greg talked about in his his comments about EBITDAR up, especially kind of in the Eaton play area.

Gregory K. Silvers: If you talk about, again, even today, if you saw Cinemark's report out earlier today, they're talking about strength in the continued food and beverage spend with moviegoing. So even though there's no doubt it's a concern, we just haven't seen it materialize.

Gregory K. Silvers: Which we would see kind of.

Gregory K. Silvers: Sooner.

Gregory K. Silvers: You talked about.

Gregory K. Silvers: Again, even today, if you saw Cinemark report out earlier today, they're talking about strength.

Gregory K. Silvers: And the continued food and beverage spend with with moviegoing.

Gregory K. Silvers: Even though there is no doubt it's a concern we just haven't seen it materialize, Greg and I think that covers it Greg.

Gregory K. Silvers: Greg, and I think that covers it.

Greg: Thanks, and then just wondering on the.

Smedes Rose: Thanks. I'm just wondering about the vacant theaters remaining for sale, can you just remind me what sort of progress has been made since the last quarter? Is it still in the same status in terms of like purchase and sale agreements? Or has there been any incremental progress?

Greg: On the on the vacant theaters.

Greg: For sale can you just remind us.

Greg: We'll remind me I guess, what sort of the progress since the last quarter or is it still.

Greg: The same status in terms of like purchase and sale agreements are available.

Smedes Rose: Incremental.

Smedes Rose: Progress.

Gregory E. Zimmerman: Yes, Smedes, obviously, we announced we sold one theater in Q1, and we have three of the eight remaining Regals under contract of sale. That's about the same as last quarter. We have had some ins and outs on LOIs, which, as we report every quarter, is usually a function of whether folks want to get a zoning variance or make changes to the underlying real estate. So sometimes they feel like it's going to take longer than they thought.

Greg: Yes, smedes so.

Speaker Change: Obviously, we announced we sold one theater Q1 and.

Gregory E. Zimmerman: And we have three of the eight remaining <unk> under contract of sale. That's about the same as last quarter, we have had some ins and outs on LOI and switch.

Gregory E. Zimmerman: We report every quarter is usually a function of whether folks want to get a zoning variance or make changes to the underlying real estate. So sometimes they feel like it's going to take longer than they thought we.

Gregory E. Zimmerman: We do have an interest in all those remaining Regals. We also have significant interest in the AMC, which is in Hamilton, New Jersey. And then we're starting to get interest in the Escape Theater, which we just closed at the end of Q4. So we feel pretty good. In general, since COVID, we've sold our terminated leases for 16 theaters, and we average around six a year, plus or minus, and we feel pretty good about that pace this year.

Gregory E. Zimmerman: We do have interest.

Gregory E. Zimmerman: All of those remaining <unk>. We also have significant interest in the AMC, which is in Hamilton New Jersey.

Gregory E. Zimmerman: And then we're starting to get interest in the escape theater, which we just terminated at the end of Q4, So we feel pretty good in general since Covid, we've sold or terminated leases for 16 theaters and we average around six a year plus or minus and we feel pretty good about that case.

Gregory E. Zimmerman: This year.

Speaker Change: Okay. Okay. Thank you appreciate it.

Smedes Rose: Great. Okay. Thank you. I appreciate it. Thank you, Smedes. And bye for now.

Operator: Thank you, Smedes. And bye for our next question. Our next question comes from Todd Thomas of Key Bank. Todd, go ahead with your question.

Speaker Change: Thank you for our next question.

Operator: Our next question comes from Todd Thomas with Keybanc.

Todd Michael Thomas: Todd go ahead with your question.

Todd Michael Thomas: Hi, good morning. This is Antara Nagtajori on behalf of Todd Thomas.

Speaker Change: Hi, Good morning. This is <unk> on for Todd Thomas I was just wondering on the investment front could you talk about the pipeline for new acquisitions and sale leasebacks.

Antara Nagtajori: No. The pace is running a little ahead for your guidance, but is there a potential to deploy more capital and are you seeing yields Cheng higher above the 8% that you discussed for new deals that you are underwriting.

Speaker Change: Greg I would say I'll, let Greg comment as well I think as always right now our opportunity set exceeds our cost of our available capital. So we're being selective in what we're doing.

