☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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43-1790877
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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909 Walnut Street,
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Suite 200
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Kansas City,
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Missouri
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64106
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
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(816)
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472-1700
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Title of each class
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Trading symbol(s)
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Name of each exchange on which registered
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Common shares, par value $0.01 per share
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EPR
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New York Stock Exchange
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5.75% Series C cumulative convertible preferred shares, par value $0.01 per share
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EPR PrC
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New York Stock Exchange
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9.00% Series E cumulative convertible preferred shares, par value $0.01 per share
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EPR PrE
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New York Stock Exchange
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5.75% Series G cumulative redeemable preferred shares, par value $0.01 per share
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EPR PrG
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New York Stock Exchange
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•
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Risks associated with the current outbreak of the novel coronavirus, or COVID-19, or the future outbreak of any other highly infectious or contagious diseases;
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•
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Global economic uncertainty and disruptions in financial markets;
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•
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Reduction in discretionary spending by consumers;
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•
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Adverse changes in our credit ratings;
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•
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Fluctuations in interest rates;
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•
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Defaults in the performance of lease terms by our tenants;
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•
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Defaults by our customers and counterparties on their obligations owed to us;
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•
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A borrower's bankruptcy or default;
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•
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Our ability to renew maturing leases on terms comparable to prior leases and/or our ability to locate substitute lessees for these properties on economically favorable terms;
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•
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Risks of operating in the experiential real estate industry;
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•
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Our ability to compete effectively;
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•
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Risks associated with three tenants representing a substantial portion of our lease revenues;
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•
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The ability of our build-to-suit tenants to achieve sufficient operating results within expected time-frames and therefore have capacity to pay their agreed upon rent;
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•
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Risks associated with our dependence on third-party managers to operate certain of our experiential lodging properties;
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•
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Risks associated with our level of indebtedness;
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•
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Risks associated with use of leverage to acquire properties;
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•
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Financing arrangements that require lump-sum payments;
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•
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Our ability to raise capital;
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•
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Covenants in our debt instruments that limit our ability to take certain actions;
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•
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The concentration and lack of diversification of our investment portfolio;
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•
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Our continued qualification as a real estate investment trust for U.S. federal income tax purposes and related tax matters;
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•
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The ability of our subsidiaries to satisfy their obligations;
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•
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Financing arrangements that expose us to funding and completion risks;
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•
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Our reliance on a limited number of employees, the loss of which could harm operations;
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•
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Risks associated with the employment of personnel by managers of our experiential lodging properties;
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•
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Risks associated with the gaming industry;
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•
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Risks associated with gaming and other regulatory authorities;
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•
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Delays or prohibitions of transfers of gaming properties due to required regulatory approvals;
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•
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Risks associated with security breaches and other disruptions;
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•
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Changes in accounting standards that may adversely affect our financial statements;
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•
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Fluctuations in the value of real estate income and investments;
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•
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Risks relating to real estate ownership, leasing and development, including local conditions such as an
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•
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Our ability to secure adequate insurance and risk of potential uninsured losses, including from natural disasters;
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•
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Risks involved in joint ventures;
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•
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Risks in leasing multi-tenant properties;
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•
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A failure to comply with the Americans with Disabilities Act or other laws;
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•
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Risks of environmental liability;
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•
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Risks associated with the relatively illiquid nature of our real estate investments;
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•
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Risks with owning assets in foreign countries;
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•
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Risks associated with owning, operating or financing properties for which the tenants', mortgagors' or our operations may be impacted by weather conditions, climate change and natural disasters;
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•
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Risks associated with the development, redevelopment and expansion of properties and the acquisition of other real estate related companies;
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•
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Our ability to pay dividends in cash or at current rates;
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•
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Fluctuations in the market prices for our shares;
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•
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Certain limits on changes in control imposed under law and by our Declaration of Trust and Bylaws;
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•
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Policy changes obtained without the approval of our shareholders;
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•
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Equity issuances that could dilute the value of our shares;
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•
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Future offerings of debt or equity securities, which may rank senior to our common shares;
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•
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Risks associated with changes in foreign exchange rates; and
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•
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Changes in laws and regulations, including tax laws and regulations.
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Page
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Item 1.
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Financial Statements
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 4.
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Controls and Procedures
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Item 1.
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Legal Proceedings
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Item 1A.
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Risk Factors
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Item 2.
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Unregistered Sale of Equity Securities and Use of Proceeds
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Item 3.
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Defaults Upon Senior Securities
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Other Information
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Item 6.
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Exhibits
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EPR PROPERTIES
Consolidated Balance Sheets
(Dollars in thousands except share data)
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|||||||
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June 30, 2020
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|
December 31, 2019
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||||
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(unaudited)
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||||
Assets
|
|
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|
||||
Real estate investments, net of accumulated depreciation of $1,034,771 and $989,254 at June 30, 2020 and December 31, 2019, respectively
|
$
|
5,110,059
|
|
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$
|
5,197,308
|
|
Land held for development
|
26,244
|
|
|
28,080
|
|
||
Property under development
|
39,039
|
|
|
36,756
|
|
||
Operating lease right-of-use assets
|
189,058
|
|
|
211,187
|
|
||
Mortgage notes and related accrued interest receivable
|
357,668
|
|
|
357,391
|
|
||
Investment in joint ventures
|
28,925
|
|
|
34,317
|
|
||
Cash and cash equivalents
|
1,006,981
|
|
|
528,763
|
|
||
Restricted cash
|
2,615
|
|
|
2,677
|
|
||
Accounts receivable
|
134,774
|
|
|
86,858
|
|
||
Other assets
|
107,615
|
|
|
94,174
|
|
||
Total assets
|
$
|
7,002,978
|
|
|
$
|
6,577,511
|
|
Liabilities and Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
96,454
|
|
|
$
|
122,939
|
|
Operating lease liabilities
|
229,030
|
|
|
235,650
|
|
||
Common dividends payable
|
19
|
|
|
29,424
|
|
||
Preferred dividends payable
|
6,034
|
|
|
6,034
|
|
||
Unearned rents and interest
|
81,096
|
|
|
74,829
|
|
||
Debt
|
3,854,088
|
|
|
3,102,830
|
|
||
Total liabilities
|
4,266,721
|
|
|
3,571,706
|
|
||
Equity:
|
|
|
|
||||
Common Shares, $.01 par value; 100,000,000 shares authorized; and 81,903,786 and 81,588,489 shares issued at June 30, 2020 and December 31, 2019, respectively
|
819
|
|
|
816
|
|
||
Preferred Shares, $.01 par value; 25,000,000 shares authorized:
|
|
|
|
||||
5,394,050 Series C convertible shares issued at June 30, 2020 and December 31, 2019; liquidation preference of $134,851,250
|
54
|
|
|
54
|
|
||
3,447,381 Series E convertible shares issued at June 30, 2020 and December 31, 2019; liquidation preference of $86,184,525
|
34
|
|
|
34
|
|
||
6,000,000 Series G shares issued at June 30, 2020 and December 31, 2019; liquidation preference of $150,000,000
|
60
|
|
|
60
|
|
||
Additional paid-in-capital
|
3,848,984
|
|
|
3,834,858
|
|
||
Treasury shares at cost: 7,290,948 and 3,125,569 common shares at June 30, 2020 and December 31, 2019, respectively
|
(260,351
|
)
|
|
(147,435
|
)
|
||
Accumulated other comprehensive income
|
(4,331
|
)
|
|
7,275
|
|
||
Distributions in excess of net income
|
(849,012
|
)
|
|
(689,857
|
)
|
||
Total equity
|
$
|
2,736,257
|
|
|
$
|
3,005,805
|
|
Total liabilities and equity
|
$
|
7,002,978
|
|
|
$
|
6,577,511
|
|
EPR PROPERTIES
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income
(Unaudited)
(Dollars in thousands except per share data)
|
|||||||||||||||
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Rental revenue
|
$
|
97,531
|
|
|
$
|
147,003
|
|
|
$
|
232,574
|
|
|
$
|
287,295
|
|
Other income
|
416
|
|
|
5,726
|
|
|
7,989
|
|
|
6,070
|
|
||||
Mortgage and other financing income
|
8,413
|
|
|
9,011
|
|
|
16,809
|
|
|
18,902
|
|
||||
Total revenue
|
106,360
|
|
|
161,740
|
|
|
257,372
|
|
|
312,267
|
|
||||
Property operating expense
|
15,329
|
|
|
14,597
|
|
|
28,422
|
|
|
30,148
|
|
||||
Other expense
|
2,798
|
|
|
8,091
|
|
|
12,332
|
|
|
8,091
|
|
||||
General and administrative expense
|
10,432
|
|
|
12,230
|
|
|
21,420
|
|
|
23,940
|
|
||||
Severance expense
|
—
|
|
|
—
|
|
|
—
|
|
|
420
|
|
||||
Costs associated with loan refinancing or payoff
|
820
|
|
|
—
|
|
|
820
|
|
|
—
|
|
||||
Interest expense, net
|
38,340
|
|
|
36,458
|
|
|
73,093
|
|
|
70,421
|
|
||||
Transaction costs
|
771
|
|
|
6,923
|
|
|
1,846
|
|
|
12,046
|
|
||||
Credit loss expense
|
3,484
|
|
|
—
|
|
|
4,676
|
|
|
—
|
|
||||
Impairment charges
|
51,264
|
|
|
—
|
|
|
51,264
|
|
|
—
|
|
||||
Depreciation and amortization
|
42,450
|
|
|
38,790
|
|
|
86,260
|
|
|
74,792
|
|
||||
(Loss) income before equity in (loss) income from joint ventures, other items and discontinued operations
|
(59,328
|
)
|
|
44,651
|
|
|
(22,761
|
)
|
|
92,409
|
|
||||
Equity in (loss) income from joint ventures
|
(1,724
|
)
|
|
470
|
|
|
(2,144
|
)
|
|
959
|
|
||||
Impairment charges on joint ventures
|
(3,247
|
)
|
|
—
|
|
|
(3,247
|
)
|
|
—
|
|
||||
Gain (loss) on sale of real estate
|
22
|
|
|
—
|
|
|
242
|
|
|
(388
|
)
|
||||
(Loss) income before income taxes
|
(64,277
|
)
|
|
45,121
|
|
|
(27,910
|
)
|
|
92,980
|
|
||||
Income tax benefit
|
1,312
|
|
|
1,300
|
|
|
2,063
|
|
|
1,905
|
|
||||
(Loss) income from continuing operations
|
$
|
(62,965
|
)
|
|
$
|
46,421
|
|
|
$
|
(25,847
|
)
|
|
$
|
94,885
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Income from discontinued operations before other items
|
—
|
|
|
10,399
|
|
|
—
|
|
|
20,568
|
|
||||
Gain on sale of real estate from discontinued operations
|
—
|
|
|
9,774
|
|
|
—
|
|
|
16,490
|
|
||||
Income from discontinued operations
|
—
|
|
|
20,173
|
|
|
—
|
|
|
37,058
|
|
||||
Net (loss) income
|
(62,965
|
)
|
|
66,594
|
|
|
(25,847
|
)
|
|
131,943
|
|
||||
Preferred dividend requirements
|
(6,034
|
)
|
|
(6,034
|
)
|
|
(12,068
|
)
|
|
(12,068
|
)
|
||||
Net (loss) income available to common shareholders of EPR Properties
|
$
|
(68,999
|
)
|
|
$
|
60,560
|
|
|
$
|
(37,915
|
)
|
|
$
|
119,875
|
|
Net (loss) income available to common shareholders of EPR Properties per share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.90
|
)
|
|
$
|
0.53
|
|
|
$
|
(0.49
|
)
|
|
$
|
1.10
|
|
Discontinued operations
|
—
|
|
|
0.27
|
|
|
—
|
|
|
0.49
|
|
||||
Basic
|
$
|
(0.90
|
)
|
|
$
|
0.80
|
|
|
$
|
(0.49
|
)
|
|
$
|
1.59
|
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.90
|
)
|
|
$
|
0.53
|
|
|
$
|
(0.49
|
)
|
|
$
|
1.10
|
|
Discontinued operations
|
—
|
|
|
0.26
|
|
|
—
|
|
|
0.49
|
|
||||
Diluted
|
$
|
(0.90
|
)
|
|
$
|
0.79
|
|
|
$
|
(0.49
|
)
|
|
$
|
1.59
|
|
Shares used for computation (in thousands):
|
|
|
|
|
|
|
|
||||||||
Basic
|
76,310
|
|
|
76,164
|
|
|
77,388
|
|
|
75,426
|
|
||||
Diluted
|
76,310
|
|
|
76,199
|
|
|
77,388
|
|
|
75,467
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
$
|
(62,965
|
)
|
|
$
|
66,594
|
|
|
$
|
(25,847
|
)
|
|
$
|
131,943
|
|
Foreign currency translation adjustment
|
7,284
|
|
|
3,972
|
|
|
(9,211
|
)
|
|
7,782
|
|
||||
Change in net unrealized loss on derivatives
|
(6,326
|
)
|
|
(7,195
|
)
|
|
(2,395
|
)
|
|
(14,693
|
)
|
||||
Comprehensive (loss) income attributable to EPR Properties
|
$
|
(62,007
|
)
|
|
$
|
63,371
|
|
|
$
|
(37,453
|
)
|
|
$
|
125,032
|
|
|
EPR Properties Shareholders’ Equity
|
|
|
||||||||||||||||||||||||||||||
|
Common Stock
|
|
Preferred Stock
|
|
Additional
paid-in capital |
|
Treasury
shares |
|
Accumulated
other comprehensive income (loss) |
|
Distributions
in excess of net income |
|
Total
|
||||||||||||||||||||
Continued from previous page.
