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Summary of Significant Accounting Policies (Policy)

12 Months Ended

Dec. 31, 2022

Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of EPR Properties and its subsidiaries, all of which are wholly owned.

Risks and Uncertainties

The Company continues to be subject to risks and uncertainties resulting from the COVID-19 pandemic. During 2021 and 2020, the COVID-19 pandemic severely impacted experiential real estate properties because such properties involve congregate social activity and discretionary spending. During 2022, the Company's non-theatre properties demonstrated strong recovery from the impacts of the pandemic. However, the Company's theatre customers were more severely impacted by the COVID-19 pandemic and have seen a slower recovery than its non-theatre customers due primarily to changes in the timing of film releases, production delays and experimentation with streaming. Additionally, one of the Company's largest theatre customers declared bankruptcy during September of 2022. The COVID-19 pandemic has negatively affected the Company's business, and could continue to have material adverse effects on its financial condition, results of operations and cash flows. The Company considered the impact of, and recovery from, the COVID-19 pandemic on the assumptions and estimates used in determining the Company’s financial condition and results of operations for the years ended December 31, 2022, 2021 and 2020.

The following summarizes the impacts to the Company's financial statements during the year ended December 31, 2022 arising out of or related to the COVID-19 pandemic:

•The Company continued to recognize revenue on a cash basis for certain tenants, including American-Multi Cinema, Inc. (AMC) and Regal Cinemas (Regal), a subsidiary of Cineworld Group. On September 7, 2022, Cineworld Group filed for Chapter 11 bankruptcy protection. The Company did not receive Regal's rent or monthly deferral payment for September 2022 but Regal subsequently paid portions of this amount pursuant to an order of the bankruptcy court. Regal resumed payment of rent and deferral payments for all Regal Leases commencing in October 2022 and has continued making those payments to the Company through February 2023.

The Company is currently in negotiations with Regal regarding the properties Regal will continue to operate and the terms and conditions of leases for those properties. Regal is entitled to certain rights under the U.S. Bankruptcy Code (the Code) regarding the assumption or rejection of the Regal Leases. There can be no assurance that these negotiations will be successful and which Regal Leases, if any, will be assumed under the Code. In December of 2022, Regal filed a motion to reject leases for three of the Company's properties, but subsequently elected not to proceed with these rejections as of February 22, 2023.

At December 31, 2022, Regal owed the Company approximately $87.3 million pursuant to a Promissory Note for rent deferred during the COVID-19 pandemic and approximately $6.5 million for September 2022 rent, of which $1.4 million represents pre-petition rent and $5.1 million represents post-petition rent under the Code. Because revenue derived from Regal is recognized on a cash-basis by the Company, none of the receivables from Regal are reflected as assets in the Company's financial statements. Substantially all of the Company's claims under the Promissory Note are unsecured and subject to the provisions of the Code, including those provisions regarding assumption and rejection of leases. Regal has substantial secured debt,

which is senior to the Promissory Note, as well as other unsecured debt. As a result, there can be no assurance how much of the amount, if any, we will recover under the Promissory Note.

•As of December 31, 2022, the Company has deferred amounts due from tenants of approximately $2.1 million that are booked as receivables. Additionally, as of December 31, 2022, the Company has amounts due from customers that were not booked as receivables because the full amounts were not deemed probable of collection as a result of the COVID-19 pandemic. The amounts not booked as receivables remain obligations of the customers and will be recognized as revenue when received. During the year ended December 31, 2022, the Company collected $17.1 million in deferred rent and $0.6 million of deferred interest from cash basis customers and from customers for which the deferred payments were not previously recognized as revenue. In addition, during the year ended December 31, 2022, the Company collected $23.8 million of deferred rent and $0.4 million of deferred interest from accrual basis customers that reduced related accounts and interest receivable. The repayment terms for all of these deferments vary by customer.

Variable Interest Entities

The Company consolidates certain entities when it is deemed to be the primary beneficiary in a variable interest entity (VIE) in which it has a controlling financial interest in accordance with the consolidation guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The equity method of accounting is applied to entities in which the Company is not the primary beneficiary as defined in the FASB ASC Topic on Consolidation (Topic 810), but can exercise significant influence over the entity with respect to its operations and major decisions.

The Company’s variable interest in VIEs currently are in the form of equity ownership and loans provided by the Company to a VIE or other partner. The Company examines specific criteria and uses its judgment when determining if the Company is the primary beneficiary of a VIE. The primary beneficiary generally is defined as the party with the controlling financial interest. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. As of December 31, 2022 and 2021, the Company does not have any investments in consolidated VIEs.

Use of Estimates

Management of the Company has made estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP). Actual results could differ from those estimates.

