UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number: 001-13561
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
| Registrant’s telephone number, including area code: | ||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | ||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | ||||||||||||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
At May 6, 2026, there were 76,507,666 common shares outstanding.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
With the exception of historical information, certain statements contained or incorporated by reference herein may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), such as those pertaining to our capital resources and liquidity, our expected pursuit of growth opportunities, our expected cash flows, the performance of our customers, our expected cash collections and our results of operations and financial condition. Forward-looking statements involve numerous risks and uncertainties, and you should not rely on them as predictions of actual events. There is no assurance that the events or circumstances reflected in the forward-looking statements will occur. You can identify forward-looking statements by use of words such as “will be,” “intend,” “continue,” “believe,” “may,” “expect,” “hope,” “anticipate,” “goal,” “forecast,” “pipeline,” “estimates,” “offers,” “plans,” “would” or other similar expressions or other comparable terms or discussions of strategy, plans or intentions in this Quarterly Report on Form 10-Q.
Factors that could materially and adversely affect us include, but are not limited to, the factors listed below:
•Global economic and geopolitical uncertainty, disruptions in financial markets, and challenging economic conditions;
•Risks associated with the future outbreak of any highly infectious or contagious diseases, such as the COVID-19 pandemic;
•The impact of inflation on our customers and our results of operations;
•Actual and perceived changes in U.S. or international trade policies;
•Reduction in discretionary spending by consumers;
•Covenants in our debt instruments that limit our ability to take certain actions;
•Adverse changes in our credit ratings;
•Elevated interest rates;
•Defaults in the performance of lease terms by our tenants;
•Defaults by our customers and counterparties on their obligations owed to us;
•A borrower's bankruptcy or default;
•Risks associated with sales or divestitures of properties;
•Our ability to renew maturing leases on terms comparable to prior leases and/or our ability to locate substitute lessees for these properties on economically favorable terms or at all;
•Risks of operating in the experiential real estate industry (including the impact of labor strikes on the production, supply or theatrical release of motion pictures to our theatre tenants);
•Our ability to compete effectively;
•Risks associated with three tenants representing a substantial portion of our lease revenues;
•The ability of our build-to-suit tenants to achieve sufficient operating results within expected time-frames and therefore have capacity to pay their agreed-upon rent;
•Risks associated with our dependence on third-party managers to operate certain of our properties;
•Risks associated with our level of indebtedness;
•Risks associated with use of leverage to acquire properties;
•Financing arrangements that require lump-sum payments;
•Our ability to raise capital;
•The concentration of our investment portfolio;
•Our continued qualification as a real estate investment trust for U.S. federal income tax purposes and related tax matters;
•The ability of our subsidiaries to satisfy their obligations;
•Financing arrangements that expose us to funding and completion risks;
•Our reliance on a limited number of associates, the loss of which could harm operations;
•Risks associated with the employment of personnel by managers of certain of our properties;
•Risks associated with the gaming industry;
•Risks associated with gaming and other regulatory authorities;
•Delays or prohibitions of transfers of gaming properties due to required regulatory approvals;
•Risks associated with security breaches and other disruptions;
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•Risks associated with technological advancement, including the use of artificial intelligence;
•Changes in accounting standards that may adversely affect our financial statements;
•Fluctuations in the value of real estate income and investments;
•Risks relating to real estate ownership, leasing and development, including local conditions such as an oversupply of space or a reduction in demand for real estate in the area, competition from other available space, whether tenants and users such as customers of our tenants consider a property attractive, changes in real estate taxes and other expenses, changes in market rental rates, the timing and costs associated with property improvements and rentals, changes in taxation or zoning laws or other governmental regulation, whether we are able to pass some or all of any increased operating costs through to tenants or other customers, and how well we manage our properties;
•Our ability to secure adequate insurance and risk of potential uninsured losses, including from natural disasters;
•Risks involved in joint ventures;
•Risks in leasing multi-tenant properties;
•Risks associated with litigation that could negatively impact our financial condition, cash flows, results of operations and the trading price of our shares;
•A failure to comply with the Americans with Disabilities Act or other laws;
•Risks of environmental liability;
•Risks associated with climate change;
•Risks associated with the relatively illiquid nature of our real estate investments;
•Risks associated with owning assets in foreign countries;
•Risks associated with owning, operating or financing properties for which the tenants', mortgagors' or our operations may be impacted by weather conditions, climate change and natural disasters;
•Risks associated with the development, redevelopment and expansion of properties and the acquisition of other real estate related companies;
•Our ability to pay dividends in cash or at current rates;
•Risks associated with the impact of inflation or market interest rates on the value of our shares;
•Fluctuations in the market prices for our shares;
•Certain limits on changes in control imposed under law and by our Declaration of Trust and Bylaws;
•Policy changes obtained without the approval of our shareholders;
•Equity issuances that could dilute the value of our shares;
•Future offerings of debt or equity securities, which may rank senior to our common shares;
•Risks associated with changes in foreign exchange rates; and
•Changes in laws and regulations, including tax laws and regulations.
Our forward-looking statements represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond our ability to control or predict. For further discussion of these factors, see Item 1A - "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report") filed with the Securities and Exchange Commission ("SEC") on February 26, 2026.
For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or the date of any document incorporated by reference herein. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except as required by law, we do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.
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TABLE OF CONTENTS
| Page | ||||||||||||||
| Item 1. | Financial Statements | |||||||||||||
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |||||||||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |||||||||||||
| Item 4. | Controls and Procedures | |||||||||||||
| Item 1. | Legal Proceedings | |||||||||||||
| Item 1A. | Risk Factors | |||||||||||||
| Item 2. | Unregistered Sale of Equity Securities and Use of Proceeds | |||||||||||||
| Item 3. | Defaults Upon Senior Securities | |||||||||||||
| Item 4. | Mine Safety Disclosures | |||||||||||||
| Item 5. | Other Information | |||||||||||||
| Item 6. | Exhibits | |||||||||||||
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
EPR PROPERTIES
Consolidated Balance Sheets
(Dollars in thousands except share data)
| March 31, 2026 | December 31, 2025 | ||||||||||
| (unaudited) | |||||||||||
| Assets | |||||||||||
Real estate investments, net of accumulated depreciation of $ | $ | $ | |||||||||
| Land held for development | |||||||||||
| Property under development | |||||||||||
| Operating lease right-of-use assets | |||||||||||
Mortgage notes and related accrued interest receivable, net of allowance for credit losses of $ | |||||||||||
| Investment in joint ventures | |||||||||||
| Cash and cash equivalents | |||||||||||
| Restricted cash | |||||||||||
| Accounts receivable | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Equity | |||||||||||
| Liabilities: | |||||||||||
| Accounts payable and accrued liabilities | $ | $ | |||||||||
| Operating lease liabilities | |||||||||||
| Common dividends payable | |||||||||||
| Preferred dividends payable | |||||||||||
| Unearned rents and interest | |||||||||||
| Debt | |||||||||||
| Total liabilities | |||||||||||
| Equity: | |||||||||||
Common Shares, $ | |||||||||||
Preferred Shares, $ | |||||||||||
| Additional paid-in-capital | |||||||||||
Treasury shares at cost: | ( | ( | |||||||||
| Accumulated other comprehensive income | |||||||||||
| Distributions in excess of net income | ( | ( | |||||||||
| Total equity | $ | $ | |||||||||
| Total liabilities and equity | $ | $ | |||||||||
See accompanying notes to consolidated financial statements.
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EPR PROPERTIES
Consolidated Statements of Income and Comprehensive Income
(Unaudited)
(Dollars in thousands except per share data)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Rental revenue | $ | $ | |||||||||
| Other income | |||||||||||
| Mortgage and other financing income | |||||||||||
| Total revenue | |||||||||||
| Property operating expense | |||||||||||
| Other expense | |||||||||||
| General and administrative expense | |||||||||||
| Retirement and severance expense | |||||||||||
| Transaction costs | |||||||||||
| Provision (benefit) for credit losses, net | ( | ( | |||||||||
| Depreciation and amortization | |||||||||||
| Total operating expenses | |||||||||||
| Gain on real estate transactions | |||||||||||
| Income from operations | |||||||||||
| Interest expense, net | |||||||||||
| Equity in loss from joint ventures | |||||||||||
| Income before income taxes | |||||||||||
| Income tax expense | |||||||||||
| Net income | |||||||||||
| Preferred dividend requirements | |||||||||||
| Net income available to common shareholders of EPR Properties | $ | $ | |||||||||
| Net income available to common shareholders of EPR Properties per share: | |||||||||||
| Basic | $ | $ | |||||||||
| Diluted | $ | $ | |||||||||
| Shares used for computation (in thousands): | |||||||||||
| Basic | |||||||||||
| Diluted | |||||||||||
| Other comprehensive income: | |||||||||||
| Net income | $ | $ | |||||||||
| Foreign currency translation adjustment | ( | ||||||||||
| Unrealized gain on derivatives, net | |||||||||||
| Comprehensive income attributable to EPR Properties | $ | $ | |||||||||
See accompanying notes to consolidated financial statements.
2
EPR PROPERTIES
Consolidated Statements of Changes in Equity
(Unaudited)
(Dollars in thousands except per share data)
| EPR Properties Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares | Preferred Shares | Additional paid-in capital | Treasury shares | Accumulated other comprehensive income (loss) | Distributions in excess of net income | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Par | Shares | Par | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
| Restricted share units issued to Trustees | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of nonvested shares and performance share units, net of cancellations | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of common shares for vesting | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Change in unrealized gain on derivatives, net | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuances of common shares | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Series C Convertible Preferred shares to common shares | — | ( | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Share option exercises, net | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Dividend equivalents accrued on performance share units | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Dividends to common shareholders ($ | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Dividends to Series C preferred shareholders ($ | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Dividends to Series E preferred shareholders ($ | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Dividends to Series G preferred shareholders ($ | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of nonvested shares and performance share units | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of common shares for vesting | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation included in retirement and severance expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Change in unrealized gain on derivatives, net | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuances of common shares | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividends to common shareholders ($ | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Dividends to Series C preferred shareholders ($ | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Dividends to Series E preferred shareholders ($ | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Dividends to Series G preferred shareholders ($ | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
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EPR PROPERTIES
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Gain on real estate transactions | ( | ( | |||||||||
| Deferred income tax expense (benefit) | ( | ||||||||||
| Provision (benefit) for credit losses, net | ( | ( | |||||||||
| Equity in loss from joint ventures | |||||||||||
| Distributions from joint ventures | |||||||||||
| Depreciation and amortization | |||||||||||
| Amortization of deferred financing costs | |||||||||||
| Amortization of above/below market leases and tenant allowances, net | ( | ( | |||||||||
| Share-based compensation expense to management and Trustees | |||||||||||
| Share-based compensation expense included in retirement and severance expense | |||||||||||
| Change in assets and liabilities: | |||||||||||
| Operating lease assets and liabilities | ( | ( | |||||||||
| Mortgage notes accrued interest receivable | ( | ( | |||||||||
| Accounts receivable | ( | ( | |||||||||
| Other assets | ( | ( | |||||||||
| Accounts payable and accrued liabilities | |||||||||||
| Unearned rents and interest | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Investing activities: | |||||||||||
| Acquisition of and investments in real estate and other assets | ( | ( | |||||||||
| Proceeds from sale of real estate | |||||||||||
| Investment in mortgage notes receivable | ( | ( | |||||||||
| Proceeds from mortgage notes receivable paydowns | |||||||||||
| Proceeds from note receivable paydowns | |||||||||||
| Additions to properties under development | ( | ( | |||||||||
| Net cash (used) provided by investing activities | ( | ||||||||||
| Financing activities: | |||||||||||
| Proceeds from long-term debt facilities | |||||||||||
| Principal payments on debt | ( | ||||||||||
| Deferred financing fees paid | ( | ( | |||||||||
| Net proceeds from issuance of common shares | |||||||||||
| Purchase of common shares for treasury for vesting | ( | ( | |||||||||
| Dividends paid to shareholders | ( | ( | |||||||||
| Net cash used by financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash | ( | ( | |||||||||
| Net change in cash and cash equivalents and restricted cash | ( | ( | |||||||||
| Cash and cash equivalents and restricted cash at beginning of the period | |||||||||||
| Cash and cash equivalents and restricted cash at end of the period | $ | $ | |||||||||
| Supplemental information continued on next page. | |||||||||||
4
EPR PROPERTIES
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
| Continued from previous page | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Reconciliation of cash and cash equivalents and restricted cash: | |||||||||||
| Cash and cash equivalents at beginning of the period | $ | $ | |||||||||
| Restricted cash at beginning of the period | |||||||||||
| Cash and cash equivalents and restricted cash at beginning of the period | $ | $ | |||||||||
| Cash and cash equivalents at end of the period | $ | $ | |||||||||
| Restricted cash at end of the period | |||||||||||
| Cash and cash equivalents and restricted cash at end of the period | $ | $ | |||||||||
| Supplemental schedule of non-cash activity: | |||||||||||
| Transfer of property under development to real estate investments | $ | $ | |||||||||
| Conversion of mortgage note receivable to real estate investment | |||||||||||
| Issuance of nonvested shares and restricted share units at fair value, including nonvested shares issued for payment of bonuses | |||||||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Cash paid during the period for interest | $ | $ | |||||||||
| Cash paid during the period for income taxes | |||||||||||
| Interest cost capitalized | |||||||||||
| Change in accrued capital expenditures | ( | ( | |||||||||
See accompanying notes to consolidated financial statements.
