EPR PROPERTIES
For the period ended Mar 31, 2026. Filed May 7, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 7, 2026
Contents
Item 1. Financial Statements
Consolidated Balance Sheets
(Dollars in thousands except share data)
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| (unaudited) | ||
| Assets | ||
| Real estate investments, net of accumulated depreciation of $1,756,760 and $1,714,886 at March 31, 2026 and December 31, 2025, respectively | $4,589,678 | $4,494,259 |
| Land held for development | 20,168 | 20,168 |
| Property under development | 23,377 | 54,905 |
| Operating lease right-of-use assets | 166,646 | 170,755 |
| Mortgage notes and related accrued interest receivable, net of allowance for credit losses of $10,704 and $15,929 at March 31, 2026 and December 31, 2025, respectively | 614,759 | 679,254 |
| Investment in joint ventures | 9,684 | 12,316 |
| Cash and cash equivalents | 68,465 | 90,577 |
| Restricted cash | 6,091 | 8,071 |
| Accounts receivable | 101,230 | 97,855 |
| Other assets | 82,714 | 71,602 |
| Total assets | $5,682,812 | $5,699,762 |
| Liabilities and Equity | ||
| Liabilities: | ||
| Accounts payable and accrued liabilities | $100,697 | $99,392 |
| Operating lease liabilities | 200,118 | 204,747 |
| Common dividends payable | 23,717 | 22,463 |
| Preferred dividends payable | 6,032 | 6,032 |
| Unearned rents and interest | 104,701 | 108,546 |
| Debt | 2,931,377 | 2,929,411 |
| Total liabilities | 3,366,642 | 3,370,591 |
| Equity: | ||
| Common Shares, $0.01 par value; 125,000,000 shares authorized at March 31, 2026 and December 31, 2025; and 84,844,157 and 84,239,580 shares issued at March 31, 2026 and December 31, 2025, respectively | 848 | 842 |
| Preferred Shares, $0.01 par value; 25,000,000 shares authorized: | ||
| 5,392,616 Series C convertible shares issued at March 31, 2026 and December 31, 2025; liquidation preference of $134,815,400 | 54 | 54 |
| 3,445,980 Series E convertible shares issued at March 31, 2026 and December 31, 2025; liquidation preference of $86,149,500 | 34 | 34 |
| 6,000,000 Series G shares issued at March 31, 2026 and December 31, 2025; liquidation preference of $150,000,000 | 60 | 60 |
| Additional paid-in-capital | 3,990,895 | 3,978,093 |
| Treasury shares at cost: 8,338,820 and 8,094,942 common shares at March 31, 2026 and December 31, 2025, respectively | (308,433) | (295,290) |
| Accumulated other comprehensive income | 609 | 1,037 |
| Distributions in excess of net income | (1,367,897) | (1,355,659) |
| Total equity | $2,316,170 | $2,329,171 |
| Total liabilities and equity | $5,682,812 | $5,699,762 |
Consolidated Statements of Income and Comprehensive Income
(Dollars in thousands except per share data)
| Three Months Ended March 31, | ||
|---|---|---|
| 2026 | 2025 | |
| Rental revenue | $155,185 | $146,359 |
| Other income | 10,070 | 11,636 |
| Mortgage and other financing income | 15,997 | 17,038 |
| Total revenue | 181,252 | 175,033 |
| Property operating expense | 15,353 | 15,171 |
| Other expense | 10,989 | 12,611 |
| General and administrative expense | 14,242 | 14,024 |
| Retirement and severance expense | 1,423 | — |
| Transaction costs | 293 | 567 |
| Provision (benefit) for credit losses, net | (5,597) | (652) |
| Depreciation and amortization | 44,957 | 41,089 |
| Total operating expenses | 81,660 | 82,810 |
| Gain on real estate transactions | 1,027 | 9,384 |
| Income from operations | 100,619 | 101,607 |
| Interest expense, net | 34,763 | 33,021 |
| Equity in loss from joint ventures | 2,632 | 2,647 |
| Income before income taxes | 63,224 | 65,939 |
| Income tax expense | 614 | 136 |
| Net income | 62,610 | 65,803 |
| Preferred dividend requirements | 6,032 | 6,032 |
| Net income available to common shareholders of EPR Properties | $56,578 | $59,771 |
| Net income available to common shareholders of EPR Properties per share: | ||
| Basic | $0.74 | $0.79 |
| Diluted | $0.74 | $0.78 |
| Shares used for computation (in thousands): | ||
| Basic | 76,326 | 75,804 |
| Diluted | 76,573 | 76,215 |
| Other comprehensive income: | ||
| Net income | $62,610 | $65,803 |
| Foreign currency translation adjustment | (4,507) | 181 |
| Unrealized gain on derivatives, net | 4,079 | 8 |
| Comprehensive income attributable to EPR Properties | $62,182 | $65,992 |
Consolidated Statements of Changes in Equity
(Dollars in thousands except per share data)
| EPR Properties Shareholders’ Equity | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Common Shares · Preferred Shares · Additionalpaid-in capital · Treasuryshares · Accumulatedothercomprehensive income (loss) · Distributionsin excess ofnet income · Total | |||||||||
| Shares · Par · Shares · Par | |||||||||
| Balance at December 31, 2024 | 83,619,740 | $836 | 14,838,696 | $148 | $3,950,528 | $(285,413) | $(3,756) | $(1,339,098) | $2,323,245 |
| Restricted share units issued to Trustees | 1,564 | — | — | — | — | — | — | — | — |
| Issuance of nonvested shares and performance share units, net of cancellations | 532,326 | 6 | — | — | 8,694 | — | — | — | 8,700 |
| Purchase of common shares for vesting | — | — | — | — | — | (9,833) | — | — | (9,833) |
| Share-based compensation expense | — | — | — | — | 3,867 | — | — | — | 3,867 |
| Foreign currency translation adjustment | — | — | — | — | — | — | 181 | — | 181 |
| Change in unrealized gain on derivatives, net | — | — | — | — | — | — | 8 | — | 8 |
| Net income | — | — | — | — | — | — | — | 65,803 | 65,803 |
| Issuances of common shares | 6,801 | — | — | — | 329 | — | — | — | 329 |
| Conversion of Series C Convertible Preferred shares to common shares | 43 | — | (100) | — | — | — | — | — | — |
| Share option exercises, net | 268 | — | — | — | 12 | (12) | — | — | — |
| Dividend equivalents accrued on performance share units | — | — | — | — | — | — | — | 497 | 497 |
| Dividends to common shareholders ($0.865 per share) | — | — | — | — | — | — | — | (65,753) | (65,753) |
| Dividends to Series C preferred shareholders ($0.359375 per share) | — | — | — | — | — | — | — | (1,938) | (1,938) |
| Dividends to Series E preferred shareholders ($0.5625 per share) | — | — | — | — | — | — | — | (1,938) | (1,938) |
| Dividends to Series G preferred shareholders ($0.359375 per share) | — | — | — | — | — | — | — | (2,156) | (2,156) |
| Balance at March 31, 2025 | 84,160,742 | $842 | 14,838,596 | $148 | $3,963,430 | $(295,258) | $(3,567) | $(1,344,583) | $2,321,012 |
| Balance at December 31, 2025 | 84,239,580 | $842 | 14,838,596 | $148 | $3,978,093 | $(295,290) | $1,037 | $(1,355,659) | $2,329,171 |
|---|---|---|---|---|---|---|---|---|---|
| Issuance of nonvested shares and performance share units | 598,801 | 6 | — | — | 7,336 | — | — | — | 7,342 |
| Purchase of common shares for vesting | — | — | — | — | — | (13,143) | — | — | (13,143) |
| Share-based compensation expense | — | — | — | — | 4,099 | — | — | — | 4,099 |
| Share-based compensation included in retirement and severance expense | — | — | — | — | 1,041 | — | — | — | 1,041 |
| Foreign currency translation adjustment | — | — | — | — | — | — | (4,507) | — | (4,507) |
| Change in unrealized gain on derivatives, net | — | — | — | — | — | — | 4,079 | — | 4,079 |
| Net income | — | — | — | — | — | — | — | 62,610 | 62,610 |
| Issuances of common shares | 5,776 | — | — | — | 326 | — | — | — | 326 |
