Q1 2025 EPR Properties Earnings Call
and 25 earnings calls.
We ask that you please hold all questions into the completion of the formal remarks, at which time you'll be given instructions for question and answer session.
Speaker Change: Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I will now hand the call over to Brian Moriarty, Senior Vice President Corporate Communications.
Speaker Change: Great. Thank you. Thanks for joining us today for our first quarter, let me 25, Ernie Call, and Webcast.
Speaker Change: Participants on today's call are Greg Silver, Chairman, CEO of Gregory Zimmerman, Executive Vice President, and CIO, and Mark Peterson, Executive Vice President and CFOs. I'll start by...
Speaker Change: Informing you that this call may include forced-looking statements as defined in the Providence Securities litigation act in 1995, identified by such words as, will be intent continue to believe may expect hope and to speak for other comfortable terms.
Speaker Change: The company's actual financial condition and the results of the operations, make their image here clearly from those counts of blood and such more looking statements.
Speaker Change: Discussion of those factors that could cause results to differ materially from those who are looking for these statements are contained in the company's SEC filing, including the company's reports on form 10K and 10Q.
Speaker Change: Additionally, this called connect references to certain non-gath measures which we believe are useful in evaluating the company's performance, a reconciliation of these measures to the most directly comparable GAAP measures are included in today's earnings release and supplemental information.
Furnished to the SEC on 4-8K.
Speaker Change: If you wish to follow along today's earnings release, supplemental and earnings calculation are all available on the Investors Center page to the company's website www.eprkc.com. Now I'll turn it all over to Greg Silvers.
Greg Silvers: Thank you, Brian . Good morning, everyone. And thank you for joining us on today's first quarter of 2025.
Speaker Change: I am happy to report that our first quarter results reflect continued strength in our portfolio with the top line revenue of 4.7% and FFO has adjusted per share of 5.3% year-over-year.
Speaker Change: Additionally, we are pleased to announce that we are increasing our 2025 earnings guidance.
Speaker Change: During the quarter, we make progress with our investment pipeline, deploying capital into a creative opportunity that support our long-term growth strategy.
Speaker Change: As part of our investment spending during the quarter and subsequent to quarter in, we are introducing two new experiential asset times to our portfolio, a construction theme, attraction, and a private golf club with expansive amenities.
Speaker Change: We are delighted to add these properties to our portfolio as they reflect the attributes we seek in our experiential investments. While we remain pregnant in our investment spending given the current cost of capital, we are encouraged by our abilities to continue to find attractive investments.
Speaker Change: We are also, we also advance our capital recycling strategy focused on the cells, theater and education assets, and incredibly redeploying this capital into target experiential properties.
Speaker Change: This strategy remains a top priority for us as we continue to refine our portfolio with the goal of further expanding our experiential portfolio across high quality projects.
Speaker Change: Turning to an overview of our portfolio, our first quarter consolidated coverage remains at 2.0, which is consistent with the reported coverage on our year end call.
Speaker Change: We are pleased with the momentum and resilience we're seeing at the box office. Thus far we've seen success around multiple genres including and including original content as most recently evidence by the performance of centers. [inaudible]
Speaker Change: franchise films, including Captain America, Brave New World and the Boss of the Lion King, and animated features like Donald Manor and Melinda II. The upcoming Don't Slate is strong, and we remain optimistic about seeing continued solid performance in theatrical exhibition.
Speaker Change: Our ski properties also deliver solid results, supported by robust season pass sales and favorable weather conditions. As we discussed previously, our snow making capabilities that these properties help to mitigate weather risk.
Speaker Change: While our eat and play sector experience some year-to-year declines, our coverage in space remains healthy, and we are confident about the sector's resilience.
Speaker Change: Lastly, amid an ongoing uncertainty, we wanted to highlight the long-term resiliency of experiential spending in many of the sectors that we invest in.
Speaker Change: As is highlighted on the chart, spending on these experiences has consistently grown over the last 25 years throughout macro cycles.
Speaker Change: Additionally, the data illustrates that these sectors are resilient during challenging economic periods, and have the potential to exhibit robust recovery.
Speaker Change: We believe that consumers often seek a way for home entertainment and leisure options even during more challenging period due to a mix of psychological, behavioral and economic factors.
