ENTERTAINMENT
RECREATION
EDUCATION
A N N U A L R E P O R T 2 0 1 5
909 WALNUT, SUITE 200,
KANSAS CITY, MO 64106
EPRKC.COM
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
5
CORPORATE
INFORMATION
BOARD OF TRUSTEES
EXECUTIVE OFFICERS
ROBERT J. DRUTEN
Chairman of the Board of Trustees
GREGORY K. SILVERS
President & Chief Executive Officer
BARRETT BRADY
Trustee
JACK A. NEWMAN, JR.
Trustee
PETER C. BROWN
Trustee
THOMAS M. BLOCH
Trustee
ROBIN P. STERNECK
Trustee
GREGORY K. SILVERS
Trustee
President & Chief Executive Officer
MARK A. PETERSON
Senior Vice President & Chief Financial Officer
MORGAN G. EARNEST II
Senior Vice President & Chief Investment Officer
CRAIG L. EVANS
Senior Vice President - General Counsel and Secretary
THOMAS B. WRIGHT III
Senior Vice President - Human Resources and Administration
MICHAEL L. HIRONS
Senior Vice President - Strategy and Asset Management
TONYA L. MATER
Vice President & Chief Accounting Officer
ANNUAL SHAREHOLDERS
MEETING
STOCK MARKET
INFORMATION
The annual meeting of shareholders will be held
at 11:00 a.m. (CST), May 11, 2016, in the Company’s
office at 909 Walnut, Suite 200, Kansas City, MO.
The Company’s common shares of
beneficial interest are traded on the
New York Stock Exchange under the
symbol EPR.
INVESTOR
RELATIONS
TRANSFER AGENT
AND REGISTRAR
INDEPENDENT
AUDITORS
For further information regarding
EPR Properties, lease direct
inquiries to:
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078
EPR Properties
Investor Relations Department
909 Walnut, Suite 200
Kansas City, MO 64106
brianm@eprkc.com
KPMG LLP
1000 Walnut Street
Suite 1000
Kansas City, MO 64106
FO R ACCESS TO ADDITIONAL FI NANCIA L INFO RMATION, VI SIT OUR WEB SI TE AT WWW. EPRKC.CO M
LETTER FROM TH E PRES IDEN T
DEAR FELLOW SHAREHOLDER:
As I reflect on our 2015 accomplishments and our outlook for 2016, I am proud of
what we continue to achieve. I am particularly proud of our hardworking, dedicated
and talented team members, who are critical for the delivery of these consistent results.
Despite some market volatility that appeared as
the year advanced, we remained focused and
delivered strong earnings growth which
exceeded our expectations from when we
entered the year. Ongoing strength in each of
our operating categories, combined with our
targeted investments, allowed us to generate
another year of record revenue, all of which
translated to strong outperformance in total
shareholder return vs comparative indices.
Additionally, we maintain a careful eye on our
mandate to deliver consistent and reliable
returns, which we have demonstrated with six
straight years of dividend growth averaging
almost 7%.
LIFETIME TOTAL RETURN TO SHAREHOLDERS*
EPR - 1,081%
MSCI US REIT (RMS) - 402%
RUSSELL 2000 - 230%
1997
‘99
‘01
‘03
‘05
‘07
‘09
‘11
‘13
2015
1 YEAR
10 YEAR
LIFETIME*
8%
3%
184%
1,081%
103%
402%
-4%
93%
230%
EPR
RMS
RUSSELL
2000
Source: SNL All data through 12/31/15
* Lifetime Data: November 1997 - December 2015
OPERATING PERFORMANCE HISTORY
2011
2012
2013
2014
2015
TOTAL REVENUE
$293.6
$317.8
$343.1
$385.1
$421.0
NET INCOME
(LOSS) – COMMON
FFO AS
ADJUSTED *
FFO AS ADJUSTED
PER SHARE*
$84.3
$93.2
$156.4
$155.8
$170.7
$160.8
$173.8
$188.2
$225.1
$260.3
$3.43
$3.69
$3.90
$4.13
$4.46
Data in millions except per share data.
* As defined in the latest earnings press release for the
quarter ended December 31, 2015.
We also achieved record levels of investment
spending in 2015, deploying $632 million
across our primary investment segments.
Importantly, we ended the year extremely
well-positioned with a robust growth pipeline
and a conservative balance sheet that has the
necessary flexibility and capacity to sustain
this growth.
With our extensive relationships, deep knowledge and systematic underwriting process,
we have established a repeatable investment strategy that is not only differentiated,
but also durable. Our focus on non-traditional assets, in categories that we have come
to understand intimately, provides us with a clear competitive advantage.
LETTE R FROM THE P RESIDE NT (con t.)
Beyond our operational achievements, we have also implemented some meaningful
initiatives for 2016:
PORTFOLIO RECYCLING
Given the scope of our portfolio and
lifecycle of some of our assets, we are
beginning the process of opportunistic
portfolio recycling. This process further
diversifies our operators and enhances
our risk profile, while at the same time
allowing us to dispose of assets at
attractive cap rates and profitably
recycle capital.
ACTIVATION OF ADELAAR
We were very pleased to announce that
Empire Resort’s wholly owned subsidiary,
Montreign Operating Company (our tenant
in the Adelaar destination resort project),
received its gaming license from the New
York State Gaming Commission. The
Adelaar Project consists of a casino/hotel,
The Monster golf course, an entertainment
village and a hotel waterpark. EPR’s
funding commitment is related only to
development of the hotel waterpark,
where we will partner with the operators
of the very successful hotel waterpark,
Camelback Resort.
OUR DIFFERENTIATED, SUSTAINABLE PLATFORM
We are continuing to demonstrate the durability, consistency and attractive growth
profile envisioned by our investment model. Over the years we have built a truly
unique portfolio that not only has very attractive characteristics, but is also very
difficult to replicate.
In 1997 EPR began as a REIT focused solely on theatres. At the outset, we had 12
theatres with a single operator. Now, 18 years later our Entertainment portfolio includes
over $2 Billion invested in 139 theatres, representing 15 operators. This segment has
proven to be stable and consistent with the box office exhibiting a long history of
growth, including setting a new box office revenue record in 2015. Furthermore, we are
now seeing a new generation of theatres, with enhanced amenities driving increased
movie attendance and market expansion.
LETTER FROM THE PR ESIDE NT (con t.)
As our model has evolved to a specialty investor beyond theatres, today our
second largest category is Education. By the end of 2015, we had invested over
$1 Billion in 91 schools, representing 44 operators across three types of education
facilities - public charter schools, early childhood education facilities, and private
schools. Driven by parental choice, we continue to see strong and growing demand
for real estate financing solutions within the education space, and our extensive
operator relationships combined with our build-to-suit program provide us with a
competitive advantage in developing a high quality portfolio of education facilities.
Finally, in our Recreation segment, we have found significant opportunities in unique
activity-based assets. As of year-end, we have approximately $940 Million invested
in 34 properties, representing 7 operators, including waterparks, a strong selection
of metropolitan daily ski parks and high growth concepts such as Topgolf.
We continue to find exciting growth opportunities within our areas of expertise. By
focusing where others are not, we have been able to build a high quality portfolio,
which delivers consistent results with a compelling potential for continued growth.
We are truly excited about EPR’s ongoing opportunities,
and on behalf of the employees of EPR, we thank you
for your continued support.
GREGORY SILVERS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015
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
EPR PROPERTIES
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of
incorporation or organization)
909 Walnut Street, Suite 200
Kansas City, Missouri
(Address of principal executive offices)
43-1790877
(I.R.S. Employer
Identification No.)
64106
(Zip Code)
Registrant’s telephone number, including area code: (816) 472-1700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common shares of beneficial interest, par value $.01 per share
5.75% Series C cumulative convertible preferred shares of beneficial
interest, par value $.01 per share
9.00% Series E cumulative convertible preferred shares of beneficial interest,
par value $.01 per share
6.625% Series F cumulative redeemable preferred shares of beneficial
interest, par value $.01 per share
Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None.
No
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes
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
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted 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 and post such files). Yes
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the
definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
No
No
No
Large accelerated filer
Non-accelerated filer
(Do not check if a smaller reporting company)
Accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
The aggregate market value of the common shares of beneficial interest (“common shares”) of the registrant held by non-affiliates, based on the closing price
on the last business day of the registrant’s most recently completed second fiscal quarter, as reported on the New York Stock Exchange, was $3,467,970,991.
At February 23, 2016, there were 63,307,247 common shares outstanding.
No
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement for the 2016 Annual Meeting of Shareholders to be filed with the Commission pursuant to Regulation
14A are incorporated by reference in Part III of this Annual Report on Form 10-K.
[This page intentionally left blank.]
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 acquisition or disposition of properties, our capital resources, future expenditures for development
projects, 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 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,” “anticipates,” “estimates,” “offers,” “plans,” “would,” or other similar expressions or other
comparable terms or discussions of strategy, plans or intentions in this Annual Report on Form 10-K. In addition,
references to our budgeted amounts and guidance are forward-looking statements.
Factors that could materially and adversely affect us include, but are not limited to, the factors listed below:
• Global economic uncertainty and disruptions in financial markets;
• Reduction in discretionary spending by consumers;
• Adverse changes in our credit ratings;
•
• The duration or outcome of litigation, or other factors outside of litigation such as project financing, relating
to our significant investment in a planned casino and resort development which may cause the development
to be indefinitely delayed or cancelled;
Fluctuations in interest rates;
• Unsuccessful development, operation, financing or compliance with licensing requirements of the planned
casino and resort development by the third-party lessee;
• The financing of common infrastructure costs for the planned casino and resort development;
• 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;
• Our ability to renew maturing leases with theatre tenants on terms comparable to prior leases and/or our ability
to lease any re-claimed space from some of our larger theatres at economically favorable terms;
• Risks of operating in the entertainment industry;
• Our ability to compete effectively;
• Risks associated with a single tenant representing a substantial portion of our lease revenues;
• The ability of our public charter school tenants to comply with their charters and continue to receive funding
from local, state and federal governments, the approval by applicable governing authorities of substitute
operators to assume control of any failed public charter schools and our ability to negotiate the terms of new
leases with such substitute tenants on acceptable terms, and our ability to complete collateral substitutions as
applicable;
• Risks relating to our tenants' exercise of purchase options or borrowers' exercise of prepayment options related
to public charter school properties;
Financing arrangements that require lump-sum payments;
• Risks associated with use of leverage to acquire properties;
•
• Our ability to raise capital;
• Covenants in our debt instruments that limit our ability to take certain actions;
• The concentration and lack of diversification of our investment portfolio;
• Our continued qualification as a real estate investment trust for U.S. federal income tax purposes;
• The ability of our subsidiaries to satisfy their obligations;
•
• Our reliance on a limited number of employees, the loss of which could harm operations;
• Risks associated with security breaches and other disruptions;
•
• 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
Financing arrangements that expose us to funding or purchase risks;
Fluctuations in the value of real estate income and investments;
i
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, 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;
• A failure to comply with the Americans with Disabilities Act or other laws;
• Risks of environmental liability;
• Risks associated with the relatively illiquid nature of our real estate investments;
• Risks 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 and climate change;
• Risks associated with the development, redevelopment and expansion of properties and the acquisition of
other real estate related companies;
Policy changes obtained without the approval of our shareholders;
• Our ability to pay dividends in cash or at current rates;
•
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;
•
• Equity issuances that could dilute the value of our shares;
•
• Risks associated with changes in the Canadian exchange rate; and
• Changes in laws and regulations, including tax laws and regulations.
Future offerings of debt or equity securities, which may rank senior to our common shares;
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 this Annual Report on Form
10-K.
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 Annual Report on Form 10-K 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 Annual Report on Form 10-K.
ii
TABLE OF CONTENTS
Page
PART I .............................................................................................................................................................
1
Business .......................................................................................................................
Item 1.
Item 1A. Risk Factors .................................................................................................................
Item 1B. Unresolved Staff Comments ........................................................................................
Properties .....................................................................................................................
Item 2.
Legal Proceedings........................................................................................................
Item 3.
Item 4. Mine Safety Disclosures ..............................................................................................
1
10
25
25
36
37
PART II............................................................................................................................................................
38
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.....................................................................................
Selected Financial Data................................................................................................
Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations ....................................................................................................................
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.....................................
Financial Statements and Supplementary Data............................................................
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ....................................................................................................................
Item 9A. Controls and Procedures ..............................................................................................
Item 9B. Other Information ........................................................................................................
Item 9.
38
41
43
62
64
129
129
131
PART III...........................................................................................................................................................
131
Item 10. Directors, Executive Officers and Corporate Governance...........................................
Executive Compensation .............................................................................................
Item 11.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters .....................................................................................................
Item 13. Certain Relationships and Related Transactions, and Director Independence ............
Principal Accountant Fees and Services ......................................................................
Item 14.
Item 12.
131
131
131
131
131
PART IV ..........................................................................................................................................................
132
Item 15.
Exhibits and Financial Statement Schedules ...............................................................
132
iii
[This page intentionally left blank.]
Item 1. Business
General
PART I
EPR Properties (“we,” “us,” “our,” “EPR” or the “Company”) was formed on August 22, 1997 as a Maryland real estate
investment trust (“REIT”), and an initial public offering of our common shares of beneficial interest (“common shares”)
was completed on November 18, 1997. Since that time, the Company has grown into a leading specialty REIT with
an investment portfolio that includes primarily entertainment, education and recreation properties. The underwriting
of our investments is centered on key industry and property cash flow criteria. As further explained under “Growth
Strategies” below, our investments are also guided by a focus on inflection opportunities that are associated with or
support enduring uses, excellent executions, attractive economics and an advantageous market position.
We are a self-administered REIT. As of December 31, 2015, our total assets exceeded $4.2 billion (after accumulated
depreciation of approximately $0.5 billion). Our investments are generally structured as long-term triple-net leases
that require the tenants to pay substantially all expenses associated with the operation and maintenance of the property,
or as long-term mortgages with economics similar to our triple-net lease structure.
Our total investments were approximately $4.6 billion at December 31, 2015. Total investments is defined herein as
the sum of the carrying values of rental properties (before accumulated depreciation), land held for development,
property under development, mortgage notes receivable (including related accrued interest receivable), net, investment
in a direct financing lease, net, investment in joint ventures, intangible assets (before accumulated amortization) and
notes receivable and related accrued interest receivable, net. Below is a reconciliation of the carrying value of total
investments to the constituent items in the consolidated balance sheet at December 31, 2015 (in thousands):
Rental properties, net of accumulated depreciation
Add back accumulated depreciation on rental properties
Land held for development
Property under development
Mortgage notes and related accrued interest receivable, net
Investment in a direct financing lease, net
Investment in joint ventures
Intangible assets, gross(1)
Notes receivable and related accrued interest receivable, net(1)
Total investments
$
$
3,025,199
534,303
23,610
378,920
423,780
190,880
6,168
20,715
2,228
4,605,803
(1) Included in other assets in the accompanying consolidated balance
sheet. Other assets includes the following:
Intangible assets, gross
Less: accumulated amortization on intangible assets
Notes receivable and related accrued interest receivable, net
Prepaid expenses and other current assets
Total other assets
$
$
20,715
(12,079)
2,228
78,993
89,857
Management believes that total investments is a useful measure for management and investors as it illustrates across
which asset categories the Company’s funds have been invested. Total investments is a non-GAAP financial measure
and is not a substitute for total assets under GAAP. It is most directly comparable to the GAAP measure, “Total assets”.
Furthermore, total investments may not be comparable to similarly titled financial measures reported by other companies
due to differences in the way the Company calculates this measure. Below is a reconciliation of total investments to
“Total assets” in the consolidated balance sheet at December 31, 2015 (in thousands):
1
Total investments
Cash and cash equivalents
Restricted cash
Deferred financing costs, net
Account receivable, net
Less: accumulated depreciation on rental properties
Less: accumulated amortization on intangible assets
Prepaid expenses and other current assets
Total assets
$
$
4,605,803
4,283
10,578
4,894
59,101
(534,303)
(12,079)
78,993
4,217,270
For financial reporting purposes, we group our investments into four reportable operating segments: Entertainment,
Education, Recreation and Other. Our total investments of approximately $4.6 billion at December 31, 2015 consisted
of interests in the following:
•
•
•
•
$2.5 billion or 53% related to entertainment properties, which includes megaplex theatres, entertainment retail
centers (centers typically anchored by an entertainment component such as a megaplex theatre or live
performance venue and containing other entertainment-related or retail properties), family entertainment
centers and other retail parcels;
$1.0 billion or 22% related to education properties, which consists of investments in public charter schools,
early education centers and K-12 private schools;
$943.3 million or 21% related to recreation properties, which includes metro ski parks and waterparks and
golf entertainment complexes; and
$203.4 million or 4% related to other properties, which consists primarily of $200.9 million related to the
Adelaar casino and resort project in Sullivan County, New York (excluding $38.7 million related to the Adelaar
indoor waterpark project included in recreation).
As further described in Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K,
during the year ended December 31, 2015, $33.7 million, or approximately 8% of our total revenue was derived from
our four entertainment retail centers in Ontario, Canada. The Company’s wholly owned subsidiaries that hold the
Canadian entertainment retail centers represent approximately $169.7 million or 8% of the Company’s equity as of
December 31, 2015.
We believe entertainment, education and recreation are highly enduring sectors of the real estate industry and that, as
a result of our focus on properties in these sectors, industry relationships and the knowledge of our management, we
have a competitive advantage in providing capital to operators of these types of properties. We believe this focused
niche approach offers the potential for higher growth and better yields.
We believe our management’s knowledge and industry relationships have facilitated favorable opportunities for us to
acquire, finance and lease properties. Historically, our primary challenges have been locating suitable properties,
negotiating favorable lease or financing terms, and managing our real estate portfolio as we have continued to grow.
We are particularly focused on property categories which allow us to use our experience to mitigate some of the risks
inherent in the current economic environment. We cannot provide any assurance that any such potential investment or
acquisition opportunities will arise in the near future, or that we will actively pursue any such opportunities.
Although we are primarily a long-term investor, we may also sell assets if we believe that it is in the best interest of
our shareholders.
2
Entertainment
As of December 31, 2015, our Entertainment segment consisted of investments in megaplex theatres, entertainment
retail centers, family entertainment centers and other retail parcels totaling approximately $2.5 billion with interests
in:
•
•
•
•
•
•
131 megaplex theatre properties located in 34 states and Ontario, Canada;
nine entertainment retail centers (which include eight additional megaplex theatre properties and one live
performance venue) located in Westminster, Colorado; New Rochelle, New York; Burbank, California;
Suffolk, Virginia; Charlotte, North Carolina; and Ontario, Canada;
seven family entertainment centers located in Illinois, Indiana and Florida;
land parcels leased to restaurant and retail operators adjacent to several of our theatre properties;
$23.6 million in construction in progress primarily for real estate development for two megaplex theatres and
redevelopment of two of our existing megaplex theatres as well as eight other retail redevelopment projects;
and
$4.5 million in undeveloped land inventory.
As of December 31, 2015, our owned real estate portfolio of megaplex theatre properties consisted of approximately
10.0 million square feet and was 100% leased and our remaining owned entertainment real estate portfolio consisted
of 1.8 million square feet and was 87% leased. The combined owned entertainment real estate portfolio consisted of
11.8 million square feet and was 98% leased. Our owned theatre properties are leased to 15 different leading theatre
operators. For the year ended December 31, 2015, approximately 20% of our total revenue was derived from rental
payments by American Multi-Cinema, Inc. ("AMC").
A significant portion of our assets consist of megaplex theatres. Megaplex theatres typically are multi-screen with
stadium-style seating (seating with elevation between rows to provide unobstructed viewing) and provide a significantly
enhanced audio and visual experience for the patron versus other formats. Many theater operators continue to expand
their food and beverage offerings, including the introduction of in-theatre dining options and alcohol availability. In
addition, as exhibitors further increase their focus on enhancing the customer experience, more spacious and comfortable
seating options are being introduced in some theatres, including fully reclining seats. The introduction of these seating
options has required theatre operators to make physical changes to the existing seating arrangements that can result in
a significant loss of existing seats. However, favorable customer response to these changes generally has significantly
increased ticket sales and food and beverage revenue at impacted locations, overcoming the loss of seats and creating
a net positive for the theatre operator.
The success of several of our larger 24 and 30 screen properties has resulted in other exhibitors building properties that
have reduced the 20 to 25 mile customer drawing range that these properties previously enjoyed. As a result of this and
other competitive pressures, in some cases we have, at the expiration of the primary term of a lease, reduced the rental
rate per square foot and/or reduced the number of screens at a property to better reflect the existing market demands.
Such screen reductions may occur in the future as well but these reductions do create an opportunity to reclaim a portion
of the former theatre or parking lot for conversion to another use, while retaining the majority of the building for the
newly re-configured theatre. In addition to positioning expiring theatre assets for continued success, the redevelopment
of these assets creates an opportunity to diversify the Company's tenant base.
The theatre box office had a very strong year in 2015 with increased attendance and revenues reaching an all-time high
of over $11 billion per Box Office Analyst, and we expect the development of new megaplex theatres and the conversion
or partial conversion of existing theatres to enhanced amenity formats to continue in the United States and abroad over
the long-term. As a result of the significant capital commitment involved in building new megaplex theatres and
redeveloping existing theatres, as well as the experience and industry relationships of our management, we believe we
will continue to have opportunities to provide capital to exhibition businesses in the future.
We also continue to seek opportunities for the development of additional restaurant, retail and other entertainment
venues around our existing portfolio. The opportunity to capitalize on the traffic generation of our market-dominant
3
theatres to create entertainment retail centers (“ERCs”) not only strengthens the execution of the megaplex theatre but
adds diversity to our tenant and asset base. We have and will continue to evaluate our existing portfolio for additional
development of retail and entertainment density, and we will also continue to evaluate the purchase or financing of
existing ERCs that have demonstrated strong financial performance and meet our quality standards. The leasing and
property management requirements of our ERCs are generally met through the use of third-party professional service
providers.
Our family entertainment center operators offer a variety of entertainment options including live performance, bowling
and bocce ball as well as an observation deck on the 94th floor of the John Hancock building in downtown Chicago,
Illinois. We will continue to evaluate the development, purchase or financing of family entertainment centers.
We will continue to seek opportunities for the development of, or acquisition of, other entertainment related properties
that leverage our expertise in this area.
Education
As of December 31, 2015, our Education segment consisted of investments in public charter schools, early education
centers and K-12 private schools totaling approximately $1.0 billion with interests in:
•
•
•
•
70 public charter school properties located in 18 states and the District of Columbia;
18 early education centers located in six states;
two K-12 private schools located in New York and Illinois and one 5-12 private school located in California;
and
$112.8 million in construction in progress for real estate development or expansion of 11 public charter schools,
14 early education centers and one K-12 private school.
As of December 31, 2015, our owned education real estate portfolio consisted of approximately 4.2 million square feet
and was 100% leased. We have 39 different operators for our owned public charter schools. For the year ended
December 31, 2015, approximately 6% of our total revenue was derived from rental payments by Imagine.
Public charter schools are tuition-free, independent schools that are publicly funded by local, state and federal tax
dollars based on enrollment. Driven by the need to improve the quality of public education and provide more school
choices in the U.S., public charter schools are one of the fastest growing segments of the multi-billion dollar educational
facilities sector, and we believe a critical need exists for the financing of new and refurbished educational facilities. To
meet this need, we have established relationships with public charter school operators, authorizers and developers
across the country and expect to continue to develop our leadership position in providing real estate financing in this
area. Public charter schools are operated pursuant to charters granted by various state or other regulatory authorities
and are dependent upon funding from local, state and federal tax dollars. Like public schools, public charter schools
are required to meet both state and federal academic standards.
Various government bodies that provide educational funding have pressure to reduce their spending budgets and have
reduced educational funding in some cases and may continue to reduce educational funding in the future. This can
impact our tenants' operations and potentially their ability to pay our scheduled rent. However, these reductions differ
state by state and have historically been more significant at the post-secondary education level than at the K-12 level
that our tenants serve. Furthermore, while there can be no assurance as to the level of these cuts, we analyze each state's
fiscal situation and commitment to the charter school movement before providing financing in a new state, and also
factor in anticipated reductions (as applicable) in the states in which we do decide to do business.
Many of our public charter school lease and mortgage agreements contain purchase or prepayment options whereby
the tenant can acquire the property or prepay the mortgage loan for a premium over the total development cost at certain
points during the terms of the agreements. If these schools meet certain criteria, the tenants may be able to obtain
bond financing at lower rates and therefore be motivated to exercise these options. We do not anticipate that all of these
options will be exercised but cannot determine at this time the amount or timing of such option exercises. In accordance
with GAAP, prepayment penalties related to mortgage agreements are included in mortgage and other financing income
4
and are included in FFO as adjusted (See Item 7 – “Management’s Discussion and Analysis of Financial Condition and
Results of Operations - Funds From Operations” for a discussion of FFO and FFO as adjusted, which are non-GAAP
measures). However, if a tenant exercises the option to purchase a property under lease, GAAP requires that a gain on
sale be recognized for the amount of cash received over the carrying value of the property and gains on sale are typically
excluded from FFO as adjusted. Accordingly, for consistency in presentation and with the wording and intent of the
lease provisions, we treat the premium over the total development cost (i.e. the undepreciated cost) as a termination
fee and include such fees in FFO as adjusted, and only the difference between the total development cost and the
carrying value is treated as gain on sale and excluded from FFO as adjusted. No such termination fees related to public
charter school buy-outs have been recorded through December 31, 2015, but we anticipate recording such amounts
beginning in 2016.
As of December 31, 2015, the number of properties potentially impacted by option exercises, the total development
cost and the total estimated amount of the prepayment penalties or lease termination fees in the first option period by
year are as follows (dollars in thousands):
Year Option
First
Exercisable
Number of
Education
Properties
Total
Development
Cost
Total Estimated
Termination Fees/
Prepayment
Penalties in First
Option Period
2016
2017
2018
2019
2020
Thereafter
4
6
9
11
10
7
$
39,906
$
7,859 (1)
65,605
84,793
108,722
72,462
123,232
16,134
15,540
18,665
11,939
18,698
(1) Subsequent to December 31, 2015, a mortgage note was prepaid on January 5, 2016.
In connection with the full payoff of this note, the Company received a prepayment penalty
of $3.6 million.
As with public charter schools, the Company's expansion into both early childhood education centers and private schools
is supported by strong unmet demand, and we expect to increase our investment in both of these areas.
Early childhood education centers continue to see demand due to the proliferation of dual income families and the
increasing emphasis on early childhood education, beyond traditional daycare. There is increased demand for
curriculum-based, child-centered learning. Within this property type, larger centers with more amenities are emerging
and enjoying enhanced economies of scale. We believe this property type is a logical extension of our education
platform and allows us to increase our diversity and geographical reach with these assets.
Within private schools, we believe K-12 private education has significant growth potential for schools that have
differentiated, high quality offerings. Many private schools in large urban and suburban areas are at capacity and have
large waiting lists making admission more difficult. The demand for nonsectarian private education has increased in
recent years as parents and students become more focused on the comprehensive impact of a strong school environment.
During 2015, our Education segment was our fastest growing segment and we will continue to seek opportunities for
the development of, or acquisition of, other education related properties that leverage our expertise in this area.
5
Recreation
As of December 31, 2015, our Recreation segment consisted of investments in metro ski parks, resorts, waterparks and
golf entertainment complexes totaling approximately $943.3 million with interests in:
•
•
•
•
10 metro ski parks located in Ohio, Maryland, Pennsylvania, Vermont and Virginia;
five waterparks located in Kansas, Texas and Pennsylvania;
19 golf entertainment complexes in nine states; and
$59.5 million in construction in progress for three golf entertainment complexes and the development of an
indoor waterpark hotel at the Adelaar casino and resort project located in Sullivan County, New York.
As of December 31, 2015, our owned recreation real estate portfolio was 100% leased.
Our metro ski parks are leased to or we have mortgages receivable from four different operators, the largest operator
of which is Peak Resorts, Inc. ("Peak"). For the year ended December 31, 2015, approximately 3% of our total revenue
related to Peak.
Our daily attendance ski park model provides a sustainable advantage for the value conscious consumer, providing
outdoor entertainment during the winter. All of the ski parks that serve as collateral for our mortgage notes in this area,
as well as our three owned properties, offer snowmaking capabilities and provide a variety of terrains and vertical drop
options. We believe that the primary appeal of our ski parks lies in the convenient, low cost and reliable experience
consumers can expect. Given that all of our ski parks are located near major metropolitan areas, they offer skiing and
snowboarding without the expense, travel, or lengthy preparations of remote ski resorts. Furthermore, advanced
snowmaking capabilities increase the reliability of the experience versus other ski areas that do not have such capabilities.
We expect to continue to pursue opportunities in this area.
Our three waterparks located in Kansas and Texas offer innovative attractions that attract a diverse segment of customers.
These waterparks serve as collateral for our mortgage notes and are operated by Schlitterbahn Waterparks and Resorts,
an industry leader. Our other two waterparks, located in Pennsylvania, are leased to the operator of Camelback Mountain
Ski Resort and include an indoor waterpark hotel and an outdoor waterpark as well as an adventure park. We also
have an indoor waterpark hotel in process at the Adelaar project in Sullivan County, New York. As many waterparks
are growing from single-day attendance to a destination getaway, we believe indoor waterpark hotels increase the four-
season appeal at many resorts. We will continue to pursue opportunities in this area.
Our golf entertainment complexes are leased to, or under mortgage with, Topgolf, which combines golf with
entertainment, competition and food and beverage service. By combining an interactive entertainment and food and
beverage experience with a long-lived recreational activity, we believe Topgolf provides an innovative, enjoyable and
repeatable customer experience. We expect to continue to pursue opportunities related to golf entertainment complexes.
We will continue to seek opportunities for the development of, or acquisition of, other recreation related properties that
leverage our expertise in this area.
Other
As of December 31, 2015, our Other segment consisted of investments totaling approximately $203.4 million with
interests in:
•
•
•
$183.0 million in construction in progress for development of the casino, golf course, entertainment village
and infrastructure related to the Adelaar casino and resort project in Sullivan County, New York;
$17.9 million related to undeveloped land inventory at our Adelaar casino and resort project in Sullivan County,
New York; and
$2.5 million in mortgage financing related to one sold winery property.
6
In December 2015, a subsidiary of Empire Resorts, Inc. ("Empire Resorts") was awarded a New York gaming license
to operate the Montreign Resort Casino (the “Casino Project”), which will be located within our Adelaar project in
Sullivan County, New York. The Adelaar project will initially consist of the Casino Project, an indoor waterpark hotel
(the “Waterpark Project”), a redesigned golf course (the “Golf Course”) and an entertainment village, which will include
retail, restaurant, shopping and entertainment (the “Entertainment Village”). Also in December 2015, we entered into
70-year ground leases (terminable by the lessee after 20 years) with subsidiaries of Empire Resorts for the three parcels
of land upon which the Casino Project, Golf Course and Entertainment Village are located and granted these entities
a purchase option for parcels. The Company has committed to the build-to-suit development of the Waterpark Project
to be leased to a waterpark operator, and the Company anticipates funding between $100.0 million to $120.0 million
over the next three years. For additional information regarding this project, see Item 7 - “Management’s Discussion
and Analysis of Financial Condition and Results of Operations - Recent Developments - Adelaar Casino and Resort
Project in Sullivan County, New York.”
Business Objectives and Strategies
Our vision is to become the leading specialty REIT by focusing our unique knowledge and resources on select
underserved real estate segments which provide the potential for outsized returns.
Our long-term primary business objective is to enhance shareholder value by achieving predictable and increasing
Funds From Operations (“FFO”) and dividends per share (See Item 7 – “Management’s Discussion and Analysis of
Financial Condition and Results of Operations - Funds From Operations” for a discussion of FFO, which is a non-
GAAP measure). Our prevailing strategy is to focus on long-term investments in a limited number of categories in
which we maintain a depth of knowledge and relationships, and which we believe offer sustained performance
throughout all economic cycles. We intend to achieve this objective by continuing to execute the Growth Strategies,
Operating Strategies and Capitalization Strategies described below.
Growth Strategies
Central to our growth is remaining focused on acquiring or developing properties in our primary investment segments:
Entertainment, Education and Recreation. We may also pursue opportunities to provide mortgage financing for these
investment segments in certain situations where this structure is more advantageous than owning the underlying real
estate.
Our segment focus is consistent with our strategic organizational design which is structured around building centers
of knowledge and strong operating competencies in each of our primary segments. Retention and building of this
knowledge depth creates a competitive advantage allowing us to more quickly identify key market trends.
To this end, we will deliberately apply information and our ingenuity to identify properties which represent potential
logical extensions within each of our segments, or potential future investment segments. As part of our strategic planning
and portfolio management process we assess new opportunities against the following five key underwriting principles:
Inflection Opportunity
Specialty versus commodity real estate
•
• New or emerging generation of real estate as a result of age, technology or change in consumer lifestyle or
habits
Enduring Value
• Underlying activity long-lived
• Real estate that supports commercially successful activities
• Outlook for business stable or growing
7
Excellent Execution
• Best-of-class executions that create market-dominant properties
•
• Tenants with a reliable track record of customer service and satisfaction
Sustainable customer demand within the category despite a potential change in tenancy
Attractive Economics
Initially accretive with escalating yield over time
•
• Rent participation features which allow for participation in financial performance
•
•
Scalable depth of opportunity
Strong, stable rent coverage and the potential for cross default features
Advantageous Position
First mover advantage and/or dominant player in real estate ownership or financing
Preferred tenant or borrower relationship that provides access to sites and development projects
•
•
• Data available to assess and monitor performance
Operating Strategies
Lease Risk Minimization
To avoid initial lease-up risks and produce a predictable income stream, we typically acquire or develop single-tenant
properties that are leased under long-term leases. We believe our willingness to make long-term investments in properties
offers our tenants financial flexibility and allows tenants to allocate capital to their core businesses. Although we will
continue to emphasize single-tenant properties, we have acquired or developed, and may continue to acquire or develop,
multi-tenant properties we believe add shareholder value.
Lease Structure
We have structured our leasing arrangements to achieve a positive spread between our cost of capital and the rents paid
by our tenants. We typically structure leases on a triple-net basis under which the tenants bear the principal portion of
the financial and operational responsibility for the properties. During each lease term and any renewal periods, the
leases typically provide for periodic increases in rent and/or percentage rent based upon a percentage of the tenant’s
gross sales over a pre-determined level. In our multi-tenant property leases and some of our theatre leases, we generally
require the tenant to pay a common area maintenance (“CAM”) charge to defray its pro rata share of insurance, taxes
and maintenance costs.
Mortgage Structure
We have structured our mortgages to achieve economics similar to our triple-net lease structure with a positive spread
between our cost of capital and the interest paid by our tenants. During each mortgage term and any renewal periods,
the notes typically provide for periodic increases in interest and/or participating features based upon a percentage of
the tenant’s gross sales over a pre-determined level.
Development and Redevelopment
We intend to continue developing properties and redeveloping existing properties that meet our guiding principles. We
generally do not begin development of a single-tenant property without a signed lease providing for rental payments
during the development period that are commensurate with our level of capital investment. In the case of a multi-tenant
development, we generally require a significant amount of the development to be pre-leased prior to construction to
minimize lease-up risks. In addition, to minimize overhead costs and to provide the greatest amount of flexibility, we
generally outsource construction management to third-party firms.
We believe our build-to-suit development program is a competitive advantage. First, we believe our strong relationships
with our tenants and developers drive new investment opportunities that are often exclusive to us, rather than bid
broadly, and with our deep knowledge of their businesses, we believe we are a value-added partner in the underwriting
8
of each new investment. Second, we offer financing from start to finish for a build-to-suit project such that there is no
need for a tenant to seek separate construction and permanent financing, which we believe makes us a more attractive
partner. Third, we are actively developing strong relationships with tenants in our select segments leading to multiple
investments without strict investment portfolio allocations. Finally, multiple investments with the same tenant allows
us in most cases to include cross-default provisions in our lease or financing contracts, meaning a default in an obligation
to us at one location is a default under all obligations with that tenant.
We will also investigate opportunities to redevelop certain of our existing properties. We may redevelop properties in
conjunction with a lease renewal or new tenant, or we may redevelop properties that have more earnings potential due
to the redevelopment. Additionally, certain of our properties have excess land where we will proactively seek
opportunities to further develop.
Tenant and Customer Relationships
We intend to continue developing and maintaining long-term working relationships with entertainment, education,
recreation and other specialty business operators and developers by providing capital for multiple properties on an
international, national or regional basis, thereby creating efficiency and value for both the operators and the Company.
Portfolio Diversification
We will endeavor to further diversify our asset base by property type, geographic location and tenant or customer. In
pursuing this diversification strategy, we will target entertainment, education, recreation and other specialty business
operators that we view as leaders in their market segments and have the ability to compete effectively and perform
under their agreements with the Company.
Dispositions
We will consider property dispositions for reasons such as creating price awareness of a certain property type,
opportunistically taking advantage of an above market offer or reducing exposure related to a certain tenant, property
type or geographic area.
Capitalization Strategies
Debt and Equity Financing
Our debt to gross assets ratio (i.e. debt of the Company as a percentage of total assets plus accumulated depreciation)
was 42% at December 31, 2015. We expect to maintain a debt to gross assets ratio of between 35% and 45% going
forward. While maintaining lower leverage mitigates the growth in per share results, we believe lower leverage and an
emphasis on liquidity are prudent during the current economic environment.
We rely primarily on an unsecured debt structure and expect to continue to pay off our existing secured debt. In the
future, while we may obtain secured debt from time to time or assume secured debt financing obligations in acquisitions,
we intend to issue primarily unsecured debt securities to satisfy our debt financing needs. We believe this strategy
increases our access to capital and permit us to more efficiently match available debt and equity financing to our ongoing
capital requirements.
Our sources of equity financing consist of the issuance of common shares as well as the issuance of preferred shares
(including convertible preferred shares). In addition to larger underwritten registered public offerings of both common
and preferred shares, we have also offered shares pursuant to registered public offerings through the direct share purchase
component of our Dividend Reinvestment and Direct Share Purchase Plan (“DSP Plan”). While such offerings are
generally smaller than a typical underwritten public offering, issuing common shares under the direct share purchase
component of our DSP Plan allows us to access capital on a more frequent basis in a cost-effective manner. We expect
to opportunistically access the equity markets in the future and, depending primarily on the size and timing of our equity
capital needs, may continue to issue shares under the direct share purchase component of our DSP Plan. Furthermore,
we may issue shares in connection with acquisitions in the future.
9
Joint Ventures
We will examine and may pursue potential additional joint venture opportunities with institutional investors or
developers if the investments to which they relate meet our guiding principles discussed above. We may employ higher
leverage in joint ventures.
Payment of Regular Dividends
We began paying dividend distributions to our common shareholders on a monthly basis (as opposed to a quarterly
basis) in the second quarter of 2013 and expect to continue to do so in the future. We expect to continue to pay dividend
distributions to our preferred shareholders on a quarterly basis. Our Series C cumulative convertible preferred shares
(“Series C preferred shares”) have a dividend rate of 5.75%, our Series E cumulative convertible preferred shares
(“Series E preferred shares”) have a dividend rate of 9.00% and our Series F cumulative redeemable preferred shares
("Series F preferred shares") have a dividend rate of 6.625%. Among the factors the Company’s board of trustees
(“Board of Trustees”) considers in setting the common share dividend rate are the applicable REIT tax rules and
regulations that apply to dividends, the Company’s results of operations, including FFO and FFO as adjusted per share,
and the Company’s Cash Available for Distribution (defined as net cash flow available for distribution after payment
of operating expenses, debt service, preferred dividends and other obligations).
Competition
We compete for real estate financing opportunities with other companies that invest in real estate, as well as traditional
financial sources such as banks and insurance companies. REITs have financed, and may continue to seek to finance,
entertainment, education, recreation and other specialty properties as new properties are developed or become available
for acquisition.
Employees
As of December 31, 2015, we had 49 full-time employees.
Principal Executive Offices
The Company’s principal executive offices are located at 909 Walnut Street, Suite 200, Kansas City, Missouri 64106;
telephone (816) 472-1700.
Materials Available on Our Website
Our internet website address is www.eprkc.com. We make available, free of charge, through our website copies of our
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable
after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the
“Commission” or “SEC”). You may also view our Code of Business Conduct and Ethics, Company Governance
Guidelines, Independence Standards for Trustees and the charters of our Audit, Nominating/Company Governance,
Finance and Compensation and Human Capital Committees on our website. Copies of these documents are also available
in print to any person who requests them. We do not intend for information contained in our website to be part of this
Annual Report on Form 10-K.
Item 1A. Risk Factors
There are many risks and uncertainties that can affect our current or future business, operating results, financial
performance or share price. The following discussion describes important factors which could adversely affect our
current or future business, operating results, financial condition or share price. This discussion includes a number of
forward-looking statements. See “Cautionary Statement Concerning Forward-Looking Statements.”
10
Risks That May Impact Our Financial Condition or Performance
Global economic uncertainty and disruptions in the financial markets may impair our ability to refinance existing
obligations or obtain new financing for acquisition or development of properties.
There continues to be global economic uncertainty, lower participation rates in the job market, and slow economic
growth, and it is uncertain as to when and to what extent economic conditions will improve. There can be no assurances
that the U.S. economy will improve or that a future recession will not occur. We rely in part on debt financing to finance
our investments and development. To the extent that turmoil in the financial markets returns or intensifies, it has the
potential to adversely affect our ability to refinance our existing obligations as they mature or obtain new financing for
acquisition or development of properties and adversely affect the value of our investments. If we are unable to refinance
existing indebtedness on attractive terms at its maturity, we may be forced to dispose of some of our assets. Uncertain
economic conditions and disruptions in the financial markets could also result in a substantial decrease in the value of
our investments, which could also make it more difficult to refinance existing obligations or obtain new financing.
Many of our customers, consisting of tenants and borrowers, operate in market segments that depend upon
discretionary spending by consumers. Any reduction in discretionary spending by consumers within the market
segments in which our customers or potential customers operate could adversely affect such customers' operations
and, in turn, reduce the demand for our properties or financing solutions.
Most of our portfolio is leased to or financed with customers operating service or retail businesses on our property
locations. Movie theatres, entertainment retail centers, recreation and entertainment venues, early childhood education
centers, private K-12 schools, metro ski parks and waterparks represent some of the largest market investments in our
portfolio; and AMC, Regal Cinemas, Inc., Cinemark USA, Inc. and Topgolf represented our largest customers for the
year ended December 31, 2015. The success of most of these businesses depends on the willingness or ability of
consumers to use their discretionary income to purchase our customers' products or services. A downturn in the economy
could cause consumers to reduce their discretionary spending within the market segments in which our customers or
potential customers operate, which could adversely affect such customers' operations and, in turn, reduce the demand
for our properties or financing solutions.
Adverse changes in our credit ratings could impair our ability to obtain additional debt and equity financing on
favorable terms, if at all, and negatively impact the market price of our securities, including our common shares.
The credit ratings of our senior unsecured debt and preferred equity securities are based on our operating performance,
liquidity and leverage ratios, overall financial position and other factors employed by the credit rating agencies in their
rating analyses of us. Our credit ratings can affect the amount and type of capital we can access, as well as the terms
of any financings we may obtain. There can be no assurance that we will be able to maintain our current credit ratings
and in the event that our current credit ratings deteriorate, we would likely incur a higher cost of capital and it may be
more difficult or expensive to obtain additional financing or refinance existing obligations and commitments. Also, a
downgrade in our credit ratings would trigger additional costs or other potentially negative consequences under our
current and future credit facilities and debt instruments.
An increase in interest rates could increase interest cost on new debt, and could materially adversely impact our
ability to refinance existing debt, sell assets and limit our acquisition and development activities.
If interest rates increase, so could our interest costs for any new debt. This increased cost could make the financing of
any acquisition and development activity more costly. Rising interest rates could limit our ability to refinance existing
debt when it matures, or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced
indebtedness. In addition, an increase in interest rates could decrease the amount third parties are willing to pay for our
assets, thereby limiting our ability to reposition our portfolio promptly in response to changes in economic or other
conditions.
11
We previously made a significant investment in a planned casino and resort development (the “Adelaar Project”),
which is now the subject of ongoing litigation. We cannot predict the duration or outcome of this litigation. Prolonged
litigation or an unfavorable outcome could have a material adverse effect on the Adelaar Project or our financial
condition and results of operations.
In 2015, we entered into long-term, triple-net ground leases with subsidiaries of Empire Resorts, Inc. (“Empire Resorts”
and, together with such subsidiaries, the “Empire Project Parties”) for three parcels of our land located in Sullivan
County, New York, approximately 90 miles from New York City. The Empire Project Parties have agreed to develop
and operate on the parcels a new resort casino (the “Montreign Resort Casino”), a redesigned golf course and an
entertainment village. A prior proposed casino and resort developer from whom we acquired the Sullivan County
property commenced litigation against us in 2011 regarding matters relating to our acquisition of the property and our
relationship with Empire Resorts. The plaintiffs, who included the prior developer and certain of its affiliates, filed a
total of three separate cases, each seeking significant monetary damages. In September 2013, a federal district court
dismissed the complaint relating to some of this litigation. However, the court's dismissal of the related state claims
was without prejudice, meaning the plaintiffs could further pursue such claims in state court, and the plaintiffs filed a
motion for reconsideration of the dismissal as well as a notice of appeal. The court denied the motion for reconsideration
in November 2014, but the plaintiffs perfected their appeal in the U.S. Court of Appeals for the Second Circuit in
December 2014. In 2015, a state court dismissed the plaintiffs’ complaint in another case, which was affirmed on
appeal. No resolution of the third case has been obtained at this time. We believe we have meritorious defenses to this
litigation and intend to defend it vigorously. There can be no assurances, however, as to the duration or ultimate outcome
of this litigation, nor can there be any assurances as to the costs we may incur in defending against or resolving this
litigation. In addition, if the outcome of the litigation is unfavorable to us, it could result in a material adverse effect
on our financial condition and results of operations.
The success of the Adelaar Project is largely dependent upon the successful development and operation of the
Montreign Resort Casino, which requires the Empire Project Parties to comply with the terms of a gaming license,
including investing or causing the investment of no less than approximately $854 million in the initial phase of the
Adelaar Project. Empire Resorts has announced its intent to raise its portion of this investment through debt and
equity financing. If Empire Resorts is unsuccessful in its efforts to raise such capital or the Empire Project Parties
otherwise fail to satisfy the conditions of the gaming license, the Adelaar Project and Montreign Resort Casino may
be indefinitely delayed or canceled, and if we are unable to identify suitable alternative uses for the property, this
could lead to a material adverse effect on our financial condition and results of operations.
On December 21, 2015, Montreign Operating Company, LLC (“Montreign”), a subsidiary of Empire Resorts, was
awarded a license (a “Gaming Facility License”) by the New York State Gaming Commission to operate the Montreign
Resort Casino, a key component of the Adelaar Project. The Gaming Facility License is subject to a number of conditions,
including the requirement that Montreign invest, or cause to be invested, no less than $854 million in the initial phase
of the Adelaar Project. In order to support its portion of this investment, consisting of the Montreign Resort Casino
and the expenditures related to the development of the golf course and entertainment village that are part of the initial
phase of the Adelaar Project, Empire Resorts has disclosed that it has obtained certain debt and equity financing
commitments. For the debt portion of this financing, Empire Resorts has disclosed that it has obtained a commitment
for a credit facility of up to a maximum of $545 million. Empire Resorts has disclosed that the credit facility is subject
to various conditions precedent, including evidence of a $301 million equity investment in Empire Resorts,
approximately $60 million of which Empire Resorts has disclosed that it has satisfied pursuant to a rights offering
conducted in January 2015 and a credit for amounts previously invested in the project. Empire Resorts disclosed that
it raised the remaining portion of its equity financing pursuant to a rights offering conducted in February 2016.
There can be no assurance that Empire Resorts will close its previously disclosed credit facility as a result of this equity
financing or that Empire Resorts will obtain adequate financing for the project or otherwise comply with the financial
or other conditions of the Gaming Facility License. In the event that Empire Resorts fails to obtain such financing or
comply with the conditions of the Gaming Facility License, the Adelaar Project and Montreign Resort Casino may be
indefinitely delayed or canceled, and there can be no assurance that a suitable alternate use for the property, whether
involving gaming or otherwise, will be identified, which could result in a material adverse effect on our investment
and on our financial condition and results of operations.
12
The offering of tax-exempt public infrastructure bonds to finance the cost of construction of common infrastructure
at the Adelaar Project may not be successful or we could overrun budgeted costs for such infrastructure construction.
We are responsible for the construction of the Adelaar Project common infrastructure, which is expected to be financed
primarily through the issuance of tax-exempt public infrastructure bonds. The debt service of these bonds is expected
to be paid primarily through special assessments levied against the property held by the benefited users. There can be
no assurance that the offering of tax-exempt public infrastructure bonds will be successfully executed. If the bonds are
not issued, we will not receive the proceeds of the bond offering as reimbursement of our expenditures and those
amounts will be treated as an additional investment in the Adelaar Project (subject to a portion of those costs being
proportionately reimbursed by our tenants) in which case our return on invested capital would be less than currently
expected. In addition, there can be no assurance that the cost of construction of common infrastructure for the Adelaar
Project will not exceed our budgeted amounts of approximately $90.0 million, subject to budget adjustments and related
approvals. If so, such excess may not be included in the tax-exempt public infrastructure bonds and, to the extent they
exceed certain negotiated caps, may not be proportionately recovered from our tenants.
We depend on leasing space to tenants on economically favorable terms and collecting rent from our tenants, who
may not be able to pay.
At any time, a tenant may experience a downturn in its business that may weaken its financial condition. Similarly, a
general decline in the economy may result in a decline in demand for space at our commercial properties. Our financial
results depend significantly on leasing space at our properties to tenants on economically favorable terms. In addition,
because a majority of our income comes from leasing real property, our income, funds available to pay indebtedness
and funds available for distribution to our shareholders will decrease if a significant number of our tenants cannot pay
their rent or if we are not able to maintain our levels of occupancy on favorable terms. If our tenants cannot pay their
rent or we are not able to maintain our levels of occupancy on favorable terms, there is also a risk that the fair value of
the underlying property will be considered less than its carrying value and we may have to take a charge against earnings.
In addition, if a tenant does not pay its rent, we might not be able to enforce our rights as landlord without significant
delays and substantial legal costs.
If a tenant becomes bankrupt or insolvent, that could diminish or eliminate the income we expect from that tenant's
leases. If a tenant becomes insolvent or bankrupt, we cannot be sure that we could recover the premises from the tenant
promptly or from a trustee or debtor-in-possession in a bankruptcy proceeding relating to the tenant. On the other hand,
a bankruptcy court might authorize the tenant to terminate its leases with us. If that happens, our claim against the
bankrupt tenant for unpaid future rent would be subject to statutory limitations that might be substantially less than the
remaining rent owed under the leases. In addition, any claim we have for unpaid past rent would likely not be paid in
full and we would also have to take a charge against earnings for any accrued straight-line rent receivable related to
the leases.
We are exposed to the credit risk of our customers and counterparties and their failure to meet their financial
obligations could adversely affect our business.
Our business is subject to credit risk. There is a risk that a customer or counterparty will fail to meet its obligations
when due. Customers and counterparties that owe us money may default on their obligations to us due to bankruptcy,
lack of liquidity, operational failure or other reasons. Although we have procedures for reviewing credit exposures to
specific customers and counterparties to address present credit concerns, default risk may arise from events or
circumstances that are difficult to detect or foresee. Some of our risk management methods depend upon the evaluation
of information regarding markets, clients or other matters that are publicly available or otherwise accessible by us. That
information may not, in all cases, be accurate, complete, up-to-date or properly evaluated. In addition, concerns about,
or a default by, one customer or counterparty could lead to significant liquidity problems, losses or defaults by other
customers or counterparties, which in turn could adversely affect us. We may be materially and adversely affected in
the event of a significant default by our customers and counterparties.
We could be adversely affected by a borrower's bankruptcy or default.
If a borrower becomes bankrupt or insolvent or defaults under its loan, that could force us to declare a default and
foreclose on any available collateral. As a result, future interest income recognition related to the applicable note
receivable could be significantly reduced or eliminated. There is also a risk that the fair value of the collateral, if any,
will be less than the carrying value of the note and accrued interest receivable at the time of a foreclosure and we may
13
have to take a charge against earnings. If a property serves as collateral for a note, we may experience costs and delays
in recovering the property in foreclosure or finding a substitute operator for the property. If a mortgage we hold is
subordinated to senior financing secured by the property, our recovery would be limited to any amount remaining after
satisfaction of all amounts due to the holder of the senior financing. In addition, to protect our subordinated investment,
we may desire to refinance any senior financing. However, there is no assurance that such refinancing would be available
or, if it were to be available, that the terms would be attractive.
The base term of some of our theatre leases are expiring and there is no assurance that such leases will be renewed
at existing lease terms or that we can lease any re-claimed space from some of our larger theatres at economically
favorable terms.
The base term of some of our theatre leases are expiring. For theatres that are not performing as well as they did in the
past, the tenants have and may continue to seek rent or other concessions or not renew at all. Furthermore, some tenants
of our larger megaplex theatres desire to down-size the theatres they lease to respond to market trends. As a result,
these tenants have and may continue to seek rent or other concessions from us, including requiring us to down-size the
theatres or otherwise modify the properties in order to renew their leases. Furthermore, while any such screen reductions
would likely create opportunities to reclaim a portion of the former theatres for conversion to other uses, there is no
guarantee that we can re-lease such space or that such leases would be at economically favorable terms.
Operating risks in the entertainment industry may affect the ability of our tenants to perform under their leases.
The ability of our tenants to operate successfully in the entertainment industry and remain current on their lease
obligations depends on a number of factors, including the availability and popularity of motion pictures, the performance
of those pictures in tenants' markets, the allocation of popular pictures to tenants, the release window (represents the
time that elapses from the date of a picture's theatrical release to the date it is available on other mediums) and the terms
on which the pictures are licensed. Neither we nor our tenants control the operations of motion picture distributors.
There can be no assurances that motion picture distributors will continue to rely on theatres as the primary means of
distributing first-run films, and motion picture distributors may in the future consider alternative film delivery methods.
The success of “out-of-home” entertainment venues such as megaplex theatres, entertainment retail centers and
recreational properties also depends on general economic conditions and the willingness of consumers to spend time
and money on out-of-home entertainment.
In addition, some of our theatre tenants have disclosed that they are subject to pending anti-trust investigations by the
U.S. Department of Justice and several states regarding such tenants' alleged anticompetitive practices, including seeking
agreements with motion picture distributors for exclusive rights to releases in certain markets. There can be no assurances
as to the outcome of such investigations or whether such investigations will materially adversely affect such tenants'
operations and, in turn, their ability to perform under their leases.
Real estate is a competitive business.
Our business operates in highly competitive environments. We compete with a large number of real estate property
owners and developers, some of which may be willing to accept lower returns on their investments. Principal factors
of competition are rent or interest charged, attractiveness of location, the quality of the property and breadth and quality
of services provided. If our competitors offer space at rental rates below the rental rates we are currently charging our
tenants, we may lose potential tenants, and we may be pressured to reduce our rental rates below those we currently
charge in order to retain tenants when our tenants' leases expire. Our success depends upon, among other factors, trends
of the national and local economies, financial condition and operating results of current and prospective tenants and
customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations,
legislation and population trends.
A single tenant represents a substantial portion of our lease revenues.
For the year ended December 31, 2015, approximately 20% of our total revenue was derived from rental payments by
AMC, one of the nation's largest movie exhibition companies, under leases for megaplex theatre properties. AMCE
Entertainment, Inc. (“AMCE”) has guaranteed AMC's performance under substantially all of their leases. We have
diversified and expect to continue to diversify our real estate portfolio by entering into lease transactions with a number
of other leading operators. Nevertheless, our revenues and our continuing ability to service our debt and pay shareholder
14
dividends are currently substantially dependent on AMC's performance under its leases and AMCE's performance under
its guarantee.
We believe AMC occupies a strong position in the industry and we intend to continue acquiring and leasing back or
developing new AMC theatres. However, AMC and AMCE are susceptible to the same risks as our other tenants
described herein. If for any reason AMC failed to perform under its lease obligations and AMCE did not perform under
its guarantee, we could be required to reduce or suspend our shareholder dividends and may not have sufficient funds
to support operations or service our debt until substitute tenants are obtained. If that happened, we cannot predict when
or whether we could obtain substitute quality tenants on acceptable terms.
Public charter schools are operated pursuant to charters granted by various state or other regulatory authorities
and are dependent upon compliance with the terms of such charters in order to obtain funding from local, state and
federal governments. We could be adversely affected by a public charter school's failure to comply with its charter,
non-renewal of a charter upon expiration or by its reduction or loss of funding.
Our public charter school properties operate pursuant to charters granted by various state or other regulatory authorities,
which are generally shorter than our lease terms, and most of the schools have undergone or expect to undergo compliance
audits or reviews by such regulatory authorities. Such audits and reviews examine the financial as well as the academic
performance of the school. Adverse audit or review findings could result in non-renewal or revocation of a public
charter school's charter, or in some cases, a reduction in the amount of state funding, repayment of previously received
state funding or other economic sanctions. Our public charter school tenants are also dependent upon funding from
local, state and federal governments, which are currently experiencing budgetary constraints, and any reduction or loss
of such funding could adversely affect a public charter school's ability to comply with its charter and/or pay its
obligations.
Imagine, an operator of public charter schools, is a lessee of a substantial number of our public charter school properties.