|
Shares
|
|
Par
|
|
Shares
|
|
Par
|
|
|
||||||||||||||||||||||||
Balance at December 31, 2019
|
81,588,489
|
|
|
$
|
816
|
|
|
14,841,431
|
|
|
$
|
148
|
|
|
$
|
3,834,858
|
|
|
$
|
(147,435
|
)
|
|
$
|
7,275
|
|
|
$
|
(689,857
|
)
|
|
$
|
3,005,805
|
|
Issuance of nonvested shares, net of cancellations
|
211,549
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
6,221
|
|
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
6,133
|
|
|||||||
Purchase of common shares for vesting
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,769
|
)
|
|
—
|
|
|
—
|
|
|
(6,769
|
)
|
|||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,509
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,509
|
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,495
|
)
|
|
—
|
|
|
(16,495
|
)
|
|||||||
Change in unrealized loss on derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,931
|
|
|
—
|
|
|
3,931
|
|
|||||||
Credit loss expense for implementation of Current Expected Credit Loss standard
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,163
|
)
|
|
(2,163
|
)
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,118
|
|
|
37,118
|
|
|||||||
Issuances of common shares
|
10,368
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
442
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
442
|
|
|||||||
Stock option exercises, net
|
1,410
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|
(63
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Dividends to common shareholders ($1.1325 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(88,996
|
)
|
|
(88,996
|
)
|
|||||||
Dividends to Series C preferred shareholders ($0.359375 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,939
|
)
|
|
(1,939
|
)
|
|||||||
Dividends to Series E preferred shareholders ($0.5625 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,939
|
)
|
|
(1,939
|
)
|
|||||||
Dividends to Series G preferred shareholders ($0.359375 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,156
|
)
|
|
(2,156
|
)
|
|||||||
Balance at March 31, 2020
|
81,811,816
|
|
|
$
|
818
|
|
|
14,841,431
|
|
|
$
|
148
|
|
|
$
|
3,845,093
|
|
|
$
|
(154,357
|
)
|
|
$
|
(5,289
|
)
|
|
$
|
(749,932
|
)
|
|
$
|
2,936,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Restricted share units issued to Trustees
|
74,767
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,463
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,463
|
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,284
|
|
|
—
|
|
|
7,284
|
|
|||||||
Change in unrealized loss on derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,326
|
)
|
|
—
|
|
|
(6,326
|
)
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(62,965
|
)
|
|
(62,965
|
)
|
|||||||
Issuances of common shares
|
17,203
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
428
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
428
|
|
|||||||
Repurchase of common shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(105,994
|
)
|
|
—
|
|
|
—
|
|
|
(105,994
|
)
|
|||||||
Dividend equivalents accrued on performance shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
(19
|
)
|
|||||||
Dividends to common shareholders ($0.3825 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30,062
|
)
|
|
(30,062
|
)
|
|||||||
Dividends to Series C preferred shareholders ($0.359375 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,939
|
)
|
|
(1,939
|
)
|
|||||||
Dividends to Series E preferred shareholders ($0.5625 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,939
|
)
|
|
(1,939
|
)
|
|||||||
Dividends to Series G preferred shareholders ($0.359375 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,156
|
)
|
|
(2,156
|
)
|
|||||||
Balance at June 30, 2020
|
81,903,786
|
|
|
$
|
819
|
|
|
14,841,431
|
|
|
$
|
148
|
|
|
$
|
3,848,984
|
|
|
$
|
(260,351
|
)
|
|
$
|
(4,331
|
)
|
|
$
|
(849,012
|
)
|
|
$
|
2,736,257
|
|
EPR PROPERTIES
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
|
|||||||
|
Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Operating activities:
|
|
|
|
||||
Net (loss) income
|
$
|
(25,847
|
)
|
|
$
|
131,943
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
||||
Impairment charges
|
51,264
|
|
|
—
|
|
||
Impairment charges on joint ventures
|
3,247
|
|
|
—
|
|
||
Gain on sale of real estate
|
(242
|
)
|
|
(16,102
|
)
|
||
Deferred income tax benefit
|
(2,789
|
)
|
|
(2,284
|
)
|
||
Costs associated with loan refinancing or payoff
|
820
|
|
|
—
|
|
||
Equity in loss (income) from joint ventures
|
2,144
|
|
|
(959
|
)
|
||
Distributions from joint ventures
|
—
|
|
|
112
|
|
||
Credit loss expense
|
4,676
|
|
|
—
|
|
||
Depreciation and amortization
|
86,260
|
|
|
82,098
|
|
||
Amortization of deferred financing costs
|
3,285
|
|
|
3,019
|
|
||
Amortization of above/below market leases and tenant allowances, net
|
(260
|
)
|
|
(117
|
)
|
||
Share-based compensation expense to management and Trustees
|
6,972
|
|
|
6,563
|
|
||
Change in assets and liabilities:
|
|
|
|
||||
Operating lease assets and liabilities
|
560
|
|
|
(290
|
)
|
||
Mortgage notes accrued interest receivable
|
(3,125
|
)
|
|
(1,544
|
)
|
||
Accounts receivable
|
(48,014
|
)
|
|
12,435
|
|
||
Direct financing leases receivable
|
—
|
|
|
(117
|
)
|
||
Other assets
|
(5,273
|
)
|
|
(5,434
|
)
|
||
Accounts payable and accrued liabilities
|
(20,072
|
)
|
|
50
|
|
||
Unearned rents and interest
|
3,807
|
|
|
383
|
|
||
Net cash provided by operating activities
|
57,413
|
|
|
209,756
|
|
||
Investing activities:
|
|
|
|
||||
Acquisition of and investments in real estate and other assets
|
(28,585
|
)
|
|
(418,114
|
)
|
||
Proceeds from sale of real estate
|
3,839
|
|
|
95,958
|
|
||
Investment in unconsolidated joint ventures
|
—
|
|
|
(325
|
)
|
||
Investment in mortgage notes receivable
|
(3,667
|
)
|
|
(33,074
|
)
|
||
Proceeds from mortgage notes receivable paydowns
|
94
|
|
|
1,954
|
|
||
Investment in promissory notes receivable
|
—
|
|
|
(9,068
|
)
|
||
Proceeds from promissory note receivable paydown
|
69
|
|
|
3,574
|
|
||
Additions to properties under development
|
(24,728
|
)
|
|
(102,101
|
)
|
||
Net cash used by investing activities
|
(52,978
|
)
|
|
(461,196
|
)
|
||
Financing activities:
|
|
|
|
||||
Proceeds from debt facilities and senior unsecured notes
|
750,000
|
|
|
422,000
|
|
||
Principal payments on debt
|
—
|
|
|
(218,150
|
)
|
||
Deferred financing fees paid
|
(2,859
|
)
|
|
(276
|
)
|
||
Costs associated with loan refinancing or payoff
|
(820
|
)
|
|
—
|
|
||
Net proceeds from issuance of common shares
|
713
|
|
|
231,407
|
|
||
Impact of stock option exercises, net
|
—
|
|
|
(732
|
)
|
||
Purchase of common shares for treasury for vesting
|
(6,769
|
)
|
|
(9,499
|
)
|
||
Purchase of common shares under share repurchase program
|
(105,994
|
)
|
|
—
|
|
||
Dividends paid to shareholders
|
(160,392
|
)
|
|
(179,989
|
)
|
||
Net cash provided by financing activities
|
473,879
|
|
|
244,761
|
|
||
Effect of exchange rate changes on cash
|
(158
|
)
|
|
109
|
|
||
Net change in cash and cash equivalents and restricted cash
|
478,156
|
|
|
(6,570
|
)
|
||
Cash and cash equivalents and restricted cash at beginning of the period
|
531,440
|
|
|
18,507
|
|
||
Cash and cash equivalents and restricted cash at end of the period
|
$
|
1,009,596
|
|
|
$
|
11,937
|
|
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,
|
||||||
|
2020
|
|
2019
|
||||
Reconciliation of cash and cash equivalents and restricted cash:
|
|
|
|
||||
Cash and cash equivalents at beginning of the period
|
$
|
528,763
|
|
|
$
|
5,872
|
|
Restricted cash at beginning of the period
|
2,677
|
|
|
12,635
|
|
||
Cash and cash equivalents and restricted cash at beginning of the period
|
$
|
531,440
|
|
|
$
|
18,507
|
|
|
|
|
|
||||
Cash and cash equivalents at end of the period
|
$
|
1,006,981
|
|
|
$
|
6,927
|
|
Restricted cash at end of the period
|
2,615
|
|
|
5,010
|
|
||
Cash and cash equivalents and restricted cash at end of the period
|
$
|
1,009,596
|
|
|
$
|
11,937
|
|
|
|
|
|
||||
Supplemental schedule of non-cash activity:
|
|
|
|
||||
Transfer of property under development to real estate investments
|
$
|
20,089
|
|
|
$
|
282,275
|
|
Issuance of nonvested shares and restricted share units at fair value, including nonvested shares issued for payment of bonuses
|
$
|
19,956
|
|
|
$
|
17,590
|
|
Credit loss expense related to adoption of ASC Topic 326
|
$
|
2,163
|
|
|
$
|
—
|
|
Amounts related to adoption of ASC Topic 842:
|
|
|
|
||||
Operating lease right-of-use assets
|
$
|
—
|
|
|
$
|
227,355
|
|
Operating lease liabilities
|
$
|
—
|
|
|
$
|
251,934
|
|
Sub-lessor straight-line rent receivable
|
$
|
—
|
|
|
$
|
24,454
|
|
Acquisition of real estate in exchange for assumption of debt at fair value
|
$
|
—
|
|
|
$
|
14,000
|
|
Assumption of debt
|
$
|
—
|
|
|
$
|
18,585
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid during the period for interest
|
$
|
72,096
|
|
|
$
|
70,954
|
|
Cash paid during the period for income taxes
|
$
|
497
|
|
|
$
|
1,066
|
|
Interest cost capitalized
|
$
|
504
|
|
|
$
|
4,667
|
|
Change in accrued capital expenditures
|
$
|
(9,576
|
)
|
|
$
|
8,854
|
|
•
|
The Company recognized straight-line write-offs totaling $13.0 million, which were comprised of $5.0 million of straight-line accounts receivable and $8.0 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 $7.5 million for the six months ended June 30, 2020.
|
•
|
The Company increased its expected credit losses by $4.7 million from its implementation estimate of $2.2 million. This increase was primarily the result of increased fundings and the economic uncertainty and the rapidly changing environment surrounding the COVID-19 pandemic.
|
•
|
The Company reduced rental revenue by $4.9 million due to contractual rent abatements and $3.8 million for rent concessions for certain of its tenants due to COVID-19.
|
•
|
The Company deferred approximately $60.0 million of amounts due from tenants and $3.5 million due from borrowers that were booked as receivables and approximately $41.0 million of amounts due from tenants that were not booked as receivables as the full amounts were not deemed probable of collection as a result of COVID-19 pandemic. The amounts not booked as receivables remain obligations of the tenants and will be recognized as revenue when received. The repayment terms for all of these deferments vary by tenant or borrower and several are still being negotiated.
|
•
|
For the six months ended June 30, 2020, the Company recognized revenue from American-Multi Cinema, Inc. (AMC) as well as several smaller tenants on a cash basis. See Note 18 for additional details on the agreements entered into with AMC on July 31, 2020.
|
•
|
The Company recognized $51.3 million in impairment charges during the three and six months ended June 30, 2020, which was comprised of $36.3 million of impairments of real estate investments, and $15.0 million of impairments of operating lease right-of-use assets.
|
•
|
The Company recognized impairment charges on joint ventures of $3.2 million related to its equity investments in three theatres projects located in China.
|
•
|
On March 20, 2020, the Company borrowed $750.0 million under its unsecured revolving credit facility as a precautionary measure to increase the Company's cash position and preserve financial flexibility given the global uncertainty caused by the COVID-19 pandemic.
|
|
Six Months Ended June 30,
|
||||||||||
|
2020
|
|
2019
|
||||||||
|
Total Revenue
|
% of Company's Total Revenue
|
|
Total Revenue
|
% of Company's Total Revenue
|
||||||
Topgolf
|
$
|
40,129
|
|
15.6
|
%
|
|
$
|
37,719
|
|
11.1
|
%
|
Regal
|
39,099
|
|
15.2
|
%
|
|
32,620
|
|
9.6
|
%
|
||
AMC
|
22,144
|
|
8.6
|
%
|
|
61,364
|
|
18.0
|
%
|
||
|
|
|
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Buildings and improvements
|
$
|
4,709,211
|
|
|
$
|
4,747,101
|
|
Furniture, fixtures & equipment
|
121,913
|
|
|
123,239
|
|
||
Land
|
1,287,656
|
|
|
1,290,181
|
|
||
Leasehold interests
|
26,050
|
|
|
26,041
|
|
||
|
6,144,830
|
|
|
6,186,562
|
|
||
Accumulated depreciation
|
(1,034,771
|
)
|
|
(989,254
|
)
|
||
Total
|
$
|
5,110,059
|
|
|
$
|
5,197,308
|
|
|
|
|
|
Outstanding principal amount of mortgage
|
Carrying amount as of
|
Unfunded commitments
|
||||||||||
Description
|
Year of Origination
|
Interest Rate
|
Maturity Date
|
June 30, 2020
|
December 31, 2019 (1)
|
June 30, 2020
|
||||||||||
Attraction property Powells Point, North Carolina
|
2019
|
7.75
|
%
|
6/30/2025
|
$
|
27,423
|
|
$
|
26,480
|
|
$
|
27,423
|
|
$
|
—
|
|
Fitness & wellness property Omaha, Nebraska
|
2017
|
7.85
|
%
|
1/3/2027
|
10,905
|
|
11,002
|
|
10,977
|
|
—
|
|
||||
Fitness & wellness property Merriam, Kansas
|
2019
|
7.55
|
%
|
7/31/2029
|
8,384
|
|
8,515
|
|
5,985
|
|
707
|
|
||||
Ski property Girdwood, Alaska
|
2019
|
8.25
|
%
|
12/31/2029
|
37,000
|
|
36,975
|
|
37,000
|
|
20,000
|
|
||||
Fitness & wellness property Omaha, Nebraska
|
2016
|
7.85
|
%
|
6/30/2030
|
5,773
|
|
5,889
|
|
5,803
|
|
5,145
|
|
||||
Experiential lodging property Nashville, Tennessee
|
2019
|
6.99
|
%
|
9/30/2031
|
71,223
|
|
68,311
|
|
70,396
|
|
—
|
|
||||
Eat & play property Austin, Texas
|
2012
|
11.31
|
%
|
6/1/2033
|
11,488
|
|
11,814
|
|
11,582
|
|
—
|
|
||||
Ski property West Dover and Wilmington, Vermont
|
2007
|
11.78
|
%
|
12/1/2034
|
51,050
|
|
51,023
|
|
51,050
|
|
—
|
|
||||
Four ski properties Ohio and Pennsylvania
|
2007
|
10.75
|
%
|
12/1/2034
|
37,562
|
|
37,392
|
|
37,562
|
|
—
|
|
||||
Ski property Chesterland, Ohio
|
2012
|
11.21
|
%
|
12/1/2034
|
4,550
|
|
4,367
|
|
4,550
|
|
—
|
|
||||
Ski property Hunter, New York
|
2016
|
8.57
|
%
|
1/5/2036
|
21,000
|
|
20,999
|
|
21,000
|
|
—
|
|
||||
Eat & play property Midvale, Utah
|
2015
|
10.25
|
%
|
5/31/2036
|
17,505
|
|
17,952
|
|
17,505
|
|
—
|
|
||||
Eat & play property West Chester, Ohio
|
2015
|
9.75
|
%
|
8/1/2036
|
18,068
|
|
18,498
|
|
18,068
|
|
—
|
|
||||
Private school property Mableton, Georgia
|
2017
|
9.02
|
%
|
4/30/2037
|
4,674
|
|
5,055
|
|
5,048
|
|
—
|
|
||||
Fitness & wellness property Fort Collins, Colorado
|
2018
|
7.85
|
%
|
1/31/2038
|
10,292
|
|
10,235
|
|
10,360
|
|
—
|
|
||||
Early childhood education center Lake Mary, Florida
|
2019
|
7.87
|
%
|
5/9/2039
|
4,200
|
|
4,304
|
|
4,258
|
|
—
|
|
||||
Eat & play property Eugene, Oregon
|
2019
|
8.13
|
%
|
6/17/2039
|
14,700
|
|
14,799
|
|
14,800
|
|
—
|
|
||||
Early childhood education center Lithia, Florida
|
2017
|
8.25
|
%
|
10/31/2039
|
3,959
|
|
4,058
|
|
4,024
|
|
—
|
|
||||
|
|
|
|
$
|
359,756
|
|
$
|
357,668
|
|
$
|
357,391
|
|
$
|
25,852
|
|
|
Mortgage notes receivable
|
Unfunded commitments
|
Notes receivable
|
Total
|
||||||||
Allowance for credit losses at January 1, 2020
|
$
|
2,000
|
|
$
|
114
|
|
$
|
49
|
|
$
|
2,163
|
|
Credit loss expense
|
4,422
|
|
73
|
|
181
|
|
4,676
|
|
||||
Charge-offs
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Recoveries
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Allowance for credit losses
|
$
|
6,422
|
|
$
|
187
|
|
$
|
230
|
|
$
|
6,839
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Receivable from tenants
|
$
|
68,254
|
|
|
$
|
11,373
|
|
Receivable from non-tenants
|
816
|
|
|
2,103
|
|
||
Straight-line rent receivable
|
65,704
|
|
|
73,382
|
|
||
Total
|
$
|
134,774
|
|
|
$
|
86,858
|
|
Fixed rate
|
|
Notional Amount (in millions)
|
|
Index
|
|
Maturity
|
||
3.7950%
|
(1)
|
$
|
116.7
|
|
|
USD LIBOR
|
|
February 7, 2022
|
3.8075%
|
(1)
|
116.7
|
|
|
USD LIBOR
|
|
February 7, 2022
|
|
3.8080%
|
(1)
|
116.6
|
|
|
USD LIBOR
|
|
February 7, 2022
|
|
3.9950%
|
(1)
|
50.0
|
|
|
USD LIBOR
|
|
February 7, 2022
|
|
Total
|
|
$
|
400.0
|
|
|
|
|
|
|
|
|
|
|
|
|
||
1.3925%
|
|
25.0
|
|
|
USD LIBOR
|
|
September 30, 2024
|
|
Total
|
|
$
|
25.0
|
|
|
|
|
|
Fixed rate
|
|
Notional Amount (in millions, CAD)
|
|
Maturity
|
||
$1.32 CAD per USD
|
|
$
|
100.0
|
|
|
July 1, 2023
|
$1.32 CAD per USD
|
|
100.0
|
|
|
July 1, 2023
|
|
Total
|
|
$
|
200.0
|
|
|
|
|
Three Months Ended June 30, 2020
|
|
Six Months Ended June 30, 2020
|
||||||||||||||||||
|
Income
(numerator)
|
|
Shares
(denominator)
|
|
Per Share
Amount
|
|
Income
(numerator) |
|
Shares
(denominator) |
|
Per Share
Amount |
||||||||||
Basic EPS:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss
|
$
|
(62,965
|
)
|
|
|
|
|
|
$
|
(25,847
|
)
|
|
|
|
|
||||||
Less: preferred dividend requirements
|
(6,034
|
)
|
|
|
|
|
|
(12,068
|
)
|
|
|
|
|
||||||||
Net loss available to common shareholders
|
$
|
(68,999
|
)
|
|
76,310
|
|
|
$
|
(0.90
|
)
|
|
$
|
(37,915
|
)
|
|
77,388
|
|
|
$
|
(0.49
|
)
|
Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss available to common shareholders
|
$
|
(68,999
|
)
|
|
76,310
|
|
|
|
|
$
|
(37,915
|
)
|
|
77,388
|
|
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Share options
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
||||||
Net loss available to common shareholders
|
$
|
(68,999
|
)
|
|
76,310
|
|
|
$
|
(0.90
|
)
|
|
$
|
(37,915
|
)
|
|
77,388
|
|
|
$
|
(0.49
|
)
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||
|
Income
(numerator) |
|
Shares
(denominator) |
|
Per Share
Amount |
|
Income
(numerator) |
|
Shares
(denominator) |
|
Per Share
Amount |
||||||||||
Basic EPS:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
46,421
|
|
|
|
|
|
|
$
|
94,885
|
|
|
|
|
|
||||||
Less: preferred dividend requirements
|
(6,034
|
)
|
|
|
|
|
|
(12,068
|
)
|
|
|
|
|
||||||||
Income from continuing operations available to common shareholders
|
$
|
40,387
|
|
|
76,164
|
|
|
$
|
0.53
|
|
|
$
|
82,817
|
|
|
75,426
|
|
|
$
|
1.10
|
|
Income from discontinued operations available to common shareholders
|
$
|
20,173
|
|
|
76,164
|
|
|
$
|
0.27
|
|
|
$
|
37,058
|
|
|
75,426
|
|
|
$
|
0.49
|
|
Net income available to common shareholders
|
$
|
60,560
|
|
|
76,164
|
|
|
$
|
0.80
|
|
|
$
|
119,875
|
|
|
75,426
|
|
|
$
|
1.59
|
|
Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations available to common shareholders
|
$
|
40,387
|
|
|
76,164
|
|
|
|
|
$
|
82,817
|
|
|
75,426
|
|
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Share options
|
—
|
|
|
35
|
|
|
|
|
—
|
|
|
41
|
|
|
|
||||||
Income from continuing operations available to common shareholders
|
$
|
40,387
|
|
|
76,199
|
|
|
$
|
0.53
|
|
|
$
|
82,817
|
|
|
75,467
|
|
|
$
|
1.10
|
|
Income from discontinued operations available to common shareholders
|
$
|
20,173
|
|
|
76,199
|
|
|
$
|
0.26
|
|
|
$
|
37,058
|
|
|
75,467
|
|
|
$
|
0.49
|
|
Net income available to common shareholders
|
$
|
60,560
|
|
|
76,199
|
|
|
$
|
0.79
|
|
|
$
|
119,875
|
|
|
75,467
|
|
|
$
|
1.59
|
|
|
Number of
options
|
|
Option price
per share
|
|
Weighted avg.