| Dividends to common shareholders ($0.90 per share) | — | — | — | — | — | — | — | (68,816) | (68,816) |
| Dividends to Series C preferred shareholders ($0.359375 per share) | — | — | — | — | — | — | — | (1,938) | (1,938) |
| Dividends to Series E preferred shareholders ($0.5625 per share) | — | — | — | — | — | — | — | (1,938) | (1,938) |
| Dividends to Series G preferred shareholders ($0.359375 per share) | — | — | — | — | — | — | — | (2,156) | (2,156) |
| Balance at March 31, 2026 | 84,844,157 | $848 | 14,838,596 | $148 | $3,990,895 | $(308,433) | $609 | $(1,367,897) | $2,316,170 |
Consolidated Statements of Cash Flows
| Three Months Ended March 31, | ||
|---|---|---|
| 2026 | 2025 | |
| Operating activities: | ||
| Net income | $62,610 | $65,803 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Gain on real estate transactions | (1,027) | (9,384) |
| Deferred income tax expense (benefit) | 114 | (530) |
| Provision (benefit) for credit losses, net | (5,597) | (652) |
| Equity in loss from joint ventures | 2,632 | 2,647 |
| Distributions from joint ventures | — | 11 |
| Depreciation and amortization | 44,957 | 41,089 |
| Amortization of deferred financing costs | 2,672 | 2,206 |
| Amortization of above/below market leases and tenant allowances, net | (81) | (81) |
| Share-based compensation expense to management and Trustees | 4,099 | 3,867 |
| Share-based compensation expense included in retirement and severance expense | 1,041 | — |
| Change in assets and liabilities: | ||
| Operating lease assets and liabilities | (520) | (293) |
| Mortgage notes accrued interest receivable | (956) | (1,687) |
| Accounts receivable | (3,431) | (3,862) |
| Other assets | (3,374) | (1,507) |
| Accounts payable and accrued liabilities | 17,089 | 3,759 |
| Unearned rents and interest | (6,861) | (2,017) |
| Net cash provided by operating activities | 113,367 | 99,369 |
| Investing activities: | ||
| Acquisition of and investments in real estate and other assets | (36,435) | (14,667) |
| Proceeds from sale of real estate | — | 70,810 |
| Investment in mortgage notes receivable | (1,375) | (298) |
| Proceeds from mortgage notes receivable paydowns | 124 | 9,287 |
| Proceeds from note receivable paydowns | 91 | 138 |
| Additions to properties under development | (13,270) | (22,873) |
| Net cash (used) provided by investing activities | (50,865) | 42,397 |
| Financing activities: | ||
| Proceeds from long-term debt facilities | — | 70,000 |
| Principal payments on debt | — | (140,000) |
| Deferred financing fees paid | (58) | (55) |
| Net proceeds from issuance of common shares | 226 | 232 |
| Purchase of common shares for treasury for vesting | (13,144) | (9,833) |
| Dividends paid to shareholders | (73,495) | (70,834) |
| Net cash used by financing activities | (86,471) | (150,490) |
| Effect of exchange rate changes on cash | (123) | (49) |
| Net change in cash and cash equivalents and restricted cash | (24,092) | (8,773) |
| Cash and cash equivalents and restricted cash at beginning of the period | 98,648 | 35,699 |
| Cash and cash equivalents and restricted cash at end of the period | $74,556 | $26,926 |
| Supplemental information continued on next page. | ||
Consolidated Statements of Cash Flows
| Continued from previous page | ||
|---|---|---|
| Three Months Ended March 31, | ||
| 2026 | 2025 | |
| Reconciliation of cash and cash equivalents and restricted cash: | ||
| Cash and cash equivalents at beginning of the period | $90,577 | $22,062 |
| Restricted cash at beginning of the period | 8,071 | 13,637 |
| Cash and cash equivalents and restricted cash at beginning of the period | $98,648 | $35,699 |
| Cash and cash equivalents at end of the period | $68,465 | $20,572 |
| Restricted cash at end of the period | 6,091 | 6,354 |
| Cash and cash equivalents and restricted cash at end of the period | $74,556 | $26,926 |
| Supplemental schedule of non-cash activity: | ||
| Transfer of property under development to real estate investments | $36,364 | $1,583 |
| Conversion of mortgage note receivable to real estate investment | 72,800 | — |
| Issuance of nonvested shares and restricted share units at fair value, including nonvested shares issued for payment of bonuses | 25,419 | 25,858 |
| Supplemental disclosure of cash flow information: | ||
| Cash paid during the period for interest | $13,850 | $17,731 |
| Cash paid during the period for income taxes | 1,870 | 1,231 |
| Interest cost capitalized | 383 | 1,435 |
| Change in accrued capital expenditures | (3,965) | (13,524) |
Notes to Consolidated Financial Statements (Unaudited)
- Organization
Description of Business
EPR Properties (the Company) was formed on August 22, 1997 as a Maryland real estate investment trust (REIT), and an initial public offering of the Company's common shares of beneficial interest (common shares) was completed on November 18, 1997. Since that time, the Company has been a leading diversified experiential net lease REIT specializing in select enduring experiential properties. The Company's underwriting is centered on key industry and property cash flow criteria, as well as the credit metrics of the Company's tenants and customers. The Company’s properties are located in the United States (U.S.) and Canada.
- Summary of Significant Accounting Policies and Recently Issued Accounting Standards
Basis of Presentation
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. In addition, operating results for the three-month period ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. Amounts as of December 31, 2025 have been derived from the audited Consolidated Financial Statements as of that date and should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (SEC) on February 26, 2026.
The Company consolidates certain entities when it is deemed to be the primary beneficiary in a variable interest entity (VIE) in which it has a controlling financial interest in accordance with the consolidation guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The equity method of accounting is applied to joint ventures and other similar entities in which the Company is not the primary beneficiary as defined in the FASB ASC Topic on Consolidation (Topic 810) but can exercise influence over the entity with respect to its operations and major decisions.
The Company's variable interests in VIEs currently are in the form of equity investments and loans provided by the Company to a VIE. The Company examines specific criteria and uses its judgment when determining if the Company is the primary beneficiary of a VIE. The primary beneficiary generally is defined as the party with the controlling financial interest. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. As of March 31, 2026 and December 31, 2025, the Company does not have any investments in consolidated VIEs.
Deferred Financing Costs
Deferred financing costs are amortized over the terms of the related debt obligations, as applicable. Deferred financing costs of$23.2 million and $25.2 million as of March 31, 2026 and December 31, 2025, respectively, are shown as a reduction of "Debt" in the accompanying consolidated balance sheets. The deferred financing costs related to the unsecured revolving credit facility of$7.1 million and $7.7 million as of March 31, 2026 and December 31, 2025, respectively, are included in "Other assets" in the accompanying consolidated balance sheets.