Real Estate Investments

Real estate investments are carried at initial recorded value less accumulated depreciation. Costs incurred for the acquisition and development of the properties are capitalized. In addition, the Company capitalizes certain costs that relate to property under development including interest and a portion of internal legal personnel costs. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which generally are estimated to be 30 years to 40 years for buildings, three years to 25 years for furniture, fixtures and equipment and 10 years to 20 years for site improvements. Tenant improvements, including allowances, are depreciated over the shorter of the lease term or the estimated useful life and leasehold interests are depreciated over the useful life of the underlying ground lease.

Management reviews the Company's real estate investments, including operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying value of a property may not be recoverable, which 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 it

is probable the assets will be sold within one year. On occasion, the Company will receive unsolicited offers from third parties to buy individual Company properties. Under these circumstances, the Company will classify the properties as held for sale when a sales contract is executed with no contingencies and the prospective buyer has funds at risk to ensure performance.

Real Estate Acquisitions

Upon acquisition of real estate properties, the Company evaluates the acquisition to determine if it is a business combination or an asset acquisition. If the acquisition is determined to be an asset acquisition, the Company records the purchase price and other related costs incurred to the acquired tangible assets and identified intangible assets and liabilities on a relative fair value basis. In addition, costs incurred for asset acquisitions including transaction costs, are capitalized.

If the acquisition is determined to be a business combination, the Company records the fair value of acquired tangible assets and identified intangible assets and liabilities as well as any noncontrolling interest. Acquisition-related costs in connection with business combinations are expensed as incurred and included in "Transaction costs" in the accompanying consolidated statements of income (loss) and comprehensive income (loss).

In addition to acquisition-related costs in connection with business combinations, transaction costs include costs associated with terminated transactions, pre-opening costs and certain leasing and tenant transition costs. Transaction costs expensed totaled $4.5 million, $3.4 million and $5.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.

For real estate acquisitions (asset acquisitions or business combinations), the fair value (or relative fair value in an asset acquisition) of the tangible assets is determined by valuing the property using recent independent appraisals or methods similar to those used by independent appraisers. Land is valued using the sales comparison approach which uses available market data from recent comparable land sales as an input to estimate the fair value. Site improvements and tenant improvements are valued using the cost approach which uses replacement cost data obtained from industry recognized guides less depreciation as an input to estimate the fair value. The building is valued either using the cost approach described above or a combination of the cost and the income approach. The income approach uses market leasing assumptions to estimate the fair value of the property as if vacant. The cost and income approaches are reconciled to arrive at an estimated building fair value.

Intangibles

The fair value of acquired in-place leases also includes management’s estimate, on a lease-by-lease basis, of the present value of the following amounts: (i) the value associated with avoiding the cost of originating the acquired in-place leases (i.e. the market cost to execute the leases, including leasing commissions, legal and other related costs); (ii) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed re-leasing period, (i.e. real estate taxes, insurance and other operating expenses); (iii) the value associated with lost rental revenue from existing leases during the assumed re-leasing period; and (iv) the value associated with avoided tenant improvement costs or other inducements to secure a tenant lease. These values are amortized over the lease term of the respective leases.

In determining the fair value of acquired above and below-market leases, the Company considers many factors. On a lease-by-lease basis, management considers the present value of the difference between the contractual amounts to be paid pursuant to the leases and management’s estimate of fair market lease rates. For above-market leases and below-market leases, management considers such differences over the lease terms. The capitalized above-market lease values are amortized as a reduction of rental income over the lease terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the lease terms of the respective leases. The lease term includes the minimum base term plus any extension options that are reasonably certain to be exercised. Management considers several factors in determining the discount rate used in the present value calculations, including the credit risks associated with the respective tenants.

If debt is assumed in the acquisition, the determination of whether it is above or below-market is based upon a comparison of similar financing terms for similar real estate investments at the time of the acquisition.

In determining the fair value of tradenames, the Company historically uses the relief from royalty method, which estimates the fair value of hypothetical royalty income that could be generated if the intangible asset was licensed from an independent third-party.

In determining the fair value of a contract intangible, the Company considers the present value of the difference between the estimated "with" and "without" scenarios. The "with" scenario presents the contract in place and the "without" scenario incorporates the potential profits that may be lost over the period without the contract in place. The capitalized contract value is amortized over the estimated useful life of the underlying asset.

The excess of the cost of an acquired business (in a business combination) over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

Management of the Company reviews the carrying value of intangible assets for impairment on an annual basis.

