x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 43-1790877 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
909 Walnut Street, Suite 200 Kansas City, Missouri | 64106 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | o | |||
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | o |
• | General international, national, regional and local business and economic conditions; |
• | Continuing volatility in the financial markets; |
• | Adverse changes in our credit ratings; |
• | The downgrade of the U.S. Government's credit rating and any future downgrade of the U.S. Government's credit rating; |
• | Fluctuations in interest rates; |
• | The duration or outcome of litigation, or other factors outside of litigation, relating to our significant investment in a planned casino and resort development which may cause the development to be indefinitely delayed or cancelled; |
• | Defaults in the performance of lease terms by our tenants; |
• | Defaults by our customers and counterparties on their obligations owed to us; |
• | A borrower's bankruptcy or default; |
• | The obsolescence of older multiplex theatres owned by some of our tenants or by any overbuilding of megaplex theatres in their markets; |
• | Our ability to renew maturing leases with theatre tenants on terms comparable to prior leases and/or our ability to lease any re-claimed space from some of our larger theatres at economically favorable terms; |
• | Risks of operating in the entertainment industry; |
• | Our ability to compete effectively; |
• | A single tenant represents a substantial portion of our lease revenues; |
• | A single tenant leases or is the mortgagor of a substantial portion of our investments related to metropolitan ski areas and a single tenant leases a significant number of our public charter school properties; |
• | The ability of our public charter school tenants to comply with their charters and continue to receive funding from local, state and federal governments, the approval by applicable governing authorities of substitute operators to assume control of any failed public charter schools and our ability to negotiate the terms of new leases with such substitute tenants on acceptable terms, and our ability to complete collateral substitutions as applicable; |
• | Risks associated with use of leverage to acquire properties; |
• | Financing arrangements that require lump-sum payments; |
• | Our ability to raise capital; |
• | Covenants in our debt instruments that limit our ability to take certain actions; |
• | Risks of acquiring and developing properties and real estate companies; |
• | The concentration and lack of diversification of our investment portfolio; |
• | Our continued qualification as a real estate investment trust for U.S. federal income tax purposes ("REIT"); |
• | The ability of our subsidiaries to satisfy their obligations; |
• | Financing arrangements that expose us to funding or purchase risks; |
• | Risks associated with security breaches and other disruptions; |
• | We have a limited number of employees and the loss of personnel could harm operations; |
• | Fluctuations in the value of real estate income and investments; |
• | Risks relating to real estate ownership, leasing and development, including local conditions such as an oversupply of space or a reduction in demand for real estate in the area, competition from other available space, whether tenants and users such as customers of our tenants consider a property attractive, changes in real estate taxes and other expenses, changes in market rental rates, the timing and costs associated with property improvements and rentals, changes in taxation or zoning laws or other governmental regulation, whether we are able to pass some or all of any increased operating costs through to tenants, and how well we manage our properties; |
• | Our ability to secure adequate insurance and risk of potential uninsured losses, including from natural disasters; |
• | Risks involved in joint ventures; |
• | Risks in leasing multi-tenant properties; |
• | A failure to comply with the Americans with Disabilities Act or other laws; |
• | Risks of environmental liability; |
• | Our real estate investments are relatively illiquid; |
• | Risks associated with owning assets in foreign countries; |
• | Risks associated with owning, operating or financing properties for which the tenants', mortgagors' or our operations may be impacted by weather conditions and climate change; |
• | Risks associated with the ownership of vineyards and wineries; |
• | Our ability to pay dividends in cash or at current rates; |
• | Fluctuations in the market prices for our shares; |
• | Certain limits on changes in control imposed under law and by our Declaration of Trust and Bylaws; |
• | Policy changes obtained without the approval of our shareholders; |
• | Equity issuances could dilute the value of our shares; |
• | Future offerings of debt or equity securities, which may rank senior to our common shares; |
• | Risks associated with changes in the Canadian exchange rate; and |
• | Changes in laws and regulations, including tax laws and regulations. |
Page | ||||
Item 1. | Financial Statements | |||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |||
Item 4. | Controls and Procedures | |||
Item 1. | Legal Proceedings | |||
Item 1A. | Risk Factors | |||
Item 2. | Unregistered Sale of Equity Securities and Use of Proceeds | |||
Item 3. | Defaults Upon Senior Securities | |||
Item 4. | Mine Safety Disclosures | |||
Item 5. | Other Information | |||
Item 6. | Exhibits |
EPR PROPERTIES Consolidated Balance Sheets (Dollars in thousands except share data) | |||||||
June 30, 2013 | December 31, 2012 | ||||||
(unaudited) | |||||||
Assets | |||||||
Rental properties, net of accumulated depreciation of $394,872 and $375,684 at June 30, 2013 and December 31, 2012, respectively | $ | 1,860,670 | $ | 1,885,093 | |||
Rental properties held for sale, net | 2,788 | 2,788 | |||||
Land held for development | 199,001 | 196,177 | |||||
Property under development | 77,492 | 29,376 | |||||
Mortgage notes and related accrued interest receivable | 482,262 | 455,752 | |||||
Investment in a direct financing lease, net | 239,803 | 234,089 | |||||
Investment in joint ventures | 12,962 | 11,971 | |||||
Cash and cash equivalents | 20,030 | 10,664 | |||||
Restricted cash | 17,030 | 23,991 | |||||
Deferred financing costs, net | 21,187 | 19,679 | |||||
Accounts receivable, net | 39,354 | 38,738 | |||||
Other assets | 43,706 | 38,412 | |||||
Total assets | $ | 3,016,285 | $ | 2,946,730 | |||
Liabilities and Equity | |||||||
Liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 51,722 | $ | 65,481 | |||
Common dividends payable | 12,418 | 35,165 | |||||
Preferred dividends payable | 5,952 | 6,021 | |||||
Unearned rents and interest | 16,821 | 11,333 | |||||
Long-term debt | 1,474,735 | 1,368,832 | |||||
Total liabilities | 1,561,648 | 1,486,832 | |||||
Equity: | |||||||
Common Shares, $.01 par value; 75,000,000 shares authorized; and 48,870,756 and 48,454,181 shares issued at June 30, 2013 and December 31, 2012, respectively | 488 | 484 | |||||
Preferred Shares, $.01 par value; 25,000,000 shares authorized: | |||||||
5,400,000 Series C convertible shares issued at June 30, 2013 and December 31, 2012; liquidation preference of $135,000,000 | 54 | 54 | |||||
3,450,000 Series E convertible shares issued at June 30, 2013 and December 31, 2012; liquidation preference of $86,250,000 | 35 | 35 | |||||
5,000,000 Series F shares issued at June 30, 2013 and December 31, 2012; liquidation preference of $125,000,000 | 50 | 50 | |||||
Additional paid-in-capital | 1,783,635 | 1,769,227 | |||||
Treasury shares at cost: 1,705,956 and 1,566,780 common shares at June 30, 2013 and December 31, 2012, respectively | (62,169 | ) | (55,308 | ) | |||
Accumulated other comprehensive income | 20,392 | 20,622 | |||||
Distributions in excess of net income | (288,225 | ) | (275,643 | ) | |||
EPR Properties shareholders’ equity | 1,454,260 | 1,459,521 | |||||
Noncontrolling interests | 377 | 377 | |||||
Total equity | $ | 1,454,637 | $ | 1,459,898 | |||
Total liabilities and equity | $ | 3,016,285 | $ | 2,946,730 |
EPR PROPERTIES Consolidated Statements of Income (Unaudited) (Dollars in thousands except per share data) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Rental revenue | $ | 60,765 | $ | 58,305 | $ | 121,552 | $ | 115,563 | |||||||
Tenant reimbursements | 4,452 | 4,365 | 9,196 | 9,186 | |||||||||||
Other income | 104 | 107 | 128 | 133 | |||||||||||
Mortgage and other financing income | 18,236 | 15,212 | 36,031 | 29,885 | |||||||||||
Total revenue | 83,557 | 77,989 | 166,907 | 154,767 | |||||||||||
Property operating expense | 5,990 | 5,687 | 12,995 | 12,061 | |||||||||||
Other expense | 243 | 339 | 437 | 689 | |||||||||||
General and administrative expense | 6,051 | 5,821 | 12,703 | 12,288 | |||||||||||
Costs associated with loan refinancing or payoff | 5,943 | — | 5,943 | — | |||||||||||
Gain on early extinguishment of debt | — | — | (4,539 | ) | — | ||||||||||
Interest expense, net | 20,000 | 18,459 | 39,989 | 36,600 | |||||||||||
Transaction costs | 224 | 31 | 542 | 189 | |||||||||||
Impairment charges | — | — | — | 3,998 | |||||||||||
Depreciation and amortization | 13,776 | 12,069 | 27,214 | 23,808 | |||||||||||
Income before equity in income from joint ventures and discontinued operations | 31,330 | 35,583 | 71,623 | 65,134 | |||||||||||
Equity in income from joint ventures | 466 | 278 | 817 | 324 | |||||||||||
Income from continuing operations | $ | 31,796 | $ | 35,861 | $ | 72,440 | $ | 65,458 | |||||||
Discontinued operations: | |||||||||||||||
Income from discontinued operations | 680 | 519 | 677 | 875 | |||||||||||
Impairment charges | — | — | — | (8,845 | ) | ||||||||||
Gain on sale or acquisition of real estate | — | 438 | 565 | 720 | |||||||||||
Net income | 32,476 | 36,818 | 73,682 | 58,208 | |||||||||||
Net income attributable to noncontrolling interests | — | (19 | ) | — | (37 | ) | |||||||||
Net income attributable to EPR Properties | 32,476 | 36,799 | 73,682 | 58,171 | |||||||||||
Preferred dividend requirements | (5,952 | ) | (6,002 | ) | (11,904 | ) | (12,003 | ) | |||||||
Net income available to common shareholders of EPR Properties | $ | 26,524 | $ | 30,797 | $ | 61,778 | $ | 46,168 | |||||||
Per share data attributable to EPR Properties common shareholders: | |||||||||||||||
Basic earnings per share data: | |||||||||||||||
Income from continuing operations | $ | 0.55 | $ | 0.64 | $ | 1.29 | $ | 1.14 | |||||||
Income (loss) from discontinued operations | 0.01 | 0.02 | 0.03 | (0.15 | ) | ||||||||||
Net income available to common shareholders | $ | 0.56 | $ | 0.66 | $ | 1.32 | $ | 0.99 | |||||||
Diluted earnings per share data: | |||||||||||||||
Income from continuing operations | $ | 0.55 | $ | 0.63 | $ | 1.28 | $ | 1.13 | |||||||
Income (loss) from discontinued operations | 0.01 | 0.02 | 0.03 | (0.15 | ) | ||||||||||
Net income available to common shareholders | $ | 0.56 | $ | 0.65 | $ | 1.31 | $ | 0.98 | |||||||
Shares used for computation (in thousands): | |||||||||||||||
Basic | 47,081 | 46,826 | 46,969 | 46,751 | |||||||||||
Diluted | 47,294 | 47,068 | 47,172 | 47,006 |
EPR PROPERTIES Consolidated Statements of Comprehensive Income (Unaudited) (Dollars in thousands) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income | $ | 32,476 | $ | 36,818 | $ | 73,682 | $ | 58,208 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustment | (7,684 | ) | (2,910 | ) | (10,687 | ) | (124 | ) | |||||||
Change in unrealized gain (loss) on derivatives | 7,961 | (171 | ) | 10,457 | (2,659 | ) | |||||||||
Comprehensive income | 32,753 | 33,737 | 73,452 | 55,425 | |||||||||||
Comprehensive income attributable to the noncontrolling interests | — | (19 | ) | — | (37 | ) | |||||||||
Comprehensive income attributable to EPR Properties | $ | 32,753 | $ | 33,718 | $ | 73,452 | $ | 55,388 |
EPR PROPERTIES Consolidated Statements of Changes in Equity Six Months Ended June 30, 2013 (Unaudited) (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
EPR Properties Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||
Common Stock | Preferred Stock | Additional paid-in capital | Treasury shares | Accumulated other comprehensive income | Distributions in excess of net income | Noncontrolling Interests | Total | |||||||||||||||||||||||||||||||
Shares | Par | Shares | Par | |||||||||||||||||||||||||||||||||||
Balance at December 31, 2012 | 48,454,181 | $ | 484 | 13,850,000 | $ | 139 | $ | 1,769,227 | $ | (55,308 | ) | $ | 20,622 | $ | (275,643 | ) | $ | 377 | $ | 1,459,898 | ||||||||||||||||||
Restricted share units issued to Trustees | 16,038 | — | — | — | 952 | — | — | — | — | — | 952 | |||||||||||||||||||||||||||
Issuance of nonvested shares, net | 196,928 | 2 | — | — | 2,588 | (3,425 | ) | — | — | — | (835 | ) | ||||||||||||||||||||||||||
Amortization of nonvested shares | — | — | — | — | 2,406 | — | — | — | — | 2,406 | ||||||||||||||||||||||||||||
Share option expense | — | — | — | — | 438 | — | — | — | — | 438 | ||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | (10,687 | ) | — | — | (10,687 | ) | ||||||||||||||||||||||||||
Change in unrealized gain/loss on derivatives | — | — | — | — | — | — | 10,457 | — | — | 10,457 | ||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | 73,682 | — | 73,682 | ||||||||||||||||||||||||||||
Issuances of common shares | 100,912 | 1 | — | — | 5,251 | — | — | — | — | 5,252 | ||||||||||||||||||||||||||||
Stock option exercises, net | 102,697 | 1 | — | — | 2,773 | (3,436 | ) | — | — | — | (662 | ) | ||||||||||||||||||||||||||
Dividends to common and preferred shareholders | — | — | — | — | — | — | — | (86,264 | ) | — | (86,264 | ) | ||||||||||||||||||||||||||
Balance at June 30, 2013 | 48,870,756 | $ | 488 | 13,850,000 | $ | 139 | $ | 1,783,635 | $ | (62,169 | ) | $ | 20,392 | $ | (288,225 | ) | $ | 377 | $ | 1,454,637 |
EPR PROPERTIES Consolidated Statements of Cash Flows (Unaudited) (Dollars in thousands) | |||||||
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Operating activities: | |||||||
Net income | $ | 73,682 | $ | 58,208 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Gain on early extinguishment of debt | (4,539 | ) | — | ||||
Non-cash impairment charges | — | 3,998 | |||||
Loss (income) from discontinued operations | (1,242 | ) | 7,250 | ||||
Costs associated with loan refinancing or payoff | 5,943 | — | |||||
Equity in income from joint ventures | (817 | ) | (324 | ) | |||
Distributions from joint ventures | 414 | 638 | |||||
Depreciation and amortization | 27,214 | 23,808 | |||||
Amortization of deferred financing costs | 1,987 | 2,177 | |||||
Share-based compensation expense to management and Trustees | 3,166 | 2,998 | |||||
Decrease (increase) in restricted cash | 5,662 | (771 | ) | ||||
Decrease (increase) in mortgage notes and related accrued interest receivable | 1,628 | (37 | ) | ||||
Increase in accounts receivable, net | (2,998 | ) | (2,005 | ) | |||
Increase in direct financing lease receivable | (2,452 | ) | (2,538 | ) | |||
Increase in other assets | (1,671 | ) | (646 | ) | |||
Decrease in accounts payable and accrued liabilities | (242 | ) | (1,156 | ) | |||
Increase in unearned rents and interest | 5,497 | 5,133 | |||||
Net operating cash provided by continuing operations | 111,232 | 96,733 | |||||
Net operating cash provided by discontinued operations | 1,494 | 6,707 | |||||
Net cash provided by operating activities | 112,726 | 103,440 | |||||
Investing activities: | |||||||
Acquisition of rental properties and other assets | (18,893 | ) | (40,424 | ) | |||
Proceeds from sale of real estate | 796 | — | |||||
Investment in unconsolidated joint ventures | (622 | ) | (661 | ) | |||
Investment in mortgage notes receivable | (28,138 | ) | (64,561 | ) | |||
Investment in a direct financing lease, net | (3,262 | ) | — | ||||
Additions to properties under development | (72,328 | ) | (43,597 | ) | |||
Net cash used by investing activities of continuing operations | (122,447 | ) | (149,243 | ) | |||
Net proceeds from sale of real estate from discontinued operations | 24,146 | 12,969 | |||||
Net cash used by investing activities | (98,301 | ) | (136,274 | ) | |||
Financing activities: | |||||||
Proceeds from long-term debt facilities | 434,000 | 396,000 | |||||
Principal payments on long-term debt | (321,380 | ) | (279,663 | ) | |||