Speaker Change: These types of experiences offer a horrible escapism by providing a value of the entertainment and a temporary escape.
Speaker Change: History suggests there is also some substitution effect whereby consumers may trade down rather than opt out, opting for local more budget-friendly experiences instead of expensive vacations or high-end purchases.
Speaker Change: This trade-out effect can make our venues more appealing during downturns.
Speaker Change: With that I'll turn it over to Greg Zimmerman to go with a business in greater detail.
Speaker Change: Thanks, Greg. At the end of the quarter, our total investments were approximately $6.8 billion with $331 properties that are 99% of the east or out of the way.
Speaker Change: excluding vacant properties we intend to sell. During the border of our investment spending was 37.7 million. 100% of the spending was in our experiential portfolio.
Speaker Change: Our experiential portfolio comprises 276 properties with 51 operators and accounts for 94% of our total investments for approximately 6.4 billion.
Speaker Change: And at the end of the quarter, excluding the vacant properties we intended to sell was 99% least for operating. Our education portfolio comprises 55 properties with five operators, and at the end of the quarter was 100% least.
Speaker Change: Turning to coverage, the most recent data provided is based on a March trailing 12 month period. Overall portfolio coverage remains strong at two times, the same as last quarter. Turning now to the operating status of our tenants.
The Rebound in North American Box Office continues.
Speaker Change: Q1 box office was 1.4 billion, down 11.6% compared to Q1 2024, largely because of the significant underperformance by Snow White.
Speaker Change: We've seen a quick rebound with the outstanding performance of several films in Q2 today.
Speaker Change: 22 box office through this week was 11 billion, which brings a year-to-date box office to 2.5 billion, a 17.1% increase over the same period in 2024.
Speaker Change: A Minecraft movie opened to 163 million, both the largest opening in 2025 and the largest opening weekend ever for a video game movie.
Speaker Change: A kind of army, Minecraft was a cultural phenomenon fueled by consumer scene movie several times in interacting with the screen.
Speaker Change: Beyond Minecraft, the well-redued, genre-bending, horror-owned centers has grossed $108 million to date, and the faith-based The King of Kings has grossed $58 million.
Speaker Change: Last week, Thunderbolts, the latest installment of the Marvel Cinematic Universe, opened at 74 million.
Speaker Change: With these strong early Q2 performances, as of the first week of May, we are back on track for our projected year-to-date box on this gross.
Speaker Change: As history has shown, when product is flowing, the box office is resilient, and when there is a consistent flow of good product, consumers are in the habit of going to multiple movies.
Speaker Change: For the remainder of Q2 beyond Minecraft 80 titles are projected to gross over $100 million, including a four projected to gross over 175 million Thunderbolt Willow and stitch mission impossible to final reckoning and how to train your dragon with.
Speaker Change: 2025 remains between 9.3 and 9.7 billion.
Speaker Change: Another important element supporting the health of exhibitor profitability is the ongoing expansion of food and beverage offerings. These expanded offerings are driving increased consumer spending revenue per patron and levels of profitability per patroncen.
Speaker Change: While our office metrics, obviously will remain an important benchmark the industry story has evolved and strong per patron profitability now plays an important role in sustaining operator health, we believe that returning to 2019 box office levels.
Speaker Change: To maintain solid rent coverage or for the industry to remain financially healthy turning now to an update on our other major customer groups. Despite continuing pressure on operating expenses and in select cases attendance and revenue declines we saw.
Speaker Change: And Drydy carding is under construction in Kansas City, Oklahoma City, and Schomburg with opening schedule for mid 25, and early 26, our eatonplay coverage remains strong in above pre COVID-19 levels by Q1, trailing 12 month revenue and even.
Speaker Change: Santa Monica Pier was adversely impacted by the southern California, wildfires, including being shutdown for several days. Some road closures are ongoing we're very pleased with the strong performance of our fitness and wellness investments.
Speaker Change: Over the same period in 24, our education portfolio continues to perform well our customers trailing 12 month revenue across the portfolio for 2024 was up while EBITDAR over the same period decreased driven largely by increased opera.
Speaker Change: Our investment spending for Q1 was 37.7 million, which included funding for Experiencetial product projects, which have closed but are not yet opened during the quarter, we acquired Diggerland U S. A in Westernland New Jersey.