5
EPR PROPERTIES
Notes to Consolidated Financial Statements (Unaudited)
1. Organization
Description of Business
EPR Properties (the Company) was formed on August 22, 1997 as a Maryland real estate investment trust (REIT), and an initial public offering of the Company's common shares of beneficial interest (common shares) was completed on November 18, 1997. Since that time, the Company has been a leading diversified experiential net lease REIT specializing in select enduring experiential properties. The Company's underwriting is centered on key industry and property cash flow criteria, as well as the credit metrics of the Company's tenants and customers. The Company’s properties are located in the United States (U.S.) and Canada.
2. Summary of Significant Accounting Policies and Recently Issued Accounting Standards
Basis of Presentation
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. In addition, operating results for the three-month period ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. Amounts as of December 31, 2025 have been derived from the audited Consolidated Financial Statements as of that date and should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (SEC) on February 26, 2026.
The Company consolidates certain entities when it is deemed to be the primary beneficiary in a variable interest entity (VIE) in which it has a controlling financial interest in accordance with the consolidation guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The equity method of accounting is applied to joint ventures and other similar entities in which the Company is not the primary beneficiary as defined in the FASB ASC Topic on Consolidation (Topic 810) but can exercise influence over the entity with respect to its operations and major decisions.
Deferred Financing Costs
Rental Revenue
The Company leases real estate to its tenants under leases classified as operating leases. The Company's leases generally provide for rent escalations throughout the lease terms. Rents that are fixed are recognized on a straight-line basis over the lease term. Base rent escalations that include a variable component are recognized upon the
6
occurrence of the specified event as defined in the Company's lease agreements. Many of the Company's leasing arrangements include options to extend the lease, which are not included in the minimum lease terms unless the option is reasonably certain to be exercised. Straight-line rental revenue is subject to an evaluation for collectability, and the Company records a direct write-off against rental revenue if collectability of these future rents is not probable. The Company recognized straight-line write-offs of $0.2 million for the three months ended March 31, 2026. There were no straight-line write-offs recognized during the three months ended March 31, 2025. Straight-line rental revenue, net of write-offs, was $3.5 million and $3.4 million, for the three months ended March 31, 2026 and 2025, respectively.
Most of the Company’s lease contracts are triple-net leases, which require the tenants to make payments directly to third parties for lessor costs (such as property taxes and insurance) associated with the properties. In accordance with FASB ASC Topic 842, the Company does not include these lessee payments made to third parties in rental revenue or property operating expenses. In certain situations, the Company pays these lessor costs directly to third parties and the tenants reimburse the Company. In accordance with Topic 842, these payments are presented on a gross basis in rental revenue and property operating expense. During both the three months ended March 31, 2026 and 2025, the Company recognized $0.7
Certain of the Company's leases, particularly at its entertainment districts, require the tenants to make payments to the Company for property-related expenses such as common area maintenance. In accordance with Topic 842, the Company has elected to combine these non-lease components with the lease components in rental revenue. For the three months ended March 31, 2026 and 2025, the amounts due for non-lease components included in rental revenue totaled $5.4 million and $4.7 million, respectively.
In addition, most of the Company's tenants are subject to additional rents (above base rents) if gross revenues of the properties exceed certain thresholds defined in the lease agreements (percentage rents). Percentage rents are recognized at the time when specified triggering events occur as provided by the lease agreement. Rental revenue included percentage rents of $2.1 million and $3.3 million for the three months ended March 31, 2026 and 2025, respectively.
The Company regularly evaluates the collectability of its receivables on a lease-by-lease basis. The evaluation primarily consists of reviewing past due account balances and considering such factors as the credit quality, projected performance and historical trends of the tenant, as well as the current economic conditions and changes in customer payment terms. When the collectability of lease receivables or future lease payments are no longer probable, the Company records a direct write-off of the receivable to rental revenue and recognizes future rental revenue on a cash basis. There were no
Mortgage Notes and Other Notes Receivable
Mortgage notes and other notes receivable, including related accrued interest receivable, consist of loans originated by the Company and the related accrued and unpaid interest income as of the balance sheet date. Mortgage notes and other notes receivable are initially recorded at the amount advanced to the borrower less allowance for credit loss. Interest income is recognized using the effective interest method over the estimated life of the note. Interest income includes both the stated interest and the amortization or accretion of premiums or discounts (if any).
The Company made an accounting policy election to not measure an allowance for credit losses for accrued interest receivables related to its mortgage notes and notes receivable. Accordingly, if accrued interest receivable is deemed to be uncollectible, the Company will record any necessary write-offs as a reversal of interest income. There were no accrued interest write-offs for the three months ended March 31, 2026 and 2025. As of March 31, 2026, the Company believes that all outstanding accrued interest is collectible.
In the event the Company has a past due mortgage note or note receivable that the Company determines is collateral-dependent, the Company measures expected credit losses based on the fair value of the collateral with the credit allowance being the difference between the outstanding principal balance of the notes and the estimated fair value.
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As of March 31, 2026, the Company does not have any mortgage notes or notes receivable with past due principal balances. See Note 5 for further discussion of mortgage notes and notes receivable for which the Company elected to apply the collateral-dependent practical expedient.
Mortgage and Other Financing Income
Certain of the Company's borrowers are subject to additional interest based on certain thresholds defined in the mortgage agreements (participating interest). Participating interest income is recognized at the time when specific triggering events occur as provided by the mortgage agreement. Participating interest income for the three months ended March 31, 2026 and 2025 was $0.4 million and $1.8 million, respectively.
Concentrations of Risk
Topgolf USA (Topgolf), American-Multi Cinema, Inc. (AMC) and Regal Cinemas (Regal), a subsidiary of Cineworld Group, represented a significant portion of the Company's total revenue for the three months ended March 31, 2026 and 2025. The following is a summary of the Company's total revenue derived from rental or interest payments from Topgolf, AMC and Regal (dollars in thousands):
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| Total Revenue | % of Company's Total Revenue | Total Revenue | % of Company's Total Revenue | ||||||||||||||
| Topgolf | $ | % | $ | % | |||||||||||||
| AMC | % | % | |||||||||||||||
| Regal | % | % | |||||||||||||||
Impact of Recently Issued Accounting Standards
3. Real Estate Investments
The following table summarizes the carrying amounts of real estate investments as of March 31, 2026 and December 31, 2025 (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Buildings and improvements | $ | $ | |||||||||
| Furniture, fixtures & equipment | |||||||||||
| Land | |||||||||||
| Leasehold interests | |||||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Total | $ | $ | |||||||||
Depreciation expense on real estate investments was $43.9 million and $40.1 million for the three months ended March 31, 2026 and 2025, respectively.
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4. Investments and Dispositions
The Company's investment spending during the three months ended March 31, 2026 totaled $51.3 million, and included the acquisition of a fitness & wellness property in New York for $34.5 million. The remaining investment spending for the three months ended March 31, 2026 related to experiential build-to-suit development and redevelopment projects.
Subsequent to quarter-end, the Company completed the acquisition of six U.S. attraction properties as part of its previously announced acquisition of a portfolio of seven attraction properties from Six Flags Entertainment Corporation. These six properties comprise the substantial majority of the Company's $315.0 million portfolio investment, are located throughout the U.S. and will be leased to and operated by Enchanted Parks (formerly Innovative Attraction Management) pursuant to a long-term triple-net master lease. La Ronde, the one park located in Canada, will be leased to and operated by La Ronde Operations, Inc. pursuant to a long-term triple-net lease following the closing of the transaction, which is expected to occur in the second quarter of 2026 subject to customary closing conditions.
5. Investment in Mortgage Notes and Notes Receivable
The Company measures expected credit losses on its mortgage notes and notes receivable on an individual basis because its financial instruments do not have similar risk characteristics. The Company uses a forward-looking commercial real estate loss forecasting tool to estimate its current expected credit losses (CECL) for each of its mortgage notes and notes receivable on a loan-by-loan basis. As of March 31, 2026, the Company did not anticipate any prepayments. Therefore, the contractual terms of its mortgage notes and notes receivable were used for the calculation of the expected credit losses. The Company updates the CECL model inputs at each reporting period to reflect, if applicable, any newly originated loans, changes to specific loan information on existing loans and current macroeconomic conditions. The CECL allowance is a valuation account that is deducted from the related mortgage note or note receivable.
Certain of the Company’s mortgage notes and notes receivable include commitments to fund future incremental amounts to its borrowers. These future funding commitments are also subject to the CECL model. The CECL allowance related to future funding is recorded as a liability and is included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets.
Investment in mortgage notes, including related accrued interest receivable, was $614.8 million and $679.3 million at March 31, 2026 and December 31, 2025, respectively. Investment in notes receivable, including related accrued interest receivable, was $2.7
During the three months ended March 31, 2026, the Company exercised its purchase option to convert a $70.0 million mortgage note receivable secured by an experiential lodging property in Tennessee into a wholly-owned rental property subject to a long-term triple-net lease. In connection with this conversion, the Company recognized a gain on real estate transactions of approximately $1.0 million and a benefit for credit losses of approximately $1.3 million.
At March 31, 2026, two of the Company's mortgage notes receivable are considered collateral-dependent and expected credit losses are based on the fair value of the underlying collateral with the credit allowance being the difference between the outstanding principal balance of the notes and the estimated fair value at the reporting date. The Company assessed the fair value of the collateral as of March 31, 2026 on the mortgage notes receivable. One of the Company's mortgage notes receivable is fully reserved with an allowance for credit loss totaling $6.4 million, which represents the outstanding principal balance of the note as of March 31, 2026. The other collateral-dependent mortgage note receivable has a carrying amount at March 31, 2026 of approximately $10.4 million net of an allowance for credit loss totaling $0.4 million. Income from these borrowers is recognized on a cash basis. During both the three months ended March 31, 2026 and 2025, the Company received cash basis interest payments of $0.3
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At March 31, 2026, one of the Company's notes receivable is considered collateral-dependent. The Company assessed the fair value of the collateral as of March 31, 2026 on the note receivable. The note receivable is fully reserved with an allowance for credit loss totaling $6.0 million, which represents the outstanding principal balance of the note as of March 31, 2026. At March 31, 2026, the Company's investment in this note receivable was a variable interest investment and the underlying entity is a VIE. The Company is not the primary beneficiary of this VIE because the Company does not individually have the power to direct the activities that are most significant to the entity and, accordingly, this investment is not consolidated. The Company's maximum exposure to loss associated with this VIE is limited to the Company's outstanding note receivable in the amount of $6.0 million, which is fully reserved in the allowance for credit losses at March 31, 2026. The Company's income received from this borrower is recognized on a cash basis. No
The following summarizes the activity within the allowance for credit losses related to mortgage notes, unfunded commitments and notes receivable for the three months ended March 31, 2026 (in thousands):
| Mortgage notes receivable | Unfunded commitments - mortgage notes receivable | Notes receivable | Unfunded commitments - notes receivable | Total | |||||||||||||
| Allowance for credit losses at December 31, 2025 | $ | $ | $ | $ | $ | ||||||||||||
| Provision (benefit) for credit losses, net | ( | ( | ( | ( | |||||||||||||
| Charge-offs | |||||||||||||||||
| Recoveries | |||||||||||||||||
Allowance for credit losses at March 31, 2026 | $ | $ | $ | $ | $ | ||||||||||||
6. Accounts Receivable
The following table summarizes the carrying amounts of accounts receivable as of March 31, 2026 and December 31, 2025 (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Receivable from tenants | $ | $ | |||||||||
| Receivable from non-tenants | |||||||||||
| Straight-line rent receivable | |||||||||||
| Total | $ | $ | |||||||||
7. Capital Markets and Dividends
During the three months ended March 31, 2026, the Company declared cash dividends totaling $0.900 per common share. Additionally, during the three months ended March 31, 2026, the Company declared cash dividends of $0.359375 5.75 % Series C cumulative convertible preferred shares and the Company's 5.75 % Series G cumulative redeemable preferred shares, and cash dividends of $0.5625 per share, on the Company's 9.00 % Series E cumulative convertible preferred shares.
At-the-Market Program ("ATM Program")
On December 5, 2025, the Company entered into an ATM Program, pursuant to which the Company may issue common shares having an aggregate sales price of up to $400.0 million on the open market or in privately negotiated transactions deemed to be “at-the-market” offerings under SEC rules, including through forward sales agreements. Transactions under the ATM Program, if any, will depend on a variety of factors to be determined by the Company, including market conditions, the trading price of the Company's common shares and the Company's capital needs. The Company intends to use any net proceeds from the sale of common shares pursuant to the ATM Program for general corporate purposes, including funding the Company's pipeline of acquisition and build-to-suit projects,
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working capital and the repayment of the Company's outstanding indebtedness. As of March 31, 2026, the Company had $352.5 million of capacity remaining under the ATM Program.