Deferred financing fees paid | (3,777 | ) | (2,101 | ) | |||
Costs associated with loan refinancing or payoff (cash portion) | (5,755 | ) | — | ||||
Net proceeds from issuance of common shares | 5,139 | 133 | |||||
Impact of stock option exercises, net | (662 | ) | (480 | ) | |||
Purchase of common shares for treasury | (3,246 | ) | (3,209 | ) | |||
Dividends paid to shareholders | (108,969 | ) | (79,764 | ) | |||
Net cash provided (used) by financing activities | (4,650 | ) | 30,916 | ||||
Effect of exchange rate changes on cash | (409 | ) | 32 | ||||
Net increase (decrease) in cash and cash equivalents | 9,366 | (1,886 | ) | ||||
Cash and cash equivalents at beginning of the period | 10,664 | 14,625 | |||||
Cash and cash equivalents at end of the period | $ | 20,030 | $ | 12,739 | |||
Supplemental information continued on next page. |
EPR PROPERTIES Consolidated Statements of Cash Flows (Unaudited) (Dollars in thousands) Continued from previous page. | |||||||
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Supplemental schedule of non-cash activity: | |||||||
Transfer of property under development to rental property | $ | 21,344 | $ | 22,702 | |||
Issuance of nonvested shares and restricted share units at fair value, including nonvested shares issued for payment of bonuses | $ | 10,326 | $ | 7,181 | |||
Conversion of equity to mortgage note receivable related to Atlantic-EPR I | $ | — | $ | 14,852 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the year for interest | $ | 39,446 | $ | 34,487 | |||
Cash paid (received) during the year for income taxes | $ | 440 | $ | (715 | ) |
June 30, 2013 | December 31, 2012 | ||||||
Buildings and improvements | $ | 1,737,237 | $ | 1,734,300 | |||
Furniture, fixtures & equipment | 29,741 | 34,028 | |||||
Land | 488,564 | 492,449 | |||||
2,255,542 | 2,260,777 | ||||||
Accumulated depreciation | (394,872 | ) | (375,684 | ) | |||
Total | $ | 1,860,670 | $ | 1,885,093 |
June 30, 2013 | December 31, 2012 | ||||||
Receivable from tenants | $ | 9,623 | $ | 9,379 | |||
Receivable from non-tenants | 138 | 1,527 | |||||
Receivable from Canada Revenue Agency | 1,364 | 793 | |||||
Straight-line rent receivable | 32,202 | 30,891 | |||||
Allowance for doubtful accounts | (3,973 | ) | (3,852 | ) | |||
Total | $ | 39,354 | $ | 38,738 |
June 30, 2013 | December 31, 2012 | ||||||
Total minimum lease payments receivable | $ | 645,441 | $ | 648,632 | |||
Estimated unguaranteed residual value of leased assets | 215,207 | 211,944 | |||||
Less deferred income (1) | (620,845 | ) | (626,487 | ) | |||
Investment in a direct financing lease, net | $ | 239,803 | $ | 234,089 | |||
Amount | |||
Year: | |||
2013 | $ | 12,057 | |
2014 | 24,609 | ||
2015 | 25,343 | ||
2016 | 26,104 | ||
2017 | 26,887 | ||
Thereafter | 530,441 | ||
Total | $ | 645,441 |
2013 | 2012 | ||||||
Rental properties, net | $ | 44,943 | $ | 46,048 | |||
Cash | 152 | 141 | |||||
Mortgage note payable (1) | 11,616 | 12,028 | |||||
Mortgage note payable to EPR Properties (2) | 19,361 | 15,165 | |||||
Partners’ equity | 18,530 | 18,742 | |||||
Rental revenue | 2,851 | 2,804 | |||||
Net income | 978 | 631 |
Effect of Derivative Instruments on the Consolidated Statements of Changes in Equity and Income for the Three and Six Months Ended June 30, 2013 and 2012 (Dollars in thousands) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
Description | 2013 | 2012 | 2013 | 2012 | |||||||||||
Interest Rate Swaps | |||||||||||||||
Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) | $ | 792 | $ | (2,560 | ) | $ | 586 | $ | (3,926 | ) | |||||
Amount of Expense Reclassified from AOCI into Earnings (Effective Portion) (1) | (431 | ) | (406 | ) | (854 | ) | (778 | ) | |||||||
Cross Currency Swaps | |||||||||||||||
Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) | 1,788 | 407 | 2,079 | (114 | ) | ||||||||||
Amount of Expense Reclassified from AOCI into Earnings (Effective Portion) (2) | (49 | ) | (108 | ) | (151 | ) | (275 | ) | |||||||
Currency Forward Agreements | |||||||||||||||
Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) | 4,971 | 1,484 | 6,906 | 344 | |||||||||||
Amount of Income Reclassified from AOCI into Earnings (Effective Portion) (2) | 70 | 16 | 119 | 16 | |||||||||||
Total | |||||||||||||||
Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) | $ | 7,551 | $ | (669 | ) | $ | 9,571 | $ | (3,696 | ) | |||||
Amount of Expense Reclassified from AOCI into Earnings (Effective Portion) | (410 | ) | (498 | ) | (886 | ) | (1,037 | ) |
(1) | Included in "Interest expense, net" in the accompanying consolidated statements of income for the three and six months ended June 30, 2013 and 2012. |
(2) | Included in “Other expense” in the accompanying consolidated statements of income for the three and six months ended June 30, 2013 and 2012. |
Assets and Liabilities Measured at Fair Value on a Recurring Basis at June 30, 2013 and December 31, 2012 (Dollars in thousands) | |||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level I) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance at end of period | |||||||||||
June 30, 2013: | |||||||||||||||
Cross-Currency Swaps* | $ | — | $ | 1,521 | $ | — | $ | 1,521 | |||||||
Currency Forward Agreements* | $ | — | $ | 3,335 | $ | — | $ | 3,335 | |||||||
Interest Rate Swap Agreements** | $ | — | $ | (2,409 | ) | $ | — | $ | (2,409 | ) | |||||
December 31, 2012: | |||||||||||||||
Cross-Currency Swaps** | $ | — | $ | (709 | ) | $ | — | $ | (709 | ) | |||||
Currency Forward Agreements** | $ | — | $ | (3,453 | ) | $ | — | $ | (3,453 | ) | |||||
Interest Rate Swap Agreements** | $ | — | $ | (3,848 | ) | $ | — | $ | (3,848 | ) |
Three Months Ended June 30, 2013 | Six Months Ended June 30, 2013 | ||||||||||||||||||||
Income (numerator) | Shares (denominator) | Per Share Amount | Income (numerator) | Shares (denominator) | Per Share Amount | ||||||||||||||||
Basic EPS: | |||||||||||||||||||||
Income from continuing operations | $ | 31,796 | $ | 72,440 | |||||||||||||||||
Less: preferred dividend requirements | (5,952 | ) | (11,904 | ) | |||||||||||||||||
Income from continuing operations available to common shareholders | $ | 25,844 | 47,081 | $ | 0.55 | $ | 60,536 | 46,969 | $ | 1.29 | |||||||||||
Income from discontinued operations available to common shareholders | $ | 680 | 47,081 | $ | 0.01 | $ | 1,242 | 46,969 | $ | 0.03 | |||||||||||
Net income available to common shareholders | $ | 26,524 | 47,081 | $ | 0.56 | $ | 61,778 | 46,969 | $ | 1.32 | |||||||||||
Diluted EPS: | |||||||||||||||||||||
Income from continuing operations available to common shareholders | $ | 25,844 | 47,081 | $ | 60,536 | 46,969 | |||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||
Share options | — | 213 | — | 203 | |||||||||||||||||
Income from continuing operations available to common shareholders | $ | 25,844 | 47,294 | $ | 0.55 | $ | 60,536 | 47,172 | $ | 1.28 | |||||||||||
Income from discontinued operations available to common shareholders | $ | 680 | 47,294 | $ | 0.01 | $ | 1,242 | 47,172 | $ | 0.03 | |||||||||||
Net income available to common shareholders | $ | 26,524 | 47,294 | $ | 0.56 | $ | 61,778 | 47,172 | $ | 1.31 |
Three Months Ended June 30, 2012 | Six Months Ended June 30, 2012 | ||||||||||||||||||||
Income (numerator) | Shares (denominator) | Per Share Amount | Income (loss) (numerator) | Shares (denominator) | Per Share Amount | ||||||||||||||||
Basic EPS: | |||||||||||||||||||||
Income from continuing operations | $ | 35,861 | $ | 65,458 | |||||||||||||||||
Less: preferred dividend requirements | (6,002 | ) | (12,003 | ) | |||||||||||||||||
Noncontrolling interest adjustments | (19 | ) | (37 | ) | |||||||||||||||||
Income from continuing operations available to common shareholders | $ | 29,840 | 46,826 | $ | 0.64 | $ | 53,418 | 46,751 | $ | 1.14 | |||||||||||
Income (loss) from discontinued operations available to common shareholders | $ | 957 | 46,826 | $ | 0.02 | $ | (7,250 | ) | 46,751 | $ | (0.15 | ) | |||||||||
Net income available to common shareholders | $ | 30,797 | 46,826 | $ | 0.66 | $ | 46,168 | 46,751 | $ | 0.99 | |||||||||||
Diluted EPS: | |||||||||||||||||||||
Income from continuing operations available to common shareholders | $ | 29,840 | 46,826 | $ | 53,418 | 46,751 | |||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||
Share options | — | 242 | — | 255 | |||||||||||||||||
Income from continuing operations available to common shareholders | $ | 29,840 | 47,068 | $ | 0.63 | $ | 53,418 | 47,006 | $ | 1.13 | |||||||||||
Income (loss) from discontinued operations available to common shareholders | $ | 957 | 47,068 | $ | 0.02 | $ | (7,250 | ) | 47,006 | $ | (0.15 | ) | |||||||||
Net income available to common shareholders | $ | 30,797 | 47,068 | $ | 0.65 | $ | 46,168 | 47,006 | $ | 0.98 | |||||||||||
Number of shares | Option price per share | Weighted avg. exercise price | |||||||||||||||
Outstanding at December 31, 2012 | 881,338 | $ | 18.18 | — | $ | 65.50 | $ | 38.51 | |||||||||
Exercised | (102,697 | ) | 18.18 | — | 47.20 | 27.01 | |||||||||||
Granted | 115,257 | 46.86 | — | 58.09 | 47.86 | ||||||||||||
Forfeited | (12,658 | ) | 36.56 | — | 60.42 | 56.90 | |||||||||||
Outstanding at June 30, 2013 | 881,240 | $ | 18.18 | — | $ | 65.50 | $ | 40.81 |
Exercise price range | Options outstanding | Weighted avg. life remaining | Weighted avg. exercise price | Aggregate intrinsic value (in thousands) | ||||||||
$ 18.18 - 19.99 | 201,859 | 5.6 | ||||||||||
20.00 - 29.99 | — | 0.0 | ||||||||||
30.00 - 39.99 | 66,159 | 2.3 | ||||||||||
40.00 - 49.99 | 502,369 | 6.2 | ||||||||||
50.00 - 59.99 | 17,500 | 7.0 | ||||||||||
60.00 - 65.50 | 93,353 | 3.5 | ||||||||||
881,240 | 5.5 | $ | 40.81 | $ | 9,771 |
Exercise price range | Options outstanding | Weighted avg. life remaining | Weighted avg. exercise price | Aggregate intrinsic value (in thousands) | ||||||||
$ 18.18 - 19.99 | 201,859 | 5.6 | ||||||||||
20.00 - 29.99 | — | 0.0 | ||||||||||
30.00 - 39.99 | 58,888 | 1.8 | ||||||||||
40.00 - 49.99 | 292,437 | 4.2 | ||||||||||
50.00 - 59.99 | 10,000 | 4.9 | ||||||||||
60.00 - 65.50 | 93,353 | 3.5 | ||||||||||
656,537 | 4.3 | $ | 38.84 | $ | 8,876 |
Number of shares | Weighted avg. grant date fair value | Weighted avg. life remaining | ||||||
Outstanding at December 31, 2012 | 322,808 | $ | 42.52 | |||||
Granted | 198,833 | 47.15 | ||||||
Vested | (145,570 | ) | 39.88 | |||||
Forfeited | (4,207 | ) | 45.39 | |||||
Outstanding at June 30, 2013 | 371,864 | $ | 46.00 | 1.49 |
Number of Shares | Weighted Average Grant Date Fair Value | Weighted Average Life Remaining | ||||||
Outstanding at December 31, 2012 | 10,925 | $ | 44.62 | |||||
Granted | 16,038 | 59.35 | ||||||
Vested | (10,925 | ) | 44.62 | |||||
Outstanding at June 30, 2013 | 16,038 | $ | 59.35 | 0.86 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Rental revenue | $ | 109 | $ | 906 | $ | 455 | $ | 1,931 | |||||||
Tenant reimbursements | 554 | — | 554 | — | |||||||||||
Mortgage and other financing income | — | 44 | — | 112 | |||||||||||
Total revenue | 663 | 950 | 1,009 | 2,043 | |||||||||||
Property operating expense (benefit) | (20 | ) | (529 | ) | — | (724 | ) | ||||||||
Other expense | 31 | 136 | 53 | 362 | |||||||||||
Interest income, net | (28 | ) | — | (28 | ) | (12 | ) | ||||||||
Impairment charges | — | — | — | 8,845 | |||||||||||
Depreciation and amortization | — | 824 | 307 | 1,542 | |||||||||||
Income (loss) before gain on sale or acquisition of real estate | 680 | 519 | 677 | (7,970 | ) | ||||||||||
Gain on sale or acquisition of real estate | — | 438 | 565 | 720 | |||||||||||
Net income (loss) | $ | 680 | $ | 957 | $ | 1,242 | $ | (7,250 | ) |
Balance Sheet Data: | |||||||||||||||||||
As of June 30, 2013 | |||||||||||||||||||
Entertainment | Education | Recreation | Other | Corporate/Unallocated | Consolidated | ||||||||||||||
Total Assets | $ | 1,808,881 | $ | 436,430 | $ | 455,873 | $ | 229,354 | $ | 85,747 | $ | 3,016,285 | |||||||
As of December 31, 2012 | |||||||||||||||||||
Entertainment | Education | Recreation | Other | Corporate/Unallocated | Consolidated | ||||||||||||||
Total Assets | $ | 1,818,712 | $ | 376,048 | $ | 427,977 | $ | 252,444 | $ | 71,549 | $ | 2,946,730 |
Operating Data: | |||||||||||||||||||
Three Months Ended June 30, 2013 | |||||||||||||||||||
Entertainment | Education | Recreation | Other | Corporate/Unallocated | Consolidated | ||||||||||||||
Rental revenue | $ | 54,522 | $ | 3,152 | $ | 1,782 | $ | 1,309 | $ | — | $ | 60,765 | |||||||
Tenant reimbursements | 4,452 | — | — | — | — | 4,452 | |||||||||||||
Other income | 24 | — | — | 77 | 3 | 104 | |||||||||||||
Mortgage and other financing income | 2,223 | 8,145 | 7,789 | 79 | — | 18,236 | |||||||||||||
Total revenue | 61,221 | 11,297 | 9,571 | 1,465 | 3 | 83,557 | |||||||||||||
Property operating expense | 5,840 | — | — | 150 | — | 5,990 | |||||||||||||
Other expense | — | — | — | 264 | (21 | ) | 243 | ||||||||||||
Total investment expenses | 5,840 | — | — | 414 | (21 | ) | 6,233 | ||||||||||||
Net operating income - before unallocated items | 55,381 | 11,297 | 9,571 | 1,051 | 24 | 77,324 | |||||||||||||
Reconciliation to Consolidated Statements of Income: | |||||||||||||||||||
General and administrative expense | (6,051 | ) | |||||||||||||||||
Costs associated with loan refinancing or payoff | (5,943 | ) | |||||||||||||||||
Interest expense, net | (20,000 | ) | |||||||||||||||||
Transaction costs | (224 | ) | |||||||||||||||||
Depreciation and amortization | (13,776 | ) | |||||||||||||||||
Equity in income from joint ventures | 466 | ||||||||||||||||||
Discontinued operations: | |||||||||||||||||||
Income from discontinued operations | 680 | ||||||||||||||||||
Net income | 32,476 | ||||||||||||||||||
Preferred dividend requirements | (5,952 | ) | |||||||||||||||||
Net income available to common shareholders of EPR Properties | $ | 26,524 |
Three Months Ended June 30, 2012 | |||||||||||||||||||
Entertainment | Education | Recreation | Other | Corporate/Unallocated | Consolidated | ||||||||||||||
Rental revenue | $ | 55,034 | $ | 1,720 | $ | 797 | $ | 754 | $ | — | $ | 58,305 | |||||||
Tenant reimbursements | 4,365 | — | — | — | — | 4,365 | |||||||||||||
Other income | 21 | — | — | 86 | — | 107 | |||||||||||||
Mortgage and other financing income | 498 | 7,548 | 7,143 | 23 | — | 15,212 | |||||||||||||
Total revenue | 59,918 | 9,268 | 7,940 | 863 | — | 77,989 | |||||||||||||
Property operating expense | 5,432 | — | — | 255 | — | 5,687 | |||||||||||||
Other expense | — | — | — | 247 | 92 | 339 | |||||||||||||
Total investment expenses | 5,432 | — | — | 502 | 92 | 6,026 | |||||||||||||
Net operating income - before unallocated items | 54,486 | 9,268 | 7,940 | 361 | (92 | ) | 71,963 | ||||||||||||
Reconciliation to Consolidated Statements of Income: | |||||||||||||||||||
General and administrative expense | (5,821 | ) | |||||||||||||||||
Interest expense, net | (18,459 | ) | |||||||||||||||||
Transaction costs | (31 | ) | |||||||||||||||||
Depreciation and amortization | (12,069 | ) | |||||||||||||||||
Equity in income from joint ventures | 278 | ||||||||||||||||||
Discontinued operations: | |||||||||||||||||||
Income from discontinued operations | 519 | ||||||||||||||||||
Gain on sale or acquisition of real estate | 438 | ||||||||||||||||||
Net income | 36,818 | ||||||||||||||||||
Noncontrolling interests | (19 | ) | |||||||||||||||||
Preferred dividend requirements | (6,002 | ) | |||||||||||||||||
Net income available to common shareholders of EPR Properties | $ | 30,797 |
For the Six Months Ended June 30, 2013 | |||||||||||||||||||
Entertainment | Education | Recreation | Other | Corporate/Unallocated | Consolidated | ||||||||||||||
Rental revenue | $ | 109,504 | $ | 6,310 | $ | 3,691 | $ | 2,047 | $ | — | $ | 121,552 | |||||||
Tenant reimbursements | 9,196 | — | — | — | — | 9,196 | |||||||||||||
Other income | 47 | — | — | 78 | 3 | 128 | |||||||||||||
Mortgage and other financing income | 4,427 | 16,102 | 15,344 | 158 | — | 36,031 | |||||||||||||
Total revenue | 123,174 | 22,412 | 19,035 | 2,283 | 3 | 166,907 | |||||||||||||
Property operating expense | 12,976 | — | — | 19 | — | 12,995 | |||||||||||||
Other expense | — | — | — | 406 | 31 | 437 | |||||||||||||
Total investment expenses | 12,976 | — | — | 425 | 31 | 13,432 | |||||||||||||
Net operating income - before unallocated items | 110,198 | 22,412 | 19,035 | 1,858 | (28 | ) | 153,475 | ||||||||||||
