Q2 2024 EPR Properties Earnings Call

Speaker Change: Good day and thank you for standing by. Welcome to the Q2 2024 EPR Properties Earnings Conference Call.

Operator: 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 1 1 on your telephone. You will then hear an automated message advising your hand is raised.

Unknown Executive: Earnings Conference Call.

Unknown Executive: 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 1, 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your questions, please press star 1, 1 again.

Speaker Change: At this time, all participants are in a listen-only mode.

Speaker Change: 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, 1, 1 on your telephone. You will then hear an automated message advising your hand is raised.

Operator: To withdraw your question, please press star 1 1 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Brian Moriarty, Senior Vice President of Corporate Communications. Please go ahead.

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

Speaker Change: To withdraw your question, please press star 1 1 again.

Brian Moriarty: I would now like to hand the conference over to your first speaker today, Brian Moriarty. Senior Vice President of Corporate Communications, please go ahead. All right. Thank you.

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

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

Gregory Silvers: Thanks for joining us today for our second quarter, 2024 earnings call and webcasts.

Brian Moriarty: All right, thank you. Thanks for joining us today for our second quarter 2024 earnings call and webcast.

Gregory Silvers: 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.

Speaker Change: 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 .

Brian Moriarty: I'll start the call by informing you that this call may include forward-looking statements as defined in the Private Securities Litigation Act of 1995, identified by such words as will be, intent, 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 these forward-looking statements are contained in the company's SEC filings, including the company's reports on Form 10-K and 10-Q. Additionally, this call contains references to certain non-GAAP measures, which we believe are useful in evaluating the company's performance.

Brian Moriarty: Discussion of those factors that could cause results to differ materially from these 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, which we believe are useful in evaluating the company's performance.

Speaker Change: I'll start the call by informing you that this call may include forward-looking statements as defined in the Private Securities Litigation Act of 1995, identified by such words as will be, intend, continue, believe, may, expect, hope, anticipate, or other comparable terms.

Speaker Change: The company's actual financial condition and the results of operations may vary materially from those contemplated by such forward-looking statements.

Speaker Change: Discussion of those factors that could cause results to differ materially from these forelooking statements are contained in the company's SEC filings, including the company's reports on Form 10-K and 10-Q.

Speaker Change: Additionally, this call will contain references to certain non-GAAP measures which we believe are useful in evaluating the company's performance.

Brian Moriarty: The reconciliation of these measures to the most directly comparable GAAP measures is included in today's earnings release and supplemental information first to the SEC under Form 8-K.

Speaker Change: The 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 8K.

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.eprkc.com.

Speaker Change: 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.

Gregory Silvers: Now I'll turn the call over to Greg Silvers. Thank you, Brian. Good morning, everyone. And thank you for joining us on today's second quarter 2024 earnings call and webcast. For the quarter, we are pleased to deliver solid results that demonstrate continued momentum in my progress, and building the elite. I'm sorry about that, guys. In building, I'd demonstrate continued momentum in progress in building the leading diversified experiential read. Our sustained rent coverage numbers illustrate broad consumer demand across our customer industries in both our triple net least and mortgage portfolios. In our managed operating properties, we're working to recapture market share of the previously closed managed theaters.

Brian Moriarty: The reconciliation of these measures to the most directly comparable gap measures is included in today's earnings release and supplemental information first filed with the SEC under Form 8K. If you wish to follow along, today's earnings release, supplementary information, 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. Thank you, Brian. Good

Gregory K. Silvers: And thank you for joining us on today's second quarter 2024 earnings call-in webcast. For the quarter, we are pleased to deliver solid results that demonstrate continued momentum and progress in building the elite. Sorry about that, guys, and Demonstrate Continued Momentum and Progress in Building the Leading Diversified Experiential READ. Our sustained rent coverage numbers illustrate broad consumer demand across our customer industries in both our triple net leased and mortgage portfolios. In our managed operating properties, we're working to recapture market share of the previously closed managed theaters, and aligned with the broader industry, we're seeing some demand normalization for post-COVID highs and expense pressures in our experiential lodging. Greg will provide more details in these areas.

Greg Silvers: Thank you, Brian . Good morning, everyone, and thank you for joining us on today's second quarter 2024 earnings call-in webcast.

Speaker Change: Sorry about that, guys.

Gregory Silvers: And aligned with the broader industry, we're seeing some demand normalization for post-COVID highs and expense pressures in our experiential lodging.

Gregory Silvers: Greg will provide more details in these areas. Office continues to show its time-tested resiliency, whether it's surprising the industry by over-delivering with a film like Twisters, or meeting high expectations with the greatly anticipated Deadpool and Wolverine. The box office is maintaining momentum. We look forward to additional titles making their way to the big screen for the remainder of the year. Additionally, last week AMC announced several refinancing transactions that extend the majority of their 2026 debt maturities to 2029 and 2030, while also providing the potential to reduce their overall net debt position. We view this as a very positive event, as it substantially mitigates their near-term debt maturity risk.

Gregory K. Silvers: This office continues to show its time-tested resilience, whether it's surprising the industry by over-delivering with a film like Twisters or meeting high expectations with the greatly anticipated Deadpool and Wolverine. The box office is maintaining momentum, and we look forward to additional titles making their way to the big screen for the remainder of the year.

Speaker Change: This office continues to show its time-tested resiliency, whether it's surprising the industry by over-delivering with a film like Twisters, or meeting high expectations with the greatly anticipated Deadpool and Wolverine.

Speaker Change: The box office is maintaining momentum.

Gregory K. Silvers: Additionally, last week, AMC announced several refinancing transactions that extend the majority of their 2026 debt maturities to 2029 and 2030, while also providing the potential to reduce their overall net debt position. While theater exhibition remains a vital part of our business, it's important to remind everyone that our growth in experiential real estate is focused outside of the theater. We remain committed to acquiring creative, compelling, and often award-winning experiential properties. Our recent investments in natural hot springs resorts, spas, climbing gyms, and indoor karting exemplify such investments.

Speaker Change: We look forward to additional titles making their way to the big screen for the remainder of the year.

Speaker Change: Additionally, last week AMC announced several refinancing transactions that extend the majority of their 2026 debt maturities to 2029 and 2030, while also providing the potential to reduce their overall net debt position.

Gregory Silvers: While theater exhibition remains a vital part of our business, it's important to remind everyone that our growth and experiential real estate is focused outside of theaters. We remain committed to acquiring creative, compelling, and often award-winning experiential properties. Our recent investments in natural hot springs, resorts, spas, climbing gyms, and indoor carting exemplify such investments. We remain confident that consumer spending on experiential activities will continue to consistently grow, and we have proven our ability to identify enduring concepts and capture that growth for the benefit of our shareholders. As we move into the second half of 2024 and into 2025, we feel very optimistic about our potential.

Speaker Change: We remain confident that consumer spending on experiential activities will continue to consistently grow, and we have proven our ability to identify enduring concepts and capture that growth for the benefit of our shareholders.

Gregory Silvers: At a macro level, we're seeing a moderation of inflation and the expectation of interest rate reductions. We are also very well positioned with strong liquidity and significant financial flexibility. Additionally, while improved, our multiple remains historically low, and we offer a well-covered, strong dividend. As we continue to execute our plan and proceed, risks such as the AMC refinancing are mitigated, we are confident we will see multiple expansion. We look forward to rewarding our investors with the strong total shareholder returns that we've historically delivered.

Gregory K. Silvers: We are also very well positioned with strong liquidity and significant financial flexibility. Additionally, while improved, our multiple remains historically low, and we offer a well-covered, strong dividend. We look forward to rewarding our investors with the strong total shareholder returns that we've historically delivered. Now, I'll turn the call over to Greg Zimmerman to go over the business in greater detail. Thanks, Greg.

Speaker Change: We are also very well positioned with strong liquidity and significant financial flexibility.

Gregory Zimmerman: Now, I'll turn the call over to Greg Zimmer to go over the business in greater detail. Thanks, Greg. At the end of the quarter, our total investments were approximately $6.9 billion, with 354 properties that are 99% at least, excluding properties we intend to sell. During the quarter, our investment spending was $46.9 million. 100% of the spending was in our experiential portfolio. Our experiential portfolio comprises 284 properties with 51 operators and accounts for 93% of our total investments for approximately $6.4 billion. At the end of the quarter, excluding the properties we intend to sell, was 99% at least.

Gregory E. Zimmerman: At the end of the quarter, our total investments were approximately $6.9 billion, with 354 properties that are 99% leased, excluding properties we intend to sell. During the quarter, our investment spending was $46.9 million, and 100% of the spending was on our experiential portfolio.

Speaker Change: Now, I'll turn the call over to Greg Zimmerman to go over the business in greater detail.

Greg Zimmerman: Thanks, Greg. At the end of the quarter, our total investments were approximately $6.9 billion, with 354 properties that are 99% leased, excluding properties we intend to sell.

Gregory E. Zimmerman: Our experiential portfolio comprises 284 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, the most recent data provided is based on a March trailing 12-month period. Overall portfolio coverage remains strong at 2.2 times, unchanged from last quarter.

Greg Zimmerman: Our experiential portfolio comprises 284 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, was 99% leased.