The use of forward sales agreements allows the Company to lock in a share price on the sale of shares at the time the forward sale agreement becomes effective, but defer receiving the proceeds from the sale of shares until a later date. If the Company enters into a forward sale agreement, it expects to physically settle each forward sale agreement with the forward purchaser on one or more dates specified by the Company prior to the maturity date of that particular forward sale agreement. The aggregate net cash proceeds at settlement will equal the number of shares underlying the particular forward sale agreement multiplied by the relevant forward sale price. The forward sales price will be equal to the volume-weighted average hedge price per share at which the borrowed common shares were sold by the forward seller, less a per share commission, subject to adjustment. However, the Company may also elect to cash settle or net share settle a particular forward sale agreement, in which case cash proceeds may or may not be received or cash may be owed to the forward purchaser. Until settlement of the forward sale agreements, earnings per share dilution resulting from the forward sale agreements will be determined under the treasury stock method. Share dilution occurs when the average market price of the Company's common shares is higher than the average forward sales price.
The Company did not issue any common shares under its ATM Program during the three months ended March 31, 2026. The following table summarizes activity under the Company's ATM Program in connection with forward sales agreements for the three months ended March 31, 2026 (dollars in thousands except share information):
| Period Entered Into Forward Sales Agreements | Total Forward Shares Sold | Total Forward Shares Settled | Total Forward Shares Outstanding | Volume Weighted Average Hedge Share Price (1) | Net Proceeds Received (2) | Anticipated Gross Proceeds Remaining | ||||||||||||||
| Three Months Ended March 31, 2026 | $ | $ | $ | |||||||||||||||||
(1) Before payment of commissions and subject to daily adjustment based on the overnight bank borrowing rate less a spread and reduced by expected dividend payments on the Company's common shares during the term of the forward sales agreement.
(2) After payment of commissions.
The Company did not initially receive any proceeds from the sale of forward shares under the ATM Program. The Company expects to settle outstanding forward sales agreements listed above prior to the maturity date of the respective agreement, March 1, 2027, through physical delivery of the outstanding common shares in exchange for cash proceeds.
8. Derivative Instruments
All derivatives are recognized at fair value in the consolidated balance sheets within the line items "Other assets" and "Accounts payable and accrued liabilities" as applicable. The Company has elected not to offset its derivative position for purposes of balance sheet presentation and disclosure. The Company had derivative assets of $0.5 million and $0.3 million at March 31, 2026 and December 31, 2025, respectively. The Company had derivative liabilities of $2.8 million and $6.9 million at March 31, 2026 and December 31, 2025, respectively. The Company has not posted or received collateral with its derivative counterparties as of March 31, 2026 or December 31, 2025. See Note 9 for disclosures relating to the fair value of the derivative instruments.
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions, including the effect of changes in foreign currency exchange rates on foreign currency transactions and interest rates on its SOFR-based borrowings. The Company manages this risk by following established risk management policies and procedures including the use of derivatives. The Company’s objective in using derivatives is to add stability to
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reported earnings and to manage its exposure to foreign exchange and interest rate movements or other identified risks. To accomplish this objective, the Company primarily uses interest rate swaps, cross-currency swaps and foreign currency forwards.
Cash Flow Hedges of Interest Rate Risk
The Company uses interest rate swaps as its interest rate risk management strategy for certain variable rate debt. Interest rate swaps designated as cash flow hedges involve the receipt or payment of variable-rate amounts from a counterparty, which results in the Company recording net interest expense that is fixed over the life of the agreements without exchange of the underlying notional amount.
At March 31, 2026, the Company had one interest rate swap agreement designated as a cash flow hedge of interest rate risk. The interest rate swap agreement outstanding as of March 31, 2026 is summarized below:
| Fixed rate | Notional Amount (in millions) | Index | Maturity | |||||||||||||||||
| $ | USD SOFR | September 30, 2026 | ||||||||||||||||||
The change in the fair value of interest rate derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (AOCI) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction.
Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of March 31, 2026, the Company estimates that through maturity, $27 thousand of losses will be reclassified from AOCI to interest expense.
Cash Flow Hedges of Foreign Exchange Risk
The Company is exposed to foreign currency exchange risk against its functional currency, USD, on CAD denominated cash flow from its six Canadian properties. The Company uses cross-currency swaps to mitigate its exposure to fluctuations in the USD-CAD exchange rate on cash inflows associated with these properties, which should hedge a significant portion of the Company's expected CAD denominated cash flows. As of March 31, 2026, the Company had the following cross-currency swaps:
| Fixed rate | Notional Amount (in millions, CAD) | Annual Cash Flow (in millions, CAD) | Maturity | |||||||||||||||||
$ | $ | $ | December 1, 2026 | |||||||||||||||||
$ | December 1, 2026 | |||||||||||||||||||
| $ | $ | |||||||||||||||||||
The change in the fair value of foreign currency derivatives designated and that qualify as cash flow hedges of foreign exchange risk is recorded in AOCI and reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. As of March 31, 2026, the Company estimates that through maturity, $280 thousand of gains will be reclassified from AOCI to other income.
Fair Value Hedges of Foreign Exchange Risk
The Company has a CAD denominated mortgage note receivable secured by a fitness & wellness property in Winnipeg, Canada. The Company uses cross-currency swaps designated as a fair value hedge to mitigate foreign currency risk associated with fluctuations in the USD-CAD spot rate associated with the principal remeasurement of this mortgage note. The Company has a cross-currency swap with an interim and final notional exchange of $27.9 million CAD and $20.0 million USD at a spot rate of $1.392 CAD per USD to fund the principal amount of the mortgage note receivable and monthly exchanges as noted below.
As of March 31, 2026, the Company had the following cross-currency swap designated as a fair value hedge:
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| Interim settlement exchange rate | Notional Amount (in millions, CAD) | Annual Cash Flow (in millions, CAD) | Maturity | |||||||||||||||||
$ | $ | $ | October 1, 2030 | |||||||||||||||||
The change in fair value of the foreign currency derivative designated and qualifying as a fair value hedge of foreign exchange risk is recorded at fair value each period on the Company's consolidated balance sheets, with the difference resulting from the changes in the spot rate recognized in foreign currency gain (loss). The foreign currency gain (loss) is included in "Other income" or "Other expense," as applicable, on the Company's consolidated statements of income and comprehensive income, which will offset the earnings impact of the foreign currency changes in the underlying transaction being hedged. The initial value of the component excluded from the assessment of effectiveness is recorded in AOCI and reclassified into earnings over the life of the hedging instrument. As of March 31, 2026, the Company estimates that during the twelve months ending March 31, 2027, $169 thousand of gains will be reclassified from AOCI to other income.
Net Investment Hedges
The Company is exposed to fluctuations in the USD-CAD exchange rate on its net investments in Canada. As such, the Company uses currency forward agreements to manage its exposure to changes in foreign exchange rates on certain of its foreign net investments. As of March 31, 2026, the Company had the following foreign currency forwards designated as net investment hedges:
| Fixed rate | Notional Amount (in millions, CAD) | Maturity | ||||||||||||
$ | $ | December 1, 2026 | ||||||||||||
$ | December 1, 2026 | |||||||||||||
| Total | $ | |||||||||||||
For qualifying foreign currency derivatives designated as net investment hedges, the change in the fair value of the derivatives is reported in AOCI as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company's accounting policy election.
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Below is a summary of the effect of derivative instruments on the consolidated statements of changes in equity and income for the three months ended March 31, 2026 and 2025.
Effect of Derivative Instruments on the Consolidated Statements of Changes in Equity and Comprehensive Income for the Three Months Ended March 31, 2026 and 2025 (Dollars in thousands)
| Three Months Ended March 31, | ||||||||
| Description | 2026 | 2025 | ||||||
| Cash Flow Hedges | ||||||||
| Interest Rate Swaps | ||||||||
| Amount of Gain Recognized in AOCI on Derivative | $ | $ | ||||||
| Amount of (Expense) Income Reclassified from AOCI into Earnings (1) | ( | |||||||
| Cross-Currency Swaps | ||||||||
| Amount of Gain Recognized in AOCI on Derivative | ||||||||
| Amount of Income Reclassified from AOCI into Earnings (2) | ||||||||
| Fair Value Hedges | ||||||||
| Cross-Currency Swaps | ||||||||
| Amount of Gain Recognized in AOCI on Derivative (3) | ||||||||
| Amount of Gain Recognized in Earnings (2)(3) | ||||||||
| Net Investment Hedges | ||||||||
| Currency Forward Agreements | ||||||||
| Amount of Gain Recognized in AOCI on Derivative | ||||||||
| Total | ||||||||
| Amount of Gain Recognized in AOCI on Derivatives | $ | $ | ||||||
| Amount of Income Reclassified from AOCI into Earnings | ||||||||
| Amount of Gain Recognized in Earnings | ||||||||
| Interest expense, net in accompanying consolidated statements of income and comprehensive income | $ | $ | ||||||
| Other income in accompanying consolidated statements of income and comprehensive income | $ | $ | ||||||
(1) Included in "Interest expense, net" in the accompanying consolidated statements of income and comprehensive income for the three months ended March 31, 2026 and 2025.
(2) Included in "Other income" in the accompanying consolidated statements of income and comprehensive income for the three months ended March 31, 2026 and 2025.
Credit-risk-related Contingent Features
The Company has an agreement with its interest rate derivative counterparty that contains a provision where, if the Company defaults on any of its obligations for borrowed money or credit in an amount exceeding $50.0 million and such default is not waived or cured within a specified period of time, including default where repayment of the indebtedness has not been accelerated by the lender, the Company could also be declared in default on its interest rate derivative agreements.
As of March 31, 2026, the fair value of the Company's derivatives in a liability position related to these agreements was $2.8 million. If the Company breaches any of the contractual provisions of these derivative contracts, it would be required to settle its obligations under the agreements at their termination value, which, after considering the right of offset, was $2.6 million at March 31, 2026. As of March 31, 2026, the Company had not posted any collateral related to these agreements and was not in breach of any provisions in these agreements.
9. Fair Value Disclosures
The Company has certain financial instruments that are required to be measured under the FASB’s Fair Value Measurement guidance. The Company currently does not have any non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis.
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Derivative Financial Instruments
The Company determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives also use Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. As of March 31, 2026, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives and therefore, classified its derivatives as Level 2 within the fair value reporting hierarchy.
Recurring fair value measurements
The table below presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025, aggregated by the level in the fair value hierarchy within which those measurements are classified and by derivative type.
Assets and Liabilities Measured at Fair Value on a Recurring Basis at
March 31, 2026 and December 31, 2025
(Dollars in thousands)
| Description | Quoted Prices in Active Markets for Identical Assets (Level I) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance at end of period | ||||||||||||||||||||||
| March 31, 2026 | ||||||||||||||||||||||||||
| Cross-Currency Swaps (1) | $ | — | $ | $ | — | $ | ||||||||||||||||||||
| Currency Forward Agreements (2) | — | ( | — | ( | ||||||||||||||||||||||
| Interest Rate Swap Agreements (1) | — | — | ||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| Cross-Currency Swaps (1) | $ | — | $ | $ | — | $ | ||||||||||||||||||||
| Cross-Currency Swaps (2) | — | ( | — | ( | ||||||||||||||||||||||
| Currency Forward Agreements (2) | — | ( | — | ( | ||||||||||||||||||||||
| Interest Rate Swap Agreements (1) | — | — | ||||||||||||||||||||||||
(1) Included in "Other assets" in the accompanying consolidated balance sheets.
(2) Included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets.
Non-recurring fair value measurements
The table below presents the Company's assets measured at fair value on a non-recurring basis as of March 31, 2026 and December 31, 2025, aggregated by the level in the fair value hierarchy within which those measurements are classified.
Assets Measured at Fair Value on a Non-Recurring Basis at March 31, 2026 and December 31, 2025
(Dollars in thousands)
| Description | Quoted Prices in Active Markets for Identical Assets (Level I) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance at end of period | |||||||||||||||||||
| 2026: | |||||||||||||||||||||||
| Real estate investments, net (1) | $ | — | $ | — | $ | $ | |||||||||||||||||
| 2025: | |||||||||||||||||||||||
| Mortgage notes and related accrued interest receivable (2) | $ | $ | $ | $ | |||||||||||||||||||
(1) As further discussed in Note 5, during the three months ended March 31, 2026, the Company exercised its purchase option to convert a $70.0 million mortgage note receivable secured by an experiential lodging property in Tennessee into a wholly-owned rental property subject to a long-term triple-net lease. Management estimated the fair value of this property using an independent appraisal, which used a discounted cash flow model. The significant inputs and assumptions used in the real estate appraisal included a discount rate of 8.00 % and a terminal
15
capitalization rate of 7.25 %. Estimating future cash flows is highly subjective and estimates can differ materially from actual results. These measurements were classified within Level 3 of the fair value hierarchy because many of the assumptions were not observable.