Reconciliation to Consolidated Statements of Income: | |||||||||||||||||||
General and administrative expense | (12,703 | ) | |||||||||||||||||
Costs associated with loan refinancing or payoff | (5,943 | ) | |||||||||||||||||
Gain on early extinguishment of debt | 4,539 | ||||||||||||||||||
Interest expense, net | (39,989 | ) | |||||||||||||||||
Transaction costs | (542 | ) | |||||||||||||||||
Depreciation and amortization | (27,214 | ) | |||||||||||||||||
Equity in income from joint ventures | 817 | ||||||||||||||||||
Discontinued operations: | |||||||||||||||||||
Income from discontinued operations | 677 | ||||||||||||||||||
Gain on sale or acquisition of real estate | 565 | ||||||||||||||||||
Net income | 73,682 | ||||||||||||||||||
Preferred dividend requirements | (11,904 | ) | |||||||||||||||||
Net income available to common shareholders of EPR Properties | $ | 61,778 |
For the Six Months Ended June 30, 2012 | |||||||||||||||||||
Entertainment | Education | Recreation | Other | Corporate/Unallocated | Consolidated | ||||||||||||||
Rental revenue | $ | 109,595 | $ | 3,141 | $ | 1,316 | $ | 1,511 | $ | — | $ | 115,563 | |||||||
Tenant reimbursements | 9,186 | — | — | — | — | 9,186 | |||||||||||||
Other income | 46 | — | — | 87 | — | 133 | |||||||||||||
Mortgage and other financing income | 945 | 14,843 | 14,049 | 48 | — | 29,885 | |||||||||||||
Total revenue | 119,772 | 17,984 | 15,365 | 1,646 | — | 154,767 | |||||||||||||
Property operating expense | 11,437 | — | — | 624 | — | 12,061 | |||||||||||||
Other expense | — | — | — | 430 | 259 | 689 | |||||||||||||
Total investment expenses | 11,437 | — | — | 1,054 | 259 | 12,750 | |||||||||||||
Net operating income - before unallocated items | 108,335 | 17,984 | 15,365 | 592 | (259 | ) | 142,017 | ||||||||||||
Reconciliation to Consolidated Statements of Income: | |||||||||||||||||||
General and administrative expense | (12,288 | ) | |||||||||||||||||
Interest expense, net | (36,600 | ) | |||||||||||||||||
Transaction costs | (189 | ) | |||||||||||||||||
Impairment charges | (3,998 | ) | |||||||||||||||||
Depreciation and amortization | (23,808 | ) | |||||||||||||||||
Equity in income from joint ventures | 324 | ||||||||||||||||||
Discontinued operations: | |||||||||||||||||||
Income from discontinued operations | 875 | ||||||||||||||||||
Impairment charges | (8,845 | ) | |||||||||||||||||
Gain on sale or acquisition of real estate | 720 | ||||||||||||||||||
Net income | 58,208 | ||||||||||||||||||
Noncontrolling interests | (37 | ) | |||||||||||||||||
Preferred dividend requirements | (12,003 | ) | |||||||||||||||||
Net income available to common shareholders | $ | 46,168 |
Condensed Consolidating Balance Sheet As of June 30, 2013 | |||||||||||||||||||
EPR Properties (Issuer) | Wholly Owned Subsidiary Guarantors | Non- Guarantor Subsidiaries | Consolidated Elimination | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Rental properties, net | $ | — | $ | 1,133,028 | $ | 727,642 | $ | — | $ | 1,860,670 | |||||||||
Rental properties held for sale, net | — | — | 2,788 | — | 2,788 | ||||||||||||||
Land held for development | — | — | 199,001 | — | 199,001 | ||||||||||||||
Property under development | — | 73,261 | 4,231 | — | 77,492 | ||||||||||||||
Mortgage notes and related accrued interest receivable | — | 440,924 | 41,338 | — | 482,262 | ||||||||||||||
Investment in a direct financing lease, net | — | 239,803 | — | — | 239,803 | ||||||||||||||
Investment in joint ventures | 7,770 | — | 5,192 | — | 12,962 | ||||||||||||||
Cash and cash equivalents | 9,136 | 282 | 10,612 | — | 20,030 | ||||||||||||||
Restricted cash | — | 13,320 | 3,710 | — | 17,030 | ||||||||||||||
Deferred financing costs, net | 16,449 | 3,920 | 818 | — | 21,187 | ||||||||||||||
Accounts receivable, net | 104 | 18,531 | 20,719 | — | 39,354 | ||||||||||||||
Intercompany notes receivable | 197,384 | — | 4,335 | (201,719 | ) | — | |||||||||||||
Investments in subsidiaries | 2,385,041 | — | — | (2,385,041 | ) | — | |||||||||||||
Other assets | 21,766 | 4,081 | 17,859 | — | 43,706 | ||||||||||||||
Total assets | $ | 2,637,650 | $ | 1,927,150 | $ | 1,038,245 | $ | (2,586,760 | ) | $ | 3,016,285 | ||||||||
Liabilities and Equity | |||||||||||||||||||
Liabilities: | |||||||||||||||||||
Accounts payable and accrued liabilities | $ | 35,020 | $ | 11,217 | $ | 5,485 | $ | — | $ | 51,722 | |||||||||
Dividends payable | 18,370 | — | — | — | 18,370 | ||||||||||||||
Unearned rents and interest | — | 15,270 | 1,551 | — | 16,821 | ||||||||||||||
Intercompany notes payable | — | — | 201,719 | (201,719 | ) | — | |||||||||||||
Long-term debt | 1,130,000 | 24,000 | 320,735 | — | 1,474,735 | ||||||||||||||
Total liabilities | 1,183,390 | 50,487 | 529,490 | (201,719 | ) | 1,561,648 | |||||||||||||
EPR Properties shareholders’ equity | 1,454,260 | 1,876,663 | 508,378 | (2,385,041 | ) | 1,454,260 | |||||||||||||
Noncontrolling interests | — | — | 377 | — | 377 | ||||||||||||||
Total equity | 1,454,260 | 1,876,663 | 508,755 | (2,385,041 | ) | 1,454,637 | |||||||||||||
Total liabilities and equity | $ | 2,637,650 | $ | 1,927,150 | $ | 1,038,245 | $ | (2,586,760 | ) | $ | 3,016,285 |
Condensed Consolidating Balance Sheet As of December 31, 2012 | |||||||||||||||||||
EPR Properties (Issuer) | Wholly Owned Subsidiary Guarantors | Non- Guarantor Subsidiaries | Consolidated Elimination | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Rental properties, net | $ | — | $ | 1,113,658 | $ | 771,435 | $ | — | $ | 1,885,093 | |||||||||
Rental properties held for sale, net | — | — | 2,788 | — | 2,788 | ||||||||||||||
Land held for development | — | — | 196,177 | — | 196,177 | ||||||||||||||
Property under development | — | 25,419 | 3,957 | — | 29,376 | ||||||||||||||
Mortgage notes and related accrued interest receivable | — | 414,075 | 41,677 | — | 455,752 | ||||||||||||||
Investment in a direct financing lease, net | — | 234,089 | — | — | 234,089 | ||||||||||||||
Investment in joint ventures | 7,250 | — | 4,721 | — | 11,971 | ||||||||||||||
Cash and cash equivalents | 1,531 | 651 | 8,482 | — | 10,664 | ||||||||||||||
Restricted cash | — | 9,715 | 14,276 | — | 23,991 | ||||||||||||||
Deferred financing costs, net | 13,563 | 4,812 | 1,304 | — | 19,679 | ||||||||||||||
Accounts receivable, net | 139 | 16,830 | 21,769 | — | 38,738 | ||||||||||||||
Intercompany notes receivable | 103,104 | — | 4,147 | (107,251 | ) | — | |||||||||||||
Investments in subsidiaries | 2,231,079 | — | — | (2,231,079 | ) | — | |||||||||||||
Other assets | 21,482 | 3,956 | 12,974 | — | 38,412 | ||||||||||||||
Total assets | $ | 2,378,148 | $ | 1,823,205 | $ | 1,083,707 | $ | (2,338,330 | ) | $ | 2,946,730 | ||||||||
Liabilities and Equity | |||||||||||||||||||
Liabilities: | |||||||||||||||||||
Accounts payable and accrued liabilities | $ | 37,441 | $ | 16,662 | $ | 11,378 | $ | — | $ | 65,481 | |||||||||
Dividends payable | 41,186 | — | — | — | 41,186 | ||||||||||||||
Unearned rents and interest | — | 7,393 | 3,940 | — | 11,333 | ||||||||||||||
Intercompany notes payable | — | — | 107,251 | (107,251 | ) | — | |||||||||||||
Long-term debt | 840,000 | 53,315 | 475,517 | — | 1,368,832 | ||||||||||||||
Total liabilities | 918,627 | 77,370 | 598,086 | (107,251 | ) | 1,486,832 | |||||||||||||
EPR Properties shareholders’ equity | 1,459,521 | 1,745,835 | 485,244 | (2,231,079 | ) | 1,459,521 | |||||||||||||
Noncontrolling interests | — | — | 377 | — | 377 | ||||||||||||||
Total equity | $ | 1,459,521 | $ | 1,745,835 | $ | 485,621 | $ | (2,231,079 | ) | $ | 1,459,898 | ||||||||
Total liabilities and equity | $ | 2,378,148 | $ | 1,823,205 | $ | 1,083,707 | $ | (2,338,330 | ) | $ | 2,946,730 |
Condensed Consolidating Statement of Income Three Months Ended June 30, 2013 | |||||||||||||||||||
EPR Properties (Issuer) | Wholly Owned Subsidiary Guarantors | Non- Guarantors Subsidiaries | Consolidated Elimination | Consolidated | |||||||||||||||
Rental revenue | $ | — | $ | 36,035 | $ | 24,730 | $ | — | $ | 60,765 | |||||||||
Tenant reimbursements | — | 440 | 4,012 | — | 4,452 | ||||||||||||||
Other income | 26 | — | 78 | — | 104 | ||||||||||||||
Mortgage and other financing income | 252 | 16,885 | 1,099 | — | 18,236 | ||||||||||||||
Intercompany fee income | 658 | — | — | (658 | ) | — | |||||||||||||
Interest income on intercompany notes receivable | 4,233 | — | 95 | (4,328 | ) | — | |||||||||||||
Total revenue | 5,169 | 53,360 | 30,014 | (4,986 | ) | 83,557 | |||||||||||||
Equity in subsidiaries’ earnings | 40,167 | — | — | (40,167 | ) | — | |||||||||||||
Property operating expense | — | 1,511 | 4,479 | — | 5,990 | ||||||||||||||
Intercompany fee expense | — | — | 658 | (658 | ) | — | |||||||||||||
Other expense | — | — | 243 | — | 243 | ||||||||||||||
General and administrative expense | — | 3,811 | 2,240 | — | 6,051 | ||||||||||||||
Costs associated with loan refinancing or payoff | — | — | 5,943 | — | 5,943 | ||||||||||||||
Interest expense, net | 12,527 | 653 | 6,820 | — | 20,000 | ||||||||||||||
Interest expense on intercompany notes payable | — | — | 4,328 | (4,328 | ) | — | |||||||||||||
Transaction costs | 224 | — | — | — | 224 | ||||||||||||||
Depreciation and amortization | 272 | 7,629 | 5,875 | — | 13,776 | ||||||||||||||
Income (loss) before equity in income from joint ventures and discontinued operations | 32,313 | 39,756 | (572 | ) | (40,167 | ) | 31,330 | ||||||||||||
Equity in income from joint ventures | 163 | — | 303 | — | 466 | ||||||||||||||
Income (loss) from continuing operations | $ | 32,476 | $ | 39,756 | $ | (269 | ) | $ | (40,167 | ) | $ | 31,796 | |||||||
Discontinued operations: | |||||||||||||||||||
Income (loss) from discontinued operations | — | 711 | (31 | ) | — | 680 | |||||||||||||
Net income (loss) | 32,476 | 40,467 | (300 | ) | (40,167 | ) | 32,476 | ||||||||||||
Preferred dividend requirements | (5,952 | ) | — | — | — | (5,952 | ) | ||||||||||||
Net income (loss) available to common shareholders of EPR Properties | $ | 26,524 | $ | 40,467 | $ | (300 | ) | $ | (40,167 | ) | $ | 26,524 | |||||||
Comprehensive income (loss) attributable to EPR Properties | $ | 32,753 | $ | 40,586 | $ | (1,365 | ) | $ | (39,221 | ) | $ | 32,753 |
Condensed Consolidating Statement of Income Three Months Ended June 30, 2012 | |||||||||||||||||||
EPR Properties (Issuer) | Wholly Owned Subsidiary Guarantors | Non- Guarantor Subsidiaries | Consolidated Elimination | Consolidated | |||||||||||||||
Rental revenue | $ | — | $ | 34,032 | $ | 24,273 | $ | — | $ | 58,305 | |||||||||
Tenant reimbursements | — | 322 | 4,043 | — | 4,365 | ||||||||||||||
Other income | 23 | (7 | ) | 91 | — | 107 | |||||||||||||
Mortgage and other financing income | 109 | 14,276 | 827 | — | 15,212 | ||||||||||||||
Intercompany fee income | 667 | — | — | (667 | ) | — | |||||||||||||
Interest income on intercompany notes receivable | 4,165 | — | 87 | (4,252 | ) | — | |||||||||||||
Total revenue | 4,964 | 48,623 | 29,321 | (4,919 | ) | 77,989 | |||||||||||||
Equity in subsidiaries’ earnings | 38,783 | — | — | (38,783 | ) | — | |||||||||||||
Property operating expense | — | 947 | 4,740 | — | 5,687 | ||||||||||||||
Intercompany fee expense | — | — | 667 | (667 | ) | — | |||||||||||||
Other expense | — | — | 339 | — | 339 | ||||||||||||||
General and administrative expense | — | 3,563 | 2,258 | — | 5,821 | ||||||||||||||
Interest expense, net | 6,800 | 4,255 | 7,404 | — | 18,459 | ||||||||||||||
Interest expense on intercompany notes payable | — | — | 4,252 | (4,252 | ) | — | |||||||||||||
Transaction costs | 31 | — | — | — | 31 | ||||||||||||||
Depreciation and amortization | 253 | 6,124 | 5,692 | — | 12,069 | ||||||||||||||
Income before equity in income from joint ventures and discontinued operations | 36,663 | 33,734 | 3,969 | (38,783 | ) | 35,583 | |||||||||||||
Equity in income from joint ventures | 136 | — | 142 | — | 278 | ||||||||||||||
Income from continuing operations | $ | 36,799 | $ | 33,734 | $ | 4,111 | $ | (38,783 | ) | $ | 35,861 | ||||||||
Discontinued operations: | |||||||||||||||||||
Income (loss) from discontinued operations | — | (3 | ) | 522 | — | 519 | |||||||||||||
Gain on sale or acquisition of real estate | — | — | 438 | — | 438 | ||||||||||||||
Net income | 36,799 | 33,731 | 5,071 | (38,783 | ) | 36,818 | |||||||||||||
Net income attributable to noncontrolling interests | — | — | (19 | ) | — | (19 | ) | ||||||||||||
Net income attributable to EPR Properties | 36,799 | 33,731 | 5,052 | (38,783 | ) | 36,799 | |||||||||||||
Preferred dividend requirements | (6,002 | ) | — | — | — | (6,002 | ) | ||||||||||||
Net income available to common shareholders of EPR Properties | $ | 30,797 | $ | 33,731 | $ | 5,052 | $ | (38,783 | ) | $ | 30,797 | ||||||||
Comprehensive income attributable to EPR Properties | $ | 33,718 | $ | 33,801 | $ | 4,055 | $ | (37,856 | ) | $ | 33,718 |
Condensed Consolidating Statement of Income Six Months Ended June 30, 2013 | |||||||||||||||||||
EPR Properties (Issuer) | Wholly Owned Subsidiary Guarantors | Non- Guarantor Subsidiaries | Consolidated Elimination | Consolidated | |||||||||||||||
Rental revenue | $ | — | $ | 72,419 | $ | 49,133 | $ | — | $ | 121,552 | |||||||||
Tenant reimbursements | — | 977 | 8,219 | — | 9,196 | ||||||||||||||
Other income | 49 | — | 79 | — | 128 | ||||||||||||||
Mortgage and other financing income | 504 | 33,338 | 2,189 | — | 36,031 | ||||||||||||||
Intercompany fee income | 1,326 | — | — | (1,326 | ) | — | |||||||||||||
Interest income on intercompany notes receivable | 8,498 | — | 93 | (8,591 | ) | — | |||||||||||||
Total revenue | 10,377 | 106,734 | 59,713 | (9,917 | ) | 166,907 | |||||||||||||
Equity in subsidiaries’ earnings | 88,501 | — | — | (88,501 | ) | — | |||||||||||||
Property operating expense | — | 3,737 | 9,258 | — | 12,995 | ||||||||||||||
Intercompany fee expense | — | — | 1,326 | (1,326 | ) | — | |||||||||||||
Other expense | — | — | 437 | — | 437 | ||||||||||||||
General and administrative expense | — | 8,036 | 4,667 | — | 12,703 | ||||||||||||||
Costs associated with loan refinancing or payoff | — | — | 5,943 | — | 5,943 | ||||||||||||||
Gain on early extinguishment of debt | — | (4,539 | ) | — | — | (4,539 | ) | ||||||||||||
Interest expense, net | 24,455 | 1,605 | 13,929 | — | 39,989 | ||||||||||||||
Interest expense on intercompany notes payable | — | — | 8,591 | (8,591 | ) | — | |||||||||||||
Transaction costs | 542 | — | — | — | 542 | ||||||||||||||
Depreciation and amortization | 545 | 14,736 | 11,933 | — | 27,214 | ||||||||||||||
Income before equity in income from joint ventures and discontinued operations | 73,336 | 83,159 | 3,629 | (88,501 | ) | 71,623 | |||||||||||||
Equity in income from joint ventures | 346 | — | 471 | — | 817 | ||||||||||||||
Income from continuing operations | $ | 73,682 | $ | 83,159 | $ | 4,100 | $ | (88,501 | ) | $ | 72,440 | ||||||||
Discontinued operations: | |||||||||||||||||||
Income (loss) from discontinued operations | — | 690 | (13 | ) | — | 677 | |||||||||||||
Gain on sale or acquisition of real estate | — | — | 565 | — | 565 | ||||||||||||||
Net income attributable to EPR Properties | 73,682 | 83,849 | 4,652 | (88,501 | ) | 73,682 | |||||||||||||
Preferred dividend requirements | (11,904 | ) | — | — | — | (11,904 | ) | ||||||||||||
Net income available to common shareholders of EPR Properties | $ | 61,778 | $ | 83,849 | $ | 4,652 | $ | (88,501 | ) | $ | 61,778 | ||||||||
Comprehensive income attributable to EPR Properties | $ | 73,452 | $ | 84,051 | $ | 2,779 | $ | (86,830 | ) | $ | 73,452 |
Condensed Consolidating Statement of Income Six Months Ended June 30, 2012 | |||||||||||||||||||
EPR Properties (Issuer) | Wholly Owned Subsidiary Guarantors | Non- Guarantor Subsidiaries | Consolidated Elimination | Consolidated | |||||||||||||||
Rental revenue | $ | — | $ | 66,864 | $ | 48,699 | $ | — | $ | 115,563 | |||||||||
Tenant reimbursements | — | 606 | 8,580 | — | 9,186 | ||||||||||||||
Other income | 46 | (6 | ) | 93 | — | 133 | |||||||||||||
Mortgage and other financing income | 204 | 28,251 | 1,430 | — | 29,885 | ||||||||||||||
Intercompany fee income | 1,343 | — | — | (1,343 | ) | — | |||||||||||||
Interest income on intercompany notes receivable | 8,380 | — | 172 | (8,552 | ) | — | |||||||||||||
Total revenue | 9,973 | 95,715 | 58,974 | (9,895 | ) | 154,767 | |||||||||||||
Equity in subsidiaries’ earnings | 62,232 | — | — | (62,232 | ) | — | |||||||||||||