Gregory Zimmerman: 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% at least. Turning to coverage, the most recent data provided is based on a March trailing 12-month period. Overall portfolio coverage remains strong at 2.2 times, unchanged from last quarter. Trailing 12-month coverage for theaters is 1.7 times, with box office at 8.8 billion for the same period. Our theater coverage reporting assumes that the Regal deal was in place for the entire trailing 12-month period. Sterling, 12-month coverage for the non-theater portion of our portfolio is 2.6 million dollars.

Gregory Zimmerman: Now I'll update you on the operating status of our tenants. Our theater coverage is at 2019 levels, even though North American box office remains well below 2019 levels. Turning to box office in the state of the industry, North American box office was $1.9 billion for Q2 and $3.6 billion for the first half of the year. The first six months of 2024 were down 19% over the same period in 2023 due to the impact of the actors and writer strikes, but led by strong performances by Inside Out 2 and Bad Boy's Ryder Die, June's $965 million gross was only down 4% from June 2023.

Gregory E. Zimmerman: Now I'll update you on the operating status of our... Our theater coverage is at 2019 levels, even though North American Box Office remains well below 2019 levels. North American box office was $1.9 billion for Q2 and $3.6 billion for the first half of the year. The first six months of 2024 were down 19% over the same period in 2023 due to the impact of the Actors and Writers strikes, but led by strong performances by Inside Out 2 and Bad Boys Ride or Die, June's $965 million gross was only down 4% from June 2023.

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

Speaker Change: The first six months of 2024 were down 19% over the same period in 2023 due to the impact of the actors' and writers' strikes.

Speaker Change: but led by strong performances by Inside Out 2 and Bad Boys Ride or Die, June's $965 million gross was only down 4% from June 2023.

Gregory Zimmerman: Inside Out 2 dramatically outperformed expectations to become the highest grossing animated movie ever, earning over 613 million to date in North America and outgrossing both Barbie and top-run Top Gun Maverick worldwide. July's box office gross exceeded 1.1 billion and serves as a solid kickoff for the second half of the year. Despicable Me for gross 291 million to date and the eagerly anticipated Deadpool and Wolverine gross 211 million on its opening weekend, substantially outpacing estimates, delivering the highest grossing opening weekend ever for an R-rated movie and the biggest domestic opening weekend since Spider-Man No Way Home in December 2021.

Gregory E. Zimmerman: July's box office gross exceeded $1.1 billion and serves as a solid kickoff for the second half of the year. Despite the encouraging uptick in box office results since June, we estimate box office for the regal lease year, the trailing 12-month period ending July 31st, will be around $7.9 billion, which is approximately $400 million less than our original forecast. Beetlejuice 2, Joker Folladu, Venom 3, Gladiator 2, Wicked, Moana 2, and Mufasa the Lion.

Speaker Change: delivering the highest grossing opening weekend ever for an R-rated movie and the biggest domestic opening weekend since Spider-Man No Way Home in December 2021. Through Monday and Tuesday of this week, Deadpool added an additional $50 million.

Gregory Zimmerman: Through Monday and Tuesday of this week, Deadpool added an additional 50 million. Despite the encouraging uptick in box office results since June, we estimate box office for the Regal this year, the trailing 12-month period ending July 31st will be around 7.9 billion, which is approximately $400 million less than our original forecast. The impact on the release schedule from the writers' and actors' strikes made predicting box office results for this period extremely challenging. On the plus side, we expected shortfall and regal percentage rent to be made up by outperformance from other tenants, so we have not adjusted our percentage rent guidance.

Speaker Change: Despite the encouraging uptick in box office results since June , we estimate box office for the regal lease year, the trailing 12-month period ending July 31st, will be around $7.9 billion, which is approximately $400 million less than our original forecast.

Speaker Change: The impact on the release schedule from the writers and actor strikes made predicting box office results for this period extremely challenging.

Gregory Zimmerman: As we have said repeatedly, box office gross is directly tied to the number of titles released. To date, 12 films have grossed more than $100 million in 2024. Another 11 have grossed between 60 and 100 million, and an increase in major releases is already underway. Titles currently projected to gross over $150 million in the second half of the year include Deadpool and Wolverine, Beetlejuice 2, Joker: Folie à Deux, Venom 3, Gladiator 2, Wicked, Moana 2, and Mufasa: The Lion King. The June and July results demonstrate that we have finally reached the end of the negative impact on content from the writers' and actors' strikes and have returned to box office growth.

Speaker Change: As we have said repeatedly, box office gross is directly tied to the number of titles released.

Speaker Change: To date, 12 films have grossed more than $100 million in 2024. Another 11 have grossed between $60 and $100 million, and an increase in major releases is already underway.

Gregory E. Zimmerman: The June and July results demonstrate that we have finally reached the end of the negative impact on content from the writers' and actor strikes and have returned to box office growth. And, more importantly, they show that when there is a strong cycle of good movies to see, consumers will go to see them on the big screen. Based on the results in June and July, we are increasing our guidance for box office in calendar year 2024 from between $8 and $8.4 billion to between $8.2 and $8.5 billion.

Gregory Zimmerman: And, more importantly, they show that when there is a strong cadence of good movies to see, consumers will go to see them on the big screen. We are optimistic that the quantity and quality of the slate for the second half of the year and into 2025 and 2026 will continue to propel an upward trajectory in box office.

Speaker Change: and have returned to box office growth. And, more importantly, they show that when there is a strong cadence of good movies to see, consumers will go to see them on the big screen.

Gregory Zimmerman: Based on the results in June and July, we are increasing our guidance for box office in calendar year 2024 from between 8 and 8.4 billion to between 8.2 and 8.5 billion.

Gregory Zimmerman: Turning now to an update on our other major customer groups, we continue to see good results across our drive to value-oriented destinations. Our eating play assets were down slightly in revenue and EVA D'ARM quarter over quarter, but continue to perform well. And Dreddy Carding is under construction in Kansas City and Oklahoma City and finalizing entitlements and plans for Schoenberg, Illinois. Six Flags and Cedar Fair concluded their merger as of July 1st. We do not expect any changes to operations that are parts in the near term and continue to believe that, longer term, this strengthens the credit and operating profile of the company.

Gregory E. Zimmerman: Turning now to an update on our other major customer groups. Our Eat and Play assets were down slightly in revenue in EBITDARM quarter over quarter but continue to perform well. Andretti Carding is under construction in Kansas City and Oklahoma City and finalizing entitlements and plans for Schaumburg, Illinois.

Gregory Zimmerman: Our attractions are now open for the summer season, but it's too early to draw conclusions about performance for the season. Construction on the extensive expansion at the spring's resort in Pagosa Springs continues, with opening scheduled for spring 2025. We're confident this expansion will drive growth at this outstanding asset. Percentage rent from a ski tenant exceeded our expectations following a strong ski season. During the off peak summer season, our Aliasca resort in Alaska will complete lobbying renovations. Both the Margaritaville Hotel Nashville and our Camp Margaritaville RV Resort and Lodge in Pigeon Forge continue to perform well.

Gregory E. Zimmerman: Our attractions are now open for the summer season, but it's too early to draw conclusions about performance for the season. However, the percentage rent from a ski tenant exceeded our expectations following a strong ski season. During the off-peak summer season, our Alyeska Resort in Alaska will complete lobbying renovations, and our Camp Margaritaville RV Resort and Lodge in Pigeon Forge continue to perform well.

Speaker Change: Our attractions are now open for the summer season, but it's too early to draw conclusions about performance for the season.

Speaker Change: Construction on the extensive expansion at the Springs Resort in Pagosa Springs continues with openings scheduled for Spring 2025. We're confident this expansion will drive growth at this outstanding asset.

Speaker Change: Percentage rent from a ski tenant exceeded our expectations following a strong ski season. During the off-peak summer season, our Alieska Resort in Alaska will complete lobbying renovations.

Speaker Change: Both the Margaritaville Hotel in Nashville and our Camp Margaritaville RV Resort and Lodge in Pigeon Forge continue to perform well.

Gregory Zimmerman: Our education portfolio continues to perform well with your view. Your increase is across the portfolio through Q1 of 2% in revenue and 5% in EBIT arm. Turning to our operating properties, as with many in the lodging industry in our joint venture operating properties, we are seeing some softness in ADR, and cost pressures are negatively impacting EBIT arm. Also, we continue to face expense pressures in the operating theaters as we attempt to recapture market share lost as part of the Regal bankruptcy in transition to Cinemark and Phoenix. During Q2, our investment spending was $46.9 million, and year-to-date is $132.7 million.

Gregory E. Zimmerman: Our education portfolio continues to perform well, with year-over-year increases across the portfolio through Q1 of 2% in revenue and 5% in EBITR. Turning to our Operating Properties, As with many in the lodging industry, in our joint venture operating properties, we are seeing some softness in ADR, and cost pressures are negatively impacting EBITDARM. Also, we continue to face expense pressures in the operating theaters as we attempt to recapture market share lost as part of the regal bankruptcy in transitioning to Cinemark and Phoenix. We're maintaining investment spending guidance for funds to be deployed in 2024 in a range of $200 million to $300 million.

Speaker Change: Turning to our Operating Properties.