Speaker Change: We made our first investment in the traditional golf space acquiring the land for 1.2 million and providing 5.9 million in mortgage financing secured by the improvements to Evere partners for an existing private club in Georgia, We've spent a lot of time.
Speaker Change: While building deep relationships and we are delighted to announce our foray into what we think is an exciting growth opportunity in a resilient space with a growing operator, we also acquired our second pin stack Eaton play venue in Northern Virginia.
Speaker Change: With a commitment to provide build to suit financing up to 19 million. This project is expected to open in 2026, Henstack features bowling food and beverage Bempport.
Speaker Change: And Delta suit development in our target experience 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 the borrowing.
Speaker Change: Redeployed in 2025, which is included at the midpoint of our 2025 guidance range. We continue to execute on our strategy to focus our portfolio on diversify experience two that ends in Q1, we sold.
Speaker Change: Early education centers, demonstrating our ability to strategically monetize our education portfolio. We also sold a vacancy two operating theaters and one vacant early childhood Education Center net proceeds for these transactions.
Speaker Change: 70.8 million and we recognize the gain of 9.4 million. Finally, we received 8.1 million in net proceeds for the payment in full of two mortgages secured by two additional early childhood education centers.
Speaker Change: In the education portfolio was anchored by the sale of a portfolio of nine leased early childhood education centers to an investor at a 7.4 capital demonstrating the high quality and value of our education portfolio for the other three.
Speaker Change: We have no vacant early childhood education centers as we noted on our year end call. We also assigned purchase and sale agreement to sell two theater properties to a smaller operator that currently leases both locations. Although there can be no assurance we continue.
Speaker Change: I now turn it over to Mark for a discussion with the meetings. Thank you Greg today I'll discuss our financial performance for the first quarter provide an update on our balance sheet and close with an update on 2025 guidance.
Mark Peterson: Before I walk through the key variance I want to go over two gains recognized during the quarter as Greg discussed during the quarter, we continue to make progress reducing our investments in theater and education properties and we cycling those proceeds into other experiences.
Mark Peterson: 78.9 million and we recognize that gain on sale of 9.4 million. We also recognize a net benefit for credit losses of 652000 note that both of these gains are excluded from FF O's adjusted and a F O now movi.
Mark Peterson: Total revenues for the quarter was 175 million versus 167.2 million in the prior year within total revenue rental revenue increased 4.1 million versus the prior year, mostly due to the impact of investment spending and higher percentage.
Mark Peterson: Percentage rents for the quarter were 3.3 million versus 1.9 million in the prior year and the increase was due primarily to 1.1 million recognized from one early education, one early childhood Education Center.
Mark Peterson: The increase in mortgage and other financing income of 4.1 million was due to additional investments in words notes over the past year as well as 1.8 million of participating interest income related to a ski property.
Mark Peterson: Oh like to know that both the 1.1 million percentage rent and 1.8 million of participating interest income relates to prior periods. The calculations for some of these amounts were under review with our customers and agreement was reset to the amount during the first quarter.
Mark Peterson: Both other income and other expense relate primarily to our consolidated operating properties, including the car right Hotel indoor water Park and our operating theaters as great discussed during the quarter. We sold two operating theaters and currently have four operating theaters remaining.
Mark Peterson: The first quarter was off season for our two remaining unconsolidated RV Park joint ventures that had a carrying value at quarter end of 11.4 million.
Mark Peterson: Interest expense net for the quarter increased by 1.4 million compared to the previous year due to an increase in borrowings under our unsecured revolving credit facility, which had no balance in the prior year.
Mark Peterson: Turning the next slide I will review some of the company's key credit ratios as you can see our coverage ratios continue to be strong with fixed chart coverage at 3.2 times in both interest and debt service coverage ratios at 3.8 times.
Mark Peterson: Our net debt to adjusted EBITDA R. E was 5.3 times for the quarter. If you adjust this ratio to include the Annualization of investments placed in service acquired or exposed of during the quarter and the annual utilization of percentage rent.
Mark Peterson: Additionally, our net debt to gross assets was 39% on a book basis, a quarter end in our common dividend continues to be very well covered with an a F O payout ratio of 71% for the first quarter now, let's move to our balance sheet, which is in great shape.