Property operating expense | — | 2,010 | 10,051 | — | 12,061 | ||||||||||||||
Intercompany fee expense | — | — | 1,343 | (1,343 | ) | — | |||||||||||||
Other expense | — | — | 689 | — | 689 | ||||||||||||||
General and administrative expense | — | 7,502 | 4,786 | — | 12,288 | ||||||||||||||
Interest expense, net | 13,521 | 8,252 | 14,827 | — | 36,600 | ||||||||||||||
Interest expense on intercompany notes payable | — | — | 8,552 | (8,552 | ) | — | |||||||||||||
Transaction costs | 189 | — | — | — | 189 | ||||||||||||||
Impairment charges | — | — | 3,998 | — | 3,998 | ||||||||||||||
Depreciation and amortization | 509 | 12,001 | 11,298 | — | 23,808 | ||||||||||||||
Income before equity in income from joint ventures and discontinued operations | 57,986 | 65,950 | 3,430 | (62,232 | ) | 65,134 | |||||||||||||
Equity in income from joint ventures | 185 | — | 139 | — | 324 | ||||||||||||||
Income from continuing operations | $ | 58,171 | $ | 65,950 | $ | 3,569 | $ | (62,232 | ) | $ | 65,458 | ||||||||
Discontinued operations: | |||||||||||||||||||
Income from discontinued operations | — | 4 | 871 | — | 875 | ||||||||||||||
Impairment charges | — | — | (8,845 | ) | — | (8,845 | ) | ||||||||||||
Gain on sale or acquisition of real estate | — | 282 | 438 | — | 720 | ||||||||||||||
Net income (loss) | 58,171 | 66,236 | (3,967 | ) | (62,232 | ) | 58,208 | ||||||||||||
Net income attributable to noncontrolling interests | — | — | (37 | ) | — | (37 | ) | ||||||||||||
Net income (loss) attributable to EPR Properties | 58,171 | 66,236 | (4,004 | ) | (62,232 | ) | 58,171 | ||||||||||||
Preferred dividend requirements | (12,003 | ) | — | — | — | (12,003 | ) | ||||||||||||
Net income (loss) available to common shareholders of EPR Properties | $ | 46,168 | $ | 66,236 | $ | (4,004 | ) | $ | (62,232 | ) | $ | 46,168 | |||||||
Comprehensive income (loss) attributable to EPR Properties | $ | 55,388 | $ | 66,251 | $ | (3,653 | ) | $ | (62,598 | ) | $ | 55,388 |
Condensed Consolidating Statement of Cash Flows Six Months Ended June 30, 2013 | |||||||||||||||
EPR Properties (Issuer) | Wholly Owned Subsidiary Guarantors | Non-Guarantor Subsidiaries | Consolidated | ||||||||||||
Intercompany fee income (expense) | $ | 1,326 | $ | — | $ | (1,326 | ) | $ | — | ||||||
Interest income (expense) on intercompany receivable/payable | 8,498 | — | (8,498 | ) | — | ||||||||||
Net cash provided (used) by other operating activities | (21,719 | ) | 94,748 | 38,203 | 111,232 | ||||||||||
Net cash provided (used) by operating activities of continuing operations | (11,895 | ) | 94,748 | 28,379 | 111,232 | ||||||||||
Net cash provided by operating activities of discontinued operations | — | 129 | 1,365 | 1,494 | |||||||||||
Net cash provided (used) by operating activities | (11,895 | ) | 94,877 | 29,744 | 112,726 | ||||||||||
Investing activities: | |||||||||||||||
Acquisition of rental properties and other assets | (148 | ) | (15,923 | ) | (2,822 | ) | (18,893 | ) | |||||||
Proceeds from sale of real estate | — | — | 796 | 796 | |||||||||||
Investment in unconsolidated joint ventures | (622 | ) | — | — | (622 | ) | |||||||||
Investment in mortgage notes receivable | — | (26,873 | ) | (1,265 | ) | (28,138 | ) | ||||||||
Investment in a direct financing lease, net | — | (3,262 | ) | — | (3,262 | ) | |||||||||
Additions to property under development | — | (69,185 | ) | (3,143 | ) | (72,328 | ) | ||||||||
Investment in (repayment of) intercompany notes payable | (94,279 | ) | — | 94,279 | — | ||||||||||
Advances to subsidiaries, net | (63,967 | ) | 44,748 | 19,219 | — | ||||||||||
Net cash provided (used) by investing activities of continuing operations | (159,016 | ) | (70,495 | ) | 107,064 | (122,447 | ) | ||||||||
Net proceeds from sale of real estate from discontinued operations | — | — | 24,146 | 24,146 | |||||||||||
Net cash provided (used) by investing activities | (159,016 | ) | (70,495 | ) | 131,210 | (98,301 | ) | ||||||||
Financing activities: | |||||||||||||||
Proceeds from long-term debt facilities | 290,000 | 144,000 | — | 434,000 | |||||||||||
Principal payments on long-term debt | — | (168,740 | ) | (152,640 | ) | (321,380 | ) | ||||||||
Deferred financing fees paid | (3,746 | ) | (13 | ) | (18 | ) | (3,777 | ) | |||||||
Costs associated with loan refinancing or payoff (cash portion) | — | — | (5,755 | ) | (5,755 | ) | |||||||||
Net proceeds from issuance of common shares | 5,139 | — | — | 5,139 | |||||||||||
Impact of stock option exercises, net | (662 | ) | — | — | (662 | ) | |||||||||
Purchase of common shares for treasury | (3,246 | ) | — | — | (3,246 | ) | |||||||||
Dividends paid to shareholders | (108,969 | ) | — | — | (108,969 | ) | |||||||||
Net cash provided (used) by financing | 178,516 | (24,753 | ) | (158,413 | ) | (4,650 | ) | ||||||||
Effect of exchange rate changes on cash | — | 2 | (411 | ) | (409 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | 7,605 | (369 | ) | 2,130 | 9,366 | ||||||||||
Cash and cash equivalents at beginning of the period | 1,531 | 651 | 8,482 | 10,664 | |||||||||||
Cash and cash equivalents at end of the period | $ | 9,136 | $ | 282 | $ | 10,612 | $ | 20,030 |
Condensed Consolidating Statement of Cash Flows Six Months Ended June 30, 2012 | |||||||||||||||
EPR Properties (Issuer) | Wholly Owned Subsidiary Guarantors | Non-Guarantor Subsidiaries | Consolidated | ||||||||||||
Intercompany fee income (expense) | $ | 1,343 | $ | — | $ | (1,343 | ) | $ | — | ||||||
Interest income (expense) on intercompany receivable/payable | 8,380 | — | (8,380 | ) | — | ||||||||||
Net cash provided (used) by other operating activities | (8,973 | ) | 78,626 | 27,080 | 96,733 | ||||||||||
Net cash provided by operating activities of continuing operations | 750 | 78,626 | 17,357 | 96,733 | |||||||||||
Net cash provided by operating activities of discontinued operations | — | 1,066 | 5,641 | 6,707 | |||||||||||
Net cash provided by operating activities | 750 | 79,692 | 22,998 | 103,440 | |||||||||||
Investing activities: | |||||||||||||||
Acquisition of rental properties and other assets | (87 | ) | (39,754 | ) | (583 | ) | (40,424 | ) | |||||||
Investment in unconsolidated joint ventures | (661 | ) | — | — | (661 | ) | |||||||||
Investment in mortgage note receivable | — | (48,339 | ) | (16,222 | ) | (64,561 | ) | ||||||||
Additions to property under development | — | (37,845 | ) | (5,752 | ) | (43,597 | ) | ||||||||
Investment in (repayment of) intercompany notes payable | (1,244 | ) | — | 1,244 | — | ||||||||||
Advances to subsidiaries, net | (151,847 | ) | 161,706 | (9,859 | ) | — | |||||||||
Net cash provided (used) by investing activities of continuing operations | (153,839 | ) | 35,768 | (31,172 | ) | (149,243 | ) | ||||||||
Net proceeds from sale of real estate from discontinued operations | — | 282 | 12,687 | 12,969 | |||||||||||
Net cash provided (used) by investing activities | (153,839 | ) | 36,050 | (18,485 | ) | (136,274 | ) | ||||||||
Financing activities: | |||||||||||||||
Proceeds from long-term debt facilities | 240,000 | 156,000 | — | 396,000 | |||||||||||
Principal payments on long-term debt | — | (271,861 | ) | (7,802 | ) | (279,663 | ) | ||||||||
Deferred financing fees paid | (2,091 | ) | (4 | ) | (6 | ) | (2,101 | ) | |||||||
Net proceeds from issuance of common shares | 133 | — | — | 133 | |||||||||||
Impact of stock option exercises, net | (480 | ) | — | — | (480 | ) | |||||||||
Purchase of common shares for treasury | (3,209 | ) | — | — | (3,209 | ) | |||||||||
Dividends paid to shareholders | (79,764 | ) | — | — | (79,764 | ) | |||||||||
Net cash provided (used) by financing activities | 154,589 | (115,865 | ) | (7,808 | ) | 30,916 | |||||||||
Effect of exchange rate changes on cash | — | — | 32 | 32 | |||||||||||
Net increase (decrease) in cash and cash equivalents | 1,500 | (123 | ) | (3,263 | ) | (1,886 | ) | ||||||||
Cash and cash equivalents at beginning of the period | 1,932 | 1,243 | 11,450 | 14,625 | |||||||||||
Cash and cash equivalents at end of the period | $ | 3,432 | $ | 1,120 | $ | 8,187 | $ | 12,739 |
Rental properties, net of accumulated depreciation | $ | 1,860,670 | |
Rental properties held for sale, net of accumulated depreciation | 2,788 | ||
Add back accumulated depreciation on rental properties | 394,872 | ||
Add back accumulated depreciation on rental properties held for sale | 319 | ||
Land held for development | 199,001 | ||
Property under development | 77,492 | ||
Mortgage notes and related accrued interest receivable | 482,262 | ||
Investment in a direct financing lease, net | 239,803 | ||
Investment in joint ventures | 12,962 | ||
Intangible assets, gross(1) | 13,604 | ||
Notes receivable and related accrued interest receivable, net(1) | 4,849 | ||
Total investments | $ | 3,288,622 |
(1) | Included in other assets in the accompanying consolidated balance sheet. Other assets includes the following: | |||
Intangible assets, gross | $ | 13,604 | ||
Less: accumulated amortization on intangible assets | (11,014 | ) | ||
Notes receivable and related accrued interest receivable, net | 4,849 | |||
Prepaid expenses and other current assets | 36,267 | |||
Total other assets | $ | 43,706 |
Total investments | $ | 3,288,622 | |
Cash and cash equivalents | 20,030 | ||
Restricted cash | 17,030 | ||
Deferred financing costs, net | 21,187 | ||
Account receivable, net | 39,354 | ||
Less: accumulated depreciation on rental properties | (394,872 | ) | |
Less: accumulated depreciation on rental properties held for sale | (319 | ) | |
Less: accumulated amortization on intangible assets | (11,014 | ) | |
Prepaid expenses and other current assets | 36,267 | ||
Total assets | $ | 3,016,285 |
• | $2.2 billion or 66% related to entertainment properties which includes megaplex theatres, entertainment retail centers (centers typically anchored by an entertainment component such as a megaplex theatre or live performance venue and containing other entertainment-related or retail properties), family entertainment centers and other retail parcels; |
• | $433.8 million or 13% related to education properties which consists of investments in public charter schools as well as early education centers; |
• | $445.5 million or 14% related to recreation properties which includes metro ski parks, water-parks and golf entertainment complexes; and |
• | $241.6 million or 7% related to other properties, including $194.5 million related to the land held for development in Sullivan County, New York and $43.6 million (before accumulated depreciation) related to vineyards and wineries. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
2013 | 2012 | Increase | 2013 | 2012 | Increase | ||||||||||||||||
Total revenue | $ | 83,557 | $ | 77,989 | 7 | % | $ | 166,907 | $ | 154,767 | 8 | % | |||||||||
Net income available to common shareholders of EPR Properties | 26,524 | 30,797 | (14 | )% | 61,778 | 46,168 | 34 | % | |||||||||||||
FFOAA per diluted share | 0.98 | 0.92 | 7 | % | 1.92 | 1.78 | 107,765 | % |
For the Six Months Ended June 30, 2013 | ||||||||||||||||||||||||
Operating Segment | Total Investment Spending | New Development | Re-development | Asset Acquisition | Investment in Mortgage Notes | Investment in Joint Ventures | ||||||||||||||||||
Entertainment | $ | 34,636 | $ | 29,009 | $ | 3,741 | $ | — | $ | 1,264 | $ | 622 | ||||||||||||
Education | 60,485 | 29,185 | — | 15,978 | 15,322 | — | ||||||||||||||||||
Recreation | 24,755 | 12,106 | — | 1,097 | 11,552 | — | ||||||||||||||||||
Other | 2,825 | 2,825 | — | — | — | — | ||||||||||||||||||
Total Investment Spending | $ | 122,701 | $ | 73,125 | $ | 3,741 | $ | 17,075 | $ | 28,138 | $ | 622 | ||||||||||||
For the Six Months Ended June 30, 2012 | ||||||||||||||||||||||||
Operating Segment | Total Investment Spending | New Development | Re-development | Asset Acquisition | Investment in Mortgage Notes | Investment in Joint Ventures | ||||||||||||||||||
Entertainment | $ | 71,117 | $ | 13,094 | $ | 5,016 | $ | 16,346 | $ | 36,000 | $ | 661 | ||||||||||||
Education | 41,060 | 25,354 | — | — | 15,706 | — | ||||||||||||||||||
Recreation | 31,425 | — | — | 20,014 | 11,411 | — | ||||||||||||||||||
Other | 4,417 | 4,417 | — | — | — | — | ||||||||||||||||||
Total Investment Spending | $ | 148,019 | $ | 42,865 | $ | 5,016 | $ | 36,360 | $ | 63,117 | $ | 661 |
• | Common shares outstanding of 47,164,800 multiplied by the last reported sales price of our common shares on the NYSE of $50.27 per share, or $2.4 billion; |
• | Aggregate liquidation value of our Series C convertible preferred shares of $135.0 million; |
• | Aggregate liquidation value of our Series E convertible preferred shares of $86.3 million; |
• | Aggregate liquidation value of our Series F redeemable preferred shares of $125.0 million; and |
• | Total long-term debt of $1.5 billion. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
FFO: | |||||||||||||||
Net income available to common shareholders of EPR Properties | $ | 26,524 | $ | 30,797 | $ | 61,778 | $ | 46,168 | |||||||
Gain on sale or acquisition of property | — | (438 | ) | (565 | ) | (720 | ) | ||||||||
Real estate depreciation and amortization | 13,498 | 12,635 | 26,967 | 24,832 | |||||||||||
Allocated share of joint venture depreciation | 162 | 144 | 319 | 286 | |||||||||||
Impairment charges | — | — | — | 12,843 | |||||||||||
FFO available to common shareholders of EPR Properties | $ | 40,184 | $ | 43,138 | $ | 88,499 | $ | 83,409 | |||||||
FFOAA: | |||||||||||||||
FFO available to common shareholders of EPR Properties | 40,184 | 43,138 | 88,499 | 83,409 | |||||||||||
Costs associated with loan refinancing or payoff | 5,943 | — | 5,943 | — | |||||||||||
Transaction costs | 224 | 31 | 542 | 189 | |||||||||||
Gain on early extinguishment of debt | — | — | (4,539 | ) | — | ||||||||||
FFOAA available to common shareholders of EPR Properties | $ | 46,351 | $ | 43,169 | $ | 90,445 | $ | 83,598 | |||||||
AFFO: | |||||||||||||||
FFOAA available to common shareholders of EPR Properties | 46,351 | 43,169 | 90,445 | 83,598 | |||||||||||
Non-real estate depreciation and amortization | 277 | 258 | 554 | 518 | |||||||||||
Deferred financing fees amortization | 988 | 1,092 | 1,987 | 2,177 | |||||||||||
Share-based compensation expense to management and trustees | 1,618 | 1,534 | 3,166 | 2,998 | |||||||||||
Maintenance capital expenditures (1) | (279 | ) | (1,066 | ) | (805 | ) | (1,420 | ) | |||||||
Straight-lined rental revenue | (707 | ) | (862 | ) | (1,921 | ) | (1,663 | ) | |||||||
Non-cash portion of mortgage and other financing income | (1,393 | ) | (1,284 | ) | (2,658 | ) | (2,541 | ) | |||||||
AFFO available to common shareholders of EPR Properties | $ | 46,855 | $ | 42,841 | $ | 90,768 | $ | 83,667 | |||||||
FFO per common share attributable to EPR Properties: | |||||||||||||||
Basic | $ | 0.85 | $ | 0.92 | $ | 1.88 | $ | 1.78 | |||||||
Diluted | 0.85 | 0.92 | 1.88 | 1.77 | |||||||||||
FFOAA per common share attributable to EPR Properties: | |||||||||||||||
Basic | $ | 0.98 | $ | 0.92 | $ | 1.93 | $ | 1.79 | |||||||
Diluted | 0.98 | 0.92 | 1.92 | 1.78 | |||||||||||
Shares used for computation (in thousands): | |||||||||||||||
Basic | 47,081 | 46,826 | 46,969 | 46,751 | |||||||||||
Diluted | 47,294 | 47,068 | 47,172 | 47,006 | |||||||||||
Other financial information: | |||||||||||||||
Dividends per common share | $ | 0.79 | $ | 0.75 | $ | 1.58 | $ | 1.50 | |||||||
(1) | Includes maintenance capital expenditures and certain second generation tenant improvements and leasing commissions. |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||||
April 1 through April 30, 2013 common stock | — | $ | — | — | $ | — | |||||||||
May 1 through May 31, 2013 common stock | 8,888 | (1) | 59.93 | — | — | ||||||||||
June 1 through June 30, 2013 common stock | — | — | — | — | |||||||||||
Total | 8,888 | $ | 59.93 | — | $ | — | |||||||||
4.1 | Indenture, dated June 18, 2013, among the Company, certain of its subsidiaries, as guarantors, and U.S. Bank National Association, as trustee, which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed June 18, 2013, is hereby incorporated by reference as Exhibit 4.1. |
4.2 | Form of 5.250% Senior Note due 2023 (included as Exhibit A to Exhibit 4.1 above). |
10.1* | EPR Properties 2007 Equity Incentive Plan, as amended and restated, which is attached as Exhibit 10.1 to the Company's Form 8-K (Commission File No. 001-13561) filed May 15, 2013, is hereby incorporated by reference as Exhibit 10.1. |
