From Waterparks to Charter Schools, EPR Properties Has You Covered

The company is a diverse REIT, which pays monthly dividends. Let's explore some of its operating segments to find out if investors should jump on board.

Jun 18, 2014 at 7:00AM
Waterslide

Flickr / blcarnut.

Are you looking to invest in giant water slides or movie theaters? How about charter schools and wineries? EPR Properties (NYSE:EPR) owns properties in all of these businesses and more.

EPR Properties is a real estate investment trust (REIT) with a portfolio of more than 200 properties in 38 states, D.C., and Canada. It has more than 250 tenants, and 99% of its properties are currently leased. The company has three primary operating segments: entertainment, recreation, and education. 

Entertainment
With a portfolio of 121 theaters, this segment is the company's biggest in terms of overall revenue and investment. While there continues to be skepticism about the future of cinemas, it is unfounded. Why? Because the cinema category is evolving. The last time I went to a movie I had a glass of wine and a slice of pizza. Along with expanded amenities including luxury seating and improvements in technology, the average moviegoer is spending more than double compared to a traditional theater. 

Recreation 
14 ski resorts, five golf complexes, and four water parks, oh my! There is a lof of fun happening at EPR's properties. But what about profits?

Ski property revenue and net income results performed ahead of their five-year average, as the extended winter season brought out more customers. Golf performed strongly. In 2013, TopGolf attendance grew by 52% to 2.25 million visitors, games played grew 83% to 7.6 million and balls hit grew 84% to 151 million. That's a lot of swings!

The Verruckt water slide, scheduled to open June 29, is the world's tallest water slide at approximately 168 feet. The name of the slide means "crazy" in German. Do you think you are crazy enough to try this ride? Its publicity should help increase summer attendances.

Waterslide

Verrückt waterslide at Schlitterbahn             Source: Jill Toyoshiba, The Kansas City Star

Education
Charter schools, which offer new and innovative learning models, provide and alternative choice in public education. The national waiting list approaches one million students. EPR owns 56 public charter schools.

"Imagine" is one of the largest for-profit charter school operators in the nation. But it has been struggling as of late, as regulators have began cracking down on low performing schools. EPR sold four Imagine public charter schools for proceeds of approximately $46 million in April, 2014. 

Adelaar
In May, 2014, the company unveiled plans for a new destination resort called "Adelaar." EPR has teamed with regional gaming and casino operator Empire Resorts and intends to apply for a license to own and operate a new destination gaming resort that will include a four-star hotel. Located 90 miles from New York City and costing an estimated $750 million. Infrastructure investment at Adelaar will include a retail village and water park hotel. However, the casino, the company hotel, and the gaming floor will be funded and controlled by Empire Resorts. 

As of Q1 2014, the Entertainment segment is 63% of overall revenue, while Recreation and Education both contributed 16%. Other properties, which includes two vineyards and wineries, are 5% of revenue.  

Monthly dividends
The company paid its first monthly dividend in May, 2013, joining a short list of other REITs that pay monthly dividends, including Realty Income Group and LTC Properties. The dividend yield is a generous 6.2%. Income investors, especially those who are retired and semi-retired, benefit from receiving a regular stream of supplemental monthly income.

Risks for investors
While the $750 million Adelaar project looks promising, the company might need to raise additional capital to pay for the project, while maintaining its dividend obligations to shareholders. Furthermore, Empire Resorts is a small operator that is not profitable, making it a risky partner.

Foolish takeaways
Overall, EPR Properties is performing well. Its diverse segments and high occupancy rate provide stability for investors. Despite the charter school risks and the Adelaar project uncertainties, investors who are looking for a REIT that is non-traditional should consider adding some shares.

Looking for even more dividend diversification?
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That’s beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor’s portfolio. To see our free report on these stocks, just click here now.

Mike Fee owns shares of Realty Income. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers