EPR Properties (EPR) came out with quarterly funds from operations (FFO) of $1.24 per share, missing the Zacks Consensus Estimate of $1.25 per share. This compares to FFO of $1.2 per share a year ago.
Some REITs have strongly recovered in recent months. At the same time, some others have stagnated and become undervalued. This is leading to some interesting capital recycling opportunities.
As a general rule, securities that deliver above average income usually have limited upside potential, i.e.
I've sold 84% of my EPR Properties position after strong gains, reallocating to new opportunities for better risk/reward. EPR's valuation gap has closed; the stock now trades at a higher P/AFFO than its 5-year average, making it less attractive for my contrarian investment style. While I trust EPR management and their resilience, the current price no longer fits my high-risk, value-seeking approach.
EPR Properties has rallied 42% in the past year, significantly outperforming peers and the S&P, driven by its shift to experiential assets. Despite strong fundamentals and raised guidance, the valuation gap has closed, making the stock less attractive for new buys at current levels. Given economic uncertainty and recent gains, I recommend trimming positions and turning off DRIP, awaiting a better entry point in the mid-$50s.
EPR delivered strong returns and resilient dividend income, outperforming during post-COVID recovery and benefiting from improved Theatre segment fundamentals. Dividend coverage remains robust, with a healthy AFFO payout ratio and management's confidence in sustainable, potentially growing payouts. Financial performance is solid, with Q1 2025 results beating expectations and management raising full-year guidance, supporting ongoing optimism.
EPR Properties' recovery from the pandemic appears overdone, as the stock trades at only a slight discount to more diversified REIT peers. I am concerned about EPR's high exposure to movie theaters—standing at 38% of profits—given the sector's long-term secular decline and tenant profitability risks. Despite recent strong FFO growth, EPR's slim risk premium and concentrated tenant base make it less attractive than peers with broader diversification.
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Here is how EPR Properties (EPR) and Aviva (AVVIY) have performed compared to their sector so far this year.
EPR Properties is up 41% over the last year as investors look past the AMC exposure and towards the REIT's capital recycling program. The REIT is paying out a 6.25% dividend yield that is 144% covered by the midpoint of funds from operations as adjusted guidance for 2025. Roughly $70.8 million was raised from dispositions in the first quarter as EPR continues to reduce its theater exposure. AMC remains its second-largest tenant by revenue.
EPR Properties (NYSE:EPR ) Nareit REITweek: 2025 Investor Conference June 3, 2025 1:45 PM ET Company Participants Gregory E. Zimmerman - Executive VP & Chief Investment Officer Gregory K.