Fair Value of Financial Instruments
The following methods and assumptions were used by the Company to estimate the fair value of each class of financial instruments at March 31, 2026 and December 31, 2025:
Mortgage notes receivable and related accrued interest receivable, net:
The fair value of the Company’s mortgage notes and related accrued interest receivable, net, is estimated by discounting the future cash flows of each instrument using current market rates. At March 31, 2026, the Company had a carrying value of $614.8 million in fixed-rate mortgage notes receivable outstanding, including related accrued interest and allowance for credit losses, with a weighted average interest rate of approximately 9.12 %. The fixed-rate mortgage notes bear interest at rates of 7.15 % to 12.69 %. Discounting the future cash flows for fixed-rate mortgage notes receivable using estimated market rates of 7.00 % to 10.50 %, management estimates the fair value of the fixed-rate mortgage notes receivable to be approximately $664.5 million with an estimated weighted average market rate of 7.87 % at March 31, 2026.
At December 31, 2025, the Company had a carrying value of $679.3 million in fixed-rate mortgage notes receivable outstanding, including related accrued interest and allowance for credit losses, with a weighted average interest rate of approximately 8.97 %. The fixed-rate mortgage notes bear interest at rates of 7.15 % to 12.69 %. Discounting the future cash flows for fixed-rate mortgage notes receivable using estimated market rates of 7.00 % to 10.50 %, management estimates the fair value of the fixed-rate mortgage notes receivable to be $728.0 million with an estimated weighted average market rate of 7.91 % at December 31, 2025.
Derivative instruments:
Derivative instruments are carried at their fair value.
Debt instruments:
The fair value of the Company's debt is estimated by discounting the future cash flows of each instrument using current market rates. At March 31, 2026 and December 31, 2025, the Company had a carrying value of $25.0 million in variable-rate debt outstanding for both periods with an interest rate of approximately 3.82 % and 3.95 %, respectively. The carrying value of the variable-rate debt outstanding approximated the fair value at March 31, 2026 and December 31, 2025.
At both March 31, 2026 and December 31, 2025, the $25.0
At March 31, 2026, the Company had a carrying value of $2.93 billion in fixed-rate long-term debt outstanding with a weighted average interest rate of approximately 4.40 %. Discounting the future cash flows for fixed-rate debt using March 31, 2026 market rates of 3.82 % to 5.55 %, management estimates the fair value of the fixed rate debt to be approximately $2.82 billion with an estimated weighted average market rate of 4.98 % at March 31, 2026.
At December 31, 2025, the Company had a carrying value of $2.93 billion in fixed-rate long-term debt outstanding with a weighted average interest rate of approximately 4.40 %. Discounting the future cash flows
16
for fixed-rate debt using December 31, 2025 market rates of 3.54 % to 5.12 %, management estimates the fair value of the fixed rate debt to be approximately $2.85 billion with an estimated weighted average market rate of 4.61 % at December 31, 2025.
10. Earnings Per Share
The following table summarizes the Company’s computation of basic and diluted earnings per share (EPS) for the three months ended March 31, 2026 and 2025 (amounts in thousands except per share information):
| Three Months Ended March 31, 2026 | |||||||||||||||||
| Income (numerator) | Shares (denominator) | Per Share Amount | |||||||||||||||
| Basic EPS: | |||||||||||||||||
| Net income | $ | ||||||||||||||||
| Less: preferred dividend requirements | ( | ||||||||||||||||
| Net income available to common shareholders | $ | $ | |||||||||||||||
| Diluted EPS: | |||||||||||||||||
| Net income available to common shareholders | $ | ||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||
| Share options and performance share units | — | ||||||||||||||||
| Net income available to common shareholders | $ | $ | |||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||
| Income (numerator) | Shares (denominator) | Per Share Amount | |||||||||||||||
| Basic EPS: | |||||||||||||||||
| Net income | $ | ||||||||||||||||
| Less: preferred dividend requirements | ( | ||||||||||||||||
| Net income available to common shareholders | $ | $ | |||||||||||||||
| Diluted EPS: | |||||||||||||||||
| Net income available to common shareholders | $ | ||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||
| Share options and performance share units | — | ||||||||||||||||
| Net income available to common shareholders | $ | $ | |||||||||||||||
The effect of the potential common shares from the conversion of the Company’s convertible preferred shares and from the exercise of share options are included in diluted earnings per share if the effect is dilutive. Potential common shares from the performance share units are included in diluted earnings per share upon the satisfaction of certain performance and market conditions. These conditions are evaluated at each reporting period and, if the conditions have been satisfied during the reporting period, the number of contingently issuable shares are included in the computation of diluted earnings per share.
The following shares have been excluded from the calculation of diluted earnings per share because they are anti-dilutive, or in the case of contingently issuable performance share units, are not probable of issuance:
•The additional 2.4 million and 2.3 million common shares that would result from the conversion of the Company’s 5.75
•The additional 1.7 9.0
17
•Outstanding options to purchase 11 56.94 76.63
•The effect of 60 thousand contingently issuable performance shares granted during 2026 for the three months ended March 31, 2026.
•The effect of 797,422 common shares related to forward sales agreements under the Company's ATM Program that have not settled for the three months ended March 31, 2026.
11. Retirement of Executive Vice President and Chief Investment Officer
12. Equity Incentive Plans
The Company issues equity awards under the 2016 Equity Incentive Plan, which may be in the form of restricted common shares, restricted share units, performance share units or other share-based awards. Under the 2016 Equity Incentive Plan, an aggregate of 5,950,000 common shares may be granted. At March 31, 2026, there were 1,688,595 shares available for issuance under the 2016 Equity Incentive Plan.
Nonvested Shares
A summary of the Company’s nonvested share activity and related information is as follows:
| Number of shares | Weighted avg. grant date fair value | Weighted avg. life remaining | |||||||||||||||
| Outstanding at December 31, 2025 | $ | ||||||||||||||||
| Granted | |||||||||||||||||
| Vested | ( | ||||||||||||||||
| Outstanding at March 31, 2026 | $ | ||||||||||||||||
The holders of nonvested shares have voting rights and receive dividends from the date of grant. The fair value of the nonvested shares that vested was $16.9 million and $11.8 million for the three months ended March 31, 2026 and 2025, respectively. Expense recognized related to nonvested shares and included in "General and administrative expense" in the accompanying consolidated statements of income and comprehensive income was $2.1 million and $1.9 million for the three months ended March 31, 2026 and 2025, respectively. Expense related to nonvested shares and included in retirement and severance expense in the accompanying consolidated statements of income and comprehensive income was $0.4 million for three months ended March 31, 2026. At March 31, 2026, unamortized share-based compensation expense related to nonvested shares was $19.5 million.
Nonvested Performance Share Units
A summary of the Company's nonvested performance share unit activity and related information is as follows:
| Target Number of Performance Share Units | Weighted avg. grant date fair value (1) | Weighted avg. life remaining | |||||||||||||||
| Outstanding at December 31, 2025 | $ | ||||||||||||||||
| Granted | |||||||||||||||||
| Vested (2) | ( | ||||||||||||||||
Outstanding at March 31, 2026 | $ | ||||||||||||||||
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(1) The grant date fair value was determined utilizing (i) a Monte Carlo simulation model to generate an estimate of the Company's future share price over the three-year performance period for performance share units based on the Company's Total Shareholder Return (TSR) performance further described below and (ii) the Company's grant date fair value for performance share units based on the Company's estimated Compounded Annual Growth Rate (CAGR) in AFFO per share over the three-year performance period.
(2) The achievement of the performance conditions for the performance share units granted during the year ended December 31, 2023 resulted in a performance payout percentage of 250 % for both the Company's TSR relative to the TSRs of the Company's peer group companies and the Company's TSR relative to the TSRs of companies in the MSCI US REIT Index. Achievement of the Company's CAGR in AFFO per share over the three-year performance period was not achieved and resulted in no pay-out. The achievement of the performance conditions and the above payout percentages resulted in the issuance of 209,238 common shares and 53,141 common shares from dividend equivalents. The fair value of the performance share units and dividend equivalents that vested was $15.2 million.
The number of common shares issuable upon settlement of the performance share units granted during the three months ended March 31, 2026, 2025 and 2024 will be based upon the Company's achievement level relative to performance measures at December 31, 2028, 2027 and 2026, respectively. The performance share units accrue dividend equivalents that are paid as additional common shares based on the Company's achievement levels and upon settlement of the performance share units. The Company's achievement level relative to the performance measures is assigned a specific payout percentage for each of these years, which is multiplied by a target number of performance share units.
| TSR vs. Triple-Net Peer Group | TSR vs. MSCI US REIT Index | CAGR in AFFO per share growth | ||||||
| % | % | % | ||||||
The performance share units based on relative TSR performance have market conditions and are valued using a Monte Carlo simulation model on the grant date, which resulted in a grant date fair value of approximately $5.4 million and $6.3 million for the three months ended March 31, 2026 and 2025, respectively. The estimated fair value is amortized to expense over the three-year performance periods, which end on December 31, 2028, 2027 and 2026 for performance share units granted in 2026, 2025 and 2024, respectively. The following assumptions were used in the Monte Carlo simulation for computing the grant date fair value of the performance share units with a market condition for the three months ended March 31, 2026: risk-free interest rate of 3.6 %, volatility factors in the expected market price of the Company's common shares of 22 % and an expected life of approximately three years .
The performance share units based on growth in AFFO per share have a performance condition. The probability of achieving the performance condition is assessed at each reporting period. If it is deemed probable that the performance condition will be met, compensation cost will be recognized based on the closing price per share of the Company's common shares on the date of the grant multiplied by the number of awards expected to be earned. If it is deemed that it is not probable that the performance condition will be met, the Company will discontinue the recognition of compensation cost and any compensation cost previously recorded will be reversed. At March 31, 2026, achievement of the performance condition was deemed probable for the performance share units granted during the three months ended March 31, 2026 and 2025 with an expected payout percentage of 132 % and 157 %, respectively, which resulted in grant date fair values of approximately $1.7 million and $1.9 million, respectively. Achievement of the performance condition for the performance share units granted during the three months ended March 31, 2024 was deemed not probable at March 31, 2026.
Expense recognized related to performance share units and included in "General and administrative expense" in the accompanying consolidated statements of income and comprehensive income was $1.4 0.6 million for the three months ended March 31, 2026. At March 31, 2026, unamortized share-based compensation expense related to nonvested performance share units was $11.3 million.
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Restricted Share Units
A summary of the Company’s restricted share unit activity and related information is as follows:
| Number of shares | Weighted avg. grant date fair value | Weighted avg. life remaining | |||||||||||||||
| Outstanding at December 31, 2025 | $ | ||||||||||||||||
| Granted | |||||||||||||||||
| Vested | |||||||||||||||||
| Outstanding at March 31, 2026 | $ | ||||||||||||||||
The holders of restricted share units receive dividend equivalents from the date of grant. Total expense recognized related to shares issued to non-employee Trustees and included in "General and administrative expense" in the accompanying consolidated statements of income and comprehensive income was $0.6 million and $0.5 million for the three months ended March 31, 2026 and 2025, respectively. At March 31, 2026, unamortized share-based compensation expense related to restricted share units was $0.4 million.
13. Operating Leases
The Company’s real estate investments are leased under operating leases. In addition to its lessor arrangements on its real estate investments, as of March 31, 2026 and December 31, 2025, the Company was lessee in 50 one of the Company's tenants, who is also a subtenant under certain ground leases, is being recognized on a cash basis. In addition, two of the Company's ground leases do not currently have subtenants. In the event a tenant fails to pay the ground lease rent or if the property does not have a subtenant, the Company is primarily responsible for the payment, assuming the Company does not sell or re-tenant the property.
The following table summarizes rental revenue, including sublease arrangements and lease costs, for the three months ended March 31, 2026 and 2025 (in thousands):
| Three Months Ended March 31, | |||||||||||||||||
| Classification | 2026 | 2025 | |||||||||||||||
| Lease revenue | |||||||||||||||||
| Operating leases | Rental revenue | $ | $ | ||||||||||||||
| Sublease income - operating ground leases | Rental revenue | ||||||||||||||||
| Lease costs | |||||||||||||||||
| Operating ground lease cost | Property operating expense | $ | $ | ||||||||||||||
| Operating office lease cost | General and administrative expense | ||||||||||||||||
14. Segment Information
The Company groups its investments into two reportable operating segments: Experiential and Education. The Company’s segment structure reflects the financial information and reports used by the Company’s management team, specifically its chief operating decision maker (CODM), to make decisions regarding the Company’s business, including resource allocation and performance assessments. The Company’s CODM is its Chairman, President and Chief Executive Officer. The CODM uses Total Assets and Net Operating Income (NOI) before unallocated items by segment to assess and allocate resources. NOI is calculated as total revenue (consisting of rental revenue, other income and mortgage and other financing income) less property operating expense and other expense.