In the past, some of the Company's public charter school properties operated by Imagine have been subject to compliance
audits or reviews that resulted in probationary actions and, in some cases, charter revocation. As of December 31,
2015, six of the Company's public charter school properties operated by Imagine have had their charters revoked. We
are currently in the process of resolving these issues with Imagine; however, there can be no assurances that any such
solutions will satisfy either the respective regulatory body or the Company, and could result in the Company pursuing
its remedies under the lease.
Our master lease agreement with Imagine provides certain contractual protections designed to mitigate risk, such as
risk arising from the revocation of a charter of one or more Imagine schools. For instance, Imagine is required to
maintain irrevocable letters of credit to secure a portion of their annual lease payment owed to us under the master
lease agreement. Subject to our approval and certain other terms and conditions, the master lease agreement also allows
Imagine to repurchase from us the public charter school properties that are causing technical defaults. Imagine may,
in substitution for such properties, sell to us public charter school properties that would otherwise comply with the
lease agreement. Through December 31, 2015, Imagine has exercised this right with respect to six properties that
suffered a charter revocation and such repurchases and substitutions have been completed. In addition, two schools of
the six schools that have charters revoked at December 31, 2015, have been sub-leased by Imagine. However, with
respect to other schools without charters for which Imagine is still paying rent, there is no guarantee that acceptable
schools will be available for substitutions or that such substitutions or repurchases will be completed. In addition, while
governing authorities may approve substitute operators for failed public charter schools to ensure continuity for students,
we cannot predict when or whether applicable governing authorities would approve such substitute operators, nor can
we predict whether we could reach lease agreements with such substitute tenants on acceptable terms. If Imagine or
any other operator is unable to provide adequate substitute collateral under its lease with us, and/or is unable to pay its
obligations, we may be required to record an impairment loss or sell schools for less than their net book value.
We are subject to risks relating to provisions included in some of our leases or financing arrangements with charter
school operators pursuant to which such operators have the option to purchase leased charter school properties or
prepay notes relating to financed charter school properties.
Some of our leases or financing arrangements with charter school operators include provisions pursuant to which tenant
operators may purchase leased charter school properties and mortgagor operators may prepay notes relating to financed
15
charter school properties, in each case, subject to option exercise payments or prepayment penalties. Some of these
tenant or mortgagor operators may be able to obtain alternative financing on more economically favorable terms, in
which case, such operators may choose to exercise their purchase option or prepayment right. If such operators exercise
their purchase options or prepayment rights, we cannot provide any assurances that we would be able to redeploy the
capital associated with these properties in other investments or that such investments would provide comparable returns,
which could reduce our earnings going forward.
There are risks inherent in having indebtedness and the use of such indebtedness to fund acquisitions.
We currently use debt to fund portions of our operations and acquisitions. In a rising interest rate environment, the cost
of our existing variable rate debt and any new debt will increase. We have used leverage to acquire properties and
expect to continue to do so in the future. Although the use of leverage is common in the real estate industry, our use of
debt exposes us to some risks. If a significant number of our tenants fail to make their lease payments and we don't
have sufficient cash to pay principal and interest on the debt, we could default on our debt obligations. A substantial
amount of our debt financing is secured by mortgages on our properties. If we fail to meet our mortgage payments, the
lenders could declare a default and foreclose on those properties.
Most of our debt instruments contain balloon payments which may adversely impact our financial performance and
our ability to pay dividends.
Most of our financing arrangements require us to make a lump-sum or "balloon" payment at maturity. There can be no
assurance that we will be able to refinance such debt on favorable terms or at all. To the extent we cannot refinance
such debt on favorable terms or at all, we may be forced to dispose of properties on disadvantageous terms or pay
higher interest rates, either of which would have an adverse impact on our financial performance and ability to pay
dividends to our shareholders.
We must obtain new financing in order to grow.
As a REIT, we are required to distribute at least 90% of our taxable net income to shareholders in the form of dividends.
Other than deciding to make these dividends in our common shares, we are limited in our ability to use internal capital
to acquire properties and must continually raise new capital in order to continue to grow and diversify our investment
portfolio. Our ability to raise new capital depends in part on factors beyond our control, including conditions in equity
and credit markets, conditions in the industries in which our tenants are engaged and the performance of real estate
investment trusts generally. We continually consider and evaluate a variety of potential transactions to raise additional
capital, but we cannot assure that attractive alternatives will always be available to us, nor that our share price will
increase or remain at a level that will permit us to continue to raise equity capital publicly or privately.
Covenants in our debt instruments could adversely affect our financial condition and our acquisitions and
development activities.
Some of our properties are subject to mortgages that contain customary covenants such as those that limit our ability,
without the prior consent of the lender, to further mortgage the applicable property or to discontinue insurance coverage.
Our unsecured revolving credit facility, term loan facility, senior notes and other loans that we may obtain in the future
contain certain cross-default provisions as well as customary restrictions, requirements and other limitations on our
ability to incur indebtedness, including covenants that limit our ability to incur debt based upon the level of our ratio
of total debt to total assets, our ratio of secured debt to total assets, our ratio of EBITDA to interest expense and fixed
charges. Our ability to borrow under both our unsecured revolving credit facility and our term loan facility is also
subject to compliance with certain other covenants. In addition, failure to comply with our covenants could cause a
default under the applicable debt instrument, and we may then be required to repay such debt with capital from other
sources. Under those circumstances, other sources of capital may not be available to us, or be available only on
unattractive terms. Additionally, our ability to satisfy current or prospective lenders' insurance requirements may be
adversely affected if lenders generally insist upon greater insurance coverage against acts of terrorism than is available
to us in the marketplace or on commercially reasonable terms.
We rely on debt financing, including borrowings under our unsecured revolving credit facility, term loan facility,
issuances of debt securities and debt secured by individual properties, to finance our acquisition and development
activities and for working capital. If we are unable to obtain financing from these or other sources, or to refinance
existing indebtedness upon maturity, our financial condition and results of operations would likely be adversely affected.
16
Our real estate investments are concentrated in entertainment, education and recreation properties and a significant
portion of those investments are in megaplex theatre properties, making us more vulnerable economically than if
our investments were more diversified.
We acquire, develop or finance entertainment, education and recreation properties. A significant portion of our
investments are in megaplex theatre properties. Although we are subject to the general risks inherent in concentrating
investments in real estate, the risks resulting from a lack of diversification become even greater as a result of investing
primarily in entertainment, education and recreation properties. These risks are further heightened by the fact that a
significant portion of our investments are in megaplex theatre properties. Although a downturn in the real estate industry
could significantly adversely affect the value of our properties, a downturn in the entertainment, education and recreation
industries could compound this adverse effect. These adverse effects could be more pronounced than if we diversified
our investments to a greater degree outside of entertainment, education and recreation properties or, more particularly,
outside of megaplex theatre properties.
If we fail to qualify as a REIT, we would be taxed as a corporation, which would substantially reduce funds available
for payment of dividends to our shareholders.
If we fail to qualify as a REIT for federal income tax purposes, we will be taxed as a corporation. We are organized
and believe we qualify as a REIT, and intend to operate in a manner that will allow us to continue to qualify as a REIT.
However, we cannot provide any assurance that we have always qualified and will remain qualified in the future. This
is because qualification as a REIT involves the application of highly technical and complex provisions of the Internal
Revenue Code of 1986, as amended, on which there are only limited judicial and administrative interpretations, and
depends on facts and circumstances not entirely within our control. In addition, future legislation, new regulations,
administrative interpretations or court decisions may significantly change the tax laws, the application of the tax laws
to our qualification as a REIT or the federal income tax consequences of that qualification.
If we were to fail to qualify as a REIT in any taxable year (including any prior taxable year for which the statute of
limitations remains open), we would face tax consequences that could substantially reduce the funds available for the
service of our debt and payment of dividends:
•
•
•
•
we would not be allowed a deduction for dividends paid to shareholders in computing our taxable income
and would be subject to federal income tax at regular corporate rates;
we could be subject to the federal alternative minimum tax and possibly increased state and local taxes;
unless we are entitled to relief under statutory provisions, we could not elect to be treated as a REIT for four
taxable years following the year in which we were disqualified; and
we could be subject to tax penalties and interest.
In addition, if we fail to qualify as a REIT, we will no longer be required to pay dividends. As a result of these factors,
our failure to qualify as a REIT could adversely affect the market price for our shares.
We will depend on distributions from our direct and indirect subsidiaries to service our debt and pay dividends to
our shareholders. The creditors of these subsidiaries, and our direct creditors, are entitled to amounts payable to
them before we pay any dividends to our shareholders.
Substantially all of our assets are held through our subsidiaries. We depend on these subsidiaries for substantially all
of our cash flow. The creditors of each of our direct and indirect subsidiaries are entitled to payment of that subsidiary's
obligations to them, when due and payable, before distributions may be made by that subsidiary to us. In addition, our
creditors, whether secured or unsecured, are entitled to amounts payable to them before we may pay any dividends to
our shareholders. Thus, our ability to service our debt obligations and pay dividends to holders of our common and
preferred shares depends on our subsidiaries' ability first to satisfy their obligations to their creditors and then to pay
distributions to us and our ability to satisfy our obligations to our direct creditors. Our subsidiaries are separate and
distinct legal entities and have no obligations, other than guaranties of our debt, to make funds available to us.
17
Our development financing arrangements expose us to funding and purchase risks.
Our ability to meet our construction financing obligations which we have undertaken or may enter into in the future
depends on our ability to obtain equity or debt financing in the required amounts. There is no assurance we can obtain
this financing or that the financing rates available will ensure a spread between our cost of capital and the rent or interest
payable to us under the related leases or mortgage notes receivable. As a result, we could fail to meet our construction
financing obligations which, in turn, could result in failed projects and related foreclosures and penalties, each of which
could have a material adverse impact on our results of operations and business.
We have a limited number of employees and loss of personnel could harm our operations and adversely affect the
value of our shares.
We had 49 full-time employees as of December 31, 2015 and, therefore, the impact we may feel from the loss of an
employee may be greater than the impact such a loss would have on a larger organization. We are dependent on the
efforts of the following individuals: Gregory K. Silvers, our President and Chief Executive Officer; Mark A. Peterson,
our Executive Vice President and Chief Financial Officer; Morgan G. Earnest, our Senior Vice President and Chief
Investment Officer; Craig L. Evans, our Senior Vice President, General Counsel and Secretary; Thomas B. Wright, III,
our Senior Vice President - Human Resources and Administration; Michael L. Hirons, our Senior Vice President -
Strategy & Asset Management and Tonya L. Mater; our Vice President and Chief Accounting Officer. While we believe
that we could find replacements for our personnel, the loss of their services could harm our operations and adversely
affect the value of our shares.
Security breaches and other disruptions could compromise our information and expose us to liability, which would
cause our business and reputation to suffer. Our service providers and our tenants and their business partners are
exposed to similar risks.
In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information
and that of our tenants and clients and personally identifiable information of our employees, in our facility and on our
network. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks
by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise
our network and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access,
disclosure or other loss of information could result in legal claims or proceedings, disrupt our operations, damage our
reputation, and cause a loss of confidence, which could adversely affect our business. Our service providers and our
tenants and their business partners are exposed to similar risks and the occurrence of a security breach or other disruption
with respect to their information technology and infrastructure could, in turn, have a material adverse impact on our
results of operations and business.
Risks That Apply to our Real Estate Business
Real estate income and the value of real estate investments fluctuate due to various factors.
The value of real estate fluctuates depending on conditions in the general economy and the real estate business. These
conditions may also limit our revenues and available cash. The rents and interest we receive and the occupancy levels
at our properties may decline as a result of adverse changes in any of the factors that affect the value of our real estate.
If our revenues decline, we generally would expect to have less cash available to pay our indebtedness and distribute
to our shareholders. In addition, some of our unreimbursed costs of owning real estate may not decline when the related
rents decline.
The factors that affect the value of our real estate include, among other things:
•
•
•
international, national, regional and local economic conditions;
consequences of any armed conflict involving, or terrorist attack against, the United States or Canada;
the threat of domestic terrorism or pandemic outbreaks, which could cause customers of our tenants to avoid
public places where large crowds are in attendance, such as megaplex theatres or recreational properties
operated by our tenants;
18
•
•
•
•
our ability to secure adequate insurance;
natural disasters, such as earthquakes, hurricanes and floods, which could exceed the aggregate limits of
insurance coverage;
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;
•
the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;
• whether we are able to pass some or all of any increased operating costs through to tenants;
•
•
•
•
•
•
•
•
•
•
how well we manage our properties;
fluctuations in interest rates;
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;
government regulation;
availability of financing on acceptable terms or at all;
potential liability under environmental or other laws or regulations; and
general competitive factors.
The rents and interest we receive and the occupancy levels at our properties may decline as a result of adverse changes
in any of these factors. If our revenues decline, we generally would expect to have less cash available to pay our
indebtedness and distribute to our shareholders. In addition, some of our unreimbursed costs of owning real estate may
not decline when the related rents decline.
There are risks associated with owning and leasing real estate.
Although our lease terms obligate the tenants to bear substantially all of the costs of operating the properties, investing
in real estate involves a number of risks, including:
•
the risk that tenants will not perform under their leases, reducing our income from the leases or requiring us
to assume the cost of performing obligations (such as taxes, insurance and maintenance) that are the tenant's
responsibility under the lease;
• we may not always be able to lease properties at favorable rates or certain tenants may require significant
capital expenditures by us to conform existing properties to their requirements;
• we may not always be able to sell a property when we desire to do so at a favorable price; and
•
changes in tax, zoning or other laws could make properties less attractive or less profitable.
19
If a tenant fails to perform on its lease covenants, that would not excuse us from meeting any debt obligation secured
by the property and could require us to fund reserves in favor of our lenders, thereby reducing funds available for
payment of dividends. We cannot be assured that tenants will elect to renew their leases when the terms expire. If a
tenant does not renew its lease or if a tenant defaults on its lease obligations, there is no assurance we could obtain a
substitute tenant on acceptable terms. If we cannot obtain another quality tenant, we may be required to modify the
property for a different use, which may involve a significant capital expenditure and a delay in re-leasing the property.
Some potential losses are not covered by insurance.
Our leases require the tenants to carry comprehensive liability, casualty, workers' compensation, extended coverage
and rental loss insurance on our properties. We believe the required coverage is of the type, and amount, customarily
obtained by an owner of similar properties. We believe all of our properties are adequately insured. However, there are
some types of losses, such as catastrophic acts of nature, acts of war or riots, for which we or our tenants cannot obtain
insurance at an acceptable cost. If there is an uninsured loss or a loss in excess of insurance limits, we could lose both
the revenues generated by the affected property and the capital we have invested in the property. We would, however,
remain obligated to repay any mortgage indebtedness or other obligations related to the property. Since September 11,
2001, the cost of insurance protection against terrorist acts has risen dramatically. There can be no assurance our tenants
will be able to obtain terrorism insurance coverage, or that any coverage they do obtain will adequately protect our
properties against loss from terrorist attack.
Joint ventures may limit flexibility with jointly owned investments.
We may continue to acquire or develop properties in joint ventures with third parties when those transactions appear
desirable. We would not own the entire interest in any property acquired by a joint venture. Major decisions regarding
a joint venture property may require the consent of our partner. If we have a dispute with a joint venture partner, we
may feel it necessary or become obligated to acquire the partner's interest in the venture. However, we cannot ensure
that the price we would have to pay or the timing of the acquisition would be favorable to us. If we own less than a
50% interest in any joint venture, or if the venture is jointly controlled, the assets and financial results of the joint
venture may not be reportable by us on a consolidated basis. To the extent we have commitments to, or on behalf of,
or are dependent on, any such “off-balance sheet” arrangements, or if those arrangements or their properties or leases
are subject to material contingencies, our liquidity, financial condition and operating results could be adversely affected
by those commitments or off-balance sheet arrangements.
Our multi-tenant properties expose us to additional risks.
Our entertainment retail centers in Westminster, Colorado, New Rochelle, New York, Burbank, California, Suffolk,
Virginia, Charlotte, North Carolina and Ontario, Canada, and similar properties we may seek to acquire or develop in
the future, involve risks not typically encountered in the purchase and lease-back of real estate properties which are
operated by a single tenant. The ownership or development of multi-tenant retail centers could expose us to the risk
that a sufficient number of suitable tenants may not be found to enable the centers to operate profitably and provide a
return to us. This risk may be compounded by the failure of existing tenants to satisfy their obligations due to various
factors, including the current economic crisis. These risks, in turn, could cause a material adverse impact to our results
of operations and business.
Retail centers are also subject to tenant turnover and fluctuations in occupancy rates, which could affect our operating
results. Multi-tenant retail centers also expose us to the risk of potential “CAM slippage,” which may occur when the
actual cost of taxes, insurance and maintenance at the property exceeds the CAM fees paid by tenants.
Failure to comply with the Americans with Disabilities Act and other laws could result in substantial costs.
Most of our properties must comply with the Americans with Disabilities Act (“ADA”). The ADA requires that public
accommodations reasonably accommodate individuals with disabilities and that new construction or alterations be
made to commercial facilities to conform to accessibility guidelines. Failure to comply with the ADA can result in
injunctions, fines, damage awards to private parties and additional capital expenditures to remedy noncompliance. Our
leases require the tenants to comply with the ADA.
20
Our properties are also subject to various other federal, state and local regulatory requirements. We do not know whether
existing requirements will change or whether compliance with future requirements will involve significant unanticipated
expenditures. Although these expenditures would be the responsibility of our tenants, if tenants fail to perform these
obligations, we may be required to do so.
Potential liability for environmental contamination could result in substantial costs.
Under federal, state and local environmental laws, we may be required to investigate and clean up any release of
hazardous or toxic substances or petroleum products at our properties, regardless of our knowledge or actual
responsibility, simply because of our current or past ownership of the real estate. If unidentified environmental problems
arise, we may have to make substantial payments, which could adversely affect our cash flow and our ability to service
our debt and pay dividends to our shareholders. This is because:
•
•
•
•
as owner, we may have to pay for property damage and for investigation and clean-up costs incurred in
connection with the contamination;
the law may impose clean-up responsibility and liability regardless of whether the owner or operator knew of
or caused the contamination;
even if more than one person is responsible for the contamination, each person who shares legal liability under
environmental laws may be held responsible for all of the clean-up costs; and
governmental entities and third parties may sue the owner or operator of a contaminated site for damages and
costs.
These costs could be substantial and in extreme cases could exceed the value of the contaminated property. The presence
of hazardous substances or petroleum products or the failure to properly remediate contamination may adversely affect
our ability to borrow against, sell or lease an affected property. In addition, some environmental laws create liens on
contaminated sites in favor of the government for damages and costs it incurs in connection with a contamination. Most
of our loan agreements require the Company or a subsidiary to indemnify the lender against environmental liabilities.
Our leases require the tenants to operate the properties in compliance with environmental laws and to indemnify us
against environmental liability arising from the operation of the properties. We believe all of our properties are in
material compliance with environmental laws. However, we could be subject to strict liability under environmental
laws because we own the properties. There is also a risk that tenants may not satisfy their environmental compliance
and indemnification obligations under the leases. Any of these events could substantially increase our cost of operations,
require us to fund environmental indemnities in favor of our lenders, limit the amount we could borrow under our
unsecured revolving credit facility and term loan facility and reduce our ability to service our debt and pay dividends
to shareholders.
Real estate investments are relatively illiquid.
We may desire to sell a property in the future because of changes in market conditions, poor tenant performance or
default of any mortgage we hold, or to avail ourselves of other opportunities. We may also be required to sell a property
in the future to meet debt obligations or avoid a default. Specialty real estate projects such as megaplex theatres cannot
always be sold quickly, and we cannot assure you that we could always obtain a favorable price. In addition, the Internal
Revenue Code limits our ability to sell our properties. We may be required to invest in the restoration or modification
of a property before we can sell it. The inability to respond promptly to changes in the performance of our property
portfolio could adversely affect our financial condition and ability to service our debt and pay dividends to our
shareholders.
There are risks in owning assets outside the United States.
Our properties in Canada are subject to the risks normally associated with international operations. The rentals under
our Canadian leases are payable in Canadian dollars, which could expose us to losses resulting from fluctuations in
exchange rates to the extent we have not hedged our position. Canadian real estate and tax laws are complex and subject
to change, and we cannot assure you we will always be in compliance with those laws or that compliance will not
21
expose us to additional expense. We may also be subject to fluctuations in Canadian real estate values or markets or
the Canadian economy as a whole, which may adversely affect our Canadian investments.
Additionally, we have made investments in projects located in China and may enter other international markets, which
may have similar risks as described above as well as unique risks associated with a specific country.
There are risks in owning or financing properties for which the tenant's, mortgagor's or our operations may be
impacted by weather conditions and climate change.
We have acquired and financed metro ski parks and may continue to do so in the future. The operators of these properties,
our tenants or mortgagors, are dependent upon the operations of the properties to pay their rents and service their loans.
The ski area operator's ability to attract visitors is influenced by weather conditions and climate change in general, each
of which may impact the amount of snowfall during the ski season. Adverse weather conditions may discourage visitors
from participating in outdoor activities. In addition, unseasonably warm weather may result in inadequate natural
snowfall, which increases the cost of snowmaking, and could render snowmaking wholly or partially ineffective in
maintaining quality skiing conditions and attracting visitors. Excessive natural snowfall may materially increase the
costs incurred for grooming trails and may also make it difficult for visitors to obtain access to the ski resorts. Prolonged
periods of adverse weather conditions, or the occurrence of such conditions during peak visitation periods, could have
a material adverse effect on the operator's financial results and could impair the ability of the operator to make rental
payments or service our loans.
We face risks associated with the development, redevelopment and expansion of properties and the acquisition of
other real estate related companies.
We may develop, redevelop or expand new or existing properties or acquire other real estate related companies, and
these activities are subject to various risks. We may not be successful in pursuing such development or acquisition
opportunities. In addition, newly developed or redeveloped/expanded properties or newly acquired companies may not
perform as well as expected. We are subject to other risks in connection with any such development or acquisition
activities, including the following:
• we may not succeed in in completing developments or consummating desired acquisitions on time;
• we may face competition in pursuing development or acquisition opportunities, which could increase our
costs;
• we may face difficulties in integrating acquisitions, which may prove costly or time-consuming and could
divert management's attention;
• we may undertake developments or acquisitions in new markets or industries where we do not have the same
level of market knowledge, which may expose us to unanticipated risks in those markets and industries to
which we are unable to effectively respond, such as an inability to attract qualified personnel with knowledge
of such markets and industries;
• we may incur construction costs in connection with developments, which may be higher than projected,
potentially making the project unfeasible or unprofitable;
• we may be unable to obtain zoning, occupancy or other governmental approvals;
• we may experience delays in receiving rental payments for developments that are not completed on time;
•
our developments or acquisitions may not be profitable;
• we may need the consent of third parties such as anchor tenants, mortgage lenders and joint venture partners,
and those consents may be withheld;
• we may issue shares in connection with acquisitions resulting in dilution to our existing shareholders; and
22
• we may assume debt or other liabilities in connection with acquisitions.
In addition, there is no assurance that planned third-party financing related to development and acquisition opportunities
will be provided on a timely basis or at all, thus increasing the risk that such opportunities are delayed or fail to be
completed as originally contemplated. We may also abandon development or acquisition opportunities that we have
begun pursuing and consequently fail to recover expenses already incurred and have devoted management time to a
matter not consummated. In some cases, we may agree to lease or other financing terms for a development project in
advance of completing and funding the project, in which case we are exposed to the risk of an increase in our cost of
capital during the interim period leading up to the funding, which can reduce, eliminate or result in a negative spread
between our cost of capital and the payments we expect to receive from the project. Furthermore, our acquisitions of
new properties or companies will expose us to the liabilities of those properties or companies, some of which we may
not be aware at the time of acquisition. In addition, development of our existing properties presents similar risks. If a
development or acquisition is unsuccessful, either because it is not meeting our expectations or was not completed
according to our plans, we could lose our investment in the development or acquisition.
Risks That May Affect the Market Price of our Shares
We cannot assure you we will continue paying cash dividends at current rates.
Our dividend policy is determined by our Board of Trustees. Our ability to continue paying dividends on our common
shares, to pay dividends on our preferred shares at their stated rates or to increase our common share dividend rate will
depend on a number of factors, including our liquidity, our financial condition and results of future operations, the
performance of lease and mortgage terms by our tenants and customers, our ability to acquire, finance and lease additional
properties at attractive rates, and provisions in our loan covenants. If we do not maintain or increase our common share
dividend rate, that could have an adverse effect on the market price of our common shares and possibly our preferred
shares. Furthermore, if the Board of Trustees decides to pay dividends on our common shares partially or substantially
all in common shares, that could have an adverse effect on the market price of our common shares and possibly our
preferred shares.
Market interest rates may have an effect on the value of our shares.
One of the factors that investors may consider in deciding whether to buy or sell our common shares or preferred shares
is our dividend rate as a percentage of our share price, relative to market interest rates. If market interest rates increase,
prospective investors may desire a higher dividend rate on our common shares or seek securities paying higher dividends
or interest.
Market prices for our shares may be affected by perceptions about the financial health or share value of our tenants
and mortgagors or the performance of REIT stocks generally.
To the extent any of our tenants or customers, or their competition, report losses or slower earnings growth, take charges
against earnings or enter bankruptcy proceedings, the market price for our shares could be adversely affected. The
market price for our shares could also be affected by any weakness in the performance of REIT stocks generally or
weakness in any of the sectors in which our tenants and customers operate.
Limits on changes in control may discourage takeover attempts which may be beneficial to our shareholders.
There are a number of provisions in our Declaration of Trust, Bylaws, Maryland law and agreements we have with
others which could make it more difficult for a party to make a tender offer for our shares or complete a takeover of
the Company which is not approved by our Board of Trustees. These include:
• a staggered Board of Trustees that can be increased in number without shareholder approval;
• a limit on beneficial ownership of our shares, which acts as a defense against a hostile takeover or acquisition
of a significant or controlling interest, in addition to preserving our REIT status;
•
the ability of the Board of Trustees to issue preferred or common shares, to reclassify preferred or common
shares, and to increase the amount of our authorized preferred or common shares, without shareholder approval;
23
•
limits on the ability of shareholders to remove trustees without cause;
•
requirements for advance notice of shareholder proposals at shareholder meetings;
• provisions of Maryland law restricting business combinations and control share acquisitions not approved by
the Board of Trustees;
• provisions of Maryland law protecting corporations (and by extension REITs) against unsolicited takeovers
by limiting the duties of the trustees in unsolicited takeover situations;
• provisions in Maryland law providing that the trustees are not subject to any higher duty or greater scrutiny
than that applied to any other director under Maryland law in transactions relating to the acquisition or potential
acquisition of control;
• provisions of Maryland law creating a statutory presumption that an act of the trustees satisfies the applicable
standards of conduct for trustees under Maryland law;
• provisions in loan or joint venture agreements putting the Company in default upon a change in control; and
• provisions of employment agreements and other compensation arrangements with our employees calling for
severance compensation and vesting of equity compensation upon termination of employment upon a change
in control or certain events of the officers' termination of service.
Any or all of these provisions could delay or prevent a change in control of the Company, even if the change was in
our shareholders' interest or offered a greater return to our shareholders.
We may change our policies without obtaining the approval of our shareholders.
Our operating and financial policies, including our policies with respect to acquiring or financing real estate or other
companies, growth, operations, indebtedness, capitalization and dividends, are exclusively determined by our Board
of Trustees. Accordingly, our shareholders do not control these policies.
Dilution could affect the value of our shares.
Our future growth will depend in part on our ability to raise additional capital. If we raise additional capital through
the issuance of equity securities, the interests of holders of our common shares could be diluted. Likewise, our Board
of Trustees is authorized to cause us to issue preferred shares in one or more series, the holders of which would be
entitled to dividends and voting and other rights as our Board of Trustees determines, and which could be senior to or
convertible into our common shares. Accordingly, an issuance by us of preferred shares could be dilutive to or otherwise
adversely affect the interests of holders of our common shares. As of December 31, 2015, our Series C preferred shares
are convertible, at each of the holder's option, into our common shares at a conversion rate of 0.3758 common shares
per $25.00 liquidation preference, which is equivalent to a conversion price of approximately $66.52 per common share
(subject to adjustment in certain events). Additionally, as of December 31, 2015, our Series E preferred shares are
convertible, at each of the holder's option, into our common shares at a conversion rate of 0.4573 common shares per
$25.00 liquidation preference, which is equivalent to a conversion price of approximately $54.67 per common share
(subject to adjustment in certain events). Under certain circumstances in connection with a change in control of our
Company, holders of our Series F preferred shares may elect to convert some or all of their Series F preferred shares
into a number of our common shares per Series F preferred share equal to the lesser of (a) the $25.00 per share liquidation
preference, plus accrued and unpaid dividends divided by the market value of our common shares or (b) 1.1008 shares.
Depending upon the number of Series C, Series E and Series F preferred shares being converted at one time, a conversion
of Series C, Series E and Series F preferred shares could be dilutive to or otherwise adversely affect the interests of
holders of our common shares. In addition, we may issue a significant amount of equity securities in connection with
acquisitions or investments with or without seeking shareholder approval, which could result in significant dilution to
our existing shareholders.
24
Future offerings of debt or equity securities, which may rank senior to our common shares, may adversely affect
the market price of our common shares.
If we decide to issue debt securities in the future, which would rank senior to our common shares, it is likely that they
will be governed by an indenture or other instrument containing covenants restricting our operating flexibility.
Additionally, any equity securities or convertible or exchangeable securities that we issue in the future may have rights,
preferences and privileges more favorable than those of our common shares and may result in dilution to owners of
our common shares. We and, indirectly, our shareholders, will bear the cost of issuing and servicing such securities.
Because our decision to issue debt or equity securities in any future offering will depend on market conditions and
other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings.
Thus, holders of our common shares will bear the risk of our future offerings reducing the market price of our common
shares and diluting the value of their shareholdings in us.
Changes in foreign currency exchange rates may have an impact on the value of our shares.
The functional currency for our Canadian operations is the Canadian dollar. As a result, our future operating results
could be affected by fluctuations in the exchange rate between U.S. and Canadian dollars, which in turn could affect
our share price. We have attempted to mitigate our exposure to Canadian currency exchange risk by entering into foreign
currency exchange contracts to hedge in part our exposure to exchange rate fluctuations. Foreign currency derivatives
are subject to future risk of loss. We do not engage in purchasing foreign exchange contracts for speculative purposes.
Additionally, we have made investments in China and may enter other international markets which pose similar currency
fluctuation risks as described above.
We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our shares.
At any time, the U.S. federal income tax laws or regulations governing REITs or the administrative interpretations of
those laws or regulations may be changed, possibly with retroactive effect. In addition, there have been a number of
proposals in Congress for major revision of the federal income tax laws, including proposals to adopt a flat tax or
replace the income tax system with a national sales tax or value-added tax. We cannot predict if or when any new U.S.
federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal
income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective or whether
any such law, regulation or interpretation may take effect retroactively. We and our shareholders could be adversely
affected by any such change in, or any new, U.S. federal income tax law, regulation or administrative interpretation.
Furthermore, any proposals seeking broader reform of U.S. federal income tax laws, if enacted, could change the federal
income tax laws applicable to REITs, subject us to federal tax or reduce or eliminate the current deduction for dividends
paid to our shareholders, any of which could negatively affect the market for our shares.
Item 1B. Unresolved Staff Comments
There are no unresolved comments from the staff of the SEC required to be disclosed herein as of the date of this Annual
Report on Form 10-K.
Item 2. Properties
As of December 31, 2015, our real estate portfolio (including properties securing our mortgage notes) consisted of
investments in each of our four operating segments. The Entertainment segment included investments in 131 megaplex
theatre properties, nine entertainment retail centers (which include eight additional megaplex theatre properties and
one live performance venue) and seven family entertainment centers. The Education segment included investments in
70 public charter school properties, 18 early education centers and three private school properties. The Recreation
segment included investments in ten metro ski parks, five waterparks and 19 golf entertainment complexes. The Other
segment consisted primarily of the construction in progress and land held for development related to the Adelaar casino
and resort project in Sullivan County, New York. Our properties are located in 37 states, the District of Columbia and
Ontario, Canada. Except as otherwise noted, all of the real estate investments listed below are owned or ground leased
directly by us. The following table lists our owned properties (excludes properties under development, land held for
development and properties securing our mortgage notes) listed by segment, their locations, acquisition dates, number
of theatre screens (if applicable), number of seats (if applicable), gross square footage, and the tenant.
25
Property
Location
Acquisition
date
Screens
Seats
Building
(gross sq. ft)
Tenant
Entertainment Properties:
Huebner Oaks 14
Studio Movie Grill
First Colony 24 (1)(18)
Leawood Town Center 20 (19)
Oakview Plaza 24
Lennox Town Center 24 (1)
Mission Valley 20 (1)
Ontario Mills 30
Studio 30
West Olive 16
Huebner Oaks Adjacent Retail
Gulf Pointe 30 (2)
South Barrington 30
Mesquite 30 (2)
Hampton Town Center 24
Raleigh Grande 16
Paradise 24 and XD
Broward 18
Aliso Viejo Stadium 20
Boise Stadium 22 (1)
Mesquite Retail Center
Woodridge 18 (2)
Starlight 20
Westminster Promenade 24 (4)
Cary Crossroads Stadium 20
Palm Promenade 24
Gulf Pointe Retail Center
Westminster Promenade
Clearview Palace 12 (1)
Elmwood Palace 20
Hammond Palace 10
Houma Palace 10
Westbank Palace 16
Cherrydale Stadium 16
Forum 30
Olathe Studio 30
Cherrydale Shops
Livonia 20
Hoffman Center 22 (1)
Colonel Glenn 18
AmStar 16-Macon (8)
Star Southfield 20
Star Southfield Center
South Wind 12 (17)
New Roc Stadium 18
New Roc City
Columbiana Grande Stadium 14 (5)
Harbour View Grande 16
Harbour View Marketplace
Cobb Grand 18
Deer Valley 30
Mesa Grand 14 (12)
Hamilton 24
Courtney Park 16 (27)
Kanata 24 (27)
Whitby 24 (27)
Winston Churchill 24 (27)
San Antonio, TX
Dallas, TX
Sugar Land, TX
Leawood, KS
Omaha, NE
Columbus, OH
San Diego, CA
Ontario, CA
Houston, TX
Creve Coeur, MO
San Antonio, TX
Houston, TX
South Barrington, IL
Mesquite, TX
Hampton, VA
Raleigh, NC
Davie, FL
Pompano Beach, FL
Aliso Viejo, CA
Boise, ID
Mesquite, TX
Woodridge, IL
Tampa, FL
Westminster, CO
Cary, NC
San Diego, CA
Houston, TX
Westminster, CO
Metairie, LA
Harahan, LA
Hammond, LA
Houma, LA
Harvey, LA
Greenville, SC
Sterling Heights, MI
Olathe, KS
Greenville, SC
Livonia, MI
Alexandria, VA
Little Rock, AR
Macon, GA
Southfield, MI
Southfield, MI
Lawrence, KS
New Rochelle, NY
New Rochelle, NY
Columbia, SC
Suffolk, VA
Suffolk, VA
Hialeah, FL
Phoenix, AZ
Mesa, AZ
Hamilton, NJ
Mississagua, ON
Kanata, ON
Whitby, ON
Oakville, ON
Subtotal Entertainment Properties, carried over to next page
14
14
24
20
24
24
20
30
30
16
—
30
30
30
24
16
24
18
20
22
—
18
20
24
20
24
—
—
12
20
10
10
16
16
30
28
—
20
22
18
16
20
—
12
18
—
14
16
—
18
30
14
24
16
24
24
24
1,008
2,576
2,962
4,684
962
4,668
4,461
4,173
5,454
4,925
1,029
—
5,701
5,687
3,095
4,673
2,596
4,180
3,424
4,238
4,883
—
4,397
3,928
4,693
3,883
3,192
—
—
2,424
4,334
1,530
1,766
3,053
2,814
4,925
4,191
—
3,604
3,839
3,997
2,950
5,962
—
2,386
4,893
—
2,938
3,036
—
4,900
3,824
2,956
4,183
3,856
4,764
4,688
4,772
187,049
53,583 Regal
56,430
Studio Movie Grill
107,690 AMC
75,224 AMC
107,402 AMC
98,261 AMC
84,352 AMC
131,534 AMC
136,154 AMC
60,418 AMC
27,485 Altitude Trampoline
Park
130,891 AMC
130,757 AMC
130,891 AMC
107,396 AMC
51,450 Carolina Cinemas
96,497 Cinemark
73,637 Carmike Cinemas, Inc.
98,557 Regal
140,300 Regal
27,201 Various
82,000 AMC
84,000 Carmike Cinemas, Inc.
89,260 AMC
77,475 Regal
88,610 AMC
7,808 Various
134,226 Various
70,000 AMC
90,391 AMC
39,850 AMC
44,450 AMC
71,607 AMC
52,830 Regal
107,712 AMC
100,251 AMC
10,000 Various
75,106 AMC
132,903 AMC
79,330 Cinemark
66,400
Southern
112,119 AMC
48,093 Various
42,497 Regal
102,267 Regal
343,809 Various
56,705 Regal
61,500 Regal
96,624 Various
77,400 Cobb
113,768 AMC
94,774 AMC
95,466 AMC
92,971 Cineplex
89,290
89,290
89,290 Cineplex
Landmark Cinemas
Landmark Cinemas
5,036,182
11/97
11/97
11/97
11/97
11/97
11/97
11/97
11/97
11/97
11/97
11/97
2/98
3/98
4/98
6/98
8/98
11/98
11/98
12/98
12/98
1/99
6/99
6/99
6/99
12/99
2/00
5/00
12/01
3/02
3/02
3/02
3/02
3/02
6/02
6/02
6/02
6/02
8/02
10/02
12/02
3/03
5/03
5/03
6/03
10/03
10/03
11/03
11/03
11/03
12/03
3/04
3/04
3/04
3/04
3/04
3/04
3/04
26
Property
Location
Acquisition
date
Screens
Seats
Building
(gross sq. ft)
Tenant
Entertainment Properties:
Subtotal from previous page
Mississauga Entertainment Centrum
(27)
Kanata Entertainment Centrum (27)
Whitby Entertainment Centrum (27)
Oakville Entertainment Centrum (27)
The Grand 16-Layafette (1)(9)
Grand Prairie 18
Cantera Retail Shops
North East Mall 18 (11)
The Grand 18-D'lberville (13)
Avenue 16
Mayfaire Stadium 16 (6)
East Ridge 18 (20)
Burbank 16
Burbank Village
The Grand 14-Conroe
Washington Square 12 (15)
The Grand 18-Hattiesburg (16)
Arroyo Grand Staduim 10 (10)
Auburn Stadium 10 (3)
Manchester Stadium 16 (14)
Modesto Stadium 10 (1)(7)
Columbia 14 (1)
Firewheel 18 (21)
White Oak Stadium 14
The Grand 18 - Winston Salem (1)
Valley Bend 18
Cityplace 14
The Grand 16-Slidell (1)(22)
Pensacola Bayou 15
The Grand 16 - Pier Park
Austell Promenade
Stadium 14 Cinema
The Grand 18 - Four Seasons Stations
(1)
Glendora 12 (1)
Harbour View Station
Ann Arbor 20
Buckland Hills 18
Centreville 12
Davenport 18
Fairfax Corner 14
Flint West 14
Hazlet 12
Huber Heights 16
North Haven 12
Preston Crossing 16
Ritz Center 16
Stonybrook 20
The Greene 14
West Springfield 15
Western Hills 14
Tinseltown 15
Tinseltown USA and XD
Tinseltown USA 20
n/a
Mississagua, ON
Kanata, ON
Whitby, ON
Oakville, ON
Lafayette, LA
Peoria, IL
Warrenville, IL
Hurst, TX
D'Iberville, MS
Melbourne, FL
Wilmington, NC
Chattanooga, TN
Burbank, CA
Burbank, CA
Conroe, TX
Indianapolis, IN
Hattiesurg, MS
Arroyo Grande, CA
Auburn, CA
Fresno, CA
Modesto, CA
Columbia, MD
Garland, TX
Garner, NC
Winston Salem, NC
Huntsville, AL
Kalamazoo, MI
Slidell, LA
Pensacola, FL
Panama City Beach, FL
Austell, GA
Kalispell, MT
Greensboro, NC
Glendora, CA
Suffolk, VA
Ypsilanti, MI
Manchester, CT
Centreville, VA
Davenport, IA
Fairfax, VA
Flint, MI
Hazlet, NJ
Huber Heights, OH
North Haven, CT
Okolona, KY
Voorhees, NJ
Louisville, KY
Beaver Creek, OH
West Springfield, MA
Cincinnati, OH
Beaumont, TX
Colorado Springs, CO
El Paso, TX
Subtotal Entertainment Properties, carried over to next page
n/a
3/04
3/04
3/04
3/04
7/04
7/04
7/04
11/04
12/04
12/04
2/05
3/05
3/05
3/05
6/05
6/05
9/05
12/05
12/05
12/05
12/05
3/06
3/06
4/06
7/06
8/06
11/06
12/06
12/06
5/07
7/07
8/07
11/07
10/08
6/09
12/09
12/09
12/09
12/09
12/09
12/09
12/09
12/09
12/09
12/09
12/09
12/09
12/09
12/09
12/09
6/10
6/10
6/10
27
1,008
—
187,049
—
5,036,182
115,934 Various
—
—
—
16
18
—
18
18
16
16
18
16
—
14
12
18
10
10
16
10
14
18
14
18
18
10
16
15
16
—
14
18
—
—
—
2,744
4,063
—
3,914
2,802
3,600
2,907
4,133
3,749
—
2,403
2,070
2,542
1,714
1,563
3,866
1,889
2,459
3,143
2,619
3,496
4,150
1,007
2,695
3,361
3,636
—
2,088
3,320
384,373 Various
149,487 Various
140,830 Various
Southern
61,579
82,330 Carmike Cinemas, Inc.
Southern
7,500 Various
98,250 Cinemark
59,533
Southern
75,850 Carmike Cinemas, Inc.
57,338 Regal
82,330 Carmike Cinemas, Inc.
86,551 AMC
34,818 Various
45,000
Southern
45,700 AMC
57,367
35,760 Regal
35,089 Regal
80,600 Regal
38,873 Regal
63,306 AMC
75,252 AMC
50,810 Regal
75,605
90,200 Carmike Cinemas, Inc.
65,525 Alamo Draft House
Cinemas
Southern
62,300
74,400 Carmike Cinemas, Inc.
75,605
Southern
18,410 Various
44,650 Cinemark
Southern
74,517
Southern
12
—
20
18
12
18
14
14
12
16
14
16
16
20
14
15
14
15
20
20
1,705
2,186
—
5,602
4,317
3,094
3,772
3,544
3,493
3,000
3,511
1,329
3,264
3,098
3,194
3,211
3,775
3,152
2,805
4,597
4,742
328,668
50,710 AMC
21,406 Various
131,098 Cinemark
87,700 Cinemark
73,500 Cinemark
93,755 Cinemark
74,689 Cinemark
85,911 Cinemark
58,300 Cinemark
95,830 Cinemark
57,202 Cinemark
79,453 Cinemark
62,658 Carmike Cinemas, Inc.
84,202 Carmike Cinemas, Inc.
73,634 Cinemark
111,166 Cinemark
63,829 Cinemark
63,352 Cinemark
109,986 Cinemark
109,030 Cinemark
9,169,265
Property
Location
Acquisition
date
Screens
Seats
Building
(gross sq. ft)
Tenant
Entertainment Properties:
Subtotal from previous page
Movies 16
Tinseltown 290
Movies 14
Movies 14-Mishawaka
Hollywood Movies 20
Tinseltown 20
Movies 10
Tinseltown
Redding 14
Beach Movie Bistro (1)
Dallas Retail
Cinemagic in Merrimack (24)
Cinemagic & IMAX in Hooksett NH
Cinemagic & IMAX in Saco
Cinemagic in Westbrook
Magic Valley Mall Theatre (1)
Pinstripes - Northbrook (1)
Latitude 30
Latitude 39
Look Cinemas-Prestonwood (1)
Pinstripes - Oakbrook (1)
Sandhills 10
Regal Winrock (1)
Alamo Draft House-Austin
Carmike Champaign (1)
Regal Virginia Gateway (1)
The Ambassador Theatre (1)(23)
New Iberia Theatre (1)(23)
Alamo Draft House-Mission
Hollywood 16 Theatre (1)
Cantera Stadium 17 (2)
Tampa Veterans 24
Cantera FEC (1)
Tiger 13
Bedford Theater 7 (25)
Seymour Stadium 8 (25)
Wilder Stadium 14 (25)
Bowling Green Stadium 12 (25)
New Albany Stadium 12 (25)
Clarksville Stadium 16 (25)
Lycoming Mall 12 (25)
Noblesville Stadium 10 (25)
Moline Stadium 14 (25)
O'Fallon Stadium 14 (25)
McDonough Stadium 16 (25)
Strawbridge-Virginia Beach
Carmike Yulee
Punch Bowl Social-Schaumburg
Regency 24 Jacksonville
Regal Crystal Lake 16
Alamo Draft House-Laredo
n/a
Grand Prairie, TX
Houston, TX
McKinney, TX
Mishawaka, IN
Pasadena, TX
Pflugerville, TX
Plano, TX
Pueblo, CO
Redding, CA
Virginia Beach, VA
Dallas, TX
Merrimack, NH
Hooksett, NH
Saco, ME
Westbrook, ME
Twin Falls, ID
Northbrook, IL
Jacksonville, FL
Indianapolis, IN
Dallas, TX
Oakbrook, IL
Southern Pines, NC
Albuquerque, NM
Austin, TX
Champaign, IL
Gainesville, VA
Lafayette, LA
New Iberia, LA
San Francisco, CA
Tuscaloosa, AL
Warrenville, IL
Tampa, FL
Warrenville, IL
Opelika, AL
Bedford, IN
Seymour, IN
Wilder, KY
Bowling Green, KY
New Albany, IN
Clarksville, TN
Williamsport, PA
Noblesville, IN
Moline, IL
O'Fallon, MO
McDonough, GA
Virginia Beach, VA
Yulee, FL
Schaumburg, IL
Jacksonville, FL
Crystal Lake, IL
Laredo, TX
n/a
6/10
6/10
6/10
6/10
6/10
6/10
6/10
6/10
6/10
12/10
12/10
3/11
3/11
3/11
3/11
4/11
7/11
2/12
2/12
3/12
3/12
6/12
6/12
9/12
9/12
2/13
8/13
8/13
8/13
9/13
10/13
10/13
10/13
11/12
4/14
4/14
4/14
4/14
4/14
4/14
4/14
4/14
4/14
4/14
4/14
2/15
2/15
4/15
5/15
7/15
12/15
1,705
15
16
14
14
20
20
10
14
14
7
328,668
2,654
4,369
2,603
2,999
3,156
4,654
1,612
2,649
2,101
640
—
12
15
13
16
13
—
—
—
11
—
10
16
10
13
10
14
10
5
16
17
24
—
13
7
8
14
12
16
16
12
10
14
14
16
12
10
—
24
16
7
—
1,810
2,248
2,256
2,292
2,100
—
—
—
1,672
—
1,696
3,033
946
2,896
2,906
2,267
1,384
537
2,912
3,866
4,344
—
2,896
1,009
1,216
2,047
1,803
2,824
2,824
1,872
1,303
2,270
2,114
2,602
1,200
1,796
—
1,951
1,173
816
9,169,265
53,880 Cinemark
100,656 Cinemark
56,088 Cinemark
62,088 Cinemark
77,324 Cinemark
103,250 Cinemark
34,046 Cinemark
55,231 Cinemark
46,793 Cinemark
20,745 Beach Cinema Bistro
Group, Inc.
33,250 GMBG
42,400 Cinemagic
55,000 Cinemagic
54,000 Cinemagic
53,000 Cinemagic
38,736 Cinema West
39,289
46,000
65,000
62,684
66,442
36,180
71,297 Regal
36,000 Alamo Draft House
Cinemas
Pinstripes
Latitude Global, Inc.
Latitude Global, Inc.
LOOK Cinemas
Pinstripes
Frank Theatres, LLC
55,063 Carmike Cinemas, Inc.
57,943 Regal
Southern
52,957
32,760
Southern
19,237 Alamo Draft House
Cinemas
65,442 Cobb
70,000 Regal
94,774 AMC
35,000 Main Event
55,063 Carmike Cinemas, Inc.
22,152 Regal
24,905 Regal
54,645 Regal
48,658 Regal
68,575 Regal
73,208 Regal
44,608 Regal
33,892 Regal
54,817 Regal
51,958 Regal
57,941 Regal
43,764 Regal
36,200 Carmike Cinemas, Inc.
25,052
PBS Schaumburg,
LLC
82,064 AMC
73,000 Regal
31,800 Alamo Draft House
Cinemas
Subtotal Entertainment Properties
2,295
426,986
11,844,122
28
Property
Location
Acquisition
date
Screens
Seats
Building
(gross sq. ft)
Tenant
Education Properties:
Academy of Columbus
East Mesa Charter Elementary
Imagine Rosefield
100 Academy of Excellence
Groveport Community School
Harvard Avenue Charter School
Hope Community Charter School
Imagine Desert West
Marietta Charter School
Academy of Environmental Science
and Math
Int'l Academy of Mableton
Master Academy
Romig Road Community School
Wesley International Academy
Imagine Groveport Prep
Imagine Indiana Life Sciences
Academy East
Imagine Indiana Life Sciences
Academy West
Mentorship Academy of Digital Arts
and Science
Ben Franklin Academy (1)
Columbus, OH
Mesa, AZ
Surprise, AZ
Las Vegas, NV
Groveport, OH
Cleveland, OH
Washington, DC
Phoenix, AZ
Marietta, GA
St. Louis, MO
Mableton, GA
Fort Wayne, IN
Akron, OH
Atlanta, GA
Groveport, OH
Indianapolis, IN
Indianapolis, IN
Baton Rouge, LA
Highlands Ranch, CO
Bradley Academy of Excellence
Goodyear, AZ
American Leadership Academy
Champions School
Loveland Classical
Gilbert, AZ
Phoenix, AZ
Loveland, CO
Prospect Ridge Academy
Broomfield, CO
South Phoenix Academy
Phoenix, AZ
Pacific Heritage
Valley Academy
Odyssey Institute for International &
Advanced Studies
American Leadership Academy-
Queen Creek Campus
North East Carolina Prep Academy
Salt Lake City, UT
Hurricane, UT
Buckeye, AZ
Gilbert, AZ
Tarboro, NC
Chester Community Charter School
Lowcountry Leadership
Chester Upland, PA
Hollywood, SC
Children's Learning Adventure
Camden Community Charter School
Lake Pleasant, AZ
Camden, NJ
Bella Mente Academy
Vista, CA
Imagine Academy at Sullivant
Imagine Klepinger Community
School
Imagine Madison Avenue
Imagine Columbia Leadership
Columbus, OH
Dayton, OH
Toledo, OH
Columbia, SC
Subtotal Education Properties, carried over to next page
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
9/07
9/07
9/07
10/07
10/07
10/07
10/07
10/07
10/07
6/08
6/08
6/08
6/08
6/08
1/10
1/10
1/10
3/11
4/11
4/11
6/11
6/11
6/11
8/11
11/11
3/12
3/12
4/12
5/12
7/12
3/13
3/13
3/13
4/13
5/13
5/13
5/13
5/13
5/13
29
71,949
45,214
45,578
59,060
78,000
57,652 Harvard Avenue
Imagine Schools, Inc.
Imagine Schools, Inc.
Imagine Schools, Inc.
Imagine Schools, Inc.
Imagine Schools, Inc.
34,962
47,186
24,503
153,000
43,188
106,955
40,400
51,094
72,346
121,933
Community School
Imagine Schools, Inc.
Imagine Schools, Inc.
Imagine Schools, Inc.
Imagine Schools, Inc.
Imagine Schools, Inc.
Imagine Schools, Inc.
Imagine Schools, Inc.
Imagine Schools, Inc.
Imagine Schools, Inc.
Imagine Schools, Inc.
79,358
Imagine Schools, Inc.
54,975 CSDC
64,779 Benjamin Franklin
Acad Project
Development
37,502 Bradley Project
44,600
61,149
24,582
Development
PCI ALA Gilbert LLC
Phoenix Charter
Properties
Loveland Classical
School Project
Development
Prospect Ridge Acad
Project Development
Skyline Schools
Project Development
Pacific Heritage Acad
Project Development
25,324 Valley Acad Project
45,125
60,818
56,724
85,154
211,440
Development
Schoolhouse Buckeye
LLC
Schoolhouse Queen
Creek LLC
110,000 NE Carolina Prep
Acad Project
Development
25,200 CSMI
59,181
Lowcountry
Leadership Project
Development
15,309 CLA Properties
59,024 CSMI
26,454 Bella Mente Project
Development
Imagine Schools, Inc.
Imagine Schools, Inc.
Imagine Schools, Inc.
Imagine Schools, Inc.
41,575
52,112
48,375
21,690
2,363,470
Property
Location
Acquisition
date
Screens
Seats
Building
(gross sq. ft)
Tenant
Education Properties:
Subtotal from previous page
n/a
Learning Foundation & Performing
Arts Academy
McKinley Academy
Global Village Academy-Colorado
Springs
Skyline Chandler
Harrisburg Pike Community
Children's Learning Adventure
American Intl School of Utah
Children's Learning Adventure
Children's Learning Adventure
Children's Learning Adventure
Children's Learning Adventure
Franklin Academy Palm Beach
iLEAD Charter School
Gilbert, AZ
Chicago, IL
Colorado Springs, CO
Chandler, AZ
Columbus, OH
Goodyear, AZ
Salt Lake City, UT
Oklahoma City, OK
Las Vegas, NV
Coppell, TX
Las Vegas, NV
Palm Beach, FL
Mesa, AZ
North Carolina Leadership Academy
Kernersville, NC
Basis Private San Jose
San Jose, CA
Basis Private Brooklyn (1)
Brooklyn, NY
Children's Learning Adventure
Global Village Academy-Fort Collins
Mesa, AZ
Fort Collins, CO
British School of Chicago
Wilson Prep Academy
Children's Learning Adventure
Impact Charter Elementary
Chicago, IL
Wilson, NC
Gilbert, AZ
Baker, LA
Bradford Preparatory School
Charlotte, NC
Horizon Science Academy South
Chicago
Children's Learning Adventure
Phoenix Academy High School
Champion Fit Kids
Children's Learning Adventure
LowCountry Montessori
Chicago, IL
Cedar Park, TX
High Point, NC
Chandler, AZ
Centennial, CO
Port Royal, SC
Global Village Academies - Douglas
County
Global Village International - Parker
Parker, CO
Parker, CO
Global Village International -
Littleton
Global Village International -
Lakewood
Global Village International - Castle
Rock
Global Village International - Arvada
Du Bois School of Arts and
Technology
Macon Charter Academy
Pineapple Cove
Littleton, CO
Lakewood, CO
Castle Rock, CO
Arvada, CO
Memphis, TN
Macon, GA
Palm Bay, FL
Subtotal Education Properties, carried over to next page
n/a
5/13
5/13
6/13
7/13
11/13
6/13
7/13
8/13
9/13
9/13
9/13
10/13
12/13
12/13
12/13
12/13
1/14
2/14
2/14
3/14
3/14
4/14
5/14
5/14
7/14
7/14
8/14
8/14
9/14
1/15
1/15
1/15
1/15
1/15
1/15
2/15
2/15
3/15
30
—
—
—
—
2,363,470
52,723 CAFA Gilbert
Investments
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
62,900 Concept Schools
110,000 GVA CS Project
70,000
Development
Skyline Chandler
Project Development
Imagine Schools, Inc.
67,043
20,746 CLA Properties
160,000
Schoolhouse Galleria
LLC
25,737 CLA Properties
16,534 CLA Properties
25,737 CLA Properties
25,737 CLA Properties
80,000 Discovery Schools
iLEAD Lancaster
34,647
Project Development
38,448 NC Leadership Project
Development
80,604 Highmark Independent
LLC
89,556 Highmark Independent
LLC
25,744 CLA Properties
51,180 GVA FC Project
Development
102,000 British Schools of
America
29,000 Wilson Prep Project
Development
25,737 CLA Properties
34,033
ICE Project
Development LLC
23,790 Bradford Charter
Holdings LLC
53,885 Concept Schools
25,737 CLA Properties
39,000
Phoenix Academy
Project Development
31,240 American Charter
Development
25,737 CLA Properties
28,070
Lowcountry Charter
Holdings LLC
37,180 Global Village
Academy
6,260 Global Village
International
8,777 Global Village
International
4,995 Global Village
International
8,580 Global Village
International
4,995 Global Village
International
135,959 DuBois Lanier Project
Development LLC
70,700 Macon Charter
Academy
Pineapple Cove
Classical Academy
32,000
4,128,481
Property
Location
Acquisition
date
Screens
Seats
Building
(gross sq. ft)
Tenant
Education Properties:
Subtotal from previous page
Global Village International -
Lafayette
Phoenix Academy II
Bridgeton Charter
Carrington Academy
Carrington Academy
Subtotal Education Properties
Recreation Properties:
Mad River Mountain (1)(26)
Topgolf-Allen (1)
Topgolf-Dallas (1)
Topgolf-Houston (1)
WISP Resort (1) (28)
Topgolf-Colony
Camelback Mountain Resort (29)
Topgolf-Alpharetta
Topgolf-Scottsdale (1)
Topgolf-Spring
Topgolf-San Antonio (1)
Topgolf-Brandon (1)
Topgolf-Gilbert
Topgolf-Overland Park
Topgolf-Dulles (1)
Topgolf-Mid Town Atlanta
Topgolf-Centennial
Topgolf-Naperville
Topgolf-Okalhoma City
Topgolf-Webster
Topgolf-Virginia Beach
Wintergreen Resort (1) (30)
n/a
Lafayette, CO
High Point, NC
Bridgeton, NJ
Atlanta, GA
Atlanta, GA
Bellfontaine, OH
Allen, TX
Dallas, TX
Houston, TX
McHenry, MD
Colony, TX
Tannersville, PA
Alpharetta, GA
Scottsdale, AZ
Spring, TX
San Antonio, TX
Tampa, FL
Gilbert, AZ
Overland Park, KS
Ashburn, VA
Atlanta, GA
Centennial, CO
Naperville, IL
Oklahoma City, OK
Webster, TX
Virginia Beach, VA
Wintergreen, VA
Camelback Lodge (1)
Tannersville, PA
Subtotal Recreation Properties
n/a
4/15
6/15
9/15
10/15
10/15
11/05
2/12
2/12
9/12
12/12
12/12
9/13
5/13
6/13
7/13
12/13
2/14
2/14
5/14
6/14
6/14
6/14
8/14
9/14
11/14
12/14
2/15
5/15
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4,128,481
4,950 Global Village
60,000
International
Phoenix Academy
Project Development
20,000 Bridgeton Project
Development LLC
13,797 Nobel Learning
Communities Inc
13,930 Nobel Learning
Communities Inc
4,241,158
48,427
63,242
46,400
65,000
113,135
64,100
Peak Resorts, Inc.
