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What changed in EPR PROPERTIES's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of EPR PROPERTIES's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+404 added−427 removedSource: 10-K (2023-12-31) vs 10-K (2022-12-31)

Top changes in EPR PROPERTIES's 2023 10-K

404 paragraphs added · 427 removed · 316 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

59 edited+12 added−11 removed60 unchanged
Biggest changeOperating 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.
Biggest changeAccordingly, we intend to be more selective in making 6 investments and acquisitions until such time as economic conditions improve and our cost of capital returns to acceptable levels. 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 that the primary appeal of our ski properties lies in the convenient and reliable experience consumers can expect. Given that all our ski properties are located near major metropolitan areas, they offer skiing, snowboarding and other activities without the expense, travel, or lengthy preparations of remote ski resorts.
We believe that the primary appeal of our ski properties lies in the convenient and reliable experience consumers can expect. Given that all of our ski properties are located near major metropolitan areas, they offer skiing, snowboarding and other activities without the expense, travel, or lengthy preparations of remote ski resorts.
However, we currently anticipate migrating over time some of what we hold in such structures to more traditional net lease or mortgage arrangements. Development and Redevelopment We intend to continue developing properties and redeveloping existing properties that are consistent with our growth strategies.
However, we currently anticipate migrating some of what we hold in such structures to more traditional net lease or mortgage arrangements over time. Development and Redevelopment We intend to continue developing properties and redeveloping existing properties that are consistent with our growth strategies.
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 8 9.00% and our Series G cumulative redeemable preferred shares ("Series G preferred shares") have a dividend rate of 5.75%.
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 G 8 cumulative redeemable preferred shares ("Series G preferred shares") have a dividend rate of 5.75%.
For additional information regarding regulations applicable to our business, and risks associated with our failure to comply with such regulations, see Item 1A – "Risk Factors" in this Annual Report on Form 10-K. 10 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.
For additional information regarding regulations applicable to our business, and risks 10 associated with our failure to comply with such regulations, see Item 1A – "Risk Factors" in this Annual Report on Form 10-K. 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.
As part of our strategic planning and portfolio management process, we assess new opportunities against the following underwriting principles: Industry • Experiential Alignment • Proven Business Model • Enduring Value • Addressable Opportunity Property • Location Quality • Competitive Position • Location Rent Coverage • Cash Flow Durability Tenant • Demonstrated Success • Commitment • Reputable Management • Solid Credit Quality We believe that our 25 years of experience and knowledge in the experiential real estate market gives us the opportunity to be the dominant player in this area.
As part of our strategic planning and portfolio management process, we assess new opportunities against the following underwriting principles: Industry • Experiential Alignment • Proven Business Model • Enduring Value • Addressable Opportunity Property • Location Quality • Competitive Position • Location Rent Coverage • Cash Flow Durability Tenant • Demonstrated Success • Commitment • Reputable Management • Solid Credit Quality We believe that our over 25 years of experience and knowledge in the experiential real estate market gives us the opportunity to be the dominant player in this area.
These are properties which make up the social infrastructure of society. 5 Our long-term primary business objective is to enhance shareholder value by achieving predictable and increasing Funds From Operations As Adjusted ("FFOAA") and dividends per share (See Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures - Funds From Operations (FFO), Funds From Operations As Adjusted (FFOAA) and Adjusted Funds From Operations (AFFO)” for a discussion of FFOAA, which is a non-GAAP financial measure).
These are properties that make up the social infrastructure of society. 5 Our long-term primary business objective is to enhance shareholder value by achieving predictable and increasing Funds From Operations As Adjusted ("FFOAA") and dividends per share (See Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures - Funds From Operations (FFO), Funds From Operations As Adjusted (FFOAA) and Adjusted Funds From Operations (AFFO)” for a discussion of FFOAA, which is a non-GAAP financial measure).
Additionally, we have tenant and borrower relationships that provide us with access to investment opportunities. The pandemic impeded our growth during 2020 and 2021 while we focused on addressing challenges brought on by the pandemic including monitoring customer status, and working with customers to help ensure long-term stability and assisting them in establishing re-opening plans.
Additionally, we have tenant and borrower relationships that provide us with access to investment opportunities. The pandemic impeded our growth during 2020 and 2021 while we focused on addressing challenges brought on by the pandemic including monitoring customer status, working with customers to help ensure long-term stability and assisting customers in establishing re-opening plans.
Results of such various release experiments have demonstrated the significant economic and strategic importance of theatrical exhibition and studios have broadly returned to exclusive theatrical releases for a period of approximately 45 days (versus the previous window of approximately 75 days), when most of a film's box office revenue is earned.
Results of such various release experiments demonstrated the significant economic and strategic importance of theatrical exhibition and studios have broadly returned to exclusive theatrical releases for a period of approximately 45 days (versus the previous window of approximately 75 days), which is when most of a film's box office revenue is earned.
Eat & Play The emergence of the "eatertainment" category has inspired an increasing number of successful concepts that appeal to consumers by providing good food and high-quality entertainment options all at one location. Our eat & play portfolio includes golf entertainment complexes, entertainment districts and family entertainment centers.
Eat & Play The emergence of the "eatertainment" category has inspired an increasing number of successful concepts that appeal to consumers by providing high-quality food and entertainment options all at one location. Our eat & play portfolio includes golf entertainment complexes, entertainment districts and family entertainment centers.
Our golf entertainment complexes combine golf with entertainment, competition and food and beverage service, and are leased to, or we have mortgage receivables from, Topgolf USA ("Topgolf"). By combining interactive entertainment with quality food and beverage and a long-lived recreational activity, Topgolf provides an innovative, enjoyable and repeatable customer experience.
Our golf entertainment complexes combine golf with entertainment, competition and food and beverage service, and are leased to, or we have mortgage receivables from, Topgolf USA ("Topgolf"). By combining interactive entertainment with high-quality food and beverage and a long-lived recreational activity, Topgolf provides an innovative, enjoyable and repeatable customer experience.
Since that time, we have been a leading net lease investor in experiential real estate, venues which create value by facilitating out of home leisure and recreation experiences where consumers choose to spend their discretionary time and money.
Since that time, we have been a leading net lease investor in experiential real estate, venues that create value by facilitating out of home leisure and recreation experiences where consumers choose to spend their discretionary time and money.
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 or pursuant to contractual rights of our tenants or our customers.
Although we are primarily a long-term investor, we may sell assets if we believe that it is in the best interest of our shareholders or pursuant to contractual rights of our tenants or our customers.
To achieve these objectives, our human capital programs are designed to develop talent to prepare them for critical roles and leadership positions for the future; reward and support employees through competitive pay, benefit, and perquisite programs; enhance our culture through efforts aimed at making the workplace more engaging and inclusive; acquire talent and facilitate internal talent mobility to create a high-performing, diverse workforce; and evolve and invest in technology, tools, and resources to enable employees at work.
To achieve these objectives, our human capital programs are designed to develop talent to prepare them for critical roles and leadership positions for the future; reward and support employees through competitive pay, benefits, and perquisite programs; enhance our culture through efforts aimed at making the workplace more engaging and inclusive; acquire talent and facilitate internal talent mobility to create a high-performing, diverse workforce; and evolve and invest in technology, tools, and resources to enable employees at work.
Moviegoing has been a dominant out-of-home entertainment option for decades, with over 1.2 billion tickets sold in North America during 2019 (prior to the pandemic) according to the Motion Picture Association (MPA) 2019 Theme Report. We believe that the evolution in theatres and enhanced customer experience will continue to bring customers back to enjoy film exhibition in a post-pandemic environment.
Moviegoing has been a dominant out-of-home entertainment option for decades, with over 1.2 billion tickets sold in North America during 2019 (prior to the pandemic) according to the Motion Picture Association (MPA) 2019 Theme Report. We believe that the evolution in theatres and enhanced customer experience will continue to bring customers back to enjoy film exhibition.
Item 1. Business General 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.
Item 1. Business General EPR Properties (“we,” “us,” “our,” “EPR” or the “Company”) was formed on August 22, 1997 as a self-administered 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.
As of December 31, 2022, we had 55 full-time employees. Examples of key programs and initiatives that are focused to attract, develop and retain our diverse workforce include: • Employee Engagement. We use Gallup to measure employee engagement through a survey administered annually. This helps us to understand the overall level of engagement of our associates.
As of December 31, 2023, we had 55 full-time employees. Examples of key programs and initiatives that are focused to attract, develop and retain our diverse workforce include: • Employee Engagement. We use Gallup to measure employee engagement through a survey administered annually. This helps us to understand the overall level of engagement of our associates.
Growth Strategies Our strategic growth is focused on acquiring or developing a high-quality, diversified portfolio of experiential real estate venues which create value by facilitating out of home leisure and recreation experiences where consumers choose to spend their discretionary time and money.
Growth Strategies Our strategic growth is focused on acquiring or developing a high-quality, diversified portfolio of experiential real estate venues that create value by facilitating out of home leisure and recreation experiences where consumers choose to spend their discretionary time and money.
Our ground lease tenant has invested in excess of $930.0 million i n the construction of the casino and resort project, and the casino first opened for business in February 2018. We will continue to pursue opportunities for investment in gaming under triple net lease structures or mortgages.
Our ground lease tenant has invested in excess of $930.0 million in the construction of the casino and resort project, and the casino first opened for business in February 2018. We will continue to pursue opportunities for investment in gaming under triple-net lease structures or mortgages.
Entertainment districts are restaurant, retail and other entertainment venues typically anchored by a megaplex theatre. The opportunity to capitalize on the traffic generation of our existing market-dominant theatres to create entertainment districts not only strengthens the execution of the megaplex theatre but adds diversity to our tenant and asset base.
Entertainment districts are restaurant, retail and other entertainment venues typically anchored by a megaplex theatre. The opportunity to capitalize on the traffic generated by our existing market-dominant theatres to create entertainment districts not only strengthens the execution of the megaplex theatre, but adds diversity to our tenant and asset base.
Fitness & Wellness The increased priority on holistic wellness has become a driving force within the fitness and wellness industry. From relaxing spas to intense spin classes, consumers are seeking an expanded set of offerings delivered across a variety of boutique fitness centers, larger fitness centers and resort spas.
Fitness & Wellness The increased focus on holistic wellness has become a driving force within the fitness and wellness industry. From relaxing spas to intense spin classes, consumers are seeking an expanded set of offerings delivered across a variety of boutique fitness centers, larger fitness centers and resort spas.
We have and will continue to evaluate our existing portfolio for additional development of entertainment, retail and restaurant density, and we will also continue to evaluate the purchase or financing of existing entertainment districts that have demonstrated strong financial performance and meet our quality standards.
We have and will continue to evaluate our existing portfolio for additional development of entertainment, retail and restaurant density, and we will also continue to evaluate the purchase or financing of existing entertainment districts that demonstrate strong financial performance and meet our quality standards.
During 2022, we returned to growth as our customers' businesses continued to recover. More recently, r ising interest rates, inflation and the challenging economic environment, along with a theatre customer's bankruptcy, have increased our cost of capital which has negatively impacted our ability to make investments in the near-term.
During 2022, we returned to growth as our customers' businesses continued to recover. More recently, rising interest rates, inflation and the challenging economic environment, along with a theatre customer's bankruptcy, have increased our cost of capital, which has negatively impacted our ability to make investments in the near-term.
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 existing experiential property types, or potential future additional experiential property types.
Retention and building of this knowledge depth creates a competitive advantage allowing us to more quickly identify key market trends. To this end, we deliberately apply information and our ingenuity to identify properties that represent potential logical extensions within each of our existing experiential property types, or potential future additional experiential property types.
As of December 31, 2022, our investment in gaming consisted of land under ground lease related to the Resorts World Catskills casino and resort project in Sullivan County, New York.
As of December 31, 2023 , our investment in gaming consisted of land under ground lease related to the Resorts World Catskills casino and resort project in Sullivan County, New York.
By allowing consumers to focus on their individual interests and goals in a community setting, operators gain loyalty and retention which are essential elements in the ongoing success of fitness and wellness facilities. Industry leaders have stayed at the forefront by offering personalization within congregate settings.
By allowing consumers to focus on their individual interests and goals in a community setting, operators gain loyalty and retention which are essential elements in the ongoing success of fitness and wellness facilities. Industry leaders remain at the forefront by offering personalization within congregate settings.
Louis is one of our properties and is a great example of an emerging category called “artainment” which is an art display that invites guests to interact and explore. We believe that demand for cultural activities will continue to build and we expect to continue to pursue opportunities in this area.
Louis is one of our properties and is a great example of an emerging category called “artainment,” which is an art display that invites guests to interact and explore. We believe that demand for cultural activities will continue to build, and we expect to continue to pursue opportunities in this area.
Business Objectives and Strategies Our vision is to continue to build the premier experiential REIT. We focus on real estate venues which create value by facilitating out of home leisure and recreation experiences where consumers choose to spend their discretionary time and money.
Business Objectives and Strategies Our vision is to continue to build the premier diversified experiential REIT. We focus on real estate venues that create value by facilitating out of home leisure and recreation experiences where consumers choose to spend their discretionary time and money.
We may redevelop properties in conjunction with a lease renewal or new tenant, or we may redevelop properties that have more earnings potential 7 due to the redevelopment. Additionally, certain of our properties have excess land where we will pro-actively seek opportunities to further develop.
We may redevelop properties in conjunction with a lease renewal or new tenant, or we may redevelop properties that have more earnings potential 7 due to the redevelopment. Additionally, certain of our properties have excess land where we will proactively seek opportunities to further develop.
Ski Our ski portfolio provides a sustainable advantage for the experience-oriented consumer, providing outdoor entertainment in the winter and, in some cases, year-round. All the ski properties that serve as collateral for our mortgage notes in this area, as well as ou r three owned p roperties, offer snowmaking capabilities and provide a variety of terrains and vertical drop options.
Ski Our ski portfolio provides a sustainable advantage for the experience-oriented consumer, providing outdoor entertainment in the winter and, in some cases, year-round. All the ski properties 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.
Additionally, national and local exhibitors have made significant strides to further enhance the customer experience. These enhancements include reserved, luxury seating and expanded food and beverage offerings, including the addition of alcohol and more efficient point of sale systems.
Additionally, national and local exhibitors have made significant strides to further enhance the customer experience. These enhancements include reserved, luxury seating and expanded food and beverage offerings, such as the addition of alcohol and more efficient point of sale systems.
We expect this to occur as we limit new investments in theatres, grow other target experiential property types and pursue opportunistic dispositions of theatre properties. As of December 31, 2022, our owned theatre properties were leased to 19 different leading theatre operators. A significant portion of our total revenue was from AMC and Regal.
We expect this to occur as we limit new investments in theatres, grow other target experiential property types and pursue opportunistic dispositions of theatre properties. As of December 31, 2023 , our owned theatre properties were leased to 17 different leading theatre operators. A significant portion of our total revenue was from AMC and Regal.
See Item 7 - "Management's Discussion and Analysis of Financial C ondition and Results of Operations - Non-GAAP Financial Measures" for the reconciliation of "Total assets" in the consolidated balance sheet to total investments and the calculation of total investments at December 31, 2022 and 2021. We currently group our investments into two reportable segments: Experiential and Education.
See Item 7 - "Management's Discussion and Analysis of Financial C ondition and Results of Operations - Non-GAAP Financial Measures" for the reconciliation of "Total assets" in the consolidated balance sheet to total investments 1 and the calculation of total investments at December 31, 2023 and 2022 . We group our investments into two reportable segments: Experiential and Education.
Our private schools provide an alternative to meet the significant demand for high-quality education in the United States. As educational choice continues to become a priority for parents, private schools provide yet another option for maximizing the educational experience.
Our private schools provide an alternative to meet the significant demand for high-quality education in the United States. As educational choice remains a priority for parents, private schools provide yet another option for maximizing the educational experience.
Our investments are generally structured as long-term triple-net leases that require tenants to pay substantially all expenses associ ated with the operation and maintenance of the property, or as long-term mortgages with economics similar to our triple-net lease structure. 1 Our total investments (a non-GAAP financial measure) were approximat ely $6.7 billion at December 31, 2022.
Our investments are generally structured as long-term triple-net leases that require tenants to pay substantially all expenses associ ated 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 (a non-GAAP financial measure) were approximat ely $6.8 billion at December 31, 2023 .
Gaming Our strategic focus in our gaming portfolio is on casino resorts and hotels leased to leading operators with a strong regulatory track record that seek to drive consumer loyalty and value through quality customer experiences, superior service, world-class affinity programs and continuous innovation on and off the gaming floor.
Gaming Our gaming portfolio is strategically focused on casino resorts and hotels leased to leading operators with a strong regulatory track record that seek to drive consumer loyalty and value through quality customer experiences, superior service, world-class affinity programs and continuous innovation on and off the gaming floor.
Payment of Regular Dividends We expect to continue paying dividend distributions to our common shareholders on a monthly basis (as opposed to a quarterly basis). We expect to continue paying dividend distributions to our preferred shareholders on a quarterly basis.
Payment of Regular Dividends We expect to continue paying dividend distributions to our common shareholders monthly (as opposed to quarterly). We expect to continue paying dividend distributions to our preferred shareholders quarterly.
For the year ended December 31, 2022, approximately $94.5 million, or 14.4% and $90.7 million or 13.8% of the Company's total revenue was from AMC and Regal, respectively.
For the year ended December 31, 2023 , approximately $94.7 million, or 13.4%, and $103.7 million, or 14.7%, of the Company's total revenue was from AMC and Regal, respectively.
As of December 31, 2022, our Experiential investments comprised $6.2 billion, or 92%, and our Education investments comprised $0.5 billion, or 8%, of our total investments . A more detailed description of the property types included within these segments is provided below.
As of December 31, 2023, our Experiential investments comprised $6.3 billion, or 93%, and our Education investments comprised $0.5 billion, or 7%, of our total investments . A more detailed description of the property types included within these segments is provided below.
Furthermore, advanced snowmaking capabilities increase the reliability of the experience during the winter versus other ski properties that do not have such capabilities. These properties are leased to, or we have mortgage notes receivable f rom, three differ ent operators. We expect to continue to pursue opportunities in this area.