Speaker Change: As with many in the lodging industry, in our joint venture operating properties, we are seeing some softness in ADR, and cost pressures are negatively impacting EBITDAR.

Gregory Zimmerman: We closed on a third new build-to-suit location for Andredi Carding in Oklahoma City, providing $5 million for the acquisition of land and a total commitment of $32 million for completion of the build-to-suit project. As previously announced, we are providing build-to-suit financing for Andredi Carding locations in the greater Kansas City and Shaw and Perp, Illinois. 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 $108 million for experiential development and redevelopment projects that have closed but are not yet funded to be deployed over the next two years.

Speaker Change: We closed on a third new build-to-suit location for Andretti Carding in Oklahoma City, providing $5 million for the acquisition of land and a total commitment of $32 million for completion of the build-to-suit project.

Speaker Change: As previously announced, we are providing build-to-suit financing for Andretti Carding locations in the greater Kansas City area and Schaumburg, Illinois.

Speaker Change: We're maintaining investment spending guidance for funds to be deployed in 2024 in a range of $200 million to $300 million.

Gregory Zimmerman: We anticipate approximately $906 million of this $180 million will be deployed in the remainder of 2024, which amount is included at the midpoint of our 2024 guidance range. In most of our experiential categories, we continue to see high-quality opportunities for both acquisition and build-to-suit redevelopment and expansion. Given our cost to 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 secured revolving credit facility. For six months of the year, disposition proceeds totaled 56.5 million. Subsequent to the end of the quarter, we sold another vacant Regal theater for 1.9 million.

Gregory E. Zimmerman: In most of our experiential categories, we continue to see high-quality opportunities for both acquisition and build-to-suit redevelopment and expansion. 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 Secured Revolving Credit Fund. Subsequent to the end of the quarter, we sold another vacant Regal Theatre for $1.9 million, less than one year after the conclusion of the Regal Bankruptcy Act. We have signed purchase and sale agreements in place for two of the remaining four vacant former Regal Theatres.

Speaker Change: 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 Secured Revolving Credit Facility.

Speaker Change: In Q2, we sold four theaters, three vacant former Regals, and a Cinemark that was reaching the end of term. The combined net proceeds were $10.3 million, with a gain of approximately $1.5 million. For the first six months of the year, disposition proceeds totaled $56.5 million.

Gregory Zimmerman: Less than one year after the conclusion of the Regal bankruptcy and taking possession of 11 former Regal theaters, we have sold seven of them. We have signed purchase and sale agreements in place for two of the remaining four vacant former Regal theaters. Beyond those four vacant former regal theaters, we have a vacant escape theater we terminated in Q4, which is under a signed purchase and sale agreement, and one remaining vacant AMC theater. We are pleased with our overall disposition cadence and particularly pleased with the pace of selling the vacant former Regal theaters.

Speaker Change: Subsequent to the end of the quarter, we sold another vacant Regal Theatre for $1.9 million. Less than one year after the conclusion of the Regal bankruptcy, and taking possession of 11 former Regal Theatres, we have sold 7 of them.

Speaker Change: We have signed purchase and sale agreements in place for two of the remaining four vacant former Regal Theatres.

Speaker Change: Beyond those four vacant formal regal theaters, we have a vacant escape theater we terminated in Q4, which is under a signed purchase and sale agreement.

Speaker Change: We are pleased with our overall disposition cadence and particularly pleased with the pace of selling the vacant former Regal Theaters. Based on that progress, we are updating our 2024 guidance for dispositions to $60 million to $75 million.

Gregory Zimmerman: Based on that progress, we are updating our 2024 guidance for dispositions to 60 million to 75 million.

Gregory Zimmerman: Finally, we have made the decision to close one of the four former Regal theaters managed for us by Cinemark. We anticipate closure around Labor Day and are already underway with marketing to sell the theater. We constantly review the performance of our operating assets, and in consultation with Cinemark, came to this decision based on theater level performance. The asset required significant deferred maintenance and capital expenditure to meet hours and Cinemark's operating standards and to recapture and grow market share. After careful evaluation consultation, we jointly concluded the level of expenditures did not make economic sense and that it was better to close the theater.

Speaker Change: Finally, we have made the decision to close one of the four former Regal Theaters managed for us by Cinemark. We anticipate closure around Labor Day and are already underway with marketing to sell the theater.

Mark Alan Peterson: We anticipate closure around Labor Day and are already underway with marketing to sell it. We constantly review the performance of our operating assets. I now turn it over to Mark for a discussion of the finances. Thank you, Greg.

Speaker Change: We constantly review the performance of our operating assets.

Speaker Change: and in consultation with CentiMark came to this decision based on theater level performance.

Speaker Change: The asset required significant deferred maintenance and capital expenditure to meet ours and Cinemark's operating standards and to recapture and grow market share.

Mark Peterson: I now turn it over to more for a discussion of the financials.

Mark Alan Peterson: Today I will discuss our financial performance for the second quarter, provide an update on our balance sheet, and close with an update on our 2024 guidance. FFOs adjusted for the quarter were $1.22 per share versus $1.28 in the prior year. And AFFO for the quarter was $1.20 per share compared to $1.31 in the prior year. Note that there were no out-of-period deferral collections from cash basis customers included in income for the quarter, or $7.3 million in the prior year, resulting in a decrease of nearly $0.10 per share versus the prior year.

Mark Peterson: Thank you, Greg. Today I will discuss our financial performance for the second quarter, provide an update on our balance sheet, and close with an update on our 2024 guidance. FFO's adjusted for the quarter was $1.22 per share versus $1.28 in the prior year, and AFFO for the quarter was $1.20 per share compared to $1.31 in the prior year. Note that there were no out-of-period deferral collections from cash-faces customers included in income for the quarter versus $7.3 million in the prior year, resulting in a decrease of nearly $0.10 per share versus prior year. Now moving to the key variances, total revenue for the quarter was $173.1 million versus $172.9 million in the prior year.

Speaker Change: I now turn it over to Mark for a discussion of the financials.

Mor: Thank you, Greg. Today I will discuss our financial performance for the second quarter, provide an update on our balance sheet, and close with an update on our 2024 guidance.

Mor: FFOs adjusted for the quarter was $1.22 per share versus $1.28 in the prior year. And AFFO for the quarter was $1.20 per share compared to $1.31 in the prior year.

Mor: Note that there were no out-of-period deferral collections from Cashbase's customers included in income for the quarter, worth $7.3 million in the prior year, resulting in a decrease of nearly $0.10 per share versus prior year.

Mor: Now moving to the key variances, total revenue for the quarter was $173.1 million versus $172.9 million in the prior year.

Mark Peterson: Within total revenue, rental revenue decreased by $6.8 million versus the prior year. The positive impact of net investment spending over the past year was more than offset by the reduction in out-of-period deferral collections that I just mentioned. As well as reduction in rental revenue related to the regal restructuring that took place in August of 2023. Within rental revenue, percentage rents for the quarter were $2 million, versus $2.1 million in the prior year. We call that percentage rent for theaters under the Regal master lease is expected to be recognized in July of Q3, the last month of the lease year.

Speaker Change: Within total revenue, rental revenue decreased by $6.8 million versus the prior year. The positive impact of net investment spending over the past year was more than offset by the reduction in out-of-period deferral collections that I just mentioned.

Speaker Change: as well as a reduction in rental revenue related to the regal restructuring that took place in August of 2023.

Speaker Change: Within rental revenue, percentage rents for the quarter were $2 million versus $2.1 million in the prior year. Recall that percentage rent for theaters under the Regal Master Lease is expected to be recognized in July of Q3, the last month of the lease year.

Mark Peterson: Additionally, within rental revenue, straight line rent increased by 1.6 million sequentially versus last quarter, primarily due to a fitness and wellness property that was placed in service in March. Per the terms of the lease for this asset, rent for the sparse six months of the lease, which represents March to August, is being accrued in the basis for determining future cash rent. Thus, straight line rent will remain a bit elevated into Q3, but then is expected to go back down in Q4. Note that straight-line rent is included in FFO's adjusted, but is excluded from AFFO. The increase in mortgage and other financing income of 2.7 million was due to additional investments in mortgage notes over the past year.

Mark Alan Peterson: Additionally, within rental revenue, straight-line rent increased by $1.6 million sequentially versus last quarter, primarily due to a fitness and wellness property that was placed in service in March. Per the terms of the lease for this asset, rent for the first six months of the lease, which represents March to August, is being accrued as the basis for determining future cash rent, as well as lower payroll costs, including non-cash share-based compensation expense and a decrease in franchise taxes due to a state legislative change.

Speaker Change: Note that straight line red is included and FFO is adjusted but is excluded from AFFO.

Speaker Change: The increase in mortgage and other financing income of $2.7 million was due to additional investments in mortgage notes over the past year.

Mark Peterson: 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 rendered by and previously leased to Regal, which have been operated by third parties on EPR's behalf since early August of 2023. On the expense side, G&X spends for the quarter decreased to 12 million, versus 15.2 million in the prior year, due primarily to lower professional fees, including those related to the regal resolution, as well as lower payroll costs, including non-cash-based, share-based compensation expense, and a decrease in franchise taxes due to a state legislative change.

Speaker Change: 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.