Rental Revenue
The Company leases real estate to its tenants under leases classified as operating leases. The Company's leases generally provide for rent escalations throughout the lease terms. Rents that are fixed are recognized on a straight-line basis over the lease term. Base rent escalations that include a variable component are recognized upon the occurrence of the specified event as defined in the Company's lease agreements. Many of the Company's leasing arrangements include options to extend the lease, which are not included in the minimum lease terms unless the option is reasonably certain to be exercised. Straight-line rental revenue is subject to an evaluation for collectability, and the Company records a direct write-off against rental revenue if collectability of these future rents is not probable. The Company recognized straight-line write-offs of $0.2 million for the three months ended March 31, 2026. There wereno straight-line write-offs recognized during thethree months ended March 31, 2025. Straight-line rental revenue, net of write-offs, was$3.5 million and $3.4 million, for thethree months ended March 31, 2026 and 2025, respectively.
Most of the Company’s lease contracts are triple-net leases, which require the tenants to make payments directly to third parties for lessor costs (such as property taxes and insurance) associated with the properties. In accordance with FASB ASC Topic 842, the Company does not include these lessee payments made to third parties in rental revenue or property operating expenses. In certain situations, the Company pays these lessor costs directly to third parties and the tenants reimburse the Company. In accordance with Topic 842, these payments are presented on a gross basis in rental revenue and property operating expense. During both the three months ended March 31, 2026 and 2025, the Company recognized $0.7 millionin tenant reimbursements related to the gross-up of these reimbursed expenses that are included in rental revenue.
Certain of the Company's leases, particularly at its entertainment districts, require the tenants to make payments to the Company for property-related expenses such as common area maintenance. In accordance with Topic 842, the Company has elected to combine these non-lease components with the lease components in rental revenue. For the three months ended March 31, 2026 and 2025, the amounts due for non-lease components included in rental revenue totaled $5.4 million and $4.7 million, respectively.
In addition, most of the Company's tenants are subject to additional rents (above base rents) if gross revenues of the properties exceed certain thresholds defined in the lease agreements (percentage rents). Percentage rents are recognized at the time when specified triggering events occur as provided by the lease agreement. Rental revenue included percentage rents of$2.1 million and $3.3 million for the three months ended March 31, 2026 and 2025, respectively.
The Company regularly evaluates the collectability of its receivables on a lease-by-lease basis. The evaluation primarily consists of reviewing past due account balances and considering such factors as the credit quality, projected performance and historical trends of the tenant, as well as the current economic conditions and changes in customer payment terms. When the collectability of lease receivables or future lease payments are no longer probable, the Company records a direct write-off of the receivable to rental revenue and recognizes future rental revenue on a cash basis. There wereno receivable write-offs recognized during the three months ended March 31, 2026 and 2025.
Mortgage Notes and Other Notes Receivable
Mortgage notes and other notes receivable, including related accrued interest receivable, consist of loans originated by the Company and the related accrued and unpaid interest income as of the balance sheet date. Mortgage notes and other notes receivable are initially recorded at the amount advanced to the borrower less allowance for credit loss. Interest income is recognized using the effective interest method over the estimated life of the note. Interest income includes both the stated interest and the amortization or accretion of premiums or discounts (if any).
The Company made an accounting policy election to not measure an allowance for credit losses for accrued interest receivables related to its mortgage notes and notes receivable. Accordingly, if accrued interest receivable is deemed to be uncollectible, the Company will record any necessary write-offs as a reversal of interest income. There were no accrued interest write-offs for thethree months ended March 31, 2026 and 2025. As of March 31, 2026, the Company believes that all outstanding accrued interest is collectible.
In the event the Company has a past due mortgage note or note receivable that the Company determines is collateral-dependent, the Company measures expected credit losses based on the fair value of the collateral with the credit allowance being the difference between the outstanding principal balance of the notes and the estimated fair value.
As of March 31, 2026, the Company does not have any mortgage notes or notes receivable with past due principal balances. See Note 5 for further discussion of mortgage notes and notes receivable for which the Company elected to apply the collateral-dependent practical expedient.
Mortgage and Other Financing Income
Certain of the Company's borrowers are subject to additional interest based on certain thresholds defined in the mortgage agreements (participating interest). Participating interest income is recognized at the time when specific triggering events occur as provided by the mortgage agreement. Participating interest income for the three months ended March 31, 2026 and 2025 was $0.4 million and $1.8 million, respectively.
Concentrations of Risk
Topgolf USA (Topgolf), American-Multi Cinema, Inc. (AMC) and Regal Cinemas (Regal), a subsidiary of Cineworld Group, represented a significant portion of the Company's total revenue for the three months ended March 31, 2026 and 2025. The following is a summary of the Company's total revenue derived from rental or interest payments from Topgolf, AMC and Regal (dollars in thousands):
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2026 | 2025 | |||
| Total Revenue | % of Company's Total Revenue | Total Revenue | % of Company's Total Revenue | |
| Topgolf | $25,613 | 14.1% | $25,176 | 14.4% |
| AMC | 25,205 | 13.9% | 23,789 | 13.6% |
| Regal | 18,716 | 10.3% | 18,722 | 10.7% |
Impact of Recently Issued Accounting Standards
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 22-40): Disaggregation of Income Statement Expenses. The ASU requires entities to provide enhanced disclosures related to certain income statement costs and expenses in the notes to the financial statements. The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact this guidance will have on the Company's financial statements and related disclosures.
- Real Estate Investments
The following table summarizes the carrying amounts of real estate investments as of March 31, 2026 and December 31, 2025 (in thousands):
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Buildings and improvements | $4,947,194 | $4,832,134 |
| Furniture, fixtures & equipment | 123,427 | 122,351 |
| Land | 1,247,364 | 1,226,207 |
| Leasehold interests | 28,453 | 28,453 |
| 6,346,438 | 6,209,145 | |
| Accumulated depreciation | (1,756,760) | (1,714,886) |
| Total | $4,589,678 | $4,494,259 |
Depreciation expense on real estate investmentswas$43.9 million and $40.1 million for the three months ended March 31, 2026 and 2025, respectively.
- Investments and Dispositions
The Company's investment spending during the three months ended March 31, 2026 totaled $51.3 million, and included the acquisition of a fitness & wellness property in New York for $34.5 million. The remaining investment spending for the three months ended March 31, 2026 related to experiential build-to-suit development and redevelopment projects.
Subsequent to quarter-end, the Company completed the acquisition ofsix U.S. attraction properties as part of its previously announced acquisition of a portfolio ofseven attraction properties from Six Flags Entertainment Corporation. These six properties comprise the substantial majority of the Company's $315.0 million portfolio investment, are located throughout the U.S. and will be leased to and operated by Enchanted Parks (formerly Innovative Attraction Management) pursuant to a long-term triple-net master lease. La Ronde, the one park located in Canada, will be leased to and operated by La Ronde Operations, Inc. pursuant to a long-term triple-net lease following the closing of the transaction, which is expected to occur in the second quarter of 2026 subject to customary closing conditions.
- Investment in Mortgage Notes and Notes Receivable
The Company measures expected credit losses on its mortgage notes and notes receivable on an individual basis because its financial instruments do not have similar risk characteristics. The Company uses a forward-looking commercial real estate loss forecasting tool to estimate its current expected credit losses (CECL) for each of its mortgage notes and notes receivable on a loan-by-loan basis. As of March 31, 2026, the Company did not anticipate any prepayments. Therefore, the contractual terms of its mortgage notes and notes receivable were used for the calculation of the expected credit losses. The Company updates the CECL model inputs at each reporting period to reflect, if applicable, any newly originated loans, changes to specific loan information on existing loans and current macroeconomic conditions. The CECL allowance is a valuation account that is deducted from the related mortgage note or note receivable.