Topgolf USA
Topgolf USA
Topgolf USA
Everbright Pacific,
LLC
Topgolf USA
155,669 CBK
64,232
59,850
64,232
64,232
64,232
64,232
65,000
64,232
65,000
65,000
64,232
65,000
64,232
64,232
164,612
Topgolf USA
Topgolf USA
Topgolf USA
Topgolf USA
Topgolf USA
Topgolf USA
Topgolf USA
Topgolf USA
Topgolf USA
Topgolf USA
Topgolf USA
Topgolf USA
Topgolf USA
Topgolf USA
Pacific Group Resorts
Inc.
580,527 CBK Lodge & CBH20
2,199,050
Total
2,295
426,986
18,284,330
(1) Third-party ground leased property. Although we are the tenant under a ground lease and have assumed responsibility for performing the obligations
(2)
thereunder, pursuant to the lease, the tenant is responsible for performing our obligations under the ground lease.
In addition to the theatre property itself, we have acquired land parcels adjacent to the theatre property, which we have or intend to lease or sell to
restaurant or other entertainment themed operators.
(3) Property is included as security for a $5.3 million mortgage notes payable.
(4) Property is included as security for a $4.8 million mortgage note payable.
(5) Property is included as security for a $6.7 million mortgage note payable.
(6) Property is included as security for a $6.3 million mortgage note payable.
(7) Property is included as security for a $3.9 million mortgage note payable.
(8) Property is included as security for a $5.3 million mortgage note payable.
(9) Property is included as security for a $7.4 million mortgage note payable.
(10) Property is included as security for a $4.0 million mortgage note payable.
(11) Property is included as security for a $12.0 million mortgage note payable.
(12) Property is included as security for a $12.8 million mortgage note payable.
(13) Property is included as security for a $9.4 million mortgage note payable.
(14) Property is included as security for a $9.7 million mortgage note payable.
(15) Property is included as security for a $4.2 million mortgage note payable.
(16) Property is included as security for a $8.5 million mortgage note payable.
(17) Property is included as security for a $3.9 million mortgage note payable
(18) Property is included as security for a $15.0 million mortgage note payable.
(19) Property is included as security for a $12.6 million mortgage note payable.
31
(20) Property is included as security for a $10.3 million mortgage note payable.
(21) Property is included as security for a $13.1 million mortgage note payable.
(22) Property is included as security for $10.6 million bond payable.
(23) Property is included as security for a $14.4 million bond payable.
(24) Property in included as security for a $3.5 million mortgage note payable.
(25) Property is included as security for a $93.6 million mortgage note payable.
(26) Property includes approximately 60 skiable acres.
(27) Property is located in Ontario, Canada.
(28) Property includes 690 skiable acres.
(29) Property includes 160 skiable acres.
(30) Property includes 129 skiable acres.
As of December 31, 2015, our owned portfolio of entertainment properties consisted of 11.8 million square feet and was
98% leased, including 10.0 million square feet of owned megaplex theatre properties that were 100% leased. The following
table sets forth lease expirations regarding EPR’s owned megaplex theatre portfolio as of December 31, 2015 (dollars in
thousands).
Year
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Thereafter
Number of
Properties
4
4
16
5
8
5
12
5
14
8
6
13 (2)
4
16 (3)
1
5 (4)
3
6
2
2
—
139
Megaplex Theatre Portfolio
Square
Footage
423,934
332,438
1,350,489
460,458
571,829
279,245
874,935
497,875
1,118,487
500,125
379,977
685,481
246,513
1,314,991
36,200
297,371
119,566
313,641
111,493
51,037
—
9,966,085
Revenue for the Year
Ended December 31, 2015 (1)
9,253
$
7,377
26,462
12,621
14,006
7,568
22,299
10,540
27,776
14,167
10,767
15,028
6,104
16,201
742
6,981
2,047
4,536
1,977
74
—
216,526
$
% of
Company's
Total
Revenue
2.2%
1.7%
6.3%
3.0%
3.3%
1.8%
5.3%
2.5%
6.6%
3.3%
2.6%
3.6%
1.4%
3.8%
0.2%
1.7%
0.5%
1.1%
0.5%
—%
—%
51.4%
(1) Consists of rental revenue and tenant reimbursements.
(2) Eleven of these properties are leased under a master lease.
(3) Fifteen of these theatre properties are leased under a master lease.
(4) Four of these theatre properties are leased under a master lease.
32
As of December 31, 2015, our owned portfolio of education properties consisted of 4.2 million square feet and was 100%
leased. The following table sets forth lease expirations regarding EPR’s owned education portfolio as of December 31,
2015 (dollars in thousands).
Year
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Thereafter
Number of
Properties
1
1
—
—
—
—
—
—
—
—
—
—
—
—
—
11 (1)
13 (2)
16 (3)
15
24 (4)
2
83
Education Portfolio
Square
Footage
Revenue for the Year
Ended December 31, 2015
% of
Company's
Total
Revenue
— $
59,024
—
—
—
—
—
—
—
—
—
—
—
—
—
469,018
899,445
969,887
763,367
1,028,943
51,474
4,241,158
$
236
1,294
—
—
—
—
—
—
—
—
—
—
—
—
—
7,703
17,062
16,464
18,638
13,000
204
74,601
0.1%
0.3%
—%
—%
—%
—%
—%
—%
—%
—%
—%
—%
—%
—%
—%
1.8%
4.1%
3.9%
4.4%
3.1%
—%
17.7%
(1) Four of these education properties are leased under a master lease to Imagine.
(2) Five of these education properties are leased under a master lease to Imagine.
(3) Nine of these education properties are leased under a master lease to Imagine.
(4) Three of these education properties are leased under a master lease to Imagine.
33
As of December 31, 2015, our owned portfolio of recreation properties consisted of approximately 2.2 million square feet
of buildings and 1,210 acres of land, and was 100% leased. The following table sets forth lease expirations regarding EPR’s
owned recreation portfolio as of December 31, 2015 (dollars in thousands).
Year
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Thereafter
Number of
Properties
—
—
—
—
—
—
—
—
—
—
—
1
—
—
—
—
3
1
6
11
—
22
Recreation Portfolio
Square
Footage
Revenue for the Year
Ended December 31, 2015
% of
Company's
Total
Revenue
— $
—
—
—
—
—
—
—
—
—
—
113,135
—
—
—
—
174,642
64,100
365,205
1,481,968
—
2,199,050
$
—
—
—
—
—
—
—
—
—
—
—
2,896
—
—
—
—
4,506
1,676
10,638
20,834
—
40,550
—%
—%
—%
—%
—%
—%
—%
—%
—%
—%
—%
0.7%
—%
—%
—%
—%
1.1%
0.4%
2.5%
4.9%
—%
9.6%
34
Our properties are located in 37 states, the District of Columbia and in the Canadian province of Ontario. The following
table sets forth certain state-by-state and Ontario, Canada information regarding our owned real estate portfolio as of
December 31, 2015 (dollars in thousands). This data does not include the public charter schools recorded as a direct financing
lease.
Location
Texas
Ontario, Canada
Arizona
Illinois
Florida
Virginia
California
Colorado
Pennsylvania
North Carolina
Michigan
Louisiana
New York
Ohio
Georgia
Indiana
New Jersey
Tennessee
Kansas
Kentucky
Utah
Alabama
South Carolina
Idaho
Maryland
Connecticut
Mississippi
Missouri
Massachusetts
Nebraska
Maine
New Hampshire
Iowa
Oklahoma
Arkansas
New Mexico
Montana
Nevada
Building (gross
sq. ft)
2,140,907
1,151,465
1,050,674
1,004,267
992,659
983,546
973,189
886,554
806,004
723,613
625,564
614,902
535,632
379,981
370,410
322,312
295,448
291,497
282,972
266,958
230,449
210,705
206,786
179,036
176,441
144,902
116,900
112,376
111,166
107,402
107,000
97,400
93,755
90,737
79,330
71,297
44,650
42,271
16,921,157
(1) Consists of rental revenue and tenant reimbursements.
Rental
revenue for the year ended
December 31, 2015 (1)
% of
Rental
Revenue
44,286
33,688
22,745
19,770
22,333
15,876
31,833
14,560
13,422
13,458
11,834
12,039
11,925
5,574
6,199
5,110
6,243
4,642
5,970
4,766
3,478
4,318
3,391
2,714
4,151
2,675
3,017
1,971
766
1,836
1,700
2,072
1,155
2,185
1,586
1,251
911
1,756
347,206
12.8%
9.7%
6.5%
5.7%
6.4%
4.6%
9.2%
4.2%
3.9%
3.9%
3.4%
3.5%
3.4%
1.6%
1.8%
1.5%
1.8%
1.3%
1.7%
1.4%
1.0%
1.2%
1.0%
0.8%
1.2%
0.8%
0.9%
0.6%
0.2%
0.5%
0.5%
0.6%
0.3%
0.6%
0.4%
0.4%
0.2%
0.5%
100.0%
$
$
35
Office Location
Our executive office is located in Kansas City, Missouri and is leased from a third-party landlord. The office occupies
approximately 39 thousand square feet with projected 2016 annual rent of approximately $594 thousand. The lease is
scheduled to expire on September 30, 2026, with two separate five-year extension options available.
Tenants and Leases
Our existing leases on rental property (on a consolidated basis - excluding unconsolidated joint venture properties) provide
for aggregate annual minimum rentals of approximately $364.8 million (not including periodic rent escalations, percentage
rent or straight-line rent). Our entertainment portfolio has an average remaining base term life of approximately nine years,
our education portfolio has an average remaining base term life of approximately 18 years and our recreation portfolio has
an average remaining base term life of approximately 19 years. These leases may be extended for predetermined extension
terms at the option of the tenant. Our leases are typically triple-net leases that require the tenant to pay substantially all
expenses associated with the operation of the properties, including taxes, other governmental charges, insurance, utilities,
service, maintenance and any ground lease payments.
Property Acquisitions and Developments in 2015
Our property acquisitions and developments in 2015 consisted primarily of spending in each of our primary segments of
Entertainment, Education and Recreation. The percentage of total investment spending related to build-to-suit projects,
including investment spending for mortgage notes, increased to approximately 81% in 2015 from approximately 73% in
2014, and we expect this trend toward more build-to-suit projects to continue in 2016. Many of our build-to-suit opportunities
come to us from our existing strong relationships with property operators and developers.
Item 3. Legal Proceedings
On June 7, 2011, affiliates of Louis Cappelli, Concord Associates, L.P., Concord Resort, LLC and Concord Kiamesha LLC
(the “Cappelli Group”), filed a complaint with the Supreme Court of the State of New York, County of Sullivan, against
two subsidiaries of the Company seeking (i) a declaratory judgment concerning the Company's obligations under a previously
disclosed settlement agreement involving these entities, (ii) an order that the Company execute the golf course lease and
the “Racino Parcel” lease subject to the settlement agreement, and (iii) an extension of the restrictive covenant against
ownership or operation of a casino on the Adelaar resort property under the settlement agreement (the “Restrictive
Covenant”), which covenant was set to expire on December 31, 2011. The Company filed counterclaims seeking related
relief. The Cappelli Group subsequently obtained leave to discontinue its claims, but the counterclaims remained pending.
On June 30, 2014, the Court (i) denied the Cappelli Group’s motion to dismiss the counterclaims, (ii) granted the Company's
motion for summary judgment finding that the Cappelli Group missed the December 31, 2011 deadline to fully execute a
master credit agreement which was a condition to the Company’s obligation to continue its joint development activities
with the Cappelli Group under the settlement agreement, (iii) granted the Company’s motion for summary judgment finding
that the Restrictive Covenant had expired, and (iv) granted the Company’s motion for declaratory relief declaring the
Company as master developer of the Adelaar resort property. The Cappelli Group perfected its appeal of the summary
judgment decision in the Appellate Division, Third Department on December 30, 2014. On July 30, 2015, the Appellate
Division, Third Department affirmed the lower court’s decision granting summary judgment in favor of the Company. On
August 27, 2015, the Cappelli Group filed a motion in the Appellate Division for leave to appeal to the Court of Appeals.
On November 23, 2015, the Cappelli Group’s motion for leave to appeal the summary judgment decision was denied. As
a result, this case is now closed.
On October 20, 2011, the Cappelli Group also filed suit against the Company and two affiliates in the Supreme Court of
the State of New York, County of Westchester, asserting a claim for breach of contract and the implied covenant of good
faith, and seeking damages of at least $800 million, based on the same allegations as in the action the Cappelli Group filed
in Sullivan County Supreme Court. The Company has moved to dismiss the Amended Complaint in Westchester County
based on the Sullivan County Supreme Court’s June 30, 2014 decision (which has now been affirmed). On January 26,
2016, the Supreme Court denied the Company's motion to dismiss but ordered the Cappelli Group to amend its pleading
and remove all claims and allegations previously determined by the Third Department (discussed above). On February 18,
2016, the Cappelli Group revised their amended complaint, which the Company believes remains deficient.
36
On September 18, 2013, the United States District Court for the Southern District of New York (the “District Court”)
dismissed the complaint filed by Concord Associates L.P. and six other companies affiliated with Mr. Cappelli against the
Company and certain of its subsidiaries, Empire Resorts, Inc. and Monticello Raceway Management, Inc. (collectively,
“Empire”), and Kien Huat Realty III Limited and Genting New York LLC (collectively, “Genting”). The complaint alleged,
among other things, that the Company had conspired with Empire to monopolize the racing and gaming market in the
Catskills by entering into exclusivity and development agreements to develop a comprehensive resort destination in Sullivan
County, New York. The plaintiffs are seeking $500 million in damages (trebled to $1.5 billion under antitrust law), punitive
damages, and injunctive relief. The District Court dismissed plaintiffs’ federal antitrust claims against all defendants with
prejudice, and dismissed the pendent state law claims against Empire and Genting without prejudice, meaning they could
be further pursued in state court. On October 2, 2013, the plaintiffs filed a motion for reconsideration with the District Court,
seeking permission to file a Second Amended Complaint, and soon after filed a Notice of Appeal. The District Court denied
the motion for reconsideration in an Opinion and Order dated November 3, 2014, and the plaintiffs perfected their appeal
in the Second Circuit on or about December 17, 2014. Oral arguments by the parties regarding the appeal were presented
on April 29, 2015.
The Company has not determined that losses related to these matters are probable. Because of the favorable rulings described
above, and the pending or potential appeals, together with the inherent difficulty of predicting the outcome of litigation
generally, the Company does not have sufficient information to determine the amount or range of reasonably possible loss
with respect to these matters. The Company’s assessments are based on estimates and assumptions that have been deemed
reasonable by management, but that may prove to be incomplete or inaccurate, and unanticipated events and circumstances
may occur that might cause the Company to change those estimates and assumptions. The Company intends to vigorously
defend the claims asserted against the Company and certain of its subsidiaries by the Cappelli Group and its affiliates, for
which the Company believes it has meritorious defenses, but there can be no assurances as to the outcome of the claims
and related litigation.
Item 4. Mine Safety Disclosures
Not applicable.
37
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Market Information and Dividends
The following table sets forth, for the quarterly periods indicated, the high and low sales prices per share for our common
shares on the New York Stock Exchange (“NYSE”) under the trading symbol “EPR” and the dividends declared.
2015:
Fourth quarter
Third quarter
Second quarter
First quarter
2014:
Fourth quarter
Third quarter
Second quarter
First quarter
High
Low
Dividend
$
$
59.42
$
50.85
$
57.79
61.70
65.76
49.24
54.70
56.64
59.29
$
49.91
$
60.80
55.90
54.76
50.24
52.50
48.38
0.908
0.908
0.908
0.908
0.855
0.855
0.855
0.855
We declared dividends to common shareholders aggregating $3.63 and $3.42 per common share in 2015 and 2014,
respectively.
While we intend to continue paying regular dividends, future dividend declarations will be at the discretion of the Board
of Trustees and will depend on our actual cash flow, our financial condition, capital requirements, the annual distribution
requirements under the REIT provisions of the Code, debt covenants and other factors the Board of Trustees deems
relevant. We began paying dividends to our common shareholders on a monthly rather than quarterly basis beginning
in May 2013 and expect to continue to pay such dividends monthly. We expect to continue to pay dividends to our
preferred shareholders on a quarterly basis. The actual cash flow available to pay dividends may be affected by a number
of factors, including the revenues received from rental properties and mortgage notes, our operating expenses, debt
service on our borrowings, the ability of tenants and customers to meet their obligations to us and any unanticipated
capital expenditures. Our Series C preferred shares have a fixed dividend rate of 5.75%, our Series E preferred shares
have a fixed dividend rate of 9.00% and our Series F preferred shares have a fixed dividend rate of 6.625%.
During the year ended December 31, 2015, the Company did not sell any unregistered equity securities.
On February 23, 2016, there were approximately 893 holders of record of our outstanding common shares.
38
Issuer Purchases of Equity Securities
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
Total Number
of Shares
Purchased
Average
Price Paid
Per Share
—
$
—
— $
4,109 (1)
5,283 (1)
9,392
$
57.53
56.79
57.11
—
—
— $
—
—
—
—
Period
October 1 through October 31,
2015 common stock
November 1 through November
30, 2015 common stock
December 1 through December
31, 2015 common stock
Total
(1) The repurchases of equity securities during November and December of 2015 were completed in conjunction with
employee stock option exercises. These repurchases were not made pursuant to a publicly announced plan or program.
39
Share Performance Graph
The following graph compares the cumulative return on our common shares during the five year period ended
December 31, 2015, to the cumulative return on the MSCI U.S. REIT Index and the Russell 2000 Index for the same
period. The comparisons assume an initial investment of $100 and the reinvestment of all dividends during the
comparison period. Performance during the comparison period is not necessarily indicative of future performance.
TOTAL RETURN TO STOCKHOLDERS
(Assumes $100 investment on 12/31/10)
EPR Properties
MSCI US REIT Index
Russell 2000 Index
2011
2012
2013
2014
2015
12/31/2010
100.00
$
100.00
$
100.00
$
12/31/2011
100.76
$
108.69
$
95.82
$
12/31/2012
113.68
$
128.00
$
111.49
$
12/31/2013
128.88
$
131.17
$
154.78
$
12/31/2014
160.91
$
171.01
$
162.35
$
12/31/2015
173.84
$
175.32
$
155.18
$
190
175
160
145
130
115
100
s
r
a
l
l
o
D
85
2010
Total Return Analysis
EPR Properties
MSCI US REIT Index
Russell 2000 Index
Source: SNL Financial
The performance graph and related text are being furnished to and not filed with the SEC, and will not be deemed
"soliciting material" or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of
the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act or
the Exchange Act, except to the extent we specifically incorporate such information by reference into such a filing.
40
Item 6. Selected Financial Data
Operating statement data
(Dollars in thousands except per share data)
Rental revenue
Tenant reimbursements
Other income
Mortgage and other financing income
Total revenue
Property operating expense
Other expense
General and administrative expense
Retirement severance expense
Costs associated with loan refinancing or payoff, net
Gain on early extinguishment of debt
Interest expense, net
Transaction costs
Provision for loan losses
Impairment charges
Depreciation and amortization
Income before equity in income from joint
ventures and other items
Equity in income from joint ventures
Gain on sale or acquisition, net
Gain on sale of investment in a direct financing lease
Gain on previously held equity interest
Income before income taxes
Income tax benefit (expense)
Income from continuing operations
Discontinued operations:
Income (loss) from discontinued operations
Transaction (costs) benefit
Impairment charges
Gain (loss) on sale, net from discontinued operations
Net income
Add: Net income attributable to noncontrolling interests
Net income attributable to EPR Properties
Preferred dividend requirements
Preferred share redemption costs
Net income available to common shareholders of
EPR Properties
Per share data attributable to EPR Properties
shareholders:
Basic earnings per share data:
Income from continuing operations
Income (loss) from discontinued operations
Net income available to common shareholders
Diluted earnings per share data:
Income from continuing operations
Income (loss) from discontinued operations
Net income available to common shareholders
Shares used for computation (in thousands):
Basic
Diluted
Cash dividends declared per common share
2015
$ 330,886
16,320
3,629
70,182
421,017
23,433
648
31,021
18,578
270
—
79,915
7,518
—
—
89,617
Year Ended December 31,
2013
$ 248,709
18,401
1,682
74,272
343,064
26,016
658
25,613
—
6,166
(4,539)
81,056
1,955
—
—
53,946
2014
$ 286,673
17,663
1,009
79,706
385,051
24,897
771
27,566
—
301
—
81,270
2,452
3,777
—
66,739
2012
$234,517
18,575
738
63,977
317,807
24,915
1,382
23,170
—
627
—
76,656
404
—
3,074
46,698
170,017
969
23,829
—
—
194,815
(482)
$ 194,333
177,278
1,273
1,209
220
—
179,980
(4,228)
$ 175,752
152,193
1,398
3,017
—
4,853
161,461
14,176
$ 175,637
140,881
1,025
—
—
—
141,906
—
$141,906
2011
$219,733
17,965
374
55,564
293,636
24,204
1,613
20,173
—
1,877
—
71,295
1,727
—
2,531
42,975
127,241
2,847
—
—
—
130,088
—
$130,088
199
—
—
—
194,532
—
194,532
(23,806)
—
505
3,376
—
—
179,633
—
179,633
(23,807)
—
333
620
—
—
— (20,835)
(27)
121,664
(108)
121,556
(24,508)
(3,888)
4,256
180,226
—
180,226
(23,806)
—
(34,367)
—
—
19,545
115,266
(38)
115,228
(28,140)
(2,769)
$ 170,726
$ 155,826
$ 156,420
$ 93,160
$ 84,319
$
$
$
$
$
2.93
0.01
2.94
2.92
0.01
2.93
58,138
58,328
3.63
$
$
$
$
$
2.80
0.07
2.87
2.79
0.07
2.86
54,244
54,444
3.42
$
$
$
$
$
3.16
0.10
3.26
3.15
0.09
3.24
48,028
48,214
3.16
$
$
$
$
$
2.42
(0.43)
1.99
2.41
(0.43)
1.98
46,798
47,049
3.00
$
$
$
$
$
2.13
(0.32)
1.81
2.12
(0.32)
1.80
46,640
46,901
2.80
The Company adopted FASB Accounting Standards Update (ASU) No. 2014-08, Reporting Discontinued Operations
and Disclosures of Disposals of Components of an Entity, in 2014.
41
Balance sheet data
(Dollars in thousands)
The balance sheet data below reflects the reclassification of deferred financing costs, net, as we early adopted the FASB
issued Accounting Standards Update (ASU) No. 2015-03, Simplifying the Presentation of Debt Issue Costs, during 2015
and applied the guidance retrospectively. The costs unrelated to our unsecured revolving credit facility are shown as a
reduction of debt for the years presented.
Net real estate investments
Mortgage notes and related accrued interest
receivable, net
Investment in a direct financing lease, net
Total assets
Dividends payable
Debt
Total liabilities
Equity
December 31,
2015
$3,427,729
2014
$2,839,333
2013
$2,394,966
2012
$2,113,434
2011
$2,031,090
423,780
507,955
486,337
455,752
325,097
190,880
4,217,270
24,352
1,981,920
199,332
3,686,275
22,233
1,629,750
242,212
3,254,372
19,552
1,457,432
234,089
2,931,827
41,186
1,353,929
233,619
2,721,980
38,711
1,142,280
2,143,402
1,759,786
1,566,358
1,471,929
1,223,877
2,073,868
1,926,489
1,688,014
1,459,898
1,498,103
42
Item 7. 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 Annual Report on Form 10-K. The forward-looking statements included in this discussion and elsewhere
in this Annual Report on Form 10-K involve risks and uncertainties, including anticipated financial performance,
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.” 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 this Item and in Item 1A - “Risk Factors.”
Overview
Business
Our principal business objective is to enhance shareholder value by achieving predictable and increasing FFO and
dividends per share. Our prevailing strategy is to focus on long-term investments in a limited number of categories in
which we maintain a depth of knowledge and relationships, and which we believe offer sustained performance
throughout all economic cycles. Our investment portfolio includes ownership of and long-term mortgages on
entertainment, education and recreation 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.
It has been our strategy to structure leases and financings to ensure a positive spread between our cost of capital and
the rentals or interest paid by our tenants. We have primarily acquired or developed new properties that are pre-leased
to a single tenant or multi-tenant properties that have a high occupancy rate. We have also entered into certain joint
ventures and we have provided mortgage note financing. 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), and managing our portfolio as we have continued to grow. We believe our
management’s knowledge and industry relationships have facilitated opportunities for us to acquire, finance and lease
properties. Our business is subject to a number of risks and uncertainties, including those described in “Risk Factors”
in Item 1A of this report.
As of December 31, 2015, our total assets were approximately $4.2 billion (after accumulated depreciation of
approximately $0.5 billion) which included investments in each of our four operating segments with properties located
in 37 states, the District of Columbia and Ontario, Canada.
• Our Entertainment segment included investments in 131 megaplex theatre properties, nine entertainment retail
centers (which include eight additional megaplex theatre properties and one live performance venue) and
seven family entertainment centers. Our portfolio of owned entertainment properties consisted of 11.8 million
square feet and was 98% leased, including megaplex theatres that were 100% leased.
• Our Education segment included investments in 70 public charter school properties, 18 early education centers
and three private schools. Our portfolio of owned education properties consisted of 4.2 million square feet
and was 100% leased.
• Our Recreation segment included investments in 10 metro ski parks, five waterparks and 19 golf entertainment
complexes. Our portfolio of owned recreation properties was 100% leased.
• Our Other segment consisted primarily of the property under development and land held for development
related to the Adelaar casino and resort project in Sullivan County, New York.
The combined owned portfolio consisted of 18.3 million square feet and was 99% leased. As of December 31, 2015,
we also had invested approximately $378.9 million in property under development.
43
Operating Results
Our total revenue, net income available to common shareholders and Funds From Operations As Adjusted ("FFOAA")
per diluted share are detailed below for the years ended December 31, 2015 and 2014 (in millions, except per share
information):
Year ended December 31,
2015
2014
Increase
Total revenue
Net income available to common
shareholders of EPR Properties
FFOAA per diluted share
$
421.0
$
385.1
170.7
4.44
155.8
4.13
9%
10%
8%
Year ended December 31, 2015
• Our total revenue, net income available to common shareholders and FFOAA per diluted share for the year
ended December 31, 2015 were favorably impacted from the capitalization of interest expense related to the
Adelaar casino and resort project of $8.7 million, by the results of investment spending in 2014 and 2015 and
lower financing rates.
• Our total revenue, net income available to common shareholders and FFOAA per diluted share for the year
ended December 31, 2015 were unfavorably impacted by the sale of four public charter schools in April 2014
and the payoff of various mortgage notes due from Peak Resorts, Inc. ("Peak") in December 2014, as well as
a weaker Canadian dollar exchange rate.
• Our net income available to common shareholders for the year ended December 31, 2015 was favorably
impacted by net gains from property dispositions of $23.8 million and unfavorably impacted by retirement
severance expense of $18.6 million related to the retirement of our former Chief Executive Officer and higher
transaction costs.
• Our net income available to common shareholders and FFOAA per diluted share for the year ended December
31, 2015 was favorably impacted by lower income tax expense related to our Canadian operations and was
unfavorably impacted by higher general and administrative costs.
Year ended December 31, 2014
• Our total revenue, net income available to common shareholders and FFOAA per diluted share for the year
ended December 31, 2014 were favorably impacted by the results of investment spending in 2013 and 2014,
a $5.0 million prepayment fee, lower financing rates and lower bad debt expense.
• Our total revenue, net income available to common shareholders and FFOAA per diluted share for the year
ended December 31, 2014 were unfavorably impacted by the sale of four public charter schools in April 2014
and and the payoff of various mortgage notes due from Peak in December 2014.
• Our net income available to common shareholders for the year ended December 31, 2014 was favorably
impacted by a $3.4 million reversal of a liability that was established related to the acquisition of Toronto
Dundas Square (now sold), as well as gains from property dispositions of $1.4 million, and was unfavorably
impacted by a $3.8 million provision for loan loss.
• Our net income available to common shareholders and FFOAA per diluted share for the year ended December
31, 2014 were unfavorably impacted by higher general and administrative costs, as well as higher income tax
expense related to our Canadian operations.
• Our per share results for the year ended December 31, 2014 were also unfavorably impacted by lower average
leverage (measured by debt to gross assets) than in the prior year.
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 "Funds From Operations (FFO), Funds From
Operations As Adjusted (FFOAA) and Adjusted Funds from Operations (AFFO)."
44
Investment Spending Overview
During 2015, our total investment spending of $632.0 million was a slight increase over our investment spending in
2014 with increases coming in our Education and Recreation segments, and offset by a decrease in our Entertainment
segment.
During 2015, our investment spending in our Entertainment segment was $106.1 million compared to $170.8 million
in the prior year. The prior year included an acquisition of an 11 theatre portfolio for approximately $118 million. We
continued to have build-to-suit opportunities available for megaplex theatres at attractive terms with both existing and
new tenants. Additionally, many megaplex theatre operators are expanding their food and beverage options and are
now including in-theatre dining options, luxury seating and alcohol availability. This trend is expected to continue to
provide build-to-suit opportunities for us in the future as well. In addition, we continue to diversify our tenant base in
the Entertainment segment. Over the last five years, revenue from our largest tenant, American Multi-Cinema, Inc.,
have decreased from 36% of our total revenue to 20% of our total revenue.
During 2015, our investment spending in our Education segment was $272.9 million compared to $225.0 million in
the prior year, and included build-to-suit public charter schools, early childhood education centers and private schools.
We continued to establish our position as a leading owner of public charter school real estate and expect this momentum
to continue into 2016. We continued to diversify our tenant base, and as of year-end, we had 39 different public charter
school operators and we expect to continue to expand this number in 2016. In addition, over the last five years, revenue
from Imagine Schools, Inc. have decreased from 8% of our total revenue to 5% of our total revenue. During 2015, we
increased our investments in early childhood education centers and private schools and expect to continue to do so in
the future. Due to demand for quality education facilities, Education was our fastest growing segment in 2015 and we
expect that demand to continue.
During 2015, our investment spending in our Recreation segment was $241.2 million compared to $212.2 million in
the prior year, and primarily related to golf entertainment complexes as well as the funding of the waterpark hotel at
Camelback Mountain Ski Resort, additional improvements at our Kansas City, Kansas waterpark and the acquisition
of one ski resort located in Wintergreen, Virginia. We plan to continue to seek attractive investments and new
opportunities in this segment in 2016.
During 2015, our investment spending in our Other segment was $11.8 million and related to the Adelaar casino and
resort project in Sullivan County, New York. This project is further discussed below under “Recent Developments".
Capitalization Strategies
Our property acquisitions and financing commitments are financed by cash from operations, borrowings under our
combined unsecured revolving credit and term loan facility, long-term mortgage debt, the sale of debt and equity
securities and the periodic sale of properties. During the past several years, we have taken significant steps to implement
our strategy of migrating to an unsecured debt structure and maintaining significant liquidity by issuing $1.2 billion of
unsecured notes and paying off secured debt. During 2015, we amended, restated and combined our unsecured revolving
credit and term loan facilities. These amendments increased the capacity of this facility to a combined $1.0 billion
with a $1.0 billion accordion feature that increases the maximum borrowing amount, subject to lender approval, from
$1.0 billion to $2.0 billion, as well as allowing for reductions in interest rate spread and facility fee pricing. Having
enhanced our liquidity position, strengthened our balance sheet and continued our access to the unsecured debt markets,
we believe we are better positioned to aggressively pursue investments, acquisitions and financing opportunities that
may become available to us from time to time.
We expect to maintain our debt to total gross assets ratio between 35% and 45%. Depending on our capital needs, we
will seek both debt and equity capital and will consider issuing additional shares under the direct share purchase
component of our Dividend Reinvestment and Direct Share Purchase Plan. We may also issue equity securities in
connection with acquisitions. While equity issuances and maintaining lower leverage mitigate the growth in per share
results, we believe lower leverage and an emphasis on liquidity are prudent during the current economic environment.
45
Critical Accounting Policies
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. The
most significant assumptions and estimates relate to consolidation, revenue recognition, depreciable lives of the real
estate, the valuation of real estate, accounting for real estate acquisitions, estimating reserves for uncollectible
receivables and the accounting for 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.
Consolidation
We consolidate certain entities if we are deemed to be the primary beneficiary in a variable interest entity ("VIE"), as
defined in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic on
Consolidation. The Topic on Consolidation requires the consolidation of VIEs in which an enterprise has a controlling
financial interest. A controlling financial interest will have both of the following characteristics: the power to direct the
activities of a VIE that most significantly impact the VIE's economic performance and the obligation to absorb losses
of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could
potentially be significant to the VIE. This topic requires an ongoing reassessment. The equity method of accounting
is applied to entities in which we are not the primary beneficiary as defined in the Consolidation Topic of the FASB
ASC, or do not have effective control, but can exercise influence over the entity with respect to its operations and major
decisions.
Revenue Recognition
Rents that are fixed and determinable are recognized on a straight-line basis over the expected terms of the leases. Base
rent escalation in other leases is dependent upon increases in the Consumer Price Index (“CPI”) and accordingly,
management does not include any future base rent escalation amounts on these leases in current revenue. Most of our
leases provide for percentage rents based upon the level of sales achieved by the tenant. These percentage rents are
recognized once the required sales level is achieved. Lease termination fees are recognized when the related leases are
canceled and we have no continuing obligation to provide services to such former tenants.
Direct financing lease income is recognized on the effective interest method to produce a level yield on funds not yet
recovered. Estimated unguaranteed residual values at the date of lease inception represent management’s initial estimates
of fair value of the leased assets at the expiration of the lease, not to exceed original cost. Significant assumptions used
in estimating residual values include estimated net cash flows over the remaining lease term and expected future real
estate values. The estimated unguaranteed residual value is reviewed on an annual basis or more frequently if necessary.
We evaluate the collectibility of our direct financing lease receivable to determine whether it is impaired. A direct
financing lease receivable is considered to be impaired when, based on current information and events, it is probable
that we will be unable to collect all amounts due according to the existing contractual terms. When a direct financing
lease receivable is considered to be impaired, the amount of loss is calculated by comparing the recorded investment
to the value determined by discounting the expected future cash flows at the direct financing lease receivable’s effective
interest rate or to the value of the underlying collateral, less costs to sell, if such receivable is collateralized.
Real Estate Useful Lives
We are required to make subjective assessments as to the useful lives of our properties for the purpose of determining
the amount of depreciation to reflect on an annual basis with respect to those properties. These assessments have a
direct impact on our net income. Depreciation and amortization are provided on the straight-line method over the useful
lives of the assets, as follows:
Buildings
Tenant improvements
Furniture, fixtures and equipment
30 to 40 years
Base term of lease or useful life, whichever is shorter
3 to 25 years
46
Impairment of Real Estate Values
We are required to make subjective assessments as to whether there are impairments in the value of our rental properties.
These estimates of impairment may have a direct impact on our consolidated financial statements.
We assess the carrying value of our rental properties whenever events or changes in circumstances indicate that the
carrying amount of a property may not be recoverable. Certain factors that may occur and indicate that impairments
may exist include, but are not limited to: underperformance relative to projected future operating results, tenant
difficulties and significant adverse industry or market economic trends. If an indicator of possible impairment exists,
a property that is held and used by the Company is evaluated for impairment by comparing the carrying amount of the
property to the estimated undiscounted future cash flows expected to be generated by the property. If the carrying
amount of a property exceeds its estimated future cash flows on an undiscounted basis, an impairment charge is
recognized in the amount by which the carrying amount of the property exceeds the fair value of the property. For
assets and asset groups that are held for sale, an impairment loss is measured by comparing the fair value of the property,
less costs to sell, to the asset (group) carrying value. Management estimates fair value of our rental properties utilizing
independent appraisals and/or based on projected discounted cash flows using a discount rate determined by management
to be commensurate with the risk inherent in the Company.
Real Estate Acquisitions
Upon acquisition of real estate properties, we determine if the acquisition meets the criteria to be accounted for as a
business combination. Accordingly, we account for (1) acquired vacant properties, (2) acquired single tenant properties
when a new lease or leases are signed at the time of acquisition, and (3) acquired single tenant properties that have an
existing long-term triple-net lease or leases (greater than 7 years) as asset acquisitions. Acquisitions of properties with
shorter-term leases or properties with multiple tenants that require business related activities to manage and maintain
the properties (i.e. those properties that involve a process) are treated as business combinations.
Costs incurred for asset acquisitions and development properties, including transaction costs, are capitalized. For asset
acquisitions, we allocate the purchase price and other related costs incurred to the real estate assets acquired based on
recent independent appraisals or methods similar to those used by independent appraisers and management judgment.
If the acquisition is determined to be a business combination, we record the fair value of acquired tangible assets
(consisting of land, building, tenant improvements, and furniture, fixtures and equipment) and identified intangible
assets and liabilities (consisting of above and below market leases, in-place leases, tenant relationships and assumed
financing that is determined to be above or below market terms) as well as any noncontrolling interest. In addition,
acquisition-related costs in connection with business combinations are expensed as incurred.
Allowance for Doubtful Accounts
Management makes quarterly estimates of the collectibility of its accounts receivable related to base rents, tenant
escalations (straight-line rents), reimbursements and other revenue or income. Management specifically analyzes trends
in accounts receivable, historical bad debts, customer credit worthiness, current economic trends and changes in
customer payment terms when evaluating the adequacy of its allowance for doubtful accounts. In addition, when
customers are in bankruptcy, management makes estimates of the expected recovery of pre-petition administrative and
damage claims. These estimates have a direct impact on our net income.
Mortgage Notes and Other Notes Receivable
Mortgage notes and other notes receivable, including related accrued interest receivable, consist of loans that we
originated 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 and we defer certain loan origination
and commitment fees, net of certain origination costs, and amortize them over the term of the related loan. Interest
income on performing loans is accrued as earned. We evaluate the collectibility of both interest and principal for each
loan to determine whether it is impaired. A loan is considered to be impaired when, based on current information and
events, we determine it is probable that we will be unable to collect all amounts due according to the existing contractual
terms. When a loan is considered to be impaired, the amount of loss is calculated by comparing the recorded investment
to the value determined by discounting the expected future cash flows at the loan’s effective interest rate or to the fair
value of the underlying collateral, less costs to sell, if the loan is collateral dependent. For impaired loans, interest
47
income is recognized on a cash basis, unless we determine based on the loan to estimated fair value ratio the loan should
be on the cost recovery method, and any cash payments received would then be reflected as a reduction of principal.
Interest income recognition is recommenced if and when the impaired loan becomes contractually current and
performance is demonstrated to be resumed.
Recent Developments
Debt Financing
On March 6, 2015, we prepaid in full a mortgage note payable of $30.4 million which was secured by one entertainment
retail center.
On March 16, 2015, we issued $300.0 million in aggregate principal amount of senior notes due on April 1, 2025
pursuant to an underwritten public offering. The notes bear interest at an annual rate of 4.50%. Interest is payable on
April 1 and October 1 of each year beginning on October 1, 2015 until the stated maturity date of April 1, 2025. The
notes were issued at 99.638% of their face value and are unsecured and guaranteed by certain of our subsidiaries.
On April 24, 2015, we amended, restated and combined our unsecured revolving credit and term loan facilities.
The amendments to the unsecured revolving portion of the new credit facility, among other things, (i) increase the
initial amount from $535.0 million to $650.0 million, (ii) extend the maturity date from July 23, 2017, to April 24, 2019
(with us having the same right as before to extend the loan for one additional year, subject to certain terms and conditions)
and (iii) lower the interest rate and facility fee pricing based on a grid related to our senior unsecured credit ratings
which at closing was LIBOR plus 1.25% and 0.25%, respectively. At December 31, 2015, we had $196.0 million
outstanding under this portion of the facility.
The amendments to the unsecured term loan portion of the new facility, among other things, (i) increase the initial
amount from $285.0 million to $350.0 million, (ii) extend the maturity date from July 23, 2018, to April 24, 2020 and
(iii) lower the interest rate at all senior unsecured credit rating tiers which was LIBOR plus 1.40% at closing. On July
24, 2015, we borrowed the remaining $65.0 million available on the $350.0 million term loan portion of the facility,
which was used to pay down a portion of our unsecured revolving credit facility. In addition, on August 12, 2015, we
entered into two interest rate swap agreements to fix the interest rate at 2.94% on an additional $60.0 million of the
unsecured term loan facility from September 8, 2015 to July 5, 2017 and on $300.0 million of the unsecured term loan
facility from July 6, 2017 to April 5, 2019.
In addition, there is a $1.0 billion accordion feature on the combined unsecured revolving credit and term loan facility
that increases the maximum borrowing amount available under the combined facility, subject to lender approval, from
$1.0 billion to $2.0 billion.
On July 31, 2015, we prepaid in full a mortgage note payable of $4.8 million which was secured by one theatre property.
Additionally, on August 6, 2015, we prepaid in full six mortgage notes payable totaling $61.5 million which were
secured by six theatre properties.
On December 7, 2015, we prepaid in full two mortgage notes payable totaling $34.2 million which were secured by
two theatre properties.
Issuance of Common Shares
During the year ended December 31, 2015, we issued 3,530,058 common shares under our Dividend Reinvestment
and Direct Stock Purchase Plan (DSPP) for net proceeds of $190.3 million.
On January 21, 2016, we issued 2,250,000 common shares in a registered public offering for total net proceeds, after
the underwriting discount and offering expenses of approximately $125.0 million. The net proceeds from the public
offering were used to pay down our unsecured revolving credit facility.
48
Investment Spending
Our investment spending during the year ended December 31, 2015 totaled $632.0 million, and included investments
in each of our four operating segments.
Entertainment investment spending during the year ended December 31, 2015 totaled $106.1 million and related
primarily to investments in the development or redevelopment of 10 megaplex theatres, four family entertainment
centers and five entertainment retail centers, as well as the acquisition of four megaplex theatres located in Virginia,
Illinois, Florida and Texas, each of which is subject to a long-term, triple-net lease or long-term mortgage agreement.
Education investment spending during the year ended December 31, 2015 totaled $272.9 million and related primarily
to investments in build-to-suit construction of 29 public charter schools, four private schools and 28 early childhood
education centers, as well as the acquisition of two public charter schools and two early childhood education centers,
each of which is subject to a long-term, triple-net lease or long-term mortgage agreement.
Recreation investment spending during the year ended December 31, 2015 totaled $241.2 million and related primarily
to investments in build-to-suit construction of 17 Topgolf golf entertainment facilities, additional improvements at the
Company’s Kansas City, Kansas waterpark and Camelback Mountain Resort, as well as the acquisition of one ski resort
located in Wintergreen, Virginia, each of which is subject to a long-term, triple-net lease or a long-term mortgage
agreement.
On August 1, 2015, per the terms of the mortgage note agreement, the borrower for Camelback Mountain Resort
exercised its option to convert the mortgage note agreement to a lease agreement. As a result, we recorded the carrying
value of our investment into rental property, which approximated the fair value of the property on the conversion date.
There was no gain or loss recognized on this transaction. The property is leased pursuant to a triple net lease with a
20-year term.
Other investment spending during the year ended December 31, 2015 totaled $11.8 million and was related to the
Adelaar casino and resort project in Sullivan County, New York.
The following details our investment spending during the years ended December 31, 2015 and 2014 (in thousands):
Operating Segment
Entertainment
Education
Recreation
Other
Total Investment Spending
Operating Segment
Entertainment
Education
Recreation
Other
For the Year Ended December 31, 2015
Total
Investment
Spending
New
Development
21,570
$
253,072
149,016
11,818
435,476
$
Re-
development
20,844
$
—
240
—
21,084
$
$
$
106,105
272,920
241,178
11,818
632,021
For the Year Ended December 31, 2014
Total
Investment
Spending
New
Development
16,139
$
196,843
133,886
4,659
Re-
development
13,224
$
—
4,717
—
$
170,837
225,041
212,171
4,659
Asset
Acquisition
63,691
$
15,990
21,865
—
101,546
$
Investment in
Mortgage Notes
—
$
3,858
70,057
—
73,915
$
Asset
Acquisition
137,808
$
7,889
—
—
Investment in
Mortgage Notes
3,666
$
20,309
73,568
—
Total Investment Spending
$
612,708
$
351,527
$
17,941
$
145,697
$
97,543
49
The above amounts include $171 thousand and $186 thousand in capitalized payroll, $18.5 million and $7.4 million
in capitalized interest and $2.3 million and $1.9 million in capitalized other general and administrative direct project
costs for the years ended December 31, 2015 and 2014, respectively. In addition, we had $2.9 million and $7.7 million
of maintenance capital expenditures for the years ended December 31, 2015 and 2014, respectively.
Property Dispositions
On January 27, 2015, we completed the sale of a theatre located in Los Angeles, California for net proceeds of $42.7
million and recognized a gain on sale of $23.7 million. In addition, during the year ended December 31, 2015, we sold
a land parcel adjacent to one of our public charter school investments for net proceeds of $1.1 million and recognized
a gain of $0.2 million, and two land parcels adjacent to our megaplex theatre properties for net proceeds of $2.9 million
and recognized a loss of $0.1 million.
On May 21, 2015, we completed the sale of one public charter school property located in Pennsylvania and previously
leased under a direct financing lease to Imagine for net proceeds of $4.7 million. There was no gain or loss recognized
on this sale.
Mortgage Notes Receivable
On October 13, 2015, we received a partial pay-down of $45.0 million on two of our mortgage notes receivable related
to Schlitterbahn waterparks. Per the terms of the mortgage notes receivable, half of this amount paid back advances
plus accrued interest and the other half, or approximately $22.5 million, further reduced the note balance but had no
impact on the interest income we were previously receiving. The proceeds from the mortgage notes receivable partial
pay-down were used to further reduce the balance outstanding on our unsecured revolving credit facility.
Subsequent to December 31, 2015, we received prepayment on one mortgage note receivable that was secured by a
public charter school located in Washington D.C. In connection with the full payoff of this note, we received a
prepayment fee of $3.6 million. Additionally, subsequent to December 31, 2015, we amended and restated our mortgage
note receivable that is secured by the North Carolina Music Factory located in Charlotte, North Carolina and funded
an additional $21.8 million.
Imagine Schools
As of December 31, 2015, we have 15 schools that are occupied and operated by Imagine, two schools that have been
subleased by Imagine, and four schools that remain non-operational. For those remaining non-operational schools,
Imagine continues to seek further opportunities for sale or sublease. Imagine remains responsible for payments on all
21 properties under the master lease and was current as of December 31, 2015. We do not anticipate any delay in future
payments under the master lease, and as additional credit support, we continue to hold a $9.0 million letter of credit
from Imagine and require them to maintain a $7.9 million escrow reserve.
Adelaar Casino and Resort Project in Sullivan County, New York
On December 21, 2015, a subsidiary of Empire Resorts, Inc. was awarded a license (a “Gaming Facility License”) by
the New York State Gaming Commission to operate the Montreign Resort Casino (the “Casino Project”), which will
be located within our Adelaar project in Sullivan County, New York, approximately 90 miles from New York City. The
Gaming Facility License will be effective on the earlier of March 1, 2016, or upon payment of certain required financial
commitments (the “License Award Effective Date”).
The Adelaar project will initially consist of the Casino Project, an indoor waterpark hotel (the “Waterpark Project”), a
redesigned golf course (the “Golf Course”) and an entertainment village, which will include retail, restaurant, shopping
and entertainment (the “Entertainment Village”). Subsidiaries of Empire Resorts, Inc. (the “Empire Project Parties”)
will be responsible for the construction and development of the Casino Project, Golf Course and Entertainment Village,
and have agreed to invest a minimum of $611.0 million, $15.0 million and $25.0 million in the development and
construction of the Casino Project, the Golf Course and the Entertainment Village, respectively. The Casino Project
will include a casino of approximately 90,000 square feet with approximately 2,150 slot machines and 102 table games,
a poker room with 14 to 16 tables and a private VIP gaming area with a lounge and reception area. It will also include
a hotel with approximately 332 luxury rooms. The Adelaar project also includes approximately 600 acres of developable
50
land. It is expected that the Casino Project will open by March 1, 2018 and the Golf Course, Entertainment Village and
Waterpark Project are expected to begin opening by September 1, 2018 but no later than March 1, 2019.
On December 28, 2015, we entered into long-term, triple-net ground leases with the Empire Project Parties for the
three parcels of land upon which the Casino Project, Golf Course and Entertainment Village are located. Pursuant to
the ground leases, we will receive the following rent:
Casino Project:
• Prior to License Award Effective Date, $500 thousand per month;
• For the 12 months following the License Award Effective Date, the expected commencement date
for the lease, $667 thousand per month, which is satisfied by option payments we have previously
received thorough December 31, 2015;
• For the 18 months following the first anniversary of the License Award Effective Date, $1.0 million
per month; and
• Thereafter, minimum rent of $7.5 million per year, plus percentage rent equal to 5.0% of eligible
gaming revenue (as defined in the Casino Project lease) above $150.0 million. In addition, every five
years of the lease term, the minimum rent will be increased by 8.0%.
Golf Course and Entertainment Village:
•
For each ground lease, rent becomes payable upon opening, and for each we will receive annual rent
of $150,000 for the first 10 years, increasing to $250,000 thereafter.
The Empire Project Parties have an option to purchase all, but not less than all, of the property subject to the ground
leases for a purchase price of $175.0 million ($200.0 million after the sixth anniversary of the License Award Effective
Date), less a credit of up to $25.0 million for certain previous payments made by the Empire Project Parties.
The Waterpark Project is expected to consist of a 300-room hotel, a 75,000 square foot indoor waterpark, a family
entertainment center, an adventure park and a conference center. We have committed to the Empire Project Parties to
cause the construction of the Waterpark Project with a minimum capital investment of $120.0 million. The Waterpark
Project will be leased to the waterpark operator pursuant to a triple-net lease with an initial term of 20 years from the
completion date.
We are also responsible for the construction of the Adelaar project’s common infrastructure, which is expected to be
financed primarily through the issuance of tax-exempt public infrastructure bonds and currently budgeted at
approximately $90.0 million, subject to budget adjustments and related approvals. The debt service related to these
bonds is expected to be paid primarily through special assessments levied against the property held by the benefited
users.
As further described in Note 19 to the consolidated financial statements in this Annual Report on Form 10-K, the
Adelaar casino and resort project is the subject of ongoing litigation for which we believe we have meritorious defenses.
Chief Executive Officer Retirement
On February 24, 2015, we announced that David Brain, our then President and Chief Executive Officer, was retiring
from the Company. In connection with his retirement, Mr. Brain and the Company entered into a Retirement Agreement
pursuant to which he agreed to retire on March 31, 2015 in consideration for certain retirement severance benefits
substantially equal to those benefits that would be payable to him under his employment agreement if he were terminated
without cause. As a result, we recorded retirement severance expense (including share-based compensation costs)
during the year ended December 31, 2015 of $18.6 million which is included in the accompanying consolidated
statements of income for the year ended December 31, 2015 in this Annual Report on Form 10-K. Retirement severance
expense includes a cash payment of $11.8 million, $5.0 million for the accelerated vesting of 113,900 nonvested shares,
$1.4 million for the accelerated vesting of 101,640 share options and $0.4 million of related taxes and other expenses.
51
Results of Operations
Year ended December 31, 2015 compared to year ended December 31, 2014
Rental revenue was $330.9 million for the year ended December 31, 2015 compared to $286.7 million for the year
ended December 31, 2014. Rental revenue increased $44.2 million from the prior period, of which $50.7 million was
related to acquisitions or build-to-suit projects completed in 2015 and 2014 and was partially offset by a net decrease
of $6.5 million in rental revenue on existing and sold properties and by the impact of a weaker Canadian exchange
rate. Percentage rents of $3.0 million and $2.0 million were recognized during the years ended December 31, 2015
and 2014, respectively. Straight-line rents of $12.2 million and $8.7 million were recognized during the years ended
December 31, 2015 and 2014, respectively.
During the year ended December 31, 2015, we experienced an increase of approximately 4.8% in rental rates on
approximately 431,000 square feet with respect to five lease renewals. Additionally, we have funded or have agreed
to fund a weighted average of $16.47 per square foot in tenant improvements. There were no leasing commissions
related to these renewals.
Tenant reimbursements totaled $16.3 million for the year ended December 31, 2015 compared to $17.7 million for the
year ended December 31, 2014. These tenant reimbursements related to the operations of our entertainment retail
centers. The $1.4 million decrease was primarily due to the impact of a weaker Canadian dollar exchange rate.
Other income was $3.6 million for the year ended December 31, 2015 compared to $1.0 million for the year ended
December 31, 2014. The $2.6 million increase was due to an increase of $1.7 million in income recognized upon
settlement of foreign currency swap contracts as well as $1.0 million recognized in fee income during the year ended
December 31, 2015.
Mortgage and other financing income for the year ended December 31, 2015 was $70.2 million compared to $79.7
million for the year ended year ended December 31, 2014. The $9.5 million decrease was due primarily to a $5.0
million prepayment fee we received on December 2, 2014 in conjunction with the full and partial repayment of four
mortgage notes receivable and the sale of four public charter school properties in April of 2014 which were classified
as a direct financing lease. This amount was partially offset by increased real estate lending activities. Additionally,
we recognized participating interest income of $1.5 million and $2.2 million for the years ended December 31, 2015
and 2014, respectively.
Our property operating expense totaled $23.4 million for the year ended December 31, 2015 compared to $24.9 million
for the year ended December 31, 2014. These property operating expenses arise from the operations of our retail centers
and other specialty properties. The $1.5 million decrease resulted primarily from the impact of a weaker Canadian
dollar exchange rate and a decrease in other non-recoverable expenses at these properties. This amount was partially
offset by an increase in bad debt expense.
Our general and administrative expense totaled $31.0 million for the year ended December 31, 2015 compared to $27.6
million for the year ended December 31, 2014. The increase of $3.4 million is primarily due to an increase in payroll
and benefits costs, as well as certain professional fees.
Retirement severance expense was $18.6 million for the year ended December 31, 2015 and related to the retirement
of our former President and Chief Executive Officer. See Note 14 to the consolidated financial statements included
in this Annual Report Form 10-K for further detail. There was no retirement severance expense for the year ended
December 31, 2014.
Our net interest expense decreased by $1.4 million to $79.9 million for the year ended December 31, 2015 from $81.3
million for the year ended December 31, 2014. This decrease resulted from an increase in interest cost capitalized
primarily related to the Adelaar casino and resort project which was $8.7 million for the year ended December 31, 2015
compared to $0 for the year ended December 31, 2014, as well as a decrease in the weighted average interest rate used
52
to finance our real estate acquisitions and fund our mortgage notes receivable. These decreases were partially offset
by an increase in average borrowings.
Transaction costs totaled $7.5 million for the year ended December 31, 2015 compared to $2.5 million for the year
ended December 31, 2014. The increase of $5.0 million was due to an increase in potential and terminated transactions.
Provision for loan loss was $3.8 million for the year ended December 31, 2014 and related to one note receivable.
There was no provision for loan loss for the year ended December 31, 2015.
Depreciation and amortization expense totaled $89.6 million for the year ended December 31, 2015 compared to $66.7
million for the year ended December 31, 2014. The $22.9 million increase resulted primarily from asset acquisitions
completed in 2015 and 2014 as well as the acceleration of depreciation on certain existing assets.
Equity in income from joint ventures was $1.0 million for the year ended December 31, 2015 compared to $1.3 million
for the year ended December 31, 2014. The $0.3 million decrease resulted from a decrease in income from our joint
venture projects located in China.
Gain on sale or acquisition, net was $23.8 million for the year ended December 31, 2015 and related to a gain on sale
of $23.7 million from a theatre located in Los Angeles, California and a gain on sale of $0.2 million from a parcel of
land adjacent to one of our public charter school investments. The gain was partially offset by a loss on sale of $0.1
million from a parcel of land adjacent to one of our megaplex theatre properties. Gain on sale or acquisition, net was
$1.2 million for the year ended December 31, 2014 and related to the sale of one winery, one vineyard and three parcels
of land.
Gain on sale of investment in a direct financing lease was $0.2 million for the year ended December 31, 2014 and
related to the sale of four public charter school properties located in Florida. There was no gain on sale of investment
in a direct financing lease for the year ended December 31, 2015.