exercise price
|
||||||||||||
Outstanding at December 31, 2019
|
118,030
|
|
|
$
|
44.62
|
|
|
—
|
|
|
$
|
76.63
|
|
|
$
|
55.63
|
|
Exercised
|
(1,410
|
)
|
|
44.98
|
|
|
—
|
|
|
44.98
|
|
|
44.98
|
|
|||
Granted
|
2,890
|
|
|
69.19
|
|
|
—
|
|
|
69.19
|
|
|
69.19
|
|
|||
Forfeited/Expired
|
(2,820
|
)
|
|
44.98
|
|
|
—
|
|
|
44.98
|
|
|
44.98
|
|
|||
Outstanding at June 30, 2020
|
116,690
|
|
|
$
|
44.62
|
|
|
—
|
|
|
$
|
76.63
|
|
|
$
|
56.36
|
|
|
|
Options outstanding
|
|
Options exercisable
|
||||||||||||||||
Exercise price range
|
|
Options outstanding
|
Weighted avg. life remaining
|
Weighted avg. exercise price
|
Aggregate intrinsic value (in thousands)
|
|
Options outstanding
|
Weighted avg. life remaining
|
Weighted avg. exercise price
|
Aggregate intrinsic value (in thousands)
|
||||||||||
$ 44.62 - 49.99
|
|
27,215
|
|
1.8
|
|
|
|
27,215
|
|
1.8
|
|
|
||||||||
50.00 - 59.99
|
|
31,710
|
|
4.0
|
|
|
|
29,793
|
|
3.8
|
|
|
||||||||
60.00 - 69.99
|
|
53,609
|
|
6.0
|
|
|
|
50,719
|
|
4.6
|
|
|
||||||||
70.00 - 76.63
|
|
4,156
|
|
7.5
|
|
|
|
2,148
|
|
7.1
|
|
|
||||||||
|
|
116,690
|
|
4.5
|
$
|
56.36
|
|
$
|
—
|
|
|
109,875
|
|
3.8
|
$
|
55.67
|
|
$
|
—
|
|
|
Number of
shares
|
|
Weighted avg.
grant date
fair value
|
|
Weighted avg.
life remaining
|
|||
Outstanding at December 31, 2019
|
509,338
|
|
|
$
|
67.88
|
|
|
|
Granted
|
211,549
|
|
|
69.09
|
|
|
|
|
Vested
|
(228,557
|
)
|
|
67.76
|
|
|
|
|
Forfeited
|
(1,317
|
)
|
|
68.38
|
|
|
|
|
Outstanding at June 30, 2020
|
491,013
|
|
|
$
|
68.45
|
|
|
1.31
|
|
Number of
Performance Shares |
|
Outstanding at December 31, 2019
|
—
|
|
Granted
|
61,615
|
|
Vested
|
—
|
|
Forfeited
|
—
|
|
Outstanding at June 30, 2020
|
61,615
|
|
|
Number of
shares
|
|
Weighted avg.
grant date
fair value
|
|
Weighted avg.
life remaining
|
|||
Outstanding at December 31, 2019
|
26,236
|
|
|
$
|
77.54
|
|
|
|
Granted
|
74,767
|
|
|
31.57
|
|
|
|
|
Vested
|
(26,236
|
)
|
|
77.54
|
|
|
|
|
Outstanding at June 30, 2020
|
74,767
|
|
|
$
|
31.57
|
|
|
0.92
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||
Rental revenue
|
$
|
10,327
|
|
|
$
|
20,758
|
|
Mortgage and other financing income
|
3,631
|
|
|
7,215
|
|
||
Total revenue
|
13,958
|
|
|
27,973
|
|
||
Property operating expense
|
174
|
|
|
416
|
|
||
Interest expense, net
|
(180
|
)
|
|
(317
|
)
|
||
Depreciation and amortization
|
3,565
|
|
|
7,306
|
|
||
Income from discontinued operations before other items
|
10,399
|
|
|
20,568
|
|
||
Gain on sale of real estate
|
9,774
|
|
|
16,490
|
|
||
Income from discontinued operations
|
$
|
20,173
|
|
|
$
|
37,058
|
|
|
|
Six Months Ended June 30,
|
||
|
|
2019
|
||
Depreciation and amortization
|
|
$
|
7,306
|
|
Acquisition of and investments in real estate and other assets
|
|
(1,827
|
)
|
|
Proceeds from sale of real estate
|
|
86,154
|
|
|
Investment in mortgage notes receivable
|
|
(4,143
|
)
|
|
Proceeds from mortgage notes receivable paydowns
|
|
1,783
|
|
|
Additions to properties under development
|
|
(15,041
|
)
|
|
|
|
|
||
Non-cash activity:
|
|
|
||
Transfer of property under development to real estate investments
|
|
$
|
4,748
|
|
Interest cost capitalized
|
|
317
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||
|
Classification
|
2020
|
2019
|
|
2020
|
2019
|
||||||||
Rental revenue
|
|
|
|
|
|
|
||||||||
Operating leases (1)
|
Rental revenue
|
$
|
92,017
|
|
$
|
141,168
|
|
|
$
|
229,106
|
|
$
|
275,737
|
|
Sublease income - operating ground leases (2)
|
Rental revenue
|
$
|
5,514
|
|
$
|
5,835
|
|
|
$
|
3,468
|
|
$
|
11,558
|
|
|
|
|
|
|
|
|
||||||||
Lease costs
|
|
|
|
|
|
|
||||||||
Operating ground lease cost
|
Property operating expense
|
$
|
6,283
|
|
$
|
6,065
|
|
|
$
|
12,500
|
|
$
|
12,003
|
|
Operating office lease cost
|
General and administrative expense
|
$
|
226
|
|
$
|
226
|
|
|
$
|
452
|
|
$
|
456
|
|
Operating lease right-of-use asset impairment charges (3)
|
Impairment charges
|
$
|
15,009
|
|
$
|
—
|
|
|
$
|
15,009
|
|
$
|
—
|
|
|
|
|
|
|
|
|
Operating Data:
|
|
|
|
|
||||||||
|
Three Months Ended June 30, 2020
|
|||||||||||
|
Experiential
|
Education
|
Corporate/Unallocated
|
Consolidated
|
||||||||
Rental revenue
|
$
|
84,204
|
|
$
|
13,327
|
|
$
|
—
|
|
$
|
97,531
|
|
Other income
|
8
|
|
—
|
|
408
|
|
416
|
|
||||
Mortgage and other financing income
|
8,108
|
|
305
|
|
—
|
|
8,413
|
|
||||
Total revenue
|
92,320
|
|
13,632
|
|
408
|
|
106,360
|
|
||||
|
|
|
|
|
||||||||
Property operating expense
|
14,514
|
|
628
|
|
187
|
|
15,329
|
|
||||
Other expense
|
2,798
|
|
—
|
|
—
|
|
2,798
|
|
||||
Total investment expenses
|
17,312
|
|
628
|
|
187
|
|
18,127
|
|
||||
Net operating income - before unallocated items
|
75,008
|
|
13,004
|
|
221
|
|
88,233
|
|
||||
|
|
|
|
|
||||||||
Reconciliation to Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income:
|
||||||||||||
General and administrative expense
|
|
|
(10,432
|
)
|
||||||||
Costs associated with loan refinancing or payoff
|
|
|
(820
|
)
|
||||||||
Interest expense, net
|
|
|
|
(38,340
|
)
|
|||||||
Transaction costs
|
|
|
|
(771
|
)
|
|||||||
Credit loss expense
|
|
|
|
(3,484
|
)
|
|||||||
Impairment charges
|
|
|
(51,264
|
)
|
||||||||
Depreciation and amortization
|
|
|
(42,450
|
)
|
||||||||
Equity in loss from joint ventures
|
|
|
(1,724
|
)
|
||||||||
Impairment charges on joint ventures
|
|
|
(3,247
|
)
|
||||||||
Gain on sale of real estate
|
|
|
22
|
|
||||||||
Income tax benefit
|
|
|
1,312
|
|
||||||||
Net loss
|
|
|
(62,965
|
)
|
||||||||
Preferred dividend requirements
|
|
|
(6,034
|
)
|
||||||||
Net loss available to common shareholders of EPR Properties
|
$
|
(68,999
|
)
|
Operating Data:
|
|
|
|
|
||||||||
|
Three Months Ended June 30, 2019
|
|||||||||||
|
Experiential
|
Education
|
Corporate/Unallocated
|
Consolidated
|
||||||||
Rental revenue
|
$
|
129,271
|
|
$
|
17,732
|
|
$
|
—
|
|
$
|
147,003
|
|
Other income
|
5,423
|
|
—
|
|
303
|
|
5,726
|
|
||||
Mortgage and other financing income
|
8,761
|
|
250
|
|
—
|
|
9,011
|
|
||||
Total revenue
|
143,455
|
|
17,982
|
|
303
|
|
161,740
|
|
||||
|
|
|
|
|
||||||||
Property operating expense
|
13,488
|
|
882
|
|
227
|
|
14,597
|
|
||||
Other expense
|
8,091
|
|
—
|
|
—
|
|
8,091
|
|
||||
Total investment expenses
|
21,579
|
|
882
|
|
227
|
|
22,688
|
|
||||
Net operating income - before unallocated items
|
121,876
|
|
17,100
|
|
76
|
|
139,052
|
|
||||
|
|
|
|
|
||||||||
Reconciliation to Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income:
|
||||||||||||
General and administrative expense
|
|
|
(12,230
|
)
|
||||||||
Interest expense, net
|
|
|
|
(36,458
|
)
|
|||||||
Transaction costs
|
|
|
|
(6,923
|
)
|
|||||||
Depreciation and amortization
|
|
|
(38,790
|
)
|
||||||||
Equity in income from joint ventures
|
|
|
470
|
|
||||||||
Income tax benefit
|
|
|
|
1,300
|
|
|||||||
Discontinued operations:
|
|
|
|
|
||||||||
Income from discontinued operations
|
|
|
10,399
|
|
||||||||
Gain on sale of real estate from discontinued operations
|
|
9,774
|
|
|||||||||
Net income
|
|
|
66,594
|
|
||||||||
Preferred dividend requirements
|
|
(6,034
|
)
|
|||||||||
Net income available to common shareholders of EPR Properties
|
$
|
60,560
|
|
Operating Data:
|
|
|
|
|
||||||||
|
Six Months Ended June 30, 2020
|
|||||||||||
|
Experiential
|
Education
|
Corporate/Unallocated
|
Consolidated
|
||||||||
Rental revenue
|
$
|
202,864
|
|
$
|
29,710
|
|
$
|
—
|
|
$
|
232,574
|
|
Other income
|
7,213
|
|
—
|
|
776
|
|
7,989
|
|
||||
Mortgage and other financing income
|
16,152
|
|
657
|
|
—
|
|
16,809
|
|
||||
Total revenue
|
226,229
|
|
30,367
|
|
776
|
|
257,372
|
|
||||
|
|
|
|
|
||||||||
Property operating expense
|
26,843
|
|
1,169
|
|
410
|
|
28,422
|
|
||||
Other expense
|
12,332
|
|
—
|
|
—
|
|
12,332
|
|
||||
Total investment expenses
|
39,175
|
|
1,169
|
|
410
|
|
40,754
|
|
||||
Net operating income - before unallocated items
|
187,054
|
|
29,198
|
|
366
|
|
216,618
|
|
||||
|
|
|
|
|
||||||||
Reconciliation to Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income:
|
||||||||||||
General and administrative expense
|
|
|
(21,420
|
)
|
||||||||
Costs associated with loan refinancing or payoff
|
|
|
(820
|
)
|
||||||||
Interest expense, net
|
|
|
|
(73,093
|
)
|
|||||||
Transaction costs
|
|
|
|
(1,846
|
)
|
|||||||
Credit loss expense
|
|
|
|
(4,676
|
)
|
|||||||
Impairment charges
|
|
|
(51,264
|
)
|
||||||||
Depreciation and amortization
|
|
|
(86,260
|
)
|
||||||||
Equity in loss from joint ventures
|
|
|
(2,144
|
)
|
||||||||
Impairment charges on joint ventures
|
|
|
(3,247
|
)
|
||||||||
Gain on sale of real estate
|
|
|
242
|
|
||||||||
Income tax benefit
|
|
|
2,063
|
|
||||||||
Net loss
|
|
|
(25,847
|
)
|
||||||||
Preferred dividend requirements
|
|
|
(12,068
|
)
|
||||||||
Net loss available to common shareholders of EPR Properties
|
$
|
(37,915
|
)
|
Operating Data:
|
|
|
|
|
||||||||
|
Six Months Ended June 30, 2019
|
|||||||||||
|
Experiential
|
Education
|
Corporate/Unallocated
|
Consolidated
|
||||||||
Rental revenue
|
$
|
253,287
|
|
$
|
34,008
|
|
$
|
—
|
|
$
|
287,295
|
|
Other income
|
5,494
|
|
—
|
|
576
|
|
6,070
|
|
||||
Mortgage and other financing income
|
18,129
|
|
773
|
|
—
|
|
18,902
|
|
||||
Total revenue
|
276,910
|
|
34,781
|
|
576
|
|
312,267
|
|
||||
|
|
|
|
|
||||||||
Property operating expense
|
27,936
|
|
1,752
|
|
460
|
|
30,148
|
|
||||
Other expense
|
8,091
|
|
—
|
|
—
|
|
8,091
|
|
||||
Total investment expenses
|
36,027
|
|
1,752
|
|
460
|
|
38,239
|
|
||||
Net operating income - before unallocated items
|
240,883
|
|
33,029
|
|
116
|
|
274,028
|
|
||||
|
|
|
|
|
||||||||
Reconciliation to Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income:
|
||||||||||||
General and administrative expense
|
|
|
(23,940
|
)
|
||||||||
Severance expense
|
|
|
(420
|
)
|
||||||||
Interest expense, net
|
|
|
|
(70,421
|
)
|
|||||||
Transaction costs
|
|
|
|
(12,046
|
)
|
|||||||
Depreciation and amortization
|
|
|
(74,792
|
)
|
||||||||
Equity in income from joint ventures
|
|
|
959
|
|
||||||||
Loss on sale of real estate
|
|
|
(388
|
)
|
||||||||
Income tax benefit
|
|
|
|
1,905
|
|
|||||||
Discontinued operations:
|
|
|
|
|
||||||||
Income from discontinued operations
|
|
|
20,568
|
|
||||||||
Gain on sale of real estate from discontinued operations
|
|
16,490
|
|
|||||||||
Net income
|
|
|
131,943
|
|
||||||||
Preferred dividend requirements
|
|
(12,068
|
)
|
|||||||||
Net income available to common shareholders of EPR Properties
|
$
|
119,875
|
|
•
|
Master Lease relating to 46 Leased Properties (the Master Lease Properties), and
|
•
|
Seven Transitional Leases relating to seven Leased Properties (the Transitional Properties).