Speaker Change: On the expense side, G&A expense for the quarter decreased to $12 million versus $15.2 million in the prior year, due primarily to lower professional fees, including those related to the regal resolution.

Speaker Change: as well as lower payroll costs, including non-cash share-based compensation expense and a decrease in franchise taxes due to a state legislative change.

Mark Peterson: During the quarter, we recognize impairment charges of 11.8 million related to one operating theater property that we intend to sell at right discussed. This charge is excluded from FFO's adjusted. Interest expense net for the quarter increased by 1.2 million compared to prior year, primarily due to an increase in interest income on short-term investments, and a decrease in capitalized interests on projects under development.

Mark Alan Peterson: During the quarter, we recognized impairment charges of $11.8 million related to one operating theater property that we intend to sell that Greg discussed. Interest expense net for the quarter increased by $1.2 million compared to the prior year primarily due to a decrease in interest income on short-term investments and a decrease in capitalized interest on projects under development.

Greg: During the quarter, we recognize impairment charges of $11.8 million related to one operating theater property that we intend to sell that Greg discussed.

Speaker Change: This charge is excluded from FFO as adjusted.

Mark Peterson: To turn to the next slide, I'll review some of the company's key credit ratios. As you can see, our coverage ratios continue to be strong. The fixed charge coverage at 3.2 times and both interest and debt service coverage ratios at 3.8 times. Our net debt to adjusted EBITDA RE was 5.2 times for the quarter. Additionally, our net debt to gross assets was 39 percent on a book basis at June 30th, and our common dividend continues to be very well covered, with an FFO payout ratio for the second quarter of 71 percent.

Mark Alan Peterson: Turning to the next slide, I'll review some of the company's key credit ratios. Our net debt to adjusted EBITDA RE was 5.2 times for the quarter. Additionally, our net debt to gross assets was 39% on a book basis on June 30th, and our common dividend continues to be very well covered with an AFFO payout ratio for the second quarter of 71%, with only $136.6 million maturing in 2024, which we anticipate paying off using our line of credit. We had $33.7 million of cash on hand at quarter end and no balance drawn on our $1 billion revolver, which positions us well going forward.

Greg: Turning to the next slide, I'll review some of the company's key credit ratios.

Speaker Change: Our net debt to adjusted EBITDA RE was 5.2 times for the quarter.

Speaker Change: Additionally, our net debt to gross assets was 39% on a book basis on June 30th, and our common dividend continues to be very well covered with an AFFO payout ratio for the second quarter of 71%.

Mark Peterson: Now, let's move to our balance sheet, which is in great shape. 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 the blended coupon of approximately 4.3 percent. In addition, our weighted average consolidated debt maturity is just under 4 years, with only 136.6 million maturing in 2024, which we anticipate paying off using our line of credit. We had $33.7 million of cash on hand at quarter end and no balance drawn on our $1 billion revolver, which positions us well going forward.

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

Speaker Change: 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 4.3%.

Mark Peterson: We are confirming our 2024 FFO's adjusted per share guidance of 476 to 496 and investment spending guidance of $200 million to $300 million. We are updating our Disposition Proceed Guidance to a range of 60 million to 75 million from a range of 50 million to 75 million. Additionally, we are confirming our percentage rank and participating interest guidance of 12 million to 16 million. We are lowering our General and Administrative guidance to a range of 49 million to 52 million from a range of 52 million to 55 million. This decrease is due to lower anticipated professional fees and payroll and benefit costs, as well as the recent state legislative change that reduced franchise tax expense.

Mark Alan Peterson: We are confirming our 2024 FFO as adjusted per share guidance of $476 to $496 and investment spending guidance of $200 million to $300 million. Additionally, we are updating our disposition proceeds guidance to a range of $60 million to $75 million from a range of $50 million to $75 million. Additionally, we are confirming our percentage rank and participating interest guidance of $12 million to $16 million. Additionally, we are lowering our general and administrative guidance to a range of $49 million to $52 million from a range of $52 million to $55 million.

Speaker Change: We are updating our disposition proceeds guidance to a range of $60 million to $75 million, from a range of $50 million to $75 million.

Speaker Change: We are lowering our general and administrative guidance to a range of $49 million to $52 million from a range of $52 million to $55 million.

Mark Peterson: On the next slide, we have detailed the guidance we are providing on our wholly owned operating properties and those held in joint ventures. We are revising the guidance for other income to a range of 55 to 65 million, a range of 57 to 67 million. And confirming our guidance for other expense of 54 to 64 million. The reduction in other revenue is due primarily to a decision to close one of our operating theaters around Labor Day. However, we do not expect the reduction in other expense to increase costs at our other operating properties. Lastly, we are revising our equity and loss from JVs to a range of 10 million to 7 million, from a range of 9 million to 6 million.

Speaker Change: On the next slide, we have detailed the guidance we are providing on our wholly owned operating properties and those held in joint ventures.

Speaker Change: We are revising the guidance for other income to a range of $55 to $65 million, from a range of $57 to $67 million, and confirming our guidance for other expense of $54 to $64 million.

Speaker Change: The reduction in other revenue is due primarily to the decision to close one of our operating theatres around Labor Day. However, we do not expect a reduction in other expense due to increased costs at our other operating properties.

Mark Alan Peterson: Lastly, we are revising our equity and loss from JVs to a range of $10 million to $7 million, from a range of $9 million to $6 million, and the FFOAA from JVs to a range of $0 to $3 million, from a range of $1 million to $4 million. Business details can be found on page 24 of our supplemental.

Speaker Change: Lastly, we are revising our equity and loss from JVs to a range of $10 million to $7 million, from a range of $9 million to $6 million, and the FFOAA from JVs to a range of $0 to $3 million, from a range of $1 million to $4 million.

Mark Peterson: And the FFOA and the FFOAA from JVs to a range of 0 to 3 million, from a range of 1 million to 4 million. As Greg mentioned, this reduction is due to some expense pressures, mostly insurance related, and demand normalization consistent with the broader experiential lodging industry. The latest details can be found on page 24 of our supplemental.

Speaker Change: As Greg mentioned, this reduction is due to some expense pressures, mostly insurance-related, and demand normalization consistent with the broader experiential lodging industry.

Mark Peterson: On the next slide, I wanted to illustrate in the last quarter the anticipated impact on growth in FFOA as adjusted per share for 2024 at the midpoint of guidance. When you remove the impact about a period cash-based deferral collections from 2023 to 36.4 million or 48 cents per share. In the amount we have collected in 2024, 0.6 million, or a penny per share. As you can see on the schedule, FFOA is adjusted per share without deferral collections from 2023 to 2024. It's still expected to grow by 3.2%.

Speaker Change: These details can be found on page 24 of our supplemental.

Speaker Change: On the next slide, I wanted to illustrate in the last quarter the anticipated impact on growth in FFO as adjusted per share for 2024 at the midpoint of guidance.

Speaker Change: 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 have collected in 2024 of $0.6 million, or a penny per share.

Operator: $0.48 per share and the amount we have collected in 2024 of $0.6 million, or a penny per share. We look forward to this progression as it allows us to once again capitalize on the many opportunities that our experiential platform offers and to continue to deliver outstanding results for our shareholders. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced.

Speaker Change: As you can see on the schedule, FFO is adjusted per share without deferral collections from 2023 to 2024. It's still expected to grow by 3.2%.

Gregory Silvers: Now, with that, I'll turn it back over to Greg for his closing remarks. Thank you, Mark. As we've discussed today, our business remains solid, and consumer demand continues to support our experiential properties. As Greg mentioned, we're further encouraged that we've gotten past the lack of theatrical content that was caused by the strikes and impacted the first half of the year. We view these developments as well as the AMC refinancing as catalysts to continue to propel us forward to a more reasonable equity multiple. We look forward to this progression as it allows us to once again capitalize on the many opportunities that our experiential platform offers.

Speaker Change: Now with that, I'll turn it back over to Greg for his closing remarks.

Greg: Thank you, Mark.

Speaker Change: As we've discussed today, our business remains solid and consumer demand continues to support our experiential properties. As Greg mentioned, we're further encouraged that we've gotten past the lack of theatrical content that was caused by the strikes and impacted the first half of the year.

Speaker Change: We view these developments as well as the AMC refinancing as catalysts to continue to propel us forward to a more reasonable equity multiple.

Greg: We look forward to this progression as it allows us to once again capitalize on the many opportunities that our experiential platform offers and to continue to deliver outstanding results for our shareholders. With that, let's open it up for questions. Corinne?

Gregory Silvers: And to continue to deliver outstanding results for our shareholders.

Unknown Executive: With that, let's open it up for questions, Corinne. Thank you. At this time, we will contact the question and answer session.

Operator: To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Great, thank you. And also, I guess kind of a bigger picture, we're thinking about the consumer. Many, especially on the lower end, are facing higher pressures. Are you seeing that flow through to the tenant base? Or is there an area that is maybe being impacted the most? Hi, thank you.

Unknown Executive: As a reminder to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster.

Speaker Change: At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster.

Joshua Dennerlein: Our first question comes from Joshua Dennerlein of Bank of America. Your line is now open. Hi, good morning.