Income tax expense was $0.5 million for the year ended December 31, 2015 compared to $4.2 million for the year
ended December 31, 2014 and related primarily to Canadian income taxes on our Canadian trust as well as state income
taxes and withholding tax for distributions related to our unconsolidated joint venture projects located in China. The
$3.7 million decrease related primarily to lower income tax expense on our Canadian trust and the impact of a weaker
Canadian dollar exchange rate.
Income from discontinued operations was $0.2 million for the year ended December 31, 2015 and related to post closing
items related to the Toronto Dundas Square property. Income from discontinued operations was $3.9 million for the
year ended December 31, 2014 and related primarily to the reversal of liabilities that related to the acquisition or
ownership of Toronto Dundas Square.
Year ended December 31, 2014 compared to year ended December 31, 2013
Rental revenue was $286.7 million for the year ended December 31, 2014 compared to $248.7 million for the year
ended December 31, 2013. Rental revenue increased $38.0 million from the prior period, of which $39.6 million was
related to acquisitions or build-to-suit projects completed in 2014 and 2013 and was partially offset by a net decrease
of $1.6 million in rental revenue on existing properties due in part by the impact of a weaker Canadian exchange rate.
Percentage rents of $2.0 million and $2.6 million were recognized during the years ended December 31, 2014 and
2013, respectively. Straight-line rents of $8.7 million and $4.8 million were recognized during the years ended December
31, 2014 and 2013, respectively.
During the year ended December 31, 2014, we experienced an increase of approximately 4.1% in rental rates on
approximately 91,000 square feet with respect to two lease renewals. Additionally, we have funded or have agreed to
fund a weighted average of $10.09 per square foot in tenant improvements. There were no leasing commissions related
to these renewals.
53
Tenant reimbursements totaled $17.7 million for the year ended December 31, 2014 compared to $18.4 million for the
year ended December 31, 2013. These tenant reimbursements related to the operations of our entertainment retail
centers. The $0.7 million decrease was primarily due to the impact of a weaker Canadian dollar exchange rate.
Other income was $1.0 million for the year ended December 31, 2014 compared to $1.7 million for the year ended
December 31, 2013. The $0.7 million decrease was primarily due to to option payments earned during 2013 related
to the Adelaar casino and resort project in Sullivan County, New York of $1.2 million and was partially offset by an
increase in income recognized upon settlement of foreign currency swap contracts.
Mortgage and other financing income for the year ended December 31, 2014 was $79.7 million compared to $74.3
million for the year ended December 31, 2013. The $5.4 million increase was due to a $5.0 million prepayment fee
we received on December 2, 2014 in conjunction with the full and partial repayment of four mortgage notes receivable
as well as increased real estate lending activities related to our mortgage loan agreements. This was partially offset by
a decrease due to the sale of four public charter school properties during 2014, which were classified as a direct financing
lease. We also recognized participating interest income of $2.2 million and $0.9 million for the years ended December
31, 2014 and 2013, respectively.
Our property operating expense totaled $24.9 million for the year ended December 31, 2014 compared to $26.0 million
for the year ended December 31, 2013. These property operating expenses related to the operations of our retail centers
and other specialty properties. The $1.1 million decrease resulted primarily from a decrease in bad debt expenses and
other non-recoverable expenses at these properties and was also impacted by a weaker Canadian dollar exchange rate.
Our general and administrative expense totaled $27.6 million for the year ended December 31, 2014 compared to $25.6
million for the year ended December 31, 2013. The increase of $2.0 million was primarily due to an increase in payroll
related expenses including stock grant amortization.
Costs associated with loan refinancing or payoff for the year ended December 31, 2014 were $0.3 million and were
related to the write off of prepaid mortgage fees in conjunction with our borrowers prepayment of four mortgage notes
receivable. Costs associated with loan refinancing or payoff were $6.2 million for the year ended December 31, 2013
and related to the repayment of secured fixed rate mortgage debt as well as the amendments to our unsecured revolving
credit facility.
Gain on early extinguishment of debt for the year ended December 31, 2013 was $4.5 million and related to our
discounted payoff of a mortgage loan secured by a theatre property located in Omaha, Nebraska. There was no gain
on early extinguishment of debt for the year ended December 31, 2014.
Our net interest expense increased by $0.2 million to $81.3 million for the year ended December 31, 2014 from $81.1
million for the year ended December 31, 2013. This increase resulted primarily from an increase in average borrowings
and was partially offset by a decrease in the weighted average interest rate used to finance our real estate acquisitions
and fund our mortgage notes receivable as well as an increase in interest cost capitalized.
Transaction costs totaled $2.5 million for the year ended December 31, 2014 compared to $2.0 million for the year
ended December 31, 2013. The increase of $0.5 million was due to an increase in costs associated with business
combinations and write offs of costs associated with terminated transactions.
Provision for loan loss was $3.8 million for the year ended December 31, 2014 and related to one note receivable.
There was no provision for loan loss for the year ended December 31, 2013.
Depreciation and amortization expense totaled $66.7 million for the year ended December 31, 2014 compared to $53.9
million for the year ended December 31, 2013. The $12.8 million increase resulted primarily from asset acquisitions
completed in 2014 and 2013 as well as the acceleration of depreciation on certain existing assets.
Gain on sale or acquisition, net was $1.2 million for the year ended December 31, 2014 and related to the sale of one
winery, one vineyard and three parcels of land. Gain on sale or acquisition, net was $3.0 million for the year ended
54
December 31, 2013 and primarily related to the acquisition of the assets held in the Atlantic-EPR I and Atlantic-EPR
II joint ventures previously held as equity interests.
Gain on sale of investment in a direct financing lease was $0.2 million for the year ended December 31, 2014 and
related to the sale of four public charter school properties located in Florida. There was no gain on sale of investment
in a direct financing lease for the year ended December 31, 2013.
Gain on previously held equity interest was $4.9 million for the year ended December 31, 2013 and was due to the fair
value adjustment associated with our original ownership in the Atlantic-EPR I and Atlantic-EPR II joint ventures that
was valued due to our acquisition of the remaining interest in these partnerships. There was no gain on previously held
equity interest for the year ended December 31, 2014.
Income tax expense was $4.2 million for the year ended December 31, 2014 and related primarily to Canadian income
taxes on our Canadian trust as well as state income taxes and withholding tax for distributions related to our
unconsolidated joint venture projects located in China. Income tax benefit was $14.2 million for the year ended
December 31, 2013 and primarily resulted from the deferred tax valuation allowance reduction which was triggered
by Canadian tax law changes. Changes in Canadian tax law at the end of 2013 restricted the deductibility of intercompany
interest such that the Canadian trust was expected to incur and pay income taxes starting in 2014. This amount was
partially offset by $0.6 million in expense recognized due to state income taxes and withholding tax for distributions
related to our unconsolidated joint venture projects located in China.
Income from discontinued operations was $3.9 million for the year ended December 31, 2014 and related primarily to
the reversal of liabilities that related to the acquisition or ownership of Toronto Dundas Square (now sold). These
liabilities were reversed during the year ended December 31, 2014 as the related payments are not expected to occur.
Income from discontinued operations was $0.3 million for the year ended December 31, 2013 and related to post closing
items for the previously sold Toronto Dundas Square property as well as the operations of five winery and vineyard
properties which were sold during 2013.
Gain on sale or acquisition of real estate from discontinued operations was $4.3 million for the year ended December
31, 2013 and was due to the sale of five winery and vineyard properties during the year. There was no gain on sale of
real estate from discontinued operations for the year ended December 31, 2014.
Liquidity and Capital Resources
Cash and cash equivalents were $4.3 million at December 31, 2015. In addition, we had restricted cash of $10.6 million
at December 31, 2015. Of the restricted cash at December 31, 2015, $9.3 million relates to cash held for our borrowers’
debt service reserves for mortgage notes receivable or tenants' off-season rent reserves. The remaining $1.3 million is
required in connection with our debt service, payment of real estate taxes and capital improvements.
Mortgage Debt, Credit Facilities and Term Loan
As of December 31, 2015, we had total debt outstanding of $2.0 billion of which $252.4 million was fixed rate mortgage
debt secured by a portion of our rental properties. The fixed rate mortgage debt had a weighted average interest rate of
approximately 5.3% at December 31, 2015.
At December 31, 2015, we had outstanding $1.2 billion in aggregate principal amount of unsecured senior notes ranging
in interest rates from 4.50% to 7.75%. All of these notes are guaranteed by certain of our subsidiaries. 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 which would cause the ratio of secured
debt to adjusted total assets to exceed 40%; (iii) a limitation on incurrence of any debt which 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.
At December 31, 2015, we had $196.0 million outstanding under our unsecured revolving credit facility, with $454.0
million of availability and with interest at a floating rate of LIBOR plus 125 basis points, which was 1.57% at
55
December 31, 2015. The amount that we are able to borrow on our unsecured revolving credit facility is a function of
the values and advance rates, as defined by the credit agreement, assigned to the assets included in the borrowing base
less outstanding letters of credit and less other liabilities.
At December 31, 2015, the unsecured term loan facility had a balance of $350.0 million with interest at a floating rate
of LIBOR plus 140 basis points, which was 1.82% at December 31, 2015, and $300.0 million of this LIBOR-based
debt has been fixed with interest rate swaps at a blended rate of 2.71% through April 5, 2019. The loan matures on
April 24, 2020.
Our combined unsecured revolving credit and term loan facility contains financial covenants that limit our levels of
consolidated debt, secured debt, investment levels outside certain categories and dividend distributions, and require
minimum coverage levels for fixed charges and unsecured debt service costs. Additionally, our combined unsecured
revolving and term loan facility as well as our unsecured senior notes contain cross-default provisions that go into effect
if we default on any of our obligations for borrowed money or credit in an amount exceeding $25.0 million ($50.0
million for the 5.25% and 4.50% unsecured senior notes), unless such default has been waived or cured within a specified
period of time. We were in compliance with all financial covenants under our debt instruments at December 31, 2015.
Our principal investing activities are acquiring, developing and financing entertainment, education and recreation
properties. These investing activities have generally been financed with senior unsecured notes and mortgage debt, as
well as the proceeds from equity offerings. Our unsecured revolving credit facility is 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. We may also issue equity securities in connection with acquisitions. Continued growth of our rental
property 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.
Certain of our debt agreements contain customary restrictive covenants related to financial and operating performance
as well as certain cross-default provisions. We were in compliance with all financial covenants at December 31, 2015.
During the year ended December 31, 2015, we issued 3,530,058 common shares under our DSPP for net proceeds of
$190.3 million. Additionally, on January 21, 2016, we issued 2,250,000 common shares in a registered public offering
for a total net proceeds, after the underwriting discount and offering expenses of approximately $125.0 million. The
net proceeds from the public offering were used to pay down our unsecured revolving credit facility.
Liquidity Requirements
Short-term liquidity requirements consist primarily of normal recurring corporate operating expenses, debt service
requirements and dividends to shareholders. We meet these requirements primarily through cash provided by operating
activities. Net cash provided by operating activities was $278.5 million, $250.3 million and $234.1 million for the years
ended December 31, 2015, 2014 and 2013, respectively. Net cash used by investing activities was $568.5 million,
$376.2 million and $336.5 million for the years ended December 31, 2015, 2014 and 2013, respectively. Net cash
provided by financing activities was $292.0 million, $121.6 million and $100.2 million for the years ended December
31, 2015, 2014 and 2013, respectively. We anticipate that our cash on hand, cash from operations, and funds available
under our unsecured revolving credit facility will provide adequate liquidity to fund our operations, make interest and
principal payments on our debt, and allow dividends to be paid to our shareholders and avoid corporate level federal
income or excise tax in accordance with REIT Internal Revenue Code requirements.
56
Liquidity requirements at December 31, 2015 consisted primarily of maturities of debt. Contractual obligations as of
December 31, 2015 are as follows (in thousands):
Contractual Obligations
Long Term Debt
Obligations
Interest on Long Term
Debt Obligations
Operating Lease
Obligations
Total
Year ended December 31,
2016
2017
2018
2019
2020
Thereafter
Total
$
75,514
$ 165,319
$
13,381
$ 196,000
$600,000
$
949,995
$ 2,000,209
91,058
84,605
80,409
75,599
60,551
126,815
519,037
594
$ 167,166
608
$ 250,532
608
94,398
608
$ 272,207
608
$661,159
3,890
$ 1,080,700
6,916
$ 2,526,162
$
Commitments
As of December 31, 2015, we had an aggregate of approximately $272.4 million of commitments to fund development
projects including seven entertainment development projects for which we have commitments to fund approximately
$24.5 million of additional improvements, 27 education development projects for which we have commitments to fund
approximately $206.6 million of additional improvements and three recreation development projects for which we have
commitments to fund approximately $41.3 million. Of these amounts, approximately $249.1 million is expected to be
funded in 2016. 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 agreements, we can discontinue funding construction
draws. We have agreed to lease the properties to the operators at pre-determined rates upon completion of construction.
Additionally, as of December 31, 2015, we had a commitment to fund approximately $120.0 million to complete an
indoor waterpark hotel and adventure park at our casino and resort project in Sullivan County, New York, of which
approximately $20.0 million is expected to be funded in 2016. We are also responsible for the construction of this
project's common infrastructure, which is expected to be financed primarily through the issuance of tax-exempt public
infrastructure bonds and currently budgeted at approximately $90.0 million, subject to budget adjustments and related
approvals. Through December 31, 2015, we had funded approximately $28.8 million for common infrastructure.
We have certain commitments related to our mortgage note 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 December 31, 2015, we had five mortgage notes receivable with commitments
totaling approximately $54.5 million, of which $25.5 million is expected to be funded in 2016. If commitments are
funded in the future, interest will be charged at rates consistent with the existing investments.
We have provided guarantees of the payment of certain economic development revenue bonds totaling $22.9 million
related to two theatres in Louisiana for which we earn fees at annual rates of 2.88% to 4.00% over the 30 year terms
of the bonds. We have recorded $9.7 million as a deferred asset included in other assets and $9.7 million included in
other liabilities in the accompanying consolidated balance sheet included in this Annual Report on Form 10-K as of
December 31, 2015 related to these guarantees. No amounts have been accrued as a loss contingency related to this
guarantee because payment by us is not probable.
Liquidity Analysis
In analyzing our liquidity, we generally expect that our cash provided by operating activities will meet our normal
recurring operating expenses, recurring debt service requirements and dividends to shareholders.
We have $64.1 million in debt balloon payments coming due in 2016. Our sources of liquidity as of December 31, 2015
to pay the 2016 commitments described above include the amount available under our unsecured revolving credit
facility of approximately $454.0 million and unrestricted cash on hand of $4.3 million. Accordingly, while there can
be no assurance, we expect that our sources of cash will exceed our existing commitments over the remainder of 2016.
57
We also believe that we will be able to repay, extend, refinance or otherwise settle our debt obligations for 2016 and
thereafter 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, dividends to shareholders and funding existing
commitments is in growing our investment portfolio through the acquisition, development and financing of additional
properties. We expect to finance these investments with borrowings under our unsecured revolving credit facility, as
well as debt and equity financing alternatives and the periodic sale of properties. The availability and terms of any such
financing or sales will depend upon market and other conditions. If we borrow the maximum amount available under
our unsecured revolving credit facility, there can be no assurance that we will be able to obtain additional investment
financing (See Item 1A - “Risk Factors”).
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 and solid interest, fixed charge and debt service coverage ratios. We expect
to maintain our debt to gross assets ratio (i.e. total debt to total assets plus accumulated depreciation) between 35%
and 45%. However, the timing and size of our equity and debt offerings may cause us to temporarily operate over this
threshold. At December 31, 2015, this ratio was 42%. Our debt as a percentage of our total market capitalization at
December 31, 2015 was 34%; however, we do not manage to a ratio based on total market capitalization due to the
inherent variability that is driven by changes in the market price of our common shares. We calculate our total market
capitalization of $5.9 billion by aggregating the following at December 31, 2015:
• Common shares outstanding of 60,823,984 multiplied by the last reported sales price of our common shares
on the NYSE of $58.45 per share, or $3.6 billion;
• Aggregate liquidation value of our Series C convertible preferred shares of $135.0 million;
• Aggregate liquidation value of our Series E convertible preferred shares of $86.3 million;
• Aggregate liquidation value of our Series F redeemable preferred shares of $125.0 million; and
• Total debt of $2.0 billion.
58
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 sales [or acquisitions] of depreciable operating properties and impairment losses of
depreciable 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 costs (gain) associated with
loan refinancing or payoff, net, transaction costs (benefit), retirement severance expense, preferred share redemption
costs, termination fees associated with tenants' exercises of public charter school buy-out options and provision for
loan losses, and subtracting gain on early extinguishment of debt, gain (loss) on sale of land and deferred income tax
benefit (expense). AFFO is presented by adding to FFOAA non-real estate depreciation and amortization, deferred
financing fees amortization, share-based compensation expense to management and Trustees and amortization of above
market leases, net; and subtracting maintenance capital expenditures (including second generation tenant improvements
and leasing commissions), straight-lined rental revenue, and the non-cash portion of mortgage and other financing
income.
FFO, FFOAA and AFFO are widely used measures of the operating performance of real estate companies and are
provided here as a supplemental measure 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 years ended December 31, 2015, 2014 and 2013 (unaudited, in thousands, except per share information):
59
FFO:
Net income available to common shareholders of EPR Properties $
Gain on sale or acquisition of real estate
Gain on sale of investment in a direct financing lease
Gain on previously held equity interest
Real estate depreciation and amortization
Allocated share of joint venture depreciation
$
$
$
$
$
$
$
$
$
$
$
FFO available to common shareholders of EPR Properties
FFO available to common shareholders of EPR Properties
Add: Preferred dividends for Series C preferred shares
Diluted FFO available to common shareholders
FFOAA:
FFO available to common shareholders of EPR Properties
Costs associated with loan refinancing or payoff
Transaction costs (benefit)
Provision for loan losses
Retirement severance expense
Gain on early extinguishment of debt
Gain on sale of land
Deferred income tax expense (benefit)
FFOAA available to common shareholders of EPR
Properties
FFOAA available to common shareholders of EPR Properties
Add: Preferred dividends for Series C preferred shares
Diluted FFOAA available to common shareholders of EPR
Properties
AFFO:
FFOAA available to common shareholders of EPR Properties
Non-real estate depreciation and amortization
Deferred financing fees amortization
Share-based compensation expense to management and trustees
Maintenance capital expenditures (1)
Straight-lined rental revenue
Non-cash portion of mortgage and other financing income
Amortization of above market leases, net
AFFO available to common shareholders of EPR
Properties
FFO per common share attributable to EPR Properties:
Basic
Diluted
FFOAA per common share attributable to EPR Properties:
Basic
Diluted
Shares used for computation (in thousands):
Basic
Diluted
Weighted average shares outstanding-diluted EPS
Effect of dilutive Series C preferred shares
Adjusted weighted average shares outsanding-diluted
Other financial information:
Dividends per common share
2015
Year ended December 31,
2014
2013
$
$
$
$
$
$
$
$
$
$
$
$
170,726
(23,748)
—
—
87,965
255
235,198
235,198
7,763
242,961
235,198
270
7,518
—
18,578
—
(81)
(1,136)
260,347
260,347
7,763
268,110
260,347
1,653
4,588
8,508
(3,856)
(12,159)
(9,435)
192
249,838
4.05
4.03
4.48
4.44
58,138
58,328
58,328
2,017
60,345
$
$
$
$
$
$
$
$
$
$
$
$
155,826
(879)
(220)
—
65,501
225
220,453
220,453
7,763
228,216
220,453
301
(924)
3,777
—
—
(330)
1,796
225,073
225,073
7,763
232,836
225,073
1,238
4,248
8,902
(7,681)
(8,665)
(6,358)
192
216,949
4.06
4.04
4.15
4.13
54,244
54,444
54,444
1,989
56,433
156,420
(7,273)
—
(4,853)
54,564
547
199,405
199,405
7,763
207,168
199,405
6,166
1,955
—
—
(4,539)
—
(14,787)
188,200
188,200
—
188,200
188,200
1,109
4,041
6,516
(4,051)
(4,846)
(5,275)
48
185,742
4.15
4.13
3.92
3.90
48,028
48,214
48,214
1,962
50,176
(1) Includes maintenance capital expenditures and certain second generation tenant improvements and leasing
commissions.
60
$
3.63
$
3.42
$
3.16
The conversion of the 5.75% Series C cumulative convertible preferred shares would be dilutive to FFO per share and
to FFOAA per share for the years ended December 31, 2014 and 2015. Therefore, the additional 2.0 million 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 diluted FFOAA per share for these periods. The additional
2.0 million shares that would result from the conversion of the 5.75% Series C cumulative convertible preferred shares
and the additional 1.6 million common shares that would result from the conversion of our 9.0% Series E cumulative
convertible preferred shares and the corresponding add-back of the preferred dividends declared on those shares are
not included in the calculation of diluted per share data for the remaining periods above because the effect is not dilutive.
Impact of Recently Issued Accounting Standards
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity
to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to
customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.
The ASU does not apply to revenue recognition for lease contracts. In April 2015, the FASB voted for a one-year
deferral of the effective date of the new revenue recognition standard which was approved in July 2015. The new
standard will become effective for the Company beginning with the first quarter 2018. The standard permits the use
of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU
2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected
a transition method nor has it determined the effect of the standard on its ongoing financial reporting.
In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis
The ASU focuses to minimize situations under previously existing guidance in which a reporting entity was required
to consolidate another legal entity in which that reporting entity did not have: (1) the ability through contractual rights
to act primarily on its own behalf; (2) ownership of the majority of the legal entity's voting rights; or (3) the exposure
to a majority of the legal entity's economic benefits. The ASU affects reporting entities that are required to evaluate
whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised
consolidation model. ASU 2015-02 will be effective for periods beginning after December 15, 2015. Early adoption
is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU 2015-02 will
have a material impact the Company’s financial position or results of operations.
Inflation
Investments by EPR are financed with a combination of equity and debt. During inflationary periods, which are generally
accompanied by rising interest rates, our ability to grow may be adversely affected because the yield on new investments
may increase at a slower rate than new borrowing costs.
Substantially all of our megaplex theatre leases as well as other leases provide for base and participating rent features.
In addition, certain of our mortgage notes receivable similarly provide for base and participating interest. To the extent
inflation causes tenant or borrower revenues at our properties to increase over baseline amounts, we would participate
in those revenue increases through our right to receive annual percentage rent and/or participating interest.
Our leases and mortgage notes receivable also generally provide for escalation in base rents or interest in the event of
increases in the Consumer Price Index, with generally a limit of 2% per annum, or fixed periodic increases. Alternatively,
during deflationary periods, the escalations in base rents or interest that are dependent on increases in the Consumer
Price Index in our leases and mortgage notes receivable may be adversely affected.
Our leases are generally triple-net leases requiring the tenants to pay substantially all expenses associated with the
operation of the properties, thereby minimizing our exposure to increases in costs and operating expenses resulting
from inflation. A portion of our megaplex theatre, retail and restaurant leases are non-triple-net leases. These leases
represent approximately 16% of our total real estate square footage. To the extent any of those leases contain fixed
expense reimbursement provisions or limitations, we may be subject to increases in costs resulting from inflation that
are not fully passed through to tenants.
61
Item 7A. 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 fixed rate borrowings whenever possible. As of December 31, 2015, we had $650.0 million unsecured
revolving credit facility with $196.0 million outstanding and $25.0 million in bonds, all of which bear interest at a
floating rate. We also had a $350.0 million unsecured term loan facility that bears interest at a floating rate and $300.0
million of this LIBOR-based debt has been fixed with interest rate swaps at a blended rate of 2.71% through April 5,
2019.
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, our ability to make
additional real estate investments may be limited.
The following table presents the principal amounts, weighted average interest rates, and other terms required by year
of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes as of December 31
(including the impact of the interest rate swap agreements described below):
Expected Maturities (in millions)
2016
2017
2018
2019
2020
Thereafter
Total
Estimated
Fair Value
$ 75.5
$ 165.3
$ 13.4
$ — $550.0
$ 925.0
$1,729.2
$1,829.0
6.0%
4.9%
6.3%
—%
5.0%
5.2%
5.2%
4.3%
$ — $ — $ — $196.0
$ 50.0
$
25.0
$ 271.0
$ 271.0
—%
—%
—%
1.6%
1.8%
0.1%
1.5%
1.5%
2015
2016
2017
2018
2019
Thereafter
Total
Estimated
Fair Value
$ 110.1
$ 109.7
$165.3
$253.4
$ — $ 875.0
$1,513.5
$1,620.0
5.7%
5.9%
4.9%
2.7%
$ — $ — $ 62.0
$ 45.0
—%
$ — $
6.2%
5.4%
3.6%
25.0
$ 132.0
$ 132.0
—%
—%
1.6%
1.8%
—%
0.1%
1.3%
1.3%
December 31, 2015:
Fixed rate debt
Average interest rate
Variable rate debt
Average interest rate
(as of December 31,
2015)
December 31, 2014:
Fixed rate debt
Average interest rate
Variable rate debt
Average interest rate
(as of December 31,
2014)
The fair value of our debt as of December 31, 2015 and 2014 is estimated by discounting the future cash flows of each
instrument using current market rates including current market spreads.
We are exposed to foreign currency risk against our functional currency, the U.S. dollar, on our four Canadian properties
and the rents received from tenants of the properties are payable in CAD. To mitigate our foreign currency risk in future
periods on these Canadian properties, we entered into cross currency swaps with a fixed original notional value of
$100.0 million CAD and $98.1 million U.S. The net effect of these swaps is to lock in an exchange rate of $1.05 CAD
per U.S. dollar on approximately $13.5 million of annual CAD denominated cash flows on the properties through June
2018. There is no initial or final exchange of the notional amounts on these swaps. These foreign currency derivatives
should hedge a significant portion of our expected CAD denominated FFO of these four Canadian properties through
June 2018 as their impact on our reported FFO when settled should move in the opposite direction of the exchange
rates used to translate revenues and expenses of these properties.
In order to also hedge our net investment on the four Canadian properties, we entered into a forward contract with a
fixed notional value of $100.0 million CAD and $94.3 million U.S. with a July 2018 settlement date. The exchange
rate of this forward contract is approximately $1.06 CAD per U.S dollar. Additionally, on February 28, 2014, the
62
Company entered into a forward contract with a fixed notional value of $100.0 million CAD and $88.1 million U.S.
with a July 2018 settlement date. The exchange rate of this forward contract is approximately $1.13 CAD per U.S.
dollar. These forward contracts should hedge a significant portion of our CAD denominated net investment in these
four centers through July 2018 as the impact on accumulated other comprehensive income from marking the derivative
to market should move in the opposite direction of the translation adjustment on the net assets of our four Canadian
properties.
See Note 10 to the consolidated financial statements in this Annual Report on Form 10-K for additional information
on our derivative financial instruments and hedging activities.
63
Item 8. Financial Statements and Supplementary Data
EPR Properties
Contents
Report of Independent Registered Public Accounting Firm...............................................................................
65
Audited Financial Statements
Consolidated Balance Sheets..............................................................................................................................
Consolidated Statements of Income ...................................................................................................................
Consolidated Statements of Comprehensive Income .........................................................................................
Consolidated Statements of Changes in Equity..................................................................................................
Consolidated Statements of Cash Flows.............................................................................................................
Notes to Consolidated Financial Statements ......................................................................................................
66
67
68
69
71
73
Financial Statement Schedules
Schedule II – Valuation and Qualifying Accounts..............................................................................................
Schedule III - Real Estate and Accumulated Depreciation.................................................................................
120
121
64
Report of Independent Registered Public Accounting Firm
The Board of Trustees and Shareholders
EPR Properties:
We have audited the accompanying consolidated balance sheets of EPR Properties and subsidiaries as of December 31,
2015 and 2014, and the related consolidated statements of income, comprehensive income, changes in equity, and cash
period ended December 31, 2015. In connection with our audits of the
flows for each of the years in the
consolidated financial statements, we have also audited the accompanying financial statement schedules listed in Item
15 (2) of this Form 10-K. These consolidated financial statements and financial statement schedules are the responsibility
of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements
and financial statement schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of EPR Properties and subsidiaries as of December 31, 2015 and 2014, and the results of their
period ended December 31, 2015, in conformity
operations and their cash flows for each of the years in the
with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statements schedules,
when considered in relation to the basic consolidated financial statements taken as a whole present fairly, in all material
respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), EPR Properties internal control over financial reporting as of December 31, 2015, based on criteria established
in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), and our report dated February 24, 2016 expressed an unqualified opinion on the
effectiveness of EPR Properties’ internal control over financial reporting.
As discussed in Note 2 to the financial statements, the Company adopted FASB Accounting Standards Update (ASU)
2015-03, Simplifying the Presentation of Debt Issue Costs in 2015 and No. 2014-08, Reporting Discontinued Operations
and Disclosures of Disposals of Components of an Entity in 2014.
Kansas City, Missouri
February 24, 2016
65
EPR PROPERTIES
Consolidated Balance Sheets
(Dollars in thousands except share data)
Assets
Rental properties, net of accumulated depreciation of $534,303 and $465,660 at
December 31, 2015 and 2014, respectively
Land held for development
Property under development
Mortgage notes and related accrued interest receivable, net
Investment in a direct financing lease, net
Investment in joint ventures
Cash and cash equivalents
Restricted cash
Deferred financing costs, net
Accounts receivable, net
Other assets
Total assets
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities
Common dividends payable
Preferred dividends payable
Unearned rents and interest
Debt
Total liabilities
Equity:
Common Shares, $.01 par value; 75,000,000 shares authorized; and 63,195,182 and
58,952,404 shares issued at December 31, 2015 and 2014, respectively
Preferred Shares, $.01 par value; 25,000,000 shares authorized:
5,400,000 Series C convertible shares issued at December 31, 2015 and 2014;
liquidation preference of $135,000,000
3,450,000 Series E convertible shares issued at December 31, 2015 and 2014;
liquidation preference of $86,250,000
5,000,000 Series F shares issued at December 31, 2015 and 2014; liquidation
preference of $125,000,000
Additional paid-in-capital
Treasury shares at cost: 2,371,198 and 1,826,463 common shares at December 31,
2015 and 2014, respectively
Accumulated other comprehensive income
Distributions in excess of net income
EPR Properties shareholders’ equity
Noncontrolling interests
Equity
Total liabilities and equity
See accompanying notes to consolidated financial statements.
December 31,
2015
2014
$
$
$
3,025,199
23,610
378,920
423,780
190,880
6,168
4,283
10,578
4,894
59,101
89,857
4,217,270
92,178
18,401
5,951
44,952
1,981,920
2,143,402
2,451,534
206,001
181,798
507,955
199,332
5,738
3,336
13,072
4,136
47,282
66,091
3,686,275
82,180
16,281
5,952
25,623
1,629,750
1,759,786
632
589
54
35
50
2,508,445
(97,328)
5,622
(343,642)
2,073,868
—
2,073,868
4,217,270
$
$
54
35
50
2,283,440
(67,846)
12,566
(302,776)
1,926,112
377
1,926,489
3,686,275
$
$
$
$
$
66
EPR PROPERTIES
Consolidated Statements of Income
(Dollars in thousands except per share data)
Year Ended December 31,
$
$
2015
330,886
16,320
3,629
70,182
421,017
23,433
648
31,021
18,578
270
—
79,915
7,518
—
89,617
170,017
969
23,829
—
—
194,815
(482)
194,333
199
—
—
194,532
(23,806)
$
$
2014
286,673
17,663
1,009
79,706
385,051
24,897
771
27,566
—
301
—
81,270
2,452
3,777
66,739
177,278
1,273
1,209
220
—
179,980
(4,228)
175,752
505
3,376
—
179,633
(23,807)
2013
248,709
18,401
1,682
74,272
343,064
26,016
658
25,613
—
6,166
(4,539)
81,056
1,955
—
53,946
152,193
1,398
3,017
—
4,853
161,461
14,176
175,637
333
—
4,256
180,226
(23,806)
$
170,726
$
155,826
$
156,420
$
$
$
$
2.93
0.01
2.94
2.92
0.01
2.93
$
$
$
$
2.80
0.07
2.87
2.79
0.07
2.86
$
$
$
$
3.16
0.10
3.26
3.15
0.09
3.24
58,138
58,328
54,244
54,444
48,028
48,214
$
Rental revenue
Tenant reimbursements
Other income
Mortgage and other financing income
Total revenue
Property operating expense
Other expense
General and administrative expense
Retirement severance expense
Costs associated with loan refinancing or payoff
Gain on early extinguishment of debt
Interest expense, net
Transaction costs
Provision for loan losses
Depreciation and amortization
Income before equity in income from joint ventures
and other items
Equity in income from joint ventures
Gain on sale or acquisition, net
Gain on sale of investment in a direct financing lease
Gain on previously held equity interest
Income before income taxes
Income tax benefit (expense)
Income from continuing operations
$
Discontinued operations:
Income from discontinued operations
Transaction (costs) benefit
Gain on sale, net from discontinued operations
Net income attributable to EPR Properties
Preferred dividend requirements
Net income available to common shareholders of EPR
Properties
Per share data attributable to EPR Properties common shareholders:
Basic earnings per share data:
Income from continuing operations
Income from discontinued operations
Net income available to common shareholders
Diluted earnings per share data:
Income from continuing operations
Income from discontinued operations
Net income available to common shareholders
Shares used for computation (in thousands):
Basic
Diluted
See accompanying notes to consolidated financial statements.
67
EPR PROPERTIES
Consolidated Statements of Comprehensive Income
(Dollars in thousands)
Net income
Other comprehensive income (loss):
Foreign currency translation adjustment
Change in unrealized gain on derivatives
Comprehensive income attributable to EPR Properties
See accompanying notes to consolidated financial statements.
Year Ended December 31,
2015
194,532
(33,710)
26,766
187,588
$
$
2014
179,633
(18,464)
13,837
175,006
$
$
2013
180,226
(13,049)
9,620
176,797
$
$
68
l
a
t
o
T
g
n
i
l
l
o
r
t
n
o
c
n
o
N
s
t
s
e
r
e
t
n
i
s
n
o
i
t
u
b
i
r
t
s
i
D
f
o
s
s
e
c
x
e
n
i
d
e
t
a
l
u
m
u
c
c
A
r
e
h
t
o
e
v
i
s
n
e
h
e
r
p
m
o
c
e
m
o
c
n
i
t
e
n
)
s
s
o
l
(
e
m
o
c
n
i
y
t
i
u
q
E
’
s
r
e
d
l
o
h
e
r
a
h
S
s
e
i
t
r
e
p
o
r
P
R
P
E
S
E
I
T
R
E
P
O
R
P
R
P
E
y
t
i
u
q
E
n
i
s
e
g
n
a
h
C
f
o
s
t
n
e
m
e
t
a
t
S
d
e
t
a
d
i
l
o
s
n
o
C
3
1
0
2
d
n
a
4
1
0
2
,
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
d
e
d
n
E
s
r
a
e
Y
)
s
d
n
a
s
u
o
h
t
n
i
s
r
a
l
l
o
D
(
y
r
u
s
a
e
r
T
s
e
r
a
h
s
l
a
n
o
i
t
i
d
d
A
n
i
-
d
i
a
p
l
a
t
i
p
a
c
k
c
o
t
S
d
e
r
r
e
f
e
r
P
k
c
o
t
S
n
o
m
m
o
C
r
a
P
s
e
r
a
h
S
r
a
P
s
e
r
a
h
S
8
9
8
,
9
5
4
,
1
$
7
7
3
$
)
3
4
6
,
5
7
2
(
$
2
2
6
,
0
2
$
)
8
0
3
,
5
5
(
$
7
2
2
,
9
6
7
,
1
$
9
3
1
$
0
0
0
,
0
5
8
,
3
1
4
8
4
$
1
8
1
,
4
5
4
,
8
4
)
5
3
8
(
4
2
0
,
1
6
5
8
2
3
8
,
4
)
9
4
0
,
3
1
(
0
2
6
,
9
6
2
2
,
0
8
1
3
9
9
,
0
2
2
7
4
9
)
8
9
4
,
6
7
1
(
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6
2
2
,
0
8
1
)
8
9
4
,
6
7
1
(
—
—
—
—
—
—
—
—
0
2
6
,
9
)
9
4
0
,
3
1
(
—
)
5
2
4
,
3
(
—
—
—
—
—
—
—
)
4
4
4
,
3
(
4
2
0
,
1
8
8
5
,
2
2
3
8
,
4
6
5
8
—
—
—
—
9
8
3
,
4
7
4
9
,
0
2
2
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2
—
—
—
—
—
6
4
2
—
—
—
—
—
—
0
3
5
,
7
1
8
2
9
,
6
9
1
—
2
7
2
,
3
4
1
0
5
3
,
9
4
5
,
4
4
1
0
,
8
8
6
,
1
$
7
7
3
$
)
5
1
9
,
1
7
2
(
$
3
9
1
,
7
1
$
)
7
7
1
,
2
6
(
$
3
6
8
,
3
0
0
,
2
$
9
3
1
$
0
0
0
,
0
5
8
,
3
1
4
3
5
$
1
6
2
,
1
6
3
,
3
5
3
8
6
4
5
0
,
1
2
8
4
,
6
9
5
3
,
1
0
5
)
4
6
4
,
8
1
(
7
3
8
,
3
1
3
3
6
,
9
7
1
5
3
3
,
4
6
2
)
4
9
4
,
0
1
2
(
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3
3
6
,
9
7
1
)
4
9
4
,
0
1
2
(
—
—
—
—
—
—
—
—
)
4
6
4
,
8
1
(
7
3
8
,
3
1
—
—
—
—
—
—
—
)
6
8
1
,
4
(
—
)
3
8
4
,
1
(
4
5
0
,
1
6
6
8
,
4
2
8
4
,
6
9
5
3
,
1
—
—
—
—
3
3
5
,
1
3
8
2
,
4
6
2
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3
—
—
—
—
—
—
2
5
—
—
—
—
—
—
—
5
8
6
,
9
1
3
9
1
,
0
8
2
—
3
6
9
,
5
3
2
0
3
,
5
5
2
,
5
9
8
4
,
6
2
9
,
1
$
7
7
3
$
)
6
7
7
,
2
0
3
(
$
6
6
5
,
2
1
$
)
6
4
8
,
7
6
(
$
0
4
4
,
3
8
2
,
2
$
9
3
1
$
0
0
0
,
0
5
8
,
3
1
9
8
5
$
4
0
4
.
2
5
9
,
8
5
s
e
v
i
t
a
v
i
r
e
d
n
o
s
s
o
l
/
n
i
a
g
d
e
z
i
l
a
e
r
n
u
n
i
e
g
n
a
h
C
t
n
e
m
t
s
u
j
d
a
n
o
i
t
a
l
s
n
a
r
t
y
c
n
e
r
r
u
c
n
g
i
e
r
o
F
s
e
e
t
s
u
r
T
o
t
d
e
u
s
s
i
s
t
i
n
u
e
r
a
h
s
d
e
t
c
i
r
t
s
e
R
2
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
e
c
n
a
l
a
B
t
e
n
,
s
e
r
a
h
s
d
e
t
s
e
v
n
o
n
f
o
e
c
n
a
u
s
s
I
s
e
r
a
h
s
d
e
t
s
e
v
n
o
n
f
o
n
o
i
t
a
z
i
t
r
o
m
A
e
s
n
e
p
x
e
n
o
i
t
p
o
e
r
a
h
S
s
e
r
a
h
s
n
o
m
m
o
c
f
o
s
e
c
n
a
u
s
s
I
t
e
n
,
s
e
s
i
c
r
e
x
e
n
o
i
t
p
o
k
c
o
t
S
e
m
o
c
n
i
t
e
N
s
r
e
d
l
o
h
e
r
a
h
s
d
e
r
r
e
f
e
r
p
d
n
a
n
o
m
m
o
c
o
t
s
d
n
e
d
i
v
i
D
s
e
v
i
t
a
v
i
r
e
d
n
o
s
s
o
l
/
n
i
a
g
d
e
z
i
l
a
e
r
n
u
n
i
e
g
n
a
h
C
t
n
e
m
t
s
u
j
d
a
n
o
i
t
a
l
s
n
a
r
t
y
c
n
e
r
r
u
c
n
g
i
e
r
o
F
s
e
e
t
s
u
r
T
o
t
d
e
u
s
s
i
s
t
i
n
u
e
r
a
h
s
d
e
t
c
i
r
t
s
e
R
3
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
e
c
n
a
l
a
B
t
e
n
,
s
e
r
a
h
s
d
e
t
s
e
v
n
o
n
f
o
e
c
n
a
u
s
s
I
s
e
r
a
h
s
d
e
t
s
e
v
n
o
n
f
o
n
o
i
t
a
z
i
t
r
o
m
A
e
s
n
e
p
x
e
n
o
i
t
p
o
e
r
a
h
S
s
e
r
a
h
s
n
o
m
m
o
c
f
o
s
e
c
n
a
u
s
s
I
t
e
n
,
s
e
s
i
c
r
e
x
e
n
o
i
t
p
o
k
c
o
t
S
e
m
o
c
n
i
t
e
N
s
r
e
d
l
o
h
e
r
a
h
s
d
e
r
r
e
f
e
r
p
d
n
a
n
o
m
m
o
c
o
t
s
d
n
e
d
i
v
i
D
4
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
e
c
n
a
l
a
B
.
e
g
a
p
t
x
e
n
n
o
d
e
u
n
i
t
n
o
C
9
6
l
a
t
o
T
g
n
i
l
l
o
r
t
n
o
c
n
o
N
s
t
s
e
r
e
t
n
i
s
n
o
i
t
u
b
i
r
t
s
i
D
f
o
s
s
e
c
x
e
n
i
d
e
t
a
l
u
m
u
c
c
A
r
e
h
t
o
e
v
i
s
n
e
h
e
r
p
m
o
c
e
m
o
c
n
i
t
e
n
)
s
s
o
l
(
e
m
o
c
n
i
y
t
i
u
q
E
’
s
r
e
d
l
o
h
e
r
a
h
S
s
e
i
t
r
e
p
o
r
P
R
P
E
S
E
I
T
R
E
P
O
R
P
R
P
E
y
t
i
u
q
E
n
i
s
e
g
n
a
h
C
f
o
s
t
n
e
m
e
t
a
t
S
d
e
t
a
d
i
l
o
s
n
o
C
3
1
0
2
d
n
a
4
1
0
2
,
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
d
e
d
n
E
s
r
a
e
Y
)
d
e
u
n
i
t
n
o
c
(
)
s
d
n
a
s
u
o
h
t
n
i
s
r
a
l
l
o
D
(
y
r
u
s
a
e
r
T
s
e
r
a
h
s
l
a
n
o
i
t
i
d
d
A
n
i
-
d
i
a
p
l
a
t
i
p
a
c
k
c
o
t
S
d
e
r
r
e
f
e
r
P
k
c
o
t
S
n
o
m
m
o
C
r
a
P
s
e
r
a
h
S
r
a
P
s
e
r
a
h
S
9
8
4
,
6
2
9
,
1
$
7
7
3
$
)
6
7
7
,
2
0
3
(
$
6
6
5
,
2
1
$
)
6
4
8
,
7
6
(
$
0
4
4
,
3
8
2
,
2
$
9
3
1
$
0
0
0
,
0
5
8
,
3
1
9
8
5
$
4
0
4
,
2
5
9
,
8
5
—
7
0
9
,
1
)
2
2
2
,
8
(
8
3
0
,
7
9
1
1
,
1
7
7
3
,
6
)
0
1
7
,
3
3
(
6
6
7
,
6
2
2
3
5
,
4
9
1
5
6
3
,
0
9
1
)
5
9
3
,
3
(
)
8
9
3
,
5
3
2
(
—
—
—
—
—
—
—
—
—
—
—
—
—
)
7
7
3
(
—
—
—
—
—
—
—
—
—
—
2
3
5
,
4
9
1
—
)
8
9
3
,
5
3
2
(
—
—
—
—
—
—
—
—
—
—
—
)
0
1
7
,
3
3
(
6
6
7
,
6
2
—
)
6
3
(
)
2
2
2
,
8
(
—
—
—
—
—
—
—
—
—
)
4
2
2
,
1
2
(
—
—
1
4
9
,
1
8
3
0
,
7
9
1
1
,
1
7
7
3
,
6
—
—
—
—
7
7
3
4
2
8
,
7
1
9
2
3
,
0
9
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2
—
—
—
—
—
—
—
—
6
3
5
—
—
—
—
—
—
—
—
—
6
3
0
,
8
1
5
8
2
,
8
1
2
—
—
0
0
4
,
6
7
4
7
5
0
,
0
3
5
,
3
8
6
8
,
3
7
0
,
2
$
—
$
)
2
4
6
,
3
4
3
(
$
2
2
6
,
5
$
)
8
2
3
,
7
9
(
$
5
4
4
,
8
0
5
,
2
$
9
3
1
$
0
0
0
,
0
5
8
,
3
1
2
3
6
$
2
8
1
,
5
9
1
,
3
6
e
s
n
e
p
x
e
e
c
n
a
r
e
v
e
s
t
n
e
m
e
r
i
t
e
r
n
i
d
e
d
u
l
c
n
i
n
o
i
t
a
s
n
e
p
m
o
c
d
e
s
a
b
-
e
r
a
h
S
s
t
i
n
u
e
r
a
h
s
d
e
t
c
i
r
t
s
e
r
d
n
a
s
e
r
a
h
s
d
e
t
s
e
v
n
o
n
f
o
n
o
i
t
a
z
i
t
r
o
m
A
e
s
n
e
p
x
e
n
o
i
t
p
o
e
r
a
h
S
s
e
v
i
t
a
v
i
r
e
d
n
o
s
s
o
l
/
n
i
a
g
d
e
z
i
l
a
e
r
n
u
n
i
e
g
n
a
h
C
t
n
e
m
t
s
u
j
d
a
n
o
i
t
a
l
s
n
a
r
t
y
c
n
e
r
r
u
c
n
g
i
e
r
o
F
s
r
e
d
l
o
h
e
r
a
h
s
d
e
r
r
e
f
e
r
p
d
n
a
n
o
m
m
o
c
o
t
s
d
n
e
d
i
v
i
D
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
n
o
n
f
o
e
r
u
t
i
e
f
r
o
F
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
e
c
n
a
l
a
B
s
e
r
a
h
s
n
o
m
m
o
c
f
o
s
e
c
n
a
u
s
s
I
t
e
n
,
s
e
s
i
c
r
e
x
e
n
o
i
t
p
o
k
c
o
t
S
e
m
o
c
n
i
t
e
N
s
e
e
t
s
u
r
T
o
t
d
e
u
s
s
i
s
t
i
n
u
e
r
a
h
s
d
e
t
c
i
r
t
s
e
R
g
n
i
t
s
e
v
r
o
f
s
e
r
a
h
s
n
o
m
m
o
c
f
o
e
s
a
h
c
r
u
P
t
e
n
,
s
e
r
a
h
s
d
e
t
s
e
v
n
o
n
f
o
e
c
n
a
u
s
s
I
.
e
g
a
p
s
u
o
i
v
e
r
p
m
o
r
f
d
e
u
n
i
t
n
o
C
4
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
e
c
n
a
l
a
B
.
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
i
f
d
e
t
a
d
i
l
o
s
n
o
c
o
t
s
e
t
o
n
g
n
i
y
n
a
p
m
o
c
c
a
e
e
S
0
7
EPR PROPERTIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Operating activities:
Net income attributable to EPR Properties
Adjustments to reconcile net income to net cash provided by operating
activities:
Gain on early extinguishment of debt
Gain on previously held equity interest
Gain on sale of real estate
Deferred income tax expense (benefit)
Provision for loan losses
Income from discontinued operations
Gain on sale of investment in a direct financing lease
Costs associated with loan refinancing or payoff
Equity in income from joint ventures
Distributions from joint ventures
Depreciation and amortization
Amortization of deferred financing costs
Amortization of above market lease
Share-based compensation expense to management and trustees
Share-based compensation expense included in retirement severance expense
Decrease (increase) in restricted cash
Increase in mortgage notes accrued interest receivable
Increase in accounts receivable, net
Increase in direct financing lease receivable
Decrease (increase) in other assets
Increase in accounts payable and accrued liabilities
Increase in unearned rents and interest
Net operating cash provided by continuing operations
Net operating cash provided by discontinued operations
Net cash provided by operating activities
Investing activities:
Acquisition of rental properties and other assets
Proceeds from sale of real estate
Investment in unconsolidated joint ventures
Proceeds from settlement of derivative
Investment in mortgage notes receivable
Proceeds from mortgage note receivable paydown
Investment in promissory notes receivable
Proceeds from promissory note receivable paydown
Investment in a direct financing lease, net
Proceeds from sale of investment in a direct financing lease, net
Additions to properties under development
Net cash used by investing activities of continuing operations
Net proceeds from sale of real estate from discontinued operations
Net cash used by investing activities
Financing activities:
Proceeds from long-term debt facilities
Principal payments on long-term debt
Deferred financing fees paid
Costs associated with loan refinancing or payoff (cash portion)
Net proceeds from issuance of common shares
Impact of stock option exercises, net
Purchase of common shares for treasury for vesting
Dividends paid to shareholders
Net cash provided by financing activities
Effect of exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Supplemental information continued on next page.
$
71
Year Ended December 31,
2014
2013
2015
$
194,532
$
179,633
$
180,226
—
—
(23,829)
(1,136)
—
(199)
—
270
(969)
540
89,617
4,588
192
8,508
6,377
2,017
(4,133)
(11,623)
(3,559)
343
5,711
10,705
277,952
508
278,460
(179,820)
46,718
—
—
(72,698)
40,956
—
—
—
4,741
(408,436)
(568,539)
—
(568,539)
856,914
(503,314)
(7,047)
—
190,158
(3,394)
(8,222)
(233,073)
292,022
(996)
947
3,336
4,283
$
—
—
(1,209)
1,796
3,777
(3,881)
(220)
301
(1,273)
810
66,739
4,248
192
8,902
—
(8)
(3,997)
(5,214)
(2,993)
(3,360)
4,586
1,323
250,152
143
250,295
(85,205)
12,055
—
5,725
(93,877)
76,256
(4,387)
1,750
—
46,092
(334,635)
(376,226)
—
(376,226)
379,000
(310,253)
(814)
(25)
264,158
50
(2,892)
(207,637)
121,587
(278)
(4,622)
7,958
3,336
$
(4,539)
(4,853)
(3,017)
(14,787)
—
(4,589)
—
6,166
(1,398)
985
53,946
4,041
48
6,516
—
12,509
(457)
(7,163)
(4,860)
2,338
7,816
2,511
231,439
2,681
234,120
(123,497)
797
(1,607)
—
(60,568)
1,900
(1,278)
1,027
(3,262)
—
(197,271)
(383,759)
47,301
(336,458)
646,000
(552,468)
(8,133)
(5,790)
220,785
947
(3,246)
(197,924)
100,171
(539)
(2,706)
10,664
7,958
Continued from previous page.
EPR PROPERTIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Year Ended December 31,
2014
2013
2015
392,786
167,600
$
$
— $
$
14,285
$
120,051
$
377
— $
— $
— $
— $
236,428
$
— $
$
101,441
15,525
$
— $
— $
— $
— $
— $
— $
90,850
1,956
18,546
417
$
$
$
$
85,290
710
7,525
7,053
$
$
$
$
139,026
—
19,710
10,398
—
—
2,500
49,391
8,282
33,089
73,403
102
2,763
1,168
Supplemental schedule of non-cash activity:
Transfer of property under development to rental property
Transfer of land held for development to property under development
Acquisiton of real estate in exchange for assumption of debt at fair value
Issuance of nonvested shares and restricted share units at fair value, including
nonvested shares issued for payment of bonuses
Conversion of mortgage note receivable to rental property
Adjustment of noncontrolling interest to additional paid in capital
Sale of real estate in exchange for note receivable
Consolidation of previously held equity interest:
Net increase in real estate and other assets
Decrease in investment in joint ventures
Decrease in mortgage notes receivable
Supplemental disclosure of cash flow information:
Cash paid during the year for interest
Cash paid during the year for income taxes
Interest cost capitalized
Increase in accrued capital expenditures
See accompanying notes to consolidated financial statements.
$
$
$
$
$
$
$
$
$
$
$
$
$
$
72
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
1. Organization
Description of Business
EPR Properties (the Company) is a specialty real estate investment trust (REIT) organized on August 29, 1997 in
Maryland. The Company develops, owns, leases and finances properties in select market segments primarily related
to Entertainment, Education and Recreation. The Company’s properties are located in the United States and Canada.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of EPR Properties and its subsidiaries, all of which are
wholly owned except for those subsidiaries discussed below.
The Company consolidates certain entities if it is deemed to be the primary beneficiary in a variable interest entity
(VIE) in which it has a controlling financial interest. A controlling financial interest will have both of the following
characteristics: the power to direct the activities of a VIE that most significantly impact the VIE's economic performance
and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive
benefits from the VIE that could potentially be significant to the VIE. This topic requires an ongoing reassessment. The
equity method of accounting is applied to entities in which the Company is not the primary beneficiary as defined in
the Consolidation Topic of the FASB ASC, or does not have effective control, but can exercise influence over the entity
with respect to its operations and major decisions.
The Company reports its noncontrolling interests as required by the Consolidation Topic of the FASB ASC.
Noncontrolling interest is the portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a
parent. The ownership interests in the subsidiary that are held by owners other than the parent are noncontrolling
interests. Such noncontrolling interests are reported on the consolidated balance sheets within equity, separately from
the Company's equity. On the consolidated statements of income, revenues, expenses and net income or loss from less-
than-wholly owned subsidiaries are reported at the consolidated amounts, including both the amounts attributable to
the Company and noncontrolling interests. Consolidated statements of changes in shareholders' equity are included for
both quarterly and annual financial statements, including beginning balances, activity for the period and ending balances
for equity, noncontrolling interests and total equity. The Company does not have any redeemable noncontrolling
interests.
Prior to October 2015, the Company owned 96% of the membership interests of VinREIT, LLC (VinREIT). This entity
was dissolved as the Company has completed the sales of its vineyard and winery properties. There was no net income
attributable to noncontrolling interest related to VinREIT for the years ended December 31, 2015, 2014 and 2013. Total
noncontrolling interest in VinREIT included in the accompanying consolidated balance sheet was $377 thousand for
the year ended December 31, 2014. The Company’s consolidated statements of income include net income related to
VinREIT of $0.2 million, $1.7 million and $6.2 million for the years ended December 31, 2015, 2014 and 2013,
respectively. The Company received operating distributions from VinREIT of $0.1 million, $1.3 million and $3.5
million during 2015, 2014 and 2013, respectively. In addition, during 2014 and 2013, respectively, the Company
received distributions of $7.1 million and $45.4 million related to property sales. During 2015, there were no
distributions related to property sales. During 2015, 2014 and 2013, there were no contributions related to financing
activities.
Use of Estimates
Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in
conformity with accounting principles generally accepted in the United States of America. Actual results could differ
from those estimates.
73
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Rental Properties
Rental properties are carried at cost less accumulated depreciation. Costs incurred for the acquisition and development
of the properties are capitalized. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets, which generally are estimated to be 30 to 40 years for buildings and 3 to 25 years for furniture,
fixtures and equipment. Tenant improvements, including allowances, are depreciated over the shorter of the base term
of the lease or the estimated useful life. Expenditures for ordinary maintenance and repairs are charged to operations
in the period incurred. Significant renovations and improvements, which improve or extend the useful life of the asset,
are capitalized and depreciated over their estimated useful life.
Management reviews a property for impairment whenever events or changes in circumstances indicate that the carrying
value of a property may not be recoverable. The review of recoverability is based on an estimate of undiscounted future
cash flows expected to result from its use and eventual disposition. If impairment exists due to the inability to recover
the carrying value of the property, an impairment loss is recorded to the extent that the carrying value of the property
exceeds its estimated fair value.
The Company evaluates the held-for-sale classification of its real estate as of the end of each quarter. Assets that are
classified as held for sale are recorded at the lower of their carrying amount or fair value less costs to sell. Assets are
generally classified as held for sale once management has initiated an active program to market them for sale and has
received a firm purchase commitment that is expected to close within one year. On occasion, the Company will receive
unsolicited offers from third parties to buy individual Company properties. Under these circumstances, the Company
will classify the properties as held for sale when a sales contract is executed with no contingencies and the prospective
buyer has funds at risk to ensure performance.
Accounting for Acquisitions
Upon acquisition of real estate properties, the Company determines if the acquisition meets the criteria to be accounted
for as a business combination. Accordingly, the Company accounts for (1) acquired vacant properties, (2) acquired
single tenant properties when a new lease or leases are signed at the time of acquisition, and (3) acquired single tenant
properties that have an existing long-term triple-net lease or leases (greater than seven years) as asset acquisitions.
Acquisitions of properties that include a process such as those with with shorter-term leases or properties with multiple
tenants that require business related activities to manage and maintain the properties are treated as business combinations.
Costs incurred for asset acquisitions and development properties, including transaction costs, are capitalized. For asset
acquisitions, the Company allocates the purchase price and other related costs incurred to the real estate assets acquired
based on recent independent appraisals or methods similar to those used by independent appraisers and management
judgment.
If the acquisition is determined to be a business combination, the Company records the fair value of acquired tangible
assets (consisting of land, building, tenant improvements, and furniture, fixtures and equipment) and identified intangible
assets and liabilities (consisting of above and below market leases, in-place leases, tenant relationships and assumed
financing that is determined to be above or below market terms) as well as any noncontrolling interest. In addition,
acquisition-related costs in connection with business combinations are expensed as incurred. Costs related to such
transactions, as well as costs associated with terminated transactions, are included in the accompanying Consolidated
Statements of Income as transaction costs. Transaction costs expensed totaled $7.5 million, $2.5 million and $2.0 million
for the years ended December 31, 2015, 2014 and 2013, respectively.