Certain of the Company’s mortgage notes and notes receivable include commitments to fund future incremental amounts to its borrowers. These future funding commitments are also subject to the CECL model. The CECL allowance related to future funding is recorded as a liability and is included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets.
Investment in mortgage notes, including related accrued interest receivable, was $614.8 million and $679.3 million at March 31, 2026 and December 31, 2025, respectively. Investment in notes receivable, including related accrued interest receivable, was $2.7 million at both March 31, 2026 and December 31, 2025, and is included in "Other assets" in the accompanying consolidated balance sheets.
During the three months ended March 31, 2026, the Company exercised its purchase option to convert a $70.0 million mortgage note receivable secured by an experiential lodging property in Tennessee into a wholly-owned rental property subject to a long-term triple-net lease. In connection with this conversion, the Company recognized a gain on real estate transactions of approximately $1.0 million and a benefit for credit losses of approximately $1.3 million.
At March 31, 2026, two of the Company's mortgage notes receivable are considered collateral-dependent and expected credit losses are based on the fair value of the underlying collateral with the credit allowance being the difference between the outstanding principal balance of the notes and the estimated fair value at the reporting date. The Company assessed the fair value of the collateral as of March 31, 2026 on the mortgage notes receivable. One of the Company's mortgage notes receivable is fully reserved with an allowance for credit loss totaling $6.4 million, which represents the outstanding principal balance of the note as of March 31, 2026. The other collateral-dependent mortgage note receivable has a carrying amount at March 31, 2026 of approximately $10.4 million net of an allowance for credit loss totaling $0.4 million. Income from these borrowers is recognized on a cash basis. During both the three months ended March 31, 2026 and 2025, the Company received cash basis interest payments of $0.3 million from these mortgage note receivable borrowers.
At March 31, 2026, one of the Company's notes receivable is considered collateral-dependent. The Company assessed the fair value of the collateral as of March 31, 2026 on the note receivable. The note receivable is fully reserved with an allowance for credit loss totaling $6.0 million, which represents the outstanding principal balance of the note as of March 31, 2026. At March 31, 2026, the Company's investment in this note receivable was a variable interest investment and the underlying entity is a VIE. The Company is not the primary beneficiary of this VIE because the Company does not individually have the power to direct the activities that are most significant to the entity and, accordingly, this investment is not consolidated. The Company's maximum exposure to loss associated with this VIE is limited to the Company's outstanding note receivable in the amount of $6.0 million, which is fully reserved in the allowance for credit losses at March 31, 2026. The Company's income received from this borrower is recognized on a cash basis. No cash payments were received during the three months ended March 31, 2026 and 2025.
The following summarizes the activity within the allowance for credit losses related to mortgage notes, unfunded commitments and notes receivable for the three months ended March 31, 2026 (in thousands):
| Mortgage notes receivable | Unfunded commitments - mortgage notes receivable | Notes receivable | Unfunded commitments - notes receivable | Total | |
|---|---|---|---|---|---|
| Allowance for credit losses at December 31, 2025 | $15,929 | $811 | $6,063 | $— | $22,803 |
| Provision (benefit) for credit losses, net | (5,225) | (355) | (17) | — | (5,597) |
| Charge-offs | — | — | — | — | — |
| Recoveries | — | — | — | — | — |
| Allowance for credit losses at March 31, 2026 | $10,704 | $456 | $6,046 | $— | $17,206 |
- Accounts Receivable
The following table summarizes the carrying amounts of accounts receivable as of March 31, 2026 and December 31, 2025 (in thousands):
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Receivable from tenants | $7,439 | $7,361 |
| Receivable from non-tenants | 2,810 | 2,939 |
| Straight-line rent receivable | 90,981 | 87,555 |
| Total | $101,230 | $97,855 |
- Capital Markets and Dividends
During thethree months ended March 31, 2026, the Company declared cash dividends totaling$0.900 per common share. Additionally, during the three months ended March 31, 2026, the Company declared cash dividends of $0.359375 per share, on each of the Company's 5.75% Series C cumulative convertible preferred shares and the Company's 5.75% Series G cumulative redeemable preferred shares, and cash dividends of $0.5625 per share, on the Company's 9.00% Series E cumulative convertible preferred shares.
At-the-Market Program ("ATM Program")
On December 5, 2025, the Company entered into an ATM Program, pursuant to which the Company may issue common shares having an aggregate sales price of up to $400.0 million on the open market or in privately negotiated transactions deemed to be “at-the-market” offerings under SEC rules, including through forward sales agreements. Transactions under the ATM Program, if any, will depend on a variety of factors to be determined by the Company, including market conditions, the trading price of the Company's common shares and the Company's capital needs. The Company intends to use any net proceeds from the sale of common shares pursuant to the ATM Program for general corporate purposes, including funding the Company's pipeline of acquisition and build-to-suit projects, working capital and the repayment of the Company's outstanding indebtedness. As of March 31, 2026, the Company had $352.5 million of capacity remaining under the ATM Program.
The use of forward sales agreements allows the Company to lock in a share price on the sale of shares at the time the forward sale agreement becomes effective, but defer receiving the proceeds from the sale of shares until a later date. If the Company enters into a forward sale agreement, it expects to physically settle each forward sale agreement with the forward purchaser on one or more dates specified by the Company prior to the maturity date of that particular forward sale agreement. The aggregate net cash proceeds at settlement will equal the number of shares underlying the particular forward sale agreement multiplied by the relevant forward sale price. The forward sales price will be equal to the volume-weighted average hedge price per share at which the borrowed common shares were sold by the forward seller, less a per share commission, subject to adjustment. However, the Company may also elect to cash settle or net share settle a particular forward sale agreement, in which case cash proceeds may or may not be received or cash may be owed to the forward purchaser. Until settlement of the forward sale agreements, earnings per share dilution resulting from the forward sale agreements will be determined under the treasury stock method. Share dilution occurs when the average market price of the Company's common shares is higher than the average forward sales price.
The Company did not issue any common shares under its ATM Program during the three months ended March 31, 2026. The following table summarizes activity under the Company's ATM Program in connection with forward sales agreements for the three months ended March 31, 2026 (dollars in thousands except share information):
| Period Entered Into Forward Sales Agreements | Total Forward Shares Sold | Total Forward Shares Settled | Total Forward Shares Outstanding | Volume Weighted Average Hedge Share Price (1) | Net Proceeds Received (2) | Anticipated Gross Proceeds Remaining |
|---|---|---|---|---|---|---|
| Three Months Ended March 31, 2026 | 797,422 | — | 797,422 | $59.52 | $— | $47,464 |
(1) Before payment of commissions and subject to daily adjustment based on the overnight bank borrowing rate less a spread and reduced by expected dividend payments on the Company's common shares during the term of the forward sales agreement.
(2) After payment of commissions.
The Company did not initially receive any proceeds from the sale of forward shares under the ATM Program. The Company expects to settle outstanding forward sales agreements listed above prior to the maturity date of the respective agreement, March 1, 2027, through physical delivery of the outstanding common shares in exchange for cash proceeds.
