EPR Properties (NYSE:EPR) Q4 2017 Earnings Conference Call Transcript

Feb 28, 2018 • 05:00 pm ET

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EPR Properties (NYSE:EPR) Q4 2017 Earnings Conference Call Transcript

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Executive
Greg Silvers

decision to fully reserve approximately $6 million in receivables and write-off approximately $9 million in straight line revenue related to CLA. While our restructuring of this tenant may still occur, we felt it prudent to take a conservative approach for 2017 and remove any revenue associated with CLA for 2018. We believe our action should remove any overhang related to this issue.

Despite the slow progress so far, several capital partners and operators have expressed serious interest in participating in the recapitalization and restructuring of CLA, or in leasing and operating our locations in the event that restructuring negotiations are not successful.

Four, Resorts World Catskills opens for business. We are excited to share the news that on February 8, the Resorts World Catskills casino and hotel the operator on our ground lease opened its doors to the public. The resort has 150 table games and 2,150 slot machines while the hotel tower has 332 all-suite rooms. The ribbon cutting of that was packed with state officials and patrons from all around the region. In addition, construction continues at the water park hotel, which we are developing there and we look forward to providing updates in the future regarding our continued progress on our Catskills property.

Five, adjusting 2018 earnings and investment spending guidance. In recognition of our decision to remove all revenue associated with CLA, we are reducing our 2018 FFO as adjusted per share guidance to a range of $5.23 to $5.38 from a range of $5.33 to $5.48. The midpoint of this range provides for approximately 6% in earnings growth. However, we should -- however, should we make the expected progress on CLA, there remains an opportunity to reach the high end of our guidance.

Separately, we are widening our 2018 investment spending guidance to reflect the existing market volatility. Previously, we had issued investment spending guidance of $700 million to $800 million. However, given our current stock price and the lag in asset repricing, we are widening our range to $400 million to $700 million. Our earnings guidance midpoint is based upon $400 million of investment spending, which can be funded through property dispositions and excess cash flow with no additional issuance of equity.

Our pipelines, however, reflects many additional opportunities and should the equity markets rebound or assets reprice, we will grow our investment spending. We are not believers in growth for growth's sake, and will remain disciplined in our underwriting and allocate capital prudently in a manner that drive shareholder value.

With that I'll turn it over to Jerry and then rejoin you for questions.

Executive
Jerry Earnest

Thank you, Greg. 2017 capped an historic year of investment spending for the company. Fourth quarter investment spending was $126.5 million. And as Greg mentioned, full year spending was $1.6 billion. The CNL Lifestyle transaction during the second quarter accounted for $730 million of investments with a balance of about $850 million in investment spending exceeding the previous year spending of $805 million which was also a record at