Antara Nagtajori: I was just wondering, on the investments front, could you talk about the pipeline for new acquisitions and sale leasebacks? I know the pace is running a little ahead of your guidance, but is there potential to deploy more capital? And are you seeing yields trend higher above the 8% that you discussed for new deals that you're underwriting?

Antara Nagtajori: I think on the on the cap rate there is clearly.

Antara Nagtajori: Pressure to move those yields.

Speaker Change: It's fine.

Antara Nagtajori: Fine line of <unk>.

Antara Nagtajori: Risk versus reward and quality so.

Gregory K. Silvers: I would say, and I'll let Greg comment as well, I think, as always, right now, our opportunity set exceeds our available capital, so we're being selective in what we're doing. I think on the cap rate, there's clearly pressure to move those yields. It's that fine line of risk versus reward and quality. So I think what we would say is we're comfortably in the eight, but it continues as more and more capital is constrained, and moving those numbers up is something that I think everybody's dealing with. But Greg? Yeah, I agree. I'd say there's upward pressure on cap rates, and we still continue to see opportunities in most of our verticals that are actionable, and we'll continue to work on those throughout the year.

Speaker Change: I think what we would say is we're comfortably in the eights.

Antara Nagtajori: But it's.

Greg: There continues as more and more capital is constrained.

Gregory K. Silvers: At moving those numbers up is something that I think everybody is dealing with but Greg yeah. I agree I would say there is upward pressure on cap rates.

Greg: We still continue to see opportunities.

Greg: Most of our verticals that are actionable.

Gregory K. Silvers: And.

Greg: We will continue to work on those throughout the year.

Speaker Change: Okay, and if I could just follow up back to the theater portfolio and the percentage rent discussion you mentioned that Youre theater portfolio is outperforming the overall industry.

Antara Nagtajori: Okay, and if I could just follow up on the theater Portfolio and the percentage rent discussion, you mentioned that your theater Portfolio is outperforming the overall industry. Does that change the math around box office targets and the regal percentage rent as we think about how the rest of the year may play out?

Antara Nagtajori: Does that change the math around box office targets and the Regal percentage rent as we think about how the rest of the year may play out.

Gregory E. Zimmerman: No, this is Greg Zimmerman. In general, as we say, we have 3% of the screens in the country, and we generate 8% of the box office. In our theater portfolio, the vast majority of our percentage rent is with the Regal Portfolio, and Mark discussed that. We expect to have a percentage rent in Q3, and we're monitoring the box office performance of those individual theaters.

Antara Nagtajori: No no this is Greg Zimmerman.

Antara Nagtajori: In general as we say, we have 3% of the screens in the country and we generated 8% of the box office.

Gregory E. Zimmerman: In our theater portfolio.

Gregory E. Zimmerman: <unk> percentage of our percentage rent is with the Regal portfolio and Mark discussed that we expect to have percentage rent in Q.

Gregory E. Zimmerman: Q3.

Gregory E. Zimmerman: And we're monitoring the box office performance of those individual theaters.

Gregory K. Silvers: I would say, and Greg, you can comment on this, is that our Regal portfolio is performing as expected. I mean, again, their market share is as we kind of underwrote it. When we say we're outperforming, we were outperforming last year. And we're still continuing to outperform. But what's going to impact the percentage rent is these next three or four months. If you look at the film calendar, it was always heavily weighted to the second half of the year and the summer kind of season.

Gregory E. Zimmerman: I would say and Greg you can comment on this as a regal portfolio is performing as expected I mean again their market share is.

Gregory K. Silvers: As we kind of.

Gregory K. Silvers: Underwrote it when we say we are outperforming we were outperforming last year, we're still continuing to outperform but what's going to impact the percentage rent is these next three or four months. If you look at the film calendar. It was always heavily weighted to the second half of the year.

Gregory K. Silvers: The summer season.

Gregory E. Zimmerman: That kind of really kicks off, as Greg said, kind of in May. The titles start really starting to flow then, and the upside-downside is really going to be governed by these next three or four months. We're hopefully optimistic. Things are tracking as we have projected them, and we'll just have to see how the titles play out. Yeah, we'll see. Starting this weekend, the fall guy opens.

Gregory K. Silvers: That kind of really kicks off as Greg said kind of in May with the title start really starting to flow then and the upside downside is really going to be governed by these next three or four months.