Furthermore, advanced snowmaking capabilities increase the reliability of the experience during the winter versus other ski properties without such capabilities. These properties are leased to, or we have mortgage notes receivable from, three different operators. We expect to continue to pursue opportunities in this area.
We expect to continue to pursue select opportunities related to golf entertainment complexes. A significant portion of our total revenue was from Topgolf, which totaled approximately $94.2 million or 14.3%, of the Compan y's total revenue for the year ended December 31, 2022. We also continue to seek opportunities for the acquisition, financing or development of entertainment districts.
We expect to continue to pursue select opportunities related to golf entertainment complexes. A significant portion of our total revenue was from Topgolf, which totaled approximat ely $98.0 million, or 13.9%, of the Company's total revenue for the year ended December 31, 2023. We also continue to seek opportunities for the acquisition, financing or development of entertainment districts.
Many are utilizing new technology, personalizing the guest experience and implementing an element of play that was previously absent. In making new investments in this property type, we will continue to identify the locations and tenants that execute well on these trends and have a history of strong attendance. City Museum in St.
In making new investments in this property type, we will continue to identify the locations and tenants that execute well on these trends and have a history of strong attendance. City Museum in St.
It is our intention to ultimately dispose of our Education portfolio over time. During 2021 and 2020, the COVID-19 pandemic severely impacted experiential real estate properties because such properties involve congregate social activity and discretionary spending. During 2022, our non-theatre properties demonstrated strong recovery from the impacts of the pandemic with overall rent coverage above the 2019 pre-pandemic level.
It is our intention to ultimately dispose of our Education portfolio over time. During 2021 and 2020, the COVID-19 pandemic severely impacted experiential real estate properties because such properties involve congregate social activity and discretionary spending.
Specific steps we have taken to address our commitment to DE&I include: ▪ Creating the first EPR DE&I Council and engaging a DE&I external advisor; ▪ Refining a Diversity Statement articulating our commitment to building an inclusive and diverse environment as follows: 9 "At EPR Properties, people are the heart of our business.
Specific steps we have taken to address our commitment to DEIB include: ▪ Continuing DEIB Council meetings to drive DEIB initiatives; ▪ Refining a Diversity Statement articulating our commitment to building an inclusive and diverse environment as follows: 9 "At EPR Properties, people are the heart of our business. We invest in properties to create experiences for all people.
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.
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.
This is in part likely due to the fact that the majority of content streamed in-home is series-based content. While theatres are the largest property type in our Experiential segment currently, we intend to significantly reduce our exposure to theatres in the future, thereby increasing the diversity of our experiential property types.
This is in part likely due to the fact that the majority of content streamed in-home is series-based content. We intend to significantly reduce our investments in theatres in the future and further diversify our other experiential property types.
As appreciation for the importance of leisure time is growing, cultural venues are broadening their appeal to reach a variety of customers. Desiring to be a preeminent choice in what is now known as location-based experiences, several trends have developed among cultural venues.
As appreciation for the importance of leisure time is growing, cultural venues are broadening their appeal to reach a variety of customers. Desiring to be a preeminent provider of location-based experiences, several trends have developed among cultural venues. Many are utilizing new technology, personalizing the guest experience and implementing an element of play that was previously absent.
Experiential As of December 31, 2022, our Experiential segment included total investments of approxim ately $6.2 billion in the following property types (owned or financed): • 172 theatre properties; • 57 eat & play properties (including seven theatres located in entertainment districts); • 23 attraction properties; • 11 ski properties; • seven experiential lodging properties; • 15 fitness & wellness properties; • one gaming property; and • three cultural properties.
Experiential As of December 31, 2023, our Experiential portfolio (excluding property under development and undeveloped land inventory) consisted of the following property types (owned or financed): • 166 theatre properties; • 58 eat & play properties (including seven theatres located in entertainment districts); • 23 attraction properties; • 11 ski properties; • seven experiential lodging properties; • 20 fitness & wellness properties; • one gaming property; and • three cultural properties.
Additionally, EPR will match employee contributions annually up to a given amount for contributions from their personal funds to nonprofit organizations that meet the criteria of the program. Also, in 2020, 2021 and 2022, EPR Impact supported a giving initiative, "The Amazing Giving Race," for employees to support local charities and other causes.
Additionally, EPR will match employee contributions annually up to a given amount for contributions from their personal funds to nonprofit organizations that meet the criteria of the program.
Experiential Lodging Experiential lodging meets the needs of consumers by providing a convenient, central location that combines high-quality lodging amenities with entertainment, recreation and leisure activities. The appeal of these properties attracts multiple generations at onc e. We have seen demand for experiential lodging return as properties have reopened post-COVID.
Experiential Lodging Experiential lodging meets the needs of consumers by providing a convenient, central location that combines high-quality lodging amenities with entertainment, recreation and leisure activities. The appeal of these properties attracts multiple generations at once. By offering more than the standard lodging destination, these properties provide an added incentive as consumers opt for distinctive, curated experiences.
As discussed below, our theatre customers were more severely impacted by the COVID-19 pandemic and have seen a slower recovery than our non-theatre customers due primarily to changes in the timing of film releases, production delays and experimentation with streaming. As discussed below, one of our largest theatre customers declared bankruptcy during September of 2022.
Our theatre customers were more severely impacted by the COVID-19 pandemic and have seen a slower recovery than our non-theatre customers due primarily to changes in the timing of film releases, labor disputes, production delays and experimentation with streaming. Going forward, we intend to significantly reduce our investments in theatres, thereby increasing the diversity of our experiential property types.
As of December 31, 2022, our owned Experiential real estate portfolio of approximately 20.0 million square feet was 97.2% leased and included $76.0 million in property under development and $20.2 million in undeveloped land inventory. Theatres A significant portion of our Experiential portfolio consists of modern megaplex theatres.
As of December 31, 2023 , our owned Experiential real estate portfolio consisted of approximately 19.8 million square feet, which includes 0.6 million square feet of properties we intend to sell. Our Experiential portfolio, excluding the properties we intend to sell, was 99% leased and included $131.3 million in property under development and $20.2 million in undeveloped land inventory.
In 2022, we hosted and facilitated virtual sessions with an external professional, focused on “Finding Balance in All You Do.” • Diversity, Equity and Inclusion ("DE&I"). Our DE&I objectives are to ensure our culture is evolving and inclusive and to build teams that reflect the life experiences of our customers and the ultimate consumers of our customers’ services.
In 2023, we hosted and facilitated a two-part training session titled "It's Your Career, Own It." • Diversity, Equity, Inclusion and Belonging ("DEIB"). Our DEIB objectives are to ensure our culture is evolving and inclusive and to build teams that reflect the life experiences of our customers and the ultimate consumers of our customers’ services.
Going forward, we intend to significantly reduce our exposure to theatres, thereby increasing the diversity of our experiential property types. We expect this to occur as we limit new investments in theatres, grow other target experiential property types and pursue opportunistic dispositions of theatre properties.
We expect this to occur as we limit new investments in theatres, grow other target experiential property types and pursue opportunistic dispositions of theatre properties. Subsequent to 2021, REITS have generally experienced heightened risks and volatility due to the impact of inflation, including rising interest rates.
Our investments in experiential lodging have been typically structured using triple-net leases, however, we currently opera te six properties (four of which are included in an unconsolidated joint venture) t hrough a traditional REIT lodging structure.
Our investments in experiential lodging are structured using triple-net leases and mortgage notes, and we currently operate five properties (all of which are included in unconsolidated joint ventures) through traditional REIT lodging structures.
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 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.
We believe this is most likely attributable to studios pushing movie content to future dates, with certain studios choosing to experiment with hybrid content release strategies in support of their direct-to-consumer streaming services, as well as production delays stemming from the COVID-19 pandemic.
During the period of COVID-19 pandemic-response restrictions on theatre operations, certain studios choose to experiment with hybrid content release strategies in support of their direct-to-consumer streaming services.
Education As of December 31, 2022, our Education segment included total investments of approxi mately $0.5 billion in the following property types (owned or financed): • 65 early childhood education center properties; and • 9 private school properties. As of December 31, 2022, our owned Education real estate portfolio consisted of approximately 1.4 million square feet, which was 100% leased.
Education As of December 31, 2023, our Education segment consisted of the following property types (owned or financed): • 61 early childhood education center properties; and • nine private school properties.
Certain theatre customers continue to be on a cash-basis for revenue recognition purposes due to the ongoing uncertainty, including American Multi-Cinema, Inc. ("AMC") and Regal Cinemas ("Regal"), a subsidiary of Cineworld Group. On September 7, 2022, Cineworld Group filed for Chapter 11 bankruptcy protection.
Two theatre customers continue to be on a cash-basis for revenue recognition purposes due to the ongoing uncertainty, including American Multi-Cinema, Inc. ("AMC"). We have experienced vacancies at certain theatre properties and have sold many of these properties. The remaining vacant properties are currently in the process of being sold or we are managing these theatres through a third-party manager.
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While we could not have foreseen that our properties would have been tested so severely by the COVID-19 pandemic, we believe our long-term investing thesis remains intact.
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Subsequent to this, our non-theatre properties demonstrated strong recovery and stabilization from the impacts of the pandemic with overall rent coverage for 2023 above the 2019 pre-pandemic level.
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As evidenced by the variety of properties we invested in during 2022, we believe we are uniquely positioned to gain access to and pursue the broader set of non-theatre experiential properties within our target set.
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As a result, negative pressure in financial and capital markets has increased the cost of capital.
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More recently, the challenging economic environment and a theatre tenant's bankruptcy have increased our cost of capital, which has negatively impacted our ability to make investments in the near-term.
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Until capital costs improve, we expect that our levels of investment spending will be limited in the near-term and that these investments will be funded primarily from cash on hand, excess cash flow, disposition proceeds and borrowing availability under our unsecured revolving credit facility, subject to maintaining our leverage levels consistent with past practice.
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As a result, we intend to be more selective in making investments and acquisitions, utilizing excess cash flow and borrowings under our line of credit, until such time as economic conditions improve and our cost of capital returns to acceptable levels, which may depend, in part, upon the ultimate outcome of our theatre tenant's bankruptcy proceedings.
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As a result, we intend to continue to be more selective in our investment spending until such time as economic conditions and our cost of capital improve. As of December 31, 2023, our total assets were a pproximately $5.7 billion (after accumulated depreciation of approximately $1.4 billion) with properties located in 44 states, Ontario and Quebec, Canada.
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We are a self-administered REIT. As of December 31, 2022, our total assets were a pproximately $5.8 billion (after accumulated depreciation of approximately $1.3 billion).
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Theatres A significant portion of our Experiential portfolio consists of modern megaplex theatres. During 2023, the theatre industry continued its recovery from the COVID-19 pandemic supported by a wide range of box office hits including Barbie, The Super Mario Bros. Movie, Spider Man - Across the Spider Verse and Oppenheimer.
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During 2022, the theatre industry continued its recovery from the COVID-19 pandemic with total U.S. box office revenues up approximately 64% over 2021. However, total U.S. box office revenues for 2022 was still approximately 35% below the 2019 pre-pandemic level.
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Additionally, Taylor Swift: The Eras Tour and Renaissance: A Film by Beyoncé grossed a combined $8.9 billio n in North American box office revenues during 2023, creating an opportunity for alternative content for our theatre tenants. To tal North American box office revenues for 2023 were up approximately 21% over 2022.
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However, film release and production delays will likely continue to impact the film release calendar in 2023. While this may be best characterized as a content issue versus a consumer demand issue, during this period of recovery our theatre customers are not able to fully maximize revenues.
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While the industry continues to demonstrate significant resilience driven by consumer demand, the recently resolved writers' and actors' strikes created production delays, which have impacted the release timing of future titles. Separately, theatre food and beverage revenues have notably increased as compared to 2019, contributing to improved theatre rent coverage levels, which are approaching pre-COVID levels.
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Prior to 2022, we experienced vacancies at certain non-Regal theatre properties and have sold most of these properties or are managing them through a third-party manager.
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This broad selection of entertainment options creates a convenient and engaging experience for consumers who want to park their cars only once, and experience different forms of entertainment.
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Accordingly, we intend to be more selective in making investments and acquisitions until such time as economic conditions improve and our cost of capital returns to 6 acceptable levels, which may depend, in part, upon the ultimate outcome of our theatre tenant's bankruptcy proceedings.
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As of December 31, 2023, our owned Education real estate portfolio consisted of approximately 1.3 million square feet, which includes 39 thousand square feet of properties we intend to sell. The Education portfolio, excluding the properties we intend to sell, was 100% leased.
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We invest in properties to create experiences for all people.
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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.
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We advocate and strive for a culture that recognizes and believes in diversity, equity, inclusion and belonging." ▪ Joining the CEO Action for Diversity & Inclusion Network committing to drive measurable action and meaningful change in advancing diversity, equity and inclusion in the workplace. ▪ Completing an Organizational DE&I Assessment to prioritize goal setting development; ▪ Hosting DE&I learning opportunities with external experts in 2022; ▪ Adopting policies with respect to recruiting processes to ensure an active approach to diversification at all areas of our organization, including a requirement that diverse candidates be interviewed for every open position; and ▪ Establishing a partnership with a local charter school to provide internship opportunities to diverse alumni as a means to invest in a future and local diverse talent pipeline. • Compensation and Benefits.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe ultimate extent of the continuing impacts of the COVID-19 pandemic or any other highly infectious or contagious diseases to our operations and those of our tenants and borrowers will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of any resurgence of the pandemic (including COVID-19 variants) or an outbreak of any other highly infectious or contagious diseases, the actions taken to contain any outbreak or resurgence or mitigate their impacts, the distribution of vaccines and the continuing efficacy of those vaccines to COVID-19 variants, the public’s confidence in the health and safety measures implemented by our tenants and borrowers, the continuing direct and indirect economic effects of the outbreak and any other outbreaks and containment measures, and the ability of our tenants and borrowers to recover from the negative economic impacts of the pandemic as it subsides, and in many cases, service elevated levels of debt resulting from the pandemic, among others.
Biggest changeThe ultimate extent of the impacts of the COVID-19 pandemic or any other highly infectious or contagious diseases to our operations and those of our tenants and borrowers will depend on future developments, which are highly uncertain and cannot be predicted with confidence. Inflation could adversely impact our customers and our results of operations.
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 a tenant becomes insolvent or bankrupt, we cannot be sure that we could promptly recover the premises from the tenant 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.
We are subject to other risks in connection with any such development or acquisition activities, including the following: • we may not succeed 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 encounter difficulties and incur substantial expenses in integrating acquired properties into our operations and systems and, in any event, the integration may require a substantial amount of time on the part of both our management and employees and therefore divert their attention from other aspects of our business; • 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 incur unanticipated capital expenditures in order to maintain or improve acquired properties; • 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; 29 • 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 incur adverse tax consequences if we fail to qualify as a REIT for U.S. federal income tax purposes following an acquisition; • we may be subject to risks associated with providing mortgage financing to third parties in connection with transactions, including any default under such mortgage financing; • we may face litigation or other claims in connection with, or as a result of, acquisitions, including claims from terminated employees, tenants, former stockholders or other third parties; • the market price of our common shares, preferred shares and debt securities may decline, particularly if we do not achieve the perceived benefits of any acquisition as rapidly or to the extent anticipated by securities or industry analysts or if the effect of an acquisition on our financial condition, results of operations and cash flows is not consistent with the expectations of these analysts; • we may issue shares in connection with acquisitions resulting in dilution to our existing shareholders; and • we may assume debt or other liabilities in connection with acquisitions.
We are subject to other risks in connection with any such development or acquisition activities, including the following: • we may not succeed 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 encounter difficulties and incur substantial expenses in integrating acquired properties into our operations and systems and, in any event, the integration may require a substantial amount of time on the part of both our management and employees and therefore divert their attention from other aspects of our business; • 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 incur unanticipated capital expenditures in order to maintain or improve acquired properties; 29 • 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 incur adverse tax consequences if we fail to qualify as a REIT for U.S. federal income tax purposes following an acquisition; • we may be subject to risks associated with providing mortgage financing to third parties in connection with transactions, including any default under such mortgage financing; • we may face litigation or other claims in connection with, or as a result of, acquisitions, including claims from terminated employees, tenants, former stockholders or other third parties; • the market price of our common shares, preferred shares and debt securities may decline, particularly if we do not achieve the perceived benefits of any acquisition as rapidly or to the extent anticipated by securities or industry analysts or if the effect of an acquisition on our financial condition, results of operations and cash flows is not consistent with the expectations of these analysts; • we may issue shares in connection with acquisitions resulting in dilution to our existing shareholders; and • we may assume debt or other liabilities in connection with acquisitions.
If we are required to be found suitable and 23 are found suitable as a landlord, we will be registered as a public company with the gaming authorities and will be subject to disciplinary action if, after we receive notice that a person is unsuitable to be a shareholder or to have any other relationship with us, we: • pay that person any distribution or interest upon any of our voting securities; • allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person; • pay remuneration in any form to that person for services rendered or otherwise; or • fail to pursue all lawful efforts to require such unsuitable person to relinquish his or her voting securities, including, if necessary, the immediate purchase of the voting securities for cash at fair market value.
If we are required to be found suitable and are found suitable as a landlord, we will be registered as a public company with the gaming authorities and will be subject to disciplinary action if, after we receive notice that a person is unsuitable to be a shareholder or to have any other relationship with us, we: • pay that person any distribution or interest upon any of our voting securities; • allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person; • pay remuneration in any form to that person for services rendered or otherwise; or • fail to pursue all lawful efforts to require such unsuitable person to relinquish his or her voting securities, including, if necessary, the immediate purchase of the voting securities for cash at fair market value.
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 or other illness outbreaks (such as COVID-19 or variants thereof), which could cause consumers to avoid congregate settings; • our ability or the ability of our tenants or managers 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 lodging properties or a reduction in demand for real estate in the area; • competition from other available space or, in the case of our experiential lodging properties, competition from other lodging properties or alternative lodging options in our markets; • whether tenants and users such as customers of our tenants consider a property attractive; • the financial condition of our tenants, borrowers and managers, including the extent of bankruptcies or defaults; • higher levels of inflation; • whether we are able to pass some or all of any increased operating costs through to tenants or other customers; • how well we manage our properties or how well the managers of properties manage those properties; • in the case of our experiential lodging properties, dependence on demand from business and leisure travelers, which may fluctuate and be seasonal; • 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; 25 • government regulation; • availability of financing on acceptable terms or at all and the costs of such financing; • potential liability under environmental or other laws or regulations; and • general competitive factors.