Most of the Company’s rental property acquisitions do not involve in-place leases. In such cases, the fair value of the
tangible assets is determined based on recent independent appraisals or methods similar to those used by independent
appraisers and management judgment. Because the Company typically executes these leases simultaneously with the
purchase of the real estate, no value is ascribed to in-place leases in these transactions.
For rental property acquisitions involving in-place leases, the fair value of the tangible assets is determined by valuing
the property as if it were vacant based on management’s determination of the relative fair values of the assets.
Management determines the “as if vacant” fair value of a property using recent independent appraisals or methods
74
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
similar to those used by independent appraisers. The aggregate value of intangible assets or liabilities is measured based
on the difference between the stated price plus capitalized costs and the property as if vacant.
In determining the fair value of acquired in-place leases, the Company considers many factors. On a lease-by-lease
basis, management considers the present value of the difference between the contractual amounts to be paid pursuant
to the leases and management’s estimate of fair market lease rates. For above market leases, management considers
such differences over the remaining non-cancelable lease terms and for below market leases, management considers
such differences over the remaining initial lease terms plus any fixed rate renewal periods. The capitalized above-
market lease values are amortized as a reduction of rental income over the remaining non-cancelable terms of the
respective leases. The capitalized below market lease values are amortized as an increase to rental income over the
remaining initial lease terms plus any fixed rate renewal periods. Management considers several factors in determining
the discount rate used in the present value calculations, including the credit risks associated with the respective tenants.
If debt is assumed in the acquisition, the determination of whether it is above or below market is based upon a comparison
of similar financing terms for similar rental properties at the time of the acquisition.
The fair value of acquired in-place leases also includes management’s estimate, on a lease-by-lease basis, of the present
value of the following amounts: (i) the value associated with avoiding the cost of originating the acquired in-place
leases (i.e. the market cost to execute the leases, including leasing commissions, legal and other related costs); (ii) the
value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the
assumed re-leasing period, (i.e. real estate taxes, insurance and other operating expenses); (iii) the value associated
with lost rental revenue from existing leases during the assumed re-leasing period; and (iv) the value associated with
avoided tenant improvement costs or other inducements to secure a tenant lease. These values are amortized over the
remaining initial lease term of the respective leases.
The Company also determines the value, if any, associated with customer relationships considering factors such as the
nature and extent of the Company’s existing business relationship with the tenants, growth prospects for developing
new business with the tenants and expectation of lease renewals. The value of customer relationship intangibles is
amortized over the remaining initial lease terms plus any renewal periods.
Management of the Company reviews the carrying value of intangible assets for impairment on an annual basis.
Intangible assets (included in Other Assets in the accompanying consolidated balance sheets) consist of the following
at December 31 (in thousands):
In-place leases, net of accumulated amortization of $11.6 million and $12.1
million, respectively
Above market lease, net of accumulated amortization of $0.4 million and $0.2
million, respectively
Goodwill
Total intangible assets, net
2015
2014
$
$
7,273
$
670
693
8,636
$
6,951
862
693
8,506
In-place leases, net at December 31, 2015 and 2014 of approximately $7.3 million and $7.0 million, respectively, relate
to four entertainment retail centers in Ontario, Canada that were purchased on March 1, 2004, three theatre properties
that were purchased during 2013, 11 theatre properties that were purchased in 2014 and three theatre properties that
were purchased during 2015. Above market lease, net at December 31, 2015 and 2014 relates to one theatre property
that was purchased during 2013. Goodwill at December 31, 2015 and 2014 relates solely to the acquisition of New
Roc that was acquired on October 27, 2003. Amortization expense related to in-place leases is computed using the
straight-line method and was $1.4 million for the years ended December 31, 2015, 2014 and 2013. The weighted
average life for these in-place leases at December 31, 2015 is 9.0 years. Amortization expense related to the above
market lease is computed using the straight-line method and was $192 thousand for the years ended December 31,
2015 and 2014 and $48 thousand for the year ended December 31, 2013. The weighted average life for the above
market lease at December 31, 2015 is 3.5 years.
75
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Future amortization of in-place leases, net and above market lease, net at December 31, 2015 is as follows (in thousands):
Year:
2016
2017
2018
2019
2020
Thereafter
Total
In place leases
Above market lease
$
$
1,137
1,026
1,015
776
537
2,782
7,273
$
$
192
192
192
94
—
—
670
Deferred Financing Costs
Deferred financing costs are amortized over the terms of the related debt obligations or mortgage note receivable as
applicable. The Company early adopted the FASB issued Accounting Standards Update (ASU) No. 2015-03,
Simplifying the Presentation of Debt Issue Costs, during 2015 and applied the guidance retrospectively. The costs
unrelated to our unsecured revolving credit facility are shown as a reduction of debt of $18.3 million and $15.8 million
as of December 31, 2015 and 2014, respectively.
Capitalized Development Costs
The Company capitalizes certain costs that relate to property under development including interest and a portion of
internal legal personnel costs.
Operating Segments
For financial reporting purposes, the Company groups its investments into four reportable operating segments:
Entertainment, Education, Recreation and Other. See Note 20 for financial information related to these operating
segments.
Revenue Recognition
Rents that are fixed and determinable are recognized on a straight-line basis over the minimum terms of the leases.
Base rent escalation on leases that are dependent upon increases in the Consumer Price Index (CPI) is recognized when
known. In addition, most of the Company's tenants are subject to additional rents if gross revenues of the properties
exceed certain thresholds defined in the lease agreements (percentage rents). Percentage rents as well as participating
interest for those mortgage agreements that contain similar such clauses are recognized at the time when specific
triggering events occur as provided by the lease or mortgage agreements. Rental revenue included percentage rents of
$3.0 million, $2.0 million and $2.6 million for the years ended December 31, 2015, 2014 and 2013, respectively.
Mortgage and other financing income included participating interest income of $1.5 million, $2.2 million $0.9 million
for the years ended December 31, 2015, 2014 and 2013, respectively. For the year ended December 31, 2014, mortgage
and other financing income also included a $5.0 million prepayment fee related to mortgage notes that were paid either
fully or partially in advance of their maturity dates. There were no prepayment fees included in mortgage and other
financing income for the years ended December 31, 2015 and 2013. Lease termination fees are recognized when the
related leases are canceled and the Company has no obligation to provide services to such former tenants. Termination
fees of $145 thousand, $123 thousand and $37 thousand were recognized during the years ended December 31, 2015,
2014 and 2013, respectively.
Direct financing lease income is recognized on the effective interest method to produce a level yield on funds not yet
recovered. Estimated unguaranteed residual values at the date of lease inception represent management's initial estimates
of fair value of the leased assets at the expiration of the lease, not to exceed original cost. Significant assumptions used
in estimating residual values include estimated net cash flows over the remaining lease term and expected future real
estate values. The Company evaluates on an annual basis (or more frequently if necessary) the collectability of its
direct financing lease receivable and unguaranteed residual value to determine whether they are impaired. A direct
financing lease receivable is considered to be impaired when, based on current information and events, it is probable
76
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
that the Company will be unable to collect all amounts due according to the existing contractual terms. When a direct
financing lease receivable is considered to be impaired, the amount of loss is calculated by comparing the recorded
investment to the value determined by discounting the expected future cash flows at the direct financing lease receivable's
effective interest rate or to the fair value of the underlying collateral, less costs to sell, if such receivable is collateralized.
Discontinued Operations
The Company evaluates each sale or disposal transaction to determine if it meets the criteria to qualify as discontinued
operations. A discontinued operation is a component of an entity or group of components that have been disposed of
or are classified as held for sale and represent a strategic shift that has or will have a major effect on the Company's
operations and financial results, or an acquired business that is classified as held for sale on the acquisition date. If the
sale or disposal transaction does not meet the criteria, the operations and related gain or loss on sale is included in
income from continuing operations. The Company adopted the FASB issued Accounting Standards Update (ASU) No.
2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, during 2014
and applied the guidance prospectively.
Allowance for Doubtful Accounts
Accounts receivable is reduced by an allowance for amounts that may become uncollectible in the future. The Company’s
accounts receivable balance is comprised primarily of rents and operating cost recoveries due from tenants as well as
accrued rental rate increases to be received over the life of the existing leases. The Company regularly evaluates the
adequacy of its allowance for doubtful accounts. The evaluation primarily consists of reviewing past due account
balances and considering such factors as the credit quality of the Company’s tenants, historical trends of the tenant and/
or other debtor, current economic conditions and changes in customer payment terms. Additionally, with respect to
tenants in bankruptcy, the Company estimates the expected recovery through bankruptcy claims and increases the
allowance for amounts deemed uncollectible. If the Company’s assumptions regarding the collectiblity of accounts
receivable prove incorrect, the Company could experience write-offs of the accounts receivable or accrued straight-
line rents receivable in excess of its allowance for doubtful accounts. The allowance for doubtful accounts was $3.2
million and $1.6 million at December 31, 2015 and 2014, respectively.
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 and the Company defers certain loan
origination and commitment fees, net of certain origination costs, and amortizes them over the term of the related loan.
Interest income on performing loans is accrued as earned. The Company evaluates the collectability of both interest
and principal of each of its loans to determine whether it is impaired. A loan is considered to be impaired when, based
on current information and events, the Company determines that it is probable that it will be unable to collect all amounts
due according to the existing contractual terms. An insignificant delay or shortfall in amounts of payments does not
necessarily result in the loan being identified as impaired. When a loan is considered to be impaired, the amount of
loss, if any, is calculated by comparing the recorded investment to the value determined by discounting the expected
future cash flows at the loan’s effective interest rate or to the fair value of the Company’s interest in the underlying
collateral, less costs to sell, if the loan is collateral dependent. For impaired loans, interest income is recognized on a
cash basis, unless the Company determines based on the loan to estimated fair value ratio the loan should be on the
cost recovery method, and any cash payments received would then be reflected as a reduction of principal. Interest
income recognition is recommenced if and when the impaired loan becomes contractually current and performance is
demonstrated to be resumed. During the year ended December 31, 2013, the Company received partial payment of
$1.0 million on a note receivable that was previously impaired and accordingly the allowance for loan losses of $0.1
million was written off. The Company had one note receivable totaling $3.8 million (including $0.1 million in accrued
interest) at December 31, 2014 that was impaired due to the inability of the borrower to meet its contractual obligations.
Interest income of $84 thousand was recognized on this note for the year ended December 31, 2014 and related to the
period before the note was impaired. Management of the Company evaluated the fair value of the underlying collateral
of the note and concluded that a loan loss reserve for its full value of $3.8 million was necessary at December 31, 2014.
During the year ended December 31, 2015, the Company wrote off $3.8 million of this previously impaired and fully
reserved note receivable.
77
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Income Taxes
The Company operates in a manner intended to qualify as a REIT under the Internal Revenue Code (the Code). A REIT
that distributes at least 90% of its taxable income to its shareholders each year and which meets certain other conditions
is not taxed on that portion of its taxable income which is distributed to its shareholders. The Company intends to
continue to qualify as a REIT and distribute substantially all of its taxable income to its shareholders.
The Company owns certain real estate assets which are subject to income tax in Canada. Prior to December 31, 2013,
a full valuation allowance had been recorded on the net Canadian deferred tax assets as there was no assurance that the
Canadian operations would generate taxable income in the future. Due to tax law changes occurring in the fourth
quarter of 2013 related primarily to limitations on the deductibility of intercompany interest expense, the Company's
Canadian operations generated taxable income during both the years ended December 31, 2015 and 2014 and the
Company expects to continue to generate taxable income from its Canadian operations going forward. For the year
ended December 31, 2013, the Company reassessed the need for a valuation allowance, and reversed its valuation
allowance associated with the net Canadian deferred tax assets and recorded an income tax benefit of $14.8 million.
At December 31, 2015, the net Canadian deferred tax assets totaled $10.9 million and the temporary differences between
income for financial reporting purposes and taxable income for the Canadian operations relate primarily to depreciation
and straight line rents.
The Company has certain taxable REIT subsidiaries, as permitted under the Code, through which it conducts certain
business activities and are subject to federal and state income taxes on their net taxable income. One of the taxable
REIT subsidiaries holds four unconsolidated joint ventures located in China. The Company records these investments
using the equity method; therefore the income reported by the Company is net of income tax paid to the Chinese
authorities. In addition, the company is liable for withholding taxes associated with the current and future repatriation
of earnings of the China joint ventures. At December 31, 2015, the amount of this future liability was approximately
$158 thousand and represented withholding taxes on 2015 earnings. Additionally, the Company paid $54 thousand in
withholding taxes during the year ended December 31, 2015 that related to 2014 earnings repatriated during 2015. In
addition to historical net operating loss carryovers, temporary differences between income for financial reporting
purposes and taxable income for the taxable REIT subsidiaries relate primarily to timing differences from when the
foreign income is recognized.
As of December 31, 2015 and 2014, respectively, the Canadian operations and the taxable REIT subsidiaries had
deferred tax assets totaling approximately $16.5 million and $18.7 million and deferred tax liabilities totaling
approximately $3.8 million and $4.4 million. As there is no assurance that the taxable REIT subsidiaries will generate
taxable income in the future beyond the reversal of temporary taxable differences, the deferred tax assets and
liabilities have been offset by a valuation allowance at December 31, 2015 and 2014. The Company’s consolidated
deferred tax position is summarized as follows:
Fixed assets
Net operating losses
Other
Less Valuation allowance
Total deferred tax assets
Straight line receivable
Other
Total deferred tax liabilities
Net deferred tax asset
2015
2014
13,791
2,249
412
(1,779)
14,673
$
$
(2,731) $
(1,072)
(3,803) $
15,720
2,880
90
(2,391)
16,299
(3,594)
(850)
(4,444)
10,870
$
11,855
$
$
$
$
$
78
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Deferred tax assets for which no valuation allowance has been established could be recognized for financial reporting
purposes in future periods if the taxable REIT subsidiaries generate sufficient taxable income.
Additionally, during the years ended December 31, 2015 and 2014, the Company recognized current income and
withholding tax expense of $1.6 million and $2.1 million, respectively, primarily related to certain state income taxes
and foreign withholding tax. The table below details the current and deferred income tax benefit (expense) for the
years ended December 31, 2015, 2014 and 2013 (in thousands):
2015
2014
2013
Current state income tax expense
Current foreign income tax
Current foreign withholding tax
Deferred foreign withholding tax
Deferred income tax benefit (expense)
Income tax benefit (expense)
$
$
(899) $
431
(1,107)
(43)
1,136
(482) $
(579) $
(493)
(1,040)
(320)
(1,796)
(4,228) $
(522)
—
—
(89)
14,787
14,176
The Company's effective tax rate for the years ended December 31, 2015 and 2014 was 0.2% and 2.3%, respectively.
The differences between the income tax benefit (expense) calculated at the statutory U.S. federal income tax rates of
35% and the actual income tax benefit (expense) recorded for continuing operations is mostly attributable to the dividends
paid deduction available for REITs.
Furthermore, the Company qualified as a REIT and distributed the necessary amount of taxable income such that no
current U.S. federal income taxes were due for the years ended December 31, 2015, 2014 and 2013. Accordingly, no
provision for current U.S. federal income taxes was recorded for any of those years. If the Company fails to qualify
as a REIT in any taxable year, without the benefit of certain provisions, it will be subject to federal and state income
taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as
a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company is subject
to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed
taxable income. Tax years 2012 through 2015 remain generally open to examination for U.S. federal income tax and
state tax purposes and from 2011 through 2015 for Canadian income tax purposes.
The Company’s policy is to recognize interest and penalties as general and administrative expense. In 2015,
approximately $65 thousand in interest and penalties related to a state audit were recognized. In 2014, the Company
did not recognize any expense related to interest and penalties. The Company did not have any accrued interest and
penalties at December 31, 2015 or December 31, 2014.
Concentrations of Risk
American Multi-Cinema, Inc. (AMC) was the lessee of a substantial portion (25%) of the megaplex theatre rental
properties held by the Company at December 31, 2015 as a result of a series of sale leaseback transactions pertaining
to AMC megaplex theatres. A substantial portion of the Company’s total revenues (approximately $86.1 million or
20%, $87.4 million or 23% and $85.1 million or 25%, for the years ended December 31, 2015, 2014 and 2013,
respectively) results from the revenue from AMC under the leases, or from its parent, AMC Entertainment, Inc. (AMCE),
as the guarantor of AMC’s obligations under the leases. AMCE is wholly owned by AMC Entertainment Holdings,
Inc. (AMCEH). AMCEH is a publicly held company (NYSE: AMC) and its consolidated financial information is
publicly available as www.sec.gov.
For the years ended December 31, 2015, 2014 and 2013, approximately $33.7 million or 8%, and $40.2 million or 10%,
and $42.3 million or 12%, respectively, of total revenue was derived from the Company's four entertainment retail
centers in Ontario, Canada. The Company's wholly owned subsidiaries that hold the four Canadian entertainment retail
centers represent approximately $169.7 million or 8% and $200.4 million or 10%, respectively, of the Company's net
assets as of December 31, 2015 and 2014.
79
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Cash Equivalents
Cash equivalents include bank demand deposits and shares of highly liquid institutional money market mutual funds
for which cost approximates market value.
Restricted Cash
Restricted cash represents cash held for a borrower’s debt service reserve for mortgage notes receivable, deposits
required in connection with debt service, and payment of real estate taxes and capital improvements.
Share-Based Compensation
Share-based compensation to employees of the Company is granted pursuant to the Company's Annual Incentive
Program and Long-Term Incentive Plan. Share-based compensation to non-employee Trustees of the Company is
granted pursuant to the Company's Trustee compensation program and shares are issued under the 2007 Equity Incentive
Plan.
Share based compensation expense consists of share option expense, amortization of nonvested share grants, and
amortization of share units issued to non-employee Trustees for payment of their annual retainers. Share based
compensation is included in general and administrative expense in the accompanying consolidated statements of income,
and totaled $8.5 million, $8.9 million and $6.5 million for the years ended December 31, 2015, 2014 and 2013,
respectively. Share-based compensation included in retirement severance expense in the accompanying consolidated
statements of income totaled $6.4 million for the year ended December 31, 2015 and related to the retirement of the
Company's former President and Chief Executive Officer.
Share Options
Share options are granted to employees pursuant to the Long-Term Incentive Plan. The fair value of share options
granted is estimated at the date of grant using the Black-Scholes option pricing model. Share options granted to
employees vest over a period of four years and share option expense for these options is recognized on a straight-line
basis over the vesting period. Expense recognized related to share options and included in general and administrative
expense in the accompanying consolidated statement of income was $1.1 million, $1.4 million and $0.9 million for the
years ended December 31, 2015, 2014 and 2013, respectively. Expense recognized related to share options and included
in retirement severance expense in the accompanying consolidated statements of income was $1.4 million for the year
ended December 31, 2015 and related to the retirement of the Company's former President and Chief Executive Officer.
Nonvested Shares Issued to Employees
The Company grants nonvested shares to employees pursuant to both the Annual Incentive Program and the Long-
Term Incentive Plan. The Company amortizes the expense related to the nonvested shares awarded to employees under
the Long-Term Incentive Plan and the premium awarded under the nonvested share alternative of the Annual Incentive
Program on a straight-line basis over the future vesting period (three to four years). Expense recognized related to
nonvested shares and included in general and administrative expense in the accompanying consolidated statements of
income was $6.3 million, $6.5 million and $4.8 million for the years ended December 31, 2015, 2014 and 2013,
respectively. Expense related to nonvested shares and included in retirement severance expense in the accompanying
consolidated statements of income was $5.0 million for the year ended December 31, 2015 and related to the retirement
of the Company's former President and Chief Executive Officer.
Restricted Share Units Issued to Non-Employee Trustees
The Company issues restricted share units to non-employee Trustees for payment of their annual retainers. The fair
value of the share units granted was based on the share price at the date of grant. The share units vest upon the earlier
of the day preceding the next annual meeting of shareholders or a change of control. The settlement date for the shares
is selected by the non-employee Trustee, and ranges from one year from the grant date to upon termination of service.
This expense was amortized by the Company on a straight-line basis over the year of service by the non-employee
Trustees. Total expense recognized related to shares issued to non-employee Trustees was $1.0 million, $1.1 million
and $828 thousand for the years ended December 31, 2015, 2014 and 2013, respectively.
80
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Foreign Currency Translation
The Company accounts for the operations of its Canadian properties and mortgage note (prior to pay-off) in Canadian
dollars. The assets and liabilities related to the Company’s Canadian properties and mortgage note are translated into
U.S. dollars at current exchange rates; revenues and expenses are translated at average exchange rates. Resulting
translation adjustments are recorded as a separate component of comprehensive income.
Derivative Instruments
The Company has acquired certain derivative instruments to reduce exposure to fluctuations in foreign currency
exchange rates and variable interest rates. The Company has established policies and procedures for risk assessment
and the approval, reporting and monitoring of derivative financial instrument activities. These derivatives consist of
foreign currency forward contracts, cross currency swaps and interest rate swaps.
The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of
derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative
in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria
necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in
the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are
considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected
future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be
designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting
generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the
recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a
fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may
enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting
does not apply or the Company elects not to apply hedge accounting.
The Company's policy is to measure the credit risk of its derivative financial instruments that are subject to master
netting agreements on a net basis by counterparty portfolio.
3. Rental Properties
The following table summarizes the carrying amounts of rental properties as of December 31, 2015 and 2014 (in
thousands):
Buildings and improvements
Furniture, fixtures & equipment
Land
Accumulated depreciation
Total
2015
2,837,611
34,423
687,468
3,559,502
(534,303)
3,025,199
$
$
2014
2,273,430
25,922
617,842
2,917,194
(465,660)
2,451,534
$
$
Depreciation expense on rental properties was $85.9 million, $63.0 million and $50.7 million for the years ended
December 31, 2015, 2014 and 2013, respectively.
On August 1, 2015, per the terms of the mortgage note agreement, the borrower for Camelback Mountain Resort
exercised its option to convert the mortgage note agreement to a lease agreement. As a result, the Company recorded
the carrying value of its investment into rental property, which approximated the fair value of the property on the
conversion date. There was no gain or loss recognized on this transaction. The property is leased pursuant to a triple
net lease with a 20-year term.
On April 21, 2014, the Company acquired 100% of an entity that owns 11 theatre properties in seven states for a total
purchase price of approximately $117.7 million. As a part of this transaction, the Company assumed a mortgage loan
of $90.3 million, which was booked at fair value on the date of the acquisition and a note payable of $1.9 million, for
81
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
which the carrying value approximated market value on the date of acquisition. See Note 10 for further details regarding
these loans. The theatre properties are leased on a triple net basis under a master lease agreement to a subsidiary of
Regal Cinemas, Inc. with the tenant responsible for all taxes, costs and expenses arising from the use or operation of
the properties. The remaining initial lease term is approximately 13 years. On the acquisition date, the Company recorded
the following in the consolidated balance sheet: $123.7 million to rental properties, $3.3 million to other assets (for in-
place leases) and $101.5 million to debt. Proforma financial information for this acquisition has been omitted as the
effects of the acquisition are not material to the consolidated financial statements. Acquisition related costs in connection
with this acquisition of $0.5 million were expensed as incurred during the year ended December 31, 2014.
During the year ended December 31, 2013, the Company sold five winery and vineyard properties located in California.
The total proceeds for these sales were $49.8 million and the Company recognized a net gain of $4.3 million. In
consideration for one of these properties, the Company received $1.0 million in cash and a mortgage note receivable
of $2.5 million, due in November 2016. As further detailed in Note 18, the results of operations of these properties
have been classified within discontinued operations.
During the year ended December 31, 2014, the Company sold one winery located in Washington and one vineyard
located in California. The total net proceeds for these sales were $8.0 million and the Company recognized a gain of
$0.9 million. Additionally, during the year ended December 31, 2014, the Company sold three land parcels for net
proceeds of $4.1 million and the Company recognized a gain of $0.3 million. The results of operations of these
properties have not been classified within discontinued operations.
On January 27, 2015, the Company completed the sale of a theatre located in Los Angeles, California for net proceeds
of $42.7 million and recognized a gain on sale of $23.7 million. In addition, during the year ended December 31, 2015,
the Company sold a land parcel adjacent to one of its public charter school investments for net proceeds of $1.1 million
and recognized a gain of $0.2 million and sold two land parcels adjacent to its megaplex theatre properties for net
proceeds of $2.9 million and recognized a loss of $0.1 million. The results of operations of these properties have not
been classified within discontinued operations.
4. Accounts Receivable, Net
The following table summarizes the carrying amounts of accounts receivable, net as of December 31, 2015 and 2014
(in thousands):
Receivable from tenants
Receivable from non-tenants
Straight-line rent receivable
Allowance for doubtful accounts
Total
2015
2014
9,999
353
52,336
(3,587)
59,101
$
$
6,705
602
41,529
(1,554)
47,282
$
$
82
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
5. Investment in Mortgage Notes
Investment in mortgage notes, including related accrued interest receivable, at December 31, 2015 and 2014 consists
of the following (in thousands):
(1) Mortgage note, 10.00%, borrower exercised conversion
option on August 1, 2015
(2) Mortgage note, 9.00%, paid October 1, 2015
(3) Mortgage note and related accrued interest receivable,
10.00%, paid November 10, 2015
(4) Mortgage note and related accrued interest receivable,
9.00%, due March 31, 2016
(5) Mortgage note, 5.50%, due November 1, 2016
(6) Mortgage note receivable and related accrued interest
receivable, 9.00%, due March 11, 2017
(7) Mortgage notes and related accrued interest receivable,
7.00% and 10.00%, due May 1, 2019
(8) Mortgage note and related accrued interest receivable,
10.65%, due June 28, 2032
(9) Mortgage note and related accrued interest receivable,
9.50%, due September 1, 2032
(10) Mortgage note and related accrued interest receivable,
10.25%, due October 31, 2032
(11) Mortgage note and related accrued interest receivable,
9.00%, due December 31, 2032
(12) Mortgage notes and related accrued interest receivable,
9.50%, due April 30, 2033
(13) Mortgage note and related accrued interest receivable,
10.25%, due June 30, 2033
(14) Mortgage note, 11.31%, due July 1, 2033
(15) Mortgage note and related accrued interest receivable,
8.50%, due June 30, 2034
(16) Mortgage note and related accrued interest receivable,
9.50%, due August 31, 2034
(17) Mortgage note and related accrued interest receivable,
11.10%, due December 1, 2034
(18) Mortgage notes, 10.13%, due December 1, 2034
(19) Mortgage notes, 10.40%, due December 1, 2034
(20) Mortgage note and related accrued interest receivable,
10.25%, due July 1, 2036
(21) Mortgage note and related accrued interest receivable,
9.75%, due October 1, 2036
2015
2014
—
—
—
1,257
2,500
1,454
70,114
1,164
2,521
1,149
2,500
—
164,543
191,116
36,032
19,944
22,188
5,469
30,680
3,488
12,781
4,900
12,392
51,450
37,562
4,550
9,147
3,443
36,032
19,795
22,188
5,598
28,788
3,471
13,005
4,870
12,082
51,450
37,562
4,550
—
—
Total mortgage notes and related accrued interest
receivable
$
423,780
$
507,955
(1) The Company's first mortgage loan agreement with CBK Lodge, LP and CBH20, LP was secured by development
land and improvements adjacent to the Company's Camelback Mountain Resort. On August 1, 2015, per the terms of
the mortgage note agreement, the borrower exercised its option to convert the mortgage note agreement to a 20-year
tripe net lease agreement. As a result, the Company recorded the carrying value of the investment into rental property,
which approximated the fair value of the property on the conversion date. There was no gain or loss recognized on this
transaction.
(2) The Company's first mortgage loan agreement with American Charter Development that was secured by
approximately 56 acres of land located in Arizona City, Arizona was paid on October 1, 2015.
83
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
(3) The Company's mortgage loan agreement with Carneros Vintners, Inc. that was secured by approximately 20 acres
of land and a custom crush facility was paid on November 10, 2015.
(4) The Company's first mortgage loan agreement with HighMark Land, LLC is secured by approximately 20 acres of
land located in Lincoln, California. The note requires accrued interest and principal to be paid at maturity.
(5) The Company's mortgage loan agreement with Alko Ranch, LLC is secured by approximately 159 acres of land
and a winery facility. The note requires monthly interest payments.
(6) The Company's first mortgage loan agreement with LBE Investments, Ltd. is secured by approximately 12 acres
of land located in Queen Creek, Arizona. The note requires accrued interest and principal to be paid at maturity.
(7) The Company’s mortgage loan agreements with SVVI, LLC (SVVI) are secured by one waterpark and adjacent
land in Kansas City, Kansas as well as two other waterparks located in New Braunfels and South Padre Island, Texas.
The mortgage notes have cross-default and cross-collateral provisions. Pursuant to the mortgage on the Texas properties,
only a seasonal line of credit secured by the Texas parks totaling not more than $9.0 million at any time ranks superior
to the Company’s collateral position. The note accrues monthly interest payments and SVVI is required to fund a debt
service reserve for off-season interest payments (those due from September to May). The reserve is to be funded by
equal monthly installments during the months of June, July and August. Monthly interest payments are transferred to
the Company from this debt service reserve. The mortgage loan agreements also contain certain participating interest
and note pay-down provisions. During the years ended December 31, 2015, 2014 and 2013, the Company recognized
$1.5 million, $1.4 million and $923 thousand of participating interest income, respectively. SVV I, LLC is a VIE, but
it was determined that the Company was not the primary beneficiary of this VIE. The Company’s maximum exposure
to loss associated with SVVI, LLC is limited to the Company’s outstanding mortgage note and related accrued interest
receivable. On October 13, 2015, the Company received a partial pay-down of $45.0 million. Per the terms of the
mortgage notes receivable, half of this amount pays back advances plus accrued interest and the other half, or
approximately $22.5 million, further reduces the note balance but has no impact on the interest income the Company
was previously receiving.
(8) The Company's first mortgage loan agreement with Montparnasse 56 USA is secured by the observation deck of
the John Hancock building in Chicago, Illinois. This note requires monthly interest payments.
(9) The Company's first mortgage loan agreement with Basis Schools, Inc. is secured by a public charter school and
the underlying land located in Washington D.C. Subsequent to December 31, 2015, the note was prepaid on January
5, 2016. In connection with the full payoff of this note, the Company received a prepayment fee of $3.6 million.
(10) The Company's first mortgage loan agreement with Fiber Mills, LLC and Music Factory Condominiums, LLC is
secured by the North Carolina Music Factory located in Charlotte, North Carolina which is an existing entertainment
retail center that includes live performance and other dining and entertainment tenants. Subsequent to December 31,
2015, this note was amended and restated. The amended note bears interest at 9.75% and requires monthly interest
payments. In conjunction with the amendment, the Company funded an additional $21.8 million.
(11) The Company's first mortgage loan agreement with LBE Investments, Ltd. is secured by a charter school property
located in Queen Creek, Arizona. The note is fully amortizing and requires monthly principal and interest payments
of $52 thousand.
(12) The Company's first mortgage loan agreements with LBE Investments, Ltd. are secured by three charter school
properties located in Gilbert and Queen Creek, Arizona. The notes bear interest beginning at 9.50% with increases of
0.50% every five years. The notes are fully amortizing and require monthly payments of principal and interest. The
notes have an effective interest rate of approximately 9.50%, which is net of a 2% servicer fee to HighMark.
(13) The Company's first mortgage loan agreement with UME Preparatory Academy is secured by approximately 28
acres of land and a public charter school property located in Dallas, Texas. The note bears interest beginning at 10.25%
84
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
with increases of 0.50% every five years and requires monthly interest payments. The note has an effective interest
rate of approximately 9.90%, which is net of a 2% servicer fee to HighMark.
(14) The Company's first mortgage loan agreement with Topgolf USA Austin is secured by a golf entertainment complex
located in Austin, Texas. The note is fully amortizing and requires monthly principal and interest payments of $141
thousand.
(15) The Company's first mortgage loan agreement with 169 Jenks is secured by a public charter school property located
in St. Paul, Minnesota. The note bears interest beginning at 8.50% which increases annually based on a formula of the
rate multiplied by 1.025%. The note requires monthly interest payments.
(16) The Company's first mortgage loan agreement with Beloved Community Charter School, Inc. is secured by a
charter school property located in Jersey City, New Jersey. The note bears interest beginning at 9.50% with increases
of 0.50% every five years and requires monthly interest payments. The note has an effective interest rate of
approximately 9.50%, which is net of a 2% servicer fee to HighMark.
(17) The Company's first mortgage loan agreement with Peak Resorts, Inc. (Peak) is secured by one metro ski park
located in Vermont. Mount Snow is approximately 588 acres and is located in both West Dover and Wilmington,
Vermont. On December 2, 2014, this note was amended and restated to extend the maturity date to December 1, 2034.
The note requires monthly interest payments and Peak is required to fund a debt service reserve for off-season interest
payments (those due from April to December). The reserve is to be funded by equal monthly installments during the
months of January, February and March. Monthly interest payments are transferred to the Company from this debt
service reserve. Annually, this interest rate increases based on a formula dependent in part on increases in the CPI.
(18) The Company's first mortgage loan agreements with Peak are secured by four metro ski parks located in Ohio
and Pennsylvania with a total of approximately 510 acres. On December 2, 2014, these notes were amended and
restated to extend the maturity date to December 1, 2034. The notes require monthly interest payments and Peak is
required to fund a debt service reserve for off-season interest payments (those due from April to December). The reserve
is to be funded by equal monthly installments during the months of January, February and March. Monthly interest
payments are transferred to the Company from this debt service reserve. Annually, this interest rate increases based
on a formula dependent in part on increases in the CPI.
(19) The Company's first mortgage loan agreement with Peak is secured by a metro ski park located in Chesterland,
Ohio with approximately 135 acres. On December 2, 2014, this note was amended and restated to extend the maturity
date to December 1, 2034. The note requires monthly interest payments and Peak is required to fund a debt service
reserve for off-season interest payments (those due from April to December). The reserve is to be funded by equal
monthly installments during the months of January, February and March. Monthly interest payments are transferred to
the Company from this debt service reserve. Annually, this interest rate increases based on a formula dependent in part
on increases in the CPI.
(20) The Company's first mortgage loan agreement with Topgolf USA Midvale, LLC is secured by a golf entertainment
complex located in Midvale, Utah. The note requires monthly interest payments.
(21) The Company's first mortgage loan agreement with Topgolf USA West Chester, LLC is secured by a golf
entertainment complex located in West Chester, Ohio. The note requires monthly interest payments.
85
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Principal payments and related accrued interest due on mortgage notes receivable subsequent to December 31, 2015
are as follows (in thousands):
Year:
2016
2017
2018
2019
2020
Thereafter
Total
Amount
5,960
2,268
902
165,546
1,112
247,992
423,780
$
$
6. Investment in a Direct Financing Lease
The Company’s investment in a direct financing lease relates to the Company’s master lease of 21 public charter school
properties as of December 31, 2015 and 23 public charter school properties as of December 31, 2014, with affiliates
of Imagine Schools, Inc. (Imagine). Investment in a direct financing lease, net represents estimated unguaranteed
residual values of leased assets and net unpaid rentals, less related deferred income. The following table summarizes
the carrying amounts of investment in a direct financing lease, net as of December 31, 2015 and 2014 (in thousands):
Total minimum lease payments receivable
Estimated unguaranteed residual value of leased assets
Less deferred income (1)
Investment in a direct financing lease, net
2015
2014
439,646
$
487,275
162,669
(411,435)
190,880
$
172,880
(460,823)
199,332
$
$
(1) Deferred income is net of $1.4 million and $1.5 million of initial direct costs at December 31, 2015 and 2014,
respectively.
Additionally, the Company has determined that no allowance for losses was necessary at December 31, 2015 and 2014.
On May 17, 2013, per the terms of the master lease of public charter schools with Imagine, the Company exchanged
three St. Louis, Missouri schools for one located in Columbus, Ohio, one located in Dayton, Ohio and another located
in Toledo, Ohio. In conjunction with this exchange, the Company completed the acquisition of a public charter school
in Columbia, South Carolina for $3.3 million that is leased under the master lease to Imagine. Additionally, on October
31, 2013, the Company exchanged one St. Louis, Missouri school for one located in Columbus, Ohio. There was no
impact on the Company's investment in direct financing lease as a result of these exchanges.
On April 2, 2014, the Company completed the sale of four public charter school properties located in Florida and
previously leased to Imagine for net proceeds of $46.1 million. Accordingly, the Company reduced its investment in a
direct financing lease, net, by $45.9 million which included $41.5 million in original acquisition cost. A gain of $0.2
million was recognized during the year ended December 31, 2014.
On May 21, 2015, the Company completed the sale of one public charter school property located in Pennsylvania and
previously leased to Imagine for net proceeds of $4.7 million. Accordingly, the Company reduced its net investment
in a direct financing lease, net by $4.7 million which included $4.1 million in original acquisition costs. There was no
gain or loss recognized on this sale.
On June 30, 2015, the Company terminated a portion of its master lease with Imagine related to one public charter
school property located in Ohio. The property was subsequently leased to another operator pursuant to a long-term
86
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
triple net lease agreement that is classified as an operating lease. There was no gain or loss recognized on this lease
termination.
The Company’s direct financing lease has expiration dates ranging from approximately 16 to 19 years. Future minimum
rentals receivable on this direct financing lease at December 31, 2015 are as follows (in thousands):
Year:
2016
2017
2018
2019
2020
Thereafter
Total
Amount
19,787
20,380
20,992
21,621
22,270
334,596
439,646
$
$
7. Unconsolidated Real Estate Joint Ventures
On October 8, 2013, the Company purchased from its partner, Atlantic of Hamburg, Germany (Atlantic), its interests
in two unconsolidated real estate joint ventures, Atlantic-EPR I and Atlantic-EPR II. The Company previously accounted
for its investment in these joint ventures under the equity method of accounting. The Company paid cash consideration
of $18.6 million in exchange for Atlantic's interests. The Company had previously made loans to the entities that held
the underlying assets in the Atlantic-EPR joint ventures totaling $33.1 million. During the year ended December 31,
2013, the Company recognized a gain on its previously held equity interest of $4.9 million from the fair value adjustment
associated with the Company's original ownership due to a change in control. Additionally, the Company recognized
a gain on acquisition of $3.2 million.
The Company recognized income of $505 thousand and received distributions of $646 thousand during 2013, from its
equity investments in the Atlantic-EPR I and Atlantic-EPR II joint ventures. Condensed consolidated financial
information for Atlantic-EPR I and Atlantic-EPR II is as follows as of and for the period ended October 8, 2013 (in
thousands):
Rental properties, net
Cash
Atlantic-EPR II mortgage note payable to EPR (1)
Atlantic-EPR I mortgage note payable to EPR (1)
Partners’ equity
Rental revenue
Net income
2013
$
44,644
512
11,796
21,293
18,372
4,373
1,430
(1) Atlantic-EPR I and Atlantic-EPR II mortgage notes payable to the Company were settled with the
Company's acquisition of Atlantic's interests in each of these joint ventures on October 8, 2013.
In addition, as of December 31, 2015 and 2014 the Company had invested $6.2 million and $5.7 million, respectively,
in unconsolidated joint ventures for three theatre projects located in China. The Company recognized income of $969
thousand, $1.3 million and $893 thousand from its investment in these joint ventures for the years ended December
31, 2015, 2014 and 2013, respectively. The Company also received distributions from these joint ventures of $540
thousand, $810 thousand and $339 thousand during the years ended December 31, 2015, 2014 and 2013, respectively.
87
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
8. Debt
Debt at December 31, 2015 and 2014 consists of the following (in thousands):
(1) Mortgage note payable, 5.56%, paid in full on March 6, 2015
(2) Mortgage note payable, 5.39%, paid in full on July 31, 2015
(3) Mortgage notes payable, 5.77%, paid in full on August 6, 2015
(4) Mortgage notes payable, 5.84%, paid in full on December 7, 2015
2015
$
— $
—
—
—
(5)
Note payable, 2.50%, due April 21, 2016
(6) Mortgage notes payable, 6.37%, due June 1, 2016
(7) Mortgage notes payable, 6.10%, due October 1, 2016
(8) Mortgage notes payable, 6.02%, due October 6, 2016
(9) Mortgage note payable, 6.06%, due March 1, 2017
(10) Mortgage note payable, 6.07%, due April 6, 2017
(11) Mortgage notes payable, 5.73%-5.95%, due May 1, 2017
(12) Mortgage notes payable, 4.00%, due July 6, 2017
(13) Mortgage note payable, 5.29%, due July 8, 2017
(14) Mortgage notes payable, 5.86% due August 1, 2017
(15) Mortgage note payable, 6.19%, due February 1, 2018
(16) Mortgage note payable, 7.37%, due July 15, 2018
1,850
24,754
22,235
16,738
9,381
9,667
31,603
93,616
3,455
22,931
13,171
4,813
2014
30,508
4,960
62,842
35,515
1,850
25,607
23,000
17,319
9,693
9,985
32,662
97,248
3,604
23,681
13,849
6,205
(17) Unsecured revolving variable rate credit facility, LIBOR +
1.25%, due April 24, 2019
(18) Unsecured term loan payable, LIBOR + 1.40%, $300,000 fixed
through interest rate swaps at a blended rate of 2.71%
through April 5, 2019, due April 24, 2020
(19) Senior unsecured notes payable, 7.75%, due July 15, 2020
(20) Senior unsecured notes payable, 5.75%, due August 15, 2022
(21) Senior unsecured notes payable, 5.25%, due July 15, 2023
(22) Senior unsecured notes payable, 4.50%, due April 1, 2025
(23) Bonds payable, variable rate, due October 1, 2037
Less: deferred financing costs, net
Total
196,000
62,000
350,000
250,000
350,000
275,000
285,000
250,000
350,000
275,000
300,000
24,995
(18,289)
$ 1,981,920
—
24,995
(15,773)
$ 1,629,750
(1) The Company’s mortgage note payable was prepaid in full on March 6, 2015 prior to its maturity date of June 5,
2015. The note was secured by one entertainment retail center.
(2) The Company's mortgage note payable was paid in full on July 31, 2015 prior to its maturity date of November 1,
2015. The note was secured by one theatre property.
(3) The Company’s mortgage notes payable were paid in full on August 6, 2015 prior to the maturity date of November
6, 2015. The notes were secured by six theatre properties.
(4) The Company’s mortgage notes payable were paid in full on December 7, 2015 prior to the maturity date of March
6, 2016. The notes were secured by two theatre properties.
88
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
(5) On April 21, 2014, the Company assumed a note payable in conjunction with the acquisition of 11 theatre properties.
The carrying value of the note approximated fair value on the date of acquisition. The note requires quarterly interest
payments of approximately $12 thousand with principal payment due at maturity.
(6) The Company’s mortgage notes payable are secured by two theatre properties, which had a net book value of
approximately $30.3 million at December 31, 2015. The notes had initial balances totaling $31.0 million and the
monthly payments are based on a 25-year amortization schedule. The notes require monthly principal and interest
payments totaling approximately $207 thousand with a final principal payment at maturity totaling approximately $24.4
million.
(7) The Company’s mortgage notes payable are secured by four theatre properties, which had a net book value of
approximately $25.6 million at December 31, 2015. The notes had initial balances totaling $27.8 million and the monthly
payments are based on a 25-year amortization schedule. The notes require monthly principal and interest payments
totaling approximately $180 thousand with a final principal payment at maturity totaling approximately $21.6 million.
(8) The Company’s mortgage notes payable are secured by three theatre properties, which had a net book value of
approximately $18.3 million at December 31, 2015. The notes had initial balances totaling $20.9 million and the monthly
payments are based on a 25-year amortization schedule. The notes require monthly principal and interest payments
totaling approximately $135 thousand with a final principal payment at maturity totaling approximately $16.2 million.
(9) The Company’s mortgage note payable is secured by one theatre property, which had a net book value of
approximately $8.9 million at December 31, 2015. The note had an initial balance of $11.6 million and the monthly
payments are based on a 25-year amortization schedule. The note requires monthly principal and interest payments of
approximately $75 thousand with a final principal payment at maturity of approximately $9.0 million.
(10) The Company’s mortgage note payable is secured by one theatre property, which had a net book value of
approximately $8.3 million at December 31, 2015. The note had an initial balance of $11.9 million and the monthly
payments are based on a 30-year amortization schedule. The note requires monthly principal and interest payments of
approximately $77 thousand with a final principal payment at maturity of approximately $9.2 million.
(11) The Company’s mortgage notes payable are secured by four theatre properties, which had a net book value of
approximately $28.9 million at December 31, 2015. The notes had initial balances totaling $38.9 million and the monthly
payments are based on a 25-year amortization schedule. The notes require monthly principal and interest payments
totaling approximately $247 thousand with a final principal payment at maturity totaling approximately $30.0 million.
The weighted average interest rate on these notes is 5.85%.
(12) On April 21, 2014, the Company assumed a mortgage note payable of $90.3 million in conjunction with the
acquisition of 11 theatre properties. The mortgage note was recorded at fair value upon acquisition which was estimated
to be $99.6 million. The fair value of this mortgage note was determined by discounting the future cash flows of the
mortgage note using an estimated current market rate of 4.00%. The mortgage note is secured by 11 theatre properties,
which had a net book value of approximately $119.0 million at December 31, 2015. The monthly payments are based
on a 10-year amortization schedule and the mortgage note requires monthly principal and interest payments of
approximately $635 thousand with a final principal payment at maturity of approximately $85.1 million.
(13) On March 3, 2011, the Company assumed a mortgage note payable of $3.8 million in conjunction with the
acquisition of a theatre property. The note was recorded at fair value upon acquisition which was estimated to be $4.1
million. The fair value of the note was determined by discounting the future cash flows of the note using an estimated
current market rate of 5.29%. The note is secured by one theatre property, which had a net book value of approximately
$8.1 million at December 31, 2015. The monthly payments are based on a 25-year amortization schedule and the note
requires monthly principal and interest payments of approximately $28 thousand with a final principal payment at
maturity of approximately $3.2 million.
(14) The Company’s mortgage notes payable due August 1, 2017 are secured by two theatre properties, which had a
net book value of approximately $25.5 million at December 31, 2015. The notes had initial balances totaling $28.0
89
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
million and the monthly payments are based on a 25-year amortization schedule. The notes require monthly principal
and interest payments totaling approximately $178 thousand with a final principal payment at maturity totaling
approximately $21.7 million.
(15) The Company’s mortgage note payable due February 1, 2018 is secured by one theatre property which had a net
book value of approximately $19.2 million at December 31, 2015. The mortgage loan had an initial balance of $17.5
million and the monthly payments are based on a 20-year amortization schedule. The note requires monthly principal
and interest payments of approximately $127 thousand with a final principal payment at maturity of approximately
$11.6 million.
(16) The Company’s mortgage note payable due July 15, 2018 is secured by one theatre property, which had a net book
value of approximately $17.1 million at December 31, 2015. The note had an initial balance of $18.9 million and the
monthly payments are based on a 20-year amortization schedule. The notes require monthly principal and interest
payments of approximately $151 thousand with a final principal payment at maturity of approximately $843 thousand.
On February 18, 2016, this loan was prepaid in full.
(17) The Company's unsecured revolving credit facility (the facility) bears interest at LIBOR plus 1.25%, which was
1.57% on December 31, 2015. Interest is payable monthly. On April 24, 2015, the Company amended, restated and
combined its unsecured revolving credit and term loan facilities. The amendments to the unsecured revolving portion
of the new credit facility, among other things, (i) increase the initial amount from $535.0 million to $650.0 million, (ii)
extend the maturity date from July 23, 2017, to April 24, 2019 (with the Company having the same right as before to
extend the loan for one additional year, subject to certain terms and conditions) and (iii) lower the interest rate and
facility fee pricing based on a grid related to the Company's senior unsecured credit ratings which at closing was LIBOR
plus 1.25% and 0.25%, respectively. In connection with the amendment, $243 thousand of deferred financing costs
(net of accumulated amortization) were written off during the year ended December 31, 2015. As of December 31,
2015, the Company had $196.0 million outstanding under the facility and total availability under the revolving credit
facility was $454.0 million. In addition, there is a $1.0 billion accordion feature on the combined unsecured revolving
credit and term loan facility that increases the maximum borrowing amount available under the combined facility,
subject to lender approval, from $1.0 billion to $2.0 billion.
(18) The Company's unsecured term loan payable bears interest at LIBOR plus 1.40%, which was 1.82% on
December 31, 2015. Interest is payable monthly. On April 24, 2015, the Company amended, restated and combined
its unsecured revolving credit and term loan facilities. The amendments to the unsecured term loan portion of the new
facility, among other things, (i) increase the initial amount from $285.0 million to $350.0 million, (ii) extend the maturity
date from July 23, 2018 to April 24, 2020 and (iii) lower the interest rate at all senior unsecured credit rating tiers which
was LIBOR plus 1.40% at closing. In addition, there is a $1.0 billion accordion feature on the combined unsecured
revolving credit and term loan facility that increases the maximum borrowing amount available under the combined
facility, subject to lender approval, from $1.0 billion to $2.0 billion.
(19) On June 30, 2010, the Company issued $250.0 million in senior unsecured notes due on July 15, 2020. The notes
bear interest at 7.75%. Interest is payable on July 15 and January 15 of each year beginning on January 15, 2011 until
the stated maturity date of July 15, 2020. The notes were issued at 98.29% of their principal amount and are guaranteed
by certain of the Company’s subsidiaries. The notes contain various covenants, including: (i) a limitation on incurrence
of any debt that would cause the ratio of the Company’s debt to adjusted total assets to exceed 60%; (ii) a limitation
on incurrence of any secured debt which would cause the ratio of the Company’s secured debt to adjusted total assets
to exceed 40%; (iii) a limitation on incurrence of any debt which would cause the Company’s debt service coverage
ratio to be less than 1.5 times; and (iv) the maintenance at all times of total unencumbered assets not less than 150%
of the Company’s outstanding unsecured debt.
(20) On August 8, 2012, the Company issued $350.0 million in senior unsecured notes due on August 15, 2022. The
notes bear interest at 5.75%. Interest is payable on February 15 and August 15 of each year beginning on February 15,
2013 until the stated maturity date of August 15, 2022. The notes were issued at 99.998% of their principal amount and
are guaranteed by certain of the Company’s subsidiaries. The notes contain various covenants, including: (i) a limitation
on incurrence of any debt that would cause the ratio of the Company’s debt to adjusted total assets to exceed 60%; (ii)
90
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
a limitation on incurrence of any secured debt which would cause the ratio of the Company’s secured debt to adjusted
total assets to exceed 40%; (iii) a limitation on incurrence of any debt which would cause the Company’s debt service
coverage ratio to be less than 1.5 times; and (iv) the maintenance at all times of total unencumbered assets not less than
150% of the Company’s outstanding unsecured debt.
(21) On June 18, 2013, the Company issued $275.0 million in senior unsecured notes due on July 15, 2023. The notes
bear interest at 5.25%. Interest is payable on January 15 and July 15 of each year beginning on January 15, 2014 until
the stated maturity date of July 15, 2023. The notes were issued at 99.546% of their principal amount and are guaranteed
by certain of the Company’s subsidiaries. The notes contain various covenants, including: (i) a limitation on incurrence
of any debt that would cause the ratio of the Company’s debt to adjusted total assets to exceed 60%; (ii) a limitation
on incurrence of any secured debt which would cause the ratio of the Company’s secured debt to adjusted total assets
to exceed 40%; (iii) a limitation on incurrence of any debt which would cause the Company’s debt service coverage
ratio to be less than 1.5 times and (iv) the maintenance at all times of the Company's total unencumbered assets such
that they are not less than 150% of the Company’s outstanding unsecured debt.
(22) On March 16, 2015, the Company issued $300.0 million in aggregate principal amount of senior notes due on
April 1, 2025 pursuant to an underwritten public offering. The notes bear interest at an annual rate of 4.50%. Interest
is payable on April 1 and October 1 of each year beginning on October 1, 2015 until the stated maturity date of April
1, 2025. The notes were issued at 99.638% of their face value and are unsecured and guaranteed by certain of the
Company’s subsidiaries. The notes contain various covenants, including: (i) a limitation on incurrence of any debt
which would cause the ratio of the Company’s debt to adjusted total assets to exceed 60%; (ii) a limitation on incurrence
of any secured debt which would cause the ratio of the Company’s secured debt to adjusted total assets to exceed 40%;
(iii) a limitation on incurrence of any debt which would cause the Company’s debt service coverage ratio to be less
than 1.5 times and (iv) the maintenance at all times of the Company's total unencumbered assets such that they are not
less than 150% of the Company’s outstanding unsecured debt.
(23) The Company’s bonds payable due October 1, 2037 are secured by three theatres, which had a net book value of
approximately $22.5 million at December 31, 2015, and bear interest at a variable rate which resets on a weekly basis
and was 0.01% at December 31, 2015. The bonds requires monthly interest only payments with principal due at maturity.
Certain of the Company’s debt agreements contain customary restrictive covenants related to financial and operating
performance as well as certain cross-default provisions. The Company was in compliance with all financial covenants
at December 31, 2015.
Principal payments due on long-term debt obligations subsequent to December 31, 2015 (without consideration of any
extensions) are as follows (in thousands):
Year:
2016
2017
2018
2019
2020
Thereafter
Less: deferred financing costs, net
Total
Amount
75,514
165,319
13,381
196,000
600,000
949,995
(18,289)
1,981,920
$
$
91
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
The Company capitalizes a portion of interest costs as a component of property under development. The following is
a summary of interest expense, net for the years ended December 31, 2015, 2014 and 2013 (in thousands):
2015
2014
2013
Interest on loans
Amortization of deferred financing costs
Credit facility and letter of credit fees
Interest cost capitalized
Interest income
Less: interest income of discontinued operations
Interest expense, net
$
$
92,140
4,588
1,759
(18,547)
(25)
—
79,915
$
$
82,839
4,248
1,735
(7,525)
(27)
—
81,270
$
$
78,292
4,041
1,510
(2,763)
(53)
29
81,056
9. Variable Interest Entities
The Company’s variable interest in VIEs currently are in the form of equity ownership and loans provided by the
Company to a VIE or other partner. The Company examines specific criteria and uses its judgment when determining
if the Company is the primary beneficiary of a VIE. Factors considered in determining whether the Company is the
primary beneficiary include risk and reward sharing, experience and financial condition of other partner(s), voting
rights, involvement in day-to-day capital and operating decisions, representation on a VIE’s executive committee,
existence of unilateral kick-out rights or voting rights, and level of economic disproportionality between the Company
and the other partner(s).
Consolidated VIEs
As of December 31, 2015, the Company does not have any investments in consolidated VIEs.
Unconsolidated VIE
At December 31, 2015, the Company’s recorded investment in SVVI, a VIE that is unconsolidated, was $164.5 million.
The Company’s maximum exposure to loss associated with SVVI is limited to the Company’s outstanding mortgage
note of $164.5 million. While this entity is a VIE, the Company has determined that the power to direct the activities
of the VIE that most significantly impact the VIE’s economic performance is not held by the Company. For further
discussion of this mortgage note, see Note 5.
10. 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's derivatives are subject to a master netting
arrangement and the Company has elected not to offset its derivative position for purposes of balance sheet presentation
and disclosure. The Company had derivative liabilities of $5.7 million and $5.1 million recorded in “Accounts payable
and accrued liabilities” and derivative assets of $42.2 million and $14.8 million recorded in “Other assets” in the
consolidated balance sheet at December 31, 2015 and 2014, respectively. Had the Company elected to offset derivatives
in the consolidated balance sheet, the Company would have had derivative assets of approximately $42.2 million and
derivative assets of $14.8 million that would have been offset against the respective derivative liabilities of $5.7 million
and liabilities of $5.1 million, resulting in a net derivative asset of $36.5 million and $9.7 million (with no derivative
liability) at December 31, 2015 and 2014, respectively. The Company has not posted or received collateral with its
derivative counterparties as of December 31, 2015 and 2014. See Note 11 for disclosures relating to the fair value of
the derivative instruments as of December 31, 2015 and 2014.
Risk Management Objective of Using Derivatives
The Company is exposed to the effect of changes in foreign currency exchange rates and interest rates on its LIBOR
based borrowings. The Company limits 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 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.
92
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its
exposure to interest rate movements on its LIBOR based borrowings. To accomplish this objective, the Company
currently uses interest rate swaps as its interest rate risk management strategy. Interest rate swaps designated as cash
flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making
fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
On January 5, 2012 the Company entered into three interest rate swap agreements to fix the interest rate on a $240.0
million term loan. These agreements have a combined outstanding notional amount of $240.0 million, a termination
date of January 5, 2016 and provide a fixed rate on this debt of 2.51%. On September 6, 2013, the Company entered
into three interest rate swap agreements to further fix the interest rate on $240.0 million of the unsecured term loan
facility at 2.38% from January 5, 2016 to July 5, 2017. On August 12, 2015, the Company entered into two interest
rate swap agreements to fix the interest rate at 2.94% on an additional $60.0 million of the unsecured term loan facility
from September 8, 2015 to July 5, 2017 and on $300.0 million of the unsecured term loan facility from July 6, 2017
to April 5, 2019.
The effective portion of changes 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. During the years ending December 31, 2015, 2014
and 2013, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The
ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. No hedge
ineffectiveness on cash flow hedges was recognized during the years ending December 31, 2015, 2014 and 2013.