Gregory E. Zimmerman: Were hopefully optimistic things are tracking as we had projected them and we'll just have to see how they how the titles play out yes, we will see starting this weekend the fall Guy opens and currently our projections are that we should have at least four films in may that are around $100 million.

Gregory E. Zimmerman: Yeah, we'll see. Starting this weekend, The Fall Guy opens, and currently, our projections are that we should have at least four films in May that are around $100 million or greater.

Gregory E. Zimmerman: Or greater.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: And thank you our next question.

Operator: And bye for our next question. Our next question comes from Ray Zong with J.P. Morgan. Ray, please go ahead with your question.

Unknown Executive: Our next question comes from Ray Zhang with Jpmorgan. Please go ahead with your question.

Unknown Executive: Hi, good morning. Thanks for taking the time to ask me a question. I guess my first one is to follow up on the remaining spending for the year. I was adding up all the things that you guys already teed up for the rest of the year with the actuals that got printed this quarter, and it seems like you guys are roughly already at the low end of the range. You guys mentioned there's some, you know, pressure on the yield. So just curious to know, are the negotiations taking a pause with the rate coming up in the past two months, or is it continuing right now? Just try to think about whether it is more back-end loaded for the remainder 15 minutes or so, or it could happen anytime as well.

Unknown Executive: Hi, Good morning, Thanks for taking my question I guess my first one is follow up on that.

Unknown Executive: The remaining.

Unknown Executive: Spending for the year.

Unknown Executive: Adding all the things that you guys already teed up for the rest of the year with the actual is that correct printed this quarter.

Unknown Executive: You guys have roughly already at the low end of the range and you guys mentioned here some pressure on the yield so just curious to know.

Unknown Executive: Negotiation is taking a pause with their with a.

Unknown Executive: Right coming up in the past 12 months.

Unknown Executive: Or is continuing.

Unknown Executive: Right now just try to think about is.

Unknown Executive: Is it more back end loaded for the remainder of <unk>.

Unknown Executive: Three minutes or so or it could happen any time as well.

Unknown Executive: Well I think it's it's.

Gregory K. Silvers: Well, I think it's trying to be measured. Again, as we have limited capital, we're always trying to balance the needs of a good deal right now versus what we might see in the, you know, third quarter. So I think Greg and his team are trying to do a good job of always holding back some degree of capital so that we have opportunities to meet the needs of either our existing tenants or something opportunistically that comes forward, while also balancing some of the things that a question was asked earlier, can we accelerate some of our dispositions to take advantage of that?

Unknown Executive: It's trying to be measured.

Unknown Executive: As we have limited capital, we're always trying to balance the needs of a good deal right now versus what we might see.

Gregory K. Silvers: In the third quarter.

Gregory K. Silvers: I think Greg and his team are trying to do a good job of always holding back some degree of capital. So that we have opportunities to meet the needs of either our existing tenants or something opportunistically that.

Gregory K. Silvers: That comes forward, while also balancing some of the things that a question was asked earlier can we can we accelerate some of our dispositions to take advantage of that and Greg and his team are always trying to.

Gregory K. Silvers: And Greg and his team are always trying to, you know, look at that balance and say, okay, what have we got right now? What you saw this quarter was a really nice mix of, A. We've got a new attractions tenant, which is great. We got a new relationship and a relationship agreement to look at future deals with them, but we also supported existing tenants with the Andrettis, and we got really what we think are strong deals there.

Gregory K. Silvers: To look at that balance and say, okay. What if we got right now what you saw this quarter was a really nice mix.

Gregory K. Silvers: We've got a new attractions tenant which is great. We got a new relationship and our relationship agreement to look at future deals with them, but we also supported existing tenants with the <unk> and we got really what we think are strong feels there. So it's trying to find that right balance within a world of limited capital.

Gregory K. Silvers: So it's trying to find that right balance within a world of limited capital and striking that balance for the entire year. Because if we spend everything in the first quarter, while that's great for earnings, that challenges us to be opportunistic as the year runs through.

Gregory K. Silvers: In striking that balance for the entire year, because if we spend everything in the first quarter, while that's great for earnings that challenges us to be opportunistic as the year months through.

Gregory K. Silvers: So.

Gregory K. Silvers: It's ray it's trying to hit that balance.