Mark Peterson: The quarter end, we had consolidated debt of 2.8 billion of which 2.7 billion is either fixed rate debt or debt that has been fixed or interest rate swaps with an overall blended coupon of approximately 4.4%.
Mark Peterson: Or liquidity position remains strong with 20.6 million of cash on hand at quarter end and 105 million drawn on our 1 billion dollar revolver.
Mark Peterson: Subsequent to quarter I know, we we re we repay 300 million in senior unsecured notes at maturity using funds available under our revolver. We have no other debt maturities in 2025, our strong liquidity position provides us great.
Mark Peterson: We are increasing our 2025 F four.
Mark Peterson: As we have discussed previously given our current cost of capital we are eliminating our near term investment study. We are confirming our 2025 investment spending guidance of 200 million to 300 million we are increasing.
Mark Peterson: Physician proceeds for 2025 to a range of 80 million to 120 million from a range of 25 million to 75 million.
Mark Peterson: On the next slide we are increasing our percentage rent and participating interest income to a range of 21, and a half million to 25, and a half million from a range of 18 million to 22 million.
Mark Peterson: This increase is primarily primarily related to the 2.9 million in prior period income recognized in the first quarter that I discussed previously as well as additional amounts expected related to the current year.
Mark Peterson: We are increasing our D N a expense to a range of 53 million to 56 million from a range of 52 million to 55 million with a largest increase at the midpoint related to non cash stock grant amortization.
Mark Peterson: We are confirming the guidance for our consolidated operating properties, which is provided by giving a range for other income and other expense one final comment regarding our ffo's adjusted per share guidance note that given the fact that our expected percentage rents have participa.
Mark Peterson: Guidance details can be found on page 23 of our supplemental finally, we are pleased to have increased our common our monthly common dividend by 3.5% to 354 per share annualized which began with a dividend payable April 15th.
Mark Peterson: I also wanted to comment on recent announcements about possible tariffs impacting the film industry.
Mark Peterson: At this point there is significant uncertainty about the viability scope and timing to implement such proposal. However, both sides of the Bay have a stated objective of producing a robust late of films that drive a successful film exhibition industry.
Speaker Change: With that let me open it up for questions Alice.
Speaker Change: Thank you at this time, if you would like to ask a question. Please click on the raid hand button, which can be found on the black screen. What is your turn you'll receive a message on the screen on the host, allowing you to talk and then you'll hear your name called please accept.
Speaker Change: One minute to low between before.
Anthony: Our first question will come from Anthony parallel with J P. Morgan you May now Unmute your audio and ask your question great. Thanks, Yes, you're good to hear me, Yes, Yes. My first great first question is on the go.
Anthony: Please spend a minute and give us a little bit more color around how you see the yields.
Speaker Change: Deal structure, and just maybe a little bit more on the the first transaction here in terms of like what equity is behind it who the operator is experienced that sort of thing.
Speaker Change: Sure I think and then I'll, let Greg add aunt Zimmerman add on to this I think what we've done is done a deep dive in this Tony and there's yeah. You know nearly 2000 forces across the U S have been eliminated over the last five years, so they're clearly a SCA.
Speaker Change: This that we're involved in is a private club. So the you know the the actual membership and fees and everything tied to the land and run with the homeownership. So we think it's a very very solid an.
Speaker Change: There are good opportunities that are gonna continue develop in the scarce environment, but great. Yeah. Antony I would say this is a private club. We're also monitoring daily fee clubs, which we would have an interest in as well I think the deal structure will see is flexible.
Speaker Change: And last thing I will say as we always do we spend a lot of time over the last five years understanding the industry and developing deep roots I think as we've said repeatedly over the last year or so we really believe the fitness and wellness as a growth opportunity.
Speaker Change: Okay. Thanks for that and then just my second one's really a two parter on the disposition side of things one just would love to hear the nature of the buyers that you're seeing out there.
Speaker Change: Boyer execution on the early childhood education sale and then also just more nuance related to the guidance you have about $40 million I think of mortgage receivables that come due later this year and I was wondering if that's if you expect.
Speaker Change: No I was repeat those get extended if it's in the disposition guidance or just what happens there.