Intangible assets and liabilities (included in "Other assets" and "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets) consist of the following at December 31 (in thousands):


	2022		2021
Assets:
In-place leases, net of accumulated amortization of $20.0 million and $17.2 million, respectively	$	17,769	$	18,401
Above-market lease, net of accumulated amortization of $1.3 million and $1.2 million, respectively	257		303
Tradenames, net of accumulated amortization of $583 thousand and $450 thousand, respectively (1)	8,580		8,713
Contract value, net of accumulated amortization of $1.6 million and $1.3 million, respectively	9,323		9,689
Goodwill	693		693
Total intangible assets, net	$	36,622	$	37,799

Liabilities:
Below-market lease, net of accumulated amortization of $2.4 million and $2.0 million, respectively	$	7,741	$	7,941

(1) At December 31, 2022 and 2021, $5.4 million in tradenames had indefinite lives and were not amortized.

Aggregate intangible amortization included in expense was $3.3 million, $3.8 million and $5.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. The net amount amortized as an increase to rental revenue for capitalized above and below-market lease intangibles was $0.4 million for both the years ended December 31, 2022 and 2021 and $0.5 million for the year ended December 31, 2020.

Future amortization of in-place leases, net, above-market lease, net, tradenames, net, contract value, net and below-market lease, net at December 31, 2022 is as follows (in thousands):


	In place leases		Tradenames (1)		Contract Value		Above-market lease		Below-market lease
Year:
2023	$	2,686	$	133	$	365	$	46	$	(431)
2024	2,008		133		365		46		(413)
2025	1,900		133		365		46		(404)
2026	1,774		133		365		46		(319)
2027	1,642		133		365		46		(255)
Thereafter	7,759		2,559		7,498		27		(5,919)
Total	$	17,769	$	3,224	$	9,323	$	257	$	(7,741)

Weighted average amortization period (years)	11.1		25.3		25.5		5.5		29.0

(1) Excludes $5.4 million in tradenames with indefinite lives.

Deferred Financing Costs

Deferred financing costs are amortized over the terms of the related debt obligations or mortgage note receivable as applicable. Deferred financing costs of $31.1 million and $36.9 million as of December 31, 2022 and 2021, respectively, are shown as a reduction of debt. The deferred financing costs of $6.4 million and $8.7 million as of December 31, 2022 and 2021, respectively, related to the unsecured revolving credit facility are included in "Other assets" in the accompanying consolidated balance sheets.

Reportable Segments

The Company has two reportable operating segments: Experiential and Education. The Experiential segment includes the following property types: theatres, eat & play (including seven theatres located in entertainment districts), attractions, ski, experiential lodging, gaming, cultural and fitness & wellness. The Education segment includes the following property types: early childhood education centers and private schools. See Note 17 for financial information related to these reportable segments.

Rental Revenue

The Company leases real estate to its tenants under leases classified as operating leases. The Company's leases generally provide for rent escalations throughout the lease terms. Rents that are fixed are recognized on a straight-line basis over the lease term. Base rent escalations that include a variable component are recognized upon the occurrence of the specified event as defined in the Company's lease agreements. Many of the Company's leasing arrangements include options to extend the lease, which are not included in the minimum lease terms unless it is reasonably certain to be exercised. Straight-line rental revenue is subject to an evaluation for collectibility, and the Company records a direct write-off against rental revenue if collectibility of these future rents is not probable. For both years ended December 31, 2022 and 2021, the Company recognized straight-line write-offs of $0.2 million. Straight-line rental revenue, net of write-offs, was $7.0 million and $5.7 million, respectively, for the years ended December 31, 2022 and 2021. For the year ended December 31, 2020, the Company recognized straight-line write-offs totaling $38.0 million, which were comprised of $26.5 million of straight-line accounts receivable and $11.5 million of sub-lessor ground lease straight-line accounts receivable. Straight-line rental revenue, net of write-offs, was a reduction to total rental revenue of $24.5 million for the year ended December 31, 2020.

The Company has agreed to defer rent for a substantial portion of its customers in response to the impact of the COVID-19 pandemic on their operations. On April 10, 2020, the FASB issued a Staff Q&A on Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic. In reliance upon the FASB Staff Q&A, the Company has not treated qualifying deferrals or rent concessions during the years ended December 31, 2021 and 2020 (the periods affected by the COVID-19 pandemic) as lease modifications. While deferments for this and future periods delay rent payments, these deferments generally do not release customers from the obligation to pay the deferred amounts in the future. Deferred rent amounts are reflected in the Company's financial statements as accounts receivable if collection is determined to be probable or recognized when received as

variable lease payments if collection is determined to not be probable. Certain agreements with tenants where remaining lease terms are extended, or other changes are made that do not qualify for the treatment in the FASB Staff Q&A, are treated as lease modifications. In these circumstances, upon an executed lease modification, if the tenant is not being recognized on a cash basis, the contractual rent reflected in accounts receivable and straight-line rent receivable will be amortized over the remaining term of the lease against rental revenue. In limited cases, customers may be entitled to the abatement of rent during governmentally imposed prohibitions on business operations which is recognized in the period to which the abatement relates, or the Company may provide rent concessions to tenants. In cases where the Company provides concessions to tenants to which they are not otherwise entitled, those amounts will be recognized in the period in which the concession is granted unless the changes are accounted for as lease modifications.