Unknown Executive: Gotcha, gotcha, that makes sense. And on the capital source side, you guys mentioned the priority is to deal with the vacant theatres for now. Anything you guys are contemplating on the theatres that are well covered and, you know, any guests on the cap rate, if ever, that would be helpful. Is there any color on that?

Speaker Change: Gotcha Gotcha that makes sense.

Gregory K. Silvers: On.

Gregory K. Silvers: Capital source side, you guys mentioned the priority is to deal with the vacant theaters for now.

Unknown Executive: You guys are contemplating on the year.

Unknown Executive: Because they are well covered.

Unknown Executive: And any guess on cap rate.

Unknown Executive: That would be helpful any color on that.

Speaker Change: Yes, I mean, the challenges as the industry has recovered we really still have not seen a lot of transactions on what we would call very strong theaters.

Gregory K. Silvers: Yeah, I mean, the challenge is, as the industry has recovered, we really still have not seen a lot of transactions in what we would call very strong theaters. I think that the market's getting better, there's no doubt. Clearly, the overhang of the industry is behind us, people are seeing. And if you look at two of our major three operators, they have as good or better balance sheets than they had in 2019. Clearly, Regal's is much better, and Cinemark is just as strong as they retired some of their largest, some of their bonds earlier this quarter. So I think that the market is developing, but Greg? I agree, and I wouldn't be able to either.

Gregory K. Silvers: Think that market is getting better there is no doubt that it's clearly the.

Gregory K. Silvers: The overhang of the industry is behind US people are seeing and if you look at two of our major three operators they have as good or better balance sheets than they had in 2019, clearly <unk> is much better and cinemark is just as strong as they retired some of their largest some of their.

Gregory K. Silvers: Bonds earlier this quarter. So I think that market is developing but Greg I agree and I wouldn't be able to hazard a guess on cap rates because as Greg said, we just haven't seen any trades of theaters that are cash flowing.

Gregory E. Zimmerman: I agree, and I wouldn't be able to hazard a guess on cap rates because, as Greg said, we just haven't seen any trades of theaters that are cash flowing because if it's a decent theater, people are holding on, betting on the recovery, which obviously is playing out and will continue to play out through the end of the year and into 2025.

Gregory E. Zimmerman: Because if it's a decent theater people are holding on betting on a recovery, which obviously is playing out and we will continue to play out through the end of the year and into 2025.

Gregory E. Zimmerman: Gotcha Gotcha.

Unknown Executive: Gotcha. That's it for me. Thank you. Thank you, Ray.

Speaker Change: Thank you.

Speaker Change: Thank you Rick.

Speaker Change: Standby for our next question.

Operator: Standby for our next question. Our next question comes from Rob Stevenson with Jannie Montgomery Scott. Rob, please go ahead with your question.

Operator: Our next question comes from Rob Stevenson with Janney Montgomery Scott Rob. Please go ahead with your question.

Robert Chapman Stevenson: Good morning, Greg or Greg, you indicated that Topgolf was going to refresh some more locations in the portfolio. What does that look like in terms of dollars invested in those types of refreshes and what do they do? And are you guys funding that? And if so, what are the expected returns and any changes to the lease term or bump success?

Robert Chapman Stevenson: Good morning.

Robert Chapman Stevenson: Greg or Gregg you indicated the top golf was going to refresh some more locations in our portfolio. What does that look like in terms of dollar invested on those type of refreshes and what do they do and are you guys funding that and if so what are the expected returns in any changes to the lease term or bumps et cetera.

Gregory E. Zimmerman: Yeah, Rob, I wouldn't know exactly how much it is because they fund it 100% themselves. They figure out which ones they want to refresh.

Greg: Yes, Rob I wouldn't know exactly how much it is because they fund 100% themselves.

Greg: They figure out which ones they want to refresh.

Gregory E. Zimmerman: So there's no change to the lease term, and we don't get a return on it. But we're happy, obviously, when our tenants are investing in our real estate. What the refresh consists of is replacing the outfield grass and turf, and then also painting and polishing the existing asset, the restrooms, that sort of thing.

Rob: So we don't Theres no change to the lease term and we don't get a return on it but we're happy obviously when our tenants are investing in our real estate what the refresh consists of as replacing the outfield grass turf and then also paint.

Gregory E. Zimmerman: Paint and Polish on the existing asset the restaurants that sort of thing. So again, we're always thrilled when when our tenants are investing in our real estate.