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 or other illness outbreaks (such as COVID-19 or variants thereof), which could cause consumers to avoid congregate settings; • our ability or the ability of our tenants or managers 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 lodging properties or a reduction in demand for real estate in the area; • competition from other available space or, in the case of our experiential lodging properties, competition from other lodging properties or alternative lodging options in our markets; • whether tenants and users such as customers of our tenants consider a property attractive; 24 • the financial condition of our tenants, borrowers and managers, including the extent of bankruptcies or defaults; • higher levels of inflation; • whether we are able to pass some or all of any increased operating costs through to tenants or other customers; • how well we manage our properties or how well the managers of properties manage those properties; • in the case of our experiential lodging properties, dependence on demand from business and leisure travelers, which may fluctuate and be seasonal; • 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 and the costs of such financing; • potential liability under environmental or other laws or regulations; and • general competitive factors.
The ability of our customers to operate successfully in the experiential real estate industry and remain current on their obligations depends on a number of factors, including, with respect to theatres, 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.
The ability of our customers to operate successfully in the experiential real estate industry and remain current on their obligations depends on a number of factors, including, with respect to theatres, 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 (the time that elapses from the date of a motion picture's theatrical release to the date it is available on other mediums) and the terms on which the motion pictures are licensed.
Also, downgrades in our credit ratings would trigger additional costs or other potentially negative consequences under our current and future credit facilities and future debt instruments. 14 Rising interest rates and future increases will likely 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.
Also, downgrades in our credit ratings would trigger additional costs or other potentially negative consequences under our current and future credit facilities and future debt instruments. Rising interest rates and future increases will likely 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.
Properties we develop may not achieve sufficient operating results within expected timeframes and therefore the tenant or borrowers may not be able to pay their agreed upon rent or interest, and managed properties may not be able to operate profitably, which could adversely affect our financial results. A significant portion of our investments include investments in build-to-suit projects.
Properties we develop may not achieve sufficient operating results within expected timeframes and therefore the tenant or borrowers may not be able to pay their agreed upon rent or interest, and managed properties may not be able to operate profitably, which could adversely affect our financial results. A significant portion of our investments include build-to-suit projects.
There are a number of provisions in our Declaration of Trust and Bylaws and under Maryland law and agreements we have with others, any of 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.
There are a number of provisions in our Declaration of Trust and Bylaws and under Maryland law and agreements we have with others, any of which could make it more difficult for a party to make a tender offer for our shares or complete a takeover of the Company that is not approved by our Board of Trustees.
Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.
Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and we have implemented various measures to manage the risk of a 23 security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.
However, we are exposed to risks that the insurance coverage levels required under our leases with tenants, financing arrangements with borrowers and agreements with managers of our properties may be inadequate, and these risks may be increased as we expand our portfolio into experiential properties that may present more risk of loss as compared to properties in our existing portfolio.
However, we are exposed to risks that the insurance coverage levels required under our leases with tenants, financing arrangements with borrowers and agreements with managers of our properties may be inadequate, and these risks may be increased as we expand our portfolio into experiential properties that may present more risk of 25 loss as compared to properties in our existing portfolio.
An increase in our expenses at these properties and a failure of our revenues to increase at least with inflation could adversely impact our financial condition and our results of operations. Most of our customers, consisting primarily of tenants and borrowers, operate properties in market segments that depend upon discretionary spending by consumers.
An increase in our expenses at these properties and a failure of our revenues to increase at least with inflation could adversely impact our financial condition and our results of operations. 12 Most of our customers, consisting primarily of tenants and borrowers, operate properties in market segments that depend upon discretionary spending by consumers.
Further, in the event that our gaming facility lease agreements or future lease agreements are terminated or expire and a new tenant is not licensed or fails to receive other regulatory approvals, the properties may not be operated as gaming facilities and we will not be able to collect the applicable rent.
Further, in the event that our gaming facility lease agreement or future lease agreements are terminated or expire and a new tenant is not licensed or fails to receive other regulatory approvals, the properties may not be operated as gaming facilities and we will not be able to collect the applicable rent.
Item 1A. Risk Factors There are many risks and uncertainties that can affect our current or future business, operating results, financial condition 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.
Item 1A. Risk Factors There are many risks and uncertainties that can affect our current or future business, operating results, financial condition or share price. The following discussion describes important factors that could adversely affect our current or future business, operating results, financial condition or share price. This discussion includes a number of forward-looking statements.
Our success depends upon, among other factors, trends of the national and local economies, financial condition and operating results of current and prospective customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation and population trends. 17 Three customers represent a significant portion of our total revenues.
Our success depends upon, among other factors, trends of the national and local economies, financial condition and operating results of current and prospective customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation and population trends. Three customers represent a significant portion of our total revenues.
If our gaming facility lease agreements, or any future lease agreement we enter into, are terminated (which could be required by a regulatory agency) or expire, any new tenant must be licensed and receive other regulatory approvals to operate our properties as gaming facilities.
If our gaming facility lease agreement, or any such future lease agreements we enter into, are terminated (which could be required by a regulatory agency) or expire, any new tenant must be licensed and receive other regulatory approvals to operate our properties as gaming facilities.
Some of these investors may be willing to accept lower returns on their investments, or have greater financial resources or a lower cost of capital than we do, a greater ability to borrow funds to acquire properties and the ability to accept more risk than we prudently manage.
Some of these investors may be willing to accept lower returns on their investments or have greater financial resources or a lower cost of capital than we do, a greater ability to borrow funds to acquire properties and the ability to accept more risk than we prudently 16 manage.
If some or all of our leases are not respected as true leases or qualified financing arrangements for U.S. federal income tax purposes and are not otherwise treated as generating qualifying REIT income, we may fail to qualify to be taxed as a REIT.
If some or all of our leases are not respected as true leases or 19 qualified financing arrangements for U.S. federal income tax purposes and are not otherwise treated as generating qualifying REIT income, we may fail to qualify to be taxed as a REIT.
Those coastal markets have historically experienced severe weather events, such as storms and drought, as well as other natural catastrophes such as wildfires and floods. If the frequency of extreme weather and other natural events increases due to climate change, our exposure to these events could increase.
Those coastal markets have historically experienced severe weather events, such as severe storms and prolonged drought, as well as other natural catastrophes such as wildfires and floods. If the frequency of extreme weather and other natural events increases due to climate change, our exposure to these events could increase.
A small amount of our debt financing is secured by mortgages on our properties and we may enter into additional secured mortgage financing in the future. If we fail to meet our mortgage payments, the lenders could declare a default and foreclose on those properties.
A small amount of our debt financing is secured by 18 mortgages on our properties and we may enter into additional secured mortgage financing in the future. If we fail to meet our mortgage payments, the lenders could declare a default and foreclose on those properties.
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. 22 We are subject to risks associated with the employment of personnel by managers of certain of our properties.
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. We are subject to risks associated with the employment of personnel by managers of certain of our properties.
Uncertain economic conditions and disruptions in the financial 12 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.
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.
In addition, in order to meet the requirements for qualification and taxation as a REIT under the Internal Revenue Code, prevent the recognition of particular types of non-cash income, or avert the imposition of a 100% tax that applies to specified gains derived by a REIT from dealer property or inventory, we may hold or dispose of some of our assets and conduct some of our operations through our TRSs or other subsidiary corporations that will be subject to corporate level income tax at regular rates.
In addition, in order to meet the requirements for qualification and taxation as a REIT under the Internal Revenue Code, prevent the recognition of particular types of non-cash income, or avert the imposition of a 100% tax that applies to specified gains derived by a REIT from dealer property or inventory, we may hold or dispose of some of our assets and conduct some of our operations through our taxable REIT subsidiaries ("TRSs") or other subsidiary corporations that will be subject to corporate level income tax at regular rates.
Many of these customers operate services or businesses that are dependent upon consumer experiences. The success of most of these businesses depends on the willingness or ability of consumers to use their discretionary 13 income to purchase our customers' products or services.
Many of these customers operate services or businesses that are dependent upon consumer experiences. 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.
O ur indebtedness could have important consequences, such as: • limiting our ability to obtain additional financing to fund our working capital needs, acquisitions, capital expenditures or other debt service requirements or for other purposes; • limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service debt; • limiting our ability to compete with other companies who are not as highly leveraged, as we may be less capable of responding to adverse economic and industry conditions; • restricting us from making strategic acquisitions, developing properties or pursuing business opportunities; • restricting the way in which we conduct our business because of financial and operating covenants in the agreements governing our existing and future indebtedness; • exposing us to potential events of default (if not cured or waived) under financial and operating covenants contained in our debt instruments that could have a material adverse effect on our business, financial condition and operating results; • increasing our vulnerability to a downturn in general economic conditions or in pricing of our investments; • negatively impacting our credit ratings; and • limiting our ability to react to changing market conditions in our industry and in our customers’ industries.
Our indebt edness could have important consequences, such as: • limiting our ability to obtain additional financing to fund our working capital needs, acquisitions, capital expenditures or other debt service requirements or for other purposes; • limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service debt; • limiting our ability to compete with other companies who are not as highly leveraged, as we may be less capable of responding to adverse economic and industry conditions; • restricting us from making strategic acquisitions, developing properties or pursuing business opportunities; • restricting the way in which we conduct our business because of financial and operating covenants in the agreements governing our existing and future indebtedness; • exposing us to potential events of default (if not cured or waived) under financial and operating covenants contained in our debt instruments that could have a material adverse effect on our business, financial condition and operating results; • increasing our vulnerability to a downturn in general economic conditions or in pricing of our investments; • negatively impacting our credit ratings; and • limiting our ability to react to changing market conditions in our industry and in our customers’ industries.
Foreign currency derivatives are subject to future risk of loss. We do not engage in purchasing foreign exchange contracts for speculative purposes. Additionally, we may enter other international markets which pose similar currency fluctuation risks as described above. 32 We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our shares.
Foreign currency derivatives are subject to future risk of loss. We do not engage in purchasing foreign exchange contracts for speculative purposes. Additionally, we may enter other international markets that 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.
We expect that our levels of investment spending will be reduced in the near term due to elevated costs of capital. 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.
We expect that our levels of investment spending will be limited in the near term due to elevated costs of capital. 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.
Specialty real estate projects such as we have 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.
Specialty real estate projects such as our investments 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.
Additionally, as of December 31, 2022, our Series E preferred shares are convertible, at each of the holder's option, into our common shares at a conversion rate of 0.4826 common shares per $25.00 liquidation preference, which is equivalent to a conversion price of approximately $51.80 per common share (subject to adjustment in certain events).
Additionally, as of December 31, 2023, our Series E preferred shares are convertible, at each of the holder's option, into our common shares at a conversion rate of 0.4826 common shares per $25.00 liquidation preference, which is equivalent to a conversion price of approximately $51.80 per common share (subject to adjustment in certain events).
The U.S. Federal Reserve has raised the benchmark interest rate multiple times during 2022, and there can be no assurances that the rate will not further increase in the future. As interest rates have increased, so has our interest costs for any new debt and any additional increases could further increase these costs.
The U.S. Federal Reserve has raised the benchmark interest rate multiple times beginning in 2022, and there can be no assurances that the rate will not further increase in the future. As interest rates have increased, so has our interest costs for any new debt and any additional increases could further increase these costs.
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.
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. A tenant becoming bankrupt or insolvent could diminish or eliminate the income we expect from that tenant's leases.
Our entertainment districts in Colorado, New York, California, 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.
Our entertainment districts in Colorado, New York, California, 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 that are operated by a single tenant.
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.
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 CAD.
There can be no assurance that we will be able to refinance such debt on favorable terms or at all, especially in light of rising interest rates and other negative economic conditions.
There can be no assurance that we will be able to refinance such debt on favorable terms or at all, especially in light of higher interest rates and other negative economic conditions.
We may also be adversely impacted as a real estate owner, operator and developer in the future by stricter energy and water efficiency standards, water access for our buildings or greenhouse gas regulations.
We may also be adversely impacted as a real estate owner, operator and developer in the future by stricter energy and water efficiency standards, water access for our properties or greenhouse gas regulations.
The ultimate extent to which the COVID-19 pandemic, as well as generally weakening economic conditions, impacts the operations of our tenants will depend on future developments, which, as discussed above, are highly uncertain and cannot be predicted with confidence. We could be adversely affected by a borrower's bankruptcy or default.
The ultimate extent to which the COVID-19 pandemic, as well as generally challenging and uncertain economic conditions, impacts the operations of our tenants will depend on future developments, which, as discussed above, are highly uncertain and cannot be predicted with confidence. 14 We could be adversely affected by a borrower's bankruptcy or default.
To the extent any of our 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.
To the extent any of our customers or their competitors report losses, slower earnings growth, take charges against earnings or enter bankruptcy proceedings, the market price for our shares could be adversely affected.
The ultimate extent to which the COVID-19 pandemic and the current challenging economic environment impacts our ability to comply with existing financial covenants and obtain financing will depend on future developments, which, as discussed above, are highly uncertain and cannot be predicted with confidence.
The ultimate extent to which the residual effects of the COVID-19 pandemic and the current challenging economic environment impacts our ability to comply with existing financial covenants and obtain financing will depend on future developments, which, as discussed above, are highly uncertain and cannot be predicted with confidence.
These include: • 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; • 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 and unsolicited takeovers; • 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 our 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 employees' termination of service. 31 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.
These include: • 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; • 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 and unsolicited takeovers; • 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; 31 • provisions in loan or joint venture agreements putting the Company in default upon a change in control; and • provisions of our 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 employees' termination of service.
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.
Our ability to meet our construction financing obligations that we have undertaken or may in the future enter into depends on our ability to obtain equity or debt financing in the required amounts.
Furthermore, our operating results and prospects may be below the expectations of public market analysts and investors or may be lower than those of companies with comparable market capitalization. Either of these factors could lead to a material decline in the market price of our shares.
These broad market fluctuations could reduce the market price of our shares. Furthermore, our operating results and prospects may be below the expectations of public market analysts and investors or may be lower than those of companies with comparable market capitalization. Either of these factors could lead to a material decline in the market price of our shares.
Under this structure and when we manage properties through a third-party manager, we rely on the performance of our properties and the ability of the properties' managers to increase revenues to keep pace with inflation which may be limited by competitive pressures.
When we manage properties through a third-party manager, we rely on the performance of our properties and the ability of the properties' managers to increase revenues to keep pace with inflation, which may be limited by competitive pressures.
We cannot predict what impact these uncertainties may have on overall guest visitation, guest spending or other related trends and the ultimate impact it will have on our customers’ operations and, in turn, their ability to perform under their respective leases or mortgages. Real estate is a competitive business. Our business operates in highly competitive environments.
We cannot predict what impact these uncertainties may have on overall guest visitation, guest spending or other related trends and the ultimate impact it will have on our customers’ operations and, in turn, their ability to perform under their respective leases or mortgages. Real estate is a competitive business. We operate in the highly competitive real estate industry.
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.
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.
The reduced economic activity resulting from the COVID-19 pandemic severely impacted our customers' businesses, financial condition and liquidity and also resulted in one of our largest tenants to declare bankruptcy , which adversely affected the market price for our shares.
Specifically, the reduced economic activity resulting from the COVID-19 pandemic severely impacted our customers' businesses, financial condition and liquidity and also resulted in one of our largest tenants declaring bankruptcy , which adversely affected the market price for our shares.
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. 27 These costs could be substantial and in extreme cases could exceed the value of the contaminated property.
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.
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 customers are engaged and the performance of real estate investment trusts generally, all of which have been negatively impacted by the COVID-19 pandemic and general weakening economic conditions.
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 customers are engaged and the performance of real estate investment trusts generally, all of which have been negatively impacted by generally challenging and uncertain economic conditions and residual effects of the COVID-19 pandemic.
Any delay in, or inability of, the new tenant to receive required licenses and other regulatory approvals from the applicable state and county government agencies may prolong the period during which we are unable to collect the applicable rent.
Any delay in, or inability of, the new tenant to receive required licenses and other regulatory approvals from the applicable state and county government agencies to operate the properties as gaming facilities may prolong the period during which we are unable to collect the applicable rent.
The ultimate extent to which the COVID-19 pandemic, as well as generally weakening economic conditions, impacts the operations of our customers will depend on future developments, which, as discussed above, are highly uncertain and cannot be predicted with confidence.
The ultimate extent to which the COVID-19 pandemic and the generally challenging and uncertain economic environment impacts the operations of our customers will depend on future developments, which, as discussed above, are highly uncertain and cannot be predicted with confidence.
While relief provisions can sometimes excuse REIT gross income test failures, significant penalty taxes may still be imposed. 21 For our TRS arrangements to comply as intended with the REIT qualification and taxation rules under the Internal Revenue Code, a number of requirements must be satisfied, including: • our TRSs may not directly or indirectly operate or manage a lodging facility, other than through an eligible independent contractor, as defined by the Internal Revenue Code; • the leases to our TRSs must be respected as true leases for federal income tax purposes and not as service contracts, partnerships, joint ventures, financings or other types of arrangements; • the leased properties must constitute qualified lodging facilities (including customary amenities and facilities) under the Internal Revenue Code; • our leased properties must be managed and operated on behalf of the TRSs by independent contractors who are less than 35% affiliated with us and who are actively engaged (or have affiliates so engaged) in the trade or business of managing and operating qualified lodging facilities for persons unrelated to us; and • the rental and other terms of the leases must be arm's length.
For our TRS arrangements to comply as intended with the REIT qualification and taxation rules under the Internal Revenue Code, a number of requirements must be satisfied, including: • our TRSs may not directly or indirectly operate or manage a lodging facility, other than through an eligible independent contractor, as defined by the Internal Revenue Code; • the leases to our TRSs must be respected as true leases for federal income tax purposes and not as service contracts, partnerships, joint ventures, financings or other types of arrangements; • the leased properties must constitute qualified lodging facilities (including customary amenities and facilities) under the Internal Revenue Code; • our leased properties must be managed and operated on behalf of the TRSs by independent contractors who are less than 35% affiliated with us and who are actively engaged (or have affiliates so engaged) in the trade or business of managing and operating qualified lodging facilities for persons unrelated to us; and • the rental and other terms of the leases must be arm's length.