|
•
|
Security Agreement granting to the Company a security interest subordinated to AMC's secured credit agreements and indentures in all of AMC Tenant’s property located at the Leased Properties to secure AMC Tenant’s obligations to the Company under the Forbearance Agreement and the Leases,
|
•
|
Guaranty providing a guaranty by Guarantor of AMC Tenant’s obligations to the Company under the Forbearance Agreement and the Leases, and
|
•
|
Capital Improvements Agreement providing a financial mechanism for the Company to provide AMC Tenant with up to $35 million of funds to complete improvements to the Master Lease Properties in exchange for increased annual fixed rent.
|
•
|
180 theatre properties;
|
•
|
56 eat & play properties (including seven theatres located in entertainment districts);
|
•
|
18 attraction properties;
|
•
|
13 ski properties;
|
•
|
six experiential lodging properties;
|
•
|
one gaming property;
|
•
|
three cultural properties; and
|
•
|
seven fitness & wellness properties.
|
•
|
69 early childhood education center properties; and
|
•
|
16 private school properties.
|
•
|
We recognized straight-line write-offs totaling $13.0 million, which was comprised of $5.0 million of straight-line accounts receivable and $8.0 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 $7.5 million for the six months ended June 30, 2020.
|
•
|
We increased our expected credit losses by $4.7 million from our implementation estimate of $2.2 million. This increase was primarily the result of increased fundings and the economic uncertainty and the rapidly changing environment surrounding the COVID-19 pandemic.
|
•
|
We reduced rental revenue by $4.9 million due to contractual rent abatements and $3.8 million for rent concessions for certain of our tenants due to COVID-19.
|
•
|
We deferred approximately $60.0 million of amounts due from tenants and $3.5 million due from borrowers that were booked as receivables and approximately $41.0 million of amounts due from tenants that were not booked as receivables as the full amounts were not deemed probable of collection as a result of COVID-19 pandemic. The amounts not booked as receivables remain obligations of the tenants and will be recognized as revenue when received. The repayment terms for all of these deferments vary by tenant or borrower and several are still being negotiated.
|
•
|
For the six months ended June 30, 2020, we recognized revenue from American-Multi Cinema, Inc. (AMC) as well as several smaller tenants on a cash basis. See section below titled "Recent Developments" for additional details on the agreements entered into with AMC on July 31, 2020.
|
•
|
We recognized $51.3 million in impairment charges during the three and six months ended June 30, 2020, which was comprised of $36.3 million of impairments of real estate investments, and $15.0 million of impairments of operating lease right-of-use assets.
|
•
|
We recognized impairment charges on joint ventures of $3.2 million related to our equity investments in three theatre projects located in China.
|
•
|
On March 20, 2020, we borrowed $750.0 million under our unsecured revolving credit facility as a precautionary measure to increase our cash position and preserve financial flexibility given the global uncertainty caused by the COVID-19 pandemic.
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
||||||||||||
|
2020
|
2019
|
Change
|
|
2020
|
2019
|
Change
|
||||||||||
Total revenue from continuing operations
|
$
|
106.4
|
|
$
|
161.7
|
|
(34
|
)%
|
|
$
|
257.4
|
|
$
|
312.3
|
|
(18
|
)%
|
Net (loss) income available to common shareholders per diluted share
|
$
|
(0.90
|
)
|
$
|
0.79
|
|
(214
|
)%
|
|
$
|
(0.49
|
)
|
$
|
1.59
|
|
(131
|
)%
|
FFOAA per diluted share
|
$
|
0.41
|
|
$
|
1.36
|
|
(70
|
)%
|
|
$
|
1.39
|
|
$
|
2.73
|
|
(49
|
)%
|
•
|
The effects of COVID-19 as described above;
|
•
|
The effect of investment spending that occurred in 2020 and 2019;
|
•
|
The effect of property dispositions and mortgage note payoffs that occurred in 2020 and 2019;
|
•
|
The increase in other income and other expenses for the six months ended June 30, 2020 and a decrease in other income and other expenses for the three months ended June 30, 2020 primarily from the operations of the Kartrite Resort and Indoor Waterpark in Sullivan County, New York and the impacts of the COVID-19 pandemic on this property;
|
•
|
The decrease in termination fees included in gain on sale related to the sale of Education properties as well as lower gains on sale of real estate;
|
•
|
The decrease in transaction costs; and
|
•
|
The increase in common shares outstanding.
|
Six Months Ended June 30, 2020
|
|||||||||||||||||||
Operating Segment
|
|
Total Investment Spending
|
New Development
|
Re-development
|
Asset Acquisition
|
Mortgage Notes or Notes Receivable
|
Investment in Joint Ventures
|
||||||||||||
Experiential:
|
|
|
|
|
|
|
|
||||||||||||
Theatres
|
|
$
|
26,118
|
|
$
|
700
|
|
$
|
3,310
|
|
$
|
22,108
|
|
$
|
—
|
|
$
|
—
|
|
Eat & Play
|
|
12,791
|
|
12,013
|
|
778
|
|
—
|
|
—
|
|
—
|
|
||||||
Attractions
|
|
970
|
|
—
|
|
970
|
|
—
|
|
—
|
|
—
|
|
||||||
Experiential Lodging
|
|
11,106
|
|
10,708
|
|
398
|
|
—
|
|
—
|
|
—
|
|
||||||
Cultural
|
|
152
|
|
—
|
|
152
|
|
—
|
|
—
|
|
—
|
|
||||||
Fitness & Wellness
|
|
2,441
|
|
—
|
|
—
|
|
—
|
|
2,441
|
|
—
|
|
||||||
Total Experiential
|
|
53,578
|
|
23,421
|
|
5,608
|
|
22,108
|
|
2,441
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Education:
|
|
|
|
|
|
|
|
||||||||||||
Early Childhood Education Centers
|
|
3
|
|
—
|
|
—
|
|
—
|
|
3
|
|
—
|
|
||||||
Total Education
|
|
3
|
|
—
|
|
—
|
|
—
|
|
3
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Total Investment Spending
|
|
$
|
53,581
|
|
$
|
23,421
|
|
$
|
5,608
|
|
$
|
22,108
|
|
$
|
2,444
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2019
|
|||||||||||||||||||
Operating Segment
|
|
Total Investment Spending
|
New Development
|
Re-development
|
Asset Acquisition
|
Mortgage Notes or Notes Receivable
|
Investment in Joint Ventures
|
||||||||||||
Experiential:
|
|
|
|
|
|
|
|
||||||||||||
Theatres
|
|
$
|
404,486
|
|
$
|
4,326
|
|
$
|
22,332
|
|
$
|
377,828
|
|
$
|
—
|
|
$
|
—
|
|
Eat & Play
|
|
47,267
|
|
27,854
|
|
1,892
|
|
1,321
|
|
16,200
|
|
—
|
|
||||||
Attractions
|
|
102
|
|
—
|
|
—
|
|
—
|
|
102
|
|
—
|
|
||||||
Ski
|
|
288
|
|
—
|
|
288
|
|
—
|
|
—
|
|
—
|
|
||||||
Experiential Lodging
|
|
47,870
|
|
46,121
|
|
644
|
|
—
|
|
—
|
|
1,105
|
|
||||||
Gaming
|
|
211
|
|
211
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Cultural
|
|
30,463
|
|
—
|
|
—
|
|
23,963
|
|
6,500
|
|
—
|
|
||||||
Fitness & Wellness
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Total Experiential
|
|
530,687
|
|
78,512
|
|
25,156
|
|
403,112
|
|
22,802
|
|
1,105
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Education:
|
|
|
|
|
|
|
|
||||||||||||
Early Childhood Education Centers
|
|
10,531
|
|
1,363
|
|
—
|
|
2,570
|
|
6,598
|
|
—
|
|
||||||
Private Schools
|
|
4,297
|
|
4,297
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Public Charter Schools
|
|
21,016
|
|
16,873
|
|
—
|
|
—
|
|
4,143
|
|
—
|
|
||||||
Total Education
|
|
35,844
|
|
22,533
|
|
—
|
|
2,570
|
|
10,741
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Total Investment Spending
|
|
$
|
566,531
|
|
$
|
101,045
|
|
$
|
25,156
|
|
$
|
405,682
|
|
$
|
33,543
|
|
$
|
1,105
|
|
•
|
The Master Lease was designed with the intention that the parties will respect the master lease characterization at all times, which we believe will enhance our position in the event of a reorganization proceeding regarding AMC,
|
•
|
The lease terms on properties included in the Master Lease were increased by an average of nine years, and
|
•
|
We have the ability to reduce our exposure to AMC through the option to terminate each of the seven Transitional Leases and re-brand or sell them with the cooperation of AMC.
