Entertainment Properties CEO Discusses Q3 2010 Results – Earnings Call Transcript
Entertainment Properties Trust (
)
Q3 2010 Earnings Call Transcript
November 2, 2010 4:30 pm ET
Executives
David Brain – President and CEO
Greg Silvers – VP and COO
Mark Peterson – VP and CFO
Analysts
Anthony Paolone – JPMorgan
Jordan Sadler – KeyBanc Capital Markets
Michael Bilerman – Citi
Greg Schweitzer – Citi
Gabe Poggi – FBR
Andrew DiZio – Janney Montgomery Scott
Rich Moore – RBC Capital Markets
Craig Mailman – KeyBanc Capital Markets
Presentation
Operator
Compare to:
Previous Statements by EPR
»
Entertainment Properties Trust Q2 2010 Earnings Call Transcript
»
Entertainment Properties Trust Q1 2010 Earnings Call Transcript
»
Entertainment Properties Trust Q3 2009 Earnings Call Transcript
»
Entertainment Properties Trust Q1 2009 Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to the third quarter 2010 Entertainment Properties Trust earnings conference call. My name is Francine and I’m your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator instructions) I would now like to turn the presentation over to your host for today’s call, Mr. David Brain, President and Chief Executive Officer. You may proceed.
David Brain
Thank you, Francine.
Good afternoon to all of you. Thank you for joining us. This is David Brain. I’ll start with the usual preface, and that is to inform you that this conference call may include forward-looking statements defined by the Private Securities Litigation Reform Act of 1995, identified by such words as will be, intend, continue, believe, may, expect, hope, anticipate, or other comparable terms.
The company’s actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. A discussion of the factors that could cause results to differ materially from those forward-looking statements is contained in the company’s SEC filings, including the company’s report on Form 10-K for the year ending 12/31/09.
All right. Let me start by saying we appreciate your vote of confidence and taking time with us today. The headlines for the third quarter for 2010 for Entertainment Properties are as follows. As usual, we have the webcast through eprkc.com. You can go there now for the slides. Headlines are, first, number one, we had a quieter but very solid quarter for tenant fundamentals; two, no major capital formation activity during the quarter, but good progress on our cost of capital. Three, good 2011 growth prospects that support guidance of $300 million in acquisitions; and four, 2011 FFO diluted share increase of 4% to 5% is expected.
All right. This afternoon, as usual, I’ll comment a bit on these items, and then Greg, who is with us this afternoon –
Greg Silvers
Hello.
David Brain
And Mark –
Mark Peterson
Hello.
David Brain
Will add some detail of these items as well as some other things, and we will follow that all by taking your questions.
Now, going to our first headline, a quieter but very solid quarter for tenant fundamentals. We did have significant and positive news regarding tenant fundamentals for the quarter, during the quarter, and I’d like to share that with you.
First, our primary index of our largest area of invest represented about 70% of our investment portfolio, the first around exhibition cinema industry accelerated its retail market-leading performance during the quarter. And during the quarter, box office receipts were up over the same period of ’09 by 5%, a great performance for the industry of the vast majority of our investments.
Second, both in terms of sequence this afternoon and EPR portfolio provenance is news regarding our tuition-free public charter school properties. Enrollment counts for the 2010-11 school year were just taken and published, and the student counts in our schools were up by 8%.
And third, this – the third quarter marks the end of the summer operating season for our water park investments, and we can report to you that revenues for our operator Schlitterbahn were right on top of last year despite not only a tough economy but major storm-related weather problems and a depressed travel and hospitality profile for the Gulf Coast as a result of BP oil spill. With that said, flat results were viewed as good news.
In sum, the seasonal aspects of our portfolio, all reported good news this quarter. And when combined with the steady, positive performance of our theater investments and the great performance of our ski portfolio have increased revenues of 8% that we reported to you on our last call. We are encouraged by the broad based positive fundamentals throughout our client base.
Our second headline today also reflects the quieter nature of the quarter and that we undertook no new capital formation activity. Unlike last quarter when the company began what I describe to you as a seismic change and our movement from being a secured to an unsecured debt issuer. There were no new financings or equity issuances in the quarter just ended, but we did see progress in our cost of capital, as our common stock traded up and our bond yield tightened.
Our investment grade rated day view unsecured bond that was sold with the 7.75% coupon in the second quarter has traded into a yield of about 7%. This coupled with a more robust stock price, translates to a lower average cost of capital, and is very supportive for the continued growth of the company. This is important, given the large and growing opportunities that we see.
Now, speaking of opportunity sets in view, with this report to you, we are providing guidance for acquisitions in 2011 in our third headline. We are able this time to provide guidance of $300 million in acquisitions throughout next year. We have formulated this estimate based on visibility of specific transactions.
Read the rest of this transcript for free on seekingalpha.com