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.
In addition, any claim we have for unpaid past rent would likely not be paid in full and we would take a charge against earnings for any accrued straight-line rent receivable related to the leases. We have experienced material customer bankruptcies in the past.
To the extent any of these 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 which could adversely impact our financial condition and our results of our operations.
To the extent any of these 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, which could adversely impact our financial condition and our results of our operations. Some of our investments are managed through a third-party manager.
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 expose us to additional expense.
Non-U.S. real estate and tax laws are complex 28 and subject to change, and we cannot assure you we will always be in compliance with those laws or that compliance will not expose us to additional expense.
Additionally, a portion of our leases are not triple-net leases which exposes 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.
Additionally, a portion of our leases are not triple-net leases, which exposes us to the risk of potential common area maintenance expense slippage, which may occur when the actual cost of taxes, insurance and maintenance at the property exceeds the reimbursements paid by tenants.
The reduced economic activity that initially resulted from the COVID-19 pandemic severely impacted our tenants' businesses, financial condition and liquidity and caused most of our tenants to be unable to meet their obligations to 15 us in full, or at all, or to otherwise seek modifications of such obligations.
The reduced economic activity initially resulting from the COVID-19 pandemic severely impacted our tenants' businesses, financial condition and liquidity and caused most of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations during this time.
Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations, including the increase in remote access and operations due to the impact of the COVID-19 pandemic.
Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations, including the increase in remote access and operations due to the residual impact of the COVID-19 pandemic reshaping traditional working dynamics.
The COVID-19 pandemic significantly reduced and impeded consumer discretionary spending, which severely impacted experiential real estate properties, including those of our customers, and, although consumer discretionary spending is recovering, it is unclear whether the COVID-19 pandemic or the current challenging economic environment will negatively impact future consumer preferences regarding congregate activities.
The reduced economic activity that initially resulted from the COVID-19 pandemic significantly reduced and impeded consumer discretionary spending, which severely impacted experiential real estate properties, including those of our customers, and, although consumer discretionary spending is recovering, it is unclear whether residual effects of the COVID-19 pandemic or the current challenging and uncertain economic environment will negatively impact future consumer preferences regarding congregate activities.
As of December 31, 2022, our Series C preferred shares are convertible, at each of the holder's option, into our common shares at a conversion rate of 0.4192 common shares per $25.00 liquidation preference, which is equivalent to a conversion price of approximately $59.64 per common share (subject to adjustment in certain events).
As of December 31, 2023, our Series C preferred shares are convertible, at each of the holder's option, into our common shares at a conversion rate of 0.4252 common shares per $25.00 liquidation preference, which is equivalent to a conversion price of approximately $58.80 per common share (subject to adjustment in certain events).
Required regulatory approvals can delay or prohibit transfers of our gaming properties, which could result in periods in which we are unable to receive rent for such properties. Our tenant is (and any future tenants of our gaming properties will be) required to be licensed under applicable law in order to operate any of our properties that are gaming facilities.
Required regulatory approvals can delay or prohibit transfers of our gaming properties, which could result in periods in which we are unable to receive rent for such properties. The tenant of our gaming property is (and any future tenants of our gaming properties will be) a gaming operator required to be licensed under applicable law.
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.
As a result, our future operating results could be affected by fluctuations in the USD-CAD exchange rate, 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 32 contracts to hedge in part our exposure to exchange rate fluctuations.
In addition, tenants or managers sought concessions or other modifications to existing leases and management agreements as a result of the COVID-19 pandemic. Some potential losses are not covered by insurance.
In addition, tenants or managers sought concessions or other modifications to existing leases and management agreements as a result of the reduced economic activity that initially resulted from the COVID-19 pandemic. Some potential losses are not covered by insurance.
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 and borrowers may not satisfy their environmental compliance and indemnification obligations under the leases or other agreements.
However, we could be subject to strict liability under environmental laws because we own the properties. There is also a risk that tenants and borrowers may not satisfy their environmental compliance and indemnification obligations under the leases or other agreements.
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, pay dividends to our shareholders and effect share repurchases. 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 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, pay dividends to our shareholders and effect share repurchases. There are risks in owning assets outside the United States.
If a significant number of our customers fail to make their lease or interest payments for a significant period of time, the risk of which has been heightened as a result of the COVID-19 pandemic and general weakening economic conditions, and we do not have sufficient cash to pay principal and interest on the debt, we could default on our debt obligations.
If a significant number of our customers fail to make their lease or interest payments for a significant period of time, the risk of which has been heightened as a result of the generally challenging and uncertain economic environment, and we do not have sufficient cash to pay principal and interest on the debt, we could default on our debt obligations.
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, 19 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.
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. Without new financing, our growth is limited.
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 26 regarding a joint venture property may require the consent of our partner.
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.
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 U.S. federal income tax consequences of that qualification. 20 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 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.
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 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.
Specifically, on September 7, 2022, Cineworld Group, plc, Regal Entertainment Group and our other Regal theatre tenants (collectively, “Regal”) filed for protection under Chapter 11 of the U.S. Bankruptcy Code (the “Code”). Regal leases 57 theatres from us pursuant to two master leases and 28 single property leases (the “Regal Leases”).
Specifically, in September 2022, Cineworld Group, plc, Regal Entertainment Group and our other Regal theatre tenants (collectively, “Regal”) filed for protection under Chapter 11 of the U.S. Bankruptcy Code. At the time of its bankruptcy filing, Regal leased 57 theatres from us pursuant to two master leases and 28 single property leases.
This increased cost could make the financing of any acquisition and development activity more costly, as well as lower future period earnings. 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.
This increased cost has made the financing of any acquisition and development activity costlier, and may lower future earnings. Rising interest rates, or the continuation of existing rates into the future, 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.
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.
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.
Therefore, so long as we make investments in gaming-related assets, our success is dependent on the gaming industry, which could be adversely affected by economic conditions in general, changes in consumer trends and preferences and other factors over which we and our tenants have no control, such as the ongoing effects of the COVID-19 pandemic and generally weakening economic conditions.
Therefore, so long as we make investments in gaming-related assets, our success is dependent on the gaming industry, which could be adversely affected by economic conditions in general, changes in consumer trends and preferences and other factors over which we and our tenants have no control, such as the residual effects of the COVID-19 pandemic and other similar health crises, labor shortages, travel restrictions, supply chain disruptions and generally challenging and uncertain economic conditions.
In response to the financial impact of the COVID-19 pandemic, we temporarily suspended our monthly cash dividends to common shareholders in 2020.
In response to the financial impact of the reduced economic activity that initially resulted from the COVID-19 pandemic, we temporarily suspended our monthly cash dividends to common shareholders in 2020.
As a result, we could fail to meet our construction financing obligations or decide to cease such funding which, in turn, could result in failed projects and penalties, each of which could have a material adverse impact on our results of operations and business.
As a result, we could fail to meet our construction financing obligations or decide to cease such funding, which, in turn, could result in failed projects and penalties, each of which could have a material adverse impact on our results of operations and business. 21 We have a limited number of employees and loss of personnel could harm our operations and adversely affect the value of our shares.
We cannot provide any assurances that the managers will manage our properties in a manner that is consistent with their respective obligations under the applicable management agreement or our obligations under any franchise agreements.
We do not supervise any of these managers or their personnel on a day-to-day basis. We cannot provide any assurances that the managers will manage our properties in a manner that is consistent with their respective obligations under the applicable management agreement or our obligations under any franchise agreements.
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. 30 Inflation may have an effect on the value of our shares.
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.
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.
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.
Global economic uncertainty, disruptions in the financial markets, rising interest rates and inflation, and the challenging economic environment may impair our ability to refinance existing obligations or obtain new financing for acquisition or development of properties.
See "Cautionary Statement Concerning Forward-Looking Statements." Risks That May Impact Our Financial Condition or Performance Global economic uncertainty, disruptions in the financial markets, rising interest rates and inflation, and the challenging economic environment may impair our ability to refinance existing obligations or obtain new financing for acquisition or development of properties.
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, particularly in light of the ongoing effects of the COVID-19 pandemic, as well as generally weakening economic conditions.
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.
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.
Additionally, our ability to satisfy current or prospective lenders' insurance requirements may be adversely affected if lenders generally insist upon greater insurance coverage than is available to us in the marketplace or on commercially reasonable terms.
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 customers in most cases, if these customers fail to perform these obligations, we may be required to do so. Potential liability for environmental contamination could result in substantial costs.
Although these expenditures would be the responsibility of our customers in most cases, if these customers fail to perform these obligations, we may be required to do so. Potential liability for environmental contamination could result in substantial costs.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth certain information by state or province regarding our owned real estate portfolio as of December 31, 2022 (dollars in thousands): Location Building (gross sq. ft.) Rental Revenue for the Year Ended December 31, 2022 % of Rental Revenue Texas 3,057,317 $ 82,363 14.3 % California 1,734,099 71,628 12.4 % Florida 1,584,699 42,855 7.5 % Ontario, Canada 1,204,639 32,659 5.7 % Pennsylvania 946,961 29,387 5.1 % Illinois 886,172 26,168 4.5 % Louisiana 842,375 15,528 2.7 % Ohio 814,269 14,122 2.5 % Tennessee 711,643 16,004 2.8 % Colorado 686,148 19,998 3.5 % Virginia 651,896 15,154 2.6 % New York 646,711 32,569 5.7 % North Carolina 631,137 19,640 3.4 % Missouri 566,890 6,597 1.2 % Michigan 521,631 8,695 1.5 % Georgia 516,315 13,800 2.4 % Kansas 512,002 12,363 2.1 % Arizona 465,755 14,908 2.6 % Indiana 457,998 7,793 1.4 % Quebec, Canada 399,437 4,421 0.8 % New Jersey 392,930 8,265 1.4 % Kentucky 365,971 8,128 1.4 % South Carolina 349,388 9,386 1.6 % Alabama 323,972 5,820 1.0 % Maryland 227,851 6,330 1.1 % Oregon 201,532 5,030 0.9 % Connecticut 185,074 3,830 0.7 % Minnesota 181,764 5,652 1.0 % Idaho 179,036 4,015 0.7 % Wisconsin 170,720 377 0.1 % Arkansas 165,219 4,062 0.7 % Mississippi 116,900 5,202 0.9 % Massachusetts 111,166 1,020 0.2 % Maine 107,000 1,083 0.2 % New Hampshire 97,400 1,284 0.2 % Iowa 93,755 1,402 0.2 % Nevada 92,697 3,018 0.5 % Oklahoma 90,737 6,508 1.1 % New Mexico 71,297 1,909 0.3 % Washington 47,004 2,950 0.5 % Montana 44,650 1,026 0.2 % Hawaii — 2,569 0.4 % Nebraska (1) — 83 — % 21,454,157 $ 575,601 100.0 % (1) Property sold during the year ended December 31, 2021 and tenant continues to pay deferred rent to EPR. 35 Office Location Our executive office is located in Kansas City, Missouri and is leased from a third-party landlord.
Biggest changeThe following table sets forth certain information by state or province regarding our owned real estate portfolio as of December 31, 2023 (dollars in thousands): Location Building (gross sq. ft.) Rental Revenue for the Year Ended December 31, 2023 % of Rental Revenue Texas 2,949,257 $ 84,461 13.7 % California 1,753,099 76,359 12.4 % Florida 1,507,299 44,397 7.2 % Ontario, Canada 1,204,639 33,917 5.5 % Pennsylvania 1,013,568 32,149 5.2 % Illinois 886,172 25,881 4.2 % Ohio 814,269 16,460 2.7 % Louisiana 809,615 17,430 2.7 % Tennessee 711,643 18,487 3.0 % New York 682,200 37,458 6.0 % Colorado 660,411 19,712 3.2 % North Carolina 631,137 24,390 4.0 % Virginia 618,659 16,487 2.7 % Missouri 566,890 6,830 1.1 % Michigan 521,631 8,612 1.4 % Georgia 516,315 14,922 2.4 % Kansas 511,234 12,856 2.1 % Arizona 465,755 14,121 2.3 % Quebec, Canada 399,437 9,398 1.5 % Indiana 392,998 8,337 1.4 % New Jersey 392,930 7,986 1.3 % Kentucky 365,971 8,100 1.3 % South Carolina 349,388 11,245 1.8 % Alabama 323,972 5,988 1.0 % Oregon 201,532 4,698 0.8 % Connecticut 185,074 3,830 0.6 % Minnesota 181,764 5,652 0.9 % Idaho 179,036 4,714 0.8 % Maryland 177,856 4,954 0.8 % Wisconsin 170,720 377 0.1 % Arkansas 165,219 4,139 0.7 % Mississippi 116,900 8,045 1.3 % Massachusetts 111,166 1,020 0.2 % Maine 107,000 1,083 0.2 % New Hampshire 97,400 1,284 0.2 % Iowa 93,755 1,402 0.2 % Oklahoma 90,737 6,586 1.1 % New Mexico 71,297 3,261 0.5 % Nevada 50,426 2,368 0.4 % Washington 47,004 3,035 0.5 % Montana 44,650 1,092 0.2 % Hawaii — 2,533 0.4 % Nebraska (1) — 83 — % 21,140,025 $ 616,139 100.0 % (1) Property sold during the year ended December 31, 2021 and tenant continues to pay deferred rent to EPR. 36 Office Location Our executive office is located in Kansas City, Missouri and is leased from a third-party landlord.
Item 2. Properties As of December 31, 2022, our real estate portfolio consisted of investments in our Experiential and Education reportable segments. Except as otherwise noted, all of the real estate investments listed below are owned or ground leased directly by us.
Item 2. Properties As of December 31, 2023, our real estate portfolio consisted of investments in our Experiential and Education reportable segments. Except as otherwise noted, all of the real estate investments listed below are owned or ground leased directly by us.
The lease has projected 2023 annual rent of appr oximately $958 thousand and is scheduled to expire on September 30, 2026, with two separate five-year extension options available.
The lease has projected 2024 annual rent of appr oximately $958 thousand and is scheduled to expire on September 30, 2026, with two separate five-year extension options available.
Our leases have remaining terms ranging from one year to 27 years. These leases may be extended for predetermined extension terms at the option of the tenants.
Our leases have remaining terms ranging from one year to 26 years. These leases may be extended for predetermined extension terms at the option of the tenants.
The following table sets forth our owned properties (excludes properties under development, land held for development and properties securing our mortgage notes) listed by segment and property type, gross square footage (except for certain ski and attraction properties where such number is not meaningful), percentage leased and total rental revenue for the year ended December 31, 2022 (dollars in thousands).
The following table sets forth our owned properties (excludes properties under development, land held for development, properties owned by unconsolidated real estate joint ventures and properties securing our mortgage notes) listed by segment and property type, gross square footage (except for certain ski and attraction properties where such number is not meaningful), percentage leased and total rental revenue for the year ended December 31, 2023 (dollars in thousands).
Tenants and Leases Our existing leases on real estate investments (on a consolidated basis - excluding unconsolidated joint venture properties) provide for aggregate annual minimum rentals for 2023 of approximately $534.7 million (not including the impact of rent deferrals, ground lease payments for leases in which we are a sub-lessor, periodic rent escalations that are not fixed, percentage rent or straight-line rent).
Tenants and Leases Our existing leases on real estate investments (on a consolidated basis - excluding unconsolidated joint venture properties) provide for aggregate annual minimum rental payments for 2024 of approximately $493.0 million (not including the impact of rent deferrals, ground lease payments for leases in which we are a sub-lessor, periodic rent escalations that are not fixed, percentage rent or straight-line rent).
Our leases are typically triple-net leases that require the tena nt 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. Additionally, we are lessee i n 52 operating ground leases as of December 31, 2022.
Our leases are typically triple-net leases that require the tena nt 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. Additionally, we are lesse e in 51 operating ground leases as of December 31, 2023.
At certain properties included below, we are the tenant under third-party ground leases and have assumed responsibility for performing the obligations thereunder. However, pursuant to the facility leases, the tenants are generally responsible for performing substantially all of our obligations under the ground leases.
At certain properties included below, we are the tenant under third-party ground leases and have assumed responsibility for performing the obligations thereunder.
Many of our build-to-suit opportunities come to us from our existing strong relationships with property operators and developers and we expect to continue to pursue these opportunities.
The percentage of total investment spending related to build-to-suit projects, including investment spending for mortgage notes on such projects, was approx imately 36% in 2 023. Many of our build-to-suit opportunities come to us from our existing strong relationships with property operators and developers, and we expect to continue to pursue these opportunities.
Our tenants are generally sub-tenants under these ground leases and are responsible for paying rent under these agreements. Our sub-lessor operating ground leases provide for aggregate annual minimum rentals for 2023 of approx imately $24.8 million. Our ground leases have remaining terms ranging fro m two years to 44 years, most of which include one or more options to renew.
Our tenants are generally sub-tenants under these ground leases and are responsible for paying rent under these agreements. Our sub-lessor operating ground leases provide for aggregate annual minimum rental payments for 2024 of approx imately $25.8 million.
(3) Represents land under ground lease to a casino operator. 33 The following table sets forth lease expirations regarding EPR’s owned portfolio as of December 31, 2022 excluding non-theatre tenant leases at entertainment districts and experiential lodging properties operated through a traditional REIT lodging structure (dollars in thousands): Year Number of Properties Square Footage Rental Revenue for the Year Ended December 31, 2022 % of Company's Rental Revenue 2023 — — $ — — % 2024 6 458,240 10,982 1.9 % 2025 3 95,328 3,355 0.6 % 2026 3 39,289 8,158 1.4 % 2027 9 513,139 24,133 4.2 % 2028 13 893,441 24,724 4.3 % 2029 12 679,171 19,251 3.3 % 2030 22 1,663,772 32,446 5.6 % 2031 13 732,923 19,083 3.3 % 2032 20 1,053,275 28,606 5.0 % 2033 10 482,563 12,675 2.2 % 2034 40 2,403,180 67,818 11.8 % 2035 32 2,527,144 76,745 13.3 % 2036 27 1,864,946 49,684 8.6 % 2037 32 1,941,997 67,706 11.8 % 2038 35 1,717,060 38,727 6.7 % 2039 3 145,083 5,490 1.0 % 2040 3 174,191 6,642 1.2 % 2041 31 818,426 18,616 3.2 % 2042 4 466,958 10,524 1.8 % Thereafter 7 87,195 16,964 3.0 % 325 18,757,321 $ 542,329 94.2 % 34 Our owned proper ties are located in 40 state s and in the Canadian provinces of Ontario and Quebec.