Most of the Company’s lease contracts are triple-net leases, which require the tenants to make payments directly to third parties for lessor costs (such as property taxes and insurance) associated with the properties. In accordance with Topic 842, the Company does not include these lessee payments to third parties in rental revenue or property operating expenses. In certain situations, the Company pays these lessor costs directly to third parties and the tenants reimburse the Company. In accordance with Topic 842, these payments are presented on a gross basis in rental revenue and property operating expense. During the years ended December 31, 2022, 2021 and 2020, the Company recognized $2.6 million, $3.5 million and $2.2 million, respectively, in tenant reimbursements related to the gross-up of these reimbursed expenses which are included in rental revenue.

Certain of the Company's leases, particularly at its entertainment districts, require the tenants to make payments to the Company for property related expenses such as common area maintenance. The Company has elected to combine these non-lease components with the lease components in rental revenue. For the years ended December 31, 2022, 2021 and 2020, the amounts due for non-lease components included in rental revenue totaled $17.2 million, $15.2 million and $12.9 million, respectively.

In addition, most of the Company's tenants are subject to additional rents (above base rents) if gross revenues of the properties exceed certain thresholds defined in the lease agreements (percentage rents). Percentage rents are recognized at the time when specific triggering events occur as provided by the lease agreement. Rental revenue included percentage rents of $10.5 million, $14.0 million and $8.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. Furthermore, due to the impact of the COVID-19 pandemic, certain of the Company's tenants paid a portion of base rent in 2022, 2021 and 2020 based on a percentage of gross revenue. This variable rent totaled $0.4 million, $16.2 million and $5.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The Company regularly evaluates the collectibility of its receivables on a lease-by-lease basis. The evaluation primarily consists of reviewing past due account balances and considering such factors as the credit quality of the Company's tenants, historical trends of the tenant, current economic conditions and changes in customer payment terms. When the collectibility of lease receivables or future lease payments are no longer probable, the Company records a direct write-off of the receivable to rental revenue and recognizes future rental revenue on a cash basis.

Property Sales

The Company evaluates each sale or disposal transaction to determine if it meets the criteria to qualify as discontinued operations. A discontinued operation is a component of an entity or group of components that have been disposed of or are classified as held for sale and represent a strategic shift that has or will have a major effect on the Company's operations and financial results. If the sale or disposal transaction does not meet the criteria, the operations and related gain or loss on sale is included in income from continuing operations.

Mortgage Notes and Other Notes Receivable

Mortgage notes and other notes receivable, including related accrued interest receivable, consist of loans originated by the Company and the related accrued and unpaid interest income as of the balance sheet date. Mortgage notes and other notes receivable are initially recorded at the amount advanced to the borrower less allowance for credit loss. Interest income is recognized using the effective interest method over the estimated life of the note. Interest income includes both the stated interest and the amortization or accretion of premiums or discounts (if any).

In accordance with ASC Topic 326, Measurement of Credit Losses on Financial Instruments, the Company records allowance for credit loss to reflect that all mortgage notes and notes receivable have some inherent risk of loss regardless of credit quality, collateral, or other mitigating factors. While Topic 326 does not require any particular method for determining the reserves, it does specify that it should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions, as well as reasonable and supportable forecasts for the term of each mortgage note or note receivable. The Company uses a forward-looking commercial real estate forecasting tool to estimate its current expected credit losses (CECL) for each of its mortgage notes and notes receivable on a loan-by-loan basis. The CECL allowance required by Topic 326 is a valuation account that is deducted from the related mortgage note or note receivable.

Certain of the Company’s mortgage notes and notes receivable include commitments to fund incremental amounts to its borrowers. These future funding commitments are also subject to the CECL model. The allowance related to future funding is recorded as a liability and is included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets.