Gregory E. Zimmerman: So, again, we're always thrilled when our tenants are investing in our real estate. Yeah, I mean, I think it's safe to say, Rob, it's millions of dollars. Oh, for sure, it's millions. And so what we take on is an commitment to the existing location. You know, if someone is spending millions of dollars to continue to refurbish an existing location, two, it talks about wear and tear and how busy they are, and, B, it talks about the commitment of the tenant to the ongoing operations of that location. But, no, we don't invest; we don't spend any of our dollars on that. It's totally worth Topgolf's investment.

Gregory E. Zimmerman: I mean, I think it's safe to say, Rob it's millions of dollars for short.

Gregory E. Zimmerman: And so what we take that on his commitment to the to the existing location.

Gregory E. Zimmerman: If someone is is spending millions of dollars to continue to refurbish an existing location to it talks about the wear and tear on how busy they are and be it talks about the commitment of the tenant to the ongoing operations of that location, but now we don't invest we don't.

Gregory E. Zimmerman: Spend any of our dollars on that it's totally top golfs investment.

Robert Chapman Stevenson: Is that because of their cost of capital, or is that because you guys..., you know, would rather they did it? I mean, are you turning down this type of stuff?

Gregory E. Zimmerman: Is that because of their cost of capital or is that because you guys.

Rob: We'd rather that they do it.

Robert Chapman Stevenson: Are you turning down this type of stuff because a lot of times. It's the landlord that does this and then you extend the lease et cetera on improvements and so to.

Gregory K. Silvers: Because a lot of times, it's the landlord that does it. So then you extend the lease, etc., for improvements. And so it's, you know, to your point, it's rare that the tenants go and invest this money on their own.

Gregory K. Silvers: To your point, it's rare that the tenants go and invest this money on their own.

Gregory K. Silvers: Again.

Gregory E. Zimmerman: Again, they have not approached us, but it would be our indication that this, much like we see in our theater business and everything as FF&E and other things need to be replaced, that it's their responsibility. We have certain standards that we put in our lease that they have to maintain too, and we would just see this as part of an ongoing responsibility that we see with all of our tenants.

Speaker Change: They have they have not.

Speaker Change: Broached us, but it would be our indication that this much like we see in our theater business and everything is <unk> and other things need to be replaced that it's their responsibility we have certain standards that we put in our lease that they have to maintain to and we would just see this as part of an ongoing responsibility that we see with all of our tenants.

Speaker Change: Yes, and it's not unique I mean Vale has refreshed their assets of ours and so a six flags so okay not unique.

Gregory E. Zimmerman: Yeah, and it's not unique. Vail has refreshed their assets of ours, and so it's six flags. So it's not unique. We generally invest in real estate, not FF&E, in refurbishment or painting and so forth.

Gregory E. Zimmerman: Generally invest in real estate, <unk> and sort of refurbishment painting and sort of for investors is the tenant.

Robert Chapman Stevenson: Okay, and then how are you guys thinking about incremental investment in California these days? There's been some talk about potentially expanding the $20 minimum wage to other industries with multiple locations nationwide, and I was wondering how that would impact your types of tenants and your desire to invest in that state going forward.

Gregory E. Zimmerman: Okay.

Gregory E. Zimmerman: And then how are you guys thinking about incremental investment in California. These days, there's been some talk about potentially expanding the $20 minimum wage.

Robert Chapman Stevenson: Waged other industries with multiple locations nationally and wondering how that would impact your types of tenants and your desire to invest in that state going forward.

Speaker Change: Well, obviously, we are in the midst of opening the Murray at a hot Springs resort.

Gregory E. Zimmerman: Well, obviously, we are in the midst of opening the Murrieta Hot Springs Resort in Murrieta, California. We had a soft opening in February, and it'll be fully open this summer. So, you know, we continue to feel like good locations in California are worth investing in. I would say, as a general proposition, we're investing in larger assets, looking at the value over time.

Gregory E. Zimmerman: And Mariana, California, we had a soft opening in February and it will be fully opened this summer so.

Gregory E. Zimmerman: We continue to feel like good locations in California are worth investing in I would say as a general proposition, where we're investing in larger assets.

Gregory E. Zimmerman: So.

Gregory E. Zimmerman: Looking at the value over time.

Speaker Change: Okay. Thanks, guys I appreciate the time this morning.