The following table sets forth lease expirations regarding EPR’s owned portfolio as of December 31, 2023 excluding properties we operate, non-theatre tenant leases at entertainment districts and experiential lodging properties operated through a traditional REIT lodging structure (dollars in thousands): Year Number of Properties Square Footage Rental Revenue for the Year Ended December 31, 2023 % of Company's Rental Revenue 2024 3 217,572 $ 4,450 0.7 % 2025 3 95,328 3,407 0.6 % 2026 2 39,289 2,643 0.4 % 2027 4 314,699 22,559 3.7 % 2028 9 604,771 16,592 2.7 % 2029 11 594,572 17,845 2.9 % 2030 18 1,391,775 34,850 5.7 % 2031 8 407,049 10,884 1.8 % 2032 10 483,288 12,613 2.0 % 2033 7 320,563 10,203 1.7 % 2034 36 2,313,989 73,560 11.9 % 2035 30 2,442,798 75,314 12.2 % 2036 40 2,698,769 77,242 12.5 % 2037 29 1,631,637 61,311 10.0 % 2038 42 2,267,041 62,902 10.1 % 2039 3 145,083 5,411 0.9 % 2040 4 209,680 9,665 1.6 % 2041 30 805,130 18,608 3.0 % 2042 4 466,958 17,747 2.9 % 2043 7 123,497 18,602 3.0 % Thereafter 2 50,073 1,822 0.3 % 302 17,623,561 $ 558,230 90.6 % 35 Our owned proper ties are located in 40 states and the Canadian provinces of Ontario and Quebec.
Number of Properties Building Gross Square Footage Percentage Leased Rental Revenue for the Year Ended December 31, 2022 % of Company's Rental Revenue Experiential Theatres 172 11,664,758 98.5 % $ 259,567 45.1 % Eat & Play (1) 53 5,081,147 92.3 % 163,206 28.4 % Attractions 21 1,001,169 100.0 % 58,772 10.2 % Ski 3 330,508 100.0 % 24,017 4.2 % Experiential Lodging (2) 6 878,193 100.0 % 2,317 0.4 % Fitness & Wellness 5 577,431 100.0 % 7,603 1.3 % Gaming (3) 1 — — % 12,871 2.2 % Cultural 3 512,768 100.0 % 7,029 1.2 % Total Experiential 264 20,045,974 97.2 % $ 535,382 93.0 % Education Early Childhood Education Centers 63 1,115,821 100.0 % $ 29,917 5.2 % Private Schools 9 292,362 100.0 % 10,302 1.8 % Total Education 72 1,408,183 100.0 % $ 40,219 7.0 % Total 336 21,454,157 97.4 % $ 575,601 100.0 % (1) Includes seven theatres located in entertainment districts.
However, pursuant to the facility leases, the tenants are generally responsible for performing substantially all of our obligations under the ground leases. 34 Number of Properties Building Gross Square Footage Percentage Leased (5) Rental Revenue for the Year Ended December 31, 2023 % of Company's Rental Revenue Experiential Theatres (1) 166 11,396,543 100.0 % $ 284,018 46.1 % Eat & Play (2) 53 5,081,986 95.3 % 167,985 27.4 % Attractions (3) 21 1,001,169 100.0 % 66,066 10.7 % Ski 3 330,508 100.0 % 25,358 4.1 % Experiential Lodging 1 276,210 100.0 % 2,743 0.4 % Fitness & Wellness 7 631,920 100.0 % 11,522 1.9 % Gaming (4) 1 — — % 12,575 2.0 % Cultural 3 512,768 100.0 % 7,448 1.2 % Total Experiential 255 19,231,104 98.8 % $ 577,715 93.8 % Education Early Childhood Education Centers 59 1,014,576 100.0 % $ 28,024 4.5 % Private Schools 9 292,362 100.0 % 10,400 1.7 % Total Education 68 1,306,938 100.0 % $ 38,424 6.2 % Total 323 20,538,042 98.8 % $ 616,139 100.0 % (1) Includes seven properties operated by EPR through third-party managers.
Removed
(2) Includes five experiential lodging properties that are owned by unconsolidated real estate joint ventures.
Added
Revenue for these properties is included in other income in the consolidated statements of income and comprehensive income. (2) Includes seven theatres located in entertainment districts. (3) Includes one property operated by EPR through a third-party manager. Revenue for this property is included in other income in the consolidated statements of income and comprehensive income.
Removed
Property Acquisitions and Developments in 2022 Our property acquisi tions and developments in 2022 consisted of spending on experiential properties. The percentage of total investment spending related to build-to-suit projects, including investment spending for mortgage notes on such projects, was approximately 25% in 2022.
Added
(4) Represents land under ground lease to a casino operator. (5) Excludes properties we intend to sell.
Added
Our ground leases have remaining term s ranging from one year to 43 years, most of which include one or more options to renew. Property Acquisitions and Developments in 2023 Our property acquisi tions and developments in 2023 consisted of spending on experiential properties.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed2 unchanged
Biggest changeREIT Index $ 100.00 $ 95.43 $ 120.09 $ 110.99 $ 158.79 $ 119.87 Russell 1000 Index $ 100.00 $ 95.22 $ 125.14 $ 151.37 $ 191.42 $ 154.80 Source: S&P Global Market Intelligence 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. 37 Item 6. [Reserved]
Biggest changeREIT Index $ 100.00 $ 125.84 $ 116.31 $ 166.39 $ 125.61 $ 142.87 Russell 1000 Index $ 100.00 $ 131.43 $ 158.98 $ 201.03 $ 162.58 $ 205.72 Source: S&P Global Market Intelligence 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. 38 Item 6. [Reserved]
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common shares are listed on the New York Stock Exchange (“NYSE”) under the trading symbol “EPR.” During the year ended December 31, 2022, the Company did not sell any unregistered equity securities.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common shares are listed on the New York Stock Exchange (“NYSE”) under the trading symbol “EPR.” During the year ended December 31, 2023, the Company did not sell any unregistered equity securities.
Share Performance Graph The following graph compares the cumulative return on our common shares during the five-year period ended December 31, 2022, to the cumulative return on the MSCI U.S. REIT Index and the Russell 1000 Index for the same period. The comparisons assume an initial investment of $100 and the reinvestment of all dividends during the comparison period.
Share Performance Graph The following graph compares the cumulative return on our common shares during the five-year period ended December 31, 2023, to the cumulative return on the MSCI U.S. REIT Index and the Russell 1000 Index for the same period. The comparisons assume an initial investment of $100 and the reinvestment of all dividends during the comparison period.
On February 22, 2023, there were app roximately 6,106 holders of record of our outstanding common shares. Issuer Purchases of Equity Securities During the quarter ended December 31, 2022, the Company did not repurchase any of its equity securities. 36 Dividends We expect to continue paying dividends to our common and preferred shareholders in future periods.
On February 28, 2024, there were app roximately 5,805 holders of record of our outstanding common shares. Issuer Purchases of Equity Securities During the quarter ended December 31, 2023, the Company did not repurchase any of its equity securities. 37 Dividends We expect to continue paying dividends to our common and preferred shareholders in future periods.
Performance during the comparison period is not necessarily indicative of future performance. Total Return Analysis 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 EPR Properties $ 100.00 $ 104.78 $ 122.73 $ 58.80 $ 88.55 $ 75.62 MSCI U.S.
Performance during the comparison period is not necessarily indicative of future performance. Total Return Analysis 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 EPR Properties $ 100.00 $ 117.13 $ 56.12 $ 84.51 $ 72.16 $ 100.18 MSCI U.S.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

101 edited+35 added−67 removed51 unchanged
Biggest changeThe following table reconciles net income (loss) available to common shareholders, the most directly comparable GAAP measure, to FFO, FFOAA and AFFO including per share amounts for FFO and FFOAA, for the years ended December 31, 2022, 2021 and 2020 (unaudited, in thousands, except per share information): Year ended December 31, 2022 2021 2020 FFO: Net income (loss) available to common shareholders of EPR Properties $ 152,088 $ 74,472 $ (155,864) Gain on sale of real estate (651) (17,881) (50,119) Impairment of real estate investments, net (1) 25,381 2,711 70,648 Real estate depreciation and amortization 162,821 162,951 169,253 Allocated share of joint venture depreciation 7,409 3,340 1,491 Impairment charges on joint ventures 647 — 3,247 FFO available to common shareholders of EPR Properties $ 347,695 $ 225,593 $ 38,656 FFO available to common shareholders of EPR Properties $ 347,695 $ 225,593 $ 38,656 Add: Preferred dividends for Series C preferred shares 7,752 — — Add: Preferred dividends for Series E preferred shares 7,756 — — Diluted FFO available to common shareholders of EPR Properties $ 363,203 $ 225,593 $ 38,656 FFOAA: FFO available to common shareholders of EPR Properties $ 347,695 $ 225,593 $ 38,656 Transaction costs 4,533 3,402 5,436 Credit loss expense (benefit) 10,816 (21,972) 30,695 Costs associated with loan refinancing or payoff — 25,451 1,632 Severance expense — — 2,868 Sale participation income (included in other income) (9,134) — — Gain on insurance recovery (included in other income) (552) (1,181) (809) Impairment of operating lease right-of-use assets (1) 1,968 — 15,009 Deferred income tax (benefit) expense (169) — 15,246 FFOAA available to common shareholders of EPR Properties $ 355,157 $ 231,293 $ 108,733 FFOAA available to common shareholders of EPR Properties $ 355,157 $ 231,293 $ 108,733 Add: Preferred dividends for Series C preferred shares 7,752 — — Add: Preferred dividends for Series E preferred shares 7,756 — — Diluted FFOAA available to common shareholders of EPR Properties $ 370,665 $ 231,293 $ 108,733 54 Year ended December 31, 2022 2021 2020 AFFO: FFOAA available to common shareholders of EPR Properties $ 355,157 $ 231,293 $ 108,733 Non-real estate depreciation and amortization 831 819 1,080 Deferred financing fees amortization 8,360 7,666 6,606 Share-based compensation expense to management and trustees 16,666 14,903 13,819 Amortization of above/below-market leases, net and tenant allowances (355) (385) (480) Maintenance capital expenditures (2) (4,545) (4,631) (11,377) Straight-lined rental revenue (6,993) (5,664) 24,550 Straight-lined ground sublease expense 1,692 382 749 Non-cash portion of mortgage and other financing income (473) (446) (250) AFFO available to common shareholders of EPR Properties $ 370,340 $ 243,937 $ 143,430 FFO per common share: Basic $ 4.64 $ 3.02 $ 0.51 Diluted 4.60 3.02 0.51 FFOAA per common share: Basic $ 4.74 $ 3.09 $ 1.43 Diluted 4.69 3.09 1.43 Shares used for computation (in thousands): Basic 74,967 74,755 75,994 Diluted 75,043 74,756 75,994 Weighted average shares outstanding-diluted EPS 75,043 74,756 75,994 Effect of dilutive Series C preferred shares 2,250 — — Effect of dilutive Series E preferred shares 1,664 — — Adjusted weighted average shares outstanding - diluted Series C and Series E 78,957 74,756 75,994 Other financial information: Dividends per common share $ 3.250 $ 1.500 $ 1.515 (1) Impairment charges recognized totaled $27.3 million and $85.7 million for the years ended December 31, 2022 and 2020, respectively, and were comprised of $25.3 million and $70.7 million of impairments of real estate investments a nd $2.0 million and $15.0 million of impairments of operating lease right-of-use assets, respectively.
Biggest changeThe following table reconciles net income available to common shareholders, the most directly comparable GAAP measure, to FFO, FFOAA and AFFO including per share amounts for FFO and FFOAA, for the years ended December 31, 2023, 2022 and 2021 (unaudited, in thousands, except per share information): 52 Year ended December 31, 2023 2022 2021 FFO: Net income available to common shareholders of EPR Properties $ 148,901 $ 152,088 $ 74,472 Loss (gain) on sale of real estate 2,197 (651) (17,881) Impairment of real estate investments, net (1) 67,366 25,381 2,711 Real estate depreciation and amortization 167,219 162,821 162,951 Allocated share of joint venture depreciation 8,876 7,409 3,340 Impairment charges on joint ventures (1) — 647 — FFO available to common shareholders of EPR Properties $ 394,559 $ 347,695 $ 225,593 FFO available to common shareholders of EPR Properties $ 394,559 $ 347,695 $ 225,593 Add: Preferred dividends for Series C preferred shares 7,752 7,752 — Add: Preferred dividends for Series E preferred shares 7,752 7,756 — Diluted FFO available to common shareholders of EPR Properties $ 410,063 $ 363,203 $ 225,593 FFOAA: FFO available to common shareholders of EPR Properties $ 394,559 $ 347,695 $ 225,593 Severance expense 547 — — Transaction costs 1,554 4,533 3,402 Provision (benefit) for credit losses, net 878 10,816 (21,972) Costs associated with loan refinancing or payoff — — 25,451 Impairment of operating lease right-of-use assets (1) — 1,968 — Sale participation income (included in other income) — (9,134) — Gain on insurance recovery (included in other income) — (552) (1,181) Deferred income tax benefit (344) (169) — FFOAA available to common shareholders of EPR Properties $ 397,194 $ 355,157 $ 231,293 FFOAA available to common shareholders of EPR Properties $ 397,194 $ 355,157 $ 231,293 Add: Preferred dividends for Series C preferred shares 7,752 7,752 — Add: Preferred dividends for Series E preferred shares 7,752 7,756 — Diluted FFOAA available to common shareholders of EPR Properties $ 412,698 $ 370,665 $ 231,293 AFFO: FFOAA available to common shareholders of EPR Properties $ 397,194 $ 355,157 $ 231,293 Non-real estate depreciation and amortization 814 831 819 Deferred financing fees amortization 8,637 8,360 7,666 Share-based compensation expense to management and trustees 17,512 16,666 14,903 Amortization of above/below-market leases, net and tenant allowances (535) (355) (385) Maintenance capital expenditures (2) (12,399) (4,545) (4,631) Straight-lined rental revenue (10,591) (6,993) (5,664) Straight-lined ground sublease expense 1,099 1,692 382 Non-cash portion of mortgage and other financing income (1,088) (473) (446) AFFO available to common shareholders of EPR Properties $ 400,643 $ 370,340 $ 243,937 FFO per common share: Basic $ 5.24 $ 4.64 $ 3.02 Diluted 5.15 4.60 3.02 FFOAA per common share: Basic $ 5.28 $ 4.74 $ 3.09 Diluted 5.18 4.69 3.09 53 Year ended December 31, 2023 2022 2021 Shares used for computation (in thousands): Basic 75,260 74,967 74,755 Diluted 75,715 75,043 74,756 Weighted average shares outstanding-diluted EPS 75,715 75,043 74,756 Effect of dilutive Series C preferred shares 2,283 2,250 — Effect of dilutive Series E preferred shares 1,663 1,664 — Adjusted weighted average shares outstanding - diluted Series C and Series E 79,661 78,957 74,756 Other financial information: Dividends per common share $ 3.300 $ 3.250 $ 1.500 (1) Impairment charges recognized totaled $28.0 million for the year ended December 31, 2022, and was comprised of $25.4 million of impairments of real estate investments, $2.0 million of impairments of operating lease right-of-use assets and $0.6 million of impairments on joint ventures.
Generally, our acquisitions are considered asset acquisitions. If the acquisition is determined to be an asset acquisition, we allocate the purchase price and other related costs incurred to the acquired tangible assets and identified intangible assets and liabilities on a relative fair value basis.
Generally, our acquisitions are considered asset acquisitions. If an acquisition is determined to be an asset acquisition, we allocate the purchase price and other related acquisition costs incurred to the acquired tangible assets and identified intangible assets and liabilities on a relative fair value basis.
Management provides EBITDAre herein because it believes this information is useful to investors as a supplemental performance measure as it can help facilitate comparisons of operating performance between periods and with other REITs. Our method of calculating EBITDAre may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
Management provides EBITDAre herein because it believes this information is useful to investors as a supplemental performance measure because it can help facilitate comparisons of operating performance between periods and with other REITs. Our method of calculating EBITDAre may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
Management believes Adjusted EBITDAre is useful to investors because it excludes various items that management believes are not indicative of operating performance, and that it is an informative measure to use in computing various financial ratios to evaluate the Company.
Management believes Adjusted EBITDAre is useful to investors because it excludes various items that management believes are not indicative of operating performance, and because it is an informative measure to use in computing various financial ratios to evaluate the Company.
Pursuant to the definition of EBITDAre by the Board of Governors of NAREIT, we calculate EB ITDAre as net income (loss), co mputed in accordance with GAAP, excluding interest expense (net), income tax (benefit) expense, depreciation and amortization, gains and losses from disposition of real estate, impairment losses on real estate, costs associated with loan refinancing or payoff and adjustments for unconsolidated partnerships, joint ventures and other affiliates.
Pursuant to the definition of EBITDAre by the Board of Governors of NAREIT, we calculate EB ITDAre as net income, co mputed in accordance with GAAP, excluding interest expense (net), income tax (benefit) expense, depreciation and amortization, gains and losses from disposition of real estate, impairment losses on real estate, costs associated with loan refinancing or payoff and adjustments for unconsolidated partnerships, joint ventures and other affiliates.
By excluding deferred financing costs, net and reducing debt for cash and cash equivalents on hand, the result provides an estimate of the contractual amount of borrowed capital to be repaid, net of cash available to repay it. We believe this calculation constitutes a beneficial supplemental non-GAAP 55 financial disclosure to investors in understanding our financial condition.