12.1** | Computation of Ratio of Earnings to Fixed Charges is attached hereto as Exhibit 12.1 |
12.2** | Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends is attached hereto as Exhibit 12.2 |
31.1** | Certification of David M. Brain pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 31.1 |
31.2** | Certification of Mark A. Peterson pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 31.2 |
32.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 32.1 |
32.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 32.2 |
101.INS** | XBRL Instance Document |
101.SCH** | XBRL Taxonomy Extension Schema |
101.CAL** | XBRL Extension Calculation Linkbase |
101.DEF** | XBRL Taxonomy Extension Definition Linkbase |
101.LAB** | XBRL Taxonomy Extension Label Linkbase |
101.PRE** | XBRL Taxonomy Extension Presentation Linkbase |
EPR Properties | ||||
Dated: | July 26, 2013 | By | /s/ David M. Brain | |
David M. Brain, President and Chief Executive Officer (Principal Executive Officer) | ||||
Dated: | July 26, 2013 | By | /s/ Mark A. Peterson | |
Mark A. Peterson, Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Chief Accounting Officer) |
4.1 | Indenture, dated June 18, 2013, among the Company, certain of its subsidiaries, as guarantors, and U.S. Bank National Association, as trustee, which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed June 18, 2013, is hereby incorporated by reference as Exhibit 4.1. |
4.2 | Form of 5.250% Senior Note due 2023 (included as Exhibit A to Exhibit 4.1 above). |
10.1* | EPR Properties 2007 Equity Incentive Plan, as amended and restated, which is attached as Exhibit 10.1 to the Company's Form 8-K (Commission File No. 001-13561) filed May 15, 2013, is hereby incorporated by reference as Exhibit 10.1. |
12.1** | Computation of Ratio of Earnings to Fixed Charges is attached hereto as Exhibit 12.1 |
12.2** | Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends is attached hereto as Exhibit 12.2 |
31.1** | Certification of David M. Brain pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 31.1 |
31.2** | Certification of Mark A. Peterson pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 31.2 |
32.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 32.1 |
32.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 32.2 |
101.INS** | XBRL Instance Document |
101.SCH** | XBRL Taxonomy Extension Schema |
101.CAL** | XBRL Extension Calculation Linkbase |
101.DEF** | XBRL Taxonomy Extension Definition Linkbase |
101.LAB** | XBRL Taxonomy Extension Label Linkbase |
101.PRE** | XBRL Taxonomy Extension Presentation Linkbase |
Six Months Ended | Year Ended December 31, | |||||||||||||||||||||||
June 30, 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
Earnings: | ||||||||||||||||||||||||
Income before equity in income from joint ventures, noncontrolling interests and discontinued operations (1) | $ | 71,623 | $ | 137,274 | $ | 116,287 | $ | 113,367 | $ | 30,641 | $ | 123,237 | ||||||||||||
Fixed charges | 40,967 | 77,582 | 71,898 | 69,620 | 63,035 | 64,776 | ||||||||||||||||||
Distributions from equity investments | 414 | 1,046 | 2,848 | 2,482 | 986 | 2,262 | ||||||||||||||||||
Capitalized interest | (970 | ) | (859 | ) | (498 | ) | (383 | ) | (600 | ) | (797 | ) | ||||||||||||
Adjusted Earnings | $ | 112,034 | $ | 215,043 | $ | 190,535 | $ | 185,086 | $ | 94,062 | $ | 189,478 | ||||||||||||
Fixed Charges: | ||||||||||||||||||||||||
Interest expense, net (including amortization of deferred financing fees) | $ | 39,989 | $ | 76,656 | $ | 71,367 | $ | 69,200 | $ | 62,360 | $ | 63,069 | ||||||||||||
Interest income | 8 | 67 | 33 | 37 | 75 | 910 | ||||||||||||||||||
Capitalized interest | 970 | 859 | 498 | 383 | 600 | 797 | ||||||||||||||||||
Total Fixed Charges | $ | 40,967 | $ | 77,582 | $ | 71,898 | $ | 69,620 | $ | 63,035 | $ | 64,776 | ||||||||||||
Ratio of Earnings to Fixed Charges | 2.7 | x | 2.8 | x | 2.7 | x | 2.7 | x | 1.5 | x | 2.9 | x | ||||||||||||
(1) | Income before equity in income from joint ventures, noncontrolling interest and discontinued operations for the six months ended June 30, 2013 includes a $4.5 million gain on early extinguishment of debt and $5.9 million in costs associated with loan refinancing or payoff. Income before equity in income from joint ventures, noncontrolling interests and discontinued operations for the years ended December 31, 2012 and 2011 includes $6.0 million and $12.5 million, respectively, in impairment charges for properties held and used. Income before equity in income from joint ventures, noncontrolling interests and discontinued operations for the year ended December 31, 2010 includes a $0.5 million impairment charge for other assets and $0.7 million in provision for loan losses. Income before equity in income from joint ventures, noncontrolling interests and discontinued operations for the year ended December 31, 2009 includes $2.1 million in impairment charges for properties held and used and $71.0 million in provision for loan losses. |
Six Months Ended | Year Ended December 31, | |||||||||||||||||||||||
June 30, 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
Earnings: | ||||||||||||||||||||||||
Income before equity in income from joint ventures, noncontrolling interests and discontinued operations (1) | $ | 71,623 | $ | 137,274 | $ | 116,287 | $ | 113,367 | $ | 30,641 | $ | 123,237 | ||||||||||||
Fixed charges before preferred dividends | 40,967 | 77,582 | 71,898 | 69,620 | 63,035 | 64,776 | ||||||||||||||||||
Distributions from equity investments | 414 | 1,046 | 2,848 | 2,482 | 986 | 2,262 | ||||||||||||||||||
Capitalized interest | (970 | ) | (859 | ) | (498 | ) | (383 | ) | (600 | ) | (797 | ) | ||||||||||||
Adjusted Earnings | $ | 112,034 | $ | 215,043 | $ | 190,535 | $ | 185,086 | $ | 94,062 | $ | 189,478 | ||||||||||||
Fixed Charges: | ||||||||||||||||||||||||
Interest expense, net (including amortization of deferred financing fees) | $ | 39,989 | $ | 76,656 | $ | 71,367 | $ | 69,200 | $ | 62,360 | $ | 63,069 | ||||||||||||
Interest income | 8 | 67 | 33 | 37 | 75 | 910 | ||||||||||||||||||
Capitalized interest | 970 | 859 | 498 | 383 | 600 | 797 | ||||||||||||||||||
Preferred dividends | 11,904 | 24,508 | 28,140 | 30,206 | 30,206 | 28,266 | ||||||||||||||||||
Combined Fixed Charges and Preferred Dividends | $ | 52,871 | $ | 102,090 | $ | 100,038 | $ | 99,826 | $ | 93,241 | $ | 93,042 | ||||||||||||
Ratio of Earnings to Combined Fixed Charges and Preferred Dividends | 2.1 | x | 2.1 | x | 1.9 | x | 1.9 | x | 1.0 | x | 2.0 | x | ||||||||||||
(1) | Income before equity in income from joint ventures, noncontrolling interest and discontinued operations for the six months ended June 30, 2013 includes a $4.5 million gain on early extinguishment of debt and $5.9 million in costs associated with loan refinancing or payoff. Income before equity in income from joint ventures, noncontrolling interests and discontinued operations for the years ended December 31, 2012 and 2011 includes $6.0 million and $12.5 million, respectively, in impairment charges for properties held and used. Income before equity in income from joint ventures, noncontrolling interests and discontinued operations for the year ended December 31, 2010 includes a $0.5 million impairment charge for other assets and $0.7 million in provision for loan losses. Income before equity in income from joint ventures, noncontrolling interests and discontinued operations for the year ended December 31, 2009 includes $2.1 million in impairment charges for properties held and used and $71.0 million in provision for loan losses. |
1. | I have reviewed this Quarterly Report on Form 10-Q of EPR Properties; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 26, 2013 | /s/ David M. Brain |
David M. Brain | ||
President and Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of EPR Properties; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 26, 2013 | /s/ Mark A. Peterson |
Mark A. Peterson | ||
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. |
/s/ David M. Brain | |
David M. Brain | |
President and Chief Executive Officer | |
(Principal Executive Officer) |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. |
/s/ Mark A. Peterson | |
Mark A. Peterson Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
Derivative Instruments
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Jun. 30, 2013
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Summary of Derivative Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments All derivatives are recognized at fair value in the consolidated balance sheets within the line items "Other assets" and "Accounts payable and accrued liabilities" as applicable. The Company's derivatives are subject to a master netting arrangement and the Company has elected not to offset its derivative position for purposes of balance sheet presentation and disclosure. The Company had derivative liabilities of $2.4 million and $8.1 million recorded in “Accounts payable and accrued liabilities” and derivative assets of $4.9 million and $0.1 million recorded in “Other assets” in the consolidated balance sheet at June 30, 2013 and December 31, 2012, respectively. Had the Company elected to offset derivatives in the consolidated balance sheet pursuant to ASU 210-20-45, the Company would have had derivative liabilities of approximately $1.9 million and derivative assets of $0.1 million that would have been offset against the respective derivative assets of $4.9 million and liabilities of $8.1 million, resulting in a net derivative asset of $3.0 million and net derivative liability of $0.6 million at June 30, 2013, and a net derivative liability of $8.0 million (with no derivative asset) at December 31, 2013. The Company has not posted or received collateral with its derivative counterparties as of June 30, 2013 or December 31, 2012. See Note 11 for disclosures relating to the fair value of the derivative instruments as of June 30, 2013 and December 31, 2012. Risk Management Objective of Using Derivatives The Company is exposed to the effect of changes in foreign currency exchange rates and interest rates on its LIBOR based borrowings. The Company limits this risk by following established risk management policies and procedures including the use of derivatives. The Company’s objective in using derivatives is to add stability to reported earnings and to manage its exposure to foreign exchange and interest rate movements or other identified risks. To accomplish this objective, the Company primarily uses interest rate swaps, cross-currency swaps and foreign currency forwards. Cash Flow Hedges of Interest Rate Risk The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements on its LIBOR based borrowings. To accomplish this objective, the Company currently uses interest rate swaps as its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. On January 5, 2012, the Company entered into three interest rate swap agreements to fix the interest rate on a $240.0 million unsecured term loan facility that closed on the same day. These agreements have a combined outstanding notional amount of $240.0 million, a termination date of January 5, 2016 and a fixed rate of 2.66%. The effective portion of changes in the fair value of interest rate derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (AOCI) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the six months ended June 30, 2013 and 2012, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. No hedge ineffectiveness on cash flow hedges was recognized during the six months ended June 30, 2013 and 2012. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of June 30, 2013, the Company estimates that during the twelve months ending June 30, 2014, $1.6 million will be reclassified from AOCI to interest expense. Cash Flow Hedges of Foreign Exchange Risk The Company is exposed to foreign currency exchange risk against its functional currency, the U.S. dollar, on its four Canadian properties. The Company uses cross currency swaps and foreign currency forwards to mitigate its exposure to fluctuations in the CAD to U.S. dollar exchange rate on its Canadian properties. These foreign currency derivatives should hedge a significant portion of the Company's expected CAD denominated cash flow of the Canadian properties as their impact on the Company's cash flow when settled should move in the opposite direction of the exchange rates used to translate revenues and expenses of these properties. The Company had cross-currency swaps with a fixed original notional value of $76.0 million CAD and $71.5 million U.S. The net effect of these swaps is to lock in an exchange rate of $1.05 CAD per U.S. dollar on approximately $13.0 million of annual CAD denominated cash flows on the properties through February 2014. Additionally, on June 19, 2013, the Company entered into cross-currency swaps that will be effective March 1, 2014 with a fixed original notional value of $100.0 million CAD and $98.1 million U.S. The net effect of these swaps is to lock in an exchange rate of $1.05 CAD per U.S. dollar on approximately $13.5 million of annual CAD denominated cash flows on the properties through June 2018. The Company entered into foreign currency forward agreements to further hedge the currency fluctuations related to the cash flows of these properties. The agreements settled or settle at the end of each month from January to December 2013. These agreements lock in an exchange rate of $0.98 CAD to $0.99 CAD per U.S. dollar on approximately $500 thousand of monthly CAD denominated cash flows. The effective portion of changes in the fair value of foreign currency derivatives designated and that qualify as cash flow hedges of foreign exchange risk is recorded in AOCI and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivative, as well as amounts excluded from the assessment of hedge effectiveness, is recognized directly in earnings. No hedge ineffectiveness on foreign currency derivatives has been recognized for the six months ended June 30, 2013 and 2012. As of June 30, 2013, the Company estimates that during the twelve months ending June 30, 2014, $0.3 million will be reclassified from AOCI to other income. Net Investment Hedges As discussed above, the Company is exposed to fluctuations in foreign exchange rates on its four Canadian properties. As such, the Company uses currency forward agreements to hedge its exposure to changes in foreign exchange rates. Currency forward agreements involve fixing the CAD to U.S. dollar exchange rate for delivery of a specified amount of foreign currency on a specified date. The currency forward agreements are typically cash settled in US dollars for their fair value at or close to their settlement date. In order to hedge the net investment in four of the Canadian properties, the Company entered into a forward contract with a fixed notional value of $100.0 million CAD and $96.1 million U.S. with a February 2014 settlement. The exchange rate of this forward contract is approximately $1.04 CAD per U.S. dollar. Additionally, on June 19, 2013, the Company entered into a forward contract with a fixed notional value of $100.0 million CAD and $94.3 million U.S. with a July 2018 settlement date. The exchange rate of this forward contract is approximately $1.06 CAD per U.S. dollar. These forward contracts should hedge a significant portion of the Company’s CAD denominated net investment in these four centers through July 2018 as the impact on AOCI from marking the derivative to market should move in the opposite direction of the translation adjustment on the net assets of these four Canadian properties. For foreign currency derivatives designated as net investment hedges, the effective portion of changes in the fair value of the derivatives are reported in AOCI as part of the cumulative translation adjustment. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. No hedge ineffectiveness on net investment hedges has been recognized for six months ended June 30, 2013 and 2012. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated. See Note 11 for disclosure relating to the fair value of the Company’s derivative instruments. Below is a summary of the effect of derivative instruments on the consolidated statements of changes in equity and income for the six months ended June 30, 2013 and 2012.