As permitted under Topic 326, the Company made an accounting policy election to not measure an allowance for credit losses for accrued interest receivables related to its mortgage notes and notes receivable. Accordingly, if accrued interest receivable is deemed to be uncollectible, the Company will record any necessary write-offs as a reversal of interest income. During the year ended December 31, 2022, the Company wrote-off approximately $1.5 million of accrued interest and fees receivable against interest income related to one mortgage note receivable and two notes receivable. During the year ended December 31, 2020, the Company wrote-off approximately $0.3 million of accrued interest against interest income related to one note receivable. No such amounts were written-off for the year ended December 31, 2021. As of December 31, 2022, the Company believes that all outstanding accrued interest is collectible.

In the event the Company has a past due mortgage note or note receivable and the Company determines it is collateral dependent, the Company measures expected credit losses based on the fair value of the collateral. As of December 31, 2022, the Company does not have any mortgage notes or notes receivable with past due principal balances. See Note 6 for further discussion of mortgage notes and notes receivable for which the Company elected to apply the collateral dependent practical expedient.

Mortgage and Other Financing Income

Certain of the Company's borrowers are subject to additional interest based on certain thresholds defined in the mortgage agreements (participating interest). Participating interest income is recognized at the time when specific triggering events occur as provided by the mortgage agreement. There was no participating interest income for the years ended December 31, 2022, 2021 and 2020.

Income Taxes

The Company has elected to be taxed as a REIT pursuant to Section 856(c) of the Internal Revenue Code. A REIT that distributes at least 90% of its taxable income to its shareholders each year and which meets certain other conditions is not taxed on that portion of its taxable income which is distributed to its shareholders. The Company intends to continue to qualify as a REIT and distribute substantially all of its taxable income to its shareholders.

The Company is subject to income tax in certain instances in both the U.S. and in certain foreign jurisdictions, as more fully described herein. The Company’s income tax expense includes deferred income tax expense or benefit, which represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as

measured by the enacted tax rates that will be in effect when these differences reverse. The Company evaluates the realizability of its deferred income tax assets and assesses the need for a valuation allowance for each jurisdiction for which it is subject to income tax. The realization of the deferred tax assets depends upon all positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets.

The Company owns certain real estate assets which are subject to income tax in Canada. At December 31, 2022, the net deferred tax assets related to the Company's Canadian operations totaled $23.0 million resulting from the temporary differences between income for financial reporting purposes and taxable income relating primarily to depreciation, capital improvements and straight-line rents. At December 31, 2022, it is more likely than not the Company will not generate sufficient taxable income to realize the net deferred tax assets related to the Company's Canadian operations as of December 31, 2022 totaling $22.8 million.

The Company has certain taxable REIT subsidiaries (TRSs), as permitted under the Internal Revenue Code, through which it conducts certain business activities and are subject to federal and state income taxes on their net taxable income. The Company uses three such TRS entities exclusively to hold the operational aspect of the traditional REIT lodging structure for four Experiential lodging properties that are facilitated by management agreements with eligible independent contractors. The real estate for these investments are held by the REIT either directly or through an investment in a joint venture and leased to the respective operations entity under a triple-net lease. Management has determined which of the real estate assets meets the requirements to be classified as qualified lodging facilities as required in a traditional REIT lodging structure and recognizes revenue on these structures accordingly for REIT testing purposes.

At December 31, 2022, the net deferred tax assets related to the Company's TRSs totaled $9.8 million resulting from the temporary differences between income for financial reporting purposes and taxable income relate primarily to net operating loss carryovers and pre-opening cost amortization. At December 31, 2022, it is more likely than not that the Company will not generate sufficient taxable income to realize the net deferred tax assets related to the Company's TRSs as of December 31, 2022 totaling $9.8 million.

As of December 31, 2022 and 2021, respectively, the Canadian operations and the Company's TRSs had deferred tax assets included in "Other assets" in the accompanying consolidated balance sheets totaling approximately $36.9 million and $35.9 million, respectively, and deferred tax liabilities included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets totaling approximately $4.1 million and $4.6 million, respectively. At December 31, 2022 and 2021, the Company had valuation allowances offsetting the net deferred tax assets included in the accompanying consolidated balance sheets totaling $32.6 million and $31.3 million, respectively. The Company’s consolidated deferred tax position is summarized as follows (in thousands):


	2022		2021
Fixed assets	$	22,788	$	21,687
Net operating losses	10,093		10,828
Start-up costs	2,185		2,309
Other	1,826		1,093
Total deferred tax assets	$	36,892	$	35,917

Capital improvements	$	(2,718)	$	(2,904)
Straight-line receivable	(962)		(915)
Other	(419)		(763)
Total deferred tax liabilities	$	(4,099)	$	(4,582)