- Derivative Instruments
All derivatives are recognized at fair value in the consolidated balance sheets within the line items "Other assets" and "Accounts payable and accrued liabilities" as applicable. The Company has elected not to offset its derivative position for purposes of balance sheet presentation and disclosure. The Company had derivative assets of $0.5 million and $0.3 million at March 31, 2026 and December 31, 2025, respectively. The Company had derivative liabilities of $2.8 million and$6.9 million at March 31, 2026 and December 31, 2025, respectively. The Company has not posted or received collateral with its derivative counterparties as of March 31, 2026 or December 31, 2025. See Note 9 for disclosures relating to the fair value of the derivative instruments.
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions, including the effect of changes in foreign currency exchange rates on foreign currency transactions and interest rates on its SOFR-based borrowings. The Company manages this risk by following established risk management policies and procedures including the use of derivatives. The Company’s objective in using derivatives is to add stability to reported earnings and to manage its exposure to foreign exchange and interest rate movements or other identified risks. To accomplish this objective, the Company primarily uses interest rate swaps, cross-currency swaps and foreign currency forwards.
Cash Flow Hedges of Interest Rate Risk
The Company uses interest rate swaps as its interest rate risk management strategy for certain variable rate debt. Interest rate swaps designated as cash flow hedges involve the receipt or payment of variable-rate amounts from a counterparty, which results in the Company recording net interest expense that is fixed over the life of the agreements without exchange of the underlying notional amount.
At March 31, 2026, the Company had one interest rate swap agreement designated as a cash flow hedge of interest rate risk. The interest rate swap agreement outstanding as of March 31, 2026 is summarized below:
| Fixed rate | Notional Amount (in millions) | Index | Maturity |
|---|---|---|---|
| 2.5325% | $25.0 | USD SOFR | September 30, 2026 |
The change in the fair value of interest rate derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (AOCI) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction.
Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of March 31, 2026, the Company estimatesthat through maturity, $27 thousand of losses willbe reclassified from AOCI to interest expense.
Cash Flow Hedges of Foreign Exchange Risk
The Company is exposed to foreign currency exchange risk against its functional currency, USD, on CAD denominated cash flow from itssix Canadian properties. The Company uses cross-currency swaps to mitigate its exposure to fluctuations in the USD-CAD exchange rate on cash inflows associated with these properties, which should hedge a significant portion of the Company's expected CAD denominated cash flows. As of March 31, 2026, the Company had the following cross-currency swaps:
| Fixed rate | Notional Amount (in millions, CAD) | Annual Cash Flow (in millions, CAD) | Maturity |
|---|---|---|---|
| $1.35 CAD per USD | $170.0 | $15.3 | December 1, 2026 |
| $1.35 CAD per USD | 90.0 | 8.1 | December 1, 2026 |
| $260.0 | $23.4 |
The change in the fair value of foreign currency derivatives designated and that qualify as cash flow hedges of foreign exchange risk is recorded in AOCI and reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. As of March 31, 2026, the Company estimatesthat through maturity, $280 thousand of gains will be reclassified from AOCI to other income.
Fair Value Hedges of Foreign Exchange Risk
The Company has a CAD denominated mortgage note receivable secured by a fitness & wellness property in Winnipeg, Canada. The Company uses cross-currency swaps designated as a fair value hedge to mitigate foreign currency risk associated with fluctuations in the USD-CAD spot rate associated with the principal remeasurement of this mortgage note. The Company has a cross-currency swap with an interim and final notional exchange of $27.9 million CAD and $20.0 million USD at a spot rate of $1.392 CAD per USD to fund the principal amount of the mortgage note receivable and monthly exchanges as noted below.
As of March 31, 2026, the Company had the following cross-currency swap designated as a fair value hedge:
| Interim settlement exchange rate | Notional Amount (in millions, CAD) | Annual Cash Flow (in millions, CAD) | Maturity |
|---|---|---|---|
| $1.25 CAD per USD | $27.9 | $2.2 | October 1, 2030 |
The change in fair value of the foreign currency derivative designated and qualifying as a fair value hedge of foreign exchange risk is recorded at fair value each period on the Company's consolidated balance sheets, with the difference resulting from the changes in the spot rate recognized in foreign currency gain (loss). The foreign currency gain (loss) is included in "Other income" or "Other expense," as applicable, on the Company's consolidated statements of income and comprehensive income, which will offset the earnings impact of the foreign currency changes in the underlying transaction being hedged. The initial value of the component excluded from the assessment of effectiveness is recorded in AOCI and reclassified into earnings over the life of the hedging instrument. As of March 31, 2026, the Company estimatesthat during the twelve months ending March 31, 2027, $169 thousand of gains will be reclassified from AOCI to other income.
Net Investment Hedges
The Company is exposed to fluctuations in the USD-CAD exchange rate on its net investments in Canada. As such, the Company uses currency forward agreements to manage its exposure to changes in foreign exchange rates on certain of its foreign net investments. As of March 31, 2026, the Company had the following foreign currency forwards designated as net investment hedges:
| Fixed rate | Notional Amount (in millions, CAD) | Maturity |
|---|---|---|
| $1.40 CAD per USD | $200.0 | December 1, 2026 |
| $1.40 CAD per USD | 90.0 | December 1, 2026 |
| Total | $290.0 |
For qualifying foreign currency derivatives designated as net investment hedges, the change in the fair value of the derivatives is reported in AOCI as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company's accounting policy election.
Below is a summary of the effect of derivative instruments on the consolidated statements of changes in equity and income for the three months ended March 31, 2026 and 2025.
Effect of Derivative Instruments on the Consolidated Statements of Changes in Equity and Comprehensive Income for the Three Months Ended March 31, 2026 and 2025 (Dollars in thousands)
| Three Months Ended March 31, | ||
|---|---|---|
| Description | 2026 | 2025 |
| Cash Flow Hedges | ||
| Interest Rate Swaps | ||
| Amount of Gain Recognized in AOCI on Derivative | $36 | $20 |
| Amount of (Expense) Income Reclassified from AOCI into Earnings (1) | (11) | 120 |
| Cross-Currency Swaps | ||
| Amount of Gain Recognized in AOCI on Derivative | 255 | 68 |
| Amount of Income Reclassified from AOCI into Earnings (2) | 81 | 272 |
| Fair Value Hedges | ||
| Cross-Currency Swaps | ||
| Amount of Gain Recognized in AOCI on Derivative (3) | 43 | — |
| Amount of Gain Recognized in Earnings (2)(3) | 39 | — |
| Net Investment Hedges | ||
| Currency Forward Agreements | ||
| Amount of Gain Recognized in AOCI on Derivative | 3,854 | 312 |
| Total | ||
| Amount of Gain Recognized in AOCI on Derivatives | $4,188 | $400 |
| Amount of Income Reclassified from AOCI into Earnings | 70 | 392 |
| Amount of Gain Recognized in Earnings | 39 | — |
| Interest expense, net in accompanying consolidated statements of income and comprehensive income | $34,763 | $33,021 |
| Other income in accompanying consolidated statements of income and comprehensive income | $10,070 | $11,636 |
(1) Included in "Interest expense, net" in the accompanying consolidated statements of income and comprehensive income for the three months ended March 31, 2026 and 2025.
(2) Included in "Other income" in the accompanying consolidated statements of income and comprehensive income for the three months ended March 31, 2026 and 2025.
(3) Amounts excluded from the effectiveness testing.
Credit-risk-related Contingent Features
The Company has an agreement with its interest rate derivative counterparty that contains a provision where, if the Company defaults on any of its obligations for borrowed money or credit in an amount exceeding $50.0 million and such default is not waived or cured within a specified period of time, including default where repayment of the indebtedness has not been accelerated by the lender, the Company could also be declared in default on its interest rate derivative agreements.