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The financial information summarized below is presented by reportable operating segment (in thousands):
| Balance Sheet Data: | ||||||||||||||
| As of March 31, 2026 | ||||||||||||||
| Experiential | Education | Corporate/Unallocated | Consolidated | |||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||
| As of December 31, 2025 | ||||||||||||||
| Experiential | Education | Corporate/Unallocated | Consolidated | |||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||
| Operating Data: | ||||||||||||||
| Three Months Ended March 31, 2026 | ||||||||||||||
| Experiential | Education | Corporate/Unallocated | Consolidated | |||||||||||
| Rental revenue | $ | $ | $ | $ | ||||||||||
| Other income | ||||||||||||||
Mortgage and other financing income | ||||||||||||||
| Total revenue | ||||||||||||||
Property operating expense | ||||||||||||||
| Other expense | ||||||||||||||
Total investment expenses | ||||||||||||||
| Net operating income - before unallocated items | ( | |||||||||||||
| Reconciliation to Consolidated Statements of Income and Comprehensive Income: | ||||||||||||||
| General and administrative expense | ( | |||||||||||||
| Retirement and severance expense | ( | |||||||||||||
| Transaction costs | ( | |||||||||||||
| (Provision) benefit for credit losses, net | ||||||||||||||
| Depreciation and amortization | ( | |||||||||||||
| Gain on real estate transactions | ||||||||||||||
| Interest expense, net | ( | |||||||||||||
| Equity in loss from joint ventures | ( | |||||||||||||
| Income tax expense | ( | |||||||||||||
| Net income | ||||||||||||||
| Preferred dividend requirements | ( | |||||||||||||
| Net income available to common shareholders of EPR Properties | $ | |||||||||||||
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| Three Months Ended March 31, 2025 | ||||||||||||||
| Experiential | Education | Corporate/Unallocated | Consolidated | |||||||||||
| Rental revenue | $ | $ | $ | $ | ||||||||||
| Other income | ||||||||||||||
Mortgage and other financing income | ||||||||||||||
| Total revenue | ||||||||||||||
Property operating expense | ||||||||||||||
| Other expense | ||||||||||||||
Total investment expenses | ||||||||||||||
| Net operating income - before unallocated items | ( | |||||||||||||
| Reconciliation to Consolidated Statements of Income and Comprehensive Income: | ||||||||||||||
| General and administrative expense | ( | |||||||||||||
| Transaction costs | ( | |||||||||||||
| (Provision) benefit for credit losses, net | ||||||||||||||
| Depreciation and amortization | ( | |||||||||||||
| Gain on real estate transactions | ||||||||||||||
| Interest expense, net | ( | |||||||||||||
| Equity in loss from joint ventures | ( | |||||||||||||
| Income tax expense | ( | |||||||||||||
| Net income | ||||||||||||||
| Preferred dividend requirements | ( | |||||||||||||
| Net income available to common shareholders of EPR Properties | $ | |||||||||||||
15. Other Commitments and Contingencies
As of March 31, 2026, the Company had 16 development projects with commitments to fund an aggregate of approximately $37.5 million. The Company advances development costs in periodic draws. If the Company determines that construction is not being completed or progressing in accordance with the terms of the development agreement, it can discontinue funding construction draws. The Company has agreed to lease the properties to the operators at pre-determined rates upon completion of construction.
The Company has certain commitments related to its mortgage notes investments that it may be required to fund in the future. The Company is generally obligated to fund these commitments at the request of the borrower or upon the occurrence of specified events outside of its direct control. As of March 31, 2026, the Company had two mortgage notes with commitments totaling approximately $46.7 million. If commitments are funded in the future, the Company will charge interest at rates consistent with the existing investments.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q of EPR Properties (the “Company”, “EPR”, “we” or “us”). The forward-looking statements included in this discussion and elsewhere in this Quarterly Report on Form 10-Q involve risks and uncertainties, including anticipated financial performance, anticipated liquidity and capital resources, business prospects, industry trends, shareholder returns, performance of leases by tenants, performance on loans to customers and other matters, which reflect management's best judgment based on factors currently known. See “Cautionary Statement Concerning Forward-Looking Statements,” which is incorporated herein by reference. Actual results and experience could differ materially from the anticipated results and other expectations expressed in our forward-looking statements as a result of a number of factors, including but not limited to those discussed in Part II, Item 1A - "Risk Factors" in this Quarterly Report on Form 10-Q and Item 1A - "Risk Factors" in our 2025 Annual Report.
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Overview
Business
Our primary long-term business objective is to enhance shareholder value by achieving predictable and increasing Funds From Operations As Adjusted ("FFOAA"), Adjusted Funds From Operations ("AFFO") and dividends per share. FFOAA and AFFO are non-GAAP financial measures and are defined and reconciled below in the section titled "Non-GAAP Financial Measures." Our growth strategy focuses on acquiring or developing experiential properties in which we maintain a depth of knowledge and relationships, and which we believe offer sustained performance through most economic cycles.
Our investment portfolio includes ownership of and long-term mortgages on Experiential and Education properties. Substantially all of our owned single-tenant properties are leased pursuant to long-term, triple-net leases under which the tenants typically pay all operating expenses of the property. Tenants at our owned multi-tenant properties are typically required to pay common area maintenance charges to reimburse us for their pro-rata portion of these costs.
We believe our management’s knowledge and industry relationships have facilitated opportunities for us to acquire, finance and lease properties. Our strategy has been to structure leases and financings to ensure a positive spread between our cost of capital and the rentals or interest paid by our tenants. To mitigate initial lease-up risks and support a predictable income stream, we typically acquire or develop single-tenant properties that are pre-leased under long-term leases. We have also entered into certain joint ventures. We intend to continue entering into some or all of these types of arrangements in the foreseeable future.
Historically, our primary challenges have been locating suitable properties, negotiating favorable lease or financing terms (on new or existing properties), managing our expanding portfolio and having a cost of capital that allows us to grow our investments in new properties beyond those funded primarily with free cash and disposition proceeds.
As of March 31, 2026, our total assets were approximately $5.7 billion (after accumulated depreciation of approximately $1.8 billion) with properties located in 42 states and Canada. Our total investments (a non-GAAP financial measure) were approximately $7.1 billion as of March 31, 2026. See "Non-GAAP Financial Measures" for the reconciliation of "Total assets" in the consolidated balance sheet to total investments at March 31, 2026 and December 31, 2025. We group our investments into two reportable segments, Experiential and Education. As of March 31, 2026, our Experiential investments comprised $6.7 billion, or 94%, and our Education investments comprised $0.4 billion, or 6%, of our total investments.
As of March 31, 2026, our Experiential portfolio (excluding property under development, undeveloped land inventory and two joint venture properties) consisted of the following property types (owned or financed):
•148 theatre properties;
•61 eat & play properties (including seven theatres located in entertainment districts);
•26 attraction properties;
•11 ski properties;
•four experiential lodging properties;
•28 fitness & wellness properties;
•one gaming property; and
•one cultural property.
As of March 31, 2026, our wholly-owned Experiential real estate portfolio consisted of approximately 19.2 million square feet, was 99% leased or operated and included $23.4 million in property under development and $20.2 million in undeveloped land inventory.
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As of March 31, 2026, our Education portfolio consisted of the following property types (owned or financed):
•46 early childhood education center properties; and
•nine private school properties.
As of March 31, 2026, our wholly-owned Education real estate portfolio consisted of approximately 1.1 million square feet and was 100% leased.
The combined wholly-owned portfolio consisted of 20.3 million square feet and was 99% leased or operated.
Geopolitical and International Trade Environment
Recent geopolitical events and macroeconomic trends, including evolving global armed conflicts and significant changes in U.S. and international trade policies, have produced heightened uncertainty. This uncertainty could weaken economic conditions, contribute to inflation, increase borrowing costs and decrease consumer spending. Tariff increases and supply chain disruptions may impact our business by increasing the cost of construction materials, which in turn may lead to higher development and renovation expenses. This increase in costs may result in reduced yields on development projects and potentially delay or result in cancelled planned projects. Additionally, our tenants and their customers are similarly experiencing these uncertainties, which could negatively affect their financial resources and ability to satisfy their obligations to us.
Operating Results
Our total revenue, net income available to common shareholders per diluted share and FFOAA per diluted share are detailed below for the three months ended March 31, 2026 and 2025 (in millions, except per share information):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | % Change | |||||||||
| Total revenue | $ | 181.3 | $ | 175.0 | 3.6 | % | |||||
| Net income available to common shareholders per diluted share | $ | 0.74 | $ | 0.78 | (5.1) | % | |||||
| FFOAA per diluted share | $ | 1.26 | $ | 1.19 | 5.9 | % | |||||
The major factors impacting our results for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025 were as follows:
•The effect of investments and dispositions that occurred in 2026 and 2025;
•The recognition of lower other income and other expense primarily related to having fewer operating properties for the three months ended March 31, 2026 versus the three months ended March 31, 2025;
•The recognition of higher retirement and severance expense for the three months ended March 31, 2026 versus the three months ended March 31, 2025;
•The increase in the benefit for credit losses, net for the three months ended March 31, 2026 versus the three months ended March 31, 2025; and
•The recognition of lower gain on real estate transactions for the three months ended March 31, 2026 versus the three months ended March 31, 2025.
For further detail on items impacting our operating results, see section below titled "Results of Operations." FFOAA is a non-GAAP financial measure. For the definitions and further details on the calculations of FFOAA and certain other non-GAAP financial measures, see the section below titled "Non-GAAP Financial Measures."
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related notes. In preparing these financial statements, management has made its best estimates and assumptions that affect the reported assets and liabilities and the reported amounts of revenues and expenses during the reporting period. The most significant assumptions and estimates relate to the valuation of real estate, accounting for real estate acquisitions, assessing the
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collectability of receivables and the credit loss related to mortgage and other notes receivable. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates. A summary of critical accounting policies and estimates is included in our 2025 Annual Report. For the three months ended March 31, 2026, there were no changes to critical accounting policies.
Recent Developments
Investment Spending
Our investment spending during the three months ended March 31, 2026 and 2025 totaled $51.3 million and $37.7 million, respectively, and is detailed below (in thousands):
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||
| Operating Segment | Total Investment Spending | New Development | Re-development | Asset Acquisition | Mortgage Notes or Notes Receivable | Investment in Joint Ventures | |||||||||||||||||
| Experiential: | |||||||||||||||||||||||
| Theatres | $ | 16 | $ | — | $ | 16 | $ | — | $ | — | $ | — | |||||||||||
| Eat & Play | 11,901 | 11,869 | 32 | — | — | — | |||||||||||||||||
| Experiential Lodging | 571 | — | — | 501 | 70 | ||||||||||||||||||
| Fitness & Wellness | 38,843 | — | 2,983 | 34,485 | 1,375 | — | |||||||||||||||||
| Total Experiential | 51,331 | 11,869 | 3,031 | 34,986 | 1,375 | 70 | |||||||||||||||||
| Education: | |||||||||||||||||||||||
| Total Education | — | — | — | — | — | — | |||||||||||||||||
| Total Investment Spending | $ | 51,331 | $ | 11,869 | $ | 3,031 | $ | 34,986 | $ | 1,375 | $ | 70 | |||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||
| Operating Segment | Total Investment Spending | New Development | Re-development | Asset Acquisition | Mortgage Notes or Notes Receivable | Investment in Joint Ventures | |||||||||||||||||
| Experiential: | |||||||||||||||||||||||
| Eat & Play | $ | 14,806 | $ | 14,180 | $ | 626 | $ | — | $ | — | $ | — | |||||||||||
| Attractions | 14,281 | — | — | 14,281 | — | — | |||||||||||||||||
| Experiential Lodging | 740 | — | — | — | — | 740 | |||||||||||||||||
| Fitness & Wellness | 7,850 | — | 7,552 | — | 298 | — | |||||||||||||||||
| Total Experiential | 37,677 | 14,180 | 8,178 | 14,281 | 298 | 740 | |||||||||||||||||
| Education: | |||||||||||||||||||||||
| Total Education | — | — | — | — | — | — | |||||||||||||||||
| Total Investment Spending | $ | 37,677 | $ | 14,180 | $ | 8,178 | $ | 14,281 | $ | 298 | $ | 740 | |||||||||||
The above amounts include $0.4 million and $1.5 million in capitalized interest and $46 thousand and $39 thousand in other general and administrative direct project costs for the three months ended March 31, 2026 and 2025, respectively. Excluded from the table above is approximately $0.2 million and $1.3 million of maintenance capital expenditures for the three months ended March 31, 2026 and 2025, respectively.
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Subsequent to quarter-end, we completed the acquisition of six U.S. attraction properties as part of our previously announced acquisition of a portfolio of seven attraction properties from Six Flags Entertainment Corporation. These six properties comprise the substantial majority of this $315.0 million portfolio investment, are located throughout the U.S. will be leased to and operated by Enchanted Parks (formerly Innovative Attraction Management) pursuant to a long-term triple-net master lease. La Ronde, the one park located in Canada, will be leased to and operated by La Ronde Operations, Inc. pursuant to a long-term triple-net lease following the closing of the transaction, which is expected to occur in the second quarter of 2026 subject to customary closing conditions.