Valuation allowance	(32,624)		(31,335)
Net deferred tax asset	$	169	$	—

Additionally, during the years ended December 31, 2022, 2021 and 2020, the Company recognized current income and withholding tax expense of $1.4 million, $1.6 million and $1.5 million, respectively, primarily related to certain

state income taxes and foreign withholding tax. The table below details the current and deferred income tax benefit (expense) for the years ended December 31, 2022, 2021 and 2020 (in thousands):


	2022		2021		2020
Current TRS income tax	$	(137)	$	—	$	7
Current state income tax expense	(226)		(505)		(503)
Current foreign income tax	(1)		(4)		3
Current foreign withholding tax	(1,041)		(1,088)		(1,018)
Deferred TRS income tax (expense) benefit	—		—		(4,448)
Deferred foreign withholding tax	—		—		—
Deferred income tax (expense) benefit	169		—		(10,797)
Income tax benefit (expense)	$	(1,236)	$	(1,597)	$	(16,756)

The Company's effective tax rate for the years ended December 31, 2022, 2021 and 2020 was 0.8%, 2.1% and 13.5%, respectively. The differences between the income tax expense calculated at the statutory U.S. federal income tax rates and the actual income tax expense recorded is mostly attributable to the dividends paid deduction available for REITs.

Furthermore, the Company qualified as a REIT and distributed the necessary amount of taxable income such that no current U.S. federal income taxes were due for the years ended December 31, 2022, 2021 and 2020. Accordingly, no provision for current U.S. federal income taxes was recorded for any of those years. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain provisions, it will be subject to federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax for years prior to January 1, 2020) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company is subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed taxable income. Tax years 2019 through 2021 remain generally open to examination for U.S. federal income tax and state tax purposes and from 2017 through 2021 for Canadian income tax purposes.

The Company’s policy is to recognize interest and penalties as general and administrative expense. The Company did not recognize any interest and penalties in 2022, 2021 or 2020. The Company did not have any accrued interest and penalties at December 31, 2022, 2021 and 2020. Additionally, the Company did not have any unrecorded tax benefits as of December 31, 2022, 2021 and 2020.

Concentrations of Risk

AMC, Topgolf USA (Topgolf), Regal and Cinemark represented a significant portion of the Company's total revenue for the years ended December 31, 2022, 2021 and 2020. The Company began recognizing revenue on a cash basis for AMC at the end of the first quarter of 2020 and for Regal at the end of the third quarter of 2020 due to the impact of the COVID-19 pandemic. The Company had higher revenue from Regal during the years ended December 31, 2022 and 2021 due to the payment of rent and the repayment of deferred rent due, both of which were recognized as rental revenue when received. As described above, on September 7, 2022, Cineworld Group, the parent entity of Regal, filed for Chapter 11 bankruptcy protection. As a result of the filing, Regal did not pay its rent or monthly deferral payment for September 2022 but subsequently paid portions of this amount pursuant to an order of the bankruptcy court. The Company has received payment of contractual rent and deferral payments from Regal for October through December 2022. The following is a summary of the Company's total revenue derived from rental or interest payments from AMC, Topgolf, Regal and Cinemark (dollars in thousands):


	Year ended December 31,
	2022				2021				2020
	Total Revenue		% of Company's Total Revenue		Total Revenue		% of Company's Total Revenue		Total Revenue		% of Company's Total Revenue
AMC	$	94,476	14.4	%	$	94,405	17.8	%	$	29,964	7.2	%
Topgolf	94,177		14.3	%	86,470		16.3	%	80,714		19.5	%
Regal	90,678		13.8	%	44,576		8.4	%	13,056		3.1	%
Cinemark	42,325		6.4	%	42,417		8.0	%	42,065		10.1	%

Cash Equivalents

Cash equivalents include bank demand deposits and other short-term investments.

Restricted Cash

Restricted cash represents cash held for tenants' off-season rent reserves and escrow deposits required in connection with property management and debt agreements or held for potential acquisitions and redevelopments.

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 and share-based compensation to non-employee Trustees of the Company is granted pursuant to the Company's Trustee compensation program.

Share based compensation expense consists of amortization of nonvested share grants and share options issued to employees, 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 (loss) and comprehensive income (loss).

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 years to four years). Expense recognized related to nonvested shares and included in "General and administrative expense" in the accompanying consolidated statements of income (loss) and comprehensive income (loss) was $7.9 million, $8.8 million and $10.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. Expense related to nonvested shares and included in "Severance expense" in the accompanying consolidated statements of income (loss) and comprehensive income (loss) was $1.0 million for the year ended December 31, 2020.