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended June 30,
|
|
Change
|
||||||||||||||
|
2020
|
2019
|
|
|
|
2020
|
2019
|
|
|
||||||||||||
Minimum rent (1)
|
$
|
89,589
|
|
$
|
134,409
|
|
|
$
|
(44,820
|
)
|
|
$
|
227,808
|
|
$
|
264,906
|
|
|
$
|
(37,098
|
)
|
Percentage rent (2)
|
1,454
|
|
4,147
|
|
|
(2,693
|
)
|
|
4,211
|
|
5,502
|
|
|
(1,291
|
)
|
||||||
Straight-line rent (3)
|
2,229
|
|
2,520
|
|
|
(291
|
)
|
|
(7,479
|
)
|
4,765
|
|
|
(12,244
|
)
|
||||||
Tenant reimbursements (4)
|
4,169
|
|
5,843
|
|
|
(1,674
|
)
|
|
7,867
|
|
11,945
|
|
|
(4,078
|
)
|
||||||
Other rental revenue
|
90
|
|
84
|
|
|
6
|
|
|
167
|
|
177
|
|
|
(10
|
)
|
||||||
Total Rental Revenue
|
$
|
97,531
|
|
$
|
147,003
|
|
|
$
|
(49,472
|
)
|
|
$
|
232,574
|
|
$
|
287,295
|
|
|
$
|
(54,721
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other income (5)
|
416
|
|
5,726
|
|
|
(5,310
|
)
|
|
7,989
|
|
6,070
|
|
|
1,919
|
|
||||||
Mortgage and other financing income (6)
|
8,413
|
|
9,011
|
|
|
(598
|
)
|
|
16,809
|
|
18,902
|
|
|
(2,093
|
)
|
||||||
Total revenue
|
$
|
106,360
|
|
$
|
161,740
|
|
|
$
|
(55,380
|
)
|
|
$
|
257,372
|
|
$
|
312,267
|
|
|
$
|
(54,895
|
)
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended June 30,
|
|
Change
|
|||||||||||||||
|
2020
|
2019
|
|
|
|
2020
|
2019
|
|
|
|||||||||||||
Property operating expense
|
$
|
15,329
|
|
$
|
14,597
|
|
|
$
|
732
|
|
|
$
|
28,422
|
|
$
|
30,148
|
|
|
$
|
(1,726
|
)
|
|
Other expense (1)
|
2,798
|
|
8,091
|
|
|
(5,293
|
)
|
|
12,332
|
|
8,091
|
|
|
4,241
|
|
|||||||
General and administrative expense (2)
|
10,432
|
|
12,230
|
|
|
(1,798
|
)
|
|
21,420
|
|
23,940
|
|
|
(2,520
|
)
|
|||||||
Severance expense
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
420
|
|
|
(420
|
)
|
|||||||
Costs associated with loan refinancing or payoff
|
820
|
|
—
|
|
|
820
|
|
|
820
|
|
—
|
|
|
820
|
|
|||||||
Interest expense, net (3)
|
38,340
|
|
36,458
|
|
|
1,882
|
|
|
73,093
|
|
70,421
|
|
|
2,672
|
|
|||||||
Transaction costs (4)
|
771
|
|
6,923
|
|
|
(6,152
|
)
|
|
1,846
|
|
12,046
|
|
|
(10,200
|
)
|
|||||||
Credit loss expense (5)
|
3,484
|
|
—
|
|
|
3,484
|
|
|
4,676
|
|
—
|
|
|
4,676
|
|
|||||||
Impairment charges (6)
|
51,264
|
|
—
|
|
|
51,264
|
|
|
51,264
|
|
—
|
|
|
51,264
|
|
|||||||
Depreciation and amortization (7)
|
42,450
|
|
38,790
|
|
|
3,660
|
|
|
86,260
|
|
74,792
|
|
|
11,468
|
|
|||||||
Equity in (loss) income from joint ventures (8)
|
(1,724
|
)
|
470
|
|
|
(2,194
|
)
|
|
(2,144
|
)
|
959
|
|
|
(3,103
|
)
|
|||||||
Impairment charges on joint ventures (9)
|
(3,247
|
)
|
—
|
|
—
|
|
(3,247
|
)
|
|
(3,247
|
)
|
—
|
|
|
(3,247
|
)
|
||||||
Gain (loss) on sale of real estate
|
22
|
|
—
|
|
|
22
|
|
|
242
|
|
(388
|
)
|
|
630
|
|
|||||||
Income tax benefit
|
1,312
|
|
1,300
|
|
|
12
|
|
|
2,063
|
|
1,905
|
|
|
158
|
|
|||||||
Income from discontinued operations before other items (10)
|
—
|
|
10,399
|
|
|
(10,399
|
)
|
|
—
|
|
20,568
|
|
|
(20,568
|
)
|
|||||||
Gain on sale of real estate from discontinued operations (11)
|
—
|
|
9,774
|
|
|
(9,774
|
)
|
|
—
|
|
16,490
|
|
|
(16,490
|
)
|
|||||||
Preferred dividend requirements
|
(6,034
|
)
|
(6,034
|
)
|
|
—
|
|
|
(12,068
|
)
|
(12,068
|
)
|
|
—
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2020
|
|
2019
|
||||
Net cash provided by operating activities
|
|
$
|
57,413
|
|
|
$
|
209,756
|
|
Net cash used by investing activities
|
|
(52,978
|
)
|
|
(461,196
|
)
|
||
Net cash provided by financing activities
|
|
473,879
|
|
|
244,761
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
FFO:
|
|
|
|
|
|
|
|
||||||||
Net (loss) income available to common shareholders of EPR Properties
|
$
|
(68,999
|
)
|
|
$
|
60,560
|
|
|
$
|
(37,915
|
)
|
|
$
|
119,875
|
|
Gain on sale of real estate
|
(22
|
)
|
|
(9,774
|
)
|
|
(242
|
)
|
|
(16,102
|
)
|
||||
Impairment of real estate investments, net (1)
|
36,255
|
|
|
—
|
|
|
36,255
|
|
|
—
|
|
||||
Real estate depreciation and amortization
|
42,151
|
|
|
42,098
|
|
|
85,676
|
|
|
81,612
|
|
||||
Allocated share of joint venture depreciation
|
378
|
|
|
554
|
|
|
761
|
|
|
1,109
|
|
||||
Impairment charges on joint ventures
|
3,247
|
|
|
—
|
|
|
3,247
|
|
|
—
|
|
||||
FFO available to common shareholders of EPR Properties
|
$
|
13,010
|
|
|
$
|
93,438
|
|
|
$
|
87,782
|
|
|
$
|
186,494
|
|
|
|
|
|
|
|
|
|
||||||||
FFO available to common shareholders of EPR Properties
|
$
|
13,010
|
|
|
$
|
93,438
|
|
|
$
|
87,782
|
|
|
$
|
186,494
|
|
Add: Preferred dividends for Series C preferred shares
|
—
|
|
|
1,939
|
|
|
—
|
|
|
3,878
|
|
||||
Add: Preferred dividends for Series E preferred shares
|
—
|
|
|
1,939
|
|
|
—
|
|
|
3,878
|
|
||||
Diluted FFO available to common shareholders of EPR Properties
|
$
|
13,010
|
|
|
$
|
97,316
|
|
|
$
|
87,782
|
|
|
$
|
194,250
|
|
FFOAA:
|
|
|
|
|
|
|
|
||||||||
FFO available to common shareholders of EPR Properties
|
$
|
13,010
|
|
|
$
|
93,438
|
|
|
$
|
87,782
|
|
|
$
|
186,494
|
|
Costs associated with loan refinancing or payoff
|
820
|
|
|
—
|
|
|
820
|
|
|
—
|
|
||||
Transaction costs
|
771
|
|
|
6,923
|
|
|
1,846
|
|
|
12,046
|
|
||||
Severance expense
|
—
|
|
|
—
|
|
|
—
|
|
|
420
|
|
||||
Termination fee included in gain on sale
|
—
|
|
|
6,533
|
|
|
—
|
|
|
11,534
|
|
||||
Impairment of operating lease right-of-use assets (1)
|
15,009
|
|
|
—
|
|
|
15,009
|
|
|
—
|
|
||||
Credit loss expense
|
3,484
|
|
|
—
|
|
|
4,676
|
|
|
—
|
|
||||
Deferred income tax benefit
|
(1,676
|
)
|
|
(1,675
|
)
|
|
(2,789
|
)
|
|
(2,284
|
)
|
||||
FFOAA available to common shareholders of EPR Properties
|
$
|
31,418
|
|
|
$
|
105,219
|
|
|
$
|
107,344
|
|
|
$
|
208,210
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
FFOAA available to common shareholders of EPR Properties
|
$
|
31,418
|
|
|
$
|
105,219
|
|
|
$
|
107,344
|
|
|
$
|
208,210
|
|
Add: Preferred dividends for Series C preferred shares
|
—
|
|
|
1,939
|
|
|
—
|
|
|
3,878
|
|
||||
Add: Preferred dividends for Series E preferred shares
|
—
|
|
|
1,939
|
|
|
—
|
|
|
3,878
|
|
||||
Diluted FFOAA available to common shareholders of EPR Properties
|
$
|
31,418
|
|
|
$
|
109,097
|
|
|
$
|
107,344
|
|
|
$
|
215,966
|
|
AFFO:
|
|
|
|
|
|
|
|
||||||||
FFOAA available to common shareholders of EPR Properties
|
$
|
31,418
|
|
|
$
|
105,219
|
|
|
$
|
107,344
|
|
|
$
|
208,210
|
|
Non-real estate depreciation and amortization
|
299
|
|
|
257
|
|
|
584
|
|
|
486
|
|
||||
Deferred financing fees amortization
|
1,651
|
|
|
1,517
|
|
|
3,285
|
|
|
3,019
|
|
||||
Share-based compensation expense to management and trustees
|
3,463
|
|
|
3,283
|
|
|
6,972
|
|
|
6,460
|
|
||||
Amortization of above and below market leases, net and tenant allowances
|
(108
|
)
|
|
(58
|
)
|
|
(260
|
)
|
|
(117
|
)
|
||||
Maintenance capital expenditures (2)
|
(1,291
|
)
|
|
(510
|
)
|
|
(2,219
|
)
|
|
(807
|
)
|
||||
Straight-lined rental revenue
|
(2,229
|
)
|
|
(3,223
|
)
|
|
7,479
|
|
|
(5,637
|
)
|
||||
Straight-lined ground sublease expense
|
207
|
|
|
205
|
|
|
383
|
|
|
389
|
|
||||
Non-cash portion of mortgage and other financing income
|
(97
|
)
|
|
(1,069
|
)
|
|
(188
|
)
|
|
(2,083
|
)
|
||||
AFFO available to common shareholders of EPR Properties
|
$
|
33,313
|
|
|
$
|
105,621
|
|
|
$
|
123,380
|
|
|
$
|
209,920
|
|
|
|
|
|
|
|
|
|
||||||||
FFO per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.17
|
|
|
$
|
1.23
|
|
|
$
|
1.13
|
|
|
$
|
2.47
|
|
Diluted
|
0.17
|
|
|
1.22
|
|
|
1.13
|
|
|
2.45
|
|
||||
FFOAA per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.41
|
|
|
$
|
1.38
|
|
|
$
|
1.39
|
|
|
$
|
2.76
|
|
Diluted
|
0.41
|
|
|
1.36
|
|
|
1.39
|
|
|
2.73
|
|
||||
Shares used for computation (in thousands):
|
|
|
|
|
|
|
|
||||||||
Basic
|
76,310
|
|
|
76,164
|
|
|
77,388
|
|
|
75,426
|
|
||||
Diluted
|
76,310
|
|
|
76,199
|
|
|
77,388
|
|
|
75,467
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding-diluted EPS
|
76,310
|
|
|
76,199
|
|
|
77,388
|
|
|
75,467
|
|
||||
Effect of dilutive Series C preferred shares
|
—
|
|
|
2,158
|
|
|
—
|
|
|
2,151
|
|
||||
Effect of dilutive Series E preferred shares
|
—
|
|
|
1,628
|
|
|
—
|
|
|
1,625
|
|
||||
Adjusted weighted average shares outstanding-diluted Series C and Series E
|
76,310
|
|
|
79,985
|
|
|
77,388
|
|
|
79,243
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other financial information:
|
|
|
|
|
|
|
|
||||||||
Dividends per common share
|
$
|
0.3825
|
|
|
$
|
1.1250
|
|
|
$
|
1.5150
|
|
|
$
|
2.2500
|
|
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, 2020 common shares
|
|
1,015,731
|
|
|
$
|
20.04
|
|
|
1,015,731
|
|
(1
|
)
|
|
$
|
129,648,479
|
|
May 1 through May 31, 2020 common shares
|
|
2,502,982
|
|
|
26.84
|
|
|
2,502,982
|
|
(1
|
)
|
|
62,475,234
|
|
||
June 1 through June 30, 2020 common shares
|
|
548,003
|
|
|
33.70
|
|
|
548,003
|
|
(1
|
)
|
|
44,006,350
|
|
||
|
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
4,066,716
|
|
|
$
|
26.06
|
|
|
4,066,716
|
|
|
|
$
|
44,006,350
|
|
3.1*
|
Composite of Amended and Restated Declaration of Trust of the Company (inclusive of all amendments through June 1, 2020), is attached hereto as Exhibit 3.1.
|
10.1*
|
Amendment No. 1 to Second Amended, Restated and Consolidated Credit Agreement, dated as of June 29, 2020, among the Company, as borrower, KeyBank National Association, as administrative agent, and the other agents and lenders party thereto.
|
10.2*
|
Second Amendment to Note Purchase Agreement, dated as of June 29, 2020, among the Company and the institutional investors party thereto.
|
31.1*
|
Certification of Gregory K. Silvers 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 - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
101.SCH*
|
Inline XBRL Taxonomy Extension Schema
|
101.CAL*
|
Inline XBRL Extension Calculation Linkbase
|
101.DEF*
|
Inline XBRL Taxonomy Extension Definition Linkbase
|
101.LAB*
|
Inline XBRL Taxonomy Extension Label Linkbase
|
101.PRE*
|
Inline XBRL Taxonomy Extension Presentation Linkbase
|
104*
|
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
|
|
|
EPR Properties
|
||
|
|
|
|
|
Dated:
|
August 6, 2020
|
By
|
|
/s/ Gregory K. Silvers
|
|
|
|
|
Gregory K. Silvers, President and Chief Executive
Officer (Principal Executive Officer)
|
|
|
|
|
|
Dated:
|
August 6, 2020
|
By
|
|
/s/ Tonya L. Mater
|
|
|
|
|
Tonya L. Mater, Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)
|
|
|
Category
|
S&P/Fitch Ratings (Covenant Relief Period):
|
Moody’s Ratings (Covenant Relief Period):
|
Base Rate
Margin (Covenant Relief Period):
|
LIBOR
Margin
(Covenant Relief Period):
|
Facility
Fee (Covenant Relief Period):
|
1
|
>=BBB
|
>=Baa2
|
37.5 bps
|
137.5 bps
|
37.5 bps
|
2
|
N/A
|
=Baa3
|
62.5 bps
|
162.5 bps
|
37.5 bps
|
3
|
<=BB+
|
<=Ba1
|
97.5 bps
|
197.5 bps
|
37.5 bps
|
Category
|
S&P/Fitch Ratings (Covenant Relief Period):
|
Moody’s Ratings (Covenant Relief Period):
|
Base Rate
Margin (Covenant Relief Period):
|
LIBOR
Margin (Covenant Relief Period):
|
1
|
>=BBB
|
>=Baa2
|
75.0 bps
|
175.0 bps
|
2
|
N/A
|
=Baa3
|
100.0 bps
|
200.0 bps
|
3
|
<=BB+
|
<=Ba1
|
135.0 bps
|
235.0 bps
|
Category
|
S&P/Fitch Ratings:
|
Moody’s Ratings:
|
Base Rate
Margin
|
LIBOR
Margin
|
Facility
Fee
|
1
|
>=A-
|
>=A3
|
0.0 bps
|
82.5 bps
|
12.5 bps
|
2
|
=BBB+
|
=Baa1
|
0.0 bps
|
87.5 bps
|
15.0 bps
|
3
|
=BBB
|
=Baa2
|
10.0 bps
|
100.0 bps
|
20.0 bps
|
4
|
=BBB-
|
=Baa3
|
20.0 bps
|
120.0 bps
|
25.0 bps
|
5
|
<=BB+
|
<=Ba1
|
55.0 bps
|
155.0 bps
|
30.0 bps
|
Category
|
S&P/Fitch Ratings:
|
Moody’s Ratings:
|
Base Rate
Margin
|
LIBOR
Margin
|
1
|
>=A-
|
>=A3
|
0.0 bps
|
90.0 bps
|
2
|
=BBB+
|
=Baa1
|
0.0 bps
|
95.0 bps
|
3
|
=BBB
|
=Baa2
|
10.0 bps
|
110.0 bps
|
4
|
=BBB-
|
=Baa3
|
35.0 bps
|
135.0 bps
|
5
|
<=BB+
|
<=Ba1
|
75.0 bps
|
175.0 bps
|
1.
|
Grant of Pledge. As security for the punctual payment and performance in full when due of the Senior Indebtedness, each Pledgor does hereby grant to the Collateral Agent, for the ratable benefit of the Secured Parties, and pledge a continuing lien on, and security interest in, all of its right, title, and interest in and to the Collateral.
|
2.
|
Defined Terms. Unless otherwise defined herein or in the Credit Agreement as in effect on the date hereof or the Intercreditor Agreement, capitalized terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC. The following terms shall have the following meanings:
|
3.
|
Warranties and Representations. Each Pledgor warrants and represents to, and agrees with, Collateral Agent that:
|
4.
|
Pledgor’s Agreements. Each Pledgor agrees so long as the Senior Indebtedness remains outstanding that:
|
(1)
|
impose any restrictions upon the sale, transfer or disposition of the Collateral other than restrictions, if any, in existence on the date hereof or on the date such Pledged
|
(2)
|
result in the issuance of any additional interest in any Issuer, or of any class of security, which issuance would reasonably be expected to materially and adversely affect the value of the Collateral or could otherwise reasonably be expected to have a Material Adverse Effect; or
|
(3)
|
vest additional powers, privileges, preferences or priorities to any other class of interest in any Issuer to the detriment of the value of or rights accruing to the Collateral; or
|
(4)
|
result in an involuntary lien or encumbrance being placed upon or attaching to any of the Collateral which lien or encumbrance is not discharged within thirty (30) days (or such longer period as the Collateral Agent may agree in its sole discretion); or
|
(5)
|
materially and adversely affect the validity, perfection or priority of the Collateral Agent’s security interest in the Collateral or would otherwise reasonably be expected to have a Material Adverse Effect;
|
5.
|
Payments on Account of Collateral.
|
6.
|
Voting Rights.
|
7.
|
Rights After Event of Default.
|
8.
|
Actions By Collateral Agent. Each Pledgor hereby designates Collateral Agent, or any attorney, agent or other Person designated by Collateral Agent, so long as any Event Default exists, as the attorney-in-fact of such Pledgor to (a) endorse in favor of Collateral Agent any of the Collateral; (b) cause the transfer of any of the Collateral in such name as Collateral Agent may from time to time determine; (c) renew, extend or roll over any Collateral; and (d) make, demand and initiate actions to enforce any of the Collateral or rights therein. Collateral Agent may take such action with respect to the Collateral as Collateral Agent may reasonably determine to be necessary to protect and preserve its interest in the Collateral. Collateral Agent shall also have and may exercise at any time all rights, remedies, powers, privileges and discretions of each Pledgor with respect to and under the Collateral; provided, however, Collateral Agent shall have no right to exercise any Voting Rights or to foreclose or otherwise realize on any Collateral in each case except in accordance with the provisions of this Agreement. Except as otherwise provided in this Agreement, including as otherwise provided in the preceding sentence, all of the rights, remedies, powers, privileges and discretions included in this Section
|
9.