Mortgage Note Receivable Conversion
During the three months ended March 31, 2026, we exercised our purchase option to convert a $70.0 million mortgage note receivable secured by an experiential lodging property in Tennessee into a wholly-owned rental property subject to a long-term triple-net lease. In connection with this conversion, we recognized a gain on real estate transactions of approximately $1.0 million and a benefit for credit losses of approximately $1.3 million.
Chief Investment Officer Transition
On March 2, 2026, our Executive Vice President and Chief Investment Officer, Greg Zimmerman, retired from his position. The role of Executive Vice President and Chief Investment Officer has been assumed by Ben Fox, who joined us in August of 2025. During the three months ended March 31, 2026, we recorded retirement and severance expense related to Mr. Zimmerman's retirement totaling $1.4 million, which included cash payments totaling $0.4 million and accelerated vesting of nonvested shares totaling $1.0 million.
Capital Markets Activities
During the three months ended March 31, 2026, we entered into a forward sales agreement pursuant to our "at-the-market" offering program ("ATM Program") to sell an aggregate of 797,422 common shares for initial gross proceeds of $47.5 million upon settlement, or an average forward price of $59.52 per share, subject to adjustment. We have the option to settle the outstanding common shares any time before the maturity of the forward sales agreement on March 1, 2027, subject to customary closing conditions, for the initial gross proceeds as adjusted for payment of commissions and applicable dividends as well as daily adjustment based on the overnight bank borrowing rate less a spread. As of March 31, 2026, we have $352.5 million of remaining capacity under our ATM Program.
Results of Operations
Three months ended March 31, 2026 compared to the three months ended March 31, 2025
Analysis of Revenue
The following table summarizes our total revenue (dollars in thousands):
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | Change | ||||||||||||
| Minimum rent (1) | $ | 143,030 | $ | 133,841 | $ | 9,189 | ||||||||
| Percentage rent (2) | 2,116 | 3,257 | (1,141) | |||||||||||
| Straight-line rent | 3,490 | 3,397 | 93 | |||||||||||
| Tenant reimbursements | 6,079 | 5,421 | 658 | |||||||||||
| Other rental revenue | 470 | 443 | 27 | |||||||||||
| Total rental revenue | $ | 155,185 | $ | 146,359 | $ | 8,826 | ||||||||
| Other income (3) | 10,070 | 11,636 | (1,566) | |||||||||||
| Mortgage and other financing income (4) | 15,997 | 17,038 | (1,041) | |||||||||||
| Total revenue | $ | 181,252 | $ | 175,033 | $ | 6,219 | ||||||||
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(1) For the three months ended March 31, 2026 compared to the three months ended March 31, 2025, the increase in minimum rent resulted from an increase of $6.6 million related to property acquisitions and developments completed in 2026 and 2025. In addition, there was a net increase in minimum rent of $3.8 million related to existing properties. This was partially offset by a decrease in rental revenue of $1.2 million from property dispositions.
During the three months ended March 31, 2026, we renewed two lease agreements on a ski property. We had no change in rental rates and paid no leasing commissions with respect to these lease renewals.
(2) The decrease in percentage rent (i.e., amounts above base rent) for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was due primarily to lower percentage rent recognized from one of our early childhood education center tenants.
(3) The decrease in other income for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 related primarily to a decrease in operating income from two operating theatre properties that were sold during the three months ended March 31, 2025.
(4) The decrease in mortgage and other financing income for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 related to $1.8 million of participating interest income recognized during the three months ended March 31, 2025, which related to amounts under review with one borrower regarding the calculation of participating interest income from prior periods that was resolved during the three months ended March 31, 2025. This was partially offset by interest income on new mortgage notes receivable funded in 2025 and from additional investments on existing mortgage note receivables in 2025 and 2026.
Analysis of Expenses and Other Line Items
The following table summarizes our expenses and other line items (dollars in thousands):
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | Change | ||||||||||||
| Property operating expense | $ | 15,353 | $ | 15,171 | $ | 182 | ||||||||
| Other expense (1) | 10,989 | 12,611 | (1,622) | |||||||||||
| General and administrative expense | 14,242 | 14,024 | 218 | |||||||||||
| Retirement and severance expense (2) | 1,423 | — | 1,423 | |||||||||||
| Transaction costs | 293 | 567 | (274) | |||||||||||
| Provision (benefit) for credit losses, net (3) | (5,597) | (652) | (4,945) | |||||||||||
| Depreciation and amortization (4) | 44,957 | 41,089 | 3,868 | |||||||||||
| Gain on real estate transactions (5) | 1,027 | 9,384 | (8,357) | |||||||||||
| Interest expense, net (6) | 34,763 | 33,021 | 1,742 | |||||||||||
| Equity in loss from joint ventures | 2,632 | 2,647 | (15) | |||||||||||
| Income tax expense | 614 | 136 | 478 | |||||||||||
| Preferred dividend requirements | 6,032 | 6,032 | — | |||||||||||
(1) The decrease in other expense for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 related primarily to a decrease in operating expense from two operating theatre properties that were sold during the three months ended March 31, 2025.
(2) Retirement and severance expense for the three months ended March 31, 2026 related to the retirement of our former Executive Vice President and Chief Investment Officer. There was no retirement and severance expense for the three months ended March 31, 2025.
(3) The change in provision (benefit) for credit losses, net for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was due to a credit loss benefit of $1.3 million recognized in connection
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with the conversion of a $70.0 million mortgage note receivable to a wholly-owned rental property and changes in our estimated current expected credit losses primarily due to improved property level performance and improved macro-economic conditions.
(4) The increase in depreciation and amortization for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 resulted from acquisitions and developments completed in 2026 and 2025. This was partially offset by property dispositions that occurred during 2025.
(5) The gain on real estate transactions for the three months ended March 31, 2026 related to the conversion of a $70.0 million mortgage note receivable into a wholly-owned rental property. The gain on real estate transactions for the three months ended March 31, 2025 related to the sale of one vacant theatre property, two operating theatre properties, one vacant early childhood education center and 10 early childhood education centers.
(6) The increase in interest expense, net for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 resulted from a decrease in capitalized interest and an increase in average borrowings. This was offset by an increase in interest income recognized on short-term investments.
Liquidity and Capital Resources
Cash and cash equivalents were $68.5 million at March 31, 2026. In addition, we had restricted cash of $6.1 million at March 31, 2026, which related primarily to escrow deposits required for property management, mortgage note and debt agreements or held for potential acquisitions, developments and redevelopments.
Mortgage Debt, Senior Notes and Unsecured Revolving Credit Facility
At March 31, 2026, we had total debt outstanding of $2.9 billion, of which 99% was unsecured.
At March 31, 2026, we had outstanding $2.75 billion in aggregate principal amount of unsecured senior notes (excluding the private placement notes discussed below) ranging in interest rates from 3.60% to 4.95%. The notes contain various covenants, including: (i) a limitation on incurrence of any debt that would cause the ratio of our debt to adjusted total assets to exceed 60%; (ii) a limitation on incurrence of any secured debt that would cause the ratio of secured debt to adjusted total assets to exceed 40%; (iii) a limitation on incurrence of any debt that would cause our debt service coverage ratio to be less than 1.5 times; and (iv) the maintenance at all times of our total unencumbered assets such that they are not less than 150% of our outstanding unsecured debt. Interest payments on our unsecured senior notes are due semiannually.
At March 31, 2026, we had no balance outstanding under our $1.0 billion unsecured revolving credit facility. Our unsecured revolving credit facility is governed by the terms of our Fourth Amended, Restated and Consolidated Credit Agreement (the "Amended Credit Agreement"). The facility will mature on October 2, 2028. We have two options to extend the maturity date of this credit facility by an additional six months each (for a total of 12 months), subject to paying additional fees and the absence of any default. The Amended Credit Agreement provides for an initial maximum principal amount of borrowing availability of $1.0 billion, which includes a $100.0 million letter-of-credit subfacility and a $300.0 million foreign currency revolving credit subfacility. The credit facility contains an "accordion" feature under which we may increase the total maximum principal amount available by $1.0 billion, to a total of $2.0 billion, subject to lender consent. The unsecured revolving credit facility bears interest at a floating rate of SOFR plus 1.05% (based on our unsecured debt ratings and with a SOFR floor of zero), which was 4.68% at March 31, 2026. Additionally, the facility fee on the revolving credit facility is 0.25%.
At March 31, 2026, we had outstanding $179.6 million of Series B senior unsecured notes that were issued in a private placement transaction and are due on August 22, 2026. At March 31, 2026, the interest rate for these Series B private placement notes was 4.56%.
Our unsecured revolving credit facility and the private placement notes contain financial covenants or restrictions that limit our levels of consolidated debt, secured debt, investments outside certain categories, share repurchases and dividend distributions and require us to meet certain coverage levels for fixed charges and debt
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service. Additionally, these debt instruments contain cross-default provisions if we default under other indebtedness exceeding certain amounts. Those cross-default thresholds vary from $50.0 million to $75.0 million, depending upon the debt instrument. We were in compliance with all financial and other covenants under our consolidated debt instruments at March 31, 2026.
In 2024, two experiential lodging properties located in St. Pete Beach, Florida, in which we hold unconsolidated equity investments, were severely damaged by two hurricanes. We continue to work in good faith with our joint venture partners, the non-recourse debt provider and the insurance companies to identify a path forward in which we expect to result in the eventual removal of the unconsolidated equity investments in these experiential lodging properties and the related non-recourse debt from our portfolio. Accordingly, we determined that our investment in these joint ventures had no fair value and was not recoverable, and during the year ended December 31, 2024, we recognized $12.1 million in other-than-temporary impairment charges on joint ventures related to these equity investments. There can be no assurance as to the ultimate outcome of our negotiations regarding our exit from these joint ventures.
Our principal investing activities are acquiring, developing and financing Experiential properties. These investing activities have generally been financed with proceeds from senior unsecured note and equity offerings. Our unsecured revolving credit facility and cash from operations are also used to finance the acquisition or development of properties, and to provide mortgage financing. We have and expect to continue to issue debt securities in public or private offerings. We have and may in the future assume mortgage debt in connection with property acquisitions or incur new mortgage debt on existing properties. We may also issue equity securities in connection with acquisitions. Continued growth of our real estate investments and mortgage financing portfolios will depend in part on our continued ability to access funds through additional borrowings and securities offerings and, to a lesser extent, our ability to assume debt in connection with property acquisitions. We may also fund investments with the proceeds from asset dispositions.
Capital Markets
As discussed above, during the three months ended March 31, 2026, we entered into a forward sales agreement pursuant to our "at-the-market" offering program ("ATM Program") to sell an aggregate of 797,422 common shares for initial gross proceeds of $47.5 million upon settlement, or an average forward price of $59.52 per share, subject to adjustment. We have the option to settle the outstanding common shares any time before the maturity of the forward sales agreement on March 1, 2027, subject to customary closing conditions, for the initial gross proceeds as adjusted for payment of commissions and applicable dividends as well as daily adjustment based on the overnight bank borrowing rate less a spread. As of March 31, 2026, we have $352.5 million of remaining capacity under our ATM Program.
Liquidity Requirements
Short-term liquidity requirements consist primarily of normal recurring corporate operating expenses, debt service requirements and distributions to shareholders. We have historically met these requirements primarily through cash provided by operating activities. The table below summarizes our cash flows (dollars in thousands):
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net cash provided by operating activities | $ | 113,367 | $ | 99,369 | ||||||||||
| Net cash (used) provided by investing activities | (50,865) | 42,397 | ||||||||||||
| Net cash used by financing activities | (86,471) | (150,490) | ||||||||||||
Commitments
As of March 31, 2026, we had 16 development projects with commitments to fund an aggregate of approximately $37.5 million, of which approximately $20.9 million is expected to be funded in the remainder of 2026. Development costs are advanced by us in periodic draws. If we determine that construction is not being completed in accordance with the terms of the development agreement, we may discontinue funding construction draws. We have agreed to lease the properties to the operators at pre-determined rates upon completion of construction.
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We have certain commitments related to our mortgage notes investments that we may be required to fund in the future. We are generally obligated to fund these commitments at the request of the borrower or upon the occurrence of events outside of our direct control. As of March 31, 2026, we had two mortgage notes with commitments totaling approximately $46.7 million, all of which is expected to be funded in the remainder of 2026. If commitments are funded in the future, interest will be charged at rates consistent with the existing investments.
Liquidity Analysis
We currently anticipate that our cash on hand, cash from operations, funds available under our unsecured revolving credit facility and proceeds from asset dispositions will provide adequate liquidity to meet our financial commitments, including the amounts needed to fund our operations, make recurring debt service payments, allow distributions to our shareholders and avoid corporate level federal income or excise tax in accordance with REIT Internal Revenue Code requirements.
Long-term liquidity requirements consist primarily of debt maturities. We have $629.6 million of debt maturities due in 2026. We currently believe that we will be able to repay, extend, refinance or otherwise settle our debt maturities as the debt comes due and that we will be able to fund our remaining commitments, as necessary. However, there can be no assurance that additional financing or capital will be available, or that terms will be acceptable or advantageous to us.