Credit-risk-related Contingent Features The Company has agreements with each of its interest rate derivative counterparties that contain a provision where if the Company defaults on any of its obligations for borrowed money or credit in an amount exceeding $25.0 million and such default is not waived or cured within a specified period of time, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its interest rate derivative obligations. As of June 30, 2013, the fair value of the Company’s derivatives in a liability position related to these agreements was $2.4 million. If the Company breached any of the contractual provisions of the derivative contracts, it would be required to settle its obligations under the agreements at their termination value of $2.5 million. |
Rental Properties
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rental Properties | Rental Properties The following table summarizes the carrying amounts of rental properties as of June 30, 2013 and December 31, 2012 (in thousands):
Depreciation expense on rental properties was $25.7 million and $22.4 million for the six months ended June 30, 2013 and 2012, respectively. |
Condensed Consolidating Financial Statements
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Condensed Consolidating Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Financial Statements | Condensed Consolidating Financial Statements A portion of the Company's subsidiaries have guaranteed the Company’s indebtedness under the Company's unsecured senior notes, unsecured revolving credit facility and unsecured term loan facility. The guarantees are joint and several, full and unconditional and subject to customary release provisions. The following summarizes the Company’s condensed consolidating information as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012 (in thousands):
|
Subsequent Events (Details) (USD $)
|
Jun. 30, 2013
|
Jun. 30, 2013
Line of Credit [Member]
|
Jun. 30, 2013
Term loan payable, due January 5, 2017 [Member]
|
Jan. 05, 2012
Term loan payable, due January 5, 2017 [Member]
|
Jul. 23, 2013
Subsequent Event [Member]
Line of Credit [Member]
|
Jul. 23, 2013
Subsequent Event [Member]
Term loan payable, due January 5, 2017 [Member]
|
---|---|---|---|---|---|---|
Subsequent Event [Line Items] | ||||||
Line of Credit Facility, Current Borrowing Capacity | $ 400,000,000 | $ 400,000,000 | $ 255,000,000 | $ 240,000,000 | $ 440,000,000 | $ 265,000,000 |
Line of Credit Facility, Maximum Borrowing Capacity | 100,000,000 | 350,000,000 | 160,000,000 | 400,000,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 1.40% | 1.60% | ||||
Debt Instrument, Fee Amount | $ 0.0030 |
Fair Value Disclosures
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures | Fair Value Disclosures The Company has certain financial instruments that are required to be measured under the FASB’s Fair Value Measurements and Disclosures guidance. The Company currently does not have any non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis. As a basis for considering market participant assumptions in fair value measurements, the FASB’s Fair Value Measurements and Disclosures guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. Derivative Financial Instruments The Company uses interest rate swaps, foreign currency forwards and cross-currency swaps to manage its interest rate and foreign currency risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. In conjunction with the FASB's fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives also use Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. As of June 30, 2013, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives and therefore, has classified its derivatives as Level 2 within the fair value reporting hierarchy. The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012 aggregated by the level in the fair value hierarchy within which those measurements are classified and by derivative type.
*Included in "Other assets" in the accompanying consolidated balance sheet. **Included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheet. Non-recurring fair value measurements There were no assets or liabilities measured at fair value on a non-recurring basis during the six months ended June 30, 2013. Fair Value of Financial Instruments Management compares the carrying value to the estimated fair value of the Company’s financial instruments. The following methods and assumptions were used by the Company to estimate the fair value of each class of financial instruments at June 30, 2013 and December 31, 2012: Mortgage notes receivable and related accrued interest receivable: The fair value of the Company’s mortgage notes and related accrued interest receivable is estimated by discounting the future cash flows of each instrument using current market rates. At June 30, 2013, the Company had a carrying value of $482.3 million in fixed rate mortgage notes receivable outstanding, including related accrued interest, with a weighted average interest rate of approximately 9.04%. The fixed rate mortgage notes bear interest at rates of 7.00% to 11.31%. Discounting the future cash flows for fixed rate mortgage notes receivable using rates of 9.00% to 11.31%, management estimates the fair value of the fixed rate mortgage notes receivable to be approximately $460.0 million with an estimated weighted average market rate of 10.10% at June 30, 2013. At December 31, 2012, the Company had a carrying value of $455.8 million in fixed rate mortgage notes receivable outstanding, including related accrued interest, with a weighted average interest rate of approximately 8.96%. The fixed rate mortgage notes bear interest at rates of 7.00% to 11.31%. Discounting the future cash flows for fixed rate mortgage notes receivable using rates of 9.00% to 11.31%, management estimates the fair value of the fixed rate mortgage notes receivable to be $431.2 million with an estimated weighted average market rate of 10.07% at December 31, 2012. Investment in a direct financing lease, net: The fair value of the Company’s investment in a direct financing lease is estimated by discounting the future cash flows of the instrument using current market rates. At June 30, 2013 and December 31, 2012, the Company had an investment in a direct financing lease with a carrying value of $239.8 million and $234.1 million, respectively, and a weighted average effective interest rate of 12.01% and 12.02%, respectively. The investment in direct financing lease bears interest at effective interest rates of 11.74% to 12.38%. The carrying value of the investment in a direct financing lease approximates the fair market value at June 30, 2013 and December 31, 2012. Derivative instruments: Derivative instruments are carried at their fair market value. Debt instruments: The fair value of the Company's debt is estimated by discounting the future cash flows of each instrument using current market rates. At June 30, 2013, the Company had a carrying value of $289.6 million in variable rate debt outstanding with a weighted average interest rate of approximately 1.86%. The carrying value of the variable rate debt outstanding approximates the fair market value at June 30, 2013. At December 31, 2012, the Company had a carrying value of $289.6 million in variable rate debt outstanding with an average weighted interest rate of approximately 1.88%. The carrying value of the variable rate debt outstanding approximates the fair market value at December 31, 2012. At June 30, 2013 and December 31, 2012, $240.0 million of variable rate debt outstanding under the Company's unsecured term loan facility had been effectively converted to a fixed rate through January 5, 2016 by interest rate swap agreements. At June 30, 2013, the Company had a carrying value of $1.19 billion in fixed rate long-term debt outstanding with a weighted average interest rate of approximately 6.11%. Discounting the future cash flows for fixed rate debt using rates of 3.36% to 5.64%, management estimates the fair value of the fixed rate debt to be approximately $1.24 billion with an estimated weighted average market rate of 4.94% at June 30, 2013. At December 31, 2012, the Company had a carrying value of $1.08 billion in fixed rate long-term debt outstanding with an average weighted interest rate of approximately 6.35%. Discounting the future cash flows for fixed rate debt using rates of 3.41% to 5.17%, management estimates the fair value of the fixed rate debt to be approximately $1.17 billion with an estimated weighted average market rate of 4.46% at December 31, 2012. |
Variable Interest Entities (Narrative) (Details) (USD $)
In Millions, unless otherwise specified |
6 Months Ended |
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Jun. 30, 2013
jointventures
|
|
Other Joint Ventures [Member]
|
|
Number of joint ventures invested in | 1 |
Company's consolidated VIEs interest | 50.00% |
SVVI [Member]
|
|
Investment in unconsolidated VIE | $ 182.1 |
Unconsolidated investment maximum exposure to loss | $ 182.1 |
Summary of Significant Accounting Policies (Details) (USD $)
|
3 Months Ended | 6 Months Ended | 144 Months Ended | 6 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 9 Months Ended | 6 Months Ended | 9 Months Ended | 6 Months Ended | ||||||||||||||||||
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Jun. 30, 2013
segment
|
Jun. 30, 2012
|
Jun. 30, 2013
segment
|
Jun. 30, 2012
|
Dec. 31, 2008
|
Dec. 31, 2012
|
Jun. 30, 2013
American Multi-Cinema, Inc. [Member]
|
Jun. 30, 2012
American Multi-Cinema, Inc. [Member]
|
Mar. 31, 2013
AMCE [Member]
|
Dec. 31, 2012
AMCE [Member]
|
Mar. 29, 2012
AMCE [Member]
|
Mar. 31, 2011
AMCE [Member]
|
Jun. 30, 2013
ONTARIO
Entertainment Retail Center Properties [Member]
properties
|
Jun. 30, 2013
ONTARIO
Four Entertainment Retail Centers [Member]
|
Jun. 30, 2012
ONTARIO
Four Entertainment Retail Centers [Member]
|
Dec. 31, 2012
ONTARIO
Four Entertainment Retail Centers [Member]
|
Sep. 30, 2012
Minimum [Member]
|
Sep. 30, 2012
Maximum [Member]
|
Sep. 30, 2012
Building [Member]
|
Sep. 30, 2012
Furniture, fixtures & equipment [Member]
Minimum [Member]
|
Sep. 30, 2012
Furniture, fixtures & equipment [Member]
Maximum [Member]
|
Jun. 30, 2013
Share Options [Member]
|
Jun. 30, 2012
Share Options [Member]
|
Jun. 30, 2013
Share Options [Member]
Non-Employee Trustees [Member]
Y
|
Jun. 30, 2013
Restricted Stock [Member]
Employee [Member]
|
Jun. 30, 2012
Restricted Stock [Member]
Employee [Member]
|
Sep. 30, 2012
Restricted Stock [Member]
Minimum [Member]
Employee [Member]
|
Sep. 30, 2012
Restricted Stock [Member]
Maximum [Member]
Employee [Member]
|
Jun. 30, 2013
Restricted Share Units [Member]
|
Jun. 30, 2013
Restricted Share Units [Member]
Non-Employee Trustees [Member]
|
Jun. 30, 2012
Restricted Share Units [Member]
Non-Employee Trustees [Member]
|
|
Operating Segments | |||||||||||||||||||||||||||||||
Number of reportable operating segments (in reportable segments) | 4 | 4 | |||||||||||||||||||||||||||||
Rental Properties [Abstract] | |||||||||||||||||||||||||||||||
Estimated useful live of buildings (in years) | 40 years | 3 years | 25 years | ||||||||||||||||||||||||||||
Revenue Recognition [Abstract] | |||||||||||||||||||||||||||||||
Percentage rents | $ 1,100,000 | $ 600,000 | |||||||||||||||||||||||||||||
Concentrations of Risk [Abstract] | |||||||||||||||||||||||||||||||
Percent of megaplex theatre rental leased by AMC | 31.00% | ||||||||||||||||||||||||||||||
Rental revenue | 60,765,000 | 58,305,000 | 121,552,000 | 115,563,000 | 42,700,000 | 51,400,000 | |||||||||||||||||||||||||
Percentage of lease revenue in total revenue | 26.00% | 33.00% | 12.70% | 14.00% | |||||||||||||||||||||||||||
Total assets | 3,016,285,000 | 3,016,285,000 | 2,946,730,000 | 4,300,000,000 | 3,600,000,000 | ||||||||||||||||||||||||||
Total liabilities | 1,561,648,000 | 1,561,648,000 | 1,486,832,000 | 3,500,000,000 | 3,500,000,000 | ||||||||||||||||||||||||||
Total stockholders' equity | 1,454,260,000 | 1,454,260,000 | 1,459,521,000 | 774,100,000 | 154,300,000 | ||||||||||||||||||||||||||
Net earnings (loss) | 32,476,000 | 36,799,000 | 73,682,000 | 58,171,000 | 7,500,000 | (57,300,000) | (82,000,000) | 122,900,000 | |||||||||||||||||||||||
Total revenue | 83,557,000 | 77,989,000 | 166,907,000 | 154,767,000 | 21,200,000 | 21,400,000 | |||||||||||||||||||||||||
Number of real estate properties (in properties) | 4 | ||||||||||||||||||||||||||||||
Net assets of wholly owned subsidiaries | 224,800,000 | 147,300,000 | |||||||||||||||||||||||||||||
Wholly owned subsidiaries percentage in net assets | 16.00% | 10.00% | |||||||||||||||||||||||||||||
Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||
Share based compensation | 3,166,000 | 2,998,000 | |||||||||||||||||||||||||||||
Share based compensation, future vesting period minimum (in years) | 4 years | 5 years | 3 years | 4 years | 4 years | 3 years | 4 years | ||||||||||||||||||||||||
Range of settlement date for shares for non-employee trustee from grant date, minimum (in years) | 1 year | 1 year | |||||||||||||||||||||||||||||
Number of years from date of grant that share options may not be exercised | 1 | ||||||||||||||||||||||||||||||
Stock-option expense | 438,000 | 481,000 | |||||||||||||||||||||||||||||
Share based compensation expense related to employees and trustees | 2,000,000 | 2,400,000 | 2,300,000 | 321,000 | 250,000 | ||||||||||||||||||||||||||
Gain (Loss) on Contract Termination | $ 0 | $ 99,000 |
Rental Properties (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Carrying Amounts Of Rental Properties | The following table summarizes the carrying amounts of rental properties as of June 30, 2013 and December 31, 2012 (in thousands):
Dep |
Summary of Significant Accounting Policies (Policy)
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
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Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. In addition, operating results for the six month period ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. The Company consolidates certain entities when it is deemed to be the primary beneficiary in a variable interest entity (VIE), as defined in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic on Consolidation. The Topic on Consolidation requires the consolidation of VIEs in which an enterprise has a controlling financial interest. A controlling financial interest will have both of the following characteristics: the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. This topic requires an ongoing reassessment of and eliminates the quantitative approach previously required for determining whether a company is the primary beneficiary and requires enhanced disclosures on variable interest entities. The equity method of accounting is applied to entities in which the Company is not the primary beneficiary as defined in the Consolidation Topic of the FASB ASC, or does not have effective control, but can exercise influence over the entity with respect to its operations and major decisions. The Company reports its noncontrolling interests as required by the Consolidation Topic of the FASB ASC. Noncontrolling interest is the portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. The ownership interests in the subsidiary that are held by owners other than the parent are noncontrolling interests. Such noncontrolling interests are reported on the consolidated balance sheets within equity, separately from the Company's equity. On the consolidated statements of income, revenues, expenses and net income or loss from less-than-wholly-owned subsidiaries are reported at the consolidated amounts, including both the amounts attributable to the Company and noncontrolling interests. Consolidated statements of changes in shareholders' equity are included for both quarterly and annual financial statements, including beginning balances, activity for the period and ending balances for equity, noncontrolling interests and total equity. The Company does not have any redeemable noncontrolling interests under the scope of the Distinguishing Liabilities from Equity guidance of the FASB ASC. The consolidated balance sheet as of December 31, 2012 has been derived from the audited consolidated balance sheet at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Comission (SEC) on February 27, 2013. |
Operating Segments | Operating Segments For financial reporting purposes, the Company groups its investments into four reportable operating segments: entertainment, education, recreation and other. See Note 16 for financial information related to these operating segments. |
Rental Properties | Rental Properties Rental properties are carried at cost less accumulated depreciation. Costs incurred for the acquisition and development of the properties are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which generally are estimated to be 40 years for buildings and 3 to 25 years for furniture, fixtures and equipment. Tenant improvements, including allowances, are depreciated over the shorter of the base term of the lease or the estimated useful life. Expenditures for ordinary maintenance and repairs are charged to operations in the period incurred. Significant renovations and improvements that improve or extend the useful life of the asset are capitalized and depreciated over their estimated useful life. Management reviews a property for impairment whenever events or changes in circumstances indicate that the carrying value of a property may not be recoverable. The review of recoverability is based on an estimate of undiscounted future cash flows expected to result from its use and eventual disposition. If impairment exists due to the inability to recover the carrying value of the property, an impairment loss is recorded to the extent that the carrying value of the property exceeds its estimated fair value. The Company evaluates the held-for-sale classification of its real estate as of the end of each quarter. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value less costs to sell. Assets are generally classified as held for sale once management has initiated an active program to market them for sale and has received a firm purchase commitment that is expected to close within one year. The results of operations of these real estate properties are reflected as discontinued operations in all periods reported. On occasion, the Company will receive unsolicited offers from third parties to buy individual Company properties. Under these circumstances, the Company will classify the properties as held for sale when a sales contract is executed with no contingencies and the prospective buyer has funds at risk to ensure performance. |