Farrell Granath: This is Raul Granath on behalf of Josh. Thanks for the question. I wanted to just first ask, how are you seeing currently in your investment pipeline? One, how it is in the competition and the market set, as well as cap rates that you're seeing going forward, compared to what you're seeing today and what you may be seeing going forward? Yeah, and I'll let Greg add some color to this, but I think, you know, in our world, which we've said, you know, to a large degree is acquisitions in that kind of $25 to $125 million range in the experiential area.

Speaker Change: Thanks for the question. I want to just first ask, how are you seeing currently in your investment pipeline? One, how it is in the competition, the market set, as well as cap rates that you're seeing going forward compared to what you're seeing today and what you may be seeing going forward.

Speaker Change: Yeah, and I'll let Greg add some color to this, but I think, you know, in our world, which we've said, you know, to a large degree is

Gregory Silvers: We're still seeing not a tremendous amount of competition. And I, while I think our operators are, you know, being thoughtful about their growth, they're still growing, as indicated by our recent kind of and dreddies. Undertaking, as we've said, we've opened some recent Top Golfs in the last year. So they continue to grow, and we continue to be supportive of that. But Greg, yeah, and to also answer the cap rate question, the cap rates we're seeing are solid in the eighths. And I don't see a lot of change in that over the near term. The other thing I would add with respect to competition in the marketplace is we're just very good at finding deals that other people probably don't find.

Greg: being thoughtful about their growth, they're still growing as indicated by our recent kind of Andretti's.

Gregory Silvers: And so in the first quarter, we were able to acquire a water park in upstate New York. And again, I don't know that there was much competition for that. So those are the kind of deals that were able to find based on our experience and the quality of our portfolio.

Greg: We were able to acquire a water park in upstate New York, and again, I don't know that there was much competition for that. So those are the kind of deals that we're able to find based on our experience and the quality of our portfolio.

Unknown Executive: Great. Thank you.

Gregory Silvers: And also, I guess kind of bigger picture. We're thinking about the consumer, many, especially on the lower end, of facing higher pressures. Are you seeing that flow through to your tenant base? Or is there an area that is maybe being impacted the most? Again, like I said, you know, and as we talked about coverage being a quarter delayed, we're still not seeing that. And I would say, I think anecdotally what we're hearing is at the very low end of the consumer. There's probably more pressure. Our properties are generally solid, middle class kind of offerings. And what we're seeing is everyone has been dealing with cost pressure, whether it's insurance or wages. Those are starting to work their way through the system and kind of dissipate a little bit.

Speaker Change: Great, thank you. And also, I guess, kind of bigger picture, we're thinking about the consumer. Many, especially on the lower end, are facing higher pressures. Are you seeing that flow through to your tenant base, or is there an area that is maybe being impacted the most?

Speaker Change: Again, like I said, you know, and as we talked about coverage being a quarter delayed, we're still not seeing.

Speaker Change: Our, our...

Speaker Change: Yeah, you know everyone has been dealing with cost pressure whether it's insurance or wages Those are starting to work their way through the system and and and kind of dissipate a little bit But so far we've seen yet, you know continued

Unknown Executive: But so far, we've seen, you know, continue solid results. Also, I think, you know, if you look at our portfolio, probably the most value-oriented proposition we have is theater tickets. And you can see from Deadpool and Wolverine this weekend, people are not shy about going to the theater. So, yeah, I would agree with Greg. We're not really seeing. Thank you so much. Thank you. One moment for our next question.

Speaker Change: Solid Results.

Speaker Change: Also, I think, you know, if you look at our portfolio, probably the most value-oriented proposition we have is theater tickets, and you can see from Deadpool and Wolverine this weekend people are not shy about going to the theater, so yeah, I would agree with Greg, we're not really seeing that yet.

Speaker Change: Great, thank you so much.

Speaker Change: Thank you.

Smedes Rose: Our next question comes from Smedes Rose of City. Your line is now open. Hi, thank you. I just wanted to ask a little bit more about the legal percentage rent following short, and I guess that's really just a function of their fiscal year, including the back half of last year, so they wouldn't get the sort of incremental improvement you're seeing in the box office. I'm thinking about that correctly, and I guess what gives you confidence that your other tenants will be able to make up with the shortfall, like where are you seeing kind of incremental strengths, I guess, that would offset the legal.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from Smedes Rose of Citi. Your line is now open.

Unknown Speaker: I just wanted to ask a little bit more about the legal percentage rents falling short. And I guess that's really just a function of their fiscal year, including the back half of last year, so they wouldn't get the sort of incremental improvement you're seeing at the box office. So I'm going to see if I'm thinking about that correctly. And I guess what gives you confidence that your other tenants will be able to make up the shortfall?

Speaker Change: The back half of last year, so they wouldn't get the sort of incremental improvement you're seeing in the box office.

Unknown Speaker: Like, where are you seeing kind of incremental strength, I guess, that would offset the legal shortfall? Again, I get what we're saying is that you're saying the consumer is clearly weakening, but like I said, we just had a ski tenant that paid above what our estimates were for that, and we just had a theater opening that was $200 million. So, while there may be some weakening, we're still seeing some strength in some areas. Yeah, I think in those JVs, we don't get percentage rents from them, so that doesn't impact the percentage rents for St. Petersburg and the RV parks. It would be in our net lease.

Gregory Silvers: Again, and Smedes, thanks. I think remember the least year for legal runs from August 1st to July 31st. So again, what we saw this year was they're kind of right in the heart of the strikes and the impact of the strikes. We do, as Greg mentioned, we are getting some recovery of that in June and July. So we got, you know, a solid couple of months as we pick up out of that. But I think, you know, it's truly about the least year, and if you look at kind of where the estimates are for the balance of the year relative to what we did in the first half of the year, meaning we the theater industry, you can see the strength is really in the second half of this year.

Smead Rose: Smedes, thanks. I think, remember, the lease year for Regal runs from August 1st to July 31st. So, again, what we saw this year was they're kind of right in the heart of the strikes and the impact of the strikes.

Speaker Change: We do, as Greg mentioned, we are getting some recovery of that in June and July, so we've got, you know, a solid couple of months as we pick up out of that, but I think, you know, it's truly about the lease year, and if you look at

Speaker Change: kind of where the estimates are for the balance of the year relative to what we did in the first half of the year, meaning we, the theater industry, you can see the strength is really in the second half of this year.

Gregory Silvers: And so I think that reflects kind of the impact from the strikes and the ability to get that back as far as how we're going to make it up. Again, we already talked about it. I think in Greg's comments and in March comments, we talked about we had other percentage rent that we didn't anticipate in our ski industry. We're seeing some other strengths in various places. So we feel confident of our ability to recover that and therefore did not change our guidance. Okay.

Speaker Change: So, we feel confident of our ability to recover that and therefore did not change our guidance.

Gregory Silvers: I guess when you say other strengths in various places, I think last quarter, you just talked about some of the JVs having percentage rents as part of their structure, including like some St. Petersburg exposure, some RV exposure. And I know you're a quarter lag that the consumer is clearly weakening, and we're seeing that kind of across the board. And I'm just wondering here, so you're not yet, I guess, seeing or you still feel confident that in those areas where you'll likely see weakness, you won't see any shortfalls on the percentage rent side. Again, I get what we're saying is we're saying the consumers clearly weakening, but like I said, we just had a ski tenant that paid above what our estimates were in that.

Speaker Change: percentage rents as part of their structure, including like some St. Petersburg exposure, some RV exposure. And I know you're a quarter lag, but the consumer is clearly weakening. And we're seeing that kind of across the board. And I'm just wondering, so you're not yet.

Speaker Change: I guess, seeing, are you still so confident that in those areas where you'll likely see weakness, you won't see any shortfalls on the percentage rent side?

Speaker Change: Again, I get what we're saying. You're saying the consumer is clearly weakening, but like I said, we just had a ski tenant that paid above what our estimates were in that, and we just had a theater opening that was $200 million.

Gregory Silvers: And we just had a theater opening that was $200 million. So, while there may be some weakening, we're still seeing some strength in some areas. Yeah, I think in those JVs, we don't get percentage rents from those, so that doesn't impact the percentage rents, those same the St. Petersburg and the RV parks. It would be in our net lease. We did acknowledge a couple of times in our scripts the fact that there is some industry weakness that we're seeing as well, impacting the experiential lodging, somewhat an ADR kind of coming off of COVID highs. And there is some expense pressures, particularly things like insurance and particularly in Florida insurance, where we have two of our JV hotels.

Speaker Change: In those JVs, we don't get percentage rents from those, so that doesn't impact the percentage rents for the St. Petersburg and the RV parks. It would be in our net lease. We did acknowledge a couple of times in our scripts the fact that there is some...

Unknown Speaker: Yeah, we did acknowledge a couple of times in our scripts the fact that there is some industry weakness that we're seeing as well, impacting experiential lodging somewhat in ADR, kind of coming off of COVID highs, and there are some expense pressures, particularly in things like insurance and particularly in Florida insurance, where we have two of our JV hotels. And that's part of the reason why we've taken down that guidance a bit, but no, none of those impact percentage rents. Okay, okay. So, thank you. Thank you for clarifying. I wanted to just ask you one last question.