|
Rights and Remedies. The rights, remedies, powers, privileges and discretions of Collateral Agent and the Secured Parties hereunder (hereinafter, the “Rights and Remedies”) shall be cumulative and not exclusive of any rights, remedies, powers, privileges or discretions which it or they may otherwise have. No delay or omission by Collateral Agent or any other Secured Party in exercising or enforcing any of its rights and remedies shall operate as, or constitute, a waiver thereof. No waiver by Collateral Agent or any Secured Party of any Default or any Event of Default or of any default under any other agreement shall operate as a waiver of any other default hereunder or under any other of the Loan Agreements. No exercise of any of the Rights and Remedies and no other agreement or transaction of whatever nature entered into between Collateral Agent, any Secured Party and Pledgor at any time shall preclude any other exercise of the Rights and Remedies. No waiver by Collateral Agent or any other Secured Party of any of the Rights and Remedies on any one occasion shall be deemed a waiver on any subsequent occasion nor shall it be deemed a continuing waiver. All of the Rights and Remedies and all of Collateral Agent’s and each other Secured Party’s rights, remedies, powers, privileges and discretions under any other agreement or transaction are cumulative and not alternative or exclusive and may be exercised by Collateral Agent and the other applicable Secured Party(ies) at such time or times in such order of preference as Collateral Agent or such other Secured Party(ies) in its or their sole and absolute discretion may determine. All Rights and Remedies, insofar as the enforcement of this Agreement is concerned, may be exercised only by the Collateral Agent, and not by any Secured Party.
|
10.
|
Pledgor’s Consent and Waivers.
|
11.
|
Collateral Agent May Assign. Each Pledgor agrees that upon any transfer of the entirety of the Collateral Agent’s rights under this Agreement, Collateral Agent may deliver to the transferee of such rights the Collateral, who shall thereupon become vested with all powers and rights given to Collateral Agent in respect thereto, and Collateral Agent shall be thereafter forever relieved and fully discharged from any liability or responsibility in connection therewith.
|
12.
|
Limits on Collateral Agent’s Duties. Collateral Agent shall have no duty as to the collection or protection of the Collateral, or any portion thereof, or any income or distribution thereon, beyond the safe custody of such of the Collateral as may come into the actual possession of Collateral Agent, and Collateral Agent shall have no duty as to the preservation of rights against prior parties or any other rights pertaining thereto.
|
13.
|
WAIVER OF JURY TRIAL. EACH PLEDGOR, COLLATERAL AGENT AND THE SECURED PARTIES MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, COLLATERAL AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
|
14.
|
Financing Statements; Other Documents. This Agreement constitutes an authenticated record, and each Pledgor hereby authorizes the Collateral Agent to file one or more UCC-1 financing statements, continuation statements and/or other documents with respect to the Collateral, without the signature of any Pledgor, and in such filing offices as the Collateral Agent shall deem reasonably appropriate. Each Pledgor agrees to deliver any other document or instrument, which the Collateral Agent may reasonably request in connection with the administration and enforcement of this Agreement or with respect to the Collateral for the purposes of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted.
|
15.
|
Termination; Release. Upon the payment in full of the Senior Indebtedness (other than unasserted contingent indemnity or similar unasserted contingent obligations) or upon any disposition of any of the Collateral permitted by the Loan Agreements, the liens and security interests created in the Collateral granted to the Collateral Agent as provided for herein shall be automatically released without any further notice or other formality. However, such release by the Collateral Agent shall not be deemed to terminate or release each Pledgor from any obligation or liability under this Agreement, which specifically by its terms survives the payment in full of the Senior Indebtedness. Upon any release of the security provided for herein, the Collateral
|
16.
|
Miscellaneous.
|
|
PLEDGORS:
|
|
[___], a [___], as a Pledgor
By:____________________________
Name:____________________________
Title:____________________________
|
|
[___], a [___], as a Pledgor
By:____________________________
Name:____________________________
Title:____________________________
|
Pledgor
|
Issuer
|
Entity Form
|
Jurisdiction of Organization
|
Percentage Owned
|
Certificate Number (if applicable)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
[UCC-1 filings to be filed in the name of each Pledgor with the Secretary of State of its state of organization describing the Collateral as set forth herein.]
|
2.
|
[Delivery to the Collateral Agent of the certificates, if any, issued to the Pledgors as set forth in Schedule II hereto and representing 100% of the Equity Interests in each such Issuer pledged hereunder, together with an undated instrument of transfer or assignment covering any such certificates duly executed in blank by the applicable Pledgor.]
|
Pledgor
|
Issuer
|
Entity
Form
|
Jurisdiction of Organization
|
Percentage Owned
|
Certificate Number (if applicable)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pledgor
|
Issuer
|
Corporate Form
|
Jurisdiction of Organization
|
Percentage Owned
|
Certificate Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECTION 1.
|
AMENDMENTS.
|
SECTION 2.
|
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
|
By
|
/s/ Mark A. Peterson
|
Noteholder
|
Fee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
$340,000
|
1.
|
Grant of Pledge. As security for the punctual payment and performance in full when due of the Senior Indebtedness, each Pledgor does hereby grant to the Collateral Agent, for the ratable benefit of the Secured Parties, and pledge a continuing lien on, and security interest in, all of its right, title, and interest in and to the Collateral.
|
2.
|
Defined Terms. Unless otherwise defined herein or in the Credit Agreement as in effect on the date hereof or the Intercreditor Agreement, capitalized terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC. The following terms shall have the following meanings:
|
(a)
|
Capital Stock. The term “Capital Stock” shall mean and include, collectively, all shares of capital stock (whether denominated as common or preferred stock), partnership, limited liability company, or membership interests, joint venture interests or other ownership interests in or equivalents of or in a Person (other than an individual), whether voting or non-voting.
|
(b)
|
CFC. The term “CFC” shall mean a Person that is a controlled foreign corporation under Section 957 of the Code.
|
(c)
|
Collateral. The term “Collateral” shall mean and include, collectively, all Pledged Interests owned by each Pledgor, together with (i) all interests, certificates (if any), options or rights of any nature whatsoever which may be issued or granted to or in respect of such Pledged Interests, (ii) all Distributions in respect thereof; (iii) all books, records, electronically stored data and information relating to such Pledged Interests and all rights of access to such books, records, and information; (iv) all additions to the Pledged Interests, all substitutions therefor and all replacements thereof; (v) all Voting Rights related thereto; (vi) all contract rights, general intangibles, claims, powers, privileges, benefits and remedies of relating to the foregoing; and (vii) all cash or non-cash Proceeds of any of the foregoing.
|
(d)
|
Issuer. The term “Issuer” shall have the meaning given to such term in the definition of “Pledged Interests” below.
|
(e)
|
Loan Agreements. The term “Loan Agreements” shall mean, individually and collectively, as the context so requires, the Credit Agreement and the Loan Documents (as defined therein) and the Note Purchase Agreement, the Notes and all instruments and other documents related thereto.
|
(f)
|
Permitted Liens. The term “Permitted Liens” shall mean Liens permitted under both clause (a) of the definition of Permitted Liens in the Credit Agreement and clause (a) of the definition of Permitted Liens in the Note Purchase Agreement.
|
(g)
|
Pledged Collateral Agreement. The term “Pledged Collateral Agreement” shall have the meaning given to such term in Section 4(c)(ii) below.
|
(h)
|
Pledged Interests. The term “Pledged Interests” shall mean and include, collectively, all Equity Interests owned by each Pledgor in any Subsidiary thereof which such Pledgor is required to pledge pursuant to the Loan Agreements (including, without limitation, each Subsidiary described in Schedule II hereof) (each, individually, an “Issuer” and, collectively, the “Issuers”), whether now existing or hereafter acquired or formed, as more particularly described in Schedule II hereof (including as such Schedule II may be supplemented from time to time by virtue of any Joinder Agreement or other supplement or amendment to this Agreement), and all Equity Interests in any successor corporation or interests or certificates of any successor limited liability company, partnership or other entity owned by each Pledgor formed by or resulting from any consolidation or merger in which any such Subsidiary thereof is not the surviving entity; provided, however, that to the extent applicable, Pledged Interests shall not include Equity Interests possessing more than 65% of the voting power or control of all classes of interests entitled to vote of any CFC to the extent such pledge would result in a material adverse tax consequence to such Pledgor.
|
(i)
|
Secured Parties. The term “Secured Parties” shall mean and include, collectively, the Collateral Agent, the Bank Agent, each Senior Lender and each Noteholder.
|
(j)
|
UCC. The term “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the applicable jurisdiction.
|
(k)
|
Voting Rights. The term “Voting Rights” shall mean all rights and interests under each of the operating agreements of each Issuer and each shareholders agreement, voting trust, proxy agreement, or similar agreement in respect of the Pledged Interests, including all management rights and rights to vote and give approvals, consents, decisions and directions and exercise any other control or similar right with respect to the Pledged Interests.
|
3.
|
Warranties and Representations. Each Pledgor warrants and represents to, and agrees with, Collateral Agent that:
|
(a)
|
Pledged Interests.
|
(i)
|
Schedule II attached hereto (as the same may be amended from time to time) correctly sets forth the percentage of the issued and outstanding shares of each class of the Capital Stock of any Issuer owned by each Pledgor;
|
(ii)
|
The Pledged Interests pledged by such Pledgor constitute all of the issued and outstanding shares of Capital Stock of each Issuer owned by such Pledgor, except to the extent provided in the definition of “Pledged Interests”, and such Pledgor
|
(iii)
|
Such Pledgor is and shall be the sole owner of, and has and shall have good and valid title to, its respective Pledged Interests as identified on Schedule II attached hereto (as the same may be amended from time to time), free and clear of all Liens, security interests and other encumbrances of every nature whatsoever, except (x) in favor of the Collateral Agent, for the benefit of the Secured Parties, and (y) Permitted Liens, and the Pledged Interests have not previously been assigned, sold, transferred, pledged or encumbered (except pursuant to this Agreement);
|
(iv)
|
All of the Pledged Interests held by such Pledgor have been duly and validly issued, and, if applicable, are fully paid and non-assessable, subject in the case of Pledged Interests constituting partnership interests or limited liability company interests or membership interests to future assessments required under applicable law and any applicable partnership or operating agreement;
|
(v)
|
With respect to any Pledged Interests of such Pledgor in an Issuer that is a limited liability company or partnership, (i) such Pledgor is a duly constituted member or partner of such Issuer pursuant to the limited liability company or partnership agreement of such Issuer, and (ii) such Pledged Interests are not credited to a “securities account” (within the meaning of Section 8-501(a) of the UCC);
|
(vi)
|
True and complete copies of the organizational documents of each Issuer and any shareholders agreement, voting trust, proxy agreement, or similar agreement related thereto have been delivered by the Pledgors to Collateral Agent, and the same have not been further amended or modified in any respect whatsoever;
|
(vii)
|
With respect to any Pledged Interests of such Pledgor in an Issuer that is a corporation, such Pledged Interests (i) are “securities” within the meaning of Sections 8-102(a)(15) and 8-103 of the UCC, (ii) are “financial assets” (within the meaning of Section 8-102(a)(9) of the UCC) and (iii) are not credited to a “securities account” (within the meaning of Section 8-501(a) of the UCC);
|
(viii)
|
With respect to any Pledged Interests of such Pledgor in an Issuer that is a corporation, such Pledged Interests are certificated; and 1
|
(ix)
|
With respect to any Pledged Interests of such Pledgor in an Issuer that is a limited liability company or a limited partnership, the operating agreement or partnership agreement of such Issuer, as applicable, and, if such is the case, each certificate, if any, evidencing such Pledged Interests, state that such Pledged Interests are “securities” as such term is defined in Article 8 of the UCC as in effect in the Issuer's state of organization. 2
|
(b)
|
Perfection.
|
(i)
|
No Pledged Interests are evidenced or represented by certificates except to the extent set forth on Schedule II attached hereto (as the same may be amended from time to time) and all such original certificates, if any, have been delivered to the Collateral Agent accompanied by instruments of transfer or assignment duly executed in blank, all in form and substance satisfactory to the Collateral Agent;
|
(ii)
|
No Pledged Interest consisting of partnership or limited liability company interests that is not evidenced or represented by a certificate constitutes a “security” for purposes of Article 8 of the UCC of the jurisdiction of organization of the Issuer of such Pledged Interests (except if and as otherwise noted in Schedule II, including any supplements or amendments thereto) and, except as has been obtained, the applicable organizational documents with respect to such Pledged Interest do not require the consent of the other shareholders, members, partners or other Persons to permit the Collateral Agent or its designees to be substituted for the applicable Pledgor as a shareholder, member, partner or other equity owner, as applicable, thereto;
|
(iii)
|
None of the Pledged Interests are dealt in or traded on securities exchanges or in securities markets, and none of the Pledged Interests by its terms expressly provides that it is an investment company security, and none of the Pledged Interests is held in a securities account (as defined in Section 8-501 of the UCC);
|
(iv)
|
The security interests granted to the Collateral Agent pursuant to this Agreement (i) upon completion of the filings and other actions specified on Schedule III attached hereto (as the same may be amended from time to time) (which, in the case of all filings and other documents referred to on said Schedule, have been delivered to the Collateral Agent completed and duly executed (if applicable)) will constitute valid perfected security interests in all of the Collateral in favor of the Collateral Agent, for the benefit of the Secured Parties, as collateral security for the Senior Indebtedness, enforceable in accordance with the terms hereof against any creditors of such Pledgor and any Persons purporting to purchase any Collateral from such Pledgor (except as enforceability may be limited to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law)), and (ii) are prior to all other Liens on the Collateral (except Permitted Liens having priority by operation of law);
|
(v)
|
No Person other than the Collateral Agent has “control” (as defined in the UCC) or possession of all or any part of the Collateral except as permitted by the Loan Agreements;
|
(vi)
|
To the extent issued, the original certificates representing 100% of the Pledged Interests have been delivered to the Collateral Agent accompanied by instruments of transfer or assignment duly executed in blank by the Pledgor; and
|
(vii)
|
There is no agreement, and no Pledgor shall enter into any agreement or take any other action, that would restrict the transferability of any of the Collateral or
|
(c)
|
Authority; Enforceability.
|
(i)
|
Such Pledgor has the full right, power and authority to pledge its respective Collateral and to grant the security interest in the Collateral as herein provided;
|
(ii)
|
There are no restrictions on the transfer of any Collateral owned by such Pledgor to Collateral Agent hereunder or with respect to any subsequent transfer thereof or realization thereupon by Collateral Agent (except for any such restrictions that have been waived to the Collateral Agent's satisfaction), and each Pledgor hereby waives any restrictions under any Pledged Collateral Agreement or applicable Law or otherwise (other than under any applicable securities laws) which otherwise might apply to the exercise by the Collateral Agent of the rights and remedies provided in this Agreement so as to permit (i) such Pledgor to enter into and perform such Pledgor’s obligations under this Agreement and (ii) the Collateral Agent’s exercise of the Collateral Agent’s rights and remedies set forth hereunder;
|
(iii)
|
This Agreement constitutes the legal, valid and binding obligation of such Pledgor in accordance with the terms hereof and has been duly authorized, executed and delivered, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and general principles of equity;
|
(iv)
|
The execution and delivery of this Agreement will not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which any Pledgor is subject or any judgment, order, writ, injunction, license or permit applicable to such Pledgor or any indenture, mortgage, deed of trust, or other material agreement or instrument to which such Pledgor is a party or by which such Pledgor may be bound, or to which such Pledgor may be subject; and
|
(v)
|
There is no material litigation or administrative proceeding now pending, or to the best of its knowledge threatened in writing, against such Pledgor which could reasonably be expected to materially impair the ability of such Pledgor to pay or perform such Pledgor’s obligations hereunder or the exercise by the Collateral Agent of its rights and remedies hereunder.
|
4.
|
Pledgor’s Agreements. Each Pledgor agrees so long as the Senior Indebtedness remains outstanding that:
|
(a)
|
Delivery of certificates; Perfection.
|
(i)
|
Upon obtaining any additional Pledged Interests, any Capital Stock, any certificate (including any certificate representing a dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights in respect of such Capital
|
(ii)
|
Any sums paid upon or in respect of the Pledged Interests upon the liquidation or dissolution of any Issuer shall be paid over to the Collateral Agent to be held by it hereunder as additional collateral security for the Senior Indebtedness, and in case any distribution of capital shall be made on or in respect of such Pledged Interests or any property shall be distributed upon or with respect to such Pledged Interests pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall, unless otherwise subject to a perfected security interest in favor of the Collateral Agent or as permitted under the Loan Agreements, be delivered to the Collateral Agent to be held by it hereunder as additional collateral security for the Senior Indebtedness. If any sums of money or property so paid or distributed in respect of any Pledged Interests shall be received by such Pledgor, such Pledgor shall, until such money or property is paid or delivered to the Collateral Agent, unless otherwise subject to a perfected security interest in favor of the Collateral Agent or as permitted under the Loan Agreements, hold such money or property in trust for the Collateral Agent, segregated from other funds of such Pledgor, as additional collateral security for the Senior Indebtedness;
|
(iii)
|
Such Pledgor shall, promptly after the receipt thereof by or on behalf of a Pledgor, deliver to the Collateral Agent all certificates and instruments constituting or representing Pledged Interests. Prior to delivery to the Collateral Agent, all such certificates constituting or representing Pledged Interests shall be held in trust by such Pledgor separate from the property of such Pledgor for the benefit of the Collateral Agent pursuant hereto. All such certificates constituting or representing Pledged Interests shall be delivered in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment in blank, in form and substance reasonably satisfactory to the Collateral Agent;
|
(iv)
|
If any of the Pledged Interests are at any time not evidenced by certificates of ownership, then each applicable Pledgor shall, to the extent permitted by applicable Law and upon the request of the Collateral Agent, cause such pledge to be recorded on the equity holder register or the books of the issuer, cause the issuer thereof to execute an Acknowledgment and Consent in the form of Exhibit A attached hereto, execute customary pledge forms or other documents necessary or reasonably requested to complete the pledge, and give the Collateral Agent the right to transfer
|
(v)
|
Such Pledgor shall cause any Pledged Interest that is issued by an Issuer that is a corporation and that is represented by a certificate to continue to be represented by a certificate (or, if such Pledged Interest is not represented by a certificate, to be represented by a certificate if so requested by the Collateral Agent) and such Pledgor shall take the actions required by Section 4(a)(iii) above with respect to such Pledged Interests and certificates.