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 December 31, 2015, the Company estimates that during the twelve months
ending December 31, 2016, $4.6 million 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, the U.S. dollar, on its four
Canadian properties. The Company uses cross currency swaps and foreign currency forwards to mitigate its exposure
to fluctuations in the CAD to U.S. dollar exchange rate on its Canadian properties. These foreign currency derivatives
should hedge a significant portion of the Company's expected CAD denominated cash flow of the Canadian properties
as their impact on the Company's cash flow when settled should move in the opposite direction of the exchange rates
utilized to translate revenues and expenses of these properties.
At December 31, 2015, the Company’s cross-currency swaps had a fixed original notional value of $100.0 million
CAD and $98.1 million U.S. The net effect of these swaps is to lock in an exchange rate of $1.05 CAD per U.S. dollar
on approximately $13.5 million of annual CAD denominated cash flows on the properties through June 2018.
The effective portion of changes 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 subsequently reclassified into earnings in the period that
the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivative,
as well as amounts excluded from the assessment of hedge effectiveness, is recognized directly in earnings. No hedge
ineffectiveness on foreign currency derivatives has been recognized for the years ended December 31, 2015, 2014 and
2013. As of December 31, 2015, the Company estimates that during the twelve months ending December 31, 2016,
$3.1 million will be reclassified from AOCI to other income.
Net Investment Hedges
As discussed above, the Company is exposed to fluctuations in foreign exchange rates on its four Canadian properties.
As such, the Company uses currency forward agreements to hedge its exposure to changes in foreign exchange rates.
Currency forward agreements involve fixing the CAD to U.S. dollar exchange rate for delivery of a specified amount
93
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
of foreign currency on a specified date. The currency forward agreements are typically cash settled in U.S. dollars for
their fair value at or close to their settlement date. In order to hedge the net investment in four of the Canadian properties,
the Company entered into a forward contract with a fixed notional value of $100.0 million CAD and $94.3 million
U.S. with a July 2018 settlement date. The exchange rate of this forward contract is approximately $1.06 CAD per
U.S. dollar. Additionally, on February 28, 2014, the Company entered into a forward contract with a fixed notional
value of $100.0 million CAD and $88.1 million U.S. with a July 2018 settlement date. The exchange rate of this forward
contract is approximately $1.13 CAD per U.S. dollar. These forward contracts should hedge a significant portion of
the Company’s CAD denominated net investment in these four centers through July 2018 as the impact on AOCI from
marking the derivative to market should move in the opposite direction of the translation adjustment on the net assets
of these four Canadian properties.
During the year ended December 31, 2014, the Company received $5.7 million of cash in connection with the settlement
of a CAD to U.S. dollar currency forward agreement which was designated as a net investment hedge. The cash receipt
has been reported as part of investing activity in the accompanying consolidated statement of cash flows. The
corresponding change in value of the forward contract for the period from inception to the settlement date of $5.7
million is reported in AOCI as part of the cumulative translation adjustment. The $5.7 million gain will remain in AOCI
and will be reclassified into earnings upon a sale or complete or substantially complete liquidation of the Company’s
investment in its four Canadian properties.
For foreign currency derivatives designated as net investment hedges, the effective portion of changes in the fair value
of the derivatives are reported in AOCI as part of the cumulative translation adjustment. The ineffective portion of the
change in fair value of the derivatives is recognized directly in earnings. No hedge ineffectiveness on net investment
hedges has been recognized for the years ended December 31, 2015, 2014 and 2013. Amounts are reclassified out of
AOCI into earnings when the hedged net investment is either sold or substantially liquidated.
Below is a summary of the effect of derivative instruments on the consolidated statements of changes in equity and
income for the years ended December 31, 2015, 2014 and 2013:
94
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Effect of Derivative Instruments on the Consolidated Statements of Changes in Equity and Income for the
Years Ended December 31, 2015, 2014 and 2013
(Dollars in thousands)
Description
Interest Rate Swaps
Amount of Loss Recognized in AOCI on Derivative
(Effective Portion)
Amount of Expense Reclassified from AOCI into Earnings
(Effective Portion) (1)
Cross Currency Swaps
Amount of Gain Recognized in AOCI on Derivative
(Effective Portion)
Amount of Income (Expense) Reclassified from AOCI into
Earnings (Effective Portion) (2)
Currency Forward Agreements
Amount of Gain Recognized in AOCI on Derivative
(Effective Portion)
Amount of Income Reclassified from AOCI into Earnings
(Effective Portion) (2)
Total
Year Ended December 31,
2015
2014
2013
$
(2,581) $
(2,458) $
(2,372)
(2,004)
(1,833)
(1,749)
5,380
2,396
3,560
698
24,359
11,600
—
—
2,278
(160)
8,092
287
Amount of Gain Recognized in AOCI on Derivative
(Effective Portion)
Amount of Gain (Expense) Reclassified from AOCI into
Earnings (Effective Portion)
$
27,158
$
12,702
$
7,998
392
(1,135)
(1,622)
(1)
(2)
Included in “Interest expense, net” in accompanying consolidated statements of income.
Included in “Other expense” or "Other income" in the accompanying consolidated statements of income.
Credit-risk-related Contingent Features
The Company has agreements with each of its interest rate derivative counterparties that contain a provision where if
the Company defaults on any of its obligations for borrowed money or credit in an amount exceeding $25.0 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, then the Company could also be declared in default on its interest
rate derivative obligations.
As of December 31, 2015, the fair value of the Company’s derivatives in a liability position related to these agreements
was $5.7 million. If the Company breached any of the contractual provisions of the derivative contracts, it would be
required to settle its obligations under the agreements at their termination value of $5.8 million.
11. Fair Value Disclosures
The Company’s has certain financial instruments that are required to be measured under the FASB’s Fair Value
Measurements and Disclosures 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.
As a basis for considering market participant assumptions in fair value measurements, the FASB’s Fair Value
Measurements and Disclosures guidance establishes a fair value hierarchy that distinguishes between market participant
assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that
are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant
assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs use quoted prices
(unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs
are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or
95
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
indirectly. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own
assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value
measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy
within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair
value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value
measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
Derivative Financial Instruments
The Company uses interest rate swaps, foreign currency forwards and cross currency swaps to manage its interest rate
and foreign currency risk. The valuation of these instruments is determined using widely accepted valuation techniques
including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the
contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including
interest rate curves, foreign exchange rates, and implied volatilities. The fair values of interest rate swaps are determined
using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected
variable cash payments. The variable cash payments are based on an expectation of future interest rates (forward curves)
derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to
appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the
fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk,
the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings,
thresholds, mutual puts, and guarantees. In conjunction with the FASB's fair value measurement guidance, the Company
made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to
master netting agreements on a net basis by counterparty portfolio.
Although the Company has 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
December 31, 2015, the Company has assessed the significance of the impact of the credit valuation adjustments on
the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant
to the overall valuation of its derivatives and therefore, has classified its derivatives as Level 2 within the fair value
reporting hierarchy.
The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of December
31, 2015 and 2014, 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 December 31, 2015 and 2014
(Dollars in thousands)
Description
2015:
Cross Currency Swaps*
Currency Forward Agreements*
Interest Rate Swap Agreements**
2014:
Cross Currency Swaps*
Currency Forward Agreements*
Interest Rate Swap Agreements**
Quoted Prices in
Active Markets
for Identical
Assets (Level I)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Balance at
December 31,
$
$
$
$
$
$
— $
— $
— $
— $
— $
— $
$
7,575
34,587
$
(5,674) $
$
4,592
10,227
$
(5,096) $
— $
— $
— $
— $
— $
— $
7,575
34,587
(5,674)
4,592
10,227
(5,096)
*Included in "Other assets" in the accompanying consolidated balance sheet.
**Included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheet.
96
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Non-recurring fair value measurements
There were no non-recurring measurements during the years ended December 31, 2015 and 2014.
Fair Value of Financial Instruments
Management compares the carrying value and the estimated fair value of the Company’s financial instruments. The
following methods and assumptions were used by the Company to estimate the fair value of each class of financial
instruments at December 31, 2015 and 2014:
Mortgage notes receivable and related accrued interest receivable:
The fair value of the Company’s mortgage notes and related accrued interest receivable is estimated by discounting
the future cash flows of each instrument using current market rates. At December 31, 2015, the Company had a
carrying value of $423.8 million in fixed rate mortgage notes receivable outstanding, including related accrued
interest, with a weighted average interest rate of approximately 9.36%. The fixed rate mortgage notes bear interest
at rates of 5.50% to 11.31%. Discounting the future cash flows for fixed rate mortgage notes receivable using
rates of 8.50% to 11.31%, management estimates the fair value of the fixed rate mortgage notes receivable to be
$415.7 million with an estimated weighted average market rate of 10.05% at December 31, 2015.
At December 31, 2014, the Company had a carrying value of $508.0 million in fixed rate mortgage notes receivable
outstanding, including related accrued interest, with a weighted average interest rate of approximately 9.07%.
The fixed rate mortgage notes bear interest at rates of 5.50% to 11.31%. Discounting the future cash flows for
fixed rate mortgage notes receivable using rates of 9.00% to 11.31%, management estimates the fair value of the
fixed rate mortgage notes receivable to be approximately $488.8 million with an estimated weighted average
market rate of 10.13% at December 31, 2014.
Investment in a direct financing lease, net:
The fair value of the Company’s investment in a direct financing lease as of December 31, 2015 and 2014 is
estimated by discounting the future cash flows of the instrument using current market rates. At December 31,
2015 and 2014, the Company had an investment in a direct financing lease with a carrying value of $190.9 million
and $199.3 million, respectively, and weighted average effective interest rate of 12.00% and 11.99%, respectively.
The investment in direct financing lease bears interest at effective interest rates of 11.74% to 12.38%. The carrying
value of the investment in a direct financing lease approximates the fair market value at December 31, 2015 and
2014.
Derivative instruments:
Derivative instruments are carried at their fair market value.
Debt instruments:
The fair value of the Company's debt as of December 31, 2015 and 2014 is estimated by discounting the future
cash flows of each instrument using current market rates. At December 31, 2015, the Company had a carrying
value of $571.0 million in variable rate debt outstanding with an average weighted interest rate of approximately
1.65%. The carrying value of the variable rate debt outstanding approximates the fair market value at December 31,
2015.
At December 31, 2014, the Company had a carrying value of $372.0 million in variable rate debt outstanding
with an average weighted interest rate of approximately 1.57%. The carrying value of the variable rate debt
outstanding approximates the fair market value at December 31, 2014.
As described in Note 8, at December 31, 2015 and 2014, $300.0 million and $240.0 million, respectively, of
variable rate debt outstanding under the Company's unsecured term loan facility had been effectively converted
to a fixed rate through April 5, 2019 by interest rate swap agreements.
At December 31, 2015, the Company had a carrying value of $1.43 billion in fixed rate debt outstanding with
an average weighted interest rate of approximately 5.66%. Discounting the future cash flows for fixed rate debt
97
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
using rates of 3.33% to 4.94%, management estimates the fair value of the fixed rate debt to be approximately
$1.55 billion with an estimated weighted average market rate of 4.28% at December 31, 2015.
At December 31, 2014, the Company had a carrying value of $1.27 billion in fixed rate debt outstanding with an
average weighted interest rate of approximately 5.94%. Discounting the future cash flows for fixed rate debt
using rates of 2.13% to 4.56%, management estimates the fair value of the fixed rate debt to be approximately
$1.38 billion with an estimated market rate of 3.76% at December 31, 2014.
12. Common and Preferred Shares
Common Shares
The Board of Trustees declared cash dividends totaling $3.63 and $3.42 per common share for the years ended December
31, 2015 and 2014, respectively.
Of the total dividends calculated for tax purposes, the amounts characterized as ordinary income, return of capital and
long-term capital gain for cash dividends paid per common share for the years ended December 31, 2015 and 2014 are
as follows:
Taxable ordinary income
Return of capital
Long-term capital gain
Unrecaptured Sec. 1250 Gain
Totals
2015
2014
$
$
3.0674
0.5451
—
—
3.6125
$
$
3.0364
0.3619
—
—
3.3983
On September 23, 2014, the Company issued 3,680,000 common shares in a registered public offering for total net
proceeds, after the underwriting discount and offering expenses, of approximately $184.2 million. The net proceeds
from the public offering were used to pay down the Company’s unsecured revolving credit facility.
During the year ended December 31, 2014, the Company issued an aggregate of 1,563,709 common shares under the
direct share purchase component of its Dividend Reinvestment and Direct Share Purchase Plan (DSPP) for total net
proceeds of $79.5 million.
During the year ended December 31, 2015, the Company issued an aggregate of 3,530,058 common shares under its
DSPP for net proceeds of $190.3 million.
On January 21, 2016, the Company issued 2,250,000 common shares in a registered public offering for a total net
proceeds, after the underwriting discount and offering expenses of approximately $125.0 million. The net proceeds
from the public offering were used to pay down the Company's unsecured revolving credit facility.
Series C Convertible Preferred Shares
The Company has outstanding 5.4 million 5.75% Series C cumulative convertible preferred shares (Series C preferred
shares). The Company will pay cumulative dividends on the Series C preferred shares from the date of original issuance
in the amount of $1.4375 per share each year, which is equivalent to 5.75% of the $25 liquidation preference per share.
Dividends on the Series C preferred shares are payable quarterly in arrears. The Company does not have the right to
redeem the Series C preferred shares except in limited circumstances to preserve the Company’s REIT status. The
Series C preferred shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption.
As of December 31, 2015, the Series C preferred shares are convertible, at the holder’s option, into the Company’s
common shares at a conversion rate of 0.3758 common shares per Series C preferred share, which is equivalent to a
conversion price of $66.52 per common share. This conversion ratio may increase over time upon certain specified
triggering events including if the Company’s common dividends per share exceeds a quarterly threshold of $0.6875.
98
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Upon the occurrence of certain fundamental changes, the Company will under certain circumstances increase the
conversion rate by a number of additional common shares or, in lieu thereof, may in certain circumstances elect to
adjust the conversion rate upon the Series C preferred shares becoming convertible into shares of the public acquiring
or surviving company.
The Company may, at its option, cause the Series C preferred shares to be automatically converted into that number of
common shares that are issuable at the then prevailing conversion rate. The Company may exercise its conversion right
only if, at certain times, the closing price of the Company’s common shares equals or exceeds 135% of the then prevailing
conversion price of the Series C preferred shares.
Owners of the Series C preferred shares generally have no voting rights, except under certain dividend defaults. Upon
conversion, the Company may choose to deliver the conversion value to the owners in cash, common shares, or a
combination of cash and common shares.
The Board of Trustees declared cash dividends totaling $1.4375 per Series C preferred share for each of the years ended
December 31, 2015 and 2014, respectively. The total amount of cash dividends paid per Series C preferred share of
$1.4375 for the years ended December 31, 2015 and 2014 were characterized as taxable ordinary income.
Series E Convertible Preferred Shares
The Company has outstanding 3.5 million 9.00% Series E cumulative convertible preferred shares (Series E
preferred shares). The Company will pay cumulative dividends on the Series E preferred shares from the date of
original issuance in the amount of $2.25 per share each year, which is equivalent to 9.00% of the $25 liquidation
preference per share. Dividends on the Series E preferred shares are payable quarterly in arrears. The Company does
not have the right to redeem the Series E preferred shares except in limited circumstances to preserve the Company’s
REIT status. The Series E preferred shares have no stated maturity and will not be subject to any sinking fund or
mandatory redemption. As of December 31, 2015, the Series E preferred shares are convertible, at the holder’s
option, into the Company’s common shares at a conversion rate of 0.4573 common shares per Series E preferred
share, which is equivalent to a conversion price of $54.67 per common share. This conversion ratio may increase
over time upon certain specified triggering events including if the Company’s common dividends per share exceeds
a quarterly threshold of $0.84.
Upon the occurrence of certain fundamental changes, the Company will under certain circumstances increase the
conversion rate by a number of additional common shares or, in lieu thereof, may in certain circumstances elect to
adjust the conversion rate upon the Series E preferred shares becoming convertible into shares of the public acquiring
or surviving company.
The Company may, at its option, cause the Series E preferred shares to be automatically converted into that number of
common shares that are issuable at the then prevailing conversion rate. The Company may exercise its conversion right
only if, at certain times, the closing price of the Company’s common shares equals or exceeds 150% of the then prevailing
conversion price of the Series E preferred shares.
Owners of the Series E preferred shares generally have no voting rights, except under certain dividend defaults. Upon
conversion, the Company may choose to deliver the conversion value to the owners in cash, common shares, or a
combination of cash and common shares.
The Board of Trustees declared cash dividends totaling $2.25 per Series E preferred share for the years ended December
31, 2015 and 2014. The total amount of cash dividends paid per Series E preferred share of $2.25 for each of the years
ended December 31, 2015 and 2014 were characterized as taxable ordinary income.
99
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Series F Preferred Shares
The Company has outstanding 5.0 million shares of 6.625% Series F cumulative redeemable preferred shares (Series
F preferred shares). The Company will pay cumulative dividends on the Series F preferred shares from the date of
original issuance in the amount of $1.65625 per share each year, which is equivalent to 6.625% of the $25.00 liquidation
preference per share. Dividends on the Series F preferred shares are payable quarterly in arrears. The Company may
not redeem the Series F preferred shares before October 12, 2017, except in limited circumstances to preserve the
Company’s REIT status or in connection with a change of control. On or after October 12, 2017, the Company may,
at its option, redeem the Series F preferred shares in whole at any time or in part from time to time by paying $25.00
per share, plus any accrued and unpaid dividends up to and including the date of redemption. The Series F preferred
shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption. The Series F
preferred shares are not convertible into any of the Company's securities, except under certain circumstances in
connection with a change of control. Owners of the Series F preferred shares generally have no voting rights except
under certain dividend defaults.
The Board of Trustees declared cash dividends totaling $1.65625 per Series F preferred share for the years ended
December 31, 2015 and 2014. The total amount of cash dividends paid per Series F preferred share of $1.65625 for
the years ended December 31, 2015 and 2014 were characterized as taxable ordinary income.
100
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
13. Earnings Per Share
The following table summarizes the Company’s computation of basic and diluted earnings per share (EPS) for the years
ended December 31, 2015, 2014 and 2013 (amounts in thousands except per share information):
Basic EPS:
Income from continuing operations
Less: preferred dividend requirements
Income from continuing operations available to common shareholders
Income from discontinued operations available to common
shareholders
Net income available to common shareholders
Diluted EPS:
Income from continuing operations available to common shareholders
Effect of dilutive securities:
Share options
Income from continuing operations available to common shareholders
Income from discontinued operations available to common
shareholders
Net income available to common shareholders
Basic EPS:
Income from continuing operations
Less: preferred dividend requirements
Income from continuing operations available to common shareholders
Income from discontinued operations available to common
shareholders
Net income available to common shareholders
Diluted EPS:
Income from continuing operations available to common shareholders
Effect of dilutive securities:
Share options
Income from continuing operations available to common shareholders
Income from discontinued operations available to common
shareholders
Net income available to common shareholders
Year Ended December 31, 2015
Income
(numerator)
Shares
(denominator)
Per Share
Amount
194,333
(23,806)
170,527
199
170,726
58,138
58,138
58,138
170,527
58,138
—
170,527
199
170,726
190
58,328
58,328
58,328
$
$
$
$
$
$
2.93
0.01
2.94
2.92
0.01
2.93
Year Ended December 31, 2014
Income
(numerator)
Shares
(denominator)
Per Share
Amount
175,752
(23,807)
151,945
3,881
155,826
54,244
54,244
54,244
151,945
54,244
—
151,945
3,881
155,826
200
54,444
54,444
54,444
$
$
$
$
$
$
2.80
0.07
2.87
2.79
0.07
2.86
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
101
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Year Ended December 31, 2013
Income
(numerator)
Shares
(denominator)
Per Share
Amount
Basic EPS:
Income from continuing operations
Less: preferred dividend requirements and redemption costs
Income from continuing operations available to common shareholders
Loss from discontinued operations available to common shareholders
Net income available to common shareholders
Diluted EPS:
Income from continuing operations available to common shareholders
Effect of dilutive securities:
Share options
Income from continuing operations available to common shareholders
Loss from discontinued operations available to common shareholders
Net income available to common shareholders
$
$
$
$
$
$
$
$
175,637
(23,806)
151,831
4,589
156,420
48,028
48,028
48,028
151,831
48,028
—
151,831
4,589
156,420
186
48,214
48,214
48,214
$
$
$
$
$
$
3.16
0.10
3.26
3.15
0.09
3.24
The additional 1.9 million common shares that would result from the conversion of the Company’s 5.75% Series C
cumulative convertible preferred shares and the additional 1.6 million common shares that would result from the
conversion of the Company’s 9.0% Series E cumulative convertible preferred shares and the corresponding add-back
of the preferred dividends declared on those shares are not included in the calculation of diluted earnings per share for
the years ended December 31, 2015, 2014 and 2013 because the effect is anti-dilutive.
The dilutive effect of potential common shares from the exercise of share options is included in diluted earnings per
share for the years ended December 31, 2015, 2014 and 2013. However, options to purchase 236 thousand, 338 thousand
and 331 thousand shares of common shares at per share prices ranging from $51.64 to $65.50, $46.86 to $65.50 and
$45.20 to $65.50, were outstanding at the end of 2015, 2014 and 2013, respectively, but were not included in the
computation of diluted earnings per share because they were anti-dilutive.
14. Chief Executive Officer Retirement
On February 24, 2015, the Company announced that David Brain, its then President and Chief Executive Officer, was
retiring from the Company. In connection with his retirement, Mr. Brain and the Company entered into a Retirement
Agreement pursuant to which he agreed to retire on March 31, 2015 in consideration for certain retirement severance
benefits substantially equal to those benefits that would be payable to him under his employment agreement if he were
terminated without cause. As a result, the Company recorded retirement severance expense (including share-based
compensation costs) during the year ended December 31, 2015 of $18.6 million. Retirement severance expense
includes a cash payment of $11.8 million, $5.0 million for the accelerated vesting of 113,900 nonvested shares, $1.4
million for the accelerated vesting of 101,640 share options and $0.4 million of related taxes and other expenses.
15. Equity Incentive Plan
All grants of common shares and options to purchase common shares are issued under the Company's 2007 Equity
Incentive Plan. Under the 2007 Equity Incentive Plan, an aggregate of 3,650,000 common shares, options to purchase
common shares and restricted share units, subject to adjustment in the event of certain capital events, may be granted.
At December 31, 2015, there were 1,066,138 shares available for grant under the 2007 Equity Incentive Plan.
Share Options
Share options granted under the 2007 Equity Incentive Plan have exercise prices equal to the fair market value of a
common share at the date of grant. The options may be granted for any reasonable term, not to exceed 10 years, and
102
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
for employees typically become exercisable at a rate of 25% per year over a four-year period. The Company generally
issues new common shares upon option exercise. A summary of the Company’s share option activity and related
information is as follows:
Outstanding at December 31, 2012
Exercised
Granted
Forfeited
Outstanding at December 31, 2013
Exercised
Granted
Forfeited
Outstanding at December 31, 2014
Exercised
Granted
Forfeited
Outstanding at December 31, 2015
Number of
shares
881,338
(143,272)
115,257
(12,658)
840,665
(35,963)
172,178
(26,666)
950,214
(476,400)
121,546
(79,055)
516,305
$
$
$
$
Option price
per share
18.18 — $
18.18 —
46.86 —
36.56 —
18.18 — $
32.50 —
51.64 —
45.20 —
18.18 — $
18.18 —
61.79 —
45.20 —
19.02 — $
65.50
47.20
58.09
60.42
65.50
52.72
51.64
51.64
65.50
61.53
61.79
65.50
65.50
$
$
$
$
Weighted avg.
exercise price
38.51
30.64
47.86
56.90
40.85
42.63
51.64
50.11
42.48
37.42
61.79
63.88
48.42
The weighted average fair value of options granted was $16.35, $13.87 and $12.35 during 2015, 2014 and 2013,
respectively. The intrinsic value of stock options exercised was $7.3 million, $0.4 million, and $2.9 million during the
years ended December 31, 2015, 2014 and 2013, respectively. Additionally, the Company repurchased 402,067 shares
into treasury shares in conjunction with the stock options exercised during the year ended December 31, 2015 with a
total value of $21.2 million.
The expense related to share options included in the determination of net income for the years ended December 31,
2015, 2014 and 2013 was $2.5 million (including $1.4 million included in retirement severance expense in the
accompanying consolidated statement of income), $1.4 million and $856 thousand, respectively. The following
assumptions were used in applying the Black-Scholes option pricing model at the grant dates: risk-free interest rate of
1.9%, 2.2% and 1.0% in 2015, 2014 and 2013, respectively, dividend yield of 5.9%, 6.4% and 5.4% to 6.5% in 2015,
2014 and 2013, respectively, volatility factors in the expected market price of the Company’s common shares of 48.0%,
50.3% and 50.7% in 2015, 2014 and 2013, respectively, 0.78%, 0.28% and 0.23% expected forfeiture rates for 2015,
2014 and 2013, and an expected life of approximately six years for 2015, 2014, and 2013. The Company uses historical
data to estimate the expected life of the option and the risk-free interest rate is based on the U.S. Treasury yield curve
in effect at the time of grant. Additionally, expected volatility is computed based on the average historical volatility of
the Company’s publicly traded shares.
At December 31, 2015, stock-option expense to be recognized in future periods was $1.9 million as follows (in
thousands):
Year:
2016
2017
2018
2019
Total
Amount
$
$
904
680
293
—
1,877
103
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
The following table summarizes outstanding options at December 31, 2015:
Exercise price range
$ 19.02 - 19.99
20.00 - 29.99
30.00 - 39.99
40.00 - 49.99
50.00 - 59.99
60.00 - 65.50
Options
outstanding
Weighted avg.
life remaining
Weighted avg.
exercise price
Aggregate intrinsic
value (in thousands)
61,097
—
7,401
202,224
111,917
133,666
516,305
3.4
—
4.2
5.0
7.6
6.4
5.7
$
48.42
$
5,731
The following table summarizes exercisable options at December 31, 2015:
Exercise price range
$ 19.02 - 19.99
20.00 - 29.99
30.00 - 39.99
40.00 - 49.99
50.00 - 59.99
60.00 - 65.50
Options
outstanding
Weighted avg.
life remaining
Weighted avg.
exercise price
Aggregate intrinsic
value (in thousands)
61,097
—
7,401
158,853
32,518
45,310
305,179
3.4
—
4.2
4.6
6.7
1.1
4.0 $
43.87
$
4,705
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, 2014
468,451
$
Granted
Vested
Forfeited
Outstanding at December 31, 2015
218,285
(295,487)
(808)
390,441
$
49.29
60.69
50.37
54.69
54.84
0.98
The holders of nonvested shares have voting rights and receive dividends from the date of grant. These shares vest
ratably over a period of three to four years. The fair value of the nonvested shares that vested was $17.1 million (including
$6.7 million in retirement severance expense in the accompanying consolidated statements of income), $7.3 million
and $6.7 million for the years ended December 31, 2015, 2014 and 2013, respectively. At December 31, 2015,
unamortized share-based compensation expense related to nonvested shares was $11.4 million and will be recognized
in future periods as follows (in thousands):
104
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Year:
2016
2017
2018
Total
Amount
$
$
5,297
3,904
2,153
11,354
Restricted Share Units
A summary of the Company’s restricted share unit activity and related information is as follows:
Number of
Shares
Weighted
Average
Grant Date
Fair Value
Weighted
Average
Life
Remaining
Outstanding at December 31, 2014
Granted
Vested
Outstanding at December 31, 2015
19,685
$
18,036
(19,685)
18,036
$
53.55
57.57
53.55
57.57
0.37
The holders of restricted share units have voting rights and receive dividends from the date of grant. The share units
vest upon the earlier of the day preceding the next annual meeting of shareholders or a change of control. The settlement
date for the shares is selected by the non-employee trustee, and ranges from one year from the grant date to upon
termination of service. At December 31, 2015, unamortized share-based compensation expense related to restricted
share units was $346 thousand which will be recognized in 2016.
16. Operating Leases
Most of the Company’s rental properties are leased under operating leases with expiration dates ranging from 1 to 34
years. Future minimum rentals on non-cancelable tenant operating leases at December 31, 2015 are as follows (in
thousands):
Year:
2016
2017
2018
2019
2020
Thereafter
Total
Amount
364,775
358,745
337,593
313,286
288,964
2,675,671
4,339,034
$
$
The Company leases its executive office from an unrelated landlord. Rental expense totaled approximately $556
thousand, $521 thousand and $435 thousand for the years ended December 31, 2015, 2014 and 2013, respectively, and
is included as a component of general and administrative expense in the accompanying consolidated statements of
income. Future minimum lease payments under this lease at December 31, 2015 are as follows (in thousands):
105
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Year:
2016
2017
2018
2019
2020
Thereafter
Total
Amount
594
608
608
608
608
3,890
6,916
$
$
17. Quarterly Financial Information (unaudited)
Summarized quarterly financial data for the years ended December 31, 2015 and 2014 are as follows (in thousands,
except per share data):
2015:
Total revenue
Net income attributable to EPR Properties
Net income available to common
shareholders of EPR Properties
Basic net income per common share
Diluted net income per common share
2014:
Total revenue
Net income attributable to EPR Properties
Net income available to common
shareholders of EPR Properties
Basic net income per common share
Diluted net income per common share
$
$
March 31
June 30
September 30
December 31
99,436
42,821
36,869
0.65
0.64
$
101,258
48,766
$
108,335
50,195
$
111,988
52,750
42,814
0.75
0.75
44,244
0.76
0.76
46,799
0.78
0.78
March 31
June 30
September 30
December 31
$
89,857
43,533
37,581
0.72
0.71
$
91,787
40,760
34,808
0.65
0.65
98,738
42,705
36,753
0.68
0.68
$
104,669
52,635
46,684
0.82
0.81
During the three months ended December 31, 2014, the Company received a $5.0 million prepayment fee from a
borrower which is included in mortgage and other financing income in the accompanying consolidated statements of
income for the year ended December 31, 2014.
18. Discontinued Operations
Included in discontinued operations for the year ended December 31, 2015 were certain post closing items related to
the Toronto Dundas Square property. Included in discontinued operations for the year ended December 31, 2014 is the
reversal of liabilities totaling $3.9 million that related to the acquisition of Toronto Dundas Square. These liabilities
were reversed as the related payments are not expected to occur. Included in discontinued operations for the year ended
December 31, 2013 are five winery and vineyard properties that were sold during 2013.
106
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
The operating results relating to discontinued operations are as follows (in thousands):
Rental revenue
Tenant reimbursements
Other income
Total revenue
Property operating expense (income)
Other expense (income)
Interest expense, net
Transaction costs (benefit)
Depreciation and amortization
Income before income taxes
Income tax expense
Income before gain on sale of real estate
Gain on sale of real estate
Net income
19. Other Commitments and Contingencies
Year ended December 31,
2015
2014
2013
— $
68
172
240
12
—
—
—
—
228
29
199
—
199
$
3
—
—
3
(484)
(18)
—
(3,376)
—
3,881
—
3,881
—
3,881
$
$
1,685
513
426
2,624
45
547
(29)
—
1,728
333
—
333
4,256
4,589
$
$
As of December 31, 2015, the Company had an aggregate of approximately $272.4 million of commitments to fund
development projects including seven entertainment development projects for which it has commitments to fund
approximately $24.5 million of additional improvements, 27 education development projects for which it has
commitments to fund approximately $206.6 million of additional improvements and three recreation development
projects for which it has commitments to fund approximately $41.3 million. Development costs are advanced by the
Company in periodic draws. If the Company determines that construction is not being completed in accordance with
the terms of the development agreements, 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.
Additionally as of December 31, 2015, the Company had a commitment to fund approximately $120.0 million to
complete an indoor waterpark hotel and adventure park at its casino and resort project in Sullivan County, New York.
The Company is also responsible for the construction of this project's common infrastructure, which is expected to be
financed primarily through the issuance of tax-exempt public infrastructure bonds and currently budgeted at
approximately $90.0 million, subject to budget adjustments and related approvals. Through December 31, 2015, the
Company has funded approximately $28.8 million for common infrastructure.
The Company has certain commitments related to its mortgage note 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 events outside of its direct control. As of December 31, 2015, the Company had five mortgage notes
receivable with commitments totaling approximately $54.5 million. If commitments are funded in the future, interest
will be charged at rates consistent with the existing investments.
The Company has provided guarantees of the payment of certain economic development revenue bonds totaling $22.9
million related to two theatres in Louisiana for which the Company earns a fee at an annual rate of 2.88% to 4.00%
over the 30 year terms of the related bonds. The Company has recorded $9.7 million as a deferred asset included in
other assets and $9.7 million included in other liabilities in the accompanying consolidated balance sheet as of
December 31, 2015 related to these guarantees. No amounts have been accrued as a loss contingency related to these
guarantees because payment by the Company is not probable.
107
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
On June 7, 2011, affiliates of Louis Cappelli, Concord Associates, L.P., Concord Resort, LLC and Concord Kiamesha
LLC (the “Cappelli Group”), filed a complaint with the Supreme Court of the State of New York, County of Sullivan,
against two subsidiaries of the Company seeking (i) a declaratory judgment concerning the Company's obligations
under a previously disclosed settlement agreement involving these entities, (ii) an order that the Company execute the
golf course lease and the “Racino Parcel” lease subject to the settlement agreement, and (iii) an extension of the restrictive
covenant against ownership or operation of a casino on the Adelaar resort property under the settlement agreement (the
“Restrictive Covenant”), which covenant was set to expire on December 31, 2011. The Company filed counterclaims
seeking related relief. The Cappelli Group subsequently obtained leave to discontinue its claims, but the counterclaims
remained pending. On June 30, 2014, the Court (i) denied the Cappelli Group’s motion to dismiss the counterclaims,
(ii) granted the Company's motion for summary judgment finding that the Cappelli Group missed the December 31,
2011 deadline to fully execute a master credit agreement which was a condition to the Company’s obligation to continue
its joint development activities with the Cappelli Group under the settlement agreement, (iii) granted the Company’s
motion for summary judgment finding that the Restrictive Covenant had expired, and (iv) granted the Company’s
motion for declaratory relief declaring the Company as master developer of the Adelaar resort property. The Cappelli
Group perfected its appeal of the summary judgment decision in the Appellate Division, Third Department on December
30, 2014. On July 30, 2015, the Appellate Division, Third Department affirmed the lower court’s decision granting
summary judgment in favor of the Company. On August 27, 2015, the Cappelli Group filed a motion in the Appellate
Division for leave to appeal to the Court of Appeals. On November 23, 2015, the Cappelli Group’s motion for leave
to appeal the summary judgment decision was denied. As a result, this case is now closed.
On October 20, 2011, the Cappelli Group also filed suit against the Company and two affiliates in the Supreme Court
of the State of New York, County of Westchester, asserting a claim for breach of contract and the implied covenant of
good faith, and seeking damages of at least $800 million, based on the same allegations as in the action the Cappelli
Group filed in Sullivan County Supreme Court. The Company has moved to dismiss the Amended Complaint in
Westchester County based on the Sullivan County Supreme Court’s June 30, 2014 decision (which has now been
affirmed). On January 26, 2016, the Supreme Court denied the Company's motion to dismiss but ordered the Cappelli
Group to amend its pleading and remove all claims and allegations previously determined by the Third Department
(discussed above). On February 18, 2016, the Cappelli Group revised their amended complaint, which the Company
believes remains deficient.
On September 18, 2013, the United States District Court for the Southern District of New York (the “District Court”)
dismissed the complaint filed by Concord Associates L.P. and six other companies affiliated with Mr. Cappelli against
the Company and certain of its subsidiaries, Empire Resorts, Inc. and Monticello Raceway Management, Inc.
(collectively, “Empire”), and Kien Huat Realty III Limited and Genting New York LLC (collectively, “Genting”). The
complaint alleged, among other things, that the Company had conspired with Empire to monopolize the racing and
gaming market in the Catskills by entering into exclusivity and development agreements to develop a comprehensive
resort destination in Sullivan County, New York. The plaintiffs are seeking $500 million in damages (trebled to $1.5
billion under antitrust law), punitive damages, and injunctive relief. The District Court dismissed plaintiffs’ federal
antitrust claims against all defendants with prejudice, and dismissed the pendent state law claims against Empire and
Genting without prejudice, meaning they could be further pursued in state court. On October 2, 2013, the plaintiffs
filed a motion for reconsideration with the District Court, seeking permission to file a Second Amended Complaint,
and soon after filed a Notice of Appeal. The District Court denied the motion for reconsideration in an Opinion and
Order dated November 3, 2014, and the plaintiffs perfected their appeal in the Second Circuit on or about December
17, 2014. Oral arguments by the parties regarding the appeal were presented on April 29, 2015.
The Company has not determined that losses related to these matters are probable. Because of the favorable rulings
described above, and the pending or potential appeals, together with the inherent difficulty of predicting the outcome
of litigation generally, the Company does not have sufficient information to determine the amount or range of reasonably
possible loss with respect to these matters. The Company’s assessments are based on estimates and assumptions that
have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and unanticipated
events and circumstances may occur that might cause the Company to change those estimates and assumptions. The
Company intends to vigorously defend the claims asserted against the Company and certain of its subsidiaries by the
Cappelli Group and its affiliates, for which the Company believes it has meritorious defenses, but there can be no
assurances as to the outcome of the claims and related litigation.
108
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
20. Segment Information
The Company has four reportable operating segments: Entertainment, Education, Recreation and Other. The financial
information summarized below is presented by reportable operating segment:
Balance Sheet Data:
Entertainment Education Recreation
Other
Corporate/
Unallocated Consolidated
As of December 31, 2015
Total Assets
$
2,006,926 $ 1,013,930 $
935,266 $
203,757 $
57,391 $
4,217,270
As of December 31, 2014
Total Assets
Operating Data:
Rental revenue
Tenant reimbursements
Other income
Mortgage and other
financing income
Total revenue
Property operating
expense
Other expense
Total investment
expenses
Net operating
income - before
unallocated items
Entertainment Education Recreation
$
2,017,046 $
734,512 $
696,931 $
Other
206,795 $
Corporate/
Unallocated Consolidated
3,686,275
30,991 $
For the Year Ended December 31, 2015
Entertainment Education Recreation Other
51,439 $
$
—
—
238,896 $
16,343
512
40,551 $
—
—
— $
(23)
119
Corporate/
Unallocated Consolidated
330,886
— $
16,320
—
3,629
2,998
7,127
262,878
30,622
82,061
32,080
72,631
23,120
—
23,120
—
—
—
—
—
—
353
449
313
648
961
—
2,998
—
—
—
70,182
421,017
23,433
648
24,081
239,758
82,061
72,631
(512)
2,998
396,936
Reconciliation to Consolidated Statements of Income:
General and administrative expense
Retirement severance expense
Costs associated with loan refinancing or payoff
Interest expense, net
Transaction costs
Depreciation and amortization
Equity in income from joint ventures
Gain on sale or acquisition, net
Income tax expense
Discontinued operations:
Income from discontinued operations
Net income attributable to EPR Properties
Preferred dividend requirements
Net income available to common shareholders of EPR Properties
$
(31,021)
(18,578)
(270)
(79,915)
(7,518)
(89,617)
969
23,829
(482)
199
194,532
(23,806)
170,726
109
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
For the Year Ended December 31, 2014
Entertainment Education Recreation Other
27,874 $
$
—
—
237,429 $
17,640
(6)
—
—
23
315
20,368 $ 1,002 $
Corporate/
Unallocated Consolidated
286,673
— $
17,663
—
1,009
700
7,056
262,119
31,488
59,362
40,775
61,143
387
1,727
24,143
—
24,143
—
—
—
—
—
754
771
— 1,525
—
700
—
—
—
79,706
385,051
24,897
771
25,668
237,976
59,362
61,143
202
700
359,383
Rental revenue
Tenant reimbursements
Other income (loss)
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:
General and administrative expense
Costs associated with loan refinancing or payoff
Interest expense, net
Transaction costs
Provision for loan losses
Depreciation and amortization
Equity in income from joint ventures
Gain on sale or acquisition, net
Gain on sale of investment in a direct financing lease
Income tax expense
Discontinued operations:
Income from discontinued operations
Transaction (costs) benefit
Net income attributable to EPR Properties
Preferred dividend requirements
Net income available to common shareholders of EPR Properties
$
(27,566)
(301)
(81,270)
(2,452)
(3,777)
(66,739)
1,273
1,209
220
(4,228)
505
3,376
179,633
(23,807)
155,826
110
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
For the Year Ended December 31, 2013
Entertainment Education Recreation Other
15,931 $
$
—
—
221,024 $
18,401
80
—
—
— 1,471
10,124 $ 1,630 $
Corporate/
Unallocated Consolidated
248,709
— $
18,401
—
1,682
131
8,447
247,952
33,275
49,206
32,232
42,356
318
3,419
25,521
—
25,521
—
—
—
—
—
495
658
— 1,153
—
131
—
—
—
74,272
343,064
26,016
658
26,674
222,431
49,206
42,356
2,266
131
316,390
Rental revenue
Tenant reimbursements
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:
General and administrative expense
Costs associated with loan refinancing or payoff
Gain on early extinguishment of debt
Interest expense, net
Transaction costs
Depreciation and amortization
Equity in income from joint ventures
Gain on sale or acquisition, net
Gain on previously held equity interest
Income tax benefit
Discontinued operations:
Income from discontinued operations
Gain on sale, net from discontinued operations
Net income attributable to EPR Properties
Preferred dividend requirements
Net income available to common shareholders of EPR Properties
$
(25,613)
(6,166)
4,539
(81,056)
(1,955)
(53,946)
1,398
3,017
4,853
14,176
333
4,256
180,226
(23,806)
156,420
111
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
21. Condensed Consolidating Financial Statements
A portion of our subsidiaries have guaranteed the Company’s indebtedness under the Company's unsecured senior notes
and combined unsecured revolving credit facility and term loan facility. The guarantees are joint and several, full and
unconditional and subject to customary release provisions. The following summarizes the Company’s condensed
consolidating information as of December 31, 2015 and 2014 and for the years ended December 31, 2015, 2014 and
2013 (in thousands):
Condensed Consolidating Balance Sheet
As of December 31, 2015
Assets
Rental properties, net
Land held for development
Property under development
Mortgage notes and related accrued interest
receivable, net
Investment in a direct financing lease, net
Investment in joint ventures
Cash and cash equivalents
Restricted cash
Deferred financing costs, net
Accounts receivable, net
Intercompany notes receivable
Investments in subsidiaries
Other assets
Total assets
Liabilities and Equity
Liabilities:
EPR
Properties
(Issuer)
Wholly Owned
Subsidiary
Guarantors
Non-
Guarantor
Subsidiaries
Consolidated
Elimination
Consolidated
$
— $ 2,485,411
$
539,788
$
— $ 3,025,199
—
—
—
—
—
1,089
475
4,894
285
—
3,825,897
18,159
1,258
152,197
400,935
190,880
—
735
8,220
—
47,502
175,757
—
10,607
22,352
226,723
22,845
—
6,168
2,459
1,883
—
11,314
—
—
61,091
$
3,850,799
$ 3,473,502
$
894,623
—
—
—
—
—
—
—
—
23,610
378,920
423,780
190,880
6,168
4,283
10,578
4,894
59,101
—
—
—
(175,757)
(3,825,897)
—
89,857
$ (4,001,654) $ 4,217,270
Accounts payable and accrued liabilities
$
49,671
$
38,759
$
3,748
$
Dividends payable
Unearned rents and interest
Intercompany notes payable
Debt
Total liabilities
Equity
Total liabilities and equity
24,352
—
—
1,702,908
1,776,931
2,073,868
—
35,512
—
—
74,271
3,399,231
—
9,440
175,757
279,012
467,957
426,666
— $
—
—
(175,757)
—
(175,757)
(3,825,897)
92,178
24,352
44,952
—
1,981,920
2,143,402
2,073,868
$
3,850,799
$ 3,473,502
$
894,623
$ (4,001,654) $ 4,217,270
112
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Condensed Consolidating Balance Sheet
As of December 31, 2014
EPR
Properties
(Issuer)
Wholly Owned
Subsidiary
Guarantors
Non-
Guarantor
Subsidiaries
Consolidated
Elimination
Consolidated
$
— $ 2,451,534
206,001
—
—
—
—
—
—
—
—
—
(175,757)
(3,115,572)
—
181,798
507,955
199,332
5,738
3,336
13,072
4,136
47,282
—
—
66,091
$ (3,291,329) $ 3,686,275
— $
—
—
(175,757)
—
(175,757)
(3,115,572)
—
82,180
22,233
25,623
—
1,629,750
1,759,786
1,926,112
377
$ (3,115,572) $ 1,926,489
$ (3,291,329) $ 3,686,275
Assets
Rental properties, net
Land held for development
Property under development
Mortgage notes and related accrued interest
receivable, net
Investment in a direct financing lease, net
Investment in joint ventures
Cash and cash equivalents
Restricted cash
Deferred financing costs, net
Accounts receivable, net
Intercompany notes receivable
Investments in subsidiaries
Other assets
Total assets
Liabilities and Equity
Liabilities:
$
— $ 1,872,053
—
—
$
—
—
—
—
(1,234)
1,000
—
90
—
3,115,572
21,272
175,439
412,625
199,332
—
840
10,466
4,136
34,414
—
—
9,151
579,481
206,001
6,359
95,330
—
5,738
3,730
1,606
—
12,778
175,757
—
35,668
$
3,136,700
$ 2,718,456
$ 1,122,448
Accounts payable and accrued liabilities
$
42,829
$
32,613
$
6,738
$
Dividends payable
Unearned rents and interest
Intercompany notes payable
Debt
Total liabilities
EPR Properties shareholders’ equity
Noncontrolling interests
22,233
750
—
1,144,776
1,210,588
1,926,112
—
—
20,295
—
160,298
213,206
2,505,250
—
—
4,578
175,757
324,676
511,749
610,322
377
Equity
Total liabilities and equity
$
$
1,926,112
$ 2,505,250
$
610,699
3,136,700
$ 2,718,456
$ 1,122,448
113
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Condensed Consolidating Statement of Income
For the Year Ended December 31, 2015
Rental revenue
Tenant reimbursements
Other income
Mortgage and other financing income
Intercompany fee income
Interest income on intercompany notes
receivable
Total revenue
Equity in subsidiaries’ earnings
Property operating expense
Intercompany fee expense
Other expense
General and administrative expense
Retirement severance expense
Costs associated with loan refinancing or
payoff
Interest expense, net
Interest expense on intercompany notes
payable
Transaction costs
Depreciation and amortization
Income before equity in income
from joint ventures and other
items
Equity in income from joint ventures
Gain on sale or acquisition, net
Income before income taxes
Income tax benefit (expense)
Income from continuing
operations
Discontinued operations:
Income from discontinued
operations
Net income attributable to EPR
Properties
Preferred dividend requirements
Net income available to
common shareholders of EPR
Properties
Comprehensive income
attributable to EPR Properties
EPR
Properties
(Issuer)
$
Wholly
Owned
Subsidiary
Guarantors
257,493
5,243
3
61,900
—
— $
—
—
848
2,717
111
3,676
298,657
—
—
—
—
18,578
243
78,217
—
7,182
1,629
196,484
—
—
196,484
(1,952)
9,690
334,329
—
11,532
—
—
24,047
—
3
(5,524)
—
—
71,700
232,571
—
23,653
256,224
—
Non-
Guarantors
Subsidiaries
73,393
$
11,077
3,626
7,434
—
—
95,530
—
11,901
2,717
648
6,974
—
24
7,222
9,801
336
16,288
39,619
969
176
40,764
1,470
Consolidated
Elimination
$
— $
—
—
—
(2,717)
Consolidated
330,886
16,320
3,629
70,182
—
(9,801)
(12,518)
(298,657)
—
(2,717)
—
—
—
—
—
(9,801)
—
—
(298,657)
—
—
(298,657)
—
—
421,017
—
23,433
—
648
31,021
18,578
270
79,915
—
7,518
89,617
170,017
969
23,829
194,815
(482)
194,532
256,224
42,234
(298,657)
194,333
—
199
—
—
199
194,532
(23,806)
256,423
—
42,234
—
(298,657)
—
194,532
(23,806)
$
$
170,726
187,588
$
$
256,423
256,200
$
$
42,234
$ (298,657) $
170,726
36,088
$ (292,288) $
187,588
114
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Condensed Consolidating Statement of Income
For the Year Ended December 31, 2014
Rental revenue
Tenant reimbursements
Other income
Mortgage and other financing income
Intercompany fee income
Interest income on intercompany notes
receivable
Total revenue
Equity in subsidiaries’ earnings
Property operating expense
Intercompany fee expense
Other expense
General and administrative expense
Costs associated with loan refinancing or
payoff
Interest expense, net
Interest expense on intercompany notes
payable
Transaction costs
Provision for loan losses
Depreciation and amortization
Income before equity in income
from joint ventures and other
items
Equity in income from joint ventures
Gain on sale or acquisition, net
Gain on sale of investment in a direct
financing lease
Income before income taxes
Income tax benefit (expense)
Income from continuing
operations
Discontinued operations:
Income from discontinued
operations
Transaction (costs) benefit
Net income attributable to EPR
Properties
Preferred dividend requirements
Net income available to
common shareholders of EPR
Properties
Comprehensive income
attributable to EPR Properties
EPR
Properties
(Issuer)
$
Wholly
Owned
Subsidiary
Guarantors
211,616
5,103
1
71,535
—
— $
—
—
765
3,124
—
3,889
241,921
—
—
—
—
—
63,056
—
1,319
—
1,224
—
288,255
—
11,264
—
—
19,325
285
2,978
—
54
—
48,541
180,211
—
205,808
—
—
—
—
220
Non-
Guarantor
Subsidiaries
75,057
$
12,560
1,008
7,406
—
Consolidated
Elimination
$
Consolidated
— $ 286,673
17,663
—
1,009
—
79,706
—
—
(3,124)
24,796
120,827
—
13,633
3,124
771
8,241
16
15,236
24,796
1,079
3,777
16,974
33,180
1,273
1,209
—
(24,796)
(27,920)
(241,921)
—
(3,124)
—
—
—
—
(24,796)
—
—
—
(241,921)
—
—
—
—
385,051
—
24,897
—
771
27,566
301
81,270
—
2,452
3,777
66,739
177,278
1,273
1,209
220
180,211
(578)
206,028
—
35,662
(3,650)
(241,921)
—
179,980
(4,228)
179,633
206,028
32,012
(241,921)
175,752
—
—
179,633
(23,807)
487
3,376
209,891
—
18
—
—
—
505
3,376
32,030
—
(241,921)
—
179,633
(23,807)
$
$
155,826
175,006
$
$
209,891
210,031
$
$
32,030
$ (241,921) $ 155,826
27,888
$ (237,919) $ 175,006
115
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Condensed Consolidating Statement of Income
For the Year Ended December 31, 2013
$
Rental revenue
Tenant reimbursements
Other income
Mortgage and other financing income
Intercompany fee income
Interest income on intercompany notes
receivable
Total revenue
Equity in subsidiaries’ earnings
Property operating expense
Intercompany fee expense
Other expense
General and administrative expense
Costs associated with loan refinancing or
payoff
Gain on early extinguishment of debt
Interest expense, net
Interest expense on intercompany notes
payable
Transaction costs
Depreciation and amortization
Income before equity in income
from joint ventures and other
items
Equity in income from joint ventures
Gain (loss) on sale or acquisition, net
Gain on previously held equity interest
Income before income taxes
$
Income tax benefit (expense)
Income from continuing
operations
Discontinued operations:
Income (loss) from discontinued
operations
Gain on sale, net from discontinued
opeartions
Net income attributable to EPR
Properties
Preferred dividend requirements
Net income available to common
shareholders of EPR Properties
Comprehensive income
attributable to EPR Properties
$
$
EPR
Properties
(Issuer)
Wholly
Owned
Subsidiary
Guarantors
180,319
5,235
9
66,886
—
— $
—
75
994
2,629
Non-
Guarantor
Subsidiaries
68,390
$
13,166
1,598
6,392
—
Consolidated
Elimination
$
— $
—
—
—
(2,629)
Consolidated
248,709
18,401
1,682
74,272
—
17,848
21,546
212,634
(88)
—
—
—
—
—
55,856
—
1,813
1,093
—
252,449
—
11,865
—
—
18,708
1,987
(4,539)
9,085
—
—
37,756
175,506
505
(150)
4,853
180,714
(488)
$
177,587
—
3,167
—
180,754
—
$
386
89,932
—
14,239
2,629
658
6,905
4,179
—
16,115
18,234
142
15,097
11,734
893
—
—
12,627
14,664
(18,234)
(20,863)
(212,634)
—
(2,629)
—
—
—
—
—
(18,234)
—
—
(212,634)
—
—
—
$ (212,634) $
—
—
343,064
—
26,016
—
658
25,613
6,166
(4,539)
81,056
—
1,955
53,946
152,193
1,398
3,017
4,853
161,461
14,176
180,226
180,754
27,291
(212,634)
175,637
—
—
638
—
(305)
4,256
—
—
333
4,256
180,226
(23,806)
156,420
176,797
$
$
181,392
—
181,392
181,628
$
$
31,242
—
(212,634)
—
180,226
(23,806)
31,242
$ (212,634) $
156,420
28,200
$ (209,828) $
176,797
116
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2015
EPR
Properties
(Issuer)
$
2,717
Wholly
Owned
Subsidiary
Guarantors
$
Non-
Guarantor
Subsidiaries
— $
(2,717) $
Consolidated
—
111
(91,731)
9,690
300,144
(9,801)
69,539
—
277,952
(88,903)
309,834
57,021
277,952
—
508
—
508
(88,903)
310,342
57,021
278,460
(618)
—
—
—
—
(112)
(406,389)
(407,119)
701,914
(142,000)
(7,038)
190,158
(3,394)
(8,222)
(233,073)
498,345
—
2,323
(1,234)
1,089
$
(178,964)
45,637
(27,835)
38,456
4,741
(366,170)
334,011
(150,124)
155,000
(315,310)
(7)
—
—
—
—
(160,317)
(6)
(105)
840
735
$
(238)
1,081
(44,863)
2,500
—
(42,154)
72,378
(11,296)
—
(46,004)
(2)
—
—
—
—
(46,006)
(990)
(1,271)
3,730
2,459
$
(179,820)
46,718
(72,698)
40,956
4,741
(408,436)
—
(568,539)
856,914
(503,314)
(7,047)
190,158
(3,394)
(8,222)
(233,073)
292,022
(996)
947
3,336
4,283
Intercompany fee income (expense)
Interest income (expense) on intercompany receivable/
payable
Net cash provided (used) by other operating activities
Net cash provided (used) by operating activities
by continuing operations
Net cash provided by operating activities of
discontinued operations
Net cash provided (used) by operating
activities
Investing activities:
Acquisition of rental properties and other assets
Proceeds from sale of real estate
Investment in mortgage notes receivable
Proceeds from mortgage note receivable paydown
Proceeds from sale of investment in a direct
financing lease, net
Additions to property under development
Advances to subsidiaries, net
Net cash used by investing activities
Financing activities:
Proceeds from debt facilities
Principal payments on debt
Deferred financing fees paid
Net proceeds from issuance of common shares
Impact of stock option exercises, net
Purchase of common shares for treasury
Dividends paid to shareholders
Net cash provided (used) by financing
activities
Effect of exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
$
117
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2014
EPR
Properties
(Issuer)
$
3,124
Wholly
Owned
Subsidiary
Guarantors
$
Non-
Guarantor
Subsidiaries
— $
(3,124) $
Consolidated
—
—
(60,684)
—
250,337
(57,560)
250,337
—
60,499
57,375
—
250,152
250,152
—
47
96
143
(57,560)
250,384
57,471
250,295
(438)
—
—
—
—
—
—
—
(821)
(16,206)
(17,465)
20,000
—
(337)
—
264,158
50
(2,892)
(207,637)
73,342
—
(1,683)
449
(1,234) $
(58,930)
—
—
(26,716)
52,834
(721)
—
46,092
(320,964)
(1,510)
(309,915)
359,000
(300,270)
(275)
(25)
—
—
—
—
58,430
39
(1,062)
1,902
(25,837)
12,055
5,725
(67,161)
23,422
(3,666)
1,750
—
(12,850)
17,716
(48,846)
—
(9,983)
(202)
—
—
—
—
—
(10,185)
(317)
(1,877)
5,607
(85,205)
12,055
5,725
(93,877)
76,256
(4,387)
1,750
46,092
(334,635)
—
(376,226)
379,000
(310,253)
(814)
(25)
264,158
50
(2,892)
(207,637)
121,587
(278)
(4,622)
7,958
840
$
3,730
$
3,336
Intercompany fee income (expense)
Interest income (expense) on intercompany receivable/
payable
Net cash provided (used) by other operating activities
Net cash provided (used) by operating activities
of continuing operations
Net cash provided by operating activities of
discontinued operations
Net cash provided (used) by operating
activities
Investing activities:
Acquisition of rental properties and other assets
Proceeds from sale of real estate
Proceeds from settlement of derivative
Investment in mortgage note receivable
Proceeds from mortgage note receivable paydown
Investment in promissory notes receivable
Proceeds from promissory note paydown
Proceeds from sale of investment in a direct
financing lease, net
Additions to property under development
Advances to subsidiaries, net
Net cash used in investing activities
Financing activities:
Proceeds from debt facilities
Principal payments on debt
Deferred financing fees paid
Costs associated with loan refinancing or payoff
(cash portion)
Net proceeds from issuance of common shares
Impact of stock option exercises, net
Purchase of common shares for treasury
Dividends paid to shareholders
Net cash provided (used) by financing
activities
Effect of exchange rate changes on cash
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
$
118
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2015, 2014 and 2013
Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2013
Intercompany fee income (expense)
Interest income (expense) on intercompany receivable/
payable
Net cash provided (used) by other operating activities
Net cash provided (used) by operating activities
of continuing operations
Net cash provided by operating activities of
discontinued operations
Net cash provided (used) by operating
activities
Investing activities:
Acquisition of rental properties and other assets
Proceeds from sale of real estate
Investment in unconsolidated joint ventures
Investment in mortgage notes receivable
Proceeds from mortgage note receivable paydown
Investment in promissory notes receivable
Proceeds from promissory note receivable
paydown
Investment in a direct financing lease, net
Additions to property under development
Investment in intercompany notes payable
Advances to subsidiaries, net
Net cash provided (used) by investing activities
of continuing operations
Net proceeds from sale of real estate from
discontinued operations
Net cash provided (used) by investing
activities
Financing activities:
Proceeds from debt facilities
Principal payments on debt
Deferred financing fees paid
Costs associated with loan refinancing or payoff
(cash portion)
Net proceeds from issuance of common shares
Impact of stock option exercises, net
Purchase of common shares for treasury
Dividends paid to shareholders
Net cash provided (used) by financing
activities
Effect of exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
EPR
Properties
(Issuer)
$
2,629
Wholly
Owned
Subsidiary
Guarantors
$
Non-
Guarantor
Subsidiaries
— $
(2,629) $
Consolidated
—
17,848
(44,752)
—
216,982
(17,848)
59,209
—
231,439
(24,275)
216,982
38,732
231,439
—
286
2,395
2,681
(24,275)
217,268
41,127
234,120
(1,358)
—
(1,607)
(11,797)
—
—
117
—
(18)
103,104
(380,190)
(118,233)
—
—
(46,375)
202
(1,278)
—
(3,262)
(190,205)
—
255,824
(3,906)
797
—
(2,396)
1,698
—
910
—
(7,048)
(103,104)
124,366
(123,497)
797
(1,607)
(60,568)
1,900
(1,278)
1,027
(3,262)
(197,271)
—
—
(291,749)
(103,327)
11,317
(383,759)
—
—
47,301
47,301
(291,749)
(103,327)
58,618
(336,458)
300,000
—
(5,620)
—
220,785
947
(3,246)
(197,924)
314,942
—
(1,082)
1,531
449
346,000
(454,683)
(2,494)
(1,753)
—
—
—
—
—
(97,785)
(19)
(4,037)
—
—
—
—
(112,930)
(13)
998
904
1,902
$
(101,841)
(526)
(2,622)
8,229
5,607
$
$
646,000
(552,468)
(8,133)
(5,790)
220,785
947
(3,246)
(197,924)
100,171
(539)
(2,706)
10,664
7,958
$
119
EPR Properties
Schedule II - Valuation and Qualifying Accounts
December 31, 2015
Description
Reserve for Doubtful Accounts
Allowance for Loan Losses
Balance at
December 31, 2014
1,554,000
$
3,777,000
Additions
During 2015
Deductions
During 2015
$
1,829,000
—
$
(173,000) $
(3,777,000)
Balance at
December 31, 2015
3,210,000
—
See accompanying report of independent registered public accounting firm.