Speaker Change: Yeah, I would say first of all it was a robust process with multiple bids and buyers in that the depth of of the buyer was good. This was you know a private fund that specializes in education and like I said I would say on both of.
Speaker Change: Okay. Thank you next.
Speaker Change: Our next question will come from Bennett Rose with city, you May now Unmute your audio and ask your question.
Bennett Rose: Okay. Thanks, Hi, I wanted to ask you just two questions. One I'm I'm sure you saw that six flags is closing the Hurricane Harbor, Annapolis, and apparently doing kind of a street a strategic review of a number of their property. So.
Speaker Change: With you about any of your Hurricane harbor properties or kind of what coverage looks like there again I would say clearly we're in contact with six legs. All the time as a good tenant we don't anticipate any of our properties closing and I think as it develops.
Speaker Change: Okay, and then I just wondering I use the credit line to pay down the bonds that were the yeah. The bonds that were coming due would you expect to do kind of a term that out later this year or maybe you could just talk a little bit about.
Speaker Change: Thinking about that yeah, we have some flexibility when it comes to that you think about it you know we have like I said 105 million on the line paid off the debt subsequent to your end, which is about took us to about 400 million on the line and then you kind of look at investment spending and cash flows over there.
Speaker Change: If you did a foreign million dollar transaction, we'd be down to you know about 100 million at year end. So I think the good news is we have some flexibility with respect to that we're monitoring the market both in the five year and 10 year realm.
Speaker Change: But but you know likely we would do a von transaction. We're also monitoring sale transaction as well.
Speaker Change: Where where do you think a five year or 10 year would price now for you. So a five year spread wise would probably be on the 180 185 area. So if you look at you know today's treasury it probably be in the 575 and three quarters or are you.
Speaker Change: We hope those spreads come in to.
Speaker Change: Okay. Thank you.
Speaker Change: Will come from our 10 million with Raven chain, you may now need your order and ask your question.
Speaker Change: Jamie again, please unmute yourself.
Speaker Change: Hey, guys, sorry about that.
Speaker Change: Physicians in the court dispositions in the quarter, a little bit more than expected and so I think on a standalone basis that would lead to a decrease in guidance, but guidance was up and market touched on this in your comments, but I'm. Just curious if you could maybe quantify some of the components, obviously higher percentage.
Speaker Change: Signing of our bond offering so so anyway 504, the two explicit it is a 507 and the kind of the net impact of about another penny of of less interest expense on a positive side and incremental dispositions on the negative side.
Speaker Change: Okay, and then just the follow up to that is in the 508 number how much of it is prior period rank collection. So we should think about pulling out for a run rate for 26, right really it's just that percentage rents 2.9 billion.
Speaker Change: So that's about three and a half okay. That's helpful and then.
Speaker Change: Thank you for that you know stocks done well so far this year. Obviously, you guys have been self funding through dispositions and free cash flow at what point or stock price do you guys start getting a little bit more aggressive and and thinking about issuing equity to to increase the best.
Speaker Change: Again R. J, it's Greg, it's it's really about accretive growth and so it's it's really a function of you know the spread that you can get and where you can you could issue at I think in a credit the team here of where delivering kind of at the.
Speaker Change: What we think is very little execution risk and no capital markets, we think that should be quite appealing to investors and the opportunity to do more as we continue to demonstrate our ability to execute.
Speaker Change: Makes sense makes sense.
Speaker Change: Our next question comes from Justin Posby with RBC capital market you May now mute your audio and ask your question.
Speaker Change: Justin if you are calling in today star nine will activate the raise hand and use our six fees delete.
Speaker Change: [noise], yeah, sorry about that thanks for taking the question can you just provide some color on the investment pipeline and the types of opportunities in the market.
Speaker Change: Yeah, and I'm Gonna, Greg jumping on this I think overall as we kind of demonstrate it's a depth and breadth that we're we're trying to to take advantage of and as we talked about before look at opportunity, which provides opportunities for future growth like yeah even.
Speaker Change: We've signed agreements where this hopefully will lead to future growth as we go forward and granted his team do a great job about not only finding a.
Speaker Change: Okay. Thanks, and then last one for me can you just expand on on the current macro environment, how that could impact your underlying tenant base and then any impacts on on future investment activity.