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(vi)
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Such Pledgor shall not permit any Pledged Interests issued by an Issuer that is not a corporation to be (1) credited to a “securities account” (within the meaning of Section 8-501(a) of the UCC), (2) dealt in or traded on securities exchanges or securities markets, (3) “investment company securities” within the meaning of Section 8-103 of the UCC, or (4) otherwise treated as a “security” for purposes of Article 8 of the UCC of the jurisdiction of organization of the Issuer of such Pledged Interests unless, the applicable Pledgor shall have given not less than ten (10) Business Day’s prior written notice to the Collateral Agent of such event and, concurrently with such event, the applicable Pledgor shall (A) in the case of (1) above, cause such securities account to be maintained with a securities intermediary that is reasonably acceptable to the Collateral Agent and deliver a control agreement with respect to such securities account in form and substance satisfactory to the Collateral Agent, and (B) in any other case of (2) - (4) above, (x) cause the organizational documents of such Issuer to be amended to provide that such Pledged Interest will be a “security” as defined in and governed by Article 8 of the Uniform Commercial Code, (y) if requested by the Collateral Agent, cause the applicable Issuer to issue certificates evidencing such Pledged Interests, and (z) satisfy the requirements of Section 4(a)(iii) above with respect to such Pledged Interests and certificates.
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(b)
|
Maintenance of Collateral and Perfected Security Interest.
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(i)
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Each Pledgor shall keep the Collateral owned by it free and clear of all liens, encumbrances, attachments, security interest pledges and charges, other than in favor of Collateral Agent under this Agreement or Permitted Liens, shall maintain the security interests of the Collateral Agent created by this Agreement as perfected security interests having at least the priority described in Section 3(b)(iv), and shall defend such security interests against the claims and demands of all Persons whomsoever (other than a holder of a Permitted Lien), subject to the rights of such Pledgor under the Loan Agreements to dispose of the Collateral, in each case, at its own cost and expense;
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(ii)
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Except as permitted by the Loan Agreements, such Pledgor shall not sell, transfer, or otherwise dispose of the Collateral owned by it or any interest therein to any other Person. If any Collateral, or any part thereof, is sold, transferred or otherwise disposed of in violation of this Section 4(b)(ii), the security interest of the Collateral Agent shall continue in the Collateral notwithstanding such sale, transfer or other disposition, and such Pledgor will deliver any proceeds thereof to the Collateral Agent to be held as Collateral hereunder (it is acknowledged and agreed that the
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(iii)
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If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note, other instrument or chattel paper, such note, instrument or chattel paper shall be promptly delivered to the Collateral Agent, duly endorsed in a manner reasonably satisfactory to the Collateral Agent, to be held as Collateral pursuant to this Agreement;
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(iv)
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Such Pledgor shall, at such Pledgor’s own expense, promptly execute all such instruments, documents and papers, and will do all such acts as Collateral Agent may reasonably request in writing from time to time to carry into effect the provisions and intent of this Agreement including, without limitation, the providing of notification in connection with book-entry securities or general intangibles, and the providing of instructions to the issuers of uncertificated securities, and will do all such other acts as Collateral Agent may reasonably request with respect to the perfection and protection of the pledge and security interest granted herein and the assignment effected hereby; and
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(v)
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Notwithstanding anything herein to the contrary, the Pledged Interests of any Issuer that is a corporation (i) will continue to be “securities” within the meaning of Sections 8-102(a)(15) and 8-103 of the Uniform Commercial Code as in effect in the Issuer's state of organization, (ii) will continue to be “financial assets” (within the meaning of Section 8-102(a)(9) of the UCC as in effect in the applicable Issuer’s state of organization), (iii) will not be credited to a “securities account” (within the meaning of Section 8-501(a) of the UCC), and (iv) are not and will not be dealt in or traded on securities exchanges or securities markets, and the terms of the Pledged Interests are not and will not be “investment company securities” within the meaning of Section 8-103 of the UCC.
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(c)
|
Governing Agreements.
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(i)
|
Such Pledgor shall not without the prior written consent of Collateral Agent in each instance, which consent may be withheld, granted, or conditionally granted, in Collateral Agent’s reasonable discretion, vote the Collateral in which it holds an interest, in favor of or consent to any resolution or action which, as determined by the Collateral Agent in its reasonable discretion, would:
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(1)
|
impose any restrictions upon the sale, transfer or disposition of the Collateral other than restrictions, if any, in existence on the date hereof or on the date such Pledged Interests become subject to this Agreement (and not created in contemplation hereof), the application of which is waived to the full satisfaction of Collateral Agent as to the Collateral; or
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(2)
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result in the issuance of any additional interest in any Issuer, or of any class of security, which issuance would reasonably be expected to materially and adversely affect the value of the Collateral or could
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(3)
|
vest additional powers, privileges, preferences or priorities to any other class of interest in any Issuer to the detriment of the value of or rights accruing to the Collateral; or
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(4)
|
result in an involuntary lien or encumbrance being placed upon or attaching to any of the Collateral which lien or encumbrance is not discharged within thirty (30) days (or such longer period as the Collateral Agent may agree in its sole discretion); or
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(5)
|
materially and adversely affect the validity, perfection or priority of the Collateral Agent’s security interest in the Collateral or would otherwise reasonably be expected to have a Material Adverse Effect;
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(ii)
|
Such Pledgor shall, if not prohibited by this Agreement or applicable law, comply with all of its obligations under any shareholders agreement, operating agreement, partnership agreement, voting trust, proxy agreement or other agreement or understanding (each a “Pledged Collateral Agreement”, and collectively, the “Pledged Collateral Agreements”) related to the Collateral to which it is a party and shall, if not prohibited by this Agreement or applicable law, enforce all of its rights thereunder; and
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(iii)
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Such Pledgor shall not itself or on behalf of any Issuer or the Borrower take any action or refrain from taking any action which would cause or result in a violation of any provisions of the Loan Agreements.
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5.
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Payments on Account of Collateral.
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(a)
|
Unless an Event of Default shall have occurred and be continuing, each Pledgor shall be permitted to receive all Distributions paid in respect of its Collateral to the extent permitted under the Loan Agreements. Upon the occurrence and during the continuance of any Event of Default (unless the applicable Secured Parties have waived such Event of Default under each Loan Agreement), subject to terms of the Loan Agreements, (i) all Distributions due on account of the Collateral, whether or not such payments are ordinary and regular cash distributions, shall be paid to Collateral Agent or, at Collateral Agent’s option, to Collateral Agent’s nominee, and (ii) all Distributions received by any Pledgor consisting of cash, checks, and other near-cash items shall be held by such Pledgor in trust for the Collateral Agent, segregated from other funds of such Pledgor, and shall, forthwith upon receipt by such Pledgor, be turned over to the Collateral Agent in the exact form received by such Pledgor (duly indorsed by such Pledgor to the Collateral Agent, if required).
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(b)
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Each Pledgor hereby authorizes and instructs each Issuer that is the issuer of any Pledged Interests pledged by such Pledgor hereunder to (i) comply with any instruction received by it from the Collateral Agent in writing that (A) states that an Event of Default has occurred and is continuing and (B) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Pledgor, and such Pledgor agrees that each Issuer shall be fully protected in so complying, and (ii) upon the occurrence and
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6.
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Voting Rights.
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(a)
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Except during the continuance of an Event of Default, each Pledgor may exercise all Voting Rights subject to the terms of this Agreement. Upon the occurrence and during the continuance of an Event of Default, all rights of each Pledgor to exercise such Voting Rights shall cease and the Collateral Agent shall have the right to exercise, in person or by its nominees or proxies, all such Voting Rights assigned to it hereunder and the Collateral Agent shall exercise such Voting Rights in such manner as the Collateral Agent in its sole discretion shall deem to be in the best interests of the Secured Parties (subject to the terms of this Agreement and the other Loan Agreements and also provided that the Collateral Agent shall be liable for its gross negligence, bad faith and willful misconduct). Upon the occurrence and during the continuance of an Event of Default, each Pledgor shall effect the directions of the Collateral Agent in connection with any such exercise in accordance with this Agreement.
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(b)
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In connection with the Collateral Agent’s exercise of the Voting Rights, the Pledgors shall cause each Issuer to rely on a notice from the Collateral Agent stating that an Event of Default has occurred and is continuing under any Loan Agreement, in which event no further direction from any Pledgor shall be required to effect the assignment of Voting Rights hereunder from such Pledgor to the Collateral Agent, and such Issuer shall immediately permit the Collateral Agent to exercise all of the Voting Rights in respect of the business and affairs of such Issuer. If the applicable Event of Default is no longer continuing, such Pledgor shall again automatically have all of the rights to exercise the Voting Rights and the Collateral Agent promptly shall so notify such Pledgor and the applicable Issuer in writing in confirmation thereof.
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(c)
|
Solely with respect to any action, decision, determination or election by any Issuer, Pledgor, or any of their respective partners or members that any of their membership interests or other equity interests constituting Collateral, as applicable, be, or cease to be, a “security” as defined in and governed by Article 8 of the UCC, and all other matters related to any such action, decision, determination or election (collectively, the “Article 8 Matters”), each Pledgor hereby irrevocably grants and appoints the Collateral Agent, so long as any Event of Default exists, as such Pledgor’s true and lawful proxy, for and in such Pledgor’s name, place and stead to vote the Pledged Interests, whether directly or indirectly, beneficially or of record, now owned or hereafter acquired, with respect to such Article 8 Matters. The proxy granted and appointed in this Section 6(c) shall include the right to sign such Pledgor’s name (as a member or other applicable equity holder) to any consent, certificate or other document relating to an Article 8 Matter and the Pledged Interests that applicable law may permit or require, to cause the Pledged Interests to be voted in accordance with the preceding sentence. Each Pledgor hereby represents and warrants that there are no other proxies and powers of attorney with respect to an Article 8 Matter and the Pledged Interests that such Pledgor may have granted or appointed that are still in effect. Other than as required herein for the benefit of the Collateral Agent, each Pledgor will not give a subsequent proxy or power of attorney or enter into any other voting agreement with respect to the Pledged Interests with respect to any Article 8 Matter and any attempt to do so with respect to an Article 8 Matter shall be void and of no effect.
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7.
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Rights After Event of Default.
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(a)
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Upon the occurrence and during the continuance of any Event of Default (unless Collateral Agent has waived such Event of Default by written instrument signed by a duly authorized officer of the Collateral Agent, the Collateral Agent shall have all of the rights and remedies of a secured party upon default under the UCC in addition to which the Collateral Agent may sell or otherwise dispose of the Collateral and/or enforce and collect the Collateral for application towards (but not necessarily in complete satisfaction of) the Senior Indebtedness in accordance with the provisions of the Intercreditor Agreement for further application pursuant to the Loan Agreement. Without limitation to the foregoing, upon the occurrence of during the continuance of an Event of Default, (i) the Collateral Agent shall have the right (A) to endorse, assign or otherwise transfer to or to register in the name of the Collateral Agent or any of its nominees or endorse for negotiation any or all of the Collateral, without any indication that such Collateral is subject to the security interest hereunder, (B) to receive any and all cash dividends, payments or other Proceeds paid in respect of the Collateral of each Pledgor and make application thereof in accordance with the Intercreditor Agreement, (C) to exchange uncertificated Pledged Interests for certificated Pledged Interests and to exchange certificated Pledged Interests for certificates of larger or smaller denominations, for any purpose consistent with this Agreement (in each case to the extent such exchanges are permitted under the applicable Pledged Collateral Agreements or otherwise agreed upon by the Issuer that is the issuer of such Pledged Interests), and (D) if requested by the Collateral Agent, to be (or have its nominee or assignee be) admitted by each Issuer as a member or limited partner of such limited liability company or partnership, and (ii) each Pledgor shall, if requested by the Collateral Agent, promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all such proxies, dividend payment orders and other instruments as the Collateral Agent may from time to time reasonably request (including stock powers registering any Pledged Interests in the name of the Collateral Agent or its nominee), and the Collateral Agent or its nominee may thereafter exercise (A) all voting, corporate and other rights pertaining to any Pledged Interests at any meeting of shareholders of the relevant issuer or otherwise and (B) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to any Pledged Interests as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of any Pledged Interests upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate or other organizational structure of any Issuer, or upon the exercise by a Pledgor or the Collateral Agent of any right, privilege or option pertaining to such Pledged Interests, and in connection therewith, the right to deposit and deliver any and all of such Collateral with any committee, depositary, transfer Collateral Agent, registrar or other designated agency upon such terms and conditions as the Collateral Agent may determine), all without liability except to account for property actually received by it, but the Collateral Agent shall have no duty to the Pledgor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing.
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(b)
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[intentionally omitted]
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(c)
|
Unless any Collateral threatens to decline speedily in value, or is of a type customarily sold on a recognized market (in which event Collateral Agent shall give Pledgors such notice as may be practicable under the circumstances), Collateral Agent shall give Pledgors at least the greater of the minimum notice required by law, or ten (10) days, prior written notice of the date, time and place of any public sale thereof, or of the time after which any private sale or any other intended disposition is to be made.
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(d)
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Each Pledgor and the Collateral Agent acknowledges that, notwithstanding anything contained herein to the contrary, any exercise by Collateral Agent of Collateral Agent’s and any Secured Party’s rights upon the occurrence and during the continuance of an Event of Default will be subject to compliance by Collateral Agent and Secured Parties with the applicable statutes, regulations, ordinances, directives and orders of any federal, state, municipal or other governmental authority. Collateral Agent in its sole discretion at any such sale or in connection with any such disposition may restrict the prospective bidders or purchasers as to their number, nature of business, investment intention, or otherwise, including, without limitation a requirement that the persons making such purchases represent and agree to the satisfaction of Collateral Agent that they are purchasing the Collateral, or some portion thereof, for their own account, for investment and not with a view towards the distribution or a sale thereof, or that they otherwise fall within some lawful exemption from registration under applicable laws.