EPR Properties
Schedule II - Valuation and Qualifying Accounts
December 31, 2014
Description
Reserve for Doubtful Accounts
Allowance for Loan Losses
Balance at
December 31, 2013
2,989,000
$
—
Additions
During 2014
Deductions
During 2014
$
1,417,000
3,777,000
$
(2,852,000) $
—
Balance at
December 31, 2014
1,554,000
3,777,000
See accompanying report of independent registered public accounting firm.
EPR Properties
Schedule II - Valuation and Qualifying Accounts
December 31, 2013
Description
Reserve for Doubtful Accounts
Allowance for Loan Losses
Balance at
December 31, 2012
3,852,000
$
123,000
$
Additions
During 2013
Deductions
During 2013
1,949,000
—
$
(2,812,000) $
(123,000)
Balance at
December 31, 2013
2,989,000
—
See accompanying report of independent registered public accounting firm.
120
n
o
i
t
a
i
c
e
r
p
e
D
e
f
i
l
e
t
a
D
d
e
r
i
u
q
c
a
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
d
l
a
t
o
T
&
t
n
e
m
p
u
q
E
i
s
t
n
e
m
e
v
o
r
p
m
I
)
6
0
0
,
3
1
(
$
$
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
t
n
u
o
m
A
s
s
o
r
G
,
s
g
n
i
d
l
i
u
B
)
s
n
o
i
t
i
s
o
p
s
i
D
s
n
o
i
t
i
d
d
A
(
)
s
t
n
e
m
r
i
a
p
m
I
(
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
a
&
t
n
e
m
p
u
q
E
i
s
t
n
e
m
e
v
o
r
p
m
i
,
s
g
n
d
i
l
i
u
B
t
s
o
c
l
a
i
t
i
n
I
d
n
a
L
t
b
e
D
s
e
i
t
r
e
p
o
r
P
R
P
E
n
o
i
t
a
i
c
e
r
p
e
D
d
e
t
a
l
u
m
u
c
c
A
d
n
a
e
t
a
t
s
E
l
a
e
R
-
I
I
I
e
l
u
d
e
h
c
S
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
)
s
d
n
a
s
u
o
h
t
n
i
s
r
a
l
l
o
D
(
s
r
a
e
y
0
4
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
5
1
7
9
/
1
1
7
9
/
1
1
7
9
/
1
1
7
9
/
1
1
7
9
/
1
1
7
9
/
1
1
7
9
/
1
1
7
9
/
1
1
7
9
/
1
1
7
9
/
1
1
8
9
/
2
0
8
9
/
3
0
8
9
/
4
0
8
9
/
6
0
8
9
/
8
0
8
9
/
8
0
8
9
/
1
1
8
9
/
2
1
8
9
/
2
1
9
9
/
1
0
1
0
/
2
1
9
9
/
6
0
9
9
/
6
0
9
9
/
2
1
9
9
/
6
0
0
0
/
2
0
0
0
/
5
0
2
0
/
3
0
2
0
/
3
0
2
0
/
3
0
2
0
/
3
0
2
0
/
3
0
2
0
/
6
0
2
0
/
6
0
2
0
/
6
0
2
0
/
8
0
2
0
/
0
1
2
0
/
2
1
3
0
/
3
0
3
0
/
5
0
)
1
4
5
,
7
(
)
5
2
6
,
8
(
)
9
8
3
,
6
(
)
0
5
5
,
5
(
)
2
1
0
,
7
(
)
9
0
5
,
8
(
)
6
6
7
,
8
(
)
1
2
9
,
5
(
)
6
7
5
,
5
(
)
2
6
6
,
9
(
)
4
0
4
,
2
1
(
)
9
7
2
,
9
(
)
5
3
8
,
0
1
(
)
4
8
2
,
6
(
)
4
3
5
,
2
(
)
3
5
0
,
9
(
)
0
5
9
,
5
(
)
1
0
8
,
6
(
)
8
1
3
(
)
3
4
0
,
5
1
(
)
6
9
0
,
6
(
)
9
9
6
,
3
(
)
3
2
7
,
4
(
)
6
6
9
,
5
(
)
3
6
0
,
7
(
)
6
9
2
,
2
(
)
0
6
0
,
4
(
)
5
2
1
,
5
(
)
5
4
3
,
2
(
)
5
4
3
,
2
(
)
4
6
2
,
4
(
)
5
0
6
,
2
(
)
9
6
6
,
8
(
)
1
6
0
,
6
(
)
8
7
8
,
5
(
)
9
9
2
,
7
(
)
3
1
6
,
2
(
)
2
1
6
,
1
(
)
5
2
9
,
3
1
(
)
2
0
7
,
1
6
2
(
3
0
2
,
7
3
4
7
9
,
1
2
7
6
1
,
9
1
6
0
2
,
2
2
5
8
6
,
2
1
8
2
0
,
6
1
0
7
9
,
4
2
0
6
0
,
6
2
1
6
6
,
1
2
0
1
9
,
9
1
6
7
8
,
5
2
8
9
3
,
4
3
5
8
0
,
8
2
8
8
5
,
8
2
5
1
5
,
0
2
9
2
4
,
9
2
1
5
,
3
2
0
0
0
,
2
2
3
0
0
,
6
1
9
0
1
,
4
4
1
3
,
8
2
4
6
1
,
3
2
4
9
8
,
8
1
0
6
1
,
5
1
1
6
2
,
0
2
0
5
2
,
5
2
4
0
7
,
5
0
4
7
,
1
1
4
8
0
,
0
2
9
1
6
,
8
4
8
1
,
9
6
3
4
,
9
6
9
5
,
6
1
1
3
3
,
7
2
9
4
9
,
2
2
5
2
0
,
2
2
5
3
0
,
2
2
8
4
8
,
1
1
8
3
0
,
7
8
4
7
,
4
3
$
3
4
1
,
4
3
9
5
7
,
6
1
7
6
1
,
9
1
0
0
2
,
9
1
5
8
6
,
2
1
8
2
0
,
6
1
9
4
4
,
9
1
7
3
0
,
0
2
6
7
6
,
6
1
6
9
1
,
6
1
2
7
5
,
1
2
1
2
8
,
7
2
3
7
1
,
5
2
6
6
7
,
4
2
4
4
7
,
3
1
0
1
5
,
6
2
1
5
,
1
2
0
0
0
,
4
1
3
0
0
,
6
1
0
9
9
9
0
1
,
2
2
4
1
3
,
7
1
8
6
9
,
8
8
0
8
,
1
1
1
6
2
,
4
1
0
5
7
,
7
1
6
9
2
,
2
0
4
7
,
1
1
0
2
8
,
4
1
0
8
7
,
6
0
8
7
,
6
6
7
7
,
7
0
3
3
,
2
1
6
5
3
,
1
2
9
4
9
,
8
1
5
2
5
,
7
1
5
3
0
,
2
2
0
9
9
,
7
6
5
0
,
5
8
4
7
,
6
2
2
2
8
,
6
3
6
0
6
0
,
3
5
1
2
,
5
—
6
0
0
,
3
—
—
1
2
5
,
5
3
2
0
,
6
5
8
9
,
4
4
1
7
,
3
4
0
3
,
4
7
7
5
,
6
2
1
9
,
2
2
2
8
,
3
1
7
7
,
6
9
1
9
,
2
0
0
0
,
2
0
0
0
,
8
—
9
1
1
,
3
5
0
2
,
6
0
5
8
,
5
6
2
9
,
9
2
5
3
,
3
0
0
0
,
6
0
0
5
,
7
8
0
4
,
3
—
4
6
2
,
5
9
3
8
,
1
4
0
4
,
2
6
6
2
,
4
0
6
6
,
1
5
7
9
,
5
0
0
0
,
4
0
0
5
,
4
—
8
5
8
,
3
2
8
9
,
1
0
0
0
,
8
d
n
a
L
—
—
—
—
9
5
7
6
0
4
5
,
5
6
7
8
9
5
7
0
,
4
0
1
1
,
4
5
8
8
,
4
8
8
5
4
8
,
3
1
5
9
2
1
5
,
8
—
—
—
—
—
9
0
5
,
9
5
5
1
2
5
4
,
1
—
6
8
6
—
—
)
5
6
5
(
—
)
2
1
1
(
6
0
2
0
0
4
,
3
4
1
0
,
3
—
—
—
—
$
2
6
8
,
8
1
$
1
8
2
,
5
1
0
0
7
,
6
1
0
0
1
,
9
1
2
6
6
,
3
1
5
8
6
,
2
1
8
2
0
,
6
1
9
4
4
,
9
1
7
3
0
,
0
2
1
0
6
,
2
1
6
8
0
,
2
1
6
9
4
,
1
2
3
2
7
,
7
2
8
8
2
,
0
2
8
7
6
,
4
2
9
9
8
,
9
9
5
5
,
5
0
0
0
,
3
1
0
0
0
,
4
1
3
0
0
,
6
1
0
9
9
0
0
6
,
2
1
4
1
3
,
7
1
8
6
9
,
8
3
5
6
,
1
1
9
0
8
,
2
1
0
5
7
,
7
1
5
6
3
,
1
0
4
7
,
1
1
0
2
8
,
4
1
0
8
7
,
6
0
8
7
,
6
0
3
3
,
2
1
0
7
5
,
7
6
5
9
,
7
1
5
3
9
,
5
1
5
2
5
,
7
1
5
3
0
,
2
2
0
9
9
,
7
6
5
0
,
5
0
3
2
,
6
3
4
1
,
5
7
$
8
1
5
,
0
2
9
5
7
,
0
6
5
1
2
1
$
0
6
0
,
3
5
1
2
,
5
—
6
0
0
,
3
—
—
1
2
5
,
5
3
2
0
,
6
5
8
9
,
4
4
1
7
,
3
4
0
3
,
4
7
7
5
,
6
2
1
9
,
2
2
2
8
,
3
1
7
7
,
6
9
1
9
,
2
0
0
0
,
2
0
0
0
,
8
—
9
1
1
,
3
5
0
2
,
6
0
5
8
,
5
6
2
9
,
9
2
5
3
,
3
0
0
0
,
6
0
0
5
,
7
3
5
6
,
3
—
4
6
2
,
5
4
0
4
,
2
4
0
4
,
2
8
7
3
,
4
0
6
6
,
1
5
7
9
,
5
0
0
0
,
4
0
0
5
,
4
—
8
5
8
,
3
2
8
9
,
1
0
0
0
,
8
$
—
—
2
5
0
,
5
1
$
—
—
—
—
—
—
1
7
5
,
2
1
—
—
—
—
—
—
—
—
—
—
—
3
1
8
,
4
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0
6
2
,
5
X
T
,
o
i
n
o
t
n
A
n
a
S
X
T
,
d
n
a
L
r
a
g
u
S
H
O
,
s
u
b
m
u
l
o
C
A
C
,
o
g
e
i
D
n
a
S
A
C
,
o
i
r
a
t
n
O
X
T
,
n
o
t
s
u
o
H
O
M
,
r
u
e
o
C
e
v
e
r
C
S
K
,
d
o
o
w
a
e
L
X
T
,
n
o
t
s
u
o
H
X
T
,
s
a
l
l
a
D
E
N
,
a
h
a
m
O
n
o
i
t
a
c
o
L
L
I
,
n
o
t
g
n
i
r
r
a
B
h
t
u
o
S
L
F
,
h
c
a
e
B
o
n
a
p
m
o
P
X
T
,
e
t
i
u
q
s
e
M
A
V
,
n
o
t
p
m
a
H
A
C
,
o
j
e
i
V
o
s
i
l
A
D
I
,
e
s
i
o
B
O
C
O
C
,
r
e
t
s
n
i
m
t
s
e
W
,
r
e
t
s
n
i
m
t
s
e
W
L
I
,
e
g
d
i
r
d
o
o
W
X
T
,
e
t
i
u
q
s
e
M
C
N
,
h
g
i
e
l
a
R
L
F
,
e
i
v
a
D
A
C
,
o
g
e
i
D
n
a
S
X
T
A
L
A
L
,
n
o
t
s
u
o
H
,
e
i
r
i
a
t
e
M
,
n
a
h
a
r
a
H
A
L
,
d
n
o
m
m
a
H
C
S
,
e
l
l
i
v
n
e
e
r
G
A
L
A
L
,
a
m
u
o
H
,
y
e
v
r
a
H
L
F
,
a
p
m
a
T
C
N
,
y
r
a
C
I
M
,
s
t
h
g
i
e
H
g
n
i
l
r
e
t
S
A
V
,
a
i
r
d
n
a
x
e
l
A
R
A
,
k
c
o
R
e
l
t
t
i
L
I
M
,
d
l
e
i
f
h
t
u
o
S
A
G
,
n
o
c
a
M
I
M
,
a
i
n
o
v
i
L
S
K
,
e
h
t
a
l
O
4
2
r
e
t
n
e
C
n
w
o
T
x
o
n
n
e
L
4
1
s
k
a
O
r
e
n
b
e
u
H
4
2
y
n
o
l
o
C
t
s
r
i
F
0
2
y
e
l
l
a
V
n
o
i
s
s
i
M
0
3
s
l
l
i
M
o
i
r
a
t
n
O
6
1
e
v
i
l
O
t
s
e
W
0
3
o
i
d
u
t
S
0
2
r
e
t
n
e
C
n
w
o
T
d
o
o
w
a
e
L
0
3
n
o
t
g
n
i
r
r
a
B
h
t
u
o
S
0
3
e
t
n
i
o
P
f
l
u
G
0
3
e
t
i
u
q
s
e
M
4
2
r
e
t
n
e
C
n
w
o
T
n
o
t
p
m
a
H
0
2
m
u
i
d
a
t
S
o
j
e
i
V
o
s
i
l
A
2
2
m
u
i
d
a
t
S
e
s
i
o
B
e
d
a
n
e
m
o
r
P
r
e
t
s
n
i
m
t
s
e
W
r
e
t
n
e
C
l
i
a
t
e
R
e
t
i
u
q
s
e
M
D
X
d
n
a
4
2
e
s
i
d
a
r
a
P
6
1
e
d
n
a
r
G
h
g
i
e
l
a
R
8
1
d
r
a
w
o
r
B
n
o
i
t
p
i
r
c
s
e
D
l
i
a
t
e
R
s
a
l
l
a
D
4
2
w
e
i
v
k
a
O
4
2
e
d
a
n
e
m
o
r
P
r
e
t
s
n
i
m
t
s
e
W
8
1
e
g
d
i
r
d
o
o
W
0
2
m
u
i
d
a
t
S
s
d
a
o
r
s
s
o
r
C
y
r
a
C
r
e
t
n
e
C
l
i
a
t
e
R
e
t
n
i
o
P
f
l
u
G
4
2
e
d
a
n
e
m
o
r
P
m
l
a
P
0
2
t
h
g
i
l
r
a
t
S
2
1
e
c
a
l
a
P
w
e
i
v
r
a
e
l
C
0
2
e
c
a
l
a
P
d
o
o
w
m
E
l
0
1
e
c
a
l
a
P
d
n
o
m
m
a
H
6
1
e
c
a
l
a
P
k
n
a
b
t
s
e
W
0
1
e
c
a
l
a
P
a
m
u
o
H
e
l
a
d
y
r
r
e
h
C
0
3
m
u
r
o
F
2
2
r
e
t
n
e
C
n
a
m
f
f
o
H
8
1
n
n
e
l
G
l
e
n
o
l
o
C
n
o
c
a
M
-
6
1
r
a
t
S
m
A
0
3
o
i
d
u
t
S
e
h
t
a
l
O
0
2
a
i
n
o
v
i
L
r
e
t
n
e
C
d
l
e
i
f
h
t
u
o
S
r
a
t
S
$
9
5
7
,
4
9
7
$
$
7
3
9
,
7
5
1
$
$
9
5
8
,
8
5
1
$
6
9
6
,
7
3
$
e
g
a
p
t
x
e
n
o
t
r
e
v
o
d
e
i
r
r
a
c
s
l
a
t
o
t
b
u
S
s
e
i
t
r
e
p
o
r
P
R
P
E
n
o
i
t
a
i
c
e
r
p
e
D
d
e
t
a
l
u
m
u
c
c
A
d
n
a
e
t
a
t
s
E
l
a
e
R
-
I
I
I
e
l
u
d
e
h
c
S
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
)
s
d
n
a
s
u
o
h
t
n
i
s
r
a
l
l
o
D
(
n
o
i
t
a
i
c
e
r
p
e
D
e
f
i
l
e
t
a
D
d
e
r
i
u
q
c
a
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
d
l
a
t
o
T
&
t
n
e
m
p
u
q
E
i
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
t
n
u
o
m
A
s
s
o
r
G
,
s
g
n
i
d
l
i
u
B
)
s
n
o
i
t
i
s
o
p
s
i
D
s
n
o
i
t
i
d
d
A
(
)
s
t
n
e
m
r
i
a
p
m
I
(
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
a
&
t
n
e
m
p
u
q
E
i
s
t
n
e
m
e
v
o
r
p
m
i
,
s
g
n
d
i
l
i
u
B
t
s
o
c
l
a
i
t
i
n
I
d
n
a
L
t
b
e
D
n
o
i
t
a
c
o
L
n
o
i
t
p
i
r
c
s
e
D
s
r
a
e
y
s
r
a
e
y
0
4
0
4
3
0
/
6
0
3
0
/
0
1
a
/
n
a
/
n
s
r
a
e
y
0
4
3
0
/
1
1
s
r
a
e
y
0
4
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
0
4
0
4
0
4
0
4
a
/
n
3
0
/
1
1
3
0
/
2
1
4
0
/
3
0
4
0
/
3
0
4
0
/
3
0
4
0
/
3
0
)
9
0
1
,
1
(
)
0
6
6
,
2
3
(
)
2
0
7
,
1
6
2
(
—
)
4
1
5
,
2
(
)
9
5
3
,
3
(
)
1
8
6
,
4
(
)
9
2
3
,
5
(
)
6
6
8
,
4
(
)
1
8
4
,
6
1
(
s
r
a
e
y
0
4
4
0
/
3
0
)
9
2
4
,
7
(
s
r
a
e
y
0
4
4
0
/
3
0
)
4
1
6
,
7
(
s
r
a
e
y
0
4
4
0
/
3
0
)
1
1
1
,
1
1
(
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
5
1
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
s
r
a
e
y
0
4
a
/
n
4
0
/
7
0
4
0
/
7
0
4
0
/
7
0
4
0
/
1
1
4
0
/
2
1
4
0
/
2
1
5
0
/
2
0
5
0
/
3
0
5
0
/
3
0
5
0
/
6
0
5
0
/
6
0
5
0
/
9
0
5
0
/
1
1
5
0
/
2
1
5
0
/
2
1
5
0
/
2
1
5
0
/
2
1
6
0
/
3
0
6
0
/
3
0
6
0
/
4
0
6
0
/
7
0
6
0
/
8
0
6
0
/
1
1
6
0
/
2
1
6
0
/
2
1
7
0
/
5
0
7
0
/
7
0
7
0
/
8
0
)
5
7
6
(
)
0
9
1
,
3
(
)
1
6
9
,
2
(
)
2
4
5
,
3
(
)
6
1
5
,
2
(
)
1
8
7
,
2
(
)
3
2
9
,
1
(
)
3
6
5
,
0
1
(
)
6
0
1
,
3
(
)
9
5
1
,
2
(
)
8
9
1
,
1
(
)
9
2
5
,
2
(
)
0
0
7
,
2
(
)
1
6
9
(
)
9
5
5
,
1
(
)
9
9
2
,
3
(
)
6
8
9
(
)
5
7
9
,
2
(
)
4
1
6
,
3
(
)
7
6
6
,
1
(
)
3
4
3
,
3
(
)
4
5
4
,
3
(
)
9
0
6
,
5
(
)
7
9
3
,
3
(
)
7
8
5
,
2
(
)
4
9
3
,
2
(
—
)
6
2
5
,
1
(
)
9
6
0
,
6
3
4
(
$
9
5
7
,
4
9
7
$
2
2
8
,
6
3
6
$
7
3
9
,
7
5
1
$
3
4
1
,
5
7
$
9
5
7
,
0
6
5
$
9
5
8
,
8
5
1
$
6
2
0
,
5
5
5
1
,
5
0
1
7
8
0
,
9
5
8
9
,
7
1
1
2
,
0
2
0
1
2
,
0
2
2
1
0
,
3
2
1
6
3
,
8
6
1
1
0
,
1
2
1
5
2
,
9
3
2
8
4
,
4
3
7
4
2
,
0
5
3
8
8
,
2
5
2
1
,
4
1
8
1
3
,
0
1
4
4
7
,
7
1
7
6
9
,
2
1
0
8
6
,
1
1
7
9
6
,
8
7
9
6
,
8
5
6
6
2
,
4
1
6
6
0
,
0
1
6
4
0
,
6
3
4
1
,
2
1
4
6
2
,
1
1
1
5
4
,
6
3
6
3
,
8
2
5
4
,
6
3
1
2
,
9
1
4
0
2
,
2
1
3
5
8
,
2
2
4
0
2
,
8
8
7
0
,
4
1
0
1
3
,
8
1
9
4
6
,
9
1
5
1
4
,
0
2
9
9
4
,
1
1
2
4
6
,
7
1
6
9
5
,
1
8
2
8
,
9
6
2
5
,
3
5
5
0
,
9
9
7
8
0
,
8
0
4
7
,
5
1
—
4
3
9
,
5
1
3
4
1
,
8
1
7
5
2
,
9
5
5
6
5
,
6
1
9
5
2
,
8
2
8
7
3
,
5
2
9
6
3
,
8
3
0
0
9
7
7
1
,
1
1
8
1
3
,
0
1
4
4
7
,
2
1
0
5
1
,
9
5
7
4
,
0
1
7
4
0
,
7
3
1
1
,
2
4
7
6
4
,
1
1
0
3
2
,
8
5
6
5
,
4
5
6
1
,
0
1
3
1
0
,
6
0
1
8
,
3
5
8
1
,
6
0
1
9
,
3
3
1
6
,
1
1
4
0
2
,
2
1
5
2
8
,
4
1
9
9
8
,
6
8
7
0
,
4
1
2
0
8
,
4
1
4
2
5
,
4
1
9
9
0
,
5
1
9
9
4
,
1
1
6
5
1
,
1
1
—
3
2
3
,
7
0
0
5
,
1
0
0
1
,
6
0
0
0
,
1
1
7
4
,
4
5
8
9
,
7
6
7
2
,
4
9
6
8
,
4
4
0
1
,
9
6
4
4
,
4
2
9
9
,
0
1
—
9
5
3
,
1
)
7
4
4
,
2
(
8
5
8
,
6
—
—
—
—
4
5
0
,
6
2
6
4
9
,
4
1
4
0
1
,
9
4
4
9
,
3
8
7
8
,
1
1
—
3
8
9
,
1
8
4
9
,
2
0
0
0
,
5
7
1
8
,
3
5
0
2
,
1
0
5
6
,
1
4
8
5
,
6
1
9
9
7
,
2
6
3
8
,
1
1
8
4
,
1
8
7
9
,
1
1
5
2
,
5
1
4
6
,
2
8
7
1
,
2
0
0
6
,
7
2
4
5
,
2
—
8
2
0
,
8
5
0
3
,
1
—
—
8
0
5
,
3
5
2
1
,
5
6
1
3
,
5
6
8
4
,
6
6
9
5
,
1
5
0
5
,
2
4
9
0
,
1
2
)
6
3
9
,
1
(
—
—
5
1
0
,
1
0
2
3
6
3
6
,
1
—
7
9
0
,
7
—
—
—
2
6
1
2
3
4
,
2
—
—
—
—
—
—
—
—
—
—
—
—
5
2
9
,
1
—
8
0
3
,
2
6
2
5
,
3
6
9
6
,
7
9
4
3
5
,
0
1
—
1
7
9
,
9
4
3
9
,
5
1
3
4
1
,
8
1
3
0
2
,
3
3
5
6
5
,
6
1
7
4
9
,
5
1
4
3
4
,
1
2
5
0
9
,
9
1
0
0
9
7
7
1
,
1
1
8
1
3
,
0
1
9
2
7
,
1
1
0
3
8
,
8
3
4
0
,
8
7
4
0
,
7
6
1
0
,
5
3
7
6
4
,
1
1
0
3
2
,
8
5
6
5
,
4
3
3
7
,
7
4
9
9
,
5
0
1
8
,
3
5
8
1
,
6
0
1
9
,
3
3
1
6
,
1
1
4
0
2
,
2
1
5
2
8
,
4
1
9
9
8
,
6
3
5
1
,
2
1
2
0
8
,
4
1
6
1
2
,
2
1
9
9
0
,
5
1
9
9
4
,
1
1
6
5
1
,
1
1
—
3
2
3
,
7
0
0
5
,
1
0
0
1
,
6
0
0
0
,
1
2
8
3
,
3
5
8
9
,
7
6
7
2
,
4
9
6
8
,
4
4
0
1
,
9
6
4
4
,
4
8
5
3
,
8
4
0
1
,
9
—
8
4
2
,
9
9
1
9
,
3
8
4
9
,
2
0
0
0
,
5
7
1
8
,
3
1
0
0
,
2
0
5
6
,
1
9
9
7
,
2
6
3
8
,
1
1
8
4
,
1
8
7
9
,
1
8
0
1
,
5
1
4
6
,
2
8
7
1
,
2
0
0
6
,
7
2
4
5
,
2
—
8
2
0
,
8
5
0
3
,
1
—
8
0
5
,
3
5
2
1
,
5
6
1
3
,
5
—
6
8
4
,
6
6
9
5
,
1
5
0
5
,
2
4
8
5
,
6
1
—
8
0
9
,
3
6
9
6
,
7
3
2
8
6
,
6
—
—
—
—
—
6
7
7
,
2
1
—
—
—
—
—
2
0
4
,
7
8
7
9
,
1
1
—
—
1
8
3
,
9
6
0
3
,
6
0
6
3
,
0
1
—
—
3
7
1
,
4
0
7
4
,
8
6
7
0
,
4
8
8
2
,
5
7
6
6
,
9
9
5
9
,
3
—
1
7
1
,
3
1
—
—
—
—
—
—
—
—
5
3
6
,
0
1
$
a
/
n
e
g
a
p
s
u
o
i
v
e
r
p
m
o
r
f
l
a
t
o
t
b
u
S
Y
N
,
e
l
l
e
h
c
o
R
w
e
N
S
K
,
e
c
n
e
r
w
a
L
C
S
,
a
i
b
m
u
l
o
C
A
V
,
k
l
o
f
f
u
S
L
F
,
h
a
e
l
a
i
H
Z
A
,
x
i
n
e
o
h
P
J
N
,
n
o
t
l
i
m
a
H
m
u
i
d
a
t
S
e
d
n
a
r
G
a
n
a
i
b
m
u
l
o
C
4
1
e
c
a
l
p
t
e
k
r
a
M
w
e
i
V
r
u
o
b
r
a
H
2
1
d
n
i
W
h
t
u
o
S
y
t
i
C
c
o
R
w
e
N
8
1
0
3
d
n
a
r
G
b
b
o
C
y
e
l
l
a
V
r
e
e
D
4
2
n
o
t
l
i
m
a
H
N
O
,
a
t
a
n
a
K
m
u
r
t
n
e
C
t
n
e
m
n
i
a
t
r
e
t
n
E
a
t
a
n
a
K
N
O
,
a
u
g
a
s
s
i
s
s
i
M
Z
A
,
a
s
e
M
N
O
,
e
l
l
i
v
k
a
O
N
O
,
y
b
t
i
h
W
L
I
,
e
l
l
i
v
n
e
r
r
a
W
A
L
,
e
t
t
e
y
a
f
a
L
X
T
,
t
s
r
u
H
L
I
,
a
i
r
o
e
P
L
F
,
e
n
r
u
o
b
l
e
M
S
M
,
e
l
l
i
v
r
e
b
I
'
D
C
N
,
n
o
t
g
n
i
m
l
i
W
A
C
,
k
n
a
b
r
u
B
N
T
,
a
g
o
o
n
a
t
t
a
h
C
X
T
,
e
o
r
n
o
C
N
I
,
s
i
l
o
p
a
n
a
i
d
n
I
S
M
,
g
r
u
s
e
i
t
t
a
H
H
O
,
e
n
i
a
t
n
o
f
l
l
e
B
t
n
e
m
n
i
a
t
r
e
t
n
E
a
g
u
a
s
s
i
s
s
i
M
m
u
r
t
n
e
C
4
1
d
n
a
r
G
a
s
e
M
t
n
e
m
n
i
a
t
r
e
t
n
E
e
l
l
i
v
k
a
O
m
u
r
t
n
e
C
e
t
t
e
f
a
y
a
L
-
6
1
d
n
a
r
G
e
h
T
8
1
l
l
a
M
t
s
a
E
h
t
r
o
N
s
p
o
h
S
l
i
a
t
e
R
a
r
e
t
n
a
C
8
1
e
i
r
i
a
r
P
d
n
a
r
G
t
n
e
m
n
i
a
t
r
e
t
n
E
y
b
t
i
h
W
m
u
r
t
n
e
C
6
1
e
u
n
e
v
A
e
l
l
i
v
r
e
b
l
'
D
-
8
1
d
n
a
r
G
e
h
T
6
1
m
u
i
d
a
t
S
e
r
i
a
f
y
a
M
e
g
a
l
l
i
V
k
n
a
b
r
u
B
8
1
e
g
d
i
R
t
s
a
E
g
r
u
b
s
e
i
t
t
a
H
-
8
1
d
n
a
r
G
e
h
T
n
i
a
t
n
u
o
M
r
e
v
i
R
d
a
M
e
o
r
n
o
C
-
4
1
d
n
a
r
G
e
h
T
2
1
e
r
a
u
q
S
n
o
t
g
n
i
h
s
a
W
A
C
,
e
d
n
a
r
G
o
y
o
r
r
A
0
1
m
i
u
d
a
t
S
d
n
a
r
G
o
y
o
r
r
A
D
M
,
a
i
b
m
u
l
o
C
A
C
,
o
t
s
e
d
o
M
X
T
,
d
n
a
l
r
a
G
C
N
,
r
e
n
r
a
G
A
C
,
n
r
u
b
u
A
A
C
,
o
n
s
e
r
F
6
1
m
u
i
d
a
t
S
r
e
t
s
e
h
c
n
a
M
0
1
m
u
i
d
a
t
S
o
t
s
e
d
o
M
0
1
m
u
i
d
a
t
S
n
r
u
b
u
A
4
1
m
u
i
d
a
t
S
k
a
O
e
t
i
h
W
4
1
8
1
a
i
b
m
u
l
o
C
l
e
e
h
w
e
r
i
F
C
N
,
m
e
l
a
S
n
o
t
s
n
i
W
m
e
l
a
S
n
o
t
s
n
i
W
-
8
1
d
n
a
r
G
e
h
T
L
A
,
e
l
l
i
v
s
t
n
u
H
I
M
,
o
o
z
a
m
a
l
a
K
L
F
,
a
l
o
c
a
s
n
e
P
A
L
,
l
l
e
d
i
l
S
l
l
e
d
i
l
S
-
6
1
d
n
a
r
G
e
h
T
5
1
u
o
y
a
B
a
l
o
c
a
s
n
e
P
8
1
d
n
e
B
y
e
l
l
a
V
4
1
e
c
a
l
p
y
t
i
C
L
F
,
h
c
a
e
B
y
t
i
C
a
m
a
n
a
P
k
r
a
P
r
e
i
P
-
6
1
d
n
a
r
G
e
h
T
T
M
,
l
l
e
p
s
i
l
a
K
A
G
,
l
l
e
t
s
u
A
e
d
a
n
e
m
o
r
P
l
l
e
t
s
u
A
a
m
e
n
i
C
4
1
m
u
i
d
a
t
S
2
2
1
$
0
5
4
,
6
8
5
,
1
$
6
2
4
,
7
5
2
,
1
$
4
2
0
,
9
2
3
$
0
1
9
,
1
6
1
$
0
6
3
,
8
9
0
,
1
$
2
8
1
,
6
2
3
$
8
2
9
,
5
6
1
$
e
g
a
p
t
x
e
n
o
t
r
e
v
o
d
e
i
r
r
a
c
s
l
a
t
o
t
b
u
S
s
e
i
t
r
e
p
o
r
P
R
P
E
n
o
i
t
a
i
c
e
r
p
e
D
d
e
t
a
l
u
m
u
c
c
A
d
n
a
e
t
a
t
s
E
l
a
e
R
-
I
I
I
e
l
u
d
e
h
c
S
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
)
s
d
n
a
s
u
o
h
t
n
i
s
r
a
l
l
o
D
(
n
o
i
t
a
i
c
e
r
p
e
D
e
f
i
l
e
t
a
D
d
e
r
i
u
q
c
a
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
d
l
a
t
o
T
&
t
n
e
m
p
u
q
E
i
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
t
n
u
o
m
A
s
s
o
r
G
,
s
g
n
i
d
l
i
u
B
)
s
n
o
i
t
i
s
o
p
s
i
D
s
n
o
i
t
i
d
d
A
(
)
s
t
n
e
m
r
i
a
p
m
I
(
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
a
&
t
n
e
m
p
u
q
E
i
s
t
n
e
m
e
v
o
r
p
m
i
,
s
g
n
d
i
l
i
u
B
t
s
o
c
l
a
i
t
i
n
I
d
n
a
L
t
b
e
D
n
o
i
t
a
c
o
L
n
o
i
t
p
i
r
c
s
e
D
s
r
a
e
y
0
3
4
0
/
0
1
)
4
9
(
s
r
a
e
y
0
4
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
0
4
s
r
a
e
y
0
4
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
0
4
0
4
0
4
0
4
0
4
7
0
/
1
1
8
0
/
0
1
9
0
/
6
0
9
0
/
2
1
9
0
/
2
1
9
0
/
2
1
9
0
/
2
1
9
0
/
2
1
9
0
/
2
1
9
0
/
2
1
9
0
/
2
1
9
0
/
2
1
9
0
/
2
1
9
0
/
2
1
9
0
/
2
1
9
0
/
2
1
9
0
/
2
1
9
0
/
2
1
0
1
/
6
0
0
1
/
6
0
0
1
/
6
0
0
1
/
6
0
0
1
/
6
0
0
1
/
6
0
0
1
/
6
0
0
1
/
6
0
0
1
/
6
0
0
1
/
6
0
0
1
/
6
0
0
1
/
6
0
0
1
/
2
1
1
1
/
3
0
1
1
/
3
0
1
1
/
3
0
1
1
/
3
0
1
1
/
3
0
1
1
/
4
0
)
1
7
6
,
2
(
)
7
9
8
,
1
(
)
0
9
3
,
3
(
)
4
3
(
)
1
2
7
,
1
(
)
5
6
2
(
)
0
1
9
(
)
9
6
7
,
1
(
)
8
5
2
(
)
7
0
7
(
)
4
8
5
(
)
7
9
4
(
)
8
7
0
,
1
(
)
2
4
4
,
1
(
)
5
8
9
(
)
5
9
9
(
)
3
6
5
(
)
1
6
2
(
)
9
6
4
,
1
(
)
1
7
2
(
)
6
5
4
(
)
0
5
7
(
)
1
8
4
(
)
9
1
6
(
)
0
1
7
(
)
4
0
6
,
1
(
)
6
8
5
,
1
(
)
9
3
3
,
1
(
)
6
1
8
,
1
(
)
3
4
5
,
1
(
)
6
9
7
(
)
2
0
4
,
1
(
)
2
6
4
(
)
2
8
6
(
)
0
6
8
(
)
4
4
6
(
)
0
2
0
,
1
(
s
r
a
e
y
0
3
1
1
/
4
0
)
8
0
7
(
3
5
2
,
6
0
2
5
,
3
1
8
8
5
,
0
1
4
1
6
,
7
1
3
4
9
,
4
2
0
1
,
5
1
7
9
3
,
5
2
3
6
,
9
1
2
4
,
4
1
3
9
9
,
2
5
3
4
,
8
1
6
8
,
4
3
0
5
,
8
0
9
6
,
8
7
3
3
,
1
1
6
4
5
,
1
1
8
0
2
,
8
5
9
2
,
6
2
0
1
,
3
5
3
6
,
3
1
0
2
0
,
3
6
3
2
,
5
3
5
8
,
7
2
2
2
,
7
4
4
5
,
6
0
0
4
,
7
4
3
7
,
2
1
9
8
8
,
5
1
8
4
8
,
3
1
5
0
8
,
7
1
8
5
1
,
4
1
6
3
7
,
1
4
4
2
,
4
1
4
3
3
,
5
2
0
8
,
8
2
9
3
,
9
4
3
6
,
6
3
2
0
,
0
1
3
8
2
,
7
3
1
6
,
5
0
2
5
,
3
1
8
8
5
,
0
1
6
1
3
,
4
1
7
2
2
4
7
4
,
1
1
9
6
7
,
1
8
6
0
,
6
1
9
7
,
1
1
3
2
7
,
1
6
1
7
,
4
1
9
8
,
3
1
6
0
,
3
1
1
3
,
3
4
1
6
,
9
7
6
5
,
6
0
3
6
,
6
5
5
7
,
3
7
6
4
,
2
8
6
9
,
1
9
1
3
,
3
4
5
4
,
5
9
4
3
,
5
0
0
5
,
4
2
6
1
,
5
4
8
6
,
0
1
9
6
6
,
1
1
3
3
5
,
1
1
9
3
7
,
9
7
0
2
,
3
1
0
2
2
,
1
1
6
3
7
,
1
5
0
6
,
1
1
6
2
8
,
3
2
4
6
,
5
9
1
1
,
7
8
3
6
,
5
3
2
0
,
0
1
7
1
5
,
6
0
4
6
—
—
8
9
2
,
3
6
1
7
,
4
8
2
6
,
3
8
2
6
,
3
4
6
5
,
3
0
3
6
,
2
0
7
2
,
1
9
1
7
,
3
0
7
9
2
4
4
,
5
9
7
3
,
5
3
2
7
,
1
9
7
9
,
4
8
7
5
,
1
0
4
5
,
2
5
3
6
1
5
9
,
2
2
5
0
,
1
7
1
9
,
1
9
9
3
,
2
3
7
8
,
1
4
4
0
,
2
8
3
2
,
2
5
6
0
,
1
6
5
3
,
4
9
0
1
,
4
8
9
5
,
4
8
3
9
,
2
—
9
3
6
,
2
8
0
5
,
1
0
6
1
,
3
3
7
2
,
2
—
6
9
9
6
6
7
—
4
1
9
—
2
5
1
,
5
—
—
—
)
5
3
(
—
—
—
—
0
0
0
,
2
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4
0
1
,
2
)
6
9
1
,
1
(
—
—
—
—
—
—
)
4
3
1
(
—
3
1
6
,
5
6
0
6
,
2
1
6
0
2
,
9
8
8
5
,
0
1
7
2
2
9
6
7
,
1
8
6
0
,
6
4
7
4
,
1
1
1
9
7
,
1
1
3
2
7
,
1
6
1
7
,
4
1
9
8
,
3
1
6
0
,
1
1
1
3
,
3
4
1
6
,
9
7
6
5
,
6
0
3
6
,
6
5
5
7
,
3
1
4
7
,
1
8
6
9
,
1
9
1
3
,
3
4
5
4
,
5
5
4
2
,
3
0
0
5
,
4
2
6
1
,
5
4
8
6
,
0
1
9
6
6
,
1
1
3
3
5
,
1
1
9
3
7
,
9
7
0
2
,
3
1
0
2
2
,
1
1
6
3
7
,
1
5
0
6
,
1
1
6
2
8
,
3
2
4
6
,
5
9
1
1
,
7
8
3
6
,
5
7
5
1
,
0
1
7
1
5
,
6
0
4
6
—
—
6
5
2
,
3
6
1
7
,
4
8
2
6
,
3
8
2
6
,
3
9
9
5
,
3
0
3
6
,
2
0
7
2
,
1
9
1
7
,
3
0
7
9
2
4
4
,
5
9
7
3
,
5
3
2
7
,
1
9
7
9
,
4
8
7
5
,
1
0
4
5
,
2
1
6
3
,
1
1
5
9
,
2
2
5
0
,
1
7
1
9
,
1
9
9
3
,
2
3
7
8
,
1
4
4
0
,
2
8
3
2
,
2
5
6
0
,
1
6
5
3
,
4
9
0
1
,
4
8
9
5
,
4
4
3
1
,
4
—
9
3
6
,
2
8
0
5
,
1
0
6
1
,
3
3
7
2
,
2
—
6
9
9
6
6
7
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5
5
4
,
3
A
C
,
a
r
o
d
n
e
l
G
I
M
,
i
t
n
a
l
i
s
p
Y
A
V
,
k
l
o
f
f
u
S
T
C
,
r
e
t
s
e
h
c
n
a
M
A
V
,
e
l
l
i
v
e
r
t
n
e
C
A
I
,
t
r
o
p
n
e
v
a
D
A
V
,
x
a
f
r
i
a
F
J
N
,
t
e
l
z
a
H
I
M
,
t
n
i
l
F
H
O
,
s
t
h
g
i
e
H
r
e
b
u
H
T
C
,
n
e
v
a
H
h
t
r
o
N
Y
K
,
a
n
o
l
o
k
O
J
N
,
s
e
e
h
r
o
o
V
Y
K
,
e
l
l
i
v
s
i
u
o
L
A
M
,
d
l
e
i
f
g
n
i
r
p
S
t
s
e
W
H
O
,
k
e
e
r
C
r
e
v
a
e
B
H
O
,
i
t
a
n
n
i
c
n
i
C
X
T
,
a
n
e
d
a
s
a
P
X
T
,
o
n
a
l
P
X
T
,
e
i
r
a
r
P
d
n
a
r
G
X
T
,
y
e
n
n
i
K
c
M
N
I
,
a
k
a
w
a
h
s
i
M
X
T
,
e
l
l
i
v
r
e
g
u
l
f
P
X
T
,
t
n
o
m
u
a
e
B
A
C
,
g
n
i
d
d
e
R
O
C
,
o
l
b
e
u
P
X
T
,
n
o
t
s
u
o
H
X
T
,
o
s
a
P
l
E
O
C
,
s
g
n
i
r
p
S
o
d
a
r
o
l
o
C
A
V
,
h
c
a
e
B
a
i
n
i
g
r
i
V
H
N
,
t
t
e
s
k
o
o
H
n
o
i
t
a
t
S
w
e
i
V
r
u
o
b
r
a
H
2
1
a
r
o
d
n
e
l
G
8
1
s
l
l
i
H
d
n
a
l
k
c
u
B
0
2
r
o
b
r
A
n
n
A
4
1
r
e
n
r
o
C
x
a
f
r
i
a
F
2
1
e
l
l
i
v
e
r
t
n
e
C
8
1
t
r
o
p
n
e
v
a
D
4
1
t
s
e
W
t
n
i
l
F
2
1
t
e
l
z
a
H
6
1
g
n
i
s
s
o
r
C
n
o
t
s
e
r
P
6
1
s
t
h
g
i
e
H
r
e
b
u
H
2
1
n
e
v
a
H
h
t
r
o
N
6
1
r
e
t
n
e
C
z
t
i
R
0
2
4
1
k
o
o
r
b
y
n
o
t
S
e
n
e
e
r
G
e
h
T
0
2
s
e
i
v
o
M
d
o
o
w
y
l
l
o
H
5
1
d
l
e
i
f
g
n
i
r
p
S
t
s
e
W
4
1
s
l
l
i
H
n
r
e
t
s
e
W
0
1
4
1
s
e
i
v
o
M
s
e
i
v
o
M
a
k
a
w
a
h
s
i
M
-
4
1
s
e
i
v
o
M
5
1
0
2
4
1
g
n
i
d
d
e
R
6
1
s
e
i
v
o
M
n
w
o
t
l
e
s
n
i
T
n
w
o
t
l
e
s
n
i
T
n
w
o
t
l
e
s
n
i
T
D
X
d
n
a
A
S
U
n
w
o
t
l
e
s
n
i
T
o
r
t
s
i
B
e
i
v
o
M
h
c
a
e
B
n
i
X
A
M
I
&
c
i
g
a
m
e
n
i
C
t
t
e
s
k
o
o
H
0
2
A
S
U
n
w
o
t
l
e
s
n
i
T
0
9
2
n
w
o
t
l
e
s
n
i
T
O
C
,
h
c
n
a
R
s
d
n
a
l
h
g
i
H
H
N
E
M
,
k
c
a
m
i
r
r
e
M
,
k
o
o
r
b
t
s
e
W
A
L
,
e
g
u
o
R
n
o
t
a
B
Z
A
,
r
a
e
y
d
o
o
G
k
c
a
m
i
r
r
e
M
n
i
c
i
g
a
m
e
n
i
C
k
o
o
r
b
t
s
e
W
n
i
c
i
g
a
m
e
n
i
C
y
m
e
d
a
c
A
n
i
l
k
n
a
r
F
n
e
B
y
m
e
d
a
c
A
p
i
h
s
r
o
t
n
e
M
f
o
y
m
e
d
a
c
A
y
e
l
d
a
r
B
e
c
n
e
l
l
e
c
x
E
E
M
,
o
c
a
S
o
c
a
S
n
i
X
A
M
I
&
c
i
g
a
m
e
n
i
C
H
O
,
d
n
a
l
e
v
e
l
C
r
e
t
r
a
h
C
e
u
n
e
v
A
d
r
a
v
r
a
H
l
o
o
h
c
S
C
N
,
o
r
o
b
s
n
e
e
r
G
s
n
o
s
a
e
S
r
u
o
F
-
8
1
d
n
a
r
G
e
h
T
s
n
o
i
t
a
t
S
a
/
n
a
/
n
)
9
6
0
,
6
3
4
(
$
0
5
4
,
6
8
5
,
1
$
6
2
4
,
7
5
2
,
1
$
4
2
0
,
9
2
3
$
0
1
9
,
1
6
1
$
0
6
3
,
8
9
0
,
1
$
2
8
1
,
6
2
3
$
8
2
9
,
5
6
1
$
a
/
n
e
g
a
p
s
u
o
i
v
e
r
p
m
o
r
f
l
a
t
o
t
b
u
S
3
2
1
)
8
0
4
,
5
7
4
(
$
2
8
6
,
6
4
9
,
1
$
7
3
4
,
4
2
5
,
1
$
5
4
2
,
2
2
4
$
5
1
7
,
0
7
1
$
1
5
6
,
4
5
3
,
1
$
8
1
3
,
1
2
4
$
3
8
3
,
9
6
1
$
e
g
a
p
t
x
e
n
o
t
r
e
v
o
d
e
i
r
r
a
c
s
l
a
t
o
t
b
u
S
s
e
i
t
r
e
p
o
r
P
R
P
E
n
o
i
t
a
i
c
e
r
p
e
D
d
e
t
a
l
u
m
u
c
c
A
d
n
a
e
t
a
t
s
E
l
a
e
R
-
I
I
I
e
l
u
d
e
h
c
S
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
)
s
d
n
a
s
u
o
h
t
n
i
s
r
a
l
l
o
D
(
n
o
i
t
a
i
c
e
r
p
e
D
e
f
i
l
e
t
a
D
d
e
r
i
u
q
c
a
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
d
l
a
t
o
T
&
t
n
e
m
p
u
q
E
i
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
t
n
u
o
m
A
s
s
o
r
G
,
s
g
n
i
d
l
i
u
B
)
s
n
o
i
t
i
s
o
p
s
i
D
s
n
o
i
t
i
d
d
A
(
)
s
t
n
e
m
r
i
a
p
m
I
(
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
a
&
t
n
e
m
p
u
q
E
i
s
t
n
e
m
e
v
o
r
p
m
i
,
s
g
n
d
i
l
i
u
B
t
s
o
c
l
a
i
t
i
n
I
d
n
a
L
t
b
e
D
n
o
i
t
a
c
o
L
n
o
i
t
p
i
r
c
s
e
D
s
r
a
e
y
0
4
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
s
r
a
e
y
0
4
0
4
0
4
0
4
0
4
0
4
0
3
0
4
9
2
0
3
0
4
0
4
0
4
0
4
1
1
/
6
0
1
1
/
6
0
1
1
/
6
0
1
1
/
7
0
1
1
/
4
0
1
1
/
8
0
1
1
/
1
1
2
1
/
2
0
2
1
/
2
0
2
1
/
2
0
2
1
/
2
0
2
1
/
3
0
2
1
/
3
0
2
1
/
3
0
2
1
/
3
0
)
4
8
7
(
)
4
1
5
(
)
0
1
4
(
)
6
7
7
(
)
8
2
4
(
)
8
2
9
(
)
6
4
7
(
)
1
5
5
(
)
7
5
0
,
1
(
)
7
8
3
,
1
(
)
8
7
3
,
1
(
)
6
5
6
(
)
5
9
3
(
)
9
5
6
(
)
5
1
8
(
s
r
a
e
y
0
4
2
1
/
4
0
)
4
3
2
,
1
(
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
2
1
/
5
0
2
1
/
6
0
2
1
/
6
0
2
1
/
7
0
2
1
/
9
0
2
1
/
9
0
2
1
/
9
0
2
1
/
2
1
2
1
/
2
1
3
1
/
2
0
)
5
1
7
(
)
5
1
4
(
)
2
6
9
,
1
(
)
2
9
1
,
1
(
)
2
9
9
(
)
5
8
3
(
)
5
9
4
(
)
1
7
6
(
)
5
6
5
(
)
3
2
3
,
3
(
s
r
a
e
y
0
3
3
1
/
3
0
)
1
1
4
(
s
r
a
e
y
0
4
s
r
a
e
y
0
3
s
r
a
e
y
0
3
s
r
a
e
y
0
4
a
/
n
3
1
/
3
0
3
1
/
3
0
3
1
/
4
0
3
1
/
4
0
3
1
/
5
0
)
3
7
3
(
)
4
2
3
(
)
7
4
9
(
—
)
6
2
4
(
s
r
a
e
y
0
4
3
1
/
5
0
)
1
7
3
(
7
0
5
,
1
1
7
8
0
,
6
1
5
3
,
5
5
2
0
,
7
3
8
7
,
4
4
7
5
,
0
1
0
0
2
,
9
4
5
5
,
0
1
6
7
8
,
2
1
8
5
1
,
1
1
8
7
7
,
1
1
8
6
0
,
8
0
3
3
,
5
4
1
4
,
5
6
9
8
,
2
1
8
6
5
,
7
1
7
4
5
,
7
2
6
5
4
,
6
3
3
7
,
3
1
7
4
9
,
5
1
7
9
7
,
2
1
1
8
9
,
8
6
0
5
,
9
1
1
5
,
7
2
9
2
4
,
7
1
6
4
8
,
0
1
8
1
4
,
6
7
8
3
,
8
0
1
5
,
4
3
0
0
,
8
1
7
6
7
8
0
6
,
0
1
9
2
9
,
7
7
2
9
,
8
4
3
8
,
4
7
5
8
,
3
5
2
0
,
7
3
8
7
,
4
0
9
4
,
9
0
4
1
,
8
4
4
0
,
6
9
9
4
,
8
8
5
1
,
1
1
8
7
7
,
1
1
8
6
0
,
8
3
3
4
,
4
9
3
9
,
4
6
9
8
,
2
1
4
5
6
,
6
1
0
6
6
,
5
2
7
4
7
,
4
3
3
7
,
3
1
7
9
5
,
5
1
7
9
7
,
2
1
3
7
3
,
6
6
0
5
,
9
3
0
8
,
7
1
5
2
4
,
3
1
6
4
8
,
0
1
0
0
9
,
5
1
8
5
,
7
4
2
5
,
3
5
5
4
,
7
1
—
9
9
0
,
0
1
3
9
5
,
6
—
—
0
8
5
,
2
3
5
2
,
1
4
9
4
,
1
4
8
0
,
1
0
6
0
,
1
0
1
5
,
4
7
7
3
,
4
—
—
—
7
9
8
5
7
4
—
4
1
9
7
8
8
,
1
—
9
0
7
,
1
—
0
5
3
—
8
0
6
,
2
8
0
7
,
9
4
0
0
,
4
—
8
1
5
6
0
8
6
8
9
8
4
5
7
6
7
9
0
5
—
—
—
—
9
0
5
,
2
)
9
6
1
(
—
3
8
9
7
5
2
,
2
1
5
1
,
1
1
7
7
,
1
—
)
5
5
(
—
0
5
7
—
—
9
3
9
,
6
7
1
1
,
1
1
4
9
3
—
5
2
1
7
3
0
,
3
)
0
4
2
(
7
0
2
,
3
—
—
—
5
0
8
,
1
6
8
8
,
6
)
5
4
8
,
1
(
4
0
2
,
4
6
3
3
,
1
—
8
1
4
,
6
4
3
8
,
4
7
5
8
,
3
5
2
0
,
7
3
8
7
,
4
9
5
6
,
9
0
4
1
,
8
1
6
0
,
5
1
2
3
,
6
7
0
0
,
0
1
7
0
0
,
0
1
8
6
0
,
8
8
8
4
,
4
9
3
9
,
4
6
4
1
,
2
1
5
1
7
,
9
3
4
5
,
4
1
7
4
7
,
4
3
3
7
,
3
1
0
6
5
,
2
1
3
0
4
,
2
1
3
7
3
,
6
1
8
3
,
9
0
1
9
,
5
1
5
6
6
,
3
1
6
4
8
,
0
1
0
0
9
,
5
6
7
7
,
5
4
2
5
,
3
9
6
5
,
0
1
—
5
9
8
,
5
3
9
5
,
6
0
8
5
,
2
3
5
2
,
1
4
9
4
,
1
—
—
4
8
0
,
1
0
6
0
,
1
0
1
5
,
4
8
9
2
,
4
—
—
—
7
9
8
5
7
4
—
4
1
9
7
8
8
,
1
—
9
0
7
,
1
—
0
5
3
—
8
0
6
,
2
4
9
3
,
8
4
0
0
,
4
—
8
1
5
6
0
8
6
8
9
8
4
5
9
0
5
2
1
6
,
2
6
3
3
,
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
L
I
,
k
o
o
r
b
h
t
r
o
N
D
I
,
s
l
l
a
F
n
i
w
T
O
C
,
d
n
a
l
e
v
o
L
Z
A
,
x
i
n
e
o
h
P
O
C
,
d
l
e
i
f
m
o
o
r
B
Z
A
,
x
i
n
e
o
h
P
L
F
,
e
l
l
i
v
n
o
s
k
c
a
J
N
I
,
s
i
l
o
p
a
n
a
i
d
n
I
L
I
,
k
o
o
r
b
k
a
O
X
T
,
n
e
l
l
A
X
T
,
s
a
l
l
a
D
Z
A
,
t
r
e
b
l
i
G
T
U
,
y
t
i
C
e
k
a
L
t
l
a
S
T
U
,
e
n
a
c
i
r
r
u
H
X
T
,
s
a
l
l
a
D
C
N
,
s
e
n
i
P
n
r
e
h
t
u
o
S
M
N
,
e
u
q
r
e
u
q
u
b
l
A
Z
A
,
k
e
e
r
C
n
e
e
u
Q
Z
A
,
e
y
e
k
c
u
B
C
N
,
o
r
o
b
r
a
T
X
T
,
n
o
t
s
u
o
H
X
T
,
n
i
t
s
u
A
L
I
,
n
g
i
a
p
m
a
h
C
D
M
,
y
r
n
e
H
c
M
X
T
,
y
n
o
l
o
C
A
V
,
e
l
l
i
v
s
e
n
i
a
G
A
P
,
d
n
a
l
p
U
r
e
t
s
e
h
C
C
S
,
d
o
o
w
y
l
l
o
H
e
r
t
a
e
h
T
l
l
a
M
y
e
l
l
a
V
c
i
g
a
M
k
o
o
r
b
h
t
r
o
N
-
s
e
p
i
r
t
s
n
i
P
y
m
e
d
a
c
A
e
g
d
i
R
t
c
e
p
s
o
r
P
y
m
e
d
a
c
A
x
i
n
e
o
h
P
h
t
u
o
S
p
i
h
s
r
e
d
a
e
L
n
a
c
i
r
e
m
A
y
m
e
d
a
c
A
l
o
o
h
c
S
s
n
o
i
p
m
a
h
C
l
a
c
i
s
s
a
l
C
d
n
a
l
e
v
o
L
n
e
l
l
A
-
f
l
o
g
p
o
T
s
a
l
l
a
D
-
f
l
o
g
p
o
T
0
3
9
3
e
d
u
t
i
t
a
L
e
d
u
t
i
t
a
L
y
m
e
d
a
c
A
e
g
a
i
t
r
e
H
c
i
f
i
c
a
P
k
o
o
r
b
k
a
O
-
s
e
p
i
r
t
s
n
i
P
y
m
e
d
a
c
A
y
e
l
l
a
V
d
o
o
w
n
o
t
s
e
r
P
-
s
a
m
e
n
i
C
k
o
o
L
r
o
f
e
t
u
t
i
t
s
n
I
y
e
s
s
y
d
O
e
h
T
d
e
c
n
a
v
d
A
d
n
a
l
a
n
o
i
t
a
n
r
e
t
n
I
s
e
i
d
u
t
S
l
o
o
h
c
S
h
g
i
H
y
m
e
d
a
c
A
p
i
h
s
r
e
d
a
e
L
n
a
c
i
r
e
m
A
k
c
o
r
n
i
W
l
a
g
e
R
0
1
s
l
l
i
h
d
n
a
S
p
e
r
P
a
n
i
l
o
r
a
C
t
s
a
E
h
t
r
o
N
y
m
e
d
a
c
A
n
o
t
s
u
o
H
-
f
l
o
G
p
o
T
n
i
t
s
u
A
-
e
s
u
o
H
t
f
a
r
D
o
m
a
l
A
y
a
w
e
t
a
G
a
i
n
i
g
r
i
V
l
a
g
e
R
y
n
o
l
o
C
e
h
T
-
f
l
o
g
p
o
T
n
g
i
a
p
m
a
h
C
e
k
i
m
r
a
C
t
r
o
s
e
R
P
S
I
W
r
e
t
r
a
h
C
y
t
i
n
u
m
m
o
C
r
e
t
s
e
h
C
l
o
o
h
c
S
p
i
h
s
r
e
d
a
e
L
y
r
t
n
u
o
c
w
o
L
y
m
e
d
a
c
A
Z
A
,
t
n
a
s
a
e
l
P
e
k
a
L
e
r
u
t
n
e
v
d
A
g
n
i
n
r
a
e
L
s
n
e
r
d
l
i
h
C
'
Z
A
,
k
e
e
r
C
n
e
e
u
Q
d
n
a
L
s
s
e
c
x
E
e
s
u
o
h
n
e
t
t
i
R
L
I
,
o
g
a
c
i
h
C
o
g
a
c
i
h
C
-
y
m
e
d
a
c
A
y
e
l
n
i
K
c
M
J
N
,
n
e
d
m
a
C
r
e
t
r
a
h
C
y
t
i
n
u
m
m
o
C
n
e
d
m
a
C
l
o
o
h
c
S
Z
A
,
t
r
e
b
l
i
G
y
m
e
d
a
c
A
s
t
r
A
g
n
i
m
r
o
f
r
e
P
&
n
o
i
t
a
d
n
u
o
F
g
n
i
n
r
a
e
L
a
/
n
a
/
n
)
8
0
4
,
5
7
4
(
$
2
8
6
,
6
4
9
,
1
$
7
3
4
,
4
2
5
,
1
$
5
4
2
,
2
2
4
$
5
1
7
,
0
7
1
$
1
5
6
,
4
5
3
,
1
$
8
1
3
,
1
2
4
$
3
8
3
,
9
6
1
$
a
/
n
e
g
a
p
s
u
o
i
v
e
r
p
m
o
r
f
l
a
t
o
t
b
u
S
4
2
1
)
3
9
6
,
1
0
5
(
$
6
2
2
,
4
0
3
,
2
$
1
0
6
,
7
3
8
,
1
$
5
2
6
,
6
6
4
$
1
4
5
,
5
1
2
$
7
3
5
,
2
2
6
,
1
$
0
5
1
,
6
6
4
$
3
8
3
,
9
6
1
$
e
g
a
p
t
x
e
n
o
t
r
e
v
o
d
e
i
r
r
a
c
s
l
a
t
o
t
b
u
S
s
e
i
t
r
e
p
o
r
P
R
P
E
n
o
i
t
a
i
c
e
r
p
e
D
d
e
t
a
l
u
m
u
c
c
A
d
n
a
e
t
a
t
s
E
l
a
e
R
-
I
I
I
e
l
u
d
e
h
c
S
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
)
s
d
n
a
s
u
o
h
t
n
i
s
r
a
l
l
o
D
(
n
o
i
t
a
i
c
e
r
p
e
D
e
f
i
l
e
t
a
D
d
e
r
i
u
q
c
a
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
d
l
a
t
o
T
&
t
n
e
m
p
u
q
E
i
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
t
n
u
o
m
A
s
s
o
r
G
,
s
g
n
i
d
l
i
u
B
)
s
n
o
i
t
i
s
o
p
s
i
D
s
n
o
i
t
i
d
d
A
(
)
s
t
n
e
m
r
i
a
p
m
I
(
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
a
&
t
n
e
m
p
u
q
E
i
s
t
n
e
m
e
v
o
r
p
m
i
,
s
g
n
d
i
l
i
u
B
t
s
o
c
l
a
i
t
i
n
I
d
n
a
L
t
b
e
D
n
o
i
t
a
c
o
L
n
o
i
t
p
i
r
c
s
e
D
s
r
a
e
y
0
4
a
/
n
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
3
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
3
s
r
a
e
y
0
3
s
r
a
e
y
0
3
s
r
a
e
y
0
4
s
r
a
e
y
0
3
s
r
a
e
y
0
4
s
r
a
e
y
0
3
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
3
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
3
s
r
a
e
y
0
3
s
r
a
e
y
0
4
s
r
a
e
y
0
4
a
/
n
3
1
/
5
0
3
1
/
6
0
3
1
/
7
0
3
1
/
8
0
3
1
/
8
0
3
1
/
9
0
3
1
/
9
0
3
1
/
0
1
3
1
/
0
1
3
1
/
5
0
3
1
/
6
0
3
1
/
6
0
3
1
/
7
0
3
1
/
7
0
3
1
/
8
0
3
1
/
8
0
3
1
/
9
0
3
1
/
9
0
3
1
/
9
0
3
1
/
0
1
3
1
/
0
1
2
1
/
1
1
3
1
/
2
1
3
1
/
2
1
3
1
/
2
1
3
1
/
2
1
3
1
/
2
1
4
1
/
1
0
4
1
/
2
0
4
1
/
2
0
4
1
/
2
0
4
1
/
2
0
4
1
/
3
0
4
1
/
3
0
4
1
/
4
0
4
1
/
4
0
)
6
2
2
(
)
3
0
4
(
)
2
6
7
(
)
6
1
7
(
)
2
9
(
)
3
3
5
(
)
6
7
9
,
5
(
)
7
4
7
,
1
(
)
3
1
5
,
1
(
)
3
2
6
(
)
3
3
4
(
)
5
3
6
(
)
7
8
3
(
)
5
0
6
(
)
6
1
4
(
—
)
4
5
1
(
)
6
7
3
(
)
6
0
3
(
)
0
0
4
(
)
5
2
5
(
)
6
3
3
(
)
0
1
2
(
)
0
8
3
(
)
0
2
5
(
)
3
3
3
(
)
4
6
5
(
)
8
8
2
(
)
5
9
3
(
)
7
9
3
(
)
5
8
5
(
)
5
7
1
(
)
4
6
2
(
)
6
7
(
)
3
0
1
(
)
8
6
0
,
1
(
5
0
8
,
5
1
6
3
,
7
9
2
6
,
0
1
8
2
7
,
2
1
0
3
6
,
1
2
8
4
,
0
7
7
8
2
,
1
1
1
9
1
,
5
2
8
1
3
,
1
3
4
2
2
,
2
2
4
9
5
,
8
2
4
9
,
6
1
5
4
0
,
1
2
0
5
4
,
9
1
3
7
3
,
1
1
1
9
9
,
4
1
5
1
7
,
1
1
5
3
1
,
0
1
1
5
8
,
7
5
8
6
,
8
9
3
0
,
9
1
5
6
2
,
0
1
7
0
3
,
8
0
0
3
,
9
1
0
5
,
5
3
0
4
4
,
6
4
6
7
9
,
5
1
9
4
7
,
7
3
8
7
,
0
1
9
5
6
,
5
1
8
9
5
,
0
2
1
4
8
,
9
4
5
9
6
,
5
7
8
4
,
0
1
3
4
9
,
1
9
1
3
,
3
2
2
5
,
4
6
5
1
,
6
0
9
5
,
9
0
3
6
,
1
8
2
7
,
2
1
2
7
4
,
9
2
4
5
,
5
3
1
9
4
,
3
2
8
1
3
,
7
1
6
1
6
,
6
1
6
8
2
,
7
2
4
9
,
6
1
2
7
8
,
2
1
2
2
5
,
4
1
4
2
2
,
0
1
4
1
9
,
2
1
8
6
1
,
0
1
1
9
1
,
9
6
6
8
,
6
5
8
6
,
8
1
5
9
,
8
8
9
1
,
6
6
1
7
,
5
1
8
3
9
,
7
5
3
5
,
5
2
0
4
4
,
6
4
6
7
9
,
5
1
7
8
9
,
6
5
6
1
,
0
1
9
5
6
,
5
1
3
6
8
,
5
1
4
8
7
,
6
4
6
4
2
,
5
2
9
1
,
9
4
9
5
,
1
1
9
2
,
2
3
8
2
,
1
5
0
2
,
1
9
3
0
,
1
—
—
5
1
8
,
1
0
0
7
,
1
0
4
9
,
4
3
0
0
0
,
4
1
8
0
6
,
5
8
0
3
,
1
—
3
7
1
,
8
8
2
9
,
4
9
4
1
,
1
7
7
0
,
2
7
4
5
,
1
4
4
9
5
8
9
—
3
2
3
,
3
4
1
3
,
1
9
0
1
,
2
2
6
3
,
1
6
6
9
,
9
—
—
2
6
7
—
8
1
6
5
3
7
,
4
7
5
0
,
3
9
4
4
5
9
2
,
1
9
4
3
8
2
0
,
1
)