Our primary use of cash after paying operating expenses, debt service, distributions to shareholders and funding existing commitments is in growing our investment portfolio through acquiring, developing and financing additional properties. We expect to finance these investments with cash on hand, excess cash flow, proceeds from asset dispositions or borrowings under our unsecured revolving credit facility as well as debt and equity financing alternatives. If we borrow the maximum amount available under our $1.0 billion unsecured revolving credit facility, there can be no assurance that we will be able to obtain additional or substitute investment financing. We may also assume mortgage debt in connection with property acquisitions. The availability and terms of any such financing or sales will depend upon market and other conditions.
Capital Structure
We believe that our shareholders are best served by a conservative capital structure. Therefore, we seek to maintain a conservative debt level on our balance sheet as measured primarily by our net debt to adjusted EBITDAre ratio (see "Non-GAAP Financial Measures" for definitions). Because adjusted EBITDAre, as defined, does not include the annualization of investments put in service, acquired or disposed of during the quarter, or the potential earnings on property under development, the annualization of percentage rent and adjustments for other items, we also look at an additional ratio that reflects these adjustments. We also seek to maintain conservative interest, fixed charge, debt service coverage and net debt to gross asset ratios (see "Non-GAAP Financial Measures" for calculations).
Non-GAAP Financial Measures
Funds From Operations (FFO), Funds From Operations As Adjusted (FFOAA) and Adjusted Funds From Operations (AFFO)
The National Association of Real Estate Investment Trusts (“NAREIT”) developed FFO as a relative non-GAAP financial measure of performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. Pursuant to the definition of FFO by the Board of Governors of NAREIT, we calculate FFO as net income available to common shareholders, computed in accordance with GAAP, excluding gains and losses from real estate transactions and impairment losses on real estate, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships, joint ventures and other affiliates. Adjustments for unconsolidated partnerships, joint ventures and other affiliates are calculated to reflect FFO on the same basis. We have calculated FFO for all periods presented in accordance with this definition.
In addition to FFO, we present FFOAA and AFFO. FFOAA is presented by adding to FFO retirement and severance expense, transaction costs, provision (benefit) for credit losses, net, costs associated with loan refinancing or payoff, preferred share redemption costs and impairment of operating lease right-of-use assets and subtracting sale
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participation income, gain on insurance recovery and deferred income tax (benefit) expense. AFFO is presented by adding to FFOAA non-real estate depreciation and amortization, deferred financing fees amortization and share-based compensation expense to management and Trustees, and subtracting amortization of above and below market leases, net and tenant allowances, maintenance capital expenditures (including second-generation tenant improvements and leasing commissions), straight-lined rental revenue (removing the impact of straight-line ground sublease expense), the non-cash portion of mortgage and other financing income and the allocated share of joint venture non-cash items.
FFO, FFOAA and AFFO are widely used measures of the operating performance of real estate companies and are provided here as supplemental measures to GAAP net income available to common shareholders and earnings per share, and management provides FFO, FFOAA and AFFO herein because it believes this information is useful to investors in this regard. FFO, FFOAA and AFFO are non-GAAP financial measures. FFO, FFOAA and AFFO do not represent cash flows from operations as defined by GAAP and are not indicative that cash flows are adequate to fund all cash needs and are not to be considered alternatives to net income or any other GAAP measure as a measurement of the results of our operations or our cash flows or liquidity as defined by GAAP. It should also be noted that not all REITs calculate FFO, FFOAA and AFFO the same way so comparisons with other REITs may not be meaningful.
The following table summarizes our FFO, FFOAA and AFFO including per share amounts for FFO and FFOAA, for the three months ended March 31, 2026 and 2025 and reconciles such measures to net income available to common shareholders, the most directly comparable GAAP measure (unaudited, in thousands, except per share information):
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| FFO: | ||||||||
| Net income available to common shareholders of EPR Properties | $ | 56,578 | $ | 59,771 | ||||
| Gain on real estate transactions | (1,027) | (9,384) | ||||||
| Real estate depreciation and amortization | 44,797 | 40,932 | ||||||
| Allocated share of joint venture depreciation | 996 | 1,036 | ||||||
| FFO available to common shareholders of EPR Properties | $ | 101,344 | $ | 92,355 | ||||
| FFO available to common shareholders of EPR Properties | $ | 101,344 | $ | 92,355 | ||||
| Add: Preferred dividends for Series C preferred shares | 1,938 | 1,938 | ||||||
| Add: Preferred dividends for Series E preferred shares | 1,938 | 1,938 | ||||||
| Diluted FFO available to common shareholders of EPR Properties | $ | 105,220 | $ | 96,231 | ||||
| FFOAA: | ||||||||
| FFO available to common shareholders of EPR Properties | $ | 101,344 | $ | 92,355 | ||||
| Retirement and severance expense | 1,423 | — | ||||||
| Transaction costs | 293 | 567 | ||||||
| Provision (benefit) for credit losses, net | (5,597) | (652) | ||||||
| Deferred income tax expense (benefit) | 114 | (530) | ||||||
| FFOAA available to common shareholders of EPR Properties | $ | 97,577 | $ | 91,740 | ||||
| FFOAA available to common shareholders of EPR Properties | $ | 97,577 | $ | 91,740 | ||||
| Add: Preferred dividends for Series C preferred shares | 1,938 | 1,938 | ||||||
| Add: Preferred dividends for Series E preferred shares | 1,938 | 1,938 | ||||||
| Diluted FFOAA available to common shareholders of EPR Properties | $ | 101,453 | $ | 95,616 | ||||
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| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| AFFO: | ||||||||
| FFOAA available to common shareholders of EPR Properties | $ | 97,577 | $ | 91,740 | ||||
| Non-real estate depreciation and amortization | 160 | 157 | ||||||
| Deferred financing fees amortization | 2,672 | 2,206 | ||||||
| Share-based compensation expense to management and trustees | 4,099 | 3,867 | ||||||
| Amortization of above and below market leases, net and tenant allowances | (81) | (81) | ||||||
| Maintenance capital expenditures (1) | (211) | (1,251) | ||||||
| Straight-lined rental revenue | (3,490) | (3,397) | ||||||
| Straight-lined ground sublease expense | (49) | 2 | ||||||
| Non-cash portion of mortgage and other financing income | (546) | (297) | ||||||
| AFFO available to common shareholders of EPR Properties | $ | 100,131 | $ | 92,946 | ||||
| AFFO available to common shareholders of EPR Properties | $ | 100,131 | $ | 92,946 | ||||
| Add: Preferred dividends for Series C preferred shares | 1,938 | 1,938 | ||||||
| Add: Preferred dividends for Series E preferred shares | 1,938 | 1,938 | ||||||
| Diluted AFFO available to common shareholders of EPR Properties | $ | 104,007 | $ | 96,822 | ||||
| FFO per common share: | ||||||||
| Basic | $ | 1.33 | $ | 1.22 | ||||
| Diluted | 1.31 | 1.20 | ||||||
| FFOAA per common share: | ||||||||
| Basic | $ | 1.28 | $ | 1.21 | ||||
| Diluted | 1.26 | 1.19 | ||||||
| Shares used for computation (in thousands): | ||||||||
| Basic | 76,326 | 75,804 | ||||||
| Diluted | 76,573 | 76,215 | ||||||
| Weighted average shares outstanding-diluted EPS | 76,573 | 76,215 | ||||||
| Effect of dilutive Series C preferred shares | 2,371 | 2,336 | ||||||
| Effect of dilutive Series E preferred shares | 1,672 | 1,665 | ||||||
| Adjusted weighted average shares outstanding-diluted Series C and Series E | 80,616 | 80,216 | ||||||
| Other financial information: | ||||||||
| Dividends per common share | $ | 0.900 | $ | 0.865 | ||||
(1) Includes maintenance capital expenditures and certain second-generation tenant improvements and leasing commissions.
The effect of the conversion of our convertible preferred shares is calculated using the if-converted method and the conversion, which results in the most dilution is included in the computation of per share amounts. The conversion of the 5.75% Series C cumulative convertible preferred shares and the 9.00% Series E cumulative convertible preferred shares would be dilutive to FFO, FFOAA and AFFO per share for the three months ended March 31, 2026 and 2025. Therefore, the additional common shares that would result from the conversion and the corresponding add-back of the preferred dividends declared on those shares are included in the calculation of diluted FFO and FFOAA per share and would be included in a calculation of AFFO per share.
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Net Debt and Proforma Net Debt
Net Debt represents debt (reported in accordance with GAAP) adjusted to exclude deferred financing costs, net and reduced for cash and cash equivalents. By excluding deferred financing costs, net, and reducing debt for cash and cash equivalents on hand, the result provides an estimate of the contractual amount of borrowed capital to be repaid, net of cash available to repay it. Proforma Net Debt is presented by subtracting the estimated net proceeds from forward sales agreements under our ATM Program from Net Debt. We believe both of these calculations constitute beneficial supplemental non-GAAP financial disclosures to investors in understanding our financial condition. Our method of calculating Net Debt and Proforma Net Debt may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
Gross Assets
Gross Assets represents total assets (reported in accordance with GAAP) adjusted to exclude accumulated depreciation and reduced by cash and cash equivalents. By excluding accumulated depreciation and reducing cash and cash equivalents, the result provides an estimate of the investment made by us. We believe that investors commonly use versions of this calculation in a similar manner. Our method of calculating Gross Assets may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
Net Debt to Gross Assets Ratio and Proforma Net Debt to Gross Assets Ratio
Net Debt to Gross Assets Ratio and Proforma Net Debt to Gross Assets Ratio are supplemental measures derived from non-GAAP financial measures that we use to evaluate capital structure and the magnitude of debt to gross assets. We believe that investors commonly use versions of these ratios in similar manners. Our method of calculating the Net Debt to Gross Assets Ratio and Proforma Net Debt to Gross Assets Ratio may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
EBITDAre
NAREIT developed EBITDAre as a relative non-GAAP financial measure of REITs, independent of a company's capital structure, to provide a uniform basis to measure the enterprise value of a company. Pursuant to the definition of EBITDAre by the Board of Governors of NAREIT, we calculate EBITDAre as net income, computed in accordance with GAAP, excluding interest expense (net), income tax (benefit) expense, depreciation and amortization, gains and losses on real estate transactions, impairment losses on real estate, costs associated with loan refinancing or payoff and adjustments for unconsolidated partnerships, joint ventures and other affiliates.
Management provides EBITDAre herein because it believes this information is useful to investors as a supplemental performance measure because it can help facilitate comparisons of operating performance between periods and with other REITs. Our method of calculating EBITDAre may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. EBITDAre is not a measure of performance under GAAP, does not represent cash generated from operations as defined by GAAP and is not indicative of cash available to fund all cash needs, including distributions. This measure should not be considered an alternative to net income or any other GAAP measure as a measurement of the results of our operations or cash flows or liquidity as defined by GAAP.
Adjusted EBITDAre
Management uses Adjusted EBITDAre in its analysis of the performance of the business and operations of the Company. Management believes Adjusted EBITDAre is useful to investors because it excludes various items that management believes are not indicative of operating performance, and because it is an informative measure to use in computing various financial ratios to evaluate the Company. We define Adjusted EBITDAre as EBITDAre (defined above) for the quarter excluding sale participation income, gain on insurance recovery, retirement and severance expense, transaction costs, provision (benefit) for credit losses, net, impairment losses on operating lease right-of-use assets and prepayment fees.
Our method of calculating Adjusted EBITDAre may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. Adjusted EBITDAre is not a measure of performance under GAAP, does not represent cash generated from operations as defined by GAAP and is not indicative of cash available to fund all cash needs, including distributions. This measure should not be considered as an alternative to
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net income or any other GAAP measure as a measurement of the results of our operations or cash flows or liquidity as defined by GAAP.