Speaker Change: The Experiential Lodging somewhat in ADR, kind of coming off of COVID highs, and there is some expense pressures, particularly

Gregory Silvers: And that's part of the reason why we've taken down that guidance a bit, but no, none of those impact percentage rents. Okay, thank you for clarifying.

Speaker Change: and things like insurance, and particularly in Florida, insurance, where we have two of our JV hotels. And that's part of the reason why we've taken down that guidance a bit. But no, none of those impact percentage rents.

Gregory Silvers: I wanted to ask you one last question. When you close the theater, it sounds like you do a lot because cat-backed investment. I mean, is that something in your, I guess, your contract is going forward now that would be avoided, or is other operators required maybe to continue to invest in order to keep a theater up to operating standards? Yeah, remember those? Those were an operating theater that we had taken back. So again, part of that, part of that lack of maintenance caps X was probably a direct result, not like Greg of Regal being in bankruptcy.

Unknown Speaker: When you close a theater, it sounds like it's due to a lack of CapEx investment. I mean, is that something in your, I guess, your contracts going forward now that would be avoided? Are the operators required, maybe, to continue to invest in order to keep the theater up to, you know, operating standards? Thank you. But the immediacy of hitting a debt maturity was the concern that was voiced most often to us about our relationship with them.

Speaker Change: It sounds like due to lack of CapEx investment. I mean, is that something in your, I guess your contracts going forward now that would be avoided or are the operators required maybe to continue to invest in order to

Speaker Change: Part of that lack of maintenance CAHPS Act was probably a direct result, not like Greg, of Regal being in bankruptcy and some things they should have done during that period of time but did not.

Gregory Silvers: And some things they should have done during that period of time, but did not. So our normal kind of lease provisions do require kind of ordinary maintenance and upkeep. But these were Smedes in one of the operating properties for which we had taken back. Yeah, Smedes, the other thing I would say is it wasn't just maintenance cat-backs. It was also cat-backs to improve the experience because during the real bankruptcy, some competing theater had substantially upgraded in the trade area. And we just found it was going to be very expensive to try to keep up. So again, one of the things we value about Sino-Marcus is that they look at the portfolio and tell us what they really think.

Gregory Silvers: And we can't put you in conclusion about it.

Unknown Executive: All right, thank you, guys. Thank you, Me. Thank you.

John Killachowski: Our next question comes from John Killachowski from Wells Fargo. Your line is now open. Hi, thank you. If we could circle back to the opening remarks, you talked about AMC putting out that AK detailing some of the refinances that did with two credit or groups. You know, it sounded like a positive pushing out some of those maturity to 29 and 30, but maybe can you talk about the structure a little bit more. I'm just curious your thoughts on the execution there. You know, I'm looking at the AK now. It's a bit complicated, very lengthy. I'm seeing things like 10% cash, 12% pick on some of this.

Speaker Change: Okay. All right. Thank you, guys.

Speaker Change: Thank you.

John Killachowski: And I'm just curious what you think about the execution overall, or if this is just giving them a little bit of breathing time before inevitable issues down the road.

Gregory Silvers: I mean, I think anybody would say, John, that it's giving them breathing time. I mean, they've had the ability to continue to raise capital to deploy. I think, you know, we would still say their balance sheet is too leveraged, but the immediacy of hitting a debt maturity was the concern that was voiced most often to us about our relationship with them. They continue to be able and seem to be able to meet their debt obligations. And I think again, it gives them time to get to a, as we've talked about today and the strength of 25 and 26 in the film calendar, to get to a period that may allow them to further execute that.

Speaker Change: But the immediacy of hitting a debt maturity was the concern that was voiced.

Unknown Speaker: They continue to be able and seem to be able to meet their debt obligations. And I think, again, it gives them time to get to, as we've talked about today, the strength of 25 and 26 in the film calendar, to get to a period that may allow them to further execute that. It also doesn't eliminate, as they have done over the past few years, their continued ability to raise equity and pay down debt. So again, I would think your characterization of breathing room is accurate, but Greg or Mark, maybe you guys have anything further to add to that?

Speaker Change: Most often to us about our relationship with them, they continue to be able and seem to be able to meet their debt obligations. And I think again, it gives them time.

Speaker Change: To get to a, as we've talked about today, in the strength of 25 and 26 in the film calendar,

Gregory Silvers: It also doesn't eliminate, as they've done over the past few years, their continually ability to raise equity and pay down debt.

Mark Peterson: So again, I would think your characterization of breathing room is accurate, but Greg or Mark, maybe you guys have anything for the end of that. No, I think Greg said we got an improving box office going forward, and now they've set themselves up to make it through that period in good shape about the, you know, alleviating the risk of bankruptcy. And from our perspective, we have our master lease. We have the best properties. We feel good about our collateral and feel good about the situation, kind of no matter what happens.

Unknown Speaker: No, I think, as Greg said, we've got an improving box office going forward. And now they've set themselves up to make it through that period in good shape without alleviating the risk of bankruptcy. And from our perspective, we have our master lease. We have the best properties.

Speaker Change: Anything further to add to that?

Speaker Change: I think, as Greg said, we've got an improving box office going forward, and now they've set themselves up to make it through that period in good shape without alleviating the risk of bankruptcy. And from our perspective, we have our master lease, we have the best properties, we feel good about our collateral, and feel good about the situation kind of no matter what happens.

Unknown Speaker: We feel good about our collateral and feel good about the situation, kind of no matter what happens. Thank you. And then maybe just jumping over to the transaction market, I guess, more generally, have you seen seller willingness change as we approach a potential Fed cut? I think there's no doubt that people are definitely thinking about what the impact of that would be. As we keep reminding people, a 25 basis point Fed cut is probably not as much of an impact as people may think, but I would say we have entered a time when everybody is painfully aware of the 10-year yield, as most of us in this industry price off of, and they pay attention to it more.

Unknown Executive: Thank you.

Unknown Executive: And then maybe just jumping over to the transaction market. I guess more generally, have you seen seller willingness change as we approach a potential Fed cut? I think we, I think there's no doubt that people are definitely thinking about what the impact of that is. As we keep reminding people, a 25 basis Fed cut is probably not as much of the impact as people may think. But I would say we are, we have entered at a time where everybody is painfully aware of the 10-year yield as most of us in this industry price off of and they pay attention to it more.

Speaker Change: I think there's no doubt that people are definitely thinking about what the impact of that is. As we keep reminding people, a 25-basis Fed cut is probably not...

Speaker Change: We have entered at a time where everybody is painfully aware of the 10-year yield, as most of us in this industry price off of, and they pay attention to it more. I think what drives people more now is...

Gregory Silvers: I think what drives people more now is simply growing their business. And I think what this does is it eliminates the marginal projects. They're really strong projects that tenants have commitment to. We're seeing them go forward with, as these are kind of, like I said, marginal projects. I think those are challenging.

Unknown Speaker: I think what drives people more now is simply growing their business, and I think what this does is it eliminates the marginal project. Thank you. Thanks, John. Thank you. Yeah, thanks.

Speaker Change: simply, you know, growing their business. And I think what this does is it eliminates the marginal projects.

Speaker Change: They're really strong projects that tenants have commitment to. We're seeing them go forward with.

Speaker Change: As these are kind of, like I said, marginal projects, I think those are challenging.

Gregory Silvers: But Greg, I completely agree in the fact that we were able to execute three and 30 deals this year shows that people are still in the market growing. And I agree with Greg; you know, obviously, people are being cautious, as are we, given our cost of capital.

Unknown Executive: Got it. Thank you.

Michael Carroll: Our next question comes from Michael Carroll of RBC. Your slide is now open. Yeah, thanks. I wanted to touch on the what's driving the drop in other income and other expenses this quarter. I believe that relates to your TRS business. And I think Mark and your prepared remarks that you mentioned something about expense pressure and experience lodging. I'm not sure I have. Sorry if I missed this, but you can provide some details and what kind of drove that drop in earnings for those line items. Yeah, sure. So if you look at for the quarter and year to date, you know, what we have running through the consolidated financials, other income and other expenses.

Speaker Change: Got it. Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Michael Carroll of RBC. Your line is now open.

Unknown Speaker: I wanted to touch on what's driving the drop in other income and other expenses this quarter. I believe that relates to your TRS business. And I think Mark, in your prepared remarks, I think you mentioned something about expense pressure and experience lodging. I'm not sure if I'm sorry if I missed this, but could you provide some details and what kind of drove that drop in earnings for those line items?

Michael Carroll: Yep, thanks. I wanted to touch on the what's driving the the drop in other income and other expenses this quarter. I believe that relates to your TRS business and I think Mark in your prepared remarks I think you mentioned something about expense pressure at experience lodging. I'm not sure if I'm sorry if I missed this but you can provide some details and what kind of drove that that that drop in earnings for for those line items.

Unknown Speaker: Yeah, sure. So if you look at for the quarter and year to date, you know what we have running through the consolidated financials, other income, and other expenses for the seven operating theaters in Cartwright. A lot due to the shutting down of that one theater. On the expense side, you're not seeing the reduction there just because of what I just mentioned, some of the elevated expenses of theater transition and management and some of the cart ride expenses.