4
9
1
(
8
6
1
,
1
—
—
—
3
1
9
8
—
—
—
1
1
—
—
5
8
3
—
—
—
0
9
8
,
1
5
4
1
6
1
2
,
2
)
8
0
1
(
—
6
6
1
)
4
4
2
(
—
—
—
—
)
7
6
(
)
7
6
2
(
—
)
1
7
(
4
3
1
,
5
—
—
—
4
5
3
,
3
0
5
3
,
6
0
9
5
,
9
8
2
7
,
2
1
0
3
6
,
1
9
2
6
,
4
3
7
8
2
,
1
1
3
8
4
,
3
2
8
1
3
,
7
1
6
1
6
,
6
1
5
7
2
,
7
2
4
9
,
6
1
2
8
9
,
0
1
2
2
5
,
4
1
9
3
8
,
9
4
1
9
,
2
1
8
6
1
,
0
1
1
9
1
,
9
1
2
7
,
6
9
6
4
,
6
1
5
9
,
8
2
3
0
,
6
4
2
8
,
5
1
2
8
1
,
8
5
3
5
,
5
2
0
4
4
,
6
4
6
7
9
,
5
1
7
8
9
,
6
1
3
0
,
5
6
2
7
,
5
1
0
3
1
,
6
1
4
8
7
,
6
4
2
4
3
,
5
2
9
1
,
9
4
9
5
,
1
1
9
2
,
2
3
8
2
,
1
5
0
2
,
1
9
3
0
,
1
—
—
—
0
4
9
,
4
3
0
0
7
,
1
0
0
0
,
4
1
8
0
6
,
5
8
0
3
,
1
—
3
7
1
,
8
8
2
9
,
4
9
4
1
,
1
7
7
0
,
2
7
4
5
,
1
4
4
9
5
8
9
—
3
2
3
,
3
4
1
3
,
1
9
0
1
,
2
2
6
3
,
1
6
6
9
,
9
—
—
2
6
7
—
8
1
6
5
3
7
,
4
7
5
0
,
3
4
2
4
9
4
3
5
9
2
,
1
8
2
0
,
1
—
—
—
0
6
3
,
4
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2
7
4
,
1
3
1
5
,
2
)
3
9
6
,
1
0
5
(
$
6
2
2
,
4
0
3
,
2
$
1
0
6
,
7
3
8
,
1
$
5
2
6
,
6
6
4
$
1
4
5
,
5
1
2
$
7
3
5
,
2
2
6
,
1
$
0
5
1
,
6
6
4
$
3
8
3
,
9
6
1
$
O
C
,
s
g
n
i
r
p
S
o
d
a
r
o
l
o
C
-
y
m
e
d
a
c
A
e
g
a
l
l
i
V
l
a
b
o
l
G
s
g
n
i
r
p
S
o
d
a
r
o
l
o
C
A
C
,
a
t
s
i
V
y
m
e
d
a
c
A
e
t
n
e
M
a
l
l
e
B
a
/
n
e
g
a
p
s
u
o
i
v
e
r
p
m
o
r
f
l
a
t
o
t
b
u
S
A
P
,
e
l
l
i
v
s
r
e
n
n
a
T
L
A
,
a
s
o
o
l
a
c
s
u
T
A
L
,
a
i
r
e
b
I
w
e
N
L
I
,
e
l
l
i
v
n
e
r
r
a
W
A
G
,
a
t
t
e
r
a
h
p
l
A
L
F
,
a
p
m
a
T
Z
A
,
r
e
l
d
n
a
h
C
A
L
,
e
t
t
e
y
a
f
a
L
t
r
o
s
e
R
n
i
a
t
n
u
o
M
k
c
a
b
l
e
m
a
C
e
r
t
a
e
h
T
6
1
d
o
o
w
y
l
l
o
H
e
r
t
a
e
h
T
r
o
d
a
s
s
a
b
m
A
e
h
T
e
r
t
a
e
h
T
a
i
r
e
b
I
w
e
N
r
e
l
d
n
a
h
C
e
n
i
l
y
k
S
4
2
s
n
a
r
e
t
e
V
a
p
m
a
T
7
1
m
u
i
d
a
t
S
a
r
e
t
n
a
C
a
t
t
e
r
a
h
p
l
A
-
f
l
o
g
p
o
T
T
U
,
y
t
i
C
e
k
a
L
t
l
a
S
h
a
t
U
f
o
l
o
o
h
c
S
l
t
n
I
n
a
c
i
r
e
m
A
X
T
,
g
n
i
r
p
S
g
n
i
r
p
S
-
f
l
o
g
p
o
T
K
O
,
y
t
i
C
a
m
o
h
a
l
k
O
e
r
u
t
n
e
v
d
A
g
n
i
n
r
a
e
L
s
n
e
r
d
l
i
h
C
'
A
C
,
o
c
s
i
c
n
a
r
F
n
a
S
n
o
i
s
s
i
M
-
e
s
u
o
H
t
f
a
r
D
o
m
a
l
A
Z
A
,
r
a
e
y
d
o
o
G
e
r
u
t
n
e
v
d
A
g
n
i
n
r
a
e
L
s
n
e
r
d
l
i
h
C
'
Z
A
,
e
l
a
d
s
t
t
o
c
S
e
l
a
d
s
t
t
o
c
S
-
f
l
o
g
p
o
T
V
N
,
s
a
g
e
V
s
a
L
e
r
u
t
n
e
v
d
A
g
n
i
n
r
a
e
L
s
n
e
r
d
l
i
h
C
'
V
N
,
s
a
g
e
V
s
a
L
e
r
u
t
n
e
v
d
A
g
n
i
n
r
a
e
L
s
n
e
r
d
l
i
h
C
'
X
T
,
l
l
e
p
p
o
C
e
r
u
t
n
e
v
d
A
g
n
i
n
r
a
e
L
s
n
e
r
d
l
i
h
C
'
L
I
,
e
l
l
i
v
n
e
r
r
a
W
C
E
F
a
r
e
t
n
a
C
L
F
,
h
c
a
e
B
m
l
a
P
h
c
a
e
B
m
l
a
P
y
m
e
d
a
c
A
n
i
l
k
n
a
r
F
C
N
,
e
l
l
i
v
s
r
e
n
r
e
K
X
T
,
o
i
n
o
t
n
A
n
a
S
A
C
,
e
s
o
J
n
a
S
Y
N
,
n
y
l
k
o
o
r
B
L
A
,
a
k
i
l
e
p
O
Z
A
,
a
s
e
M
p
i
h
s
r
e
d
a
e
L
a
n
i
l
o
r
a
C
h
t
r
o
N
y
m
e
d
a
c
A
l
o
o
h
c
S
r
e
t
r
a
h
C
D
A
E
L
i
e
s
o
J
n
a
S
e
t
a
v
i
r
P
s
i
s
a
B
n
y
l
k
o
o
r
B
e
t
a
v
i
r
P
s
i
s
a
B
o
i
n
o
t
n
A
n
a
S
-
f
l
o
g
p
o
T
3
1
r
e
g
i
T
O
C
,
s
n
i
l
l
o
C
t
r
o
F
t
r
o
F
-
y
m
e
d
a
c
A
e
g
a
l
l
i
V
l
a
b
o
l
G
s
n
i
l
l
o
C
Z
A
,
a
s
e
M
e
r
u
t
n
e
v
d
A
g
n
i
n
r
a
e
L
s
n
e
r
d
l
i
h
C
'
L
F
,
a
p
m
a
T
Z
A
,
t
r
e
b
l
i
G
L
I
,
o
g
a
c
i
h
C
C
N
,
n
o
s
l
i
W
Z
A
,
t
r
e
b
l
i
G
N
I
,
d
r
o
f
d
e
B
N
I
,
r
u
o
m
y
e
S
e
r
u
t
n
e
v
d
A
g
n
i
n
r
a
e
L
s
n
e
r
d
l
i
h
C
'
o
g
a
c
i
h
C
f
o
l
o
o
h
c
S
h
s
i
t
i
r
B
y
m
e
d
a
c
A
p
e
r
P
n
o
s
l
i
W
8
m
u
i
d
a
t
S
r
u
o
m
y
e
S
7
r
e
t
a
e
h
T
d
r
o
f
d
e
B
n
o
d
n
a
r
B
-
f
l
o
g
p
o
T
t
r
e
b
l
i
G
-
f
l
o
g
p
o
T
5
2
1
)
5
1
2
,
4
2
5
(
$
4
6
5
,
4
0
9
,
2
$
1
7
8
,
4
2
3
,
2
$
3
9
6
,
9
7
5
$
6
2
6
,
6
2
2
$
2
6
5
,
0
0
1
,
2
$
8
7
3
,
7
7
5
$
8
2
7
,
7
8
1
$
e
g
a
p
t
x
e
n
o
t
r
e
v
o
d
e
i
r
r
a
c
s
l
a
t
o
t
b
u
S
)
5
1
2
,
4
2
5
(
$
4
6
5
,
4
0
9
,
2
$
1
7
8
,
4
2
3
,
2
$
3
9
6
,
9
7
5
$
6
2
6
,
6
2
2
$
2
6
5
,
0
0
1
,
2
$
8
7
3
,
7
7
5
$
8
2
7
,
7
8
1
$
s
e
i
t
r
e
p
o
r
P
R
P
E
n
o
i
t
a
i
c
e
r
p
e
D
d
e
t
a
l
u
m
u
c
c
A
d
n
a
e
t
a
t
s
E
l
a
e
R
-
I
I
I
e
l
u
d
e
h
c
S
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
)
s
d
n
a
s
u
o
h
t
n
i
s
r
a
l
l
o
D
(
n
o
i
t
a
i
c
e
r
p
e
D
e
f
i
l
e
t
a
D
d
e
r
i
u
q
c
a
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
d
l
a
t
o
T
&
t
n
e
m
p
u
q
E
i
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
t
n
u
o
m
A
s
s
o
r
G
,
s
g
n
i
d
l
i
u
B
)
s
n
o
i
t
i
s
o
p
s
i
D
s
n
o
i
t
i
d
d
A
(
)
s
t
n
e
m
r
i
a
p
m
I
(
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
a
&
t
n
e
m
p
u
q
E
i
s
t
n
e
m
e
v
o
r
p
m
i
,
s
g
n
d
i
l
i
u
B
t
s
o
c
l
a
i
t
i
n
I
d
n
a
L
t
b
e
D
n
o
i
t
a
c
o
L
n
o
i
t
p
i
r
c
s
e
D
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
s
r
a
e
y
0
4
0
4
s
r
a
e
y
0
4
a
/
n
s
r
a
e
y
0
4
s
r
a
e
y
0
3
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
3
s
r
a
e
y
0
3
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
a
/
n
a
/
n
4
1
/
4
0
4
1
/
4
0
4
1
/
4
0
4
1
/
4
0
4
1
/
4
0
4
1
/
4
0
4
1
/
4
0
4
1
/
4
0
4
1
/
4
0
4
1
/
4
0
4
1
/
4
0
4
1
/
5
0
4
1
/
5
0
4
1
/
5
0
4
1
/
6
0
4
1
/
6
0
4
1
/
6
0
4
1
/
7
0
4
1
/
7
0
4
1
/
8
0
4
1
/
8
0
4
1
/
8
0
4
1
/
9
0
4
1
/
9
0
4
1
/
1
1
4
1
/
2
1
a
/
n
4
1
/
2
1
)
9
8
4
(
)
3
5
4
(
)
4
4
6
(
)
2
3
7
(
)
6
0
3
(
)
9
2
3
(
)
8
4
4
(
)
1
2
3
(
)
9
3
7
(
—
)
8
4
(
)
0
8
1
(
)
5
2
2
(
)
8
0
2
(
)
9
5
1
(
)
0
8
1
(
)
1
4
1
(
)
7
8
(
)
0
4
(
)
9
3
(
)
6
8
(
)
9
6
1
(
)
5
0
2
(
)
5
5
(
)
4
7
(
—
—
s
r
a
e
y
0
4
5
1
/
1
0
)
2
7
(
s
r
a
e
y
0
3
5
1
/
1
0
)
1
2
(
s
r
a
e
y
0
3
5
1
/
1
0
)
4
2
(
s
r
a
e
y
0
3
5
1
/
1
0
)
5
1
(
s
r
a
e
y
0
3
5
1
/
1
0
)
0
3
(
6
1
2
,
2
1
3
6
4
,
1
1
8
6
2
,
7
1
3
3
5
,
0
2
7
2
9
,
8
9
3
3
,
8
6
4
1
,
2
1
8
8
3
,
8
7
7
0
,
9
1
—
6
5
9
,
6
6
3
0
,
3
9
3
7
,
9
9
4
8
,
2
2
9
1
1
,
2
2
2
3
4
,
5
2
3
7
8
,
6
1
0
2
6
,
8
0
2
0
,
2
1
0
2
0
,
2
1
3
0
1
,
9
2
7
0
4
,
8
7
0
5
,
9
1
0
7
7
,
4
3
6
3
,
3
2
3
6
6
,
5
2
9
1
9
,
0
1
5
0
0
,
9
6
9
2
,
1
5
1
7
,
1
4
1
1
,
1
6
9
8
,
1
3
3
2
,
1
1
2
2
2
,
0
1
7
0
8
,
4
1
9
6
7
,
6
1
4
8
6
,
6
3
5
4
,
7
3
8
1
,
0
1
2
4
3
,
7
2
4
8
,
6
1
—
6
6
7
,
6
7
7
4
,
1
5
9
1
,
8
0
3
3
,
7
1
6
0
1
,
9
1
9
8
2
,
7
1
3
7
8
,
6
1
2
2
3
,
7
0
0
5
,
0
1
1
7
7
,
0
1
9
7
2
,
0
2
7
7
8
,
6
1
2
4
,
6
1
3
8
3
,
4
2
3
7
,
7
1
5
1
7
,
8
1
—
5
1
8
,
6
7
1
0
,
1
8
4
2
,
1
3
2
8
6
4
6
,
1
3
8
9
1
4
2
,
1
1
6
4
,
2
4
6
7
,
3
3
4
2
,
2
6
8
8
3
6
9
,
1
6
4
0
,
1
5
3
2
,
2
—
0
9
1
9
5
5
,
1
4
4
5
,
1
9
1
5
,
5
3
1
0
,
3
3
4
1
,
8
—
8
9
2
,
1
0
2
5
,
1
9
4
2
,
1
4
2
8
,
8
0
3
5
,
1
6
8
0
,
3
7
8
3
1
3
6
,
5
8
4
9
,
6
9
1
9
,
0
1
0
9
1
,
2
9
7
2
7
6
4
1
9
2
0
5
2
—
—
—
—
—
—
—
—
—
—
—
3
0
2
1
2
1
,
2
—
—
—
—
—
—
—
—
—
—
—
—
—
0
7
—
—
—
—
—
3
3
2
,
1
1
2
2
2
,
0
1
7
0
8
,
4
1
9
6
7
,
6
1
4
8
6
,
6
3
5
4
,
7
3
8
1
,
0
1
2
4
3
,
7
2
4
8
,
6
1
—
3
6
5
,
6
7
7
4
,
1
4
7
0
,
6
0
3
3
,
7
1
6
0
1
,
9
1
9
8
2
,
7
1
3
7
8
,
6
1
2
2
3
,
7
0
0
5
,
0
1
1
7
7
,
0
1
9
7
2
,
0
2
7
7
8
,
6
1
2
4
,
6
1
3
8
3
,
4
2
3
7
,
7
1
5
1
7
,
8
1
—
5
1
8
,
6
7
1
0
,
1
8
4
2
,
1
3
2
8
6
4
6
,
1
3
8
9
1
4
2
,
1
1
6
4
,
2
4
6
7
,
3
3
4
2
,
2
6
8
8
3
6
9
,
1
6
4
0
,
1
5
3
2
,
2
—
0
9
1
9
5
5
,
1
4
4
5
,
1
9
1
5
,
5
3
1
0
,
3
3
4
1
,
8
—
8
9
2
,
1
0
2
5
,
1
9
4
2
,
1
4
2
8
,
8
0
3
5
,
1
6
8
0
,
3
7
8
3
1
3
6
,
5
8
4
9
,
6
9
4
8
,
0
1
0
9
1
,
2
9
7
2
7
6
4
1
9
2
0
5
2
2
5
2
,
9
1
8
6
,
8
7
7
0
,
3
1
0
5
5
,
5
1
1
6
7
,
6
5
1
3
,
6
9
9
1
,
9
1
5
3
,
6
5
4
4
,
4
1
0
5
8
,
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Y
K
,
n
e
e
r
G
g
n
i
l
w
o
B
2
1
m
u
i
d
a
t
S
n
e
e
r
G
g
n
i
l
w
o
B
Y
K
,
r
e
d
l
i
W
4
1
m
u
i
d
a
t
S
r
e
d
l
i
W
a
/
n
e
g
a
p
s
u
o
i
v
e
r
p
m
o
r
f
l
a
t
o
t
b
u
S
N
I
,
y
n
a
b
l
A
w
e
N
N
T
,
e
l
l
i
v
s
k
r
a
l
C
A
P
,
t
r
o
p
s
m
a
i
l
l
i
W
N
I
,
e
l
l
i
v
s
e
l
b
o
N
O
M
,
n
o
l
l
a
F
O
'
L
I
,
e
n
i
l
o
M
2
1
m
u
i
d
a
t
S
y
n
a
b
l
A
w
e
N
6
1
m
u
i
d
a
t
S
e
l
l
i
v
s
k
r
a
l
C
0
1
m
u
i
d
a
t
S
e
l
l
i
v
s
e
l
b
o
N
2
1
l
l
a
M
g
n
i
m
o
c
y
L
4
1
m
u
i
d
a
t
S
n
o
l
l
a
F
O
'
4
1
m
u
i
d
a
t
S
e
n
i
l
o
M
A
G
,
h
g
u
o
n
o
D
c
M
6
1
m
u
i
d
a
t
S
h
g
u
o
n
o
D
c
M
C
N
,
e
t
t
o
l
r
a
h
C
l
o
o
h
c
S
y
r
o
t
a
r
a
p
e
r
P
d
r
o
f
d
a
r
B
A
L
,
r
e
k
a
B
y
r
a
t
n
e
m
e
l
E
r
e
t
r
a
h
C
t
c
a
p
m
I
,
s
e
r
u
t
n
e
V
l
e
t
o
H
l
a
n
o
i
t
a
n
r
e
t
n
I
.
c
n
I
S
K
,
k
r
a
P
d
n
a
l
r
e
v
O
O
C
,
l
a
i
n
n
e
t
n
e
C
L
I
,
o
g
a
c
i
h
C
A
G
,
a
t
n
a
l
t
A
A
V
n
r
u
b
h
s
A
C
N
,
t
n
i
o
P
h
g
i
H
y
m
e
d
a
c
A
e
c
n
e
i
c
S
n
o
z
i
r
o
H
o
g
a
c
i
h
C
h
t
u
o
S
k
r
a
P
d
n
a
l
r
e
v
O
-
f
l
o
g
p
o
T
l
a
i
n
n
e
t
n
e
C
-
f
l
o
g
p
o
T
a
t
n
a
l
t
A
n
w
o
T
d
i
M
-
f
l
o
g
p
o
T
h
g
i
H
y
m
e
d
a
c
A
x
i
n
e
o
h
P
l
o
o
h
c
S
s
e
l
l
u
D
-
f
l
o
g
p
o
T
K
O
,
y
t
i
C
a
m
o
h
a
l
k
O
C
S
,
l
a
y
o
R
t
r
o
P
X
T
,
r
e
t
s
b
e
W
L
I
,
e
l
l
i
v
r
e
p
a
N
Z
A
,
r
e
l
d
n
a
h
C
y
t
i
C
a
m
o
h
a
l
k
O
-
f
l
o
g
p
o
T
i
r
o
s
s
e
t
n
o
M
y
r
t
n
u
o
C
w
o
L
r
e
t
s
b
e
W
-
f
l
o
g
p
o
T
e
l
l
i
v
r
e
p
a
N
-
f
l
o
g
p
o
T
s
d
i
K
t
i
F
n
o
i
p
m
a
h
C
A
V
,
h
c
a
e
B
a
i
n
i
g
r
i
V
h
c
a
e
B
a
i
n
i
g
r
i
V
-
f
l
o
g
p
o
T
X
T
,
k
r
a
P
r
a
d
e
C
e
r
u
t
n
e
v
d
A
g
n
i
n
r
a
e
L
s
n
e
r
d
l
i
h
C
'
O
C
,
l
a
i
n
n
e
t
n
e
C
e
r
u
t
n
e
v
d
A
g
n
i
n
r
a
e
L
s
n
e
r
d
l
i
h
C
'
I
M
,
s
t
h
g
i
e
H
g
n
i
l
r
e
t
S
a
m
e
n
i
C
l
a
t
i
g
i
D
e
c
a
l
p
t
e
k
r
a
M
0
2
O
C
,
d
o
o
w
e
k
a
L
O
C
,
n
o
t
e
l
t
t
i
L
O
C
,
k
c
o
R
e
l
t
s
a
C
O
C
,
r
e
k
r
a
P
O
C
,
r
e
k
r
a
P
-
s
e
i
m
e
d
a
c
A
e
g
a
l
l
i
V
l
a
b
o
l
G
y
t
n
u
o
C
s
a
l
g
u
o
D
-
l
a
n
o
i
t
a
n
r
e
t
n
I
e
g
a
l
l
i
V
l
a
b
o
l
G
r
e
k
r
a
P
-
l
a
n
o
i
t
a
n
r
e
t
n
I
e
g
a
l
l
i
V
l
a
b
o
l
G
n
o
t
e
l
t
t
i
L
-
l
a
n
o
i
t
a
n
r
e
t
n
I
-
l
a
n
o
i
t
a
n
r
e
t
n
I
e
g
a
l
l
i
V
l
a
b
o
l
G
d
o
o
w
e
k
a
L
e
g
a
l
l
i
V
l
a
b
o
l
G
k
c
o
R
e
l
t
s
a
C
6
2
1
)
4
3
7
,
0
3
5
(
$
3
4
3
,
9
9
2
,
3
$
1
9
9
,
7
3
6
,
2
$
2
5
3
,
1
6
6
$
0
2
0
,
9
2
2
$
8
5
3
,
1
1
4
,
2
$
7
6
9
,
8
5
6
$
9
0
2
,
9
7
2
$
e
g
a
p
t
x
e
n
o
t
r
e
v
o
d
e
i
r
r
a
c
s
l
a
t
o
t
b
u
S
s
e
i
t
r
e
p
o
r
P
R
P
E
n
o
i
t
a
i
c
e
r
p
e
D
d
e
t
a
l
u
m
u
c
c
A
d
n
a
e
t
a
t
s
E
l
a
e
R
-
I
I
I
e
l
u
d
e
h
c
S
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
)
s
d
n
a
s
u
o
h
t
n
i
s
r
a
l
l
o
D
(
n
o
i
t
a
i
c
e
r
p
e
D
e
f
i
l
e
t
a
D
d
e
r
i
u
q
c
a
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
d
l
a
t
o
T
&
t
n
e
m
p
u
q
E
i
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
5
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
t
n
u
o
m
A
s
s
o
r
G
,
s
g
n
i
d
l
i
u
B
s
n
o
i
t
i
d
d
A
)
s
n
o
i
t
i
s
o
p
s
i
D
(
)
s
t
n
e
m
r
i
a
p
m
I
(
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
a
&
t
n
e
m
p
u
q
E
i
s
t
n
e
m
e
v
o
r
p
m
i
,
s
g
n
d
i
l
i
u
B
t
s
o
c
l
a
i
t
i
n
I
d
n
a
L
t
b
e
D
n
o
i
t
a
c
o
L
n
o
i
t
p
i
r
c
s
e
D
s
r
a
e
y
0
3
s
r
a
e
y
0
4
s
r
a
e
y
0
3
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
s
r
a
e
y
0
4
5
1
/
1
0
5
1
/
2
0
5
1
/
2
0
5
1
/
2
0
5
1
/
2
0
5
1
/
2
0
5
1
/
3
0
)
6
1
(
)
2
9
(
)
5
9
(
)
5
3
1
(
)
4
4
1
(
)
5
9
7
(
)
6
5
(
s
r
a
e
y
0
3
5
1
/
4
0
)
6
(
s
r
a
e
y
0
3
s
r
a
e
y
5
2
s
r
a
e
y
s
r
a
e
y
0
4
0
3
s
r
a
e
y
5
2
s
r
a
e
y
s
r
a
e
y
0
4
0
3
s
r
a
e
y
0
3
s
r
a
e
y
0
4
a
/
n
a
/
n
a
/
n
a
/
n
5
1
/
4
0
5
1
/
5
0
5
1
/
5
0
5
1
/
6
0
5
1
/
7
0
5
1
/
9
0
5
1
/
0
1
5
1
/
0
1
5
1
/
2
1
a
/
n
a
/
n
a
/
n
a
/
n
—
)
4
0
5
(
)
5
5
2
,
1
(
)
6
5
1
(
)
0
7
2
(
)
3
1
(
)
5
1
(
)
7
1
(
—
—
—
—
—
—
2
1
0
,
1
4
8
2
,
8
4
2
6
,
5
2
2
0
,
9
0
7
9
,
7
6
5
9
4
9
9
,
6
5
6
8
,
1
2
0
7
9
,
5
4
4
1
,
7
2
4
5
3
,
0
2
1
3
7
5
,
0
1
1
0
5
,
6
1
5
4
5
,
2
6
0
8
,
2
0
0
3
,
3
9
3
2
,
9
0
1
6
,
3
2
0
2
9
,
8
7
3
—
—
—
8
8
7
3
8
8
,
7
9
8
0
,
4
8
7
4
,
6
4
3
9
,
6
3
6
6
2
1
2
,
6
6
2
1
,
6
1
2
7
3
,
5
4
6
0
,
2
2
4
5
3
,
0
2
1
3
9
3
,
9
1
2
5
,
3
1
2
9
3
,
2
0
5
8
,
1
8
3
0
,
2
6
8
8
,
7
—
—
—
—
—
4
2
2
1
0
4
5
3
5
,
1
4
4
5
,
2
6
3
0
,
1
9
3
7
,
5
2
8
7
3
9
2
8
9
5
—
0
8
0
,
5
0
8
1
,
1
0
8
9
,
2
3
5
1
6
5
9
2
6
2
,
1
3
5
3
,
1
—
—
—
0
1
6
,
3
2
0
2
9
,
8
7
3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8
8
7
3
8
8
,
7
9
8
0
,
4
8
7
4
,
6
4
3
9
,
6
3
6
6
2
1
2
,
6
6
2
1
,
6
1
2
7
3
,
5
4
6
0
,
2
2
4
5
3
,
0
2
1
3
9
3
,
9
1
2
5
,
3
1
2
9
3
,
2
0
5
8
,
1
8
3
0
,
2
6
8
8
,
7
—
—
—
—
—
4
2
2
1
0
4
5
3
5
,
1
4
4
5
,
2
6
3
0
,
1
9
3
7
,
5
2
8
7
3
9
2
8
9
5
—
0
8
0
,
5
0
8
1
,
1
0
8
9
,
2
3
5
1
6
5
9
2
6
2
,
1
3
5
3
,
1
—
—
—
0
1
6
,
3
2
0
2
9
,
8
7
3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0
0
0
,
6
9
1
0
0
0
,
5
2
5
,
1
)
9
8
2
,
8
1
(
)
3
0
3
,
4
3
5
(
$
2
3
0
,
2
6
9
,
3
$
4
3
0
,
2
7
8
,
2
$
8
9
9
,
9
8
0
,
1
$
0
2
0
,
9
2
2
$
1
0
4
,
5
4
6
,
2
$
3
1
6
,
7
8
0
,
1
$
0
2
9
,
1
8
9
,
1
$
7
2
1
A
V
,
h
c
a
e
B
a
i
n
i
g
r
i
V
h
c
a
e
B
a
i
n
i
g
r
i
V
-
e
g
d
i
r
b
w
a
r
t
S
O
C
,
a
d
a
v
r
A
A
G
,
n
o
c
a
M
N
T
,
s
i
h
p
m
e
M
-
l
a
n
o
i
t
a
n
r
e
t
n
I
e
g
a
l
l
i
V
l
a
b
o
l
G
a
d
a
v
r
A
d
n
a
s
t
r
A
f
o
l
o
o
h
c
S
s
i
o
B
u
D
y
g
o
l
o
n
h
c
e
T
y
m
e
d
a
c
A
r
e
t
r
a
h
C
n
o
c
a
M
A
V
,
n
e
e
r
g
r
e
t
n
i
W
L
F
,
y
a
B
m
l
a
P
L
F
,
e
e
l
u
Y
O
C
,
e
t
t
e
y
a
f
a
L
L
I
,
g
r
u
b
m
u
a
h
c
S
L
F
,
e
l
l
i
v
n
o
s
k
c
a
J
A
P
,
e
l
l
i
v
s
r
e
n
n
a
T
C
N
,
t
n
i
o
P
h
g
i
H
L
I
,
e
k
a
L
l
a
t
s
y
r
C
J
N
,
n
o
t
e
g
d
i
r
B
A
G
,
a
t
n
a
l
t
A
A
G
,
a
t
n
a
l
t
A
X
T
,
o
d
e
r
a
L
-
l
a
n
o
i
t
a
n
r
e
t
n
I
e
g
a
l
l
i
V
l
a
b
o
l
G
e
t
t
e
y
a
f
a
L
e
l
l
i
v
n
o
s
k
c
a
J
4
2
y
c
n
e
g
e
R
6
1
e
k
a
L
l
a
t
s
y
r
C
l
a
g
e
R
I
I
y
m
e
d
a
c
A
x
i
n
e
o
h
P
e
g
d
o
L
k
c
a
b
l
e
m
a
C
y
m
e
d
a
c
A
n
o
t
g
n
i
r
r
a
C
y
m
e
d
a
c
A
n
o
t
g
n
i
r
r
a
C
r
e
t
r
a
h
C
n
o
t
e
g
d
i
r
B
o
d
e
r
a
L
-
e
s
u
o
H
t
f
a
r
D
o
m
a
l
A
t
n
e
m
p
o
l
e
v
e
d
r
e
d
n
u
y
t
r
e
p
o
r
P
t
n
e
m
p
o
l
e
v
e
d
r
o
f
d
l
e
h
d
n
a
L
t
i
d
e
r
c
g
n
i
v
l
o
v
e
r
d
e
r
u
c
e
s
n
U
y
t
i
l
i
c
a
f
-
l
a
i
c
o
S
l
w
o
B
h
c
n
u
P
g
r
u
b
m
u
a
h
c
S
t
r
o
s
e
R
n
e
e
r
g
r
e
t
n
i
W
e
v
o
C
e
l
p
p
a
e
n
i
P
e
e
l
u
Y
e
k
i
m
r
a
C
,
s
t
s
o
c
g
n
i
c
n
a
n
i
f
d
e
r
r
e
f
e
d
:
s
s
e
L
t
e
n
l
a
t
o
T
s
e
t
o
n
n
a
o
l
d
e
r
u
c
e
s
n
u
r
o
i
n
e
S
m
r
e
t
d
n
a
e
l
b
a
y
a
p
a
/
n
a
/
n
)
4
3
7
,
0
3
5
(
$
3
4
3
,
9
9
2
,
3
$
1
9
9
,
7
3
6
,
2
$
2
5
3
,
1
6
6
$
0
2
0
,
9
2
2
$
8
5
3
,
1
1
4
,
2
$
7
6
9
,
8
5
6
$
9
0
2
,
9
7
2
$
a
/
n
e
g
a
p
s
u
o
i
v
e
r
p
m
o
r
f
l
a
t
o
t
b
u
S
EPR Properties
Schedule III - Real Estate and Accumulated Depreciation (continued)
Reconciliation
(Dollars in thousands)
December 31, 2015
Real Estate:
Reconciliation:
Balance at beginning of the year
Acquisition and development of rental properties during the year
Disposition of rental properties during the year
Balance at close of year
Accumulated Depreciation
Reconciliation:
Balance at beginning of the year
Depreciation during the year
Disposition of rental properties during the year
Balance at close of year
See accompanying report of independent registered public accounting firm.
$
$
$
$
3,304,993
691,379
(34,340)
3,962,032
465,660
78,135
(9,492)
534,303
128
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
As of the end of the period covered by this report, 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 that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that as of the end of the period covered by this report our disclosure controls and procedures were effective
to ensure 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, to allow timely decisions regarding required disclosure.
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 errors and 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 collusions 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.
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 fourth 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.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as
such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an
evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on our evaluation under the framework in Internal Control–Integrated Framework (2013), our
management concluded that our internal control over financial reporting was effective as of December 31, 2015. KPMG
LLP, the independent registered public accounting firm that audited the consolidated financial statements included in
this Annual Report on Form 10-K, has issued a report on the effectiveness of our internal control over financial reporting.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements, errors or fraud. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of or compliance with
the policies or procedures may deteriorate.
129
Report of Independent Registered Public Accounting Firm
The Board of Trustees and Shareholders
EPR Properties:
We have audited EPR Properties’ internal control over financial reporting as of December 31, 2015, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). EPR Properties’ management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility
is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining
an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit
also included performing such other procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on
the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
In our opinion, EPR Properties maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of EPR Properties and subsidiaries as of December 31, 2015 and 2014, and the
related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for each of
the years in the three-year period ended December 31, 2015, and our report dated February 24, 2016 expressed an
unqualified opinion on those consolidated financial statements.
As discussed in Note 2 to the financial statements, the Company adopted FASB Accounting Standards Update (ASU)
2015 2015-03, Simplifying the Presentation of Debt Issue Costs in 2015 and No. 2014-08, Reporting Discontinued
Operations and Disclosures of Disposals of Components of an Entity in 2014.
Kansas City, Missouri
February 24, 2016
130
Item 9B. Other Information
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The Company’s definitive Proxy Statement for its Annual Meeting of Shareholders to be held on May 11, 2016 (the
“Proxy Statement”), contains under the captions “Election of Trustees”, “Company Governance”, “Executive Officers”,
and “Section 16(a) Beneficial Ownership Reporting Compliance” the information required by Item 10 of this Annual
Report on Form 10-K, which information is incorporated herein by this reference.
We have adopted a Code of Business Conduct and Ethics that applies to our Chief Executive Officer, Chief Financial
Officer, and all other officers, employees and trustees. The Code of Business Conduct and Ethics may be viewed on
our website at www.eprkc.com. Changes to and waivers granted with respect to the Code of Business Conduct and
Ethics required to be disclosed pursuant to applicable rules and regulations will be posted on our website.
Item 11. Executive Compensation
The Proxy Statement contains under the captions “Election of Trustees”, “Executive Compensation”, and
“Compensation Committee Report”, the information required by Item 11 of this Annual Report on Form 10-K, which
information is incorporated herein by this reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The Proxy Statement contains under the captions “Share Ownership” and “Equity Compensation Plan Information”
the information required by Item 12 of this Annual Report on Form 10-K, which information is incorporated herein by
this reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The Proxy Statement contains under the caption “Transactions Between the Company and Trustees, Officers or their
Affiliates” the information required by Item 13 of this Annual Report on Form 10-K, which information is incorporated
herein by this reference.
Item 14. Principal Accounting Fees and Services
The Proxy Statement contains under the caption “Ratification of Appointment of Independent Registered Public
Accounting Firm” the information required by Item 14 of this Annual Report on Form 10-K, which information is
incorporated herein by this reference.
131
Item 15. Exhibits and Financial Statement Schedules
(1) Financial Statements: See Part II, Item 8 hereof
PART IV
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2015 and 2014
Consolidated Statements of Income for the years ended December 31, 2015, 2014 and 2013
Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and
2013
Consolidated Statements of Changes in Equity for the years ended December 31, 2015, 2014 and 2013
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013
Notes to Consolidated Financial Statements
Financial Statement Schedules: See Part II, Item 8 hereof
Schedule II – Valuation and Qualifying Accounts
Schedule III – Real Estate and Accumulated Depreciation
Exhibits
The exhibits listed in the Exhibit Index immediately preceding the exhibits are filed as part of this Annual
Report on Form 10-K or incorporated by reference as indicated below.
(2)
(3)
132
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
Dated: February 24, 2016
By /s/ Gregory K. Silvers
EPR Properties
Dated: February 24, 2016
By /s/ Mark A. Peterson
Gregory K. Silvers, President and Chief Executive
Officer (Principal Executive Officer)
Mark A. Peterson, Executive Vice President, Chief
Financial Officer and Treasurer (Principal Financial
Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature and Title
/s/ Robert J. Druten
Robert J. Druten, Chairman of the Board
/s/ Gregory K. Silvers
Gregory K. Silvers, President, Chief Executive Officer
(Principal Executive Officer) and Trustee
/s/ Mark A. Peterson
Mark A. Peterson, Executive Vice President, Chief
Financial Officer and Treasurer (Principal Financial
Officer)
Date
February 24, 2016
February 24, 2016
February 24, 2016
/s/ Tonya L. Mater
February 24, 2016
Tonya L. Mater, Vice President and Chief Accounting
Officer (Principal Accounting Officer)
/s/ Thomas M. Bloch
Thomas M. Bloch, Trustee
/s/ Barrett Brady
Barrett Brady, Trustee
/s/ Peter Brown
Peter Brown, Trustee
/s/ Jack A. Newman, Jr.
Jack A. Newman, Jr., Trustee
/s/ Robin P. Sterneck
Robin P. Sterneck, Trustee
February 24, 2016
February 24, 2016
February 24, 2016
February 24, 2016
February 24, 2016
133
Subsidiary
Jurisdiction of Incorporation or Formation
Subsidiaries of the Company
EXHIBIT 21
30 West Pershing, LLC
655554 NB, Inc.
Adelaar Developer, LLC
Atlantic - EPR I
Atlantic - EPR II
Burbank Village, Inc.
Burbank Village, LP
Cantera 30, Inc.
Cantera 30 Theatre, LP
Cinescape Equity, LLC
Cinescape Mezz, LLC
Cinescape Property, LLC
Early Childhood Education, LLC
ECE I, LLC
ECE II, LLC
ECS Douglas I, LLC
Educational Capital Solutions, LLC
EPR Apex, Inc.
EPR Camelback, LLC
EPR Canada, Inc.
EPR Concord II, L.P.
EPR Escape, LLC
EPR Gaming Properties, LLC
EPR Hialeah, Inc.
EPR Metropolis Trust
EPR North Finance Trust
EPR North GP ULC
EPR North Holdings GP ULC
EPR North Holdings LP
EPR North Properties LP
EPR North Trust
EPR North US GP Trust
EPR North US LP
EPR Resorts, LLC
EPR TRS Holdings, Inc.
EPR TRS I, Inc.
EPR TRS II, Inc.
EPR TRS III, Inc.
EPR TRS IV, Inc.
EPR Tuscaloosa, LLC
EPT 301, LLC
EPT 909, Inc.
EPT Aliso Viejo, Inc.
EPT Arroyo, Inc.
Missouri
New Brunswick
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Missouri
Delaware
Delaware
Delaware
Missouri
Delaware
Ontario
British Columbia
British Columbia
Ontario
Ontario
Kansas
Delaware
Delaware
Delaware
Missouri
Missouri
Missouri
Missouri
Missouri
Delaware
Missouri
Delaware
Delaware
Delaware
EPT Auburn, Inc.
EPT Biloxi, Inc.
EPT Boise, Inc.
EPT Charlotte, LLC
EPT Chattanooga, Inc.
EPT Columbiana, Inc.
EPT Concord, LLC
EPR Concord II, LLC
EPT Dallas, LLC
EPT Davie, Inc.
EPT Deer Valley, Inc.
EPT DownREIT II, Inc.
EPT DownREIT, Inc.
EPT East, Inc.
EPT Firewheel, Inc.
EPT First Colony, Inc.
EPT Fontana, LLC
EPT Fresno, Inc.
EPT Gulf Pointe, Inc.
EPT Hamilton, Inc.
EPT Hattiesburg, Inc.
EPT Huntsville, Inc.
EPT Hurst, Inc.
EPT Indianapolis, Inc.
EPT Kalamazoo, Inc.
EPT Kenner, LLC
EPT Lafayette, Inc.
EPT Lawrence, Inc.
EPT Leawood, Inc.
EPT Little Rock, Inc.
EPT Macon, Inc.
EPT Mad River, Inc.
EPT Manchester, Inc.
EPT Melbourne, Inc.
EPT Mesa, Inc.
EPT Mesquite, Inc.
EPT Modesto, Inc.
EPT Mount Attitash, Inc.
EPT Mount Snow, Inc.
EPT New England, LLC
EPT New Roc GP, Inc.
EPT New Roc, LLC
EPT Nineteen, Inc.
EPT Oakview, Inc.
EPT Pensacola, Inc.
EPT Pompano, Inc.
EPT Raleigh Theatres, Inc.
EPT Ski Properties, Inc.
EPT Slidell, Inc.
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Missouri
Missouri
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Missouri
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Missouri
Delaware
Missouri
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Missouri
Delaware
Delaware
Delaware
Delaware
EPT South Barrington, Inc.
EPT Twin Falls, LLC
EPT Virginia Beach, Inc.
EPT Waterparks, Inc.
EPT White Plains, LLC
EPT Wilmington, Inc.
Flik Depositor, Inc.
Flik, Inc.
Go to the Show, L.L.C.
International Hotel Ventures, Inc.
Kanata Entertainment Holdings, Inc.
McHenry FFE, LLC
Megaplex Four, Inc.
Megaplex Nine, Inc.
Metropolis Entertainment Holdings, Inc.
Mississauga Entertainment Holdings, Inc.
New Roc Associates, LP
Oakville Entertainment Holdings, Inc.
Rittenhouse Holding, LLC
Suffolk Retail, LLC
Tampa Veterans 24, Inc.
Tampa Veterans 24, LP
Theatre Sub, Inc.
WestCol Center, LLC
WestCol Corp.
WestCol Holdings, LLC
WestCol Theatre, LLC
Westminster Promenade Owner's Association, LLC
Whitby Entertainment Holdings, Inc.
YongeDundas Signage Trust
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Louisiana
Delaware
New Brunswick
Delaware
Missouri
Missouri
New Brunswick
New Brunswick
New York
New Brunswick
Delaware
Delaware
Delaware
Delaware
Missouri
Delaware
Delaware
Delaware
Delaware
Colorado
New Brunswick
Delaware
Consent of Independent Registered Public Accounting Firm
EXHIBIT 23
The Board of Trustees
EPR Properties:
We consent to the incorporation by reference in the Registration Statements (Form S-3 No. 333-189024 pertaining to the Dividend
Reinvestment and Direct Shares Purchase Plan, Form S-8 No. 333-76625 and Form S-8 No. 333-159465 pertaining to the 1997
Share Incentive Plan, Form S-8 No. 333-142831 and Form S-8 No. 333-189028 pertaining to the 2007 Equity Incentive Plan,
Form S-4 No. 333-78803, as amended, pertaining to the shelf registration of 5,000,000 common shares and Form S-3 No.
333-189023 for an undetermined amount of securities) of EPR Properties of our reports dated February 24, 2016, with respect to
the consolidated balance sheets of EPR Properties and subsidiaries as of December 31, 2015 and 2014, and the related consolidated
statements of income, comprehensive income, changes in equity, and cash flows, for each of the years in the three-year period
ended December 31, 2015, and the related financial statement schedules listed in Item 15 (2) of the Form 10-K, and the effectiveness
of internal control over financial reporting as of December 31, 2015, which reports appear in the December 31, 2015 Annual
Report on Form 10-K of EPR Properties. Our report refers to the Company’s adoption of FASB Accounting Standards Update
(ASU) 2015 -03, Simplifying the Presentation of Debt Issue Costs in 2015 and No. 2014-08, Reporting Discontinued Operations
and Disclosures of Disposals of Components of an Entity in 2014.
/s/ KPMG LLP
Kansas City, Missouri
February 24, 2016
CERTIFICATION
EXHIBIT 31.1
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.
I, Gregory K. Silvers, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of EPR Properties;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a)
(b)
(c)
(d)
designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter
in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
(a)
(b)
all significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: February 24, 2016
/s/ Gregory K. Silvers
Gregory K. Silvers
President and Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION
EXHIBIT 31.2
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.
I, Mark A. Peterson, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of EPR Properties;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a)
(b)
(c)
(d)
designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter
in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
(a)
(b)
all significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: February 24, 2016
/s/ Mark A. Peterson
Mark A. Peterson
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350 AS
ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT
EXHIBIT 32.1
I, Gregory K. Silvers, President and Chief Executive Officer of EPR Properties (the “Issuer”), have executed this
certification for furnishing to the Securities and Exchange Commission in connection with the filing with the
Commission of the registrant’s Annual Report on Form 10-K for the period ended December 31, 2015 (the “Report”).
I hereby certify that, to the best of my knowledge and belief:
(1)
(2)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Issuer.
/s/ Gregory K. Silvers
Gregory K. Silvers
President and Chief Executive Officer
(Principal Executive Officer)
Date: February 24, 2016
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350 AS
ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT
EXHIBIT 32.2
I, Mark A. Peterson, Executive Vice President, Chief Financial Officer and Treasurer of EPR Properties (the “Issuer”),
have executed this certification for furnishing to the Securities and Exchange Commission in connection with the filing
with the Commission of the registrant’s Annual Report on Form 10-K for the period ended December 31, 2015 (the
“Report”). I hereby certify that, to the best of my knowledge and belief:
(1)
(2)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Issuer.
/s/ Mark A. Peterson
Mark A. Peterson
Executive Vice President, Chief Financial Officer
and Treasurer (Principal Financial
Officer)
Date: February 24, 2016
This page intentionally left blank
ENTERTAINMENT
RECREATION
EDUCATION
A N N U A L R E P O R T 2 0 1 5
909 WALNUT, SUITE 200,
KANSAS CITY, MO 64106
EPRKC.COM
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
5