Robert Chapman Stevenson: Okay, thanks guys. I appreciate the time this morning. Thank you, Brown Thread.

Speaker Change: Thank you Brian threat.

Operator: Standby for our next question. Our next question comes from Michael Carroll with RBC. Michael, go ahead with your question.

Speaker Change: Thank you Sir our next question.

Operator: Our next question comes from Michael Carroll with RBC. Michael Go ahead with your question.

Michael Albert Carroll: Yeah. Thanks, I guess, Greg earlier in your prepared remarks, you talked a little bit about new potential investment opportunities that you are.

Michael Albert Carroll: Yep, thanks. I guess, Greg, earlier in your prepared remarks, you talked a little bit about new potential investment opportunities that you're continuing to kind of mine your relationships to find those deals. I mean, should we think about these as different property types that you're currently not invested in? I guess, what are those discussions about, and what type of properties are we talking about?

Michael Albert Carroll: Continuing to kind of minor relationships to find those deals I mean should we think about these as different property types that youre currently not invest and then I guess what are those discussions on what type of properties that we're talking about.

Gregory E. Zimmerman: No, I think they're all solidly within the verticals, Michael, but I'll give you an example, a couple of examples. You know, we did the deal at the end of the year with Mirabal, which is a family business, a great fitness asset, and we have a relationship agreement with them, so we feel like that's helping to expand our fitness and wellness category. As Greg and I both mentioned, we're really happy with Water Safari and Old Forge.

Michael Albert Carroll: No I think they are all solidly within the verticals.

Speaker Change: Michael but I will give you. An example, a couple of examples.

Gregory E. Zimmerman: We did the deal at the end of the year with Mirabel, which is a family business, great fitness asset and we have a relationship with agreement with them. So we feel like that's helping to expand our fitness and wellness category.

Gregory E. Zimmerman: As Greg and I, both mentioned, we're really happy with what our Safari and old forge, it's been around for probably 50 years.

Gregory E. Zimmerman: It's been around for probably 50 years. It's a great asset in central New York in the Adirondacks, and again, we have a new operator and, as Greg mentioned, a relationship agreement with them, and then, obviously, we've had an ongoing relationship with Andretti, so we're thrilled to be able to do a couple more Andretti deals. So we're always looking within the verticals, and what I like to tell my team is that we're expanding the aperture of the verticals.

Gregory E. Zimmerman: A great asset in Central New York, and the Adirondacks and again, we have a new operator.

Gregory E. Zimmerman: And as Greg mentioned, our relationship agreement with them.

Gregory E. Zimmerman: And then obviously we've had a long an ongoing relationship with <unk>. So we're thrilled to be able to do a couple more <unk> deals.

Gregory E. Zimmerman: So we're always looking within the verticals and what I.

Gregory E. Zimmerman: I'd like to tell my team as we're expanding the aperture of the vertical.

Speaker Change: Okay, and then I guess, what are you doing specifically to kind of strengthen those relationships is it just kind of like talking to those stakeholders within the space and deploying capital in these smaller deals that you that you can make sense and then winter our cost of capital improves then you can be prepared to be more aggressive deploying capital into those vertical.

Michael Albert Carroll: Okay, and then, I guess, what are you doing specifically to kind of strengthen those relationships? Is it just kind of like talking to those stakeholders within the space and deploying capital and these smaller deals that you can make sense, and then when your cost of capital improves, then you can be prepared to be more aggressive in deploying capital into those verticals?

Michael Albert Carroll: Yeah.

Gregory K. Silvers: Well, and I'll jump in on this. I think Greg and his team have done a great job of, and we talked, and you hear him talk about this phrase, a relationship agreement. What we think about a relationship agreement is that not only are we going to do this deal, but we're going to see every deal that you're involved in as we go forward, and we have a right to do those deals. So it's not an obligation, but it's creating a pipeline for us.

Gregory K. Silvers: Well,

Speaker Change: Well I'll jump in on this I think Greg and his team have done a great job and we talked and you hear him talk about this phrase relationship agreement what we think about our relationship agreement is not only are we going to do this deal, but we're going to see every deals that you are involved in as we go forward and we have a right to do those deals.

Gregory K. Silvers: So it's not an obligation, but it's creating pipeline for us as they grow their businesses. We are their preferred capital partner. So when we are when we are in an environment, where we have limited capital. It's not good enough for us to have this deal we want this deal and <unk>.