Speaker Change: Again, as we kind of laid out there's a actual notwithstanding the moniker of consumer discretionary there's a lot of resilience in what we think is affordable entertainment and leisure options. It will flow within like we said.
Speaker Change: Play was down a little ski was up theaters are up 17% year to day. So again, those those things will evanflow, but people don't give up fun and we continue to see those kind of resi.
Speaker Change: Through history and will continue to be mindful of what we think are those value oriented drive to destinations that demonstrate that kind of resiliency and continue to deploy capital in a way that we think create.
Speaker Change: Quality and resilient cash flow streams that support rising dividends, Craig I would also add one of our strong thesis is in the fitness and wellness spaces that that's the change in culture and the people are going to want to continue to spend money in those spaces.
Speaker Change: R C.
Speaker Change: Great. Thanks.
Speaker Change: Next question will come from Nuffin Grace with D. B S. You may now meet your audio and ask your question.
Speaker Change: Hey, good morning. Thank you for taking my questions. My first a M C on our earnings call. So they expect 2026 box office to surpass 2025, so is that consistent with the conversations that you're having with others and do.
Speaker Change: About two years no longer term.
Speaker Change: I think that is consistent that we think it's really driven by the content and the slate of movies and that's kind of where everybody starts that and the slate continues to get deeper I don't think it changes our perspective on theaters, we continue to say that we want to.
Speaker Change: Sustainability of the environment. If you look at someone like cinemark, they're down trading back at levels pre 2019. So again, we're very very excited about kind of that continuity evolvement of box office and as we said.
Speaker Change: Yeah on the slide that we presented the mix has changed and we now have with food and beverage yet you know even at nine and a half billion, which is kind of the midpoint of what we're talking about this year kind of EBITDAR contributions should be.
Speaker Change: Two box outlets that were 11 three so we're we're really excited about where the direction would go just add to that you know that should increase our regala goes through July so we've got a nice momentum this year and expect.
Speaker Change: Got it. Thank you that's helpful. And then my second question you you discussed for the tariff and inflation resistance of the existing Experiencial portfolio, but I I was wondering maybe a little bit more on tariffs. How are you thinking about the possible impact to your development.
Speaker Change: Pipeline has the tone of negotiation shifts at at all following April 2nd are there any concerns for things like projects getting delayed or paused or anything like that.
Speaker Change: Prior to the prior to the implementation of the tariffs, but as we go forward. There's no doubt that people are going to be looking at those things like you know for what we have in our forecast right now we feel good about because we've got.
Speaker Change: But we're quite confident that it will at least be a topic of discussion as we go forward with whether that slumber steel equipment. All of those things are gonna be brought to bear and we'll be we'll just have to see kind of as we go forward right now.
Speaker Change: Got it thank you for the color. Thank you.
Speaker Change: N next question will come from Mitchenaine with Simpsons capital markets and Advisory you May now Unmute your audio and ask your question.
Speaker Change: Hey, good morning, I think there was some previous commentary by an industry group in the theater industry about a significant amount of capital spend several billion dollars of capital spend plan you know for theater upgrades and I'm curious if.
Speaker Change: Process is underway and you think there could be any disruption given what's happening in the macro Oh the process is already underway and and we're seeing it impacts some of our properties. So that's but it's not it's literally kind of what we would call.
Speaker Change: Kind of expansions into large format, and and IMAX and new seating and things, we don't really see an impact to that nor do we see a lot yet that that's being impacted by anything related to terrace that most of those commitments have already been.
Speaker Change: So they laid them out you know in future schedules, so haven't seen any backup of that yet, Greg, but no and Mitch I would say, even though it's a big number they announced it's per house, a relatively limited impact so it doesn't take that long to make these all.
Speaker Change: Great. That's helpful and then I I'm I hope I didn't Miss it Mark was there anything specific that drove the percentage right in activity in the first quarter.
Speaker Change: Yeah as I mentioned, we had 2.9 million of prior periods that hit that hit percent rents and interest and then in addition, we had some additional percentage.
Speaker Change: We took up our guidance three and a half million a lot of that relates to what happened in Q1, and when I say first it's percented rents a percentage interest. It's two different line items percentage rent is rental income and percentage interest, it's mortgage and financing income, but that was the big Delta.
