Back to top

Analyst Blog

In order to pay off its outstanding debts, EPR Properties (EPR - Snapshot Report) – a specialty real estate investment trust (REIT) – recently priced an underwritten equity offering of 5.250% Senior Notes worth $275 million. The offering is expected to be completed on Jun 18, 2013 (subject to customary closing conditions).

Notably, some of EPR's subsidiaries will guarantee the senior notes. J.P. Morgan Securities LLC of JPMorgan Chase & Co. (JPM - Analyst Report), Citigroup Global Markets Inc. of Citigroup, Inc. (C - Analyst Report) and RBC Capital Markets, LLC served as joint book-running managers for the notes offering. 

In particular, EPR intends to use the net proceeds to repay several outstanding debts – including principal balance of the unsecured revolving credit facility; fixed rate mortgage debt secured by 4 Canada-based entertainment retail centers worth $90.9 million Canadian dollars (U.S. $89.5 million based on a conversion rate of 0.9843 as of Mar 31, 2013); and fixed rate mortgage debt worth $56.7 million secured by its N.Y.-based entertainment retail center.

Also, the company plans to pay early repayment costs, related to the abovementioned mortgage debt. Moreover, it intends to spend the remaining amount of the proceeds for future investments and other corporate purposes. This, in particular, includes the proposed acquisition of a company, which indirectly holds 11 theatre properties.

We expect this underwritten public offering to help the company attain financial flexibility and position it favorably to pursue investment opportunities and acquisitions, which will go a long way in enhancing its top-line.

Significantly, EPR has interests in assets in selected market segments, with Entertainment, Recreation and Education being the primary segments. Its investment in these segments totals over $3.2 billion.

Currently, EPR carries a Zacks Rank #2 (Buy). Other well performing REITs include Acadia Realty Trust (AKR - Snapshot Report) which has the same rank as EPR.