Nonvested Performance Shares Issued to Employees

The Company awards performance shares to the Company's executive officers pursuant to the Long-Term Incentive Plan. The performance shares contain both a market condition and a performance condition. The Company amortizes the expense related to the performance shares over the future vesting period of three years. Expense recognized related to performance shares and included in "General and administrative expense" in the accompanying consolidated statements of income (loss) and comprehensive income (loss) was $6.6 million, $3.9 million and $1.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. Expense related to nonvested performance shares and included in "Severance expense" in the accompanying consolidated statements of income (loss) and comprehensive income (loss) was $261 thousand for the year ended December 31, 2020.

Share Options

Prior to 2022, share options were granted to employees pursuant to the Long-Term Incentive Plan. The fair value of share options granted is estimated at the date of grant using the Black-Scholes option pricing model. Share options granted to employees vest over a period of four years and share option expense for these options is recognized on a straight-line basis over the vesting period. Expense recognized related to share options and included in "General and administrative expense" in the accompanying consolidated statements of income (loss) and comprehensive income

(loss) was $14 thousand, $17 thousand and $12 thousand for the years ended December 31, 2022, 2021 and 2020, 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 under the Company's Trustee compensation program. 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 and included in "General and administrative expense" in the accompanying consolidated statements of income (loss) and comprehensive income (loss) was $2.2 million for each of the years ended December 31, 2022, 2021 and 2020.

Foreign Currency Translation

The Company accounts for the operations of its Canadian properties in Canadian dollars. The assets and liabilities related to the Company’s Canadian properties and mortgage note are translated into U.S. dollars using the spot rates at the respective balance sheet dates; revenues and expenses are translated at average exchange rates. Resulting translation adjustments are recorded as a separate component of comprehensive income (loss).

Derivative Instruments

The Company uses derivative instruments to reduce exposure to fluctuations in foreign currency exchange rates and variable interest rates.

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 foreign currency risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows are considered cash flow hedges. 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 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. If hedge accounting is not applied, realized and unrealized gains or losses are reported in earnings.

The Company's policy is to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Impact of Recently Issued Accounting Standards

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848). The ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. On March 5, 2021, the Financial Conduct Authority (FCA) announced that the USD LIBOR will no longer be published after June 30, 2023. In December 2022, the FASB issued ASU No. 2022-06, Deferral of the Sunset Date of Topic 848. The guidance in ASU 2022-06 deferred the sunset date to December 31, 2024. At December 31, 2022, the Company had four agreements (including debt, mortgage note and lease agreements) that are indexed to LIBOR. The Company has transitioned several existing contracts to a replacement index and continues to make progress

transitioning the remaining contracts. These ASUs are not anticipated to have any significant impact on the Company's consolidated financial statements.

Principles of Consolidation

ariable Interest EntitiesThe Company consolidates certain entities when it is deemed to be the primary beneficiary in a variable interest entity (VIE) in which it has a controlling financial interest in accordance with the consolidation guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The equity method of accounting is applied to entities in which the Company is not the primary beneficiary as defined in the FASB ASC Topic on Consolidation (Topic 810), but can exercise significant influence over the entity with respect to its operations and major decisions.The Company’s variable interest in VIEs currently are in the form of equity ownership and loans provided by the Company to a VIE or other partner. The Company examines specific criteria and uses its judgment when determining if the Company is the primary beneficiary of a VIE. The primary beneficiary generally is defined as the party with the controlling financial interest. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. As of December 31, 2022 and 2021, the Company does not have any investments in consolidated VIEs.

Use of Estimates

Rental Properties

Accounting for Acquisitions

Goodwill and Intangible Assets, Intangible Assets, Policy

Intangibles

Management of the Company reviews the carrying value of intangible assets for impairment on an annual basis.


	2022		2021
Assets:
In-place leases, net of accumulated amortization of $20.0 million and $17.2 million, respectively	$	17,769	$	18,401
Above-market lease, net of accumulated amortization of $1.3 million and $1.2 million, respectively	257		303
Tradenames, net of accumulated amortization of $583 thousand and $450 thousand, respectively (1)	8,580		8,713
Contract value, net of accumulated amortization of $1.6 million and $1.3 million, respectively	9,323		9,689
Goodwill	693		693
Total intangible assets, net	$	36,622	$	37,799

Liabilities:
Below-market lease, net of accumulated amortization of $2.4 million and $2.0 million, respectively	$	7,741	$	7,941

(1) At December 31, 2022 and 2021, $5.4 million in tradenames had indefinite lives and were not amortized.