Gregory K. Silvers: As they grow their businesses, we are their preferred capital partner. So when we are in an environment where we have limited capital, it's not good enough for us to have this deal. We want this deal and an opportunity to grow with that tenant going forward. And in every one of the instances that Greg just mentioned, not only did we do a transaction, but we got a relationship deal, which will give us a pipeline for future growth. So it's not only about deploying capital today; it's about creating that opportunity to deploy capital for years into the future. And Greg and his team have done a great job of doing that.

Gregory K. Silvers: An opportunity to grow with that tenant going forward.

Gregory K. Silvers: And every one of the instances that Greg just mentioned not only did we do a transaction, but we got a relationship deal, which will give us a pipeline to future growth. So it's not only about deploying capital today, it's about creating that opportunity to deploy capital for years.

Gregory K. Silvers: Into the future and Greg and his team have done a great job.

Gregory K. Silvers: Doing that.

Gregory K. Silvers: Thanks, Greg and then I guess just last one for me historically, where do these tenants typically get financing I'm, assuming that that market's pretty dried up right now and they are looking to create these relationships with people like you. So they can grow their business.

Michael Albert Carroll: Thanks, Greg. And I guess just the last one for me.

Gregory K. Silvers: Historically, where do these tenants typically get financing? I'm assuming that that market's pretty dried up right now, and they're looking to create these relationships with people like you so they can grow their business.

Speaker Change: Again, I would say that for most of these groups that they are they have grown with banking relationships and at this point in time, they've either outgrown those banking relationships because they've gotten too.

Gregory K. Silvers: Our next tier of size.

Gregory K. Silvers: As is always yes.

Gregory K. Silvers: The regional banks are not as.

Gregory E. Zimmerman: Again, I would say that for most of these groups that they are, they have grown with banking relationships, and at this point in time, they've either outgrown those banking relationships because they've gotten to the next tier of size, or, as always, you know, the regional banks are not as aggressive in doing more real estate loans. So I would say it's primarily in that world.

Speaker Change: Aggressive on on doing more real estate loans. So I would say, it's primarily in that world and I would also say Michael look if you want to grow and maybe not within a certain jurisdiction than a regional banks, probably going to be less helpful than we are.

Gregory E. Zimmerman: Yeah, and I would also say, Michael, look, if you want to grow and maybe not within a certain jurisdiction, then a regional bank is probably going to be less helpful than we are, because we'll go anywhere in the U.S. as long as our underwriting supports the location. So, and I think once people start to deal with this, they learn that we bring a lot to the table compared to your typical banking relationship. In terms of advice and things that we see trends across, And I think as you get to that next size, like an Andretti.

Gregory E. Zimmerman: We'll go anywhere over the U S as long as our underwriting supports the location so and I think once people start to deal with us they learn that we bring a lot to the table that your typical banking relationship.

Gregory E. Zimmerman: In terms of advice and things that we see trends across the industry.

Gregory E. Zimmerman: And I think as you get to that next size, like Andretti's, candidly, a lot of our TripleNet competitors have done Andretti deals, but once again, we have these kind of relationship agreements that allow us to see certain things so we can be selective in where we're doing them, and then others in the TripleNet world may be doing deals with them, but we're aware that several of our competitors have done deals with them.

Gregory E. Zimmerman: And I think as you get to that next size like in Andretti's candidly a lot of our triple net competitors have done and <unk> deals, but once again, we have these kind of relationship agreements that allow us to see certain things. So we can be selective in where were doing it than others in the triple net world maybe.

Gregory E. Zimmerman: Doing deals with them, but we are aware that several of our competitors have done deals with them.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thanks Keith.

Gregory E. Zimmerman: I'm showing no further questions at this time I would now like to turn it back over to Greg Silvers for closing remarks.

Operator: I'm showing no further questions at this time. I'd now like to turn it back over to Greg Silvers for closing remarks.

Gregory K. Silvers: Well, thank you everyone for joining us today. We look forward to probably meeting with all of you and investors in NARIC coming up shortly. Have a great day and thanks for attending. Bye-bye.

Gregory K. Silvers: Well. Thank you everyone for joining us today, we look forward to probably meeting with all of you and investors in NAREIT coming up shortly have a great day and thanks for attending provided.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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