As of March 31, 2026, the fair value of the Company's derivatives in a liability position related to these agreements was $2.8 million. If the Company breaches any of the contractual provisions of these derivative contracts, it would be required to settle its obligations under the agreements at their termination value, which, after considering the right of offset, was $2.6 million at March 31, 2026. As of March 31, 2026, the Company had not posted any collateral related to these agreements and was not in breach of any provisions in these agreements.
- Fair Value Disclosures
The Company has certain financial instruments that are required to be measured under the FASB’s Fair Value Measurement guidance. The Company currently does not have any non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis.
Derivative Financial Instruments
The Company determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives also use Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. As of March 31, 2026, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives and therefore, classified its derivatives as Level 2 within the fair value reporting hierarchy.
Recurring fair value measurements
The table below presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025, aggregated by the level in the fair value hierarchy within which those measurements are classified and by derivative type.
Assets and Liabilities Measured at Fair Value on a Recurring Basis at
March 31, 2026 and December 31, 2025
| Description | Quoted Prices in Active Markets for Identical Assets (Level I) | Significant OtherObservableInputs (Level 2) | SignificantUnobservableInputs (Level 3) | Balance atend of period |
|---|---|---|---|---|
| Cross-Currency Swaps (1) | $— | $371 | $— | $371 |
| Currency Forward Agreements (2) | — | (2,823) | — | (2,823) |
| Interest Rate Swap Agreements (1) | — | 153 | — | 153 |
| Cross-Currency Swaps (1) | $— | $101 | $— | $101 |
| Cross-Currency Swaps (2) | — | (252) | — | (252) |
| Currency Forward Agreements (2) | — | (6,677) | — | (6,677) |
| Interest Rate Swap Agreements (1) | — | 194 | — | 194 |
(1) Included in "Other assets" in the accompanying consolidated balance sheets.
(2) Included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets.
Non-recurring fair value measurements
The table below presents the Company's assets measured at fair value on a non-recurring basis as of March 31, 2026 and December 31, 2025, aggregated by the level in the fair value hierarchy within which those measurements are classified.
Assets Measured at Fair Value on a Non-Recurring Basis at March 31, 2026 and December 31, 2025
| Description | Quoted Prices inActive Marketsfor IdenticalAssets (Level I) | SignificantOtherObservableInputs (Level 2) | SignificantUnobservableInputs (Level 3) | Balance atend of period |
|---|---|---|---|---|
| 2026: | ||||
| Real estate investments, net (1) | $— | $— | $72,800 | $72,800 |
| 2025: | ||||
| Mortgage notes and related accrued interest receivable (2) | $— | $— | $— | $— |
(1) As further discussed in Note 5, during the three months ended March 31, 2026, the Company exercised its purchase option to convert a $70.0 million mortgage note receivable secured by an experiential lodging property in Tennessee into a wholly-owned rental property subject to a long-term triple-net lease. Management estimated the fair value of this property using an independent appraisal, which used a discounted cash flow model. The significant inputs and assumptions used in the real estate appraisal included a discount rate of 8.00% and a terminal capitalization rate of 7.25%. Estimating future cash flows is highly subjective and estimates can differ materially from actual results. These measurements were classified within Level 3 of the fair value hierarchy because many of the assumptions were not observable.
(2) During the year ended December 31, 2025, the Company recorded an allowance for credit loss totaling $6.4 million related toone mortgage note receivable to fully reserve the outstanding principal balance as a result of changes in the borrower's financial status. Management valued the mortgage note receivable based on the fair value of the underlying collateral, which was determined taking into account various factors including implied asset value changes based on current market conditions and review of the financial statements of the borrower and was classified within Level 3 of the fair value hierarchy.
Fair Value of Financial Instruments
The following methods and assumptions were used by the Company to estimate the fair value of each class of financial instruments at March 31, 2026 and December 31, 2025:
Mortgage notes receivable and related accrued interest receivable, net:
The fair value of the Company’s mortgage notes and related accrued interest receivable, net, is estimated by discounting the future cash flows of each instrument using current market rates. At March 31, 2026, the Company had a carrying value of $614.8 million in fixed-rate mortgage notes receivable outstanding, including related accrued interest and allowance for credit losses, with a weighted average interest rate of approximately 9.12%. The fixed-rate mortgage notes bear interest at rates of 7.15% to 12.69%. Discounting the future cash flows for fixed-rate mortgage notes receivable using estimated market rates of 7.00% to 10.50%, management estimates the fair value of the fixed-rate mortgage notes receivable to be approximately $664.5 million with an estimated weighted average market rate of 7.87% at March 31, 2026.
At December 31, 2025, the Company had a carrying value of $679.3 million in fixed-rate mortgage notes receivable outstanding, including related accrued interest and allowance for credit losses, with a weighted average interest rate of approximately 8.97%. The fixed-rate mortgage notes bear interest at rates of 7.15% to 12.69%. Discounting the future cash flows for fixed-rate mortgage notes receivable using estimated market rates of 7.00% to 10.50%, management estimates the fair value of the fixed-rate mortgage notes receivable to be $728.0 million with an estimated weighted average market rate of 7.91% at December 31, 2025.
Derivative instruments:
Derivative instruments are carried at their fair value.
Debt instruments:
The fair value of the Company's debt is estimated by discounting the future cash flows of each instrument using current market rates. At March 31, 2026 and December 31, 2025, the Company had a carrying value of $25.0 million in variable-rate debt outstanding for both periods with an interest rate of approximately 3.82% and 3.95%, respectively. The carrying value of the variable-rate debt outstanding approximated the fair value at March 31, 2026 and December 31, 2025.
At both March 31, 2026 and December 31, 2025, the $25.0 million of variable-rate debt outstanding, discussed above, had been effectively converted to a fixed rate by an interest rate swap agreement. See Note 8 for additional information related to the Company's interest rate swap agreement.
At March 31, 2026, the Company had a carrying value of $2.93 billion in fixed-rate long-term debt outstanding with a weighted average interest rate of approximately 4.40%. Discounting the future cash flows for fixed-rate debt using March 31, 2026 market rates of 3.82% to 5.55%, management estimates the fair value of the fixed rate debt to be approximately $2.82 billion with an estimated weighted average market rate of 4.98% at March 31, 2026.
At December 31, 2025, the Company had a carrying value of $2.93 billion in fixed-rate long-term debt outstanding with a weighted average interest rate of approximately 4.40%. Discounting the future cash flows for fixed-rate debt using December 31, 2025 market rates of 3.54% to 5.12%, management estimates the fair value of the fixed rate debt to be approximately $2.85 billion with an estimated weighted average market rate of 4.61% at December 31, 2025.