Future amortization of in-place leases, net, above-market lease, net, tradenames, net, contract value, net and below-market lease, net at December 31, 2022 is as follows (in thousands):


	In place leases		Tradenames (1)		Contract Value		Above-market lease		Below-market lease
Year:
2023	$	2,686	$	133	$	365	$	46	$	(431)
2024	2,008		133		365		46		(413)
2025	1,900		133		365		46		(404)
2026	1,774		133		365		46		(319)
2027	1,642		133		365		46		(255)
Thereafter	7,759		2,559		7,498		27		(5,919)
Total	$	17,769	$	3,224	$	9,323	$	257	$	(7,741)

Weighted average amortization period (years)	11.1		25.3		25.5		5.5		29.0

(1) Excludes $5.4 million in tradenames with indefinite lives.

Deferred Financing Costs

Deferred Financing CostsDeferred financing costs are amortized over the terms of the related debt obligations or mortgage note receivable as applicable. Deferred financing costs of $31.1 million and $36.9 million as of December 31, 2022 and 2021, respectively, are shown as a reduction of debt. The deferred financing costs of $6.4 million and $8.7 million as of December 31, 2022 and 2021, respectively, related to the unsecured revolving credit facility are included in "Other assets" in the accompanying consolidated balance sheets.

Operating Segment

Reportable Segments

Revenue Recognition

Rental Revenue

Property Sales, Policy [Policy Text Block]

Sales of real estate properties are recognized when a contract exists and the purchaser has obtained control of the property. Gains on sales of properties are recognized in full in a partial sale of nonfinancial assets, to the extent control is not retained. Any noncontrolling interest retained by the seller would, accordingly, be measured at fair value. The Company evaluates each sale or disposal transaction to determine if it meets the criteria to qualify as discontinued operations. A discontinued operation is a component of an entity or group of components that have been disposed of or are classified as held for sale and represent a strategic shift that has or will have a major effect on the Company's operations and financial results. If the sale or disposal transaction does not meet the criteria, the operations and related gain or loss on sale is included in income from continuing operations.

Mortgage Notes And Other Notes Receivable

Mortgage Notes and Other Notes Receivable

Mortgage and Other Financing Income

Income Taxes


	2022		2021
Fixed assets	$	22,788	$	21,687
Net operating losses	10,093		10,828
Start-up costs	2,185		2,309
Other	1,826		1,093
Total deferred tax assets	$	36,892	$	35,917

Capital improvements	$	(2,718)	$	(2,904)
Straight-line receivable	(962)		(915)
Other	(419)		(763)
Total deferred tax liabilities	$	(4,099)	$	(4,582)

Valuation allowance	(32,624)		(31,335)
Net deferred tax asset	$	169	$	—

state income taxes and foreign withholding tax. The table below details the current and deferred income tax benefit (expense) for the years ended December 31, 2022, 2021 and 2020 (in thousands):


	2022		2021		2020
Current TRS income tax	$	(137)	$	—	$	7
Current state income tax expense	(226)		(505)		(503)
Current foreign income tax	(1)		(4)		3
Current foreign withholding tax	(1,041)		(1,088)		(1,018)
Deferred TRS income tax (expense) benefit	—		—		(4,448)
Deferred foreign withholding tax	—		—		—
Deferred income tax (expense) benefit	169		—		(10,797)
Income tax benefit (expense)	$	(1,236)	$	(1,597)	$	(16,756)

Concentrations of Risk Policy [Policy Text Block]

Concentrations of Risk


	Year ended December 31,
	2022				2021				2020
	Total Revenue		% of Company's Total Revenue		Total Revenue		% of Company's Total Revenue		Total Revenue		% of Company's Total Revenue
AMC	$	94,476	14.4	%	$	94,405	17.8	%	$	29,964	7.2	%
Topgolf	94,177		14.3	%	86,470		16.3	%	80,714		19.5	%
Regal	90,678		13.8	%	44,576		8.4	%	13,056		3.1	%
Cinemark	42,325		6.4	%	42,417		8.0	%	42,065		10.1	%

Cash Equivalents and Restricted Cash

Cash Equivalents

Cash equivalents include bank demand deposits and other short-term investments.

Restricted Cash

Share-Based Compensation

Nonvested Shares Issued To Employees

Nonvested Shares Issued to Employees

Nonvested Performance Shares Issued to Employees

Share Options

(loss) was $14 thousand, $17 thousand and $12 thousand for the years ended December 31, 2022, 2021 and 2020, respectively.

Restricted Share Units Issued To Non-Employee Trustees

Restricted Share Units Issued to Non-Employee Trustees

Foreign Currency Translation

Derivative Instruments

The Company uses derivative instruments to reduce exposure to fluctuations in foreign currency exchange rates and variable interest rates.

The Company's policy is to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Description of New Accounting Pronouncements Not yet Adopted [Text Block]

Impact of Recently Issued Accounting Standards

transitioning the remaining contracts. These ASUs are not anticipated to have any significant impact on the Company's consolidated financial statements.