Mark Peterson: The seven operating theaters in Cartwright to think about. Two of those operating theaters were operated in both periods. And obviously, box office was lower for the quarter and for the six months versus the prior year. So you had lower results there versus the prior year on the other operating theaters. We took back from Regal. Those two, you know, we're had lower box office than expected due to the impact of the strikes. So we think it is, and then we got an offset expense, but maybe not as much as expected. And I think part of the expense pressure in that area was spending by the new operators to kind of regain market shares that continue to, you know, manage those theaters post Regal.

Speaker Change: Well...

Speaker Change: versus the prior year. On the other operating theaters we took back from Riegel...

Speaker Change: Those two had lower box office than expected.

Mark Peterson: And then a third thing on Cartwright, Cartwright revenue and line, they've had a bit of cost pressures on insurance and utilities and a couple other line. And so I think all in all, if you look at the kind of year to date, sort of theater lower box office and a bit of expense pressures. The good news as they move into guidance for the year, though we expect that the operating theaters perform significantly better in the back half of the year as back box office rises. We're still going to have a reduction in revenue just because the fact we're shutting down one of the theaters.

Mark Peterson: So overall revenue is still down, but a lot due to that shutting down in one theater. On the expense side, you're not seeing the reduction there just because what I just mentioned, some of the elevated expenses of theater transition and management, and some of the Cartwright expenses. So that's on the... That's on the consolidated. We're down about two million in our guidance net with respect to that. The experiential lodging relates to cart rights, but it also relates to the unsolidated JV. So that's our St. Petersburg hotels and the RV parks. And there the pressures are kind of industry-wide in the experiential lodging relating to on the expense side, again, insurance, particularly like I said in my remarks in Florida, insurance has gone up a lot on the St.

Speaker Change: A lot due to that shutting down of that one theater. On the expense side, you're not seeing the reduction there just because of what I just mentioned, some of the elevated expenses of theater transition and management and some of the cartwright expenses. So that's on the...

Unknown Speaker: So that's on the..., kind of the impact for the quarter and sort of the outlook for the year in both the consolidated and the JV. Yeah, Michael, the other thing I would add is obviously the box office recovery will weigh into this. I mean, we just made the decision before Deadpool, not that it would have changed it because we didn't see a path, but it'll be interesting to see how the others perform with the box office recovering as strong.

Speaker Change: The experiential lodging comment relates to Cartwright, but it also relates to the unconsolidated JVs. So that's our St. Petersburg hotels and the RV parks.

Mark Peterson: Petersburg hotels. And then there's been a little bit of softness in ADR industry-wide and experiential lodging across the hotels and the RV parks.

Mark Peterson: So that's really the kind of the impact or the quarter and sort of the outlook for the year in both the consolidated and the JVs. Okay.

Speaker Change: Kind of the impact for the quarter and sort of the outlook for the year in both the consolidated and the JVs

Gregory Silvers: And then, within the operating theater bucket, I know that you decided to kind of shut one down. I guess, what about the other assets within those buckets? I mean, how are they performing and how are they positioning the market? I mean, is there any concern or thought that you're going to need to kind of shift strategies, and then you have both specific theaters? I think, and this is Greg Michael, I think we're constantly looking at those things. Right now, clearly, we don't think that. I think it's market by market. You look at kind of what, as Greg talked about, do you have to make investment in it to compete?

Speaker Change: Okay.

Speaker Change: I think, and this is Greg, Michael, I think we're constantly looking at those things right now. Clearly, we don't think that. I think...

Gregory Silvers: Again, if you look at several of the other theaters, they're much newer, more modern. So there's not, it doesn't mean though that if we get offers or we consider and there's a real estate play that makes more money, I mean, our job is to drive value. So we will constantly be evaluating kind of what the best option is. And when we look at the property that we shut down in Los Angeles, relative to the idea, it made sense to pursue that as a real estate solution. Yeah, Michael, the other thing I would add is obviously the box office recovery will weigh into this.

Speaker Change: Again, if you look at the other...

Speaker Change: Several of the other theaters, they're much newer, more modern, so there's not, it doesn't mean though that if we get offers or we consider and there's a real estate play that makes more money, I mean, our job is to drive value, so we will constantly be evaluating kind of what the best option is and when we look at

Gregory Silvers: I mean, we just made the decision before Deadpool, not that it would have changed it because we didn't see it pass, but it'll be interesting to see how the others perform with the box office recovering as strong. Okay, great. And then just last one for me is I know you increased your box office guidance for this year. What specifically drove that increase? Was it just the performance that you've seen over the past few months, or is it the expectation of better performance in the back half of the year? So I guess what drove that increase?

Unknown Speaker: Okay, great. And then just last one for me is, I know you increased your box office guidance for this year. What specifically drove that increase? Was it just the performance that you've seen over the past few months?

Unknown Speaker: Or is it the expectation of better performance in the back half of the year? So I guess what drove that increase? And then also, can you kind of touch on what you're expecting for 2025? If you have any early readings on what you think the box office can do next year? Yeah, we don't have any guidance for 2025 yet. But I would say the calendar is shaping up very nicely.

Speaker Change: Okay great and then just last one for me is

Speaker Change: I know you increased your box office guidance for this year. What specifically drove that increase? Was it just the performance that you've seen over the past few months? Or is it the expectation of better performance in the back half of the year? So I guess what drove that increase? And then also, can you kind of touch on what you're expecting for 2025? Do you have any early read-throughs on what you think the box office can do next year?

Gregory Silvers: And then also can you kind of touch on what you're expecting for 2025 if you have any early re-thrues on what you think box office can do next year? Yeah, we don't have any guidance for 2025 yet. I would say the calendar is shaping up very nicely. So, on a general proposition, we think it'll clearly exceed this year's box office, and I would hope that it's solidly in the $9 billion range. So we'll probably have more to talk about that toward the end of the year, Michael. With respect to this year, it's both one of the complete outperformance of the past handful of titles.

Speaker Change: Yeah, we don't have any guidance for 2025 yet. I would say the calendar is shaping up very nicely. So, on a general proposition, we think it'll clearly exceed this year's box office, and I would hope that it's solidly in the $9 billion range. So, we'll probably have more to talk about that toward the end of the year, Michael. With respect to this year, it's both. One, the complete outperformance of the past

Unknown Speaker: So, on a general proposition, we think it'll clearly exceed this year's box office, and I would hope that it's solidly in the $9 billion range. So we'll probably have more to talk about that toward the end of the year, Michael. With respect to this year, it's both.

Unknown Speaker: One, the complete outperformance of the past handful of titles. I mean, if you look at Deadpool 2, it's $261 million. Despicable Me, $293 million. Twisters, kind of out of nowhere, $159 million. And Inside Out, too, $615 million.

Gregory Silvers: I mean, if you look at Deadpool's at 261 million, Despicable Me, 293 million, Twisters kind of out of nowhere, 159 million, and Inside Out 2, 615 million. So these all outperformed dramatically. And then, as I mentioned, there are a number of 150 million titles projected for the end of the year. So we're very comfortable with the increase in the guidance. And again, I think it comes back to the fact that there is a cadence of solid releases. When the more movies there are in theaters, the more reason people have to go. And they will return even if they weren't planning on seeing a movie because they saw it on the marquee, or maybe the other one was sold out; whatever.

Michael Carroll: handful of titles. I mean, if you look at

Unknown Speaker: So these all outperform dramatically. And then, as I mentioned, there are a number of $150 million titles projected for the end of the year. So we're very comfortable with the increase in the guidance. And again, I think it comes back to the fact that there is a cadence of solid releases. When the more movies there are in theaters, the more reason people have to go.

Unknown Executive: The point is, people are returning to this. Thank you. Thank you, Michael. Thank you.

Unknown Speaker: Okay, great. Thank you. Thank you, Mark. The next question comes from Rob Stevenson of Janney Montgomery Scott. Your line is now open.

Rob Stevenson: The next question comes from Rob Stevenson of Janie Montgomery Scott.

Michael Carroll: Okay, great. Thank you.

Michael Carroll: Thank you, Michael.

Speaker Change: Thank you.

Rob Stevenson: Your line is now open. Good morning, guys. Greg or Greg, have you seen any solid in comproducing theaters with term left and least one of the major operators trade in the marketplace over the last quarter or two? Again, it's still rare, but there have been some reported things that are at least discussions. And I think that market is starting to open up as people start to see the visibility and the return of that. I think there are a couple of data points that are helping people, you know, Cinemark's recent debt deal where they did a debt deal at 7% and reaffirmed their kind of credit rating.

Unknown Speaker: Good morning, guys. Greg or Greg, have you seen any solid income-producing theaters with term left and leased to one of the major operators in the marketplace over the last quarter or two? Okay. And then Mark, I know you said that the $137 million of debt coming due in a few weeks is going to be done on the line. If you had to do that, or the $300 million that's coming due in April, in the unsecured market today, where would you be pricing debt today in the current environment and the uncertainty? Yeah, the good news is spreads are low. And for us, I think the latest quote I got was a little over 210 as far as spread.

Gregory Silvers: So I think you're starting to see a little bit of the thawing of that. And hopefully, as we move through the balance of this year, and especially in the next year, where the recovery is more robust, I think you'll start to see a further thawing of that. But Greg, I agree. I can't say that we've seen an actual transaction, but I agree; you know, there's certainly thawing.