- Earnings Per Share
The following table summarizes the Company’s computation of basic and diluted earnings per share (EPS) for the three months ended March 31, 2026 and 2025 (amounts in thousands except per share information):
| Three Months Ended March 31, 2026 | |||
|---|---|---|---|
| Income(numerator) | Shares(denominator) | Per ShareAmount | |
| Basic EPS: | |||
| Net income | $62,610 | ||
| Less: preferred dividend requirements | (6,032) | ||
| Net income available to common shareholders | $56,578 | 76,326 | $0.74 |
| Diluted EPS: | |||
| Net income available to common shareholders | $56,578 | 76,326 | |
| Effect of dilutive securities: | |||
| Share options and performance share units | — | 247 | |
| Net income available to common shareholders | $56,578 | 76,573 | $0.74 |
| Three Months Ended March 31, 2025 | |||
|---|---|---|---|
| Income(numerator) | Shares(denominator) | Per ShareAmount | |
| Basic EPS: | |||
| Net income | $65,803 | ||
| Less: preferred dividend requirements | (6,032) | ||
| Net income available to common shareholders | $59,771 | 75,804 | $0.79 |
| Diluted EPS: | |||
| Net income available to common shareholders | $59,771 | 75,804 | |
| Effect of dilutive securities: | |||
| Share options and performance share units | — | 411 | |
| Net income available to common shareholders | $59,771 | 76,215 | $0.78 |
The effect of the potential common shares from the conversion of the Company’s convertible preferred shares and from the exercise of share options are included in diluted earnings per share if the effect is dilutive. Potential common shares from the performance share units are included in diluted earnings per share upon the satisfaction of certain performance and market conditions. These conditions are evaluated at each reporting period and, if the conditions have been satisfied during the reporting period, the number of contingently issuable shares are included in the computation of diluted earnings per share.
The following shares have been excluded from the calculation of diluted earnings per share because they are anti-dilutive, or in the case of contingently issuable performance share units, are not probable of issuance:
The additional 2.4 million and 2.3 million common shares that would result from the conversion of the Company’s 5.75% Series C cumulative convertible preferred shares and the corresponding add-back of the preferred dividends declared on those shares for the three months ended March 31, 2026 and 2025, respectively.
The additional 1.7 million common shares that would result from the conversion of the Company’s 9.0% Series E cumulative convertible preferred shares and the corresponding add-back of the preferred dividends declared on those shares for both the three months ended March 31, 2026 and 2025.
Outstanding options to purchase 11 thousand common shares at per share prices ranging from $56.94 to $76.63 for both the three months ended March 31, 2026 and 2025.
The effect of 60 thousand contingently issuable performance shares granted during 2026 for the three months ended March 31, 2026.
The effect of 797,422 common shares related to forward sales agreements under the Company's ATM Program that have not settled for the three months ended March 31, 2026.
- Retirement of Executive Vice President and Chief Investment Officer
On March 2, 2026, the Company's Executive Vice President and Chief Investment Officer, Greg Zimmerman, retired from his position at the Company. The role of Executive Vice President and Chief Investment Officer has been assumed by Ben Fox, who joined the Company in August of 2025. During thethree months ended March 31, 2026, the Company recorded retirement and severance expense related to Mr. Zimmerman's retirement totaling $1.4 million, which included cash payments totaling $0.4 million and accelerated vesting of nonvested shares totaling $1.0 million.
- Equity Incentive Plans
The Company issues equity awards under the 2016 Equity Incentive Plan, which may be in the form of restricted common shares, restricted share units, performance share units or other share-based awards. Under the 2016 Equity Incentive Plan, an aggregate of 5,950,000 common shares may be granted. At March 31, 2026, there were 1,688,595 shares available for issuance under the 2016 Equity Incentive Plan.
Nonvested Shares
A summary of the Company’s nonvested share activity and related information is as follows:
| Number of shares | Weighted avg. grant date fair value | Weighted avg. life remaining | |
|---|---|---|---|
| Outstanding at December 31, 2025 | 648,878 | $46.05 | |
| Granted | 336,422 | 54.68 | |
| Vested | (331,954) | 45.24 | |
| Outstanding at March 31, 2026 | 653,346 | $50.93 | 1.61 |
The holders of nonvested shares have voting rights and receive dividends from the date of grant. The fair value of the nonvested shares that vested was$16.9 million and$11.8 million for the three months ended March 31, 2026 and 2025, respectively. Expense recognized related to nonvested shares and included in "General and administrative expense" in the accompanying consolidated statements of income and comprehensive income was$2.1 million and $1.9 million for the three months ended March 31, 2026 and 2025, respectively. Expense related to nonvested shares and included in retirement and severance expense in the accompanying consolidated statements of income and comprehensive income was $0.4 million forthree months ended March 31, 2026. At March 31, 2026, unamortized share-based compensation expense related to nonvested shares was$19.5 million.
Nonvested Performance Share Units
A summary of the Company's nonvested performance share unit activity and related information is as follows:
| Target Number of Performance Share Units | Weighted avg. grant date fair value (1) | Weighted avg. life remaining | |
|---|---|---|---|
| Outstanding at December 31, 2025 | 341,692 | $57.97 | |
| Granted | 119,459 | 56.19 | |
| Vested (2) | (111,593) | 63.08 | |
| Outstanding at March 31, 2026 | 349,558 | $55.73 | 1.75 |
(1) The grant date fair value was determined utilizing (i) a Monte Carlo simulation model to generate an estimate of the Company's future share price over the three-year performance period for performance share units based on the Company's Total Shareholder Return (TSR) performance further described below and (ii) the Company's grant date fair value for performance share units based on the Company's estimated Compounded Annual Growth Rate (CAGR) in AFFO per share over the three-year performance period.
(2) The achievement of the performance conditions for the performance share units granted during the year ended December 31, 2023 resulted in a performance payout percentage of 250% for both the Company's TSR relative to the TSRs of the Company's peer group companies and the Company's TSR relative to the TSRs of companies in the MSCI US REIT Index. Achievement of the Company's CAGR in AFFO per share over the three-year performance period was not achieved and resulted inno pay-out. The achievement of the performance conditions and the above payout percentages resulted in the issuance of 209,238 common shares and 53,141 common shares from dividend equivalents. The fair value of the performance share units and dividend equivalents that vested was $15.2 million.
The number of common shares issuable upon settlement of the performance share units granted during the three months ended March 31, 2026, 2025 and 2024 will be based upon the Company's achievement level relative to performance measures at December 31, 2028, 2027 and 2026, respectively. The performance share units accrue dividend equivalents that are paid as additional common shares based on the Company's achievement levels and upon settlement of the performance share units. The Company's achievement level relative to the performance measures is assigned a specific payout percentage for each of these years, which is multiplied by a target number of performance share units.
| TSR vs. Triple-Net Peer Group | TSR vs. MSCI US REIT Index | CAGR in AFFO per share growth |
|---|---|---|
| 52.2% | 26.1% | 21.7% |
The performance share units based on relative TSR performance have market conditions and are valued using a Monte Carlo simulation model on the grant date, which resulted in a grant date fair value of approximately $5.4 million and $6.3 million for the three months ended March 31, 2026 and 2025, respectively. The estimated fair value is amortized to expense over the three-year performance periods, which end on December 31, 2028, 2027 and 2026 for performance share units granted in 2026, 2025 and 2024, respectively. The following assumptions were used in the Monte Carlo simulation for computing the grant date fair value of the performance share units with a market condition for the three months ended March 31, 2026: risk-free interest rate of 3.6%, volatility factors in the expected market price of the Company's common shares of 22% and an expected life of approximately three years.
The performance share units based on growth in AFFO per share have a performance condition. The probability of achieving the performance condition is assessed at each reporting period. If it is deemed probable that the performance condition will be met, compensation cost will be recognized based on the closing price per share of the Company's common shares on the date of the grant multiplied by the number of awards expected to be earned. If it is deemed that it is not probable that the performance condition will be met, the Company will discontinue the recognition of compensation cost and any compensation cost previously recorded will be reversed. At March 31, 2026, achievement of the performance condition was deemed probable for the performance share units granted during the three months ended March 31, 2026 and 2025 with an expected payout percentage of 132% and 157%, respectively, which resulted in grant date fair values of approximately $1.7 million and $1.9 million, respectively. Achievement of the performance condition for the performance share units granted during the three months ended March 31, 2024 was deemed not probable at March 31, 2026.