Allowance For Doubtful Accounts | Allowance for Doubtful Accounts The Company makes quarterly estimates of the collectability of its accounts receivable related to base rents, tenant escalations (straight-line rents), reimbursements and other revenue or income. The Company specifically analyzes trends in accounts receivable, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of its allowance for doubtful accounts. When evaluating customer creditworthiness, management reviews the periodic financial statements for significant tenants and specifically evaluates the strength and material changes in net operating income, coverage ratios, leverage and other factors to assess the tenant's credit quality. In addition, when customers are in bankruptcy, the Company makes estimates of the expected recovery of pre-petition administrative and damage claims. These estimates have a direct impact on the Company's net income. |
Revenue Recognition | Revenue Recognition Rents that are fixed and determinable are recognized on a straight-line basis over the minimum terms of the leases. Base rent escalation on leases that are dependent upon increases in the Consumer Price Index (CPI) is recognized when known. In addition, most of the Company's tenants are subject to additional rents if gross revenues of the properties exceed certain thresholds defined in the lease agreements (percentage rents). Percentage rents as well as participating interest for those mortgage agreements that contain similar such clauses are recognized at the time when specific triggering events occur as provided by the lease or mortgage agreements. Rental revenue included percentage rents of $1.1 million and $0.6 million for the six months ended June 30, 2013 and 2012, respectively. Lease termination fees are recognized when the related leases are canceled and the Company has no obligation to provide services to such former tenants. Termination fees of $8 thousand and $99 thousand were recognized during the six months ended June 30, 2013 and 2012, respectively. Direct financing lease income is recognized on the effective interest method to produce a level yield on funds not yet recovered. Estimated unguaranteed residual values at the date of lease inception represent management's initial estimates of fair value of the leased assets at the expiration of the lease, not to exceed original cost. Significant assumptions used in estimating residual values include estimated net cash flows over the remaining lease term and expected future real estate values. The Company evaluates on an annual basis (or more frequently, if necessary) the collectability of its direct financing lease receivable and unguaranteed residual value to determine whether they are impaired. A direct financing lease receivable is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms. When a direct financing lease receivable is considered to be impaired, the amount of loss is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the direct financing lease receivable's effective interest rate or to the fair value of the underlying collateral, less costs to sell, if such receivable is collateralized. |
Mortgage Notes And Other Notes Receivable | Mortgage Notes and Other Notes Receivable Mortgage notes and other notes receivable, including related accrued interest receivable, consist of loans originated by the Company and the related accrued and unpaid interest income as of the balance sheet date. Mortgage notes and other notes receivable are initially recorded at the amount advanced to the borrower and the Company defers certain loan origination and commitment fees, net of certain origination costs, and amortizes them over the term of the related loan. Interest income on performing loans is accrued as earned. The Company evaluates the collectability of both interest and principal of each of its loans to determine whether it is impaired. A loan is considered to be impaired when, based on current information and events, the Company determines that it is probable that it will be unable to collect all amounts due according to the existing contractual terms. An insignificant delay or shortfall in amounts of payments does not necessarily result in the loan being identified as impaired. When a loan is considered to be impaired, the amount of loss, if any, is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the loan’s effective interest rate or to the fair value of the Company’s interest in the underlying collateral, less costs to sell, if the loan is collateral dependent. For impaired loans, interest income is recognized on a cash basis, unless the Company determines based on the loan to estimated fair value ratio the loan should be on the cost recovery method, and any cash payments received would then be reflected as a reduction of principal. Interest income recognition is recommenced if and when the impaired loan becomes contractually current and performance is demonstrated to be resumed. |
Concentrations Of Risk | Concentrations of Risk American Multi-Cinema, Inc. (AMC) was the lessee of a substantial portion (31%) of the megaplex theatre rental properties held by the Company (including joint venture properties) at June 30, 2013 as a result of a series of sale leaseback transactions pertaining to AMC megaplex theatres. A substantial portion of the Company’s total revenues (approximately $42.7 million or 26% and $51.4 million or 33%, for the six months ended June 30, 2013 and 2012, respectively) result from the revenue from AMC under the leases, or from its parent, AMC Entertainment, Inc. (AMCE), as the guarantor of AMC’s obligations under the leases. AMCE is wholly-owned by Dalian Wanda Group Co. Ltd. and has publicly-held debt and the following financial information was reported in its consolidated financial information which is publicly available. AMCE publicly reported total assets of $4.3 billion and $3.6 billion and total stockholders' equity of $774.1 million and $154.3 million at December 31, 2012 and March 29, 2012, respectively. Additionally, AMCE publicly reported total liabilities of $3.5 billion at both December 31, 2012 and March 29, 2012. AMCE publicly reported net earnings of $57.3 million for the transition period beginning on March 30, 2012 and ending December 31, 2012, a net loss of $82.0 million for the fifty-two weeks ended March 29, 2012 and a net loss of $122.9 million for the fifty-two weeks ended March 31, 2011. In addition, AMCE reported a net loss of $7.5 million for the three months ended March 31, 2013. For the six months ended June 30, 2013 and 2012, approximately $21.2 million or 12.7%, and $21.4 million or 14%, respectively, of total revenue was derived from the Company's four entertainment retail centers in Ontario, Canada. The Company's wholly owned subsidiaries that hold the four Canadian entertainment retail centers represent approximately $224.8 million or 16% of the Company's net assets at June 30, 2013. The third party debt held by these subsidiaries was repaid during the three months ended June 30, 2013. See Note 8 for further details. The Company's wholly owned subsidiaries that hold the four Canadian entertainment retail centers and third party debt represented approximately $147.3 million or 10%, of the Company's net assets as of December 31, 2012. |
Share-Based Compensation | Share-Based Compensation Share-based compensation to employees of the Company is granted pursuant to the Company's Annual Incentive Program and Long-Term Incentive Plan. Share-based compensation to non-employee Trustees of the Company is granted pursuant to the Company's Trustee compensation program and shares are issued under the 2007 Equity Incentive Plan. Share based compensation expense consists of share option expense, amortization of nonvested share grants, and amortization of share units issued to non-employee Trustees for payment of their annual retainers. Share based compensation is included in general and administrative expense in the accompanying consolidated statements of income, and totaled $3.2 million and $3.0 million for the six months ended June 30, 2013 and 2012, respectively. |
Share Options | Share Options Share options are granted to employees pursuant to the Long-Term Incentive Plan and to non-employee Trustees for their service to the Company. The fair value of share options granted is estimated at the date of grant using the Black-Scholes option pricing model. Share options granted to employees vest over a period of four years and share option expense for these options is recognized on a straight-line basis over the vesting period. Share options granted to non-employee Trustees vest immediately but may not be exercised for a period of one year from the grant date. Share option expense for non-employee Trustees is recognized on a straight-line basis over the year of service by the non-employee Trustees. Total expense recognized related to share options was $438 thousand and $481 thousand for the six months ended June 30, 2013 and 2012, respectively. |
Nonvested Shares Issued To Employees | Nonvested Shares Issued to Employees The Company grants nonvested shares to employees pursuant to both the Annual Incentive Program and the Long-Term Incentive Plan. The Company amortizes the expense related to the nonvested shares awarded to employees under the Long-Term Incentive Plan and the premium awarded under the nonvested share alternative of the Annual Incentive Program on a straight-line basis over the future vesting period (three to four years). Total expense recognized related to all nonvested shares was $2.4 million and $2.3 million for the six months ended June 30, 2013 and 2012, respectively. |
Restricted Share Units Issued To Non-Employee Trustees | Restricted Share Units Issued to Non-Employee Trustees The Company issues restricted share units to non-employee Trustees for payment of their annual retainers. The fair value of the share units granted was based on the share price at the date of grant. The share units vest upon the earlier of the day preceding the next annual meeting of shareholders or a change of control. The settlement date for the shares is selected by the non-employee Trustee, and ranges from one year from the grant date to upon termination of service. This expense is amortized by the Company on a straight-line basis over the year of service by the non-employee Trustees. Total expense recognized related to shares issued to non-employee Trustees was $321 thousand, and $250 thousand for the six months ended June 30, 2013 and 2012, respectively. |
Derivative Instruments | Derivative Instruments The Company has acquired certain derivative instruments to reduce exposure to fluctuations in foreign currency exchange rates and variable interest rates. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. These derivatives consist of foreign currency forward contracts, cross-currency swaps and interest rate swaps. The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. In conjunction with the FASB's fair value measurement guidance in FASB ASU 2011-04 (Amendments to ASC 820), the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior period amounts to conform to the current period presentation primarily for asset groups that qualify for presentation as discontinued operations. |
Unconsolidated Real Estate Joint Ventures (Unaudited Condensed Financial Information) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Long-term debt | $ 1,474,735 | $ 1,474,735 | $ 1,368,832 | ||
Mortgage note payable to EPR Properties (2) | 0 | 0 | 0 | ||
Net income | 32,476 | 36,818 | 73,682 | 58,208 | |
Atlantic-EPR I and II [Member]
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Rental properties, net | 44,943 | 46,048 | 44,943 | 46,048 | |
Cash | 152 | 141 | 152 | 141 | |
Long-term debt | 11,616 | 12,028 | 11,616 | 12,028 | |
Mortgage note payable to EPR Properties (2) | 19,361 | 15,165 | 19,361 | 15,165 | |
Partners' equity | 18,530 | 18,742 | 18,530 | 18,742 | |
Rental revenue | 2,851 | 2,804 | |||
Net income | $ 978 | $ 631 |
Equity Incentive Plans (Tables)
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6 Months Ended | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Sep. 30, 2012
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Share-based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Share Option Activity | A summary of the Company’s share option activity and related information is as follows:
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Summary Of Outstanding Options | The following table summarizes outstanding options at June 30, 2013:
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Summary Of Exercisable Options | The following table summarizes exercisable options at June 30, 2013:
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Summary Of Nonvested Share Activity | A summary of the Company’s nonvested share activity and related information is as follows:
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Summary Of Restricted Share Unit Activity | A summary of the Company’s restricted share unit activity and related information is as follows:
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Derivative Instruments (Narrative) (Details)
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0 Months Ended | 6 Months Ended | ||||||||||||||||
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Jun. 30, 2013
USD ($)
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Dec. 31, 2012
USD ($)
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Jun. 30, 2013
Cash Flow Hedging [Member]
USD ($)
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Jan. 05, 2012
Interest Rate Swap [Member]
USD ($)
swap_agreements
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Jun. 30, 2013
Interest Rate Swap [Member]
USD ($)
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Jun. 30, 2013
Interest Rate Risk [Member]
USD ($)
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Jun. 30, 2013
Cross Currency Swaps [Member]
USD ($)
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Jun. 30, 2013
Cross Currency Swaps [Member]
CAD
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Jun. 30, 2013
Cross Currency Swaps [Member]
Cash Flow Hedging [Member]
CAD
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Jun. 30, 2013
Cross Currency Swaps 2018 [Member]
USD ($)
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Jun. 30, 2013
Cross Currency Swaps 2018 [Member]
CAD
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Jun. 30, 2013
Currency Forward Agreements [Member]
USD ($)
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Jun. 30, 2013
Currency Forward Agreements [Member]
Net Investment Hedging [Member]
USD ($)
properties
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Jun. 30, 2013
Currency Forward Agreements [Member]
Net Investment Hedging [Member]
CAD
properties
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Oct. 11, 2012
Currency Forward Agreements [Member]
Cash Flow Hedging [Member]
USD ($)
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Jun. 30, 2013
Currency Forward Agreements 2018 [Member]
Net Investment Hedging [Member]
CAD
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Oct. 11, 2012
Minimum [Member]
Currency Forward Agreements [Member]
Cash Flow Hedging [Member]
CAD
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Oct. 11, 2012
Maximum [Member]
Currency Forward Agreements [Member]
Cash Flow Hedging [Member]
CAD
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Derivative Liability, Fair Value, Gross Liability | $ 2,400,000 | $ 8,100,000 | $ 1,900,000 | |||||||||||||||
Derivative Asset, Fair Value, Gross Asset | 4,900,000 | 100,000 | 4,900,000 | |||||||||||||||
Derivative Liabilities | 600,000 | 8,000,000 | ||||||||||||||||
Derivative Assets | 3,000,000 | |||||||||||||||||
Outstanding notional amount of interest rate swaps | 240,000,000 | |||||||||||||||||
Number of entered into interest rate swap agreements (in interest rate swaps) | 3 | |||||||||||||||||
Amount of hedged term loan | 240,000,000 | |||||||||||||||||
Derivative fixed interest rate | 2.66% | |||||||||||||||||
Number of Canadian properties exposed to foreign currency exchange risk (in properties) | 4 | 4 | ||||||||||||||||
Fixed notional value of cross-currency swaps | 71,500,000 | 76,000,000 | 98,100,000 | 100,000,000 | ||||||||||||||
Net exchange rate, CAD to US dollar | 1.05 | 1.04 | 1.06 | 0.98 | 0.99 | |||||||||||||
Cash flows on the properties | 13,000,000 | |||||||||||||||||
Monthly CAD denominated cash flows | 500,000 | |||||||||||||||||
Estimated amount to be reclassified from accumulated other comprehensive income to other expense in the next twelve months | 300,000 | 1,600,000 | ||||||||||||||||
Net investment hedges notional value | 96,100,000 | 100,000,000 | 94,300,000 | |||||||||||||||
Fair value of derivatives in a liability position | 2,400,000 | |||||||||||||||||
Assets needed to settle obligations under the agreements | $ 2,500,000 |
Derivative Instruments (Tables)
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Jun. 30, 2013
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Summary of Derivative Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of The Effect Of Derivative Instruments On The Consolidated Statements Of Changes In Equity And Income | Below is a summary of the effect of derivative instruments on the consolidated statements of changes in equity and income for the six months ended June 30, 2013 and 2012.