Speaker Change: No, I agree. I can't say that we've seen an actual transaction, but I agree, you know, there's certainly thawing.

Mark Peterson: Okay. And then Mark, I know you said that the 137 million of debt coming during a few weeks is going to be done on the line. If you had to do that, or the 300 million that's coming due in April in the unsecured market today, where would you be pricing debt today in the current environment and the uncertainty? Yeah, good news is spreads are low and you know, for us, I think the latest quote, I got a little over 210 as far as the spread. So it would put us, you know, under six in a quarter to do a to do a 10 year right now.

Unknown Speaker: So it would put us, you know, under six and a quarter to do to do a 10 year right now. As I mentioned, 136 million. We have cash in the bank, nothing on the lines; we'd intend to take that out with a line of credit. You know, as we move to next year and have that $300 million maturity and start to grow our investments, we'll start to look at the debt market as we move into 2025.

Mark Peterson: As I mentioned, the 136 million, you know, we have cash in the bank, nothing to draw on the lines. We then tend to take that out with the line of credit. You know, as we move to next year and have that $300 million maturity and start to grow our investments, you know, we'll start to look at the debt market as we move into 2025 to, you know, term out what's going on the line of credit. But it'd be, it'd be, like I said, a little over 200 spread right now. Hopefully, treasuries, you know, come down as people's hopes, and so that we're maybe a little lower when we go to need to issue in 2025.

Speaker Change: who put us under six and a quarter to do a 10-year right now.

Speaker Change: As I mentioned, the $136 million, you know, we have cash in the bank, nothing to draw on the lines, we intend to take that out with a line of credit.

Unknown Speaker: To, you know, term out what's on the line of credit, but it'd be, like I said, a little over 200 spread right now. Hopefully, treasuries will come down, in people's hopes, and so that we're maybe a little lower when we go to need to issue in 2025. Okay. And then last one for me.

Speaker Change: Treasuries, you know, come down is people's hopes and so that we're maybe a little lower when we go to need to issue in 2025.

Unknown Speaker: In the prepared remarks, you guys talked about the 71% payout ratio of AFFO. How much cushion do you guys have right now to keep the dividend at that 28 and a half cents per month and not have to raise it to keep in compliance? Or is that something the board's going to have to address here in the near term? I mean, we always look at taxable income relative to our dividend, and we're in good shape with respect to that.

Mark Peterson: Okay. And then last one for me, in the prepared remarks, you guys talked about the 71% payout ratio of AFFO. How much cushion do you guys have right now to keep the dividend at that 28.5 cents per month and not have to raise it to keep in reccompliance? Or is that something the board's going to have to address here in the near term? I mean, we always look at taxable income relative to our dividend. We're in good shape with respect to that. I think we're going to keep on the cadence of keeping in that range of AFFO per share payout ratio.

Speaker Change: Okay, and then last one for me, in the prepared remarks, you guys talked about the 71% payout ratio of AFFO. How much cushion do you guys have right now to keep the dividend at that 28.5 cents per month and not have to raise it to keep and re-compliance? Or is that something the board's going to have to address here in the near term?

Unknown Speaker: I think we're going to keep on the cadence of keeping in that range of AFFO per share payout ratio. And I think as we move forward, we can comfortably do that with our taxable income. So I don't think there's pressure, but I think we will grow the dividend and can measure it with an increase in AFFO per share and kind of keep at that same percentage.

Speaker Change: I mean, we always look at taxable income relative to our dividend, and we're in good shape with respect to that. I think we're going to keep on the cadence of keeping in that range of AFFO per share payout ratio.

Mark Peterson: And I think as we move forward, we can comfortably, comfortably do that with our taxable income. So I don't think there's pressure, but I think we will grow the dividend and can measure it with increase in AFFO per share and kind of keep at that same percentage.

Speaker Change: And I think as we move forward, we can comfortably do that with our taxable income. So I don't think there's pressure, but I think we will grow the dividend, can measure it with increase in AFFO per share and kind of keep it that same percentage.

Unknown Executive: Okay. That's helpful.

Unknown Speaker: Okay, that's helpful. Thanks, guys. Thank you. Thank you. Our next question comes from Upal Rana. Great, thank you for taking my questions. With most of the vacant dispositions largely complete, you know, what's the next bucket of dispositions that you may be targeting? I would say, and we've always maintained that, you know, education is not strategic long-term for us.

Unknown Executive: Thanks, guys.

Paul Rana: Thank you.

Paul Rana: Our next question comes from Paul Rana. Your line is now of keeping Capital Markets. Your line is now open. Great. Thank you for taking the questions. Most of the big in this position is largely complete.

Speaker Change: Thank you.

Upal Rana: Upal Rana

Gregory Silvers: What's the next bucket of this position that you may be targeting? I would say, and we've always maintained that the education is not strategic. It's a big long term for us, and we'll look at that. Likewise, we've said, as that market returns, we want to lower exposure to theaters. Those two buckets operating theaters, meaning those that have a least and have an income stream and our education if we're looking to recycle. Great. Thank you.

Unknown Speaker: And, you know, we'll look at that. And likewise, we've said, as that market returns, we want to limit exposure to theater. So I would say, you know, those two buckets, operating theaters, meaning those that are leased and have an income stream, and our education if we're looking to recycle. Great, thank you. And then, you know, I appreciate your comments on the AMC structuring. But I'm assuming this now takes any kind of risk off the table with AMC's escalator. It's slated to hit next year.

Gregory Silvers: And then, you know, appreciate your comments on the A&C structure, but I'm assuming this now takes any kind of risk off the table with the A&C fiscal year. We didn't think there was any risk to it anyway. So yeah, we feel very confident with the strength of our portfolio that there was no risk to that. But, yeah, I think what this does is. Those people who were worried about, you know, bankruptcy risk or a wall of maturity hitting, forcing that, that is removed that issue. Okay. Great. Thanks.

Upal Rana: Great, thank you. And then, you know, I appreciate your comments on the AMT structuring, but I'm assuming this now takes any kind of risk off the table with AMT escalator, slated to hit next year?

Unknown Speaker: Yeah, we didn't think there was any risk to it anyway. So yeah, we feel very confident with the strength of our portfolio that there was no risk to that. But yeah, I mean, I think what this does is that those people who were worried about, you know, bankruptcy risk or a wall of maturity hitting, forcing that, that has removed that issue.

Unknown Speaker: Okay, great. Thanks. And then, you know, I was wondering who's buying the vacant theaters? And what are the plans for that kind of space? You know, will that space get redeveloped into updated theaters or other uses? I just want to kind of see if there's any follow through on the ongoing consolidation across the theater industry. Yeah, I don't think this is Greg. I don't think you can take much of a read through.

Gregory Silvers: And then, you know, I was wondering who's behind the vacant theaters and what are the signs with that kind of space? You know, well, that's if you get redeveloped into updated theaters or other uses. I just want to kind of keep there's any read through on the ongoing consolidation across the theater industry. Yeah, I don't think this is Greg. I don't think you can take much of a read through. So, over the past, you know, since COVID, we sold 21 theaters; about a third of them are being used as theaters. And they tend to be a local smaller operator that sees an opportunity because it's already a theater, and they can buy some of the equipment.

Unknown Speaker: So, over the past, you know, since COVID, we sold 21 theaters; about a third of them are being used as theaters. And they tend to be local smaller operators that see an opportunity because it's already a theater and they can buy some of the equipment. We've had others used for industrial office space, multifamily, retail, so redevelopment plays. It really does depend on the location of the real estate.

Speaker Change: Yeah, I don't think, this is Greg, I don't think you can take much of a read-through. So over the past, you know, since COVID, we've sold 21 theaters.

Gregory Silvers: We've had others used for industrial, office space, multifamily, retail, so redevelopment plays. It really does depend on the location of the real estate. And that's the way we market them. We never market them solely as theaters. We just put out a marketing piece, and the market decides what the highest invest uses for the theater. Okay, great. Thank you.

Speaker Change: We've had others used for industrial, office space, multi-family.

Unknown Speaker: And that's the way we market them. We never market them solely as theaters. We just put out a marketing piece, and the market decides what the highest and best use is for the theater.

Speaker Change: Retail, so redevelopment plays. It really does depend on the location of the real estate, and that's the way we market them. We never market them solely as theaters. We just put out a marketing piece, and the market decides what the highest and best use is for the theater.

Unknown Speaker: Okay, great. Thank you. Thank you. Thank you. Thank you, everyone. We appreciate your time and attention and look forward to talking to you in the near future.

Speaker Change: Okay, great. Thank you.

Unknown Executive: This concludes the question and answer session.

Gregory Silvers: I would now like to turn it over to Greg Silver's chairman and CEO. Thank you, everyone. We appreciate your time and attention and look forward to talking to you in the near future. Thanks, everyone. Thank you for your participation in the state conference.

Speaker Change: This concludes the question and answer session. I would now like to turn it over to Greg Silvers, Chairman and CEO .

Greg Silvers: Thank you, everyone. We appreciate your time and attention and look forward to talking to you in the near future. Thanks, everyone.

Unknown Executive: This does conclude the program. You may now disconnect. Thank you.