Expense recognized related to performance share units and included in "General and administrative expense" in the accompanying consolidated statements of income and comprehensive income was $1.4 million for both the three months ended March 31, 2026 and 2025. Expense related to performance share units and included in retirement and severance expense in the accompanying consolidated statements of income and comprehensive income was $0.6 million for the three months ended March 31, 2026. At March 31, 2026, unamortized share-based compensation expense related to nonvested performance share units was $11.3 million.
Restricted Share Units
A summary of the Company’s restricted share unit activity and related information is as follows:
| Number of shares | Weighted avg. grant date fair value | Weighted avg. life remaining | |
|---|---|---|---|
| Outstanding at December 31, 2025 | 42,071 | $56.01 | |
| Granted | — | — | |
| Vested | — | — | |
| Outstanding at March 31, 2026 | 42,071 | $56.01 | 0.17 |
The holders of restricted share units receive dividend equivalents from the date of grant. Total expense recognized related to shares issued to non-employee Trustees and included in "General and administrative expense" in the accompanying consolidated statements of income and comprehensive income was$0.6 million and $0.5 million for the three months ended March 31, 2026 and 2025, respectively. At March 31, 2026, unamortized share-based compensation expense related to restricted share units was$0.4 million.
- Operating Leases
The Company’s real estate investments are leased under operating leases. In addition to its lessor arrangements on its real estate investments, as of March 31, 2026 and December 31, 2025, the Company was lessee in 50 operating ground leases, and lessee in an operating lease of its executive office. The Company's tenants, who are generally subtenants under these ground leases, are responsible for paying the rent under these ground leases. As of March 31, 2026, rental revenue fromone of the Company's tenants, who is also a subtenant under certain ground leases, is being recognized on a cash basis. In addition, two of the Company's ground leases do not currently have subtenants. In the event a tenant fails to pay the ground lease rent or if the property does not have a subtenant, the Company is primarily responsible for the payment, assuming the Company does not sell or re-tenant the property.
The following table summarizes rental revenue, including sublease arrangements and lease costs, for the three months ended March 31, 2026 and 2025 (in thousands):
| Three Months Ended March 31, | |||
|---|---|---|---|
| Classification | 2026 | 2025 | |
| Lease revenue | |||
| Operating leases | Rental revenue | $148,423 | $139,779 |
| Sublease income - operating ground leases | Rental revenue | 6,762 | 6,580 |
| Lease costs | |||
| Operating ground lease cost | Property operating expense | $6,679 | $6,668 |
| Operating office lease cost | General and administrative expense | 224 | 224 |
- Segment Information
The Company groups its investments intotwo reportable operating segments: Experiential and Education. The Company’s segment structure reflects the financial information and reports used by the Company’s management team, specifically its chief operating decision maker (CODM), to make decisions regarding the Company’s business, including resource allocation and performance assessments. The Company’s CODM is its Chairman, President and Chief Executive Officer. The CODM uses Total Assets and Net Operating Income (NOI) before unallocated items by segment to assess and allocate resources. NOI is calculated as total revenue (consisting of rental revenue, other income and mortgage and other financing income) less property operating expense and other expense.
The financial information summarized below is presented by reportable operating segment (in thousands):
| Balance Sheet Data: | ||||
|---|---|---|---|---|
| As of March 31, 2026 | ||||
| Experiential | Education | Corporate/Unallocated | Consolidated | |
| Total Assets | $5,251,679 | $360,590 | $70,543 | $5,682,812 |
| As of December 31, 2025 | ||||
| Experiential | Education | Corporate/Unallocated | Consolidated | |
| Total Assets | $5,241,639 | $363,430 | $94,693 | $5,699,762 |
| Operating Data: | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended March 31, 2026 | ||||||
| Experiential · Education · Corporate/Unallocated · Consolidated | ||||||
| Rental revenue | $146,546 | $8,639 | $— | $155,185 | ||
| Other income | 10,031 | — | 39 | 10,070 | ||
| Mortgage and other financing income | 15,992 | 5 | — | 15,997 | ||
| Total revenue | 172,569 | 8,644 | 39 | 181,252 | ||
| Property operating expense | 15,131 | 5 | 217 | 15,353 | ||
| Other expense | 10,989 | — | — | 10,989 | ||
| Total investment expenses | 26,120 | 5 | 217 | 26,342 | ||
| Net operating income - before unallocated items | 146,449 | 8,639 | (178) | 154,910 | ||
| Reconciliation to Consolidated Statements of Income and Comprehensive Income: | ||||||
| General and administrative expense | (14,242) | |||||
| Retirement and severance expense | (1,423) | |||||
| Transaction costs | (293) | |||||
| (Provision) benefit for credit losses, net | 5,597 | |||||
| Depreciation and amortization | (44,957) | |||||
| Gain on real estate transactions | 1,027 | |||||
| Interest expense, net | (34,763) | |||||
| Equity in loss from joint ventures | (2,632) | |||||
| Income tax expense | (614) | |||||
| Net income | 62,610 | |||||
| Preferred dividend requirements | (6,032) | |||||
| Net income available to common shareholders of EPR Properties | $56,578 | |||||
| Three Months Ended March 31, 2025 | ||||||
|---|---|---|---|---|---|---|
| Experiential · Education · Corporate/Unallocated · Consolidated | ||||||
| Rental revenue | $135,806 | $10,553 | $— | $146,359 | ||
| Other income | 11,458 | — | 178 | 11,636 | ||
| Mortgage and other financing income | 16,771 | 267 | — | 17,038 | ||
| Total revenue | 164,035 | 10,820 | 178 | 175,033 | ||
| Property operating expense | 14,931 | 4 | 236 | 15,171 | ||
| Other expense | 12,611 | — | — | 12,611 | ||
| Total investment expenses | 27,542 | 4 | 236 | 27,782 | ||
| Net operating income - before unallocated items | 136,493 | 10,816 | (58) | 147,251 | ||
| Reconciliation to Consolidated Statements of Income and Comprehensive Income: | ||||||
| General and administrative expense | (14,024) | |||||
| Transaction costs | (567) | |||||
| (Provision) benefit for credit losses, net | 652 | |||||
| Depreciation and amortization | (41,089) | |||||
| Gain on real estate transactions | 9,384 | |||||
| Interest expense, net | (33,021) | |||||
| Equity in loss from joint ventures | (2,647) | |||||
| Income tax expense | (136) | |||||
| Net income | 65,803 | |||||
| Preferred dividend requirements | (6,032) | |||||
| Net income available to common shareholders of EPR Properties | $59,771 | |||||
- Other Commitments and Contingencies
As of March 31, 2026, the Company had 16 development projects with commitments to fund an aggregate of approximately $37.5 million. The Company advances development costs in periodic draws. If the Company determines that construction is not being completed or progressing in accordance with the terms of the development agreement, it can discontinue funding construction draws. The Company has agreed to lease the properties to the operators at pre-determined rates upon completion of construction.
The Company has certain commitments related to its mortgage notes investments that it may be required to fund in the future. The Company is generally obligated to fund these commitments at therequest of the borrower or upon the occurrence of specified events outside of its direct control. As of March 31, 2026, the Company hadtwo mortgage notes with commitments totaling approximately $46.7 million. If commitments are funded in the future, the Company will charge interest at rates consistent with the existing investments.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.