Net Debt to Adjusted EBITDAre Ratio and Proforma Net Debt to Adjusted EBITDAre Ratio
Net Debt to Adjusted EBITDAre Ratio and Proforma Net Debt to Adjusted EBITDAre Ratio are supplemental measures derived from non-GAAP financial measures that we use to evaluate our capital structure and the magnitude of our debt against our operating performance. We believe that investors commonly use versions of these ratios in similar manners. In addition, financial institutions use versions of these ratios in connection with debt agreements to set pricing and covenant limitations. Our method of calculating the Net Debt to Adjusted EBITDAre Ratio and Proforma Net Debt to Adjusted EBITDAre Ratio may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
Reconciliations of debt, total assets and net income (all reported in accordance with GAAP) to Net Debt, Proforma Net Debt, Gross Assets, Net Debt to Gross Assets Ratio, Proforma Net Debt to Gross Assets Ratio, EBITDAre, Adjusted EBITDAre, Net Debt to Adjusted EBITDAre Ratio and Proforma Net Debt to Adjusted EBITDAre Ratio (each of which is a non-GAAP financial measure), as applicable, are included in the following tables (unaudited, in thousands except ratios):
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| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net Debt: | |||||||||||
| Debt | $ | 2,931,377 | $ | 2,791,962 | |||||||
| Deferred financing costs, net | 23,215 | 17,630 | |||||||||
| Cash and cash equivalents | (68,465) | (20,572) | |||||||||
| Net Debt | $ | 2,886,127 | $ | 2,789,020 | |||||||
| Proforma Net Debt: | |||||||||||
| Net Debt | $ | 2,886,127 | $ | 2,789,020 | |||||||
| Estimated net proceeds from forward sales agreements (1) | (46,855) | — | |||||||||
| Proforma Net Debt | $ | 2,839,272 | $ | 2,789,020 | |||||||
| Gross Assets: | |||||||||||
| Total Assets | $ | 5,682,812 | $ | 5,532,549 | |||||||
| Accumulated depreciation | 1,756,760 | 1,595,820 | |||||||||
| Cash and cash equivalents | (68,465) | (20,572) | |||||||||
| Gross Assets | $ | 7,371,107 | $ | 7,107,797 | |||||||
| Debt to Total Assets Ratio | 52 | % | 50 | % | |||||||
| Net Debt to Gross Assets Ratio | 39 | % | 39 | % | |||||||
| Proforma Net Debt to Gross Assets Ratio | 39 | % | 39 | % | |||||||
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| EBITDAre and Adjusted EBITDAre: | |||||||||||
| Net income | $ | 62,610 | $ | 65,803 | |||||||
| Interest expense, net | 34,763 | 33,021 | |||||||||
| Income tax expense | 614 | 136 | |||||||||
| Depreciation and amortization | 44,957 | 41,089 | |||||||||
| Gain on real estate transactions | (1,027) | (9,384) | |||||||||
| Allocated share of joint venture depreciation | 996 | 1,036 | |||||||||
| Allocated share of joint venture interest expense | 503 | 375 | |||||||||
| EBITDAre | $ | 143,416 | $ | 132,076 | |||||||
| Retirement and severance expense | 1,423 | — | |||||||||
| Transaction costs | 293 | 567 | |||||||||
| Provision (benefit) for credit losses, net | (5,597) | (652) | |||||||||
| Adjusted EBITDAre (for the quarter) | $ | 139,535 | $ | 131,991 | |||||||
| Adjusted EBITDAre (annualized) (2) | $ | 558,140 | $ | 527,964 | |||||||
| Net Debt/Adjusted EBITDAre Ratio | 5.2 | 5.3 | |||||||||
| Proforma Net Debt/Adjusted EBITDAre Ratio | 5.1 | 5.3 | |||||||||
| (1) Represents proforma adjustments for estimated net proceeds from forward sales agreements that have not settled as if they have been physically settled for cash as of the date presented. Settlement of these shares is subject to customary closing conditions, and actual net proceeds will be net of costs and certain adjustments calculated on the settlement date. | |||||||||||
| (2) Adjusted EBITDA for the quarter is multiplied by four to calculate an annual amount but does not include the annualization of investments put in service, acquired or disposed of during the quarter, as well as the potential earnings on property under development, the annualization of percent rent and participating interest and adjustments for other items. | |||||||||||
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Total Investments
Total investments is a non-GAAP financial measure defined as the sum of the carrying values of real estate investments (before accumulated depreciation), land held for development, property under development, mortgage notes receivable and related accrued interest receivable, net, investment in joint ventures, intangible assets, gross (before accumulated amortization and included in other assets) and notes receivable and related accrued interest receivable, net (included in other assets). Total investments is a useful measure for management and investors as it illustrates across which asset categories the Company's funds have been invested. Our method of calculating total investments may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. A reconciliation of total assets (computed in accordance with GAAP) to total investments is included in the following table (unaudited, in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Total assets | $ | 5,682,812 | $ | 5,699,762 | |||||||
| Operating lease right-of-use assets | (166,646) | (170,755) | |||||||||
| Cash and cash equivalents | (68,465) | (90,577) | |||||||||
| Restricted cash | (6,091) | (8,071) | |||||||||
| Accounts receivable | (101,230) | (97,855) | |||||||||
| Add: accumulated depreciation on real estate investments | 1,756,760 | 1,714,886 | |||||||||
| Add: accumulated amortization on intangible assets (1) | 32,127 | 31,584 | |||||||||
| Prepaid expenses and other current assets (1) | (42,511) | (37,237) | |||||||||
| Total investments | $ | 7,086,756 | $ | 7,041,737 | |||||||
| Total Investments: | |||||||||||
| Real estate investments, net of accumulated depreciation | $ | 4,589,678 | $ | 4,494,259 | |||||||
| Add back accumulated depreciation on real estate investments | 1,756,760 | 1,714,886 | |||||||||
| Land held for development | 20,168 | 20,168 | |||||||||
| Property under development | 23,377 | 54,905 | |||||||||
| Mortgage notes and related accrued interest receivable, net | 614,759 | 679,254 | |||||||||
| Investment in joint ventures | 9,684 | 12,316 | |||||||||
| Intangible assets, gross (1) | 69,678 | 63,239 | |||||||||
| Notes receivable and related accrued interest receivable, net (1) | 2,652 | 2,710 | |||||||||
| Total investments | $ | 7,086,756 | $ | 7,041,737 | |||||||
| (1) Included in "Other assets" in the accompanying consolidated balance sheet. Other assets include the following: | |||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||
| Intangible assets, gross | $ | 69,678 | $ | 63,239 | |||||||
| Less: accumulated amortization on intangible assets | (32,127) | (31,584) | |||||||||
| Notes receivable and related accrued interest receivable, net | 2,652 | 2,710 | |||||||||
| Prepaid expenses and other current assets | 42,511 | 37,237 | |||||||||
| Total other assets | $ | 82,714 | $ | 71,602 | |||||||
Impact of Recently Issued Accounting Standards
See Note 2 to the consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information on the impact of recently issued accounting standards on our business.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks, primarily relating to potential losses due to changes in interest rates and foreign currency exchange rates. We seek to mitigate the effects of fluctuations in interest rates by matching the term of new investments with new long-term fixed rate borrowings whenever possible. As of March 31, 2026, we had a $1.0 billion unsecured revolving credit facility with no outstanding balance. We also had a $25.0 million bond that bears interest at a floating rate but has been fixed through an interest rate swap agreement.
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We are subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of such refinancing may not be as favorable as the terms of current indebtedness. The majority of our borrowings are subject to contractual agreements or mortgages, which limit the amount of indebtedness we may incur. Accordingly, if we are unable to raise additional equity or borrow money due to these limitations or otherwise, our ability to make additional real estate investments may be limited.
Cash Flow Hedges of Interest Rate Risk
To hedge our interest rate risk, we entered into an interest rate swap agreement on our variable rate secured bonds with a notional amount of $25.0 million. The interest rate cap agreement limits the variable portion of the interest rate (SOFR) on this bond to 2.5325% until September 30, 2026.
Hedges of Foreign Exchange Risk
We are exposed to foreign currency risk against our functional currency, the U.S. dollar ("USD"), on our six Canadian properties and the rents received from tenants of the properties are payable in the Canadian dollar ("CAD"). In order to hedge our CAD denominated cash flows and our net investment in our six Canadian properties, we entered into cross-currency swaps designated as cash flow hedges and foreign currency forwards designated as net investment hedges as further described below.
Additionally, we have a CAD denominated mortgage note receivable that exposes us to currency risk associated with the fluctuations in the USD-CAD spot rate associated with the principal remeasurement of this mortgage note as well as the interest received from the borrower. In order to hedge this risk, we entered into a cross-currency swap designated as a fair value hedge as further described below.
Cash Flow Hedges of Foreign Exchange Risk-Cross Currency Swaps
We entered into six USD-CAD cross-currency swaps that became effective October 1, 2024, with a total fixed original notional value of $170.0 million CAD and $125.0 million USD. The net effect of these swaps is to lock in an exchange rate of $1.35 CAD per USD on approximately $15.3 million annual CAD denominated cash flows through December 2026.
We entered into two USD-CAD cross-currency swaps that became effective December 1, 2024, with a total fixed original notional value of $90.0 million CAD and $66.2 million USD. The net effect of these swaps is to lock in an exchange rate of $1.35 CAD per USD on approximately $8.1 million annual CAD denominated cash flows through December 2026.
Net Investment Hedges - Foreign Currency Forward Contracts
We entered into two forward contracts that became effective December 19, 2024 with a fixed notional value of $200.0 million CAD and $142.8 million USD with a settlement date of December 1, 2026. The exchange rate of these forward contracts is approximately $1.40 CAD per USD.
We entered into a forward contract that became effective December 19, 2024 with a fixed notional value of $90.0 million CAD and $64.3 million USD with a settlement date of December 1, 2026. The exchange rate of this forward contract is approximately $1.40 CAD per USD.
For foreign currency derivatives designated as net investment hedges, the change in the fair value of the derivatives, including any cash settlements, is reported in AOCI as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated.
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Fair Value Hedge of Foreign Exchange Risk-Cross Currency Swap
We entered into a USD-CAD cross-currency swap that became effective September 25, 2025, with a total fixed notional value of $27.9 million CAD and $20.0 million USD. The cross-currency swap includes an initial and final exchange of the principal balance of the CAD denominated mortgage note receivable with an exchange rate of $1.392 CAD per USD. In addition to the initial and final exchange, we have monthly exchanges on the notional value of $27.9 million CAD. The net effect of these swaps is to lock in an exchange rate of $1.246 CAD per USD on approximately $2.2 million annual CAD denominated cash flows through September 2030.
See Note 8 to the consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information on our derivative financial instruments and hedging activities.
Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures
As of March 31, 2026, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon and as of the date of that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Limitations on the effectiveness of controls
Our disclosure controls were designed to provide reasonable assurance that the controls and procedures would meet their objectives. Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable assurance of achieving the designed control objectives and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Because of the inherent limitations in a cost-effective, maturing control system, misstatements due to error or fraud may occur and not be detected.
Change in internal controls
There have not been any changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter of the fiscal year to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are subject to certain claims and lawsuits in the ordinary course of business, the outcome of which cannot be determined at this time. In the opinion of management, any liability we might incur upon the resolution of these claims and lawsuits will not, in the aggregate, have a material adverse effect on our consolidated financial position or results of operations.
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Item 1A. Risk Factors
There have been no material changes to the risk factors associated with our business previously disclosed in Item 1A - "Risk Factors" in our 2025 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
| Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
| January 1 through January 31, 2026 common shares | 123,297 | (1) | $ | 49.90 | — | $ | — | |||||||||||||||||||
| February 1 through February 28, 2026 common shares | 104,130 | (1) | 57.75 | — | — | |||||||||||||||||||||
| March 1 through March 31, 2026 common shares | 16,451 | (1) | 59.41 | — | — | |||||||||||||||||||||
| Total | 243,878 | $ | 53.89 | — | $ | — | ||||||||||||||||||||
(1) The repurchases of equity securities during January, February and March 2026 were completed in conjunction with the vesting of employee nonvested shares and performance share units. These repurchases were not made pursuant to a publicly announced plan or program.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Except as noted below, during the quarter ended March 31, 2026, no
On March 24, 2026, Gwendolyn Johnson, the Company's Senior Vice President - Asset Management, through a family trust, adopted a Rule 10b5-1 trading arrangement for the sale of up to 4,000 common shares that is intended to satisfy the affirmative defense condition of Rule 10b5-1(c) under the Exchange Act. The first trade may not occur until June 23, 2026, at the earliest. The duration of the Rule 10b5-1 trading arrangement is until June 23, 2027, or earlier if all transactions under the trading arrangement are completed.
On March 24, 2026, Paul Turvey, the Company's Senior Vice President, General Counsel and Secretary, adopted a Rule 10b5-1 trading arrangement for the sale of up to 6,400 common shares that is intended to satisfy the affirmative defense condition of Rule 10b5-1(c) under the Exchange Act. The first trade may not occur until June 23, 2026, at the earliest. The duration of the Rule 10b5-1 trading arrangement is until June 22, 2027, or earlier if all transactions under the trading arrangement are completed.
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Item 6. Exhibits
10.1* | Retirement and Release Agreement, dated as of March 2, 2026, by and between the Company and Gregory E. Zimmerman, is attached hereto as Exhibit 10.1. | ||||
31.1* | Certification of Gregory K. Silvers pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 31.1. | ||||
31.2* | Certification of Mark A. Peterson pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 31.2. | ||||
32.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 32.1. | ||||
32.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 32.2. | ||||
| 101.INS* | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema | ||||
| 101.CAL* | Inline XBRL Extension Calculation Linkbase | ||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase | ||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase | ||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase | ||||
| 104* | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) | ||||
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| EPR Properties | ||||||||||||||
| Dated: | May 7, 2026 | By | /s/ Gregory K. Silvers | |||||||||||
| Gregory K. Silvers, Chairman, President and Chief Executive Officer (Principal Executive Officer) | ||||||||||||||
| Dated: | May 7, 2026 | By | /s/ Tonya L. Mater | |||||||||||
| Tonya L. Mater, Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) | ||||||||||||||
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