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(e)
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The proceeds of any collection or of any sale or disposition of any Collateral, or any portion thereof, held pursuant to this Agreement shall be applied in accordance with the Intercreditor Agreement. Borrower and any Pledgor that is a guarantor of or otherwise liable for any Senior Indebtedness shall remain liable to Collateral Agent and the Secured Parties for any deficiency remaining following such application.
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(f)
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The Collateral Agent may buy or otherwise acquire any part or all of the Collateral at any public sale or other disposition and if any part or all of the Collateral is of a type customarily sold or otherwise disposed of in a recognized market or is of the type which is the subject of widely-distributed standard price quotations, the Collateral Agent may buy or otherwise acquire at private sale or other disposition and may make payments thereof by any means. The Collateral Agent shall apply the cash proceeds actually received from any sale or other disposition in accordance with the Intercreditor Agreement. Only after such applications, and after payment by the Collateral Agent of any amount required by §9-608(a)(1)(C) or §9-615(a)(3) of the UCC, need the Collateral Agent account to the applicable Pledgor for any surplus.
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(g)
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Each Pledgor and the Collateral Agent recognizes that the Collateral Agent may be unable to effect a public sale or other disposition of the Pledged Interests by reason of certain prohibitions contained in the Securities Act of 1933, as amended (the “Securities Act”), federal banking laws, and other applicable Laws, but may be compelled to resort to one or more private sales thereof to a restricted group of purchasers. Each Pledgor agrees that any such private sales may be at prices and other terms less favorable to the seller than if sold at public sales and that such private sales shall not by reason thereof be deemed not to have been made in a commercially reasonable manner. The Collateral Agent shall be under no obligation to delay a sale of any of the Pledged Interests for the period of time necessary to permit the Issuer of such securities to register such securities for public sale under the
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(h)
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Each Pledgor further agrees to do or cause to be done all such other acts and things as may be reasonably necessary to make any sales of any portion or all of the Pledged Interests pursuant to this Section 7 valid and binding and in compliance with any and all applicable Laws (including, without limitation, the Securities Act, the Securities Exchange Act of 1934, as amended, the rules and regulations of the Securities and Exchange Commission applicable thereto and all applicable state securities or “Blue Sky” laws), regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales, all at such Pledgor’s expense. Each Pledgor further agrees that a breach of any of the covenants contained in this Section 7 will cause irreparable injury to the Collateral Agent and the Secured Parties, that the Collateral Agent and the Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, agrees that each and every covenant contained in this Section 7 shall be specifically enforceable against such Pledgor by the Collateral Agent and each Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants.
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8.
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Actions By Collateral Agent. Each Pledgor hereby designates Collateral Agent, or any attorney, agent or other Person designated by Collateral Agent, so long as any Event Default exists, as the attorney-in-fact of such Pledgor to (a) endorse in favor of Collateral Agent any of the Collateral; (b) cause the transfer of any of the Collateral in such name as Collateral Agent may from time to time determine; (c) renew, extend or roll over any Collateral; and (d) make, demand and initiate actions to enforce any of the Collateral or rights therein. Collateral Agent may take such action with respect to the Collateral as Collateral Agent may reasonably determine to be necessary to protect and preserve its interest in the Collateral. Collateral Agent shall also have and may exercise at any time all rights, remedies, powers, privileges and discretions of each Pledgor with respect to and under the Collateral; provided, however, Collateral Agent shall have no right to exercise any Voting Rights or to foreclose or otherwise realize on any Collateral in each case except in accordance with the provisions of this Agreement. Except as otherwise provided in this
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9.
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Rights and Remedies. The rights, remedies, powers, privileges and discretions of Collateral Agent and the Secured Parties hereunder (hereinafter, the “Rights and Remedies”) shall be cumulative and not exclusive of any rights, remedies, powers, privileges or discretions which it or they may otherwise have. No delay or omission by Collateral Agent or any other Secured Party in exercising or enforcing any of its rights and remedies shall operate as, or constitute, a waiver thereof. No waiver by Collateral Agent or any Secured Party of any Default or any Event of Default or of any default under any other agreement shall operate as a waiver of any other default hereunder or under any other of the Loan Agreements. No exercise of any of the Rights and Remedies and no other agreement or transaction of whatever nature entered into between Collateral Agent, any Secured Party and Pledgor at any time shall preclude any other exercise of the Rights and Remedies. No waiver by Collateral Agent or any other Secured Party of any of the Rights and Remedies on any one occasion shall be deemed a waiver on any subsequent occasion nor shall it be deemed a continuing waiver. All of the Rights and Remedies and all of Collateral Agent’s and each other Secured Party’s rights, remedies, powers, privileges and discretions under any other agreement or transaction are cumulative and not alternative or exclusive and may be exercised by Collateral Agent and the other applicable Secured Party(ies) at such time or times in such order of preference as Collateral Agent or such other Secured Party(ies) in its or their sole and absolute discretion may determine. All Rights and Remedies, insofar as the enforcement of this Agreement is concerned, may be exercised only by the Collateral Agent, and not by any Secured Party.
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10.
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Pledgor’s Consent and Waivers.
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(a)
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Each Pledgor agrees that Collateral Agent may enforce its rights as against such Pledgor, the Collateral, or as against any other party liable for the Senior Indebtedness, or as against any other collateral given for any of the Senior Indebtedness, in any order or in such combination as Collateral Agent may in its sole discretion determine, and each Pledgor hereby expressly waives all suretyship defenses and defenses in the nature thereof, agrees to the release or substitution of any collateral hereunder or otherwise, and consents to each and all of the terms, provisions and conditions of the other Loan Agreements. Each Pledgor further: (a) waives presentment, demand, notice and protest with respect to the Senior Indebtedness and the Collateral; (b) waives any delay on the part of Collateral Agent or any other Secured Party; (c) assents to any indulgence or waiver which Collateral Agent or any other Secured Party may grant or give any other Person liable or obliged to Collateral Agent or any other Secured Party for or on account of the Senior Indebtedness; (d) authorizes Collateral Agent and each other Secured Party to alter the obligations of any other person liable or obligated to Collateral Agent or such Secured Party for or on account of the Senior Indebtedness without notice to or further consent from such Pledgor; (e) agrees that no release of any property securing the Senior Indebtedness shall affect the
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(b)
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All rights of the Collateral Agent and the other Secured Parties hereunder, the grant of a security interest in the Collateral and all obligations of each Pledgor hereunder, shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Loan Agreements or any other agreement or instrument relating to any Loan Agreement, (b) any change in time, manner or place of payment of, or in any other term of, all or any of the Senior Indebtedness, or any other amendment or waiver of or any consent to any departure from the Note or any other agreement or instrument, (c) any exchange, release or non-perfection of any other collateral, or any release or amendment or waiver of or consent to or departure from any guarantee, for all or any of the Senior Indebtedness, or (d) any other circumstance which might otherwise constitute a defense available to (other than the defense of indefeasible payment), or a discharge of, any Pledgor in respect of the Senior Indebtedness or in respect of this Agreement.
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(c)
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So long as this Agreement is in effect, each Pledgor irrevocably waives any and all of its rights under those provisions of the operating or partnership agreements of each applicable Issuer that (a) prohibit, restrict, condition or otherwise affect the grant hereunder of any lien on any of the Collateral or any enforcement action which may be taken in respect of any such lien or (b) otherwise conflict with the terms of this Agreement. To the extent that this provision is inconsistent with the terms of the operating or partnership agreement of any such Issuer, such operating or partnership agreement shall be deemed to be amended or waived so as to be consistent with the terms of this Section 10. Each Pledgor of any Pledged Interests of an Issuer that is a limited liability company or a partnership hereby irrevocably consents to the Collateral Agent or its nominee becoming a member of such limited liability company or a partner of such partnership (including any management rights appurtenant thereto) upon an exercise of remedies pursuant to Section 7 hereof.
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11.
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Collateral Agent May Assign. Each Pledgor agrees that upon any transfer of the entirety of the Collateral Agent's rights under this Agreement, Collateral Agent may deliver to the transferee of such rights the Collateral, who shall thereupon become vested with all powers and rights given to Collateral Agent in respect thereto, and Collateral Agent shall be thereafter forever relieved and fully discharged from any liability or responsibility in connection therewith.
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12.
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Limits on Collateral Agent’s Duties. Collateral Agent shall have no duty as to the collection or protection of the Collateral, or any portion thereof, or any income or distribution thereon, beyond the safe custody of such of the Collateral as may come into the actual possession of Collateral Agent, and Collateral Agent shall have no duty as to the preservation of rights against prior parties or any other rights pertaining thereto.
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13.
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WAIVER OF JURY TRIAL. EACH PLEDGOR, COLLATERAL AGENT AND THE SECURED PARTIES MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
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14.
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Financing Statements; Other Documents. This Agreement constitutes an authenticated record, and each Pledgor hereby authorizes the Collateral Agent to file one or more UCC-1 financing statements, continuation statements and/or other documents with respect to the Collateral, without the signature of any Pledgor, and in such filing offices as the Collateral Agent shall deem reasonably appropriate. Each Pledgor agrees to deliver any other document or instrument, which the Collateral Agent may reasonably request in connection with the administration and enforcement of this Agreement or with respect to the Collateral for the purposes of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted.
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15.
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Termination; Release. Upon the payment in full of the Senior Indebtedness (other than unasserted contingent indemnity or similar unasserted contingent obligations) or upon any disposition of any of the Collateral permitted by the Loan Agreements, the liens and security interests created in the Collateral granted to the Collateral Agent as provided for herein shall be automatically released without any further notice or other formality. However, such release by the Collateral Agent shall not be deemed to terminate or release each Pledgor from any obligation or liability under this Agreement, which specifically by its terms survives the payment in full of the Senior Indebtedness. Upon any release of the security provided for herein, the Collateral Agent shall, upon request and at the Pledgors’ sole cost and expense, execute and deliver any documentation and take any such other requested action in order to demonstrate or evidence such release.
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16.
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Miscellaneous.
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(a)
|
Collateral Agent’s and Secured Parties’ Rights and Remedies may be exercised without resort to or regard to any other source of satisfaction of the Senior Indebtedness.
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(b)
|
All of the agreements, obligations, undertakings, representations and warranties herein made by the Pledgors shall inure to the benefit of Collateral Agent and Secured Parties and their respective successors and assigns and shall bind each Pledgor and its successors and assigns; provided that no Pledgor shall have any right to (a) assign this Agreement or any interest herein, or (b) assign any interest in the Collateral or any part thereof, or otherwise pledge, encumber or grant any option with respect to the Collateral or any part thereof, or any cash or property held by each Pledgor as Collateral under this Agreement as expressly permitted under the Loan Agreements or hereunder.
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(c)
|
Any notice, demand, request or other communication which any party hereto may be required or may desire to give hereunder shall be in writing and shall be delivered in accordance with the provisions of §12.1 of the Credit Agreement.
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(d)
|
This Agreement and all other Loan Agreements executed in connection herewith incorporate all discussions and negotiations between Pledgors and Collateral Agent
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(e)
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This Agreement and all other documents in Collateral Agent’s possession which relate to the Senior Indebtedness may be reproduced by Collateral Agent by any photographic, photostatic microfilm, microcard, miniature photographic, xerographic or similar process and, with the exception of instruments constituting the Collateral, Collateral Agent may destroy the original from which any document was so reproduced. Any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business) and any enlargement, facsimile or further reproduction shall be likewise admissible in evidence.
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(f)
|
Captions in this Agreement are intended solely for convenience and shall not have any effect on the meaning or interest of any provisions hereof.
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(g)
|
Each provision hereof shall be enforceable to the fullest extent not prohibited by applicable law. The invalidity and unenforceability of any provision(s) hereof shall not impair or affect any other provision(s) hereof which are valid and enforceable.
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(h)
|
This Agreement may be executed in several counterparts, each of which when executed and delivered is an original, but all of which together shall constitute one instrument. In making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart which is executed by the party against whom enforcement of such agreement is sought. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.
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(i)
|
THIS AGREEMENT, EXCEPT AS OTHERWISE PROVIDED IN HEREIN, AND ANY DISPUTES ARISING FROM THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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(j)
|
THE PLEDGORS AND THE COLLATERAL AGENT AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT MAY BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK (INCLUDING ANY FEDERAL COURT SITTING THEREIN). THE PLEDGORS AND THE COLLATERAL AGENT FURTHER ACCEPT, GENERALLY AND UNCONDITIONALLY, THE NON EXCLUSIVE JURISDICTION OF SUCH COURTS AND ANY RELATED APPELLATE COURT AND IRREVOCABLY (i) AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY WITH RESPECT TO THIS AGREEMENT AND (ii) WAIVE, TO THE FULLEST EXTENT PERMITTED BY
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(k)
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The initial Pledgors hereunder shall be each of the signatories hereto, which are listed on Schedule I attached hereto. From time to time after the date hereof, additional Subsidiaries of the Borrower may become parties hereto as additional Pledgors (each an “Additional Pledgor”) by executing a joinder agreement in the form of Exhibit B attached hereto or any other form as Collateral Agent may approve (the form attached as Exhibit B hereto or any other such form approved by Collateral Agent, a “Joinder Agreement”). Upon delivery of any such Joinder Agreement to Collateral Agent, notice of which is hereby waived by the Pledgors, each such Additional Pledgor shall be a Pledgor hereunder and shall be a party hereto as if such Additional Pledgor were an original signatory hereof and any such Joinder Agreement may amend or supplement Schedule II and/or Schedule III attached hereto to reflect such Additional Pledgor and any Collateral owned by it without the consent of any other Pledgor. Each Pledgor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Pledgor hereunder, or by any election by Collateral Agent not to cause any Subsidiary of Borrower to become an Additional Pledgor hereunder. This Agreement shall be fully effective as to any Pledgor that is or becomes a party hereto regardless of whether any other person becomes or fails to become or ceases to be a Pledgor hereunder.
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PLEDGORS:
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[___], a [___], as a Pledgor
By:____________________________
Name:____________________________
Title:____________________________
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[___], a [___], as a Pledgor
By:____________________________
Name:____________________________
Title:____________________________
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Pledgor
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Issuer
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Entity Form
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Jurisdiction of Organization
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Percentage Owned
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Certificate Number (if applicable)
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1.
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[UCC-1 filings to be filed in the name of each Pledgor with the Secretary of State of its state of organization describing the Collateral as set forth herein.]
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2.
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[Delivery to the Collateral Agent of the certificates, if any, issued to the Pledgors as set forth in Schedule II hereto and representing 100% of the Equity Interests in each such Issuer pledged hereunder, together with an undated instrument of transfer or assignment covering any such certificates duly executed in blank by the applicable Pledgor.]
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3.
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Pledgor
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Issuer
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Entity
Form
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Jurisdiction of Organization
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Percentage Owned
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Certificate Number (if applicable)
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Pledgor
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Issuer
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Corporate Form
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Jurisdiction of Organization
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Percentage Owned
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Certificate Number
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1.
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I have reviewed this Quarterly Report on Form 10-Q of EPR Properties;
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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Date:
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August 6, 2020
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/s/ Gregory K. Silvers
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Gregory K. Silvers
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President and Chief Executive Officer
(Principal Executive Officer)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of EPR Properties;
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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Date:
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August 6, 2020
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/s/ Mark A. Peterson
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Mark A. Peterson
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Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
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(1)
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the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.
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/s/ Gregory K. Silvers
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Gregory K. Silvers
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President and Chief Executive Officer
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(Principal Executive Officer)
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(1)
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the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.
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/s/ Mark A. Peterson
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Mark A. Peterson
Executive Vice President, Chief Financial Officer
and Treasurer (Principal Financial
Officer)
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