Speaker Change: I'm next question will come from you Paul Rana with Keybanc, you May now Unmute your audio and ask your question.
Paul Rana: Great. Thank you Greg maybe you can talk about the strength of the consumer today, and if you're seeing any impact on consumer spend at least in the near term the longer term chart that you provided was helpful. But just curious what you're seeing today as it relates to consumer spend behavior. Thank.
Paul Rana: I think it's really again resilient I mean, we're seeing pockets, where it's stronger in pockets, where we're seeing weakness I would say if anything is going through there. It's on the food spend even when we.
Paul Rana: Play, it's the kind of the each side of that that's kind of down so people are still enjoying the activities, but not spending as much on that so again it that's consistent with what we've seen a historically so we still see you know like I said.
Paul Rana: We saw fitness and wellness, we saw Eaton play down slightly so it's it's this is the benefit of having a diversified portfolio and the experiential and it manifests itself out in the coverage kind of state the same but right now there.
Paul Rana: Real pressure at the lowest end of the consumer but in that lower middle through the middle we still feel it's it's it's you know highly supportive when we talk to our tenants they say that so.
Paul Rana: Yeah, I think probably the best metric is we've had five straight weeks of $100 million or more of the box office, including two weeks of over $200 million. So people are still spending and as we mentioned both cinemark and C reported in the past week.
Paul Rana: Okay. Great. Thank you that was helpful. And then you know the box office has had a good starter two queue, but you know there's some anticipation that we might get over two get over 4 billion in the box office this summer, which only happened once since the pandemic due to.
Paul Rana: Just curious how do you anticipate the box office trending heading into the summer months and then later in the second half. Thanks, I will tell you and we tell people. All this time, we are horrible at.
Paul Rana: But the titles the depth and the quantity of titles looked strong when you start to look if you look at Lilo and stitch, that's coming up is now trending higher in presales than minecraft.
Paul Rana: You know so it really looks like we have a good shot at setting an all time not COVID-19 I'm, saying all time Memorial day weekend record with the mission possible film and Lelo and stitch on their own doing together over 200 million.
Paul Rana: Again, when you have a constant flow of product and you've heard us talk about this many times, it's not necessarily the individual film. It's the stacking up films week after week, and where people get into the habit and going to that film and seeing those reviews.
Paul Rana: We got Wicked the second half of Wicked coming in so I mean, there's there's a lot of good titles and again. It's it's also a nice balance we're getting back into that you know you've got a mission if possible. If you got Leo instead, you got that that drives 18 to 24.
Paul Rana: Drives the family and as we get to that kind of good content and consistent number of high quality films that leads to good box office results.
Paul Rana: Okay, great. Thank you.
Speaker Change: Next question will come from Spencer Glinter with Green Street May now Unmute your audio and ask your question.
Spencer Glinter: Great can you guys hear me.
Spencer Glinter: Okay excellent okay. What this one for me as you look across your various investment opportunities. As you continue recycling capital have you noticed changes to to bid ask spreads or cap rate movements in any of the sectors you're underwriting.
Spencer Glinter: Movements I mean again, we consistently said we're comfortably in the eighth that's kind of stayed there and again I would say Spencer when you look at you know quality variations may move that a little bit but but.
Speaker Change: Okay. That's it for me thanks, guys. Thank you.
Speaker Change: Last question will come from Yamigan with Bank of America Merryl Lynch you May now audio and ask you a question.
Speaker Change: Hi, Thank you good morning, and congrats on a great start to the year just a quick follow up on the 2.9 million percentage rent and participating interest truck in the first quarter. Just wanted to clarify is that completely retroactive you mentioned.
Speaker Change: These and this related to kind of discussions with these tenants and how they were calculating versus how we were calculating it resolved favorably to our.
Greg Silvers: Interpretation, so not only does it impact prior periods, but it's going to benefit us as we go forward as well yeah. A lot of that conversation was about deductions that we're taking that we politely disagreed with and then like Greg said, we resolve it at this quarter.
Greg Silvers: Great. Thank you for clarifying.
Speaker Change: Yeah, I'm no more questions. So I will now turn the call back over to Greg Silver is there any closing remarks I just want to thank everyone. I appreciate the opportunity to spend time with you and we look forward to seeing you at Nayrate in June thanks, everybody. Thanks.