By excluding deferred financing costs, net and reducing debt for cash and cash equivalents on hand, the result provides an estimate of the contractual amount of borrowed capital to be repaid, net of cash available to repay it. We believe this calculation constitutes a beneficial supplemental non-GAAP financial disclosure to investors in understanding our financial condition.
Our method of calculating Net Debt to Gross Assets Ratio may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. EBITDAre NAREIT developed EBITDAre as a relative non-GAAP financial measure of REITs, independent of a company's capital structure, to provide a uniform basis to measure the enterprise value of a company.
Our method of calculating Net Debt to Gross Assets Ratio may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. 54 EBITDAre NAREIT developed EBITDAre as a relative non-GAAP financial measure of REITs, independent of a company's capital structure, to provide a uniform basis to measure the enterprise value of a company.
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.
We have primarily acquired or developed new properties that are pre-leased to a single tenant or multi-tenant properties with a high occupancy rate. We have also entered into certain joint ventures and provided mortgage note financing. We intend to continue entering into some or all of these types of arrangements in the foreseeable future.
In addition, financial institutions use versions of this ratio in connection with debt agreements to set pricing and covenant limitations. Our method of 56 calculating the Net Debt to Adjusted EBITDAre Ratio may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
In addition, financial institutions use versions of this ratio in connection with debt agreements to set pricing and covenant limitations. Our method of calculating the Net Debt to Adjusted EBITDAre Ratio may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
In the event we have a past due mortgage note or note receivable and we determine it is collateral dependent, we measure expected credit losses based on the fair value of the collateral.
In the event we have a past due mortgage note or note receivable 44 and we determine it is collateral dependent, we measure expected credit losses based on the fair value of the collateral.
Liquidity Requirements Short-term liquidity requirements consist primarily of normal recurring corporate operating expenses, debt service requirements, distributions to shareholders. We have historically met these requirements primarily through cash provided by operating activities.
Liquidity Requirements Short-term liquidity requirements consist primarily of normal recurring corporate operating expenses, debt service requirements, and distributions to shareholders. We have historically met these requirements primarily through cash provided by operating activities.
Pursuant to the definition of FFO by the Board of Governors of NAREIT, we calculate FFO as net income (l oss) availab le to common shareholders, computed in accordance with GAAP, excluding gains and losses from disposition of real estate and impairment losses on real estate, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships, joint ventures and other affiliates.
Pursuant to the definition of FFO by the Board of Governors of NAREIT, we calculate FFO as net income availab le to common shareholders, computed in accordance with GAAP, excluding gains and losses from disposition of real estate and impairment losses on real estate, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships, joint ventures and other affiliates.
Additionally, these debt instruments contain cross-default provisions if we default under other indebtedness exceeding certain amounts. Those cross-default thresholds vary from $50.0 million to $75.0 million, depending upon the debt instrument. We were in compliance with all financial and other covenants under our debt instruments at December 31, 2022 .
Additionally, these debt instruments contain cross-default provisions if we default under other indebtedness exceeding certain amounts. Those cross-default thresholds vary from $50.0 million to $75.0 million, depending upon the debt instrument . We were in compliance with all financial and other covenants under our debt instruments at December 31, 2023.
During 2022, our non-theatre properties demonstrated strong recovery from the impacts of the pandemic. However, our theatre customers were more severely impacted by the COVID-19 pandemic and have seen a slower recovery than our non-theatre customers due primarily to changes in the timing of film releases, production delays and experimentation with streaming.
Our non-theatre properties have demonstrated strong recovery from the impacts of the pandemic. However, our theatre customers were more severely impacted by the COVID-19 pandemic and have seen a slower recovery than our non-theatre customers due primarily to changes in the timing of film releases, production delays and experimentation with streaming.
Market rent assumptions used for the estimated future cash flows as well as the capitalization rate used to estimate the residual value of the real estate can fluctuate based on economic and industry specific factors. Changes in these assumptions could materially impact the result of the undiscounted cash flow test.
Market rent assumptions used for the estimated future cash flows and the capitalization rate used to estimate the residual value of the real estate can fluctuate based on economic and industry specific factors. Changes in these assumptions could materially impact the result of the undiscounted cash flow test.
At December 31, 2022, we had outstanding $2.5 billion in aggregate principal amount of unsecured senior notes (excluding the private placement notes discussed below) ranging in interest rates from 3.60% to 4.95%.
At December 31, 2023, we had outstanding $2.5 billion in aggregate principal amount of unsecured senior notes (excluding the private placement notes discussed below) ranging in interest rates from 3.60% to 4.95%.
(2) Included in other income in the consolidated statements of income (loss) and comprehensive income (loss) for the quarter.
(2) Included in other income in the consolidated statements of income and comprehensive income for the quarter.
Mortgage Debt, Senior Notes, Unsecured Revolving Credit Facility and Unsecured Term Loan Facility As of December 31, 2022, we had total debt outstanding of $2.8 billion of which 99% was unsecured.
Mortgage Debt, Senior Notes, Unsecured Revolving Credit Facility and Unsecured Term Loan Facility As of December 31, 2023 , we had total debt outstanding of $2.8 billion of which 99% was unsecured.
The additional common shares that would result from the conversion of the 5.75% Series C cumulative convertible preferred shares and the 9.00% Series E cumulative convertible preferred shares for each of the years ended December 31, 2021 and 2020, and the corresponding add-back of the preferred dividends declared on those shares are not included in the calculation of diluted FFO and FFOAA per share for those periods because the effect is anti-dilutive.
The additional common shares that would result from the conversion of the 5.75% Series C cumulative convertible preferred shares and the 9.00% Series E cumulative convertible preferred shares for the year ended December 31, 2021, and the corresponding add-back of the preferred dividends declared on those shares are not included in the calculation of diluted FFO and FFOAA per share for those periods because the effect is anti-dilutive.
We define Adjusted EBITDAre as EBITDAre (defined above) for the quarter excluding sale participation income, gain on insurance recovery, severance expense, credit loss (benefit) expense, transaction costs, impairment losses on operating lease right-of-use assets and prepayment fees.
We define Adjusted EBITDAre as EBITDAre (defined above) for the quarter excluding sale participation income, gain on insurance recovery, severance expense, transaction costs, provision (benefit) for credit losses, net, impairment losses on operating lease right-of-use assets and prepayment fees.
At December 31, 2022 , the interest rates for the private placement notes were 4.35% and 4.56% for the Series A notes due 2024 and the Series B notes due 2026, respectively.
At December 31, 2023 , the interest rates for the private placement notes were 4.35% and 4.56% for the Series A notes due 2024 and the Series B notes due 2026, respectively.
The most significant assumptions and estimates relate to the valuation of real estate, accounting for real estate acquisitions, assessing the collectibility of receivables and the credit loss related to mortgage and other notes receivable. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.
The most significant assumptions and estimates relate to the valuation of real estate, accounting for real estate acquisitions, assessing the collectibility of receivables and the credit loss related to mortgage and other notes receivable. Applying these assumptions requires exercising judgment as to future uncertainties and, as a result, actual results could differ from these estimates.
Our total investments (a non-GAAP financial measure) were approximate ly $6.7 billion at December 31, 2022. See "Non-GAAP Financial Measures" for the reconcil iation of "Total assets" in the consolidated balance sheet to total 38 investments and the calculation of total investments at December 31, 2022 and 2021. We group our investments into two reportable segments, Experient ial and Education.
Our total investments (a non-GAAP financial measure) were approximate ly $6.8 billion at December 31, 2023. See "Non-GAAP Financial Measures" for the reconcil iation of "Total assets" in the consolidated balance sheet to total investments and the calculation of total investments at December 31, 2023 and 2022. We group our investments into two reportable segments, Experient ial and Education.
FFOAA is presented by adding to FFO transaction costs, credit loss expense (benefit), costs associated with loan refinancing or payoff, severance expense, preferred share redemption costs and impairment of operating lease right-of-use assets and subtracting sale participation income, gain on insurance recovery and deferred income tax (benefit) expense.
FFOAA is presented by adding to FFO severance expense, transaction costs, provision (benefit) for credit losses, net, costs associated with loan refinancing or payoff, preferred share redemption costs and impairment of operating lease right-of-use assets and subtracting sale participation income, gain on insurance recovery and deferred income tax (benefit) expense.
Our primary use of cash after paying operating expenses, debt service, distributions to shareholders and funding existing commitments is in growing our investment portfolio through 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 or proceeds from asset dispositions.
Our primary use of cash after paying operating expenses, debt service, distributions to shareholders and funding existing commitments is growing our investment portfolio through acquiring, developing and financing additional properties. We expect to finance these investments with borrowings under our unsecured revolving credit facility as well as debt and equity financing alternatives or proceeds from asset dispositions.
The conversion of the 5.75% Series C cumulative convertible preferred shares and the 9.00% Series E cumulative convertible preferred shares would be dilutive to FFO and FFOAA per share for year ended December 31, 2022.
The conversion of the 5.75% Series C cumulative convertible preferred shares and the 9.00% Series E cumulative convertible preferred shares would be dilutive to FFO, FFOAA and AFFO per share for the years ended December 31, 2023 and 2022.
Our business is subject to a number of risks and uncertainties, including those described in Item 1A - “Risk Factors” of this report. As of December 31, 2022, our total assets were app roximately $5.8 billion (after accumulated depreciation of approximately $1.3 billion) with properties located in 44 states and the provinces of Ontario and Quebec, Canada.
Our business is subject to a number of risks and uncertainties, including those described in Item 1A - “Risk Factors” of this report. 39 As of December 31, 2023, our total assets were app roximately $5.7 billion (after accumulated depreciation of approximately $1.4 billion) with properties located in 44 states and the provinces of Ontario and Quebec, Canada.
Our principal investing activities are acquiring, developing and financing Experiential properties. These investing activities have generally been financed with senior unsecured notes, as well as the proceeds from equity offerings. Our unsecured revolving credit facility and cash from operations are also used to finance the acquisition or development of properties, and to provide mortgage financing.
Our principal investing activities are acquiring, developing and financing Exp eriential properties. These investing activities have generally been financed with senior unsecured notes and the proceeds from equity offerings. Our 49 unsecured revolving credit facility and cash from operations are also used to finance the acquisition or development of properties, and to provide mortgage financing.
Challenging Economic Environment REITS are generally experiencing heightened risks and uncertainties resulting from current challenging economic conditions, including significant volatility and negative pressure in financial and capital markets, increasing cost of capital, high inflation and other risks and uncertainties associated with a recessionary environment.
Challenging Economic Environment REITS are generally experiencing heightened risks and uncertainties resulting from current challenging economic conditions, including significant volatility and negative pressure in financial and capital markets, higher cost of capital, high inflation and other risks and uncertainties associated with the current economic environment.
The fair value may be impacted based on economic factors, an estimate of future operating cash flows of the collateral and capitalization rates, that are subjective and can be impacted by a lack of comparable transactions. Changes in these assumptions could materially impact the estimated value of the collateral and lead to increased credit loss expense.
The fair value may be impacted based on economic factors, an estimate of future operating cash flows of the collateral and capitalization rates, that are subjective and can be impacted by a lack of comparable transactions. Changes in these assumptions could materially impact the estimated value of the collateral and lead to increased provision (benefit) for credit losses, net.
Liquidity Analysis We currently anticipate that our cash on hand, cash from operations, funds available under our unsecured revolving credit facility and proceeds from asset dispositions will provide adequate liquidity to meet our financial commitments, including to fund our operations, make recurring debt service payments, and allow distributions to our shareholders and avoid corporate level federal income or excise tax in accordance with REIT Internal Revenue Code requirements. 52 Long-term liquidity requirements consist primarily of debt maturities.
Liquidity Analysis We currently anticipate that our cash on hand, cash from operations, funds available under our unsecured revolving credit facility and proceeds from asset dispositions will provide adequate liquidity to meet our financial commitments, including the amounts needed to fund our operations, make recurring debt service payments, allow distributions to our shareholders and avoid corporate level federal income or excise tax in accordance with REIT Internal Revenue Code requirements.
As discussed above, we intend to fund our investments in the near term primarily from cash from operations and borrowing availability under our unsecured revolving credit facility, subject to maintaining our leverage levels consistent with past practice, due to our current elevated cost of capital.
As discussed above, due to our current elevated cost of capital, we intend to fund our investments in the near-term primarily from cash on hand, excess cash flow, disposition proceeds and borrowing availability under our unsecured revolving credit facility, subject to maintaining our leverage levels consistent with past practice.
However, there can be no assurance that additional financing or capital will be available, or that terms will be acceptable or advantageous to us, particularly in light of the impact of the challenging economic environment and our theatre tenant's bankruptcy proceedings on our cost of capital.
However, there can be no assurance that additional financing or capital will be available, or that terms will be acceptable or advantageous to us, particularly in light of the impact of the challenging economic environment and our elevated cost of capital.
Therefore, the additional common shares that would result from the conversion and the corresponding add-back of the preferred dividends declared on those shares are included in the calculation of diluted FFO and FFOAA per share for that period.
Therefore, the additional common shares that would result from the conversion and the corresponding add-back of the preferred dividends declared on those shares are included in the calculation of diluted FFO and FFOAA per share and would be included in a calculation of AFFO per share for these periods.
Although we intend to continue making future investments, we expect that our levels of investment spending will be reduced in the near term due to elevated costs of capital, and that these investments will be funded primarily from cash from operations and borrowing availability under our unsecured revolving credit facility, subject to maintaining our leverage levels consistent with past practice.
Although we intend to continue making future investments, we expect our levels of investment spending to be reduced in the near-term due to elevated costs of capital, and near-term investments will be funded primarily from cash on hand, excess cash flow, disposition proceeds and borrowing availability under our unsecured revolving credit facility, subject to maintaining our leverage levels consistent with past practice.
As of December 31, 2022, our Experiential segment consisted of the following property types (owned or financed): • 172 theatre properties; • 57 eat & play properties (including seven theatres located in entertainment districts); • 23 attraction properties; • 11 ski properties; • seven experiential lodging properties; • 15 fitness & wellness properties; • one gaming property; and • three cultural properties.
As of December 31, 2023, our Experiential segment consisted of the following property types (owned or financed): • 166 theatre properties; • 58 eat & play properties (including seven theatres located in entertainment districts); • 23 attraction properties; • 11 ski properties; • seven experiential lodging properties; • 20 fitness & wellness properties; • one gaming property; and • three cultural properties.
We have two options to extend the maturity date of the facility by an additional six months each (for a total of 12 months), subject to paying additional fees and the absence of any default.
The facility will mature on October 6, 2025. We have two options to extend the maturity date of the facility by an additional six months each (for a total of 12 months), subject to paying additional fees and the absence of any default.
T he challenging economic environment and our theatre tenant's bankruptcy have increased our cost of capital, which has negatively impacted our ability to make investments in the near-term.
T he challenging economic environment has increased our cost of capital, which has negatively impacted our ability to make investments in the near-term.
We record credit loss expense 42 and reduce our mortgage note and note receivables balances by the allowance for credit losses on a quarterly basis in accordance with ASC 326.
We record provision (benefit) for credit losses, net and reduce our mortgage note and note receivables balances by the allowance for credit losses on a quarterly basis in accordance with ASC 326.
In the event the tenant fails to pay the ground lease rent or the property is vacant, we would be primarily responsible for the payment, assuming we do not sell or re-tenant the property.
In the event the tenant fails to pay the ground lease rent or the property does not have sub-tenants, we would be primarily responsible for the payment, assuming we do not sell or re-tenant the property.
Capital Structure We believe that our shareholders are best served by a conservative capital structure. Therefore, we seek to maintain a conservative debt level on our balance sheet as measured primarily by our net debt to adjusted EBITDAre ratio (see "Non-GAAP Financial Measures" for definitions).
Therefore, we seek to maintain a conservative debt level on our balance sheet as measured primarily by our net debt to adjusted EBITDAre ratio (see "Non-GAAP Financial Measures" for definitions).
If economic conditions or the borrower's financial condition declines, this could result in additional credit loss expense, the suspension of interest income recognition or the write off of the receivables.
If economic conditions or the borrower's financial condition declines, this could result in additional provision (benefit) for credit losses, net, the suspension of interest income recognition or the write off of the receivables.
Our investment portfolio includes ownership of and long-term mortgages on Experiential and Education properties. Substantially all of our owned single-tenant properties are leased pursuant to long-term, triple-net leases, under which the tenants typically pay all operating expenses of the property.
See Item 1 - "Business" for further discussion regarding our strategic rationale for our focus on experiential properties. Our investment portfolio includes ownership of and long-term mortgages on Experiential and Education properties. Substantially all of our owned single-tenant properties are leased pursuant to long-term, triple-net leases, under which the tenants typically pay all operating expenses of the property.
In addition, during the year ended December 31, 2022 , we collected $23.8 million of deferred rent and $0.4 million of deferred interest from accrual basis customers that reduced related accounts and interest receivable. The repayment terms for all of these deferments vary by customer.
In addition, during the years ended December 31, 2023 and 2022, we collected $2.1 million and $24.2 million, respectively, of deferred rent and interest from accrual basis customers that reduced related accounts and interest receivable. The repayment terms for all of these deferments vary by customer.
At December 31, 2022 , we had no outstanding balance under our $1.0 billion unsecured revolving credit facility. Our unsecured revolving credit facility is governed by the terms of a Third Amended, Restated and Consolidated Credit Agreement, dated as of October 6, 2021 (the "Third Consolidated Credit Agreement"). The facility will mature on October 6, 2025.
Interest payments on our unsecured senior notes are due semiannually. At December 31, 2023 , we had no outstanding balance under our $1.0 billion unsecured revolving credit facility. Our unsecured revolving credit facility is governed by the terms of a Third Amended, Restated and Consolidated Credit Agreement, dated as of October 6, 2021 (the "Third Consolidated Credit Agreement").
As of December 31, 2022, rental revenue from several of our tenants, who are also sub-tenants under the ground leases, are being recognized on a cash b asis. In most cases, the ground lease sub-tenants have continued to pay the rent under these ground leases. In addition, two of these properties do not currently have sub-tenants.
As of December 31, 2023, rental revenue from two of our tenants, who are also sub-tenants under the ground leases, are being recognized on a cash basis. In most cases, the ground lease sub-tenants have continued to pay the rent under these ground leases, however, one of these properties does not currently have a sub-tenant.
Other assets include the following: December 31, 2022 December 31, 2021 Intangible assets, gross $ 60,109 $ 57,962 Less: accumulated amortization on intangible assets (23,487) (20,163) Notes receivable and related accrued interest receivable, net 2,872 7,254 Prepaid expenses and other current assets 33,559 24,865 Total other assets $ 73,053 $ 69,918 Impact of Recently Issued Accounting Standards See Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K for additional information on the impact of recently issued accounting standards on our business.
Other assets include the following: December 31, 2023 December 31, 2022 Intangible assets, gross $ 65,299 $ 60,109 Less: accumulated amortization on intangible assets (30,589) (23,487) Notes receivable and related accrued interest receivable, net 3,879 2,872 Prepaid expenses and other current assets 22,718 33,559 Total other assets $ 61,307 $ 73,053 Impact of Recently Issued Accounting Standards See Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K for additional information on the impact of recently issued accounting standards on our business.
During the year ended December 31, 2022 , we collected $17.1 million in deferred rent and $0.6 million of deferred interest from cash basis customers and from customers for which the deferred payments were not previously recognized as revenue.
During the years ended December 31, 2023 and 2022, we collected $36.4 million and $17.7 million, respectively, in deferred rent and interest from cash basis customers and from customers for which the deferred payments were not previously recognized as revenue.
Other income includes the following: Three Months Ended December 31, 2022 2021 Income from settlement of foreign currency swap contracts $ 246 $ 41 Gain on insurance recovery — 1,151 Sale participation income 9,134 — Operating income from operated properties 7,325 7,815 Miscellaneous income 51 7 Other income $ 16,756 $ 9,014 (3) Adjusted EBITDAre for the quarter is multiplied by four to calculate an annual amount. 57 Total Investments Total investments is a non-GAAP financial measure defined as the sum of the carrying values of real estate investments (before accumulated depreciation), land held for development, property under development, mortgage notes receivable (including related accrued interest receivable), investment in joint ventures, intangible assets, gross (before accumulated amortization and included in other assets) and notes receivable and related accrued interest receivable, net (included in other assets).
Other income includes the following: Three Months Ended December 31, 2023 2022 Income from settlement of foreign currency swap contracts $ 243 $ 246 Sale participation income — 9,134 Operating income from operated properties 11,809 7,325 Miscellaneous income 16 51 Other income $ 12,068 $ 16,756 (3) Adjusted EBITDAre for the quarter is multiplied by four to calculate an annual amount but does not include the annualization of investments put in service, acquired or disposed of during the quarter, as well as the potential earnings on property under development, the annualization of percent rent and adjustments for other items. 56 Total Investments Total investments is a non-GAAP financial measure defined as the sum of the carrying values of real estate investments (before accumulated depreciation), land held for development, property under development, mortgage notes receivable (including related accrued interest receivable), investment in joint ventures, intangible assets, gross (before accumulated amortization and included in other assets) and notes receivable and related accrued interest receivable, net (included in other assets).
Non-GAAP Financial Measures Funds From Operations (FFO), Funds From Operations As Adjusted (FFOAA) and Adjusted Funds from Operations (AFFO) The National Association of Real Estate Investment Trusts (“NAREIT”) developed FFO as a relative non-GAAP financial measure of performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP.
We also seek to maintain conservative interest, fixed charge, debt service coverage and net debt to gross asset ratios (see "Non-GAAP Financial Measures" for calculations). 51 Non-GAAP Financial Measures Funds From Operations (FFO), Funds From Operations As Adjusted (FFOAA) and Adjusted Funds from Operations (AFFO) The National Association of Real Estate Investment Trusts (“NAREIT”) developed FFO as a relative non-GAAP financial measure of performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP.
We have no scheduled debt payments due until 2024. We currently believe that we will be able to repay, extend, refinance or otherwise settle our debt maturities as the debt comes due and that we will be able to fund our remaining commitments, as necessary.
Long-term liquidity requirements consist primarily of debt maturities. We have $136.6 million in scheduled debt payments due in 2024. We currently believe that we will be able to repay, extend, refinance or otherwise settle our debt maturities as the debt comes due and that we will be able to fund our remaining commitments, as necessary.
(2) The increase in general and administrative expense for the year ended December 31, 2022 related primarily to an increase in payroll and benefit costs and an increase in travel expenses and professional fees.
(2) The increase in general and administrative expense for the year ended December 31, 2023 compared to the year ended December 31, 2022 related primarily to an increase in payroll and benefit costs and an increase in professional fees, including those related to the comprehensive restructuring agreement with Regal.
As of December 31, 2022, our Experiential investments comprised $6.2 billion, or 92%, and our Education investments comprised $0.5 billion, or 8%, of our total investments.
As of December 31, 2023, our Experiential investments comprised $6.3 billion, or 93%, and our Education investments comprised $0.5 billion, or 7%, of our total investments.
(9) The decrease in equity in loss from joint ventures for the year ended December 31, 2022 compared to the year ended December 31, 2021 related primarily to more income recognized at two experiential lodging properties located in St. Petersburg, Florida.
(9) The increase in equity in loss from joint ventures for the year ended December 31, 2023 compared to the year ended December 31, 2022 related primarily to government incentives received at our experiential lodging properties located in St. Petersburg, Florida during the year ended December 31, 2022.
(2) The increase in percentage rent (amounts above base rent) for the year ended December 31, 2021 compared to the year ended December 31, 2020 was due to higher percentage rent recognized from our gaming tenant, golf entertainment tenant, one ski tenant and two attraction tenants.
(2) The increase in percentage rent (amounts above base rent) for the year ended December 31, 2023 compared to the year ended December 31, 2022 was due primarily to higher percentage rent recognized from one ski property tenant, one cultural property tenant and one attraction property tenant.
A reconciliation of total assets (computed in accordance with GAAP) to total investments is included in the following table (unaudited, in thousands): December 31, 2022 December 31, 2021 Total assets $ 5,758,701 $ 5,801,150 Operating lease right-of-use assets (200,985) (180,808) Cash and cash equivalents (107,934) (288,822) Restricted cash (2,577) (1,079) Accounts receivable (53,587) (78,073) Add: accumulated depreciation on real estate investments 1,302,640 1,167,734 Add: accumulated amortization on intangible assets (1) 23,487 20,163 Prepaid expenses and other current assets (1) (33,559) (24,865) Total investments $ 6,686,186 $ 6,415,400 Total Investments: Real estate investments, net of accumulated depreciation $ 4,714,136 $ 4,713,091 Add back accumulated depreciation on real estate investments 1,302,640 1,167,734 Land held for development 20,168 20,168 Property under development 76,029 42,362 Mortgage notes and related accrued interest receivable 457,268 370,159 Investment in joint ventures 52,964 36,670 Intangible assets, gross (1) 60,109 57,962 Notes receivable and related accrued interest receivable, net (1) 2,872 7,254 Total investments $ 6,686,186 $ 6,415,400 (1) Included in "Other assets" in the accompanying consolidated balance sheets.
A reconciliation of total assets (computed in accordance with GAAP) to total investments is included in the following table (unaudited, in thousands): December 31, 2023 December 31, 2022 Total assets $ 5,700,885 $ 5,758,701 Operating lease right-of-use assets (186,628) (200,985) Cash and cash equivalents (78,079) (107,934) Restricted cash (2,902) (2,577) Accounts receivable (63,655) (53,587) Add: accumulated depreciation on real estate investments 1,435,683 1,302,640 Add: accumulated amortization on intangible assets (1) 30,589 23,487 Prepaid expenses and other current assets (1) (22,718) (33,559) Total investments $ 6,813,175 $ 6,686,186 Total Investments: Real estate investments, net of accumulated depreciation $ 4,537,359 $ 4,714,136 Add back accumulated depreciation on real estate investments 1,435,683 1,302,640 Land held for development 20,168 20,168 Property under development 131,265 76,029 Mortgage notes and related accrued interest receivable 569,768 457,268 Investment in joint ventures 49,754 52,964 Intangible assets, gross (1) 65,299 60,109 Notes receivable and related accrued interest receivable, net (1) 3,879 2,872 Total investments $ 6,813,175 $ 6,686,186 (1) Included in "Other assets" in the accompanying consolidated balance sheets.
Recent Developments Investment Spending Our investment spending during the years ended December 31, 2022 and 2021 totaled $402.5 million and $133.5 million, respectively, and is detailed below (in thousands): For the Year Ended December 31, 2022 Investment Type Total Investment Spending New Development Re-development Asset Acquisition Mortgage Notes or Notes Receivable Investment in Joint Ventures Experiential: Theatres $ 622 $ 5 $ 617 $ — $ — $ — Eat & Play 24,747 23,151 1,596 — — — Attractions 145,026 — 2,261 142,765 — — Ski 27,178 — — — 27,178 — Experiential Lodging 77,782 4,354 — — 11,305 62,123 Fitness & Wellness 127,057 44,090 6,358 19,858 56,751 — Cultural 107 — 107 — — — Total Experiential 402,519 71,600 10,939 162,623 95,234 62,123 Education: Total Education — — — — — — Total Investment Spending $ 402,519 $ 71,600 $ 10,939 $ 162,623 $ 95,234 $ 62,123 43 For the Year Ended December 31, 2021 Investment Type Total Investment Spending New Development Re-development Asset Acquisition Mortgage Notes or Notes Receivable Investment in Joint Ventures Experiential: Theatres $ 4,633 $ 4,182 $ 451 $ — $ — $ — Eat & Play 58,387 9,347 121 48,919 — — Attractions 56 — 56 — — — Ski 6,540 — — — 6,540 — Experiential Lodging 57,367 17,029 301 — — 40,037 Fitness & Wellness 2,124 — — — 2,124 — Cultural 4,399 — 20 — 4,379 — Total Experiential 133,506 30,558 949 48,919 13,043 40,037 Education: Total Education — — — — — — Total Investment Spending $ 133,506 $ 30,558 $ 949 $ 48,919 $ 13,043 $ 40,037 The above amounts include $1.3 million and $1.6 million in capitalized interest and $0.7 million and $0.3 million in capitalized other general and administrative direct project costs for the years ended December 31, 2022 and 2021, respectively.
Recent Developments Investment Spending Our investment spending during the years ended December 31, 2023 and 2022 totaled $269.4 million and $402.5 million, respectively, and is detailed below (in thousands): For the Year Ended December 31, 2023 Investment Type Total Investment Spending New Development Re-development Asset Acquisition Mortgage Notes or Notes Receivable Investment in Joint Ventures Experiential: Theatres $ 5,182 $ — $ 5,182 $ — $ — $ — Eat & Play 24,048 20,750 2,192 — 1,106 — Attractions 28,384 — 3,669 — 24,715 — Ski 5,324 — — — 5,324 — Experiential Lodging 16,034 — — — — 16,034 Fitness & Wellness 184,370 45,632 3,286 53,144 82,308 — Cultural 6,086 — 6,086 — — — Total Experiential 269,428 66,382 20,415 53,144 113,453 16,034 Education: Total Education — — — — — — Total Investment Spending $ 269,428 $ 66,382 $ 20,415 $ 53,144 $ 113,453 $ 16,034 45 For the Year Ended December 31, 2022 Investment Type Total Investment Spending New Development Re-development Asset Acquisition Mortgage Notes or Notes Receivable Investment in Joint Ventures Experiential: Theatres $ 622 $ 5 $ 617 $ — $ — $ — Eat & Play 24,747 23,151 1,596 — — — Attractions 145,026 — 2,261 142,765 — — Ski 27,178 — — — 27,178 — Experiential Lodging 77,782 4,354 — — 11,305 62,123 Fitness & Wellness 127,057 44,090 6,358 19,858 56,751 — Cultural 107 — 107 — — — Total Experiential 402,519 71,600 10,939 162,623 95,234 62,123 Education: Total Education — — — — — — Total Investment Spending $ 402,519 $ 71,600 $ 10,939 $ 162,623 $ 95,234 $ 62,123 The above amounts include $3.6 million and $1.3 million in capitalized interest and $0.2 million and $0.7 million in capitalized other general and administrative direct project costs for the years ended December 31, 2023 and 2022, respectively.
Additionally, the facility fee on the revolving credit facility is 0.25%. 50 At December 31, 2022 , we had outstanding $316.2 million of senior unsecured notes that were issued in a private placement transaction. The private placement notes were issued in two tranches with $148.0 million due August 22, 2024, and $192.0 million due August 22, 2026.
At December 31, 2023 , we had outstanding $316.2 million of senior unsecured notes that were issued in a private placement transaction. The private placement notes were issued in two tranches with $136.6 million due August 22, 2024, and $179.6 million due August 22, 2026.
Liquidity and Capital Resources Cash and cash equivalents wer e $107.9 million a t December 31, 2022. In addition, we had restricted cash o f $2.6 million at December 31, 2022, which related primarily t o escrow deposits required for property management and debt agreements or held for potential acquisitions and redevelopments.
In addition, we had restricted cash of $2.9 million at December 31, 2023, which related primarily to escrow deposits required for property management and debt agreements or held for potential acquisitions and redevelopments.
The unsecured revolving credit facility bears interest at a floating rate of LIBOR plus 1.20% (based on our unsecured debt ratings and with a LIBOR floor of zero), which was 5.58% at December 31, 2022.
The unsecured revolving credit facility bears interest at a floating rate of SOFR plus 1.30% (based on our unsecured debt ratings and with a SOFR floor of zero), which was 6.66% at December 31, 2023. Additionally, the facility fee on the revolving credit facility is 0.25%.
Reconciliations of debt, total assets and net income (all reported in accordance with GAAP) to Net Debt, Gross Assets Ratio, Net Debt to Gross Assets Ratio, EBITDAre, Adjusted EBITDAre and Net Debt to Adjusted EBITDAre Ratio (each of which is a non-GAAP financial measure), as applicable, are included in the following tables (unaudited, in thousands): December 31, 2022 2021 Net Debt: Debt $ 2,810,111 $ 2,804,365 Deferred financing costs, net 31,118 36,864 Cash and cash equivalents (107,934) (288,822) Net Debt $ 2,733,295 $ 2,552,407 Gross Assets: Total Assets $ 5,758,701 $ 5,801,150 Accumulated depreciation 1,302,640 1,167,734 Cash and cash equivalents (107,934) (288,822) Gross Assets $ 6,953,407 $ 6,680,062 Debt to Total Assets Ratio 49 % 48 % Net Debt to Gross Assets Ratio 39 % 38 % Three Months Ended December 31, 2022 2021 EBITDAre and Adjusted EBITDAre: Net income $ 42,329 $ 44,557 Interest expense, net 31,879 34,005 Income tax expense 86 397 Depreciation and amortization 41,303 40,294 Gain on sale of real estate (347) (16,382) Impairment of real estate investments, net (1) 21,030 — Costs associated with loan refinancing or payoff — 20,469 Allocated share of joint venture depreciation 1,833 1,561 Allocated share of joint venture interest expense 2,215 1,145 EBITDAre $ 140,328 $ 126,046 Sale participation income (2) (9,134) — Gain on insurance recovery (2) — (1,151) Transaction costs 993 60 Credit loss expense (benefit) 1,369 (2,295) Impairment of operating lease right-of-use asset (1) 1,968 — Adjusted EBITDAre $ 135,524 $ 122,660 Adjusted EBITDAre (annualized) (3) $ 542,096 $ 490,640 Net Debt to Adjusted EBITDAre Ratio 5.0 5.2 (1) Impairment charges recognized during the three months ended December 31, 2022 totaled $23.0 million, which was comprised of $21.0 million of impairments of real estate investments and a $2.0 million impairment of an operating lease right-of-use asset.
Reconciliations of debt, total assets and net income (all reported in accordance with GAAP) to Net Debt, Gross Assets, Net Debt to Gross Assets Ratio, EBITDAre, Adjusted EBITDAre and Net Debt to Adjusted EBITDAre Ratio (each of which is a non-GAAP financial measure), as applicable, are included in the following tables (unaudited, in thousands): 55 December 31, 2023 2022 Net Debt: Debt $ 2,816,095 $ 2,810,111 Deferred financing costs, net 25,134 31,118 Cash and cash equivalents (78,079) (107,934) Net Debt $ 2,763,150 $ 2,733,295 Gross Assets: Total Assets $ 5,700,885 $ 5,758,701 Accumulated depreciation 1,435,683 1,302,640 Cash and cash equivalents (78,079) (107,934) Gross Assets $ 7,058,489 $ 6,953,407 Debt to Total Assets Ratio 49 % 49 % Net Debt to Gross Assets Ratio 39 % 39 % Three Months Ended December 31, 2023 2022 EBITDAre and Adjusted EBITDAre: Net income $ 45,529 $ 42,329 Interest expense, net 30,337 31,879 Income tax expense 667 86 Depreciation and amortization 40,692 41,303 Loss (gain) on sale of real estate 3,612 (347) Impairment of real estate investments, net (1) 2,694 21,030 Allocated share of joint venture depreciation 2,344 1,833 Allocated share of joint venture interest expense 1,879 2,215 EBITDAre $ 127,754 $ 140,328 Sale participation income (2) — (9,134) Transaction costs 401 993 Provision (benefit) for credit losses, net 1,285 1,369 Impairment of operating lease right-of-use asset (1) — 1,968 Adjusted EBITDAre $ 129,440 $ 135,524 Adjusted EBITDAre (annualized) (3) $ 517,760 $ 542,096 Net Debt to Adjusted EBITDAre Ratio 5.3 5.0 (1) Impairment charges recognized during the three months ended December 31, 2022 totaled $23.0 million, which was comprised of $21.0 million of impairments of real estate investments and a $2.0 million impairment of an operating lease right-of-use asset.
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 and below market leases, net and tenant allowances; and subtracting maintenance capital expenditures (including second generation tenant improvements and leasing commissions), straight-lined rental revenue (removing the impact of straight-line ground sublease expense), and the non-cash portion of mortgage and other financing income. 53 FFO, FFOAA and AFFO are widely used measures o f the operating performance of real estate companies and are provided here as supplemental measures to GAAP net income (loss) ava ilable 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.