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Investments In Direct Financing Lease (Summary Of Carrying Amounts Of Investment In Direct Financing Lease, Net) (Details) (USD $)
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Jun. 30, 2013
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Dec. 31, 2012
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Capital Leases, Net Investment in Direct Financing Leases [Abstract] | ||||||
Total minimum lease payments receivable | $ 645,441,000 | $ 648,632,000 | ||||
Estimated unguaranteed residual value of leased assets | 215,207,000 | 211,944,000 | ||||
Less deferred income | (620,845,000) | [1] | (626,487,000) | [1] | ||
Investment in a direct financing lease, net | 239,803,000 | 234,089,000 | ||||
Capital Leases, Net Investment in Direct Financing Leases, Initial Direct Costs | $ 1,700,000 | $ 1,700,000 | ||||
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Subsequent Events (Notes)
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6 Months Ended |
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Jun. 30, 2013
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Subsequent Event [Line Items] | |
Subsequent Events [Text Block] | Subsequent Events Subsequent to June 30, 2013, the Company amended and restated both its $400.0 million unsecured revolving credit facility as well as its $255.0 million unsecured term loan facility. The amendments to the unsecured revolving credit facility (i) increase the initial amount from $400.0 million to $440.0 million and increase the accordion from $100.0 million to $160.0 million, (ii) extend the maturity date from October 13, 2015, to July 23, 2017 (with the Company having the same right as before to extend the loan for one additional year), (iii) lower the interest rate and facility fee pricing based on a grid related to the Company's senior unsecured credit ratings which was LIBOR plus 1.40% and 0.30%, respectively, at closing, (iv) revise certain definitions to broaden the types of properties eligible for consideration in the borrowing base, (v) increase borrowing base availability by increasing the values assigned to the Company's properties and (vi) add four new subsidiary borrowers. The amendments to the unsecured term loan facility (i) increase the initial amount from $255.0 million to $265.0 million and increase the accordion such that the maximum amount available under the facility goes from $350.0 million to $400.0 million, (ii) extend the maturity date from January 5, 2017, to July 23, 2018, (iii) lower the interest rate in all but the lowest rating agencies' ratings categories which was LIBOR plus 1.60% at closing and (iv) add four new subsidiary borrowers. |
Consolidated Statement Of Changes In Equity (USD $)
In Thousands, except Share data, unless otherwise specified |
Total
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Common Stock [Member]
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Preferred Stock [Member]
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Additional paid-in capital [Member]
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Treasury shares [Member]
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Accumulated other comprehensive income (loss) [Member]
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Distributions in excess of net income [Member]
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Noncontrolling Interests [Member]
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Balance at Dec. 31, 2012 | $ 1,459,898 | $ 484 | $ 139 | $ 1,769,227 | $ (55,308) | $ 20,622 | $ (275,643) | $ 377 |
Balance (in shares) at Dec. 31, 2012 | 48,454,181 | 13,850,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Other Changes During Period Shares | 16,038 | |||||||
Stockholders' Equity, Other | 952 | |||||||
Issuance of nonvested shares, net | 196,928 | |||||||
Issuance of nonvested shares, net | (835) | 2 | 2,588 | (3,425) | ||||
Amortization of nonvested shares | 2,406 | 2,406 | ||||||
Share option expense | 438 | 438 | ||||||
Foreign currency translation adjustment | (10,687) | (10,687) | ||||||
Change in unrealized gain/loss on derivatives | 10,457 | 10,457 | ||||||
Net income | 73,682 | 73,682 | ||||||
Issuances of common shares (in shares) | 100,912 | |||||||
Issuances of common shares | 5,252 | 1 | 5,251 | |||||
Stock option exercises, net (in shares) | 102,697 | 102,697 | ||||||
Stock option exercises, net | (662) | (1) | (2,773) | (3,436) | ||||
Dividends to common and preferred shareholders | (86,264) | (86,264) | ||||||
Balance at Jun. 30, 2013 | $ 1,454,637 | $ 488 | $ 139 | $ 1,783,635 | $ (62,169) | $ 20,392 | $ (288,225) | $ 377 |
Balance (in shares) at Jun. 30, 2013 | 48,870,756 | 13,850,000 |
Organization
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6 Months Ended |
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Jun. 30, 2013
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Organization [Abstract] | |
Organization | Organization Description of Business EPR Properties (the Company) is a specialty real estate investment trust (REIT) organized on August 29, 1997 in Maryland. Effective November 12, 2012, the Company updated its name from Entertainment Properties Trust to EPR Properties. The Company develops, owns, leases and finances properties in select market segments primarily related to entertainment, education and recreation. The Company’s properties are located in the United States and Canada. |
Investments and Dispositions
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6 Months Ended |
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Jun. 30, 2013
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Investments And Dispositions [Abstract] | |
Investments and Dispositions | Investments and Dispositions The Company's investment spending during the six months ended June 30, 2013 totaled approximately $122.7 million, and included investments in each of its four operating segments. Entertainment investment spending during the six months ended June 30, 2013 totaled $34.6 million, and was related primarily to investments in build-to-suit construction of six megaplex theatres and two family entertainment centers that are subject to long-term triple net leases or long-term mortgage agreements. Education investment spending during the six months ended June 30, 2013 totaled $60.5 million, and was related to investments in build-to-suit construction of 13 public charter schools and one early childhood education center, as well as the acquisition of an early childhood education center located in Peoria, Arizona, each of which is subject to a long-term triple net lease or long-term mortgage agreement. In addition, the Company completed the acquisition of a public charter school in Columbia, South Carolina for $3.3 million that is leased under the master lease to Imagine Schools, Inc. (Imagine). See Note 6 for further details on this acquisition. Recreation investment spending during the six months ended June 30, 2013 totaled $24.8 million, and was related to fundings under the Company's mortgage notes for improvements at existing ski and water-park properties. In addition, the Company's recreation investment spending related to build-to-suit construction of four TopGolf golf entertainment facilities, as well as funding improvements at the Company's ski property located in Maryland. Other investment spending during the six months ended June 30, 2013 totaled $2.8 million and was related to the land held for development in Sullivan County, New York. On March 18, 2013, the Company sold a winery and a portion of related vineyards located in Sonoma County, California for proceeds of $24.1 million and recognized a gain of $0.6 million during the six months ended June 30, 2013. The results of operations of this property have been classified within discontinued operations. Additionally, during the six months ended June 30, 2013, the Company extended the maturity of its mortgage loan agreement with Peak Resorts, Inc. from April 1, 2013 to April 1, 2016. The loan is secured by 696 acres of development land at Mt. Snow. |
Summary of Significant Accounting Policies
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6 Months Ended |
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Jun. 30, 2013
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Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. In addition, operating results for the six month period ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. The Company consolidates certain entities when it is deemed to be the primary beneficiary in a variable interest entity (VIE), as defined in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic on Consolidation. The Topic on Consolidation requires the consolidation of VIEs in which an enterprise has a controlling financial interest. A controlling financial interest will have both of the following characteristics: the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. This topic requires an ongoing reassessment of and eliminates the quantitative approach previously required for determining whether a company is the primary beneficiary and requires enhanced disclosures on variable interest entities. The equity method of accounting is applied to entities in which the Company is not the primary beneficiary as defined in the Consolidation Topic of the FASB ASC, or does not have effective control, but can exercise influence over the entity with respect to its operations and major decisions. The Company reports its noncontrolling interests as required by the Consolidation Topic of the FASB ASC. Noncontrolling interest is the portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. The ownership interests in the subsidiary that are held by owners other than the parent are noncontrolling interests. Such noncontrolling interests are reported on the consolidated balance sheets within equity, separately from the Company's equity. On the consolidated statements of income, revenues, expenses and net income or loss from less-than-wholly-owned subsidiaries are reported at the consolidated amounts, including both the amounts attributable to the Company and noncontrolling interests. Consolidated statements of changes in shareholders' equity are included for both quarterly and annual financial statements, including beginning balances, activity for the period and ending balances for equity, noncontrolling interests and total equity. The Company does not have any redeemable noncontrolling interests under the scope of the Distinguishing Liabilities from Equity guidance of the FASB ASC. The consolidated balance sheet as of December 31, 2012 has been derived from the audited consolidated balance sheet at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Comission (SEC) on February 27, 2013. Operating Segments For financial reporting purposes, the Company groups its investments into four reportable operating segments: entertainment, education, recreation and other. See Note 16 for financial information related to these operating segments. Rental Properties Rental properties are carried at cost less accumulated depreciation. Costs incurred for the acquisition and development of the properties are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which generally are estimated to be 40 years for buildings and 3 to 25 years for furniture, fixtures and equipment. Tenant improvements, including allowances, are depreciated over the shorter of the base term of the lease or the estimated useful life. Expenditures for ordinary maintenance and repairs are charged to operations in the period incurred. Significant renovations and improvements that improve or extend the useful life of the asset are capitalized and depreciated over their estimated useful life. Management reviews a property for impairment whenever events or changes in circumstances indicate that the carrying value of a property may not be recoverable. The review of recoverability is based on an estimate of undiscounted future cash flows expected to result from its use and eventual disposition. If impairment exists due to the inability to recover the carrying value of the property, an impairment loss is recorded to the extent that the carrying value of the property exceeds its estimated fair value. The Company evaluates the held-for-sale classification of its real estate as of the end of each quarter. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value less costs to sell. Assets are generally classified as held for sale once management has initiated an active program to market them for sale and has received a firm purchase commitment that is expected to close within one year. The results of operations of these real estate properties are reflected as discontinued operations in all periods reported. On occasion, the Company will receive unsolicited offers from third parties to buy individual Company properties. Under these circumstances, the Company will classify the properties as held for sale when a sales contract is executed with no contingencies and the prospective buyer has funds at risk to ensure performance. Allowance for Doubtful Accounts The Company makes quarterly estimates of the collectability of its accounts receivable related to base rents, tenant escalations (straight-line rents), reimbursements and other revenue or income. The Company specifically analyzes trends in accounts receivable, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of its allowance for doubtful accounts. When evaluating customer creditworthiness, management reviews the periodic financial statements for significant tenants and specifically evaluates the strength and material changes in net operating income, coverage ratios, leverage and other factors to assess the tenant's credit quality. In addition, when customers are in bankruptcy, the Company makes estimates of the expected recovery of pre-petition administrative and damage claims. These estimates have a direct impact on the Company's net income. Revenue Recognition Rents that are fixed and determinable are recognized on a straight-line basis over the minimum terms of the leases. Base rent escalation on leases that are dependent upon increases in the Consumer Price Index (CPI) is recognized when known. In addition, most of the Company's tenants are subject to additional rents if gross revenues of the properties exceed certain thresholds defined in the lease agreements (percentage rents). Percentage rents as well as participating interest for those mortgage agreements that contain similar such clauses are recognized at the time when specific triggering events occur as provided by the lease or mortgage agreements. Rental revenue included percentage rents of $1.1 million and $0.6 million for the six months ended June 30, 2013 and 2012, respectively. Lease termination fees are recognized when the related leases are canceled and the Company has no obligation to provide services to such former tenants. Termination fees of $8 thousand and $99 thousand were recognized during the six months ended June 30, 2013 and 2012, respectively. Direct financing lease income is recognized on the effective interest method to produce a level yield on funds not yet recovered. Estimated unguaranteed residual values at the date of lease inception represent management's initial estimates of fair value of the leased assets at the expiration of the lease, not to exceed original cost. Significant assumptions used in estimating residual values include estimated net cash flows over the remaining lease term and expected future real estate values. The Company evaluates on an annual basis (or more frequently, if necessary) the collectability of its direct financing lease receivable and unguaranteed residual value to determine whether they are impaired. A direct financing lease receivable is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms. When a direct financing lease receivable is considered to be impaired, the amount of loss is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the direct financing lease receivable's effective interest rate or to the fair value of the underlying collateral, less costs to sell, if such receivable is collateralized. Mortgage Notes and Other Notes Receivable Mortgage notes and other notes receivable, including related accrued interest receivable, consist of loans originated by the Company and the related accrued and unpaid interest income as of the balance sheet date. Mortgage notes and other notes receivable are initially recorded at the amount advanced to the borrower and the Company defers certain loan origination and commitment fees, net of certain origination costs, and amortizes them over the term of the related loan. Interest income on performing loans is accrued as earned. The Company evaluates the collectability of both interest and principal of each of its loans to determine whether it is impaired. A loan is considered to be impaired when, based on current information and events, the Company determines that it is probable that it will be unable to collect all amounts due according to the existing contractual terms. An insignificant delay or shortfall in amounts of payments does not necessarily result in the loan being identified as impaired. When a loan is considered to be impaired, the amount of loss, if any, is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the loan’s effective interest rate or to the fair value of the Company’s interest in the underlying collateral, less costs to sell, if the loan is collateral dependent. For impaired loans, interest income is recognized on a cash basis, unless the Company determines based on the loan to estimated fair value ratio the loan should be on the cost recovery method, and any cash payments received would then be reflected as a reduction of principal. Interest income recognition is recommenced if and when the impaired loan becomes contractually current and performance is demonstrated to be resumed. Concentrations of Risk American Multi-Cinema, Inc. (AMC) was the lessee of a substantial portion (31%) of the megaplex theatre rental properties held by the Company (including joint venture properties) at June 30, 2013 as a result of a series of sale leaseback transactions pertaining to AMC megaplex theatres. A substantial portion of the Company’s total revenues (approximately $42.7 million or 26% and $51.4 million or 33%, for the six months ended June 30, 2013 and 2012, respectively) result from the revenue from AMC under the leases, or from its parent, AMC Entertainment, Inc. (AMCE), as the guarantor of AMC’s obligations under the leases. AMCE is wholly-owned by Dalian Wanda Group Co. Ltd. and has publicly-held debt and the following financial information was reported in its consolidated financial information which is publicly available. AMCE publicly reported total assets of $4.3 billion and $3.6 billion and total stockholders' equity of $774.1 million and $154.3 million at December 31, 2012 and March 29, 2012, respectively. Additionally, AMCE publicly reported total liabilities of $3.5 billion at both December 31, 2012 and March 29, 2012. AMCE publicly reported net earnings of $57.3 million for the transition period beginning on March 30, 2012 and ending December 31, 2012, a net loss of $82.0 million for the fifty-two weeks ended March 29, 2012 and a net loss of $122.9 million for the fifty-two weeks ended March 31, 2011. In addition, AMCE reported a net loss of $7.5 million for the three months ended March 31, 2013. For the six months ended June 30, 2013 and 2012, approximately $21.2 million or 12.7%, and $21.4 million or 14%, respectively, of total revenue was derived from the Company's four entertainment retail centers in Ontario, Canada. The Company's wholly owned subsidiaries that hold the four Canadian entertainment retail centers represent approximately $224.8 million or 16% of the Company's net assets at June 30, 2013. The third party debt held by these subsidiaries was repaid during the three months ended June 30, 2013. See Note 8 for further details. The Company's wholly owned subsidiaries that hold the four Canadian entertainment retail centers and third party debt represented approximately $147.3 million or 10%, of the Company's net assets as of December 31, 2012. Share-Based Compensation Share-based compensation to employees of the Company is granted pursuant to the Company's Annual Incentive Program and Long-Term Incentive Plan. Share-based compensation to non-employee Trustees of the Company is granted pursuant to the Company's Trustee compensation program and shares are issued under the 2007 Equity Incentive Plan. Share based compensation expense consists of share option expense, amortization of nonvested share grants, and amortization of share units issued to non-employee Trustees for payment of their annual retainers. Share based compensation is included in general and administrative expense in the accompanying consolidated statements of income, and totaled $3.2 million and $3.0 million for the six months ended June 30, 2013 and 2012, respectively. Share Options Share options are granted to employees pursuant to the Long-Term Incentive Plan and to non-employee Trustees for their service to the Company. The fair value of share options granted is estimated at the date of grant using the Black-Scholes option pricing model. Share options granted to employees vest over a period of four years and share option expense for these options is recognized on a straight-line basis over the vesting period. Share options granted to non-employee Trustees vest immediately but may not be exercised for a period of one year from the grant date. Share option expense for non-employee Trustees is recognized on a straight-line basis over the year of service by the non-employee Trustees. Total expense recognized related to share options was $438 thousand and $481 thousand for the six months ended June 30, 2013 and 2012, respectively. Nonvested Shares Issued to Employees The Company grants nonvested shares to employees pursuant to both the Annual Incentive Program and the Long-Term Incentive Plan. The Company amortizes the expense related to the nonvested shares awarded to employees under the Long-Term Incentive Plan and the premium awarded under the nonvested share alternative of the Annual Incentive Program on a straight-line basis over the future vesting period (three to four years). Total expense recognized related to all nonvested shares was $2.4 million and $2.3 million for the six months ended June 30, 2013 and 2012, respectively. Restricted Share Units Issued to Non-Employee Trustees The Company issues restricted share units to non-employee Trustees for payment of their annual retainers. The fair value of the share units granted was based on the share price at the date of grant. The share units vest upon the earlier of the day preceding the next annual meeting of shareholders or a change of control. The settlement date for the shares is selected by the non-employee Trustee, and ranges from one year from the grant date to upon termination of service. This expense is amortized by the Company on a straight-line basis over the year of service by the non-employee Trustees. Total expense recognized related to shares issued to non-employee Trustees was $321 thousand, and $250 thousand for the six months ended June 30, 2013 and 2012, respectively. Derivative Instruments The Company has acquired certain derivative instruments to reduce exposure to fluctuations in foreign currency exchange rates and variable interest rates. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. These derivatives consist of foreign currency forward contracts, cross-currency swaps and interest rate swaps. The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. In conjunction with the FASB's fair value measurement guidance in FASB ASU 2011-04 (Amendments to ASC 820), the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. Reclassifications Certain reclassifications have been made to the prior period amounts to conform to the current period presentation primarily for asset groups that qualify for presentation as discontinued operations. |
Accounts Receivable, Net (Schedule Of Accounts Receivable) (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Straight-line rent receivable | $ 32,202 | $ 30,891 |
Allowance for doubtful accounts | (3,973) | (3,852) |
Total | 39,354 | 38,738 |
Tenants [Member]
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Carrying amounts of accounts receivable | 9,623 | 9,379 |
Non-Tenants [Member]
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Carrying amounts of accounts receivable | 138 | 1,527 |
Canada Revenue Agency [Member]
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Carrying amounts of accounts receivable | $ 1,364 | $ 793 |
Accounts Receivable, Net (Tables)
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Accounts Receivable, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Accounts Receivable | The following table summarizes the carrying amounts of accounts receivable, net as of June 30, 2013 and December 31, 2012 (in thousands):
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Fair Value Disclosures (Tables)
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Measured At Fair Value On A Recurring Basis | The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012 aggregated by the level in the fair value hierarchy within which those measurements are classified and by derivative type.
*Included in "Other assets" in the accompanying consolidated balance sheet. **Included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheet. |
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Assets And Liabilities Measured At Fair Value On A Non-Recurring Basis | assets or liabilities measured at fair value on a non-recurring basis during the six months ended June 30, 2013. |
Condensed Consolidating Financial Statements (Tables)
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Condensed Consolidating Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Balance Sheet |
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Condensed Consolidating Statement Of Income |
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Condensed Consolidating Statement Of Cash Flows |
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