EPR Properties (NYSE:EPR) is the only pure play on experiential real estate in the market, and despite a rough 2020, things are looking very bright for EPR's future. In this Fool Live video clip, recorded on Oct. 25, Fool.com contributor Matt Frankel discusses what EPR does and why the stock is on his radar now.
Matt Frankel: This is EPR Properties. Ticker symbol EPR, another real estate investment trust. Because hey, it's one of my favorite recommendations. It's recommended by a Fool services. But in full disclosure I'm the one who recommended it, so it qualifies. I think this is the highest yielding stock on the show. It pays about 5.8% right now. It actually makes monthly dividend payments, which if you rely on your stocks for income is a big deal. Who wants to wait every three months for a payday? I don't want to wait to get my paycheck every three months.
EPR is an experiential real estate investment trust. They own a portfolio of properties that sell experiences. Unfortunately, during the pandemic, movie theaters is their biggest property type. AMC (NYSE:AMC) is their biggest tenant, so they need to thank the meme-stock traders for saving that one for them. They traded in tandem with AMC during all the meme stock stuff when AMC was raising capital. But They also own golf attraction. Top-golf is one of their large tenants. They own ski resorts, Vail Resorts (NYSE:MTN) is a major tenant of theirs. They own waterparks, the kind that have hotels and are indoors, you can go to in the winter time. They have these kind of experiential properties.
They are ready to get into full on growth mode. They have a phenomenal balance sheet. Their debt is so manageable, they never went unprofitable during the pandemic. They never lost money for a company whose properties were 100% shutdown for a lot of 2020, 100%. EPR, they see $100 billion market opportunity and they want to actively diversify away from movie theaters. They mentioned properties like gaming properties. Right now they think they own one property that has a casino on it. They want that to be a focus of theirs going forward. They mentioned cultural attractions like zoos and aquariums, which is something like a sale leaseback arrangement that the real estate sector really hasn't even thought of yet. They really want to diversify their portfolio, grow their portfolio.
Currently They are about a $4 billion company. They see $100 billion opportunity and they're essentially the only non-gaming experiential period. They really have the expertise to tackle this even with the poor performance during the pandemic, They've handily outperformed the market in their history. I like the stock a lot, great dividend payers. They paused their dividend out of caution in the pandemic, which was 100% of their properties closed. You really can't blame them for that. But now they say they have visibility into their cash flow. They reinstituted their dividend quicker and at a higher level than people expected. I like this one.