AFFO is presented by adding to FFOAA non-real estate depreciation and amortization, deferred financing fees amortization and share-based compensation expense to management and Trustees; and subtracting amortization of above and below market leases, net and tenant allowances, maintenance capital expenditures (including second generation tenant improvements and leasing commissions), straight-lined rental revenue (removing the impact of straight-line ground sublease expense), and the non-cash portion of mortgage and other financing income.
Dispositions During the year ended December 31, 2022, we completed the sale of three vacant theatre properties and a land parcel for net proceeds totaling $11.0 million. In connection with these sales, we recognized a combined gain on sale of $0.7 million.
Dispositions During the year ended December 31, 2023, we completed the sale of three vacant theatre properties, two operating theatre properties, one vacant eat & play property, four vacant early childhood education centers and a land parcel for net proceeds totaling $57.2 million. In connection with these sales, we recognized a combined loss on sale of $2.2 million.
(7) The gain on sale of real estate for the year ended December 31, 2021 related to the sale of four theatre properties, two ski properties, one eat & play property and four land parcels.
(7) The loss on sale of real estate for the year ended December 31, 2023 related to the sale of three vacant theatres properties, two operating theatre properties, one vacant eat & play property, four vacant early childhood education centers and one land parcel.
As of December 31, 2022, our ow ned Experiential real estate portfolio consisted of approximately 20.0 million square feet, was 97.2% leased and included $76.0 million in property under development and $20.2 million in undeveloped land inventory.
As of December 31, 2023 , our ow ned Experiential real estate portfolio consisted of approximately 19.8 million square feet, which includes 0.6 million square feet of properties we intend to sell. The Experiential portfolio, excluding the properties we intend to sell, was 99% leased and included $131.3 million in property under development and $20.2 million in undeveloped land inventory.
During the year ended December 31, 2022, we recognized credit loss expense of $6.8 million related to one mortgage note receivable and $3.1 million related to two notes receivable.
(4) The change in provision (benefit) for credit losses, net for the year ended December 31, 2023 compared to the year ended December 31, 2022 was due primarily to credit loss expense of $6.8 million related to one mortgage note receivable and $3.1 million related to two notes receivable recorded during the year ended December 31, 2022.
The assumptions used to derive the estimated future cash flows for the undiscounted cash flow test are based on capitalization rates, anticipated future market rent and our anticipated hold period, all of which are subjective.
If an impairment is indicated, we will record a loss for the amount by which the carrying value of the asset exceeds its estimated fair value. 43 The assumptions used to derive the estimated future cash flows for the undiscounted cash flow test are based on capitalization rates, anticipated future market rent and our anticipated hold period, which are all subjective.
(6) The decrease in depreciation and amortization expense for the year ended December 31, 2021 compared to the year ended December 31, 2020 resulted primarily from property dispositions that occurred during 2020 and 2021 as 49 well as property impairments. This decrease was partially offset by acquisitions and developments completed in 2020 and 2021.
(6) The increase in depreciation and amortization expense for the year ended December 31, 2023 compared to the year ended December 31, 2022 resulted from acquisitions and developments completed in 2023 and 2022 and accelerated amortization of in-place leases related to Regal leases that were terminated. This was partially offset by property dispositions that occurred during 2023 and 2022.
Regal Update On September 7, 2022, Cineworld Group, plc, Regal Entertainment Group and the Company's other Regal theatre tenants (collectively, “Regal”) filed for protection under Chapter 11 of the U.S. Bankruptcy Code (the “Code”). Regal leases 57 theatres from the Company pursuant to two master leases and 28 single property leases (the “Regal Leases”).
Regal Update On September 7, 2022, Cineworld Group, plc, Regal Entertainment Group and our other Regal theatre tenants (collectively, "Regal") filed for protection under Chapter 11 of the U.S. Bankruptcy Code (the "Code").
As a result, we intend to be more selective in making investments and acquisitions, utilizing excess cash flow and borrowings under our line of credit, until such time as economic conditions improve and our cost of capital returns to acceptable levels, which may depend, in part, upon the ultimate outcome of our theatre tenant's bankruptcy proceedings.
As a result, we intend to continue to be more selective in making investments, acquisitions, utilizing cash on hand, excess cash flow and borrowings under our line of credit until such time as economic conditions improve and our cost of capital returns to acceptable levels. Capital Structure We believe that our shareholders are best served by a conservative capital structure.
In addition, there was an increase in minimum rent of $14.2 million related to property acquisitions and developments completed in 2022 and 2021. This was partially offset by a decrease in rental revenue of $4.6 million from property dispositions.
In addition, there was an increase in minimum rent of $3.4 million related to lease termination fees recognized during the year ended December 31, 2023 and $12.1 million related to property acquisitions and developments completed in 2023 and 2022. This increase was partially offset by a decrease in rental revenue of $0.5 million from property dispositions.
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 Funds From Operations As Adjusted ("FFOAA") and dividends per share.
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.” A discussion regarding our financial condition and results of operations for fiscal year 2023 compared to fiscal year 2022 is presented below.
The combined owned portfolio consisted of 21.5 million square feet and was 97.4% leased. COVID-19 Update We continue to be subject to risks and uncertainties resulting from the COVID-19 pandemic. During 2021 and 2020, the COVID-19 pandemic severely impacted experiential real estate properties because such properties involve congregate social activity and discretionary spending.
The combined owned portfolio consisted of 21.1 million square feet and was 99% leased excluding the 0.6 million square feet of properties we intend to sell. Update on Continuing Impact of COVID-19 Pandemic The COVID-19 pandemic severely impacted experiential real estate properties because such properties involve congregate social activity and discretionary spending.
If we determine that construction is not being completed in accordance with the terms of the development agreement, we can discontinue funding construction draws. We have agreed to lease the properties to the operators at pre-determined rates upon completion of construction.
We advance development costs in periodic draws. If we determine that construction is not being completed in accordance with the terms of the development agreement, we can discontinue funding construction draws.
As of December 31, 2022, our Education segment consisted of the following property types (owned or financed): • 65 early childhood education center properties; and • nine private school properties. As of December 31, 2022, our owned Education real estate portfolio consisted of approximately 1.4 million square feet, which was 100% leased.
As of December 31, 2023 , our Education segment consisted of the following property types (owned or financed): • 61 early childhood education center properties; and • nine private school properties.
During the year ended December 31, 2021, we renewed eight lease agreements on approximately 460 thousand square feet. We experienced an increase of 8.1% in rental rates and paid no leasing commissions with respect to these lease renewals.
During the year ended December 31, 2023, we renewed one lease agreement on approximately 62 thousand square feet, experienced a decrease of approximately 11.5% in rental rates and paid no leasing commissions with respect to this lease renewal.
During the year ended December 31, 2022, we also wrote-off $1.5 million in accrued interest receivables and fees to mortgage and other financing income related to the mortgage note and notes receivables.
In addition, during the year ended 47 December 2022, $1.5 million of accrued interest and fees receivable was written off against interest income related to one mortgage note receivable and two notes receivable.
Contractual obligations as of December 31, 2022 are as follows (in thousands): Year ended December 31, Contractual Obligations 2023 2024 2025 2026 2027 Thereafter Total Long Term Debt Obligations $ — $ 136,637 $ 300,000 $ 629,597 $ 450,000 $ 1,324,995 $ 2,841,229 Interest on Long Term Debt Obligations 122,841 120,728 106,773 99,595 62,020 104,440 616,397 Operating Lease Obligation - Corporate Office 958 958 958 717 — — 3,591 Operating Ground Lease Obligations (1) 26,317 27,504 27,622 25,796 24,235 235,792 367,266 Total $ 150,116 $ 285,827 $ 435,353 $ 755,705 $ 536,255 $ 1,665,227 $ 3,828,483 (1) Our tenants, who are generally sub-tenants under the ground leases, are responsible for paying the rent under these ground leases.
Contractual obligations as of December 31, 2023 are as follows (in thousands): Year ended December 31, Contractual Obligations 2024 2025 2026 2027 2028 Thereafter Total Long Term Debt Obligations $ 136,637 $ 300,000 $ 629,597 $ 450,000 $ 400,000 $ 924,995 $ 2,841,229 Interest on Long Term Debt Obligations 120,728 106,773 99,595 62,020 39,558 64,882 493,556 Operating Lease Obligation - Corporate Office 958 958 717 — — — 2,633 Operating Ground Lease Obligations (1) 27,341 27,460 25,954 24,614 23,730 212,408 341,507 Total $ 285,664 $ 435,191 $ 755,863 $ 536,634 $ 463,288 $ 1,202,285 $ 3,678,925 (1) Our te nants, who are generally sub-tenants under the ground leases, are responsible for paying the rent under these ground leases.
(3) The increase in transaction costs during the year ended December 31, 2022 compared to the year ended December 31, 2021 was due to an increase in costs related to transactions where costs can not be capitalized and terminated transactions.
(3) The decrease in transaction costs during the year ended December 31, 2023 compared to the year ended December 31, 2022 was due to a decrease in costs related to equity method investments and fewer terminated transactions.
In connection with construction of our development projects and related infrastructure, certain public agencies require posting of surety bonds to guarantee that our obligations are satisfied. These bonds expire upon the completion of the improvements or infrastructure. As of December 31, 2022 , we had three surety bonds outstanding totaling $2.7 million.
If commitments are funded in the future, interest will be charged at rates consistent with the existing investments. In connection with construction of our development projects and related infrastructure, certain public agencies require posting of surety bonds to guarantee that our obligations will be satisfied. These bonds expire upon the completion of the improvements or infrastructure.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

14 edited+1 added−1 removed4 unchanged
Biggest changeThe 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 (dollars in millions) 2023 2024 2025 2026 2027 Thereafter Total Estimated Fair Value December 31, 2022: Fixed rate debt $ — $136.6 $300.0 $629.6 $450.0 $1,325.0 $2,841.2 $2,413.6 Average interest rate — % 4.35 % 4.50 % 4.70 % 4.50 % 4.04 % 4.32 % 7.88 % Variable rate debt $ — $ — $ — $ — $ — $ — $ — $ — Average interest rate (as of December 31, 2022) — % — % — % — % — % — % — % — % 2022 2023 2024 2025 2026 Thereafter Total Estimated Fair Value December 31, 2021: Fixed rate debt $ — $ — $136.6 $300.0 $629.6 $1,775.0 $2,841.2 $2,955.8 Average interest rate — % — % 4.35 % 4.50 % 4.70 % 4.18 % 4.31 % 3.42 % Variable rate debt $ — $ — $ — $ — $ — $ — $ — $ — Average interest rate (as of December 31, 2021) — % — % — % — % — % — % — % — % The fair value of our debt as of December 31, 2022 and 2021 is estimated by discounting the future cash flows of each instrument using current market rates including current market spreads.
Biggest changeThe 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 (dollars in millions) 2024 2025 2026 2027 2028 Thereafter Total Estimated Fair Value December 31, 2022: Fixed rate debt $136.6 $300.0 $629.6 $450.0 $400.0 $925.0 $2,841.2 $2,606.8 Average interest rate 4.35 % 4.50 % 4.70 % 4.50 % 4.95 % 3.65 % 4.32 % 6.56 % Variable rate debt $ — $ — $ — $ — $ — $ — $ — $ — Average interest rate (as of December 31, 2023) — % — % — % — % — % — % — % — % 2023 2024 2025 2026 2027 Thereafter Total Estimated Fair Value December 31, 2022: Fixed rate debt $ — $136.6 $300.0 $629.6 $450.0 $1,325.0 $2,841.2 $2,413.6 Average interest rate — % 4.35 % 4.50 % 4.70 % 4.50 % 4.04 % 4.32 % 7.88 % Variable rate debt $ — $ — $ — $ — $ — $ — $ — $ — Average interest rate (as of December 31, 2022) — % — % — % — % — % — % — % — % The fair value of our debt as of December 31, 2023 and 2022 is estimated by discounting the future cash flows of each instrument using current market rates and current market spreads.
We are exposed to foreign currency risk against our functional currency, the U.S. dollar, on our six Canadian properties and the rents received from tenants of the properties are payable in CAD.
We are exposed to foreign currency risk against our functional currency, the U.S. dollar ("USD"), on our six Canadian properties and the rents received from tenants of the properties are payable in the Canadian dollar ("CAD").
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.
Accordingly, if we are unable to raise additional equity or borrow money due to these limitations or otherwise, our ability to make additional real estate investments may be limited.
Th e mortgage loan bears interest at SOFR plus 3.65%, with monthly interest payments required. The joint venture has an interest rate cap agreement to limit the variable portion of the interest rate (SOFR) on this note to 3.5% from May 19, 2022 to June 1, 2024.
Th e mortgage loan bears interest at SOFR plus 3.65%, with monthly interest payments required. The joint venture includes an interest rate cap agreement to limit the variable portion of the interest rate (SOFR) on this note to 3.5% from May 19, 2022 to June 1, 2024.
As of December 31, 2022, we had a $1.0 billion unsecured revolving credit facility with no balance outsta nding. We also had a $25.0 million bond that bears interest at a floating rate but has been fixed through an interest rate swap agreement.
As of December 31, 2023, we had a $1.0 billion unsecured revolving credit facility with no balance outsta nding. We also had a $25.0 million bond that bears interest at a floating rate but has been fixed through an interest rate swap agreement.
As of December 31, 2022, we had a 65% investment interest in two unconsolidated real estate joint ventures related to two experiential lodging properties located in St. Petersburg Beach, Florida. At December 31, 2022, the joint 58 ventures had a secured mortgage loan with an outstanding ba lance of $105.0 million.
As of December 31, 2023, we had a 65% investment interest in two unconsolidated real estate joint ventures related to two experiential lodging properties located in St. Petersburg Beach, Florida. At December 31, 2023, the joint 57 ventures had a secured mortgage loan with an outstanding ba lance of $105.0 million.
See Note 9 to the consolidated financial statements in this Annual Report on Form 10-K for additional information on our derivative financial instruments and hedging activities. 60
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. 59
The net effect of these swaps is to lock in an exchange rate of $1.26 CAD per USD on approximately $10.8 million annual CAD denominated cash flows through October 1, 2024. On April 29, 2022, we entered into two USD-CAD cross-currency swaps effective May 1, 2022 with a total fixed notional value of $200.0 million CAD and $156.0 million USD.
The net effect of these swaps provides a fixed exchange rate of $1.26 CAD per USD on approximately $10.8 million annual CAD denominated cash flows. We entered into two USD-CAD cross-currency swaps that became effective May 1, 2022, mature on October 1, 2024 and have a total fixed notional value of $200.0 million CAD and $156.0 million USD.
The net effect of these swaps is to lock in an 59 exchange rate of $1.28 CAD per USD on approximately $4.5 million of annual CAD denominated cash flows through October 1, 2024. On June 14, 2022, we entered into three USD-CAD cross-currency swaps with a total fixed notional value of $90.0 million CAD and $69.5 million USD.
The net effect of these 58 swaps provides a fixed exchange rate of $1.28 CAD per USD on approximately $4.5 million of annual CAD denominated cash flows. We entered into three USD-CAD cross-currency swaps that became effective June 1, 2022, mature on December 1, 2024 and have a total fixed notional value of $90.0 million CAD and $69.5 million USD.
The net effect of these swaps is to lock in an exchange rate of $1.30 CAD per USD on approximately $8.1 million of annual CAD denominated cash flows through December 1, 2024.
The net effect of these swaps provides a fixed exchange rate of $1.30 CAD per USD on approximately $8.1 million of annual CAD denominated cash flows.
Net Investment Hedges - Foreign Currency Forwards On April 29, 2022, we entered into two forward contracts with a fixed notional value of $200.0 million CAD and $155.9 million USD with a settlement date of October 1, 2024. The exchange rate of these forward contracts is approximately $1.28 CAD per USD.
Net Investment Hedges - Foreign Currency Forward Contracts We entered into two forward contracts that became effective December 13, 2023 with a fixed notional value of $200.0 million CAD and $148.3 million USD with a settlement date of October 1, 2025. The exchange rate of these forward contracts is approximately $1.35 CAD per USD.
The fixed rate of 1.3925% indexed to LIBOR was modified to 2.5325% indexed to SOFR. Cash Flow Hedges of Foreign Exchange Risk- Cross Currency Swaps On April 12, 2022, we entered into three USD-CAD cross-currency swaps effective July 1, 2022 with a total fixed original notional value of $150.0 million CAD and $118.7 million USD.
Cash Flow Hedges of Foreign Exchange Risk-Cross Currency Swaps We entered into three USD-CAD cross-currency swaps that became effective July 1, 2022, mature on October 1, 2024, and have a total fixed original notional value of $150.0 million CAD and $118.7 million USD.
On June 14, 2022, we entered into a forward contract with a fixed notional value of $90.0 million CAD and $69.2 million USD with a settlement date of December 2, 2024. The exchange rate of this forward contract is approximately $1.30 CAD per USD.
We entered into a forward contract that became effective December 13, 2023 with a fixed notional value of $90.0 million CAD and $66.8 million USD with a settlement date of December 1, 2025. The exchange rate of this forward contract is approximately $1.35 CAD per USD.
Cash Flow Hedges of Interest Rate Risk On October 28, 2022, we amended and restated our interest rate swap agreement on our variable rate secured bonds with a notional amount of $25.0 million. This amendment changed the index rate from LIBOR to SOFR and extended the termination date by two years to September 30, 2026.
Cash Flow Hedges of Interest Rate Risk In order to hedge our interest rate risk, we entered into an interest rate swap agreement on our variable rate secured bonds with a notional amount of $25.0 million. The interest rate cap agreement limits the variable portion of the interest rate (SOFR) on this bond to 2.5325% until September 30, 2026.
Removed
On April 29, 2022, we terminated two cross-currency swaps with a fixed notional value of $200.0 million CAD. These contracts were previously designated as net investment hedges. We paid $3.8 million in connection with the settlement of these CAD to USD cross-currency swap agreements.
Added
On December 13, 2023, we terminated our previous CAD to USD forward contracts in conjunction with entering into the new forward agreements described above. We received $10.0 million in connection with the settlement of the CAD to USD forward contracts.

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