The contemplated theatre deal involves 19 properties with 291 screens, 67,000 seats and 1.56 million square feet of space combined, according to the Nov. 10 filing. If the transaction is closed, EPR expects the properties to be leased to the theatre operator under one master lease, structured as a triple-net lease with an initial 20-year term and an initial base rent equal to the purchase price multiplied by 12%, plus rent escalators every five years. "The theatre operator is currently negotiating with a third party for the purchase of the theatres," the filing states. "It is anticipated that [EPR] would acquire the theatre properties directly from the third party and lease them to the theatre operator."
Meanwhile, the same filing discloses that EPR is discussing an option to buy as many as five charter schools from Imagine Schools Inc. The purchases as well as plans to invest in the expansion of a charter school the REIT already owns, is estimated to total $50 million.
During the company's third quarter earnings conference call last week, EPR executives alluded to possible transactions in the theatre and charter school property markets, saying they have been spending a lot of time looking at deals in the 11% to 12% cap rate range. The deals are generally coming from "distressed sellers, not necessarily distressed properties, but distressed sellers," president and chief executive officer David Brain said during the call.
Brain also noted during the call that during the third quarter, the company had raised $50 million of equity from the sale of about 1.6 million shares, at an average price of about $32 a share, through its direct share purchase program. That brought the company's year-to-date equity raise to just under $100 million. "These transactions are very important in their contribution to our liquidity, our stability, as we reduce our leverage position and create capacity to resolve issues and execute growth transactions."
And since the date of the Q3 call, EPR has announced further capital raising activity: On Tuesday it announced that it priced a public offering of 5.5 million newly issued common shares for anticipated proceeds of $173.3 million. The deal grants an over-allotment option of another 825,000 shares to the underwriters; J.P. Morgan Securities Inc. and RBC Capital markets Corp. are joint book running managers, while Citigroup Global Markets Inc., Barclays Capital Inc. and KeyBanc Capital Markets Inc. are co-lead managers and FBR Capital markets & Co. is co-manager of the offering.
The proceeds are slated for general corporate purposes, an announcement from the company states, "which may include funding the acquisition, development or financing of properties or the repayment of debt."
EPR's core portfolio consists of megaplex theatre properties; at the end of the third quarter, it owned 80 such properties totaling about 6.6 million square feet, which were 100% occupied. It also owns about 3.9 million square feet of restaurant, retail and other destination recreation and specialty properties; 22 charter schools; and a number of vineyards and wineries. The company also has a real estate mortgage loan portfolio, including financing for entertainment, retail and recreational properties, which was valued at $518.1 million at the end of the third quarter.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
